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EX-31.1 - EXHIBIT 31.1 - TELCO CUBA, INC..ex31-1.htm
EX-32.2 - EXHIBIT 32.2 - TELCO CUBA, INC..ex32-2.htm
EX-32.1 - EXHIBIT 32.1 - TELCO CUBA, INC..ex32-1.htm
EX-31.2 - EXHIBIT 31.2 - TELCO CUBA, INC..ex31-2.htm
EX-10.7 - EXHIBIT 10.7 - TELCO CUBA, INC..ex10-7.htm
EX-10.8 - EXHIBIT 10.8 - TELCO CUBA, INC..ex10-8.htm


 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
Form 10-K
 
ý
Annual report pursuant section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended November 30, 2010
 
r
Transition report pursuant section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from ________________ to ________________
 
Commission file number 000-53157
 
Sungro Minerals Inc.
(Exact name of small business issuer as specified in its charter)
 
Nevada
(State of Incorporation)
98-0546544
(I.R.S. Employer Identification No.)

111 Airport Rd., Unit 5
Warwick, RI  02889
Tel: (401) 648-0805
(Address and telephone number of Registrant's principal
executive offices and principal place of business)

Securities registered pursuant to Section 12(b) of the Act:
 
None
     
Securities registered pursuant to Section 12(g) of the Act:
 
Common Stock, par value $0.001
(Title of Class)
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes r      No ý
 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes r      No ý
 
Note - Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Exchange Act from their obligations under those Sections.
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes ý      No r
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes r      No r
 
 
 

 
 
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.
r
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer r
Non-accelerated filer r
(Do not check if a smaller reporting company)
Accelerated filer r
Smaller reporting company ý
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  
Yes q   No ý
 
The number of shares of Common Stock held by non-affiliates, as of March 14, 2011 was 79,433,932 shares, all of one class of common stock, $0.001 par value, having an aggregate market value of $5,560,375 based on the closing price of the Registrant's common stock of $0.07 on March 14, 2011 as quoted on the Electronic Over-the-Counter Bulletin Board ("OTCBB").
 
As of March 14, 2011 there were 87,067,217 shares of the Company's Common Stock outstanding.
 
Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date.
 
 
Class: common stock - $0.001 par value
 
Outstanding at March 14, 2011: 87,067,217
 
 
DOCUMENTS INCORPORATED BY REFERENCE
 
 
None.
 
 
 

 

PART I
 
ITEM 1.  DESCRIPTION OF BUSINESS
 
How our company is organized
 
Sungro Minerals Inc. (the "Company" or "Sungro") was incorporated under the laws of the State of Nevada on August 10, 2007.
 
Where you can find us
 
We are located at 111 Airport Road - Unit 5, Warwick, RI 02889. Our telephone number is (401) 648-0805, our facsimile number is (401) 648-0699, our e-mail address is info@sungrominerals.com, and our homepage on the world-wide web is at http://www.sungrominerals.com.
 
About Our Company
 
Sungro Minerals, Inc. is an early stage Mining and Exploration Company seeking to acquire, develop, and manage various mineral properties and resources. In August 2009, the Company entered into an agreement to acquire the mineral rights to 331 unpatented lode mining claims known as the Conglomerate Mesa, located in Inyo County, California.  The Company continues to evaluate other properties for acquisition or development.
 
In February 2011, the Company received its first report on the potential mineralization of the Conglomerate Mesa.  The report is based on the Canadian standard or National Instrument 43-101.  The report provides estimates of the minerals including an estimated 2,000,000 ounces of gold as well as significant silver, lead, and zinc deposits.  The report can be viewed on our website at http://sungrominerals.com/images/report.pdf.
 
Conglomerate Mesa Claims
 
Pursuant to an agreement dated August 27, 2009 we acquired, the mineral rights to 331 unpatented lode mining claims know as the Conglomerate Mesa from Mr. Steven Van Ert, and Mr. Noel Cousins, the registered owners of the Conglomerate Mesa Claims. The Conglomerate Mesa Claims are located in Inyo County, California.
 
 
 
1

 
 
By written, mutual agreement between the parties, the final closing of the Agreement was extended to March 22, 2010.  Under the agreement, Sungro was required to make all filings related to the Conglomerate Mesa Properties, to maintain the Conglomerate Mesa Claims in good standing by preparing and filing and paying claim fees to the Bureau of Land Management, and keeping the claim area free and clear of all liens and encumbrances.
 
In order to complete the acquisition of the Conglomerate Mesa Claims, Sungro has made payments of cash and stock to Mr. Steve Van Ert and Mr. Noel Cousins in accordance with the table below:
 
   
Cash
 
Stock1
Steven Van Ert
  $ 170,000  
2,210,000 shares
           
Noel Cousins
  $ 30,000  
  390,000 shares
           
Total
  $ 200,000  
2,600,000 shares
 
1 - Shares issued into escrow and to be released in accordance with the schedule below:
 
Escrow Release Date
 
Steven Van Ert
   
Noel Cousins
   
Total
 
Completed
February 2010
    255,000       45,000       300,000  
January 1, 2011
    425,000       75,000       500,000  
January 1, 2012
    425,000       75,000       500,000    
January 1, 2013
    425,000       75,000       500,000    
January 1, 2014
    425,000       75,000       500,000    
January 1, 2015
    255,000       45,000       300,000    
Total
    2,210,000       390,000       2,600,000    
 
Governmental Regulations and Environmental Compliance
 
The Company’s operations if and when they begin, will be subject to various federal, state, and local permitting and environmental regulations.  The Conglomerate Mesa Claims were previously permitted by several companies.  These permits included roadways, drilling, and preliminary mining approvals.  The Company believes that some or all of these permits can be transferred to its name following filings and updates to the plan of exploration and development.
 
Plan of Operation
 
With the completion of the first Conglomerate Mesa Mineral Agreement, our goal is to continue acquiring additional mineral properties to develop or explore, or in the alternative, acquire companies or businesses with those assets who are seeking the advantages of being a publicly held company.
 
If we decide to acquire a target company or business, we do not plan to restrict our potential candidate companies to any specific business, industry or geographical location and, thus, we may acquire any type of business.  The Company has been in discussion with several potential business acquisition candidates regarding business opportunities for Sungro. The Company has unrestricted flexibility in seeking, analyzing and participating in such potential business opportunities. Management will screen all potential properties to determine their economic viability and examine proposed properties with regard to sound business fundamentals, utilizing the expertise and experience of management and such consultants as the Company determines are needed to fully understand the potential of the properties to be acquired. In its efforts to analyze potential acquisition targets, Sungro will consider some or all of the following factors:
 
(a)
Potential for growth, indicated by new technology, anticipated market expansion or new products;
 
(b)
Competitive position as compared to other firms of similar size and experience within the industry segment as well as within the industry as a whole;
 
(c)
Strength and diversity of management, either in place or scheduled for recruitment;
 
 
2

 
 
(d)
Capital requirements and anticipated availability of required funds, to be provided by Sungro or from operations, through the sale of additional securities, through joint ventures or similar arrangements or from other sources;
 
(e)
The cost of participation by Sungro as compared to the perceived tangible and intangible values and potentials;
 
(f)
The extent to which the business opportunity can be advanced;
 
(g)
The accessibility of required management expertise, personnel, raw materials, services, professional assistance and other required items; and
 
(h)
Other relevant factors.
 
In applying the foregoing criteria, none of which will be controlling, management will attempt to analyze all factors and circumstances and make a determination based upon reasonable investigative measures and available data. Potentially available business opportunities may occur in many different industries, and at various stages of development, all of which will make the task of comparative investigation and analysis of such business opportunities extremely difficult and complex. Due to the Company's limited capital available for investigation, the Company may not discover or adequately evaluate adverse facts about the opportunity to be acquired.
 
There is no assurance that management will identify and successfully negotiate the acquisition of any potential properties or assets, or any interests therein, or that any such opportunities or businesses acquired will be profitable.
 
The Company intends to develop the mineral sites acquired to the point of proven reserves.  Depending on the types of mineral deposits, and the complexity of their extraction, the Company will generate revenue in one of two ways:
 
 
1.
Sale of the mining rights to a third party mining company with Sungro receiving a percentage of the revenue generated; or
 
 
2.
The Company will retain a management team or Joint Venture Partner with the experience and capabilities of directing the efforts connected with the development and commercialization of the various mining property(s).
 
Employees
 
We presently have three employees our Chief Executive Officer / President, our Chief Financial Officer, both of whom are directors of the Company, and a person supporting Investor Relations.  We expect that as we begin development of the Conglomerate Mesa property, additional personnel will be added.  We believe that our relationship with employees is satisfactory. We have not suffered any labor problems during the last two years.
 
 
3

 

ITEM 1A. RISK FACTORS
 
Investment in our securities involves a high degree of risk. We are subject to various risks that may materially harm our business, financial condition and results of operations. You should carefully consider the risks and uncertainties described below and the other information in this filing before deciding to purchase our common stock. If any of these risks or uncertainties actually occurs, our business, financial condition or operating results could be materially harmed. In that case, the trading price of our common stock could decline and you could lose all or part of your investment.
 
We are an Exploration Stage Company, as such; you cannot evaluate the investment merits of our Company because we have no operating history.
 
Our Company is only recently organized with no operating history, which makes it difficult to evaluate the investment merits of our Company. Our Company was organized on August 10, 2007 and is a start-up, Exploration Stage Company. We have no operating history and we did not have any business prior to our organization. During the fiscal year ended November 30, 2010, we incurred $48,815 in claims fees paid to the Bureau of Land Management to preserve the Conglomerate Mesa claims in good standing, and $178,000 to complete the required cash component of the acquisition of the Conglomerate Mesa claims as well as issuing 2,600,000 common shares at $1.00 per share to complete the contract.  We incurred a total of $8,287,246 in expenses from inception to November 30, 2010.
 
We may not be able to continue as a going concern if we do not obtain additional financing.
 
Because of our lack of sufficient funds and short operating history incurring only expenses, and no revenues, our independent auditors report states that there is substantial doubt about our ability to continue as a going concern. Our independent auditor in their audit report have stated that we incurred only losses since our inception raising substantial doubt about our ability to continue as a going concern. Therefore, our ability to continue as a going concern is highly dependent upon obtaining additional financing for our planned operations. As of the date hereof, cash has been raised from the issuance of securities and promissory notes.
 
Our Negative Cash Flow, Operating Losses, Lack of Revenue, And Limited Operating History Makes It Difficult or Impossible To Evaluate Our Performance And Make Predictions About The Future.
 
We have not generated revenue, nor are we likely to generate revenue within the next twelve to eighteen months.  We are an exploration stage company.  Consequently, there is no meaningful historical operating or financial information about our business upon which to evaluate future performance.
 
We cannot assure generation of significant revenues, sustained profitability or generation of positive cash flow from operating activities in the future. If we cannot generate enough revenue, our business may not succeed and our Common Stock may have little or no value.
 
We Are Subject To A Working Capital Deficit, Which Means That Our Current Assets On November 30, 2010 Were Not Sufficient To Satisfy Our Current Liabilities.
 
As of November 30, 2010, we have incurred substantial operating losses. Since we have no revenue, we have generated negative free cash flow and expect to continue to experience negative free cash flow at least through our exploration phase.  We have current liabilities of $943,677 and current assets of $2,367 at November 30, 2010, and a working capital deficiency of $941,310.  If we cannot meet our current liabilities we may have to curtail or cease business operations.
 
 
4

 
 
We Have Been The Subject Of A Going Concern Opinion As Of November 30, 2010 And November 30, 2009 From Our Independent Auditors Which Means That We May Not Be Able To Continue Operations Unless We Obtain Additional Funding.
 
