UNITED STATES
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 OCTOBER 31, 2009
Commission file number 333-143626
AMERICAN EAGLE ENERGY INC.
(Exact name of registrant as specified in its charter)
NEVADA
(State or other jurisdiction of incorporation or organization)
10B Time Centre, 53-55 Hollywood Road, Central, Hong Kong
(Address of principal executive offices, including zip code)
852 2521 5455
(Telephone number, including area code)
YELLOW HILL ENERGY INC.
(Former name or former address, if changed since last report)
Resident Agents of Nevada, Inc.
711 S. Carson Street, Ste 4
Carson City, Nevada 89701
775 882 4641
(Name, address and telephone number of agent for service)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 last 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). Yes [ ] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer, "accelerated filer,"
"non-accelerated filer," and "smaller reporting company" in Rule 12b-2 of the
Exchange Act.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [X] No [ ]
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 60,000,000 shares as of December 8,
2009
ITEM 1. FINANCIAL STATEMENTS
AMERICAN EAGLE ENERGY INC.
(formerly Yellow Hill Energy Inc.)
(An Exploration Stage Company)
Balance Sheets
(Expressed in U.S. Dollars)
October 31, April 30,
2009 2009
-------- --------
(Audited)
ASSETS
CURRENT ASSETS
Cash $ 7,048 $ 7,157
-------- --------
Total Current Assets 7,048 7,157
-------- --------
Total Assets $ 7,048 $ 7,157
======== ========
LIABILITIES
CURRENT LIABILITIES
Accounts Payable and Accrued Liabilities $ 3,368 $ 429
Due to Related Parties 14,975 --
-------- --------
Total Liabilities 18,343 429
-------- --------
STOCKHOLDERS' EQUITY
Common Stock
150,000,000 authorized shares, par value $0.001
60,000,000 shares issued and outstanding 60,000 60,000
Additional Paid-in-Capital -- --
Deficit accumulated during exploration stage (71,295) (53,272)
-------- --------
Total Stockholders' Equity (11,295) 6,728
-------- --------
Total Liabilities and Stockholders' Equity $ 7,048 $ 7,157
======== ========
The accompanying notes are an integral part of these financial statements.
2
AMERICAN EAGLE ENERGY INC.
(formerly Yellow Hill Energy Inc.)
(An Exploration Stage Company)
Statements of Operations
(Expressed in U.S. Dollars)
Period from
For the For the For the For the March 14, 2007
Three Months Three Months Six Months Six Months (Date of inception)
Ended Ended Ended Ended through
October 31, October 31, October 31, October 31, October 31,
2009 2008 2009 2008 2009
----------- ----------- ----------- ----------- -----------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
REVENUES:
Revenues $ -- $ -- $ -- $ -- $ --
------------ ------------ ------------ ------------ ------------
Total Revenues -- -- -- -- --
------------ ------------ ------------ ------------ ------------
EXPENSES:
Operating Expenses
Impairment of mineral property -- -- -- -- 8,650
Exploration -- -- -- -- 7,880
General and Administrative 1,260 1,080 1,689 1,615 11,344
Rent and Administrative Paid to
Related Party 4,599 -- 9,138 -- 18,930
Professional Fees 3,695 440 7,196 3,440 24,491
------------ ------------ ------------ ------------ ------------
Total Expenses $ 9,554 1,520 18,023 5,055 71,295
------------ ------------ ------------ ------------ ------------
Net loss from Operations (9,554) (1,520) (18,023) (5,055) (71,295)
PROVISION FOR INCOME TAXES:
Income Tax Expense -- -- -- -- --
------------ ------------ ------------ ------------ ------------
Net Income (Loss) for the period $ (9,554) $ (1,520) $ (18,023) $ (5,055) $ (71,295)
============ ============ ============ ============ ============
Basic and Diluted Earnings Per
Common Share (0.00) (0.00) (0.00) (0.00)
------------ ------------ ------------ ------------
Weighted Average number of Common Shares 60,000,000 60,000,000 60,000,000 60,000,000
used in per share calculations ============ ============ ============ ============
The accompanying notes are an integral part of these financial statements.
3
AMERICAN EAGLE ENERGY INC.
(formerly Yellow Hill Energy Inc.)
