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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC  20549


FORM 10-Q


QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934


For the Quarterly Period ended September 30, 2012


Pacific Metals Corp.

(Exact Name of registrant as specified in its Charter)


Nevada

 

43-2110431

(State or other jurisdiction of

incorporation or organization)

 

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


848 North Rainbow Blvd #2987, Las Vegas, Nevada

 

89107

(Address of principal executive offices)

 

(Zip Code)


Registrant’s telephone number, including area code       (416) 214-1483


Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes x  No o


Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x  No o


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


Large accelerated filer  o      Accelerated filer  o      Non-accelerated filer  o      Smaller reporting company  x


Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes o  No x


As of October 29, 2012, the Company had outstanding 20,000,000 shares of its common stock, par value $0.001.





TABLE OF CONTENTS


 

 

 

 

 

 

ITEM NUMBER AND CAPTION

PAGE

 

 

 

PART I

 

 

 

 

 

  ITEM 1.       Financial Statements

3

  ITEM 2.       Management’s Discussion and Analysis of Financial Condition And Results of Operations

11

  ITEM 3.       Quantitative and Qualitative Disclosures About Market Risk

16

  ITEM 4.       Controls and Procedures

16

 

 

 

PART II

 

 

 

 

 

  ITEM 1.       Legal Proceedings

16

  ITEM 1A     Risk Factors

16

  ITEM 2.       Unregistered Sales of Equity Securities and Use of Proceeds

16

  ITEM 3.       Defaults Upon Senior Securities

17

  ITEM 4.       Mine Safety Disclosures.

17

  ITEM 5.       Other Information

17

  ITEM 6.       Exhibits

17




2




PART I

ITEM 1. FINANCIAL STATEMENTS


Pacific Metals Corp.

(An Exploration Stage Company)

Balance Sheets (Unaudited)

 

 

 

 

 

 

 

September 30,

2012

 

December 31,

2011

ASSETS

 

 

 

 

 

Current Assets

 

 

 

 

 

Cash

$

1,932 

 

$

125 

Total Current Assets

 

1,932 

 

 

125 

Mineral Rights

 

 

 

 

 

Total Mineral Rights

 

36,615 

 

 

33,255 

Intangibles

 

 

 

 

 

Total Intangible Assets, net

 

9,667 

 

 

Other Assets

 

 

 

 

 

Total Other Assets

 

500 

 

 

TOTAL ASSETS

$

48,714 

 

$

33,380 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

 

 

 

 

 

Current Liabilities

 

 

 

 

 

Accounts Payable

$

1,940 

 

$

Related Party Notes Payable

 

111,398 

 

 

59,397 

Total Current Liabilities

 

113,338 

 

 

59,397 

Long Term Liabilities

 

 

 

 

 

Total Long Term Liabilities

 

 

 

Total Liabilities

 

113,338 

 

 

59,397 

Stockholders' Deficit

 

 

 

 

 

Common stock - $0.001 par value; 200,000,000 shares authorized, 20,000,000 issued and outstanding at September 30, 2012 and December 31, 2011

 

20,000 

 

 

10,000 

Preferred Stock - $0.001 par value; 10,000,000 shares authorized, no shares outstanding at September 30, 2012 and December 31, 2011

 

 

 

Additional Paid In Capital

 

 

 

Deficit accumulated during the exploration stage

 

(84,624)

 

 

(36,017)

Total Stockholder’s Deficit

 

(64,624)

 

 

(26,017)

TOTAL LIABILITIES AND STOCKHOLDER’S DEFICIT

$

48,714 

 

$

33,380 


See accompanying notes to the financial statements




3




Pacific Metals Corp.

(An Exploration Stage Company)

Statements of Operations (Unaudited)


 

Three Months

Ended

September 30,

2012

 

Three Months

Ended

September 30,

2011

 

Nine Months

Ended

September 30,

2012

 

Nine Months

Ended

September 30,

2011

 

June 28, 2006

(Date of Inception)

to

September 30

2012

Revenue

 

 

 

 

 

 

 

 

 

Total Revenue

$

 

$

 

$

$

 

 

$

Operating Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Amortization Expense

 

250 

 

 

 

 

333 

 

 

 

 

333 

Automobile Expense

 

 

 

 

 

 

 

 

 

188 

Bank Service Charges

 

108 

 

 

99 

 

 

329 

 

 

313 

 

 

2,596 

Business License & Fees

 

 

 

 

 

 

 

 

 

40 

Dues and Subscriptions

 

 

 

58 

 

 

 

 

58 

 

 

356 

Interest Expense

 

 

 

 

 

 

 

 

 

109 

Licenses and Permits

 

 

 

 

 

610 

 

 

610 

 

 

5,185 

Materials and Supplies

 

 

 

 

 

 

 

 

 

533 

Mineral Rights Expense

 

 

 

 

 

 

 

 

 

9,551 

Office Supplies

 

 

 

 

 

