As filed with the Securities and Exchange Commission on November 14, 2003.
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2003; OR |
[ ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ________ TO _______ |
Commission File No. 0-24027
ENERGY EXPLORATION TECHNOLOGIES INC.
(Exact name of registrant as specified in its charter)
Alberta, Canada | N/A |
840 7th Avenue S.W., Suite 700, Calgary, Alberta, Canada T2P 3G2
(Address of principal executive offices) (Zip Code)
(403) 264–7020
(Registrant’s telephone number, including area code)
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 registration 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:
19,056,152 common shares as of November 13, 2003
ENERGY EXPLORATION TECHNOLOGIES
INDEX TO THE FORM 10-Q
For the quarterly period ended September 30, 2003
PAGE | ||||
PART I | FINANCIAL INFORMATION | 3 | ||
ITEM 1. | FINANCIAL STATEMENTS | 3 | ||
Consolidated Balance Sheets | 3 | |||
Consolidated Statements of Loss and Comprehensive Loss | 4 | |||
Consolidated Statements of Shareholders’ Equity | 5 | |||
Consolidated Statements of Cash Flows | 6 | |||
Notes to the Consolidated Financial Statements | 7 | |||
ITEM 2. | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 18 | ||
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 23 | ||
ITEM 4. | CONTROLS AND PROCEDURES | 24 | ||
PART II | OTHER INFORMATION | 24 | ||
ITEM 1. | LEGAL PROCEEDINGS | 24 | ||
ITEM 2. | CHANGES IN SECURITIES AND USE OF PROCEEDS | 25 | ||
ITEM 3. | DEFAULTS UPON SENIOR SECURITIES | 25 | ||
ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS | 25 | ||
ITEM 5. | OTHER INFORMATION | 25 | ||
ITEM 6. | EXHIBITS AND REPORTS ON FORM 8-K | 25 | ||
SIGNATURE | 28 | |||
CERTIFICATION | 29 | |||
-2-
ITEM 1 - FINANCIAL INFORMATION
ENERGY EXPLORATION TECHNOLOGIES CONSOLIDATED BALANCE SHEETS (expressed in U.S. dollars) |
September 30, 2003 | December 31, 2002 | |||
(unaudited) | ||||
ASSETS | ||||
Current assets: | ||||
Cash and cash equivalents | $ 1,009,289 | $ 585,070 | ||
Accounts receivable | 145,231 | 328,174 | ||
Due from officers and employees | 2,006 | 5,004 | ||
Prepaid expenses and other | 63,767 | 73,315 | ||
Note receivable from officer [note 4] | 41,644 | 34,212 | ||
1,261,937 | 1,025,775 | |||
Aircraft and flight equipment held for sale [notes and ] | - | 22,985 | ||
Oil and natural gas properties, on the basis of full cost accounting, | ||||
net of depletion and impairments [notes and ] | 1,957,795 | 2,763,919 | ||
Other property and equipment, net of accumulated depreciation, | ||||
amortization and impairment [notes and ] | 208,545 | 206,146 | ||
$ 3,428,277 | $ 4,018,825 | |||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||
Current liabilities: | ||||
Trade payables | $ 164,963 | $ 68,555 | ||
Wages and employee benefits payable | 10,587 | 5,738 | ||
Other accrued liabilities | 26,774 | 74,740 | ||
202,324 | 149,033 | |||
Contingencies, continuing operations and commitments [notes 1 and 12] | - | - | ||
Shareholders' equity: | ||||
Series 'A' convertible preferred stock; par value $0.001 per share: | ||||
liquidation preference $7.50 per share | ||||
800,000 shares authorized | ||||
Nil shares issued as of September 30, 2003 and |
| |||
800,000 shares issued as of December 31, 2002 [note 9] | - | 800 | ||
Common stock, par value $0.001 per share: | ||||
50,000,000 shares authorized; 18,846,153 shares issued as of | ||||
September 30, 2003 and 16,971,153 shares issued as of December 31, 2002 | 18,846 | 16,971 | ||
Additional paid-in capital | 24,193,543 | 24,077,655 | ||
Accumulated deficit | (21,112,785) | (20,041,865) | ||
Accumulated other comprehensive income (loss) | 126,349 | (183,769) | ||
3,225,953 | 3,869,792 | |||
$ 3,428,277 | $ 4,018,825 | |||
The accompanying notes to consolidated financial statements
are an integral part of these consolidated balance sheets
-3-
ENERGY EXPLORATION TECHNOLOGIES CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS (unaudited) (expressed in U.S. dollars) |
Three months ended | Nine months ended September 30, | ||||
2003 | 2002 | 2003 | 2002 | ||
(unaudited) | |||||
Revenues: | |||||
Oil and natural gas revenue | $ - | $ 6,500 | $ - | $ 75,439 | |
Operating expenses: | |||||
Oil and natural gas operating expenses | - | - | - | 8,533 | |
Administrative [note 13] | 451,226 | 348,722 | 1,074,911 | 1,139,624 | |
Depletion and impairment of oil and natural gas properties [notes 2 and 6] | - | (880) | 59,973 | 201,714 | |
Amortization and depreciation [notes 2 and 7] | 15,160 | 71,166 | 43,365 | 138,626 | |
Research and development [note 2] | - | 179 | 716 | 142,822 | |
Survey operations and support [note 2] | 19,083 | 292 | 63,906 | 41 | |
485,469 | 419,479 | 1,242,871 | 1,631,360 | ||
Operating loss from continuing operations | (485,469) | (412,979) | (1,242,871) | (1,555,921) | |
Other income (expense) | 3,750 | 44,892 | 5,629 | 130,401 | |
Net loss for the period from continuing operations | (481,719) | (368,087) | (1,237,242) | (1,425,520) | |
Income (loss) from discontinued operations [note 3] | (26,660) | (71,119) | 166,322 | (596,937) | |
Net loss for the period | (508,379) | (439,206) | (1,070,920) | (2,022,457) | |
Other comprehensive income | |||||
Foreign currency translation adjustment | (13,128) | (93,142) | 310,118 | 18,584 | |
Comprehensive loss for the period | $ (521,507) | $ (532,348) | $ (760,802) | $ (2,003,873) | |
Basic and diluted loss per share [note 2] | $ (0.03) | $ (0.03) | $ (0.04) | $ (0.12) | |
Weighted average shares outstanding | 17,108,516 | 16,971,153 | 17,108,516 | 16,971,153 | |
The accompanying notes to consolidated financial statements are
an integral part of these consolidated statements of loss and comprehensive loss.
