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EX-99.1 - CERTIFICATE RULE 13A-14A HECTOR DAVIS, CEO/CFO - Cortronix Biomedical Advancement Technologies Inc. | certrule13a14ahectordavisceo.htm |
EX-99.2 - CERTIFICATE 18 U.S.C. SECT 1350 H. DAVIS, CEO/CFO - Cortronix Biomedical Advancement Technologies Inc. | certsect906hectordavisceocfo.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
(X
)
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITES EXCHANGE ACT OF
1934
|
For the
quarterly period ended February 28,
2010
|
(
)
|
TRANSACTION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For the transaction period
from
to
|
|
Commission File number 333-154218
|
PANA-MINERALES S.A.
|
(Exact
name of registrant as specified in
charter)
|
Nevada
|
98-0515701
|
(State
or other jurisdiction of incorporation or organization)
|
(I.R.S.
Employee I.D. No.)
|
Primera Calle
El Carmen, EDF. PH Villa Medici
|
|
Apt. 28, Torre
C, Panama, Rep. of Panana
|
|
(Address of
principal executive offices)
|
(Zip
Code)
|
Issuer’s
telephone number 507-391-6820
|
Not Applicable
|
(Former
name, former address and formal fiscal year, if changed since last
report)
|
Indicate
by check mark whether the registrant (1) filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes [X] No
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a small reporting company. See
definition of “large accelerated filer”, “accelerated filer” and “small
reporting company” Rule 12b-2 of the Exchange Act.
Large
accelerated
filer [ ] Accelerated
filer [ ]
Non-accelerated
filer [ ] (Do not check
if a small reporting
company) Small
reporting company [X]
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act) Yes
[X] No [ ]
APPLICABLE
ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS
DURING THE PROCEDING FIVE YEARS
Indicate by check mark whether the
registrant has filed all documents and reports required to be filed by Section
12, 13 or 15(d) of the Securities Exchange Act of 1934 after the distribution of
securities subsequent to the distribution of securities under a plan confirmed
by a court. Yes □ No □
APPLICABLE
ONLY TO CORPORATE ISSUERS
Indicate
the number of shares outstanding of each of the issuer’s classes of common
stock, as of the latest practicable date:
March 25,
2010: 14,000,000 common shares
-1-
Page
Number
|
||
PART
1.
|
FINANCIAL
INFORMATION
|
|
ITEM 1.
|
Financial
Statements (unaudited)
|
3
|
Balance
Sheets as at February 28, 2010 and August 31, 2009
|
4
|
|
Statement
of Operations
For
the three months and six months ended February 28, 2010 and 2009 and for
the period October 4, 2006 (Date of Inception) to February 28,
2010
|
5
|
|
Statement
of Cash Flows
For
the six months ended February 28, 2010 and 2009 and for the period October
4, 2006 (Date of Inception) to February 28,
2010
|
6
|
|
Notes
to the Financial Statements.
|
7
|
|
ITEM 2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
10
|
ITEM 3.
|
Quantitative
and Qualitative Disclosure about Market Risk
|
16
|
ITEM 4.
|
Controls
and Procedures
|
17
|
ITEM 4T.
|
Controls
and Procedures
|
18
|
PART
11.
|
OTHER
INFORMATION
|
18
|
ITEM 1.
|
Legal
Proceedings
|
18
|
ITEM 1A.
|
Risk
Factors
|
18
|
ITEM 2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
23
|
ITEM 3.
|
Defaults
Upon Senior Securities
|
23
|
ITEM 4.
|
Submission
of Matters to a Vote of Security Holders
|
23
|
ITEM 5.
|
Other
Information
|
23
|
ITEM 6.
|
Exhibits
|
23
|
SIGNATURES.
|
24
|
|
-2-
PART
1 – FINANCIAL INFORMATION
ITEM
1. FINANCIAL STATEMENTS
The
accompanying balance sheets of Pana-Minerales S.A. (pre-exploration stage
company) at February 28, 2010 (with comparative figures as at August 31, 2009)
and the statement of operations for the three and six months ended February 28,
2010 and 2009 and from October 4, 2006 (date of incorporation) to
February 28, 2010 and the statement of cash flows for the six months ended
February 28, 2010 and 2009 and for the period from October 4, 2006 (date of
incorporation) to February 28, 2010 have been prepared by the Company’s
management in conformity with accounting principles generally accepted in the
United States of America. In the opinion of management, all
adjustments considered necessary for a fair presentation of the results of
operations and financial position have been included and all such adjustments
are of a normal recurring nature.
Operating
results for the three and six months ended February 28, 2010, are not
necessarily indicative of the results that can be expected for the year ending
August 31, 2010.
-3-
PANA-MINERALES
S.A.
(Pre-Exploration
Company)
BALANCE
SHEETS
(Unaudited
– Prepared by Management)
February
28, 2010
|
August
31, 2009
|
|
ASSETS
|
||
Current
Assets
|
||
Cash
|
$ -
|
$ -
|
Total Current
Assets
|
$ -
|
$ -
|
LIABILITIES
AND STOCKHOLDER’S DEFICIENCY
|
||
Current
Liabilities
|
||
Accounts Payable
|
$ 11,896
|
$ 11,972
|
Due to Director
|
27,594
|
24,056
|
Total Current
Liabilities
|
39,490
|
36,028
|
STOCKHOLDER’S
DEFICIENCY
|
||
Common stock
|
||
100,000,000 shares authorized, at
$0.001 par value
14,000,000 shares issued and
outstanding
|
14,000
|
14,000
|
Capital in excess of par
value
|
11,700
|
3,900
|
Deficit accumulated during the
pre-exploration stage
|
(65,190)
|
(53,928)
|
Total Stockholder’s
Deficiency
|
(39,490)
|
(36,028)
|
$ -
|
$ -
|
The
accompanying notes are an integral part of these unaudited financial
statements.
-4-
PANA-MINERALES
S.A.
(Pre-Exploration
Company)
STATEMENT
OF OPERATIONS
For the
three and six months ended February 28, 2010 and 2009 and for the period from
October 4, 2006 (date of inception) to February 28, 2010
(Unaudited
– Prepared by Management)
For
the three months
ended
February
28,
2010
|
For
the three months
ended
February
28,
2009
|
For
the six months
ended
February
28,
2010
|
For
the six months
ended
February
28,
2009
|
From
inception
(October
4, 2006) to
February
28, 2010
|
|
REVENUE
|
$ -
|
$ -
|
$ -
|
$ -
|
$ -
|
EXPENSES
|
|||||
Acquisition,
staking and Geological
report
|
-
|
-
|
-
|
-
|
6,843
|
Administrative
|
4,856
|
6,403
|
11,262
|
18,599
|
58,347
|
NET
LOSS FROM OPERATIONS
|
$
(4,856)
|
$
(6,403)
|
$
(11,262)
|
$ (18,599)
|
$
(65,190)
|
NET
LOSS PER COMMON SHARE
|
|||||
Basic
and Diluted
|
$ (0.000)
|
$ (0.000)
|
$
(0.001)
|
$ (0.001)
|
|
AVERAGE
OUTSTANDING SHARES
|
|||||
Basic
|
14,000,000
|
14,000,000
|
14,000,000
|
14,000,000
|
|
The
accompanying notes are an integral part of these unaudited financial
statements.
