UNITED STATES
SECURITIES & EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended December 31, 1999
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the transition period from to
----- -----
Commission File Number 0-8847
------
DOL RESOURCES, INC.
-------------------
(Exact Name of Registrant as Specified in Charter)
Wyoming 83-0219465
- ------------------------------ ------------------
State of Other Jurisdiction of I.R.S. Employer
Incorporation or Organization Identification No.
13636 Neutron Road, Dallas,Texas 75244-4410
- --------------------------------------- ----------
(Address of Principal Executive Office) (Zip code)
Registrant's Telephone Number:(214) 661 5869
-------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT
Title of each class Name of each exchange on which registered
None None
------ ------
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
Common Stock, $0.01 Par Value
-----------------------------
(Title of Class)
Indicate by check mark whether Registrant has (I) filed all reports required by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the proceeding
twelve months, and (ii) been subject to such filings requirements for the past
ninety (90) days.
Yes. No. X
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulations S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. (X)
At March 1, 2000 the aggregate market value of the shares of Common Stock held
by non-affiliates of the registrant was approximately $93,634. At such date
there were 25,000,000 shares of the registrant's Common Stock outstanding.
PART 1
Item 1. Business
- ----------------
DOL Resources, Inc. ("Registrant" or "the company") was incorporated
November 6,1973 under the laws of the State of Wyoming.
The Company buys, leases and sells oil and gas properties. It also
explores and develops these properties usually with others through joint
ventures or farmouts.
The economic success of Registrant depends on its ability to locate and
purchase or lease valuable oil and gas prospects or mineral deposits. It must
further sell or lease these deposits or prospects to others at a profit or
develop the properties itself in conjunction with others.
To accomplish these goals, Registrant will encounter competition from
major oil companies and independent operators attempting to acquire prospective
oil and gas leases and other mineral interests.
These sources of competition maybe both large and small energy oriented
companies operating in states in which Registrant does business. Some of these
competitors are major oil and gas companies with substantial reserves and
earnings records. Others are small independents with varying degrees of
stability. Some not only produce oil and gas but refine and market petroleum
products. Registrant may be in a position of competitive disadvantage with many
of these companies in that they have a greater source of capital, technical and
management talent, research facilities and sources of information.
Registrant has sold certain coal properties to others retaining an
overriding royalty interest. Although Registrant had no additional expense in
developing these properties in which a royalty is retained, it also has no
control over when-if ever-these properties are developed.
If coal is discovered under lease in which Registrant owns an economic
interest, the availability of a ready-market for coal will depend upon numerous
factors beyond Registrant's control including the expense of domestic production
and imports of coal, proximity of transportation and the effect of state and
federal regulations on production of coal.
Compliance with statutory requirements respecting environmental quality
may necessitate significant capital outlays which may materially affect the
earning power of the Company, or may cause material changes in its proposed
business. In 1999 Registrant did not expend any funds to comply with
environmental regulations. It does not contemplate spending funds incidental to
its operation in 2000 to comply with environmental regulations.
Registrant did not participate in the drilling of any wells in 1999.
Registrant had no paid employees.
The business of the Company is seasonal only to the extent that weather
conditions, particularly snow and cold in the winter, impede the ability of it
or others who may be developing properties in which it has an interest to
conduct exploratory activities or drilling or mining operations.
Registrant is engaged in two lines of business (1) the exploration for
the sales of oil and gas, and (2) investments in natural resource properties.
The operations pertaining to the exploration of and sales of oil and
gas involve actively participating in drilling for oil and gas and sale of
subsequent production. The investment in natural resource properties involves
buying and selling the right to explore for or produce the resources from the
land owners property.
The following details Registrant's operations in the described lines of
business:
Year Ended December 31,
1999 1998 1997
------- ------- -------
Sales to Unaffiliated
Customer
Sales of Oil and Gas 85,180 30,316 74,615
Investment in natural
resource properties -0- -0- -0-
Operating profit or
(loss)
Sales of oil & gas (21,105) (8,068) 20,477
Investment in natural
resource properties: -0- -0- -0-
Identifiable assets:
Sale of oil & gas 773,793 487,407 508,563
Investment in
natural resource
properties: -0- 10,156 10,156
General corporate assets 400,000 433,777 483,233
Item 2. Oil and Gas Properties:
- -------------------------------
For the following discussion, gross well or acre is a well or acre in
which an interest is owned. The number of gross wells is the total number of
wells in which a working interest is owned.
A net well or acre is deemed to exist when the sum of fractional
ownership working interests in gross wells to acres equals one. the number of
net wells or acres is the sum of the fractional working interests owned in gross
wells or acres as expressed as whole numbers and fractions thereof.
