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 OCTOBER 31, 2009
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from _______________to _______________
Commission file number 333-146627
BARON ENERGY INC.
(Exact name of registrant as specified in its charter)
NEVADA
(State or other jurisdiction of incorporation or organization)
26-0582528
IRS Identification Number
3753 Howard Hughes Parkway
Suite 135
Las Vegas, NV 89169
(Address of principal executive offices, including zip code)
702-993-7424
(Telephone number, including area code)
Indicate by check whether the issuer (1) 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 last 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,"
"non-accelerated filer," and "smaller reporting company" in Rule 12b-2 of the
Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] 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
equity, as of the latest practicable date: 44,500,000 shares as of December 14,
2009.
BARON ENERGY INC.
INDEX
Part I Financial Information
Item 1. Financial Statements (Unaudited) 3
Balance Sheets 3
Statements of Operations 4
Statements of Shareholders' Equity (Deficit) 5
Statements of Cash Flows 6
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 11
Item 3. Quantitative and Qualitative Disclosures About Market Risk 13
Item 4T. Controls and Procedures 13
Part II Other Information
Item 1. Legal Proceedings 14
Item 1A. Risk Factors 14
Item 2. Unregistered Sales of Equity 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 15
Signatures 15
2
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BARON ENERGY INC.
(An Exploration Stage Company)
Balance Sheets
(Unaudited)
- --------------------------------------------------------------------------------
As of As of
October 31, July 31,
2009 2009
----------- -----------
ASSETS
CURRENT ASSETS
Cash $ 17,257 $ 12,217
Deposits 2,500 5,000
----------- -----------
TOTAL CURRENT ASSETS 19,757 17,217
OIL AND GAS PROPERTIES (FULL COST METHOD),
Unevaluated, net of impairment of $1,372,937 -- --
----------- -----------
TOTAL ASSETS $ 19,757 $ 17,217
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 30,503 $ 2,263
----------- -----------
TOTAL CURRENT LIABILITIES 30,503 2,263
LONG-TERM LIABILITIES
Asset retirement obligations 4,998 4,880
----------- -----------
TOTAL LONG-TERM LIABILITIES 4,998 4,880
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, $0.001 par value, 150,000,000 shares
authorized; 44,500,000 and 44,400,000 shares issued and
outstanding as of October 31, 2009 and July 31, 2009 44,500 44,400
Additional paid-in capital 5,155,500 5,130,600
Deficit accumulated during the exploration stage (5,215,744) (5,164,926)
----------- -----------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (15,744) 10,074
----------- -----------
TOTAL LIABILITIES and STOCKHOLDERS' EQUITY (DEFICIT) $ 19,757 $ 17,217
=========== ===========
See notes to the financial statements.
3
BARON ENERGY INC.
(An Exploration Stage Company)
Statements of Operations
(Unaudited)
- --------------------------------------------------------------------------------
July 24, 2007
Three Months Ended (inception)
October 31, through
----------------------------------- October 31,
2009 2008 2009
------------ ------------ ------------
Oil Revenues $ -- $ -- $ 5,092
Costs and Expenses:
General & Administrative Expenses 44,047 60,960 239,037
Lease Operating Expense 6,653 -- 52,648
Impairment of goodwill and oil and
gas properties -- -- 4,911,340
Accretion Expense 118 107 561
------------ ------------ ------------
Loss from Continuing Operations (50,818) (61,067) (5,198,494)
Discontinued Operations
Loss from discontinued operations -- (9,500) (17,250)
------------ ------------ ------------
Net Loss $ (50,818) $ (70,567) (5,215,744)
============ ============ ============
Basic and diluted net loss per
Net loss per share $ (0.00) $ (0.00)
Continuing operations loss per share $ (0.00) $ (0.00)
Discontinued operations loss per share $ (0.00) $ (0.00)
Weighted average number of common
shares outstanding 44,410,870 25,280,435
------------ ------------
See notes to the financial statements.
4
BARON ENERGY INC.
