UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2012
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
to
Commission File Number: 000-50906
AMERICAN EAGLE ENERGY CORPORATION
(Exact name of registrant as specified in
its charter)
Nevada
|
|
20-0237026
|
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
2549 West Main Street, Suite 202, Littleton, Colorado
|
|
80120
|
|
(Address of principal executive offices)
|
|
(Zip Code)
|
|
(303) 798-5235
|
(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 Exchange Act during the past 12 months (or for such shorter
period that 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
o
Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large
accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange
Act.
(Check one):
Large accelerated filer
o
|
Accelerated filer
o
|
|
|
Non-accelerated filer
o
|
Smaller reporting company
x
|
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act).
Yes
o
No
x
Indicate the number of shares outstanding of each of the issuer’s
classes of common equity, as of the latest practicable date:
45,842,778 shares of common stock issued and outstanding at
August 17, 2012.
Explanatory Note
The purpose of this Amendment No. 1 to
American Eagle Energy Corp.’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2012, filed with
the Securities and Exchange Commission on August 20, 2012 (the “Form 10-Q”), is to correct an accidental omission
in Note 6, to revise proceeds from the conveyance of working interests in the condensed, consolidated statement of cash
flows and related notes, and to furnish Exhibit 101 to the Form 10-Q in accordance with Rule 405 of
Regulation S-T. Exhibit 101 to this Report provides the consolidated financial statements and related notes from
the Form 10-Q formatted in XBRL (eXtensible Business Reporting Language).
No other changes have been made to the Form
10-Q. This Amendment No. 1 to the Form 10-Q speaks as of the original filing date of the Form 10-Q, does not reflect
events that may have occurred subsequent to the original filing date.
Pursuant to Rule 406T of Regulation S-T,
the interactive data files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes
of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities
Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
American Eagle Energy Corporation
Condensed Consolidated Financial Statements
As of June 30, 2012, December
31, 2011 and
For the Three-Month and Six-Month
Periods Ended June 30, 2012 and 2011
American Eagle Energy Corporation
Index to the Condensed Consolidated
Financial Statements
As of June 30, 2012, December
31, 2011 and
For the Three-Month and Six-Month
Periods Ended June 30, 2012 and 2011
Condensed Consolidated Balance Sheets as of June 30, 2012 and December 31, 2011 (Unaudited)
|
F-2
|
|
|
Condensed Consolidated Statements of Income and Comprehensive Income for the Three-Month and Six-Month Periods Ended June 30, 2012 and 2011 (Unaudited)
|
F-3
|
|
|
Condensed Consolidated Statements of Stockholders’ Equity for the Six-Month Period Ended June 30, 2012 and the Year Ended December 31, 2011 (Unaudited)
|
F-5
|
|
|
Condensed Consolidated Statements of Cash Flows for the Six-Month Periods Ended June 30, 2012 and 2011 (Unaudited)
|
F-6
|
|
|
Notes to the Consolidated Financial Statements (Unaudited)
|
F-7
|
American Eagle Energy Corporation
Condensed Consolidated Balance Sheets
As of June 30, 2012 and December
31, 2011
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2012
|
|
|
2011
|
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
10,084,292
|
|
|
$
|
12,151,309
|
|
Trade receivables
|
|
|
12,063,519
|
|
|
|
3,105,079
|
|
Receivables from related parties
|
|
|
-
|
|
|
|
314,521
|
|
Prepaid expenses
|
|
|
60,872
|
|
|
|
45,690
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
22,208,683
|
|
|
|
15,616,599
|
|
|
|
|
|
|
|
|
|
|
Equipment and leasehold improvements, net of accumulated depreciation and amortization of $173,872 and $156,744, respectively
|
|
|
109,610
|
|
|
|
19,823
|
|
Oil and gas properties, under the full cost method – subject to amortization, net of accumulated depletion of $733,307 and $183,238, respectively
|
|
|
23,572,737
|
|
|
|
15,798,307
|
|
Oil and gas properties, under the full cost method – not subject to amortization
|
|
|
9,667,990
|
|
|
|
7,295,215
|
|
Marketable securities
|
|
|
1,126,324
|
|
|
|
1,254,434
|
|
Restricted cash
|
|
|
101,500
|
|
|
|
51,500
|
|
Deposits
|
|
|
5,345
|
|
|
|
5,345
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
56,792,189
|
|
|
$
|
40,041,223
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
15,791,115
|
|
|
$
|
6,002,204
|
|
Amounts due to working interest partners
|
|
|
10,694,454
|
|
|
|
2,233,267
|
|
Accrued income taxes
|
|
|
204,637
|
|
|
|
1,460,137
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
26,690,206
|
|
|
|
9,695,608
|
|
|
|
|
|
|
|
|
|
|
Asset retirement obligations
|
|
|
251,811
|
|
|
|
34,628
|
|
Deferred taxes
|
|
|
4,288,786
|
|
|
|
4,552,864
|
|
Total liabilities
|
|
|
31,230,803
|
|
|
|
14,283,100
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies (Note 8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity:
|
|
|
|
|
|
|
|
|
Common stock, $.001 par value, 194,444,444 shares authorized, 45,842,782 and 45,588,948 shares outstanding, respectively
|
|
|
45,843
|
|
|
|
45,589
|
|
Additional paid-in capital
|
|
|
26,446,455
|
|
|
|
25,948,311
|
|
Accumulated other comprehensive income (loss)
|
|
|
(9,200
|
)
|
|
|
180,447
|
|
Accumulated deficit
|
|
|
(921,712
|
)
|
|
|
(416,224
|
)
|
|
|
|
|
|
|
|
|
|
Total stockholders’ equity
|
|
|
25,561,386
|
|
|
|
25,758,123
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders’ equity
|
|
$
|
56,792,189
|
|
|
$
|
40,041,223
|
|
The accompanying notes are an integral part
of the condensed consolidated financial statements.
