UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of February 2007
Commission File Number 0-29586
ENERNORTH INDUSTRIES INC.
1 King Street West, Suite 1502, Toronto, Ontario, M5H 1A1, Canada
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
Form 20-F X Form 40-F
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
Yes No X
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7)
Yes N o X
Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:
Yes No X
If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3- 2(b):
82- _________
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
ENERNORTH INDUSTRIES INC.
Date: February 14, 2006 By:____”Sandra J. Hall”____ ______
Sandra J. Hall,
President, Secretary & Director
EnerNorth Industries Inc.
Consolidated Financial Statements
Second Quarter
December 31, 2006
(Unaudited)
(Expressed in Canadian Dollars)
Notice to Reader
Management has compiled the unaudited interim consolidated financial information of EnerNorth Industries Inc. consisting of the Consolidated Balance Sheet as at December 31, 2006, Consolidated Statements of Operations and Deficit and Consolidated Statements of Cash Flows and notes thereto for the three and six month period ended December 31, 2006. All amounts are stated in Canadian Dollars. An accounting firm has not reviewed or audited these interim consolidated financial statements.
1 King Street West, Suite 1502, Toronto, Ontario M5H 1A1
416-861-1484 www.enernorth.com
EnerNorth Industries Inc. | |||||||
Consolidated Balance Sheets | |||||||
(Expressed in Canadian dollars) | |||||||
Dec. 31, 2006 | June 30, 2006 | ||||||
(unaudited) | (audited | ) | |||||
ASSETS | |||||||
Current | |||||||
| Cash and cash equivalents | $ | 38,160 | $ | 67,315 | |||
| Restricted cash (Note 5) | 1,500,000 | - | |||||
| Marketable securities (Market value $784,487 | |||||||
| June 30, 2006 - $1,621,199) | 784,487 | 1,621,199 | |||||
| Advances | 305,916 | 235,510 | |||||
| Receivables | 252,671 | 436,658 | |||||
Total current assets | 2,881,234 | 2,360,682 | |||||
| Accounts receivable | 296,205 | 295,390 | |||||
| Oil and gas interests (net of accumulated | |||||||
| depletion) | 8,421,765 | 9,434,617 | |||||
| Investments (Note 4) | 3,130,873 | 3,107,782 | |||||
$ | 14,730,077 | $ | 15,198,471 | ||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
Current | |||||||
| Short term debt | $ | 225,834 | $ | 322,469 | |||
| Accounts payable and accrued liabilities (Note 6) | 1,665,096 | 1,055,330 | |||||
| Due to shareholder | 71,722 | 60,000 | |||||
| Promissory note (Note 6) | 654,105 | - | |||||
| Current income taxes | 18,927 | 18,927 | |||||
| Current portion of convertible debenture (Note 6) | 15,152 | 15,152 | |||||
| Current portion of future income tax | 117,807 | 117,807 | |||||
| Oakwell claim (Note 5) | 7,825,946 | 7,686,971 | |||||
Total current liabilities | 10,594,589 | 9,276,656 | |||||
| Site Restoration | 298,018 | 285,219 | |||||
| Convertible debt (Note 6) | 143,151 | 152,924 | |||||
| Future income tax liability | 941,515 | 941,515 | |||||
Total liabilities | 11,977,273 | 10,656,314 | |||||
Shareholders' equity | |||||||
| Capital stock (Note 7) | 43,797,995 | 43,781,030 | |||||
| Contributed surplus (Note 7) | 194,200 | 181,875 | |||||
| Deficit | (41,239,391 | ) | (39,420,748 | ) | |||
Total shareholders' equity | 2,752,804 | 4,542,157 | |||||
$ | 14,730,077 | $ | 15,198,471 | ||||
The accompanying notes are an integral part of these consolidated financial statements | |||||||
EnerNorth Industries Inc. | |||||||||||||
Consolidated Statements of Operations and Deficit | |||||||||||||
(Unaudited) | |||||||||||||
(Expressed in Canadian dollars) | |||||||||||||
For the six months | For the three months | ||||||||||||
ended December 31, | ended December 31, | ||||||||||||
2006 | 2005 | 2006 | 2005 | ||||||||||
Revenue | |||||||||||||
| Oil and gas revenue | $ | 784,657 | $ | 705,112 | $ | 385,655 | $ | 379,865 | |||||
| Less: royalties | 160,393 | 91,916 | 69,698 | 53,751 | |||||||||
624,264 | 613,196 | 315,957 | 326,114 | ||||||||||
Expenses | |||||||||||||
| Operating and transportation | 287,237 | 197,681 | 140,516 | 97,248 | |||||||||
| Depletion and accretion | 656,762 | 390,480 | 388,948 | 204,062 | |||||||||
| Administrative expenses | 1,077,125 | 736,997 | 442,975 | 311,540 | |||||||||
| Interest | 66,649 | 1,267 | 58,781 | 646 | |||||||||