-5-
PANA-MINERALES
S.A.
(Pre-Exploration
Company)
STATEMENTS
OF CASH FLOWS
For the
six months ended February 28, 2010 and 2009 and for the period from October 4,
2006 (date of inception) to February 28, 2010
(Unaudited
– Prepared by Management)
For the
six months ended
Feb. 28, 2010
|
For
the six months ended
Feb. 28, 2009
|
From
inception
(October
4, 2006) to
Feb. 28, 2010
|
|
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|||
Net
loss
|
$ (11,262)
|
$ (18,599)
|
$ (65,190)
|
Capital
contributions - expenses
|
7,800
|
-
|
11,700
|
Changes
in accounts payable
|
(76)
|
(1,171)
|
11,896
|
Net
Cash Provided (Used) in Operation
|
(3,538)
|
(19,770)
|
(41,594)
|
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
-
|
-
|
-
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|||
Proceeds
from loan from related party
|
3,538
|
19,770
|
27,594
|
Proceeds
from issuance of common stock
|
-
|
-
|
14,000
|
3,538
|
19,770
|
41,594
|
|
Net
(Decrease) Increase in Cash
|
-
|
-
|
-
|
Cash
at Beginning of Period
|
-
|
-
|
-
|
CASH
AT END OF PERIOD
|
-
|
-
|
-
|
Cash
at end of Period
|
$
-
|
$
-
|
$
-
|
The
accompanying notes are an integral part of these unaudited financial
statements.
-6-
PANA-MINERALES
S.A.
(Pre-exploration
Stage Company)
NOTES
TO FINANCIAL STATEMENTS
February
28, 2010
(Unaudited
– Prepared by Management)
1. ORGANIZATION
The
Company, Pana-Minerales S.A., was incorporated under the laws of the State of
Nevada on October 4, 2006 with the authorized capital stock of 100,000,000
shares at $0.001 par value.
The
Company was organized for the purpose of acquiring and developing mineral
properties. At the report date mineral claims, with unknown reserves,
had been acquired. The Company has not established the existence of a
commercially minable ore deposit and therefore has not reached the development
stage and is considered to be in the pre-exploration stage.
2. SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES
Accounting
Methods
The
Company recognizes income and expenses based on the accrual method of
accounting.
Dividend
Policy
The
Company has not yet adopted a policy regarding payment of
dividends.
|
Basic and Diluted Net
Income (loss) Per Share
|
|
Basic
net income (loss) per share amounts are computed based on the weighted
average number of shares actually outstanding. Diluted
net income (loss) per share amounts are computed using the weighted
average number of common and common equivalent shares outstanding as if
shares had been issued on the exercise of any common share rights unless
the exercise becomes antidilutive and then only the basic per share
amounts are shown in the report.
|
Evaluation of Long-Lived
Assets
The
Company periodically reviews its long term assets and makes adjustments, if the
carrying value exceeds fair value.
Income
Taxes
The
Company utilizes the liability method of accounting for income
taxes. Under the liability method deferred tax assets and liabilities
are determined based on differences between financial reporting and the tax
bases of the assets and liabilities and are measured using the enacted tax rates
and laws that will be in effect, when the differences are expected to be
reversed. An allowance against deferred tax assets is recorded,
when it is more likely than not, that such tax benefits will not be
realized.
-7-
PANA-MINERALES
S.A.
(Pre-exploration
Stage Company)
NOTES
TO FINANCIAL STATEMENTS
February
28, 2010
(Unaudited
– Prepared by Management)
2. SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES - Continued
Income Taxes -
continued
On
February 28, 2010, the Company had a net operating loss carry forward of $65,190
for income tax purposes. The tax benefit of approximately $19,500
from the loss carry forward has been fully offset by a valuation reserve because
the future tax benefit is undeterminable since the Company is unable to
establish a predictable projection of operating profits for future
years. The losses expire 2027 through 2030.
Revenue
Recognition
Revenue
is recognized on the sale and delivery of a product or the completion of a
service provided.
Advertising and Market
Development
The company expenses advertising and
market development costs as incurred.
Financial
Instruments
|
The
carrying amounts of financial instruments are considered by management to
be their fair value due to their short term
maturities.
|
Estimates and
Assumptions
Management
uses estimates and assumptions in preparing financial statements in accordance
with general accepted accounting principles. Those estimates and
assumptions affect the reported amounts of the assets and liabilities, the
disclosure of contingent assets and liabilities, and the reported revenues and
expenses. Actual results could vary from the estimates that
were assumed in preparing these financial statements.
|
Statement of Cash
Flows
|
|
For
the purposes of the statement of cash flows, the Company considers all
highly liquid investments with a maturity of three months or less to be
cash equivalents.
|
Unproven Mining Claim
Costs
Cost of
acquisition, exploration, carrying and retaining unproven properties are
expensed as incurred.
|
Environmental
Requirements
|
|
At
the report date environmental requirements related to the mineral claim
acquired are unknown and therefore any estimate of any future cost cannot
be made.
|
-8-
|
PANA-MINERALES
S.A.
|
(Pre-exploration
Stage Company)
NOTES
TO FINANCIAL STATEMENTS
February
28, 2010
(Unaudited
– Prepared by Management)
7.
|
SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES –
Continued
|
Recent Accounting
Pronouncements
The
Company does not expect that the adoption of other recent accounting
pronouncements will have a material impact on its financial
statements.
3. Acquisition
OF MINERAL CLAIM
|
On
January 15, 2008, the Company purchased the Marawi Gold Claims located in
the Philippines for $5,000 and obtained a mining license for an additional
payment of $1,843. The Company had not established the
existence of a commercially minable ore deposit on the Marawi Gold
Claims. These claims have no expiry date and only if the
Company decides to abandon them will it no longer have an interest in the
minerals thereon.
|
4. SIGNIFICANT
TRANSACTIONS WITH RELATED PARTY
The sole
officer-director has acquired 100% of the common stock
issued. The officer-director has made no interest, demand loans
of $27,594 and has made contributions to capital of $11,700 in the form of
expenses paid for the Company.
7.
|
5. CAPITAL
STOCK
|
On August
31, 2007, the Company completed a private placement of 1,000,000 common shares
at a price of $0.001 per share for $1,000 to its sole director and
officer.
On August
23, 2008, the Company issued a further 13,000,000 common shares at a price of
$0.001 per share for $13,000 to its sole director and icer.