Our independent auditors have added an explanatory paragraph to their audit report issued in connection with our financial statements for the years ended November 30, 2010 and 2009.  We have incurred losses of $7,896,734 and $292,155 for the years ended November 30, 2010 and 2009, and a cumulative loss since inception of $8,287,246, and that we had a working capital deficiency of $941,310 at November 30, 2010 and that these conditions raise substantial doubt about the Company's ability to continue as a going concern. Our financial statements do not include any adjustments that might result from the outcome of this uncertainty.
 
If we do not obtain additional financing, our business will fail because we cannot fund our business objectives.
 
We need to raise money to meet our general and administrative expenses, and we need to raise money to achieve our business objective to acquire other mineral properties or a target company or business. As of November 30, 2010, we had cash in the amount of $1,367, and current liabilities of $943,677. We currently do not have any operations and we have no income. We currently do not have any arrangements for financing and we may not be able to obtain financing when required. Obtaining additional financing would be subject to a number of factors, including the fact that we have no business and the present financial market conditions may make obtaining additional financing difficult. These factors may make the timing, amount, terms or conditions of additional financing unavailable to us.
 
We Could Fail To Attract Or Retain Key Personnel.
 
Our success largely depends on the efforts and abilities of key executives and consultants, including Frederick Pucillo, Jr., our Chief Executive Officer and President, and Erwin Vahlsing, Jr. our Chief Financial Officer. The loss of the services of any of these individuals could materially harm our business because of the cost and time necessary to replace and train a replacement. Such loss would also divert management attention away from operational issues. We do not presently maintain key-man life insurance policies on any executive. In addition, we need to attract additional high quality geological, investor relations, and consulting personnel. To the extent that we are smaller than our competitors and have fewer resources we may not be able to attract the sufficient number and quality of staff.
 
We Are Subject To Municipal and Other Local Regulation.
 
Municipalities may require us to obtain various permits and licenses in order to install or operate equipment in various locations where we seek to explore or develop mineral deposits. A municipality’s decision to require Sungro to obtain permits or licenses could delay or impede the development of revenue model, as well as force us to incur additional costs.
 
We May Face Opposition Regarding Development of the Minerals Contained On Our Claims
.
There may face environmental and developmental opposition regarding the development of the mineral claims that we own.  This opposition may be sufficient to cost the Company significant funds to overcome if at all.  There can be no certainty with regard to the outcome of such opposition if it should develop.  If the opposition is successful in their efforts, it may render the claims valueless with a similar impact on the value of the Company’s Common Stock.
 
No Expectation of Dividends on Common Stock.
 
We have never paid cash dividends on our Common Stock and we do not expect to pay cash dividends on our Common Stock at any time in the foreseeable future.  The future payment of dividends directly depends upon the future earnings, capital requirements, financial requirements and other factors that our Board of Directors will consider.  Since we do not anticipate paying cash dividends on our Common Stock, the return on investment on our Common Stock will depend solely on an increase, if any, in the market value of the Common Stock.
 
 
5

 
 
Our Common Stock May Lack Liquidity And Be Affected By Limited Trading Volume.
 
Our Common Stock is traded on the NASDAQ Over the Counter Bulletin Board. There can be no assurance that an active trading market for our common stock will be maintained. An absence of an active trading market could adversely affect our shareholders' ability to sell our common stock in short time periods, or possibly at all.  Our common stock has experienced, and is likely to experience in the future, significant price and volume fluctuations, which could adversely affect the market price of our common stock without regard to our operating performance.  In addition, we believe that factors such as quarterly fluctuations in our financial results and changes in the overall economy or the condition of the financial markets could cause the price of our common stock to fluctuate substantially.  We cannot predict the actions of market participants and, therefore, can offer no assurances that the market for our stock will be stable or appreciate over time.
 
The Volatility Of Stock Prices May Adversely Affect The Market Price Of Our Common Stock.
 
The market for our Common Stock is highly volatile.  The trading price of our Common Stock could be subject to wide fluctuations in response to, among other things:
 
 
(i)
changes in market price of the various minerals;
 
 
(ii)
quarterly variations in operating and financial results;
 
 
(iii)
changes in mineral resources within the claim areas;
 
 
(iv)
changes in our revenue and revenue growth rates; and
 
 
(v)
marketing and advertising.
 
Statements or changes in opinions, ratings, or earnings estimates made by brokerage firms or industry analysts relating to the market in which we do business or related to it could result in an immediate effect in the market price of our Common Stock. In addition, the stock market has from time to time experienced extreme price and volume fluctuations which have particularly affected the market price for the securities of many mining and exploration companies and which often have been unrelated to the operating performance of these companies.  These broad market fluctuations may adversely affect the market price of our Common Stock.
 
If the selling shareholders sell a large number of shares all at once or in blocks, the market price of our shares would most likely decline.
 
Our Form S-1 Registration Statement filed on February 22, 2008, registered for resale 23,750,000 shares (adjusted for the 5:1 forward split) of our common stock held by our selling shareholders, which represented 48.7% of the common shares outstanding at that time. The offer or sale of a large number of shares at any price may cause the market price to fall.
 
 
6

 
 
Risks Relating to Financing Arrangements - The Conversion Price Feature of Notes, Preferred Stock, and Debentures May Encourage Short Sales in the Company’s Common Stock.
 
The Company has issued convertible debentures in connection with its financing needs.  These debentures are convertible at a variable price that is computed as sixty percent of the average of the lowest three days closing bid price prior to the date of conversion.

The downward pressure on the price of the common stock as the selling stockholders under both these financings convert and sell amounts of common stock could encourage short sales by investors. This could place further downward pressure on the price of the common stock. The selling stockholders could sell common stock into the market in anticipation of covering the short sale by converting their securities, which could cause the further downward pressure on the stock price. In addition, not only the sale of shares issued upon conversion or exercise of notes and related warrants, and Series B preferred stock, but also the mere perception that these sales could occur, may adversely affect the market price of the common stock.
 
Rules of the Securities and Exchange Commission concerning low priced securities may limit the ability of shareholders to sell their shares.
 
Sungro's common stock is subject to Rule 15g-9 of the Securities and Exchange Commission which regulates broker/dealer practices in connection with transactions in "penny stocks". Penny stocks generally are equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in that security are provided by the exchange or system. The penny stock rules require a broker/dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document prepared by the Commission that provides information about penny stocks and the nature and level or risks in the penny stock market. The broker/dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker/dealer and its salesperson in the transaction, and if the broker/dealer is the sole market-maker, the broker/dealer must disclose this fact and the broker/dealers presumed control over the market. This information must be provided to the customer orally or in writing before or with the written confirmation of trade sent to the customer. The bid and offer quotations, and the broker/dealer and its salesperson compensation information, must be given to the customer in writing before or with the customer's confirmation. The broker/dealer must make a special suitability determination for purchasers of the securities and receive the purchaser's written agreement to the transaction prior to sale. Monthly statements must be sent by the broker/dealer to the customer disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. These disclosure requirements may reduce the level of trading activity in the market for Sungro's common stock and may limit the ability of investors in this offering to sell Sungro's common stock in the secondary market.
 
The limited public market for Sungro's common stock may limit the ability of shareholders to sell their shares.
 
There has been only a limited public market for Sungro's common stock. An active trading market for Sungro's stock may not develop and purchasers of the shares may not be able to resell their securities at prices equal to or greater than the price paid for these shares. The market price of Sungro's common stock may decline as the result of announcements by Sungro or its competitors, variations in Sungro's results of operations, and market conditions in the real estate and commodities markets in general.
 
Rules of the Securities and Exchange Commission concerning late report filings.
 
Sungro's common stock is quoted on the OTC Bulletin Board. FINRA Rule 6530 provides that OTC Bulletin Board issuers who are late in filing their annual or quarterly reports three times within a 24-month period will be ineligible for quotation on the OTC Bulletin Board. In order to regain eligibility under this rule, the issuer would need to timely file all of its annual and quarterly reports due in a one year period. We have not been late in filing our quarterly and annual reports.
 
ITEM 1B. UNRESOLVED STAFF COMMENTS
 
None.
 
 
7

 
 
ITEM 2. PROPERTIES
 
We have acquired 331 unpatented lode mining claims known as the Conglomerate Mesa, located in Inyo County, California.  The Company must maintain periodic payments on these claims to the Bureau of Land Management.
 
Currently, the Company leases approximately 1,000 SF of office space at 111 Airport Rd., Unit 5, Warwick, RI  02889
 
ITEM 3. LEGAL PROCEEDINGS
 
 
(a)
In August, 2009, trading in the Company’s stock was temporarily suspended in British Columbia, Canada by the British Columbia Securities Commission (BCSC).  The temporary suspension was the result of what the BCSC termed “suspicious trading activity” due to a significant increase in the share price of the Company’s stock price.  Various shareholders, and the former CEO and President, Malkeet Bains have been interviewed.  To date, no charges of wrongdoing have been made against the Company; however, the BCSC has requested various documents and information as part of the investigation.  The Cease Trade Order is still in effect regarding trading in British Columbia, Canada, and the residents thereof.
 
The Company cannot be certain of the outcome of the proceedings; however, we do not believe they will impact the Company itself.
 
ITEM 4. RESERVED

 
8

 

PART II
 
ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
 
As of March 14, 2011, there were approximately 82 owners of record of the Company's common stock. The Company's common stock is traded on the OTC Bulletin Board under the symbol "SUGO". Set forth below are the range of high and low bid quotations for the periods indicated as reported by the OTC Bulletin Board. The market quotations reflect inter-dealer prices, without retail mark-up, mark-down or commissions and may not necessarily represent actual transactions. The Company's common stock began trading on September 24, 2008. The following table reports high and low closing prices, on a quarterly basis, for the Company's common stock:
 
Quarter Ending
 
High
   
Low
 
             
Feb. 28, 2009
  $ 0.35     $ 0.35  
May 31, 2009
  $ 0.35     $ 0.35  
Aug. 31, 2009
  $ 1.91     $ 1.01  
Nov. 30, 2009
  $ 1.01     $ 1.01  
Feb. 28, 2010
  $ 1.70     $ 0.51  
May 31, 2010
  $ 1.00     $ 0.251  
Aug. 31, 2010
  $ 0.425     $ 0.14  
Nov. 30, 2010
  $ 0.25     $ 0.015  
 
Dividend Policy
 
We have never declared or paid any cash dividends on our common stock. We currently intend to retain future earnings, if any, to finance the expansion of our business. As a result, we do not anticipate paying any cash dividends in the foreseeable future.
 
Recent Sales of Unregistered Securities
 
The following sets forth certain information regarding sales of, and other transactions with respect to, our securities, which sales and other transactions were not registered pursuant to the Securities Act of 1933, during the last three years. Unless otherwise indicated, no underwriters were involved in such transactions.
 
On August 15, 2007, we issued an aggregate of 5,000,000 shares (prior to the forward stock split of 5:1) of common stock to Mal Bains.  At the time, Mr. Bains was the sole director and officer, at a price of $0.001 per share. We received $5,000 from this offering. These shares were issued pursuant to Section 4(2) of the Securities Act of 1933 and are restricted shares as defined in the Securities Act. The securities sold were acquired for investment purposes only and without a view to distribution. At the time the shares were purchased, Mr. Bains was fully informed and advised about matters concerning the Company, including its business, financial affairs and other matters. The purchaser acquired the securities for his own account. On December 15, 2009, in connection with his resignation, Mr. Bains committed to returning the shares to the Company, however, due to the Cease Trade Order of the BCSC, the shares are currently being held by council in Vancouver, BC, Canada.
 
