UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
FORM 10-Q
(Mark One)
[ x ]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
February 28,
2011
[ ]
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
000-52626
PENGRAM CORPORATION
(Exact
name of registrant as specified in its charter)
NEVADA
|
68-0643436
|
(State or other jurisdiction of incorporation or
organization)
|
(I.R.S. Employer Identification No.)
|
|
|
|
|
1200 Dupont Street, Suite 2J
|
|
Bellingham, WA
|
98225
|
(Address of principal executive offices)
|
(Zip Code)
|
(360) 255-3436
(Registrant's telephone number,
including area code)
Not Applicable
(Former name, former address and
former fiscal year, if changed since last report)
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.
[ x ]
Yes
[ ] No
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.
Large accelerated filer [ ]
|
Accelerated filer [ ]
|
Non-accelerated filer [ ] (Do not check if a smaller
reporting company)
|
Smaller reporting company
[ x ]
|
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act).
Yes[ ]
No
[ x ]
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable date:
As of
April 18, 2011, the Issuer had 58,264,344 Shares of Common Stock
outstanding.
PART I - FINANCIAL INFORMATION
ITEM 1.
|
FINANCIAL STATEMENTS.
|
The accompanying unaudited financial statements have been
prepared in accordance with the instructions to Form 10-Q and Rule 8-03 of
Regulation S-X, and, therefore, do not include all information and footnotes
necessary for a complete presentation of financial position, results of
operations, cash flows, and stockholders' equity in conformity with generally
accepted accounting principles. In the opinion of management, all adjustments
considered necessary for a fair presentation of the results of operations and
financial position have been included and all such adjustments are of a normal
recurring nature. Operating results for the three months ended February 28, 2011
are not necessarily indicative of the results that can be expected for the year
ending November 30, 2011.
As used in this Quarterly Report, the terms "we, "us, "our,
Pengram and the Company mean Pengram Corporation and its subsidiaries,
unless otherwise indicated. All dollar amounts in this Quarterly Report are in
U.S. dollars unless otherwise stated.
2
PENGRAM CORPORATION
(An Exploration Stage
Company)
FIRST QUARTER CONSOLIDATED FINANCIAL STATEMENTS
FEBRUARY 28, 2011
(Unaudited)
(Stated in U.S.
Dollars)
PENGRAM CORPORATION
|
(An Exploration Stage Company)
|
|
CONSOLIDATED BALANCE SHEETS
|
(Unaudited)
|
(Stated in U.S. Dollars)
|
|
|
FEBRUARY 28
|
|
|
NOVEMBER 30
|
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
Cash
|
$
|
1,028
|
|
$
|
353
|
|
Total Current Assets
|
|
1,028
|
|
|
353
|
|
|
|
|
|
|
|
|
Long-term Investment
(Note 3)
|
|
10,367
|
|
|
10,367
|
|
Mineral Property Acquisition Costs
(Note 4)
|
|
396,887
|
|
|
412,875
|
|
|
|
|
|
|
|
|
Total
Assets
|
$
|
408,282
|
|
$
|
423,595
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
Accounts
payable and accrued liabilities
|
$
|
384,336
|
|
$
|
340,915
|
|
Amounts due to related
parties (Note 11)
|
|
59,510
|
|
|
49,000
|
|
Amount
due to shareholder
|
|
1,920
|
|
|
1,920
|
|
Promissory notes payable
(Notes 4 and 5)
|
|
83,486
|
|
|
96,248
|
|
Promissory notes payable to related parties (Note 6)
|
|
26,395
|
|
|
25,901
|
|
Loan payable (Note 7)
|
|
7,148
|
|
|
7,015
|
|
Unit
subscriptions received (Note 9)
|
|
14,965
|
|
|
14,965
|
|
Total Current Liabilities
|
|
577,760
|
|
|
535,964
|
|
|
|
|
|
|
|
|
STOCKHOLDERS DEFICIENCY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Stock
(Note 10)
|
|
|
|
|
|
|
Authorized:
100,000,000 preferred stock with a par value of $0.001 per share
300,000,000 common voting stock with a par value of $0.001
per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issued:
58,264,344 at February 28, 2011 and
57,737,144 common shares as at November 30, 2010
|
|
58,264
|
|
|
57,737
|
|
Units and Share Subscriptions Received In Advance
|
|
-
|
|
|
26,360
|
|
Additional Paid-In Capital
|
|
869,285
|
|
|
851,852
|
|
Share Purchase Warrants
(Note 10)
|
|
30,150
|
|
|
21,750
|
|
Deficit Accumulated During The
Exploration Stage
|
|
(1,127,177
|
)
|
|
(1,070,068
|
)
|
Total Stockholders Deficiency
|
|
(169,478
|
)
|
|
(112,369
|
)
|
|
|
|
|
|
|
|
Total
Liabilities And Stockholders Deficiency
|
$
|
408,282
|
|
$
|
423,595
|
|
The accompanying condensed notes are an integral part of these
interim consolidated financial statements.
PENGRAM CORPORATION
|
(An Exploration Stage Company)
|
|
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(Unaudited)
|
(Stated in U.S. Dollars)
|
|
|
|
|
|
|
|
|
CUMULATIVE
|
|
|
|
|
|
|
PERIOD FROM
|
|
|
|
THREE
|
|
|
INCEPTION
|
|
|
|
MONTHS
|
|
|
APRIL 28
|
|
|
|
ENDED
|
|
|
2006 TO
|
|
|
|
FEBRUARY 28
|
|
|
FEBRUARY 28
|
|
|
|
2011
|
|
|
2010
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
Bank charges and interest
|
$
|
3,149
|
|
$
|
5,212
|
|
$
|
44,206
|
|
Consulting fees
|
|
12,300
|
|
|
-
|
|
|
43,776
|
|
Depreciation
|
|
-
|
|
|
126
|
|
|
1,516
|
|
Filing
and regulatory
|
|
1,223
|
|
|
879
|
|
|
19,703
|
|
Finance charges
|
|
-
|
|
|
22,603
|
|
|
137,500
|
|
Incorporation costs
|
|
-
|
|
|
-
|
|
|
3,382
|
|
Investor relations
|
|
-
|
|
|
-
|
|
|
15,800
|
|
Management fees
|
|
9,000
|
|
|
9,000
|
|
|
137,600
|
|
Mineral
property exploration costs (recovery)
|
|
(2,393
|
)
|
|
1,569
|
|
|
97,354
|
|
Office
and administrative
|
|
5,623
|
|
|
3,420
|
|
|
71,936
|
|
Professional fees
|
|
27,845
|
|
|
33,051
|
|
|
543,034
|
|
Recovery
on mineral property
|
|
-
|
|
|
-
|
|
|
(18,377
|
)
|
Travel
|
|
-
|
|
|
-
|
|
|
16,341
|
|
Website
design
|
|
362
|
|
|
3,500
|
|
|
4,406
|
|
Write-off of mineral
property costs
|
|
-
|
|
|
-
|
|
|
9,000
|
|
|
|
|
|
|
|
|
|
|
|
Net Loss For
The Period
|
$
|
(57,109
|
)
|
$
|
(79,360
|
)
|
$
|
(1,127,177
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic And Diluted Loss Per Share
|
$
|
(0.01
|
)
|
$
|
(0.01
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted Average Number Of
Common Shares
Outstanding
|
|
57,795,722
|
|
|
54,207,144
|
|
|
|
|
The accompanying condensed notes are an integral part of these
interim consolidated financial statements.
PENGRAM CORPORATION
|
(An Exploration Stage Company)
|
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(Unaudited)
|
(Stated in U.S. Dollars)
|
|
|
|
|
|
|
|
|
CUMULATIVE
|
|
|
|
|
|
|
|
|
|
PERIOD FROM
|
|
|
|
THREE
|
|
|
INCEPTION
|
|
|
|
MONTHS
|
|
|
APRIL 28
|
|
|
|
ENDED
|
|
|
2006 TO
|
|
|
|
FEBRUARY 28
|
|
|
FEBRUARY 28
|
|
|
|
2011
|
|
|
2010
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
Cash Provided By (Used In):
|
|
|
|
|
|
|
|
|
|
Operating Activities
|
|
|
|
|
|
|
|
|
|
Net loss
for the period
|
$
|
(57,109
|
)
|
$
|
(79,360
|
)
|
$
|
(1,127,177
|
)
|
Adjustment for items not
affecting cash:
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
-
|
|
|
126
|
|
|
1,516
|
|
Finance charges on convertible notes
|
|
-
|
|
|
22,603
|
|
|
137,500
|
|
Foreign exchange
|
|
-
|
|
|
671
|
|
|
11,369
|
|
Recovery of mineral property
|
|
-
|
|
|
-
|
|
|
(18,377
|
)
|
Accrued interest expense
|
|
3,026
|
|
|
5,003
|
|
|
41,311
|
|
Write-off of mineral property costs
|
|
-
|
|
|
-
|
|
|
9,000
|
|
Changes
in non-cash operating working capital items:
|
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
42,871
|
|
|
27,449
|
|
|
359,664
|
|
Amounts due to related parties
|
|
10,510
|
|
|
6,000
|
|
|
59,510
|
|
|
|
(702
|
)
|
|
(17,508
|
)
|
|
(525,684
|
)
|
Investing Activities
|
|
|
|
|
|
|
|
|
|
Advances
|
|
-
|
|
|
-
|
|
|
(10,367
|
)
|
Mineral
property acquisition costs
|
|
-
|
|
|
(38,000
|
)
|
|
(84,075
|
)
|
Recovery of mineral
property costs
|
|
15,988
|
|
|
-
|
|
|
133,065
|
|
Purchase
of computer equipment
|
|
-
|
|
|
-
|
|
|
(1,516
|
)
|
|
|
15,988
|
|
|
(38,000
|
)
|
|
37,107
|
|
Financing Activities
|
|
|
|
|
|
|
|
|
|
Issuance of convertible
notes
|
|
-
|
|
|
-
|
|
|
137,500
|
|
Issuance
of common stock
|
|
-
|
|
|
-
|
|
|
278,981
|
|
Finders fees
|
|
-
|
|
|
-
|
|
|
(5,042
|
)
|
Units and
share subscriptions received in advance
|
|
-
|
|
|
10,000
|
|
|
43,825
|
|
Advance on promissory
note payable
|
|
-
|
|
|
75,000
|
|
|
75,000
|
|
Repayment
of promissory note
|
|
(14,611
|
)
|
|
-
|
|
|
(67,969
|
)
|
Promissory note payable
to related party
|
|
-
|
|
|
-
|
|
|
27,000
|
|
Repayment
of promissory notes payable to related parties
|
|
-
|
|
|
-
|
|
|
(7,000
|
)
|
Advance on loan payable
|
|
-
|
|
|
-
|
|
|
5,390
|
|
Advance
on amount due to shareholder
|
|
-
|
|
|
-
|
|
|
1,920
|
|
|
|
(14,611
|
)
|
|
85,000
|
|
|
489,605
|
|
|
|
|
|
|
|
|
|
|
|
Increase In Cash
|
|
675
|
|
|
29,492
|
|
|
1,028
|
|
|
|
|
|
|
|
|
|
|
|
Cash, Beginning Of Period
|
|
353
|
|
|
3,711
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Cash, End Of
Period
|
$
|
1,028
|
|
$
|
33,203
|
|
$
|
1,028
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental Disclosure Of Cash Flow Information
|
|
|
|
|
|
|
|
|
|
Cash paid
during the period for:
|
|
|
|
|
|
|
|
|
|
Interest
|
$
|
-
|
|
$
|
-
|
|
$
|
400
|
|
Income taxes
|
$
|
-
|
|
$
|
-
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Non-Cash Financing And Investing
Activities
|
|
|
|
|
|
|
|
|
|
Shares received from
Solfotara Minerals Corp. (Note 3)
|
$
|
-
|
|
$
|
-
|
|
$
|
10,367
|
|
Shares
issued for mineral property acquisition costs (Note 4)
|
$
|
-
|
|
$
|
-
|
|
$
|
379,900
|
|
Promissory note payable
for mineral property acquisition costs (Note 4)
|
$
|
-
|
|
$
|
-
|
|
$
|
56,600
|
|
Shares
issued on conversion of convertible note (Note 10)
|
$
|
-
|
|
$
|
-
|
|
$
|
137,500
|
|
Shares issued from funds received in advance (Note 10)
|
$
|
26,360
|
|
$
|
-
|
|
$
|
26,360
|
|
The accompanying condensed notes are an integral part of these
interim consolidated financial statements.
