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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
|X| Quarterly Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended September 30, 1995;
or
|_| Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from _______ to_______
.
Commission File Number 0-18754
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Black Warrior Wireline Corp.
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(Exact Name of Small Business Issuer as Specified in its Charter)
Delaware 11-2904094
- -------------------------------- -------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
3748 Highway 45 North, Columbus, Mississippi 39701
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(Address of Principal Executive Offices)
(Zip Code)
(601) 329-1047
--------------------------------------------
(Issuer's Telephone Number, Including Area Code)
Indicate by a check mark whether the Issuer (1) has filed all Reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the proceeding 12 months (or for such shorter period that the Issuer
was required to file such Reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES [X] [NO]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at November 10, 1995
Common Stock, par value 70,846.29 shares
$.0005 per share
Page 1 of 12 Pages
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BLACK WARRIOR WIRELINE CORP.
QUARTERLY REPORT ON FORM 10-QSB
INDEX
PART I -- FINANCIAL INFORMATION
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<CAPTION>
Page
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Item 1. Financial Statements
Consolidated Balance Sheets -- September 30, 1995
and December 31, 1994 3
Consolidated Statements of Operations --
Three Months Ended September 30, 1995 and 1994 4
Consolidated Statements of Operations --
Nine Months Ended September 30, 1995 and 1994 5
Consolidated Statements of Cash Flows --
Nine Months Ended September 30, 1995 and 1994 6
Notes to Financial Statements --
Nine Months Ended September 30, 1995 and 1994 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II -- OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 10
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Page 2 of 12 Pages
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PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements
BLACK WARRIOR WIRELINE CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September December
30, 31,
1995 1994
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 91,617 $ 40,453
Accounts receivable, less allowance for
doubtful accounts, of $101,178 and $117,540
at September 30, 1995 and December 31, 1994,
respectively 1,077,928 875,012
Inventories 197,957 228,193
Prepaid expenses 12,932 73,754
Federal income tax receivable 80,432 80,432
Other Receivables 20,435
---------- ----------
Total current assets 1,460,866 1,318,279
Property, plant & equipment, less accumulated
depreciation of $3,444,166 and $3,200,235 at
September 30, 1995 and December 31, 1994,
respectively 1,194,802 1,380,157
Other assets 5,539 3,839
---------- ----------
Total assets $ 2,661,207 $ 2,702,275
========== ==========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 832,428 $ 867,815
Accrued salaries and vacation 77,580 61,721
Accrued interest payable 1,659,019 1,276,675
Other accrued expenses 140,939 155,958
Notes payable to bank 84,173 82,227
Notes payable, related parties 636,331 623,531
Current maturities of long-term debt and
capital lease obligations 2,178,811 2,151,444
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Total current liabilities 5,609,281 5,219,371
Long-term debt and capital lease obligations,
less current maturities 395,343 237,341
---------- ----------
Total liabilities 6,004,624 5,456,712
Common stock, par value $.0005 per share,
50,000,000 shares authorized, 14,169,258
shares issued June 30, 1995 and December 31, 1994 7,084 7,084
Additional paid-in capital 1,992,695 1,992,695
Accumulated deficit (4,759,803) (4,170,823)
Treasury stock, at cost, 814,626 shares (583,393) (583,393)
---------- ----------
Total stockholders' equity (3,343,417) (2,754,437)
---------- ----------
Total liabilities and stockholders' deficit $ 2,661,207 $ 2,702,275
========== ==========
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Page 3 of 12 Pages
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BLACK WARRIOR WIRELINE CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended
-------------------------------------
September September
30, 30,
1995 1994
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<S> <C> <C>
Net revenues $ 1,474,819 $ 1,575,786
Operating costs and expenses (1,379,358) (1,452,034)
Depreciation and amortization expense (155,678) (194,798)
------------ -------------
Operating income (loss) (60,217) (71,046)
Interest expense and amortization
of debt discount and expense (152,660) (141,212)
Other income 32,725 35,122
------------ -------------
Net income (loss) $ (180,152) $ (177,136)
