5
|
52
|
|||
9
|
56
|
|||
16
|
58
|
|||
16
|
60
|
|||
16
|
64
|
|||
17
|
65
|
|||
18
|
65
|
|||
20
|
66
|
|||
21
|
3
|
|||
37
|
F-1
|
|||
45
|
“blow-out
preventers”
|
Large
safety devices placed on the surface of an oil or natural gas well
to
maintain high pressure well bores.
|
“booster”
|
A
machine that increases the volume of air when used in conjunction
with a
compressor or a group of compressors.
|
“capillary
tubing”
|
Small
diameter tubing installed in producing wells and through which
chemicals
are injected to enhance production and reduce corrosion and other
problems.
|
“casing”
|
A
pipe placed in a drilled well to secure the well bore and
formation.
|
“choke
manifolds”
|
An
arrangement of pipes, valves and special valves on the rig floor
that
controls pressure during drilling by diverting pressure away from
the
blow-out preventers and the annulus of the well.
|
“coiled
tubing”
|
Small
diameter tubing used to service producing and problematic wells
and to
work in high pressure applications during drilling, production
and
workover operations.
|
“directional
drilling”
|
The
technique of drilling a well while varying the angle of direction
of a
well and changing the direction of a well to hit a specific
target.
|
“double
studded adapter”
|
A
flange that adapts a valve or blow-out preventer to another non-compatible
valve.
|
“downhole
drilling”
|
The
technique of directional drilling used to deviate a well away from
surface
locations to reach a specified target.
|
“drill
pipe”
|
A
pipe that attaches to the drill bit to drill a well.
|
“heavy
weight spiral drill pipe”
|
Heavy
drill pipe used for special applications primarily in directional
drilling. The ‘spiral’ design increases flexibility and penetration of the
pipe.
|
“horizontal
drilling”
|
The
technique of drilling wells at a 90-degree angle.
|
“laydown
machines”
|
A
truck mounted machine used to move pipe and casing and tubing onto
a pipe
rack (from which a derrick crane lifts the drill pipe, casing and
tubing
and inserts it into the well).
|
“links”
|
Adaptors
that fit on the blocks to attach handling tools.
|
“logging-while-drilling”
or “LWD”
|
The
technique of measuring, in real time, the formation pressure and
the
position of equipment inside of a well.
|
“measurement-while-drilling”
or “MWD”
|
The
technique used to measure direction and angle while drilling a
well.
|
“mist
pump”
|
A
drilling pump that uses mist as the circulation medium for injecting
small
amounts of foaming agent, corrosion agent and other chemical solutions
into the well.
|
“spacer
spools” or “adapter spools”
|
High
pressure connections or links which are stacked to elevate the
blow-out
preventers to the drilling rig floor.
|
“straight
hole drilling”
|
The
technique of drilling that allows very little or no vertical
deviation.
|
“test
plugs”
|
A
device used to test the connections of wellheads and the blow-out
preventers.
|
“torque
turn service” or “torque turn equipment”
|
Monitoring
device to insure proper makeup of the casing.
|
“tubing”
|
A
pipe placed inside the casing to allow the well to
produce.
|
“tubing
work strings”
|
Tubing
used on workover rigs through which high pressure liquids, gases
or
mixtures are pumped into a well to perform production
operations.
|
“underbalanced
drilling” or “air drilling”
|
The
technique in which oil, natural gas or geothermal wells are drilled
by
creating a pressure within the well that is lower than the reservoir
pressure. The result is increased rate of penetration, reduced
formation
damage and reduced drilling costs.
|
“wear
bushings”
|
A
device placed inside a wellhead to protect the wellhead from
wear.
|
Common
stock to be offered by the selling stockholders from time to time,
assuming the exercise of all outstanding options and warrants held
by the
selling stockholders are exercised
|
9,411,391
shares
|
|
Common
stock to be offered by the selling stockholders from time to time,
assuming no exercise of outstanding options and warrants held by
the
selling stockholders are exercised
|
8,166,530
shares
|
|
Shares
outstanding prior to the offering
|
17,168,562
shares as of February 16, 2006.
|
|
Shares
outstanding after the offering, assuming the exercise of outstanding
options and warrants held by the selling stockholders
|
18,413,423
shares
|
|
Use
of proceeds
|
We
will not receive any proceeds from the sale of shares by the selling
stockholders.
|
|
Dividend
Policy
|
We
do not intend to declare or pay dividends in the foreseeable future.
Instead, we generally intend to invest any future earnings in our
business.
|
|
Risk
factors
|
Please
read "Risk Factors" for a discussion of factors you should consider
carefully before deciding to invest in shares of our common
stock..
|
|
American
Stock Exchange trading symbol
|
“ALY”
|
•
|
make
it more difficult for us to satisfy our obligations with respect
to the
notes and our other debt;
|
•
|
increase
our vulnerability to general adverse economic and industry conditions,
including declines in oil and natural gas prices and declines in
drilling
activities;
|
•
|
limit
our ability to obtain additional financing for future working capital,
capital expenditures, mergers and other general corporate
purposes;
|
•
|
require
us to dedicate a substantial portion of our cash flow from operations
to
payments on our debt, thereby reducing the availability of our
cash flow
for operations and other purposes;
|
•
|
limit
our flexibility in planning for, or reacting to, changes in our
business
and the industry in which we operate;
|
•
|
make
us more vulnerable to increases in interest rates;
|
•
|
place
us at a competitive disadvantage compared to our competitors that
have
less debt; and
|
•
|
have
a material adverse effect on us if we fail to comply with the covenants
in
the indenture relating to the notes or in the instruments governing
our
other debt.
|
•
|
incur
additional debt;
|
•
|
make
certain investments or pay dividends or distributions on our capital
stock
or purchase or redeem or retire capital stock;
|
•
|
sell
assets, including capital stock of our restricted
subsidiaries;
|
•
|
restrict
dividends or other payments by restricted subsidiaries;
|
•
|
create
liens;
|
•
|
enter
into transactions with affiliates; and
|
|
|
•
|
merge
or consolidate with another company.
|
Year
Ended
December
31
|
||||
2004
|
High
|
Low
|
||
First
Quarter
|
$10.05
|
$
2.55
|
||
Second
Quarter
|
10.25
|
4.25
|
||
Third
Quarter
|
9.75
|
4.75
|
||
Fourth
Quarter
|
5.40
|
3.25
|
||
2005
|
||||
First
Quarter
|
$
7.25
|
$
3.64
|
||
Second
Quarter
|
5.22
|
4.38
|
||
Third
Quarter
|
14.70
|
5.65
|
||
Fourth
Quarter
|
13.75
|
8.61
|
||
2006
|
||||
First
Quarter (through February 28)
|
$18.50
|
$12.52
|
As
of
September 30, 2005 |
|||
(unaudited)
|
|||
(in
thousands)
|
|||
Cash
and cash equivalents
|
$
|
3,909
|
|
Long-term
debt, including current maturities
|
|||
Credit
facility
|
$
|
45,700
|
|
Other
debt(2)
|
9,643
|
||
Payment
obligations under non-compete agreements(3)
|
784
|
||
Total
debt
|
56,127
|
||
Stockholders’
equity
|
57,376
|
||
Total
capitalization
|
$
|
113,503
|
(1)
|
This
debt was repaid with the proceeds of the issuance of the senior
notes in
January 2000.
|
(2)
|
Other
debt consisted of a $4.0 million 5.0% subordinated note payable
by
Allis-Chalmers Energy Inc., a $3.0 million 7.5% subordinated note
payable
by our subsidiary Allis-Chalmers Tubular Services, Inc. and $2.6
million
of miscellaneous other debt. All of such other indebtedness, except
the
$4.0 million 5.0% subordinated note and $1.5 million of miscellaneous
debt, was repaid in January 2006 with the proceeds of the issuance
of the
senior notes.
|
(3)
|
Consists
of amounts payable to former owners of acquired
businesses.
|
Nine
Months
Ended
|
||||||||||||||||||||||
Year
Ended December
31,
|
September
30,
|
|||||||||||||||||||||
|
|
|
2000
|
|
|
2001(1)
|
|
|
2002
|
2003
|
2004
|
2004
|
2005
|
|||||||||
(unaudited)
|
||||||||||||||||||||||
Statement
of Operations Data:
|
(in
thousands, except per share amounts)
|
|||||||||||||||||||||
Revenues
|
$
|
—
|
$
|
4,796
|
$
|
17,990
|
$
|
32,724
|
$
|
47,726
|
$
|
32,989
|
$
|
71,830
|
||||||||
Cost
of revenues
|
—
|
3,331
|
14,640
|
24,029
|
35,300
|
24,191
|
51,153
|
|||||||||||||||
Gross
profit
|
—
|
1,465
|
3,350
|
8,695
|
12,426
|
8,798
|
20,677
|
|||||||||||||||
General
and administrative expense
|
383
|
2,898
|
3,792
|
6,169
|
8,011
|
5,381
|
12,344
|
|||||||||||||||
Personnel
restructuring costs
|
—
|
—
|
495
|
—
|
—
|
—
|
—
|
|||||||||||||||
Abandoned
acquisition/private placement costs
|
244
|
—
|
233
|
—
|
—
|
—
|
—
|
|||||||||||||||
Post-retirement
medical costs
|
—
|
—
|
(98
|
)
|
(99
|
)
|
188
|
—
|
(352
|
)
|
||||||||||||
Total
operating expenses
|
627
|
2,898
|
4,422
|
6,070
|
8,199
|
5,381
|
11,992
|
|||||||||||||||
Income
(loss) from operations
|
(627
|
)
|
(1,433
|
)
|
(1,072
|
)
|
2,625
|
4,227
|
3,417
|
8,685
|
||||||||||||
Other
income (expense):
|
||||||||||||||||||||||
Interest
income
|
—
|
41
|
49
|
3
|
32
|
9
|
51
|
|||||||||||||||
Interest
expense
|
—
|
(869
|
)
|
(2,256
|
)
|
(2,467
|
)
|
(2,808
|
)
|
(1,643
|
)
|
(2,194
|
)
|
|||||||||
Factoring
costs on note receivable
|
—
|
—
|
(191
|
)
|
—
|
—
|
—
|
—
|
||||||||||||||
Settlement
on lawsuit
|
—
|
—
|
—
|
1,034
|
—
|
—
|
—
|
|||||||||||||||
Gain
on sale of interest in AirComp LLC
|
—
|
—
|
—
|
2,433
|
—
|
—
|
—
|
|||||||||||||||
Debt
retirement
|
—
|
—
|
—
|
—
|
—
|
—
|
1,087
|
|||||||||||||||
Other
|
—
|
(12
|
)
|
(40
|
)
|
12
|
272
|
224
|
221
|
|||||||||||||
Total
other income (expense)
|
—
|
(840
|
)
|
(2,438
|
)
|
1,015
|
(2,504
|
)
|
(1,410
|
)
|
(3,009
|
)
|
||||||||||
Net
income (loss) before income taxes and minority interest
|
(627
|
)
|
(2,273
|
)
|
(3,510
|
)
|
3,640
|
1,723
|
2,007
|
5,676
|
||||||||||||
Minority
interests in income of subsidiaries
|
—
|
—
|
(189
|
)
|
(343
|
)
|
(321
|
)
|
(248
|
)
|
(488
|
)
|
||||||||||
Income
tax
|
—
|
—
|
(270
|
)
|
(370
|
)
|
(514
|
)
|
(359
|
)
|
(559
|
)
|
||||||||||
Net
income (loss) from continuing operations
|
(627
|
)
|
(2,273
|
)
|
(3,969
|
)
|
2,927
|
888
|
1,400
|
4,629
|
||||||||||||
(Loss)
from discontinued operations
|
—
|
(291
|
)
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||
(Loss)
from sales of discontinued operations
|
—
|
(2,013
|
)
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||
Net
(loss) from discontinued operations
|
—
|
(2,304
|
)
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||
Net
income (loss)
|
(627
|
)
|
(4,577
|
)
|
(3,969
|
)
|
2,927
|
888
|
1,400
|
4,629
|
||||||||||||
Preferred
stock dividend
|
—
|
—
|
(321
|
)
|
(656
|
)
|
(124
|
)
|
(124
|
)
|
—
|
|||||||||||
Net
income (loss) attributed to common stockholders
|
$
|
(627
|
)
|
$
|
(4,577
|
)
|
$
|
(4,290
|
)
|
$
|
2,271
|
$
|
764
|
$
|
1,276
|
$
|
4,629
|
As
of December 31,
|
As
of September
30,
|
||||||||||||||||||
2000
|
2001
|
2002
|
2003
|
2004
|
2005
|
||||||||||||||
(unaudited)
(in thousands) |
|||||||||||||||||||
Balance
Sheet Data:
|
|||||||||||||||||||
Cash
and cash equivalents
|
$
|
4
|
$
|
152
|
$
|
146
|
$
|
1,299
|
$
|
7,344
|
$
|
3,909
|
|||||||
Total
assets
|
2,360
|
12,465
|
34,778
|
53,662
|
80,192
|
129,562
|
|||||||||||||
Long-term
debt (including current portion)
|
—
|
7,856
|
21,221
|
32,233
|
30,473
|
56,127
|
|||||||||||||
Stockholders’
equity
|
2,348
|
1,250
|
1,009
|
4,541
|
35,109
|
57,376
|
(1) |
We
entered the oilfield services business in 2001. We sold our last
non-oilfield services business in December 2001, which is reflected
in our
financial statements for 2001 as a discontinued
operation.
|
•
|
The
addition of experienced accounting personnel with appropriate experience
and qualifications to perform quality review procedures and to
satisfy our
financial reporting obligations. During August 2004, we hired a
new chief
financial officer and in October of 2004 we hired a full-time in-house
general counsel. In March 2005, we hired a certified public accountant
as
our financial reporting manager and in July 2005 we hired as chief
accounting officer a certified public accountant who has significant
prior
experience as a chief accounting officer of a publicly traded
company.
|
•
|
In
the fourth quarter of 2004, we engaged an independent internal
controls
consulting firm which is in the process of documenting, analyzing,
identifying and correcting weaknesses and testing our internal
controls
and procedures, including our controls over internal financial
reporting.
|
•
|
Our
audit committee dismissed our prior independent auditors in October
2004
and engaged new independent auditors who we believe have greater
experience with publicly traded companies.
|
•
|
We
are in the process of implementing new accounting software to facilitate
timely and accurate
reporting.
|
|
Revenues
|
Income
(Loss) from Operations
|
|||||||||||||||||
|
Nine
Months Ended September 30,
|
Nine
Months Ended September 30,
|
|||||||||||||||||
|
2004
|
2005
|
Change
|
2004
|
2005
|
Change
|
|||||||||||||
(in
thousands)
|
|||||||||||||||||||
Directional
drilling services
|
$
|
18,352
|
$
|
32,218
|
$
|
13,866
|
$
|
2,435
|
$
|
5,069
|
$
|
2,634
|
|||||||
Casing
and tubing services
|
7,218
|
12,596
|
5,378
|
2,174
|
4,015
|
1,841
|
|||||||||||||
Compressed
air drilling services
|
7,419
|
16,684
|
9,265
|
723
|
3,331
|
2,608
|
|||||||||||||
Production
services
|
—
|
6,833
|
6,833
|
—
|
(130
|
)
|
(130
|
)
|
|||||||||||
Rental
tools
|
—
|
3,499
|
3,499
|
—
|
780
|
780
|
|||||||||||||
General
corporate
|
—
|
—
|
—
|
(1,915
|
)
|
(4,380
|
)
|
(2,465
|
)
|
||||||||||
Total
|
$
|
32,989
|
$
|
71,830
|
$
|
38,841
|
$
|
3,417
|
$
|
8,685
|
$
|
5,268
|
|
Revenues
|
Income
(Loss) from Operations
|
|||||||||||||||||
|
Year
Ended December 31,
|
Year
Ended December 31,
|
|||||||||||||||||
|
2003
|
2004
|
Change
|
2003
|
2004
|
Change
|
|||||||||||||
(in
thousands)
|
|||||||||||||||||||
Directional
drilling services
|
$
|
16,008
|
$
|
24,787
|
$
|
8,779
|
$
|
1,103
|
$
|
3,061
|
$
|
1,958
|
|||||||
Casing
and tubing services
|
10,037
|
10,391
|
354
|
3,628
|
3,217
|
(411
|
)
|
||||||||||||
Compressed
air drilling services
|
6,679
|
11,561
|
4,882
|
17
|
1,169
|
1,152
|
|||||||||||||
Other
services
|
—
|
987
|
987
|
—
|
(67
|
)
|
(67
|
)
|
|||||||||||
General
corporate
|
—
|
—
|
—
|
(2,123
|
)
|
(3,153
|
)
|
(1,030
|
)
|
||||||||||
Total
|
$
|
32,724
|
$
|
47,726
|
$
|
15,002
|
$
|
2,625
|
$
|
4,227
|
$
|
1,602
|
|
Revenues
|
Income
(Loss) from Operations
|
|||||||||||||||||
|
2002
|
2003
|
Change
|
2002
|
2003
|
Change
|
|||||||||||||
(in
thousands)
|
|||||||||||||||||||
Directional
drilling services
|
$
|
6,529
|
$
|
16,008
|
$
|
9,479
|
$
|
(576
|
)
|
$
|
1,103
|
$
|
1,679
|
||||||
Casing
and tubing services
|
7,796
|
10,037
|
2,241
|
2,495
|
3,628
|
1,133
|
|||||||||||||
Compressed
air drilling services
|
3,665
|
6,679
|
3,014
|
(945
|
)
|
17
|
962
|
||||||||||||
General
corporate
|
—
|
—
|
—
|
(2,046
|
)
|
(2,123
|
)
|
(77
|
)
|
||||||||||
Total
|
$
|
17,990
|
$
|
32,724
|
$
|
14,734
|
$
|
(1,072
|
)
|
$
|
2,625
|
$
|
3,697
|
• |
A
$13.0 million revolving line of credit. Borrowings were limited
to 85% of
eligible accounts receivable plus 50% of eligible inventory (up
to a
maximum of $2.0 million of borrowings based on eligible inventory).
The
line of credit was to be used to finance working capital requirements
and
other general corporate purposes, including the issuance of standby
letters of credit. Outstanding borrowings under this line of credit
were
$3.7 million as of September 30,
2005.
|
• | Two term loans totaling $42.0 million. Outstanding borrowings under these term loans were $42.0 million as of September 30, 2005. |
|
Payments
by Periods
|
|||||||||||||||
|
Total
|
|
Less
than
1 Year |
|
2
— 3 Years
|
|
4
— 5 Years
|
|
After
5 Years |
|||||||
(in
thousands)
|
||||||||||||||||
Notes
payable
|
$
|
30,473
|
$
|
5,541
|
$
|
17,406
|
$
|
7,526
|
$
|
—
|
||||||
Interest
payments on notes payable
|
2,133
|
316
|
1,470
|
346
|
—
|
|||||||||||
Operating
lease
|
1,834
|
550
|
813
|
471
|
—
|
|||||||||||
Employment
contracts
|
2,566
|
1,006
|
1,560
|
—
|
—
|
|||||||||||
Total
contractual cash obligations
|
$
|
37,006
|
$
|
7,413
|
$
|
21,249
|
$
|
8,343
|
$
|
—
|
• |
producers
are more heavily favoring integrated suppliers that can provide
a broad,
comprehensive offering of products and services in many geographic
locations; in addition, many businesses in the highly fragmented
oilfield
services industry lack sufficient size, depth of management (many
businesses are family-owned and managed) and sophisticated service
and
control capabilities;
|
• | consolidation among larger oilfield services providers has created an opportunity for us to compete effectively in markets that are underserved by these larger suppliers; and |
• | based on technological advancements in drilling for oil and natural gas, producers are demanding higher quality service and equipment from their suppliers. |
•
|
improvement
of total cumulative recoverable reserves;
|
|
•
|
improved
reservoir production performance beyond conventional vertical wells;
and
|
|
•
|
reduction
of the number of field development wells.
|
Business
Segment
|
Location
|
Property
|
Directional
Drilling Services
|
Houston,
Texas
|
Operating
Location
|
Midland,
Texas
|
Operating
Location
|
|
Corpus
Christi, Texas
|
Operating
Location
|
|
Oklahoma
City, Oklahoma
|
Operating
Location
|
|
Compressed
Air Drilling Services
|
Houston,
Texas
|
Operating
Location
|
San
Angelo, Texas
|
Operating
Location
|
|
Fort
Stockton, Texas
|
Operating
Location
|
|
Farmington,
New Mexico
|
Operating
Location
|
|
Grand
Junction, Colorado
|
Operating
Location
|
|
Wilburton,
Oklahoma
|
Operating
Location
|
|
Casing
and Tubing Services
|
Alice,
Texas
|
Operating
Location
|
Edinburg,
Texas
|
Operating
Location
|
|
Victoria,
Texas
|
Operating
Location
|
|
Pearsall,
Texas
|
Operating
Location
|
|
Buffalo,
Texas
|
Operating
Location
|
|
Corpus
Christi, Texas
|
Operating
Location
|
|
Kilgore,
Texas
|
Operating
Location
|
|
Lafayette,
Louisiana
|
Operating
Location
|
|
Houma,
Louisiana
|
Operating
Location
|
|
Production
Services
|
Midland,
Texas
|
Operating
Location
|
Corpus
Christi, Texas
|
Operating
Location
|
|
Kilgore,
Texas
|
Operating
Location
|
|
Rental
Tools
|
Houston,
Texas
|
Operating
Location
|
Lafayette,
Louisiana
|
Operating
Location
|
|
General
Corporate
|
Houston,
Texas
|
Principal
Executive Offices
|
Name
|
Age
|
Position
|
Munawar
H. Hidayatallah
|
61
|
Chairman
and Chief Executive Officer
|
David
Wilde
|
50
|
President
and Chief Operating Officer
|
Victor
M. Perez
|
52
|
Chief
Financial Officer
|
Theodore
F. Pound III
|
51
|
General
Counsel and Secretary
|
Bruce
Sauers
|
42
|
Vice
President and Corporate Controller
|
Alya
H. Hidayatallah
|
30
|
Vice
President — Planning and Development
|
Terrence
P. Keane
|
53
|
President
and Chief Executive Officer of AirComp LLC
|
David
K. Bryan
|
48
|
President
and Chief Executive Officer of Strata Directional Technology,
Inc.
|
Jens
H. Mortensen, Jr.
|
52
|
Vice
Chairman
|
John
E. McConnaughy, Jr.
|
76
|
Director(1)
|
Victor
F. Germack
|
66
|
Director(1)
|
Thomas
E. Kelly
|
50
|
Director(2)
|
Thomas
O. Whitener, Jr.
|
58
|
Director(2)
|
Robert
E. Nederlander
|
72
|
Director(3)
|
Jeffrey
R. Freedman
|
58
|
Director(3)
|
Leonard
Toboroff
|
73
|
Vice
Chairman
|
(1)
|
Member
of Audit Committee.
|
(2)
|
Member
of Compensation Committee.
|
(3)
|
Member
of Nominating Committee.
|
Long
Term
|
||||||||||||||||
Compensation
|
||||||||||||||||
Annual
Compensation
|
Awards
Securities
|
|||||||||||||||
Other
Annual
|
Underlying
|
|||||||||||||||
Name
and Principal Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Compensation
(1)
|
Options/SARs
(#)
|
|||||||||||
Munawar
H. Hidayatallah,
|
2005
|
395,833
|
195,000
|
3,000
|
725,000
|
|||||||||||
Chairman &
Chief Executive Officer
|
2004
|
337,500(3)
|
|
580,000(2)
|
|
3,375
|
—
|
|||||||||
2003
|
300,000(4)
|
|
81,775
|
3,000
|
400,000
|
|||||||||||
David
Wilde,
|
2005
|
300,000
|
162,500
|
2,340
|
290,000
|
|||||||||||
President
and Chief Operating
|
2004
|
200,000
|
188,364
|
1,672
|
110,000
|
|||||||||||
Officer
(5)
|
2003
|
187,626
|
30,000
|
1,876
|
100,000
|
|||||||||||
Victor
M. Perez,
|
2005
|
180,000
|
60,000
|
600
|
45,000
|
|||||||||||
Chief
Financial Officer (6)
|
2004
|
105,000
|
5,500
|
2,500
|
55,000
|
|||||||||||
Terrence
P. Keane,
|
2005
|
164,000
|
16,150
|
1,640
|
50,000
|
|||||||||||
President
and Chief Executive Officer
|
2004
|
153,508
|
50,000
|
—
|
—
|
|||||||||||
of
AirComp (7)
|
2003
|
72,086
|
—
|
—
|
—
|
|||||||||||
David
Bryan
|
2005
|
176,917
|
160,456
|
1,849
|
40,000
|
|||||||||||
Divisional
President and Chief Executive
|
2004
|
156,050
|
68,750
|
1,800
|
—
|
|||||||||||
Officer
of Strata Directional Drilling
|
2003
|
105,000
|
—
|
4,050
|
30,000
|
|||||||||||
Todd
C. Seward,
|
2005
|
195,284
|
7,000
|
1,065
|
—
|
|||||||||||
Chief
Accounting Officer (9)
|
2004
|
131,000
|
65,500(8)
|
|
650
|
—
|
||||||||||
2003
|
123,192
|
40,000
|
1,232
|
30,000
|
(1)
|
Represents
contributions to 401K plans. We match contributions made by all employees
up to a maximum 1% of each employee’s salary.
|
|
(2)
|
Of
this amount $175,000 was paid in 2005. The bonuses awarded to
Mr. Hidayatallah for fiscal years 2002 and 2003 were determined
pursuant to his 2001 employment agreement, based on acquisitions
completed
for fiscal years 2002 and 2003, and the bonus for fiscal year 2004
was
based on Mr. Hidayatallah’s attaining certain strategic objectives
set forth in his 2004 employment agreement (see, “Employment Agreements
with Management,” below).
|
|
(3)
|
Of
this amount, $60,000 was deferred and paid during 2004.
|
|
(4)
|
Of
this amount, $65,000 was deferred and paid during 2003.
|
|
(5)
|
Mr. Wilde
was President and Chief Executive Officer of Strata, one of our
subsidiaries, until February 2005 when he was named our President
and
Chief Operating Officer.
|
|
(6)
|
Mr. Mortensen
served as President of Jens’ since we acquired Jens’ in February 2002
until February 2005 and served as our President and Chief Operating
Officer from February 2003 until February 2005.
|
|
(7)
|
Mr. Keane
serves as President and Chief Executive Officer of AirComp, LLC and
as
such is considered an executive officer.
|
|
(8)
|
Of
this amount, $32,500 was paid in 2005.
|
|
(9)
|
Mr. Seward
became our Vice President — Corporate Systems in July 2005, and
resigned in December 2005.
|
Individual
Grants
|
Potential
Realizable
Value at Assumed Annual |
|||||||||||||||||||||
|
|
Rates
of Stock Price
Appreciation for Option |
||||||||||||||||||||
Number
of Securities |
% of
Exercise Options/SARs |
Exercise
|
||||||||||||||||||||
Underlying
|
Granted to
|
Price
|
Terms
(3)
|
|||||||||||||||||||
Name
|
Options/SARs
Granted (1) |
Employees
in 2005 |
per
Share
($/Sh) (2) |
Expiration
Date |
5%
($)
|
10%
($)
|
||||||||||||||||
Munawar
Hidayatallah
|
125,000
|
7.47%
|
|
$
|
10.85
|
12/16/2015
|
$
|
852,938
|
$
2,161,513
|
|||||||||||||
600,000
|
35.86%
|
|
$
|
3.86
|
2/2/2015
|
$
|
1,456,520
|
$
3,691,108
|
||||||||||||||
David
Wilde
|
90,000
|
5.38%
|
|
$
|
10.85
|
12/16/2015
|
$
|
614,116
|
$
1,556,290
|
|||||||||||||
200,000
|
11.95%
|
|
$
|
3.86
|
2/2/2015
|
$
|
485,507
|
$
1,230,369
|
||||||||||||||
Victor
Perez
|
45,000
|
2.69%
|
|
$
|
10.85
|
12/16/2015
|
$
|
307,058
|
$
778,145
|
|||||||||||||
Terence
Keane
|
25,000
|
1.49%
|
|
$
|
4.87
|
5/25/2015
|
$
|
76,568
|
$
194,038
|
|||||||||||||
25,000
|
1.49%
|
|
$
|
10.85
|
12/16/2015
|
$
|
170,588
|
$
432,303
|
||||||||||||||
David
Bryan
|
20,000
|
1.20%
|
|
$
|
3.86
|
2/2/2015
|
$
|
48,551
|
$
123,037
|
|||||||||||||
20,000
|
1.20%
|
|
$
|
4.87
|
5/25/2015
|
$
|
61,254
|
$
155,231
|
||||||||||||||
Todd
Seward
|
—
|
—
|
—
|
(1)
|
All
options were granted under our 2003 Incentive Stock Plan. All options
granted by us to date vest and become exercisable in three equal
installments, one of which vested upon the grant of the options and
one of
which will vest upon each of the first and second anniversaries of
the
date of grant of option, provided that all options will become fully
exercisable upon the occurrence of a change of control (as defined
in the
2003 Incentive Stock Plan).
|
|
(2)
|
The
exercise price for these options is equal to the fair market value
of the
common stock on the date of grant. The exercise price may be paid
in cash
or in shares of common stock valued at the fair market value on the
exercise date.
|
|
(3)
|
The
5% and 10% assumed rates of appreciation are prescribed by the rules
and
regulations of the Securities and Exchange Commission and do not
represent
our estimate or projection of the future trading prices of our common
stock. The calculations assume annual compounding and continued retention
of the options or the underlying common stock by the optionee for
the full
option term of ten years. Unless the market price of the common stock
actually appreciates over the option term, no value will be realized
by
the optionee from these option grants. Actual gains, if any, on stock
option exercises are dependent on numerous factors, including, without
limitation, the future performance of the Company, overall business
and
market conditions, and the optionee’s continued employment with the
Company throughout the entire vesting period and option term, which
factors are not reflected in this table.
|
Number
of Securities
Underlying Unexercised Options/SARs
at
Fiscal Year-End
(#)
|
Value
of Unexercised
In-the-Money
Options/SARs
at
Fiscal Year-End
($)(1)
|
||||||||||||
Name
|
Exercisable
|
Unexercisable
|
Exercisable
|
Unexercisable
|
|||||||||
Munawar
H. Hidayatallah
|
841,667
|
283,333
|
7,399,501
|
1,856,995
|
|||||||||
David
Wilde
|
336,666
|
163,334
|
2,727,395
|
950,605
|
|||||||||
Victor
M. Perez
|
51,667
|
48,333
|
303,703
|
188,297
|
|||||||||
Terence
P. Keane
|
16,666
|
33,334
|
76,830
|
153,620
|
|||||||||
David
Bryan
|
50,000
|
20,000
|
457,066
|
158,734
|
|||||||||
Todd
C. Seward
|
20,000
|
—
|
194,400
|
21,500
|
(1)
|
Based
on a value of $12.47 per share, the closing price per share on the
American Stock Exchange on December 31, 2005, less the exercise
price.
|
|
•
|
restricting
dividends on the common stock;
|
|
•
|
diluting
the voting power of the common stock;
|
||
•
|
impairing
the liquidation rights of the common stock; and
|
||
•
|
delaying
or preventing a change in control of our Company.
|
•
|
our
chief executive officer and each of our four other most highly
compensated
executive officers as of December 31, 2005 (the “named executive
officers”);
|
•
|
each
of our other directors;
|
•
|
all
of our directors and executive officers as a group; and
|
•
|
each
other person known by us to be a beneficial owner of more than
5.0% of our
outstanding common stock.
|
Name
and Address
|
Number
of Shares
Beneficially Owned |
Beneficial
Ownership Percentage |
|||||
Named
Executive Officers:
|
|||||||
Munawar
H. Hidayatallah(1)
|
1,686,666
|
9.5
|
|||||
David
Wilde(2)
|
341,666
|
2.0
|
|||||
Victor
M. Perez(3)
|
51,666
|
*
|
|||||
Theodore
F. Pound III(4)
|
55,000
|
*
|
|||||
David
Bryan(5)
|
62,000
|
*
|
|||||
Directors:
|
|||||||
Jens
H. Mortensen, Jr.(6)
|
1,600,591
|
9.4
|
|||||
John
E. McConnaughy, Jr.(7)
|
100,000
|
*
|
|||||
Victor
F. Germack(8)
|
—
|
—
|
|||||
Thomas
E. Kelly(9)
|
14,201
|
*
|
|||||
Thomas
O. Whitener, Jr.(10)
|
—
|
—
|
|||||
Robert
E. Nederlander(11)
|
717,594
|
4.2
|
|||||
Jeffrey
R. Freedman(12)
|
119,000
|
*
|
|||||
Leonard
Toboroff(13)
|
695,594
|
4.1
|
|||||
All
directors and executive officers as a group
(16 persons)
|
5,482,976
|
29.3
|
|||||
Other
5% Holders:
|
|||||||
Palo
Alto Investors(14)
|
2,308,967
|
13.7
|
|||||
Steve
Emerson(15)
|
1,065,900
|
6.3
|
(1)
|
Mr.
Hidayatallah is the trustee of the Hidayatallah Family Trust, which
is the
record owner of 845,000 shares of our common stock, and Mr. Hidayatallah
holds options to purchase 1,125,000 shares of common stock, of
which
options to purchase 841,666 shares are exercisable within 60 days.
Mr.
Hidayatallah’s address is 5075 Westheimer, Suite 890, Houston, TX
77056.
|
(2)
|
Includes
(a) 5,000 shares of common stock owned of record by Mr. Wilde and
(b)
options to purchase 500,000 shares of common stock, of which 336,666
are
exercisable within 60 days. Mr. Wilde’s address is 5075 Westheimer, Suite
890, Houston, TX 77056.
|
(3)
|
Includes
options to purchase 100,000 shares of common stock, of which 51,666
are
exercisable within 60 days. Mr. Perez’s address is 5075 Westheimer, Suite
890, Houston, TX 77056.
|
(4)
|
Includes
(a) 5,000 shares of common stock of record by Mr. Pound and (b)
options to
purchase 100,000 shares of common stock, of which 50,000 are exercisable
within 60 days. Mr. Pound’s address is 5075 Westheimer, Suite 890,
Houston, TX 77056.
|
(5)
|
Includes
(a) 12,000 shares of common stock owned of record by Mr. Bryan
and (b)
options to purchase 70,000 shares of common stock, of which 50,000
are
exercisable within 60 days. Mr. Bryan’s address is 5075 Westheimer, Suite
890, Houston, TX 77056.
|
(6)
|
Includes
(a) 1,500,591 shares of common stock owned of record by Mr. Mortensen
and
(b) options to purchase 100,000 shares of common stock, all of
which are
exercisable within 60 days. Mr. Mortensen’s address is 5075 Westheimer,
Suite 890, Houston, TX 77056.
|
(7)
|
Mr.
McConnaughy’s address is 2 Parklands Drive, Darien, CT
06820.
|
(8)
|
Mr.
Germack’s address is 845 3rd Avenue, Suite 1410, New York, NY
10022.
|
(9)
|
Mr.
Kelly’s address is 450 North Marienfield, Suite 200, Midland, TX
79701.
|
(10)
|
Mr.
Whitener’s address is 5956 Sherry Lane, Suite 900, Dallas, TX
75225.
|
(11)
|
Includes
(a) 446,527 shares of common stock owned directly by Mr. Nederlander
or by
RER Corp. or QEN Corp., corporations controlled by Mr. Nederlander,
and
(b) currently exercisable options and warrants to purchase 271,067
shares
of common stock owned directly by Mr. Nederlander or RER Corp.
Mr.
Nederlander’s address is 1450 Broadway, Suite 2001, New York, NY
10018.
|
(12)
|
Mr.