American Eagle Energy Corporation
Condensed Consolidated Statements of
Income and Comprehensive Income
For the Three-Month and Six-Month
Periods Ended June 30, 2012 and 2011
|
|
For the Three-Month Period
|
|
|
For the Six-Month Period
|
|
|
|
Ended June 30,
|
|
|
Ended June 30,
|
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
Oil and gas sales
|
|
$
|
1,690,673
|
|
|
$
|
13,702
|
|
|
$
|
2,916,252
|
|
|
$
|
52,805
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil and gas operating expenses
|
|
|
694,954
|
|
|
|
67,508
|
|
|
|
1,101,510
|
|
|
|
115,691
|
|
General and administrative
|
|
|
867,008
|
|
|
|
438,436
|
|
|
|
2,045,700
|
|
|
|
994,767
|
|
Depreciation, amortization and depletion expense
|
|
|
270,400
|
|
|
|
13,558
|
|
|
|
567,197
|
|
|
|
29,117
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
1,832,362
|
|
|
|
519,502
|
|
|
|
3,714,407
|
|
|
|
1,139,575
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating loss
|
|
|
(141,689
|
)
|
|
|
(505,800
|
)
|
|
|
(798,155
|
)
|
|
|
(1,086,770
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
|
1,468
|
|
|
|
1,662
|
|
|
|
4,871
|
|
|
|
3,030
|
|
Dividend income
|
|
|
11,449
|
|
|
|
19,476
|
|
|
|
28,730
|
|
|
|
34,532
|
|
Interest expense
|
|
|
(521
|
)
|
|
|
-
|
|
|
|
(703
|
)
|
|
|
-
|
|
Gain on the sale of oil and gas properties, subject to amortization, net of costs
|
|
|
-
|
|
|
|
3,402,000
|
|
|
|
-
|
|
|
|
3,402,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before taxes
|
|
|
(129,293
|
)
|
|
|
2,917,338
|
|
|
|
(765,257
|
)
|
|
|
2,352,792
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax benefit (expense)
|
|
|
(17,860
|
)
|
|
|
(4,429
|
)
|
|
|
259,769
|
|
|
|
(4,429
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(147,153
|
)
|
|
$
|
2,912,909
|
|
|
$
|
(505,488
|
)
|
|
$
|
2,348,363
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.00
|
)
|
|
$
|
0.32
|
|
|
$
|
(0.01
|
)
|
|
$
|
0.26
|
|
Diluted
|
|
$
|
(0.00
|
)
|
|
$
|
0.30
|
|
|
$
|
(0.01
|
)
|
|
$
|
0.24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding -
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
45,842,782
|
|
|
|
9,112,405
|
|
|
|
45,741,054
|
|
|
|
9,112,405
|
|
Diluted
|
|
|
45,842,782
|
|
|
|
9,820,460
|
|
|
|
45,741,054
|
|
|
|
9,796,757
|
|
The accompanying notes are an integral part
of the condensed consolidated financial statements.
American Eagle Energy Corporation
Condensed Consolidated Statements of
Income and Comprehensive Income
For the Three-Month and Six-Month
Periods Ended June 30, 2012 and 2011
|
|
For the Three-Month Period
|
|
|
For the Six-Month Period
|
|
|
|
Ended June 30,
|
|
|
Ended June 30,
|
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
Net income (loss)
|
|
$
|
(147,153
|
)
|
|
$
|
2,912,909
|
|
|
$
|
(505,488
|
)
|
|
$
|
2,348,363
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive loss, net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized foreign exchange losses
|
|
|
(34,217
|
)
|
|
|
-
|
|
|
|
(34,217
|
)
|
|
|
-
|
|
Unrealized losses on securities
|
|
|
(168,385
|
)
|
|
|
(64,722
|
)
|
|
|
(87,627
|
)
|
|
|
(17,054
|
)
|
Total other comprehensive loss, net of tax
|
|
|
(202,602
|
)
|
|
|
(64,722
|
)
|
|
|
(121,844
|
)
|
|
|
(17,054
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss)
|
|
$
|
(349,755
|
)
|
|
$
|
2,848,187
|
|
|
$
|
(627,332
|
)
|
|
$
|
2,331,309
|
|
The accompanying notes are an integral part
of the condensed consolidated financial statements.
American Eagle Energy Corporation
Condensed Consolidated Statements
of Stockholders’ Equity
For the Six-Month Period Ended
June 30, 2012 and the Year Ended December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
Other
|
|
|
|
|
|
Total
|
|
|
|
Common Stock
|
|
|
Paid-In
|
|
|
Comprehensive
|
|
|
Accumulated
|
|
|
Stockholders
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Income
|
|
|
Deficit
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2010
|
|
|
9,112,405
|
|
|
$
|
9,112
|
|
|
$
|
9,231,199
|
|
|
$
|
415,463
|
|
|
$
|
(4,870,125
|
)
|
|
$
|
4,785,649
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued during acquisition
|
|
|
36,476,543
|
|
|
|
36,477
|
|
|
|
16,686,498
|
|
|
|
-
|
|
|
|
-
|
|
|
|
16,722,975
|
|
Stock based compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
30,614
|
|
|
|
-
|
|
|
|
-
|
|
|
|
30,614
|
|
Unrealized loss on securities
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(235,016
|
)
|
|
|
-
|
|
|
|
(235,016
|
)
|
Net income
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,453,901
|
|
|
|
4,453,901
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2011
|
|
|
45,588,948
|
|
|
|
45,589
|
|
|
|
25,948,311
|
|
|
|
180,447
|
|
|
|
(416,224
|
)
|
|
|
25,758,123
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock based compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
353,773
|
|
|
|
-
|
|
|
|
-
|
|
|
|
353,773
|
|
Shares issued in private placement
|
|
|
100,000
|
|
|
|
100
|
|
|
|
109,900
|
|
|
|
-
|
|
|
|
-
|
|
|
|
110,000
|
|
Shares issued from exercise of stock options
|
|
|
153,834
|
|
|
|
154
|
|
|
|
34,471
|
|
|
|
-
|
|
|
|
-
|
|
|
|
34,625
|
|
Unrealized loss on securities
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(189,647
|
)
|
|
|
-
|
|
|
|
(189,647
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(505,488
|
)
|
|
|
(505,488
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2012
|
|
|
45,842,782
|
|
|
$
|
45,843
|
|
|
$
|
26,446,455
|
|
|
$
|
(9,200
|
)
|
|
$
|
(921,712
|
)
|
|
$
|
25,561,386
|
|
The accompanying notes are an integral part
of the condensed consolidated financial statements.
