Capital City Energy Group, Inc. - Quarterly Transition Report (10-QT)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

o Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended _________________

x Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from November 1, 2007 to December 31, 200 7

Commission File Number: 333-140806

Capital City Energy Group, Inc.

(Exact name of small business issuer as specified in its charter)

Nevada		20-5131044
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

8351 N. High Street, Suite 101

Columbus, Ohio 43235

(Address of principal executive offices)

(614) 310-1614

(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 Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

State the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: There are 30,781,415 shares of Common Stock and 3,147,122 shares of Preferred A Stock issued and outstanding as of May 5, 2008.

Transitional Small Business Disclosure Format (check one): Yes x No o

- 1 -

TABLE OF CONTENTS

		Page

PART I - FINANCIAL INFORMATIO N

Item 1.	Financial Statements	2

Item 2.	Plan of Operation	9

Item 3.	Controls and Procedures	10

PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	11

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	11

Item 3.	Defaults Upon Senior Securities	11

Item 4.	Submission of Matters to a Vote of Security Holders	11

Item 5.	Other Information	11

Item 6.	Exhibits	11

- 2 -

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

Our unaudited financial statements included in this Form 10-Q are as follows:

4	Consolidated Balance Sheets as of December 31, 2007 (unaudited) and October 31, 2007 (audited);

5	Consolidated Statements of Operations for the three and nine months ended December 31, 2007 and 2006 and period from inception (November 1, 2005) through December 31, 2007 (unaudited);

6	Consolidated Statements of Stockholders’ Equity from inception (November 1, 2005) through December 31, 2007 (unaudited);

7	Consolidated Statements of Cash Flows for the two months ended JDecember 31, 2007 and 2006 and period from inception (November 1, 2005) through December 31, 2007 (unaudited);

8	Notes to Financial Statements.

These unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the SEC instructions to Form 10-Q. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. Operating results for the interim period ended December 31, 2007 are not necessarily indicative of the results that can be expected for the full year. The Company is filing this Transition Report in compliance with Rule 13a-10 of the Securities Exchange Act of 1934, as amended. By resolution of its board of directors, the Company changed its fiscal year ending from October 31 to December 31. This transition report presents the operational and financial results of those months since the Company’s Form 10-KSB filing, which reported all of the operational results for the Company through October 31, 2007.

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CAPITAL CITY ENERGY GROUP, INC.

(FKA THE BABY DOT COMPANY)

(A Development Stage Company)

Balance Sheets

	December 31,			October 31,
	2007			2007
	(unaudited)

ASSETS

CURRENT ASSETS

Cash	$	-		$	7,131
Prepaid expenses		-			-
Inventory		-			-

Total Current Assets		-			7,131

PROPERTY AND EQUIPMENT, net		-			661

TOTAL ASSETS	$	-		$	7,792

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES

Accounts payable	$	-		$	1,250
Advances from related parties		-			7,749

Total Current Liabilities		-			8,999

STOCKHOLDERS' EQUITY (DEFICIT)

Common stock: $0.001 par value;
90,000,000 shares authorized, 9,960,000 and
7,000,000 shares issued and outstanding, respectively		9,960			9,960
Additional paid-in capital		11,840			11,840
Deficit accumulated during the development stage		(21,800	)		(23,007	)

Total Stockholders' Equity (Deficit)		-			(1,207	)

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)	$	-		$	7,792

The accompanying notes are an integral part of these financial statements.

- 4 -

CAPITAL CITY ENERGY GROUP, INC.
(FKA THE BABY DOT COMPANY)
(A Development Stage Company)
Statements of Operations
(Unaudited)

 
                From Inception


  
 
                on November 1,
  
 
    For the Two Months Ended
     2005 Through
  
 
    December 31,
     December 31,
  
 
    2007
     2006
     2007
  
 
                   
 
REVENUES
   $ -     $ -     $ -  
 
COST OF SALES
     -       -       -  
 
GROSS MARGIN
     -       -       -  
 
                         
 
OPERATING EXPENSES
                        
 
                         
 
General and administrative
     -       -       -  
 
                         
 
Total Operating Expenses
     -       -       -  
 
                         
 
DISCONTINUED OPERATIONS
     1,207       (5,509 )     (21,800 )
 
                         
 
NET LOSS
   $ 1,207     $ (5,509 )   $ (21,800 )
 
                         
 
BASIC LOSS PER SHARE
   $ 0.00     $ (0.00 )        
 
                         
 
WEIGHTED AVERAGE
                        
 
   SHARES OUTSTANDING
     9,960,000       4,987,275          
 
 

 

The accompanying notes are an integral part of these financial statements.

