Delaware
|
90-0023731
|
(State
or other jurisdiction of incorporation)
|
(I.R.S.
Employer Identification Number)
|
7030
Empire Central Drive, Houston TX 77040
|
|
(Address
of Principal Executive Offices)
|
|
|
|
PART
I - FINANCIAL INFORMATION
|
Page
|
|
|
|
|
|
Item
1. Financial
Statements
|
1
|
|
|
|
|
Item
2. Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
16
|
|
|
|
|
Item
3. Controls
and Procedures
|
25
|
|
|
|
PART
II - OTHER INFORMATION
|
||
|
|
|
|
Item
2. Unregistered
Sales of Equity Securities and Use of
Proceeds
|
26
|
|
Item
6. Exhibits
|
26
|
|
|
|
Signatures
|
27
|
September
30,
2005
|
December
31,
2004
|
||||||
(Unaudited)
|
|||||||
ASSETS
|
|||||||
Current
assets:
|
|||||||
Cash
and cash equivalents
|
$
|
8,832,769
|
$
|
284,801
|
|||
Restricted
cash
|
¾
|
37,038
|
|||||
Accounts
receivable, net
|
7,565,413
|
3,372,236
|
|||||
Inventories,
net
|
10,775,042
|
2,447,390
|
|||||
Other
current assets
|
99,254
|
39,721
|
|||||
Total
current assets
|
27,272,478
|
6,181,186
|
|||||
Property,
plant and equipment, net
|
7,761,752
|
2,116,796
|
|||||
Goodwill
|
11,748,889
|
7,465,725
|
|||||
Intangible
and other assets, net
|
1,701,154
|
193,380
|
|||||
$
|
48,484,273
|
$
|
15,957,087
|
||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|||||||
Current
liabilities:
|
|||||||
Accounts
payable
|
$
|
2,158,188
|
$
|
2,641,577
|
|||
Accrued
liabilities
|
2,040,177
|
1,617,762
|
|||||
Current
portion of long-term debt
|
2,182,109
|
1,136,467
|
|||||
Amounts
due to related parties
|
¾
|
466,401
|
|||||
Deferred
tax liability
|
1,602,765
|
¾
|
|||||
Total
current liabilities
|
7,983,239
|
5,862,207
|
|||||
Long-term
debt, less current portion
|
7,788,784
|
5,271,987
|
|||||
Total
liabilities
|
15,772,023
|
11,134,194
|
|||||
Stockholders’
equity:
|
|||||||
Common
stock, $.0001 par value; 20,000,000 shares authorized; shares
issued
and
outstanding: September 30, 2005 - 8,241,035 and December 31, 2004
-
6,670,004
|
824 | 667 | |||||
Additional
paid-in capital
|
39,745,013
|
17,082,141
|
|||||
Accumulated
deficit
|
(7,033,587
|
)
|
(12,259,915
|
)
|
|||
Total
stockholders’ equity
|
32,712,250
|
4,822,893
|
|||||
$
|
48,484,273
|
$
|
15,957,087
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
|||||||||||||
2005
|
2004
|
2005
|
2004
|
|||||||||||
Revenues
|
$
|
13,303,670
|
$
|
5,671,044
|
$
|
36,805,438
|
$
|
15,278,420
|
||||||
Cost
of revenues
|
7,576,120
|
3,174,442
|
21,746,026
|
8,662,846
|
||||||||||
Gross
profit
|
5,727,550
|
2,496,602
|
15,059,412
|
6,615,574
|
||||||||||
Expenses:
|
||||||||||||||
Selling,
general and
administrative
|
2,415,259
|
1,314,024
|
6,461,727
|
3,915,949
|
||||||||||
Depreciation
and
amortization
|
421,810
|
173,686
|
999,805
|
537,960
|
||||||||||
Research
and development
|
163,005
|
75,111
|
440,863
|
211,401
|
||||||||||
Total
expenses
|
3,000,074
|
1,562,821
|
7,902,395
|
4,665,310
|
||||||||||
Income
from operations
|
2,727,476
|
933,781
|
7,157,017
|
1,950,264
|
||||||||||
Other
income (expense):
|
||||||||||||||
Interest
expense
|
(214,956
|
)
|
(178,900
|
)
|
(653,004