American Eagle Energy Corporation
Condensed Consolidated Statements of
Cash Flows
For the Six-Month Periods Ended
June 30, 2012 and 2011
|
|
2012
|
|
|
2011
|
|
Cash flows provided by operating activities:
|
|
|
|
|
|
|
|
|
Net income (loss)
|
|
$
|
(505,488
|
)
|
|
$
|
2,348,363
|
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
Non-cash transactions:
|
|
|
|
|
|
|
|
|
Stock-based compensation
|
|
|
353,773
|
|
|
|
-
|
|
Depreciation, depletion and amortization
|
|
|
567,197
|
|
|
|
29,117
|
|
Accretion of discount on asset retirement obligation
|
|
|
6,205
|
|
|
|
707
|
|
Provision for deferred income taxes
|
|
|
(264,078
|
)
|
|
|
-
|
|
Foreign currency transaction gains
|
|
|
(10,236
|
)
|
|
|
-
|
|
Gain on the sale of oil and gas properties, subject to amortization, net of costs
|
|
|
-
|
|
|
|
(3,402,000
|
)
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
(Increase) decrease in prepaid expenses
|
|
|
(15,182
|
)
|
|
|
24,072
|
|
(Increase) decrease in trade receivables
|
|
|
(8,643,919
|
)
|
|
|
182,352
|
|
Increase in amounts due from American Eagle Energy Inc. (pre-merger)
|
|
|
-
|
|
|
|
(387,957
|
)
|
Increase in accounts payable
|
|
|
9,788,911
|
|
|
|
1,973,531
|
|
Increase in drilling pre-payments collected
|
|
|
8,461,187
|
|
|
|
788,748
|
|
Decrease in income taxes payable
|
|
|
(1,255,500
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
8,482,870
|
|
|
|
1,556,933
|
|
|
|
|
|
|
|
|
|
|
Cash flows provided by (used for) investing activities:
|
|
|
|
|
|
|
|
|
Proceeds from the sale of oil and gas properties
|
|
|
227,661
|
|
|
|
3,456,960
|
|
Proceeds from the conveyance of working interests
|
|
|
3,789,989
|
|
|
|
-
|
|
Proceeds from the sale of equipment
|
|
|
-
|
|
|
|
700
|
|
Additions to oil and gas properties
|
|
|
(14,503,946
|
)
|
|
|
(1,990,753
|
)
|
Additions to office equipment and leasehold improvements
|
|
|
(106,915
|
)
|
|
|
(1,010
|
)
|
Purchase of certificates of deposit
|
|
|
(50,000
|
)
|
|
|
-
|
|
Purchase of marketable securities
|
|
|
(51,301
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used for) investing activities
|
|
|
(10,694,512
|
)
|
|
|
1,465,897
|
|
|
|
|
|
|
|
|
|
|
Cash flows provided by financing activities:
|
|
|
|
|
|
|
|
|
Proceeds from sale of stock to a director
|
|
|
110,000
|
|
|
|
-
|
|
Proceeds from the exercise of stock options
|
|
|
34,625
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities
|
|
|
144,625
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Net increase (decrease) in cash
|
|
|
(2,067,017
|
)
|
|
|
3,022,830
|
|
|
|
|
|
|
|
|
|
|
Cash - beginning of period
|
|
|
12,151,309
|
|
|
|
2,400,362
|
|
|
|
|
|
|
|
|
|
|
Cash - end of period
|
|
$
|
10,084,292
|
|
|
$
|
5,423,192
|
|
The accompanying notes are an integral part
of the condensed consolidated financial statements.
American Eagle Energy Corporation
Notes to the Condensed Consolidated
Financial Statements
As of June 30, 2012, December
31, 2011 and
For the Three-Month and Six-Month
Periods Ended June 30, 2012 and 2011
|
1.
|
Description of Business
|
American Eagle Energy Corporation (the “Company”)
was incorporated in the state of Nevada in March 2003 under the name Golden Hope Resources. In July 2005, the Company changed its
name to Eternal Energy Corp. In December 2011, the Company changed its name to American Eagle Energy Corporation, in connection
with its acquisition of, and merger with, American Eagle Energy Inc. (“AEE Inc.”). See Note 3.
The Company engages in the acquisition, exploration,
development and producing of oil and gas properties. At June 30, 2012, the Company had entered into participation agreements related
to oil and gas exploration projects in the Spyglass Property and West Spyglass Prospect, located in Divide County, North Dakota,
and Sheridan County, Montana and the Hardy Property, located in southeastern Saskatchewan, Canada. In addition, the Company owns
working interests in mineral leases located in Richland, Roosevelt and Toole Counties in Montana.
|
2.
|
Summary of Significant Accounting Policies
|
Basis of Presentation and Principles of Consolidation
The accompanying consolidated financial statements
include the accounts of the Company and its wholly-owned subsidiaries, American Eagle Energy Inc., EERG Energy ULC (Canadian) and
AEE Canada Inc. (Canadian). All material intercompany accounts, transactions and profits have been eliminated.
These consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the United States for interim financial information and
with the instructions to Securities and Exchange Commission (“SEC”) Form 10-Q and Article 8 of SEC Regulation S-X.
The principles for interim financial information do not require the inclusion of all the information and footnotes required by
generally accepted accounting principles for complete financial statements. Therefore, these financial statements should be read
in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2011. The consolidated financial
statements included herein are unaudited; however, in the opinion of management, they contain all normal recurring adjustments
necessary for a fair statement of the condensed results for the interim periods. Operating results for the three-month and six-month
periods ended June 30, 2012 are not necessarily indicative of the results that may be expected for the year ending December 31,
2012.
In December 2011, the Company announced a 1.0-for-4.5
reverse stock split. As a result, all share and per share information included in these consolidated financial statements has been
presented on a post-reverse-split basis.
American Eagle Energy Corporation
Notes to the Condensed Consolidated
Financial Statements
As of June 30, 2012, December
31, 2011 and
For the Three-Month and Six-Month
Periods Ended June 30, 2012 and 2011
Certain amounts presented in the prior year financial
statements have been renamed or reclassified in order to conform to the current period presentation. Such reclassifications had
no effect on net loss.
Concentration of Credit Risk
At June 30, 2012, the Company had $9,325,522 on deposit
that exceeded the United States (FDIC) federally insurance limit of $250,000 per bank.
Foreign Currency Adjustments
The functional currency of the Company’s Canadian
subsidiaries is the US Dollar. All transactions are translated using historical exchange rates. Gains and losses resulting from
foreign currency transactions are included in the Company’s results of operations. The Company’s wholly-owned subsidiary,
EERG Energy ULC, which holds title to the Company’s Canadian assets and operates the Hardy Property wells, routinely conducts
transactions denominated in Canadian Dollars. The Company recognized exchange gains totaling $118,059 and $73,039 for the three-month
and six-month periods ended June 30, 2012, respectively, and losses totaling ($21,637) and $(28,584) for the three-month and six-month
periods ended June 30, 2011, respectively.
