Gladstone Resources, Inc.
- -----------------------------------------------------------------
1998 ANNUAL REPORT
For the year ended December 31, 1998
<PAGE>
Dear Shareholders:
In January of 1999, a group of investors acquired a majority
stock ownership in Gladstone from the Brooks family and others.
We believe Gladstone will present an excellent opportunity for
investing in the domestic oil and gas industry.
Many changes have occurred over the last twelve months
which will impact the strategy of Gladstone. Under the watch of
the previous management, 1998 proved to be a difficult year for
Gladstone. Declining commodity prices coupled with several
exploratory failures, caused Gladstone's balance sheet to shrink
by 45%.
The posted well head prices for oil fell below $10 per barrel in
late 1998 and remained there through February of 1999. In
March, the prices started to rebound. However, many producers
have lost the desire or financial ability to continue. We
believe that many producers will sell off assets to bring those producers'
debt into compliance with loan agreements. Further, major oil
companies continue to consolidate. These mergers have caused
properties that fail to fit their global philosophy to be
liquidated. These events have caused a window of opportunity
that we believe should exist through mid-year 2000. We further believe that
properties will be available to companies that have the means in place for
acquisition. We plan on Gladstone being one of those companies.
Our plans for Gladstone include an initial acquisition of
properties that will increase our asset base. We then plan
to strengthen our capital position, and when combined with anticipated debt
facilities should allow us to expand our acquisition possibilities.
We believe that we have brought together an experienced and
diversified Board of Directors. Your Directors have made a
commitment to expand the management with competent and experienced
team of professional individuals who will work together to build
a quality asset base. We believe that the remainder of 1999 and
2000 can be significant years in the corporate life cycle of
Gladstone. Increasing the value for the shareholders is going to
be our primary focus for Gladstone's future.
Yours truly.
GLADSTONE RESOURCES, INC.
/s/ CHARLES B. HUMPHREY /s/ JOHNATHAN M. HILL
Charles B. Humphrey Johnathan M. Hill
Chairman President
<PAGE>
THE COMPANY
Gladstone Resources, Inc. (the "Company") is an independent
oil and gas company engaged in the acquisition of, exploration
for and production of oil and natural gas. The Company, a
Washington corporation, presently conducts its exploration,
production and acquisition activities primarily in Texas and New
Mexico.
SELECTED FINANCIAL DATA
Selected financial data for the fiscal years indicated is as
follows:
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------------------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Operations
Revenues $ 264,002 $ 511,477 $ 472,915 $ 405,366 $ 429,556
Net Income (loss) before
extraordinary item (486,267) (196,662) 73,752 (48,110) (20,606)
Net income (loss) (486,267) (196,662) 73,752 (48,110) (20,606)
Net income (loss) per
share (1) ( .11) ( .05) .02 ( .01) ( .00)
Balance Sheet
Current assets $ 29,501 $274,282 $ 314,791 $ 160,584 $ 175,314
Current liabilities 21,729 55,005 59,900 54,510 169,830
Working capital (deficit) 7,772 219,277 254,891 106,074 5,484
Total assets 620,450 1,141,293 1,369,710 1,276,059 1,450,263
Long-term debt 0 0 0 0 60,000
Stockholders' equity 598,721 1,084,988 1,369,710 1,207,898 1,256,008
Current ratio 1.35 4.98 5.25 2.94 1.03
(1) The Company has not declared nor paid any dividends during any of the periods
presented.
</TABLE>
-2-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Fiscal 1998 Results Compared to Fiscal 1997 Results
The net loss for fiscal 1998 was $486,267, or $.11 per share,
compared to net loss of $196,662, or $.05 per share, in fiscal 1997.
This difference of $289,605 was primarily the result of a decrease in
revenue, as discussed below.
Oil and gas sales decreased $247,475, or 48%, to $264,002 in
fiscal 1998 from $511,477 in fiscal 1997. Fiscal 1998 oil and gas
production was 28% lower than 1997 (continued depletion of current
properties with no new wells being added). On the basis of 6 mcf of
gas being equivalent to 1 barrel of oil, total fiscal 1998 gas
production decreased 32%. The total oil and gas revenue drop of 48%
was due to decrease in production and a decrease in prices.
The Company's costs and expenses decreased $104,618, or 16%. Oil
and gas production costs decreased $7,343 or 5%, to $130,912 in fiscal
1998 from $138,255 due to decreased production. Dry hole and
abandonment costs decreased $218,867 or 47% to $243,764 in fiscal 1998
due to participation in fewer wells. Depletion, depreciation and
amortization decreased from $133,103 to $102,215, or 23%, in fiscal
1998 due to decreased production. General and administrative costs
decreased from $12,851 to $11,162 or 13% in fiscal 1998 as a result of
small decreases in a variety of items. The Company reversed entry of
an accrued tax to the State of Texas for franchise taxes that resulted
in a current year income of $35,648. Legal, audit and accounting costs
increased from $9,623 to $12,704, or 32%, in fiscal 1998 as a result
of the Company's proposed merger with Exco Resources, Inc., which
merger was terminated January 19, 1999. The decreases in costs were
more than offset by an asset impairment charge of $181,946 to reflect
the value of the Schleicher and Kent County properties that were sold
on January 19, 1999. See Note 9 to the Financial Statements.
Fiscal 1997 Results Compared to Fiscal 1996 Results
The net loss for fiscal 1997 was $196,662, or $.05 per share,
compared to net income of $73,752, or $.02 per share, in fiscal 1996.
This difference of $270,414 was primarily the result of an increase in
dry hole and abandonment costs.
Oil and gas sales increased $38,562, or 8%, to $511,477 in fiscal
1997 from $472,915 in fiscal 1996 due to increased gas production and
increased average oil price.
The Company's costs and expenses increased by $386,750, or 165%,
from $234,363 in fiscal 1996 to $621,113 in fiscal 1997. Oil and gas
production costs decreased $25,819, or 15%, to $138,255 in fiscal 1997
from $164,074 in fiscal 1996 due to a decrease in operating expenses.