(An Exploration Stage Company)
Statements of Stockholders' Equity
For the period from March 14, 2007 (inception) to October 31, 2009
(Expressed in U.S. Dollars)
Accumulated
Deficit During
$0.001 Paid-In Exploration Stockholders'
Shares Par Value Capital Stage Equity
------ --------- ------- ----- ------
Balance, March 14, 2007 (Date of Inception) -- $ -- $ -- $ -- $ --
Stock Issued for cash at $0.001 per share 30,000,000 30,000 (15,000) -- 15,000
on April 28, 2007
Net Loss for the Period -- -- -- (15,890) (15,890)
----------- -------- -------- --------- ---------
Balance, April 30, 2007 30,000,000 30,000 (15,000) (15,890) (890)
Stock Issued for cash at $0.003 per share 30,000,000 30,000 15,000 -- 45,000
on July 31, 2007
Net Loss for the Period -- -- -- (16,112) (16,112)
----------- -------- -------- --------- ---------
Balance, April 30, 2008 60,000,000 60,000 -- (32,002) 27,998
Net Loss for the Period -- -- -- (21,270) (21,270)
----------- -------- -------- --------- ---------
Balance, April 30, 2009 60,000,000 60,000 -- (53,272) 6,728
Net Loss for the Period -- -- -- (18,023) (18,023)
----------- -------- -------- --------- ---------
Balance, October 31, 2009 60,000,000 $ 60,000 $ -- $ (71,295) $ (11,295)
=========== ======== ======== ========= =========
The accompanying notes are an integral part of these financial statements.
4
AMERICAN EAGLE ENERGY INC.
(formerly Yellow Hill Energy Inc.)
(An Exploration Stage Company)
Statements of Cash Flows
(Expressed in U.S. Dollars)
Period from
For the For the March 14, 2007
Three Months Six Months (Date of inception)
Ended Ended through
October 31, October 31, October 31,
2009 2009 2009
-------- -------- --------
OPERATING ACTIVITIES:
Net Loss $ (9,554) $(18,023) $(71,295)
Adjustments to reconcile net loss to net
cash used in operating activities:
Impairment of mineral property -- -- 8,650
Accounts payable and accrued liabilities 1,426 2,939 3,368
-------- -------- --------
Net Cash Used in Operating Activities (8,128) (15,084) (59,277)
-------- -------- --------
INVESTING ACTIVITIES:
Mineral property acquisition cost -- -- (8,650)
-------- -------- --------
Net Cash Used in Investing Activities -- -- (8,650)
-------- -------- --------
FINANCING ACTIVITIES:
Amounts due to related parties 14,975 14,975 14,975
Common Stock issued for cash -- -- 60,000
-------- -------- --------
Net Cash Provided from Financing Activities 14,975 14,975 74,975
-------- -------- --------
Increase (decrease) in Cash 6,847 (109) 7,048
-------- -------- --------
Cash, Beginning of the period 201 7,157 --
-------- -------- --------
Cash, End of the period $ 7,048 $ 7,048 $ 7,048
======== ======== ========
Supplemental Information:
Taxes paid $ -- $ -- $ --
======== ======== ========
Interest paid $ -- $ -- $ --
======== ======== ========
The accompanying notes are an integral part of these financial statements.
5
AMERICAN EAGLE ENERGY INC.
(formerly Yellow Hill Energy Inc.)
(An Exploration Stage Company)
Notes to the Financial Statements
1. DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
THE COMPANY'S HISTORY - American Eagle Energy Inc. (hereinafter referred to as
the "Company" or "American Eagle Energy") was incorporated in the State of
Nevada as Yellow Hill Energy Inc. on March 14, 2007 to engage in the
acquisition, exploration and development of natural resource properties of
merit. On October 5, 2009, we filed, with the Nevada Secretary of State,
documents to effect a change of name from "Yellow Hill Energy Inc." to "American
Eagle Energy Inc.", by way of a merger with our wholly owned subsidiary American
Eagle Energy Inc., which was formed solely for the change of name. The Company
completed its prospectus offering of 30,000,000 shares of the Company's common
stock at a price of $0.0015 per share for gross proceeds of $45,000 on July 31,
2007. The Company acquired mineral claims during the initial period ending April
30, 2007. During the period ended July 31, 2008, the Company did not renew their
mineral claims.
