<PAGE> 1
- --------------------------------------------------------------------------------
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
-------------
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _________ TO ___________
COMMISSION FILE NUMBER: 0-12185
-------------
DAUGHERTY RESOURCES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
PROVINCE OF BRITISH COLUMBIA NOT APPLICABLE
(State or other jurisdiction of incorporation or (I.R.S. EMPLOYER
organization) IDENTIFICATION NO.)
120 PROSPEROUS PLACE, SUITE 201
LEXINGTON, KENTUCKY 40509-1844
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (606) 263-3948
-------------
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No .
--- ---
THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE REGISTRANT'S CLASSES OF
COMMON STOCK, AS OF SEPTEMBER 30, 1998, WAS 2,183,783.
Transitional Small Business Disclosure Format (check one): Yes No X .
--- ---
- --------------------------------------------------------------------------------
================================================================================
<PAGE> 2
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
The information required by this Item 1 appears on pages 8 through 11
of this Report, and is incorporated herein by reference.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The following is a discussion of the Company's financial condition and
results of operations. This discussion should be read in conjunction with the
Financial Statements of the Company described in Item 1 of this Report.
Statements contained in this "Management's Discussion and Analysis of Financial
Condition and Results of Operations," which are not historical facts may be
forward looking statements. Reliance upon such information involves risks and
uncertainties, including those created by general market conditions, competition
and the possibility that events may occur which could limit the ability of the
Company to maintain or improve its operating results or execute its primary
growth strategy. Although management believes that the assumptions underlying
the forward-looking statements are reasonable, any of the assumptions could be
inaccurate, and there can be no assurances that the forward-looking statements
included herein will prove to be accurate. The inclusion of such information
should not be regarded as a representation by management or any other person
that the objectives and plans of the Company will be achieved. Moreover, such
forward-looking statements are subject to certain risks and uncertainties which
could cause actual results to differ materially from those projected. Readers
are cautioned not to place undue reliance on these forward-looking statements
that speak only as of the date hereof.
Daugherty Resources, Inc., formerly Alaska Apollo Resources Inc., (the
"Company" or the "Registrant") is a diversified natural resources company with
assets in oil and gas, wood products, manufacturing, and gold prospects.
Originally formed in 1979 to develop gold properties, the Company in the fourth
quarter of 1993, acquired its wholly owned subsidiary, Daugherty Petroleum, Inc.
The purchase of Daugherty Petroleum, Inc. and the subsequent purchase of 80% of
Red River Hardwoods, Inc. in the fourth quarter of 1996 have given the Company a
diversified revenue and asset base that primarily is located in Appalachia.
Since acquiring Daugherty Petroleum, Inc., the Company has increased
its reserves through the acquisition of oil and gas properties in the
Appalachian and Illinois Basins, and the drilling of wells through joint venture
and turnkey drilling programs, where Daugherty Petroleum, Inc. is the primary
decision maker. The Company continues to aggressively seek acquisitions and
drilling programs.
At the Annual General Meeting held on June 22, 1998, shareholders
approved special resolutions, effective June 23, 1998, including one that
changed the Company's name from Alaska Apollo Resources Inc. to Daugherty
Resources, Inc., a name that management believes more closely represents the
Company's current revenue generating activities. Further, special resolutions
were approved that increased the Company's capital structure as follows:
1. The Company's authorized common shares were increased from
20,000,000 common shares without par value, of which 10,141,331 are issued, to
50,000,000 common shares without par value, of which 10,141,331 will be issued;
2. The Memorandum of the Company was altered so that the
authorized capital was increased by creating 6,000,000 preferred shares without
par value;
3. Special rights and restrictions were attached to the
common shares and preferred shares;
4. The 50,000,000 common shares and 6,000,000 preferred shares
were consolidated by a 1 for 5 reverse stock split, resulting in the authorized
capital of the Company being 11,200,000 shares, divided into 10,000,000 common
shares without par value, with 2,028,266 common shares issued and outstanding
and 1,200,000 preferred shares without par value.
2
<PAGE> 3
Effective 8:00 a.m. June 29, 1998, the Company's stock was traded on
The Nasdaq Small Cap Market under the name Daugherty Resources, Inc. and the
symbol "NGASF".
The issuance of preferred stock by the Company will allow the planned
acquisition of certain operating wells in Kentucky, Louisiana and Tennessee.
Management believes this acquisition will close in the fourth quarter of 1998.
