UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended: June 30, 2005
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[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE
EXCHANGE ACT
For the transition period from to
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Commission file number 0-29543
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Baseline Energy, Inc.
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(Exact name of small business issuer as
specified in its charter)
Nevada 86-0972778
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
2920 N. Swan Road, Suite 206, Tucson, Arizona 85712
(Address of principal executive offices)
(520) 977-9654
Issuer's telephone number
(Former name, former address and former fiscal year, if changed
since last report.)
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDING DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required
to be filed by Section 12, 13 or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court. Yes ----- No -----
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practical date: August 16, 2005 8,700,000
Transitional Small Business Disclosure Format (check one).
Yes ; No X
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PART I
ITEM 1. FINANCIAL STATEMENTS
BASELINE ENERGY, INC.
(A Development Stage Company)
BALANCE SHEETS
(Unaudited)
June 30, December 31,
2005 2004
------------------ ------------------
Assets: Cash $ 1,243 $ -
================== ==================
Liabilities:
Accounts Payable $ 9,850 $ 7,350
Accrued Interest 122 -
Note Payable-Related Party 16,067 -
------------------ ------------------
26,039 7,350
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Stockholders' Equity:
Common Stock, Par value $.001
Authorized 100,000,000 shares,
Issued 8,700,000 Shares at June 30, 2005
and 1,000,000 Shares at December 31, 2004 8,700 1,000
Paid-In Capital 5,608 5,608
Retained Deficit (1,200) (1,200)
Deficit Accumulated During the
Development Stage (37,904) (12,758)
------------------ ------------------
Total Stockholders' Equity (24,796) (7,350)
------------------ ------------------
Total Liabilities and
Stockholders' Equity $ 1,243 $ -
================== ==================
See accompanying notes.
BASELINE ENERGY, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(Unaudited)
Cumulative
since October
20, 1999
Inception
For the three months ended For the six months ended of
June 30, June 30, development
------------------------------------- -------------------------------------
2005 2004 2005 2004 stage
------------------ ----------------- ----------------- ------------------ ------------------
Revenues: $ - $ - $ - $ - $ -
Expenses: 25,146 - 25,146 300 37,904
------------------ ----------------- ----------------- ------------------ ------------------
Net Loss $ (25,146) $ - $ (25,146) $ (300) $ (37,904)
================== ================= ================= ================== ==================
Basic &
Diluted loss
per share $ - $ - $ - $ -
================== ================= ================= ==================
See accompanying notes.
BASELINE ENERGY, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)
Cumulative
since October
20, 1999
For the six months ended Inception of
June 30, Development
-------------------------------------
2005 2004 Stage
----------------- ------------------ ------------------
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net Loss $ (25,146) $ (300) $ (37,904)
Increase (Decrease) in accounts payable 2,500 300 9,650
Increase (Decrease) in accrued interest 122
----------------- ------------------ ------------------
Net Cash Used in operating activities (22,524) - (28,254)
----------------- ------------------ ------------------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Net cash provided by investing activities - - -
----------------- ------------------ ------------------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Issuance of common stock 7,700
Proceeds from notes payable 16,067
Capital contributed by shareholder - - 5,608
----------------- ------------------ ------------------
Net Cash Provided by
Financing Activities 23,767 - 5,608
----------------- ------------------ ------------------
Net (Decrease) Increase in
Cash and Cash Equivalents 1,243 - -
Cash and Cash Equivalents
at Beginning of Period - - -
----------------- ------------------ ------------------
Cash and Cash Equivalents
at End of Period $ 1,243 $ - $ -
================= ================== ==================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $ - $ - $ -
Franchise and income taxes $ - $ - $ 500
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING
ACTIVITIES: None
See accompanying notes.
BASELINE ENERGY, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2005 AND 2004
(Unaudited)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of accounting policies for Baseline Energy, Inc. (a
development stage company) is presented to assist in understanding the Company's
financial statements. The accounting policies conform to generally accepted
accounting principles and have been consistently applied in the preparation of
the financial statements.