 

 

 

 

394 

Professional Fees

 

6,370 

 

 

 

 

37,335 

 

 

 

 

50,220 

Travel

 

 

 

 

 

 

 

 

 

5,119 

Total Operating Expenses

 

6,728 

 

 

157 

 

 

38,607 

 

 

981 

 

 

74,624 

Net Ordinary Loss

 

(6,728)

 

 

(157)

 

 

(38,607)

 

 

(981)

 

 

(74,624)

Net Loss

$

(6,728)

 

$

(157)

 

$

(38,607)

 

$

(981)

 

$

(74,624)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss Per Share

 

(0.000)

 

 

(0.000)

 

 

(0.003)

 

 

(0.000)

 

 

(0.011)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Number of Shares

 

20,000,000 

 

 

20,000,000 

 

 

20,000,000 

 

 

20,000,000 

 

 

6,518,070 


See accompanying notes to the financial statements




4





Pacific Metal Corp.

(An Exploration Stage Company)

Statements of Changes in Stockholders' Deficit

From Inception June 28, 2006 to September 30, 2012 (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deficit

 

 

 

 

 

 

 

 

Accumulated

 

 

 

 

 

 

 

 

During the

 

 

 

 

Common Stock

 

Additional paid

 

Exploration

 

 

 

Shares

 

Amount

 

in Capital

 

Stage

 

Total

Balance at June 28, 2006

200 

 

$

 

$

 

$

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Loss

 

 

 

 

 

 

(20,047)

 

 

(20,047)

Balance at December 31, 2006

200 

 

$

 

$

 

$

(20,047)

 

$

(20,047)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Loss

 

 

 

 

 

 

(7,277)

 

 

(7,277)

Balance at December 31, 2007

200 

 

$

 

$

 

$

(27,324)

 

$

(27,324)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Loss

 

 

 

 

 

 

(1,429)

 

 

(1,429)

Balance at December 31, 2008

200 

 

$

 

$

 

$

(28,753)

 

$

(28,753)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Loss

 

 

 

 

 

 

(1,022)

 

 

(1,022)

Balance at December 31, 2009

200 

 

$

 

$

 

$

(29,775)

 

$

(29,775)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares Issued for Related Party Debt Repayment

19,999,800 

 

 

10,000 

 

 

 

 

 

 

10,000 

Net Loss

 

 

 

 

 

 

(1,566)

 

 

(1,566)

Balance at December 31, 2010

20,000,000 

 

$

10,000 

 

$

 

$

(31,341)

 

$

(21,341)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Loss

 

 

 

 

 

 

(4,676)

 

 

(4,676)

Balance at December 31, 2011

20,000,000 

 

$

10,000 

 

$

 

$

(36,017)

 

$

(26,017)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock Split 1 to 1

 

 

10,000

 

 

-  

 

 

(10,000)

 

 

Net Loss

 

 

 

 

 

 

(38,607)

 

 

(38,607)

Balance at September 30, 2012

20,000,000 

 

$

20,000 

 

$

 

$

(84,624)

 

$

(64,624)


See accompanying notes to the financial statements




5





Pacific Metals Corp.

(An Exploration Stage Company)

Statements of Cash Flows (Unaudited)


 

For the Nine

 

For the Nine

 

June 28, 2006

 

Months Ended

 

Months Ended

 

(date of inception) to

 

September 30,

2012

 

September 30,

2011

 

September 30,

2012

CASH FLOW FROM OPERATING ACTIVITIES:

 

 

 

 

 

 

 

 

Net Loss

$

(38,607)

 

$

(981)

 

$

(74,624)

Adjustments to Reconcile net Loss to Net Cash Used in Operating Activities:

 

 

 

 

 

 

 

 

Amortization Expense

 

333 

 

 

 

 

333 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Prepaid Expenses

 

(500)

 

 

 

 

(500)

Accounts Payable

 

1,940 

 

 

(3,143)

 

 

1,940 

NET CASH USED IN OPERATING ACTIVITIES

 

(36,834)

 

 

(4,124)

 

 

(72,851)

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

 

 

 

 

 

 

 

Investment in Intangible Assets

 

(10,000)

 

 

 

 

(10,000)

Investment in Mineral Rights

 

(3,360)

 

 

(3,360)

 

 

(36,615)

NET CASH USED IN INVESTING ACTIVITIES

 

(13,360)

 

 

(3,360)

 

 

(46,615)

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

 

 

 

 

 

 

Payment on Related Party Note Payable

 

(1,718)

 

 

 

 

(1,718)

Proceeds from Related Party Note payable

 

53,719 

 

 

7,725 

 

 

123,116 

NET CASH PROVIDED BY FINANCING ACTIVITIES

 

52,001 

 

 

7,725 

 

 

121,398 

 

 

 

 

 

 

 

 

 

NET CHANGE IN CASH

 

1,807 

 

 

241 

 

 

1,932 

CASH AT BEGINNING OF PERIOD

 

125 

 

 

39 

 

 

CASH AT END OF PERIOD

$

1,932 

 

$

280 

 

$

1,932 

Cash Paid during the year for:

 

 

 

 

 

 

 

 

Interest

$

 

$

 

$

Income Taxes

$

 

$

 

$

Non-Cash financing and investing activities:

 

 

 

 

 

 

 

 

Common stock issued for Related Party Debt Repayment

$

 

$

 

$

10,000 

Stock Split 1 to 1

$

10,000 

 

$

 

$

10,000 


See accompanying notes to the financial statements




6




Pacific Metals Corp.

