PALAL MINING CORPORATION FORM 10Q

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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 DECEMBER 31, 2001

OR

[ ]

Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

COMMISSION FILE NUMBER 000-33193

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 December 31, 2001: 30,299,250

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PART I.

ITEM 1. - Financial Statements

PALAL MINING CORPORATION
(An Exploration Stage Company)
BALANCE SHEETS

December 31,
2001
(Unaudited)



June 30,
2001


ASSETS

CURRENT ASSETS

Cash

$

2,044


$

10,231


Total Current Assets

2,044


10,231


PROPERTY AND EQUIPMENT

Office equipment

1,595

1,595

Less: accumulated depreciation

(360)


(196)


Total Property and Equipment

1,235


1,399


OTHER ASSETS

Deposits

411


411


Total Other Assets

411


411


TOTAL ASSETS

$

3,690
====================

$

12,041
=================

LIABILITIES & STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

Accounts payable

$

1,695

$

-

Related party payable

-


770


Total Current Liabilities

1,695


770


COMMITMENTS AND CONTINGENCIES

-


-


STOCKHOLDERS' EQUITY

Common stock, 100,000,000 shares authorized,
$0.00001 par value; 30,299,250 shares
issued and outstanding



303



303

Additional paid-in-capital

380,924

380,924

Deficit accumulated during exploration stage

(379,232)


(369,956)


TOTAL STOCKHOLDERS' EQUITY

1,995


11,291


TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY


$


3,690
====================


$


12,061
=================

 

See notes to interim financial statements

1

- 2 -


PALAL MINING CORPORATION
(An Exploration Stage Company)
STATEMENTS OF OPERATIONS

Period from
September 2,
1999
(Inception)
to
December 31,
2001
(Unaudited)


Three Months Ended
December 31,


Six Months Ended
December 31,


2001
(Unaudited)


2000
(Unaudited)


2001
(Unaudited)


2000
(Unaudited)


REVENUES

$

-


$

-


$

-


$

-


$

-


EXPENSES

Consulting services provided by directors

-

-

-

-

273,586

Rent

-

2,377

-

3,585

6,788

General and administrative expense

607

6,088

632

10,173

14,980

Legal and accounting

2,400

15,801

8,412

20,054

61,035

Travel

-

12,276

-

13,579

14,786

Consulting

-

-

-

-

3,000

Depreciation

82

25

164

25

360

Miscellaneous

-

-

-

-

125

Stock Transfer expenses

25

-

68

-

3,025

Mining exploration

-


-


-


-


1,241


TOTAL EXPENSES

3,114


36,567


9,276


47,416


378,926


LOSS BEFORE INCOME TAXES

(3,114)

(36,567)

(9,276)

(47,416)

(378,926)

OTHER EXPENSES

Loss on impairment of assets

-

-

-

-

(64)

INCOME TAXES

-


-


-


-


-


NET LOSS

$

(3,144)
============

$

(36,567)
==============

$

(9,276)
============

$

(47,416)
============

$

(378,990)
============

NET LOSS PER COMMON SHARE,
BASIC AND DILUTED


$


NIL
============


$


(0.01)
==============


$


NIL
============


$


(0.01)
============


$


(0.03)
============

WEIGHTED AVERAGE NUMBER OF
COMMON STOCK SHARES
OUTSTANDING, BASIC AND DILUTED



30,299,250
============



6,033,404
==============



30,299,250
============



5,545,724
============



13,253,422
============

See notes to interim financial statements

2

- 3 -


 

PALAL MINING CORPORATION
(An Exploration Stage Company)
STATEMENT OF SHAREHOLDERS' EQUITY

Deficit
Accumulated
during the
Exploration
Stage


Common Stock

Additional
Paid-in
Capital


Total
Stockholders'
Equity


Number
of Shares



Amount


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


1,059,850


11


105,974


-


105,985

Issuance of common stock for four-
for-one stock dividend at
par value



24,239,400



242



-



(242)



-

Net loss for the year
ended June 30, 2001


-



-



-



(71,451)



(71,451)


Balance, June 30, 2001

30,299,250

303

380,924

(369,956)

11,271

Net loss for the six months ended
December 31, 2001


-



-



-



(9,276)



(9,276)


Balance, December 31, 2001
(Unaudited)


