UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 2009
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
COMMISSION FILE NUMBER 0-30503
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PANGEA PETROLEUM CORP.
(Exact Name of Registrant as Specified in Its Charter)
COLORADO 76-0635938
(State or other jurisdiction (I.R.S. Employer Identification No.)
3600 GESSNER, SUITE 220, HOUSTON, TEXAS 77063
(Address of principal executive offices)
(713) 710-7103
(Registrant's telephone number)
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 [ ] No [X]
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). Yes [ ] No [ ]
Indicate by check mark whether the Registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act (Check one).
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
(Do not check if smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 390,499,544 common shares as of
August 20, 2009
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
PANGEA PETROLEUM CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30, December 31,
2009 2008
ASSETS
Current assets:
Cash $ 2,090 $ 2,595
Accounts receivable 54,164 1,844
Prepaid expenses 8,301
Property and equipment:
Oil and gas properties (successful efforts
method net of accumulated depletion of
$143,234 and $138,642) 44,262 28,734
Unproven oil and gas properties (successful
efforts method) 205,252 152,000
------------------------
Total property and equipment 197,214 180,734
Investment in subsidiary 100,000
Goodwill 287,754
------------------------
Total assets $ 701,823 $ 185,173
========================
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 69,559 $ 43,595
Credit card payable 18,374
Other current liabilities
Accrued interest payable to related parties 96,174 79,090
Notes payable - other 24,753
Notes payable to related parties 99,197 11,500
-----------------------
Total current liabilities 289,683 152,559
Long-term debt to related parties 659,771 659,771
Asset retirement obligations 8,193
-----------------------
Total liabilities $ 949,454 820,523
Stockholders' deficit:
Preferred stock: $.001 par value; 10,000,000
shares authorized, none issued and outstanding 100,000 -
Common stock: $.001 par value; 500,000,000
shares authorized; 355,279,544 and 306,339,544
shares issued and outstanding at June 30, 2008
and December 31, 2007, respectively 390,499 365,499
Additional paid-in capital 18,521,904 18,521,904
Accumulated deficit (19,260,034)(19,522,753)
-----------------------
Total stockholders' deficit (247,631) (635,350)
-----------------------
Total liabilities and stockholders' deficit $ 701,823 185,173
========================
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PANGEA PETROLEUM CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2009 2008 2009 2008
Oil and gas revenue $ 1,623 $ 14,292 $ 4,295 $ 21,860
Revenue from aviation
operations 163,601 336,324
---------------------------------------------------
Total revenue 165,224 14,292 340,619 21,860
Costs and expenses:
Cost of goods sold 93,546 202,804
Lease operating expenses 5,024 7,687
Production taxes 813 146 1,279
Dry hole costs - - - -
Depreciation, depletion and
amortization 1,004 745 4,592
Impairment 42,696 42,696
Selling, general and
administrative
expenses 83,183 119,451 198,738 215,927
---------------------------------------------------
Total costs and expenses 176,729 168,988 402,433 272,181
---------------------------------------------------
Loss from operations (11,505) (154,696) (61,814) (250,321)
Other income and (expenses):
Other income - - - -
Interest expense (19,590) (39,178)
---------------------------------------------------
Net loss $ (11,505) $(174,286) $ (61,814) $ (289,499)
===================================================
Basic and diluted net loss per common
share $ (0.00) $ (0.00) $ (0.00) $ (0.00)
Weighted average common
shares 390,499,544 337,638,006 390,499,544 327,100,643
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PANGEA PETROLEUM CORPORATION
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
for the Six months ended June 30, 2009
(Unaudited)
Preferred Additional Accumu- Stockholders'
Stock Paid-In lated Equity
Shares Amount Capital Deficit (Deficit)
Balance at December
31, 2008 $ 365,500 $ 18,521,903 $ (19,522,753) $ (635,350)
Acquisition of San
Diego Airmotive 100,000 324,533
Common stock
issued to
services 25,000 - - 25,000
Net loss - (61,814) (61,814)
---------------------------------------------------------------
Balance at June
30, 2009 100,000 $ 390,500 $ 18,521,904 $ (19,260,034) $(247,631)
================================================================
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PANGEA PETROLEUM CORPORATION
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
