UNITED STATES
SECURITIES & EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the transition period from to
Commission File Number 0-8847
DOL RESOURCES, INC.
(Exact Name of Registrant as Specified in Charter)
83-0219465
Wyoming I.R.S.
Employer
State of Other Jurisdiction of Identification No.
Incorporation or Organization
13636 Neutron Road, Dallas,Texas 75244-4410
(Address of Principal Executive Office) (Zip code)
Registrant's Telephone Number:(214) 661 5869
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT
Title of each class Name of each exchange on which
registered
None None
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
Common Stock, $0.01 Par Value
(Title of Class)
Indicate by check mark whether Registrant has (i) filed all
reports required by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the proceeding twelve months, and
(ii) been subject to such filings requirements for the past
ninety (90) days.
Yes. X No.
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 4-05 of Regulations S-K is not contained here,
and will not be contained, to the best of registrant's knowledge
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. ( )
At March 1, 1996 the aggregate market value of the shares of
Common Stock held by non-affiliates of the registrant was
approximately $137,754. At such date there were 20,671,254
shares of the registrant's Common Stock outstanding.
<PAGE>
PART 1
Item 1. Business
DOL Resources, Inc. ("Registrant" or "the company") was
incorporated November 6,1973 under the laws of the State of
Wyoming.
The Company buys, leases and sells oil and gas properties.
It also explores and develops these properties usually with
others through joint ventures or farmouts.
The economic success of Registrant depends on its ability to
locate and purchase or lease valuable oil and gas prospects or
mineral deposits. It must further sell or lease these deposits
or prospects to others at a profit or develop the properties
itself in conjunction with others.
To accomplish these goals, Registrant will encounter
competition from major oil companies and dependent operators
attempting to acquire prospective oil and gas leases and other
mineral interests.
These sources of competition maybe both large and small
energy oriented companies operating in states in which Registrant
does business. Some of these competitors are major oil and gas
companies with substantial reserves and earnings records. Others
are small independents with varying degrees of stability. Some
not only produce oil and gas but refine and market petroleum
products. Registrant may be in a position by competitive
disadvantage with many of these companies in that they have a
greater source of capital, technical and management talent,
research facilities and sources of information.
Registrant has sold certain coal properties to others
retaining an overriding royalty interest. Although Registrant
had no additional expense in developing these properties in which
a royalty is retained, it also has no control over when-if ever-
these properties are developed.
If coal is discovered under lease in which Registrant owns
an economic interest, the availability of a ready-market for coal
will depend upon numerous factors beyond Registrant's control
including the expense of domestic production and imports of coal,
proximity of transportation and the effect of state and federal
regulations on production of coal.
Compliance with statutory requirements respecting
environmental quality may necessitate significant capital outlays
which may materially affect the earning power of the Company, or
may cause material changes in its proposed business. In 1995
Registrant did not expend any funds to comply with environmental
regulations. It does not contemplate spending funds incidental
to its operation in 1996 to comply with environmental
regulations.
1
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Registrant did not participate in the drilling of any wells
in 1995. Registrant had no paid employees.
The business of the Company is seasonal only to the extent
that weather conditions, particularly snow and cold in the
winter, impede the ability of it or others who may be devloping
properties in which it has an interest to conduct exploratory
activities or drilling or mining operations.
Registrant is engaged in two lines of business (1) the
exploration for the sales of oil and gas, and (2) investments in
natural resource properties.
The operations pertaining to the exploration or and sales of
oil and gas involve actively participating in drilling for oil
and gas and sale of subsequent production. The investment in
natural resource properties involves buying and selling the right
to explore for or produce the resources from the land owners
property.
The following details Registrant's operations in the
described lines of business:
Year Ended December 31,
1995 1994 1993
Sales to Unaffiliated
Customer
Sales of Oil and Gas 55,436 56,627 57,504
Investment in natural
resource properties -0- -0- -0-
Operating profit or
(loss)
Sales of oil & gas 5,624 10,028 5,353
Investment in natural
resource properties: -0- -0- -0-
Identifiable assets:
Sale of oil & gas 546,815 567,644 593,907
Investment in
natural resource
properties: 10,156 10,156 10,156
General corporate assets 370,171 250,095 205,536
2
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Item 2 Oil and Gas Properties:
For the following discussion, gross well or acre is a well
or acre in which an interest is owned. The number of gross wells
is the total number of wells in which a working interest is
owned.
