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, 2000
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, 2000, WAS 2,520,628.
Transitional Small Business Disclosure Format (check one): Yes No X .
-- --
================================================================================
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, 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.
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 in the Appalachian
Basin 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.
LIQUIDITY
The Company continues its tradition of realizing revenues from its oil
and gas operations. For the three months ending March 31, 2000, the Company
drilled fourteen wells (3.30 net wells) (eleven natural gas wells, three wells
capable of producing both oil and natural gas) completed seven natural gas
wells and extended its gathering system by 5000 feet. By comparison, for the
same period of 1999, the Company drilled four natural gas wells (1.95 net
wells). Drilling operations for the first three months of 2000 were primarily
related to a joint venture on the Company's farmout acreage acquired from
Equitable Resources Energy Corporation.
The Company funds its operations through a combination of cash flow
from operations, capital raised through drilling partnerships and the sale of
stock. Operational cash flow is generated by sales of natural gas and oil from
interests the Company owns in wells, well operations of partnership wells, and
well drilling and completions for Company sponsored partnerships.
The Company continues to review additional opportunities for
acquisitions of oil and gas properties. Previous acquisitions have been
completed using Company stock to pay for the acquisitions. Generally, interests
in wells purchased include a majority interest in the wells and the right to
operate wells.
The Company acquired wells in two acquisitions in the last quarter of
1999. One transaction was with Environmental Energy, Inc., and its affiliated
limited partnerships, which closed on October 21, 1999 and allowed the Company
to acquire interests in 41 oil and gas wells located in Kentucky, Louisiana and
Tennessee. On October 13, 1999
2
3
the agreed to purchase 50% interest in 24 natural gas wells located in Knox
County, Kentucky together with gathering systems, easements and operating rights
for $425,000 payable in 191,519 shares of restricted common stock valued at
$2.2191 per share. Because of the ownership structure of the well interests the
transaction was designed to be a three part closing. As of March 31, 2000 a
total of 158,399 shares of stock had been issued in connection with the
acquisition. Additional interests may be acquired in a subsequent closing for
which the company is prepared to issue an additional 33,120 shares of stock.
The Company has primarily concentrated in drilling wells on prospects
it generates in the Appalachian Basin. Historically, a major portion of the
Company's revenues have been from its activities as "turnkey driller" and
operator of various drilling programs in the Appalachian Basin. During the first
three months of 2000, approximately 94% of the Company's revenues were derived
from joint venture drilling.
The Company plans to drill 16 wells during the last three quarters of
2000 and earn interests ranging from 15% to 50% of each well it drills.
Sentra Corporation, the Company's natural gas utility subsidiary,
completed its first full quarter of operations with sales of $27,602. Sentra
has installed approximately 73,000 feet of transmission line and 17,000 feet of
distribution line. As of May 12, 2000, Sentra has 56 customers, 15 of which are
commercial accounts. In addition, Sentra has installed 54 risers that are
awaiting the setting of meters and the commencement of service, and has an
additional 93 applications from customers requesting service. Sentra expects
high demand for natural gas service in its service areas because of ease of
usage, economy and reliability. Further, demand is expected to increase
because of continued growth and acceptance of natural gas by the chicken
industry that is a major commercial segment in the economy of Sentra's service
areas.
Working capital for the period ending March 31, 2000 was a negative
$2,565,509 compared to the same period in 1999, when working capital was a
negative $4,019,060.
During the period ending March 31, 2000 and compared to that same
period in 1999, the changes in the composition of the Company's current assets
were: cash balances increased $416,303 from $298,353 to $714,656 accounts
receivable balances decreased $57,975 from $336,116 to $278,141; and inventories
decreased $396,631 from $396,631 to $0. The inventory decrease was due to the
divestiture of Red River Hardwoods, Inc. during 1999. Other current assets such
as prepaids and notes receivable decreased $16,619 from $19,770 to $3,151.
Overall, current assets decreased by $54,922 to $995,948.
Current liabilities for the period ended March 31, 2000 were $3,561,457
compared to $5,069,930 for the period ended March 31, 1999. The majority of the
decrease was due to the divestiture of Red River Hardwoods, Inc. during 1999.
While the Company believes 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 term strategy in 2000
to meet the Company's financial obligations. This strategy includes:
- INCREASING JOINT VENTURE DRILLING. Higher oil and gas prices have
sparked an increased interest in partnership drilling. On
April 30, 2000 the Company signed a partnership agreement to
drill up to 8 wells in the second quarter ending June 30. Because
of renewed interest in drilling the Company believes that it
will be able to meet its goal of 30 wells to be drilled in 2000.
