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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10QSB
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000
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 333-94631
PALAL MINING CORPORATION
(Exact name of registrant as specified in its charter)
NEVADA 88-0435904
(State of other jurisdiction (IRS Employer Identification
of incorporation or organization) Number)
1040 West Georgia
Suite 1160
Vancouver, British Columbia
Canada V6E 4H1
(Address of principal executive offices)
(604) 605-0885
(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 the number of shares outstanding of each of the issuer's
classes of common stock, as of September 30, 2000: 5,451,850
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Board of Directors
Palal Mining Corporation
Vancouver, BC
CANADA
ACCOUNTANT'S REVIEW REPORT
We have reviewed the accompanying balance sheet of Palal Mining
Corporation (an exploration stage enterprise) as of September 30, 2000,
and the related statements of operations, stockholders' equity (deficit),
and cash flows for the three months ended September 30, 2000, for the
period from September 2, 1999 (inception) to September 30, 1999, and for
the period from September 2, 1999 (inception) to September 30, 2000. All
information included in these financial statements is the representation
of the management of Palal Mining Corporation.
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 making inquiries of persons responsible
for financial and accounting matters. It is substantially less in scope
than an audit 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.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying financial statements in order for them
to be in conformity with generally accepted accounting principles.
The financial statements for the period from September 2, 1999
(inception) to June 30, 2000 were audited by us and we expressed an
unqualified opinion on it in our report dated July 31, 2000. We have not
performed any auditing procedures since that date.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 2,
the Company has been in the exploration stage since its inception on
September 2, 1999. Realization of a major portion of the assets is
dependent upon the Company's ability to meet its future financing
requirements, and the success of future operations. These factors raise
substantial doubt about the Company's ability to continue as a going
concern. Management's plans regarding those matters also are described
in Note 2. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
/s/ Williams & Webster, P.S.
Williams & Webster, P.S.
Certified Public Accountants
Spokane, Washington
November 10, 2000
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PALAL MINING CORPORATION
(An Exploration Stage Company)
BALANCE SHEETS
September 30, June 30,
2000 2000
(Unaudited)
ASSETS
CURRENT ASSETS
Cash $ 42,694 $ 56
---------- ----------
Total Current Assets 42,694 56
---------- ----------
OTHER ASSETS
Deposits 411 411
Mining claims 64 64
---------- ----------
Total Other Assets 475 475
---------- ----------
TOTAL ASSETS $ 43,169 $ 531
========== ==========
LIABILITIES & STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 6,054 $ 2,570
Related party payable 26,042 21,224
---------- ----------
Total Current Liabilities 32,096 23,794
---------- ----------
COMMITMENTS AND CONTINGENCIES - -
---------- ----------
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, 100,000,000 shares
authorized, $0.00001 par value;
5,451,850 and 5,000,000 shares
issued and outstanding, respectively 55 50
Additional paid-in-capital 320,130 274,950
Deficit accumulated during
exploration stage (309,112) (298,263)
---------- ----------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) 11,073 (23,263)
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 43,169 $ 531
========== ==========
See accompanying notes and accountant's review report.
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PALAL MINING CORPORATION
(An Exploration Stage Company)
STATEMENTS OF OPERATIONS
For the For the
Period From Period From
September 2, September 2,
For the 1999 1999
Three Months (Inception) (Inception)
Ended to to
September 30 September 30 September 30
2000 1999 2000
(Unaudited) (Unaudited) (Unaudited)
REVENUES $ - $ - $ -
--------- ---------- ----------
E X P E N S E S
Consulting services
provided by directors - 273,586 273,586
Rent 1,208 - 2,029
General and administrative
expense 4,085 - 4,701
Legal and accounting 4,253 - 26,127
Travel 1,227 - 1,227
Meals 76 - 76
Miscellaneous - - 125
Mining exploration - - 1,241
--------- ---------- ----------
TOTAL EXPENSES 10,849 273,586 309,112
--------- ---------- ----------
LOSS BEFORE INCOME TAXES (10,849) (273,586) (309,112)
INCOME TAXES - - -
--------- ---------- ----------
NET LOSS $ (10,849) $ (273,586) $ (309,112)
========= ========== ==========
NET LOSS PER COMMON SHARE,
BASIC AND DILUTED $ nil $ (0.05) $ (0.06)
========= ========== ==========
WEIGHTED AVERAGE NUMBER
OF COMMON STOCK SHARES
OUTSTANDING, BASIC
AND DILUTED 5,058,044 5,000,000 5,013,519
========= ========== ==========
See accompanying notes and accountant's review report.
