[As adopted in Release No. 34-32231, April 28, 1993, 58 F.R. 26509]
U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THESECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 2007
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THEEXCHANGE
ACT
For the transition period from_______ to _______
Commission file number333-105008
Caliber Energy, Inc.
(Exact name of small business issuer as specified in its charter)
Delaware | 87-0700927 | |
---|---|---|
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) |
9595 Wilshire Boulevard #900, Beverly Hills, California 90212
(Address of principal executive offices)
(310) 300-4064
Issuer’s telephone number
(Former name, former address and former fiscal year, if changed since last report.)
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 shell company (as defined by Rule 12b-2 of the Exchange Act). Yes [ ] No [X] |
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCYPROCEEDING
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: March 31, 2007 36,565,164 |
Transitional Small Business Disclosure Format (check one). Yes [ ]; No [X] |
PART I
Item 1. Financial Statements
CALIBER ENERGY, INC.
(An Exploration State Company)
BALANCE SHEETS
(Unaudited) March 31, 2007 | December 31, 2006 | |||||||
---|---|---|---|---|---|---|---|---|
ASSETS | ||||||||
Current Assets | ||||||||
Cash and cash equivalents | $ | 3,005 | $ | 5,788 | ||||
Prepaid expenses | 1,005 | 1,005 | ||||||
Total Assets | $ | 4,010 | $ | 6,793 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current Liabilities | ||||||||
Accounts payable | $ | 39,881 | $ | 39,881 | ||||
Accrued liabilities & short term contract payable | 60,299 | 36,599 | ||||||
Total Current Liabilities | 100,180 | 76,480 | ||||||
Long-Term Liabilities | ||||||||
Contract payable - the "Ritz Claim" | 15,000 | 15,000 | ||||||
Total Long-Term Liabilities | 15,000 | 15,000 | ||||||
Total Liabilities | 115,180 | 91,480 | ||||||
Stockholders' Equity | ||||||||
Preferred stock, $.0001 par value, authorized 10,000,000 | ||||||||
shares, -0- issued | -- | -- | ||||||
Common stock, $.0001 par value, authorized 500,000,000 | ||||||||
shares, 36,565,164 issued at March 31, 2007 and | ||||||||
December 31, 2006 | 3,657 | 3,657 | ||||||
Stock to be issued | 2 | 2 | ||||||
Additional paid-in capital | 1,310,491 | 1,310,491 | ||||||
Deficit accumulated during exploration state | (1,425,320 | ) | (1,398,837 | ) | ||||
Total Stockholders' Equity | (111,170 | ) | (84,687 | ) | ||||
Total Liabilities and Stockholders' Equity | $ | 4,010 | $ | 6,793 | ||||
See accompanying notes.
3
CALIBER ENERGY, INC.
(An Exploration State Company)
STATEMENTS OF OPERATIONS
(Unaudited) For the Three Months Ended March 31, | Accumulated Since November 21, 2002 Inception of Exploration | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
2007 | 2006 | State | |||||||||
Revenues | $ | -- | $ | -- | $ | -- | |||||
Expenses | |||||||||||
Consulting | -- | 9,000 | 71,000 | ||||||||
Officers compensation | 23,700 | 22,500 | 280,205 | ||||||||
General and administrative | 2,783 | 10,853 | 209,125 | ||||||||
Investor relations | -- | -- | 60,000 | ||||||||
General exploration | -- | -- | 334,763 | ||||||||
Total Expenses | 26,483 | 42,353 | 955,093 | ||||||||
Other Income (Expense) | |||||||||||
Interest Income | -- | 210 | 1,203 | ||||||||
Interest Expense | -- | (5,965 | ) | (471,430 | ) | ||||||
Total Other Income (Expense) | -- | (5,755 | ) | (470,227 | ) | ||||||
Net Income (Loss) | $ | (26,483 | ) | $ | (48,108 | ) | $ | (1,425,320 | ) | ||
Weighted Average Shares | 36,565,164 | 62,590,000 | |||||||||
Loss per Common Share | $ | -- | $ | -- | |||||||
See accompanying notes.
4
CALIBER ENERGY, INC.