A net well or acre is deemed to exist when the sum of
fractional ownership working interests in gross wells to acres
equals one. the number of net wells or acres is the sum of the
fractional working interests owned in gross wells or acres as
expressed as whole numbers and fractions thereof.
A summary of Registrant's oil and gas properties as of
December 31, 1995 is as follows:
Gross Acres Net Acres Costs
Undeveloped acres:
Leasehold Interest:
Oil and Gas:
Wyoming 792 792 -0-
North Dakota 280 8 -0-
1,072 800 -0-
Developed Acres:
Leasehold Interest:
Oil and Gas:
Wyoming 7,768.4 363 986,133
Louisiana 640 13 17,106
New Mexico 1,240 30 110,464
North Dakota 40 1 44,770
Texas 80 1 7,876
New York 522 1.3 -0-
10,289.4 409.3 1,116,349
Oil and Gas Production: As of December 31, 1995 the
Company owns the following productive wells:
Oil and Gas
Oil Gas (Dual Producers)
Gross Wells 14 5 14
Net Wells 1.32915 .54217 .83125
3
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From the drilling efforts and from production purchased from
others, Registrant's yearly production of crude oil and gas has
been as follows:
Year Crude Oil in Barrels Gas in MCFs
1993 1,777 16,529
1994 1,723 14,603
1995 1,743 11,414
The average sales price (including transfers) per unit of
oil and gas produced is as follows:
1995 1994 1993
Oil - Barrels 18.85 15.97 18.53
Gas - MCF 1.79 1.99 1.72
The average production (lifting) cost per unit of production is
as follows:
1995 1994 1993
Oil - Barrels 9.55 9.64 11.40
Gas - MCF .58 .62 .90
Exploratory Wells
Producers Dry Holes Total Wells
Year Drilled Gross Net Gross Net Gross Net
1995 0 0 0 0 0 0
1994 0 0 0 0 0 0
1993 0 0 0 0 0 0
Developed Wells
Producters Dry Wells Total Wells
Year Drilled Gross Net Gross Net Gross Net
1995 0 0 0 0 0 0
1994 0 0 0 0 0 0
1993 0 0 0 0 0 0
4
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Reserves: The following are reserve estimates as of December
31,
Proved Oil and Gas Reserves: Oil (bbls) (Gas (MCF)
1995 32,938 73,209
1994 34,567 84,423
1993 36,421 96,628
Proved Developed Oil and Gas Reserves:
1995 8,968 73,209
1994 10,597 84,423
1993 12,451 96,628
The following are estimated net revenues from production of oil
and gas reserves as of December 31, 1995.
Proved
Proved Developed
Reserves
1996 (24,419) 29,751
1997 81,487 26,007
1998 65,203 22,643
Remainder 198,603 99,593
320,874 177,994
As of December 31, 1994.
1995 (20,124) 34,046
1996 85,231 29,751
1997 68,567 26,007
Remainder 221,247 122,237
354,921 212,040
Present value of estimated future net reserves, computed using a
discount factor of 10% as of December 31, 1995.
1995 175,078 85,358
1994 199,464 109,744
5
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The reserve estimates for all properties were completed by
management. No reserve figures have been filed with or reported
to any other regulatory authorities or agencies. All of the
reserves of Registrant are located entirely in the United States.
Registrant has annual rental obligation from $.24 to $1.00
per acre on all of it's leasehold oil, gas and coal properties on
which there is no production. If these payments are not made
when due, the leases terminate. Additionally, the leases
terminate at the end of this term unless production is obtained
in which case the lease continues as long as production
continues.
Coal Properties: In 1975, Registrant acquired certain coal
properties. These properties were located primarily in the
Powder River Basin portion of the State of Wyoming.
Subsequently, some of these leases were sold and an overriding
royalty retained. No cal leases have been sold since 1977.
Royalty interest as of December 31, 1995 are:
Gross acres - - 2,901
Net acres - - 58
Cost - - 10,156
None of the coal properties described above are producing and
Registrant is attempting to find others to purchase these
properties.
