10-K/A 1 sure_10ka.htm AMENDMENT NO. 1 sure_10ka.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-K/A
Amendment 2
 
þ ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
 
For the fiscal year ended November 30, 2012
 
o TRANSACTION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
 
For the transaction period from ________to ________
 
Commission File No. 000-54268
 
SONORA RESOURCES CORP.
(Exact Name of Issuer as specified in its charter)
 
Nevada
 
27-1269503
(State or other jurisdiction of incorporation)
 
(IRS Employer File Number)
     
Cerro del Padre #11, Rinconada de
   
los Pirules, Guadalupe, Zacatecas
   
Mexico 98619
  98619
(Address of principal executive offices)
 
(zip code)
 
1-877-513-7873
(Registrant's telephone number, including area code)
 
Securities registered pursuant to Section 12 (b) of the Exchange Act:
 
Common
 
OTCBB
(Title of each class)
 
(Name of each exchange on which registered)
 
Securities registered pursuant to Section 12 (g) of the Exchange 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. o Yes þ No
 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. o Yes þ 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 Exchange Act 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. þ Yes o No
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). þ Yes o No
 
Indicate by check mark if disclosure of delinquent filers in response to Item 405 of Regulation S-K (§229.405) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):
 
Large accelerated filer
o
Accelerated filer
o
Non-accelerated filer
o
Smaller reporting company
þ
(Do not check if a smaller reporting company)
   
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes þ No
 
As of May 31, 2012 (the last business day of our most recently completed second fiscal quarter), based upon the last reported trade on that date, the aggregate market value of the voting and non-voting common equity held by non-affiliates (for this purpose, all outstanding and issued common stock minus stock held by the officers, directors and known holders of 10% or more of the Company’s common stock) was $16,202,947.
 
As of February 7, 2013, the Company had 91,855,861 shares of common stock issued and outstanding.
 


 
 

 
 
EXPLANATORY NOTE
 
We are filing this Amendment No. 2 on Form 10-K/A to our Annual Report on Form 10-K for the year ended November 30, 2012 (the “Form 10-K”), which was originally filed with the Securities and Exchange Commission on February 7, 2013 and amended on July 22, 2013 and August 16, 2013, for the purpose of expanding our disclosures concerning our mining option agreements, our exploration and production status and other disclosures.
 
No other changes have been made to the Form 10-K. This Amendment does not reflect events that have occurred after the February 7, 2013 filing date of the Form 10-K, or modify or update the disclosures presented therein, except to reflect the amendment described above.
 
 
 
 
 

 
 
SONORA RESOURCES CORP.

TABLE OF CONTENTS
 
      Page  
PART 1
 
ITEM 1.
Description of Business
    4  
ITEM 1A.
Risk Factors
    6  
ITEM 1B.
Unresolved Staff Comments
    16  
ITEM 2.
Properties
    16  
ITEM 3.
Legal Proceedings
    16  
ITEM 4.
Mine Safety Disclosure
    16  
PART II
     
ITEM 5.
Market for Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    17  
ITEM 6.
Selected Financial Data
    19  
ITEM 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
    20  
ITEM 7A.
Quantitative and Qualitative Disclosures About Market Risk
    25  
ITEM 8.
Financial Statements and Supplementary Data
    25  
ITEM 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    25  
ITEM 9A.
Controls and Procedures
    25  
ITEM 9B.
Other Information
    26  
PART III
     
ITEM 10.
Directors, Executive Officers and Corporate Governance
    27  
ITEM 11.
Executive Compensation
    30  
ITEM 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    35  
ITEM 13.
Certain Relationships and Related Transactions, and Director Independence
    36  
ITEM 14.
Principal Accounting Fees and Services
    37  
     
PART IV
     
ITEM 15.
Exhibits, Financial Statement Schedules
    40  
SIGNATURES
    42  
 
 
2

 
 
PART I
 
FORWARD-LOOKING STATEMENTS
 
The following discussion, in addition to the other information contained in this report, should be considered carefully in evaluating us and our prospects. This report (including without limitation the following factors that may affect operating results) contains forward-looking statements (within the meaning of Section 27A of the Securities Act of 1933, as amended ("Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended ("Exchange Act") regarding us and our business, financial condition, results of operations and prospects. Words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates" and similar expressions or variations of such words are intended to identify forward-looking statements, but are not the exclusive means of identifying forward-looking statements in this report. Additionally, statements concerning future matters such as revenue projections, projected profitability, growth strategies, development of new products, enhancements or technologies, possible changes in legislation and other statements regarding matters that are not historical are forward-looking statements.
 
Forward-looking statements in this report reflect the good faith judgment of our management and the statements are based on facts and factors as we currently know them. Forward-looking statements are subject to risks and uncertainties and actual results and outcomes may differ materially from the results and outcomes discussed in the forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include, but are not limited to, those discussed below and in "Management's Discussion and Analysis of Financial Condition and Results of Operations" as well as those discussed elsewhere in this report. Readers are urged not to place undue reliance on these forward-looking statements which speak only as of the date of this report. We undertake no obligation to revise or update any forward-looking statements in order to reflect any event or circumstance that may arise after the date of this report.
 
As used in this Form 10-K, “we,” “us,” and “our” refer to Sonora Resources Corp. and its wholly-owned subsidiary, Finder Plata S.A. de C.V., a company organized under the laws of Mexico, which are also sometimes collectively referred to as the “Company” or “Sonora Resources” unless otherwise noted.
 
 
3

 
 
ITEM 1.  DESCRIPTION OF BUSINESS
 
THE COMPANY AND OUR BUSINESS
 
Plan of Operation
 
Sonora Resources Corp. (formerly Nature's Call Brands, Inc.) (the "Company" or "Sonora Resources" ) was incorporated under the laws of the State of Nevada on December 3, 2007 with a business plan to sell and distribute water treatment systems for residential and commercial use. In September of 2010, the business of the Company was changed to the acquisition, exploration and development of mineral resources, with emphasis on gold and silver. Efforts in the area of water treatment were then abandoned.
 
We are a mining exploration company focused on the acquisition and exploration of prospective silver opportunities in Mexico. For this objective, we incorporated a mexican subsidiary, Finder Plata SA de CV on July 12, 2011. Our goal is to build our Company into a successful mineral exploration and development company. During 2013 and 2014, we intend to produce silver and gold at our Corazon property and Liz project through processing economical old dumps and tailings by VAT leaching with amonium tiosulphate on these properties.

We closed a series of mining option agreements through our fully owned subsidiary Finder Plata as described below. We intend to raise capital from investors for development and execution of our business plan with this portfolio of mining properties.
 
We have mining option agreements in (i) the Los Amoles Property consisting of 1,630 hectares located in Sonora; (ii) the Jalisco Group of Properties, consisting of mining claims totaling 5,240 hectares located in Jalisco; and (iii) the Ayones Group of Properties consisting of numerous mining claims totaling 48 hectares in Jalisco. We have commenced an underground work program at the Los Amoles property and completed a geologic report to define the potential vein structure and outcroppings and prepare for a planned drilling program later in 2013.
 
Also, we have five mining concessions on 721 hectares surrounding the Ayones Group of Properties, called the Corazon Property. We have a letter of intent with the Liz Property located in Ayutla, Jalisco State, Mexico. Sonora Resources is based in Guadalupe, Zacatecas, Mexico. We have concluded phase one field work at the Corazon property and the Company intends to produce silver and gold at our Corazon and Liz properties in 2013 and 2014.
 
We are currently in the exploration stage as defined in ASC 915 "Accounting and Reporting for Development Stage Enterprises" and have minimal operations.
 
We have incurred a cumulative net loss since inception on December 3, 2007 to November 30, 2012 of $2,197,000 and have no source of operating revenue. While our management believes that we will be successful in our planned operating activities under our business plan and capital raising activities, there can be no assurance that we will be successful in the mining development and exploration business or the raising of sufficient capital such that we will generate adequate revenues to earn a profit or sustain its operations.
 
The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplates our continuation as a going concern. We have not established a source of revenues sufficient to cover its operating costs, and as such, have incurred an operating loss since inception. Further, as of November 30, 2012, we have working capital of $347,000. These and other factors raise doubt about our ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments or classifications that may result from the possible inability of the Company to continue as a going concern.
 
4

 
 
Corporate Information
 
We were incorporated in the State of Nevada on December 3, 2007. Our principal executive office is located at Cerro del Padre # 11 Rinconada de los Pirules, Guadalupe, Zacatecas Mexico, 98619. Our US mailing address is PO Box 12616, Seattle, WA 98111 and our telephone number is 1-877-513-7873. The Company’s principal website address is located at www.sonoraresources.com. The information on our website is not incorporated as a part of this Form 10-K.
 
The Company’s Common Stock
 
Our common stock currently trades on the Over the Counter Bulletin Board (“OTCBB”) under the symbol “SURE.”
 
Key Market Priorities
 
Our primary key market priority will be to explore our Los Amoles, Jalisco, Ayones, Corazon and Liz, Mexico properties in order to determine whether they possess commercially exploitable quantities of gold, silver, and other metals. We cannot guarantee that the Los Amoles, Jalisco, Ayones, Corazon and Liz, Mexico properties will be successful or that any project that we embark upon will be successful. Our goal is to build our Company into a successful mineral exploration and development company.
 
Primary Market Risks
 
We are exposed to various risks related to the volatility of the price of silver, our reserve estimates, operating as a going concern, unique difficulties and uncertainties in mining exploration ventures, our need for additional financing, and a volatile market price for our common stock. These risks and uncertainties are discussed in more detail below in this item.
 
Employees
 
As of November 30, 2012, we had two part-time employees. The Chief Executive Officer is based out of Guadalupe, Zacatecas Mexico. The Chief Financial Officer is based out of Seattle, WA and Atlanta, GA.
 
Website Access to United States Securities and Exchange Commission Reports
 
We file annual and quarterly reports, proxy statements and other information with the Securities and Exchange Commission ("SEC"). You may read and copy any document we file at the SEC's Public Reference Room at 100 F Street, N.E., Washington D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. The SEC maintains a website at http://www.sec.gov that contains reports, proxy and information statements and other information concerning filers. We also maintain a web site at http://www.sonoraresources.com that provides additional information about our Company and links to documents we file with the SEC. The Company's charters for the Compensation Committee and the Code of Conduct & Ethics are also available on our website. The Company does not have an Auditing or Nominations Committee at this time. The information on our website is not part of this Form 10-K.
 
 
5

 
 
ITEM 1A.  RISK FACTORS
 
An investment in our Common Stock involves a high degree of risk. You should carefully consider the following risk factors and other information in this prospectus before deciding to invest in shares of the Company’s Common Stock. The most significant risks and uncertainties known and identified by our management are described below; however, they are not the only risks that we face. If any of the following risks actually occurs, our business, financial condition, liquidity, results of operations and prospects for growth could be materially adversely affected, the trading price of our Common Stock could decline, and you may lose all or part of your investment. You should acquire shares of our Common Stock only if you can afford to lose your entire investment. We make various statements in this section that constitute “forward-looking statements”. See “Forward-Looking Statements” beginning on page  3 of this report.
 
Risks Related to Our Company
 
We have a limited operating history on which to base an evaluation of our business and prospects.
 
We have been in the business of exploring mineral resource properties since November 2010. As a result, we have never had any revenues from our mining operations. In addition, our operating history has been restricted to the acquisition and exploration of our mineral properties, and this does not provide a meaningful basis for an evaluation of our prospects if we ever determine that we have a mineral reserve and commence the construction and operation of a mine. We have no way to evaluate the likelihood of whether our mineral properties contain any mineral reserves or, if they do, that we will be able to build or operate a mine successfully. We anticipate that we will continue to incur operating costs without realizing any revenues during the period when we are exploring our properties. We therefore expect to continue to incur significant losses into the foreseeable future. We recognize that if we are unable to generate significant revenues from mining operations and any dispositions of our properties, we will not be able to earn profits or continue operations. At this early stage of our operation, we also expect to face the risks, uncertainties, expenses and difficulties frequently encountered by companies at the start up stage of their business development. We cannot be sure that we will be successful in addressing these risks and uncertainties, and our failure to do so could have a materially adverse effect on our financial condition. There is no history upon which to base any assumption as to the likelihood that we will prove successful, and we can provide investors with no assurance that we will generate any operating revenues or ever achieve profitable operations.
 
The fact that we have not earned any operating revenues since our incorporation raises substantial doubt about our ability to continue to explore our mineral properties as a going concern.
 
