SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549
FORM 10-KSB/A
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended March 31, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ______________ to _________________
Commission File No. 0-9458
Eagle Exploration Company
(Name of small business issuer in its charter)
Colorado 84-0804143
(State or other jurisdiction of
(I.R.S. Employer ID Number) incorporation or organization)
1776 Lincoln Street, Suite 1311, Denver, Colorado, 80203
(Address and zip code of principal executive offices)
Registrant's telephone number, including area code: (303) 863-0800
Securities registered pursuant to section 12 (b) of the Act: None
Securities registered pursuant to Section 12 (g) of the Act:
Common Stock, No Par Value
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the
Securities 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
Check if there is no disclosure of delinquent filers in
response to Item 405 of Regulation S-B contained in this form, and
no disclosure will be contained, to the best of Registrant's
knowledge, in definitive proxy or information statements incorporated
by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB [X]
State Registrant's revenues for its most recent fiscal year.
$137,165
At July 15, 1996, 3,072,836 shares of common stock, no par
value, (the Registrant's only class of voting stock) were
outstanding. The aggregate market value of the 1,678,336
common shares of Registrant held by nonaffiliates was
approximately $681,824 at July 15, 1996, based on the mean
between the bid and asked prices on the National Quotation Bureau's
"Bulletin Board". See Item 5 herein for additional information in
this regard.
This report consists of pages. The exhibit index appears on
page 14.
PART I
Item 1. Description of Business.
Nature of Business and Management's Plan
Eagle Exploration Company's primary operations include the
purchase and development of residential real estate. The Company's
primary operations previously included engaging in oil and gas
exploration and production activities, acquiring whole or partial
interests in oil and gas leases, and farming out or reselling all or
part of its interest in these leases to other companies in the oil
and gas industry. The Company has sold all land held for sale during
the year ended March 31, 1995. Currently, the Company has no plans
to acquire additional land for development and sale but is
investigating various financial acquisitions or business
opportunities. Eagle Exploration Company and its wholly owned
subsidiary, Eagle Development Company, are referred to herein
collectively as "the Company".
1996 Activities
During the fiscal year 1996 the Company wrote off a $600,000
note receivable executed July 26, 1995, between James D. Alderton and
the Company. The note was collateralized with 180,000 shares of
Incomnet, Inc., a Small Cap NASDAQ Company, then trading at $22.00
per share.
On September 8, 1995, a notice of default was given to Alderton.
Default under terms of the Pledge Agreement gave the Company the
right to sell the collateral. Arrangements were made with Barron
Chase Securities in Denver, Colorado, to sell the collateral for
approximately $6.00 per share.
On September 14, 1995, the Company contacted the transfer agent
for assistance and verification of the proposed sale, and on
September 15, 1995, the American Stock Transfer & Trust Company
advised that the certificates were apparently forged.
Alderton requested that the Company consider an alternate plan
for repayment and offered to re-collateralize the note. An Amended
Pledge Agreement was entered into effective September 29, 1995, when
Alderton agreed to collateralize the note with gold nuggets, stock in
a private company and assignment of certain German historical bonds.
However no adequate substitute collateral was forthcoming. Hence, on
December 4, 1995, the Company served Alderton with a lawsuit.
On February 2, 1996, the Company received an order from the
court entering judgment on the Company's first claim for relief in
the civil action brought by the Company against Alderton for the sum
of $757,794.12, the amount due under the note, and judgment for an
additional $1.2 million under the Colorado conversion of property
statute. Management is pursuing the collection of this judgment, but
is not optimistic that sufficient assets are owned by Alderton to
satisfy the amount of the note or the judgment.
As discussed in the Company's previous quarterly reports for the
periods ended June 30, 1995, and September 30, 1995, the Company
acquired a 40 percent membership interest in Eagle's Landing, LLC,
owner of a 176 unit apartment complex. On December 12, 1995, the LLC
held its annual meeting. Among other resolutions the members of the
LLC unanimously approved nonrecourse permanent financing for the
apartment complex in the amount of $11 million subject to certain
covenants by the developer. In January of 1996 permanent financing
for the project was closed. The $9.2 million construction loan,
approximately $825,000 of cost overruns, and closing costs were paid
by the title company from the permanent loan proceeds. The lender's
appraisal of the property is $14.7 million.
