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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
o [X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended March 31, 2003.
o [ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the transition period from ___________________ to
___________________.
Commission file number: 33-61888-FW
COMPRESSCO, INC.
(Exact name of small business issuer in its charter)
DELAWARE 72-1235449
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
1313 Southeast 25th Street, Oklahoma City, Oklahoma 73129
(Address of principal executive offices) (Zip Code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days.
YES / X / NO / /
The number of shares outstanding of the issuer's classes of Common Stock as of
March 31, 2003:
Common Stock, $1.00 Par Value - 153,235 shares
COMPRESSCO, INC.
Index to Form 10-QSB
Part I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements (Unaudited)
Consolidated Balance Sheets as of March 31, 2003 and December 31,
2002
Consolidated Statements of Operations for the Three Months Ended
March 31, 2003 and 2002
Consolidated Statements of Cash Flows for the Three Months Ended
March 31, 2003 and 2002
Notes to the Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Item 3. Controls and Procedures
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
COMPRESSCO,
Inc.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, 2003 December 31, 2002
--------------- -----------------
ASSETS
CURRENT ASSETS:
Cash $ 499,036 $ 317,707
Accounts receivable 2,098,272 2,238,850
Inventories 2,121,171 2,028,662
Prepaid expenses 231,165 245,359
Deferred income tax asset 57,570 57,570
----------- -----------
Total current assets 5,007,214 4,888,148
COMPRESSORS, cost 19,653,188 18,617,232
Less- Accumulated depreciation (3,376,713) (3,020,925)
----------- -----------
Total compressors, net 16,276,475 15,596,307
----------- -----------
VEHICLES, EQUIPMENT and
OTHER PROPERTY, cost 1,476,052 1,473,982
Less - Accumulated depreciation (522,226) (489,090)
----------- -----------
Total vehicles and equipment, net 953,826 984,892
OTHER ASSETS 44,706 60,052
----------- -----------
Total assets $ 22,282,221 $ 21,529,399
=============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 775,847 $ 523,089
Accrued liabilities 366,572 608,119
Deferred revenues 52,678 266,239
Current portion of long-term debt 560,012 560,012
----------- -----------
Total current liabilities 1,755,109 1,957,459
LONG-TERM DEBT, net of current portion 13,173,157 13,077,850
DEFERRED INCOME TAXES 2,044,755 1,709,581
---------- ---------
Total liabilities 16,973,021 16,744,890
---------- ----------
COMMITMENTS (Note 4)
STOCKHOLDERS' EQUITY:
Preferred stock, $1 par value; 2,000,000 shares authorized; -- --
No shares issued or outstanding
Common stock, $1 par value; 20,000,000 shares authorized;
153,235 shares issued and outstanding 153,235 153,235
Warrants outstanding 100,000 100,000
Additional paid-in capital 2,663,715 2,663,715
Retained earnings 2,392,250 1,867,559
---------- ---------
Total stockholders' equity 5,309,200 4,784,509
---------- ---------
Total liabilities and stockholders' equity $ 22,282,221 $ 21,529,399
=============== ===============
The accompanying notes are an integral part of these consolidated balance sheets.
COMPRESSCO, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three Months Ended March 31, 2003 and 2002
(Unaudited)
2003 2002
-------- --------
REVENUES:
Rental revenue $ 3,668,536 $ 2,791,144
Sales - Compressors and parts 346,035 113,679
Service and other 304,442 233,525
----------- -----------
Total revenues 4,319,013 3,138,348
----------- -----------
COST OF SALES AND EXPENSES:
Cost of sales 219,939 57,433
Operating expenses 2,606,832 2,152,549
Depreciation and amortization expense 426,879 389,387
----------- -----------
Total cost of sales and expenses 3,253,650 2,599,369
----------- -----------
OPERATING INCOME 1,065,363 538,979
OTHER INCOME (EXPENSE)
Gain on sale of asset 84,405 ---
Interest expense (289,903) (324,147)
----------- -----------
Total other income (expense) (205,498) (324,147)
----------- -----------
INCOME BEFORE PROVISION FOR INCOME TAXES 859,865 214,832
PROVISION FOR INCOME TAXES (335,174) (85,933)
----------- -----------
NET INCOME $ 524,691 $ 128,899
=========== ===========
Earnings per common share:
Basic $ 3.42 $ 0.84
=========== ===========
Diluted $ 2.96 $ 0.80
=========== ===========
The accompanying notes are an integral part of these consolidated financial statements.