(An Exploration State Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited) For the Three Months Ended March 31, | Deficit Accumulated Since November 6, 2002 Inception of Development | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
2007 | 2006 | Stage | |||||||||
CASH FLOWS FROM OPERATING | |||||||||||
ACTIVITIES: | |||||||||||
Net Loss | $ | (26,483 | ) | $ | (48,108 | ) | $ | (1,425,320 | ) | ||
Adjustments used to reconcile net loss to net | |||||||||||
cash provided by (used in) operating activities: | |||||||||||
Depreciation and Amortization | -- | -- | 744 | ||||||||
Common stock issued for liabilities | -- | -- | 257,932 | ||||||||
Stock compensation | -- | -- | 102,000 | ||||||||
Interest expense from beneficial conversion | -- | -- | 441,515 | ||||||||
Common stock to be issued for mineral rights | -- | -- | 19,000 | ||||||||
Mineral rights expensed | -- | -- | 16,000 | ||||||||
(Increase) decrease in prepaid expenses | -- | -- | (1,005 | ) | |||||||
(Increase) decrease in receivables | -- | 40,998 | -- | ||||||||
(Increase) decrease in interest receivable | -- | 993 | -- | ||||||||
Increase (decrease) in accrued interest | -- | 5,965 | -- | ||||||||
Increase (decrease) in accounts payable | -- | 238 | 39,881 | ||||||||
Increase (decrease) in accrued liabilities | 23,700 | 27,600 | 60,299 | ||||||||
Increase (decrease) in contracts payable | -- | -- | 15,000 | ||||||||
Net cash used in operating activities | (2,783 | ) | 27,686 | (473,954 | ) | ||||||
CASH FLOWS FROM INVESTING | |||||||||||
ACTIVITIES: | |||||||||||
Cash paid for website design | -- | -- | (744 | ) | |||||||
Cash paid for mineral rights | -- | -- | (16,000 | ) | |||||||
Net cash used by investing activities | -- | -- | (16,744 | ) | |||||||
CASH FLOWS FROM FINANCING | |||||||||||
ACTIVITIES: | |||||||||||
Proceeds from convertible debentures | -- | -- | 361,923 | ||||||||
Proceeds from loans | -- | -- | 78,695 | ||||||||
Proceeds from shareholder loan | -- | -- | 22,835 | ||||||||
Loans to related parties | -- | -- | (40,512 | ) | |||||||
Proceeds from loans to related parties | -- | 40,512 | 40,512 | ||||||||
Proceeds on sale of common stock | -- | -- | 30,250 | ||||||||
Net Cash Provided by Financing Activities | -- | 40,512 | 493,703 | ||||||||
5
CALIBER ENERGY, INC.
(An Exploration State Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(continued)
(Unaudited) For the Three Months Ended March 31, | Deficit Accumulated Since November 6, 2002 Inception of Development | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
2007 | 2006 | Stage | |||||||||
Net Increase (Decrease) in | |||||||||||
Cash and Cash Equivalents | (2,783 | ) | 68,198 | 3,005 | |||||||
Cash and Cash Equivalents at | |||||||||||
Beginning of the Period | 5,788 | -- | -- | ||||||||
Cash and Cash Equivalents at | |||||||||||
End of the Period | $ | 3,005 | $ | 68,198 | $ | 3,005 | |||||
SUPPLEMENTAL DISCLOSURE OF CASH | |||||||||||
FLOW INFORMATION: | |||||||||||
Interest | $ | -- | $ | -- | $ | -- | |||||
Income Taxes | $ | -- | $ | -- | $ | -- |
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
During the quarter ended June 30, 2006, convertible debt of $463,453, accrued interest of $29,915, accounts payable of $158,217 and accrued expenses of $69,800 were converted into 24,046,164 shares of common stock.
See accompanying notes.
6
CALIBER ENERGY, INC.
(An Exploration State Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 — NATURE OF OPERATIONS AND GOING CONCERN
This summary of accounting policies for Caliber Energy is presented to assist in understanding the Company’s consolidated financial statements. The accounting policies conform to generally accepted accounting principles and have been consistently applied in the preparation of the financial statements.
The unaudited financial statements as of March 31, 2007, and the three 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.
The accompanying consolidated financial statements have been prepared on the basis of accounting principles applicable to a “going concern”, which assume that the Company will continue in operation for at least one year and will be able to realize its assets and discharge its liabilities in the normal course of operations.
Several conditions and events cast doubt about the Company’s ability to continue as a “going concern”. The Company is an exploration state company, and has incurred net losses of $26,483 for the three months ended March 31, 2007, losses of $142,533 for the year ended December 31, 2006, and losses of $1,425,320 since inception. The Company has not realized economic production from its mineral properties as of March 31, 2007. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management continues to actively seek additional sources of capital to fund current and future operations. There is no assurance that the Company will be successful in continuing to raise additional capital, establishing probable or proven reserves, or determining if the mineral properties can be mined economically. These financial statements do not include any adjustments that might result from the outcome of these uncertainties.
Organization and Basis of Presentation
Caliber Energy, Inc. (the Company), an exploration state company, was incorporated on November 6, 2002 in the State of Delaware as Twin Ventures, Ltd. On June 18, 2004, the Company changed the name to Rincon Resources, Inc. On March 14, 2005, the Company changed its name to Caliber Energy, Inc.
7
CALIBER ENERGY, INC.
(An Exploration State Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
NOTE 1 — NATURE OF OPERATIONS AND GOING CONCERN (continued)
Nature of Operations
The Company is an exploration state oil and gas company. The Company also has interests in mining and mineral properties. On November 21, 2002 the Company became actively engaged in acquiring mineral properties, raising capital, and preparing properties for production.
The Company did not have any significant mining operations or activities from inception; accordingly, the Company is deemed to be in the exploration state. For purposes of recording the Company’s mineral claims in Canada, the Company acquired New Heights Capital Corporation (a Canadian corporation) and transferred the claims listed in the following paragraph into the subsidiary in exchange for 100% of the subsidiary’s outstanding stock.
