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, 2005
| ¨ | 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) |
1801 Broadway, Suite 1010, 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 x No ¨.
Indicate the number of shares outstanding of each of the issuer’s classes 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.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.): Yes ¨ No x
EAGLE EXPLORATION COMPANY AND SUBSIDIARIES
INDEX TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
| Page | ||||
PART I | FINANCIAL INFORMATION | |||
Item 1 | Condensed Consolidated Balance Sheets – September 30, 2005 (unaudited), and March 31, 2005 | 2 | ||
| 3 | ||||
| 4 | ||||
Notes to Unaudited Condensed Consolidated Financial Statements | 5 | |||
Item 2 | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 6 | ||
Item 3 | 7 | |||
PART II | 8 | |||
Item 6 | 8 | |||
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EAGLE EXPLORATION COMPANY AND SUBSIDIARIES
PART I – FINANCIAL INFORMATION
Item 1
Condensed Consolidated Balance Sheets
| September 30, 2005 | March 31, 2005 | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 860,478 | $ | 938,301 | ||||
Marketable securities | 112,612 | 110,348 | ||||||
Accounts receivable | 5,304 | 5,914 | ||||||
Total current assets | 978,394 | 1,054,563 | ||||||
Office furniture, equipment and other, net of accumulated depreciation of $208,662 and $205,036 at September 30, 2005 and March 31, 2005, respectively | 47,356 | 50,982 | ||||||
Equity investment in LLC | 231,489 | 231,489 | ||||||
Other assets | 24,837 | 24,837 | ||||||
Total non-current assets | 303,682 | 307,308 | ||||||
Total assets | $ | 1,282,076 | $ | 1,361,871 | ||||
| Liabilities and Stockholders’ Equity | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 5,380 | $ | 5,380 | ||||
Deposits, deferred revenue and other | 11,385 | 11,385 | ||||||
Total current liabilities | 16,765 | 16,765 | ||||||
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 | (5,417,671 | ) | (5,335,612 | ) | ||||
Unrealized holding loss on investments available for sale | 49,984 | 47,720 | ||||||
Total stockholders’ equity | 1,265,311 | 1,345,106 | ||||||
Total liabilities and stockholders’ equity | $ | 1,282,076 | $ | 1,361,871 | ||||
See notes to unaudited condensed consolidated financial statements.
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EAGLE EXPLORATION COMPANY AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Operations
| For the Three Months Ended September 30, 2005 | For the Three Months Ended September 30, 2004 | For the Six Months Ended September 30, 2005 | For the Six Months Ended September 30, 2004 | |||||||||||||
Revenue | ||||||||||||||||
Oil and gas | $ | 12,172 | $ | 12,684 | $ | 23,149 | $ | 18,819 | ||||||||
Total revenue | 12,172 | 12,684 | 23,149 | 18,819 | ||||||||||||
Expenses | ||||||||||||||||
Depreciation | 1,813 | 2,407 | 3,626 | 3,881 | ||||||||||||
General and administrative expense | 54,915 | 76,140 | 113,913 | 122,190 | ||||||||||||
Total expense | 56,728 | 78,547 | 117,539 | 126,071 | ||||||||||||
Loss from operations | (44,556 | ) | (65,863 | ) | (94,390 | ) | (107,252 | ) | ||||||||
Other income (expense) | ||||||||||||||||
Interest and dividend income | 7,382 | 1,935 | 12,331 | 15,012 | ||||||||||||
Realized loss on sale of investments available-for-sale | — | — | — | (6,230 | ) | |||||||||||
Realized gain on sale of real estate held for sale | — | 2,352 | — | 2,352 | ||||||||||||
Total other income | 7,382 | 4,287 | 12,331 | 11,134 | ||||||||||||
Net loss before other comprehensive income (loss) | (37,174 | ) | (61,576 | ) | (82,059 | ) | (96,118 | ) | ||||||||
Other comprehensive income (loss) | ||||||||||||||||
Unrealized gain (loss) on investments available-for-sale | (6,259 | ) | 10,426 | 2,264 | (13,720 | ) | ||||||||||
Comprehensive loss | $ | (43,433 | ) | $ | (51,150 | ) | $ | (79,795 | ) | $ | (109,838 | ) | ||||
Basic and diluted weighted average common shares outstanding | 3,072,836 | 3,072,836 | 3,072,836 | 3,072,836 | ||||||||||||
Basic and diluted loss per common share | $ | (0.014 | ) | $ | (0.017 | ) | $ | (0.026 | ) | $ | (0.036 | ) | ||||
See notes to unaudited condensed consolidated financial statements.
