U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------
FORM 10-QSB
(Mark One)
[X] Quarterly report pursuant section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended March 31, 2005
[ ] Transition report pursuant section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from__________to____________
Commission file number: 333-76242
----------------------------------
Pinoak, Inc.
----------------------------------------------------
(Exact name of small business issuer in its charter)
Nevada 86-0983750
- - - - ------------------------------- -------------------
(State or other jurisdiction of (IRS Employer
Incorporation or organization) Identification No.)
10801 E. Grove Street, Mesa, AZ 85208
--------------------------------------------------------------------
(Address of principal executive offices)
(480) 984-8446
---------------------------
(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 [ ]
Number of shares outstanding of the issuer's classes of common equity, as of
March 31, 2005:
2,000,000 Shares of Common Stock (One Class)
Transitional Small Business Disclosure Format: Yes [ ] No [X]
This document consists of 13 pages, excluding exhibits.
The Exhibit Index is on page 12.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements................................. 3
Independent Accountants Review Report................ 4
Balance Sheet (unaudited)............................ 5
Statements of Operations (unaudited)................. 6
Statements of Cash Flows (unaudited)................. 7
Notes to Financial Statements........................ 8
Item 2. Management's Discussion and Analysis of Plan
of Operation........................................ 9
Item 3. Controls and Procedures.............................. 13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.................................... 14
Item 2. Changes in Securities and Use of Proceeds............ 14
Item 3. Defaults upon Senior Securities...................... 14
Item 4. Submission of Matters to a Vote
of Security Holders.................................. 14
Item 5. Other Information.................................... 14
Item 6. Exhibits and Reports on Form 8-K..................... 14
Signatures..................................................... 15
2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS AND EXHIBITS
As prescribed by item 310 of Regulation S-B, the independent auditor has
reviewed these unaudited interim financial statements of the registrant
for the three months ended March 31, 2005. The financial statements
reflect all adjustments which are, in the opinion of management, necessary
to a fair statement of the results for the interim period presented. The
unaudited financial statements of registrant for the three months ended
March 31, 2005, follow.
3
BECKSTEAD AND WATTS, LLP
- ----------------------------
CERTIFIED PUBLIC ACCOUNTANTS
2425 W Horizon Ridge Parkway
Henderson, NV 89052
702.257.1984 tel
702.362.0540 fax
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
Board of Directors
Pinoak, Inc.
(a Development Stage Company)
We have reviewed the accompanying balance sheet of Pinoak, Inc. (a Nevada
corporation) (a development stage company) as of March 31, 2005 and the related
statements of operations for the three months ended March 31, 2005 and 2004 and
for the period December 31, 1998 (Inception) to March 31, 2005, and statements
of cash flows for the three months ended March 31, 2005 and 2004 and for the
period December 31, 1998 (Inception) to March 31, 2005. These financial
statements are the responsibility of the Company's management.
We conducted our reviews in accordance with standards established by the Public
Company Accounting Oversight Board (United States). A review of interim
financial information consists principally of applying analytical procedures to
financial data, and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, which will be
performed for the full year with the objective of expressing an opinion
regarding the financial statements taken as a whole. Accordingly, we do not
express such an opinion.
Based on our reviews, we are not aware of any material modifications that
should be made to the accompanying financial statements referred to above for
them to be in conformity with generally accepted accounting principles in the
United States of America.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note 2 to the financial
statements, the Company has had limited operations and has not commenced
planned principal operations. This raises substantial doubt about its ability
to continue as a going concern. Management's plans in regard to these matters
are also described in Note 2. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
Beckstead and Watts, LLP has previously audited, in accordance with generally
accepted auditing standards established by the Public Company Accounting
Oversight Board (United States), the balance sheet of Pinoak, Inc. (a
development stage company) as of December 31, 2004, and the related statements
of operations, stockholders' equity, and cash flows for the year then ended
(not presented herein) and in our report dated April 14, 2005, we expressed an
unqualified opinion on those financial statements.
/s/ Beckstead and Watts, LLP
- ----------------------------
May 12, 2005
4
Pinoak, Inc.
