U. S. Securities and Exchange Commission
Washington, D. C. 20549
FORM 10-Q
| x | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2008
| ¨ | 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) |
93 Spyglass Drive, Littleton, CO 80123
(Address and zip code of principal executive offices)
Registrant’s telephone number, including area code: (303) 797-6816
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 ¨.
Indicated by check mark whether the registrant is a large accelerated filer, and accelerated file, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and a “smaller reporting company” in Rule 12b-2 of the Exchange Act.
| Larger accelerated filer ¨ | Accelerated filer ¨ | Non-accelerated filer ¨ | Smaller reporting company x | |||
| (Do not check if a smaller reporting company.) |
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether 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 ¨ 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
| Page | ||||
| PART I | FINANCIAL INFORMATION | |||
| Item 1 | Condensed Consolidated Balance Sheets – September 30, 2008 (unaudited), and March 31, 2008 | 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 | OTHER INFORMATION | 8 | ||
| Item 6 | Exhibits and Reports on Form 8-K | 8 | ||
| SIGNATURES | 9 | |||
EAGLE EXPLORATION COMPANY AND SUBSIDIARIES
PART I – FINANCIAL INFORMATION
Item 1
Condensed Consolidated Balance Sheets
| September 30, 2008 | March 31, 2008 | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 401,668 | $ | 415,692 | ||||
Marketable securities | 30,200 | 42,900 | ||||||
Accounts receivable | 12,848 | 8,590 | ||||||
Total current assets | 444,716 | 467,182 | ||||||
Office furniture, equipment and other, net of accumulated depreciation of $221,365 and $219,629 at September 30, 2008 and March 31, 2008, respectively | 17,864 | 19,600 | ||||||
Equity investment in LLC | 892,107 | 841,290 | ||||||
Other assets | 24,250 | 24,250 | ||||||
Total non-current assets | 934,221 | 885,140 | ||||||
Total assets | $ | 1,378,937 | $ | 1,352,322 | ||||
| Liabilities and Stockholders’ Equity | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 1,662 | $ | 510 | ||||
Guarantee on LLC line of credit | 199,913 | 123,450 | ||||||
Total current liabilities | 201,575 | 123,960 | ||||||
Stockholders’ equity | ||||||||
Common stock, no par value; authorized 100,000,000 shares; 3,072,836 shares issued and outstanding | 6,632,998 | 6,632,998 | ||||||
Accumulated deficit | (5,435,836 | ) | (5,397,536 | ) | ||||
Unrealized holding loss on investments available for sale | (19,800 | ) | (7,100 | ) | ||||
Total stockholders’ equity | 1,177,362 | 1,228,362 | ||||||
Total liabilities and stockholders’ equity | $ | 1,378,937 | $ | 1,352,322 | ||||
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, 2008 | For the Three Months Ended September 30, 2007 | For the Six Months Ended September 30, 2008 | For the Six Months Ended September 30, 2007 | |||||||||||||
Revenue | ||||||||||||||||
Oil and gas | $ | 20,849 | $ | 12,448 | $ | 41,536 | $ | 25,000 | ||||||||
Total revenue | 20,849 | 12,448 | 41,536 | 25,000 | ||||||||||||
Expenses | ||||||||||||||||
Depreciation | 868 | 919 | 1,736 | 1,838 | ||||||||||||
General and administrative expense | 27,477 | 56,405 | 57,726 | 101,001 | ||||||||||||
Total expense | 28,345 | 57,324 | 59,462 | 102,839 | ||||||||||||
Loss from operations | (7,496 | ) | (44,876 | ) | (17,926 | ) | (77,839 | ) | ||||||||
Other income (expense) | ||||||||||||||||
Interest and dividend income | 3,207 | 6,319 | 5,272 | 11,532 | ||||||||||||
Income earned on sold investments | — | — | — | 39,376 | ||||||||||||
Equity in losses in LLC | (12,893 | ) | (12,893 | ) | (25,646 | ) | (25,626 | ) | ||||||||
Total other income (expense) | (9,686 | ) | (6,574 | ) | (20,374 | ) | 25,282 | |||||||||
Net loss before other comprehensive loss | (17,182 | ) | (51,450 | ) | (38,300 | ) | (52,557 | ) | ||||||||
Other comprehensive income (loss) | ||||||||||||||||
Unrealized gain (loss) arising during period | (9,700 | ) | (2,280 | ) | (12,700 | ) | 2,255 | |||||||||
Reclass adjustment | — | — | — | (39,376 | ) | |||||||||||
Comprehensive loss | $ | (26,882 | ) | $ | (53,730 | ) | $ | (51,000 | ) | $ | (89,678 | ) | ||||