Dry hole and abandonment costs increased to $462,631 in fiscal 1997
from $97,544 in fiscal 1996. Changes in this item are due to
increased drilling. The $22,756, or 20%, increase in depreciation,
depletion and amortization from $110,347 in fiscal 1996 to $133,103 in
fiscal 1997 is a result of increased production. General and
administrative costs were $12,851 for fiscal 1997 as compared to
$18,222 in fiscal 1996, an decrease of $5,371, or 29%, due to
relatively small decreases in a variety of items.
-3-
<PAGE>
Liquidity and Capital Resources
The Company has financed its operating and capital expenditure
requirements to date principally through cash flow from operations.
Cash decreased $90,699 to $23,372 at December 31, 1998, from
$114,071 at December 31, 1997. Accounts receivable decreased $45,948
to $6,129 from $52,077 during the corresponding periods, and accounts
payable increased $2,372 to $21,729 from $19,357. These amounts for
cash, accounts receivable and accounts payable reported by the Company
at its fiscal year-end Balance Sheet dates reflect temporary
fluctuations related to the timing and status of the Company's
projects and the timing of payments, invoices and billings related to
such projects. Accounts receivable includes accounts due from joint
interest owners for operating and drilling costs paid by the Company
on their behalf.
As of the date of this report, the Company did not have bank
credit facilities.
Inflation and Changing Prices
The impact of inflation, as always, is difficult to assess.
During the three years ended December 1998, the oil and gas industry
remained depressed. As a result, the Company experienced continued
weakness in demand and in prices received for its oil and gas
production. The general softening of the market has, however, also
reduced the cost of labor, materials, contract services, and other
operating costs. The Company cannot anticipate whether the present
trend of low inflation will remain; however, a sudden increase in
inflation and/or an increase in operating costs coupled with a
continuation of low oil prices could have an adverse effect on the
operations of the Company.
Year 2000 Readiness Disclosure
"Year 2000," or the ability of computer systems to process dates
with years beyond 1999, affects almost all companies and
organizations. Computer systems that are not Year 2000 compliant by
January 1, 2000 may cause material adverse effects to companies and
organizations that rely upon those systems.
The Company's timely receipt of royalty income will largely
depend upon performance of computer systems and computer-controlled
equipment of the operators of the Company's oil and gas producing
properties and other third parties including oil and natural gas
purchasers and significant service providers such as electric utility
companies and natural gas plant, pipeline and gathering system
operators. The Company is seeking written verification from its
operators that they will be Year 2000 compliant. The Company
anticipates that the cost of seeking verification will be minimal. The
Company believes that it is not practical to independently verify the
response it receives because the cost would not be affordable.
The Company has undertaken an inventory of its financial software
and hardware systems for Year 2000 readiness. The Company used an
outside consultant to assist in this review. The outside consultant
has completed his review and identified the required upgrades. All
required
-4-
<PAGE>
upgrades to the Company's financial software and hardware system are
expected to be complete by October 30, 1999. The cost of the outside
consultant, as well as the cost of upgrade, is expected to be minimal.
The failure to remediate critical systems (software or hardware),
or the failure of a material third party to resolve critical Year 2000
issues could have a serious adverse impact on the Company's ability to
continue operations and meet obligations. Any Year 2000 problems that
do occur will likely manifest themselves in reduced production through
equipment shut down or impaired liquidity through an inability of the
Company's customers to take delivery or to process payment. At the
current time, the Company believes that any interruption in operation
will be minor and short-lived. However, until the Company's review has
progressed, it is impossible to accurately identify the risks,
quantify potential impacts or establish a contingency plan. The
Company currently intends to complete its contingency planning by
October 30, 1999.
-5-
<PAGE>
INDEPENDENT AUDITOR'S REPORT
Board of Directors and Stockholders
Gladstone Resources, Inc.
I have audited the accompanying consolidated balance sheets of
Gladstone Resources, Inc. and Subsidiary (a Washington corporation) as
of December 31, 1998 and 1997, and the related consolidated statements
of operations, stockholders' equity and cash flows for the three years
then ended. These financial statements are the responsibility of the
Company's management. My responsibility is to express an opinion on
these consolidated financial statements based on my audits.
I conducted my audits in accordance with generally accepted
auditing standards. Those standards require that I plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial
statement presentation. I believe that my audits provide a reasonable
basis for my opinion.
In my opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial position
of Gladstone Resources, Inc. as of December 31, 1998 and 1997, and the
results of its operations and its cash flow for the three years then
ended in conformity with generally accepted accounting principles.
/s/ Harold Ratcliff
Certified Public Accountant
Dallas, Texas
February 19, 1999
-6-
<PAGE>
GLADSTONE RESOURCES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
December 31, 1998 and 1997
ASSETS
1998 1997
------------- ------------
Current assets:
Cash $ 23,372 $ 114,071
Accounts receivable 6,129 52,077
Investments - 108,134
----------- ---------
Total current assets 29,501 274,282
----------- ----------
Property and equipment:
Gas and oil properties
(successful efforts method) 1,811,235 2,044,925
Equipment 17,128 29,851
----------- ----------
1,828,363 2,074,776
Less accumulated depletion
and depreciation (1,280,631) (1,259,687)
----------- ----------
Total property and equipment
547,732 815,089
----------- ----------
Other assets:
Organizational cost - 4,954
Cost in excess of amount
assigned to net assets of 337,000 337,000
subsidiary at date of ------------ -----------
acquisition
337,000 341,954
Less accumulated amortization (293,783) (290,032)
------------ ------------
Total other assets 43,217 51,922
------------ ------------
$ 620,450 $1,141,293
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 21,729 $ 19,357
Accrued expenses - 35,648
----------- ----------
Total current liabilities 21,729 55,005
----------- ----------
Deferred income taxes - 1,300
----------- ----------
Stockholders' equity:
Common stock 150,000 150,000
Capital in excess of stated 1,230,134 1,230,134
value
Retained earnings (deficit) (781,413) (295,146)
------------ -----------
Total stockholders' equity 598,721 1,084,988
------------ -----------
$ 620,450 $1,141,293
============ ===========
The accompanying notes are an integral part of this financial
statement.
