<PAGE>
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)
<PAGE>
Part I - Financial Information
Flotek Industries Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
May 31, February 28,
ASSETS 1999 1999
------------ ------------
<S> <C> <C>
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
============ ============
</TABLE>
The accompanying notes are an integral part of these statements and should be
read in conjunction herewith.
2
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Flotek Industries Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
Periods ended May 31,
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
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
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements and
should be read in conjunction herewith.
3
<PAGE>
Flotek Industries Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months
Ended May 31,
1999 1998
--------- ---------
<S> <C> <C>
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 - -
</TABLE>
The accompanying notes are an integral part of these financial statements and
should be read in conjunction herewith.
4
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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.
<TABLE>
<CAPTION>
Three Months Ended
May 31,
1999 1998
-------- --------
<S> <C> <C>
Comprehensive income:
Net Loss $186,147 $174,190
Cumulative translation adjustment (45,666) 5,145
-------- --------
Total comprehensive loss $140,481 $179,335
======== ========
</TABLE>
5
<PAGE>
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:
<TABLE>
<CAPTION>
1999 Drilling Production
Products Equipment Corporate Total
--------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C>
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)
<CAPTION>
1998 Drilling Production
Products Equipment Corporate Total
-------------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
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)
</TABLE>
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
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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
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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:
<TABLE>
<CAPTION>
May 31,
1999 1998
-------- --------
<S> <C> <C>
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
</TABLE>
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
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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
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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
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. 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
<PAGE>
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
<PAGE>
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
<PAGE>
* 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
<PAGE>
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
<PAGE>
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
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-28-2000
<PERIOD-START> MAR-01-1999
<PERIOD-END> MAY-31-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 290,302
<ALLOWANCES> 54,431
<INVENTORY> 766,767
<CURRENT-ASSETS> 1,314,545
<PP&E> 108,977
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,314,545
<CURRENT-LIABILITIES> 1,639,739
<BONDS> 0
0
0
<COMMON> 18,134,295
<OTHER-SE> 18,468,585
<TOTAL-LIABILITY-AND-EQUITY> 1,314,545
<SALES> 304,653
<TOTAL-REVENUES> 304,653
<CGS> 186,771
<TOTAL-COSTS> 544,752
<OTHER-EXPENSES> 53,952
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 33,404
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (186,147)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (186,147)
<EPS-BASIC> (.004)
<EPS-DILUTED> .004
</TABLE>
