UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: December 31, 2006
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[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE
EXCHANGE ACT
For the transition period from __________ to __________
Commission file number 0-730
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Penn-Pacific Corp.
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(Exact name of small business issuer as
specified in its charter)
Nevada 95-3227748
- --------------------------------------------------------------------------------
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
3325 Griffin Road, #200, Ft. Lauderdale, FL 33323
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(Address of principal executive offices)
(866) 387-6583
Issuer's telephone number
(Former name, former address and former fiscal year, if changed
since last report.)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
Indicate by Check Mark Whether the Registrant is a Shell Company (as Defined by
Rule 12B-2 of the Exchange Act). Yes X ; No
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practical date: June 26, 2007 1,168,698
Transitional Small Business Disclosure Format (check one).
Yes ; No X
---- -----
PART I
ITEM 1. FINANCIAL STATEMENTS
PENN-PACIFIC CORP.
(A Development Stage Company)
BALANCE SHEETS
(Unaudited)
December 31, September 30,
2006 2006
------------------ ------------------
Assets: $ - $ -
================== ==================
Liabilities:
Accounts Payable - -
Advances from shareholder 47,913 47,913
------------------ ------------------
Total Liabilities 47,913 47,913
------------------ ------------------
Stockholders' Equity:
Preferred Stock, Par value $.0001
Series A, Authorized 10,000,000 shares, None issued - -
Series B, authorized 9,990,000 shares, None issued - -
Series C, Authorized 10,000 shares, None issued - -
Common Stock, Par value $.00001
Authorized 500,000,000 shares,
Issued 1,168,698 Shares at December 31, 2006 and
September 30, 2005 12 12
Paid-In Capital 35,811,071 35,811,071
Retained Deficit (35,735,362) (35,735,362)
Deficit Accumulated During the
Development Stage (123,634) (123,634)
------------------ ------------------
Total Stockholders' Equity (47,913) (47,913)
------------------ ------------------
Total Liabilities and
Stockholders' Equity $ - $ -
================== ==================
See accompanying notes
PENN-PACIFIC CORP.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(Unaudited)
Cumulative
since
January 13,
1997
For the three months ended inception of
December 31, development
--------------------------------------
2006 2005 stage
------------------- ----------------- -----------------
Revenues: $ - $ - $ -
Expenses: - 1,500 (123,634)
------------------- ----------------- -----------------
Net Loss $ - $ (1,500) $ (123,634)
=================== ================= =================
Basic &
Diluted loss
per share $ - $ -
=================== =================
Weighted Average
Shares Outstanding 1,168,698 1,168,698
=================== =================
See accompanying notes
PENN-PACIFIC CORP.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)
Cumulative
since January
13, 1997
For the three months ended Inception of
December 31, Development
-------------------------------------
2006 2005 Stage
----------------- ------------------ ------------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Loss $ - $ (1,500) $ (123,634)
Common Stock issued for expenses - - 21,717
Increase (Decrease) in Accounts Payable - 1,500 -
Increase (Decrease) in Advances
from shareholder - 47,913
Increase (Decrease) in Accrued Expenses - - 54,004
----------------- ------------------ ------------------
Net Cash Used in operating activities - - -
----------------- ------------------ ------------------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Net cash provided by investing activities - - -
----------------- ------------------ ------------------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Net Cash Provided by
Financing Activities - - -
----------------- ------------------ ------------------
Net (Decrease) Increase in
Cash and Cash Equivalents - - -
Cash and Cash Equivalents
at Beginning of Period - - -
----------------- ------------------ ------------------
Cash and Cash Equivalents
at End of Period $ - $ - $ -
================= ================== ==================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $ - $ - $ -
Franchise and income taxes $ - $ - $ -
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING
ACTIVITIES: None
See accompanying notes
PENN-PACIFIC CORP.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2006 AND 2005
(Unaudited)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of accounting policies for Penn-Pacific Corp. (a
development stage company) is presented to assist in understanding the Company's
financial statements. The accounting policies conform to generally accepted
accounting principles and have been consistently applied in the preparation of
the financial statements.
Going Concern
The accompanying financial statements have been prepared in conformity
with accounting principles generally accepted in the United States, which
contemplates the Company as a going concern. However, the Company has sustained
substantial operating losses in recent years and has used substantial amounts of
working capital in its operations. Realization of the assets reflected on the
accompanying balance sheet is dependent upon continued operations of the Company
which, in turn, is dependent upon the Company's ability to meet its financing
requirements and succeed in its future operations. Management believes that
actions presently being taken to revise the Company's operating and financial
requirements provide them with the opportunity for the Company to continue as a
going concern.
Interim Reporting
The unaudited financial statements as of December 31, 2006 and for the
three month period then ended reflect, in the opinion of management, all
adjustments (which include only normal recurring adjustments) necessary to
fairly state the financial position and results of operations for the three
months. Operating results for interim periods are not necessarily indicative of
the results which can be expected for full years.