Registrant follows the policy of capitalizing all property
acquisition costs. Such costs are charged to operations through
depletion when production is obtained. At the time of the sale
of a lease where no interest is retained in the property, the
costs of the property is charged to operations at that time. If
at the time of the sale Registrant retains a nonoperating
interest, the carrying value of the property is written down in
an amount representing its estimated realizable value computed on
the basis of geological estimates of proven primary reserves. If
no geological estimates of proven primary reserves are available
on the nonoperating interest retained, the entire cost associated
with the property is charged to operations at the time of the
sale. If Registrant determines that a property is not capable
of profitable development, all nonrecoverable costs applicable to
the property are charged against operations at the time such
determination is made.
6
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Gold Properties: In 1980, Registrant acquired placer gold mining
claims in the Mesquite Mining District of Imperial County,
California by cancelling a promissory note from non-affiliated
entities in the sum of $125,247, principal and accrued interest.
These claims cover approximately 20,800 acres. In 1983, the
Company sold this property for $20,000. DOL retained a royalty
interest valued at $10,000. In 1985 the claims were abandoned
and expensed.
Item 3. Legal Proceedings:
On November 20, 1979, Phillips Petroleum Company (Phillips)
filed a complaint (Docket No. C1-80-70-000) with Federal Energy
Regulatory Commission (FERC) against Registrant and other
producers alleging certain producer respondents had abandoned the
sale of natural gas from the Miller Jacobs #1 (the well) to
Phillips without having obtained 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 Registrant's share of the settlement
to be paid from future production from the Well is $160,000
payable out of 30% of gas revenues accruing to its interest for
the period December 1, 1985 through November 30, 1989 and 50% of
gas revenues accruing to its interest in production on and after
December 1, 1989. This situation arose prior to present
management's ownership in Registrant and management has since
entered into an agreement with former management whereby
Registrant is to recover 100% of the amount withheld by Phillips.
There are no other pending legal proceedings to which
Registrant is a party or of which any of its property is subject.
Item 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
7
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PART 11
Item 5. Market for Registrant's Common Equity and Related
Stockholders Matters.
The company's shares are traded over-the-counter. The range
of quoted bid prices are as follows:
1st quarter 2nd quarter 3rd quarter 4th
quarter
High Low High Low High Low High Low
1995 .01 .01 .01 .01 .01 .01 .01 .01
1994 .01 .01 .01 .01 .01 .01 .01 .01
The source for the prices quoted is as reported by the
National Association of Securities Dealers and does not include
retail markups, mark-downs, commissions or other adjustments, and
does not represent actual transactions.
There were approximately 2,491 holders of record of Company's
of the common stock as of March 16, 1996.
No dividends have been declared in the Company's history.
Wyoming law generally provides that dividends may be declared and
paid only out of the unreserved and unrestricted earned surplus
of the corporation except when the Articles of Incorporation of a
corporation engaged in the business of exploiting natural
resources so provide, dividends may be declared and paid out of
the depletion reserves.
Registrant presently has no unreserved and unrestricted earned
surplus and its Articles of Incorporation do not provide that
dividends may be paid from deletion reserves.
8
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Item 6. Selected Financial Data:
1995 1994 1993 1992 1991
Operating revenues $56,608 $68,299 $69,181 $77,275 $113,800
Income (loss from
continuing opers.) 4,122 (13,554) (31,192) (23,417) 1,524
Income (losses) from
continuing operations
per share .0003 (.0009) (.002) (.0016) .0001
Total Assets 927,142 827,895 809,599 846,132 876,966
Long-term oblig. 77,669 84,122 192,000 197,487 203,805
Cash dividends paid for
common share -0- -0- -0- -0- -0-
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Liquidity
Registrant's recurring monthly average cash flow from the
sale of oil and gas was approximately $7,200.00 per month in
1995. This was down $1500.00 from year 1994. The average cash
in 1994 was up $500.00 from 1993 at $8,700.00. Working capital
increased $18,400 primarily in the area of cash.
Net cash provided in operating activities for 1995 was a
negative $107,779. A positive cash flow from investing
activities of $6,507 and a positive cash flow from financing
activities of $124,360 more than offset operating leaving a net
increase in cash of $23,088 over 1994. There are no plans to
seek long-term credit or equity capital for any project.
If Registrant should experience a major oil or salt water
spill, compliance with statutory requirements respecting
environmental quality could necessitate significant capital
outlays which would materially decrease its liquidity and
profitability.
No funds were expended in 1995 for clean-up compliance and none
is expected in 1996.
