ITEM 1 - DESCRIPTION OF BUSINESS
Background
Panex Resources Inc. (“Panex” or the “Company”) is a Nevada corporation that was incorporated on May 28, 2004.
The Company conducts principal and technical activities from Coresco AG, Level 3, Gotthardstrasse 20, 6304 Zug, Switzerland. The telephone number is +41 41 711 0281. These offices are provided to the Company on a month-to-month basis. The Company believes these offices are adequate for the business requirements during the next 12 months. The Company does not own any real property. Panex maintains its statutory registered agent’s office at 1859 Whitney Mesa Drive, Henderson, Nevada, 89014.
Panex is an exploration stage company engaged in the acquisition and exploration of mineral properties. The Company’s plan of operations is to conduct mineral exploration activities on mineral properties in order to assess whether these claims possess commercially exploitable mineral deposits. Panex’s exploration program will be designed to explore for commercially viable deposits of base and precious minerals, such as gold, silver, lead, barium, mercury, copper, and zinc minerals.
Panex has an authorized capital of 500,000,000 shares of common stock with a par value of $0.001 per share with 103,261,507 shares of common stock currently issued and outstanding. On August 30, 2010, the authorized capital was increased from 75,000,000 shares of common stock to 500,000,000 shares of common stock.
Panex has not been involved in any bankruptcy, receivership or similar proceedings. There have been no material reclassifications, mergers, consolidations or purchases or sales of a significant amount of assets not in the ordinary course of Panex’s business.
Currently, Panex has not obtained an employer identification number for the purpose of registering to do business in the United States. Panex does not currently conduct any business in the United States nor employ any staff in the United States and is therefore not required by law to obtain an employer identification number at this time. Panex will take immediate steps to obtain an employer identification number if it becomes necessary to do so at any time in the future.
Plan of Operation
Panex is an Exploration Stage Company. Panex’s principal business is the acquisition and exploration of mineral resources. Panex currently has no interest in any mineral resources or properties but is continuing to identify and assess viable mineral properties or mineral projects.
Panex is also a “shell” company as defined by the SEC as a result of only having nominal operations and nominal assets.
Panex has not generated any revenues from its mineral exploration activities. From the time of its incorporation in 2004 to early 2008, Panex was actively engaged in the exploration of various mineral projects that were prospective for gold, silver and copper. Since 2008, a combination of limited exploration success and a dwindling of its working capital caused Panex to withdraw from its mineral exploration projects.
During the next 12 months, management’s objective is to recapitalize Panex, continue to raise new capital and to seek new investment opportunities in the mineral sector. As is evident from the “Background” section above and previous SEC filings, Panex has in the past successfully negotiated agreements enabling it to earn an interest in a number of different mineral properties. Consequently, management believes that its worldwide industry contacts will make it possible to identify and assess new projects for acquisition purposes.
Panex is seeking a viable business opportunity through acquisition, merger or other suitable business combination method, with a focus on undervalued mineral properties for eventual acquisition. Panex intends to concentrate its acquisition efforts on mineral properties or mineral exploration businesses that management believes to be undervalued or that management believes may realize a substantial benefit from being publicly owned. Panex will continue to identify and assess undervalued mineral properties when capital raisings are completed. A small number of mineral properties are presently being reviewed, but it is too early to say whether they may be considered appropriate for acquisition. The Company is in the process of raising new capital up to a maximum of $2,400,000 whereby Panex is offering up to 30,000,000 shares of common stock on a self-underwritten basis. At the date of this report a total of $978,989 has been raised under this offering. A Prospectus on Form 424B4 was filed on February 17, 2012 and June 18, 2012 with the Securities and Exchange Commission.
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The offering price is $0.08 per share and the maximum amount to be raised is $2,400,000. Panex intends to offer up to a maximum of 30,000,000 shares through its president and sole director to investors, outside the United States. There will be no underwriter or broker/dealer involved in the transaction and there will be no commissions paid to any individuals from the proceeds of this sale. Klaus Eckhof, the president and sole director of Panex, intends to sell the shares directly. The intended methods of communication include, without limitations, telephone and personal contact.
Property Interests
Panex does not have any mineral property assets or mineral property interests.
Competition
Panex competes with other mining and exploration companies possessing greater financial resources and technical facilities than Panex in connection with the acquisition of mineral exploration claims and in connection with the recruitment and retention of qualified personnel. Many of Panex’s competitors have a very diverse portfolio and have not confined their market to one mineral or property, but explore a wide array of minerals and mineral exploration properties. Some of these competitors have been in business for longer than Panex and may have established more strategic partnerships and relationships than Panex.
Management believes that it will have a competitive advantage over its competitors due to its network of contacts, which will enable it to identify and acquire prospective mineral properties more quickly and efficiently than many of its competitors.
Government Controls and Regulations
Panex is not subject to any government controls or regulations as the Company has no interests in any mineral projects.
If and when Panex acquires a mineral property asset or a mineral property interest, its business may be subject to various levels of government controls and regulations, which are supplemented and revised from time to time. Changes to current local, state or federal laws and regulations in the jurisdictions where Panex will operate could require additional capital expenditures and increased operating and/or reclamation costs. Panex is unable to predict what additional legislation or revisions may be proposed that might affect its business or when any such proposals, if enacted, might become effective. Such changes, however, could require increased capital and operating expenditures and could prevent or delay certain operations by Panex or the property operators. Although Panex is unable to predict what additional legislation, if any, might be proposed or enacted, additional regulatory requirements could render certain exploration activities uneconomical.
Patents/Trade Marks/Licences/Franchises/Concessions/Royalty Agreements or Labour Contracts
Panex currently does not own any patents or trade marks. Also, Panex is not party to any license or franchise agreements, concessions, royalty agreements or labor contracts arising from any patents or trademarks.
Number of Total Employees and Number of Full Time Employees
There are no employees at the present time, with the exception of its officers.
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ITEM 1A
ITEM 1A - RISK FACTORS
Panex is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is not required to provide the information required under this item.
ITEM 1B
ITEM 1B - UNRESOLVED STAFF COMMENTS
Panex is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is not required to provide the information required under this item.
ITEM 2
ITEM 2 - DESCRIPTION OF PROPERTY
The Company conducts principal and technical activities from Coresco AG, Level 3, Gotthardstrasse 20, 6304 Zug, Switzerland. The telephone number is +41 41 711 0281. These offices are provided to the Company on a month-to-month basis. The Company believes these offices are adequate for the business requirements during the next 12 months. The Company does not own any real property. Panex maintains its statutory registered agent’s office at 1859 Whitney Mesa Drive, Henderson, Nevada, 89014.
ITEM 3
ITEM 3 - LEGAL PROCEEDINGS
Panex is not a party to any pending legal proceedings and, to the best of Panex’s knowledge, none of Panex’s assets are the subject of any pending legal proceedings.
ITEM 4
ITEM 4 - MINING SAFETY DISCLOSURES
There are no current mining activities at the date of this report.
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PART II
ITEM 5
ITEM 5 - MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASE OF EQUITY SECURITIES
a.
Market Information
Panex’s shares of common stock were quoted on the FINRA OTC Bulletin Board under the symbol “DBGF” from March 8, 2006 to December 17, 2007. Since then Panex’s shares of common stock have been quoted on the OTCQB under the symbol “OTCQB:DBGF”.
The following table gives the high and low bid information for each fiscal quarter Panex’s common stock has been quoted for the last two fiscal years. The bid information was obtained from OTC Markets, Inc. and reflects inter-dealer prices, without retail mark-up, mark-down or commission, and may not represent actual transactions.
b.
Holders of Record
Panex has approximately 87 holders of record of Panex’s common stock as of August 31, 2012 according to a shareholders’ list provided by Panex’s transfer agent as of that date. The number of registered shareholders does not include any estimate by Panex of the number of beneficial owners of common stock held in street name. The transfer agent for Panex’s common stock is Empire Stock Transfer Inc., 1859 Whitney Mesa Drive, Henderson, Nevada, 89014 and their telephone number is 702-818-5898.
c.
Dividends
There are no restrictions in Panex’s Articles of Incorporation or By-laws that restrict Panex from declaring dividends. The Nevada Revised statutes, however, do prohibit Panex from declaring dividends where, after giving effect to the distribution of the dividend:
1. Panex would not be able to pay its debts as they become due in the usual course of business; or
2. Panex’s total assets would be less than the sum of its total liabilities, plus the amount that would be needed to satisfy the rights of stockholders who have preferential rights superior to those receiving the distribution.
Panex has declared no cash dividends on its shares of common stock and is not subject to any restrictions that limit its ability to pay cash dividends on its shares of common stock. Cash dividends are declared at the sole discretion of Panex’s Board of Directors.
d.