The developer who assigned the interest in the LLC to the
Company on May 26, 1995, has challenged the Company's 40 percent
ownership. On January 25, 1996, the Company was served with a
summons and complaint by the developer of the project. He filed this
action to obtain a declaration from the court that the transaction
between the parties was in substance, a real estate loan. The
complaint alleged that the assignment was intended to secure the
payment of an obligation affecting an interest in real property, and
as a result the assignment did not constitute a conveyance and
consequently the Company was not entitled to possession of the
property without instituting foreclosure proceedings. The Company
and its legal counsel believed it was unlikely that the courts would
rule in favor of the developer's claim. However, management
attempted to settle the matter.
Out of court settlement negotiations were unsuccessful and
management instructed the Company's legal counsel to proceed in
defending the Company's ownership in the LLC. Subsequent to the
fiscal year ended March 31, 1996, the Company through its counsel
motioned the court for Summary Judgment. Shortly after the
plaintiff's receipt of this motion the Company was contacted by the
plaintiff requesting that the lawsuit be dismissed. The Company's
legal counsel prepared a Notice and Stipulation of Dismissal with
Prejudice, stipulating that the Company is the owner and holder of a
40 percent membership interest in Eagle's Landing, LLC, effective May
26, 1995. On June 24, 1996, the Company received from Eagle's
Landing, LLC, approximately $320,000. This payment represents the
Company's share of loan proceeds resulting from the difference
between the construction loan and the permanent financing. The
Company will aggressively strive to promote proper management of the
apartment complex and pursue its goal of selling this asset.
In late October 1996, the Company obtained December 31, 1995 audited
financial statements for the LLC and has appropriately reduced its
investment for 40% of the operating losses of the LLC through
December 31, 1995.
Employees
At July 15, 1996, the Company had two full-time employees. The
Company has and may retain independent consultants from time to time
on a limited basis.
Item 6. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
Financial Condition, Liquidity and Capital Resources
Cash, temporary cash investments and certificates of deposit
decreased approximately 97 percent for the fiscal year ended March
31, 1996. This decrease in cash and the redemption of certificates
of deposit was due to the Company's investment in Eagle's Landing,
LLC, and a note receivable advance of $600,000.
The Company's note receivable in the amount of $500,000 was paid
in full subsequent to fiscal 1996 year end.
Stockholder's equity decreased from $1,996,390 to $1,112,230 or
$884,160 for the year ended March 31, 1996, primarily due to the
impairment of a note receivable in the amount of $600,000 and the
loss on investment in LLC of approximately $180,000. See Item
1. above.
The Company's initial investment in the 40 percent membership
interest in Eagle's Landing, LLC, of approximately $850,000 has
returned to date approximately $445,000. The Company received
$125,000 in October, 1995, and subsequent to fiscal year ended, 1996,
the Company received approximately $320,000 representing its
proportionate share of permanent loan proceeds. Additionally, the
LLC has net operating losses for the year ended December 31, 1995 for
which the Company's 40% share is approximately $180,000. See Item
1. above. These proceeds and share of losses have reduced the
Company's investment in the apartment complex to approximately
$227,000.
The future income from the property is projected to create a
good return on the company's current investment. However,
more importantly the occupancy rate is currently near 95 percent
and is projected to be 95 percent in August, 1996. This increased
occupancy rate should facilitate the sale of this asset at an
increased sales price.
Results of Operations
Fiscal 1996 Compared with Fiscal 1995
Total revenues for the year ended March 31, 1996, were $137,165
as compared to $548,760 for the year ended March 31, 1995. The
Company reported a net loss of $884,160 for the year ended March 31,
1996, and as compared to the year ended March 31, 1995, it reported
net income of $277,388. This loss was essentially due to the
impairment of a note receivable in the amount of $600,000, the loss
from investment in LLC of approximately $180,000, and the lack of
interest income generated in the previous fiscal year by the
Company's cash, temporary cash investments and certificates of
deposit.
