10QSB 1 form10qsb063005.txt [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 THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: June 30, 2005 -------------------------------------------- [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE EXCHANGE ACT For the transition period from to -------------- ------------ Commission file number 333-105008 --------------------------------------------------------- Caliber Energy, Inc. ------------------------------------------------------------------------ (Exact name of small business issuer as specified in its charter) Delaware 87-0700927 -------------------------------------------------------------------------------- (State or other jurisdiction (IRS Employer of incorporation or organization) Identification No.) 11300 W. Olympic Blvd., Ste. 800, Los Angeles, California 90064 ------------------------------------------------------------------------------- (Address of principal executive offices) (661) 477-7699 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 APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDING DURING THE PRECEDING FIVE YEARS Check whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes ----- No ----- APPLICABLE ONLY TO CORPORATE ISSUERS State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practical date: June 30, 2005 62,595,000 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) June 30, December 31, 2005 2004 ------------------ ----------------- ASSETS Current Assets Cash and cash equivalents $ 55,888 $ 728 Prepaid expenses 33,824 - ------------------ ----------------- Total Current Assets 89,712 728 Other Assets Oil and gas properties 40,999 - ------------------ ----------------- Total Assets $ 130,711 $ 728 ================== =================
3 CALIBER ENERGY, INC. (An Exploration State Company) BALANCE SHEETS (continued)
(Unaudited) June 30, December 31, 2005 2004 ------------------ ----------------- LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable $ 174,651 $ 189,067 Accrued expenses & short term contract payable 13,456 97,730 Notes payable - 78,695 Related party loans - 22,835 Accrued interest - 1,659 ------------------ ----------------- Total Current Liabilities 188,107 389,986 Long-Term Liabilities Convertible debentures 471,819 - Contract payable - the "Ritz Claim" 15,000 15,000 ------------------ ----------------- Total Liabilities 674,926 404,986 ------------------ ----------------- Stockholders' Equity Preferred stock, $.0001 par value, authorized 10,000,000 shares, -0- issued - - Common stock, $.0001 par value, authorized 500,000,000 shares, 62,595,000 issued at June 30, 2005 and 92,570,000 issued at December 31, 2004 6,260 9,257 Stock to be issued 10 10 Additional paid-in capital 144,980 141,983 Deficit accumulated during exploration state (695,465) (555,508) ------------------ ----------------- Total Stockholders' Equity (544,215) (404,258) ------------------ ----------------- Total Liabilities and Stockholders' Equity $ 130,711 $ 728 ================== =================
See accompanying notes. 4 CALIBER ENERGY, INC. (An Exploration State Company) STATEMENTS OF OPERATIONS
Accumulated Since November 21, (Unaudited) (Unaudited) 2002 For the Three Months For the Six Months Inception of Ended June 30, Ended June 30, Exploration ------------------------------------- -------------------------------------- 2005 2004 2005 2004 State ------------------ ----------------- ------------------ ------------------ ------------------ Revenues $ - $ - $ - $ - $ - ------------------ ----------------- ------------------ ------------------ ------------------ Expenses Consulting 9,000 - 18,000 - 44,000 Officers compensation 21,600 - 45,300 - 112,205 General and administrative 41,205 3,176 57,854 4,050 196,130 General exploration - - 12,095 - 334,763 ------------------ ----------------- ------------------ ------------------ ------------------ Total Expenses 71,805 3,176 133,249 4,050 687,098 Other Income (Expense) Interest Expense (5,117) - (6,708) - (8,367) ------------------ ----------------- ------------------ ------------------ ------------------ Net Income (Loss) $ (76,922) $ (3,176) $ (139,957) $ (4,050) $ (695,465) ================== ================= ================== ================== ================== Weighted Average Shares 64,241,976 106,416,140 78,327,738 189,034,160 ================== ================= ================== ================== Loss per Common Share $ - $ - $ - $ - ================== ================= ================== ==================
See accompanying notes. 5 CALIBER ENERGY, INC. (An Exploration State Company) STATEMENTS OF CASH FLOWS
Accumulated Since November 21, (Unaudited) 2002 For the Six Months Inception of Ended June 30, Exploration ------------------------------------ 2005 2004 State ----------------- ------------------ ------------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net Loss $ (139,957)$ (4,050)$ (695,465) Adjustments used to reconcile net loss to net cash provided by (used in) operating activities Depreciation - - 744 Stock compensation - - 102,000 Common stock to be issued for mineral rights - - 19,000 Mineral rights expensed - - 16,000 (Increase) decrease in prepaid expenses (33,824) - (33,824) Increase (decrease) in accrued interest 6,707 - 8,366 Increase (decrease) in accrued expenses (84,274) - 13,456 Increase (decrease) in contract payable - - 15,000 Increase (decrease) in accounts payable (14,416) 3,974 174,651 ----------------- ------------------ ------------------ Net cash used in operating activities (265,764) (76) (380,072) ----------------- ------------------ ------------------ CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of oil and gas properties (40,999) - (40,999) Cash paid for website design - - (744) Cash paid for mineral rights - - (16,000) ----------------- ------------------ ------------------ Net cash used by investing activities (40,999) - (57,743) ----------------- ------------------ ------------------ CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from convertible debentures 361,923 - 361,923 Proceeds from loans - - 78,695 Proceeds from shareholder loans - - 22,835 Proceeds on sale of common stock - - 30,250 ----------------- ------------------ ------------------ Net Cash Provided by Financing Activities 361,923 - 493,703 ----------------- ------------------ ------------------ Net Increase (Decrease) in cash and cash equivalents 55,160 (76) 55,888 Cash and cash equivalents at beginning of the period 728 76 - ----------------- ------------------ ------------------ Cash and cash equivalents at end of the period $ 55,888 $ - $ 55,888 ================= ================== ==================
6 CALIBER ENERGY, INC. (An Exploration State Company) STATEMENTS OF CASH FLOWS (continued)
Accumulated Since November 21, (Unaudited) 2002 For the Six Months Inception of Ended June 30, Exploration ------------------------------------ 2005 2004 State ----------------- ------------------ ------------------ SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Interest $ - $ - $ - Income Taxes $ - $ - $ - SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: NONE -----------
See accompanying notes. 7 CALIBER ENERGY, INC. (An Exploration State Company) NOTES TO 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 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 June 30, 2005, and for the three and six month period then ended, reflect, in the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to fairly state the financial position and results of operations for the three and six months. Operating results for interim periods are not necessarily indicative of the results which can be expected for full years. The accompanying 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 approximately $140,000 for the six months ended June 30, 2005, losses of approximately $4,000 for the six months ended June 30, 2004, and losses of approximately $695,000 since inception. The Company has not realized economic production from its mineral properties as of June 30, 2005. 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. The Company is headquartered in Tucson, Arizona. 8 CALIBER ENERGY, INC. (An Exploration State Company) NOTES TO 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 and six months ended June 30, 2005 and 2004 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. 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. 9 CALIBER ENERGY, INC. (An Exploration State Company) NOTES TO FINANCIAL STATEMENTS (continued) NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 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 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. 10 CALIBER ENERGY, INC. (An Exploration State Company) NOTES TO FINANCIAL STATEMENTS (continued) NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 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 non- productive 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. 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. 11 CALIBER ENERGY, INC. (An Exploration State Company) NOTES TO FINANCIAL STATEMENTS (continued) NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 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. Stock Based Compensation In October 1995, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation," (SFAS 123), which is effective for periods beginning after December 15, 1995. SFAS 123 requires that companies either recognize compensation expense for grants of stock, stock options, and other equity instruments based on fair value or provide pro-forma disclosure of the effect on net income and earnings per share in the Notes to the Financial Statements. The Company has adopted SFAS 123 in accounting for stock-based compensation. 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. 12 CALIBER ENERGY, INC. (An Exploration State Company) NOTES TO FINANCIAL STATEMENTS (continued) NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 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. 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. Diluted loss per common share for the six months ended June 30, 2005 and 2004 are not presented as it would be anti-dilutive. At June 30, 2005, the total number of potentially dilutive common stock equivalents was 4,718,200. There are no dilutive outstanding common stock equivalents at June 30, 2004. 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 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). 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, 2004, the Company had a net operating loss carryforward for income tax reporting purposes of approximately $556,000 that may be offset against future taxable income through 2024. Current tax laws limit the amount of loss available to be offset against future taxable income when a substantial change in ownership occurs. Therefore, the amount available to offset future taxable income may be limited. No tax benefit has been reported in the financial statements, because the Company believes there is a 50% or greater chance the carryforwards will expire unused. Accordingly, the potential tax benefits of the loss carryforwards are offset by a valuation allowance of the same amount. NOTE 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. 