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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-K


(x)  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES ACT OF 1934

 


For the fiscal year ended November 30, 2013


( ) TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

  For the transaction period from ___________to __________

   

  Commission File number         333-179390


LINGAS VENTURES, INC.

(formerly Lingas Resources, Inc.)

(Exact name of registrant as specified in its charter)


Nevada

99-0372219

State or other jurisdiction of incorporation or organization

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


469 Pujols Avenue, Fort Benafacio, Manila, Philippines

_________

(Address of principal executive offices)

(Zip Code)


 (632) 211-6739

(Issuer’s telephone number)


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


None

None

(Title of each class)

(Name of each exchange on which registered)


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


None

(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   [X] No


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   [X] No


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 past 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. [X] Yes   

[  ] No


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 (§229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). [X] Yes  [   ] No


Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy information statements incorporated by reference in Part III of this Form 10-K or any amendments to this Form 10-K [    ]



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Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company. See definition of “large accelerated filer”, “accelerated filer” and “small reporting company” Rule 12b-2 of the Exchange Act.


Large accelerated filer   [   ]

Accelerated filer     [   ]


Non-accelerated filer     [   ] (Do not check if a small reporting company)

Small reporting company [X]


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes [X]  No  [   ]


State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recent completed second fiscal quarter.   $2,900,000 as of May 31, 2013, based on the registered resale of securities at a price of $0.001 per share.


(APPLICABLE ONLY TO CORPORATE REGISTRANTS)


Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date:  March 12, 2014: 290,000,009 common shares


DOCUMENTS INCORPORATED BY REFERENCE


List hereunder the following documents if incorporated by reference and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) Any annual report to security holders; (2) Any proxy or information statement; (3) Any prospectus filed pursuant to Rule 424 (b) or (c) under the Securities Act of 1933.   The listed documents should be clearly described for identification purposes (e.g., annual report to security holders for fiscal year ended December 31, 1980).  None





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TABLE OF CONTENTS


 

 

 

PART I

 

Page

 

 

 

ITEM 1.

Business.

4

 

 

 

ITEM 1A.

Risk Factors.

5

 

 

 

ITEM 1B.

Unresolved Staff Comments.

10

 

 

 

ITEM 2.

Properties.

11

 

 

 

ITEM 3.

Legal Proceedings.

29

 

 

 

ITEM 4.

Submission of Matters to Vote of Securities Holders

29

 

 

 

PART II

 

 

 

 

 

ITEM 5.

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


30

 

 

 

ITEM 6

Selected Financial Information.

30

 

 

 

ITEM 7.

Management’s Discussion and Analysis of Financial Conditions and Results of Operations.

30

 

 

 

ITEM 7A.

Quantitative and Qualitative Disclosure about Market Risk.

35

 

 

 

ITEM 8.

Financial Statement and Supplementary Data.

36

 

 

 

ITEM 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.


45

 

 

 

ITEM 9A

Controls and Procedures.

46

 

 

 

ITEM 9B

Other information

46

 

 

 

PART III

 

 

 

 

 

ITEM 10.

Directors, Executive Officers and Corporate Governance.

47

 

 

 

ITEM 11.

Executive Compensation.

50

 

 

 

ITEM 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.


50

 

 

 

ITEM 13.

Certain Relationships and Related Transactions, and Director Independence.

51

 

 

 

ITEM 14

Principal Accounting Fees and Services.

55

 

 

 

PART IV

 

 

 

 

 

ITEM 15.

Exhibits

56

 

 

 

 

SIGNATURES

57





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PART 1


ITEM 1.  BUSINESS


History and Organization


The following is only a summary of the information, financial statements and the notes included in this Form 10-K.  Unless the context indicates or suggests otherwise, the terms “Lingas”, the “Company”, “we,” “our” and “us” means Lingas Resources, Inc.


Our Business


We were incorporated on September 14, 2010 pursuant to the laws of the State of Nevada.  


Our address in the Philippines is at 469 Pujols Avenue, Fort Beneafacio, Manila and with our telephone number being (632) 211-6739. Our office is located in the private resident of the President of our Company and until such time as the Company can afford to rent its own facilities this arrangement will serve as our office.  To date there has been no charge for the use of this office.

We are an Emerging Growth Company as defined in the Jumpstart Our Business Startups Act.

 

We shall continue to be deemed an emerging growth company until the earliest of—

 

(A) the last day of the fiscal year of the issuer during which it had total annual gross revenues of $1,000,000,000 (as such amount is indexed for inflation every 5 years by the Commission to reflect the change in the Consumer Price Index for All Urban Consumers published by the Bureau of Labor Statistics, setting the threshold to the nearest 1,000,000) or more;

 

(B) the last day of the fiscal year of the issuer following the fifth anniversary of the date of the first sale of common equity securities of the issuer pursuant to an effective registration statement under this title;

 

(C) the date on which such issuer has, during the previous 3-year period, issued more than $1,000,000,000 in non-convertible debt; or

 

(D) the date on which such issuer is deemed to be a ‘large accelerated filer’, as defined in section 240.12b-2 of title 17, Code of Federal Regulations, or any successor thereto.

 

As an emerging growth company we are exempt from Section 404(b) of Sarbanes Oxley. Section 404(a) requires Issuers to publish information in their annual reports concerning the scope and adequacy of the internal control structure and procedures for financial reporting. This statement shall also assess the effectiveness of such internal controls and procedures.

 

Section 404(b) requires that the registered accounting firm shall, in the same report, attest to and report on the assessment on the effectiveness of the internal control structure and procedures for financial reporting.


As an emerging growth company we are exempt from Section 14A and B of the Securities Exchange Act of 1934 which require the shareholder approval of executive compensation and golden parachutes.

 

We have irrevocably opted out of the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the Act.


Our Company is a U.S.-based precious metals exploration company with the objective of becoming a premier gold producer. The Company is currently focused on the advancement of its only mineral claim; the Prosperidad located in the Philippines.  The Company has now completed Phase I of its exploration program and the results are shown on page 22 under the heading of “Exploration Program under Phase I.



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There is no assurance that a commercially viable mineral deposit or reserve exists at our mineral claim or may exist until sufficient and appropriate exploration is completed and a comprehensive evaluation of such work concludes economic and legal feasibility.   Such work could take many years of exploration and would require expenditure of a substantial amount of capital, capital which we do not currently have and may never be able to raise.


We have no historical information to allow anyone to base an evaluation on our future performance. We have only been incorporated since September 14, 2010 and have generated no revenue during our time in existence.  We do not know if we will be successful in our business operations in the future.   Like all new businesses we are a start-up company and will suffer all the problems of being a start-up company as follows:


·

possible delays in exploring the Prosperidad and experiencing cost overruns;

·

trying to generate revenue or identify sources of cash, managing our assets and administrating ongoing financial commitments to our creditors;

·

adhering to all regulatory requirements both as a future public company and as a company required to meet State and Federal filing requirements; and

·

ensuring our shareholders are informed about our development on a regular basis.


We have no full-time employees and our management devotes a small percentage of their time to the affairs of the Company.


The shareholders may read and copy any material filed by Lingas with the SEC at the SEC’s Public Reference Room at 100 F Street, N.E., Washington, DC, 20549.   The shareholders may obtain information on the operations of the Public Reference Room by calling the SEC at 1-800-SEC-0330.  The SEC maintains an Internet site that contains reports, proxy and information statements, and other information which Lingas has filed electronically with the SEC by assessing the website using the following address:  http://www.sec.gov.   Lingas has no website at this time.


ITEM 1A. RISK FACTORS


An investment in our common stock involves an exceptionally high degree of risk and is extremely speculative. In addition to the other information regarding Lingas contained in this Form 10-K, you should consider many important factors in determining whether to purchase the shares in our Company.  The following risk factors reflect all known potential and substantial material risks which could be involved if you decide to purchase shares in our Company.


Risks Associated with our Company:


Since our auditors have issued a going concern opinion and although our officers and directors have agreed to loan money to us, we may not be able to achieve our objectives and may have to suspend or cease exploration activity.


Our auditors have issued a going concern opinion. This means that there is doubt that we can continue as an ongoing business for the next twelve months.  If we do not raise additional capital through the issuance of treasury shares or loans to Lingas we will be unable to conduct exploration activity on the Prosperidad.  In addition, in the event we are unable to raise additional capital we will have to cease operations and go out of business.


We lack an operating history and have losses which we expect to continue into the future. As a result, we may have to suspend or cease exploration activity or cease operations.


We have not yet conducted any exploration activities.  We have not generated any revenues. We have no exploration history upon which you can evaluate the likelihood of our future success or failure.  Our net loss from inception to November 30, 2013, the date of our most recent annual financial statement, was $90,735.  Our ability to achieve profitability and positive cash flow in the future is dependent upon


·

our ability to discover an ore body on the Prosperidad;

·

our ability to locate a profitable mineral property other than the Prosperidad if need requires it;

·

our ability to generate revenues from the Prosperidad

·

our ability to reduce exploration costs.



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Based upon current plans, we expect to incur operating losses in future periods. This will happen because there are expenses associated with the exploration of the Prosperidad. We cannot guarantee we will be successful in generating revenues in the future. Failure to generate revenues may cause us to go out of business.


We are governed by only two people, John C. Ngitew and Grace E. Parinas, which may lead to faulty corporate governance.


We have two directors and two executive officers who make all the decisions regarding corporate governance.  This includes their (executive) compensation, accounting overview, related party transactions and so on.  They will also have full control over matters that require Board of Directors approval. This may introduce conflicts of interest and prevent the segregation of executive duties from those that require Board of Directors’ approval.  This may lead to ineffective disclosure and accounting controls.  None compliance with laws and regulations may result in fines and penalties.  They would have the ability to take any action as they themselves review them and approve them.  They would exercise control over all matters requiring shareholder approval including significant corporate transactions.   We have not implemented various corporate governance measures nor have we adopted any independent committees as we presently do not have any independent directors.


Since substantially all of our assets, and our directors and officers are outside the United States it may be difficult for investors to enforce within the United States any judgments obtained against us or any of our officers and directors.


Substantially all of our assets are located outside the United States and we do not currently maintain a permanent place of business within the United States.  We were incorporated in the State of Nevada and have an agent for service in Carson City, Nevada.  Our agent for service will accept on our behalf the service of any legal process and any demand or notice authorized by law to be served upon a corporation.  Our agent for service will not, however, accept service on behalf of any of our officers or directors.  All of our directors and officers are residents of the Philippines and neither of them have an agent for service in the United States.  Therefore, it may be difficult for investors to enforce within the United States any judgments obtained against us or our officers or directors, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state thereof.


We must attract and maintain key personnel or our business will fail.


Our Company’s success depends on the acquisition of key personnel who are specialist in their area of expertise.  Unfortunately our Company will have to compete with other companies both within and outside the mining industry to recruit and retain competent employees.  These companies may be better financed, have more exploration and development properties than our Company has. If our Company cannot maintain qualified employees to meet the needs of our anticipated growth, this could have a material adverse effect on our business and financial condition.


We were recently incorporated in the State of Nevada, have a lack an operating history and have yet to make any revenues.  If we cannot generate any profits, you may lose your entire investment.


We were a recently incorporated company in the State of Nevada and have yet to generate any revenues. No profits have been made to date and if we fail to make any then we may fail as a business and an investment in our common stock will be worth nothing.  We have no operating history and thus no way for you to measure progress or potential future success.  Success has yet to be proved. Currently, there are no operations in place to produce revenue.  We are an exploration company and have yet to find or produce sellable product. Financial losses should be expected to continue in the near future and at least until such time that we enter the production stage.  As a new business we face all the risks of a ‘start-up’ venture including unforeseen costs, expenses, problems, and management limitations and difficulties.  From inception through November 30, 2013, we have incurred a loss of $90,735. There is no guarantee, unfortunately, that we will ever be able to turn a profit.  


International operations in the Philippines are subject to inherent risks.


Political instability, uncertainty of the economic climate, currency fluctuations, exchange controls and taxation laws may be significant in our business dealing in the Philippines. Exchange rate changes between the Philippine currency and the U.S. Dollar may also adversely affect our successful operations.


We have no known ore reserves and we cannot guarantee we will find any gold mineralization or, if we find gold mineralization, that it may be economically extracted. If we fail to find any gold mineralization or if we are unable to find gold mineralization that may be economically extracted, we will have to cease operations.



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We have no known ore reserves. Even if we find gold mineralization we cannot guarantee that any gold mineralization will be of sufficient quantity so as to warrant recovery. Additionally, even if we find gold mineralization in sufficient quantity to warrant recovery, we cannot guarantee that the ore will be recoverable. Finally, even if any gold mineralization is recoverable, we cannot guarantee that this can be done at a profit. Failure to locate gold deposits in economically recoverable quantities will cause us to cease operations.


Because the probability of an individual prospect ever having reserves is extremely remote, in all probability our property does not contain any reserves, and any funds spent on exploration will be lost.


Because the probability of an individual prospect ever having reserves is extremely remote, in all probability our sole property, the Prosperidad, does not contain any reserves, and any funds spent on exploration will be lost. If we cannot raise further funds as a result, we may have to suspend or cease operations entirely which would result in the loss of your investment.


Because our officers and directors do not have technical training or experience in starting and operating an exploration company nor in managing a public company, we will have to hire qualified personnel to fulfill these functions. If we lack funds to retain such personnel, or cannot locate qualified personnel, we may have to suspend or cease exploration activity or cease operations which will result in the loss of your investment.


Because our officers and directors are inexperienced with exploring for minerals and starting, and operating a mineral exploration company, we will have to hire qualified persons to perform surveying, exploration, and excavation of our property.  Our officers and directors have no direct training or experience in these areas and as a result may not be fully aware of many of the specific requirements related to working within the industry. Their decision may not take into account standard engineering or managerial approaches which geological company to use. Consequently our exploration, earnings and ultimate financial success could suffer irreparable harm due to management's lack of experience in this industry.   Additionally, our officers and directors have no direct training or experience in managing and fulfilling the regulatory reporting obligations of a ‘public company’ like Lingas.  Unless our part time officers are willing to spend more time addressing these matters, we will have to hire professionals to undertake these filing requirements for Lingas and this will increase the overall cost of operations. As a result we may have to suspend or cease exploration activity, or cease operations altogether, which will result in the loss of your investment.


Since we are small and do not have much capital, we must limit our exploration and as a result may not find an ore body. Without an ore body, we cannot generate revenues and you will lose your investment.


The possibility of development of and production from our exploration property depends upon the results of exploration programs and/or feasibility studies and the recommendations of duly qualified professional engineers and geologists.  We are a small company and do not have much capital.  We must limit our exploration activity unless and until we raise additional capital.  Any decision to expand our operations on the Prosperidad will involve the consideration and evaluation of several significant factors beyond our control.  These factors include, but are not limited to:


·

Market prices for the minerals to be produced;

·

Costs of bringing the Prosperidad into production including exploration preparation of production feasibility studies and construction of production facilities;

·

Political climate and/or governmental regulations and controls;

·

Ongoing costs of production;

·

Availability and cost of financing; and

·

Environmental compliance regulations and restraints.


These types of programs require substantial capital. Because we may have to limit our exploration, we may not find an ore body, even though our property may contain mineralized material. Without an ore body, we cannot generate revenues and you will lose your investment.


