UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________
FORM 8-K/A
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported)
JUNE 23, 1997
BLACK WARRIOR WIRELINE CORP.
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation)
0-18754 11-2904094
(Commission file number) (IRS employer identification no.)
3748 HIGHWAY 45 NORTH
COLUMBUS, MISSISSIPPI 39701
(Address of principal executive offices) (Zip code)
(601) 329-1047
(Registrant's telephone number, including area code)
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND PRO FORMA FINANCIAL INFORMATION
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED. The following financial
statements of the business acquired are filed as exhibits hereto:
Financial Statements of Petro - Log, Inc. as of March 31, 1997 and for the
years ended March 31, 1997 and 1996
Report of Independent Accountants
Balance Sheet as of March 31, 1997
Statements of Operations for the years ended March 31, 1997 and 1996
Statements of Stockholders' Equity for the years ended March 31, 1997 and
1996
Statements of Cash Flows for the years ended March 31, 1997 and 1996
Notes to Financial Statements
(b) PRO FORMA FINANCIAL INFORMATION. The following pro forma financial
statements of the registrant are filed as an exhibit hereto:
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF BLACK
WARRIOR WIRELINE CORP. AND SUBSIDIARIES FOR THE SIX MONTHS ENDED JUNE 30,
1997 AND FOR THE YEAR ENDED DECEMBER 31, 1996
Unaudited Pro Forma Condensed Consolidated Financial Statements
Introduction
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the
year ended December 31, 1996
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the
six months ended June 30, 1997
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS,
CONTINUED
(c) EXHIBITS.
NONE
SIGNATURES
Pursuant to the requirements of the Securities and 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. AND SUBSIDIARY
Date: August 20, 1997 By: /s/ William Jenkins
--------------- -------------------------------
William Jenkins, President
and Chief Operating Officer
<PAGE>
INDEX TO FINANCIAL STATEMENTS
SEQUENTIAL
DESCRIPTION PAGE NO.
----------- --------
Financial Statements of Petro - Log, Inc. as of March 31, 1997
and for the years ended March 31, 1997 and 1996 ................ F-1 - F-9
Unaudited Pro Forma Condensed Consolidated Financial Statements
of Black Warrior Wireline Corp. and Subsidiaries for the six
months ended June 30, 1997 and for the year ended December 31,
1996 ........................................................... F-10 - F-14
<PAGE>
PETRO - LOG, INC.
FINANCIAL STATEMENTS
FOR THE YEARS ENDED MARCH 31, 1997 AND 1996
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
The Stockholders
Petro - Log, Inc.
Gillette, Wyoming
We have audited the accompanying balance sheet of Petro - Log, Inc. (the
Company) as of March 31, 1997, and the related statements of operations,
stockholders' equity, and cash flows for the years ended March 31, 1997 and
1996. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Petro - Log, Inc. as of March
31, 1997, and the results of its operations and its cash flows for the years
ended March 31, 1997 and 1996 in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND L.L.P.
Birmingham, Alabama
July 15, 1997
F-1
<PAGE>
PETRO - LOG, INC.
BALANCE SHEET
March 31, 1997
ASSETS
Current assets:
Cash and cash equivalents $ 1,040,233
Accounts receivable 154,012
Inventories 74,131
Prepaid expenses 54,580
------------
Total current assets 1,322,956
Deferred tax asset 58,283
Property, plant, and equipment, less accumulated depreciation of
$5,142,675 at March 31, 1997 575,598
------------
Total assets $ 1,956,837
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 34,343
Taxes payable 8,057
Note payable, related party 26,256
Note payable 10,969
Deferred tax liability 79,492
Other liabilities 12,944
------------
Total current liabilities 172,061
------------
Stockholders' equity:
Common stock, no par value; 100 shares authorized;
and issued, 95 shares outstanding 10,000
Retained earnings 1,813,031
Treasury stock, at cost, 5 shares (38,255)
------------
Total stockholders' equity 1,784,776
------------
$ 1,956,837
============
The accompanying notes are an integral part of these financial statements.
F-2
<PAGE>
PETRO - LOG, INC.
