ENERGY EXPLORATION TECHNOLOGIES / - 10-Q Quarterly Report

ENERGY EXPLORATION TECHNOLOGIES INC.
(Exact name of registrant as specified in its charter)

840 7^th Avenue S.W., Suite 700, Calgary, Alberta, Canada T2P 3G2
(Address of principal executive offices) (Zip 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 [√] NO [ ]

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. YES [ ] NO [ ]

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

	September 30, 2004		December 31, 2003
Assets
Current assets
Cash	$	308,151	$	1,024,201
Accounts receivable		77,424		76,133
Due from officers and employees		2,037		-
Note receivable from former officer [note 3]		47,050		43,952
Prepaid expenses		59,937		106,622
		494,599		1,250,908

Oil and natural gas properties, on the basis of full cost accounting,
net of depletion and impairments [note 4]		1,282,708		1,194,406

Other property and equipment, net of accumulated depreciation,
amortization and impairment [note 5]		179,111		190,810
	$	1,956,418	$	2,636,124

Liabilities And Shareholders' Equity
Current liabilities
Trade payables	$	125,135	$	136,098
Other accrued liabilities		11,352		78,452
Subscriptions payable [note 6]		377,320		472,501
		513,807		687,051

Contingencies, continuing operations and commitments [notes 1 and 10]

Shareholders' equity
Preferred shares [note 7]
Authorized: unlimited
Issued : Nil		-		-
Common shares
Authorized: unlimited
Issued : 20,400,742 and 19,306,852 at September 30, 2004 and
December 31, 2003, respectively [note 6]		26,494,125		24,527,066
Warrants [notes 6 and 8]		-		-
Accumulated Deficit		(25,275,628)		(22,855,739)
Accumulated other comprehensive income		224,114		277,746
		1,442,611		1,949,073

	$	1,956,418	$	2,636,124

		Three months ended				Nine months ended
		September 30				September 30
		2004		2003		2004			2003

Revenues
Oil and natural gas revenue	$	16,181	$	-	$		37,823	$	-
Gain on sale of properties		1,562		-			28,863		-
		17,743		-			66,686		-

Operating expenses
Oil and natural gas operating expenses		1,818		-			4,207		-
Administrative [notes 6 and 11]		418,971		451,226		1,800,709			1,075,626
Depletion and impairment of oil and
natural gas properties [notes 4 and 12]		203		-			541		59,974
Amortization and depreciation [notes 5 and 12]		19,254		15,160			43,880		43,365
Survey operations and support		(6,053)		19,083			675,062		63,906
		434,193		485,469		2,524,399			1,242,871

Operating loss from continuing operations		(416,450)		(485,469)		(2,457,713)			(1,242,871)

Other income (expense)
Interest		831		(1,017)			1,999		-
Other		-		4,767					5,629
		831		3,750			1,999		5,629

Net loss for the period from continuing operations		(415,619)		(481,719)		(2,455,714)			(1,237,242)

Income (loss) from discontinued
operations [note 12]		5,052		(26,660)			35,825		166,322
Net loss for the period		(410,567)		(508,379)		(2,419,889)			(1,070,920)

Other comprehensive income (loss):
Foreign currency translation adjustment		64,413		(13,128)		(53,632)			310,118
Comprehensive loss for the period	$	(346,154)	$	(521,507)	$	(2,473,521)		$	(760,802)

Basic and diluted net loss per share from
continuing operations [note 6]	$	(0.02)	$	(0.03)	$		(0.12)	$	(0.07)

Basic and diluted loss per share [note 6]	$	(0.02)	$	(0.03)	$		(0.12)	$	(0.04)

Weighted average shares outstanding		20,263,608		17,108,516		19,939,469			17,108,516

The accompanying notes to consolidated financial statements are an integral part of these consolidated statements of loss and comprehensive loss.

	Accumulated Other
	Comprehensive		Common Shares			Preferred Shares			Warrants		Accumulated
	Income (loss)		Shares		Amount	Shares		Amount	Number	Amount	Deficit			Total

Beginning balance — December 31, 2002	$	(183,769)	16,971,153	$	23,365,426	800,000	$	730,000	-	-	$	(20,041,865)	$	3,869,792
Grant and vesting of options to investor
relations consultant [note 11]		-	-		17,048	-		-	-	-		-
Redemption of preferred shares		-	-		-	(800,000)		(730,000)	-	-		-		(730,000)
Issued for cash at $0.40 per share on
September 11, 2003 net of issuance costs			1,875,000		740,815									740,815
Compensation expense related to issuance
of options to employees and directors					89,100
Net loss for the nine months ended
September 30, 2003 on continuing operations		-	-		-	-		-	-	-		(1,237,242)		(1,237,242)
Gain on discontinued operations for the
nine months ended September 30, 2003		-	-		-	-		-	-	-		166,322		166,322
Net other comprehensive income for the
nine months ended September 30, 2003		310,118	-		-	-		-	-	-		-		310,118
Balance — September 30,2003	$	126,349	18,846,153	$	24,212,389	-	$	-	-	-	$	(21,112,785)	$	3,225,953