Even though our two directors and officers have agreed to contribute funds to our Company there is no assurance this will occur.

 

Even though our two officers and directors have agreed to contribute funds to cover any shortage of funds in order that the Company can complete Phase II there is no assurance, due to having no written agreement with our directors regarding this contribution, that they will be willing or able to provide the funds required to complete Phase II.



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Neither of our two directors has visited the Prosperidad.


Our two directors have not visited the Prosperidad.  Without visiting the Prosperidad our two officers and directors do have any personal knowledge of the claim and its mineralization.  They will have to rely upon the advice of the geologists working the claim during the exploration period.


Because our officers and directors have other outside business activities and may not be in a position to devote a majority of their time to our exploration activity, our exploration activity may be sporadic which may result in periodic interruptions or suspensions of exploration.


Our officers and directors, collectively, will be devoting only approximately 25% of their time each month to the business of our Company; John Ngitew being 30 hours and Grace Parinas being 20 hours each month. As a reporting company, we have to meet the various requirements of filing periodic reports with the SEC as well as overseeing the activities on the Prosperidad.  With our directors having other business interests this might restrict some of the time they could spend on the activities of our


There is no assurance our Company will have access to all the exploration supplies and materials we will need to undertake our recommend exploration program on the Prosperidad.


To date we have not contacted any suppliers of material we will need in our exploration program.   We do not know if the equipment and supplies required will be available when we start our exploration program due to other exploration companies requiring the same equipment and supplier.   In addition, there might be shortages due to the prior use of the supplies and materials.  If we cannot find the products and equipment needed at the time, we might have to suspend our exploration plans until we do find the products and equipment we need.


No matter how much money is spent on the Prosperidad, the risk is that we might never identify a commercially viable ore reserve.


Over the coming years, we might spend considerable capital on exploring of the Prosperidad without finding anything of value.  It is very likely the Prospertidad does not contain any reserves so any funds spent on exploration will probably be lost.  No matter how much money is spent on the Prosperidad, we might never be able to find a commercially viable ore reserve.  


Even with positive results during exploration, the Prosperidad might never be put into commercial production due to inadequate tonnage, low metal prices or high extraction costs.


We might be successful, during future exploration programs, in identifying a source of minerals of good grade but not in the quantity, the tonnage, required to make commercial production feasible.  If the cost of extracting any minerals that might be found on the Prosperidad is in excess of the selling price of such minerals, we would not be able to develop the claim.  Accordingly even if ore reserves were found on the Prosperidad, without sufficient tonnage we would still not be able to economically extract the minerals from the claim in which case we would have to abandon the Prosperidad and seek another mineral property to develop, or cease operations altogether.


Even if our property were found to contain a deposit, since we have not put a mineral deposit into production before, we will have to acquire outside expertise. If we are unable to acquire such expertise we may be unable to put our property into production and you may lose your investment.


We have no experience in placing mineral deposit properties into production, and our ability to do so will be dependent upon using the services of appropriately experienced personnel or entering into agreements with other major resource companies that can provide such expertise. There can be no assurance that we will have available to us the necessary expertise when and if we place a mineral deposit into production.


Mineral exploration and development activities are inherently risky and we may be exposed to environmental liabilities. If such an event were to occur it may result in a loss of your investment.



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The business of mineral exploration and extraction involves a high degree of risk. Few properties that are explored are ultimately developed into production.  Most exploration projects do not result in the discovery of commercially mineable deposits of ore.  The Prosperidad, our sole property, does not have a known body of commercial ore. Should our mineral claim be found to have commercial quantities of ore, we would be subject to additional risks respecting any development and production activities. Unusual or unexpected formations, formation pressures, fires, power outages, labor disruptions, flooding, explosions, cave-ins, landslides and the inability to obtain suitable or adequate machinery, equipment or labor are other risks involved in extraction operations and the conduct of exploration programs. We do not carry liability insurance with respect to our mineral exploration operations and we may become subject to liability for damage to life and property, environmental damage, cave-ins or hazards.


We are vulnerable to the change of the world gold supply, demand and prices.


Gold prices change on a world market beyond our control.  A drop in price would adversely affect our ability to generate a profit.  All our revenues would be derived from the sale of gold and possibly other precious metals. Changes in the price of gold thus may affect profitability and impede us from being able to afford to continue operations.  Gold prices historically have fluctuated widely; price tends to be linked to a number of factors beyond our control such as: various macroeconomic factors (terrorism, political and regional events that may include such, confidence in the global monetary system, rate of inflation expectations, interest rates, US dollar and certain other currency strength); speculative or hedging activities; forward sales by producers, speculators and other holders; central bank lending; sales and purchases of gold; industrial and jewelry demand; and the current supply and demand.  These things are impossible for us to predict.  Per ounce, the highest price of gold per year has been $1,120 (2010), $1,834 (2011), $1,720 (2012) and $1,694 (2013) London PM Fix Price for instance. This volatility may favor operations now but should the price drop unexpectedly some or all exploration activities may become economically unfeasible in the future.


Risks Associated with Our Stock:


Our officers and directors will own a substantial amount of our common stock and will have substantial influence over our operations.


Our directors and officers sold under our effective registration statement 50% of their shares to other investors.  They still own 50% of our outstanding shares.  As a result, our directors and officers will have the potential to continue to exercise influence over our operations. This concentration of ownership may also have the effect of delaying or preventing a change in control.


There is no market for our shares.  If and when a market develops for our shares, they may be thinly traded, with wide share price fluctuations, low share prices and minimal liquidity.


If and when a market for our shares develops, the share price may be volatile with wide fluctuations in response to several factors, including:


·

Potential investors’  anticipated feeling regarding our results of operations;

·

Increased competition and/or variations in mineral prices;

·

Our ability or inability to generate future revenues; and

·

Market perception of the future of the mineral exploration industry.


Even though our shares are quoted on the OTCBB, our share price may be impacted by factors that are unrelated or disproportionate to our operating performance.  Our share price might be affected by general economic, political and market conditions, such as recessions, interest rates or international currency fluctuations.  In addition, stocks traded on the OTCBB are usually thinly traded, highly volatile and not followed by analysts.  These factors, which are not under our control, may have a material effect on our share price.


We anticipate the need to sell additional treasury shares in the future meaning that there will be a dilution to our shareholders resulting in their percentage ownership in the Company being reduced accordingly.


We may seek additional funds through the issuance and sale of our common stock.  This will result in dilution to our shareholders whereby their percentage ownership interest in the Company is reduced.  The magnitude of this dilution effect will be determined by the number of shares we will have to issue in the future to obtain the funds required.



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Since our securities are subject to penny stock rules, you may have difficulty reselling your shares.


Our shares are "penny stocks" and are covered by Section 15(g) of the Securities Exchange Act of 1934 which imposes additional sales practice requirements on broker/dealers who sell the Company's securities including the delivery of a standardized disclosure document; disclosure and confirmation of quotation prices; disclosure of compensation the broker/dealer receives; and, furnishing monthly account statements. For sales of our securities, the broker/dealer must make a special suitability determination and receive from its customer a written agreement prior to making a sale. The imposition of the foregoing additional sales practices could adversely affect a shareholder's ability to dispose of his stock.


ITEM 1B. UNRESOLVED STAFF COMMENTS


There are no unresolved staff comments.



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ITEM 2.  PROPERTIES


PROSPERIDAD CLAIM


The Prosperidad was acquired by our Company from Herandez Ventures Inc. in September 2010 for the sum of $5,000 which included a geological report.


We have acquired a 100% interest in the Prosperidad consisting of a 7 unit claim block containing approximately 94.5 hectares (approximately 250 acres).  The Prosperidad is located 55 kilometers (37.5 miles) southeast of the city of Butuea and 60 kilometers (41 miles) northeast of city of Bislig, both located in the Philippines.  We have undertaken Phase I of our exploration program but need funds to start and complete Phase II.  The directors and officers have agreed to contribute funds to cover this shortage of funds in order that the Company, if required, can complete Phase II of its exploration program.   No written agreement has been entered into.  The Company will move forward with further exploration activities once the above mentioned funds are available.  Once the funds are available, the Board and Directors in consultation with our geologist will determine the exact date of commencement of Phase II.


The Company is currently performing no exploration activities on the Prosperidad until such time as it receives the funding to do so.


Based on the recommendation of Ricardo Ramos as set forth in his report dated December 15, 2011 wherein he indicated in his geological report that “based on field observation, laboratory results, and reviews of available geological and historical data, further exploration work is warranted on the property” management has decided to proceed with Phase II when the Company has adequate funds to do so.


Our Company has all the mineral rights relating to the Prosperidad below and above surface.


In fact, our Company is the only party having an interest in the Prosperidad and it has not entered into any agreements regarding the Claim and there are no outstanding royalties or charges of any kind.  There is a tax on any income from the Prosperidad, if the Company is able to sell minerals therefrom, in the amount of 11%.


The Prosperidad Claim can be identified in the Philippines by the following information:


Property Name:

Prosperidad Gold Claim

Certificate Number:

STBC1019947

Title Number:

BA178031

Registration Received:

September 23, 2010

Latitude:

8° 34’ 48”

Longitude:

125° 53’ 47”

Assignment Transferred From:

Hernandez Ventures Inc.

Transfer No.

129-769

Taxation Authority:

City of Butuan, Philippines




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The Prosperidad will be in good standing until such time as it is abandoned by the Company.   When our Company obtained its licensing for its exploration work it was required to pay a fee to the Department of Energy and Natural Resources of $560.  When renewing the existing license it has 30 days to make the required payment of a similar amount and it can take upwards to 14 days to process the application.


We engaged the services of Alfredo Jumpay, Professional Geologist, to prepare a geological report on the Presperidad which was issued to us on October 1, 2010. Mr. Jumpay graduated from the University of the Far East in Manila, Philippines in 1975 with a Bachelor of Science Degree in Geology and in 1978 obtained his Master of Science degree from the same university.   He has work for the past 20 years as a geologist for such companies as Divio Resources, Hernandez Explorations and Borocay Ventures.   He is a member of the Geological Society of the Philippines and has consulted for companies around the world.


Our company has no revenue from the Prosperidad and we do not anticipate earning revenues until such time as we enter into commercial production. We are presently in the exploration stage of our business and we can provide no assurance that commercially viable mineral deposits exist on the Prosperidad, or that, if such deposits are discovered, we will be able to enter into further substantial exploration or development programs.  Further exploration is required to determine the economic and legal feasibility of the Prosperidad.


To acquire the Prosperidad the directors purchased 290,000,000 common shares at $0.001 per share to give the Company the needed cash.   These funds were used to incorporate the Company, purchase the Prosperidad, engage the services of Alfredo Jumpay, professional geologist, prepare a geological report on the Prosperidad, obtain a title opinion to the Prosperidad, obtain audited financial statements and undertake Phase I of the exploration program.


Very few mineral exploration properties ever become producers whereby commercial viable mineralization is extract from the property.   Until we undertake considerable exploration on the Prosperidad our Company is considered an exploration company.


Gold Mineralization on the Prosperidad


Until we complete our Phase II exploration program we will not know if there is any gold on the Prosperidad and even when we have completed Phase II we might not have any indication as to whether there is gold on our mineral claim.  If we do not find any gold on the Prosperidad then we will have to abandon the claim which might lead us to ceasing operations.



12




Obtaining Mineral Properties in the Philippines


There are two methods in the Philippines in obtaining mineral properties:


1. Direct purchase from the Department of Energy and Natural Resources; or


2.  Purchase from an existing mineral property owner.


The Company will be required to obtain an Exploration Permit when it commences its exploration work. Normally this is obtained by the geologist assigned to undertake the exploration program.


During the exploration stage there is no requirement to obtain a bond.  A bond is needed only when development of the Prosperidad occurs, meaning the extraction of minerals.   We must adhere to the environmental requirements the Department of Environmental and Natural Resources.   Mines and Geoscience has the right to inspect and demand reclamation work on our property in the event to do not adhere to the requirements.


Additional approvals maybe required from the Department of Environmental and Natural Resources or other governmental departments depending upon the work we will be undertaking on the Prosperidad.  In the event we decided to cut trees we will require a license to cut from the applicable governmental department.  In deposing of waste, being rock and soil material removed during the development stage of the Prosperidad, we will also be required to obtain approves for this.


At the present time we do not know the amount of money which will be required to adhere to all the environmental regulations since only after the completion of Phases I and II will we have some idea of the actual costs required in the future.   Hopefully these costs will not be so prohibitive that we will have to decide to do no further work on the Prosperidad.


Competition


There are many exploration companies in the Philippines and many of them are better financed and have mineral claims where mineral showing are positive. We are exploring the Prosperidad and will not know until the completion of Phase II whether there are minerals of merit on our claim.   These other mineral companies have more money to hire more employees than we have at the present time.  Many geologists would rather work with a company which can offer them full time employment rather than being employed for a short period of time during our exploration program.  We compete with other mineral resource exploration and development companies for the acquisition of new mineral properties.  These competitors may be able to spend greater amounts of money to acquire mineral properties of merit or on exploring their mineral properties and on developing their mineral properties. In addition, they may be able to afford greater geological expertise in the targeting and exploration of mineral properties. This competition could adversely impact our ability to finance further exploration and to achieve the financing necessary for us to develop our mineral properties.


We will also compete with other junior mineral exploration companies for financing from a limited number of investors that are prepared to make investments in junior mineral exploration companies. The presence of competing junior mineral exploration companies may impact our ability to raise additional capital in order to fund our exploration programs if investors are of the view that investments in competitors are more attractive based on the merit of the mineral properties under investigation and the price of the investment offered to investors.  


Research and Development Expenditures


We have not incurred any research expenditures since our incorporation.  


Patents and Trademarks


We do not own, either legally or beneficially, any patent or trademark.



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Geological Terms


Various geological terms used in this Form 10-K are defined as follows:


Amphilbolite

crystallized rock formed under high temperature ranging from 450° to 700° C which contains some quartz but not in great quantities.

  

  

Anastomosing

Said to be channel pattern of a braided stream.

  

  

Andesite

A rock of fine grain and darkish color which contains some quartz and/or feldspar.

  

  

Anorthosite

A granular plutonic igneous rock composed chiefly of a soda-lime feldspar, as labradorite.

  

  

Aplite

A fine grained granite consisting chiefly of quartz and feldspar.

  

  

Argillite

An argillaceous rock, differing from shale in being metamorphosed, and from slate in having no slaty cleavage.

  

  

Assays

Examination and determination as to weight, measure, quality, etc. test.

  

  

Auriferous

Gold bearing, as ore.

  

  

Basalt

A dark-grey to black, dense to fine-grained igneous rock, consisting of basic plagioclase.

  

  

Bauxite

A aluminium hydroxide consisting of several minerals occurring in masses and earthly form.

  

  

Caldera

A large crater formed by the collapse of the central part of a volcano.

  

  

Chanrockites

A rock containing granite but composed mainly of quartz.

  

  

Chert

A hard, dense and fine grained sedimentary rock consisting of interlocking crystals of

  

  

Chrysocolla

A source of copper and an ornamental stone.

  

  

Claim

A piece of property either purchased or staked for minerals which a company owns.

  

  

Clinopyrozene

A type of rock consisting of magnesium and iron as its chief mineralization.

