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Exhibit B
PRO FORMA FINANCIAL INFORMATION
DAUGHERTY RESOURCES, INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
The accompanying pro forma consolidated balance sheet and pro forma
consolidated statements of operations give effect to Daugherty Resources, Inc.'s
("Company") acquisition of the oil and gas Interests of Environmental Energy,
Inc. and its affiliates Environmental Operating, Inc. and affiliated limited
partnerships ("Environmental Interests"), and are based upon assumptions set
forth in the notes to such statements.
The pro forma consolidated financial statements comprise historical
data which have been retroactively adjusted or combined to reflect the effects
of the above mentioned transaction on the historical consolidated financial
statements. The historical information assumes that the transaction for which
pro forma effects are shown was consummated on March 31, 1999 for the pro forma
consolidated balance sheet and January 1 of each period presented for the pro
forma consolidated statements of operations. Such pro forma information should
be read in conjunction with the related historical financial information and is
not necessarily indicative of the results which would actually have occurred had
the transaction been in effect on the date or the beginning of the periods
indicated or which may occur in the future due to several factors, including,
but not limited to, commencement of production from new wells that has occurred
subsequent to the dates of the periods presented.
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PRO FORMA CONSOLIDATED BALANCE SHEET
DAUGHERTY RESOURCES, INC. AND SUBSIDIARIES
MARCH 31, 1999
(UNAUDITED, IN THOUSANDS)
ENVIRONMENTAL
HISTORICAL INTERESTS PRO
COMPANY ACQUISITION FORMA
(a)
ASSETS
------
CURRENT ASSETS
- --------------
Cash $ 298 $ -0- $ 298
Accounts receivable 336 -0- 336
Inventory 397 -0- 397
Other current assets 20 -0- 20
-------- ------ --------
TOTAL CURRENT ASSETS 1,051 -0- 1,051
OIL AND GAS PROPERTIES (NET) 4,637 650 5,287
- ---------------------------
MINING PROPERTY (NET) 11,232 -0- 11,232
- ---------------------
PROPERTY AND EQUIPMENT (NET) 1,738 -0- 1,738
- ---------------------------
OTHER ASSETS
- ------------
Related party loans 96 -0- 96
Bonds and deposits 54 -0- 54
Other assets 266 -0- 266
Goodwill, net of amortization of $848 1,028 -0- 1,028
-------- ------ --------
1,444 -0- 1,444
-------- ------ --------
TOTAL ASSETS $ 20,102 $ 650 $ 20,752
======== ====== ========
LIABILITIES AND
---------------
STOCKHOLDER'S EQUITY
--------------------
CURRENT LIABILITIES
- -------------------
Short-term loans and notes $ 879 $ -0- $ 879
Current portion of long-term debt 1,151 -0- 1,151
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Accounts payable 1,465 -0- 1,465
Accrued liabilities 751 -0- 751
Drilling prepayments 824 -0- 824
-------- ------ --------
TOTAL CURRENT LIABILITIES 5,070 -0- 5,070
LONG-TERM LIABILITIES 2,554 -0- 2,554
- ---------------------
PAYABLE TO RELATED PARTIES 25 -0- 25
- --------------------------
7,649 -0- 7,649
MINORITY INTEREST -0- -0- -0-
STOCKHOLDER'S EQUITY
- --------------------
Common stock 21,210 -0- 21,210
Common stock subscribed -0- -0- -0-
Preferred stock -0- 650 650
Additional paid in capital -0- -0- -0-
Retained earnings (deficit) (8,505) -0- (8,505)
Current income (loss) (252) -0- (252)
-------- ------ --------
12,453 650 13,103
-------- ------ --------
TOTAL LIABILITIES AND
- ---------------------
STOCKHOLDER'S EQUITY $ 20,102 $ 650 $ 20,752
======== ====== ========
The accompanying notes are an integral part of this pro forma financial
statement.
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PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
DAUGHERTY RESOURCES, INC. AND SUBSIDIARIES
THREE MONTHS ENDED MARCH 31, 1999
(UNAUDITED, IN THOUSANDS)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
ENVIRONMENTAL
HISTORICAL INTERESTS PRO
COMPANY ACQUISITION ADJUSTMENTS FORMA
(c)
GROSS REVENUE $ 1,360 $ 48 -0- $ 1,408
- -------------
DIRECT EXPENSES 1,207 15 (b) 42 1,264
- --------------- -------
GROSS PROFIT (LOSS) 153 33 (42) 144
GENERAL AND ADMINISTRATIVE
- --------------------------
EXPENSES 340 -0- -0- 340
--------
OTHER INCOME (EXPENSE) (65) -0- -0- (65)
- --------------------- ------- ------- -------
INCOME (LOSS) BEFORE
INCOME TAX AND OTHER $ (252) $ 33 $ (42) $ (261)
- --------------------
Income tax expense (benefit) -0- -0- -0- -0-
------- ------- ------- -------
NET INCOME (LOSS) $ (252) $ 33 $ (42) $ (261)
======= ======= ======= =======
Shares outstanding 2,184 2,184
Earnings per share $ (.12) $ (.12)
The accompanying notes are an integral part of this pro forma financial
statement.
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PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
DAUGHERTY RESOURCES, INC. AND SUBSIDIARIES
YEAR ENDED DECEMBER 31, 1998
(UNAUDITED, IN THOUSANDS)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
ENVIRONMENTAL
HISTORICAL INTERESTS PRO
COMPANY ACQUISITION ADJUSTMENTS FORMA
(c)
GROSS REVENUE $ 5,944 $281 $ -0- $ 6,225
- -------------
DIRECT EXPENSES 5,201 59 (b) 156 5,416
- ---------------
GROSS PROFIT 743 222 (156) 809
GENERAL AND ADMINISTRATIVE
- --------------------------
EXPENSES 2,436 -0- -0- 2,436
--------
OTHER INCOME (EXPENSE) 143 -0- -0- 143
- ---------------------
INCOME (LOSS) BEFORE
INCOME TAX AND OTHER (1,550) 222 (156) (1,484)
- --------------------
Income tax expense
(benefit) -0- -0- -0- -0-
MINORITY PORTION (18) -0- -0- (18)
- ---------------- ---- ----- -------
NET INCOME (LOSS) $(1,568) $222 $(156) $(1,502)
======= ==== ===== =======
Shares outstanding 2,184 2,184
Average number of shares
outstanding for 1998 2,035 2,035
Earnings per share (.77) (.74)
The accompanying notes are an integral part of this pro forma financial
statement.
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NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
DAUGHERTY RESOURCES, INC. AND SUBSIDIARIES
(UNAUDITED)
(a) To reflect Daugherty Resources acquisition of oil and gas
properties from the Environmental Interest owners and the related issuance of
preferred stock. Due to the restrictions on the preferred stock to be issued,
the marketable value of the preferred stock was undeterminable. The fair market
value of the underlying assets was used to estimate the value of the preferred
stock. The fair market value of oil and gas working interests were based upon
the Company's petroleum engineers reserves analysis and the other non-producing
properties were based on managements estimates of fair market value.
(b) Represents the increase in depreciation, depletion expense
resulting from the inclusion of the Environmental Interests acquisition computed
on the straight line and units of production method.
(c) Pro forma financial data are not expected by the Company to be
representative of future operating results.
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