SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996
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
ALASKA APOLLO 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.)
131 PROSPEROUS PLACE, SUITE 17
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 JUNE 30, 1996 WAS 7,742,710.
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
The information required by this Item 1 appears on pages 10 through 12 of this
Report, and is incorporated herein by reference.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
In the fourth quarter of 1993, the Registrant acquired its wholly owned
subsidiary, Daugherty Petroleum, Inc. ("DPI"). Since the acquisition, the
Registrant has been the aggressively (1) acquiring natural gas and oil
properties in southeastern and western Kentucky, (2) expanding its natural gas
production through joint ventures and drilling programs for its own account, and
(3) diversifying its revenue and asset base to include other segments of the oil
and gas industry.
The Registrant has traditionally realized revenues from two primary sources.
The first is from its interests in the producing natural gas and oil wells it
operates or in which it owns fractional interests. The second is derived from
its activities as a "turnkey driller" and operator for various drilling programs
within its geographic area. The Registrant is expanding these revenue sources
to include pipeline construction and operation and the marketing and aggregation
of natural gas direct to commercial accounts and utility systems. Revenues from
these sources began to be realized during the third quarter of 1995. As
discussed below, during the first six months of 1996, the Registrant's revenues
were derived primarily from proceeds attributable to the sale of its natural gas
and oil production and its turnkey drilling and operating contracts. The
decline in second quarter drilling activities resulted from 1) a delay in the
completion of a drilling program started in July 1995 2) the lack of a year-end
drilling program in the fourth quarter of 1995 which would have generated first
and second quarter drilling activity and 3) normal seasonal fluctuations in
these activities. For the six month period ending June 30 1996, the Registrant
did not drill any natural gas wells and completed three wells that were drilled
in the fourth quarter of 1995. This is in contrast to 1995 when, during the
same period, the Registrant drilled and completed nine natural gas wells. The
Registrant earns an interest ranging from 7.5 percent to 25 percent net revenue
interest in each well it drills as a program sponsor or turnkey driller. During
the second quarter of 1995, the Registrant completed negotiations with a major
joint venture partner to develop a minimum of 15 additional wells. During the
period from July 1995 to June 30, 1996, the Registrant had drilled ten and
completed four of those drilled.
On March 31, 1996, the Registrant purchased the working interests in a total of
35 oil wells. This purchase was concluded with owner financing to be paid from
production revenues. After debt service, this acquisition will result in a net
increase in revenues of approximately $54,000 per year. DPI had been operating
the properties under a Participation Agreement whereby it paid all operating
expenses. The acquisition will result in the Registrant obtaining offsetting
revenues in excess of expenses currently being incurred.
On April 12, 1996, the Registrant entered into a farm out agreement to develop
5,400 acres in Bell and Knox counties in southeastern Kentucky. Provided
drilling commitments are met on the original 5,400 acres, this agreement gives
the Registrant the right of first refusal on an
2
additional block of 8,500 acres contiguous to the original farm out acreage and
its existing area of interest. In July, 1996, the Registrant entered into a
partnership agreement for the drilling of the first well necessary to maintain
the drilling commitment on this farm out acreage.
In May, 1996, the Registrant sold, on a prepay basis, 198,000 Mcf of natural gas
to an existing customer for $250,000 ($1.2626 per Mcf). This one time sale
obligates the Registrant to supply up to this quantity of natural gas and it is
estimated that this obligation will be fulfilled over a period of approximately
24 months.
As of June 30, 1996, the Registrant had entered into and agreement for the sale
of Niagara Oil, Inc., a wholly owned subsidiary of DPI. This transaction will
result in a reduction of debt service and operating expenses currently being
paid by the Registrant. In addition, the purchaser will contract with DPI for
the development, enhancement, and operation of these wells on a cost plus basis.