  

  

Cretacious Age

Of the nature of chalk or relating to chalk beds which were deposited during this period.

  

  

Crystalline

Resembling crystal; transparent.

  

  

Dolerite

A loosely dark igneous rock with course basalt.

  

  

Dynamothermal

A rock which has been formed under pressure and extreme heat.

  

  

Extrusive

Forced out at the surface; effusive or volcanic.

  

  

Fault

A break in the continuity of a rock bed.

 

 

 Feldspar

Feldspar occurs in all rocks and constitutes 60% of the Earth’s crust.

  

  

Gabbro

It is approximate intrusive equivalent to basalt.

  

  

Gangue

That part of an ore that is not economically desirable but cannot be avoided in mining.

  

  

Geomorphologic

Pertaining to the form of the Earth or of its surface features.


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Gneiss

A rock corresponding in composition to granite and some feldspar rocks.

  

  

Grade

The relative quantity  or the percentage of ore-mineral or metal content in an orebody.

  

  

Granite

Any very hard natural igneous rock formation of visible crystalline texture consisting essentially of quartz.

  

  

Greenstone

The term is used frequently when no accurate determination is possible.

  

  

Granulites

A whitish granular rock consisting of feldspar, quartz and small red garnets.

  

  

Granodiorite

A combining form meaning granite.

  

  

Gypsum

Hydrous calcium sulfate.  It is used as a dressing for soil or making plaster of Paris.

  

  

Hornfels

A rock fine grained in texture which is formed by high temperatures.

  

  

Hydrothermal

Of or pertaining to hot water and the action of hot water.

  

  

Igneous

A rock formed by the action of heat within the Earth’s surface and associated with fusion.

  

  

Ilmenite

Iron black  titanic iron ore.

  

  

Intrusions

A mass of igneous rock that, while molten, was forced into or between other rocks.

  

  

Landsat

Multispecral data from satellite remote sensing imagery that provides landscape patterns reflecting geological structures, types of rocks and vegetation.

  

  

Laterites

Red residual soil developed in humid, tropical, and subtropical regions of good drainage.

  

  

Leptynite

A fissile or schistose containing some quartz, feldspar and mica..

  

  

Limestone

A rock consisting chiefly of calcium carbonate, ie., organic remains such as shells.

  

  

Lode

A mineral deposit consisting of a zone of veins.

  

  

Metamorphic

An ore deposit that has been subject to great pressure, high temperatures and alteration by solutions.

  

  

Metasediment

A rock which has been subject to metamorphism.

  

  

Mica

A rock yielding touch, elastic flakes  and sheets, colorless, white, yellow green or black.  Basically an industrial mineral used in electrical units and in insulation.

  

  

Mineralization

A process whereby mineral are introduced in various rock often forming potential ore bodies.


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 Mineral Reserve

Mineral Reserves are sub-divided in order of increasing confidence into Probable Mineral Reserves and Proven Mineral Reserves.  A Probable Mineral Reserve has a lower level of confidence than a Proven Mineral Reserve.


A Mineral Reserve is the economically mineable part of a Measured or Indicated Mineral Reserve demonstrated by at least a Preliminary Feasibility Study.   This Study must include adequate information on mining, processing, metallurgical, economic and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified.   A Mineral Reserve includes diluting materials and allowance for losses that may occur when the material is mined.


A “Probable Mineral Reserve” is the economically mineable part of an Indicated and, in some circumstances, a Measured Mineral Resource demonstrated by at least a Preliminary Feasibility Study.   This Study must include adequate information on mining, processing, metallurgical, economic and other relevant facts that demonstrate, at the time of reporting, that economic extraction is justified.


A “Proven Mineral Reserve” is the economically mineable part of a Measured Mineral Resource demonstrated by at least a Preliminary Feasibility Study.   This Study must include adequate information on mining, processing, metallurgical, economic and other relevant factors that demonstrate, at the time of reporting, that economic extraction is justified.

  

  

Monzonite

A granular plutonic rock containing equal amounts of orthoclase and plagioclase.

  

  

Nodules

A rounded mass of irregular shape; a little lump.

  

  

Ore

A rock containing commercial viable mineralization.

  

  

Paragniesses

An assemble of minerals within an ore deposit.

  

  

Pegmatite

Basically quartz and feldspar occurring in granite.

  

  

Placer

A place where gold is obtain by washing.

  

  

Pyrite

A common mineral of a pale brass-yellow color and metallic luster.

  

  

Pyrrhotite

A rock that can be a source of nickel.

  

  

Quartz

Any hard, gold or silver ore, as distinguished from gravel or earth.

  

  

Quartzite

A very hard sandstone containing chiefly quartz  grains that are completely cemented.

  

  

Quaternary

It became 2 to 3 million years ago and extends to the current period.

  

  

Radioelement

A form or sample of an element containing one or more radioactive isotopes.

  

  

Rutile

A reddish-brown mineral consisting of titanium dioxide.

  

  

Schistosity

A type of cleavage.

  

  

Sedimentary

Form by or from deposits of sediment which have been water transported.

  

  

Shear

An action or stress, resulting from applied forces, which causes or tends to cause two contiguous parts of a rock body to slide relatively to each other in a direction parallel to their plane of contact.

  

  

Silica

A mineral occurring in quartz similar to an opal.


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Stockwork

A mineral deposit consisting of a three-dimensional network of planar to irregular veinlets closely enough spaced that the whole mass can be mined.

  

  

Sulphides

One of the elements present in varying quantities in most coal as part of ash and is used in the steel making business.

  

  

Telluride

Ores of the precious metals (chiefly gold) containing tellurium.

  

  

Tonalite

Basically comprising feldspar and quartz.

  

  

Wollastonite

This mineral is found in contact-metamorphosed limestone and occurs in cleavable masses.

  

  

Zircon

If this rock is cut and polished it is an exceptionally brilliant gemstone.

 

For ease of reference, the following conversion factors are provided:


Metric Unit

U.S. Measure

U.S. Measure

Metric Unit

 

 

 

 

1 hectare

2.471 acres

1 acre

0.4047 hectares

1 metre

3.2881 feet

1 foot

0.3048 metres

1 kilometre

0.621 miles

1 mile

1.609 kilometres

1 gram

0.032 troy oz.

1 troy ounce

31.1 grams


Geological Report on the Prosperidad


Results of previous exploration on or near the Prosperidad has indicated there are some interesting areas for future exploration, hence the Company decided to acquire the mineral claim.


Disclaimer by Alfredo Jumpay, Professional Geologist


In the report prepared by Alfredo Jumpay, he stated that he visited the Prosperidad between September 28 to 30, 2010 subsequent to reviewing various geological reports both historical and current comprising geological surveys, assessment reports, maps and various other documents available. This allowed him to assess the potential of the Prosperidad as to whether future exploration work should be undertaken. From this information he was able to recommend a two Phase exploration program as shown above.


Description of the Prosperidad


Prosperidad consists of one unpatented mineral claim which is located 55 kilometers North East of the city of Butuan at UTM co-ordinates Latitude 08°34’48”N and Longitude 125°53’47”E. In order to obtain rights to the Prosperidad the Company entered into an agreement with Hernandez Ventures Inc. whereby a 100% interest in the Prosperidad was transferred to it and recorded with the Mineral Resources Department of the Ministry of Energy and Mineral Resources of the Government of the Philippines.


ACCESSIBILITY TO THE PROSPERIDAD, REGIONAL CLIMATE AND LANDSCAPE


Accessibility to the Prosperidad is by the Philippines only highway from Butuan and then reverting to an all weather gravel road to actually reach the Prosperidad. The country side was formed approximately 350 million years ago during a period called the Carbon period.   This period is representative of abundant vegetation which later turned into peat and hence coal and/or large shallow marches. The area near Butuan has large coal reserves which supply of coal mining industry in existence today.


With the Philippines being situated between 5 and 22 degrees North latitude means that the country has a tropical climate with high temperatures for most of the year and also has relatively high amounts of rain mainly during the months of October to December but there is nevertheless rain every month during the year.  This results in the vegetation being lush since the annual rainfall in approximately between 1 to 1.5 meters.  With the terrain being rather steep 60% of the rainfall tends to run downhill to the sea whereas 40 % seeps through to the island’s underground water aquifier.



17




Being located in a mining area, the city of Butuan does have experienced people to undertake exploration and development work and the city offers all the necessary services needed for an exploration and development:, including police, hospitals, groceries, fuel, helicopter services, hardware and other necessary items. There are many drilling companies and assay facilities in Butuan.


HISTORY


The Philippines is composed of limestone generally of which has been developed over the years from deposits of shell and sand.   The limestone was, over the centuries, pushed upwards, thereby making it possible to find various shells and sea fossils in the upper parts of the mountains. This occurrence is even happening today and is the cause that the Philippine Plate, on which much of the country of the Philippines is situated, is slowly diving under the Eurasian Plate of the mainland of Asia.


Philippines have mountains which are high but have little or no forest cover in many of the areas of these mountains. The peaks can be as high as 1,000 plus meters. The Philippines is a small island being only 35 kilometres wide and approximately 300 kilometres long.   With the high mountains in parts of the country and the excessive rain at times means the rainwater washes down the slopes into the sea which cause continual erosion of the land.


The Philippines has coal reserves in the central part of the island as well as both gold and copper reserves.   Many of these reserves are being mined.


There has been limited, if any, exploration work on the Prosperidad but it is ready for Phase I of our exploration program.   Phase II will commence once Phase I has properly been evaluated by our geologist and a recommendation is made to the Board of Directors.   


GEOLOGICAL SETTING


Regional Geology of the Area


The hilly terrains and the middle level plain contain crystalline hard rocks such as charnockites, granite gneiss, khondalites, leptynites, metamorphic gneisses with detached occurrences of crystalline limestone, iron ore, quartzo-feldspathic veins and basic intrusives such as dolerites and anorthosites.  Coastal zones contain sedimentary limestones, clay, laterites, heavy mineral sands and silica sands. The hill ranges are sporadically capped with laterites and bauxites of residual nature.  Gypsum and phosphatic nodules occur as sedimentary veins in rocks of the cretaceous age.  Gypsum of secondary replacement occurs in some of the areas adjoining the foot hills of the Western Ghats.  Lignite occurs as sedimentary beds of tertiary age.  The Black Granite and other hard rocks are amenable for high polish. These granites occur in most of the districts except the coastal area.


There is electrical power in the area and therefore any requirements during the exploration period will be met.   In the event that there is a power shortage the Company will be able to rent generators to meet its demand.   During Phase I and II there will be no requirements for electrical power since the exploration program will consist of surveying, mapping and sampling.


Stratigraphy


The principal bedded rocks for the area of Prosperidad (and for most of the Philippines for that matter) are Precambrian rocks which are exposed along a wide axial zone of a broad complex.


Gold, if present, which is in close proximity to the Prosperidad is generally concentrated within extrusive volcanic rocks in the walls of large volcanic caldera.


Intrusive


In general the volcanoes culminate with effluents of hydrothermal solutions that carry precious metals in the form of naked elements, oxides or sulphides.


These hydrothermal solutions intrude into the older rocks as quartz veins. These rocks may be broken due to mechanical and chemical weathering into sand size particles and carried by streams and channels. Gold occurs also in these sands as placers.



18




Recent exploration result for gold occurrence in Butuan, is highly encouraging. Gold belt in sheared gneissic rocks is found in three subparallel auriferous load zones where some blocks having 250 to 500 metre length and 1.5 to 2 metre width could be identified as most promising ones.


GEOLOGICAL STRUCTURE


Veins form in high-grade, dynamothermal metamorphic environment where metasedimentary belts are invaded by igneous rocks.


ROCK TYPES ASSOCIATED WITH THE PROSPERIDAD


Hosted by paragneisses, quartzites, clinopyroxenites, wollastonite-rich rocks, pegmatites. Other associated rocks are charnockites, granitic and intermediate intrusive rocks, quartz-mica schists, granulites, aplites, marbles, amphibolites, magnetite-graphite iron formations and anorthosites.


FOLDING AND FAULTING SETTINGS:


 Katazone (relatively deep, high-grade metamorphic environments associated with igneous activity; conditions that are common in the shield areas).


ENVIRONMENTAL DEPOSITS:


Veins form in high-grade, dynamothermal metamorphic environment where metasedimentary belts are invaded by igneous rocks.


DEPOSIT TYPES


Deposits are from a few millimeters to over a metre thick in places. Individual veins display a variety of forms, including saddle-, pod- or lens-shaped, tabular or irregular bodies; frequently forming anastomosing or stockwork patterns


Mineralization is located within a large fractured block created where prominent northwest-striking shears intersect the norths triking caldera fault zone. The major lodes cover an area of 2 km and are mostly within 400m of the surface. Lodes occur in three main structural settings:


(i) steeply dipping northweststriking shears;

(ii) flatdipping (1040) fractures (flatmakes); and

(iii) shatter blocks between shears.


Most of the gold occurs in tellurides and there are also significant quantities of gold in pyrite.


MINERALIZATION

No mineralization has been reported for the area of the Prosperidad but structures and shear zones affiliated with mineralization on adjacent properties pass through it.


EXPLORATION


Previous exploration work has not to Mr. Jumpay knowledge included any attempt to drill the structure on Prosperidad. Records indicate that no detailed exploration has been completed on the property.


PROPERTY GEOLOGY


To the east of the property is intrusives consisting of rocks such as tonalite, monzonite, and gabbro while the property itself is underlain by sediments and volcanics. The intrusives also consist of a large mass of granodiorite towards the western most point of the property.


The area consists of interlayered chert, argillite and massive andesitic to basaltic volcanics. The volcanics are hornfelsed, commonly contain minor pyrite, ­pyrrhotite.



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DRILLING SUMMARY


No drilling is reported on the Prosperidad.


There are no reserves on the Prosperidad and our Phases I and II are ones of exploration.


We required an exploration license to undertake Phase I of our exploration program. The license was obtained by our geologist who did the work and the fee was $560 which was included in the total amount for Phase I. When, and if, a drilling program is recommended we will have to obtain a drilling license but at this time we cannot determine the amount required since it will depend in part as to the number of feet we will be drilling. This will only occur if our geologist recommends we continue to explore the Prosperidad and determine if there is a reserve thereon.


SAMPLING METHOD; SAMPLE PREPARATION; DATA VERIFICATION


All the exploration conducted will be in according to generally accepted exploration procedures that are consistent with generally accepted exploration practices. No opinion as to the number of soil and other samples we will take during our initial exploration program. This will be left to the discretion of our geologist.


No other procedures of quality control were employed and no opinion on their lack is expressed.


INTERPRETATIONS AND CONCLUSIONS


The locale of the Prosperidad is underlain by the units of the Precambrian rocks that are found at those mineral occurrence sites.


These rocks consisting of cherts and argillites (sediments) and andesitic to basaltic volcanic have been intruded by granodiorite. Structures and mineralization probably related to this intrusion are found throughout the region and occur on the claim. They are associated with all the major mineral occurrences and deposits in the area.


Mineralization found on the claim is consistent with that found associated with zones of extensive mineralization. Past work however has been limited and sporadic and has not tested the potential of the Prosperidad.


Potential for significant amounts of mineralization to be found exists on the Prosperidad and it merits intensive exploration.