In addition, the Company has signed a program agreement to drill 100 wells in
southeastern Kentucky, in which the Company will retain from 15% to 50% working
interests.
Red River Hardwoods, Inc. has continued to diversify the Company by
adding lumber activities. Since its acquisition by the Company, Red River
Hardwoods has experienced increased revenues that are reflected on the
consolidated financial statement. Management has initiated a change in Red
River's product mix from primarily oak furniture to poplar mouldings and
furniture parts. Poplar, a predominant species in eastern Kentucky, has
increasingly become a substitute for western pine in the wood products industry.
With its close proximity to significant supplies of poplar, Red River will
continue to manufacture good quality, price-competitive products.
Along with revenues from Red River's operations, the Company continues
its tradition of realizing revenues from its oil and gas operations. For the
nine months ending September 30, 1998, the Company drilled ten natural gas wells
and completed nine natural gas wells. Additionally, the Company extended its gas
gathering system located in Knox County, Kentucky by 10,500 feet. By comparison,
for the same period of 1997, the Company drilled nine natural gas wells and
completed nine natural gas wells. Drilling operations for the first nine months
of 1998 were primarily related to a joint venture on the Company's farmout
acreage acquired from Equitable Resources Energy Corporation.
LIQUIDITY
The Company continues to acquire natural gas and oil properties.
Daugherty Petroleum, Inc. has provided the Company with a diversified asset base
which includes natural resources other than its original gold and silver mining
properties. During the first nine months of 1998, management continued to invest
in areas it deemed crucial in developing an infrastructure suitable to support
future growth. These areas included ongoing expenses in management, professional
and operational personnel, and other expenses deemed necessary to position the
Company for future acquisitions and financing.
Historically, the Company's revenues have been from its interests in
the producing natural gas and oil wells it operates and in which it owns
interests, from its activities as "turnkey driller" and operator for various
drilling programs in its geographic area, and sales of wood products. Daugherty
Petroleum, Inc. has reduced its dependence on activities as "turnkey driller"
for private investors and instead concentrated on joint ventures with industry
partners. During the first nine months of 1998, approximately 27% of the
Company's revenues were derived from joint venture drilling. Natural gas and oil
operations and revenues accounted for 10% of the revenues. Manufacturing sales
related to Red River accounted for 63% of the revenues.
The Company plans to drill 7 wells during the fourth quarter of 1998
and will attempt to earn interests ranging from 12.5% to 50% interest in each
well it drills.
Working capital for the period ending September 30, 1998, was a
negative $2,764,610 compared to the same period in 1997, when working capital
was a negative $436,378.
During the first nine months of 1998, and compared to the same period
in 1997, the changes in the composition of the Company's current assets were:
cash balances increased $59,458 from $316,118 to $375,576, accounts receivable
balances decreased $83,808 from $632,588 to $548,780; and inventories decreased
$253,976 from $617,234 to $363,258. Other current assets such as prepaids and
notes receivable decreased $95,732 from $104,805 to $9,073. Overall, current
assets decreased by $374,058 to $1,296,687.
3
<PAGE> 4
Current liabilities for the period ended September 30, 1998 were
$4,061,297 compared to $2,064,805 for the period ended September 30, 1997.
Drilling pre-payments expected to be used during 1998 accounted for $1,022,654
of the increase and a new revolving line of credit accounted for $622,177 of the
increase.
While management believes that its cash flow resulting in operating
revenues will contribute significantly to its short-term financial commitments
and operating costs, it has continued to refine its long range strategy in 1998
to meet the Company's financial obligations. This strategy involves:
- ACQUISITION OF REVENUE-PRODUCING PROPERTIES: In November 1997,
Daugherty Petroleum signed a Letter of Intent to acquire
producing oil and gas properties in Kentucky, Louisiana and
Tennessee. Management believes that the addition of these
properties will favorably impact the Company's cash flow.
Daugherty Petroleum is continually reviewing existing
properties in its area of interest that are for sale.
- ACQUIRING A LINE OF CREDIT: The Company obtained a $1,000,000
line of credit from Compass Bank of Houston, Texas.
- INSTALLATION OF ADDITIONAL NATURAL GAS GATHERING SYSTEM: The
Company plans to expand its natural gas pipeline by 45,000
feet in 1998. The extension will allow for substantially more
natural gas to be transported to market from wells drilled in
1997 and 1998.