Beginning balance — December 31, 2003	$	277,746	19,306,852	$	24,527,066	-	$	-	7,496	-	$	(22,855,739)	$	1,949,073
Options exercised for cash at prices between
$0.29 and $2.00 per share		-	157,621		194,164	-		-	-	-		-		194,164
Issued for cash at $2.00 per share on
February 12, 2004 net of issuance costs		-	573,269		1,063,277	-		-	604,331	-		-		1,063,277
Issued for services at $1.80 per share on
April 18,2004		-	30,000		54,000	-		-	-	-		-		54,000
Issued for services at $2.00 per share on
July 22, 2004			200,000		400,000									400,000
Issued for cash at $2.00 per share on
July 22, 2004 net of issuance costs			55,000		109,853				60,680					109,853
Issued for cash at $2.00 per share on
Sept 10, 2004 net of issuance costs			78,000		145,765				44,960					145,765
Net loss for the nine months ended
September 30, 2004 on continuing operations		-	-		-	-		-	-	-		(2,455,714)		(2,455,714)
Loss from discontinued operations for the
nine months ended September 30, 2004		-	-		-	-		-	-	-		35,825		35,825
Net other comprehensive loss for the
nine months ended September 30, 2004		(53,632)	-		-	-		-	-	-		-		(53,632)
Balance — September 30,2004	$	224,114	20,400,742	$	26,494,124	-	$	-	717,467	-	$	(25,275,628)	$	1,442,611

The accompanying notes to consolidated financial statements are an integral part of these consolidated statements of shareholders' equity


		Three months ended				Nine months ended
		September 30				September 30
		2004		2003		2004		2003

Operating activities
Net loss for the period from continuing operations	$	(415,619)	$	(481,719)	$	(2,455,714)	$	(1,237,242)
Amortization and depreciation of other property
and equipment		19,254		15,160		43,880		43,365
Depletion and impairment of oil and natural gas properties		203		-		541		59,975
Consulting costs settled by issuance of common stock
and options		-		-		54,000		17,048
Gain on sale of oil and natural gas properties		(1,562)		21		(28,863)		(12,003)
Changes in non-cash working capital
Accounts receivable		17,629		(60,729)		47,634		182,943
Interest accrued on loan to former employee		(3,156)		(497)		(3,098)		(7,432)
Due from officers and employees		11,771		2,921		(2,037)		2,998
Prepaid expenses and other		21,614		(19,364)		46,685		9,548
Trade payables		(339,664)		21,163		(10,963)		101,257
Other accrued liabilities		(56,128)		(16,495)		(67,100)		(47,966)
Compensation settled with options		-		89,100		-		89,100
Net cash used by operating activities		(745,658)		(450,439)		(2,375,035)		(798,409)

Financing activities
Funds raised through the sale of common shares,
net of issuance costs		655,617		740,815		1,718,894		740,815
Funds raised through the exercise of options		27,067		-		194,164		-
Subscriptions payable		(137,601)		-		(95,181)		-
Net cash generated by financing activities		545,083		740,815		1,817,877		740,815

Investing activities
Funds invested in other property and equipment		(16,293)		(4,100)		(32,721)		(45,763)
Proceeds on sale of other property and equipment		-		-		-		1,916
Funds received (invested) in oil and natural gas properties		(72,292)		(221,005)		(89,597)		(601,470)
Proceeds on sale of oil and natural gas properties		1,633		(150)		30,158		86,125
Net cash generated (used ) by investing activities		(86,952)		(225,255)		(92,160)		(559,192)

Net cash generated (used) by discontinued operations		5,025		(5,591)		(13,100)		730,888

Effect of net other comprehensive income (loss)

[√]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTER ENDED SEPTEMBER 30, 2004; OR
[ ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ________ TO _______

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PART I	FINANCIAL INFORMATION
	ITEM 1.	FINANCIAL STATEMENTS (UNAUDITED)	3
		Consolidated Balance Sheets	3
		Consolidated Statements of Loss and Comprehensive Loss	4
		Consolidated Statements of Shareholders’ Equity (Deficit)	5
		Consolidated Statements of Cash Flow	6
		Notes to the Consolidated Financial Statements	7
	ITEM 2.	MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	16
	ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	21
	ITEM 4.	CONTROLS AND PROCEDURES	21
PART II	OTHER INFORMATION
	ITEM 1.	LEGAL PROCEEDINGS	22
	ITEM 2.	CHANGES IN SECURITIES AND USE OF PROCEEDS	23
	ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	23
	ITEM 4.	OTHER INFORMATION	23
	ITEM 5.	EXHIBITS	24
		SIGNATURE	27