0001477932-14-002951.txt : 20140529 0001477932-14-002951.hdr.sgml : 20140529 20140529160956 ACCESSION NUMBER: 0001477932-14-002951 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 13 CONFORMED PERIOD OF REPORT: 20140228 FILED AS OF DATE: 20140529 DATE AS OF CHANGE: 20140529 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Penola Inc. CENTRAL INDEX KEY: 0001524774 STANDARD INDUSTRIAL CLASSIFICATION: METAL MINING [1000] IRS NUMBER: 000000000 STATE OF INCORPORATION: NV FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-54901 FILM NUMBER: 14876158 BUSINESS ADDRESS: STREET 1: 492 GILBERT ROAD CITY: WEST PRESTON STATE: C3 ZIP: 3072 BUSINESS PHONE: 61 3 9605 3907 MAIL ADDRESS: STREET 1: 492 GILBERT ROAD CITY: WEST PRESTON STATE: C3 ZIP: 3072 10-K 1 pnla_10k.htm FORM 10-K pnla_10k.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
FORM 10-K
 
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the fiscal year ended February 28, 2014
 
Commission File No. 000-54901
 
PENOLA, INC.
(Exact name of registrant as specified in its charter)
 
Nevada
 
None
(State or other jurisdiction of
 
(I.R.S. Employer
incorporation or organization)
 
Identification No.)

492 Gilbert Road
West Preston, Victoria 3072, Australia
(Address of principal executive offices, zip code)

+61 (3) 9605-3907
(Registrant’s telephone number, including area code)

____________________________________________________________
(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:
None

Securities registered pursuant to section 12(g) of the Act:
Common Stock, $.001 par value
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x
 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No x
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes x No ¨
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files) Yes ¨ No x
 
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ¨
Accelerated filer ¨
Non-accelerated filer ¨
Smaller reporting company x
   
(Do not check if a smaller reporting company)
 
       
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
 
At May 31, 2013, the last business day of the Registrant’s most recently completed second fiscal quarter, the aggregate market value of the voting common stock held by non-affiliates of the Registrant (without admitting that any person whose shares are not included in such calculation is an affiliate) was approximately $27,840. At February 28, 2014, the end of the Registrant’s most recently completed fiscal year, and at May 28, 2014, there were 3,160,000 shares of the Registrant’s common stock, par value $0.001 per share, outstanding.
 


 
 

 
PENOLA, INC.
TABLE OF CONTENTS
 
     
Page No.
 
         
 
PART I
     
         
Item 1.
Business
    4  
Item 1A.
Risk Factors
    12  
Item 1B.
Unresolved Staff Comments
    12  
Item 2.
Properties
    12  
Item 3.
Legal Proceedings
    12  
Item 4.
Mine Safety Disclosure
    12  
           
 
PART II
       
           
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    13  
Item 6.
Selected Financial Data
    13  
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
    14  
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
    16  
Item 8.
Financial Statements and Supplementary Data
    F-1  
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    17  
Item 9A.
Controls and Procedures
    17  
Item 9B.
Other Information
    18  
           
 
Part III
       
           
Item 10.
Directors, Executive Officers and Corporate Governance
    19  
Item 11.
Executive Compensation
    21  
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    22  
Item 13.
Certain Relationships and Related Transactions, and Director Independence
    22  
Item 14.
Principal Accounting Fees and Services
    22  
           
 
Part IV
       
           
Item 15.
Exhibits and Financial Statement Schedules
    23  
           
Signatures
      24  
 
 
2

 
 
FORWARD-LOOKING STATEMENTS
 
This Annual Report on Form 10-K of Penola, Inc., a Nevada corporation, contains “forward-looking statements,” as defined in the United States Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by terminology such as “may”, “will”, “should”, “could”, “expects”, “plans”, “intends”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of such terms and other comparable terminology. These forward-looking statements include, without limitation, statements about our market opportunity, our strategies, competition, expected activities and expenditures as we pursue our business plan, and the adequacy of our available cash resources. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Actual results may differ materially from the predictions discussed in these forward-looking statements. The economic environment within which we operate could materially affect our actual results. Additional factors that could materially affect these forward-looking statements and/or predictions include, among other things: the volatility of minerals prices, the possibility that exploration efforts will not yield economically recoverable quantities of minerals, accidents and other risks associated with mineral exploration and development operations, the risk that the Company will encounter unanticipated geological factors, the Company’s need for and ability to obtain additional financing, the possibility that the Company may not be able to secure permitting and other governmental clearances necessary to carry out the Company’s exploration and development plans, the exercise of the approximately 63.2% control the Company’s sole officer and director holds of the Company’s voting securities, other factors over which we have little or no control; and other factors discussed in the Company’s filings with the Securities and Exchange Commission (“SEC”).

Our management has included projections and estimates in this Form 10-K, which are based primarily on management’s experience in the industry, assessments of our results of operations, discussions and negotiations with third parties and a review of information filed by our competitors with the SEC or otherwise publicly available. We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

All references in this Form 10-K to the “Company”, “Penola”, “we”, “us,” or “our” are to Penola, Inc.
 
 
3

 
 
PART I

ITEM 1.
BUSINESS

ORGANIZATION WITHIN THE LAST FIVE YEARS
 
On May 7, 2010, the Company was incorporated under the laws of the State of Nevada. We are engaged in the business of acquisition, exploration and development of natural resource properties.
 
Filomena Gencarelli served as our sole Director, President and Chief Executive Officer, Secretary and Treasurer, from May 7, 2010 through August 15, 2013 and from May 12, 2014 the date of filing of this Form 10-K.

We are authorized to issue 100,000,000 shares of common stock, par value $.001 per share, and 25,000,000 shares of “blank check” preferred stock, par value $.001 per share. On September 30, 2010, we offered and sold 2,000,000 shares of common stock to our sole officer and director, at a purchase price of $0.001, for an aggregate of $2,000. We hold our cash in bank accounts located in Australia.
 
On July 6, 2010 we entered into a Mineral Property Option Agreement, as amended, whereby we have the right to acquire a 100% interest in Exploration License 80/3757, located in Halls Creek Shire, in the Kimberly region of Western Australia and known as the Halls Creek Property. The option agreement requires us to make an initial cash payment of AUD$7,000 (US$7,703), which we paid on July 6, 2010. The option agreement has an exercise price of approximately two hundred thousand AUD$200,000 (US$208,840) cash to be paid if exercised by the Company. We retained a consulting geologist to prepare an evaluation report on the prospects. We intend to conduct exploratory activities on the claim and if feasible, develop the prospects.

IN GENERAL

We are an exploration stage company engaged in the acquisition and exploration of mineral properties. We currently hold an option to acquire for AUD$200,000 (US$208,840) a 100% undivided interest in Exploration License E 80/3757 located in Halls Creek Shire, in the Kimberly region of Western Australia and known as the Halls Creek Property. We are currently conducting mineral exploration activities on the Halls Creek Property in order to assess whether it contains any commercially exploitable mineral reserves. Currently there are no known mineral reserves on the Halls Creek Property.

Since our inception, we have not earned any revenues to date and our accumulated losses are $56,948 at February 28, 2014. Our independent auditor has issued an audit opinion which includes a statement expressing substantial doubt as to our ability to continue as a going concern. The source of information contained in this discussion is our geology report prepared by Gregory Curnow, B. SC (Geology), M AusIMM, dated October 7, 2010.

While we intend to test for commercially viable reserves of gold, tin-tungsten and other rare earths, there is the likelihood of our mineral claim containing little or no economic mineralization or reserves of gold and other minerals. We are presently in the exploration stage of our business and we can provide no assurance that any commercially viable mineral deposits exist on our mineral claims, that we will discover commercially exploitable levels of mineral resources on our property, or, if such deposits are discovered, that we will enter into further substantial exploration programs. Further exploration is required before a final determination can be made as to whether our mineral claims possess commercially exploitable mineral deposits. If our claim does not contain any reserves all funds that we spend on exploration will be lost.

We have no current plans, proposals or arrangements, written or otherwise, to seek a business combination with another entity in the near future.
 
 
4

 

POTENTIAL ACQUISITION OF THE HALLS CREEK PROPERTY

On July 6, 2010, we purchased an option to acquire a 100% undivided interest in a mineral claim known as Exploration License 80/3757 located in Halls Creek Shire, in the Kimberly region of Western Australia and known as the Halls Creek Property, for a price of AUD$7,000 (US$7,703). The mineral claim underlying the option was granted by the Department of Mines and Petroleum, Western Australia, on July 16, 2010.

We engaged Gregory Curnow, B. SC (Geology). M AusIMM, to prepare a geological evaluation report on the Halls Creek Property. Mr. Curnow is a consulting professional geologist and Member of the Australasian Institute of Mining & Metallurgy. Mr. Curnow attended Monash University, Melbourne, Australia and graduated in 1986 with a Bachelor of Science degree in geology.

The work completed by Mr. Curnow in preparing the geological report consisted of a review of geological data from previous exploration within the region. The acquisition of this data involved the research and investigation of historical files to locate and retrieve data information acquired by previous exploration companies in the area of the mineral claims.

We received the geological evaluation report on the Halls Creek Property entitled "Evaluation Report, E 80/3757, Western Australia" prepared by Mr. Curnow on October 7, 2010. The geological report summarizes the results of the history of the exploration of the mineral claims, the regional and local geology of the mineral claims and the mineralization and the geological formations identified as a result of the prior exploration. The geological report also gives conclusions regarding potential mineralization of the mineral claims and recommends a further geological exploration program on the mineral claims. The description of the Halls Creek Property provided below is based on Mr. Curnow’s report.

DESCRIPTION OF PROPERTY

The property on which the Company has an option is the Halls Creek Property which is comprised of one located mineral claim, Exploration License E 80/3757. The Halls Creek Property is in the Day Dawn district of the Murchison Mineral Fields approximately 550 kilometers north north-east of Perth. The nearest towns are the mining centers of Cue 25 kilometers to the north and Mt. Magnet 50 kilometers to the south.

PHYSIOGRAPHY, CLIMATE, VEGETATION & WATER

The nearest town is the mining and pastoral centre of Halls Creek 83 kilometers to the north-east (see Fig 1). The Kimberley region is a semi-arid region with a monsoonal climate with the wet season running from November to mid April. Temperatures in summer average 37 degrees C (99 degrees F) and the humidity is commonly over 90%.

The Halls Creek Property is located 30 kilometers south of the Great Northern Highway, the major road of the Kimberley region, and is serviced by unsealed minor roads. The terrain is open scrubland criss-crossed by a number of perennial streams that only flow in the wet season and the main land use is cattle farming.

Fieldwork in the Kimberley is usually scheduled for the dry season between April and December.
 
 
5

 

The license was granted to George Lee on August 8, 2007 for a period of five years and covers approximately 324 hectares. Mr. Lee is the third party with whom we have entered into our Mineral Property Option Agreement.
 