14 CALIBER ENERGY, INC. (An Exploration State Company) NOTES TO FINANCIAL STATEMENTS (continued) 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. 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, 180,000,000 shares were returned to the treasury and cancelled. 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. All references to common stock have been adjusted to reflect the stock split. On April 6, 2005, 29,975,000 shares of common stock were returned to the treasury and cancelled. 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 32,000,000 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 570,000 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 100,000 shares of common stock upon the execution of the agreement. As of December 31, 2004, the Company has expensed $19,000 in exploration costs related to the 100,000 shares of common stock due upon execution of the agreement. The shares were value at $.19 per share and as of June 30, 2005, had not been issued. 15 CALIBER ENERGY, INC. (An Exploration State Company) NOTES TO FINANCIAL STATEMENTS (continued) NOTE 8 - SHAREHOLDERS' EQUITY (continued) Common Stock Recorded as Compensation The Company does not have an employee stock compensation package set up at this time. The stock compensation that has been granted falls under Rule 144. Compliance with Rule 144 is discussed in the following paragraph. In general, under Rule 144 as currently in effect, a person who has beneficially owned shares of a company's common stock for at least one year is entitled to sell within any three month period a number of shares that does not exceed the greater of: 1. 1% of the number of shares of the company's common stock then outstanding which, in our case, would equal approximately 280,380 shares as of the date of this prospectus; or 2. The average weekly trading volume of the company's common stock during the four calendar weeks preceding the filing of a notice on form 144 with respect to the sale. Sales under Rule 144 are also subject to manner of sale provisions and notice requirements and to the availability of current public information about the company. The Company records stock issued for services and future services at the fair value of the stock issued, if known, or the fair value of the services if the fair value of the stock is not determined and no value is contemplated in the contract. The stock is recorded as issued in the equity section of the financial statements when a contract for services is entered into for stock compensation. 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. 16 CALIBER ENERGY, INC. (An Exploration State Company) NOTES TO FINANCIAL STATEMENTS (continued) NOTE 9 - MINERAL RIGHTS (continued) 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. 100,000 shares of common stock upon full execution of this Agreement, and 4. 200,000 shares of common stock on or before one year from the date of full execution of this Agreement. 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 June 30, 2005, the Company has 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 100,000 shares of common stock due upon execution of the agreement. The shares were valued at $.19 per share and as of March 31, 2005, had not been issued. 17 CALIBER ENERGY, INC. (An Exploration State Company) NOTES TO FINANCIAL STATEMENTS (continued) NOTE 9 - MINERAL RIGHTS (continued) 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. NOTE 10 - COMMITMENTS AND CONTINGENCIES As of June 30, 2005 and 2004, 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. 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 $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. As of June 30, 2005, the Company had received approximately $463,453 from the convertible debentures. As of June 30, 2005, accrued interest on convertible debentures was $8,366. 18 CALIBER ENERGY, INC. (An Exploration State Company) NOTES TO FINANCIAL STATEMENTS (continued) 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. As of June 30, 2005, the Company paid $40,999 towards the drilling of wells. All of these costs have been capitalized. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION. GENERAL - This discussion should be read in conjunction with Management's Discussion and Analysis of Financial Condition and Results of Operations in the Company's annual report on Form 10-KSB for the year ended December 31, 2004. PLAN OF OPERATIONS The following discussion and analysis provides information which management believes is relevant to an assessment and understanding of our results of operations and financial condition. The discussion should be read in conjunction with our financial statements and notes thereto appearing in this prospectus. The accompanying financial statements have been prepared assuming that we will continue as a going concern. As discussed in the notes to the financial statements, we have experienced losses from inception. Our financial position and operating results raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. The following discussion and analysis contains forward-looking statements, which involve risks and uncertainties. Our actual results may differ significantly from the results, expectations and plans discussed in these forward-looking statements. On April 4th the Company reported it had commenced seismic interpretation and geologic mapping to determine a suitable target location for drilling an oil well on the Bolloque