for the six months ended June 30, 2009 and 2008
(Unaudited)
2009 2008
Cash flows from operating activities:
Net loss $ (81,922) $ (289,499)
Adjustments to reconcile net loss to net cash
used in operating activities (24,520) 276,753
Net cash used in operating activities 49,268 (12,746)
Cash flows from investing activities:
Capital and exploratory expenditures - -
Cash flows from financing activities:
Repayment of debt
Borrowing of debt 25,000 11,500
----------------------
Net cash provided by (used in) financing activities 25,000 11,500
----------------------
Net increase/(decrease) in cash and cash equivalents (6,908) (1,246)
Cash and cash equivalents at beginning of period 8,998 2,718
-----------------------
Cash and cash equivalents at end of period $ 2,090 $ 1,472
=======================
Supplemental Disclosures
Cash paid for interest $ - $ -
Cash paid for income taxes - -
Non Cash Disclosures
Assumptions of debt associated with Oil & Gas Property - -
Seller Financed purchase of O&G properties - -
Oil and gas property acquired with common stock issuance 32,000
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NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying unaudited interim consolidated financial statements of Pangea
Petroleum Corp., a Colorado corporation, have been prepared in accordance with
accounting principles generally accepted in the United States of America and the
rules of the Securities and Exchange Commission and should be read in
conjunction with the audited financial statements and notes thereto contained in
the Pangea's latest Annual Report filed with the SEC on Form 10-K. In the
opinion of management, all adjustments, consisting of normal recurring
adjustments, necessary for a fair presentation of financial position and the
results of operations for the interim periods presented have been reflected
herein. The results of operations for interim periods are not necessarily
indicative of the results to be expected for the full year.
Notes to the consolidated financial statements that would substantially
duplicate the disclosure contained in the audited financial statements for the
most recent fiscal year, December 31, 2008, as reported in Form 10-K, have been
omitted.
2. GOING CONCERN CONSIDERATIONS
Since its inception, Pangea has suffered recurring losses from operations and
has been dependent on existing stockholders and new investors to provide cash
resources to sustain its operations. During the three months ended June 30, 2009
and 2008, Pangea reported net losses of $11,505 and $174,286 respectively. These
conditions raise substantial doubt about Pangea's ability to continue as a going
concern.
Pangea has developed a multi-step plan and has taken actions to improve its
financial position and deal with its liquidity problems. The final steps of the
plan are still being developed, but may include additional private placements of
Pangea's common stock, and/or exploration efforts, and efforts to raise
additional debt financing or equity investments. There can be no assurance that
any of the plans developed by Pangea will produce cash flows sufficient to
ensure its long-term viability as a going concern.
Pangea's long-term viability as a going concern is dependent on certain key
factors, as follows:
* Pangea's ability to obtain adequate sources of outside financing to support
near term operations and to allow the Company to continue forward with current
strategic plans.
* Pangea's ability to ultimately achieve adequate profitability and cash flows
to sustain continuing operations.
3. STOCKHOLDERS' EQUITY
There was no change in stockholders' equity as there was no stock issuance in
the second quarter of 2009.
4. RECENT EVENTS
The Company entered into a Share Exchange Agreement fully executed on February
20, 2009 (the "Exchange Agreement") by and between the Company and AvStar
Aviation Services, Inc. ("AvStar"), providing for the Company's acquisition of
all of the outstanding common stock in San Diego Airmotive ("SDA"), which
(through its predecessor entity) has been providing maintenance, repair and
overhaul ("MRO") services in California since 1987. In connection with this
acquisition, the Company issued to AvStar, the prior owner of SDA, 1,000,000
shares of the Company's newly-created series A preferred stock ("Series A
Preferred Stock"), which shares constitute in the aggregate approximately 92.8%
of outstanding economic interest and voting power in the Company. All
descriptions of the share exchange contained herein and all references to the
terms, provisions and conditions of the Exchange Agreement are qualified in
their entirety by reference to the Exchange Agreement which was detailed in the
8-K filed on February 25, 2009.
