UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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 June 30, 2000
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Commission File No. 000-30503
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PANGEA PETROLEUM CORPORATION
(Name of small business issuer in its charter)
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<S> <C>
Colorado 76-0635938
(State or jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
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6666 Harwin Drive, Suite 545
Houston, Texas 77036
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)
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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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26,771,328 shares of Common Stock, par value $.001 per
share, were outstanding at August 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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Consolidated Financial Statements (Quarter ended June 30,
2000 Reviewed)
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Balance Sheets - June 30, 2000 and December 31, 1999
(Audited)
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Statements of Operations - Six Months ended June 30, 2000
and 1999
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Statements of Operations - Three Months ended June 30,
2000 and 1999
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Statements of Cash Flows - Six Months ended June 30, 2000
and 1999
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Notes to Consolidated 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 4 - Submission of Matters to a Vote of Security
Holders
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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 six months ended June 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 June 30, 2000, and
the related condensed statements of operations and cash
flows for the three-month and six-month periods ended June
30, 2000. These financial statements are the
responsibility of the Corporation's management.
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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.
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 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.
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Houston, Texas
August 11, 2000
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PANGEA PETROLEUM CORPORATION
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Balance Sheets
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June 30, 2000 and December 31, 1999
(Unaudited - see accompanying accountants' review report)
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<S> <C> <C>
Assets 2000 1999
(Audited)
Current assets:
Cash $ 0 $ 343
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Accounts receivable, less allowance
for doubtful accounts of
$29,868 in 2000 and in 1999 10,081 8,009
Prepaid expenses and other current assets 50,000 0
Deferred income taxes 82,858 65,261
Total current assets 142,939 73,613
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Real estate held for sale 46,642 0
Property and equipment, net of
accumulated depreciation 112,523 98,471
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Goodwill 178,750 100,000
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Other assets 1,988 2,205
Total assets $ 482,842 $ 274,289
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Liabilities and Stockholders' Equity
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Current liabilities:
Bank overdrafts 16,624 5,931
Accounts payable and accrued expenses 139,576 103,202
Accrued interest payable 0 7,350
Payable to affiliated companies 0 301,119
Note payable 25,000 0
Total current liabilities 181,200 417,602
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Long-term note payable to related parties 0 162,000
Total liabilities 181,200 579,602
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Stockholders' equity:
Common stock, $.001 par value.
Authorized 50,000,000 shares:
issued and outstanding, 25,634,578
in 2000 and 17,809,000 in 1999 25,635 17,809
Additional paid-in capital 898,640 84,996
Accumulated deficit (622,633) (408,118)
Total stockholders' equity (deficit) 301,642 (305,313)
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Commitments and contingent liabilities
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Total liabilities and
stockholders' equity $ 482,842 $ 274,289
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See accompanying notes to financial statements.
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PANGEA PETROLEUM CORPORATION
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Statements of Operations
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Six months ended June 30, 2000 and 1999
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(Unaudited - see accompanying accountants' review report)
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<S> <C> <C>
2000 1999
Revenues $ 0 $ 0
Costs and expenses:
Costs of sales 0 0
Selling, general and administrative 223,680 55,368
Depreciation 8,948 0
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Total operating expenses 232,628 55,368
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Operating loss (232,628) (55,368)
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Other income:
Other income 516 0
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Total other income 516 0
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Net loss before tax benefit (232,112) (55,368)
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Deferred income tax benefit 17,597 0
Net loss $ (214,515) $ (55,368)
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Net loss per share - basic and diluted $ (0.01) $ (0.00)
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Weighted average common shares 21,035,110 13,060,300
================================
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See accompanying notes to financial statements.
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PANGEA PETROLEUM CORPORATION
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Statements of Operations
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Three months ended June 30, 2000 and 1999
(Unaudited - see accompanying accountants' review report)
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<S> <C> <C>
2000 1999
---- ----
Revenues $ 0 $ 0
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Costs and expenses:
Costs of sales 0 0
Selling, general and
administrative 123,516 55,368
Depreciation 4,474 0
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Total operating expenses 127,990 55,368
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Operating loss (127,990) (55,368)
Other income:
Other income 0 0
Total other income 0 0
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Net loss before tax benefit (127,990) (55,368)
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Deferred income tax benefit 0 0
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Net loss $ (127,990) $ (55,368)
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Net loss per share
- basic and diluted $ (0.01) $ (0.00)
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Weighted average common shares 23,112,658 13,273,333
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See accompanying notes to financial statements.
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PANGEA PETROLEUM CORPORATION
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Statements of Cash Flows
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Six months ended June 30, 2000 and 1999
(Unaudited - see accompanying accountants' review report)
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<S> <C> <C>
2000 1999
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Cash flows from operating activities:
Net loss $ (214,515) $ (55,368)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation of property and equipment 8,948 0
Changes in assets and liabilities:
Increase in accounts receivable (2,072) 0
Increase in prepaid expenses (50,000) 0
(Increase) decrease in other assets 217 (683)
Increase in accounts payable
and accrued expenses 34,778 7,613
Net cash used in operating activities (222,644) (48,438)
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Cash flows from investing activities:
Purchase of property and equipment (23,000) (64,536)
Purchase of real estate held for sale (46,642) 0
Increase in goodwill (50,000) (100,000)
Net cash used in investing activities (119,642) (164,536)
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Cash flows from financing activities:
Proceeds from issuance of common stock 331,250 1,500
Proceeds from notes payable to related parties 0 199,411
Increase in bank overdrafts 10,693 12,063
Net cash provided by financing
activities 341,943 212,974
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Net decrease in cash (343) 0
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Cash at beginning of year 343 0
Cash at end of period $ 0 $ 0
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See accompanying notes to financial statements.
