U.S.
SECURITIES AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549


FORM
10-K




(Mark
One)


x
            ANNUAL
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934


For
Fiscal Year Ended: December 31, 2008


OR


 ̈
            TRANSITION
      REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934




For the
transition period from _______________ to _______________




Commission
file number:  333-140148




Loreto Resources Corporation





(Exact
name of registrant as specified in its charter)





Nevada
                  
                  20-5308449(State
      or other jurisdiction of incorporation or organization)
                  
                  (IRS
      Employer Identification
No.)





Av.
      Pardo y Aliaga 699 Of. 802
                    Lima
      27 - Perú
                  
                  None(Address
      of principal executive offices)
                  
                  (Postal
      Code)




Registrant’s telephone
number:  011 (511)
212-1880




Securities registered under Section 12(b) of the Act:  None




Securities registered under Section 12(g) of the Act:  None




Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.


Yes ̈Nox




Indicate by check mark if the
registrant is not required to file reports pursuant to Section 13 or 15(d) of
the Exchange Act.  YesxNo ̈




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.  YesxNo ̈




Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.   ̈




Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, or a smaller reporting company.  See the
definitions of the “large accelerated filer,” “accelerate filer,” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.   (Check
one):




Large
      Accelerated Filer  ̈
                        Accelerated
      Filer  ̈Non-Accelerated
      Filer  ̈
                        Smaller
      reporting company x(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).


Yes x
  No  ̈




As of
April 14, 2009, there were 35,050,000 shares of the registrant's common stock,
par value $0.001, issued and outstanding.  Of these, 20,340,000 shares
are held by non-affiliates of the registrant.  The market value of
securities held by non-affiliates is $20,340,000, based on the price of $1.00
per share for the registrant’s common stock which was sold in a private
placement that closed initially on September 9, 2008.  Shares of
common stock held by each officer and director have been excluded from this
calculation because such persons may be deemed to be affiliates. This
determination of officer or affiliate status is not necessarily a conclusive
determination for other purposes.




DOCUMENTS
INCORPORATED BY REFERENCE


Not
Applicable.





TABLE
OF CONTENTS




Item
      Number and Caption
                                                                                                                                                                
                                                                                                                                                                PageForward-Looking
      Statements
                                                                                                                                                                
                                                                                                                                                                3PART
      I
                                                                                                                                                                
                                                                                                                                                                41.
                                                                                                                                                                Business
                                                                                                                                                                
                                                                                                                                                                41A.
                                                                                                                                                                Risk
      Factors
                                                                                                                                                                
                                                                                                                                                                81B.
                                                                                                                                                                Unresolved
      Staff Comments
                                                                                                                                                                
                                                                                                                                                                82.
                                                                                                                                                                Properties
                                                                                                                                                                
                                                                                                                                                                83.
                                                                                                                                                                Legal
      Proceedings
                                                                                                                                                                
                                                                                                                                                                84.
                                                                                                                                                                Submission
      Of Matters To A Vote Of Security Holders
                                                                                                                                                                
                                                                                                                                                                8PART
      II
                                                                                                                                                                
                                                                                                                                                                85.
                                                                                                                                                                Market
      For Registrant’s Common Equity, Related Stockholder Matters And Issuer
      Purchases Of Equity Securities
                                                                                                                                                                
                                                                                                                                                                86.
                                                                                                                                                                Selected
      Financial Data
                                                                                                                                                                
                                                                                                                                                                117.
                                                                                                                                                                Management’s
      Discussion and Analysis of Financial Condition and Results of
      Operations
                                                                                                                                                                
                                                                                                                                                                118.
                                                                                                                                                                Financial
      Statements and Supplemental Data
                                                                                                                                                                
                                                                                                                                                                129A.[T]
                                                                                                                                                                Controls
      And Procedures
                                                                                                                                                                
                                                                                                                                                                129B.
                                                                                                                                                                Other
      Information
                                                                                                                                                                
                                                                                                                                                                13PART
      III
                                                                                                                                                                
                                                                                                                                                                1410.
                                                                                                                                                                Directors,
      Executive Officers, and Corporate Governance
                                                                                                                                                                
                                                                                                                                                                1411.
                                                                                                                                                                Executive
      Compensation
                                                                                                                                                                
                                                                                                                                                                1812.
                                                                                                                                                                Security
      Ownership Of Certain Beneficial Owners And Management And Related
      Stockholder Matters
                                                                                                                                                                
                                                                                                                                                                2113.
                                                                                                                                                                Certain
      Relationships And Related Transactions and Director
      Independence
                                                                                                                                                                
                                                                                                                                                                2314.
                                                                                                                                                                Principal
      Accountant Fees And Services
                                                                                                                                                                
                                                                                                                                                                24PART
      IV
                                                                                                                                                                
                                                                                                                                                                2515.
                                                                                                                                                                Exhibits
      and Financial Statement Schedules
                                                                                                                                                                
                                                                                                                                                                25


2


FORWARD-LOOKING
STATEMENTS





Except
for historical information, this report contains forward-looking
statements.  Such forward-looking statements involve risks and
uncertainties, including, among other things, statements regarding our business
strategy, future revenues and anticipated costs and expenses.  Such
forward-looking statements include, among others, those statements including the
words “expects,” “anticipates,” “intends,” “believes” and similar
language.  Our actual results may differ significantly from those
projected in the forward-looking statements.  Factors that might cause
or contribute to such differences include, but are not limited to, those
discussed in the sections “Business” and “Management’s Discussion and Analysis
of Financial Condition and Results of Operations.”  You should
carefully review the risks described in this Annual Report and in other
documents we file from time to time with the Securities and Exchange Commission
(the “SEC”).  You are cautioned not to place undue reliance on the
forward-looking statements, which speak only as of the date of this
report.  We undertake no obligation to publicly release any revisions
to the forward-looking statements or reflect events or circumstances after the
date of this document.





Although
we believe that the expectations reflected in these forward-looking statements
are based on reasonable assumptions, there are a number of risks and
uncertainties that could cause actual results to differ materially from such
forward-looking statements.





All
references in this Form 10-K to “Loreto,” “Loreto Resources,” the “Company,”
“we,” “us” or “our” are to Loreto Resources Corporation and its wholly owned
subsidiaries.


3


PART
I




ITEM
      1.
            BUSINESS





Loreto
Resources Corporation is an exploration stage, growth oriented mineral resource
company engaged in the acquisition, development and production of significant
base and precious metals deposits. We are primarily seeking development and
production-stage zinc, copper, gold and silver assets.





Our
business objective is to develop a substantial mining company in South America
with an initial focus in Peru, where we have established an operating subsidiary
with executive offices in Lima.





History
and General Development of Our Business





The
Company was incorporated in the State of Nevada on June 28, 2006 under the name
Loreto Corporation. The Company was formed to design, print, market and sell
greeting cards, wrapping paper, stationery products and collectibles in retail
locations throughout Mexico1
(the “Legacy Business”).





During
the later part of 2007, we discontinued our Legacy Business and, in mid 2008, we
decided to redirect our business focus and strategy towards identifying and
pursuing business opportunities in the mining sector in South
America.  To that end we have taken the following steps:





·
                  On
      July 3, 2008, Magdalena Cruz, our President, Chief Executive Officer,
      Chief Financial Officer, Treasurer, Secretary and sole member of our Board
      of Directors, resigned from her position as director.  Ms.
      Cruz’s resignation did not result from any disagreement between her and
      us.





·
              On
      July 3, 20082,
      we appointed Nadine C. Smith as a director to replace Ms. Cruz and to
      serve as Chairman of our Board of
Directors.





·
            On
      July 3, 20082,
      we filed Amended and Restated Articles of Incorporation (the “Restated
      Articles”) with the Secretary of State of the State of Nevada which, among
      other things, (i) changed our name from Loreto Corporation to Loreto
      Resources Corporation, to better reflect our plans to focus our business
      strategy on the mining sector in South America, and (ii) increased our
      authorized capital stock from 50,000,000 shares of common stock to
      300,000,000 shares of common stock (the “Common Stock”), and 10,000,000
      shares of preferred stock.




1.
                As
      more fully described in our registration statement on Form SB-2 filed with
      the Securities and Exchange Commission (the “SEC”) on January 23,
      2007 (File No. 333-140148).
 2.
              As
      further discussed in our Form 8-K filed with the SEC on July 10,
      2008.




4




·
            On
      July 3, 2008, our Board of Directors and stockholders adopted the 2008
      Plan which reserves a total of 8,000,0003
      shares of Common Stock for issuance under the 2008
    Plan.





·
            We
      have changed the address of our principal executive offices to Av. Pardo y
      Aliaga 699 Of. 802, Lima, Peru, and our telephone number to + (511)
      212-1880.  Our website address is www.loretoresources.com.





·
            Effective
      July 24, 20084,
      our Board of Directors declared a 2 for 1 forward stock split in the form
      of a dividend.  The record date for the stock dividend was July
      18, 2008, and the payment date was July 23,
  2008.





·
            On
      July 21, 20084,
      Magdalena Cruz, our then President, Chief Executive Officer, Chief
      Financial Officer, Treasurer and Secretary, submitted to us a letter of
      resignation from her positions as President and Chief Executive Officer
      effective as of that date.  Ms. Cruz’s resignation from these
      positions did not result from any disagreement between her and
      us.





·
              On
      July 21, 20084,
      we entered into an employment agreement with Luis Saenz pursuant to which
      Mr. Saenz has served as our President and Chief Executive Officer (“CEO”)
      beginning as of that date.  Mr. Saenz also became a member of
      our Board of Directors as of July 21,
2008.





·
            In
      September, 2008, we completed the closing of a private placement of
      4,050,000 shares of our Common Stock  at a price of $0.50 per
      share pursuant to which we raised $1,980,313 net of offering
      expenses.





·
            Established
      a wholly owned subsidiary organized in the Cayman Islands, Loreto
      Resources Corporation – Peru (“Loreto – CI”), to own our planned operating
      entities in South America.





·
            Established
      an operating subsidiary in Peru as a wholly owned subsidiary of Loreto -
      CI,Loreto
      Resources Peru S.R.L. Compania Minera (“Loreto – Peru”), and opened and
      began staffing our offices in Lima,
Peru;





·
            Effective
      February 2, 20095, our Board of
      Directors declared a 2 for 1 forward stock split in the form of a
      dividend.  The record date for the stock dividend was January
      26, 2009, and the payment date was January 30,
  2009;





·
            On
      March 9, 20096,
      Magdalena Cruz, our then Chief Financial Officer, Treasurer and Secretary,
      submitted to us a letter of resignation from those positions. Ms. Cruz’s
      resignation from these positions did not result from any disagreement
      between her and us;







3.
            Adjusted
      for the July 24, 2008 and February 2, 2009 2 for 1 stock
      splits.


4.
              As
      further discussed in our Form 8-K filed with the Securities and Exchange
      Commission on July 24, 2008.


5.
            As
      further discussed in our Form 8-K filed with the Securities and Exchange
      Commission on January 29, 2009.


6.
            As
      further discussed in our Form 8-K filed with the Securities and Exchange
      Commission on March 23, 2009.




