Aly Energy Services Inc. (“Aly Operating”) was incorporated in Delaware on July 17, 2012, for the purpose of creating an oilfield manufacturing, distribution and services company that serves exploration and production companies from well planning to plug and abandonment.
On October 26, 2012, Aly Operating acquired all of the stock of Austin Chalk Petroleum Services Corp. (“Austin Chalk” or “Predecessor”). Austin Chalk provides surface rental equipment as well as roustabout services which include the rig-up and rig-down of equipment and the hauling of equipment to and from the customer's location.
On May 14, 2013, Aly Operating and Preferred Voice, Inc. (“Preferred Voice”) entered into a Share Exchange Agreement (the “Exchange Agreement”), pursuant to which the holders of common stock of Aly Operating surrendered all of their shares in exchange for approximately 68 million newly issued shares of common stock of Preferred Voice (the “Share Exchange”), representing approximately 92% of the outstanding common stock of Preferred Voice after giving effect to the Share Exchange. Shares were exchanged at the ratio of 19.91 shares of Preferred Voice common stock for each one share of Aly Operating common stock.
Immediately after the execution and delivery of the Exchange Agreement, Preferred Voice amended its certificate of incorporation to change the name of Preferred Voice to Aly Energy Services, Inc. (“Aly Energy” or the “Company”) and Aly Operating amended its certificate of incorporation to change the name of Aly Energy Services Inc. to Aly Operating, Inc.
For financial accounting purposes, this acquisition (referred to as the “Merger”) was a reverse acquisition of Preferred Voice by Aly Operating under the acquisition method of accounting and was treated as a recapitalization with Aly Operating as the accounting acquirer. Accordingly, the consolidated financial statements have been prepared to give retroactive effect of the Merger completed on May 14, 2013 and represent the operations of Aly Operating.
Aly Operating is a wholly-owned subsidiary of Aly Energy and Aly Operating has one wholly-owned subsidiary, Austin Chalk.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Principles of Consolidation
: The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the accounts of Aly Energy and its Subsidiaries on the consolidated balance sheets as of December 31, 2013 and 2012 and
the related consolidated statements of operations, stockholders’ equity, and cash flows for the year ended December 31, 2013 and for the period from inception (July 17, 2012) through December 31, 2012 and of the Predecessor period (January 1, 2012 through October 26, 2012).
All significant intercompany transactions and account balances have been eliminated upon consolidation.
Revenue Recognition
: The Company generates revenues from renting equipment at per-day rates and from providing equipment transportation and rig-up/rig-down services at flat rates per job or at an hourly rate. Revenue is recognized when it is realized or realizable and earned.
Cash and Cash Equivalents:
For purposes of the consolidated statement of cash flows, cash is defined as cash on-hand and balances in bank accounts. The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents.
Accounts Receivable, Unbilled Receivables and Allowance for Doubtful Accounts
: Accounts receivable and unbilled receivables are stated at the amount which has been or will be billed to customers. Once billed, customer payments are typically due within 30 days. The Company provides an allowance for doubtful accounts which is based upon a review of outstanding receivables, historical collection information and existing economic conditions. Provisions for doubtful accounts are recorded when it is deemed probable that the customer will not make the required payments. At December 31, 2013 and 2012, the allowance for doubtful accounts was approximately $90,000 and $13,000, respectively.
Property, Plant and Equipment
: Property, plant and equipment are recorded at cost less accumulated depreciation. Maintenance and repairs, which do not improve or extend the life of the related assets, are charged to expense when incurred. Refurbishments and renewals are capitalized when the value of the equipment is enhanced for an extended period. When property and equipment are sold or otherwise disposed of, the asset account and related accumulated depreciation account are relieved, and any gain or loss is included in operating income.
