SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 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
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COMMISSION FILE NUMBER: 0-12185
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ALASKA APOLLO RESOURCES INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
PROVINCE OF BRITISH COLUMBIA NOT APPLICABLE
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
131 PROSPEROUS PLACE, SUITE 17 40509-1844
LEXINGTON, KENTUCKY (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (606) 263-3948
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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, 1996, WAS 8,504,954 .
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
The information required by this Item 1 appears on pages 11 through 13 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 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 nine 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 third quarter
drilling activities resulted from 1) a delay in the completion of a drilling
program started in July 1995 and normal seasonal fluctuations in these
activities. For the nine month period ending September 30, 1996, the
Registrant drilled three natural gas wells and completed seven wells. 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 September 30, 1996, the Registrant had drilled eleven and completed five
of those drilled.
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 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.
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
2
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. As of the date of this report,
this transaction has not been closed.
LIQUIDITY
The Registrant plans to drill five 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 three of its five targeted wells
during the remainder of 1996.
During the third 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. Year to date revenues related to
this activity accounted for 26.8 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 three quarters 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 September 30, 1996, was a negative
$119,955. Compared to the same period in 1995, working capital was a
negative $341,950, reflecting an improvement of $221,995.
Compared to the same nine month period in 1995, the major change in the
composition of the Registrant's current assets consisted of the increase in
intercompany and other notes receivable of $500,926 from $0 to $500,926.
Accounts receivable declined by $108,546 from $757,432 to $648,886. Lumber
inventories increased to $42,837 from $0 during the same period. Prepaid
expenses, short term investments and other current assets incurred a net
decrease of $97,458 from $103,117 to $5,659. Current liabilities increased
from $180,785 from $1,239,923 to $1,420,708 with the components of this
change being the decrease of current bank loans of $43,242 and the increase
in accounts receivable and current portion of long term debt of $53,253 and
$170,774 respectively.
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:
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.
3
As of the date of this report, the Registrant has sold 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 entered negotiations with two energy lenders to
secure financing for its drilling and development activities. These
negotiations are ongoing and no commitments have been made as to the final
structure or amount of this financing.
The Registrant has also negotiated extended payment arrangements with
various vendors.
In July, 1996, the Registrant authorized 683,812 additional shares and issued,
pursuant to a Form S-8 registration statement, 626,998 shares of its common
stock. The aggregate value of the issued shares was $265,642, and was issued to
various vendors for services rendered and to employees as part of an employee
stock plan. The details of this stock issue are as follows:
STOCK ISSUED TO VENDORS FOR SERVICES RENDERED
VALUE OF
# SHARES # SHARES # SHARES TO PRICE PER SHARES
VENDOR AUTHORIZED ISSUED BE ISSUED SHARE ISSUED
- ------ ---------- -------- --------- --------- --------
Robert L. McIntyre 100,775 100,775 0 $0.445 $ 44,800
Norman T. Reynolds 148,245 148,245 0 $0.380 56,333
Fred Mercer & Associates 32,200 32,200 0 $0.500 16,100
CFO Services, Inc. 190,832 134,018 56,814 $0.500 67,009
BCD Softech, Inc. 7,760 7,760 0 $0.500 3,880
------- ------- ------ --------
Total-Vendors 479,812 422,998 56,814 $188,122
STOCK ISSUED TO EMPLOYEES
VALUE OF
# SHARES # SHARES # SHARES TO PRICE PER SHARES
EMPLOYEE GROUP AUTHORIZED ISSUED BE ISSUED SHARE ISSUED
- -------------- ---------- -------- --------- --------- --------
Officers and Directors
William S. Daugherty,
President and Chairman 50,000 50,000 0 $ 0.38 $ 19,000
Timothy F. Guthrie,
Chief Financial
Officer and
Secretary 50,000 50,000 0 $ 0.38 19,000
Employees as a Group 104,000 104,000 0 $ 0.38 39,520
------- ------- ------ --------
Total-Employees 204,000 204,000 0 $77,520
On August 23, 1996, the Registrant accepted a subscription, pursuant to
Regulation S, 500,000 shares of its common stock for $125,000 ($0.25 per
share). These funds were used to meet working capital requirements.
