-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, N18Z8quQji7JHzdBl2WLrUmGliyOpucs1lffBhpGohoYrYILzSqhSmP525AbbrIL hWB1dcucR2fub8iTMJRZVw== 0000899243-99-001521.txt : 19990716 0000899243-99-001521.hdr.sgml : 19990716 ACCESSION NUMBER: 0000899243-99-001521 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990531 FILED AS OF DATE: 19990715 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FLOTEK INDUSTRIES INC/CN/ CENTRAL INDEX KEY: 0000928054 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-INDUSTRIAL MACHINERY & EQUIPMENT [5084] IRS NUMBER: 120370187 FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 001-13270 FILM NUMBER: 99664606 BUSINESS ADDRESS: STREET 1: 7030 EMPIRE CENTRAL DRIVE CITY: HOUSTON STATE: TX ZIP: 77040 BUSINESS PHONE: 7138499911 MAIL ADDRESS: STREET 1: 7030 EMPIRE CENTRAL DRIVE CITY: HOUSTON STATE: TX ZIP: 77040 10QSB 1 FORM 10-QSB FOR FISCAL QUARTER ENDED MAY 31, 1999 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10 - QSB (x) Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarter ended May 31, 1999 (_) Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (no fee required) Commission file number 1-13270 FLOTEK INDUSTRIES INC. (Exact name of registrant as specified in its charter) ALBERTA 77-0709256 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 7030 EMPIRE CENTRAL DRIVE, HOUSTON, TEXAS 77040 (Address of principal executive offices) (zip code) REGISTRANTS TELEPHONE NUMBER, INCLUDING AREA CODE (713) 849-9911 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 and 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 (_) As of May 31, 1999 the number of shares of common stock outstanding was 45,680,795 Transitional Small Business Disclosure Format (check one): Yes (_) No (x) Part I - Financial Information Flotek Industries Inc. and Subsidiaries CONSOLIDATED BALANCE SHEETS
May 31, February 28, ASSETS 1999 1999 ------------ ------------ CURRENT ASSETS Cash $ 13,323 $ 50,492 Accounts receivable, less allowance for doubtful accounts of $54,431 and $25,569 290,302 138,357 Inventory 766,767 785,639 ------------ ------------ Total current assets 1,070,392 974,488 FURNITURE AND EQUIPMENT 108,977 117,863 OTHER ASSETS 135,176 137,186 ------------ ------------ $ 1,314,545 $ 1,229,537 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Note payable $ 30,000 $ 30,000 Current portion of long-term debt 1,084,955 930,012 Accounts payable and accrued liabilities 434,784 432,273 Due to related party 90,000 21,000 ------------ ------------ Total current liabilities 1,639,739 1,413,285 LONG-TERM DEBT 9,096 10,061 COMMITMENTS - - SHAREHOLDERS' EQUITY Common stock - no par value; 100,000,000 shares authorized; 45,680,795 issued and outstanding 18,134,295 18,134,295 Additional paid in capital 163,813 163,813 Equity adjustment from foreign currency translation (238,420) (284,086) Accumulated deficit (18,393,978) (18,207,831) ------------ ------------ (334,290) (193,809) ------------ ------------ $ 1,314,545 $ 1,229,537 ============ ============
The accompanying notes are an integral part of these statements and should be read in conjunction herewith. 2 Flotek Industries Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF OPERATIONS Periods ended May 31,
1999 1998 ----------- ----------- Sales $ 304,653 $ 729,686 Costs and expenses: Cost of goods sold 186,771 347,819 Selling 236,129 319,549 General and administrative 111,122 221,096 Depreciation and amortization 10,730 15,183 ----------- ----------- 544,752 903,647 ----------- ----------- Loss from operations 240,099 173,961 Other (expense) income, net Interest (33,404) (42,436) Other 87,356 42,207 ----------- ----------- 53,952 (229) ----------- ----------- Net loss 186,147 174,190 =========== =========== Basic and diluted net loss per share $ .004 $ .004 =========== =========== Weighted average number of shares outstanding 45,680,795 43,180,795 =========== ===========
The accompanying notes are an integral part of these financial statements and should be read in conjunction herewith. 3 Flotek Industries Inc. and Subsidiaries CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended May 31, 1999 1998 --------- --------- Cash flows from operating activities Net loss for the period $(186,147) $(174,190) Adjustments to reconcile net losses to net cash used in operating activities Depreciation and amortization 10,730 15,183 Accretion of discount 6,916 12,130 Change in assets and liabilities Increase in accounts receivable (151,945) (143,404) Decrease (Increase) in inventory 18,872 (167,455) Increase in related party transactions 54,000 - Increase (decrease) in accounts payable and accrued liabilities 48,177 (121,255) --------- --------- Net cash (used) provided in operating activities (199,397) (578,991) Cash flows from investing activities Proceeds from sale of capital assets - - Purchase of capital assets - - Purchase of other assets - - --------- --------- Net cash provided (used) by investing activities - - Cash flows from financing activities Proceeds from long-term debt and notes payable 162,228 - Repayment of long-term debt and notes payable - (30,309) --------- --------- Net cash (used) provided by financing activities 162,228 (30,309) Net (decrease) increase in cash (37,169) (609,300) Cash at beginning of year 50,492 634,511 --------- --------- Cash at end of period $ 13,323 $ 25,211 Supplementary information Interest paid $ 1,789 $ 19,755 Income taxes paid - -