- ACQUISITION OF REVENUE PRODUCING PROPERTIES. The Company
continues to review existing oil and gas properties for sale in
its areas of interest. In addition to reviewing new properties,
the Company intends to complete the closing of the Ken-Tex
acquisition in 2000.
- INSTALLATION OF ADDITIONAL NATURAL GAS GATHERING SYSTEM. The
Company plans to expand its natural gas gathering system in 2000
by more than 50,000 feet. The Company owns wells that are shut in
or experiencing production constraints due to pipeline
restrictions and a 40,000 foot extension to the Kay Jay Field is
planned. This will allow the Company to increase its flow of gas
from wells it owns and operates, plus transport gas from wells
drilled in the future. On May 5, 2000, 14,000 feet of four inch
pipeline was completed and gas flow commenced from the Company's
Hatfield Gap Field that allows new gas production to be marketed.
- GOLD AND SILVER PROPERTIES. It is the Company's objective to
realize the value of its gold and silver properties by 1)
obtaining a joint venture partner to provide funds for additional
exploration on its prospects or 2) divesting its gold and silver
properties. To help achieve its goal in March 2000, the Company
commissioned an engineering review and an appraisal by qualified
independent third parties of its gold and silver properties.
3
4
RESULTS OF OPERATIONS
For the three month period ending March 31, 2000, the Company's gross
revenues increased $1,619,466 to $2,979,595 from $1,360,129 for the same period
in 1999. The majority of the increase was attributable to increased turnkey
drilling operations. The Company experienced net income from continuous
operations of $720,442 in this period compared to a net loss of $252,166 in the
same period of 1999.
The Company's gross revenues were derived from drilling contract
revenues of $2,809,362 (94%), from natural gas and oil operations and production
revenues of $142,631 (5%) and natural gas distribution of $27,602 (1%).
The increase in gross revenues of $1,619,466 was primarily attributable
to the increased in drilling activity during the period. Contract revenues from
drilling activities increased by $2,482,528 from $326,834 in the first three
months of 1999 to $2,809,362 in the first three months of 2000.
During the first three months of 2000, total direct costs increased by
$680,147 to $1,887,804 compared to $1,207,157 in the first three months of 1999.
These direct costs included drilling and related costs for 14 natural gas wells.
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, 2000...........i
Income Statement for the Period Ended March 31, 2000...ii-iii
Segmented Information......................................iv
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.
4
5
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 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).
3(h)* Special Resolution of Daugherty Resources, Inc., a British
Columbia corporation, dated June 30, 1999, changing the
authorized capital of the Registration from 10,000,000 shares of
common stock, without par value per share, to 100,000,000 shares
of common stock, without par value per share, and from 1,200,000
shares of preferred stock, without par value per share, to
5,000,000 shares of preferred stock, without par value per
share. Altered Memorandum of Daugherty Resources, Inc., dated
June 30, 1999, changing the authorized capital of the Company to
105,000,000 shares divided into 5,000,000 shares of preferred
stock, without par value and 100,000,000 common shares without
par value. Special Resolution of Daugherty Resources, Inc., a
British Columbia corporation, dated June 30, 1999, altering
Article 23.1(b) of the Company Articles by substituting a new
Article 23.1(b) that sets forth the conditions and terms upon
which the preferred shares can be converted to common stock.
Filed as an exhibit to Form 8-K, for the Company for reporting
an event on October 25, 1999. (File No.0-12185)
4* See Exhibit No. 3(a), (b). (c), (d), (e), (f), (g) and (h)
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).
5
6
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)* Agreement of Purchase and Sale by and between Environmental
Energy Partners I, Ltd., Environmental Energy Partners II, Ltd,
Environmental Operating Partners, Ltd., Environmental Holding,
LLC, Environmental Processing Partners, Ltd., Environmental
Energy, Inc., and Environmental Operating, Inc., as Sellers and
Daugherty Petroleum, Inc., as Buyer, and Daugherty Resources,
Inc. as Accommodating Party, dated as of January 26, 1999, filed
as an Exhibit to Form 8-K by the Company for reporting an event
on May 25, 1999 (File No. 0-12185).
10(d)* Agreement for the Purchase and Sale by and between H&S Lumber,
Inc., Buyer, and Daugherty Petroleum, Inc., Seller, for the sale
of Red River Hardwoods, Inc., an 80% subsidiary of Daugherty
Petroleum, Inc., which was effective June 30, 1999, and closed
December 1, 1999, filed as Exhibit 10.1 to Form 8-K by the
Company for reporting an event on December 9, 1999 (File No.
