<PAGE>   1

================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                  -------------

                                   FORM 10-QSB

                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                  FOR THE QUARTERLY PERIOD ENDED JUNE 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 ___________

                         COMMISSION FILE NUMBER: 0-12185

                                  -------------

                            DAUGHERTY RESOURCES, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


          PROVINCE OF BRITISH COLUMBIA                         NOT APPLICABLE
 (State or other jurisdiction of incorporation                (I.R.S. EMPLOYER
                or organization)                             IDENTIFICATION NO.)


         120 PROSPEROUS PLACE, SUITE 201
              LEXINGTON, KENTUCKY                                 40509-1844
    (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                      (ZIP CODE)

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (606) 263-3948

                                  -------------

         Indicate by check mark whether the 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 for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X   No   .
                                             ---    ---

        THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE REGISTRANT'S CLASSES OF
COMMON STOCK, AS OF JUNE 30, 1999, WAS 2,272,182.

        Transitional Small Business Disclosure Format (check one): Yes    No X .
                                                                      ---   ---

================================================================================

<PAGE>   2

                                     PART I
                              FINANCIAL INFORMATION


ITEM 1. FINANCIAL STATEMENTS.

         The information required by this Item 1 appears on pages 8 through 11
of this Report, and is incorporated herein by reference.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS.

         The following is a discussion of the Company's financial condition and
results of operations. This discussion should be read in conjunction with the
Financial Statements of the Company described in Item 1 of this Report.
Statements contained in this "Management's Discussion and Analysis of Financial
Condition and Results of Operations," which are not historical facts may be
forward looking statements. Reliance upon such information involves risks and
uncertainties, including those created by general market conditions, competition
and the possibility that events may occur which could limit the ability of the
Company to maintain or improve its operating results or execute its primary
growth strategy. Although management believes that the assumptions underlying
the forward-looking statements are reasonable, any of the assumptions could be
inaccurate, and there can be no assurances that the forward-looking statements
included herein will prove to be accurate. The inclusion of such information
should not be regarded as a representation by management or any other person
that the objectives and plans of the Company will be achieved. Moreover, such
forward-looking statements are subject to certain risks and uncertainties that
could cause actual results to differ materially from those projected. Readers
are cautioned not to place undue reliance on these forward-looking statements
that speak only as of the date hereof.

         Daugherty Resources, Inc., formerly Alaska Apollo Resources Inc., (the
"Company" or the "Registrant") is a diversified natural resources company with
assets in oil and gas, wood products manufacturing, and gold prospects.
Originally formed in 1979 to develop gold properties, the Company in the fourth
quarter of 1993, acquired its wholly owned subsidiary, Daugherty Petroleum, Inc.
The purchase of Daugherty Petroleum, Inc. and the subsequent purchase of 80% of
Red River Hardwoods, Inc. in the fourth quarter of 1996 have given the Company a
diversified revenue and asset base that is primarily located in Appalachia.

         Since acquiring Daugherty Petroleum, Inc., the Company has increased
its reserves through the acquisition of oil and gas properties in the
Appalachian and Illinois Basins, and the drilling of wells through joint venture
and turnkey drilling programs, where Daugherty Petroleum, Inc. is the primary
decision maker. The Company continues to aggressively seek acquisitions and
drilling programs.

         At the Annual General Meeting held on June 30, 1999, shareholders
approved special resolutions, effective June 30, 1999, authorizing the
following:

                  1. Increasing the Company's authorized common shares from
10,000,000 common shares without par value to 100,000,000 common shares without
par value;

                  2. Altering the Memorandum of the Company so that the
authorized capital will be increased by creating 5,000,000 preferred shares
without par value;

                  3. Attaching special rights and restrictions to the common
shares and preferred shares;

         The creation of the preferred shares by the Company will allow the
planned acquisition of interests in certain oil and gas wells in Kentucky,
Louisiana and Tennessee. Management believes this acquisition will close in the
third quarter of 1999.



