AMERICAN EAGLE RESOURCES, INC.
10-Q FOR QUARTER ENDED 12-31 96
Commission File No. 0-12570
QUARTERLY REPORT UNDER SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED COMMISSION FILE
December 31, 1996 Number: 0-12570
AMERICAN EAGLE RESOURCES, INC.
(Exact name of registrant as specified in its charter)
Delaware 95-3494141
(State of other jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
Six Mile Canyon Road, Virginia City, Nevada 89502
(Address of principal executive office) (Zip code)
Registrant's telephone number including area code: (702) 246-0761
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 than the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days:
Yes___x___No______
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date:
5,400,000 shares of common stock outstanding at December 31, 1996
<PAGE>
AMERICAN EAGLE RESOURCES, INC.
10-Q FOR QUARTER ENDED 12-31 96
Commission File No. 0-12570
INDEX
Page Number
Part I - Financial Information
Item 1. Financial Statements:
Consolidated Balance Sheets as at December 31, 1996
(unaudited) and June 30, 1996 3
Consolidated Statements of Operations for
the three months ended December 31, 1996,
1995, and 1994 (unaudited) 4
Consolidated Statements of Cash Flows for the
three months ended December 31, 1996, 1995,
and 1994 (unaudited) 5
Notes to Consolidated Financial Statements
(unaudited) 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
Part II - Other Information
Item 6. Exhibits and Reports of Form 8-K 11
Signatures 12
<PAGE>
<TABLE>
AMERICAN EAGLE RESOURCES, INC.
10-Q FOR QUARTER ENDED 12-31 96
Commission File No. 0-12570
AMERICAN EAGLE RESOURCES, INC.
CONSOLIDATED BALANCE SHEET
<CAPTION>
December 31, 1996 June 30, 1996
<S> <C> <C>
Assets
Current Assets
Cash $ 30,547 $ 48,545
Accounts Receivable 27,987 56,846
Prepaid Expenses 9,025 14,978
Total Current Assets $ 67,559 $ 120,369
Property and Equipment - Net - -
Other Assets
Marketable Securities at cost 1,058,125 1,058,125
Restricted Cash 366,232 365,872
Due from Related Party 55,121 55,121
Total Other Assets $ 1,479,478 $ 1,479,118
Total Assets $ 1,547,037 $ 1,599,487
Liabilities and Shareholders' Equity (Deficiency)
Current Liabilities
Accounts Payable $ 10,798 $ 21,845
Accrued and Other Liabilities 10,134 9,316
Total Current Liabilities $ 20,932 $ 31,161
Long Term Liabilities
Reclamation 460,148 $ 113,601
Due to Related Parties 2,549,919 2,521,426
Total Long Term Liabilities $ 3,010,067 $ 2,635,027
Shareholders' Equity (Deficiency)
Common Shares, par value $0.01 per share
30,000,000 shares aurthorized
5,400,000 shares issued and outstanding 54,000 54,000
Additional Paid-in Capital 15,088,360 15,088,360
Deficit (16,626,322) (16,208,701)
Total Shareholders' Equity (Deficiency) (1,483,962) (1,066,341)
Total Liabilities & Shareholders' Equity $ 1,547,037 $ 1,599,847
<FN>
(See accompanying notes to the consolidated financial statements)
</TABLE>
<PAGE>
<TABLE>
AMERICAN EAGLE RESOURCES, INC.
10-Q FOR QUARTER ENDED 12-31 96
Commission File No. 0-12570
AMERICAN EAGLE RESOURCES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
<CAPTION>
Six months ended December 31
1996 1995 1994
<S> <C> <C> <C>
Revenue
Mineral Sales and Royalties 128,346 475,589 305,849
Interest Income and Other 15,848 17,106 4,827
144,194 492,695 310,676
Expenses
Mine Operating Costs 151,636 428,238 417,855
Mineral Exploration 0 0 0
Reclamation Expense 360,000 0 0
Depreciation and Depletion 142,558 92,404 0
General and Administration 50,179 5,716 68,738
561,815 576,512 578,997
Net Loss for the Period (417,621) (83,817) (268,321)
Net Loss per share (0.02) (0.002) (0.05)
Weighted average shares
Outstanding 5,400,000 5,400,000 5,400,000
</TABLE>
<PAGE>
<TABLE>
AMERICAN EAGLE RESOURCES, INC.
