ParaFin (PFNO) 10QSB 2007 Q1 Quarterly report (small business)

U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

FORM 10-QSB

(Mark One)x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED March 31, 2007

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ______________ TO ______________

COMMISSION FILE NUMBER: 0-9071

PARAFIN CORPORATION

(Exact name of Registrant as specified in its charter)

Nevada 74-2026624

(State or jurisdiction of incorporation (I.R.S. Employer

or organization) Identification No.)

5190 Neil Road, Suite 430Reno, Nevada 89502

(Address of principal executive offices)(Zip Code)

Registrant’s telephone number: (877) 613-3131

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

Securities registered pursuant to Section 12(g) of the Act: Common Stock, $0.001 Par Value

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) been subject to such filing requirements for the past 90 days. Yes X No .

As of March 31, 2007, the Registrant had 116,338,152 shares of common stock issued and outstanding.

Transitional Small Business Disclosure Format (check one): Yes No X .

TABLE OF CONTENTS
PART I – FINANCIAL INFORMATION	PAGE
Item 1. FINANCIAL STATEMENTS
BALANCE SHEET AS OF March 31, 2007	3
STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND SIX MONTHS ENDED
March 31, 2006 AND March 31, 2007	4
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED
March 31, 2006 AND March 31, 2007	5
NOTES TO FINANCIAL STATEMENTS	6
ITEM 2. PLAN OF OPERATION	9
ITEM 3. CONTROLS AND PROCEDURES	17
PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS	18
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	18
ITEM 3. DEFAULTS UPON SENIOR SECURITIES	18
ITEM 4. SUBMISSION OF MATTERS TO A VOTE
OF SECURITY HOLDERS	19
ITEM 5. OTHER INFORMATION	19
ITEM 6. EXHIBITS	19
SIGNATURES	20

CERTIFICATIONS 21

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PART I – FINANCIAL INFORMATION

ITEM 1. FINANCAL STATEMENTS.

PARAFIN CORPORATION
(A Development Stage Company)
BALANCE SHEET
March 31, 2007
(Unaudited)
ASSETS
Intangible Assets:
Personal computer Environment Work Station (at cost)		$6,059,522
Total Assets		$6,059,522
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Debenture Payable - JRM Financial Services Inc.		$164,478
Accounts Payable	0
		$164,478
Shareholders' Equity:
Common Stock, $0.001 par value
1,990,000,000 common shares authorized,
116,338,152 issued and outstanding		116,338
Preferred Stock - 10,000,000 authorized, none issued		0
Paid-In-Capital (in excess of par value)		50,465,185
Accumulated Deficit		(44,686,449)
Shareholders' Equity:		5,895,074
Total Liabilities & Shareholders' Equity		$ 6,059,522

The accompanying notes are an integral part of these financial statements

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PARAFIN CORPORATION

(A Development Stage Company)

		STATEMENTS OF OPERATIONS
	From Inception (October 3,1978) To March 32, 2007	Three Months Ended March 31,		Six Months Ended March 31,
		2006	2007	2006	2007
REVENUES:	$0	$0	$0	$0	$0
EXPENSES:
Options Granted for services by Non- employees/related parties	4,500,000	0	0	0	0
Employee Retention Expense	1,545,000	0	0	0	1,545,000
Professional Fees	323,055	18,500	21,100	37,700	39,100
Consulting and Management Fees	27,513,157	191,000	186,000	377,000	1,402,000
Internet Web Design	250,000	0	0	0	0
Transfer and Filing Fees	157,869	6,267	7,285	9,667	9,447
Amortization	8,143,848	0	0	0	0
Depreciation	534,886	0	0	0	0
Total General and Administrative Expenses	42,967,815	235,767	214,385	444,367	2,995,547
Net (Loss) Before Other Income (Expense)	(42,967,815)	(235,767)	(214,385)	(444,637)	(2,995,547)
OTHER INCOME AND (EXPENSES):
Interest Expense	(1,800,641)	(18,785)	(14,951)	(30,664)	(27,473)
Forgiveness of Debt	82,007	0	0	0	0
Total Other (Income) And Expenses	(1,718,634)	(18,785)	(14,951)	(30,664)	(27,473)
NET INCOME (LOSS)	($44,686,449)	($254,552)	($229,336)	($475,031)	($3,023,020)
Basic Diluted Earnings (Loss) Per Share	N/A	($0.01)	$0.00	($0.02)	($0.03)
Weighted Average Shares Outstanding Basic and Diluted	N/A	52,338,152	108,030,460	28,639,064	99,453,537