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5. RELATED PARTY TRANSACTIONS.
We entered into a Share Exchange Agreement fully executed on February 20, 2009
providing for our acquisition of all of the outstanding common stock in San
Diego Airmotive ("SDA"). In connection with this acquisition, we issued to
AvStar Aviation Services, Inc. ("AvStar"), the prior owner of SDA, 1,000,000
shares of our newly-created series A preferred stock, which shares constitute in
the aggregate approximately 90% of outstanding economic interest and voting
power in us. Each of Henry A. Schulle, Gregory H. Noble and James H. Short
(each now a director of ours, and in the cases of Messrs. Schulle and Noble,
officers as well) were a director or an officer or both of AvStar prior to the
completion of this transaction.
6. SUBSEQUENT EVENTS
On August 19, 2009 at a special meeting, the stockholders of Pangea Petroleum
Corporation (the "Company") approved all five proposed amendments to the
Company's Articles of Incorporation and a sixth proposal that calls for such
Articles of Incorporation (as amended heretofore or at the meeting) to be
restated in a single document. The principal effects of these amendments
involve the change of the Company's corporate name to "AvStar Aviation Group,
Inc." and a one-for-100 reverse stock split of the Company's common stock. One
consequence of the reverse stock split will be the conversion of all outstanding
shares of Series A Preferred Stock into shares of common stock, thereby
simplifying the Company's capitalization. Moreover, another consequence will be
the creation of additional authorized but unissued common shares for general
corporate use. Several more technical amendments will modernize the Company's
Articles of Incorporation. The Company is currently working with relevant
regulators to complete the name change and reverse stock split.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS.
CAUTIONARY STATEMENT FOR FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q includes 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. We have based
these forward-looking statements on our current expectations and projections
about future events. These forward-looking statements are subject to known and
unknown risks, uncertainties and assumptions about us that may cause our actual
results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by such forward-looking statements. In some
cases, you can identify forward-looking statements by terminology such as "may,"
"should," "could," "would," "expect," "plan," "anticipate," "believe,"
"estimate," "continue," or the negative of such terms or other similar
expressions. Factors that might cause or contribute to such a discrepancy
include, but are not limited to, those described in our other Securities and
Exchange Commission filings. The following discussion should be read in
conjunction with our Financial Statements and related Notes thereto included
elsewhere in this report.
GENERAL
We have historically been an independent energy company focused on exploration
and development of oil and natural gas reserves, whose core business was
directed to the development of oil and gas prospects in proven onshore
production areas. In February 2009, we adopted a significant change in our
corporate direction. We have decided to focus our efforts on acquiring aviation
related businesses and developing these businesses to their commercial
potential.
Our new business plan is to acquire, consolidate and grow businesses in the
general aviation industry. We have adjusted our future goals and will place our
primary focus on the acquistion of a portfolio of fixed base operations (FBOs)
at airports that support light jet traffice along with turbine powered and
piston engine aircraft. We believe that the time is here to invest in this
sector. It is both a combination of the economic trends, consumer confidence
and valuation levels as well as new technological innovations that have just
started to impact this sector that makes our prospects of growing a portfolio of
FBO businesses compelling. These facilities will be supported by our
maintenance, repair and overhaul (MRO) of aircraft providing products and
services for the general aviation sector. We believe that since September 11,
2001, both private air transportation and the number of aircraft owned by both
individuals and business have dramatically increased. Each of these sectors, in
addition to routine maintenance, has mandated a number of inspections by the FAA
that are commonly included in traditional MRO services.
Our recently acquired, wholly owned subsidiary, San Diego Airmotive ("SDA"), has
been operating (through its predecessor entity) as an MRO for approximately 22
years. SDA historically provided MRO services for single and multi-engine
aircraft. As capital is available to us, we intend to grow our business through
the expansion of our existing MRO business as well as by acquisitions of fixed
base operaions (FBOs), expansion of our existing MRO, charter operations and
other operational aircraft related businesses.
Since our inception, we have recurring losses from operations and have been
dependent on existing stockholders and new investors to provide the cash
resources to sustain its operations. During the three months ended June 30,
2009, we reported a loss of $11,505 compared to a loss of $174,286 reported for
the three months ended June 30, 2008.
