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 quarter period ended: September 30, 1995
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:# 0-8447
DOL RESOURCES, INC.
(Exact Name of Registrant as specified in its Charter)
WYOMING 82-0219465
(State or other Jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
13636 Neutron Road, Dallas, Texas 75244-4410
(Address of Principal Executive Offices) (Zip Code)
(214) 661-5869
(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 Act of 1934 during the preceding 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
The number of shares outstanding of each of the Issuer's Classes
of Common Stock, as of the close of the period covered by this
report:
Common - $0.01 Par Value - 20,671,254 shares at September 30,
1995.
<PAGE>
DOL RESOURCES, INC.
Index to Form 10-Q for Fiscal Quarter ended September 30, 1995
Page No.
PART 1 - Financial Information
Condensed Unaudited Balance Sheet, September 30, 1995
and December 31, 1994 3 - 4
Condensed Unaudited Statement of Income,
Nine Months ended September 30, 1995 and 1994 5
Condensed Unaudited Statement of Shareholder's
Equity Nine Months ended Sept. 30, 1995 and 1994 6
Condensed Unaudited Statement of Changes in
Financial Position Nine-Months Ended
September 30, 1995 and 1994 7
Summary of Significant Accounting Policies and
Notes to Condensed Unaudited Financial Statements 8-13
Management's Discussion and Analysis of Condensed
Financial Condition and Results of Operations 14
PART 11 - Other Information
Item 6(b) - Exhibits and Reports on Form 8-K 15
Signature Pursuant to General Instruction E 15
All other items called for by the instructions are omitted as
they are inapplicable, not required, or the information is
included in the condensed financial statements or notes thereto.
2
<PAGE>
DOL RESOURCES, INC.
BALANCE SHEET
(Unaudited)
ASSETS
<TABLE>
<S> <C> <C>
Sept. 30 Dec. 31
1995 1994
CURRENT ASSETS
Cash $ 53,641 $ 26,127
Marketable securities, at
lower or aggregate cost
or market, cost $24,175
in 1995 and 1994 - Note 2 1,924 1,924
Trade accounts receivable,
less allowance for doubtful
accounts of $1,711, ($1,711 in 1994
Note 1) 20,448 19,050
Due from related parties-Note 4 267,494 175,102
Prepaid Expenses 37,500 37,500
Total Current Assets 381,007 259,703
PROPERTIES - Using full costing-
Note 1
Production payment 100,000 100,000
Exploration, acquisition &
development, cost, net of
allowance for reduction of
oil & gas assets of $137,083
in 1985 1,654,290 1,654,290
Total cost 1,754,290 1,754,290
Less accumulated depletion 1,294,528 1,284,028
Net Properties 459,762 470,262
AUTOMOBILES, FURNITURE & FIXTURES
At cost - Note 1
Furniture and fixtures 6,476 6,476
Less accumulated depreciation 3,724 3,238
Net furniture and fixtures 2,752 3,240
OTHER ASSETS
Undeveloped coal royalties-Note 8 10,156 10,156
Other accounts receivable-Note 7 79,384 84,534
89,540 94,690
TOTAL ASSETS 933,061 827,895
</TABLE>
3
<PAGE>
DOL RESOURCES, INC.
BALANCE SHEET
(Unaudited)
<TABLE>
<S> <C> <C>
Sept. 30 December 31,
1995 1994
CURRENT LIABILITIES
Notes payable - Note 3 375,000 244,187
Accounts payable 29,973 29,759
Accrued expenses -0- 28,067
Total current liabilities 404,973 302,013
LONG-TERM LIABILITIES
Notes payable - Note 4 and 12 78,590 84,122
Total Long-Term Liabilities 78,590 84,122
STOCKHOLDERS' EQUITY
Capital Stock, common,
$.01 par value:
Authorized 25,000,000 shares
issued and outstanding
20,671,234 shares at 6-30-95
and 12-31-94 206,713 206,713
Capital in excess of
par value 1,502,741 1,502,741
Accumulated deficit (1,259,581) (1,267,319)
Treasury Stock ( 375) ( 375)
449,498 441,760
TOTAL 933,061 827,895
</TABLE>
4
<PAGE>
DOL RESOURCES, INC.