2,087,773 | 1,326,425 | 1,031,220 | 613,496 | ||||||||||
| Loss before the following | (1,463,509 | ) | (713,229 | ) | (715,263 | ) | (287,382 | ) | |||||
| Foreign exchange gain (loss) | 417 | 152,440 | 6,446 | (96,311 | ) | ||||||||
| Oakwell claim (Note 5) | (138,976 | ) | (197,961 | ) | (42,311 | ) | (99,388 | ) | |||||
| Interest income | 3,044 | 203,383 | 2,294 | 97,534 | |||||||||
| Write down of marketable securities | (377,185 | ) | - | (134,449 | ) | - | |||||||
| Cash distributions from | |||||||||||||
| marketable securities | 95,273 | 109,647 | 43,740 | 59,463 | |||||||||
| Gain on sale of marketable securities | 62,293 | 282,137 | (18,302 | ) | 167,110 | ||||||||
Net loss | (1,818,643 | ) | (163,583 | ) | (857,845 | ) | (158,974 | ) | |||||
| Deficit, beginning of period | (39,420,748 | ) | (36,412,003 | ) | (40,381,546 | ) | (36,416,612 | ) | |||||
Deficit, end of period | (41,239,391 | ) | (36,575,586 | ) | (41,239,391 | ) | (36,575,586 | ) | |||||
Net loss per common share | ($0.43 | ) | ($0.04 | ) | ($0.21 | ) | ($0.04 | ) | |||||
Weighted average common shares | |||||||||||||
outstanding (thousands) | 4,272 | 4,059 | 4,059 | 4,059 | |||||||||
The accompanying notes are an integral part of these consolidated financial statements | |||||||||||||
EnerNorth Industries Inc. | |||||||||||||
Consolidated Statements of Cash Flows | |||||||||||||
(Unaudited) | |||||||||||||
(Expressed in Canadian dollars) | |||||||||||||
For the six month | For the three month | ||||||||||||
ended December 31, | ended December 31, | ||||||||||||
2006 | 2005 | 2006 | 2005 | ||||||||||
| Cash provided by (used in) | |||||||||||||
Operating activities | |||||||||||||
| Net loss | ($1,818,643 | ) | ($163,583 | ) | ($857,845 | ) | ($158,974 | ) | |||||
| Adjustments to reconcile net loss to | |||||||||||||
| net cash provided by operating activities | |||||||||||||
| Depletion and accretion | 656,762 | 390,480 | 388,948 | 204,062 | |||||||||
| Loss from equity investment | 7,745 | - | - | - | |||||||||
| Oakwell claim | 138,975 | (170,770 | ) | 42,310 | 134,120 | ||||||||
| Stock based compensation | 6,735 | 3,736 | 6,735 | - | |||||||||
| Unrealized foreign exchange loss | - | 212,078 | - | 59,241 | |||||||||
| Write down of marketable securities | 377,185 | - | 134,449 | - | |||||||||
| Gain on sale of marketable securities | (62,293 | ) | (282,137 | ) | 18,302 | (167,110 | ) | ||||||
(693,534 | ) | (10,196 | ) | (267,101 | ) | 71,339 | |||||||
| Net change in non-cash working capital | |||||||||||||
| Receivables | 183,172 | (961,265 | ) | (84,840 | ) | (423,219 | ) | ||||||
| Restricted cash | (1,500,000 | ) | - | - | - | ||||||||
| Accounts payable and accrued liabilities | 609,766 | 122,550 | 682,538 | (483,627 | ) | ||||||||
| Income Taxes | - | - | - | - | |||||||||
| Cash used by operating activities | (1,400,596 | ) | (848,911 | ) | 330,597 | (835,507 | ) | ||||||
Financing activities | |||||||||||||
| Increase in due to shareholder | 11,722 | - | 11,722 | - | |||||||||
| Issue of short term debt | (96,635 | ) | - | (200,324 | ) | - | |||||||
| Advances | 654,105 | - | 4,105 | - | |||||||||
| Repayment to shareholder | (18,750 | ) | - | (18,750 | ) | ||||||||
| Payment of convertible debt | (9,773 | ) | - | (6,743 | ) | - | |||||||
| Issue of common shares | 22,555 | - | 22,555 | - | |||||||||
581,974 | (18,750 | ) | (168,685 | ) | (18,750 | ) | |||||||
Investing activities | |||||||||||||
| Oil and gas assets | 368,889 | (2,137,395 | ) | (423,185 | ) | (948,194 | ) | ||||||
| Advances | (70,406 | ) | - | 73,778 | - | ||||||||
| Purchase of investment | (30,836 | ) | (286,327 | ) | - | (516,519 | ) | ||||||
| Sale of marketable securities | 521,820 | - | 146,312 | - | |||||||||
789,467 | (2,423,722 | ) | (203,095 | ) | (1,464,713 | ) | |||||||
Decrease in cash | (29,155 | ) | (3,291,383 | ) | (41,183 | ) | (2,318,970 | ) | |||||
| Cash, beginning of period | 67,315 | 5,286,315 | 79,343 | 4,313,902 | |||||||||
Cash, end of period | $ | 38,160 | $ | 1,994,932 | $ | 38,160 | $ | 1,994,932 | |||||
Cash, end of period consists of: | |||||||||||||
| Cash | $ | 38,160 | $ | 1,394,605 | $ | 38,160 | $ | 1,394,605 | |||||
| Money market funds | $ | - | $ | 600,327 | $ | - | $ | 600,327 | |||||
The accompanying notes are an integral part of these consolidated financial statements | |||||||||||||
EnerNorth Industries Inc.