LIQUIDITY
The Registrant plans to drill 15 wells during the remainder of 1996 and will
attempt to earn interests ranging from 7.5 percent to 25 percent net revenue
interests in each well it drills as a program sponsor or turnkey driller. In
addition, the Registrant is currently negotiating with several prospective joint
venture partners to develop its existing leased acreage as well as acreage it
has obtained in 1996. Management believes that these negotiations could result
in the drilling of 5 to 10 of its 15 targeted wells during the remainder of
1996.
During the second quarter of 1996, the Registrant realized additional revenues
from the purchase and sale of lumber related to a proposed acquisition of a
hardwood lumber manufacturing facility. Revenues related to this activity
accounted for 36 percent of the Registrant's total gross revenues.
In addition, production resulting from the acquisition of various natural gas
and oil reserves, the treatment of wells drilled and completed in 1995 and the
first quarter of 1996, as well as projected turnkey drilling programs will, in
the opinion of management, provide sufficient cash flow to meet the short term
operating needs and financial commitments of the Registrant. The Registrant's
revenues should be further enhanced in 1996 as additional revenue sources
materialize from agreements reached during 1995 such as the operation of a
natural gas pipeline gathering system and the completion of the acquisition of
the hardwood lumber manufacturer.
Working capital for the period ending June 30, 1996, was a negative $493,818.
Compared to the same period in 1995, working capital was a negative $219,863,
reflecting a decrease of $273,955.
During the second quarter of 1996, the major change in the composition of the
Registrant's current assets consisted of notes and accounts receivable increase
of $512,265 from $744,682 to $1,256,947 and other current assets such as
inventories, prepaids and notes receivable decreased $109,276 from $180,964 to
$71,688. Current liabilities remained relatively constant at $1,630,721.
3
While management believes that the cash flow resulting from operating revenues
will contribute significantly to its short term financial commitments and
operating costs, it has implemented a plan developed in early 1996 to meet its
short term financial obligations. This plan includes:
Sponsorship of a private placement drilling/production program to
investors. DPI will offer to investors through a network of brokers, a
drilling/production program targeted for the third and forth quarters of
1996. This program, if successfully completed, will generate revenues and
profits for the Registrant earlier in the year than normally occurs with a
year-end, tax driven program. Management has entered into discussions with
several potential brokers who have expressed interest in marketing a
program in early 1996. This program has been prepared and is being sold.
Sale of miscellaneous assets of the Registrant. The Registrant owns real
estate in Williamsburg, Kentucky, consisting of a field office and a
separate office/apartment building. The Registrant has sold and is
awaiting final closing of the office/apartment building. It will retain
the field office for use in its eastern Kentucky natural gas production
operations. The sale of this real estate will reduce debt service by
approximately $16,000 per year. The Registrant has also identified surplus
vehicles and equipment, the sale of which has resulted in a reduction of
debt service in the amount of $16,740 per year.
Negotiations related to third party loans. The Registrant is negotiating
with various third party lenders, including major shareholders, to secure
short term loans. If successful, these loans will be available during
1996.
The Registrant has also negotiated extended payment arrangements with
various vendors.
RESULTS OF OPERATIONS
Compared to the same period of 1995, the Registrant's gross revenues increased
by 10 percent to $742,550 from $675,333. For the period, the Registrant
experienced a net loss of $397,522 in 1996 compared to a net loss of $643,746 in
1995.
The Registrant's gross revenues are derived from turnkey contract revenues of
$222,062 (29.9 percent); natural gas and oil production revenues of $206,684
(27.8 percent); operating revenues of $43,595 (5.8 percent); lumber sales of
$268,594 (36.0 percent) and miscellaneous revenues of $1,615 (0.22 percent).
Gross revenues for the period ending June 30 were impacted by the level of
contract revenue from turnkey drilling activities which declined by $193,422
from $415,482 in 1995 to $222,062 in 1996. These revenues are derived from
partnerships sponsored by the Registrant or others who contract with the
Registrant to drill and operate wells on a contract basis. These partnerships
are, to a large extend, driven by investors' desire for the tax benefits
associated with oil and gas investments. Historically, the drilling activity
generated from these partnerships result in significant year-end revenues and
drilling activity during the first three to six months of the following year.