The accompanying notes are an integral part of these financial statements and should be read in conjunction herewith. 4 Flotek Industries Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1 - General The unaudited consolidated condensed financial statements included herein have been prepared by Flotek Industries Inc. (the "Company") pursuant to the rules and regulations of the Securities and Exchange Commission. These financial statements reflect all adjustments which the Company considers necessary for the fair presentation of such financial statements for the interim periods presented. Although the Company believes that the disclosures in these financial statements are adequate to make the interim information presented not misleading, certain information relating to the Company's organization and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles has been condensed or omitted in this Form 10-QSB pursuant to such rules and regulations. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-KSB for the year ended February 28, 1999. The results of operations for the three-month period ended May 31, 1999 are not necessarily indicative of the results expected for the full year. Note 2 - Comprehensive Income Effective March 1, 1998, the Company adopted Statement of Financial Accounting Standards No. 130, Reporting Comprehensive Income, which requires an entity to report and display comprehensive income and its components. Comprehensive income includes net earnings plus other comprehensive income. The Company's other comprehensive income consists of foreign currency translation adjustments.
Three Months Ended May 31, 1999 1998 -------- -------- Comprehensive income: Net Loss $186,147 $174,190 Cumulative translation adjustment (45,666) 5,145 -------- -------- Total comprehensive loss $140,481 $179,335 ======== ========
5 Note 3 - Segment Information The Company is an energy service and manufacturing company that provides a variety of services and equipment to the exploration and production of oil and gas. The Company defines its business segments into two separate groups: drilling products and production equipment. Financial information by industry segment for each of the three months ended May 31, 1999 and 1998 is summarized below:
1999 Drilling Production Products Equipment Corporate Total --------------- -------------- -------------- --------------- Revenue $ 224,677 $ 79,976 - $ 304,653 Total expenses 328,713 138,416 77,623 544,752 Income (loss) from operations (104,036) (58,440) (77,623) (240,099) Net income (loss) (99,098) (57,924) (29,125) (186,147) 1998 Drilling Production Products Equipment Corporate Total -------------- ------------- ------------- -------------- Revenue $ 517,681 $212,005 - $ 729,686 Total expenses 552,859 179,521 171,267 903,647 Income (loss) from operations (35,178) 32,484 (171,267) (173,961) Net income (loss) (16,094) 50,369 (208,465) (174,190)
Note 4 - Reclassifications and Restatements Certain reclassifications of prior year balances have been made to conform such amounts to corresponding 1999 classifications. These reclassifications had no impact on net income or shareholders' equity. Item 2 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This Form 10-QSB includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. The words "anticipate," "believe," "expect," "plan," "intend," "project," "forecasts," "could" and similar expressions are intended to identify forward-looking statements. All statements other than statements of historical facts included in this Form 10-QSB regarding the Company's financial position, business strategy, budgets and plans and objectives of management for future operations are forward-looking statements. Although the Company believes that the expectations reflected in such forward- looking statements are reasonable, no assurance can be given that actual results may not differ materially from those in the forward-looking statements herein for reasons including the effect of competition, the level of 6 petroleum industry exploration and production expenditures, world economic conditions, prices of, and the demand for crude oil and natural gas, drilling activity, weather, the legislative environment in the United States and other countries, and the condition of the capital and equity markets. Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Company's Consolidated Financial Statements and the related notes thereto. Business Flotek Industries Inc. (hereafter the "Company" or "Flotek") was originally incorporated under the laws of the Province of British Columbia on May 17, 1985. Effective September 7, 1995, the Company transferred its corporate status by continuing under the laws of the Province of Alberta. Flotek is headquartered in Houston, Texas and its common shares have been listed on the Vancouver Stock Exchange and the OTC Bulletin Board market. On April 7, 1999, the Company received notice from the Vancouver Stock Exchange regarding the acceptance of the Company's request to voluntarily delist and that the last day of trading of the common shares of the Company on the Vancouver Stock Exchange was April 21, 1999. The Company's common stock continues to be traded in the United States on the OTC Bulletin Board market. The Company's product lines are divided into two separate segments in the industry: drilling products and production equipment. The production equipment division develops, manufactures and markets the Petrovalve + Plus(R) Pump Valve and the Petrovalve Gas Breaker Valve, which are valves for downhole sucker-rod pumps used in oil wells. The drilling products division manufactures and distributes centralizers, which are spiraled vane cementing sleeves and stand off tools that improve mud and cementation displacement in drilled oil wells. Production Equipment The Company has focused on the development of its proprietary and patented technologies: the Petrovalve + Plus(R) Pump Valve and the Petrovalve Gas Breaker Valve. Both patented products are valves used in down-hole sucker- rod pumps. The Petrovalve Gas Breaker Valve provides a solution to gas lock problems. Both valves offer producers operating advantages by performing more efficiently and lasting longer than the traditional ball and seat valves. Flotek's original technology was developed in concert with several university research departments, including the University of Alberta and is the subject of various patents and patent applications. Drilling Products Flotek's drilling products division distributes and services several products that enhance oil and gas well cementing programs and the safety and effectiveness of the drilling process. Its primary product is the Cementing Turbulator, which the Company began distributing in March of 1994, when it acquired Turbeco Inc., an oilfield service company. The Turbulator is a steel sleeve, which is placed over pipe before the cementation process of pipe or 7 casing. This pipe or casing is commonly cemented in the open hole section of a recently drilled oil well. The main purpose of this tool is to provide maximum standoff and improve mud displacement to obtain the best cement bond. The Company was one of the first companies to distribute spiral vaned cementing turbulators. The Turbulator has gained widespread acceptance through its proven ability to improve oil and gas well cementing programs and is effective in deep, directional and horizontal well applications. Business Environment The business environment for oilfield operations and its corresponding operating results are affected significantly by petroleum industry exploration and production expenditures. The depressed market for oilfield products and services continued to decline during the first quarter of 1999. The domestic rig count remained at historical low levels and despite recent increases in oil and natural gas prices, drilling and production activity has remained low. The increase in oil prices has followed an agreement of the Organization of Petroleum Exporting Countries to limit oil production. The increase in oil prices has not yet resulted in any material increase in rig or drilling activity. The reduction in exploration and production activity during 1999 has impacted our businesses through lower revenues, pricing pressures and reduced margins. Reduced exploration activity has reduced the demand for the products and services provided by us serving the drilling markets. Our drilling products have been the most significantly affected. Results of Operations Quarter ended May 31, 1999 compared to the quarter ended May 31, 1998 The following charts contain selected financial data comparing our results for 1999 and 1998:
May 31, 1999 1998 -------- -------- Revenues $304,653 $729,686 Gross profit 117,882 381,867 Gross margin % 39% 52% Costs and expenses 544,752 903,647 Loss from operations 240,099 173,961 Net loss 186,147 174,190 Loss per share 0.004 0.004
Consolidated revenues were down $425,033, or 58% for the quarter ended May 31, 1999, as compared to the same period in 1998. The Company's drilling products segment continued to be severely impacted by the decline in worldwide drilling activity in 1999. Revenues for the first quarter of 1999 was down by more than 57% from the level recorded in the first quarter of 1998. The Company's production equipment segment results for the first quarter of 1999 compared to the first quarter of 1998, were down significantly due to a substantial 8 reduction in demand for our production equipment products following the downturn in the industry. Revenues for the first quarter of 1999 was down by more than 62% from the level recorded in the first quarter of 1998. The overall decrease was attributed to an