COMPRESSCO, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended March 31, 2003 and 2002
(Unaudited)
2003 2002
----- -------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 524,691 $ 128,899
Adjustments to reconcile net income to net cash provided by
(used in) operating activities-
Depreciation and amortization 426,879 389,387
Provision for bad debts 30,000 10,500
Amortization of discount on subordinated promissory notes 8,333 8,334
Amortization of deferred financing costs 9,633 9,633
Other assets 5,713 (395)
Gain on sale of operating equipment and natural gas well (94,157) ---
Deferred income tax 335,174 85,933
Changes in current assets and liabilities:
Accounts receivable 110,578 62,762
Notes receivable --- 8,287
Inventories (92,508) (129,966)
Other current assets 14,195 88,205
Accounts payable 252,758 91,147
Accrued liabilities (241,548) (305,362)
Deferred revenues (51,270) ---
----------- -----------
Net cash provided by operating activities 1,238,471 447,364
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to leased units (1,036,225) (112,059)
Additions to vehicles and equipment (125,601) (110,201)
Proceeds from sale of operating equipment 17,709 ---
----------- -----------
Net cash used in investing activities (1,144,117) (222,260)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITES:
Payments of notes payable (139,999) (93,334)
Proceeds from line of credit 1,615,424 4,411,559
Principal payments on line of credit (4,184,585) (1,648,043)
----------- -----------
Net cash provided by (used in) financing activities 86,975 (125,953)
----------- -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 181,329 99,151
CASH AND CASH EQUIVALENTS, Beginning of period 317,707 53,624
----------- -----------
CASH AND CASH EQUIVALENTS, End of period $ 499,036 $ 152,775
=========== ===========
The accompanying notes are an integral part of these consolidated financial statements.
COMPRESSCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION
Compressco, Inc., formerly Emerging Alpha Corporation (the "Company"), was
incorporated in the State of Delaware on February 10, 1993 for the purpose of
acquiring business opportunities. On October 29, 1999, the Company purchased
Compressco Field Services, Inc., an Oklahoma corporation, and Compressco Testing
L.L.C. Subsequent to the acquisition the two companies are wholly owned
subsidiaries of the Company.
The Company is engaged primarily in the manufacture, rental and service of
natural gas compressors that provide economical well head compression to mature,
low pressure natural gas wells. The Company's compressors are currently sold and
rented to natural gas producers located primarily in the mid-continent
hydrocarbon producing regions of the United States and western Canada.
Compressco Testing L.L.C. is a natural gas measurement, testing and service
company, based in Oklahoma City, that began operations in September 1999.
In October 2001, the Company established a wholly owned Canadian subsidiary,
Compressco Canada, Inc., to market the sale and rental of compressors in Canada.
During the fall of 2001 the Company hired a Canadian representative, opened an
office and began to service the Canadian market. As of March 31, 2003 the
Company has 39 compressors on rental and has sold 3 compressors in Canada.
2. BASIS OF PRESENTATION
The consolidated balance sheet as of March 31, 2003 and the consolidated
statements of operations and cash flows for the three months ended March 31,
2003 and 2002 are unaudited. In the opinion of management, such consolidated
financial statements include all adjustments, consisting only of normal
recurring adjustments necessary for a fair presentation of the financial
position, results of operations and cash flows for the periods presented.
The consolidated balance sheet data as of December 31, 2002 was derived from
audited consolidated financial statements, but does not include all disclosures
required by generally accepted accounting principles. The consolidated financial
statements presented herein should be read in connection with the Company's
December 31, 2002 consolidated financial statements included in the Company's
Form 10-KSB.
The results of operations for the three months ended March 31, 2003 are not
necessarily indicative of the results of operations to be expected for the full
fiscal year ending December 31, 2003.
