Banner Resources 10QSB 2008 Q3 Quarterly report (small business)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-QSB

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

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: December 31, 2007

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Commission file number: 000-51939

BANNER RESOURCES INC.

(Exact name of small business issuer as specified in its charter)

Nevada	98-0446606
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

206-595 Howe Street
Vancouver, British Columbia, Canada	V6C 2T5
(Address of principal executive offices)	(zip code)

Issuer's Telephone Number: (604) 681-2575

Check whether the issuer (1) 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 is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes x No o

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: As of February 14, 2008, there were 7,445,000 shares of common stock issued and outstanding.

Transitional Small Business Disclosure Format (check one)

Yes o No x

PART I - FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

The accompanying unaudited financial statements have been prepared in accordance with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B, and, therefore, do not include all information and footnotes necessary for a complete presentation of financial position, results of operations, cash flows, and stockholders’ equity in conformity with generally accepted accounting principles. 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 months and nine months ended December 31, 2007 are not necessarily indicative of the results that can be expected for the fiscal year ending March 31, 2008.

As used in this Quarterly Report, the terms “we”, “us”, “our”, “the Company” and “Banner” mean Banner Resources Inc., unless otherwise indicated. All dollar amounts in this Quarterly Report are in U.S. dollars unless otherwise stated.

Banner Resources Inc.

(An Exploration Stage Company)

December 31, 2007

Index

Consolidated Balance Sheets

F–1

Consolidated Statements of Operations

F–2

Consolidated Statements of Cash Flows

F–3

Notes to the Consolidated Financial Statements

F–4

Banner Resources Inc.

(An Exploration Stage Company)

Consolidated Balance Sheets

(Expressed in U.S. dollars)

(unaudited)

	December 31, 2007 $	March 31, 2007 $
ASSETS

Current Assets

Cash	2,266	61,254
Prepaid expenses	-	1,000

Total Assets	2,266	62,254


LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

Current Liabilities

Accounts payable	25,375	17,846
Accrued liabilities	1,969	610
Due to related parties (Note 4)	8,295	7,834
Loans payable (Note 5)	9,640	14,640

Total Liabilities	45,279	40,930

Contingencies and Commitments (Notes 1 and 3)

Stockholders’ Equity (Deficit)

Common Stock Authorized: 75,000,000 common shares, par value $0.001 Issued and outstanding: 7,445,000 shares	7,445	7,445

Additional Paid-in Capital	136,250	136,250

Donated Capital (Note 4(a))	37,266	23,766

Accumulated Other Comprehensive Loss	(3,236)	(200)

Deficit Accumulated During the Exploration Stage	(220,738)	(145,937)

Total Stockholders’ Equity (Deficit)	(43,013)	2 1,324

Total Liabilities and Stockholders’ Equity (Deficit)	2,266	62,254

The accompanying notes are an integral part of these interim consolidated financial statements

F-1

Banner Resources Inc.

(An Exploration Stage Company)

Consolidated Statements of Operations

(Expressed in U.S. dollars)

(unaudited)

	Accumulated From January 24, 2005 (Date of Inception) to December 31,	For the Three Months Ended December 31,	For the Three Months Ended December 31,	For the Nine Months Ended December 31,	For the Nine Months Ended December 31,
	2007	2007	2006	2007	2006
	$	$	$	$	$

Revenue	-	-	-	-	-


Expenses

General and administrative	19,742	1,838	897	7,010	961
Management fees (Note 4(a))	35,000	3,000	3,000	9,000	9,000
Mineral property costs	29,289	89	7,657	2,923	11,415
Rent (Note 4(a))	20,854	1,500	1,500	4,500	4,500
Professional services	115,853	21,477	8,422	51,368	25,489

Total Expenses	220,738	27,904	21,476	74,801	51,365

Net Loss	(220,738)	(27,904)	(21,476)	(74,801)	(51,365)

Other Comprehensive Loss

Foreign Currency Translation Adjustment	(3,236)	(144)	640	(3,036)	157

Comprehensive Loss	(223,974)	(28,048)	(20,836)	(77,837)	(51,208)


Net Loss Per Share – Basic and Diluted		-	-	(0.01)	(0.01)

Weighted Average Shares Outstanding		7,445,000	7,445,000	7,445,000	7,143,000

The accompanying notes are an integral part of these interim consolidated financial statements

F-2

Banner Resources Inc.