- ADDITIONAL FUNDING FOR RED RIVER HARDWOODS, INC.: The Company
is seeking additional capital for Red River Hardwoods, Inc.
that will allow it to increase its inventory, which would
permit Red River to operate at a more efficient capacity, and
thereby increase its revenues.
RESULTS OF OPERATIONS
For the nine month period ending September 30, 1998, the Company's
gross revenues increased $826,477 to $4,408,820 from $3,582,343 for the same
period in 1997. The Company experienced a net loss of $1,195,972 in this period
compared to a net loss of $1,066,994 in the same period of 1997.
The Company's gross revenues were derived from drilling contract
revenues of $1,203,302 (27%) from natural gas and oil operations and production
revenues of $426,725 (10%) and lumber sales and product manufacturing revenues
of $2,778,793 (63%).
The increase in gross revenues of $826,477 was primarily attributable
to the increased drilling activities and lumber sales during the period.
Contract revenues from drilling activities increased by $446,656 from $756,646
in the first nine months of 1997 to $1,203,302 in the first nine months of 1998.
Manufacturing revenues related to Red River Hardwoods increased by $349,987 from
$2,428,806 in the first nine months of 1997 to $2,778,793 in the first nine
months of 1998.
During the first nine months of 1998, total direct costs increased by
$1,124,941 to $4,119,881 compared to $2,994,940 in the first nine months of
1997. These direct costs included Red River Hardwoods' expenses and drilling
costs for nine natural gas wells.
The Company believes there are several factors that will increase
revenues for 1998. First, the prices received for natural gas produced are up
over 1997's overall average price. Secondly, the natural gas gathering system
expansion planned for 1998 will dramatically increase Daugherty Petroleum's
ability to transport natural gas to the market. Thirdly, The Company will
receive additional revenues from the pending acquisition of oil and gas
properties. Further, the commencement of drilling on the 100 well drilling
contract should positively impact earnings for the second half of 1998.
YEAR 2000 INFORMATION
The Company's field and administrative operations have been reviewed
for Year 200 Compliance. Normal upgrades will result in essential operations
being Year 2000 compliant. Some remaining operations, such as non-essential
personal computers and non-financial software products, can be easily upgraded
at nominal cost and inconvenience.
4
<PAGE> 5
The Company has contacted its gas purchasers and third party software and
service vendors concerning Year 2000 compliance. Those third parties not already
compliant have indicated that they are working to be compliant. The Company will
be preparing contingency plans regarding those third parties that do not
currently meet Year 2000 compliance standards. Costs incurred to date, future
costs, implementation of contingency plans and completion of modifications or
replacements have not been and are not expected to be material or pose a
material risk.
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None.
ITEM 5. OTHER INFORMATION.
Not Applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) List of Documents Filed with this Report.
-----------------------------------------
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
(1) Balance Sheet for the Period Ended June 30, 1998.................8
Income Statement for the Period Ended June 30, 1998.......... 9-10
Computation of Per Share Earnings...............................11
</TABLE>
All schedules have been omitted since the information required to be
submitted has been included in the financial statements or notes or has been
omitted as not applicable or not required.
(2) Exhibits--
The exhibits indicated by an asterisk (*) are incorporated by
reference.
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------ ----------------------
3(a)* Memorandum and Articles for Catalina Energy & Resources
Ltd., a British Columbia corporation, dated January 31,
1979, filed as an exhibit to Form 10 Registration Statement
filed May 25, 1984. File No. 0-12185.
3(b)* Certificate for Catalina Energy & Resources Ltd., a British
Columbia corporation, dated November 27, 1981, changing the
name of Catalina Energy & Resources Ltd. to Alaska Apollo
Gold Mines Ltd., and further changing the authorized capital
of the Company from 5,000,000 shares of common stock,
without par value per share, to 20,000,000 shares of common
stock, without par value per share, filed as an exhibit to
Form 10 Registration Statement filed May 25, 1984. File No.
0-12185.
3(c)* Certificate of Change of Name for Alaska Apollo Gold Mines
Ltd., a British Columbia corporation, dated October 14,
1992, changing the name of Alaska Apollo Gold Mines Ltd. to
Alaska Apollo Resources Inc., and further changing the
authorized capital of the Company from 20,000,000 shares of
common stock, without par value per share, to 6,000,000
shares of common stock, without par value per share.