Item 7. Financial Statements.
See pages F-1 through F-19.
EAGLE EXPLORATION COMPANY
Financial Statements and
Independent Auditors' Report
March 31, 1996
Table of Contents
Page
Independent Auditors' Report F - 2
Consolidated Financial Statements
Consolidated Balance Sheet as of March 31, 1996 F - 4
Consolidated Statements of Operations for the Years
Ended March 31, 1996 and 1995 F - 5
Consolidated Statement of Stockholders' Equity for
the Years Ended March 31, 1996 and 1995 F - 6
Consolidated Statements of Cash Flows for the Years Ended
March 31, 1996 and 1995 F - 7
Notes to Consolidated Financial Statements F - 8
Eagles Landing LLC
Independent Auditors' Report F-13
Financial Statements
Balance Sheet F-14
Statement of Operations and Member's Equity F-15
Statement of Cash Flows F-16
Notes to Financial Statements F-17
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
Eagle Exploration Company
Denver, Colorado
We were engaged to audit the accompanying balance sheets of Eagle
Exploration Company and Subsidiaries as of March 31, 1996 and 1995
and the related statements of operations, stockholders' equity and
cash flows for the years then ended. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated
financial statements based on our audits. We did not audit the
financial statements of Eagles Landing, LLC at December 31, 1995 in
which the Company has a 40% equity interest which statements reflect
total assets of $11,158,490 as of December 31, 1995 and total
revenues and net loss of $910,146 and $448,963, respectively, for the
year then ended. Those statements were audited by other auditors
whose report has been furnished to us, and our opinion, insofar as it
relates to the amounts included for Eagles Landing, LLC, is based
solely on the report of the other auditors.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatements.
An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the consolidated financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall consolidated financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our report dated May 16, 1996, we did not express an opinion on
the consolidated financial statements of Eagle Exploration Company
and Subsidiaries for the year ended March 31, 1996 because we were
unable to obtain audited financial statements supporting the
Company's investment in a limited liability company (LLC) or its
equity earnings or losses of that affiliate. Subsequent to our
report dated May 16, 1996, we obtained audited financial statements
for the LLC. Accordingly, our present opinion on the March 31, 1996
consolidated financial statements, as presented herein, is different
from that expressed in our previous report.
To the Board of Directors and Stockholders
Eagle Exploration Company
Page Two
In our opinion the consolidated financial statements referred to
above present fairly, in all material respects, the consolidated
financial position of Eagle Exploration Company and Subsidiaries as
of March 31, 1996 and 1995, and the consolidated results of their
operations and their cash flows for the years then ended, in
conformity with generally accepted accounting principles.
/s/ Ehrhardt Keefe Steiner & Hottman PC
Ehrhardt Keefe Steiner & Hottman PC
May 12, 1995, except for Note 5 as to which
the date is November 14, 1996
Denver, Colorado
Consolidated Balance Sheet
March 31, 1996
<TABLE>
<CAPTION>
Assets
<S> <C>
Cash $ 41,387
Note receivable (Note 2) 500,000
Other receivables 3,822
Office furniture, equipment
and other, net of $209,321
of accumulated depreciation 44,444
Other 23,387
Investment in limited
liability company (Note 5) 546,702
$ 1,159,742
Liabilities and Stockholders' Equity
Accounts payable $ 37,251
Deposits, deferred revenue
and other 10,261
Total liabilities 47,512
Contingencies (Notes 2 and 5)
Stockholders' equity
Common stock, no par value;
authorized 10,000,000 shares;
3,072,836 shares issued and
outstanding 6,632,998
Accumulated deficit (5,520,768)