|
)
|
(522,961
|
)
|
||||||
Other,
net
|
(1,133
|
)
|
48,223
|
39,539
|
51,678
|
|||||||||
Total
other income
(expense)
|
(216,089
|
)
|
(130,677
|
)
|
(613,465
|
)
|
(471,283
|
)
|
||||||
Income
before income taxes
|
2,511,387
|
803,104
|
6,543,552
|
1,478,981
|
||||||||||
Provision
for income taxes
|
(741,620
|
)
|
(100,000
|
)
|
(1,317,224
|
)
|
(100,000
|
)
|
||||||
Net
income
|
$
|
1,769,767
|
$
|
703,104
|
$
|
5,226,328
|
$
|
1,378,981
|
||||||
Basic
and diluted earnings per common share:
|
||||||||||||||
Basic
earnings per
common
share
|
$
|
0.24
|
$
|
0.11
|
$
|
0.75
|
$
|
0.21
|
||||||
Diluted
earnings per
common
share
|
$
|
0.21
|
$
|
0.10
|
$
|
0.67
|
$
|
0.19
|
||||||
Weighted
average common shares used in
computing
basic earnings per common share
|
7,387,467
|
6,666,330
|
6,976,915
|
6,656,496
|
||||||||||
Incremental
common shares from stock options
and
warrants
|
955,062
|
643,039
|
865,177
|
646,645
|
||||||||||
Weighted
average common shares used in
computing
diluted earnings per common share
|
8,342,529
|
7,309,369
|
7,842,092
|
7,303,141
|
Nine
Months Ended September 30,
|
|||||||||
2005
|
2004
|
||||||||
Cash
flows from operating activities:
|
|
|
|||||||
Net
income
|
$
|
5,226,328
|
$
|
1,378,981
|
|||||
Adjustments
to reconcile net income to
net
cash provided by operating
activities:
|
|
|
|||||||
Depreciation
and amortization
|
999,805
|
537,960
|
|||||||
Change
in assets and liabilities:
|
|
||||||||
Restricted
cash
|
37,038
|
¾
|
|||||||
Accounts
receivable
|
(1,316,939
|
)
|
(983,577
|
)
|
|||||
Inventories
|
(885,852
|
)
|
(488,757
|
)
|
|||||
Deposits
and other
|
(101,205
|
)
|
48,318
|
||||||
Accounts
payable
|
(1,967,762
|
)
|
(436,035
|
)
|
|||||
Accrued
liabilities
|
406,595
|
633,022
|
|||||||
Deferred
tax liability
|
(186,501
|
)
|
¾
|
||||||
Net
cash provided by operating activities
|
2,211,507
|
689,912
|
|||||||
|
|
||||||||
Cash
flows from investing activities:
|
|
||||||||
Acquisition
earn-out payment
|
(153,830
|
)
|
(229,633
|
)
|
|||||
Acquisitions,
net of cash acquired
|
(7,452,084
|
)
|
¾
|
||||||
Other
assets
|
(267,890
|
)
|
¾
|
||||||
Capital
expenditures
|
(1,425,370
|
)
|
(107,393
|
)
|
|||||
Net
cash used in investing activities
|
(9,299,174
|
)
|
(337,026
|
)
|
|||||
|
|
||||||||
Cash
flows from financing activities:
|
|
||||||||
Issuance
of stock
|
19,914,598
|
107,800
|
|||||||
Proceeds
from borrowings
|
9,602,862
|
302,019
|
|||||||
Repayments
of indebtedness
|
(13,415,424
|
)
|
(700,045
|
)
|
|||||
Payments
to related parties
|
(466,401
|
)
|
(62,660
|
)
|
|||||
Net
cash used in financing activities
|
15,635,635
|
(352,886
|
)
|
||||||
Net
increase in cash and cash equivalents
|
8,547,968
|
¾
|
|||||||
Cash
and cash equivalents at beginning of period
|
284,801
|
¾
|
|||||||
Cash
and cash equivalents at end of period
|
$
|
8,832,769
|
$
|
¾
|
|||||
Supplementary
schedule of non-cash investing and
financing
activities (See Note 3):
|
|||||||||
Fair
value of net assets acquired
|
$
|
17,410,757
|
$
|
¾
|
|||||
Less
cash acquired
|
(133,674
|
)
|
¾
|
||||||
Less