associated drop in heavy oil drilling activity primarily in Canada and other marginal oil production activity. Costs and Expenses The Company's consolidated gross margins decreased from 52% in the quarter ended May 31, 1998 to 39% in the quarter ended May 31, 1999. The Company's drilling products segments gross margins declined from 40% in the quarter ended May 31, 1998 to 32% in the quarter ended May 31, 1999. The decline in gross margins is attributed to pricing pressures in the Company's centralizer line of products. As a result, the Company has been forced to reduce the selling price of such products. The Company's production equipment segments gross margins declined from 83% in the quarter ended May 31, 1998 to 57% in the quarter ended May 31, 1999. This was attributed to the Company's sale of certain Petrovalve inventory components from quantities that were previously written-off in fiscal year 1998. Selling expenses, which consist primarily of the salaries, wages, and benefits of the Company's salesmen, rent, insurance, and other direct selling costs, were down $83,420, or 26% in the quarter as compared to the same period in 1998. In response to the current industry conditions, the Company has implemented various actions directed at reducing costs to be in line with the reduced operating activities. These actions include reductions in the Company's sales-force. General corporate expenses decreased in the quarter by $109,974, or 50% as compared to the same period in 1998. In response to the current industry conditions, the Company has implemented various actions directed at reducing costs to be in line with the reduced operating activities. These actions include reductions in the Company's corporate overhead. Non-recurring Charges In the second quarter of fiscal year 1999, the Company made a severance provision of $80,635 for the departure of William G. Jayroe, the Company's former President and Chief Executive Officer. During the forth quarter of fiscal year 1999, William G. Jayroe filed a request for arbitration of his dispute with the company relating to his employment agreement. General counsel is handling the arbitration. General counsel believes the outcome from arbitration will not have a material effect on the financial condition and operations of the Company, and that the provision that the Company accrued in the prior year will not be realized. Therefore, during the first quarter for the period ended May 31, 1999, the Company decreased the provision and recorded a gain of approximately $80,000, which is included in other income. Capital Resources and Liquidity The Company has financed its operations to date from stock offerings, subordinated borrowings and internally generated funds. The principal use of its cash has been to fund the working capital needs of the Company. 9 Operating Activities Substantially all of the Company's customers are engaged in the energy industry. This concentration of customers may impact the Company's overall exposure to credit risk, either positively or negatively, in that customers may be similarly affected by changes in economic and industry conditions. The Company performs ongoing credit evaluations of its customers and does not generally require collateral in support of its trade receivables. The Company maintains reserves for potential credit losses, and actual losses have historically been within the Company's expectations. At May 31, 1999, the Company had a working capital deficit of $569,347 and cash of $13,323, as compared to a working capital deficit of $438,797 and cash of $50,492 at February 28, 1999. The overall decrease in the Company's working capital during the current fiscal year is attributed to an overall decrease in cash and an increase in short-term debt. The Company has sustained substantial operating losses in recent years. In addition, the Company has used substantial amounts of working capital in its operations. Further, the company has a debt payment of $750,000 due in July 1999. In view of these matters, realization of a major portion of the assets in the accompanying balance sheet is dependent upon continued operations of the Company, which in turn is dependent upon the Company's ability to meet its financing requirements, and the success of its future operations. Management believes that actions presently being taken to revise the Company's operating and financial requirements provide the opportunity for the Company to continue as a going concern. Management is taking the following steps to provide the Company with adequate working capital: . Management continues to reduce selling, general and administrative expenses. . Management is adding complementary product lines to help diversify the Company's product mix, without increasing supporting expenditures. . Management intends to secure new long-term equity financing for working capital purposes. . Management intends to convert the existing $900,000 debt obligation to equity. . Management plans to seek potential acquisition candidates that will be accretive to earnings and diversify the Company's market. Risk Factors The following risk factors, among others, may cause the Company's operating results and/or financial position to be adversely affected: . The Company's ability to raise additional working capital could be limited due to future operating losses and the existing level of short-term debt. Without the ability to raise operating capital, there would be substantial doubt about the Company's ability to continue as a going concern. 