Unregistered Sales of Equity Securities and Use of Proceeds
There have been no sales of unregistered securities within the last three years that would be required to be disclosed pursuant to Item 701 of Regulation S-K, except for the following:
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June 15, 2012 - S-1 Registration Statement Effective
On June 15, 2012, the Securities and Exchange Commission declared Panex’s Form S-1 Registration Statement effective, file number 333-172375, permitting Panex to offer up to 30,000,000 shares of common stock at $0.08 per share. The offering is being conducted on a best efforts basis and there is no underwriter involved in this public offering. As of October 26, 2012, Panex has received and accepted 22 subscription agreements and received an aggregate $978,989 in proceeds from those subscriptions and issued 12,237,075 shares of common stock. Panex has applied the proceeds to ongoing operations, paying accounts payable, paying for offering expenses, assessing and evaluating possible new mineral project opportunities, and, subject to acquiring any such new projects, funding the exploration on such projects. The offering period for the public offering expires on December 12, 2012.
March 28, 2012 - 3,196,971 Shares For Debt Offering
During March 2012, the Company entered into debt settlement agreements with creditors in consideration for the issuance of the Company’s common stock, par value $0.001, at a per share price of $0.08 per share. As a result, the Company will no longer be indebted as further set forth in the debt settlement agreements as follows:
-
Dr Georg Schnura, a creditor, for $175,758, for a total of 2,196,971 shares at a price of $0.08 per share.
-
Victor Dario, a creditor, for $80,000, for a total of 1,000,000 shares at a price of $0.08 per share.
February 24, 2012 - 8,477,553 Shares For Debt Offering
On February 24, 2012, the board of directors approved the settlement of debt for shares at a settlement price of $0.02 per restricted share. Panex settled $169,551 in debt in this closing, and on February 24, 2012 issued an aggregate 8,477,553 restricted shares of common stock to three non-US creditors outside the United States.
The share certificates for this common stock were issued June 20, 2012.
December 2010 - $0.05 Shares For Debt Offering
On December 20, 2010, the board of directors approved the settlement of debt for shares at a settlement price of $0.05 per restricted share. Panex settled an aggregate $615,156 in debt in this closing, and issued an aggregate 12,303,123 restricted shares of common stock to seven non-US creditors outside the United States.
Panex set the value of the restricted shares arbitrarily without reference to its assets, book value, revenues or other established criteria of value. All the restricted shares issued in this offering were issued for investment purposes in a “private transaction”.
For the seven non-US creditors outside the United States in this closing, Panex relied upon Section 4(2) of the Securities Act of 1933 and Rule 903 of Regulation S promulgated pursuant to that Act by the Securities and Exchange Commission. Management is satisfied that Panex complied with the requirements of the exemption from the registration and prospectus delivery of the Securities Act of 1933. The settlement of debt was not a public offering and was not accompanied by any general advertisement or any general solicitation. Panex received from each creditor a completed and signed shares for debt agreement containing certain representations and warranties, including, among others, that (a) the creditor was not a U.S. person, (b) the creditor accepted the shares for debt for their own investment account and not on behalf of a U.S. person, and (c) there was no prearrangement for the resale of the shares with any buyer. No offer was made or accepted in the United States and the share certificates representing the shares were issued bearing a legend with the applicable trading restrictions.
January 2010 - $0.01 Shares For Debt Offering
On January 7, 2010, the board of directors approved the settlement of debt for shares at a settlement price of $0.01 per restricted share. De Beira settled $10,000 in debt in this closing, and on January 7, 2010 issued an aggregate 1,000,000 restricted shares of common stock to one non-US creditor outside the United States.
De Beira set the value of the restricted shares arbitrarily without reference to its assets, book value, revenues or other established criteria of value. All the restricted shares issued in this offering were issued for investment purposes in a “private transaction”.
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For the one non-US creditor outside the United States in this one closing, De Beira relied upon Section 4(2) of the Securities Act of 1933 and Rule 903 of Regulation S promulgated pursuant to that Act by the Securities and Exchange Commission. Management is satisfied that De Beira complied with the requirements of the exemption from the registration and prospectus delivery of the Securities Act of 1933. The settlement of debt was not a public offering and was not accompanied by any general advertisement or any general solicitation. De Beira received from each creditor a completed and signed shares for debt agreement containing certain representations and warranties, including, among others, that (a) the creditor was not a U.S. person, (b) the creditor accepted the shares for debt for their own investment account and not on behalf of a U.S. person, and (c) there was no prearrangement for the resale of the shares with any buyer. No offer was made or accepted in the United States and the share certificates representing the shares were issued bearing a legend with the applicable trading restrictions.
October 2009 - $0.01 Shares For Debt Offering
On October 19, 2009, the board of directors approved the settlement of debt for shares at a settlement price of $0.01 per restricted share. Panex settled $23,500 in debt in this closing, and on October 19, 2009 issued an aggregate 2,350,000 restricted shares of common stock to two non-US creditors outside the United States.
Panex set the value of the restricted shares arbitrarily without reference to its assets, book value, revenues or other established criteria of value. All the restricted shares issued in this offering were issued for investment purposes in a “private transaction”.
For the two non-US creditors outside the United States in this one closing, Panex relied upon Section 4(2) of the Securities Act of 1933 and Rule 903 of Regulation S promulgated pursuant to that Act by the Securities and Exchange Commission. Management is satisfied that Panex complied with the requirements of the exemption from the registration and prospectus delivery of the Securities Act of 1933. The settlement of debt was not a public offering and was not accompanied by any general advertisement or any general solicitation. Panex received from each creditor a completed and signed shares for debt agreement containing certain representations and warranties, including, among others, that (a) the creditor was not a U.S. person, (b) the creditor accepted the shares for debt for their own investment account and not on behalf of a U.S. person, and (c) there was no prearrangement for the resale of the shares with any buyer. No offer was made or accepted in the United States and the share certificates representing the shares were issued bearing a legend with the applicable trading restrictions.
October 2009 - $0.01 Private Placement Offering
On October 19, 2009, the board of directors authorized the issuance of 4,000,000 restricted shares of common stock at a subscription price of $0.01 per restricted share. Panex raised $40,000 in cash in this closing, and on October 19, 2009 issued an aggregate 4,000,000 restricted shares of common stock to two non-US subscribers outside the United States.
Panex set the value of the restricted shares arbitrarily without reference to its assets, book value, revenues or other established criteria of value. All the restricted shares issued in this offering were issued for investment purposes in a “private transaction”.
For the two non-US subscribers outside the United States in this one closing, Panex relied upon Section 4(2) of the Securities Act of 1933 and Rule 903 of Regulation S promulgated pursuant to that Act by the Securities and Exchange Commission. Management is satisfied that Panex complied with the requirements of the exemption from the registration and prospectus delivery of the Securities Act of 1933. The offering was not a public offering and was not accompanied by any general advertisement or any general solicitation. Panex received from each subscriber a completed and signed subscription agreement containing certain representations and warranties, including, among others, that (a) the subscriber was not a U.S. person, (b) the subscriber subscribed for the shares for their own investment account and not on behalf of a U.S. person, and (c) there was no prearrangement for the resale of the shares with any buyer. No offer was made or accepted in the United States and the share certificates representing the shares were issued bearing a legend with the applicable trading restrictions.
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e.
Penny Stock Rules
The SEC has also 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 system).
The shares of Panex will remain penny stock for the foreseeable future. The classification of penny stock makes it more difficult for a broker-dealer to sell the stock into a secondary market, which makes it more difficult for a purchaser to liquidate his or her investment. Any broker-dealer engaged by the purchaser for the purpose of selling his or her shares in Panex will be subject to rules 15g-1 through 15g-10 of the Exchange Act. Rather than creating a need to comply with those rules, some broker-dealers will refuse to attempt to sell penny stock.
The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, deliver a standardized risk disclosure document prepared by the SEC, which:
·
contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading;
·
contains a description of the broker’s or dealer’s 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;
·
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;
·
contains a toll-free telephone number for inquiries on disciplinary actions;
·
defines significant terms in the disclosure document or in the conduct of trading penny stocks; and
·
contains such other information and is in such form (including language, type, size, and format) as the Commission shall require by rule or regulation.
·
The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer:
o
with bid and offer quotations for the penny stock;
o
the compensation of the broker-dealer and its salesperson in the transaction;
o
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
o
monthly account statements showing the market value of each penny stock held in the customer’s 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 purchaser’s 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 suitability statement. These disclosure requirements will have the effect of reducing the trading activity in the secondary market for Panex’s stock because it will be subject to these penny stock rules. Therefore, stockholders may have difficulty selling those securities.
ITEM 6
ITEM 6 - SELECTED FINANCIAL DATA
Panex is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is not required to provide the information required under this item.