We have not generated any revenue from operations since our incorporation, and we anticipate that we will continue to incur operating expenses without revenues unless and until we are able to identify a mineral resource in a commercially exploitable quantity on one or more of our mineral properties and we build and operate a mine. At November 30, 2012, we had working capital of $347,000. We incurred a net loss of $935,000 for the fiscal year ended November 30, 2012 and a net loss of $2,197,000 since inception. We will require additional financing to sustain our business operations if we are not successful in earning revenues once exploration is complete. If our exploration programs are successful in discovering reserves of commercial tonnage and grade, we will require significant additional funds in order to place our properties into commercial production. Should the results of our planned exploration require us to increase our current operating budget, we may have to raise additional funds to meet our currently budgeted operating requirements for the next 12 months. As we cannot assure a lender that we will be able to successfully explore and develop our mineral properties, we will probably find it difficult to raise debt financing from traditional lending sources. We have traditionally raised our operating capital from sales of equity and debt securities, but there can be no assurance that we will continue to be able to do so. If we cannot raise the money that we need to continue exploration of our mineral properties, we may be forced to delay, scale back, or eliminate our exploration activities. If any of these were to occur, there is a substantial risk that our business would fail. These circumstances led our independent registered public accounting firm, in their report dated February 7, 2013 relative to our audited financial statements for the year ended November 30, 2012, to comment about our Company’s ability to continue as a going concern. When an auditor issues a going concern opinion, the auditor has substantial doubt that the Company will continue to operate indefinitely and not go out of business and liquidate its assets. These conditions raise substantial doubt about our ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event our Company cannot continue in existence. We continue to experience net operating losses.
 
 
6

 
 
Economic and political developments in Mexico may adversely affect our business.
 
All of our operations and assets are located in Mexico. As a result, our financial condition, results of operations and business may be affected by and are subject to the general condition of the Mexican economy, the devaluation of the Mexican peso as compared to the U.S. Dollar, Mexican inflation, interest rates, regulation, taxation, social instability and other political, social and economic developments in or affecting Mexico, including changes in the laws and policies that govern foreign investment, as well as changes in United States laws and regulations relating to foreign trade and investment, over which we have no control. There can be no assurance as to the future effect of any such changes on our results of operations, financial condition, or cash flows.
 
Fluctuations in foreign currency rates, in particular the Mexican peso, may materially affect our results of operations.
 
The Company carries on its primary business activity outside of the United States. Accordingly, it is subject to the risks associated with fluctuation of the rate of exchange of other foreign currencies, in particular the Mexican peso, the currency in which much of the Company's costs are paid, and the United States dollar, the currency for calculating the Company's sales of gold and silver based on the world's commodity markets. Such currency fluctuations may materially affect the Company's financial position and results of operations.
 
All of our assets, our sole director and our Chief Executive Officer are outside the United States, with the result that it may be difficult for investors to enforce within the United States any judgments obtained against us or our directors and officers.
 
All of our assets are located outside the United States. In addition, our sole director and Chief Executive Officer is a national and resident of a country other than the United States, and all or a substantial portion of his assets are located outside the United States. As a result, it may be difficult for investors to enforce within the United States any judgments obtained against us or our director and officers, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state thereof. Consequently, you may be effectively prevented from pursuing remedies under United States federal and state securities laws against us or our directors and officers.
 
Our future is dependent upon our ability to obtain financing. If we do not obtain such financing, we may have to cease our exploration activities and investors could lose their entire investment.
 
There is no assurance that we will operate profitably or generate positive cash flow in the future. We will require additional financing in order to proceed beyond the first few months of our exploration program. We will also require additional financing for the fees we must pay to maintain our status in relation to the rights to our properties and to pay the fees and expenses necessary to become and operate as a public company. We will also need more funds if the costs of the exploration of our existing projects are greater than we have anticipated. We will also require additional financing to sustain our business operations if we are not successful in earning revenues. We may not be able to obtain financing on commercially reasonable terms or terms that are acceptable to us when it is required. Our future is dependent upon our ability to obtain financing. If we do not obtain such financing, our business could fail and investors could lose their entire investment.
 
 
7

 
 
We are subject to corporate governance and internal control reporting requirements, and our costs related to compliance with, or our failure to comply with existing and future requirements, could adversely affect our business.
 
We must comply with corporate governance requirements under the Sarbanes-Oxley Act of 2002 and the Dodd–Frank Wall Street Reform and Consumer Protection Act of 2010, as well as additional rules and regulations currently in place and that may be subsequently adopted by the SEC and the Public Company Accounting Oversight Board. These laws, rules, and regulations continue to evolve and may become increasingly stringent in the future. We are required to include management’s report on internal controls as part of our annual report pursuant to Section 404 of the Sarbanes-Oxley Act. We strive to continuously evaluate and improve our control structure to help ensure that we comply with Section 404 of the Sarbanes-Oxley Act. The financial cost of compliance with these laws, rules, and regulations is expected to remain substantial.
 
Our management has concluded that our disclosure controls and procedures were not effective due to the presence of the following material weaknesses in internal control over financial reporting:
 
We do not have an audit committee. An audit committee would improve oversight in the establishment and monitoring of required internal controls and procedures.
 
Management anticipates that such disclosure controls and procedures will not be effective until the material weaknesses are remediated. We cannot assure you that we will be able to fully comply with these laws, rules, and regulations that address corporate governance, internal control reporting, and similar matters. Failure to comply with these laws, rules and regulations could materially adversely affect our reputation, financial condition, and the value of our securities.
 
Our business is dependent on key executives and the loss of any of our key executives could adversely affect our business, future operations and financial condition.
 
We are dependent on the services of key executives, including our officers, Mark Scott and Juan Miguel Ríos Gutiérrez, and our sole director Juan Miguel Ríos Gutiérrez. Mr. Gutierrez has many years of experience and an extensive background in the mining industry in general. We may not be able to replace that experience and knowledge with other individuals. We do not have “Key-Man” life insurance policies on our key executives. The loss of our key executives or our inability to attract and retain additional highly skilled employees may adversely affect our business, future operations, and financial condition.
 
We have limited insurance.
 
We have limited director and officer insurance and commercial insurance policies. Any significant insurance claims would have a material adverse effect on our business, financial condition and results of operations.
 
 
8

 
 
Risks Associated with Mining
 
Our Mining Operation Agreements are critical to our operations and are subject to cancellation.
 
We are a mining exploration company focused on the acquisition and development of prospective silver opportunities in Mexico. We have mining option agreements in (i) the Los Amoles Property consisting of 1,630 hectares located in Sonora; (ii) the Jalisco Group of Properties, consisting of mining claims totaling 5,240 hectares located in Jalisco; (iii) the Ayones Group of Properties consisting of numerous mining claims totaling 48 hectares in Jalisco; and (iv) the five mining concessions on 721 hectares surrounding the Ayones Group of Properties, called the Corazon Property. We have a letter of intent with the Liz Property located in Ayutla, Jalisco State, Mexico. Sonora Resources is based in Guadalupe, Zacatecas, Mexico.
 
The failure to operate in accordance with the mining option agreements could result in the agreements being terminated. See Note 3 to the Consolidated Financial Statements for a discussion of these critical agreements.
 
Because of the unique difficulties and uncertainties inherent in mineral exploration ventures, we face a high risk of business failure
 
Potential investors should be aware of the difficulties normally encountered by new mineral exploration companies and the high rate of failure of such enterprises. The likelihood of success must be considered in light of the problems, expenses, difficulties, complications, and delays encountered in connection with the exploration of the mineral properties that we plan to undertake. These potential problems include, but are not limited to, unanticipated problems relating to exploration, environmental permitting difficulties and delays, and additional costs and expenses that may exceed current estimates. The expenditures to be made by us in the exploration of the mineral claim may not result in the discovery of mineable mineral deposits. Problems such as unusual or unexpected formations and other conditions are involved in mineral exploration and often result in unsuccessful exploration efforts. If the results of our exploration do not reveal viable commercial mineralization, we may decide to abandon our claims. If this happens, our business will likely fail. All of our mineral properties to which we have rights are in the exploration stage. There is no assurance that we can establish the existence of any mineral resource on any of these properties in commercially exploitable quantities. Until we can do so, we cannot earn any revenues from operations and if we do not do so we will lose all of the funds that we expend on exploration. If we do not discover any mineral resource in a commercially exploitable quantity, our business could fail.
 
Because of the speculative nature of exploration of mineral properties, we may never discover a commercially exploitable quantity of minerals, our business may fail and investors may lose their entire investment.
 
We plan to conduct mineral exploration on certain mineral properties. The search for valuable minerals as a business is extremely risky. We can provide investors with no assurance that additional exploration on these properties will establish that commercially exploitable reserves of minerals exist on these properties. Additional potential problems that may prevent us from discovering any reserves of minerals on these properties include, but are not limited to, unanticipated problems relating to exploration, environmental permitting difficulties and delays, and additional costs and expenses that may exceed current estimates. If we are unable to establish the presence of commercially exploitable reserves of minerals on these properties, our ability to fund future exploration activities will be impeded, we will not be able to operate profitably, and investors may lose all of their investment in our Company.
 
 
9

 
 
The nature of mineral exploration activities involves a high degree of risk and the possibility of uninsured losses that could materially and adversely affect our operations.
 
Exploration for minerals is highly speculative and involves greater risk than many other businesses. Many exploration programs do not result in the discovery of mineralization and any mineralization discovered may not be of sufficient quantity or quality to be profitably mined. Few properties that are explored are ultimately advanced to the stage of producing mines. Our current exploration efforts are, and any future exploration, development or mining operations we may elect to conduct will be, subject to all of the operating hazards and risks normally incident to exploring for and developing mineral properties, such as, but not limited to:
 
economically insufficient mineralized material;
fluctuations in production costs that may make mining uneconomical;
labor disputes;
unanticipated variations in grade and other geologic problems;
environmental hazards;
water conditions;
difficult surface or underground conditions;
industrial accidents;
metallurgical and other processing problems;
mechanical and equipment performance problems;
failure of pit walls or dams;
unusual or unexpected rock formations;
personal injury, fire, flooding, cave-ins, and landslides; and
decrease in revenues due to lower mineral prices.
 
Any of these risks can materially and adversely affect, among other things, the exploration and development of properties, production quantities and rates, costs and expenditures, and production commencement dates. We currently have no insurance to guard against any of these risks. If we determine that capitalized costs associated with any of our mineral interests are not likely to be recovered, we would incur a write-down of our investment in these interests. All of these factors may result in losses in relation to amounts spent which are not recoverable.
 
The potential profitability of mineral ventures depends in part upon factors beyond the control of our Company, and even if we discover and exploit mineral deposits, we may never become commercially viable and we may be forced to cease operations.
 
The commercial feasibility of mineral properties is dependent upon many factors beyond our control, including the existence and size of mineral deposits in the properties we explore, the proximity and capacity of processing equipment, market fluctuations of prices, taxes, royalties, land tenure, allowable production, and environmental regulation. These factors cannot be accurately predicted and any one or a combination of these factors may result in our Company not receiving an adequate return on invested capital. These factors may have material and negative effects on our financial performance and our ability to continue operations.
 
 
10

 
 
Mineralized material is based on interpretation and assumptions and may yield less mineral production under actual conditions than is currently estimated.
 
Unless otherwise indicated, mineralized material presented in our filings with securities regulatory authorities, including the SEC, press releases, and other public statements that may be made from time to time are based upon estimates made by our consultants. When making determinations about whether to advance any of our projects to development, we must rely upon such estimated calculations as to the mineralized material on our properties. Until mineralized material is actually mined and processed, it must be considered an estimate only. These estimates are imprecise and depend on geological interpretation and statistical inferences drawn from drilling and sampling analysis, which may prove to be unreliable. We cannot assure you that these mineralized material estimates will be accurate or that this mineralized material can be mined or processed profitably. Any material changes in estimates of mineralized material will affect the economic viability of placing a property into production and such property's return on capital. There can be no assurance that minerals recovered in small scale tests will be recovered at production scale. The mineralized material estimates have been determined and valued based on assumed future prices, cut-off grades, and operating costs that may prove inaccurate. Extended declines in market prices for gold and silver may render portions of our mineralized material uneconomic and adversely affect the commercial viability of one or more of our properties and could have a material adverse effect on our results of operations or financial condition.
 
The construction of mines is subject to all of the risks inherent in construction.
 
These risks include potential delays, cost overruns, shortages of material or labor, construction defects, and injuries to persons and property. While we anticipate taking all measures which we deem reasonable and prudent in connection with the construction, there is no assurance that the risks described above will not cause delays or cost overruns in connection with such construction. Any delay would postpone our anticipated receipt of revenue and adversely affect our operations. Cost overruns would likely require that we obtain additional capital in order to commence production. Any of these occurrences may adversely affect our ability to generate revenues and the price of our stock.
 
An adequate supply of water may not be available to undertake mining and production at our properties.
 
The amount of water that we are entitled to use from wells must be determined by the appropriate regulatory authorities. A determination of these rights is dependent in part on our ability to demonstrate a beneficial use for the amount of water that we intend to use. Unless we are successful in developing a property to a point where it can commence commercial production of silver, gold or other precious metals, we may not be able to demonstrate such beneficial use. Accordingly, there is no assurance that we will have access to the amount of water needed to operate a mine at our properties.
 