(An Exploration Stage Company)

Consolidated Statements of Cash Flows

(Expressed in U.S. dollars)

(unaudited)

	For the Nine Months Ended December 31,	For the Nine Months Ended December 31,
	2007	2006
	$	$

Operating Activities

Net loss for the period	(74,801)	(51,365)

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

Donated services	13,500	13,500

Changes in operating assets and liabilities:

Prepaid expenses	1,000	(1,000)
Accounts payable and accrued liabilities	8,888	5,104
Due to related parties	461	2,580

Net Cash Used in Operating Activities	(50,952)	(31,181)

Financing Activities

Repayment of loans payable	(5,000)	-
Proceeds received from issuance of common stock	-	100,000

Net Cash Provided By (Used In) Financing Activities	(5,000)	100,000

Effect of Exchange Rate Changes on Cash	(3,036)	157

Increase (Decrease) in Cash	(58,988)	68,976

Cash – Beginning of Period	61,254	6,383

Cash – End of Period	2,266	75,359


Supplemental Disclosures:

Interest paid	-	-
Income taxes paid	-	-

The accompanying notes are an integral part of these interim consolidated financial statements

F-3

Banner Resources Inc.

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

(Expressed in U.S. dollars)

(unaudited)

Exploration Stage Company

Banner Resources (“the Company”) was incorporated in the State of Nevada on January 24, 2005. The Company is an Exploration Stage Company, as defined by Statement of Financial Accounting Standard (“SFAS”) No.7 “Accounting and Reporting by Development Stage Enterprises”. The Company’s principal business is the acquisition and exploration of mineral resources. The Company does not currently have any property interests, as explained in Note 3.

These consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has never generated revenue and has never paid any dividends and is unlikely to pay dividends or generate earnings in the immediate or foreseeable future. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to obtain necessary equity financing to continue operations and to determine the existence, discovery and successful exploitation of economically recoverable reserves in resource properties, confirmation of the Company’s interests in the underlying properties, and the attainment of profitable operations. As at December 31, 2007, the Company has a working capital deficit of $43,013 and accumulated losses of $220,738 since inception. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern.

Summary of Significant Accounting Policies

a) Basis of Presentation

These consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States, and are expressed in US dollars. These consolidated financial statements include accounts of the Company and its wholly-owned subsidiary, Banner Exploration Limited, a company incorporated in the Province of British Columbia, Canada, on January 26, 2005. All intercompany transactions and balances have been eliminated upon consolidation. The Company’s fiscal year end is March 31.

b) Interim Consolidated Financial Statements

The unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions for Securities and Exchange Commission (“SEC”) Form 10-QSB. They do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. Therefore, these interim consolidated financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto for the year ended March 31, 2007, and Auditor's Report dated June 12, 2007, included in the Company’s Annual Report on Form 10-KSB filed with the SEC on July 2, 2007.

The interim consolidated financial statements included herein are unaudited; however, they contain all normal recurring accruals and adjustments that, in the opinion of management, are necessary to present fairly the Company’s financial position at December 31, 2007, and the results of its operations and cash flows for the nine months ended December 31, 2007 and 2006. The results of operations for the nine months ended December 31, 2007 are not necessarily indicative of the results to be expected for future quarters or the full year.

c) Use of Estimates

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

F- 4

Banner Resources Inc.

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

(Expressed in U.S. dollars)

(unaudited)

Summary of Significant Accounting Policies (continued)

d) Cash and Cash Equivalents

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

e) Basic and Diluted Net Income (Loss) Per Share

The Company computes net income (loss) per share in accordance with SFAS No. 128, "Earnings per Share" (SFAS 128). SFAS 128 requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period including stock options, using the treasury stock method, and convertible preferred stock, using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. As at December 31, 2007, there are no dilutive potential common shares.

f) Financial Instruments

The fair values of cash, accounts payable, accrued liabilities, amounts due to related parties, and loans payable approximate their carrying values due to the immediate or short-term maturity of these financial instruments.

g) Foreign Currency Transactions/Balances

The Company’s functional currency is the United States dollar. The financial statements of the Company are translated to United States dollars in accordance with SFAS No. 52 “Foreign Currency Translation” (“SFAS No. 52). Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of income. Foreign currency transactions are primarily undertaken in Canadian dollars. The Company has not, to the date of these financials statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.