5




·
            Effective
      March 9, 20096,
      we appointed Eric E. Marin as our Interim Chief Financial Officer. Mr.
      Marin will serve in this capacity until such time as his replacement is
      appointed.





·
            On
      March 9, 2009, our Board of Directors approved the Company’s acceptance of
      an engagement letter with Marin Management Services (“MMS”), of which Mr.
      Marin is the President, pursuant to which MMS provided us with internal
      controls review, financial reports review, and internal control assessment
      report services; and




·
            Have
      begun identifying and investigating mining investment opportunities in
      Peru.





Additionally,
in the coming months, we expect to:





·
            Appoint
      three to five additional independent director(s) to our Board of
      Directors;





·
            Hire
      geologists and a mining engineer, to form a strong technical team, as well
      as additional finance and administrative personnel;
  and





·
            Enter
      into a material agreement to acquire mining rights in
      Peru.  (Although we have not yet finalized decisions to pursue
      any particular opportunities, we have begun to identify and evaluate
      potential prospects.)





Plan
of Operation




We plan
to build a substantial mining company focused in select countries in South
America. We will concentrate our efforts initially in Peru, where, we believe,
good mining opportunities exist. At a later stage, we plan to turn to
opportunities in other South American countries if we deem the relevant
considerations merit our investment. Within the spectrum of the mining industry,
we plan to focus on a blend between significant base and precious metal
opportunities through a variety of transactions.





Our
strategy is to own and operate assets at various stages of the mining life cycle
ranging from exploration to production.  Our initial plan is to
acquire producing mining operations.  Mining activity in Peru, and
South America more generally, has been very active historically and the current
volatile market conditions may present us with opportunities. We seek to be
opportunistic due to these market conditions and to acquire mining assets with
positive cash flow.  We are actively identifying and evaluating
potential acquisitions of mining assets in Peru and throughout South America,
generally, although we have not yet finalized decisions to pursue any such
particular opportunities.





Our
management currently consists of our Chief Executive Officer, Luis F. Saenz, who
has more than 18 years in the mining industry, and a number of professional
advisors.  Mr. Saenz is building our management team and has hired a
number of consultants with technical, managerial and financial skills in the
mining sector.  Management is overseen by our Board of Directors
currently comprised of Mr. Saenz and our Chairman, Nadine C. Smith, who has more
than 20 years experience working with development stage public companies in
various industries, including the oil and gas exploration and production sector
in South America.  During the next year, we expect to add additional
persons to our Board of Directors and additional management personnel with the
backgrounds and relationships necessary to assist us in achieving our goals and
objectives.




6




Competition





The
mining industry is highly competitive. We face competition from both local and
international companies in matters such as acquiring and developing metal
deposits and mining operations and securing trained personnel. Many of these
competitors have financial and technical resources that exceed ours, and we
believe that these companies have a competitive advantage in these areas. Others
are smaller, and we believe our technical and managerial capabilities give us a
competitive advantage over those companies.





Sustainability
and Environment





Loreto
Resources is committed to being a socially and environmentally responsible
company. We plan to do our best to minimize all impact on the environment and
local communities in order to harvest sustainability for future generations.
Additionally, we will strive to improve every aspect of performance and meet all
reasonable community expectations in order to stimulate local economies and to
ensure that benefits and opportunities from our future expected operations flow
into such communities. For Loreto Resources, protecting the environment and
maintaining respectful relationships with local communities is held as a core
value.





Because
we have not begun any exploration or mining activities, we are not subject to
any environmental laws or regulations at this time.





Research
and Development





We have
not spent any amounts on research and development activities during either of
the last two fiscal years.





Employees




As of
March 31, 2009 our only full time employees were our sole executive officer and
one administrative assistant.  We also employ four independent
consultants on a part time basis.




7




Expected
Split-Off of Legacy Business




In
connection with the discontinuation of our Legacy Business and the redirecting
of our business strategy to focus on mining opportunities in South America, we
have decided to split off and sell all of the assets and liabilities of the
Legacy Business (the “Split-Off”) to Magdalena Cruz, our founding
stockholder.  The Split Off is expected to close sometime during 2009.
We will contribute all of the assets and liabilities relating to the Legacy
Business, whether accrued, contingent or otherwise, and whether known or
unknown, to a newly organized, wholly owned subsidiary (“Split-Off Sub”), and
immediately thereafter will sell all of the outstanding capital stock of
Split-Off Sub to Ms. Cruz in exchange for the 10,000,000 (post-July 2008 stock
split) shares of our Common Stock previously surrendered by Ms. Cruz, all of our
Common Stock that Ms. Cruz currently owns, 12,000,000 (post-February 2009 stock
split) shares, and the forgiveness by Ms. Cruz (which was effected as of
June 30, 2008) of the $13,200 in loans she previously granted to
us.  It is expected that Ms. Cruz will indemnify us and our officers
and directors against any third party claims relating to the Legacy
Business. It is expected that Split-Off Sub and Ms. Cruz will also agree to
release us and our officers, directors, stockholders, employees and agents from
all liabilities incurred by Split-Off Sub or Ms. Cruz arising from, relating to,
or in any way connected with, any fact, event, transaction, action or omission
that occurred or failed to occur on or prior to the closing date of the
Split-Off.  Following the Split-Off, Ms. Cruz will no longer be one of
our stockholders.





ITEM
      1A.
            RISK
      FACTORS





Because we are a “smaller reporting
company” as that term is defined by the SEC, we are not required to present risk
factors at this time.





ITEM
      1B.
            UNRESOLVED
      STAFF COMMENTS





None.




ITEM
      2.
            PROPERTIES





We currently rent approximately 1,600
square feet of executive office space in Lima, Peru.





ITEM
      3.
            LEGAL
      PROCEEDINGS





No legal or governmental proceedings
are presently pending or, to our knowledge, threatened, to which we are a
party.





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





No
matters were submitted to a vote of security holders, through the solicitation
of proxies or otherwise, during the fourth quarter of the fiscal year covered by
this report.




PART
II





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





Our
Common Stock is currently listed on the OTC Bulletin Board under the symbol
“LRTC.OB”.




8




For the
period from April 30, 2007 to December 31, 2008, the table sets forth the high
and low closing bid prices based upon information obtained from inter-dealer
quotations on the OTC Bulletin Board without retail markup, markdown, or
commission and may not necessarily represent actual
transactions.  Although our Common Stock was approved for listing on
the OTC Bulletin Board on May 2, 2007, there have been no trades to
date:




Fiscal Year Ended December 31, 2008
                    Quarter Ended
                
                
                High Bid
                
                
                
                Low BidMarch
      31, 2008 (1)
                
                $
                0.05
                
                
                $
                0.05June
      30, 2008
                
                $
                0.05
                
                
                $
                0.05July
      1, 2008 through July 23, 2008
                
                $
                0.05
                
                
                $
                0.05July
      24, 2008 through September 28, 2008 (1)
                
                $
                0.07
                
                
                $
                0.07December
      31, 2008
                
                $
                0.07
                
                
                $
                0.07Fiscal
      Year Ended December 31, 2007
                    Quarter
      Ended
                
                High Bid
                
                
                Low BidJune
      30, 2007
                
                $
                0.05
                
                
                $
                0.05September
      30, 2007
                
                $
                0.05
                
                
                $
                0.05December
       31, 2007
                
                $
                0.05
                
                
                $
                0.05




(1) All
information from July 24, 2008 reflects the 2:1 forward stock
split.




Because
our Common Stock has not traded, bid information on our Common Stock does not
necessarily represent its fair market value.




Holders




As of
March 31, 2009, we had 35,050,000 shares of our Common Stock issued and
outstanding held by 11 shareholders of record.




Securities
Authorized For Issuance Under Equity Compensation Plans




On July
3, 2008, our Board of Directors and stockholders adopted the 2008 Equity
Incentive Plan (the “2008 Plan”) which reserves a total of 8,000,0007shares of Common Stock
for issuance under the 2008 Plan.  If an incentive award granted under
the 2008 Plan expires, terminates, is unexercised or is forfeited, or if any
shares are surrendered to us in connection with an incentive award, the shares
subject to such award and the surrendered shares will become available for
further awards under the 2008 Plan. As of December 31, 2008, we had granted two
awards under the 2008 Plan to our employees, exercisable for 3,160,000 shares of
our Common Stock at an exercise price of $0.50 per share (number of shares and
exercise price adjusted for February 2009 stock split), vesting in three equal
annual installments beginning in 2009.




7.
Adjusted for the July 24, 2008 and February 2, 2009 2 for 1 stock
splits.




9


Dividends
 
 We have
never declared any cash dividends with respect to our Common
Stock.  Future payment of dividends is within the discretion of our
board of directors and will depend on our earnings, capital requirements,
financial condition and other relevant factors.  Although there are no
material restrictions limiting, or that are likely to limit, our ability to pay
dividends on our Common Stock, we presently intend to retain future earnings, if
any, for use in our business and have no present intention to pay cash dividends
on our Common Stock.


Recent
Sales of Unregistered Securities





On
September 17, 2008, we completed our private placement of our Common Stock (the
“Private Placement”).  We completed an initial closing of the Private
Placement on September 9, 2008.  We offered the shares of Common Stock
in the Private Placement at a price of $0.50 per share8. We received proceeds of
$1,980,313, net of offering costs of $44,687 from the sale of 4,050,000 shares
of our Common Stock in the Private Placement.  The Private Placement
was conducted pursuant to the exemption from the registration requirements of
the federal securities laws provided by Regulation D and Regulation S
promulgated under the Securities Act of 1933, as amended (the “Securities Act”),
and Section 4(2) of the Securities Act. The Common Stock was offered and sold
only to “accredited investors,” as that term is defined by Rule 501 of
Regulation D, and/or to persons who were neither resident in, nor citizens of,
the United States. No commissions were paid in connection with the Private
Placement. The shares of Common Stock sold in the Private Placement carry
“piggyback” registration rights.





On
February 7, 2008, we received a $50,000 investment from an investor for the sale
of 1,000,000 shares of our Common Stock at a price of $0.05 per
share.





In July
2007 we issued 12,000,000 shares of our Common Stock to Magdalena Cruz in
consideration of her services as our then President, Chief Executive Officer,
Chief Financial Officer and sole director, in the amount of $0.0015 per share
for a total value of $4,500. The issuance of these shares to Ms. Cruz was exempt
from the registration requirements of the Securities Act of 1933, as amended
(the “Securities Act”) pursuant to Section 4(2) of the Securities Act as a
transaction not involving a public offering. The certificate evidencing the
shares bears a legend restricting its transfer.




Use
of Proceeds from Registered Securities




On
February 23, 2007, our public offering registration statement on Form SB-2 was
declared effective by the Securities and Exchange Commission (the “SEC”) (SEC
file no. 333-140148). On March 9, 2007, the sale under this Form SB-2 of
18,000,000 common shares at a price of $0.001 per share for an aggregate of
$18,000 was completed and the offering was closed. There was no underwriter
involved in this public offering. We incurred estimated expenses to third
parties of approximately $7,310 in connection with the preparation and filing of
the Form SB-2, and net proceeds to us from this Form SB-2 offering were
approximately $10,690. We have used these funds as working capital for
administrative expenses and professional fee payments to third
parties.




