third quarter financial report - fiscal 2005

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 6-K

Report of Foreign Private Issuer Pursuant to Rule 13a-16 or 15d-16 under the
Securities Exchange Act of 1934

For the month of   May, 2005

Commission File Number 0-29586

 EnerNorth Industries Inc. 
(Address of Principal executive offices)


2 Adelaide Street West, Suite 301, Toronto, Ontario, M5H 1L6, Canada
(Address of principal executive offices)


Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F X   Form 40-F    

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Yes     No X   

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:

Yes     No X    

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3- 2(b):
82- _________  

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 by the undersigned, thereunto duly authorized.

     EnerNorth Industries Inc.

Date: May 16, 2005                  By:____”Sandra J. Hall”____ ______
Sandra J. Hall,
President, Secretary & Director
 
 

EnerNorth Industries Inc.
Consolidated Financial Statements
Third Quarter
March 31, 2005
(Unaudited)
(Expressed in Canadian Dollars)



Notice to Reader


 
Management has compiled the unaudited interim consolidated financial information of EnerNorth Industries Inc. consisting of the Consolidated Balance Sheet as at March 31, 2005, Consolidated Statements of Operations and Deficit and Consolidated Statements of Cash Flows and notes thereto for the period ended March 31, 2005. All amounts are stated in Canadian Dollars. An accounting firm has not reviewed or audited these interim consolidated financial statements.

2 Adelaide Street West, Suite 301, Toronto, Ontario M5H 1L6,  1-866-230-3305, www.enernorth.com
 
 
 

 
          
EnerNorth Industries Inc.
          
Consolidated Balance Sheets
          
(Expressed in Canadian dollars)
          
 
    
March 31, 2005 
    
June 30, 2004
  
 
    
(unaudited) 
    
(audited
)
               
               
               
ASSETS
              
Current
              
Cash and cash equivalents
  
$
6,064,431
  
$
600,313
  
Marketable securities (Market value $2,308,111,
             
June 30, 2004 - $680,301)
    
2,018,681
   
521,039
 
Receivables
    
624,842
   
7,690,129
 
Inventories
    
-
   
466,969
 
Unbilled revenue
    
-
   
1,941,548
 
Due from co-venturer
    
-
   
923,168
 
Prepaid expenses
    
-
   
700,851
 
Investment
   
3,281,950
   
3,365,000
 
Total current assets
    
11,989,904
   
16,209,017
 
Oil and gas interests (net of accumulated
              
depletion)
    
3,882,664
   
3,750,817
 
Capital assets (net of accumulated
              
depreciation and amortization)
    
-
   
3,272,538
 
Future income tax asset
    
-
   
30,224
 
               
   
$
15,872,568
  
$
23,262,596
  
               
LIABILITIES AND SHAREHOLDERS' EQUITY
              
Current
              
Bank indebtedness
 
$
-
  
$
2,213,010
  
Accounts payable and accrued liabilities
    
350,398
   
4,368,412
 
Due to shareholder
   
-
   
42,000
 
Current portion of long-term debt
   
-
   
226,499
 
Deferred revenue
    
-
   
351,782
 
Future income tax liability
    
-
   
276,648
 
Oakwell claim
   
7,328,460
   
7,915,681
 
Total current liabilities
    
7,678,858
   
15,394,032
 
               
Long-term debt
   
-
   
542,109
 
Future income tax liability
    
-
   
25,617
 
Site Restoration
    
225,919
   
135,819
 
Total liabilities
    
7,904,777
   
16,097,577
 
               
Minority interest
    
-
   
75,141
 
               
Shareholders' equity
              
Capital stock (Note 6)
    
43,488,578
   
43,339,132
 
Deficit
    
(35,520,787
)
  
(36,249,254
)
Total shareholders' equity
  
$
7,967,791
  
$
7,089,878
  
               
   
$
15,872,568
  
$
23,262,596
  
               
               
The accompanying notes to the financial statements are an integral part of these financial statements
              
 

                   
                   
EnerNorth Industries Inc.
                  