ITEM 7
ITEM 7 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the Financial Statements and Notes to the Financial Statements filed with this Report.
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Business Overview
Panex Resources Inc. (‘Panex” or the “Company”) was incorporated in the State of Nevada on May 28, 2004. The Company is considered to be an Exploration Stage Company. The Company’s principal business is the acquisition and exploration of mineral resources.
Going concern and management’s plans:
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. Since its inception on May 28, 2004, the Company has not generated revenue and has incurred net losses. The Company incurred a net loss of $926,016 for the year ended August 31, 2012, and a deficit accumulated during the exploration stage of $13,469,429 for the period May 28, 2004 (inception) through August 31, 2012. Accordingly, it has not generated cash flow from operations and has primarily relied upon advances from shareholders and proceeds from equity financings to fund its operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.
The Company has no mineral property interests as of the date of this report. Certain mineral property interests are presently being considered, however it is too early to determine whether they may be considered appropriate for acquisition.
As of August 31, 2012, the Company had cash of $65,799.
The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts or classification of liabilities that may result from the possible inability of the Company to continue as a going concern.
The report of the independent registered public accounting firm on Panex’s financial statements as of and for the year ended August 31, 2012 includes a ‘going concern’ explanatory paragraph which means that the accounting firm has expressed substantial doubt about Panex’s ability to continue as a going concern. Management’s plans with respect to these matters are described in this section and in its financial statements, and do not include any adjustments that might result from the outcome of this uncertainty. There is no guarantee that Panex will be able to raise the funds or raise further capital for the operations planned in the future.
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Plan of Operation
Panex is an Exploration Stage Company. Panex’s principal business is the acquisition and exploration of mineral resources. Panex currently has no interest in any mineral resources or properties but is continuing to identify and assess viable mineral properties or mineral projects.
Panex is also a “shell” company as defined by the SEC as a result of only having nominal operations and nominal assets.
Panex has not generated any revenues from its mineral exploration activities. From the time of its incorporation in 2004 to early 2008, Panex was actively engaged in the exploration of various mineral projects that were prospective for gold, silver and copper. Since 2008, a combination of limited exploration success and a dwindling of its working capital caused Panex to withdraw from its mineral exploration projects.
During the next 12 months, management’s objective is to recapitalize Panex, continue to raise new capital and to seek new investment opportunities in the mineral sector. As is evident from the “Background” section above and previous SEC filings, Panex has in the past successfully negotiated agreements enabling it to earn an interest in a number of different mineral properties. Consequently, management believes that its worldwide industry contacts will make it possible to identify and assess new projects for acquisition purposes.
Panex is seeking a viable business opportunity through acquisition, merger or other suitable business combination method, with a focus on undervalued mineral properties for eventual acquisition. Panex intends to concentrate its acquisition efforts on mineral properties or mineral exploration businesses that management believes to be undervalued or that management believes may realize a substantial benefit from being publicly owned. Panex will continue to identify and assess undervalued mineral properties when capital raisings are completed. A small number of mineral properties are presently being reviewed, but it is too early to say whether they may be considered appropriate for acquisition. The Company is in the process of raising new capital up to a maximum of $2,400,000 whereby Panex is offering up to 30,000,000 shares of common stock on a self-underwritten basis. At the date of this report a total of $978,989 has been raised under this offering. A Prospectus on Form 424B4 was filed on February 17, 2012 and June 18, 2012 with the Securities and Exchange Commission.
The offering price is $0.08 per share and the maximum amount to be raised is $2,400,000. Panex intends to offer up to a maximum of 30,000,000 shares through its president and sole director to investors, outside the United States. There will be no underwriter or broker/dealer involved in the transaction and there will be no commissions paid to any individuals from the proceeds of this sale. Klaus Eckhof, the president and sole director of Panex, intends to sell the shares directly. The intended methods of communication include, without limitations, telephone and personal contact.
In the mineral sector, it is an established practice for companies to earn an interest in a mineral project on a progressive basis by expending funds on mineral exploration programs. Such arrangements allow companies to continue to expend funds in order to earn an interest if exploration results are encouraging and conversely, if exploration results are not encouraging, companies can terminate or withdraw from such arrangements without further financial commitment. Such arrangements are commonly referred to as “farm-in” arrangements. Panex has successfully negotiated farm-in arrangements in the past and, subject to identifying suitable mineral projects, Panex’s management believes Panex can again enter into such arrangements.
Panex’s sole director, Klaus Eckhof, has contacts in the mineral sector; amongst mineral permit holders, industry promoters, government mining departments, geologists, mining engineers, and equipment suppliers. Panex’s management have successfully (in Panex previously and in other entities) put together teams with diverse skills to explore and manage mineral properties. This process is assisted by their contacts amongst drilling companies, laboratories, supplies procurement agencies, labour recruitment agencies and transport and freight companies.
During the next 12 months, management does not anticipate generating any revenue. Any additional funding required will come from equity financing from the sale of Panex’s common stock. If Panex is successful in completing an equity financing, existing stockholders will experience dilution of their interest in Panex. Management does not have any financing arranged and cannot provide investors with any assurance that Panex will be able to raise sufficient funding from the sale of its common stock to fund its plan of operation. In the absence of such financing, Panex’s business will fail.
Based on the nature of its business, Panex anticipates incurring operating losses in the foreseeable future. Panex bases this expectation, in part, on the fact that very few mineral claims in the exploration stage ultimately develop into producing, profitable mines. Panex’s future financial results are also uncertain due to a number of factors, some of which are outside its control. These factors include, but are not limited to:
·
Panex’s ability to raise additional funding;
·
the market price for minerals; and
·
Panex’s ability to identify viable mineral property assets or mineral property interests.
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Accounting and Audit Plan
Panex intends to continue to have Coresco AG, its outside consultant, assist in the preparation of Panex’s quarterly and annual financial statements and have these financial statements reviewed or audited by Panex’s independent registered public accounting firm. Coresco AG is expected to charge Panex approximately $3,000 to prepare Panex’s quarterly financial statements and approximately $6,000 to prepare Panex’s annual financial statements. Panex’s independent auditor is expected to charge approximately $4,000 to review each of Panex’s quarterly financial statements and approximately $12,500 to audit Panex’s annual financial statements. In the next 12 months, Panex anticipates incurring approximately $39,500 to pay for its accounting and audit requirements.
SEC Filing Plan
Panex expects to incur filing costs of approximately $5,000 per quarter to support its quarterly and annual filings. In the next 12 months, Panex anticipates spending approximately $20,000 for costs to pay for three quarterly filings and one annual filing.
Results of Operations
Panex has generated no operating revenues since its inception on May 28, 2004 through August 31, 2012.
For the year ended August 31, 2012, Panex had net interest expense of $21,653, compared to $50,054 for the year ended August 31, 2011. Total expenses for the year ended August 31, 2012 were $914,789 compared to $250,019 for the year ended August 31, 2011. Expenses were higher in the fiscal year 2012 than 2011 primarily due to renewed activities to recapitalize the Company and seek new investment opportunities, including preparing a Form S-1 Registration Statement and several amendments.
Liquidity and Capital Resources
The financial statements have been prepared assuming that the Company will continue as a going concern. Since inception in May 2004, the Company has not generated revenue and has incurred net losses. The Company has a working capital deficit of $267,842 at August 31, 2012, incurred net losses of $926,016 for the fiscal year 2012 compared to $299,498 for the fiscal year 2011, and has a deficit accumulated during the exploration stage of $13,469,429 for the period from May 28, 2004 (inception) through August 31, 2012.
Accordingly, the Company has not generated cash flows from operations and have primarily relied upon loans from related and unrelated parties and equity financing to fund operations. These conditions (as indicated in the 2012 audit report of our Independent Registered Public Accounting Firm) raise substantial doubt about the Company’s ability to continue as a going concern.
During the year ended August 31, 2012, Panex used cash of $369,692 in operating activities compared to $63,456 for the year ended August 31, 2011. The proceeds from the capital raised during the period have been used in part to repay liabilities incurred by the Company. The Company intends to conserve cash reserves to the greatest extent possible and use the cash for investment opportunities. As previously noted, Panex is not generating revenues and accordingly has not generated any significant cash flow from operations. Panex is uncertain as to when it will produce cash flows from operations that are required to meet operating and capital requirements and will require significant funding from external sources to continue its operations.
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During the year ended August 31, 2012, $560,000 was repaid in loans compared to $50,000 during the year ended August 31, 2011. During the year ended August 31, 2012 $978,989 was received for common shares issued in the company. On February 24, 2012 financial liabilities were converted to common stock via the entry into debt settlement agreements with creditors and related parties in consideration for the issue of the Company’s common stock, par value $0.001, at a per share price of $0.02 per share, with the result that the Company will no longer be indebted as further set forth in the settlement agreements as follows:
- Ross Doyle, a related party for $ 39,551 USD, for a total of 1,977,553 shares at a price of $0.02 per share.