Organization and Basis of Presentation
The Company was incorporated under the laws of the state of Delaware on
May 18, 1971. From 1979 to 1991 the primary business of Penn Pacific and its
subsidiaries was the acquisition, exploration, development, production and
operation of oil and gas properties. Penn Pacific has been inactive since 1991.
The Company filed a voluntary petition of reorganization under Chapter 11 of the
United States Bankruptcy Code on January 27, 1994. On January 13, 1997, the
Company emerged from bankruptcy pursuant to a final decree of the United States
Bankruptcy Court for the Northern District of Oklahoma. The Company is in the
development stage since January 13, 1997 and has not commenced planned principal
operations.
PENN-PACIFIC CORP.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2006 AND 2005 (Continued)
(Unaudited)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Nature of Business
The Company has no products or services as of December 31, 2006. The
Company was organized as a vehicle to seek merger or acquisition candidates. The
Company intends to acquire interests in various business opportunities, which in
the opinion of management will provide a profit to the Company.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with a maturity of three months or less
to be cash equivalents to the extent the funds are not being held for investment
purposes.
Loss per Share
The reconciliations of the numerators and denominators of the basic loss per
share computations are as follows:
Per-Share
Income Shares Amount
(Numerator) (Denominator)
For the three months ended December 31, 2006
BASIC LOSS PER SHARE
Loss to common shareholders $ - 1,168,698 $ -
================== =================== ==================
For the three months ended December 31, 2005
BASIC LOSS PER SHARE
Loss to common shareholders $ (1,500) 1,168,698 $ -
================== =================== ==================
The effect of outstanding common stock equivalents would be
anti-dilutive for December 31, 2006 and 2005 and are thus not considered. There
are no common stock equivalents outstanding at December 31, 2006 and 2005.
PENN-PACIFIC CORP.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2006 AND 2005 (Continued)
(Unaudited)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Recent Accounting Standards
In June, 2006 the FASB issued FIN 48, "Accounting for Uncertainty in
Income Taxes--an interpretation of FASB Statement No. 109". This Interpretation
clarifies, among other things, the accounting for uncertainty in income taxes
recognized in an enterprise's financial statements in accordance with FASB
Statement No. 109, Accounting for Income Taxes. This Interpretation prescribes a
recognition threshold and measurement attribute for the financial statement
recognition and measurement of a tax position taken or expected to be taken in a
tax return. This Interpretation also provides guidance on derecognition,
classification, interest and penalties, accounting in interim periods,
disclosure, and transition. FIN 48, Accounting for Uncertainty in Income
Taxes--an interpretation of FASB Statement No. 109, is effective for fiscal
years beginning after December 15, 2006. Earlier application is encouraged if
the enterprise has not yet issued financial statements, including interim
financial statements, in the period the Interpretation is adopted. Management is
evaluating the financial impact of this pronouncement.
In September 2006, the FASB issued SFAS No. 157, "Accounting for Fair
Value Measurements." SFAS No. 157 defines fair value, and establishes a
framework for measuring fair value in generally accepted accounting principles
and expandsdisclosure about fair value measurements. SFAS No. 157 is effective
for the Company for financial statements issued subsequent to November 15, 2007.
The Company does not expect the new standard to have any material impact on the
financial position and results of operations.
In September 2006, the staff of the Securities and Exchange Commission
issued Staff Accounting Bulletin No. 108 ("SAB 108") which provides interpretive
guidance on how the effects of the carryover or reversal of prior year
misstatements should be considered in quantifying a current year misstatement.
SAB 108 becomes effective in fiscal 2007. Management is evaluating the financial
impact of this pronouncement.
Pervasiveness of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles required management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
PENN-PACIFIC CORP.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2006 AND 2005 (Continued)
(Unaudited)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Concentration of Credit Risk
The Company has no significant off-balance-sheet concentrations of
credit risk such as foreign exchange contracts, options contracts or other
foreign hedging arrangements.
NOTE 2 - INCOME TAXES
As of December 31, 2006, the Company had a net operating loss
carryforward for income tax reporting purposes of approximately $123,000 that
may be offset against future taxable income through 2026. Current tax laws limit
the amount of loss available to be offset against future taxable income when a
substantial change in ownership occurs. Therefore, the amount available to
offset future taxable income may be limited. No tax benefit has been reported in
the financial statements, because the Company believes there is a 50% or greater
chance the carryforwards will expire unused. Accordingly, the potential tax
benefits of the loss carryforwards are offset by a valuation allowance of the
same amount.