On November 21, 2002, the Company acquired mineral claims (the “Ritz Claims”) located in the Lillooet Lake Region of Southwest British Columbia, Canada. The property consists of twenty unpatented two post mineral claims and one unpatented four post mineral claim representing forty units that have been staked and recorded in the Lillooet mining division. The Company has not commenced economic production and is therefore still considered to be in the exploration stage.
On July 26, 2004, the Company executed an agreement and made the 1st statutory payment of $55,000 to acquire a 75% interest in the Tudor Gold Property. The Tudor Gold Property is located in eastern Ontario, Canada approximately 100 miles northeast of Toronto. The property lies within Tudor and Grimsthorpe Townships. The property consists of twenty-two contiguous unpatented mining claims containing sixty units covering approximately 2,965 acres of land. The Company intends to launch a comprehensive, property wide, surface exploration program immediately. The Company intends to follow-up with drill testing of the mineralized zones of the property. The data derived from the drill testing of the various zones should enable the Company to identify and assess gold bearing structures to ultimately establish the size and grade of the gold resource.
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements for the three months ended March 31, 2007 and 2006 include the accounts of Caliber Energy, Inc. and its subsidiary New Heights Capital Corporation. New Heights Capital Corporation was acquired by the Company on April 22, 2003.
8
CALIBER ENERGY, INC.
(An Exploration State Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
The results of subsidiaries acquired or sold during the year are consolidated from their effective dates of acquisition through their effective dates of disposition.
All significant intercompany balances and transactions have been eliminated.
Revenue and Cost Recognition
The Company uses the accrual basis of accounting for financial statement reporting. Revenues and expenses are recognized in accordance with Generally Accepted Accounting Principles for the industry. Certain period expenses are recorded when obligations are incurred.
Use of Estimates
The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, and disclosure of contingent liabilities at the date of the financial statements, and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those results.
Accounts Receivable, Deposits, Accounts Payable and Accrued Expenses
Accounts receivable have historically been immaterial and therefore no allowance for doubtful accounts has been established. Normal operating refundable Company deposits are listed as Other Assets. Accounts payable and accrued expenses consist of trade payables created from the normal course of business.
Mineral Properties and Mining Equipment
Mineral properties and mining equipment include land and mining equipment carried at cost. Mining equipment including mill facilities is depreciated using the straight-line method over estimated useful lives of 5 to 15 years, or the units-of-production method based on estimated tons of ore reserves if the equipment is located at a producing property with a shorter economic life. Mining equipment not in service is not depreciated.
During 1997, the Securities and Exchange Commission (SEC) staff reconsidered existing accounting practices for mineral expenditures by United States junior mining companies. They now
9
CALIBER ENERGY, INC.
(An Exploration State Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
interpret generally accepted accounting policy for junior mining companies to permit capitalization of acquisition and exploration costs only after persuasive engineering evidence is obtained to support recoverability of these costs (ideally upon determination of proven and/or probable reserves based upon dense drilling samples and feasibility studies by a recognized independent engineer). Although the Company has obtained samples, and an independent engineer has deemed the properties may contain platinum group metals, management has chosen to follow the more conservative method of accounting by expensing all mineral costs, for which there is no feasibility study.
Land Options
As noted above, since the Company interprets generally accepted accounting policies to permit capitalization of acquisition costs including leases and land options only after persuasive engineering evidence has been obtained to support recoverability of these costs, these costs will be expensed.
Reclamation and Environmental Costs
Reclamation costs and related accruals are based on the Company’s interpretation of environmental and regulatory requirements. Minimum standards for mine reclamation have been established by various governmental agencies. Reclamation, site restoration, and closure costs for each producing mine are accrued over the life of the mine using the units-of-production method. Ongoing reclamation activities are expensed in the period incurred.
Oil and Gas Properties
The Company follows the full cost method of accounting for its oil and gas operations whereby all costs related to the acquisition of petroleum and natural gas interests are capitalized. Such costs include land and lease acquisition costs, annual carrying charges of non-producing properties, geological and geophysical costs, costs of drilling and equipping productive and nonproductive wells, and direct exploration salaries and related benefits. Proceeds from the disposal of oil and gas properties are recorded as a reduction of the related capitalized costs without recognition of a gain or loss unless the disposal would result in a change of 20 percent or more in the depletion rate. The Company operates in one cost center, being Canada. To date the Company has not established any proven recoverable reserves on its properties.
Depletion and depreciation of the capitalized costs are computed using the unit-of-production method based on the estimated proven reserves of oil and gas determined by independent consultants.
10
CALIBER ENERGY, INC.
(An Exploration State Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Estimated future removal and site restoration costs are provided over the life of proven reserves on a unit-of-production basis. Costs, which include the cost of production equipment removal and environmental clean-up, are estimated each period by management based on current regulations, costs, technology and industry standards. The charge is included in the provision for depletion and depreciation and the actual restoration expenditures are charged to the accumulated provision amounts as incurred.