CONDENSED UNAUDITED STATEMENT OF INCOME
<TABLE>
<S> <C> <C> <C>
3 Months 9 Months 9 Months
Ended Ended Ended
9-30-95 9-30-95 9-30-94
Operating Revenue:
Oil and Gas Sales 11,640 36,060 48,489
Interest and other income 2,264 7,797 8,925
Total 13,904 43,857 57,414
Operating Expenses:
Depletion,depreciation
and amortization 3,662 10,986 13,191
General and administrative 141 1,574 3,402
Interest 1,517 2,585 -0-
Salaries -0- -0- 23,070
Production Taxes 1,281 3,796 5,096
Lease Operating Expense 4,831 17,178 16,286
Lease Rentals -0- -0- -0-
Total Operating
Expenses 11,432 36,119 61,045
Net Inome (Loss) before income
taxes 2,472 7,73 (3,631)
Provision for income taxes
(note 6) -0- -0- -0-
Net Income (Loss) 2,472 7,738 (3,631)
Weighted Average Number of
Common Shares
Outstanding 20,671,254 14,921,25 20,671,254
Earnings (Loss) for
Common Share $.00001 $.00004 $(.0002)
The accompany notes are an integral part of this statement.
</TABLE>
5
<PAGE>
DOL RESOURCES, INC.
CONDENSED UNAUDITED STATEMENT OF STOCKHOLDER'S EQUITY
Nine Months ended September 30, 1995 and 1994
<TABLE>
<S> <C> <C> <C> <C>
Capital Stock Capital in
Number of Excess of Accumulatted Treasury
Shares Amount Par Value Deficit Stock
Balance at
1/1/95 20,671,254 206,713 1,502,741 (1,267,319) ( 375)
Net Income -0- -0- -0- 7,738 -0-
Balance at
9/30/95 20,671,254 206,713 1,502,741 (1,259,581) ( 375)
Balance
1/1/94 14,921,254 149,213 1,422,693 (1,253,765) ( 375)
Net Income -0- -0- -0- ( 3,631) -0-
Balance at
9/30/94 14,921,254 149,213 1,422,693 (1,257,396) ( 375)
</TABLE>
6
<PAGE>
DOL RESOURCES, INC.
CONDENSED UNAUDITED STATEMENT
OF CHANGES IN FINANCIAL POSITION
<TABLE>
<S> <C> <C>
Nine Months Ended
September 30, 1995 Sept. 30, 1994
Financial Resources Provided
By Operations:
Net Income 7,738 ( 3,631)
Items not requiring outlay
of working Capital:
Depletion, Deprec. and
Amortization 10,986 13,191
Working Capital provided by
operations 18,724 9,560
Reduction in Properties -0- -0-
Reduction in other Assets 5,150 5,912
Increase in long term debt -0- -0-
Total Resources 23,874 15,472
Financial Resources Applied to:
Retirement of long-term debt 5,532 6,608
Increase in Properties -0- -0-
Total 5,532 6,608
Net Increase (Decrease) in
Working Capital 18,342 8,864
Working Capital at begin.
of period (42,310) (82,439)
Working Capital at end
of period (23,968) (73,575)
</TABLE>
7
<PAGE>
DOL RESOURCES, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1. Summary of Significant Accounting Policies
Organization and Operations
The Company was organized on November 6, 1973 under the
laws of the State of Wyoming. Its primary activities
have been the acquisition of interests in various oil
and gas properties, coal properties (Note 8) and
exploration for oil and gas.
Allowance for Bad Debts:
Accounts receivable from participants in oil and gas
exploration are estimated to be at least 95%
collectible, consequently a 5% allowance for bad debts
has been established against those receivables.
Receivables from the sale of oil and gas are fully
collectible, as accruals are based primarily on
collection of oil and gas sales subsequent to year-end.
Properties:
The Company uses the full cost method of accounting for
oil and gas acquisition, exploration and development
costs. The Company has operations only within the
continental United States and consequently has only one
cost center.
All costs associated with property acquisition,
exploration and development activities are capitalized
within the cost center. No costs related to
production, general corporate overhead or similar
activities are capitalized.
Capitalized costs within the cost center are amortized
on the units-of-production basis using proved oil and
gas reserves. The carrying value of capitalized cost
is limited to the sum of (A) the present value of
future net revenues from estimated production of proved
oil and gas reserves, plus (B) the cost of properties
not being amortized, plus (C) the lower cost or
estimated fair value of unproved properties included
inn the costs being amortized less (D) income tax
effects related to differences between book and tax
basis of the properties involved. For the year ended
December 31, 1985, total capitalized costs exceeded the
cost center ceiling by $137,083. The excess was
expense to current operations.
8
<PAGE>
DOL RESOURCES, INC.
NOTES TO FINANCIAL STATEMENTS (CONT.)
NOTE 1: Sales and abandonments of oil and gas properties are
accounted for as adjustments of capitalized costs, with
no gain or loss recognized.
Drilling inn progress is included in the cost center
with depletion being calculated on all costs with the
cost center.