NOTE 3 - DEVELOPMENT STAGE COMPANY
The Company has not begun principal operations and as is common with a
development stage company, the Company has had recurring losses during its
development stage. The Company's financial statements are prepared using
generally accepted accounting principles applicable to a going concern which
contemplates the realization of assets and liquidation of liabilities in the
normal course of business. However, the Company does not have significant cash
or other material assets, nor does it have an established source of revenues
sufficient to cover its operating costs and to allow it to continue as a going
concern. In the interim, shareholders of the Company have committed to meeting
its minimal operating expenses.
NOTE 4 - COMMITMENTS
As of December 31, 2006 all activities of the Company have been
conducted by corporate officers from either their homes or business offices.
Currently, there are no outstanding debts owed by the company for the use of
these facilities and there are no commitments for future use of the facilities.
PENN-PACIFIC CORP.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2006 AND 2005 (Continued)
(Unaudited)
NOTE 5 - CHANGES IN COMMON AND PREFERRED STOCK
On April 8, 2005 a Plan and Articles of Merger between Penn-Pacific
Corp. (Delaware) and Penn-Pacific Corp. (Nevada) was filed in the State of
Nevada whereby the Company was redomiciled in the State of Nevada. As part of
the merger, the Company changed the authorized stock to 500,000,000 Common
shares, par value $.00001 and 20,000,000 Preferred shares, par value $.0001. The
common and the preferred stock are entitled to all the same rights and
privileges except for the voting restrictions for Series C Preferred shares
which are entitled to 50% of the stockholders' voting rights. Changes in par
value have been retroactively restated.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
This Quarterly Report contains certain forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended, which are
intended to be covered by the safe harbors created thereby. Investors are
cautioned that all forward-looking statements involve risks and uncertainty,
including without limitation, the ability of the Company to continue its
expansion strategy, changes in costs of raw materials, labor, and employee
benefits, as well as general market conditions, competition and pricing.
Although the Company believes that the assumptions underlying the
forward-looking statements contained herein are reasonable, any of the
assumptions could be inaccurate, and therefore, there can be no assurance that
the forward-looking statements included in this Quarterly Report will prove to
be accurate. In light of the significant uncertainties inherent in the
forward-looking statements included herein, the inclusion of such information
should not be regarded as a presentation by the Company or any other person that
the objectives and plans of the Company will be achieved.
As used herein the term "Company" refers to Penn-Pacific Corp., a
Nevada corporation and its predecessors, unless the context indicates otherwise.
The Company is currently a shell company whose purpose is to acquire operations
through an acquisition or merger or to begin its own start-up business.
The Company is in the process of attempting to identify and acquire a
favorable business opportunity. The Company has reviewed and evaluated a number
of business ventures for possible acquisition or participation by the Company.
The Company has not entered into any agreement, nor does it have any commitment
or understanding to enter into or become engaged in a transaction as of the date
of this filing. The Company continues to investigate, review, and evaluate
business opportunities as they become available and will seek to acquire or
become engaged in business opportunities at such time as specific opportunities
warrant.
PLAN OF OPERATIONS
The Company has no products or services as of December 31, 2006. The
Company was organized as a vehicle to seek merger or acquisition candidates. The
Company intends to acquire interests in various business opportunities, which in
the opinion of management will provide a profit to the Company.
The Company had no sales or sales revenues for the three months ended
December 31, 2006 or 2005 because it is a shell company that has not had any
business operations for the past four years.
The Company had no costs of sales for the three months ended December
31, 2006 or 2005 because it is a shell company that has not had any business
operations for the past four years. The Company had general and administrative
expenses of $-0- for the three month period ended December 31, 2006 and $1,500
for the same period in 2005.
CAPITAL RESOURCES AND LIQUIDITY
At December 31, 2006, the Company had total current assets of $0 and
total assets of $0 as compared to $0 current assets and $0 total assets at
September 30, 2005. The Company had a net capital deficit of $123,634 at
December 31, 2006 and 2005.
Net stockholders' deficit in the Company was $47,913 as of December 31,
2006 and $47,913 at September 30, 2006.
GOVERNMENT REGULATIONS - The Company is subject to all pertinent Federal, State,
and Local laws governing its business. The Company is subject to licensing and
regulation by a number of authorities in its State or municipality. These may
include health, safety, and fire regulations. The Company's operations are also
subject to Federal and State minimum wage laws governing such matters as working
conditions, overtime and tip credits.
CRITICAL ACCOUNTING POLICIES -The preparation of financial statements in
conformity with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and the disclosure of contingent
assets and liabilities of the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Note 1 to the
Consolidated Financial Statements describes the significant accounting policies
and methods used in the preparation of the Consolidated Financial Statements.
Estimates are used for, but not limited to, contingencies and taxes. Actual
results could differ materially from those estimates. The following critical
accounting policies are impacted significantly by judgments, assumptions, and
estimates used in the preparation of the Consolidated Financial Statements.