The accompanying notes are an integral part of these financial statements

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PARAFIN CORPORATION
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)
	For The Six Months Ended			From Inception
		March 31, 2007	March 31, 2006	Oct. 3, 1978 to March 31, 2007
Cash Flows From Operating Activities:
Net Loss for the period		$ (3,023,020)	$ (475,031)	$ (44,686,449)
Adjustments to reconcile net (loss) to
cash (loss):
From Operating Activities:
Stock Compensation		2,575,000	5,000	11,605,000
Amortization		0	0	8,143,848
Depreciation		0	0	534,886
Increase in Deposits		0	(135,000)	0
Increase (Decrease) in accounts payable		(2,553)	2,687	0
Net cash used in operating activities		(450,573)	(602,344)	(24,402,715)
Cash Flows From Financing Activities:
Acquisition of Fixed Assets		0	0	(534,886)
Acquisition of Other Assets		0	(6,000,000)	(14,203,400)
Net Cash Used in Investing Activities		0	0	(14,738,286)
Cash Flows From Financing Activities:
Proceeds from JRM Financial
Services Inc.		450,573	467,344	5,579,478
Payments to JRM Financial Services Inc.		(600,000)	(750,000)	(5,415,000)
Issuance of common stock		600,000	6,885,000	38,976,523
Net cash provided by financing activities		450,573	6,602,344	39,141,001
Net Increase (Decrease) in Cash		0	0	0
Beginning Cash Balance		0	0	0
Ending Cash Balance		$0	$0	$0

The accompanying notes are an integral part of these financial statements.

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PARAFIN CORPORATION

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

March 31, 2007

(Unaudited)

NOTE 1 - BASIS OF PRESENTATION

The accompanying consolidated financial statements of Parafin Corporation, a Nevada corporation (“Company”), have been prepared in accordance with Securities and Exchange Commission (“SEC”) requirements for interim financial statements. Therefore, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The financial statements should be read in conjunction with the year ended September 30, 2006 financial statements of the Company included in the Form 10-KSB filed with the SEC by the Company.

The results of operations for the interim periods shown in this report are not necessarily indicative of results to be expected for the full year. In the opinion of management, the information contained herein reflects all adjustments necessary to make the results of operations for the interim periods a fair statement of such operations. All such adjustments are of a normal recurring nature. The Company is considered a development stage company as it has not generated revenues from its operations.

NOTE 2 - RELATED PARTY TRANSACTIONS

Due to related parties at March 31, 2007 consist of the following:

Advances payable to an entity controlled by a

major shareholder of the company represent advances,

secured with floating debenture and due on demand $164,478

Total due to related parties $164,478

NOTE 3 - GOING CONCERN

As shown in the accompanying interim financial statements, the Company has incurred a net loss of $3,023,020 for the six months ended March 31, 2007. As of March 31, 2007, the Company reported an accumulated deficit of $44,686,449. The Company’s ability to generate net income and positive cash flows is dependent on the ability to develop its business while reducing operating costs, as well as the ability to raise additional capital. Management is following strategic plans to accomplish these objectives, but success is not guaranteed. As of March 31, 2007, these factors raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments to reflect the possible future effects on the

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PARAFIN CORPORATION

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

March 31, 2007

(Unaudited)

NOTE 3 (CON’T.)

recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.

NOTE 4 - HYDROCARBON EXPLORATION

Parafin signed a Farmout Agreement on May 1, 2007 with Meta Petroleum Ltd. (Meta) to acquire a 50% working interest in a Hydrocarbon Concession and operating oil field in the Republic of Columbia, South America.

The Concession consists of approximately 7,000 hectares. It currently has four (4) producing wells with the potential for up to an additional twenty-seven (27) offset locations.

The Agreement requires ParaFin to pay 100% of all costs associated with the drilling, completing, equiping or abandoning the next four (4) wells to be drilled on the Concession. In addition, 100% of the revenue from the current four (4) wells will continue to be paid to the trustee for Meta until the said additional four (4) wells have been drilled, thereafter revenues from all wells shall be divided equally.