                                       2
<PAGE>   3

         The acquisition of Red River Hardwoods, Inc. diversified the Company by
adding lumber activities. The revenues of Red River have been reflected on the
Company's Consolidated Financial Statements. On June 30, 1999, a Letter of
Intent was signed to sell Red River to H & S Lumber, Inc., Clay City, KY. The
sale is expected to close during August, 1999 and has an effective date of
June 30, 1999. The sale of Red River will allow the Company's management to
concentrate on expanding its core oil and gas operations.

         The Company continues its tradition of realizing revenues from its oil
and gas operations. For the six months ending June 30, 1999, the Company drilled
four natural gas wells. By comparison, for the same period of 1998, the Company
drilled seven natural gas wells. Drilling operations for the first six months of
1999 were primarily related to a joint venture on the Company's farmout acreage
acquired from Equitable Resources Energy Corporation.

         Effective June 29, 1998, the Company's stock was traded on The Nasdaq
Small Cap Market under the name Daugherty Resources, Inc. Effective March 15,
1999, the Company's symbol was changed to "NGAS".

LIQUIDITY

         The Company continues to acquire natural gas and oil properties.
Daugherty Petroleum, Inc. has provided the Company with a diversified asset base
that includes natural resources other than its original gold and silver mining
properties. During the first six months of 1999, management continued to invest
in areas it deemed crucial in developing an infrastructure suitable to support
future growth. These areas included ongoing expenses in management, professional
and operational personnel, and other expenses deemed necessary to position the
Company for future acquisitions and financing.

         Historically, the Company's revenues have been from its interests in
the producing natural gas and oil wells it operates and in which it owns
interests, from its activities as "turnkey driller" and operator for various
drilling programs in its geographic area, and sales of wood products. Daugherty
Petroleum, Inc. has reduced its dependence on activities as "turnkey driller"
for private investors and instead concentrated on joint ventures with industry
partners. During the first six months of 1999, approximately 15% of the
Company's revenues were derived from joint venture drilling. Natural gas and oil
operations and revenues accounted for 10% of the revenues. Manufacturing sales
related to Red River accounted for 75% of the revenues.

         The Company plans to drill 15 wells during the last two quarters of
1999 and earn interests ranging from 12.5% to 50% interest in each well it
drills.

         Working capital for the period ending June 30, 1999, was a negative
$3,679,472 compared to the same period in 1998, when working capital was a
negative $2,451,792.

         During the first six months of 1999, and compared to the same period in
1998, the changes in the composition of the Company's current assets were: cash
balances increased $149,472 from $201,792 to $351,264 accounts receivable
balances decreased $282,482 from $557,807 to $275,325; and inventories decreased
$407,299 from $663,169 to $255,870. Other current assets such as prepaids and
notes receivable increased $7,131 from $9,073 to $16,204. Overall, current
assets decreased by $533,178 to $898,663.

         Current liabilities for the period ended June 30, 1999 were $4,578,135
compared to $3,883,633 for the period ended June 30, 1998. A line of credit and
new short-term bank loans accounted for $972,177 of the increase.

         While management believes that its cash flow resulting in operating
revenues will contribute significantly to its short-term financial commitments
and operating costs, it has continued to refine its long range strategy in 1999
to meet the Company's financial obligations. This strategy involves:

         - ACQUISITION OF REVENUE-PRODUCING PROPERTIES: In November 1997,
           Daugherty Petroleum signed a Letter of Intent to acquire producing
           oil and gas properties in Kentucky, Louisiana and Tennessee.
           Management believes that the addition of these properties will
           favorably impact the Company's cash flow. Daugherty Petroleum is also
           continually reviewing existing properties in its area of interest
           that are for sale.




                                       3
<PAGE>   4

         - INCREASING THE LINE OF CREDIT: The Company obtained a $1,000,000 line
           of credit from Compass Bank of Houston, Texas in 1998. The Company
           expects to increase the line of credit in 1999.