7.
|
6. GOING
CONCERN
|
The
Company intends to seek business opportunities that will provide a
profit. However, the Company does not have the working capital
necessary to be successful in this effort and to service its debt, which raises
substantial doubt about its ability to continue as a going concern.
Continuation
of the Company as a going concern is dependent upon obtaining additional working
capital and the management of the Company has developed a strategy, which it
believes will accomplish this objective through additional loans from related
parties, and equity funding, which will enable the Company to operate for the
coming year.
7.
|
SUBSEQUENT
EVENTS
|
The
Company has evaluated subsequent events from the balance sheet date through to
March 25, 2010 and has found no material subsequent events to
report.
-9-
ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The
following discussion should be read in conjunction with the information
contained in the financial statements of Pana-Minerales S.A. (“Pana” and “we”)
and the notes which form an integral part of the financial statements which are
attached hereto.
The
financial statements mentioned above have been prepared in conformity with
accounting principles generally accepted in the United States of America and are
stated in United States dollars.
This
section of our Form 10-Q includes a number of forward-looking statements that
reflect our current views with respect to future events and financial
performance. Forward-looking statements are often identified by words like:
believe, expect, estimate, anticipate, intend, project and similar expressions,
or words which, by their nature, refer to future events. You should not place
undue certainty on these forward-looking statements, which apply only as of the
date of this Form 10-Q. These forward-looking statements are subject to certain
risks and uncertainties that could cause actual results to differ materially
from historical results or our predictions.
We were
incorporated in the State of Nevada on October 4, 2006 and established a fiscal
year end of August 31. We do not have any subsidiaries, affiliated
companies or joint venture partners.
We are a
start-up, pre-exploration stage company engaged in the search for gold and
related minerals and have not generated any operating revenues since
inception.
Pana was
formed to engage in the exploration of mineral properties in the Republic of the
Philippines for gold and silver. The Company purchased, from an
unaffiliated third party seller, a 100% interest in a mineral claim known as
Marawi Gold Claim (“Marawi Claim”), consisting of one-9 unit claim block
containing 97.4 hectares located near the town of Malaybalay in the Republic of
the Philippines.
We own no
property other than the Marawi Claim.
There is
no assurance that a commercially viable mineral deposit, a reserve, exists at
our mineral claim or can be shown to exist until sufficient and appropriate
exploration is done and a comprehensive evaluation of such work concludes
economic and legal feasibility. Such work could take many years
of exploration and would require expenditure of very substantial amounts of
capital, capital we do not currently have and may never be able to
raise.
The
Company does not have any subsidiaries, affiliated companies or joint venture
partners. We have
not been involved in any bankruptcy, receivership or similar proceedings since
inception nor have we been party to a reclassification, merger, consolidation,
or purchase or sale of a significant amount of assets not in the ordinary course
of business other than the Marawi Claim. We have no
intention of entering into a merger or acquisition and we have a specific
business plan to complete exploration work on Marawi Claim. We do not foresee
any circumstances that would cause us to alter our current business plan within
the next twelve months.
We have
incurred losses since inception and we must raise additional capital to fund our
operations. There is no assurance we will be able to raise this
capital.
As of the
date of this Form 10-Q, we have not conducted any exploration work on the Marawi
Claim. We intend to
complete our Phase I exploration program recommended for the Marawi Claim, at an
estimated cost of $13,082.
We plan
to finance our operations through a combination of equity and debt
capital. As summarized below, since inception we have raised a total
of $14,000 in equity while our total expense incurred since inception total
$65,190 leaving us with a working capital deficit of $39,490 as of February 28,
2010. As of February 28, 2010 we had also received cash advances of
$27,594 from our President and sole shareholder. This
debt capital advanced by our President is in the form of non interest bearing
demand loans. Our President has agreed to advance to the Company, on
an ‘as needed’ basis, up to an additional $12,406 on the same terms and
conditions
-10-
Apart
from these advances we have no funds to satisfy our cash requirements and should
we be unable to raise additional capital from other sources in the future we
will have to go out of business. We have no full time employees and
our management devotes a small percentage of his time to the affairs of the
Company.
Our
administrative office is located at Primera Calle El Carmen, EDF. PH Villa
Medici, Apt. 28,Torre C, Panama, Rep. of Panama. Our telephone number
is (507) 391-6820 and our fax number is (507) 265-0638
On August
31, 2007 we completed a private placement pursuant to Regulation S of the
Securities Act of 1933, of 1,000,000 shares of common stock sold to our sole
officer and director at the price of $0.001 per share to raise
$1,000. On August 23, 2008 we completed a further private placement
pursuant to Regulation S of the Securities Act of 1933, whereby 13,000,000
common shares were sold at the price of $0.001per share to raise
$13,000. The total cash raised from the sale of shares was
$14,000.
We had no
cash on hand as of February 28, 2010, the end of our most recent fiscal
quarter.
Pana
presently has minimal day-to-day operations; mainly comprising of future
exploration work on the Marawi claim and preparing the various
reports to be filed with the United States Securities and Exchange Commission
(the “SEC”) as required.
LIQUIDITY
AND CAPITAL RESOURCES
There is
no historical financial information about us upon which to base an evaluation of
our performance as an exploration corporation. We are a pre-exploration stage
company and have not generated any revenues from our exploration activities.
Further, we have not generated any revenues since our formation on October 4,
2006. We cannot guarantee we will be successful in our exploration
activities. Our business is subject to risks inherent in the establishment of a
new business enterprise, including limited capital resources, possible delays in
the exploration of our properties, and possible cost overruns due to price and
cost increases in services.
To become
profitable and competitive, we must invest into the exploration of our property
before we start production of any minerals we may find. We must obtain equity or
debt financing to provide the capital required to fully implement our phased
exploration program. We have no
assurance that financing will be available to us on acceptable terms. If
financing is not available on satisfactory terms, we may be unable to commence,
continue, develop or expand our exploration activities. Even if available,
equity financing could result in additional dilution to existing
shareholder.
Results
of Operations – Six Months Ended February 28, 2010.
We
incurred a net loss of $65,190 from the date of inception (October 4, 2006) to
as at February 28, 2010. The loss for the six months ended February
28, 2010 we incurred expense of $11,262 representing various administrative
expenses as follows: audit and accounting - $2,835, management fees - $6,000,
office and miscellaneous - $263, rent - $1,200, telephone - $600 and transfer
agent fees - $364. Management fees, rent and telephone are not cash
expenses as such but are accrued for accounting purposes as expenses and
credited to Capital in Excess of Par Value.
Our
Planned Exploration Program
We must
conduct exploration to determine what, if any, amounts of minerals exist on the
Marawi Claim and if such minerals can be economically extracted and profitably
processed.
Our
planned exploration program is designed to efficiently explore and evaluate our
property.