PENGRAM CORPORATION
|
(An Exploration Stage Company)
|
|
STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIENCY)
|
|
PERIOD FROM INCEPTION APRIL 28, 2006 TO FEBRUARY 28,
2011
|
(Unaudited)
|
(Stated in U.S. Dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DEFICIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ACCUMULATED
|
|
|
|
|
|
|
|
|
|
|
|
|
SHARE
|
|
|
|
|
|
|
|
|
DURING
|
|
|
|
|
|
|
|
|
|
|
|
|
SUBSCRIPTIONS
|
|
|
ADDITIONAL
|
|
|
SHARE
|
|
|
THE
|
|
|
|
|
|
|
COMMON STOCK
|
|
|
RECEIVED
|
|
|
PAID-IN
|
|
|
PURCHASE
|
|
|
EXPLORATION
|
|
|
|
|
|
|
SHARES
|
|
|
AMOUNT
|
|
|
IN
ADVANCE
|
|
|
CAPITAL
|
|
|
WARRANTS
|
|
|
STAGE
|
|
|
TOTAL
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 19, 2006 stock issued for cash at
$0.001
|
|
27,000,000
|
|
$
|
27,000
|
|
$
|
-
|
|
$
|
(18,000
|
)
|
$
|
-
|
|
$
|
-
|
|
$
|
9,000
|
|
Stock issued for cash at $0.01 in private placement
|
|
17,997,144
|
|
|
17,997
|
|
|
-
|
|
|
101,984
|
|
|
-
|
|
|
-
|
|
|
119,981
|
|
Net loss for the period
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(20,112
|
)
|
|
(20,112
|
)
|
Balance, November 30, 2006
|
|
44,997,144
|
|
|
44,997
|
|
|
-
|
|
|
83,984
|
|
|
-
|
|
|
(20,112
|
)
|
|
108,869
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the year
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(108,384
|
)
|
|
(108,384
|
)
|
Balance, November 30, 2007
|
|
44,997,144
|
|
|
44,997
|
|
|
-
|
|
|
83,984
|
|
|
-
|
|
|
(128,496
|
)
|
|
485
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 4, 2008 units issued for cash
at $0.03
|
|
3,000,000
|
|
|
3,000
|
|
|
-
|
|
|
41,300
|
|
|
35,700
|
|
|
-
|
|
|
80,000
|
|
Net loss for the year
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(139,039
|
)
|
|
(139,039
|
)
|
Balance, November 30, 2008
|
|
47,997,144
|
|
|
47,997
|
|
|
-
|
|
|
125,284
|
|
|
35,700
|
|
|
(267,535
|
)
|
|
(58,554
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock issued for mineral property
|
|
6,000,000
|
|
|
6,000
|
|
|
-
|
|
|
294,000
|
|
|
-
|
|
|
-
|
|
|
300,000
|
|
Relative fair value allocation of convertible notes
|
|
-
|
|
|
-
|
|
|
-
|
|
|
90,021
|
|
|
47,479
|
|
|
-
|
|
|
137,500
|
|
Stock issued under assignment agreement
|
|
150,000
|
|
|
150
|
|
|
-
|
|
|
37,350
|
|
|
-
|
|
|
-
|
|
|
37,500
|
|
Stock issued pursuant to extension agreement
|
|
60,000
|
|
|
60
|
|
|
-
|
|
|
35,940
|
|
|
-
|
|
|
-
|
|
|
36,000
|
|
Share subscriptions received in advance
|
|
-
|
|
|
-
|
|
|
2,500
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
2,500
|
|
Net loss for the year
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(375,580
|
)
|
|
(375,580
|
)
|
Balance, November 30, 2009
|
|
54,207,144
|
|
|
54,207
|
|
|
2,500
|
|
|
582,595
|
|
|
83,179
|
|
|
(643,115
|
)
|
|
79,366
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Units issued for cash at $0.10
|
|
600,000
|
|
|
600
|
|
|
-
|
|
|
37,650
|
|
|
21,750
|
|
|
-
|
|
|
60,000
|
|
Finders fees
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(5,042
|
)
|
|
-
|
|
|
-
|
|
|
(5,042
|
)
|
Exercise of warrants
|
|
150,000
|
|
|
150
|
|
|
(2,500
|
)
|
|
12,350
|
|
|
-
|
|
|
-
|
|
|
10,000
|
|
Expiry of warrants
|
|
-
|
|
|
-
|
|
|
-
|
|
|
83,179
|
|
|
(83,179
|
)
|
|
-
|
|
|
-
|
|
Conversion of convertible notes
|
|
2,750,000
|
|
|
2,750
|
|
|
-
|
|
|
134,750
|
|
|
-
|
|
|
-
|
|
|
137,500
|
|
Stock issued under assignment agreement
|
|
30,000
|
|
|
30
|
|
|
-
|
|
|
6,370
|
|
|
-
|
|
|
-
|
|
|
6,400
|
|
Share subscriptions received in advance
|
|
-
|
|
|
-
|
|
|
26,360
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
26,360
|
|
Net loss for the year
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(426,953
|
)
|
|
(426,953
|
)
|
Balance, November 30, 2010
|
|
57,737,144
|
|
|
57,737
|
|
|
26,360
|
|
|
851,852
|
|
|
21,750
|
|
|
(1,070,068
|
)
|
|
(112,369
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Units issued for cash at $0.05
|
|
527,200
|
|
|
527
|
|
|
(26,360
|
)
|
|
17,433
|
|
|
8,400
|
|
|
-
|
|
|
-
|
|
Net loss for the period
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(57,109
|
)
|
|
(57,109
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, February 28, 2011
|
|
58,264,344
|
|
$
|
58,264
|
|
$
|
-
|
|
$
|
869,285
|
|
$
|
30,150
|
|
$
|
(1,127,177
|
)
|
$
|
(169,478
|
)
|
The accompanying condensed notes are an integral part of these
interim consolidated financial statements.
PENGRAM CORPORATION
|
(An Exploration Stage Company)
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
FEBRUARY 28, 2011
|
(Unaudited)
|
(Stated in U.S. Dollars)
|
1.
|
BASIS OF PRESENTATION AND NATURE OF
OPERATIONS
|
The unaudited financial information
furnished herein reflects all adjustments, all of which are of a normal
recurring nature, which in the opinion of management are necessary to fairly
state the interim consolidated financial position of Pengram Corporation (the
Company) and the results of its operations for the periods presented. This
report on Form 10-Q should be read in conjunction with the Companys financial
statements and notes thereto included in the Companys Form 10-K for the fiscal
year ended November 30, 2010. The Company assumes that the users of the interim
financial information herein have read or have access to the audited financial
statements for the preceding fiscal year and that the adequacy of additional
disclosure needed for a fair presentation may be determined in that context.
Accordingly, footnote disclosure, which would substantially duplicate the
disclosure contained in the Companys Form 10-K for the fiscal year ended
November 30, 2010, has been omitted. The results of operations for the three
month period ended February 28, 2011 are not necessarily indicative of results
for the entire fiscal year ending November 30, 2011.
Consolidated Financial Statements
These consolidated financial statements
include the accounts of Pengram Corporation (the Company) and its wholly owned
subsidiaries, Magellan Acquisition Corp. (Nevada) (MAC) and Clisbako Minerals
Inc. (British Columbia) (CMI). All intercompany balances have been
eliminated.
Organization
The Company was incorporated in the
State of Nevada, U.S.A., on April 28, 2006. The Companys principal executive
offices are in Bellingham, Washington, U.S.A. The Companys year end is November
30.
Exploration Stage Activities
The Company has been in the exploration
stage since its formation and has not yet realized any revenues from its planned
operations. The Company was formed for the purpose of acquiring exploration and
development stage natural resource properties. The Company has not commenced
business operations. The Company is an exploration stage company as defined in
the Securities and Exchange Commission (S.E.C.) Industry Guide No. 7.
PENGRAM CORPORATION
|
(An Exploration Stage Company)
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
FEBRUARY 28, 2011
|
(Unaudited)
|
(Stated in U.S. Dollars)
|
1.
|
BASIS OF PRESENTATION AND NATURE OF OPERATIONS
(Continued)
|
|
|
|
|
Going Concern
|
|
|
|
|
The accompanying financial statements have been prepared
assuming the Company will continue as a going concern.
|
|
|
|
|
As shown in the accompanying financial statements, the
Company has incurred a net loss of $1,127,177 for the period from April
28, 2006 (inception) to February 28, 2011, and has no revenues. These
factors raise substantial doubt about the Companys ability to continue as
a going concern. The future of the Company is dependent upon its ability
to obtain financing and upon future profitable operations from the
development of its natural resource properties. 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 of and classification of liabilities that might be necessary
in the event the Company cannot continue in existence.
|
|
|
|
2.
|
SIGNIFICANT ACCOUNTING POLICIES
|
|
|
|
|
The financial statements of the Company have been
prepared in accordance with generally accepted accounting principles in
the United States. Because a precise determination of many assets and
liabilities is dependent upon future events, the preparation of financial
statements for a period necessarily involves the use of estimates which
have been made using careful judgement.
|
|
|
|
|
The financial statements have, in managements opinion,
been properly prepared within the framework of the significant accounting
policies summarized below:
|
|
|
|
|
a)
|
Organization and Start-up Costs
|
|
|
|
|
|
Costs of start up activities, including organizational
and incorporation costs, are expensed as incurred.
|
|
|
|
|
b)
|
Exploration Stage Enterprise
|
|
|
|
|
|
The Companys financial statements are prepared using the
accrual method of accounting. Until such properties are acquired and
developed, the Company will continue to prepare its financial statements
and related disclosures in accordance with entities in the exploration
stage.
|
PENGRAM CORPORATION
|
(An Exploration Stage Company)
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
FEBRUARY 28, 2011
|
(Unaudited)
|
(Stated in U.S. Dollars)
|
2.
|
SIGNIFICANT ACCOUNTING POLICIES
(Continued)
|
|
|
|
|
c)
|
Mineral Property Interests
|
|
|
|
|
|
The Company is an exploration stage mining company and has not yet realized any revenue from its operations. It is primarily engaged in the acquisition, exploration and development of mining properties. Exploration costs are
expensed as incurred regardless of the stage of development or existence of reserves. Costs of acquisition are capitalized subject to impairment testing when facts and circumstances indicate impairment may exist. Proceeds received from the sale of
any interest in a property will first be credited against the carrying value of the property, with any excess included in operations for the period.
|
|
|
|
|
|
The Company regularly performs evaluations of any investment in mineral properties to assess the recoverability and/or the residual value of its investments in these assets. All long-lived assets are reviewed for impairment
whenever events or circumstances change which indicate the carrying amount of an asset may not be recoverable.
|
|
|
|
|
|
Management periodically reviews the carrying value of its investments in mineral leases and claims with internal and external mining related professionals. A decision to abandon, reduce or expand a specific project is based upon
many factors including general and specific assessments of mineral deposits, anticipated future mineral prices, anticipated future costs of exploring, developing and operating a producing mine, the expiration term and ongoing expenses of maintaining
mineral properties and the general likelihood that the Company will continue exploration on such project. The Company does not set a pre-determined holding period for properties with unproven deposits, however, properties which have not demonstrated
suitable metal concentrations at the conclusion of each phase of an exploration program are re-evaluated to determine if future exploration is warranted, whether there has been any impairment in value and that their carrying values are
appropriate.
|
|
|
|
|
|
If an area of interest is abandoned or it is determined that its carrying value cannot be supported by future production or sale, the related costs are charged against operations in the year of abandonment or determination of
value. The amounts recorded as mineral leases and claims represent costs to date and do not necessarily reflect present or future values.
|
|
|
|
|
|
The Companys exploration activities are subject to various laws and regulations governing the protection of the environment. These laws are continually changing, generally becoming more restrictive. The Company has made, and
expects to make in the future, expenditures to comply with such laws and regulations.
|
PENGRAM CORPORATION
|
(An Exploration Stage Company)
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
FEBRUARY 28, 2011
|
(Unaudited)
|
(Stated in U.S. Dollars)
|
2.
|
SIGNIFICANT ACCOUNTING POLICIES
(Continued)
|
|
|
|
|
|
c)
|
Mineral Property Interests (Continued)
|
|
|
|
|
|
|
The accumulated costs of properties that are developed on
the stage of commercial production will be amortized to operations through
unit-of-production depletion.
|
|
|
|
|
|
d)
|
Cash
|
|
|
|
|
|
|
Cash consists primarily of cash on deposit.
|
|
|
|
|
|
e)
|
Long Term Investment
|
|
|
|
|
|
|
Investments in securities of private companies that do
not have a quoted market price on a recognized securities exchange are
recorded at cost. Investments are written-down when, in the opinion of
management, there has been an impairment in their value which is other
than temporary and such impairment is recorded in the statement of
operations.
|
|
|
|
|
|
f)
|
Computer Equipment
|
|
|
|
|
|
|
Computer equipment is recorded at cost and will be
depreciated over an estimated useful life of three years on a
straight-line basis.
|
|
|
|
|
|
g)
|
Financial Instruments
|
|
|
|
|
|
|
The Companys financial instruments include cash,
accounts payable and accrued liabilities, amounts due to related parties,
amount due to shareholder, promissory notes payable, promissory notes
payable to related parties, loan payable and convertible notes. All such
instruments are carried at cost, which, due to the short maturity of these
financial instruments, approximate fair value at February 28,
2011.
|
|
|
|
|
|
h)
|
Foreign Currency Translation
|
|
|
|
|
|
|
The Companys functional currency is the US dollar.