STATEMENTS OF OPERATIONS
for the years ended March 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Net revenues $ 1,456,272 $ 1,578,722
Operating costs 1,058,083 1,382,312
General and administrative expenses 257,552 316,457
Depreciation 75,243 93,385
------------ -----------
Income (loss) from operations 65,394 (213,432)
Other (expense) income:
Interest expense (1,504) (1,846)
Gain on sale of property, plant, and equipment, net 675,000 1,509
------------ -----------
Income (loss) before (provision) benefit for income taxes 738,890 (213,769)
(Provision) benefit for income taxes (262,000) 61,097
------------ -----------
Net income (loss) $ 476,890 $ (152,672)
============ ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE>
PETRO - LOG, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
for the years ended March 31, 1997 and 1996
<TABLE>
<CAPTION>
Common Stock Treasury Stock
--------------------- Retained --------------------- Total
Shares Value Earnings Shares Value Equity
------- ----------- ------------ ------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Balance, March 31, 1995 100 $ 10,000 $ 1,632,464 5 $ (38,255) $ 1,604,209
Net loss (152,672) (152,672)
Forgiveness of shareholder receivable
in the form of dividends (120,569) (120,569)
------- ----------- ------------ ------- ------------ ------------
Balance, March 31, 1996 100 10,000 1,359,223 5 (38,255) 1,330,968
Net income 476,890 476,890
Forgiveness of shareholder receivable
in the form of dividends (23,082) (23,082)
------- ----------- ------------ ------- ------------ ------------
Balance, March 31, 1997 100 $ 10,000 $ 1,813,031 5 $ (38,255) $ 1,784,776
======= =========== ============ ======= ============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE>
PETRO - LOG, INC.
STATEMENTS OF CASH FLOWS
for the years ended March 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 476,890 $ (152,672)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation 75,243 93,385
Gain on sale of property, plant, and equipment (675,000) (1,509)
Provision (benefit) for deferred taxes 253,940 (61,097)
Change in:
Accounts receivable 42,821 (20,716)
Related party receivable (23,082) (120,569)
Inventories (9,187) 5,261
Prepaid expenses 13,146 (2,116)
Accounts payable (14,985) (5,270)
Taxes payable 8,057
Accrued expenses (5,747) 4,826
----------- -----------
Net cash provided by (used in) operating activities 142,096 (260,477)
----------- -----------
Cash flows from investing activities:
Purchases of property, plant, and equipment (19,585) (32,763)
Proceeds from sale of property, plant, and equipment 675,000 1,509
----------- -----------
Cash provided by (used in) investing activities 655,415 (31,254)
----------- -----------
Cash flows from financing activities:
Principal payments, note payable (8,804) (8,492)
Principal payments, related party note payable (1,933)
----------- -----------
Cash used in financing activities (10,737) (8,492)
----------- -----------
Net increase (decrease) in cash and cash equivalents 786,774 (300,223)
Cash and cash equivalents, beginning of year 253,459 553,682
----------- -----------
Cash and cash equivalents, end of year $ 1,040,233 $ 253,459
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest $ 1,504 $ 1,846
=========== ===========
Supplemental schedule of noncash investing and financing activities:
Forgiveness of related party receivable in the form of a dividend $ 23,082 $ 120,569
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
PETRO - LOG, INC.
NOTES TO FINANCIAL STATEMENTS
1. GENERAL INFORMATION
Petro - Log, Inc. (the Company), incorporated in Wyoming, is an integrated
oil and gas well servicing company which provides wireline, drilling,
completion, and workover services primarily in Wyoming, Montana and South
Dakota.
2. SIGNIFICANT ACCOUNTING POLICIES
CASH AND CASH EQUIVALENTS - The Company considers all investments with an
original maturity of three months or less to be cash equivalents.
INVENTORIES - Inventories, which consist primarily of supplies used in well
servicing activities, are stated at the lower of cost (first-in, first-out
method) or net realizable value.
PROPERTY, PLANT, AND EQUIPMENT - Property, plant, and equipment is stated
at cost. The cost of maintenance and repairs is charged to expense when
incurred; the cost of betterments is capitalized. The cost of assets sold
or otherwise disposed of and the related accumulated depreciation are
removed from the accounts and the gain or loss on such disposition is
included in income. Depreciation is computed using accelerated methods over
the estimated useful lives of the assets (buildings - 20 to 40 years,
vehicles and other equipment - 3 to 14 years).
INCOME TAXES - The Company uses an asset and liability approach for
financial accounting and reporting for income taxes. Deferred tax assets
are recognized only to the extent of their anticipated realization.
USE OF ESTIMATES - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from these
estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS - The carrying amount of the Company's
cash and cash equivalents, accounts receivable, other receivables, and note
payable - related party approximates fair value due to the relatively short
period to maturity of these instruments.
3. RELATED PARTY TRANSACTIONS
At March 31, 1997, the Company had a note payable due on demand in the
amount of $26,256 due to one of its stockholders.