Exploration and exploitation activities are subject to comprehensive regulation which may cause substantial delays or require capital outlays in excess of those anticipated causing an adverse effect on our Company.
 
Exploration and exploitation activities are subject to federal, state, and local, and in some cases, foreign laws, regulations, and policies, including laws regulating the removal of natural resources from the ground and the discharge of materials into the environment. Exploration and exploitation activities are also subject to federal, state, and local, and in some cases, foreign laws and regulations which seek to maintain health and safety standards by regulating the design and use of drilling methods and equipment.
 
Various permits from government bodies are required for drilling operations to be conducted, and no assurance can be given that such permits will be received. Environmental and other legal standards imposed by federal, state, or local authorities may be changed and any such changes may prevent us from conducting planned activities or increase our costs of doing so, which would have material adverse effects on our business. Moreover, compliance with such laws may cause substantial delays or require capital outlays in excess of those anticipated, thus causing an adverse effect on us. Additionally, we may be subject to liability for pollution or other environmental damages which we may not be able to or elect not to insure against due to prohibitive premium costs and other reasons. Any laws, regulations, or policies of any government body or regulatory agency may be changed, applied, or interpreted in a manner which will alter and negatively affect our ability to carry on our business.
 
 
11

 
 
As we face intense competition in the mineral exploration industry, we will have to compete with our competitors for financing and for qualified managerial and technical employees.
 
Our mineral properties are in Mexico and our competition there includes large, established mining companies with substantial capabilities and with greater financial and technical resources than we have. As a result of this competition, we may have to compete for financing and we may be unable to acquire financing on terms we consider acceptable. We may also have to compete with the other mining companies in the recruitment and retention of qualified managerial and technical employees. If we are unable to successfully compete for financing or qualified employees, our exploration programs may be slowed down or suspended, which may cause us to cease operations as a Company.
 
Government regulation may adversely affect our business and planned operations.
 
Mineral exploration and development activities are subject to various Mexican laws governing prospecting, development, taxes, labor standards and occupational health, mine safety, toxic substances, land use, water use, land claims of local people, and other matters. We cannot assure you that new rules and regulations will not be enacted or that existing rules and regulations will not be applied in a manner which could limit or curtail our exploration or development of our properties.
 
The Company's mining, exploration and development projects could be adversely affected by amendments to such laws and regulations, by future laws and regulations, by more stringent enforcement of current laws and regulations, by changes in policies of México and the United States affecting foreign trade, investment, mining and repatriation of financial assets, by shifts in political attitudes in México and by exchange controls and currency fluctuations. The effect, if any, of these factors cannot be accurately predicted. Further, there can be no assurance that the Company will be able to obtain or maintain all necessary licenses and permits that may be required to carry out exploration, development and mining operations at its projects.
 
Our operating costs could be adversely affected by inflationary pressures especially to labor, equipment, and fuel costs.
 
The global economy is currently experiencing a period of high commodity prices and as a result, the mining industry is attempting to increase production at new and existing projects, while also seeking to discover, explore and develop new projects. This has caused significant upward price pressures in the costs of mineral exploration companies, especially in the areas of skilled labor and drilling equipment, both of which are in tight supply and whose costs are increasing. Continued upward price pressures in our exploration costs may have an adverse impact to our business.
 
We may not have sufficient funding for exploration which may impair our profitability and growth.
 
The capital required for exploration of mineral properties is substantial. From time to time, we will need to raise additional cash, or enter into joint venture arrangements, in order to fund the exploration activities required to determine whether mineral deposits on our projects are commercially viable. New financing or acceptable joint venture partners may or may not be available on a basis that is acceptable to us. Inability to obtain new financing or joint venture partners on acceptable terms may prohibit us from continued exploration of such mineral properties. Without successful sale or future development of our mineral properties through joint venture, we will not be able to realize any profit from our interests in such properties, which could have a material adverse effect on our financial position and results of operations.
 
We have no reported mineral reserves and if we are unsuccessful in identifying mineral reserves in the future, we may not be able to realize any profit from our property interests.
 
We are an exploration stage company and have no reported mineral reserves. Any mineral reserves will only come from extensive additional exploration, engineering, and evaluation of existing or future mineral properties. The lack of reserves on our mineral properties could prohibit us from sale or joint venture of our mineral properties. If we are unable to sell or joint venture for development our mineral properties, we will not be able to realize any profit from our interests in such mineral properties, which could materially adversely affect our financial position or results of operations. Additionally, if we or partners to whom we may joint venture our mineral properties are unable to develop reserves on our mineral properties, we may be unable to realize any profit from our interests in such properties, which could have a material adverse effect on our financial position or results of operations.
 
 
12

 
 
Severe weather or violent storms could materially affect our operations due to damage or delays caused by such weather.
 
Our exploration activities are subject to normal seasonal weather conditions that often hamper and may temporarily prevent exploration activities. There is a risk that unexpectedly harsh weather or violent storms could affect areas where we conduct exploration activities. Delays or damage caused by severe weather could materially affect our operations or our financial position.
 
Our business is extremely dependent on gold, silver, commodity prices, and currency exchange rates over which we have no control.
 
Our operations will be significantly affected by changes in the market price of gold, silver and other commodities since the evaluation of whether a mineral deposit is commercially viable is heavily dependent upon the market price of gold, silver and other commodities. The price of commodities also affects the value of exploration projects we own or may wish to acquire. These prices of commodities fluctuate on a daily basis and are affected by numerous factors beyond our control. The supply and demand for gold, silver and other commodities, the level of interest rates, the rate of inflation, investment decisions by large holders of these commodities, including governmental reserves, and stability of exchange rates can all cause significant fluctuations in prices. Such external economic factors are in turn influenced by changes in international investment patterns and monetary systems and political developments. The prices of commodities have fluctuated widely and future serious price declines could have a material adverse effect on our financial position or results of operations.
 
Estimates of mineralized materials are subject to geologic uncertainty and inherent sample variability.
 
Although the estimated resources at our existing properties will be delineated with appropriately spaced drilling, there is inherent variability between duplicate samples taken adjacent to each other and between sampling points that cannot be reasonably eliminated. There also may be unknown geologic details that have not been identified or correctly appreciated at the proposed level of delineation. This results in uncertainties that cannot be reasonably eliminated from the estimation process. Some of the resulting variances can have a positive effect and others can have a negative effect on mining and processing operations. Acceptance of these uncertainties is part of any mining operation.
 
We engage in our operations through a venture that we do not control. We may not be able to materially affect the cost or success of that venture.
 
Pursuant to our option agreement with Yale Resources, the exploration and development work on our Los Amoles Property is expected to be performed by Minera Alta Vista S.A. de C.V., the Mexican subsidiary of the optionor, Yale Resources. As the operator, Yale Resources makes most of the decisions about the exploration and development of this project. We cannot assure you that Yale Resources or its subsidiaries, affiliates, agents or management will make decisions concerning this project that are reasonable, profitable or in our best interest.
 
If we establish the existence of a mineral resource on any of our properties in a commercially exploitable quantity, we will require additional capital in order to explore and develop the property into a producing mine. If we cannot raise this additional capital, we will not be able to exploit the resource, and our business could fail.
 
If we do discover mineral resources in commercially exploitable quantities on any of our properties, we will be required to expend substantial sums of money to establish the extent of the resource, develop processes to extract it and develop extraction and processing facilities and infrastructure. Although we may derive substantial benefits from the discovery of a major deposit, there can be no assurance that such a resource will be large enough to justify commercial operations, nor can there be any assurance that we will be able to raise the funds required for development on a timely basis. If we cannot raise the necessary capital or complete the necessary facilities and infrastructure, our business may fail.
 
Mineral exploration and development is subject to extraordinary operating risks. We do not currently insure against these risks. In the event of a cave-in or similar occurrence, our liability may exceed our resources, which would have an adverse impact on our Company.
 
Mineral exploration, development and production involve many risks which even a combination of experience, knowledge and careful evaluation may not be able to overcome. Our operations will be subject to all the hazards and risks inherent in the exploration for mineral resources and, if we discover a mineral resource in commercially exploitable quantity, our operations could be subject to all of the hazards and risks inherent in the development and production of resources, including liability for pollution, cave-ins or similar hazards against which we cannot insure or against which we may elect not to insure. Any such event could result in work stoppages and damage to property, including damage to the environment. We do not currently maintain any insurance coverage against these operating hazards. The payment of any liabilities that arise from any such occurrence would have a material adverse impact on our Company.
 
 
13

 
 
If our costs of exploration are greater than anticipated, then we may not be able to complete the exploration program for our properties without additional financing, of which there is no assurance that we would be able to obtain.
 
We are proceeding with the initial stages of exploration on our Los Amoles Property and properties in Jalisco, Mexico. Our exploration program outlines a budget for completion of the program. However, there is no assurance that our actual costs will not exceed the budgeted costs. Factors that could cause actual costs to exceed budgeted costs include increased prices due to competition for personnel and supplies during the exploration season, unanticipated problems in completing the exploration program and delays experienced in completing the exploration program. Increases in exploration costs could result in our not being able to carry out our exploration program without additional financing. There is no assurance that we would be able to obtain additional financing in this event.
 
Because of the speculative nature of exploration of mining properties, there is substantial risk that no commercially exploitable minerals will be found and our business will fail.
 
We have not commenced the initial stage of exploration of our mineral property, and thus have no way to evaluate the likelihood that we will be successful in establishing commercially exploitable reserves of gold, silver or other valuable minerals on our Los Amoles Property or properties in Jalisco, Mexico. The search for valuable minerals as a business is extremely risky. We may not find commercially exploitable reserves of gold, silver or other valuable minerals in our mineral property. Exploration for minerals is a speculative venture necessarily involving substantial risk. The expenditures to be made by us on our exploration program may not result in the discovery of commercial quantities of ore. The likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays encountered in connection with the exploration of the mineral properties that we plan to undertake. Problems such as unusual or unexpected formations and other conditions are involved in mineral exploration and often result in unsuccessful exploration efforts. In such a case, we would be unable to complete our business plan.
 
As we undertake exploration of our mineral property, we will be subject to compliance with government regulation that may increase the anticipated time and cost of our exploration program, which could increase our expenses.
 
We will be subject to the mining laws and regulations in Mexico as we carry out our exploration program. We will be required to pay mining taxes to the Mexican government. We will be required to prove our compliance with relevant Mexican environmental and workplace safety laws, regulations and standards by submitting receipts showing the purchase of equipment used for workplace safety or the prevention of pollution or the undertaking of environmental remediation projects before we are able to obtain drilling permits. If our exploration activities lead us to make a decision to go into mining production, before we initiate a major drilling program, we will have to obtain an environmental impact statement authorization. This could potentially take more than 10 months to obtain and could potentially be refused. New regulations, if any, could increase our time and costs of doing business and prevent us from carrying out our exploration program. These factors could prevent us from becoming profitable.
 
Because our executive officers and directors have other business interests, they may not be able or willing to devote a sufficient amount of time to our business operations, causing our business to fail.
 
Juan Miguel Ríos Gutiérrez, our Chief Executive Officer and sole director of our Company, and Mark Scott, our Chief Financial Officer, each devote approximately 40% of their working time on providing management services to us. If the demands on our executive officers and sole director from their other obligations increase, they may no longer be able to devote sufficient time to the management of our business. This could negatively impact our business development.
 
Because we have limited staff, we need to utilize outside parties in our business operations, which could cause our business to fail.
 
Our President & CEO Juan Miguel Ríos Gutiérrez holds an MBA in P.Eng., Mining and Metallurgical. He has worked for twenty years in management and on projects at Peñoles, the largest mining operation in Mexico. Mr. Juan Miguel Ríos Gutiérrez was the fourth employee at First Majestic Silver Corp. (“First Majestic” or FMSC”) and helped build that company from a junior mining exploration company on the TSXV and NYSE to a major global silver producer. Mr. Gutierrez held the General Manager position at four of the FMSC mining units in Mexico.
 
Because of limited staff, we rely on outside parties in our business operations. This could negatively impact our business development.
 
 
 
14

 
 
Risks Related to Our Common Stock
 
If we issue additional shares in the future, it will result in the dilution of our existing shareholders.
 
Our articles of incorporation authorize the issuance of up to 500,000,000 shares of common stock with a par value of $0.001 per share. Our Board of Directors may choose to issue some or all of such shares to acquire one or more companies or properties and to fund our overhead and general operating requirements. The issuance of any such shares may reduce the book value per share and may contribute to a reduction in the market price of the outstanding shares of our common stock. If we issue any such additional shares, such issuance will reduce the proportionate ownership and voting power of all current shareholders. Further, such issuance may result in a change of control of our corporation.
 