Notes to Unaudited Consolidated Financial Statements
For the Period Ended December 31, 2006
(Expressed in Canadian Dollars)
1. Basis of Presentation
These unaudited interim consolidated financial statements have been prepared by management following the same accounting policies and methods of computation as the audited consolidated financial statements for the year ended June 30, 2006. These interim financial statements should be read in conjunction with the Company’s audited consolidated financial statements together with notes for the year ended June 30, 2006. For further detailed discussions please refer to the Company’s Management Discussion and Analysis of Financial Condition and Operating Results for the three and six month period ending December 31, 2006.
The Company’s primary activities include investment in, exploration, development and production of oil and gas. The unaudited consolidated financial results for the periods ending December 31, 2006 and 2005 include the accounts of the Company and its subsidiaries Great Northern Oil and Gas Limited (“Great Northern”), EPS Karnataka Power Corp. and CanPower Development Corp.
Operating results for the three and six month periods ending December 31, 2006 are not indicative of the results that may be expected for the full year ending June 30, 2007.
The Company’s ability to continue as a going concern is primarily dependent upon the Company’s ability to negotiate a favorable proposal with its creditors (see Note 5, 6, 8(ii) and (iv)). If the proposal is not accepted by its creditors then the Company may become insolvent and placed into receivership and as a result the liquidation value of the Company’s assets may differ materially from the stated values.
These consolidated financial statements do not include any adjustments to the amounts and classification of assets and liabilities that might be necessary should the Company not be able to continue in the normal course of operations. If the “going concern” assumption is not appropriate for these consolidated financial statements then adjustments may be necessary to the carrying value of assets and liabilities, the reported revenues and expenses, and the balance sheet classifications used.
These consolidated financial statements have been prepared by management in accordance with accounting principles generally accepted in Canada.
| 2. | Seasonality and Trend Information |
Oil and gas production is not a seasonal business, but increased consumer demand or changes in supply in certain months of the year can influence the price of produced hydrocarbons, depending on the circumstances. Production from the Company's oil and gas properties is the primary determinant for the volume of sales during the year.
| 3. | Segmented information |
The Company's operations consist of one operating segment in the oil and gas industry, which includes investment in, exploration, development and production of oil and gas. These operations consist of one cost centre, Canada.
| 4. | Investments |
As of December 31, 2006 the Company owns 12,348,200 common shares, par value Indian Rupees (“INR”) 10 in Konaseema Gas Power Limited, and a 12% equity investment in Euro India Power Canara Private Limited.
5. Oakwell Claim
The Oakwell Claim relates to a Singapore judgment against the Company plus costs and interest. On August 2, 2005 the Superior Court for the Province of Ontario ruled that the Singapore judgment was enforceable in Ontario with costs. The Company filed a notice of appeal of the August 2, 2005 order. On June 9, 2006 the Company’s appeal was dismissed with costs. On July 18, 2006 the Company brought a motion before the Court of Appeal seeking a stay of execution of the decision of the Court of Appeal pending the Company’s application to the Supreme Court of Canada for leave to appeal, and, should leave be granted, the appeal itself. On July 28, 2006 the Court of Appeal granted the Company's motion for a stay of execution on the condition that the Company pay $1,500,000 into Court on or before September 8, 2006. The Company paid this amount into Court on September 7, 2006. On September 8, 2006 the Company filed its application for leave to appeal to the Supreme Court of Canada. On January 18, 2007 the Supreme Court of Canada dismissed the Company’s application for leave with costs (See Note 8 (ii) and (iv)).
