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, 2006
| ¨ | 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. 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.
EAGLE EXPLORATION COMPANY AND SUBSIDIARIES
INDEX TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
EAGLE EXPLORATION COMPANY AND SUBSIDIARIES
| Item 1 |
Condensed Consolidated Balance Sheets
| December 31, | March 31, | |||||||
| 2006 | 2006 | |||||||
| (Unaudited) | ||||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 595,370 | $ | 750,843 | ||||
Marketable securities | 82,704 | 98,776 | ||||||
Accounts receivable | 6,711 | 7,208 | ||||||
Total current assets | 684,785 | 856,827 | ||||||
Office furniture, equipment and other, net of accumulated depreciation of $215,034 and $212,298 at December 31, 2006 and March 31, 2006, respectively | 40,984 | 43,730 | ||||||
Investment in option to purchase real estate | 306,426 | 265,067 | ||||||
Other assets | 24,837 | 24,837 | ||||||
Total assets | $ | 1,057,032 | $ | 1,190,461 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 1,060 | $ | 1,060 | ||||
Deposits, deferred revenue and other | 11,385 | 11,385 | ||||||
Total current liabilities | 12,445 | 12,445 | ||||||
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 | (5,611,741 | ) | (5,491,130 | ) | ||||
Unrealized holding gain on investments available for sale | 23,330 | 36,148 | ||||||
| 1,044,587 | 1,178,016 | |||||||
Total liabilities and stockholders’ equity | $ | 1,057,032 | $ | 1,190,461 | ||||
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, | |||||||||||||||
| 2006 | 2005 | 2006 | 2005 | |||||||||||||
Revenue | ||||||||||||||||
Oil and gas | $ | 12,089 | $ | 14,919 | $ | 38,960 | $ | 38,068 | ||||||||
Total revenue | 12,089 | 14,919 | 38,960 | 38,068 | ||||||||||||
Expenses | ||||||||||||||||
Depreciation | 919 | 1,813 | 2,746 | 5,439 | ||||||||||||
General and administrative | 47,711 | 48,598 | 161,909 | 162,511 | ||||||||||||
Total expense | 48,630 | 50,411 | 164,655 | 167,950 | ||||||||||||
Loss from operations | (36,541 | ) | (35,492 | ) | (125,695 | ) | (129,882 | ) | ||||||||
Other income | ||||||||||||||||
Interest and dividend income | 6,588 | 6,826 | 22,475 | 19,157 | ||||||||||||
Equity in losses in LLC | — | — | (17,391 | ) | — | |||||||||||
Total other income | 6,588 | 6,826 | 5,084 | 19,157 | ||||||||||||
Net loss before other comprehensive income (loss) | (29,953 | ) | (28,666 | ) | (120,611 | ) | (110,725 | ) | ||||||||
Other comprehensive income (loss) Unrealized gain (loss) on investments available-for-sale | 135 | (12,893 | ) | (12,818 | ) | (10,629 | ) | |||||||||
Comprehensive (loss) | $ | (29,818 | ) | $ | (41,559 | ) | $ | (133,429 | ) | $ | (121,354 | ) | ||||
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 | ) | $ | (.04 | ) | ||||
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, | ||||||||
| 2006 | 2005 | |||||||
Cash flows from operating activities | ||||||||
Net loss | $ | (120,611 | ) | $ | (110,725 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation | 2,746 | 5,439 | ||||||
Equity in losses in LLC | 17,391 | — | ||||||
Change in assets and liabilities: | ||||||||
(Increase) decrease in accounts receivable | 498 | (2,719 | ) | |||||
| 20,635 | 2,720 | |||||||
Net cash flows used in operating activities | (99,976 | ) | (108,005 | ) | ||||
Cash flows from investing activities | ||||||||
Payment of contribution to equity investment in LLC | (58,750 | ) | (51,578 | ) | ||||
Proceeds from sale for investments available-for-sale | 3,253 | — | ||||||
Net cash flows used in investing activities | (55,497 | ) | (51,578 | ) | ||||
Net decrease in cash and cash equivalents | (155,473 | ) | (159,583 | ) | ||||
Cash and cash equivalents, beginning of year | 750,843 | 938,301 | ||||||
Cash and cash equivalents, end of quarter | $ | 595,370 | $ | 778,718 | ||||
Supplemental disclosure of cash flow information:
The change in unrealized loss on investments available-for-sale for the nine months ended December 31, 2006 and December 31, 2005 was $12,818 and $10,629, 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, 2006 and March 31, 2006 and of the unaudited condensed consolidated statements of operations for the three and nine months ended December 31, 2006 and 2005 and the unaudited condensed consolidated statements of cash flows for the nine months ended December 31, 2006 and 2005. 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 in the United States of America, 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, 2006, included in the Company’s 10-KSB filed with the Securities and Exchange Commission on June 29, 2006.
| 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, 2006 was $595,370 as compared to cash for the year ended March 31, 2006 of $750,843. This decrease in cash of $155,473 for the nine months ended December 31, 2006 was primarily due to operating costs.
Stockholders’ equity decreased from $1,178,016 at March 31, 2006 to $1,044,587 at December 31, 2006 or $133,429. The Company incurred an unrealized loss on investments available-for-sale of $12,818 and a net loss before other comprehensive income of $120,611 for the nine months ended December 31, 2006.
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, 2006, Compared to the Nine Months Ended December 31, 2005.
For the nine months ended December 31, 2006, the Company’s total oil and gas revenue was $38,960 as compared to $38,068 for the nine months ended December 31, 2005. Other income, including interest and dividend income, was $22,475 for the nine months ended December 31, 2006 and $19,157 for the nine months ended December 31, 2005.
Total expense for the nine months ended December 31, 2006, was $164,655 as compared to $167,950 for the nine months ended December 31, 2005. Unrealized loss on investments available-for-sale for the nine months ended December 31, 2006 was $12,818 compared to an unrealized loss of $10,629 for the nine months ended December 31, 2005. This resulted in a comprehensive loss of $133,429 and $121,354 for the periods ended December 31, 2006, and 2005, 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, 2006, 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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| 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
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 14, 2007
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