Automobiles, Furniture and Fixtures
Depreciation is computed by the straight-line method on
the cost of automobiles and furniture and fixtures at
rates based on their estimated service lives.
Estimated lives in use are as follows:
Automobiles 4 - 5 years
Furniture and Fixtures 5 - 12 years
During the year ended 12-31-87, all automobiles,
furniture and fixtures were sold. Additional furniture
and fixtures were acquired from an affiliate during
1988 as payment on accounts receivable.
Earnings per Common Share
Earnings per common share were computed by dividing the
net loss by the weighted average number of common
shares outstanding during the year.
NOTE 2. Marketable Securities
Marketable securities are valued at the lower
of cost or market value.
<TABLE>
<S> <C> <C>
1995 1994
Aggregate Cost 24,175 24,175
Aggregate Market Value 1,924 1,924
Unrealized Loss* 22,251 22,251
</TABLE>
*The unrealized loss on marketable securities
is charged to operations.
9
<PAGE>
DOL RESOURCES, INC.
NOTES TO FINANCIAL STATEMENTS (CONT.)
NOTE 3: Notes Payable
Notes payable consist of the following:
December 31, 1994
Monthly Interest Due Within Due After
Installment Rate One Year One Year
1994
Note 1 Due 10-4-87 * 140,000 $ -0-
Note 2 Due 5-15-86 ** 104,187 -0-
244,187
1995 September 30, 1995
Note 1 Due 1-1-96 ** 375,000 $ -0-
* First City Bank of Dallas, prime - 2%
** Interest only payable monthly at
Lender's prime + 2% for twelve
months commencing September 3,
1986; $4,500 monthly plus interest
for twelve months commencing 10-3-
87. The entire remaining balance
plus accrued interest was due
October 1, 1988.
*** Gateway National Bank. Interest
only payable monthly AT 7.08%
per annum over a year of 360 days.
10
<PAGE>
NOTE 4: Related Party Transactions:
As reported in the registrants 10-Q for the
quarter ended June 30, 1984, Featherstone
Development Corp. owned 3,245,099 shares.
Featherstone Farms, Ltd. owned 609,058
shares, and Olen F. Featherstone II owned
654,097 shares of DOL Resources, Inc. common
stock from January 1, 1982 to April 14, 1984.
The Featherstone group had a total of 4, 509,
254 shares of common stock representing
approximately 31.9% of the total outstanding
stock of DOL Resources, Inc. at December 31,
1983. On April 16, 1984 all of their
restricted shares in Petro Imperial
Corporation of Dallas, Texas, a Utah
Corporation controlled by Commercial
Technology, Inc. Petro Imperial Corporation
purchased an additional 500,000 shares of DOL
Resources, Inc. common stock also on that
date.
The Company acquired by assignment from Petro
Imperial Corp. in 1987 accounts receivable of
$100,000 from Comtec Superior Management Co.
and $139,719 from Comtec Glauber Management
Co. as contributed capital. Both are
affiliated companies. This was reversed in
December, 1991. The Company ended 1994 with
account receivable from Glabuer Management
Corp. (the parent company) of $175,102. The
balance of this account on Sept. 30, 1995 was
$267,494.
NOTE 5: Commitments:
The Company had the following lease
obligations:
<TABLE>
<S> <C> <C>
Coal Oil & Gas
Leases Leases
1993 $ -0- $ -0-
1994 -0- -0-
After 1994 -0- -0-
11
<PAGE>
DOL RESOURCES, INC.
NOTES TO FINANCIAL STATEMENTS (CONT.)
NOTE 6: Income Taxes
The company as of December 31, 1994 had a net
operating income loss carryover for income
tax purposes of approximately $ 936,000. The
carryover is available to offset taxable
income of future years and expires as
follows:
1996 265,000
1997 148,000
1998 241,000
1999 14,000
2000 109,000
2001 40,000
2002 48,000
2003 3,000
2004 34,000
2007 14,000
2008 19,000
2009 1,000
936,000
The Company also had approximately $27,000 of
investment tax credits available for
carryover against future federal income tax
liabilities.
For financial reporting purposes, the net
operating loss has been used to offset prior
deferred income taxes. To the extent that
the net operating loss carryovers are
utilized for income tax purposes in future
years, the deferred income taxes eliminated
to give recognition to the carryover, as well
as credits related to timing differences of
the current year not recorded, will be
reinstated.
Because of timing differences related
principally to intangible drilling costs,
cumulative losses for income tax reporting
purposes exceed those reported by
approximately $576,000. Because of the
uncertainty as to realization, no future tax
benefits are recognized at December 31, 1994.