3. LONG-TERM DEBT
Long-term debt consists of the following at March 31, 2003:
(a) In December 2000 and January 2001 the Company offered an issue of
subordinated promissory notes and stock warrants (see Note 5) to qualified
private investors. At March 31, 2003, $5,550,000 of the subordinated
promissory notes were issued. Of the $5,550,000 in proceeds, $100,000 was
allocated to the stock warrants. The notes are subordinated unsecured
obligations of the Company and rank subordinate to all existing
indebtedness of the Company. In March 2003 the Company and the holders of
the subordinated promissory notes agreed to amend the promissory notes to
extend the maturity to March 31, 2005, change the interest rate from 13%
to 10% effective April 1, 2003 and make convertible by the holder into
common stock of the Company at anytime prior to maturity at a conversion
price of $150 per share. The Notes mature on the earlier of (1) the
consummation of an underwritten public offering of the Company's capital
stock or (2) March 31, 2005. The Company may, at any time prepay any part
of the principal balance on the Notes, in increments of $10,000, without
premium or penalty prior to maturity. Interest is payable at 13% per
annum, 10% effective April 1, 2003, and is payable quarterly in arrears.
(b) On October 29, 1999, the Company borrowed $2,800,000 under a term loan
agreement with a bank. The note bears interest at 1% over Wall Street
Journal Prime Rate (5.25% at March 31, 2003). Principal payments of
$46,667 plus accrued interest are due monthly until maturity on October
30, 2004. The loan balance at March 31, 2003 is $886,642 of which $326,630
is long term. The loan is secured with the assets and compressor leases of
the Company.
(c) On October 29, 1999, the Company entered into a revolving line of credit
agreement with a bank. Under the agreement, as amended and restated
November 28, 2001, the Company can borrow the lesser of $8,883,997 or the
sum of 80% of the aggregate amount of eligible receivables, plus 50% of
the aggregate amount of eligible inventory, plus 85% of the appraised
value of compressors fabricated since acquisition of the business on
October 29, 1999. The line of credit bears interest at Wall Street Journal
Prime Rate (4.25% at March 31, 2003). Interest is due monthly with all
outstanding borrowings due at maturity on April 2, 2004, that was extended
in March 2003. The loan is secured with the assets and compressor leases
of the Company. The balance outstanding under the line of credit agreement
at March 31, 2003 was $7,321,527. The Company's credit facility imposes a
number of financial and restrictive covenants that among other things,
limit the Company's ability to incur additional indebtedness, create liens
and pay dividends. At March 31, 2003, the Company was in compliance with
the loan covenants. Management expects that the Company will be in
compliance with the revised covenants under the amended credit facility
for the next twelve months.
4. COMMITMENTS
The Company entered into a purchase agreement on December 14, 2000, with a
supplier to purchase 1,000 compressor engines by December 31, 2002. At March 31,
2003 the Company has taken delivery of 247. The purchase agreement was amended
on February 24, 2003, to provide that the Company shall purchase 13 engines per
month commencing January 1, 2003 and not less than 156 engines per year until
the remaining balance of engines have been purchased. The purchase agreement
provides that the Company's liability to the supplier for any failure to
purchase the full amount of engines is limited to (i) pay for the engines
delivered, (ii) reasonable direct out of pocket costs incurred by the supplier
in acquiring material for production of the number of engines contemplated by
the agreement and (iii) the reasonable costs incurred by the supplier for the
work in progress at the time of termination of the agreement including labor
costs and reasonable quantities of parts and materials ordered by the supplier.
5. STOCKHOLDERS' EQUITY
In connection with the offering of the subordinated promissory notes discussed
in Note 3, the Company issued stock warrants to purchase 420 shares of the
Company's common stock per every $50,000 amount of Notes purchased. The warrants
have an exercise price of $120 per share. At March 31, 2003 total stock warrants
of 46,620 had been issued. The warrants are exercisable upon issue, and expire
on March 31, 2005, that was extended in March 2003.
The Company obtained a valuation as to the amount to be assigned to the warrants
from the total proceeds received from the issuance of the subordinated
promissory notes. The value was determined using the Valrex model, which is an
option valuation model that uses established option pricing theory to price
nontrading options and warrants. Based on the valuation estimate, the value
assigned to the warrants is $100,000. This amount is shown as outstanding
warrants in stockholders' equity and as a discount to the subordinated
promissory notes. The discount is being amortized over the three-year life of
the stock warrants as additional interest expense.
