UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
<P>
FORM 10-QSB
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QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended September 30, 2000
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Commission File No. 000-30503
<P>
PANGEA PETROLEUM CORPORATION
(Name of small business issuer in its charter)
<TABLE>
<S> <C>
Colorado 76-0635938
(State or jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
</TABLE>
<P>
6776 Southwest Freeway, Suite 620
Houston, Texas 77074
713-933-0374
(Address, including zip code and telephone number,
including area
code, of registrant's executive offices)
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Common Stock
(Title of class)
<P>
Check whether the issuer (1) 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 Company was required to file such
reports), and (2) has been subject to such filing
requirements for the past 90 days.
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Yes X NO
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29,693,900 shares of Common Stock, par value $.001 per
share, were outstanding at November 14, 2000.
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Documents Incorporated by Reference: None
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PANGEA PETROLEUM CORPORATION
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FORM 10-QSB
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Table of Contents
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PART I - Financial Information
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Item 1 - Financial Statements
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Independent Accountants' Report
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Condensed Financial Statements (Quarter ended September
30, 2000 Reviewed)
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Balance Sheets - September 30, 2000 and December 31, 1999
(Audited)
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Statements of Operations - Nine Months ended September 30,
2000 and 1999
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Statements of Operations - Three Months ended September
30, 2000 and 1999
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Statements of Cash Flows - Nine Months ended September 30,
2000 and 1999
<P>
Notes to Financial Statements
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Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations
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PART II - OTHER INFORMATION
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Item 2 - Changes in Securities and Use of Proceeds
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Item 6 - Reports on Form 8-K
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SIGNATURES
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PART I - FINANCIAL INFORMATION
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Item 1. Consolidated Financial Statements
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BASIS OF PRESENTATION
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The accompanying reviewed financial statements are
presented in accordance with generally accepted
accounting principles for interim financial
information and the instructions to Form 10-QSB and
item 310 under subpart A of Regulation S-B.
Accordingly, they do not include all of the
information and footnotes required by generally accepted
accounting principles for complete financial
statements. The accompanying statements should be
read in conjunction with the audited financial statements
for the year ended December 31, 1999. In the
opinion of management, all adjustments (consisting only
of normal occurring accruals) considered necessary in
order to make the financial statements not misleading,
have been included. Operating results for the three
months and nine months ended September 30, 2000 are not
necessarily indicative of results that may be expected for
the year ending December 31, 2000. The financial
statements are presented on the accrual basis.
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Independent Accountants' Report
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R. E. Bassie & Co., P.C.
Certified Public Accountants
A Professional Corporation
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7171 Harwin Drive, Suite 306
Houston, Texas 77036-2197
Tel: (713) 266-0691 Fax: (713) 266-0692
E-Mail: [email protected]
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To The Board of Directors and Stockholders
Pangea Petroleum Corporation:
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We have reviewed the accompanying condensed balance sheet
of Pangea Petroleum Corporation as of September 30, 2000,
and the related condensed statements of operations and
cash flows for the three-month and nine-month periods
ended September 30, 2000. These financial statements are
the responsibility of the Corporation's management.
<P>
We conducted our review in accordance with standards
established by the American Institute of Certified Public
Accountants. A review of interim financial information
consists principally of applying analytical procedures to
financial data and of making inquiries of persons
responsible for financial and accounting matters. It is
substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion
regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
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Based on our review, we are not aware of any material
modifications that should be made to such condensed
financial statements for them to be in conformity with
generally accepted accounting principles.
<P>
The Corporation's 1999 financial statements were audited
by another auditor, in accordance with generally accepted
auditing standards, including the balance sheet of Pangea
Petroleum Corporation as of December 31, 1999, and the
related statements of operations, stockholders' equity,
and cash flows for the year then ended (not presented
herein); the other auditor's report, dated February 15,
2000, expressed an unqualified opinion on those financial
statements and included an explanatory paragraph
concerning matters that raise substantial doubt about the
Corporation's ability to continue as a going concern. In
our opinion, the information set forth in the accompanying
condensed consolidated balance sheet as of December 31,
1999 is fairly stated, in all material respects, in
relation to the balance sheet from which it has been
derived.
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/s/ R. E. Bassie & Co., P.C.