1,112,230
$ 1,159,742
</TABLE>
Consolidated Statements of Operations
<TABLE>
<CAPTION>
For the Year Ended
March 31,
1996 1995
<S> <C> <C>
Revenues (Note 3)
Gain on land held for sale -
Proceeds from sales $ - $ 1,288,000
Less cost of land sold - (827,555)
- 460,445
Interest income 97,470 50,910
Other income 39,695 37,405
137,165 88,315
Total net revenues 137,165 548,760
Expenses
Loss on investment in LLC (Note 5) 179,585 -
Depreciation 18,329 6,646
Write-off of note receivable (Note 2) 600,000 -
Other operating expenses 223,411 189,726
1,021,325 196,372
(Loss) income before income taxes (884,160) 352,388
Provision for income taxes (Note 4) - 75,000
Net (loss) income $ (884,160) $ 277,388
Net (loss) income per share $ (.29) $ .09
Weighted average number of shares
outstanding 3,072,836 3,063,567
</TABLE>
Consolidated Statement of Stockholders' Equity
For the Year Ended March 31, 1996 and 1995
<TABLE>
<CAPTION>
Total
Common Stock Accumulated Stockholders'
Shares Amount Deficit Equity
<S> <C> <C> <C> <C>
Balances - March 31, 1994 3,062,836 $ 6,630,798 $(4,913,996) $1,716,802
Issuance of common stock
for services 10,000 2,200 - 2,200
Net income for the year - - 277,388 277,388
Balances - March 31, 1995 3,072,836 6,632,998 (4,636,608) 1,996,390
Net (loss) for the year - - (884,160) (884,160)
Balance - March 31, 1996 3,072,836 $6,632,998 $(5,520,768) $1,112,230
</TABLE>
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
For the Year Ended
March 31,
1996 1995
<S> <C> <C>
Cash flows from operating activities
Net (loss) income $ (884,160) $ 277,388
Adjustments to reconcile net (loss)
income to net cash (used) provided by
operating activities -
Gain on sale of real estate - (460,445)
Loss on abandonment of undeveloped
oil and gas properties - 11,993
Depreciation 18,329 6,646
Write-off of note receivable 600,000 -
Stock issued for services - 2,200
Deferred taxes - 75,000
Loss on investment in LLC 179,585 -
Change in assets and liabilities -
Proceeds from sale of real estate held for sale - 788,000
Purchase of and improvements in real estate held
for sale - (21,486)
Receivables (366) 1,303
Accounts payable 28,514 (41,052)
Deposits, deferred revenue and other (4,661) 2,196
821,401 364,355
Net cash (used) provided by operating
activities (62,759) 641,743
Cash flows from investing activities
Redemption (purchase) of certificates of deposit 1,018,913 (825,913)
Purchases of office furniture and equipment (4,534) (24,590)
(Advances) payments on notes receivable (600,000) 70,000
Investment in limited liability company (726,287) (1,800)
Net cash used by investing activities (311,908) (782,303)
Net decrease in cash and temporary cash investments (374,667) (140,560)
Cash and temporary cash investments, beginning of year 416,054 556,614
Cash and temporary cash investments, end of year $ 41,387 $416,054
</TABLE>
Supplemental disclosure of cash flow information
Cash paid during the year for income taxes was $0 in 1996 and
$5,200 in 1995.
Supplemental disclosure of non-cash operating, investing and
financing activities
In fiscal year 1995, the Company sold real estate held for sale
for cash of $788,000 and a note receivable of $500,000.
Note 1 - Nature of Business and Summary of Significant Accounting
Policies
Nature of Business and Management's Plans
Eagle Exploration Company's primary operations include the purchase
and development of residential real estate. The Company's primary
operations previously included engaging in oil and gas exploration
and production activities, acquiring whole or partial interests in
oil and gas leases, and farming out or reselling all or part of its
interest in these leases to other companies in the oil and gas
industry. As discussed in Note 3, the Company sold all land held for
sale during the year ended March 31, 1995. Currently, the Company has
no plans to acquire additional land for development and sale but is
investigating various financial acquisitions or business
opportunities.