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Our long-term viability as a going concern depends on certain key factors, as
follows:
* Our ability to continue to obtain sources of outside financing to allow us to
continue to business operations.
* Our ability to increase profitability and sustain a cash flow level that will
ensure support for continuing operations.
On August 19, 2009 at a special meeting, the stockholders of Pangea Petroleum
Corporation (the "Company") approved all five proposed amendments to the
Company's Articles of Incorporation and a sixth proposal that calls for such
Articles of Incorporation (as amended heretofore or at the meeting) to be
restated in a single document. The principal effects of these amendments
involve the change of the Company's corporate name to "AvStar Aviation Group,
Inc." and a one-for-100 reverse stock split of the Company's common stock. One
consequence of the reverse stock split will be the conversion of all outstanding
shares of Series A Preferred Stock into shares of common stock, thereby
simplifying the Company's capitalization. Moreover, another consequence will be
the creation of additional authorized but unissued common shares for general
corporate use. Several more technical amendments will modernize the Company's
Articles of Incorporation. The Company is currently working with relevant
regulators to complete the name change and reverse stock split.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our discussion and analysis of the financial condition and results of operations
are based upon our financial statements, which have been prepared in accordance
with generally accepted accounting principles in the placecountry-regionUnited
States. The preparation of these financial statements requires us to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenue and expenses, and related disclosure of contingent assets and
liabilities. On an ongoing basis, we evaluate estimates. We base our estimates
on historical experience and on various other assumptions that are believed to
be reasonable under the circumstances. These estimates and assumptions provide a
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, and these differences
may be material.
We believe the following critical accounting policies affect its more
significant judgments and estimates used in the preparation of its consolidated
financial statements.
OIL AND GAS PRODUCING ACTIVITIES
We follow the "successful efforts" method of accounting for our oil and gas
properties. Under this method of accounting, all property acquisition costs
(cost to acquire mineral interests in oil and gas properties) and costs (to
drill and equip) of exploratory and development wells are capitalized when
incurred, pending determination of whether the well has found proved reserves.
If an exploratory well has not found proved reserves in commercial quantities,
the costs associated with the well are charged to expense. The costs of
development wells are capitalized whether productive or nonproductive.
Geological and geophysical costs and the costs of carrying and retaining
undeveloped properties are expensed as incurred. Management estimates the future
liability for plugging and abandonment of the related wells.
Unproved oil and gas properties that are individually significant are
periodically assessed for impairment of value, and a loss is recognized at the
time of impairment by providing an impairment allowance. Other unproved
properties are amortized based on the average holding period. Capitalized costs
of producing oil and gas properties after considering estimated dismantlement
and abandonment costs and estimated salvage values are depreciated and depleted
by the unit-of-production method. On the sale or retirement of a complete unit
of a proved property, the cost and related accumulated depreciation, depletion,
and amortization are eliminated from the property accounts, and the resultant
gain or loss is recognized. On the retirement or sale of a partial unit of
proved property, the cost is charged to accumulated depreciation, depletion, and
amortization with a resulting gain or loss recognized in the statement of
operations.
On the sale of an entire interest in an unproved property for cash or cash
equivalent, gain or loss on the sale is recognized, taking into consideration
the amount of any recorded impairment if the property had been assessed
individually. If a partial interest in an unproved property is sold, the amount
received is treated as a reduction of the cost of the interest retained.
RESULTS OF OPERATIONS
Financial results for the quarter and half-year ended June 30, 2009 are not
directly comparable to financial results for the equivalent periods ended June
30, 2008. During the first half of 2008, the Company had only limited
participation interests in various oil and gas wells. During the first quarter
of 2009, the Company completed the acquisition of San Diego Airmotive ("SDA"),
which provides maintenance, repair and overhaul ("MRO") services of aircraft in
California. This acquisition greatly affected the financial results for the
second quarter and first half of 2009 compared to the financial results for the
equivalent periods of 2008.