After the said four (4) wells have been drilled and completed (or abandoned) ParaFin shall have earned a 50% working interest in the Concession and Meta shall immediately assign 50% of the Concession to ParaFin. The Parties have also agreed to execute a standard “Joint Operating Agreement” (JOA) to administer the development and drilling of the remaining offset locations.

On December 6, 2004 the Company signed a Farmout Agreement and potentially acquired an 80% interest in a license to explore the 2,456,452 hectares (approximately 5,986,000 acres) in the Alto Parana Block, Alto Parana Province, Paraguay. Details of the acquisition are contained in a Farmout Agreement as filed on Form 8-K with the SEC. The acquisition is pending approval of the Paraguay government. In connection with the acquisition the Company engaged a consultant who will be compensated in 5,000,000 shares of Company stock payable in installments as work proceeds.

NOTE 5 - EXPENSE AGREEMENT

Effective April 1, 2005 the Company signed a new agreement with JRM Financial Services Inc. (JRM), an entity controlled by a majority shareholder of the Company. Under the new agreement, JRM, in consideration for $62,000 per month, will pay all expenses of the Company except professional legal and accounting fees, transfer agent fees and extraordinary expenditures. Typical expenditures included under the agreement are management fees, rent, telephone, travel and promotion and auto expenses. The accompanying statement of operations has been reclassified to record the expenses in accordance with the new agreement.

NOTE 6 - FUNDING CONCENTRATION

Monies raised to pay down the debenture have been provided by the private placement sale of restricted stock through an investment banker.

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PARAFIN CORPORATION

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

March 31, 2007

(Unaudited)

(CON’T.)

NOTE 7 - INCOME TAXES

The Company has net operating losses (NOL) carryforwards of approximately $21,000,000. NOL’s can be carried forward 15 years for losses prior to August 6, 1997; 20 years for losses after August 6, 1997. Because of the uncertainty that the NOL will ever be used the Company has provided an allowance for the entire NOL.

NOTE 8 - SHARE CAPITAL

The authorized share capital was increased to 2,000,000,000 Shares consisting of 1,990,000,000

Common and 10,000,000 Preferred in April, 2006. The Corporation issued 12 million Reg. “S”, 144 restricted common shares under a Reg. “S” offering for consideration of $600,000 by way of Private Placement.

NOTE 9 - ACQUISITION

On March 31, 2006, Parafin Corporation acquired 100% of the proprietary technology of the Personal Computer Environment work station developed by PCE Computers, Inc. (PCE). This acquisition shall include all Patents, Patents Pending, internet web sites and e-Mail addresses, Intellectual Properties and all Development Concepts owned by PCE. Parafin paid US$6,000,000 for 100% of the proprietary technology of the Personal Computer Environment work station developed by P--CE Computers, Inc. (PCE).

NOTE 10 - AGREEMENT

On April 20, 2006, the Registrant entered into a one year consulting agreement (the “Consulting Agreement”) with Francisco Saez relating to Mr. Saez attempting to secure REBCO ( Russian Export Blend Crude Oil) contracts for the Registrant in the Russian Federation. The Consulting Agreement provides for Mr. Saez to be compensated through the issuance of 10,000,000 shares of the Registrant’s common stock upon execution and an additional 10,000,000 shares of each 10,000,000 barrels of oil delivered pursuant to contracts introduced and arranged by Mr. Saez up to 100,000,000 barrels of crude oil. The Consulting Agreement provides that the common stock to be issued to Mr. Saez will be issued pursuant to the Registrant’s existing stock plans and pursuant to a Registration Statement on Form S-8. The Consulting Agreement further required that Mr. Saez advise the Registrant of the feasibility of delivery of the crude oil to proposed vendees. The Consulting Agreement provides that all crude oil contracts are to be arranged by Mr. Saez and accepted by the Company. When the REBCO is sold ParaFin has the right to retain US$5 per barrel less selling costs.

On June 20^th, 2006, and approved by the Board of Directors on July 12^th, 2006, ParaFin Corporation (the Company) signed an Agreement directly with OY Coral Marine Management, Ltd. a company organized under the laws of Finland (“OY Coral (thePurchaser)). The Company

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PARAFIN CORPORATION

(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

March 31, 2007

(Unaudited)

NOTE 10 (CON’T.)

executed an “Oil and Share Purchase Agreement” whereby ParaFin agreed to buy a 12.2 million metric ton (88,864,800 Bbls.) allotment of Russian Export Blend Crude Oil ("REBCO"). The

Company will issue to the Purchaser 88,865 SERIES “A” REDEEMABLE, RETRACTABLE ON DEMAND,NON-VOTING, PREFERRED SHARES priced at US$70,000 per share (US$6.22 Billion). No Preferred shares have been issued at this time.