The cost of property and equipment currently in service is depreciated, on a straight-line basis, over the estimated useful lives of the related assets, which range from one to 12 years. A residual value of 20% is used for asset types deemed to have a minimum salvage value, normally these assets contain a large amount of iron in their construction. Major classifications of property, plant and equipment and their respective useful lives are as follows (in thousands):
|
Estimated
Useful Lives
|
|
December 31,
2013
|
|
|
December 31,
2012
|
|
|
|
|
|
|
|
|
|
Machinery and Equipment
|
1-12 years
|
|
$
|
23,322
|
|
|
$
|
13,680
|
|
Office Furniture, Fixtures and Equipment
|
3-7 years
|
|
|
93
|
|
|
|
15
|
|
|
Remaining Term
|
|
|
|
|
|
|
|
|
Leasehold Improvements
|
of Lease
|
|
|
48
|
|
|
|
9
|
|
|
|
|
|
23,463
|
|
|
|
13,704
|
|
Less: Accumulated Depreciation
|
|
|
|
(2,185
|
)
|
|
|
(327
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,278
|
|
|
|
13,377
|
|
Assets Not Yet Placed In Service
|
|
|
|
145
|
|
|
|
79
|
|
|
|
|
|
|
|
|
|
|
|
Property, Plant and Equipment, Net
|
|
|
$
|
21,423
|
|
|
$
|
13,456
|
|
Depreciation expense for the year ended December 31, 2013, for the period from inception (July 17, 2012) through December 31, 2012, and for the Predecessor period (January 1, 2012 through October 26, 2012) was approximately $1.9 million, $0.3 million, and $0.8 million, respectively.
Intangible Assets
: Intangible assets consist of the following (in thousands):
|
Estimated
Useful Lives
|
|
December 31,
2013
|
|
|
December 31,
2012
|
|
|
|
|
|
|
|
|
|
Customer Relationships
|
10 years
|
|
$
|
3,141
|
|
|
$
|
3,141
|
|
Trade Name
|
10 years
|
|
|
1,098
|
|
|
|
1,098
|
|
Non-Compete
|
5 years
|
|
|
491
|
|
|
|
491
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,730
|
|
|
|
4,730
|
|
Less: Accumulated Amortization
|
|
|
|
(609
|
)
|
|
|
(87
|
)
|
|
|
|
|
|
|
|
|
|
|
Intangible Assets, Net
|
|
|
$
|
4,121
|
|
|
$
|
4,643
|
|
Total amortization expense for the year ended December 31, 2013, for the period from inception (July 17, 2012) through December 31, 2012, and for the Predecessor period (January 1, 2012 through October 26, 2012) was approximately $0.5 million, $87,000, and no amortization expense, respectively.
Estimated amortization expense for the next five years and thereafter is as follows (in thousands):
Year Ending December 31,
|
|
|
|
|
|
|
|
2014
|
|
$
|
522
|
|
2015
|
|
|
522
|
|
2016
|
|
|
522
|
|
2017
|
|
|
506
|
|
2018
|
|
|
424
|
|
Thereafter
|
|
|
1,625
|
|
|
|
$
|
4,121
|
|
Impairment of Long-Lived Assets
: Long-lived assets, which include property, plant and equipment and intangible assets with finite lives, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recorded in the period in which it is determined that the carrying amount is not recoverable. The determination of recoverability is made based upon the estimated undiscounted future net cash flows, excluding interest expense. The impairment loss is determined by comparing the fair value with the carrying value of the related assets. For the year ended December 31, 2013, for the period from inception (July 17, 2012) through December 31, 2012, and for the Predecessor period (January 1, 2012 through October 26, 2012) no impairment loss was deemed necessary.
Goodwill:
The carrying amount of goodwill is tested annually for impairment in the fourth quarter and whenever events or circumstances indicate its carrying value may not be recoverable. Impairment testing is conducted for Aly Energy on a consolidated basis because we have only one reporting unit.
Our detailed impairment testing involves comparing the fair value of the Company to its carrying value, including goodwill. Fair value reflects the price a market participant would be willing to pay in a potential sale of the Company. If the fair value exceeds carrying value, then it is concluded that no goodwill impairment has occurred. If the carrying value of the Company exceeds its fair value, a second step is required to measure possible goodwill impairment loss. The second step includes hypothetically valuing the tangible and intangible assets and liabilities of the Company as if the Company had been acquired in a business combination. Then, the implied fair value of the Company’s goodwill is compared to the carrying value of that goodwill. If the carrying value of the Company’s goodwill exceeds the implied fair value of the goodwill, we recognize an impairment loss in an amount equal to the excess, not to exceed the carrying value.