<P>
Houston, Texas
October 20, 2000
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PANGEA PETROLEUM CORPORATION
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Balance Sheets
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September 30, 2000 and December 31, 1999
(Unaudited - see accompanying accountants' review report)
<TABLE>
<S> <C> <C>
Assets 2000 1999
(Audited)
Current assets:
Cash $ 106,475 $ 343
<P>
Accounts receivable, less allowance
for doubtful accounts of
$0 at September 30, 2000 and
$29,868 at December 31, 1999 5,115 8,009
Prepaid expenses and other current assets 7,800 0
Deferred income taxes 708,066 65,261
--------------------------------
Total current assets 910,314 73,613
--------------------------------
Real estate held for sale 46,642 0
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Property and equipment, net (note 2) 58,000 98,471
<P>
Investment in joint venture (note 3) 12,500 0
<P>
Goodwill, net of accumulated amortization
of $1,969 at September 30, 2000 76,781 100,000
<P>
Other assets 1,988 2,205
--------------------------------
Total assets $ 1,106,225 $ 274,289
================================
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Bank overdrafts 0 5,931
Accounts payable and accrued expenses 1,368 103,202
Accrued interest payable 0 7,350
Payable to affiliated companies 0 301,119
Note payable 10,000 0
--------------------------------
Total current liabilities 11,368 417,602
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Long-term note payable to related parties 0 162,000
--------------------------------
Total liabilities 11,368 579,602
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Stockholders' equity:
Common stock, $.001 par value.
Authorized 50,000,000 shares:
issued and outstanding, 27,240,900
at September 30, 2000 and 17,809,000
at December 31, 1999 27,241 17,809
Additional paid-in capital 2,589,719 84,996
Accumulated deficit (1,487,103) (408,118)
---------------------------------
1,129,857 (305,313)
Less stock subscription receivable (35,000) 0
----------------------------------
Total stockholders' equity (deficit) 1,094,857 (305,313)
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Commitments and contingent liabilities
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Total liabilities and
stockholders' equity $ 1,106,225 $ 274,289
==================================
<P>
See accompanying notes to financial statements.
</TABLE>
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PANGEA PETROLEUM CORPORATION
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Statements of Operations
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Three months ended Setpember 30, 2000 and 1999
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(Unaudited - see accompanying accountants' review report)
<TABLE>
<S> <C> <C>
2000 1999
----------------------------
Revenues $ 0 $ 32,823
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Costs and expenses:
Costs of sales 0 59,393
Selling, general and administrative 709,914 250,254
Write-off of goodwill 100,000 0
Depreciation and amortization 1,969 0
-------------------------------
Total operating expenses 811,883 309,647
------------------------------
Operating loss (811,883) (276,824)
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Other income (expense):
Other income 1,436 0
Loss on the disposition of assets (54,023) 0
------------------------------
Total other income (52,587) 0
------------------------------
Net loss before tax benefit (864,470) (276,824)
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Deferred income tax benefit 0 0
------------------------------
Net loss $ (864,470) $(276,824)
==============================
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Net loss per share - basic and diluted $ (0.04) $ (0.03)
==============================
Weighted average common shares 24,527,469 9,402,160
==============================
</TABLE>
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See accompanying notes to financial statements.
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PANGEA PETROLEUM CORPORATION
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Statements of Operations
<P>
Nine months ended September 30, 2000 and 1999
(Unaudited - see accompanying accountants' review report)
<TABLE>
<S> <C> <C>
2000 1999
---- ----
Revenues $ 0 $ 32,823
<P>
Costs and expenses:
Costs of sales 0 59,393
Selling, general and
administrative 933,594 305,622
Write-off of goodwill 100,000 0
Depreciation and amortization 10,917 0
------------------------
Total operating expenses 1,044,511 365,015
------------------------
Operating loss (1,044,511) (332,192)
<P>
Other income (expense):
Other income 1,952 0
Loss on disposition of assets (54,023) 0
------------------------
Total other income (52,071) 0
------------------------
Net loss before tax benefit (1,096,582) (332,192)
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Deferred income tax benefit 17,597 0
------------------------
Net loss $ (1,078,985) $ (332,192)
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Net loss per share
- basic and diluted $ (0.06) $ (0.04)
<P>
Weighted average common shares 17,565,545 8,370,899
============================
<P>
See accompanying notes to financial statements.