- Werte AG, a creditor, for $ 80,000 USD, for a total of 4,000,000 shares at a price of $0.02 per share.
- Lars Pearl, a creditor, for $ 50,000 USD, for a total of 2,500,000 shares at a price of $0.02 per share.
During March 2012, the Company entered into debt settlement agreements with creditors in consideration for the issuance of the Company’s common stock, par value $0.001, at a per share price of $0.08 per share. As a result, the Company will no longer be indebted as further set forth in the debt settlement agreements as follows:
-
Dr Georg Schnura, a creditor, for $175,758, for a total of 2,196,971 shares at a price of $0.08 per share.
-
Victor Dario, a creditor, for $80,000, for a total of 1,000,000 shares at a price of $0.08 per share.
Critical Accounting Policies
Panex has identified the following policies below as critical to the business and results of operations. Panex’s reported results are impacted by the application of the following accounting policies, certain of which require management to make subjective or complex judgments. These judgments involve making estimates about the effect of matters that are inherently uncertain and may significantly impact quarterly or annual results of operations. For all of these policies, management cautions that future events rarely develop exactly as expected, and the best estimates routinely require adjustment. Specific risks associated with these critical accounting policies are described in the paragraphs below.
Mineral property and exploration costs
Panex has been in the exploration stage since its formation on May 28, 2004 and has not yet realized any revenues from its planned operations. It is primarily engaged in the acquisition and exploration of mining properties. Mineral property and exploration costs are expensed as incurred. When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves, the costs incurred to develop such property are capitalized. Such costs will be amortized using the units-of-production method over the estimated life of the probable reserve. If mineral properties are subsequently abandoned or impaired, any capitalized costs will be charged to operations.
Valuation of loan advances
Panex evaluates loan advances for possible collectability concerns on a quarterly basis. Panex considers both the intent and ability of the borrower to repay the loan advances as part of its collectability analysis. Allowances are recorded against the loan advances in an amount management believe would be adequate to cover estimated losses, based on its evaluation of the collectability of the loan advances.
Stock-Based Compensation
The Company accounts for share-based payments under the fair value method of accounting for stock-based compensation consistent with US GAAP. Under the fair value method, stock-based compensation cost is measured at the grant date based on the fair value of the award using the Black-Sholes option pricing model and is recognized to expense on a straight-line basis over the requisite service period, which is generally the vesting period. Where upon grant the options vest immediately the stock-based costs are expensed immediately.
Outlook
The Company has no mineral property interests as of the date of this report. Certain mineral property interests are presently being considered, however it is too early to determine whether they may be considered appropriate for acquisition.
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Off-Balance Sheet Arrangements
Panex has no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on Panex’s financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors, nor did Panex have any non-consolidated, special-purpose entities during this quarter.
Recent Accounting Pronouncements
The Company continually assesses any new accounting pronouncements to determine their applicability. Where it is determined that a new accounting pronouncement affects the Company’s financial reporting, the Company undertakes a study to determine the consequence of the change to its financial statements and assures that there are proper controls in place to ascertain that the Company’s financials properly reflect the change. A variety of proposed or otherwise potential accounting standards are currently under study by standard-setting organizations and various regulatory agencies. Because of the tentative and preliminary nature of these proposed standards, the Company has not determined whether implementation of such proposed standards would be material to the Company’s financial statements. New pronouncements assessed by the Company recently are discussed below:
In June 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2011-05, Comprehensive Income (Topic 220) - Presentation of Comprehensive Income (“ASU 2011-05”). ASU 2011-05 requires entities to present net income and other comprehensive income in either a single continuous statement or in two separate, but consecutive, statements of net income and other comprehensive income. ASU 2011-05 is effective for fiscal years and interim periods within those years, beginning after December 15, 2011 (March 1, 2012 for the Company). The adoption of ASU 2011-05 did not have a material impact on the Company’s results of operations, financial condition, or cash flows.
ITEM 7A
ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Panex is a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and is not required to provide the information required under this item.
ITEM 8
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Panex’s financial statements are stated in United States Dollars (USD) and are prepared in accordance with accounting principles generally accepted in the United States of America. See Exhibit A - Financial Statements attached below.
ITEM 9
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not applicable.
ITEM 9A
ITEM 9A - CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
In connection with the preparation of this annual report on Form 10-K, an evaluation was carried out by Panex’s management, with the participation of the Chief Executive Officer and the Chief Financial Officer, of the effectiveness of Panex’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (“ Exchange Act ”)) as of August 31, 2012. Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC rules and forms and that such information is accumulated and communicated to management, including the Chief Executive Officer and the Chief Financial Officer, to allow timely decisions regarding required disclosures.
Based on that evaluation, Panex’s management concluded, as of the end of the period covered by this report, that Panex’s disclosure controls and procedures were not effective in recording, processing, summarizing, and reporting information required to be disclosed, within the time periods specified in the SEC rules and forms and that such information was not accumulated or communicated to management to allow timely decisions regarding required disclosure, for the reasons listed below in management’s report on internal control over financial reporting.
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Management’s Report on Internal Controls over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as required by Sarbanes-Oxley (SOX) Section 404A. Panex’s internal control over financial reporting is a process designed under the supervision of Panex’s Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of Panex’s financial statements for external purposes in accordance with U.S. generally accepted accounting principles. Internal control over financial reporting includes those policies and procedures that:
·
pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of Panex’s assets;
·
provide reasonable assurance that transactions are recorded as necessary to permit preparation of the financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and the Board of Directors; and
·
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of Panex’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.
Management conducted an assessment of the effectiveness of the Company’s internal control over financial reporting as of August 31, 2012, based on criteria established in Internal Control -Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). As a result of this assessment, management identified material weaknesses in internal control over financial reporting.
A material weakness is a control deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of Panex’s annual or interim financial statements will not be prevented or detected on a timely basis.
The matters involving internal controls and procedures that management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were: (1) lack of a functioning audit committee and lack of a majority of outside directors on Panex’s board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; (2) inadequate segregation of duties consistent with control objectives; (3) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements; and (4) ineffective controls over period end financial disclosure and reporting processes. The aforementioned material weaknesses were identified by Panex’s Chief Financial Officer and communicated to the board of directors.
As a result of the material weaknesses in internal control over financial reporting described above, management has concluded that, as of August 31, 2012, Panex’s internal control over financial reporting was not effective based on the criteria in Internal Control - Integrated Framework issued by COSO.
Management believes that the material weaknesses set forth above did not have an affect on Panex’s financial results.
Management also believes that the lack of a functioning audit committee and lack of a majority of outside directors on Panex’s board of directors caused and continues to cause an ineffective oversight in the establishment and monitoring of the required internal controls over financial reporting.
Panex is committed to improving its financial organization. As part of this commitment and when funds are available, Panex will create a position within Panex’s accounting and finance team to segregate duties consistent with its control objectives and will increase its personnel resources and technical accounting expertise within the accounting function by: i) appointing one or more outside directors to its board of directors who will also be appointed to the audit committee of Panex resulting in a fully functioning audit committee who will undertake the oversight in the establishment and monitoring of required internal controls over financial reporting; and ii) preparing and implementing sufficient written policies and checklists that will set forth procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements.
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Management believes that the appointment of one or more outside directors, who will also be appointed to a fully functioning audit committee, will remedy the lack of a functioning audit committee and a lack of a majority of outside directors on Panex’s Board. In addition, management believes that preparing and implementing sufficient written policies and checklists will remedy the following material weaknesses: (i) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements; and (ii) ineffective controls over period end financial close and reporting processes. Further, management believes that the hiring of additional personnel who have the technical expertise and knowledge will result proper segregation of duties and provide more checks and balances within the department. Additional personnel will also provide the cross training needed to support Panex if personnel turn-over issues within the department occur. This coupled with the appointment of additional outside directors will greatly decrease any control and procedure issues Panex may encounter in the future.
Management will continue to monitor and evaluate the effectiveness of Panex’s internal controls over financial reporting on an ongoing basis and is committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow.
Panex’s independent registered public accounting firm has not issued an attestation report regarding Panex’s internal control over financial reporting. As a result, this annual report does not include such a report. Panex was not required to have, nor has Panex, engaged its independent registered public accounting firm to perform an audit of internal control over financial reporting pursuant to the rules of the Securities and Exchange Commission that permit Panex to provide only management’s report in this annual report.