(An Exploration Stage Company)
Statement of Changes in Stockholders' Equity (Deficit)
From July 24, 2007 (Inception) through October 31, 2009
(Unaudited)
- --------------------------------------------------------------------------------
Deficit
Accumulated
Common Stock Additional During the
--------------------- Paid-in Exploration
Shares Amount Capital Stage Total
------ ------ ------- ----- -----
BALANCE, JULY 24, 2007 -- $ -- $ -- $ -- $ --
---------- ------- ---------- ----------- -----------
Stock issued for cash 12,000,000 12,000 3,000 -- 15,000
Net loss -- -- -- (590) (590)
---------- ------- ---------- ----------- -----------
BALANCE, JULY 31, 2007 12,000,000 12,000 3,000 (590) 14,410
Stock issued for cash 12,000,000 12,000 48,000 -- 60,000
Net loss -- -- -- (19,906) (19,906)
---------- ------- ---------- ----------- -----------
BALANCE, JULY 31, 2008 24,000,000 24,000 51,000 (20,496) 54,504
Stock issued for cash 2,400,000 2,400 597,600 -- 600,000
Stock issued to TMG Members 18,000,000 18,000 4,482,000 -- 4,500,000
Net loss -- -- -- (5,144,430) (5,144,430)
---------- ------- ---------- ----------- -----------
BALANCE, JULY 31, 2009 44,400,000 44,400 5,130,600 (5,164,926) 10,074
Stock issued for cash 100,000 100 24,900 -- 25,000
Net loss -- -- -- (50,818) (50,818)
---------- ------- ---------- ----------- -----------
BALANCE, OCTOBER 31, 2009 44,500,000 $44,500 $5,155,500 $(5,215,744) $ (15,744)
========== ======= ========== =========== ===========
See notes to the financial statements.
5
(An Exploration Stage Company)
Statements of Cash Flows
(Unaudited)
- --------------------------------------------------------------------------------
July 24, 2007
Three Months Ended (inception)
October 31, through
--------------------------------- October 31,
2009 2008 2009
----------- ----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (50,818) $ (70,567) $(5,215,744)
Adjustments to reconcile net loss to net
cash used in operating activities:
Accretion expense 118 107 561
Impairment -- -- 4,911,340
Changes in operating assets and liabilities:
Accounts receivable -- (29,571) 99,969
Inventory -- -- 9,389
Accounts payable and accrued expenses 28,240 14,579 (3,773)
Deposits 2,500 4,750 (2,500)
----------- ----------- -----------
NET CASH USED IN OPERATING ACTIVITIES (19,960) (80,702) (200,758)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of oil and gas properties -- (213,500) (481,985)
----------- ----------- -----------
NET CASH USED IN INVESTING ACTIVITIES -- (213,500) (481,985)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of common stock 25,000 489,571 700,000
----------- ----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 25,000 489,571 700,000
----------- ----------- -----------
NET INCREASE IN CASH 5,040 195,369 17,257
CASH AT BEGINNING OF PERIOD 12,217 49,754 --
----------- ----------- -----------
CASH AT END OF PERIOD $ 17,257 $ 245,123 $ 17,257
=========== =========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during period for:
Interest $ -- $ -- $ --
Income Taxes $ -- $ -- $ --
NON-CASH TRANSACTIONS
Asset retirement obligations $ -- $ 4,437 $ 4,437
Stock issued for business combination $ -- $ -- $ 4,500,000
See notes to the financial statements.
6
NOTE 1. BASIS OF PRESENTATION
The accompanying unaudited interim financial statements of Baron Energy Inc.
("Baron") 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 Baron's annual report filed
with the SEC on Form 10-K for the year ended July 31, 2009. 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 financial statements
which would substantially duplicate the disclosures contained in the audited
financial statements for the most recent fiscal year 2009 as reported in the
Form 10-K have been omitted.
In May 2009, the FASB issued FAS 165 (ASC 855-10), "Subsequent Events". This
pronouncement establishes standards for accounting for and disclosing subsequent
events (events which occur after the balance sheet date but before financial
statements are issued or are available to be issued). FAS 165 (ASC 855-10)
requires an entity to disclose the date subsequent events were evaluated and
whether that evaluation took place on the date financial statements were issued
or were available to be issued. It is effective for interim and annual periods
ending after June 15, 2009. The adoption of FAS 165 (ASC 855-10) did not have a
material impact on the Company's financial condition or results of operation.