In 1995, the Registrant sponsored a partnership that was intended to provide
these revenues but that partnership failed to reach the minimum aggregate
investment necessary for it to be completed. In addition, other customers of
the Registrant, that is other partnerships
4
who would typically use the Registrant as a turnkey driller and operator,
encountered similar problems in closing year-end investments which adversely
impacted these revenues.
Total operating expenses were $633,1820 for the first six months of 1996 and
$734,397 in for the same period in 1995 for a decrease of $101,2159. Operating
expenses for the quarter included non cash items such as amortization and
depreciation of $150,543. Non cash items included $89,478 for the amortization
of goodwill related to the Registrant's acquisition of DPI.
While the Registrant is successfully achieving its goal of asset growth, it has
incurred costs and expenses above historical levels as a result of these
efforts. Management has implemented cost containment measures to control cost
and to reduce overhead during the first six months of 1996.
The Registrant believes there are three factors that will increase the price it
receives for its natural gas production. First, the acquisition of gas reserves
from the Wentzloff Energy and Michigan Southern Energy, Inc. partnerships is
providing a much larger production base with which to negotiate contracts
previously unavailable to the Registrant. Secondly, the natural gas gathering
systems completed in 1995 and currently under construction will allow the
Registrant to diversify its customer base and access markets where prices are
higher. Thirdly, natural gas prices in 1996 are up significantly over 1995, and
projected market trends indicate that higher prices will prevail throughout
1996. The combined effect will be a higher overall price for the Registrant's
production. The Registrant intends to aggressively pursue new contracts based
on its increased reserves, increased production capacity and improved
distribution.
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Not Applicable.
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) Financial statements, Alaska Apollo Resources Inc. and
subsidiary companies--
Summary Consolidated Balance Sheet
for the period ended June 30, 1996 10
Summary Consolidated Statement of Profit (Loss)
for the period ended June 30, 1996 11
Consolidated Statement of Change in Financial Position
for the period ended June 30, 1996 12
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.
5
(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.
4* See Exhibit No. 3(a).
9* Voting Trust Agreements. Exhibits 3, 10 and 13 to Form 8-K for
the Company dated March 6, 1994. File No. 0-12185.
10(a)* Letter of Intent dated May 8, 1992 between Alaska Apollo Gold
Mines Limited and the Alaska Syndicate. Exhibit 10(f) to Form
10-K for the Company for the fiscal year ended December 31, 1992.
File No. 0-12185.
10(b)* Letter of Intent between Daugherty Petroleum, Inc. and Michigan
Southern Energy Corporation dated March 31, 1994 described in
Exhibit 10(b) to Form 10-K for the Company for the fiscal year
ended December 31, 1993. (File No. 0-12185).
10(c)* Redevelopment Agreement between the Company and Summit Funding,
Inc. dated July 1993 described in Exhibit 10(c) to Form 10-K for
the Company for the fiscal year ended December 31, 1993. (File
No. 0-12185).
10(d)* Agreement dated December 22, 1993 by and between Daugherty
Petroleum, Inc. and Wentzloff Energy, Inc. with respect to the
purchase by Daugherty Petroleum, Inc. of 6.5 billion cubic feet
of natural gas or its equivalent from 29 Kentucky partnerships
produced since April 1, 1993. Exhibit "1" to Form 8-K for the
Company dated March 6, 1994. File No. 0-12185.
6
10(e)* Trust Agreement dated December 22, 1993 by and between the
various partnerships described in Exhibit "1" to Form 8-K for the
Company dated March 6, 1994 (File No. 0-12185) and Breeding,
McIntyre & Cunningham, P.S.C. with respect to the 1,086,108
shares of the Common Stock of the Company received by the
partnerships in consideration of the sale and purchase described
in Exhibit "1" attached thereto.