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PANGEA PETROLEUM CORPORATION
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Notes to Financial Statements
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(1) General
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Pangea Petroleum Corporation (the Company), formerly
Segway II Corp., is in the business of producing oil and
gas from proven reserves.
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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.
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As contemplated by the Securities and Exchange Commission
(SEC) under 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) Acquisition
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Effective April 26, 2000, Pangea Petroleum Corporation
acquired 100% of the outstanding stock of Segway II Corp.
(Segway) in exchange for $50,000 in cash, a note payable
in the amount of $25,000 and by issuing 5,000 shares of
the Company's common stock. The only asset Segway had on
the acquisition date was the fact the Segway was a
publicly trading company listed on the OTC Bulletin Board
in good standing with the SEC and the National Association
of Securities Dealers (Segway was a reporting public
company). Therefore, the Company recorded the acquisition
by recording $78,750 of goodwill.
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(3) Property and Equipment
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Property and equipment is summarized as follows at June
30, 2000 and December 31, 1999.
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<S> <C> <C>
2000 1999
Oil and gas properties $ 58,000 $ 35,000
Machinery and equipment 61,000 61,000
Office equipment 15,245 15,245
Total property and equipment 134,245 111,245
Less accumulated depreciation 21,722 12,774
Net property and equipment $ 112,523 $ 98,471
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PANGEA PETROLEUM CORPORATION
Notes of Financial Statements
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On March 9, 2000, the Company entered into a contract to
drill and develop oil and gas prospects on certain oil and
gas leases in Webb County, Texas at a cost of $23,000.
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In July 1999, the Company acquired a non-producing South
Texas oil and gas property in exchange for common stock.
This property is in the development process; therefore, it
has no known production or reserves. It is therefore
carried on the Company books at cost of $35,000.
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(4) Conversion of Debt to Equity
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In June 2000, the Company converted $482,470 of the
Company's debt to related parties, including accrued
interest payable in the amount of $7,350, to equity by
issuing 2,970,847 shares of the Company's common stock.
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PART I - FINANCIAL INFORMATION
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Item 1 - Consolidated Financial Statements
Item 2- Management's Discussion and Analysis of Financial
Condition and Results of Operations.
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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.
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The Months Ended June 30, 2000 Compared to Three Months
Ended June 30, 1999.
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Results of Operations -
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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.
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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.
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Net Earnings
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Earnings from operations were zero during the quarter
because WorldLink operations were terminated and energy
projects had not started producing revenues as noted
above.
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Liquidity and Capital Resources
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The Company remains liquid because sufficient funds for
capital projects and very limited G & A was raised from
investors.
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Part II
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Pursuant to the Instructions on Part II of the Form 10-
QSB, Items 1, 3 and 5 are omitted.
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Item 2. Changes in Securities
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The following information sets forth certain information
as of June 30, 2000, for all securities the Company sold
since March 31, 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.
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On April 5, 2000, the Company issued 20,000 shares to
Sallie E. Curry 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.
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On April 6, 2000, the company issued 45,455 to Charles D.
Taylor Profit Sharing Plan in consideration of $20,000.
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.
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On April 14, 2000, the Company issued 1,500,000 shares to
Rhea Laws 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.
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On June 7, 2000, the Company issued 5,500 shares to J.T.
Fraser 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.
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On June 7, 2000, the Company issued 15,000 to Darrell
Nilson 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.
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On June 7, 2000, the Company issued 100,000 to Charles D.
Taylor Profit Sharing Plan in consideration of $15,000.
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.
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On June 7, 2000, the Company issued 7,000 to David B. Van
Matre of $17,640. 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.
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On June 26, 2000, the Company issued 5,000 shares to
Timothy McCulley 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.
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On June 26, 2000, the Company issued 2,970,847 to Rapid
Release Research, Inc. for the conversion of promissory
notes owed by the Company to Rapid Release in the amount
of $649,872. 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.
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On June 27, 2000, the Company issued 50,000 shares to
Jeffrey Brommer in consideration of $12,500. 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.
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On June 27, 2000, the Company issued 175,000 shares to
Sandra B. Lam in consideration for the settlement and
mutual release of a claim against 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.
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On June 27, 2000, the Company issued 500,000 shares to
Pecan Tree Consulting, Inc. 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.
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On June 29, 2000, the Company issued 40,000 shares to
Bradley E. and Nassim Hough in consideration of $10,000.
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.
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On June 30, 2000, the Company issued 40,000 shares to Ray
Howard in consideration of $10,000. 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. Such shares were issued in July 2000.
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Item 4. Submission of Matters to a Vote of Security
Holders.
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On April 26, 2000 a majority of the outstanding shares
approved
the Stock Acquisition and Reorganization Agreement between
the Company and Segway II Corp. dated April 26, 2000 and
the issuance of 5,000 shares of the Company's common stock
to Segway II shareholders in accordance therewith. To
date such shares have not been issued.
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Item 6 Exhibits and Reports on Form 8-K
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(a) Exhibits - Exhibit 27 - Financial Data Schedule
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(b) Reports on Form 8-K - On April 26, 2000, the
Company filed an 8-K12g3 with the Securities and Exchange
Commission for the Stock Acquisition and Reorganization
Agreement between the Company and Segway II Corp. dated
April 26, 2000. (See SEC File No. 000-30503)
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SIGNATURES
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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 August 16, 2000.
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PANGEA PETROLEUM CORPORATION
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By: /s/ Charles B. Pollock
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Charles B. Pollock,
Chairman of the Board of Directors
and Chief Executive Officer
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