- 5 -

 CAPITAL CITY ENERGY GROUP, INC.(FKA THE BABY DOT COMPANY)
(A Development Stage Company)
Statements of Stockholders' Equity (Deficit)
(Unaudited)

 
                      Deficit
        
 
                      Accumulated
        
 
                Additional
     During the
     Total
  
 
    Common Stock
     Paid-In
     Development
     Stockholders'
  
 
    Shares
     Amount
     Capital
     Stage
     Equity
  
 
                               
 
Balance, November 1, 2005
     -     $ -     $ -     $ -     $ -  
 
                                         
 
Shares issued for cash
                                        
 
   at $0.001 per share
     5,000,000       5,000       -       -       5,000  
 
                                         
 
Shares issued for services
                                        
 
   at $0.001 per share
     2,000,000       2,000       -       -       2,000  
 
                                         
 
Net loss since inception
                                        
 
   through October 31, 2006
     -       -       -       (5,625 )     (5,625 )
 
                                         
 
Balance, October 31, 2006
     7,000,000       7,000       -       (5,625 )     1,375  
 
                                         
 
Shares issued for cash
                                        
 
   at $0.005 per share
     2,960,000       2,960       11,840       -       14,800  
 
                                         
 
Net loss for the year
                                        
 
   ended October 31, 2007
     -       -       -       (17,382 )     (17,382 )
 
                                         
 
Balance, October 31, 2007
     9,960,000       9,960       11,840       (23,007 )     (1,207 )
 
                                         
 
Net loss for the two months
                                        
 
   ended December 31, 2007
     -       -       -       1,207       1,207  
 
                                         
 
Balance, December 31, 2007
     9,960,000     $ 9,960     $ 11,840     $ (21,800 )   $ -

The accompanying notes are an integral p art of these financial statements.

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CAPITAL CITY ENERGY GROUP, INC.

(FKA THE BABY DOT COMPANY)

(A Development Stage Company)

Statements of Cash Flows

(Unaudited)

							From Inception
							on November 1,
	For the Two Months Ended						2005 Through
	December 31,						December 31,
	2007			2006			2007

CASH FLOWS FROM OPERATING ACTIVITIES

Net loss	$	1,207		$	(5,509	)	$	(21,800	)
Adjustments to reconcile net loss to net cash used by operating activities:
Depreciation expense		-			-			11
Common stock issued for services		-			2,000			2,000
Changes in operating assets and liabilities:
(Increase) decrease in inventory		-			-			-
(Increase) decrease in prepaid expenses		-			-			-
Increase (decrease) in accounts payable		(589	)		3,049			661

Net Cash Used by Operating Activities		618			(460	)		(19,128	)

CASH FLOWS FROM INVESTING ACTIVITIES

Property and equipment purchased		-			-			(672	)

Net Cash Used by Operating Activities		-			-			(672	)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from common stock issued		-			-			19,800
Increase in advances from related parties		(7,749	)		-			-

Net Cash Provided by Financing Activities		(7,749	)		-			19,800

NET DECREASE IN CASH		(7,131	)		(460	)		-

CASH AT BEGINNING OF PERIOD		7,131			1,193			-

CASH AT END OF PERIOD	$	-		$	733		$	-

SUPPLIMENTAL DISCLOSURES OF CASH FLOW INFORMATION

CASH PAID FOR:

Interest	$	-		$	-		$	-
Income Taxes	$	-		$	-		$	-

The accompanying notes are an integral part of these financial statements.

- 7 -

THE BABY DOT COMPANY

Notes to the Condensed Financial Statements

December 31, 2007 and October 31, 2007

NOTE 1 - CONDENSED FINANCIAL STATEMENTS

The accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations, and cash flows at December 31, 2007, and for all periods presented herein, have been made.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s October 31, 2007 audited financial statements. The results of operations for the periods ended December 31, 2007 and 2006 are not necessarily indicative of the operating results for the full years.

NOTE 2 - GOING CONCERN

The Company’s financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.

In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses and seeking equity and/or debt financing. However management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.

The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

- 8 -

Item 2. Plan of Operation

Forward-Looking Statements

Certain statements, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives, and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements generally are identified by the words “believes,” “project,” “expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and are including this statement for purposes of complying with those safe-harbor provisions. Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse affect on our operations and future prospects on a consolidated basis include, but are not limited to: changes in economic conditions, legislative/regulatory changes, availability of capital, interest rates, competition, and generally accepted accounting principles. These risks and uncertainties should also be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise. Further information concerning our business, including additional factors that could materially affect our financial results, is included herein and in our other filings with the SEC.

Management’s Assessment of Our Business

We were formed on June 27, 2006 to engage in the business of designing, marketing and distributing handcrafted baby blankets and other accessories made from quality fabrics. Our business operations have been conducted through our wholly owned subsidiary, Baby Dot LLC, a limited liability company incorporated under the laws of the State of Nevada. On August 15, 2006, we acquired Baby Dot, LLC from Ms. Jennie Slade, our officer and director, in exchange for 2,000,000 shares of our common stock. In that acquisition, we acquired all assets of the limited liability company, including our website, an existing but limited inventory of products, and all rights to the BabyDot designs.