ITEM 2. PLAN OF OPERATION.

The following discussion should be read in conjunction with the financial statements of the Company and notes thereto contained elsewhere in this report.

Twelve-Month Plan of Operation

Business of the Registrant.

Ergonomic Workstation Rights - Personal Computer Environment (PCE) Work Station

On January 24, 2006 the Company acquired all rights and patents to an ergonomic computer work station it calls the PCE, (Personal Computer Environment) for $6,000,000. Since April 2006, Parafin has modified the design of the computer work stations and new patents have been submitted and are pending. The Company anticipates that the manufacture of the PCE work station will be done through sub-contractors. Parafin management anticipates having its first prototypes of the PCE computer work stations completed by the end of the Registrants second quarter. Although Parafin currently does not have any customers for the work station, it has been marketing the work station to several large potential buyers. Although iot has not conducted any formal studies, Parafin management believes there is a large market for the work stations; however, there can be no assurance that Parafin will obtain the patents that it has applied for, that those patents will offer meaningful protection to Parafin, that those patents will not be held to infringe on the patents held by others, that Parafin will be successful in selling the computer work stations to any customers, or that any such sales will be on terms that are beneficial to Parafin. The Company proposes budgeting $300,000 to complete the first stage of Production of the PCE.

Oil and Gas Exploration

Parafin signed a Farmout Agreement on May 1, 2007 with Meta Petroleum Ltd. (Meta) to acquire a 50% working interest in a Hydrocarbon Concession and operating oil field in the Republic of Columbia, South America.

The Concession consists of approximately 7,000 hectares. It currently has four (4) producing wells with the potential for up to an additional twenty-seven (27) offset locations.

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The Agreement requires ParaFin to pay 100% of all costs associated with the drilling, completing, equiping or abandoning the next four (4) wells to be drilled on the Concession. In addition, 100% of the revenue from the current four (4) wells will continue to be paid to the trustee for Meta until the said additional four (4) wells have been drilled, thereafter revenues from all wells shall be divided equally.

After the said four (4) wells have been drilled and completed (or abandoned) ParaFin shall have earned a 50% working interest in the Concession and Meta shall immediately assign 50% of the Concession to ParaFin. The Parties have also agreed to execute a standard “Joint Operating Agreement” (JOA) to administer the development and drilling of the remaining offset locations.

On December 6, 2004, the Registrant entered into a Farmout Agreement with Guarani Exploration and Development Corporation, Lambare, Paraguay, for the purpose of the Registrant potentially acquiring an 80% interest in a license to explore the 2,456,453 hectares (approximately 5,986,000 acres) in the Alto Parana Block, Alto Parana Province, Paraguay (See Exhibit 10.1). The farmout agreement becomes effective after the approval of the Department of Minerals and Energy has been received (has been Received), the Agreement is signed by the President of Paraguay (the President has signed the Agreement) and the final condition, the approval of the Congress of Paraguay. (which has not yet been received). Parafin is obligated to pay 5 million for drilling expenses once Parafin has received formal and complete Paraguayn government approval. Parafin remains optimistic that such approval will happen, but no such assurances can be made that Parafin will ultimately obtain any such approval. Under the terms of this agreement, within 30 days following the approval of such a license the Registrant is to deposit the sum of $150,000 with Guarani. On or before 60 days thereafter, the Registrant is to deposit with Guarani an additional sum of $350,000. Prior to the date to be stipulated in a license for completing the initial drilling obligations, the Registrant is to finance the “Work Program”, as defined in the agreement. The agreement estimates that the items to be performed under the Work Program will not exceed $3,500,000. The Company is looking at several different financing sources for the capital that will be required to fund operations if Guarani receives license approval; the terms of this agreement are conditioned on such approval. Since the Registrant has not realized any revenues from these oil and gas activities and since it has not commenced any drilling operations, this area of the Registrant’s business may be considered as in an exploratory stage.

Parafin may also explore additional financing alternatives or enter into additional farm-out agreements to enable the company to develop the Paraguay fields if that mineral lease is ultimately successfully secured.