-7-
<PAGE>
GLADSTONE RESOURCES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS
For the three years ended December 31, 1998
1998 1997 1996
-------- -------- ---------
Sales:
Gas and oil $264,002 $511,477 $472,915
Cost of Sales:
Production taxes 12,003 24,291 22,021
Well operating expense 118,909 113,964 142,053
-------- ------- --------
130,912 138,255 164,074
-------- ------- --------
Gross profit on sales 133,090 373,222 308,841
-------- -------- --------
Expenses:
Dry hole and abandonments 243,764 462,631 97,544
Depletion 90,846 115,003 101,275
Depreciation and amortization 11,369 180,100 9,072
General and administrative 11,162 12,851 18,222
Taxes 352 2,905 586
Legal, audit and accounting 12,704 91,623 7,664
Asset impairment charge 181,946 - -
Recovery of taxes (35,648) - -
--------- -------- --------
516,495 621,113 234,363
--------- -------- --------
Income (loss) from operations (383,405) (247,891) 74,478
Other income:
Gain on sale of assets - 13,429 -
Unrealized gain (loss) on (108,134) (937) -
investments
Interest income 3,972 11,877 7,637
Recovery from uncollectable note - - 6,146
receivable --------- --------- --------
Income (loss) before taxes (487,567) (223,522) 88,261
Income taxes (benefit)-deferred (1,300) (26,860) 14,509
--------- --------- --------
NET INCOME (LOSS) $(486,267) $(196,662) $ 73,752
========== ========= ========
Earnings (loss) per share:
Basic $ (.11) $ (.05) $ .02
========= ========= ========
Diluted $ (.11) $ (.05) $ .02
========= ========= ========
The accompanying notes are an integral part of this financial
statement.
-8-
<PAGE>
GLADSTONE RESOURCES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
For the three years ended December 31, 1998
Capital
Excess of Retained
Stated Stated Earnings
Value(A) Value (Deficit) Total
-------- ---------- ---------- ----------
Balance at January 1, 1996 $150,000 $1,230,134 $ (172,236) $1,207,898
Net income for the
year 1996 - - 73,752 73,752
--------- ---------- ---------- ----------
Balance at December
31, 19996 150,000 1,230,134 (98,484) 1,281,650
Net loss for the year 1997 - - (196,662) (196,662)
--------- ---------- ---------- ---------
Balance at December
31, 1997 150,000 1,230,134 (295,146) 1,084,988
Net loss for the year 1998 - - (486,267) (486,267)
--------- ----------- --------- ---------
Balance at December
$150,000 $1,230,134 $ (781,413) $ 598,721
========= =========== ========== ==========
(A) Common stock consists of no par value shares only. There are
6,000,000 shares authorized and 4,244,060 shares issued and
outstanding. The stated value for all outstanding shares is
$150,000.
The accompanying notes are an integral part of this financial
statement.
-10-
<PAGE>
GLADSTONE RESOURCES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
For the three years ended December 31, 1998
1998 1997 1996
-------- --------- --------
Cash flows from operating
activities:
Net earnings (loss) $(486,267) $(196,662) $73,752
Adjustments to reconcile net
earnings to net cash provided
by operating activities:
Non-productive properties 58,970 100,545 -
written off
Depreciation, depletion and
amortization 102,215 133,112 110,347
Change in accounts receivable 45,948 2,163 (18,209)
Decrease in value of producing
properties 149,267 - -
Change in accounts payable 2,372 (7,672) 5,390
Change in accrued expenses (35,648) 2,777 -
Decrease in value of listed 108,134 - -
securities
Change in deferred income (1,300) (26,860) 14,509
taxes --------- ---------- ---------
Net cash provided by (used by) (56,309) 7,403 185,789
operations --------- ---------- ---------
Cash flows from investing
activities:
Investment in oil and gas (34,390) (45,749) (36,890)
properties
Purchase of truck - - (12,901)
Purchase of listed securities - (108,134) -
---------- ----------- ---------
Net cash used by investing (34,390) (153,883) (49,791)
activities ----------- ----------- ---------
Net increase (decrease) in (90,699) (146,480) 135,998
cash
Cash at beginning of year 114,071 260,551 124,553
---------- ---------- ---------
Cash at end of year $ 23,372 $ 114,071 $ 260,551
========== ========== =========
Supplemental disclosure of cash
flow information
Cash paid (received) during the
period for:
Interest paid $ - $ - $ -
Federal income tax (refund) $ - $ - $ -
The accompanying notes are an integral part of this financial
statement.
-10-
<PAGE>
GLADSTONE RESOURCES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998
NOTE 1 - ORGANIZATION
Gladstone Resources, Inc. was incorporated in the State of
Washington on July 19, 1916. In March, 1973, the company acquired
100% ownership of Brooks NM, Inc. a Texas corporation (now named NM
Corporation). The Company sells oil and gas in Texas and New Mexico.
The sales to the customers are on open accounts receivable, which are
unsecured.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
On an accrual basis, the Company uses the successful efforts
method of accounting. This method follows the premise that an
enterprise is to capitalize only those costs it incurs that directly
result in an asset that has future benefits measured in terms of
future cash flows.
For purpose of consolidation all intercompany transactions have
been eliminated.
For purposes of the statement of cash flows, the Company
considers all short-term debt securities purchased with a maturity of
three months or less to be cash equivalents. There were no
significant non-cash investing or financing activities during the
three year period ended December 31, 1998.
Depreciation, depletion and amortization are calculated using the
straight-line and unit of production method over the estimated useful
lives of the assets or production of the estimated recoverable oil and
gas reserves. Vehicles are depreciated over a five year life.
Organization expenses are amortized on a straight-line basis currently
with a life of five years.