A summary of Registrant's oil and gas properties as of December 31,
1999 is as follows:
Gross Acres Net Acres Costs
----------- ----------- -----------
Undeveloped acres:
Leasehold Interest:
Oil and Gas:
Wyoming 792 792 -0-
North Dakota 280 8 -0-
Oklahoma 680 610 -0-
----------- ----------- -----------
1,752 1,410 -0-
Developed Acres:
Leasehold Interest:
Oil and Gas:
Wyoming 7,768.4 363 984,083
Louisiana 640 13 17,106
New Mexico 1,240 30 107,584
North Dakota 40 1 47,146
Texas 80 1 7,576
New York 522 1.3 -0-
Oklahoma 320 114.3 407,942
----------- ----------- -----------
10,609.4 523.6 1,571,437
Oil and Gas Production: As of December 31, 1999 the Company owns the
following productive wells:
Oil and Gas
Oil Gas (Dual Producers)
---------------- ---------------- ----------------
Gross Wells 18 5 30
Net Wells 5.04215 .54217 3.98369
From the drilling efforts and from production purchased from others,
Registrant's yearly production of crude oil and gas has been as follows:
Year Crude Oil in Barrels Gas in MCF
- ---- -------------------- ----------
1997 2,444 11,687
1998 1,612 7,420
1999 4,119 17,903
The average sales price (including transfers) per unit of oil and gas
produced is as follows:
1999 1998 1997
------ ------ ------
Oil - Barrels 14.45 19.30 11.11
Gas - MCF 1.67 1.65 2.35
The average production (lifting) cost per unit of production is as follows:
1999 1998 1997
------ ------ ------
Oil - Barrels 7.44 11.07 7.47
Gas - MCF .59 .94 .98
Exploratory Wells
-----------------
Producers Dry Holes Total Wells
Year Drilled Gross Net Gross Net Gross Net
- ------------ ----------- ----------- -----------
1999 0 0 0 0 0 0
1998 0 0 0 0 0 0
1997 0 0 0 0 0 0
Developed Wells
---------------
Producers Dry Wells Total Wells
Year Drilled Gross Net Gross Net Gross Net
- ------------ ----------- ----------- -----------
1999 0 0 0 0 0 0
1998 0 0 0 0 0 0
1997 0 0 0 0 0 0
Reserves: The following are reserve estimates as of December 31,
Proved Oil and Gas Reserves:
Oil (bbls) (Gas (MCF)
----------- -----------
1999 89,723 40,961
1998 31,753 49,590
1997 30,263 53,468
Proved Developed Oil and Gas Reserves:
1999 22,643 40,961
1998 7,783 49,590
1997 6,283 53,468
The following are estimated net revenues from production of oil and gas reserves
as of December 31, 1999.
Proved
Proved Developed
--------- ---------
2000 (34,786) 39,329
2001 68,239 34,069
2002 54,601 29,376
Remainder 199,032 80,115
--------- ---------
287,086 182,889
As of December 31, 1998
Proved Proved
Reserves Developed
--------- ---------
1999 (34,786) 19,692
2000 72,662 17,182
2001 57,444 14,884
Remainder 146,845 47,835
--------- ---------
242,473 99,593
The reserve estimates for all properties were completed by management.
No reserve figures have been filed with or reported to any other regulatory
authorities or agencies. All of the reserves of Registrant are located entirely
in the United States.
Registrant has annual rental obligation from $.24 to $1.00 per acre on
all of it's leasehold oil, gas and coal properties on which there is no
production. If these payments are not made when due, the leases terminate.
Additionally, the leases terminate at the end of this term unless production is
obtained in which case the lease continues as long as production continues.
Coal Properties: In 1975, Registrant acquired certain coal properties.
These properties were located primarily in the Powder River Basin portion of the
State of Wyoming. Subsequently, some of these leases were sold and an overriding
royalty retained. No coal leases have been sold since 1977. The remaining coal
leases and related overriding royalties were transferred to Glauber Management
Co. on June 30, 1999.
Registrant follows the policy of capitalizing all property acquisition
costs. Such costs are charged to operations through depletion when production is
obtained. At the time of the sale of a lease where no interest is retained in
the property, the costs of the property is charged to operations at that time.
If at the time of the sale Registrant retains a nonoperating interest, the
carrying value of the property is written down in an amount representing its
estimated realizable value computed on the basis of geological estimates of
proven primary reserves. If no geological estimates of proven primary reserves
are available on the nonoperating interest retained, the entire cost associated
with the property is charged to operations at the time of the sale. If
Registrant determines that a property is not capable of profitable development,
all nonrecoverable costs applicable to the property are charged against
operations at the time such determination is made.