 
9

 
 
On September 18, 2007, we issued 4,750,000 shares (prior to the forward spit of 5:1) of common stock to 40 purchasers at $0.02 per share pursuant to Regulation S of the Securities Act. The purchasers represented to us that they were non-US persons, as defined in Regulation S, and that their intentions to acquire the securities was for investment only and not with a view toward distribution. We did not engage in a distribution of this offering in the United States and no general solicitation was made to the public and no advertising was conducted for the offering.
 
On July 28, 2009, the Company received $100,000 under a Subscription Agreement for 133,333 shares of Common Stock at a price of $0.75 per share.  On February 5, 2010, the shares were issued.
 
In January 2010, the Company issued 2,600,000 common shares in connection with the closing of the Mineral Agreement for the Conglomerate Mesa project.  The shares were valued at a price of $1.00 per share at the time of issuance.
 
In February 2010, the Company issued 50,000 common shares for gross proceeds of $25,000 under a Subscription Agreement with a non-affiliated, accredited investor.
 
In February 2010, the Company issued 500,000 common shares to the Company’s president and a director at a price of $0.50 per share as compensation.
 
In February 2010, the Company issued 500,000 common shares to a consultant as compensation for consulting services rendered.  The shares were issued at a price of $0.50 per share the price on the closing date of the consulting agreement.
 
In February 2010, the Company issued 2,000,000 common shares to a consultant as compensation for consulting services rendered.  The shares were issued at a price of $1.00 per share the same price as the shares were issued in connection with the Conglomerate Mesa closing.
 
In June 2010, the Company issued 5,500,000 common shares to a consultant as compensation for consulting services rendered.  The shares were issued at a price of $0.39 per share the closing market price on the date of issuance.
 
In June 2010, the Company issued 1,000,000 common shares in connection with the conversion of a $100,000 convertible debenture issued in December 2009.  The conversion was priced at $0.10 per share.
 
In August 2010, the Company issued 1,000,000 common shares to a member of the Company’s board of directors at a price of $0.14 per share as compensation.  The price was the closing market price on the date of grant.
 
In September 2010, the Company issued 9,000,000 common shares to a consultant as compensation for consulting services rendered.  The shares were issued at a price of $0.175 per share the closing market price on the date of issuance.
 
In September 2010, the Company issued 1,500,000 common shares to its CEO, in connection with the signing of a five year Employment Agreement.  The shares were issued at a price of $0.131 per share the average closing market price from the Agreements effective date until its ratification by the Board.
 
In September 2010, the Company issued 1,500,000 common shares to its CFO, in connection with the signing of a five year Employment Agreement.  The shares were issued at a price of $0.131 per share the average closing market price from the Agreements effective date until its ratification by the Board.
 
In September 2010, the Company issued 1,000,000 common shares to an employee, in connection with the signing of a five year Employment Agreement.  The shares were issued at a price of $0.131 per share the average closing market price from the Agreements effective date until its ratification by the Board.
 
In October 2010, the Company issued 1,976,284 common shares to a consultant as compensation for consulting services rendered.  The shares were issued at a price of $0.0548 per share the closing market price on the date of issuance.
 
In December 2009 Malkeet Bains, the Chief Executive Officer, President, Secretary, and a Director resigned.  Subsequently, the Company appointed Frederick J. Pucillo, Jr. as Chief Executive Officer, President and Director.  Simultaneously, the Company appointed Erwin Vahlsing, Jr. to the additional position of Secretary.
 
 
10

 
 
ITEM 6. SELECTED FINANCIAL DATA
 
Not applicable.
 
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
The financial data presented below should be read in conjunction with the more detailed financial statements and related notes, which are included elsewhere in this report. Information discussed herein, as well as elsewhere in this Annual Report on Form 10-K, includes forward-looking statements or opinions regarding future events or the future financial performance of the Company, and are subject to a number of risks and other factors which could cause the actual results to differ materially from those contained in forward-looking statements. Among such factors are general business and economic conditions, and risk factors as listed in this Form 10-K or listed from time to time in documents filed by the Company with the Securities and Exchange Commission.
 
Financial Condition
 
As of November 30, 2010, Sungro had total current assets of $2,367 and total current liabilities of $943,677 for a net working capital deficit of $941,310. We need to raise additional money to meet our general and administrative expenses, and we need to raise money to achieve our business objective to acquire additional mineral properties, develop the properties we have, or acquire a target company or business. The additional funding will come from equity financing from the sale of Sungro's common stock. If Sungro is successful in completing an equity financing, existing shareholders will experience dilution of their interest in Sungro. Sungro does not have any financing arranged and Sungro cannot provide investors with any assurance that Sungro will be able to raise sufficient funding from the sale of its common stock. In the absence of such financing, Sungro's business will fail.
 
Based on the nature of Sungro's business, management anticipates incurring operating losses in the foreseeable future. Management bases this expectation, in part, on the fact that exploration and development of the Conglomerate Mesa claims will cost a substantial amount of money, and possibly take several years before it is capable of generating revenue or be profitable. Sungro's future financial results are also uncertain due to a number of factors, some of which are outside its control. These factors include, but are not limited to:
 
 
·
Sungro's ability to raise additional funding;
 
 
·
Sungro's ability to identify and successfully negotiate the acquisition of potential properties or assets; and
 
 
·
If such opportunities or businesses acquired will be profitable.
 
Due to Sungro's lack of operating history and present inability to generate revenues, Sungro's independent auditors have added an explanatory paragraph to their audit opinion issued in connection with our financial statements indicating substantial doubt about Sungro's ability to continue as a going concern. This means that there is substantial doubt whether Sungro can continue as an ongoing business for the next 12 months unless we obtain additional capital to pay our bills.
 
 
11

 
 
Liquidity
 
Sungro's internal sources of liquidity will be loans that may be available to Sungro from management. Although Sungro has no written arrangements with its management, Sungro expects that the officers may provide Sungro with nominal liquidity, when and if it is required.
 
Sungro's external sources of liquidity will be private placements for equity and debt financing.
 
On July 26, 2009, the Company completed the private placement of $100,000 of restricted common stock to a non-affiliated accredited investor at a price of $0.75 per share.
 
On October 26, 2009, the Company borrowed $110,000 from the sale of demand notes to a non-affiliated, accredited investor.  The Company issued 100,000 warrants at $0.50 per share that are exercisable for one year.  In addition, a shareholder provided a personal guarantee to the investor for the loan and accrued but unpaid interest.  In October 2010 when the demand note became due, the investor extended the due date to October 26, 2010, and the Company issued 150,000 warrants at $0.049 per share to replace the expired warrants.
 
In December 2009, the Company borrowed $60,000 from the sale of a demand note to a non-affiliated accredited investor.
 
Between December 2009 and November 2010, the Company borrowed $231,507 from a non-affiliated accredited investor.  The loans are due on demand and carry interest at 15% per year.
 
In February 2010, the Company issued 50,000 common shares for gross proceeds of $25,000 under a Subscription Agreement with a non-affiliated, accredited investor.
 
In June 2010, the Company borrowed $55,000 from the sale of a convertible debenture to a non-affiliated accredited investor.  The debenture carries interest at 8% per year and is convertible into Common Stock based on a 40% discount to the average of the three lowest closing bid prices in the ten days prior to conversion.
 
In June 2010, the Company borrowed $35,000 from the sale of a convertible debenture to a non-affiliated accredited investor.  The debenture carries interest at 8% per year and is convertible into Common Stock based on a 40% discount to the average of the three lowest closing bid prices in the ten days prior to conversion.
 
In July 2010, the Company borrowed $5,000 from the sale of a convertible debenture to a non-affiliated accredited investor.  The debenture carries interest at 10% per year and is convertible into Common Stock based on a 40% discount to the average of the three lowest closing bid prices in the ten days prior to conversion.
 
In September 2010, the Company borrowed $27,000 from the sale of a convertible debenture to a non-affiliated accredited investor.  The debenture carries interest at 8% per year and is convertible into Common Stock based on a 40% discount to the average of the three lowest closing bid prices in the ten days prior to conversion.
 
In November 2010, the Company borrowed $40,000 from the sale of a convertible debenture to a non-affiliated accredited investor.  The debenture carries interest at 8% per year and is convertible into Common Stock based on a 40% discount to the average of the three lowest closing bid prices in the ten days prior to conversion.
 
There are no assurances that Sungro will be able to achieve further sales of its common stock or any other form of additional financing. If Sungro is unable to achieve the financing necessary to continue its plan of operations, then Sungro will not be able to continue its exploration programs and its business will fail.
 
 
12

 
 
Capital Resources
 
As of November 30, 2010, Sungro had total assets of $2,804,367, total liabilities of $943,677 and a working capital deficit of $941,310, compared with a net working capital of $146,226 as of November 30, 2009. The assets are comprised of cash of $1,367, prepaid expenses of $1,000, and mineral rights of $2,802,000. The liabilities consisted mainly of accounting, audit and legal fees, convertible debentures, demand notes, officer loans, and accrued expenses.
 
Sungro's current cash is not sufficient to fully finance its operations at current and planned levels for the next 12 months. Management intends to manage Sungro's expenses and payments to preserve cash until Sungro is profitable, otherwise additional financing must be arranged. Specifically, management is deferring payments due them until such time as there is sufficient financing in place to permit their payment or the possible issuance of the Company’s stock in settlement of amounts due.
 
Results of Operations
 
We did not earn any revenues for the fiscal year ended November 30, 2010 and from inception on August 10, 2007 to November 30, 2010. We do not anticipate earning revenues until such time as we have entered into commercial production of our mineral properties. We are presently in the exploration stage of our business and we can provide no assurance that we will discover commercially exploitable levels of mineral resources on our properties, or if such resources are discovered, that we will enter into commercial production of our mineral properties.
 
We incurred total expenses in the amount of $7,896,734 during the fiscal year ended November 30, 2010, and total expenses in the amount of $292,155 during the fiscal year ended November 30, 2009.
 
   
Years Ended November 30,
 
Expense Item
 
2010
   
2009
 
Mineral Property Maintenance
  $ 112,715     $ 58,223  
Royalty Payments
    150,000       -  
Conglomerate Mesa Acquisition – value of shares issued
    2,600,000       -  
Payroll and bonuses
    664,000       -  
Consulting
    3,959,893       16,500  
Accounting
    24,350       42,700  
Legal
    83,311       153,380  
Amortization of debt discount
    208,477       -  
Other
    93,988       21,352  
Total
  $ 7,896,734     $ 292,155  
 
Off-Balance Sheet Arrangements
 
Sungro has no off-balance sheet arrangements.
 
Material Agreements
 
In July 2009, the Company entered into a Consulting and Fee Agreement for business development, strategic planning, technology implementation, public relations, and mergers and acquisitions.  The agreement calls for the payment of ten percent (10%) of the gross value of any projects to which the Company is introduced by the consultant and which is ultimately closed by the Company.
 
 
13

 
 
Subsequent Events
 
In December 2010, The Company issued 4,666,518 common shares in connection with the conversion of $62,389 of convertible debentures and interest.  The shares were issued at an average price of $0.0134 per share.
 
In December 2010, the Company issued 1,500,000 common shares to a consultant as compensation for consulting services rendered.  The shares were issued at a price of $0.047 per share the closing market price on the date of issuance.
 
In December 2010, the Company issued 2,500,000 common shares for gross proceeds of $50,000 under a Subscription Agreement with a non-affiliated, accredited investor.  The shares were issued at a price of $0.02 per share.
 
In December 2010, the Company borrowed $60,000 from the sale of a convertible debenture to a non-affiliated accredited investor.  The debenture carries interest at 8% per year and is convertible into Common Stock based on a 40% discount to the average of the three lowest closing bid prices in the ten days prior to conversion.
 