The Company applies a ceiling test to capitalized costs to ensure that such costs do not exceed estimated future net revenues from production of proven reserves at year end market prices less future production, administrative, financing, site restoration, and income tax costs plus the lower of cost or estimated market value of unproved properties. If capitalized costs are determined to exceed estimated future net revenues, a write-down of carrying value is charged to depletion in the period.
Income Taxes
The Company accounts for income taxes using the liability method which requires recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred tax assets and liabilities are determined based on the difference between the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.
The Company’s management determines if a valuation allowance is necessary to reduce any tax benefits when the available benefits are more likely than not to expire before they can be used.
Cash and Cash Equivalents, and Credit Risk
For purposes of reporting cash flows, the Company considers all cash accounts with maturities of 90 days or less and which are not subject to withdrawal restrictions or penalties, as cash and cash equivalents in the accompanying balance sheet.
The portion of deposits in a financial institution that insures its deposits with the FDIC up to $100,000 per depositor in excess of such insured amounts are not subject to insurance and represent a credit risk to the Company.
11
CALIBER ENERGY, INC.
(An Exploration State Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Stock Based Compensation
Effective January 1, 2006, the company adopted the provisions of SFAS No. 123(R). SFAS No. 123(R) requires employee equity awards to be accounted for under the fair value method. Accordingly, share-based compensation is measured at grant date, based on the fair value of the award. Prior to January 1, 2006, the company accounted for awards granted to employees under its equity incentive plans under the intrinsic value method prescribed by Accounting Principles Board (APB) Opinion No. 25, “Accounting for Stock Issued to Employees” (APB 25), and related interpretations, and provided the required pro forma disclosures prescribed by SFAS No. 123, “Accounting for Stock-Based Compensation” (SFAS No. 123), as amended. No stock options were granted to employees during the years ended December 30, 2006 or 2005 and accordingly, no compensation expense was recognized under APB No. 25 for the years ended December 31, 2006 or 2005. In addition, no compensation expense is required to be recognized under provisions of SFAS No. 123(R) with respect to employees.
Under the modified prospective method of adoption for SFAS No. 123(R), the compensation cost recognized by the company beginning on January 1, 2006 includes (a) compensation cost for all equity incentive awards granted prior to, but not yet vested as of January 1, 2006, based on the grant-date fair value estimated in accordance with the original provisions of SFAS No. 123, and (b) compensation cost for all equity incentive awards granted subsequent to January 1, 2006, based on the grant-date fair value estimated in accordance with the provisions of SFAS No. 123(R). The company uses the straight-line attribution method to recognize share-based compensation costs over the service period of the award. Upon exercise, cancellation, forfeiture, or expiration of stock options, or upon vesting or forfeiture of restricted stock units, deferred tax assets for options and restricted stock units with multiple vesting dates are eliminated for each vesting period on a first-in, first-out basis as if each vesting period was a separate award. To calculate the excess tax benefits available for use in offsetting future tax shortfalls as of the date of implementation, the company followed the alternative transition method discussed in FASB Staff Position No. 123(R)-3.
Foreign Currency Translation and Transactions
The Company’s functional currency is the US dollar. No material translations or transactions have occurred. Upon the occurrence of such material transactions or the need for translation adjustments, the Company will adopt Financial Accounting Standard No. 52 and other methods in conformity with Generally Accepted Accounting Principles.
12
CALIBER ENERGY, INC.
(An Exploration State Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Earnings Per Share
Basic earnings per common share were computed by dividing net loss by the weighted average number of shares of common stock outstanding during the year. There are no dilutive outstanding common stock equivalents at March 31 ,2007 and 2006.
Fair Value of Financial Instruments
The carrying value of the Company’s financial instruments, including accounts payable and accrued liabilities at March 31, 2007 and December 31, 2006 approximates their fair values due to the short-term nature of these financial instruments.
NOTE 3 — EXPLORATION STATE COMPANY/ GOING CONCERN
The Company has not begun principal operations and as is common with a company in the exploration state, the Company has had recurring losses. Continuation of the Company as a going concern is dependent upon obtaining the additional working capital necessary to be successful in its planned activity, and the management of the Company has developed a strategy, which it believes will accomplish this objective through additional equity funding and long term financing, which will enable the Company to operate for the coming year.
NOTE 4 — AFFILIATES AND RELATED PARTIES
Significant relationships with (1) companies affiliated through common ownership and/or management, and (2) other related parties are as follows:
On July 26th, 2004, the Company executed an agreement with Louvicourt Gold Mines Inc. and made a first payment of $55,000.00 (US) to acquire a 75% interest and the rights to explore a series of gold occurrences situated on the Tudor Gold Property. The President of Louvicourt Gold Mines Inc. is Fenton Scott, a related party and father of Graeme F. Scott, the President and CEO of the Company. Additionally, Graeme F. Scott was a past director of Louvicourt Gold Mines, Inc. See Note 8 for a description of this Project.