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PALAL MINING CORPORATION
(An Exploration Stage Company)
STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT)
Deficit
Accumulated Total
Common Stock Additional during the Stockholders'
Number Paid-In Exploration Equity
of Shares Amount Capital Stage (Deficit)
Issuance of common
stock for mining
claims and executive
compensation at
$0.055 per share 5,000,000 $ 50 $ 274,950 $ - $ 275,000
Net loss for the
period ending
June 30, 2000 - - - (298,263) (298,263)
--------- ---- --------- ---------- ----------
Balance,
June 30, 2000 5,000,000 50 274,950 (298,263) (23,263)
Sale of common stock
at $0.10 per share 451,850 5 45,180 - 45,185
Net loss for the
period ended
September 30, 2000 - - - (10,849) (10,849)
--------- ---- --------- ---------- ----------
Balance,
September 30, 2000
(Unaudited) 5,451,850 $ 55 $ 320,130 $ (309,112) $ 11,073
========= ==== ========= ========== ==========
See accompanying notes and accountant's review report
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PALAL MINING CORPORATION
(An Exploration Stage Company)
STATEMENTS OF CASH FLOWS
For the For the
Period From Period From
September 2, September 2,
For the 1999 1999
Three Months (Inception) (Inception)
Ended to to
September 30 September 30 September 30
2000 1999 2000
(Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (10,849) $ (273,586) $ (309,112)
Adjustments to reconcile net
loss to net cash used by
operating activities:
Payment of expenses from
issuance of stock - 273,586 274,804
Increase in:
Deposits - - (411)
Accounts payable 3,484 - 6,054
Loan from related party 4,818 - 26,042
--------- ---------- ----------
Net cash provided by
operating activities (2,547) - (2,623)
--------- ---------- ----------
CASH FLOWS FROM INVESTING
ACTIVITIES - - -
--------- ---------- ----------
CASH FLOWS FROM FINANCING
ACTIVITIES
Proceeds from sales of stock 45,185 - 45,185
Proceeds from advances - - 132
--------- ---------- ----------
Net cash provided by
financing activities 45,185 - 45,317
--------- ---------- ----------
Increase in cash 42,638 - 42,694
Cash, beginning of period 56 - -
--------- ---------- ----------
Cash, end of period $ 42,694 $ - $ 42,694
========= ========== ==========
SUPPLEMENTAL DISCLOSURES:
Interest paid $ - $ - $ -
========= ========== ==========
Income taxes paid $ - $ - $ -
========= ========== ==========
NON-CASH TRANSACTIONS:
Stock issued in payment of
expenses $ - $ 273,586 $ 273,586
Stock issued in payment of
advances $ - $ - $ -
Stock issued in payment of
mining claims $ - $ - $ -
See accompanying notes and accountant's review report.
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PALAL MINING CORPORATION
(An Exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
September 30, 2000
NOTE 1 - ORGANIZATION AND DESCRIPTION OF BUSINESS
Palal Mining Corporation (hereinafter "the Company") filed for
incorporation on September 2, 1999 under the laws of the state of Nevada
primarily for the purpose of acquiring, exploring, and developing mineral
properties. The Company's fiscal year end is June 30.
The Company is actively seeking additional capital and management
believes that the Company can develop mineral properties, which it has
acquired in British Columbia. However, there are inherent uncertainties
in mining operations and management cannot provide assurances that it
will be successful in this endeavor. Furthermore, the Company is in the
exploration stage, as it has not realized any significant revenues from
its planned operations.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies is presented to assist in
understanding the financial statements. The financial statements and
notes are representations of the Company's management, which is
responsible for their integrity and objectivity. These accounting
policies conform to generally accepted accounting principles and have
been consistently applied in the preparation of the financial statements.
Interim Financial Statements
The interim financial statements as of September 30, 2000 and for the
three months ended September 30, 2000, included herein, have been
prepared for the Company without audit. They reflect all adjustments,
which are, in the opinion of management, necessary to present fairly the
results of operations for these periods. All such adjustments are normal
recurring adjustments. The results of operations for the periods
presented are not necessarily indicative of the results to be expected
for the full fiscal year.