In January 2011, the Company issued 1,023,894 common shares in connection with the conversion of $27,000 of convertible debentures and interest.  The shares were issued at an average price of $0.0264 per share.
 
In January 2011, the Company issued 1,000,000 common shares to its CEO as a grant for services.  The shares were issued at a price of $0.05 per share the market price on the date of grant.
 
In January 2011, the Company issued 1,500,000 common shares to an employee as a grant for services.  The shares were issued at a price of $0.05 per share the market price on the date of grant.
 
In January 2011, the Company borrowed $75,000 from the sale of a convertible debenture to a non-affiliated accredited investor.  The debenture carries interest at 8% per year and is convertible into Common Stock based on a 40% discount to the average of the three lowest closing bid prices in the ten days prior to conversion.
 
In February 2011, the Company issued 367,188 common shares in connection with the conversion of $9,400 of convertible debentures and interest.  The shares were issued at an average price of $0.0256 per share.
 
In February 2011, the Company issued 1,000,000 common shares to a consultant as compensation for consulting services rendered.  The shares were issued at a price of $0.0275 per share the closing market price on the date of issuance.
 
In February 2011, the Company borrowed $30,000 from the sale of a convertible debenture to a non-affiliated accredited investor.  The debenture carries interest at 8% per year and is convertible into Common Stock based on a 40% discount to the average of the three lowest closing bid prices in the ten days prior to conversion.
 
In February 2011, the Company received its first report on the potential mineralization of the Conglomerate Mesa.  The report is based on the Canadian standard or National Instrument 43-101.  The report provides estimates of the minerals including an estimated 2,000,000 ounces of gold as well as significant silver, lead, and zinc deposits.  The report can be viewed on our website at http://sungrominerals.com/images/report.pdf.
 
 
14

 
 
Critical Accounting Policies
 
 
Exploration Stage Company
 
The Company is considered to be in the exploration stage. The Company is devoting substantially all of its present efforts to exploring and identifying mineral properties suitable for development.
 
 
Accounting Principles
 
The accounting and reporting policies of the Company conform to United States generally accepted accounting principles applicable to exploration stage enterprises.
 
 
Mineral Property Exploration
 
The Company is in the exploration stage and has not yet realized any revenue from its planned operations.  Mineral property acquisition costs are capitalized. Additionally, mine development costs incurred either to develop new ore deposits and constructing new facilities are capitalized until operations commence.  All such capitalized costs are amortized using a straight-line basis, based on the minimum original license term at acquisition, but do not exceed the useful life of the capitalized costs.  Upon commercial development of an ore body, the applicable capitalized costs would then be amortized using the units-of-production method.  Exploration costs, costs incurred to maintain current production or to maintain assets on a standby basis are charged to operations.  Costs of abandoned projects are charged to operations upon abandonment.  The Company evaluates, at least quarterly, the carrying value of capitalized mining costs and related property, plant and equipment costs, if any, to determine if these costs are in excess of their net realizable value and if a permanent impairment needs to be recorded.  The periodic evaluation of carrying value of capitalized costs and any related property, plant and equipment costs are based upon expected cash flows and/or estimated salvage value in accordance with guidance issued by the FASB, "Accounting for Impairment or Disposal of Long-Lived Assets."
 
Cautionary Note to U.S. Investors
 
This report on Form 10K may use the terms "measured resources," "indicated resources," "inferred resources," and "historical resources" which are calculated in accordance with the Canadian National Instrument 43-101 and the Canadian Institute of Mining, Metallurgy and Petroleum Classification system. The United States Securities and Exchange Commission (the "SEC") does not recognize these terms and the SEC guidelines (Industry Guide 7) provide that such terms shall not be included in a registrant's filings with the SEC (unless required to be disclosed by foreign or state law).  The SEC permits U.S. mining companies, in their filings with the SEC, to disclose only those mineral deposits that a company can economically and legally extract or produce. "Inferred resources" have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility.  It cannot be assumed that all or any part of an "inferred mineral resource" will ever be upgraded to a higher category.  U.S. investors are cautioned not to assume that any part or all of a measured, indicated or inferred resource exists or is economically or legally mineable. U.S. investors are urged to consider closely the disclosure in our Form 10-K which may be secured from us, or from the SEC's website at http://www.sec.gov.
 
 
15

 
 
Cautionary Statement Regarding Forward-Looking Statements
 
This annual report contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These include statements about our expectations, beliefs, intentions or strategies for the future, which we indicate by words or phrases such as "anticipate," "expect," "intend," "plan," "will," "we believe," "our company believes," "management believes" and similar language. These forward-looking statements are based on our current expectations and are subject to certain risks, uncertainties and assumptions, including those set forth in the following discussion, including under the heading "Risk Factors". Our actual results may differ materially from results anticipated in these forward-looking statements. We base our forward-looking statements on information currently available to us, and we assume no obligation to update them. In addition, our historical financial performance is not necessarily indicative of the results that may be expected in the future and we believe that such comparisons cannot be relied upon as indicators of future performance. Other important factors that could cause actual results to differ materially include the following: business conditions, the price of precious metals, ability to attract and retain personnel; the price of the Company's stock; and the risk factors set forth from time to time in the Company's SEC reports, including but not limited to its annual report on Form 10-K; its quarterly reports on Form 10-Q; and any current reports on Form 8-K. In addition, the Company disclaims any obligation to update or correct any forward-looking statements in all the Company's annual reports and SEC filings to reflect events or circumstances after the date hereof.
 
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
Not applicable.
 
 
16

 

ITEM 8. FINANCIAL STATEMENTS OF SMALLER REPORTING COMPANIES
 
 
SUNGRO MINERALS, INC.
(An Exploration Stage Company)

FINANCIAL STATEMENTS
 
 
INDEX
 
   
Page Number
   
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
F - 2
   
FINANCIAL STATEMENTS:
 
     
 
Balance Sheets
F - 3
     
 
Statements of Operations
F - 4
     
 
Statements of Stockholders' Equity (Deficit)
F - 5
     
 
Statements of Cash Flows
F - 6
     
 
Notes to Financial Statements
F - 7 to F - 18

 
 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders
Sungro Minerals, Inc. (An Exploration Stage Company)

We have audited the accompanying balance sheets of Sungro Minerals, Inc. (An Exploration Stage Company) (the “Company”) as of November 30, 2010 and 2009 and the related statements of operations, stockholders' equity (deficit) and cash flows for the years ended November 30, 2010 and 2009 and for the period from inception (August 10, 2007) to November 30, 2010.  These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Accordingly we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
 

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Sungro Minerals, Inc. (An Exploration Stage Company) as of November 30, 2010 and 2009 and the results of their operations and their cash flows for the years ended November 30, 2010 and 2009 and from the period from inception (August 10, 2007) to November 30, 2010, in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.  The Company has incurred significant losses as more fully described in Note 1.  These issues raise substantial doubt about the Company’s ability to continue as a going concern.  Management’s plans in regard to these matters are also described in Note 1.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 
  /s/ Sherb & Co., LLP  
 
Certified Public Accountants
 

New York, New York
March 14, 2011
 
 
F - 2

 
 
SUNGRO MINERALS, INC.
(An Exploration Stage Company)
BALANCE SHEETS
 
   
November 30, 2010
   
November 30, 2009
 
             
ASSETS  
             
CURRENT ASSETS:
           
Cash
  $ 1,367     $ 438  
Prepaid expenses
    1,000       1,000  
TOTAL CURRENT ASSETS     2,367       1,438  
                 
MINERAL RIGHTS
    2,802,000       24,000  
                 
    $ 2,804,367     $ 25,438  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
 
                 
CURRENT LIABILITIES:
               
Accounts payable
  $ 40,793     $ 31,539  
Accrued expenses
    43,970       30,583  
Accrued payroll
    150,750       -  
Convertible debentures  (net of debt discount of $67,178 and $0)
    94,822       -  
Notes payable (net of debt discount of $6,125 and $44,408)
    395,382       65,592  
Due to former CEO
    20,473       19,950  
Due to officers
    58,254       -  
Derivative liability
    139,233       -  
TOTAL CURRENT LIABILITIES     943,677       147,664  
                 
STOCKHOLDERS' EQUITY (DEFICIT):
               
Preferred stock, $.001 par value; authorized shares -
               
1,000,000 shares; 0 issued and outstanding     -       -  
Common stock, $.001 par value; authorized shares -
               
375,000,000 shares; 77,009,617 and 48,750,000 shares issued and outstanding     77,009       48,750  
Common stock to be issued, $.001 par value, 2,506,667 and 133,333 shares
    2,506       133  
Additional paid-in capital
    10,068,421       219,403  
Deficit accumulated during the exploration stage
    (8,287,246 )     (390,512 )
TOTAL STOCKHOLDERS' EQUITY (DEFICIT)     1,860,690       (122,226 )
                 
    $ 2,804,367     $ 25,438  

 
See notes to audited financial statements

 
F - 3

 
 
SUNGRO MINERALS, INC.
(An Exploration Stage Company)
STATEMENTS OF OPERATIONS

               
Cumulative amount
 
               
from Inception
 
   
Year Ended November 30,
   
(August 10, 2007) through
 
   
2010
   
2009
   
November 30, 2010
 
OPERATING EXPENSES:
                 
General and administrative   $ 7,371,647     $ 221,665     $ 7,681,970  
Bank charges and interest     1,087       311       1,565  
Foreign exchange loss     3,076       1,492       4,389  
Mineral claim maintenance and geological costs     262,715       58,223       330,650  
TOTAL OPERATING EXPENSES     7,638,525       281,691       8,018,574  
                         
OPERATING LOSS
    (7,638,525 )     (281,691 )     (8,018,574 )
                         
INTEREST EXPENSE
    (40,520 )     (10,464 )     (50,983 )
CHANGE IN FAIR VALUE OF DERIVATIVE LIABILITY
    (9,212 )     -       (9,212 )
AMORTIZATION OF DEBT DISCOUNT
    (208,477 )     -       (208,477 )
                         
NET LOSS
  $ (7,896,734 )   $ (292,155 )   $ (8,287,246 )
                         
BASIC AND DILUTED - LOSS PER SHARE
  $ (0.13 )   $ (0.01 )        
                         
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
                       
Basic and Diluted     60,948,714       48,750,000          
 
 
See notes to audited financial statements
 
 
F - 4

 
 
SUNGRO MINERALS, INC.
(An Exploration Stage Company)
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
 
   
Common Stock
         
Additional
         
Total
 
   
($.001 par value)
   
Common Stock
   
Paid-In
   
Accumulated
   
Stockholders'
 
   
Shares
   
Amount
   
To be issued
   
Capital
   
Deficit
   
Equity (Deficit)
 
                                     
Balance, August 10, 2007 (Inception)
    -     $ -     $ -     $ -     $ -     $ -  
Adjsuted for 5:1 forward stock split                                                
Issuance of stock for:
                                               
Subscription Agreement - $0.001 per share
    25,000,000       25,000       -       (20,000 )     -       5,000  
Subscription Agreement - $0.02 per share
    23,750,000       23,750       -       71,250       -       95,000  
                                                 
Net loss     -       -       -       -       (26,395 )     (26,395 )
                                                 
Balance, November 30, 2007
    48,750,000       48,750       -       51,250       (26,395 )     73,605  
                                                 
Net loss     -       -       -       -       (71,962 )     (71,962 )
                                                 
Balance, November 30, 2008
    48,750,000       48,750       -       51,250       (98,357 )     1,643  
                                                 
Capital provided by stockholder
    -       -       -       14,996       -       14,996  
Issuance of warrants
    -       -       -       53,290       -       53,290  
Common stock to be issued
    -       -       133       99,867       -       100,000  
                                                 
Net loss     -       -       -       -       (292,155 )     (292,155 )
                                                 