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QUARTER ENDED JUNE 30, 2009 COMPARED TO THE QUARTER ENDED JUNE 30, 2008
-----------------------------------------------------------------------
Revenues. Revenues for the second quarter 2009 were $165,224, consisting of
$163,601 in revenues from aviation operations from SDA and $1,623 in oil and gas
revenues. These revenues represent a great increase from revenues for the second
quarter 2008 of $14,292, which resulted solely from oil and gas interests,
inasmuch as the Company did not own SDA at any time during 2008. The decrease in
oil and gas revenues from the second quarter of 2008 to the second quarter of
2009 resulted from a decrease in production and a decline in oil and gas prices.
Expenses. Costs and expenses increased to $176,729 in the second quarter
2009 from $168,988 in the second quarter 2008. This increase in costs and
expenses reflects $93,546 in costs of goods sold in the second quarter 2009 from
SDA's operations (while the Company had no costs of goods sold in the second
quarter 2008), with the increase being offset by the absence in the second
quarter 2009 of certain costs and expenses relating to oil and gas operations
that were incurred during the second quarter 2008, particularly a $42,696
impairment charge during the second quarter 2008. Moreover, selling, general and
administrative expenses declined to $83,183 in the second quarter 2009 from
$119,451 in the second quarter 2008. Furthermore, the Company had interest
expense in the amount of $19,590 during the second quarter 2008 with no such
expense during the second quarter 2009.
Net Loss. As a result of the considerable increase in revenues and the
comparative small increase in expenses, the net loss of $11,505 for the second
quarter 2009 represents a decrease of $162,781 from the net loss of $174,286 for
second quarter 2008.
SIX MONTHS ENDED JUNE 30, 2009 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 2008
-----------------------------------------------------------------------------
Revenues. Revenues for the first half 2009 were $340,619, consisting of
$336,324 in revenues from aviation operations from SDA and $4,295 in oil and gas
revenues. These revenues represent a great increase from revenues for the first
half 2008 of $21,860, which resulted solely from oil and gas interests, inasmuch
as the Company did not own SDA at any time during 2008. The decrease in oil and
gas revenues from the first half of 2008 to the first half of 2009 resulted from
a decrease in production and a decline in oil and gas prices.
Expenses. Costs and expenses increased to $402,433 in the first half 2009
from $272,181 in the first half 2008. This increase in costs and expenses
reflects $202,804 in costs of goods sold in the first half 2009 from SDA's
operations (while the Company had no costs of goods sold in the first half
2008), with the increase being offset by the absence in the first half 2009 of
certain costs and expenses relating to oil and gas operations that were incurred
during the first half 2008, particularly a $42,696 impairment charge during the
first half 2008. Moreover, selling, general and administrative expenses declined
to $198,738 in the first half 2009 from $215,927 in the first half 2008.
Furthermore, the Company had interest expense in the amount of $39,178 during
the first half 2008 with no such expense during the first half 2009.
Net Loss. As a result of the considerable increase in revenues and the
relatively smaller increase in expenses, the net loss of $61,814 for the first
half 2009 represents a decrease of $227,685 from the net loss of $289,499 for
first half 2008.
LIQUIDITY AND CAPITAL RESOURCES
Currently, we have limited financial ability to pursue our new business plan. We
are currently trying to determine the scope of the business activities that we
will pursue in the foreseeable future. The amount of capital that we will need
depends on the scope of the business activities that we ultimately decide to
pursue. This scope is uncertain at this time. However, we know that we must
obtain additional financing to pursue our business plan at any level that we are
likely to pursue. We are currently searching for sources of financing, but we
currently do not have any binding commitments for, or readily available sources
of, financing. We cannot assure anyone that financing will be available to us
when needed or, if available, that such financing can be obtained on
commercially reasonably terms. If we do not obtain financing we will be
constrained to contract the scope of our business plan. Under certain
circumstances, we may be constrained to attempt to sell some of our assets.
However, we cannot assure anyone that we will be able to find interested buyers
or that the funds received from any such sale would be adequate to fund our
activities. Under certain circumstances, we could be forced to cease our
operations and liquidate our remaining assets, if any.
We have outstanding the following notes that became due and payable at
December 31, 2008 totaling $659,771 and related accrued interest of $98,313 as
of June 30, 2009. We are currently starting negotiations to satisfy these
amounts.
