AMERICAN EAGLE RESOURCES, INC.
10-Q FOR QUARTER ENDED 09-30-97
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
September 30, 1997 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
incorporation or organization) Identification No.)
Six Mile Canyon Road, Virginia City, Nevada 89502
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(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 September 30, 1997
FORM 10-Q
INDEX
Page Number
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Part I - Financial Information
----------------------------------
Item 1. Financial Statements:
Consolidated Balance Sheets as at September 30, 1997
(unaudited) and June 30, 1997 3
Consolidated Statements of Operations for
the three months ended September 30, 1997,
1996, and 1995 (unaudited) 4
Consolidated Statements of Cash Flows for the
three months ended September 30, 1997, 1996,
and 1995 (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
AMERICAN EAGLE RESOURCES, INC.
10-Q FOR QUARTER ENDED 09-30-97
Commission File No. 0-12570
<TABLE>
<CAPTION>
AMERICAN EAGLE RESOURCES, INC.
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
SEPTEMBER 30, 1997 JUNE 30, 1997
-------------------- ----------------
ASSETS
------
<S> <C> <C>
Current Assets
Cash $ 32,686 $ 36,311
Interest Receivable 13,837 -
Prepaid Expenses 4,245 7,255
-------------------- ----------------
Total Current Assets $ 50,768 $ 43,566
Property and Equipment - Net - -
Other Assets
Marketable Securities at cost 1,058,125 1,058,125
Restricted Cash 364,056 364,056
Due from Related Party 53,831 55,121
Other 9,340 9,340
------------------- ----------------
Total Other Assets $ 1,485,352 $ 1,486,642
-------------------- ----------------
Total Assets $ 1,536,120 $ 1,530,208
==================== ================
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)
------------------------------------------------
Current Liabilities
Accounts Payable $ 10,620 $ 6,426
Accrued and Other Liabilities 667 2,617
Reclamation 346,906 407,760
-------------------- ----------------
Total Current Liabilities $ 358,193 $ 416,803
Long Term Liabilities
Due to Related Parties 2,638,836 2,570,915
-------------------- ----------------
Total Long Term Liabilities $ 2,638,836 $ 2,570,915
Shareholders'Equity(Deficiency)
Common Shares, par value
$0.01 per share
30,000,000 shares authorized
5,400,000 shares issued and
outstanding 54,000 54,000
Additional Paid-in Capital 15,088,360 15,088,360
Deficit (16,603,269) (16,599,870)
-------------------- ----------------
Total Shareholders' Equity
(Deficiency) (1,460,909) ( 1,457,510)
-------------------- ----------------
Total Liabilities & Shareholders'
Equity $ 1,536,120 $ 1,530,208
=================== ===============
<FN>
(see accompanying notes to the consolidated financial statements)
</TABLE>
<TABLE>
<CAPTION>
AMERICAN EAGLE RESOURCES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
Three months ended September 30
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
Revenue
-------
Mineral Sales and Royalties - 94,318 298,876
Interest Income and Other 14,756 13,196 14,499
---------- ---------- ----------
14,756 107,514 313,375
Expenses
Mine Operating Costs - 85,529 242,311
Mineral Exploration - - -
Reclamation (5,466) - -
Depreciation and Depletion - - 48,412
General and Administration 23,621 31,308 22,249
---------- ---------- ----------
18,155 116,837 312,972
Net Income/(Loss) for the Period (3,399) (9,323) 403
--------- ---------- ---------
Net Loss per share (0.00) (0.00) (0.00)
Weighted average shares
Outstanding 5,400,000 5,400,000 5,400,000
</TABLE>
<TABLE>
<CAPTION>
AMERICAN EAGLE RESOURCES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
Three months ended September 30
1997 1996 1995
------- ------- -------
($) ($) ($)
<S> <C> <C> <C>
Net Profit (Loss) (3,399) (9,323) (9,681)
Adjustments to reconcile net loss
to net cash provided by (used in)
Operating Activities
Depreciation and Depletion - - 91,325
Reclamation expense (60,854) (2,872) 10,332
(Increase) decrease in accounts receivable - 28,372 (20,995)
(Increase) decrease in prepaid expenses 3,010 4,589 (3,941)
(Increase) in due to related party 69,211 10,402 82,685
(Increase) decrease in other assets - - -
Increase (decrease) in accounts payable 4,194 (7,158) (35,831)
Increase (decrease) in accrued and
other liabilities (1,950) 1,955 (4,617)
-------- ------- --------
Total adjustments (226) 35,288 118,958
-------- ------- --------
Net Cash used in Operations (3,625) 25,965 109,277
Purchase of Equipment - - (56,545)
Financing Activities - - -
--------- ------ --------
Increase (Decrease) in Cash (3,625) 165,415 52,732
Cash - Beginning of Period 36,311 48,545 48,000
---------- ------ --------
Cash - End of Period 32,686 74,510 100,732
========== ====== ========
</TABLE>
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
primarily engaged in the exploration, development, and production of
precious metals. As of June 30, 1997 and 1996, the Company's only
operating activity was a 40% interest in the Golden Eagle Mine Joint
Venture (formerly, the Flowery Mine) (the "Mine"), located in Storey
County, Nevada. Revenues generated from production at the Mine were
primarily received from a single refiner. During fiscal 1997, the
Company ceased all leaching and production and was in the reclamation
phase at the Mine.