Principles of Consolidation
The consolidated financial statements include the accounts of Eagle
Exploration Company and its wholly owned subsidiaries (hereinafter
the Company) after elimination of all significant intercompany
accounts and transactions. The following is a listing of the wholly
owned subsidiaries of Eagle Exploration Company, Colorado Eagle
Exploration Company, Emsen Energy, Inc., Eagle Development Company
and Overland Energy, Inc.
Use of Estimates
The preparation of consolidated 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 consolidated financial statements and
the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents.
The effect of exchange rate changes on cash flows is not material.
Property and Equipment
Property and equipment are recorded at cost. The Company depreciates
its office furniture and equipment over an estimated useful life of
five years using straight-line and accelerated methods.
Investment in Limited Liability Company
The Company accounts for its 40 percent investment in a limited
liability company using the equity method of accounting.
Note 1 - Nature of Business and Summary of Significant Accounting
Policies (continued)
(Loss) Income Per Share
(Loss) income per common share is computed based on the weighted
average number of shares outstanding during each year.
Income Taxes
The Company calculates and records the amount of taxes payable or
refundable currently or in the future years for temporary differences
between the consolidated financial statement basis and income tax
based on the current enacted tax laws.
Statement of Cash Flows
For purposes of reporting cash and temporary cash investments (cash
equivalents) for cash flow purposes, cash equivalents consist of
money market funds and certificates of deposit with original
maturities of 90 days or less.
Accounting Standards Not Yet Adopted
Statement of Financial Accounting Standards No. 121 - Accounting for
Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed of is effective for fiscal years beginning after December
15, 1995. This Statement establishes standards for the impairment of
long-lived assets, certain identifiable intangibles, and goodwill
related to those assets to be held and used and for long-lived assets
and certain identifiable intangibles to be disposed of.
Statement of Financial Accounting Standards No. 123 - Accounting for
Stock-Based Compensation is effective for transactions entered into
after December 15, 1995. This Statement establishes financial
accounting and reporting standards for stock-based employee
compensation plans, including stock purchase plans, stock options,
restricted stock and stock appreciation rights.
Management believes the adoption of these standards will not have a
material impact on the consolidated financial statements.
Note 2 - Note Receivable
The note receivable consists of a $500,000 note from a third party
developer, interest at 9% due monthly, unpaid interest and principal
were due September 2, 1995. The note is collateralized by a first
deed of trust on real estate. On September 2, 1995 the note
receivable was in default and as stated in the note accrued interest
at 16%. The original $500,000 principal balance was outstanding at
March 31, 1996 and 1995 and was paid in full subsequent to March 31,
1996.
Note 2 - Note Receivable (continued)
In July, 1995, the Company advanced $600,000 to a third party in the
form of a note receivable. The note bore interest at 45% and was
collateralized by 180,000 shares of stock of a small cap NASDAQ
company. The holder defaulted on the note and the Company exerted
its rights to the collateral, for which it was later discovered, was
allegedly illegally obtained. On February 2, 1996, the Company
obtained a judgment against the holder for the principal balance plus
interest for a total amount of $757,794 and an additional $1.2
million under the Colorado conversion of property statute. The
Company has written-off the note balance and has not accrued the
balance of the judgments.
Note 3 - Land Held for Sale
During the year ended March 31, 1995, the Company sold all of its
interest in land with a cost of $827,555 for $1,288,000.