Our common stock is illiquid and the price of our common stock may be negatively impacted by factors which are unrelated to our operations.
 
Although our common stock is currently quoted on the OTC Bulletin Board, relatively few of our shares have been purchased or sold on that market. Even when a more active market is established, trading through the OTC Bulletin Board is frequently thin and highly volatile. There is no assurance that a sufficient market will develop in our stock, in which case it could be difficult for shareholders to sell their stock. The market price of our common stock could fluctuate substantially due to a variety of factors, including market perception of our ability to achieve our planned growth, quarterly operating results of our competitors, trading volume in our common stock, changes in general conditions in the economy and the financial markets or other developments affecting our competitors or us. In addition, the stock market is subject to extreme price and volume fluctuations. This volatility has had a significant effect on the market price of securities issued by many companies for reasons unrelated to their operating performance and could have the same effect on our common stock.
 
We do not intend to pay cash dividends on any investment in the shares of stock of our Company.
 
We have never paid any cash dividends and currently do not intend to pay any cash dividends for the foreseeable future. Because we do not intend to declare cash dividends, any gain on an investment in our Company will need to come through an increase in the stock's price. This may never happen and investors may lose all of their investment in our Company.
 
Our stock is categorized as a penny stock. Trading of our stock may be restricted by the SEC's penny stock regulations which may limit a shareholder's ability to buy and sell our stock.
 
Our stock is categorized as a penny stock. The SEC has adopted Rule 15g-9 which generally defines "penny stock" to be any equity security that has a market price (as defined) less than US$ 5.00 per share or an exercise price of less than US$ 5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and accredited investors. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer's account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer's confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common stock.
 
 
15

 
 
FINRA sales practice requirements may also limit a shareholder’s ability to buy and sell our stock.
 
In addition to the “penny stock” rules described above, FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.
 
ITEM 1B.  UNRESOLVED STAFF COMMENTS
 
Not applicable.
 
ITEM 2.  PROPERTIES
 
Other than our mining claims, leases, and other real property interests specifically related to mining, we do not own real estate nor have plans to acquire any real estate.
 
ITEM 3.  LEGAL PROCEEDINGS
 
There are no pending legal proceedings against us that are expected to have a material adverse effect on our cash flows, financial condition or results of operations.
 
ITEM 4.  MINE SAFETY DISCLOSURE
 
Not applicable.
 
 
16

 
 
PART II
 
ITEM 5.  MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
 
Our common stock currently trades on the Over the Counter Bulletin Board (“OTCBB”) under the symbol “SURE.” The following table sets forth the range of the high and low sale prices of the common stock for the periods indicated:
 
Quarter Ended
 
High
   
Low
 
                 
February 28, 2012
  $ 0.48     $ 0.24  
May 31, 2012
  $ 0.30     $ 0.16  
August 31, 2012
  $ 0.22     $ 0.13  
November 30, 2012
  $ 0.16     $ 0.05  
                 
February 28, 2011
  $ 0.29     $ 0.10  
May 31, 2011
  $ 0.67     $ 0.18  
August 31, 2011
  $ 0.76     $ 0.38  
November 30, 2011
  $ 0.61     $ 0.22  
                 
February 28, 2010
  $ -     $ -  
May 31, 2010
  $ -     $ -  
August 31, 2010
  $ -     $ -  
November 30, 2010
  $ 0.32     $ 0.16  
 
As of February 6, 2013, the closing price of the Company's common stock was $0.19 per share. As of February 7, 2013, there were 91,855,861 shares of common stock outstanding held by approximately 17 stockholders of record. The number of stockholders, including the beneficial owners' shares through nominee names, is approximately 400.
 
DIVIDEND POLICY
 
We have never paid any cash dividends and intend, for the foreseeable future, to retain any future earnings for the development of our business. Our future dividend policy will be determined by the board of directors on the basis of various factors, including our results of operations, financial condition, capital requirements and investment opportunities.
 
RECENT SALES OF UNREGISTERED SECURITIES
 
During the three months ended November 30, 2012, there were the following sales of unregistered equity securities.
 
On November 16, 2012, we issued 200,000 shares to Yale Resources pursuant to an Option Agreement at the market value of $0.08 per share for a total value of $16,000. The shares do not have registration rights.
 
Unless otherwise indicated, all of the above private placements of Company securities were conducted under the exemption from registration as provided under Section 4(2) of the Securities Act of 1933. All of the shares issued were issued in private placements not involving a public offering, are considered to be “restricted stock” as defined in Rule 144 promulgated under the Securities Act of 1933 and stock certificates issued with respect thereto bear legends to that effect.
 
 
17

 
 
Performance Graph
Comparison of Cumulative Total Return
 
Among Sonora Resources Corp, Global X Silver Miners ETF and iShares Silver Trust ETF
 
 
 
   
11/30/2009
   
11/30/2010
   
11/30/2011
   
11/30/2012
 
                         
Sonora Resources Corp
  $ 100.00     $ 2,300.00     $ 2,900.00     $ 900.00  
                                 
Global X Silver Miners ETF
  $ 100.00     $ 163.38     $ 158.86     $ 255.98  
                                 
iShares Silver Trust ETF
  $ 100.00     $ 151.18     $ 176.31     $ 178.29  
 
The above assumes that $100 was invested in the common stock and each index on November 30, 2009. Although the company has not declared a dividend on its common stock, the total return for each index assumes the reinvestment of dividends. Stockholder returns over the periods presented should not be considered indicative of future returns. The foregoing table shall not be deemed incorporated by reference by any general statement incorporating by reference the Form 10-K  into any filing under the Securities Act or the Exchange Act, except to the extent the company specifically incorporates this information by reference, and shall not otherwise be deemed filed under the acts.
 
 
18

 
 
EQUITY COMPENSATION PLAN INFORMATION
 
The following table provides information as of November 30, 2012 related to the equity compensation plan in effect at that time.
 
   
(a)
   
(b)
   
(c)
 
Plan Category
 
Number of securities
to be issued upon
exercise of outstanding
options, warrants
and rights
   
Weighted-average
exercise price of
outstanding options,
warrants and rights
   
Number of securities
remaining available
for future issuance under equity compensation plan
(excluding securities
reflected in column (a))
 
                   
Equity compensation plan approved by shareholders
                 
Equity compensation plans not approved by shareholders
    1,400,000       0.200       7,100,000  
Total
    1,400,000       0.200       7,100,000  
 
ITEM 6.  SELECTED FINANCIAL DATA
 
In the following table, we provide you with our selected consolidated historical financial and other data. We have prepared the consolidated selected financial information using our consolidated financial statements for the years ended November 30, 2012 and 2011. When you read this selected consolidated historical financial and other data, it is important that you read along with it the historical financial statements and related notes in our consolidated financial statements included in this report, as well as Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations.
 
   
Year Ended,
 
   
November 30, 2012
   
November 30, 2011
   
November 30, 2010
   
November 30, 2009
 
STATEMENT OF OPERATIONS DATA:
                       
Revenue
  $ -     $ -     $ -     $ 11,254  
Net loss
    (934,943 )     (1,153,748 )     (80,849 )     (17,866 )
Net loss applicable to Sonora Resources Corp. common shareholders
    (934,943 )     (1,153,748 )     (80,849 )     (17,866 )
Net loss per share
    (0.01 )     (0.01 )     -       -  
                                 
BALANCE SHEET DATA:
                               
Total assets
    4,536,250       3,965,749       300,750       2,130  
Stockholders' equity (deficit)
    4,490,075       3,520,593       297,011       (21,629 )
 
 
19

 
 
ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
Forward-Looking Statements and Associated Risks.
 
This report contains forward-looking statements. Forward-looking statements are projections of events, revenues, income, future economic performance or management’s plans and objectives for future operations. In some cases, you can identify forward-looking statements by the use of terminology such as “may”, “should”, “expect”, “plan”, “anticipate”, “believe”, “estimate”, “predict”, “potential” or “continue” or the negative of these terms or other comparable terminology. Examples of forward-looking statements made in this report include statements about:
 
our plan of operations;
our future exploration programs and results;
our expectations regarding the impact of various accounting policies;
our future capital expenditures; and
our future investments in and acquisitions of mineral resource properties.
 
These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including:
 
risks and uncertainties relating to the interpretation of sampling results, the geology, grade and continuity of mineral deposits;
risks and uncertainties that results of initial sampling and mapping will not be consistent with our expectations;
mining and development risks, including risks related to accidents, equipment breakdowns, labor disputes or other unanticipated difficulties with or interruptions in production;
the potential for delays in exploration activities; risks related to the inherent uncertainty of cost estimates and the potential for unexpected costs and expenses;
risks related to commodity price fluctuations;
the uncertainty of profitability based upon our limited history;
risks related to failure to obtain adequate financing on a timely basis and on acceptable terms for our planned exploration project;
risks related to environmental regulation and liability;
risks that the amounts reserved or allocated for environmental compliance, reclamation, post- closure control measures, monitoring and on-going maintenance may not be sufficient to cover such costs;
risks related to tax assessments;
political and regulatory risks associated with mining development and exploration; and
the risks in the section entitled “Risk Factors”.
 
Any of these risks could cause our Company’s or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by the forward-looking statements contained in this quarterly report.
 
While these forward-looking statements and any assumptions upon which they are based are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
 
In this report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to “common shares” refer to the common shares in our capital stock.
 
 
20

 
 
Plan of Operation
 
We are a mining exploration company focused on the acquisition and exploration of prospective silver opportunities in Mexico. For this objective, we incorporated a mexican subsidiary, Finder Plata SA de CV, on July 12, 2011. Our goal is to build our Company into a successful mineral exploration and development company. During 2013 and 2014, we intend to produce silver and gold at our Corazon property and Liz project through processing economical old dumps and tailings by VAT leaching with amonium tiosulphate on these properties.

We closed a series of mining option agreements through our fully owned subsidiary Finder Plata as described below. We intend to raise capital from investors for development and execution of our business plan with this portfolio of mining properties.
 
We have mining option agreements in (i) the Los Amoles Property consisting of 1,630 hectares located in Sonora; (ii) the Jalisco Group of Properties, consisting of mining claims totaling 5,240 hectares located in Jalisco; and (iii) the Ayones Group of Properties consisting of numerous mining claims totaling 48 hectares in Jalisco. We have commenced an underground work program at the Los Amoles property and completed a geologic report to define the potential vein structure and outcroppings and prepare for a planned drilling program later in 2013.
 
Also, we have five mining concessions on 721 hectares surrounding the Ayones Group of Properties, called the Corazon Property. We have a letter of intent with the Liz Property located in Ayutla, Jalisco State, Mexico. Sonora Resources is based in Guadalupe, Zacatecas, Mexico. We have concluded phase one field work at the Corazon property and the Company intends to produce silver and gold at our Corazon and Liz properties in 2013 and 2014.
 
We are currently in the exploration stage as defined in ASC 915 "Accounting and Reporting for Development Stage Enterprises" and have minimal operations.
 
We are currently in the development stage as defined in ASC 915 "Accounting and Reporting for Development Stage Enterprises" and have minimal operations.
 
We have incurred a cumulative net loss since inception on December 3, 2007 to November 30, 2012 of $2,197,000 and have no source of operating revenue. While our management believes that we will be successful in our planned operating activities under our business plan and capital raising activities, there can be no assurance that we will be successful in the mining development and exploration business or the raising of sufficient capital such that we will generate adequate revenues to earn a profit or sustain its operations.
 
The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplates our continuation as a going concern. We have not established a source of revenues sufficient to cover its operating costs, and as such, have incurred an operating loss since inception. Further, as of November 30, 2012, we have working capital of $347,000. These and other factors raise doubt about our ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments or classifications that may result from the possible inability of the Company to continue as a going concern.
Results of Operations
 
The following table presents certain consolidated statement of operations information and presentation of that data as a percentage of change from period-to-period.
 
(dollars in thousands)
 
For the year ended November 30, 2012 compared to the year ended November 30, 2011
 
   
Year Ended November 30,
 
   
2012
   
2011
   
$ Variance
   
% Variance
 
                         
Revenue
  $ -     $ -     $ -        
Cost of sales     -       -       -        
Gross profit
    -       -       -        
General and administrative expenses
    277       558       (281 )     50.4 %
Exploration expenses
    520       185       335       -100.0 %
Operating loss
    (797 )     (743 )     (54 )     -7.3 %
Other income (expense):
                               
                                 
Interest expense
    (138 )     (412 )     274       66.5 %
Foreign exchange gain
    -       1       (1 )     -100.0 %
Total other expense
    (138 )     (411 )     273       66.4 %
Net loss     (935 )     (1,154 )     219       19.0 %
 
 
21

 
 
We have not generated any revenues during the year ended November 30, 2012 and 2011.
 