On September 9, 2008 Craig Lindsay resigned as our president, chief financial
officer and director and Sean Mitchell resigned as our secretary, treasurer and
director. As a result on September 9, 2008 we appointed Jay Jhaveri as
president, secretary, treasurer, director and chief financial officer of our
company. Our board of directors now consists of Jay Jhaveri.
On September 9, 2008 the Company moved our operations to 10B Time Centre, 53-55
Hollywood Road, Central, Hong Kong and Jay Jhaveri performs all our corporate
and administrative operations.
On October 14, 2009, our board of directors approved a forward split of our
company's stock on a 1 old for 2 new basis, such that our authorized capital
shall increase from 75,000,000 shares of common stock with a par value of $0.001
to 150,000,000 shares of common stock with a par value of $0.001 and,
correspondingly, our issued and outstanding shares of common stock shall
increase from 30,000,000 shares of common stock to 60,000,000 shares of common
stock. The effective date with respect to the forward stock split was October
26, 2009.
THE COMPANY TODAY - The Company is currently a development stage company. Our
purpose has been to serve as a vehicle to acquire an operating business and we
are currently considered a "shell" company inasmuch as we are not generating
revenues, do not own an operating business, and have no specific plan other than
to engage in a merger or acquisition transaction with a yet-to-be identified
operating company or business. We have no employees and no material assets.
6
AMERICAN EAGLE ENERGY INC.
(formerly Yellow Hill Energy Inc.)
(An Exploration Stage Company)
Notes to the Financial Statements
1. DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
MANAGEMENT OF COMPANY - The Company filed its articles of incorporation with the
Nevada Secretary of State on March 14, 2007, indicating Sandra L. Miller on
behalf of Resident Agents of Nevada, Inc. as the sole incorporator. The initial
list of officers filed with the Nevada Secretary of State on April 13, 2007,
indicates Craig T. Lindsay as the President and Treasurer; and Sean Mitchell as
Secretary and Director.
On September 9, 2008 Craig Lindsay resigned as our president, chief financial
officer and director and Sean Mitchell resigned as our secretary, treasurer and
director. As a result on September 9, 2008 we appointed Jay Jhaveri as
president, secretary, treasurer, director and chief financial officer of our
company. Jay Jhaveri performs all our corporate and administrative operations.
Our board of directors now consists of Jay Jhaveri.
GOING CONCERN - The Company's financial statements are prepared using generally
accepted accounting principles in the United States of America applicable to a
going concern which contemplates the realization of assets and liquidation of
liabilities in the normal course of business. The Company has not yet
established an ongoing source of revenues sufficient to cover its operating
costs and allow it to continue as a going concern. The ability of the Company to
continue as a going concern is dependent on the Company obtaining adequate
capital to fund operating losses until it becomes profitable. If the Company is
unable to obtain adequate capital, it could be forced to cease operations.
In order to continue as a going concern, the Company will need, among other
things, additional capital resources. Management's plan is to obtain such
resources for the Company by obtaining capital from management and significant
shareholders sufficient to meet its minimal operating expenses and seeking
equity and/or debt financing. However management cannot provide any assurances
that the Company will be successful in accomplishing any of its plans.
The ability of the Company to continue as a going concern is dependent upon its
ability to successfully accomplish the plans described in the preceding
paragraph and eventually secure other sources of financing and attain profitable
operations. The accompanying financial statements do not include any adjustments
that might be necessary if the Company is unable to continue as a going concern.
YEAR END - The Company's year end is April 30.
7
AMERICAN EAGLE ENERGY INC.
(formerly Yellow Hill Energy Inc.)
(An Exploration Stage Company)
Notes to the Financial Statements
1. DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
USE OF ESTIMATES - The preparation of the financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amount of revenue and expenses during
the reporting period. Actual results could differ from those estimates.
INCOME TAXES - The Company accounts for its income taxes by recognizing deferred
tax assets and liabilities for future tax consequences attributable to
differences between the financial statement carrying amounts of existing assets
and liabilities and their respective tax basis and tax credit carry forwards.
Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled.
The effect on deferred tax assets and liabilities of a change in tax rates is
recognized in operations in the period that includes the enactment date.