-11-
Our
anticipated exploration costs for Phase I work on the Marawi Claim are
approximately $13,082. This figure represents the anticipated cost to
us of completing only Phase I work recommended in the Ngan
Report. With funds to be advanced by our President under the loan
facility he has agreed to provide, we will have funds available to undertake
Phase I exploration work. However, should the results of this work be
sufficiently encouraging to justify our undertaking Phase II work recommended in
the Ngan Report, at an estimated cost of $25,650, we will have to raise
additional investment capital. Regardless, we will have to raise
additional funds within the next twelve months in order to satisfy our ongoing
cash requirements and finance anything beyond Phase I work on the Marawi
Claim.
Balance
Sheet
Total
cash as at February 28, 2010 was $Nil. Our working capital deficiency
as at February 28, 2010 was $39,490.
Our lack
of working capital since inception (October 4, 2006) and for the six months
ended February 28, 2010 and the year ended August 31, 2009 is attributable to
our incurring administrative and/or exploration expenses aggregating
$65,190.
Since
inception to February 28, 2010, our working capital was derived from the
completion of an initial seed capital offering on August 31, 2007 which raised
$1,000, a private placement completed on August 23, 2008 which raised a further
$13,000 and cash advances from our President totalling $27,594. No
revenue was generated during these periods.
Total
shareholder’s deficiency as at February 28, 2010 was $39,490. Total
shares outstanding as at February 28, 2010 were 14,000,000.
Funds
required over the next twelve months
Our
director estimates the funds required over the next twelve months will be a
follows:
Internal
Accountant
|
$
4,725
|
Preparation
of various working papers for submission to the audits including financial
statements.
|
|
Independent
Accountant
|
4,000
|
Review
of financial statement produced each quarter and examination of year-end
financial statements
|
|
Edgarizing
|
1,470
|
Edgarizing
various Form 10-Qs and K.
|
|
Exploration
– Phase I
|
13,083
|
As
per the Ngan Report
|
|
Filing
fees
|
325
|
To
maintain Pana in good standing in State of Nevada
|
|
Office
|
500
|
Office
supplies, courier and fax charges
|
|
Transfer
Agent
|
1,500
|
Issuance
of share certificates and annual transfer agent fee
|
|
25,603
|
|||
Accounts
Payable – February 28, 2010
|
11,896
|
Represents
amounts owed to third parties
|
|
Cash
requirements
|
$
37,499
|
Even with
the additional advances from our director, Pana will require an additional to
meet its ongoing expenses during the forthcoming year. We will
have to seek outside financing either from the sale of treasury shares or from
loans from third parties. Our director has not yet considered
what would be the best alternative for Pana.
Trends
We are in
the pre-explorations stage, have not generated any revenue and have no prospects
of generating any revenue in the foreseeable future. We are unaware
of any known trends, events or uncertainties that have
had, or are reasonably likely to have, a material impact on our
business or income, either in the long term of short term, other than as
described under ‘Risk Factors’.
-12-
Critical
Accounting Policies
Our
discussion and analysis of its financial condition and results of operations,
including the discussion on liquidity and capital resources, are based upon our
financial statements, which have been prepared in accordance with accounting
principles generally accepted in the United States. The preparation of these
financial statements requires us to make estimates and judgments that affect the
reported amounts of assets, liabilities, revenues and expenses, and related
disclosure of contingent assets and liabilities. On an ongoing basis, management
re-evaluates its estimates and judgments.
The going
concern basis of presentation assumes we will continue in operation throughout
the next fiscal year and into the foreseeable future and will be able to realize
our assets and discharge our liabilities and commitments in the normal course of
business. Certain conditions, discussed below, currently exist which raise
substantial doubt upon the validity of this assumption. The financial statements
do not include any adjustments that might result from the outcome of the
uncertainty.
Our intended exploration activities are
dependent upon our ability to obtain third party financing in the form of debt
and equity and ultimately to generate future profitable exploration activity or
income from its investments. As of the date of this registration statement we
have not generated revenues, and have experienced negative cash flow from
minimal exploration activities. We may look to secure additional funds through
future debt or equity financings. Such financings may not be available or may
not be available on reasonable terms.
Description
of Property
We are
the beneficial owner of a 100% interest in the Marawi Claim, consisting of one-9
unit claim block containing 97.4 hectares located near the town of Malaybalay in
the Republic of the Philippines. We do not have any ore body and have
not generated any revenues from our operations. Pana acquired the
Marawi Claim because the claim area has mineral occurrences similar to those
found at the Cotabatto Gold Mine (which has produced 265,000 ounces of gold),
located approximately 35 kilometeres to the north of our claim.
Pana is
preparing to conduct preliminary exploration work on the Marawi
Claim.
Location
and Access
The
Marawi Claim is a gold exploration project located approximately 55 kilometers
southwest of the city of Malaybalay in the Republic of the
Philippines. Access to the claim is via an all-weather
government-maintained highway and all-weather gravel road. Malaybalay
has an experienced work force and will provide all the necessary services needed
for exploration and development operations, including groceries, fuel,
helicopter service, hardware and equipment, hospitals and police.
The
Marawi Claim is located in an active mining area. There are no known
environmental concerns or parks designated within the claim area.
The
Marawi Claim is located in the tropical climate zone, which is characterized by
high temperatures year-round, high rainfall and lush vegetation. The rainy
season is typically October-December. Due to steep terrain and
deforested land, the claim can work year-round, including the rainy
season.
No
electrical power is required at this stage of exploration. Any
electrical power that might be required in the foreseeable future could be
supplied by gas powered portable generators.
History
& Regional Geology
Deposits
of shell and eroded sand formed the basis for the limestone, which makes up most
of the Philippines. This limestone was, over the ages, pushed upwards, making it
possible to today find sea fossils high in the country’s mountains such as those
in an around the Mawawi Claim. The island has vast coal, copper and
gold reserves mined mainly from the central part of the island. Numerous
showings of mineralization have been discovered in the area of the Marawi Claim
and six prospects have achieved significant gold production, most notably the
Cotabatto Gold Mine (which is in close proximity) mentioned above.
-13-
The
principal bedded rocks for the area of the Marawi Claim are Precambrian rocks
that are exposed along a wide axial zone of a broad complex.
In
general the volcanoes culminate with effluents of hydrothermal solutions that
carry precious metals in the form of naked elements, oxides or sulphides. These
hydrothermal solutions intrude into the older rocks as quartz veins. Recent
exploration results for gold occurrences in the vicinity of the Marawi Claim are
encouraging. Gold belt in sheared gneissic rocks found in sub
parallel auriferous lode zones, where some blocks having 250 to 500 meter length
and 1.5 to 2 meter width, could be identified as most promising.
Typically
veins form in high-grade dynathermal metamorphic environments where
meta-sedimentary belts are invaded by igneous rocks, hosted by paragneisses,
quartites clinopyroxenites, wollastonite-rich rocks, pegatites, charockites,
granitic and intermediate intrusive rocks, quartz-mica schist and
others.