0-12185).
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
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:
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, May 15, 2000
- ------------------------ Director of the Registrant
WILLIAM S. DAUGHERTY
James K. Klyman* Director of the Registrant May 15, 2000
- ----------------
JAMES K. KLYMAN
Charles L. Cotterell* Director of the Registrant May 15, 2000
- ---------------------
CHARLES L. COTTERELL
*By /s/William S. Daugherty
------------------------
William S. Daugherty,
Attorney-in-Fact
7
8
DAUGHERTY RESOURCES. INC.
SUMMARY CONSOLIDATED BALANCE SHEETS
(United States Dollars)
Unaudited
3/31/99 3/31/00
------------ ------------
ASSETS
------
CURRENT ASSETS
- --------------
Cash $ 298,353 $ 714,656
Accounts receivable 336,116 278,141
Inventory 396,631 -
Other current assets 19,770 3,151
------------ ------------
TOTAL CURRENT ASSETS 1,050,870 995,948
OIL & GAS PROPERTIES (NET) 4,637,303 6,631,337
- --------------------------
MINING PROPERTY (NET) 11,232,229 4,450,000
- ---------------------
PROPERTY & EQUIPMENT (NET) 1,737,687 113,278
- -------------------------
OTHER ASSETS
- ------------
Related party loans 96,324 389,923
Bonds & deposits 54,224 41,000
Other assets 266,016 98,586
Goodwill, net of amortization of $1,163,215 1,027,357 626,349
------------ ------------
1,443,921 1,155,858
------------ ------------
TOTAL ASSETS $ 20,102,010 $ 13,346,421
============ ============
LIABILITIES & STOCKHOLDER'S EQUITY
----------------------------------
CURRENT LIABILITIES
Short-term loans & notes $ 879,177 $ 1,152,588
Current portion of LT debt 1,151,283 190,011
Accounts payable 1,464,996 431,316
Accrued liabilities 750,553 1,156,007
Drilling prepayments 823,921 631,535
------------ ------------
TOTAL CURRENT LIABILITIES 5,069,930 3,561,457
LONG-TERM LIABILITIES 2,553,897 1,804,454
- ---------------------
PAYABLE TO RELATED PARTIES 25,517 43,745
- -------------------------- ------------ ------------
7,649,344 5,409,656
MINORITY INTEREST - -
- -----------------
STOCKHOLDER'S EQUITY
- --------------------
Common stock 21,209,821 21,745,730
Preferred stock 650,000
Common stock subscribed - 546,502
Additional paid in capital - -
Retained earnings (deficit) (8,504,989) (15,725,909)
Current income (loss) (252,166) 720,442
------------ ------------
12,452,666 7,936,765
------------ ------------
TOTAL LIABILITIES &
STOCKHOLDER'S EQUITY $ 20,102,010 $ 13,346,421
============ ============
Unaudited-Internally prepared by Company management
i
9
DAUGHERTY RESOURCES, INC.
SUMMARY CONSOLIDATED STATEMENTS OF INCOME
(United States Dollars)
Unaudited
For the three month period ended
3/31/99 3/31/00
------------------------ ---------------------------
GROSS REVENUE $ 1,360,129 100.00% $ 2,979,595 100.00%
- -------------
DIRECT EXPENSES 1,207,157 88.75% 1,887,304 63.34%
- --------------- ----------- ------- -------------- ------
GROSS PROFIT 152,972 11.25% 1,092,291 36.66%
GENERAL & ADMINISTRATIVE EXPENSES
- ---------------------------------
Salaries & wages 93,229 6.85% 80,786 2.71%
Accounting & audit 23,826 1.75% 12,453 0.42%
Advertising & promotion 536 0.04% - 0.00%
Amortization 52,616 3.87% 72,260 2.43%
Bad debts 6,157 0.45% - 0.00%
Depreciation 11,514 0.85% 12,772 0.43%
General consulting 31,176 2.29% 152,618 5.12%
Insurance 7,554 0.56% 6,761 0.23%
Legal 30,463 2.24% 33,936 1.14%
Office & general 33,277 2.45% 26,393 0.89%
Payroll & property tax 13,933 1.02% 6,363 0.21%
Rent 14,724 1.08% 13,720 0.46%
Repairs & maintenance 1,316 0.10% 3,453 0.12%
Shareholder & investor information 1,929 0.14% 5,675 0.19%
Travel & entertainment 18,024 1.33% 17,295 0.58%
----------- ------- -------------- ------
TOTAL G & A EXPENSES 340,274 25.02% 444,485 14.92%
OTHER INCOME (EXPENSE)