10(f)* Voting Trust Agreement dated December 22, 1993 by and between
Wentzloff Energy, Inc. and the various partnerships described in
Exhibit "1" to Form 8-K for the Company dated March 6, 1994 (File
No. 0-12185) and Breeding, McIntyre & Cunningham, P.S.C. with
respect to the 1,086,108 shares of the Common Stock of the
Company received by the partnerships in consideration of the sale
and purchase described in Exhibit "1" attached thereto.
10(g)* Gas Purchase and Sale Agreement dated December 22, 1993 by and
between the various partnerships described in Exhibit "1" to Form
8-K for the Company dated March 6, 1994 (File No. 0-12185) and
Daugherty Petroleum, Inc. with respect to the production of gas
resulting from the sale and purchase of gas pursuant to the sale
and purchase described in Exhibit "1" attached thereto.
10(h)* Proxy dated December 22, 1993 by and between Wentzloff Energy,
Inc. and the various partnerships described in Exhibit "1" to
Form 8-K for the Company dated March 6, 1994 (File No. 0-12185)
in favor of Breeding, McIntyre & Cunningham, P.S.C. with respect
to the voting of the 1,086,108 shares of the Common Stock of the
Company received by the partnerships in consideration of the sale
and purchase described in Exhibit "1" attached thereto.
10(i)* Agreement for Purchase and Sale dated as of September 24, 1993 by
and between Wentzloff Energy, Inc. and Daugherty Petroleum, Inc.
with respect to the purchase and sale of the of 6.5 billion cubic
feet of natural gas or its equivalent from 29 Kentucky
partnerships produced since April 1, 1993 as described in Exhibit
"1" to Form 8-K for the Company dated March 6, 1994 (File No.
0-12185), as well as the purchase by Daugherty Petroleum, Inc. of
undivided working interests in oil and gas leases and certain
equipment, machinery and personal property with respect to such
leases from Wentzloff Energy, Inc.
10(j)* Agreement and Amendment to Agreement dated November 16, 1993 by
and between Daugherty Petroleum, Inc., Wentzloff Energy, Inc. and
Wentzloff Partners, Inc. with respect to the amendment of the
agreement described in Exhibit "6" to Form 8-K for the Company
dated March 6, 1994 (File No. 0-12185), and the recasting of the
agreement in its current form.
10(k)* Agreement and Amendment to Agreement dated November 16, 1993 by
and between Daugherty Petroleum, Inc., Wentzloff Energy, Inc. and
Southern Drilling Co., Inc. with respect to the amendment of the
agreement described in Exhibit "6" to Form 8-K for the Company
dated March 6, 1994 (File No. 0-12185), and the recasting of the
agreement in its current form.
10(l)* Escrow Agreement dated November 15, 1993 by and between Wentzloff
Energy, Inc., Daugherty Petroleum, Inc., Inc., Alaska Apollo
Resources Inc., and Breeding, McIntyre & Cunningham, P.S.C. with
respect to the 60,000 shares of the Common Stock of the Company
received by Wentzloff Energy, Inc. in consideration of the sale
and purchase described in Exhibit "6" to Form 8-K for the Company
dated March 6, 1994. (File No. 0-12185).
10(m)* Voting Trust Agreement dated November 16, 1993 by and between
Wentzloff Energy, Inc. and Breeding, McIntyre & Cunningham,
P.S.C. with respect to the 60,000 shares of the Common Stock of
the Company received by Wentzloff Energy, Inc. in consideration
of the
7
sale and purchase described in Exhibit "6" to Form 8-K for the
Company dated March 6, 1994. (File No. 0-12185).
10(n)* Proxy executed by Wentzloff Energy, Inc. covering the 60,000
shares of the Common Stock of the Company received by Wentzloff
Energy, Inc. in consideration of the sale and purchase described
in Exhibit "6" to Form 8-K for the Company dated March 6, 1994.
(File No. 0-12185).