Transactions in a foreign currency are translated into U.S. dollars as
follows:
|
|
|
|
|
|
|
i)
|
monetary items are translated at the exchange rate
prevailing at the balance sheetdate;
|
|
|
ii)
|
non-monetary items are translated at the historical exchange rate;
|
|
|
iii)
|
revenue and expense items are translated at the average
rate in effect during the applicable accounting
period.
|
PENGRAM CORPORATION
|
(An Exploration Stage Company)
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
FEBRUARY 28, 2011
|
(Unaudited)
|
(Stated in U.S. Dollars)
|
2.
|
SIGNIFICANT ACCOUNTING POLICIES
(Continued)
|
|
|
|
|
i)
|
Use of Estimates
|
|
|
|
|
|
The preparation of financial statements, in conformity
with generally accepted accounting principles, requires management to make
estimates and assumptions that affect the amounts reported in the
financial statements and accompanying disclosures. Actual results may
differ from the estimates.
|
|
|
|
|
j)
|
Basic and Diluted Loss Per Share
|
|
|
|
|
|
Basic loss per common share is computed by dividing net
loss available to common stockholders by the weighted average number of
common shares outstanding. Diluted loss per common share is computed
similar to basic loss per common share except that the denominator is
increased to include the number of additional common shares that would
have been outstanding if the potential common shares had been issued and
if the additional common shares were dilutive.
|
|
|
|
|
|
The following outstanding share purchase warrants were
excluded from the diluted EPS computation as their effect would have been
anti-dilutive:
|
|
|
FEBRUARY 28
|
|
|
NOVEMBER 30
|
|
|
|
2011
|
|
|
2010
|
|
|
|
|
|
|
|
|
Share purchase warrants
|
|
1,127,200
|
|
|
600,000
|
|
|
k)
|
Income Taxes
|
|
|
|
|
|
The Company uses an asset and liability approach for
financial accounting and reporting on income taxes. If it is more likely
than not that some portion or all of a deferred tax asset will not be
realized, a valuation allowance is recognized.
|
|
|
|
|
l)
|
Impairment of Long-Lived Assets
|
|
|
|
|
|
The Company records impairment losses on long-lived
assets used in operations when indicators of impairment are present and
the undiscounted cash flows estimated to be generated by those assets are
less than the assets carrying amount. In such cases, the amount of the
impairment is determined based on the relative fair values of the impaired
assets. The Company tests the recoverability of the assets whenever events
or changes in circumstances indicate that its carrying amount may not be
recoverable.
|
PENGRAM CORPORATION
|
(An Exploration Stage Company)
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
FEBRUARY 28, 2011
|
(Unaudited)
|
(Stated in U.S. Dollars)
|
2.
|
SIGNIFICANT ACCOUNTING POLICIES
(Continued)
|
|
|
|
|
m)
|
Asset Retirement Obligations
|
|
|
|
|
|
An asset retirement obligation (ARO) is a legal
obligation associated with the retirement of a tangible long-lived asset
and is recognized as a liability in the period which it is incurred and
becomes determinable, with an offsetting increase in the carrying amount
of the associated asset.
|
|
|
|
|
|
The cost of the tangible asset, including the initially
recognized ARO, is depleted, such that the cost of the ARO is recognized
over the useful life of the asset. The ARO is recorded at fair value, and
accretion expense is recognized over time as the discounted liability is
accreted to its expected settlement value. The fair value of the ARO is
measured using expected future cash flows, discounted at the Companys
credit-adjusted risk-free interest rate. To date, no significant asset
retirement obligation exists due to the early stage of exploration.
Accordingly, no liability has been recorded.
|
|
|
|
|
n)
|
Share-based Compensation
|
|
|
|
|
|
The Company accounts for stock-based compensation under
the provisions of the Financial Accounting Standards Board (FASB)
Accounting Standards Codification (ASC) 718, Stock Compensation, which
requires the recognition of the fair value of stock-based compensation.
Under the fair value recognition provisions for ASC 718, stock-based
compensation cost is estimated at the grant date based on the fair value
of the awards expected to vest and recognized as expense ratably over the
requisite service period of the award. The Company has used the
Black-Scholes valuation model to estimate fair value of its stock-based
awards which requires various judgmental assumptions including estimating
stock price volatility and expected life. The Companys computation of
expected volatility is based on a combination of historical and market-
based volatility. In addition, the Company considers many factors when
estimating expected life, including types of awards and historical
experience. If any of the assumptions used in the Black-Scholes valuation
model change significantly, stock- based compensation expense may differ
materially in the future from that recorded in the current
period.
|
|
|
|
|
|
The Company accounts for equity instruments issued in
exchange for the receipt of goods or services from other than employees in
accordance with ASC 718 and the conclusions reached by ASC 505-50. Costs
are measured at the estimated fair market value of the consideration
received or the estimated fair value of the equity instruments issued,
whichever is more reliably measurable. The value of equity instruments
issued for consideration other than employee services is determined on the
earliest of a performance commitment or completion of performance by the
provider of goods or services as defined by ASC
505-50.
|
PENGRAM CORPORATION
|
(An Exploration Stage Company)
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
FEBRUARY 28, 2011
|
(Unaudited)
|
(Stated in U.S. Dollars)
|
2.
|
SIGNIFICANT ACCOUNTING POLICIES
(Continued)
|
|
|
|
|
o)
|
Environmental Protection and Reclamation Costs
|
|
|
|
|
|
The operations of the Company have been, and may in the
future be affected from time to time in varying degrees by changes in
environmental regulations, including those for future removal and site
restorations costs. Both the likelihood of new regulations and their
overall effect upon the Company may vary from region to region and are not
predictable.
|
|
|
|
|
|
Environmental expenditures that relate to ongoing
environmental and reclamation programs are charged to the statements of
operations as incurred or capitalized and amortized depending upon their
future economic benefits. The Company does not currently anticipate any
material capital expenditures for environmental control facilities because
its property holding is at an early stage of exploration.
|
|
|
|
|
p)
|
Fair Value of Financial Instruments
|
|
|
|
|
|
Fair value is defined as the price that would be received
to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date in the principal or
most advantageous market.
|
|
|
|
|
|
The Company uses a three-tier fair value hierarchy which
prioritizes the inputs used in measuring fair value as
follows:
|
|
Level 1:
|
Observable inputs such as quoted prices in
active markets;
|
|
|
|
|
Level 2:
|
Inputs, other than the quoted prices in active
markets, that are observable either directly or indirectly; and
|
|
|
|
|
Level 3:
|
Unobservable inputs in which there is little or
no market data, which require the reporting entity to develop its own
assumptions.
|
The Company did not have any fair
value adjustments for assets and liabilities measured at fair value on a
nonrecurring basis during the three month period ended February 28, 2011.
PENGRAM CORPORATION
|
(An Exploration Stage Company)
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
FEBRUARY 28, 2011
|
(Unaudited)
|
(Stated in U.S. Dollars)
|
2.
|
SIGNIFICANT ACCOUNTING POLICIES
(Continued)
|
|
|
|
|
p)
|
Fair Value of Financial Instruments (Continued)
|
|
|
|
|
|
The following table presents information about the
Companys financial instruments that have been measured at fair value as
of February 28, 2011, and indicates the fair value hierarchy of the
valuation inputs utilized to determine such fair
values:
|
|
|
|
|
|
|
QUOTED
|
|
|
SIGNIFICANT
|
|
|
|
|
|
|
|
FAIR VALUE
|
|
|
PRICES
|
|
|
OTHER
|
|
|
|
|
|
|
|
AT
|
|
|
IN ACTIVE
|
|
|
OBSERVABLE
|
|
|
UNOBSERVABLE
|
|
|
|
|
FEBRUARY 28
|
|
|
MARKETS
|
|
|
INPUTS
|
|
|
INPUTS
|
|
|
DESCRIPTION
|
|
2011
|
|
|
(LEVEL 1)
|
|
|
(LEVEL 2)
|
|
|
(LEVEL 3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
$
|
1,028
|
|
$
|
1,028
|
|
$
|
-
|
|
$
|
-
|
|
|
Assets measured at fair value at February
28, 2011
|
$
|
1,028
|
|
$
|
1,028
|
|
$
|
-
|
|
$
|
-
|
|
|
q)
|
Recent Accounting Pronouncements
|
|
|
|
|
|
In April 2010, the FASB provided an update to address the classification of an employee share-based payment award with an exercise price denominated in the currency of a market in which the underlying equity security trades. FASB Accounting Standards Codification Topic 718, Compensation—Stock Compensation, provides guidance on the classification of a share-based payment award as either equity or a liability. A share-based payment award that contains a condition that is not a market, performance, or service condition is required to be classified as a liability. This standard is effective for fiscal years beginning after December 15, 2010, and for subsequent interim and annual reporting periods thereafter. The Company does not expect the adoption of this standard to have a significant effect on the Company's results of operations or financial position.
|
|
|
|
|
|
In January 2010, the FASB issued ASU 2010-06, Fair Value Measurements and Disclosures (Topic 820), Improving Disclosures about Fair Value Measurements, amending ASC 820. ASU 2010-06 requires entities to provide new disclosures and clarify existing disclosures relating to fair value measurements. The new disclosures and clarifications of existing disclosures are effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances, and settlements in Level 3 fair value measurements, which are effective for fiscal years beginning after December 15, 2010 and for interim periods within those fiscal years. The Company is currently evaluating the impact of ASU 2010-06, but does not expect its adoption to have a material impact on the Company’s financial position or results of operations
.
|
PENGRAM CORPORATION
|
(An Exploration Stage Company)
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
FEBRUARY 28, 2011
|
(Unaudited)
|
(Stated in U.S. Dollars)
|
2.
|
SIGNIFICANT ACCOUNTING POLICIES
(Continued)
|
|
|
|
|
q)
|
Recent Accounting Pronouncements (Continued)
|
|
|
|
|
|
In October 2009, the FASB issued ASU 2009-13, Revenue Recognition (Topic 605), Multiple-Deliverable Revenue Arrangements amending ASC 605. ASU 2009-13 requires entities to allocate revenue in an arrangement using estimated selling prices of the delivered goods and services based on a selling price hierarchy. ASU 2009-13 eliminates the residual method of revenue allocation and requires revenue to be allocated using the relative selling price method. ASU 2009-13 is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. The adoption did not have a material impact on the Company’s financial position or results of operations.
|
|
|
|
|
|
Management does not believe any other recently issued but not yet effective accounting pronouncements, if adopted, would have an effect on the accompanying financial statements.
|
|
|
|
3.
|
LONG-TERM INVESTMENT
|
|
|
|
|
In the year ended November 30, 2009, the Company received
250,000 common shares in Solfotara Minerals Corp. (Solfotara), a private
Canadian company as consideration for transferring its interest in an
option agreement to Solfotara. The total value attributed to the common
stock received from Solfotara was $10,367.
|
|
|
|
4.
|
MINERAL PROPERTY ACQUISITION
COSTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECOVERY
|
|
|
|
|
|
|
|
NOVEMBER 30
|
|
|
|
|
|
ABANDONED,
|
|
|
|
|
|
RECOGNIZED
|
|
|
FEBRUARY 28
|
|
|
|
|
2010
|
|
|
ADDITIONS
|
|
|
IMPAIRED
|
|
|
RECOVERY
|
|
|
AS
INCOME
|
|
|
2011
|
|
|
Mineral Property
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Clisbako claims (a)
|
$
|
350,350
|
|
$
|
-
|
|
$
|
-
|
|
$
|
(15,988
|
)
|
$
|
-
|
|
$
|
334,362
|
|
|
Eureka claims (b)
|
|
62,525
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
62,525
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
412,875
|
|
$
|
-
|
|
$
|
-
|
|
$
|
(15,988
|
)
|
$
|
-
|
|
$
|
396,887
|
|
PENGRAM CORPORATION
|
(An Exploration Stage Company)
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
FEBRUARY 28, 2011
|
(Unaudited)
|
(Stated in U.S. Dollars)
|
4.