(An Exploration Stage Company)

NOTES TO FINANCIAL STATEMENTS

September 30, 2012



NOTE 1 – ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


Pacific Metals Corp. (“Pacific Metals”) was incorporated in Nevada on June 28, 2006. Pacific Metals owns mineral claims in Colorado. Pacific Metals is a wholly owned subsidiary of Pacific Gold Corp. (“Pacific Gold”, or the “parent Company”).


Exploration Stage Company


The accompanying financial statements have been prepared in accordance with generally accepted accounting principles related to accounting and reporting by exploration stage companies. An exploration stage company is one in which planned principal operations have not commenced or if its operations have commenced, there has been no significant revenues therefrom.


Basis of Presentation


These financial statements are expressed in U.S dollars. The Company’s year-end is December 31. Financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States.


Significant Accounting Principles


Use of Estimates and Assumptions.


The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities, (ii) the disclosure of contingent assets and liabilities known to exist as of the date the financial statements are published, and (iii) the reported amount of net sales, expenses and costs recognized during the periods presented. Adjustments made with respect to the use of estimates often relate to improved information not previously available. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of financial statements; accordingly, actual results could differ from these estimates.


Cash and Cash Equivalents


The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.  At September 30, 2012, cash includes cash on hand and cash in the bank.


Income Taxes


The Company accounts for income taxes in accordance with ASC Topic 740, Income Taxes.  This statement prescribes the use of the asset and liability method whereby deferred tax asset and liability account balances are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse.


Loss Per Share


The Company follows the provisions of ASC Topic 260, Earnings per Share.  Basic net loss per share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding during the period.  Basic and diluted losses per share are the same as all potentially dilutive securities are anti-dilutive.




7




Basic earnings per share is computed by dividing net income available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflects the potential dilution that could occur if stock options and other commitments to issue common stock were exercised or equity awards vest resulting in the issuance of common stock or conversion of notes into shares of the Company’s common stock that could increase the number of shares outstanding and lower the earnings per share of the Company’s common stock.  This calculation is not done for periods in a loss position as this would be antidilutive.  As of September 30, 2012, there were no stock options or stock awards that would have been included in the computation of diluted earnings per share that could potentially dilute basic earnings per share in the future.


Mineral Rights


All mine-related costs, other than acquisition costs, are expensed prior to the establishment of proven or probable reserves.  Reserves designated as proven and probable are supported by a final feasibility study, or the profitable extraction of ores, indicating that the reserves have had the requisite geologic, technical and economic work performed and are legally extractable at the time of reserve determination. Once proven or probable reserves are established, all development and other site-specific costs are capitalized.


Capitalized development costs and production facilities are depleted using the units-of-production method based on the estimated gold which can be recovered from the ore reserves processed.  There has been no change to the estimate of proven and probable reserves. Maintenance and repairs are charged to expense as incurred.


Intangible Assets


Pacific Metals has acquired a mining claims database which will be amortized over its estimated useful life of ten years using the straight-line method.


Intangibles Assets

September 30,

2012

 

December 31,

2011

Mining Claims Database

$

10,000 

 

$

Accumulated Amortization

 

(333)

 

 

-

 Net

$

9,667 

 

$


Amortization Expense for the nine months ended September 30, 2012 and 2011 was $333 and $0, respectively.


For these assets, amortization expense over the next five years is expected to be $4,250.


Year

 

USD

2012

 

$

250

2013

 

 

1,000

2014

 

 

1,000

2015

 

 

1,000

2016

 

 

1,000

 

 

$

4,250


Impairment of Long-Lived Assets.


The Company reviews the carrying value of its long-lived assets annually or whenever events or changes in circumstances indicate that the historical cost-carrying value of an asset may no longer be appropriate. Pacific Metals assesses recoverability of the carrying value of the asset by estimating the undiscounted future net cash flows, which depend on estimates of metals to be recovered from proven and probable ore reserves, and also identified resources beyond proven and probable reserves, future production costs and future metals prices over the estimated remaining mine life.  If undiscounted cash flows are less that the carrying value of a property, an impairment loss is recognized based upon the estimated expected future net cash flows from the property discounted at an interest rate commensurate with the risk involved.  If the future net cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset’s carrying value and fair value.