debt issued
|
(7,375,000
|
)
|
¾
|
||||||
Less
equity issued
|
(2,449,999
|
)
|
¾
|
||||||
Acquisition,
net of cash acquired
|
$
|
7,452,084
|
$
|
¾
|
|||||
Supplemental
disclosure of cash flow information:
|
|||||||||
Interest
paid
|
$
|
689,373
|
$
|
531,000
|
|||||
Income
taxes paid
|
$
|
1,413,524
|
$
|
¾
|
Appraised
Investment
|
Application
of
FAS 14
|
Recorded
Investment
|
||||||||
Cash
|
$
|
133,673
|
$
|
¾
|
$
|
133,673
|
||||
Receivables
|
2,495,877
|
¾
|
2,495,877
|
|||||||
Inventories
|
6,873,854
|
¾
|
6,873,854
|
|||||||
Deferred
tax asset
|
74,000
|
¾
|
74,000
|
|||||||
Property,
plant and equipment
|
17,484,818
|
(16,001,480
|
)
|
1,483,338
|
||||||
Accounts
payable
|
(927,436
|
)
|
¾
|
(927,436
|
)
|
|||||
Accrued
liabilities
|
(112,828
|
)
|
¾
|
(112,828
|
)
|
|||||
Federal
income taxes payable
|
(156,212
|
)
|
¾
|
(156,212
|
)
|
|||||
Deferred
tax liability
|
¾
|
(1,789,266
|
)
|
(1,789,266
|
)
|
|||||
Less:
Total purchase price
|
8,075,000
|
¾
|
8,075,000
|
|||||||
Excess
of investment over purchase price
|
$
|
17,790,746
|
$
|
(17,790,746
|
)
|
$
|
¾
|
For
the Period Ended
|
|||||||
September
30,
2005
|
December
31,
2004
|
||||||
Raw
materials
|
$
|
1,751,100
|
$
|
797,430
|
|||
Finished
goods
|
9,525,941
|
2,107,217
|
|||||
Gross
inventories
|
11,277,041
|
2,904,647
|
|||||
Less:
Slow-moving and obsolescence reserve
|
(501,999
|
)
|
(457,257
|
)
|
|||
Inventories,
net
|
$
|
10,775,042
|
$
|
2,447,390
|
For
the Period Ended
|
|||||||
September
30,
2005
|
December
31,
2004
|
||||||
Land
|
$
|
268,594
|
$
|
68,000
|
|||
Buildings
and leasehold improvements
|
3,092,477
|
1,990,436
|
|||||
Machinery
and equipment
|
6,497,681
|
953,224
|
|||||
Equipment
in progress
|
207,523
|
¾
|
|||||
Furniture
and fixtures
|
278,585
|
108,481
|
|||||
Transportation
equipment
|
1,484,776
|
514,652
|
|||||
Computer
equipment
|
427,090
|
424,837
|
|||||
Gross
property, plant and equipment
|
12,256,726
|
4,059,630
|
|||||
Less:
Accumulated depreciation and amortization
|
(4,494,974
|
)
|
(1,942,834
|
)
|
|||
Net
property and equipment
|
$
|
7,761,752
|
$
|
2,116,796
|
For
the Period Ended
|
|||||||
September
30,
2005
|
December
31,
2004
|
||||||
Senior
Credit Facility
|
|||||||
Equipment
term loan (A)
|
$
|
5,950,000
|
$
|
¾
|
|||
Real
estate term loan (A)
|
812,665
|
¾
|
|||||
Amendments
to Senior Credit Facility
|
|||||||
Equipment
term loan (B)
|
1,309,667
|
¾
|
|||||
Real
estate term loan (B)
|
223,908
|
¾
|
|||||
Promissory
notes to stockholders of acquired businesses, maturing
December
2007 and 2008
|
350,000
|
750,000
|
|||||
Promissory
notes to stockholders of acquired businesses, maturing
February
2008
|
1,104,861
|
¾
|
|||||
Note
payable to Facilities
|
¾
|
465,495
|
|||||
Note
payable to bank maturing March 2008
|
¾
|
1,365,766
|
|||||
Note
payable to bank maturing October 2008
|
¾
|
629,539
|
|||||
Term
loan payable to bank maturing December 2007
|
¾
|
536,281
|
|||||
Revolving
line of credit, maturing September 2005
|
¾
|
2,439,483
|
|||||
Mortgage
note payable maturing December 2012
|
¾
|
96,872
|
|||||
Other
