Spotlight Capital Holdings, Inc - Quarter Report: 2008 March (Form 10-Q)

pangea10q033108.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2008

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from _______ to _______

Commission File #0-30503

PANGEA PETROLEUM CORPORATION

(Exact name of small business issuer as specified in its charter)

COLORADO	76-0635938
(State or other jurisdiction of	(IRS Employer Identification No.)
incorporation or organization)

9801 Westheimer, Suite 302, Houston, Texas 77042

(Address of principal executive offices)

(713) 706-6350

(Issuer's telephone number)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 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 12b2 of the Exchange Act

	Large accelerated filer ( )	Accelerated filer ( )

	Non-accelerated filer ( ) (Do not check if a smaller reporting company)	Smaller reporting company (X)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [ ] No [X]

State the number of shares outstanding of each of the issuer’s classes of common stock as of the last practicable date:

324,279,544 Shares as of $0.001 par value Common Stock outstanding as of May 20, 2008

Transitional Small Business Disclosure Format (check one): Yes [ ] No [ X]

PANGEA PETROLEUM CORPORATION

FORM 10-Q

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1 - Financial Statements	4

Item 2 - Management's Discussion and Analysis or Plan of Operations	5

Item 3 - Quantitative and Qualitative Disclosures about Market Risks	7

Item 4T - Controls and Procedures	7


PART II - OTHER INFORMATION

Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds	8

Item 6 - Exhibits	8

SIGNATURES	9

FORWARD LOOKING STATEMENT

The following discussion should be read in conjunction with our unaudited consolidated interim financial statements and related notes thereto included in this quarterly report and in our audited consolidated financial statements and Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") contained in our Form 10-KSB for the year ended December 31, 2007.

We are including the following cautionary statement in this Form 10-Q to make applicable and take advantage of the safe harbor provision of the Private Securities Litigation Reform Act of 1995 for any forward-looking statements made by, or on behalf of, the Company. Forward-looking statements include statements concerning plans, objectives, goals, strategies, expectations, future events or performance and underlying assumptions and other statements , which are other than statements of historical facts. The statements contained herein and other information contained in this report may be based, in part, on management's estimates, projections, plans and judgments. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or those anticipated. In this report, the words "anticipates", "believes", "expects", "intends", "future", "plans", "targets" and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on the forward-looking statements contained herein. We undertake no obligation to publicly revise these forward-looking statements to reflect events or circumstances that may arise after the date hereof. Our expectations, beliefs and projections are expressed in good faith and are believed to have a reasonable basis, including without limitations, management's examination of historical operating trends, data contained in our records and other data available from third parties, but there can be no assurance that management's expectations, beliefs or projections will result or be achieved or accomplished. In addition to other factors and matters discussed elsewhere herein, the following are important factors that could cause actual results to differ materially from those discussed in the forward-looking statements: our dependence on limited cash resources, dependence on certain key personnel within the Company, and the ability to raise additional capital; our ability to secure leases for our oil and gas projects; our ability to obtain acceptable forms and amounts of financing; the demand for, and price level of, our products and services; competitive factors; the ability to mitigate concentration of business in a small number of customers; the evolving industry and technology standards; the ability to protect proprietary technology; the dependence on key personnel; and the effect of business interruption due to political unrest; oil and gas prices; and our ability to efficiently manage our operations. In addition, our ability to generate long-term value for the common stockholder is dependent upon the acquisition of profitable energy prospects. There are many companies participating in the oil and gas industry, many with greater resources. Greater competition for profitable operations can increase prices and make it more difficult to acquire assets at reasonable multiples of cash flow. We believe that we will be able to compete in this environment and will be able to find attractive investments; however, it is not possible to predict competition or the effect this will have on operations. Operations are also significantly affected by factors, which are outside our control, including the prices of oil and natural gas, environmental and governmental regulations. Accordingly, actual results may differ, possibly materially, from the predictions contained herein.