The Company has net operating loss carryover to be used for reducing future
year's taxable income. The Company has recorded a valuation allowance for the
full potential tax benefit of the operating loss carryovers due to the
uncertainty regarding realization.
NET LOSS PER COMMON SHARE - Basic net loss per share is computed by dividing the
net loss available to common stockholders for the period by the weighted average
number of shares of common stock outstanding during the period. The calculation
of diluted net loss per share gives effect to common stock equivalents; however,
potential common shares are excluded if their effect is anti-dilutive. For the
period from March 14, 2007 (Date of Inception) through October 31, 2009, the
Company had no potentially dilutive securities.
STOCK-BASED COMPENSATION - The Company has not adopted a stock option plan and
has not granted any stock options. Accordingly no stock-based compensation has
been recorded to date.
LONG-LIVED ASSETS - The carrying value of intangible assets and other long-lived
assets is reviewed on a regular basis for the existence of facts or
circumstances that may suggest impairment. The Company recognizes impairment
when the sum of the expected undiscounted future cash flows is less than the
carrying amount of the asset. Impairment losses, if any, are measured as the
excess of the carrying amount of the asset over its estimated fair value.
8
AMERICAN EAGLE ENERGY INC.
(formerly Yellow Hill Energy Inc.)
(An Exploration Stage Company)
Notes to the Financial Statements
1. DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
MINERAL PROPERTY COSTS - The Company has been in the exploration stage since its
inception on March 14, 2007 and has not yet realized any revenues from its
planned operations, being the acquisition and exploration of mining properties.
Mineral property exploration costs are expensed as incurred. Mineral property
acquisition costs are initially capitalized when incurred. The Company assesses
the carrying costs for impairment at each fiscal quarter end. When it has been
determined that a mineral property can be economically developed as a result of
establishing proven and probable reserves, the costs then incurred to develop
such property, are capitalized. Such costs will be amortized using the
units-of-production method over the estimated life of the probable reserve. If
mineral properties are subsequently abandoned or impaired, any capitalized costs
will be charged to operations.
RECENT ACCOUNTING PRONOUNCEMENTS - In December 2007, the FASB issued SFAS No.
160, Noncontrolling Interest in Consolidated Financial Statements, an amendment
of ARB No. 51 ("SFAS No. 160"), which will change the accounting and reporting
for minority interests, which will be recharacterized as noncontrolling
interests and classified as a component of equity within the consolidated
balance sheets. SFAS No. 160 is effective as of the beginning of an entity's
first fiscal year beginning on or after December 15, 2008. Earlier adoption is
prohibited. Management has not determined the effect that adopting this
statement would have on the Company's financial position or results of
operations.
In December 2007, the FASB issued SFAS No. 141 (Revised 2007), Business
Combinations ("SFAS No. 141R"). SFAS No. 141R will change the accounting for
business combinations. Under SFAS No. 141R, an acquiring entity will be required
to recognize all the assets acquired and liabilities assumed in a transaction at
the acquisition-date fair value with limited exceptions. SFAS No. 141R will
change the accounting treatment and disclosure for certain specific items in a
business combination. SFAS No. 141R applies prospectively to business
combinations for which the acquisition date is on or after the beginning of the
entity's first annual reporting period beginning on or after December 15, 2008.
Accordingly, any business combinations completed by the Company prior to January
1, 2009 will be recorded and disclosed following existing GAAP. Management has
not determined the effect that adopting this statement would have on the
Company's financial position or results of operations.
9
AMERICAN EAGLE ENERGY INC.
(formerly Yellow Hill Energy Inc.)
(An Exploration Stage Company)
Notes to the Financial Statements
1. DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
In February 2007, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities - Including an amendment of FASB Statement No.
115 ("SFAS No. 159"). This statement permits entities to choose to measure many
financial instruments and certain other items at fair value. The objective is to
improve financial reporting by providing entities with the opportunity to
mitigate volatility in reported earnings caused by measuring related assets and
liabilities differently without having to apply complex hedge accounting
provisions. This Statement is expected to expand the use of fair value
measurement, which is consistent with the Board's long-term measurement
objectives for accounting for financial instruments. As of October 31, 2009, the
Company has not adopted this statement and management has not determined the
effect that adopting this statement would have on the Company's financial
position or results of operations.