Deposits
are from a few millimeters to over a meter thick in
places. Individual veins display a wide variety of
forms. Mineralization is located within a large fractures block
created where the prominent northwest-striking shears intersect the north
striking caldera fault zone. (For example, gold at the nearby Cotabatto Gold
Mine is generally concentrated within extrusive volcanic rocks in the walls of
large volcanic caldera.)
The major
lodes cover an area of 2 kilometers and are mostly within 400 meteres of the
surface. Lodes occur in three main structural settings:
(i)
|
steeply
dipping northwest striking shears;
|
(ii)
|
flat-dipping
(1040) fractures (flatmakes);
and
|
(iii)
|
shatter
blocks between shears.
|
Most of
the gold occurs in tellurides and there are also significant quantities of gold
in pyrite.
Property
Geology
No
mineralization has been reported for the area of the Marawi Claim but structures
and shear zones affiliated with mineralization on adjacent properties pass
through it.
While the
area of our claim has been prospected in the past, to the knowledge of our
Geologist, Mr. Ngan, such work has not include any drilling of the area covered
by the Marawi Claim, nor do the records, which Mr. Ngan has been able to review,
indicate that any detailed exploration of the claim area has ever been
undertaken.
To the
east of the Marawi Claim are intrusives consisting of rocks such as tonalite,
monzonite, and gabbro while the property itself is inderlain by sediments and
volcanics. The intrusives also consist of a large mass of grandorite
towards the western-most point of the claim.
The area
consists of interlayered chert, argillite and massive andesitic to basaltic
volcanics. The volcanics are hornfelsed and commonly contain minor
pyrite and pyrrhotite.
Proposed Exploration
Work – Plan of Operation
Mr. Frank
Ngan, P. Geol., authored "Summary of Exploration On the Marawi Property, Marawi
Philippines” dated February 28, 2008 (the “Ngan Report”). In his report Mr. Ngan
observes that the area is:
-14-
-
|
well
known for numerous productive mineral occurrences, including the Cotabatto
Gold Mine;
|
-
|
the
area of our claim is underlain by units of Precambrian rocks found at
those other mineral occurences;
|
-
|
structures
and mineralization on our claim are associated with all the major mineral
occurrences and deposits in the
regime;
|
-
|
mineralization
found on the claim is consistent with that found associated with zones of
extensive mineralization and past work has been sporadic and limited and
has not tested the potential of our claim;
and
|
-
|
potential
for significant mineralization to be found on the Marawi
Claim exist and it merits intensive
exploration.
|
Mr. Ngan
has recommended a phased exploration program to evaluate the potential of the
Marawi Claim.
Mr. Ngan
is a registered Professional Geologist in good standing in the Geological
Society of Philippines. He is a graduate of the University of Philippines, with
a Bachelor of Science (1978) and Masters (1982) from the same
university. Mr. Ngan has practiced his profession as a
geologist continuously for over 25 years. He visited the area covered
by our claim on February 18-21, 2008.
We must
conduct exploration to determine what minerals exist on our property and whether
they can be economically extracted and profitably processed. We plan to proceed
with exploration of the Marawi Claim by undertaking work recommended in the Ngan
Report, in order to begin determining the potential for discovering commercially
exploitable deposits of gold on our claim.
We have
not discovered any ores or reserves on the Marawi Claim, our sole mineral
property. Our planned work is exploratory in nature.
The Ngan
Report recommends a two-phase exploration program to further delineate the
mineralized system currently recognized on the Marwai Claim, at an estimated
total cost of approximately $38,732.
This
two-phase program would consist of air photo interpretations of the structures,
geological mapping, both regionally and detailed on the area of the main
showings; geophysical survey (using both magnetic and electromagnetic
instrumentation) in detail over the area of the showings and in a regional
reconnaissance survey and geochemical soil surveying regionally to identify
other areas on the claim that are mineralized in detail on the known areas of
mineralization. Costs are estimated as follows:
Philippine
Pesos
|
U.S.
Dollars
|
|||
Phase
I
|
Geological
mapping
|
618,091
|
$ 13,082
|
|
Phase
II
|
Geochemical
surveying & sampling
|
1,211,897
|
25,650
|
|
Total
|
1,829,988
|
$ 38,732
|
The
purpose of this exploration work is to define and enable the interpretation of a
possible (which would be Phase III) diamond drill program.
We will
finance Phase I work with loan capital to be advanced by our
President.
However, to
conduct any additional exploration work we will have to raise additional
funds. If we are unable to raise such capital we will have to go out
of business.
Even if
we are able raise the necessary capital and to undertake the work recommended in
the Ngan Report and the results of our planned exploration work proves
encouraging, there is no assurance we will be able to raise the capital
necessary to conduct further exploration work on the Marawi
Claim. Furthermore, even if funding is
available, additional work will only be undertaken if the results of
our planned work is successful in identifying target zones of gold
mineralization deemed worthy, by our geologist, of drilling to determine if a
gold deposit may exist. Should our initial work prove
unsuccessful in identifying such drill targets, the Company will likely abandon
the Marawi Claim and we may have to go out of business.
-15-
There are
no permanent facilities, plants, buildings or equipment on the Marawi
Claim.
Competitive
Factors
The
mining industry is highly fragmented. We are competing with many other
exploration companies looking for gold and silver. We are among the smallest
exploration companies in existence and are an infinitely small participant in
the mining business which is the cornerstone of the founding and early stage
development of the mining industry. While we generally compete with other
exploration companies, there is no competition for the exploration or removal of
minerals from our claims. Readily available markets exist for the sale of gold
and silver. Therefore, we will likely be able to sell any gold or silver that we
are able to recover, in the event commercial quantities are discovered on the
Marawi Claims. There is no ore body on the Marawi
Claims.
Government
Regulation
Exploration
activities are subject to various national, state, foreign and local laws and
regulations in the Republic of Philippines, which govern prospecting,
development, mining, production, exports, taxes, labor standards, occupational
health, waste disposal, protection of the environment, mine safety, hazardous
substances and other matters. We believe that we are in compliance in all
material respects with applicable mining, health, safety and environmental
statutes and the regulations passed thereunder in the Philippines.
Environmental
Regulation
Our
exploration activities are subject to various federal, state and local laws and
regulations governing protection of the environment. These laws are continually
changing and, as a general matter, are becoming more restrictive. Our policy is
to conduct business in a way that safeguards public health and the environment.
We believe that our exploration activities are conducted in material compliance
with applicable laws and regulations. Changes to current local, state or federal
laws and regulations in the jurisdictions where we operate could require
additional capital expenditures and increased operating and/or reclamation
costs. Although we are unable to predict what additional legislation, if any,
might be proposed or enacted, additional regulatory requirements could render
certain exploration activities uneconomic.