         - INSTALLATION OF ADDITIONAL NATURAL GAS GATHERING SYSTEM: The Company
           plans to expand its natural gas pipeline by 45,000 feet in 1999. The
           extension will allow for substantially more natural gas to be
           transported to market from wells drilled in 1998 and 1999.

         - CONVERTIBLE NOTE PRIVATE PLACEMENT: During the second and third
           quarters of 1999, the Company conducted a private placement of its
           10% convertible secured notes due 2004 (the "Notes) to raise funds
           for its ongoing drilling activities. The Notes will be convertible
           into the Company's common stock at 125% above the prevailing market
           price prior to the closing and will be guaranteed by Daugherty
           Petroleum. Daugherty Petroleum's guarantee will be secured by a lien
           on its gold mining interests, which lien may ultimately be replaced
           by a lien on wells drilled with Note proceeds. Each Note will be
           redeemable at the option of the holder eighteen months after the
           closing at 100% of the principal amount, payable in cash, plus a
           premium equal to 25% of the principal amount, payable in common stock
           of the Company based on its prevailing market price. The put rights
           are exercisable only during a 10-day period commencing 14 months
           after the closing. To date, the Company has received subscriptions
           for Notes aggregating $800,000, which it intends to issue in
           mid-August 1999, with the offering to continue until the end of
           August 1999.

         - SALE OF RED RIVER HARDWOODS, INC.: The Company has signed a Letter of
           Intent to sell its 80% stake in Red River. The divestiture of Red
           River will dramatically affect the Company's financial statement by
           reducing outstanding debt by approximately $3.7 million.


RESULTS OF OPERATIONS

         For the six month period ending June 30, 1999, the Company's gross
revenues decreased $768,512 to $2,188,217 from $2,956,729 for the same period in
1998. The Company experienced a net loss of $771,531 in this period compared to
a net loss of $538,960 in the same period of 1998.

         The Company's gross revenues were derived from drilling contract
revenues of $326,834 (15%), from natural gas and oil operations and production
revenues of $212,777 (10%), and lumber sales and product manufacturing revenues
of $1,648,606 (75%).

         The decrease in gross revenues of $768,512 was primarily attributable
to the decreased drilling activities and lumber sales during the period.
Contract revenues from drilling activities decreased by $461,212 from $788,046
in the first six months of 1998 to $326,834 in the first six months of 1999.
Manufacturing revenues related to Red River Hardwoods decreased by $239,744 from
$1,888,350 in the first six months of 1998 to $1,648,606 in the first three
months of 1999.

         During the first six months of 1999, total direct costs decreased by
$519,198 to $2,079,501 compared to $2,598,699 in the first six months of 1998.
These direct costs included Red River Hardwoods' expenses and drilling costs for
four natural gas wells.

YEAR 2000 INFORMATION

         The Company's field and administrative operations have been reviewed
for Year 2000 Compliance. Normal upgrades will result in essential operations
being Year 2000 compliant. Some remaining operations, such as non-essential
personal computers and non-financial software products, can be easily upgraded
at nominal cost and inconvenience. The Company has contacted its gas purchasers
and third party software and service vendors concerning Year 2000 compliance.
Those third parties not already compliant have indicated that they are working
to be compliant. The Company will be preparing contingency plans regarding those
third parties that do not currently meet Year 2000 compliance standards. Costs
incurred to date, future costs, implementation of contingency plans and
completion of modifications or replacements have not been and are not expected
to be material or pose a material risk.




                                       4
<PAGE>   5

                                     PART II
                                OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS.

        None.


ITEM 5. OTHER INFORMATION.

        Not Applicable.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

        (a) LIST OF DOCUMENTS FILED WITH THIS REPORT.

                                                                           PAGE
                                                                           -----

        (1) Balance Sheet for the Period Ended June 30, 1999..............  8
            Income Statement for the Period Ended June 30, 1999........... 9-10
            Computation of Per Share Earnings.............................  11


        All schedules have been omitted since the information required to be
submitted has been included in the financial statements or notes or has been
omitted as not applicable or not required.

