AMERICAN EAGLE RESOURCES, INC.
10-Q FOR QUARTER ENDED 12-31-97
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
December 31, 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
(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, 1997
AMERICAN EAGLE RESOURCES, INC.
10-Q FOR QUARTER ENDED 12-31-97
Commission File No. 0-12570
AMERICAN EAGLE RESOURCES INC.
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
Page Number
<S> <C> <C>
Part I - Financial Information
Item 1. Financial Statements:
Consolidated Balance Sheets as at December 31, 1997
(unaudited) and June 30, 1997 3
Consolidated Statements of Operations for
the three months ended December 31, 1997,
1996, and 1995 (unaudited) 4
Consolidated Statements of Cash Flows for the
three months ended December 31, 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
</TABLE>
<PAGE>
AMERICAN EAGLE RESOURCES, INC.
10-Q FOR QUARTER ENDED 12-31-97
Commission File No. 0-12570
<TABLE>
<CAPTION>
AMERICAN EAGLE RESOURCES, INC.
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
December 31, 1997 June 30, 1997
Assets
<S> <C> <C>
Current Assets
Cash. . . . . . . . . . . . . . . . . . . . . $ 40,912 36,311
Interest Receivable . . . . . . . . . . . . . - -
Prepaid Expenses. . . . . . . . . . . . . . . 3,338 7,255
Total Current Assets. . . . . . . . . . . . . . $ 44,250 $ 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. . . . . . . . . . . . . . . . . . . $ 1,529,602 $ 1,530,208
Liabilities and Shareholders' Equity (Deficiency)
Current Liabilities
Accounts Payable. . . . . . . . . . . . . . . $ 6,786 $ 6,426
Accrued and Other Liabilities . . . . . . . . 1,541 2,617
Reclamation . . . . . . . . . . . . . . . . . 281,818 407,760
Total Current Liabilities . . . . . . . . . . . $ 290,145 $ 416,803
Long Term Liabilities
Due to Related Parties. . . . . . . . . . . . 2,695,005 2,570,915
Total Long Term Liabilities . . . . . . . . . . $ 2,695,005 $ 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 . . . . . . . . . . . . . . . . . . . (16,597,908) (16,599,870)
Total Shareholders' Equity (Deficiency) . . . . (1,455,548) (1,457,510)
Total Liabilities & Shareholders' Equity. . . . . $ 1,529,602 $ 1,530,208
<FN>
(See accompanying notes to the consolidated financial statements)
</TABLE>
AMERICAN EAGLE RESOURCES, INC.
10-Q FOR QUARTER ENDED 12-31-97
Commission File No. 0-12570
<TABLE>
<CAPTION>
AMERICAN EAGLE RESOURCES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
Six months ended December 31
1997 1996 1995
<S> <C> <C> <C>
Revenue
Mineral Sales and Royalties. . . 10,291 128,346 475,589
Interest Income and Other. . . . 17,971 15,848 17,106
28,262 144,194 492,695
Expenses
Mine Operating Costs . . . . . . 4,010 151,636 428,238
Mineral Exploration. . . . . . . - - -
Reclamation. . . . . . . . . . . - 360,000 -
Depreciation and Depletion . . . - - 142,558
General and Administration . . . 22,290 50,179 5,716
26,300 561,815 576,512
Net Income/(Loss) for the Period 1,962 (417,621) (83,817)
Net Loss per share . . . . . . . (0.00) (0.08) (0.02)
Weighted average shares
Outstanding. . . . . . . . . . . 5,400,000 5,400,000 5,400,000
</TABLE>
AMERICAN EAGLE RESOURCES, INC.