In June 2009, the FASB issued SFAS No. 168, The FASB Accounting Standards
Codification and the Hierarchy of Generally Accepted Accounting Principles
("SFAS 168" or ASC 105-10). SFAS 168 (ASC 105-10) establishes the Codification
as the sole source of authoritative accounting principles recognized by the FASB
to be applied by all nongovernmental entities in the preparation of financial
statements in conformity with GAAP. SFAS 168 (ASC 105-10) was prospectively
effective for financial statements issued for fiscal years ending on or after
September 15, 2009, and interim periods within those fiscal years. The adoption
of SFAS 168 (ASC 105-10) on July 1, 2009 did not impact the Company's results of
operations or financial condition. The Codification did not change GAAP;
however, it did change the way GAAP is organized and presented. As a result,
these changes impact how companies reference GAAP in their financial statements
and in their significant accounting policies. The Company implemented the
Codification in this Report by providing references to the Codification topics
alongside references to the corresponding standards.
On December 31, 2008, the SEC published the final rules and interpretations
updating its oil and gas reporting requirements. Many of the revisions are
updates to definitions in the existing oil and gas rules to make them consistent
with the petroleum resource management system, which is a widely accepted
standard for the management of petroleum resources that was developed by several
industry organizations. Key revisions include changes to the pricing used to
estimate reserves to the utilization of a 12-month average price rather than a
single day spot price which eliminates the ability to utilize prices subsequent
to the end of a reporting period in those instances where the full cost ceiling
was exceeded and subsequent pricing exceeds pricing at the end of a reporting
period, the ability to include nontraditional resources in reserves, the use of
new technology for determining reserves, and permitting disclosure of probable
and possible reserves. The SEC will require companies to comply with the amended
disclosure requirements for registration statements filed after January 1, 2010,
and for annual reports on Form 10-K for fiscal years ending on or after December
15, 2009. Early adoption is not permitted. The Company is currently assessing
the impact that the adoption will have on the Company's disclosures, operating
results, financial position and cash flows.
With the exception of the pronouncements noted above, no other accounting
standards or interpretations issued or recently adopted are expected to a have a
material impact on the Company's financial position, operations or cash flows.
7
NOTE 2. GOING CONCERN
As shown in the accompanying financial statements, we incurred a net loss of
$50,818 for the three months ended October 31, 2009 and had an accumulated
deficit of $5,215,744 as of October 31, 2009. These conditions raise substantial
doubt as to our ability to continue as a going concern. The financial statements
do not include any adjustments that might be necessary if we are unable to
continue as a going concern.
Our financial statements are prepared using accounting principles generally
accepted in the United States of America applicable to a going concern which
contemplates the realization of assets and liquidation of liabilities in the
normal course of business. We are in the process of establishing a sufficient
ongoing source of revenues to cover its operating costs. The ability of the
Company to continue as a going concern is dependent on our ability to fulfill
the business plan.
NOTE 3. EARNINGS (LOSS) PER SHARE OF COMMON STOCK
Basic and diluted net income per share calculations are calculated on the basis
of the weighted average number of common shares outstanding during the year.
Purchases of treasury stock reduce the outstanding shares commencing on the date
that the stock is purchased. Common stock equivalents are excluded from the
calculation when a loss is incurred as their effect would be anti-dilutive. The
basic income per share of common stock is based on the weighted average number
of shares outstanding at the date of the financial statements.
2009 2008
------------ ------------
Numerator - Net Income (Loss) (A) $ (50,818) $ (70,567)
Basic Income (loss) Per Share (A/B) $ (0.00) $ (0.00)
Denominator - weighted average shares (B) 44,410,870 25,280,435
Fully Diluted Income Per Share (A)/(B+C) $ (0.00) $ (0.00)
Dilutive effect of warrants (C) -- --
Denominator - fully diluted weighted average
shares (B+C) 44,410,870 25,280,435
NOTE 4. DISCONTINUED OPERATIONS
On July 31, 2008, we discontinued our business plan to invest in minerals and
changed our business plan to the acquisition, exploration, development and
production of oil and gas.
There were no assets associated with these operations, no remaining liabilities
as of October 31, 2009, and there was no gain or loss associated with the
discontinuation of the minerals operations. Prior period amounts applicable to
the mineral operations were reclassified and included under "Loss from
discontinued operations."
8
The following table presents the loss for the interim periods shown and from
Inception.
July 24, 2007
Three Months Ended (inception)
October 31, through
-------------------------- October 31,
2009 2008 2009
-------- -------- --------
Costs and expenses $ -- $ (9,500) $(17,250)
-------- -------- --------
Loss from discontinued
operations $ -- $ (9,500) $(17,250)
======== ======== ========
Discontinued operations have not been segregated in the statement of cash flows.
Therefore, amounts for certain captions will not agree with respective data in
the statement of operations.