In March 2008, the FASB issued SFAS No. 161, "Disclosures about Derivative
Instruments and Hedging Activities", an amendment of SFAS No. 133. SFAS 161
applies to all derivative instruments and non-derivative instruments that are
designated and qualify as hedging instruments pursuant to paragraphs 37 and 42of
SFAS 133 and related hedged items accounted for under SFAS 133. SFAS 161
requires entities to provide greater transparency through additional disclosures
about how and why an entity uses derivative instruments, how derivative
instruments and related hedged items are accounted for under SFAS 133 and its
related interpretations, and how derivative instruments and related hedged items
affect an entity's financial position, results of operations, and cash flows. We
do not expect that the adoption of SFAS 161 will have a material impact on our
financial condition or results of operation.
In May 2008, the FASB issued SFAS No. 163, "Accounting for Financial Guarantee
Insurance Contracts - an interpretation of FASB Statement No. 60." SFAS 163
requires that an insurance enterprise recognize a claim liability prior to an
event of default (insured event) when there is evidence that credit
deterioration has occurred in an insured financial obligation. This Statement
also clarifies how Statement 60 applies to financial guarantee insurance
contracts, including the recognition and measurement to be used to account for
premium revenue and claim liabilities. Those clarifications will increase
comparability in financial reporting of financial guarantee insurance contracts
by insurance enterprises. This Statement requires expanded disclosures about
financial guarantee insurance contracts. The accounting and disclosure
requirements of the Statement will improve the quality of information provided
to users of financial statements. SFAS 163 will be effective for financial
statements issued for fiscal years beginning after December 15, 2008. The
Company does not expect the adoption of SFAS 163 will have a material impact on
its financial condition or results of operation.
10
AMERICAN EAGLE ENERGY INC.
(formerly Yellow Hill Energy Inc.)
(An Exploration Stage Company)
Notes to the Financial Statements
1. DESCRIPTION OF BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (continued)
In April 2009, the FASB issued FSP No. FAS 107-1 and APB 28-1, Interim
Disclosures about Fair Value of Financial Instruments. This FSP amends FASB
Statement No. 107, Disclosures about Fair Value of Financial Instruments, to
require disclosures about fair value of financial instruments for interim
reporting periods of publicly traded companies as well as in annual financial
statements. This FSP also amends APB Opinion No. 28, Interim Financial
Reporting, to require those disclosures in summarized financial information at
interim reporting periods. This FSP shall be effective for interim reporting
periods ending after June 15, 2009. The company does not have any fair value of
financial instruments to disclose and accordingly, does not expect the adoption
of this standard to have a material effect on its financial statements.
In June 2009, the Securities and Exchange Commission's Office of the Chief
Accountant and Division of Corporation Finance announced the release of Staff
Accounting Bulletin (SAB) No. 112. This staff accounting bulletin amends or
rescinds portions of the interpretive guidance included in the Staff Accounting
Bulletin Series in order to make the relevant interpretive guidance consistent
with current authoritative accounting and auditing guidance and Securities and
Exchange Commission rules and regulations. Specifically, the staff is updating
the Series in order to bring existing guidance into conformity with recent
pronouncements by the Financial Accounting Standards Board, namely, Statement of
financial Accounting Standards No. 141 (revised 2007), Business combinations,
and Statement of Financial Accounting Standards No. 160, Non-controlling
Interests in Consolidated Financial Statements. The statements in staff
accounting bulletins are not rules or interpretations of the Commission, nor are
they published as bearing the Commission's official approval. They represent
interpretations and practices followed by the Division of Corporation Finance
and the Office of the Chief Accountant in administering the disclosure
requirements of the Federal securities laws.
Management believes recently issued accounting pronouncements will have no
impact on the financial statements of American Eagle Energy.
2. PROPERTY AND EQUIPMENT
As of October 31, 2009, the Company does not own any property and/or equipment.
3. MINERAL PROPERTY
During the year ended April 30, 2008, the Company did not renew their mineral
claims.
11
AMERICAN EAGLE ENERGY INC.
(formerly Yellow Hill Energy Inc.)
(An Exploration Stage Company)
Notes to the Financial Statements
4. STOCKHOLDER'S EQUITY
The Company was incorporated originally with 75,000,000 shares authorized with a
par value of $0.001 per share.