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PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

The financial statements of the company are set forth beginning on page F-1.

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PANGEA PETROLEUM CORPORATION

TABLE OF CONTENTS


	Page

Unaudited Consolidated Financial Statements:

Unaudited Consolidated Balance Sheets as of
March 31, 2008 and December 31, 2007	F-2

Unaudited Consolidated Statements of Operations
for the three months ended
March 31, 2008 and 2007	F-3

Unaudited Consolidated Statements of Stockholders'
Deficit for the three months ended March 31, 2008	F-4

Unaudited Consolidated Statements of Cash Flows
for the three months ended March 31, 2008 and 2007	F-5

Notes to Unaudited Consolidated Financial Statements	F-6

F-1

PANGEA PETROLEUM CORPORATION

CONSOLIDATED BALANCE SHEETS

(Unaudited)


	March 31,			December 31,
	2008			2007
ASSETS

Current assets:
Cash	$	7		$	2,718
Accounts receivable		1,994			-

Property and equipment:
Oil and gas properties (successful efforts method
net of accumulated depletion of $152,033 and $138,642)		27,525			40,478
Unproven oil and gas properties (successful efforts method)		203,462			171,462
Total property and equipment		230,987			211,940

Total assets	$	232,988		$	214,658


LIABILITIES AND STOCKHOLDERS’ DEFICIT

Current liabilities:
Accounts payable	$	37,704		$	21,535
Accrued interest payable to related parties		19,589			126,730
Notes payable - other		15,507			15,507
Notes payable to related parties		659,771			528,041
Stock Payable		68,165			21,680


Total current liabilities		800,736			713,493

Long-term debt to related parties		-			5,000
Asset retirement obligations		8,193			8,193

Total liabilities		808,929			726,686


Stockholders' deficit:
Preferred stock: $.001 par value; 10,000,000 shares authorized,
none issued and outstanding		-			-
Common stock: $.001 par value; 500,000,000 shares authorized;
324,059,544 and 306,339,544 shares issued and outstanding at
March 31, 2008 and December 31, 2007, respectively		324,060			306,340
Additional paid-in capital		18,407,409			18,373,829
Accumulated deficit		(19,307,410	)		(19,192,197	)

Total stockholders' deficit		(575,941	)		(512,028	)

Total liabilities and stockholders' deficit	$	232,988		$	214,658

The accompanying notes are an integral part of these consolidated financial statements.

F-2

PANGEA PETROLEUM CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

	Three Months Ended
	March 31
	2008			2007

Oil and gas revenue	$	7,567		$	19,835

Costs and expenses:
Lease operating expenses		2,662			7,195
Production taxes		465			1,038
Dry hole costs		-			282
Depreciation and depletion		13,515			12,240
Selling, general and administrative, including
stock based compensation		86,549			137,312


Total costs and expenses		103,191			158,067

Loss from operations		(95,624	)		(138,232	)

Other (expenses):
Interest expense		(19,589	)		(16,863	)

Net loss	$	(115,213	)	$	(155,095	)

Basic and diluted net loss per common share	$	(0.00	)	$	(0.00	)

Weighted average common shares outstanding		306,451,893			277,817,097

The accompanying notes are an integral part of these consolidated financial statements.

F-3

PANGEA PETROLEUM CORPORATION

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ DEFICIT

for the three months ended March 31, 2008

(Unaudited)

					Additional					Total
	Common Stock				Paid-In		Accumulated			Stockholders’
	Shares		Amount		Capital		Deficit			Deficit

Balance at December 31, 2007		306,339,544	$	306,340	$	18,373,829	$	(19,192,197	)	$	(512,028	)

Common stock issued to compensate
employees and consultants		7,720,000		7,720		11,580		-			19,300

Common stock issued for
property acquisition		10,000,000		10,000		22,000		-			32,000

Net loss		-		-		-		(115,213	)		(115,213	)

Balance at March 31, 2008		324,059,544	$	324,060	$	18,407,409	$	(19,307,410	)	$	(575,941	)

The accompanying notes are an integral part of these consolidated financial statements.