For income tax reporting, the Company uses accounting methods
that recognize depreciation sooner than for financial statement
reporting. As a result, the basis of property and equipment for
financial reporting exceeds its tax basis by the cumulative amount
that accelerated depreciation exceeds straight-line depreciation.
Also, for tax purposes the Company deducts intangible drilling costs
and capitalizes them on the successful efforts accounting method.
Deferred income taxes had been recorded in prior years for the excess
deductions, which will be taxable in future periods through reduced
depreciation and cost depletion deductions for tax purposes.
Investment tax credits are accounted for as a reduction of income
tax expense in the year they are utilized under the flow-through
method.
Management uses estimates and assumptions in preparing financial
statements in accordance with generally accepted accounting
principles. Those estimates and assumptions affect the reported
amounts of assets and liabilities, the disclosure of contingent assets
and liabilities, and the reported revenues and expenses. Actual
results could vary from the estimates that were used.
-11-
<PAGE>
GLADSTONE RESOURCES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998
NOTE 3 - ACCOUNTS RECEIVABLE
Of the net revenue interest amount of $6,129 due from oil and gas
sales at December 31, 1998, $2,624 has been received from the
operators as of the date of this report. Of the receivables due at
December 31, 1997, $18,519 was due from the president/stockholder of
the Company at that time.
NOTE 4 - NOTE RECEIVABLE AND RELATED BAD DEBT EXPENSE (RECOVERY)
November 1, 1993, Gladstone agreed to loan Advanced Welding
Technologies, Inc. a total of $350,000. As of December 31, 1993,
$200,000 had been advanced on the loan. Management did not advance
the balance of $150,000. The note was secured by substantially all of
the assets of the borrower. The note was written off in 1994 and
1995. In 1996, the security was sold for $6,146 net of legal fees.
NOTE 5 - PROPERTY AND EQUIPMENT
Gas and oil properties
- ----------------------
In March, 1973, Gladstone Resources, Inc. acquired 100% ownership
of Brooks NM, Inc. (NM Corporation), a Texas corporation, in exchange
for 338,000 shares of common stock. An additional 115,000 shares of
common stock were issued October 12, 1975, in further consideration
for additional capital costs incurred in securing price increases.
NM Corporation, the subsidiary of Gladstone Resources, Inc., owns
a 28.71% net revenue interest in 6 producing gas wells in San Juan
County, New Mexico.
On January 1, 1982, Gladstone Resources, Inc. purchased producing
properties for $550,000 in Kent County, Texas. Previously in 1981,
Gladstone purchased a 6.25% interest in a 207 acre lease with one
producing well. The 1982 purchase consists of four leases on 3,035
acres with 68 producing wells. The reserves on some of the properties
were reduced by production declines. These properties were sold for
$20,000 in January, 1999, with an effective date of October 1, 1998,
for income and expenses.
From 1990 through 1994, the Company participated in successful
wells in Schleicher and Pecos Counties in Texas. The reserves in
Schleicher County were estimated by management to be 1,524,300 MCF's
in 1994, there are currently seven producing wells and a pipeline.
Gladstone Resources, Inc. has a 40.17% revenue interest in the Wilson-
Pope wells in Schleicher County. The Schleicher County wells were
sold for $295,000 in January, 1999, with an effective date of October
1, 1998, for income and expenses.
-12-
<PAGE>
GLADSTONE RESOURCES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998
NOTE 5 - PROPERTY AND EQUIPMENT (CONTINUED)
Gas and oil properties
- ----------------------
A summary of changes in the Company's gas reserves (in MCF'S) is
as follows (oil reserves have been included as MCF's by multiplying
barrels by 6). ALL RESERVE AMOUNTS INCLUDING THE REVISIONS HAVE BEEN
FURNISHED BY MANAGEMENT. There are no "proved undeveloped reserves"
according to management, other than in Schleicher County.
Total for United States
--------------------------------
1998 1997 1996
--------- --------- ---------
Beginning of year 1,293,559 2,040,641 2,222,664
Additions through exploration - - 760
of leases
Adjustment to reserve (1) (4,284) (565,573) -
Production (129,032) (181,509) (182,783)
--------- --------- ---------
Balance at end of year (2) 1,160,243 1,293,559 2,040,641
(1) Based on reevaluation of estimated reserves by management. The
estimates were based on current production levels of all
properties.
(2) In January, 1999, the Kent and Schleicher Counties properties
including reserves of 976,459 MCF'S were sold. The remaining
reserves consist of 183,784 MCF'S.
NOTE 6 - FEDERAL AND STATE INCOME TAXES
A reconciliation of income tax expense (benefit) computed by
applying the U.S. federal tax rates to loss from continuing operations
before income taxes and extraordinary items and recorded income tax
expense (benefit) is as follows:
1998 1997 1996
--------- --------- --------
Tax expense (benefit) at $ (73,135) $ (33,528) $ 13,239
statutory rate
Non-deductible items 34,158 24,846 9,439
Change in valuation allowance 37,677 (18,178) (8,169)
--------- ---------- -------
Provision for income tax $ (1,300) $ (26,860) $ 14,509
========= ========== ========
The components of the Company's deferred income taxes for 1998 and
1997 are as follows:
1998 1997
--------- ---------
Amortization of asset cost $ (5,556) $ (4,250)
Depreciation 11,323 9,972
Cost depletion (61,237) (50,922)
Intangible Development costs (1,300) (26,860)
Impairment of asset value 27,292 -
Net operating loss carryforward 43,150 23,795
Valuation allowance (44,512) (6,835)
-------- --------
Total $ - $ 1,300
======== ========
-13-
<PAGE>
GLADSTONE RESOURCES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998
NOTE 6 - FEDERAL AND STATE INCOME TAXES (CONTINUED)
Net operating loss deductions and credits carryforward consists of the
following:
From year ending Year Expires Losses Credit
- --------------------- ------------- ------------ --------
12-31-84 12-31-99 $ - $ 384
12-31-94 12-31-09 100,759 -
12-31-97 12-31-12 57,877 -
12-31-98 12-31-13 129,028 -
--------- --------
$ 287,664 $ 384
============ ========
The Company files a consolidated tax return.