Potential Oil Brokering

In addition to Parafin’s efforts in hydrocarbon exploration in Paraguay, Parafin is attempting to expand its business to brokering and/or re-selling of Hydrocarbon and derivatives. Initially, Parafin

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has been presented with a proposition that would provide Parafin with a $5 per barrel profit based on the then prevailing market price on 90,000,000 barrels of oil to be exported from Russia. Parafin does not plan to assume the inventory but instead will be acting as a broker in these transactions. Notwithstanding the role of the Registrant as a broker, Parafin will likely assume some of the credit risk. The Registrant is currently exploring various methods of using the equity of the Registrant to help potential buyers obtain the necessary financing or letter of credit from a bank that will satisfy the demands of the seller of the REBCO, Oy Coral Marine Management, Ltd. The Registrant believes it is able to secure this $5 per barrel profit because it is offering an otherwise unavailable marketing outlet to smaller Russian oil producers. Parafin does not know when or if this proposed deal will ever materialize. To date, both the seller and Parafin have failed to arrange delivery from Russia satisfactory to the buyer of the oil. If Parafin or the seller can arrange delivery satisfactory to the buyer, then Parafin estimated projected gross profit could be as high as $5.00 per Barrel or approximately $450,000,000 after delivery. Parafin will also likely incur up front costs of obtaining necessary government licenses and approvals of at least $200,000, which are not included in that estimate. At this point, it is anticipated that such up front costs will include the cost of Parafin obtaining all necessary government export license from Russia and possibly other countries, but the final structure of the deal will dictate those requirements

The Registrant has signed a Consulting Agreement that engages a Consultant to provide access to proprietary petroleum contracts to the Registrant Client relating to Laos, Thailand and otherSouth East Asian countries to supply those Countries with #2 High Speed Diesel fuel and other products (the Oil). On September 6, 2006, the Board of Directors of ParaFin Corporation (the Company) signed an Agreement directly with Wellsink Petroleum Co., Ltd. (Wellsink), Bangkok, Thailand in Southeast Asia whereby ParaFin agreed to the Re-Sale of 1,200,000 Metric Tons of High Speed Diesel #2. The terms of this Agreement, required Wellsink to purchase and the Company to deliver through its vendor relationships, 50,000 Metric Tons of High Speed Diesel #2 every two weeks. This Agreement has been delayed by problems in documenting the financial arrangements between the three banks involved in the transaction. The company is working to resolve the wording of the Letter of Credit (LC) from Wellsink, the product description in “Proof of Product” (POP) from the suppliers of the D #2 in South America and the payment from the purchaser to the supplier through Parafins bank. Parafin remains very confident that the financial terms of the Agreement will be met and delivery of the D #2 will commence, however, not until after November 30, 2006. Subsequent to the signing of the Agreement with Wellsink, the Government of Thailand was taken over in a military coup. It is the opinion of the Registrant that this has had an effect in completing the financing of the Diesel #2 contract.

1 900 Numbers.

All 1 900 telecommunications services and all numbers associated with 1 900 “pay-per-call have been deactivated.

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Capital Expenditures.

In March 31, 2006, Parafin Corporation acquired 100% of the proprietary technology of the Personal Computer Environment work station developed by PCE Computers, Inc. (PCE). This acquisition shall include all Patents, Patents Pending, internet web sites and e-Mail addresses, Intellectual Properties and all Development Concepts owned by PCE. Parafin paid US$6,000,000 for 100% of the proprietary technology of the Personal Computer Environment (PCE) work station developed by P--CE Computers, Inc. (PCE). The Company proposes budgeting $300,000 to complete the first stage of Production of the PCE.

Risk Factors Connected with Plan of Operation.

(a)Limited Prior Operations, History of Operating Losses, and Accumulated Deficit May Affect Ability of Company to Survive.

The Company has had limited prior operations to date. From its inception in 1978 until this year, the Company’s principal activities were limited to organizational activities, research and development, and prospect development. However, the Company has recently engaged in petrochemical exploration, oil distribution and marketing, as well as the design, manufacturing and distribution of a unique computer workstation. However, all of these operations are in a developmental stage and there is only a limited operating history upon which to base an assumption that the Company will be able to achieve its business plans. As a result, there can be no assurance that the Company will generate significant revenues in the future and there can be no assurance that the Company will operate at a profitable level. If the Company is unable to obtain customers and generate sufficient revenues so that it can profitably operate, the Company’s business will not succeed. Accordingly, the Company’s prospects must be considered in light of the risks, expenses and difficulties frequently encountered in connection with the entering a new line of business.

