<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 March 31, 1999
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 MARCH 31, 1999, WAS 2,183,783.
Transitional Small Business Disclosure Format (check one):
Yes No X .
--- ---
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<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 that
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 were issued, to
50,000,000 common shares without par value;
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 2,183,783 common shares issued and outstanding as
of March
2
<PAGE> 3
31, 1999 and 1,200,000 preferred shares without par value authorized, with no
preferred shares outstanding as March 31, 1999.
Effective June 29, 1998, the Company's stock was traded on The Nasdaq
Small Cap Market under the name Daugherty Resources, Inc. Effective
March, 15, 1999, the Company's trading symbol was changed to "NGAS".
The creation of the preferred shares by the Company will allow the
planned acquisition of interests in certain oil and gas wells in Kentucky,
Louisiana and Tennessee, that the shareholders will be asked to approve at the
1999 Annual General Meeting. Management believes this acquisition will close in
the third quarter of 1999. 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
three months ending March 31, 1999, the Company drilled four natural gas wells.
By comparison, for the same period of 1998, the Company drilled six natural gas
wells and completed one natural gas well. Drilling operations for the first
three months of 1999 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
that includes natural resources other than its original gold and silver mining
properties. During the first three months of 1999, 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 three months of 1999, approximately 24% of the
Company's revenues were derived from joint venture drilling. Natural gas and oil
operations and revenues accounted for 8% of the revenues. Manufacturing sales
related to Red River accounted for 68% of the revenues.
The Company plans to drill 25 wells during the remainder of 1999 and
will attempt to earn interests ranging from 12.5% to 50% interest in each well
it drills.
Working capital for the period ending March 31, 1999, was a negative
$4,019,060 compared to the same period in 1998, when working capital was a
negative $1,702,968.
During the first three months of 1999, and compared to the same period
in 1998, the changes in the composition of the Company's current assets were:
cash balances decreased $312,049 from $610,402 to $298,353 accounts receivable
balances decreased $433,951 from $770,067 to $336,116; and inventories decreased
$191,164 from $587,795 to $396,631. Other current assets such as prepaids and
notes receivable increased $15,097 from $4,673 to $19,770. Overall, current
assets decreased by $922,067 to $1,050,870.
3
<PAGE> 4
Current liabilities for the period ended March 31, 1999 were $5,069,930
compared to $3,675,905 for the period ended March 31, 1998. A line of credit and
new short-term bank loans accounted for $847,177 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 1999
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.
- INCREASING THE LINE OF CREDIT: The Company obtained a
$1,000,000 line of credit from Compass Bank of Houston, Texas.
The Company expects to increase the line of credit in 1999.
- INSTALLATION OF ADDITIONAL NATURAL GAS GATHERING SYSTEM: The
Company plans to expand its natural gas pipeline by 45,000
feet in 1999. The extension will allow for substantially more
natural gas to be transported to market from wells drilled in
1998 and 1999.
RESULTS OF OPERATIONS
For the three month period ending March 31, 1999, the Company's gross
revenues decreased $517,609 to $1,360,129 from $1,877,738 for the same period in
1998. The Company experienced a net loss of $252,166 in this period compared to
a net loss of $64,244 in the same period of 1998.
The Company's gross revenues were derived from drilling contract
revenues of $326,834 (24%), from natural gas and oil operations and production
revenues of $112,604 (8%), and lumber sales and product manufacturing revenues
of $920,691 (68%).
The decrease in gross revenues of $517,609 was primarily attributable
to the decreased drilling activities and lumber sales during the period.
Contract revenues from drilling activities decreased by $367,619 from $694,453
in the first three months of 1998 to $326,834 in the first three months of 1999.
Manufacturing revenues related to Red River Hardwoods decreased by $123,772 from
$1,044,463 in the first three months of 1998 to $920,691 in the first three
months of 1999.
During the first three months of 1999, total direct costs decreased by
$385,233 to $1,207,507 compared to $1,592,390 in the first three months of 1998.
These direct costs included Red River Hardwoods' expenses and drilling costs for
four natural gas wells.
YEAR 2000 INFORMATION
The Company's field and administrative operations have been reviewed
for Year 2000 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. 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.
4
<PAGE> 5
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.
PAGE
----
(1) Balance Sheet for the Period Ended March 31, 1999....... 8
Income Statement for the Period Ended March 31, 1999.... 9-10
Computation of Per Share Earnings....................... 11
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.
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
5
<PAGE> 6
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. (File
No.0-12185).
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. (File
No.0-12185).
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.