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EAGLE EXPLORATION COMPANY AND SUBSIDIARIES
Unaudited Condensed Consolidated Statements of Cash Flows
For the Six Months Ended September 30, | ||||||||
| 2005 | 2004 | |||||||
Cash flows from operating activities | ||||||||
Net loss | $ | (82,059 | ) | $ | (96,118 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation | 3,626 | 3,881 | ||||||
Loss on disposal of investments available-for-sale | — | 6,230 | ||||||
Gain on disposal of real estate held for sale | — | (2,352 | ) | |||||
Change in assets and liabilities: | ||||||||
Decrease in accounts receivable | 610 | (1,112 | ) | |||||
| 4,236 | 6,647 | |||||||
Net cash flows used in operating activities | (77,823 | ) | (89,471 | ) | ||||
Cash flows from investing activities | ||||||||
(Purchase) redemption of certificates of deposit | — | 200,000 | ||||||
Purchase of office furniture, equipment and other | — | (3,685 | ) | |||||
Purchase of investment available-for-sale | — | (50,000 | ) | |||||
Proceeds from the sale for investments available-for-sale | — | 143,771 | ||||||
Proceeds from real estate held for sale | — | 300,877 | ||||||
Net cash flows provided by investing activities | — | 590,963 | ||||||
Net increase (decrease) in cash and cash equivalents | (77,823 | ) | 501,492 | |||||
Cash and cash equivalents, beginning of year | 938,301 | 264,257 | ||||||
Cash and cash equivalents, end of quarter | $ | 860,478 | $ | 765,749 | ||||
Supplemental disclosure of cash flow information:
The change in unrealized gain (loss) on investments available-for-sale for the six months ended September 30, 2005 and September 30, 2004 was $2,264 and $(13,720), respectively.
See notes to unaudited condensed consolidated financial statements.
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EAGLE EXPLORATION COMPANY AND SUBSIDIARIES
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 consolidated financial position at September 30, 2005, and March 31, 2005, and of the condensed consolidated statements of operations and condensed consolidated statements of cash flows for the three and six months ended September 30, 2005, and 2004. 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 account principles. For further information refer to the audited consolidated financial statements and notes thereto for the year ended March 31, 2005, included in the Company’s 10-KSB filed with the Securities and Exchange Commission on June 20, 2005.
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EAGLE EXPLORATION COMPANY AND SUBSIDIARIES
| Item 2: | Management’s Discussion and Analysis of Financial Condition and Results of Operation |
Plan of Operations
Eagle Exploration Company’s history of operations includes the purchase and development of residential and commercial real estate. In 1992 the Company began the change of its focus from oil and gas exploration to real estate development and in connection with this change subsequently sold most of its oil and gas interests and investments. However, the Company continues to hold minor interests in oil and gas properties and indirect interest by acquiring equity in other oil and gas companies. The Company is also investigating various potential acquisitions and other business opportunities.
Financial Condition, Liquidity and Capital Resources
The Company’s cash at September 30, 2005 was $860,478 as compared to cash for the year ended March 31, 2005 of $938,301. This decrease in cash of $77,823 was primarily due to operating costs.
Stockholder’s equity decreased from $1,345,106 at March 31, 2005 to $1,265,311 at September 30, 2005 or $79,795. The Company incurred an unrealized gain on investments available-for-sale for the period ended September 30, 2005 of $2,264 and a net loss before other comprehensive income of $82,059.
Results of Operations
For the Six Months Ended September 30, 2005, Compared to the Six Months Ended September 30, 2004.
For the six months ended September 30, 2005, the Company’s total oil and gas revenue was $23,149 as compared to $18,819 for the six months ended September 30, 2004. Other income including interest and dividend income was $12,331 for the period ended September 30, 2005 and $11,134 for the period ended September 30, 2004.
Total expense for the six months ended September 30, 2005 was $117,539 as compared to $126,071 for the six months ended September 30, 2004. Unrealized gain on investments available-for-sale for the period ended September 30, 2005 was $2,264 and for the period ended September 30, 2004 the Company had an unrealized loss on investments available-for-sale of $13,720. This resulted in a comprehensive loss of $79,795 and $109,838 for the period ended September 30, 2005 and 2004, respectively.
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EAGLE EXPLORATION COMPANY AND SUBSIDIARIES
| Item 3: | Controls and Procedures |
As of the end of the period covered by this report, the Company conducted an evaluation, under the supervision and with the participation of the principal executive officer and principal financial officer, of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”). Based on this evaluation, the principal executive officer and principal financial officer concluded that the Company’s disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms. There was no change in the Company’s internal control over financial reporting during the Company’s most recently completed fiscal quarter that has materially affected or is reasonably likely to materially affect the Company’s internal control over financial reporting.
In connection with the audit of the year ended March 31, 2005, there were no “Reportable Events” within the meaning of Item 304(a)(1)(v) of Regulation S-K. However, there is a lack of segregation of duties that is considered to be a weakness in the Registrant’s internal controls relating to the adequacy of staffing and size of the accounting and finance department.
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EAGLE EXPLORATION COMPANY AND SUBSIDIARIES
| Item 6. | Exhibits |
(a) Exhibits
| Exhibit 31.1 | Certification of President and Chief Financial Officer Pursuant to 18 USC Section 1350, as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002 | |
| Exhibit 31.2 | Certification of Secretary and Vice President of Operations Pursuant to 18 USC Section 1350, as adopted pursuant to section 302 of the Sarbanes-Oxley Act of 2002 | |
| Exhibit 32.1 | Certification of President and Chief Financial Officer Pursuant to 18 USC Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002 | |
| Exhibit 32.2 | Certification of Secretary and Vice President of Operations Pursuant to 18 USC Section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002 | |
(b) No reports on Form 8-K have been filed during the quarter ended September 30, 2005.
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EAGLE EXPLORATION COMPANY AND SUBSIDIARIES
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 and Chief Financial Officer | ||
| By: | /s/ Paul M. Joeckel | |
Secretary and Vice President Operations | ||
Date: November 10, 2005
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