Registrant has made no commitments for capital expenditures as
of the end of the fiscal year. However, Registrant intends to
continue to pursue its drilling activities with both joint
ventures and partnerships, and for its own account providing
financing is made available in a sufficient amount to justify
same. Interest in oil and gas drilling activities is presently
at a low level, however, if prices continue their upward trend
this could change in the future.
9
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Cash requirements for the fiscal year 1995 averaged
approximately $6,000 per month. This is expected to be about the
same in 1996 provided there are no major repairs or workovers.
Results of Operations
Losses in revenues over the past three (3) years are
attributable primarily to price declines, normal decline in
production and shutting in of non-economic wells. Management
continues to update existing production of re-working the wells
and continues to reduce recurring expenses when practicable.
1995 vs 1994
Total revenues in 1995 were down approximately $11,700,000
from 1994 due primarily to a decline in oil and gas production.
The average price of oil increased $3.00 per bbl. Lease
operating expenses decreased significantly as did total expense
due to the eliminating of salaries. Consequently there was an
increase in profitability (before depreciation and depletion) in
1995 from 1994 of approximately $11,678.
1994 vs 1993
Total revenues in 1994 were down approximately $900.00 from
1993 due [primarily to a slight decline in production. Lease
operating expenses decreased slightly. General administration
expense decreased substantially, due to the dispensing with a
consulting position. Profitability (before depletion and
depreciation) increased approximately $16,200 in 1994 from 1993.
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 $25.0-0 per Bbl. oil is
need in order to expand operations and replace depleted reserves.
Meanwhile a continuing effort is being made to increase the
production, and consequently revenues by seeking out and
negotiating joint-venture recompletion projects where positive
reserve information exists.
At the year-=end there was nothing specific to indicate a
material change in income and expenses over the next twelve (12)
months.
During 1994, an $100,000 payable to an affiliate was
converted to equity by the issuance of 5,000,000 shares of common
stock. Relative to the restructuring of long-term debt, a
collateral fee of $37,500 was paid to an affiliate by the
issuance of 750,000 shares of common stock. Restructuring of
debt was finalized in 1995.
10
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Item 8 Financial Statement and Supplementary Data.
Enclosed
Item 9. Disagreements on Accounting and Financial Disclosure.
None
Item 10. Directors and Executive Officers of the Registrant
S. Mort Zimmermann, age 69, has been a director and
president of the company since April 16, 1984.
Fred M. Updegraff, age 61, has been a director vice-
president and treasurer since April 16, 1984.
Stephen G., Wesstrom, age 46, has been a director and
vice-president of the company since April 16, 1984.
There is no family relationship between any of the
officers and directors of the company.
11
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Item 11. Executive Compensation
The following is information regarding remuneration
received by management of the Company in the calendar year 1994.
Name Capacities Cash and cash-equivalent Aggregate
Individual in which Forms and remuneration contingent
or person served Salaries, Fees, Securities forms
in group director's fees, or property remuneration
Commissions Insurance
bonuses benefits or
reimbursement,
personal benefit.
Name None -0- -0- -0-
All officers Directors -0- -0- -0-
and directors president,
as a group vice president and
secretary treasurer
Joe B. Abbey, Attorney at Law, which represents the Company
as general counsel. The Company contracts for necessary legal
services with the law firms on abn as needed basis. In 1995 the
Company was not billed for any attorney's fees by the firm.
The Company adopted a stock plan for key employees and a
restricted plan bonus un 1981. Neither of these programs has
been implemented.
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
The following tabulations shows the name of each person who
as of December 31, 1995 was known by the Company to own
beneficially more than 5% of the Company's outstanding Common
Stock.
Amount and Nature of Per cent
Name Beneficial Ownership Of Class
Glauber Management Co. 5,672,630 27.4%
Owned directly
Interfederal Capital, Inc. 5,750,000 27.8%
Owned directly
Managements does not own any voting common stock of the
Company as of December 31, 1995.
12
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Item 13. Certain Relationships and Related Transactions
As reported in the Registrant's 10-Q for the quarter ended June
30, 1984 Featherstone Development Corporation owned 3,245,099
shares, Featherstone, Ltd. owned 609,058 shares, and Olen F.