Item 3.
- -------
There are no pending legal proceedings to which Registrant is a party
or of which any of its property is subject.
Item 4. Submission of Matters to a Vote of Security Holders.
- ------------------------------------------------------------
Not applicable.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholders Matters.
- -------------------------------------------------------------------------------
(a) Principal Market, and Stock Price
---------------------------------
Registrant's common shares trade in the Over-The-Counter
market. Since 1984 trading has been so limited and sporadic
that it is not possible to obtain a continuing quarterly
history of high and low bid quotations. Stock information is
received from registered securities Dealers and reflect
inter-dealer prices, without Retail mark-up, mark-down or
commission and may not necessarily represent actual
transactions. Registrant has been advised that shares are not
presently trading and have not traded significantly during the
past three years. The last available quotations was a high bid
of .05.
There were approximately 2,478 holders of record of Company's of the
common stock as of March 1,2000.
No dividends have been declared in the Company's history. Wyoming law
generally provides that dividends may be declared and paid only out of the
unreserved and unrestricted earned surplus of the corporation except when the
Articles of Incorporation of a corporation engaged in the business of exploiting
natural resources so provide, dividends may be declared and paid out of the
depletion reserves.
Registrant presently has no unreserved and unrestricted earned surplus
and its Articles of Incorporation do not provide that dividends may be paid from
deletion reserves.
Item 6. Selected Financial Data:
- ---------------------------------
1999 1998 1997 1996 1995
----------- ----------- ----------- ----------- -----------
Operating revenues $ 89,076 38,109 $ 83,599 $ 73,267 $ 56,608
Income (loss from
continuing opers (56,030) (67,970) 8,981 (224,760) 4,122
Income (losses) from
continuing operations
per share (.0022) (.0033) .0004 (.0109) .0003
Total Assets 1,173,794 931,340 1,001,852 888,200 927,142
Long-term oblig -0- 330,472 335,599 294,800 77,669
Cash dividends paid for
common share -0- -0- -0- -0- -0-
Item 7. Management's Discussion and Analysis of Financial Condition and Results
- --------------------------------------------------------------------------------
of Operations.
- --------------
Liquidity
---------
Registrant's recurring monthly average cash flow from the sale of oil
and gas was approximately $7,300.00 per month in 1999. This was up $2,000.00
from year 1998. The average cash in 1998 was down $2,300.00 from 1997 at
$5,300.00. Working capital increased $398,383 primarily due to the transfer of
all current liabilities to the Glauber Management.
Net cash provided in operating activities for 1999 was a negative
$397,639. A negative cash flow from investing activities of $340,452 and a
positive cash flow from financing activities of $737,220 offset each other
leaving a net decrease in cash of $871 over 1998. There are no plans to seek
long-term credit or additional equity capital for any project.
If Registrant should experience a major oil or salt water spill,
compliance with statutory requirements respecting environmental quality could
necessitate significant capital outlays which would materially decrease its
liquidity and profitability. No funds were expended in 1999 for clean-up
compliance and none is expected in 2000.
Registrant has made no commitments for capital expenditures as of the
end of the fiscal year. However, Registrant intends to continue to pursue its
drilling activities with both joint ventures and partnerships, and for its own
account providing financing is made available in a sufficient amount to justify
same. Interest in oil and gas drilling activities is presently on the increase
and will intensify if prices continue their upward trend.
Cash requirements for the fiscal year 1999 averaged approximately
$6,600 per month. This is expected to be about the same in 2000 provided there
are no major repairs or work overs.
Results of Operations
- ---------------------
1999 and 1998
-------------
Total revenues in 1999 were up approximately $51,000.00 over 1998 due
primarily to an increase in the oil prices and the acquisition of additional oil
producing wells. Lease operating expenses increased significantly as did total
expense due to the addition of six wells in Oklahoma. Consequently there was an
increase in profitability (before depreciation and depletion) in 1999 over 1998
of approximately $59,100.
Management expects the upward trend in oil and gas prices to level off
and hold steady at around $25.00 per Bbl.through most of 2000. This not only
increases revenues and cash flow but also enhances our ability to raise much
needed funds for drilling and reworking wells. It is the opinion of management
that a minimum of $25.00 per Bbl. oil is need in order to expand operations and
replace depleted reserves.A continuing effort is being made to increase the
production, and consequently revenues by seeking out and negotiating
joint-venture recompletion projects where positive reserve information exists.
At the year-end there was nothing specific to indicate a material
change in income and expenses over the next twelve (12) months.