============ =============
Earnings (loss) per average
share $ (0.01) $ (0.01)
Average common and common equivalent
shares outstanding 14,169,258 14,169,258
============ =============
</TABLE>
Page 4 of 12 Pages
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BLACK WARRIOR WIRELINE CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Nine Months Ended
-----------------------------------
September September
30, 30,
1995 1994
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<S> <C> <C>
Net revenues $ 4,639,173 $ 4,611,159
Operating costs and expenses (4,318,393) (4,500,709)
Depreciation and amortization expense (531,369) (585,823)
---------- -----------
Operating income (loss) (210,589) (475,373)
Interest expense and amortization
of debt discount and (453,580) (422,046)
Other income 75,201 123,374
---------- -----------
Net income (loss) $ (588,968) $ (774,045)
========== ===========
Earnings (loss) per average
share $ (0.04) $ (0.05)
Average common and common equivalent
shares outstanding 14,169,258 14,169,258
========== ===========
</TABLE>
Page 5 of 12 Pages
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BLACK WARRIOR WIRELINE CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended
----------------------------------
September September
30, 30,
1995 1994
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<S> <C> <C>
Net cash flows from operating activities: $ 138,487 $ 204,756
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Cash flows used in investing activities:
Proceeds from the sale of fixed assets 50,250 54,550
Acquisition of property,
plant and equipment (303,556) (223,111)
---------- ---------
Net cash flow provided
by investing activities (253,306) (168,561)
---------- ---------
Cash flows provided by financing activities:
Net advances on receivables financed 0 0
Increase in notes payable 329,878 204,254
Reductions in notes payable (163,894) (218,123)
---------- ---------
Net cash flow used in financing activities 165,984 (13,869)
Net increase (decrease) in cash 51,164 58,326
Cash - beginning of period 40,453 60,816
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Cash - end of period $ 91,617 $ 119,142
========== =========
Supplemental disclosure of cash flow information:
Interest paid $ 66,176 $ 45,621
Taxes paid $ 0 $ 0
</TABLE>
Page 6 of 12 Pages
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BLACK WARRIOR WIRELINE CORP. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
1. GENERAL
The accompanying financial statements reflect all adjustments which, in
the opinion of management, are necessary for a fair presentation of the
financial position of Black Warrior Wireline Corp. and subsidiaries
(the "Company"). Such adjustments are of a normal recurring nature. The
results of operations for the interim periods are not necessarily
indicative of the results to be expected for the full year. The
Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1994 should be read in conjunction with this document.
2. LONG-TERM DEBT
The Company is in default of its 14% subordinated debenture and 13%
convertible subordinated debenture agreements due to its failure to
make scheduled principal and interest payments. Debenture holders
representing $800,000 of the 14% subordinated debentures outstanding at
December 31, 1994 and 1993 have notified the Company of default and
requested immediate payment of the entire outstanding balance. In
accordance with the default provisions in the 14% subordinated
debenture and 13% subordinated debenture agreements, the stated
interest rate was increased to 2% per month effective November 30, 1991
and June 30, 1992, respectively. The default on the 14% debentures has
caused the Company to be in violation of certain covenants related to
the 13% convertible subordinated debentures.
In addition, the Company is in violation of several other covenants
related to the 14% and 13% subordinated debenture agreements,
including, but not limited to, timely payment of taxes and compliance
with provisions and terms of all material agreements and commitments.
Although the remaining 14% debenture holders and the 13% debenture
holders have not notified the Company regarding acceleration of
payment, the debenture holders have the right to require immediate
payment. Accordingly, the entire balances of the debentures have been
classified as current liabilities.
Under the covenants of the debenture agreements, the Company is
prohibited from declaring or paying any dividends to stockholders as
long as the debentures are in default.
3. NOTES PAYABLE - RELATED PARTIES
In October 1991, the Company entered into an agreement with a
partnership consisting of officers and spouses of officers of the
Company, whereby such partnership advanced funds to the Company for
operations. These advances are collateralized by certain accounts
receivable of the Company and bear interest at a rate of prime plus 2%.
At September 30, 1995, the Company owed the partnership $289,293.