Featherstone II owned 654,0978 of DOL Resources, Inc. common
stock from January
1, 1982 to April, 1984. On April 16, 1984 all of their
restricted shares of DOL Resources, were exchanged for restricted
shares in Petro Imperial Corporation, Dallas, Texas, a Utah
Corporation controlled by Commercial Technology, Inc.
Item 14. Exhibits, Financial Statements Schedules, and Reports
on
Form 8-K.
(1) The following financial statements are included in Item
Page
Balance Sheet 13-14
Statement of Income 15
Statements of Stockholders' Equity 16
Statements of Changes in Financial Position 17
Notes to Financial Statements 18 - 26
The following financial schedules for the years 1995,
1994, and 1993 are submitted herewith.
(2) Schedules to Financial Statement
None
The other schedules have been omitted because they are not
applicable or the required information is shown in the financial
statements or notes hereto.
(3) Exhibits No Exhibits are filed as part of this.
There are no reports on Form 8-K filed in the last quarter of the
period covered by this report.
The financial statements included herein have been prepared by
internal accountants of the Registrant, without audit, due to the
inability of the Registrant to pay for a certified unit.
Financial statements have been prepared in accordance with
generally accepted accounting principles and in the opinion of
management presents fairly the financial position of the Company
at December 31, 1995.
13
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SIGNATURE
Pursuant to the requirement of Section 13 or 15(d) 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.
DOL RESOURCES, INC.
By: /s/ Fred M. Updegraff
Fred M. Updegraff
Treasurer and Chief
Financial Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons
on behalf of the Registrant and in the capacities and on the date
indicated.
/s/ S. Mort Zimmerman
S. Mort Zimmerman
Chairman of the Board and President Dated: March 29, 1996
/s/ Fred M. Updegraff
Fred M. Updegraff
Director, Vice President and Treasurer Dated: March 29, 1996
14
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DOL RESOURCES, INC.
BALANCE SHEET
(Unaudited)
ASSETS
December
1995 1994
CURRENT ASSETS
Cash $ 49,215 $ 26,127
Marketable Securities, at
lower of 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) 18,347 19,050
Due from related parties -
Note 4 272,743 175,102
Prepaid expenses 37,500 37,500
Total Current Assets 379,729 259,703
PROPERTIES - Using full costing -
Note 1. 100,000 100,000
Production payment
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 1,297,651 1,284,028
Net Properties 456,639 470,262
FURNITURE & FIXTURES
At cost - Note 1
Furniture and fixtures 6,476 6,478
Less accumulated depreciation 3,885 3,238
Net Furniture and Fixtures 2,591 3,240
OTHER ASSETS
Undeveloped coal royalties-Note 9 10,156 10,155
Other accounts receivable-Note 12 78,027 84,535
Total Other Assets 88,183 94,690
TOTAL ASSETS 927,142 827,895
15
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DOL RESOURCES, INC.
BALANCE SHEET
December 31,
CURRENT LIABILITIES 1995 1994
Notes payable - Note 3 375,000 244,187
Accounts payable 28,592 29,759
Accrued expenses -0- 28,067
Total current liabilities 403,592 302,013
LONG-TERM LIABILITIES
Notes payable -0- -0-
Other accounts payable - Notes 4 & 12 77,669 84,122
Total Long Term Liabilities 77,669 84,122
STOCKHOLDERS' EQUITY
Capital Stock, common,
$.01 par value
Authorized 25,000,000 shares;
issued and outstanding
20,671,254 shares at 12-31-94
and 12-31-95 206,713 206,712
Capital in excess of
par value 1,502,741 1,502,741
Accumulated deficit (1,263,198) (1,267,319)
Treasury Stock ( 375) ( 375)
Total Equity 445,881 441,760
TOTAL LIABILITIES AND STOCKHOLDERS
EQUITY 927,142 827,895
The accompanying notes are an integral part of this statement.
16
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DOL RESOURCES, INC.