Item 8 Financial Statement and Supplementary Data.
- --------------------------------------------------
Enclosed
Item 9. Disagreements on Accounting and Financial Disclosure.
- -------------------------------------------------------------
None
Item 10. Directors and Executive Officers of the Registrant
- -----------------------------------------------------------
S. Mort Zimmermann, age 72, has been a director and president of the
company since April 16, 1984.
Fred M. Updegraff, age 65, has been a director vice- president and
treasurer since April 16, 1984.
Stephen G. Wesstrom, age 50, has been a director of the company since
April 16, 1984.
There is no family relationship between any of the officers and
directors of the company.
Item 11. Executive Compensation
- -------------------------------
The following is information regarding remuneration received by
management of the Company in the calendar year 1996.
Name Capacities Cash and cash-equivalent Aggregate
Individual in which Forms and remuneration contingent
or person served Salaries, Fees, Securities forms
in group director's fees, or property remuneration
Commissions Insurance
bonuses benefits or
reimbursement,
personal benefit.
- --------------------------------------------------------------------------------
Name None -0- -0- -0-
- --------------------------------------------------------------------------------
All officers Directors -0- -0- -0-
and directors president,
as a group vice president and
secretary treasurer
Joe B. Abbey, Attorney at Law, represents the Company as general
counsel. The Company contracts for necessary legal services with the law firm on
an as needed basis. In 1999 the Company was not billed for any attorney's fees
by the firm.
The Company adopted a stock plan for key employees and a restricted
plan bonus in 1981. Neither of these programs has been implemented.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
- ------------------------------------------------------------------------
The following tabulations shows the name of each person who as of
December 31, 1999 was known by the Company to own beneficially more than 5% of
the Company's outstanding Common Stock.
Amount and Nature of Per cent
Name Beneficial Ownership Of Class
- ---- -------------------- --------
Glauber Management Co. 5,670,130 22.7%
Owned directly
Interfederal Capital, Inc. 5,000,000 20.0%
Owned directly
Elctric & Gas Technology, Inc. 4,966,471 19.9%
Owned directly
Management does not own any voting common stock of the Company as of
December 31, 1999.
Item 13. Certain Relationships and Related Transactions
- -------------------------------------------------------
Management is also seeking out possible merger opportunities There have
been several negotiations with private companies desiring to go public. In
preparation for an impending merger Glauber Management, by an agreement dated
June 30, 1999 assumed all liabilities and selected assets of the company in
exchange for contributed capital. Also, Oklahoma oil properties held by Glauber
Management were contributed to the Company.
Item 14. Exhibits, Financial Statements Schedules, and Reports on Form 8-K.
- ---------------------------------------------------------------------------
(1) The following financial statements are included in Item
Page
----
Balance Sheet 15-16
Statement of Income 17
Statements of Stockholders' Equity 18
Statements of Cash Flow 19
Notes to Financial Statements 20-28
(2) Exhibits No Exhibits are filed as part of this.
There are no reports on Form 8-K filed in the last quarter of the period covered
by this report.
The financial statements included herein have been prepared by internal
accountants of the Registrant, without audit, due to the inability of the
Registrant to pay for a certified audit. Financial statements have been prepared
in accordance with generally accepted accounting principles and in the opinion
of management presents fairly the financial position of the Company at December
31, 1999.
SIGNATURE
Pursuant to the requirement of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
DOL RESOURCES, INC.
By: /s/ Fred M. Updegraff
----------------------
Fred M. Updegraff
Treasurer and Chief
Financial Officer
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 date indicated.
/s/ S. Mort Zimmerman
- ---------------------
S. Mort Zimmerman
Chairman of the Board and President Dated: April 5, 2000
/s/ Fred M. Updegraff
- ---------------------
Fred M. Updegraff
Director, Vice President and Treasurer Dated: April 5, 2000
DOL RESOURCES, INC.
BALANCE SHEET
(Unaudited)
ASSETS
December 31,
1999 1998
--------- ---------
CURRENT ASSETS
Cash $ -0- 870
Marketable Securities, at
cost in 1998 - Note 2 400,000 1,924
Trade accounts receivable,
less allowance for doubtful
accounts of $1,711, (in 1998 Note 1) -0- 22,927
Due from related parties - Note 4 11,482 426,115
--------- ---------
Total Current Assets 411,482 451,836
PROPERTIES - Using full costing -
Note 1 100,000 100,000
Production payment
Exploration, acquisition &
development cost, net of
allowance for reduction of
oil & gas assets of $137,083
in 1985 2,057,928 1,649,985
--------- ---------
Total cost 2,157,928 1,749,985
Less accumulated depletion 1,395,617 1,338,297
--------- ---------
Net Properties 762,311 411,688
--------- ---------
FURNITURE & FIXTURES
At cost - Note 1
Furniture and fixtures -0- 6,476
Less accumulated depreciation -0- 5,828
--------- ---------
Net Furniture and Fixtures -0- 648
--------- ---------
OTHER ASSETS
Undeveloped coal royalties-Note 9 -0- 10,156
Other accounts receivable-Note 11 -0- 57,012
---------
Total Other Assets -0- 67,168
--------- ---------
TOTAL ASSETS 1,173,793 931,340
--------- ---------
DOL RESOURCES, INC.