The Company has incurred losses from operations of $3,023,020 for the six months ended March 31, 2007, and $44,686,449 for the period from inception (October 3, 1978) to March 31, 2007. At March 31, 2007, the Company had an accumulated deficit of $44,686,449. These factors raise substantial doubt about the Companys ability to continue as a going concern.

(b) Uncertainty of ability to raise capital

The Company does not anticipate, at the present time, needing to raise any additional capital in the next twelve months to implement its sales and marketing strategy and grow. The Company believes that it will generate sufficient revenues from its REBCO distribution activities to fund its anticipated operations, but no assurance is given that this will prove successful.

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In the event that the Company’s plans change or its assumptions change (due to unanticipated expenses, technical difficulties, or otherwise), the Company would be required to seek additional financing sooner than currently anticipated or may be required to significantly curtail or cease its operations.

If funding is insufficient at any time in the future, the Company may not be able to take advantage of business opportunities or respond to competitive pressures, or may be required to reduce the scope of its planned product development and marketing efforts, any of which could have a negative impact on its business and operating results. In addition, insufficient funding may have a material adverse effect on the company’s financial condition, which could require the company to: curtail operations significantly; sell significant assets; seek arrangements with strategic partners or other parties that may require the company to relinquish significant rights to products, technologies or markets; or explore other strategic alternatives including a merger or sale of the company.

To the extent that the Company raises additional capital through the sale of equity or convertible debt securities, the issuance of such securities may result in dilution to existing stockholders. If additional funds are raised through the issuance of debt securities, these securities may have rights, preferences and privileges senior to holders of common stock and the terms of such debt could impose restrictions on the Company’s operations. Regardless of whether the Company’s access to financing proves to be inadequate to meet the company’s operational needs, the Company may seek to compensate providers of services by issuance of stock in lieu of cash, which may also result in dilution to existing shareholders.

(c)Independent Auditors Have Expressed Substantial Doubt of the Ability to Continue as a Going Concern.

In his report dated January 8, 2007, the Company’s independent auditor stated that the financial statements for the year ended September 30, 2006 were prepared assuming that the company would continue as a going concern. The Company’s ability to continue as a going concern is an issue raised as a result of cash flow constraint, an accumulated deficit, and recurring losses from operations. The Company continues to experience net losses. The Company’s ability to continue as a going concern is subject to the ability to generate a profit and/or obtain necessary funding from outside sources, including obtaining additional funding from the sale of the company’s securities, increasing sales or obtaining loans from various financial institutions where possible. The continued net losses and stockholders’ deficit increases the difficulty in meeting such goals and there can be no assurances that such methods will prove successful.

(d) The Company has Commenced Operations in the Volatile Crude Oil Market.

The Company has just recently entered the crude oil distribution market. This industry has recently been characterized by extremely volatile price levels which create added risk that even if the Company can obtain crude oil at favorable prices, it can not resell the same profitably.

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(e)Non-Cumulative Voting May Affect Ability of Shareholders to Influence Company Decisions.

Holders of the shares are not entitled to accumulate their votes for the election of directors or otherwise. Accordingly, the holders of a majority of the shares present at a meeting of shareholders will be able to elect all of the directors of the Company, and the minority shareholders will not be able to elect a representative to the Company’s board of directors.

(f) Absence of Cash Dividends May Affect Investment Value of Company’s Stock.

The board of directors does not anticipate paying cash dividends on the shares for the foreseeable future and intends to retain any future earnings to finance the growth of the Company’s business. Payment of dividends, if any, will depend, among other factors, on earnings, capital requirements, and the general operating and financial condition of the Company, and will be subject to legal limitations on the payment of dividends out of paid-in capital.

(g)No Assurance of Public Trading Market and Risk of Low Priced Securities May Affect Market Value of Company’s Stock.

The Securities and Exchange Commission (“SEC”) has adopted a number of rules to regulate “penny stocks.” Such rules include Rule 3a51-1 and Rules 15g-1 through 15g-9 under the Securities Exchange Act of 1934, as amended. Because the securities of the Company may constitute “penny stocks” within the meaning of the rules (as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, largely traded in the Over the Counter Bulletin Board or the Pink Sheets), the rules would apply to the Company and to its securities.

