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 31,2001
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, 2002 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. These coal Royalties were transferred
to the Glauber Management Co. Corporation on June 30, 1999.
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 2001 Registrant did not expend any funds to comply with
environmental regulations. It does not contemplate spending funds incidental to
its operation in 2002 to comply with environmental regulations.
Registrant did not participate in the drilling of any wells in 2001.
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,
2001 2000 1999
------- ------- -------
Sales to Unaffiliated
Customer
Sales of Oil and Gas 117,117 166,903 85,180
Investment in natural
resource properties -0- -0- -0-
Operating profit or
(loss)
Sales of oil & gas 6,328 42,251 (21,106)
Identifiable assets:
Sale of oil & gas 626,634 783,962 773,793
Investment in
natural resource
properties: -0- -0- -0-
General corporate assets 400,000 400,000 400,000
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,
2000 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 7,448.4 327.2 935,939
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
----------- ----------- -----------
10,290.4 487.8 1,523,293
Oil and Gas Production: As of December 31, 2001 the Company owns the
following productive wells:
Oil and Gas
Oil Gas (Dual Producers)
---------------- ---------------- ----------------
Gross Wells 18 5 29
Net Wells 5.04215 .54217 3.87169
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
- ---- -------------------- ----------
1999 4,119 17,903
2000 5,820 11,819
2001 5,274 8,744
The average sales price (including transfers) per unit of oil and gas
produced is as follows:
2001 2000 1999
------ ------ ------
Oil - Barrels 18.91 23.29 14.45
Gas - MCF 1.99 2.58 1.67
The average production (lifting) cost per unit of production is as follows:
2001 2000 1999
------ ------ ------
Oil - Barrels 7.65 7.55 7.44
Gas - MCF 1.34 1.00 .59
Exploratory Wells
-----------------
Producers Dry Holes Total Wells
Year Drilled Gross Net Gross Net Gross Net
2001 0 0 0 0 0 0
2000 0 0 0 0 0 0
1999 0 0 0 0 0 0
Developed Wells
---------------
Producers Dry Wells Total Wells
Year Drilled Gross Net Gross Net Gross Net
2001 0 0 0 0 0 0
2000 0 0 0 0 0 0
1999 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)
---------- ----------
2001 104,650 51,860
2000 109,924 60,604
1999 115,744 72,413
Proved Developed Oil and Gas Reserves:
2001 37,580 51,860
2000 42,814 60,604
1999 48,674 72,413
The following are estimated net revenues from production of oil and gas reserves
as of December 31, 2001
Proved
Proved Developed
--------- ---------
2002 180,280 108,922
2003 162,240 98,030
2004 146,015 88,227
Remainder 589,799 356,374
--------- ---------
1,078,334 651,553
As of December 31, 2000
Proved Proved
Reserves Developed
--------- ---------
2001 147,000 88,815
2002 156,412 79,933
2003 146,771 71,940
Remainder 666,965 337,781
--------- ---------
959,618 578,469
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 1,2002.
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
depletion reserves.
Item 6. Selected Financial Data:
- ---------------------------------
2001 2000 1999 1998 1997
----------- ----------- ----------- ----------- -----------
Operating revenues $ 117,117 $ 166,903 $ 89,076 $ 38,109 $ 83,599
Income (loss from
continuing opers (20,500) 10,169 (56,030) (67,970) 8,981
Income (losses) from
continuing operations
per share (.0008) .0004 (.0022) (.0033) .0004
Total Assets $ 1,026,634 1,183,962 1,173,794 931,340 1,001,852
Long-term oblig -0- -0- -0- 330,472 335,599
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 $6,400.00 per month in 2001. This was down $3,400.00
from year 2000. The average cash in 2000 was up $2,500.00 from 1999 at
$9,800.00. Working capital decreased $112,595 due to a decrease in the
inter-company receivable resulting from decreases in oil and gas prices.
Net cash provided in operating activities for 2001 was a positive
$140,856. A negative cash flow from investing activities of $4,027 and a
negative cash flow from financing activities of $136,828 offset operating
leaving a net change in cash of zero over 2000. 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 2001 for clean-up
compliance and none is expected in 2002.
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 2001 averaged approximately
$5,900 per month. This is expected to be increased slightly in 2002 provided
there are no major repairs or work overs.
Results of Operations
- ---------------------
2001 and 2000
-------------
Total revenues in 2001 were down approximately $49,800.00 from 2000 due
primarily to decreases in oil and gas prices. Lease operating expenses decreased
slightly as did total expense. Consequently there was a decrease in
profitability (before depreciation and depletion) in 2001 from 2000 of
approximately $38,300.
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 2002. 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 74, has been a director and president of the
company since April 16, 1984.
Fred M. Updegraff, age 67, has been a director vice- president and
treasurer since April 16, 1984.