|
219,792
|
125,018
|
|||||
Total
|
9,970,893
|
6,408,454
|
|||||
Less
current maturities
|
(2,182,109
|
)
|
(1,136,467
|
)
|
|||
Long-term
debt
|
$
|
7,788,784
|
$
|
5,271,987
|
Issued
and outstanding as of December 31, 2004
|
6,670,004
|
|||
Shares
issued for Spidle acquisition (See Note 3)
|
129,271
|
|||
Shares
issued for IBS 2000 “earn-out payment” (See Note 6)
|
34,080
|
|||
Shares
issued for Harmon acquisition (See Note 3)
|
35,108
|
|||
Shares
issued in private offering (See above)
|
1,300,000
|
|||
Shares
issued for LOR acquisition (See Note 3)
|
68,001
|
|||
Stock
options exercised through September 30, 2005
|
4,571
|
|||
Issued
and outstanding as of September 30, 2005
|
8,241,035
|
For
the Three Months Ended
September
30,
|
For
the Nine Months Ended
September
30,
|
||||||||||||
2005
|
2004
|
2005
|
2004
|
||||||||||
Net
income
|
$
|
1,769,767
|
$
|
703,104
|
$
|
5,226,328
|
$
|
1,378,981
|
|||||
Weighted-average
common shares
outstanding
|
7,387,467
|
6,666,330
|
6,976,915
|
6,656,496
|
|||||||||
Basic
earnings per common share
|
$
|
0.24
|
$
|
0.11
|
$
|
0.75
|
$
|
0.21
|
|||||
Diluted
earnings per common share
|
$
|
0.21
|
$
|
0.10
|
$
|
0.67
|
$
|
0.19
|
|||||
|
|
|
|||||||||||
Weighted-average
common shares
outstanding
|
7,387,467
|
6,666,330
|
6,976,915
|
6,656,496
|
|||||||||
Effect
of dilutive securities
|
955,062
|
643,039
|
865,177
|
646,645
|
|||||||||
Weighted-average
common
equivalent
shares outstanding
|
8,342,529
|
7,309,369
|
7,842,092
|
7,303,141
|
For
the Three Months Ended
September
30,
|
For
the Nine Months Ended
September
30,
|
||||||||||||
2005
|
2004
|
2005
|
2004
|
||||||||||
Pro
forma revenues
|
$
|
32,303,670
|
$
|
10,858,641
|
$
|
36,805,438
|
$
|
27,321,366
|
|||||
Pro
forma income from operations
|
2,752,312
|
1,637,886
|
7,181,853
|
2,990,607
|
|||||||||
Pro
forma net income
|
1,794,603
|
1,563,016
|
5,251,164
|
2,961,214
|
|||||||||
Pro
forma weighted-average common shares outstanding
|
7,387,467
|
6,795,601
|
6,976,915
|
6,785,767
|
|||||||||
Basic
earnings per common share
|
$
|
0.24
|
$
|
0.23
|
$
|
0.75
|
$
|
0.44
|
For
the Three Months Ended
September
30,
|
For
the Nine Months Ended
September
30,
|
||||||||||||
2005
|
2004
|
2005
|
2004
|
||||||||||
Net
income:
|
|
|
|
|
|||||||||
As
reported
|
$
|
1,769,767
|
$
|
703,104
|
$
|
5,226,328
|
$
|
1,378,981
|
|||||
Deduct:
Total stock-based
employee
compensation expense
determined
under fair value based
method
for all awards, net of related tax
effects
|
¾
|
(12,808
|
)
|
(43,922
|
)
|
(47,075
|
)
|
||||||
Pro
forma
|
$
|
1,769,767
|
$
|
690,296
|
$
|
5,182,406
|
$
|
1,331,906
|
|||||
|
|
|
|
||||||||||
Basic
earnings per share:
|
|
|
|
||||||||||
As
reported
|
$
|
0.24
|
$
|
0.11
|
$
|
0.75
|
$
|
0.21
|
|||||
Pro
forma
|
$
|
0.24
|
$
|
0.10
|
$
|
0.74
|
$
|
0.20
|
|||||
|
|
|
|||||||||||
Diluted
earnings per share:
|
|
|
|||||||||||
As
reported
|
$
|
0.21
|
$
|
0.10
|
$
|
0.67
|
$
|
0.19
|
|||||
Pro
forma
|
$
|
0.21
|
$
|
0.09
|
$
|
0.66
|
$
|
0.18
|
·
|
The
Chemicals and Logistics segment is made up of two business units.