Through our subsidiary, we introduced our blanket products in November of 2005, starting with our large 40” by 40” blanket, and later with our smaller 30” by 30” blanket. Our business strategy was to sell quality blankets to the premium market in order to generate higher gross margins and offer significant growth potential. We have sought to indentify a brand image based on superior fabric designs, quality and style. We have carefully selected stylish modern prints and fabrics that we manufactured into a comfortable line of baby blankets. To make our products stand out from others, we have labeled our blankets with a BabyDot logo and design and hand-wrapped them with a satin ribbon prior to delivery.

Because we have not had enough product demand to necessitate large scale manufacturing, our strategy has been to hire talented women to handcraft each blanket, the majority of which are stay-at-home moms. Every product has been made with great care and attention to detail. Our top priority was a happy consumer.

Since our inception, we have sought to diversify our product line. We have added several products, including children’s clothing, bibs, burp cloths, hats, and other baby accessories. We have also expanded our business to include baby announcements of births, blessings, birthdays, and other important events. Yet despite our efforts to grow, we have only achieved limited sales to date. Our limited sales since November 2005 have largely been the result of the personal efforts of our President, CEO and Director, Ms. Jennie Slade. We developed a website and blog to promote our products, but the bulk of our sales were the result of word of mouth marketing and small vendor shows.

Results of Operations for the two month transition period from November 1, 2007 through December 31, 2007

We generated $0 in revenue for the two months ended December 31, 2007, compared with $0 for the quarterly period ended December 31, 2006. Our revenue during all these periods was generated by sales of our BabyDot blankets and baby-accessory products.

Our cost of goods sold was $0 for the two months ended December 31, 2007, as opposed to $0 for the quarterly period ended December 31, 2006. Our gross profits were negligible for the periods ended 2007 and 2006 and suggests that our business plan may not be viable in the long term.

We incurred operating expenses in the amount of $0 for the two months ended December 31, 2007, compared to $0 for the quarterly period ended December 31, 2006.

We incurred a charge for discontinued operations of $1,207 for the two month transition period ended December 31, 2007 which resulted in a total net loss of $1,207 for this same time period.

- 9 -

Liquidity and Capital Resources

As of December 31, 2007, we had total current assets of $0. Our total current liabilities as of December 31, 2007 were also $0. In addition, we had $0 stockholder’s equity as of December 31, 2007.

Off Balance Sheet Arrangements

As of December 31, 2007, there were no off balance sheet arrangements.

Going Concern

Item 3. Controls and Procedures

We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of December 31, 2007. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer, Mr. Timothy Crawford and our Chief Financial Officer, David Beule, who have been serving in these capacities since March 11, 2008. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2007, our disclosure controls and procedures are effective. There have been no changes in our internal controls over financial reporting during the quarter ended December 31, 2007.

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act are recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Limitations on the Effectiveness of Internal Controls

Our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will necessarily prevent all fraud and material error. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving our objectives and our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective at that reasonable assurance level. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the internal control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.

- 10 -

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

We are not a party to any pending legal proceeding. We are not aware of any pending legal proceeding to which any of our officers, directors, or any beneficial holders of 5% or more of our voting securities are adverse to us or have a material interest adverse to us.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults upon Senior Securities

None.

Item 4. Submission of Matters to a Vote of Security Holders

No matters have been submitted to our security holders for a vote, through the solicitation of proxies or otherwise, during the period ended December 31, 2007.

Item 5. Other Information

None.

Item 6. Exhibits

Exhibit Number		Description of Exhibit
3.1		Articles of Incorporation (1)
3.2		By-Laws (1)
31.1		Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1		Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(1)	Previously included as an exhibit to the 8-KA filed on March 14, 2008.

SIGNATURES

In accordance with the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Capital City Energy Group, Inc.


Date:	May 5, 2008

	/s/ David Beule
By: Title:	David Beule Chief Financial Officer, Principal Accounting Officer (Since March 11, 2008)

- 11 -

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							Deficit
							Accumulated
					Additional		During the			Total
	Common Stock				Paid-In		Development			Stockholders'
	Shares		Amount		Capital		Stage			Equity

Balance, November 1, 2005		-	$	-	$	-	$	-		$	-

Shares issued for cash
at $0.001 per share		5,000,000		5,000		-		-			5,000

Shares issued for services
at $0.001 per share		2,000,000		2,000		-		-			2,000

Net loss since inception
through October 31, 2006		-		-		-		(5,625	)		(5,625	)

Balance, October 31, 2006		7,000,000		7,000		-		(5,625	)		1,375

Shares issued for cash
at $0.005 per share		2,960,000		2,960		11,840		-			14,800

Net loss for the year
ended October 31, 2007		-		-		-		(17,382	)		(17,382	)

Balance, October 31, 2007		9,960,000		9,960		11,840		(23,007	)		(1,207	)

Net loss for the two months
ended December 31, 2007		-		-		-		1,207			1,207

Balance, December 31, 2007		9,960,000	$	9,960	$	11,840	$	(21,800	)	$	-

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