Page 7 of 12 Pages
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The Company had an outstanding balance of $347,037 in notes payable at
September 30, 1995 to the President of the Company and his spouse.
These notes are collateralized by certain assets of the Company.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
The Company experienced a net loss of $180,152 for the third quarter of
1995 as compared to a net loss of $177,136 for the same period of 1994. During
the first nine months of 1995, the Company had a net loss of $588,968 as
compared to a net loss of $744,045 for the first nine months of 1994. Continuing
efforts to control costs and improved margins generated by the Company's
directional drilling services led to this improvement.
Revenues decreased by $100,967 to $1,474,819 for the third quarter of
1995 as compared to $1,575,786 in the same period in 1994. Revenues for the
first nine months of 1995 increased $28,014 to $4,639,173 as compared to
$4,611,159 for the same period last year. While revenues remain stable, as
compared to the same period of 1994, a decrease in cased hole revenue was offset
by an increase in revenue from directional drilling services. The decrease in
cased hole revenue is the result of a temporary reduction in activity by three
of the Company's major customers in West Texas. Revenues by business line are
summarized below:
Nine Months Ended Three Months Ended
-----------------------------------------------------
September September September September
-----------------------------------------------------
30, 1995 30, 1994 30, 1995 30, 1994
Wireline services
(logging, directional
services, perforating) $ 3,473,888 $ 3,237,590 $ 1,104,774 $ 1,135,970
Completion (workover
services) $ 1,010,861 $ 1,113,544 324,240 349,587
Tools and Packers
(sales and rentals of
bridge plugs) $ 154,424 $ 260,025 45,805 90,229
-----------------------------------------------------
Total $ 4,639,173 $ 4,611,159 $ 1,474,819 $ 1,575,786
====================================================
Costs and expenses decreased $72,676 for the third quarter of 1995 and
$182,316 for the first nine months of 1995 as compared to the same periods in
1994. This decrease was due to a reduction in insurance expense related to
workman's compensation from the same period of 1994 and the Company's continued
efforts to
Page 8 of 12 Pages
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reduce costs. Salaries increased $84,289 for the first nine months of 1995 with
the total number of employees decreasing to 84 at September 30, 1995 from 87 at
September 30, 1994. This increase was the result of an effort by the Company to
remain competitive and retain its key employees.
Interest expense increased by $11,448 for the third quarter of 1995 and
$31,534 for the first nine months of 1995 as compared to the same periods in
1994. Three to five year notes were used to purchase new vehicles during the
last quarter of 1994 and the first nine months of 1995. Net new borrowing for
the first nine months of 1995 totaled $329,878. Interest on the debt ranged from
prime to 11.75%.
The Company is continually reevaluating its strengths and weaknesses to
meet the demands of an evolving oil and gas industry. Resources are being
redirected around services in which the Company maintains key competitive
advantages. One such area is directional drilling services. Demand for these is
strong and the Company expects this demand to continue.
The Company is continuing its plan to modernize its wireline truck
fleet. The Company is purchasing one new tractor every 120 days and building
technologically advanced wireline trucks "in-house." This plan will save the
Company approximately $100,000 from the cost of purchasing a new, fully equipped
wireline truck. The third of five trucks the company will build is currently
under construction and should be ready for service in the fourth quarter of
1995. The Company plans to continue upgrading its rolling stock until the fleet
is competitive with the other companies in the industry. The Company is
currently evaluating which new down hole tools will best complement these
trucks. When this evaluation is complete, the Company will seek financing to
acquire this equipment With this new technology, the Company will increase its
activity in the "deep-hole" sector of the market. In this sector, where well
depths are below 10,000 feet, there are fewer competitors and price discounts
are much less than shallower wells.
The Company, whose Common Stock is trade on OTC Bulletin Board,
effected a reverse stock split on a 1-for-200 basis effective on October 30,
1995. The numbers in the financial statements of this document do not reflect
the reverse split on October 30, 1995.