The CESI
Chemical business unit designs, develops, manufactures packages and
sells
chemicals used by oilfield service companies in oil and gas well
drilling,
cementing, stimulation and production. The Materials Translogistics
business unit manages automated bulk material handling, loading
facilities, and blending capabilities for oilfield service companies.
|
·
|
The
Drilling Products segment rents, inspects, manufactures and markets
downhole drilling equipment for the energy, mining, water well and
industrial drilling sectors.
|
·
|
The
Production Products segment manufactures and markets the Petrovalve
line
of downhole pump components.
|
Chemicals
and
Logistics
|
Drilling
Products
|
Production
Products
|
Corporate
and
Other
|
Total
|
||||||||||||
Three
months ended September 30, 2005
|
||||||||||||||||
Net
revenues to external customers
|
$
|
7,727
|
$
|
5,372
|
$
|
205
|
$
|
¾
|
$
|
13,304
|
||||||
Income
(loss) from operations
|
$
|
2,243
|
$
|
1,253
|
$
|
(33
|
)
|
$
|
(736
|
)
|
$
|
2,727
|
||||
Three
months ended September 30, 2004
|
||||||||||||||||
Net
revenues to external customers
|
$
|
4,889
|
$
|
650
|
$
|
132
|
$
|
¾
|
$
|
5,671
|
||||||
Income
(loss) from operations
|
$
|
1,285
|
$
|
94
|
$
|
(92
|
)
|
$
|
(353
|
)
|
$
|
934
|
||||
Nine
months ended September 30, 2005
|
||||||||||||||||
Net
revenues to external customers
|
$
|
20,920
|
$
|
14,978
|
$
|
907
|
$
|
¾
|
$
|
36,805
|
||||||
Income
(loss) from operations
|
$
|
5,598
|
$
|
3,355
|
$
|
33
|
$
|
(1,829
|
)
|
$
|
7,157
|
|||||
Nine
months ended September 30, 2004
|
||||||||||||||||
Net
revenues to external customers
|
$
|
12,377
|
$
|
2,607
|
$
|
294
|
$
|
¾
|
$
|
15,278
|
||||||
Income
(loss) from operations
|
$
|
3,224
|
$
|
382
|
$
|
(330
|
)
|
$
|
(1,326
|
)
|
$
|
1,950
|
For
the Period Ended
|
|||||||
September
30,
2005
|
December
31,
2004
|
||||||
Chemicals
and Logistics
|
$
|
14,538
|
$
|
12,837
|
|||
Drilling
Products
|
24,315
|
868
|
|||||
Production
Products
|
1,255
|
1,467
|
|||||
Corporate
and Other
|
8,376
|
785
|
|||||
Total
Assets
|
$
|
48,484
|
$
|
15,957
|
·
|
The
Chemicals and Logistics segment is made up of two business units.
The CESI
Chemical business unit designs, develops, manufactures, packages
and sells
chemicals used by oilfield service companies in oil and gas well
drilling,
cementing, stimulation and production. The Materials Translogistics
business unit manages automated bulk material handling, loading
facilities, and blending capabilities for oilfield service
companies.
|
·
|
The
Drilling Products segment rents, inspects, manufactures and markets
downhole drilling equipment for the energy, mining, water well
and
industrial drilling sectors.
|
·
|
The
Production Products segment manufactures and markets the Petrovalve
line
of downhole pump components.
