-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VdRNJa/7MxbdlH2hqRSlzXoNNL4nZXIdOqBiT76g2KZgqSRvm3NGLbsKAKLhbz7D 8Q2lATTwmlR95ZRuHmLMBQ== 0001010549-03-000093.txt : 20030311 0001010549-03-000093.hdr.sgml : 20030311 20030311153319 ACCESSION NUMBER: 0001010549-03-000093 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20011231 FILED AS OF DATE: 20030311 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DOL RESOURCES INC CENTRAL INDEX KEY: 0000029504 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 820219465 STATE OF INCORPORATION: WY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-08447 FILM NUMBER: 03599465 BUSINESS ADDRESS: STREET 1: 13636 NEUTRON RD CITY: DALLAS STATE: TX ZIP: 75244 BUSINESS PHONE: 2146615869 MAIL ADDRESS: STREET 2: 13636 NEUTRON RD CITY: DALLAS STATE: TX ZIP: 752444410 10-K 1 dol10k123101.txt 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. -----END PRIVACY-ENHANCED MESSAGE-----