The fair value of an asset retirement obligation is recognized in the period in which it is incurred if a reasonable estimate of fair value can be made.  The present value of the estimated asset retirement costs is capitalized as part of the carrying amount of the long-lived asset.  For Pacific Metals, asset retirement obligations primarily relate to the abandonment of ore-producing property and facilities.




8




We review the carrying value of our interest in each mineral claim on a quarterly basis to determine whether impairment has incurred in accordance with ASC 360-930.


Where information and conditions suggest impairment, we write-down these properties to the net recoverable amount, based on estimated discounted future cash flows. Our estimate of mineral price, mineralized materials, operating capital, and reclamation costs are subject to risks and uncertainties affecting the recoverability of our investment in property, plant, and equipment. Although we have made our best estimate of these factors based on current conditions, it is possible that changes could occur in the near term that could adversely affect our estimate of net cash flows expected to be generated from our operating properties and the need for possible asset impairment write-downs.


Where estimates of future net operating cash flows are not available and where other conditions suggest impairment, we assess if carrying value can be recovered from net cash flows generated by the sale of the asset or other means.


Recently issued accounting pronouncements


Recent accounting updates that the Company has adopted or that will be required to adopt in the future are summarized below.


On December 31, 2011, the Company adopted updates issued by the Financial Accounting Standards Board (“FASB”) to the authoritative hierarchy of GAAP. These changes establish the FASB Accounting Standards Codification (“ASC”) as the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity with GAAP. Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. The FASB no longer issues new standards in the form of Statements, FASB Staff Positions, or Emerging Issues Task Force Abstracts; instead the FASB issues Accounting Standards Updates. Accounting Standards Updates will not be authoritative in their own right as they will only serve to update the Codification. These changes and the Codification itself do not change GAAP. Other than the manner in which new accounting guidance is referenced, the adoption of these changes had no impact on the Financial Statements.


The Company does not expect the adoption of any other recently issued accounting pronouncements to have a significant impact on its results of operations, financial position or cash flow.


NOTE 2 – INTERIM FINANCIAL STATEMENTS


The accompanying interim unaudited condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In our opinion, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine and three month period ended September 30, 2012 are not necessarily indicative of the results that may be expected for the year ending December 31, 2012. For further information, refer to the financial statements and footnotes thereto included in our Annual Report on Form 10 for the fiscal year ended December 31, 2011.


NOTE 3 – MINERAL RIGHTS


Mineral rights at September 30, 2012 and December 31, 2011 consisted of the following:


 

September 30,

2012

 

December 31,

2011

Graysill Claims

$

36,615 

 

$

33,255 


NOTE 4 – SHAREHOLDER NOTE PAYABLE / RELATED PARTY TRANSACTIONS


Pacific Metals owed $111,398 and $57,769 to its parent company as of September 30, 2012 and December 31, 2011, respectively.  The amount due is represented in a single, demand note to the parent company, which bears no interest. The parent company advances funds on an as needed basis to the Company.


Pacific Metals owed $1,718 to another subsidiary of its parent company as of December 31, 2011. The amount due was represented by a demand note, which bore no interest. The note was paid in full as of September 30, 2012.



9





NOTE 5 – INCOME TAXES


The parent company, Pacific Gold, files its corporate income tax returns on a consolidated basis.  Pacific Gold uses the asset/liability method, whereby deferred tax assets and liabilities are determined based on the expected future tax consequences of temporary differences between the carrying amounts of assets and liabilities for financial and income tax reporting purposes.  During 2011 and 2010, Pacific Gold incurred net losses and, therefore, had no tax liability.


NOTE 6 – COMMON STOCK


At the time of inception, 200 common shares were issued to its parent company, Pacific Gold Corp. In 2010, there were 19,999,800 common shares issued to Pacific Gold Corp. as payment for a portion of the debt owed to the parent company.


On July 20, 2012, the board of Pacific Metals. agreed to a stock split effected in the form of a dividend of the outstanding shares of the Company on a one for one basis. The new issued and outstanding shares of Pacific Metals are 20,000,000 shares, all of which were owned by Pacific Gold Corp. at September 30, 2012.  The Company has restated outstanding shares for all prior periods to reflect the effects of the stock split.  See Note 8.


NOTE 7 – GOING CONCERN


The Company’s financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As of September 30, 2012, the Company had an accumulated deficit of $64,624, negative working capital of $111,406, and negative cash flows from operations of $36,834, raising substantial doubt about its ability to continue as a going concern.  During the nine months ended September 30, 2012, the Company financed its operations through issuance of debt to a related party.


NOTE 8 – SUBSEQUENT EVENTS


On October 26, 2012 the board of Pacific Metals Corp. agreed to a dividend of the outstanding shares of the Company; one share of Pacific Metals will be issued for every 420 shares of Pacific Gold Corp. owned by shareholders of record on November 1, 2012.