Consolidated Statements of Operations and Deficit
                  
(Unaudited)
                  
(Expressed in Canadian dollars)
                  
   
For the nine
  
For the three
 
 
 
months ended
 
months ended
 
 
 
March 31,
 
March 31,
  
     
2005
    
2004*
    
2005
    
2004*
  
     
   
             
                           
                           
Revenue
                          
Oil and gas revenue
  
$
753,987
  
$
433,108
  
$
271,878
  
$
119,422
  
Less: royalties
    
157,778
   
68,091
   
65,834
   
12,311
 
     
596,209
   
365,017
   
206,044
   
107,111
 
                           
Expenses
                          
Operating and transportation
    
354,811
   
228,032
   
88,317
   
71,817
 
Depletion and accretion
    
546,448
   
319,746
   
184,835
   
83,534
 
Administrative expenses
    
1,873,946
   
1,372,839
   
749,972
   
755,275
 
Interest
    
1,542
   
4,102
   
359
   
460
 
     
2,776,747
   
1,924,719
   
1,023,483
   
911,086
 
Loss before the following
    
(2,180,538
)
  
(1,559,702
)
  
(817,439
)
  
(803,975
)
                           
Foreign exchange gain (loss)
    
492,781
   
(159,070
)
  
(11,050
)
  
(6,246
)
Oakwell claim
    
-
   
(2,150,000
)
  
-
   
(547,000
)
Interest income
    
221,452
   
76,156
   
56,603
   
17,089
 
Gain on sale of marketable securities
    
9,775
   
14,628
   
-
   
-
 
                           
Net loss from continuing operations before tax
    
(1,456,530
)
  
(3,777,988
)
  
(771,886
)
  
(1,340,132
)
                           
Income taxes
                          
Future (net of valuation provision)
    
-
   
(160,018
)
  
-
   
(461,101
)
Utilization of loss carryforwards
    
-
   
160,018
   
-
   
461,101
 
-
         
-
   
-
   
-
 
                           
Net loss from continuing operations
    
(1,456,530
)
  
(3,777,988
)
  
(771,886
)
  
(1,340,132
)
                           
Net income (loss) from discontinued
                         
operations (Note 5)
    
337,355
   
835,677
   
112,367
   
(420,291
)
Gain on disposition of discontinued operations
    
1,847,642
   
-
   
1,847,642
   
-
 
                           
Net income (loss)
    
728,467
   
(2,942,311
)
  
1,188,123
   
(1,760,423
)
                           
Deficit, beginning of period
    
(36,249,254
)
  
(32,085,526
)
  
(36,708,910
)
  
(33,267,414
)
Deficit, end of period
    
($35,520,787
)
  
($35,027,837
)
  
($35,520,787
)
  
($35,027,837
)
                           
                           
Net income (loss) per common share
  
$
0.18
    
($0.72
)
$
0.29
    
($0.43
)
                           
Net loss from continuing operations per
                          
common share
    
($0.36
)
  
($0.93
)
  
($0.19
)
  
($0.33
)
                           
Weighted average common shares
                          
outstanding (thousands)
    
4,059
    
4,059
    
4,059
    
4,059
  
                           
                           
Fully diluted net income per common share
  
$
0.16
    
antidilutive
  
$
0.26
    
antidilutive
  
                           
*Comparative figures have been reclassified to conform to the current periods financial statement presentation (See Notes 5 and 7).
 
                          
                           
The accompanying notes to the financial statements are an integral part of these financial statements
        
 

                   
                   
EnerNorth Industries Inc.
                  