STATEMENT OF INCOME
(Unaudited)
Years Ended December 31,
1995 1994 1993
REVENUE:
Oil and gas sales 46,464 56,627 57,504
Investment and
other income 10,144 11,672 11,677
56,608 68,299 69,181
EXPENSES:
General and Administrative 10,814 4,985 20,022
Depletion, depreciation and
amortization 10,186 16,184 17,586
Lease operating expense 22,504 24,851 25,262
Interest 4,085 -0- -0-
Production and windfall
profit taxes 4,713 6,211 9,951
Salaries -0- 29,820 27,452
Lease rentals 184 100 100
52,486 82,153 100,373
Net profit (loss)
before income taxes 4,122 (13,554) (31,192)
Provision for income taxes -
Note 6 -0- -0- -0-
Net Profit (loss) 4,122 (13,544) (31,192)
Weighted average number of
common shares outstanding 20,671,254 15,400,421 14,921,254
Earnings per common share $.0002 $ (.0009) $ (.002)
The accompanying notes are an integral part of this statement.
17
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DOL RESOURCES, INC.
STATEMENTS OF STOCKHOLDERS EQUITY
(Unaudited)
Year ended December 31, 1995, 1994, and 1993
Capital Stock Capital in
Number of Excess of Accumulated Treasury
Shares Amount Par Value Deficit Stock
Balance at
12-31-92 14,921,264 149,213 1,422,693 (1,222,573) (375)
Net Loss ( 31,192)
Balance at
12-31-93 14,921,254 149,213 1,422,693 (1,253,765) (375)
Net Loss
Stock Issued
for Loan
Collateral
Fee 750,000 7,500 30,000
Stock issued
in payment of
account 5,000,000 50,000 50,048
Balance at
12-31-94 20,671,254 206,713 1,502,741 (1,267,319) (375)
Net Income
Balance at
12-31-95 20,671,254 206,713 1,502,741 (1,263,198) (375)
The accompanying notes are an integral part of this statement.
18
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DOL RESOURCES, INC.
STATEMENTS OF CASH FLOWS
Years Ended December 31,
1995 1994 1993
INCREASE (DECREASE) in Cash:
CASH FLOWS FROM OPERATING
ACTIVITIES;
Net Income (Loss) 4,122 (13,554) (31,192)
Adjustments to Reconcile
Net Earnings to net cash
provided by operating
activities:
Depreciation and depletion 14,271 16,184 17,585
Changes in Assets and
Liabilities:
Accounts Receivable-Trade 703 2,875 ( 2,371)
Accounts Receivable-Affil. (97,641) 15,762 ( 4,471)
Prepaid Expense -0- (37,500) -0-
Accounts Payable - Trade ( 1,167) 2,202 6,465
Accrued Expenses (28,067) -0- (4,387)
Net Cash Provided by operating
Activities (107,779) (14,031) (18,371)
Cash Flows from Investing Activities:
Proceeds from sale of property
and equipment -0- ( 2) -0-
Decrease in other assets 6,507 7,853 5,919
Net Cash provided by investing
Activities 6,507 7,851 5,919
Cash Flow from Financing Activities:
Decrease in Note Payable 124,360 (107,900) (5,465)
Increase in Capital Stock -0- 57,000 -0-
Increase in paid-in capital -0- 85,048 -0-
Net Cash provided by financing
Activities 124,360 29,648 (5,465)
Net Increase (Decrease) in
Cash 23,088 23,468 (17,917)
Cash at beginning of year 26,127 2,659 20,756
Cash at end of the year 49,215 26,127 2,659
Supplemental Disclosures of Cash Flow Information:
Cash paid during the year for:
Interest 4,085 -0- -0-
Income taxes -0- -0- -0-
19
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DOL RESOURCES, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1. Summary of Significant Accounting Policies
Organization and Operations
The Company was organized on November 1, 1983 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 93%
collectible, consequently a 7% allowance for bad debts
has been established against those receivables.
Receivables from the sale of oil and gas are fully
collectible, since 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
note being amortized, plus (C) the lower of cost or
estimated fair value of unproved properties included in
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 expensed in
1985 operations.
20
<PAGE>
DOL RESOURCES, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1. Properties: (Con't).
Sales and abandonments of oil and gas properties are
accounted for as adjustments of capitalized costs,
with no gain or loss recognized.
Drilling in progress is included in the cost center
with depletion being calculated on all costs within the cost
center.
Furniture and Fixtures
Deprecation is computed by the straight-in line method
on the cost of the automobiles and furniture and
fixtures at rates based on their estimated service
lives.
Estimated lives in use are as follows:
Furniture and
Fixtures 5 - 12 years
During the year ended 12-31-87, all 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
of value.