Restricted Cash
At June 30, 2012 and December 31, 2011, the Company
had $101,500 and $51,500 of restricted cash, respectively. The restricted cash consists of cash bonds required by the State of
North Dakota in order to pursue future drilling in the state. The cash is held in custody by the issuing bank in the form of certificates
of deposit and is restricted as to withdrawal or use. Interest income earned from the certificates of deposit is paid to the Company
upon maturation of the certificates of deposit. The certificates of deposit have six-month terms. However, it is the Company’s
intention to renew the certificates of deposit upon maturation and to leave the cash bond in place for the foreseeable future.
Accordingly, the restricted cash has been classified as a non-current asset.
Receivables
The Company’s accounts receivables consist
mainly of receivables from oil and gas purchasers and from joint interest owners on properties the Company operates. For receivables
from joint interest owners, the Company typically has the ability to withhold future revenue disbursements to recover non-payment
of joint interest billings. Receivables are evaluated for collectability based on the financial strength of the individual customers
or joint interest partners, as well as projected future production of the associated wells. At June 30, 2012, the Company has determined
that all receivable balances are fully collectible and, accordingly, no allowance for doubtful accounts has been recorded.
American Eagle Energy Corporation
Notes to the Condensed Consolidated
Financial Statements
As of June 30, 2012, December
31, 2011 and
For the Three-Month and Six-Month
Periods Ended June 30, 2012 and 2011
Stock-Based Compensation
The Company measures compensation cost for all stock-based
awards at fair value on the date of grant and recognizes compensation expense in its statements of operations over the service
period that the awards are expected to vest. The Company has elected to recognize compensation cost for all options with graded
vesting on a straight-line basis over the vesting period of the entire option. The Company recognized stock-based compensation
expense of $188,096 and $353,773, for the three-month and six-month periods ended June 30, 2012. The Company did not recognize
any stock-based compensation expense for the three-month and six-month periods ended June 30, 2011.
Fair Value of Financial Instruments
Fair value is the price that would be received from
the sale of an asset or paid to transfer a liability in an orderly transaction between market participants. Hierarchy Levels 1,
2 or 3 are terms for the priority of inputs to valuation techniques used to measure fair value. Hierarchy Level 1 inputs are quoted
prices in active markets for identical assets or liabilities. Hierarchy Level 2 inputs are inputs other than quoted prices included
within Level 1 that are directly or indirectly observable for the asset or liability. Hierarchy Level 3 inputs are inputs that
are not observable in the market.
The fair value of the Company’s financial instruments,
measured on a recurring basis at June 30, 2012 and December 31, 2011, were as follows:
|
|
Level 1
|
|
|
Level 2
|
|
|
Level 3
|
|
|
Total
|
|
June 30, 2012
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketable securities
|
|
$
|
1,126,324
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
1,126,324
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Marketable securities
|
|
|
1,181,077
|
|
|
|
73,357
|
|
|
|
-
|
|
|
|
1,254,434
|
|
The Company
uses level 2 inputs to determine the fair value of certain warrants to purchase sh
ares
of common stock of an entity that is traded on the Canadian National Stock Exchange. The warrants are valued using the Black Scholes
Option Pricing Model which includes a calculation of historical volatility of the stock.
American
Eagle Energy Corporation
Notes to the Condensed Consolidated
Financial Statements
As of June 30, 2012, December
31, 2011 and
For the Three-Month and Six-Month
Periods Ended June 30, 2012 and 2011
Basic and Diluted Earnings (Loss) Per Share
Basic earnings (loss) per common share is computed
by dividing net earnings available to common stockholders by the weighted average number of common shares outstanding during the
period. Diluted earnings per common share is computed in the same way as basic earnings per common share except that the denominator
is increased to include the number of additional common shares that would be outstanding if all potential common shares had been
issued that were dilutive. Diluted loss per common share for the three-month and six-month periods ended June 30, 2012 is computed
in the same way as basic loss per common share, as the inclusion of additional common shares that would be outstanding if all potential
common shares had been issued would be anti-dilutive. See Note 9 for the calculation of basic and diluted weighted average common
shares outstanding for the three-month and six-month periods ended June 30, 2012 and 2011.
|
3.
|
Acquisition of American Eagle Energy Inc.
|
On December 20, 2011, the Company finalized its merger
transaction with AEE Inc. Prior to the transaction, AEE Inc. operated as a publicly traded company with oil and gas holdings in
North Dakota, Texas and southeastern Saskatchewan, Canada and was a working interest partner to the Company with respect to its
Hardy Property and certain proved oil and gas properties and unproven oil and gas prospects located in North Dakota. The Company
acquired AEE Inc. in order to leverage the two companies’ respective oil and gas holdings.
Pursuant to the terms of the Merger Agreement, the
Company issued 36,476,543 shares of its common stock to acquire 100% of the then-outstanding shares of AEE Inc.’s common
stock, which resulted in AEE Inc. becoming a wholly owned subsidiary of the Company. Immediately subsequent to the transaction,
legacy AEE Inc. stockholders owned approximately 80% of the shares of the Company’s outstanding common stock, exclusive of
outstanding options to purchase shares of the Company’s common stock and shares of AEE Inc.’s common stock. The shares
of common stock that were issued in connection with the Company’s acquisition of AEE Inc. were registered with the SEC on
November 11, 2011.
Despite the fact the AEE Inc.’s legacy stockholders
held approximately 80% of the Company’s outstanding shares immediately following the merger, other factors present in the
structure of the transaction resulted in the Company being determined to be the legal and acquiring entity. Specific factors that
led to this conclusion included the fact that the majority of the merged company’s officers and Board of Directors membership
consists of legacy Eternal Energy Corp. officers and directors. In addition, there is no single stockholder or organized group
of stockholders of the former AEE Inc. that holds the largest minority voting interest in the merged company. Rather, the individual
who owns the largest number of shares of the merged company’s voting stock is a legacy Eternal Energy stockholder and was
a member of the Eternal Energy Corp.’s senior management and is a member of the merged company’s senior management
team.
The Company’s historical financial statements
have been prepared to give effect to the merger and to represent the historical operations of the Company through the merger date
and the consolidated results of operations for the period from the merger date through December 31, 2011. The merger was structured
to qualify as a “tax-free” transaction pursuant to Internal Revenue Service regulations.