The functional currency of the wholly-owned subsidiary is the Canadian dollar. The financial statements of the subsidiary are translated to United States dollars in accordance with SFAS No. 52 using period-end rates of exchange for assets and liabilities, and average rates of exchange for the year for revenues and expenses. Translation gains (losses) are recorded in accumulated other comprehensive income (loss) as a component of stockholders’ equity. Foreign currency transaction gains and losses are included in current operations.

h) Mineral Property Costs

The Company has been in the exploration stage since its inception on January 24, 2005, and has not yet realized any revenues from its planned operations. It is primarily engaged in the acquisition and exploration of mining properties. Mineral property exploration costs are expensed as incurred. Mineral property acquisition costs are capitalized in accordance with EITF 04-2 “Whether Mineral Rights Are Tangible or Intangible Assets” when management has determined that probable future benefits consisting of a contribution to future cash inflows have been identified and adequate financial resources are available or are expected to be available as required to meet the terms of property acquisition and budgeted exploration and development expenditures. Mineral property acquisition costs are expensed as incurred if the criteria for capitalization are not met. In the event that a mineral property is acquired through the issuance of the Company’s shares, the mineral property will be recorded at the fair value of the respective property or the fair value of common shares, whichever is more readily determinable.

When mineral properties are acquired under option agreements with future acquisition payments to be made at the sole discretion of the Company, those future payments, whether in cash or shares, are recorded only when the Company has made or is obliged to make the payment or issue the shares. Because option payments do not meet the definition of tangible property under EITF 04-2, all option payments are expensed as incurred.

When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves and pre feasibility, the costs incurred to develop such property are capitalized.

F- 5

Banner Resources Inc.

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

(Expressed in U.S. dollars)

(unaudited)

Summary of Significant Accounting Policies (continued)

h) Mineral Property Costs (continued)

Estimated future removal and site restoration costs, when determinable are provided over the life of proven reserves on a units-of-production basis. Costs, which include production equipment removal and environmental remediation, are estimated each period by management based on current regulations, actual expenses incurred, and technology and industry standards. Any charge is included in exploration expense or the provision for depletion and depreciation during the period and the actual restoration expenditures are charged to the accumulated provision amounts as incurred.

As of the date of these interim consolidated financial statements, the Company has incurred only acquisition and exploration costs which have been expensed.

To date, the Company has not established any proven or probable reserves on its mineral properties.

i) Comprehensive Loss

SFAS No. 130, “Reporting Comprehensive Income” establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at December 31, 2007 and March 31, 2007, the Company’s only component of comprehensive loss was foreign currency translation adjustments.

j) Income Taxes

Potential benefits of income tax losses are not recognized in the accounts until realization is more likely than not. The Company has adopted SFAS No. 109 “Accounting for Income Taxes” as of its inception. Pursuant to SFAS No. 109 the Company is required to compute tax asset benefits for net operating losses carried forward. Potential benefit of net operating losses have not been recognized in these financial statements because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years.

k) Donated Services

The Company recognizes professional services donated to the Company based upon their fair value. During the nine-month period ended December 31, 2007, the Company recognized donated management services of $9,000 (2006 - $9,000), and donated rent of $4,500 (2006 - $4,500).

l) Stock-based Compensation

The Company records stock-based compensation in accordance with SFAS No. 123R “Share Based Payments”, using the fair value method. The Company has not issued any stock options since its inception.

m) Recently Issued Accounting Pronouncements

In December 2007, the FASB issued SFAS No. 141R, “Business Combinations”. This statement replaces SFAS 141 and defines the acquirer in a business combination as the entity that obtains control of one or more businesses in a business combination and establishes the acquisition date as the date that the acquirer achieves control. SFAS 141R requires an acquirer to recognize the assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree at the acquisition date, measured at their fair values as of that date. SFAS 141R also requires the acquirer to recognize contingent consideration at the acquisition date, measured at its fair value at that date. This statement is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008 and earlier adoption is prohibited. The adoption of this statement is not expected to have a material effect on the Company's financial statements.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements Liabilities –an Amendment of ARB No. 51”. This statement amends ARB 51 to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. This statement is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008 and earlier adoption is prohibited. The adoption of this statement is not expected to have a material effect on the Company's financial statements.