F-4

PANGEA PETROLEUM CORPORATION

UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

for the three months ended March 31, 2008 and 2007

(Unaudited)

	2008			2007


Cash flows from operating activities:
Net loss	$	(115,213	)	$	(155,095	)
Adjustments to reconcile net loss to net cash
used in operating activities		112,502			148,727

Net cash used in operating activities		(2,711	)		(6,368	)
Cash flows from investing activities:
Capital and exploratory expenditures		-			(12,100	)

Cash flows from financing activities:
Repayment of debt		-			(6,981	)

Net cash used in financing activities		-			(6,981	)

Net decrease in cash and cash equivalents		(2,711	)		(25,449	)

Cash and cash equivalents at beginning of period		2,718			53,690

Cash and cash equivalents at end of period	$	7		$	28,241

Supplemental Disclosures:
Cash paid for interest	$	-		$	-
Cash paid for income taxes		-			-

Noncash investing and financing activities:
Oil and gas property acquired with common stock issuance	$	32,000		$	-

The accompanying notes are an integral part of these consolidated financial statements.

F-5

PANGEA PETROLEUM CORPORATION

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation

The accompanying unaudited interim consolidated financial statements of Pangea Petroleum Corporation, a Colorado corporation, have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission and should be read in conjunction with the audited financial statements and notes thereto contained in the Pangea’s latest Annual Report filed with the SEC on Form 10-KSB. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year.

Notes to the consolidated financial statements which would substantially duplicate the disclosure contained in the audited financial statements for the most recent fiscal year, December 31, 2007, as reported in Form 10-KSB, have been omitted.

2. Going Concern Considerations

Since its inception, Pangea has suffered recurring losses from operations and has been dependent on existing stockholders and new investors to provide cash resources to sustain its operations. During the three months ended March 31, 2008 and 2007, Pangea reported net losses of $115,213 and $155,095, respectively. These conditions raise substantial doubt about Pangea’s ability to continue as a going concern.

Pangea has developed a multi-step plan and has taken actions to improve its financial position and deal with its liquidity problems. The final steps of the plan are still being developed, but may include additional private placements of Pangea’s common stock, additional oil and gas property acquisitions and/or exploration efforts, and efforts to raise additional debt financing or equity investments. There can be no assurance that any of the plans developed by Pangea will produce cash flows sufficient to ensure its long-term viability as a going concern.

Pangea’s long-term viability as a going concern is dependent on certain key factors, as follows:

·	Pangea’s ability to obtain adequate sources of outside financing to support near term operations and to allow the Company to continue forward with current strategic plans.

·	Pangea’s ability to locate, prove and produce from economically viable oil and gas reserves.

·	Pangea’s ability to ultimately achieve adequate profitability and cash flows to sustain continuing operations.

3. Stockholders’ Equity

During the three months ended March 31, 2008, Pangea engaged in various transactions affecting stockholders’ equity, as follows:


·	7,500,000 shares of common stock were issued to employees and consultants. Compensation expense of $18,750 was recorded based on market value on date of issuance.
·	100,000 shares of restricted common stock were issued to an independent director valued at $250.
·	120,000 shares of restricted common stock were issued to our Chief Financial Officer valued at $300.
·	10,000,000 shares were issued under an Asset Purchase Agreement see Note 5.

