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, 2001
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: (859) 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, 2001, WAS 3,448,229.
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 i through iv
of this Report, and is incorporated herein by reference.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF GENERAL OPERATIONS.
The following is a discussion of Daugherty Resources' financial
condition and results of operations. This discussion should be read in
conjunction with the Financial Statements of Daugherty Resources described in
Item 1 of this report. 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
Daugherty Resources 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 Daugherty Resources 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. 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 (See "Forward-Looking Statements" herein at page 7).
Daugherty Resources, Inc. ("Daugherty Resources"), formerly Alaska
Apollo Resources Inc., is a diversified natural resources company with
assets in oil and gas, and gold and silver prospects. Originally formed in 1979
to develop gold properties, Daugherty Resources in the fourth quarter of 1993,
acquired its wholly owned subsidiary, Daugherty Petroleum, Inc. ("Daugherty
Petroleum"). The purchase of Daugherty Petroleum has given Daugherty
Resources a diversified revenue and asset base that is primarily located in
Appalachia.
Since acquiring Daugherty Petroleum, Inc., Daugherty Resources 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
For the three months ending March 31, 2001, Daugherty Resources drilled
eleven (11) natural gas wells (2.8175 net wells), all of which were capable of
producing natural gas and completed six natural gas wells. By comparison, for
the same period of 2000, Daugherty Resources drilled fourteen (14) natural gas
wells (3.30 net wells). Drilling operations for the first three months of 2001
were primarily related to year end private placement drilling programs on
Daugherty Resources' farmout acreage acquired from Equitable Resources Energy
Corporation.
Daugherty Resources 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 Daugherty Resources owns in wells, well operations of partnership
wells, and well drilling and completions for partnerships sponsored by Daugherty
Petroleum, and gas distributed by Sentra Corporation a wholly owned subsidiary
of Daugherty Petroleum.
Daugherty Resources continues to review additional opportunities for
acquisitions of oil and gas properties. Previous acquisitions have been
completed using Daugherty Resources stock to pay for the acquisitions.
Generally, acquisitions include interests in the wells and the right to operate
the wells. Daugherty Resources generally participates in less than a majority
interest in those wells drilled by programs or joint ventures sponsored by
Daugherty Petroleum.
2
3
Daugherty Petroleum participated as a sponsor in two private placement
drilling program, which closed in December 2000 having subscribers for
$2,000,000 of partnership units, which allowed Daugherty Petroleum to drill 10
natural gas wells for the partnerships during the first quarter of 2001.
Daugherty Petroleum participated for a 25% interest in the programs. In
addition, Daugherty Petroleum participated in a 2 well joint venture that was
drilled in the first quarter of 2001, in which it also retained 25% working
interest.
Daugherty Resources has primarily concentrated in drilling wells on
prospects it generates in the Appalachian Basin. Historically, a major portion
of Daugherty Resources' revenues has been from its activities as "turnkey
driller" and operator of drilling programs and joint ventures in the Appalachian
Basin sponsored by Daugherty Petroleum.
Daugherty Resources plans to drill 29 additional wells during the last
three quarters of 2001 and retain interests ranging from 25% to 33% of each well
it drills. This estimate is based upon two pending private placement drilling
programs covering the drilling and completion of up to 25 wells, and discussion
with potential joint venture partners for the balance of the projected wells for
2001.
For the period ending March 31, 2001, Sentra Corporation, Daugherty
Resources' natural gas utility subsidiary, had sales of $42,916 compared with
sales of $27,602 for the first three months of 2000. In the first quarter of
2001 Sentra installed approximately 770 feet of transmission line and 735 feet
of distribution line. As of March 31, 2001, Sentra has 134 customers, 41 of
which are commercial and agri-business accounts. In addition, Sentra has 106
applications from customers requesting service. Sentra expects high demand for
natural gas service because of the ease of usage, economy and reliability of
natural gas. Further, demand is expected to increase because of continued growth
and acceptance of natural gas by the chicken industry that is a major segment
the economy in Sentra's service areas.
On March 8, 2001 Sentra entered into an agreement with Clay Gas Utility
District of Celina, Tennessee to manage its business, which currently consists
of 146 customers, including 30 industrial, commercial and agri-business
connections. Sentra also reads Clay Gas' meters, issue its bills and collects
it's receivables.
On February 1, 2001, Daugherty Petroleum entered into agreements with
Sentra and Clay Gas Utility District to supply natural gas to the two utilities.