The SEC has adopted Rule 15g-9 which established sales practice requirements for certain low price securities. Unless the transaction is exempt, it shall be unlawful for a broker or dealer to sell a penny stock to, or to effect the purchase of a penny stock by, any person unless prior to the transaction: (I) the broker or dealer has approved the person’s account for transactions in penny stock pursuant to this rule and (ii) the broker or dealer has received from the person a written agreement to the transaction setting forth the identity and quantity of the penny stock to be purchased. In order to approve a person’s account for transactions in penny stock, the broker or dealer must: (a) obtain from the person information concerning the person’s financial situation, investment experience, and investment objectives; (b) reasonably determine that transactions in penny stock are suitable for that person, and that the person has sufficient knowledge and experience in financial matters that the person reasonably may be expected to be capable of evaluating the risks of transactions in penny stock; 8 deliver to the person a written statement setting forth the basis on which the broker or dealer made the determination (I) stating in a highlighted format that it is unlawful for the broker or dealer to affect a transaction in penny

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stock unless the broker or dealer has received, prior to the transaction, a written agreement to the

transaction from the person; and (ii) stating in a highlighted format immediately preceding the customer signature line that (iii) the broker or dealer is required to provide the person with the written statement; and (iv) the person should not sign and return the written statement to the broker or dealer if it does not accurately reflect the person’s financial situation, investment experience, and investment objectives; and (d) receive from the person a manually signed and dated copy of the written statement. It is also required that disclosure be made as to the risks of investing in penny stock and the commissions payable to the broker-dealer, as well as current price quotations and the remedies and rights available in cases of fraud in penny stock transactions. Statements, on a monthly basis, must be sent to the investor listing recent prices for the Penny Stock and information on the limited market.

There has been only a limited public market for the common stock of the Company. The common stock of the Company is currently traded on the Over the Counter Bulletin Board. As a result, an investor may find it difficult to dispose of, or to obtain accurate quotations as to the market value of the company’s securities. The regulations governing penny stocks, as set forth above, sometimes limit the ability of broker-dealers to sell the Company’s common stock and thus, ultimately, the ability of the investors to sell their securities in the secondary market.

Potential shareholders of the Company should also be aware that, according to SEC Release No. 34-29093, the market for penny stocks has suffered in recent years from patterns of fraud and abuse. Such patterns include (I) control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer; (ii) manipulation of prices through

prearranged matching of purchases and sales and false and misleading press releases; (iii) “boiler room” practices involving high-pressure sales tactics and unrealistic price projections by inexperienced sales persons; (iv) excessive and undisclosed bid-ask differential and markups by selling broker-dealers; and (v) the wholesale dumping of the same securities by promoters and broker dealers after prices have been manipulated to a desired level, along with the resulting inevitable collapse of those prices and with consequent investor losses.

(h)Failure to Remain Current in Reporting Requirements Could Result in Delisting from the OTC Bulletin Board.

Companies trading on the OTC Bulletin Board, such as the Company, must be reporting issuers under Section 12 of the Securities Exchange Act of 1934, as amended, and must be current in their reports under Section 13, in order to maintain price quotation privileges on the OTC Bulletin Board. If the Company fails to remain current in its reporting requirements, the company could be removed from the OTC Bulletin Board. As a result, the market liquidity for the Company’s securities could be severely adversely affected by limiting the ability of broker-dealers to sell its securities and the ability of stockholders to sell their securities in the secondary market.

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(i) Effects of Failure to Maintain Market Makers.

If the Company is unable to maintain a National Association of Securities Dealers, Inc. member broker/dealers as market makers, the liquidity of the common stock could be impaired, not only in the number of shares of common stock which could be bought and sold, but also through possible delays in the timing of transactions, and lower prices for the common stock than might otherwise prevail. Furthermore, the lack of market makers could result in persons being unable to buy or sell shares of the common stock on any secondary market. There can be no assurance the Company will be able to maintain such market makers.

Off-Balance Sheet Arrangements.

The Company does not have any off-balance sheet arrangements.

Critical Accounting Policies.

The Securities and Exchange Commission (“SEC”) has issued Financial Reporting release No. 60, “Cautionary Advice Regarding Disclosure About Critical Accounting Policies” (“FRR 60”), suggesting companies provide additional disclosure and commentary on their most critical accounting policies. In FRR 60, the SEC defined the most critical accounting policies as the ones that are most important to the portrayal of a company’s financial condition and operating results, and require management to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Based on this definition, the Company’s most critical accounting policies include: (a) use of estimates in the preparation of financial statements; and (b) impairment of long-lived assets. The methods, estimates and judgments the Company uses in applying these most critical accounting policies have a significant impact on the results the Company reports in its financial statements.