RECOMMENDATIONS


Alfred Jumpay has recommended a two-stage exploration program as indicated below.


The program would consist of air photo interpretation of the structures, geological mapping, both regionally and detailed on the area of the main showings, geophysical survey using both magnetic and electromagnetic instrumentation in detail over the area of the showings and in a regional reconnaissance survey and geochemical soil sample surveying regionally to identify other areas on the Prosperidad that are mineralized. The effort of this exploration work is to define and enable interpretation of a follow-up diamond drill program, so that the known mineralization and the whole property can be thoroughly evaluated with the most up to date exploration techniques.


Budget


The proposed budget for the recommended work is US$44,575 (Php 1,916,000) is as follows:


Phase I


 

 

 

Program (Paid)

U.S. Dollars

Philippine Pesos

 

 

 

Geological mapping

8,139

350,000

Geological surveying

6,741

290,000

 

 

 

Total of Phase I

14,880

640,000




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Phase II


 

 

 

Geochemical surveying and surface sampling

(including sample collection and assaying)

29,695

1,276,000

 

 

 

Total of Phases I and II

44,575

1,916,000


For a review of exploration work undertaken on Phase I refer to pages 22 to 32 inclusive wherein Ricardo Ramos describes the work performed.


Phase II will follow up on a number of significant geological discrepancies that were shown during the geological mapping and surveying done under Phase I.  Mr. Ramos states that these discrepancies justify field follow-up.   In these areas of discrepancies additional soil and rock samples will be taken for assaying in order to determine the mineralization.


With Phase I completed it is estimated that Phase II will take approximately three to four weeks to complete with a minimum of two workers performing the exploration procedures.  We will commence Phase II, when the funds are available, since management has reviewed the results of Phase I with Mr. Ramos and will follow up on the discrepancies shown during the mapping and surveying done under Phase I.


The above conversion rate has been done at PHP 43.2 to US $1.00.


Exploration Program under Phase I

The Company engaged the services of Ricardo Ramos, Professional Geologist, of Quezon City, Philippines who undertook Phase I of the Company’s exploration program. Our previous geologist, Alfred Jumpay was not available at the time. Mr. Romas has worked as a geologist for the past 18 years and is a member of trhe Geological Society of the Philippines.   He visited the Prosperidad property from October 29 to 31, 2011.   He issued his report entitled “Report on Geological Mapping of the Prosperidad Gold Claim” on December 15, 2011. The following has been taken from his report.


Introduction

Locally, rocks on and near the property is rich in mineral resources. The high elevation forest of the district have concentrations of heavy minerals like Ilmenite, Rutile, and Zircon which offer scope of exploitation for industrial purpose. These rocks have been tilted to near vertical during widespread normal faulting and basin development related to extensional regional detachment faulting.  A series of trenches and adits in the central property area provide good exposure to the veins.

 

An integrated geological mapping approach, in which existing geological map data are re-compiled on the basis of the interpretation of aerial photographs, satellite imagery and airborne geophysical data before and during progressing fieldwork provides solutions that meet this requirement, since it facilitates the time-efficient production of consistent up-to-date digital geological map databases covering large regions that can be easily upgraded in future mapping campaigns.


Working Methodology


A seamless coverage of 1:250 000 scale provisional geological maps was prepared during the preliminary phase of the regional geological mapping of the LOT 2 and LOT 3 areas and their extensions in Prosperidad with the objective to produce the most up-to-date geological map coverage over the project areas before fieldwork commenced. The preparatory compilation work comprised the recovery of old airborne geophysical surveys, digitizing of previously published maps, geometric co-registration of the spatial data layers, various image processing and enhancement techniques and knowledge-driven geological image interpretation. In addition to describing the methodology, we present examples of image processing and interpretation results to illustrate how significant geological information was extracted from the multi-source image data sets. The data processing and interpretation tasks were conducted in phase with fieldwork progress



21




Property Description and Location


Prosperidad Gold Claim has no known environmental concerns or parks designated for any area contained within the claims. The property is surrounded by trees and mostly covered by thin tropical forest. The geologist identified three quartz filled fractures systems within the sedimentary rocks transecting the central area of property (referred to as the north, central and south veins). The veins are generally one metre in width, parallel to the local schistosity, and can be traced for up to 200 meters on surface.  In some areas, the veins have an estimated width of up to 3 meters. A series of trenches and adits in the central property area provide good exposure to the veins. The main zone consists of an epithermal quartz filled fault zone found within the local limestone and conglomerate country rocks.  Hematite and carbonate alteration, and chrysocolla mineralization were commonly noted at each sample location within the quartz gangue and the immediate wall rocks. Frequently, quartz veins had a vesicular texture.  The south zone is located approximately 340 meters south of the main zone. This zone has similar mineralogy and orientation to the main zone. The approximate width of the south zone varied from 0.5 to 2 meters (1.5 to 6.5 feet).   The north zone is located 175 meters north of the main zone. Only one vein exposure was identified here. The mineralogy of the north zone and orientation is similar to that of the main and south zones.


Geometric Transformation


All LANDSAT ETM scenes provided to the project were geo referenced on UTM projection, zone.  The required datum transformations became available through a technical report on the adjustment of the old geodetic network of Agusan Del sur, conducted for an urban-environmental management project. Thirty-five LANDSAT ETM scenes covering the LOT 2 and LOT 3 areas and their extensions were re-sampled to fit the MOZNET datum using bicubic re-sampling. The re-registration of the LANDSAT scenes to the MOZNET datum facilitated the registration of GPS stations collected during fieldwork without having to apply datum transformations to the GPS measurements afterwards. The ASTER 1A and 1B scenes are by standard registered on UTM projection with WGS84 datum (equivalent to the MOZNET datum) to a nominal accuracy of 100 meters. They were interactively registered to 1 to 2 pixel accuracy by shifting the scenes until they fitted the GPS track logs within a tolerance of one to two pixels (15–30 meters).



[f10k113013004.gif]



22




Several enhanced products were derived from the LANDSAT 7 ETM scenes to support geological image interpretation. The enhancement methods that were employed included: linear and interactive contrast stretching of single bands and color composite images and principal component analysis. In generating color composite images from the twenty possible combinations of the six 30-metre bands, the discrimination of rocks (or related soil cover) was considered an important factor in selecting an optimal triplet for discrimination of litho logical units. Another less important factor for consideration was the possibility to detect litho logical variations indirectly expressed as broad-scale geobotanic relationships in natural and semi-natural vegetation communities. The band combinations RGB (red, green, blue) 731 and RGB 732 provided attractive color composites, particularly for LANDSAT scenes acquired over relatively dry areas or during dry periods. Both band triplets exploit the strong and broad absorption features of carbonate and hydroxyl-bearing minerals between about 2.2–2.4 microns, a range overlapping with the wavelength position of ETM band 7. The 731 and 732 band combinations also provide information on the spectral slope between 0.4 and 0.7 microns (the visible range comprising band 1, band 2 and band 3), which is diagnostic for the presence of iron-oxide minerals. Good exposures of carbonate and mica rich rocks typically appear in shades of blue on such cooler composites, whereas rocks with red alteration, due to high contents of iron-oxides, appear in yellow to reddish tones. The use of these diagnostic spectral properties of rocks and derived soil material is obviously hampered in areas with moderate to dense vegetation cover. In these areas, however, subtle geobotanic relationships between natural vegetation communities and their substrate may be exploited by using band combinations that include the prominent and steep slope between the visible red and near infra-red range of the green vegetation spectrum. Hence, RGB 473 was used as an additional combination to maximize spectral discrimination of litho logical units in areas with higher green biomass densities. Principal component analysis was used to exploit the sun illumination of the LANDSAT scenes. PCA generates a new orthogonal set of bands along the lines of maximum variance among the original bands. This effectively minimizes redundant information, particularly because the original bands tend to be highly correlated. The new bands, called principal components, are ordered according to the percentage of variance they explain. The first principal component contains the information that is common among the multispectral bands, which is usually strongly related to the scene illumination. As a result, PC1 provides optimal enhancement of relief features, which may be exploited for outlining litho logical units on their variable geomorphologic expression. PC1 images, for example, appeared to enhance the differences between granites and intrusive rocks of mafic composition and the differences among different felsic suites themselves, as well as the more subtle small-scale linear patterns reflecting differences in the degree of penetrative foliation bedding fabric in various plutonic, metamorphic and sedimentary rock units.


Topography


The gamma-ray spectrometry channels were enhanced and displayed as ternary radioelement maps in RGB color space using linear contrast enhancement with cut-off percentages of 2%. In areas with a very high or low gamma-ray response, stretching intervals were interactively adjusted. The total field and first vertical magnetic derivative grids were enhanced in color-shaded relief images, using an illumination inclination angle and azimuth of respectively 25 and 300 degrees for the relief shading and a rainbow hue spectrum. Diagram below presents color enhancements of the total magnetic intensity and ternary radioelement grids from the merged geophysical surveys. During the course of the compilation phase of the LOT 3 project, digital elevation data with a spatial resolution of 90 meters.   The data were relief-shaded from three different directions using an inclination angle of 30 degrees above the horizon and three declination angles of 270, 315 and 360 degrees. The individual shaded-relief enhancements were combined in a color composite image, such that topographic features were rendered in different colors. Diagram B presents a sub scene of the color shaded relief image that was enhanced interactively during image interpretation through linear contrast stretching to adapt the enhancement to the local prevailing topographic relief characteristics. The resultant relief-shaded color composite image appeared to be particularly useful in tracing the boundaries between Quaternary units. Twenty-eight LANDSAT TM scenes were combined in four image map mosaics that cover the LOT 2 and LOT 3 project areas. The band combination 7-3-1 in RGB was selected, as this provides optimal spectral information for geological interpretation. The mosaic was compiled in several steps, from small to large areas, to keep the color balance in hand and to avoid boundary effects. Histogram matching and/or feathering in the overlap was sometimes needed.




23




[f10k113013006.gif]


Field Work Planning


Areas of high outcrop density and secondary roads were interpreted from the 15-metre TM band 8 and color composite images of bands 7, 3 and 1 for the entire project area. Most areas of good bedrock exposure can be recognized as positive features in the topographic relief with a rough and 'dotty' image texture. It was difficult to identify the primary and secondary roads, such that only segments of many could be identified. Some roads or paths do not appear to be connected to the paved road network and instead appear to originate from minor settlements in remote areas. Additional roads were identified from color composites of geometrically corrected ASTER scenes, now available. A digital interpretation guide map was prepared to document areas considered of specific interest for follow-up work before the start of the first field season. The interpretation guide shows areas of specific interest as numbered polygons on the interpretation. The polygons are linked to an attribute table with a memo field for details on the reasoning followed during the interpretation, including preliminary geological ideas and hypothesis to be verified during fieldwork. The targets overlap with areas defined in the fieldwork activity plan, previously submitted. The interpretation guide also contains a number of traverse suggestions with concise description of follow-up targets along the traverse Lot 2 and Lot 3.


Rock Sampling


Due to magnetic susceptibility contrasts between the met basalt and met sedimentary units within them. The airborne radioelement concentrations of the Archaean units are generally low with the exception of some granitoid units. The greenstone belts generally display dark green hues and smooth image texture on the LANDSAT ETM color composite images and form linear positive features that outline foliation form lines within the greenstone belts. Met basalts have the darkest tone while schist and psammite are slightly lighter in tone (B,D). On a LANDSAT ETM731 color composite image, the granitoids and gneisses exhibit light pink, white-yellow tones and display moderate to coarse image textures. Isolated Achaean granite-gneiss domes forming circular basement inliers have been outlined on the magnetic data (A) and LANDSAT ETM color composite images (C). Their interpretation is supported by their inferred lower structural position and the similar hue and texture of the units on the LANDSAT color composite images when compared with granitoid and gneiss units on 1:250 000 scale geological maps of the Prosperidad area towards the west.

[f10k113013008.gif]



24




Sampling preparation, Analysis and Security


Rock and Soil samples were collected under the direct supervision geologist using plastic bags and sealed in the field by the supervisor with security tape.


Samples were transported under supervision of the geologist to the airport at the City of Butuan where they were dispatched by airfreight to the laboratory.


Sample Preparation and laboratory in Manila states that the samples showed no signs of any tampering whatsoever.


The following sample preparation procedures were followed by the laboratory:


- The entire sample was oven dried; sample size was approx 20-25 kg.

- The sample was passed through a jaw crusher if necessary.

- The entire sample was pulverized in LM3 ring mills to a specification of at least 85% passing 753.

- The entire sample was mixed and homogenized prior to sampling for assay.

- Assays for gold were carried out on all samples with gold determined by fire assay on 30g sample with AAS finish.

- Cu, Pb, Zn, Ag - by AAS following conc. HCl and HCl/HNO3/HClO4 leach in latter stages on 1g sample.

- 1 in 34 samples were subject to repeat assay.


[f10k113013010.gif]




25




Analytical Results


SAMPLE NO

Cu,ppm

Pb,ppm

Zn,ppm

Au,ppm

Ag,ppm


170070

70

15

50

0.04

0.5

169070

61

<5

92

0.03

<0.5

168070

56

5

71

0.01

<0.5

167070

35

<5

22

0.02

<0.5

170071

115

5

99

0.02

<0.5

169071

102

<5

72

<.01

<0.5

168071

72

<5

65

<.01

0.5

167071

85

<5

90

0.01

<0.5

166071

118

5

112

0.02

<0.5

165071

128

<5

65

0.01

<0.5

164071

90

11

98

0.01

<0.5

168072

80

10

60

0.04

0.5

167072

101

5

82

0.02

<0.5

166072

65

<5

38

0.01

<0.5

165072

76

5

23

0.02

<0.5

164072

112

20

81

0.04

<0.5

168073

100

10

78

0.01

0.5

167073

79

5

65

<.01

0.5

168074

85

<5

12

0.01

0.5

167074

115

12

104

0.03

<0.5

169075

140

<5

56

0.01

<0.5

168075

94

11

89

0.01

<0.5

167075

138

<5

56

0.01

<0.5

166075

90

11

98

0.01

<0.5

169076

102

10

80

0.04

0.5

168076

97

5

78

0.02

<0.5

167076

65

<5

38

0.01

<0.5

166076

76

5

23

0.02

<0.5

168077

112

30

81

0.04

<0.5

167077

70

40

50

0.04

0.5

166077

96

5

92

0.03

<0.5

168078

87

<5

71

0.01

<0.5

167078

55

<5

32

0.02

<0.5

167079

110

5

100

0.02

<0.5


Conclusion and Recommendation


The setting of the Prosperidad Gold Mine is triggered by the units of the Precambrian rocks that are found at those mineral sites. Grass-root exploration has been conducted and surveyed. Mineralization found on the claim is consistent with that found associated with zones of extensive mineralization. Structures and mineralization probably related to this intrusion are found throughout the region and occur on the claim. They are associated with all the major mineral occurrences and deposits in the area. Potential for significant amounts of mineralization to be found exists on the property and it merits intensive exploration.  We have presented the data processing and integration methodology and a summary of geological image interpretation results that supported the regional geological field mapping component of LOT 2, LOT 3 and their extensions. We have shown that the integrated enhancement and digital interpretation of airborne geophysical, optical remote sensing and SRTM data lend themselves to extract a large number of litho logical and structural patterns.



