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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
(X) Quarterly Report Pursuant Section 13 or 15(d) of the Securities
Exchange Act of 1934
For Quarter Ended: September 30, 1999
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission File: 0-8447
DOL RESOURCES, INC.
(Exact Name of Registrant as specified in its Charter)
Wyoming 82-0219465
(State of other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
13636 Neutron Road, Dallas, Texas 75244
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number (Area code (214) 661 5869)
Indicate by check mark whether 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 such shorter period that Registrant was required to
file such reports and (2) has been subject to such filing requirements for the
past 90 days YES: NO: X
The number of shares outstanding of each of the Issuer's Classes of Common
Stock, as of the close of the period covered by this report:
Common - $0.01 Par Value - 25,000,000 shares as of September 30, 1999.
DOL RESOURCES, INC.
Index to Form 10-Q for Fiscal Quarter ended September 30, 1999.
Page No.
PART 1 - Financial Information
Condensed Unaudited Balance Sheet, September 30, 1999
and December 31, 1998 2 - 3
Condensed Unaudited Statement of Income,
Nine Months ended September 30, 1999 and 1998 4
Condensed Unaudited Statement of Shareholder's
Equity Nine Months ended September 30, 1999 and 1998 5
Condensed Unaudited Statement of Changes in
Financial Position Nine-Months Ended
September 30, 1999 and 1998 5
Summary of Significant Accounting Policies and
Notes to Condensed Unaudited Financial Statements 6 - 8
Management's Discussion and Analysis of Condensed
Financial Condition and Results of Operations 9
PART 11 - Other Information
Item 6(b) - Exhibits and Reports on Form 8-K 10
Signature Pursuant to General Instruction E 10
All other items called for by the instructions are omitted as they are
inapplicable, not required, or the information is included in the condensed
financial statements or notes thereto.
1
DOL RESOURCES, Inc.
BALANCE SHEET
(Unaudited)
ASSETS
Sept. 30 Dec. 31
1999 1998
CURRENT ASSETS
Cash $ -0- $ 870
Marketable securities, at
lower or aggregate cost
or market 400,000 1,924
Trade accounts receivable,
less allowance for doubtfiul
accounts of $1,711, in 1998
Note 1) -0- 22,927
Due from related parties-Note 3 4,323 426,115
Prepaid Expenses -0- -0-
--------- ---------
Total Current Assets 404,323 451,836
--------- ---------
PROPERTIES - Using full costing-
Production payment 100,000 100,000
Exploration, acquisition &
development, cost, net of
allowance for reduction of
oil & gas assets of $137,083
In 1985 2,057,927 1,649,985
--------- ---------
Total cost 2,157,927 1,749,985
Less accumulated depletion 1,348,567 1,338,297
--------- ---------
809,360 411,688
AUTOMOBILES, 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- -0- 10,155
Other accounts receivable- -0- 57,012
62,140 --------- ---------
Total Other Assets -0- 67,168
72,296 --------- ---------
TOTAL ASSETS 1,213,683 931,340
--------- ---------
2
DOL Resources, Inc.
BALANCE SHEET
Sept. 30, Dec. 31,
1999 1998
CURRENT LIABILITIES
Notes payable - Note 2 -0- 408,000
Accounts payable -0- 30,737
Accrued expenses -0- -0-
---------- ----------
Total current liabilities -0- 438,737
----------
LONG-TERM LIABILITIES
Accounts payable
Total Long-Term Liabilities -0- 330,472
---------- ----------
-0- 330,472
STOCKHOLDERS' EQUITY
Capital Stock, common,
$.01 par value:
Authorized 25,000,000 shares
Issued and outstanding:
25,000,000 shares at 9-30-99
and 20,783,529 at 1998 250,000 207,835
Capital in excess of
par value 2,526,770 1,501,618
Accumulated deficit (1,563,087) (1,546,947)
Treasury Stock -0- (375)
---------- ----------
1,213,683 162,131
TOTAL 1,213,683 931,340
---------- ----------
3
DOL RESOURCES, INC.
CONDENSED UNAUDITED STATEMENT OF INCOME
3 Months 9 Months
Ended Ended
9-30-99 9-30-99 9-30-98
Operating Revenue:
Oil and Gas Sales 31,030 46,525 35,745
Interest and other income -0- 3,896 5,844
Total 31,030 50,421 41,589
Operating Expenses:
Depletion,depreciation
and amortization 5,000 10,594 12,795
General and administrative 4,044 6,759 217
Interest -0- 13,650 20,313
Consulting & Mgmt Fees 4,091 4,091 -0-
Production Taxes 2,555 4,209 3,898
Lease Operating Expense 15,656 26,897 20,098
Lease Rentals 361 361 -0-
Total Operating Expenses 31,707 66,561 57,321
Net Income (Loss) before income
taxes (677) (16,140) (15,732)
Provision for income taxes
(note 6) -0- -0- -0-
Net Income (Loss) (677) (16,140) (15.732)
Weighted Average Number of Common
Shares Outstanding 25,000,000 22,657,516 20,671,254
Earnings (Loss)forCommon Share $ (.00003) $ (.0007) $ (.0008)
The accompany notes are an integral part of this statement.
4
DOL RESOURCES, INC.