(a) Use of Estimates in the Preparation of Financial Statements.

The preparation of the financial statements contained in this report requires the company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, the Company evaluates these estimates, including those related to revenue recognition and concentration of credit risk. The Company bases its estimates on historical experience and on various other assumptions that is 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 that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

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(b) Impairment of Long-Lived Assets

Long-lived assets and certain identifiable intangible assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. Measurement of an impairment loss for long-lived assets and certain identifiable intangible assets that management expects to hold and use is based on the fair value of the asset. Long-lived assets and certain identifiable intangible assets to be disposed of are reported at the lower of carrying amount of fair value less costs to sell.

Forward Looking Statements.

Information in this Form 10-QSB contains “forward looking statements” within the meaning of Rule 175 of the Securities Act of 1933, as amended, and Rule 3b-6 of the Securities Act of 1934, as amended. When used in this Form 10-QSB, the words “expects,” “anticipates,” “believes,” “plans,” “will” and similar expressions are intended to identify forward-looking statements. These are statements that relate to future periods and include, but are not limited to, statements regarding our adequacy of cash, expectations regarding net losses and cash flow, and our operating expenses.

Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. These risks and uncertainties include, but are not limited to, those discussed above as well as the risks factors set forth above. These forward-looking statements speak only as of the date hereof. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking

statements contained herein to reflect any change in its expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

ITEM 3. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures.

The Company maintains disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 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 SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and our principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

As of the end of the period covered by this report, our management carried out an evaluation, under the supervision and with the participation of our principal executive officer and our principal financial officer, of our disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) of the Exchange Act). Based upon the evaluation, our principal

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executive officer and our principal financial officer concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms.

Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, will be or have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, and/or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, and/or the degree of compliance with the policies and procedures may deteriorate. Because of the inherent limitations in a cost-effective internal control system, misstatements due to error or fraud may occur and not be detected.

Changes in Disclosure Controls and Procedures.

There were no significant changes in the Company’s disclosure controls and procedures, or in factors that could significantly affect those controls and procedures, since their most recent evaluation.

PART II.

OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

The Company is not a party to any material pending legal proceedings and, to the best of its knowledge, no such action by or against the Company has been threatened.

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

The Corporation issued 12 million Reg. “S”, 144 restricted common shares under a Reg. “S” offering for consideration of $600,000 by way of Private Placement.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

Not Applicable.

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

None.

ITEM 5. OTHER INFORMATION.

During this Quarter, On March 7, 2007, the Company appointed DeJoya Griffiths & Co. Of Henderson, Nevada as its independent auditor to replace George Brenner, C.P.A. who was forced to resign for health related reasons.

Subsequent Events

Parafin signed a Farm Out Agreement on May 1, 2007 with Meta Petroleum Ltd. (Meta) to acquire a 50% working interest in a Hydrocarbon Concession and operating oil field in the Republic of Columbia, South America.

The Concession consists of approximately 7,000 hectares. It currently has four (4) producing wells with the potential for up to an additional twenty-seven (27) offset locations.

The Agreement requires ParaFin to pay 100% of all costs associated with the drilling, completing, equipping or abandoning the next four (4) wells to be drilled on the Concession. In addition, 100% of the revenue from the current four (4) wells will continue to be paid to the trustee for Meta until the said additional four (4) wells have been drilled, thereafter revenues from all wells shall be divided equally.

After the said four (4) wells have been drilled and completed (or abandoned) ParaFin shall have earned a 50% working interest in the Concession and Meta shall immediately assign 50% of the Concession to ParaFin. The Parties have also agreed to execute a standard “Joint Operating Agreement” (JOA) to administer the development and drilling of the remaining offset locations.

ITEM 6. EXHIBITS.

Exhibits have been filed previous to the filing of this 10-QSB and are incorporated by reference herein.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

ParaFin Corporation

Dated: May 10, 2007

By: /s/ Sidney B. Fowlds

Sidney B. Fowlds, President

By: /s/ Anthony V. Feimann

Anthony V. Feimann,

Secretary/Treasurer

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