F-6

4. Related Party Transactions

Notes payable to related parties consist of the following at March 31, 2008:

Notes payable to Mary Pollock, daughter of the chief executive
officer. This note bears interest of 12% per year and
is due in a onetime payment of principal and interest on December
31, 2008. These notes are not collateralized.	$	146,691

Notes payable to Charles Pollock, the Chief Executive Officer and a
significant stockholder of the Company. This note bears interest
of 12% per year, and due in onetime payment of principal and
interest on December 31, 2008. These notes are not collateralized.		400,911


Notes payable to Mark Weller, the Chief Operating Officer and a
significant stockholder of the Company. This note bears interest
of 12% per year, and due in one time payments of principal and
interest on December 31, 2008. These notes are not collateralized.		107,169

Notes payable to Mark Weller due on-demand		5,000

	$	659,771

The above consists of renewed promissory notes extending the maturity dates from the original due date of December 31, 2007,which combined prior principal and accrued interest into principal amount of new debt. Accrued interest payable to related parties of $19,589 at March 31, 2008 represents interest accrued on the above notes payable to related parties.

5. Asset Purchase Agreement

On January 1, 2008, Pangea purchased working and royalty interests in certain oil and gas leases in Texas for 10,000,000 shares of common stock valued at $32,000 based on market value on the purchase date.

6. Subsequent Event

The following shares of restricted common stock have been issued for services:

Date Issued	Name	# of Restricted Common Shares	Fair Market Value
4/29/08	Scott Duncan, CFO	120,000	$	504
4/29/08	Edward Skaggs, Director	100,000	$	420

F-7

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

GENERAL

Pangea Petroleum Corporation ("Pangea" or "Company"), a Colorado corporation, was organized on March 11, 1997 as Zip Top, Inc. On December 11, 1998, we changed our name to Pangea Petroleum Corporation. Our offices are located at 9801 Westheimer, Suite 302, Houston, Texas 77042. Our website is www.pangeapetroleum.com.

Pangea is a publicly traded company listed on the OTC Electronic Bulletin Board under the symbol “PAPO”. We are an independent energy company focused on the exploration and development of oil and natural gas reserves, whose core business is directed to the development of oil and gas prospects in proven onshore production areas. Pangea is pursuing a development program designed to achieve profitability by distributing risk across multiple oil and gas projects. Pangea diversifies its risk by carefully identifying prospects that fit within strict parameters and by taking a minority working interest in each project. We devote essentially all of our resources to development of revenue producing activities by keeping overhead at a minimum level through the retention of carefully selected consultants, contractors and service companies.

We are working to create shareholder value by using capital and proven technology to exploit energy prospects that are of minor interest to larger companies due to their size and location. We invest in projects at different levels of participation, generally as a minority owner, such that daily operating responsibility is in the hands of experienced, high quality partners and contractors. Producing properties may be resold as appropriate to establish and maintain optimum asset value.

Since our inception, we have recurring losses from operations and have been dependent on existing stockholders and new investors to provide the cash resources to sustain its operations. During the three months ended March 31, 2008, we reported a loss of $115,213 compared to a loss of $155,095 reported for the three months ended March 31, 2007.

Our long-term viability as a going concern is dependent on certain key factors, as follows:

-	Our ability to continue to obtain sources of outside financing to allow the Company to continue to make strategic investments in new oil and gas well prospects.

-	Our ability to locate attractive development prospects, and coordinate with timely funding that will allow the Company to continue to increase oil and gas reserves and production.

-	Our ability to increase profitability and sustain a cash flow level that will ensure support for continuing operations.

RESULTS OF OPERATIONS

During the three months ended March 31, 2008, we reported $7,567 in revenue from the working interests in three producing wells.

In February 2006, we purchased a 7% working interest (5.25% net interest) in a re-entry workover in Brazoria County, Texas. The well was drilled in 2002 and experienced mechanical difficulty in the first of four zones in the Miocene sands. The logs indicate three additional sands which will be sequentially completed for the project. A workover rig moved in at the end of March 2006. The workover in the first zone was successful. Following facilities construction and pipeline connection the well was placed on production at a 250 MCFD restricted rate. This prospect will likely have two to three additional well locations. To date, we have not received revenue from this project, as the operator has not provided well information or status and appears to have the well shut-in. In 2006, a $21,000 impairment value was placed on the well pending results of operations. The operator has continued to fail to respond to Pangea demands for status and contract performance and we are evaluating how to proceed.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our discussion and analysis of the financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate estimates. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. These estimates and assumptions provide a basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions, and these differences may be material.