NOTE 5. ACQUISITIONS
On April 6, 2009, Baron acquired 100% of the issued and outstanding membership
interests of TMG Partners, LLC, a Nevada limited liability company ("TMG") in
exchange for 18,000,000 restricted shares of common stock of the Company, valued
at $4,500,000 The following table presents the unaudited pro forma condensed
combined statement of expenses as if TMG Partners, LLC had been acquired at the
beginning of each period presented. The pro forma results do not purport to
represent what the Company's results of operations or financial position would
have been if such transactions had occurred on the date indicated.
Three Months Ended
October 31,
-----------------------------------
Pro Forma
-----------------------------------
2009 2008
------------ ------------
Oil Revenues $ -- $ --
Professional fees -- 68,567
General & administrative expenses 44,047 66,095
Lease operating expense 6,653 --
Accretion expense 118 107
------------ ------------
Loss from Continuing Operations (50,818) (134,769)
Discontinued Operations
Loss from discontinued operations -- (9,500)
------------ ------------
Net Loss $ (50,818) $ (144,269)
============ ============
Basic and diluted net loss per
Net loss per share $ (0.00) $ (0.00)
Continuing operations loss per share $ (0.00) $ (0.00)
Discontinued operations loss per share $ (0.00) $ (0.00)
Weighted average number of
common shares outstanding 44,410,870 43,280,435
------------ ------------
9
NOTE 6. COMMON STOCK
All references in the financial statements to the number of common shares and
related per share amounts reflect the effect of both the September 2008 and
February 2009 stock splits.
Effective September 2, 2008, we effected a two (2) for one (1) forward stock
split of our issued and outstanding common stock. As a result, our authorized
capital was not increased and remained at 75,000,000 shares of common stock with
a par value of $0.001 and our issued and outstanding shares increased from
6,000,000 shares of common stock to 12,000,000 shares of common stock.
On November 5, 2008, we filed with the State of Nevada the paperwork required
for a two (2) for one (1) forward stock split of our authorized, issued and
outstanding common stock; however, this stock split was not effective until
February 24, 2009. As a result, our authorized capital was increased from
75,000,000 to 150,000,000 shares of common stock with a par value of $0.001 and
our issued and outstanding shares increased from 13,100,000 shares of common
stock to 26,200,000 shares of common stock. For purposes of calculating earnings
per share, the stock split was retroactively applied to prior periods.
On October 22, 2009 we sold 100,000 shares of common stock for $25,000.
NOTE 7. COMMITMENTS & CONTINGENCIES
Upon the acquisition of TMG Partners, LLC, the Company assumed an agreement to
acquire certain leases. Under the terms of the agreement, the Company is
committed to fund approximately $1,055,000 for leases; the Company had paid
$955,000 and owed $100,000 of the remaining commitment and is obligated to pay
the remaining upon request.
The Company may from time to time be involved with various litigation and claims
that arise in the normal course of business. As of October 31, 2009, no such
matters were outstanding.
NOTE 8. SUBSEQUENT EVENTS
The Company evaluated subsequent events through the date the financial
statements were issued and there were no significant subsequent events to
report.
10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FORWARD LOOKING STATEMENTS
This quarterly report contains forward-looking statements that involve risk and
uncertainties. We use words such as "anticipate", "believe", "plan", "expect",
"future", "intend", and similar expressions to identify such forward-looking
statements. Investors should be aware that all forward-looking statements
contained within this filing are good faith estimates of management as of the
date of this filing. Our actual results could differ materially from those
anticipated in these forward-looking statements.
GENERAL INFORMATION
You should read the following summary together with the financial statements and
related notes that appear elsewhere in this report. In this report, unless the
context otherwise denotes, references to "we", "us", "our", "Company", "Baron"
and "Baron Energy" are to Baron Energy Inc. (formerly Nevwest Explorations
Corp.).
Baron Energy Inc. was incorporated as Nevwest Explorations Corp. in the State of
Nevada on July 24, 2007 to engage in the acquisition, exploration and
development of natural resource properties. Effective September 2, 2008, we
changed our name from Nevwest Explorations Corp. to Baron Energy Inc. We are an
exploration stage company with no current revenues and limited operating
history. The principal executive offices are located at 3753 Howard Hughes
Parkway, Las Vegas, NV 89169. The telephone and fax number is (702) 993-7424.
We completed a form SB-2 Registration Statement under the Securities Act of 1933
with the U.S. Securities and Exchange Commission registering 12,000,000 shares
at a price of $0.005 per share. The offering was completed on April 8, 2008 for
total proceeds to the company of $60,000.