        (2) Exhibits--

        The exhibits indicated by an asterisk (*) are incorporated by
reference.

        EXHIBIT
        NUMBER    DESCRIPTION OF EXHIBIT
        -------   ----------------------

         3(a)*    Memorandum and Articles for Catalina Energy & Resources Ltd.,
                  a British Columbia corporation, dated January 31, 1979, filed
                  as an exhibit to Form 10 Registration Statement filed May 25,
                  1984. File No. 0-12185.

         3(b)*    Certificate for Catalina Energy & Resources Ltd., a British
                  Columbia corporation, dated November 27, 1981, changing the
                  name of Catalina Energy & Resources Ltd. to Alaska Apollo Gold
                  Mines Ltd., and further changing the authorized capital of the
                  Company from 5,000,000 shares of common stock, without par
                  value per share, to 20,000,000 shares of common stock, without
                  par value per share, filed as an exhibit to Form 10
                  Registration Statement filed May 25, 1984. File No. 0-12185.

         3(c)*    Certificate of Change of Name for Alaska Apollo Gold Mines
                  Ltd., a British Columbia corporation, dated October 14, 1992,
                  changing the name of Alaska Apollo Gold Mines Ltd. to Alaska
                  Apollo Resources Inc., and further changing the authorized
                  capital of the Company from 20,000,000 shares of common stock,
                  without par value per share, to 6,000,000 shares of common
                  stock, without par value per share.

         3(d)*    Altered Memorandum of Alaska Apollo Resources Inc., a British
                  Columbia corporation, dated September 9, 1994, changing the
                  authorized capital of the Company from 6,000,000 shares of
                  common stock, without par value per share, to 20,000,000
                  shares of common stock, without par value per share.

         3(e)*    Certificate of Change of Name for Alaska Apollo Resources
                  Inc., a British Columbia corporation, dated June 24, 1998,
                  changing the name of Alaska Apollo Resources Inc. to Daugherty
                  Resources, Inc. and further changing the authorized capital of
                  the Registrant from



                                       5
<PAGE>   6

                  20,000,000 shares of common stock, without par value per
                  share, to 50,000,000 shares of common stock, without par
                  value, and authorizing the creation of 6,000,000 shares of
                  preferred stock, without par value per share. (File
                  No. 0-12185).

         3(f)*    Altered Memorandum of Daugherty Resources, Inc., a British
                  Columbia corporation, dated June 24, 1998, changing the
                  authorized common stock of the Registrant from 50,000,000
                  shares of common stock, without par value per share, to
                  10,000,000 shares of common stock, without par value. (File
                  No. 0-12185).

         3(g)*    Altered Memorandum of Daugherty Resources, Inc., a British
                  Columbia corporation, dated June 25, 1998, changing the
                  authorized preferred stock of the Registrant from 6,000,000
                  shares of preferred stock, without par value per share, to
                  1,200,000 shares of preferred stock, without par value. Filed
                  as an exhibit to Form 8-K, by the Company for reporting an
                  event on June 29, 1998. (File No. 0-12185).

         4*       See Exhibit No. 3(a), (b), (c), (d), (e), (f), and (g).

         10(a)*   Alaska Apollo Resources Inc. 1997 Stock Option Plan, filed as
                  Exhibit 10(a) to Form 10-K for the Company for the fiscal year
                  ended December 31, 1996. (File No. 0-12185).

         10(b)*   Incentive Stock Option Agreement by and between Alaska Apollo
                  Resources Inc. and William S. Daugherty dated March 7, 1997,
                  filed as Exhibit 10(b) to Form 10-K for the Company for the
                  fiscal year ended December 31, 1996. (File No. 0-12185).

         10(c)*   Warrant Agreement by and between Alaska Apollo Resources Inc.
                  and Jayhead Investments Limited dated March 7, 1997, filed as
                  Exhibit 10(c) to Form 10-K for the Company for the fiscal year
                  ended December 31, 1996. (File No. 0-12185).