8.  Number
of shares and price per share have been adjusted for February 2009 stock
split.




10




ITEM
      6.
            SELECTED
      FINANCIAL DATA





Not
applicable.





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





The
following discussion highlights the principal factors that have affected our
financial condition and results of operations as well as our liquidity and
capital resources for the periods described. This discussion contains
forward-looking statements. Please see “Forward-Looking Statements” for a
discussion of the uncertainties, risks and assumptions associated with these
forward-looking statements.




The
following discussion and analysis of the Company’s financial condition and
results of operations are based on the preparation of our financial statements
in accordance with U.S. generally accepted accounting principles. You
should read the discussion and analysis together with such financial statements
and the related notes thereto.




Results
of Operations





Fiscal
year Ended December 31, 2008 and 2007





We are
still in our exploration stage and have generated no revenues to
date.




We
incurred operating expenses of $705,220 and $43,518 for the years ended December
31, 2008 and 2007, respectively. These expenses consisted of general operating
expenses incurred in connection with the day to day operation of our business
and the preparation and filing of our periodic reports.




Our net
losses for years ended December 31, 2008 and 2007 were $699,020 and $43,518,
respectively.




We have
generated no revenues and our net operating loss from inception through December
31, 2008 was $743,415.




Liquidity
and Capital Resources





Our cash
and cash equivalents balance as of December 31, 2008 was
$1,517,269.




11




The
Private Placement




On
September 17, 2008 we completed the Private Placement of our Common Stock for
net proceeds to us of $1,980,313. We are using the proceeds of the Private
Placement for working capital purposes.





We presently do not have any available
credit, bank financing or other external sources of liquidity, other than the
remaining net proceeds from the Private Placement. Due to our brief history and
historical operating losses, our operations have not been a source of liquidity.
We believe that, at our current level of operation, we have sufficient cash to
meet our expenses for the next nine to twelve months.  However, we
expect that we will need to obtain additional capital in order to execute our
business plan, build our operations and become profitable. In order to obtain
capital, we may need to sell additional shares of our Common Stock or debt
securities, or borrow funds from private lenders or banking institutions. We
have not made any decisions with respect to any such financing.  There
can be no assurance that we will be successful in obtaining additional funding
in amounts or on terms acceptable to us, if at all.  If we are unable
to raise additional funding as necessary, we may have to suspend our operations
temporarily or cease operations entirely.





Our
auditors have included an explanatory paragraph in their report on our
consolidated financial statements relating to the uncertainty of our business as
a going concern, due to our limited operating history, our lack of historical
profitability, and our limited funds. We believe that we will be able to raise
the required funds for operations and to achieve our business plan.





ITEM
      8.
            FINANCIAL
      STATEMENTS AND SUPPLEMENTAL DATA





Our
audited financial statements are included beginning immediately following the
signature page to this report.  See Item 15 for a list of the
financial statements included herein.





ITEM
9A.[T] CONTROLS
AND PROCEDURES





Disclosure
Controls and Procedures





Disclosure
controls and procedures include, without limitation, controls and procedures
designed to ensure that information required to be disclosed by an issuer in the
reports that it files or submits under the Exchange Act of 1934 (the “Exchange
Act”) is accumulated and communicated to the issuer's management, including its
principal executive and principal financial officers, or persons performing
similar functions, as appropriate to allow timely decisions regarding required
disclosure. It should be noted that the design of any system of controls is
based in part upon certain assumptions about the likelihood of future events,
and there can be no assurance that any design will succeed in achieving its
stated goals under all potential future conditions, regardless of how
remote.  Under the supervision and with the participation of our
management, including our Chief Executive Officer and interim Chief Financial
Officer, we have evaluated the effectiveness of our disclosure controls and
procedures as required by Exchange Act Rule 13a-15(b) as of the end of the
period covered by this report. Based on that evaluation, our Chief Executive
Officer and Chief Financial Officer has concluded that our disclosure controls
and procedures were effective.




12




Management’s
Annual Report on Internal Control over Financial Reporting





Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting, as such term is defined in Rules 13a-15(f) and
15d-15(f) under the Exchange Act, for the Company.  As of the end of
the period covered by this Annual Report, we carried out an evaluation, under
the supervision and with the participation of our Chief Executive and interim
Chief Financial Officer, of the effectiveness of the design and operation of our
internal control over financial reporting. The Company's management based its
evaluation on criteria set forth in the framework in Internal Control—Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission. Based on that assessment, management has concluded that the
Company's internal control over financial reporting was effective as of December
31, 2008.





This
annual report does not include an attestation report of our registered public
accounting firm regarding internal control over financial reporting.
Management’s report was not subject to attestation by our registered public
accounting firm pursuant to temporary rules of the Securities and Exchange
Commission (the “SEC”) that permit us to provide only management’s report in
this Annual Report.





Changes
in Internal Control over Financial Reporting





There
were no changes in our internal control over financial reporting during the year
ended December 31, 2008 that have materially affected, or are reasonably likely
to materially affect, our internal control over financial
reporting.





Officers’
Certifications





Appearing
as exhibits to this Annual Report are “Certifications” of our Chief Executive
Officer and Interim Chief Financial Officer.  The Certifications are
required pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (the “Section
302 Certifications”).  This section of the Annual Report contains
information concerning the Controls Evaluation referred to in the Section 302
Certification.  This information should be read in conjunction with
the Section 302 Certifications for a more complete understanding of the topics
presented.





ITEM
      9B.
            OTHER
      INFORMATION





Not
applicable.




13





PART
III





ITEM
      10.
            DIRECTORS,
      EXECUTIVE OFFICERS, AND CORPORATE
GOVERNANCE





Executive
Officers and Directors




Below are
the names and certain information regarding the Company’s current executive
officers and directors:




Name
                                  
                                  Age
                                  
                                  Title
                                  
                                  Date First AppointedNadine
      C. Smith
                                  
                                  51
                                  
                                  Director
      and Chairman of the Board
                                  
                                  July
      3, 2008Luis
      F. Saenz
                                  
                                  38
                                  
                                  President,
      Chief Executive Officer and Director
                                  
                                  July
      21, 2008Eric
      E. Marin
                                  
                                  47
                                  
                                  Interim
      Chief Financial Officer
                                  
                                  March
      9,
2009




Directors
are elected to serve until the next annual meeting of stockholders and until
their successors are elected and qualified.




Currently,
directors are not compensated for their services, although their expenses in
attending meetings may be reimbursed. Officers are elected by the Board of
Directors and serve until their successors are appointed by the Board of
Directors. Biographical resumes of each officer and director are set forth
below.




Certain
biographical information of our directors and officers:




Nadine
C. Smith




Ms. Smith
has been a private investor and business consultant since 1990. Ms. Smith is
currently the Chairperson, Vice President and Interim Chief Financial Officer of
La Cortez Energy, Inc., a publicly held independent international energy company
involved in oil and natural gas exploration in South America. Ms. Smith is
currently also a member of the Board of Directors of the public company WaferGen
Bio-Systems, Inc. and has previously served as a director of Gran Tierra Energy,
Inc., Patterson-UTI Energy Inc. and American Retirement Corporation, all public
companies.





Luis
F. Saenz




Mr. Saenz
was most recently employed at Standard Bank ("Standard") with Standard's
investment banking unit, Standard Americas, Inc.  Mr. Saenz joined
Standard in New York in 1997 and relocated to Peru in 1998 to establish
Standard's Peru representative office. While in Peru, he led Standard's mining
and metals origination effort in the Latin America region. He recently returned
to New York to head Standard's mining and metals team in the Americas. He
previously worked for Pechiney World Trade in the base metals trading area
before joining Merrill Lynch as Vice-President for Commodities in Latin
America.  Mr. Saenz graduated from Franklin and Marshall College in
1991 with a Bachelor of Arts degree in economics and international
affairs.




14




Eric
C. Marin





Eric E.
Marin is currently the president of Marin Management Services, a privately-held
consultancy firm offering management, financial, and information technology
consulting services to companies.  From April 2006 to date, Mr. Marin has
been the vice president of Quorum Business Solutions.  Mr. Marin’s
responsibilities in this role include building and managing client relations;
and overseeing operational budget, strategic planning, business development and
organizational leadership services for various Fortune 500 companies. 
Prior thereto, from December 2003 through March 2006, Mr. Marin was the
president and founder of Marin Medical Services LLC, a company providing front
and back-office services to the healthcare industry.  From April 1996 to
November 2003, Mr. Marin was a partner with Accenture Ltd. where Mr. Marin was
responsible for overseeing all aspects of Accenture’s information technology
post-mergers and acquisition program, supervising a team of over 120
employees.  Mr. Marin received a Masters of Business Administration degree
from the University of Houston in 1992, and a Bachelor of Science degree in
Computer Science from Texas A&M University in 1986.





Employment
Agreements with Executive Officers





Luis
F. Saenz





We have
entered into an employment agreement effective as of July 21, 2008 (the
“Employment Agreement”) with Luis F. Saenz pursuant to which Mr. Saenz was
appointed as our President and Chief Executive Officer, with the following
terms:





Mr. Saenz’s
base annual compensation has been set at $250,000, which amount shall be paid in
accordance with our customary payroll practices and may be increased annually at
the discretion of the Board. This annual compensation shall be paid in equal
monthly installments in Peruvian Nuevo Sols (“PEN”). The exchange rate used to
calculate Mr. Saenz’s monthly salary payment will be calculated each month and
shall neither exceed a maximum of PEN 2.9 nor be less than a minimum of PEN 2.5.
This minimum/maximum range will be adjusted at the end of each calendar year
based upon changes in the consumer price index in Peru.




In
addition, Mr. Saenz is eligible to receive an annual cash bonus of up to fifty
percent (50%) of his applicable base salary. Mr. Saenz’s annual bonus (if any)
shall be in such amount (up to the limit stated above) as the Board may
determine in its sole discretion, based upon Mr. Saenz’s achievement of certain
performance milestones to be established annually by the Board in discussion
with Mr. Saenz (the “Milestones”). For the first year of employment, in the
event the Board and Mr. Saenz are unable to agree to Milestones acceptable to
both, the amount of Mr. Saenz’s bonus shall be determined by the Board on a
discretionary basis.





We also
agreed to reimburse Mr. Saenz for his reasonable costs relating to his
relocation to Lima Peru not to exceed a maximum of $20,000 unless Mr. Saenz
receives prior approval from us for any additional amounts.





15




On July
21, 2008, we granted Mr. Saenz an option to purchase an aggregate of 3,100,000
shares of our Common Stock under our 2008 Equity Incentive Plan. This option
vests in three equal annual installments beginning on July 21, 2009 and is
exercisable at $1.00 per share, a price equal to the fair market value per share
of our Common Stock on the date hereof as reasonably determined by our
Board.




The
initial term of the Employment Agreement expires on July 21, 2009; provided,
however, that the Employment Agreement will automatically renew for additional
one (1) year terms thereafter, unless either party provides notice to the
other party of its intent not to renew such Employment Agreement not less than
thirty (30) days prior to the expiration of the then-current term or unless
the Employment Agreement is terminated earlier in accordance with its
terms.