BALANCE SHEET
December 31,
CURRENT LIABILITIES 1999 1998
---------- ----------
Notes payable - Note 3 -0- 408,000
Accounts payable -0- 30,737
Accrued expenses -0- -0-
---------- ----------
Total current liabilities -0- 438,737
LONG-TERM LIABILITIES
` Notes payable -0- -0-
Other accounts payable - Notes 4 & 11 -0- 330,472
---------- ----------
Total Long Term Liabilities -0- 330,472
---------- ----------
STOCKHOLDERS' EQUITY
Capital Stock, common,
$.01 par value
Authorized 25,000,000 shares;
issued and outstanding
20,783,529 shares at 12-31-98
and 25,000,000 at 12-31-99 250,000 207,835
Capital in excess of
par value 2,526,770 1,501,618
Accumulated deficit (1,602,977) (1,546,947)
Treasury Stock -0- (375)
---------- ----------
Total Equity 1,173,793 162,131
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS
EQUITY 1,173,793 931,340
---------- ----------
The accompanying notes are an integral part of this statement.
DOL RESOURCES, INC.
STATEMENT OF INCOME
(Unaudited) Years Ended December 31,
1999 1998 1997
----------- ----------- -----------
REVENUE:
Oil and gas sales 85,180 30,316 74,615
Investment and other income 3,896 7,792 8,984
----------- ----------- -----------
89,076 38,108 83,599
EXPENSES:
General and Administrative 24,486 38,684 9,461
Depletion, depreciation and
amortization 57,644 11,188 17,062
Lease operating expense 41,259 24,857 29,707
Interest Expense 13,650 27,138 10,112
Production taxes 7,706 3,704 8,015
Lease rentals 361 507 261
----------- ----------- -----------
145,106 106,078 74,618
Net profit (loss)
before income taxes (56,030) (67,970) 8,981
Provision for income taxes -
Note 6 -0- -0- -0-
----------- ----------- -----------
Net Profit (loss) (56,030) (67,970) 8,981
Weighted average number of
common shares outstanding 25,000,000 20,783,529 20,671,254
Earnings per common share $ (.0022) $ .0033 $ (.0004)
----------- ----------- -----------
The accompanying notes are an integral part of this statement.
DOL RESOURCES, INC.
STATEMENTS OF STOCKHOLDERS EQUITY
(Unaudited)
Year ended December 31, 1999, 1998, and 1997
Capital Stock
------------- Capital in
Number of Excess of Accumulated Treasury
Shares Amount Par Value Deficit Stock
------------- ------------- ------------- ------------- -------------
Balance at
12-31-97 20,671.254 206,713 1,502,741 (1,478,977) (375)
------------- ------------- ------------- ------------- -------------
67,970)
Net Income
Error Correction
by Transfer Agent 112,275 1,123 (1,123)
Balance at
12-31-98 20,783,529 207,835 1,501,618 (1,546,947) (375)
------------- ------------- ------------- ------------- -------------
Net Income -0- -0- -0- 56,030 -0-
------------- ------------- ------------- ------------- -------------
Treas Stock
Cancelled (375) (375)
ELGT Stock
Exchange 4,216,471 42,165 357,835
Glauber Management
Contribution 668,692
------------- ------------- ------------- ------------- -------------
Balance at 25,000,000 250,000 2,526,770 (1,602,977) -0-
12/31/99
The accompanying notes are an integral part of this statement.
DOL RESOURCES, INC.