During October 2004, the Company received a loan from a related party for $19,590 for exploration costs associated with the Tudor Gold Property. The loan is due on demand with interest accrued at 5% annually. In March 2005, this loan was converted to convertible debentures (see Note 11).
13
CALIBER ENERGY, INC.
(An Exploration State Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
NOTE 4 — AFFILIATES AND RELATED PARTIES (continued)
During December 2004, the Company received a loan from a shareholder of $3,245 for payment of accounts payable. The loan is due on demand with interest accrued at 5% annually. In March 2005, this loan was converted to convertible debentures (see Note 11).
During the year ended December 31, 2005, the Company made two short-term loans totaling $40,512 to two affiliated companies. The loans carry an interest rate of 6% per annum. In February 2006, both of these loans were repaid.
NOTE 5 — NOTES PAYABLE
In July 2004, the Company received a loan of $58,000 from a third-party. The loan is due July 14, 2005 with interest at 5% annually. In March 2005, this loan was converted to convertible debentures (see Note 11).
In December 2004, the Company received a loan of $20,695 from a third-party. The loan is due on demand with interest at 5% annually. In March 2005, this loan was converted to convertible debentures (see Note 11).
NOTE 6 — INCOME TAXES
As of December 31, 2006, the Company had a net operating loss carry forward for income tax reporting purposes of approximately $957,324 that may be offset against future taxable income through 2026. 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 carry-forwards will expire unused. Accordingly, the potential tax benefits of the loss carry-forwards are offset by a valuation allowance of the same amount.
2006 | 2005 | |||||||
---|---|---|---|---|---|---|---|---|
Net Operating Losses | $ | 143,599 | $ | 122,219 | ||||
Valuation Allowance | (143,599 | ) | (122,219 | ) | ||||
$ | - | $ | - | |||||
14
CALIBER ENERGY, INC.
(An Exploration State Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
NOTE 6 — INCOME TAXES (continued)
The provision for income taxes differs from the amount computed using the federal US statutory income tax rate as follows:
2006 | 2005 | |||||||
---|---|---|---|---|---|---|---|---|
Provision (Benefit) at US Statutory Rate | $ | 21,380 | $ | 38,892 | ||||
Increase (Decrease) in Valuation Allowance | (21,380 | ) | (38,892 | ) | ||||
$ | - | $ | - | |||||
The Company evaluates its valuation allowance requirements based on projected future operations. When circumstances change and causes a change in management’s judgment about the recoverability of deferred tax assets, the impact of the change on the valuation is reflected in current income.
NOTE 7 — LONG-TERM DEBT
On November 21, 2002, the Company entered into an agreement with Mr. Garth Barton for the purchase of mining property, the “Ritz Claim”, located in the Lillooet Lake Region of Southwest British Columbia, Canada. The “Ritz Claim” is title to forty (40) mineral claim units that are unpatented. The total purchase price of the claim is $33,500 due per terms of the contract with advance royalties of $25,000 to be paid annually commencing 36 months from the date of signature of the agreement. The property is subject to a royalty agreement.
The contract payment schedule calls for $13,500 to be paid upon delivery of a summary geological report and transfer of property title. The $13,500 was paid per the contract. On February 28, 2003 a payment of $2,500 was made per contract schedule. Twelve months from the date of title registration, $2,500 becomes due with another $2,500 due twenty four months from such date. No later than thirty six months from the date of signature on the contract, the balance of payment is due for a total purchase price of $33,500. At March 31, 2007 and December 31, 2006, the amount due on this contract was $15,000 and $15,000, respectively.
NOTE 8 — SHAREHOLDERS’ EQUITY
Preferred Stock
The Company has authorized ten million (10,000,000) shares of preferred stock with a par value of $.0001, none of which have been issued.
15
CALIBER ENERGY, INC.
(An Exploration State Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
NOTE 8 — SHAREHOLDERS’ EQUITY (continued)
Common Stock
The Company has authorized five hundred million (500,000,000) shares of common stock with a par value of $.0001.
On April 8, 2004, 36,000,000 shares were returned to the treasury and canceled.
On April 6, 2005, 5,995,000 shares of common stock were returned to the treasury and canceled.
During the quarter ended June 30, 2006, convertible debt of $463,453, accrued interest of $29,915, accounts payable of $158,217 and accrued expenses of $69,800 were converted into 24,046,164 shares of common stock.
On July 23, 2004, the Company did a 10 to 1 forward stock split of its issued and outstanding shares of common stock from 9,257,000 shares to 92,570,000 shares. On June 26, 2006, the Company did a 5 to 1 reverse stock split of its issued and outstanding shares of common stock from 182,825,805 shares to 36,565,164 shares. All references to common stock have been adjusted to reflect the stock splits.
Common Stock Subscribed and Issued for Cash
During December, 2002, the Company undertook an offering exempt from registration pursuant to Section 4(2) of the Securities Act of 1933 to raise $16,000 in the issuance of 6,400,000 shares of common stock for the purpose of the acquisition and exploration of mining properties. The Company’s management considers this offering to be exempt under the Securities Act of 1933.