American Eagle Energy Corporation
Notes to the Condensed Consolidated
Financial Statements
As of June 30, 2012, December
31, 2011 and
For the Three-Month and Six-Month
Periods Ended June 30, 2012 and 2011
The following table summarizes the consideration
paid by the Company to acquire AEE Inc. and the net assets acquired:
Consideration given:
|
|
|
|
|
36,476,543 shares of the Company’s common stock
|
|
$
|
16,722,975
|
|
|
|
|
|
|
Identifiable assets acquired and liabilities assumed:
|
|
|
|
|
Financial assets acquired
|
|
$
|
6,032,799
|
|
Oil and gas properties acquired (amortizable)
|
|
|
12,781,348
|
|
Oil and gas properties acquired (non-amortizable)
|
|
|
7,290,500
|
|
Financial liabilities assumed
|
|
|
(9,381,672
|
)
|
Net assets acquired
|
|
$
|
16,722,975
|
|
The amounts presented above are
based on estimated fair market values and are subject to change as additional information becomes available. Because the common
stock of both companies is very thinly traded, the Company estimated the fair market value of the shares issued based on an independent
valuation.
The financial assets acquired included
cash and cash equivalents of $5,598,916, trade and other receivables totaling $351,558, prepaid expenses totaling $7,468, marketable
securities of a related party totaling $73,357 and restricted cash totaling $1,500.
The financial liabilities assumed
consisted of trade payables and accrued liabilities totaling $3,300,491, amounts due to the Company totaling $251,081 and long-term
asset retirement obligations totaling $17,314 and current income taxes payable totaling $975,000. In addition, the Company recorded
a deferred tax liability in the amount of $4,837,786, which represents the future tax effects of the fair market value adjustments
applied to the assets of AEE Inc. upon acquisition.
Supplemental Pro Forma
Information (Unaudited)
The following pro forma financial
information for the three-month and six-month periods ended June 30, 2012 is presented as if the merger transaction had occurred
on January 1, 2011 (unaudited):
|
|
Revenue
|
|
|
Net Earnings (Loss)
|
|
For the three-months ended June 30, 2011
|
|
$
|
24,139
|
|
|
$
|
4,569,213
|
|
|
|
|
|
|
|
|
|
|
For the six-months ended June 30, 2011
|
|
$
|
99,282
|
|
|
$
|
3,608,154
|
|
American Eagle Energy Corporation
Notes to the Condensed Consolidated
Financial Statements
As of June 30, 2012, December
31, 2011 and
For the Three-Month and Six-Month
Periods Ended June 30, 2012 and 2011
The following assumptions were
used to prepare the supplemental pro forma financial information presented above:
|
·
|
No adjustments were made to reflect economies of scale or other potential cost savings that may have been achieved had the
merger occurred on January 1, 2011.
|
|
·
|
No adjustments were made relative to alternative financing strategies that may have been implemented on a combined entity basis.
|
|
·
|
The estimated fair market value of AEE Inc.’s oil and gas properties, subject to amortization,
is based on the net present value of future cash flows from proven reserves as of December 31, 2011, as calculated by an independent,
third-party engineering firm.
|
|
·
|
The estimated fair market values of AEE Inc.’s oil and gas properties, not subject to amortization,
were determined based on
prevailing
lease prices associated with acreage located in close
proximity to the acquired properties and/or the Company’s recent acreage purchase transactions as of or near to December
20, 2011.
|
Available-for-sale marketable securities at June 30,
2012 and December 31, 2011 consist of the following:
|
|
|
|
|
Gains in
|
|
|
Losses in
|
|
|
|
|
|
|
Accumulated
|
|
|
Accumulated
|
|
|
|
Estimated
|
|
|
Other
|
|
|
Other
|
|
|
|
Fair
|
|
|
Comprehensive
|
|
|
Comprehensive
|
|
|
|
Value
|
|
|
Income
|
|
|
Income
|
|
June 30, 2012
|
|
|
|
|
|
|
|
|
|
Noncurrent assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock
|
|
$
|
1,126,324
|
|
|
$
|
101,962
|
|
|
$
|
-
|
|
Total available-for-sale marketable securities
|
|
$
|
1,126,324
|
|
|
$
|
101,962
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
|
|
Noncurrent assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock and warrants
|
|
$
|
1,254,434
|
|
|
$
|
281,371
|
|
|
$
|
-
|
|
Total available-for-sale marketable securities
|
|
$
|
1,254,434
|
|
|
$
|
281,371
|
|
|
$
|
-
|
|
American Eagle Energy Corporation
Notes to the Condensed Consolidated
Financial Statements
As of June 30, 2012, December
31, 2011 and
For the Three-Month and Six-Month
Periods Ended June 30, 2012 and 2011
The fair value of substantially all securities is
determined by quoted market prices. The estimated fair value of securities for which there are no quoted market prices is based
on similar types of securities that are traded in the market.
In June 2012, the
Company exercised warrants to purchase 1,000,000 shares of common stock of Passport Energy Ltd. at an exercise price of approximately
$0.05 per share. Cash consideration paid to exercise the warrants totaled $51,301. There were no sales of marketable securities
during the six-month periods ended June 30, 2012 and 2011.
|
5.
|
Equipment and Leasehold Improvements
|
The following is a summary of equipment and improvements
as of June 30, 2012 and December 31, 2011:
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2012
|
|
|
2011
|
|
Office equipment
|
|
$
|
129,701
|
|
|
$
|
129,057
|
|
Computer equipment
|
|
|
103,906
|
|
|
|
-
|
|
Leasehold improvements
|
|
|
49,875
|
|
|
|
47,510
|
|
|
|
|
|
|
|
|
|
|
Total equipment and improvements
|
|
|
283,482
|
|
|
|
176,567
|
|
Less: accumulated depreciation and amortization
|
|
|
(173,872
|
)
|
|
|
(156,744
|
)
|
Equipment and improvements, net
|
|
$
|
109,610
|
|
|
$
|
19,823
|
|
Depreciation and amortization expense for the three-month
and six-month periods ended June 30, 2012 was $10,805 and $17,217, respectively, and $1,879 and $11,801 for the three-month and
six-month periods ended June 30, 2011, respectively.
