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, 2007
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 [X] NO [ ]
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 Accelerated filer Non-accelerated
filer 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, 2008, 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.................. 9
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK.......................................... 11
ITEM 4. CONTROLS AND PROCEDURES.............................. 11
PART II.
OTHER INFORMATION
ITEM 6. EXHIBITS............................................. 12
SIGNATURES..................................................... 12
EXHIBITS:
EXHIBIT 31: SARBANES-OXLEY SECTION 302 CERTIFICATION........ 13
EXHIBIT 32: SARBANES-OXLEY SECTION 906 CERTIFICATION........ 14
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Pan Asian Corporation
(A Development Stage Company)
Condensed Balance Sheets
December 31, June30,
2007 2007
(Unaudited) (Audited)
------------ -----------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ - $ -
------------ -----------
Total assets $ - $ -
============ ===========
LIABILITIES AND SHAREHOLDERS'
EQUITY (DEFICIT)
CURRENT LIABILITIES
Payable to Affiliate $ 8,266 $ 5,835
Accounts payable 3,375 2,431
------------ -----------
Total current liabilities 11,641 8,266
------------ -----------
Commitments and Contingencies (Note 7) -- --
------------ -----------
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 110 110
Additional paid in capital -- --
Deficit accumulated during
development stage (11,751) (8,376)
------------ -----------
Total shareholders'
equity (deficit) (11,641) (8,266)
------------ -----------
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)
Period of inception Cumulative During
(September 27, 2006) Development Stage
Six Months Ended through December 31, (September 27, 2006
December 31, 2007 2006 to December 31, 2007)
------------------ -------------------- ---------------------
Revenues $ -- $ -- $ --
------------------ -------------------- ---------------------
Expenses
Formation, general and administrative
expenses 3,375 3,737 11,751
------------------ -------------------- ---------------------
Total operating expenses 3,375 3,737 11,751
------------------ -------------------- ---------------------
Operating loss (3,375) (3,737) (11,751)
Income tax expense (benefit) -- -- --
------------------ -------------------- ---------------------
Net loss $ (3,375) $ (3,737) $ (11,751)
================== ==================== =====================
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 Operations
(Unaudited)
Three Months Ended Three Months Ended
December 31, 2007 December 31, 2006
------------------ ------------------
Revenues $ -- $ --
Expenses
Formation, general and
administrative expenses 3,375 1,145
------------------ -----------------
Total operating expenses 3,375 1,145
------------------ -----------------
Operating loss (3,375) (1,145)
Income tax expense
(benefit) -- --
------------------ -----------------
Net loss $ (3,375) $ (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.
5
Pan Asian Corporation
(A Development Stage Company)
Condensed Statements of Cash Flows
(Unaudited)
Period of inception Cumulative During
(September 27, 2006) Development Stage
Six Months Ended through December 31, (September 27, 2006
December 31, 2007 2006 to December 31, 2007)
----------------- -------------------- ---------------------
Cash flows from operating activities
Net loss $ (3,375) $ (3,737) $ (11,751)
Adjustments to reconcile net loss to
cash used in operating activities:
Shares issued to Founder for
payment of formation costs -- 110 110
Changes in operating assets
and liabilities
Payable to Affiliate 2,431 2,482 8,266
Accounts Payable 944 1,145 3,375
----------------- -------------------- ---------------------
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.
6
Pan Asian Corporation
(A Development Stage Company)
NOTES TO CONDENSED FINANCIAL STATEMENTS
December 31, 2007
(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 Company's founders of $2,482.
At December 31, 2007, the Company had not yet commenced any
operations. All activity from September 27, 2006 ("Date of
Inception") through December 31, 2007 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 States 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 Ordinary Share
Basic loss per ordinary share is based on the weighted effect of
ordinary shares issued and outstanding, and is calculated by
dividing net loss by the weighted average shares outstanding
during the period. Diluted loss per ordinary share is calculated
by dividing net loss by the weighted average number of ordinary
shares used in the basic loss per share calculation plus the
number of ordinary shares that would be issued assuming exercise
or conversion of all potentially dilutive ordinary 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, 2007, there were no potentially dilutive ordinary
shares outstanding.
Income Taxes
Pan Asian Growth 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.
8
NOTE 3 - Liquidity and Capital Resources
The Company has no revenues for the period from inception through
December 31, 2007, and does not expect 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. The Company will continue to fund
its activities through payables to its Founders until a merger is
consummated or alternative forms of financing are secured. As of
December 31, 2007, the Company did not have a cash balance.
NOTE 4 - Payable to Affiliate and Accounts Payable
As of December 31, 2007, The Company has a payable of $8,266 to a
founder of the Company. The payable is non-interest bearing and
payable on demand. The Company also has accounts payable for
$3,375 as of December 31, 2007.
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.
NOTE 6 - Preference shares
The Company is authorized to issue 1,000,000 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, 2007, 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.
9
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 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.
Comparison of the three months December 31, 2007 and 2006
Because we currently do not have any business operations, we
have not had any revenues during the three months ended December
31, 2007 or 2006. Total expenses for the three months ended
December 31, 2007 were $3,375, compared with $1,145 for the three
months ended December 31, 2006. The decrease is primarily related
to annual fees and administration expenses that were not
applicable for 2006.
Comparison of the six months ending December 31, 2007 and 2006
Because we currently do not have any business operations, we
have not had any revenues during the six months ended December
31, 2007 or 2006. Total expenses for the six months ended
December 31, 2007 were $3,375, compared with $3,737 for the
period of September 27, 2006 (date of inception) to December 31,
2006. The decrease is primarily related to non-recurring expenses
related to the formation of the Company during 2006, and is
partially offset by the annual fees in 2007.
Liquidity and Capital Resources
As of December 31, 2007, we had current liabilities of
$8,266 to a related party and $3,375 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 it will be able to fund necessary expenses
through the continued funding from its founding shareholders in
the form of payables, but may seek additional financing in
10
connection with a potential business combination or if it
otherwise requires additional funds. As of December 31, 2007,
the Company did not have a cash balance.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK
None
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.
There have been no material changes to the risk factors
previously disclosed under Item 1A of the Company's Registration
Statement on Form 10, filed with the Securities and Exchange
Commission on December 4, 2006.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
11
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.
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
--------------------------------
JOSEPH R. ROZELLE
Chief Executive Officer
Date: February 14, 2008
12