Freedman’s address is 123 Via Verde Way, Palm Beach, FL
33418.
|
(13)
|
Includes
(a) 595,194 shares of common stock owned directly by Mr. Toboroff
or Lenny
Corp., a corporation wholly-owned by Mr. Toboroff, and (b) currently
exercisable options to purchase 100,400 shares of common stock
owned
directly by Mr. Toboroff. Mr. Toboroff’s address is 1450 Broadway, Suite
2001, New York, NY 10018.
|
(14)
|
Consists
of 1,091,000 shares, 84,000 shares and 1,133,967 shares owned by
Micro Cap
Partners, L.P., UBTI Free, L.P. and Palo Alto Global Energy Fund,
L.P.,
respectively. Palo Alto Investors, LLC acts as the general partner
of
Micro Cap Partners, L.P., UBTI Free, L.P. and Palo Alto Global
Energy
Fund, L.P. Palo Alto Investors, Inc. is the manager of Palo Alto
Investors, LLC, and William L. Edwards is the President of Palo
Alto
Investors, Inc. Palo Alto Investors, LLC, Palo Alto Investors,
Inc. and
William L. Edwards each have investment and voting authority with
respect
to the shares owned by this stockholder. The business address for
each of
these persons is 470 University Avenue, Palo Alto, CA
94301.
|
(15)
|
Consists
of certain shares owned by J. Steven Emerson IRA RO II, Bear Stearns
Securities Corporation, Custodian, J. Steven Emerson Roth IRA,
Bear
Stearns Securities Corporation, Custodian, and Emerson Partners,
respectively. J. Steven Emerson has investment and voting authority
with
respect to the shares owned by J. Steven Emerson IRA RO II, Bear
Stearns
Securities Corporation, Custodian, J. Steven Emerson Roth IRA,
Bear
Stearns Securities Corporation, Custodian and Emerson Partners,
Bear
Stearns Securities Corporation, Custodian. Mr. Emerson’s business address
is 1522 Ensley Avenue, Los Angeles, CA
90024.
|
Name
|
Common
Stock
Owned
Prior To
The
Offering
|
Common
Stock
Being
Offered
Pursuant
To This
Prospectus
|
Common
Stock
Owned
Upon
Completion
Of
This
Offering
|
Percentage
Of
Common
Stock Owned
Upon
Completion
Of
This Offering
(1)
|
|
|
|
|
|
Bear
Stearns Securities Corp.,
Custodian J. Steven Emerson
Roth IRA (2)
|
560,300
|
560,300
|
0
|
--
|
Bear
Stearns Securities Corp.,
Custodian J. Steven Emerson
Roth IRA R.O. II (3)
|
455,600
|
455,600
|
0
|
--
|
Emerson
Partners (4)
|
50,000
|
50,000
|
0
|
--
|
Christopher
Engel (5)
|
124,950
|
124,950
|
0
|
--
|
Donald
Engel (6)
|
212,893
|
212,893
|
0
|
--
|
Engle
Defined Benefit Plan (7)
|
83,027
|
83,027
|
0
|
--
|
Jeffrey
Freedman (8)
|
119,000
|
119,000
|
0
|
--
|
Hidayatallah
Family Trust (9)
|
845,000
|
845,000
|
0
|
--
|
Munawar
H. Hidayatallah (10)
|
1,000,000
|
1,000,000
|
0
|
--
|
Nadia
Hidayatallah
|
5,000
|
5,000
|
0
|
--
|
Alya
Hidayatallah
|
5,000
|
5,000
|
0
|
--
|
Yasmin
Indrizzo
|
2,000
|
2,000
|
0
|
--
|
Lenny
Corp. (11)
|
17,862
|
17,862
|
0
|
--
|
Morgan
Keegan Investment
Fund, L.P. (12)
|
36,600
|
36,600
|
0
|
--
|
May
Management, Inc.
|
|
|
|
|
Bank of California, Custodian(13)
|
10,000
|
10,000
|
0
|
--
|
Micro
Cap Partners, L.P.(14)
|
920,000
|
920,000
|
0
|
|
Jens
H. Mortensen (15)
|
1,400,000
|
1,400,000
|
0
|
|
Robert
Nederlander (16)
|
174,400
|
174,400
|
0
|
|
Palo
Alto Global Energy
Fund, L.P.(17)
|
666,667
|
666,667
|
0
|
|
QEN,
Inc. (18)
|
17,862
|
17,862
|
0
|
|
RER
Corp. (19)
|
523,332
|
523,332
|
0
|
|
Strauss-GEPT
Partners, LP(20)
|
124,333
|
124,333
|
0
|
|
Strauss
Partners, L.P.(20)
|
136,500
|
136,500
|
0
|
|
Leonard
Toboroff(21)
|
577,732
|
577,732
|
0
|
|
UBTI
Free, L.P.(22)
|
80,000
|
80,000
|
0
|
Name
|
Common
Stock
Owned
Prior To
The
Offering
|
Common
Stock
Being
Offered
Pursuant
To This
Prospectus
|
Common
Stock
Owned
Upon
Completion
Of
This
Offering
|
Percentage
Of
Common
Stock Owned
Upon
Completion
Of
This Offering
(1)
|
Wells
Fargo Energy Capital, Inc.(23)
|
67,000
|
67,000
|
0
|
--
|
420,667
|
420,667
|
0
|
--
|
|
Milton
H. Dresner Revocable Living
Trust(25)
|
51,125
|
50,000
|
1,125
|
--
|
Joseph
S. Dresner(26)
|
51,125
|
50,000
|
1,125
|
--
|
Waverly
Limited Partnership(27)
|
100,000
|
100,000
|
0
|
--
|
Rosebury,
L.P.(28)
|
101,900
|
101,900
|
0
|
--
|
Meteoric,
L.P.(28)
|
90,100
|
90,100
|
0
|
--
|
The
Schmieding Foundation(29)
|
69,800
|
69,800
|
0
|
--
|
Meadowbrook
Opportunity
Fund LLC(30)
|
77,200
|
77,200
|
0
|
--
|
Kenneth
Malkes(31)
|
6,667
|
6,666
|
0
|
--
|
John
E. McConnaughy (32)
|
100,000
|
100,000
|
0
|
--
|
Bestin
Worldwide Limited
|
100,000
|
100,000
|
0
|
--
|
Theodore
F. Pound III
|
5,000
|
5,000
|
0
|
--
|
Dave
Wilde
|
5,000
|
5,000
|
0
|
--
|
Dick
Backset
|
5,000
|
5,000
|
0
|
--
|
David
K. Bryan
|
12,000
|
12,000
|
0
|
--
|
James
Davey
|
3,000
|
3,000
|
0
|
--
|
Total
Number of Shares Being Offered
|
9,411,391
|
|||
(1)
|
Percentage
ownership is based upon 14,022,800 shares of common stock of the
Registrant issued and outstanding as of the date of this prospectus.
|
||
|
|
||
(2)
|
J.
Steven Emerson exercises investment and voting authority over the
shares
owned by this selling stockholder.
|
||
|
|
||
(3)
|
J.
Steven Emerson exercises investment and voting authority over the
shares
owned by this selling stockholder.
|
||
|
|
||
(4)
|
J.
Steven Emerson exercises investment and voting authority over the
shares
owned by this selling stockholder.
|
||
|
|
||
(5)
|
Includes
77,461 shares owned by this selling stockholder and 99,950 shares
which
may be issued upon the exercise of warrants owned by this selling
stockholder with an exercise price of $2.50 per share. These warrants
expire on April 1, 2006.
|
||
|
|
||
(6)
|
Includes
212,893 shares owned by this selling stockholder.
|
||
|
|
||
(7)
|
Includes
83,027 shares owned by this selling stockholder. Chris Engel exercises
investment and voting authority with respect to securities owned
by Engel
Defined Benefit Plan.
|
||
|
|
(8)
|
Includes
120,000 shares owned by this selling stockholder.
|
|
|
|
|
(9)
|
Mr.
Hidayatallah, our Chief Executive Officer and Chairman, exercises
investment and voting authority with respect to 875,000 shares of
common
stock owned by the Hidayatallah Family Trust.
|
|
|
|
|
(10)
|
Represents
options to purchase 1,000,000 shares issued pursuant to our 2003
Incentive
Stock Plan. Options to purchase 400,000 shares have an exercise price
of
$2.75 per share and expire in December 2013. Options to purchase
600,000
shares have an exercise price of $3.86 per share and expire in February
2015. The options are currently exercisable with respect to 800,000
shares.
|
|
|
|
|
(11)
|
Includes
17,862 shares owned by this selling stockholder. Leonard Toboroff,
one of
our directors and selling stockholder, is the sole director and officer
of
this selling stockholder and exercises investment and voting authority
with respect to the securities owned by this selling stockholder.
|
|
|
|
|
(12)
|
Merchant
Bankers, Inc. is the general partner of this selling stockholder.
Merchant
Bankers, Inc., its Chairman, Alan B. Morgan, its President, Minor
Perkins,
and its Secretary and Treasurer, Joseph C. Wells, exercise investment
and
voting authority with respect to the securities owned by this selling
stockholder.
|
|
|
|
|
(13)
|
May
Management, Inc., its President, Roger May, and its Chairman, Earl
May,
exercise investment and voting authority with respect to the securities
owned by this selling stockholder.
|
|
|
|
|
(14)
|
Palo
Alto Investors, LLC, Palo Alto Investors Inc. and William L. Edwards
exercise investment and voting authority with respect to the securities
owned by this selling stockholder. Palo Alto Investors, LLC is the
general
partner of this selling stockholder. Palo Alto Investors, Inc. is
the
Manager of Palo Alto Investors, LLC. William L. Edwards is the President
of Palo Alto Investors, Inc.
|
|
|
|
|
(15)
|
Includes
1,565,591 shares owned by Mr. Mortensen and 100,000 shares which
may be
issued upon the exercise of options granted to Mr. Mortensen pursuant
to
our 2003 Incentive Stock Plan. The options have an exercise price
of $2.75
and expire in December 2013. The options are currently
exercisable.
|
|
|
|
|
(16)
|
Includes
174,400 shares owned by this selling stockholder.
|
|
|
|
|
(17)
|
Palo
Alto Investors, LLC, Palo Alto Investors Inc. and William L. Edwards
exercise investment and voting authority with respect to the securities
owned by this selling stockholder. Palo Alto Investors, LLC is the
general
partner of this selling stockholder. Palo Alto Investors, Inc. is
the
Manager of Palo Alto Investors, LLC. William L. Edwards is the President
of Palo Alto Investors, Inc.
|
|
|
|
|
(18)
|
Includes
17,862 shares owned by this selling stockholder. Robert E. Nederlander,
one of our directors, exercises investment and voting authority with
respect to the securities owned by this selling stockholder.
|
|
|
|
|
(19)
|
Includes
523,332 shares owned by this selling stockholder. Robert E. Nederlander,
one of our directors, exercises investment and voting authority with
respect to the securities owned by this selling stockholder.
|
|
|
||
(20)
|
Melville
Straus is the Managing Principal and exercises investment and voting
authority with respect to the securities owned by this selling
stockholder.
|
|
|
|
|
(21)
|
Includes
677,332 shares owned by this selling stockholder and 400 shares which
may
be issued upon exercise of options owned by this selling stockholder.
The
options have an exercise price of $13.75 per share and expire in
March
2010. Mr. Toboroff is one of our directors.
|
|
|
|
|
(22)
|
Palo
Alto Investors, LLC, Palo Alto Investors Inc. and its President William
L.
Edwards exercise investment and voting authority with respect to
the
securities owned by this stockholder. Palo Alto Investors, LLC is
the
general partner of this selling stockholder. Palo Alto Investors,
Inc. is
the Manager of Palo Alto Investors, LLC.
|
(23)
|
Represents
shares which may be issued upon exercise of warrants owned by this
selling
stockholder. The warrants have an exercise price of $5.00 per share
and
expire in February 2012. This selling stockholder is a wholly-owned
subsidiary of Wells Fargo & Company, a publicly-traded bank holding
company.
|
|
|
|
|
(24)
|
Transcontinental
Capital and its President, Rolando Gonzalez Bunster, exercise investment
and voting authority with respect to the securities owned by this
selling
stockholder.
|
|
|
|
|
(25)
|
Milton
H. Dresner exercises investment and voting authority with respect
to the
securities owned by this selling stockholder.
|
|
|
|
|
(26)
|
Joseph
S. Dresner exercises investment and voting authority with respect
to the
securities owned by this selling stockholder.
|
|
|
|
|
(27)
|
Graham
R. Smith is the managing general partner of and exercises investment
and
voting authority with respect to the securities owned by this selling
stockholder.
|
|
|
|
|
(28)
|
Guild
Investment Management, Inc. and its President, Anthony R. Danaher,
exercise investment and voting authority with respect to the securities
owned by this selling stockholder.
|
|
|
|
|
(29)
|
L.H.
Schmieding is Chief Executive Officer of The Schmieding Foundation,
and
exercises investment and voting authority with respect to, the
securities
owned by this selling stockholder.
|
|
|
|
|
(30)
|
MYR
Pautreus, LLC and its Managing Member, Michael Ragins, exercise
investment
and voting authority with respect to the securities owned by this
selling
stockholder.
|
|
|
|
|
(31)
|
Kenneth
Malkes exercises investment and voting authority with respect to
the
securities owned by this selling stockholder.
|
|
(32)
|
Mr.
McConnaughy is one of our
directors.
|
·
|
Ordinary
brokerage transactions and transactions in which the broker-dealer
solicits purchasers;
|
·
|
Block
trades in which the broker-dealer will attempt to sell the shares
as agent
but may position and resell a portion of the block as principal
to
facilitate the transaction;
|
·
|
Purchases
by a broker-dealer as principal and resale by the broker-dealer
for its
account;
|
·
|
An
exchange distribution in accordance with the rules of the applicable
exchange;
|
·
|
Privately
negotiated transactions;
|
·
|
Settlement
of put or call option transactions;
|
·
|
Settlement
of short sales;
|
·
|
Broker-dealers
may agree with the selling stockholders to sell a specified number
of such
shares at a stipulated price per share;
|
·
|
A
combination of any such methods of sale; and
|
·
|
Any
other method permitted pursuant to applicable law.
|
ALLIS-CHALMERS
ENERGY INC.
|
|
Reports
of Independent Registered Public Accounting Firms
|
F-3
|
Consolidated
Balance Sheets as of December 31, 2004 and 2003
|
F-5
|
Consolidated
Statements of Operations for the Years Ended December 31,
2004, December
31, 2003 and December 31, 2002
|
F-6
|
Consolidated
Statement of Stockholders’ Equity for the Years Ended December 31, 2004,
December 31, 2003 and December 31, 2002
|
F-7
|
Consolidated
Statements of Cash Flows for the Years Ended December 31,
2004, December
31, 2003 and December 31, 2002
|
F-8
|
Notes
to Consolidated Financial Statements
|
F-9
|
Consolidated
Balance Sheets as of September 30, 2005 (unaudited) and December
31,
2004
|
F-46
|
Consolidated
Statements of Operations for the Three and Nine Months Ended
September 30,
2005 and September 30, 2004 (unaudited)
|
F-47
|
Consolidated
Statements of Cash Flows for the Nine Months Ended September
30, 2005 and
September 30, 2004 (unaudited)
|
F-48
|
Notes
to Unaudited Consolidated Financial Statements
|
F-49
|
DIAMOND
AIR DRILLING SERVICES, INC.
|
|
Independent
Auditor’s Reports
|
F-62
|
Balance
Sheets as of July 31, 2004 and December 31, 2003 and 2002
|
F-64
|
Statements
of Income for the Seven Months Ended July 31, 2004 and the
Years Ended
December 31, 2003 and 2002
|
F-65
|
Statements
of Stockholders’ Equity for the Seven Months Ended July 31, 2004 and the
Years Ended December 31, 2003 and 2002
|
F-66
|
Statements
of Cash Flows for the Seven Months Ended July 31, 2004 and
the Years Ended
December 31, 2003 and 2002
|
F-67
|
Notes
to Financial Statements
|
F-68
|
MARQUIS
BIT CO., LLC
|
|
Independent
Auditor’s Report
|
F-74
|
Balance
Sheets as of July 31, 2004 and December 31, 2003 and 2002
|
F-76
|
Statements
of Income and Members’ Equity for the Seven Months Ended July 31, 2004,
the Year Ended December 31, 2003 and the Period
from
Inception, October 1, 2002, through December 31, 2002
|
F-77
|
Statements
of Cash Flows for the Seven Months Ended July 31, 2004, the
Year Ended
December 31, 2003 and the Period from Inception,
October
1, 2002, through December 31, 2002
|
F-78
|
Notes
to Financial Statements
|
F-79
|
DOWNHOLE
INJECTION SERVICES, LLC
|
|
Independent
Auditors’ Report
|
F-82
|
Balance
Sheets as of November 30, 2004 and December 31, 2003
|
F-83
|
Statements
of Operations and Members’ Equity for the Eleven Months Ended November 30,
2004 and the Year Ended December 31, 2003
|
F-84
|
Statements
of Cash Flows for the Eleven Months Ended November 30, 2004
and the Year
Ended December 31, 2003
|
F-85
|
Notes
to Financial Statements
|
F-86
|
DELTA
RENTAL SERVICE, INC.
|
|
Independent
Auditor’s Report
|
F-92
|
Balance
Sheets as of December 31, 2004 and 2003
|
F-93
|
Statements
of Operations for the Years Ended December 31, 2004 and
2003
|
F-95
|
Statements
of Retained Earnings for the Years Ended December 31, 2004
and
2003
|
F-96
|
Statements
of Cash Flows for the Years Ended December 31, 2004 and
2003
|
F-97
|
Notes
to Financial Statements
|
F-98
|
Unaudited
Balance Sheet as of March 31, 2005
|
F-102
|
Unaudited
Statements of Operations for the Three Months Ended March
31, 2005 and
2004
|
F-103
|
Unaudited
Statement of Retained Earnings for the Three Months Ended
March 31, 2005
and 2004
|
F-104
|
Unaudited
Statements of Cash Flows for the Three Months Ended March
31, 2005 and
2004
|
F-105
|
CAPCOIL
TUBING SERVICES, INC.
|
|
Independent
Auditor’s Report
|
F-106
|
Balance
Sheets as of December 31, 2004 and 2003
|
F-107
|
Statements
of Operations and Retained Earnings for the Years Ended December
31, 2004
and 2003
|
F-109
|
Statements
of Cash Flows for the Years Ended December 31, 2004 and
2003
|
F-110
|
Notes
to Financial Statements
|
F-111
|
Independent
Auditors’ Report on Additional Information
|
F-118
|
Statements
of Operations with Additional Information
|
F-119
|
Unaudited
Balance Sheet as of March 31, 2005
|
F-121
|
Unaudited
Statement of Income and Retained Earnings for the Three Months
Ended March
31, 2005 and 2004
|
F-122
|
Unaudited
Statements of Cash Flows for the Three Months Ended March
31, 2005 and
2004
|
F-123
|
W.
T. ENTERPRISES, INC.
|
|
Independent
Auditor’s Report
|
F-124
|
Balance
Sheets as of March 31, 2005, December 31, 2004 and 2003
|
F-125
|
Statements
of Income for the Three Months Ended March 31, 2005, and
Years Ended
December 31, 2004 and 2003
|
F-126
|
Statements
of Stockholders’ Equity for the Three Months Ended March 31, 2005, and
Years Ended December 31, 2004 and 2003
|
F-127
|
Statements
of Cash Flows for the Three Months Ended March 31, 2005,
and Years Ended
December 31, 2004 and 2003
|
F-128
|
Notes
to Financial Statements
|
F-129
|
Unaudited
Balance Sheet as of June 30, 2005
|
F-133
|
Unaudited
Statements of Income and Retained Earnings for the Six Months
ended June
30, 2005 and June 30, 2004
|
F-134
|
Unaudited
Schedule of Cost of Revenue and Operating Expenses for the
Six Months
ended June 30, 2005 and June 30, 2004
|
F-135
|
Unaudited
Statements of Cash Flows for the Six Months ended June 30,
2005 and June
30, 2004
|
F-136
|
SPECIALTY
RENTAL TOOLS, INC.
|
|
Independent
Auditors’ Report
|
F-137
|
Balance
Sheets as of September 30, 2005 and December 31, 2004 and
2003
|
F-138
|
Statements
of Income for the Nine Months Ended September 30, 2005 and
the Years Ended
December 31, 2004 and 2003
|
F-138
|
Statements
of Shareholder’s Equity for the Nine Months Ended September 30, 2005 and
the Years Ended December 31, 2004 and 2003
|
F-139
|
Statements
of Cash Flows for the Nine Months Ended September 30, 2005
and the Years
Ended December 31, 2004 and 2003
|
F-139
|
Notes
to Financial Statements
|
F-140
|
Supplemental
Information
|
|
Schedule
I — Schedule of General and Administrative Expenses
|
F-143
|
PRO
FORMA FINANCIAL INFORMATION
|
|
Unaudited
Pro Forma Consolidated Condensed Statement of Financial Position
as of
September 30, 2005
|
F-144
|
Unaudited
Pro Forma Consolidated Condensed Statement of Operations
for the Year
Ended December 31, 2004
|
F-145
|
Unaudited
Pro Forma Consolidated Condensed Statement of Operations
for the Nine
Months Ended September 30, 2005
|
F-146
|
Unaudited
Pro Forma Consolidated Condensed Statement of Operations
for the Twelve
Months Ended September 30, 2005
|
F-147
|
Notes
to Unaudited Pro Forma Consolidated Condensed Financial
Statements
|
F-148
|
/s/ UHY Mann Frankfort Stein & Lipp CPAs, LLP | |
|
/s/ GORDON, HUGHES & BANKS, LLP | |
|
December 31,
|
||||||||||
2004
|
2003
|
|||||||||
(restated)
|
||||||||||
(in
thousands, except
|
||||||||||
for
share amounts)
|
||||||||||
ASSETS | ||||||||||
Cash and cash
equivalents
|
$ | 7,344 | $ | 1,299 | ||||||
Trade receivables,
net
of allowance for doubtful accounts of $265 and $168 at December 31,
2004 and 2003, respectively
|
12,986 | 8,823 | ||||||||
Inventory
|
2,373 | — | ||||||||
Lease receivable,
current
|
180 | 180 | ||||||||
Prepaid expenses
and
other
|
1,495 | 887 | ||||||||
Total current
assets
|
24,378 | 11,189 | ||||||||
Property and
equipment,
at costs net of accumulated depreciation of $5,251 and $2,586
at
December 31, 2004 and 2003, respectively
|
37,679 | 31,128 | ||||||||
Goodwill
|
11,776 | 7,661 | ||||||||
Other intangible
assets, net of accumulated amortization of $2,036 and $1,254
at
December 31, 2004 and 2003, respectively
|
5,057 | 2,290 | ||||||||
Debt issuance
costs,
net of accumulated amortization of $828 and $462 at December 31, 2004
and 2003, respectively
|
685 | 567 | ||||||||
Lease receivable,
less
current portion
|
558 | 787 | ||||||||
Other Assets
|
59 | 40 | ||||||||
Total assets
|
$ | 80,192 | $ | 53,662 | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||
Current maturities
of
long-term debt
|
$ | 5,541 | $ | 3,992 | ||||||
Trade accounts
payable
|
5,694 | 3,133 | ||||||||
Accrued salaries,
benefits and payroll taxes
|
615 | 591 | ||||||||
Accrued
interest
|
470 | 152 | ||||||||
Accrued
expenses
|
1,852 | 1,761 | ||||||||
Accounts payable,
related parties
|
740 | 787 | ||||||||
Total current
liabilities
|
14,912 | 10,416 | ||||||||
Accrued postretirement
benefit obligations
|
687 | 545 | ||||||||
Long-term debt,
net of
current maturities
|
24,932 | 28,241 | ||||||||
Other long-term
liabilities
|
129 | 270 | ||||||||
Redeemable
warrants
|
— | 1,500 | ||||||||
Redeemable
convertible
preferred stock, $0.01 par value (4,200,000 shares authorized;
3,500,000 issued and outstanding at December 31, 2003)($1 redemption
value) including accrued dividends
|
— | 4,171 | ||||||||
Total
liabilities
|
40,660 | 45,143 | ||||||||
Commitments
and
Contingencies (Note 9 and Note 21)
|
||||||||||
Minority
interests
|
4,423 | 3,978 | ||||||||
STOCKHOLDERS’ EQUITY (NOTE 10) | ||||||||||
Common stock,
$0.01 par value (20,000,000 shares authorized; 13,611,525 and
3,926,668 issue and outstanding at December 31, 2004 and
December 31, 2003, respectively
|
136 | 39 | ||||||||
Capital in
excess of
par value
|
40,331 | 10,748 | ||||||||
Accumulated
deficit
|
(5,358 | ) | (6,246 | ) | ||||||
Total stockholders’
equity
|
35,109 | 4,541 | ||||||||
Total liabilities
and
stockholders’ equity
|
$ | 80,192 | $ | 53,662 | ||||||
Years
Ended December 31,
|
|||||||||||||
2004
|
2003
|
2002
|
|||||||||||
(restated)
|
(restated)
|
||||||||||||
Revenues
|
$ | 47,726 | $ | 32,724 | $ | 17,990 | |||||||
Cost of
revenues
|
35,300 | 24,029 | 14,640 | ||||||||||
Gross margin
|
12,426 | 8,695 | 3,350 | ||||||||||
General and
administrative expense
|
8,011 | 6,169 | 3,792 | ||||||||||
Personnel restructuring
costs
|
— | — | 495 | ||||||||||
Abandoned
acquisition/private placement costs
|
— | — | 233 | ||||||||||
Post retirement
medical
costs
|
188 | (99 | ) | (98 | ) | ||||||||
Total operating
expenses
|
8,199 | 6,070 | 4,422 | ||||||||||
Income (loss)
from
operations
|
4,227 | 2,625 | (1,072 | ) | |||||||||
Other income
(expense):
|
|||||||||||||
Interest
income
|
32 | 3 | 49 | ||||||||||
Interest
expense
|
(2,808 | ) | (2,467 | ) | (2,256 | ) | |||||||
Minority interests
in
income of subsidiaries
|
(321 | ) | (343 | ) | (189 | ) | |||||||
Factoring costs
on note
receivable
|
— | — | (191 | ) | |||||||||
Settlement
on
lawsuit
|
— | 1,034 | — | ||||||||||
Gain on sale
of
interest in AirComp
|
— | 2,433 | — | ||||||||||
Other
|
272 | 12 | (40 | ) | |||||||||
Total other
income
(expense)
|
(2,825 | ) | 672 | (2,627 | ) | ||||||||
Net income
(loss)
before income taxes
|
1,402 | 3,297 | (3,699 | ) | |||||||||
Provision for
foreign
income tax
|
(514 | ) | (370 | ) | (270 | ) | |||||||
Net income
(loss)
|
888 | 2,927 | (3,969 | ) | |||||||||
Preferred stock
dividend
|
(124 | ) | (656 | ) | (321 | ) | |||||||
Net income
(loss)
attributed to common stockholders
|
$ | 764 | $ | 2,271 | $ | (4,290 | ) | ||||||
Income (loss)
per
common share — basic
|
$ | 0.10 | $ | 0.58 | $ | (1.14 | ) | ||||||
Income (loss)
per
common share — diluted
|
$ | 0.09 | $ | 0.50 | $ | (1.14 | ) | ||||||
Weighted average
number
of common shares outstanding:
|
|||||||||||||
Basic
|
7,930 | 3,927 | 3,766 | ||||||||||
Diluted
|
9,510 | 5,850 | 3,766 | ||||||||||
Common
Stock
|
Capital
in
|
|||||||||||||||||||
Excess
of
|
Accumulated
|
|||||||||||||||||||
Shares
|
Amount
|
Par
Value
|
Deficit
|
Total
|
||||||||||||||||
Balances,
December 31, 2001
|
2,317,626 | $ | 23 | $ | 6,431 | $ | (5,204 | ) | $ | 1,250 | ||||||||||
Issuance of
common
stock in connection with the purchase of Jens’
|
279,570 | 3 | 627 | — | 630 | |||||||||||||||
Issuance of
stock
purchase warrants in connection with the purchase of Jens’
|
— | — | 47 | — | 47 | |||||||||||||||
Issuance of
common
stock in connection with the purchase of Strata
|
1,311,972 | 13 | 2,939 | — | 2,952 | |||||||||||||||
Issuance of
stock
purchase warrants in connection with the purchase of Strata
|
— | — | 267 | — | 267 | |||||||||||||||
Issuance of
common
stock in connection with the purchase of Strata
|
17,500 | — | 153 | — | 153 | |||||||||||||||
Accrual of
preferred
dividends
|
— | — | (321 | ) | — | (321 | ) | |||||||||||||
Net (Loss)
|
— | — | — | (3,969 | ) | (3,969 | ) | |||||||||||||
Balances,
December 31, 2002
|
3,926,668 | $ | 39 | $ | 10,143 | $ | (9,173 | ) | $ | 1,009 | ||||||||||
Effect of consolidation
of AirComp
|
— | — | 955 | — | 955 | |||||||||||||||
Accrual of
preferred
dividends
|
— | — | (350 | ) | — | (350 | ) | |||||||||||||
Net Income
(RESTATED)
|
— | — | — | 2,927 | 2,927 | |||||||||||||||
Balances,
December 31, 2003, as restated (RESTATED)
|
3,926,668 | $ | 39 | $ | 10,748 | $ | (6,246 | ) | $ | 4,541 | ||||||||||
Issuance of
common
stock in connection with the $2 million equity raise
|
620,000 | 6 | 1,544 | — | 1,550 | |||||||||||||||
Issuance of
stock
purchase warrants in Connection with the $2 million equity
raise
|
— | — | 450 | — | 450 | |||||||||||||||
Issuance of
common
stock in Connection with the $16.4 million equity raise
|
5,461,301 | 55 | 14,056 | — | 14,111 | |||||||||||||||
Issuance of
stock
purchase warrants in Connection with the $16.4 million equity
raise
|
— | — | 641 | — | 641 | |||||||||||||||
Issuance of
common
stock in connection With the 19% conversion of Jens
|
1,300,000 | 13 | 6,421 | — | 6,434 | |||||||||||||||
Conversion
of preferred
stock
|
1,718,090 | 17 | 4,278 | — | 4,295 | |||||||||||||||
Issuance of
common
stock for services
|
14,000 | — | 97 | — | 97 | |||||||||||||||
Issuance of
common
stock for services
|
3,000 | — | 2 | — | 2 | |||||||||||||||
Issuance of
stock
purchase warrants in Connection with the issuance of debt
|
— | — | 47 | — | 47 | |||||||||||||||
Issuance of
common
stock for Purchase of Downhole Injector Systems
|
568,466 | 6 | 2,171 | — | 2,177 | |||||||||||||||
Accrual of
preferred
dividends
|
— | — | (124 | ) | — | (124 | ) | |||||||||||||
Net Income
|
— | — | — | 888 | 888 | |||||||||||||||
Balances,
December 31, 2004
|
13,611,525 | $ | 136 | $ | 40,331 | $ | (5,358 | ) | $ | 35,109 | ||||||||||
Years
Ended December 31,
|
||||||||||||
2004
|
2003
|
2002
|
||||||||||
|
||||||||||||
(restated)
|
||||||||||||
CASH FLOWS
FROM
OPERATING ACTIVITIES:
|
||||||||||||
Net income/
(loss)
|
$ | 888 | $ | 2,927 | $ | (3,969 | ) | |||||
Adjustments
to
reconcile net income/(loss) to net cash provided by operating
activities:
|
||||||||||||
Depreciation
expense
|
2,702 | 2,052 | 1,837 | |||||||||
Amortization
expense
|
876 | 884 | 744 | |||||||||
Issuance of
stock
options for services
|
14 | — | — | |||||||||
Amortization
of
discount on debt
|
350 | 516 | 475 | |||||||||
(Gain) on change
in PBO
liability
|
— | (125 | ) | — | ||||||||
(Gain) on settlement
of
lawsuit
|
— | (1,034 | ) | — | ||||||||
(Gain) on sale
of
interest in AirComp
|
— | (2,433 | ) | — | ||||||||
Minority interest
in
income of subsidiaries
|