6. EARNINGS PER SHARE
Basic earnings per share is calculated using the weighted average number of
shares issued and outstanding during the period. The weighted average shares
issued and outstanding for the three months ending March 31, 2003 and 2002 were
153,235. The diluted weighted average shares, adjusted for the dilutive effect
of stock options, for the three months ending March 31, 2003 and 2002 were
177,390 and 161,860, respectively.
7. STOCK BASED COMPENSATION
The Company applies APB Opinion No. 25 in accounting for its fixed price stock
options. Accordingly, no compensation cost for options has been recognized in
the financial statements. The chart below sets forth the Company's net income
and loss per share for three months ended March 31, 2003 and 2002, as reported
and on a pro forma basis as if the compensation cost of stock options had been
determined consistent with SFAS 123.
2003 2002
Net Income, as reported $ 524,691 $ 128,899
Deduct: Total stock-based employee
compensation expense determined
under fair value based method for
all awards, net of related tax effects (21,922) (25,096)
-------- ---------
Pro forma net income $ 502,769 $103,803
========== =========
Basic Income per Share:
As reported $ 3.42 $ .84
Pro forma 3.28 .68
Diluted Income per Share:
As reported $ 2.96 $ .80
Pro forma 2.83 .64
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
OVERVIEW
Compressco, Inc., formerly Emerging Alpha Corporation (the "Company"), was
incorporated in the State of Delaware on February 10, 1993 for the purpose of
acquiring business opportunities. On October 29, 1999, the Company purchased
Compressco Field Services, Inc., an Oklahoma corporation, and Compressco Testing
L.L.C. Subsequent to the acquisition the two companies are wholly owned
subsidiaries of the Company.
The Company is engaged primarily in the manufacture, rental and service of
natural gas compressors that provide economical well head compression to mature,
low pressure natural gas wells. The Company's compressors are currently sold and
leased to natural gas producers located primarily in the mid-continent
hydrocarbon producing regions of the United States and western Canada.
Compressco Testing L.L.C. is a natural gas measurement, testing and service
company, based in Oklahoma City, that began operations in September 1999.
In October 2001, the Company established a wholly owned Canadian subsidiary,
Compressco Canada, Inc., to market the sale and rental of compressors in Canada.
During the fall of 2001 the Company hired a Canadian representative, opened an
office and began to service the Canadian market. As of March 31, 2003 the
Company has 39 compressors on rental and has sold 3 compressors in Canada
including 13 compressors placed on rental and 1 compressor was sold during the
three months ended March 31, 2003.
The following table sets forth selected consolidated financial information as of
December 31, 2002 and as of March 31, 2003 and for the three months ended March
31, 2003 and 2002 and is qualified in its entirety by the consolidated financial
statements appearing elsewhere in this Form 10-QSB.
RESULTS OF OPERATIONS
SELECTED CONSOLIDATED FINANCIAL DATA
STATEMENT OF OPERATIONS DATA:
THREE MONTHS ENDED MARCH 31,
2003 2002
Operating Revenues.................... $ 4,319,013 $ 3,138,348
Cost of Sales and Expenses ........... 3,253,650 2,599,369
Operating Income...................... 1,065,363 538,979
Net Income............................ $ 524,691 $ 128,899
March 31, 2003 December 31, 2002
BALANCE SHEET DATA (AT END OF PERIOD):
Cash................................... $ 499,036 $ 317,707
Total Assets............................ 22,282,221 21,529,399
Total Liabilities........................ 16,973,021 16,744,890
Stockholders' Equity..................... 5,309,200 4,784,509
The following discussion regarding the consolidated financial statements of the
Company should be read in conjunction with the consolidated financial statements
and notes thereto.