The company evaluated subsequent events through the date of issuance of these financial statements and has determined that there were no additional material subsequent events that need to be disclosed.




10




ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Forward Looking Statements


From time to time, we or our representatives have made or may make forward-looking statements, orally or in writing. Such forward-looking statements may be included in, but not limited to, press releases, oral statements made with the approval of an authorized executive officer or in various filings made by us with the Securities and Exchange Commission. Words or phrases "will likely result", "are expected to", "will continue", "is anticipated", "estimate", "project or projected", or similar expressions are intended to identify "forward-looking statements". Such statements are qualified in their entirety by reference to and are accompanied by the above discussion of certain important factors that could cause actual results to differ materially from such forward-looking statements.


Management is currently unaware of any trends or conditions other than those mentioned in this management's discussion and analysis that could have a material adverse effect on the company's current financial position, future results of operations, or liquidity, because its current operations are limited. However, investors should also be aware of factors that could have a negative impact on the company's prospects and the consistency of progress in the areas of revenue generation, liquidity, and generation of capital resources, once it begins to implement its business plan. These may include: (i) variations in revenue, (ii) possible inability to attract investors for its equity securities or otherwise raise adequate funds from any source should the company seek to do so, (iii) increased governmental regulation or significant changes in that regulation, (iv) increased competition, (v) unfavorable outcomes to litigation involving the company or to which the company may become a party in the future, and (vi) a very competitive and rapidly changing operating environment.


The risks identified here are not all inclusive. New risk factors emerge from time to time and it is not possible for management to predict all of such risk factors, nor can it assess the impact of all such risk factors on the company's business or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statements. Accordingly, forward-looking statements should not be relied upon as a prediction of actual results.


The financial information set forth in the following discussion should be read with the financial statements of Pacific Metals included elsewhere herein.


Business


Pacific Metals Corp. (“Pacific Metals,” or the “company”) was incorporated in Nevada on June 28, 2006. Pacific Metals owns federal mining claims in Southwest Colorado. The company staked the claims it owns in August 2006. Since then, Pacific Metals has worked to maintain the claims and internally established an exploration and development plan.   More recently, Pacific Metals has been proceeding to effect its business plan and has engaged a geological consulting firm to evaluate the mineral deposits and to begin an exploration and measuring program of the historical resources on the company’s claims and upon those results beginning a drilling program to confirm historical results and expand the size of the known resource on the mining claims.


The main objective of Pacific Metals is to explore, identify, and develop commercially viable mineral deposits in the claims over which the company has rights that could potentially produce revenues. Exploration and development for commercially viable mineral deposits of any commercial metal or mineral includes a high degree of risk, which careful evaluation, experience and factual knowledge may not eliminate, and therefore, we may never produce any significant revenues.


Pacific Metals does not have the financial resources and does not have any commitments for funding from unrelated parties or any other agreements that will provide working capital. We cannot give any assurance that Pacific Metals will locate any funding or enter into any agreements that will provide the required operating capital. Pacific Metals has been dependent on its parent company Pacific Gold Corp. to provide it with working capital since inception. In 2012, Pacific Gold Corp. advanced funds such that Pacific Metals could begin to implement its business plan by engaging a geologist consulting firm.


The company should be considered an exploration stage company, in which stage the company will only be commencing the search for mineral deposits and will seek to assess and define those deposits. The company does not have any reserve analysis reports in respect of its claims. The company is not in actual development or production of any mineral deposits.




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Description of Property


The company owns 24 unpatented federal lode mining claims, PMC 30-46 and PMC 48-54, Colorado Mining Claim numbers 259820-259843, in San Juan and Dolores Counties, Colorado, staked in August 2006, immediately southeast of Bolam Pass. The lead claim file number for the file is San Juan County 145097 and Delores County 00150911.The claims are located within the San Juan Mountains, north of Durango, Colorado. The claims are situated on federal land. They cover approximately 480 acres of very rugged, mountainous terrain. The claims are subject to an annual renewal fee of $140 each, paid yearly by the Company to the BLM prior to September 1st of each year along with a notice of intent to hold the claims. The mining claims were acquired by staking land owned by the BLM. The staking process involved a physical visit to the site using a GPS to locate USGS corner posts and then placing location monuments at the four corners of each prospective claim. Subsequently a field map is prepared and then the claim location notices are filed with the proper county of location and once stamped by the county the claims are then submitted to the Colorado BLM with the appropriate location fee and advance renewal fee of $140 per claim for the subsequent year.


The claims are located at an elevation of 11,000 feet above mean sea level and are accessible by a dirt road that is maintained during the summer months by the United States Forest Service. The property, which is referred to as the Graysill Property, encompasses the historic Graysill Mine, a past producer of vanadium and uranium ore.  Based on generally available public information, the Graysill Mine is known to have produced vanadium and by-product uranium during a period of approximately twenty years after World War II. It is generally estimated that before the mine ceased production in the early 1960s, approximately 32,000 tons of ore were mined with a reported grade of approximately 2.41% vanadium pentoxide and 0.09% uranium oxide.  No assurance can be given that these reportable grades will be matched in future explorations and operations if commenced.