Changes in Internal Controls over Financial Reporting
There were no changes in Panex’s internal controls over financial reporting (as defined in Rule 13a-15(f) of the Exchange Act) during the year ended August 31, 2012, that materially affected, or are reasonably likely to materially affect, Panex’s internal control over financial reporting.
ITEM 9B
ITEM 9B - OTHER INFORMATION
During the fourth quarter of the year covered by this Form 10-K, Panex had no information to be disclosed as required on a Form 8-K that was not previously disclosed.
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PART III
ITEM 10
ITEM 10 - DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
a.
Identify Directors and Executive Officers
The directors named below will serve until the next annual meeting of the stockholders. Thereafter, directors will be elected for one-year terms at the annual stockholders' meeting. Officers will hold their positions at the discretion of the board of directors, absent any employment agreement, of which none currently exists or is contemplated. There is no arrangement or understanding between the directors and officers and any other person pursuant to which any director or officer was to be selected as a director or officer.
The names, addresses, ages and positions of Panex’s officers and directors that held their positions during or since the fiscal year ended August 31, 2012 are set forth below:
On March 26, 2012, Susmit Shah resigned as the Chief Financial Officer, Treasurer, and Corporate Secretary of Panex. Also, on March 26, 2012, Ross Doyle consented to and was appointed the Chief Financial Officer, Treasurer, and Corporate Secretary of Panex by the board of directors.
Klaus Eckhof (Dipl. Geol. TU, AusIMM): Mr Eckhof has been the Chairman of Panex since May 2006 and was appointed sole director and Chief Executive Officer on June 1, 2008. Mr Eckhof is a senior exploration geologist and a member of the Australian Institute of Mining and Metallurgy. Mr Eckhof has many global contacts and has been instrumental in sourcing and developing successful projects in Australia, Africa, Russia, South America and the Philippines.
Since 1994, Mr. Eckhof has managed his own geological consultancy company and has considerable experience in assessing and acquiring mineral prospects around the world. He was formerly President and Chief Executive Officer of Moto Goldmines Limited (“MGL”). Within 4 years from Mr Eckhof’s appointment, MGL discovered just under 20 million ounces of gold and completed a Bankable Feasibility Study at the Moto Gold Project in the Democratic Republic of Congo (DRC). Rangold Resources subsequently acquired MGL. He is currently a director of Carnavale Resources Ltd, Erongo Energy Limited and Burey Gold Ltd.
During the past three years, Mr Eckhof has also served as a director of the following listed companies: Condor Resources Plc. (September 1996-April 2011), African Metals Corporation (November 2005 to January 2011), and Aspire Mining Limited (formerly Windy Knob Resources Ltd) (April 2008 to September 2009).
Ross Doyle (CA, BCOM): Mr Doyle has been the Chief Financial Officer, Treasurer, and Corporate Secretary of Panex since March 2012. Mr Doyle is a Chartered Accountant with over 15 years experience as a strategic business analyst and CFO working with large commodity trading firms and financial institutions including working at the head office of Glencore International AG. Subsequent to departing Glencore, Mr. Doyle has advised other commodity firms in a similar capacity, before joining the board of Aurora Gold Corporation in October 2011, the CFO of Alphamin Resources in May 2012, and the CFO of Panex in March 2012.
b.
Identify Significant Employees
Panex currently does not have any significant employees, with the exception of its officers.
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c.
Family Relationships
There are no family relationships among the directors, executive officers or persons nominated or chosen by Panex to become directors or executive officers.
d.
Involvement in Certain Legal Proceedings
During the past ten years, none of Panex’s directors or officers has been:
·
a general partner or executive officer of any business against which any bankruptcy petition was filed, either at the time of the bankruptcy or two years prior to that time;
·
convicted in a criminal proceeding or named subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
·
subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities;
·
subject to any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity, or to be associated with persons engaged in any such activity;
·
found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated;
·
found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated;
·
the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of:
·
any Federal or State securities or commodities law or regulation; or
·
any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or
·
any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
·
the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization, any registered entity, or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
e.
Compliance with Section 16(a) of the Exchange Act
All reports were filed with the SEC on a timely basis and Panex is not aware of any failures to file a required report during the period covered by this annual report.
f.
Nomination Procedure for Directors
Panex does not have a standing nominating committee; recommendations for candidates to stand for election as directors are made by the board of directors. Panex has not adopted a policy that permits shareholders to recommend candidates for election as directors or a process for shareholders to send communications to the board of directors.
g.
Audit Committee Financial Expert
Panex does not have a separately-designated standing audit committee. Mr Ross Doyle, Panex’s chief financial officer has skills and experience commensurate with an “audit committee financial expert”.
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h.
Identification of Audit Committee
Panex does not have a separately designated standing audit committee. Rather, Panex’s board of directors performs the required functions of an audit committee. Panex’s board of directors is responsible for: (1) selection and oversight of Panex’s independent accountant; (2) establishing procedures for the receipt, retention and treatment of complaints regarding accounting, internal controls and auditing matters; (3) establishing procedures for the confidential, anonymous submission by Panex’s employees of concerns regarding accounting and auditing matters; (4) engaging outside advisors; and, (5) funding for the outside auditory and any outside advisors engagement by the audit committee.
i.
Code of Ethics
Panex has adopted a code of ethics that applies to all its executive officers and employees, including its CEO and CFO. See Exhibit 14.1 - Code of Ethics for more information. Panex undertakes to provide any person with a copy of its code of ethics free of charge. Please contact Mr Ross Doyle at +41 41 711 0281 to request a copy of Panex’s code of ethics. Management believes Panex’s code of ethics is reasonably designed to deter wrongdoing and promote honest and ethical conduct; provide full, fair, accurate, timely and understandable disclosure in public reports; comply with applicable laws; ensure prompt internal reporting of code violations; and provide accountability for adherence to the code.
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ITEM 11
ITEM 11 - EXECUTIVE COMPENSATION
Panex has paid $329,492 and $76,900 in compensation to its named officers during its fiscal years ended August 31, 2012 and 2011, respectively.
SUMMARY COMPENSATION TABLE
+ Administration, accounting and secretarial fees of $ Nil (2011: $52,398, 2010: $30,687) were paid or payable to Corporate Consultants Pty Ltd, a company in which Mr Shah was a director and has a beneficial interest.
^ In addition, administration, accounting and secretarial fees of $42,000 (2011: $45,000) were paid or payable to Coresco AG, a company in which Mr Eckhof and Mr Doyle has a beneficial interest.
Currently, there are no arrangements between Panex and any of its directors whereby such directors are compensated for any services provided as directors.
There are no other employment agreements between Panex and any named executive officer, and there are no employment agreements or other compensating plans or arrangements with regard to any named executive officer which provide for specific compensation in the event of resignation, retirement, other termination of employment or from a change of control of Panex or from a change in a named executive officer’s responsibilities following a change in control.
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ITEM 12
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL HOLDERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following tables set forth, as of the date of this annual report, the total number of common shares owned beneficially by Panex’s director and officers, individually and as a group, and the present owners of 5% or more of Panex’s total outstanding common shares. The stockholders listed below have direct ownership of their shares and possess sole voting and dispositive power with respect to the shares.
Security Ownership of Certain Beneficial Owners (more than 5%)
[1] The listed beneficial owner has no right to acquire any shares within 60 days of the date of this Form 10-K from options, warrants, rights, conversion privileges or similar obligations excepted as otherwise noted. Coresco AG subscribed to 820,533 shares that were assigned to Lars Pearl.
[4] Based on 103,261,507 shares of common stock issued and outstanding as of October 26, 2012.
Security Ownership of Management
[4] Based on 103,261,507 shares of common stock issued and outstanding as of October 5, 2012.
Changes in Control
Panex is not aware of any arrangement that may result in a change in control of Panex.
ITEM 13
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
a.
Relationships with Insiders
Since the beginning of Panex’s last fiscal year, no director, executive officer, security holder, or any immediate family of such director, executive officer, or security holder has had any direct or indirect material interest in any transaction or currently proposed transaction, which Panex was or is to be a participant, that exceeded the lesser of (1) $120,000 or (2) one percent of the average of Panex’s total assets at year-end for the last three completed fiscal years, except for the following:
Consultant Agreements
Mr Eckhof and Mr Shah are directors and shareholders of Corporate Consultants Pty Ltd. (“CCPL”). CCPL provided administration, accounting and company secretarial services to Panex Resources Inc. Fees paid or payable to CCPL for the year ended August 31, 2012 were $ Nil (2011: $52,398).
Klaus Eckhof and Ross Doyle are beneficial shareholders in Coresco AG (Coresco). Coresco charges $3,000 for office and facilities and administrative support and $7,000 for financial, management and statutory reporting, totaling to $10,000 per month. This agreement was entered on December 1, 2011, and can be terminated with 6 months notice subsequent to December 31, 2012.