Employees
We
anticipate using the services of subcontractors to conduct exploration work on
our claim. At present, we have no employees as
such. Our sole officer and director devotes a portion of his
time to the affairs of the Company. Our sole officer and director
does not have an employment agreement with us. We presently do not have pension,
health, annuity, insurance, profit sharing or similar benefit plans; however, we
may adopt such plans in the future. There are presently no benefits available to
any employee.
We expect
to hiring subcontractors on an ‘as needed’ basis. We have not entered into
negotiations or contracts with any of potential subcontractors. We do
not intend to initiate negotiations or hire anyone until we are nearing the time
of commencement of our planned exploration activities.
ITEM
3.
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURE ABOUT MARKET
RISK
|
Market
Information
There are
no common shares subject to outstanding options, warrants or securities
convertible into common equity of our Company.
-16-
The
number of shares subject to Rule 144 is 4,000,000 Share
certificates representing these shares have the appropriate legend affixed on
them.
There are
no shares being offered to the public other than indicated in our effective
registration statement and no shares have been offered pursuant to an employee
benefit plan or dividend reinvestment plan.
Our
shares do not trade on any exchange or quotation system but it is our intention
to seek a quotation on the OTC Bulletin Board (“OTCBB”). This will require us
identifying a market maker to file a Form 211 on our behalf. We
have not yet discussed with any market maker the filing of a Form
211. Although the OTCBB does not have any listing requirements per
se, to be eligible for quotation on the OTCBB, we must remain current in our
filings with the SEC; being as a minimum Forms 10-Q and
10-K. Securities already quoted on the OTCBB that become delinquent
in their required filings will be removed following a 30 or 60 day grace period
if they do not make their filing during that time.
ITEM
4. CONTROLS
AND PROCEDURES
Under the
supervision and with the participation of Pana’s management which including only
our Chief Executive Officer, Hector Davis, who is also the only director, he has
evaluated the effectiveness of Pana’s disclosure controls and procedures as
required by Exchange Act Rule 13a-15(b) as of February 28, 2010 (the “Evaluation
Date”). Based on his evaluation, he has concluded that these disclosure controls
and procedures were not effective as of the Evaluation Date as a result of the
material weaknesses in internal control over financial reporting.
Disclosure
controls and procedures are those controls and procedures that are designed to
ensure that information required to be disclosed in Pana’s reports filed or
submitted under the Exchange Act are recorded, processed, summarized and
reported within the time periods specified in the SEC's rules and forms.
Disclosure controls and procedures include, without limitation, controls and
procedures designed to ensure that information required to be disclosed in
Pana’s reports filed under the Exchange Act is accumulated and communicated to
management to allow timely decisions regarding required disclosure.
As of
February 28, 2010, Hector Davis assessed the effectiveness of the Company’s
internal control over financial reporting based on the criteria for effective
internal control over financial reporting established in Internal
Control—Integrated Framework issued by the Committee of Sponsoring Organizations
of the Treadway Commission (“COSO”) and SEC guidance on conducting such
assessments.
Notwithstanding
the assessment that Pana’s internal control over financial reporting was not
effective and that there were material weaknesses as identified below, Hector
Davis believes that the Company’s financial statements contained in its Annual
Report on Form 10-Q for the six months ended February 28, 2010 fairly present
its financial condition, results of operations and cash flows in all material
respects.
Material
Weaknesses
Hector
Davis has assessed the effectiveness of the Company’s internal control over
financial reporting as of Evaluation Date and identified the following material
weaknesses:
1.
|
Certain
entity level controls establishing a “tone at the top” were considered
material weaknesses. As of February 28, 2010, we did not have an audit
committee due to there only being one officer who is also the sole
director. No independent expert has been appointed to the
audit committee so that it is not controlled by one individual as it is
presently. There is no policy on fraud. A whistleblower policy is not
necessary given the small size of the
organization.
|
2.
|
Due
to the significant number and magnitude of out-of-period adjustments
identified during the year-end closing process, Hector Davis has concluded
that the controls over the period-end financial reporting process were not
operating effectively. A material weakness in the period-end financial
reporting process could result in the Company not being able to
meet its regulatory filing deadlines and, if not remedied, has the
potential to cause a material misstatement or to miss a filing deadline in
the future. Hector Davis override of existing controls is possible given
the small size of the organization and lack of
personnel.
|
-17-
3.
|
There
is no system in place to review and monitor internal control over
financial reporting. The Company maintains an insufficient complement of
personnel to carry out ongoing monitoring responsibilities and ensure
effective internal control over financial
reporting.
|
ITEM
9T CONTROLS AND PROCEDURES
There
were no changes in the Company’s internal control over financial reporting
during the six months ended February 28, 2010 that have materially affected, or
are reasonably likely to materially affect, the Company’s internal control over
financial reporting.
PART
11 – OTHER INFORMATION
ITEM
1. LEGAL
PROCEEDINGS
There are
no legal proceedings to which Pana is party nor to the best of management’s
knowledge are any material legal proceedings contemplated.
ITEM
1A RISK
FACTORS
There are
certain risk factors regarding Pana’s operation which might affect the outcome
of its ability to operate in the future. An investment in Pana’s
securities involves an exceptionally high degree of risk and is extremely
speculative. The following risk factors reflect the potential and substantial
material risks which could be involved if you decide to purchase shares in
Pana.
Risks
Associated with our Company:
Since our auditors have issued a
going concern opinion and although our sole officer and director has agreed to
loan money to us, we may not be able to achieve our objectives and may have to
suspend or cease exploration activity.
Our
auditors have issued a going concern opinion. This means that there is doubt
that we can continue as an ongoing business for the next twelve
months. If we do not raise additional capital through the issuance of
treasury shares or loans to Pana we will be unable to conduct exploration
activity on the Marawi Claim. In addition, in the event we are unable
to raise additional capital we will have to cease operations and go out of
business.
Our
liquidity, and thus our ability to continue to operate depends upon the
continuing willingness of our President, who is also our sole stockholder, to
finance the Company’s operations.
We are
financing our continuing operations with cash loaned to us by our
President. As at February 28, 2010, our President has loaned us
$27,594. He has agreed to advance a further $12,406 until such time
as other sources of funding can be considered. Without these loan
advances, absent any other source of funds, we would be forced to go out of
business. Even if our President advances further funds we will at
some time have to consider other avenues of raising money either by way of
private placement offerings, further advance from Hector Davis or loans
guaranteed by him personally. We will have to raise additional funds
in the next twelve months to satisfy our cash requirements. The loan
advances made by Hector Davis are repayable on demand. Accordingly,
if he were to demand repayment of his loan advances we would not have sufficient
funds to satisfy our cash requirements and would be forced to go out of
business.
-18-
We
lack an operating history and have losses which we expect to continue into the
future. As a result, we may have to suspend or cease exploration activity or
cease operations.