         10(d)*   Warrant Agreement by and between Alaska Apollo Resources Inc.
                  and Trio Growth Trust dated March 7, 1997, filed as Exhibit
                  10(d) to Form 10-K for the Company for the fiscal year ended
                  December 31, 1996. (File No. 0-12185).

         10(e)*   Warrant Agreement by and between Alaska Apollo Resources Inc.
                  and Exergon Capital S.A. dated March 7, 1997, filed as Exhibit
                  10(e) to Form 10-K for the Company.

         11       Computation of Per Share Earnings.

         24       Powers of Attorney.

         27       Financial Data Schedule.

         (b)      REPORTS ON FORM 8-K.

                  None

         (c)      FINANCIAL STATEMENT SCHEDULES.

                  No schedules are required, as all information required has
                  been presented in the audited financial statements.



                                       6
<PAGE>   7

                                   SIGNATURES


         Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf of the
undersigned hereunto duly authorized.


                                        DAUGHERTY RESOURCES, INC.



                                        By: /s/ William S. Daugherty
                                           -------------------------------
                                           William S. Daugherty, President


Dated: August 13, 1999

         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 dates indicated.


       SIGNATURE                           TITLE                      DATE
       ---------                           -----                      ----


/s/ William S. Daugherty     Chairman of the Board, President,   August 13, 1999
------------------------     Director of the Registrant
WILLIAM S. DAUGHERTY


James K. Klyman*
------------------------     Director of the Registrant          August 13, 1999
JAMES K. KLYMAN


Charles L. Cotterell*
------------------------     Director of the Registrant          August 13, 1999
CHARLES L. COTTERELL





*By /s/ William S. Daugherty
    ------------------------
    William S. Daugherty,
    Attorney-in-Fact




                                       7
<PAGE>   8

DAUGHERTY RESOURCES, INC.
SUMMARY CONSOLIDATED BALANCE SHEETS
(United States Dollars)
Unaudited

                                                     6/30/98        6/30/99
                                                   -----------    -----------

                                     ASSETS

CURRENT ASSETS
  Cash                                             $   201,792    $   351,264
  Accounts receivable                                  557,807        275,325
  Inventory                                            663,169        255,870
  Other current assets                                   9,073         16,204
                                                   -----------    -----------
    TOTAL CURRENT ASSETS                             1,431,841        898,663

OIL & GAS PROPERTIES (NET)                           4,284,367      4,614,703

MINING PROPERTY (NET)                               11,227,733     11,232,229

PROPERTY & EQUIPMENT (NET)                           1,863,741      1,692,374

OTHER ASSETS
  Related party loans                                   83,066         96,055
  Bonds & deposits                                      54,224         54,224
  Other assets                                         293,884        251,918
  Goodwill, net of amortization of $1,110,925        1,204,209        974,741
                                                   -----------    -----------
                                                     1,635,383      1,376,938
                                                   -----------    -----------
    TOTAL ASSETS                                   $20,443,065    $19,814,907
                                                   ===========    ===========


                       LIABILITIES & STOCKHOLDER'S EQUITY

CURRENT LIABILITIES
  Short-term loans & notes                            $ 32,000    $ 1,029,177
  Current portion of LT debt                         1,011,195        635,494
  Accounts payable                                   1,179,082      1,378,823
  Accrued liabilities                                  541,202        705,720
  Drilling prepayments                               1,120,154        828,921
                                                   -----------    -----------
    TOTAL CURRENT LIABILITIES                        3,883,633      4,578,135

LONG-TERM LIABILITIES                                2,942,360      3,173,299

PAYABLE TO RELATED PARTIES                              37,612         20,848
                                                   -----------    -----------
                                                     6,863,605      7,772,282
MINORITY INTEREST                                          757              -