321 | 343 | 189 | |||||||||
Loss on sale
of
property
|
— | 82 | 119 | |||||||||
Changes in
working
capital:
|
||||||||||||
Decrease (increase)
in
accounts receivable
|
(2,292 | ) | (4,414 | ) | (713 | ) | ||||||
Decrease (increase)
in
due from related party
|
(7 | ) | — | 61 | ||||||||
Decrease (increase)
in
other current assets
|
(612 | ) | (1,260 | ) | 1,644 | |||||||
Decrease (increase)
in
other assets
|
(19 | ) | 1 | 902 | ||||||||
Decrease (increase)
in
lease deposit
|
— | 525 | 176 | |||||||||
(Decrease)
increase in
accounts payable
|
1,140 | 2,251 | 1,316 | |||||||||
(Decrease)
increase in
accrued interest
|
299 | (126 | ) | 651 | ||||||||
(Decrease)
increase in
accrued expenses
|
(276 | ) | 397 | (339 | ) | |||||||
(Decrease)
increase in
other long-term liabilities
|
(141 | ) | — | (123 | ) | |||||||
(Decrease)
increase in
accrued employee benefits and payroll taxes
|
19 | 1,293 | (788 | ) | ||||||||
NET CASH PROVIDED
BY
OPERATING ACTIVITIES
|
3,262 | 1,879 | 2,182 | |||||||||
Cash flows
from
investing activities:
|
||||||||||||
Acquisition
of Jens’,
net of cash acquired
|
— | — | (8,120 | ) | ||||||||
Acquisition
of Strata,
net of cash acquired
|
— | — | (179 | ) | ||||||||
Acquisition
of
Safco
|
(947 | ) | — | — | ||||||||
Acquisition
of Diamond
Air, net of cash acquired
|
(2,530 | ) | — | — | ||||||||
Acquisition
of Downhole
Services, net of cash acquired
|
(982 | ) | — | — | ||||||||
Purchase of
equipment
|
(4,603 | ) | (5,354 | ) | (518 | ) | ||||||
Proceeds from
sale of
equipment
|
— | 843 | 367 | |||||||||
NET CASH USED
IN
INVESTING ACTIVITIES
|
(9,062 | ) | (4,511 | ) | (8,450 | ) | ||||||
Cash flows
from
financing activities:
|
||||||||||||
Proceeds from
issuance
of long-term debt
|
8,169 | 14,127 | 9,683 | |||||||||
Payments on
long-term
debt
|
(13,505 | ) | (10,826 | ) | (4,079 | ) | ||||||
Payments on
related
party debt
|
— | (246 | ) | — | ||||||||
Proceeds from
issuance
of common stock
|
16,883 | — | — | |||||||||
Borrowings
on lines of
credit
|
689 | 1,138 | 1,246 | |||||||||
Debt issuance
costs
|
(391 | ) | (408 | ) | (588 | ) | ||||||
NET CASH PROVIDED
BY
FINANCING ACTIVITIES
|
11,845 | 3,785 | 6,262 | |||||||||
NET INCREASE
(DECREASE) IN CASH AND CASH EQUIVALENTS
|
6,045 | 1,153 | (6 | ) | ||||||||
Cash and cash
equivalents:
|
||||||||||||
Beginning of
year
|
1,299 | 146 | 152 | |||||||||
END OF YEAR
|
$ | 7,344 | $ | 1,299 | $ | 146 | ||||||
SUPPLEMENTAL
INFORMATION:
|
||||||||||||
Interest paid
|
$ | 2,159 | $ | 2,341 | $ | 1,082 | ||||||
Foreign taxes
paid
|
$ | 514 | $ | 370 | $ | 270 | ||||||
Note 1 — | Nature of Business and Summary of Significant Accounting Policies |
For
the Year Ended
December 31,
|
|||||||||||||
2004
|
2003
|
2002
|
|||||||||||
(restated)
|
(restated)
|
||||||||||||
(in
thousands, except per share)
|
|||||||||||||
Net income/(loss):
As
reported
|
$ | 764 | $ | 2,271 | $ | (4,290 | ) | ||||||
Less total
stock based
employee compensation expense determined under fair value based
method for
all awards net of tax related effects
|
(1,072 | ) | (2,314 | ) | — | ||||||||
Pro-forma net
income
(loss) to common stockholders’
|
$ | (308 | ) | $ | (43 | ) | $ | (4,290 | ) | ||||
Net income/(loss)
per
share:
|
|||||||||||||
Basic As
reported
|
$ | 0.10 | $ | 0.58 | $ | (1.14 | ) | ||||||
Pro
forma
|
(0.04 | ) | (0.01 | ) | (1.14 | ) | |||||||
Diluted As
reported
|
$ | 0.09 | $ | 0.50 | $ | (1.14 | ) | ||||||
Pro
forma
|
(0.02 | ) | 0.10 | (1.14 | ) | ||||||||
For
the Year Ended
December 31,
|
||||||||||||
2004
|
2003
|
2002
|
||||||||||
Expected dividend
yield
|
— | — | — | |||||||||
Expected price
volatility
|
89.76 | % | 265.08 | % | — | |||||||
Risk-free interest
rate
|
7.0 | % | 6.25 | % | — | |||||||
Expected life
of
options
|
7 years | 7 years | — | |||||||||
Weighted average
fair
value of options granted at market value
|
$ | 3.19 | $ | 2.78 | $ | — |
2004
|
2003
|
|||||||||
(restated)
|
(restated)
|
|||||||||
(in
thousands, except
|
||||||||||
earnings
per share)
|
||||||||||
Year Ended
December 31,
|
||||||||||
Numerator:
|
||||||||||
Net income
available
for common stockholders
|
$ | 764 | $ | 2,271 | ||||||
Plus income
impact of
assumed conversions:
|
||||||||||
Preferred stock
dividends/interest
|
124 | 656 | ||||||||
Net income
(loss)
applicable to common stockholders Plus assumed conversions
|
$ | 888 | $ | 2,927 | ||||||
Denominator:
|
||||||||||
Denominator
for basic
earnings per share — weighted average shares outstanding
|
7,930 | 3,927 | ||||||||
Effect of potentially
dilutive common shares:
|
||||||||||
Convertible
preferred
stock and employee and director stock options
|
1,580 | 1,923 | ||||||||
Denominator
for diluted
earnings per share — weighted average shares outstanding and assumed
conversions
|
9,510 | 5,850 | ||||||||
Basic earnings
(loss)
per share
|
$ | 0.10 | $ | 0.58 | ||||||
Diluted earning
(loss)
per share
|
$ | 0.09 | $ | 0.50 | ||||||
Note 2 — | Restatement |
Three
Months Ended March 31,
2005
|
|||||||||||||
As
|
|||||||||||||
Previously
|
As
|
||||||||||||
Reported
|
Adjustments
|
Restated
|
|||||||||||
Income/(loss)
per
common share — diluted
|
$ | 0.09 | $ | 0.02 | $ | 0.11 | |||||||
Weighted average
number
of common shares outstanding —
|
|||||||||||||
diluted
|
17,789 | (3,094 | ) | 14,695 | |||||||||
Year
Ended December 31, 2004
|
|||||||||||||
As
|
|||||||||||||
Previously
|
As
|
||||||||||||
Reported
|
Adjustments
|
Restated
|
|||||||||||
Income/(loss)
per
common share — diluted
|
$ | 0.07 | $ | 0.02 | $ | 0.09 | |||||||
Weighted average
number
of common shares outstanding —
|
|||||||||||||
diluted
|
11,959 | (2,449 | ) | 9,510 | |||||||||
Three
Months Ended September 30,
2004
|
|||||||||||||
As
|
|||||||||||||
Previously
|
As
|
||||||||||||
Reported
|
Adjustments
|
Restated
|
|||||||||||
Income/(loss)
per
common share — basic
|
$ | 0.04 | $ | 0.02 | $ | 0.06 | |||||||
Income/(loss)
per
common share — diluted
|
$ | 0.04 | $ | 0.01 | $ | 0.05 | |||||||
Weighted average
number
of common shares outstanding:
|
|||||||||||||
Basic
|
11,599 | (3,301 | ) | 8,298 | |||||||||
Diluted
|
14,407 | (4,579 | ) | 9,828 | |||||||||
Three
Months Ended June 30,
2004
|
||||||||||||
As
|
||||||||||||
Previously
|
As
|
|||||||||||
Reported
|
Adjustments
|
Restated
|
||||||||||
Income/(loss)
per
common share — diluted
|
$ | 0.04 | $ | 0.01 | $ | 0.05 | ||||||
Weighted average
number
of common shares outstanding — diluted
|
10,237 | (2,618 | ) | 7,619 | ||||||||
Three
Months Ended March 31,
2004
|
||||||||||||
As
|
||||||||||||
Previously
|
As
|
|||||||||||
Reported
|
Adjustments
|
Restated
|
||||||||||
Income/(loss)
per
common share — diluted
|
$ | 0.05 | $ | 0.03 | $ | 0.08 | ||||||
Weighted average
number
of common shares outstanding — diluted
|
5,762 | 478 | 6,240 | |||||||||
Year
Ended December 31, 2003
|
||||||||||||
As
|
||||||||||||
Previously
|
As
|
|||||||||||
Reported
|
Adjustments
|
Restated
|
||||||||||
Income/(loss)
per
common share — diluted
|
$ | 0.39 | $ | 0.11 | $ | 0.50 | ||||||
Weighted average
number
of common shares outstanding — diluted
|
5,761 | 89 | 5,850 | |||||||||
Three
Months Ended September 30,
2003
|
||||||||||||
As
|
||||||||||||
Previously
|
As
|
|||||||||||
Reported
|
Adjustments
|
Restated
|
||||||||||
Income/(loss)
per
common share — diluted
|
$ | 0.60 | $ | (0.01 | ) | $ | 0.59 | |||||
Weighted average
number
of common shares outstanding — diluted
|
5,761 | 208 | 5,969 | |||||||||
At
December 31, 2003
|
||||||||||||
As
|
||||||||||||
Previously
|
Restatement
|
As
|
||||||||||
Reported
|
Adjustments
|
Restated
|
||||||||||
ASSETS | ||||||||||||
Cash and cash
equivalents
|
$ | 1,299 | $ | 1,299 | ||||||||
Trade receivables,
net
of allowance for doubtful accounts
|
8,823 | 8,823 | ||||||||||
Lease Receivable,
current
|
180 | 180 | ||||||||||
Prepaid expenses
and
other
|
887 | 887 | ||||||||||
Total current
assets
|
11,189 | 11,189 | ||||||||||
Property and
equipment,
net of accumulated depreciation
|
26,339 | 4,789 | 31,128 | |||||||||
Goodwill
|
7,661 | 7,661 | ||||||||||
Other intangible
assets, net of accumulated amortization
|
2,290 | 2,290 | ||||||||||
Debt issuance
costs,
net of accumulated amortization
|
567 | 567 | ||||||||||
Lease receivable,
less
current portion
|
787 | 787 | ||||||||||
Other Assets
|
40 | 40 | ||||||||||
Total Assets
|
$ | 48,873 | $ | 4,789 | $ | 53,662 | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||
Current maturities
of
long-term debt
|
$ | 3,992 | $ | 3,992 | ||||||||
Trade accounts
payable
|
3,133 | 3,133 | ||||||||||
Accrued salaries,
benefits and payroll taxes
|
591 | 591 | ||||||||||
Accrued
interest
|
152 | 152 | ||||||||||
Accrued
expenses
|
1,761 | 1,761 | ||||||||||
Accounts payable,
related parties
|
787 | 787 | ||||||||||
Total current
liabilities
|
10,416 | 10,416 | ||||||||||
Accrued postretirement
benefit obligations
|
545 | 545 | ||||||||||
Long-term debt,
net of
current maturities
|
28,241 | 28,241 | ||||||||||
Other long-term
liabilities
|
270 | 270 | ||||||||||
Redeemable
warrants
|
1,500 | 1,500 | ||||||||||
Redeemable
convertible
preferred stock including accrued dividends
|
4,171 | 4,171 | ||||||||||
Total
liabilities
|
45,143 | 45,143 | ||||||||||
Commitments
and
Contingencies
|
||||||||||||
Minority
interests
|
2,523 | 1,455 | 3,978 | |||||||||
COMMON STOCKHOLDERS’
EQUITY
|
||||||||||||
Common stock
|
39 | 39 | ||||||||||
Capital in
excess of
par value
|
9,793 | 955 | 10,748 | |||||||||
Accumulated
(deficit)
|
(8,625 | ) | 2,379 | (6,246 | ) | |||||||
Total stockholders’
equity
|
1,207 | 3,334 | 4,541 | |||||||||
Total liabilities
and
stockholders’ equity
|
$ | 48,873 | $ | 4,789 | $ | 53,662 | ||||||
Year
Ended December 31, 2003
|
|||||||||||||
As
|
|||||||||||||
Previously
|
Restatement
|
As
|
|||||||||||
Reported
|
Adjustments
|
Restated
|
|||||||||||
Revenues
|
$ | 32,724 | — | $ | 32,724 | ||||||||
Cost of
revenues
|
23,931 | 98 | 24,029 | ||||||||||
Gross margin
|
8,793 | (98 | ) | 8,695 | |||||||||
General and
administrative expense
|
6,169 | — | 6,169 | ||||||||||
Income/ (loss)
from
operations
|
2,624 | (98 | ) | 2,526 | |||||||||
Other income
(expense):
|
|||||||||||||
Interest
income
|
3 | — | 3 | ||||||||||
Interest
expense
|
(2,467 | ) | — | (2,467 | ) | ||||||||
Minority interests
in
income of subsidiaries
|
(387 | ) | 44 | (343 | ) | ||||||||
Settlement
on
lawsuit
|
1,034 | — | 1,034 | ||||||||||
Gain on sale
of stock
in a subsidiary
|
— | 2,433 | 2,433 | ||||||||||
Other
|
111 | — | 111 | ||||||||||
Total other
income
(expense)
|
(1,706 | ) | 2,477 | 771 | |||||||||
Net income/
(loss)
before income taxes
|
918 | 2,379 | 3,297 | ||||||||||
Provision for
foreign
income tax
|
(370 | ) | — | (370 | ) | ||||||||
Net income/
(loss)
|
548 | 2,379 | 2,927 | ||||||||||
Preferred stock
dividend
|
(656 | ) | — | (656 | ) | ||||||||
Net income
attributed
to common stockholders
|
$ | (108 | ) | $ | 2,379 | $ | 2,271 | ||||||
Income/ (loss)
per
common share — basic
|
$ | (0.03 | ) | $ | 0.58 | ||||||||
Income/ (loss)
per
common share — diluted
|
$ | (0.03 | ) | $ | 0.39 | ||||||||
Weighted average
number
of common shares outstanding:
|
|||||||||||||
Basic
|
3,927 | 3,927 | |||||||||||
Diluted
|
5,761 | 5,761 | |||||||||||
Year
Ended December 31, 2003
|
||||||||||||
As
|
||||||||||||
Previously
|
Restatement
|
As
|
||||||||||
Reported
|
Adjustment
|
Restated
|
||||||||||
Cash flows
from
operating activities:
|
||||||||||||
Net
income/(loss)
|
$ | 548 | $ | 2,379 | $ | 2,927 | ||||||
Adjustments
to
reconcile net income/ (loss) to net cash provided by operating
activities:
|
||||||||||||
Depreciation
expense
|
1,954 | 98 | 2,052 | |||||||||
Amortization
expense
|
884 | — | 884 | |||||||||
Issuance of
stock
options for services
|
— | — | — | |||||||||
Amortization
of
discount on debt
|
516 | — | 516 | |||||||||
(Gain)/ loss
on change
PBO liability
|
(125 | ) | — | (125 | ) | |||||||
(Gain)/ loss
on
settlement of lawsuit
|
(1,034 | ) | — | (1,034 | ) | |||||||
(Gain)/ loss
on sale of
interest in AirComp
|
— | (2,433 | ) | (2,433 | ) | |||||||
Minority interest
in
income of subsidiaries
|
387 | (44 | ) | 343 | ||||||||
Loss on sale
of
property
|
82 | — | 82 | |||||||||
Changes in
working
capital:
|
||||||||||||
Decrease (increase)
in
accounts receivable
|
(4,414 | ) | — | (4,414 | ) | |||||||
Decrease (increase)
in
due from related party
|
— | — | — | |||||||||
Decrease (increase)
in
other current assets
|
(1,260 | ) | — | (1,260 | ) | |||||||
Decrease (increase)
in
other assets
|
1 | — | 1 | |||||||||
Decrease (increase)
in
lease deposit
|
525 | — | 525 | |||||||||
Increase (decrease)
in
accounts payable
|
2,251 | — | 2,251 | |||||||||
Increase (decrease)
in
accrued interest
|
(126 | ) | — | (126 | ) | |||||||
Increase (decrease)
in
accrued expenses
|
397 | — | 397 | |||||||||
Increase (decrease)
in
other long-term liabilities
|
— | — | — | |||||||||
Increase (decrease)
in
accrued employee benefits and payroll taxes
|
1,293 | — | 1,293 | |||||||||
Net cash provided
by
operating activities
|
1,879 | — | 1,879 | |||||||||
Cash flows
from
investing activities:
|
||||||||||||
Recapitalization,
net
of cash received
|
— | — | — | |||||||||
Business acquisition
costs
|
— | — | — | |||||||||
Acquisition
of MADSCO
assets, net of cash acquired
|
— | — | — | |||||||||
Acquisition
of Jens’,
net of cash acquired
|
— | — | — | |||||||||
Acquisition
of Strata,
net of cash acquired
|
— | — | — | |||||||||
Purchase of
equipment
|
(5,354 | ) | — | (5,354 | ) | |||||||
Proceeds from
sale-leaseback of equipment, net of lease deposit
|
— | — | — | |||||||||
Proceeds from
sale of
equipment
|
843 | — | 843 | |||||||||
Net cash (used) by
investing activities
|
(4,511 | ) | — | (4,511 | ) | |||||||
Cash flows
from
financing activities:
|
||||||||||||
Proceeds from
issuance
of long-term debt
|
14,127 | — | 14,127 | |||||||||
Payments on
long-term
debt
|
(10,826 | ) | — | (10,826 | ) | |||||||
Payments on
related
party debt
|
(246 | ) | — | (246 | ) | |||||||
Proceeds from
issuance
of common stock, net
|
— | — | — | |||||||||
Borrowing on
lines of
credit
|
30,537 | — | 30,537 | |||||||||
Payments on
lines of
credit
|
(29,399 | ) | — | (29,399 | ) | |||||||
Debt issuance
costs
|
(408 | ) | — | (408 | ) | |||||||
Net cash provided
(used) by financing activities
|
3,785 | — | 3,785 | |||||||||
Net increase
(decrease)
in cash and cash equivalents
|
1,153 | — | 1,153 | |||||||||
Cash and cash
equivalents:
|
||||||||||||
Beginning of
the
year
|
146 | — | 146 | |||||||||
End of the
year
|
$ | 1,299 | — | $ | 1,299 | |||||||
Supplemental
information:
|
||||||||||||
Interest paid
|
$ | 2,341 | — | $ | 2,341 | |||||||
Three
Months
|
Three
Months
|
Three
Months
|
||||||||||
Ended
|
Ended
|
Ended
|
||||||||||
March 31,
|
June 30,
|
September 30,
|
||||||||||
2004
|
2004
|
2004
|
||||||||||
(in
thousands except per share amounts)
|
||||||||||||
Net income
attributed
to common stockholders
|
||||||||||||
Previously
reported
|
$ | 501 | $ | 434 | $ | 576 | ||||||
Adjustment —
depreciation expense
|
(139 | ) | (79 | ) | (79 | ) | ||||||
Adjustment —
minority interest expense
|
22 | 22 | 22 | |||||||||
Restated
|
384 | 377 | 519 | |||||||||
Net income
(loss) per
share, basic
|
||||||||||||
Previously
reported
|
$ | 0.13 | $ | 0.07 | $ | 0.05 | ||||||
Total
adjustments
|
(0.03 | ) | (0.01 | ) | (0.01 | ) | ||||||
Restated
|
0.10 | 0.06 | 0.04 |
Three
Months
|
Three
Months
|
Three
Months
|
||||||||||
Ended
|
Ended
|
Ended
|
||||||||||
March 31,
|
June 30,
|
September 30,
|
||||||||||
2003
|
2003
|
2003
|
||||||||||
(in
thousands except per share amounts)
|
||||||||||||
Net income
(loss)
attributed to common stockholders
|
||||||||||||
Previously
reported
|
$ | (183 | ) | $ | (330 | ) | $ | 1,136 | ||||
Adjustment — gain
on sale of stock in a subsidiary
|
— | — | 2,433 | |||||||||
Adjustment —
depreciation expense
|
— | — | (49 | ) | ||||||||
Adjustment —
minority interest expense
|
— | — | 22 | |||||||||
Adjustment —
foreign tax expense
|
(158 | ) | (92 | ) | (93 | ) | ||||||
Restated
|
(341 | ) | (422 | ) | 3,449 | |||||||
Net income
(loss) per
share, basic and diluted
|
||||||||||||
Previously
reported
|
$ | (0.05 | ) | $ | (0.08 | ) | $ | 0.29 | ||||
Total
adjustments
|
(0.04 | ) | (0.03 | ) | 0.58 | |||||||
Restated
|
(0.09 | ) | (0.11 | ) | 0.87 |
Note 4 — | Acquisitions |
Year
Ended December 31,
|
|||||||||||||
2004
|
2003
|
2002
|
|||||||||||
|
|||||||||||||
(restated)
|
(restated)
|
||||||||||||
(unaudited)
|
|||||||||||||
(in
thousands, except per share)
|
|||||||||||||
Revenues
|
$ | 58,103 | $ | 34,446 | $ | 19,142 | |||||||
Operating income
(loss)
|
$ | 5,405 | $ | 3,008 | $ | (401 | ) | ||||||
Net income
(loss)
|
$ | 1,367 | $ | 411 | $ | (4,431 | ) | ||||||
Net income
(loss) per
common share
|
|||||||||||||
Basic
|
$ | 0.17 | $ | 0.10 | $ | (1.18 | ) | ||||||
Diluted
|
$ | 0.14 | $ | 0.07 | $ | (1.18 | ) |
Note 5 — | Inventories |
2004
|
2003
|
|||||||
Hammer bit
inventory
|
||||||||
Finished goods
|
$ | 857 | $ | — | ||||
Work in
process
|
385 | — | ||||||
Raw materials
|
151 | — | ||||||
Total hammer
bit
inventory
|
$ | 1,393 | $ | — | ||||
Hammer
inventory
|
417 | — | ||||||
Chemical
inventory
|
254 | — | ||||||
Coil tubing
and related
inventory
|
309 | — | ||||||
Total
inventory
|
$ | 2,373 | $ | — | ||||
Note 6 — | Property and Other Intangibles Assets |
Depreciation
|
||||||||||||
Period
|
2004
|
2003
|
||||||||||
(restated)
|
||||||||||||
Land
|
— | $ | 27 | $ | 27 | |||||||
Building and
improvements
|
15–20 years | 740 | 729 | |||||||||
Machinery and
equipment
|
3–15 years | 41,120 | 28,860 | |||||||||
Tools, furniture,
fixtures and leasehold improvements
|
3–7 years | 1,043 | 4,098 | |||||||||
Total
|
$ | 42,930 | $ | 33,714 | ||||||||
Less: accumulated
depreciation
|
(5,251 | ) | (2,586 | ) | ||||||||
Property and
equipment,
net
|
$ | 37,679 | $ | 31,128 | ||||||||
Amortization
|
||||||||||||
Period
|
2004
|
2003
|
||||||||||
Intellectual
Property
|
20 years | $ | 1,009 | $ | 1,009 | |||||||
Non-compete
agreements
|
3–5 years | 2,856 | 1,535 | |||||||||
Patent
|
15 years | 496 | — | |||||||||
Other intangible
assets
|
3–10 years | 2,732 | 1,000 | |||||||||
Total
|
$ | 7,093 | $ | 3,544 | ||||||||
Less: accumulated
amortization
|
(2,036 | ) | (1,254 | ) | ||||||||
Intangibles
assets,
net
|
$ | 5,057 | $ | 2,290 | ||||||||
2004
|
2003
|
|||||||||||||||||||||||
Gross
|
Accumulated
|
Current
Year
|
Gross
|
Accumulated
|
Current
Year
|
|||||||||||||||||||
Value
|
Amortization
|
Amortization
|
Value
|
Amortization
|
Amortization
|
|||||||||||||||||||
Intellectual
Property
|
$ | 1,009 | $ | 239 | $ | 56 | $ | 1,009 | $ | 183 | $ | 46 | ||||||||||||
Non-compete
agreements
|
2,856 | 1,032 | 300 | 1,535 | 731 | 347 | ||||||||||||||||||
Patent
|
496 | 6 | 6 | — | — | — | ||||||||||||||||||
Other intangible
assets
|
2,732 | 759 | 420 | 1,000 | 340 | 135 | ||||||||||||||||||
Total
|
$ | 7,093 | $ | 2,036 | $ | 782 | $ | 3,544 | $ | 1,254 | $ | 528 | ||||||||||||
Intangible
Amortization by Period
|
||||||||||||||||||||
|
||||||||||||||||||||
Year
Ended December 31,
|
||||||||||||||||||||
2009
and
|
||||||||||||||||||||
2005
|
2006
|
2007
|
2008
|
Thereafter
|
||||||||||||||||
Intangible
Assets
Amortization
|
||||||||||||||||||||
Intellectual
property
|
$ | 56 | $ | 56 | $ | 56 | $ | 56 | $ | 546 | ||||||||||
Non-compete
agreements
|
484 | 481 | 275 | 234 | 349 | |||||||||||||||
Patent
|
33 | 33 | 33 | 33 | 358 | |||||||||||||||
Other intangible
assets
|
244 | 244 | 214 | 214 | 1,057 | |||||||||||||||
Total Intangible
Amortization
|
$ | 817 | $ | 814 | $ | 578 | $ | 537 | $ | 2,310 | ||||||||||
Note 7 — | Income Taxes |
2004
|
2003
|
|||||||
Deferred non-current
income tax assets:
|
||||||||
Net future
tax
deductible items
|
$ | 533 | $ | 500 | ||||
Net operating
loss
carry forwards
|
4,894 | 2,975 | ||||||
A-C Reorganization
Trust claims
|
30,112 | 35,000 | ||||||
Total deferred
non-current income tax assets
|
35,539 | 38,475 | ||||||
Valuation
allowance
|
(35,539 | ) | (38,475 | ) | ||||
Net deferred
non-current income taxes
|
$ | — | $ | — | ||||
2004
|
2003
|
2002
|
||||||||||
Income tax
expense
based on the U.S. statutory tax rate
|
$ | — | $ | — | $ | — | ||||||
Foreign income
subject
to foreign taxes a rate different than the U.S. statutory
rate
|
514 | 370 | 270 | |||||||||
Total
|
$ | 514 | $ | 370 | $ | 270 | ||||||
December 31,
|
||||||||
2004
|
2003
|
|||||||
(in
thousands)
|
||||||||
Debt of Allis-Chalmers
Energy
|
||||||||
Revolving line
of
credit
|
$ | 2,353 | $ | — | ||||
Bank term loan
|
6,335 | — | ||||||
Notes payable
to former
directors
|
402 | 386 | ||||||
12.0% subordinated
note
|
— | 2,675 | ||||||
Debt of Jens’
|
||||||||
Revolving line
of
credit
|
— | 26 | ||||||
Bank term loan
|
— | 4,654 | ||||||
Bank real estate
note
|
— | 207 | ||||||
Subordinated
seller
note
|
4,000 | 4,000 | ||||||
Note payable
under
non-compete agreement
|
514 | 761 | ||||||
Bank term loan
|
263 | 354 | ||||||
Equipment installment
note
|
321 | — | ||||||
Debt of Strata
|
||||||||
Revolving line
of
credit
|
— | 2,413 | ||||||
Vendor
financing
|
1,164 | 2,383 | ||||||
Debt of Safco
|
||||||||
Note payable
under
non-compete agreement
|
150 | — | ||||||
Debt of
Downhole
|
||||||||
Vehicle installment
note
|
11 | — | ||||||
Notes payable
to a
former stockholders
|
49 | — | ||||||
Debt of Mountain
Air
|
||||||||
Term loan
|
198 | 247 | ||||||
Seller note
|
1,600 | 1,511 | ||||||
Debt of
AirComp
|
||||||||
Revolving line
of
credit
|
1,520 | 369 | ||||||
Bank term loan
|
6,775 | 7,429 | ||||||
Subordinated
note
payable to M-I LLC
|
4,818 | 4,818 | ||||||
Total debt
|
$ | 30,473 | $ | 32,233 | ||||
Less: short-term
debt
and current maturities
|
5,541 | 3,992 | ||||||
Long-term debt
obligations
|
$ | 24,932 | $ | 28,241 | ||||
Maturities
of Debt
|
||||
(in
thousands)
|
||||
Year Ending:
|
||||
December 31,
2005
|
$ | 5,541 | ||
December 31,
2006
|
7,378 | |||
December 31,
2007
|
10,028 | |||
December 31,
2008
|
2,638 | |||
December 31,
2009
|
4,888 | |||
Thereafter
|
— | |||
Total
|
$ | 30,473 | ||
• | A $10.0 million revolving line of credit. Borrowings are subject to a borrowing base based on 85% of eligible accounts receivables, as defined. Outstanding borrowings under this line of credit were $2.4 million as of December 31, 2004. | |
• | A term loan in the amount of $6.3 million to be repaid in monthly payments of principal of $105,583 per month. Prepayments are also required in an amount equal to 20% of our collections from Matyep in Mexico. Proceeds of the term loan were used to prepay the term loan owed by our Jens’ subsidiary and to prepay the 12% $2.4 million subordinated note and retire its related warrants. The outstanding balance was $6.3 million as of December 31, 2004. | |
• | A $6.0 million capital expenditure and acquisition line of credit. Borrowings under this facility are to be repaid monthly over four years beginning January 2006. Availability of this capital expenditure term loan facility is subject to security acceptable to the lender in the form of equipment or other acquired collateral. There were no outstanding borrowings as of December 31, 2004 |
• | A $3.5 million bank line of credit of which $1.5 million was outstanding at December 31, 2004. Interest accrues at a floating rate based on the prime rate. The interest rate was 7.50% as of December 31, 2004. There is a 0.5% per annum fee on the undrawn portion of the facility. Borrowings under the line of credit are subject to a borrowing base consisting of eligible accounts receivable. | |
• | A $7.1 million term loan with an adjustable, floating interest rate based on either the prime rate or the London interbank offered rate or (“LIBOR”). The interest rate was 6.25% as of December 31, 2004. Principal payments of $286,000 plus accrued interest are due quarterly, with a final maturity date of June 27, 2007. The balance at December 31, 2004 was $6.8 million. | |
• | A $1.5 million term loan facility to be used for capital expenditures. Interest accrues at a floating interest rate based on either the prime rate or LIBOR. Quarterly principal payments commence on March 31, 2006 in an amount equal to 5.0% of the outstanding balance as of December 31, 2005, |
with a final maturity of June 27, 2007. There were no borrowings outstanding under this facility as of December 31, 2004. |
Operating
Leases
|
||||
(in
thousands)
|
||||
Year Ending:
|
||||
December 31,
2005
|
$ | 550 | ||
December 31,
2006
|
425 | |||
December 31,
2007
|
388 | |||
December 31,
2008
|
265 | |||
December 31,
2009
|
206 | |||
Thereafter
|
— | |||
Total
|
$ | 1,834 | ||
• | In exchange for an investment of $2.0 million the Company issued 620,000 shares of common stock for a purchase price equal to $2.50 per share, and issued warrants to purchase 800,000 shares of common stock at an exercise price of $2.50 per share, expiring on April 1, 2006, to an investor group (the “Investor Group”) consisting of entities affiliated with Donald and Christopher Engel and directors Robert Nederlander and Leonard Toboroff. The aggregate purchase price for the common stock was $1.55 million and the aggregate purchase price for the warrants was $450,000. | |
• | Energy Spectrum converted its 3,500,000 shares of Series A 10% Cumulative Convertible Preferred Stock, including accrued dividend rights, into 1,718,090 shares of common stock. The conversion of the preferred stock will have an impact on the earnings per share in future periods since the Company will not record any dividends. | |
• | The Company, the Investor Group, Energy Spectrum, and former director Saeed Sheikh and officers and directors Munawar H. Hidayatallah and Jens H. Mortensen entered into a stockholders agreement pursuant to which the parties agreed to vote for the election to the board of directors of the Company three persons nominated by Energy Spectrum, two persons nominated by the Investor Group and one person nominated by Messrs. Hidayatallah, Mortensen and Sheikh. In addition, the parties and the Company agreed that in the event the Company has not effected a public offering of its shares prior to September 30, 2005, then, at the request of Energy Spectrum, the Company will retain an investment banking firm to identify candidates for a transaction involving the sale of the Company or its assets. Energy Spectrum has agreed to enter into an amendment to the Stockholders Agreement to eliminate the requirement that an investment bank be retained to sell the Company. Two of Energy Spectrum’s three designated directors on the Board resigned January 14, 2005 and Energy Spectrum has agreed not to utilize its right to appoint more than one director unless and until the parties to the Stockholders of the Company of its determination to reassert such right. |
December 31,
2004
|
December 31,
2003
|
December 31,
2002
|
||||||||||||||||||||||
Shares
Under
|
Weighted
Avg.
|
Shares
Under
|
Weighted
Avg.
|
Shares
Under
|
Weighted
Avg.