In
the event of a termination of employment “without cause” (as defined in the
Employment Agreement) by the Company during the first 12 months following July
21, 2008, Mr. Saenz shall receive: (i) twelve (12) months of his base
salary; plus (ii) to the extent the Milestones are achieved or, in the
absence of Milestones, the Board has, in its sole discretion, otherwise
determined an amount for Mr. Saenz’s bonus for the initial 12 months of his
employment, a pro rata portion of his annual bonus for the initial 12 months of
his employment, to be paid to him on the date such annual bonus would have been
payable to him had he remained employed by the Company; plus (iii) any
other accrued compensation and Benefits (as defined in the Employment
Agreement). In the event of a termination of employment by Mr. Saenz for “good
reason”(as defined in the Employment Agreement), Mr. Saenz shall receive:
(i) twelve (12) months of his then in effect base salary, subject to
his compliance with the non-competition, non-solicitation and confidentiality
provisions of the Employment Agreement. All of the foregoing shall be payable in
accordance with the Company’s customary payroll practices then in
effect.





Further,
in the event of the termination of Mr. Saenz’s employment in connection with a
Change of Control (as defined in the Employment Agreement), without cause by the
Company within 12 months of July 21, 2008, or by Mr. Saenz for good reason, any
options then held by Mr. Saenz that have not already vested in accordance with
their terms shall immediately vest and become exercisable as of the date of such
termination and Mr. Saenz shall have six (6) months from the date of
termination to exercise any or all such options.





The
Employment Agreement also provides that Mr. Saenz shall not: (i) during his
employment and for a period of one (1) year following the termination of
his employment, unless such employment is terminated by us for cause or by him
for no reason, directly or indirectly engage or invest in, own, manage, operate,
finance, control or participate in the ownership, management, operation,
financing, or control of, be employed by, associated with, or in any manner
connected with, lend any credit to, or render services or advice to, any
business, firm, corporation, partnership, association, joint venture or other
entity that engages or conducts any business the same as or substantially
similar to the business or currently proposed to be engaged in or conducted by
the Company and/or any of its affiliates, including its planned Peru subsidiary,
in South America or included in the future strategic plan of the business of the
Company, anywhere within the United States of America or South America; provided, however, that Mr.
Saenz may own less than 5% of the outstanding shares of any class of securities
of any enterprise (but without otherwise participating in the activities of such
enterprise) including those engaged in the mining business, other than any such
enterprise with which the Company competes or is currently engaged in a joint
venture, if such securities are listed on any national or regional securities
exchange or have been registered under Section 12(g) of the Securities Exchange
Act of 1934, as amended; and provided, further, that solely
with the prior approval of the Company, the Executive may participate in the
activities of an enterprise in the commercial banking industry or mining
consultancy business; (ii) during his employment and for a period of one
(1) year following the termination of his employment, solicit any of our
current and/or future employees to leave our employ, or solicit or attempt to
take away any customers of the Company or any of our affiliates; or
(iii) during his employment and thereafter, disclose, directly or
indirectly, any confidential information of the Company to any third party,
except as may be required by applicable law or court order, in which case the
executive must promptly notify the Company so as to allow us to seek a
protective order if the Company so elects.





16




The
Employment Agreement with Mr. Saenz including its terms of compensation were
negotiated in an arm’s length transaction between Mr. Saenz and us and was
approved by Ms. Smith our Chairman and sole director at the time of Mr. Saenz’s
hire.




Eric
E. Marin




As of
March 9, 2009, we hired Mr. Marin as our Interim Chief Executive Officer
pursuant to an engagement letter dated March 3, 2009, on an independent
contractor basis.  In accordance with his engagement letter, we are
paying Mr. Marin for his services to us on an hourly basis at the rate of $200
per hour.




Board
Committees




The
Company currently has not established any committees of the Board of Directors.
Our Board of Directors may designate from among its members an executive
committee and one or more other committees in the future.  We do not
have a nominating committee or a nominating committee
charter.  Further, we do not have a policy with regard to the
consideration of any director candidates recommended by security
holders.  To date, no security holders have made any such
recommendations.  Our two directors perform all functions that would
otherwise be performed by committees.  Given the present size of our
board it is not practical for us to have committees.  If we are able
to grow our business and increase our operations, we intend to expand the size
of our board and allocate responsibilities accordingly.




Director
Independence





We are
not currently subject to listing requirements of any national securities
exchange or inter-dealer quotation system which has requirements that a majority
of the board of directors be “independent” and, as a result, we are not at this
time required to (and we do not) have our Board of Directors comprised of a
majority of “Independent Directors.”





17




Shareholder
Communications





Currently,
we do not have a policy with regard to the consideration of any director
candidates recommended by security holders.  To date, no security
holders have made any such recommendations.





Code
of Ethics




We have
adopted a written code of ethics (the “Code of Ethics”) that applies to our
principal executive officer, principal financial officer, principal accounting
officer or controller, and persons performing similar functions. We believe that
the Code of Ethics is reasonably designed to deter wrongdoing and promote honest
and ethical conduct; provide full, fair, accurate, timely and understandable
disclosure in public reports; comply with applicable laws; ensure prompt
internal reporting of code violations; and provide accountability for adherence
to the code.  To request a copy of the Code of Ethics, please make
written request to our President at Av. Pardo y Aliaga 699 Of. 802, Lima 27 -
Perú.





Compliance
with Section 16(a) of the Exchange Act





Our
common stock is not registered pursuant to Section 12 of the Exchange
Act.  Accordingly, our officers, directors and principal shareholders
are not subject to the beneficial ownership reporting requirements of Section
16(a) of the Exchange Act.





ITEM
      11.
            EXECUTIVE
      COMPENSATION





The
following table sets forth information concerning the total compensation paid or
accrued by us during the last two fiscal years ended December 31, 2008 to (i)
all individuals that served as our principal executive officer or acted in a
similar capacity for us at any time during the fiscal year ended December 31,
2008; (ii) all individuals that served as our principal financial officer or
acted in a similar capacity for us at any time during the fiscal year ended
November 30, 2008; and (iii) all individuals that served as executive officers
of ours at any time during the fiscal year ended December 31, 2008 that received
annual compensation during the fiscal year ended December 31, 2008 in excess of
$100,000.





18




Summary
Compensation Table




Name and
                                                                                                                          Principal Position
                                                                                                                        
                                                                                                                        Year
                                                                                                                        
                                                                                                                        Salary
                                                                                                                          ($)
                                                                                                                        
                                                                                                                        Bonus
                                                                                                                          ($)
                                                                                                                        
                                                                                                                        Stock
                                                                                                                          Awards
                                                                                                                          ($)
                                                                                                                        
                                                                                                                        Option
                                                                                                                          Awards
                                                                                                                          ($)
                                                                                                                        
                                                                                                                        Non-Equity
                                                                                                                          Incentive
                                                                                                                          Plan
                                                                                                                          Compen-sation ($)
                                                                                                                        
                                                                                                                        Change
                                                                                                                          in
                                                                                                                          Pension
                                                                                                                          Value
                                                                                                                          andNon-qualified
                                                                                                                          Deferred
                                                                                                                          Compen-sation Earnings
                                                                                                                          ($)
                                                                                                                        
                                                                                                                        All Other
                                                                                                                          Compensation
                                                                                                                          ($)
                                                                                                                        
                                                                                                                        Total ($)(a)
                                                                                                                        
                                                                                                                        (b)
                                                                                                                        
                                                                                                                        (c)
                                                                                                                        
                                                                                                                        (d)
                                                                                                                        
                                                                                                                        (e)
                                                                                                                        
                                                                                                                        (f)
                                                                                                                        
                                                                                                                        (g)
                                                                                                                        
                                                                                                                        (h)
                                                                                                                        
                                                                                                                        (i)
                                                                                                                        
                                                                                                                        (j)Luis
      F. Saenz, Chief Executive Office (1)
                                                                                                                        
                                                                                                                        2008
                                                                                                                        
                                                                                                                        
                                                                                                                        104,165
                                                                                                                        
                                                                                                                        
                                                                                                                        0
                                                                                                                        
                                                                                                                        
                                                                                                                        0
                                                                                                                        
                                                                                                                        
                                                                                                                        181,612
                                                                                                                        
                                                                                                                        
                                                                                                                        0
                                                                                                                        
                                                                                                                        
                                                                                                                        0
                                                                                                                        
                                                                                                                        
                                                                                                                        0
                                                                                                                        
                                                                                                                        
                                                                                                                        285,777Magdalena
      Cruz,  Chief
                                                                                                                        
                                                                                                                        2008
                                                                                                                        
                                                                                                                        
                                                                                                                        3,000
                                                                                                                        
                                                                                                                        
                                                                                                                        0
                                                                                                                        
                                                                                                                        
                                                                                                                        0
                                                                                                                        
                                                                                                                        
                                                                                                                        0
                                                                                                                        
                                                                                                                        
                                                                                                                        0
                                                                                                                        
                                                                                                                        
                                                                                                                        0
                                                                                                                        
                                                                                                                        
                                                                                                                        0
                                                                                                                        
                                                                                                                        
                                                                                                                        3,000Executive
      Officer and Chief Financial Officer (1)
                                                                                                                        
                                                                                                                        2007
                                                                                                                        
                                                                                                                        
                                                                                                                        0
                                                                                                                        
                                                                                                                        
                                                                                                                        0
                                                                                                                        
                                                                                                                        
                                                                                                                        0
                                                                                                                        
                                                                                                                        
                                                                                                                        0
                                                                                                                        
                                                                                                                        
                                                                                                                        0
                                                                                                                        
                                                                                                                        
                                                                                                                        0
                                                                                                                        
                                                                                                                        
                                                                                                                        0
                                                                                                                        
                                                                                                                        
                                                                                                                        0







(1)
            Effective
      July 21, 2008, Ms. Cruz resigned as our Chief Executive Officer and
      President and Mr. Saenz was appointed our Chief Executive Officer and
      president.  We paid Ms. Cruz a fee of $500 per month for the
      last six months of her tenure for her services to us as officer and
      director.




We have
not issued any stock options or maintained any stock option or other incentive
plans other than our 2008 Plan. (See “Item 5. Market for Common Equity and
Related Stockholder Matters – Securities Authorized for Issuance Under Equity
Compensation Plans” above.) We have no other plans in place and have never
maintained any plans that provide for the payment of retirement benefits or
benefits that will be paid primarily following retirement including, but not
limited to, tax qualified deferred benefit plans, supplemental executive
retirement plans, tax-qualified deferred contribution plans and nonqualified
deferred contribution plans.


19





Outstanding
Equity Awards at Fiscal Year-End





The
following table sets forth information regarding stock options held by the
Company's Named Executive Officers at December 31, 2008.