F-6
<PAGE>
NOTES TO FINANCIAL STATEMENTS, CONTINUED
4. PROPERTY, PLANT, AND EQUIPMENT
Property, plant, and equipment includes the following at March 31, 1997:
1997
Land $ 69,770
Vehicles 1,969,414
Leasehold improvements 149,822
Operating equipment 2,654,171
Office equipment 77,466
Buildings 714,993
Airplane 82,637
----------
5,718,273
Less accumulated depreciation 5,142,675
----------
Net property, plant, and equipment $ 575,598
==========
5. LONG-TERM FINANCING ARRANGEMENT
The Company entered into a long-term financing arrangement in June 1988
with Contract Service Center for the purchase of land and building. The
outstanding debt as of March 31, 1997 was $10,969 at an interest rate of
10%. The debt is collateralized by land and building with a net book value
of $60,211.
6. INCOME TAXES
Provision (benefit) for income taxes consists of the following for the
years ended March 31, 1997 and 1996:
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Federal:
Current $ 8,057
Deferred, net of utilization of net operating loss
carryforwards (16,003) $ (61,097)
Utilization of net operating loss carryforwards 269,946
--------- ---------
$ 262,000 $ (61,097)
========= =========
</TABLE>
F-7
<PAGE>
NOTES TO FINANCIAL STATEMENTS, CONTINUED
The provision (benefit) for federal income taxes differs from the amount
computed by applying the federal income tax statutory rate of 34% to the
income (loss), as follows:
1997 1996
Tax provision (benefit) at federal statutory rate $ 251,223 $ (72,568)
Nondeductible meals and entertainment 11,191 11,471
Other (414)
--------- ---------
Provision (benefit) for federal income taxes $ 262,000 $ (61,097)
========= =========
The Company has available loss carryforwards of approximately $ 96,000 for
federal purposes that expire March 31, 2011.
Deferred income taxes reflect the impact of temporary differences between
amounts of assets and liabilities recorded for financial reporting purposes
and such amounts as measured in accordance with tax laws. The primary cause
of temporary differences for the Company is that the tax returns are filed
on the cash basis while the financial statements are prepared on the
accrual basis. The specific items which comprise a significant portion of
the deferred tax assets and liabilities at March 31, 1997 are as follows:
Gross deferred tax assets:
Accounts payable $ 16,634
Property, plant, and equipment 17,631
Net operating loss carryforwards 32,595
Alternative minimum tax credit carryforwards 8,057
----------
Gross deferred tax asset 74,917
----------
Gross deferred tax liabilities:
Accounts receivable (52,364)
Inventories (25,205)
Prepaid expenses (18,557)
----------
Gross deferred tax liability (96,126)
----------
Net deferred tax liability $(21,209)
==========
F-8
<PAGE>
NOTES TO FINANCIAL STATEMENTS, CONTINUED
7. MAJOR CUSTOMERS
Most of the Company's business activity is with customers engaged in
drilling and operating natural gas wells primarily in Wyoming.
Substantially all of the Company's accounts receivable at March 31, 1997 is
from such customers. Performance in accordance with the credit arrangements
is in part dependent upon the economic condition of the natural gas
industry in the respective geographic areas. The Company does not require
its customers to pledge collateral on its accounts receivable.
The Company earned revenues in excess of 10% of its total revenues from the
following customers for the years ended March 31, 1997 and 1996:
1997 1996
Amoco, Inc. $ 187,880 $ 456,735
Barrett 213,080
Devon 154,123
Louisiana Land & Exploration 310,955 236,908
----------- -----------
$ 866,038 $ 693,643
=========== ===========
8. SUBSEQUENT EVENT
On June 9, 1997, all outstanding stock of Petro - Log, Inc. was sold to
Black Warrior Wireline Corp. for $2,137,500.
F-9
<PAGE>
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS INTRODUCTION
The accompanying unaudited pro forma condensed consolidated financial statements
reflect the consolidated results of operations of Black Warrior Wireline Corp.
(the Company) for the year ended December 31, 1996, and the six months ended
June 30, 1997 after giving pro forma effect to (i) the purchase of Petro - Log,
Inc. (Petro - Log), (ii) the purchase of Dyna Jet, Inc. (Dyna Jet), (iii) the
purchase of Production Well Services, Inc. (PWS), and (iv) incurrence of debt in
connection with the acquisitions. The purchases of Petro - Log, Dyna Jet, and
PWS were all completed prior to June 30, 1997 and therefore are reflected in the
Company's June 30, 1997 condensed consolidated balance sheet, previously filed
on Form 10-QSB. The unaudited pro forma condensed consolidated financial
statements should be read in conjunction with the Company's "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
the respective historical financial statements of the Company, Dyna Jet and
Petro - Log and the related notes thereto. The unaudited pro forma information
does not purport to be indicative of actual results that would have been
achieved had the acquisitions actually been completed or debt been issued as of
the dates indicated on the following pages nor which may be achieved in the
future.