10-Q FOR QUARTER ENDED 12-31-97
Commission File No. 0-12570
<TABLE>
<CAPTION>
AMERICAN EAGLE RESOURCES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
Six months ended December 31
1997 1996 1995
($) ($) ($)
Operating Activities
<S> <C> <C> <C>
Net Profit (Loss) . . . . . . . . . . . . . 1,962 (417,621) (83,817)
Adjustments to reconcile net loss
to net cash provided by (used in):
Depreciation and Depletion. . . . . . . . . - - 142,558
Reclamation expense . . . . . . . . . . . . (125,942) 346,547 17,986
(Increase) decrease in accounts receivable. - 28,859 (225)
(Increase) decrease in prepaid expenses . . 3,917 5,953 (17,883)
(Increase) in due to related party . . . . 125,380 28,493 9,221
(Increase) decrease in other assets . . . . - - -
Increase (decrease) in accounts payable . . 360 (11,047) 13,125
Increase (decrease) in accrued and
other liabilities. . . . . . . . . . . . . (1,076) 818 (10,492)
Total adjustments . . . . . . . . . . . . . 2,639 399,623 154,290
Net Cash used in Operations . . . . . . . . 4,601 (17,998) 70,473
Investing Activities
Purchase of Equipment . . . . . . . . . . . - - (55,063)
Increase in Mineral Properties. . . . . . . - - 33,098
- - (21,965)
Financing Activities
Increase (decrease) in silver loan payable. - - (21,213)
Increase (Decrease) in Cash . . . . . . . . 4,601 (17,998) 27,295
Cash - Beginning of Period. . . . . . . . . 36,311 48,545 105,243
Cash - End of Period. . . . . . . . . . . . 40,912 30,547 132,538
</TABLE>
AMERICAN EAGLE RESOURCES, INC.
10-Q FOR QUARTER ENDED 12-31-97
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
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,
AMERICAN EAGLE RESOURCES, INC.
10-Q FOR QUARTER ENDED 12-31-97
Commission File No. 0-12570
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.
AMERICAN EAGLE RESOURCES, INC.
10-Q FOR QUARTER ENDED 12-31-97
Commission File No. 0-12570
Reclamation - Estimated reclamation costs are accrued over the estimated life
of the mine on a unit-of-production basis. For the six months ended December
31, 1997, $ 125,942 has been expensed, decreasing the reclamation liability to
$ 281,818.
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
December 31, 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,
AMERICAN EAGLE RESOURCES, INC.
10-Q FOR QUARTER ENDED 12-31-97
Commission File No. 0-12570
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:
<TABLE>
<CAPTION>
<S> <C>
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 . . . . . . . . . . . . . . . . . . . . . $ -
</TABLE>
AMERICAN EAGLE RESOURCES, INC.
10-Q FOR QUARTER ENDED 12-31-97
Commission File No. 0-12570
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 December 31, 1997, the Company had a payable to Miramar Gold of
$2,695,005 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, 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.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
All operations have ceased, and only reclamation work is being carried out.
AMERICAN EAGLE RESOURCES, INC.
10-Q FOR QUARTER ENDED 12-31-97
Commission File No. 0-12570
Liquidity and Capital Resources
<TABLE>
<CAPTION>
Dec 31 June 30, Increase
1997 1997 (Decrease)
<S> <C> <C> <C>
Current Assets. . . $ 44,250 $ 43,566 $ 684
Current Liabilities 291,145 416,803 (125,658)
Working Capital . . $(246,895) $(373,237) $ 126,342
<FN>
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.
</TABLE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS OF FORM 8-K
A) NONE
B) NONE
AMERICAN EAGLE RESOURCES, INC.
10-Q FOR QUARTER ENDED 12-31-97
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
undersigned thereunto duly authorized.
AMERICAN EAGLE RESOURCES, INC.
Date: January 26, 1998 By: /s/ Margaret E. Stewart
-----------------------
Margaret E. Stewart
Authorized Representative
Date: January 26, 1998 By: /s/ James McKay
---------------
James McKay
Director
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> DEC-31-1997
<CASH> 40,912
<SECURITIES> 1,058,125
<RECEIVABLES> 53,831
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 44,250
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,529,602
<CURRENT-LIABILITIES> 290,145
<BONDS> 0
0
0
<COMMON> 54,000
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1,529,602
<SALES> 10,291
<TOTAL-REVENUES> 28,262
<CGS> 4,010
<TOTAL-COSTS> 4,010
<OTHER-EXPENSES> 22,290
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,962
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,962
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