</TABLE>
PANGEA PETROLEUM CORPORATION
<P>
Statements of Cash Flows
<P>
Nine months ended September 30, 2000 and 1999
(Unaudited - see accompanying accountants' review report)
<TABLE>
<S> <C> <C>
2000 1999
-----------------------
Cash flows from operating activities:
Net loss $ (1,078,985) $ (332,192)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation of property and equipment 8,948 0
Amortization of goodwill 1,969 0
Write-off of goodwill 100,000 0
Stock issued for compensation 613,213 0
Bad debts 30,279 0
Loss on disposition of assets 54,023 0
(Increase) decrease in operating activities
Accounts receivable 2,894 (37,784)
Prepaid expenses and other
current assets (7,800) (1,000)
Advances to affiliate (708,066) 0
Deferred income taxes (17,597) 0
Other assets 217 317
Increase (decrease) in operating liabilities:
Accounts payable and accrued expenses (40,780) 83,136
----------------------------------
Net cash used in operating activities (1,041,685) (287,523)
-----------------------------------
Cash flows from investing activities:
Purchase of property and equipment (23,000) (111,245)
Proceeds from the sale of assets 500 0
Purchase of real estate held for sale (46,642) 0
Cash paid for acquisition (53,750) 0
-----------------------------------
Net cash used in investing activities (122,892) (111,245)
<P>
Cash flows from financing activities:
Proceeds from issuance of registered
common stock 310,890 0
Proceeds from issuance of restricted
Common stock 943,750 34,612
Proceeds from borrowing from affiliated
Companies 0 203,028
Proceeds form long-term debt 0 162,000
Proceeds from short-term borrowing 22,000 0
Decrease in bank overdrafts (5,931) 0
-----------------------------------
Net cash provided by financing
activities 1,270,709 399,840
-----------------------------------
Net increase in cash 106,132 1,072
<P>
Cash at beginning of year 343 0
-----------------------------------
Cash at end of period $ 106,475 $ 1,072
===================================
<P>
See accompanying notes to financial statements.
</TABLE>
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PANGEA PETROLEUM CORPORATION
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Notes to Financial Statements
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Notes to Financial Statements
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1) General
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Pangea Petroleum Corporation (the Company or Pangea),
formerly Segway II Corp., is in the business of producing
oil and gas from proven reserves.
<P>
The unaudited financial statements have been prepared on
the same basis as the audited financial statements and, in
the opinion of management, reflect all adjustments
(consisting of normal recurring adjustments) necessary for
a fair presentation for each of the periods presented.
The results of operations for interim periods are not
necessarily indicative of results to be achieved for full
fiscal years.
<P>
As contemplated by the Securities and Exchange Commission
(SEC) under Rules of Regulation S-B, the accompanying
financial statements and related footnotes have been
condensed and do not contain certain information that will
be included in the Company's annual financial statements
and footnotes thereto. For further information, refer to
the Company's 1999 audited financial statements and
related footnotes.
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(2) Property and Equipment
<P>
Property and equipment is summarized as follows at
September 30, 2000 and December 31, 1999.
<TABLE>
<S> <C> <C>
2000 1999
--------------------------
Oil and gas properties $ 58,000 $ 35,000
Machinery and equipment - 61,000
Office equipment 15,245 15,245
--------------------------
Total property and equipment 73,245 111,245
Less accumulated depreciation 15,245 12,774
--------------------------
Net property and equipment $ 58,000 $ 98,471
</TABLE>
<P>
(3) Investment in Joint Venture
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Effective September 7, 2000, the Company entered into an
agreement with Paradigm Advanced Technologies, Inc., a
Delaware Corporation (Paradigm), whereby the Company and
Paradigm will both own a 50% interest in WorldLink USA,
LLC, a Nevada Limited Liability Company (WorldLink).
WorldLink is a development stage company that owns or
licenses video streaming technology and a library of
concerts previously broadcast over the Internet. In
consideration for the 50% ownership in WorldLink, the
Company issued warrants representing the rights to
purchase 12,500,000 shares of Pangea's common stock, par
value $0.001 per share, at an exercise price of $1.00 per
share. The warrants may be exercised on the second
anniversary of the date of issuance. There is no market
for the purchase of Pangea's warrants; therefore, the
issuance of 12,500,000 warrants was recorded at the par
value ($0.001) of common stock of the Company or $12,500.
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(4) Subsequent Event
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Effective October 5, 2000, the Company acquired all of the
outstanding stock of Mass Energy, Inc., a Houston, Texas
based oil and gas exploration company. The Company issued
2,000,000 shares of restricted common stock as
consideration in the acquisition. As part of the
agreement, the Company agreed to file an S-4 Registration
Statement within 20 working days from the date of closing
of the agreement. The acquisition will be accounted for
as a purchase.
<P>
PART I - FINANCIAL INFORMATION
<P>
Item 1 - Consolidated Financial Statements
<P>
Item 2- Management's Discussion and Analysis of Financial
Condition and Results of Operations.