10 . Competitive factors including, but not limited to, the Company's limitations with respect to financial resources and its ability to compete against companies with substantially greater resources. . The Company's ability to control the amount of operating expenses. . A continuation of the rig count at its current level for a prolonged period of time will adversely affect the Company's results of operations as demand for oil related products and services would continue to fall because of the uncertainty relating to the future. In addition, any further declines in the current worldwide rig count or drilling activity will further reduce the demand for our drilling products and services and will have a material adverse effect on the Company's financial condition and results of operations. . In managing inventory requirements, the Company must forecast customer demand for our products. Should the Company underestimate the supplies needed to meet demand, it could be unable to meet customer demand. Should the Company overestimate the supplies needed to meet customer demand, its working capital could be adversely affected. If the Company is unable to manage purchases and utilization of its inventory to maintain low inventory levels immediately prior to major price declines, the Company could be unable to take immediate advantage of such declines to lower product costs, which could adversely affect its sales and gross margins. . The Year 2000 issue (i.e., the ability of computer systems to accurately identify and process dates beginning with year 2000 and beyond) affects virtually all companies and organizations. Recognizing the need to limit problems associated with year 2000 software failures; the Company has developed a plan to address this potential exposure. Key financial information and operational systems are being assessed and detailed plans have been developed. The Company is also communicating with its suppliers to determine their plans to limit problems associated with the year 2000 issue. Despite these efforts, the year 2000 issue is complex and may present unforeseen problems in the Company's systems and from third parties with which the Company deals, such as third party payers. Year 2000 Issue The Year 2000 issue is the risk that information systems, computers, equipment and products using date-sensitive software or containing computer chips with two-digit date fields will be unable to correctly process the Year 2000 date change. If not identified and corrected prior to the Year 2000, failures could occur in the software, hardware, equipment and products of the Company and its suppliers, vendors and customers that could result in interruptions of the Company's business. Any of such failures could have a material impact on the Company. The Company is currently assessing the cost and uncertainties related to the Year 2000 issue using internal and external resources. Based on preliminary information, the Company currently believes that it has substantially addressed the Year 2000 issues with respect to its software, hardware and products without significant impact on its operations. The estimated costs associated with achieving Year 2000 compliance are not expected to have a material impact on the Company's financial condition or results of operations. There is inherent 11 uncertainty in the Year 2000 problem due to the possibility of unanticipated failures by third party customers and suppliers. Accordingly, the Company is unable, at this time, to assess the extent and resulting materiality of the impact of possible Year 2000 failures on its operations, liquidity or financial position. The Company has designated personnel responsible to identify and respond to these issues and once all identifications and reviews are completed, a contingency plan will be developed to mitigate the risk of business interruption. 