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b.
Transactions with Promoters
During the past five fiscal years, Klaus Eckhof, Susmit Shah, and Reg Gillard have been promoters of Panex’s business, but none of these promoters have received anything of value from Panex nor is any person entitled to receive anything of value from Panex for services provided as a promoter of the business of Panex.
c.
Director Independence
Panex’s board of directors currently solely consists of Klaus Eckhof. Pursuant to Item 407(a)(1)(ii) of Regulation S-B of the Securities Act, Panex’s board of directors has adopted the definition of “independent director” as set forth in Rule 4200(a)(15) of the NASDAQ Manual. In summary, an “independent director” means a person other than an executive officer or employee of Panex or any other individual having a relationship which, in the opinion of Panex’s board of directors, would interfere with the exercise of independent judgement in carrying out the responsibilities of a director, and includes any director who accepted any compensation from Panex in excess of $200,000 during any period of 12 consecutive months within the three past fiscal years. Also, the ownership of Panex’s stock will not preclude a director from being independent.
In applying this definition, Panex’s board of directors has determined that Mr. Eckhof does not qualify as an “independent director” pursuant to the same Rule.
As of the date of the report, Panex did not maintain a separately designated compensation, nominating or audit committee. Panex has also adopted this definition for the independence of the members of its audit committee. Panex’s board of directors has determined that Mr. Eckhof is not “independent” for purposes of Rule 4200(a)(15) of the NASDAQ Manual, applicable to audit, compensation and nominating committee members, and is “independent” for purposes of Section 10A(m)(3) of the Securities Exchange Act.
ITEM 14
ITEM 14 - PRINCIPAL ACCOUNTING FEES AND SERVICES
a.
Audit Fees
The aggregate fees billed and expected to be billed for each of the last two fiscal years for professional services rendered by the principal accountant for Panex’s audit of its annual financial statements, reviews of its quarterly financial statements, or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years was:
2012 - $33,800 - GHP Horwath, P.C.
2011 - $40,000 - GHP Horwath, P.C.
b.
Audit-Related Fees
The aggregate fees billed in each of the last two fiscal years for audit related services by the principal accountants that are reasonably related to the performance of the audit or review of Panex’s financial statements and are not reported in the preceding paragraph:
2012 - $Nil - GHP Horwath, P.C.
2011 - $Nil - GHP Horwath, P.C.
c.
Tax Fees
The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning was:
2012 - $Nil - GHP Horwath, P.C.
2011 - $Nil - GHP Horwath, P.C.
d.
All Other Fees
The aggregate fees billed in each of the last two fiscal years for the products and services provided by the principle accountant, other than the services reported in paragraphs (a) and (b) was:
2012 - $Nil - GHP Horwath, P.C.
2011 - $Nil - GHP Horwath, P.C.
e.
Audit Committee
Panex does not have an Audit Committee. Therefore Panex’s Board of Director’s pre-approval policies and procedures described in paragraph (c)(7)(i) of Rule 2-01 of Regulation S-X were that the Board of Director’s pre-approve all accounting related activities prior to the performance of any services by any accountant or auditor.
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PART IV
ITEM 15
ITEM 15 - EXHIBIT, FINANCIAL STATEMENT SCHEDULES
1.
Financial Statements
Audited financial statements of Panex Resources Inc. have been included in Item 8 above and Exhibit A attached.
2.
Financial Statement Schedules
All schedules for which provision is made in Regulation S-X are either not required to be included herein under the related instructions or are inapplicable or the related information is included in the footnotes to the applicable financial statement and, therefore, have been omitted from this Item 15.
3.
Exhibits
All exhibits required to be filed with the Form 10-K are included in this annual report or incorporated by reference to Panex’s previous filings with the SEC, which can be found in their entirety at the SEC website at www.sec.gov under SEC File Number 333-130264 and SEC File Number 000-51707.
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SIGNATURES
In accordance with Section 13 or 15(d) of the Securities and Exchange Act of 1934, Panex Resources Inc. has caused this report to be signed on its behalf by the undersigned duly authorized person.
PANEX RESOURCES INC.
/s/ Klaus Eckhof
Name: Klaus Eckhof
Title: President and CEO
Principal Executive Officer
In accordance with the requirements of the Securities Exchange Act of 1934, Panex Resources Inc. has caused this report to be signed on its behalf by the undersigned duly authorized person.
PANEX RESOURCES INC.
/s/ Klaus Eckhof
Name: Klaus Eckhof
Title: President and CEO
Principal Executive Officer
/s/ Ross Doyle
Name: Ross Doyle
Title: CFO
Principal Financial Officer
October 26, 2012
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EXHIBIT A
FINANCIAL STATEMENTS
Page - 26
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Panex Resources Inc. Board of Directors and Stockholders
We have audited the accompanying balance sheets of Panex Resources Inc. (an Exploration Stage Company) as of August 31, 2012 and 2011, and the related statements of operations, cash flows and stockholders’ equity (deficiency) for each of the years then ended, and for the period from May 28, 2004 (inception) through August 31, 2012. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Panex Resources Inc. as of August 31, 2012 and 2011, and the results of its operations and cash flows for each of the years then ended, and for the period from May 28, 2004 (inception) through August 31, 2012, in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company incurred a net loss of $926,016 for the year ended August 31, 2012, and a deficit accumulated during the exploration stage of $13,469,429 for the period from May 28, 2004 (inception) through August 31, 2012. The Company also has a limited history and no revenue producing operations. These conditions raise substantial doubt about the Company's ability to continue as a going concern. Management's plans with regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ GHP HORWATH, P.C.
Denver, Colorado
October 26, 2012
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BALANCE SHEETS
The accompanying notes are an integral part of these financial statements.
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STATEMENTS OF OPERATIONS
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STATEMENTS OF CASH FLOWS
Page - 30
STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIENCY)
The accompanying notes are an integral part of these financial statements.
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NOTES TO FINANCIAL STATEMENTS
1.
Organization, Nature of Business, Going Concern and Management’s Plans
Panex Resources Inc. (‘Panex” or the “Company”) was incorporated in the State of Nevada on May 28, 2004. The Company is considered to be an Exploration Stage Company. The Company’s principal business is the acquisition and exploration of mineral resources.
Going concern and management’s plans:
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. Since its inception on May 28, 2004, the Company has not generated revenue and has incurred net losses. The Company incurred a net loss of $926,016 for the year ended August 31, 2012, and a deficit accumulated during the exploration stage of $13,469,429 for the period May 28, 2004 (inception) through August 31, 2012. Accordingly, it has not generated cash flow from operations and has primarily relied upon advances from shareholders and proceeds from equity financings to fund its operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.
The Company has no mineral property interests as of the date of this report. Certain mineral property interests are presently being considered, however it is too early to determine whether they may be considered appropriate for acquisition.
During the next 12 months, management’s objective is to recapitalize Panex, continue to raise new capital and to seek new investment opportunities in the mineral sector. Management believes that its worldwide industry contacts will make it possible to identify and assess new projects for acquisition purposes.
Panex is seeking a viable business opportunity through acquisition, merger or other suitable business combination method, with a focus on undervalued mineral properties for eventual acquisition. Panex intends to concentrate its acquisition efforts on mineral properties or mineral exploration businesses that management believes to be undervalued or that management believes may realize a substantial benefit from being publicly owned. Panex will continue to identify and assess undervalued mineral properties when capital raisings are completed. A small number of mineral properties are presently being reviewed, but it is too early to say whether they may be considered appropriate for acquisition. The Company is in the process of raising new capital up to a maximum of $2,400,000 whereby Panex is offering up to 30,000,000 shares of common stock on a self-underwritten basis. At the date of this report a total of $978,989 has been raised under this offering. A Prospectus on Form 424B4 was filed on February 17, 2012 and June 18, 2012 with the Securities and Exchange Commission.
The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts or classification of liabilities that may result from the possible inability of the Company to continue as a going concern.
2.
Summary of Significant Accounting Policies
a.
Basis of Preparation
These financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States (US GAAP). The Company’s fiscal year-end is August 31. Certain reclassifications to the 2011 balance sheet have been made to conform with 2012 presentation, none of which had any effect on cash flows from operating, investing and financing activities or total assets, total liabilities and stockholders’ equity (deficiency).
b.
Use of Estimates
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
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2. Summary of Significant Accounting Policies (Continued)
c.
Cash
Cash includes deposits in banks, which are unrestricted as to withdrawal or use.
d.
Mineral Property and Exploration Costs
The Company has been in the exploration stage since its formation on May 28, 2004 and has not realized any revenues from its planned operations. It has been primarily engaged in the acquisition and exploration of mining properties. Mineral property acquisition and exploration costs are expensed as incurred. When it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves, the costs incurred to develop such property are capitalized. Such costs will be amortized using the units-of-production method over the estimated life of the probable reserve. If mineral properties are subsequently abandoned or impaired, any capitalized costs will be charged to operations.
e.