Filed as an exhibit to Form 8-K, by the Company for
reporting an event on June 29, 1998. (File No.0-12185).
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.
24 Powers of Attorney.
27 Financial Data Schedule.
(b) REPORTS ON FORM 8-K.
None
(c) FINANCIAL STATEMENT SCHEDULES.
No schedules are required, as all information required has
been presented in the audited financial statements.
6
<PAGE> 7
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: May 17, 1999
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.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ William S. Daugherty Chairman of the Board, President,
- --------------------------- Director of the Registrant May 17, 1999
WILLIAM S. DAUGHERTY
James K. Klyman* Director of the Registrant May 17, 1999
- ---------------------------
JAMES K. KLYMAN
Charles L. Cotterell* Director of the Registrant May 17, 1999
- ----------------------------
CHARLES L. COTTERELL
*By /s/ William S. Daugherty
---------------------------
William S. Daugherty,
Attorney-in-Fact
7
<PAGE> 8
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 three months ended March 31, 1999 and 1998, and the years ended December
31, 1998, 1997 and 1996. The computations below reflect the 1 for 5 Reverse
Stock Split effective June 30, 1998.
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------
MARCH 31 YEAR ENDED DECEMBER 31
-------- ----------------------
1999 1998 1998 1997 1996
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Net loss applicable to share of
Common Stock and Common
Stock equivalents $ (252,166) $ (64,244) $(1,568,348) $(1,708,418) $ (733,973)
Average number of shares of
Common Stock Outstanding 2,183,783 1,964,351 2,035,188 1,831,926 1,610,168
Common Stock equivalents 1,514,134 1,455,404 1,448,355 1,353,244 283,293
Total shares of Common Stock
and Common Stock equivalents 3,697,917 3,389,755 3,483,543 3,185,170 1,893,461
Primary loss per share of
Common Stock $ (.12) $ (.03) $ (0.77) $ (.93) $ (.46)
Fully diluted loss per share of
Common Stock $ (.07) $ (.02) $ (0.45) $ (.54) $ (.39)
</TABLE>
- --------------
Common Stock equivalents are considered anti-dilutive because of the
net losses incurred by the Company.
<PAGE> 9
POWER OF ATTORNEY
WHEREAS, Daugherty Resources, Inc., a British Columbia corporation (the
"Company"), intends to file with the Securities and Exchange Commission (the
"Commission") under the Securities Exchange Act of 1934, as amended (the "Act"),
a Form 10-QSB for the fiscal quarter ended March 31, 1999, a draft of which has
been previously reviewed by the undersigned (the "Form 10-QSB"), together with
any and all exhibits and other documents having relation to the Form 10-QSB;
NOW, THEREFORE, the undersigned in his capacity as a director or
officer or both, as the case may be, of the Company, does hereby constitute and
appoint William S. Daugherty and D. Michael Wallen, and each of them severally,
as his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, to do any and all acts and things in his name
and on his behalf in his capacity as a director or officer or both, as the case
may be, of the Company, as fully and to all intents and purposes as the
undersigned might or could do in person, and to execute any and all instruments
for the undersigned and in his name in any and all capacities which such person
may deem necessary or advisable to enable the Company to comply with the Act and
any rules, regulations and requirements of the Commission, in connection with
the filing of the Form 10-QSB, including specifically, but not limited to, power
and authority to sign for the undersigned, in his capacity as a director or
officer or both, as the case may be, of the Company, the Form 10-QSB and any and
all other documents (including, without limitation, any amendments to the Form
10-QSB or to such other documents) which such person may deem necessary or
advisable in connection therewith; and the undersigned does hereby ratify and
confirm all that such person shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
as of the 14th day of May, 1999.
/s/ Charles L. Cotterell
----------------------------
CHARLES L. COTTERELL
<PAGE> 10
POWER OF ATTORNEY
WHEREAS, Daugherty Resources, Inc., a British Columbia corporation (the
"Company"), intends to file with the Securities and Exchange Commission (the
"Commission") under the Securities Exchange Act of 1934, as amended (the "Act"),
a Form 10-QSB for the fiscal quarter ended March 31, 1999, a draft of which has
been previously reviewed by the undersigned (the "Form 10-QSB"), together with
any and all exhibits and other documents having relation to the Form 10-QSB;
NOW, THEREFORE, the undersigned in his capacity as a director or
officer or both, as the case may be, of the Company, does hereby constitute and
appoint William S. Daugherty and D. Michael Wallen, and each of them severally,
as his true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, to do any and all acts and things in his name
and on his behalf in his capacity as a director or officer or both, as the case
may be, of the Company, as fully and to all intents and purposes as the
undersigned might or could do in person, and to execute any and all instruments
for the undersigned and in his name in any and all capacities which such person
may deem necessary or advisable to enable the Company to comply with the Act and
any rules, regulations and requirements of the Commission, in connection with
the filing of the Form 10-QSB, including specifically, but not limited to, power
and authority to sign for the undersigned, in his capacity as a director or
officer or both, as the case may be, of the Company, the Form 10-QSB and any and
all other documents (including, without limitation, any amendments to the Form
10-QSB or to such other documents) which such person may deem necessary or
advisable in connection therewith; and the undersigned does hereby ratify and
confirm all that such person shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has executed this Power of Attorney
as of the 14th day of May, 1999.