We have
not yet conducted any exploration activities. We have not generated
any revenues. We have no exploration history upon which you can evaluate the
likelihood of our future success or failure. Our net loss from
inception to February 28, 2010, the date of our most recent financial
statements, was $65,190. Our ability to achieve profitability and
positive cash flow in the future is dependent upon
*
|
our
ability to locate a profitable mineral property
|
|
*
|
our
ability to locate an economic ore reserve
|
|
*
|
our
ability to generate revenues
|
|
*
|
our
ability to reduce exploration
costs.
|
Based
upon current plans, we expect to incur operating losses in future periods. This
will happen because there are expenses associated with the research and
exploration of our mineral property. We cannot guarantee we will be successful
in generating revenues in the future. Failure to generate revenues may cause us
to go out of business.
We have no known
ore reserves and we cannot guarantee we will find any gold and/or silver
mineralization
or, if we find gold and/or silver mineralization, that it may be economically
extracted. If we fail to find any gold and/or silver mineralization or if we are
unable to find gold and/or silver mineralization that may be economically
extracted, we will have to cease operations.
We have
no known ore reserves. Even if we find gold and/or silver mineralization we
cannot guarantee that any gold and/or silver mineralization will
be of sufficient quantity so as to warrant recovery. Additionally, even if we
find gold and/or silver mineralization in
sufficient quantity to warrant recovery, we cannot guarantee that the ore will
be recoverable. Finally, even if any gold and/or silver mineralization is
recoverable, we cannot guarantee that this can be done at a profit. Failure to
locate gold deposits in economically recoverable quantities will cause us to
cease operations.
Because
the probability of an individual prospect ever having reserves is extremely
remote, in all probability our property does not contain any reserves, and any
funds spent on exploration will be lost.
Because
the probability of an individual prospect ever having reserves is extremely
remote, in all probability our sole property, the Marawi Claim, does not contain
any reserves, and any funds spent on exploration will be lost. If we cannot
raise further funds as a result, we may have to suspend or cease operations
entirely which would result in the loss of your investment.
Because
our sole officer and director does not have technical training or experience in
starting and operating an exploration company nor in managing a public company,
we will have to hire qualified personnel to fulfill these functions. If we lack
funds to retain such personnel, or cannot locate qualified personnel, we may
have to suspend or cease exploration activity or cease operations which will
result in the loss of your investment.
Because
our sole officer and director is inexperienced with exploring for minerals and
starting, and operating a mineral exploration company, we will have to hire
qualified persons to perform surveying, exploration, and excavation of our
property. Our officer and director has no direct training or
experience in these areas and as a result may not be fully aware of many of the
specific requirements related to working within the industry. His decisions and
choices may not take into account standard engineering or managerial approaches,
mineral exploration companies commonly use. Consequently our exploration,
earnings and ultimate financial success could suffer irreparable harm due to
management's lack of experience in this industry. Additionally,
our sole officer and director has no direct training or experience in managing
and fulfilling the regulatory reporting obligations of a ‘public company’ like
Pana. Unless our sole part time officer is willing to spend more time
addressing these matters, we will have to hire professionals to undertake these
filing requirements for Pana and this will increase the overall cost of
operations. As a result we may have to suspend or cease exploration activity, or
cease operations altogether, which will result in the loss of your
investment.
-19-
If
we don't raise additional capital for ongoing exploration work, we will have to
delay such exploration or go out of business, which will result in the loss of
your investment.
We
estimate that, with $40,000 in loan capital (non interest bearing, payable on
demand) agreed to be advanced by our President (of which $27,594 had been
advanced as of February 28, 2010), we will have sufficient cash to continue
operations into the summer of 2010 provided we carry out only the ‘Phase I’
exploration activity recommended by our engineer at an estimated cost of
$17,500. We are a start-up, pre-exploration stage
company. We will need to raise additional capital to undertake
additional exploration activity. You may be investing in a company
that will not have the funds necessary to conduct any exploration beyond the
initial work noted above due to our inability to raise additional capital. If
that occurs we will have to cease our exploration activity and go out of
business that will result in the loss of your investment.
Since we are
small and do not have much capital, we must limit our exploration and as a
result may not find an ore body. Without an ore
body, we cannot generate revenues and you will lose your
investment.
The
possibility of development of and production from our exploration property
depends upon the results of exploration programs and/or feasibility studies and
the recommendations of duly qualified professional engineers and
geologists. We are small company and do not have much
capital. We must limit our exploration activity unless and until we
raise additional capital. Any decision to expand our operations on
our exploration property will involve the consideration and evaluation of
several significant factors beyond our control. These factors
include, but are not limited to:
●
|
Market
prices for the minerals to be produced;
|
|
●
|
Costs
of bringing the property into production including exploration preparation
of production feasibility studies and construction of production
facilities;
|
|
●
|
Political
climate and/or governmental regulations and controls;
|
|
●
|
Ongoing
costs of production;
|
|
●
|
Availability
and cost of financing; and
|
|
●
|
Environmental
compliance regulations and
restraints.
|
These
types of programs require substantial capital. Because we may have to limit our
exploration, we may not find an ore body, even though our property may contain
mineralized material. Without an ore body, we cannot generate revenues and you
will lose your investment.
Because our sole
officer and director has other outside business activities and may not be in a
position to devote a majority of his time to our exploration activity, our
exploration activity may be sporadic which may result in periodic interruptions
or suspensions of exploration.
Our sole
officer and director will be devoting only approximately 10% of his time,
approximately 16 hours per month, to our business. As a consequence of the
limited devotion of time to the affairs of the Company expected from management,
our business may suffer. For example, because our officer
and director has other outside business activities and may not be in a position
to devote a majority of his time to our exploration activity, our exploration
activity may be sporadic or may be periodically interrupted or
suspended. Such suspensions or interruptions may cause us to
cease operations altogether and go out of business.
-20-
We
may not have access to all of the supplies and materials we need to begin
exploration which could cause us to delay or suspend exploration
activity.
We have
made no attempt to locate or negotiate with any suppliers of products, equipment
or materials. We will attempt to locate products, equipment and materials as and
when we begin to undertake exploration activity. Competition and
unforeseen limited sources of supplies in the industry could result in
occasional spot shortages of equipment and/or supplies we need to conduct our
planned exploration work. If we cannot find the products and
equipment we need, we will have to suspend our exploration plans until we do
find the products and equipment we need.
No
matter how much money is spent on the Marawi Claim, the risk is that we might
never identify a commercially viable ore reserve.
Over the
coming years, we might expend considerable capital on exploration of the Marawi
Claim without finding anything of value. It is very likely the Marawi
Claim does not contain any reserves so any funds spent on exploration will
probably be lost. No matter how much money is spent on the Marawi
Claim, we might never be able to find a commercially viable ore
reserve.