Stephen G. Wesstrom, age 52, 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 2001 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, 2001 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, 2001.
Item 13. Certain Relationships and Related Transactions
- -------------------------------------------------------
Management is also seeking out possible merger or acquisition
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 the Glauber Management Co. 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 14-15
Statement of Income 16
Statements of Stockholders' Equity 17
Statements of Cash Flow 18
Notes to Financial Statements 19-26
(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, 2001.
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: March 30, 2002
/s/ Fred M. Updegraff
- ---------------------
Fred M. Updegraff
Director, Vice President and Treasurer Dated: March 30, 2002
DOL RESOURCES, INC.
BALANCE SHEET
(Unaudited)
ASSETS
December 31,
2001 2000
--------- ---------
CURRENT ASSETS
Cash $ -0- -0-
Marketable Securities, at
cost in 1998 - Note 2 400,000 400,000
Due from related parties - Note 4 25,154 137,749
--------- ---------
Total Current Assets 425,154 537,749
PROPERTIES - Using full costing - Note 1
Exploration, acquisition &
development cost, net of
allowance for reduction of
oil & gas assets of $137,083
in 1985 2,101,290 2,098,263
--------- ---------
Total cost 2,102,290 2,098,263
Less accumulated depletion 1,500,810 1,452,050
--------- ---------
Net Properties 601,480 646,213
--------- ---------
TOTAL ASSETS 1,026,634 1,183,962
--------- ---------
Total liabilities -0- -0-
STOCKHOLDERS' EQUITY
Capital Stock, common,
$.01 par value
Authorized 25,000,000 shares;
issued and outstanding
25,000,000 shares at 12-31-99
and 25,000,000 at 12-31-00 250,000 250,000
Capital in excess of
par value 2,389,942 2,526,770
Accumulated deficit (1,613,308) (1,592,808)
---------- ----------
Total Equity 1,026,634 1,183,962
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS
EQUITY 1,026,634 1,183,962
---------- ----------
The accompanying notes are an integral part of this statement.
DOL RESOURCES, INC.
STATEMENT OF INCOME
(Unaudited) Years Ended December 31,
2001 2000 1999
----------- ----------- -----------
REVENUE:
Oil and gas sales 117,117 166,903 85,180
Investment and other income -0- -0- 3,896
----------- ----------- -----------
117,117 166,903 89,076
EXPENSES:
General and Administrative 26,828 32,082 24,486
Depletion, depreciation and
amortization 48,761 56,432 57,644
Lease operating expense 52,037 55,839 41,259
Interest Expense -0- -0- 13,650
Production taxes 9,991 12,381 7,706
Lease rentals -0- -0- 361
----------- ----------- -----------
137,687 156,734 145,106
Net profit (loss)
before income taxes (20,500) 10,169 (56,030)
Provision for income taxes -
Note 6 -0- -0- -0-
----------- ----------- -----------
Net Profit (loss) (20,500) 10,169 (56,030)
Weighted average number of
common shares outstanding 25,000,000 25,000,000 25,000,000
Earnings per common share $ (.0008) $ (.0004) $ (.0022)
----------- ----------- -----------
The accompanying notes are an integral part of this statement.
DOL RESOURCES, INC.
STATEMENTS OF STOCKHOLDERS EQUITY
(Unaudited)
Year ended December 31, 2001, 2000, and 1999
Capital Stock Capital in
Number of Excess of Accumulated Treasury
Shares Amount Par Value Deficit Stock
------------- ------------- ------------- ------------- -------------
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
Parent Con-
Tribution 668,692
------------- ------------- ------------- ------------- -------------
Balance at 25,000,000 250,000 2,526,770 (1,602,977) -0-
12/31/99
Net Income -0- -0- -0- 10,169 -0-
------------- ------------- ------------- ------------- -------------
Balance at
12/31/00 25,000,000 250,000 2,526,700 (1,592,808) -0-
Reversal of
Parent Contrib (136,828)
Net Income (Loss) (20,500) -0-
------------- ------------- ------------- ------------- -------------
Balance at
12/31/01 25,000,000 250,000 2,389,942 (1,613,308) -0-
The accompanying notes are an integral part of this statement.
DOL RESOURCES, INC.