26




These patterns appeared to be regionally consistent and supported geological map compilation in combination with insights obtained from geological field mapping. Integrated image enhancement, in which image data of higher spatial resolution substituted the intensity of the ternary radioelement color composite, proved to be very effective for geological mapping. It was by far the most useful enhancement technique for outlining bedrock units in the Precambrian basement and helped in analyzing relationships between the Phanerozoic sedimentary cover, landscape morphology and topography. A systematic comparison of the newly published geological map coverage and the image database will highlight a number of geologically significant discrepancies that justify field follow- ups in a variety of terrains and for a variety of purposes. However, based on field observations, laboratory results, and reviews of available geological and historical data, further exploration work is warranted at the property.


Gold Mineralization on the Prosperidad


Until we complete our two Phase exploration program we will not know if there is any gold on the Prosperidad and even when we have completed these two programs we might not have any indication as to whether there is gold on our mineral claim.  If we do not find any gold on the Prosperidad then we will have to abandon the claim which might lead us to ceasing operations.


Other Mineralization on the Prosperidad


Once we complete Phase II, we will have a better understanding of the mineralization on the Prosperidad.


Effect of Existing or Probable Governmental Regulation in the Philippines


Government and environmental regulations exist in the Philippines and our exploration plans are subject to these various federal, state and local laws. The rules are dynamic and are generally becoming more demanding as we approach the mining stage, which in our case might never happen.  Our plans aim to safeguard public and environmental health. We are currently in compliance with all material mining, health, safety, and environmental statutes of the Republic of the Philippines. Requirements for health, safety and environmental are not onerous on us during the exploration stage since basically we will not be disturbing any fish life in the small streams located on the Prosperidad, up-rooting trees and shrubs or causing a change in the land scrape. There is no bonding requirement for us during the exploration stage.  Nevertheless, if we do disburse the landscape the Government will require us to put the area back into the same


If, and when, if ever, we are fortunate to consider developing a mine on the Prosperidad, the following requirement will have to be adhered to.


Mine safety and environment protection will have to comply with the requirements of safety and sanitary as set forth by the Secretary of Mines for the Philippines under Republic Act No. 7305.  No person under 16 years of age shall be employed in any phase of the mining operation and no person under 18 years of age will be allowed below ground.   If more than 50 workers are employed there has to be at least one licensed mining engineer with at least 5 years of experience in mining operations.


The regional director shall have exclusive jurisdiction over the safety inspection of all installations, surface and underground.


Every mining company will undertake an environmental protection and enhancement program covering the period of the mineral agreement or permit.  Such environmental program shall be incorporated in the work program which the mining company has submitted as accompanying documents in obtaining their mining permit.  This program shall set forth the steps for rehabilitation, regeneration, revegetation and reforestation as well as what will be done to any and all tailing ponds.   None of the above impacts our Company during its exploration periods.


The cost and effect of compliance with environmental laws at this time is undeterminable by us.


The main agency that governs the exploration of minerals in the Philippines is the Mineral Resources Department of the Ministry of Energy and Mineral Resources.  The Ministry of Energy and Mineral Resources manages the development of public conservation lands and implements policies and programs respecting their development while protecting the environment.


We will be subject to ensuring, during our exploration programs. that there are no environmental impacts which affect streams on the Prosperidad which could endanger the fish and other small wildlife.   We are able to clear away small brush but any large trees are subject to the Department of Forestry and permission to cut must be obtained.  At



27



the present time both Phase I and II should have no environmental impact on our claim. There is no bonding requirements for us but the geologist used in our exploration program must be fully bonded and approved by the Department of Environmental and Natural Resources.


When we commenced exploration on the Prosperidad, the Department of Mines in the Philippine required us to complete and submit a Form MGB 50-1 along with a fee of $560.  This is a licensing fee and was paid in full prior to the commencement of Phase I.   


A new license can take up to 30 days to process and the renewal of an existing license takes up to 14 days to process.   There are no bonding requirements for the Company but the mining company used for exploration purposes must be fully bonded and approved by the Department of Environmental and Natural Resources (DENR) and Mines and Geoscience.   The DERN also has the right to inspect the Company’s property on demand to ensure all criteria are being met.


Changes to current federal, state and local laws in the jurisdiction in which we operate may require additional costs and financing.  These changes are unpredictable and the additional requirements may render certain exploration activities uneconomical and lead to business failure.


The Company’s Main Product


At present we do not have a main product since we have not defined an ore reserve on the Prosperidad and hence are unable to sell any minerals. We are exploring for gold which if found will be our main product.


Plant and Equipment


With the Philippines being a hub for mining activities in Asia, ultra modern equipment is used by the various mining companies. The high safety standards enforce the level of good equipment being available with the most modern and up to date mining equipment being at our disposal.


There is no plant or equipment on the Prosperidad at the present time and it is expect that during Phase II there will be no need for either plant or equipment.


Additional Mineral Claims


Our Company has only one mineral claim, being the Prosperidad as more fully described above. It has no intention at the present time to acquire an additional mineral claim. The Company wishes to focus its attention on the exploration program on the Prosperidad.


Employees


As of November 30, 2013, our Company did not have any employees either part time or full time other than its directors and officers.  In exploring the Prosperidad it will use the services of qualified geologists who will only be retained during the exploration program.   Once the program is over the Company will evaluate the need to hire additional employees if it is warranted.


Our previous geologist, Alfredo Jumpay, was not engaged either full time or part time by the Company since the date of his report-- October 2010.   No agreement was made with him, either verbally or in writing, indicating he was employed with our Company. When Phase I was undertaken, Mr. Jumpay was unable to undertake the work due to other commitments and the Company hired Ricardo Ramos to do the work under Phase I and prepare a report on his findings.   No agreement in writing was entered into with Mr. Ramos to undertake the work on Phase I.  He merely agreed to do the work and prepare the geological report on his findings.   Once his report was completed Mr. Ramos ceased his association with our Company until such time as we might require his services again.


Our executive officers do not work full time for our Company but during the present period are devoting approximately 30 hours a month for John Ngitew and 20 hours a month for Grace Parinas on the affairs of our Company.  Our President was instrumental in incorporating the Company, having a mineral property identified to our Company, seeking a geologist to visit the claim and subsequently prepare a geological report on the Prosperidad and recommend a work program in addition to identifying professional help such as an attorney, auditors and transfer agent.



28




We are not a party to any employment contracts or collective bargaining agreements.   The Philippines area has a relatively large pool of people experienced in exploration of mineral properties; being mainly geologist and mining consultants.  In addition, there is no lack of worker and consultants initially on a part time basis.


Risk Associated with the Prosperidad


Our Company is aware of certain risk associated with the Prosperidad as follows:


1.  We realize that any money spent on the Prosperidad might be lost money never to be recovered.   Very few mineral claims that are explored ever turn into actual mines which produce saleable minerals.


2.  We realize that even though we actual discover mineralization on the Prosperidad that it might not be of the tonnage nor grade to make it profitable to mine it.   Without the tonnage or grade there is no point in our Company trying to mine and sell the mineral on the claim. Another factor which must be borne in mind is that the world price for minerals fluctuates on a daily bases and hence even if the tonnage and grades are there the price per ounce might be too low to make it worthwhile for us to extract the minerals.


3.  Because we are small and have not undertaken sufficient exploration work on the Prosperidad we might find it extremely difficult to raise money for future exploration work.  If our directors wish to continue exploring they may have to contribute the funds to the Company themselves.


4.  We have never undertaken a survey of the Prosperidad to determine the exact boundaries of our claim.   If we are fortunate enough to discover an ore body of merit we might become involved in a legal dispute with another party as to our boundaries.   This will be expensive and time consuming to our Company and presently we do not have the funds to dispute a long-term court case.


5.  Mining has many risks attached to it which we are presently not insured against and may never be.   For example, the Prosperidad might be subject to cave-ins or moving rocks which will injure our workers and which might lead to court action and government intervention.   Without insurance any funds we have on hand would have to be directed to disputing any claim made against us.


ITEM 3. LEGAL PROCEEDINGS


There are no legal proceedings to which Lingas is a party or to which the Prosperidad Gold Claim is subject, nor to the best of management’s knowledge are any material legal proceedings contemplated.


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS


There has been no Annual General Meeting of Stockholders since Lingas’s date of inception.  Management has not set a date for an Annual General Meeting of Stockholders.



29




PART II


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


Only recently has Lingas’ common shares been quoted on the OTCBB.  Lingas has not paid any dividends on its common stock and it does not anticipate that it will pay dividends in the foreseeable future.  As at November 30, 2013, Lingas had 36 shareholders; two of these shareholders are officers and directors of Lingas.


Option Grants and Warrants outstanding since Inception.


No stock options have been granted since Lingas’ inception.


There are no outstanding warrants or conversion privileges for Lingas’ shares.


ITEM 6. SELECTED FINANCIAL INFORMATION


The following summary financial data was derived from our financial statements.  This information is only a summary and does not provide all the information contained in our financial statements and related notes thereto.  You should read the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and related noted included elsewhere in this Form 10-K.


Our historical results do not necessary indicate results expected for any future periods.


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


Forward Looking Statements


This Form 10-K contains "forward-looking statements" that involve risks and uncertainties. The use of words such as "anticipate", "expect", "intend", "plan", "believe", "seek" and "estimate", and variations of these words and similar expressions to identify such forward-looking statements. Our actual results are most likely to differ materially from those anticipated in these forward-looking statements for many reasons, including the risks faced by us described in the "Risk Factors" section and elsewhere in this Form 10-K. These forward-looking statements address, among others, such issues as:


·

the estimated financial information we are furnishing in this Form 10-K;

·

our future projected earning and cash flows;

·

the expansion of our business and its operations over the next few years;

·

Our future expectations of development projects.


These statements are based on assumptions and analyses made by us in light of our experience and our perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate under the circumstances. However, whether actual results and developments will meet our expectations and predictions depend on a number of risks and uncertainties, which could cause our actual results, performance and financial condition to differ materially from our expectation.


Consequently, these cautionary statements qualify all of the forward-looking statements made in this Form 10-K. We cannot assure you that the actual results or developments anticipated by us will be realized or, even if substantially realized, that they would have the expected effect on us or our business or operations.


Our Business


Our Company is classified as an exploration company and not a pre-exploration company since we have commenced exploration on the Prosperidad.  Other than undertaking Phase I of our exploration program we have no history in which an investor could evaluate us. We have not generated any revenue and the chances of generating any revenues during the next several years are slight. The Prosperidad is in the early stage of exploration and there is no assurance we will be able to find any mineralization on our claim that is worth extracting.   Unless we are able to derive some revenue from the Prosperidad we might have to abandon the claim and eventually cease to operate.



30




There is no assurance that a commercially viable mineral deposit or reserve exists at our mineral claim or may exist until sufficient and appropriate exploration is completed and a comprehensive evaluation of such work concludes economic and legal feasibility.   Such work could take many years of exploration and would require expenditure of a substantial amount of capital, capital which we do not currently have and may never be able to raise.


We do not have any ore body and have not generated any revenues from our operations.


To become profitable and competitive, we must invest into the exploration of our property before we start production of any minerals we may find. We must obtain equity or debt financing to provide the capital required to fully implement our phased exploration program.  We have no assurance that financing will be available to us on acceptable terms. If financing is not available on satisfactory terms, we will be unable to commence, continue, develop or expand our exploration activities. Even if available, equity financing could result in additional dilution to existing shareholders.


Our auditors have issued a going concern opinion. This means that our auditors believe there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our bills. This is because we have not generated any revenues and no revenues are anticipated until we begin removing and selling minerals. Accordingly, we must raise cash from sources other than the sale of minerals found on the Prosperidad Gold Claim.  Our only other source for cash at this time is investments by others in the Company.  We must raise cash to implement our planned exploration program and stay in business.


To meet our need for cash we must raise additional capital.  We will attempt to raise additional money through a private placement, public offering or through loans.  We have discussed this matter with our officers and directors.  At the present time, we have not made any arrangements to raise additional cash.  We require additional cash to continue operations.  Such operations could take many years of exploration and would require expenditure of very substantial amounts of money, money we do not presently have and may never be able to raise.   If we cannot raise it we will have to abandon our planned exploration activities and go out of business.


Our future financial success will be dependent on the success of the exploration work on the Prosperidad Gold Claim.   Such exploration may take years to complete and future cash flows, if any, are impossible to predict at this time.   The realization value from any mineralization which may be discovered by us is largely dependent on factors beyond our control such as the market value of metals produced, mining regulations in the Republic of Fiji and foreign exchange rates.


We have no plant or significant equipment to sell, nor are we going to buy any plant or significant equipment during the next twelve months. We will not buy any equipment until we have located a body of ore and we have determined it is economical to extract the ore from the land.


We may attempt to interest other companies to undertake exploration work on the Prosperidad Gold Claim through joint venture arrangement or even the sale of part of the Prosperidad Gold Claim.  Neither of these avenues has been pursued as of the date of this Form 10-K.


We do not intend to hire any employees at this time. All of the work on the Prosperidad Gold Claim will be conducted by unaffiliated independent contractors that we will hire.


 The independent contractors will be responsible for surveying, exploration, and excavation.  We may engage a geologist to assist in evaluating the information derived from the exploration and excavation including advising us on the economic feasibility of removing any mineralized material we may discover.


We have no full-time employees and our management devotes a small percentage of their time to the affairs of the Company.



31




PLAN OF OPERATIONS


Our financial commitments for the next twelve months consist of primarily related expenses of approximately $30,000 associated with the initiation of a mineral exploration program for a total estimate of expenses and cash requirements of $34,561. Including mineral exploration program, we will have to incur the following estimated expenses, including amounts owed to third party creditors less cash on hand, over the next twelve months:


Expenses

Amount

 

Description

 

 

 

 

Accounting

$4,200

 

Fees to the internal accountant for preparing the quarter and annual working papers for the financial statements to be reviewed and examined by the independent accountants.

Audit

9,500 

 

Review of the quarterly financial statements and examination of the annual financial statements and rendering an opinion thereon.

Mineral exploration program

29,695 

 

Mineral exploration program.

Filing fees

4,000 

 

Filing reports with the SEC for edgarizing and XBRL.

Office

1,000 

 

General office supplies.

Transfer agent’s fees

2,000 

 

Annual maintenance fee and preparation of share certificates and other documents periodically required by the Company.

Miscellaneous

1,000 

 

Miscellaneous expenses.

 

51,395 

 

 

Add: Account Payable

2,615 

 

Relates to accounts payable owed to third parties as at November 30, 2012 with no consideration to amounts owed to related parties.

Estimated cash requirements

before cash on hand

54,010 

 

 

Deduct: Cash on hand

(19,449)

 

As at November 30, 2013

Estimated cash needed

$34,561 

 

 


Our geologist, based on field observations, laboratory results, and reviews of available geological and historical data, recommends further exploration work is warranted on the Prosperidad.


RESULTS OF OPERATIONS


Working Capital


  

November 30,

November 30,

  

2013

$

2012

$

Current Assets

19,449

43,128

Current Liabilities

60,184

39,300

Working Capital (Deficit)

(40,735)

3,828


Cash Flows


 

Year ended

November 30,

2013

$

Year ended

November 30,

2012

$

Cash Flows used in Operating Activities

(41,176)

(19,406)

Cash Flows from Financing Activities

18,747

35,342

Net Increase (decrease) in Cash During Period

(22,429)

15,936




32




Operating Revenues


For the period from September 14, 2010 (date of inception) to November 30, 2013, the Company did not earn any operating revenues.  