Vanadium is primarily used as a steel additive to strengthen it. Vanadium also is compatible with titanium, therefore vanadium foil is used in cladding titanium to steel. Vanadium also is a suitable material for the inner structure of a fusion reactor. Several vanadium alloys show superconducting behavior.  Certain vanadium oxides are used in chemical reactions for the production of other products, such as sulfuric acid, ceramics and glass coatings.


Uranium has many uses, notably in the energy and military sectors. Medical and scientific uses are also important within the uranium industry, including for medical diagnostics, cell and medical research and scientific dating.


The property is underlain by a gently dipping assemblage of Paleozoic and Mesozoic sedimentary rocks within which vanadium and uranium occurs in many of the rock units in a stratabound manner, exhibiting little or no apparent relationship to regional structural trends. Although vanadium and uranium occurrences are ubiquitous and are known to exist in over 20 distinctly different sedimentary units in the vicinity of the property of American Uranium, the Pennsylvanian-Permian Rico Formation and the Upper Jurassic Entrada Sandstone are the only formations which have been mined previously for vanadium and uranium. Most of the past production has come from the Entrada Sandstone. Historically, there have been a number of uraniferous vanadium deposits developed in the Entrada Sandstone along a sinuous trend extending in a north-south direction for over 100 miles. This trend coincides with a major structural feature representing a transitional zone between the Colorado Plateau and the Southern Rocky Mountain physiographic provinces.


There is no modern determination of mineral reserves, which means there is no current evaluation of the economic or legally extractable or producible mineral deposits within the claims owned by the company.


The company has not completed any work on the property aside from an on-site inspection by a mining engineer.


There are currently no usable facilities or infrastructure on the property.


The company has begun its exploration and development program as outlined below under the heading Business Plan.


No sources of water or power have yet been secured or identified by the company at the property.


To date, the company has spent approximately $50,000 on the project claims and initial exploratory activities.




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Competition


Currently, we do not have any direct competition with respect to the specific claims that the company owns.  Within the industry of vanadium and uranium, if we were to develop production capacity, the company would compete with other suppliers of these minerals.  Because minerals are sourced world-wide, our competition would include companies operating in diverse locations such as Africa, Australia, the People’s Republic of China and the Americas.  The companies that commonly are producing minerals of this nature are large capitalization companies, with established mining clams and operations.  Their deposits are often refined and sold through related parties or to and through companies with which they have long standing relationships.  In some countries which are seeking to develop their mineral resource capabilities, there are direct and indirect subsidies and supports that give these producers market advantage.  In the United States, we will also have to face the competitive differential imposed by a body of sophisticated, comprehensive environmental laws that cover mining, transportation, refining and distribution of minerals.  Additionally, since there are dangerous aspects to the operation of shaft mining and associated with vanadium and uranium, there is a body of worker protection and similar laws with which we will have to comply.  These may be more restrictive and costly rules than our competitors have to follow, which would make our operations more expensive and less competitive in the world market.


In terms of developing our business plan and conducting exploration and later mineral deposit development, we also expect to compete for qualified geological and environmental experts to assist us in our exploration of mining prospects, as well as any other consultants, employees and equipment that we may require in order to conduct our operations.


Currently, there is significant competition for financial capital to be deployed in mining and mineral extraction, particularly in relation to the oil and gas extractive industries.  Therefore, it is difficult for smaller mineral companies such as Pacific Metals to attract investment for its exploration activities.  We cannot give any assurances that we will be able to compete for capital funds, and without adequate financial resources management cannot assure that the company will be able to compete in exploration activities and ultimately in mineral deposit development, production and sales.


Regulation


The exploration and development of a mining prospect is subject to regulation by a number of federal and state government authorities. These include the United States Environmental Protection Agency and the Bureau of Land Management as well as the various state environmental protection agencies.  The regulations address many environmental issues relating to air, soil and water contamination and apply to many mining related activities including exploration, mine construction, mineral extraction, ore milling, water use, waste disposal and use of toxic substances.  In addition, we are subject to regulations relating to labor standards, occupational health and safety, mine safety, general land use, export of minerals and taxation.  Many of the regulations require permits or licenses to be obtained and the filing of Notices of Intent and Plans of Operations, the absence of which or inability to obtain will adversely affect the ability for us to conduct our exploration, development and operation activities.  The failure to comply with the regulations and terms of permits and licenses may result in fines or other penalties or in revocation of a permit or license or loss of a prospect.


For the purposes of exploration drilling, the company will be subject to the approval of a plan of operations submitted to the US Forest Service and/or the BLM. Additionally, the plan of operations for exploration drilling will have to be approved by the Colorado Division of Reclamation, Mining and Safety and the Colorado Department of Public Health and Environment. Once the plan of operations is approved by these agencies, the company must post a bond with the state prior to commencing any exploration work that disturbs the ground in a material manner, which bond amount will cover reclaimation and other costs in the event the company fails to act in accordance with its plan.