|
|||||||||||||||||||
Options
|
Exercise
Price
|
Option
|
Exercise
Price
|
Option
|
Exercise
Price
|
|||||||||||||||||||
Beginning
balance
|
973,300 | $ | 2.78 | 104,800 | $ | 3.00 | 104,800 | $ | 3.00 | |||||||||||||||
Granted
|
248,000 | 4.85 | 868,500 | 2.75 | — | — | ||||||||||||||||||
Canceled
|
(6,300 | ) | 2.78 | — | — | — | — | |||||||||||||||||
Exercised
|
— | — | — | — | — | — | ||||||||||||||||||
Ending balance
|
1,215,000 | $ | 3.20 | 973,300 | $ | 2.78 | 104,800 | $ | 3.00 | |||||||||||||||
Weighted
Average
|
||||||||||||||||||||
Fair
Value
|
Shares
Under
|
Remaining
|
Options
|
Fair
Value of
|
||||||||||||||||
Exercise
Price
|
Option
|
Contractual
Life
|
Exercisable
|
Exercise
Price
|
||||||||||||||||
$ | 2.50 | 100,000 | 6.79 years | 100,000 | $ | 2.50 | ||||||||||||||
$ | 13.75 | 4,800 | 5.24 years | 4,800 | $ | 13.75 | ||||||||||||||
$ | 2.75 | 862,200 | 8.96 years | 574,800 | $ | 2.75 | ||||||||||||||
$ | 4.85 | 248,000 | 9.73 years | 82,667 | $ | 4.85 | ||||||||||||||
$ | 3.20 | 1,215,000 | 8.93 years | 762,267 | $ | 3.01 |
Year
Ended December 31,
|
||||||||||||
2004
|
2003
|
2002
|
||||||||||
(restated)
|
||||||||||||
REVENUES:
|
||||||||||||
Casing
services
|
$ | 10,391 | $ | 10,037 | $ | 7,796 | ||||||
Directional
drilling
services
|
24,787 | 16,008 | 6,529 | |||||||||
Compressed
air drilling
services
|
11,561 | 6,679 | 3,665 | |||||||||
Other services
|
987 | — | — | |||||||||
Total revenues
|
$ | 47,726 | $ | 32,724 | $ | 17,990 | ||||||
OPERATING INCOME
(LOSS):
|
||||||||||||
Casing
services
|
$ | 3,217 | $ | 3,628 | $ | 2,495 | ||||||
Directional
drilling
services
|
3,061 | 1,103 | (576 | ) | ||||||||
Compressed
air drilling
services
|
1,169 | 17 | (945 | ) | ||||||||
Other services
|
(67 | ) | — | — | ||||||||
General
corporate
|
(3,153 | ) | (2,123 | ) | (2,046 | ) | ||||||
Total income/loss)
from
operations
|
$ | 4,227 | $ | 2,625 | $ | (1,072 | ) | |||||
DEPRECIATION
AND
AMORTIZATION EXPENSE:
|
||||||||||||
Casing
services
|
$ | 1,597 | $ | 1,413 | $ | 1,265 | ||||||
Directional
drilling
services
|
466 | 275 | 295 | |||||||||
Compressed
air drilling
services
|
1,329 | 1,139 | 955 | |||||||||
Other services
|
66 | — | — | |||||||||
General
corporate
|
120 | 109 | 65 | |||||||||
Total depreciation
and
amortization expense
|
$ | 3,578 | $ | 2,936 | $ | 2,580 | ||||||
Year
Ended December 31,
|
||||||||||||
2004
|
2003
|
2002
|
||||||||||
(restated)
|
||||||||||||
INTEREST
EXPENSE:
|
||||||||||||
Casing
services
|
$ | 827 | $ | 1,044 | $ | 643 | ||||||
Directional
drilling
services
|
321 | 268 | 215 | |||||||||
Compressed
air drilling
services
|
801 | 839 | 761 | |||||||||
Other services
|
4 | — | — | |||||||||
General
corporate
|
855 | 316 | 637 | |||||||||
Total interest
expense
|
$ | 2,808 | $ | 2,467 | $ | 2,256 | ||||||
CAPITAL
EXPENDITURES
|
||||||||||||
Casing
services
|
$ | 1,285 | $ | 2,176 | $ | 137 | ||||||
Directional
drilling
services
|
1,552 | 1,066 | 83 | |||||||||
Compressed
air drilling
services
|
1,399 | 2,093 | 288 | |||||||||
Other services
|
338 | — | — | |||||||||
General
corporate
|
29 | 19 | 10 | |||||||||
Total capital
expenditures
|
$ | 4,603 | $ | 5,354 | $ | 518 | ||||||
GOODWILL:
|
||||||||||||
Casing
services
|
$ | 3,673 | $ | — | $ | — | ||||||
Directional
Drilling
Services
|
4,168 | 4,168 | 4,168 | |||||||||
Compressed
Air Drilling
Services
|
3,510 | 3,493 | 3,493 | |||||||||
Other services
|
425 | — | — | |||||||||
General
Corporate
|
— | — | — | |||||||||
Total Goodwill
|
$ | 11,776 | $ | 7,661 | $ | 7,661 | ||||||
ASSETS:
|
||||||||||||
Casing
services
|
$ | 21,197 | $ | 18,191 | $ | 15,681 | ||||||
Directional
drilling
services
|
14,166 | 11,529 | 8,888 | |||||||||
Compressed
air drilling
services
|
29,147 | 22,735 | 9,138 | |||||||||
Other services
|
7,097 | — | — | |||||||||
General
corporate
|
8,585 | 1,207 | 1,071 | |||||||||
Total assets
|
$ | 80,192 | $ | 53,662 | $ | 34,778 | ||||||
REVENUES
|
||||||||||||
United States
|
$ | 42,466 | $ | 28,995 | $ | 15,321 | ||||||
International
|
5,260 | 3,729 | 2,669 | |||||||||
TOTAL
|
$ | 47,726 | $ | 32,724 | $ | 17,990 | ||||||
December 31,
|
December 31,
|
December 31,
|
||||||||||
2004
|
2003
|
2002
|
||||||||||
(restated)
|
||||||||||||
(in
thousands)
|
||||||||||||
Non-cash investing
and
financing transactions in connection with the acquisitions of
Jens’ and
Strata:
|
||||||||||||
Fair value
of net
assets acquired
|
$ | — | $ | — | $ | (13,945 | ) | |||||
Goodwill and
other
intangibles
|
— | — | (5,903 | ) | ||||||||
Note payable
to Seller
of Jens’ Oilfield Service
|
— | — | 4,000 | |||||||||
Value of common
stock
issued
|
— | — | 3,735 | |||||||||
Issuance of
preferred
stock
|
— | — | 3,500 | |||||||||
Fair value
of warrants
issued
|
— | — | 314 | |||||||||
Net cash paid
to
acquire subsidiary
|
$ | — | $ | — | $ | (8,299 | ) | |||||
Other non-cash
investing and financing transactions:
|
||||||||||||
Sale of
property & equipment in connection with the direct financing
lease (Note 14)
|
$ | — | $ | — | $ | 1,193 | ||||||
(Gain) on settlement
of
debt
|
— | (1,034 | ) | — | ||||||||
Amortization
of
discount on debt
|
— | 442 | — | |||||||||
Purchase of
equipment
financed through assumption of debt or accounts payable
|
— | 906 | — | |||||||||
Non-cash investing
and
financing transactions in connection with the formation of
AirComp:
|
||||||||||||
Other non-cash
investing and financing transactions in connection with AirComp:
|
||||||||||||
Issuance of
debt to
joint venture by M-I
|
— | (4,818 | ) | — | ||||||||
Contribution
of
property, plant and equipment by M-I to joint venture
|
— | 10,268 | — | |||||||||
Increase in
minority
interest
|
— | (2,063 | ) | — | ||||||||
(Gain) on sale
of stock
in a subsidiary
|
— | (2,433 | ) | — | ||||||||
Difference
of Company’s
investment cost basis in AirComp and their share of underlying
equity of
net assets of AirComp
|
— | (954 | ) | — | ||||||||
Net cash paid
in
connection with the joint venture
|
$ | — | $ | — | $ | — | ||||||
December 31,
|
December 31,
|
December 31,
|
||||||||||
2004
|
2003
|
2002
|
||||||||||
(restated)
|
||||||||||||
(in
thousands)
|
||||||||||||
Non-cash investing
and
financing transactions in connection with the acquisitions of
Safco,
Diamond Air and Downhole:
|
||||||||||||
Fair Value
of net
assets acquired
|
$ | (4,867 | ) | $ | — | $ | — | |||||
Goodwill and
other
intangibles
|
(3,839 | ) | — | — | ||||||||
Value of common
stock,
issued
|
2,177 | — | — | |||||||||
Value of minority
interest contribution
|
2,070 | — | — | |||||||||
$ | (4,459 | ) | $ | — | $ | — | ||||||
Non-cash investing
and
financing transaction in connection with the remaining acquisition
of the
19% of Jens:
|
||||||||||||
Fair Value
of net
assets acquired
|
$ | (813 | ) | — | — | |||||||
Goodwill and
other
intangibles
|
(3,676 | ) | — | — | ||||||||
Value of common
stock
issued
|
6,434 | — | — | |||||||||
Value of minority
interest retirement
|
(1,945 | ) | — | — | ||||||||
$ | — | $ | — | $ | — | |||||||
First
|
Second
|
Third
|
Fourth
|
|||||||||||||
Quarter
|
Quarter
|
Quarter
|
Quarter
|
|||||||||||||
(restated)
|
||||||||||||||||
(in
thousands, except per share amounts)
|
||||||||||||||||
YEAR 2004
|
||||||||||||||||
Revenues
|
$ | 9,661 | $ | 11,422 | $ | 11,888 | $ | 14,755 | ||||||||
Operating
income
|
1,030 | 1,150 | 1,239 | 808 | ||||||||||||
Net income
(loss)
|
472 | 413 | 519 | (516 | ) | |||||||||||
Preferred stock
dividend
|
(88 | ) | (36 | ) | — | — | ||||||||||
Net income
(loss)
attributed to common shares
|
$ | 384 | $ | 377 | $ | 519 | $ | (516 | ) | |||||||
Income (loss)
per
common share Basic:
|
$ | .10 | $ | .06 | $ | .06 | $ | (0.04 | ) | |||||||
Income (loss)
per
common share Diluted:
|
$ | .08 | $ | .05 | $ | .05 | $ | (0.04 | ) | |||||||
First
|
Second
|
Third
|
Fourth
|
||||||||||||||
Quarter
|
Quarter
|
Quarter
|
Quarter
|
||||||||||||||
(restated)
|
(restated)
|
||||||||||||||||
(in
thousands, except per share amounts)
|
|||||||||||||||||
YEAR 2003
|
|||||||||||||||||
Revenues
|
$ | 6,999 | $ | 7,340 | $ | 8,089 | $ | 10,296 | |||||||||
Operating
income
|
1,023 | 910 | 678 | 14 | |||||||||||||
Net income
(loss)
|
53 | (335 | ) | 3,537 | (328 | ) | |||||||||||
Preferred stock
dividend
|
(394 | ) | (87 | ) | (88 | ) | (87 | ) | |||||||||
Net income
(loss)
attributed to common shares
|
$ | (341 | ) | $ | (422 | ) | $ | 3,449 | $ | (415 | ) | ||||||
Income (loss)
per
common share
|
|||||||||||||||||
(Basic)
|
$ | (0.09 | ) | $ | (0.11 | ) | $ | 0.88 | $ | (0.11 | ) | ||||||
Income (loss)
per
common share
|
|||||||||||||||||
Diluted:
|
$ | (0.09 | ) | $ | (0.11 | ) | $ | 0.59 | $ | (0.11 | ) | ||||||
Note 21 — | Legal Matters |
|
September
30,
2005
|
December
31,
2004
|
|||||
(Unaudited)
|
|||||||
ASSETS
|
|||||||
Cash
and cash equivalents
|
$
|
3,909
|
$
|
7,344
|
|||
Trade
receivables, net
|
23,777
|
12,986
|
|||||
Inventory
|
5,217
|
2,373
|
|||||
Lease
receivable, current
|
—
|
180
|
|||||
Prepaid
expenses and other
|
1,014
|
1,495
|
|||||
Total
current assets
|
33,917
|
24,378
|
|||||
Property
and equipment, net
|
75,516
|
37,679
|
|||||
Goodwill
|
12,042
|
11,776
|
|||||
Other
intangible assets, net
|
7,264
|
5,057
|
|||||
Debt
issuance costs, net
|
783
|
685
|
|||||
Lease
receivable, less current portion
|
—
|
558
|
|||||
Other
assets
|
40
|
59
|
|||||
Total
assets
|
$
|
129,562
|
$
|
80,192
|
|||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|||||||
Current
maturities of long-term debt
|
$
|
4,636
|
$
|
5,541
|
|||
Trade
accounts payable
|
8,703
|
5,694
|
|||||
Accrued
salaries, benefits and payroll taxes
|
701
|
615
|
|||||
Accrued
interest
|
462
|
470
|
|||||
Accrued
expenses
|
4,688
|
1,852
|
|||||
Accounts
payable, related parties
|
78
|
740
|
|||||
Total
current liabilities
|
19,268
|
14,912
|
|||||
Accrued
postretirement benefit obligations
|
335
|
687
|
|||||
Long-term
debt, net of current maturities
|
51,491
|
24,932
|
|||||
Deferred
income taxes
|
750
|
—
|
|||||
Other
long-term liabilities
|
342
|
129
|
|||||
Total
liabilities
|
72,186
|
40,660
|
|||||
Commitments
and contingencies
|
|||||||
Minority
interests
|
—
|
4,423
|
|||||
STOCKHOLDERS’
EQUITY
|
|||||||
Preferred
stock, $0.01 par value (25,000,000 shares authorized, no shares
issued)
|
—
|
—
|
|||||
Common
stock, $0.01 par value (100,000,000 shares authorized; 16,453,714
issued
and outstanding
at
September 30, 2005 and 20,000,000 shares authorized and 13,611,525
issued
and outstanding
at
December 31, 2004)
|
165
|
136
|
|||||
Capital
in excess of par value
|
57,940
|
40,331
|
|||||
Accumulated
deficit
|
(729
|
)
|
(5,358
|
)
|
|||
Total
stockholders’ equity
|
57,376
|
35,109
|
|||||
Total
liabilities and stockholders’ equity
|
$
|
129,562
|
$
|
80,192
|
|
For
the
Three
Months Ended
September
30,
|
For
the
Nine
Months Ended
September
30,
|
|||||||||||
|
2005
|
2004
|
2005
|
2004
|
|||||||||
(Restated)
|
(Restated)
|
||||||||||||
Revenues
|
$
|
28,908
|
$
|
11,888
|
$
|
71,830
|
$
|
32,989
|
|||||
Cost
of revenues Direct costs
|
19,280
|
7,633
|
47,756
|
22,395
|
|||||||||
Depreciation
|
1,391
|
591
|
3,397
|
1,796
|
|||||||||
Total
cost of revenues
|
20,671
|
8,224
|
51,153
|
24,191
|
|||||||||
Gross
margin
|
8,237
|
3,664
|
20,677
|
8,798
|
|||||||||
General
and administrative
|
4,261
|
2,227
|
10,720
|
4,781
|
|||||||||
Amortization
|
452
|
198
|
1,272
|
600
|
|||||||||
Income
from operations
|
3,524
|
1,239
|
8,685
|
3,417
|
|||||||||
Other
income (expense):
|
|||||||||||||
Interest
|
(977
|
)
|
(566
|
)
|
(2,143
|
)
|
(1,634
|
)
|
|||||
Debt
retirement
|
(1,087
|
)
|
—
|
(1,087
|
)
|
—
|
|||||||
Other
|
63
|
19
|
221
|
224
|
|||||||||
Total
other income (expense)
|
(2,001
|
)
|
(547
|
)
|
(3,009
|
)
|
(1,410
|
)
|
|||||
Net
income before minority interest and income taxes
|
1,523
|
692
|
5,676
|
2,007
|
|||||||||
Minority
interest in income of subsidiaries
|
—
|
(34
|
)
|
(488
|
)
|
(248
|
)
|
||||||
Provision
for income taxes
|
(230
|
)
|
(139
|
)
|
(559
|
)
|
(359
|
)
|
|||||
Net
income
|
1,293
|
519
|
4,629
|
1,400
|
|||||||||
Preferred
stock dividend
|
—
|
—
|
—
|
(124
|
)
|
||||||||
Net
income attributed to common shareholders
|
$
|
1,293
|
$
|
519
|
$
|
4,629
|
$
|
1,276
|
|||||
Net
income per common share:
|
|||||||||||||
Basic
|
$
|
0.09
|
$
|
0.06
|
$
|
0.33
|
$
|
0.21
|
|||||
Diluted
|
$
|
0.08
|
$
|
0.05
|
$
|
0.30
|
$
|
0.18
|
|||||
Weighted
average shares outstanding:
|
|||||||||||||
Basic
|
14,985
|
8,298
|
14,197
|
6,168
|
|||||||||
Diluted
|
16,601
|
9,828
|
15,589
|
7,890
|
|
For
the Nine Months Ended
September
30,
|
||||||
|
2005
|
2004
|
|||||
(Restated)
|
|||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
|||||||
Net
income
|
$
|
4,629
|
$
|
1,400
|
|||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
|||||||
Depreciation
|
3,397
|
1,796
|
|||||
Amortization
|
1,272
|
600
|
|||||
Amortization
of note discount
|
9
|
143
|
|||||
Fair
value of warrant issued to consultant
|
14
|
||||||
Write-off
of deferred financing due to refinancing
|
653
|
—
|
|||||
Minority
interest in income of subsidiaries
|
488
|
248
|
|||||
Changes
in operating assets and liabilities, net of acquisitions:
|
|||||||
(Increase)
in trade receivable
|
(7,250
|
)
|
(1,417
|
)
|
|||
(Increase)
in other current assets
|
(1,522
|
)
|
(412
|
)
|
|||
(Increase)
in other assets
|
(171
|
)
|
(39
|
)
|
|||
Increase
(decrease) in accounts payable
|
1,058
|
(725
|
)
|
||||
Increase
in accrued interest
|
497
|
131
|
|||||
Increase
(decrease) in accrued expenses
|
1,269
|
(471
|
)
|
||||
(Decrease)
in accrued salaries, benefits and payroll taxes
|
(287
|
)
|
(557
|
)
|
|||
(Decrease)
in other long-term liabilities
|
(160
|
)
|
(141
|
)
|
|||
Net
Cash Provided By Operating Activities
|
3,882
|
570
|
|||||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|||||||
Acquisition
of businesses, net of cash received
|
(15,416
|
)
|
(959
|
)
|
|||
Acquisition
of assets
|
(21,249
|
)
|
—
|
||||
Purchase
of equipment
|
(9,585
|
)
|
(2,120
|
)
|
|||
Net
Cash Used In Investing Activities
|
(46,250
|
)
|
(3,079
|
)
|
|||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|||||||
Proceeds
from issuance of common stock, net
|
15,888
|
16,946
|
|||||
Proceeds
from long-term debt
|
45,700
|
—
|
|||||
Repayments
on long-term debt
|
(21,438
|
)
|
(2,427
|
)
|
|||
Debt
issuance costs
|
(1,217
|
)
|
(317
|
)
|
|||
Net
Cash Provided By Financing Activities
|
38,933
|
14,202
|
|||||
Net
change in cash and cash equivalents
|
(3,435
|
)
|
11,693
|
||||
Cash
and cash equivalents at beginning of period
|
7,344
|
1,299
|
|||||
Cash
and cash equivalents at end of period
|
$
|
3,909
|
$
|
12,992
|
|||
SUPPLEMENTAL
INFORMATION:
|
|||||||
Interest
paid
|
$
|
2,151
|
$
|
1,491
|
|||
Foreign
taxes paid
|
$
|
459
|
$
|
—
|
|||
Non-cash
transactions in connection with the acquisition of Target
Settlement
of lease receivable
|
$
|
592
|
$
|
—
|
|||
Deferred
taxes
|
$
|
750
|
$
|
—
|
|
For
the Three Months
Ended
September 30,
|
For
the Nine Months
Ended
September 30,
|
|||||||||||
|
2005
|
2004
|
2005
|
2004
|
|||||||||
Revenues
|
$
|
29,016
|
$
|
17,566
|
$
|
76,869
|
$
|
43,122
|
|||||
Operating
income
|
3,558
|
1,887
|
9,667
|
4,717
|
|||||||||
Net
income
|
1,321
|
892
|
5,692
|
2,037
|
|||||||||
Net
income per common share:
|
|||||||||||||
Basic
|
$
|
0.10
|
$
|
0.10
|
$
|
0.40
|
$
|
0.31
|
|||||
Diluted
|
$
|
0.07
|
$
|
0.09
|
$
|
0.36
|
$
|
0.25
|
|
For
the Three Months
Ended
September 30,
|
For
the Nine Months
Ended
September 30,
|
|||||||||||
|
2005
|
2004
|
2005
|
2004
|
|||||||||
Net
income as reported
|
$
|
1,293
|
$
|
519
|
$
|
4,629
|
$
|
1,276
|
|||||
Less:
stock based employee compensation expense determined under fair
value
based method for all awards, net of tax
|
(863
|
)
|
—
|
(2,368
|
)
|
—
|
|||||||
Pro
forma net income
|
$
|
430
|
$
|
519
|
$
|
2,261
|
$
|
1,276
|
|
For
the Three Months
Ended
September 30,
|
For
the Nine Months
Ended
September 30,
|
|||||||||||
|
2005
|
2004
|
2005
|
2004
|
|||||||||
Basic
net income per common share:
|
|||||||||||||
As
reported
|
$
|
0.09
|
$
|
0.06
|
$
|
0.33
|
$
|
0.21
|
|||||
Pro
forma
|
$
|
0.03
|
$
|
0.06
|
$
|
0.16
|
$
|
0.21
|
|||||
Diluted
net income per common share:
|
|||||||||||||
As
reported
|
$
|
0.08
|
$
|
0.05
|
$
|
0.30
|
$
|
0.18
|
|||||
Pro
forma
|
$
|
0.03
|
$
|
0.05
|
$
|
0.15
|
$
|
0.18
|
|
For
the Nine Months
Ended
September
30, 2005
|
|||
Expected
dividend yield
|
—
|
|||
Expected
price volatility
|
98.65
|
%
|
||
Risk-free
interest rate
|
6.63
|
%
|
||
Expected
life of options
|
7
years
|
|||
Weighted
average fair value of options granted at market value
|
$
|
3.12
|
|
For
the Three Months
Ended
September 30,
|
For
the Nine Months
Ended
September 30,
|
|||||||||||
|
2005
|
2004
|
2005
|
2004
|
|||||||||
(restated)
|
(restated)
|
||||||||||||
Numerator:
|
|||||||||||||
Net
income available for common stockholders
|
$
|
1,293
|
$
|
519
|
$
|
4,629
|
$
|
1,276
|
|||||
Plus
income impact of assumed conversions:
|
|||||||||||||
Preferred
stock dividends
|
—
|
—
|
—
|
124
|
|||||||||
Net
income applicable to common stockholders plus assumed
conversions
|
$
|
1,293
|
$
|
519
|
$
|
4,629
|
$
|
1,400
|
|||||
Denominator:
|
|||||||||||||
Basic
earnings per share — weighted average shares outstanding
|
14,985
|
8,298
|
14,197
|
6,168
|
|||||||||
Effect
of potentially dilutive common shares:
|
|||||||||||||
Convertible
preferred stock and employee and director stock
options
and warrants
|
1,616
|
1,530
|
1,392
|
1,722
|
|||||||||
Diluted
earnings per share — weighted average shares outstanding
and
assumed conversions
|
16,601
|
9,828
|
15,589
|
7,890
|
|||||||||
Net
income per share — basic
|
$
|
0.09
|
$
|
0.06
|
$
|
0.33
|
$
|
0.21
|
|||||
Net
income per share — diluted
|
$
|
0.08
|
$
|
0.05
|
$
|
0.30
|
$
|
0.18
|
|
Three
Months Ended
September
30, 2004
|
|||||||||
|
As
Reported
|
Adjustments
|
As
Restated
|
|||||||
Income
per common share — basic
|
$
|
0.04
|
$
|
0.02
|
$
|
0.06
|
||||
Income
per common share — diluted
|
$
|
0.04
|
$
|
0.01
|
$
|
0.05
|
||||
Weighted
average number of common shares outstanding:
|
||||||||||
Basic
|
11,599
|
(3,301
|
)
|
8,298
|
||||||
Diluted
|
14,407
|
(4,579
|
)
|
9,828
|
|
Nine
Months Ended
September
30, 2004
|
|||||||||
|
As
Reported
|
Adjustments
|
As
Restated
|
|||||||
Income
per common share — basic
|
$
|
0.18
|
$
|
0.03
|
$
|
0.21
|
||||
Income
per common share — diluted
|
$
|
0.13
|
$
|
0.05
|
$
|
0.18
|
||||
Weighted
average number of common shares outstanding:
|
||||||||||
Basic
|
7,285
|
(1,117
|
)
|
6,168
|
||||||
Diluted
|
9,980
|
(2,090
|
)
|
7,890
|
|
At
September 30, 2004
|
|||||||||
|
As
Previously
Reported
|
Adjustments
|
As
Restated
|
|||||||
ASSETS
|
||||||||||
Cash
and cash equivalents
|
$
|
12,992
|
$
|
—
|
$
|
12,992
|
||||
Trade
receivables, net
|
10,419
|
—
|
10,419
|
|||||||
Lease
receivable, current
|
180
|
—
|
180
|
|||||||
Prepaid
expenses and other
|
1,496
|
—
|
1,496
|
|||||||
Total
current assets
|
25,087
|
—
|
25,087
|
|||||||
Property
and equipment, net
|
28,818
|
4,491
|
33,309
|
|||||||
Goodwill
|
10,331
|
—
|
10,331
|
|||||||
Other
intangible assets, net
|
3,089
|
—
|
3,089
|
|||||||
Debt
issuance costs, net
|
635
|
—
|
635
|
|||||||
Lease
receivable, less current portion
|
590
|
—
|
590
|
|||||||
Other
|
79
|
—
|
79
|
|||||||
Total
Assets
|
$
|
68,629
|
$
|
4,491
|
$
|
73,120
|
||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||||
Current
maturities of long-term debt
|
$
|
4,858
|
$
|
—
|
$
|
4,858
|
||||
Trade
accounts payable
|
2,566
|
—
|
2,566
|
|||||||
Accrued
salaries, benefits and payroll taxes
|
481
|
—
|
481
|
|||||||
Accrued
interest
|
283
|
—
|
283
|
|||||||
Accrued
expenses
|
1,331
|
—
|
1,331
|
|||||||
Accounts
payable, related parties
|
406
|
—
|
406
|
|||||||
Total
current liabilities
|
9,925
|
—
|
9,925
|
|||||||
Accrued
postretirement benefit obligations
|
510
|
—
|
510
|
|||||||
Long-term
debt, net of current maturities
|
25,241
|
—
|
25,241
|
|||||||
Other
long-term liabilities
|
129
|
—
|
129
|
|||||||
Redeemable
warrants
|
1,500
|
—
|
1,500
|
|||||||
Total
Liabilities
|
37,305
|
—
|
37,305
|
|||||||
Commitments
and contingencies
|
||||||||||
Minority
interests
|
886
|
1,388
|
2,274
|
|||||||
STOCKHOLDERS’
EQUITY
|
||||||||||
Common
stock
|
130
|
—
|
130
|
|||||||
Capital
in excess of par value
|
37,425
|
955
|
38,380
|
|||||||
Accumulated
(deficit)
|
(7,117
|
)
|
2,148
|
(4,969
|
)
|
|||||
Total
Stockholders’ Equity
|
30,438
|
3,103
|
33,541
|
|||||||
Total
Liabilities and Stockholders’ Equity
|
$
|
68,629
|
$
|
4,491
|
$
|
73,120
|
|
Three
Months Ended
September
30, 2004
|
|||||||||
|
As
Previously
Reported
|
Adjustments
|
As
Restated
|
|||||||
Revenue
|
$
|
11,888
|
$
|
—
|
$
|
11,888
|
||||
Cost
of revenues
|
||||||||||
Direct
costs
|
7,633
|
—
|
7,633
|
|||||||
Depreciation
|
512
|
79
|
591
|
|||||||
Total
cost of revenues
|
8,145
|
79
|
8,224
|
|||||||
Gross
margin
|
3,743
|
(79
|
)
|
3,664
|
||||||
General
and administrative expense
|
2,227
|
—
|
2,227
|
|||||||
Amortization
|
198
|
—
|
198
|
|||||||
Income
(loss) from operations
|
1,318
|
(79
|
)
|
1,239
|
||||||
Other
income (expense):
|
||||||||||
Interest
|
(566
|
)
|
—
|
(566
|
)
|
|||||
Minority
interests in income of subsidiaries
|
(56
|
)
|
22
|
(34
|
)
|
|||||
Other
|
19
|
—
|
19
|
|||||||
Total
other income (expense)
|
(603
|
)
|
22
|
(581
|
)
|
|||||
Net
income (loss) before income taxes
|
715
|
(57
|
)
|
658
|
||||||
Provision
for foreign income tax
|
(139
|
)
|
—
|
(139
|
)
|
|||||
Net
income (loss)
|
576
|
(57
|
)
|
519
|
||||||
Preferred
stock dividend
|
—
|
—
|
—
|
|||||||
Net
income (loss) attributed to common stockholders
|
$
|
576
|
$
|
(57
|
)
|
$
|
519
|
|||
Net
income per common share — basic
|
$
|
0.05
|
$
|
(0.01
|
)
|
$
|
0.04
|
|||
Net
income per common share — diluted
|
$
|
0.04
|
$
|
—
|
$
|
0.04
|
||||
Weighted
average number of common shares outstanding:
|
||||||||||
Basic
|
11,599
|
—
|
11,599
|
|||||||
Diluted
|
14,407
|
—
|
14,407
|
|
Nine
Months Ended
September
30, 2004
|
|||||||||
|
As
Previously
Reported
|
Adjustments
|
As
Restated
|
|||||||
Revenue
|
$
|
32,989
|
$
|
—
|
$
|
32,989
|
||||
Cost
of revenues
|
||||||||||
Direct
costs
|
22,395
|
—
|
22,395
|
|||||||
Depreciation
|
1,498
|
298
|
1,796
|
|||||||
Total
cost of revenues
|
23,893
|
298
|
24,191
|
|||||||
Gross
margin
|
9,096
|
(298
|
)
|
8,798
|
||||||
General
and administrative expense
|
4,781
|
—
|
4,781
|
|||||||
Amortization
|
600
|
—
|
600
|
|||||||
Income
(loss) from operations
|
3,715
|
(298
|
)
|
3,417
|
||||||
Other
income (expense):
|
||||||||||
Interest
|
(1,634
|
)
|
—
|
(1,634
|
)
|
|||||
Minority
interests in income of subsidiaries
|
(315
|
)
|
67
|
(248
|
)
|
|||||
Other
|
224
|
—
|
224
|
|||||||
Total
other income (expense)
|
(1,725
|
)
|
67
|
(1,658
|
)
|
|||||
Net
income (loss) before income taxes
|
1,990
|
(231
|
)
|
1,759
|
||||||
Provision
for foreign income tax
|
(359
|
)
|
—
|
(359
|
)
|
|||||
Net
income (loss)
|
1,631
|
(231
|
)
|
1,400
|
||||||
Preferred
stock dividend
|
(124
|
)
|
—
|
(124
|
)
|
|||||
Net
income (loss) attributed to common stockholders
|
$
|
1,507
|
$
|
(231
|
)
|
$
|
1,276
|
|||
Net
income per common share — basic
|
$
|
0.21
|
$
|
(0.03
|
)
|
$
|
0.18
|
|||
Net
income per common share — diluted
|
$
|
0.15
|
$
|
(0.02
|
)
|
$
|
0.13
|
|||
Weighted
average number of common shares outstanding:
|
||||||||||
Basic
|
7,285
|
—
|
7,285
|
|||||||
Diluted
|
9,980
|
—
|
9,980
|
|
Nine
Months Ended
September
30, 2004
|
|||||||||
|
As
Previously
Reported
|
Adjustments
|
As
Restated
|
|||||||
Cash
Flows From Operating Activities:
|
||||||||||
Net
income (loss)
|
$ | 1,631 |
$
|
(231
|
)
|
$
|
1,400
|
|||
Adjustments
to reconcile net income (loss) to net cash
|
||||||||||
provided
by operating activities:
|
||||||||||
Depreciation
and amortization expense
|
2,098
|
298
|
2,396
|
|||||||
Fair
value of warrant issued to consultant
|
14
|
—
|
14
|
|||||||
Amortization
of discount on debt
|
143
|
—
|
143
|
|||||||
Minority
interest in income of subsidiaries
|
315
|
(67
|
)
|
248
|
||||||
Changes
in operating assets and liabilities:
|
||||||||||
(Increase)
in accounts receivable
|
(1,417
|
)
|
—
|
(1,417
|
)
|
|||||
(Increase)
in other current assets
|
(609
|
)
|
—
|
(609
|
)
|
|||||
Decrease
in other assets
|
158
|
—
|
158
|
|||||||
Increase
in accounts payable
|
(725
|
)
|
—
|
(725
|
)
|
|||||
Increase
in accrued interest
|
131
|
—
|
131
|
|||||||
(Decrease)
in accrued expenses
|
(471
|
)
|
—
|
(471
|
)
|
|||||
(Decrease)
in other long-term liabilities
|
(141
|
)
|
—
|
(141
|
)
|
|||||
(Decrease)
in accrued employee benefits and payroll taxes
|
(557
|
)
|
—
|
(557
|
)
|
|||||
Net
Cash Provided by Operating Activities
|
570
|
—
|
570
|
|||||||
Cash
Flows From Investing Activities:
|
||||||||||
Purchase
of equipment
|
(2,120
|
)
|
—
|
(2,120
|
)
|
|||||
Acquisition
of Safco, net of cash acquired
|
(959
|
)
|
—
|
(959
|
)
|
|||||
Net
Cash Used by Investing Activities
|
(3,079
|
)
|
—
|
(3,079
|
)
|
|||||
Cash
Flows From Financing Activities:
|
||||||||||
Proceeds
from issuance of common stock, net
|
16,946
|
—
|
16,946
|
|||||||
Repayments
of long-term debt
|
(2,427
|
)
|
—
|
(2,427
|
)
|
|||||
Debt
issuance costs
|
(317
|
)
|
—
|
(317
|
)
|
|||||
Net
Cash Provided by Financing Activities
|
14,202
|
—
|
14,202
|
|||||||
Net
decrease in cash and cash equivalents
|
11,693
|
—
|
11,693
|
|||||||
Cash
and cash equivalents at beginning of the year
|
1,299
|
—
|
1,299
|
|||||||
Cash
and cash equivalents at end of the period
|
$
|
12,992
|
$
|
—
|
$
|
12,992
|
||||
Supplemental
information:
|
||||||||||
Interest
paid
|
$
|
1,491
|
$
|
—
|
$
|
1,491
|
|
September
30,
2005
|
December
31,
2004
|
|||||
Hammer
bits
|
|||||||
Finished
goods
|
$
|
952
|
$
|
857
|
|||
Work
in process
|
713
|
385
|
|||||
Raw
materials
|
90
|
151
|
|||||
Total
hammer bits
|
1,755
|
1,393
|
|||||
Hammers
|
524
|
417
|
|||||
Drive
pipe
|
651
|
—
|
|||||
Rental
supplies
|
234
|
—
|
|||||
Chemicals
|
191
|
254
|
|||||
Coiled
tubing and related inventory
|
1,096
|
309
|
|||||
Shop
supplies and related inventory
|
766
|
—
|
|||||
Total
inventory
|
$
|
5,217
|
$
|
2,373
|
|
September
30,
2005
|
December
31,
2004
|
|||||
Allis-Chalmers
Energy Inc.
|
|||||||
Revolving
line of credit
|
$
|
3,700
|
$
|
2,353
|
|||
Bank
term loan
|
42,000
|
6,335
|
|||||
Notes
payable to former directors
|
96
|
402
|
|||||
Allis-Chalmers
Tubular Service, Inc.
|
|||||||
Subordinated
seller note
|
3,031
|
4,000
|
|||||
Note
payable under non-compete agreement
|
329
|
514
|
|||||
Bank
term loans
|
958
|
584
|
|||||
Strata
Directional Technology, Inc.
|
|||||||
Vendor
financing
|
420
|
1,164
|
|||||
Safco
Oil Field Products, Inc. and Delta
|
|||||||
Note
payable under non-compete agreement
|
125
|
150
|
|||||
Note
payable to former owners of Delta
|
350
|
—
|
|||||
Downhole
Injection Services, LLC and Capcoil
|
|||||||
Vehicle
and equipment installment notes
|
128
|
60
|
|||||
Note
payable under non-compete agreements
|
330
|
—
|
|||||
Mountain
Compressed Air Inc.
|
|||||||
Term
loan
|
160
|
198
|
|||||
Seller
note
|
500
|
1,600
|
|||||
AirComp
|
|||||||
Revolving
line of credit
|
—
|
1,520
|
|||||
Bank
term loan
|
—
|
6,775
|
|||||
Subordinated
note payable to M-I
|
4,000
|
4,818
|
|||||
Total
debt
|
56,127
|
30,473
|
|||||
Less:
short-term debt and current maturities
|
4,636
|
5,541
|
|||||
Long-term
debt obligations
|
$
|
51,491
|
$
|
24,932
|
• |
A
$13.0 million revolving line of credit. Borrowings are limited
to 85% of
eligible accounts receivable and 50% of eligible inventory (up
to a
maximum of $2.0 million of borrowings based on inventory). This
facility
is used to finance working capital requirements and other general
corporate purposes, including the issuance of standby letters
of credit.
Outstanding borrowings under this line of credit were $3.7 million
at
prime as of September 30, 2005.
|
• |
Two
term loans totaling $42.0 million. Outstanding borrowings under
these term
loans were $42.0 million as of September 30, 2005. These loans
are at
LIBOR rates approximating 7.2%.
|
• |
A
$10.0 million revolving line of credit. Borrowings were limited
to 85% of
eligible accounts receivables, as
defined.
|
• |
A
term loan with a principal balance payable in monthly payments
of
principal of $105,583. We were also required to prepay this term
loan by
an amount equal to 20% of receipts from our largest customer
in
Mexico.
|
• |
A
$6.0 million capital expenditure and acquisition line of credit.