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
||||||||||||
2005
|
2004
|
2005
|
2004
|
||||||||||
|
|
|
|
||||||||||
Revenues
|
$
|
13,303,670
|
$
|
5,671,044
|
$
|
36,805,438
|
$
|
15,278,420
|
|||||
Cost
of revenues
|
7,576,120
|
3,174,442
|
21,746,026
|
8,662,846
|
|||||||||
Gross
profit
|
5,727,550
|
2,496,602
|
15,059,412
|
6,615,574
|
|||||||||
Gross
profit %
|
43.1
|
%
|
44.0
|
%
|
40.9
|
%
|
43.3
|
%
|
|||||
Expenses:
|
|||||||||||||
Selling, general and administrative
|
2,415,259
|
1,314,024
|
6,461,727
|
3,915,949
|
|||||||||
Depreciation and amortization
|
421,810
|
173,686
|
999,805
|
537,960
|
|||||||||
Research and development
|
163,005
|
75,111
|
440,863
|
211,401
|
|||||||||
Total expenses
|
3,000,074
|
1,562,821
|
7,902,395
|
4,665,310
|
|||||||||
Income
from operations
|
2,727,476
|
933,781
|
7,157,017
|
1,950,264
|
|||||||||
Income
from operations %
|
20.5
|
%
|
16.5
|
%
|
19.4
|
%
|
12.8
|
%
|
|||||
Other
income (expense):
|
|
|
|
||||||||||
Interest expense
|
(214,956
|
)
|
(178,900
|
)
|
(653,004
|
)
|
(522,961
|
)
|
|||||
Other, net
|
(1,133
|
)
|
48,223
|
39,539
|
51,678
|
||||||||
Total other income (expense)
|
(216,089
|
)
|
(130,677
|
)
|
(613,465
|
)
|
(471,283
|
)
|
|||||
|
|||||||||||||
Income
before income taxes
|
2,511,387
|
803,104
|
6,543,552
|
1,478,981
|
|||||||||
Provision
for income taxes
|
(741,620
|
)
|
(100,000
|
)
|
(1,317,224
|
)
|
(100,000
|
)
|
|||||
Net
income
|
$
|
1,769,767
|
$
|
703,104
|
$
|
5,226,328
|
$
|
1,378,981
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
||||||||||||
2005
|
2004
|
2005
|
2004
|
||||||||||
|
|
|
|
|
|||||||||
Revenues
|
$
|
7,726,746
|
$
|
4,889,426
|
$
|
20,919,830
|
$
|
12,377,009
|
|||||
Gross
profit
|
$
|
3,181,472
|
$
|
2,001,007
|
$
|
8,286,832
|
$
|
5,149,683
|
|||||
Gross
profit %
|
41.2
|
%
|
40.9
|
%
|
39.6
|
%
|
41.6
|
%
|
|||||
|
|||||||||||||
Operating
income
|
$
|
2,243,410
|
$
|
1,285,142
|
$
|
5,598,728
|
$
|
3,223,981
|
|||||
Operating
margin %
|
29.0
|
%
|
26.3
|
%
|
26.8
|
%
|
26.1
|
%
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
||||||||||||
2005
|
2004
|
2005
|
2004
|
||||||||||
|
|
|
|
|
|||||||||
Revenues
|
$
|
5,372,108
|
$
|
650,164
|
$
|
14,977,962
|
$
|
2,607,263
|
|||||
Gross
profit
|
$
|
2,443,894
|
$
|
416,357
|
$
|
6,289,706
|
$
|
1,320,724
|
|||||
Gross
profit %
|
45.5
|
%
|
64.0
|
%
|
42.0
|
%
|
50.7
|
%
|
|||||
|
|||||||||||||
Operating
income
|
$
|
1,252,521
|
$
|
93,510
|
$
|
3,354,993
|
$
|
382,031
|
|||||
Operating
margin %
|
23.3
|
%
|
14.4
|
%
|
22.4
|
%
|
14.7
|
%
|
Three
Months Ended
September
30,
|
Nine
Months Ended
September
30,
|
||||||||||||
2005
|
2004
|
2005
|
2004
|
||||||||||
|
|
|
|
|
|||||||||
Revenues
|
$
|
204,817
|
$
|
131,453
|
$
|
907,647
|
$
|
294,149
|
|||||
Gross
profit
|
$
|
102,184
|
$
|
79,238
|
$
|
482,874
|
$
|
145,167
|
|||||
Gross
profit %
|
49.9
|
%
|
60.3
|
%
|
53.2
|
%
|
49.4
|
%
|
|||||
|
|||||||||||||
Operating
income (loss)
|
$
|
(33,014
|
)
|
$
|
(92,397
|
)
|
$
|
32,768
|
$
|
(330,139
|
)
|
||
Operating
margin %
|
(16.1
|
)%
|
(70.3
|
)%
|
3.6
|
%
|
(112.2
|
)%
|
· |
In
February 2005, we issued 129,271 shares of our common stock in conjunction
with the acquisition of Spidle.
|
· |
In
the February 2002 acquisition of IBS 2000, we agreed to make an "earn-out
payment" based on 25% of the division’s earnings before interest and taxes
for the three years ending on March 31, 2005.
|
· |
On
August 2, 2005 the remaining balance on the earnout was settled in
stock
as required by the original agreement, and 34,080 shares of common
stock
were issued.