|
MINERAL PROPERTY ACQUISITION COSTS
(Continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECOVERY
|
|
|
|
|
|
|
|
NOVEMBER 30
|
|
|
|
|
|
ABANDONED,
|
|
|
|
|
|
RECOGNIZED
|
|
|
NOVEMBER 30
|
|
|
|
|
2009
|
|
|
ADDITIONS
|
|
|
IMPAIRED
|
|
|
RECOVERY
|
|
|
AS
INCOME
|
|
|
2010
|
|
|
Mineral Property
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Clisbako claims (a)
|
$
|
392,600
|
|
$
|
6,400
|
|
$
|
-
|
|
$
|
(48,650
|
)
|
$
|
-
|
|
$
|
350,350
|
|
|
Eureka claims (b)
|
|
47,500
|
|
|
15,025
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
62,525
|
|
|
Manado Gold claims (c)
|
|
-
|
|
|
50,050
|
|
|
-
|
|
|
(68,427
|
)
|
|
18,377
|
|
|
-
|
|
|
June claims (d)
|
|
-
|
|
|
3,000
|
|
|
(3,000
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
440,100
|
|
$
|
74,475
|
|
$
|
(3,000
|
)
|
$
|
(117,077
|
)
|
$
|
18,377
|
|
$
|
412,875
|
|
|
a)
|
Clisbako Claims
|
|
|
|
|
|
On December 16, 2008, the Company entered into a purchase
agreement to acquire an undivided 100% interest in a group of ten mineral
claims (collectively known as the Clisbako claims) located in the
Cariboo Mining Division of British Columbia, Canada. Consideration for the
claims was 6,000,000 shares (issued see Note 10(a)) of the Companys
common stock with a value of $300,000 and the issuance to the vendor of a
promissory note in the amount of CDN$70,000 (to US$56,600 payable June 30,
2009. On July 23, 2009, the Company reached an agreement with the vendor
to extend the deadline of the CDN$70,000 mineral property payment
(Property Payment) to December 31, 2009. In consideration of the
extension of the deadline, the Company issued 60,000 common shares to the
vendor with a fair value of $36,000.
|
|
|
|
|
|
On January 21, 2010, the Company reached an agreement
with the vendor to further extend the due date of the Property Payment to
February 15, 2010. In consideration of the further extension of the
deadline, the Company issued 10,000 shares of its common stock to the
vendor with a value of $4,200.
|
|
|
|
|
|
On March 15, 2010, the Company entered into a third
extension agreement dated for reference February 15, 2010, with the vendor
to extend the Property Payment from February 15, 2010 to June 30, 2010. In
consideration of the extension, the Company issued to the vendor 20,000
common shares with a value of $2,200.
|
PENGRAM CORPORATION
|
(An Exploration Stage Company)
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
FEBRUARY 28, 2011
|
(Unaudited)
|
(Stated in U.S. Dollars)
|
4.
|
MINERAL PROPERTY ACQUISITION COSTS
(Continued)
|
|
|
|
|
a)
|
Clisbako Claims
(Continued)
|
|
|
|
|
|
On September 15, 2010, and as amended by letter agreement
dated November 15, 2010, the Company, through its wholly owned subsidiary,
CMI., entered into an option agreement (the "Clisbako Option Agreement")
with Manado Gold Corp. whereby the Company granted Manado Gold Corp. the
sole and exclusive right and option to acquire a 75% undivided interest in
the Clisbako Property. Under the terms of the Option Agreement, Manado
Gold Corp. will exercise its option upon completing the
following:
|
|
1.
|
Paying an aggregate of $150,000
to CMI. as follows:
|
|
|
|
|
|
(a)
|
$50,000 on execution of the agreement
(CDN$50,000 or US$48,650 has been paid);
|
|
|
|
|
|
|
(b)
|
a further $50,000 on or before February 28, 2011 (paid CDN$16,000 or US$15,988; an additional CDN$24,000 paid subsequent to February 28, 2011); and
|
|
|
|
|
|
|
(c)
|
a further $50,000 on or before April 30, 2011.
|
|
|
|
|
|
2.
|
Issuing an aggregate of 600,000
Shares to CMI as follows:
|
|
|
|
|
|
(a)
|
100,000 Shares on or before September 15, 2011;
|
|
|
|
|
|
|
(b)
|
a further 200,000 Shares on or before September
15, 2012; and
|
|
|
|
|
|
|
(c)
|
a further 300,000 Shares on or before September
15, 2013.
|
|
|
|
|
|
3.
|
Incurring Exploration Expenditures of
CDN$650,000 on the Clisbako Property as follows:
|
|
|
|
|
|
(a)
|
CDN$100,000 on or before September 15, 2011;
|
|
|
|
|
|
|
(b)
|
a further CDN$300,000 on or before September
15, 2012; and
|
|
|
|
|
|
|
(c)
|
a further CDN$250,000 on or before September
15, 2013.
|
Manado Gold Corp. will also be
responsible to make all government payments required to keep the claims in good
standing.
PENGRAM CORPORATION
|
(An Exploration Stage Company)
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
FEBRUARY 28, 2011
|
(Unaudited)
|
(Stated in U.S. Dollars)
|
4.
|
MINERAL PROPERTY ACQUISITION COSTS
(Continued)
|
|
|
|
|
|
b)
|
Eureka Claims
|
|
|
|
|
|
|
On May 29, 2009, the Company entered into an assignment
agreement to acquire an undivided 100% interest in a series of mineral
claims (collectively known as the Eureka claims) situated in the Eureka
County, Esmeralda County and Mineral County, Nevada. Consideration for the
claims is as follows:
|
|
|
|
|
|
|
i)
|
150,000 common shares (issued) with a value of
$37,500;
|
|
|
|
|
|
|
ii)
|
$10,000 advance royalty payment due on or before August
28, 2009 (paid);
|
|
|
|
|
|
|
iii)
|
$15,000 advance royalty payment due on or before August
28, 2010 (paid);
|
|
|
|
|
|
|
iv)
|
$20,000 advance royalty payment due on or before August
28, 2011;
|
|
|
|
|
|
|
v)
|
$25,000 advance royalty payment due on or before August
28, 2012;
|
|
|
|
|
|
|
vi)
|
$30,000 advance royalty payment due on or before August
28, 2013, with an additional $30,000 due each year thereafter for a period
of ten years, with an option to renew for an additional ten
years.
|
|
|
|
|
|
c)
|
Manado Gold Claims
|
|
|
|
|
|
|
On January 19, 2010, the Company entered into an option
agreement dated for reference November 2, 2009 (the Agreement) to
acquire interests in four mineral claims (collectively referred to as the
Manado Gold claims) in the Lobongan District of Northern Sulawesi,
Indonesia.
|
|
|
|
|
|
|
In consideration of $35,000 paid on execution of the
Agreement, the Company has been granted an exclusive right, for a period
of 90 days (to January 31, 2010) from the date of execution of this
Agreement (the Due Diligence Period) to enter into an acquisition
agreement (the Acquisition Agreement) to acquire up to an 85% undivided
interest in the Manado Gold claims. At any time prior to the expiration of
the Due Diligence Period, the Company may elect, by notice in writing, to
exercise its option to enter into the Acquisition Agreement
(exercised).
|
PENGRAM CORPORATION
|
(An Exploration Stage Company)
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
FEBRUARY 28, 2011
|
(Unaudited)
|
(Stated in U.S. Dollars)
|
4.
|
MINERAL PROPERTY ACQUISITION COSTS
(Continued)
|
|
|
|
|
|
|
c)
|
Manado Gold Claims
(Continued)
|
|
|
|
|
|
|
|
During the year ended November 30, 2010, the Company
elected to exercise its option to enter into the Acquisition Agreement.
The Acquisition Agreement shall provide for the earning of interests by
the Company in the Manado Gold claims by making cash payments, stock
issuances and completing work programs as follows:
|
|
|
|
|
|
|
|
i)
|
A 10% interest by:
|
|
|
|
|
|
|
|
|
|
Making a cash payment of $90,000 on execution of the
Acquisition Agreement ($15,050 paid);
|
|
|
|
|
Issuing 150,000 shares of the Companys common stock on
execution of the Acquisition Agreement; and
|
|
|
|
|
Completing a mineral exploration program at a cost of not
less than $250,000 within one year of the Acquisition Agreement.
|
|
|
|
|
|
|
|
ii)
|
An additional 15% interest by:
|
|
|
|
|
|
|
|
|
|
Making an additional cash payment of $100,000 on the
first anniversary of the Acquisition Agreement;
|
|
|
|
|
Issuing an additional 300,000 shares of the Companys
common stock on the first anniversary of the Acquisition Agreement;
and
|
|
|
|
|
Completing an additional mineral exploration program at a
cost of not less than $500,000 prior to the second anniversary of the
Acquisition Agreement.
|
|
|
|
|
|
|
|
iii)
|
An additional 26% interest by:
|
|
|
|
|
|
|
|
|
|
Making an additional cash payment of $200,000 on the
second anniversary of the Acquisition Agreement;
|
|
|
|
|
Issuing an additional 500,000 shares of the Companys
common stock on the second anniversary of the Acquisition Agreement;
and
|
|
|
|
|
Completing an additional mineral exploration program at a
cost of not less than $1,000,000 prior to the third anniversary of the
Acquisition Agreement.
|
|
|
|
|
|
|
|
iv)
|
An additional 34% interest on completion of a scoping
study on the claims.
|
|
|
|
|
|
|
|
Upon the Company earning an 85% interest as outlined
above, the vendor shall be carried and shall not be obligated to pay their
proportionate share of the costs to complete a feasibility study and to
place the claims into commercial production. On completion of the
feasibility study, the Company shall have the option to acquire the
remaining 15% interest for a cash payment of
$5,000,000.
|
PENGRAM CORPORATION
|
(An Exploration Stage Company)
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
FEBRUARY 28, 2011
|
(Unaudited)
|
(Stated in U.S. Dollars)
|
4.
|
MINERAL PROPERTY ACQUISITION COSTS
(Continued)
|
|
c)
|
Manado Gold Claims
(Continued)
|
In August 2010, the Company entered
into an agreement with Manado Gold Corp. (the Assignee) to assign a 75%
undivided interest in the original option agreement. The consideration for the
assignment is:
|
a)
|
The reimbursement by the Assignee of $80,000 in
expenditures incurred by the Company in connection with the original
option agreement payable as follows:
|
|
|
|
|
(i)
|
$40,000 on execution of this Agreement
(received);
|
|
(ii)
|
$40,000 on or before September 15, 2010
($28,427 received as at February 28, 2011).
|
|
|
|
|
b)
|
The Assignee incurring expenditures to complete
exploration on or place into production the Manado Gold Property as
follows:
|
|
|
|
|
(i)
|
$250,000 within the first year of the
Acquisition Agreement;
|
|
(ii)
|
$500,000 prior to the second anniversary of the
Acquisition Agreement; and
|
|
(iii)
|
$1,000,000 prior to the third anniversary of
the execution of the Acquisition Agreement.
|
|
|
|
|
c)
|
Following completion of the expenditures set
out above, the Assignee making the expenditures will complete a scoping
study on the Manado Gold Property.
|
|
|
|
|
d)
|
The Assignee will issue 950,000 shares of its
common stock to the Company, as follows:
|
|
|
|
|
(i)
|
150,000 shares on execution of the Acquisition
Agreement;
|
|
(ii)
|
300,000 shares prior to the first anniversary
the Acquisition Agreement; and
|
|
(iii)
|
500,000 shares prior to the second anniversary
of the Acquisition Agreement.
|
|
|
|
|
e)
|
The Assignee will make payments to the
Concession Owners as follows:
|
|
|
|
|
(i)
|
$75,000 on execution of the Acquisition
Agreement;
|
|
(ii)
|
$100,000 on the first anniversary of the
execution of the Acquisition Agreement; and
|
|
(iii)
|
$200,000 on the secondanniversary of the
execution of the Acquisition Agreement.
|
PENGRAM CORPORATION
|
(An Exploration Stage Company)
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
FEBRUARY 28, 2011
|
(Unaudited)
|
(Stated in U.S. Dollars)
|
4.
|
MINERAL PROPERTY ACQUISITION COSTS
(Continued)
|
|
|
|
|
|
c)
|
Manado Gold Claims
(Continued)
|
|
|
|
|
|
|
Upon completing the payments expenditures and share
issuance as set out above, the Assignee will earn up to 75% of the
Companys interest in the Manado Gold Property as follows:
|
|
|
|
|
|
|
(i)
|
7.5% undivided interest upon completion of the items set
out in (a), (b)(i), (d)(i) and (e)(i) above;
|
|
|
|
|
|
|
(ii)
|
11.25% undivided interest upon completion of the items
set out in paragraphs (b)(ii), (d)(ii) and (e)(ii) above;
|
|
|
|
|
|
|
(iii)
|
19.5% undivided interest upon completion of the items set
out in paragraphs (b)(iii), (d)(iii) and (e)(iii) above; and
|
|
|
|
|
|
|
(iv)
|
25.5% undivided interest on completing the scoping study
described in paragraph (c) above.