In September, 1996, the Registrant issued 135,246 shares of restricted common
stock valued at
4
$61,283 ($0.45 per share) as payment for a judgment lien against the prior
owner of property located in Williamsburg, Kentucky.
RESULTS OF OPERATIONS
Compared to the same period of 1995, the Registrant's gross revenues declined
by 24% to $1,092,047 from $1,444,800. For the period, the Registrant
experienced a net loss of $549,527 in 1996 compared to a net loss of $552,500
in 1995.
The Registrant's gross revenues are derived from turnkey contract revenues of
$410,248 (37.57 percent); natural gas and oil production revenues of $327,115
(29.95 percent); operating revenues of $57,476 (5.3 percent); lumber sales of
$293,450 (26.9 percent) and miscellaneous revenues of $3,759 (0.34 percent).
Gross revenues for the period ending September 30 were impacted by the level
of contract revenue from turnkey drilling activities which declined by
$621,458 from $1,031,732 in 1995 to $410,248 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 nine 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 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 $908,532 for the first nine months of 1996 and
$1,110,699 for the same period in 1995 reflecting a decrease of $202,167.
Operating expenses for the quarter included non cash items such as
amortization and depreciation of $167,127. Non cash items included $134,217
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 nine 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
5
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 September 30, 1996 11
Summary Consolidated Statement of Profit (Loss)
for the period ended September 30, 1996 12
Consolidated Statement of Change in Financial Position
for the period ended September 30, 1996 13
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
6
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.
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.
7
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 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
8
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.)
(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 he filing of a lawsuit by J. Rudolph Oliver.
(Item 5. Other Events.)
9
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: November 14, 1996
10
ALASKA APOLLO RESOURCES, INC.
SUMMARY CONSOLIDATED BALANCE SHEET
(UNITED STATES DOLLARS)
UNAUDITED UNAUDITED
30-SEP-95 30-SEP-96
--------- ---------
ASSETS
CURRENT ASSETS
Cash 37,424 102,445
Short Term Investments 33,820 0
Account Receivable 757,432 648,886
Inventory 0 42,837
Prepaid Expenses 53,297 5,659
Intercompany and Other Receivable 500,926
Other Current 16,000 0
---------- ----------
Subtotal Current 897,973 1,300,753
MINING PROPERTY AND
RELATED EXPENDITURES-NET 11,231,967 11,250,790
OIL AND GAS PROPERTIES - NET 4,156,683 4,207,582
CAPITAL ASSETS 353,153 284,987
OTHER ASSETS
Deferred Tax Benefit 219,805 0
Bonds and Deposits 41,919 42,919
Related Party Receivable 163,055 107,645
NOTES RECEIVABLE 30,926 0
GOODWILL (NET OF ACCUMULATED
AMORTIZATION OF $447,390) 1,431,652 1,252,696
INCORPORATION COSTS 428 0
---------- ----------
TOTAL ASSETS 18,527,561 18,447,372
---------- ----------
---------- ----------
LIABILITIES
CURRENT LIABILITIES
Bank Loan 50,242 7,000
Account Payable and Accrued
Liabilities 1,085,681 1,138,934
Long Term Debt 104,000 274,774
Loans Payable 0 0
---------- ----------
Subtotal Current Liabilities 1,239,923 1,420,708
LOANS PAYABLE 890,822 1,557,053
DEFERRED INCOME TAXES 0 8,890
---------- ----------
Subtotal Liabilities 2,130,745 2,986,651
SHAREHOLDER EQUITY
CAPITAL STOCK
Issued 20,003,537 20,459,186
Current Period Earnings (549,527)
Deficit (3,606,721) (4,448,938)
---------- ----------
Subtotal Shareholder Equity 16,396,816 15,460,721
TOTAL LIABILITIES AND SHAREHOLDER
EQUITY 18,527,561 18,447,372
---------- ----------
---------- ----------
0 0
Unaudited-Internally Prepared by Company Management
11
ALASKA APOLLO RESOURCES, INC.
