U. S. Securities and Exchange Commission
Washington, D. C. 20549
FORM 10-QSB
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2001
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE EXCHANGE ACT
For the transition period from _____ to _____.
Commission File No. 0-9458
Eagle Exploration Company
(Exact name of registrant as specified in its character)
Colorado 84-0804143
-------- ----------
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
1630 Welton Street, Suite 530, Denver, Colorado 80202
-----------------------------------------------------
(Address and zip code of principal executive offices)
Registrant's telephone number, including area code: (303) 296-3677
Indicated by check mark whether the registrant (1) filed all reports required
to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. Yes No ___.
---
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS 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 court.
Yes X No __.
---
Indicate the number of shares outstanding of each of the issuer's classed of common
equity, as of the latest practicable date:
Class Number of Shares
----- ----------------
Common stock 3,072 836
Transitional Small Business Disclosure format: (Check one) Yes ___ No X .
---
EAGLE EXPLORATION COMPANY AND SUBSIDIARIES
INDEX TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
PART I FINANCIAL INFORMATION
Item 1 Condensed Consolidated Balance Sheets -
March 31, 2001, and September 30, 2001 (Unaudited)
Unaudited Condensed Consolidated Statements of Operations -
Three and Six Months Ended September 30, 2000, and 2001
Unaudited Condensed Consolidated Statements of Cash Flows -
Three and Six Months Ended September 30, 2000, and 2001
Notes to Unaudited Condensed Consolidated Financial Statements
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations
PART II SIGNATURES
EAGLE EXPLORATION COMPANY AND SUBSIDIARIES
PART I FINANCIAL INFORMATION
Item 1
Condensed Consolidated Balance Sheets
March 31, September 30,
2001 2001
---------- ------------
(Unaudited)
Assets
Current assets
Cash and cash equivalents $ 839,864 $ 740,930
Investments available-for-sale 1,308,548 713,730
Other receivables 4,013 31,168
---------- ----------
Total current assets 2,152,425 1,485,828
Office furniture, equipment and other, net of $239,820
of accumulated depreciation at March 31, 2001 and
$245,492 of accumulated depreciation at September 30,
2001 31,073 26,432
Land held for investment 301,275 301,275
Investment in joint venture - 63,125
Other assets 26,637 26,637
---------- ----------
Total assets $2,511,410 $1,903,297
========== ==========
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $ 19,385 $ 8,114
Deposits, deferred revenue and other 8,148 8,148
---------- ----------
Total current liabilities 27,533 16,262
---------- ----------
Stockholders' equity
Common stock, no par value; authorized 10,000,000
shares; 3,072,836 shares issued and outstanding 6,632,998 6,632,998
Accumulated deficit (4,105,132) (4,129,804)
Unrealized holding loss on investments available for
sale (43,989) (616,159)
---------- ----------
2,483,877 1,887,035
---------- ----------
Total liabilities and stockholders' equity $2,511,410 $1,903,297
========== ==========
See notes to unaudited condensed consolidated financial statements.
Unaudited Condensed Consolidated Statements of Operations
For the Three For the Six
Months Ended Months Ended
September 30, September 30,
--------------------------- -------------------------
2001 2000 2001 2001
----------- ---------- ---------- ----------
Revenue
Interest and dividend
income $ 7,590 $ 20,425 $ 34,372 $ 61,570
Other income 34,586 11,890 42,286 27,195
----------- ---------- ---------- ----------
Total revenue 42,176 32,315 76,658 88,765
----------- ---------- ---------- ----------
Expenses
Depreciation 2,836 4,813 5,672 9,065
Other operating expense 40,995 58,256 95,658 109,447
----------- ---------- ---------- ----------
Total expense 43,831 63,069 101,330 118,512
----------- ---------- ---------- ----------
Net loss $ (1,655) $ (30,754) $ (24,672) $ (29,747)
=========== ========== ========== ==========
Other comprehensive income
Unrealized gain (loss) on
investments
available-for-sale (545,449) 16,072 (572,170) 61,921
----------- ---------- ---------- ----------
Comprehensive (loss) income $ (547,104) $ (14,682) $ (596,842) $ 32,174
=========== ========== ========== ==========
Basic and diluted net loss
per share $ (.001) $ (.10) $ (.08) $ (.010)
=========== ========== ========== ==========
Weighted average number of
shares outstanding 3,072,836 3,072,836 3,072,836 3,072,836
=========== ========== ========== ==========
See notes to unaudited condensed consolidated financial statements.