Option awardsName and
                      Principal Position
                    
                    Number of
                      securities
                      underlying
                      unexercised
                      options
                      exercisable
                      (#)
                    
                    
                    Number of
                      securities
                      underlying
                      unexercised
                      options
                      unexercisable
                      (#)
                    
                    
                    Equity
                      incentive plan
                      awards:
                      Number of
                      securities
                      underlying
                      unexercised
                      unearned
                      options
                      (#)
                    
                    
                    Option
                      plan
                      exercise
                      price
                      ($)
                    
                    
                    Option
                      expiration
                      date(a)
                    
                    (b)
                    
                    
                    (c)
                    
                    
                    (d)
                    
                    
                    (e)
                    
                    
                    (f)Luis
      F. Saenz, Chief Executive Officer (1)
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    3,100,000
                    
                    
                    $
                    0.50
                    
                    
                    July
      20, 2018Magdalena
      Cruz, Chief Executive Officer (1)
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    -
                    
                    
                    
                    N/A
                    
                    
                    
                    N/A





(1)
            Effective
      July 21, 2008, Ms. Cruz resigned as our President and Chief Executive
      Officer and Mr. Saenz was appointed our President and Chief Executive
      Officer.





There
were no stock awards to executive officers during the year ended December 31,
2008, and there are no stock awards outstanding as of December 31,
2008.





Equity Compensation Plan
Information





The
following table sets forth information about the Company’s equity compensation
plans as of December 31, 2008:





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 plansEquity
      compensation plans approved by security holders
                      
                      
                      3,160,000
                      
                      
                      $
                      0.50
                      
                      
                      
                      4,840,000Equity
      compensation plans not approved by security holders
                      
                      
                      -
                      
                      
                      
                      -
                      
                      
                      
                      -Total
                      
                      
                      3,160,000
                      
                      
                      $
                      0.50
                      
                      
                      
                      4,840,000





Compensation
of Directors




Except as
indicated above, none of our directors receives any compensation for serving as
such, for serving on committees (if any) of the board of directors or for
special assignments. During the fiscal year ended December 31, 2008 there were
no other arrangements between us and our directors that resulted in our making
payments to any of our directors for any services provided to us by them as
directors.




20


ITEM
      12.
              SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
      STOCKHOLDER MATTERS
  The
following table sets forth information with respect to the beneficial ownership
of our common stock known by us as of March 31, 2009 by:
  ·
              each
      person or entity known by us to be the beneficial owner of more than 5% of
      our common stock;
 
 ·
              each
      of our directors;
 
 ·
              each
      of our executive officers; and
 
 ·
              all
      of our directors and executive officers as a
  group.
  Except as
otherwise indicated, the persons listed below have sole voting and investment
power with respect to all shares of our common stock owned by them, except to
the extent such power may be shared with a spouse.
 
 NAME OF OWNER
                                    
                                    TITLE OF
                                      CLASS
                                    
                                    NUMBER OF
                                      SHARES OWNED (1)
                                    
                                    
                                    PERCENTAGE OF
                                      COMMON STOCK (2)Nadine
      C. Smith
                                      6830
      Elm Street
                                      McLean,
      VA 22101
                                    
                                    Common Stock
                                    
                                    
                                    2,510,000
                                    
                                    
                                    
                                    7.16
                                    %Luis
      F. Saenz (3)
                                    
                                    Common Stock
                                    
                                    
                                    200,000
                                    
                                    
                                    
                                    0.57
                                    %Eric
      E. Marin
                                    
                                    Common Stock
                                    
                                    
                                    - 0
      -
                                    
                                    
                                    
                                    0.00
                                    %All
      Officers and Directors
                                    
                                    Common Stock
                                    
                                    
                                    2,710,000
                                    
                                    
                                    
                                    7.73
                                    %As
      a Group (3 persons)Magdalena
      Cruz
                                    
                                    Common Stock
                                    
                                    
                                    12,000,000
                                    
                                    
                                    
                                    34.24
                                    %47395
      Monroe Street, #274Indio,
      CA 92201Aton
      Select Fund
                                    
                                    Common Stock
                                    
                                    
                                    3,000,000
                                    
                                    
                                    
                                    8.56
                                    %3076
      Sir Francis Drake's Highway
                                      Raod
      Town, Tortola
                                      British
      Virgin IslandsAdrien
      Ellel
                                    
                                    Common Stock
                                    
                                    
                                    2,500,000
                                    
                                    
                                    
                                    7.13
                                    %SOHO
      Square
                                      21
      Lyndhurst Terrace
                                      Central,
      Hong Kong
                                      Hong
      Kong SAR  21
 Laffin
      Ventures Corporation
                                          
                                          Common Stock
                                          
                                          
                                          2,500,000
                                          
                                          
                                          
                                          7.13
                                          %c/o
      Gottbetter & Partners, LLP
                                            488
      Madison Avenue, 12th Floor
                                            New
      York, NY 10022Paramount
      Strategy Corp.
                                          
                                          Common Stock
                                          
                                          
                                          2,500,000
                                          
                                          
                                          
                                          7.13
                                          %PO
      BOX 802
                                            West
      Bay
                                            Cayman
      Islands
                                            KYI-1303Affaires
      Financieres
                                          
                                          Common Stock
                                          
                                          
                                          2,000,000
                                          
                                          
                                          
                                          5.71
                                          %Nuschelerstrasse
      44
                                            8001
      Zurich
                                            SwitzerlandTangoCorp,
      Inc.
                                          
                                          Common Stock
                                          
                                          
                                          2,000,000
                                          
                                          
                                          
                                          5.71
                                          %802
      Grand Pavilion
                                            PO
      Box 10335 APO
                                            West
      Bay Rd
                                            Grand
      Cayman, Cayman Islands
 
 (1)
                Beneficial
      Ownership is determined in accordance with the rules of the SEC and
      generally includes voting or investment power with respect to securities.
      Shares of common stock subject to options or warrants currently
      exercisable or convertible, or exercisable or convertible within 60 days
      of March 31, 2009 are deemed outstanding for computing the percentage of
      the person holding such option or warrant but are not deemed outstanding
      for computing the percentage of any other
  person.
 
 (2)
              Percentage
      based upon 35,050,000 shares of common stock outstanding as of March
      31, 2009.
 
 (3)
                Does
      not include 3,100,000 shares of Common Stock issuable upon the exercise of
      options granted to Mr. Saenz as part of his employment
      agreement.  These options vest in three equal annual
      installments beginning on July 21,
2009.
 
 22
  Securities
Authorized for Issuance Under Equity Compensation Plans
  On July
3, 2008, our Board of Directors and stockholders adopted the 2008 Plan which
reserves a total of 8,000,0009
shares of Common Stock for issuance under the 2008 Plan.  If an
incentive award granted under the 2008 Plan expires, terminates, is unexercised
or is forfeited, or if any shares are surrendered to us in connection with an
incentive award, the shares subject to such award and the surrendered shares
will become available for further awards under the 2008 Plan. As of the date
hereof, we have granted awards under the 2008 Plan to our Chief Executive
Officer.
 
 ITEM
      13.
              CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS, ANDDIRECTOR
      INDEPENDENCE
 
 As of
December 31, 2007, Magdalena Cruz, our then sole officer and director, had
loaned us $13,200 with no specific terms of repayment and no interest.  As
of June 30, 2008, Ms. Cruz had forgiven the $13,200 in loans she granted
the Company, with no interest or penalties, as partial consideration for the
prospective Split-Off to Ms. Cruz of the Legacy Business formerly operated by
Ms. Cruz.  Additionally, Ms. Cruz agreed to the cancellation on July
18, 2008, of 5,000,000 (20,000,000 shares on a post-split basis) shares of
restricted Common Stock held by her, as additional consideration towards the
Split-Off.
  In July
2007, we issued 12,000,000 shares of our Common Stock to Magdalena Cruz in
consideration of her services as our then President, Chief Executive Officer,
Chief Financial Officer and sole director, in the amount of $0.000375 per share
for a total value of $4,500. See “Item 5. - Recent Sales of Unregistered
Securities” above.
 
 Nadine C.
Smith, our Chairman, purchased 1,000,000 shares of our Common Stock in the
Private Placement for $500,000.  Ms. Smith owns an additional
11,510,000 shares of our Common Stock.  Luis F. Saenz, our President
and Chief Executive Officer, purchased 200,000 shares of our Common Stock in the
Private Placement for $100,000.  For a discussion of the Private
Placement, see “Item 5. - Recent Sales of Unregistered Securities”
above.
 
 9.  Adjusted
for the July 24, 2008 and February 2, 2009 2 for 1 stock splits.
  23
 
 ITEM
      14.
              PRINCIPAL
      ACCOUNTANT FEES AND SERVICES
 
 Audit
Fees.
  The
aggregate fees billed to us by our principal accountant for services rendered
during the fiscal years ended December 31, 2008 and 2007 are set forth in the
table below:
 
 Fee Category
                  
                  Fiscal year ended December 31,
                    200810
                  
                  
                  Fiscal year ended December 31,
                    200711Audit
      fees (1)
                  
                  $
                  15,400
                  
                  
                  $
                  6,500Audit-related
      fees (2)Tax
      fees (3)
                  
                  $
                  750All
      other fees (4)Total
      fees
                  
                  $
                  16,150
                  
                  
                  $
                  6,500
 
 (1)
              Audit
      fees consists of fees incurred for professional services rendered for the
      audit of consolidated financial statements, for reviews of our interim
      consolidated financial statements included in our quarterly reports on
      Form 10-QSB and for services that are normally provided in connection with
      statutory or regulatory filings or
engagements.
 
 (2)
              Audit-related
      fees consists of fees billed for professional services that are reasonably
      related to the performance of the audit or review of our consolidated
      financial statements, but are not reported under “Audit
    fees.”
 
 (3)
              Tax
      fees consists of fees billed for professional services relating to tax
      compliance, tax planning, and tax
advice.
 
 (4)
              All
      other fees consists of fees billed for all other
  services.
 
 Audit Committee’s
Pre-Approval Practice.
  We do not
have an audit committee.  Our board of directors performs the function
of an audit committee.  Section 10A(i) of the Securities Exchange Act
of 1934, as amended, prohibits our auditors from performing audit services for
us as well as any services not considered to be audit services unless such
services are pre-approved by our audit committee or, in cases where no such
committee exists, by our board of directors (in lieu of an audit committee) or
unless the services meet certain de minimis standards.
 
 10.  Includes
$7,000 in estimated audit fees relating to the audit of our financial statements
for the year ended December 31, 2008, by Malone & Bailey, PC, our current
auditors.  The total amount for the audit of our 2008 financial
statements has not yet been finalized or billed.  The remainder of
these fees was paid in full and relates to the review of our financial
statements for the quarters ended March 31, 2008, June 30, 2008 and September
30, 2008, by George Stewart, CPA, our former auditor.
 11.   Paid
to George Stewart, CPA, our former auditor.
  24
 
 PART
IV
 
 ITEM
      15.
              EXHIBITS
      AND FINANCIAL STATEMENT SCHEDULES
 
 Financial
Statement Schedules
 
 The
consolidated financial statements of Loreto Resources Corporation are listed on
the Index to Financial Statements on this annual report on Form 10-K beginning
on page F-1.
 
 Exhibits
 
 The
following Exhibits are being filed with this Annual Report on Form
10-K:
  Exhibit
                        No.
                      