10(o)* Escrow Agreement dated November 15, 1993 by and between Southern
Drilling Co., Inc., Daugherty Petroleum, Inc., Alaska Apollo
Resources Inc., and Breeding, McIntyre & Cunningham, P.S.C. with
respect to the 20,000 shares of the Common Stock of the Company
received by Southern Drilling Co., Inc. in consideration of the
sale and purchase described in Exhibit "6" to Form 8-K for the
Company dated March 6, 1994. (File No. 0-12185).
10(p)* Voting Trust Agreement dated November 16, 1993 by and between
Southern Drilling Co., Inc. and Breeding, McIntyre & Cunningham,
P.S.C. with respect to the 20,000 shares of the Common Stock of
the Company received by Southern Drilling Co., Inc. in
consideration of the sale and purchase described in Exhibit "6"
to Form 8-K for the Company dated March 6, 1994. (File No.
0-12185).
10(q)* Proxy executed by Southern Drilling Co., Inc. covering the 20,000
shares of the Common Stock of the Company received by Southern
Drilling Co., Inc. in consideration of the sale and purchase
described in Exhibit "6" to Form 8-K for the Company dated March
6, 1994. (File No. 0-12185).
10(r)* Stock Purchase Agreement by and between William S. Daugherty,
Alaska Apollo Resources, Inc. and Daugherty Petroleum, Inc. dated
July 20, 1993. Reference is made to Form 8-K, dated November 11,
1993, filed with the Securities and Exchange Commission on
November 12, 1993. (File No. 0-12185).
10(s)* Subscription Agreement dated July 30, 1992 between Alaska Apollo
Gold Mines Ltd. and Alaska Investments Ltd. described in Exhibit
10(g) to Form 20-F for the Company for the fiscal year ended
December 31, 1993. (File No. 0-12185).
10(t)* Letter of Intent dated March 15, 1993 between Alaska Apollo
Resources Inc. and Daugherty Petroleum, Inc. described in Exhibit
10(h) to Form 20-F for the Company for the fiscal year ended
December 31, 1993. (File No. 0-12185).
10(u)* Director's Incentive Stock Option Agreement dated January 10,
1994 between the Company and John R. Bogert.
10(v)* Director's Incentive Stock Option Agreement dated January 10,
1994 between the Company and William S. Daugherty.
10(w)* Director's Incentive Stock Option Agreement dated January 10,
1994 between the Company and James K. Klyman-Mowczan.
10(x)* Director's Incentive Stock Option Agreement dated January 10,
1994 between the Company and Colin R. Bowdidge.
(b) REPORTS ON FORM 8-K.
(1) Current Report on Form 8-K for the Company dated November 11, 1993,
File No. 0-12185, reporting the acquisition of Daugherty Petroleum,
Inc. (Item 2. Acquisition or Disposition of Assets.)
8
(2) Current Report on Form 8-K/A for the Company dated November 30, 1993,
File No. 0-12185, with respect to Financial Statements and Stock
Purchase Agreement pertaining to the acquisition of Daugherty
Petroleum, Inc. (Item 7. Financial Statements and Exhibits.)
(3) Current Report on Form 8-K for the Company dated March 6, 1994, File
No. 0-12185, reported the acquisition by the Company of 6.5 billion
cubic feet of gas or its equivalent from 29 Kentucky partnerships, as
well as 6,500 acres of oil and gas leases and various undivided
working interests in oil and gas leases and equipment and machinery.
The required financial statements and pro forma financial information
were not filed at the time the report was filed. Instead, the
financial statements and pro forma financial information were to be
filed by March 31, 1994. (Item 2. Acquisition or Disposition of
Assets.)
(4) Current Report on Form 8-K for the Company dated March 24, 1994, File
No. 0-12185, reported the resignation of Milton Klyman as a director
of the Company on March 24, 1994. (Item 5. Other Events.)