5
<PAGE> 6
3(d)* Altered Memorandum of Alaska Apollo Resources Inc., a
British Columbia corporation, dated September 9, 1994,
changing the authorized capital of the Company from
6,000,000 shares of common stock, without par value per
share, to 20,000,000 shares of common stock, without par
value per share.
3(e) Certificate of Change of Name for Alaska Apollo Resources
Inc., a British Columbia corporation, dated June 24, 1998,
changing the name of Alaska Apollo Resources Inc. to
Daugherty Resources, Inc. and further changing the
authorized capital of the Registrant from 20,000,000 shares
of common stock, without par value per share, to 50,000,000
shares of common stock, without par value, and authorizing
the creation of 6,000,000 shares of preferred stock, without
par value per share.
3(f) Altered Memorandum of Daugherty Resources, Inc., a British
Columbia corporation, dated June 24, 1998, changing the
authorized common stock of the Registrant from 50,000,000
shares of common stock, without par value per share, to
10,000,000 shares of common stock, without par value.
3(g) Altered Memorandum of Daugherty Resources, Inc., a British
Columbia corporation, dated June 25, 1998, changing the
authorized preferred stock of the Registrant from 6,000,000
shares of preferred stock, without par value per share, to
1,200,000 shares of preferred stock, without par value.
4* See Exhibit No. 3(a).
10(a)* Alaska Apollo Resources Inc. 1997 Stock Option Plan, filed
as Exhibit 10(a) to Form 10-K for the Company for the fiscal
year ended December 31, 1996. (File No. 0-12185).
10(b)* Incentive Stock Option Agreement by and between Alaska
Apollo Resources Inc. and William S. Daugherty dated March
7, 1997, filed as Exhibit 10(b) to Form 10-K for the Company
for the fiscal year ended December 31, 1996. (File No.
0-12185).
10(c)* Warrant Agreement by and between Alaska Apollo Resources
Inc. and Jayhead Investments Limited dated March 7, 1997,
filed as Exhibit 10(c) to Form 10-K for the Company for the
fiscal year ended December 31, 1996. (File No. 0-12185).
10(d)* Warrant Agreement by and between Alaska Apollo Resources
Inc. and Trio Growth Trust dated March 7, 1997, filed as
Exhibit 10(d) to Form 10-K for the Company for the fiscal
year ended December 31, 1996. (File No. 0-12185).
10(e)* Warrant Agreement by and between Alaska Apollo Resources
Inc. and Exergon Capital S.A. dated March 7, 1997, filed as
Exhibit 10(e) to Form 10-K for the Company.
11 Computation of Per Share Earnings
27 Financial Data Schedule.
(b) Reports on Form 8-K.
--------------------
Current Report on Form 8-K for the Company dated June 29,
1998, File No. 0-12185, reported the results of the General
Annual Meeting shareholder vote on special resolutions,
resulting in name change and change in capital structure.
(Item 5. Other Events.)
6
<PAGE> 7
(c) Financial Statement Schedules.
------------------------------
No schedules are required as all information required has
been presented in the audited financial statements.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf of the
undersigned hereunto duly authorized.
DAUGHERTY RESOURCES, INC.
By: /s/ William S. Daugherty
-------------------------------
William S. Daugherty, President
Dated: November 13, 1998
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 dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ William S. Daugherty Chairman of the Board, President, November 13, 1998
- -------------------------- Director of the Registrant
WILLIAM S. DAUGHERTY
James K. Klyman* Director of the Registrant November 13, 1998
- --------------------------
JAMES K. KLYMAN
Charles L. Cotterell* Director of the Registrant November 13, 1998
- --------------------------
CHARLES L. COTTERELL
/s/ Daryl J. Greattinger Chief Financial Officer November 13, 1998
- --------------------------
DARYL J. GREATTINGER
*By William S. Daugherty
----------------------
William S. Daugherty,
Attorney-in-Fact
</TABLE>
7
<PAGE> 8
DAUGHERTY RESOURCES, INC.