STATEMENTS OF CASH FLOWS
Years Ended December 31,
1999 1998 1997
INCREASE (DECREASE) in Cash:
CASH FLOWS FROM OPERATING
ACTIVITIES;
Net Income (Loss) (56,030) (67,970) 8,981
Adjustments to Reconcile
Net Earnings to net cash
provided by operating
activities:
Depreciation and depletion 57,644 11,198 17,062
Changes in Assets and
Liabilities:
Accounts Receivable-Trade 22,927 2,758 404
Accounts Receivable-Affil 414,633 10,107 (154,982)
Marketable Securities (398,076) -0- -0-
Prepaid Expense -0- 37,500 -0-
Accounts Payable - Trade (30,737) 2,586 (6,819)
Notes Payable (408,000) -0- -0-
---------- ---------- ----------
Net Cash Provided by operating
Activities (397,639) (3,831)
Cash Flows from Investing Activities:
Proceeds from sale of property
and equipment (407,620) 3,500 961
Decrease in other assets 67,168 5,128 6,507
---------- ---------- ----------
Net Cash provided by investing
Activities (340,452) 8,628 8,979
Cash Flow from Financing Activities:
Decrease in Note Payable (330,472) (5,127) 111,489
Increase in Capital Stock 42,165 -0- -0-
Increase in paid-in capital 1,025,527 -0- -0-
---------- ---------- ----------
Net Cash provided by financing
Activities 737,220 (5,127) 111,489
---------- ---------- ----------
Net Increase (Decrease) in
Cash (871) (330) (14,890)
Cash at beginning of year 871 1,201 16,086
---------- ---------- ----------
Cash at end of the year -0- 871 1,196
---------- ---------- ----------
Supplemental Disclosures of Cash Flow Information:
Cash paid during the year for:
Interest 13,650 27,138 10,112
Income taxes -0- -0- -0-
DOL RESOURCES, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1. Summary of Significant Accounting Policies
------------------------------------------
Organization and Operations
The Company was organized on November 1, 1983 under the laws of the
State of Wyoming. Its primary activities have been the acquisition of
interests in various oil and gas properties, coal properties (Note 9)
and exploration for oil and gas.
Allowance for bad debts
-----------------------
Accounts receivable from participants in oil and gas exploration are
estimated to be at least 93% collectible, consequently a 7% allowance
for bad debts has been established against those receivables.
Receivables from the sale of oil and gas are fully collectible, since
accruals are based primarily on collection of oil and gas sales
subsequent to year-end.
Properties
----------
The Company uses the full cost method of accounting for oil and gas
acquisition, exploration and development costs. The Company has
operations only within the continental United States and consequently
has only one cost center.
All costs associated with property acquisition, exploration and
development activities are capitalized within the cost center. No costs
related to production, general corporate overhead or similar activities
are capitalized.
Capitalized costs within the cost center are amortized on the
units-of-production basis using proved oil and gas reserves. The
carrying value of capitalized cost is limited to the sum of (A) the
present value of future net revenues from estimated production of
proved oil and gas reserves, plus (B) the cost of properties note being
amortized, plus (C) the lower of cost or estimated fair value of
unproved properties included in the costs being amortized less (D)
income tax effects related to differences between book and tax basis of
the properties involved. For the year ended December 31, 1985, total
capitalized costs exceeded the cost center ceiling by $137,083. The
excess was expensed in 1985 operations.
DOL RESOURCES, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1. Properties: (Con't).
--------------------
Sales and abandonments of oil and gas properties are accounted for as
adjustments of capitalized costs, with no gain or loss recognized.
Drillingin progress is included in the cost center with depletion being
calculated on all costs within the cost center.
Furniture and Fixtures
----------------------
Deprecation is computed by the straight-in line method on the cost of
the automobiles and furniture and fixtures at rates based on their
estimated service lives.
Estimated lives in use are as follows:
Furniture and
Fixtures 5 - 12 years
On June 30, 1999 all furniutre and fixtures were transferred to Glauber
Management Co. as part of an Assumption and Exchange Agreement. (See
Item 13)
Earnings per common share
-------------------------
Earnings per common share were computed by dividing the net loss by the
weighted average number of common shares outstanding during the year.
NOTE 2. Marketable Securities
---------------------
Marketable securities are valued at the lower of cost of value.
1999 1998
--------- ---------
Aggregate cost 400,000 24,172
Aggregate market cost 400,000 1,924
--------- ---------
Unrealized loss: -0- 22,251
*The unrealized loss on marketable securities is charged to operations.
In a stock exchange Agreement dated June 30, 1999 the company received
250,000 shares of Electric & Gas Technology stock in exchange for 4,216,471
shares of DOL stock. This was a tax-free exchange.
DOL Resources, Inc.