During March 2003, the Company undertook a Regulation D Rule 506 private placement offering to raise $14,250 for the issuance of 114,000 shares of common stock for the purpose of mineral exploration. The Company’s management considers this offering to be exempt under the Securities Act of 1933.
Common Stock to be Issued
On July 26, 2004, the Company entered into a property option agreement with Louvicourt Gold Mines, Inc. As part of this agreement, the Company was to issue 20,000 shares of common stock upon the execution of the agreement. As of December 31, 2005, the Company had expensed $19,000 in exploration costs related to the 20,000 shares of common stock due upon execution of the agreement. The shares were valued at $.19 per share and as of March 31, 2007, had not been issued.
16
CALIBER ENERGY, INC.
(An Exploration State Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
NOTE 9 — MINERAL RIGHTS
On November 21, 2002, the Company entered into an agreement with Mr. Garth Barton for the purchase of mining property, the “Ritz Claim”, located in the Lillooet Lake Region of Southwest British Columbia, Canada. The “Ritz Claim” is title to forty (40) mineral claim units that are unpatented. The total purchase price of the claim is $33,500 due per terms of the contract with advance royalties of $25,000 to be paid annually commencing 36 months from the date of signature of the agreement. Failure to pay the advance royalties will cause a reversion of the property within 10 days of such failure. The property is subject to a 2 1/2% Net Smelter Royalty (NSR) and a 7 1/2% Gross Rock Royalty (GRR). 1 1/2% of the NSR can be acquired for $1.0 million within 12 months from the commencement of commercial production. Mr. Barton is required to keep the claims in good standing for at least 18 months from the date of the agreement. In addition, Mr. Barton will provide geological consulting services for the claims and will maintain the claims in good standing for a period of 36 months with fees advanced by the Company prior to the anniversary dates from signature of the agreement. Said fees are to be deducted from the total cost. All costs related to this claim have been expensed in accordance with Generally Accepted Accounting Principals for the industry.
On April 22, 2003, the Company acquired the outstanding common share (one common share) of New Heights Capital Corporation, an inactive Canadian corporation, for the purpose of recording the Company’s Canadian “Ritz Claim” in a Canadian corporation as required. The “Ritz Claim” was transferred to the subsidiary in exchange for the subsidiary’s outstanding common share of stock. New Heights Capital Corporation is a wholly owned Canadian subsidiary of the Company.
On July 26, 2004, the Company executed a Property Option Agreements with Louvicourt Gold Mines, Inc. (“Louvicourt”) (see Note 3) to acquire a 75% interest in the Tudor Gold Property. The Company agreed to make the following cash and share option payments to Louvicourt:
1. | $55,000 upon the full execution of the Agreement. |
2. | $55,000 on or before one year from the date of full execution of this Agreement. 3. 20,000 shares of common stock upon full execution of this Agreement, and 4. 40,000 shares of common stock on or before one year from the date of full execution |
of this Agreement.
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CALIBER ENERGY, INC.
(An Exploration State Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
NOTE 9 — MINERAL RIGHTS (continued)
The Company also agreed to fund work programs on the mineral claims by advancing exploration funds to Louvicourt on the following basis:
1. | by no later than July 31, 2004, the Company will advance Exploration Funds of $150,000 |
2. | by no later than one year from the signing of this Agreement, the Company will advance additional Exploration Funds of $350,000; |
3. | by no later than two years from the signing of this Agreement, the Company will advance additional Exploration Funds of $250,000; and |
4. | by no later than 4 years from the signing of this Agreement, the Company will advance additional Exploration Funds of $1,250,000. |
Provided the Company has made the option payments and advanced the exploration funds required for work programs costing a total of $750,000, the Company shall have earned an immediately vested 50% interest in the mineral claims. Provided the Company has made the option payments and advanced the exploration funds required for work programs costing a total of $1,250,000, the Company shall have earned an immediately vested additional 25% interest in the mineral claims, bringing the Company’s total interest in the mineral claims to 75%.
As of December 31, 2004 the Company had paid Louvicourt a cash payment of $55,000 as part of this agreement. The $55,000 was expensed in 2004 as part of exploration costs. The Company has accrued $150,000 in accounts payable for the exploration funds due on July 31, 2004. This $150,000 was expensed in 2004 as part of exploration costs. The Company also expensed $19,000 in exploration costs in 2004 related to the 20,000 shares of common stock due upon execution of the agreement. The shares were valued at $.19 per share and as of March 31, 2007, had not been issued.
The Tudor Gold Property is located in Tudor and Grimsthorpe Townships in the Madoc-Bancroft region of the Providence of Ontario and is located approximately 100 miles northeast of Toronto, Canada. The property consists of twenty-two contiguous unpatented mining claims containing sixty units covering approximately 2,965 acres of land. The Company intends to launch a comprehensive, property wide, surface exploration program immediately. Once further funding is acquired and the agreement can be fully executed, the Company intends to follow-up with drill testing of the mineralized zones of the property. The data derived from the drill testing of the various zones should enable the Company to identify and assess gold bearing structures to ultimately establish the size and grade of the gold resource.