Project; a Leduc oil play. The seismic line purchased and being interpreted covers an area where the Company has identified three sections that cover a topographic high, potentially coincident with a Leduc reef that may represent the extension of the prolific Leduc D-3 pools. The project is located 60 miles directly north of Edmonton, Alberta in the prolific oil producing Leduc area. Leduc "reef" oil fields 19 south of Bolloque contain oil wells that currently produce oil at rates of several hundred barrels per day and also wells that have cumulatively produced over one million barrels of oil. Of the 680 oil wells drilled in D-3 pools, the production has been between a low of 145 and a high 400 barrels per day with pay thickness of 35 to 142 feet. On April 7th, the Company reported that it had returned 29,975,000 common Reg. 144 shares to treasury. This represents a 32.4% decrease of the issued and outstanding shares of the Company, which now has been reduced from 92,570,000 to 62,595,000. On April 18th, Caliber reported that a third a third party reservoir engineer and an independent geophysicist completed the seismic review and interpretation on the Bolloque Project. The seismic line that crosses the Company's leases is a previously shot, east-west, 2-D seismic line. The line was purchased and re-interpreted by the independent consultants to the Company. The interpretation confirms that a Leduc Pinnacle Reef buildup exists under the Company leases. An estimate made from the seismic section indicates a reef buildup of approximately 30 meters (98.5 feet). Drill Stem Tests (D.S.T.'s) of this zone in nearby wells gave significant fluid recoveries from the flanks of the reef indicating good permeability. The reef has never been tested for oil at its highest development coincident to a topographic high. The Company plans on drilling at the highest location on the leases to test for an oil accumulation. The presence of a strong structural trap has increased greatly the probability of success of discovering a significant oil accumulation on the leases. The Company now feels that the Bolloque may represent a northern extension of the historic Leduc reef and that it may represent the extension of the prolific Leduc D-3 pools. In a direct analog comparison, the Acheson D-3A pool with 100 oil wells with an average pay thickness of 82 feet and had peak production rates of 300 barrels per day. The project is located 60 miles north of Edmonton, Alberta in the prolific oil producing Leduc area. Leduc Reef oil fields south of Bolloque contain oil wells that produce oil at rates of several hundred barrels per day and also well that have cumulatively produced over one million barrels of oil. Of the 680 oil wells drilled in D-3 pools, the production has been between a low of 145 and a high of 400 barrels per day with pay thickness of 35 to 142 feet. Drilling as reported earlier is planned during May-June 2005 following spring breakup when road bans restricting movement of heavy equipment by the Province are lifted. The well depth to test the top of the Leduc is approximately 3,300 feet (1,100 metres) and an oil well is estimated to cost $280,000 for dry hole and an additional $125,000 to complete the well. Caliber is earning its 49% working interest by drilling, casing and completing an exploratory well on the leases. On May 2nd, the Company reported that it was moving forward in making the necessary preparations for the spud of the first oil well at Bolloque. The Company and the operator of the project, Transaction Oil and Gas Ventures of Calgary have begun the well licensing, required permitting and have picked the well location. Site preparations will commence when the government road bans are lifted, anticipated to be shortly. 20 The spud preparations of the first oil well at Bolloque are for the well designation of 7-1-64- 25W4M. Caliber is advancing funds required to complete the well licensing and site preparations totaling $45,000 as part of the executed Authority for Expenditure (A.F.E.) totaling $329,000 to drill, test and case the well. Access to the well site is excellent and government road bans are now being lifted. The first well location is 200 yards from a producing gas well and 2 miles from a municipal road. Caliber is sourcing a drilling rig for the project. Caliber reported that the Company's share of a "Coal Sales Agreement" has been finalized. Caliber's interest in the Sales Agreement for 500,000 metric tonnes of metallurgical grade coal is anticipated to generate revenue in excess of one million dollars to the Company over the next 6 months. The Company is moving forward on the first coal shipment that will commence once export permits are issued and credit facilities are in place. 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 June 30, 2005, there were no significant changes in the Company's internal controls over financial reporting or in any other areas that could significantly affect the Company's internal controls subsequent to the date of his most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS None. ITEM 2. CHANGES IN SECURITIES None. 21 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 Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2 Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (b) Reports on Form 8-K filed. None. 22 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: August 10, 2005 /S/ Graeme Scott Graeme Scott President, CEO and Director (Principal Executive Officer) /S/ David Naylor David Naylor Treasurer, CFO and Director (Principal Financial Officer) 23