Daugherty purchases the natural gas it sells to the utilities from a gas
marketing company that delivers the gas to the utilities sales meter on the
Texas Eastern Transmission line in Monroe County, Kentucky. Gas sales during the
first quarter were $129,401.
Working capital as of March 31, 2001, was a negative $2,763,094
compared to March 31, 2000, when working capital was negative $2,565,509.
During the three month period ending March 31, 2001, and compared to
the same period in 2000, the changes in the composition of Daugherty Resources'
current assets were: cash balances decreased $358,882 from $714,656 to $355,774;
accounts receivable balances increased $31,675 from $278,141 to $309,816. Other
current assets such as prepaids, inventory, and notes receivable increased
$31,018 from $3,151 to $34,169. Overall, current assets decreased by $296,189 to
$699,759.
Current liabilities as of March 31, 2001 were $3,462,853 compared to
$3,561,457 as of March 31, 2000. During the three month period ending March 31,
2001, and compared to the same period in 2000, the changes in the composition of
current liabilities were: short-term loans and current portion of long-term debt
decreased $15,368 from $1,342,599 to $1,327,231, customer drilling deposits
decreased $384,798 from $631,535 to $246,737, accounts payable and accrued
liabilities increased $301,562 from $1,587,323 to $1,888,885. Daugherty
Resources is required to categorize $1,106,327 of debt as short-term loans
despite the fact that historically these obligations have been renewed annually.
Management does not believe that its working capital deficit will have
a material or substantial negative impact on Daugherty Resources' financial
position, results of operations or liquidity in future periods due to the
following:
3
4
o The natural gas prices contained in the contracts negotiated by
Daugherty Petroleum in the last quarter of 2000 that runs
throughout substantially all of 2001 will result in significantly
higher future revenues from the sale of natural gas.
Additionally, the higher natural gas prices are expected to
result in increased interest in drilling partnerships, which
directly result in an increase in revenue from drilling
activities.
o The addition of reserves through future drilling and acquisitions
is expected to enhance the ability of Daugherty Resources to
secure long term financing, and increased lines of credit.
Management continues to purse a new credit facility to convert
Daugherty Resources' short-term debt to long-term debt and to increase its line
of credit, which is expected to reduce the working capital deficit, insure
financial liquidity, and enhance the balance sheet.
Daugherty Resources believes its cash flow resulting in operating
revenues will contribute significantly to its short term financial commitments
and operating costs, and has continued to refine its long term strategy in 2001
to meet the financial obligations of Daugherty Resources. This strategy
includes:
o INCREASING PARTNERSHIP AND JOINT VENTURE DRILLING. Higher oil and
gas prices have sparked an increased interest in partnership
drilling. On May 1, 2001 Daugherty Resources began two private
placement drilling programs, which will permit the drilling and
completion of 25 additional wells in 2001 if the maximum capital
is raised.
o ACQUISITION OF REVENUE PRODUCING PROPERTIES. Daugherty Resources
continues to review existing oil and gas properties for
acquisition in its areas of interest. In addition to reviewing
new properties, Daugherty Resources intends to conclude the
Ken-Tex acquisition in 2001.
o GOLD AND SILVER PROPERTIES. It is the objective of Daugherty
Resources 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 of its
gold and silver properties.
RESULTS OF OPERATIONS
For the three-month period ending March 31, 2001, Daugherty Resources'
gross revenues increased $297,882 to $3,277,477 from $2,979,595 for the same
period in 2000. Daugherty Resources experienced net income from continuous
operations of $985,916 for the three-month period ending March 31, 2001 compared
to net income of $720,442 for the same period in 2000.
Daugherty Resources' gross revenues were derived from drilling contract
revenues of $2,825,490 (86.2%) natural gas and oil operations and production
revenues of $409,062 (12.5%), and natural gas distribution of $42,916 (1.3%).
The increase in gross revenues of $297,882 was primarily attributable
to an increase in oil and gas production revenues. Revenues from oil and gas
production activities increased by $266,431 to $409,062 for the three-month
period ending March 31, 2001 from $142,631 for the same period in 2000. The
increase in revenues from oil and gas production activities was primarily
attributable to increased oil and gas production and higher oil and gas prices.
During the three-month period ended March 31, 2001, total direct costs
decreased by $219,135 to $1,668,169 compared to $1,887,304 in 2000. These direct
costs included drilling and related costs for eleven natural gas wells in the
first quarter of 2001 compounded to 14 in the same period of 2000.