Figure 1: Location Plan 
 
PROPERTY HISTORY
 
There is no prior mining exploration activity for the property to which our Mineral Property Option Agreement relates.
 
 
6

 
 
REGIONAL GEOLOGY
 
The region falls within the Halls Creek Proterozoic Mobile Zone that is folded about the edge of the Kimberly craton, which is also Proterozoic in age (see Fig 2). The Halls Creek Zone consists of moderately to highly deformed rocks of the Halls Creek Group which is broken up into:

Olympio Formation
Biscay Formation
Saunders Creek Formation
Ding Dong Downs Volcanics
 
Deformation of the Hall Creek Zone has included tight sub-isoclinal to isoclinals folding with associated regional faulting. Both the folding and faulting is parallel to the Kimberley craton edge and generally trending to the north north-east.
 
Only the Olympio and Biscay Formation occur in the area.

Olympio Formation

The Olympio Formation consists mainly of a sequence of turbidite and deep water sediments with a basal sequence of acid to intermediate volcanic interbedded with tuffaceous and lithic sediments. Metamorphism is generally greenschist to amphibolite facies.

Biscay Formation
 
The Biscay Formation is a sequence of basic volcanics rocks generally basalts, dolerites and gabbroic intrusives interbedded with turbiditic sediments. Metamorphism is generally greenschist to amphibolite facies.
 
 
7

 

Figure 2: Regional Geology of the Kimberley (Tyler 02)

Local Geology

Locally the area of the Mt. Dockrell goldfield is made up of a sequence of basic volcanics, felsic volcanics and sediments which are part of the Halls Creek Group. E 80/3757 consists of both the Olympio and Biscay Formations with the contact between the two trending north north-east suggesting it is fault related.

Mineralization

Gold mineralization in the Mt. Dockrell area is generally associated with both copper and lead, and there are 5 known types of mineralization, as follows:

1. Gold-galena in quartz filled axial plane shears and fractures.
2. Gold-arsenopyrite-chalcopyrite stratabound deposits.
3. Gold-tourmaline quartz veins.
4. Chalcopyrite-galena quartz veins.
5. Copper in quartz-calcite-epidote altered zones.

Both disseminated and vein hosted tin-tungsten mineralization is known in the area and is associated with a quartzite unit in the Butchers Gully member (part of the Biscay Formation) and is exposed by a large south plunging anticline. The quartzite unit is lithologically mixed and consists of bands of magnetite, epidote, tourmaline, and manganese rich quartzite with minor bands of amphibolite and pelite.
 
 
8

 
 
The scheelite appears to be formed through preferential metasomatism of psammitic horizons in the quartzite and is associated with secondary epidote and less generally with fluorite, tourmaline, apatite and zircon.
 
Figure 3: Geology Plan of the Mt. Dockrell Goldfield
 
 
9

 
 
EXPLORATION POTENTIAL

Though there are no known occurrences of mineralization on E 80/3757, we believe that the exploration potential of project area will contain occurrences of mineralization, based on the substantial past exploration and the known, widespread occurrence of gold and tin-tungsten mineralization in the area and the local geology.

With a major fault splay passing through the license and a large portion of the contact between the Biscay volcanics and the Olympio Formation also being included in the license and the lack of modern exploration techniques, especially geophysics, being carried out in the area the potential for discovery in the area is high.

The tin-tungsten mineralization highlights the presence of a granitoid body that does not outcrop in the area suggesting that it is located at a shallow depth increasing the potential for more tin-tungsten mineralization to be found below the surface.
 
CONDITIONS TO RETAIN TITLE TO THE CLAIM
 
State and local regulations will require a yearly maintenance fee to keep the claim to Halls Creek Property in good standing. Yearly maintenance fees of AUD$10,000 (US$10,605) payable to the Department of Mines and Petroleum Western Australia, are payable prior to the anniversary of the claim to keep the claim in good standing for an additional year.
 
COMPETITIVE CONDITIONS
 
The mineral exploration business is an extremely competitive industry. We are competing with many other exploration companies looking for minerals. We are a very early stage mineral exploration company and a very small participant in the mineral exploration business. Being a junior mineral exploration company, we compete with other companies like ours for financing and joint venture partners. Additionally, we compete for resources such as professional geologists, camp staff, helicopters and mineral exploration supplies.
 
GOVERNMENT APPROVALS AND RECOMMENDATIONS
 
We will be required to comply with all regulations, rules and directives of governmental authorities and agencies applicable to the exploration of minerals in Australia and the state of Western Australia.
 
 
10

 
 
COSTS AND EFFECTS OF COMPLIANCE WITH ENVIRONMENTAL LAWS
 
We currently have no costs to comply with environmental laws concerning our exploration program. We will also have to sustain the cost of reclamation and environmental remediation for all work undertaken which causes sufficient surface disturbance to necessitate reclamation work. Both reclamation and environmental remediation refer to putting disturbed ground back as close to its original state as possible. Other potential pollution or damage must be cleaned-up and renewed along standard guidelines outlined in the usual permits. Reclamation is the process of bringing the land back to a natural state after completion of exploration activities. Environmental remediation refers to the physical activity of taking steps to remediate, or remedy, any environmental damage caused, i.e. refilling trenches after sampling or cleaning up fuel spills. Our initial programs do not require any reclamation or remediation other than minor clean up and removal of supplies because of minimal disturbance to the ground. The amount of these costs is not known at this time as we do not know the extent of the exploration program we will undertake, beyond completion of the recommended three phases described in the chart below. Because there is presently no information on the size, tenor, or quality of any resource or reserve at this time, it is impossible to assess the impact of any capital expenditures on our earnings or competitive position in the event a potentially economic deposit is discovered.

Proposed Work
 
Amount
 
Cost ($AUD)
 
Phase 1
         
Data Collection
     
$
5,000.00
 
Re-Interpretation of Geophysical Data
     
$
10,000.00
 
Field Mapping
 
5 days @ $500
 
$
2,500.00
 
Sampling
 
50 samples @ $30
 
$
1,500.00
 
Travel & Accommodation
 
5 days @ $300
 
$
1,500.00
 
Report
 
1.5 days @ $1,000
 
$
1,500.00
 
Administration
 
15 % of costs
 
$
3,300.00
 
             
       
$
25,300.00
 
Phase 2
           
Soil Sampling
 
5 days @ $750
 
$
3,750.00
 
Assaying
 
150 samples @ $20
 
$
3,000.00
 
Ground Geophysics
     
$
65,000.00
 
Report
 
1.5 days @ $1,000
 
$
1,500.00
 
Administration
 
15 % of costs
 
$
10,987.50
 
             
       
$
84,237.50
 
Phase 2
           
Drilling
 
1,000 meters @ $50
 
$
50,000.00
 
Assaying
 
1,000 meters @ $30
 
$
30,000.00
 
Supervision
 
7 days @ $600
 
$
4,200.00
 
Travel & Accommodation
 
7 days @ $300
 
$
2,100.00
 
Report
 
1.5 days @ $1,000
 
$
1,500.00
 
Administration
 
15 % of costs
 
$
13,170.00
 
             
       
$
100,970.00
 
             
Total
     
$
210,507.50
 
 
 
11

 
 
EMPLOYEES
 
We currently have no employees other than our directors. We intend to retain the services of geologists, prospectors and consultants on a contract basis to conduct the exploration programs on our mineral claims and to assist with regulatory compliance and preparation of financial statements.
 
ITEM 1A.
RISK FACTORS

As a “smaller reporting company,” as defined in Rule 12b-2 of the Exchange Act, we are not required to provide the information called for by this Item.

ITEM 1B.
UNRESOLVED STAFF COMMENTS

None.

ITEM 2.
PROPERTIES

Our current business address is 492 Gilbert Road, West Preston, Victoria 3072, Australia. Our telephone number is +61 (3) 9605-3907. 

We believe that this space is adequate for our current needs.

ITEM 3.
LEGAL PROCEEDINGS

We are not currently involved in any legal proceedings and we are not aware of any pending or potential legal actions.
 
ITEM 4.
MINE SAFETY DISCLOSURE
 
None.
 
 
12

 
 
PART II
 
ITEM 5.
MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS MARKET INFORMATION

Our shares of our common stock have never been quoted on any exchange or the over-the-counter market.

TRANSFER AGENT

The company is the registrar of its own securities and does not have a transfer agent.

HOLDERS

As of May 28, 2014, the Company had 3,160,000 shares of our common stock issued and outstanding held by 11 holders of record.

DIVIDENDS

Historically, we have not paid any dividends to the holders of our common stock and we do not expect to pay any such dividends in the foreseeable future as we expect to retain our future earnings for use in the operation and expansion of our business.

RECENT SALES OF UNREGISTERED SECURITIES

None.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

We have not established any compensation plans under which equity securities are authorized for issuance.

PURCHASES OF EQUITY SECURITIES BY THE REGISTRANT AND AFFILIATED PURCHASERS

We did not purchase any of our shares of common stock or other securities during the year ended February 28, 2014.
 
ITEM 6.
SELECTED FINANCIAL DATA

As a “smaller reporting company,” as defined in Rule 12b-2 of the Exchange Act, we are not required to provide the information called for by this Item.
 
 
13

 
 
ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS
 
We have generated no revenues since inception.

For the year ended February 28, 2014, we incurred $21,596 in operating expenses, comprised of $11,452 in professional fees, and $10,144 in office and general costs. Additionally, we had interest expense of $3,031 for the year ended February 28, 2014.

For the year ended February 28, 2013, we incurred $19,274 in operating expenses, comprised of $5,400 in professional fees, and $12,446 in office and general costs. Additionally, we had interest expense of $1,428 for the year ended February 28, 2013. 

Our net loss since inception (May 7, 2010) through February 28, 2014 was $81,574. The following table provides selected financial data about our company for the years ended February 28, 2014 and 2013.

Balance Sheet Data
 
February 28,
2014
   
February 28,
2013
 
Cash and Cash Equivalents
 
$
1,336
   
$
10,740
 
Total Assets
 
$
1,336
   
$
10,740
 
Total Liabilities
 
$
47,262
   
$
35,071
 
Shareholders’ Equity (deficit)
 
$
(45,926)
)
 
$
(24,331)
 
 
GOING CONCERN
 
Penola, Inc. is an exploration stage company and currently has minimal operations. Our independent auditor has issued an audit opinion for Penola, Inc. which includes a statement raising substantial doubt as to our ability to continue as a going concern.
 
LIQUIDITY AND CAPITAL RESOURCES
 
Our cash balance at February 28, 2014 was $1,336 with $47,262 in outstanding liabilities. Total expenditures over the next 12 months are expected to be approximately $230,508. If we experience a shortage of funds prior to generating revenues from operations we may utilize funds from our directors, who have informally agreed to advance funds to allow us to pay for operating costs, however they have no formal commitment, arrangement or legal obligation to advance or loan funds to us. Management believes our current cash balance will not be sufficient to fund our operations for the next six months.
 