6. Secured Indebtedness
The Company has debt instruments including secured convertible debentures, a secured promissory note and a secured amount due to a service provider. Subsequent to the period end, the Company is in default of these secured instruments.
EnerNorth Industries Inc.
Notes to Unaudited Consolidated Financial Statements
For the Period Ended December 31, 2006
(Expressed in Canadian Dollars)
| 7. | Share Capital |
Authorized:
Unlimited number of Common Shares, without par value
Unlimited number of Class A Preference Shares, Series I
Unlimited number of Class A Preference Shares, Series II
Issued
| Common shares | # | Consideration |
Balance, as at June 30, 2006 | 4,272,009 | $43,781,030 |
| Issued pursuant to terms of convertible debenture | 7,702 | 5,964 |
| Options exercised | 12,800 | 11,001 |
| Balance, as at December 31, 2006 | 4,292,511 | $43,797,995 |
| Contributed Surplus | Value |
Balance, as at June 30, 2006 | $181,875 |
| Grant of options | 6,735 |
| Issued pursuant to terms of convertible debenture | 5,590 |
| Balance, as at December 31, 2006 | $194,200 |
Common share purchase options
Exercise | Expiry | 2006 | 2005 |
Price | Date | # | # |
| US$0.75 | February 28, 2010 | 572,200 | 600,000 |
| US$0.73 | November 20, 2011 | 30,000 | - |
| US$1.77 | July 15, 2008 | 15,000 | - |
| Balance December 31, 2006 | 630,000 | 600,000 |
Of the options priced at US$1.77 5,000 vest on July 15, 2007.
8. Subsequent events and other
| i.) | On December 12, 2006 the Company received notice from the American Stock Exchange (“AMEX”) that the Company does not meet certain continued listing standards. On January 12, 2007 the Company submitted a plan of compliance to AMEX. If AMEX accepts the plan, the Company may be able to continue its listing during the plan period of up to eighteen months (June 11, 2008), during which time the Company will be subject to periodic review. If AMEX does not accept the Company's plan or if the Company does not make progress consistent with the plan during the plan period or if the Company is not in compliance with the continued listing standards at the end of the plan period, AMEX may then initiate delisting proceedings. As of the date of this MD&A the Company has not received a decision from AMEX with respect to the plan and continued listing. There can be no assurance that the Company can maintain its AMEX listing or marketability of its common shares. |
| ii.) | On January 18, 2007 the Supreme Court of Canada dismissed with costs the Company’s application for leave to appeal its ongoing litigation with Oakwell Engineering Limited of Singapore (“Oakwell”). EnerNorth is required to satisfy a judgment in favour of Oakwell for approximately CDN $6.8 million in addition to the $1.5 million posted as security on September 7, 2006. On January 19, 2007 the $1.5 million posted as security was withdrawn by Oakwell. The Company also has obligations to secured and unsecured creditors. |
| iii.) | EnerNorth has received notice from 1211115 Alberta Ltd. ("1211115") in respect of the share purchase agreement made September 6, 2006, as amended (the "Agreement"). 1211115 states in the notice that EnerNorth is not in a position to close under the terms of the Agreement, and accordingly 1211115 is awaiting confirmation from EnerNorth it is releasing 1211115 from its obligations under the Agreement. 1211115 also indicated it expects the parties to execute a mutual release from the Agreement. |
| iv.) | On February 9, 2007 the Company announced that it filed a Notice of Intention to make a proposal to its creditors under the Bankruptcy and Insolvency Act (Canada) ("BIA"). The BIA stays all actions against the Company to give it time to make a proposal to its creditors to satisfy their claims without bankruptcy. The Company has appointed Zwaig Associates Inc., ("Zwaig"), a licensed trustee, to act as trustee under the proposal. On February 9, 2007 the Superior Court of Justice for the Province of Ontario also appointed Zwaig Interim Receiver of the Company. Zwaig's appointment as Interim Receiver will ensure that the Company's assets are effectively managed during the proposal period. No assurances can be made that a proposal under the Notice of Intention will be accepted by the Company’s creditors. |