Deferred Acquisition Costs
The Company capitalizes deposits paid during the acquisition of equity interests as deferred acquisition costs. Deferred acquisition costs are recorded at cost and are included in the purchase price of the equity interest once the acquisition has been consummated.
f.
Fair Value Measurements
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 fair value hierarchy that has three levels of inputs, both observable and unobservable, with use of the lowest possible level of input to determine fair value.
Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level 2 - observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable; and
Level 3 - assets and liabilities whose significant value drivers are unobservable.
As of August 31, 2012 and August 31, 2011, the Company did not have any assets or liabilities that were measured at fair value on a recurring or non-recurring basis.
Observable inputs are based on market data obtained from independent sources, while unobservable inputs are based on the Company’s market assumptions. Unobservable inputs require significant management judgment or estimation. In some cases, the inputs used to measure an asset or liability may fall into different levels of the fair value hierarchy. In those instances, the fair value measurement is required to be classified using the lowest level of input that is significant to the fair value measurement. Such determination requires significant management judgment.
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2. Summary of Significant Accounting Policies (Continued)
Financial instruments, which include cash, accounts payable, and loans and borrowings, were estimated to approximate their carrying values due to the immediate or short-term maturity of these financial instruments. The fair value of amounts due to related parties are not practical to estimate, due to the related party nature of the underlying transactions. The financial risk to the Company’s operations arises from fluctuations in foreign exchange rates and the degree of volatility of these rates. Currently, the Company does not use derivative instruments to reduce its exposure to foreign currency risk.
g.
Income Taxes
The Company recognizes deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their tax bases, as well as net operating losses.
Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets or liabilities of a change in tax rates is recognized in the period in which the tax change occurs. A valuation allowance is provided to reduce the deferred tax assets to a level, that more likely than not, will be realized.
Management does not believe that the Company has any unrecognized tax positions. The Company’s policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense.
h.
Stock-Based Compensation
The Company accounts for share-based payments under the fair value method of accounting for stock-based compensation consistent with US GAAP. Under the fair value method, stock-based compensation cost is measured at the grant date based on the fair value of the award using the Black-Sholes option pricing model and is recognized to expense on a straight-line basis over the requisite service period, which is generally the vesting period. Where upon grant the options vest immediately the stock-based costs are expensed immediately.
i.
Foreign Currency Translation and Transactions
The Company’s functional and reporting currency is the United States dollar. Monetary assets and liabilities denominated in foreign currencies are translated into the United States dollar using the exchange rate prevailing at the balance sheet date. Gains and losses arising on settlement of foreign currency denominated transactions or balances are included in the determination of income.
j.
Concentration of Credit Risk
The Company’s financial instruments that are exposed to concentration of credit risk consist of cash. The Company’s cash is in demand deposit accounts placed with federally insured financial institutions in Canada.
k.
Basic and Diluted Net Income (Loss) Per Share
Earnings (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding during the reporting period including common stock issued effective the date committed. Common stock issuable is considered outstanding as of the original approval date for the purposes of earnings per share computations. Diluted earnings (loss) per common share is computed by dividing net earnings (loss) by the sum of (a) the basic weighted average number of shares of common stock outstanding during the period and (b) additional shares that would have been issued and potentially dilutive securities. During the year ended August 31, 2012 and 2011 the diluted earnings (loss) per share was equivalent to the basic earnings (loss) per share because all potentially dilutive securities were anti-dilutive due to the net losses incurred. Potentially dilutive securities consist of stock options and warrants outstanding at the end of the reporting period. Stock options outstanding as at August 31, 2012 were 8,000,0000 (2011: Nil).
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2. Summary of Significant Accounting Policies (Continued)
l.
Recent Accounting Pronouncements
The Company continually assesses any new accounting pronouncements to determine their applicability. Where it is determined that a new accounting pronouncement affects the Company’s financial reporting, the Company undertakes a study to determine the consequence of the change to its financial statements and assures that there are proper controls in place to ascertain that the Company’s financials properly reflect the change. A variety of proposed or otherwise potential accounting standards are currently under study by standard-setting organizations and various regulatory agencies. Because of the tentative and preliminary nature of these proposed standards, the Company has not determined whether implementation of such proposed standards would be material to the Company’s financial statements. New pronouncements assessed by the Company recently are discussed below:
In June 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2011-05, Comprehensive Income (Topic 220) - Presentation of Comprehensive Income (“ASU 2011-05”). ASU 2011-05 requires entities to present net income and other comprehensive income in either a single continuous statement or in two separate, but consecutive, statements of net income and other comprehensive income. ASU 2011-05 is effective for fiscal years and interim periods within those years, beginning after December 15, 2011 (the interim period ending November 30, 2012 for the Company). The Company does not expect the adoption of ASU 2011-05 to have a material impact on its results of operations, financial condition, or cash flows.
3.
Stock Options
In August 2012, the Company's Board of Directors approved the issuance of stock options as an incentive to obtain services of key employees, directors and consultants of the Company. The following is a summary of stock option activity and the status of stock options outstanding and exercisable at August 31, 2012:
The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value for all “in-the-money” options (i.e. the difference between the Company’s closing stock price on the last trading day of the fiscal year and the exercise price, multiplied by the number of shares) that would have been received by the option holders had all option holders exercised their options on August 31, 2012.
Effective August 3, 2012, the Company’s board of directors granted 8,000,000 stock purchase options. Each of the options has an issue date, effective date and vesting date of August 3, 2012, with an exercise price of $0.08 per share. The term of these options is five years. The options are exercisable at any time from the grant date up to and including August 2, 2017.
The total fair value of options granted during the year ended August 31, 2012 was $221,756 (August 31, 2011: nil) and expensed in full as the options were vested in full upon their grant. The fair value of the options were determined using the Black Scholes option pricing model that takes into account the exercise price, the expected life of the option, the share price at grant date (August 3, 2012), the expected price volatility of the underlying share, the expected dividend yield (nil assumed) and the risk free interest rate (4.50% was used) for the term of the option. Management determined 2.50 years to be the average expected life of the options and utilized the simplified method to develop historical data to provide a reasonable basis to estimate option lives since the Company has not had significant options granted. Volatility rates were calculated at the grant date of the option tranche using a historical rate analysis (150.69% was used).
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4.
Related Party Transactions
a.
During the year ended August 31, 2012, the Company recognized a total of $30,260 for donated services provided by the president of the Company ($31,617 for the year ended August 31, 2011).
b.
The Company incurred $44,736 of management fees during the year ended August 31, 2012 ($24,502 for the year ended August 31, 2011) for services provided by the president of the Company. As of August 31, 2012, the Company has an accrued liability of $31,594 for management fees and travel expenses due to this related party ($79,425 for the year ended August 31, 2011).
c.
Included in professional fees during the year ended August 31, 2012 are $63,000 ($52,398 for the year ended August 31, 2011 for the outgoing Chief Financial Officer) paid to the Chief Financial Officer for consulting, administration and fund raising activities. An amount of $39,551 (included expense reimbursements paid on behalf of the Company) was settled for the issuance of 1,977,553 shares of commons stock (Note 7). As of August 31, 2012, the Company has an accrued liability of $21,160 owing for services provided under this agreement ($202,258 for the year ended August 31, 2011).
d.
In August 2007, the Company received loan proceeds totalling $105,068 from companies in which the president/chief executive officer is a director and shareholder. Interest was charged at 8% simple interest, the loan was unsecured and had no stated maturity date. In May 2008 $67,193 was repaid including accrued interest. On December 20, 2010, principal of $46,892 and accrued interest of $15,751 was assigned to an unrelated third party (Note 5). As of August 31, 2012, there was $Nil of accrued interest outstanding in relation to the loans ($1,254 as of August 31, 2011).
e.
Included in professional fees during the year ended August 31, 2012 were $192,765 in consulting fees were recognized for services performed by Coresco AG ($Nil for the year ended August 31, 2011). The President and CFO exert significant influence over this company. The fees are in relation to work performed for fund raising, corporate office and management activities. As of August 31, 2012, the Company has an accrued liability of $31,594 due to this related party ($Nil for year ended August 31, 2011).
5.
Loans and Borrowings
In March and July 2007, the Company received loan proceeds of $240,000 and $500,000 respectively from an unrelated third party. These loans were unsecured bearing interest at 8% per annum, with no fixed repayment date, but the understanding with the lender was that the loans will be repaid from the proceeds of future equity financings and/or the repayment of amounts lent to Minanca. On December 20, 2010, principal of $46,892 and interest of $15,751 was assigned to this third party (Note 4d). In December 2010, $267,072 of this loan as well as $200,310 of accrued interest on this loan was settled by the issue of 9,347,640 shares. In May 31, 2012 this loan was settled in full for $560,000, resulting in a gain on extinguishment of $10,426, which is included within interest income and other for the year ended August 31, 2012.