/s/ James K. Klyman
---------------------------
JAMES K. KLYMAN
<PAGE> 11
DAUGHERTY RESOURCES. INC.
SUMMARY CONSOLIDATED BALANCE SHEETS
(United States Dollars)
Unaudited
3/31/98 3/31/99
------------ ------------
ASSETS
------
CURRENT ASSETS
- --------------
Cash $ 610,402 $ 298,353
Accounts receivable 770,067 336,116
Inventory 587,795 396,631
Other current assets 4,673 19,770
------------ ------------
TOTAL CURRENT ASSETS 1,972,937 1,050,870
OIL & GAS PROPERTIES (NET) 4,298,261 4,637,303
- -------------------------
MINING PROPERTY (NET) 11,227,733 11,232,229
- --------------------
PROPERTY & EQUIPMENT (NET) 1,900,943 1,737,687
- --------------------------
OTHER ASSETS
- ------------
Related party loans 86,023 96,324
Bonds & deposits 41,000 54,224
Other assets 315,569 266,016
Goodwill, net of amortization of $1,058,309 1,256,826 1,027,357
------------ ------------
1,699,418 1,443,921
------------ ------------
TOTAL ASSETS $ 21,099,292 $ 20,102,010
============ ============
LIABILITIES & STOCKHOLDER'S EQUITY
----------------------------------
CURRENT LIABILITIES
- -------------------
Short-term loans & notes $ 32,000 $ 879,177
Current portion of LT debt 619,203 1,151,283
Accounts payable 1,205,534 1,464,996
Accrued liabilities 714,795 750,553
Drilling prepayments 1,104,373 823,921
------------ ------------
TOTAL CURRENT LIABILITIES 3,675,905 5,069,930
LONG-TERM LIABILITIES 3,390,988 2,553,897
- ---------------------
PAYABLE TO RELATED PARTIES 43,529 25,517
- -------------------------- ------------ ------------
7,110,422 7,649,344
MINORITY INTEREST 12,264 --
- -----------------
STOCKHOLDER'S EQUITY
- --------------------
Common stock 20,954,436 21,209,821
Common stock subscribed 23,055 --
Additional paid in capital -- --
Retained earnings (deficit) (6,936,641) (8,504,989)
Current income (loss) (64,244) (252,166)
------------ ------------
13,976,606 12,452,666
------------ ------------
TOTAL LIABILITIES &
STOCKHOLDER'S EQUITY $ 21,099,292 $ 20,102,010
============ ============
Unaudited-Internally prepared by Company management
<PAGE> 12
DAUGHERTY RESOURCES, INC.