                      SEC Report
                        Reference Number
                      
                      Description3.1
                      
                      3.1
                      
                      Amended
      and Restated Articles of Incorporation of Registrant as filed with the
      Nevada Secretary of State on July 3, 2008 (1)3.2
                      
                      3.2
                      
                      By-Laws
      of Registrant (2)10.1
                      
                      10.1
                      
                      Employment
      Agreement dated July 21, 2008 by and between Loreto Resources Corporation
      and Luis F. Saenz (3)10.2
                      
                      10.2
                      
                      Stock
      Option Agreement dated July 21, 2008 between Loreto Resources Corporation
      and Luis F. Saenz (3)10.3
                      
                      10.1
                      
                      Form
      of Subscription Agreement (4)10.4
                      
                      *
                      
                      2008
      Equity Incentive Plan14.1
                      
                      14
                      
                      Code
      of Ethics (5)21
                      
                      *
                      
                      List
      of Subsidiaries31.1
                      
                      *
                      
                      Certification
      of Principal Executive Officer, pursuant to SEC Rules 13a-14(a) and
      15d-14(a), adopted pursuant to Section 302 of the Sarbanes-Oxley Act
      of 200231.2
                      
                      *
                      
                      Certification
      of Interim Principal Financial Officer, pursuant to SEC
      Rules 13a-14(a) and 15d-14(a), adopted pursuant to Section 302
      of the Sarbanes-Oxley Act of 200232.1
                      
                      *
                      
                      Certification
      of Chief Executive Officer, pursuant to 18 U.S.C. Section 1350,
      adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
      2002**
  25
  Exhibit
                        No.
                      
                      SEC Report
                        Reference Number
                      
                      Description32.2
                      
                      *
                      
                      Certification
      of Interim Chief Financial Officer, pursuant to 18 U.S.C.
      Section 1350, adopted pursuant to Section 906 of the
      Sarbanes-Oxley Act of
2002**
  (1)
              Filed
      with the SEC on July 10, 2008 as an exhibit, numbered as indicated above,
      to the Registrant’s current report (SEC File No. 333-140148) on Form 8-K,
      which exhibit is incorporated herein by
  reference.
  (2)
              Filed
      with the SEC on January 23, 2007 as an exhibit, numbered as indicated
      above, to the Registrant’s registration statement (SEC File No.
      333-140148) on Form SB-2, which exhibit is incorporated herein by
      reference.
 
 (3)
              Filed
      with the SEC on July 24, 2008 as an exhibit, numbered as indicated above,
      to the Registrant’s current report (SEC File No. 333-140148) on Form 8-K,
      which exhibit is incorporated herein by
  reference.
  (4)
              Filed
      with the SEC on September 15, 2008 as an exhibit, numbered as indicated
      above, to the Registrant’s current report (SEC File No. 333-140148) on
      Form 8-K, which exhibit is incorporated herein by
    reference.
  (5)
              Filed
      with the SEC on March 31, 2008 as an exhibit, numbered as indicated above,
      to the Registrant’s annual report (SEC File No. 333-140148) on Form
      10-KSB, which exhibit is incorporated herein by
  reference.
  * Filed
herewith.
 
 ** This
certification is being furnished and shall not be deemed “filed” with the SEC
for purposes of Section 18 of the Exchange Act, or otherwise subject to the
liability of that section, and shall not be deemed to be incorporated by
reference into any filing under the Securities Act or the Exchange Act, except
to the extent that the Registrant specifically incorporates it by
reference.
 
 In
reviewing the agreements included as exhibits and incorporated by reference to
this Annual Report on Form 10-K, please remember that they are included to
provide you with information regarding their terms and are not intended to
provide any other factual or disclosure information about the Company or the
other parties to the agreements. The agreements may contain representations and
warranties by each of the parties to the applicable agreement. These
representations and warranties have been made solely for the benefit of the
parties to the applicable agreement and:
  26
 
 •
                should
      not in all instances be treated as categorical statements of fact, but
      rather as a way of allocating the risk to one of the parties if those
      statements prove to be
inaccurate;
 
 •
                have
      been qualified by disclosures that were made to the other party in
      connection with the negotiation of the applicable agreement, which
      disclosures are not necessarily reflected in the
  agreement;
 
 •
                may
      apply standards of materiality in a way that is different from what may be
      viewed as material to you or other investors;
  and
 
 •
                were
      made only as of the date of the applicable agreement or such other date or
      dates as may be specified in the agreement and are subject to more recent
      developments.
 
 Accordingly,
these representations and warranties may not describe the actual state of
affairs as of the date they were made or at any other time. Additional
information about the Company may be found elsewhere in this Annual Report on
Form 10-K and the Company’s other public filings, which are available without
charge through the SEC’s website at http://www.sec.gov.
  27
 
 SIGNATURES
 
 Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
 
 LORETO
      RESOURCES CORPORATIONDated:  April
      14, 2009
                
                By:
                /s/ Luis F. SaenzLuis
      F. Saenz, President and Chief Executive OfficerBy:
                /s/ Eric E. MarinEric
      E. Marin, Interim Chief Financial
Officer
 
 In
accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
  SIGNATURE
              
              TITLE
              
              DATE/s/ Nadine C. Smith
              
              Director
              
              April
      14, 2009Nadine
      C. Smith/s/ Luis F. Saenz
              
              Director
              
              April
      14, 2009Luis
      F. Saenz
 
 28
 
 PART
IV – FINANCIAL INFORMATION
  ITEM
15. FINANCIAL STATEMENTS
 
 PageReports
      of Independent Registered Public Accounting Firms
                  F-2Consolidated
      Balance Sheets as of December 31, 2008 and 2007
                  F-4Consolidated
      Statements of Operations for the years ended December 31, 2008 and 2007
      and for the Period from June 28, 2006 (inception) through December 31,
      2008
                  F-5Consolidated
      Statements of Changes in Stockholders’ Equity (Deficit) for the period
      from June 28, 2006 (inception) to December 31, 2008
                  F-6Consolidated
      Statements of Cash Flows for the years ended December 31, 2008 and 2007
      and for the Period from June 28, 2006 (inception) through December 31,
      2008
                  F-7Notes
      to Consolidated Financial Statements
                  F-8 – F-14
  F-1
 
 REPORT OF
INDEPENDENT REGISTERED ACCOUNTING FIRM
 
 To the
Board of Directors
 Loreto
Resources Corporation
 (An
Exploration Stage Company)
 Houston,
Texas
 
 We have
audited the accompanying consolidated balance sheet of Loreto Resources
Corporation, (“Loreto”) as of December 31, 2008 and the related consolidated
statement of operations, stockholders’ equity (deficit) and cash flows for the
year then ended and the period from June 28, 2006 (inception) through December
31, 2008.  The financial statements for the period from June 28, 2006
(inception) through December 31, 2007 were audited by other auditors whose
report expressed an unqualified opinion on those financial
statements.  The financial statements for the period from June 28,
2006 (inception) through December 31, 2007 include no revenue and a net loss of
$44,395.  Our opinion on the statements of operations, stockholder’
equity, and cash flows for the periof from June 28, 2006 (inception) through
December 31, 2008, insofar as it relates to amounts for prior periods through
December 31,2007 is based solely on the report of the other
auditor.  These consolidated financial statements are the
responsibility of Loreto’s management. Our responsibility is to express an
opinion on these consolidated financial statements based on our
audit.
 
 We
conducted our audits in accordance with 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 misstatements. Loreto is
not required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audit 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 Loreto’s internal control over financial
reporting. Accordingly, we express no such opinion. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the
consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall consolidated financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
 
 In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Loreto as of
December 31, 2008 and the consolidated results of its operations and its cash
flows for the year then ended and the period from June 28, 2006 (inception)
through December 31, 2008 in conformity with accounting principles generally
accepted in the United States of America.
 
 MALONE
& BAILEY, PC
 www.malone-bailey.com
 Houston,
Texas
 
 April 14,
2009
  F-2
 
 GEORGE
STEWART, CPA
 2301
SOUTH JACKSON STREET, SUITE 101-G
 SEATTLE,
WASHINGTON 98144
 (206)
328-8554 FAX(206) 328-0383
 
 REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 To the
Board of Directors
 Loreto
Corporation
 
 I have
audited the accompanying balance sheet of Loreto Corporation (An Exploration
Stage Company) as of December 31, 2007 and the related statement of operations,
stockholders’ equity and cash flows for the year then ended and the period from
June 28, 2006 (inception), to December 31, 2007. These financial statements are
the responsibility of the Company’s management. My responsibility is to express
an opinion on these financial statements based on my audit.
 
 I
conducted my audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that I plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. I believe that my audit provides a reasonable
basis for my opinion.
 
 In my
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Loreto Corporation (A Development
Stage Company) as of December 31, 2007, and the results of its operations and
cash flows for the year then ended and from June 28, 2006 (inception) to
December 31, 2007, in conformity with generally accepted accounting principles
in the United States of America.
  The
accompanying financial statements have been prepared assuming the Company will
continue as a going concern. As discussed in Note #3 to the financial
statements, the Company has had no operations and has no established source of
revenue. This raises substantial doubt about its ability to continue as a going
concern. Management’s plan in regard to these matters is also described in Note
# 3. The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
  
 Seattle,
Washington
 March 6,
2008
 
 F-3
 LORETO
RESOURCES CORPORATION
 (An
Exploration Stage Company)
 Consolidated
Balance Sheets
 December 31
                      
                      
                      December 31,2008
                      
                      
                      2007ASSETSCURRENT
      ASSETSCash
                      
                      $
                      1,517,269
                      
                      
                      $
                      805Prepaid
      Expenses
                      
                      
                      50,742
                      
                      
                      
                      -Total
      Current Assets
                      
                      
                      1,568,011
                      
                      
                      
                      805Other
      AssetsDeposits
                      
                      
                      5,628
                      
                      
                      
                      500TOTAL
      ASSESTS
                      
                      $
                      1,573,639
                      
                      
                      $
                      1,305LIABILITIES
      & STOCKHOLDERS' EQUITYCurrent
      LiabilitiesAccounts
      Payable
                      
                      $
                      59,429
                      
                      
                      
                      -Loan
      from Stockholder
                      
                      
                      -
                      
                      
                      
                      13,200Total
      Current Liabilities
                      
                      
                      59,429
                      
                      
                      
                      13,200STOCKHOLDERS'
      EQUITY (DEFICIT)Preferred
      stock, $0.001 par value, 10,000,000 shares authorized; 0 shares issued and
      outstanding) as of December 31, 2008 & 2007,
    respectivelyCommon
      stock, $0.001 par value, 300,000,000 shares authorized; 35,050,000 shares
      and 50,000,000 issued and outstanding, as of December 31, 2008 & 2007,
      respectively
                      
                      
                      35,050
                      
                      
                      
                      50,000Additional
      paid-in capital
                      
                      
                      2,222,575
                      
                      
                      
                      (17,500
                      )Deficit
      accumulated during exploration stage
                      
                      
                      (743,415
                      )
                      
                      
                      (44,395
                      )Total
      Stockholders' Equity (Deficit)
                      
                      
                      1,514,210
                      
                      
                      
                      (11,895
                      )TOTAL
      LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)
                      