Borrowings under this facility were payable monthly over four
years
beginning in January 2006.
|
• |
A
$3.5 million bank line of credit. Interest accrued at an adjustable
rate
based on the prime rate. We paid a 0.5% per annum fee on the
undrawn
portion. Borrowings under the line of credit were subject to
a borrowing
base consisting of 80% of eligible accounts
receivable.
|
• |
A
term loan that accrued interest at an adjustable rate based on
either
LIBOR or the prime rate. Principal payments of $286,000 plus
interest were
due quarterly, with a final maturity date of June 27,
2007.
|
• |
A
“delayed draw” term loan facility in the amount of $1.5 million to be used
for capital expenditures. Interest accrued at an adjustable rate
based on
either the LIBOR or the prime rate. Quarterly principal payments
were to
commence on March 31, 2006 in an amount equal to 5.0% of the
outstanding
balance as of December 31, 2005, with a final maturity of June
27,
2007.
|
|
For
the Three Months
Ended
September 30,
|
For
the Nine Months
Ended
September 30,
|
|||||||||||
|
2005
|
2004
|
2005
|
2004
|
|||||||||
(restated)
|
(restated)
|
||||||||||||
REVENUES
|
|||||||||||||
Directional
drilling services
|
$
|
11,383
|
$
|
6,677
|
$
|
32,218
|
$
|
18,352
|
|||||
Casing
and tubing services
|
5,103
|
2,831
|
12,596
|
7,218
|
|||||||||
Compressed
air drilling services
|
7,637
|
2,380
|
16,684
|
7,419
|
|||||||||
Production
services
|
3,226
|
—
|
6,833
|
—
|
|||||||||
Rental
tools
|
1,559
|
—
|
3,499
|
—
|
|||||||||
$
|
28,908
|
$
|
11,888
|
$
|
71,830
|
$
|
32,989
|
||||||
OPERATING
INCOME (LOSS):
|
|||||||||||||
Directional
drilling services
|
$
|
1,696
|
$
|
1,048
|
$
|
5,069
|
$
|
2,435
|
|||||
Casing
and tubing services
|
1,336
|
949
|
4,015
|
2,174
|
|||||||||
Compressed
air drilling services
|
1,802
|
130
|
3,331
|
723
|
|||||||||
Production
services
|
(128
|
)
|
—
|
(130
|
)
|
—
|
|||||||
Rental
tools
|
454
|
—
|
780
|
—
|
|||||||||
General
corporate
|
(1,636
|
)
|
(888
|
)
|
(4,380
|
)
|
(1,915
|
)
|
|||||
$
|
3,524
|
$
|
1,239
|
$
|
8,685
|
$
|
3,417
|
|
For
the Three Months
Ended
September 30,
|
For
the Nine Months
Ended
September 30,
|
|||||||||||
|
2005
|
2004
|
2005
|
2004
|
|||||||||
(restated)
|
(restated)
|
||||||||||||
DEPRECIATION
AND AMORTIZATION:
|
|||||||||||||
Directional
drilling services
|
$
|
295
|
$
|
117
|
$
|
652
|
$
|
331
|
|||||
Casing
and Tubing services
|
510
|
358
|
1,418
|
1,075
|
|||||||||
Compressed
air drilling services
|
536
|
288
|
1,406
|
914
|
|||||||||
Production
services
|
279
|
—
|
604
|
—
|
|||||||||
Rental
tools
|
121
|
—
|
386
|
—
|
|||||||||
General
corporate
|
102
|
26
|
203
|
76
|
|||||||||
$
|
1,843
|
$
|
789
|
$
|
4,669
|
$
|
2,396
|
||||||
CAPITAL
EXPENDITURES:
|
|||||||||||||
Directional
drilling services
|
$
|
945
|
$
|
94
|
$
|
2,145
|
$
|
882
|
|||||
Casing
and tubing services
|
1,373
|
32
|
3,230
|
457
|
|||||||||
Compressed
air drilling services
|
915
|
107
|
2,841
|
771
|
|||||||||
Production
services
|
606
|
—
|
896
|
—
|
|||||||||
Rental
tools
|
271
|
—
|
278
|
—
|
|||||||||
General
corporate
|
12
|
8
|
195
|
10
|
|||||||||
$
|
4,122
|
$
|
241
|
$
|
9,585
|
$
|
2,120
|
|
As
of
|
||||||
|
September
30,
2005
|
December
31,
2004
|
|||||
GOODWILL:
|
|||||||
Directional
drilling services
|
$
|
4,168
|
$
|
4,168
|
|||
Casing
and tubing services
|
3,673
|
3,673
|
|||||
Compressed
air drilling services
|
3,592
|
3,510
|
|||||
Production
services
|
609
|
425
|
|||||
Rental
tools
|
—
|
—
|
|||||
General
corporate
|
—
|
—
|
|||||
$
|
12,042
|
$
|
11,776
|
||||
ASSETS:
|
|||||||
Directional
drilling services
|
$
|
21,437
|
$
|
14,166
|
|||
Casing
and tubing services
|
41,482
|
21,197
|
|||||
Compressed
air drilling services
|
41,011
|
29,147
|
|||||
Production
services
|
11,949
|
5,472
|
|||||
Rental
tools
|
8,084
|
1,625
|
|||||
General
corporate
|
5,599
|
8,585
|
|||||
$
|
129,562
|
$
|
80,192
|
|
For
the Three Months
Ended
September 30,
|
For
the Nine Months
Ended
September 30,
|
|||||||||||
|
2005
|
2004
|
2005
|
2004
|
|||||||||
(restated)
|
(restated)
|
||||||||||||
REVENUES:
|
|||||||||||||
United
States
|
$
|
27,486
|
$
|
10,493
|
$
|
66,879
|
$
|
29,402
|
|||||
International
|
1,422
|
1,395
|
4,951
|
3,587
|
|||||||||
$
|
28,908
|
$
|
11,888
|
$
|
71,830
|
$
|
32,989
|
/s/ Accounting & Consulting Group, LLP | |
|
|
Accounting & Consulting Group, LLP |
/s/ Accounting & Consulting Group, LLP | |
|
|
Accounting & Consulting Group, LLP |
July 31,
|
December 31,
|
December 31,
|
||||||||||||
2004
|
2003
|
2002
|
||||||||||||
ASSETS | ||||||||||||||
CURRENT
ASSETS:
|
||||||||||||||
Cash and cash
equivalents
|
$ | 123,171 | $ | 38,566 | $ | 129,612 | ||||||||
Accounts receivable
(Note 3)
|
826,198 | 704,466 | 547,332 | |||||||||||
Unbilled
receivables
|
75,809 | — | 3,518 | |||||||||||
Related party
receivables (Note 2)
|
85,636 | 153,981 | 197,859 | |||||||||||
Inventories
(Note 4)
|
1,712,465 | 1,146,070 | 344,948 | |||||||||||
Prepaid
expenses
|
10,160 | 16,300 | 9,629 | |||||||||||
TOTAL CURRENT
ASSETS
|
2,833,439 | 2,059,383 | 1,232,898 | |||||||||||
Related party
receivables (Note 2)
|
182,844 | 234,607 | 317,003 | |||||||||||
Property, Plant
and
Equipment, at cost (Note 5)
|
295,867 | 245,673 | 223,217 | |||||||||||
Other Assets
(Note 12)
|
24,885 | 31,699 | 27,036 | |||||||||||
TOTAL ASSETS
|
$ | 3,337,035 | $ | 2,571,362 | $ | 1,800,154 | ||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||
CURRENT
LIABILITIES:
|
||||||||||||||
Current maturities
of
long-term debt
|
$ | 341,184 | $ | 171,561 | $ | 164,535 | ||||||||
Current maturities
of
capital lease obligations
|
3,447 | — | — | |||||||||||
Accounts
payable
|
635,418 | 602,918 | 517,471 | |||||||||||
Accrued
expenses
|
97,366 | 197,588 | 269,489 | |||||||||||
Related party
payables
(Note 2)
|
687,559 | 427,465 | 48,694 | |||||||||||
Loans from
related
parties (Note 2)
|
768,281 | 667,137 | 209,000 | |||||||||||
TOTAL CURRENT
LIABILITIES
|
2,533,255 | 2,066,669 | 1,209,189 | |||||||||||
Long-Term Debt
(Note 6)
|
312,085 | 309,612 | 410,524 | |||||||||||
Capital lease
obligations (Note 5)
|
14,873 | — | — | |||||||||||
Commitments
and
Contingencies
|
— | — | — | |||||||||||
TOTAL
LIABILITIES
|
2,860,213 | 2,376,281 | 1,619,713 | |||||||||||
STOCKHOLDERS’
EQUITY
|
||||||||||||||
Common stock,
par value
$11,000 shares issued and outstanding
|
1,000 | 1,000 | 1,000 | |||||||||||
Paid-in
capital
|
2,370 | 2,370 | 2,370 | |||||||||||
Retained
earnings
|
473,452 | 191,711 | 177,071 | |||||||||||
TOTAL STOCKHOLDERS’
EQUITY
|
476,822 | 195,081 | 180,441 | |||||||||||
TOTAL LIABILITIES
AND
STOCKHOLDERS’ EQUITY
|
$ | 3,337,035 | $ | 2,571,362 | $ | 1,800,154 | ||||||||
July 31,
|
December 31,
|
December 31,
|
||||||||||||
2004
|
2003
|
2002
|
||||||||||||
NET SALES
(Note 8)
|
$ | 3,984,512 | $ | 5,470,208 | $ | 4,073,653 | ||||||||
Drilling
expenses
|
2,803,729 | 4,592,677 | 3,394,507 | |||||||||||
Selling, general,
and
administrative
|
390,690 | 620,776 | 492,067 | |||||||||||
Depreciation
and
amortization
|
91,902 | 99,730 | 102,648 | |||||||||||
Interest
expense
|
34,156 | 48,279 | 16,217 | |||||||||||
Total Costs
and
Expenses
|
3,320,477 | 5,361,462 | 4,005,439 | |||||||||||
Operating
income
|
664,035 | 108,746 | 68,214 | |||||||||||
Other income
|
||||||||||||||
Gain (loss)
on sale of
assets
|
(7,104 | ) | 9,841 | 15,906 | ||||||||||
Interest
income
|
11,008 | 23,053 | 5,232 | |||||||||||
NET INCOME
|
$ | 667,939 | $ | 141,640 | $ | 89,352 | ||||||||
Common
|
Paid-in
|
Retained
|
||||||||||||||
Stock
|
Capital
|
Earnings
|
Total
|
|||||||||||||
Balance,
January 1, 2002
|
$ | 1,000 | $ | 2,370 | $ | 485,719 | $ | 489,089 | ||||||||
Net Income
|
— | — | 89,352 | 89,352 | ||||||||||||
Dividends paid
|
— | — | (398,000 | ) | (398,000 | ) | ||||||||||
Balance,
December 31, 2002
|
1,000 | 2,370 | 177,071 | 180,441 | ||||||||||||
Net Income
|
— | — | 141,640 | 141,640 | ||||||||||||
Dividends paid
|
— | — | (127,000 | ) | (127,000 | ) | ||||||||||
Balance,
December 31, 2003
|
1,000 | 2,370 | 191,711 | 195,081 | ||||||||||||
Net Income
|
— | — | 667,939 | 667,939 | ||||||||||||
Dividends paid
|
— | — | (386,198 | ) | (386,198 | ) | ||||||||||
Balance, July 31,
2004
|
$ | 1,000 | $ | 2,370 | $ | 473,452 | $ | 476,822 | ||||||||
July 31,
|
December 31,
|
December 31,
|
|||||||||||
2004
|
2003
|
2002
|
|||||||||||
CASH FLOWS
FROM
OPERATING ACTIVITIES:
|
|||||||||||||
Net income
|
$ | 667,939 | $ | 141,640 | $ | 89,352 | |||||||
Adjustments
to
reconcile net loss to net cash provided (used) by operating
activities:
|
|||||||||||||
Depreciation
and
amortization
|
91,902 | 99,730 | 102,648 | ||||||||||
Gain (loss)
on sale of
property, plant, and equipment
|
(7,104 | ) | 9,841 | 15,906 | |||||||||
Change in operating
assets and liabilities:
|
|||||||||||||
Accounts
receivable
|
(197,541 | ) | (153,616 | ) | (165,294 | ) | |||||||
Inventory
|
(566,395 | ) | (801,122 | ) | (47,471 | ) | |||||||
Prepaid
expenses
|
6,140 | (6,671 | ) | (302 | ) | ||||||||
Other noncurrent
assets
|
6,814 | (4,663 | ) | (13,780 | ) | ||||||||
Accounts
payable
|
292,594 | 464,218 | 198,954 | ||||||||||
Accrued payroll
and
employee benefits
|
(100,224 | ) | (71,899 | ) | 162,920 | ||||||||
NET CASH PROVIDED
(USED) BY OPERATING ACTIVITIES
|
194,125 | (322,542 | ) | 342,933 | |||||||||
CASH FLOWS
FROM
INVESTING ACTIVITIES:
|
|||||||||||||
Repayment from
loans to
related parties
|
120,108 | 128,896 | 202,450 | ||||||||||
Loans made
to related
parties
|
— | (2,622 | ) | (430,370 | ) | ||||||||
Proceeds from
sale of
property, plant, and equipment
|
— | 30,494 | 53,804 | ||||||||||
Capital expenditures
on
property, plant, and equipment
|
(115,314 | ) | (162,521 | ) | (140,047 | ) | |||||||
NET CASH PROVIDED
(USED) BY INVESTING ACTIVITIES
|
4,794 | (5,753 | ) | (314,163 | ) | ||||||||
CASH FLOWS
FROM
FINANCING ACTIVITIES:
|
|||||||||||||
Repayment of
long-term
debt
|
(188,522 | ) | (219,947 | ) | (111,897 | ) | |||||||
Proceeds from
issuance
of long-term debt
|
360,618 | 126,061 | 367,788 | ||||||||||
Repayment of
short-term
debt
|
(200,000 | ) | (200,000 | ) | — | ||||||||
Proceeds from
issuance
of short-term debt
|
200,000 | 200,000 | — | ||||||||||
Repayment of
capital
lease obligations
|
(1,358 | ) | — | — | |||||||||
Repayment of
loans from
related parties
|
(162,667 | ) | (302,494 | ) | (6,000 | ) | |||||||
Proceeds from
loans
from related parties
|
263,813 | 760,629 | 215,000 | ||||||||||
Payment of
dividend
distributions to stockholders
|
(386,198 | ) | (127,000 | ) | (398,000 | ) | |||||||
NET CASH PROVIDED
(USED) BY FINANCING ACTIVITIES
|
(114,314 | ) | 237,249 | 66,891 | |||||||||
NET INCREASE
(DECREASE) IN CASH AND CASH EQUIVALENTS
|
84,605 | (91,046 | ) | 95,661 | |||||||||
Cash and Cash
Equivalents at Beginning of Year
|
38,566 | 129,612 | 33,951 | ||||||||||
Cash and Cash
Equivalents at End of Year
|
$ | 123,171 | $ | 38,566 | $ | 129,612 | |||||||
NON-CASH INVESTING
AND
FINANCING ACTIVITIES:
|
|||||||||||||
Payments made
directly
to Marquis Bit Co., LLC from a loan obtained by the Company
|
$ | — | $ | — | $ | 102,565 | |||||||
Note 1: | Summary of Significant Accounting Policies |
Note 2: | Related-Party Transactions |
December 31,
|
|||||||||||||
July 31,
|
|||||||||||||
2004
|
2003
|
2002
|
|||||||||||
Note receivable
from
Marquis Bit Co, LLC, variable interest rate (currently 7.25%)
payable in
monthly installments of $7,315 maturing September 2005, unsecured
|
$ | 268,480 | $ | 317,002 | $ | 395,684 | |||||||
Note receivables
from
stockholders, due upon demand, bearing interest of 0%, unsecured
|
— | 64,148 | 111,740 | ||||||||||
Note receivables
from
Marquis Bit Co, LLC, due upon demand, bearing interest of 0%,
unsecured
|
— | 7,438 | 7,438 | ||||||||||
Subtotal
|
268,480 | 388,588 | 514,862 | ||||||||||
Less current
portion
|
85,636 | 153,981 | 197,859 | ||||||||||
Related party
receivables
|
$ | 182,844 | $ | 234,607 | $ | 317,003 | |||||||
December 31,
|
|||||||||
July 31,
|
|||||||||
2004
|
2003
|
2002
|
|||||||
Trade accounts
payable
to Marquis Bit Co, LLC for fabrication of drill bits
|
$ | 687,559 | $427,465 | $48,694 | |||||
Related party
payables
|
$ | 687,559 | $427,465 | $48,694 | |||||
December 31,
|
||||||||||||
July 31,
|
||||||||||||
2004
|
2003
|
2002
|
||||||||||
Notes payable
to
stockholders, due on demand, unsecured, bearing an interest rate
of
0%
|
$ | 437,342 | $ | 220,696 | $ | 99,000 | ||||||
Loan payable
to Marquis
Bit Co, LLC, due on demand, unsecured, bearing an interest rate
of
0%
|
257,439 | 257,439 | — | |||||||||
Loan payable
to various
related entities (related due to certain Company stockholders
owning
majority interest in entities), due on demand, unsecured bearing
an
interest rate of 0%
|
73,500 | 189,000 | 110,000 | |||||||||
$ | 768,281 | $ | 667,135 | $ | 209,000 | |||||||
December 31,
|
||||||||
July 31,
|
||||||||
2004
|
2003
|
2002
|
||||||
Amount paid,
or
accrued, to Marquis Bit Co, LLC for the fabrication of drill
bits
|
$ | 680,573 | $1,271,242 | $62,472 | ||||
Note 3: | Accounts Receivable |
December 31,
|
|||||||||||||
July 31,
|
|||||||||||||
2004
|
2003
|
2002
|
|||||||||||
Accounts
receivable
|
$ | 831,086 | $ | 713,644 | $ | 550,161 | |||||||
Allowance for
doubtful
accounts
|
(4,888 | ) | (9,178 | ) | (2,829 | ) | |||||||
Total
|
$ | 826,198 | $ | 704,466 | $ | 547,332 | |||||||
Note 4: | Inventories |
December 31,
|
|||||||||||||
July 31,
|
|||||||||||||
2004
|
2003
|
2002
|
|||||||||||
Air hammers
|
$ | 376,627 | $ | 346,321 | $ | 292,719 | |||||||
Finished drill
bits
|
757,040 | 607,478 | 52,229 | ||||||||||
Drill bits
in
process
|
452,018 | 151,563 | — | ||||||||||
Raw materials
|
126,780 | 40,708 | — | ||||||||||
Total
|
$ | 1,712,465 | $ | 1,146,070 | $ | 344,948 | |||||||
Note 5: | Property, Plant and Equipment |
December 31,
|
|||||||||||||
July 31,
|
|||||||||||||
2004
|
2003
|
2002
|
|||||||||||
Equipment
|
$ | 99,721 | $ | 95,995 | $ | 58,956 | |||||||
Transportation
equipment
|
427,714 | 395,331 | 336,304 | ||||||||||
Equipment under
capital
lease
|
19,678 | — | — | ||||||||||
Total
|
547,113 | 491,326 | 395,260 | ||||||||||
Less: accumulated
depreciation
|
|||||||||||||
Accumulated
depreciation
|
247,966 | 245,653 | 172,043 | ||||||||||
Accumulated
amortization
|
3,280 | — | — | ||||||||||
Net property,
plant,
and equipment
|
$ | 295,867 | $ | 245,673 | $ | 223,217 | |||||||
Amount
|
|||||
Year ending
July 31,
|
$ | — | |||
2005
|
4,788 | ||||
2006
|
4,788 | ||||
2007
|
4,788 | ||||
2008
|
4,788 | ||||
2009 and
thereafter
|
2,793 | ||||
Total minimum
lease
payments
|
21,945 | ||||
Less amount
representing interest
|
3,625 | ||||
Total present
value of
minimum lease payments
|
18,320 | ||||
Less current
portion of
such obligations
|
3,447 | ||||
Long-term
obligations
|
$ | 14,873 | |||
Note 6: | Long Term Debt and Related Matters |
December 31,
|
||||||||
July 31,
|
||||||||
2004
|
2003
|
2002
|
||||||
Various notes
payable
to banks and financing companies for transportation equipment,
due in
installments through February, 2010 at fixed interest rates ranging
from
0.0% to 10.95%, collateralized by transportation equipment
|
$ | 209,788 | $147,312 | $173,675 | ||||
Variable interest
rate
(currently 7.25%) note payable, due in monthly installments of
$7,315
including interest through September 2005, collateralized by
equipment
(including equipment currently owned by Marquis Bit Co, LLC)
with
depreciated costs of $261,783, inventory, and accounts and notes
receivable. This note is personally guaranteed by a stockholder
of the
Company
|
249,792 | 290,577 | 356,719 |
December 31,
|
|||||||||||||
July 31,
|
|||||||||||||
2004
|
2003
|
2002
|
|||||||||||
4.0% note payable,
due in monthly installments of $1,181 including interest, through
November
2005, collateralized by accounts receivable and equipment (including
equipment currently owned by Marquis Bit Co, LLC) with depreciated
costs
of $26,406. This note is personally guaranteed by a shareholder
of the
Company
|
18,689 | 26,425 | 38,965 | ||||||||||
Variable interest
rate
(Carlsbad National Bank base rate) line of credit agreement,
$200,000
limit, expiring June 2005, collateralized by accounts receivable,
equipment, and inventory
|
175,000 | — | — | ||||||||||
Miscellaneous
notes
payable, varying interest rates, due various dates
|
— | 16,859 | 5,700 | ||||||||||
Subtotal
|
691,468 | 483,176 | 577,061 | ||||||||||
Less current
maturities
|
341,184 | 171,561 | 164,535 | ||||||||||
Total
|
$ | 350,284 | $ | 311,615 | $ | 412,526 | |||||||
Note 7: | Stockholders’ Equity |
December 31,
|
||||||||||||
July 31,
|
||||||||||||
2004
|
2003
|
2002
|
||||||||||
Common stock
authorized
|
1,000,000 | 1,000,000 | 1,000,000 | |||||||||
Common stock
issued
|
1,000 | 1,000 | 1,000 | |||||||||
Common stock
outstanding
|
1,000 | 1,000 | 1,000 | |||||||||
Common stock,
per share
par value
|
$ | 1.00 | $ | 1.00 | $ | 1.00 | ||||||
Cash dividends
paid on
common stock
|
$ | 386,198 | $ | 127,000 | $ | 398,000 |
Note 8: | Dependence on Key Customers |
Note 9: | Employee Benefit Plans |
Note 10: | Subsequent Event |
Note 11. | Supplemental Cash Flow Information |
Note 12. | Patent Pending |
/s/ Accounting & Consulting Group, LLP | |
|
|
Accounting & Consulting Group, LLP |
/s/ Accounting & Consulting Group, LLP | |
|
|
Accounting & Consulting Group, LLP |
July 31,
|
December 31,
|
December 31,
|
||||||||||||
2004
|
2003
|
2002
|
||||||||||||
ASSETS
|
||||||||||||||
CURRENT
ASSETS:
|
||||||||||||||
Cash and cash
equivalents
|
$ | — | $ | 5,223 | $ | 1,504 | ||||||||
Accounts receivable
(Note 2)
|
358,368 | 303,358 | 48,694 | |||||||||||
Unbilled
receivables
|
329,191 | 107,435 | 15,875 | |||||||||||
Related party
notes
receivable (Note 2)
|
257,439 | 257,439 | — | |||||||||||
Prepaid
expenses
|
5,623 | — | 3,269 | |||||||||||
TOTAL CURRENT
ASSETS
|
950,621 | 673,455 | 69,342 | |||||||||||
Property, Plant
and
Equipment, net (Note 3)
|
261,783 | 305,472 | 386,704 | |||||||||||
Other Assets
|
1,323 | 1,485 | 1,011 | |||||||||||
TOTAL ASSETS
|
$ | 1,213,727 | $ | 980,412 | $ | 457,057 | ||||||||
LIABILITIES
AND
MEMBERS’ EQUITY
|
||||||||||||||
Current
Liabilities:
|
||||||||||||||
Bank overdraft
|
$ | 9,305 | $ | — | $ | — | ||||||||
Accounts
payable
|
15,890 | 38,640 | 46,854 | |||||||||||
Accrued
expenses
|
14,597 | 9,076 | 6,580 | |||||||||||
Loans from
related
parties (Note 2)
|
114,836 | 125,020 | 122,119 | |||||||||||
TOTAL CURRENT
LIABILITIES
|
154,628 | 172,736 | 175,553 | |||||||||||
Loans from
Related
Parties, net of current portion (Note 2)
|
182,844 | 234,607 | 317,002 | |||||||||||
Commitments
and
Contingencies
|
— | — | — | |||||||||||
TOTAL
LIABILITIES
|
337,472 | 407,343 | 492,555 | |||||||||||
MEMBERS’
EQUITY
|
876,255 | 573,069 | (35,498 | ) | ||||||||||
TOTAL LIABILITIES
AND
MEMBERS’ EQUITY
|
$ | 1,213,727 | $ | 980,412 | $ | 457,057 | ||||||||
July 31,
|
December 31,
|
December 31,
|
|||||||||||
2004
|
2003
|
2002
|
|||||||||||
SALES
|
$ | 697,245 | $ | 1,238,695 | $ | 78,347 | |||||||
COST OF GOODS
SOLD
|
307,058 | 525,593 | 65,947 | ||||||||||
GROSS PROFIT
|
390,187 | 713,102 | 12,400 | ||||||||||
Selling, general,
and
administrative
|
33,504 | 67,423 | 35,424 | ||||||||||
Depreciation
and
amortization
|
43,689 | 86,232 | 7,242 | ||||||||||
Interest
expense
|
11,008 | 23,053 | 5,232 | ||||||||||
Total Costs
and
Expenses
|
88,201 | 176,708 | 47,898 | ||||||||||
OPERATING INCOME
(LOSS)
|
301,986 | 536,394 | (35,498 | ) | |||||||||
Other income
|
1,200 | 72,173 | — | ||||||||||
NET INCOME
(LOSS)
|
303,186 | 608,567 | (35,498 | ) | |||||||||
Members’ equity,
beginning of period
|
573,069 | (35,498 | ) | — | |||||||||
MEMBERS’ EQUITY, END
OF
PERIOD
|
876,255 | 573,069 | (35,498 | ) | |||||||||
July 31,
|
December 31,
|
December 31,
|
|||||||||||
2004
|
2003
|
2002
|
|||||||||||
CASH FLOWS
FROM
OPERATING ACTIVITIES:
|
|||||||||||||
Net income
(loss)
|
$ | 303,186 | $ | 608,567 | $ | (35,498 | ) | ||||||
Adjustments
to
reconcile net loss to net cash provided (used) by operating
activities:
|
|||||||||||||
Depreciation
and
amortization
|
43,689 | 86,232 | 7,242 | ||||||||||
Change in operating
assets and liabilities:
|
|||||||||||||
Accounts
receivable
|
(276,766 | ) | (346,224 | ) | (64,569 | ) | |||||||
Prepaid
expenses
|
(5,623 | ) | 3,269 | (3,269 | ) | ||||||||
Other assets
|
162 | (474 | ) | (1,011 | ) | ||||||||
Accounts
payable
|
(22,750 | ) | 18,794 | 19,846 | |||||||||
Accrued payroll
and
employee benefits
|
5,521 | 2,496 | 6,580 | ||||||||||
NET CASH PROVIDED
(USED) BY OPERATING ACTIVITIES
|
47,419 | 372,660 | (70,679 | ) | |||||||||
CASH FLOWS
FROM
INVESTING ACTIVITIES:
|
|||||||||||||
Loans made
to
others
|
— | (257,439 | ) | — | |||||||||
Capital expenditures
on
property, plant, and equipment
|
— | (32,008 | ) | (80,088 | ) | ||||||||
NET CASH PROVIDED
(USED) BY INVESTING ACTIVITIES
|
— | (289,447 | ) | (80,088 | ) | ||||||||
CASH FLOWS
FROM
FINANCING ACTIVITIES:
|
|||||||||||||
Repayment of
loans from
related parties
|
(120,058 | ) | (84,682 | ) | (34,259 | ) | |||||||
Proceeds from
loans
from related parties
|
58,111 | 5,188 | 186,530 | ||||||||||
Net increase
in bank
overdrafts
|
9,305 | — | — | ||||||||||
NET CASH PROVIDED
(USED) BY FINANCING ACTIVITIES
|
(52,642 | ) | (79,494 | ) | 152,271 | ||||||||
NET INCREASE
(DECREASE) IN CASH AND CASH EQUIVALENTS
|
(5,223 | ) | 3,719 | 1,504 | |||||||||
Cash and Cash
Equivalents at Beginning of Period
|
5,223 | 1,504 | — | ||||||||||
Cash and Cash
Equivalents at End of Period
|
$ | — | $ | 5,223 | $ | 1,504 | |||||||
NON-CASH INVESTING
AND
FINANCING TRANSACTIONS:
|
|||||||||||||
Property and
equipment
acquired with long-term debt
|
$ | — | $ | — | $ | 286,850 | |||||||
Note 1: | Summary of Significant Accounting Policies |
Note 2: | Related-Party Transactions |
December 31,
|
|||||||||||||
July 31,
|
|||||||||||||
2004
|
2003
|
2002
|
|||||||||||
Trade accounts
receivable from Diamond Air Drilling Services, Inc. (related
due to common
ownership)
|
$ | 358,368 | $ | 303,358 | $ | 48,694 | |||||||
Unbilled receivables
from Diamond Air Drilling Services, Inc. (related due to common
ownership)
|
329,191 | 107,435 | 15,875 | ||||||||||
Total accounts
receivable from related parties
|
$ | 687,559 | $ | 410,793 | $ | 64,569 | |||||||
December 31,
|
||||||||||||
July 31,
|
||||||||||||
2004
|
2003
|
2002
|
||||||||||
Loan receivable
from
Diamond Air Drilling Services, Inc. (related due to common ownership),
due
upon demand, bearing interest of 0%, unsecured Entire balance
considered
current
|
$ | 257,439 | $ | 257,439 | $ | — | ||||||
December 31,
|
|||||||||||||
July 31,
|
|||||||||||||
2004
|
2003
|
2002
|
|||||||||||
Loans payable
to
members, due on demand, unsecured, bearing an interest rate of
0%
|
$ | 29,200 | $ | 25,188 | $ | 25,000 | |||||||
Loan payable
to various
related entities (related due to certain Company stockholders
owning
majority interest in entities), due on demand, unsecured bearing
an
interest rate of 0%
|
— | 17,437 | 18,437 | ||||||||||
Loan payable
to Diamond
Air Drilling Services, Inc. (related due to common ownership),
variable
interest rate (currently 7.25%) payable in monthly installments
of $7,315
maturing September 2005, unsecured
|
268,480 | 317,002 | 395,684 | ||||||||||
Subtotal
|
297,680 | 359,627 | 439,121 | ||||||||||
Less current
maturities
|
114,836 | 125,020 | 122,119 | ||||||||||
Loans from
related
parties
|
$ | 182,844 | $ | 234,607 | $ | 317,002 | |||||||
December 31,
|
||||||||||||
July 31,
|
||||||||||||
2004
|
2003
|
2002
|
||||||||||
Amount received,
or
accrued, from Diamond Air Drilling Services, Inc. (related due
to common
ownership) for the fabrication of drill bits
|
$ | 697,245 | $ | 1,238,695 | $ | 78,347 | ||||||
Note 3: | Property, Plant and Equipment |
December 31,
|
|||||||||||||
July 31,
|
|||||||||||||
2004
|
2003
|
2002
|
|||||||||||
Manufacturing
equipment
|
$ | 386,789 | $ | 386,789 | $ | 381,789 | |||||||
Computer
equipment
|
9,942 | 9,942 | 9,942 | ||||||||||
Leasehold
improvements
|
2,215 | 2,215 | 2,215 | ||||||||||
Total
|
398,946 | 398,946 | 393,946 | ||||||||||
Less:
|
|||||||||||||
Accumulated
depreciation
|
133,550 | 91,126 | 7,061 | ||||||||||
Amortization
of
leasehold improvements
|
3,613 | 2,348 | 181 | ||||||||||
Net property,
plant,
and equipment
|
$ | 261,783 | $ | 305,472 | $ | 386,704 | |||||||
Note 4: | Dependence on Key Customers |
Note 5: | Employee Benefit Plans |
Note 6: | Subsequent Events |
Note 7: | Restatement of Previously Issued Financial Statements |
/s/ JOHNSON, MILLER & CO. | |
|
2004
|
2003
|
||||||||||
ASSETS | |||||||||||
CURRENT ASSETS
|
|||||||||||
Cash and cash
equivalents (note A12)
|
$ | 71,881 | $ | 20,064 | |||||||
Accounts receivable,
net of allowance of $10,000 and $10,000 Customers
|
1,242,346 | 466,435 | |||||||||
Employees
|
— | 2,447 | |||||||||
Inventories
(note A8)
|
295,040 | 189,287 | |||||||||
Prepaid
expenses
|
155,626 | 60,263 | |||||||||
Total current
assets
|
1,764,893 | 738,496 | |||||||||
PROPERTY AND
EQUIPMENT,
NET (notes A8, A9 and C)
|
719,322 | 682,564 | |||||||||
OTHER ASSETS
(notes A9, A10 and D)
|
4,617 | 55,400 | |||||||||
Total assets
|
$ | 2,488,832 | $ | 1,476,460 | |||||||
LIABILITIES AND MEMBERS’ EQUITY | |||||||||||
CURRENT
LIABILITIES
|
|||||||||||
Current portion
of
notes payable (note E)
|
$ | 757,406 | $ | 159,846 | |||||||
Current portion
of
capitalized lease obligations (note F)
|
45,735 | 67,367 | |||||||||
Accounts
payable
|
1,002,375 | 572,238 | |||||||||
Accrued
expenses
|
105,333 | 78,583 | |||||||||
Sales tax
payable
|
21,937 | 9,340 | |||||||||
Interest
payable
|
19,827 | 4,314 | |||||||||
Total current
liabilities
|
1,952,613 | 891,688 | |||||||||
DEFERRED
REVENUE
|
197,400 | 197,400 | |||||||||
NOTES PAYABLE,
net of
current portion (note E)
|
17,070 | 103,744 | |||||||||
CAPITALIZED
LEASE
OBLIGATIONS, net of current portion (note F)
|
66,702 | — | |||||||||
COMMITMENTS
AND
CONTINGENCIES (notes G and H) MEMBERS’ EQUITY
|
255,047 | 283,628 | |||||||||
Total liabilities
and
members’ equity
|
$ | 2,488,832 | $ | 1,476,460 | |||||||
2004
|
2003
|
|||||||||
Sales
|
$ | 4,792,719 | $ | 3,835,414 | ||||||
Cost of sales
|
3,875,646 | 3,050,921 | ||||||||
Gross profit
|
917,073 | 784,493 | ||||||||
General and
administrative expenses
|
871,927 | 792,603 | ||||||||
Income (loss)
from
operations
|
45,146 | (8,110 | ) | |||||||
Other income
(expense)
|
||||||||||
Interest
income
|
22 | 403 | ||||||||
Interest
expense
|
(73,749 | ) | (41,673 | ) | ||||||
Impairment
loss on
patent (note D)
|
— | (983,278 | ) | |||||||
(73,727 | ) | (1,024,548 | ) | |||||||
NET LOSS
|
(28,581 | ) | (1,032,658 | ) | ||||||
Members’ equity —
beginning of period
|
283,628 | 1,316,286 | ||||||||
Members’ equity —
end of period
|
$ | 255,047 | $ | 283,628 | ||||||
2004
|
2003
|
|||||||||
Increase (Decrease)
in
Cash and Cash Equivalents
|
||||||||||
Cash flows
from
operating activities
|
||||||||||
Net loss
|
$ | (28,581 | ) | $ | (1,032,658 | ) | ||||
Adjustments
to
reconcile net loss to net cash (used in) provided by operating
activities:
|
||||||||||
Depreciation
and
amortization
|
326,034 | 283,765 | ||||||||
Impairment
loss on
patent
|
— | 983,278 | ||||||||
Change in account
balances
|
||||||||||
(Increase)
decrease in
accounts receivable — trade
|
(775,911 | ) | 69,523 | |||||||
Decrease in
accounts
receivable — employees
|
2,447 | 2,722 | ||||||||
Increase in
inventories
|
(105,753 | ) | (51,145 | ) | ||||||
(Increase)
decrease in
prepaid expenses
|
(95,363 | ) | 46,792 | |||||||
Increase (decrease)
in
accounts payable
|
430,137 | (73,388 | ) | |||||||
Increase (decrease)
in
accrued expenses
|
26,750 | (39,028 | ) | |||||||
Increase (decrease)
in
sales tax payable
|
12,597 | (5,268 | ) | |||||||
Increase in
deferred
revenue
|
— | 135,000 | ||||||||
Increase in
interest
payable
|
15,513 | 4,314 | ||||||||
Net cash (used
in)