 
14

 
 
PLAN OF OPERATION
 
Our plan of operation for the twelve months following the date of this Form 10-K is to complete the first and second of the three phases of the exploration program on our prospects. In addition to the $210,508 we anticipate spending for the first two phases of the exploration program as outlined below, we anticipate spending an additional $20,000 on general and administration expenses including fees payable in connection with complying with our reporting obligations, and general administrative costs. Total expenditures over the next 12 months are therefore expected to be approximately $230,508. We will experience a shortage of funds prior to funding and we may utilize funds from our president, however they have no formal commitment, arrangement or legal obligation to advance or loan funds to the company.
 
Proposed Work
 
Amount
 
Cost ($AUD)
 
Phase 1
         
Data Collection
     
$
5,000.00
 
Re-Interpretation of Geophysical Data
     
$
10,000.00
 
Field Mapping
 
5 days @ $500
 
$
2,500.00
 
Sampling
 
50 samples @ $30
 
$
1,500.00
 
Travel & Accommodation
 
5 days @ $300
 
$
1,500.00
 
Report
 
1.5 days @ $1,000
 
$
1,500.00
 
Administration
 
15 % of costs
 
$
3,300.00
 
             
       
$
25,300.00
 
Phase 2
           
Soil Sampling
 
5 days @ $750
 
$
3,750.00
 
Assaying
 
150 samples @ $20
 
$
3,000.00
 
Ground Geophysics
     
$
65,000.00
 
Report
 
1.5 days @ $1,000
 
$
1,500.00
 
Administration
 
15 % of costs
 
$
10,987.50
 
             
       
$
84,237.50
 
Phase 2
           
Drilling
 
1,000 meters @ $50
 
$
50,000.00
 
Assaying
 
1,000 meters @ $30
 
$
30,000.00
 
Supervision
 
7 days @ $600
 
$
4,200.00
 
Travel & Accommodation
 
7 days @ $300
 
$
2,100.00
 
Report
 
1.5 days @ $1,000
 
$
1,500.00
 
Administration
 
15 % of costs
 
$
13,170.00
 
             
       
$
100,970.00
 
             
Total
     
$
210,507.50
 
 
 
15

 
 
We plan to commence Phase 1 of the exploration program on the claim in summer 2014. We expect this phase to take two weeks to complete and an additional one to two months for the geologist to prepare his report.

The above program costs are management’s estimates based upon the recommendations of the professional geologist’s report and the actual project costs may exceed our estimates. To date, we have not commenced exploration.
 
Following phase one of the exploration program, if it proves successful in identifying mineral deposits, we intend to proceed with phase two of our exploration program. Subject to the results of phase 1, we anticipate commencing with phase 2 in fall 2014. We will require additional funding to proceed with phase 3 work on the claim; we have no current plans on how to raise the additional funding. We cannot provide any assurance that we will be able to raise sufficient funds to proceed with any work after the first two phases of the exploration program.
 
OFF-BALANCE SHEET ARRANGEMENTS
 
We have no off-balance sheet arrangements.

ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a “smaller reporting company,” as defined in Rule 12b-2 of the Exchange Act, we are not required to provide the information called for by this Item.
 
 
16

 

ITEM 8.
FINANCIAL STATEMENTS
 
PENOLA INC.
(An Exploration Stage Company)
 
FINANCIAL STATEMENTS

February 28, 2014
 
 
F-1

 
 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
To the Board of Directors
Penola Inc. (An Exploration Stage Company)

We have audited the accompanying balance sheets of Penola Inc. (An Exploration Stage Company) as of February 28, 2014 and February 28, 2013, and the related statements of operations, changes in stockholders’ equity (deficit), and cash flows for the periods then ended, and for the period from May 7, 2010 (inception) through February 28, 2014. 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 standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. 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 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 Penola Inc. (An Exploration Stage Company) as of February 28, 2014 and February 28, 2013, and the results of its operations and cash flows for the periods described above 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 has incurred losses since inception and has an accumulated deficit, which raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding those 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/ M&K CPAS, PLLC
www.mkacpas.com
Houston, Texas
May 29, 2014

 
F-2

 

PENOLA INC.
(An Exploration Stage Company)
 
BALANCE SHEETS
 
   
February 28,
2014
   
February 28,
2013
 
    - $ -     - $ -  
ASSETS
           
Current
           
Cash
    1,336       10,740  
Total assets
    1,336       10,740  
                 
LIABILITIES
               
Current
               
Accounts payable and accrued liabilities
    997       625  
Due to related parties
    46,265       34,446  
Total liabilities
    47,262       35,071  
                 
STOCKHOLDERS’ DEFICIT
               
Authorized:
               
75,000,000 common shares With a par value of $0.001
    -       -  
Issued and Outstanding:
               
3,160,000 common shares
               
(February 28, 2013 - 3,160,000)
    3,160       3,160  
Additional paid up capital
    32,488       29,457  
Deficit accumulated during the exploration stage
    (81,574 )     (56,948 )
Total stockholders’ deficit
    (45,926 )     (24,331 )
Total liabilities and stockholders’ deficit
    1,336       10,740  
 
– See Accompanying Notes –
 
 
F-3

 
 
PENOLA INC.
(An Exploration Stage Company)
 
STATEMENTS OF OPERATIONS
 
   
Year ended
February 28,
2014
   
Year ended
February 28,
2013
   
May 7, 2010 (Inception) to
February 28,
2014
 
   
- $ -
   
- $ -
   
- $ -
 
                         
Office and general
    10,143       12,446       25,150  
Professional fees
    11,452       5,400       44,073  
Mining costs
    -       -       7,703  
Total expenses
    21,595       17,846       76,926  
Interest expense
    (3,031 )     (1,428 )     (4,648 )
NET LOSS
    (24,626 )     (19,274 )     (81,574 )
                         
Basic and diluted loss per share
    (0.01 )     (0.01 )        
                         
Weighted average number of common shares outstanding
    3,160,000       3,160,000          
 
See Accompanying Notes –
 
 
F-4

 
 
PENOLA INC.
(An Exploration Stage Company)
 
STATEMENTS OF CASH FLOWS
 
   
Year ended
February 28,
2014
   
Year ended
February 28,
2013
   
Period from May 7, 2010 (Inception) to
February 28,
2014
 
   
- $ -
   
- $ -
   
- $ -
 
                   
Cash Flows From Operating Activities
                 
Net loss
    (24,626 )     (19,274 )     (81,574 )
Impairment of mining costs
    -               7,703  
Imputed interest
    3,031       1,428       4,648  
Net change in non-cash working capital balances:
                       
Accounts payable
    371       625       997  
Net cash used in operations
    (21,224 )     (17,221 )     (68,226 )
                         
Cash flows from Investing Activities
                       
Mineral property option
    -       -       (7,703 )
Net cash used in investing activities
    -       -       (7,703 )
Cash Flows From Financing Activities
                       
Capital stock issued
    -       -       31,000  
Due to related party
    11,820       27,277       46,265  
Net cash provided by financing activities
    11,820       27,277       77,265  
                         
Increase (Decrease) In Cash
    (9,404 )     10,056       1,336  
                         
Cash, beginning
    10,740       684       -  
Cash, ending
    1,336       10,740       1,336  
                         
Supplementary Cash Flow Information:
                       
Cash paid for:
                       
Interest
    -       -       -  
Income taxes
    -       -       -  

- See Accompanying Notes -
 
 
F-5

 
 
PENOLA INC.
(An Exploration Stage Company)
 
STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIT)
FOR THE PERIOD FROM MAY 7, 2010 (INCEPTION) TO FEBRUARY 28, 2014
 
   
Shares
Subscribed
   
Common
Stock
   
Additional Paid
in Capital
   
Accumulated
Deficit
   
Total
Equity (Deficit)
 
Balance, May 7, 2010
    -     $ -     $ -     $ -     $ -  
Common stock issued for cash at $0.001 per share
    2,000,000       2,000       -       -       2,000  
Common stock issued for cash at $0.025 per share – July 16, 2009 to February 28, 2011
      1,160,000         1,160         27,840         -         29,000  
Net loss
    -       -       -       (9,782 )     (9,782 )
Balance, February 28, 2011
    3,160,000       3,160       27,840       (9,782 )     21,218  
Imputed interest
    -       -       189       -       189  
Net loss
    -       -       -       (27,892 )     (27,892 )
Balance, February 29, 2012
    3,160,000       3,160       28,029       (37,674 )     (6,485 )
Imputed interest
    -       -       1,428       -       1,428  
Net loss
    -       -       -       (19,274 )     (19,274 )
Balance, February 28, 2013
    3,160,000       3,160       29,457       (56,948 )     (24,331 )
Imputed interest
    -       -       3,031       -       3,031  
Net loss
    -       -       -       (24,626 )     (24,626 )
Balance, February 28, 2014
    3,160,000     $ 3,160     $ 32,488     $ ( 81,574 )   $ (45,926 )
 
- See Accompanying Notes -
 
 
F-6

 
 
PENOLA INC.
(An Exploration Stage Company)

NOTES TO THE FINANCIAL STATEMENTS
FEBRUARY 28, 2014
 
1. 
NATURE OF OPERATIONS AND BASIS OF PRESENTATION

Penola Inc. (the “Company”) was incorporated in the State of Nevada on May 7, 2010, and its year-end is February 28. The Company is an exploration stage company and is currently seeking for new business opportunities.
 
Going Concern
 
These financial statements have been prepared on a going concern basis. The Company has incurred losses since inception resulting in an accumulated deficit of $81,574 at February 28, 2014 and further losses are anticipated in the development of its business raising substantial doubt about the Company’s ability to continue as a going concern. Its ability to continue as a going concern is dependent upon the ability of the Company to generate profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due.

Management has plans to seek additional capital through a private placement of its common stock or further director loans as needed. These financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue.
 
2. 
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation
 
These financial statements are presented in United States dollars and have been prepared in accordance with United States generally accepted accounting principles.
 
Cash and cash equivalents
 
The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. The Company had no cash equivalents at February 28, 2014 or February 28, 2013, respectively.
 
 
 
F-7

 
 
Use of estimates and assumptions
 
The preparation of financial statements in conformity with generally accepted accounting principles 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. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are readily apparent from other sources. The actual results experienced by the Company may differ materially from the Company’s estimates. To the extent there are material differences, future results may be affected. Estimates used in preparing these financial statements include the carrying value of the equipment, deferred income tax amounts, rates and timing of the reversal of income tax differences.
 
Mineral property costs
 
The Company has been in the exploration stage since its formation on May 7, 2010 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 acquisition and exploration costs are charged to operations 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.