We believe the following critical accounting policies affect its more significant judgments and estimates used in the preparation of its consolidated financial statements.

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OIL AND GAS PRODUCING ACTIVITIES

Pangea follows the "successful efforts" method of accounting for its oil and gas properties. Under this method of accounting, all property acquisition costs (cost to acquire mineral interests in oil and gas properties) and costs (to drill and equip) of exploratory and development wells are capitalized when incurred, pending determination of whether the well has found proved reserves. If an exploratory well has not found proved reserves in commercial quantities, the costs associated with the well are charged to expense. The costs of development wells are capitalized whether productive or nonproductive. Geological and geophysical costs and the costs of carrying and retaining undeveloped properties are expensed as incurred. Management estimates the future liability for plugging and abandonment of the related wells. Accordingly, a net cost of $8,193 has been accrued for plugging and abandonment.

Unproved oil and gas properties that are individually significant are periodically assessed for impairment of value, and a loss is recognized at the time of impairment by providing an impairment allowance. Other unproved properties are amortized based on the average holding period. Capitalized costs of producing oil and gas properties after considering estimated dismantlement and abandonment costs and estimated salvage values are depreciated and depleted by the unit-of-production method. On the sale or retirement of a complete unit of a proved property, the cost and related accumulated depreciation, depletion, and amortization are eliminated from the property accounts, and the resultant gain or loss is recognized. On the retirement or sale of a partial unit of proved property, the cost is charged to accumulated depreciation, depletion, and amortization with a resulting gain or loss recognized in the statement of operations.

On the sale of an entire interest in an unproved property for cash or cash equivalent, gain or loss on the sale is recognized, taking into consideration the amount of any recorded impairment if the property had been assessed individually. If a partial interest in an unproved property is sold, the amount received is treated as a reduction of the cost of the interest retained.

COMPARISON OF THREE MONTHS ENDED MARCH 31, 2008 TO THREE MONTHS ENDED MARCH 31, 2007.

The net loss of $115,213 for the three months ended March 31, 2008 decreased by $39,882 from the net loss of $155,095 for the three months ended March 31, 2007. The decrease results from a 45% decrease in stock based compensation. Pangea generated revenue from the participation in ongoing oil and gas wells in the amount of $7,567 for the three months ended March 31, 2008, compared to $19,835 in revenue for the three months ended March 31, 2007. This revenue decrease resulted from a decrease in production. Total assets decreased to $232,988 at March 31, 2008 compared to $277,161 at March 31, 2007. This decrease is primarily reflected in a decrease in oil and gas properties and by the decrease in cash from $7 at March 31, 2008 compared to $28,241 at March 31, 2007.

Total liabilities at March 31, 2008 are $808,929 compared to $652,471 at March 31, 2007. The increase in liabilities is primarily due to an increase in accrued liabilities related to accrued interest on notes payable and increased debt related to the Blue Ridge field in Ft. Bend County, Texas.

LIQUIDITY AND CAPITAL RESOURCES

Our operating activities used cash in the amount of $2,711 for the quarter ended March 31, 2008 related primarily to professional fees and expenses on producing wells. For the three months ended March 31, 2008, we were not able to generate positive cash flow from operations. However, we are generating revenue from six wells. We have been unable to raise cash from financing activities to fund investing activities in 2008. There was no cash used from financing activities at March 31, 2008 while there was $6,981 provided by financing activities at March 31, 2007. We intend to continue investing in additional oil and gas projects but will need additional working capital to participate fully at the levels we intend. We expect to raise working capital through private placements, debt financing or equity investment. There can be no assurance that any of the plans developed will produce cash flows sufficient to ensure its long-term viability.

