PARADIGM RESOURCE MANAGEMENT CORP - 10-Q - Management's Discussion and Analysis of Financial Condition and Results of Operations.
(Edgar Glimpses Via Acquire Media NewsEdge) SPECIAL NOTE CONCERNING FORWARD-LOOKING STATEMENTS
We believe that it is important to communicate our future expectations to our
security holders and to the public. This report, therefore, contains statements
about future events and expectations which are "forward-looking statements"
within the meaning of Sections 27A of the Securities Act of 1933 and 21E of the
Securities Exchange Act of 1934, including the statements about our plans,
objectives, expectations and prospects under the heading "Management's
Discussion and Analysis of Financial Condition and Results of Operations." You
can expect to identify these statements by forward-looking words such as "may,"
"might," "could," "would," "will," "anticipate," "believe," "plan," "estimate,"
"project," "expect," "intend," "seek" and other similar expressions. Any
statement contained in this report that is not a statement of historical fact
may be deemed to be a forward-looking statement. Although we believe that the
plans, objectives, expectations and prospects reflected in or suggested by our
forward-looking statements are reasonable, those statements involve risks,
uncertainties and other factors that may cause our actual results, performance
or achievements to be materially different from any future results, performance
or achievements expressed or implied by these forward-looking statements, and we
can give no assurance that our plans, objectives, expectations and prospects
will be achieved.
Important factors that might cause our actual results to differ materially from
the results contemplated by the forward-looking statements are contained in the
"Risk Factors" section of and elsewhere in our Annual Report on Form 10-K for
the fiscal year ended September 30, 2012 and in our subsequent filings with the
Securities and Exchange Commission. The following discussion of our results of
operations should be read together with our financial statements and related
notes included elsewhere in this report.
The Company was incorporated as China Digital Ventures Corporation in Nevada on
March 26, 2007 and was in the web based telecom services business in China. The
Company's mission was to acquire, own and manage a portfolio of "technology",
"media" and "telecommunication" assets in China. During the periods presented,
all revenue was derived from the telecom business sector.
In July 2009, the Company acquired a 76.8% interest in China Integrated Media
Corporation Limited ("CIMC"), a public company in Australia.
In February 2010, the Company decided to divest from its investment in CIMC due
to its inability to raise the capital necessary to pursue this investment on a
timely manner and concerns on its internal liquidity. On April 30, 2010 the
Company disposed of CIMC.
On June 20, 2010, the Company disposed of its subsidiary company, Lead Concept
Limited, which operated its web based VOIP business as the Company was no longer
competitive in this market segment. After this disposal, the Company had no
On July 23, 2010, the Company experienced a change in control. Canton
Investments Ltd ("CIL") acquired a majority of the issued and outstanding common
stock of the Company in accordance with stock purchase agreements by and between
CIL and Wireless One International Limited ("Wireless One"), Bing HE and Ning
HE, the Company's former directors, and other various shareholders. On the
closing date, July 23, 2010, pursuant to the terms of the Stock Purchase
Agreement, CIL purchased from Wireless One and Bing HE and Ning HE 1,150,000,000
shares of the Company's outstanding common stock for $205,750. Also on July 23,
2010, CIL purchased 244,000,000 shares of the Company's outstanding common stock
for $36,600 from various shareholders. As a result of the change in control, CIL
owns a total of 1,394,000,000 shares of the Company's common stock representing
On May 10, 2012, the Company filed an amendment to its Articles of Incorporation
in the State of Nevada to change its name to Paradigm Resource Management
Corporation. The Company is currently contemplating acquisitions of certain
gold, copper and uranium mineral property rights.
On September 10, 2012, CIL contributed 1,200,000,000 shares of common stock to
the Company's treasury. The Company immediately retired and canceled these
shares. As a result of the contribution of shares, CIL owns a total of
194,000,000 shares of the Company's common stock representing 60.1%.
The Company is currently a development stage enterprise.
Plan of Operation
On March 21, 2012, the Company signed a Letter of Intent to acquire all of the
mineral rights properties of ARNEVUT Resources, Inc. ("ARNEVUT"), an exploration
and mining company engaged in the identification, acquisition, evaluation,
exploration and development of mineral properties in the United States. ARNEVUT
holds mineral rights, or options to acquire mineral rights, on certain
properties in Nevada, Utah, and New Mexico. After the completion of our due
diligence, management decided not to complete the acquisition.
On May 22, 2012, the Company signed a Memorandum of Understanding between the
shareholder group of Sao Camilo Mineradora Ltda. Group ("Sao Camilo") to acquire
a strategic equity interest in Sao Camilo. Sao Camilo was founded in 2006 with
the objective of developing an iron ore proessing project, The Sao Camilo
Project, to produce and export pellet feeds from its mining resources located
nearby the city of Sao Raimundo Nonato, south of Piaui State, in the northeast
region of Brazil. To date, Sao Camilo has acquired two farms totaling 690
hectares, which cover most of the mining rights, including the ideal location
for the construction of plant facilities, piling stocks and tailings dam. After
the completion of our due diligence, management decided not to complete the
Management is currently assessing and evaluating new strategic opportunities as
it remains in its development stage.