F- 6

Banner Resources Inc.

(An Exploration Stage Company)

Notes to the Consolidated Financial Statements

(Expressed in U.S. dollars)

(unaudited)

Summary of Significant Accounting Policies (continued)

m) Recently Adopted Accounting Pronouncements (continued)

In February 2007, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities – Including an Amendment of FASB Statement No. 115”. This statement permits entities to choose to measure many financial instruments and certain other items at fair value. Most of the provisions of SFAS No. 159 apply only to entities that elect the fair value option. However, the amendment to SFAS No. 115 “Accounting for Certain Investments in Debt and Equity Securities” applies to all entities with available-for-sale and trading securities. SFAS No. 159 is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. Early adoption is permitted as of the beginning of a fiscal year that begins on or before November 15, 2007, provided the entity also elects to apply the provision of SFAS No. 157, “Fair Value Measurements”. The adoption of this statement did not have a material effect on the Company's financial statements.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements”. The objective of SFAS No. 157 is to increase consistency and comparability in fair value measurements and to expand disclosures about fair value measurements. SFAS No. 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. SFAS No. 157 applies under other accounting pronouncements that require or permit fair value measurements and does not require any new fair value measurements. The provisions of SFAS No. 157 are effective for fair value measurements made in fiscal years beginning after November 15, 2007. The adoption of this statement did not have a material effect on the Company's future reported financial position or results of operations.

Mineral Property

On February 1, 2005, the Company acquired a 100% interest in seven mineral claims consisting of 70 mineral claim units located in Clinton Mining Division, British Columbia, Canada, in consideration for the issuance of 320,000 common shares at a fair value price of $0.001 per share or $320 in total. The fair value of these common shares was determined to be $0.001 per share based on the cash sale of common stock on February 28, 2005 being the closest date shares were issued. The purchase price of $320 was charged to operations as mineral property costs as proven or probable reserves have not been established on the mineral property. In order to maintain the Chita claims in good standing, the Company was required to make minimum expenditures on the claims or pay renewal fees. The Company maintained the Chita claims through July 31, 2007. On July 31, 2007, we attempted to pay the renewal fees prior to the expiration on the B.C. Ministry of Energy and Mines – Mineral Titles Online system; however, due to technical problems, the system was not available to process payments. Section 35(1) of the Mineral Tenure Act operates such that a mineral or placer claim forfeits automatically when exploration and development work or payment instead of work has not been registered by the end of the expiry date of the claim. We have been informed that this statutory provision is not set aside due to the unavailability of Mineral Titles Online system and our claims expired. We will be filing a lawsuit against the Ministry of Energy, Mines and Petroleum Resources, Her Majesty the Queen in Right of the Province of British Columbia, Mineral Titles Branch, Mineral Titles Online and the Chief Gold Commissioner for the Province of British Columbia and for the loss of our assets and the Banner Claims as they were subsequently claimed by another party. The Chita claims were registered in the name of our wholly owned subsidiary, Banner Exploration Ltd.

Related Party Transactions

During the nine-month period ended December 31, 2007, the Company recognized a total of $9,000 (2006– $9,000) for donated services at $1,000 per month and $4,500 (2006 –$4,500) for donated rent at $500 per month provided by the President of the Company.

As at December 31, 2007, the Company has an amount owing of $5,231 (March 31, 2007 - $5,231) to the former President of the Company for rent and management services incurred on behalf of the Company. The amount is non-interest bearing, unsecured, and due on demand.

As at December 31, 2007, the Company has an amount owing of $3,064 (March 31, 2007 - $2,603) to directors of the Company for expenses incurred on behalf of the Company. The amount is non-interest bearing, unsecured, and due on demand.

Loans Payable

As at December 31, 2007, the Company has $9,640 (March 31, 2007 - $14,640) of outstanding loans payable. These loans are unsecured, non-interest bearing, and due on demand.