(a Development Stage Company)
Balance Sheets
Balance Sheets
(unaudited)
March 31, December 31,
2005 2004
------------- -----------
Assets
Current assets:
Cash $ 489 $ 522
------------- ----------
Total current assets 489 522
------------- ----------
$ 489 $ 522
============= ==========
Liabilities and Stockholders' Equity
Current liabilities
Subscriptions payable $ $ -
------------- ----------
Stockholders' equity:
Preferred stock, $0.001 par value, 5,000,000
shares authorized, no shares issued and
outstanding - -
Common stock, $0.001 par value, 20,000,000
shares authorized, 2,000,000 shares
issued and outstanding 2,000 2,000
Additional paid-in capital 2,820 2,820
Deficit accumulated during development stage (4,331) (4,298)
------------- -----------
489 522
------------- -----------
$ 489 $ 522
============= ==========
The accompanying notes are an integral part of these financial statements
5
Pinoak, Inc.
(a Development Stage Company)
Statement of Operations
(unaudited)
For the Three Months Ending March 31, 2005 and 2004
and For the Period December 31, 1998 (Inception) to March 31, 2005
Statement of Operations
Three Months Ending December 31, 1998
March 31, (Inception) to
----------------------- March 31,
2005 2004 2005
---------- ---------- --------------
Revenue $ - $ - $ -
---------- ---------- --------------
Expenses:
General and administrative
expenses 33 30 4,331
---------- ---------- --------------
Total expenses 33 33 4,331
---------- ---------- --------------
Net income (loss) $ (33) $ (33) $ (4,331)
=========== =========== ==============
Weighted average number of
common shares outstanding-
basic and fully
diluted 2,000,000 2,000,000
========= =========
Net income (loss) per share-
basic and fully diluted $ (0.00) $ (0.00)
========= =========
The accompanying notes are an integral part of these financial statements
6
Pinoak, Inc.
(a Development Stage Company)
Statement of Cash Flows
(unaudited)
For the Three Months Ending March 31, 2005 and 2004
and For the Period December 31, 1998 (Inception) to March 31, 2005
Statement of Cash Flows
Three Months Ending December 31, 1998
March 31, (Inception) to
----------------------- March 31,
2005 2004 2005
---------- ---------- --------------
Cash flows from operating activities
Net (loss) $ (33) $ (33) $ (4,331)
---------- --------- -----------------
Net cash (used) by operating activities (33) (33) (4,331)
---------- --------- -----------------
Cash flows from financing activities
Issuances of common stock - - 4,820
Net cash provided by financing activities - - 4,820
---------- --------- -----------------
Net (decrease) increase in cash (33) (33) 489
Cash - beginning 522 653 -
---------- --------- -----------------
Cash - ending $ 489 $ 620 $ 489
========== ========= =================
Supplemental disclosures:
Interest paid $ - $ - $ -
========== ========= =================
Income taxes paid $ - $ - $ -
========== ========= =================
The accompanying notes are an integral part of these financial statements
7
PINOAK, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES
NOTE 1 - BASIS OF PRESENTATION
The condensed interim financial statements included herein, presented in
accordance with United States generally accepted accounting principles and
stated in US dollars, have been prepared by the Company, without audit,
pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures are adequate to
make the information presented not misleading.
These statements reflect all adjustments, consisting of normal recurring
adjustments, which in the opinion of management are necessary for fair
presentation of the information contained therein. It is suggested that these
condensed interim financial statements be read in conjunction with the
financial statements of the Company for the year ended December 31, 2004 and
notes thereto included in the Company's 10-KSB annual report. The Company
follows the same accounting policies in the preparation of interim reports.
Results of operation for the interim period are not indicative of annual
results.
NOTE 2 - GOING CONCERN
These financial statements have been prepared in accordance with generally
accepted accounting principles applicable to a going concern, which
contemplates the realization of assets and the satisfaction of liabilities and
commitments in the normal course of business. As at March 31, 2005, the Company
has not recognized any revenue to date and has accumulated operating losses of
approximately $4,331 since inception. The Company's ability to continue as a
going concern is contingent upon the successful completion of additional
financing arrangements and its ability to achieve and maintain profitable
operations. Management plans to raise equity capital to finance the operating
and capital requirements of the Company. Amounts raised will be used to
further development of the Company's products, to provide financing for
marketing and promotion, to secure additional property and equipment, and for
other working capital purposes. While the Company is expending its best
efforts to achieve the above plans, there is no assurance that any such
activity will generate funds that will be available for operations.