STATEMENTS OF CASH FLOWS
Years Ended December 31,
2001 2000 1999
---------- ---------- ----------
INCREASE (DECREASE) in Cash:
CASH FLOWS FROM OPERATING
ACTIVITIES;
Net Income (Loss) (20,500) 10,169 (56,030)
Adjustments to Reconcile
Net Earnings to net cash
provided by operating
activities:
Depreciation and depletion 48,761 56,432 57,644
Changes in Assets and
Liabilities:
Accounts Receivable-Trade -0- -0- 22,927
Accounts Receivable-Affil 112,595 (126,267) 414,633
Marketable Securities -0- -0- (398,076)
Prepaid Expense -0- -0- -0-
Accounts Payable - Trade -0- -0- (30,737)
Notes payable -0- -0- (408,000)
---------- ---------- ----------
Net Cash Provided by operating
Activities 140,856 (59,666) (397,639)
Cash Flows from Investing Activities:
Proceeds from sale of property
and equipment (4,027) 59,666 340,452
Cash Flow from Financing Activities:
Decrease in Note Payable -0- -0- (330,472)
Increase in Capital Stock -0- -0- 42,165
Increase in paid-in capital (136,828) -0- 1,025,527
---------- ---------- ----------
Net Cash provided by financing
Activities (136,828) -0- 737,220
---------- ---------- ----------
Net Increase (Decrease) in
Cash
Cash at beginning of year -0- -0- (871)
---------- ---------- ----------
Cash at beginning of year -0- -0- 871
---------- ---------- ----------
Cash at end of the year -0- -0- -0-
---------- ---------- ----------
Supplemental Disclosures of Cash Flow Information:
Cash paid during the year for:
Interest -0- -0- 13,650
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.
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
----------------------
Depreciation 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 Income (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.
2001 2000
--------- ---------
Aggregate cost 400,000 400,000
Aggregate market value 400,000 400,000
--------- ---------
Unrealized loss: -0- -0-
*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
----------- -------- ---------- ---------
2000
Note obligation was assumed by -0- -0-
Parent Corporation on June 30,
1999 (See Note A)
Further information concerning
borrowing:
2001 2000
---------- ---------
Maximum unpaid balance -0- -0-
Weighted average borrowing -0- -0-
Weighted average interest
rate -0-
NOTE 4. Related Party Transactions
--------------------------
As reported in our registrant's 10-Q for the quarter ended 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.
- -------
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 2001
with an account receivable from Glauber Management Co. of $23,461.
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 also seeking out possible merger and acquisition
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 Co. were contributed to the
Company.
NOTE 5. Commitments:
------------
The Company had the following lease obligations:
Coal Oil & Gas
Leases Leases
------ ---------
2000 -0- -0-
2001 -0- -0-
After 2001 -0- -0-
DOL RESOURCES, INC.
NOTES TO FINANCIAL STATEMENTS (Con't.)
NOTE 6. Income Taxes
------------
The Company as of December 31, 2001 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:
2001 40,000
2002 48,000
2003 3,000
2004 34,000
2007 14,000
2008 19,000
2009 1,000
2011 217,000
2018 57,000
2019 15,000
-------
448,000
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, 2001.
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. Certain financial information
concerning the company's operations in the described industrieis 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
31,1999
Assets applicable
to industry segment 773,723 -0- 400,000
----------- ----------- -----------
Year ended December
31, 2000
Assets applicable
To industry segment 783,962 -0- 400,000
----------- ----------- -----------
Year ended December
31. 2001
Assets applicable
to industry segment 626,634 -0- 400,000
----------- ----------- -----------
Exploration Investment
for and in Natural General
Sale of Oil Resource Corporate
and Gas Properties Assets
----------- ----------- -----------
Year ended December
31, 1999
Income (loss) $ (42,083) $ -0- $ (13,947)
----------- ----------- -----------
Applicable to
Industry Segment
Year ended December
31, 2000
Income (loss) $ 10,169 $ -0- $ -0-
----------- ----------- -----------
Applicable to
Industry Segment
Year ended December
31, 2001 $ 20,500) $ -0- $ -0-
----------- ----------- -----------
Income (loss)
Applicable to
Industry Segment
NOTE 8. Major Customers:
----------------
The company had sales of oil and gas to four primary customers
(purchasers of over 10% of product) in 2001. These sales were in the
amount of $99,490 and $13,200 respectively.
During the year ended December 31, 2000, the company had sales of oil
and gas of $109,305 and $19,763 to three major purchasers, and for the
year ended December 31, 1999, $36,903 and $7,024 to four major
purchasers.
DOL RESOURCES, INC.
NOTES TO FINANCIAL STATEMENTS (Con't)
NOTE 9. Undeveloped Coal Royalties
--------------------------
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, 2001. 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, 2001 information, have been
prepared by Company personnel.
Proved developed reserves at December 31, 2001 were 47,163 barrels.
Proved undeveloped reserves of 43,100 bbls. are estimated at December
31, 2001. 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 12-31-01, 12-31-00, and 12-31-99 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 2001 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 2001 53,894 43,100
Acquisitions -0-
Revisions of prior
year's estimates (7,790) -0-
Production (6,731) -0-
---------------- ----------------
12-31-01 39,373 43,100
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.