Going Concern
The accompanying financial statements have been prepared in conformity
with accounting principles generally accepted in the United States, which
contemplates the Company as a going concern. However, the Company has sustained
substantial operating losses in recent years and has used substantial amounts of
working capital in its operations. Realization of the assets reflected on the
accompanying balance sheet is dependent upon continued operations of the Company
which, in turn, is dependent upon the Company's ability to meet its financing
requirements and succeed in its future operations. Management believes that
actions presently being taken to revise the Company's operating and financial
requirements provide them with the opportunity for the Company to continue as a
going concern.
Interim Reporting
The unaudited financial statements as of June 30, 2005 and for the
three and six month period then ended reflect, in the opinion of management, all
adjustments (which include only normal recurring adjustments) necessary to
fairly state the financial position and results of operations for the three
months. Operating results for interim periods are not necessarily indicative of
the results which can be expected for full years.
Organization and Basis of Presentation
The Company was incorporated under the laws of the State of Nevada on
July 25, 1997. The Company ceased all operating activities during the period
from July 25, 1997 to October 20, 1999 and was considered dormant. Since October
20, 1999, the Company is in the development stage, and has not commenced planned
principal operations.
BASELINE ENERGY, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2005 AND 2004 (Continued)
(Unaudited)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Nature of Business
The Company has no products or services as of June 30, 2005. The
Company was organized as a vehicle to seek merger or acquisition candidates. The
Company intends to acquire interests in various business opportunities, which in
the opinion of management will provide a profit to the Company.
Loss per Share
Basic earnings (loss) per share has been computed by dividing the
income (loss) for the year applicable to the common stockholders by the weighted
average number of common shares outstanding during the years. The effects of
common stock equivalents are anti-dilutive and thus are not considered.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with a maturity of three months or less
to be cash equivalents to the extent the funds are not being held for investment
purposes.
Pervasiveness of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles required management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Concentration of Credit Risk
The Company has no significant off-balance-sheet concentrations of
credit risk such as foreign exchange contracts, options contracts or other
foreign hedging arrangements.
BASELINE ENERGY, INC.
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2005 AND 2004 (Continued)
(Unaudited)
NOTE 2 - INCOME TAXES
As of June 30, 2005, the Company had a net operating loss carryforward
for income tax reporting purposes of approximately $39,000 that may be offset
against future taxable income through 2024. Current tax laws limit the amount of
loss available to be offset against future taxable income when a substantial
change in ownership occurs. Therefore, the amount available to offset future
taxable income may be limited. No tax benefit has been reported in the financial
statements, because the Company believes there is a 50% or greater chance the
carryforwards will expire unused. Accordingly, the potential tax benefits of the
loss carryforwards are offset by a valuation allowance of the same amount.
NOTE 3 - DEVELOPMENT STAGE COMPANY
The Company has not begun principal operations and as is common with a
development stage company, the Company has had recurring losses during its
development stage.
NOTE 4 - COMMITMENTS
As of June 30, 2005 all activities of the Company have been conducted
by corporate officers from either their homes or business offices. Currently,
there are no outstanding debts owed by the company for the use of these
facilities and there are no commitments for future use of the facilities.
NOTE 5 - COMMON STOCK
During June, 2005 the Company issued 7,700,000 shares of common stock
for services valued at $7,700 under the provisions of Regulation D. The shares
are restricted under Rule 144.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
This Quarterly Report contains certain forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended, which are
intended to be covered by the safe harbors created thereby. Investors are
cautioned that all forward-looking statements involve risks and uncertainty,
including without limitation, the ability of the Company to continue its
expansion strategy, changes in costs of raw materials, labor, and employee
benefits, as well as general market conditions, competition and pricing.
Although the Company believes that the assumptions underlying the
forward-looking statements contained herein are reasonable, any of the
assumptions could be inaccurate, and therefore, there can be no assurance that
the forward-looking statements included in this Quarterly Report will prove to
be accurate. In light of the significant uncertainties inherent in the
forward-looking statements included herein, the inclusion of such information
should not be regarded as a presentation by the Company or any other person that
the objectives and plans of the Company will be achieved.