10-Q FOR QUARTER ENDED 12-31 96
Commission File No. 0-12570
AMERICAN EAGLE RESOURCES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
<CAPTION>
Three months ended December 31
1996 1995 1994
<S> <C> <C> <C>
Net Profit (Loss) (417,621) (83,817) (268,321)
Adjustments to reconcile net loss
to net cash provided by (used in)
Operating Activities
(Gain) loss on sale of assets 0 0 (2,122)
Depreciation and Depletion 0 142,558 92,404
Reclamation expense 346,547 17,986 11,692
(Increase) decrease in accounts receivable 28,859 (225) (32,597)
(Increase) decrease in prepaid expenses 5,953 (17,883) (2,279)
(Increase) in due to related party 28,493 9,221 296,833
(Increase) decrease in other assets 15,148 0 0
Increase (decrease) in accounts payable (11,047) 13,125 (44,205)
Increase (decrease) in accrued and
other liabilities 818 (10,492) (2,077)
Total adjustments 399,623 154,290 332,797
Net Cash used in Operations (17,998) 70,473 64,476
Purchase of Equipment 0 (68,209) (15,414)
Financing Activities 0 0 (55,521)
Increase (Decrease) in Cash (17,998) 2,264 (6,459)
Cash - Beginning of Period 48,545 48,000 20,888
Cash - End of Period 30,547 50,264 14,429
</TABLE>
<PAGE>
AMERICAN EAGLE RESOURCES, INC.
10-Q FOR QUARTER ENDED 12-31 96
Commission File No. 0-12570
AMERICAN EAGLE RESOURCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Nature of Business - American Eagle Resources, Inc., (the"Company")
is primar-ily engaged in the exploration, development, and production of
precious metals. As of December 31, 1996, the Company's only operating
activity was a 40% interest in the Golden Eagle Mine Joint Venture ( formerly
the Flowery Mine), located in the Storey county of Nevada. Revenues generated
from production at the Golden Eagle Mine are primarily received from a single
refiner. Mining stopped on January 11, 1996, but leaching will continue until
is no longer economically feasible.
Basis of Presentation - The financial statements include the accounts of
American Eagle Resources, Inc. (the "Company") and a proportionate share of the
accounts of the Golden Eagle Mine Joint Venture in which the Company has an
interest. All material inter-company balances and transactions have been
eliminated.
Restricted Cash - Restricted cash consists of certificates of deposit held as
collateral for the performance of the Companies reclamation activities.
Property and Equipment - Property acquisition costs and mine development costs
incurred to expand the capacity of the operating mine, develop new ore bodies
or develop new areas substantially in advance of current production are
capitalized. When commercial production commences, depletion of such costs is
computed using the unit-of-production method based on estimated recoverable ore
reserves. When a mining property is determined to be non-commercial, non-
productive, or its value impaired, the remaining capitalized costs are expensed
to the extent that they exceed the estimated net realizable value. Mine
exploration costs and mine development costs related to current production are
expensed as incurred.
Buildings and equipment are depreciated using the straight-line method over
estimated useful lives of ten years and five years respectively.
The Company ceased mining operations during fiscal 1996 and management does not
intend to further explore, expand or develop the properties owned and leased by
the Golden Eagle Mine Joint Venture.
<PAGE>
AMERICAN EAGLE RESOURCES, INC.
10-Q FOR QUARTER ENDED 12-31 96
Commission File No. 0-12570
Accordingly, an impairment allowance of $442,181 was established as of
June 30, 1996 which fully reserved the remaining net book value of property and
equipment.
Revenue Recognition - Revenue is recognized when gold shipments are made.
Net Loss Per share - The computation of net loss per share is based on the
Company's reported net loss and the weighted average number of shares of common
stock outstanding.
Reclamation - Estimated reclamation costs are accrued over the estimated life
of the mine on a unit-of-production basis. Estimated additional reclamation
costs of $360,000 have been added bringing the anticipated reclamation total
to $ 524,312.
Impairment of Long-Lived Assets - Statement of Financial Accounting Standards
("SFAS") No. 121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of, was issued by the Financial Accounting
Standards Board ("FASB") in March 1995, and established accounting for the
impairment of long-lived assets, certain identifiable intangibles, and goodwill
related to those assets to be held and used for long-lived assets and certain
identifiable intangibles to be disposed of. The Company adopted the provisions
of SFAS No. 121 during the year ended June 30, 1996. The Company reviews the
carrying values of its long-lived and identifiable intangible assets for
possible impairment whenever events or changes in circumstances indicate that
the carrying amount of assets may not be recoverable.
Reclassifications - Certain amounts have been reclassified to conform with the
current year's presentation.
2. PROPERTY AND EQUIPMENT
Property and Equipment has been fully reserved
3. INVESTMENT IN MIRAMAR MINING CORPORATION
The Company's Investment in Miramar Mining Corporation ("Miramar")
represents and approximate 2% interest in that Company. Miramar is a mining
Company listed on the NASDAQ Stock Exchange and is a related party. At
December 31, 1996 and 1995, this investment was recorded at cost, which was
less than market value. Due to the related party nature of the investment, the
investment is not recorded above original cost basis.
<PAGE>
AMERICAN EAGLE RESOURCES, INC.
10-Q FOR QUARTER ENDED 12-31 96
Commission File No. 0-12570
4. INCOME TAXES
No provision for income taxes has been recorded in the financial
statements due to the net losses of the Company. At June 30, 1996, the Company
had net operating loss ("NOL") carryforwards of $15,207,207, which expire up to
the year ending June 30, 2011. The Company has not recognized a deferred tax
asset relating to these carryforwards.