American
Eagle Energy Corporation
Notes to the Condensed Consolidated
Financial Statements
As of June 30, 2012, December
31, 2011 and
For the Three-Month and Six-Month
Periods Ended June 30, 2012 and 2011
|
6.
|
Oil and Gas Properties
|
As of June 30, 2012 and December 31, 2011, net costs
included in the Company’s full-cost pool cost centers are as follows:
|
|
June 30, 2012
|
|
|
December 31, 2011
|
|
|
|
Amortizable
|
|
|
Non-Amortizable
|
|
|
Amortizable
|
|
|
Non-Amortizable
|
|
United States
|
|
$
|
11,160,024
|
|
|
$
|
9,667,990
|
|
|
$
|
6,816,654
|
|
|
$
|
7,295,215
|
|
Canada
|
|
|
12,412,713
|
|
|
|
-
|
|
|
|
8,981,653
|
|
|
|
-
|
|
Total
|
|
$
|
23,572,737
|
|
|
$
|
9,667,990
|
|
|
$
|
15,798,307
|
|
|
$
|
7,295,215
|
|
Hardy Property
As of June 30, 2012, the Company owns a 50%
working interest in approximately 4,300 net acres held by 6 leases, each of which is scheduled to expire on April 1, 2014.
Spyglass Property
As of June 30, 2012, the Company owns a consolidated
50% working interest in approximately 11,883 net acres within the Spyglass Property, which is held by approximately 429 leases,
with expiration dates ranging from August 2012 to February 2017.
Benrude P
roperty
As
of June 30, 2012, the Company owns a 100% working interest in approximately 743 net acres located in Roosevelt County, Montana.
The acreage is held by 32 leases, with expiration dates ranging from December 2012 to July 2015. The Company is planning to conduct
a 3-D seismic study of the Benrude Property during 2012, the results of which will be used to determine the Company’s strategy
for pursuing the proved reserves assigned to the Benrude Property.
Exploratory
Prospects
As
of June 30, 2012, the Company has entered into participation agreements in a number of exploratory oil and gas prospects, all
which are located within the continental United States. Unproven exploratory prospects are excluded from the amortizable cost
pools. Each prospect’s costs are transferred into the amortization base on an ongoing basis as the prospect is evaluated
and proved reserves are established or impairment is determined. The Company paid certain amounts upon execution of the agreements
and is obligated to share in the drilling costs of certain exploratory wells being drilled in the prospects. The capitalized costs
of the exploratory prospects are not subject to amortization because, to date, no proved reser
ves have been assigned to
the individual prospects. The nature of the capitalized costs of the unproven prospects is as follows:
American Eagle Energy Corporation
Notes to the Condensed Consolidated
Financial Statements
As of June 30, 2012, December
31, 2011 and
For the Three-Month and Six-Month
Periods Ended June 30, 2012 and 2011
|
|
YTD
|
|
|
|
|
|
Aggregate
|
|
|
|
|
|
|
June 30,
|
|
|
|
|
|
Through
|
|
|
|
|
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition costs
|
|
$
|
2,600,436
|
|
|
$
|
9,442,209
|
|
|
$
|
2,362,741
|
|
|
$
|
14,405,386
|
|
Exploration costs
|
|
|
-
|
|
|
|
520,967
|
|
|
|
206,203
|
|
|
|
727,170
|
|
Reclassifications to the amortizable pool
|
|
|
-
|
|
|
|
(758,723
|
)
|
|
|
-
|
|
|
|
(758,723
|
)
|
Impairments and sales
|
|
|
(227,661
|
)
|
|
|
(2,499,605
|
)
|
|
|
(1,978,577
|
)
|
|
|
(4,705,843
|
)
|
Total capitalized costs of exploratory prospects
|
|
$
|
2,372,775
|
|
|
$
|
6,704,848
|
|
|
$
|
590,367
|
|
|
$
|
9,667,990
|
|
Glacier Prospect
As of June 30, 2012, the Company owns an undivided
33% working interest in approximately 25,000 net acres located in Toole County, Montana. The acreage is held by approximately 400
leases, with expiration dates ranging from June 2013 to June 2015.
Because no proved reserves have yet been identified,
the Glacier Prospect has been assigned to the full-cost pool that is not subject to amortization. Management is currently in the
process of developing its exploration strategy relative to the Glacier Prospect. The Company is evaluating the results of nearby
wells drilled by other companies in order to make a determination on the future of the Glacier Prospect. The Glacier Prospect is
evaluated for impairment during each reporting period. There were no impairments evident as of June 30, 2012.
Sidney North Prospect
As of June 30, 2012, the Company owns a 100% working
interest in oil and gas leases on approximately 399 net acres located in Richland County, Montana (the “Sidney North Prospect”).
The acreage is held by approximately 14 leases, with expiration dates ranging from July 2013 to October 2015. The Company’s
management is currently evaluating this prospect. No formal determination of the ultimate viability of this prospect is expected
during the next twelve months. Management has reviewed the carrying value of this property and determined that no impairment exists
as of June 30, 2012.
West Spyglass Prospect
As of June 30, 2012, the Company owns a 25% working
interest in approximately 12,032 net acres located within the West Spyglass Prospect. The net acres are held by 288 leases, with
expiration dates ranging from February 2013 to February 2017. The Company’s management is currently evaluating this prospect.
No formal determination of the ultimate viability of this prospect is expected during the next twelve months. Management has reviewed
the carrying value of this property and determined that no impairment exists as of June 30, 2012.
American Eagle Energy Corporation
Notes to the Condensed Consolidated
Financial Statements
As of June 30, 2012, December
31, 2011 and
For the Three-Month and Six-Month
Periods Ended June 30, 2012 and 2011
Exploratory Prospect Cost Summary
The following table summarizes the costs of the Company’s
aggregate exploratory activities for all unproven prospects for the three-month period ended June 30, 2012 and the year ended December
31, 2011:
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2012
|
|
|
2011
|
|
|
|
|
|
|
|
|
Balance at the beginning of the period
|
|
$
|
7,295,215
|
|
|
$
|
590,368
|
|
Additions to exploratory costs
|
|
|
2,600,436
|
|
|
|
11,407,645
|
|
Disposals
|
|
|
(227,661
|
)
|
|
|
(2,499,605
|
)
|
Reassignments to the amortizable pool
|
|
|
-
|
|
|
|
(2,203,193
|
)
|
Balance at the end of the period
|
|
$
|
9,667,990
|
|
|
$
|
7,295,215
|
|
|
7.
|
Asset Retirement Obligations
|
The Company has recorded estimated asset retirement
obligations for the future plugging and abandonment of wells that it operates within the Hardy and Spyglass Properties. As of June
30, 2012 and December 31, 2011, the discounted value of the asset retirement obligations was $251,811 and $34,628, respectively.