(5) Current Report on Form 8-K/A, Amendment No. 1, for the Company dated
March 31, 1994, File No. 0-12185, advising that the required financial
statements and pro forma financial information with respect to the
Form 8-K dated March 6, 1994 would be filed by April 15, 1994. (Item
7. Financial Statements and Exhibits.)
(6) Current Report on Form 8-K/A, Amendment No. 2, for the Company dated
April 14, 1994, File No. 0-12185, advising that the required financial
statements and pro forma financial information with respect to the
Form 8-K dated March 6, 1994 would be filed by April 29, 1994. (Item
7. Financial Statements and Exhibits.)
(7) Current Report on Form 8-K/A, Amendment No. 3, for the Company dated
May 6, 1994, File No. 0-12185, filing the required financial
statements and pro forma financial information with respect to the
Form 8-K dated March 6, 1994. (Item 7. Financial Statements and
Exhibits.)
(8) Current Report on Form 8-K for the Company dated August 24, 1995, File
No. 0-12185, reported the filing of a lawsuit by J. Rudolph Oliver.
(Item 5. Other Events.)
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.
ALASKA APOLLO RESOURCES INC.
By /s/ William S. Daugherty
---------------------------------------
William S. Daugherty, President
By /s/ Timothy F. Guthrie
---------------------------------------
Timothy F. Guthrie, Chief Financial
Officer
Dated: August 15, 1996
9
ALASKA APOLLO RESOURCES, INC.
SUMMARY CONSOLIDATED BALANCE SHEET
(United States Dollars)
Unaudited
30-Jun-95 30-Jun-96
--------- ---------
ASSETS
------
CURRENT ASSETS
Cash 7,011 29,474
Short Term Investments 128,654 0
Account Receivable 744,682 718,886
Inventory 0 64,529
Prepaid Expenses 52,310 7,159
Intercompany and Other Receivable 0 538,061
Other Current 0 0
- ------------ ------------ ------------
Subtotal Current 932,657 1,358,109
MINING PROPERTY AND
RELATED EXPENDITURES-NET 11,207,927 11,250,790
OIL AND GAS PROPERTIES - NET 4,149,797 3,977,405
CAPITAL ASSETS 359,875 293,487
OTHER ASSETS
Deferred Tax Benefit 219,805 0
Bonds and Deposits 41,919 42,919
Related Party Receivable 87,555 110,324
NOTES RECEIVABLE 38,348 0
GOODWILL (Net of Accumulated
Amortization of $447,390) 1,476,391 1,297,435
INCORPORATION COSTS 428 0
- ------------ ------------ ------------
TOTAL ASSETS 18,514,702 18,330,469
------------ ------------
------------ ------------
LIABILITIES
CURRENT LIABILITIES
Bank Loan 54,931 106,207
Account Payable and Accrued Liabilities 1,019,985 1,467,204
Long Term Debt 77,604 278,516
Loans Payable 0 0
- ------------ ------------ ------------
Subtotal Current Liabilities 1,152,520 1,851,927
LOANS PAYABLE 830,508 1,247,921
DEFERRED INCOME TAXES 0 8,890
- ------------ ------------ ------------
Subtotal Liabilities 1,983,028 3,108,738
SHAREHOLDER EQUITY
CAPITAL STOCK
Issued 20,003,537 20,068,190
Current Period Earnings (397,521)
Deficit (3,471,863) (4,448,938)
- ------------ ------------ ------------
Subtotal Shareholder Equity 16,531,674 15,221,731
TOTAL LIABILITIES AND SHAREHOLDER EQUITY 18,514,702 18,330,469
------------ ------------
------------ ------------
0 0
Unaudited-Internally Prepared by Company Management
ALASKA APOLLO RESOURCES, INC.