THREE MONTHS ENDED MARCH 31, 2003 COMPARED TO THREE MONTHS ENDED MARCH 31, 2002
The revenues for the three months ended March 31, 2003 of $4,319,013 increased
by $1,180,665, or 37.6% for the comparable period in 2002. The following table
sets forth the components of our revenue for the three months ended March 31,
2003 and 2002:
2003 2002
Revenue:
Rental revenue $3,668,536 $2,791,144
Sale of compressors and parts 346,035 113,679
Service and other 304,442 233,525
---------- ----------
Total revenue $4,319,013 $3,138,348
---------- ----------
The Company had 819 compressors in service at March 31, 2003 compared to 643 at
March 31, 2002, an increase of 176 or 27%. The three months ending March 31,
2003 had a net increase of 58 compressors on rental or an increase of 8%
compared to a net decrease of 15 compressors on rental during the first three
months of 2002. In the three months ended March 31, 2003 the Company sold five
compressors compared to three compressors sold in the first quarter of 2002. The
increase in compressor rentals and sale of units is due primarily to the higher
natural gas prices in 2003.
The cost of sales and operating expenses for the 2003 period were $2,826,771, or
65% of operating revenues, compared to $2,209,982, or 70%, in the 2002 period.
Operating expenses for the 2003 period were $2,606,832, or 66% of rental and
service revenues, compared to $2,152,549, or 71% for the 2001 period. The
decrease in cost of sales and operating expenses as a percent of revenues in
2003 was due to the growth in rental revenue in 2003, resulting from increasing
the rental units in service and increased rental rates with lower increases in
operating expenses to support the increased units.
The Company manufactured 35 compressors in the 2003 period compared to 3 in the
2002 period. The increase in the number of compressors manufactured was due to
higher demand as a result of higher natural gas prices. The Company had 52
compressors off rental at March 31, 2003 compared to 151 off rental at March 31,
2002. The Company is manufacturing new compressors, as needed, for the US and
Canadian operations.
Depreciation and amortization expense increased in the 2003 period to $426,879
compared to $389,387 for the 2002 period. The increase is due to the growth in
the Company's compressor fleet to 871 units at March 31, 2003 from 794 units at
March 31, 2002.
The 2003 period includes interest expense of $289,903 compared to $324,147 for
the 2002 period. The decrease was due to lower interest rates in 2003 compared
to 2002.
The Company made the decision to discontinue the Providence Natural Gas business
and sold the natural gas well it owned for a gain of $84,405 in January 2003.
Net income was $524,691 for the 2003 period compared to $128,899 for the 2002
period. The increase in net income was primarily due to the growth of the
company's rental fleet.
LIQUIDITY AND CAPITAL RESOURCES
In December 2000 and January 2001, the Company offered its subordinated
promissory notes and stock warrants in a private placement. At March 31, 2003,
$5,550,000 of the subordinated promissory notes had been issued. Of the
$5,550,000 in proceeds, $100,000 was allocated to the stock warrants. The notes
are subordinated unsecured obligations of the Company and rank junior to all
existing indebtedness of the Company. In March 2003 the Company and the holders
of the subordinated promissory notes agreed to amend the promissory notes to
extend the maturity date from December 31, 2003 to March 31, 2005, change the
interest rate from 13% to 10% effective April 1, 2003 and make the notes
convertible by the holder into common stock of the Company at anytime prior to
maturity at a conversion price of $150 per share. The Notes mature on the
earlier of (1) the consummation of an underwritten public offering of the
Company's capital stock , and (2) March 31, 2005. The Company may, at any time,
prepay any part of the principal balance on the notes, in increments of $10,000,
without premium or penalty prior to maturity. Interest is payable at 13% per
annum, 10% effective April 1, 2003, and is payable quarterly in arrears.
In March 2000 the Company issued 70,002 shares of its common stock through a
Private Placement for $30.00 per share or total equity proceeds of $2,100,060.
The equity proceeds were used in part to repay borrowings under the Company's
line of credit and the remaining proceeds were used primarily to fund the growth
in our compressor fleet.
On October 29, 1999, the Company borrowed $2,800,000 under a term loan agreement
with Hibernia National Bank. The related note bears interest at 1% over Wall
Street Prime Rate (5.25% at March 31, 2003). Principal payments of $46,667, plus
accrued interest, are due monthly until maturity on October 30, 2004. The loan
is secured with the assets and compressor leases of the Company.