We acquired mining option agreements with the Los Amoles, Jalisco, Ayones, and Corazon Mexico properties in order to determine whether they possess commercially exploitable quantities of gold, silver, and other metals.
 
General and administrative expenses for the year ended November 30, 2012 decreased $281,000 to $277,000 as compared to $558,000 for the year ended November 30, 2011.
 
Exploration expenses for the year ended November 30, 2012 increased $335,000 to $520,000 as compared to $185,000 for the year ended November 30, 2011.
 
Net loss for the year ended November 30, 2012 was $935,000 as compared to a net loss of $1,154,000 for the year ended November 30, 2011.
 
Liquidity and Capital Resources
 
As of November 30, 2012, we had cash of $293,000 and working capital of $347,000. This increase in our working capital is primarily due to the issuance of common stock and convertible debentures for exploration expenses related to Los Amoles and Corazon properties and common stock issued for private placement for cash. We have incurred operating losses since inception, and this is likely to continue until we mine the Corazon property. We expect to finance our plan through investors, First Majestic and cash flow from the Corazon and Liz properties discussed below.
 
We require funds to enable us to address our minimum current and ongoing expenses. Presently, we do not generate any revenue and expect to incur significant operating and capital expenses. Management projects that we may require an additional $4,584,250 to fund our operating expenditures for the next twelve month period for the Los Amoles, Jalisco, Ayones and Corazon, Mexico properties. Details are as follows:
 
Expenditures
 
Amount
 
       
Mining exploration expenses
  $ 4,296,250  
General and administration expenses     288,000  
Total
  $ 4,584,250  
 
Operating Activities
 
Net cash used in operating activities for the year ended November 30, 2012 was $476,000, compared with net cash used of $620,000 for the year ended November 30, 2011. This amount was primarily related to a net loss of $935,000, offset by non-cash expenses of $510,000.
 
Investing Activities
 
Net cash used in investing activities for the year ended November 30, 2012 was $271,000. This related to option payments for our Mexican properties.
 
 
22

 
 
Financing Activities
 
Net cash provided by financing activities for the year ended November 30, 2012 was $945,000. This is primarily due to the issuance of convertible demand promissory notes for $205,000 and the issuance of common stock for $740,000.
 
We must raise additional funds or achieve profitable operations in order to continue as a going concern. We may not be successful in our efforts to raise additional funds. Even if we are able to raise additional funds through the sale of our securities or through the issuance of debt securities, or loans from our director or financial institutions, our cash needs could be greater than anticipated in which case we could be forced to raise additional capital. At the present time, we have no commitments for any additional financing, and there can be no assurance that, if needed, additional capital will be available to us on commercially acceptable terms or at all.
 
These conditions raise substantial doubt as to our ability to continue as a going concern, which may make it more difficult for us to raise additional capital when needed. If we cannot get the needed capital, we may have to curtail or cease our operations.
 
Our unaudited contractual cash obligations as of November 30, 2012 are summarized in the table below:
 
         
Less Than
               
Greater Than
 
Contractual Cash Obligations
 
Total
   
1 Year
   
1-3 Years
   
3-5 Years
   
5 Years
 
                                         
Operating leases
  $ 0     $ 0     $ 0     $ 0     $ 0  
Capital lease obligations
    0       0       0       0       0  
Note payable
    0       0       0       0       0  
Mining expenditures
    8,545,250       4,296,250       2,249,000       2,000,000       0  
Acquisitions
    0       0       0       0       0  
    $ 8,545,250     $ 4,296,250     $ 2,249,000     $ 2,000,000     $ 0  
 
Off-Balance Sheet Arrangements
 
We have no 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 is material to stockholders.
 
Critical Accounting Policies
 
The application of GAAP involves the exercise of varying degrees of judgment. On an ongoing basis, we evaluate our estimates and judgments based on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions. We believe that of our significant accounting policies (see summary of significant accounting policies more fully described in Note 2 to the financial statements set forth in this report), the following policies involve a higher degree of judgment and/or complexity:
 
 
23

 
 
Foreign Currency Translation
 
We maintain our accounting records in U.S. Dollars. Our Finder Plata records are maintained in Mexican Pesos. At the transaction date, each asset, liability, revenue and expense involving foreign currencies is translated into U.S. dollars by the use of the exchange rate in effect at that date. At the period end, monetary assets and liabilities involving foreign currencies are re-measured by using the exchange rate in effect at that date. The resulting foreign exchange gains and losses are included in operations. Our currency exposure is insignificant and immaterial and we do not use derivative instruments to reduce our potential exposure to foreign currency risk.
 
Mineral Properties
 
Costs of acquiring mineral properties are capitalized by project area upon purchase of the associated claims. Costs to maintain the mineral rights and leases and explore are expensed as incurred.  When a property reaches the production stage, the related capitalized costs will be amortized, using the units of production method on the basis of periodic estimates of ore reserves.
 
Mineral properties are periodically assessed for impairment of value and any diminution in value.
 
Stock-Based Compensation
 
The Company adopted ASC 718, Compensation – Stock-Based Compensation, to account for its stock options and similar equity instruments issued. Accordingly, compensation costs attributable to stock options or similar equity instruments granted are measured at the fair value at the grant date, and expensed over the expected vesting period. ASC 718 requires excess tax benefits be reported as a financing cash inflow rather than as a reduction of taxes paid.
 
Impairment of Long-lived Assets
 
Long-lived assets are reviewed for impairment in accordance with FASB ASC 360, Property, Plant, and Equipment. Under FASB ASC 360, these assets are tested for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. An impairment charge is recognized for the amount, if any, when the carrying value of the asset exceeds the fair value. As of November 30, 2012, no events or circumstances occurred for which an evaluation of the recoverability of long-lived assets was required.
 
Going Concern
 
Due to the uncertainty of our ability to meet our current operating and capital expenses, in their report on the annual financial statements for the year ended November 30, 2012, our independent auditors included an explanatory paragraph regarding concerns about our ability to continue as a going concern. Our financial statements contain additional note disclosures describing the circumstances that lead to this disclosure by our independent auditors.
 
There is substantial doubt about our ability to continue as a going concern as the continuation of our business is dependent upon obtaining further financing. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders. Commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.
 
There are no assurances that we will be able to obtain further funds required for our continued operations or for our entry into the mining exploration and development industry. We are pursuing various financing alternatives to meet our immediate and long-term financial requirements. There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. If we are not able to obtain the additional financing on a timely basis, we will not be able to meet our other obligations as they become due.
 
 
24

 
 
ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 
We have no investments in any market risk sensitive instruments either held for trading purposes or entered into for other than trading purposes.
 
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
Reference is made to our consolidated financial statements beginning on page F-1 of this report.
 
ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
 
Not applicable.
 
ITEM 9A.  CONTROLS AND PROCEDURES
 
MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
 
a) Evaluation of Disclosure Controls and Procedures
 
We conducted an evaluation under the supervision and with the participation of our management, of the effectiveness of the design and operation of our disclosure controls and procedures as of November 30, 2012. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as amended (“Exchange Act”), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by the company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures also include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company's management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Based on this evaluation, our principal executive and principal financial officers concluded as of November 30, 2012 that our disclosure controls and procedures were not effective at the reasonable assurance level due to the material weaknesses in our internal controls over financial reporting discussed immediately below.
 
 
25

 
 
Identified Material Weakness
 
A material weakness in our internal control over financial reporting is a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected.
 
Management identified the following material weakness during its assessment of internal controls over financial reporting:
 
Audit Committee: We have a board which consists of the Chief Executive Officer and we do not have an audit committee. An audit committee would improve oversight in the establishment and monitoring of required internal controls and procedures. We expect to expand the board and establish an audit committee during 2013.
 
b) Changes In Internal Control Over Financial Reporting
 
During the quarter ended November 30, 2012, there were no changes in our internal controls over financial reporting during this fiscal quarter that materially affected, or is reasonably likely to have a materially affect, on our internal control over financial reporting.
 
MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
 
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we assessed the effectiveness of our internal control over financial reporting as of the end of the period covered by this report based on the framework in "Internal Control—Integrated Framework" issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that assessment, our principal executive officer and principal financial officer concluded that our internal control over financial reporting were not effective to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of our financial statements for external purposes in accordance with United States generally accepted accounting principles.
 
The effectiveness of our internal control over financial reporting as of November 30, 2012 has not been audited by PMB Helin Donovan, LLP, an independent registered public accounting firm.
 
ITEM 9B.  OTHER INFORMATION
 
There were no disclosures of any information required to be filed on Form 8-K during the three months ended November 30, 2012 that were not filed.
 
 
26

 
 
PART III
 
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
 
The following table sets forth, as of November 30, 2012, the name, age, and position of each executive officer and director and the term of office of each director of the Company, as well as certain biographical information, is set forth below.
 
Business Experience Descriptions
 
Set forth below is certain biographical information regarding each of the Company's executive officers and directors.
 
Name
 
Age
 
Positions and Offices Held
 
Since
             
Juan Miguel Ríos Gutiérrez
 
53
 
Director, Chief Executive Officer and Secretary
 
January 21, 2011
             
Mark Scott
 
59
 
Chief Financial Officer
 
June 15, 2011
 
Our Management Director
 
Juan Miguel Ríos Gutiérrez
 
Mr. Gutiérrez is a seasoned mining professional and metallurgical engineer who resides in Mexico. In 2004, he was the 4th person hired by First Majestic (Durango, Mexico) and helped build that company from a junior mining exploration company on the TSXV to a major global silver producer (7.5m oz Ag in 2011). He first served with the company in the capacity of general manager of each of the three mining units, and then moved to the position of manager for new business initiatives and strategic planning. He left First Majestic in January 2011 to begin working with Sonora yet maintains strong contacts with them. Mr. Gutiérrez graduated with a degree in engineering from the University of Chihuahua in Mexico, specializing in mining and metallurgical studies and a diploma in management projects. His twenty-seven year career is characterized by an array of appointments related to underground mining and exploration. His vocational experience has provided him with vast abilities to manage distinct and detailed mining projects while also focusing on the identification and successful negotiation of strategic corporate initiatives.
 
Mr. Gutiérrez was appointed to the Board on January 21, 2011 when he was appointed Chief Executive Officer.
 
Other Executive Officers
 
Mark Scott
 
Mr. Scott has significant financial, capital market and experience in public microcap companies. Mr. Scott serves as (i) Chief Financial Officer of Sonora Resources Corporation, a position he has held since June 2011; (ii) Chief Financial Officer, Secretary and Treasurer of Visualant, Inc., a position he has held since May 2010;  and (iii) Chief Financial Officer, Secretary and Treasurer of WestMountain Gold, Inc. since December 8, 2010. Mr. Scott also provides consulting financial services to other public companies.
 
Mr. Scott previously served as Chief Financial Officer and Secretary of IA Global, Inc. from October 2003 to June 2011. Previously, he held executive financial positions with Digital Lightwave; Network Access Solutions; and Teltronics, Inc. He has also held senior financial positions at Protel, Inc., Crystals International, Inc., Ranks Hovis McDougall, LLP and Brittania Sportswear, and worked at Arthur Andersen. Mr. Scott is also a certified public accountant and received a Bachelor of Arts in Accounting from the University of Washington.
 
 
27

 
 
Family Relationships
 
There are no family relationships among our directors and executive officers.
 
Involvement in Certain Legal Proceedings
 
None of our directors or executive officers has, during the past five years:
 
 
Had any petition under the federal bankruptcy laws or any state insolvency law filed by or against, or had a receiver, fiscal agent, or similar officer appointed by a 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 filing, or any corporation or business association of which he was an executive officer at or within two years before the time of such filing;
 
 
Been convicted in a criminal proceeding or a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);
     
 
Been 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:
     
 
Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;
     
 
Engaging in any type of business practice; or
     
 
Engaging in any activity 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;
     
 
Been 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 in (i) above, or to be associated with persons engaged in any such activity;
     
 
Been found by a court of competent jurisdiction in a civil action or by the SEC to have violated any federal or state securities law, where the judgment in such civil action or finding by the SEC has not been subsequently reversed, suspended, or vacated; or
     
 
Been 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, where the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended, or vacated.
 
 
28

 
 
Committees of the Board of Directors
 
There were no Compensation, Audit or Nominating Committees in 2012. The Board plans to form committees during 2013. However, that is subject to the Company being able to recruit qualified individuals to serve as Directors of the Company. We will be seeking independent directors in 2013, but no assurance can be given that we will be able to attract qualified individuals who will be willing and able to serve as independent directors.
 
Code of Conduct and Ethics
 
We have adopted conduct and ethics standards titled the Code of Conduct and Ethics (the “Code of Conduct”), which are available at www.sonoraresource.com. These standards were adopted by the Board to promote transparency and integrity. The standards apply to the Board, executives and employees. Waivers of the requirements of the Code of Conduct or associated polices with respect to members of the Board or executive officers are subject to approval of the full Board.
 