|
|
|
|
|
|
|
If the Assignee exercises its rights under the Agreement,
the Company will be carried through the first $1,750,000 of expenditures
and through completion of a scoping study. Thereafter the Company will be
responsible for its proportionate share. The Company will remain
responsible to issue up to 950,000 of its common shares to the Concession
Holders under the formal agreement.
|
|
|
|
|
|
In the event the Company elects to exercise its option to
purchase the Concession Owners 15% carried interest, the Assignee will
have the right to participate as to 75% in the exercise of that
option.
|
|
|
|
|
|
Assuming that the Assignee exercises all its options under
the Agreement, the Assignee will have acquired a 63.75% undivided interest
in the Manado Gold Property and the Company will retain an 11.25% interest
in the Manado Gold Property, In the event the option to acquire the
Concession Holders carried interest is exercised, the Assignee will hold
a 75% undivided interest and the Company will hold a 25% undivided
interest.
|
|
|
|
|
|
As of February 28, 2011, the Company has not entered into
the Acquisition Agreement.
|
|
|
|
|
|
Subsequent to the period ended February 28, 2011, the
Company received a notice from a party purporting to represent the vendor
of the Manado Gold Property. The notice purports to cancel the Companys
rights under the letter agreement dated November 2, 2009. The Company is
considering legal action against the vendor. The Company has advanced a
total of $50,000 to the vendor.
|
PENGRAM CORPORATION
|
(An Exploration Stage Company)
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
FEBRUARY 28, 2011
|
(Unaudited)
|
(Stated in U.S. Dollars)
|
4.
|
MINERAL PROPERTY AND ACQUISITION COSTS
(Continued)
|
|
|
|
|
|
d)
|
June Claims
|
|
|
|
|
|
|
On February 5, 2010, the Company entered into an option
agreement to acquire an undivided 100% interest in a series of mineral
claims (collectively known as the June claims) situated in the Alberni
Mining Division of British Columbia, Canada. Consideration for the claims
is as follows:
|
|
|
|
|
|
|
i)
|
Payment of $3,000 due on February 5, 2010
(paid);
|
|
|
|
|
|
|
ii)
|
Payment of $10,000 due on or before May 6,
2010;
|
|
|
|
|
|
|
iii)
|
Payment of $10,000 and the issuance of 100,000 shares of
the Companys common stock due on or before February 5, 2011;
|
|
|
|
|
|
|
iv)
|
Payment of $10,000 and the issuance of 100,000 shares of
the Companys common stock due on or before February 5, 2012;
|
|
|
|
|
|
|
v)
|
Payment of $10,000 and the issuance of 100,000 shares of
the Companys common stock due on or before February 5, 2013.
|
|
|
|
|
|
|
During the year ended November 30, 2010, the Company
abandoned and wrote off all costs incurred with respect to the June
property.
|
|
|
|
|
5.
|
PROMISSORY NOTES PAYABLE
|
|
|
|
|
|
a)
|
On January 11, 2010, the Company entered into a
promissory note agreement whereby it borrowed $75,000 from an arms length
party. The note bears interest at 10% per annum, is unsecured and
repayable on demand. As at February 28, 2011, a total of $8,486 (November
30, 2010 - $6,637) has been accrued as interest on this note.
|
|
|
|
|
|
b)
|
Pursuant to a purchase agreement to acquire the Clisbako
claims outlined in Note 4(a), the Company issued a promissory note in the
amount of CDN$70,000 (translated to US$65,913 as at November 30, 2009)
payable June 30, 2009. The promissory note is unsecured and free on
interest. During the year ended November 30, 2009, the Company reached an
agreement with the vendor to extend the deadline of the promissory note to
December 31, 2009.
|
|
|
|
|
|
|
During the year ended November 30, 2010, the Company
obtained various extensions from the vendor to postpone the Property
Payment. The Company repaid CDN$55,000 on the promissory note. During the
three month period ended February 28, 2011, the Company repaid the
remaining balance of CDN$15,000 of the promissory
note.
|
PENGRAM CORPORATION
|
(An Exploration Stage Company)
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
FEBRUARY 28, 2011
|
(Unaudited)
|
(Stated in U.S. Dollars)
|
6.
|
PROMISSORY NOTES PAYABLE TO RELATED PARTIES
|
|
|
|
On December 19, 2007, the Company entered into a promissory note agreement whereby it borrowed $20,000. The note is unsecured, repayable on demand and bears interest at 10% per annum, payable annually. As at February 28, 2011,
a total of $6,395 (November 30, 2010 - $5,901) has been accrued as interest payable on the loan. During the year ended November 30, 2008, the owner of the company holding the promissory note became an officer and director of the Company.
|
|
|
7.
|
LOAN PAYABLE
|
|
|
|
On October 1, 2008, the Company received a loan from an arms length party of $10,000. The loan is unsecured, repayable on demand and bears interest at 10% per annum, payable annually. During the year ended November 30,
2009, the Company paid back $4,610 of this balance. As at February 28, 2011, a total of $1,758 (November 30, 2010 - $1,625) has been accrued as interest payable on the loan.
|
|
|
8.
|
CONVERTIBLE NOTES
|
|
|
|
On April 30, 2009, the Company issued 55, $2,500 Convertible Notes (the notes) in the aggregate amount of $137,500 due and payable on or before October 31, 2010, with interest charged at the rate of 10% per
annum payable annually. Attached to the Notes were 550,000 share purchase warrants (10,000 attached to each of the 55 notes). Each warrant entitles the holder to purchase three shares of the Companys common stock for a period expiring one year
from the date of issuance of the notes at an exercise price of $0.25 ($0.083 per share). At the election of the holder, the notes and interest accrued thereon are convertible into such number of shares of the Companys common stock as
shall be equal to the principal amount of the convertible note to be converted divided by $0.05. Conversion of the notes does not affect the warrants.
|
|
|
|
During the year ended November 30, 2008, the Company had received $67,500 towards the convertible notes offering. During the year end November 30, 2009, the Company received the remaining $70,000 towards this offering.
|
PENGRAM CORPORATION
|
(An Exploration Stage Company)
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
FEBRUARY 28, 2011
|
(Unaudited)
|
(Stated in U.S. Dollars)
|
8.
|
CONVERTIBLE NOTES
(Continued)
|
|
|
|
The Company has allocated the proceeds received between the notes and the detachable warrants on a relative fair value basis. The fair value of the warrants was estimated using the Black-Scholes option pricing model at the date of
issue with the following weighted average assumptions: expected dividend yield of 0%; average risk free interest rate of 0.63%; expected volatility of 229% and a term of 1.0 year. The fair value of the notes was estimated by multiplying the number
of shares that would result from an immediate exercise of the conversion option, by the market price on the date of issue. The relative fair values of the notes and the warrants determine the debt discount attributable to the warrants. The result
was $47,479 of the proceeds being allocated to the warrants and $90,021 being allocated to the notes. The resulting discount on the notes is amortized over the term of the notes to maturity such that, in the absence of any conversions, the
carrying value of the notes at maturity would be equal to the face amount of $137,500. In the event of a conversion of any, or all, of the face amount of the notes, the proportionate amount of the unamortized discount as of the date of
conversion is immediately charged to operations.
|
|
|
|
In accordance with the provisions of ASC 470 20, the Company determined the intrinsic value of the beneficial conversion feature on the notes by comparing the market price of the Companys common stock at issuance of
the notes to the effective conversion price of the notes, as determined by dividing the proceeds allocated to the notes by the number of shares that would result from an immediate exercise of the conversion option. The initial beneficial conversion
feature was determined to be $734,250; however, in accordance with the provisions of ASC 470 20, it is limited to the proceeds allocated to the notes, being $90,021. This beneficial conversion feature was recorded as an immediate
charge to additional paid-in capital and a further discount on the convertible note carrying value. This further discount is to be amortized over the term of the notes to maturity. In the event of a conversion of any, or all, of the face amount of
the notes, the proportionate amount of the unamortized beneficial conversion feature as of the date of conversion is immediately charged to operations.
|
|
|
|
During the year ended November 30, 2010, the Company recorded as finance charges, $28,964 of amortization (February 28, 2010 - $7,804) of the discount resulting from the allocation of proceeds to the warrants and a further
$54,917 (February 28, 2010 - $14,799) of the intrinsic value of the beneficial conversion feature, leaving total unamortized amounts of $Nil (February 28, 2010 - $61,278). The accrued interest of $20,406 remains unpaid as of
February 28, 2011 and November 30, 2010, and is included in accounts payable and accrued liabilities.
|
|
|
|
During the year ended November 30, 2010, the entire principal of $137,500 was converted into 2,750,000 shares of the Companys common stock.
|
PENGRAM CORPORATION
|
(An Exploration Stage Company)
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
FEBRUARY 28, 2011
|
(Unaudited)
|
(Stated in U.S. Dollars)
|
9.
|
UNIT SUBSCRIPTIONS RECEIVED
|
|
|
|
|
|
During the year ended November 30, 2010, the Company
received $14,965 in subscription funds in connection with a private
placement mentioned above. Due to the provision in the subscription
agreements that the subscription funds will constitute non-interest
bearing demand loans to the Company in the event the subscriptions are not
accepted by the Company, the Company classified the unit subscriptions
received in advance as current liabilities.
|
|
|
|
|
10.
|
CAPITAL STOCK
|
|
|
|
|
|
a)
|
Common Stock
|
|
|
|
|
|
|
On June 19, 2006, the Company issued 27,000,000 common
shares to the Companys founder (9,000,000 pre-stock split shares at a
price of $0.001 for gross proceeds of $9,000).
|
|
|
|
|
|
|
During the year ended November 30, 2006, pursuant to a
private placement, the Company issued 17,997,144 common shares (5,999,048
pre-stock split shares at a price of $0.02 for gross proceeds of
$119,981).
|
|
|
|
|
|
|
During the year ended November 30, 2008, the Company
received $80,000 from completing a private placement of 3,000,000 units
(1,000,000 pre-stock split units at a price of $0.08 per unit). Each unit
was comprised of one share of the Companys common stock and one share
purchase warrant. Each warrant entitles the subscriber to purchase one
share of the Companys common stock for a period expiring two years from
the date of issue at an exercise price of $0.033 per share.
|
|
|
|
|
|
|
During the year ended November 30, 2009, the Company
completed the following stock transactions:
|
|
|
|
|
|
|
|
issued 6,000,000 common shares pursuant to a mineral
property purchase agreement (see Note 4). The Company recorded these
shares at a price of $0.05 per share for a total value of
$300,000;
|
|
|
|
issued 150,000 common shares pursuant to a mineral
property assignment agreement (see Note 4). The Company recorded these
shares at a price of $0.25 per share for a total value of $37,500;
and
|
|
|
|
issued 60,000 common shares pursuant to an extension to a
mineral property purchase agreement (see Note 4). The Company recorded
these shares at a price of $0.60 per share for a total value of
$36,000.
|
PENGRAM CORPORATION
|
(An Exploration Stage Company)
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
FEBRUARY 28, 2011
|
(Unaudited)
|
(Stated in U.S. Dollars)
|
10.
|
CAPITAL STOCK
(Continued)
|
|
|
|
|
|
a)
|
Common Stock (Continued)
|
|
|
|
|
|
|
During the year ended November 30, 2010, the Company
completed the following stock transactions:
|
|
|
|
|
|
|
|
issued 600,000 units for total proceeds of $60,000 in
relation to a private placement. Each unit consists of one common share
and one share purchase warrant, each whole warrant entitling the holder
thereof to purchase an additional common share at a price of $0.15 for a
period of two years.
|
|
|
|
issued 150,000 common shares from exercise of
warrants;
|
|
|
|
issued 2,750,000 common shares with a value of $137,500
pursuant to the conversion of convertible notes (see Note 8);
|
|
|
|
issued 30,000 common shares with a value of $6,400
pursuant to an extension to a mineral property purchase agreement (see
Note 4);
|
|
|
|
|
|
|
During the three month period ended February 28, 2011,
pursuant to a private placement, the Company issued 527,200 units for
proceeds of $26,360. These funds had been received in advance at November
30, 2010. Each unit consists of one common share and one share purchase
warrant, each whole warrant entitling the holder thereof to purchase an
additional common share at a price of $0.10 for a period of two
years.
|
|
|
|
|
|
b)
|
Share Purchase Warrants
|
|
|
|
|
|
|
As at February 28, 2011 share purchase warrants were
outstanding for the purchase of common shares as
follows:
|
NUMBER OF
|
EXERCISE
|
|
WARRANTS
|
PRICE
|
EXPIRY DATE
|
|
|
|
500,000
|
$ 0.15
|
July 20, 2012
|
100,000
|
$ 0.15
|
August 4, 2012
|
527,200
|
$ 0.10
|
February 18, 2013
|
|
|
|
1,127,200
|
|
|
PENGRAM CORPORATION
|
(An Exploration Stage Company)
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
FEBRUARY 28, 2011
|
(Unaudited)
|
(Stated in U.S. Dollars)
|
10.
|
CAPITAL STOCK
(Continued)
|
|
|
|
|
b)
|
Share Purchase Warrants (Continued)
|
|
|
|
|
|
A summary of changes in share purchase warrants for the
periods ended November 30, 2010 and February 28, 2011 is presented
below:
|
|
|
NUMBER OF
|
|
|
WEIGHTED AVERAGE
|
|
|
|
WARRANTS
|
|
|
EXERCISE PRICE
|
|
|
|
|
|
|
|
|
Balance, November 30, 2009
|
|
4,650,000
|
|
$
|
0.05
|
|
Granted
|
|
600,000
|
|
$
|
0.15
|
|
Exercised
|
|
(150,000
|
)
|
$
|
(0.083
|
)
|
Expired
|
|
(4,500,000
|
)
|
$
|
(0.05
|
)
|
|
|
|
|
|
|
|
Balance, November 30, 2010
|
|
600,000
|
|
$
|
0.15
|
|
Granted
|
|
527,200
|
|
$
|
0.10
|
|
|
|
|
|
|
|
|
Balance, February 28, 2011
|
|
1,127,200
|
|
$
|
0.13
|
|
The fair value of the warrants issued
in connection with the private placement during the year ended November 30, 2010
was measured at the award date using the Black-Scholes option pricing model with
the following weighted average assumptions: expected dividend yield of 0%;
average risk free interest rate of 1.46%; expected volatility of 168% and a term
of 2 years. Of the total proceeds, $21,750 was allocated to share purchase
warrants.