                      $
                      1,573,639
                      
                      
                      $
                      1,305
 
 The
accompanying notes are an integral part of these consolidated financial
statements.
  F-4
  LORETO
RESOURCES CORPORATION
 (An
Exploration Stage Company)
 Consolidated
Statements of Operations
 For the
Years Ended December 31, 2008 and 2007 and
 For the
Period from June 28, 2006 (Inception) through December 31, 2008
 June 28, 2006(Inception)Year Ended
                      
                      
                      Year Ended
                      
                      
                      throughDecember 31,
                      
                      
                      December 31,
                      
                      
                      December 31,2008
                      
                      
                      2007
                      
                      
                      2008General
      and administrative expenses
                      
                      $
                      705,220
                      
                      
                      $
                      43,518
                      
                      
                      $
                      749,615Loss
      from operations
                      
                      
                      (705,220
                      )
                      
                      
                      (43,518
                      )
                      
                      
                      (749,615
                      )Interest
      income
                      
                      
                      6,200
                      
                      
                      
                      -
                      
                      
                      
                      6,200Net
      loss
                      
                      $
                      (699,020
                      )
                      
                      $
                      (43,518
                      )
                      
                      $
                      (743,415
                      )Loss
      per share – basic and fully diluted
                      
                      $
                      (0.02
                      )
                      
                      $
                      (0.00
                      )Weighted
      average number of common shares outstanding – basic and fully
      diluted
                      
                      
                      43,584,563
                      
                      
                      
                      41,320,548
 
 The
accompanying notes are an integral part of these consolidated financial
statements.
  F-5
  LORETO
RESOURCES CORPORATION
 (An
Exploration Stage Company)
 Consolidated
Statements of Stockholders’ Equity
 From June
28, 2006 (Inception) through December 31, 2008
  DeficitAccumulatedCommon
                          
                          
                          Additional
                          
                          
                          DuringCommon
                          
                          
                          Stock
                          
                          
                          Paid-in
                          
                          
                          ExplorationStock
                          
                          
                          Amount
                          
                          
                          Capital
                          
                          
                          Stage
                          
                          
                          TotalBalance,
      June 28, 2006
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          -Stock
      issued for cash on October 3, 200620,000,000
                          
                          
                          
                          20,000
                          
                          
                          
                          (10,000
                          )
                          
                          
                          -
                          
                          
                          
                          10,000Net
      loss,  December 31, 2006
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          (877
                          )
                          
                          
                          (877
                          )Balance,
      December 31, 2006
                          
                          
                          20,000,000
                          
                          
                          
                          20,000
                          
                          
                          
                          (10,000
                          )
                          
                          
                          (877
                          )
                          
                          
                          9,123Stock
      issued for cash on February 23, 200718,000,000
                          
                          
                          
                          18,000
                          
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          18,000Stock
      issued for services on July 2, 200712,000,000
                          
                          
                          
                          12,000
                          
                          
                          
                          (7,500
                          )
                          
                          
                          -
                          
                          
                          
                          4,500Net
      loss,  December 31, 2007
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          (43,518
                          )
                          
                          
                          (43,518
                          )Balance,
      December 31, 2007
                          
                          
                          50,000,000
                          
                          
                          
                          50,000
                          
                          
                          
                          (17,500
                          )
                          
                          
                          (44,395
                          )
                          
                          
                          (11,895
                          )Stock
      issued for cash on February 7, 2008
                          
                          
                          1,000,000
                          
                          
                          
                          1,000
                          
                          
                          
                          49,000
                          
                          
                          
                          -
                          
                          
                          
                          50,000Debt
      forgiveness from stockholder on June 30, 2008
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          13,200
                          
                          
                          
                          -
                          
                          
                          
                          13,200Restricted
      stock cancelled on July 18, 2008
                          
                          
                          (20,000,000
                          )
                          
                          
                          (20,000
                          )
                          
                          
                          20,000
                          
                          
                          
                          -
                          
                          
                          
                          -Stock-based
      compensation on July 21, 2008
                          
                          
                          -
                          
                          
                          
                          -
                          
                          
                          
                          181,612
                          
                          
                          
                          -
                          
                          
                          
                          181,612Stock
      issued for cash on September 17, 2008, net of offering costs of
      $44,687
                          
                          
                          4,050,000
                          
                          
                          
                          4,050
                          
                          
                          
                          1,976,263
                          
                          
                          
                          
                          
                          
                          
                          1,980,313Net
      loss,  December 31, 2008
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          
                          (699,020
                          )
                          
                          
                          (699,020
                          )Balance,
      December 31, 2008
                          
                          
                          35,050,000
                          
                          
                          
                          35,050
                          
                          
                          
                          2,222,075
                          
                          
                          
                          (743,415
                          )
                          
                          
                          1,514,210
 
 The accompanying notes are an integral
part of these consolidated financial statements.
  F-6
 LORETO
RESOURCES CORPORATION
 (An
Exploration Stage Company)
 Consolidated
Statements of Cash Flows
 For the
Years Ended December 31, 2008 and 2007 and
 For the
Period from June 28, 2006 (Inception) through December 31, 2008
 June 28, 2006(Inception)throughYear Ended December 31,
                        
                        
                        December 31,2008
                        
                        
                        2007
                        
                        
                        2008CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      loss
                        
                        $
                        (699,020
                        )
                        
                        $
                        (43,518
                        )
                        
                        $
                        (743,415
                        )Adjustments
      to reconcile net loss to net cash used in operating
      activities:Stock
      option expense
                        
                        
                        181,612
                        
                        
                        
                        -
                        
                        
                        
                        181,612Common
      stock issued for services
                        
                        
                        -
                        
                        
                        
                        4,500
                        
                        
                        
                        4,500Changes
      in operating assets and liabilities:Prepaid
      expenses and deposits
                        
                        
                        (55,870
                        )
                        
                        
                        -
                        
                        
                        
                        (56,370
                        )Accounts
      payable
                        
                        
                        59,429
                        
                        
                        
                        -
                        
                        
                        
                        59,429Net
      cash used in operating activities
                        
                        
                        (513,849
                        )
                        
                        
                        (39,018
                        )
                        
                        
                        (554,244
                        )CASH
      FLOWS FROM FINANCING ACTIVITIESLoan
      from stockholder
                        
                        
                        -
                        
                        
                        
                        13,200
                        
                        
                        
                        13,200Proceeds
      from stock issued for cash, net ofoffering costs
                        
                        
                        2,030,313
                        
                        
                        
                        18,000
                        
                        
                        
                        2,058,313Net
      cash provided by financing activities
                        
                        
                        2,030,313
                        
                        
                        
                        31,200
                        
                        
                        
                        2,071,513Net
      increase (decrease) in cash
                        
                        
                        1,516,464
                        
                        
                        
                        (7,818
                        )
                        
                        
                        1,517,269Cash
      at beginning of period
                        
                        
                        805
                        
                        
                        
                        8,623
                        
                        
                        
                        -Cash
      at end of period
                        
                        $
                        1,517,269
                        
                        
                        $
                        805
                        
                        
                        $
                        1,517,269SUPPLEMENTAL
      DISCLOSURES OF CASH FLOW INFORMATIONCash
      paid during year for:Interest
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -Income
      Taxes
                        
                        
                        -
                        
                        
                        
                        -
                        
                        
                        
                        -NON-CASH FINANCING
    TRANSACTIONSForgiveness
      of debt by stockholder
                        
                        
                        13,200
                        
                        
                        
                        -
                        
                        
                        
                        13,200
 
 The
accompanying notes are an integral part of these consolidated financial
statements.
  F-7
  LORETO
RESOURCES CORPORATION.
 (An
Exploration Stage Company)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 December
31, 2008 and 2007
  NOTE
1. ORGANIZATION AND DESCRIPTION OF BUSINESS
 
 Loreto
Resources Corporation (the Company) was incorporated on June 28, 2006 in Nevada
under the name Loreto Corporation. The Company pursued its original business
plan to create, market, and sell greeting cards to wholesalers and retail
customers in shopping malls in its own planned retail shops (the “Legacy
Business”). However, recently the Company decided to redirect its business focus
and strategy toward identifying and pursuing business opportunities in the
mining sector in South America, more specifically in Peru. The Company is in the
exploration stage in accordance with SFAS No.7 “Accounting and Reporting by
Development Stage Enterprises”.
 
 On July
3, 2008, the Company amended its articles of incorporation to (1) change its
name toLoreto Resources
Corporation and (2) increase its authorized capital stock to 310,000,000
shares of which 300,000,00 shares are common stock, par value $0.001 per share
(the “Common Stock”), and 10,000,000 shares are preferred stock, par value
$0.001 per share.
 
 On August
25, 2008, by unanimous written consent of its directors, the Company resolved to
form a wholly-owned subsidiary in Peru, South America. This subsidiary will be
owned through the Company’s wholly-owned Cayman Island subsidiary, Loreto
Resources Corporation-Peru, which was organized on August 27, 2008. The
Company’s activities to date have been limited to capital formation,
organization and development of its new business plan. It has taken initial
steps in its plan of operation and signed a commercial property lease for office
space in Lima, Peru, that commenced on October 1, 2008.
 
 NOTE
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 a.Basis of
Accounting
 
 The
Company’s financial statements are prepared using the accrual method of
accounting. The Company has elected a December 31 year-end.
 
 b.
Principles of
Consolidation
 
 The
consolidated financial statements include the accounts of the Company and its
100% owned subsidiary, Loreto Resources Corporation-Peru., after
elimination of all significant inter-company accounts and
transactions.
 
 c.Use of Estimates and
Assumptions
 
 The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
  F-8
  LORETO
RESOURCES CORPORATION.
 (An
Exploration Stage Company)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 December
31, 2008 and 2007
 d.Cash
Equivalents
 
 The
Company considers all highly liquid debt instruments with original maturities of
three months or less when acquired to be cash equivalents. The Company had no
cash equivalents at December 31, 2008 and 2007.  The Company may, in
the normal course of operations, maintain cash balances in excess of federally
insured limits.  At December 31, 2008, cash and cash equivalents
exceeded the federally insured limits by $1,267,269. As of October 3, 2008, FDIC
insurance coverage of demand deposit accounts was raised from $100,000 to
$250,000.
 
 e.Income
Taxes
 
 Income
taxes are provided in accordance with SFAS No. 109, “Accounting for Income
Taxes”. A deferred tax asset or liability is recorded for all temporary
differences between financial and tax reporting and net operating loss
carryforwards. Deferred tax expense (benefit) results from the net change during
the year of deferred tax assets and liabilities.
 
 Deferred
tax assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that some portion of all of the deferred
tax assets will be realized. Deferred tax assets and liabilities are adjusted
for the effects of changes in tax laws and rates on the date of
enactment.
 
 f.Basic Earnings per
Share
 
 In
February 1997, the FASB issued SFAS No. 128, “Earnings Per Share”, which
specifies the computation, presentation and disclosure requirements for earnings
(loss) per share for entities with publicly held common stock. SFAS No. 128
supersedes the provisions of APB No. 15, and requires the presentation of basic
earnings (loss) per share and diluted earnings (loss) per share. The Company has
adopted the provisions of SFAS No. 128 effective June 28, 2006 (date of
inception).
 