SUMMARY CONSOLIDATED
STATEMENT OF PROFIT (LOSS)
(United States Dollars)
Unaudited
For the Six Months Ending
30-Jun-95 30-Jun-96
--------- ---------
REVENUE
Gross Revenues 675,333 100.0% 742,551 100.0%
Direct Costs 587,053 86.9% 543,357 73.2%
---------- ----------
Gross Profit 88,280 13.1% 199,194 26.8%
GENERAL AND ADMINISTRATIVE COSTS
Salaries and Wages 142,103 21.0% 117,868 15.9%
Consulting and Management Fees 142,299 21.1% 39,404 5.3%
Office and General 54,552 8.1% 38,094 5.1%
Legal 80,976 12.0% 124,445 16.8%
Travel and Entertainment 28,286 4.2% 23,477 3.2%
Shareholder and Investor Information 39,347 5.8% 64,369 8.7%
Advertising and Promotion 0 0.0% 5,877 0.8%
Property and Payroll Taxes 23,816 3.5% 12,002 1.6%
Insurance 22,060 3.3% 17,878 2.4%
Depreciation and Amortization 108,881 16.1% 109,888 14.8%
Engineering 18,225 2.7% 0 0.0%
Rent 17,780 2.6% 15,915 2.1%
Accounting and Audit 39,055 5.8% 51,297 6.9%
Repairs and Maintenance 6,490 1.0% 8,182 1.1%
Licenses and Fees 0 0.0% 4,486 0.6%
Trust and Stock Exchange Company Fees 10,527 1.6% 0 0.0%
---------- ----------
SUBTOTAL-G&A COSTS 734,397 108.7% 633,182 85.3%
Less: Interest and Other Expense (Income) (2,371) -0.4% (36,467) -4.9%
---------- ----------
Income Before Tax and Extraordinary Items (643,746) -95.3% (397,521) -53.5%
Income Tax Expense (Benefit) (166,812) -24.7% 0 0.0%
Extraordinary Item: Cummulative Effect of
Accounting Change 59,318 8.8% 0 0.0%
---------- ----------
NET PROFIT (LOSS) FOR CURRENT PERIOD (417,616) -61.8% (397,521) -53.5%
---------- ----------
---------- ----------
DEFICIT, beginning of period (4,448,938)
DEFICIT, end of period (417,616) (4,846,459)
Shares Outstanding 7,065,070 7,742,710
Earnings Per Share ($0.06) ($0.05)
Unaudited-Internally Prepared by Company Management
ALASKA APOLLO RESOURCES, INC.
CONSOLIDATED STATEMENT
OF CHANGE IN FINANCIAL POSITION
(United States Dollars)
Unaudited
For The Six Month Period Ending
30-Jun-95 30-Jun-96
--------- ---------
OPERATING ACTIVITIES
Net Income (Loss) (417,616) (397,521)
Amort., Deprec, Depletion and Non Cash Items 195,538 151,534
Gain on Sale of Assets 0 0
Change in Accounts Receivable 0 (208,943)
Change in Prepaid Expenses 0 4,262
Change in Accounts Payable and Accrued Expenses 0 116,131
Change in Intercompany and Other Accounts
Receivable 0 (248,157)
Change Other Current Assets (167,569) 16,361
------------ ------------
Net Cash From Operating Activities (389,647) (566,333)
FINANCING ACTIVITIES
Issue of Capital Stock 219,094 0
Change in Notes Payable (14,019) 12,058
Change in Loan Payable (32,253) 333,935
------------ ------------
Net Cash from Financing Activities 172,822 345,993
INVESTING ACTIVITIES
Change in Resource Properties (49,346) (39,328)
Change in Oil and Gas Properties (14,279) 38,857
Change in Capital Assets (81,986) 73,886
Change in Other Assets 0 (25,448)
Change in Note Receivable 0 17,556
Change in Retained Earnings 45,311
------------ ------------
Net Cash From Investing Activities (145,611) 110,834
CHANGE IN CASH (362,436) (109,506)
CASH, beginning of period 369,447 138,980
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CASH, end of period 7,011 29,474
------------ ------------
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Unaudited-Internally Prepared by Company Management