30,299,250
============


$


303
============


$


380,924
============


$


(379,232)
============


$


1,995
============

See notes to interim financial statements

3

- 4 -


PALAL MINING CORPORATION
(An Exploration Stage Company)
STATEMENTS OF CASH FLOWS

Period from

September 2,
1999
(Inception)
to
December 31,
2001
(Unaudited)


Six Months Ended
December 31,

2001
(Unaudited)


2000
(Unaudited)


CASH FLOWS FROM OPERATING ACTIVITIES

Net loss

$

(9,276)

$

(47,416)

$

(378,990)

Adjustments to reconcile net loss to net
cash used by operating activities:

Depreciation

164

25

360

Loss on impairment of assets

-

-

64

Payment of expenses from issuance of stock

-

-

274,804

Net change in:

Deposits

-

-

(411)

Accounts payable

1,695

(120)

1,695

Loan from related party

(770)


(20,454)


-


Net cash provided by operating activities

(8,187)


(67,965)


(102,478)


CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of equipment

-


(1,595)


(1,595)


CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from sales of stock

-

105,985

105,985

Proceeds from advances

-


-


132


Net cash provided by financing activities

-


105,985


106,117


Increase in cash

(8,187)

36,425

2,044

Cash, beginning of period

10,231


56


-


Cash, end of period

$

2,044
================

$

36,481
================

$

2,044
================

SUPPLEMENTAL CASH FLOW DISCLOSURES:

Interest paid

$

-
================

$

-
================

$

-
================

Income taxes paid

$

-
================

$

-
================

$

-
================

NON-CASH TRANSACTIONS:

Stock issued in payment of expenses

$

-

$

-

$

274,804

Stock issued in payment of advances

$

-

$

-

$

132

Stock issued in payment of mining claims

$

-

$

-

$

64

Stock issued for stock dividend

$

-

$

-

$

242

 

See notes to interim financial statements

4

- 5 -


PALAL MINING CORPORATION
(An Exploration Stage Company)
December 31, 2001

NOTES TO INTERIM FINANCIAL STATEMENTS
========================================

1. BASIS OF PRESENTATION

The foregoing unaudited interim financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Regulation S-B as promulgated by the Securities and Exchange Commission. Accordingly, these financial statements do not include all of the disclosures required by generally accepted accounting principles for complete financial statements. These unaudited interim financial statements should be read in conjunction with the audited financial statements for the year ended June 30, 2001. In the opinion of management, the unaudited interim financial statements furnished herein include all adjustments, all of which are of a normal recurring nature, necessary for a fair statement of the results for the interim period presented.

The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities known to exist as of the date the financial statements are published, and the reported amounts of revenues and expenses during the reporting period. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of the Company's financial statements; accordingly, it is possible that the actual results could differ from these estimates and assumptions that could have a material effect on the reported amounts of the Company's financial position and results of operations.

Operating results for the three and six month periods ended December 31, 2001 are not necessarily indicative of the results that may be expected for the year ending June 30, 2002.

5

- 6 -


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR OPERATIONS

Financial Condition, Liquidity and Capital Resources

Since inception on September 2, 1999, our Company has been engaged in exploration and acquisition of mineral properties. Our Company's principal capital resources have been acquired through issuance of common stock and from shareholder loans.

At December 31, 2001, there was positive working capital of $349 compared to $9,461 at June 30, 2001. This change is primarily the result of payment of professional expenses.

At December 31, 2001, our Company's total assets of $3,690 consisted of mainly cash and office equipment. This compares with our Company's total assets at June 30 of $12,041, also mainly cash.

At December 31, 2001, our Company's total liabilities rose to $1,695 from $770 at June 30, 2001, primarily reflecting a build-up of accounts payable.

Our Company has not had revenues from inception. Although there is insufficient capital to fully explore and develop its mineral properties, our Company expects to survive and exploit its resources primarily with funding from sales of its securities and, as necessary, from shareholder loans.

Our Company has no long-term debt and does not regard long-term borrowing as a good, prospective source of financing.

Results of Operations

Our Company posted a loss of $9,276 for the six months ended December 31, 2001. The principal component of the loss was professional expenses.

Operating expenses for the six months ending December 31, 2001 were also $9,276 down from $47,416 in the comparable half year ending December 31, 2000, due to sharp reductions in all categories of expense.

- 6 -


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 28th day of January, 2002.

PALAL MINING CORPORATION
(Registrant)

/s/ Hugh Grenfal
Hugh Grenfal, President, Treasurer, Principal
Accounting Officer and a member of the Board
Of Directors