NOTE 7 - SIGNIFICANT ESTIMATES AND CONCENTRATIONS
Generally accepted accounting principles require disclosure of
certain significant estimates and current vulnerabilities due to
certain concentrations. Those matters included the following.
1. Year 2000
---------
Like all entities, the Company is exposed to risks associated
with the Year 2000 issue which affects computer software and
hardware; transactions with customers, vendors and other
entities; and equipment dependent on microchips. The Company has
begun but not yet completed the process of identifying and
remediating potential Year 2000 problems. It is not possible for
any entity to guarantee the results of its own remediation
efforts or to accurately predict the impact of the Year 2000
issue on third parties with which the Company does business. If
remediation efforts of the Company or third parties with which it
does business are not successful, the Year 2000 problem could
have negative effects on the Company's financial condition and
results of operations in the near term.
2. Major Customers
---------------
In 1998, the Company has two customers which represent 47% and
23% of its total revenue.
NOTE 8 - RENT EXPENSE
The Company pays rent on a month-to-month basis. The Company
does not have a commitment on a lease contract. Rent expense for
1998, 1997 and 1996 was $6,606, $5,919 and $6,426, respectively.
NOTE 9 - COMMITMENTS
Exco Resources, Inc. purchased all of the Company's producing
properties in Schleicher and Kent Counties, Texas for $315,000 and the
funds were received on January 19, 1999. The agreement to purchase the
properties was completed on January 19, 1999, but was effective as of
October 1, 1998. All revenue less all expenses relating to these
properties will be paid to the purchaser for the period after October
1, 1998. Because the sale was completed in January, 1999, the sale
was not entered on the books of the Company until 1999. The sales
price of the properties was $181,946 less than the amount on the books
of the Company; therefore a loss was recorded in 1998 for the
impairment of asset value. The merger that had previously been entered
into as of April 30, 1998, by an "Agreement and Plan of Merger" with
Exco Resources, Inc., was also terminated. In a separate transaction
the same day, Mr. Brooks, individually, purchased the same properties
from Exco Resources, Inc. for $315,000.
-14-
<PAGE>
GLADSTONE RESOURCES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1998
NOTE 9 - COMMITMENTS (CONTINUED)
On January 19, 1999, Mr. E. B. Brooks, Jr. agreed to sell all of the
shares that he and his three daughters owned to a group of investors.
NOTE 10 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Pursuant to certain operating agreements by and between the
Company and Edward B. Brooks, Jr., Mr. Brooks serves as the operator
of certain of the Company's oil and gas interests. Pursuant to such
operating agreements, the Company paid the following described amounts
to Mr. Brooks in 1997 and 1998 and Mr. Brooks paid the following
described amounts to the Company in 1997 and 1998.
Mr. Brooks paid the Company $90,802 and $72,602, respectively, in
1997 and 1998 as the Company's share of gas sales from properties in
Schleicher County. The Company paid Mr. Brooks $68,881 and $52,306,
respectively, in 1997 and 1998 for the Company's share of operating
costs on properties in Kent County and Schleicher County. In 1998,
the Company also paid Mr. Brooks $4,734 for the Company's share of
operating expenses on the Schleicher and Kent County properties that
were paid by Mr. Brooks in 1997.
In 1997, the Company paid Mr. Brooks $228,472 for the Company's
share of the cost of a seismic study on properties in Stonewall County
and the cost of drilling two wells in other counties in Texas which
turned out to be non-productive. In 1998, the Company paid Mr. Brooks
$18,915 for the Company's share of the seismic study on properties in
Stonewall County and $37,591 for the Company's share of the cost of
drilling a well in Stonewall County that was nonproductive. In 1998,
the Company paid $24,334 to Mr. Brooks for the Company's share of
lease costs of properties in Stonewall County.
In 1997 and 1998, the Company reimbursed Mr. Brooks $1,769 and
$1,159, respectively, for expenses incurred by him in operating a
Company owned vehicle that was provided to him for Company business.
-15-
<PAGE>
OTHER FINANCIAL INFORMATION
-16-
<PAGE>
Board of Directors and Stockholders
Gladstone Resources, Inc.
My report on my audit of the basic financial statements of Gladstone
Resources, Inc. for 1998 and 1997 appears on page 6. That audit was
made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The information on pages 18 through 28
is presented for purposes of additional analysis and is not a required
part of the basic financial statements. Such information has not been
subjected to the auditing procedures applied in the audit of the basic
financial statements and, accordingly, I express no opinion on it.