The preparation and filing of the plan of operations for exploration drilling and the associated permitting is not difficult process because of the limited intrusion into the land.  The company believes that once it has the necessary reports that it will be able to formulate a plan and obtain the necessary permits.   The permits related to the number of drill sites, the location, and the extent of the drilling, as well as the expected disruption to the land and the necessary steps for reclaimation.




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In the future, if and when the company progresses to establishing a mining operation, in order to begin operating a mine, the company must have an approved plan of operations with the US Forest Service and/or BLM, an approved Air permit with the Colorado Department of Public Health and Environment, an approved water pollution control permit with the Colorado Department of Public Health and Environment, an approved and acceptable bond with the Colorado Department of Public Health and Environment and US Forest Service and/or BLM, any business license required by the relevant counties and must also abide by all Mine Safety and Health Agency regulations. The Colorado Division of Reclamation has permitting oversight on all reclamation plans. Since the minerals include some that may be radioactive, the company will also have to comply with the regulation of radioactive materials of the State of Colorado, which will be an added permitting process within the overall plan of operations for an operating mine.  Before the plan of operations will be filed, the company will have to arrange for a source of water, develop a water pollution control system, and develop an air pollution control system, in addition to all the other aspects of opening a mine for operations.


We must comply with the annual staking and patent maintenance requirements of the State of Colorado and the United States Bureau of Land Management, which included the payment of the annual renewal fee for each claim.  We must also comply with the filing requirements of our proposed exploration and development, including Notices of Intent and Plans of Operations.  In connection with our exploration and assessment activities, we have pursued necessary permits where exemptions have not been available although, to date, most of these activities have been done under various exemptions.  We will need to file for water use and other extractive-related permits in the future.


Employees


We currently employ one person, our chief executive officer Mr. Mitchell Geisler.  Mr. Geisler is employed without a written employment agreement.  Currently, Mr. Geisler does not draw a salary, and the company only reimburses him for his expenses.  Notwithstanding the current arrangement, the company may pay Mr. Geisler a salary or other compensation on a bonus basis in the future, in amounts determined in the discretion of the company or as negotiated with Mr. Geisler, which compensation may take the form of cash, stock issuances, employee options and promissory notes.


We do not have any other employees at this time. In the future, when we need other persons for aspects of the exploratory work and other functions, we will hire persons under service agreements as consultants, part-time and full time employees as necessary.  We do not have any arrangements for the hiring of any persons at this time.


Executive Offices


Our principal executive offices are located at 848 North Rainbow Blvd #2987, Las Vegas, Nevada 89107. Our telephone number is (416) 214-1483.


Overall Operating Results:


The company has had no revenues since inception (June 28, 2006) through September 30, 2012.


Operating expenses over that same time frame totaled $74,624. These expenses include various general and administrative costs of $19,285, professional fees of $50,220, and travel expenses of $5,119.


Liquidity and Capital Resources:


We do not currently have any working capital with which we can fund our future operations. We cannot assure that we will be able to continue our operations without adequate funding. We have total assets of $48,714 and total liabilities of $113,337 as of September 30, 2012. Total stockholder’s deficit at September 30, 2012 was $64,624.




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We will need capital for all aspects of our business development.  We initially will need $30,000 in capital to commence our business and exploration plan.  Expenses in phase one of our business development will include general operations, hiring geological and engineering experts for conducting historical research and mapping along with preliminary exploration activities. Further capital as will be identified by phase one of our plan will then be required for preparation and analysis of geological findings, core drillings where necessary, scientific testing of samples, among other things. We anticipate that the capital requirements for subsequent phases of the geological exploration will be in excess of $1,000,000.  Further, until there is a fuller assessment of the mining property, we cannot determine the capital requirements and our operating budgets, if it is decided to pursue full exploration and development. We also will be subject to environmental expenses in connection with these activities.  We will also have the expense of maintaining and defending our claims, and seeking further claims to be able to garner enough area to make our operations more viable once we have shown appropriate mineral deposits present in our claims, if at all.  After the first four phases of our exploration plan, we will need substantial capital to develop the claims, acquire plant and equipment and hire personnel.


We intend to seek equity forms of capital. We do not believe that debt financing is available to the company at this time, partly because we do not have any earnings with which to support debt service or maintain typical debt covenants. We have no arrangements for any capital at this time.  Additionally, equity capital for small companies generally and small companies in the mining and resources segment in particular, have a difficult time competing for investors because of the high risk at this stage of development and the fact that the investment is long term.  The market for the minerals that the company believes may be within its mining claims also influences investment decisions, such that if there is strong demand, then funds may be relatively more available, but if market demand is not strong or the price of the minerals declines, funding may be unavailable. Additionally, the capital demands of the oil and gas industries present competition for funds for companies in the junior mining segment.