Even
if our property were found to contain a deposit, since we have not put a mineral
deposit into production before, we will have to acquire outside expertise. If we
are unable to acquire such expertise we may be unable to put our property into
production and you may lose your investment.
We have
no experience in placing mineral deposit properties into production, and our
ability to do so will be dependent upon using the services of appropriately
experienced personnel or entering into agreements with other major resource
companies that can provide such expertise. There can be no assurance that we
will have available to us the necessary expertise when and if we place a mineral
deposit into production.
Mineral
exploration and development activities are inherently risky and we may be
exposed to environmental liabilities. If such an event were to occur it may
result in a loss of your investment.
The
business of mineral exploration and extraction involves a high degree of risk.
Few properties that are explored are ultimately developed into
production. Most exploration projects do not result in the discovery
of commercially mineable deposits of ore. The Marawi Claim, our sole
property, does not have a known body of commercial ore. Should our mineral claim
be found to have commercial quantities of ore, we would be subject to additional
risks respecting any development and production activities. Unusual or
unexpected formations, formation pressures, fires, power outages, labour
disruptions, flooding, explosions, cave-ins, landslides and the inability to
obtain suitable or adequate machinery, equipment or labour are other risks
involved in extraction operations and the conduct of exploration programs. We do
not carry liability insurance with respect to our mineral exploration operations
and we may become subject to liability for damage to life and property,
environmental damage, cave-ins or hazards.
Even
with positive results during exploration, the Marawi Claim might never be put
into commercial production due to inadequate tonnage, low metal prices or high
extraction costs.
We might
be successful, during future exploration programs, in identifying a source of
minerals of good grade but not in the quantity, the tonnage, required to make
commercial production feasible. If the cost of extracting any
minerals that might be found on the Marawi Claim is in excess of the selling
price of such minerals, we would not be able to develop the
claim. Accordingly even if ore reserves were found on the Marawi
Claim, without sufficient tonnage we would still not be able to economically
extract the minerals from the claim in which case we would have to abandon the
Marawi Claim and seek another mineral property to develop, or cease operations
altogether.
-21-
Risks
Associated with our Shares:
Our
sole officer and director will own a substantial amount of our common stock and
will have substantial influence over our operations.
Our sole
director and officer currently own 14,000,000 shares of common stock
representing approximately 100% of our outstanding shares. He
registered for resale 10,000,000 of his shares under our effective registration
statement. Assuming that our sole director and officer sells the
10,000,000 shares he has registered for resale, he will still own 4,000,000
shares of common stock representing approximately 28.6% of our outstanding
shares. As a result, he will have the potential to continue to
exercise influence over our operations. This concentration of ownership may also
have the effect of delaying or preventing a change in control.
Without a public market there is no
liquidity for our shares and our shareholders may never be able to sell their
shares that would result in a total loss of their investment.
Our
common shares are not listed on any exchange or quotation
system. There is no market for our
shares. Consequently, our future shareholders will not be able
to sell their shares in an organized market place unless they sell their shares
privately. If this happens, our shareholders might not receive a
price per share which he might have received had there been a public market for
our shares. Now that our registration statement becomes
effective, it is our intention to apply for a quotation on the OTCBB
whereby:
●
|
We
will have to be sponsored by a participating market maker who will
file
a
Form 211 on our behalf since we will not have direct access to the
FINRA
personnel;
and
|
|
●
|
We
will not be quoted on the OTCBB unless we are current in our
periodic
reports
filed with the SEC.
|
From the
date of this Form 10-Q, we estimate that it will take us between twelve to
eighteen weeks to be approved for a quotation on the OTCBB. However,
we cannot be sure we will be able to obtain a participating market maker or be
approved for a quotation on the OTCBB, in which case, there will be no liquidity
for the shares of our shareholder.
Even if a market develops for our shares our shares
may be thinly traded, with wide share price fluctuations, low share prices and
minimal liquidity.
If a
market for our shares develops, the share price may be volatile with wide
fluctuations in response to several factors, including:
●
|
Potential
investors’ anticipated feeling regarding our results of
operations;
|
|
●
|
Increased
competition and/or variations in mineral prices;
|
|
●
|
Our
ability or inability to generate future revenues; and
|
|
●
|
Market
perception of the future of the mineral exploration
industry.
|
In
addition, if our shares are quoted on the OTCBB, our share price may be impacted
by factors that are unrelated or disproportionate to our operating
performance. Our share price might be affected by general economic,
political and market conditions, such as recessions, interest rates or
international currency fluctuations. In addition, even if our stock
is approved for quotation by a market maker through the OTCBB, stocks traded
over this quotation system are usually thinly traded, highly volatile and not
followed by analysts. These factors, which are not under our control,
may have a material effect on our share price.
-22-
We
anticipate the need to sell additional treasury share in the future meaning that
there will be a dilution to our shareholders resulting in their percentage
ownership in the Company being reduced accordingly.
We may
seek additional funds through the sale of our common stock. This will
result in a dilution effect to our shareholders whereby their percentage
ownership interest in the Company is reduced. The magnitude of this
dilution effect will be determined by the number of shares we will have to issue
in the future to obtain the funds required.
Since our securities are
subject to penny stock rules, you may have difficulty reselling your
shares.
Our
shares are "penny stocks" and are covered by Section 15(g) of the Securities
Exchange Act of 1934 which imposes additional sales practice requirements on
broker/dealers who sell the Company's securities including the delivery of a
standardized disclosure document; disclosure and confirmation of quotation
prices; disclosure of compensation the broker/dealer receives; and, furnishing
monthly account statements. For sales of our securities, the broker/dealer must
make a special suitability determination and receive from its customer a written
agreement prior to making a sale. The imposition of the foregoing additional
sales practices could adversely affect a shareholder's ability to dispose of his
stock.
ITEM
2. UNREGISTERED
SALE OF EQUITY SECURITIES AND USE OF PROCEEDS
None
ITEM
3. DEFAULTS
UPON SENIOR SECURITIES
None
ITEM
4. SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM
5. OTHER
INFORMATION
None
ITEM
6. EXHIBITS
(a) Exhibits
1. Certificate
of Incorporation, Articles of Incorporation and By-laws
1.1
|
Certificate
of Incorporation (incorporated by reference from Pana’s Registration
Statement on Form S-1 filed on October 14,
2008)
|
1.2
|
Articles
of Incorporation (incorporated by reference from Pana’s Registration
Statement on Form S-1 filed on October 14,
2008)
|
1.3
|
By-laws
(incorporated by reference from Pana’s Registration Statement on Form S-1
filed on October 14, 2008)
|
-23-
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
PANA-MINERALES
S.A.
(Registrant)
HECTOR FRANCISCO VASQUEZ
DAVIS
Hector
Francisco Vasquez Davis
Chief
Executive Officer, Chief Financial Officer.
President,
Secretary Treasurer and Director
Dated:
March 30, 2010
-24-