Unaudited Condensed Consolidated Statements of Cash Flows
For the Six Months Ended
September 30,
-----------------------------
2001 2000
------------- ------------
Cash flows from operating activities
Net loss $ (24,672) $ (29,747)
------------ ------------
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation 5,672 9,065
Change in assets and liabilities:
Decrease in accounts receivable (27,155) 5,225
Decrease in accounts payable (11,271) (462)
------------ ------------
(32,754) 13,828
------------ ------------
Net cash flows used in operating activities (57,426) (15,919)
------------ ------------
Cash flows from investing activities
Redemption of certificates of deposit - 200,000
Purchases of office furniture and equipment (1,031) (3,242)
Purchase of investment in joint venture (63,125)
Purchase of investments available-for-sale - (464,184)
Proceeds from sale of investments available-for-sale 22,648 35,000
------------ ------------
Net cash flows used in investing activities (41,508) (232,426)
------------ ------------
Net decrease in cash and cash equivalents (98,934) (248,345)
Cash and cash equivalents, beginning of year 839,864 1,569,309
------------ ------------
Cash and cash equivalents, end of quarter $ 740,930 $ 1,320,964
============ ============
Supplemental disclosure of cash flow information:
The change in unrealized gain (loss) on investments available-for-sale for the six
months ended September 30, 2001 and September 30, 2000 was $(572,170) and $(61,921),
respectively.
See notes to unaudited condensed consolidated financial statements.
Notes to Unaudited Condensed Consolidated Financial Statements
Opinion of Management
1. The financial information furnished reflects all adjustments, which are, in the
opinion of management, necessary for a fair presentation of the financial position at
September 30, 2001, and March 31, 2001, and of the condensed consolidated statements of
operations and condensed consolidated statements of cash flows for the three and six months
ended September 30, 2001 and 2000. The results of operations and statements of cash flows
for the periods presented are not necessarily indicative of those to be expected for the
entire year.
2. The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim financial
information. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles. For further information refer to the
audited consolidated financial statements and notes thereto for the year ended March 31,
2001, included in the Company's 10-KSB filed with the Securities and Exchange Commission on
July 5, 2001.
Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations
Financial Condition, Liquidity and Capital Resources
Cash and cash equivalents decreased for the six months ended September 30, 2001 to
$740,930 from $839,864 for the year ended March 31, 2001 or $98,934. This is primarily due
to the Company's initial investment in Buffalo Highlands, a real estate investment, and
operating costs.
On August 20, 2001, the Company and its partners formed Buffalo Highlands, LLC. The
Company owns a 25 percent interest in the LLC and is a co-manager. The newly formed LLC
entered into an Option Agreement to purchase 320 acres of land. The Option Agreement,
among other things, provides for a $25,000 earnest money payment and $200,000 annual option
payments until closing which is scheduled to occur on or before December 31, 2005. The
earnest money and option payments apply to the purchase price of $5,000,000. It is the
intent of the LLC to improve the property by obtaining the proper entitlements for single
and multi family use. During the entitlement process and upon completion, the property
will be marketed. The LLC plans to rezone the property, plat the property for high-density
residential use, and sell the property prior to the expiration date of the Option
Agreement.
Stockholders' equity decreased from $2,483,877 at March 31, 2001 to $1,887,035 at
September 30, 2001 or $596,842. An increase in unrealized loss on investments
available-for-sale for the period ended September 30, 2001 was $572,170, and the net
operating loss was $24,672.
The unrealized loss on investments available-for-sale increased significantly for the
period ended September 30, 2001. This is primarily due to two investments. The Company
invested approximately $450,000 in four companies involved in drilling and developing a gas
prospect near Bakersfield, California. The current fair market value at September 30, 2001
was $128,645 a decrease of approximately 71.5 percent. This decrease in value is a result
of the decrease in the price of gas and the result of mechanical problems encountered in
completing the last two wells drilled on the structure. Currently, two new wells are
drilling on the structure, and a new 3D seismic has recently been completed and is under
evaluation. It is management's opinion that a large quantity of gas and hydrocarbons is in
place under this structure. The question that remains is can this exploration effort
economically produce gas and hydrocarbons.
The other investment that significantly impacted the unrealized loss on investments
available-for-sale is the Company's investment in a telecommunication company. The Company
acquired bonds in the amount of $352,600. For the period ended September 30, 2001, the
value was $41,800. Market conditions in that sector have restricted that company's ability
to finance its growth, and as a result the probability of this investment to turn around is
uncertain.
Results of Operations
For the Six Months Ended September 30, 2001, Compared to the Six Months Ended September 30, 2000
For the six months ended September 30, 2001, the Company's total revenue was $76,658
as compared to $88,765 for the six months ended September 30, 2000. This decrease in
income is primarily due to the Company's decrease in cash and cash equivalents and the
interest and dividend income derived from those assets along with lower interest rates.
Total expense for the six months ended September 30, 2001, was $101,330 as compared
to $118,512 for the six months ended September 30, 2000. This slight decrease in expense
is primarily due to a reduction of office rent.
PART II
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.
EAGLE EXPLORATION COMPANY
(Registrant)
By: /s/ Raymond N. Joeckel
----------------------
Raymond N. Joeckel
President/Chief Financial Officer
By: /s/ Paul M. Joeckel
-------------------
Secretary/Vice President Operations
Date: November 12, 2001