Basic and diluted net income (loss) per common share
 
The Company computes net income (loss) per share in accordance with Financial Accounting Standards Codification (“ASC”) 260 “Earnings Per Share” which requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing income (loss) available to common stockholders (numerator) by the weighted average number of common shares outstanding (denominator) for the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period including stock options, using the treasury stock method, and convertible preferred stock, using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential common shares if their effect is anti-dilutive. Because the Company does not have any potentially dilutive securities, diluted loss per share is equal to the basic loss per share.
 
Comprehensive loss
 
For all periods presented, the Company has no items that represent a comprehensive loss and, therefore, has not included a statement of comprehensive loss in these financial statements.
 
Financial instruments
 
The fair value of the Company’s financial instruments consisting of cash, accounts payable, and amounts due to related party approximate their carrying values due to the immediate or short-term maturity of these financial instruments. The Company operates in Australia and therefore is exposed to foreign exchange risk. It is management's opinion that the Company is not exposed to significant interest or credit risks arising from these financial instruments.
 
 
F-8

 
 
Fair value of financial instruments
 
The Company adopted ASC 820 “Fair Value Measurements”. ASC 820 defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures. The three levels are defined as follows:
 
Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
 
Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly for substantially the full term of the financial instrument.
 
Level 3 inputs to the valuation methodology are unobservable and significant to the fair measurement.
 
The carrying amounts reported in the balance sheets for cash and cash equivalents, and current liabilities each qualify as financial instruments and are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest.
 
The following table presents the Company’s assets and liabilities within the fair value hierarchy utilized to measure fair value on a recurring basis as of February 28, 2014 and February 28, 2013:
 
   
Level 1
   
Level 2
   
Level 3
 
February 28, 2014
    -       -       -  
February 28, 2013
    -       -       -  
 
Income taxes
 
Deferred income taxes are provided for tax effects of temporary differences between the tax basis of asset and liabilities and their reported amounts in the financial statements. The Company uses the liability method to account for income taxes, which requires deferred taxes to be recorded at the statutory rate expected to being in effect when the taxes are paid. Valuation allowances are provided for a deferred tax asset when it is more likely than not that such asset will not be realized.

Management evaluates tax positions taken or expected to be taken in a tax return. The evaluation of a tax position includes a determination of whether a tax position should be recognized in the financial statements, and such a position should only be recognized if the Company determines that it is more likely than not that the tax position will be sustained upon examination by the tax authorities, based upon the technical merits of the position. For those tax positions that should be recognized, the measurement of a tax position is determined as being the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement.
 
Stock-based compensation
 
The Company has not adopted a stock option plan and therefore has not granted any stock options. Accordingly, no stock-based compensation has been recorded to date.
 
 
F-9

 
 
Foreign currency translation
 
Foreign denominated monetary assets and liabilities are translated to their United States dollar equivalents using foreign exchange rates which prevailed at the balance sheet date. Expenses are translated at average rates of exchange during the period. Related translation adjustments are reported as a separate component of stockholders' equity, whereas gains or losses resulting from foreign currency transactions are included in results of operations.

Exploration stage company
 
The Company complies with ASC 915 and Securities and Exchange Commission Act Guide 7 for its characterization of the Company as an Exploration stage enterprise.
 
Recent accounting pronouncements
 
In July 2013, FASB issued ASU No. 2013-11, "Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists." The provisions of ASU No. 2013-11 require an entity to present an unrecognized tax benefit, or portion thereof, in the statement of financial position as a reduction to a deferred tax asset for a net operating loss carryforward or a tax credit carryforward, with certain exceptions related to availability. ASU No. 2013-11 is effective for interim and annual reporting periods beginning after December 15, 2013. The adoption of ASU No. 2013-11 is not expected to have a material impact on the Company's Consolidated Financial Statements.

In February 2013, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income, to improve the transparency of reporting these reclassifications. Other comprehensive income includes gains and losses that are initially excluded from net income for an accounting period. Those gains and losses are later reclassified out of accumulated other comprehensive income into net income. The amendments in the ASU do not change the current requirements for reporting net income or other comprehensive income in financial statements. All of the information that this ASU requires already is required to be disclosed elsewhere in the financial statements under U.S. GAAP. The new amendments will require an organization to:
 
 
-  
Present (either on the face of the statement where net income is presented or in the notes) the effects on the line items of net income of significant amounts reclassified out of accumulated other comprehensive income - but only if the item reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period; and
 
-  
Cross-reference to other disclosures currently required under U.S. GAAP for other reclassification items (that are not required under U.S. GAAP) to be reclassified directly to net income in their entirety in the same reporting period. This would be the case when a portion of the amount reclassified out of accumulated other comprehensive income is initially transferred to a balance sheet account (e.g., inventory for pension-related amounts) instead of directly to income or expense.
 
The amendments apply to all public and private companies that report items of other comprehensive income. Public companies are required to comply with these amendments for all reporting periods (interim and annual). The amendments are effective for reporting periods beginning after December 15, 2012, for public companies. Early adoption is permitted. The adoption of ASU No. 2013-02 is not expected to have a material impact on our financial position or results of operations.
 
 
F-10

 

In January 2013, the FASB issued ASU No. 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities, which clarifies which instruments and transactions are subject to the offsetting disclosure requirements originally established by ASU 2011-11. The new ASU addresses preparer concerns that the scope of the disclosure requirements under ASU 2011-11 was overly broad and imposed unintended costs that were not commensurate with estimated benefits to financial statement users. In choosing to narrow the scope of the offsetting disclosures, the Board determined that it could make them more operable and cost effective for preparers while still giving financial statement users sufficient information to analyze the most significant presentation differences between financial statements prepared in accordance with U.S. GAAP and those prepared under IFRSs. Like ASU 2011-11, the amendments in this update will be effective for fiscal periods beginning on, or after January 1, 2013. The adoption of ASU 2013-01 is not expected to have a material impact on our financial position or results of operations.

In October 2012, the FASB issued Accounting Standards Update ASU 2012-04, “Technical Corrections and Improvements” in Accounting Standards Update No. 2012-04. The amendments in this update cover a wide range of Topics in the Accounting Standards Codification. These amendments include technical corrections and improvements to the Accounting Standards Codification and conforming amendments related to fair value measurements. The amendments in this update will be effective for fiscal periods beginning after December 15, 2012. The adoption of ASU 2012-04 is not expected to have a material impact on our financial position or results of operations.

In August 2012, the FASB issued ASU 2012-03, “Technical Amendments and Corrections to SEC Sections: Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin (SAB) No. 114, Technical Amendments Pursuant to SEC Release No. 33-9250, and Corrections Related to FASB Accounting Standards Update 2010-22 (SEC Update)” in Accounting Standards Update No. 2012-03. This update amends various SEC paragraphs pursuant to the issuance of SAB No. 114. The adoption of ASU 2012-03 is not expected to have a material impact on our financial position or results of operations.

In July 2012, the FASB issued ASU 2012-02, “Intangibles – Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment” in Accounting Standards Update No. 2012-02. This update amends ASU 2011-08, Intangibles – Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment and permits an entity first to assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment test in accordance with Subtopic 350-30, Intangibles - Goodwill and Other - General Intangibles Other than Goodwill. The amendments are effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted, including for annual and interim impairment tests performed as of a date before July 27, 2012, if a public entity’s financial statements for the most recent annual or interim period have not yet been issued or, for nonpublic entities, have not yet been made available for issuance. The adoption of ASU 2012-02 has not had a material impact on our financial position or results of operations.
 
 
F-11

 
 
Change in management

Effective July 22, 2013, (a) Lena Gencarelli resigned as the Company’s sole director, and president, and (b) Stuart Carnie was appointed as the Company’s sole director and president. Effective May 12, 2014, Stuart Carnie resigned as the Company’s sole director and president and Lena Gencarelli was reappointed as the Company’s president and sole director.
 
3. 
Related Party Transactions

In the prior year, the Company issued 2,000,000 common shares at $0.001 per share to the Company’s President for cash proceeds of $2,000. The Company owed $34,446 and $34,446 to the president and the director of the Company for funds advanced as of February 28, 2014 and February 28, 2013 respectively. In addition, the Company owed $12,000 and $Nil to the former president and former director of the Company for funds advanced as of February 28, 2014, and February 28, 2013 respectively. Interest of $3,031 was imputed for the twelve months ended February 28, 2014, and $1,428 was imputed for the year ended February 28, 2013. These amounts are unsecured, bear no interest and are payable on demand.

Related party transactions are measured at the exchange amount which is the amount agreed upon by the related parties.
 
4.
Income Taxes

At February 28, 2014, the Company has estimated tax loss carry forwards for tax purpose of approximately $78,543, which expire by 2030. These amounts may be applied against future taxable income. Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements, as their realization has not been determined to be more likely than not to occur.

The actual income tax provisions differ from the expected amounts calculated by applying the statutory income tax rate to the Company’s loss before income taxes. The components of these differences are as follows:
 
     
2014
 -$-
     
2013
-$-
 
Net loss carry forward
    78,543       55,256  
Statutory tax rate
    34 %     34 %
Expected recovery of income taxes at standard rates
    26,705       18,879  
Change in valuation allowance
    (26,705 )     (18,879 )
Income tax provision
            -  
 
5.
Subsequent Event

In accordance with ASC 855, Subsequent Events, the Company has evaluated subsequent events through to the date of issuance of the audited financial statements. During this period, the Company did not have any material recognizable subsequent events.
 
 
F-12

 
 
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON FINANCIAL DISCLOSURE

None.

ITEM 9A.
CONTROLS AND PROCEDURES

DISCLOSURE CONTROLS AND PROCEDURES

Under the supervision and with the participation of our management, including our principal executive officer and the principal financial officer, we are responsible for conducting an evaluation of the effectiveness of the design and operation of our internal controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as of the end of the fiscal year covered by this report. Disclosure controls and procedures means that the material information required to be included in our Securities and Exchange Commission (“SEC”) reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms relating to our company, including any consolidating subsidiaries, and was made known to us by others within those entities, particularly during the period when this report was being prepared. Based on this evaluation, our principal executive officer and principal financial officer concluded as of the evaluation date that our disclosure controls and procedures were not effective as of February 28, 2014.

MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

As of February 28, 2014, management assessed the effectiveness of our internal control over financial reporting. The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934, as amended, as a process designed by, or under the supervision of, the Company’s Chief Executive Officer and Chief Financial Officer and effected by the Company’s Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP in the United States of America and includes those policies and procedures that:

·
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect our transactions and dispositions of our assets;

·
Provide reasonable assurance our transactions are recorded as necessary to permit preparation of our financial statements in accordance with GAAP, and that receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

·
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statement.