12 Part II - Other Information Item 6 - Exhibits and Reports on Form 8-K (a) Exhibits 3.1 Articles of Incorporation (incorporated by reference to the Company's Form 10-Q for the quarter ended November 30, 1997) 3.2 By-laws (incorporated by reference to the Company's Form 10-Q for the quarter ended November 30, 1997) 3.3 Amendment to Registrant's Bylaws (incorporated by reference to the Company's Form 10-KSB for the year ended February 28, 1998) 4.1 Shareholders Protection Rights Plan (incorporated by reference to the Company's Form 10-Q for the quarter ended November 30, 1997) 10.1 Distribution Agreement - Downhole Products (UK), LTD (incorporated by reference to the Company's Form 10-Q for the quarter ended November 30, 1997) 10.2 Wallace Robertson Inc. Consulting Agreement (incorporated by reference to the Company's Form 10-Q for the quarter ended November 30, 1997) 10.3 Bill Jayroe Employment Agreement (incorporated by reference to the Company's Form 10-Q for the quarter ended November 30, 1997) 10.4 Convertible Loan Agreement between the Company and TOSI, L.P. dated October 16,1997 (incorporated by reference to the Company's Form 10-Q for the quarter ended November 30, 1997) 10.5 Form of Warrant Agreement dated October 16, 1997 - Marlin Investors, L.L.C. (incorporated by reference to the Company's Form 10-Q for the quarter ended November 30, 1997) 10.6 Form of Warrant Agreement dated October 16, 1997 - Charles A. Dickinson (incorporated by reference to the Company's Form 10-Q for the quarter ended November 30, 1997) 10.7 License Agreement - Harlan King (incorporated by reference to the Company's Form 10-Q for the quarter ended November 30, 1997) 10.8 Form of Subscription Agreement by and between the Company and certain shareholders, dated September 16, 1997 - Marlin Investors, L.L.C. (incorporated by reference to the Company's Form 10-Q for the quarter ended November 30, 1997) 10.9 Form of Subscription Agreement by and between the Company and certain shareholders, dated September 16, 1997 - Charles A. Dickinson (incorporated by reference to the Company's Form 10-Q for the quarter ended November 30, 1997) 10.10 Promissory Note between Chisholm Energy Partners, LLC and the Company dated February 24, 1999. (incorporated by reference to the Company's Form 10-KSB for the year ended February 28, 1999) 21.1 List of Operating Subsidiaries (incorporated by reference to the Company's Form 10-Q for the quarter ended November 30, 1997) *27.1 Financial Data Schedule 13 * Filed herewith b) Reports on Form 8-K During the fiscal quarter ended May 31, 1999, the Company filed no reports on Form 8-K. 14 SIGNATURES In accordance with the requirements 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. FLOTEK INDUSTRIES INC. (Registrant) /s/ JERRY D. DUMAS Date: July 14, 1999 By: ____________________________ Jerry Dumas President and Chief Executive Officer (Principal Executive Officer, Principal Financial Officer, Principal Accounting Officer) 15 Exhibit Index 3.1 Articles of Incorporation (incorporated by reference to the Company's Form 10-Q for the quarter ended November 30, 1997) 3.2 By-laws (incorporated by reference to the Company's Form 10-Q for the quarter ended November 30, 1997) 3.3 Amendment to Registrant's Bylaws (incorporated by reference to the Company's Form 10-KSB for the year ended February 28, 1998) 4.1 Shareholders Protection Rights Plan (incorporated by reference to the Company's Form 10-Q for the quarter ended November 30, 1997) 10.1 Distribution Agreement - Downhole Products (UK), LTD (incorporated by reference to the Company's Form 10-Q for the quarter ended November 30, 1997) 10.2 Wallace Robertson Inc. Consulting Agreement (incorporated by reference to the Company's Form 10-Q for the quarter ended November 30, 1997) 10.3 Bill Jayroe Employment Agreement (incorporated by reference to the Company's Form 10-Q for the quarter ended November 30, 1997) 10.4 Convertible Loan Agreement between the Company and TOSI, L.P. dated October 16,1997 (incorporated by reference to the Company's Form 10-Q for the quarter ended November 30, 1997) 10.5 Form of Warrant Agreement dated October 16, 1997 - Marlin Investors, L.L.C. (incorporated by reference to the Company's Form 10-Q for the quarter ended November 30, 1997) 10.6 Form of Warrant Agreement dated October 16, 1997 - Charles A. Dickinson (incorporated by reference to the Company's Form 10-Q for the quarter ended November 30, 1997) 10.7 License Agreement - Harlan King (incorporated by reference to the Company's Form 10-Q for the quarter ended November 30, 1997) 10.8 Form of Subscription Agreement by and between the Company and certain shareholders, dated September 16, 1997 - Marlin Investors, L.L.C. (incorporated by reference to the Company's Form 10-Q for the quarter ended November 30, 1997) 10.9 Form of Subscription Agreement by and between the Company and certain shareholders, dated September 16, 1997 - Charles A. Dickinson (incorporated by reference to the Company's Form 10-Q for the quarter ended November 30, 1997) 10.10 Promissory Note between Chisholm Energy Partners, LLC and the Company dated February 24, 1999. (incorporated by reference to the Company's Form 10-KSB for the year ended February 28, 1999) 21.1 List of Operating Subsidiaries (incorporated by reference to the Company's Form 10-Q for the quarter ended November 30, 1997) *27.1 Financial Data Schedule * Filed herewith 16 EX-27.1 2 FINANCIAL DATA SCHEDULE
5 3-MOS FEB-28-2000 MAR-01-1999 MAY-31-1999 0 0 290,302 54,431 766,767 1,314,545 108,977 0 1,314,545 1,639,739 0 0 0 18,134,295 18,468,585 1,314,545 304,653 304,653 186,771 544,752 53,952 0 33,404 0 0 (186,147) 0 0 0 (186,147) (.004) .004
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