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 December 31, 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 incorporation or organization) | (IRS Employer Identification Number) |
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
Indicate 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. Yesx 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¨ Nox.
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 – March 31, 2005, and December 31, 2005 (Unaudited) | 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 | 5 | ||
Item 3 | 6 | |||
PART II | OTHER INFORMATION | |||
Item 6 | 7 | |||
| 8 | ||||
EAGLE EXPLORATION COMPANY AND SUBSIDIARIES
PART I FINANCIAL INFORMATION
Item 1
Condensed Consolidated Balance Sheets
| December 31, 2005 | March 31, 2005 | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 778,718 | $ | 938,301 | ||||
Marketable securities | 99,719 | 110,348 | ||||||
Accounts receivable | 8,633 | 5,914 | ||||||
Total current assets | 887,070 | 1,054,563 | ||||||
Office furniture, equipment and other, net of accumulated depreciation of $210,475 and $205,036 at December 31, 2005 and March 31, 2005, respectively | 45,543 | 50,982 | ||||||
Investment in option to purchase real estate | 283,067 | 231,489 | ||||||
Other assets | 24,837 | 24,837 | ||||||
Total assets | $ | 1,240,517 | $ | 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 | (5,446,337 | ) | (5,335,612 | ) | ||||
Unrealized holding gain on investments available for sale | 37,091 | 47,720 | ||||||
| 1,223,752 | 1,345,106 | |||||||
Total liabilities and stockholders’ equity | $ | 1,240,517 | $ | 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 December 31, | For the Nine Months Ended December 31, | |||||||||||||||
| 2005 | 2004 | 2005 | 2004 | |||||||||||||
Revenue | ||||||||||||||||
Oil and gas | $ | 14,919 | $ | 9,446 | $ | 38,068 | $ | 28,265 | ||||||||
Total revenue | 14,919 | 9,446 | 38,068 | 28,265 | ||||||||||||
Expenses | ||||||||||||||||
Depreciation | 1,813 | 2,407 | 5,439 | 6,288 | ||||||||||||
General and administrative | 48,598 | 58,542 | 162,511 | 180,732 | ||||||||||||
Total expense | 50,411 | 60,949 | 167,950 | 187,020 | ||||||||||||
Loss from operations | (35,492 | ) | (51,503 | ) | (129,882 | ) | (158,755 | ) | ||||||||
Other income | ||||||||||||||||
Interest and dividend income | 6,826 | 10,952 | 19,157 | 25,964 | ||||||||||||
Miscellaneous income | — | — | — | 2,352 | ||||||||||||
Realized loss on sale of investments available-for-sale | — | — | — | (6,230 | ) | |||||||||||
Total other income | 6,826 | 10,952 | 19,157 | 22,086 | ||||||||||||
Net loss before other comprehensive income (loss) | (28,666 | ) | (40,551 | ) | (110,725 | ) | (136,669 | ) | ||||||||
Other comprehensive income (loss) | ||||||||||||||||
Unrealized gain (loss) on investments available-for-sale | (12,893 | ) | 9,211 | (10,629 | ) | (4,509 | ) | |||||||||
Comprehensive (loss) | (41,559 | ) | (31,340 | ) | (121,354 | ) | (141,178 | ) | ||||||||
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 | $ | (.01 | ) | $ | (.01 | ) | $ | (.04 | ) | $ | (.05 | ) | ||||
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 Nine Months Ended December 31, | ||||||||
| 2005 | 2004 | |||||||
Cash flows from operating activities | ||||||||
Net loss | $ | (110,725 | ) | $ | (136,669 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation | 5,439 | 6,288 | ||||||
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: | ||||||||
Accounts receivable | (2,719 | ) | (909 | ) | ||||
Deposits, deferred revenue and other | — | 1,034 | ||||||
| 2,720 | 10,291 | |||||||
Net cash flows used in operating activities | (108,005 | ) | (126,378 | ) | ||||
Cash flows from investing activities | ||||||||
Redemption (purchase) of certificates of deposit, net | — | 200,000 | ||||||
Purchase of office furniture and equipment | — | (3,685 | ) | |||||
Purchase of investment in option to purchase real estate | (51,578 | ) | (18,750 | ) | ||||
Purchase of investments available-for-sale | — | (50,000 | ) | |||||
Proceeds from the sale of investments available-for-sale | — | 144,690 | ||||||
Proceeds from real estate held for sale | — | 300,877 | ||||||
Net cash flows used in (provided by) investing activities | (51,578 | ) | 573,132 | |||||
Net increase (decrease) in cash and cash equivalents | (159,583 | ) | 446,754 | |||||
Cash and cash equivalents, beginning of year | 938,301 | 264,257 | ||||||
Cash and cash equivalents, end of quarter | $ | 778,718 | $ | 711,011 | ||||
Supplemental disclosure of cash flow information:
The change in unrealized loss on investments available-for-sale for the nine months ended December 31, 2005 and December 31, 2004 was $10,629 and $4,509, 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 financial position at December 31, 2005 and March 31, 2005 and of the unaudited condensed consolidated statements of operations for the three and nine months ended December 31, 2005 and 2004 and the unaudited condensed consolidated statements of cash flows for the nine months ended December 31, 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.
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, 2005, included in the Company’s 10-KSB filed with the Securities and Exchange Commission on June 20, 2005.
| Item 2: | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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 interests 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 December 31, 2005 was $778,718 as compared to cash for the year ended March 31, 2005 of $938,301. This decrease in cash of $159,583 for the nine months ended December 31, 2005 was primarily due to operating costs.
Stockholders’ equity decreased from $1,345,106 at March 31, 2005 to $1,223,752 at December 31, 2005 or $121,354. The Company incurred an unrealized loss on investments available-for-sale of $10,629 and a net loss of $110,725 for the nine months ended December 31, 2005.
See notes to unaudited condensed consolidated financial statements.
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EAGLE EXPLORATION COMPANY AND SUBSIDIARIES
Results of Operations
For the Nine Months Ended December 31, 2005, Compared to the Nine Months Ended December 31, 2004.
For the nine months ended December 31, 2005, the Company’s total oil and gas revenue was $38,068 as compared to $28,265 for the nine months ended December 31, 2004. Other income, including interest and dividend income, was $19,157 for the nine months ended December 31, 2005 and $22,086 for the nine months ended December 31, 2004.
Total expense for the nine months ended December 31, 2005, was $167,950 as compared to $187,020 for the nine months ended December 31, 2004. Unrealized loss on investments available-for-sale for the nine months ended December 31, 2005 was $10,629 compared to an unrealized loss of $4,509 for the nine months ended December 31, 2004. This resulted in a comprehensive loss of $121,354 and $141,178 for the period ended December 31, 2005, and 2004, respectively.
| 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 Commissions 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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PART II
| Item 6. | Exhibits and reports on Form 8-K |
| Exhibit 31.1 | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| Exhibit 31.2 | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| Exhibit 32.1 | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| Exhibit 32.2 | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
See notes to unaudited condensed consolidated financial statements.
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EAGLE EXPLORATION COMPANY AND SUBSIDIARIES
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: February 10, 2006
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