In evaluating the effectiveness of our internal control over financial reporting, our management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control – Integrated Framework. Based on that evaluation, completed only by Filomena Gencarelli, our President, Chief Executive Officer, Treasurer and Director, who also serves as our principal financial officer and principal accounting officer, Ms. Gencarelli concluded that, during the period covered by this report, such internal controls and procedures were not effective to detect the inappropriate application of US GAAP rules as more fully described below.
 
 
17

 

This was due to deficiencies that existed in the design or operation of our internal controls over financial reporting that adversely affected our internal controls and that may be considered to be material weaknesses.

The matters involving internal controls and procedures that our management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were: (i) lack of a functioning audit committee due to a lack of a majority of independent members and a lack of a majority of outside directors on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; (ii) inadequate segregation of duties consistent with control objectives; and (iii) ineffective controls over period end financial disclosure and reporting processes. The aforementioned material weaknesses were identified by our President, Chief Executive Officer, Secretary, Treasurer and Director, who also serves as our principal financial officer and principal accounting officer, in connection with the review of our financial statements as of February 28, 2014.

Management believes that the lack of a functioning audit committee and the lack of a majority of outside directors on our board of directors results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING.

There were no changes in the Company’s internal control over financial reporting that occurred during the fourth quarter of the year ended February 28, 2014 that have materially affected, or that are reasonably likely to materially affect, the Company’s internal control over financial reporting.

ITEM 9B.
OTHER INFORMATION.

None.
 
 
18

 
 
PART III
 
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Our executive officers and directors and their respective ages as of February 28, 2014 are as follows:

Name
 
Age
 
Positions and Offices
         
Ms. Filomena Gencarelli
 
64
 
President, Chief Executive Officer, Treasurer and Director
 
The directors named above will serve until the next annual meeting of the stockholders or until their respective resignation or removal from office. Thereafter, directors are anticipated to be elected for one-year terms at the annual stockholders’ meeting. Officers will hold their positions at the pleasure of the Board of Directors, absent any employment agreement, of which none currently exists or is contemplated.
 
Set forth below is a brief description of the background and business experience of our executive officers and directors for the past five years.

FILOMENA GENCARELLI
 
Ms. Gencarelli has served as our President, Chief Executive Officer, Secretary and sole Director from our formation on May 7, 2010 to August 15, 2013, and since May 12, 2014. Since 2001, Ms. Gencarelli has owned and operated Illura Corporate Services Limited, a company which provides corporate administrative and commercial services to various companies. As Principal of Illura, Ms. Gencarelli has been instrumental in working with local government and staff to restructure and multi-skill a number of private companies as well as providing advisory services for the structuring of mining resource companies. Ms. Gencarelli has had over 30 years experience in implementing motivational inductions and training programs, administration management and community development projects for companies. Ms. Gencarelli is a graduate of St Josephs Convent, Bunbury, Western Australia, where she earned a Leaving Certificate (tertiary entrance exam) 1965. In 1966, Ms. Gencarelli graduated from Bunbury Technical College, Western Australia, where she earned a Diploma in Administration and Business Practices in 1966.
 
Ms. Gencarelli’s background providing advisory services for the structuring of mining resource companies and what we believe to be her an excellent understanding of commercial imperatives have led to our conclusion that she should be serving as a member of our Board of Directors in light of our business and structure.

TERM OF OFFICE

All directors hold office until the next annual meeting of the stockholders of the Company and until their successors have been duly elected and qualified. The Company’s Bylaws provide that the Board of Directors will consist of no less than three members. Officers are elected by and serve at the discretion of the Board of Directors.
 
DIRECTOR INDEPENDENCE
 
Our board of directors is currently composed of one member, whom does not qualify as an independent director in accordance with the published listing requirements of the NASDAQ Global Market (the Company has no plans to list on the NASDAQ Global Market). The NASDAQ independence definition includes a series of objective tests, such as that the director is not, and has not been for at least three years, one of our employees and that neither the director, nor any of his family members has engaged in various types of business dealings with us. In addition, our board of directors has not made a subjective determination as to our director that no relationships exist which, in the opinion of our board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director, though such subjective determination is required by the NASDAQ rules. Had our board of directors made these determinations, our board of directors would have reviewed and discussed information provided by our director and us with regard to our director’s business and personal activities and relationships as they may relate to us and our management.
 
 
19

 

CERTAIN LEGAL PROCEEDINGS
 
No director, nominee for director, or executive officer of the Company has appeared as a party in any legal proceeding material to an evaluation of his ability or integrity during the past five years.

SIGNIFICANT EMPLOYEES AND CONSULTANTS
 
Other than our officers and directors, we currently have no other significant employees.

AUDIT COMMITTEE AND CONFLICTS OF INTEREST
 
Since we do not have an audit or compensation committee comprised of independent directors, the functions that would have been performed by such committees are performed by our directors. The Board of Directors has not established an audit committee and does not have an audit committee financial expert, nor has the Board of Directors established a nominating committee. The Board is of the opinion that such committees are not necessary since the Company is an early exploration stage company and has only two directors, and to date, such directors have been performing the functions of such committees. Thus, there is a potential conflict of interest in that our directors and officers have the authority to determine issues concerning management compensation, nominations, and audit issues that may affect management decisions.
 
There are no family relationships among our directors or officers. Other than as described above, we are not aware of any other conflicts of interest with any of our executive officers or directors.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires our executive officers and directors, and persons who own more than ten percent of a registered class of our equity securities, file reports of ownership and changes in ownership with the SEC. Executive officers, directors and greater-than-ten percent stockholders are required by SEC regulations to furnish us with all Section 16(a) forms they file. Based on our review of filings made on the SEC website, and the fact of us not receiving certain forms or written representations from certain reporting persons that they have complied with the relevant filing requirements, we believe that, during the year ended February 28, 2014, our executive officers, directors and greater-than-ten percent stockholders complied have with all Section 16(a) filing requirements.

CODE OF ETHICS

The Company has not adopted a code of ethics that applies to its principal executive officers, principal financial officer, principal accounting officer or controller, or persons performing similar functions. The Company has not adopted a code of ethics because it has only commenced operations.
 
 
20

 

ITEM 11.
EXECUTIVE COMPENSATION

The following tables set forth certain information about compensation paid, earned or accrued for services by our Chief Executive Officer and all other executive officers (collectively, the “Named Executive Officers”) in the fiscal years ended February 28, 2014 and February 28, 2013:

SUMMARY COMPENSATION TABLE
 
The table below summarizes all compensation awarded to, earned by, or paid to our officers for all services rendered in all capacities to us as of the year ended February 28, 2014 and February 28, 2013.

                               
Non-Equity
                   
                               
Incentive
   
Nonqualified
             
Name and
                 
Stock
   
Option
   
Plan
   
Deferred
   
All Other
       
Principal
Position
 
Year
 
Salary
($)
   
Bonus
($)
   
Awards
($)
   
Awards
($)
   
Compensation
($)
   
Compensation
($)
   
Compensation
($)
   
Total
($)
 
                                                                     
Filomena
 
2014
   
0
     
0
     
0
     
0
     
0
     
0
     
0
     
0
 
Gencarelli (1)  
2013
   
0
     
0
     
0
     
0
     
0
     
0
     
0
     
0
 
                                                                     
Stuart Carnie (2)
 
2014
   
0
     
0
     
0
     
0
     
0
     
0
     
0
     
0
 
   
2013
   
0
     
0
     
0
     
0
     
0
     
0
     
0
     
0
 

(1) President and Chief Executive Officer, Secretary, Treasurer and Director from May 7, 2010 until August 15, 2013, and since May 12, 2014.

(2) President, Secretary, Treasurer and Director from August 15, 2013 until May 12, 2014.

None of our directors have received monetary compensation since our inception to the date of this Annual Report on Form 10-K. We currently do not pay any compensation to our directors serving on our board of directors.

STOCK OPTION GRANTS
 
We have not granted any stock options to the executive officers since our inception. Upon the further development of our business, we will likely grant options to directors and officers consistent with industry standards for junior mineral exploration companies.
 
EMPLOYMENT AGREEMENTS
 
The Company is not a party to any employment agreement and has no compensation agreement with its sole officer and director, Filomena Gencarelli.
 
 
21

 
 
DIRECTOR COMPENSATION
 
The following table sets forth director compensation as of February 28, 2014:

   
Fees
               
Non-Equity
   
Nonqualified
             
   
Earned
               
Incentive
   
Deferred
             
   
Paid in
   
Stock
   
Option
   
Plan
   
Compensation
   
All Other
       
Name
 
Cash($)
   
Awards($)
   
Awards($)
   
Compensation($)
   
Earnings($)
   
Compensation($)
   
Total($)
 
                                                         
Filomena Gencarelli
   
0
     
0
     
0
     
0
     
0
     
0
     
0
 
                                                         
Stuart Carnie
   
0
     
0
     
0
     
0
     
0
     
0
     
0
 

ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table lists, as of February 28, 2014, the number of shares of common stock of our Company that are beneficially owned by (i) each person or entity known to our Company to be the beneficial owner of more than 5% of the outstanding common stock; (ii) each officer and director of our Company; and (iii) all officers and directors as a group. Information relating to beneficial ownership of common stock by our principal shareholders and management is based upon information furnished by each person using “beneficial ownership” concepts under the rules of the Securities and Exchange Commission. Under these rules, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or direct the voting of the security, or investment power, which includes the power to vote or direct the voting of the security. The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days. Under the Securities and Exchange Commission rules, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which he or she may not have any pecuniary beneficial interest. Except as noted below, each person has sole voting and investment power.

The percentages below are calculated based on 3,160,000 shares of our common stock issued and outstanding as of February 28, 2014. We do not have any outstanding warrant, options or other securities exercisable for or convertible into shares of our common stock.

   
Name and Address
 
Number of Shares Owned
    Percent of Class  
Title of Class
 
of Beneficial Owner (1)
 
Beneficially
   
Owned
 
                 
Common Stock:
 
Ms. Filomena Gencarelli, President, President, Chief Executive Officer, Treasurer and Director
   
2,000,000
     
63.2
%
                     
All executive officers and directors as a group (1 person)
       
2,000,000
     
63.2
%
 
(1) Unless otherwise noted, the address of each person or entity listed is, c/o Penola, Inc., 492 Gilbert Road, West Preston, Victoria 3072, Australia.

ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

None.

ITEM 14.
PRINCIPAL ACCOUNTING FEES AND SERVICES

For the year ended February 28, 2014 the total fees charged to the company for audit services, including quarterly reviews were $5,400 for audit-related services were $0, and for tax services and other services were $0 and $0, respectively. For the year ended February 28, 2013 the total fees charged to the company for audit services, including quarterly reviews were $5,400, for audit-related services were $0, and for tax services and other services were $0 and $0, respectively.
 
 
 
22

 
 
PART IV

ITEM 15.
EXHIBITS AND FINANCIAL STATEMENT SCHEDULE

(a) The following Exhibits, as required by Item 601 of Regulation SK, are attached or incorporated by reference, as stated below.