F- 7

FORWARD LOOKING STATEMENTS

Certain statements contained in this Quarterly Report on Form 10-QSB constitute “forward-looking statements”. These statements, identified by words such as “plan”, “anticipate”, “believe”, “estimate”, “should,” “expect” and similar expressions include our expectations and objectives regarding our future financial position, operating results and business strategy. These statements reflect the current views of management with respect to future events and are subject to risks, uncertainties and other factors that may cause our actual results, performance or achievements, or industry results, to be materially different from those described in the forward-looking statements. Information concerning the interpretation of drill results and mineral resource estimates also may be deemed to be forward-looking statements, as such information constitutes a prediction of what mineralization might be found to be present if and when a project is actually developed. You are cautioned that any such forward-looking statements are not guarantees and may involve risks and uncertainties. Our actual results may differ materially from those in the forward-looking statements due to risks facing us or due to actual facts differing from the assumptions underlying our predictions. Some of these risks and assumptions include:

•

general economic and business conditions, including changes in interest rates, fluctuations in the prices for base metals, fluctuations in prices for securities in the resource sector, demand for base metals and other economic and business conditions;

•

natural phenomena or disasters that may affect completion of drill programs, exploration work, completion of feasibility studies or development, if warranted;

•

actions by government authorities, including changes in government regulation, permitting requirements or environmental legislation;

•

the Company’s ability to raise sufficient financing to complete its planned exploration work on its properties and to place its properties into development, if warranted;

•

future decisions by management in response to changing conditions, and

•

misjudgments, inaccurate assumptions or changes in conditions related to forward-looking statements.

Certain risks and uncertainties include those set forth under the caption “Management’s Discussion and Analysis or Plan of Operation” and elsewhere in this Form 10-QSB. We advise you to carefully review the reports and documents we file from time to time with the Securities and Exchange Commission (the “SEC”), particularly our annual reports on Form 10-KSB and our current reports on Form 8-K.

We advise you that these cautionary remarks expressly qualify in their entirety all forward-looking statements attributable to us or persons acting on our behalf. The Company assumes no obligation to update its forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting such statements. You should not place undue reliance on such forward-looking statements.

As used in this Annual Report, the terms “we”, “us”, “our”, “Banner Resources” and the “Company” mean Banner Resources, Inc., unless otherwise indicated. All dollar amounts in this Annual Report are expressed in U.S. dollars unless otherwise indicated.

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Overview

Banner Resources Inc. was incorporated under the laws of the state of Nevada on January 24, 2005. We have commenced limited business operations and we are considered an exploration stage company.

stock on February 28, 2005 being the closest date shares were issued. The purchase price of $320 was charged to operations as mineral property costs as proven or probable reserves have not been established on the mineral property. In order to maintain the Chita claims in good standing, the Company was required to make minimum expenditures on the claims or pay renewal fees. The Company maintained the Chita claims through July 31, 2007. On July 31, 2007, we attempted to pay the renewal fees prior to the expiration on the B.C. Ministry of Energy and Mines – Mineral Titles Online system; however, due to technical problems, the system was not available to process payments. Section 35(1) of the Mineral Tenure Act operates such that a mineral or placer claim forfeits automatically when exploration and development work or payment instead of work has not been registered by the end of the expiry date of the claim. We have been informed that this statutory provision is not set aside due to the unavailability of Mineral Titles Online system and our claims expired. We will be filing a lawsuit against the Ministry of Energy, Mines and Petroleum Resources, Her Majesty the Queen in Right of the Province of British Columbia, Mineral Titles Branch, Mineral Titles Online and The Chief Gold Commissioner for the Province of British Columbia for the loss of our assets and the Chita claims as they were subsequently claimed by another party. The Chita claims were registered in the name of our wholly owned subsidiary, Banner Exploration Ltd.

During our present exploration stage, Mr. Krause, our president and secretary-treasurer, will only be devoting approximately 8 hours per week of his time to our business. We do not foresee this limited involvement as negatively impacting our company over the next 12 months as all exploratory work is being performed by an outside consultant. If, however, the demands of our business require more time of Mr. Krause, such as raising additional capital or addressing unforeseen issues with regard to our exploration efforts, he is prepared to adjust his timetables to devote more time to our business. However, he may not be able to devote sufficient time to the management of our business, as and when needed.

We are actively reviewing additional natural resources properties in Canada, USA and Africa. We are also exploring opportunities in other industries including the technology sector, biotechnology and communications. However, we have no current plans, arrangements or intentions to acquire any specific property or to pursue any potential business opportunity. We have no current plans, arrangements or intentions to enter into a joint venture with any specific party. However, we are always open to speak to third parties to explore business opportunities.