Note 4 - Income Taxes
The provision for income taxes consists of the following:
<TABLE>
<CAPTION>
March 31,
1996 1995
<S> <C> <C>
Current provision $ - $ -
Deferred provision - 75,000
$ - $ 75,000
</TABLE>
Reconciliations between the statutory federal income tax expense
(benefit) rate as a percentage of income (loss) before income taxes
is as follows:
<TABLE>
<CAPTION>
March 31,
1996 1995
<S> <C> <C>
Statutory federal income tax expense rate 34% 34%
Federal net operating losses utilized (34%) (34%)
Effective income tax expense - -
</TABLE>
Note 4 - Income Taxes (continued)
At March 31, 1996, the Company has net operating loss carryforwards
for federal and state income tax purposes as follows:
<TABLE>
<CAPTION>
Federal Year
Net Operating of
Losses Expiration
<S> <C>
$ 1,040,000 2000
1,482,000 2001
1,162,000 2002
426,000 2003
464,000 2004
1,000 2005
33,000 2006
- 2007
$ 4,608,000
</TABLE>
In the years prior to fiscal year 1995, the Company had significant
land held for sale and contracts to sell the land at guaranteed
profit levels. At March 31, 1995, the Company had sold all land held
for sale and currently has no plans to purchase and develop
additional land for resale. There is uncertainty as to whether the
Company will generate sufficient revenues in the future to utilize
the net operating loss carryforwards and therefore the deferred tax
asset resulting from the net operating loss carryforwards has been
fully impaired, although, overall the impairment of deferred tax
assets decreased approximately $8,000 during the year ended March 31,
1996 due to the utilization of net operating loss carryforwards:
Note 5 - Investment in Limited Liability Company
In May 1995, the Company acquired a 40 percent interest in a limited
liability company (LLC) for $851,287. The agreement between the
Company and seller included an option for the seller to repurchase
the Company's investment for $976,287, through September 26, 1995.
On September 26, 1995 the option was extended until October 26, 1995
for which the Company received a $125,000 extension fee, which is
recorded as a reduction of the Company's investment in the
accompanying consolidated financial statements. The option
subsequently expired and on January 25, 1996, the seller filed an
action against the Company challenging the nature of the original
sales transaction. Subsequent to March 31, 1996, the lawsuit was
dismissed.
Note 5 - Investment in Limited Liability Company (continued)
The following is a condensed unaudited balance sheet and statement of
operations for the LLC as of December 31, 1995:
Condensed Balance Sheet
December 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
<S> <C>
Assets
Cash and cash equivalents $ 29,916
Property and equipment 10,964,556
Other assets 164,018
$11,158,490
Liabilities and Members' Equity
Accrued liabilities $ 381,797
Construction loan 9,199,524
10,541,614
Members' equity 616,876
$11,158,490
Condensed Statement of Operations
For the Year Ended December 31, 1995
(Unaudited)
Revenues $ 910,146
Operating expenses (796,955)
Other expenses, net (562,154)
$ (448,963)
</TABLE>
INDEPENDENT AUDITORS' REPORT
Board of Directors and Members
Eagle's Landing LLC
Westminster, Colorado
We have audited the accompanying balance sheet of Eagle's Landing LLC
as of December 31, 1995, and the related statements of operations and
accumulated deficit and cash flows for the year then ended. These
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Eagle's
Landing LLC as of December 31, 1995 and the results of its operations
and its cash flows for the year then ended in conformity with
generally accepted accounting principles.
/s/ Brock and Company, CPA's, P.C.
Boulder, Colorado
October 10, 1996
EAGLE'S LANDING LLC
Balance Sheet
December 31, 1995
Assets
<TABLE>
<CAPTION>
<S> <C>
Cash $18,946
Tenant receivables 10,970
Property and equipment - at cost
Land 1,201,395
Buildings and contents (held for rental) 10,034,787
11,236,182
Less accumulated depreciation (271,626)
Net property and equipment 10,964,556
Other assets
Organizational costs 12,393
Prepaid loan acquisition fees 205,151
217,544
Less accumulated amortization (53,526)
Net other assets 164,018
$ 11,158,490
Liabilities and Members' Equity
Accounts payable
Trade $ 28,307
Subcontractors 881,554
909,861
Deposits and advances from tenants
Security deposits 41,800
Prepaid rent 8,632
50,432
Accrued liabilities
Property taxes 22,125
Interest 64,780
Special improvement district tax 294,892
Total accrued liabilities 381,797
Construction loan 9,199,524
Total liabilities 10,541,614
Members' equity
Members' capital contributions 1,071,107
Accumulated deficit (454,231)