On July 9, 2008 our common stock shares were approved for trading on the
Over-the-Counter Bulletin Board under the symbol "NVWT". On September 2, 2008
the symbol was changed to "BRON" and on February 24, 2009 the symbol was changed
to "BROE".
On July 31, 2008, we discontinued our business plan to invest in minerals and
changed our business plan to the acquisition, exploration, development and
production of oil and gas.
Effective September 2, 2008, we effected a two (2) for one (1) forward stock
split of our issued and outstanding common stock. As a result, our authorized
capital was not increased and remained at 75,000,000 shares of common stock with
a par value of $0.001 and our issued and outstanding shares increased from
6,000,000 shares of common stock to 12,000,000 shares of common stock.
On August 29, 2008, we sold 1,400,000 shares (700,000 shares prior to the
February 2009 stock split) of common stock for $350,000.
On October 16, 2008, we sold 600,000 (300,000 shares prior to the February 2009
stock split) shares of common stock for $150,000.
On January 29, 2009, we sold 200,000 (100,000 shares prior to the February 2009
stock split) shares of common stock for $50,000.
On November 5, 2008, we filed with the State of Nevada the paperwork required
for a two (2) for one (1) forward stock split of our authorized, issued and
outstanding common stock; however, this stock split was not effective until
February 24, 2009. As a result, our authorized capital was increased from
75,000,000 to 150,000,000 shares of common stock with a par value of $0.001 and
our issued and outstanding shares increased from 13,100,000 shares of common
stock to 26,200,000 shares of common stock. For purposes of calculating earnings
per share, the stock split was retroactively applied to prior periods.
11
On April 6, 2009, we issued 18,000,000 shares of common stock for 100%
membership interest in TMG Partners, LLC valued at $4,500,000.
On April 29, 2009, we sold 200,000 shares of common stock for $50,000.
On October 22, 2009, we sold 100,000 shares of common stock for $25,000.
We have a total of 150,000,000 authorized common shares with a par value of
$0.001 per share and 44,500,000 common shares issued and outstanding as of
October 31, 2009.
RESULTS OF OPERATIONS
THREE MONTHS ENDED OCTOBER 31, 2009 AND 2008
We had no revenues during the three months ended October 31, 2009 and 2008.
For the three months ended October 31, 2009 and 2008, our general and
administrative expenses were $44,047 and $60,960, respectively. The decrease is
primarily due to consulting fees.
For the three months ended October 31, 2009 and 2008, our lease operating
expenses were $6,653 and $0, respectively. The increase is primarily due to
expenses relating to the green lease wells.
LIQUIDITY AND CAPITAL RESOURCES
As of October 31, 2009,we had cash of $17,257 and a working capital deficit of
$10,746. This compares to cash of $12,217 and working capital of $14,954 at July
31, 2009. As of October 31, 2009, we had a deficit accumulated during the
exploration stage of $5,215,744. Baron will need to generate revenues to achieve
profitability. To the extent that increases in its operating expenses precede or
are not subsequently followed by commensurate revenues, or that Baron is unable
to adjust operating expense levels accordingly, the Company's business, results
of operations and financial condition would be materially and adversely
affected. There can be no assurances that the Company can achieve or sustain
profitability or that the Company's operating losses will not increase in the
future. These factors raise substantial doubt regarding Baron's ability to
continue as a going concern.
If we experience a shortage of funds prior to generating revenues from
operations we may utilize funds from our director, who has informally agreed to
advance funds to allow us to pay for operating costs, however he has no formal
commitment, arrangement or legal obligation to advance or loan funds to us.
CASH FLOW FROM OPERATING ACTIVITIES
Cash used in operating activities for the three months ended October 31, 2009
and 2008 were $19,960 and $80,702, respectively. The decrease is due to our
decreased business activity.
CASH FLOW FROM INVESTING ACTIVITIES
Cash used in investing activities for the three months ended October 31, 2009
and 2008 were $0 and $213,500, respectively. The decrease is due to our prior
year acquisition of oil and gas properties.
CASH FLOW FROM FINANCING ACTIVITIES
Cash provided by financing activities for the three months ended October 31,
2009 and 2008 were $25,000 and $489,571, respectively. The decrease is due to
our prior year private placements.