The Company recognized
accretion expense of $5,333 and $6,205 for the three-month and six-month periods ended June 30, 2012, respectively, and $358 and
$707 for the three-month and six-month periods ended June 30, 2011, associated with its asset retirement obligations. The projected
plugging dates for the Company’s existing operated wells range from December 2020 to June 2036.
|
8.
|
Commitments and Contingencies
|
Drilling Obligations
The Company has the option to participate in the drilling
of future, non-operated exploratory wells related to its working interest in the Spyglass Property, should any such wells be proposed
by the other working interest owners. As of June 30, 2012, the Company has elected to participate in 34 non-operated wells located
within the Spyglass Property. As such, the Company is currently obligated to fund its non-operating working interest portion of
the drilling and future operations costs of these wells. The Company’s working interests in the Spyglass wells range from
0.03% to 22.87%. Additional wells could be proposed in the future, at which time the Company may or may not elect to participate
in such wells.
American Eagle Energy Corporation
Notes
to the Condensed Consolidated Financial Statements
As of June 30, 2012, December
31, 2011 and
For the Three-Month and Six-Month
Periods Ended June 30, 2012 and 2011
During the six-month period ended June 30, 2012, the
Company drilled and completed three oil wells within the Spyglass Property. The Company intends to drill and operate additional
horizontal and/or vertical wells within the Spyglass Property over the next year and has contracted for the use of a drilling rig
for the foreseeable future. The Company is obligated to pay all costs related to the use of the drilling rig in connection with
the drilling of 7 wells, 1 of which is currently being completed, 1 of which is currently being drilled and 5 wells that are waiting
to be spud.
Employment Agreement
In January 2012, the Company amended its three-year
employment agreements with its President and Chief Operating Officer and entered into new, two-year employment agreement with its
Chief Financial Officer. In addition to employment benefits commensurate with their positions, the President, Chief Operating Officer
and Chief Financial Officer will receive annual compensation totaling $204,000, $204,000 and $150,000, respectively. The employment
agreements contain certain buy-out provisions should the Company experience a change of control prior to the expiration of their
respective terms.
Lease Obligation
The Company currently leases office space pursuant
to the terms of a three-year lease agreement. The original lease agreement was scheduled to expire on December 31, 2011. In September
2011, the Company amended the original lease agreement and extended the term of the lease through December 31, 2014. Effective
July 1, 2012, the Company amended the lease-agreement to include additional square footage. Future lease payments related to the
Company’s office and equipment leases as of June 30, 2012 are as follows:
|
|
Amount
|
|
2012 (remainder)
|
|
$
|
51,617
|
|
2013
|
|
|
105,880
|
|
2014
|
|
|
111,174
|
|
Total
|
|
$
|
268,671
|
|
Rent expense for the three-month
and six-month periods ended June 30, 2012 totaled $18,053 and $42,891, respectively, and $19,418 and $36,960 for the three-month
and six-month periods ended June 30, 2011, respectively.
|
9.
|
Earnings (Loss) Per Share
|
Because the Company recognized a net loss for three-month
and six-month periods ended June 30, 2012, diluted loss per common share for the periods is computed in the same way as basic loss
per common share, as the inclusion of additional common shares that would be outstanding if all potential common shares had been
issued would be anti-dilutive. The following is a reconciliation of the number of shares used in the calculation of basic and diluted
loss per share for the three-month and six-month periods ended June 30, 2012 and 2011:
American Eagle Energy Corporation
Notes
to the Condensed Consolidated Financial Statements
As of June 30, 2012, December
31, 2011 and
For the Three-Month and Six-Month
Periods Ended June 30, 2012 and 2011
|
|
For the Three-Month Period
|
|
|
For the Six-Month Period
|
|
|
|
Ended June 30,
|
|
|
Ended June 30,
|
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
Net income (loss)
|
|
$
|
(147,153
|
)
|
|
$
|
2,912,909
|
|
|
$
|
(505,488
|
)
|
|
$
|
2,348,363
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding
|
|
|
45,842,782
|
|
|
|
9,112,405
|
|
|
|
45,741,054
|
|
|
|
9,112,405
|
|
Incremental shares from the assumed exercise of dilutive stock options
|
|
|
-
|
|
|
|
708,055
|
|
|
|
-
|
|
|
|
684,352
|
|
Diluted common shares outstanding
|
|
|
45,842,782
|
|
|
|
9,820,460
|
|
|
|
45,741,054
|
|
|
|
9,796,757
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share – basic
|
|
$
|
(0.00
|
)
|
|
$
|
0.32
|
|
|
$
|
(0.01
|
)
|
|
$
|
0.26
|
|
Earnings (loss) per share – diluted
|
|
$
|
(0.00
|
)
|
|
$
|
0.30
|
|
|
$
|
(0.01
|
)
|
|
$
|
0.24
|
|
On April 16, 2012,
the Company entered into a Carry Agreement with a third-party working interest partner, pursuant to which (i) that partner agreed
to fund 100% of the Company’s working interest share of the drilling and completion costs of up to six new oil and gas wells
within our Spyglass Property and (ii) the Company will convey, for a limited duration, 50% of its working interest in the pre-payout
revenues of each carried well to that partner. If payout has not occurred within two years of the commencement date for such well,
then the temporary assignment is to increase to 100% for years three through payout. Once payout has occurred (112% of the costs
on a well-by-well basis), the respective working interests in the revenues from each carried well will revert to the original working
interests in each such well. The Carry Agreement relieves the Company of approximately $12 million in what the working interest
share of the drilling and completion costs of such six wells would have been. The Company expects that it will significantly strengthen
its working capital position and allow it to pursue our short-term drilling program vigorously.
As of the date
of closing, the Company had incurred drilling costs associated with the first two wells to be covered under the Carry Agreement
totaling $3,789,989. Upon execution of the Carry Agreement, these costs were removed from the Company’s books and an offsetting
receivable was created. Pursuant to accounting rules, the assignment of a portion of the Company’s working interests in certain
existing and future wells under the Carry Agreement has been treated as a conveyance of the working interests. The Company has
disclosed the transfer of the drilling costs to the financing partner as a source of cash from investing activities on its consolidated
statement of cash flows for the six-month period ended June 30, 2012.
As of June 30,
2012, the Company has received $6,778,134 of funding under the Carry Agreement. Proceeds received pursuant to the terms of the
Carry Agreement, subsequent to the closing, are applied against the drilling and completion costs to which they relate. Additions
to oil and gas properties that occurred subsequent to the closing of the Carry Agreement are presented net of proceeds received
under the Carry Agreement on the consolidated statement of cash flows. Funds received pursuant to the Carry Agreement, prior to
the incurrence of related drilling costs, are presented as amounts due to working interest partners on the consolidated balance
sheet.