Accounting Method
The Company's financial statements are prepared using the accrual method
of accounting.
Use of Estimates
The process of preparing financial statements in conformity with
generally accepted accounting principles requires the use of estimates
and assumptions regarding certain types of assets, liabilities, revenues,
and expenses. Such estimates primarily relate to unsettled transactions
and events as of the date of the financial statements. Accordingly, upon
settlement, actual results may differ from estimated amounts.
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PALAL MINING CORPORATION
(An Exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
September 30, 2000
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Exploration Stage Activities
The Company has been in the exploration stage since its formation in
September 1999 and has not yet realized any revenues from its planned
operations. It is primarily engaged in the acquisition, exploration and
development of mining properties. Upon location of a commercial minable
reserve, the Company expects to actively prepare the site for its
extraction and enter a development stage.
Foreign Currency Valuation
Management has elected to value foreign currency transactions on the date
the transaction concludes. The conversion is calculated by multiplying
the foreign currency value by the exchange rate at the close of the
nearest trading day.
Foreign Currency Translation
The Company has adopted Financial Accounting Standard No. 52. There were
no foreign currency translation adjustments required at September 30,
2000. The Company will record future foreign currency translation
results as a separate component of stockholders' equity.
Cash and Cash Equivalents
For purposes of the Statement of Cash Flows, the Company considers all
short-term debt securities purchased with a maturity of three months or
less to be cash equivalents.
Fair Value of Financial Instruments
The carrying amounts for cash, accounts payable and accrued liabilities
approximate their fair value.
Concentration of Risk
The Company maintains its cash accounts in primarily one commercial bank
in Vancouver, British Columbia, Canada. The Company's cash account is a
business checking account maintained in U.S. dollars, which totaled
$42,694 as of September 30, 2000. This amount is not insured.
Derivative Instruments
In June 1998, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities." This standard
establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities. It requires that an entity
recognize all derivatives as either assets or liabilities in the balance
sheet and measure those instruments at fair value.
At September 30, 2000, the Company has not engaged in any transactions
that would be considered derivative instruments or hedging activities.
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PALAL MINING CORPORATION
(An Exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
September 30, 2000
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Impaired Asset Policy
In March 1995, the Financial Accounting Standards Board issued
statement (SFAS) No. 121 titled "Accounting for Impairment of Long-
lived Assets." In complying with this standard, the Company reviews
its long-lived assets quarterly to determine if any events or changes
in circumstances have transpired which indicate that the carrying value
of its assets may not be recoverable. The Company does not believe any
adjustments are needed to the carrying value of its assets at September
30, 2000.
Exploration Costs
In accordance with generally accepted accounting principles, the
Company expenses exploration costs as incurred.
Compensated Absences
Currently, the Company has no employees; therefore it is impracticable
to estimate the amount of compensation for future absences and no
liability has been recorded in the accompanying financial statements.
The Company's policy is to recognize the costs of compensated absences
when actually paid to employees.
Provision for Taxes
At September 30, 2000, the Company had a cumulative net operating loss
from inception of approximately $309,000. No provision for taxes or
tax benefit has been reported in the financial statements, as there is
not a measurable means of assessing future profits or losses.
Basic and Diluted Loss Per Share
Loss per share was computed by dividing the net loss by the weighted
average number of shares outstanding during the period. The weighted
average number of shares was calculated by taking the number of shares
outstanding and weighting them by the amount of time that they were
outstanding. Basic and diluted loss per share was the same, as there
were no common stock equivalents outstanding.
Going Concern
The Company's financial statements have been presented on a going concern
basis that contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. As shown in the
accompanying financial statements, the Company incurred a net loss of
$309,112 for the period from September 2, 1999 (inception) to September
30, 2000, and had no sales. These conditions raise substantial doubt
about the Company's ability to continue as a going concern. Management
has plans to seek additional capital through a private placement and
public offering of its common stock. The financial statements do not
include any adjustments relating to the recoverability and classification
of recorded assets, or the amounts and classifications of liabilities
that might be necessary in the event the Company cannot continue in
existence.