Daugherty Resources believes there are several factors that will
increase revenues in the year 2001. Daugherty Resources will receive additional
revenues from the oil and gas well properties it acquired and drilled during
2000 and the first quarter of 2001. The natural gas price contained in Daugherty
Petroleum's gas sales contracts negotiated late in the 4th quarter of 2000 will
result in higher revenue through November of 2001. The
4
5
expansion of its natural gas gathering system completed in 2000 and
additional expansion planned in 2001 should increase Daugherty Petroleum's
ability to transport natural gas.
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, 2001....... i
Income Statement for the Period Ended March 31, 2001.... ii-iii
Segmented Information................................... iv
Computation of Per Share Earnings....................... v
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.
5
6
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).
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).
6
7
11 Computation of Per Share Earnings.
24 Powers of Attorney.
(b)* Reports on Form 8-K.
None
(c) Financial Statement Schedules.
No schedules are required, as all information required has
been presented in the unaudited financial statements.
FORWARD-LOOKING STATEMENTS
This Form 10-KSB contains forward-looking statements within meaning of
section 27A of the Securities Act of 1933 and section 21E of the Securities
Exchange Act of 1934, including statements regarding, among other items, our
growth strategies, anticipated trends in our business and our future results of
operations, market conditions in the oil and gas industry, our ability to make
and integrate acquisitions and the outcome of litigation and the impact of
governmental regulation. These forward-looking statements are based largely on
our expectations and are subject to a number of risks and uncertainties, many of
which are beyond our control. Actual results could differ materially from these
forward-looking statements as a result of, among other things:
o A decline in oil and/or gas production or prices.
o Incorrect estimates of required capital expenditures.
o Increases in the cost of drilling, completion and gas collection
or other costs of production and operations.
o An inability to meet growth projections.
o Government regulations.
o Other risk factors discussed or not discussed herein.
In addition, the words "believe", "may", "will", "estimate",
"continue", "anticipate", "intend", "expect" and similar expressions, as they
relate to Daugherty Petroleum and/or Daugherty Resources, our business or our
management, are intended to identify forward-looking statements.
Daugherty Resources believes that the expectations reflected in the
forward-looking statements and the basis of the assumptions of such
forward-looking statements are reasonable. However, in light of these risks and
uncertainties, the forward-looking events and circumstances discussed in this
report may not occur and actual results could differ materially from those
anticipated or implied in the forward-looking statements.
Daugherty Resources claims the protection of the safe harbor for
forward-looking statements combined in the Private Securities Litigation Reform
Act of 1995 for these statements.
7
8
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, 2001
- --------------------------- Director of the Registrant
William S. Daugherty
/S/ James K. Klyman *
- --------------------------- Director of the Registrant May 15, 2001
James K. Klyman
/S/ Charles L. Cotterell Director of the Registrant May 15, 2001
- ---------------------------
Charles L. Cotterell
*By /S/ William S. Daugherty
---------------------------
William S. Daugherty
Attorney-in-Fact
8
9
DAUGHERTY RESOURCES. INC.
SUMMARY CONSOLIDATED BALANCE SHEETS
(United States Dollars)
Unaudited
3/31/2001 3/31/2000
------------ ------------
ASSETS
------
CURRENT ASSETS
- --------------
Cash $ 355,774 $ 714,656
Accounts receivable 309,816 278,141
Inventory -- --
Other current assets 34,169 3,151
------------ ------------
TOTAL CURRENT ASSETS 699,759 995,948
OIL & GAS PROPERTIES (NET) 9,072,591 6,631,337
- --------------------------
MINING PROPERTY (NET) 4,450,000 4,450,000
- ---------------------
PROPERTY & EQUIPMENT (NET) 264,030 113,278
- ---------------------------
OTHER ASSETS
- ------------
Related party loans 579,348 389,923
Bonds & deposits 41,000 41,000
Other assets 91,706 98,586
Goodwill, net of amortization 447,394 626,349
------------ ------------
1,159,448 1,155,858
------------ ------------
TOTAL ASSETS $ 15,645,828 $ 13,346,421
============ ============
LIABILITIES & STOCKHOLDERS' EQUITY
----------------------------------
CURRENT LIABILITIES
- -------------------
Short-term loans & notes $ 1,127,522 $ 1,152,588
Current portion of LT debt 199,709 190,011
Accounts payable 855,268 431,316
Accrued liabilities 1,033,617 1,156,007
Drilling prepayments 246,737 631,535
------------ ------------
TOTAL CURRENT LIABILITIES 3,462,853 3,561,457
LONG-TERM LIABILITIES 1,652,669 1,804,454
- ---------------------
PAYABLE TO RELATED PARTIES 43,745 43,745
- -------------------------- ------------ ------------
5,159,267 5,409,656
MINORITY INTEREST -- --
- -----------------
STOCKHOLDERS' EQUITY
- --------------------
Common stock 23,117,748 21,745,730
Preferred stock 618,781 650,000
Common stock subscribed 1,441,386 546,502
Additional paid in capital -- --
Retained earnings (deficit) (15,677,270) (15,725,909)
Current income (loss) 985,916 720,442
------------ ------------
10,486,561 7,936,765
------------ ------------
TOTAL LIABILITIES &
STOCKHOLDERS' EQUITY $ 15,645,828 $ 13,346,421
============ ============
Unaudited-Internally prepared by Company management
i
10
DAUGHERTY RESOURCES, INC.