Results of Operations
For the Three Months Ended December 31, 2012 and 2011 and For the Period March
26, 2007 (Inception) to December 31, 2012
The Company had no revenue for the three months ended December 31, 2012 and
For the period from March 26, 2007 (date of inception) to December 31, 2012, the
Company realized revenue of $31,912, incurred a cost of revenue of $15,731 and
achieved a gross profit of $16,181. All revenue was derived from the telecom
business and reflects the disposal of the Company's operating subsidiaries
during the 2010 fiscal year.
For the three months ended December 31, 2012 total operating expenses were
$25,561 compared to $5,049 for the three months ended December 31, 2011
resulting in an increase of $20,512. The increase in operating expenses
primarily relates to increases in legal fees, accounting and audit fees, and
costs associated with regulatory reporting.
For the period from March 26, 2007 (date of inception) to December 31, 2012, the
accumulated gross profit was $16,181, the total operating expenses were $441,774
which was all general and administrative expenses, had $118,193 in gain on
disposal of subsidiaries, $1,028 in exchange gain, $2,170 in interest expense,
$1,196 in interest income and other income and loss attributable to minority
interest of $24,430, resulting in an accumulated net loss to our shareholders of
Liquidity and Capital Resources
As of December 31, 2012, the Company had no cash and a deficit in working
capital of $198,356. Since July 23, 2010, the date CIL became our majority
shareholder, our operating expenses have been funded and paid by CIL.
We do not have sufficient resources to effectuate our business. As of December
31, 2012, we had no cash. We expect to incur a minimum of $125,000 in expenses
during the next twelve months of operations. We estimate that this will be
comprised of the following expenses: $25,000 for business planning and
development, and $100,000 for general overhead expenses such as legal and
accounting fees, office overhead and general expenses.
Liquidity and Capital Resources during the Three Months Ended December 31, 2012
compared to the Three Months ended December 31, 2011
We used cash for operating activities of $10,493 and $0 for the three months
ended December 31, 2012, and 2011, respectively. The elements of cash flow used
in operations for the three months ended December 31, 2012 included a net loss
of $25,561, offset by increases in accounts payable of $10,318 and accrued
expenses of $4,750. The elements of cash flow used in operations for the three
months ended December 31, 2011 included a net loss of $5,049, offset by
increases in accounts payable of $299 and accrued expenses of $4,750.
We used no cash in investing activities during the three months ended December
31, 2012 and 2011.
Cash generated in our financing activities was $10,493 for the three months
ended December 31, 2012, compared to cash generated of $0 during the comparable
period in 2011. This increase was primarily attributed to amounts due to our
principal shareholder for expenses paid on our behalf by the shareholder in
We will have to raise funds to pay for our expenses. We may have to borrow money
from shareholders or issue debt or equity or enter into a strategic arrangement
with a third party. There can be no assurance that additional capital will be
available to us. We currently have no arrangements or understandings with any
person to obtain funds through bank loans, lines of credit or any other sources.
Since we have no such arrangements or plans currently in effect, our inability
to raise funds for our operations will have a severe negative impact on our
ability to remain a viable company.
Due to the uncertainty of our ability to meet our current operating and capital
expenses, our independent auditors included an explanatory paragraph in their
report on the financial statements for the year ended September 30, 2012
regarding concerns about our ability to continue as a going concern. Our
financial statements contain additional note disclosures describing the
circumstances that lead to this disclosure by our independent auditors.
Our unaudited financial statements have been prepared on a going concern basis,
which assumes the realization of assets and settlement of liabilities in the
normal course of business. Our ability to continue as a going concern is
dependent upon our ability to generate profitable operations in the future
and/or to obtain the necessary financing to meet our obligations and repay our
liabilities arising from normal business operations when they become due. The
outcome of these matters cannot be predicted with any certainty at this time and
raise substantial doubt that we will be able to continue as a going concern. Our
unaudited financial statements do not include any adjustments to the amount and
classification of assets and liabilities that may be necessary should we be
unable to continue as a going concern.
There is no assurance that our operations will be profitable. Our continued
existence and plans for future growth depend on our ability to obtain the
additional capital necessary to operate either through the generation of revenue
or the issuance of additional debt or equity.
Off-Balance Sheet Arrangements
We currently have no off-balance sheet arrangements that have or are reasonably
likely to have a current or future material effect on our financial condition,
changes in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources.
Critical Accounting Policies
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires us to make a number
of 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. Such estimates and assumptions affect the reported
amounts of revenues and expenses during the reporting period. We base our
estimates on historical experiences and on various other assumptions that we
believe to be reasonable under the circumstances. Actual results may differ
materially from these estimates under different assumptions and conditions. We
continue to monitor significant estimates made during the preparation of our
financial statements. On an ongoing basis, we evaluate estimates and assumptions
based upon historical experience and various other factors and circumstances. We
believe our estimates and assumptions are reasonable in the circumstances;
however, actual results may differ from these estimates under different future
See Item 7, "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and Note 2, "Summary of Significant Accounting Policies"
in our audited consolidated financial statements for the year ended September
30, 2012, included in our Annual Report on Form 10-K as filed on December 27,
2012, for a discussion of our critical accounting policies and estimates.
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