|
· |
In
the acquisition of Harmon on August 19, 2005, we issued 35,108 shares
of
common stock and assumed approximately $1.0 million in liabilities
as
partial consideration for that
acquisition.
|
· |
The
Company completed a private offering of 1,300,000 shares of common
stock
on August 29, 2005 at a price of $16.30 per share to 18 accredited
investors. Gross proceeds from the private offering were $21.2
million;
estimated costs associated with the offering were $1.4
million.
|
· |
In
the acquisition of LOR on August 31, 2005, we issued 68,001 shares
of
common stock.
|
· |
For
the nine months ended September 30, 2005, 4,571 stock options have
been
exercised by an employee, with proceeds of $30,000 paid to the
Company.
|
Exhibit
No.
|
Description of Exhibit |
4.1
|
Subscription
and Registration Rights Agreement dated August 29, 2005 (incorporated
by reference to Exhibit 4.6 to Registration Statement No. 333-129308
on
Form SB-2 filed with the SEC on October 28, 2005.)
|
10.1
|
Asset
Purchase Agreement dated August 4, 2005 among Flotek Industries,
Inc. and
Harmon Machine Works, Inc. (incorporated by reference to Exhibit
10.8 to
Registration Statement No. 333-129308 on Form SB-2 filed with
the SEC on
October 28, 2005.)
|
10.2
|
Asset
Purchase Agreement dated August 25, 2005 among Flotek Industries,
Inc. and
Precision LOR, Ltd.
(incorporated
by reference to Exhibit 10.9 to Registration Statement No. 333-129308
on
Form SB-2 filed with the SEC on October 28, 2005.)
|
10.3
|
First
Amendment to Credit Agreement Between Flotek Industries, Inc.
and Wells
Fargo Bank, N.A. dated August 19, 2005 (incorporated by reference
to
Exhibit 10.10 to Registration Statement No. 333-129308 on Form
SB-2 filed
with the SEC on October 28, 2005.)
|
31.1
|
Rule
13a-15(e) and 15d-15(e) Certification of Chief Executive
Officer
|
31.2
|
Rule
13a-15(e) and 15d-15(e) Certification of Chief Financial
Officer
|
32.1
|
Certification
of Periodic Report by Chief Executive Officer and Chief Financial
Officer
|
|
|
FLOTEK
INDUSTRIES, INC.
|
|
|
|
|
|
|
|
|
|
By:
/s/
Jerry D. Dumas Sr.
|
|
|
|
|
Jerry
D. Dumas, Sr.
|
|
|
|
|
Chairman
and Chief Executive Officer
|
|
|
By:
/s/
Lisa Bromiley Meier
|
||||
Lisa
Bromiley Meier
|
||||
Chief
Financial Officer
|
||||
November 7, 2005 |
Exhibit
No.
|
Description of Exhibit |
4.1
|
Subscription
and Registration Rights Agreement dated August 29, 2005 (incorporated
by reference to Exhibit 4.6 to Registration Statement No. 333-129308
on
Form SB-2 filed with the SEC on October 28, 2005.)
|
10.1
|
Asset
Purchase Agreement dated August 4, 2005 among Flotek Industries,
Inc. and
Harmon Machine Works, Inc. (incorporated by reference to Exhibit
10.8 to
Registration Statement No. 333-129308 on Form SB-2 filed with
the SEC on
October 28, 2005.)
|
10.2
|
Asset
Purchase Agreement dated August 25, 2005 among Flotek Industries,
Inc. and
Precision LOR, Ltd.
(incorporated
by reference to Exhibit 10.9 to Registration Statement No.
333-129308 on
Form SB-2 filed with the SEC on October 28, 2005.)
|
10.3
|
First
Amendment to Credit Agreement Between Flotek Industries, Inc.
and Wells
Fargo Bank, N.A. dated August 19, 2005 (incorporated by reference
to
Exhibit 10.10 to Registration Statement No. 333-129308 on Form
SB-2 filed
with the SEC on October 28, 2005.)
|
31.1
|
Rule
13a-15(e) and 15d-15(e) Certification of Chief Executive
Officer
|
31.2
|
Rule
13a-15(e) and 15d-15(e) Certification of Chief Financial
Officer
|
32.1
|
Certification
of Periodic Report by Chief Executive Officer and Chief Financial
Officer
|