SUMMARY CONSOLIDATED
STATEMENT OF PROFIT (LOSS)
(UNITED STATES DOLLARS)
UNAUDITED
FOR THE NINE MONTHS ENDING
UNAUDITED UNAUDITED
30-SEP-95 30-SEP-96
--------- ---------
REVENUE
GROSS REVENUES 1,444,801 100.0% 1,092,047 100.0%
Direct Costs 1,112,932 77.0% 740,787 67.8%
--------- ---------
GROSS PROFIT 331,869 23.0% 351,260 32.2%
GENERAL AND ADMINISTRATIVE COSTS
Salaries and Wages 219,486 15.2% 198,836 18.2%
Consulting and Management Fees 177,774 12.3% 74,268 6.8%
Office and General 74,522 5.2% 47,605 4.4%
Legal 107,598 7.4% 113,442 10.4%
Travel and Entertainment 43,882 3.0% 33,485 3.1%
Shareholder and Investor Information 92,955 6.4% 69,333 6.3%
Advertising and Promotion 0 0.0% 6,760 0.6%
Property and Payroll Taxes 31,365 2.2% 18,210 1.7%
Insurance 30,555 2.1% 35,152 3.2%
Depreciation and Amortization 176,745 12.2% 163,127 14.9%
Engineering 22,625 1.6% 0 0.0%
Rent 24,352 1.7% 24,086 2.2%
Accounting and Audit 46,050 3.2% 82,510 7.6%
Repairs and Maintenance 8,719 0.6% 5,476 0.5%
Licenses and Fees 33,543 2.3% 36,242 3.3%
Trust and Stock Exchange Company Fees 20,528 1.4% 0 0.0%
--------- ---------
SUBTOTAL-G&A COSTS 1,110,699 76.9% 908,532 83.2%
Less: Interest and Other Expense (Income) (201) (0.0%) (7,745) (0.7%)
--------- ---------
INCOME BEFORE TAX AND EXTRAORDINARY ITEMS (778,629) (53.9%) (549,527) (50.3%)
Income Tax Expense (Benefit) (166,812) (11.5%) 0 0.0%
Extraordinary Item: Cummulative Effect of
Accounting Change 59,318 4.1% 0 0.0%
--------- ---------
NET PROFIT (LOSS) FOR CURRENT PERIOD (552,499) (38.2%) (549,527) (50.3%)
--------- ---------
--------- ---------
DEFICIT, beginning of period (3,054,222) (4,448,938)
DEFICIT, end of period (3,606,721) (4,998,465)
Shares Outstanding 7,065,070 8,504,954
EARNINGS PER SHARE ($0.08) ($0.06)
Unaudited-Internally Prepared by Company Management
12
ALASKA APOLLO RESOURCES, INC.
CONSOLIDATED STATEMENT
OF CHANGE IN FINANCIAL POSITION
(UNITED STATES DOLLARS)
UNAUDITED
FOR THE NINE MONTH PERIOD ENDING
UNAUDITED UNAUDITED
30-SEP-95 30-SEP-96
--------- ---------
OPERATING ACTIVITIES
Net Income (Loss) (552,499) (549,527)
Amort., Deprec, Depletion and Non Cash Items 275,624 225,596
Gain on Sale of Assets 0 0
Change in Accounts Receivable 0 (138,943)
Change in Inventories 0 38,053
Change in Prepaid Expenses 0 5,762
Change in Accounts Payable and Accrued Expenses 0 (212,139)
Change in Intercompany and Other Accounts Receivable 0 (211,022)
Change Other Current Assets (142,668) 0
-------- --------
Net Cash From Operating Activities (419,543) (842,220)
FINANCING ACTIVITIES
Issue of Capital Stock 219,094 390,996
Change in Notes Payable 19,131 (147,207)
Change in Loan Payable 54,459 699,383
-------- --------
Net Cash from Financing Activities 292,684 943,172
INVESTING ACTIVITIES
Change in Resource Properties (73,386) (39,328)
Change in Oil and Gas Properties (44,502) (212,143)
Change in Capital Assets (87,276) 73,886
Change in Other Assets 0 (22,769)
Change in Note Receivable 0 17,556
Change in Retained Earnings 0 45,311
-------- --------
Net Cash From Investing Activities (205,164) (137,487)
CHANGE IN CASH (332,023) (36,535)
CASH, BEGINNING OF PERIOD 369,447 138,980
-------- --------
CASH, END OF PERIOD 37,424 102,445
-------- --------
-------- --------
Unaudited-Internally Prepared by Company Management
13