UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2006
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OR
[ ] 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 000-52343
Pan Asian Corporation
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(Exact name of Registrant as specified in its charter)
Cayman Islands N/A
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
c/o Nautilus Global Partners
700 Gemini, Suite 100, Houston, TX 77056
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(Address of principal executive offices) (Zip Code)
(281) 488-3883
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(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the Registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days.
YES [ ] NO [X]
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, or a non-accelerated filer.
See definition of "accelerated filer and large accelerated filer" in
rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [X]
Indicate by check mark whether the registrant is a shell company
(as defined in rule 12b-2 of the Exchange Act).
YES [X] NO [ ]
At February 14, 2007, there were 1,100,000 shares of Registrant's
ordinary shares outstanding.
GENERAL INDEX
Page
Number
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PART I.
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS..................................... 3
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS...................... 8
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK.............................................. 9
ITEM 4. CONTROLS AND PROCEDURES.................................. 10
PART II.
OTHER INFORMATION
ITEM 6. EXHIBITS................................................. 10
SIGNATURES....................................................... 11
EXHIBITS:
EXHIBIT 31: SARBANES-OXLEY SECTION 302 CERTIFICATION.......... 12
EXHIBIT 31: SARBANES-OXLEY SECTION 302 CERTIFICATION.......... 13
2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Pan Asian Corporation
(A Development Stage Company)
Condensed Balance Sheets
December 31 September 30
2006 2006
----------- ------------
(Unaudited) (Audited)
ASSETS
CURRENT ASSETS
Cash $ -- $ --
----------- ------------
Total assets $ -- $ --
=========== ============
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Payable to Affiliate $ 2,482 $ 2,482
Accounts payable 1,145 --
----------- ------------
Total current liabilities 3,627 2,482
----------- ------------
Commitments and Contingencies -- --
----------- ------------
SHAREHOLDERS' EQUITY (DEFICIT)
Preference shares, $0.0001 par value,
1,000,000 shares authorized, none
issued and outstanding -- --
Ordinary shares, $.0001 par value;
50,000,000 shares authorized;
1,100,000 shares issued and outstanding
at December 31 and September 30,
respectively 110 110
Additional paid in capital -- --
Deficit accumulated during development
stage (3,737) (2,592)
----------- ------------
Total shareholders' equity (deficit) (3,627) (2,482)
----------- ------------
Total liabilities and shareholders'
equity (deficit) $ -- $ --
=========== ============
See accompanying notes to condensed financial statements.
3
Pan Asian Corporation
(A Development Stage Company)
Condensed Statements of Operations
(Unaudited)
Cumulative During
Development Stage
(September 27, 2006 Three Months Ended
to December 31, 2006) December 31, 2006
--------------------- ------------------
Revenues $ -- $ --
----------- ------------
Expenses
Formation and Other Costs 3,737 1,145
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Total operating expenses 3,737 1,145
----------- ------------
Operating loss (3,737) (1,145)
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Income tax Expense (Benefit) -- --
----------- ------------
Net loss $ (3,737) $ (1,145)
=========== ============
Basic and diluted loss per share $ (0.00) $ (0.00)
=========== ============
Weighted average ordinary shares
outstanding - basic and diluted 1,100,000 1,100,000
=========== ============
See accompanying notes to condensed financial statements.
4
Pan Asian Corporation
(A Development Stage Company)
Condensed Statements of Cash Flows
(Unaudited)
Cumulative During
Development Stage
(September 27, 2006
to December 31, 2006)
---------------------
Cash flows from operating activities
Net loss $ (3,737)
Adjustments to reconcile net loss to cash used in
operating activities:
Shares issued to Founder for payment of
formation costs 110
Changes in operating assets and liabilities
Payable to Affiliate 2,482
Accounts Payable 1,145
-----------
Net cash provided by 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 increase in cash --
-----------
Cash at beginning of the period --
-----------
Cash at end of the period $ --
===========
Supplemental disclosures of cash flow information:
Interest paid $ --
===========
Income taxes paid $ --
===========
See accompanying notes to condensed financial statements.
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Pan Asian Corporation
(A Development Stage Company)
NOTES TO CONDENSED FINANCIAL STATEMENTS
December 31, 2006
(Unaudited)
NOTE 1 - Organization, Business and Operations
On September 27, 2006, Pan Asian Corporation (the "Company") was
formed in the Cayman Islands with the objective to acquire, or merge
with, an operating business. The Company's formation costs of $2,592
were financed through the issuance of 1,100,000 shares of ordinary
shares at par value of $0.0001 per share together with a payable to
the Founders of $2,482.
At December 31, 2006, the Company had not yet commenced any
operations. All activity from September 27, 2006 ("Date of Inception")
through December 31, 2006 relates to the Company's formation. The
Company selected June 30 as its fiscal year-end.