SUMMARY CONSOLIDATED BALANCE SHEETS
(United States Dollars)
Unaudited
<TABLE>
<CAPTION>
9/30/97 9/30/98
----------- ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 316,118 $ 375,576
Accounts receivable 632,588 548,780
Inventory 617,234 363,258
Other current assets 104,805 9,073
----------- -----------
TOTAL CURRENT ASSETS 1,670,745 1,296,687
OIL & GAS PROPERTIES (NET) 3,776,068 4,388,332
MINING PROPERTY (NET) 11,252,733 11,227,733
PROPERTY & EQUIPMENT (NET) 1,985,415 1,824,185
OTHER ASSETS
Related party loans 51,612 82,386
Bonds & deposits 68,282 54,224
Other assets 351,885 300,743
Goodwill, net of amortization of $953,077 1,362,059 1,151,592
----------- -----------
1,833,838 1,588,945
----------- -----------
TOTAL ASSETS $20,518,799 $20,325,882
=========== ===========
LIABILITIES & STOCKHOLDER'S EQUITY
CURRENT LIABILITIES
Short-term loans & notes $ 57,000 $ 7,000
Current portion of LT debt 510,000 1,294,939
Accounts payable 1,063,350 1,208,217
Accrued liabilities 434,455 528,487
Drilling prepayments - 1,022,654
----------- -----------
TOTAL CURRENT LIABILITIES 2,064,805 4,061,297
LONG-TERM LIABILITIES 3,857,539 3,152,211
PAYABLE TO RELATED PARTIES 42,318 34,409
----------- -----------
TOTAL LIABILITIES 5,964,662 7,247,917
MINORITY INTEREST 757 757
STOCKHOLDER'S EQUITY
Common stock 20,670,461 21,209,821
Retained earnings (deficit) (5,050,087) (6,936,641)
Current income (loss) (1,066,994) (1,195,972)
----------- -----------
STOCKHOLDER'S EQUITY 14,553,380 13,077,208
----------- -----------
TOTAL LIABILITIES & STOCKHOLDER'S EQUITY $20,518,799 $20,325,882
=========== ===========
</TABLE>
Unaudited-Internally prepared by Company management
8
<PAGE> 9
DAUGHERTY RESOURCES, INC.
SUMMARY CONSOLIDATED STATEMENTS OF INCOME
(United States Dollars)
Unaudited
<TABLE>
<CAPTION>
For the nine month period ended
9/30/97 9/30/98
------------------------ ------------------------
<S> <C> <C> <C> <C>
GROSS REVENUE $ 3,582,343 100.00% $ 4,408,820 100.00%
DIRECT EXPENSES 2,994,940 83.60% 4,119,881 93.45%
------------ ------ ------------ ------
GROSS PROFIT 587,403 16.40% 288,939 6.55%
GENERAL & ADMINISTRATIVE EXPENSES
Salaries & wages 251,040 7.01% 347,719 7.89%
Accounting & audit 25,394 0.71% 84,649 1.92%
Advertising & promotion 32,559 0.91% 9,461 0.21%
Amortization 157,851 4.41% 157,851 3.58%
Bad debts 133,946 3.74% - 0.00%
Depreciation 50,177 1.40% 52,919 1.20%
General consulting 98,947 2.76% 147,562 3.35%
Insurance 67,491 1.88% 36,695 0.83%
Legal 142,288 3.97% 101,561 2.30%
Office & general 108,059 3.02% 152,673 3.46%
Payroll & property tax 23,264 0.65% 30,109 0.68%
Rent 72,947 2.04% 36,652 0.83%
Repairs & maintenance 5,152 0.14% 7,736 0.18%
Shareholder & investor information 66,632 1.86% 51,977 1.18%
Travel & entertainment 45,163 1.26% 51,636 1.17%
------------ ------ ------------ ------
TOTAL G & A EXPENSES 1,280,910 35.76% 1,269,200 28.79%
OTHER INCOME (EXPENSE)
Interest & dividend income 3,136 0.09% 26,203 0.59%
Miscellaneous 29,334 0.82% 41,589 0.94%
Gain (loss) on sale of equipment (200,095) -5.59% - 0.00%
Interest expense (205,862) -5.75% (283,503) -6.43%
------------ ------ ------------ ------
INCOME BEFORE INCOME TAX & OTHER (1,066,994) -29.78% (1,195,972) -27.13%
Income tax expense (benefit) - 0.00% - 0.00%
MINORITY PORTION - 0.00% - 0.00%
------------ ------ ------------ ------
NET INCOME (LOSS) $ (1,066,994) -29.78% $ (1,195,972) -27.13%
====== ======
DEFICIT, beginning of period (5,050,087) (6,936,641)
------------ ------------
DEFICIT, end of period $ (6,117,081) $ (8,132,613)
============ ============
Shares outstanding 1,899,696 2,183,783
EARNINGS PER SHARE ($0.56) ($0.55)
====== ======
</TABLE>
Unaudited-Internally prepared by Company management
9
<PAGE> 10
DAUGHERTY RESOURCES, INC.