- ----------------------
Interest & dividend income 4,177 0.31% 19,524 0.66%
Miscellaneous 22,295 1.64% 122,577 4.11%
Gain (loss) on sale of equipment - 0.00% - 0.00%
Interest expense (91,336) -6.72% (69,465) -2.33%
----------- ------- -------------- ------
INCOME BEFORE INCOME TAX & OTHER (252,166) -18.54% 720,442 24.18%
- --------------------------------
Income tax expense (benefit) - 0.00% - 0.00%
DISCONTINUED OPERATIONS
- -----------------------
Income (loss) from discontinued operations - 0.00% - 0.00%
Gain (loss) on disposal - 0.00% - 0.00%
----------- ------- ----------- ------
NET INCOME (LOSS) $ (252,166) -18.54% $ 720,442 24.18%
=========== ======= ============== ======
DEFICIT, beginning of period (8,504,989) $ (15,725,909)
DEFICIT, end of period (8,757,155) $ (15,005,467)
Shares outstanding 2,183,783 2,504,099
EARNINGS PER SHARE ($0.12) $0.29
Unaudited-Internally prepared by Company management
ii
10
DAUGHERTY RESOURCES, INC.
SUMMARY CONSOLIDATED STATEMENTS OF CASH FLOWS
(United States Dollars)
Unaudited
For the three month period ended
3/31/99 3/31/00
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
- ------------------------------------
Net income (loss) $ (252,166) $ 720,442
Adjustments to reconcile net income (loss) to net cash
cash provided by operating activities:
Depreciation, depletion, & amortization 150,191 137,512
Gain on sale of subsidiary - -
Changes in current assets & liabilities
(Increase) decrease in:
Accounts receivable 75,380 (60,273)
Inventory 35,837 -
Other current assets 31,507 (3,151)
Increase (decrease) in:
Short-term loans & notes (54,340) (3,849)
Accounts payable 303,574 (258,841)
Accrued liabilities (100,577) 504,852
Drilling prepayments (98,589) (1,904,929)
----------- -----------
Net cash provided by (used in) operating activities 90,817 (868,237)
CASH FLOWS FROM INVESTING ACTIVITIES
- ------------------------------------
Change in oil & gas properties (34,200) (825,512)
Change in mining properties - -
Change in property & equipment 19,959 (15,989)
Change in other assets (122,865) 45,363
----------- -----------
Net cash provided by (used in) investing activities (137,106) (796,138)
CASH FLOWS FROM FINANCING ACTIVITIES
- ------------------------------------
Issuance of common stock - 211,504
Change in long-term liabilities (198,833) 54,380
Change in payable to related party 14,809 (163,960)
----------- -----------
Net cash provided by (used in) financing activities (184,024) 101,924
----------- -----------
NET INCREASE (DECREASE) IN CASH (230,313) (1,562,451)
- -------------------------------
CASH AT BEGINNING OF PERIOD 528,666 2,277,107
- --------------------------- ----------- -----------
CASH AT END OF PERIOD $ 298,353 $ 714,656
- --------------------- =========== ===========
Unaudited-Internally prepared by Company management
iii
11
DAUGHERTY RESOURCES, INC.
SEGMENTED INFORMATION
For the thre month period ended March 31, 2000
(United States Dollars)
Unaudited
WOOD
OIL & GAS MINING PRODUCTS* CORPORATE TOTAL
--------- ------ --------- --------- -----
GROSS EXTERNAL REVENUE $ 2,979,595 - - - $ 2,979,595
INTERSEGMENT REVENUES - - - - -
INTEREST REVENUE 16,667 - - 2,857 19,524
INTEREST EXPENSE 48,430 - - 21,035 69,465
DEPRECIATION 1,772 - - 11,000 12,772
DEPLETION 80,000 - - - 80,000
AMORTIZATION OF GOODWILL - - - 44,739 44,739
SEGMENT PROFIT (LOSS) $ 963,519 - - (243,077) $ 720,442
=========== ========= ====== =========== ===========
SEGMENT ASSETS $ 6,631,337 4,450,000 - 2,265,084 $13,346,421
=========== ========= ====== =========== ===========
EXPENDITURES FOR SEGMENT
ASSETS $ 825,512 - - 15,989 $ 841,501
=========== ========= ====== =========== ===========
*Discontinued operation
Unaudited-Internally prepared by Company management
iv