- 4 -
ENERGY EXPLORATION TECHNOLOGIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (expressed in U.S. dollars) |
|
Accumulated Other Comprehensive Income (Loss) |
Series 'A' Convertible Preferred Stock |
Additional Paid-in Capital |
||||||||||||||||||||
|
Common Stock |
Accumulated Deficit |
|||||||||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||||||||
|
|
(unaudited) |
|
||||||||||||||||||||
| Beginning balance - December 31, 2001 | $ | (222,980) | 16,971,153 | $ | 16,971 |
800,000 |
$ |
800 | $ | 24,043,439 | $ | (14,365,745) | ||||||||||
| Grant and vesting of options to investor | ||||||||||||||||||||||
| relations consultant (note 13) | - | - | - | - | - | 25,688 | - | |||||||||||||||
| Net loss for the nine months ended | ||||||||||||||||||||||
| September 30, 2002 from continuing | ||||||||||||||||||||||
| Operations | - | - | - | - | - | - | (1,425,520) | |||||||||||||||
| Loss on discontinued operations for the | ||||||||||||||||||||||
| nine months ended September 30, 2002 | - | - | - | - | - | - | (596,937) | |||||||||||||||
| Net other comprehensive income for the | ||||||||||||||||||||||
| nine months ended September 30, 2002 | 18,584 | - | - | - | - | - | - | |||||||||||||||
| Balance - September 30,2002 | $ | (204,396) | 16,971,153 | $ | 16,971 | 800,000 |
$ |
800 | $ | 24,069,127 | $ | (16,388,202) | ||||||||||
| Beginning balance - December 31, 2002 | $ | (183,769) | 16,971,153 | $ | 16,971 | 800,000 | $ | 800 | $ | 24,077,655 | $ | (20,041,865) | ||||||||||
| Issued for cash at $0.40 per share on | ||||||||||||||||||||||
| Sept 11, 2003, net of issuance costs | 1,875,000 | 1,875 | 738,940 | |||||||||||||||||||
| Grant and vesting of options to investor | ||||||||||||||||||||||
| relations consultant (note 13) | - | - | - | - | - | 17,048 | - | |||||||||||||||
| Compensation expense related to issuance of | ||||||||||||||||||||||
| options to employees and directors | 89,100 | |||||||||||||||||||||
| Redemption of preferred shares | (800,000) | (800) | (729,200) | - | ||||||||||||||||||
| Net loss for the nine months ended | ||||||||||||||||||||||
| September 30, 2003 on continuing | ||||||||||||||||||||||
| operations | - | - | - | - | - | - | (1,237,242) | |||||||||||||||
| Income from discontinued operations for | ||||||||||||||||||||||
| the nine months ended September 30, 2003 | - | - | - | - | - | - | 166,322 | |||||||||||||||
| Net other comprehensive income for the | ||||||||||||||||||||||
| nine months ended September 30, 2003 | ||||||||||||||||||||||
| 310,118 | - | - | - | - | - | - | ||||||||||||||||
| Balance - September 30, 2003 | $ | 126,349 | 18,846,153 | $ | 18,846 | - | $ | - | $ | 24,193,543 | $ | (21,112,785) | ||||||||||
The accompanying notes to consolidated financial statements are an integral part of these consolidated statements of shareholders' equity
- 5 -
ENERGY EXPLORATION TECHNOLOGIES CONSOLIDATED STATEMENTS OF CASH FLOW (unaudited) (expressed in U.S. dollars) |
Three months ended | Nine months ended | |||||||
2003 | 2002 | 2003 | 2002 | |||||
Operating activities: | ||||||||
Net loss for the period from continuing operations | $ (481,719) | $ (368,087) | $(1,237,242) | $(1,425,520) | ||||
Amortization and depreciation of other property and equipment | 15,160 | 71,166 | 43,365 | 138,626 | ||||
Depletion and impairment of oil and natural gas properties | 2 | (880) | 59,975 | 201,714 | ||||
Gain on sale of oil and natural gas properties | 21 | (42,046) | (12,003) | (42,046) | ||||
Changes in non-cash working capital: | ||||||||
Accounts receivable | (60,729) | (383,761) | 182,943 | (363,482) | ||||
Due from officers and employees | 2,921 | (1,117) | 2,998 | (5,230) | ||||
Prepaid expenses and other | (19,364) | 1,409 | 9,548 | (15,673) | ||||
Trade payables | 33,345 | (320,324) | 96,408 | (404,622) | ||||