The fair value of the warrants issued
in connection with the private placement during the three month period ended
February 28, 2011 was measured at the award date using the Black-Scholes option
pricing model with the following weighted average assumptions: expected dividend
yield of 0%; average risk free interest rate of 0.78%; expected volatility of
202% and a term of 2 years. Of the total proceeds, $8,400 was allocated to share
purchase warrants.
|
c)
|
Stock Options
|
|
|
|
|
|
As at February 28, 2011, the Company does not have an
incentive stock option plan.
|
PENGRAM CORPORATION
|
(An Exploration Stage Company)
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
FEBRUARY 28, 2011
|
(Unaudited)
|
(Stated in U.S. Dollars)
|
11.
|
RELATED PARTY TRANSACTIONS
|
As of February 28, 2011, the Company is
indebted to the following related parties:
|
i)
|
Loan payable to a member of the board of
directors of MAC of $497 (November 30, 2010 - $Nil);
|
|
|
|
|
ii)
|
Loan payable to a company owned by a member of
the board of directors of MAC of $1,013 (November 30, 2010 - $Nil).
|
The amounts due to the related parties
are unsecured, non-interest bearing with no fixed terms of repayment.
During the three months ended February
28, 2011, the Company paid or accrued $9,000 (2010 - $9,000) for management fees
to the board of directors of MAC.
These transactions with related parties
were in the normal course of operations and were measured at the exchange value
which represented the amount of consideration established and agreed to by the
parties.
12.
|
COMMITMENTS AND CONTRACTUAL OBLIGATIONS
|
|
|
|
The Company has no significant commitments or contractual
obligations with any parties respecting executive compensation, consulting
arrangements or other matters. Rental of premises and investor relations
services are provided on a month-to-month
basis.
|
PENGRAM CORPORATION
|
(An Exploration Stage Company)
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
FEBRUARY 28, 2011
|
(Unaudited)
|
(Stated in U.S. Dollars)
|
13.
|
SEGMENT INFORMATION
|
|
|
|
The Company has one reportable operating segment, being
the acquisition and exploration of mineral properties. Details of
identifiable assets by geographic segments are as
follows:
|
|
|
|
|
|
MINERAL
|
|
|
|
CAPITAL
|
|
|
PROPERTY
|
|
|
|
ASSETS
|
|
|
INTERESTS
|
|
|
|
|
|
|
|
|
February 28, 2011
|
|
|
|
|
|
|
USA
|
$
|
-
|
|
$
|
62,525
|
|
Canada
|
|
-
|
|
|
334,362
|
|
|
$
|
-
|
|
$
|
396,887
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MINERAL
|
|
|
|
CAPITAL
|
|
|
PROPERTY
|
|
|
|
ASSETS
|
|
|
INTERESTS
|
|
|
|
|
|
|
|
|
November 30, 2010
|
|
|
|
|
|
|
USA
|
$
|
-
|
|
$
|
62,525
|
|
Canada
|
|
-
|
|
|
350,350
|
|
|
|
|
|
|
|
|
|
$
|
-
|
|
$
|
412,875
|
|
14.
|
SUBSEQUENT EVENTS
|
|
|
|
|
a)
|
Subsequent to February 28, 2011, the Company entered into three promissory note agreements whereby it borrowed $70,000 from two arms’ length parties and $12,000 from a related party. Each note bears interest at 10% per annum, is unsecured and is repayable on demand.
|
|
|
|
|
b)
|
On March 1, 2011, the Company adopted its 2011 Stock
Incentive Plans (the 2011 Plan). The 2011 Plan provides for the issuance
of incentive and non-qualified shares of the Company's stock to officers,
directors, employees, and non-employees. A total of 5,500,000 shares of
the Companys common stock are available for issuance under the Plan. The
exercise price must not be less than: (i) 80% of market price of the
Company's common stock in respect of non-qualified stock options; and (ii)
market price of the Company's common stock in respect of incentive stock
options. The options can be granted for a maximum term of 10 years and
vest as determined by the Board of Directors.
|
PENGRAM CORPORATION
|
(An Exploration Stage Company)
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
|
FEBRUARY 28, 2011
|
(Unaudited)
|
(Stated in U.S. Dollars)
|
14.
|
SUBSEQUENT EVENT
(Continued)
|
|
|
|
|
c)
|
On April 13, 2011, the Company acquired a 30-day exclusive right to negotiate with Development Resources LLC, a Delaware limited liability company, for the acquisition of 54 mineral claims located in Elko County, Nevada. The
Company paid $10,000 to Development Resources LLC to acquire the exclusive right.
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION
AND
ANALYSIS
OF
FINANCIAL
CONDITION
AND
RESULTS OF OPERATIONS.
|
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING
STATEMENTS
Certain statements contained in this Quarterly Report
constitute "forward-looking statements. These statements, identified by words
such as plan, "anticipate, "believe, "estimate, "should, "expect" and
similar expressions include our expectations and objectives regarding our future
financial position, operating results and business strategy. These statements
reflect the current views of management with respect to future events and are
subject to risks, uncertainties and other factors that may cause our actual
results, performance or achievements, or industry results, to be materially
different from those described in the forward-looking statements. Such risks and
uncertainties include those set forth under the caption "Part II - Item 1A. Risk
Factors and elsewhere in this Quarterly Report. We advise you to carefully
review the reports and documents we file from time to time with the United
States Securities and Exchange Commission (the SEC), particularly our periodic
reports filed with the SEC pursuant to the Securities Exchange Act of 1934 (the
Exchange Act).
OVERVIEW
We were incorporated on April 28, 2006 under the laws of the
State of Nevada.
Our business plan is to assemble a portfolio of mineral
properties with gold potential and to engage in the exploration and development
of these properties. We currently have an option to acquire a 100% interest in
certain mineral properties known as the Golden Snow Project in Eureka County,
Nevada, the Fish Project in Esmeralda County, Nevada and the CPG Project in
Mineral County, Nevada (collectively, the Eureka Optioned Properties).
We also hold a 100% interest in ten contiguous mineral claims
covering an area of approximately 3,388 hectares (the Clisbako Property)
located in the Interior Plateau Region of north central British Columbia. On
September 15, 2010, Clisbako Minerals Inc. (Clisbako) entered into an option
agreement (the Clisbako Option Agreement) with Manado Gold Corp. (Manado
Corp.) whereby we granted Manado Corp. the sole and exclusive right and option
to acquire a 75% undivided interest in the Clisbako Property. Under the terms of
the Clisbako Option Agreement, Manado Corp. will exercise its option upon paying
Clisbako Inc. an aggregate of USD $150,000, issuing 600,000 shares of Manado
Corp.s common stock and incurring CAD $650,000 in exploration expenditures on
the Clisbako Property in stages over a three year period.
We previously held an option to acquire the Manado Gold
Property located 50 miles south of Manado in northern Sulawesi, Indonesia. On
April 10, 2011, we received a notice from a party purporting to represent Agus
Abidin, the vendor of the Manado Gold Property. The notice purports to cancel
our rights under the letter agreement dated November 2, 2009 (the "Agreement")
alleging that we failed to meet the requirements under the Agreement. Under the
terms of the Agreement, we had elected to exercise our right to enter into a
formal agreement to acquire the Manado Gold Property; however, the vendor, Mr.
Abidin, had not met legal requirements to convert the tenures under which the
Manado Gold Property is held into the new form of tenure required by the new
Indonesian mining laws which is necessary to permit us to acquire our interest.
Despite numerous requests by us to Mr. Abidin and his representatives, this was
never accomplished by him. Because of the delays on the part of the vendor, we
had already determined to focus on our North American properties. Based on the
notice received, we are now considering legal action against the vendor. We have
advanced a total of $50,000 to the vendor.
Based on the potential and current state of development, we
have decided to focus our resources on the Eureka Optioned Properties.
3
RECENT CORPORATE DEVELOPMENTS
We experienced the following corporate developments since the
filing of our Annual Report on Form 10-K for the fiscal year ended November 30,
2010:
1.
|
On April 10, 2011, we received a notice to cancel our
rights to the Manado Gold Property. See Overview above.
|
|
|
2.
|
On April 13, 2011, we acquired a 30-day exclusive right
to negotiate with Development Resources LLC, a Delaware limited liability
company, for the acquisition of 54 mineral claims located in Elko County,
Nevada. We paid $10,000 to Development Resources LLC to acquire the
exclusive right.
|
PLAN OF OPERATION
Over the next twelve months, our plan of operation is to focus
our resources on the exploration of the Eureka Optioned Properties
Subject to obtaining sufficient financing, we plan to retain a
consulting geologist to conduct a review of these properties in order to
recommend an exploration program to be conducted in summer 2011. Once our
consulting geologist has provided us with their findings, we will determine
whether to proceed with an exploration program on these properties.
During the next twelve months, we will be required to make a
number of payments in order to maintain our options to acquire the Golden Snow
Project, Fish Project and CPG Project. Under the terms of our options to acquire
the Golden Snow Project, Fish Project and CPG Project, in order to keep them in
good standing, we are required to pay to Claremont: (i) an option payment of
$20,000 by August 28, 2011; and (ii) the Bureau of Land Management maintenance
and claim fees of approximately $32,583 by September 1, 2011. If we are unable
to make the payments to Claremont, the Bureau of Land Management or pay the
annual maintenance claim fees, we will lose our interest in the Golden Snow
Project, Fish Project and CPG Project.
As the agreement is an option, we may decide at any time not to
proceed in which case we would not be liable to pay any funds beyond the amounts
due at the time we provide notice that we are not proceeding. There is no
assurance that we will exercise the option.
As at February 28, 2011, we had $1,028 cash on hand.
Accordingly, we have insufficient cash on hand to proceed with our exploration
on the Golden Snow Project, Fish Project and CPG Project, and meet our ongoing
operating costs. As such, we will require substantial financing in order to meet
our obligations. There is no assurance that we will be able to acquire such
financing on terms that are acceptable to us, or at all.
RESULTS OF OPERATIONS
Three Months Summary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Three Months Ended
|
|
|
Percentage
|
|
|
|
February 28, 2011
|
|
|
February 28, 2010
|
|
|
Increase / (Decrease)
|
|
Revenue
|
$
|
-
|
|
$
|
-
|
|
|
n/a
|
|
Expenses
|
|
(57,109
|
)
|
|
(79,360
|
)
|
|
(28.0)%
|
|
Net Loss
|
$
|
(57,109
|
)
|
$
|
(79,360
|
)
|
|
(28.0)%
|
|
Revenue
We have not earned any revenues to date. We do not anticipate
earning revenues until such time as we enter into commercial production of our
mineral properties. We are presently in the exploration stage of our business
and we can provide no assurance that we will discover commercially exploitable
levels of mineral resources on our properties, or if such deposits are
discovered, that we will enter into further substantial exploration
programs.