Operating Expenses and Net Loss


During the year ended November 30, 2013, the Company incurred operating expenses of $44,563 compared to $20,928 for the year ended November 30, 2012.  The increase in operating expenses was attributed to additional costs incurred for day-to-day operations including professional fees and filing fees relating to required SEC filings.  


For the years ended November 30, 2013 and 2012, the Company had a loss per share of $nil.  


Liquidity and Capital Resources


As at November 30, 2013, the Company had cash and total assets of $19,449 compared with cash and total assets of $41,878 and $43,128 respectively as at November 30, 2012.  The decrease in cash and total assets were attributed to the use of available financing for operating costs and the repayment of amounts due to related parties, as the Company had minimal proceeds from financing activities during the period.  


During the year ended November 30, 2013, the Company approved an increase in the authorized share capital to 2,610,000,000 common shares and effected a 5.8-to-1 forward stock split of its issued and outstanding common shares.  The effect of the forward stock split increased the number of issued and outstanding common shares from 50,000,000 common shares to 290,000,009 common shares.  


Cash Flows from Operating Activities


During the year ended November 30, 2013, the Company used $41,176 of cash for operating activities compared with $19,406 during the year ended November 30, 2012.  The increase is attributed to the fact that the Company incurred more professional fees and out-of-pocket costs which were repaid by funds previously received by the Company.  


Cash Flows from Investing Activities


During the years ended November 30, 2013 and 2012, the Company did not have any investing activities.  


Cash Flows from Financing Activities


During the years ended November 30, 2013, the Company received $18,747 of cash for financing activities compared to $35, 342 received during the year ended November 30, 2012.  The Company received $26,904 from related parties and repaid $7,711 to related parties whereas in the prior year, the Company received $35,342 from related parties.    


Going Concern


We have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive acquisitions and activities. For these reasons, our auditors stated in their report on our audited financial statements that they have substantial doubt that we will be able to continue as a going concern without further financing. 


Future Financings


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


Off-Balance Sheet Arrangements


We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.



33




Critical Accounting Policies


Our financial statements and accompanying notes have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

 

We regularly evaluate the accounting policies and estimates that we use to prepare our financial statements. A complete summary of these policies is included in the notes to our financial statements. In general, management's estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.


Recently Issued Accounting Pronouncements


The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.


Corporate Organization and History Within Last Five years


The Company was incorporated under the laws of the State of Nevada on September 14, 2010 under the name Lingas Resources, Inc.  The Company does not have any subsidiaries, affiliated companies or joint venture partners.   We have not been involved in any bankruptcy, receivership or similar proceedings since inception nor have we been party to a reclassification, merger, consolidation, or purchase or sale of a significant amount of assets not in the ordinary course of business other than the Prosperidad Gold Claim.    We have plans to complete Phase I of our exploration program during the spring of 2013.  


On June 11, 2013, the Company entered into an Agreement and Plan of Merger with its wholly-owned subsidiary – Lingas Prime, Inc., a Nevada corporation (“Sub”), and on June 19, 2013 Sub was merged with and into the Company.  The only change to the Company’s constating documents was to change the name of the Company to “Lingas Ventures, Inc.”   


On June 19, 2013 the Company increased its authorized capital stock by 5.8 times to 2,610,000,000 shares of common stock and converted each outstanding share of outstanding common stock into 5.8 shares, except that fractional shares will be rounded up to the next whole share.


The foregoing actions did not require the approval of the stockholders of the Company.


All numbers of shares of common stock outstanding or issued in this Report are presented on a post split basis.


We have relied upon advances from our directors to assist in financing the Company’s operations since inception as well as the issuance of common shares to them in the amount of $50,000.  As of the November 30, 2013 our directors had advanced a total of $62,312 to the Company.


Trends

We are in the pre-explorations stage, have not generated any revenue and have no prospects of generating any revenue in the foreseeable future.  We are unaware of any known trends, events or  uncertainties that have had, or are reasonably likely to have, a material impact on our business or income, either in the long term of short term, other than as described in this section or in ‘Risk Factors’.


Internal and External Sources of Liquidity

There are no material internal or external sources of liquidity.


Known Trends, Events or Uncertainties having an Impact on Income

Since we are in the start-up stage and the Prosperidad Gold Claim has not produced any income, there is a chance that it never will.  We do not know of any trends, events or uncertainties that are reasonably expected to have a material impact on income in the future.



34




Dividend Policy


We have never declared or paid any cash dividends or distributions on our common stock.   We currently intend to retain our future earnings to support operations and to finance future growth and expansion and, therefore, do not anticipate paying any cash dividends on our common stock in the foreseeable future.


Compensation Plans


As at November 30, 2013 and up to the date of this Form 10-K, we have no shares of our common stock that are issued under compensation plans approved by our shareholders.


ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Not applicable



35




ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The financial statements attached to this Form 10-K for the year ended November 30, 2013 have been audited by our independent accountants, Sadler Gibb & Associates, LLC, and are attached hereto.




Lingas Ventures, Inc.

(A Pre-Exploration Stage Company)

Financial Statements

For the year ended November 30, 2013





Report of Independent Registered Public Accounting Firm

38


Balance Sheets

39


Statements of Operations

40


Statements of Stockholders’ Equity (Deficit)

41


Statements of Cash Flows

42


Notes to the Financial Statements

43



36





[f10k113013011.jpg]






Report of Independent Registered Public Accounting Firm


To the Board of Directors

Lingas Ventures, Inc.


We have audited the accompanying balance sheets of Lingas Ventures, Inc. (the Company) as of November 30, 2013 and 2012 and the related statements of operations, stockholders’ equity (deficit), and cash flows for the years then ended and for the cumulative period from September 14, 2010 (date of inception) through November 30, 2013.  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 audits to obtain reasonable assurance about whether the consolidated 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. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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 Lingas Ventures, Inc. as of November 30, 2013 and 2012, and the results of their operations and cash flows for the years then ended and for the cumulative period from September 14, 2010 (date of inception) through November 30, 2013, in conformity with U.S. generally accepted accounting principles.


The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has a working capital deficit of $40,735 and accumulated losses of $90,735 for the period from inception through November 30, 2013 which raises substantial doubt about its ability to continue as a going concern. Management’s plans concerning 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/ Sadler, Gibb & Associates, LLC

Sadler, Gibb & Associates, LLC

Salt Lake City, UT

March 13, 2014







37





Lingas Ventures, Inc.

(A Pre-Exploration Stage Company)

Balance Sheets



 

November 30,

2013

$

 November 30,

 2012

 $

 

 

 

ASSETS

 

 

 

 

 

Current Assets

 

 

Cash

19,449 

41,878 

Prepaid expenses

1,250 

 

 

 

Total Current Assets

19,449 

43,128 

 

 

 

LIABILITIES

 

 

 

 

 

Current Liabilities

 

 

 

 

 

Accounts payable and accrued liabilities

2,615 

3,892 

Due to related party

57,569 

35,408 

 

 

 

Total Current Liabilities

60,184 

39,300 

 

 

 

STOCKHOLDERS’ EQUITY (DEFICIT)

 

 

 

 

 

Common Stock

 

 

Authorized: 2,610,000,000 common shares with a par value of $0.001 per share

 

 

Issued and outstanding: 290,000,009 common shares

290,000 

290,000 

 

 

 

Additional paid-in capital

(240,000)

(240,000)

 

 

 

Accumulated deficit during the pre-exploration stage

(90,735)

(46,172)

 

 

 

Total Stockholders’ Equity (Deficit)

(40,735)

3,828 

 

 

 

Total Liabilities and Stockholders’ Equity (Deficit)

19,449 

43,128 

 

 

 



(The accompanying notes are an integral part of these financial statements)



38





Lingas Ventures, Inc.

(A Pre-Exploration Stage Company)

Statements of Operations


 

For the year ended November 30,

2013

$

For the year ended November 30,

2012

$

Accumulated from September 14, 2010 (Date of Inception) to November 30,

2013

$

 




Revenues

 

 

 

 

Operating Expenses

 

 

 

 

 

 

 

General and administrative

44,563 

20,928 

68,355 

Mineral property costs

17,380 

Impairment loss on mineral property

5,000 

 

 

 

 

Net Loss

(44,563)

(20,928)

(90,735)


Net Earnings per Share – Basic and Diluted        

(0.00)

(0.00)

 


Weighted Average Shares Outstanding – Basic and Diluted             

290,000,009 

290,000,009 

 

 

 

 

 




(The accompanying notes are an integral part of these financial statements)




39





Lingas Ventures, Inc.

(A Pre-Exploration Stage Company)

Statements of Stockholders’ Equity (Deficit)



 

 

 

 

 

 

 

 

 

Common Stock

 

Additional Paid-

 


Accumulated

 

 

 

Shares

 

Par Value

 

In Capital

 

Deficit

 

Total

 

#

 

$

 

$

 

$

 

$

 

 

 

 

 

 

 

 

 

 

Balance – September 14, 2010 (Date of Inception)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of shares for cash

 290,000,009

 

 290,000

 

 (240,000)

 

 

 50,000 

 

 

 

 

 

 

 

 

 

 

Net loss for the period

 

 

 

 (6,014)

 

 (6,014)

 

 

 

 

 

 

 

 

 

 

Balance – November 30, 2010

 290,000,009

 

 290,000

 

 (240,000)

 

 (6,014)

 

 43,986 

 

 

 

 

 

 

 

 

 

 

Net loss for the year

 

 

 

 (19,230)

 

 (19,230)

 

 

 

 

 

 

 

 

 

 

Balance – November 30, 2011

 290,000,009

 

 290,000

 

 (240,000)

 

 (25,244)

 

 24,756 

 

 

 

 

 

 

 

 

 

 

Net loss for the year

 

 

 

 (20,928)

 

 (20,928)

 

 

 

 

 

 

 

 

 

 

Balance – November 30, 2012

 290,000,009

 

 290,000

 

 (240,000)

 

 (46,172)

 

 3,828 

 

 

 

 

 

 

 

 

 

 

Net loss for the year

 

 

 

 (44,563)

 

 (44,563)

 

 

 

 

 

 

 

 

 

 

Balance – November 30, 2013

 290,000,009

 

 290,000

 

 (240,000)

 

 (90,735)

 

 (40,735)




(The accompanying notes are an integral part of these financial statements)




40





Lingas Ventures, Inc.

(A Pre-Exploration Stage Company)

Statements of Cash Flows


 

For the year ended November 30,

2013

$

For year ended November 30,

2012

$

Accumulated from September 14, 2010 (Date of Inception) to November 30,

2013

$

 

 

 

 

Operating Activities

 

 

 

 

 

 

 

Net loss

(44,563)

(20,928)

(90,735)

 

 

 

 

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

 

 

 

 

 

 

 

Impairment loss on mineral property

5,000 

Expense paid by related party

3,414 

 

3,414 

 

 

 

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

Prepaid expenses

1,250 

(1,250)

Accounts payable and accrued liabilities

(1,277)

2,772 

2,615 

 

 

 

 

Net Cash Used In Operating Activities

(41,176)

(19,406)

(79,706)

 

 

 

 

Investing Activities

 

 

 

 

 

 

 

Acquisition of mineral property

(5,000)

 

 

 

 

Net Cash Used In Investing Activities

(5,000)

 

 

 

 

Financing Activities

 

 

 

 

 

 

 

Proceeds from related party

26,904 

35,342 

62,312 

Repayments to related party

(7,711)

(7,711)

Proceeds from issuance of common shares

50,000 

 

 

 

 

Net Cash Provided by Financing Activities

18,747 

35,342 

104,155 

 

 

 

 

Increase (decrease) in Cash

(22,429)

15,936 

19,449 

 

 

 

 

Cash – Beginning of Period

41,878 

25,942 

 

 

 

 

Cash – End of Period

19,449 

41,878 

19,449 

 

 

 

 

 

 

 

 

Supplemental Disclosures

 

 

 

 

 

 

 

Interest paid

Income tax paid

 

 

 

 

 

 

 

 


(The accompanying notes are an integral part of these financial statements)



41





1.

Nature of Operations and Continuance of Business


Lingas Ventures Inc. (the “Company”) was incorporated in the state of Nevada on September 14, 2010. The Company is a development stage company, as defined by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 915, Development Stage Entities, and is a mineral exploration company with the purpose of acquiring and developing mineral properties.


Going Concern

These financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities in the normal course of business. As of November 30, 2013, the Company has not recognized any revenue, has a working capital deficit of $40,735, and has an accumulated deficit of $90,735. The continuation of the Company as a going concern is dependent upon the continued financial support from its management, and its ability to identify future investment opportunities and obtain the necessary debt or equity financing, and generating profitable operations from the Company’s future operations. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern.  These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.  


2.

Summary of Significant Accounting Policies


a)

Basis of Presentation


The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) and are expressed in U.S. dollars.  The Company’s fiscal year end is November 30.


b)

Use of Estimates


The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.


c)

Cash and cash equivalents


The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents.  


d)

Basic and Diluted Net Loss per Share


The Company computes net loss per share in accordance with ASC 260, Earnings per Share. ASC 260 which requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti dilutive. As of November 30, 2013 and 2012, the Company did not have any potentially dilutive shares.



42





e)

Financial Instruments


Pursuant to ASC 820, Fair Value Measurements and Disclosures, an entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value:


Level 1

Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.


Level 2

Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.


Level 3

Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.


The Company’s financial instruments consist principally of cash, accounts payable, accrued liabilities, and amounts due to related parties.  Pursuant to ASC 820, the fair value of our cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. We believe that the recorded values of all of our other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.


f)

Mineral claim acquisition and exploration costs


The cost of acquiring mineral properties or claims is initially capitalized and then tested for recoverability whenever events or changes in circumstances indicate that its carrying amount may not be recoverable. Mineral exploration costs are expensed as incurred.


g)

Comprehensive Income


ASC 220, Comprehensive Income, establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at November 30, 2013 and 2012, the Company has no items that represent a comprehensive loss and, therefore, has not included a schedule of comprehensive loss in the financial statements.


h)

Impairment of Long-Lived Assets


The Company evaluates the recoverability of long-lived assets and the related estimated remaining lives at each balance sheet date.  The Company records an impairment or change in useful life whenever events or changes in circumstances indicate that the carrying amount may not be recoverable or the useful life has changed.  



43






i)

Foreign Currency Translation


The Company’s functional and reporting currency is the United States dollar. Monetary assets and liabilities denominated in foreign currencies are translated in accordance with ASC 830 Foreign Currency Translation Matters, using the exchange rate prevailing at the balance sheet date. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of income. The Company has not, to the date of these financials statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.


j)

Recent Accounting Pronouncements


The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.



3.

Related Party Transactions


During the year ended November 30, 2013, the Company received cash advances of $26,904 from the President and Director of the Company and repaid $7,711 to the President and Director of the Company. The President also paid $3,414 in expenses on behalf of the Company. During the year ended November 30, 2012, the Company received cash advances of $35,342 from the President and Director of the Company. At November 30, 2013, the Company owed $57,569 (2012 - $35,408) to the President and Director of the Company.  The amounts owing are unsecured, non-interest bearing, and due on demand.  