The Company, based on its proposed business activities, is a "blank
check" company. The Securities and Exchange Commission defines such a
company as "a development stage company" as it either has no specific
business plan or purpose, or has indicated that its business plan is
to engage in a merger or acquisition with an unidentified company or
companies, or other entity or person; and has issued "penny stock," as
defined in Rule 3a51-1 under the Securities Exchange Act of 1934. Many
states have enacted statutes, rules and regulations limiting the sale
of securities of "blank check" companies in their respective
jurisdictions. Management does not intend to undertake any efforts to
cause a market to develop in its securities, either debt or equity,
until the Company concludes a business combination with an operating
entity.
The Company was organized to acquire a target company or business
seeking the perceived advantages of being a publicly-held company and,
to a lesser extent, that desires to employ the Company's funds in its
business. The Company's principal business objective for the next 12
months and beyond will be to achieve long-term growth potential
through a business combination rather than short-term earnings. The
Company will not restrict its potential candidate target companies to
any specific business, industry or geographical location. The analysis
of new business opportunities will be undertaken by or under the
supervision of the officers and directors of the Company.
NOTE 2 - Summary of Significant Accounting Policies
Basis of Presentation
These financial statements are presented on the accrual basis of
accounting in accordance with generally accepted accounting principles
in the United State of America, whereby revenues are recognized in the
period earned and expenses when incurred. The Company also follows
Statement of Financial Accounting Standards ("SFAS") No. 7,
"Accounting and Reporting for Development Stage Enterprises" in
preparing its financial statements.
Statement of Cash Flows
For purposes of the statement of cash flows, we consider all highly
liquid investments (i.e., investments which, when purchased, have
original maturities of three months or less) to be cash equivalents.
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NOTE 2 - Summary of Significant Accounting Policies (Continued)
Use of Estimates
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 disclosure of contingent assets
and liabilities at the date of the financial statements and reported
amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.
Loss Per Common Share
Basic loss per common share is based on the weighted effect of common
shares issued and outstanding, and is calculated by dividing net loss
by the weighted average shares outstanding during the period. Diluted
loss per common share is calculated by dividing net loss by the
weighted average number of common shares used in the basic loss per
share calculation plus the number of common shares that would be
issued assuming exercise or conversion of all potentially dilutive
common shares outstanding. The Company does not present diluted
earnings per share for years in which it incurred net losses as the
effect is antidilutive.
At December 31, 2006, there were no potentially dilutive common shares
outstanding.
Income Taxes
Pan Asian Corporation was registered as an Exempted Company in
the Cayman Islands, and therefore, is not subject to Cayman Island
income taxes for 20 years from the Date of Inception. While the Company
has no intention of conducting any business activities in the United
States, the Company would be subject to United States income taxes
based on such activities that would occur in the United States.
The Company accounts for income taxes in accordance with SFAS No. 109,
Accounting for Income Taxes. This statement prescribes the use of the
liability method whereby deferred tax asset and liability account
balances are determined based on differences between financial
reporting and tax bases of assets and liabilities and are measured
using the enacted tax rates and laws that will be in effect when the
differences are expected to reverse. In assessing the realization of
deferred tax assets, management considers whether it is likely that
some portion or all of the deferred tax assets will be realized. The
ultimate realization of deferred tax assets is dependent upon the
Company attaining future taxable income during periods in which those
temporary differences become deductible.
Fair Value of Financial Instruments
Our financial instruments consist of a payable to an affiliate. We
believe the fair values of our payable reflect its respective carrying
amounts.
Recently Issued Accounting Pronouncements
Management does not believe that any recently issued, but not yet
effective, accounting standards, if currently adopted, would have a
material effect on the accompanying financial statements.
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NOTE 3 - Liquidity and Capital Resources
The Company has no revenues for the period from inception through
December 31, 2006, and does not intend to realize revenues until the
consummation of a merger with an operating entity. The Company's
principal business objective for the next 12 months and beyond will be
to achieve long-term growth potential through a business combination
rather than short-term earnings. There can be no assurance that the
Company will ever consummate the business combination; achieve or
sustain profitability or positive cash flows from its operations,
reduce expenses or sell ordinary shares. To date, the Company has
funded its formation activities primarily through the issuance of its
ordinary shares and a payable to affiliate.
NOTE 4 - Payable to Affiliate and Accounts Payable
The Company has a payable to affiliate of $2,482 to a Founder of the
Company. The payable is non-interest bearing and payable on demand.
The Company also has accounts payable for $1,145.
NOTE 5 - Ordinary shares
On September 27, 2006, the Company was formed with 1,100,000 shares of
its restricted ordinary shares issued at par value of $0.0001 per
share, for consideration of $110 to its founding shareholders. The
stock, along with a payable issued to a Founder of $2,482 were the
basis of the funding of the Company's formation costs to date.
NOTE 6 - Preference shares
The Company is authorized to issue 1,000,000 shares of preference
shares with such designations, voting and other rights and preferences
as may be determined from time to time by the Board of Directors. At
December 31, 2006, there were no preference shares issued or
outstanding.