We are subject to various loss contingencies arising in the ordinary course of
business. We consider the likelihood of loss or impairment of an asset or the
incurrence of a liability, as well as our ability to reasonably estimate the
amount of loss in determining loss contingencies. An estimated loss contingency
is accrued when management concludes that it is probable that an asset has been
impaired or a liability has been incurred and the amount of the loss can be
reasonably estimated. We regularly evaluate current information available to us
to determine whether such accruals should be adjusted.
We recognize deferred tax assets (future tax benefits) and liabilities for the
expected future tax consequences of temporary differences between the book
carrying amounts and the tax basis of assets and liabilities. The deferred tax
assets and liabilities represent the expected future tax return consequences of
those differences, which are expected to be either deductible or taxable when
the assets and liabilities are recovered or settled. Future tax benefits have
been fully offset by a 100% valuation allowance as management is unable to
determine that it is more likely than not that this deferred tax asset will be
realized.
RECENTLY ENACTED AND PROPOSED REGULATORY CHANGES - Recently enacted and proposed
changes in the laws and regulations affecting public companies, including the
provisions of the Sarbanes- Oxley Act of 2002 and rules proposed by the SEC and
NASDAQ could cause us to incur increased costs as we evaluate the implications
of new rules and respond to new requirements. The new rules could make it more
difficult for us to obtain certain types of insurance, including directors and
officers liability insurance, and we may be forced to accept reduced policy
limits and coverage or incur substantially higher costs to obtain the same or
similar coverage. The impact of these events could also make it more difficult
for us to attract and retain qualified persons to serve on the Company's board
of directors, or as executive officers. We are presently evaluating and
monitoring developments with respect to these new and proposed rules, and we
cannot predict or estimate the amount of the additional costs we may incur or
the timing of such costs.
In September 2006, the FASB issued SFAS No. 157, "Accounting for Fair
Value Measurements." SFAS No. 157 defines fair value, and establishes a
framework for measuring fair value in generally accepted accounting principles
and expands disclosure about fair value measurements. SFAS No. 157 is effective
for the Company for financial statements issued subsequent to November 15, 2007.
The Company does not expect the new standard to have any material impact on the
financial position and results of operations.
In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option
for Financial Assets and Financial Liabilities" ("SFAS 159"). SFAS 159 provides
companies with an option to report selected financial assets and liabilities at
fair value. The objective of SFAS 159 is to reduce both complexity in accounting
for financial instruments and the volatility in earnings caused by measuring
related assets and liabilities differently. Generally accepted accounting
principles have required different measurement attributes for different assets
and liabilities that can create artificial volatility in earnings. The FASB has
indicated it believes that SFAS 159 helps to mitigate this type of
accounting-induced volatility by enabling companies to report related assets and
liabilities at fair value, which would likely reduce the need for companies to
comply with detailed rules for hedge accounting. SFAS 159 also establishes
presentation and disclosure requirements designed to facilitate comparisons
between companies that choose different measurement attributes for similar types
of assets and liabilities. SFAS 159 does not eliminate disclosure requirements
included in other accounting standards, including requirements for disclosures
about fair value measurements included in SFAS 157 and SFAS No. 107,
"Disclosures about Fair Value of Financial Instruments." SFAS 159
is effective for the Company as of the beginning of fiscal year 2009. The
adoption of this pronouncement is not expected to have an impact on the
Company's financial position, results of operations or cash flows.
ITEM 3. CONTROLS AND PROCEDURES
The Company's Chief Executive Officer and Chief Financial Officer are
responsible for establishing and maintaining disclosure controls and procedures
for the Company.
(a) Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this report, the Company carried
out an evaluation, under the supervision and with the participation of
the Company's management, including the Company's President, of the
effectiveness of the design and operation of the Company's disclosure
controls and procedures pursuant to Rule 13a-15 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). Based upon the
evaluation, the Company's President concluded that, as of the end of
the period, the Company's disclosure controls and procedures were
effective in timely alerting him to material information relating to
the Company required to be included in the reports that the Company
files and submits pursuant to the Exchange Act.
(b) Changes in Internal Controls
Based on this evaluation as of December 31, 2006, there were no
significant changes in the Company's internal controls over financial
reporting or in any other areas that could significantly affect the
Company's internal controls subsequent to the date of his most recent
evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None/Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
None/Not Applicable.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
The following documents are filed herewith or have been included as
exhibits to previous filings with the Commission and are incorporated herein by
this reference:
Exhibit No. Exhibit
3 Articles of Incorporation (1)
3.2 Bylaws (1)
3.1 Amended Articles of Incorporation (1)
31 Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32 Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K. No reports on Form 8-K were filed during the period
covered by this Form 10-QSB.
(1) Incorporated herein by reference.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Penn-Pacific Corp.
/s/ Rose Fischer
Rose Fischer
President
(Principal Executive & Accounting Officer)
June 26, 2007