2008 OUTLOOK

We are working on identifying additional prospects for drilling in 2008 in Illinois and New York, but we currently have nothing scheduled. We have no active drilling prospects, however, we are pursuing three opportunities to purchase existing production in Texas and Mississippi.

Pangea’s 2.5% working interest in Stueben County, New York, which covers approximately 50,000 acres, has completed shooting twenty-two square miles of 3-D seismic. The data is being processed and drilling prospects are being examined. Thus far there are leads identified in the Oriskany and Onandaga Reef sands. Currently plans for drilling have been deferred due to land issues. Pangea is evaluating how to proceed with the project and may elect to farm out the prospect to avoid future expenditures until operations proceed.

-6-

Pangea has an interest in a Geneva Reef project covering approximately 3600 acres in Clay, Effingham, Shelby, Fayette, and Cumberland Counties in Illinois. Analysis of 2D seismic in the area indicated that there are at least six geologic features having potential to offset successful Geneva Reef production in the area. The operator ran 3D seismic in the areas of interest and confirmed the existence of one reef structure that was drilled in 2007 and was unsuccessful. It is anticipated that at least one of the remaining 2D prospects will have a drillable reef. The operator is running additional 3D seismic to attempt to define drilling locations on this prospect. The offset reefs have had approximately three wells each, and initial total reef production has been between 500 and 1000 BOPD on the successful 3D finds. Pangea has a 3.0% working interest and a 2.1% net interest in the project.

Henderson County, Texas is an 11500’ test in the Rodessa and Pettit with a secondary objective in the Upper Travis Peak. The first well has the potential for an additional well in the fault trap and, if successful, will lead to drilling in four additional analogous fault blocks on the leased acreage. Pangea had reserved a 2% working interest and 1.54% net interest in the first well, but has not provided any funding. The operator has had extended difficulty obtaining the necessary leases for the surface drilling location and has been delayed in proceeding throughout 2007. In December 2007 Pangea informed the operator that we will not proceed with participation in the project.

Pangea is also pursuing the acquisition of interests in three producing projects; two in Texas and one in Mississippi. The two Texas projects are primarily gas producers that are comprised of multiple wells with excellent production histories. Pangea is looking a 5% of a project making 30,000,000 cubic feet per month and 3% of a project making 150,000,000 cubic feet per month. The Mississippi project is in a relatively shallow oil horizon area that produces relatively heavy oil. The wells produce at a very shallow decline rate over a long period and are currently making 3200 Barrels per month. Pangea is evaluating a 3-5% interest. All three projects appear to have a greater than 10 year remaining life. To date there are no definitive agreements for purchase and final negotiations will depend on the ability of Pangea to raise the up front capital necessary to finalize each deal.

We continue to review additional prospects in Texas, Louisiana, Illinois and New York to add new wells to our prospect list. Our strategy remains one of evaluating primarily shallow, onshore oil and gas projects that avoid investing in “wildcat” or exploratory wells. Focus remains on investing in development well prospects that are supported by seismic data, proven production from the surrounding area and good information from adjacent wells. Additionally, we will continue to diversify our risk by taking a minority working interest in the prospects such that we are not dependent on any one project or highly impacted by an unsuccessful well. The ability to invest further is entirely dependent on Pangea securing additional capital from investors or debt financing. There is no assurance that additional equity or debt financing will be available on terms acceptable to Management.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSRES ABOUT MARKET RISK

The information to be reported under this item is not required of smaller reporting companies.

ITEM 4T. CONTROLS AND PROCEDURES.

(a) Evaluation of disclosure controls and procedures.

Based on their evaluation of our disclosure controls and procedures (as defined in Rule 13a-15e under the Securities Exchange Act of 1934), our principal executive officer and principal financial officer have concluded that as of the end of the period covered by this quarterly report on Form 10-Q such disclosure controls and procedures were not effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms. We are continuing our efforts to enhance, improve and strengthen our control processes and procedures.