4
Expenses
Our operating expenses for the three months ended February 28,
2011 and 2010 consisted of the following:
|
|
Three Months Ended
|
|
|
Three Months Ended
|
|
|
Percentage
|
|
|
|
February 28, 2011
|
|
|
February 28, 2010
|
|
|
Increase / (Decrease)
|
|
Bank charges and interest
|
$
|
3,149
|
|
$
|
5,212
|
|
|
(39.6)%
|
|
Consulting Fees
|
|
12,300
|
|
|
-
|
|
|
100%
|
|
Depreciation Expense
|
|
-
|
|
|
126
|
|
|
(100)%
|
|
Filing and Regulatory
|
|
1,223
|
|
|
879
|
|
|
39.1%
|
|
Finance Charges
|
|
-
|
|
|
22,603
|
|
|
(100)%
|
|
Management Fees
|
|
9,000
|
|
|
9,000
|
|
|
0.0%
|
|
Mineral Property Exploration
|
|
(2,393
|
)
|
|
1,569
|
|
|
(252.5)%
|
|
Costs
|
|
|
|
|
|
|
|
|
|
Office and Administrative
|
|
5,623
|
|
|
3,420
|
|
|
64.4%
|
|
Professional Fees
|
|
27,845
|
|
|
33,051
|
|
|
(15.8)%
|
|
Website Costs
|
|
362
|
|
|
3,500
|
|
|
(89.7)%
|
|
Total Operating Expenses
|
$
|
57,109
|
|
$
|
79,360
|
|
|
(28.0)%
|
|
Our operating expenses decreased from $79,360, during the three
months ended February 28, 2010, to $57,109 during the three months ended
February 28, 2011. The decrease in our operating expenses was primarily a result
of decreased bank charges and interest, finance charges, mineral property
exploration costs, professional fees and website costs. This decrease was
partially offset by increases in consulting fees, filing and regulatory fees and
office and administrative.
Management fees relate to fees paid or accrued to the directors
of Magellan Acquisition Corp., our wholly owned Nevada subsidiary.
Professional fees primarily relate to costs incurred in
connection with meeting our ongoing reporting requirements under the Exchange
Act.
Finance fees during the three months ended February 28, 2010
primarily relate to amortization of the discount resulting from the allocation
of proceeds to the warrants and the intrinsic value beneficial conversion
feature.
We anticipate our operating expenses will increase if we
implement our exploration program on our mineral properties.
LIQUIDITY AND CAPITAL RESOURCES
Working Capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At
|
|
|
Percentage
|
|
|
|
At February 28, 2011
|
|
|
November 30, 2010
|
|
|
Increase / (Decrease)
|
|
Current Assets
|
$
|
1,028
|
|
$
|
353
|
|
|
191.2%
|
|
Current Liabilities
|
|
(577,760
|
)
|
|
(535,964
|
)
|
|
7.8%
|
|
Working Capital Deficit
|
$
|
(576,732
|
)
|
$
|
(535,611
|
)
|
|
7.7%
|
|
5
Cash Flows
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
|
Three Months Ended
|
|
|
|
February 28, 2011
|
|
|
February 28, 2010
|
|
Cash Flows (Used In) Operating Activities
|
$
|
(702
|
)
|
$
|
(17,508
|
)
|
Cash Flows (Used In) From Investing Activities
|
|
15,988
|
|
|
(38,000
|
)
|
Cash Flows (Used In) From Financing
Activities
|
|
(14,611
|
)
|
|
85,000
|
|
Increase (Decrease) In Cash During Period
|
$
|
675
|
|
$
|
29,492
|
|
The increase in our working capital deficit at February 28,
2011 from our year ended November 30, 2010 is a result of the fact that accounts
payable increased due to our lack of capital to meet ongoing expenditures.
Future Financings
As at February 28, 2011, we had $1,028 cash on hand. Currently,
we do not have sufficient financial resources to complete our plan of operation
for the next twelve months. We have not earned any revenues to date and we do
not anticipate earning revenues in the near future. As such, our ability to
complete our plan of operation is dependent upon our ability to obtain
substantial financing in the near term. Any future financing that we obtain is
expected to be in the form of sales of our equity securities. If we are
successful in completing any equity financings, of which there is no assurance,
our existing shareholders will experience a dilution of their interest in our
company. There is a substantial doubt that we will be able to obtain financing
in an amount that is sufficient to enable us to complete our proposed plan of
operation. If we are not successful in raising sufficient financing, we will not
be able to complete our plan of operation. We do not have any specific
alternatives to our current plan of operation and have not planned for any such
contingency. If we are not successful in raising sufficient financing, our
business may fail and our shareholders may lose all or part of their
investment.
OFF-BALANCE SHEET ARRANGEMENTS
We have no significant off-balance sheet arrangements that have
or are reasonably likely to have a current or future effect on our financial
condition, changes in financial condition, revenues or expenses, results of
operations, liquidity, capital expenditures or capital resources.
CRITICAL ACCOUNTING POLICIES
Our significant accounting policies are disclosed in the notes
to our consolidated financial statements for the three months ended February 28,
2011 included in this Quarterly Report.
We have identified certain accounting policies, described
below, that are most important to the portrayal of our current financial
condition and results of operations.
Use of Estimates
The preparation of financial statements, in conformity with
generally accepted accounting principles, requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying disclosures. Actual results may differ from the estimates.
Exploration Stage Enterprise
Our financial statements are prepared using the accrual method
of accounting. Until such properties are acquired and developed, we will
continue to prepare our financial statements and related disclosures in
accordance with entities in the exploration stage.
Mineral Property Interests
We are an exploration stage mining company and have not yet
realized any revenue from our operations. We are primarily engaged in the
acquisition, exploration and development of mining properties. Exploration costs
are expensed as incurred regardless of the stage of development
or existence of reserves. Costs of acquisition are capitalized subject to
impairment testing, when facts and circumstances indicate impairment may
exist.
6
We regularly perform evaluations of any investment in mineral
properties to assess the recoverability and/or the residual value of our
investments in these assets. All long-lived assets are reviewed for impairment
whenever events or circumstances change which indicate the carrying amount of an
asset may not be recoverable.
Management periodically reviews the carrying value of our
investments in mineral leases and claims with internal and external mining
related professionals. A decision to abandon, reduce or expand a specific
project is based upon many factors including general and specific assessments of
mineral deposits, anticipated future mineral prices, anticipated future costs of
exploring, developing and operating a production mine, the expiration term and
ongoing expenses of maintaining mineral properties and the general likelihood
that we will continue exploration on such project. We do not set a
pre-determined holding period for properties with unproven deposits; however,
properties which have not demonstrated suitable metal concentrations at the
conclusion of each phase of an exploration program are re-evaluated to determine
if future exploration is warranted, whether there has been any impairment in
value and that their carrying values are appropriate.
If an area of interest is abandoned or it is determined that
its carrying value cannot be supported by future production or sale, the related
costs are charged against operations in the year of abandonment or determination
of value. The amounts recorded as mineral leases and claims represent costs to
date and do not necessarily reflect present or future values.
Our exploration activities are subject to various laws and
regulations governing the protection of the environment. These laws are
continually changing, generally becoming more restrictive. We have made, and
expect to make in the future, expenditures to comply with such laws and
regulations.
The accumulated costs of properties that are developed on the
stage of commercial production will be amortized to operations through
unit-of-production depletion.
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK.
|
Not Applicable.
ITEM 4T.
|
CONTROLS AND PROCEDURES.
|
Disclosure Controls and Procedures
We carried out an evaluation of the effectiveness of our
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) as of February 28, 2011 (the Evaluation Date). This evaluation
was carried out under the supervision and with the participation of our Chief
Executive Officer and Chief Financial Officer. Based upon that evaluation, our
Chief Executive Officer and Chief Financial Officer concluded that our
disclosure controls and procedures were not effective as of the Evaluation Date
as a result of the material weaknesses in internal control over financial
reporting discussed in our Annual Report on Form 10-K for the year ended
November 30, 2010 (the 2010 Annual Report).
Disclosure controls and procedures are those controls and
procedures that are designed to ensure that information required to be disclosed
in our reports filed or submitted under the Exchange Act are recorded,
processed, summarized and reported within the time periods specified in the
SEC's rules and forms. Disclosure controls and procedures include, without
limitation, controls and procedures designed to ensure that information required
to be disclosed in our reports filed under the Exchange Act is accumulated and
communicated to management, including our Chief Executive Officer and Chief
Financial Officer, to allow timely decisions regarding required disclosure.
Notwithstanding the assessment that our internal control over
financial reporting was not effective and that there were material weaknesses as
identified in our 2010 Annual Report, we believe that our financial statements
contained in our Quarterly Report on Form 10-Q for the quarter ended February
28, 2011 fairly present our financial condition, results of operations and cash
flows in all material respects.
7
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial
reporting that occurred during the quarter ended February 28, 2011 that have
materially affected, or that are reasonably likely to materially affect, our
internal control over financial reporting.
8
PART II - OTHER INFORMATION
ITEM 1.
|
LEGAL PROCEEDINGS.
|
None.
The following are some of the important factors that could
affect our financial performance or could cause actual results to differ
materially from estimates contained in our forward-looking statements. We may
encounter risks in addition to those described below. Additional risks and
uncertainties not currently known to us, or that we currently deem to be
immaterial, may also impair or adversely affect our business, financial
condition or results of operation.
If we do not obtain additional financing, our business will
fail.
As of February 28, 2011, we had $1,028 cash on hand and a
working capital deficit of $576,732. Our plan of operation calls for significant
expenses in order to meet our obligations under the Eureka Properties Option
Agreement. There is no guarantee that we will exercise our option.
Our Board of Directors have approved a private placement
offering of up to 3,000,000 units (the Units) at a price of $0.05 per Unit for
gross proceeds of up to $150,000. Each Unit is comprised of one share of our
common stock and one share purchase warrant, with each warrant entitling the
subscriber to purchase an additional share of our common stock for a period of
one year following the date of issuance at an exercise price equal to $0.10 per
share. This offering of Units is being made to investors who are not U.S.
Persons as defined in Regulation S. To date, we have issued 527,200 units for
proceeds of $26,360 under this offering. There are no assurances that any
additional units will be sold under this offering.
Obtaining financing would be subject to a number of factors
outside of our control, including market conditions and additional costs and
expenses that might exceed current estimates. These factors may make the timing,
amount, terms or conditions of financing unavailable to us in which case we will
be unable to complete our plan of operation on our mineral properties and to
meet our obligations under our option agreements.
We have yet to earn revenue and our ability to sustain our
operations is dependent on our ability to raise financing. As a result, our
accountants believe there is substantial doubt about our ability to continue as
a going concern.
We have a cumulative net loss of $1,127,177 for the period from
our inception on April 28, 2006 to February 28, 2011, and have no revenues to
date. Our future is dependent upon our ability to obtain additional financing.
Our auditors have expressed substantial doubt about our ability to continue as a
going concern given our accumulated losses. This opinion could materially limit
our ability to raise additional funds by issuing new debt or equity securities
or otherwise. If we fail to raise sufficient capital, we will not be able to
complete our business plan. As a result, we may have to liquidate our business
and investors may lose their investment. Investors should consider our former
auditor's comments when determining if an investment in us is suitable.
Because of the unique difficulties and uncertainties
inherent in mineral exploration ventures, we face a high risk of business
failure.
Investors should be aware of the difficulties normally
encountered by new mineral exploration companies and the high rate of failure of
such enterprises. The likelihood of success must be considered in light of the
problems, expenses, difficulties, complications and delays encountered in
connection with the exploration of the mineral properties that we plan to
undertake. These potential problems include, but are not limited to,
unanticipated problems relating to exploration, and additional costs and
expenses that may exceed current estimates.
9
We have no known mineral reserves and if we cannot find any,
we will have to cease operations.
We have no mineral reserves. If we do not find a mineral
reserve containing gold or if we cannot explore the mineral reserve, either
because we do not have the money to do it or because it will not be economically
feasible to do it, we will have to cease operations and you will lose your
investment. Mineral exploration, particularly for gold, is highly speculative.
It involves many risks and is often non-productive. Even if we are able to find
mineral reserves on our properties, our production capability is subject to
further risks including:
-
Costs of bringing the property into production including exploration work,
preparation of production feasibility studies, and construction of production
facilities, all of which we have not budgeted for;
-
Availability and costs of financing;
-
Ongoing costs of production; and
-
Environmental compliance regulations and restraints.
The marketability of any minerals acquired or discovered may be
affected by numerous factors which are beyond our control and which cannot be
accurately predicted, such as market fluctuations, the lack of milling
facilities and processing equipment near our mineral properties, and such other
factors as government regulations, including regulations relating to allowable
production, importing and exporting of minerals, and environmental
protection.
Given the above noted risks, the chances of finding reserves
on our mineral properties are remote and funds expended on exploration will
likely be lost.
Even if we discover proven reserves of precious metals on
our mineral properties, we may not be able to successfully commence commercial
production.
Our mineral properties do not contain any known bodies of ore.