These conditions raise substantial doubt about the Company's ability to
continue as a going concern. These financial statements do not include any
adjustments that might arise from this uncertainty.
8
PINOAK, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES
NOTE 3 - RELATED PARTY TRANSACTIONS
The Company does not lease or rent any property. A director provides office
services without charge. Such costs are immaterial to the financial statements
and, accordingly, have not been reflected therein. The officers and directors
of the Company are involved in other business activities and may, in the
future, become involved in other business opportunities. If a specific
business opportunity becomes available, such persons may face a conflict in
selecting between the Company and their other business interests. The Company
has not formulated a policy for the resolution of such conflicts.
NOTE 4 - STOCKHOLDERS' EQUITY
The Company is authorized to issue 20,000,000 shares of its $0.001 par value
common stock, 5,000,000 shares of its $0.001 par value preferred stock.
For the three months ending March 31, 2005, there have been no other issuances
of common and or preferred stock.
NOTE 5 - RECENT EVENT
On March 25, 2005, Pinoak, Inc. entered into a preliminary agreement to merge
with Lanzhou Lantong Petro Machinery Forging Company, ("LLPMFO") a Chinese
Company, located in Lanzhou, Gansu, China. This agreement to merger with
LLPMFO is contingent upon completion of audited financials conducted in
accordance with the generally accepted accounting principles ("GAAP") of the
United States.
9
ITEM 2. Management's Discussion and Analysis of Plan of Operation.
(a) Results of Operations
- -------------------------
As a developmental stage Company, the Company had no revenues for the three
months ending March 31, 2005. The Company does not expect to generate any
revenues over the next approximately to twelve (12) months. During three months
ending March 31, 2005 the Company experienced net losses $(33). These expenses,
$33 were monthly bank fees and classified as general and administrative costs.
Since the Company's inception on December 31, 1998 through March 31, 2005
it has lost $(4,331). The founder of the Company has agreed to cover the costs
to operate the Company, without receiving reimbursement or accrual of these
expenses. The Company does not have any material commitments for capital
expenditures.
(b) Plan of Operation
- ---------------------
The management of Pinoak is currently seeking to engage in a merger with or
acquisition of an unidentified foreign or domestic company which desires to
become a reporting ("public") company whose securities are qualified for
trading in the United States secondary market. Pinoak meets the definition of
a "blank check" company contained in Section (7)(b)(3) of the Securities Act
of 1933, as amended. Pinoak has been in the developmental stage since
inception and have no operations to date. Other than issuing shares to the
Registrant's sole stockholder, the Registrant has not commenced any
operational activities.
Pinoak will not acquire or merge with any entity which cannot provide audited
financial statements at or within a reasonable period of time after closing
of the proposed transaction. Pinoak is subject to all the reporting
requirements included in the Exchange Act. Included in these requirements is
Pinoak's duty to file audited financial statements as part of Pinok's Form 8-K
to be filed with the Securities and Exchange Commission upon consummation of a
merger or acquisition, as well as Pinoak's audited financial statements
included in the annual report on Form 10-KSB. If such audited financial
statements are not available at closing, or within time parameters necessary
to insure the Registrant's compliance with the requirements of the Exchange Act,
or if the audited financial statements provided do not conform to the
representations made by the target business, the closing documents may provide
that the proposed transaction will be voidable at the discretion of the
Company's present management.
10
Recent Event
- ------------
On March 25, 2005, the Registrant entered into a preliminary agreement with
to merge with Lanzhou Lantong Petro Machinery Forging Company, a Chinese
Company, located in Lanzhou, Gansu, China. Lanzhou Lantong Petro Machinery
Forging Company was founded in 1872 and was nationalized by the Chinese
government in 1949. In 1996, the Company was acquired by its current 334
existing shareholders. Lanzhou Lantong Petro Machinery Forging Company
manufacturers oil field pumping equipment.
Management's agreement to merger with Lanzhou Lantong Petro Machinery Forging
Company is contingent upon completion of audited financials conducted in
accordance with the generally accepted accounting principles ("GAAP") of the
United States. If Lanzhou Lantong Petro Machinery Forging Company is unable
to provide the Registrant with audited financials, no merger will take place.