Our principal office is located at 206 - 595 Howe Street, Vancouver, British Columbia, V6C 2T5, and our phone number is (604) 681-2575.

Plan of Operation

Our current business plan is to acquire exploration stage resource properties or other projects our board of directors may determine are commercially viable. We currently have no property interests.

If we acquire exploration stage properties, we will have to engage qualified geologists to conduct the mineral exploration program under industry standards. We anticipate that they will be responsible for hiring personnel and for all appropriate worker-related costs and will bill us for their services. This work is applicable to assessment requirements for the claims.

We may also explore other business opportunities in other industries, including technology, biotechnology, communications and manufacturing, although we have no current plans to do so.

On December 31, 2007, we had cash on hand of $2,266 and a working capital deficit of $43,013. Current liabilities at December 31, 2007 were $45,279, which included (1) unsecured loans payable to two shareholders of $9,640, (2) $5,231 payable to a former officer and director for rent and management services and (3) $3,064 to directors of the Company for expenses incurred on behalf of the Company.

During the nine-month period ended December 31, 2007, we recognized a total of $9,000 for services and a total of $4,500 for rent donated by Robert Krause, our President and Treasurer. We anticipate that Mr. Krause will continue to donate services and rent until we have sufficient working capital to pay his salary and rent. We do not have sufficient funds to satisfy our on-going working capital requirements for the fiscal year ending March 31, 2008.

We anticipate that we will be required to raise additional financing during the fiscal year ending March 31, 2008 to fund our on-going working capital requirements.

We are currently evaluating our options for acquiring exploration properties or other commercial opportunities, which will require us to raise additional capital beyond our working capital requirements.

We are presently exploring opportunities to raise additional funding in the form of equity or debt. However, we cannot provide investors with any assurance that we will be able to raise sufficient funding from the sale of our common stock to fund properties acquisitions or to pursue new business opportunities. We do not have any arrangements in place for any future equity financing.

We anticipate that we will incur the following expenses over the next 12 months:

(1)

$15,000 in connection with due diligence and examination of new properties and business opportunities depending on our ability to raise additional financing; and

(2)

$60,000 for operating and administrative expenses.

We do not have plans to purchase any significant equipment or change the number of our employees during the next 12 months. We may also pursue business opportunities in other industries or acquire other properties although we have no current plans or arrangements to do so.

Results of Operations for the Quarter and Nine Months Ending on December 31, 2007

During the quarter ended December 31, 2007, we had total expenses of $27,904 ($21,476 – 2006), which included management fees of $3,000 ($3,000 - 2006), rent of $1,500 ($1,500 – 2006), professional service fees of $21,477 ($8,422 – 2006), mineral property costs of $89 ($7,657 – 2006) and general and administrative expenses of $1,838 ($897 – 2006). Total expenses increased by $6,428 from $21,476 for the quarter ended December 31, 2006 to $27,904 for the quarter ended December 31, 2007, due primarily to our SEC reporting obligations and legal, accounting and auditing expenses. We anticipate total expenses to increase during the remainder of the fiscal year ending March 31, 2008.

During the quarter ended December 31, 2007, we had a comprehensive loss of $27,904, compared to $21,476 for the same period in 2006. During the nine month period ending December 31, 2007, we had a net loss of $74,801 compared to $51,365 for the same period in 2006.

We have not attained profitable operations and are dependent upon obtaining financing to pursue acquisition activities. For these reasons our auditors stated in their report that they have substantial doubt we will be able to continue as a going concern.

Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Contractual Obligations

As of December 31, 2007, we had no non-cancelable contractual obligations.

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in conformity with generally accepted accounting principles requires our management to make estimates and assumptions that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Our management routinely makes judgments and estimates about the effects of matters that are inherently uncertain.

We have identified certain accounting policies, described below, that are most important to the portrayal of our current financial condition and results of operations. Our significant accounting policies are disclosed in Note 2 to the financial statements included in this Quarterly Report.

Exploration Stage Enterprise

The Company’s financial statements are prepared using the accrual method of accounting and according to the provisions of Statement of Financial Accounting Standards No. 7 (“SFAS 7”), “Accounting and Reporting for Development Stage Enterprises”, as it devotes substantially all of its efforts to acquiring and exploring mineral properties. Until such properties are acquired and developed, the Company will continue to prepare its financial statements and related disclosures in accordance with entities in the exploration stage.