Our Code of Conduct includes the following:
 
-
promotes honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest;- promotes the full, fair, accurate, timely and understandable disclosure of the our financial results in accordance with applicable disclosure standards, including, where appropriate, standards of materiality;
 
-
promotes compliance with applicable SEC and governmental laws, rules and regulations;
 
-
deters wrongdoing; and
 
-
requires prompt internal reporting of breaches of, and accountability for adherence to, the Code of Conduct.
 
On an annual basis, each director and executive officer is obligated to complete a Director and Officer Questionnaire which requires disclosure of any transactions with the Company in which the director or executive officer, or any member of his or her immediate family, have a direct or indirect material interest. Pursuant to the Code of Conduct, the Board is charged with resolving any conflict of interest involving management, the Board and employees on an ongoing basis.
 
 
29

 
 
ITEM 11.  EXECUTIVE COMPENSATION
 
Compensation Discussion and Analysis
 
Overview of Compensation Program
 
This Compensation Discussion and Analysis describes the material elements of compensation awarded to, earned by or paid to each of our named executive officers who served during the year that ended on November 30, 2012. This compensation discussion primarily focuses on the information contained in the following tables and related footnotes and narrative for the last completed fiscal year. We also describe compensation actions taken after the last completed fiscal year to the extent that it enhances the understanding of our executive compensation disclosure.
 
The Board has responsibility for overseeing, reviewing and approving executive compensation and benefit programs.
 
Compensation Philosophy and Objectives
 
The major compensation objectives for named executive officers are as follows:
 
 
to attract and retain highly qualified individuals capable of making significant contributions to the long-term success of the Company;
     
 
to motivate and reward named executive officers whose knowledge, skills, and performance are critical to the Company’s success;
     
 
to closely align the interests of the Company’s named executive officers and other key employees with those of its shareholders; and
     
 
to utilize incentive based compensation to reinforce performance objectives and reward superior performance.
 
Role of Chief Executive Officer in Compensation Decisions
 
The Board approves all compensation for the chief executive officer. Currently, the Board consists of the Juan Miguel Ríos Gutiérrez, the Chief Executive Officer. We will be seeking independent directors in 2013, but no assurance can be given that we will be able to attract qualified individuals who will be willing and able to serve as independent directors.
 
The Board makes recommendations on the compensation for the chief executive officer and approves all compensation decisions, including equity awards, for the named executive officers of the Company. Our chief executive officer makes recommendations regarding the base salary and non-equity compensation of other named executive officers that are approved by the Board in its discretion.
 
 
30

 
 
Setting Executive Compensation
 
The Board believes that compensation for named executive officers must be managed to what we can afford and in a way that allows us to meet our goals for overall performance. During 2012, the Board compensated our Chief Executive Officer with a monthly consulting fee of $5,000, and our Chief Financial Officer with a $4,000 monthly consulting fee and $3,000 of our restricted common stock. This compensation reflected our financial condition. The Board does not use a peer group of publicly-traded and privately-held companies in structuring the compensation packages.
 
Executive Compensation Components for the Year Ended November 30, 2012
 
The Board did not use a formula for allocating compensation among the elements of total compensation during the fiscal year that ended on November 30, 2012. The Board believes that in order to attract and retain highly effective people it must maintain a flexible compensation structure. For fiscal 2012, the principal components of compensation for named executive officers were consulting fees.
 
Consulting Fees
 
Consulting fees are intended to ensure that our management is fairly and equitably compensated. Generally, base salary is used to appropriately recognize and reward the experience and skills that the consultants bring to the Company and provides motivation for career development and enhancement. Base salary ensures that all employees continue to receive a basic level of compensation that reflects any acquired skills which are competently demonstrated and are consistently used at work.
 
Consulting fees for our named executive officers are initially established based on their prior experience, the scope of their responsibilities and the applicable competitive market compensation paid by other companies for similar positions. During 2012, the Board compensated our Chief Executive Officer with a monthly consulting fee of $5,000 and our Chief Financial Officer with a $4,000 monthly consulting fee and $3,000 of our restricted common stock. This compensation reflected our financial condition. The Board does not use a peer group of publicly-traded and privately-held companies in structuring the compensation packages.
 
Performance-Based Incentive Compensation
 
The Board believes incentive compensation reinforces performance objectives, rewards superior performance and is consistent with the enhancement of stockholder value. All of our named executive officers are eligible to receive performance-based incentive compensation. The Board did not recommend or approve payment of any performance-based incentive compensation to the named executive officers during 2012 based on our financial condition.
 
Ownership Guidelines
 
The Board does not require our named executive officers to hold a minimum number of our shares. However, to directly align the interests of executive officers with the interests of the stockholders, the Board encourages each named executive officer to maintain an ownership interest in the Company.
 
 
31

 
 
Stock Option Program
 
Stock options are an integral part of our executive compensation program. They are intended to encourage ownership and retention of the Company’s common stock by named executive officers and employees, as well as non-employee members of the Board. Through stock options, the objective of aligning employees’ long-term interest with those of stockholders may be met by providing employees with the opportunity to build a meaningful stake in the Company.
 
The Stock Option Program assists us by:
 
-   
enhancing the link between the creation of stockholder value and long-term executive incentive compensation;
 
-   
providing an opportunity for increased equity ownership by executive officers; and
 
-   
maintaining competitive levels of total compensation.
 
Stock option award levels are determined by the Board and vary among participants’ positions within the Company. Newly hired executive officers or promoted executive officers are generally awarded stock options, at the discretion of the Board, at the next regularly scheduled Board Committee meeting on or following their hire or promotion date. In addition, such executives are eligible to receive additional stock option on a discretionary basis after performance criteria are achieved.
 
Options are awarded at our closing price of the common stock on the date of the grant or last trading day prior to the date of the grant. The Board policy is not to grant options with an exercise price that is less than the closing price of the Company's common stock on the grant date.
 
Generally, the majority of the options granted by the Board vest quarterly over two to three years or annually over five years of the 5-10-year option term. Vesting and exercise rights cease upon termination of employment and/or service, except in the case of death (subject to a one year limitation), disability or retirement. Stock options vest immediately upon termination of employment without cause or an involuntary termination following a change of control. Prior to the exercise of an option, the holder has no rights as a stockholder with respect to the shares subject to such option, including voting rights and the right to receive dividends or dividend equivalents.
 
Mr. Gutiérrez, the Company’s Chief Executive Officer and Mr. Scott, the Company’s Chief Financial Officer and. did not receive a stock option grant during the year then ended November 30, 2012.
 
Retirement and Other Benefits
 
We have no other retirement, savings, long-term stock award or other type of plans for the named executive officers.
 
Perquisites and Other Personal Benefits
 
We have no perquisites or other personal benefits for the named executive officers. The Board expects to review the levels of perquisites and other personal benefits to be provided to named executive officers. 
 
Currently, we have Consulting Agreements with Juan Miguel Ríos Gutiérrez and Mark Scott which are discussed at page 35. The Consulting Agreements do not contain potential payments upon termination.
 
 
32

 
 
Tax and Accounting Implications
 
Deductibility of Executive Compensation
 
Subject to certain exceptions, Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code") generally denies a deduction to any publicly held corporation for compensation paid to its chief executive officer and its three other highest paid executive officers (other than the principal financial officer) to the extent that any such individual's compensation exceeds $1 million. “performance-based compensation” (as defined for purposes of Section 162(m)) is not taken into account for purposes of calculating the $1 million compensation limit, provided certain disclosure, shareholder approval and other requirements are met. We periodically review the potential consequences of Section 162(m) and may structure the performance-based portion of our executive compensation to comply with certain exceptions to Section 162(m). However, we may authorize compensation payments that do not comply with the exceptions to Section 162(m) when we believe that such payments are appropriate and in the best interests of the stockholders, after taking into consideration changing business conditions or the officer's performance.
 
Section 409A is a relatively recent provision of the Code. If an executive is entitled to nonqualified deferred compensation benefits that are subject to Section 409A of the Code, and such benefits do not comply with Section 409A of the Code, the executive would be subject to adverse tax treatment, including accelerated income recognition (in the first year that benefits are no longer subject to a substantial risk of forfeiture) and an additional income tax of 20% of the amount so recognized.
 
Accounting for Stock-Based Compensation
 
Beginning on January 1, 2006, we began accounting for stock-based payments including its Stock Option Program in accordance with the requirements of ASC 718, “Compensation-Stock Compensation.”
 
REMUNERATION OF EXECUTIVE OFFICERS
 
The following table provides information concerning remuneration of the chief executive officer, the chief financial officer and another named executive officer for the fiscal years then ended November 30, 2012 and 2011.
 
         
Salary
 
Bonus
 
Stock
Awards
 
Non-Equity
Incentive
Plan
Compensation
 
Option
Awards
 
Other
Compensation
 
Total
 
Name
  Principal Position     
($)
 
($)
 
($) (1)
 
($)
 
($) (2)
 
($) (3)
 
($)
 
                                     
Juan Miguel Ríos Gutiérrez
 
Director, Chief Executive
 
11/30/2012
  $ -     $ -     $ -     $ -     $ -     $ 60,000     $ 60,000  
   
Officer and Secretary
 
11/30/2011
  $ -     $ -     $ -     $ -     $ 140,000     $ 49,167     $ 189,167  
                                                                 
Mark Scott
 
Chief Financial Officer
 
11/30/2012
  $ -     $ -     $ 22,513     $ -     $ -     $ 48,000     $ 70,513  
       
11/30/2011
  $ -     $ -     $ 9,000     $ -     $ -     $ 20,667     $ 29,667  

(1)   The 2011 amount for Mr. Scott reflects 14,600 shares of restricted common stock issued by the Company on September 15, 2011 at the average close price of $0.616 per share. The 2012 amount for Mr. Scott reflects (i) 33,237 shares of restricted common stock issued by the Company on January 16, 2012 at the average close price of $0.361 per share; and (ii) 37,285 shares of restricted common stock issued by the Company on April 30, 2012 at the average close price of $0.282 per share.
 
(2)   These amounts reflects the dollar amount recognized for financial statement reporting purposes for the fiscal years then ended September 30, 2010, in accordance with FASB ASC Topic 718 of awards pursuant to the 2010 Stock Option Plan. Assumptions used in the calculation of this amount are included in footnotes to the Company's audited financial statements for the fiscal years then ended November 30, 2012 and 2011. There were no grants issued in 2012.
 
(3)   The 2012 and 2011 amounts for Mr. Gutiérrez include consulting fees paid from January 21, 2011 to November 30, 2012. The Board compensated Mr. Gutiérrez with a monthly consulting fee of $5,000. The 2012 and 2011 amounts for Mr. Scott include consulting fees paid from June 15, 2011 to November 30, 2012.
 
 
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Grants of Stock Based Awards in Fiscal Year Then Ended November 30, 2012
 
The Board did not provide performance-based incentive compensation paid to the named executive officers during 2012 based on our financial condition.
 
Outstanding Equity Awards as of Fiscal Year Then Ended November 30, 2012
 
There were the following outstanding equity awards as of November 30. 2012:
 
    Option Awards (1)   Stock Awards  
   
Number of
Securities
Underlying
Unexercised
Options
Exercisable
   
Number of
Securities
Underlying
Unexercised
Options
Unexerciseable
   
Number of
Securities
Underlying
Unexercised
Unearned
Options
 
Option
Exercise
Price
 
Option
Expiration
 
Number of
Shares or Units
of Stock
That Have Not
Vested
 
Market Value
of Shares or
Units of
Stock That
Have Not Vested
   
Number of
Unearned Shares,
Units or Other
Rights That
Have Not
Vested
 
Market or
Payout Value of
Unearned Shares,
Units, or Other
Rights That Have
Not Vested
 
Name
    (#)       (#)       (#)  
($)
 
Date
    (#)  
($)
      (#)  
($)
 
                                                             
Juan Miguel Ríos Gutiérrez
    375,000       625,000       -     $ 0.20  
1/21/2016
    -     $ -       -     $ -  
                                                                   
Mark Scott
    -       -       -     $ -         -     $ -       -     $ -  
 
(1)
Mr. Gutiérrez’s stock option grant vests at 125,000 shares every six months.
 
Option Exercises and Stock Vested
 
Our named executive officers did not exercise any stock options during the year ended November 30, 2012 and 2011.
 
Pension Benefits
 
We do not provide any pension benefits.
 
Nonqualified Deferred Compensation
 
We do not have a nonqualified deferral program. 
 
 
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CONSULTING AGREEMENTS
 
On January 21, 2011, we entered into a consulting agreement with Juan Miguel Ríos Gutiérrez whereby Mr. Gutiérrez was appointed Chief Executive Officer at $5,000 per month for a term of indefinite period unless terminated by either party with sixty days advance written notice to the other party.
 