STOCKHOLDER'S EQUITY
  Common stock                                      21,054,304     21,319,145
  Common stock subscribed                                    -              -
  Additional paid in capital                                 -              -
  Retained earnings (deficit)                       (6,936,641)    (8,504,989)
  Current income (loss)                               (538,960)      (771,531)
                                                   -----------    -----------
                                                    13,578,703     12,042,625
                                                   -----------    -----------
    TOTAL LIABILITIES &
      STOCKHOLDER'S EQUITY                         $20,443,065    $19,814,907
                                                   ===========    ===========


Unaudited-Internally prepared by Company management


                                       8
<PAGE>   9
DAUGHERTY RESOURCES, INC.
SUMMARY CONSOLIDATED STATEMENTS OF INCOME
(United States Dollars)
Unaudited

<TABLE>
<CAPTION>
                                                                 For the six month period ended
                                                                              6/30/98                          6/30/99
                                                                 -------------------------------    ---------------------------
<S>                                                                <C>              <C>          <C>                 <C>
GROSS REVENUE                                                      $ 2,956,729         100.00%      $ 2,188,217         100.00%
-------------

DIRECT EXPENSES                                                      2,598,699          87.89%        2,079,501          95.03%
---------------                                                     -----------        -------       -----------        -------
              GROSS PROFIT                                             358,030          12.11%          108,716           4.97%

GENERAL & ADMINISTRATIVE EXPENSES
---------------------------------
  Salaries & wages                                                     181,867           6.15%          250,660          11.45%
  Accounting & audit                                                    73,546           2.49%           54,709           2.50%
  Advertising & promotion                                                5,658           0.19%              844           0.04%
  Amortization                                                         105,234           3.56%          105,232           4.81%
  Bad debts                                                                  -           0.00%            6,157           0.28%
  Depreciation                                                          34,911           1.18%           23,028           1.05%
  General consulting                                                    90,753           3.07%           41,224           1.88%
  Insurance                                                             18,673           0.63%           26,254           1.20%
  Legal                                                                 50,288           1.70%           79,498           3.63%
  Office & general                                                     107,962           3.65%           69,941           3.20%
  Payroll & property tax                                                16,095           0.54%           26,284           1.20%
  Rent                                                                  23,397           0.79%           28,444           1.30%
  Repairs & maintenance                                                  2,809           0.10%            4,412           0.20%
  Shareholder & investor information                                    28,738           0.97%            8,340           0.38%
  Travel & entertainment                                                30,715           1.04%           31,123           1.42%
                                                                    -----------        -------       -----------        -------
              TOTAL G & A EXPENSES                                     770,646          26.06%          756,150          34.56%

OTHER INCOME (EXPENSE)
----------------------
  Interest & dividend income                                            14,277           0.48%           11,569           0.53%
  Miscellaneous                                                         28,727           0.97%           42,507           1.94%
  Gain (loss) on sale of equipment                                           -           0.00%                -           0.00%
  Interest expense                                                    (169,348)         -5.73%         (178,173)         -8.14%
                                                                    -----------        -------       -----------        -------
INCOME BEFORE INCOME TAX & OTHER                                      (538,960)        -18.23%         (771,531)        -35.26%
--------------------------------

  Income tax expense (benefit)                                               -           0.00%                -           0.00%

MINORITY PORTION                                                            -            0.00%               -            0.00%
----------------                                                            --           -----               --           -----
                                                                    -----------        -------       -----------        -------
              NET INCOME (LOSS)                                     $ (538,960)        -18.23%       $ (771,531)        -35.26%
                                                                    ===========        =======       ===========        =======
DEFICIT, beginning of period                                        (6,936,641)                    $ (8,504,989)
DEFICIT, end of period                                              (7,475,601)                    $ (9,276,520)

Shares outstanding                                                   1,964,351                        2,272,182

EARNINGS PER SHARE                                                      ($0.27)                          ($0.34)
</TABLE>