4.

Common Stock


On June 19, 2013, the Company authorized an increase in its authorized share capital to 2,610,000,000 common shares and a forward stock split of its issued and outstanding common shares at a rate of 5.8 new common shares for every one common share.  The effects of the forward stock split increased the number of issued and outstanding common shares from 50,000,000 common shares to 290,000,009 common shares and has been applied on a retroactive basis.  


5.   Income Taxes

The income tax benefit differs from the amount computed by applying the US federal income tax rate of 34% to net loss before income taxes for the years ended November 30, 2013 and 2012 as a result of the following:


 

 

2013

$

2012

$

 

 

 

 

Net loss before taxes

 

(44,563)

(20,928)

Statutory rate

 

34%

34%

 

 

 

 

Expected tax recovery

 

(15,151)

(7,116)

Change in valuation allowance

 

15,151

7,116

 

 

 

 

Income tax provision

 




44






The significant components of deferred income tax assets and liabilities as at November 30, 2013 and 2012, after applying enacted corporate income tax rates, are as follows:


 

 

2013

$

2012

$

 

 

 

 

Net operating losses carried forward

 

30,850

15,699

Valuation allowance

 

(30,850)

(15,699)

 

 

 

 

Net deferred tax asset

 


The Company has incurred operating losses of $90,735 which, if unutilized, will expire beginning in 2030. Future tax benefits, which may arise as a result of these losses, have not been recognized in these financial statements, and have been offset by a valuation allowance.


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


None.


ITEM 9A. CONTROLS PROCEDURES


Under the supervision and with the participation of our management, including the Principal Executive Officer, Mr. John C. Ngitew, and Principal Accounting Officer, Ms. Grace Parinas, we have evaluated the effectiveness of our disclosure controls and procedures as required by Exchange Act Rule 13a-15(b) as of November 30, 2013 (the “Evaluation Date”). Based on that evaluation, the Principal Executive Officer and Principal Accounting Officer have concluded that these disclosure controls and procedures were not effective as of the Evaluation Date as a result of the material weaknesses in internal control over financial reporting discussed below.


Disclosure controls and procedures are those controls and procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act are recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Principal Executive Officer and Principal Accounting Officer, to allow timely decisions regarding required disclosure.


Notwithstanding the assessment that our internal control over financial reporting was not effective and that there were material weaknesses as identified below, we believe that our financial statements contained in our Annual Report on Form 10-K for the fiscal year ended November 30, 2013 fairly present our financial condition, results of operations and cash flows in all material respects.


Management’s Report on Internal Control over Financial Reporting


Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. The Company's internal control over financial reporting is a process, under the supervision of the Chief Executive Officer and the Chief Financial Officer, designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company's financial statements for external purposes in accordance with United States Generally Accepted Accounting Principles (GAAP). Internal control over financial reporting includes those policies and procedures that:



45






-

 Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the Company's assets;


-

Provide reasonable assurance that transactions are recorded as necessary to permit preparation of the financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and the Board of Directors; and


-

Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company's assets that could have a material effect on the financial statements.


Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.


The Company's management conducted an assessment of the effectiveness of the Company's internal control over financial reporting as of November 30, 2013, based on criteria established in Internal Control –Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). As a result of this assessment, management identified a material weakness in internal control over financial reporting.


A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company's annual or interim financial statements will not be prevented or detected on a timely basis.


The material weakness identified is described below.


1.  Certain entity level controls establishing a “tone at the top” were considered material weaknesses.  As of November 30, 2013, the Company did not have a separate audit committee or a policy on fraud.  A whistleblower policy is not necessary given the small size of the organization.


2.  Due to the significant number and magnitude of out-of-period adjustments identified during the year- end closing process, management has concluded that the controls over the period-end financial reporting process were not operating effectively. A material weakness in the period-end financial reporting process could result in us not being able to meet our regulatory filing deadlines and, if not remedied, has the potential to cause a material misstatement or to miss a filing deadline in the future. Management override of existing controls is possible given the small size of the organization and lack of personnel.


3.  There is no system in place to review and monitor internal control over financial reporting. The Company maintains an insufficient complement of personnel to carry out ongoing monitoring responsibilities and ensure effective internal control over financial reporting.


As a result of the material weakness in internal control over financial reporting described above, the Company's management has concluded that, as of November 30, 2013, the Company's internal control over financial reporting was not effective based on the criteria in Internal Control - Integrated Framework issued by COSO.


This Annual Report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. We were not required to have, nor have we, engaged our independent registered public accounting firm to perform an audit of internal control over financial reporting pursuant to the rules of the Securities and Exchange Commission that permit us to provide only management's report in this Annual Report.



46






Controls and Procedures


There were no changes in the Company’s internal controls or in other factors that could affect its disclosure controls and procedures subsequent to the Evaluation Date, nor any deficiencies or material weaknesses in such disclosure controls and procedures requiring corrective actions.


ITEM 9B. OTHER INFORMATION


There is no other information to be reported under this Item.


PART III


ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE


Each of our Directors serves until his successor is elected and qualified. Each of our officers is elected by the Board of Directors to a term of one year and serves until his successor is duly elected and qualified, or until he is removed from office. The Board of Directors has no nominating or compensation committees.


Our officers and directors and their respective ages and positions as of November 30, 2013 were as follows:


 

 

 

Name and address

Age

Position(s)

 

 

 

John Catagan Ngitew (1)

469 Pujols Ave., Fort Benafacio

Manila, Philippines

38

Chief Executive Officer, President and Director

 

 

 

Grace Evangelista Parinas (1)

380 Ayala Avenue

Makati, Philippines

38

Chief Financial Officer, Chief Accounting Officer, Secretary Treasurer and Director


(1) Member of the audit committee


John C. Ngitew was appointed to the Board of Directors on September 15, 2010 and on the same day by a Directors’ Consent Resolutions was appointed as Chief Executive Officer and President.


Grace E. Parinas was appointed to the Board of Directors on September 15, 2010 and on the same day by a Directors’ Consent Resolutions was appointed Chief Financial Officer, Chief Accounting Officer and Secretary Treasurer.


A description of the work experience of our two directors and officers is as follows.


JOHN C. NGITEW graduated with a Bachelor of Science in Accountancy of March 1996 from the Polytechnic University of the Philippines in Bataan in the Republic of the Philippines.  His first employment was with The Inter Continental Hotel in Manila where he was a supervisor of accounts reviewing corporate by organizing them and accounting for their cash positions.   He worked for this company until 2000 when he transferred to PGMC Accounting and Financial Services in Manila where he was responsible for financing strategies, preparing of financial statements, preparation of corporate tax returns and providing tax advice on investment returns.  In 2005 until the present time he has worked as senior accountant for the same firm where he became more involved with clients and their various tax issues and in the preparation of detailed corporate and personal tax returns.



47






With Mr. Ngitew knowledge of the Philippines, both business wise and from a taxation point of view, his appointment as a director and officer was appropriate.  He knows various aspects of running a business since he has worked for a number of years with various businesses located in the Philippines.  With our Company having its mineral property located in the Philippines, Mr. Ngitew’s residency is ideal to oversee, if required, the exploration process on the Prosperidad claim.


GRACE E. PARINAS graduated in 1994 from the University of The Far East in Manila, Philippines with a Diploma in Paralegal Studies and in 1996 graduated from the same University with a Diploma in Legal Studies.  Between June and October 1996, she worked for Nine Dots Management Consultancy in Manila where she was responsible for scheduling appointment, filing and telephone answering,   Between November 1996 and December 2000 she was responsible for legal record keeping, bookkeeping, invoicing of clients, preparation, filing and service of legal documents in the area of wills. worked as a legal secretary responsible for preparation of legal documents relating to estate, family law matters, various types of litigation and other matters involving corporate law.


With Ms. Parinas background as a paralegal for a major law firm in Makati, Philippines has allowed her to have the knowledge of legal documents and the related business laws which in the future the Company might need to know.    Even though she is not an attorney she is able to advise the Company when it would be prudent, if ever, to engage the services of an attorney and be able to monitor the costs associated with such service.


Both of our officers and directors do not work full time for our Company but devote time to our Company as required.   John Nigitew does devote at least 30 hours each month to the affairs of the Company which is over and above his other work commitments.   Grace Parinas does devote whatever time is required of her; often in excess of 20 hours a month.   Once our Company further develops the Prosperidad they both will have to spend more time on the affairs of the Company.   In the meantime they will rely on the expertise of geologists to do the work on the Prosperidad.


None of our directors is an officer or director of a company registered under the Securities and Exchange Act of 1934.


Term of Office


Members of our Board of Directors are appointed to hold office until the next annual meeting of our stockholders or until his successor is elected and qualified, or until they resign or are removed in accordance with the provisions of the Nevada Revised Statutes.   Our officers are appointed by our Board of Directors and hold office until removed by the Board.


Involvement in Certain Legal Proceedings

To the knowledge of our Company, during the past ten years, none of our directors or executive officers:



1.

has filed a petition under the federal bankruptcy laws or any state insolvency law, nor had a receiver, fiscal agent or similar officer appointed by the court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filings;

 

 

2.

was convicted in a criminal proceeding or named subject of a pending criminal proceeding (excluding traffic violations and other minor offences);

 

 

3.

was the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from or otherwise limiting, the following activities:



48






i.

acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, associated person of any of the foregoing, or as an investment advisor, underwriter, broker or dealer in securities, or as an affiliate person, director or employee of any investment company, or engaging in or continuing any conduct or practice in connection with such activity;


ii.

engaging in any type of business practice; or


iii.

engaging in any activities in connection with the purchase or sale of any security or commodity or in connection with any violation of federal or state securities laws or federal commodities laws;


4.

was the subject of any order, judgment, or decree, not subsequently reversed, suspended, or vacated, of any federal or state authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described above under this Item, or to be associated with persons engaged in any such activities;

 

5.

was found by a court of competent jurisdiction in a civil action or by the SEC to have violated any federal or state securities law, and the judgment in such civil action or finding by the SEC has not been subsequently reversed, suspended, or vacated.

 

6.

was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any federal commodities law, and the judgement in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated.


Board of Directors’ Audit Committee


The Charter of the Audit Committee of the Board of Directors sets forth the responsibilities of the Audit Committee. The primary function of the Audit Committee is to oversee and monitor the Company’s accounting and reporting processes and the audits of the Company’s financial statements.


Our audit committee consists of John Ngitew, our President and Chairman of the Audit Committee, and Grace Parinas, our Chief Financial Officer and Secretary Treasurer neither of whom are independent. John Ngitew is an “audit committee financial expert” as defined in Item 407 of Regulation S-K because he has been employed for the past 20 years as an accountant and is now a senior accountant with the firm of PGMC Accounting and Financial Services. He has the background to review and understand financial statements and recommend changes thereto.  Neither Mr. Ngitew nor Ms Parinas can be considered independent.


Apart from the Audit Committee, the Company has no other Board committees.


Since incorporation on September 14, 2010, our members of our Audit Committee have not yet held a meeting.


We have no other Board Committees other than the Audit Committee.


Significant Employees


At the present time we have no paid employees and will not have until such time as the Board of Directors deem it practical.   Presently our Officers and Directors fulfill many functions that would otherwise require our Company to hire employees or outside consultants other than the exploration of the Prosperidad.   Our management will have to rely upon the recommendation of Alfredo Jumpay regarding the results obtained during our exploration program on the Prosperidad since neither of them are geologists.   Even during our exploration of the Prosperidad we will hire workers on a part time basis ending with the completion of the program.  This will avoid us having to carry full time employees when no work is being done on the Prosperidad.


Family Relationships


 John Ngitew and Grace Parinas are not related.



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ITEM 11.  EXECUTIVE COMPENSATION, SECURITIES OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

Executive Compensation


Presently there is no formal or informal method, either written or unwritten, of granting compensation to our officers and directors.  Directors and officers are not paid for attending meetings but any out-of-pocket costs borne by them will be paid by our Company.


We have not paid any compensation to neither John Ngitew nor Grace Parinas, our two officers and directors, since the incorporation of our Company to November 30, 2013.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND REALTED STOCKHOLDERS MATTERS.


The following table sets forth certain information concerning the number of shares of our common stock owned beneficially as of November 30, 2013 by: (i) each person (including any group) known to us to own more than five percent (5%) of any class of our voting securities of our shares of common stock, (ii) our executive officers and directors, and (iii) our named executive officers as defined in Item 402(m) (2) of Regulation S-K. Unless otherwise indicated, the stockholder listed below possesses sole voting and investment power with respect to the shares shown.


 

 

 

 



Title of Class



Name and Address of Beneficial Ownership

Amount and Nature of Beneficial

Ownership

Percentage of

Common Stock

(i)


 

 

 

 

Common Stock

John Catagan Ngitew

469 Pujols Avenue, Fort Benafacio

Manila, Philippines

87,000,000

(Direct)

30.0%

 

 

 

 

Common Stock

Grace Evangelista Parinas

380 Ayala Avenue

Makati, Philippines

58,000,000

(direct)

20.0%

 

 

 

 

Common Stock

All Directors and Officers as a Group (2 people)


145,000,000


50.00%


1.  A beneficial owners of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares.  Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares).  In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided.  In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights.  As a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the person’s actual ownership or voting power with respect to the number of shares of common stock actually outstanding on November 30, 2013.  As of November 30, 2013, there were 290,000,009 shares of our common stock issued and outstanding.



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Corporate Governance


Corporate governance is a term that refers broadly to the rules, processes, or laws by which businesses are operated, regulated and controlled.   The term can refer to internal factors defined by the officers, stockholders or constitution of a corporation, as well as to external forces such as consumer groups, clients and governmental regulations. A well-defined and enforced corporate governance provides a structure that, at least in theory, works for the benefit of everyone concerned by ensuring that the corporation adheres to accepted ethical standards and best practices as well as to formal laws.


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


Market for Common Equity, Dividends and Related Stockholder Matters


Holders of Common shares


Our Company has two shareholders, being our two officers and directors, who hold 50% of the issued and outstanding common shares of our Company; being 145,000,000 common shares.


Market Information


Our common shares are presently quoted on the OTCBB.   Although the OTCBB does not have any listing requirements per se, to be eligible for quotation on the OTCBB, issuers must remain current in their filings with the SEC; being as a minimum Forms 10-Q and 10-K.  Market makers will not be permitted to begin quotation of a security whose issuer does not meet these filing requirements. Securities already quoted on the OTCBB that become delinquent in their required filings will be moved following a 30 or 60 day grace period if they do not make their filing during that time.  


There might be no liquidity in our common stock resulting in trading prices been volatile with wide fluctuations.


At the date of this Form 10-K our Company symbol on the OTCBB is “LGSR”.


Our common shares are not subject to outstanding options, warrants or securities convertible into common shares of our Company.  All the issued and outstanding share certificates owned presently by our two directors have a legend printed on them restricting the certificates from being able to trade as in compliance with Rule 144.


Dividend Rights


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.