provided by operating activities
|
(192,130 | ) | 323,907 | |||||||
Cash flows
provided by
(used in) investing activities
|
||||||||||
Purchase of
property,
plant and equipment
|
(174,305 | ) | (137,267 | ) | ||||||
Net cash used
in
investing activities
|
(174,305 | ) | (137,267 | ) | ||||||
Cash flows
provided by
(used in) financing activities
|
||||||||||
Issuance of
notes
payable
|
1,090,335 | — | ||||||||
Repayments
on notes
payable
|
(579,449 | ) | (171,830 | ) | ||||||
Repayments
of capital
lease obligations
|
(92,634 | ) | (119,594 | ) | ||||||
Net cash provided
by
(used in) financing activities
|
418,252 | (291,424 | ) | |||||||
Net increase
(decrease)
in cash and cash equivalents
|
51,817 | (104,784 | ) | |||||||
Cash and cash
equivalents
|
||||||||||
Beginning of
period
|
20,064 | 124,848 | ||||||||
End of period
|
$ | 71,881 | $ | 20,064 | ||||||
Supplemental
disclosure
of cash flow information
|
||||||||||
Interest paid
|
$ | 58,236 | $ | 37,359 | ||||||
Non-cash investing
and
financing activities:
|
||||||||||
Acquisition
of property
and equipment through capital lease financing
|
$ | 137,704 | $ | — | ||||||
Acquisition
of
Ener-Coil, L.L.C. (see note B)
|
— | — |
1. | Formation of Company |
2. | Nature of Operations |
3. | Product, Geographic Location and Customer Concentrations |
2004
|
|||||
Type of Services
Rendered:
|
|||||
Installation
of
Tubing
|
60 | % | |||
Removal and
Repair of
Customer Owned Tubing
|
37 | % | |||
Rental and
Other
|
3 | % | |||
Geographic
Location of
Services Rendered:
|
|||||
Texas
|
47 | % | |||
Oklahoma
|
7 | % | |||
Louisiana
|
16 | % | |||
United Arab
Emirates
|
3 | % | |||
Other
Locations
|
27 | % |
4. | Supplier Concentration |
5. | Revenue Recognition and Deferred Revenue |
6. | Allowance for Uncollectible Accounts Receivable |
7. | Inventory |
8. | Property, Plant and Equipment |
9. | Long-Lived Assets |
10. | Intangible Assets |
11. | Income Taxes |
12. | Cash Flow and Non-Cash Investing and Financing Transactions |
13. | Advertising Expenses |
14. | Management’s Use of Estimates |
Accounts
receivable
|
$ | 360,327 | ||
Other current
assets
|
39,305 | |||
Property, plant
and
equipment
|
154,679 | |||
Notes payable
|
(533,929 | ) | ||
Accounts payable
and
accrued expenses
|
(20,382 | ) | ||
$ | — | |||
November 30,
|
December 31,
|
|||||||
2004
|
2003
|
|||||||
Computer
Equipment
|
$ | 115,649 | $ | 115,137 | ||||
Machinery and
Equipment
|
1,318,938 | 1,082,616 | ||||||
Vehicles
|
203,813 | 128,638 | ||||||
Furniture and
Fixtures
|
50,451 | 50,451 | ||||||
1,688,851 | 1,376,842 | |||||||
Less accumulated
depreciation
|
(969,529 | ) | (694,278 | ) | ||||
$ | 719,322 | $ | 682,564 | |||||
November 30,
|
||||
2004
|
||||
Promissory
note payable
to Michael Weaver, 4 months of $7,750, interest rate at 0%,
unsecured
|
$ | 7,750 | ||
Revolving line
of
credit with Bank of America, with maximum borrowings of $600,000,
matures
March 8, 2005, interest rate variable, collateralized by
substantially all of the Company’s assets
|
585,822 | |||
Promissory
note payable
to PAS, Inc. and W.T. Butler Enterprises, 58 months of $3,500 each,
interest rate at 6%, unsecured
|
1,566 | |||
Promissory
note payable
Robert Patterson, former shareholder, 24 months of $2,436, interest
rate at 0% collateralized by certain specific assets of the
Company
|
12,315 | |||
Promissory
note payable
to Herb Sostek, 24 months of $6,648, interest rate at 6%,
unsecured
|
45,620 | |||
Promissory
note payable
to Local Bank of Oklahoma, 60 payments of $2,219, interest rate
at 6.75%,
collateralized by certain specific assets of the Company
|
43,778 | |||
Promissory
note payable
to Ford Motor Credit Corp, 36 payments of $1,137, interest rate
at 0%
collateralized by 2003 Ford F350
|
14,783 | |||
Promissory
note payable
to Local Bank of Oklahoma, 60 Payments of $2,147, interest rate
at 6.75%,
collateralized by equipment
|
$ | 62,842 | ||
774,476 | ||||
Less — Current
Portion
|
(757,406 | ) | ||
$ | 17,070 | |||
December 31,
|
||||
2003
|
||||
Promissory
note payable
to PAS, Inc. and W.T. Butler Enterprises, 58 months of $3,500 each,
interest rate at 6%, unsecured
|
$ | 76,208 | ||
Promissory
note payable
to Herb Sostek, 24 months of $6,648, interest rate at 6%,
unsecured
|
41,168 | |||
Promissory
note payable
to Local Bank of Oklahoma, 60 payments of $2,219, interest rate
at 6.75%,
collateralized by certain specific assets of the Company
|
62,931 | |||
Promissory
note payable
to Ford Motor Credit Corp, 60 payments of $798.94, interest rate
at 9.25%
collateralized by 1999 Ford F350
|
2,360 | |||
Promissory
note payable
to Local Bank of Oklahoma, 60 Payments of $2,147, interest rate
at 6.75%,
collateralized by certain specific assets of the Company
|
80,923 | |||
263,590 | ||||
Less — Current
Portion
|
(159,846 | ) | ||
$ | 103,744 | |||
November 30,
|
|||||
2005
|
$ | 757,406 | |||
2006
|
17,070 | ||||
$ | 774,476 | ||||
Present
Value
|
||||
of
Obligation
|
||||
Capital lease
payable
to Outsource Lease, 60 monthly payments of $3,710 commencing
April 11, 2002, interest rate at 10.67%, collateralized by tubing
unit
|
$ | 21,259 | ||
Capital lease
payable
to Outsource Lease, 60 monthly payments of $865 commencing
April 29, 2002, interest rate at 10.67%, collateralized by computer
network
|
91,178 | |||
112,437 | ||||
Less — Current
Portion
|
45,735 | |||
$ | 66,702 | |||
Year |
Total
Payment
|
|||
2005
|
$ | 54,900 | ||
2006
|
54,900 | |||
2007
|
21,232 | |||
Total Future
Minimum
Lease Payments
|
131,032 | |||
Total Amount
Representing Interest
|
18,595 | |||
Present Value
of Lease
Obligation
|
$ | 112,437 | ||
2005
|
$ | 166,235 | ||
2006
|
132,245 | |||
2007
|
60,161 | |||
2008
|
30,000 | |||
2009
|
10,000 | |||
$ | 398,641 | |||
/s/ | WRIGHT, MOORE, DEHART, |
DUPUIS & HUTCHINSON, L.L.C. |
Certified Public Accountants |
December 31,
|
|||||||||||
2004
|
2003
|
||||||||||
|
|||||||||||
ASSETS | |||||||||||
CURRENT ASSETS
|
|||||||||||
Cash
|
$ | 891,338 | $ | 705,553 | |||||||
Accounts
Receivable
|
1,095,587 | 713,929 | |||||||||
Prepaid
Insurance
|
13,838 | 14,067 | |||||||||
Prepaid Income
Taxes
|
— | 51,411 | |||||||||
Current Deferred
Tax
Asset
|
— | 77,595 | |||||||||
Employee
Advances
|
|||||||||||
Total Current
Assets
|
2,000,763 | 1,562,555 | |||||||||
PROPERTY AND
EQUIPMENT
|
|||||||||||
Office
Equipment
|
33,624 | 32,407 | |||||||||
Rental
Equipment
|
3,699,987 | 3,341,816 | |||||||||
Transportation
Equipment
|
144,260 | 144,260 | |||||||||
Yard Equipment
|
77,211 | 77,211 | |||||||||
Total
|
3,955,082 | 3,595,694 | |||||||||
Less: Accumulated
Depreciation
|
(2,610,143 | ) | (2,307,864 | ) | |||||||
Net Property
and
Equipment
|
1,344,939 | 1,287,830 | |||||||||
OTHER ASSETS
|
|||||||||||
Cash Surrender
Value of
Life Insurance
|
38,261 | 35,446 | |||||||||
Total Other
Assets
|
38,261 | 35,446 | |||||||||
TOTAL ASSETS
|
$ | 3,383,963 | $ | 2,885,831 | |||||||
December 31,
|
|||||||||||
2004
|
2003
|
||||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||||
CURRENT
LIABILITIES
|
|||||||||||
Accounts
Payable
|
$ | 53,949 | $ | 40,829 | |||||||
Payroll Liabilities
Payable
|
17,157 | 16,063 | |||||||||
Sales Tax
Payable
|
12,308 | 3,487 | |||||||||
Accrued Interest
Expense
|
3,734 | 4,244 | |||||||||
Income Taxes
Payable
|
92,448 | — | |||||||||
Current Portion
of
Stockholder Loan
|
93,994 | 87,674 | |||||||||
Total Current
Liabilities
|
273,590 | 152,297 | |||||||||
LONG-TERM
LIABILITIES
|
|||||||||||
Stockholder
Loan (Less
Current Portion)
|
547,784 | 641,775 | |||||||||
Long-Term Deferred
Tax
Liability
|
353,147 | 311,762 | |||||||||
Stockholder
Loan
|
|||||||||||
Total Long-Term
Liabilities
|
900,931 | 953,537 | |||||||||
Total
Liabilities
|
1,174,521 | 1,105,834 | |||||||||
STOCKHOLDERS’
EQUITY
|
|||||||||||
Common Stock
(No Par
Value, 300,000 Shares Authorized, 27,083 Shares Issued and 8,333
Outstanding)
|
27,083 | 27,083 | |||||||||
Additional
Paid-In
Capital
|
64,574 | 64,574 | |||||||||
Retained
Earnings
|
3,117,785 | 2,688,340 | |||||||||
Less: Treasury
Stock
(18,750 Shares at Cost)
|
(1,000,000 | ) | (1,000,000 | ) | |||||||
Total Stockholders’
Equity
|
2,209,442 | 1,779,997 | |||||||||
TOTAL LIABILITIES
AND
STOCKHOLDERS’ EQUITY
|
$ | 3,383,963 | $ | 2,885,831 | |||||||
Twelve
Months Ended
|
||||||||||
December 31,
|
||||||||||
|
||||||||||
2004
|
2003
|
|||||||||
REVENUES
|
$ | 3,249,338 | $ | 2,662,091 | ||||||
COST OF
REVENUES
|
||||||||||
Direct
|
796,194 | 766,196 | ||||||||
GROSS PROFIT
|
2,453,144 | 1,895,895 | ||||||||
ADMINISTRATIVE
EXPENSES
|
||||||||||
General and
Administrative
|
1,798,414 | 1,926,173 | ||||||||
Depreciation
|
30,061 | 31,678 | ||||||||
Total Administrative
Expenses
|
1,828,475 | 1,957,851 | ||||||||
INCOME (LOSS) FROM
OPERATIONS
|
624,669 | (61,956 | ) | |||||||
OTHER INCOME
(EXPENSES)
|
||||||||||
Interest
Expense
|
(48,503 | ) | (61,177 | ) | ||||||
Interest
Income
|
4,064 | 2,234 | ||||||||
Life Insurance
Dividends
|
930 | 930 | ||||||||
Gain on Sale
of
Assets
|
113,435 | 354,382 | ||||||||
Total Other
Income
(Expenses)
|
69,926 | 296,369 | ||||||||
INCOME BEFORE
PROVISION
FOR INCOME TAXES
|
694,595 | 234,413 | ||||||||
PROVISION FOR
INCOME
TAXES
|
||||||||||
Current
|
146,170 | — | ||||||||
Deferred
|
118,980 | 134,274 | ||||||||
Total Income
Tax
Provision
|
265,150 | 134,274 | ||||||||
NET INCOME
|
$ | 429,445 | $ | 100,139 | ||||||
Twelve
Months Ended
|
||||||||
December 31,
|
||||||||
2004
|
2003
|
|||||||
BEGINNING
BALANCE
|
$ | 2,688,340 | $ | 2,588,201 | ||||
NET INCOME
|
429,445 | 100,139 | ||||||
ENDING BALANCE
|
$ | 3,117,785 | $ | 2,688,340 | ||||
Twelve
Months Ended
|
||||||||||||
December 31,
|
||||||||||||
2004
|
2003
|
|||||||||||
CASH FLOWS
FROM
OPERATING ACTIVITIES
|
||||||||||||
Net Income
|
$ | 429,445 | $ | 100,139 | ||||||||
Adjustments
to
Reconcile Net Income to Net Cash Provided By Operating
Activities:
|
||||||||||||
Depreciation
and
Amortization
|
346,615 | 308,587 | ||||||||||
Gain on Sale
of
Assets
|
(113,435 | ) | (354,382 | ) | ||||||||
Change in Assets
and
Liabilities:
|
||||||||||||
Accounts
Receivable
|
(381,658 | ) | (7,963 | ) | ||||||||
Prepaid
Expenses
|
51,640 | 62,610 | ||||||||||
Accounts Payable
and
Accrued Expenses
|
114,973 | (29,129 | ) | |||||||||
Deferred Taxes
|
118,980 | 134,274 | ||||||||||
Total
Adjustments
|
137,115 | 113,997 | ||||||||||
Net Cash Provided
By
Operating Activities
|
566,560 | 214,136 | ||||||||||
CASH FLOWS
FROM
INVESTING ACTIVITIES
|
||||||||||||
Purchase of
Equipment
|
(480,371 | ) | (781,152 | ) | ||||||||
Proceeds from
Sale of
Assets
|
190,082 | 522,911 | ||||||||||
Cash Surrender
Value — Life Insurance
|
(2,815 | ) | (2,816 | ) | ||||||||
Net Cash Used
In
Investing Activities
|
(293,104 | ) | (261,057 | ) | ||||||||
CASH FLOWS
FROM
FINANCING ACTIVITIES
|
||||||||||||
Principal Payments
on
Treasury Stock Note
|
— | (506,036 | ) | |||||||||
Proceeds From
Long-Term
Debt
|
— | — | ||||||||||
Proceeds From
Stockholder Note Payable
|
— | 450,000 | ||||||||||
Principal Payments
Stockholder Note Payable
|
(87,671 | ) | (20,550 | ) | ||||||||
Net Cash Used
in
Financing Activities
|
(87,671 | ) | (76,586 | ) | ||||||||
NET INCREASE
(DECREASE) IN CASH
|
185,785 | (123,507 | ) | |||||||||
CASH AT BEGINNING
OF
YEAR
|
705,553 | 829,060 | ||||||||||
CASH AT END
OF
YEAR
|
$ | 891,338 | $ | 705,553 | ||||||||
SUPPLEMENTAL
DISCLOSURES:
|
||||||||||||
Interest Paid
|
$ | 49,013 | $ | 84,650 | ||||||||
Income Taxes
Paid
|
$ | 2,311 | $ | 37,460 | ||||||||
2004
|
2003
|
|||||||
Billed Accounts
Receivable
|
$ | 699,442 | $ | 407,556 | ||||
Accrued Unbilled
Revenue
|
396,145 | 306,373 | ||||||
Total
|
$ | 1,095,587 | $ | 713,929 | ||||
2004
|
2003
|
||||||||||
Current
|
|||||||||||
Federal
|
$ | 128,548 | $ | — | |||||||
States
|
17,622 | — | |||||||||
Total Current
Income
Tax Expense
|
146,170 | — | |||||||||
Deferred
|
118,980 | 134,274 | |||||||||
Total Income
Tax
Expense
|
$ | 265,150 | $ | 134,274 | |||||||
2004
|
2003
|
||||||||
Depreciation
Timing
Difference
|
$ | 882,867 | $ | 779,405 | |||||
Net Operating
Loss
Carry-Forward
|
— | (163,311 | ) | ||||||
Charitable
Contribution
Carryover
|
— | (30,678 | ) | ||||||
882,867 | 585,416 | ||||||||
Blended Federal
and
State Rates
|
40 | % | 40 | % | |||||
Deferred Income
Tax
Liability (Net)
|
$ | 353,147 | $ | 234,167 | |||||
2004
|
2003
|
|||||||
Current Deferred
Tax
Asset
|
$ | — | $ | (77,595 | ) | |||
Long-Term Deferred
Tax
Liability
|
353,147 | 311,762 | ||||||
Total
|
$ | 353,147 | $ | 234,167 | ||||
Twelve Months
Ending
December 31,
|
||||||
2005
|
$ | 93,994 | ||||
2006
|
100,772 | |||||
2007
|
108,038 | |||||
2008
|
115,827 | |||||
2009
|
124,178 | |||||
Later
|
98,969 | |||||
Total
|
$ | 641,778 | ||||
Twelve Months
Ending
December 31,
|
||||
2005
|
$36,000 | |||
Total
|
$36,000 | |||
Percentage
of
|
||||||||||||
Sales
|
Percentage
of
|
Total
Accounts
|
||||||||||
Amount
|
Total
Revenue
|
Receivable
|
||||||||||
Customer A
|
$ | 488,589 | 18.35 | % | 14.39 | % | ||||||
Customer B
|
$ | 401,265 | 15.07 | % | 9.85 | % | ||||||
Customer C
|
$ | 296,570 | 11.14 | % | 11.71 | % | ||||||
Customer D
|
$ | 269,963 | 10.14 | % | 9.61 | % |
Percentage
of
|
||||||||||||
Sales
|
Percentage
of
|
Total
Accounts
|
||||||||||
Amount
|
Total
Revenue
|
Receivable
|
||||||||||
Customer A
|
$ | 549,678 | 16.92 | % | 14.31 | % | ||||||
Customer B
|
$ | 528,474 | 16.26 | % | 22.51 | % | ||||||
Customer C
|
$ | 329,160 | 10.13 | % | 6.40 | % | ||||||
Customer D
|
$ | 308,133 | 9.48 | % | 13.15 | % |
March 31,
|
||||||||
2005
|
||||||||
ASSETS | ||||||||
CURRENT
ASSETS
|
||||||||
Cash
|
$ | 169,154 | ||||||
Accounts
Receivable
|
936,156 | |||||||
Prepaid
Insurance
|
— | |||||||
Prepaid Income
Taxes
|
— | |||||||
Current Deferred
Tax
Asset
|
160,349 | |||||||
Employee
Advances
|
||||||||
Total Current
Assets
|
1,265,659 | |||||||
PROPERTY
AND
EQUIPMENT
|
||||||||
Office
Equipment
|
33,624 | |||||||
Rental
Equipment
|
3,739,342 | |||||||
Transportation
Equipment
|
144,180 | |||||||
Yard Equipment
|
77,211 | |||||||
Total
|
3,994,357 | |||||||
Less: Accumulated
Depreciation
|
(2,652,825 | ) | ||||||
Net Property
and
Equipment
|
1,341,532 | |||||||
OTHER
ASSETS
|
||||||||
Cash Surrender
Value of
Life Insurance
|
— | |||||||
Total Other
Assets
|
— | |||||||
TOTAL ASSETS
|
$ | 2,607,191 | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
CURRENT
LIABILITIES
|
||||||||
Accounts
Payable
|
$ | 31,630 | ||||||
Payroll Liabilities
Payable
|
398 | |||||||
Sales Tax
Payable
|
7,433 | |||||||
Accrued Insurance
Payable
|
19,447 | |||||||
Accrued Interest
Expense
|
— | |||||||
Accrued Profit
Sharing
Payable
|
— | |||||||
Income Taxes
Payable
|
374,492 | |||||||
Note Payable
—
Insurance
|
— | |||||||
Current Portion
of
Stockholder Loan
|
— | |||||||
Total Current
Liabilities
|
433,400 | |||||||
LONG-TERM
LIABILITIES
|
||||||||
Stockholder
Loan (Less
Current Portion)
|
— | |||||||
Long-Term Deferred
Tax
Liability
|
373,153 | |||||||
Total Long-Term
Liabilities
|
373,153 | |||||||
Total
Liabilities
|
806,553 | |||||||
STOCKHOLDERS’
EQUITY
|
||||||||
Common Stock
(No Par
Value, 300,000 Shares Authorized, 27,083 Shares Issued and 8,333
Outstanding)
|
27,083 | |||||||
Additional
Paid-In
Capital
|
64,574 | |||||||
Retained
Earnings
|
2,708,981 | |||||||
Less: Treasury
Stock
(18,750 Shares at Cost)
|
(1,000,000 | ) | ||||||
Total Stockholders’
Equity
|
1,800,638 | |||||||
TOTAL LIABILITIES
AND
STOCKHOLDERS’ EQUITY
|
$ | 2,607,191 | ||||||
Three
Months Ended
|
||||||||||
March 31,
|
||||||||||
2005
|
2004
|
|||||||||
REVENUES
|
$ | 820,769 | $ | 744,811 | ||||||
COST
OF
REVENUES
|
||||||||||
Direct
|
203,271 | 265,230 | ||||||||
GROSS
PROFIT
|
617,498 | 479,581 | ||||||||
ADMINISTRATIVE
EXPENSES
|
||||||||||
General and
Administrative
|
984,505 | 1,106,656 | ||||||||
Depreciation
|
7,578 | 7,465 | ||||||||
Total Administrative
Expenses
|
992,083 | 1,114,121 | ||||||||
LOSS FROM
OPERATIONS
|
(374,585 | ) | (634,540 | ) | ||||||
OTHER
INCOME
(EXPENSES)
|
||||||||||
Interest
Expense
|
(10,937 | ) | (13,166 | ) | ||||||
Interest
Income
|
2,896 | 364 | ||||||||
Gain on Sale
of
Assets
|
115,519 | 36,850 | ||||||||
Total Other
Income
(Expenses)
|
107,478 | 24,048 | ||||||||
LOSS BEFORE
PROVISION
FOR INCOME TAXES
|
(267,107 | ) | (610,492 | ) | ||||||
PROVISION (BENEFIT)
FOR
INCOME TAXES
|
||||||||||
Current
|
— | — | ||||||||
Deferred
|
141,697 | (221,825 | ) | |||||||
Total Income
Tax
Provision (Benefit)
|
141,697 | (221,825 | ) | |||||||
NET LOSS
|
$ | (408,804 | ) | $ | (388,667 | ) | ||||
Three
Months Ended
|
||||||||
March 31,
|
||||||||
|
||||||||
2005
|
|
2004
|
||||||
BEGINNING
BALANCE
|
$ | 3,117,785 | $ | 2,688,340 | ||||
NET LOSS
|
(408,804 | ) | (388,667 | ) | ||||
ENDING BALANCE
|
$ | 2,708,981 | $ | 2,299,673 | ||||
Three
Months Ended
|
||||||||||||
March 31,
|
||||||||||||
2005
|
2004
|
|||||||||||
CASH FLOWS
FROM
OPERATING ACTIVITIES
|
||||||||||||
Net Loss
|
$ | (408,804 | ) | $ | (388,667 | ) | ||||||
Adjustments
to
Reconcile Net Income to Net Cash Provided By Operating
Activities:
|
||||||||||||
Depreciation
and
Amortization
|
94,220 | 83,854 | ||||||||||
Gain on Sale
of
Assets
|
(115,519 | ) | (36,850 | ) | ||||||||
Change in Assets
and
Liabilities:
|
||||||||||||
Accounts
Receivable
|
159,431 | (97,326 | ) | |||||||||
Prepaid
Expenses
|
13,838 | (10,933 | ) | |||||||||
Accounts Payable
and
Accrued Expenses
|
253,804 | 256,078 | ||||||||||
Deferred Taxes
|
(140,343 | ) | (221,825 | ) | ||||||||
Total
Adjustments
|
265,431 | (27,002 | ) | |||||||||
Net Cash Used
In
Operating Activities
|
(143,373 | ) | (415,669 | ) | ||||||||
CASH FLOWS
FROM
INVESTING ACTIVITIES
|
||||||||||||
Purchase of
Equipment
|
(151,956 | ) | (40,557 | ) | ||||||||
Proceeds from
Sale of
Assets
|
176,662 | 44,440 | ||||||||||
Cash Surrender
Value — Life Insurance
|
38,261 | (473 | ) | |||||||||
Net Cash Used
In
Investing Activities
|
62,967 | 3,410 | ||||||||||
CASH FLOWS
FROM
FINANCING ACTIVITIES
|
||||||||||||
Principal Payments
Stockholder Note Payable
|
(641,778 | ) | (21,349 | ) | ||||||||
Net Cash Used
in
Financing Activities
|
(641,778 | ) | (21,349 | ) | ||||||||
NET DECREASE
IN
CASH
|
(722,184 | ) | (433,608 | ) | ||||||||
CASH AT BEGINNING
OF
PERIOD
|
891,338 | 705,553 | ||||||||||
CASH AT END
OF
PERIOD
|
$ | 169,154 | $ | 271,945 | ||||||||
SUPPLEMENTAL
DISCLOSURES:
|
||||||||||||
Interest Paid
|
$ | 7,203 | $ | 13,166 | ||||||||
Income Taxes
Paid
|
$ | — | $ | — | ||||||||
Non-Cash Financing
of
Insurance Premiums
|
$ | — | $ | 30,351 | ||||||||
/s/ CURTIS BLAKELY & CO., PC | |
|
December 31,
|
||||||||||
2004
|
2003
|
|||||||||
ASSETS | ||||||||||
CURRENT
ASSETS:
|
||||||||||
Cash and Cash
Equivalents
|
$ | 348,674 | $ | 45,857 | ||||||
Accounts
Receivable
|
538,658 | 818,736 | ||||||||
Inventory
|
386,685 | 384,431 | ||||||||
Prepaid
Expenses
|
107,703 | 92,306 | ||||||||
TOTAL CURRENT
ASSETS
|
1,381,720 | 1,341,330 | ||||||||
PROPERTY AND
EQUIPMENT:
|
||||||||||
Furniture,
Fixtures and
Equipment
|
11,343 | 5,870 | ||||||||
Software
|
3,127 | 3,127 | ||||||||
Production
Equipment
|
2,078,897 | 1,709,196 | ||||||||
Vehicles
|
172,720 | 107,442 | ||||||||
Production
Equipment
Under Construction
|
94,332 | -0- | ||||||||
TOTAL PROPERTY
AND
EQUIPMENT
|
2,360,419 | 1,825,635 | ||||||||
Less: Accumulated
Depreciation
|
(433,800 | ) | (221,451 | ) | ||||||
NET PROPERTY
AND
EQUIPMENT
|
1,926,619 | 1,604,184 | ||||||||
OTHER ASSETS:
|
||||||||||
Organizational
Costs
|
12,057 | 18,085 | ||||||||
TOTAL ASSETS
|
$ | 3,320,396 | $ | 2,963,599 | ||||||
December 31,
|
||||||||||
2004
|
2003
|
|||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||
CURRENT
LIABILITIES:
|
||||||||||
Current Portion
of
Long-term Debt
|
$ | 445,924 | $ | 431,452 | ||||||
Current Portion
of
Obligation Under Capital Lease
|
447 | -0- | ||||||||
Current Portion
of
Long-term Debt — Related Party
|
22,824 | -0- | ||||||||
Accounts Payable —
Trade
|
383,762 | 891,508 | ||||||||
Accrued Interest
Payable
|
4,018 | -0- | ||||||||
Accrued Wages
|
6,400 | -0- | ||||||||
Short-term
Borrowings
|
430,314 | 422,321 | ||||||||
Short-term
Borrowings — Related Party
|
130,000 | -0- | ||||||||
TOTAL CURRENT
LIABILITIES
|
1,423,689 | 1,745,281 | ||||||||
LONG-TERM DEBT,
LESS
CURRENT MATURITIES:
|
||||||||||
Long-term Debt
|
471,451 | 451,262 | ||||||||
Long-term Debt —
Related Party
|
31,213 | -0- | ||||||||
Obligation
Under
Capital Lease
|
2,880 | -0- | ||||||||
TOTAL LONG-TERM
DEBT
|
505,544 | 451,262 | ||||||||
TOTAL
LIABILITIES
|
1,929,233 | 2,196,543 | ||||||||
STOCKHOLDERS’
EQUITY:
|
||||||||||
Common Stock —
$1 Par Value
|
||||||||||
100,000 Shares
Authorized
|
||||||||||
1,000 Shares
Issued and Outstanding
|
600,000 | 600,000 | ||||||||
Additional
Paid-in
Capital
|
50,000 | 50,000 | ||||||||
Retained
Earnings
|
741,163 | 117,056 | ||||||||
TOTAL STOCKHOLDERS’
EQUITY
|
1,391,163 | 767,056 | ||||||||
TOTAL LIABILITIES
AND
STOCKHOLDERS’ EQUITY
|
$ | 3,320,396 | $ | 2,963,599 | ||||||
Years
Ended December 31,
|
||||||||||
2004
|
2003
|
|||||||||
REVENUE
|
$ | 5,774,442 | $ | 5,478,666 | ||||||
Cost of Sales
and
Services
|
4,371,316 | 4,523,702 | ||||||||
Gross Profit
|
1,403,126 | 954,964 | ||||||||
OPERATING
EXPENSES:
|
||||||||||
General and
Administrative
|
159,677 | 131,254 | ||||||||
Depreciation
|
35,456 | 24,648 | ||||||||
Insurance
|
228,112 | 186,125 | ||||||||
Lease Expense
|
29,250 | 27,000 | ||||||||
Salaries —
Administration
|
126,520 | 89,287 | ||||||||
Taxes
|
126,222 | 68,838 | ||||||||
Interest
|
73,782 | 51,380 | ||||||||
TOTAL OPERATING
EXPENSES
|
779,019 | 578,532 | ||||||||
NET INCOME
|
624,107 | 376,432 | ||||||||
RETAINED EARNINGS
(DEFICIT) — BEGINNING OF PERIOD
|
117,056 | (259,376 | ) | |||||||
RETAINED
EARNINGS — END OF PERIOD
|
$ | 741,163 | $ | 117,056 | ||||||
Years
Ended December 31,
|
||||||||||||
2004
|
2003
|
|||||||||||
CASH FLOWS
FROM
OPERATING ACTIVITIES:
|
||||||||||||
Net Income
|
$ | 624,107 | $ | 376,432 | ||||||||
Adjustments
to
Reconcile Net Income to Net Cash Provided by Operating
Activities:
|
||||||||||||
Depreciation
and
Amortization
|
218,375 | 170,317 | ||||||||||
Change in Assets
and
Liabilities:
|
||||||||||||
Accounts
Receivable
|
280,078 | (595,486 | ) | |||||||||
Inventory
|
(428,090 | ) | 298,810 | |||||||||
Prepaids
|
(15,395 | ) | (32,465 | ) | ||||||||
Accounts Payable
and
Accruals
|
(42,242 | ) | 95,417 | |||||||||
TOTAL
ADJUSTMENTS
|
12,726 | (63,407 | ) | |||||||||
NET CASH PROVIDED
BY
OPERATING ACTIVITIES
|
636,833 | 313,025 | ||||||||||
CASH FLOWS
FROM
INVESTING ACTIVITIES:
|
||||||||||||
Additions to
Plant and
Equipment
|
(462,998 | ) | (541,551 | ) | ||||||||
NET CASH USED
IN
INVESTING ACTIVITIES
|
(462,998 | ) | (541,551 | ) | ||||||||
CASH FLOWS
FROM
FINANCING ACTIVITIES:
|
||||||||||||
Payments of
Short-term
Borrowings
|
(101,736 | ) | (124,513 | ) | ||||||||
Payments of
Long-term
Debt
|
(519,383 | ) | (377,668 | ) | ||||||||
Payments of
Capital
Lease Obligation
|
(89 | ) | -0- | |||||||||
Proceeds From
Short-term Debt Borrowing
|
239,729 | 223,578 | ||||||||||
Proceeds From
Long-term
Debt Borrowing
|
510,461 | 441,265 | ||||||||||
Proceeds From
Additional Paid-in Capital
|
-0- | 50,000 | ||||||||||
NET CASH PROVIDED
BY
FINANCING ACTIVITIES
|
128,982 | 212,662 | ||||||||||
NET INCREASE
(DECREASE) IN CASH AND CASH EQUIVALENTS
|
302,817 | (15,864 | ) | |||||||||
CASH AND CASH
EQUIVALENTS AT BEGINNING OF YEAR
|
45,857 | 61,721 | ||||||||||
CASH AND CASH
EQUIVALENTS AT END OF YEAR
|
$ | 348,674 | $ | 45,857 | ||||||||
Note 1 — | Summary of Significant Accounting Policies: |
Note 2 — | Organizational Costs: |
Note 3 — | Property and Equipment: |
Depreciation
|
|||||||||||||
Rate
(%)
|
2004
|
2003
|
|||||||||||
Furniture,
fixtures,
and equipment
|
20% | $ | 11,343 | $ | 5,870 | ||||||||
Software
|
33% | 3,127 | 3,127 | ||||||||||
Production
equipment
|
10% – 20% | 2,078,897 | 1,709,196 | ||||||||||
Vehicles
|
20% | 172,720 | 107,442 | ||||||||||
Production
equipment
under construction
|
N/A | 94,332 | -0- | ||||||||||
Total Property
and
Equipment
|
2,360,419 | 1,825,635 | |||||||||||
Less: Accumulated
Depreciation
|
(433,800 | ) | (221,451 | ) | |||||||||
Net Property
and
Equipment
|
$ | 1,926,619 | $ | 1,604,184 | |||||||||
Note 4 — | Capital Lease Obligations: |
2004
|
||||||
Total | $ | 3,327 | ||||
Less:
|
Current portion | (447 | ) | |||
Long-Term Portion | $ | 2,880 | ||||
2004
|
||||
2005
|
$ | 1,072 | ||
2006
|
1,072 | |||
2007
|
1,072 | |||
2008
|
1,072 | |||
2009
|
894 | |||
5,182 | ||||
Less: Amount
representing interest
|
(1,855 | ) | ||
Present Value
of Future
Minimum Lease payments
|
$ | 3,327 | ||
Creditor
|
Terms
|
Collateral
|
2004
|
2003
|
||||||
Texas Bank &
Trust
|
$350,000 line-of-credit expiring December 2005 bearing interest at prime (5.25 percent at December 31, 2004). | Equipment | $349,923 | $350,000 | ||||||
Texas Bank &
Trust
|
$375,000 line of credit expiring December 2004 bearing interest at prime. | Equipment | -0- | 3,029 | ||||||
AICCO,
Inc.
|
Due $11,760 per month through July 2005 including interest at 7.15 percent. | None | 80,391 | -0- | ||||||
AICCO,
Inc.
|
Due $10,114 per month through July 2004 including interest at 6.50 percent. | None | -0- | 69,292 | ||||||
Total Short-Term
Borrowings
|
$430,314 | $422,321 | ||||||||
Creditor
|
Terms
|
Collateral
|
2004
|
2003
|
||||||
M Bar Ranch,
L.P.
|
$130,000 promissory note, interest of 8 percent and principal due at maturity date — August 2005. | None | $130,000 | $-0- |
Creditor
|
Terms
|
Collateral
|
2004
|
2003
|
||||||||||
Texas Bank &
Trust
|
Due $6,048 per month through August 2006, including interest at prime (5.25% at December 2004). | Equipment - Accounts | $ | 117,138 | $ | 183,232 | ||||||||
Texas Bank &
Trust
|
Due $7,037 per month through March 2007, including interest at prime (5.25% at December 2004). | Equipment - Accounts | 176,501 | 251,566 | ||||||||||
Texas Bank &
Trust
|
Due $7,000 per month through March 2006, including interest at prime (5.25% at December 2004). | Equipment - Accounts | 101,957 | 179,620 | ||||||||||
Texas Bank &
Trust
|
Due $30,000 per month through June 2004, including interest at prime (Pd in full at December 2004). | Equipment - Accounts | -0- | 171,541 | ||||||||||
Texas Bank &
Trust
|
Due $7,407 per month through March 2007, including interest at prime (5.25% at December 2004). | Equipment - Accounts | 191,125 | -0- | ||||||||||
Texas Bank &
Trust
|
Due $6,100 per month through October 2007, including interest at prime (5.25% at December 2004). | Equipment - Accounts | 195,082 | -0- | ||||||||||
Navistar
|
Due $1,055 per month through November 2005, including interest at 9.95 percent. | Equipment | 11,046 | 22,004 | ||||||||||
Navistar
|
Due $1,055 per month through November 2005, including interest at 9.95 percent. | Equipment | 11,046 | 21,075 | ||||||||||
Navistar
|
Due $998 per month through June 2007, including interest at 11.50 percent. | Equipment | 24,405 | -0- | ||||||||||
Ford Motor
Credit
|
Due $738 per month through May 2006, including interest at 2.90 percent. | Vehicle | 12,275 | 20,641 | ||||||||||
Ford Motor
Credit
|
Due $1,112 per month through August 2006, including interest at 5.50 percent. | Vehicle | 21,211 | 33,035 | ||||||||||
Ford Motor
Credit
|
Due $1,173 per month through July 2007, including interest at 2.90 percent. | Vehicle | 35,007 | -0- | ||||||||||
Ford Motor
Credit
|
Due $730 per month through August 2007, including interest at 7.25 percent. | Vehicle | 20,582 | -0- | ||||||||||
Total Long-Term
Notes
Payable
|
917,375 | 882,714 | ||||||||||||
Current
Maturities
|
(445,924 | ) | (431,452 | ) | ||||||||||
Long-Term
Notes Payable,
|
||||||||||||||
Net of Current
Maturities
|
$ | 471,451 | $ | 451,262 | ||||||||||
2005
|
$ | 445,924 | |||
2006
|
349,064 | ||||
2007
|
122,387 | ||||
Total
|
$ | 917,375 | |||
Creditor
|
Terms
|
Collateral
|
2004
|
2003
|
|||||||||
M Bar Ranch,
L.P.