On October 14, 2009, our board of directors approved a forward split of our
company's stock on a 1 old for 2 new basis, such that our authorized capital
shall increase from 75,000,000 shares of common stock with a par value of $0.001
to 150,000,000 shares of common stock with a par value of $0.001 and,
correspondingly, our issued and outstanding shares of common stock shall
increase from 30,000,000 shares of common stock to 60,000,000 shares of common
stock. The effective date with respect to the forward stock split was October
26, 2009.
Unless otherwise noted, all references in the financial statements to numbers of
shares of common stock and weighted average number of common shares outstanding
have been restated to reflect the October 14, 2009 forward stock split.
Effective April 28, 2007, a total of 30,000,000 shares of the Company's common
stock were issued to the sole director of the Company pursuant to a stock
subscription agreement at $0.0005 per share for total proceeds of $15,000.
Effective July 31, 2007, a total of 30,000,000 shares of the Company's common
stock were issued pursuant to stock subscription agreements at $0.0015 per share
for total proceeds of $45,000.
5. RELATED PARTY TRANSACTIONS
We currently utilize office space at the office of Axonus Asia Limited, 10B
TimeCentre, 53-55 Hollywood Road, Central, Hong Kong. Jay Jhaveri, the sole
office rand director of the Company, is a principal and sole shareholder of
Axonus Asia Limited. Axonus Asia Limited is paid a total of $1,500 per month for
providing facilities that include office space, telephone services, facsimile
services, computer and office equipment. For the period ending October 31, 2009,
Axonus Asia Limited has charged the Company a total of $9,138 for office rent
and corporate services. $1,513 of this amount is recorded as accounts payable at
October 31, 2009.
During the quarter ended October 31, 2009, the Company obtained a loan in the
amount of $14,975 from the Director of the Company. The loan is unsecured, non
interest bearing and has no specific terms of repayment.
12
AMERICAN EAGLE ENERGY INC.
(formerly Yellow Hill Energy Inc.)
(An Exploration Stage Company)
Notes to the Financial Statements
6. STOCK OPTIONS
As of October 31, 2009, the Company does not have any stock options outstanding,
nor does it have any written or verbal agreements for the issuance or
distribution of stock options at any point in the future.
7. ADVERTISING
The Company will expense its advertising when incurred. There has been no
expenditures on advertising since inception.
8. SUBSEQUENT EVENTS
The Company had no significant subsequent events as at the date of this report.
13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
RESULTS OF OPERATIONS
We are an exploration stage company and have generated no revenues.
We incurred operating expenses of $9,554 for the three month period ended
October 31, 2009. For the same period in 2008 our operating expenses were
$1,520. These expenses consisted of general operating expenses incurred in
connection with the day to day operation of our business and the preparation and
filing of our periodic reports.
Our net loss for from inception (March 14, 2007) through October 31, 2009 was
$71,295.
On October 5, 2009, we filed, with the Nevada Secretary of State, documents to
effect a change of name from "Yellow Hill Energy Inc." to "American Eagle Energy
Inc.", by way of a merger with our wholly owned subsidiary American Eagle Energy
Inc., which was formed solely for the change of name. The name change became
effective with the Over-the-Counter Bulletin Board at the opening for trading on
October 14, 2009 under the new stock symbol "AMRE".
On October 14, 2009, our board of directors approved a forward split of our
company's stock on a 1 old for 2 new basis, such that our authorized capital
increased from 75,000,000 shares of common stock with a par value of $0.001 to
150,000,000 shares of common stock with a par value of $0.001 and,
correspondingly, our issued and outstanding shares of common stock increased
from 30,000,000 shares of common stock to 60,000,000 shares of common stock. The
forward split became effective with the Over-the-Counter Bulletin Board at the
opening for trading on October 26, 2009 under the new stock symbol "AMZG".
In their report on our audited financial statements as at April 30, 2009, our
auditors expressed their doubt about our ability to continue as a going concern
unless we are able to raise additional capital and ultimately to generate
profitable operations.
The following table provides selected financial data about our company for the
period from the date of incorporation through October 31, 2009.