The NOL carryforwards generated through the date of the Company's
reorganization in 1990 are subject to an annual limitation of $272,858. The
NOL carryforwards generated subsequent to such reorganization are allowed with-
out limitation. Therefore, total NOL carryforwards actually available to
offset future taxable income will be limited to approximately $6,500,000 before
fully expiring during the year ending June 30, 2011. Subsequent ownership
changes could further reduce available NOL carryforwards. The annual
limitation, and therefore the NOL carryforwards available, are increased by
any recognized built-in gains during a taxable year as provide by Internal
Revenue Code Section 382.
The Company has adopted Financial Accounting Standards Board
Statement No. 109, Accounting for Income Taxes (FAS109). The Company had no
recorded deferred taxes before or after implementation of FAS 109 and,
accordingly, there was no cumulative or current period effect from the adoption
of FAS 109.
Deferred income taxes reflect the impact of temporary differences
between the amount of assets and liabilities recognized for financial report-
ing purposed and such amount recognized for tax purposes and the impact of net
operating loss carryforwards. The components of the Company's deferred tax
assets as of June 30, 1996 were as follows:
Benefit from net operating loss carryovers $5,170,450
Benefit from investment tax credit carryovers $ 129,120
Other $ 164,777
Total 5,464,347
Valuation Allowance (5,464,347)
Net $ -
<PAGE>
AMERICAN EAGLE RESOURCES, INC.
10-Q FOR QUARTER ENDED 12-31 96
Commission File No. 0-12570
5. RELATED PARTY TRANSACTIONS
In September 1989, the Company entered into a joint venture agree-
ment with Miramar Gold Corporation ("Miramar Gold"), a Nevada corporation for
the operation of mining properties and equipment (the Golden Eagle Mine Joint
Venture). Miramar Gold is a wholly owned subsidiary of Miramar (see Note 3),
which has a 16% interest in the Company. Mr. W.H. Berukoff is President and a
member of the Board of Directors of the Company. He is also President and a
member of the Board of Directors of Miramar Gold and Miramar. Under the terms
of the agreement, the Company received 20% of the revenues and paid 40% of the
expenses from mining operations until Miramar had received the sum of
$1,000,000. Beginning in September, 1994, the Company received 40% of the
revenues and paid 40% of the expenses.
At December 31, 1996, the Company had a payable to Miramar Gold of
$2,549,919 for costs paid by Miramar Gold on behalf of the Company. The
Company classifies this payable as non-current as Miramar Gold has represented
it will not demand payment in fiscal 1997.
At December 31, 1996, the Company has a receivable of $53,261 from a
Company controlled by the President of the Company as well as a receivable of
$1,860 from other companies that are controlled by the President of the
Company. The Company classifies this amount as non-current as significant re-
payments are not expected within a year.
<PAGE>
AMERICAN EAGLE RESOURCES, INC.
10-Q FOR QUARTER ENDED 12-31 96
Commission File No. 0-12570
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
The profitability of the Company's operations in any one accounting period is
directly related to, among other things: 1) the average realized price of gold
and silver; 2) the average ore grade; 3)the rate of production of ore.
In the current year mining stopped on January 11, 1996, but leaching of the
previously stacked ore has continued and will continue until it is no longer
economically feasible.
During the first six months, net production was 606 ounces of gold and 10,119
ounces of silver of which the Company's share is 242 ounces of gold and 4,048
ounces of silver.
Liquidity and Capital Resources
Dec 31 June 30 Increase
1996 1996 (Decrease)
Current Assets $ 67,559 $120,369 $ (52,810)
Current Liabilities 20,932 31,161 (10,229)
Working Capital $ 46,627 $ 89,208 $ (42,581)
Working capital decreased due to slow down of leaching process and due to the
cessation of mining there was no new ore placed on the pad.
Only leaching and reclamation work was in process during the first and second
quarter.
The Company is in the process of evaluating various future business directions.
<PAGE>
AMERICAN EAGLE RESOURCES, INC.
10-Q FOR QUARTER ENDED 09-30 96
Commission File No. 0-12570
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS OF FORM 8-K
A) NONE
B) NONE
<PAGE>
AMERICAN EAGLE RESOURCES, INC.
10-Q FOR QUARTER ENDED 09-30 96
Commission File No. 0-12570
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf the under-
signed thereunto duly authorized.
AMERICAN EAGLE RESOURCES, INC.
Date: By: Margaret E. Stewart
Authorized Representative
Date: By: James McKay
Director
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> Jun-30-1996
<PERIOD-END> Dec-31-1996
<CASH> 30,547
<SECURITIES> 1,058,125
<RECEIVABLES> 27,987
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 67,559
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,547,037
<CURRENT-LIABILITIES> 20,932
<BONDS> 0
0
0
<COMMON> 54,000
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1,547,037
<SALES> 128,346
<TOTAL-REVENUES> 144,194
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 561,815
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (417,621)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (417,621)
<EPS-PRIMARY> (0.02)
<EPS-DILUTED> (0.02)
</TABLE>