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.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed above, the Company's
only operating activity has moved into the reclamation phase and no future
cash flows from operating activities are expected. The Company is currently
dependent upon its joint venture partner to continue to fund the cash needs of
the Mine, which raises substantial doubt about its ability to continue as a
going concern. Management's plans in regard to these matters are also
described below. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
FUTURE OPERATIONS - During fiscal 1997, the Company's management entered
into negotiations with various entities, including related parties, which
could ultimately result in a change in the Company's operating entities and a
reorganization of the corporate structure of the Company. The reorganization
contemplated includes: 1) a transaction in which the Company's 40% interest in
the Golden Eagle Mine Joint Venture is sold or transferred; 2) the acquisition
of shares of the Company's common stock from related entities; 3) the
liquidation of a portion of the Company's investment in Miramar; and 4) the
elimination of a portion or all of the amounts due to related parties.
Subsequently, management plans to acquire or lease new properties and to
continue in the business of exploration, development, and production of
precious metals. The terms of such reorganization have not been finalized,
nor can its impact on the financial statements be determined at this
time. Accordingly, no amounts have been recorded in the financial
statements which could result from these proposed transactions.
There can be no assurances that such transactions will occur.
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 capacity of operating mines, 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 noncommercial,
nonproductive, or its value impaired, the remaining capitalized costs are
expensed to the extent that they exceed estimated net realizable value.
Building 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. 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 - Any 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.
USE OF ESTIMATES - 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 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.
RECLAMATION - Estimated reclamation costs are accrued over the estimated
life of the mine on a unit-of-production basis. For the three months ended
September 30, 1997, $ 60,854 has been expensed, decreasing the reclamation
liability to $346,906.
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 (see note 1, "Impairment
of Long-lived Assets").
Costs of mineral properties relate principally to the Golden Eagle Mine.
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
September 30, 1997 and 1996, 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. Due to the nature
of marketable securities, and their susceptibility to fluctuations in market
conditions, their fair value could change significantly in the next year.
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, 1997, the
Company had net operating loss ("NOL") carryforwards of $15,401,338, which
expire up to the year ending June 30, 2012. 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
without 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, 2017. 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 reporting
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, 1997 were as follows:
Benefit from net operating loss carryovers $5,236,455
Benefit from investment tax credit carryovers $ 121,240
Other $ 231,770
-----------
Total $5,589,465
Valuation Allowance (5,589,465)
----------
Net $ -
5. RELATED PARTY TRANSACTIONS
In September 1989, the Company entered into a joint venture agreement
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 September 30, 1997, the Company had a payable to Miramar Gold of
$2,638,836 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 September 30, 1997, the Company has a receivable of $51,971 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 repayments
are not expected within a year.
TEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operation
All operations have ceased, and only reclamation work is being carried out.
<TABLE>
<CAPTION>
Liquidity and Capital Resources
Sept 30 June 30, Increase
1997 1997 (Decrease)
---------- ---------- -----------
<S> <C> <C> <C>
Current Assets $ 50,768 $ 43,566 $ 7,202
Current Liabilities 358,193 416,803 58,610
Working Capital $(307,425) $(373,237) $ 65,812
</TABLE>
Working capital increased as the reclamation work and the reclamation
liability decreases.
During fiscal 1997, the Company ceased all leaching and production and was in
the reclamation phase at the Mine.
The Company is in the process of evaluating various future business
directions.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS OF FORM 8-K
A) NONE
B) NONE
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
undersigned thereunto duly authorized.
AMERICAN EAGLE RESOURCES, INC.
Date: October 22, 1997 By: Margaret E. Stewart
Authorized Representative
Date: October 22, 1997 By: James McKay
Director
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> SEP-30-1997
<CASH> 32,686
<SECURITIES> 1,058,125
<RECEIVABLES> 67,668
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 50,768
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,536,120
<CURRENT-LIABILITIES> 358,193
<BONDS> 0
0
0
<COMMON> 54,000
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1,536,120
<SALES> 0
<TOTAL-REVENUES> 14,756
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 18,155
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (3,399)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,399)
<EPS-PRIMARY> (0.00)
<EPS-DILUTED> (0.00)
</TABLE>