Balance Sheet Data: 10/31/2009
------------------- ----------
Cash $ 7,048
Total assets $ 7,048
Total liabilities $ 18,343
Shareholders' equity $(11,295)
LIQUIDITY AND CAPITAL RESOURCES
Our cash in the bank at October 31, 2009 was $7,048 with outstanding liabilities
of $18,343. If we experience a shortage of cash for operations, funds may be
loaned to or invested in us by our stockholders, management or other investors.
14
PLAN OF OPERATION
Our plan is to seek, investigate, and consummate a merger or other business
combination, purchase of assets or other strategic transaction (i.e. a merger)
with a corporation, partnership, limited liability company or other operating
business entity (a Merger Target") desiring the perceived advantages of becoming
a publicly reporting and publicly held corporation. We have no operating
business, and conduct minimal operations necessary to meet regulatory
requirements. Our ability to commence any operations is contingent upon
obtaining adequate financial resources.
A common reason for a Merger Target to enter into a merger with us is the desire
to establish a public trading market for its shares. Such a company would hope
to avoid the perceived adverse consequences of undertaking a public offering
itself, such as the time delays and significant expenses incurred to comply with
the various Federal and state securities law that regulate initial public
offerings.
As a result of our limited resources, we expect to have sufficient proceeds to
effect only a single business combination. Accordingly, the prospects for our
success will be entirely dependent upon the future performance of a single
business. Unlike certain entities that have the resources to consummate several
business combinations or entities operating in multiple industries or multiple
segments of a single industry, we will not have the resources to diversify our
operations or benefit from the possible spreading of risks or offsetting of
losses. A target business may be dependent upon the development or market
acceptance of a single or limited number of products, processes or services, in
which case there will be an even higher risk that the target business will not
prove to be commercially viable.
We are not currently engaged in any business activities that provide cash flow.
The costs of investigating and analyzing business combinations for the next 12
months and beyond such time will be paid with money in our treasury.
During the next twelve months we anticipate incurring costs related to:
(i) filing of Exchange Act reports, and
(ii) costs relating to identifying and consummating a transaction with a
Merger Target.
We believe we will be able to meet these costs through use of funds in our
treasury and additional amounts, as necessary, to be loaned to or invested in us
by our stockholders, management or other investors.
We may consider a business which has recently commenced operations, is a
developing company in need of additional funds for expansion into new products
or markets, is seeking to develop a new product or service, or is an established
business which may be experiencing financial or operating difficulties and is in
need of additional capital. In the alternative, a business combination may
involve the acquisition of, or merger with, a company which does not need
substantial additional capital, but which desires to establish a public trading
market for its shares, while avoiding, among other things, the time delays,
significant expense, and loss of voting control which may occur in a public
offering.
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Our officer and director are only required to devote a small portion of their
time (less than 10%) to our affairs on a part-time or as-needed basis. No
regular compensation has, in the past, nor is anticipated in the future, to be
paid to any officer or director in their capacities as such. We do not
anticipate hiring any full-time employees as long as we are seeking and
evaluating business opportunities.
We expect our present management to play no managerial role in our company
following a business combination. Although we intend to scrutinize closely the
management of a prospective target business in connection with our evaluation of
a business combination with a target business, our assessment of management may
be incorrect. We cannot assure you that we will find a suitable business with
which to combine.
Our principal business objective for the next 12 months and beyond such time
will be to achieve long-term growth potential through a combination with an
operating business. We will not restrict our potential candidate target
companies to any specific business, industry or geographical location and, thus,
may acquire any type of business. The analysis of new business opportunities
will be undertaken by or under the supervision of our officer and director.
OFF-BALANCE SHEET ARRANGEMENTS
We have no off-balance sheet arrangements.
ITEM 4. CONTROLS AND PROCEDURES
Under the supervision and with the participation of our management, including
our principal executive officer and the principal financial officer, we have
conducted an evaluation of the effectiveness of the design and operation of our
disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e)
under the Securities and Exchange Act of 1934, as of the end of the period
covered by this report. Based on this evaluation, our principal executive
officer and principal financial officer concluded as of the evaluation date that
our disclosure controls and procedures were effective such that the material
information required to be included in our Securities and Exchange Commission
reports is recorded, processed, summarized and reported within the time periods
specified in SEC rules and forms relating to our company, particularly during
the period when this report was being prepared.