A controls system cannot provide absolute assurance, however, that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes using accounting principles generally accepted in the United States.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance of achieving their control objectives.

As of the end of the period of this report, our principal executive and principal financial officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures. This evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Principal Financial Officer. Based on that evaluation, our Chief Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures are not effective in timely alerting them to material information required to be included in the Company’s periodic reports to the Securities and Exchange Commission. During the first quarter, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.

-7-

In addition, there were adjustments at year end and so management considers the controls in place are not adequate for the company. A stock adjustment to account for shares due at the yearend was not processed along with an equity adjustment.

Management uses a separation of function approach to insure adequate controls. There were no material weaknesses identified during the preparation of year end financial reports.

The weaknesses noted for the quarter ended March 31, 2008 were specifically the monitoring controls that ensured journal entries were posted accurately and in a timely fashion. These controls were ineffective during the fiscal 2006 and first quarter 2007 closing process. This resulted in a missed entry to depreciation of oil and gas properties and an incorrect entry to common stock. Although the missed or incorrect entries were not prevented or detected by the Company's existing system of internal controls, the entries were identified by the Company’ independent registered certified public accounting firm, and were corrected and properly reflected in the quarter ended March 31, 2008 financial statements.

We previously reported that we had material weaknesses in our disclosure controls and procedures and that they were not effective as of the end of fiscal year 2006 and the first quarter of 2007. The Company continues to address these issues and continues to take steps to remediate the material weaknesses in our disclosure controls and procedures, including the steps to adopt policies for controls over accounting review and training personnel in the processing of transactions involving oil and gas properties and issuance of stock.

This report does not include an attestation report of the company’s registered public accounting firm regarding internal controls over financial reporting. Management’s report was not subject to attestation by the company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that the company to provide only management’s report in the annual report.

PART II – OTHER INFORMATION

Pursuant to the Instructions on Part II of the Form 10-Q, Items 1, 3, 4, and 5 are omitted.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

During our quarter ended March 31, 2008, we completed the following transactions in reliance upon exemptions from registration under the Securities Act of 1933, as amended (the "Act") as provided in Section 4(2) thereof. Each certificate issued for unregistered securities contained a legend stating that the securities have not been registered under the Act and setting forth the restrictions on the transferability and the sale of the securities. None of the transactions involved a public offering. We believe that each person had knowledge and experience in financial and business matters, which allowed them to evaluate the merits and risks of our securities. We believe that each person was knowledgeable about our operations and financial condition.

During the three months ended March 31, 2008, we issued 120,000 shares of restricted common stock to our Chief Financial Officer. We issued 7,500,000 restricted shares to consultants and 100,000 restricted common shares to our independent director for services. We recognized total compensation expense of $19,300 for the issued shares. Additionally, we issued 10,000,000 shares of restricted common stock to a seller for the acquisition of oil and gas working and royalty interest.

ITEM 6 EXHIBITS.

Exhibit 31.1 - Certification of Chief Executive Officer of Pangea Petroleum Corporation required by Rule 13a - 14(1) or Rule 15d - 14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Exhibit 31.2 - Certification of Chief Financial Officer of Pangea Petroleum Corporation required by Rule 13a - 14(1) or Rule 15d - 14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Exhibit 32.1 -- Certification of Chief Executive Officer of Pangea Petroleum Corporation pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and Section 1350 of 18 U.S.C. 63.

Exhibit 32.2 -- Certification of Chief Financial Officer of Pangea Petroleum Corporation pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and Section 1350 of 18 U.S.C. 63.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

PANGEA PETROLEUM CORPORATION

By: /s/ Charles B. Pollock	Date: May 20, 2008
Charles B. Pollock,
Chairman of the Board and
Chief Executive Officer


By: /s/ Scott Duncan	Date: May 20 2008
Scott Duncan
Chief Financial Officer and
Principal Financial Officer

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