On October 29, 1999, the Company entered into a revolving line of credit
agreement with a bank. Under the agreement, as amended and restated November 28,
2001, the Company can borrow the lesser of $8,883,997 or the sum of 80% of the
aggregate amount of eligible receivables, plus 50% of the aggregate amount of
eligible inventory, plus 85% of the appraised value of compressors fabricated
since acquisition of the business on October 29, 1999. The line of credit bears
interest at Wall Street Journal Prime Rate (4.25% at March 31, 2003). Interest
is due monthly with all outstanding borrowings due at maturity on December 27,
2003. The loan is secured with the assets and compressor leases of the Company.
The balance outstanding under the line of credit agreement at March 31, 2003 was
$7,321,527. The Company's credit facility imposes a number of financial and
restrictive covenants that among other things, limit the Company's ability to
incur additional indebtedness, create liens and pay dividends. At March 31,
2003, the Company was in compliance with the loan covenants. Management expects
that the Company will be in compliance with the covenants under the credit
facility for the next twelve months.
The Company believes that cash flow from operations and funds available under
its credit facilities will provide the necessary working capital to fund the
Company's requirements for current operations through 2003. However, in
connection with any expansion of operations or acquisition activities, it is
likely that the Company will need additional sources of debt or equity
financing. The Company cannot provide assurance that these funds will be
available or if available will be available on satisfactory terms.
IMPORTANT FACTORS RELATING TO FORWARD-LOOKING STATEMENTS
In connection with forward-looking statements contained in this Form 10-QSB and
those that may be made in the future by or on behalf of the Company which are
identified as forward-looking by such words as "believes," "intends" or words of
a similar nature, the Company notes that there are various factors that could
cause actual results to differ materially from those set forth in any such
forward-looking statements. The forward-looking statements contained in this
Form 10-QSB were prepared by management and are qualified by, and subject to,
significant business, economic, competitive, regulatory and other uncertainties
and contingencies, all of which are difficult or impossible to predict and many
of which are beyond the control of the Company. Accordingly, there can be no
assurance that the forward-looking statements contained in this Form 10-QSB will
be realized or the actual results will not be significantly higher or lower.
These forward-looking statements have not been audited by, examined by, compiled
by or subjected to agreed-upon procedures by independent accountants, and no
third-party has independently verified or reviewed such statements. Readers of
this Form 10-QSB should consider these facts in evaluating the information
contained herein. In addition, the business and operations of the Company are
subject to substantial risks which increase the uncertainty inherent in the
forward-looking statements contained in this Form 10-QSB. The inclusion of the
forward-looking statements contained in this Form 10-QSB should not be regarded
as a representation by the Company or any other person that the forward-looking
statements contained in this Form 10-QSB will be achieved. In light of the
foregoing, readers of this Form 10-QSB are cautioned not to place undue reliance
on the forward-looking statements contained herein.
ITEM 3. CONTROLS AND PROCEDURES
(a) Evaluation of disclosure controls and procedures. We maintain
disclosure controls and procedures designed to provide reasonable assurance that
information required to be disclosed in the reports we file with the SEC is
recorded, processed, summarized and reported within the time periods specified
in the rules of the SEC. Within 90 days prior to the filing of the Quarterly
Report on Form 10QSB, we carried out an evaluation, under the supervision and
the participation of our management, including our Chief Executive Officer and
Chief Financial Officer, of the design and operation of these disclosure
controls and procedures pursuant to the Exchange Act Rule 13a-14. Based upon
that evaluation, our Chief Executive Officer and Chief Financial Officer
concluded that our disclosure controls and procedures are effective in timely
alerting them to material information relating to the company (including our
consolidated subsidiaries) required to be included in our periodic SEC filings.
(b) Changes in internal controls. There were no significant changes in
internal controls or other factors that could significantly affect our internal
controls subsequent to the date of our evaluation.
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
None
Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None
Item 3. DEFAULTS UPON SENIOR SECURITIES
None
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
Item 5. OTHER INFORMATION
None
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits. The following exhibits of the Company are included
herein.