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CALIBER ENERGY, INC.
(An Exploration State Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
NOTE 10 — COMMITMENTS AND CONTINGENCIES
As of March 31, 2007, 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.
The Company’s “Ritz Claims” will revert back to the seller within no less than a 10 day period if the Company fails to make the $25,000 annual advance royalty payments per the sales contract commencing 36 months from the date of the contract.
On June 1, 2004, the Company entered into a consulting agreement with Mr. Robert McIntosh. Mr. McIntosh will provide geological and administrative services to the Company for $3,000 per month. This agreement was canceled as of March 31, 2006.
Pursuant to consulting agreements dated June 1, 2004, the Company agreed to pay $2,500 per month to the CFO and director of the Company and $5,000 per month to the President and director of the Company. Pursuant to a consulting agreement dated April 23, 2004, the Company agreed to pay $400 per month to a director.
Management is not aware of any contingent matters that could have a material adverse effect on the Company’s financial condition, results of operations, or liquidity.
NOTE 11 — CONVERTIBLE DEBENTURES
On March 9, 2005, the Company executed three Convertible Debentures for up to $870,000. The notes are due and payable in full on or before March 9, 2006 and carry an interest rate of 5% per annum. The notes are convertible, at the discretion of the holder, into shares of common stock of the Company at a conversion price of $.10 per share.
On March 9, 2005, the Company sold $383,610 of convertible debentures. On that date the fair market value of the stock was $.20. Since the fair market value of the stock was greater than the conversion price of $.10, the Company has recognized interest expense of $383,610.
On June 1, 2005, the Company sold $50,000 of convertible debentures. On that date the fair market value of the stock was $.18. Since the fair market value of the stock was greater than the conversion price of $.10, the Company has recognized interest expense of $40,000.
On June 10, 2005, the Company sold $29,842 of convertible debentures. On that date the fair value of the stock was $.16. Since the fair market value of the stock was greater than the conversion price of $.10, the Company has recognized interest expense of $17,905.
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CALIBER ENERGY, INC.
(An Exploration State Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(continued)
NOTE 11 — CONVERTIBLE DEBENTURES (continued)
The Company had received approximately $463,453 from the convertible debentures. In June 2006, the convertible debentures of $463,453 and accrued interest of $29,915 was converted common stock.
NOTE 12 — OIL AND GAS PROPERTIES
On March 28, 2005, the Company entered into an agreement with Salida Capital, Inc. (Salida) whereby the Company will be entitled to 49% of the benefits and interests earned by Salida, pursuant to an agreement between Salida and Vega Resources, Ltd. (Vega), on certain lands known as the Bolloque Prospect, located in the Province of Alberta. To earn the interest in the Bolloque Prospect, the Company shall be required to assume the obligations of Salida pursuant to Salida’s agreement with Vega, including the drilling of a test well, and the drilling of two additional option wells. If all three wells are not drilled and completed, or capped and abandoned, as the case may be, the Company will earn no interest in the Bolloque Prospect. During the year ended December 31, 2005, the Company paid $40,998 towards the drilling of wells. These costs had been capitalized. However, the Company was unable to advance the full funds for the Test-Well, and was in default pursuant to the original agreement. On August 26, 2005, the Company and Salida agreed that Salida would reimburse the Company the full amount of its investment in the Test-Well. In consideration for the advancement of funds paid, Salida will grant the Company a 10% carried interest in the section of lands earned by Salida under the Vega Participation Agreement by virtue of the completion of the Test-Well. At December 31, 2005, the capitalized cost of the investment in oil and gas properties of $40,998 has been reclassified as a receivable. On March 3, 2006, the Company received this payment from Salida.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
The following discussion and analysis should be read in conjunction with our financial statements, included herewith. This discussion should not be construed to imply that the results discussed herein will necessarily continue into the future, or that any conclusion reached herein will necessarily be indicative of actual operating results in the future. Such discussion represents only the best present assessment of our management.
Plan of Operations
On March 16th, 2006 the Company began negotiations with a private Company to participate in oil and gas exploration in Kansas. The oil and gas boom returned to Kansas in 2005. Its impact on the state economy depends on how long it lasts. Kansas oil and gas production was worth $4.7 billion in 2005, according to estimates by the Kansas Geological Survey at the University of Kansas.
The total value of oil produced in the state in 2005 was estimated at about $1.8 billion, up from about $500 million in 2004. The total value of natural gas production was more than $2.8 billion in 2005, up from $2.2 billion the previous year. Natural gas production in 2005 is estimated at 380 billion cubic feet, down about 20 billion cubic feet from the previous year. The statewide peak was 990 billion cubic feet in 1970.
Caliber will join other partners that have acquired participation rights in a large data base that includes a geophysical survey covering approximately one million acres, located in central Kansas, covering parts of Ellsworth, Salina, McPherson, Reno, Harvey, Kingman, and Sedgwick counties. Total cumulative oil production through 1999 from these counties is more than 978 million barrels of oil. The geophysical survey utilized RAM technology, owned by Paramount Energy Corp., which is a geophysical methodology used to highlight oil and gas deposits. Unlike 2-D and 3-D seismic methods, which gather information based upon artificially induced sonic responses recorded at the surface, RAM technology identifies “unique bright spots” using its proprietary software to process certain aspects of the earth’s magnetic field data.