Unaudited-Internally prepared by Company management


                                       9
<PAGE>   10

DAUGHERTY RESOURCES, INC.
SUMMARY CONSOLIDATED STATEMENTS OF CASH FLOWS
(United States Dollars)
Unaudited


                                                  For the six month period ended
                                                       6/30/98       6/30/99
                                                     -----------    ----------

CASH FLOWS FROM OPERATING ACTIVITIES
  Net income (loss)                                  $  (538,960)   $ (771,531)
  Adjustments to reconcile net income
   (loss) to net cash cash provided by
   operating activities:
    Depreciation, depletion, & amortization              287,577       300,382
    Minority interest                                          -
    Changes in current assets & liabilities
      (Increase) decrease in:
        Accounts receivable                              (64,085)      136,171
        Inventory                                         14,975       176,598
        Other current assets                              55,589        35,073
      Increase (decrease) in:
        Short-term loans & notes                         (34,100)       95,660
        Accounts payable                                (293,630)      217,401
        Accrued liabilities                              180,806      (145,410)
        Drilling prepayments                            (283,153)      (93,589)
                                                     -----------    ----------
          Net cash provided by (used in)
            operating activities                        (674,981)      (49,245)

CASH FLOWS FROM INVESTING ACTIVITIES
  Change in oil & gas properties                        (387,104)      (59,600)
  Change in mining properties                              4,496             -
  Change in property & equipment                         (39,422)       15,697
  Change in other assets                                 (90,189)     (124,658)
                                                     -----------    ----------
          Net cash provided by (used in)
            investing activities                        (512,219)     (168,561)

CASH FLOWS FROM FINANCING ACTIVITIES
  Issuance of common stock                                99,868       109,324
  Change in long-term liabilities                         38,275       (95,220)
  Change in payable to related party                      11,289        26,300
                                                     -----------    ----------
          Net cash provided by (used in)
            financing activities                         149,432        40,404
                                                     -----------    ----------

NET INCREASE (DECREASE) IN CASH                       (1,037,768)     (177,402)

CASH AT BEGINNING OF PERIOD                            1,239,560       528,666
                                                     -----------    ----------

CASH AT END OF PERIOD                                  $ 201,792    $  351,264
                                                     ===========    ==========


Unaudited-Internally prepared by Company management



                                       10

<PAGE>   11

DAUGHERTY RESOURCES, INC.
COMPUTATION OF PER SHARE EARNINGS
(United States Dollars)
Unaudited


         The table below presents information necessary for the computation of
loss per share of the common stock, on both a primary and fully diluted basis,
for the six months ended June 30, 1999 and 1998, and the years ended December
31, 1998, 1997 and 1996. The computations below reflect the 1 for 5 Reverse
Stock Split effective June 30, 1998.

<TABLE>
<CAPTION>
                                           SIX MONTHS ENDED
                                                JUNE 30                         YEAR ENDED DECEMBER 31
                                                -------                          ----------------------

                                         1999          1998               1998           1997           1996
                                         ----          ----               ----           ----           ----
<S>                                   <C>            <C>              <C>             <C>             <C>
Net loss applicable to share of
Common Stock and Common
Stock equivalents                     $ (771,531)    $ (545,692)      $(1,568,348)    $(1,708,418)    $ (733,973)

Average number of shares of
Common Stock Outstanding               2,272,782      1,907,050         2,035,188       1,831,926      1,610,168

Common Stock equivalents               1,514,134      1,455,404         1,448,355       1,353,244        283,293

Total shares of Common Stock
and Common Stock equivalents           3,786,916      3,362,458         3,483,543       3,185,170      1,893,461

Primary loss per share of
Common Stock                          $     (.34)    $     (.29)      $     (0.77)    $      (.93)    $     (.46)

Fully diluted loss per share of
Common Stock                          $     (.20)    $     (.16)      $     (0.45)    $      (.54)    $     (.39)
</TABLE>

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      Common Stock equivalents are considered anti-dilutive because of the
                      net losses incurred by the Company.



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