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 | $ | (0.008 | ) | $ | (0.02 | ) | $ | (0.02 | ) | $ | (0.02 | ) | ||||
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, | ||||||||
| 2008 | 2007 | |||||||
Cash flows from operating activities | ||||||||
Net loss | $ | (38,300 | ) | $ | (52,557 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation | 1,736 | 1,838 | ||||||
Equity in losses in LLC | 25,646 | 25,625 | ||||||
Gain on sale of investment | — | (39,375 | ) | |||||
Change in assets and liabilities: | ||||||||
Accounts receivable | (4,258 | ) | 79 | |||||
Accounts payable | 1,152 | (2,048 | ) | |||||
| 24,383 | (13,881 | ) | ||||||
Net cash flows used in operating activities | (14,024 | ) | (66,438 | ) | ||||
Cash flows from investing activities | ||||||||
Payment of contribution to equity investment in LLC | — | (38,250 | ) | |||||
Proceeds from the sale for investments available-for-sale | — | 48,750 | ||||||
Net cash flows used in investing activities | — | 10,500 | ||||||
Net decrease in cash and cash equivalents | (14,024 | ) | (55,938 | ) | ||||
Cash and cash equivalents, beginning of year | 415,692 | 550,460 | ||||||
Cash and cash equivalents, end of quarter | $ | 401,668 | $ | 494,522 | ||||
Supplemental disclosure of cash flow information:
The change in unrealized (loss) gain on investments available-for-sale for the six months ended September 30, 2008 and September 30, 2007 was $(12,700) and $2,255, 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, 2008, and March 31, 2008, and of the condensed consolidated statements of operations and condensed consolidated statements of cash flows for the three and six months ended September 30, 2008, and 2007. 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, 2008, included in the Company’s 10-KSB filed with the Securities and Exchange Commission on July 14, 2008.
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EAGLE EXPLORATION COMPANY AND SUBSIDIARIES
| Item 2: | Management’s Discussion and Analysis of Financial Condition and Results of Operation |
Financial Condition, Liquidity and Capital Resources
The Company’s cash at September 30, 2008 was $401,668 as compared to cash for the year ended March 31, 2008 of $415,692. This decrease in cash of $14,024 was primarily due to operating costs.
Effective July 21, 2008, authorized common stock was increased from 10,000,000 shares to 100,000,000 shares. In addition 1,000,000 shares of preferred stock were authorized. At September 30, 2008, zero shares of preferred stock were issued and outstanding.
Stockholder’s equity decreased from $1,228,362 at March 31, 2008 to $1,177,362 at September 30, 2008 or $51,000. The Company incurred an unrealized loss on investments available-for-sale for the period ended September 30, 2008 of $12,700 and a net loss before other comprehensive income of $51,000.
Results of Operations
For the Six Months Ended September 30, 2008 Compared to the Six Months Ended September 30, 2007.
For the six months ended September 30, 2008, the Company’s total oil and gas revenue was $41,536 as compared to $25,000 for the six months ended September 30, 2007. Other income including interest and dividend income was $5,272 for the period ended September 30, 2008 and $11,532 for the period ended September 30, 2007.
Total expense for the six months ended September 30, 2008 was $59,462 as compared to $102,839 for the six months ended September 30, 2007. Unrealized loss on investments available-for-sale for the period ended September 30, 2008 was $12,700 and for the period ended September 30, 2007 the Company had an unrealized gain on investments available-for-sale of $2,255. This resulted in a comprehensive loss of $51,000 and $89,678 for the period ended September 30, 2008 and 2007, 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, 2008, 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, 2008.
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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 | |
| Paul M. Joeckel | ||
| Secretary and Vice President Operations | ||
Date: November 13, 2008
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