American Eagle Energy Corporation
Notes
to the Condensed Consolidated Financial Statements
As of June 30, 2012, December
31, 2011 and
For the Three-Month and Six-Month
Periods Ended June 30, 2012 and 2011
Reverse Stock Split
In December
2011, the Company declared a 1.0-for-4.5 reverse stock split. All historical share and per-share information presented below has
been restated and presented on a post-reverse-split basis.
Stock Issuances
In January
2011, the Company issued 100,000 shares of its common stock to one of its directors in exchange for cash consideration totaling
$110,000.
In March
2011, the Company issued 153,834 shares of its common stock to one of its directors in connection with the exercise of stock options.
Cash consideration received upon the exercise of the stock options totaled $34,625.
Stock Options
In January 2012, the Company granted 390,000 options
to purchase shares of its common stock to certain employees. The stock options were valued using the Black-Scholes option pricing
model and had a fair market value of $391,962 at the time of grant. The assumptions used in the Black-Scholes option pricing model
for the stock options granted in January 2012 were as follows:
Risk-free interest rate
|
|
|
0.28
|
%
|
Expected volatility of common stock
|
|
|
101
|
%
|
Dividend yield
|
|
$
|
0.00
|
|
Expected life of options
|
|
|
5 years
|
|
Weighted average fair market value of options granted
|
|
$
|
0.79
|
|
As of the date of merger, AEE Inc. had 1,732,990 options
to purchase shares of AEE Inc.’s common stock. The options were originally issued in December 2010 and had a five-year life.
In April 2012, these options were exchanged for options to purchase shares of the Company’s common stock at a price of $0.74
per share. The options are scheduled to expire in December 2015.
A summary of stock option activity for the six-month
period ended June 30, 2012 and the year ended December 31, 2011 is presented below:
American Eagle Energy Corporation
Notes
to the Condensed Consolidated Financial Statements
As of June 30, 2012, December
31, 2011 and
For the Three-Month and Six-Month
Periods Ended June 30, 2012 and 2011
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
Weighted
|
|
|
Average
|
|
|
|
|
|
|
Average
|
|
|
Remaining
|
|
|
|
|
|
|
Exercise
|
|
|
Contract
|
|
|
|
Options
|
|
|
Price
|
|
|
Term
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2010
|
|
|
820,444
|
|
|
$
|
0.23
|
|
|
|
3.8 years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options granted
|
|
|
975,000
|
|
|
|
1.18
|
|
|
|
5.0 years
|
|
Options exercised
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Options expired
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Options forfeited
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at December 31, 2011
|
|
|
1,795,444
|
|
|
$
|
0.74
|
|
|
|
4.0 years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AEE Inc. options converted
|
|
|
1,732,990
|
|
|
|
0.74
|
|
|
|
3.5 years
|
|
Options granted
|
|
|
390,000
|
|
|
|
1.18
|
|
|
|
4.6 years
|
|
Options exercised
|
|
|
(153,834
|
)
|
|
|
0.05
|
|
|
|
3.8 years
|
|
Options expired
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Options forfeited
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at June 30, 2012
|
|
|
3,764,600
|
|
|
$
|
0.77
|
|
|
|
3.6 years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable at June 30, 2012
|
|
|
2,399,600
|
|
|
$
|
0.58
|
|
|
|
3.1 years
|
|
Options outstanding
as of June 30, 2012 and December 31, 2011 that have an exercise price that is lower than the prevailing market price were deemed
to have an intrinsic value of $0.70 and $1.08 per share, resulting in an aggregate intrinsic value of $316,640 and $886,080, respectively.
The Company
recognized stock-based compensation expense of $188,096 and $353,773 for the three-month and six-month periods ended June 30, 2012,
respectively, related to stock options that were granted during December 2011 and January 2012. The Company did not recognize any
stock-based compensation expense for the three-month and six-month periods ended June 30, 2011 as all options outstanding during
that period had fully vested previously.
Shares Reserved for Future Issuance
As of June 30, 2012 and December 31, 2011, the Company
had reserved 3,764,600 and 1,795,444 shares, respectively, for future issuance upon exercise of outstanding options.
|
12.
|
Related Party Transactions
|
The Company routinely obtains legal services from
a firm for whom one of its directors serves as a principal. Fees paid to this firm totaled $10,367 and $6,618 for the six-month
periods ended June 30, 2012 and 2011, respectively.
American Eagle Energy Corporation
Notes
to the Condensed Consolidated Financial Statements
As of June 30, 2012, December
31, 2011 and
For the Three-Month and Six-Month
Periods Ended June 30, 2012 and 2011
Prior to its acquisition by the Company, AEE Inc.
entered into an agreement with Synergy Energy Resources LLC (“Synergy”) for it to provide monthly geological consulting
services to AEE Inc. One of the Company’s current directors and one current officer own material ownership interests in Synergy.
The Company purchased $84,000 and $68,000 of consulting fees from Synergy during the six-month periods ended June 30, 2012 and
2011, respectively
Effective July 15, 2012, the Company amended the
Carry Agreement (described in Note 10) with the third-party to include an additional four oil and gas wells. The amendment relieves
the Company of approximately $8 million of estimated future drilling related costs associated with the additional four wells.
PART II – OTHER INFORMATION
ITEM 6. EXHIBITS.
Exhibit
|
|
Description of Exhibit
|
31.1*
|
|
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
31.2*
|
|
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
32.1*
|
|
Certification of Chief Executive Officer pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
32.2*
|
|
Certification of Chief Financial Officer pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
101.INS*
|
|
XBRL Instance Document
|
101.SCH*
|
|
XBRL Taxonomy Extension Schema document
|
101.CAL*
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
101.DEF*
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
101.LAB*
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
101.PRE*
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
* Filed herewith.
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
AMERICAN EAGLE ENERGY CORPORATION
|
|
|
|
|
|
(Registrant)
|
|
|
|
|
|
September 13, 2012
|
/s/ Bradley M. Colby
|
|
|
Bradley M. Colby
|
|
|
President and Chief Executive Officer
|
|
Immage Biotherapeutics (CE) (USOTC:IMMG)
Historical Stock Chart
From Jun 2024 to Jul 2024
Immage Biotherapeutics (CE) (USOTC:IMMG)
Historical Stock Chart
From Jul 2023 to Jul 2024