12
HEDGING
We did not hedge any of our oil or natural gas production during the quarters
ending October 31, 2009 or 2008 and have not entered into any such hedges from
October 31, 2009 through the date of this filing.
CONTRACTUAL OBLIGATIONS AND OFF-BALANCE SHEET ARRANGEMENTS
Upon the acquisition of TMG Partners, LLC (See Note 7), the Company assumed an
agreement to acquire certain leases. Under the terms of the agreement, the
Company is committed to fund approximately $1,055,000 for leases; the Company
had paid $955,000 and owed $100,000 of the remaining commitment and is obligated
to pay the remaining upon request.
RELATED PARTY TRANSACTIONS
None.
CRITICAL ACCOUNTING POLICIES
Our discussion and analysis of our financial condition and results of operations
is based on our financial statements, which have been prepared in accordance
with accounting principles generally accepted in the United States of America.
The preparation of these financial statements requires us to make estimates and
judgments that affect the reported amounts of assets, liabilities and expenses.
We base our estimates on historical experience and on various other assumptions
that we believe to be reasonable under the circumstances, the results of which
form the 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.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 4T. CONTROLS AND PROCEDURES
DISCLOSURE CONTROLS AND PROCEDURES
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")) are designed to
ensure that information required to be disclosed in reports filed or submitted
under the Exchange Act is recorded, processed, summarized and reported within
the time periods specified in Securities and Exchange Commission rules and forms
and that such information is accumulated and communicated to management,
including the Chief Executive Officer and Chief Financial Officer, to allow
timely decisions regarding required disclosures.
MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Management of the Company is responsible for establishing and maintaining
adequate internal control over financial reporting, as such term is defined in
Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Internal control over
financial reporting is a process designed under the supervision of our principal
executive and principal financial officers to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with GAAP.
Due to inherent limitations, internal control over financial reporting may not
prevent or detect misstatements and, even when determined to be effective, can
only provide reasonable, not absolute, assurance with respect to financial
13
statement preparation and presentation. Projections of any evaluation of
effectiveness to future periods are subject to risk that controls may become
inadequate as a result of changes in conditions or deterioration in the degree
of compliance.
Under the supervision and with the participation of our management, including
our chief executive officer and chief financial officer, we evaluated the
effectiveness of the design and operation of our disclosure controls and
procedures as of the end of the period covered by this report. Based on the
evaluation, our management concluded that the design and operation of such
disclosure controls and procedures were effective.
CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There have not been any 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.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Our management is not aware of any significant litigation, pending or
threatened, that would have a significant adverse effect on our financial
position or results of operations.
ITEM 1A. RISK FACTORS
There have been no material changes to the risk factors set forth in our Annual
Report on Form 10-K for the year ended July 31, 2009, as filed with the SEC on
October 29, 2009. The risk factors disclosed in our Annual Report on Form 10-K
for the fiscal year ended July 31, 2009, in addition to the other information
set forth in this quarterly report, could materially affect our business,
financial condition or results of operations. Additional risks and uncertainties
not currently known to us or that we deem to be immaterial could also materially
adversely affect our business, financial condition or results of operations.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
October 22, 2009 - Sold 100,000 shares of common stock for $25,000 For working
capital purposes.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
14
ITEM 6. EXHIBITS
The following exhibits are included with this quarterly filing. Those marked
with an asterisk and required to be filed hereunder, are incorporated by
reference and can be found in their entirety in our Form SB-2 Registration
Statement, filed under SEC File Number 333-146627, at the SEC website at
www.sec.gov:
Exhibit No. Description
----------- -----------
3.1 Articles of Incorporation*
3.2 Bylaws*
31.1 Sec. 302 Certification of Principal Executive Officer and
Principal Financial Officer
32.1 Sec. 906 Certification of Principal Executive Officer and
Principal Financial Officer
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.
December 14, 2009 Baron Energy Inc.
/s/ Michael Maguire
--------------------------------------------------
By: Michael Maguire
(Chief Executive Officer, Chief Financial Officer,
Principal Accounting Officer,
President, Secretary, Treasurer & Director)
/s/ Lou Schiliro
--------------------------------------------------
By: Lou Schiliro
(Director)
In accordance with the requirements of the Securities Act of 1933, this
quarterly report was signed by the following person in the capacities and date
stated.
/s/ Michael Maguire December 14, 2009
- -------------------------------------------------- -----------------
Michael Maguire, President & Director Date
(Chief Executive Officer, Chief Financial Officer,
Principal Accounting Officer)
15