SUMMARY CONSOLIDATED STATEMENTS OF INCOME
(United States Dollars)
Unaudited
<TABLE>
<CAPTION>
For the three month period ended
3/31/98 3/31/99
--------------------------- ---------------------------
<S> <C> <C> <C> <C>
GROSS REVENUE $ 1,877,738 100.00% $ 1,360,129 100.00%
- -------------
DIRECT EXPENSES 1,592,390 84.80% 1,207,157 88.75%
- -------------- ----------- ------ ----------- ------
GROSS PROFIT 285,348 15.20% 152,972 11.25%
GENERAL & ADMINISTRATIVE EXPENSES
- ---------------------------------
Salaries & wages 71,123 3.79% 93,229 6.85%
Accounting & audit 50,411 2.68% 23,826 1.75%
Advertising & promotion 2,452 0.13% 536 0.04%
Amortization 52,617 2.80% 52,616 3.87%
Bad debts - 0.00% 6,157 0.45%
Depreciation 16,820 0.90% 11,514 0.85%
General consulting 16,667 0.89% 31,176 2.29%
Insurance 13,615 0.73% 7,554 0.56%
Legal 14,429 0.77% 30,463 2.24%
Office & general 53,267 2.84% 33,277 2.45%
Payroll & property tax 3,871 0.21% 13,933 1.02%
Rent 8,215 0.44% 14,724 1.08%
Repairs & maintenance 1,791 0.10% 1,316 0.10%
Shareholder & investor information 4,290 0.23% 1,929 0.14%
Travel & entertainment 13,183 1.03% 18,024 1.33%
----------- ------ ----------- ------
TOTAL G & A EXPENSES 322,751 25.19% 340,274 18.12%
OTHER INCOME (EXPENSE)
- ----------------------
Interest & dividend income 10,519 0.82% 4,177 0.31%
Miscellaneous 19,902 1.55% 22,295 1.64%
Gain (loss) on sale of equipment - 0.00% - 0.00%
Interest expense (45,755) -2.44% (91,336) -6.72%
----------- ------ ----------- ------
INCOME BEFORE INCOME TAX & OTHER (52,737) -4.12% (252,166) -18.54%
- --------------------------------
Income tax expense (benefit) - 0.00% - 0.00%
MINORITY PORTION (11,507) -0.61% - 0.00%
- ---------------- ----------- ------ ----------- ------
NET INCOME (LOSS) $ (64,244) -4.73% $ (252,166) -18.54%
=========== ====== =========== =======
DEFICIT, beginning of period (6,936,641) $(8,504,989)
DEFICIT, end of period (7,000,885) $(8,757,155)
Shares outstanding 1,964,351 2,183,783
EARNINGS PER SHARE ($0.03) ($0.12)
</TABLE>
Unaudited-Internally prepared by Company management
<PAGE> 13
DAUGHERTY RESOURCES, INC.
SUMMARY CONSOLIDATED STATEMENTS OF CASH FLOWS
(United States Dollars)
Unaudited
<TABLE>
<CAPTION>
For the three month period ended
3/31/98 3/31/99
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
- ------------------------------------
<S> <C> <C>
Net income (loss) $ (64,244) $ (252,166)
Adjustments to reconcile net income (loss) to net cash
cash provided by operating activities:
Depreciation, depletion, & amortization 139,976 150,191
Minority interest 11,507
Changes in current assets & liabilities
(Increase) decrease in:
Accounts receivable (276,345) 75,380
Inventory 90,349 35,837
Other current assets 59,989 31,507
Increase (decrease) in:
Short-term loans & notes (34,100) (54,340)
Accounts payable (267,178) 303,574
Accrued liabilities 354,399 (100,577)
Drilling prepayments (298,934) (98,589)
----------- -----------
Net cash provided by (used in) operating activities (284,581) 90,817
CASH FLOWS FROM INVESTING ACTIVITIES
- ------------------------------------
Change in oil & gas properties (360,266) (34,200)
Change in mining properties 4,496 --
Change in property & equipment (22,372) 19,959
Change in other assets (101,607) (122,865)
----------- -----------
Net cash provided by (used in) investing activities (479,749) (137,106)
CASH FLOWS FROM FINANCING ACTIVITIES
- ------------------------------------
Issuance of common stock 23,055 --
Change in long-term liabilities 94,911 (198,833)
Change in payable to related party 17,206 14,809
----------- -----------
Net cash provided by (used in) financing activities 135,172 (184,024)
----------- -----------
NET INCREASE (DECREASE) IN CASH (629,158) (230,313)
- -------------------------------
CASH AT BEGINNING OF PERIOD 1,239,560 528,666
- --------------------------- ----------- -----------
CASH AT END OF PERIOD $ 610,402 $ 298,353
- --------------------- =========== ===========
</TABLE>
Unaudited-Internally prepared by Company management
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<EXCHANGE-RATE> 1
<CASH> 298,353
<SECURITIES> 0
<RECEIVABLES> 355,886
<ALLOWANCES> 0
<INVENTORY> 396,631
<CURRENT-ASSETS> 1,050,870
<PP&E> 19,051,140
<DEPRECIATION> 0
<TOTAL-ASSETS> 20,102,010
<CURRENT-LIABILITIES> 5,069,930
<BONDS> 2,579,414
0
0
<COMMON> 21,209,821
<OTHER-SE> (8,757,155)
<TOTAL-LIABILITY-AND-EQUITY> 20,102,010
<SALES> 1,360,129
<TOTAL-REVENUES> 1,360,129
<CGS> 1,207,157
<TOTAL-COSTS> 1,207,157
<OTHER-EXPENSES> 313,802
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 91,336
<INCOME-PRETAX> (252,166)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (252,166)
<EPS-PRIMARY> (0.12)
<EPS-DILUTED> (0.07)
</TABLE>