Number
 
Description
     
3.1
 
Articles of Incorporation*
3.2
 
Bylaws*
31.1
 
Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2
 
Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1
 
Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

* Incorporated by reference to the Registrant’s Form S-1 (File No. 333-175529), filed with the Commission on July 13, 2011.
 
 
23

 
 
SIGNATURES
 
In accordance with Section 13 or 15(d) of the Securities Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 
PENOLA, INC.
 
 
(Name of Registrant)
 
       
Date: May 29, 2014
By:
/s/ Filomena Gencarelli
 
   
Filomena Gencarelli
 
   
President, Chief Executive Officer (principal executive officer, principal financial officer and principal accounting officer)
 
 
 
24

 
 
EXHIBIT INDEX

Number
 
Description
     
3.1
 
Articles of Incorporation*
3.2
 
Bylaws*
31.1
 
Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2
 
Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1
 
Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
* Incorporated by reference to the Registrant’s Form S-1 (file no. 333-175529), filed with the Commission on July 13, 2011.
 
 
25

EX-31.1 2 pnla_ex311.htm CERTIFICATION pnla_ex311.htm
EXHIBIT 31.1
 
SECTION 302 CERTIFICATION
OF PRINCIPAL EXECUTIVE OFFICER OF PENOLA, INC.
 
I, Filomena Gencarelli, certify that:
 
1.
I have reviewed this report on Form 10-K of Penola, 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 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.
 
 
Date: May 29, 2014
By:
/s/ Filomena Gencarelli
 
   
Filomena Gencarelli
 
   
President and Chief Executive Officer, Treasurer
(and principal financial officer and principal accounting officer)
 
EX-31.2 3 pnla_ex312.htm CERTIFICATION pnla_ex312.htm
EXHIBIT 31.2
 
SECTION 302 CERTIFICATION
OF PRINCIPAL FINANCIAL OFFICER OF PENOLA, INC.

I, Filomena Gencarelli, certify that:

1.
I have reviewed this report on Form 10-K of Penola, 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 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.
 
 
Date: May 29, 2014
By:
/s/ Filomena Gencarelli
 
   
Filomena Gencarelli
 
   
President and Chief Executive Officer, Treasurer
(and principal financial officer and principal accounting officer)
 
EX-32.1 4 pnla_ex321.htm CERTIFICATION pnla_ex321.htm
EXHIBIT 32.1
 
SECTION 906 CERTIFICATION OF
 PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER
OF PENOLA, INC.

In connection with the accompanying Annual Report on Form 10-K of Penola, Inc. for the year ended February 28, 2014, the undersigned, Filomena Gencarelli, President and Chief Executive Officer of Penola, Inc., does hereby certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) such Annual Report on Form 10-K for the year ended February 28, 2014 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2) the information contained in such Annual Report on Form 10-K for the year ended February 28, 2014 fairly presents, in all material respects, the financial condition and results of operations of Penola, Inc.
 
 
Date: May 29, 2014 By:
/s/ Filomena Gencarelli
 
   
Filomena Gencarelli
 
   
President and Chief Executive Officer, Secretary and Treasurer (and principal financial officer and principal accounting officer)
 
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RELATED PARTY TRANSACTIONS
12 Months Ended
Feb. 28, 2014
Related Party Transactions  
Note 3. RELATED PARTY TRANSACTIONS

In the prior year, the Company issued 2,000,000 common shares at $0.001 per share to the Company’s President for cash proceeds of $2,000. The Company owed $34,446 and $34,446 to the president and the director of the Company for funds advanced as of February 28, 2014 and February 28, 2013 respectively. In addition, the Company owed $12,000 and $Nil to the former president and former director of the Company for funds advanced as of February 28, 2014, and February 28, 2013 respectively. Interest of $3,031 was imputed for the twelve months ended February 28, 2014, and $1,428 was imputed for the year ended February 28, 2013. These amounts are unsecured, bear no interest and are payable on demand.

 

Related party transactions are measured at the exchange amount which is the amount agreed upon by the related parties.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
12 Months Ended
Feb. 28, 2014
Summary Of Significant Accounting Policies  
Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

 

These financial statements are presented in United States dollars and have been prepared in accordance with United States generally accepted accounting principles.

 

Cash and cash equivalents

 

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. The Company had no cash equivalents at February 28, 2014 or February 28, 2013, respectively.

 

Use of estimates and assumptions

 

The preparation of financial statements in conformity with generally accepted accounting principles 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. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are readily apparent from other sources. The actual results experienced by the Company may differ materially from the Company’s estimates. To the extent there are material differences, future results may be affected. Estimates used in preparing these financial statements include the carrying value of the equipment, deferred income tax amounts, rates and timing of the reversal of income tax differences.

 

Mineral property costs

 

The Company has been in the exploration stage since its formation on May 7, 2010 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 acquisition and exploration costs are charged to operations 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.

 

Basic and diluted net income (loss) per common share

 

The Company computes net income (loss) per share in accordance with Financial Accounting Standards Codification (“ASC”) 260 “Earnings Per Share” which requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing income (loss) available to common stockholders (numerator) by the weighted average number of common shares outstanding (denominator) for the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period including stock options, using the treasury stock method, and convertible preferred stock, using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential common shares if their effect is anti-dilutive. Because the Company does not have any potentially dilutive securities, diluted loss per share is equal to the basic loss per share.

 

Comprehensive loss

 

For all periods presented, the Company has no items that represent a comprehensive loss and, therefore, has not included a statement of comprehensive loss in these financial statements.

 

Financial instruments

 

The fair value of the Company’s financial instruments consisting of cash, accounts payable, and amounts due to related party approximate their carrying values due to the immediate or short-term maturity of these financial instruments. The Company operates in Australia and therefore is exposed to foreign exchange risk. It is management's opinion that the Company is not exposed to significant interest or credit risks arising from these financial instruments.

 

Fair value of financial instruments

 

The Company adopted ASC 820 “Fair Value Measurements”. ASC 820 defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures. The three levels are defined as follows:

 

Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

 

Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly for substantially the full term of the financial instrument.

 

Level 3 inputs to the valuation methodology are unobservable and significant to the fair measurement.

 

The carrying amounts reported in the balance sheets for cash and cash equivalents, and current liabilities each qualify as financial instruments and are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest.

 

The following table presents the Company’s assets and liabilities within the fair value hierarchy utilized to measure fair value on a recurring basis as of February 28, 2014 and February 28, 2013:

 

    Level 1     Level 2     Level 3  
February 28, 2014     -       -       -  
February 28, 2013     -       -       -  

 

Income taxes

 

Deferred income taxes are provided for tax effects of temporary differences between the tax basis of asset and liabilities and their reported amounts in the financial statements. The Company uses the liability method to account for income taxes, which requires deferred taxes to be recorded at the statutory rate expected to being in effect when the taxes are paid. Valuation allowances are provided for a deferred tax asset when it is more likely than not that such asset will not be realized.

 

Management evaluates tax positions taken or expected to be taken in a tax return. The evaluation of a tax position includes a determination of whether a tax position should be recognized in the financial statements, and such a position should only be recognized if the Company determines that it is more likely than not that the tax position will be sustained upon examination by the tax authorities, based upon the technical merits of the position. For those tax positions that should be recognized, the measurement of a tax position is determined as being the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement.

 

Stock-based compensation

 

The Company has not adopted a stock option plan and therefore has not granted any stock options. Accordingly, no stock-based compensation has been recorded to date.

 

Foreign currency translation

 

Foreign denominated monetary assets and liabilities are translated to their United States dollar equivalents using foreign exchange rates which prevailed at the balance sheet date. Expenses are translated at average rates of exchange during the period. Related translation adjustments are reported as a separate component of stockholders' equity, whereas gains or losses resulting from foreign currency transactions are included in results of operations.

 

Exploration stage company

 

The Company complies with ASC 915 and Securities and Exchange Commission Act Guide 7 for its characterization of the Company as an Exploration stage enterprise.

 

Recent accounting pronouncements

 

In July 2013, FASB issued ASU No. 2013-11, "Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists." The provisions of ASU No. 2013-11 require an entity to present an unrecognized tax benefit, or portion thereof, in the statement of financial position as a reduction to a deferred tax asset for a net operating loss carryforward or a tax credit carryforward, with certain exceptions related to availability. ASU No. 2013-11 is effective for interim and annual reporting periods beginning after December 15, 2013. The adoption of ASU No. 2013-11 is not expected to have a material impact on the Company's Consolidated Financial Statements.

 

In February 2013, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income, to improve the transparency of reporting these reclassifications. Other comprehensive income includes gains and losses that are initially excluded from net income for an accounting period. Those gains and losses are later reclassified out of accumulated other comprehensive income into net income. The amendments in the ASU do not change the current requirements for reporting net income or other comprehensive income in financial statements. All of the information that this ASU requires already is required to be disclosed elsewhere in the financial statements under U.S. GAAP. The new amendments will require an organization to:

 

  -   Present (either on the face of the statement where net income is presented or in the notes) the effects on the line items of net income of significant amounts reclassified out of accumulated other comprehensive income - but only if the item reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period; and
  -   Cross-reference to other disclosures currently required under U.S. GAAP for other reclassification items (that are not required under U.S. GAAP) to be reclassified directly to net income in their entirety in the same reporting period. This would be the case when a portion of the amount reclassified out of accumulated other comprehensive income is initially transferred to a balance sheet account (e.g., inventory for pension-related amounts) instead of directly to income or expense.

 

The amendments apply to all public and private companies that report items of other comprehensive income. Public companies are required to comply with these amendments for all reporting periods (interim and annual). The amendments are effective for reporting periods beginning after December 15, 2012, for public companies. Early adoption is permitted. The adoption of ASU No. 2013-02 is not expected to have a material impact on our financial position or results of operations.

 

In January 2013, the FASB issued ASU No. 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities, which clarifies which instruments and transactions are subject to the offsetting disclosure requirements originally established by ASU 2011-11. The new ASU addresses preparer concerns that the scope of the disclosure requirements under ASU 2011-11 was overly broad and imposed unintended costs that were not commensurate with estimated benefits to financial statement users. In choosing to narrow the scope of the offsetting disclosures, the Board determined that it could make them more operable and cost effective for preparers while still giving financial statement users sufficient information to analyze the most significant presentation differences between financial statements prepared in accordance with U.S. GAAP and those prepared under IFRSs. Like ASU 2011-11, the amendments in this update will be effective for fiscal periods beginning on, or after January 1, 2013. The adoption of ASU 2013-01 is not expected to have a material impact on our financial position or results of operations.

 

In October 2012, the FASB issued Accounting Standards Update ASU 2012-04, “Technical Corrections and Improvements” in Accounting Standards Update No. 2012-04. The amendments in this update cover a wide range of Topics in the Accounting Standards Codification. These amendments include technical corrections and improvements to the Accounting Standards Codification and conforming amendments related to fair value measurements. The amendments in this update will be effective for fiscal periods beginning after December 15, 2012. The adoption of ASU 2012-04 is not expected to have a material impact on our financial position or results of operations.