The holders of our common stock are entitled to receive dividends pro-rata based on the number of shares held, when and if declared by our Board of Directors, from funds legally available for that purpose. Section 78.288 of Chapter 78 of the NRS prohibits us from declaring dividends where, after giving effect to the distribution of the dividend:


(a)  we would not be able to pay our debts as they become due in the usual course of business; or


(b)  except as may be allowed by our Articles of Incorporation, our total assets would be less than the sum of our total liabilities plus the amount that would be needed, if we were to be dissolved at the time of the distribution, to satisfy the preferential rights upon dissolution of stockholders who may have preferential rights and whose preferential rights are superior to those receiving the distribution.



51






The holders of our common stock are entitled to receive dividends as may be declared by our Board of Directors; are entitled to share ratably in all of our assets available for distribution upon winding up of the affairs our Company; and are entitled to one non-cumulative vote per share on all matters on which shareholders may vote at all Meetings of the shareholders.


The shareholders are not entitled to preference as to dividends or interest; preemptive rights to purchase in new issues of shares; preference upon liquidation; or any other special rights or preferences.


There are no restrictions on dividends under any loan or other financing arrangements.


Our Articles of Incorporation and Bylaws do not contain provisions restricting our ability to pay dividends on our common stock.


Outstanding Equity Awards


Since incorporation on September 14, 2010, our Company has not granted any stock options or equity awards to our directors and officers or any other party.


We do not have an employee benefit stock option plan nor a dividend reinvestment plan. There are no outstanding warrants or rights attached to our common shares.


Outstanding Stock Opinion, Purchase Warrants and Convertible Securities


Our Company does not have any outstanding stock options to its two directors and officers.   There are no share purchase warrants outstanding as at the date of this Form 10-K are there convertible securities.


Our authorized capital is 2,610,000,000 shares of common stock with a par value $0.001 per share.   There are only 290,000,009 common shares issued and outstanding as of the date of this Form 10-K.


Non-Cumulative Voting.

The holders of our shares of common stock do not have cumulative voting rights, which means that the holders of more than 50% of such outstanding shares, voting for the election of Directors, can elect all of the Directors to be elected, if they so choose. In such event, the holders of the remaining shares will not be able to elect any of our Directors.


Equity Compensation Plans, Stock Options, Bonus Plans


No such plans or options exist.  None have been approved or are anticipated.  No Compensation Committee exists either.


Pension Benefits


We do not maintain any defined benefit pension plans.


Nonqualified Deferred Compensation


We do not maintain any nonqualified deferred compensation plans.


Debt Securities and Other Securities


There are no debt securities outstanding or other securities.



52






Rule 144 Share Restrictions 

 

Under Rule 144, an individual who is not an affiliate of our Company and has not been an affiliate at any time during the three months preceding a sale and has been the beneficial owner of our shares for at least six months would be entitled to sell them without restriction.   This is subject to the continued availability of current public information about us for the first year which can be eliminated after a one-year hold.


Whereas an individual who is deemed to be an affiliate and has beneficially owned shares in our Company for at least six months can sell their shares in a given three month period as follows::

1.  One percent of the number of shares of our Company's common stock then outstanding, which the case of our current directors and officers, will equal approximately 1,450,000 shares as of the date of this Form 10-K; or


2.  The average weekly trading volume of our company's common stock during the four calendar weeks preceding the filing of a notice on form 144 with respect to the sale.

Under Rule 405 of the Securities Act, a reporting or non-reporting shell company cannot sell shares under Rule 144,  unless the company: (i) has ceased to be a shell company; (ii) is subject to the Exchange Act reporting obligations; (iii) has filed all required Exchange Act reports during the preceding twelve months; (iv) and at least one year has elapsed from the time the company filed with the SEC, current Form 10 type information reflecting its status as an entity that is not a shell company.


Employment Agreements


There are no employment agreements with our two directors or officers.


Penny Stock Rule


Our common shares are considered to be a “penny stock” because it meets one or more of the definitions in SEC Rule 3a51-1:


 

 

 

(i)

 

It has a price less than five dollars per share;

 

 

 

(ii)

 

It is not traded on a recognized national exchange;

 

 

 

(iii)

 

It is not quoted on a FINRA automated quotation system (NASDAQ), or even if so, has a price of less than five dollars per share; or

 

 

 

(iv)

 

It is issued by a company with net tangible assets of less than $2,000,000, if in business more than three years continuously, or $5,000,000, if the business is less than three years continuously, or with average revenues of less than $6,000,000 for the past three years.


A broker-dealer will have to undertake certain administrative functions required when dealing win a penny stock transaction.  Disclosure forms detailing the level of risk in acquiring our Company’s shares will have to be sent to an interested investor, current bid and offer quotations will have to be provided with an indication as to what compensation the broker-dealer and the salesperson will be receiving from this transaction and a monthly statement showing the closing month price of the shares being held by the investor.  In addition, the broker-dealer will have to receive from the investor a written agreement consenting to the transaction.  This additional administrative work might make the broker-dealer reluctant to participate in the purchase and sale of our Company’s shares. 


From our Company’s point of view, being subject to the Penny Stock Rule could make it extremely difficult for it to attract new investors for future capital requirements since many financial institutions are restricted under their by-laws from investing in shares under a certain dollar amount. Ordinary investors might not be willing to subscribe to shares in the capital stock of our Company due to the uncertainty as to whether the share price will ever be able to be high enough that the Penny Stock Rule is no longer a concern.



53






In addition, the stock market in general, and the market prices for thinly traded companies in particular, have experienced extreme volatility that often has been unrelated to the operating performance of such companies. These wide fluctuations may adversely affect the trading price of our shares regardless of our future performance and that of our Company. In the past, following periods of volatility in the market price of a security, securities class action litigation has often been instituted against such company. Such litigation, if instituted, whether successful or not, could result in substantial costs and a diversion of management’s attention and resources, which would have a material adverse effect on our business, results of operations and financial conditions.


Any new investor purchasing shares in our Company might consider whether they will be able to sell their shares at the price they acquired them or higher since if no broker-dealer becomes involved with our Company and our Company is unable to raise future investment capital the price per share may deteriorate to a point that an investor’s entire investment could be lost.


Change in Control of Our Company


We do not know of any arrangements which might result in a change in control.


Registered Agent


We are required by Section 78.090 of the Nevada Revised Statutes (the “NRS”) to maintain a registered agent in the State of Nevada.  Our registered agent for this purpose is American Corporate Enterprises, Inc., 123 W Nye Lane, Suite 129, Carson City, NV 89703.  All legal process and any demand or notice authorized by law to be served upon us may be served upon our registered agent in the State of Nevada in the manner provided in NRS 14.020(2).


Transfer Agent


We have engaged the service of Action Stock Transfer Corp., Suite 214 – 2469 E. Fort Union Blvd., Salt lake City, Utah, 84121, to act as transfer and registrar.


Anti-takeover Provision


In accordance with the laws of the State of Nevada and the Securities Regulation Act.

The Chapter 78 of Nevada Revised Statutes contains a provision governing "acquisition of controlling interest."  This law provides generally that any person or entity that acquires 20% or more of the outstanding voting shares of a publicly-held Nevada corporation in the secondary public or private market may be denied voting rights with respect to the acquired shares, unless a majority of the disinterested shareholders of the corporation elects to restore such voting rights in whole or in part. The control share acquisition act provides that a person or entity acquires "control shares" whenever it acquires shares that, but for the operation of the control share acquisition act, would bring its voting power within any of the following three ranges: 20 to 33 1/3%; 33 1/3 to 50%; or more than 50%.


A "control share acquisition" is generally defined as the direct or indirect acquisition of either ownership or voting power associated with issued and outstanding control shares.  The shareholders or board of directors of a corporation may elect to exempt the stock of the corporation from the provisions of the control share acquisition act through adoption of a provision to that effect in the articles of incorporation or bylaws of the corporation.  Our articles of incorporation and bylaws do not exempt our common stock from the control share acquisition act.


The control share acquisition act is applicable only to shares of "Issuing Corporations" as defined by the Nevada law.  An Issuing Corporation is a Nevada corporation, which: has 200 or more shareholders, with at least 100 of such shareholders being both shareholders of record and residents of Nevada; and does business in Nevada directly or through an affiliated corporation.


At this time, we do not have 100 shareholders of record resident of Nevada.  Therefore, the provisions of the control share acquisition act do not apply to acquisitions of our shares and will not until such time as these requirements have been met.  At such time as they may apply, the provisions of the control share acquisition act may discourage companies or persons interested in acquiring a significant interest in or control of us, regardless of whether such acquisition may be in the interest of our shareholders.



54






The Nevada "Combination with Interested Shareholders Statute" may also have an effect of delaying or making it more difficult to effect a change in control of us.  This statute prevents an "interested shareholder" and a resident domestic Nevada corporation from entering into a "combination," unless certain conditions are met.  The statute defines "combination" to include any merger or consolidation with an "interested shareholder," or any sale, lease, exchange, mortgage, pledge, transfer or other disposition, in one transaction or a series of transactions with an "interested shareholder" having: an aggregate market value equal to 5 percent or more of the aggregate market value of the assets of the corporation; an aggregate market value equal to 5 percent or more of the aggregate market value of all outstanding shares of the corporation; or representing 10 percent or more of the earning power or net income of the corporation.


Conflicts of Interest


Neither of our officers or directors are directors or officers of any other company involved in the mining industry. However there can be no assurance such involvement will not occur in the future. Such present and potential future, involvement could create a conflict of interest.


To ensure that potential conflicts of interest are avoided or declared to our Company and its shareholders and to comply with the requirements of the Sarbanes Oxley Act of 2002, the Board of Directors adopted, on September 20, 2010, a Code of Ethics.  Our Company’s Code of Ethics embodies our commitment to such ethical principles and sets forth the responsibilities of our Company and its officers and directors to its shareholders, employees, customers, lenders and other stakeholders. Our Code of Ethics addresses general business ethical principles and other relevant issues.


Director Independence


Under NASDAQ Rule 4200(a)(15), a director is not considered to be independent if he or she is also an executive officer or employee of the corporation.  As John Ngitew and Grace Parinas, our executive officers and directors, we have determined that neither John Ngitew nor Grace Parinas is an independent director as defined under NASDAQ Rule 4200(a)(15).


ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES


(1)  Audit Fees


Audit fees for the years ended November 30, 2013 and 2012, were $ 8,000 and $6,400, respectively.

 

(2)  Audit-Related Fees


The aggregate fees billed in each of the two periods mentioned above for assurance and related services by the principal accountants that are reasonably related to the performance of the audit or review of Lingas’ financial statements and are not reported under Item 9 (e)(1) of Schedule 14A was NIL.


(3)  Tax Fees


The aggregate fees billed in November 30, 2013 for professional services rendered by the principal accountants for tax compliance, tax advice, and tax planning was NIL.


(4)  All Other Fees


During the period from inceptions to November 30, 2013 there were no other fees charged by the principal accountants other than those disclosed in (1) and (3) above.



55






(5)  Audit Committee’s Pre-approval Policies


At the present time, there are not sufficient directors, officers and employees involved with Lingas to make any pre-approval policies meaningful.  Once Lingas has elected more directors and appointed directors and non-directors to the Audit Committee it will have meetings and function in a meaningful manner.


ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

 

 

Exhibit Number


Description of Exhibits

 

 

3

Corporate Charter (*)

3 (i)

Articles of Incorporation. (*)  

3 (ii)

Bylaws. (*)

10.1

Assignment Agreement dated September 20, 2010 between Hernandez Ventures Inc. and Lingas Resources, Inc. (**)

10.2

Agreement between Action Stock Transfer Corporation and Lingas Resources, Inc. dated September 15, 2010 (*)

31

13a-14 Certifications

32

Section 1350 Certifications


(*) Included herein by reference to the Company’s registration statement on Form S-1 filed with the United States Securities and Exchange Commission on February 6, 2012.


(**) Included herein by reference to the Company’s registration statement on Form S-1A filed with the United States Securities and Exchange Commission on May 22, 2012.



56






SIGNATURES


Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


LINGAS RESOURCES, INC.

(Registrant)


By: /s/ JOHN C. NGITEW

John C. Ngitew

Chief Executive Officer,

President and Director


Date: March 13, 2014


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


By: /s/ JOHN C. NGITEW

John C. Ngitew

Chief Executive Officer,

President and Director


Date: March 13, 2014


By: /s/ GRACE E. PARINAS

Grace E. Parinas

Chief Accounting Officer,

Chief Financial Officer and Director


Date: March 13, 2014


57






Exhibit 31.1   

The certification required by Rule 13a-14a (17 CFR 240.13a-14(a)) or Rule 15d-14(a) (17CFR 240. 15d-14(a))


I, John C. Ngitew, certify that:


1.  I have reviewed this Form 10-K of Lingas Resources, Inc. (the “registrant”);


2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.  The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act 13a-15(e) and 15d – 15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:


(a)  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


(b)  Designed such internal controls over financing reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;


(c)  Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end to the period covered by this report based on such evaluation; and


(d)  Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal year (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


5.  The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


(a)  All significant deficiencies and material weaknesses in the design or operations of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


(b)  Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: March 13, 2014


JOHN C, NGITEW

John C. Ngitew

Chief Executive Officer, President and Director



58






Exhibit 31.2

The certification required by Rule 13a-14a (17 CFR 240.13a-14(a)) or Rule 15d-14(a) (17CFR 240. 15d-14(a))


I, Grace E. Parinas, certify that:


1.  I have reviewed this Form 10-K of Lingas Resources, Inc. (the “registrant”);


2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;


3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;


4.  The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act 13a-15(e) and 15d – 15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and have:


(a)  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;


(b)  Designed such internal controls over financing reporting, or caused such internal control over financial reporting to be designed under our supervision, 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;


(c)  Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end to the period covered by this report based on such evaluation; and


(d)  Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal year (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and


5.  The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):


(a)  All significant deficiencies and material weaknesses in the design or operations of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and


(b)  Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


Date: March 13, 2014


GRACE E. PARINAS

Grace E. Parinas

Chief Financial Officer, Secretary and Director




59






Exhibit 32.1


CERTIFICATE PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002



In connection with the Annual Report (the “Report”) on the Form 10-K of Lingas Resources, Inc. (the “Company”) for the year ended November 30, 2013, as filed with the Securities and Exchange Commission on the date hereof, I, John C. Ngitew, Chief Executive Officer, President and Director, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:


1.The Report fully complies with the requirements of Section 13 (a) or 15 (d) of the Securities and Exchange Act of 1934, as amended; and


2. The information contained in this Report fairly presents, in all material respects, the financial condition and results of operation of the Company.



Date: March 13, 2014

 

/s/ JOHN C. NGITEW

John C. Ngitew

Chief Executive Officer,

President and Director




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Exhibit 32.2



CERTIFICATE PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002



In connection with the Annual Report (the “Report”) on the Form 10-K of Lingas Resources, Inc. (the “Company”) for the year ended November 30, 2013, as filed with the Securities and Exchange Commission on the date hereof, I, Grace E. Parinas, Chief Accounting Officer, Chief Financial Officer and Director, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge and belief:


1.    The Report fully complies with the requirements of Section 13 (a) or 15 (d) of the Securities and Exchange Act of 1934, as amended; and


2.    The information contained in this Report fairly presents, in all material respects, the financial condition and results of operation of the Company.



Date: March 13, 2014


/s/ GRACE E. PARINAS

Grace E. Parinas

Chief Accounting Officer,

Chief Financial Officer and Director



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