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PALAL MINING CORPORATION
(An Exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
September 30, 2000
NOTE 3 - COMMON STOCK
On September 2, 1999, 5,000,000 shares of common stock were issued to
officers and directors only. There was no public offering of any
securities. The above referenced shares were issued in payment of
consulting services in the amount of $273,586 and repayment of mining
claim recording fees of $64, expenses of $1,218 and advances of $132.
These shares were issued pursuant to exemption from registration
contained in Section 4(2) of the Securities Act of 1933.
In September 1999, the Company, through Mr. Hugh Grenfal, president and
a member of the board of directors, acquired ten Mak mining claims
located in the Osoyoos Mining Division of British Columbia, Canada.
In September 2000, the Company sold 451,850 shares of its common stock
at a price of ten cents per share.
NOTE 4 - LEASES
On March 31, 2000, the Company entered into an office lease agreement
with Callinan Mines Limited for a period of approximately three years
for $607 Canadian dollars per month. As of September 30, 2000 this was
equivalent to approximately $403 U.S. per month. The lease expires
on June 29, 2003. The minimum future lease payments as of June 30,
2000 for the remaining life of the lease are:
Fiscal Year Ended June 30: Amount
2001 $ 3,627
2002 4,836
2003 4,836
--------
Total minimum lease payments $ 13,299
NOTE 5 - RELATED PARTIES
An officer of the Company has advanced monies to the Company for the
payment of legal fees. This amount is uncollateralized and has been
recorded as a short-term loan, bearing no interest and having no specific
due date.
The Company occupies office space provided by Mr. Grenfal, its
president, in his capacity as vice president and director of Callinan
Mines Limited. On May 1, 2000, the Company entered into a lease
agreement with Callinan for a period of approximately three years. See
Note 4.
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PALAL MINING CORPORATION
(An Exploration Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
September 30, 2000
NOTE 6 - COMMITMENTS AND CONTINGENCIES
The Company is engaged in the exploration and development of mineral
properties. At present there are no feasibility studies establishing
proven and probable reserves.
Although the minerals exploration and mining industries are inherently
speculative and subject to complex environmental regulations, the Company
is unaware of any pending litigation or of any specific past or
prospective matters which could impair the value of its mining claims.
NOTE 7 - SUBSEQUENT EVENTS
Subsequent to September 30, 2000, the Company sold 608,200 shares of its
common stock at a price of ten cents per share.
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ITEM 2. MANAGEMENT'S DISCUSSIONS AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
Financial Condition, Liquidity and Capital Resources
Since inception on September 2, 1999, the Company has been engaged
in exploration and acquisition of mineral properties. The Company's
principal capital resources have been acquired through issuance of common
stock and from shareholder loans.
At September 30, 2000, there was positive working capital of $10,598
compared to deficit working capital of $12,368 at September 30, 1999.
This change is primarily the result of the Company's stock issuance
proceeds of $45,185, more than offsetting increasing accounts payable
related party loans.
At September 30, 2000, the Company's total assets of $43,169
consists of mainly cash and deposits. This compares favorably with the
Company's assets of September 30, 1999 of $196, which consisted of only
$132 in cash.
At September 30, 2000, the Company's total liabilities increased to
$32,096 from $12,500 at September 30, 1999, primarily reflecting related
party loans and payables of $26,042 and a build-up of accounts payable in
the amount of $6,054.
The Company has not had revenues form inception. Although there is
insufficient capital to fully explore and develop its mineral properties,
the Company expects to survive and exploit its resources primarily with
funding from sales of its securities and, as necessary, from shareholder
loans.
The Company has not long-term debt and does not regard long-term
borrowing as a good, prospective source of financing.
Results of Operations.
The Company posted loses of $10,849 for the three months ending
September 30, 2000. The principal component of the loss was professional
expenses.
Operating expenses for the three months ending September 30, 2000
were $10,849, down approximately $260,000 from the year ending June 30,
2000, primarily as a result of decreased executive compensation expenses,
which were $273,586 in the year ended June 30, 2000 and $-0- thereafter.
PART II.
ITEM 6. EXHIBITS
Exhibit No. Description
27 Financial Data Schedule
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized on this 13th day of November,
2000
PALAL MINING CORPORATION
(Registrant)
By: /s/ Hugh Grenfal
Hugh Grenfal, President Treasurer,
Principal Accounting Officer and a
member of the Board of Directors