12
<PAGE>
NOTE 7: Legal Proceedings:
On November 20, 1979, Phillips Petroleum
Company filed a complaint with the Federal
Energy Regulatory Commission (Docket No.
C180-70-00) against DOL Resources, Inc. and
other producers alleging that certain
producer respondents abandoned the sale of
natural gas to Phillips without first
obtaining necessary Commission authorization
under Section 7(b) of the Natural Gas Act.
The Commission ruled in favor of Phillips on
April 16, 1985. Effective December 1, 1985,
DOL's share of the settlement to be paid from
future production from the Miller-Jacobs #1
well as follows: $160,000 payable out of 30%
of gas reserves accruing to its interest in
production for the period December 1, 1985
through November 30, 1989, and payable out of
50% of gas revenues accruing to its interest
in production on and after December 1, 1989.
The situation arose prior to present
management's association with DOL Resources,
Inc. DOL has since entered into an agreement
with past management and will recover the
entire amount on the basis of the amounts of
production withheld by Phillips.
NOTE 8: Undeveloped Coal Royalties
The undeveloped coal royalties were received
inn exchange for stock in the company from
Discovery Oil, Ltd. (at the time the parent
company of DOL Resources, Inc.) in a related
party transaction inn prior years. These
coal royalties cover approximately 2,901
gross acres and 58 net acres at the end of
1994. There were no coal lease expirations
in 1994 and 1995. Development is not under
control of the company.
13
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE
CONDENSED UNAUDITED STATEMENT OF INCOME
The following is Management's discussion and analysis of
certain significant factors which have affected the Company's
earnings during the period included in the accompanying Condensed
Unaudited Statement of Income.
A summary of the period to period changes in the principal
items included in the Condensed Unaudited Statement of Income is
as shown below:
Nine Months
Ended Sept. 30,
1995 and 1994
</TABLE>
<TABLE>
<S> <C>
Net Sales (12,429)
Interest and Other Income ( 1,128)
General & Administrative ( 1,828)
Depletion, Depreciation
and Amortization ( 2,205)
Interest Expense 2,585
Net Income (Loss) 11,369
</TABLE>
Oil and gas sales decreased as compared to the same period
last year due to a decrease in the selling price of oil and gas,
and normal decline in production.
The recurring cash flow for the first nine months of 1995
approximated $7,800 per month. General and Administrative
expenses decreased due to a decrease in payroll taxes, Part-time
salaries, were eliminated to off-set monthly interest payments on
newly negotiated note payable.
Management expects a slow upward trend in oil and gas prices
to continue beyond $20.00 per Bbl. This would not only increase
revenues and cash flow but would enhance our ability to raise
much needed funds for drilling additional wells. It is the
opinion of management that a minimum of $25.00 per Bbl. oil is
needed in order to expand operations and replace depleted
reserves. Meanwhile a continuing effort is being made to
increase production, and consequently revenues by seeking out and
negotiating joint-venture recompletion projects where positive
reserve information exists.
Review of Independent Public Accountants:
The information contained in substantially all financial
statements accompanying this report were supplied by internal
accountant of registrant. Although such statements have not been
reviewed by registrant's certified public accountant they are
available for review.
14
<PAGE>
15
Other Information
No reports on Form 8-K were filed by the Company in the
quarter for which this report is filed.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
DOL RESOURCES, INC.
/s/ Fred M. Updegraff
Fred M. Updegraff
Vice President, Treasurer and
Principal Accounting Officer
Date: October 30, 1995
16
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1995
<PERIOD-END> SEP-30-1995 SEP-30-1995
<CASH> 53,641 26,127
<SECURITIES> 1,924 1,924
<RECEIVABLES> 289,653 195,863
<ALLOWANCES> 1,711 1,711
<INVENTORY> 0 0
<CURRENT-ASSETS> 381,007 259,703
<PP&E> 1,754,290 1,754,290
<DEPRECIATION> 1,294,528 1,284,028
<TOTAL-ASSETS> 933,061 827,895
<CURRENT-LIABILITIES> 404,973 302,013
<BONDS> 0 0
<COMMON> 206,713 206,713
0 0
0 0
<OTHER-SE> 0 0
<TOTAL-LIABILITY-AND-EQUITY> 933,061 827,895
<SALES> 13,904 43,857
<TOTAL-REVENUES> 13,904 43,857
<CGS> 0 0
<TOTAL-COSTS> 11,432 36,119
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 1,517 2,585
<INCOME-PRETAX> 2,472 7,738
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 2,472 7,738
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 2,472 7,738
<EPS-PRIMARY> .00 .00
<EPS-DILUTED> .00 .00
</TABLE>