The Registrant is subject to reporting requirements under the Exchange Act
and will, therefore, be required to furnish audited financial statements for
any acquisition as required by Rule 3-05(b) of Regulation S-X. As of the date
of this filing Lanzhou Lantong Petro Machinery Forging Company has yet to
produce any audited financials, and therefore, this acquisition is on hold.
Pinoak has, and will continue to have, no capital with which to provide the
owners of business opportunities with any cash or other assets. The
Company's founder and director have not conducted market research and is
not aware of statistical data to support the perceived benefits of a merger or
acquisition transaction for the owners of a business opportunity.
The Pinoak audit reflects the fact that the Company has no current source of
income. Further, that without realization of additional capital, it would be
unlikely for the Company to continue as a going concern.
If Lanzhou Lantong Petro Machinery Forging Company audit does not come
fruition, the Company may seek a business opportunity with entities that
have recently commenced operations, or that wish to utilize the public
marketplace in order to raise additional capital in order to expand into
new products or markets, to develop a new product or service, or for other
corporate purposes.
We anticipate that the selection of a business opportunity in which to
participate will be complex and extremely risky. Due to general economic
conditions, rapid technological advances being made in some industries and
shortages of available capital, management believes that there are numerous
firms seeking the perceived benefits of a publicly registered corporation.
Such perceived benefits may include facilitating or improving the terms on
which additional equity financing may be sought, providing liquidity for
incentive stock options or similar benefits to key employees, providing
liquidity (subject to restrictions of applicable statutes) for all
shareholders and other factors. Potentially, available business
opportunities may occur in many different industries and at various stages
of development, all of which will make the task of comparative investigation
and analysis of such business opportunities extremely difficult and complex.
11
The owners of the business opportunities will incur significant legal and
accounting costs in connection with acquisition of a business opportunity,
including the costs of preparing Form 8-K's, 10-K's or 10-KSB's, agreements
and related reports and documents. The 1934 Act specifically requires that
any merger or acquisition candidate comply with all applicable reporting
requirements, which include providing audited financial statements to be
included within the numerous filings relevant to complying with the 1934
Act.
Competition
The Company will remain an insignificant participant among the firms which
engage in the acquisition of business opportunities. There are many
established venture capital and financial concerns which have significantly
greater financial and personnel resources and technical expertise than the
Company. In view of the Company's combined extremely limited financial
resources and limited management availability, the Company will continue to
be at a significant competitive disadvantage compared to the Company's
competitors.
12
ITEM 3. Controls and Procedures
As of the end of the period covered by this report, the Company conducted an
evaluation, under the supervision and with the participation of the principal
executive officer and principal financial officer, of the Company's disclosure
controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934 (the "Exchange Act")). Based on this evaluation,
the principal executive officer and principal financial officer concluded that
the Company's disclosure controls and procedures are effective to ensure that
information required to be disclosed by the Company in reports that it files or
submits under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in Securities and Exchange Commission rules
and forms. There was no change in the Company's internal control over financial
reporting during the Company's most recently completed fiscal year that has
materially affected, or is reasonably likely to materially affect, the Company's
internal control over financial reporting.
13
PART II OTHER INFORMATION
ITEM 1. Legal Proceedings
There is no litigation pending or threatened by or against the Company.
ITEM 2. Changes in Securities and Use of Proceeds
None.
ITEM 3. Defaults upon Senior Securities
None.
ITEM 4. Submission of Matters to a Vote of Security Holders
During the quarter ended March 31, 2005, no matters were submitted to
the Company's security holders.
ITEM 5. Other Information
None.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit
Number Title of Document
-----------------------------------------------
(a) Exhibits
31.1 Certifications of the Chief Executive Officer and Chief Financial
Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1 Certifications of Chief Executive Officer and Chief Financial
Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002
(b) Reports on Form 8-K
The Company filed a Current Report dated March 25, 2005 on Form 8-K
pursuant to Item 8.01; ("Other Events"), entitled pending acquisition
of Lanzhou Lantong Petro Machinery Forging Company.
14
PINOAK, INC.
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.
PINOAK, INC.
---------------------
Registrant
Date: May 13, 2005 By: /s/ Rick Jesky
------------------------------
Rick Jesky
Chief Executive Officer
Chief Financial Officer
15