 Basic net
loss per share amounts is computed by dividing the net loss by the weighted
average number of common shares outstanding. Diluted earnings per share are the
same as basic earnings per share due to the lack of dilutive items in the
Company.
 
 g. Fair Value of Financial
Instruments
 
 The
Company estimates the fair value of financial instruments using the available
market information and valuation methods.  Considerable judgment is
required in estimating fair value. Accordingly, the estimates of fair value may
not be indicative of the amounts the Company could realize in a current market
exchange. As of December 31, 2008 and 2007, the carrying value of the assets and
liabilities approximated fair value due to the short-term nature and maturity of
these instruments.
  F-9
 LORETO
RESOURCES CORPORATION.
 (An
Exploration Stage Company)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 December
31, 2008 and 2007
 g.  Stock
Split
 
 On
February 2, 2009 the Company implemented a 2 for 1 stock split.  The
par value of the common stock was not affected by the stock
split.  All shares and per share amounts have been restated in the
financial statements and in the notes to financial statements for all periods
presented, to reflect the  stock split as if it occurred on the first
day of the first period presented.
 
 h.  Reclassifications
 
 Certain
reclassifications have been made to prior year amounts to conform to current
year classifications.
 
 i.
Recentaccounting
pronouncements
 
 The
Company does not expect that the adoption of recently issued accounting
pronouncements will have a material impact on its financial position, results,
of operations or cash flows.
 NOTE
3. GOING CONCERN
 
 The
accompanying financial statements for 2007 were presented on a going concern
basis. The Company had minimal operations during the period from June 28, 2006
(date of inception) to December 31, 2007 and generated no revenues. This
condition raised a substantial doubt about the Company’s ability to continue as
a going concern as of December 31, 2007.  During 2008 the company has
raised $1,980,313 in capital and therefore as of December 31, 2008 there is no
longer a substantial doubt about the company’s ability to continue as a going
concern.
 NOTE
4. STOCK OPTIONS
  The
2008 Equity Incentive Plan
 
 The
Company’s 2008 Equity Incentive Plan (the “2008 Plan”) provides for the grant of
incentive stock options to employees of the Company and of an affiliate or
subsidiary of the Company and non-statutory stock options, restricted stock and
stock appreciation rights to employees, directors and consultants of the Company
and of an affiliate or subsidiary of the Company. A maximum of 8,000,000 shares
of common stock are available for issuance under the 2008 plan. As of December
31, 2008, options had been granted under the 2008 Plan exercisable for an
aggregate of 3,160,000.  Options granted under the 2008 Plan are
generally granted with a strike price equal to market value and a ten year
term.  The outstanding options vest over periods ranging from three
months to three years.
  Effective
July 21, 2008, the President and CEO of the Company was granted an option to
purchase 3,100,000 shares of Common Stock with a fair value of
$1,237,539.  The options are exercisable at $1.00 per share, expire in
ten years and 1/3 per year for 3 years.
 
 On
December 8, 2008, a consultant was granted 60,000 options with a fair value of
$20,416.  The options are exercisable at $1.00 per share, expire in 10
years and vest over 3 months.
 
 F-10
  LORETO
RESOURCES CORPORATION.
 (An
Exploration Stage Company)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 December
31, 2008 and 2007
  Stock
option activity summary is presented in the table below:
 
 Number of
                      Shares
                    
                    
                    Weighted-
                      average
                      Exercise
                      Price
                    
                    
                    Weighted-
                      average
                      Remaining
                      Contractual
                      Term (years)
                    
                    
                    Aggregate
                      Intrinsic
                      ValueOutstanding
      at December 31, 2006
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —Granted
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —Exercised
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —Expired/Forfeited
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —Outstanding
      at December 31, 2007
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —Granted
                    
                    
                    3,160,000
                    
                    
                    $
                    0.50
                    
                    
                    
                    9.56
                    
                    
                    
                    —Exercised
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —Expired /
      Forfeited
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —Outstanding
      at December 31, 2008
                    
                    
                    3,160,000
                    
                    
                    $
                    0.50
                    
                    
                    
                    9.56
                    
                    
                    $
                    —Exercisable
      at December 31, 2008
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    
                    —
                    
                    
                    $
                    —
  None of
the options outstanding at December 31, 2008 are vested or
exercisable.  During the year ended December 31, 2008, 3,160,000
options were granted with a weighted average grant date fair value of
$0.83.  During the year ended December 31, 2008, the Company
recognized stock-based compensation expense of $181,612 related to stock
options.  As of December 31, 2008, there was approximately $1,076,343
of total unrecognized compensation cost related to non-vested stock options
which is expected to be recognized over a weighted-average period of
approximately 2.5 years.
 
 The fair
value of the options granted during 2008 was estimated at the date of grant
using the Black-Scholes option-pricing model with the following
assumptions:
  Market
      value of stock on grant date
                                          
                                          $
                                          0.50
                                          (1)Risk-free
      interest rate
                                          
                                          3.69 %
      and 2.17
                                          %Dividend
      yield
                                          
                                          
                                          0.00
                                          %Volatility
      factor
                                          
                                          
                                          112.46 - 119.09
                                          %Weighted
      average expected life
                                          
                                          5.5
                                          years (2)Expected
      forfeiture rate
                                          
                                          
                                          5
                                          %
  F-11
 LORETO
RESOURCES CORPORATION.
 (An
Exploration Stage Company)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 December
31, 2008 and 2007
 (1)
              The
      market value of the stock was calculated in anticipation of the July 25,
      2008 private placement that sold 4,050,000 shares at $0.50 per
      share.
 (2)
              Due
      to a lack of stock option exercise history, the Company uses the
      simplified method under SAB 107 to estimate expected
  term
 
 NOTE
5. RELATED PARTY TRANSACTIONS
 
 As of
June 30, 2008, Magdalena Cruz, the sole officer, director and stockholder of the
Company, forgave loans to the Company totaling $13,200, which was recorded as
additional paid in capital.
 
 As of
July 18, 2008 20,000,000 shares of restricted Common Stock held by Ms. Cruz were
cancelled.
 
 Effective
July 21, 2008, Ms. Cruz’s resigned from her position as director of the Company,
Luis Saenz was appointed the Company’s director, President and Chief Executive
Officer. He was granted an option to purchase 3,100,000 shares of Common Stock
at $0.50, vesting over three years.
 
 During
the year ended December 31, 2008, Nadine C. Smith, our Chairman, purchased
1,000,000 shares of our common stock for $500,000.  Ms. Smith owns an
additional 11,510,000 shares of our common stock.  Luis F. Saenz, our
President and Chief Executive Officer, purchased 200,000 shares of our common
stock for $100,000.
 
 NOTE
6. INCOME TAXES
 
 Loreto
Resources Corporation, files a U.S. Federal income tax return.  The
Company’s foreign subsidiary files income tax returns in its jurisdictions. The
components of the consolidated taxable net loss before income tax benefit are as
follows:
  2008
                      
                      
                      2007U.S.
                      
                      $
                      392,464
                      
                      
                      $
                      43,518Non-U.S.
                      
                      
                      169,340
                      
                      
                      
                      -561,804
                      
                      
                      
                      43,518
 
 The
components of the Company’s deferred tax assets at December 31, 2008 and 2007
are as follows:
  F-12
 LORETO
RESOURCES CORPORATION.
 (An
Exploration Stage Company)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 December
31, 2008 and 2007
  2008
                        
                        
                        2007Deferred
      tax assets and liabilities:Loss
      carryforwards
                        
                        
                        175,919
                        
                        
                        
                        15,094Stock-based
      compensation
                        
                        
                        61,748
                        
                        
                        
                        -Total
      deferred tax assets
                        
                        
                        237,667
                        
                        
                        
                        15,094Valuation
      allowance
                        
                        
                        (237,667
                        )
                        
                        
                        (15,094
                        )-
                        
                        
                        
                        -
  As of
December 31, 2008, the Company had generated U.S. net operating loss
carryforwards of $392,464, which expire from 2026 to 2028 and net loss
carryforwards in certain non-U.S. jurisdictions of $169,340. These net operating
loss carryforwards are available to reduce future taxable income. However, a,
change in ownership, as defined by federal income tax regulations, could
significantly limit the Company’s ability to utilize its U.S. net operating loss
carryforwards. Additionally, because federal tax laws limit the time during
which the net operating loss carryforwards may be applied against future taxes,
if the Company fails to generate taxable income prior to the expiration dates it
may not be able to fully utilize the net operating loss carryforwards to reduce
future income taxes. As the Company has had cumulative losses and there is no
assurance of future taxable income, valuation allowances have been recorded to
fully offset the deferred tax asset at December 31, 2008 and 2007.
 
 NOTE
7. STOCK TRANSACTIONS
 
 On
October 3, 2006 the Company issued 20,000,000 common shares to a director for
$10,000.
 
 On
February 23, 2007 the Company issued 18,000,000 common shares to 36
non-affiliated stockholders for a total of $18,000 pursuant to a SB-2
Registration Statement.
 
 On July
2, 2007, the Company issued 12,000,000 common shares to Magdalena Cruz,
President and CEO, in exchange for her services valued at $4,500.
 
 On
February 7, 2008, the company issued 1,000,000 common shares to Milestone
Enhanced Fund Ltd. for $50,000.
 
 On July
18, 2008, 20,000,000 common shares held by the director were
cancelled.
 
 On each
of July 18, 2008 and January 15, 2009, the Company declared two for one (2 for
1) forward stock splits on each common share.  All share and per share
amounts have been adjusted retroactively from inception to reflect these
splits.
 
 In
September, 2008, the Company issued 4,050,000 shares through a private
placement to various individuals and entities at the price of $0.50 per
share.  Total proceeds were $1,980,313, net of offering costs of
$44,687.
  F-13
  LORETO
RESOURCES CORPORATION.
 (An
Exploration Stage Company)
 NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
 December
31, 2008 and 2007
  NOTE
8. DISCONTINUED OPERATIONS
 
 In late
2007, the Company discontinued its Legacy Business.  The net assets
from the Legacy Business were zero as of December 31, 2008 and
2007.   There was no material profit or loss from the Legacy
Business for the years ended December 31, 2008 and 2007.
 
 NOTE
9. COMMITMENTS AND CONTINGENCIES
 
 Leases
 
 The
Company has signed a three-year non-cancellable lease for approximately 1,600
square feet of office space in Lima, Peru to be paid in U.S. dollars, subject to
a three-percent annual increase, expiring on September 30,
2011.
  The
Company is amortizing this lease as it is paid rather than expensing it on a
straight line basis. The difference between the two methods is not
material.
  Year
                    
                    Total Lease Payment
                      Amount2009
                    
                    $
                    40,5022010
                    
                    $
                    41,7172011
                    
                    $
                    31,986
 
 NOTE
9. SUBSEQUENT EVENTS
 
 On
January 1, 2009, the Company granted 90,000 options to a
consultant.  The options are exercisable at $0.50 per share, vest
equally over 3 months and expire in 10 years.
 
 On March
8, 2009, the Company granted 60,000 options to a consultant.  The
options are exercisable at $0.50 per share, vest equally over 3 months and
expire in 10 years.
  F-14