We currently have borrowed $111,398 from our parent company, Pacific Gold Corp. This note is due on January 31, 2013. We anticipate that Pacific Gold Corp. will advance us further funds throughout 2012 in order to complete the first 4 phases of our exploration plan. These funds have been loaned interest free, and are convertible into shares of the Company at $0.05 per share. We expect further advances in 2012 to be on the same terms.


JOBS Act - Adoption of New and Revised Standards


The JOBS Act affords us the ability to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies.  This election, which we have made, is irrevocable.  The result of this election means that our financial statements may not be comparable to other public companies that comply with the accounting standards when effective.


Emerging Growth Company Status


We have elected to be treated as an “emerging growth company” under the federal securities laws and will be subject to reduced public company reporting requirements. In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We are choosing to take advantage of the extended transition period for complying with new or revised accounting standards.


Going Concern


Our financial statements include a statement that unless we obtain financing or generate revenues there is substantial doubt that we will be able to continue as a going concern.  We do not have any current prospects for obtaining financing and as part of our business plan we intend to seek operational capital to commence our exploration activities and maintain our operations.  We do not have any prospects for generating revenues within the near or longer-term future because we are in the exploration stage of a mining business.  Therefore, we may not be able to continue with our business plan and may have to curtail our operations and any early exploration activities.


To date, we have financed our operations from the issuance of non-interest bearing, demand notes to our parent corporation and an affiliated corporation.  We have not had any external sources of capital for our operations.


Off balance sheet arrangements:


The company has no off-balance sheet arrangements.




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New Accounting Pronouncements


Pacific Metals Corp. does not expect the adoption of recently issued accounting pronouncements to have a significant impact on Diagnostic Imaging’s results of operations, financial position, or cash flow.


ITEM 3 – QUANTITATIVE AND QUALITATIVE ANALYSIS OF MARKET RISKS


N/A


ITEM 4 – CONTROLS AND PROCEDURES


(a)

Evaluation of Disclosure Controls and Procedures.  We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) that are designed to ensure that information required to be disclosed in our periodic reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management and our board of directors, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired objectives, and management necessarily is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.


We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2012. This evaluation was carried out under the supervision and with the participation of our management, including our chief executive officer (who is also our principal financial and accounting officer). Based upon the evaluation, our chief executive officer concluded that our disclosure controls and procedures were not effective at the date of management’s evaluation through the date of this report.


(b)

Changes in Internal Controls. There was no change in the Company’s internal controls over financial reporting during our most recently completed fiscal quarter that has materially affected, or is reasonably likely to affect the Company’s internal control over financial reporting.


1.  As of September 30, 2012, we did not maintain effective controls over the control environment.  Specifically, the Board of Directors does not currently have any independent members and no director qualifies as an audit committee financial expert as defined in Item 207(d)(5)(ii) of Regulation S-B.  Since these entity level programs have a pervasive effect across the organization, management has determined that these circumstances constitute a material weakness.


2.  As of September 30, 2012, we did not maintain effective controls over financial statement disclosure. Specifically, controls were not designed and in place to ensure that all disclosures required were originally addressed in our financial statements. Accordingly, management has determined that this control deficiency constitutes a material weakness.


Management is evaluating our control environment and plans to make improvements to the quality of our controls. When changes are made to our control structure it will be disclosed in future filings.



PART II OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS


No Legal Proceedings


ITEM 1A. RISK FACTORS


N/A


ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS


During the quarter ended September 30, 2012, the Company issued 10,000,000 shares of common stock.



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ITEM 3. DEFAULTS UPON SENIOR SECURITIES


None


ITEM 4. MINE SAFETY DISCLOSURES


None


ITEM 5. OTHER INFORMATION


None


ITEM 6. EXHIBITS


EXHIBIT NUMBER

DESCRIPTION


31.1

Certification of Chief Executive Officer, pursuant to Rule 13a-14(a) of the Exchange Act, as enacted by Section 302 of the Sarbanes-Oxley Act of 2002. *


31.2

Certification of Chief Financial Officer, pursuant to Rule 13a-14(a) of the Exchange Act, as enacted by Section 302 of the Sarbanes-Oxley Act of 2002. *


32.1

Certification of Chief Executive Officer and Chief Financial Officer, pursuant to 18 United States Code Section 1350, as enacted by Section 906 of the Sarbanes-Oxley Act of 2002. *


*    Filed herewith





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SIGNATURES


Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this amendment to the registration statement on Form 10 to be signed on its behalf by the undersigned, thereunto duly authorized.


 

 

PACIFIC METALS CORP.

 

 

 

 

 

 

 

 

 

 

 

By: /s/  Mitchell Geisler

 

 

 

Mitchell Geisler,

 

 

 

Chief Executive Officer

 

 

 

 

 

 

 

Dated November 13, 2012

 




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