Balance, November 30, 2009
    48,750,000       48,750       133       219,403       (390,512 )     (122,226 )
                                                 
Issuance of stock for:
                                               
Conversion of debentures     1,000,000       1,000               99,000       -       100,000  
Private placement     50,000       50               24,950       -       25,000  
Compensation     24,476,284       24,476               6,967,824       -       6,992,300  
Acquisition of Mineral Agreement     2,600,000       2,600               2,597,400       -       2,600,000  
Beneficial conversion
            -               100,000       -       100,000  
Issuance of warrants
            -               7,350               7,350  
Common stock to be issued
            -       2,506       52,494       -       55,000  
Issuance of stock to be issued
    133,333       133       (133 )                     -  
                                                 
Net loss     -       -                       (7,896,734 )     (7,896,734 )
                                                 
Balance, November 30, 2010
    77,009,617     $ 77,009     $ 2,506       10,068,421     $ (8,287,246 )   $ 1,860,690  
 
 
See notes to audited financial statements
 
 
F - 5

 
 
SUNGRO MINERALS, INC.
(An Exploration Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
 
               
Cummulative amount
 
               
from Inception
 
               
(August 10, 2007)
 
   
Year Ended November 30,
   
through
 
   
2010
   
2009
   
November 30, 2010
 
CASH FLOWS FROM OPERATING ACTIVITIES:
                 
Net loss
  $ (7,896,734 )   $ (292,155 )   $ (8,287,246 )
Adjustments to reconcile net loss to net cash used in operating activities:
                       
Amortization of debt discount     208,477       8,882       217,359  
Stock issued for compensation     6,992,300       -       6,992,300  
Change in fair value of derivative liability     9,212       -       9,212  
                         
Changes in assets and liabilities:
                       
Prepaid expenses
    -       (1,000 )     (1,000 )
Accounts payable and accrued expenses
    173,390       49,455       235,512  
NET CASH USED IN OPERATING ACTIVITIES
    (513,355 )     (234,818 )     (833,863 )
                         
CASH FLOWS FROM INVESTING ACTIVITIES
                       
Payments on acquistion of Mineral Rights Agreement
    (178,000 )     (24,000 )     (202,000 )
NET CASH USED IN INVESTING ACTIVITIES
    (178,000 )     (24,000 )     (202,000 )
                         
CASH FLOWS FROM FINANCING ACTIVITIES:
                       
Proceeds from expenses paid by stockholder
    -       14,996       14,996  
Proceeds from notes payable
    291,507       110,000       401,507  
Proceeds from private placement
    80,000       100,000       280,000  
Proceeds from convertible debentures
    262,000       -       262,000  
Proceeds from officers and prior CEO
    58,777       19,950       78,727  
NET CASH PROVIDED BY FINANCING ACTIVITIES
    692,284       244,946       1,037,230  
                         
NET INCREASE (DECREASE) IN CASH
    929       (13,872 )     1,367  
                         
CASH - BEGINNING OF PERIOD
    438       14,310       -  
                         
CASH - END OF PERIOD
  $ 1,367     $ 438     $ 1,367  
                         
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
                       
Cash paid for taxes
  $ 1,744     $ -          
Cash paid for interest
  $ 13,034     $ 1,582          
                         
NON-CASH INVESTING AND FINANCING ACTIVITIES:
                       
Acquisition of Mineral Agreement for stock issued
  $ 2,600,000     $ -          
 
 
See notes to audited financial statements
 
 
F - 6

 

Sungro Minerals Inc.
(An Exploration Stage Company)
Notes to the Financial Statements
November 30, 2010 and 2009
 
 
1.
Nature of Operations and Going Concern
 
Sungro Minerals Inc. (the "Company") was incorporated in the State of Nevada on August 10, 2007. The Company is engaged in the exploration, development, and acquisition of mineral properties. The accompanying financial statements have been prepared on the basis of accounting principles applicable to a going concern; accordingly, they do not give effect to adjustment that would be necessary should the Company be unable to continue as a going concern and therefore be required to realize its assets and retire its liabilities in other than the normal course of business and at amounts different from those in the accompanying financial statements. As shown in the accompanying financial statements, the Company incurred a net loss of $7,896,734 for the year ended November 30, 2010, and has an accumulated deficit of $8,287,246. Management plans to raise cash from public or private debt or equity financing, on an as needed basis and in the longer term, to generate revenues from the acquisition, exploration and development of mineral interests, if found. The Company's ability to continue as a going concern is dependent upon achieving profitable operations and/or upon obtaining additional financing. The outcome of these matters cannot be predicted at this time.
 
2.
Significant Accounting Policies
 
 
a)
Exploration Stage Company
 
The Company is considered to be in the exploration stage. The Company is devoting substantially all of its present efforts to exploring and identifying mineral properties suitable for development.
 
 
b)
Accounting Principles
 
The accounting and reporting policies of the Company conform to United States generally accepted accounting principles applicable to exploration stage enterprises.
 
 
c)
Mineral Property Exploration
 
The Company is in the exploration stage and has not yet realized any revenue from its planned operations. It is primarily engaged in the acquisition, exploration, and development of mineral properties. Mineral property acquisition and exploration costs are expensed as incurred.  When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves, the costs incurred to develop such property are capitalized. Such costs will be depreciated using the units-of-production method over the estimated life of the probable reserve.
 
 
d)
Foreign Currency Translation
 
The Company's functional and reporting currency is the U.S. Dollar. All transactions initiated in foreign currencies are translated into U.S. dollars in accordance with ASC Topic 830 "Foreign Currency Matters" as follows:
 
 
i)      monetary assets and liabilities at the rate of exchange in effect at the balance sheet date;
 
 
ii)     non-monetary assets at historical rates; and
 
 
iii)    revenue and expense items at the average rate of exchange prevailing during the period.
 
Gains and losses from foreign currency transactions are included in the statement of operations.
 
 
F - 7

 
 
Sungro Minerals Inc.
(An Exploration Stage Company)
Notes to the Financial Statements
November 30, 2010 and 2009
 
 
2.
Significant Accounting Policies (continued)
 
 
e)
Impairment of Long-Lived Assets
 
The Company reviews the carrying value of long-lived assets or asset groups to be used in operations whenever events or changes in circumstances indicate that the carrying amount of the assets might not be recoverable. Factors that would necessitate an impairment assessment include a significant adverse change in the extent or manner in which an asset is used, a significant adverse change in legal factors or the business climate that could affect the value of the asset, or a significant decline in the observable market value of an asset, among others. If such facts indicate a potential impairment, the Company would assess the recoverability of an asset group by determining if the carrying value of the asset group exceeds the sum of the projected undiscounted cash flows expected to result from the use and eventual disposition of the assets over the remaining economic life of the primary asset in the asset group. If the recoverability test indicates that the carrying value of the asset group is not recoverable, the Company will estimate the fair value of the asset group using appropriate valuation methodologies which would typically include an estimate of discounted cash flows. Any impairment would be measured as the difference between the asset groups carrying amount and its estimated fair value.
 
 
f)
Basic and Diluted Loss Per Share
 
Basic and diluted loss per share is based on the weighted average number of shares outstanding. Potential common shares includable in the computation of fully diluted per share results are not presented in the financial statements as their effect would be anti-dilutive.
 
 
g)
Financial Instruments
 
The Company adopted FASB ASC 820-Fair Value Measurements and Disclosures, for assets and liabilities measured at fair value on a recurring basis. ASC 820 establishes a common definition for fair value to be applied to existing generally accepted accounting principles that require the use of fair value measurements establishes a framework for measuring fair value and expands disclosure about such fair value measurements.
 
ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Additionally, ASC 820 requires the use of valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. These inputs are prioritized below:
 
Level 1: Observable inputs such as quoted market prices in active markets for identical assets or liabilities
 
Level 2: Observable market-based inputs or unobservable inputs that are corroborated by market data
 
Level 3: Unobservable inputs for which there is little or no market data, which require the use of the reporting entity’s own assumptions.
 
 
F - 8

 
 
Sungro Minerals Inc.
(An Exploration Stage Company)
Notes to the Financial Statements
November 30, 2010 and 2009
 
 
2.
Significant Accounting Policies (continued)
 
As required by FASB ASC Topic No. 820 – 10 (formerly SFAS 157), financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels. The estimated fair value of the derivative liability was calculated using the Black-Scholes option pricing model (see Note 8).
 
The following table sets forth, by level within the fair value hierarchy, the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of November 30, 2010:
 
    Fair Value Measurements at November 30, 2010  
Description
 
(Level 1)
   
(Level 2)
   
(Level 3)
   
Total Carrying Value
 
    $ -     $ -     $ 139,233     $ 139,233  
Derivative liability - Total   $ -     $ -     $ 139,233     $ 139,233  
 
The Company did not have any Level 2 or Level 3 assets or liabilities as of November 30, 2010 and 2009, with the exception of its notes payable.  The carrying amount of the notes payable at November 30, 2010 and 2009, approximate their respective fair value based on the Company’s incremental borrowing rate.
 
Cash and cash equivalents include money market securities that are considered to be highly liquid and easily tradable as of November 30, 2010 and 2009, respectively. These securities are valued using inputs observable in active markets for identical securities and are therefore classified as Level 1 within our fair value hierarchy.
 
In addition, FASB ASC 825-10-25 Fair Value Option was effective at the time of adoption. ASC 825-10-25 expands opportunities to use fair value measurements in financial reporting and permits entities to choose to measure many financial instruments and certain other items at fair value. The Company did not elect the fair value options for any of its qualifying financial instruments.
 
 
h)
Income Taxes
 
Income taxes are provided for using the liability method of accounting. A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting. Deferred income taxes and tax benefits are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and for tax loss and credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The Company provides an allowance against deferred tax assets for the estimated future tax effects attributable to temporary differences and carry-forwards when realization is more likely than not.
 
 
F - 9

 
 
Sungro Minerals Inc.
(An Exploration Stage Company)
Notes to the Financial Statements
November 30, 2010 and 2009
 
 
2.
Significant Accounting Policies (continued)
 
Effective December 1, 2007, the Company adopted ASC 740 which requires that the Company recognize in the financial statements, the impact of a tax position if that position is more likely than not of being sustained on examination by taxation authorities, based on the technical merits of the position.
 
 
i)
Cash and Cash Equivalents
 
For purposes of the statement of cash flows, cash includes demand deposits, saving accounts and money market accounts. The Company considers all highly liquid instruments with maturities of three months or less when purchased to be cash equivalents.
 
 
j)
Revenue Recognition
 
As of November 30, 2010 and 2009, the Company had no revenues to report.
 
 
k)
Estimates
 
The preparation of financial statements in conformity with US generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of revenues and expenditures during the reporting period. Actual results could differ from those reported.
 
 
l)
Recently Adopted Accounting Pronouncements
 
In January 2010, the FASB issued ASU No. 2010-06, Fair Value Measurements and Disclosures: Improving Disclosures about Fair Value Measurements. ASU 2010-06 amends ASC 820 to require a number of additional disclosures regarding (1) the different classes of assets and liabilities measured at fair value, (2) the valuation techniques and inputs used, (3) the activity in Level 3 fair value measurements, and (4) the transfers between Levels 1, 2, and 3. The new disclosures and clarifications of existing disclosures are effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. The Company does not expect that the adoption of ASU 2010-06 will have a material impact on the Company’s financial statements.
 