Data is collected by a low flying aircraft equipped with specialized equipment and then analyzed by RAM software. These “unique bright spot” anomalies can be correlated to near-surface alterations caused by the slow geochemical processes that occur over both oil and gas deposits. The RAM technology is an indirect hydrocarbon indicator independent of structure so it a good tool in areas where seismic is not. Since RAM data is collected from an aircraft, large acreage surveys can be acquired many times faster and many times less costly than traditional seismic. That makes RAM an ideal first reconnaissance tool. Several identified RAM anomalies interpreted within the survey area are believed to have hydrocarbon potential over multi-sections of lands that have never been tested with a drill bit. Most nearby production within this region of the Central Kansas Platform produces from Mississippian age and older limestone rocks above the Arbuckle dolomite formation. Some of the accumulations of hydrocarbons are stratagraphically trapped and unrelated to structure and therefore not easily identifiable by traditional seismic. The magnetic survey and interpretation of the region is of excellent quality. Oil wells will be drilled to test the most promising prospects
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to the deepest known petroleum formation, the Arbuckle, generally less than 4000’ in depth in the Central Kansas Platform. Drilling costs have been estimated to be in the order of $200,000 for a cased and completed well.
The Central Kansas Platform covered by the survey and interpretation contains some of the most prolific production from shallow depths in that part of the country. There are many established oil fields within the boundaries of the survey area. The survey indicates “bright spots” that could be hydrocarbon accumulations not yet discovered by traditional seismic or other older exploration technologies. Multiple prospects are expected to be generated after more extensive field tests. When formalized, Caliber will join partners who are proceeding to further evaluate the most prospective oil and gas targets for drilling utilizing complimentary geochemical and geophysical methodologies in their field testing. The operator will then recommend leases for acquisition and the exploration program will commence.
Caliber will join other Companies which are Silver Star, with a 20% working interest, Fidelis Energy, Inc. which has a 25% working interest, and Cascade Energy, Inc. which also has a 25% working interest. The private company will be carried through the drilling and completion of the first two (2) exploratory wells. The 70% working interest partners will pay 100% of the costs of drilling and completing the initial two wells. Subsequent to those first two wells, all participants in the play will contribute on a straight up working interest basis.
On June 16, 2006 the Data Sharing Agreement between Caliber, Silver Star, Fidelis, Cascade and the private company was cancelled. Caliber will no longer have any interest to participate in the oil exploration in Kansas.
Reverse Stock Split
On June 15, 2006, the Board of Directors voted in favor of the reverse stock split and directed that the reverse stock split be completed. The Board of Directors also placed the ratification of the reverse stock split on the agenda for consideration by stockholders at the special meeting to be held on December 15, 2006. The Board of Directors believes that the per share price of our common stock justified the 1:5 reverse stock split and that it would not negatively impact the marketability of the existing shares or our potential ability to raise capital. The Board of Directors further believed that the increase in the number of shares of common stock outstanding as a consequence of the reverse stock split would ultimately encourage greater interest in our common stock by the financial community and investing public. Accordingly, we believe that our company and our stockholders will realize benefits over time and suffer no long-term negative consequences as a result of the reverse split.
As a result of the reverse stock split, the number of issued and outstanding shares of our common stock decreased from 182,825,805 shares to 36,565,164 shares, based upon the total number of issued and outstanding shares of common stock as of the record date on October 27, 2006 and decreased our total number of authorized shares of common stock from 500,000,000 to
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100,000,000. Please note that the reverse stock split did not change a stockholder’s proportionate equity interest in our company.
As an additional result of the reverse stock split, our stated capital decreased from $18,283 to $3,657 on the effective date of the reverse stock split. Our stated capital consists of the aggregate number of our shares of common stock outstanding from time-to-time, multiplied by the par value of $0.0001 of the common stock.
Liquidity and Capital Resources
The Company requires working capital principally to fund its current operations. There are no commitments from banks or other lending sources for lines of credit or similar short-term borrowing. From time to time in the past, required short-term borrowing have been obtained from a principal shareholder or other related entities.
The Company’s business plan requires substantial funding from a public or private offering of its common stock in connection with a business acquisition, for which the Company has no commitments. The Company intends to actively pursue other financing or funding opportunities.
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 his evaluation as of March 31, 2007, 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.
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PART II — OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
Exhibit Number | Title of Document | |
---|---|---|
31.1 31.2 32.1 32.2 | Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
(b) Reports on Form 8-K filed.
None.
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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.
Caliber Energy, Inc. (Registrant) | |
DATE: May 7, 2007 | |
/S/ Graeme Scott | |
Graeme Scott President, CEO and Director (Principal Executive Officer) | |
/S/ David Naylor | |
David Naylor Treasurer, CFO and Director (Principal Financial Officer) |
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