(a) Note payable to Mary Pollock Merritt, daughter of our former chief
executive officer. This note bears interest at rates of 12% per year and
became due on December 31, 2008. This note is not collateralized.
The current outstanding balance on this note as of June 30, 2009
was $168,683.
(b) Note payable to Charles Pollock, our former chief executive officer and
a significant stockholder of ours. This note bears interest of 12% per year
and became due on December 31, 2008. This note is not collateralized. The
current outstanding balance on this note as of June 30, 2009 was
$461,015.
(c) Note payable to Mark Weller, our former president and a significant
stockholder of ours. This note bears interest of 12% per year and became
due on December 31, 2008. This note is not collateralized. The current
outstanding balance on this note as of June 30, 2009 was $128,387.
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OFF-BALANCE SHEET ARRANGEMENTS
We have no off balance sheet arrangements.
ITEM 4T. CONTROLS AND PROCEDURES.
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
As of the end of the period of this report, our principal executive and
principal financial officer carried out an evaluation of the effectiveness of
the design and operation of our disclosure controls and procedures. This
evaluation was carried out under the supervision and with the participation of
our management, including our Chief Executive Officer and Chief Financial
Officer. We have concluded, based on that evaluation, that, as of such date, the
disclosure controls and procedures were not effective to ensure that information
required to be disclosed in reports filed or submitted under the Securities
Exchange Act of 1934 (the "Exchange Act") is accumulated and communicated to our
management, including our Chief Executive Officer and Chief Financial Officer,
as appropriate to allow timely decisions regarding required disclosure. Although
the evaluation did not detect any material weaknesses in our system of internal
accounting controls over financial reporting, management identified significant
deficiencies with respect to the timely public reporting of events requiring
such reporting. We are instituting corrective action to ensure that such events
are timely reported publicly. Notwithstanding management's assessment that our
internal control over financial reporting was ineffective as of the end of the
period of this report, and the significant deficiencies described above, we
believe that the consolidated financial statements included in this report
correctly present our financial condition, results of operations and cash flows
for the periods covered thereby in all material respects.
LIMITATIONS ON EFFECTIVENESS OF CONTROLS AND PROCEDURES
Our management, including our Chief Executive Officer and Chief Financial
Officer, does not expect that our disclosure controls and procedures or our
internal controls will prevent all error and all fraud. A control system, no
matter how well conceived and operated, can provide only reasonable, not
absolute, assurance that the objectives of the control system are met. Further,
the design of a control system must reflect the fact that there are resource
constraints and the benefits of controls must be considered relative to their
costs. 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, within we have been detected. These inherent limitations
include, but are not limited to, 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, 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, control may become inadequate because of changes
in conditions, or the degree of compliance with the policies or procedures may
deteriorate.
CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING
There have not been any changes in our internal control over financial
reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the
Exchange Act, during our first fiscal quarter of 2009 that have materially
affected, or are reasonably likely to materially affect our internal control
over financial reporting.
PART II OTHER INFORMATION
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
There were no sales of Equity Securtities during the second quarter of 2009.
-10-
ITEM 6. EXHIBITS.
(a) The following exhibits are filed with this Quarterly Report or are
incorporated herein by reference:
Exhibit
Number Description
31.01 Certification pursuant to Rule 13a-14(a) of the Securities Exchange
Act of 1934.
31.02 Certification pursuant to Rule 13a-14(a) of the Securities Exchange
Act of 1934.
32.01 Certification Pursuant to 18 U.S.C. Section 1350, as pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
32.02 Certification Pursuant to 18 U.S.C. Section 1350, as pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant has
duly caused this Report to be signed on its behalf by the undersigned, thereunto
duly authorized.
PANGEA PETROLEUM CORP.
(Registrant)
By: /s/Russell Ivy
Russell Ivy,
Chief Executive Officer
(Principal Executive Officer)
By: /s/ Robert Wilson
Robert Wilson,
Vice President and Chief
Financial Officer
(Principal Financial Officer
and Principal Accounting Officer)
August 24, 2009
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