/s/ Harold Ratcliff
--------------------------------
Dallas, Texas Certified Public Accountant
February 19, 1999
-17-
<PAGE>
GLADSTONE RESOURCES, INC. AND SUBSIDIARY
EXHIBIT A
SUMMARY OF OPERATIONS
For the year ended December 31,
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994
------- ------- ------- -------- -------
<S> <C> <C> <C> <C> <C>
Sales
Gas and oil $ 264,002 $511,477 $472,915 $ 405,366 $ 429,556
Cost of sales:
Production taxes 12,003 24,291 22,021 20,556 21,855
Well operating expenses 118,909 113,964 142,053 127,406 138,664
--------- --------- --------- --------- ---------
Gross profit on sales 130,912 138,255 164,074 147,962 160,519
---------- --------- --------- --------- ---------
133,090 373,222 308,841 257,404 269,037
---------- --------- --------- --------- ---------
Expenses:
Depletion 90,846 115,003 101,275 114,456 130,608
Depreciation and
amortization 11,369 18,100 9,072 11,057 11,035
Dryhole and abandonment 243,764 462,631 97,544 60,915 61,845
General and 11,162 12,851 18,222 10,704 14,644
administrative
Interest - - - 6,399 10,255
Taxes 352 2,905 586 3,154 1,262
Legal, audit and 12,704 9,623 7,664 13,107 16,131
accounting
Asset impairment charge 181,946 - - - -
Recovery of taxes (35,648) - - - -
---------- --------- --------- --------- ---------
516,495 621,113 234,363 219,792 245,780
---------- --------- --------- --------- ---------
Income (loss) from (383,405) (247,891) 74,478 37,612 23,257
operations
Other income (losses) (104,162) 24,369 13,783 (96,496) (50,075)
---------- --------- --------- --------- ---------
Income (loss) before (487,567) (223,522) 88,261 (58,884) (26,818)
taxes
Income taxes (benefit) (1,300) (26,860) 14,509 (10,774) (6,212)
---------- --------- --------- --------- ---------
NET INCOME (LOSS) (486,267) (196,662) 73,752 (48,110) (20,606)
Retained earnings
(deficit) at (295,146) (98,484) (172,236) (124,126) (103,520)
beginning of year ---------- --------- --------- --------- ---------
Retained earnings $ (781,413) $ (295,146) $ (98,484) $(172,236) $(124,126)
(deficit) at end of =========== ========== ========= ========= =========
year
Capital stock and paid $1,380,134 $1,380,134 1,380,134 $1,380,134 $1,380,134
in capital =========== ========== ========== ========== ==========
Average common shares 4,244,060 4,244,060 4,244,060 4,244,060 4,244,060
=========== ========== ========== ========== ==========
Income (loss) per $ (.11) $ (.05) $ .02 $ (.01) $ (.00)
share =========== ========== ========== ========== ==========
</TABLE>
See auditor's report on other financial information
-18-
<PAGE>
GLADSTONE RESOURCES, INC.
December 31, 1998
SCHEDULE II - AMOUNTS RECEIVABLE FROM RELATED PARTIES
- -----------
Balance Balance
Debtor: 1-1-98 Additions Deductions 12-31-98
------- ---------- ---------- -----------
E. B. Brooks, Jr. $18,519 $63,504 $82,023* $ --
The above amounts are for working interests in gas sales in Schleicher
County Texas and the amount is paid by Brooks monthly as he receives
the sale proceeds.
*This amount consists of payments received of $72,602 and $9,421
offset by the amount owed to Mr. Brooks.
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT
- ----------
Balance Balance
Description: 1-1-98 Additions Retirement 12-31-98
---------- ---------- ---------- ----------
Oil and gas $2,044,925 $ 154,481 $ 388,171 $1,811,235
properties
Automotive 27,751 -- 27,751 --
equipment
Furniture and 2,100 17,128 2,100 27,128
equipment ---------- --------- ---------- ----------
Totals $2,074,776 $ 171,609 $ 418,022 $1,828,363
========== ========= ========== ==========
SCHEDULE VI - ACCUMULATED DEPRECIATION, DEPLETION AND
- -----------
AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT
Balance Balance
Description: 1-1-98 Additions Retirement 12-31-98
---------- ------------- ----------- ------------
Oil and gas $1,249,627 $ 90,846 $ 59,842 $1,280,631
properties
Automotive 7,960 2,664 10,624 --
equipment
Furniture and 2,100 -- 2,100 --
equipment ---------- --------- ---------- ----------
Totals $1,259,687 $ 93,510 $ 72,566 $1,280,631
========== ========= ========== ==========
See auditor's report on other financial information
-19-
<PAGE>
GLADSTONE RESOURCES, INC.
CAPITALIZED COSTS OF OIL AND GAS PRODUCING ACTIVITIES
For the two years ended December 31, 1998
DISCLOSURE 2
------------
<TABLE>
<CAPTION>
United States Total
-------------------------------
1998 1997
------------ -----------
<S> <C> <C>
Capitalized costs - proved properties $ 1,753,971 $ 1,966,105
Capitalized costs - unproven properties 57,264 78,820
------------ -----------
Total capitalized costs 1,811,235 2,044,925
Accumulated depletion and depreciation (1,280,631) (1,249,627)
------------ -----------
Net costs $ 530,604 $ 795,298
============ ===========
</TABLE>
See auditor's report on other financial Information
-20-
<PAGE>
GLADSTONE RESOURCES, INC.
COSTS INCURRED IN OIL AND GAS PROPERTY
ACQUISITION, EXPLORATION AND DEVELOPMENT ACTIVITIES
For the three years ended December 31, 1998
DISCLOSURE 3
------------
United States Totals
---------------------------------------------
1998 1997 1996
---------- ---------- --------
Acquisition of properties:
Proved $ -- $ -- $ --
Unproven 29,939 45,059 10,978
Exploration 243,765 311,595 97,544
Development costs 4,451 690 20,188
Production costs 118,909 113,964 142,053
See auditor's report on other financial information
-21-
<PAGE>
GLADSTONE RESOURCES, INC.
RESULTS OF OPERATIONS FOR PRODUCING ACTIVITIES
For the three years ended December 31, 1998
DISCLOSURE 4
------------
For United States
--------------------------------------------
1998 1997 1996
------- ------- -------
Sales $ 264,002 $ 511,477 $ 472,915
--------- --------- ---------
Production costs and taxes 130,912 138,255 164,074
Exploration expenses (dry holes,
abandonments and delay rents) 243,765 462,631 97,544
Asset impairment charge 181,946 -- --
Depreciation, depletion and amortization 99,551 127,806 105,466
---------- -------- ---------
656,174 728,692 367,084
--------- -------- ---------
Results of operations from producing
activities (excluding corporate
overhead and interest costs) $(392,172) $(217,215) $ 105,831
========== ========= =========
See auditor's report on other financial information
-22-
<PAGE>
GLADSTONE RESOURCES, INC.