SUMMARY CONSOLIDATED STATEMENTS OF INCOME
(United States Dollars)
Unaudited
For the quarter ended For the three months ended
3/31/2001 3/31/2001
---------------------- ---------------------------
GROSS REVENUE $ 3,277,477 100.00% $ 3,277,477 100.00%
- -------------
DIRECT EXPENSES 1,668,169 50.90% 1,668,169 50.90%
- --------------- ----------- ------- ----------- -------
GROSS PROFIT 1,609,308 49.10% 1,609,308 49.10%
GENERAL & ADMINISTRATIVE EXPENSES
- ---------------------------------
Salaries & wages 104,504 3.19% 104,504 3.19%
Accounting & audit 33,771 1.03% 33,771 1.03%
Advertising & promotion - 0.00% - 0.00%
Amortization 51,619 1.57% 51,619 1.57%
Bad debts - 0.00% - 0.00%
Depreciation 16,999 0.52% 16,999 0.52%
General consulting 214,804 6.55% 214,804 6.55%
Insurance 13,684 0.42% 13,684 0.42%
Legal 8,900 0.27% 8,900 0.27%
Office & general 68,496 2.09% 68,496 2.09%
Payroll & property tax 8,763 0.27% 8,763 0.27%
Rent 14,853 0.45% 14,853 0.45%
Repairs & maintenance 13,083 0.40% 13,083 0.40%
Shareholder & investor information - 0.00% - 0.00%
Travel & entertainment 24,474 0.75% 24,474 0.75%
---------- ------- ----------- -------
TOTAL G & A EXPENSES 573,950 17.51% 573,950 17.51%
OTHER INCOME (EXPENSE)
- ----------------------
Interest & dividend income 11,996 0.37% 11,996 0.37%
Miscellaneous - 0.00% - 0.00%
Gain (loss) on sale of equipment 3,000 0.09% 3,000 0.09%
Interest expense (64,438) -1.97% (64,438) -1.97%
-------- ------ ----------- -------
INCOME BEFORE INCOME TAX & OTHER 985,916 30.08% 985,916 30.08%
- --------------------------------
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) 985,916 30.08% $ 985,916 30.08%
======== ====== =========== =======
DEFICIT, beginning of period $ (15,677,270) $ (15,677,270)
DEFICIT, end of period $ (14,691,354) $ (14,691,354)
Average shares outstanding 3,446,493 3,446,493
EARNINGS PER SHARE $0.29 $0.29
====== ======
For the quarter ended For the three months ended
3/31/2000 3/31/2000
------------------------ ---------------------------
GROSS REVENUE $ 2,979,595 100.00% $ 2,979,595 100.00%
- -------------
DIRECT EXPENSES 1,887,304 63.34% 1,887,304 63.34%
- --------------- ---------- ------- ---------- ------
GROSS PROFIT 1,092,291 36.66% 1,092,291 36.66%
GENERAL & ADMINISTRATIVE EXPENSES
- ---------------------------------
Salaries & wages 80,786 2.71% 80,786 2.71%
Accounting & audit 12,453 0.42% 12,453 0.42%
Advertising & promotion - 0.00% - 0.00%
Amortization 72,260 2.43% 72,260 2.43%
Bad debts - 0.00% - 0.00%
Depreciation 12,772 0.43% 12,772 0.43%
General consulting 152,618 5.12% 152,618 5.12%
Insurance 6,761 0.23% 6,761 0.23%
Legal 33,936 1.14% 33,936 1.14%
Office & general 26,393 0.89% 26,393 0.89%
Payroll & property tax 6,363 0.21% 6,363 0.21%
Rent 13,720 0.46% 13,720 0.46%
Repairs & maintenance 3,453 0.12% 3,453 0.12%
Shareholder & investor information 5,675 0.19% 5,675 0.19%
Travel & entertainment 17,295 0.58% 17,295 0.58%
------- ------- ------- -----
-
TOTAL G & A EXPENSES 444,485 14.92% 444,485 14.92%
OTHER INCOME (EXPENSE)
- ----------------------
Interest & dividend income 19,524 0.66% 19,524 0.66%
Miscellaneous 122,577 4.11% 122,577 4.11%
Gain (loss) on sale of equipment 0.00% - 0.00%
Interest expense (69,465) -2.33% (69,465) -2.33%
-------- ------- -------- ------
-
INCOME BEFORE INCOME TAX & OTHER 720,442 24.18% 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) $ 720,442 24.18% $ 720,442 24.18%
========== ======= ========== ======
DEFICIT, beginning of period $ (15,725,909) $ (15,725,909)
DEFICIT, end of period $ (15,005,467) $ (15,005,467)
Average shares outstanding 2,520,628 2,520,628
EARNINGS PER SHARE $0.29 $0.29
====== =====
Unaudited-Internally prepared by Company management
ii
11
DAUGHERTY RESOURCES, INC.