On March 5, 2010, the FASB issued authoritative guidance to clarify the type of embedded credit derivative that is exempt from embedded derivative bifurcation requirements. Specifically, only one form of embedded credit derivative qualifies for the exemption – one that is related only to the subordination of one financial instrument to another. As a result, entities that have contracts containing an embedded credit derivative feature in a form other than such subordination may need to separately account for the embedded credit derivative feature. This guidance also has transition provisions, which permit entities to make a special one-time election to apply the fair value option to any investment in a beneficial interest in securitized financial assets, regardless of whether such investments contain embedded derivative features. This guidance is effective on the first day of the first fiscal quarter beginning after June 15, 2010. Early adoption is permitted at the beginning of any fiscal quarter beginning after March 5, 2010. This amendment is not expected to have a material impact on the Company’s financial statements
 
 
F - 10

 
 
Sungro Minerals Inc.
(An Exploration Stage Company)
Notes to the Financial Statements
November 30, 2010 and 2009

 
Management does not believe that any other recently issued, but not yet effective, accounting standards could have a material effect on the accompanying financial statements. As new accounting pronouncements are issued, the Company will adopt those that are applicable under the circumstances.
 
A variety of proposed or otherwise potential accounting standards are currently under study by standard setting organizations and various regulatory agencies. Due to the tentative and preliminary nature of those proposed standards, management has not determined whether implementation of such proposed standards would be material to our financial statements.
 
3.
Mineral Rights
 
On August 27, 2009, the Company entered into a Mineral Agreement (the "Agreement") with unrelated parties to acquire a 100% interest in 341 unpatented lode mining claims known as the Conglomerate Mesa.  The claims are located in Inyo Mountain County, California.
 
By written, mutual agreement between the parties, the final closing of the Agreement was extended to February 15, 2010.  Under the agreement, Sungro was required to make all filings related to the Conglomerate Mesa Properties, to maintain the Conglomerate Mesa Claims in good standing by preparing and filing and paying claim fees to the Bureau of Land Management, and keeping the claim area free and clear of all liens and encumbrances.
 
In order to complete the acquisition of the Conglomerate Mesa Claims, Sungro has made payments of cash and stock to Mr. Steve Van Ert and Mr. Noel Cousins in accordance with the table below:
 
   
Cash
 
Stock1
 
Stock Price
   
Total Value
 
Steven Van Ert
  $ 170,000  
2,210,000 shares
  $ 1.00     $ 2,380,000  
                           
Noel Cousins
  $ 30,000  
  390,000 shares
  $ 1.00     $ 420,000  
                           
Total
  $ 200,000  
2,600,000 shares
  $ 1.00     $ 2,800,000  
 
1 - Shares issued into escrow and to be released in accordance with the schedule below:
 
Escrow Release Date
 
Steven Van Ert
   
Noel Cousins
   
Total
 
February 2010
    255,000       45,000       300,000  
January 1, 2011
    425,000       75,000       500,000  
January 1, 2012
    425,000       75,000       500,000  
January 1, 2013
    425,000       75,000       500,000  
January 1, 2014
    425,000       75,000       500,000  
January 1, 2015
    255,000       45,000       300,000  
Total
    2,210,000       390,000       2,600,000  
 
In addition, the Company must make the following royalty payments:
 
Date
 
Minimum Royalty
   
Royalty % of Net Smelter Returns
 
Second Anniversary
  $ 200,000       4%  
Third Anniversary on
  $ 250,000       4%  
 
 
F - 11

 
 
Sungro Minerals Inc.
(An Exploration Stage Company)
Notes to the Financial Statements
November 30, 2010 and 2009
 
 
4.
Capital Stock
 
 
a)
Authorized
 
Authorized capital stock consists of:
 
1,000,000 preferred shares with a par value of $0.001 per share; and
 
375,000,000 common shares with a par value of $0.001 per share
 
 
b)
Share Issuances
 
During the period ended November 30, 2007, the Company issued 25,000,000 common shares for gross proceeds of $5,000 to the Company’s president and sole director. 
 
During the period ended November 30, 2007, the Company issued 23,750,000 common shares for gross proceeds of $95,000.   
 
On July 6, 2009, subject to regulatory approval, the Company approved a five-for-one forward stock split of the Company’s authorized and outstanding shares of common stock. All outstanding share amounts have been retroactively adjusted to reflect the stock split.
 
On July 28, 2009, the Company received $100,000 under a Subscription Agreement for 133,333 shares of Common Stock at a price of $0.75 per share.  On February 5, 2010, the shares were issued.
 
In January 2010, the Company issued 2,600,000 common shares in connection with the closing of the Mineral Agreement for the Conglomerate Mesa project.  The transaction closed on February 16, 2010.  The shares were valued at $1.00 per share which is the market price of the stock on the date of closing.
 
In February 2010, the Company issued 50,000 common shares for gross proceeds of $25,000 under a Subscription Agreement with a non-affiliated, accredited investor.
 
In February 2010, the Company issued 500,000 common shares to the Company’s president and a director at a price of $0.50 per share as compensation.
 
In February 2010, the Company issued 500,000 common shares to a consultant as compensation for consulting services rendered.  The shares were issued at a price of $0.50 per share the price on the closing date of the consulting agreement.
 
In February 2010, the Company issued 2,000,000 common shares to a consultant as compensation for consulting services rendered.  The shares were issued at a price of $1.00 per share the same price as the shares were issued in connection with the Conglomerate Mesa closing.
 
In June 2010, the Company issued 5,500,000 common shares to a consultant as compensation for consulting services rendered.  The shares were issued at a price of $0.39 per share the closing market price on the date of issuance.
 
In June 2010, the Company issued 1,000,000 common shares in connection with the conversion of a $100,000 convertible debenture issued in December 2009.  The conversion was priced at $0.10 per share.
 
In August 2010, the Company issued 1,000,000 common shares to a member of the Company’s board of directors at a price of $0.14 per share as compensation.  The price was the closing market price on the date of grant.
 
In September 2010, the Company issued 9,000,000 common shares to a consultant as compensation for consulting services rendered.  The shares were issued at a price of $0.175 per share the closing market price on the date of issuance.
 
 
F - 12

 
 
Sungro Minerals Inc.
(An Exploration Stage Company)
Notes to the Financial Statements
November 30, 2010 and 2009
 
 
4.
Capital Stock (continued)
 
In September 2010, the Company issued 1,500,000 common shares to its CEO, in connection with the signing of a five year Employment Agreement.  The shares were issued at a price of $0.131 per share the average closing market price from the Agreements effective date until its ratification by the Board.
 
 
In September 2010, the Company issued 1,500,000 common shares to its CFO, in connection with the signing of a five year Employment Agreement.  The shares were issued at a price of $0.131 per share the average closing market price from the Agreements effective date until its ratification by the Board.
 
 
In September 2010, the Company issued 1,000,000 common shares to an employee, in connection with the signing of a five year Employment Agreement.  The shares were issued at a price of $0.131 per share the average closing market price from the Agreements effective date until its ratification by the Board.
 
In October 2010, the Company issued 1,976,284 common shares to a consultant as compensation for consulting services rendered.  The shares were issued at a price of $0.0548 per share the closing market price on the date of issuance.
 
5.
Warrants
 
From time to time, the Company has issued warrants in connection with the issuance of certain financial instruments.
 
During the year ended November 30, 2009, the Company issued 100,000 warrants in connection with a loan, the warrants were issued at an exercise price of $0.050 per share. The Company recorded the fair value of $53,290 as a debt discount based on the Black-Scholes valuation and amortized this over the life of the note.  (See Note 9)
 
During the year ended November 30, 2010, the Company issued 150,000 warrants in connection with a loan, the warrants were issued at an exercise price of $0.049 per share.  The Company recorded the fair value of $7,350 as a debt discount based on the Black-Scholes valuation and is amortizing this over the life of the note.  (See Note 9)
 
During the year ended November 30, 2010, the Company issued 1,000,000 warrants at an exercise price of $0.050 per share. The warrants were issued in connection with a subscription agreement with an accredited investor. (See Note 9)
 
At November 30, 2010, the warrants issued in 2009 had expired unexercised.  (See Note 9)
 
Below are the currently unexercised, open warrants:
 
 
Date of issuance
   
Expiration Date
 
Number of Warrants
   
Exercise Price
   
Total Face Value
 
                       
10/26/2010
 
10/26/2011
    150,000     $ 0.049     $ 7,350.00  
11/09/2010
 
11/09/2011
    1,000,000     $ 0.050     $ 50,000.00  
   
Total
    1,150,000    
$0.0499 Avg.
    $ 57,350.00  
 
6.
Concentration Risk
 
The Company's financial instruments consist of cash, accounts payable and accrued liabilities. It is management's opinion that the Company is not exposed to significant interest or credit risks arising from these financial instruments. Because of the short maturity and capacity of prompt liquidation of such assets and liabilities, the fair values of these financial instruments approximate their carrying values.
 
 
F - 13

 
 
Sungro Minerals Inc.
(An Exploration Stage Company)
Notes to the Financial Statements
November 30, 2010 and 2009
 
 
6.
Concentration Risk (continued)
 
Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash. The Company places its cash with high credit quality financial institutions in the United States.  Bank deposits in the United States did not exceed federally insured limits as of November 30, 2010 and as of November 30, 2009. 
 
The Company may operate outside the United States of America and thus may have significant exposure to foreign currency risk in the future due to the fluctuations between the currency in which the Company operates and the U.S. dollar.
 
7.
Income Taxes
 
A reconciliation of income taxes at statutory rates with the reported income taxes is as follows:
 
Period ended November 30,
 
2010
   
2009
 
Income tax benefit at Federal statutory rate of 35%
  $ 2,764,000     $ 102,000  
Income tax benefit, net of Federal effect
    395,000       15,000  
Permanent differences (primarily stock-based compensation)
    (2,884,000 )     (4,000 )
Change in valuation allowance
    (275,000 )     (113,000 )
    $ -     $ -  
 
The significant components of the Company's deferred income tax assets are as follows:
 
As at November 30
 
2010
   
2009
 
             
Operating losses carried forward
  $ 427,000     $ 113,000  
Valuation allowance
    (427,000 )     (113,000 )
    $ -     $ -  
 
At November 30, 2010 the Company has available net operating losses of approximately $1,068,000 which may be carried forward to apply against future taxable income. These losses will expire in 2030. Deferred tax assets related to these losses have not been recorded due to uncertainty regarding their utilization.
 
8.
Derivative Liabilities
 
In June 2008, the FASB finalized ASC 815, “Determining Whether an Instrument (or Embedded Feature) is indexed to an Entity’s Own Stock.” Under ASC 815, instruments which do not have fixed settlement provisions are deemed to be derivative instruments. The Company has determined that it needs to account for 5 convertible debentures issued during the fiscal year convertible into shares of its common stock, as derivative liabilities, and apply the provisions of ASC 815. The instruments have a ratchet provision that adjust either the exercise price and/or quantity of the shares as the conversion price is equal to 60% of the "market price" at the time of conversion, which "market price" will be calculated as the average of the three lowest "trading prices" for the Company's common stock during the ten day trading period prior to the date a conversion notice is sent to the Company.
 
 
F - 14

 
 
Sungro Minerals Inc.
(An Exploration Stage Company)
Notes to the Financial Statements
November 30, 2010 and 2009
 
 
8.
Derivative Liabilities (continued)
 
As a result, the instruments need to be accounted for as derivative liabilities. In accordance with ASC 815, these convertible debentures have been re-characterized as derivative liabilities. ASC 815, “Accounting for Derivative Instruments and Hedging Activities” (“ASC 815”) requires that the fair value of these liabilities be re-measured at the end of every reporting period with the change in fair value reported in the consolidated statement of operations.
 