 

In August 2012, the FASB issued ASU 2012-03, “Technical Amendments and Corrections to SEC Sections: Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin (SAB) No. 114, Technical Amendments Pursuant to SEC Release No. 33-9250, and Corrections Related to FASB Accounting Standards Update 2010-22 (SEC Update)” in Accounting Standards Update No. 2012-03. This update amends various SEC paragraphs pursuant to the issuance of SAB No. 114. The adoption of ASU 2012-03 is not expected to have a material impact on our financial position or results of operations.

 

In July 2012, the FASB issued ASU 2012-02, “Intangibles – Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment” in Accounting Standards Update No. 2012-02. This update amends ASU 2011-08, Intangibles – Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment and permits an entity first to assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment test in accordance with Subtopic 350-30, Intangibles - Goodwill and Other - General Intangibles Other than Goodwill. The amendments are effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted, including for annual and interim impairment tests performed as of a date before July 27, 2012, if a public entity’s financial statements for the most recent annual or interim period have not yet been issued or, for nonpublic entities, have not yet been made available for issuance. The adoption of ASU 2012-02 has not had a material impact on our financial position or results of operations.

 

Change in management

 

Effective July 22, 2013, (a) Lena Gencarelli resigned as the Company’s sole director, and president, and (b) Stuart Carnie was appointed as the Company’s sole director and president. Effective May 12, 2014, Stuart Carnie resigned as the Company’s sole director and president and Lena Gencarelli was reappointed as the Company’s president and sole director.

XML 19 R2.htm IDEA: XBRL DOCUMENT v2.4.0.8
BALANCE SHEETS (USD $)
Feb. 28, 2014
Feb. 28, 2013
Current    
Cash $ 1,336 $ 10,740
TOTAL ASSETS 1,336 10,740
Current    
Accounts payable and accrued liabilities 997 625
Due to related party 46,265 34,446
TOTAL LIABILITIES 47,262 35,071
STOCKHOLDERS' DEFICIT    
Authorized: 75,000,000 common shares With a par value of $0.001 Issued and Outstanding: 3,160,000 common shares (February 28, 2013 - 3,160,000) 3,160 3,160
Additional paid up capital 32,488 29,457
Deficit accumulated during the exploration stage (81,574) (56,948)
Total stockholders' deficit (45,926) (24,331)
Total liabilities and stockholders' deficit $ 1,336 $ 10,740
XML 20 R6.htm IDEA: XBRL DOCUMENT v2.4.0.8
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT) (USD $)
Common Stock
Additional Paid-In Capital
Accumulated Deficit
Total
Beginning Balance, Amount at May. 06, 2010            
Beginning Balance, Shares at May. 06, 2010         
Common stock issued for cash at $0.001 per share, Amount 2,000       2,000
Common stock issued for cash at $0.001 per share, Shares 2,000,000      
Common stock issued for cash at $0.025 per share - July 16, 2009 to February 28, 2011, Amount 1,160 27,840    29,000
Common stock issued for cash at $0.025 per share - July 16, 2009 to February 28, 2011, Shares 1,160,000      
Net loss       (9,782) (9,782)
Ending Balance, Amount at Feb. 28, 2011 3,160 27,840 (9,782) 21,218
Ending Balance, Shares at Feb. 28, 2011 3,160,000      
Imputed interest    189    189
Net loss       (27,892) (27,892)
Ending Balance, Amount at Feb. 29, 2012 3,160 28,029 (37,674) (6,485)
Ending Balance, Shares at Feb. 29, 2012 3,160,000      
Imputed interest    1,428    1,428
Net loss       (19,274) (19,274)
Ending Balance, Amount at Feb. 28, 2013 3,160 29,457 (56,948) (24,331)
Ending Balance, Shares at Feb. 28, 2013 3,160,000      
Imputed interest    3,031    3,031
Net loss       (24,626) (24,626)
Ending Balance, Amount at Feb. 28, 2014 $ 3,160 $ 32,488 $ (81,574) $ (45,926)
Ending Balance, Shares at Feb. 28, 2014 3,160,000      
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NATURE OF OPERATIONS AND BASIS OF PRESENTATION
12 Months Ended
Feb. 28, 2014
Nature Of Operations And Basis Of Presentation  
Note 1. NATURE OF OPERATIONS AND BASIS OF PRESENTATION

Penola Inc. (the “Company”) was incorporated in the State of Nevada on May 7, 2010, and its year-end is February 28. The Company is an exploration stage company and is currently seeking for new business opportunities.

 

Going Concern

These financial statements have been prepared on a going concern basis. The Company has incurred losses since inception resulting in an accumulated deficit of $81,574 at February 28, 2014 and further losses are anticipated in the development of its business raising substantial doubt about the Company’s ability to continue as a going concern. Its ability to continue as a going concern is dependent upon the ability of the Company to generate profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due.

 

Management has plans to seek additional capital through a private placement of its common stock or further director loans as needed. These financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts of and classification of liabilities that might be necessary in the event the Company cannot continue.

XML 23 R3.htm IDEA: XBRL DOCUMENT v2.4.0.8
BALANCE SHEETS (Parenthetical) (USD $)
Feb. 28, 2014
Feb. 28, 2013
STOCKHOLDERS' EQUITY (DEFICIT)    
Common stock, par value $ 0.001 $ 0.001
Common stock, authorized 75,000,000 75,000,000
Common stock, issued 3,160,000 3,160,000
Common stock, outstanding 3,160,000 3,160,000
XML 24 R17.htm IDEA: XBRL DOCUMENT v2.4.0.8
RELATED PARTY TRANSACTIONS (Details Narrative) (USD $)
12 Months Ended 46 Months Ended
Feb. 28, 2014
Feb. 28, 2013
Feb. 28, 2014
Common share Issued to the Company former President and Director for cash 2,000,000 2,000,000 2,000,000
Common Share Issued Per Share $ 0.001 $ 0.001 $ 0.001
Cash proceeds $ 2,000 $ 2,000 $ 2,000
Interest imputed 3,031 1,428 4,648
President and Director [Member]
     
Funds advanced from related party 34,446 34,446 34,446
Former President and Director [Member]
     
Funds advanced from related party $ 12,000    $ 12,000
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Document and Entity Information (USD $)
12 Months Ended
Feb. 28, 2014
May 28, 2014
May 31, 2013
Document And Entity Information      
Entity Registrant Name Penola Inc.    
Entity Central Index Key 0001524774    
Document Type 10-K    
Document Period End Date Feb. 28, 2014    
Amendment Flag false    
Current Fiscal Year End Date --02-28    
Document Fiscal Year Focus 2014    
Document Fiscal Period Focus FY    
Entity Well-known Seasoned Issuer No    
Entity Voluntary Filer No    
Entity's Current Reporting Status Yes    
Entity Filer Category Smaller Reporting Company    
Entity Public Float     $ 27,840
Entity Common Stock, Shares Outstanding   3,160,000  
XML 27 R18.htm IDEA: XBRL DOCUMENT v2.4.0.8
INCOME TAXES (Details) (USD $)
Feb. 28, 2014
Feb. 28, 2013
Income Taxes Details    
Net loss carry forward $ 78,543 $ 55,256
Statutory tax rate 34.00% 34.00%
Expected recovery of income taxes at standard rates 26,705 18,879
Change in valuation allowance (26,705) (18,879)
Income tax provision      
XML 28 R4.htm IDEA: XBRL DOCUMENT v2.4.0.8
STATEMENTS OF OPERATIONS (USD $)
12 Months Ended 46 Months Ended
Feb. 28, 2014
Feb. 28, 2013
Feb. 28, 2014
Expenses      
Office and general $ 10,143 $ 12,446 $ 25,150
Professional fees 11,452 5,400 44,073
Mining costs       7,703
Total expenses 21,595 17,846 76,926
Interest expense (3,031) (1,428) (4,648)
NET LOSS $ (24,626) $ (19,274) $ (81,574)
Basic and diluted loss per share $ (0.01) $ (0.01)  
Weighted average number of common shares outstanding 3,160,000 3,160,000  
XML 29 R12.htm IDEA: XBRL DOCUMENT v2.4.0.8
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)
12 Months Ended
Feb. 28, 2014
Summary Of Significant Accounting Policies Policies  
Basis of presentation

These financial statements are presented in United States dollars and have been prepared in accordance with United States generally accepted accounting principles.

Cash and cash equivalents

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. The Company had no cash equivalents at February 28, 2014 or February 28, 2013, respectively.

 

Use of estimates and assumptions

The preparation of financial statements in conformity with generally accepted accounting principles 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. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are readily apparent from other sources. The actual results experienced by the Company may differ materially from the Company’s estimates. To the extent there are material differences, future results may be affected. Estimates used in preparing these financial statements include the carrying value of the equipment, deferred income tax amounts, rates and timing of the reversal of income tax differences.

Mineral property costs

The Company has been in the exploration stage since its formation on May 7, 2010 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 acquisition and exploration costs are charged to operations 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.

Basic and diluted net income (loss) per common share

The Company computes net income (loss) per share in accordance with Financial Accounting Standards Codification (“ASC”) 260 “Earnings Per Share” which requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing income (loss) available to common stockholders (numerator) by the weighted average number of common shares outstanding (denominator) for the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period including stock options, using the treasury stock method, and convertible preferred stock, using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential common shares if their effect is anti-dilutive. Because the Company does not have any potentially dilutive securities, diluted loss per share is equal to the basic loss per share.

Comprehensive loss

For all periods presented, the Company has no items that represent a comprehensive loss and, therefore, has not included a statement of comprehensive loss in these financial statements.

 

Financial instruments

The fair value of the Company’s financial instruments consisting of cash, accounts payable, and amounts due to related party approximate their carrying values due to the immediate or short-term maturity of these financial instruments. The Company operates in Australia and therefore is exposed to foreign exchange risk. It is management's opinion that the Company is not exposed to significant interest or credit risks arising from these financial instruments.

Fair value of financial instruments

The Company adopted ASC 820 “Fair Value Measurements”. ASC 820 defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures. The three levels are defined as follows:

 

Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

 

Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly for substantially the full term of the financial instrument.

 

Level 3 inputs to the valuation methodology are unobservable and significant to the fair measurement.

 

The carrying amounts reported in the balance sheets for cash and cash equivalents, and current liabilities each qualify as financial instruments and are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest.