On June 15, 2011, we entered into a Consulting Agreement (the “Agreement”) with Mark E. Scott, whereby Mr. Scott will serve as Chief Financial Officer of the Company. Concurrently with the Company’s entrance into the Agreement, the Company entered into a Restricted Stock Award Agreement with Mr. Scott (the “RSA”). Pursuant to the Agreement and in connection with his service as Chief Financial Officer of the Company, Mr. Scott will receive: (i) US $4,000 cash per month and (ii) shares of Company common stock equaling US $3,000 per month calculated on a monthly basis, such shares to be vested and issued quarterly (the “Shares”). In accordance with the RSA, the determination of the number of Shares issuable to Mr. Scott is determined by dividing US $3,000 by the average bid and ask price of the Company's common stock as reported by Bloomberg beginning June 15, 2011 and on the last day of each following month thereafter (each a "Determination Date" ). If a Determination Date falls on a date on which the Company's common stock is not reported by Bloomberg, the Determination Date shall be the next reportable trading day.
 
On September 15, 2011, we issued 14,600 shares of restricted common stock at $0.616 per share for a total value of $9,000 related to Mr. Scott's June 15, 2011 Consulting Agreement. On January 16, 2012, we issued 33,237 shares of restricted common stock at in accordance with the Restricted Stock Award Agreement dated June 15, 2011 at $0.361 per share for a total value of $11,999. On April 30, 2012, we issued 37,285 shares of restricted common stock at $0.282 per share for a total value of $10,514.
 
Potential Payments Upon Termination or Change in Control
 
The Consulting Agreements with the named executive officers have no provisions providing for severance payments.
 
ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
 
The following table sets forth certain information regarding the ownership of our common stock as of November 30, 2012 by:
 
 
each director and nominee for director;
     
 
each person known by us to own beneficially 5% or more of our common stock;
     
 
each officer named in the summary compensation table elsewhere in this report; and
     
 
all directors and executive officers as a group.
 
The amounts and percentages of common stock beneficially owned are reported on the basis of regulations of the SEC governing the determination of beneficial ownership of securities. Under the rules of the SEC, a person is deemed to be a “beneficial owner” of a security if that person has or shares voting power,” which includes the power to vote or to direct the voting of such security, or “investment power,” which includes the power to dispose of or to direct the disposition of such security. A person is also deemed to be a beneficial owner of any securities of which that person has the right to acquire beneficial ownership within 60 days. Under these rules more than one person may be deemed a beneficial owner of the same securities and a person may be deemed to be a beneficial owner of securities as to which such person has no economic interest.
 
 
35

 
 
Unless otherwise indicated below, each beneficial owner named in the table has sole voting and sole investment power with respect to all shares beneficially owned, subject to community property laws where applicable. Unless otherwise indicated, the address of each beneficial owner of more than 5% of common stock is Sonora Resources Corp at Cerro del Padre #11, Rinconada de los Pirules, Guadalupe, Zacatecas, Mexico 98619.
 
   
November 30, 2012
   
November 30, 2012
 
   
Shares Beneficially Owned
   
Fully Diluted Ownership
 
   
Amount
   
%
   
Amount
   
%
 
Directors and Officers-
                       
Juan Miguel Ríos Gutiérrez
    4,000,000       4.4 %     4,375,000       4.7 %
Mark Scott
    85,122      
*
      85,122      
*
 
Total Directors and Officers (2 in total)
    4,085,122       4.5 %     4,460,122       4.7 %
 
   
November 30, 2012
   
November 30, 2012
 
   
Shares Beneficially Owned
   
Fully Diluted Ownership
 
   
Amount
   
%
   
Amount
   
%
 
Greater Than 5% Ownership
                       
First Majestic Silver Corp. (1)
    13,750,000       15.0 %     13,750,000       14.6 %
1805-925 West Georgia Street
                               
Vancouver, BC Canada V6C 3L2.
                               
 
(1)
Reflects the shares beneficially owned by First Majestic Silver Corp. as stated in a Schedule 13D/A filed with the SEC on May 15, 2012, and which has subsequently confirmed the ownership.
 
ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
 
Related Party Transactions
 
Related party transactions for the year ended November 30, 2012 are detailed in Note 3 to the Company’s Financial Statements filed with this Form 10-K.
 
Review and Approval of Related Person Transactions
 
We have operated under a Code of Conduct since 2011. Our Code of Conduct requires all employees, officers and directors, without exception, to avoid the engagement in activities or relationships that conflict, or would be perceived to conflict, with our interests or adversely affect its reputation. It is understood, however, that certain relationships or transactions may arise that would be deemed acceptable and appropriate upon full disclosure of the transaction, following review and approval to ensure there is a legitimate business reason for the transaction and that the terms of the transaction are no less favorable to us than could be obtained from an unrelated person.
 
 
36

 
 
The Board is responsible for reviewing and approving all transactions with related persons. We have not adopted a written policy for reviewing related person transactions. The Board reviews all relationships and transactions in which the Company and our directors and executive officers or their immediate family members are participants to determine whether such persons have a direct or indirect material interest. As required under SEC rules, transactions that are determined to be directly or indirectly material to the Company or a related person are disclosed.
 
Director Independence
 
The Board does not have an independent director. We will be seeking independent directors in 2013 but no assurance can be given that we will be able to attract qualified individuals who will be willing and able to serve as independent directors.
 
ITEM 14.  PRINCIPAL ACCOUNTING FEES AND SERVICES
 
Resignation of Change Lee LLP
 
On June 21, 2011, Chang Lee LLP (“Chang Lee”) resigned as our independent registered public accounting firm as Chang Lee was merged with MNP LLP (“MNP”). Most of the professional staff of Chang Lee continued with MNP, either as employees or partners of MNP, and will continue their practice with MNP. On June 21, 2011, we, through and with the approval of its Board of Directors acting as its Audit Committee, accepted the resignation of Chang Lee and engaged MNP as its independent registered public accounting firm.
 
The reports of Chang Lee regarding our financial statements for the fiscal years ended November 30, 2010 and 2009 did not contain any adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles, except that the audit report of Chang Lee on our financial statements for fiscal years ended November 30, 2010 and 2009 contained an explanatory paragraph which noted that there was substantial doubt about our ability to continue as a going concern.
 
During the years ended November 30, 2010 and 2009, and during the period from November 30, 2010 to June 21, 2011, the date of resignation, (i) there were no disagreements with Chang Lee on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedures, which disagreements, if not resolved to the satisfaction of Chang Lee would have caused it to make reference to such disagreement in its reports; and (ii) there were no reportable events as defined in Item 304(a)(1)(v) of Regulation S-K.
 
During each of our two most recent fiscal years and through the interim periods preceding the engagement of MNP, we (a) have not engaged MNP as either the principal accountant to audit our financial statements, or as an independent accountant to audit a significant subsidiary of the Company and on whom the principal accountant is expected to express reliance in its report; and (b) has not consulted with MNP regarding (i) the application of accounting principles to a specific transaction, either completed or proposed, or the type of audit opinion that might be rendered on our financial statements, and no written report or oral advice was provided to us by MNP concluding there was an important factor to be considered by us in reaching a decision as to an accounting, auditing or financial reporting issue; or (ii) any matter that was either the subject of a disagreement, as that term is defined in Item 304(a)(1)(iv) of Regulation S-K or a reportable event, as that term is described in Item 304(a)(1)(v) of Regulation S-K.
 
 
37

 
 
Dismissal of MNP LLP
 
On October 24, 2011, we dismissed MNP as our independent registered public accounting firm. The decision to change accountants was approved by our Board of Directors.
 
MNP was appointed June 21, 2011 and did not report on our financial statements.
 
There were no disagreements with MNP on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to MNP’s satisfaction, would have caused MNP to make reference to the subject matter of such disagreements in its reports on our financial statements. There were no reportable events as defined in Item 304(a)(1)(v) of Regulation S-K other than management identified a material weakness during its assessment of internal controls over financial reporting as of August 31, 2011. We do not have an audit committee. An audit committee would improve oversight in the establishment and monitoring of required internal controls and procedures.
 
Engagement of PMB Helin Donovan LLP
 
On October 25, 2011, we, upon the Board of Director’s approval, engaged the services of PMB Helin Donovan LLP (“PMB”) as our new independent registered public accounting firm to audit our consolidated financial statements as of November 30, 2011 and for the year then ended. PMB will also perform a review of the unaudited consolidated quarterly financial statements to be included in our quarterly reports on Form 10-Q, which review will include financial quarters beginning with the quarter ending February 28, 2012.
 
During each of our two most recent fiscal years and through the date of this report, (a) we have not engaged PMB as either the principal accountant to audit our financial statements, or as an independent accountant to audit a significant subsidiary of the Company and on whom the principal accountant is expected to express reliance in its report; and (b) the Company or someone on its behalf did not consult PMB with respect to (i) either: the application of accounting principles to a specified transaction, either completed or proposed; or the type of audit opinion that might be rendered on our financial statements, or (ii) any other matter that was either the subject of a disagreement or a reportable event as set forth in Items 304(a)(1)(iv) and (v) of Regulation S-K.
 
Audit Committee Pre-Approval Policy
 
The Board has established a pre-approval policy and procedures for audit, audit-related and tax services that can be performed by the independent auditors without specific authorization from the Board subject to certain restrictions. The policy sets out the specific services pre-approved by the Board and the applicable limitations, while ensuring the independence of the independent auditors to audit our financial statements is not impaired. The pre-approval policy does not include a delegation to management of the Board’s responsibilities under the Exchange Act. During fiscal year ended November 30, 2012, the Board pre-approved all audit and permissible non-audit services provided by our independent auditors.
 
Service Fees Paid to the Independent Registered Public Accounting Firm
 
We engaged PMB to perform an annual audit of our financial statements for the fiscal years ended November 30, 2012 and 2011. The following is the breakdown of aggregate fees paid to the auditors for the Company for the last three fiscal years:
 
    Year Ended ,  
   
November 30, 2012
   
November 30, 2011
   
November 30, 2010
 
                         
Audit fees
  $ 10,300     $ -     $ 3,700  
Audit related fees
    13,000       9,522       2,000  
Tax fees
    4,000       -       -  
All other fees
    -       -       -  
    $ 27,300     $ 9,522     $ 5,700  
 
 
38

 
 
- “Audit Fees” are fees paid for professional services for the audit of our financial statements.
 
- “Audit-Related fees” are fees billed by our auditors to us for services not included in the first category, specifically, SAS 100 reviews, SEC filings and consents, and accounting consultations on matters addressed during the audit or interim reviews, and review work related to quarterly filings.
 
- “Tax Fees” are fees primarily for tax compliance in connection with filing US income tax returns.
 
- “There were no all other fees.
 
SECTION16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
 
Our executive officers, directors and 10% stockholders are required under Section 16(a) of the Exchange Act to file reports of ownership and changes in ownership with the SEC. Copies of these reports must also be furnished to the Company.
 
Based solely on a review of copies of reports furnished to us, or written representations that no reports were required, we believe that during the fiscal year ended November 30, 2012 its executive officers, directors and 10% holders complied with all filing requirements, with the following possible exceptions:
 
 
1.
A Form 4 for Mark Scott dated January 16, 2012 and required to be filed on January 18, 2012, was filed on February 6, 2012.
 
 
39

 
 
PART IV
 
ITEM 15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES
 
(a)  FINANCIAL STATEMENTS:
 
Our financial statements, as indicated by the Index to Consolidated Financial Statements set forth below, begin on page F-1 of this Form 10-K, and are hereby incorporated by reference. Financial statement schedules have been omitted because they are not applicable or the required information is included in the financial statements or notes thereto.
 
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 
Title of Document
     
       
Report of Independent Registered Public Accounting Firm
    F-1  
Consolidated Balance Sheets as of November 30, 2012 and 2011
    F-2  
Consolidated Statements of Operations and Comprehensive Income (Loss) for the years ended November 30, 2012 and 2011 and the period from inception of December 3, 2007 to November 30, 2012
    F-3  
Consolidated Statements of Changes in Stockholders' Equity for the years ended November 30, 2012 and 2011 and the period from inception of December 3, 2007 to November 30, 2012
    F-4  
Consolidated Statements of Cash Flows for the for the years ended November 30, 2012 and 2011 and the period from inception of December 3, 2007 to November 30, 2012
    F-5  
Notes to the Consolidated Financial Statements
    F-6  
 
 
40

 
 
(b)  EXHIBITS:
 
No.
 