The fair value of the derivative liabilities was measured using the Black-Scholes option pricing model and the following assumptions:
 
   
November 30,
   
Date of
 
   
2010
   
issuance
 
   $55,000 Debenture:
           
Discount Rate – Bond Equivalent Yield
    0.30 %     0.30 %
Annual rate of dividends
    -       -  
Volatility
    165.87 %     97.26 %
Weighted Average life (months)
    3       9  
                 
   $35,000 Debenture:
               
Discount Rate – Bond Equivalent Yield
    0.30 %     0.30 %
Annual rate of dividends
    -       -  
Volatility
    165.87 %     97.26 %
Weighted Average life (months)
    4       9  
                 
   $5,000 Debenture:
               
Discount Rate – Bond Equivalent Yield
    0.30 %     0.30 %
Annual rate of dividends
    -       -  
Volatility
    165.87 %     97.26 %
Weighted Average life (months)
    7       12  
                 
   $27,000 Debenture:
               
Discount Rate – Bond Equivalent Yield
    0.30 %     0.30 %
Annual rate of dividends
    -       -  
Volatility
    165.87 %     97.26 %
Weighted Average life (months)
    5       9  
                 
   $40,000 Debenture:
               
Discount Rate – Bond Equivalent Yield
    0.30 %     0.30 %
Annual rate of dividends
    -       -  
Volatility
    165.87 %     97.26 %
Weighted Average life (months)
    6       9  
                 
Fair Value
  $ 139,233     $ 186,068  

The discount rate was based on rates established by the Federal Reserve. The Company based expected volatility on the historical volatility for its common stock. The expected life of the debentures was based on their full term. The expected dividend yield was based upon the fact that the Company has not historically paid dividends, and does not expect to pay dividends in the future.
 
 
F - 15

 
 
Sungro Minerals Inc.
(An Exploration Stage Company)
Notes to the Financial Statements
November 30, 2010 and 2009
 
 
8.
Derivative Liabilities (continued)
 
On the date of issuance the derivative liabilities and debt discount associated with the debentures was $186,068 and $130,021, respectively. The $56,047 increase in the fair value of the derivative liability over the debt discount is recorded as mark to market loss at November 30, 2010. At November 30, 2010, the derivative liability associated with the debentures was revalued to $139,233.  The $46,835 decrease in the derivative liability at November 30, 2010 is recorded as a change in fair value of derivative liabilities in the Company’s statement of operations for the twelve months ended November 30, 2010.
 
9.
Notes Payable
 
In October 2009, the Company raised $110,000 from a one year note from a non-affiliated, accredited investor.  The Note carries interest at a rate of 15% per annum. The Company issued 100,000 warrants in connection with the October 2009 note. In October 2010, the note due date was extended to October 2011. The Company issued 150,000 warrants upon extension of the note (see Note 5).
 
In December 2009, the Company raised $60,000 from a demand note from a non-affiliated, accredited investor.  The Note carries interest at a rate of 15% per annum.
 
Between December 2009 and November 30, 2010, the Company raised $231,507 from a series of payments of its Company expenses or loans to the Company by a stockholder.  The payments are recorded as a demand note and carry interest at a rate of 15% per annum.
 
10.
Related Party Transactions
 
From time to time, the former CEO, Mal Bains lent money to the Company.  At November 30, 2010 the balance owed was $20,473.  The balance does not bear interest and is due on demand.

During 2009, a stockholder provided a personal guarantee on a note taken by the Company.  During the year ended November 30, 2009, the same stockholder contributed money to the Company which was recorded as additional paid-in capital.
 
During the twelve months ended November 30, 2010, the Company received advances from its CFO, totaling $58,055 to cover various payments due under contracts and to cover administrative costs.  These advances are non-interest bearing and payable upon demand.
 
During the twelve months ended November 30, 2010, the Company received advances from its CEO, totaling $200 net of repayments during the period.  The funds were used to cover miscellaneous administrative costs.  These advances are non-interest bearing and payable upon demand.
 
11.
Commitments and Contingencies
 
In August, 2009, trading in the Company’s stock was temporarily suspended in British Columbia, Canada by the British Columbia Securities Commission (BCSC).  The temporary suspension was the result of what the BCSC termed “suspicious trading activity” due to a significant increase in the share price of the Company’s stock price.  Various stockholders, and the former CEO and President, Malkeet Bains have been interviewed.  To date, no charges of wrongdoing have been made against the Company; however, the BCSC has requested various documents and information as part of the investigation.  The Cease Trade Order is still in effect regarding trading in British Columbia, Canada, and the residents thereof.  The Company cannot be certain of the outcome of the proceedings; however, we do not believe they will impact the Company itself.  Accordingly, the Company has not reserved for any additional legal fees, which the Company believes will be nominal and expensed as incurred.
 
 
F - 16

 
 
Sungro Minerals Inc.
(An Exploration Stage Company)
Notes to the Financial Statements
November 30, 2010 and 2009
 
 
11.
Commitments and Contingencies (continued)
 
Under a consulting agreement dated July 9, 2009 between Sungro and Internet Marketing Solutions, Inc. (IMS), IMS will provide services for business development, strategic planning, technology implementation, and mergers and acquisition.  IMS will receive a Consulting Fee of ten percent (10%) of the gross value of any projects or assets received by Sungro through IMS.
 
12.
Employment Contracts
 
In September 2010, the Company entered into five year Employment Contracts with its three employees.
 
Below is a summary of the basic terms of the Agreements:
 
 
·
Base Salary for the CEO and CFO
$120,000 per year
 
 
·
Base Salary for Investor relations
$100,000 per year
 
 
·
The officers received stock grants in connection with the contracts of:
 
 
o
CEO
1,500,000 common shares
 
 
o
CFO
1,000,000 common shares
 
 
o
Investor Relations
1,000,000 common shares
 
 
·
4% annual increases in Base Salary
 
 
·
Bonus provision if and when the Company reaches profitability
 
 
·
Other normal benefits provided such as health insurance as negotiated by the Company
 
13.
Subsequent Events
 
In December 2010, The Company issued 4,666,518 common shares in connection with the conversion of $62,389 of convertible debentures and interest.  The shares were issued at an average price of $0.0134 per share.
 
In December 2010, the Company issued 1,500,000 common shares to a consultant as compensation for consulting services rendered.  The shares were issued at a price of $0.047 per share the closing market price on the date of issuance.
 
In December 2010, the Company issued 2,500,000 common shares for gross proceeds of $50,000 under a Subscription Agreement with a non-affiliated, accredited investor.  The shares were issued at a price of $0.02 per share.
 
In December 2010, the Company borrowed $60,000 from the sale of a convertible debenture to a non-affiliated accredited investor.  The debenture carries interest at 8% per year and is convertible into Common Stock based on a 40% discount to the average of the three lowest closing bid prices in the ten days prior to conversion.
 
 
F - 17

 
 
Sungro Minerals Inc.
(An Exploration Stage Company)
Notes to the Financial Statements
November 30, 2010 and 2009
 
 
13.
Subsequent Events (continued)
 
In January 2011, the Company issued 1,023,894 common shares in connection with the conversion of $27,000 of convertible debentures and interest.  The shares were issued at an average price of $0.0264 per share.
 
In January 2011, the Company issued 1,000,000 common shares to its CEO as a grant for services.  The shares were issued at a price of $0.05 per share the market price on the date of grant.
 
In January 2011, the Company issued 1,500,000 common shares to an employee as a grant for services.  The shares were issued at a price of $0.05 per share the market price on the date of grant.
 
In January 2011, the Company borrowed $75,000 from the sale of a convertible debenture to a non-affiliated accredited investor.  The debenture carries interest at 8% per year and is convertible into Common Stock based on a 40% discount to the average of the three lowest closing bid prices in the ten days prior to conversion.
 
In February 2011, the Company issued 367,188 common shares in connection with the conversion of $9,400 of convertible debentures and interest.  The shares were issued at an average price of $0.0256 per share.
 
In February 2011, the Company issued 1,000,000 common shares to a consultant as compensation for consulting services rendered.  The shares were issued at a price of $0.0275 per share the closing market price on the date of issuance.
 
In February 2011, the Company borrowed $30,000 from the sale of a convertible debenture to a non-affiliated accredited investor.  The debenture carries interest at 8% per year and is convertible into Common Stock based on a 40% discount to the average of the three lowest closing bid prices in the ten days prior to conversion.
 
 
F - 18

 
 
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
 
None.
 
ITEM 9A. CONTROLS AND PROCEDURES
 
Disclosure Controls and Procedures
 
Under the supervision and with the participation of the Company's management, including the Company's principal executive officer and principal financial officer, the Company has evaluated the effectiveness of the design and operation of its disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(e) and Rule 15d-15(e) as of the end of the fiscal year covered by this annual report. Based on that evaluation, the principal executive officer and principal financial officer have identified that the lack of segregation of accounting duties as a result of limited personnel resources is a material weakness of its financial procedures. Other than for this exception, the principal executive officer and principal financial officer believe the disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Commission's rules and forms and that our disclosure and controls are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. There were no significant changes in the Company's internal controls or in other factors that could significantly affect internal controls subsequent to the date of their evaluation and there were no corrective actions with regard to significant deficiencies and material weaknesses.
 
Internal Control over Financial Reporting
 
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Internal control over financial reporting is a process designed under the supervision of our principal executive and principal financial officers to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. All internal control systems, no matter how well designed, have inherent limitations. Even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
 
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of November 30, 2009 based on the framework established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).” Based on management’s assessment, management concluded that, as of November 30, 2009, the Company’s internal control over financial reporting was effective.
 
This Annual Report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit the Company to provide only management’s report in this Annual Report.
 
ITEM 9B. OTHER INFORMATION
 
None.
 
 
17

 
 
PART III
 
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
 
Executive Officers And Directors
 
The following table sets forth the directors and executive officers of our Company, their ages and positions with our Company. Pursuant to our bylaws, our directors are elected at our annual meeting of stockholders and each director holds office until his successor is elected and qualified. Officers are elected by our Board of Directors and hold office until an officer's successor has been duly appointed and qualified unless an officer sooner dies, resigns or is removed by the Board.
 
There are no arrangements or understandings’ regarding the length of time a director of our company is to serve in such a capacity.
 
On December 15, 2009, Mr. Malkeet Bains, resigned as a Director, CEO, President, and Secretary of the Company.
 
The following table sets forth information about our executive officers and directors as of March 14, 2011.
 
Name and Address
 
Age
 
Position
Frederick J. Pucillo, Jr.
Warwick, RI
 
59
 
Director, President and CEO
Erwin Vahlsing, Jr.
Warwick, RI
 
53
 
Director, Chief Financial Officer, Treasurer, and Secretary
Thomas Craft, Jr.
Warwick, RI
 
44
 
Director
 
Frederick J. Pucillo, Jr. has served as our President, Chief Executive Officer and Director since December 2009.  Mr. Pucillo has over twenty years experience serving mid-size to Fortune 100 companies in the banking and finance area, having managed a $110 million loan portfolio with 10,000 accounts, and other capital funding and business development opportunities.  Mr. Pucillo was the CFO for Atlantic Fire Protection, LLC from 2007 through 2209, and previously, was CFO for Zammido Automotive Group from 2000 through 2007.  He is thoroughly familiar with finance, cash flow analysis and budgeting, as well as negotiation of promising opportunities.
 
Erwin Vahlsing, Jr. has served as our Chief Financial Officer, Secretary, Treasurer, and Director since September 2009.  Mr. Vahlsing is a financial executive with domestic and international experience managing finance departments in the manufacturing, service, and construction industries. Mr. Vahlsing has acted as Chief Financial Officer to ICOA, Inc. since 2001. He acted as a Consultant to E&M Advertising for SEC compliance and due diligence. Mr. Vahlsing received an MBA from the University of Rhode Island in 1986 and a Bachelors degree in Accounting from the University of Connecticut.
 