Net members' equity 616,876
$ 11,158,490
</TABLE>
EAGLE'S LANDING LLC
Statement of Operations and
Member's Equity
Year Ended December 31, 1995
<TABLE>
<CAPTION>
<S> <C>
Revenues
Rental income $836,745
Other operating income 73,401
910,146
Operating expenses
Depreciation and amortization 323,706
Property management 162,432
Contract services 143,394
Utilities 70,515
Marketing 58,504
Property taxes 13,633
Tenant turnover 9,418
Repairs and maintenance 7,802
Insurance 7,551
796,955
Income from operation 113,191
Other income (expense)
Interest income 1,092
Interest expense (563,246)
Net other income (expense) (562,154)
Net loss (448,963)
Accumulated deficit, beginning of year (5,268)
Accumulated deficit, end of year $ (454,231)
</TABLE>
EAGLE'S LANDING LLC
Statement of Cash Flows
Year Ended December 31, 1995
Increase (Decrease) in Cash and Cash Equivalents
<TABLE>
<CAPTION>
<S> <C>
Cash flows from operating activities
Net loss $ (448,963)
Adjustment to reconcile net loss to
net cash provided by operating
activities
Depreciation and amortization 323,706
Increase (decrease) from changes
in assets and liabilities:
Tenant receivable (10,970)
Accounts payable 35,109
Deposits and advances received from
tenants 50,432
Accrued liabilities 86,905
Net cash provided by operating
activities 36,219
Cash flows from investing activities
Construction of building and
contents (4,667,587)
Acquisition of intangible asset (115,300)
Net cash used in investing
activities (4,782,887)
Cash flows from financing activities:
Principal borrowings on
construction loan 4,758,911
Net cash provided by financing
activities 4,758,911
Decrease in cash and cash equivalents (12,243)
Cash and cash equivalents, beginning
of year 6,703
Cash and cash equivalents, end of year $ 18,946
</TABLE>
Supplemental disclosure of cash flow information:
The Company paid $836,018 in interest costs during 1995 and
capitalized $272,772.
Supplemental schedule of noncash investing and financing activities:
In connection with the building construction, the Company has
$881,554 in construction payables
outstanding at December 31, 1995.
EAGLE'S LANDING LLC
Notes to Financial Statements
December 31, 1995
Note 1 - Summary of Significant Accounting Policies
Organization and Operations
The Company is a Colorado limited liability company that owns a
multi-family residential apartment community located in
Westminster, Colorado. The community consists of 176 units in
seven buildings that are leased primarily to individuals and
generally under terms that do not exceed one year. Construction
commenced in 1994 and was completed in October of 1995.
Use of Estimates in the Preparation of Financial Statements
The preparation of 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 amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid debt instruments purchased
with a maturity of three months or less to be cash equivalents.
The fair value of cash and cash equivalents approximates their
carrying amount.
Real Estate Costs
Costs that clearly relate to the acquisition, development and
construction of the community are capitalized. Interest costs are
capitalized while development and construction is in progress.
Interest of $272,772 was capitalized in 1995.
Depreciation
Depreciation on buildings which are held for rental by the Company
has been computed using the straight-line method over 27.5 years.
Identifiable components of the building such as appliances,
carpeting and window treatments are depreciated using accelerated
methods over lives ranging from 5 to 7 years. Depreciation expense
for 1995 was $271,626.
Intangible assets
Cost incurred in organizing the Company have been capitalized and
are being amortized on the straight-line basis over five years.
Prepaid loan acquisition fees have been capitalized and are written
off on the straight-line basis over the life of the loan namely two
years for the construction loan and ten years for the permanent
loan (see notes payable and subsequent event). Amortization
expense for 1995 was $52,080.
Advertising costs
Advertising costs included in operating expenses, are expensed as
incurred and were $23,978 for 1995.
Income Taxes
The Company is treated as a partnership for federal income tax
purposes. Consequently, federal income taxes are not payable, or
provided for, by the Company. Members are taxed individually on
their share of the Company's earnings. The Company's net income or
loss is allocated among the members in accordance with the
operating agreement of the Company.
Term
The Company shall continue for a term of thirty years of until
dissolved by any one of several events.