Liquidity and Capital Resources
Cash flow provided by Company operations was $138,487 for the quarter
ended September 30, 1995 as compared to $204,756 for the quarter ended September
30, 1994. This decrease is a result of purchasing supplies and tools with cash
rather than on account. The Company had a net loss of $588,968 for the first
nine months of the year compared to a net loss of 774,045 for the same period
last year. Uses of the Company's cash went to reduce current liabilities and to
repay $163,894 net principal indebtedness.
The Company is in default in payment of principal and interest on
$900,000 in aggregate principal amount of its 14% Subordinated Debentures due
August 31, 1993. At September 30, 1995, the Company had failed to make principal
payments
Page 9 of 12 Pages
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aggregating $900,000 and interest payments aggregating $734,500 including
interest at the penalty rate, as discussed below. The holders of $800,000 of
such debentures have given notice of the default and acceleration thereunder.
Under the terms of the debentures, the entire principal balance plus accrued but
unpaid interest is due by virtue of the notice of default and acceleration. In
addition, the stated interest rate applicable to the debentures was increased to
2% per month as of November 30, 1991.
The Company is also in default of payment of interest under the
Company's $1,100,000 in outstanding aggregate principal amount of 13%
Convertible Subordinated Debentures due August 31, 1995. At September 30, 1995,
interest arrearages amounted to $826,750.
The Company is currently negotiating a restructuring of both classes of
debentures in an effort to resolve the defaults in a manner which would minimize
or reduce the potential adverse effect on the Company's liquidity. Such
negotiations include, but are not limited to, an exchange of principal for
equity. However, no agreements with respect to such a resolution are in place.
Even if such arrearages could be resolved on a basis favorable to the Company,
the Company will still require improved cash flow from operations and additional
working capital to meet its obligations. Therefore, the Company is seeking
commitments from investment bankers to assist the Company in raising such
capital in the financial markets.
PART II -- OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
27. Financial Data Schedule
(b) Reports on Form 8-K
The Company filed no reports on Form 8-K during the quarter
for which this Quarterly Report on Form 10-QSB is filed.
No other Items of Part II are applicable to the Registrant for the
period covered by this Quarterly Report on Form 10-QSB.
Page 10 of 12 Pages
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
BLACK WARRIOR WIRELINE CORP.
----------------------------
(Registrant)
Date: November 10 , 1995 /s/ WILLIAM L. JENKINS
---------- ---------------------------
William L. Jenkins
President and
Chief Operating Officer
(Principal Executive, Financial
and Accounting Officer)
Page 11 of 12 Pages
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EXHIBIT 27
[GRAPHIC OMITTED]
Page 12 of 12 Pages
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[ARTICLE] 5
[MULTIPLIER] 1
[CURRENCY] U.S. DOLLARS
<TABLE>
<S> <C>
[PERIOD-TYPE] 9-MOS
[FISCAL-YEAR-END] DEC-31-1995
[PERIOD-END] SEP-30-1995
[EXCHANGE-RATE] 1
[CASH] $91,617
[SECURITIES] $0
[RECEIVABLES] $1,077,928
[ALLOWANCES] ($101,178)
[INVENTORY] $197,957
[CURRENT-ASSETS] $1,460,866
[PP&E] $4,638,968
[DEPRECIATION] ($3,444,166)
[TOTAL-ASSETS] $2,661,207
[CURRENT-LIABILITIES] $5,609,281
[BONDS] $2,000,000
[COMMON] $7,084
[PREFERRED-MANDATORY] $0
[PREFERRED] $0
[OTHER-SE] ($583,393)
[TOTAL-LIABILITY-AND-EQUITY] $2,661,207
[SALES] $4,639,173
[TOTAL-REVENUES] $4,639,173
[CGS] $0
[TOTAL-COSTS] $4,771,973
[OTHER-EXPENSES] $4,318,393
[LOSS-PROVISION] $0
[INTEREST-EXPENSE] $453,580
[INCOME-PRETAX] $0
[INCOME-TAX] $0
[INCOME-CONTINUING] ($588,968)
[DISCONTINUED] $0
[EXTRAORDINARY] $0
[CHANGES] $0
[NET-INCOME] ($588,968)
[EPS-PRIMARY] ($0.04)
[EPS-DILUTED] $0
</TABLE>