1995 1994
Aggregate cost 24,172 24,172
Aggregate market cost 1,924 1,924
Unrealized loss: 22,251 22,251
*The unrealized loss on marketable securities is
charged to operations.
21
<PAGE>
DOL Resources, Inc.
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 3. Notes Payable
Notes payable consist of the following:
Monthly Interest Due Within Due After
Installment Rate One Year One Year
1995
Note 1 due 1-9-96 7.08% 375,000 $ -0-
1994
Note 1 Due 10-4-87 * 140,000 $ -0-
Note 2 Due 5-15-86 ** 104,187 -0-
244,187
*First City Bank of Dallas, prime = 2%
**Interest only payable monthly at Lender's prime
+ 2 for twelve months commencing September 7, 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.
Further information concerning borrowing:
1995 1994
Maximum unpaid balance 375,000 244,187
Weighted average borrowing 375,000 244,187
Weighted average interest
rate 7.08% 11.0%
A settlement of existng debt was negotiated with the
R.T.C. (Resolution Trust Corporation) in January, 1995.
This resulted in a consolidated refinancing with a
local financial institution. The new note includes accrued
interest and approximately $100,000. of debt assumed
from the parent corporation thus increasing the
inter-company receivable by approximately $100,000.00.
22
<PAGE>
DOL Resources, Inc.
NOTES TO FINANCILA STATEMENTS (CONTINUED)
NOTE 4. Related Party Transactions
As reported in our registrant's 10-Q for the quarter
ended 30, 1984, Featherstone Development Corporation
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 16, 1984. The
Featherstone group had a total of 4,508,254 shares of
common stock representing approximately 31.9% of the
total outstanding common stock of DOL Resources, Inc. at
December 31, 1983. On April 16, 1984 all of their
restricted shares in DOL Resources, Inc. were exchanged
for 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
1991. The Company also had accounts receivable from
RCT Petro, Ltd. of $7,414 in 1990. This was written
off as uncollectible in 1991. The Company ended 1995 with
an account receivable from Glauber Management Co. (The
parent corporation) of $272,743.
A long-term payable if $100,148 was created to an
affiliate during 1989 when a bank was holding, as
collateral, a Certificate of Deposit belonging
to the Affiliate applied the proceeds of the C.D.
to accrued interest and a principal payment on one
of the company's matured notes. There are two notes
presently being negotiated as stated in Note 3.
In 1994 5,000,000 shares of stock were issued to the
affiliate in payment of the $100,148. ($.02 per
share).
NOTE 5. Commitments:
The Company had the following lease obligations:
Coal Oil & Gas
Leases Leases
1994 -0- -0-
1995 -0- -0-
After 1995 -0- -0-
23
<PAGE>
DOL Resources
NOTES TO FINANCIAL STATEMENTS
NOTE 6. Income Taxes
The Company as of December 31, 1995 has a net operating
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 $24,000 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 carryovers as well as
credits related to timing difference 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 $554,000. Because of the uncertainty
as to realization, no future tax benefits are
recognized at December 31, 1995.
24
<PAGE>
DOL Resources
NOTES TO FINANCIAL STATEMENTS
NOTE 7. Operations in Difference Industries:
The company operates principally in two industries
(1) the exploration for and sale of oil and gas, and
(2) investment in natural resource properties. The
operations pertaining to the exploration for and
sale of oil and gas involve actively participating
in drilling for oil and gas and sale of subsequent
production. The investment in natural resource
properties as of December 31, 1995 includes investments
in coal royalties of $10,156. Certain financial
information concerning the company's operations in
the described industries is as follows:
Exploration Investment
for and in Natural General
Sale of Oil Resource Corporate
and Gas Properties Assets
Year ended December
31, 1993
Assets applicable
to industry segment 593,907 10,156 205,536
Year ended December
31, 1994
Assets applicable
to industry segment 567,644 10,156 250,095
Year ended December
31, 1995
Assets applicable
to industry segment 546,815 10,156 370,171
Exploration Investment
for and in Natural General
Sale of Oil Resources Corporate
and Gas Properties Assets
Year ended December
31, 1993
Income (loss) $ 5,352 $ -0- $(36,544)
Applicable
to Industry Segment
Year ended December
31, 1994
Income (loss) $ 10,028 $ -0- $(23,572)
Applicable to
Industry Segment
Year ended December
31, 1995
Income (loss) $ 5,624 $ -0- $( 1,502)
Applicable to
Industry Segment
25
<PAGE>
DOL Resources, Inc.