 

The following table presents the Company’s assets and liabilities within the fair value hierarchy utilized to measure fair value on a recurring basis as of February 28, 2014 and February 28, 2013:

 

    Level 1     Level 2     Level 3  
February 28, 2014     -       -       -  
February 28, 2013     -       -       -  
Income taxes

Deferred income taxes are provided for tax effects of temporary differences between the tax basis of asset and liabilities and their reported amounts in the financial statements. The Company uses the liability method to account for income taxes, which requires deferred taxes to be recorded at the statutory rate expected to being in effect when the taxes are paid. Valuation allowances are provided for a deferred tax asset when it is more likely than not that such asset will not be realized.

 

Management evaluates tax positions taken or expected to be taken in a tax return. The evaluation of a tax position includes a determination of whether a tax position should be recognized in the financial statements, and such a position should only be recognized if the Company determines that it is more likely than not that the tax position will be sustained upon examination by the tax authorities, based upon the technical merits of the position. For those tax positions that should be recognized, the measurement of a tax position is determined as being the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement.

 

Stock-based compensation

The Company has not adopted a stock option plan and therefore has not granted any stock options. Accordingly, no stock-based compensation has been recorded to date.

Foreign currency translation

Foreign denominated monetary assets and liabilities are translated to their United States dollar equivalents using foreign exchange rates which prevailed at the balance sheet date. Expenses are translated at average rates of exchange during the period. Related translation adjustments are reported as a separate component of stockholders' equity, whereas gains or losses resulting from foreign currency transactions are included in results of operations.

 

Exploration stage company

The Company complies with ASC 915 and Securities and Exchange Commission Act Guide 7 for its characterization of the Company as an Exploration stage enterprise.

 

Recent Accounting pronouncements

In July 2013, FASB issued ASU No. 2013-11, "Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists." The provisions of ASU No. 2013-11 require an entity to present an unrecognized tax benefit, or portion thereof, in the statement of financial position as a reduction to a deferred tax asset for a net operating loss carryforward or a tax credit carryforward, with certain exceptions related to availability. ASU No. 2013-11 is effective for interim and annual reporting periods beginning after December 15, 2013. The adoption of ASU No. 2013-11 is not expected to have a material impact on the Company's Consolidated Financial Statements.

 

In February 2013, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income, to improve the transparency of reporting these reclassifications. Other comprehensive income includes gains and losses that are initially excluded from net income for an accounting period. Those gains and losses are later reclassified out of accumulated other comprehensive income into net income. The amendments in the ASU do not change the current requirements for reporting net income or other comprehensive income in financial statements. All of the information that this ASU requires already is required to be disclosed elsewhere in the financial statements under U.S. GAAP. The new amendments will require an organization to:

 

  -   Present (either on the face of the statement where net income is presented or in the notes) the effects on the line items of net income of significant amounts reclassified out of accumulated other comprehensive income - but only if the item reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period; and
  -   Cross-reference to other disclosures currently required under U.S. GAAP for other reclassification items (that are not required under U.S. GAAP) to be reclassified directly to net income in their entirety in the same reporting period. This would be the case when a portion of the amount reclassified out of accumulated other comprehensive income is initially transferred to a balance sheet account (e.g., inventory for pension-related amounts) instead of directly to income or expense.

 

The amendments apply to all public and private companies that report items of other comprehensive income. Public companies are required to comply with these amendments for all reporting periods (interim and annual). The amendments are effective for reporting periods beginning after December 15, 2012, for public companies. Early adoption is permitted. The adoption of ASU No. 2013-02 is not expected to have a material impact on our financial position or results of operations.

 

In January 2013, the FASB issued ASU No. 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities, which clarifies which instruments and transactions are subject to the offsetting disclosure requirements originally established by ASU 2011-11. The new ASU addresses preparer concerns that the scope of the disclosure requirements under ASU 2011-11 was overly broad and imposed unintended costs that were not commensurate with estimated benefits to financial statement users. In choosing to narrow the scope of the offsetting disclosures, the Board determined that it could make them more operable and cost effective for preparers while still giving financial statement users sufficient information to analyze the most significant presentation differences between financial statements prepared in accordance with U.S. GAAP and those prepared under IFRSs. Like ASU 2011-11, the amendments in this update will be effective for fiscal periods beginning on, or after January 1, 2013. The adoption of ASU 2013-01 is not expected to have a material impact on our financial position or results of operations.

 

In October 2012, the FASB issued Accounting Standards Update ASU 2012-04, “Technical Corrections and Improvements” in Accounting Standards Update No. 2012-04. The amendments in this update cover a wide range of Topics in the Accounting Standards Codification. These amendments include technical corrections and improvements to the Accounting Standards Codification and conforming amendments related to fair value measurements. The amendments in this update will be effective for fiscal periods beginning after December 15, 2012. The adoption of ASU 2012-04 is not expected to have a material impact on our financial position or results of operations.

 

In August 2012, the FASB issued ASU 2012-03, “Technical Amendments and Corrections to SEC Sections: Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin (SAB) No. 114, Technical Amendments Pursuant to SEC Release No. 33-9250, and Corrections Related to FASB Accounting Standards Update 2010-22 (SEC Update)” in Accounting Standards Update No. 2012-03. This update amends various SEC paragraphs pursuant to the issuance of SAB No. 114. The adoption of ASU 2012-03 is not expected to have a material impact on our financial position or results of operations.

 

In July 2012, the FASB issued ASU 2012-02, “Intangibles – Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment” in Accounting Standards Update No. 2012-02. This update amends ASU 2011-08, Intangibles – Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment and permits an entity first to assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment test in accordance with Subtopic 350-30, Intangibles - Goodwill and Other - General Intangibles Other than Goodwill. The amendments are effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted, including for annual and interim impairment tests performed as of a date before July 27, 2012, if a public entity’s financial statements for the most recent annual or interim period have not yet been issued or, for nonpublic entities, have not yet been made available for issuance. The adoption of ASU 2012-02 has not had a material impact on our financial position or results of operations.

Change in management

Effective July 22, 2013, (a) Lena Gencarelli resigned as the Company’s sole director, and president, and (b) Stuart Carnie was appointed as the Company’s sole director and president. Effective May 12, 2014, Stuart Carnie resigned as the Company’s sole director and president and Lena Gencarelli was reappointed as the Company’s president and sole director.

 

XML 30 R11.htm IDEA: XBRL DOCUMENT v2.4.0.8
SUBSEQUENT EVENT
12 Months Ended
Feb. 28, 2014
Subsequent Event  
Note 5. SUBSEQUENT EVENT

In accordance with ASC 855, Subsequent Events, the Company has evaluated subsequent events through to the date of issuance of the audited interim financial statements. During this period, the Company did not have any material recognizable subsequent events

XML 31 R19.htm IDEA: XBRL DOCUMENT v2.4.0.8
INCOME TAXES (Details Narrative) (USD $)
12 Months Ended
Feb. 28, 2014
Feb. 28, 2013
Income Taxes Details Narrative    
Estimated tax loss carry forwards amount $ 78,543 $ 55,256
Estimated tax loss carry forwards Expiry Period 2030  
XML 32 R15.htm IDEA: XBRL DOCUMENT v2.4.0.8
NATURE OF OPERATIONS AND BASIS OF PRESENTATION (Details Narrative) (USD $)
12 Months Ended
Feb. 28, 2014
Nature Of Operations And Basis Of Presentation Details Narrative  
Company incorporated date May 07, 2010
Company incorporated state State of Nevada
Accumulated deficit $ 81,574
XML 33 R13.htm IDEA: XBRL DOCUMENT v2.4.0.8
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)
12 Months Ended
Feb. 28, 2014
Summary Of Significant Accounting Policies Tables  
Schedule of assets and liabilities

The following table presents the Company’s assets and liabilities within the fair value hierarchy utilized to measure fair value on a recurring basis as of February 28, 2014 and February 28, 2013:

 

    Level 1     Level 2     Level 3  
February 28, 2014     -       -       -  
February 28, 2013     -       -       -  
XML 34 R14.htm IDEA: XBRL DOCUMENT v2.4.0.8
INCOME TAXES (Tables)
12 Months Ended
Feb. 28, 2014
Income Taxes Tables  
Summary of statutory income tax rate

The actual income tax provisions differ from the expected amounts calculated by applying the statutory income tax rate to the Company’s loss before income taxes. The components of these differences are as follows:

 

     

2014

-$-

     

2013

-$-

 
Net loss carry forward     78,543       55,256  
Statutory tax rate     34 %     34 %
Expected recovery of income taxes at standard rates     26,705       18,879  
Change in valuation allowance     (26,705 )     (18,879 )
Income tax provision             -  
XML 35 R16.htm IDEA: XBRL DOCUMENT v2.4.0.8
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $)
Feb. 28, 2014
Feb. 28, 2013
Level 1 [Member]
   
Fair value of assets and liabilities on reccuring basis      
Level 2 [Member]
   
Fair value of assets and liabilities on reccuring basis      
Level 3 [Member]
   
Fair value of assets and liabilities on reccuring basis      
XML 36 R5.htm IDEA: XBRL DOCUMENT v2.4.0.8
STATEMENTS OF CASH FLOWS (USD $)
12 Months Ended 46 Months Ended
Feb. 28, 2014
Feb. 28, 2013
Feb. 28, 2014
Cash Flows From Operating Activities      
Net loss $ (24,626) $ (19,274) $ (81,574)
Impairment of mining costs      7,703
Imputed interest 3,031 1,428 4,648
Net change in non-cash working capital balances:      
Accounts payable 371 625 997
Net cash used in operations (21,224) (17,221) (68,226)
Cash Flows from Investing Activities      
Mineral property option       (7,703)
Net cash used in investing activities       (7,703)
Cash Flows From Financing Activities      
Capital stock issued       31,000
Due to related party 11,820 27,277 46,265
Net cash provided by financing activities 11,820 27,277 77,265
Increase (Decrease) In Cash (9,404) 10,056 1,336
Cash, beginning 10,740 684   
Cash, ending 1,336 10,740 1,336
Supplementary Cash Flow Information:      
Cash Paid for Interest         
Cash paid for Income taxes         
XML 37 R10.htm IDEA: XBRL DOCUMENT v2.4.0.8
INCOME TAXES
12 Months Ended
Feb. 28, 2014
Income Taxes  
Note 4. INCOME TAXES

At February 28, 2014, the Company has estimated tax loss carry forwards for tax purpose of approximately $78,543, which expire by 2030. These amounts may be applied against future taxable income. Future tax benefits which may arise as a result of these losses have not been recognized in these financial statements, as their realization has not been determined to be more likely than not to occur.

 

The actual income tax provisions differ from the expected amounts calculated by applying the statutory income tax rate to the Company’s loss before income taxes. The components of these differences are as follows:

 

     

2014

-$-

     

2013

-$-

 
Net loss carry forward     78,543       55,256  
Statutory tax rate     34 %     34 %
Expected recovery of income taxes at standard rates     26,705       18,879  
Change in valuation allowance     (26,705 )     (18,879 )
Income tax provision     -       -  
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