SUMMARY CONSOLIDATED STATEMENTS OF CASH FLOWS
(United States Dollars)
Unaudited
For the three month periods ended
3/31/2001 3/31/2000
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
- ------------------------------------
Net income (loss) $ 985,916 $ 720,442
Adjustments to reconcile net income (loss) to net cash
cash provided by operating activities:
Depreciation, depletion, & amortization 218,618 137,512
Gain on sale of subsidiary --
Changes in current assets & liabilities
(Increase) decrease in:
Accounts receivable 40,889 (60,273)
Inventory -- --
Other current assets 1,471 (3,151)
Increase (decrease) in:
Short-term loans & notes (4,276) (3,849)
Accounts payable 193,519 (258,841)
Accrued liabilities 98,269 504,852
Drilling prepayments (1,185,165) (1,904,929)
----------- -----------
Net cash provided by (used in) operating activities 349,241 (868,237)
CASH FLOWS FROM INVESTING ACTIVITIES
- ------------------------------------
Change in oil & gas properties (140,460) (825,512)
Change in mining properties -- --
Change in property & equipment 2,954 (15,989)
Change in other assets -- 45,363
----------- -----------
Net cash provided by (used in) investing activities (137,506) (796,138)
CASH FLOWS FROM FINANCING ACTIVITIES
- ------------------------------------
Issuance of common stock 1,694 211,504
Change in long-term liabilities (61,780) 54,380
Change in payable to related party (222,535) (163,960)
----------- -----------
Net cash provided by (used in) financing activities (282,621) 101,924
----------- -----------
NET INCREASE (DECREASE) IN CASH (70,886) (1,562,451)
- -------------------------------
CASH AT BEGINNING OF PERIOD 426,660 2,277,107
- --------------------------- ----------- -----------
CASH AT END OF PERIOD $ 355,774 $ 714,656
- --------------------- =========== ===========
Unaudited-Internally prepared by Company management
iii
12
DAUGHERTY RESOURCES, INC.
SEGMENTED INFORMATION
For the three months ended March 31, 2001
(United States Dollars)
Unaudited
WOOD
OIL & GAS MINING PRODUCTS* CORPORATE TOTAL
------------ ---------- --------- ---------- ------------
GROSS EXTERNAL REVENUE $ 3,277,477 - - - $ 3,277,477
INTERSEGMENT REVENUES - - - - -
INTEREST REVENUE 4,853 - - 7,143 11,996
INTEREST EXPENSE 43,188 - - 21,250 64,438
DEPRECIATION 16,999 - - - 16,999
DEPLETION 150,000 - - - 150,000
AMORTIZATION OF GOODWILL - - - 44,739 44,739
SEGMENT PROFIT (LOSS) $ 1,263,180 - - (277,264) $ 985,916
============ ========== ========= ========== ===========
SEGMENT ASSETS $ 9,072,591 4,450,000 - 2,123,237 $15,645,828
============ ========== ========= ========== ===========
EXPENDITURES FOR SEGMENT
ASSETS $ 140,460 - - - $ 140,460
============ ========== ========= ========== ===========
* Discontinued operation.
Unaudited-Internally prepared by Company management
iv