CONDENSED UNAUDITED STATEMENT OF STOCKHOLDER'S EQUITy
Nine Months ended September 30, 1999 and 1998
Capital Stock Capital in
Number of Excess of Accumulated Treasury
Shares Amount Par Value Deficit Stock
Balance at
1/1/99 20,783,529 207,835 1,501,618 (1,546,947) (375)
Net Income -0- -0- -0- (16,140) -0-
----------- ----------- ----------- ----------- -----------
Treas. Stock
Cancelled (375) (375)
ELGT Stock
Exchange 4,216,471 42,165 357,835
Parent Con-
Tribution 667,692
----------- ----------- ----------- ----------- -----------
Balance at
9/30/99 25,000,000 250,000 2,526,770 (1,563,087) -0-
Balance at
1/1/98 20,671,254 206,713 1,502,741 (1,478,977) (375)
Net Income -0- -0- -0- (15,732) -0-
Balance at
9/30/98 20,671,254 206,713 1,502,741 (1,494,709) (375)
CONDENSED UNAUDITED STATEMENT
OF CHANGES IN FINANCIAL POSITION
Nine Months Ended:
Sept. 30, 1999 Sept. 30, 1998
Financial Resources Provided
By Operations:
Net Income (16,140) (15,732)
Items not requiring outlay
of working Capital:
Depletion, Deprec. and
Amortization 10,594 12,795
-------------- --------------
Working Capital provided by
operations (5,546) (2,937)
Increase in Properties (407,619) 3,500
Reduction in other Assets 67,168 4,424
Increase in long term debt -0- -0-
-------------- --------------
Total Resources (345,997) 4,987
Financial Resources Applied to
Retirement of long-term debt (330,472) (4,423)
Increase in common stock 42,165
Increase in contributed stock 1,025,528 -0-
-------------- --------------
Net Increase (Decrease) in
Working Capital 391,224 564
Working Capital at begin. of period 13,099 66,381
Working Capital at end of period 404,323 66,945
5
DOL Resources, Inc.
NOTES TO FINANCIAL STATEMENTS
NOTE 1. Summary of Significant Accounting Policies
Organization and Operations
The Company was organized on November 6, 1973 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 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 95% collectible, consequently a 5% allowance
for bad debts has been established against those receivables.
Receivables from the sale of oil and gas are fully collectible, as
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
acqusition, 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 not being
amortized, plus (C) the lower 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 expense to current operations.
6
DOL RESOURCES, INC.
NOTES TO FINANCIAL STATEMENTS (CON'T).
NOTE 1: Sales and abandonments of oil and gas properties are accounted for as
adjustment of capitalized costs, with no gain or loss recognized.
Drilling in progress is included in the cost center with depletion
being calculated on all costs with cost center.
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. 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 $408,000 $ -0-
Gateway National Bank. Interest only payable monthly at 6.64% per
annum over a year of 360 days.
NOTE 3. Related Party Transactions
The Company ended 1998 with accounts receivable from Glauber
Management Corp. of $344,615. The balance of this account on September
30, 1999 was $4,323.
NOTE 4. Income Taxes
The Company as of December 31, 1998 had a net operating income loss
carryover for income tax purposes of approximately $740,000. The
carryover is available to offset taxable income of future years and
expires as follows:
7
1998 241,000
1999 14,000
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
-------
740,000
The Company also had approximately $17,000 of investment tax credits
available for carryover against future federal income tax liabilities.
For financial reporting purposes, the net operating loss has been used
to offset prior deferred income taxes. To the extend that the net
operating loss carryovers are utilized for income tax purposes in
future years, the deferred income taxes eliminated to give credits
related to timing differences 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 $576,000. Because of the
uncertainly as to realization,no future tax benefits are recognized at
December 31, 1998.
8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE
CONDENSED UNAUDITED STATEMENT OF INCOME
The following is Management's discussion and analysis of certain
significant factors which have affected the Company's earnings during the period
included in the accompanying Condensed Unaudited Statement of Income.
A summary of the period to period changes in the principal items included
in the Condensed Unaudited Statement of Income is as shown below:
Nine Months
ending Sept. 30
1999 and 1998
Net Sales 10,780
Interest and Other Income (1,948)
General and Administrative 6,242
Depletion, Depreciation
and Amortization (2,201)
Consulting & Management Fees 4,091
Interest Expense (6,663)
Net Income (Loss) (408)
Oil and gas sales increased as compared the same period last year due
primarily to the contribution of Oklahoma oil producing properties by Glauber
Management and some increase in oil prices.
The recurring cash flow for the first nine months of 1999 was approximately
$8,100 per month. Consulting and management fee expenses increased due to the
payment $1,000.00 per month to Gluaber Management Company effective 7-1-99.
Interest expense decreased due to assumptoipm of bank debt by Glauber
Management. General and Administrative expenses increased due to legal and
transfer fees.
Management expects a slow upward trend in oil and gas prices to continue.
This would not only increase revenues and cash flow but would enhance our
ability to raise much needed funds for drilling additional wells. It is the
opinion of management that a minimum of $25.00 per Bbl. oil is needed in order
to expand operations and replace depleted reserves. Meanwhile a continuing
effort is being made to increase production, and consequently revenues by
seeking out and negotiating joint-venture recompletion projects where positive
reserve information exists.
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 Gluaber 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.
9
Review of Independent Public Accountants:
The information contained in substantially all financial statements
accompanying this report were supplied by internal accountant of registrant.
Although such statements have not been reviewed by registrant's certified public
accountant they are available for review.
Office Information
No reports on Form 8-K were filed by the Company in the quarter for which
this report is filed.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Registrant has duly caused this report to be signed on its behalf by the
undersigned there unto duly authorized.
DOL RESOURCES, INC.
/s/ Fred M. Updegraff
-----------------------------
Fred M. Updegraff
Vice President, Treasurer and
Principal Accounting Officer
Date: November 4, 1999
10