<P>
The statements contained herein and other information
contained in this report may be based, in part, on
manangement's estimates, projections, plans and judgments,
As such, these are forward looking statements and involve
a number of risks and uncertainties. A number of factors,
which could cause actual results to differ materially,
include: general economic conditions, competitive market,
influences, technology changes, and other influences
beyond the control of management.
<P>
The Months Ended June 30, 2000 Compared to Three Months
Ended June 30, 1999.
<P>
Results of Operations -
<P>
Pangea Petroleum Corporation terminated WorldLink
operations during the last quarter pending the successful
sale of a majority of those assets. Additionally, oil and
natural gas operations were still in a startup phase.
Consequently, there were no revenues from operations
during the quarter ending June 30th, 2000. Expenses
during the quarter increased due to costs associated with
the startup of a major energy project that is expected to
generate revenues before the end of the year. Additional
costs were associated with the sale of certain WorldLink
assets. General and Administrative expenses were down.
<P>
Pangea Petroleum has undertaken several small and one
major energy project. We are in the final stages of
negotiating another major energy project. It is expected
that revenues from ongoing and pending projects, coupled
with assets derived from the WorldLink sale will create a
positive and profitable environment for the company.
<P>
Net Earnings
<P>
Earnings from operations were zero during the quarter
because WorldLink operations were terminated and energy
projects had not started producing revenues as noted
above.
<P>
Liquidity and Capital Resources
<P>
The Company remains liquid because sufficient funds for
capital projects and very limited G & A was raised from
investors.
<P>
Part II
<P>
Pursuant to the Instructions on Part II of the Form 10-
QSB, Items 1, 3 and 5 are omitted.
<P>
Item 2. Changes in Securities
<P>
The following information sets forth certain information
as of September 30, 2000, for all securities the Company
sold since July 1, 2000, without registration under the
Act, excluding any information "previously reported as
defined in Rule 12b-2 of the Securities Exchange Act of
1934." There were no underwriters in any of these
transactions, nor were any sales commissions paid thereon.
<P>
On July 5, 2000, the Company issued 4,750 shares to
Richard I. Anslow pursuant to the Stock Acquisition and
Reorganization Agreement with the Company. Such shares
were issued in reliance on the exemption under Section
4(2) of the Securities Act of 1933, as amended (the "Act")
and are restricted in accordance with Rule 144 of the
Securities Act of 1933.
<P>
On July 5, 2000, the Company issued 250 shares to
Robert Jaclin pursuant to the Stock Acquisition and
Reorganization Agreement with the Company. Such shares
were issued in reliance on the exemption under Section
4(2) of the Securities Act of 1933, as amended (the "Act")
and are restricted in accordance with Rule 144 of the
Securities Act of 1933.
<P>
On July 5, 2000, the Company issued 60,000 shares to Ray
Howard in consideration for $17,640 pursuant to a
subscription agreement. Such shares were issued in
reliance on the exemption under Section 4(2) of the
Securities Act of 1933, as amended (the "Act") and are
restricted in accordance with Rule 144 of the Securities
Act of 1933.
<P>
On July 20, 2000, the Company issued 60,000 shares to
Kenneth D. Davidson for consulting services rendered to
the Company. Such shares were issued in reliance on the
exemption under Section 4(2) of the Securities Act of
1933, as amended (the "Act") and are restricted in
accordance with Rule 144 of the Securities Act of 1933.
<P>
On July 19, 2000, the Company issued 20,000 shares to
Randall Massey, an officer of the Company, as
consideration for the repayment of a loan to the Company.
Such shares were issued in reliance on the exemption under
Section 4(2) of the Securities Act of 1933, as amended
(the "Act") and are restricted in accordance with Rule 144
of the Securities Act of 1933.
<P>
On July 19, 2000, the Company issued 100,000 shares to
Charles D. Taylor Profit Sharing Plan in consideration for
$31,000 pursuant to a subscription agreement. Such shares
were issued in reliance on the exemption under Section
4(2) of the Securities Act of 1933, as amended (the "Act")
and are restricted in accordance with Rule 144 of the
Securities Act of 1933.
<P>
On July 27, 2000, the Company issued 10,000 shares to Brad
Stapp in consideration for $5,000 pursuant to a
subscription agreement. Such shares were issued in
reliance on the exemption under Section 4(2) of the
Securities Act of 1933, as amended (the "Act") and are
restricted in accordance with Rule 144 of the Securities
Act of 1933.