F-10
<PAGE>
BLACK WARRIOR WIRELINE CORP. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
for the year ended December 31, 1996
<TABLE>
<CAPTION>
Black Warrior
Wireline
Corp. and Dyna Jet Petro - Log
Subsidiaries (a) Inc. (b) Inc. (c) PWS (d)
---------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues $ 7,582,021 $ 514,590 $ 1,456,272 $ 805,299
Operating costs 5,116,777 175,111 1,058,083 590,858
Selling, general, and administrative expenses 1,302,994 349,685 257,552 130,430
Depreciation and amortization 574,400 43,155 75,243 25,800
------------ ------------ ------------ ------------
Income (loss) from operations 587,850 (53,361) 65,394 58,211
Interest expense and amortization of debt discount (342,197) (1,129) (1,504) (9,868)
Net gain (loss) on sale of fixed assets 76,645 (3,550) 675,000
Other income (loss) 39,425 (284)
------------ ------------ ------------ ------------
Income (loss) before benefit (provision)
for income taxes and extraordinary gain 361,723 (58,324) 738,890 48,343
Benefit (provision) for income taxes 65,715 (21,924) (262,000) (16,437)
------------ ------------ ------------ ------------
Income (loss) before extraordinary gain 427,438 (80,248) 476,890 31,906
Extraordinary gain on extinguishment of debt 1,608,501
------------ ------------ ------------ ------------
Net income (loss) $ 2,035,939 $ (80,248) $ 476,890 $ 31,906
============ ============ ============ ============
Income per common share (h):
Income before extraordinary gain $ 0.41
Extraordinary gain 1.55
------------
Net income per common share $ 1.96
============
Weighted average number of common shares
outstanding (h) 1,040,192
============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Pro Forma
Pro Forma Consolidated
Adjustments As Adjusted
------------- --------------
<S> <C> <C>
Revenues $ 10,358,182
Operating costs 6,940,829
Selling, general, and administrative expenses 2,040,661
Depreciation and amortization $ 419,249 (e) 1,137,847
------------ ------------
Income (loss) from operations (419,249) 238,845
Interest expense and amortization of debt discount (499,045)(f) (853,743)
Net gain (loss) on sale of fixed assets 748,095
Other income (loss) 39,141
------------ ------------
Loss before benefit (provision) for income
taxes and extraordinary gain (918,294) 172,338
Benefit (provision) for income taxes 283,830 (g) 49,184
------------ ------------
Income (loss) before extraordinary gain (634,464) 221,522
Extraordinary gain on extinguishment of debt 1,608,501
------------ ------------
0
Net income (loss) $ (634,464) $ 1,830,023
============ ============
Income per common share (h):
Income before extraordinary gain $ 0.13
Extraordinary gain 0.97
------------
Net income per common share $ 1.10
============
Weighted average number of common shares
outstanding (h) 1,663,388
============
</TABLE>
See notes to the unaudited pro forma condensed consolidated financial
statements.
F-11
<PAGE>
BLACK WARRIOR WIRELINE CORP. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
for the six months ended June 30, 1997
<TABLE>
<CAPTION>
Black Warrior
Wireline Pro Forma
Corp. and Petro - Log Pro Forma Consolidated
Subsidiaries(i) Inc. (j) PWS (k) Adjustments As Adjusted
-------------- ----------- ----------- -------------- ------------
<S> <C> <C> <C> <C> <C>
Revenues $ 4,653,069 $ 602,458 $ 439,761 $ 5,695,288
Operating costs 4,058,840 544,276 312,103 4,915,219
Depreciation and amortization 464,514 31,128 14,250 $ 155,273 (l) 665,165
----------- ----------- ----------- ----------- -----------
Income (loss) from operations 129,715 27,054 113,408 (155,273) 114,904
Interest expense and amortization of debt discount (136,070) (622) (4,441) (250,000)(m) (391,133)
Other income (loss) 50,116 675,000 725,116
----------- ----------- ----------- ----------- -----------
Income (loss) before provision for income taxes 43,761 701,432 108,967 (405,273) 448,887
(Provision) benefit for income taxes (248,718) (37,049) 117,029 (g) (168,738)
----------- ----------- ----------- ----------- -----------
Net income (loss) $ 43,761 $ 452,714 $ 71,918 $ (288,244) $ 280,149
=========== =========== =========== =========== ===========
Net income (loss) per common share (n) $ 0.02 $ 0.12
=========== ===========
Weighted average number of common shares
outstanding (n) 2,245,742 2,418,973
=========== ===========
</TABLE>
See notes to the unaudited pro forma condensed consolidated financial
statements.