|
Due $2,194 per month through March 2007, including interest at 8.00 percent. | Vehicle | $ | 54,037 | $-0- | ||||||||
Current
Maturities
|
(22,824 | ) | -0- | ||||||||||
Long-Term
Note Payables — Related Party, Net of Current
Maturities
|
$ |
31,213 | $-0- |
||||||||||
2005
|
$ | 22,824 | |||
2006
|
24,719 | ||||
2007
|
6,494 | ||||
Total
|
$ | 54,037 | |||
2005
|
$ | 27,000 | ||
2006
|
27,000 | |||
2007
|
5,625 |
2004
|
2003
|
||||||||
Cash paid during
the
year:
|
|||||||||
Interest
|
$ | 69,764 | $ | 51,380 |
/s/ CURTIS BLAKELY & CO., PC | |
|
Year
Ended December 31,
|
||||||||||
2004
|
2003
|
|||||||||
REVENUE
|
$ | 5,774,442 | $ | 5,478,666 | ||||||
COST OF SALES
AND
SERVICES:
|
||||||||||
Inventory
Purchases
|
2,684,319 | 3,400,025 | ||||||||
Wages
|
854,041 | 546,858 | ||||||||
Contract
Services
|
153,192 | 152,432 | ||||||||
Location
Expenses
|
84,709 | 58,027 | ||||||||
Repairs and
Maintenance
|
132,846 | 70,024 | ||||||||
Depreciation
|
182,919 | 145,669 | ||||||||
Fuel and Oil
|
114,112 | 74,836 | ||||||||
Freight
|
14,432 | 11,646 | ||||||||
Sales
Commissions
|
15,352 | 323 | ||||||||
Sales Expense
|
13,307 | 10,827 | ||||||||
Supplies
|
61,494 | 28,165 | ||||||||
Other Expenses
|
12,082 | 6,676 | ||||||||
Equipment Leases
and
Rentals
|
48,511 | 18,194 | ||||||||
TOTAL COST
OF GOODS
SOLD
|
4,371,316 | 4,523,702 | ||||||||
GROSS PROFIT
|
1,403,126 | 954,964 | ||||||||
GENERAL AND
ADMINISTRATIVE:
|
||||||||||
Accounting
|
41,794 | 22,456 | ||||||||
Telephone
|
26,939 | 19,842 | ||||||||
Auto
|
17,955 | 15,203 | ||||||||
Consulting
|
15,100 | 15,012 | ||||||||
Advertising
and
Promotional
|
12,715 | 6,847 | ||||||||
License and
Fees
|
10,719 | 7,110 | ||||||||
Office
Supplies
|
7,818 | 7,644 | ||||||||
Utilities
|
7,582 | 6,397 | ||||||||
Janitorial
|
5,542 | 2,953 | ||||||||
Office Expense
|
4,248 | 3,332 | ||||||||
Postage
|
4,084 | 4,556 | ||||||||
Other General
and
Administrative
|
1,643 | 829 | ||||||||
Meals
|
1,393 | 1,899 | ||||||||
Contract Service —
Office
|
1,145 | 16,779 | ||||||||
Contributions
|
1,000 | 395 | ||||||||
TOTAL GENERAL
AND
ADMINISTRATIVE
|
159,677 | 131,254 | ||||||||
Year
Ended December 31,
|
||||||||||
2004
|
2003
|
|||||||||
DEPRECIATION
AND
AMORTIZATION:
|
||||||||||
Depreciation
Expense
|
29,428 | 18,620 | ||||||||
Amortization
Expense
|
6,028 | 6,028 | ||||||||
TOTAL DEPRECIATION
AND
AMORTIZATION
|
35,456 | 24,648 | ||||||||
INSURANCE
EXPENSE:
|
||||||||||
Insurance —
General
|
119,039 | 118,023 | ||||||||
Insurance —
Health
|
65,583 | 40,792 | ||||||||
Insurance —
Workmen’s Compensation
|
41,445 | 25,265 | ||||||||
Insurance — Keyman
Life
|
2,045 | 2,045 | ||||||||
TOTAL
INSURANCE
|
228,112 | 186,125 | ||||||||
LEASE OF BUILDINGS
AND
STORAGE FACILITIES
|
29,250 | 27,000 | ||||||||
SALARIES —
ADMINISTRATIVE
|
||||||||||
Salaries —
Officers
|
89,115 | 77,769 | ||||||||
Salaries — Office
Employees
|
37,405 | 11,518 | ||||||||
TOTAL SALARIES —
ADMINISTRATIVE
|
126,520 | 89,287 | ||||||||
TAX EXPENSE:
|
||||||||||
Taxes —
Payroll
|
78,536 | 52,205 | ||||||||
Taxes —
Property
|
43,495 | 13,926 | ||||||||
Taxes —
Other
|
2,501 | 1,832 | ||||||||
Taxes — State
Franchise
|
1,690 | 875 | ||||||||
TOTAL TAX
EXPENSE
|
126,222 | 68,838 | ||||||||
INTEREST
|
73,782 | 51,380 | ||||||||
TOTAL OPERATING
EXPENSES
|
779,019 | 578,532 | ||||||||
NET INCOME
|
$ | 624,107 | $ | 376,432 | ||||||
ASSETS | |||||||
Current
Assets
|
|||||||
Cash in Bank —
TB&T
|
183,614.45 | ||||||
Accounts
Receivable
|
1,021,133.53 | ||||||
Inventory
|
334,309.46 | ||||||
Prepaid
Expenses
|
79,136.57 | ||||||
Total
Current
Assets
|
1,618,194.01 | ||||||
Property
and
Equipment Equipment
|
2,474,765.35 | ||||||
Accumulated
Depreciation
|
(492,780.50 | ) | |||||
Net Property
and
Equipment
|
1,981,984.85 | ||||||
Other Assets
Organization Costs
|
2,242.25 | ||||||
Startup Costs
|
27,898.75 | ||||||
Accumulated
Amortization
|
(19,590.00 | ) | |||||
Deposits
|
10,875.00 | ||||||
Total
Other
Assets
|
21,426.00 | ||||||
Total
Assets
|
3,621,604.86 | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current
Liabilities
|
|||||||
Accounts
Payable
|
449,217.60 | ||||||
Payroll Taxes
Payable
|
3,448.71 | ||||||
Sales Tax
Payable
|
44,997.92 | ||||||
Accrued Interest
Payable
|
4,017.53 | ||||||
Salaries
Payable
|
16,143.77 | ||||||
Current Income
Taxes
Payable
|
94,000.00 | ||||||
N/ P —
Insurance
|
46,139.99 | ||||||
N/ P — M-BAR
Ranch
|
130,000.00 | ||||||
N/ P TB&T
LOC
|
349,923.29 | ||||||
Current Maturities
of
L-T
|
467,915.64 | ||||||
Total
Current
Liabilities
|
1,605,804.45 | ||||||
Long-Term Liabilities
N/ P — FMC
|
135,292.77 | ||||||
N/ P —
Navistar
|
39,147.38 | ||||||
N/ P —
TB&T
|
686,059.55 | ||||||
N/ P —
M-BAR
|
48,500.43 | ||||||
N/ P — IKON
RICOH
|
3,258.52 | ||||||
Current Maturities
of
L-T
|
(467,915.64 | ) | |||||
Total
Long-Term
Liabilities
|
444,343.01 | ||||||
Total
Liabilities
|
2,050,147.46 | ||||||
Deferred Income
Taxes
|
6,898.00 | ||||||
Stockholders’
Equity Capital Stock
|
600,000.00 | ||||||
Contribution
to
Capital
|
50,000.00 | ||||||
Retained
Earnings
|
914,559.40 | ||||||
Total
Stockholders’ Equity
|
1,564,559.40 | ||||||
Total
Liabilities and Stockholders’ Equity
|
3,621,604.86 | ||||||
Three
Months Ended March 31,
|
||||||||||
2005
|
2004
|
|||||||||
Revenue
|
||||||||||
Sales —
Service
|
622,283.61 | 355,661.68 | ||||||||
Sales —
Materials
|
911,615.67 | 1,190,200.66 | ||||||||
Total Revenue
|
1,533,899.28 | 1,545,862.34 | ||||||||
Cost of Goods
Sold
|
950,535.70 | 1,131,968.64 | ||||||||
Gross Profit
|
583,363.58 | 413,893.70 | ||||||||
Operating Expenses
Contract Services
|
3,007.50 | 8,548.13 | ||||||||
Insurance
|
61,206.10 | 57,193.97 | ||||||||
Lease
|
59,372.36 | 24,618.30 | ||||||||
Supplies
|
28,500.98 | 14,705.44 | ||||||||
Taxes
|
26,077.65 | 16,749.81 | ||||||||
Accounting &
Legal
|
28,478.91 | 13,481.21 | ||||||||
Advertising &
Promotional
|
844.43 | 882.50 | ||||||||
Amortization
|
1,506.00 | 1,506.00 | ||||||||
Bank Charges
|
128.60 | 129.20 | ||||||||
Commission —
Salesman
|
4,000.00 | 0.00 | ||||||||
Consulting
|
4,200.00 | 3,300.00 | ||||||||
Depreciation
|
9,240.66 | 5,926.17 | ||||||||
Dues &
Subscriptions
|
1,189.39 | 0.00 | ||||||||
Employee —
Medical
|
978.22 | 436.06 | ||||||||
Freight
|
8,259.61 | 340.00 | ||||||||
Interest
|
20,360.28 | 18,007.80 | ||||||||
License &
Fees
|
150.46 | 1,364.98 | ||||||||
Maint &
Repairs — General
|
98.51 | 815.40 | ||||||||
Meals &
Entertainment
|
0.00 | 101.85 | ||||||||
Office Expense
|
3,326.71 | 964.16 | ||||||||
Postage
|
1,117.54 | 999.49 | ||||||||
Janitorial
|
1,300.00 | 1,340.75 | ||||||||
Salaries —
Officers
|
21,000.00 | 21,000.00 | ||||||||
Salaries —
Office
|
8,830.06 | 5,805.94 | ||||||||
Sales Expense
|
3,679.23 | 2,649.54 | ||||||||
Telephone
|
8,483.66 | 4,296.17 | ||||||||
Uniforms
|
824.89 | 0.00 | ||||||||
Utilities
|
1,610.44 | 1,828.06 | ||||||||
Waste Water
|
714.00 | 475.00 | ||||||||
Travel
|
0.00 | 246.75 | ||||||||
Truck Expense
|
583.27 | 218.00 | ||||||||
Total Operating
Expenses
|
309,069.46 | 207,930.68 | ||||||||
Income/(Loss) Before
Income Taxes
|
274,294.12 | 205,963.02 | ||||||||
Income Taxes
|
(100,898.00 | ) | 0.00 | |||||||
Other Income
|
0.00 | 1,000.00 | ||||||||
Net Income
(Loss)
|
173,396.12 | 206,963.02 | ||||||||
Retained Earnings
at
Beginning of Period
|
741,163.28 | 117,056.14 | ||||||||
Retained Earnings
at
End of Period
|
914,559.40 | 324,019.16 | ||||||||
Three
Months Ended
|
|||||||||
March 31,
|
|||||||||
2005
|
2004
|
||||||||
Cash flows
from
operating activities:
|
|||||||||
Net income
(loss)
|
$ | 173,396 | $ | 206,963 | |||||
Adjustments
to
reconcile net (loss) to net cash provided by operating
activities:
|
|||||||||
Depreciation
and
amortization expense
|
51,247 | 44,236 | |||||||
Changes in
working
capital:
|
|||||||||
Decrease
(increase) in accounts receivable
|
(482,476 | ) | 69,545 | ||||||
Decrease
(increase) in other current assets
|
80,942 | 163,895 | |||||||
Decrease
(increase) in other assets
|
(10,875 | ) | (375 | ) | |||||
(Decrease)
increase in
accounts payable
|
65,456 | (306,063 | ) | ||||||
(Decrease)
increase in
accrued expenses
|
138,998 | 21,643 | |||||||
(Decrease)
increase in
other long-term liabilities
|
6,898 | — | |||||||
(Decrease)
increase in
accrued employee benefits and payroll taxes
|
13,193 | 67 | |||||||
Net cash provided
by
operating activities
|
36,779 | 199,911 | |||||||
Cash flows
from
investing activities:
|
|||||||||
Purchase of
equipment
|
(105,107 | ) | (35,739 | ) | |||||
Net cash provided
(used) by investing activities
|
(105,107 | ) | (35,739 | ) | |||||
Cash flows
from
financing activities:
|
|||||||||
Repayments
of long-term
debt
|
(96,732 | ) | (161,241 | ) | |||||
Proceeds form
issuance
of long-term debt
|
— | 307,399 | |||||||
Net cash provided
(used) by financing activities
|
(96,732 | ) | 146,158 | ||||||
Net increase
(decrease) in cash and cash equivalents
|
(165,060 | ) | 310,330 | ||||||
Cash and cash
equivalents at beginning of year
|
348,674 | 45,857 | |||||||
Cash and cash
equivalents at end of period
|
$ | 183,614 | $ | 356,187 | |||||
Accounting & Consulting Group, LLP |
March 31,
|
December 31,
|
December 31,
|
||||||||||||
2005
|
2004
|
2003
|
||||||||||||
ASSETS | ||||||||||||||
Current
Assets:
|
||||||||||||||
Cash and cash
equivalents
|
$ | 123,093 | $ | 49,695 | $ | 39,821 | ||||||||
Accounts
receivable
|
359,875 | 418,290 | 446,646 | |||||||||||
Unbilled
receivables
|
129,325 | 101,400 | 47,000 | |||||||||||
Related party
receivable (Note 2)
|
7,967 | 9,673 | 15,991 | |||||||||||
Prepaid income
taxes
|
— | — | 3,507 | |||||||||||
Prepaid
expenses
|
10,497 | 11,593 | 11,697 | |||||||||||
Total Current
Assets
|
630,757 | 590,651 | 564,662 | |||||||||||
Property
and
Equipment:
|
||||||||||||||
Transportation
equipment
|
137,555 | 137,555 | 137,555 | |||||||||||
Machinery and
equipment
|
1,905,235 | 1,867,336 | 1,248,414 | |||||||||||
Office furniture
and
equipment
|
7,131 | 7,131 | 7,131 | |||||||||||
Accumulated
depreciation
|
(748,646 | ) | (677,475 | ) | (428,031 | ) | ||||||||
Total Property
and
Equipment
|
1,301,275 | 1,334,547 | 965,069 | |||||||||||
Total
Assets
|
$ | 1,932,032 | $ | 1,925,198 | $ | 1,529,731 | ||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||
Current
Liabilities:
|
||||||||||||||
Current maturities
of
long-term debt (Note 4)
|
$ | 283,194 | $ | 312,414 | $ | 235,137 | ||||||||
Short-term
notes
payable (Note 3)
|
54,601 | 86,765 | 149,995 | |||||||||||
Accounts
payable
|
82,369 | 117,928 | 129,895 | |||||||||||
Accrued
expenses
|
131,188 | 62,726 | 63,514 | |||||||||||
Deferred income
taxes
(Note 9)
|
68,644 | 72,204 | 33,425 | |||||||||||
Total Current
Liabilities
|
619,996 | 652,037 | 611,966 | |||||||||||
Long-Term Debt
(Note 4)
|
89,959 | 153,675 | 279,349 | |||||||||||
Deferred income
taxes
(Note 9)
|
136,593 | 132,577 | 78,565 | |||||||||||
Total
Liabilities
|
846,548 | 938,289 | 969,880 | |||||||||||
Stockholders’
Equity:
|
||||||||||||||
Common stock,
par value
$10 100 shares issued and outstanding
|
1,000 | 1,000 | 1,000 | |||||||||||
Retained
earnings
|
1,084,484 | 985,909 | 558,851 | |||||||||||
Total stockholders’
equity
|
1,085,484 | 986,909 | 559,851 | |||||||||||
Total liabilities
and stockholders’ equity
|
$ | 1,932,032 | $ | 1,925,198 | $ | 1,529,731 | ||||||||
March 31,
|
December 31,
|
December 31,
|
||||||||||||
2005
|
2004
|
2003
|
||||||||||||
Revenue
|
||||||||||||||
Service
revenue
|
$ | 926,906 | $ | 3,862,005 | $ | 2,415,266 | ||||||||
Other income
|
— | — | 2,800 | |||||||||||
Total
revenue
|
926,906 | 3,862,005 | 2,418,066 | |||||||||||
Expenses
|
||||||||||||||
Service-related
expenses
|
552,472 | 2,514,373 | 1,582,313 | |||||||||||
Selling, general,
and
administrative expenses
|
150,499 | 514,211 | 459,186 | |||||||||||
Depreciation
and
amortization
|
71,171 | 249,444 | 174,386 | |||||||||||
Interest
expense
|
8,656 | 44,344 | 27,604 | |||||||||||
Total
expenses
|
782,798 | 3,322,372 | 2,243,489 | |||||||||||
Operating
income
|
144,108 | 539,633 | 174,577 | |||||||||||
Other
income
|
||||||||||||||
Gain (loss)
on sale of
assets
|
— | — | 6,723 | |||||||||||
Interest
income
|
93 | 585 | 905 | |||||||||||
Income
before
income taxes
|
144,201 | 540,218 | 182,205 | |||||||||||
Federal and
state
income taxes (Note 9)
|
45,626 | 113,160 | 37,121 | |||||||||||
Net
income
|
$ | 98,575 | $ | 427,058 | $ | 145,084 | ||||||||
Common
|
Paid-in
|
Retained
|
||||||||||||||
Stock
|
Capital
|
Earnings
|
Total
|
|||||||||||||
Balance,
January 1, 2003
|
$ | 1,000 | $ | — | $ | 413,767 | $ | 414,767 | ||||||||
Net Income
|
— | — | 145,084 | 145,084 | ||||||||||||
Dividends paid
|
— | — | — | — | ||||||||||||
Balance,
December 31, 2003
|
1,000 | — | 558,851 | 559,851 | ||||||||||||
Net Income
|
— | — | 427,058 | 427,058 | ||||||||||||
Dividends paid
|
— | — | — | — | ||||||||||||
Balance,
December 31, 2004
|
1,000 | — | 985,909 | 986,909 | ||||||||||||
Net Income
|
— | — | 98,575 | 98,575 | ||||||||||||
Dividends paid
|
— | — | — | — | ||||||||||||
Balance,
March 31, 2005
|
$ | 1,000 | $ | — | $ | 1,084,484 | $ | 1,085,484 | ||||||||
March 31,
|
December 31,
|
December 31,
|
||||||||||||
2005
|
2004
|
2003
|
||||||||||||
Cash
flows from
operating activities:
|
||||||||||||||
Net income
|
$ | 98,575 | $ | 427,058 | $ | 145,084 | ||||||||
Adjustments
to
reconcile net income to net cash provided (used) by operating
activities:
|
||||||||||||||
Depreciation
and
amortization
|
71,171 | 249,444 | 174,386 | |||||||||||
Gain (loss)
on sale of
property, plant, and equipment
|
— | — | (6,723 | ) | ||||||||||
Deferred income
taxes
|
457 | 92,791 | 37,121 | |||||||||||
Change in operating
assets and liabilities:
|
||||||||||||||
Accounts
receivable
|
30,490 | (26,044 | ) | (309,046 | ) | |||||||||
Shareholder
loans
|
1,707 | 6,318 | 5,695 | |||||||||||
Prepaid
expenses
|
1,096 | 104 | (858 | ) | ||||||||||
Prepaid income
tax
|
— | 3,507 | (3,507 | ) | ||||||||||
Accounts
payable
|
(35,559 | ) | (11,967 | ) | 81,718 | |||||||||
Accrued payroll
and
employee benefits
|
29,696 | (14,467 | ) | 31,379 | ||||||||||
Income tax
payable
|
38,764 | 13,679 | (2,076 | ) | ||||||||||
Net Cash
Provided
(Used) by Operating Activities
|
236,397 | 740,423 | 153,173 | |||||||||||
Cash
flows from
investing activities:
|
||||||||||||||
Proceeds from
sale of
property, plant, and equipment
|
— | — | 25,000 | |||||||||||
Capital expenditures
on
property, plant, and equipment
|
(37,899 | ) | (406,618 | ) | (220,385 | ) | ||||||||
Net Cash
Provided
(Used) by Investing Activities
|
(37,899 | ) | (406,618 | ) | (195,385 | ) | ||||||||
Cash
flows from
financing activities:
|
||||||||||||||
Repayment of
long-term
debt
|
(92,936 | ) | (322,686 | ) | (190,748 | ) | ||||||||
Proceeds from
issuance
of long-term debt
|
— | 160,000 | 155,105 | |||||||||||
Repayment of
short-term
debt
|
(32,164 | ) | (1,550,165 | ) | (479,550 | ) | ||||||||
Proceeds from
issuance
of short-term debt
|
— | 1,388,920 | 561,260 | |||||||||||
Net Cash
Provided
(Used) by Financing Activities
|
(125,100 | ) | (323,931 | ) | 46,067 | |||||||||
Net Increase
(Decrease) in Cash and Cash Equivalents
|
73,398 | 9,874 | 3,855 | |||||||||||
Cash and Cash
Equivalents at Beginning of Year
|
49,695 | 39,821 | 35,966 | |||||||||||
Cash and Cash
Equivalents at End of Year
|
$ | 123,093 | $ | 49,695 | $ | 39,821 | ||||||||
Supplemental
Schedule of Noncash Investing and Financing Activities:
|
||||||||||||||
Purchase of
equipment
financed with debt proceeds
|
$ | — | $ | 212,303 | $ | 378,396 | ||||||||
Cash paid for
interest
|
$ | 8,954 | $ | 44,045 | $ | 27,022 | ||||||||
Note 1: | Summary of Significant Accounting Policies |
Note 2: | Related-Party Transactions |
December 31,
|
||||||||||||
March 31,
|
||||||||||||
2005
|
2004
|
2003
|
||||||||||
Note receivables
from
shareholders, due upon demand, bearing interest of 0%, unsecured
|
$ | 7,967 | $ | 9,673 | $ | 15,991 | ||||||
Note 3: | Pledged Assets and Short-Term Notes Payable |
December 31,
|
||||||||||||
March 31,
|
||||||||||||
2005
|
2004
|
2003
|
||||||||||
Note payable,
FNB,
$150,000 line of credit, 6.0 to 6.25% interest rate
|
$ | — | $ | — | $ | 103,850 | ||||||
Note payable,
FNB,
$53,485, 6.0 to 7.75% interest rate
|
— | — | 24,299 | |||||||||
Note payable,
FNB,
$53,485, 6.25 to 8.75% interest rate
|
— | — | 21,846 | |||||||||
Note payable,
FNB,
$46,145, 6.0 to 7.25% interest rate
|
13,380 | 21,106 | — | |||||||||
Note payable,
CAT
Financial, $98,013, 6.7% interest rate
|
41,221 | 65,659 | — | |||||||||
$ | 54,601 | $ | 86,765 | $ | 149,995 | |||||||
Note 4: | Pledged Assets and Long-Term Debt |
December 31,
|
|||||||||||||
March 31,
|
|||||||||||||
2005
|
2004
|
2003
|
|||||||||||
Various notes
payable
to banks and financing companies for vehicles and equipment,
due in
installments through March, 2008 at fixed interest rates ranging
from 0.0%
to 8.75%, collateralized by vehicles, equipment and accounts
receivable
|
$ | 138,594 | $ | 160,674 | $ | 250,893 | |||||||
Various notes
payable
to banks and financing companies for vehicles and equipment,
due in
installments through March, 2007 at variable interest rates ranging
from
4.15% to 7.25%, collateralized by vehicles, equipment and accounts
receivable
|
234,559 | 305,415 | 263,593 | ||||||||||
Subtotal
|
373,153 | 466,089 | 514,486 | ||||||||||
Less current
maturities
|
283,194 | 312,414 | 235,137 | ||||||||||
Total Long-term
debt
|
$ | 89,959 | $ | 153,675 | $ | 279,349 | |||||||
Year Ending March 31, | ||||
2006
|
$ | 283,194 | ||
2007
|
79,845 | |||
2008
|
10,114 | |||
$ | 373,153 | |||
Note 5: | Leases |
Year Ending March 31, | ||||
2006
|
$ | 144,000 | ||
Note 6: | Stockholders’ Equity |
December 31,
|
||||||||||||
March 31,
|
||||||||||||
2005
|
2004
|
2003
|
||||||||||
Common stock
authorized
|
100 | 100 | 100 | |||||||||
Common stock
issued
|
100 | 100 | 100 | |||||||||
Common stock
outstanding
|
100 | 100 | 100 | |||||||||
Common stock,
per share
par value
|
$ | 10 | $ | 10 | $ | 10 | ||||||
Cash dividends
paid on
common stock
|
— | — | — |
Note 7: | Dependence on Key Customers |
Note 8: | Subsequent Events |
Note 9: | Income Tax Matters |
December 31,
|
|||||||||||||
March 31,
|
|||||||||||||
2005
|
2004
|
2003
|
|||||||||||
Deferred Tax
Liabilities:
|
|||||||||||||
Property and
equipment
|
$ | 136,593 | $ | 132,577 | $ | 78,565 | |||||||
Cash basis
receivables
|
95,394 | 101,340 | 96,261 | ||||||||||
Prepaid
expenses
|
2,047 | 2,261 | 2,281 | ||||||||||
234,034 | 236,178 | 177,107 | |||||||||||
Deferred Tax
Assets:
|
|||||||||||||
Net operating
loss
carryforward
|
— | — | 31,099 | ||||||||||
Cash basis
accounts
payable and accrued expenses
|
28,797 | 31,397 | 34,018 | ||||||||||
28,797 | 31,397 | 65,117 | |||||||||||
Net deferred
tax
liabilities
|
$ | 205,237 | $ | 204,781 | $ | 111,990 | |||||||
December 31,
|
||||||||||||
March 31,
|
||||||||||||
2005
|
2004
|
2003
|
||||||||||
Current
liabilities
|
$ | 68,644 | $ | 72,204 | $ | 33,425 | ||||||
Noncurrent
liabilities
|
136,593 | 132,577 | 78,566 | |||||||||
$ | 205,237 | $ | 204,781 | $ | 111,991 | |||||||
December 31,
|
||||||||||||
March 31,
|
||||||||||||
2005
|
2004
|
2003
|
||||||||||
Current tax
expense
|
$ | 45,169 | $ | 51,469 | $ | — | ||||||
Deferred tax
expense
|
457 | 92,790 | 37,121 | |||||||||
Benefit of
operating
loss carryforward
|
— | (31,099 | ) | — | ||||||||
$ | 45,626 | $ | 113,160 | $ | 37,121 | |||||||
ASSETS | |||||||||||
Current
Assets
|
|||||||||||
Cash
|
$ | 153,254.16 | |||||||||
Trade
Receivables
|
422,900.00 | ||||||||||
Trade
Receivables-WIP
|
111,225.00 | ||||||||||
Loans to
Shareholder
|
6,242.36 | ||||||||||
Prepaid
Expense
|
19,120.50 | ||||||||||
Total
Current
Assets
|
$ | 712,742.02 | |||||||||
Property
and
Equipment
|
|||||||||||
Transportation
Equipment
|
178,238.71 | ||||||||||
Machinery &
Equipment
|
2,140,792.13 | ||||||||||
Office
Furniture & Equipment
|
7,131.34 | ||||||||||
Accumulated
Depreciation
|
(829,395.00 | ) | |||||||||
Net
Property
and Equipment
|
1,496,767.18 | ||||||||||
Total
Assets
|
$ | 2,209,509.20 | |||||||||
LIABILITIES AND EQUITY | |||||||||||
Current
Liabilities
|
|||||||||||
Accounts
Payable
|
$ | 85,265.16 | |||||||||
Accrued
Expenses
|
114,569.38 | ||||||||||
Income Tax
Payable
|
80,329.09 | ||||||||||
Deferred Income
Taxes
|
71,781.00 | ||||||||||
Notes Payable
|
246,301.98 | ||||||||||
Current Portion
of L.T.