NOTES TO FINANCIAL STATEMENTS (Continued)
NOTE 3. Notes Payable
-------------
Notes payable consist of the following:
Monthly Interest Due Within Due After
Installment Rate One Year One Year
----------- -------- ---------- ---------
1998
----
Note 1 Due 7-14-99 6.64% 408,000 $ -0-
1999
----
Note obligation was assumed by -0- -0-
Glauber Management on June 30,
1999 (See Note A)
Further information concerning
borrowing:
1999 1997
---------- ---------
Maximum unpaid balance -0- 408,000
Weighted average borrowing -0- 408,000
Weighted average interest
rate 6.64%
NOTE 4. Related Party Transactions
--------------------------
As reported in our registrant's 10-Q for the quarter ended June 30,
1984, Featherstone Development Corporation owned 3,245,099 shares,
Featherstone Farms, Ltd., owned 609,058 shares, and Olen F.
Featherstone II owned 654,097 shares of DOL Resources, Inc. common
stock from January 1, 1982 to April 16, 1984. The Featherstone group
had a total of 4,508,254 shares of common stock representing
approximately 31.9% of the total outstanding common stock of DOL
Resources, Inc. at December 31, 1983. On April 16, 1984 all of their
restricted shares in DOL Resources, Inc. were exchanged for restricted
shares in Petro Imperial Corporation of Dallas, Texas, a Utah
Corporation controlled by Commercial Technology, Inc. Petro Imperial
Corporation purchased an additional 500,000 shares of DOL Resources,
Inc. common stock also on that date.
The Company acquired by assignment from Petro Imperial Corp. in 1987
accounts receivable of $100,000 from Comtec Superior Management Co. and
$139,719 from Comtec Glauber Management Co. as contributed capital.
DOL RESOURCES, INC.
NOTES TO FINANCIAL STATEMENTS (Con't).
NOTE 4. Related Party Transactions, cont.
---------------------------------
Both are affiliated companies. This was reversed in 1991. The Company
also had accounts receivable from RCT Petro, Ltd. of $7,414 in 1990.
This was written off as uncollectible in 1991. The Company ended 1998
with an account receivable from Glauber Management Co. of $344,615.
A long-term payable if $100,148 was created to an affiliate during 1989
when a bank that was holding, as collateral, a Certificate of Deposit
belonging to the Affiliate applied the proceeds of the C.D. to accrued
interest and a principal payment on one of the company's matured notes.
In 1994 5,000,000 shares of stock were issued to the affiliate in
payment of the $100,148. ($.02 per share).
Management is seeking possible merger opportunities. There have been
several negotiations with private companies desiring to go public. In
preparation for an impending merger Glauber Management, by an agreement dated
June 30, 1999 assumed all liabilities and selected assets of the company in
exchange for contributed capital. Also, Oklahoma oil properties held by Glauber
Management were contributed to the Company.
NOTE 5. Commitments:
------------
The Company had the following lease obligations:
Coal Oil & Gas
Leases Leases
--------- ---------
1998 -0- -0-
1999 -0- -0-
After 1999 -0- -0-
DOL RESOURCES, INC.
NOTES TO FINANCIAL STATEMENTS (Con't.)
NOTE 6. Income Taxes
------------
The Company as of December 31, 1999 has a net operating loss carryover
for income tax purposes of approximately $557,000. The carryover is
available to offset taxable income of future years and expires as
follows:
2000 109,000
2001 40,000
2002 48,000
2003 3,000
2004 34,000
2007 14,000
2008 19,000
2009 1,000
2011 217,000
2012 57,000
2013 15,000
-------
557,000
For financial reporting purposes, the net operating loss has been used
to offset prior deferred income taxes. To the extent that the net
operating loss carryovers are utilized for income tax purposes in
future years, the deferred income taxes eliminated to give recognition
to the carryovers as well as credits related to timing difference of
the current year not recorded will be reinstated.
Because of timing differences related principally to intangible
drilling costs, cumulative losses for income tax reporting purposes
exceed those reported by approximately $272,000. Because of the
uncertainty as to realization, no future tax benefits are recognized at
December 31, 1999.
NOTE 7. Operations in Difference Industries:
------------------------------------
The company operates principally in two industries (1) the exploration
for and sale of oil and gas, and (2) investment in natural resource
properties. The operations pertaining to the exploration for and sale
of oil and gas involve actively participating in drilling for oil and
gas and sale of subsequent production. The properties as of December
31, 1997 and 1998 included investments in coal royalties of $10,156.
Certain financial information concerning the company's operations in
the described industries is as follows:
DOL RESOURCES, INC.
NOTES TO FINANCIAL STATEMENTS (Con't).