3. Certificate of Incorporation and Bylaws
*3.1 Restated Certificate of Incorporation
*3.2 Bylaws
*3.3 Proposed Certificate of Amendment to the Restated
Certificate of Incorporation
10. Material Contracts
*10.1 1993 Stock Option Plan
*10.2 Form of Stock Option Agreements with Messrs. Keenan,
Killeen, Jarrell and Chaffe with Schedule of Details
**10.3 Stock Purchase Agreement, dated as of October 29,
1999, by and between the Company and the
Stockholders of Gas Jack, Inc.
**10.4 Loan Agreement, dated as of October 29, 1999, by and
between Hibernia National Bank and the Company
****10.5 Modification to Promissory Note and Loan Agreement,
dated as of December 28,2000, by and between the
Company and Hibernia National Bank.
****10.6 Amended and Restated Loan Agreement, dated as of
November 28, 2001, by and among Hibernia National
Bank, the Company and Compressco Field Services,
Inc.
***10.7 Securities Purchase Agreement, dated as of December
22, 2000, between the Company and each investor
party thereto.
***10.8 Stock Warrant Agreement, dated as of December 22,
2000, between the Company and each investor party
thereto.
***10.9 Subordinated Promissory Note, dated December 22, 2000,
issued by the Company to each purchaser of the
notes.
***10.10 Registration Rights Agreement, dated as of December
22, 2000, between the Company and each investor
party thereto.
***** 99.1 Certification Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
(b) Reports on 8-K.
No reports were filed in the quarter ended March 31, 2003
- --------------------------
* Filed with Registration Statement on Form SB-2, File NO. 33-61888-FW and
incorporated herein.
** Filed with Current Report on Form 8-K (October 29, 1999) and incorporated
by reference herein.
*** Filed with Annual Report on 10-KSB for the year ended December 31, 2000
and incorporated by by reference herein.
**** Filed with Annual Report on 10-KSB for the year ended December 31, 2001
and incorporated by by reference herein.
***** Filed herewith.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized on May 7, 2003.
COMPRESSCO, INC.
By: /S/ BROOKS MIMS TALTON
-------------------------------
Brooks Mims Talton
Chief Executive Officer
By: /S/ GARY MCBRIDE
------------------------------
Gary McBride
Chief Financial Officer
(Principal Financial and
Accounting Officer)
Certification of
Chief Executive Officer
of Compressco, Inc.
I, Brooks Mims Talton, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Compressco,
Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
have:
a) designed such disclosure controls and procedures to
ensure that material information relating to the
registrant, including its consolidated subsidiaries, is
made known to us by others within those entities,
particularly during the period in which this quarterly
report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior
to the filing date of this quarterly report (the
"Evaluation Date"); and
c) presented in this quarterly report our conclusions about
the effectiveness of the disclosure controls and
procedures based on our evaluation as of the Evaluation
Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent functions):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and
report financial data and have identified for the
registrant's auditors any material weaknesses in internal
controls; and
b) any fraud, whether or not material, that involves
management or other employees who have a significant role
in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
Dated: May 7, 2003 /S/ BROOKS MIMS TALTON
---------------------------------
Brooks Mims Talton
Chief Executive Officer
Certification of
Chief Financial Officer
of Compressco, Inc.
I, Gary McBride, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of Compressco,
Inc.;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
have:
a) designed such disclosure controls and procedures to ensure
that material information relating to the registrant,
including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during
the period in which this quarterly report is being
prepared;
b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior
to the filing date of this quarterly report (the
"Evaluation Date"); and
c) presented in this quarterly report our conclusions about
the effectiveness of the disclosure controls and
procedures based on our evaluation as of the Evaluation
Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of registrant's board of directors (or persons
performing the equivalent functions):
a) all significant deficiencies in the design or operation of
internal controls which could adversely affect the
registrant's ability to record, process, summarize and
report financial data and have identified for the
registrant's auditors any material weaknesses in internal
controls; and
b) any fraud, whether or not material, that involves
management or other employees who have a significant role
in the registrant's internal controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation,
including any corrective actions with regard to significant
deficiencies and material weaknesses.
Dated: May 7, 2003 /S/ GARY MCBRIDE
-------------------------------
Gary McBride
Chief Financial Officer