RESERVE QUANTITY INFORMATION
For the three years ended December 31, 1998
DISCLOSURE 5
------------
<TABLE>
<CAPTION>
Proved developed reserves:* United States and Total
-------------------------------------------------------
1998 1997 1996
-------------- ----------------- -----------------
Oil Gas(1) Oil Gas(1) Oil Gas(1)
------ ------ ------ --------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Beginning of year 86,904 772,135 101,636 1,430,825 117,685 1,516,554
Development of new properties -- -- -- -- 126(2) --
Revisions of previous estimates (725) 66 -- (565,573) -- --
Extensions of proved reserves -- -- -- -- -- --
Sales of producing properties -- -- -- -- -- --
Production (11,057) (62,690) (14,732) (93,117) (16,175) (85,729)
------- ------- ------- ------- ------- ---------
End of year 75,122 709,511 86,904 772,135 101,636 1,430,825
====== ======= ======= =========
Sale of properties (3) (75,122)(525,727)
======= =======
Balance after sale of Jan. 19, 1999 -- 183,784
======= =======
- ----------------------------------
(1) Gas includes gas liquids.
(2) Production from two wells drilled in 1996 and at year end were declared as
non-productive due to mechanical problems with the wells. Other wells
drilled on the same leases in 1997 were non-productive.
(3) The Company sold the Schleicher and Kent Counties properties on January 19,
1999, effective as of October 1, 1998.
</TABLE>
Oil quantities are in barrels.
Gas quantities are in MCF'S.
*All undeveloped reserves that may exist are on the same leases as the
developed reserves and additional wells, if drilled, may or may not
produce additional reserves.
See auditor's report an other financial information
-23-
<PAGE>
GLADSTONE RESOURCES, INC. AND SUBSIDIARY
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
December 31, 1998
ASSETS
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
------------ ------------ -----------
<S> <C> <C> <C>
Current assets:
Cash $ 23,372 $ 315,000(2) $ 338,372
Accounts receivable 6,129 -- 6,129
--------- ---------- -----------
Total current assets 29,501 315,000 344,501
Property and equipment:
Gas and oil properties (successful 1,811,235 (1,188,560)(1) 622,675
efforts method)
Equipment 17,128 -- 17,128
--------- ----------- -----------
1,828,363 (1,188,560) 639,803
Less accumulated depletion
and depreciation (1,280,631) 873,560(1) 407,071
--------- ---------- -----------
Total property and equipment 547,732 (315,000) 232,732
Other assets:
Cost in excess of amount assigned
to net assets of subsidiary at date
of acquisition 337,000 -- 337,000
Less accumulated amortization (293,783) -- (293,783)
--------- ---------- ------------
Total other assets 43,217 -- 43,217
--------- ---------- ------------
$ 620,450 $ -- $ 620,450
========= ========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 21,729 $ $ 21,729
Accrued expenses -- -- --
-------- ---------- -----------
Total current liabilities 21,729 -- 21,729
Deferred income taxes -- -- --
---------- ---------- -----------
Stockholders' equity:
Common stock 150,000 -- 150,000
Capital in excess of stated value 1,230,134 -- 1,230,134
Retained earnings (deficit) (781,413) -- (781,413)
----------- ---------- -----------
Total stockholders' equity 598,721 -- 598,721
----------- ---------- ------------
$ 620,450 $ $ 620,450
========== ========== ============
</TABLE>
The accompanying notes are an integral part of this financial
statement.
-24-
<PAGE>
GLADSTONE RESOURCES, INC. AND SUBSIDIARY
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For the year ended December 31, 1998
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments ProForma
------------ ------------ -----------
<S> <C> <C> <C>
Sales:
Gas and oil $ 264,002 $ (213,377)(1) $ 50,625
---------- ------------ ---------
Cost of sales:
Production taxes 12,003 (8,604)(1) 3,399
Well operating expense 118,909 (57,228)(1) 61,681
---------- ------------ ---------
130,912 (65,832) 65,080
---------- ------------ ---------
Gross profit on sales 133,090 (147,545) (14,455)
---------- ------------ ---------
Expenses:
Dry hole and abandonments 243,764 -- 243,764
Depletion 90,846 (61,433)(1) 29,413
Depreciation and amortization 11,369 -- 11,369
General and administrative 11,162 -- 11,162
Taxes 352 -- 352
Legal, audit and accounting 12,704 -- 12,704
Asset impairment charge 181,946 (181,946)(3) --
Recovery of taxes (35,648) -- (35,648)
---------- ------------- -----------
516,495 (243,379) 273,116
---------- ------------- ----------
Income (loss) from operations (383,405) 95,834 (287,571)
Other income:
Unrealized gain (loss) on
investments (108,134) -- (108,134)
Interest income 3,972 -- 3,972
---------- ------------ ----------
Income (loss) before taxes (487,567) 95,834 (391,733)
Income taxes (benefit)- deferred (1,300) -- (1,300)
---------- ------------ -----------
NET INCOME (LOSS) $ (486,267) $ 95,834 $ (390,433)
========== ============ ===========
Earnings (loss) per share:
Basic $ (.11) $ .02 $ (.09)
========== ============ ===========
Diluted $ (.11) $ .02 $ (.09)
========== ============== ==========
</TABLE>
The accompanying notes are an integral part of this financial
statement
-25-
<PAGE>
GLADSTONE RESOURCES, INC. AND SUBSIDIARY
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For the year ended December 31, 1997
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments ProForma
------------- ------------ -------------
<S> <C> <C> <C>
Sales:
Gas and oil $ 511,477 $ (405,928)(1) $ 105,549
Cost of sales:
Production taxes 24,291 (17,239)(1) 7,052
Well operating expense 113,964 (52,055)(1) 61,909
------------ ----------- --------
138,255 69,294 68,961
------------ ----------- --------
Gross profit on sales 373,222 (336,634) 36,588
------------ ----------- --------
Expenses:
Dry hole and abandonments 462,631 -- 462,631
Depletion 115,003 (71,502)(1) 43,501
Depreciation and amortization 18,100 -- 18,100
General and administrative 12,851 -- 12,851
Taxes 2,905 -- 2,905
Legal, audit and accounting 9,623 -- 9,623
------------ ----------- --------
621,113 (71,502) 549,611
------------ ----------- --------
Income (loss) from operations (247,891) (265,132) (513,023)
Other income:
Gain on sale of assets 13,429 -- 13,429
Unrealized gain (loss) on
investments (937) -- (937)
Interest income 11,877 -- 11,877
------------ ------------ --------
Income (loss) before taxes (223,522) (265,132) (488,654)
Income taxes (benefit)-deferred (26,860) (31,860) (58,720)
------------ ----------- --------
NET INCOME (LOSS) $ (196,662) $ (233,272) $ (429,934)
============ =========== ==========
Earnings (loss) per share:
Basic $ (.05) $ (.05) $ (.10)
============ =========== ==========
Diluted $ (.05) $ (.05) $ (.10)
============ ============ ==========
</TABLE>
The accompanying notes are an integral part of this financial statement.