Exploration Investment
for and in Natural General
Sale of Oil Resource Corporate
and Gas Properties Assets
----------- ----------- -----------
Year ended December
31, 1997
Assets applicable
to industry segment 508,463 10,156 483,233
----------- ----------- -----------
Year ended December
31,1998
Assets applicable
to industry segment 487,407 10,156 433,777
----------- ----------- -----------
Year ended December
31, 1999
Assets applicable
To industry segment 773,723 -0- 400,000
----------- ----------- -----------
Exploration Investment
for and in Natural General
Sale of Oil Resource Corporate
and Gas Properties Assets
----------- ----------- -----------
Year ended December
31, 1997
Income (loss) $ 27,623 $ -0- $ (18,642)
----------- ----------- -----------
Year ended December
31, 1998 $ (9,293) $ -0- $ (58,677)
----------- ----------- -----------
Year ended December
31, 1999
Income (loss) $ (42,083) $ -0- $ (13,947)
----------- ----------- -----------
NOTE 8. Major Customers:
----------------
The company had sales of oil and gas to four primary customers
(purchasers of over 10% of product) in 1999. These sales were in the
amount of $36,903 and $27,024 respectively.
During the year ended December 31, 1998, the company had sales of oil
and gas of $7,565 and $11,275 to three major purchasers, and for the
year ended December 31, 1997 $26,971 and $24,531 to three major
purchasers.
NOTE 9. Undeveloped Coal Royalties:
---------------------------
The undeveloped coal royalties were received in exchange of stock in
the company from Discovery Oil, Ltd. (at the time the parent company of
DOL Resources, Inc.) in related party transaction in prior years.
DOL RESOURCES, INC.
NOTES TO FINANCIAL STATEMENTS (Con't)
These coal royalties cover approximately 2,901 gross acres and 58 net
acres at the end of 1998 and 1997. There were no coal lease expiration
in 1998. These coal royalties were transferred to Glauber management
Co. On June 30, 1999.
NOTE 10. Supplementary information as to Oil and Gas Producing Activities
-----------------------------------------------------------------------
(Unaudited)
-----------
Supplementary disclosures for oil and gas producing activities in
accordance with Financial Accounting Standard No. 69 set forth below.
The following table represents the Company's estimate of its proved oil
and gas reserves at December 31, 1999. The company emphasized that
reserve estimates are inherently imprecise. Accordingly, the estimates
are expected to change as future information becomes available. These
estimates, as they relate to December 31, 1999 information, have been
prepared by Company personnel.
Proved developed reserves at December 31, 1999 were 29,470 barrels.
Proved undeveloped reserves of 67,070 bbls. are estimated at December
31, 1999. Gas reserves are included in the estimated barrels at 6 MCF
per barrel.
Disclosure of the standardized measure of discount future net cash
flows for the year ending 12-31-99, 12-31-98, and 12-31-97 have not
been included in this note due to the following:
(1) Future gas flows are based on year and prices with changes in
pricing considered only to the extend of contractual
arrangements existing at year-end. Due to the significant
fluxuation in oil and gas prices during 1999 future cash
inflows based on year-end prices would be inaccurate and would
result in a material misstatement.
(2) Future development costs and production costs based on
year-end cost and assuming continuation of continuing economic
conditions would also result in a misstatement due to the
price decline.
DOL RESOURCES, INC.
NOTES TO FINANCIAL STATEMENTS (Con't.)
(3) Future income tax expense, if any, would be difficult to
determine due to large net operating losses incurred for both
financial reporting and tax purposes.
Proved Developed Proved Undeveloped
Reserves
(In Barrels) (In Barrels
---------------- -------------------
Reserves:
Beginning of 1999 16,048 23,970
Acquisitions 17,796 43,100
Revisions of prior
year's estimates 2,729 -0-
Production (7,103) -0-
------- -------
12-31-99 29,470 67,070
NOTE 11. Legal Proceedings:
------------------
On November 20, 1979, Phillips Petroleum Company filed a complaint with
the Federal Energy Regulatory Commission (Docket No. C180-70--00)
against DOL Resources, Inc. and other producers alleging that certain
producer respondents abandoned the sales of natural gas to Phillips
without first obtaining necessary Commission authorization under
Section 7(b) of the Natural Gas Act. The Commission ruled in favor of
Phillips on April 16, 1985. Effective December 1, 1985, DOL's share of
the settlement to be paid from future production from the Miller-Jacobs
#1 well is as follows:
$160,000 payable out of 30% of gas reserves accruing to its interest in
production for the period December 1, 1985 through November 30, 1989,
and payable out of 50% of gas revenues accruing to its interest in
production on or after December 1, 1989. The situation arose prior to
present management's association with DOL Resources, Inc. DOL has since
entered into an agreement with past management and will recover the
entire amount on the basis of the amounts' of production withheld by
Phillips.
The balance of this obligation on June 30, 1999 was $54,698 and was
assumed by Glauber Management Company.