<P>
On July 27, 2000, the Company issued 7,000 shares to David
Van Metre in consideration for $140 pursuant to an
exercise of options under a subscription agreement. Such
shares were issued in reliance on the exemption under
Section 4(2) of the Securities Act of 1933, as amended
(the "Act") and are restricted in accordance with Rule 144
of the Securities Act of 1933.
<P>
On August 11, 2000, the Company issued 50,000 shares to
DeLisa Willaims in consideration for $1,750 pursuant to an
option certificate. Such shares were issued in reliance
on the exemption under Section 4(2) of the Securities Act
of 1933, as amended (the "Act") and are restricted in
accordance with Rule 144 of the Securities Act of 1933.
<P>
On August 31, 2000, the Company issued 5,000 shares to
Brad Stapp in consideration for $1,750 pursuant to an
option certificate. Such shares were issued in reliance
on the exemption under Section 4(2) of the Securities Act
of 1933, as amended (the "Act") and are restricted in
accordance with Rule 144 of the Securities Act of 1933.
<P>
On August 31, 2000, the Company issued 5,000 shares to
Michelle M. Crawford for a wedding gift from the Company.
Such shares were issued in reliance on the exemption under
Section 4(2) of the Securities Act of 1933, as amended
(the "Act") and are restricted in accordance with Rule 144
of the Securities Act of 1933.
<P>
On September 5, 2000, the Company issued 5,000 shares to
Brad Stapp in consideration for $2,500 pursuant to a
subscription agreement. Such shares were issued in
reliance on the exemption under Section 4(2) of the
Securities Act of 1933, as amended (the "Act") and are
restricted in accordance with Rule 144 of the Securities
Act of 1933.
<P>
On September 7, 2000, the Company issued 214,286 shares to
David Lennox, an officer and director of the Company for
the conversion of a promissory note owed by the Company to
David Lennox in the amount of $75,000. Such shares were
issued in reliance on the exemption under Section 4(2) of
the Securities Act of 1933, as amended (the "Act") and are
restricted in accordance with Rule 144 of the Securities
Act of 1933.
<P>
On September 7, 2000, the Company issued 74,286 shares to
Charles B. Pollock, an officer and director of the Company
for the payment of salary in the amount of $26,000. Such
shares were issued in reliance on the exemption under
Section 4(2) of the Securities Act of 1933, as amended
(the "Act") and are restricted in accordance with Rule 144
of the Securities Act of 1933.
<P>
On September 26, 2000, the Company issued 5,000 shares to
Roger Elswick in consideration for $1,750 pursuant to an
option certificate. Such shares were issued in reliance
on the exemption under Section 4(2) of the Securities Act
of 1933, as amended (the "Act") and are restricted in
accordance with Rule 144 of the Securities Act of 1933.
<P>
On September 27, 2000, the Company issued 20,000 shares to
Garland G. Mueller in consideration for $25,000 pursuant
to a subscription agreement. Such shares were issued in
reliance on the exemption under Section 4(2) of the
Securities Act of 1933, as amended (the "Act") and are
restricted in accordance with Rule 144 of the Securities
Act of 1933.
<P>
On September 28, 2000, the Company issued 1,000 shares to
Citation Solutions, Inc. in consideration for services
rendered in the design of the Company's website. Such
shares were issued in reliance on the exemption under
Section 4(2) of the Securities Act of 1933, as amended
(the "Act") and are restricted in accordance with Rule 144
of the Securities Act of 1933.
<P>
Item 4. Submission of Matters to a Vote of Security
Holders.
<P>
On September 7, 2000 a majority of the outstanding shares
approved the Strategic Alliance Agreement between the
Company and Paradigm Advanced Technologies, Inc. dated
September 7, 2000.
<P>
Item 6 Exhibits and Reports on Form 8-K
<P>
(a) Exhibits - Exhibit 27 - Financial Data Schedule
<P>
(b) Reports on Form 8-K - On September 22, 2000, the
Company filed an 8-K with the Securities and Exchange
Commission for the Strategic Alliance Agreement between
the Company and Paradigm Advanced Technologies, Inc. dated
September 7, 2000. (See SEC File No. 000-30503)
<P>
SIGNATURES
<P>
Pursuant to the requirements of Section 13 or 15(d) 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 on November 14,
2000.
<P>
PANGEA PETROLEUM CORPORATION
<P>
By:/s/ Charles B. Pollock
---------------------------
Charles B. Pollock,
Chairman of the Board of Directors
and Chief Executive Officer
<P>
Date: November 14, 2000
<P>