Description
     
3.1
 
Articles of Incorporation (incorporated by reference to an exhibit to our registration statement on Form S-1 filed on December 13, 2009).
3.2
 
Bylaws (incorporated by reference to an exhibit to our registration statement on Form S-1 filed on December 13, 2009).
3.3
 
Certificate of Amendment (incorporated by reference to an exhibit to our current report on Form 8- K filed on November 29, 2010).
4.1
 
Stock Option Plan (incorporated by reference to an exhibit to our current report on Form 8-K filed on December 23, 2010).
10.1
 
Option Agreement dated November 26, 2010 with Yale Resources Ltd. (incorporated by reference to an exhibit to our current report on Form 8-K filed on November 29, 2010)
10.2
 
Consulting Agreement dated January 18, 2011 with Juan Miguel Ríos Gutiérrez (incorporated by reference to an exhibit to our current report on Form 8-K filed on January 26, 2011). *
10.3
 
Mining Option Agreement dated April 15, 2011 with First Majestic Silver Corp. (incorporated by reference to an exhibit to our current report on Form 8-K filed on April 28, 2011).
10.4
 
Consulting Agreement dated June 15, 2011 by and between Sonora Resources Corp. and Mark Scott (incorporated by reference to an exhibit to our current report on Form 8-K filed on June 16, 2011). *
10.5
 
Mining Option Agreement dated August 10, 2011 by and between Finder Plata S.A. de C.V. and Industrial Miners Mexico, S.A. de C.V.(incorporated by reference to an exhibit to our Form 10-Q for the period ended August 31, 2011 and filed with the SEC on October 7, 2011).
10.6
 
Mining Option Agreement dated September 5, 2011 by and between Finder Plata S.A. de C.V. and various Mexican citizens related to the Corazon, Mexico claims (incorporated by reference to an exhibit to our Form 10-K for the year ended November 30, 2011 and filed with the SEC on January 27, 2012).
10.7
 
Letter of Intent dated March 1, 2012 by and between Finder Plata SA de CV and Ramiro Romero Aguirre related to the Liz property (incorporated by reference to an exhibit to our Form 10-Q dated May 31, 2012 and filed on June 22, 2012).
10.8
 
Additional Agreement dated August 2, 2012 by and between Finder Plata SA de CV and Industrial Minera Mexico, S.A. DE C.V.(incorporated by reference to an exhibit to our Form 10-Q dated August 31, 2012 and filed on October 5, 2012
 
Subsidiary of Registrant. Filed herewith.
 
Certification by Chief Executive Officer pursuant to Rule 13a-14(a). Filed herewith.
 
Certification by Chief Financial Officer pursuant to Rule 13a-14(a). Filed herewith.
 
Certification by Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Filed herewith.
 
Certification by Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Filed herewith.
 
* Indicates management contract or compensatory plan.
 
 (1)   Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability.
 
 
41

 
 
Report of Independent Registered Public Accounting Firm
 
The Board of Directors and Shareholders
 
Sonora Resources Corp.:
 
We have audited the accompanying consolidated balance sheet of Sonora Resources Corp. (the “Company”) (an exploration  stage company) as of November 30, 2012 and 2011 and the related statements of operations and comprehensive loss, stockholders’ equity (deficit), and cash flows for the years ended November 30, 2012 and 2011. The cumulative period from inception (December 3, 2007) through November 30, 2012 is presented as unaudited. The consolidated financial statements for the period from inception (December 3, 2007) through November 30, 2010 were audited by other auditors that have ceased operation.  The other auditors’ reports included an explanatory paragraph that expressed substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements for the period from inception (December 3, 2007) through November 30, 2010 include total revenues and net loss of $11,254 and $108,478, respectively. Sonora Resources Corp. management is responsible for these consolidated financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.
 
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the 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 consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
 
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Sonora Resources Corp. as of November 30, 2012 and 2011, and the results of its operations and its cash flows for the years then ended, in conformity with U.S. generally accepted accounting principles
 
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has sustained a net loss from operations and has an accumulated deficit during the  exploration stage. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in this regard are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
 
PMB Helin Donovan, LLP  
   
/s/ PMB Helin Donovan, LLP  
   
February 7, 2013
 
Seattle, Washington  
 
 
F-1

 
 
SONORA RESOURCES CORP. AND SUBSIDIARY
AN EXPLORATION STAGE COMPANY
CONSOLIDATED BALANCE SHEETS
 
   
November 30,
2012
   
November 30,
2011
 
ASSETS
           
             
CURRENT ASSETS:
           
Cash and cash equivalents
  $ 293,395     $ 62,095  
Consumption and deferred tax receivable
    82,244       30,276  
Prepaid expense
    17,238       17,247  
Total current assets
    392,877       109,618  
                 
EQUIPMENT, NET
    -       -  
                 
OTHER ASSETS
               
Mining interest- Los Amoles
    298,000       282,000  
Mining interest- Jalisco (First Majestic Silver Corp.)
    3,400,000       3,400,000  
Mining interest-  Ayones and Corazon
    445,373       174,131  
                 
TOTAL ASSETS
  $ 4,536,250     $ 3,965,749  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
               
                 
CURRENT LIABILITIES:
               
Accounts payable and accrued liabilities
  $ 46,175     $ 45,156  
Convertible demand promissory note
    -       400,000  
Total current liabilities
    46,175       445,156  
                 
COMMITMENTS AND CONTINGENCIES
    -       -  
                 
STOCKHOLDERS' EQUITY
               
                 
Common stock - $0.001 par value, 500,000,000 shares authorized, 91,684,882
               
and 96,664,600 shares issued and outstanding at 11/30/12 and 11/30/11, respectively
    46,135       51,115  
Additional paid in capital
    6,641,227       4,765,321  
(Deficit) accumulated during the exploration stage
    (2,197,169 )     (1,262,226 )
Unrealized gain (loss)
    (118 )     (33,617 )
Total stockholders' equity
    4,490,075       3,520,593  
                 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
  $ 4,536,250     $ 3,965,749  
 
The accompanying notes are an integral part of these financial statements.
 
 
F-2

 
 
SONORA RESOURCES CORPORATION AND SUBSIDIARY
AN EXPLORATION STAGE COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
 
   
Year Ended,
   
December 3,
2007
(Inception)
 
   
November 30,
2012
   
November 30,
2011
   
to November 30,
2012
 
               
(Unaudited)
 
REVENUE
  $ -     $ -     $ 11,254  
COST OF SALES
    -       -       8,186  
GROSS PROFIT
    -       -       3,068  
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
    277,064       558,234       945,179  
EXPLORATION EXPENSE
    519,760       184,627       704,387  
(LOSS) BEFORE OTHER EXPENSE
    (796,824 )     (742,861 )     (1,646,498 )
                         
OTHER INCOME (EXPENSE):
                       
Interest expense
    (138,119 )     (412,156 )     (551,940 )
Foreign exchange gain
    -       1,269       1,269  
Total other expense
    (138,119 )     (410,887 )     (550,671 )
                         
NET LOSS BEFORE INCOME TAX
    (934,943 )     (1,153,748 )     (2,197,169 )
                         
INCOME TAX
    -       -       -  
                         
NET LOSS
    (934,943 )     (1,153,748 )     (2,197,169 )
                         
GAIN (LOSS )ON CURRENCY TRANSLATION
    33,499       (33,617 )     (118 )
                         
COMPREHENSIVE LOSS
  $ (901,444 )   $ (1,187,365 )   $ (2,197,287 )
                         
Basic and diluted loss per common share  attributable to Sonora Resources Corp. common shareholders-
                       
Basic and diluted loss per share
  $ (0.01 )   $ (0.01 )   $    
                         
Weighted average shares of common stock outstanding- basic and diluted
    93,714,946       92,116,970          
 
The accompanying notes are an integral part of these financial statements.
 
 
F-3

 
 
SONORA RESOURCES CORP. AND SUBSIDIARY
AN EXPLORATION STAGE COMPANY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR THE YEARS ENDED
NOVEMBER 30, 2012 AND 2011
 
                     
(Deficit)
    Other        
               
Additional
   
Accumulated
   
Comprehensive
       
   
Common Stock
   
Paid in
   
During the
   
Gain
   
Stockholders'
 
   
Shares
   
Amount
   
Capital
   
Exploration Stage
   
or (Loss)
   
Equity
 
                                     
Balance as of November 30, 2008 (Unaudited)
    -       -       -       (9,763 )     -       (9,763 )
Common stock issued for cash at $0.00005 per share, August 4, 2009
    105,000,000       5,000       -       -       -       5,000  
Common stock issued for subscription, August 4, 2009
    21,000,000       1,000       -       -       -       1,000  
Net (loss) for the year
    -       -       -       (17,866 )     -       (17,866 )
                                                 
Balance as of November 30, 2009 (Unaudited)
    126,000,000       6,000       -       (27,629 )     -       (21,629 )
                                                 
Common stock issued for cash at $0.0005 per share, March 2, 2010
    64,050,000       30,500       -       -       -       30,500  
Common stock issued in exhange for indebtedness at $0.10 per share, November 17, 2010
    3,000,000       3,000       297,000       -       -       300,000  
Cancellation of shares
    (108,000,000 )     -       -       -       -       -  
Common stock issued to Yale Resources Ltd  related to Mining Option Agreement
    200,000       200       45,800       -       -       46,000  
Debt forgiven by related parties
    -       -       22,989       -       -       22,989  
Net (loss) for the year
    -       -       -       (80,849 )     -       (80,849 )
                                                 
Balance as of November 30, 2010 (Unaudited)
    85,250,000       39,700       365,789       (108,478 )     -       297,011  
                                                 
Common stock issued to First Majestic Silver Corp related to Mining Option Agreement
    10,000,000       10,000       3,390,000       -       -       3,400,000  
Common stock issued to Yale Resources Ltd  related to Mining Option Agreement
    400,000       400       185,600       -       -       186,000  
Convertible note equity conversion feature
    -       -       400,000       -       -       400,000  
Common stock issued for cash under private placements net of cost
    1,000,000       1,000       249,000       -       -       250,000  
Stock based compensation expense
    -       -       167,446       -       -       167,446  
Issuance of common stock for services
    14,600       15       7,486       -       -       7,501  
Net (loss) for the period
    -       -       -       (1,153,748 )     (33,617 )     (1,187,365 )
                                                 
Balance as of November 30, 2011
    96,664,600     $ 51,115     $ 4,765,321     $ (1,262,226 )   $ (33,617 )   $ 3,520,593  
                                                 
Common stock issued to First Majestic Silver Corp related to Mining Option Agreement
    2,000,000       2,000       398,000       -       -       400,000  
Common stock issued to Yale Resources Ltd  related to Mining Option Agreement
    200,000       200       15,800       -       -       16,000  
Conversion of demand promissory notes
    2,549,760       2,550       754,790       -       -       757,340  
Common stock issued for cash under private placements net of cost
    3,700,000       3,700       736,300       -       -       740,000  
Stock based compensation expense
    -       -       (64,947 )     -       -       (64,947 )
Issuance of common stock for services
    70,522       70       22,463       -       -       22,533  
Forfeiture of common stock
    (13,500,000 )     (13,500 )     13,500       -       -       -  
Net (loss) for the period
    -       -       -       (934,943 )     33,499       (901,444 )
                                                 
Balance as of November 30, 2012
    91,684,882     $ 46,135     $ 6,641,227     $ (2,197,169 )   $ (118 )   $ 4,490,075  
 
The accompanying notes are an integral part of these financial statements.
 
 
F-4

 
 
SONORA RESOURCES CORP. AND SUBSIDIARY
AN EXPLORATION STAGE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
 
               
December 3,
2007
 
   
Year Ended,
   
(Inception) to
 
   
November 30,
2012
   
November 30,
2011
   
November 30,
2012
 
               
(Unaudited)
 
CASH FLOWS FROM OPERATING ACTIVITIES:
                 
Net (loss)
  $ (934,943 )   $ (1,153,748 )   $ (2,197,169 )
Adjustments to reconcile net loss to net cash
                       
(used in) operating activities
                       
Stock based compensation expense
    (64,947 )     167,446       102,499  
Accrued interest on convertible note
    152,340       414,246       566,586  
Issuance of common stock for services and exploration expenses
    422,533       -       422,533  
Consulting and management fees forgiven
    -       -       4,500  
Changes in operating assets and liabilities:
                       
Accounts receivable
    -       -       1,510  
Consumption and deferred tax receivable
    (51,968 )     (30,897 )     (85,546 )
Prepaid expenses
    9       (14,423 )     (14,414 )
Accounts payable - trade and accrued expenses
    1,019       (2,231 )     9,706  
CASH (USED IN) OPERATING ACTIVITIES
    (475,957 )     (619,607 )     (1,189,795 )
                         
CASH FLOWS FROM INVESTING ACTIVITIES:
                       
Mineral interest
    (237,743 )     (165,958 )     (453,701 )
NET CASH (USED IN) INVESTING ACTIVITIES:
    (237,743 )     (165,958 )     (453,701 )
                         
CASH FLOWS FROM FINANCING ACTIVITIES:
                       
Issuance of common stock
    740,000       250,000       1,026,500  
Convertible demand promissory notes
    205,000       400,000       605,000  
Loan payable
    -       -