PLAN OF OPERATION
Baseline Energy, Inc. (the "Company"), formerly known as Green Oaks
Concepts, is a Nevada corporation formed in July 1997, with its principal
offices and operations center in Tucson, Arizona. Until May 2, 2005, the Company
was a shell company with no assets and no business activities. On May 2, 2005,
we adopted a new business direction.
BUSINESS STRATEGY
The Company is now a development state company with a focus in the
petroleum industry, particularly oil and gas exploration and production. The
Company's primary objective is to identify, acquire and develop underdeveloped
oil and gas projects in the United States. The Company intends to acquire
working interests, royalty interests and/or producers. The Company plans to
acquire projects following the due diligence necessary to fully evaluate the
projects potential. We will apply appropriate technologies to improve the
reservoir characterization, reduce risk and uncertainty, and improve development
and production efficiency. We have significant relative flexibility in selecting
and structuring our investments. We will seek to structure our acquisitions so
as to take into account the uncertain and potentially variable financial
performance of projects.
RESULTS OF OPERATIONS
The Company had no sales or sales revenues for the three months ended
June 30, 2005 or 2004 because it is a shell company that has not had any
business operations for the past three years.
The Company had no costs of sales revenues for the three months ended
June 30, 2005 or 2004 because it is a shell company that has not had any
business operations for the past three years. The Company had general and
administrative expenses of $25,146 for the three month period ended June 30,
2005 and $-0- for the same period in 2004.
CAPITAL RESOURCES AND LIQUIDITY
At June 30, 2005, the Company had total current assets of $1,243 and
total assets of $1,243 as compared to $0 current assets and $0 total assets at
December 31, 2004. The Company had a net working capital deficit of $24,796 at
June 30, 2005 and $7,350 at December 31, 2004.
Net stockholders' deficit in the Company was $24,796 as of June 30,
2005 and $7,350 at December 31, 2004.
ITEM 3. CONTROLS AND PROCEDURES
The Company's Chief Executive Officer and Chief Financial Officer are
responsible for establishing and maintaining disclosure controls and procedures
for the Company.
(a) Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this report, the Company carried
out an evaluation, under the supervision and with the participation of the
Company's management, including the Company's President, of the effectiveness of
the design and operation of the Company's disclosure controls and procedures
pursuant to Rule 13a-15 under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). Based upon the evaluation, the Company's President
concluded that, as of the end of the period, the Company's disclosure controls
and procedures were effective in timely alerting him to material information
relating to the Company required to be included in the reports that the Company
files and submits pursuant to the Exchange Act.
(b) Changes in Internal Controls
Based on this evaluation as of June 30, 2005, there were no significant
changes in the Company's internal controls over financial reporting or in any
other areas that could significantly affect the Company's internal controls
subsequent to the date of his most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None/Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
None/Not Applicable.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
The following documents are filed herewith or have been included as
exhibits to previous filings with the Commission and are incorporated herein by
this reference:
Exhibit No. Exhibit
*3 Articles of Incorporation
*3.2 Bylaws
*3.1 Amended Articles of Incorporation
31 Certification Pursuant to Section 302 of the Sarbanes-Oxley
Act of 2002.
32 Certification Pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002.
(b) Reports on Form 8-K. On May 9, 2005, the Company filed a Current Report on
Form 8-K to report under Item 5.02 that the Board of Directors appointed new
officers and directors: Karen Christensen as President and Kevin Sherlock as
Secretary; and the following as Directors of the Company: Karen Christensen,
Robert Hadley, Michael High, Eric Kendle, Kevin Sherlock and Daniel Hodges to
remain as Board Chairman. Michael High and Eric Kendle did not assume their
positions on the board.
* Incorporated herein by reference from Registrant's Form 10SB12G,
Registration Statement, dated February 16, 2000.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Baseline Energy, Inc.
/s/ Karen Christensen
Karen Christensen
President/CFO and Director
August 16, 2005