Thomas J. Craft, Jr., is a Florida attorney, specializing in federal securities law and mergers and acquisitions. He practices securities law in Florida. Mr. Craft has more than 15 years of experience in federal securities matters as well as the public markets generally. Mr. Craft has served on the board of directors of several public companies prior to joining the Company's board of directors on November 22, 2002. Mr. Craft has served as a member of our Audit Committee since 2002 and in April 2007 Mr. Craft was appointed as a member of our Compensation Committee and Nominating Committee. Mr. Craft has served as an officer and a director of Peregrine Industries, Inc., a public reporting company, since March 2004.
 
 
18

 
 
Committees of the Board of Directors
 
The functions of the audit committee are currently carried out by our Board of Directors. In 2009, we hired a Chief Financial Officer.  He was subsequently appointed to the Board.  Our Board has determined that at current, we do not need an additional expert because we are a start-up exploration company and have no revenue. The cost of hiring a financial expert to act as a director of Sungro and to be a member of the audit committee or otherwise perform audit committee functions outweighs the benefits of having a financial expert on the audit committee. We do not have a compensation committee, nominating committee, executive committee of our board of directors, stock plan committee or any other committees.
 
Code of Ethics
 
We have adopted a code of ethics that applies to our Chief Executive Officer, Chief Financial Officer, Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer, Controller and persons performing similar functions within the Company. A copy of the code of ethics is filed with the SEC as an exhibit to the Company's Form S-1 filed on February 22, 2008. If we make any substantive amendments to the Code of Ethics or grant any waiver, including any implicit waiver, from a provision of the Code of Ethics to our directors, officers and employees, we will disclose the nature of such amendment or waiver in a report on Form 8-K. The Code of Ethics is available on the Company’s website at http://www.sungrominerals.com/CodeofEthics021308.pdf.
 
Family Relationships
 
There are no family relationships between any two or more of our directors or executive officers. There is no arrangement or understanding between any of our directors or executive officers and any other person pursuant to which any director or officer was or is to be selected as a director or officer, and there is no arrangement, plan or understanding as to whether non-management shareholders will exercise their voting rights to continue to elect the current board of directors. There are also no arrangements, agreements or understandings to our knowledge between non-management shareholders that may directly or indirectly participate in or influence the management of our affairs.
 
Section 16(a) Beneficial Ownership Reporting Compliance
 
Section 16(a) of the Securities Exchange Act of 1934 requires directors, executive officers and 10% or greater shareholders of the Company ("Reporting Persons") to file with the Securities and Exchange Commission initial reports of ownership (Form 3) and reports of changes in ownership of equity securities of the Company (Form 4 and Form 5) and to provide copies of all such forms as filed to the Company. With the exception of the CFO, who has completed his Form 3 report but which as of the date of this filing had not been filed with the Commission, he also has not completed a Form 4 to update his holdings.  Aside from this, the Company is not aware of any Reporting Persons that have failed to file reports on a timely basis.
 
Mr. Pucillo has completed and filed his Form 3 indicating he is currently the owner of 3,019,500 common shares.
 
At the time of Mr. Vahlsing’ hiring, he completed his Form 3.  It appears the Company filed it on the Canadian, SEDA system and failed to file it on the SEC’s Edgar database.  The report is being updated with current information and will be filed subsequent to the date of this report.  Mr. Vahlsing is the owner at the time of this report of 3,000,000 common shares.
 
Significant Personnel
 
We have no significant personnel other than our officers and directors. We presently rely on consultants and other third party contractors to perform administrative and geological services for the Company. We have no formal contracts with any of these consultants and contractors.
 
 
19

 
 
Nominating Committee
 
We do not have a standing nominating committee; our Board of Directors is responsible for identifying new candidates for nomination to the Board. We have not adopted a policy that permits shareholders to recommend candidates for election as directors or a process for shareholders to send communications to the Board of Directors.
 
ITEM 11. EXECUTIVE COMPENSATION
 
To date, our directors do not currently receive and have never received any compensation for serving as a director of the Company. Presently, our officers are paid on a consulting basis for the time and efforts spent on behalf of the Company.  Effective September 2, 2010 the Company entered into Employment Agreements with our CEO, CFO, and Investor Relations.
 
The following table sets forth all compensation awarded to, earned by, or paid for services rendered to us in all capacities by the officers for the last three fiscal years.
 
Summary Compensation Table
 
    Annual Compensation     Long-Term Compensation  
Name &
Principal Position
 
Fiscal Year
Nov 30,
 
Salary
   
Bonus
   
Other Annual
Compensation (2)
   
Restricted Stock
Awards in US$(1)
   
Options/SARs
   
LTIP Payouts
   
All Other
Compensation(2)
 
                                               
Frederick J. Pucillo, Jr.(4)
 
2010
  $ 0     $ 0     $ 86,250     $ 196,500       0       0       0  
Chief Executive Officer,
 
2009
  $ 0     $ 0     $ 0       0       0       0       0  
President, Director
 
2008
  $ 0     $ 0     $ 0       0       0       0       0  
                                                             
Erwin Vahlsing, Jr.(5)
 
2010
  $ 0     $ 0     $ 86,250     $ 196,500       0       0       0  
Chief Financial Officer,
 
2009
  $ 0     $ 0     $ 0       0       0       0       0  
Secretary, Treasurer, Director
 
2008
  $ 0     $ 0     $ 0       0       0       0       0  
                                                             
Malkeet Bains(3)
 
2009
  $ 0     $ 0     $ 0       0       0       0       0  
Former: Chief Executive Officer,
 
2008
  $ 0     $ 0     $ 0       0       0       0       0  
President, Director
                                                           
 
See notes below:
 
(1)
The named executive officers received grants of restricted stock in connection with entry into 5 year employment agreements.
 
(2)
Salary was accrued with only partial payment made during the year 2010.  The balance may be paid either in cash or stock.
 
(3)
On December 15, 2009, Mr. Bains resigned as Chief Executive Officer, Secretary, and Director.
 
(4)
Effective December 21, 2009 Mr. Pucillo was appointed as Chief Executive Officer, and Director.  Mr. Pucillo did not have any association with the Company prior to this date.
 
5)
Effective September 21, 2009 Mr. Vahlsing was appointed as Chief Financial Officer, and Treasurer.  Effective November 17, 2009, Mr. Vahlsing was appointed to the additional role as Secretary and a Director.  Mr. Vahlsing did not have any association with the Company prior to this date and is therefore not separately listed in the compensation table.
 
 
20

 
 
We do not presently have a stock option plan but intend to develop an incentive based stock option plan for our officers and directors in the future and may reserve up to ten percent of our outstanding shares of common stock for that purpose.
 
Compensation Committee
 
We do not have a compensation committee. The functions of the compensation committee are currently carried out by our Board of Directors.
 
 
21

 
 
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
 
Securities authorized for issuance under equity compensation plans
 
The Company has no securities authorized for issuance under equity compensation plans.
 
Security Ownership of Certain Beneficial Owners and Management
 
The following table sets forth certain information as of March 14, 2011 with respect to the beneficial ownership of our Company's common stock with respect to each named director and executive officer of our Company, each person known to our Company to be the beneficial owner of more than 5% of said securities, and all directors and executive officers of our Company as a group:
 
Name and Address
 
Title of Class
 
Amount and Nature
of Beneficial
Ownership
   
Percentage
of Class (1)
 
Frederick J. Pucillo, Jr.
Chief Executive Officer, President, and Director
 
Common
    3,019,500       3.5%  
Erwin Vahlsing, Jr.
Chief Financial Officer
 
Common
    3,000,000       3.4%  
Martin Bolodian
Investor Relations
 
Common
    1,500,000       1.7%  
Malkeet Bains(2) – former officer
 
Common
    25,000,000       28.7%  
All officers & directors as a group
 
Common
    29,519,500       37.3%  
(1) The percentage of class is based on 87,067,217 shares of common stock outstanding as of March 14, 2011.
(2)  Mr. Bains in connection with his resignation on December 15, 2009 agreed to surrender his shares to the Company.  Due to the cease trade order by the British Columbia Securities Commission (BCSC), the shares are currently held by council in the territory pending permission of the BCSC for them to be returned to the Company.
 
The persons named above have full voting and investment power with respect to the shares indicated. Under the rules of the Securities and Exchange Commission, a person (or group of persons) is deemed to be a "beneficial owner" of a security if he or she, directly or indirectly, has or shares the power to vote or to direct the voting of such security, or the power to dispose of or to direct the disposition of such security. Accordingly, more than one person may be deemed to be a beneficial owner of the same security. A person is also deemed to be a beneficial owner of any security, which that person has the right to acquire within 60 days, such as options or warrants to purchase our common stock.
 
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
 
Since the beginning of Sungro's last fiscal year, no director, executive officer, security holder, or any immediate family of such director, executive officer, or security holder owing more than 5% of our shares of common stock has had any direct or indirect material interest in any transaction or currently proposed transaction, which Sungro was or is to be a participant, that exceeded the lesser of (1) $120,000, or (2) 1% of the average of Sungro's total assets at year end for the last two completed fiscal years.
 
 
22

 
 
In September 2010, the Company entered into 5 year employment agreements with its three employees.  Below is a summary of the basic terms of the Agreements:
 
 
·
Base Salary for the CEO and CFO
$120,000 per year
 
·
Base Salary for Investor relations
$100,000 per year
 
·
The officers received stock grants in connection with the contracts of:
 
o
CEO
1,500,000 common shares
 
o
CFO
1,000,000 common shares
 
o
Investor Relations
1,000,000 common shares
 
·
4% annual increases in Base Salary
 
·
Bonus provision if and when the Company reaches profitability
 
·
Other normal benefits provided such as health insurance as negotiated by the Company
 
During 2009, a stockholder provided a personal guarantee for the repayment of principal and interest with regard to a one year loan which the Company accepted from an unaffiliated accredited investor.  During the year ended November 30, 2009, the same stockholder contributed money to the Company which is recorded as Additional Paid in Capital.
 
From time to time, our former CEO, Mal Bains lent money to the Company.  At November 30, 2010 and 2009 the balance owed was $19,950 (CAD).  The balance does not bear interest and is due on demand.
 
During 2010, our CEO and CFO have from time to time lent money to the Company.  At November 30, 2010 they had lent a total of $58,254.  The balance does not bear interest and is due on demand.
 
The Company's transactions with its officers, directors and affiliates have been and such future transactions will be, on terms no less favorable to the Company than could have been realized by the Company in arm's length transactions with non-affiliated persons and will be approved by a majority of the independent disinterested directors.
 
Directors Independence
 
The only director on our board that is independent Thomas Craft, Jr., our other two directors Mr. Pucillo and Mr. Vahlsing, are not independent, pursuant to the definition of an "independent director" set forth in Rule 5605(a)(2) of the NASDAQ Manual. In summary, an "independent director" means a person other than an executive officer or employee of the issuer or any other individual having a relationship which, in the opinion of the issuer's board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.
 
The Company intends to add members to the Board of Directors who are independent during the fiscal year 2011.
 
We do not have a compensation committee, nominating committee or audit committee; the functions of these committees are performed by our directors and Chief Financial Officer.
 
The Company is currently traded on the OTC Bulletin Board, which does not require that a majority of the Board be independent.
 
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
 
The fees billed to the Company for the fiscal years ending November 30, 2009 and 2008 by Sherb & Co., LP and MacKay LLP were as follows:
 
   
Year ended
Nov. 30, 2010
   
Year ended
Nov. 30, 2009
 
Audit Fees
  $ 35,500     $ 27,500  
Audit-Related Fees
  $ 0     $ 0  
Tax Fees
  $ 0     $ 0  
All Other Fees
  $ 0     $ 0  

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

 
23