Consolidated Statements of Cash Flows
                  
(Unaudited)
                  
(Expressed in Canadian dollars)
                  
   
For the nine months  
  
For the three months  
 
   
ended March 31  
  
ended March 31  
  
     
2005
    
2004
    
2005
    
2004
  
                           
 
                          
Cash provided by (used in)
                          
                           
Operating activities
                          
Net income (loss)
  
$
728,467
    
($2,942,311
)
$
1,188,123
    
($1,760,423
)
Adjustments to reconcile net income to
                          
net cash provided by operating activities
                          
Amortization, depletion and accretion
    
735,414
   
564,480
   
218,339
   
179,692
 
(Gain) loss on sale of capital assets
    
(2,889
)
  
-
   
(2,889
)
  
-
 
Oakwell claim
    
-
   
2,150,000
   
-
   
547,000
 
Unrealized foreign exchange (gain) loss
   
(370,646
)
  
135,000
   
133,185
   
-
 
Loss on sale of capital assets
    
(3,741,728
)
  
-
   
(3,741,728
)
  
-
 
Fair value of stock options
    
149,446
   
-
   
149,446
   
-
 
Gain on disposition of discontinued
                          
operations
    
(1,847,642
)
  
-
   
(1,847,642
)
  
-
 
Write down of capital assets
    
100,000
   
-
   
-
   
-
 
Minority Interest
    
10,569
   
-
   
95,663
   
-
 
Gain on sale of marketable securities
    
(9,775
)
  
(14,628
)
  
-
   
-
 
     
(4,248,784
)
  
(107,459
)
  
(3,807,503
)
  
(1,033,731
)
Net change in non-cash working capital
                          
Receivables
    
7,065,287
   
3,055,526
   
6,152,854
   
2,302,372
 
Inventories and unbilled revenue
    
2,408,517
   
1,153,675
   
936,565
   
(102,648
)
Prepaid expenses
    
700,851
   
90,294
   
115,398
   
41,748
 
Accounts payable and accrued liabilities
    
(4,018,014
)
  
(1,973,177
)
  
(3,806,383
)
  
(70,132
)
Restricted cash
    
-
   
426,324
   
-
   
426,324
 
Deferred revenue
    
(351,782
)
  
(2,002,102
)
  
-
   
(1,765,661
)
     
1,556,075
   
643,081
   
(409,069
)
  
(201,728
)
                           
Financing activities
                          
Bank indebtedness
    
(2,213,010
)
  
(1,606,402
)
  
(860,968
)
  
(582,890
)
Repayment of long term debt
    
(768,608
)
  
(85,439
)
  
(718,872
)
  
858
 
Repayment to shareholders
    
(42,000
)
  
(402,419
)
  
(42,000
)
  
-
 
     
(3,023,618
)
  
(2,094,260
)
  
(1,621,840
)
  
(582,032
)
     
         
       
Investing activities
                          
Purchase of capital assets
   
(61,027
)
  
(136,867
)
  
(61,027
)
  
(136,867
)
Proceeds from sale of capital assets
    
34,668
   
-
   
34,668
   
-
 
Proceeds from sale of discontinued
                         
operations
    
8,111,989
   
-
   
8,111,989
   
-
 
Oil and gas interests
    
(589,270
)
  
(1,253,926
)
  
(112,565
)
  
(463,705
)
Net change in due from co-venturer
    
923,168
   
(942,542
)
  
1,214,618
   
(275,520
)
Marketable securities
    
(1,487,867
)
  
(329,607
)
  
(1,499,242
)
  
(31,500
)
     
6,931,661
   
(2,662,942
)
  
7,688,441
   
(907,592
)
                           
Increase (decrease) in cash
    
5,464,118
   
(4,114,121
)
  
5,657,532
   
(1,691,352
)
Cash, beginning of period
    
600,313
   
6,729,283
   
406,899
   
4,306,514
 
Cash, end of period
  
$
6,064,431
  
$
2,615,162
  
$
6,064,431
  
$
2,615,162
  
                           
                           
Cash, end of period consists of:
                          
Cash
  
$
264,855
  
$
1,359,989
  
$
264,855
  
$
1,359,989
  
Money market funds
  
$
5,799,576
  
$
1,255,173
  
$
5,799,576
  
$
1,255,173
  
                           
The accompanying notes to the financial statements are an integral part of these financial statements
                    
 
 
 

EnerNorth Industries Inc.
Notes to Unaudited Consolidated Financial Statements
For the Period Ended March 31, 2005
(Expressed in Canadian Dollars)


1. Basis of Presentation

These unaudited interim consolidated financial statements have been prepared by management following the same accounting policies and methods of computation as the audited consolidated financial statements for the year ended June 30, 2004. These interim financial statements should be read in conjunction with the Company’s audited consolidated financial statements together with notes for the year ended June 30, 2004.