-26-
<PAGE>
GLADSTONE RESOURCES, INC. AND SUBSIDIARY
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For the year ended December 31, 1996
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments ProForma
-------------- ------------ -----------
<S> <C> <C> <C>
Sales:
Gas and oil $ 472,915 $ (381,064)(1) $ 91,851
------------ ----------- --------
Cost of sales:
Production taxes 22,021 (15,669)(1) 6,352
Well operating expense 142,053 (60,159)(1) 81,894
------------- ----------- --------
164,074 (75,828) 88,246
------------- ----------- --------
Gross profit on sales 308,841 (305,236) 3,605
------------- ----------- --------
Expenses:
Dry hole and abandonments 97,544 -- 97,544
Depletion 101,275 (42,243)(1) 59,032
Depreciation and amortization 9,072 -- 9,072
General and administrative 18,222 -- 18,222
Taxes 586 -- 586
Legal, audit and accounting 7,664 -- 7,664
------------- ----------- -----------
234,363 (42,243) 192,120
------------- ----------- -----------
Income (loss) from operations 74,478 (262,993) (188,515)
Other income:
Interest income 7,637 -- 7,637
Recovery from uncollectible
note receivable 6,146 -- 6,146
------------- ----------- -----------
Income (loss) before taxes 88,261 (262,993) (174,732)
Income taxes (benefit)-deferred 14,509 (40,719) (26,210)
------------- ----------- -----------
NET INCOME (LOSS) $ 73,752 $ (222,274) $ (148,522)
============= =========== ===========
Earnings (loss) per share:
Basic $ .02 $ (.05) $ (.03)
============= =========== ===========
Diluted $ .02 $ (.05) $ (.03)
============= =========== ===========
</TABLE>
The accompanying notes are an integral part of this financial
statement.
-27-
<PAGE>
GLADSTONE RESOURCES, INC.
FOOTNOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
(1) To reflect the elimination of assets relating to and
resulting from the operations of the Schleicher and Kent
Counties (Texas) oil and gas wells sold in connection with
the Sale.
(2) To reflect the net proceeds resulting from and related to
the Sale of the Schleicher and Kent County oil and gas wells
calculated as follows:
Gross proceeds from sale of assets $315,000
=========
(There were no fees or expenses associated with the sale)
(3) To reflect the loss for financial statement purposes
resulting from the Sale of the oil and gas wells calculated
as follows:
Gross proceeds from sale of the wells $315,000
Net book value of assets relating to
the wells (496,946)
---------
Impairment (loss) in value of assets
recorded in 1998 $181,946
=========
-28-
<PAGE>
MARKET INFORMATION AND DIVIDENDS
Market information
There is no current public market for the company's common
stock.
According to the records of the Company's transfer agent,
there were 539 holders of record of the Company's common stock at
June 17, 1999.
Dividends
The Company has not paid any cash dividends on its common
stock, and it is not anticipated that dividend payments would be
considered in the foreseeable future. The Board of Directors of
the Company presently plans to retain the Company's earnings to
finance the development and expansion of the Company's
operations. Future dividend policy is subject to the discretion
of the Board of Directors and will depend on a number of factors,
including future earnings, capital requirements and the financial
condition of the Company.
-29-
<PAGE>
DIRECTORY
DIRECTORS
H. Wayne Gifford
President of Gifford Operating Company
Johnathan M. Hill
President of Hill & Hill
Production Company
Charles B. Humphrey
President of Humphrey Oil Corporation
Katherine R. Murphy
Vice President and Assistant Secretary
of Humphrey Oil Corporation
Fred Oliver
President of Petroleum Ventures
OFFICERS
Johnathan Hill
President
Sheila Irons
Vice President and Secretary
Katherine R. Murphy
Treasurer and Assistant Secretary
EXECUTIVE OFFICES
3500 Oak Lawn, Suite 590, LB 49
Dallas, Texas 75219
Telephone: (214) 528-9710
LEGAL COUNSEL
Arter & Hadden LLP
1717 Main Street, Suite 4100
Dallas, Texas 75201
AUDITORS
Harold L. Ratcliff
4514 Cole Avenue, Suite 1010
Dallas, Texas 75205
TRANSFER AGENT
American Securities Transfer & Trust, Inc.
938 Quail Street, Suite 101
Lakewood, Colorado 80215
ANNUAL MEETING
The annual meeting of stockholders will be held at 3500 Oak Lawn,
Suite 590, Dallas, Texas 75219 on July 15, 1999 at 10:00 a.m.
Stockholders of record on June 17, 1999 will be mailed an
official notice of the meeting.
ANNUAL REPORT ON FORM 10-K
THE COMPANY, WITHOUT CHARGE, WILL PROVIDE TO EACH STOCKHOLDER, ON
WRITTEN REQUEST, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM
10-K INCLUDING FINANCIAL STATEMENTS AND FINANCIAL STATEMENT
SCHEDULES, BUT WITHOUT EXHIBITS, REQUIRED TO BE FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION FOR THE FISCAL YEAR ENDED
DECEMBER 31, 1998. WRITTEN REQUESTS FOR SUCH FORM 10-K SHOULD BE
DIRECTED TO SHEILA IRONS, SECRETARY, GLADSTONE RESOURCES, INC.,
3500 OAK LAWN, SUITE 590, LB 49, DALLAS, TEXAS 75219.
-30-