In January 2011, the Company received loan proceeds of $50,000, from an unrelated third party. This loan was unsecured, and had no stated interest rate. This amount was settled for issuance of 2,500,000 shares of common stock in February 2012 (Note 7).
6.
Material Contingencies and Commitments
Panex has no contingencies or long-term commitments.
While Panex has raised capital to meet its working capital and financing needs in the past, additional financing is required in order to fully complete its plan of operation and launch its business operations. Panex is seeking financing in the form of equity in order to provide the necessary working capital. Panex currently has no commitments for financing. There are no assurances Panex will be completely successful in raising the funds required.
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7.
Stockholders’ Equity
Common Stock
Panex’s authorized capital stock consists of 500,000,000 shares of common stock at a par value of $0.001 per share. On August 30, 2010, the authorized capital was increased from 75,000,000 shares of common stock to 500,000,000 shares of common stock.
Stock cancellations and recapitalization:
On May 25, 2006 and June 9, 2006, the Company completed the return and cancellation of 30,000,000 and 6,000,000 common shares to the treasury, respectively. The shares were returned by the former president of the Company.
The net loss per share amounts and stockholders’ equity (deficit) have been retroactively restated (accounted for as a recapitalization) to reflect the return and cancellation of 36,000,000 common shares by the former president of the Company.
Common stock issuances
On May 28, 2004, the Company issued 6,000,000 shares of common stock to the then President of the Company for reimbursement of legal expenses of $500 incurred on behalf of the Company.
On June 30, 2005, the Company issued 6,000,000 shares of common stock for cash proceeds of $25,000.
On April 15, 2005, the Company issued 22,500,000 shares of common stock for cash proceeds of $18,750.
On March 22, 2005 the Company issued 36,000,000 shares of common stock for cash proceeds of $3,000.
On June 8, 2006, the Company completed a private placement with a director of the Company for 714,285 common shares at a price of $2.80 per share for proceeds of $2,000,000.
On August 30, 2006, the Company completed a private placement of 1,250,000 units at a price of $2.00 per unit for proceeds of $2,500,000. Each unit consisted of one common share and one common share purchase warrant.
Each share purchase warrant entitles the holder to acquire one additional common share at an exercise price of $2.50 per share for a period of two years. All warrants expired unexercised on August 31, 2008.
During November 2006, the Company completed private placements for 3,095,000 shares of restricted common stock at $0.80 per share, raising proceeds of $2,476,000.
In January 2007 the Company completed two private placements for 3,187,500 shares of restricted common stock at $0.80 per share raising proceeds of $2,550,000.
In February 2007 the Company completed two private placements for 1,350,000 shares of restricted common stock at $0.80 per share raising proceeds of $1,080,000.
On February 28, 2009, the board of directors authorized the issuance of 14,100,000 restricted shares of common stock at a subscription price of $0.01 per restricted share, for cash proceeds of $16,000 and the settlement of $125,000 accrued liabilities and debt. The shares were issued on June 19, 2009.
On May 29, 2009, the Company completed a private placement for 1,500,000 shares of restricted common stock at price of $0.01 per restricted share in exchange for the settlement of $15,000 debt.
In October 2009, the Company issued 6,350,000 restricted shares of common stock at a subscription price of $0.01 per restricted share, for cash proceeds of $40,000 and the settlement of $23,500 in accrued liabilities and debt due to a related party. The cash was received in December 2008.
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7.
Stockholders’ Equity (Continued)
In January 2010, the Company issued 1,000,000 restricted shares of common stock at a subscription price of $0.01 per restricted share, for the settlement of $10,000 in accrued liabilities and debt due to a related party.
On December 20, 2010, the Company issued 2,955,483 restricted shares of common stock at a subscription price of $0.05 per share, for the settlement of $147,774 in accounts payable and accrued liabilities and issued 9,347,640 restricted shares of common stock at a subscription price of $0.05 per share for the settlement of loans and accrued interest totaling $467,382 from an unrelated third party.
On June 15, 2012, the Securities and Exchange Commission declared Panex’s Form S-1 Registration Statement effective, file number 333-172375, permitting Panex to offer up to 30,000,000 shares of common stock at $0.08 per share. The offering is being conducted on a best efforts basis and there is no underwriter involved in this public offering. As of October 26, 2012, Panex has received and accepted 22 subscription agreements and received an aggregate $978,989 in proceeds from those subscriptions and issued 12,237,075 shares of common stock. Panex intends on applying the proceeds to ongoing operations, paying accounts payable, paying for offering expenses, assessing and evaluating possible new mineral project opportunities, and, subject to acquiring any such new projects, funding the exploration on such projects. The offering period for the public offering expires on December 12, 2012.
Effective August 3, 2012, the Company’s board of directors granted 8,000,000 stock purchase options. Each of the options has an issue date, effective date and vesting date of August 3, 2012, with an exercise price of $0.08 per share. The term of these Options are five years. The Options are exercisable at any time from the grant date up to and including August 2, 2017.
Financing Activities:
On February 24, 2012, the Company entered into debt settlement agreements with creditors and related parties in consideration for the issuance of the Company’s common stock, par value $0.001, at a per share price of $0.02 per share. As a result, the Company extinguished certain liabilities as further set forth in the debt settlement agreements as follows:
-
Ross Doyle, a related party for $ 39,551, for a total of 1,977,553 shares at a price of $0.02 per share.
-
Werte AG, a creditor, for $80,000, for a total of 4,000,000 shares at a price of $0.02 per share.
-
Lars Pearl, a creditor, for $50,000, for a total of 2,500,000 shares at a price of $0.02 per share.
During March 2012, the Company entered into debt settlement agreements with creditors in consideration for the issuance of the Company’s common stock, par value $0.001, at a per share price of $0.08 per share. As a result, the Company extinguished certain liabilities as further set forth in the debt settlement agreements as follows:
-
Dr Georg Schnura, a creditor, for $175,758, for a total of 2,196,971 shares at a price of $0.08 per share.
-
Victor Dario, a creditor, for $80,000, for a total of 1,000,000 shares at a price of $0.08 per share.
During the period ended May 31, 2012, the Company received cash of $978,989 from a private placement of 12,237,075 shares of common stock at $0.08 per share.
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8.
Income Taxes
The components of the Company’s net deferred tax asset as of August 31, 2012 and 2011, rate and the valuation allowance are as follows:
The Company has net operating loss carry-forwards for tax purposes of approximately $7,147,673, which begin expiring in 2031. The utilization of the net operating loss carry-forwards cannot be assured.
Deferred income tax reflects the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Company provided a valuation allowance of 100% of its net deferred tax asset due to the uncertainty of generating future profits that would allow for the realization of such deferred tax assets.
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Exhibit 31.1
PANEX RESOURCES INC. CERTIFICATIONS PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
CERTIFICATION
I, Klaus Eckhof, certify that:
1. I have reviewed this annual report on Form 10-K for the fiscal year ended August 31, 2012 of Panex Resources Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
/s/ Klaus Eckhof
Klaus Eckhof
Chief Executive Officer
October 26, 2012
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Exhibit 31.2
PANEX RESOURCES INC. CERTIFICATIONS PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
CERTIFICATION
I, Ross Doyle, certify that:
1. I have reviewed this quarterly report on Form 10-K for the fiscal year ended August 31, 2012 of Panex Resources Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
/s/ Ross Doyle
Ross Doyle
Chief Financial Officer
October 26, 2012
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Exhibit 32
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Panex Resources Inc. (the “Company”) on Form 10-K for the period ended August 31, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Klaus Eckhof, President, Chief Executive Officer of the Company and sole member of the Board of Directors, certify, pursuant to s.906 of the Sarbanes-Oxley Act of 2002, that:
1.
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.
The information contained in the Report fairly presents, in all material aspects, the financial condition and result of operations of the Company.
/s/ Klaus Eckhof
Klaus Eckhof
Chief Executive Officer
October 26, 2012
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Exhibit 32
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Panex Resources Inc. (the “Company”) on Form 10-K for the period ended August 31, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Klaus Eckhof, President, Chief Executive Officer of the Company and sole member of the Board of Directors, certify, pursuant to s.906 of the Sarbanes-Oxley Act of 2002, that:
1.
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.
The information contained in the Report fairly presents, in all material aspects, the financial condition and result of operations of the Company.
/s/ Ross Doyle
Ross Doyle
Chief Financial Officer
October 26, 2012
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