NOTES TO FINANCIAL STATEMENTS
NOTE 8. Major Customers:
The company had sales of oil and gas to three primary
customers (purchasers of over 10% of product) in
1995. These sales were in the amount of $13,539 and
$20,812 respectively.
During the year ended December 31, 1994, the company
had sales of oil and gas of $16,922 and $29,457 to
four major purchasers, and for the year ended
December 31, 1993 $21,238 and $23,750 to three
major purchasers.
NOTE 9. Undeveloped Coal Royalties:
The undeveloped coal royalties were received in
exchange of stock in the company from Discovery Oil,
Ltd. (at the time the parent company of DOL Resources,
Inc. ) in related party transaction in prior years.
These coal royalties cover approximately 2,901 gross
acres and 58 net acres at the end of 1995 and 1994.
There were no coal lease expiration in 1995 and 1994.
Development is not under control of the company.
NOTE 10. Undeveloped Gold Properties
The undeveloped gold properties, which were obtained
on March 1, 1980 through foreclosure of a note by a
placer gold mining claim in California, were sold
for $20,000 during 1983 and $10,000 overriding
royalty interest was retained by DOL Resources, Inc.
In 1985, the pacer gold mining claim project was
abandoned. The remaining cost was expensed during
1985.
NOTE 11. Supplementary information as to Oil and Gas Producing
Activities (Unaudited)
Supplementary disclosures for oil and gas producing
activities in accordance with Financial Accounting
Standard No. 69 set forth below.
The following table represents the Company's estimate
of its proved oil and gas reserves at December 31,
1995. The company emphasized that reserve estimates
are inherently imprecise. Accordingly, the estimates
are expected to change as future information becomes
available. These estimates, as they relate to
December 31, 1995 information, have been prepared by
Company personnel.
26
<PAGE>
DOL Resources, Inc.
NOTES TO FINANCIAL STATEMENTS
NOTE 11. Supplementary Information to Oil and Gas Producing
Activities (Unaudited) (continued)
Proved developed reserves at December 31, 1995 were
21,170 barrels. Proved undeveloped reserves of
23,970 bbls. are estimated at December 31, 1995.
Gas reserves are included in the estimated barrels at
6 MCF per barrel.
Disclosure of the standardized measure of discount
future net cash flows for the year ending 12-31-95,
12-31-94, and 12-31-93 have not been included in
this note due to the following:
(1) Future gas flows are based on year and prices
with changes in pricing considered only to the
extend of contractual arrangements existing at
year-end. Due to the significant decline in
oil and gas prices during 1995 future cash
inflows based on year-end prices would be
inaccurate and would result in a material
misstatement.
(2) Future development costs and production costs
based on year-end cost and assuming continuation
of continuing economic conditions would also
result in a misstatement due to the price decline.
(3) Future income tax expense, if any, would be
difficult to determine due to large net operating
losses incurred for both financial reporting and
tax purposes.
Proved Developed Proved Undeveloped
Reserves
(In Barrels) (In Barrels
Reserves:
Beginning of 1995 24,668 23,970
Discoveries -0- -0-
Revisions of prior
year's estimates 147 -0-
Production ( 3,645) -0-
12-31-95 21,170 23,970
27
<PAGE>
DOL Resources, Inc.
NOTES TO FINANCIAL STATEMENTS
NOTE 12. 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 sales 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 is 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 or 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.
28
<PAGE>
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 49,125
<SECURITIES> 1,924
<RECEIVABLES> 20,058
<ALLOWANCES> 1,711
<INVENTORY> 0
<CURRENT-ASSETS> 379,729
<PP&E> 1,754,290
<DEPRECIATION> 1,297,651
<TOTAL-ASSETS> 927,142
<CURRENT-LIABILITIES> 403,592
<BONDS> 0
0
0
<COMMON> 206,713
<OTHER-SE> 720,429
<TOTAL-LIABILITY-AND-EQUITY> 927,142
<SALES> 56,608
<TOTAL-REVENUES> 56,608
<CGS> 0
<TOTAL-COSTS> 52,486
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,085
<INCOME-PRETAX> 4,122
<INCOME-TAX> 0
<INCOME-CONTINUING> 4,122
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,122
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