SUMMARY CONSOLIDATED STATEMENTS OF CASH FLOWS
(United States Dollars)
Unaudited
<TABLE>
<CAPTION>
For the nine month period ended
9/30/97 9/30/98
------------ --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (1,066,994) $ (1,195,972)
Adjustments to reconcile net income (loss) to net cash
cash provided by operating activities:
Depreciation, depletion, & amortization 518,385 440,447
Minority interest - -
Changes in current assets & liabilities
(Increase) decrease in:
Accounts receivable (74,206) (55,058)
Inventory (36,919) 314,886
Other current assets (63,924) 55,589
Increase (decrease) in:
Short-term loans & notes - (59,100)
Accounts payable 32,129 (264,495)
Accrued liabilities - 168,091
Drilling prepayments - (380,653)
------------ ------------
Net cash provided by (used in) operating activities (691,529) (976,265)
CASH FLOWS FROM INVESTING ACTIVITIES
Change in oil & gas properties 394,627 (558,969)
Change in mining properties - 4,496
Change in property & equipment 32,059 (32,219)
Change in other assets (217,733) (96,368)
------------ ------------
Net cash provided by (used in) investing activities 208,953 (683,060)
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of common stock 149,991 255,385
Change in long-term liabilities 395,443 531,870
Change in payable to related party 6,692 8,086
------------ ------------
Net cash provided by (used in) financing activities 552,126 795,341
------------ ------------
NET INCREASE (DECREASE) IN CASH 69,550 (863,984)
CASH AT BEGINNING OF PERIOD 246,568 1,239,560
------------ ------------
CASH AT END OF PERIOD $ 316,118 $ 375,576
============ ============
</TABLE>
Unaudited-Internally prepared by Company management
10
<PAGE> 11
DAUGHERTY RESOURCES, INC.
COMPUTATION OF PER SHARE EARNINGS
(United States Dollars)
Unaudited
The table below presents information necessary for the computation of
loss per share of the common stock, on both a primary and fully diluted basis,
for the nine months ended September 30, 1998 and 1997, and the years ended
December 31, 1997, 1996 and 1995. The computations below reflect the 1 for 5
Reverse Stock Split effective June 30, 1998.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
-----------------
SEPTEMBER 30 YEAR ENDED DECEMBER 31
------------ ----------------------
1998 1997 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net loss applicable to share of
Common Stock and Common
Stock equivalents $(1,195,972) $(1,066,994) $(1,708,418) $ (733,973) $(1,440,003)
Average number of shares of
Common Stock Outstanding 2,183,783 1,899,696 1,964,351 1,700,991 1,548,542
Common Stock equivalents 1,464,355 1,313,244 1,353,244 283,293 190,333
Total shares of Common Stock
and Common Stock equivalents 3,648,138 3,212,940 3,389,755 1,984,284 1,738,875
Primary loss per share of
Common Stock $ (.55) $ (.56) $ (.87) $ (.43) $ (.93)
Fully diluted loss per share of
Common Stock $ (.33) $ (.33) $ (.50) $ (.37) $ (.83)
</TABLE>
- --------------
Common Stock equivalents are considered anti-dilutive because of the
net losses incurred by the Company.
11
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JUL-01-1998
<PERIOD-END> SEP-30-1998
<EXCHANGE-RATE> 1
<CASH> 375,576
<SECURITIES> 0
<RECEIVABLES> 557,853
<ALLOWANCES> 0
<INVENTORY> 363,258
<CURRENT-ASSETS> 1,296,687
<PP&E> 19,029,195
<DEPRECIATION> 0
<TOTAL-ASSETS> 20,325,882
<CURRENT-LIABILITIES> 4,061,297
<BONDS> 3,187,377
21,209,821
0
<COMMON> 0
<OTHER-SE> (8,132,613)
<TOTAL-LIABILITY-AND-EQUITY> 20,325,882
<SALES> 4,408,820
<TOTAL-REVENUES> 4,408,820
<CGS> 4,119,881
<TOTAL-COSTS> 4,119,881
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 283,503
<INCOME-PRETAX> (1,195,972)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,195,972)
<EPS-PRIMARY> (.55)
<EPS-DILUTED> (.33)
</TABLE>