NOTE 7 - Commitments and Contingencies
The Company may become subject to various claims and litigation. The
Company vigorously defends its legal position when these matters
arise. The Company is not a party to, nor the subject of, any
material pending legal proceeding nor to the knowledge of the Company,
are any such legal proceedings threatened against the Company.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Disclosure Regarding Forward Looking Statements
Statements, other than historical facts, contained in this
Quarterly Report on Form 10-Q, including statements of potential
acquisitions and our strategies, plans and objectives, are "forward-
looking statements" within the meaning of Section 27A of the
Securities Act of 1933, as amended (the "Securities Act"), and Section
21E of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). Although we believe that our forward looking statements are
based on reasonable assumptions, we caution that such statements are
subject to a wide range of risks, trends and uncertainties that could
cause actual results to differ materially from those projected. Among
those risks, trends and uncertainties are important factors that could
cause actual results to differ materially from the forward looking
statements, including, but not limited to; the effect of existing and
future laws, governmental regulations and the political and economic
climate of the United States; the effect of derivative activities; and
conditions in the capital markets. We undertake no duty to update or
revise these forward-looking statements.
When used in this Form 10-Q, the words, "expect," "anticipate,"
"intend," "plan," "believe," "seek," "estimate" and similar
expressions are intended to identify forward-looking statements,
although not all forward-looking statements contain these identifying
words. Because these forward-looking statements involve risks and
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uncertainties, actual results could differ materially from those
expressed or implied by these forward-looking statements for a number
of important reasons.
General
We are a development stage company formed solely for the purpose
of identifying and entering into a business combination with a
privately held business or company, domiciled and operating in an
emerging market, that is seeking the advantages of being a publicly
held corporation whose stock is eventually traded on a major United
States stock exchange. We intend to focus on targets located
primarily in Asia, South America and Eastern Europe, as we believe
that businesses with operating history and growth potential in these
locations would benefit significantly from access to the United States
capital markets and may offer the potential of capital appreciation
stemming from the economic growth in such emerging markets.
Plan of Operation
We have not engaged in any business activities that
generate revenue. Our activities to date have been primarily
focused upon our formation and raising capital. We have
conducted private offerings of our ordinary shares, the proceeds
of which we intend to use for payment of costs associated with
formation, accounting and auditing fees, legal fees, and costs
associated with identifying acquisition targets and completing
necessary due diligence. In addition, we expect to incur costs
related to filing periodic reports with the Securities and
Exchange Commission. We believe we will be able to meet these
costs for at least the next 12 months by obtaining loans from our
shareholders, management or other investors.
We may consider a business which has recently commenced
operations, is a developing company in need of additional funds for
expansion into new products or markets, is seeking to develop a new
product or service, or is an established business which may be
experiencing financial or operating difficulties and is in need of
additional capital. In the alternative, a business combination may
involve the acquisition of, or merger with, a company which does not
need substantial additional capital, but which desires to establish a
public trading market for its shares, while avoiding, among other
things, the time delays, significant expense, and loss of voting
control which may occur in a public offering.
Continuing Operating Expenses for the three months ended
December 31, 2006
Because we currently do not have any business operations, we have not
had any revenues during the three months ended December 31, 2006.
Total expenses for the three months ended December 31, 2006 were
$1,145. These expenses constituted professional and filing fees.
Liquidity and Capital Resources
As of December 31, 2006, we had current liabilities of $2,482 to
a related party and $1,145 to unrelated parties. The Company is
actively pursuing merger opportunities as described in the "General"
Section of Management's Discussion and Analysis, and believes that its
current available cash will be sufficient for its operations until a
merger candidate is selected, but may seek additional financing in
connection with a potential business combination or if it otherwise
requires additional funds.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
None
9
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures. Our Chief
Executive and Financial Officer has reviewed and evaluated the
effectiveness of our disclosure controls and procedures (as defined in
Exchange Act Rules 240.13a-15(e) or 15d-15(e)) as of the end of the
period covered by this report. Based on that evaluation, the Chief
Executive Officer has concluded that our current disclosure controls
and procedures provide him with reasonable assurance that they are
effective to provide him with timely material information relating to
us required to be disclosed in the reports we file or submit under the
Exchange Act.
Changes in Internal Control over Financial Reporting. Our
management has evaluated whether any change in our internal control
over financial reporting occurred during the last fiscal quarter.
Based on that evaluation, management concluded that there has been no
change in our internal control over financial reporting during the
relevant period that has materially affected, or is reasonably likely
to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None.
ITEM 1A. RISK FACTORS.
Not applicable.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS.
Exhibit
Number Description
31 Certification of Principal Executive Officer and Principal
Financial Officer pursuant to Rule 13a-14(a) or 15d-14(a) of
the Securities and Exchange Act of 1934, as adopted pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002.
32 Certification of Principal Executive Officer and Principal
Financial Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
Pan Asian Corporation
(Registrant)
By: /s/ JOSEPH R. ROZELLE
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JOSEPH R. ROZELLE
Chief Executive Officer
Date: February 14, 2007
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