If our exploration programs are successful in discovering proven reserves on our
mineral properties, we will require additional funds in order to place the
mineral properties into commercial production. The expenditures to be made by us
in the exploration of mineral properties in all probability will be lost as it
is an extremely remote possibility that the mineral claims will contain proven
reserves. If our exploration programs are successful in discovering proven
reserves, we will require additional funds in order to place the mineral
properties into commercial production. The funds required for commercial mineral
production can range from several millions to hundreds of millions. We currently
do not have sufficient funds to place our mineral claims into commercial
production. Obtaining additional financing would be subject to a number of
factors, including the market price for gold and the costs of exploring for or
mining these materials. These factors may make the timing, amount, terms or
conditions of additional financing unavailable to us. Because we will need
additional financing to fund our exploration activities there is substantial
doubt about our ability to continue as a going concern. At this time, there is a
risk that we will not be able to obtain such financing as and when needed.
We face significant competition in the mineral exploration
industry.
We compete with other mining and exploration companies
possessing greater financial resources and technical facilities than we do in
connection with the acquisition of mineral exploration claims and leases on
precious metal prospects and in connection with the recruitment and retention of
qualified personnel. There is significant competition for precious metals and,
as a result, we may be unable to acquire an interest in attractive mineral
exploration properties on terms we consider acceptable on a continuing
basis.
There is no assurance that we will be able to exercise our
option to acquire the Eureka Optioned Properties.
In order to exercise our option to acquire the Eureka Optioned
Properties, we are required to make a series of cash payments and meet the
annual claim maintenance fees. In order to meet these payments we will need to
obtain substantial financing. If we are unable to meet these payments, we will
lose our options to acquire these properties.
10
Because our sole executive officer does not have formal
training specific to the technicalities of mineral exploration, there is a
higher risk that our business will fail.
Richard W. Donaldson, our sole executive officer, does not have
any formal training as a geologist or in the technical aspects of managing a
mineral exploration company. With the exception of Bryan H. Wilson, a director,
our management may not be fully aware of the specific requirements related to
working within this industry. As such, the loss of Mr. Wilsons services could
cause irreparable harm to our operations, earnings, and ultimate financial
success could suffer irreparable harm due to management's lack of experience in
this industry.
Because the prices of metals fluctuate, if the price of
metals for which we are exploring decreases below a specified level, it may no
longer be profitable to explore for those metals and we will cease
operations.
Prices of metals are determined by such factors as expectations
for inflation, the strength of the United States dollar, global and regional
supply and demand, and political and economic conditions and production costs in
metals producing regions of the world. The aggregate effect of these factors on
metal prices is impossible for us to predict. In addition, the prices of
precious metals are sometimes subject to rapid short-term and/or prolonged
changes because of speculative activities. The current demand for and supply of
these metals affect the metal prices, but not necessarily in the same manner as
current supply and demand affect the prices of other commodities. The supply of
these metals primarily consists of new production from mining. If the prices of
the metals are, for a substantial period, below our foreseeable cost of
production, we could cease operations and investors could lose their entire
investment.
We may conduct further offerings in the future in which case
investors shareholdings will be diluted.
We are currently offering units (common stock and share
purchase warrants) for gross proceeds of up to $150,000. Since our inception, we
have relied on such equity sales of our common stock to fund our operations. We
may conduct further equity offerings in the future to finance our current
projects or to finance subsequent projects that we decide to undertake. If
common stock is issued in return for additional funds, the price per share could
be lower than that paid by our current stockholders. We anticipate continuing to
rely on equity sales of our common stock in order to fund our business
operations. If we issue additional stock, the interests of existing shareholders
will be diluted.
The quotation price of our common stock may be volatile,
with the result that an investor may not be able to sell any shares acquired at
a price equal to or greater than the price paid by the investor.
Our common shares are quoted on the OTCQB under the symbol
"PNGM. Companies quoted on the OTCQB have traditionally experienced extreme
price and volume fluctuations. In addition, our stock price may be adversely
affected by factors that are unrelated or disproportionate to our operating
performance. Market fluctuations, as well as general economic, political and
market conditions such as recessions, interest rates or international currency
fluctuations may adversely affect the market price of our common stock. As a
result of this potential volatility and potential lack of a trading market, an
investor may not be able to sell any of our common stock that they acquire at a
price equal or greater than the price paid by the investor.
Because our stock is a penny stock, shareholders will be
more limited in their ability to sell their stock.
The SEC has adopted rules that regulate broker-dealer practices
in connection with transactions in penny stocks. Penny stocks are generally
equity securities with a price of less than $5.00, other than securities
registered on certain national securities exchanges or quoted on the Nasdaq
system, provided that current price and volume information with respect to
transactions in such securities is provided by the exchange or quotation system.
Because our securities constitute penny stocks within the meaning of the
rules, the rules apply to us and to our securities. The rules may further affect
the ability of owners of shares to sell our securities in any market that might
develop for them. As long as the trading price of our common stock is less than
$5.00 per share, the common stock will be subject to Rule 15g-9 under the
Exchange Act. The penny stock rules require a broker-dealer, prior to a
transaction in a penny stock, to deliver a standardized risk disclosure document
prepared by the SEC, that:
1.
|
contains a description of the nature and level of risk in
the market for penny stocks in both public offerings and secondary
trading;
|
11
2.
|
contains a description of the brokers or dealers duties
to the customer and of the rights and remedies available to the customer
with respect to a violation to such duties or other requirements of
securities laws;
|
|
|
3.
|
contains a brief, clear, narrative description of a
dealer market, including bid and ask prices for penny stocks and the
significance of the spread between the bid and ask price;
|
|
|
4.
|
contains a toll-free telephone number for inquiries on
disciplinary actions;
|
|
|
5.
|
defines significant terms in the disclosure document or
in the conduct of trading in penny stocks; and
|
|
|
6.
|
contains such other information and is in such form,
including language, type, size and format, as the SEC shall require by
rule or regulation.
|
The broker-dealer also must provide, prior to effecting any
transaction in a penny stock, the customer with: (a) bid and offer quotations
for the penny stock; (b) the compensation of the broker-dealer and its
salesperson in the transaction; (c) the number of shares to which such bid and
ask prices apply, or other comparable information relating to the depth and
liquidity of the market for such stock; and (d) a monthly account statements
showing the market value of each penny stock held in the customers account. In
addition, the penny stock rules require that prior to a transaction in a penny
stock not otherwise exempt from those rules; the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchasers written acknowledgment of the receipt
of a risk disclosure statement, a written agreement to transactions involving
penny stocks, and a signed and dated copy of a written suitably statement. These
disclosure requirements may have the effect of reducing the trading activity in
the secondary market for our stock.
ITEM 2.
|
UNREGISTERED SALES OF EQUITY SECURITIES AND
USE OF PROCEEDS.
|
All unregistered sales of our equity securities made during the
fiscal year ended November 30, 2010 have been previously reported in our
Quarterly Reports on Form 10-Q and our Current Reports on Form 8-K.
ITEM 3.
|
DEFAULTS UPON SENIOR SECURITIES.
|
None.
ITEM 5.
|
OTHER INFORMATION.
|
None.
Exhibit
|
|
Number
|
Description of Exhibits
|
3.1
|
Articles of Incorporation.
(1)
|
3.2
|
Certificate of Change Pursuant to NRS 78.209 increasing
the authorized capital of common stock to 300,000,000 shares, par value
$0.001 per share.
(5)
|
3.3
|
Bylaws, as amended.
(1)
|
4.1
|
Specimen Stock Certificate.
(1)
|
10.1
|
Loan Agreement dated December 19, 2007 between the
Company (as the borrower) and Kahala Financial Corp. (as the
lender).
(2)
|
10.2
|
Purchase Agreement dated December 15, 2008 among Magellan
Acquisition Corp., Solfotara Mining Corp. and Magellan Copper and Gold plc
(Magellan Singapore Subsidiaries)
.
(4)
|
12
Exhibit
|
|
Number
|
Description of Exhibits
|
10.3
|
Purchase Agreement dated
December 16, 2008 between the Company and Bako Resources Inc.
(Clisbako
Property)
.
(4)
|
10.4
|
Extension Agreement dated July 23, 2009 between
the Company and Bako Resources Inc.
(7)
|
10.5
|
Assignment Agreement dated May
29, 2009 among the Company, Portal Resources US Inc. and Portal Resources
Ltd.
(Golden Snow Project, Fish Project and CPG Project)
(6)
|
10.6
|
Agreement dated for reference November 2, 2009
executed on January 19, 2010 between the Company and Agus Abidin
(Manado Gold Property)
.
(8)
|
10.7
|
Second Extension Agreement
dated January 21, 2010 between the Company and Bako Resources Inc.
(Clisbako Property)
.
(9)
|
10.8
|
Extension Agreement Dated January 21, 2010
between the Company and Agus Abidin
(Manado
Gold Property).
|
10.9
|
Option agreement dated February
5, 2010 between the Company and Larry Sostad (
June Claims).
(10)
|
10.10
|
Third Extension Agreement dated March 15, 2010
between the Company and Bako Resources Inc.
(Clisbako
Property).
(11)
|
10.11
|
Second Extension Agreement
Dated March 29, 2010 between the Company and Agus Abidin
(Manado Gold
Property).
(12)
|
10.12
|
Loan Agreement dated January 11, 2010 between
the Company and Laverne Assets Group Corp.
(13)
|
10.12
|
Agreement dated for reference
April 23, 2010 executed on April 28, 2010 between the Company and Bull and
Bear Financial Report.
(14)
|
10.13
|
Option Agreement dated July 23, 2010 between
the Clisbako Minerals Inc. and Interior Plateau Mining Corp.
(15)
|
10.14
|
Assignment Agreement dated
August 24, 2010 between the Company and Manado Gold Corp.
(16)
|
10.15
|
Option Agreement dated for September 15, 2010
between Clisbako Minerals Inc. and Manado Gold Corp.
(17)
|
10.16
|
Extension Agreement dated
November 30, 2010 between the Company and Manado Gold Corp.
(19)
|
10.17
|
2011 Stock Option Plan.
(18)
|
14.1
|
Code of Ethics.
(3)
|
21.1
|
List of Subsidiaries.
(19)
|
31.1
|
Certification of Chief
Executive Officer and Chief Financial Officer as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.
|
32.1
|
Certification of Chief Executive Officer and
Chief Financial Officer as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
|
Notes:
|
|
(1)
|
Previously filed as an exhibit to our
Registration Statement on Form SB-2 filed on April 24, 2007.
|
(2)
|
Previously filed as an exhibit to our Current
Report on Form 8-K filed on December 26, 2007.
|
(3)
|
Previously filed as an exhibit to our Annual
Report on Form 10-KSB filed on March 6, 2008.
|
(4)
|
Previously filed as an exhibit to our Current
Report on Form 8-K filed on December 22, 2008.
|
(5)
|
Previously filed as an exhibit to our Current
Report on Form 8-K filed on April 17, 2009.
|
(6)
|
Previously filed as an exhibit to our Current
Report on Form 8-K filed on June 2, 2009.
|
(7)
|
Previously filed as an exhibit to our Current
Report on Form 8-K filed on July 27, 2009.
|
(8)
|
Previously filed as an exhibit to our Current
Report on Form 8-K filed on January 21, 2010.
|
(9)
|
Previously filed as an exhibit to our Current
Report on Form 8-K filed on January 26, 2010.
|
(10)
|
Previously filed as an exhibit to our Current
Report on Form 8-K filed on February 11, 2010.
|
(11)
|
Previously filed as an exhibit to our Annual
Report on Form 10-K filed on March 16, 2010.
|
(12)
|
Previously filed as an exhibit to our Current
Report on Form 8-K filed on April 6, 2010.
|
(13)
|
Previously filed as an exhibit to our Quarterly
Report on Form 10-Q filed on April 19, 2010.
|
(14)
|
Previously filed as an exhibit to our Current
Report on Form 8-K filed on May 4, 2010.
|
(15)
|
Previously filed as an exhibit to our Current
Report on Form 8-K filed on August 10, 2010.
|
(16)
|
Previously filed as an exhibit to our Current
Report on Form 8-K filed on August 30, 2010.
|
(17)
|
Previously filed as an exhibit to our Quarterly
Report on Form 10-Q filed on October 20, 2010.
|
(18)
|
Previously filed as an exhibit to our Current
Report on Form 8-K filed on March 3, 2011.
|
(19)
|
Previously filed as an exhibit to our Annual
Report on Form 10-K filed on March 15, 2011.
|
13
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.
|
|
|
PENGRAM CORPORATION
|
|
|
|
|
|
|
|
|
|
|
|
|
Date:
|
April
19, 2011
|
By:
|
/s/
Richard W. Donaldson
|
|
|
|
RICHARD W. DONALDSON
|
|
|
|
Chief Executive Officer, Chief Financial
Officer,
|
|
|
|
President, Secretary, Treasurer,
|
|
|
|
(Principal Executive Officer
|
|
|
|
and Principal Accounting Officer)
|
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