F-12
<PAGE>
BLACK WARRIOR WIRELINE CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
The unaudited pro forma condensed consolidated statement of operations for the
year ended December 31, 1996 gives effect to the consolidated results of
operations for the year ended December 31, 1996, as if the acquisition of Petro
- - Log, PWS, Dyna Jet, and the issuance of debt occurred on January 1, 1996. The
unaudited pro forma condensed consolidated statement of operations for the six
months ended June 30, 1997 gives effect to the consolidated results of
operations for the six months ended June 30, 1997, as if the acquisition of
Petro - Log, PWS, and the issuance of debt occurred on January 1, 1997. These
results are not necessarily indicative of the consolidated results of operations
of the Company as they may be in the future, or as they might have been had
these events been effective at January 1, 1996 and 1997, respectively. The
unaudited pro forma condensed consolidated financial statements should be read
in conjunction with the historical financial statements of the Company, Petro -
Log, and Dyna Jet and the related notes thereto.
PRO FORMA ADJUSTMENTS FOR THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1996 ARE AS FOLLOWS:
(a) Represents the condensed consolidated results of operations of the Company
for the year ended December 31, 1996.
(b) Represents the condensed results of operations of Dyna Jet for the period
January 1, 1996 to November 20, 1996, the acquisition date by the Company.
(c) Represents the condensed results of operations of Petro - Log for the year
ended March 31, 1997. Petro-Log was acquired by the Company on June 9,
1997.
(d) Represents the condensed results of operation of PWS, Inc. for the year
ended December 31, 1996. PWS was acquired by the Company on June 9, 1997.
(e) Represents the net increase in depreciation expense ($378,937) and the
increase to amortization ($83,500) of the cost over fair value of net
assets acquired over ten years as a result of the preliminary purchase
price allocation. Depreciation expense of ($43,188) was also reduced to
reflect the distribution of certain assets to the former stockholders of
Petro - Log and Dyna Jet.
(f) Reflects the increase in interest costs ($500,000) resulting from
additional debt of $5,000,000 with effective interest at 10% associated
with the financing of Petro - Log and PWS and the reduction to interest
costs ($955) on a note payable to the former stockholder of Dyna Jet.
(g) Reflects applicable income tax effects of adjustments.
F-13
<PAGE>
BLACK WARRIOR WIRELINE CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS, CONTINUED
(h) Pro forma weighted average number of common shares outstanding reflects the
increase to common stock equivalents using the treasury stock method for
666,000 warrants issued on June 9, 1997 in connection with the issuance of
debt. The proceeds of this debt were used to, among other things, purchase
Petro - Log and PWS. The pro-forma weighted average also reflects 600,000
additional shares issued on October 25, 1996. The proceeds of this offering
were used to, among other things, purchase Dyna Jet. The pro-forma weighted
average also reflects 133,333 shares of common stock issued to the former
owners of PWS in connection with its acquisition.
PRO FORMA ADJUSTMENTS FOR THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1997 ARE AS FOLLOWS:
(i) Represents the condensed consolidated results of operations of the Company
for the six months ended June 30, 1997.
(j) Represents the condensed results of operations of Petro - Log for the six
months ended March 31, 1997.
(k) Represents the condensed results of operations of PWS for the six months
ended March 31, 1997.
(l) Represents the increase in depreciation expense ($139,207) and the increase
to amortization ($30,535) of the cost over fair value of net assets
acquired over ten years. Depreciation expense ($14,469) was also reduced to
reflect the distribution of certain assets to the former stockholders of
Petro Log as a result of preliminary purchase price allocation.
(m) Reflects the increase in interest costs ($250,000) resulting from
additional debt of $5,000,000 with effective interest at 10% associated
with the financing of Petro - Log and PWS.
(n) Pro forma weighted average number of common shares outstanding reflects the
increase to common stock equivalents using the treasury stock method for
666,000 warrants issued on June 5, 1997 in connection with the issuance of
debt. The proceeds of this debt were used to, among other things, purchase
Petro - Log and PWS. The pro-forma weighted average also reflects 133,333
shares of common stock issued to the former owners of PWS in connection
with its acquisition.
F-14