Debt
|
206,298.26 | ||||||||||
Total
Current
Liabilities
|
$ | 804,544.87 | |||||||||
Deferred Income
Tax
|
158,816.00 | ||||||||||
Long-Term Debt,
Net of
Current Portion
|
16,014.91 | ||||||||||
Stockholders’
Equity
|
|||||||||||
Common Stock,
$10 Par Value
|
1,000.00 | ||||||||||
Retained
Earnings
|
1,229,133.42 | ||||||||||
Total
Stockholders’ Equity
|
1,230,133.42 | ||||||||||
Total
Liabilities & Stockholders’ Equity
|
$ | 2,209,509.20 | |||||||||
Six Months
Ended
|
Six Months
Ended
|
|||||||||||||||||
Jun. 30,
2005
|
Pct
|
Jun. 30,
2004
|
Pct
|
|||||||||||||||
Revenue
|
||||||||||||||||||
Service
Revenue
|
$ | 1,949,131.25 | 100.00 | $ | 1,839,365.00 | 100.00 | ||||||||||||
Total Revenue
|
1,949,131.25 | 100.00 | 1,839,365.00 | 100.00 | ||||||||||||||
Cost of
Revenue
|
1,257,348.70 | 64.51 | 1,421,254.04 | 77.27 | ||||||||||||||
Gross Profit
|
691,782.55 | 35.49 | 418,110.96 | 22.73 | ||||||||||||||
Operating
Expenses
|
328,061.99 | 16.83 | 269,719.48 | 14.66 | ||||||||||||||
Income From
Operations
|
363,720.56 | 18.66 | 148,391.48 | 8.07 | ||||||||||||||
Other Income
(Expense)
|
||||||||||||||||||
Interest
Income
|
168.77 | 0.01 | 343.36 | 0.02 | ||||||||||||||
Interest
Expense
|
(16,139.41 | ) | (0.83 | ) | (24,819.02 | ) | (1.35 | ) | ||||||||||
Total Other
Income
(Expense)
|
(15,970.64 | ) | (0.82 | ) | (24,475.66 | ) | (1.33 | ) | ||||||||||
Income Before
Taxes
|
347,749.92 | 17.84 | 123,915.82 | 6.74 | ||||||||||||||
Income Taxes
|
||||||||||||||||||
Current Income
Tax
|
78,710.75 | 4.04 | ||||||||||||||||
Deferred Income
Taxes
|
25,816.00 | 1.32 | 23,830.00 | 1.30 | ||||||||||||||
104,526.75 | 5.36 | 23,830.00 | 1.30 | |||||||||||||||
Net Income
|
243,223.17 | 12.48 | 100,085.82 | 5.44 | ||||||||||||||
Beginning Retained
Earnings
|
985,910.25 | 558,852.46 | ||||||||||||||||
Ending Retained
Earnings
|
$ | 1,229,133.42 | $ | 658,938.28 | ||||||||||||||
Six Months
Ended
|
Six Months
Ended
|
|||||||||||||||||
Jun. 30,
2005
|
Pct
|
Jun. 30,
2004
|
Pct
|
|||||||||||||||
Cost
of
Revenue
|
||||||||||||||||||
Contract Air
|
191,500.00 | 9.83 | 352,300.00 | 19.15 | ||||||||||||||
Freight &
Trucking
|
11,529.98 | 0.59 | 13,788.47 | 0.75 | ||||||||||||||
Auto Expense
|
57,800.36 | 2.97 | 57,554.74 | 3.13 | ||||||||||||||
Depreciation
|
148,285.00 | 7.61 | 110,875.00 | 6.03 | ||||||||||||||
Fuel
|
0.00 | 0.00 | 12,906.32 | 0.70 | ||||||||||||||
Insurance
|
27,634.49 | 1.42 | 21,697.12 | 1.18 | ||||||||||||||
Laundry/
Uniforms
|
1,365.96 | 0.07 | 5,223.46 | 0.28 | ||||||||||||||
Maintenance &
Repairs
|
95,822.66 | 4.92 | 73,610.05 | 4.00 | ||||||||||||||
Equipment
Rental
|
141,320.17 | 7.25 | 175,289.72 | 9.53 | ||||||||||||||
Subcontracting —
Other
|
2,942.50 | 0.15 | 1,800.00 | 0.10 | ||||||||||||||
Supplies
|
104,745.30 | 5.37 | 139,860.66 | 7.60 | ||||||||||||||
Taxes
|
34,631.08 | 1.78 | 33,779.21 | 1.84 | ||||||||||||||
Travel
|
2,666.50 | 0.14 | 0.00 | 22.97 | ||||||||||||||
Wages
|
437,054.70 | 22.42 | 422,569.29 | 22.97 | ||||||||||||||
Total
Cost of
Revenue
|
$ | 1,257,348.70 | 64.51 | $ | 1,421,254.04 | 77.27 | ||||||||||||
Operating
Expenses
|
||||||||||||||||||
Advertising &
Promotional
|
0.00 | 0.00 | 454.56 | 0.02 | ||||||||||||||
Bank Charges
|
0.00 | 0.00 | 632.62 | 0.03 | ||||||||||||||
Contract Labor
|
0.00 | 0.00 | 924.00 | 0.05 | ||||||||||||||
Car & Truck
Expense
|
3,400.29 | 0.17 | 0.00 | 0.05 | ||||||||||||||
Contributions
|
2,250.00 | 0.12 | 1,000.00 | 0.05 | ||||||||||||||
Depreciation
|
3,635.00 | 0.19 | 3,341.00 | 0.18 | ||||||||||||||
Dues &
Subscriptions
|
71.70 | 0.00 | 170.40 | 0.01 | ||||||||||||||
Insurance
|
21,057.11 | 1.08 | 20,040.54 | 1.09 | ||||||||||||||
Laundry &
Uniforms
|
1,748.23 | 0.09 | 0.00 | 1.09 | ||||||||||||||
Life Insurance
|
288.00 | 0.01 | 269.00 | 0.01 | ||||||||||||||
Medical
Reimbursement
|
0.00 | 0.00 | 3,621.06 | 0.20 | ||||||||||||||
Meals &
Entertainment
|
7,604.96 | 0.39 | 1,441.28 | 0.08 | ||||||||||||||
Office Expense
|
936.47 | 0.05 | 1,510.61 | 0.08 | ||||||||||||||
Professional
fees
|
5,171.03 | 0.27 | 1,054.00 | 0.06 | ||||||||||||||
Rent
|
6,026.48 | 0.31 | 6,938.15 | 0.38 | ||||||||||||||
Repairs &
Maintenance
|
154.20 | 0.01 | 0.00 | 0.38 | ||||||||||||||
Supplies
|
497.90 | 0.03 | 40.00 | 0.00 | ||||||||||||||
Taxes
|
19,904.64 | 1.02 | 11,195.41 | 0.61 | ||||||||||||||
Travel
|
6,104.48 | 0.31 | 1,564.70 | 0.09 | ||||||||||||||
Utilities &
Telephone
|
13,329.50 | 0.68 | 8,322.15 | 0.45 | ||||||||||||||
Wages
|
43,482.00 | 2.23 | 8,322.15 | 0.45 | ||||||||||||||
Salaries-Officers
|
192,400.00 | 9.87 | 207,200.00 | 11.26 | ||||||||||||||
Total
Operating
Expenses
|
$ | 328,061.99 | 16.83 | $ | 269,719.48 | 14.66 | ||||||||||||
6
Months Ended
|
6
Months Ended
|
||||||||||
Jun. 30,
2005
|
Jun. 30,
2004
|
||||||||||
Cash
Flow from
Operating Activities
|
|||||||||||
Net Income
(Loss)
|
$ | 242,223.17 | $ | 100,085.82 | |||||||
Adjustments
to
Reconcile Cash Flow
|
|||||||||||
Depreciation
|
151,920.00 | 114,216.00 | |||||||||
Deferred Income
Tax
|
25,816.00 | 23,830.00 | |||||||||
Decrease (Increase)
in
Current Assets
|
|||||||||||
Trade
Receivables
|
(4,610.00 | ) | 56,721.00 | ||||||||
Trade Receivable
WIP
|
(9,825.00 | ) | (30,025.00 | ) | |||||||
Loans to
Shareholder
|
3,432.23 | 2,959.58 | |||||||||
Prepaid
Expense
|
(7,527.57 | ) | (321.51 | ) | |||||||
Prepaid Income
Taxes
|
0.00 | 894.00 | |||||||||
Increase (Decrease)
in
Current Liabilities
|
|||||||||||
Accounts
Payable
|
(32,662.73 | ) | (19,411.84 | ) | |||||||
Accrued
Expenses
|
65,522.20 | 2,781.13 | |||||||||
Credit Cards
Payable
|
66,650.50 | 10,690.02 | |||||||||
Total
Adjustments
|
258,714.63 | 162,333.38 | |||||||||
Cash
Provided
(Used) by Operations
|
501,937.80 | 262,419.20 | |||||||||
Cash
Flow From
Investing Activities
|
|||||||||||
Sales (Purchases)
of
Assets
|
|||||||||||
Machinery &
Equipment
|
(314,139.87 | ) | (397,016.47 | ) | |||||||
Cash
Provided
(Used) by Investing
|
(314,139.87 | ) | (397,016.47 | ) | |||||||
Cash
Flow From
Financing Activities
|
|||||||||||
Cash (Used)
or provided
by:
|
|||||||||||
Short-Term
Debt
|
159,537.27 | 42,475.87 | |||||||||
Long-Term Debt
|
(243,775.81 | ) | 137,312.81 | ||||||||
Cash
Provided
(Used) by Financing
|
(84,238.54 | ) | 179,788.68 | ||||||||
Net
Increase
(Decrease) in Cash
|
103,559.39 | 45,191.41 | |||||||||
Cash
at
Beginning of Period
|
49,694.77 | 39,821.42 | |||||||||
Cash
at End of
Period
|
$ | 153,254.16 | $ | 85,012.83 | |||||||
September
30,
|
December
31,
|
|||||||||
2005
|
2004
|
2003
|
||||||||
ASSETS
|
||||||||||
CURRENT
ASSETS
|
||||||||||
Cash
and cash equivalents
|
$
|
15,816,572
|
$
|
11,038,970
|
$
|
9,097,762
|
||||
Trade
receivables, net
|
8,602,269
|
5,437,713
|
3,206,942
|
|||||||
Advances
to employees
|
140,000
|
—
|
—
|
|||||||
Inventory
|
348,058
|
256,888
|
181,368
|
|||||||
Prepaid
expenses and other
|
102,553
|
82,256
|
66,910
|
|||||||
TOTAL
CURRENT ASSETS
|
25,009,452
|
16,815,827
|
12,552,982
|
|||||||
PROPERTY
AND EQUIPMENT, net
|
16,242,311
|
12,285,735
|
9,103,656
|
|||||||
TOTAL
ASSETS
|
$
|
41,251,763
|
$
|
29,101,562
|
$
|
21,656,638
|
||||
LIABILITIES
AND SHAREHOLDER’S EQUITY
|
||||||||||
LIABILITIES
|
||||||||||
CURRENT
LIABILITIES
|
||||||||||
Accounts
payable
|
$
|
1,605,368
|
$
|
1,217,857
|
$
|
1,280,641
|
||||
Accrued
liabilities
|
152,242
|
291,195
|
260,650
|
|||||||
Current
portion of notes payable
|
3,050,649
|
1,488,466
|
1,021,530
|
|||||||
TOTAL
CURRENT LIABILITIES
|
4,808,259
|
2,997,518
|
2,562,821
|
|||||||
NOTES
PAYABLE, less current portion
|
1,089,824
|
1,566,536
|
—
|
|||||||
TOTAL
LIABILITIES
|
5,898,083
|
4,564,054
|
2,562,821
|
|||||||
COMMITMENTS
AND CONTINGENCIES
|
—
|
—
|
—
|
|||||||
SHAREHOLDER’S
EQUITY
|
||||||||||
Common
stock
|
155,655
|
155,655
|
155,655
|
|||||||
Treasury
stock, at cost
|
(736,000
|
)
|
(736,000
|
)
|
(736,000
|
)
|
||||
Retained
earnings
|
35,934,025
|
25,117,853
|
19,674,162
|
|||||||
TOTAL
SHAREHOLDER’S EQUITY
|
35,353,680
|
24,537,508
|
19,093,817
|
|||||||
TOTAL
LIABILITIES AND SHAREHOLDER’S EQUITY
|
$
|
41,251,763
|
$
|
29,101,562
|
$
|
21,656,638
|
Nine
Months
|
||||||||||
Ended
|
||||||||||
September
30,
|
Year
Ended December 31,
|
|||||||||
2005
|
2004
|
2003
|
||||||||
REVENUES,
NET
|
$
|
21,774,801
|
$
|
18,010,940
|
$
|
16,437,616
|
||||
EXPENSES
|
||||||||||
Cost
of sales
|
2,551,101
|
2,718,080
|
2,273,928
|
|||||||
General
and administrative
|
4,671,964
|
5,218,634
|
4,857,507
|
|||||||
Depreciation
|
2,540,955
|
2,434,682
|
2,543,332
|
|||||||
Gain
on sale of assets
|
(1,690,550
|
)
|
(1,098,488
|
)
|
(332,431
|
)
|
||||
TOTAL
EXPENSES
|
8,073,470
|
9,272,908
|
9,342,336
|
|||||||
INCOME
FROM OPERATIONS
|
13,701,331
|
8,738,032
|
7,095,280
|
|||||||
OTHER
INCOME (EXPENSE)
|
||||||||||
Interest
income
|
76,371
|
46,173
|
66,282
|
|||||||
Interest
expense
|
(151,341
|
)
|
(11,987
|
)
|
(58,442
|
)
|
||||
Other,
net
|
(7,687
|
)
|
(76,917
|
)
|
(95,327
|
)
|
||||
TOTAL
OTHER EXPENSE
|
(82,657
|
)
|
(42,731
|
)
|
(87,487
|
)
|
||||
NET
INCOME
|
$
|
13,618,674
|
$
|
8,695,301
|
$
|
7,007,793
|
Additional
|
|||||||||||||||||||
Common
Stock
|
Treasury
|
Paid-in
|
Retained
|
||||||||||||||||
Shares
|
Amount
|
Stock
|
Capital
|
Earnings
|
Total
|
||||||||||||||
Balance,
January 1, 2003
|
225
|
$
|
155,655
|
$
|
(736,000
|
)
|
$
|
154,655
|
$
|
25,467,954
|
$
|
24,887,609
|
|||||||
Net
income
|
—
|
—
|
—
|
—
|
7,007,793
|
7,007,793
|
|||||||||||||
Distributions
|
—
|
—
|
—
|
—
|
(12,801,585
|
)
|
(12,801,585
|
)
|
|||||||||||
Balance,
December 31, 2003
|
225
|
155,655
|
(736,000
|
)
|
154,655
|
19,674,162
|
19,093,817
|
||||||||||||
Net
income
|
—
|
—
|
—
|
—
|
8,695,301
|
8,695,301
|
|||||||||||||
Distributions
|
—
|
—
|
—
|
—
|
(3,251,610
|
)
|
(3,251,610
|
)
|
|||||||||||
Balance,
December 31, 2004
|
225
|
155,655
|
(736,000
|
)
|
154,655
|
25,117,853
|
24,537,508
|
||||||||||||
Net
income
|
—
|
—
|
—
|
—
|
13,618,674
|
13,618,674
|
|||||||||||||
Distributions
|
—
|
—
|
—
|
—
|
(2,802,502
|
)
|
(2,802,502
|
)
|
|||||||||||
Balance,
September 30, 2005
|
225
|
$
|
155,655
|
$
|
(736,000
|
)
|
$
|
154,655
|
$
|
35,934,025
|
$
|
35,353,680
|
Nine
Months
|
||||||||||
Ended
|
||||||||||
September
30,
|
Year
Ended December 31,
|
|||||||||
2005
|
2004
|
2003
|
||||||||
CASH
FLOWS FROM OPERATING ACTIVITIES
|
||||||||||
Net
income
|
$
|
13,618,674
|
$
|
8,695,301
|
$
|
7,007,793
|
||||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||||
Depreciation
|
2,540,955
|
2,434,682
|
2,543,332
|
|||||||
Gain
on sale of assets
|
(1,690,550
|
)
|
(1,098,488
|
)
|
(332,431
|
)
|
||||
Changes
in operating assets and liabilities:
|
||||||||||
Receivables
|
(3,304,556
|
)
|
(2,230,771
|
)
|
777,986
|
|||||
Inventory
|
(91,170
|
)
|
(75,520
|
)
|
78,267
|
|||||
Prepaid
expenses and other
|
(20,297
|
)
|
(15,346
|
)
|
(14,604
|
)
|
||||
Accounts
payable
|
387,511
|
(62,784
|
)
|
43,879
|
||||||
Accrued
liabilities
|
(138,953
|
)
|
30,545
|
10,519
|
||||||
NET
CASH PROVIDED BY OPERATING ACTIVITIES
|
11,301,614
|
7,677,619
|
10,114,741
|
|||||||
CASH
FLOWS FROM INVESTING ACTIVITIES
|
||||||||||
Purchase
of property and equipment
|
(7,631,679
|
)
|
(5,796,433
|
)
|
(921,949
|
)
|
||||
Proceeds
from sale of property and equipment
|
2,872,096
|
1,334,493
|
1,088,038
|
|||||||
NET
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES
|
(4,759,583
|
)
|
(4,461,940
|
)
|
166,089
|
|||||
CASH
FLOWS FROM FINANCING ACTIVITIES
|
||||||||||
Distributions
to shareholder
|
(2,802,502
|
)
|
(3,251,610
|
)
|
(12,801,585
|
)
|
||||
Proceeds
from notes payable
|
3,000,000
|
3,000,000
|
—
|
|||||||
Repayment
of notes payable
|
(1,961,927
|
)
|
(1,022,861
|
)
|
(1,493,440
|
)
|
||||
NET
CASH USED IN FINANCING ACTIVITIES
|
(1,764,429
|
)
|
(1,274,471
|
)
|
(14,295,025
|
)
|
||||
NET
INCREASE (DECREASE) IN CASH AND CASH
|
||||||||||
EQUIVALENTS
|
4,777,602
|
1,941,208
|
(4,014,195
|
)
|
||||||
CASH
AND CASH EQUIVALENTS — BEGINNING OF PERIOD
|
11,038,970
|
9,097,762
|
13,111,957
|
|||||||
CASH
AND CASH EQUIVALENTS — END OF PERIOD
|
$
|
15,816,572
|
$
|
11,038,970
|
$
|
9,097,762
|
||||
SUPPLEMENTAL
CASH FLOW INFORMATION
|
||||||||||
Cash
paid for interest
|
$
|
151,341
|
$
|
11,987
|
$
|
58,442
|
Estimated
|
|||||||||||||
Useful
|
September
30,
|
December
31,
|
|||||||||||
Lives
|
2005
|
2004
|
2003
|
||||||||||
Rental
equipment
|
7
- 10 years
|
$
|
33,667,834
|
$
|
27,390,801
|
$
|
23,338,565
|
||||||
Automobiles
|
5
years
|
508,535
|
410,094
|
330,734
|
|||||||||
Furniture
and fixtures
|
5
- 7 years
|
12,369
|
12,369
|
1,835
|
|||||||||
Leasehold
improvements
|
15
- 39 years
|
161,091
|
161,091
|
105,426
|
|||||||||
34,349,829
|
27,974,355
|
23,776,560
|
|||||||||||
Less:
accumulated depreciation
|
(18,107,518
|
)
|
(15,688,620
|
)
|
(14,672,904
|
)
|
|||||||
$
|
16,242,311
|
$
|
12,285,735
|
$
|
9,103,656
|
September
30,
|
December
31,
|
|||||||||
2005
|
2004
|
2003
|
||||||||
Note
payable to bank(1)
|
$
|
—
|
$
|
—
|
$
|
1,021,530
|
||||
Note
payable to bank(2)
|
1,904,583
|
3,000,000
|
—
|
|||||||
Note
payable to bank(3)
|
2,154,160
|
—
|
—
|
|||||||
Note
payable to GMAC(4)
|
38,233
|
55,002
|
—
|
|||||||
Note
payable to Ford Credit(5)
|
43,497
|
—
|
—
|
|||||||
4,140,473
|
3,055,002
|
1,021,530
|
||||||||
Less:
current portion
|
3,050,649
|
1,488,466
|
1,021,530
|
|||||||
Total
notes payable — long-term
|
$
|
1,089,824
|
$
|
1,566,536
|
$
|
—
|
Period
Ending September 30,
|
|
|||
2006
|
$
|
3,050,649
|
||
2007
|
1,075,617
|
|||
2008
|
14,207
|
|||
$
|
4,140,473
|
• |
The
Company acquired an automobile for $47,398 which was funded
through a note
payable instrument.
|
• |
The
Company acquired an automobile for $56,333 which was funded
through a note
payable instrument.
|
Nine
Months
|
||||||||||
Ended
|
||||||||||
September
30,
|
Year
Ended December 31,
|
|||||||||
2005
|
2004
|
2003
|
||||||||
Salaries
and wages
|
$
|
2,001,351
|
$
|
2,449,073
|
$
|
2,340,807
|
||||
Retirement
plan expenses
|
—
|
163,261
|
155,409
|
|||||||
Selling
expenses
|
363,579
|
325,595
|
292,420
|
|||||||
Shop
supplies
|
590,929
|
500,783
|
571,038
|
|||||||
Shop
maintenance
|
103,479
|
43,691
|
46,767
|
|||||||
Rent
|
486,000
|
288,257
|
180,000
|
|||||||
Insurance
|
306,736
|
404,886
|
345,318
|
|||||||
Automobile
expenses
|
195,915
|
161,549
|
145,333
|
|||||||
Advertising
|
192,874
|
196,037
|
244,695
|
|||||||
Taxes,
licenses and other
|
173,895
|
377,022
|
415,390
|
|||||||
Bad
debt expense, net of recoveries
|
126,900
|
81,389
|
(59,220
|
)
|
||||||
Office
expense
|
33,093
|
49,648
|
26,814
|
|||||||
Uniforms
|
19,938
|
17,971
|
19,800
|
|||||||
Utilities
|
64,671
|
115,565
|
69,006
|
|||||||
Dues
and subscriptions
|
7,189
|
7,375
|
8,956
|
|||||||
Professional
fees
|
4,678
|
34,739
|
52,112
|
|||||||
Other
|
737
|
1,793
|
2,862
|
|||||||
TOTAL
|
$
|
4,671,964
|
$
|
5,218,634
|
$
|
4,857,507
|
|
ALLIS-
CHALMERS
CONSOLIDATED
|
SPECIALTY
HISTORICAL
|
SPECIALTY
PURCHASE
ADJUSTMENTS
|
ALLIS-
CHALMERS
CONSOLIDATED
|
|||||||||
ASSETS
|
|||||||||||||
Cash
and cash equivalents
|
$
|
3,909
|
$
|
15,817
|
$
|
(14,141
|
)
AA
|
$
|
5,585
|
||||
Trade
receivables, net
|
23,777
|
8,602
|
—
|
32,379
|
|||||||||
Inventories
|
5,217
|
348
|
—
|
5,565
|
|||||||||
Prepaids
and other
|
1,014
|
243
|
—
|
1,257
|
|||||||||
Total
Current Assets
|
33,917
|
25,010
|
(14,141
|
)
|
44,786
|
||||||||
Property
and equipment, net
|
75,516
|
16,242
|
70,646
|
162,404
|
|||||||||
Goodwill
|
12,042
|
—
|
—
|
12,042
|
|||||||||
Other
intangibles, net
|
7,264
|
—
|
—
|
7,264
|
|||||||||
Debt
issuance costs, net
|
783
|
—
|
—
|
783
|
|||||||||
Other
assets
|
40
|
—
|
—
|
40
|
|||||||||
Total
Assets
|
$
|
129,562
|
$
|
41,252
|
$
|
56,505
|
$
|
227,319
|
|||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|||||||||||||
Current
maturities of long-term debt
|
$
|
4,636
|
$
|
3,051
|
$
|
(3,051
|
)
AA
|
$
|
4,636
|
||||
Trade
accounts payable
|
8,703
|
1,605
|
—
|
10,308
|
|||||||||
Accrued
employee benefits
|
701
|
—
|
—
|
701
|
|||||||||
Accrued
interest
|
462
|
—
|
—
|
462
|
|||||||||
Accrued
expenses
|
4,688
|
152
|
—
|
4,840
|
|||||||||
Accounts
payable, related parties
|
78
|
—
|
—
|
78
|
|||||||||
Total
Current Liabilities
|
19,268
|
4,808
|
(3,051
|
)
|
21,025
|
||||||||
Accrued
postretirement benefit obligations
|
335
|
—
|
—
|
335
|
|||||||||
Long-term
debt, net of current maturities
|
51,491
|
1,090
|
94,910
|
AC |
147,491
|
||||||||
Deferred
income taxes
|
750
|
—
|
750
|
||||||||||
Other
long-term liabilities
|
342
|
—
|
—
|
342
|
|||||||||
72,186
|
5,898
|
91,859
|
169,943
|
||||||||||
STOCKHOLDERS’
EQUITY
|
|||||||||||||
Common
stock
|
165
|
156
|
(156
|
)
AD
|
165
|
||||||||
Capital
in excess of par value
|
57,940
|
—
|
—
|
57,940
|
|||||||||
Treasury
stock, at cost
|
(736
|
)
|
736
|
AD |
—
|
||||||||
Accumulated
earnings (deficit)
|
(729
|
)
|
35,934
|
(35,934
|
)
AD
|
(729
|
)
|
||||||
Total
Stockholders’ Equity
|
57,376
|
35,354
|
(35,354
|
)
|
57,376
|
||||||||
Total
Liabilities and Stockholders’ Equity
|
$
|
129,562
|
$
|
41,252
|
$
|
56,505
|
$
|
227,319
|
|
Allis-
|
|
Diamond
|
|
Downhole
|
|
Delta
|
|
Capcoil
|
|
W.T.
Ent
|
MI
|
|
Specialty
|
Allis-
|
|||||||||||||||||||||||||||||||
|
Chalmers
|
Diamond
|
Purchase
|
Downhole
|
Purchase
|
Delta
|
Purchase
|
Capcoil
|
Purchase
|
W.T.
Ent
|
Purchase
|
Purchase
|
Specialty
|
Purchase
|
Chalmers
|
|||||||||||||||||||||||||||||||
|
Consolidated
|
Historical
|
Adjustments
|
Historical
|
Adjustments
|
Historical
|
Adjustments
|
Historical
|
Adjustments
|
Historical
|
Adjustments
|
Adjustments
|
Historical
|
Adjustments
|
Consolidated
|
|||||||||||||||||||||||||||||||
Sales
|
$
|
47,726
|
$
|
5,584
|
$
|
--
|
4,793
|
$
|
3,249
|
$
|
5,774
|
$
|
3,862
|
$
|
19,109
|
$
|
90,097
|
|||||||||||||||||||||||||||||
Cost
of Sales
|
35,300
|
3,565
|
--
|
3,876
|
--
|
826
|
298
|
A |
4,400
|
398
|
A |
2,764
|
(904
|
)B |
--
|
5,153
|
6,254
|
A |
61,930
|
|||||||||||||||||||||||||||
Gross
Profit
|
12,426
|
2,019
|
--
|
917
|
--
|
2,423
|
(298
|
)
|
1,374
|
(398
|
)
|
1,098
|
904
|
--
|
13,956
|
(6,254
|
)
|
28,167
|
||||||||||||||||||||||||||||
Marketing
and
Administrative
Expense
|
8,199
|
664
|
163
|
C |
872
|
83
|
C |
1,798
|
(940)
|
D |
676
|
110
|
C |
514
|
93
|
C |
--
|
5,219
|
(312
|
E) |
17,139
|
|||||||||||||||||||||||||
Income
(Loss)
from
Operations
|
4,227
|
1,355
|
(163
|
)
|
45
|
(83
|
)
|
625
|
642
|
698
|
(508
|
)
|
584
|
811
|
--
|
8,737
|
(5,942
|
)
|
11,028
|
|||||||||||||||||||||||||||
Other
Income
|
||||||||||||||||||||||||||||||||||||||||||||||
Interest
Income
|
32
|
--
|
--
|
--
|
--
|
4
|
--
|
--
|
--
|
--
|
--
|
--
|
46
|
(46
|
)F |
36
|
||||||||||||||||||||||||||||||
Interest
Expense
|
(2,808
|
)
|
(59
|
)
|
59
|
G |
(74
|
)
|
74
|
G |
(49
|
)
|
49
|
G |
(74
|
)
|
74
|
G |
(44
|
)
|
(406
|
)H |
(733
|
)H |
(12
|
)
|
(6,708
|
)H |
(10,711
|
)
|
||||||||||||||||
Other
|
272
|
(26
|
)
|
--
|
--
|
--
|
114
|
--
|
--
|
--
|
--
|
--
|
--
|
(77
|
)
|
--
|
283
|
|||||||||||||||||||||||||||||
Income
(Loss)
Before
Taxes
|
1,723
|
1,270
|
(104
|
)
|
(29
|
)
|
(9
|
)
|
694
|
691
|
624
|
(434
|
)
|
540
|
405
|
(733
|
)
|
8,694
|
(12,696
|
)
|
636
|
|||||||||||||||||||||||||
Minority
Interest
|
(321
|
)
|
--
|
(524
|
)I |
--
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
845
|
J |
--
|
--
|
--
|
||||||||||||||||||||||||||||
Taxes
|
(514
|
)
|
--
|
--
|
--
|
--
|
(265
|
)
|
265
|
K |
--
|
--
|
(113
|
)
|
113
|
K |
--
|
--
|
(514
|
)
|
||||||||||||||||||||||||||
Net
Income/(Loss)
|
888
|
1,270
|
(628
|
)
|
(29
|
)
|
(9
|
)
|
429
|
956
|
624
|
(434
|
)
|
427
|
518
|
112
|
8,694
|
(12,696
|
)
|
122
|
||||||||||||||||||||||||||
Preferred
Dividend
|
(124
|
)
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
(124
|
)
|
|||||||||||||||||||||||||||||
Net
income/(loss)
attributed
to
common
shares
|
$
|
764
|
$
|
1,270
|
$
|
(628
|
)
|
$
|
(29
|
)
|
$
|
(9
|
)
|
$
|
429
|
$
|
956
|
$
|
624
|
$
|
(434
|
)
|
$
|
427
|
$
|
518
|
$
|
112
|
$
|
8,694
|
$
|
(12,696
|
)
|
$
|
(2
|
)
|
||||||||||
Pro
forma net income
(loss)
per common
share
|
||||||||||||||||||||||||||||||||||||||||||||||
Basic
|
$
|
0.10
|
$
|
0.00
|
||||||||||||||||||||||||||||||||||||||||||
Diluted
|
$
|
0.09
|
$
|
0.00
|
||||||||||||||||||||||||||||||||||||||||||
Weighted
average
shares
outstanding
|
||||||||||||||||||||||||||||||||||||||||||||||
Basic
|
7,930
|
385
|
L |
294
|
L |
8,609
|
||||||||||||||||||||||||||||||||||||||||
Diluted
|
9,510
|
385
|
L |
294
|
L |
8,609
|
|
Allis-
|
|
Delta
|
|
Capcoil
|
|
W.T.
Ent
|
MI
|
|
Specialty
|
Allis-
|
|||||||||||||||||||||||
|
Chalmers
|
Delta
|
Purchase
|
Capcoil
|
Purchase
|
W.T.
Ent
|
Purchase
|
Purchase
|
Specialty
|
Purchase
|
Chalmers
|
|||||||||||||||||||||||
|
Consolidated
|
Historical
|
Adjustments
|
Historical
|
Adjustments
|
Historical
|
Adjustments
|
Adjustments
|
Historical
|
Adjustments
|
Consolidated
|
|||||||||||||||||||||||
Sales
|
$
|
71,830
|
$
|
821
|
$
|
--
|
$
|
2,161
|
$
|
2,057
|
$
|
23,466
|
$
|
100,335
|
||||||||||||||||||||
Cost
of Sales
|
51,153
|
211
|
82
|
A |
1,458
|
132
|
A |
1,331
|
(286
|
)M |
--
|
5,092
|
4,692
|
A |
63,865
|
|||||||||||||||||||
Gross
Profit
|
20,677
|
610
|
(82
|
)
|
703
|
(132
|
)
|
726
|
286
|
--
|
18,374
|
(4,692
|
)
|
36,470
|
||||||||||||||||||||
Marketing
and
|
||||||||||||||||||||||||||||||||||
Administrative
|
||||||||||||||||||||||||||||||||||
Expense
|
11,992
|
985
|
(665
|
)D |
421
|
28
|
C |
342
|
75
|
C |
--
|
4,672
|
(495
|
)N |
17,355
|
|||||||||||||||||||
Income
(Loss)
|
||||||||||||||||||||||||||||||||||
from
Operations
|
8,685
|
(375
|
)
|
583
|
282
|
(160
|
)
|
384
|
211
|
--
|
13,702
|
(4,197
|
)
|
19,115
|
||||||||||||||||||||
Other
Income
|
||||||||||||||||||||||||||||||||||
Interest
Income
|
--
|
3
|
--
|
--
|
--
|
--
|
--
|
--
|
76
|
(76
|
)F |
3
|
||||||||||||||||||||||
Interest
Expense
|
(2,143
|
)
|
(11
|
)
|
11
|
G |
(26
|
)
|
(16
|
)G |
(17
|
)
|
(102
|
)H |
(366
|
)H |
(151
|
)
|
(5,789
|
)H |
(8,610
|
)
|
||||||||||||
Debt
Retirement
|
(1,087
|
)
|
--
|
--
|
(1,087
|
)
|
||||||||||||||||||||||||||||
Other
|
221
|
116
|
--
|
--
|
--
|
--
|
--
|
(8
|
)
|
329
|
||||||||||||||||||||||||
Income (Loss) | ||||||||||||||||||||||||||||||||||
Before
Taxes
|
5,676
|
(267
|
)
|
594
|
256
|
(176
|
)
|
367
|
109
|
(366
|
)
|
13,619
|
(10,062
|
)
|
9,750
|
|||||||||||||||||||
Minority
Interest
|
(488
|
)
|
--
|
--
|
--
|
--
|
488
|
J |
--
|
|||||||||||||||||||||||||
Taxes
|
(559
|
)
|
(142
|
)
|
142
|
K |
(87
|
)
|
87
|
K |
(111
|
)
|
111
|
K |
--
|
--
|
--
|
(559
|
)
|
|||||||||||||||
Net
Income/(Loss)
|
4,629
|
(409
|
)
|
736
|
169
|
(89
|
)
|
256
|
220
|
122
|
13,619
|
(10,062
|
)
|
9,191
|
||||||||||||||||||||
Preferred
Dividend
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
|||||||||||||||||||||||
Net income/ | ||||||||||||||||||||||||||||||||||
(loss)
attributed
|
||||||||||||||||||||||||||||||||||
to
common shares
|
$
|
4,629
|
$
|
(409
|
)
|
$
|
736
|
$
|
169
|
$
|
(89
|
)
|
$
|
256
|
$
|
220
|
$
|
122
|
$
|
13,619
|
$
|
(10,062
|
)
|
$
|
9,191
|
|||||||||
Pro forma net | ||||||||||||||||||||||||||||||||||
income
(loss)
|
||||||||||||||||||||||||||||||||||
per
common share
|
||||||||||||||||||||||||||||||||||
Basic
|
$
|
0.33
|
$
|
0.64
|
||||||||||||||||||||||||||||||
Diluted
|
$
|
0.30
|
$
|
0.59
|
||||||||||||||||||||||||||||||
Weighted
average
|
||||||||||||||||||||||||||||||||||
shares
outstanding
|
||||||||||||||||||||||||||||||||||
Basic
|
14,197
|
55O
|
62O
|
14,314
|
||||||||||||||||||||||||||||||
Diluted
|
15,589
|
55O
|
62O
|
15,706
|
|
Allis-
|
|
Diamond
|
|
Downhole
|
|
Delta
|
|
Capcoil
|
|
W.T.
Ent
|
MI
|
|
Specialty
|
Allis-
|
|||||||||||||||||||||||||||||||
|
Chalmers
|
Diamond
|
Purchase
|
Downhole
|
Purchase
|
Delta
|
Purchase
|
Capcoil
|
Purchase
|
W.T.
Ent
|
Purchase
|
Purchase
|
Specialty
|
Purchase
|
Chalmers
|
|||||||||||||||||||||||||||||||
|
Consolidated
|
Historical
|
Adjustments
|
Historical
|
Adjustments
|
Historical
|
Adjustments
|
Historical
|
Adjustments
|
Historical
|
Adjustments
|
Adjustments
|
Historical
|
Adjustments
|
Consolidated
|
|||||||||||||||||||||||||||||||
Sales
|
$
|
86,567
|
$
|
460
|
$
|
--
|
$
|
1,006
|
$
|
--
|
$
|
1,764
|
$
|
--
|
$
|
3,475
|
$
|
--
|
$
|
3,033
|
$
|
--
|
$
|
--
|
$
|
28,590
|
$
|
--
|
$
|
124,895
|
||||||||||||||||
Cost
of Sales
|
62,262
|
293
|
--
|
813
|
--
|
422
|
156
|
A |
2,504
|
231
|
A |
1,980
|
(639
|
)B |
--
|
6,955
|
6,256
|
A |
81,233
|
|||||||||||||||||||||||||||
Gross
Profit
|
24,305
|
167
|
--
|
193
|
--
|
1,342
|
(156
|
)
|
971
|
(231
|
)
|
1,053
|
639
|
--
|
21,635
|
(6,256
|
)
|
43,662
|
||||||||||||||||||||||||||||
Marketing
and
|
||||||||||||||||||||||||||||||||||||||||||||||
Administrative
|
||||||||||||||||||||||||||||||||||||||||||||||
Expense
|
14,810
|
54
|
16
|
C |
275
|
15
|
C |
1,260
|
(665
|
)O |
507
|
55
|
C |
480
|
98
|
C |
--
|
6,012
|
(574
|
)P |
22,343
|
|||||||||||||||||||||||||
Income
(Loss)
|
||||||||||||||||||||||||||||||||||||||||||||||
from
Operations
|
9,495
|
113
|
(16
|
)
|
(82
|
)
|
(15
|
)
|
82
|
509
|
464
|
(286
|
)
|
573
|
541
|
--
|
15,623
|
(5,682
|
)
|
21,319
|
||||||||||||||||||||||||||
Other
Income
|
||||||||||||||||||||||||||||||||||||||||||||||
Interest
Income
|
32
|
--
|
--
|
--
|
--
|
5
|
--
|
--
|
--
|
--
|
--
|
--
|
88
|
(88
|
)F |
37
|
||||||||||||||||||||||||||||||
Interest
Expense
|
(3,317
|
)
|
(5
|
)
|
5G
|
(39
|
)
|
39
|
G |
(22
|
)
|
22
|
G |
(47
|
)
|
5
|
G |
(27
|
)
|
(204
|
)H |
(550
|
)H |
(154
|
)
|
(7,766
|
)H |
(12,060
|
)
|
|||||||||||||||||
Debt
Retirement
|
(1,087
|
)
|
(1,087
|
)
|
||||||||||||||||||||||||||||||||||||||||||
Other
|
269
|
(3
|
)
|
--
|
--
|
--
|
162
|
--
|
(7
|
)
|
--
|
--
|
--
|
--
|
(94
|
)
|
--
|
327
|
||||||||||||||||||||||||||||
Income
(Loss)
|
||||||||||||||||||||||||||||||||||||||||||||||
Before
Taxes
|
5,392
|
105
|
(11
|
)
|
(121
|
)
|
24
|
227
|
531
|
410
|
(281
|
)
|
546
|
337
|
(550
|
)
|
15,463
|
(13,536
|
)
|
8,536
|
||||||||||||||||||||||||||
Minority
Interest
|
(561
|
)
|
--
|
(41
|
)I |
--
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
602
|
J |
--
|
--
|
--
|
||||||||||||||||||||||||||||
Taxes
|
(714
|
)
|
--
|
--
|
--
|
--
|
(304
|
)
|
304
|
K |
(87
|
)
|
87
|
K |
(142
|
)
|
142
|
K |
--
|
--
|
--
|
(714
|
)
|
|||||||||||||||||||||||
Net
Income/(Loss)
|
4,117
|
105
|
(52
|
)
|
(121
|
)
|
24
|
(77
|
)
|
835
|
323
|
(194
|
)
|
404
|
479
|
52
|
15,463
|
(13,536
|
)
|
7,822
|
||||||||||||||||||||||||||
Preferred
|
||||||||||||||||||||||||||||||||||||||||||||||
Dividend
|
--
|
--
|
||||||||||||||||||||||||||||||||||||||||||||
Net
income/(loss)
|
||||||||||||||||||||||||||||||||||||||||||||||
attributed
to
|
||||||||||||||||||||||||||||||||||||||||||||||
common
shares
|
$
|
4,117
|
$
|
105
|
$
|
(52
|
)
|
$
|
(121
|
)
|
$
|
24
|
$
|
(77
|
)
|
$
|
835
|
$
|
323
|
$
|
(194
|
)
|
$
|
404
|
$
|
479
|
$
|
52
|
$
|
15,463
|
$
|
(13,536
|
)
|
$
|
7,822
|
|||||||||||
Pro
forma net
|
||||||||||||||||||||||||||||||||||||||||||||||
income
(loss)
|
||||||||||||||||||||||||||||||||||||||||||||||
per
common
|
||||||||||||||||||||||||||||||||||||||||||||||
share
|
||||||||||||||||||||||||||||||||||||||||||||||
Basic
|
$
|
0.29
|
$
|
0.54
|
||||||||||||||||||||||||||||||||||||||||||
Diluted
|
$
|
0.26
|
$
|
0.50
|
||||||||||||||||||||||||||||||||||||||||||
Weighted
|
||||||||||||||||||||||||||||||||||||||||||||||
average
shares
|
||||||||||||||||||||||||||||||||||||||||||||||
outstanding
|
||||||||||||||||||||||||||||||||||||||||||||||
Basic
|
14,197
|
91
|
Q |
84
|
Q |
14,372
|
||||||||||||||||||||||||||||||||||||||||
Diluted
|
15,589
|
91
|
Q |
84
|
Q |
15,764
|
AA)
|
Reflects
the usage of excess cash of Specialty to either pay existing
debt or to
reduce the amount of borrowing needed to complete the
acquisition.
|
AB)
|
Reflects
the step-up in the basis of the fixed assets as a result of the
Specialty
acquisition to the lower of fair market value or actual
cost.
|
AC)
|
Reflects
the borrowing necessary to fund the cash portion of the
acquisitions.
|
AD)
|
Reflects
the elimination of Specialty’s stockholders’ equity.
|
A)
|
Reflects
the increase in depreciation expense as a result of the step-up
in basis
of fixed assets.
|
B)
|
Reflects
the elimination of lease expense not assumed as part of the acquisition,
net of additional depreciation expense of $249,000 due to the
increase
value of the assets acquired in the W.T. Enterprises
purchase.
|
C)
|
Reflects
the increase in amortization due to the increase in other intangible
assets in connection with the acquisitions of Diamond, Downhole,
Capcoil
and W.T. Enterprises.
|
D)
|
Reflects
the elimination of year-end bonus paid to the employees of
Delta.
|
E)
|
Reflects
the following changes in general and administrative cost that
will result
from the acquisition of Specialty:
|
•
The
elimination of director fees of $96,000,
|
|
•
increased
rent expense of $12,000 and
|
|
•
the
elimination of officer salary of $228,000.
|
|
F)
|
Reflects
the elimination of interest income as the pro forma assumes excess
cash
was utilized to offset borrowings.
|
G)
|
Reflects
the elimination of interest expense due to historical debt not
being
assumed.
|
H)
|
Reflects
the interest expense related to cash borrowed to affect the
acquisition.
|
I)
|
Reflects
the 45% minority interest position of M-I on the results of operations
for
Diamond, which operates as a division of AirComp.
|
J)
|
Reflects
the elimination of the 45% minority interest position of
M-I.
|
K)
|
Reflects
the elimination of tax provisions of the Delta and W.T. Enterprises
acquisitions as Allis-Chalmers has tax net operating losses to
offset net
income of the acquired entities.
|
L)
|
Reflects
the issuance of shares of our common stock as part of the acquisition
price. The pro forma treats the shares as having been issued
at the stock
price of $2.60 on January 1, 2004. The Delta and Capcoil acquisitions
were
comprised of $1.0 million in stock and $765,000 in stock,
respectively.
|
M)
|
Reflects
the elimination of lease expense not assumed as part of the W.T.
Enterprises acquisition, net of additional depreciation expense
of
$187,000 due to the increased value of the assets
acquired.
|
N)
|
Reflects
the following general and administrative cost savings that will
result
from the acquisition of Specialty:
|
•
The
elimination of director fees of $64,000,
|
|
•
decreased
rent expense of $261,000 and
|
|
•
the
elimination of officer salary of $170,000.
|
|
O)
|
Reflects
the issuance of shares of our common stock as part of the acquisition
price of Delta and Capcoil. The pro forma treats the shares as
having been
issued at the stock price of $4.90 on January 1, 2005. The Delta
and
Capcoil acquisitions were comprised of $1.0 million in stock
and $765,000
in stock, respectively. The adjustment related to the Delta and
Capcoil
acquisitions takes into account that the historical numbers for
Allis-Chalmers include the issuance of the stock at the date
of
acquisition.
|
P)
|
Reflects
the following general and administrative cost savings that will
result
from the acquisition of Specialty:
|
•
The
elimination of director fees of $88,000,
|
|
•
decreased
rent expense of $258,000 and
|
|
•
the
elimination of officer salary of $228,000.
|
|
Q)
|
Reflects
the issuance of shares of our common stock as part of the acquisition
price of Delta and Capcoil. The pro forma treats the shares as
having been
issued at the stock price of $4.94 on October 1, 2004. The Delta
and
Capcoil acquisitions were comprised of $1.0 million in stock
and $765,000
in stock, respectively. The adjustment related to the Delta and
Capcoil
acquisitions takes into account that the historical numbers for
Allis-Chalmers include the issuance of the stock at the date
of
acquisition.
|