Note 2 - Related Party Transactions
One of the Company's members is the sole owner of the general
contractor responsible for construction of the apartment community
known as Eagle's Landing at Church Ranch. Payments to the general
contractor in 1995 amounted to $3,510,997.
During 1995, a member who is also the manager of the Company,
provided accounting and management services to the Company without
charge.
Note 3 - Construction Loan Payable and Subsequent Event
In June of 1994, the Company entered into an agreement with a bank
to borrow up to $9,200,000 at the bank's prime rate plus 1.5%. The
Company was required to make monthly payments of interest only and
all principal and accrued interest were due June 30, 1996. The
construction loan was collateralized by the apartment community and
was also personally guaranteed by a member of the Company. The
construction loan was paid in full in January of 1996.
In January of 1996, the Company entered into an agreement with an
insurance company lender to borrow $11,000,000 with interest
calculated at 7.5% per annum. The proceeds were used to pay the
construction loan in full, pay the remaining construction
liabilities due to certain subcontractors, pay certain loan closing
costs with the remaining balance distributed to the members as a
distribution. Payments in the amount of $79,281 are due monthly
commencing March 1, 1996 with the entire remaining unpaid principal
and accrued interest due February 1, 2006. The note is
collateralized by a deed of trust, assignment of leases, rents and
contracts, security agreement and fixture filing on the apartment
community known as Eagle's Landing at Church Ranch.
If the Company should choose to pay the outstanding principal
before the normal due date, it may be liable for a prepayment
premium calculated by comparing the prevailing interest rate as
defined in the deed of trust to the contract rate.
Following are maturities of long-term debt for each of the
next five years:
<TABLE>
<CAPTION>
<S> <C>
Year Amount
1996 $ 108,319
1997 139,214
1998 150,021
1999 161,668
2000 174,218
Thereafter 10,266,560
$ 11,000,000
</TABLE>
Note 4 - Property Management
On June 8, 1994, the Company entered into a management agreement
with a professional property manager. The agreement is currently
month to month and may be terminated by either party upon thirty
days written notice. The property manager receives a management
fee of 3.7% of monthly gross receipts. The management fee for 1995
amounted to $33,803.
Note 5 - Commitments and Contingencies
The Company has entered into a letter of credit arrangement with a
bank on behalf of the lender Insurance Company to induce the lender
to close and fund the loan. This letter of credit is a guarantee
the Company will attain certain leasing and occupancy thresholds.
The maximum amount guaranteed under the letter of credit is
$220,000.
The Company leases various equipment and contracts for services
with vendors on a recurring basis. These leases are primarily on a
month to month basis and are for such items as alarm monitoring,
furniture rental, washers and dryers and landscaping.
SIGNATURES
In accordance with Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant caused this report
to be signed on its behalf by the undersigned, thereunto duly
authorized.
EAGLE EXPLORATION COMPANY
By /S/ Raymond N. Joeckel
Raymond N. Joeckel
President
Date: November 18, 1996
In accordance with the Securities Exchange Act of 1934,
this report has been signed below by the following persons on
behalf of the Registrant and in the capacities and on the dates
indicated.
Date
November 18, 1996 /s/ Raymond N. Joeckel
Raymond N. Joeckel
Principal Executive, Accounting and
Financial Officer and a director
November 18, 1996 /s/ Paul M. Joeckel
Paul M. Joeckel
Secretary and a director
November 18, 1994
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 41,387
<SECURITIES> 0
<RECEIVABLES> 503,822
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 253,765
<DEPRECIATION> 209,321
<TOTAL-ASSETS> 1,159,742
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 6,632,998
<OTHER-SE> (5,520,768)
<TOTAL-LIABILITY-AND-EQUITY> 1,159,742
<SALES> 0
<TOTAL-REVENUES> 137,165
<CGS> 0
<TOTAL-COSTS> 421,325
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 600,000
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (884,160)
<INCOME-TAX> 0
<INCOME-CONTINUING> (884,160)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (884,160)
<EPS-PRIMARY> (.29)
<EPS-DILUTED> (.29)
</TABLE>