The Company’s primary activities include investment in, exploration and development and production of oil and gas. The unaudited consolidated financial results for the periods ending March 31, 2005 and 2004 include the accounts of the Company and it’s subsidiaries 10915 Newfoundland Limited, 11123 Newfoundland Limited and Euro India Cara Private Limited. The results of operations of its formerly wholly owned subsidiaries held through M&M Engineering Limited are accounted for as discontinued operations (See Notes 5 and 7).

Operating results for the nine months ended March 31, 2005 are not indicative of the results that may be expected for the full year ending June 30, 2005.

These consolidated financial statements have been prepared by management in accordance with accounting principles generally accepted in Canada.

2.  
Seasonality and Trend Information

Oil and gas production is not a seasonal business, but increased consumer demand or changes in supply in certain months of the year can influence the price of produced hydrocarbons, depending on the circumstances. Production from the Company's oil and gas properties is the primary determinant for the volume of sales during the year.

3.  
Change of Accounting Policy

During 2005, the Company adopted the recommendations of the new CICA Handbook Section 3870, stock-based compensation and other stock-based payments. The primary difference between this new accounting policy and the former policy is that the company calculates the fair value of stock options issued to directors and employees. The Company has chosen to adopt the recommendation prospectively.

As a result of adopting the new accounting policy the Company records compensation expense on all stock options granted. The fair value is recorded at their fair value at date of issuance and the amount is estimated using the Black-Scholes Option Pricing Model. During the three months ended March 31, 2005 the Company recorded $149,446 of compensation expense related to the issuance of stock options.

4.  
Segmented information

The Company's operations consist of one operating segment in the oil and gas industry, which includes investment in, exploration, development and production of oil and gas. These operations consist of one cost centre, Canada.

 

EnerNorth Industries Inc.
Notes to Unaudited Consolidated Financial Statements
For the Period Ended March 31, 2005
(Expressed in Canadian Dollars)


5.  
Discontinued Operations

On February 1, 2005 the Company divested its interests in M&M for cash proceeds of Cdn. $7,361,989. The transaction was closed in escrow on February 1, 2005 pending completion of certain closing conditions that were satisfied on February 4, 2005. The transaction is a purchase of 100% of the common shares and 100% of the preferred shares of M&M held by the Company. Prior to closing, the Company retracted preferred shares of M&M for Cdn $1,000,000 cash. The Company received shareholder approval for the transaction at a special meeting of shareholders held on January 26, 2005.

The results of M&M have been accounted for as discontinued operations. Estimated disposal costs have been included in the net income (loss) from discontinued operations.

6.  
Share Capital
 
(a)  
Authorized and Issued:

Authorized: 
Unlimited number of Common Shares, without par value
Unlimited number of Class A Preference Shares, Series I
Unlimited number of Class A Preference Shares, Series II

Issued
Common shares
        #         Consideration
Balance, as at June 30, 2004         4,059,009          $43,339,132
 
Balance, as at March 31, 2005         4,059,009          $43,488,578

(b)  
Common share purchase warrants outstanding consist of the following:

Exercise
Expiry
2005
2004
Price
Date
#
#
US$ 1.80
December 31, 2004
-
533,332
   
-
533,332

(c)  
Common share purchase options outstanding consist of the following:


Exercise
Expiry
2005
2004
Price
Date
#
#
US$0.75
February 28, 2010
600,000 
-
   
600,000  
-

7.  
Comparative Figures

As a result of discontinued operations the comparative unaudited consolidated financial statements have been reclassified from statements previously presented to conform to the March 31, 2005 presentation.