Mineral Property Costs

The Company has been in the exploration stage since its inception on January 24, 2005, and has not yet realized any revenues from its planned operations. It is primarily engaged in the acquisition and exploration of mining properties. Mineral property exploration costs are expensed as incurred. Mineral property acquisition costs are capitalized in accordance with EITF 04-2 “Whether Mineral Rights Are Tangible or Intangible Assets” when management has determined that probable future benefits consisting of a contribution to future cash inflows have been identified and adequate financial resources are available or are expected to be available as required to meet the terms of property acquisition and budgeted exploration and development expenditures. Mineral property acquisition costs are expensed as incurred if the criteria for capitalization are not met. In the event that a mineral property is acquired through the issuance of the Company’s shares, the mineral property will be recorded at the fair value of the respective property or the fair value of common shares, whichever is more readily determinable.

As of the date of the interim consolidated financial statements, the Company has incurred only acquisition and exploration costs which have been expensed.

To date, the Company has not established any proven or probable reserves on its mineral properties.

Use of Estimates

related to valuation of long-lived assets, donated services, stock based compensation and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected.

ITEM 3. CONTROLS AND PROCEDURES

We maintain disclosure controls and procedures designed to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the specified time periods. As of the end of the period covered by this report, our principal executive officer and principal financial officer evaluated the effectiveness of our disclosure controls and procedures. Based on the evaluation, which disclosed no significant deficiencies or material weaknesses, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures are effective and that our disclosure controls and procedures were adequately designed and are effective to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in applicable rules and forms. In addition, our principal executive officer and principal financial officer have determined that the disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports that are filed under the Exchange Act are accumulated and communicated to management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure.

There were no changes in our internal control over financial reporting (as defined in Rule 13(a)-15(f) or 15(d)-15(f)) that occurred during the Company’s the period covered by this quarterly report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

On February 1, 2005, the Company acquired a 100% interest in seven mineral claims consisting of 70 mineral claim units located in Clinton Mining Division, British Columbia, Canada (the “Chita claims”), in consideration for the issuance of 320,000 common shares at a fair value price of $0.001 per share or $320 in total. The fair value of these common shares was determined to be $0.001 per share based on the cash sale of common stock on February 28, 2005 being the closest date shares were issued. The purchase price of $320 was charged to operations as mineral property costs as proven or probable reserves have not been established on the mineral property. In order to maintain the Chita claims in good standing, the Company was required to make minimum expenditures on the claims or pay renewal fees. The Company maintained the Chita claims through July 31, 2007. On July 31, 2007, we attempted to pay the renewal fees prior to the expiration on the B.C. Ministry of Energy and Mines – Mineral Titles Online system; however, due to technical problems, the system was not available to process payments. Section 35(1) of the Mineral Tenure Act operates such that a mineral or placer claim forfeits automatically when exploration and development work or payment instead of work has not been registered by the end of the expiry date of the claim. We have been informed that this statutory provision is not set aside due to the unavailability of Mineral Titles Online system and our claims expired. We will be filing a lawsuit against the Ministry of Energy, Mines and Petroleum Resources, Her Majesty the Queen in Right of the Province of British Columbia, Mineral Titles Branch, Mineral Titles Online and The Chief Gold Commissioner for the Province of British Columbia for the loss of our assets and the Chita claims as they were subsequently claimed by another party. The Chita claims were registered in the name of our wholly owned subsidiary, Banner Exploration Ltd.

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

None.

ITEM 3. DEFAULT UPON SENIOR SECURITIES

None.

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

None.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Exhibit 32.1 Certification of Robert Krause, President and Treasurer, of Banner Resources Inc., pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Exhibit 32.1 Certification of Robert Krause, President and Treasurer, of Banner Resources Inc., pursuant to 18 U.S.C. 1350.

SIGNATURES

In accordance with the Securities Exchange Act of 1934, as amended, this annual report has been signed below by the following persons on behalf of the Company and in the capacities and on the dates indicated.

Date: February 19, 2008

BANNER RESOURCES, INC.

By: /s/ Robert Krause
Robert Krause
President and Treasurer
(Principal Executive Officer and Principal Financial and Accounting Officer)

Banner Resources Inactive 10QSB2008 Q3 Quarterly report (small business)