Additionally, there were no significant changes in our internal controls or in
other factors that could significantly affect these controls subsequent to the
evaluation date. We have not identified any significant deficiencies or material
weaknesses in our internal controls, and therefore there were no corrective
actions taken.
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PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION
CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.
(a) On August 7, 2009, Board of Directors of the Registrant dismissed Moore &
Associates Chartered, its independent registered public account firm. On the
same date, August 7, 2009, the accounting firm of Seale and Beers, CPAs was
engaged as the Registrant's new independent registered public account firm. The
Board of Directors of the Registrant and the Registrant's Audit Committee
approved of the dismissal of Moore & Associates Chartered and the engagement of
Seale and Beers, CPAs as its independent auditor. None of the reports of Moore &
Associates Chartered on the Company's financial statements for either of the
past two years or subsequent interim period contained an adverse opinion or
disclaimer of opinion, or was qualified or modified as to uncertainty, audit
scope or accounting principles, except that the Registrant's audited financial
statements contained in its Form 10-K for the fiscal year ended April 30, 2008 a
going concern qualification in the registrant's audited financial statements.
During the registrant's two most recent fiscal years and the subsequent interim
periods thereto, there were no disagreements with Moore and Associates,
Chartered whether or not resolved, on any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure,
which, if not resolved to Moore and Associates, Chartered's satisfaction, would
have caused it to make reference to the subject matter of the disagreement in
connection with its report on the registrant's financial statements.
In a letter dated September 2, 2009 the registrant was advised by the Securities
and Exchange Commission that the Public Company Accounting Oversight Board
(PCAOB) had revoked the registration of Moore and Associates, Chartered on
August 27, 2009 because of violations of PCAOB rules and auditing standards in
auditing the financial statements, PCAOB rules and qulity controls standards,
and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5
thereunder, and noncooperation with a Board investigation.
As Moore and Associates, Chartered is no longer registered with the PCAOB; the
registrant may no longer include Moore and Associates, Chartered's audit reports
or consents in filings with the Commission made on or after August 27, 2009. If
Moore and Associates, Chartered audited a year that we are required to include
in our filings with the Commission, we are required to have Seale and Beers,
CPA's, our new independent accountant, re-audit that year. On October 23, 2009
we filed an amended annual report on Form 10-K/A that included financials
re-audited by Seale and Beers, CPA's for the years ended April 30, 2009 and
2008.
The registrant requested that Moore and Associates, Chartered furnish it with a
letter addressed to the Securities and Exchange Commission stating whether it
agrees with the above statements. On October 9, 2009, Moore and Associates
declined our request for the letter.
b) On August 7, 2009, the registrant engaged Seale and Beers, CPAs as its
independent accountant. During the two most recent fiscal years and the interim
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periods preceding the engagement, the registrant has not consulted Seale and
Beers, CPAs regarding any of the matters set forth in Item 304(a)(2)(i) or (ii)
of Regulation S-B.
ITEM 6. EXHIBITS
The following exhibits are included with this quarterly filing. Those marked
with an asterisk and required to be filed hereunder, are incorporated by
reference and can be found in their entirety in our original Form SB-2
Registration Statement, filed under SEC File Number 333-143626, at the SEC
website at www.sec.gov:
Exhibit No. Description
----------- -----------
3.1 Articles of Incorporation*
3.2 Bylaws*
31.1 Sec. 302 Certification of Chief Executive Officer
31.2 Sec. 302 Certification of Chief Financial Officer
32.1 Sec. 906 Certification of Chief Executive Officer
32.2 Sec. 906 Certification of Chief Financial Officer
SIGNATURES
Pursuant to the requirements of Section 13(a) or 15(d) 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.
December 8, 2009 American Eagle Energy Inc., Registrant
/s/ Jay Jhaveri
-----------------------------------------------
By: Jay Jhaveri
(Chief Executive Officer, Secretary & Director)
In accordance with the Exchange Act, this report has been signed below by the
following person on behalf of the registrant and in the capacities and on the
date indicated.
/s/ Jay Jhaveri December 8, 2009
- ------------------------------------- ----------------
Jay Jhaveri, President & Director Date
(Chief Executive Officer,
Chief Financial Officer,
Principal Accounting Officer)
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