Our detailed impairment analysis involves the use of discounted cash flow models. Significant management judgment is necessary to evaluate the impact of operating and macroeconomic changes on Aly Energy. Critical assumptions include projected revenue growth, gross profit rates, selling, general and administrative expenses, working capital fluctuations, capital expenditures, discount rates and terminal growth rates. We determine discount rates using the capital asset pricing model.
Judgment is used in assessing whether goodwill should be tested for impairment more frequently than annually. Factors such as unexpected adverse economic conditions, competition, market changes and other external events may require more frequent assessments. The annual goodwill impairment testing has been completed for the Company during the fourth quarter and as the fair value of the Company was in excess of its carrying value, it has been determined that our $8.8 million of goodwill is not impaired.
Deferred Loan Costs
: Costs incurred to obtain financing are capitalized and amortized on a straight-line basis over the term of the loan, which approximates the effective interest method. These costs are classified within interest expense on the accompanying consolidated statements of operations and are approximately $0.2 million, $22,000, and no deferred loan costs for the year ended December 31, 2013, for the period from inception (July 17, 2012) through December 31, 2012, and for the Predecessor period (January 1, 2012 through October 26, 2012), respectively.
Estimated future amortization expense relating to deferred loan costs is as follows:
Year Ending December 31,
|
|
|
|
|
|
|
|
2014
|
|
$
|
182
|
|
2015
|
|
|
182
|
|
2016
|
|
|
151
|
|
|
|
$
|
515
|
|
Accumulated amortization was approximately $0.2 million and $22,000 as of December 31, 2013 and 2012, respectively.
Income Taxes
: The Company accounts for income taxes utilizing the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized as income or expense in the period that includes the enactment date.
The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. In assessing the likelihood and extent that deferred tax assets will be realized, consideration is given to projected future taxable income and tax planning strategies. A valuation allowance is recorded when, in the opinion of management, it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized.
The Company recognizes the financial statement effects of a tax position when it is more-likely-than-not, based on the technical merits, that the position will be sustained upon examination. A tax position that meets the more-likely-than-not recognition threshold is measured as the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement with a taxing authority. Previously recognized tax positions are reversed in the first period in which it is no longer more-likely-than-not that the tax position would be sustained upon examination.
Income tax related interest and penalties, if applicable, are recorded as a component of the provision for income tax expense. However, there were no amounts recognized relating to interest and penalties in the consolidated statements of operations for the year ended December 31, 2013, the period from inception (July 17, 2012) through December 31, 2012, and for the Predecessor period (January 1, 2012 through October 26, 2012), respectively. The Company had no uncertain tax positions as of December 31, 2013.
Use of Estimates
: The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Reclassifications.
Certain reclassifications have been made to prior period consolidated financial statements to conform to current period presentations. These reclassifications had no effect on the consolidated financial position, results of operations or cash flows of the Company.
Recent Accounting Pronouncements:
None.
NOTE 3 - BUSINESS COMBINATION
On October 26, 2012, Aly Operating acquired all of the stock of Austin Chalk for a total purchase price of $22.5 million. Total consideration included $17.9 million cash (net of cash acquired of approximately $58,000), a payable of $0.8 million and the issuance of 4.0 million shares of preferred stock at Aly Operating, $0.01 par value, at fair value of $3.8 million. The business combination resulted in a change in control and was accounted for using the acquisition method of accounting. As a result, at the date of the acquisition the purchase price was allocated to the net assets acquired based upon their estimated value, as follows (in thousands):
Current Assets
|
|
$
|
3,672
|
|
Property and Equipment
|
|
|
13,373
|
|
Goodwill
|
|
|
8,834
|
|
Other Intangible Assets
|
|
|
4,730
|
|
|
|
|
|
|
Total Assets Acquired
|
|
|
30,609
|
|
|
|
|
|
|
Current Liabilities
|
|
|
1,649
|
|
Deferred Tax Liabilities
|
|
|
6,449
|
|
|
|
|
|
|
Total Liabilities Assumed
|
|
|
8,098
|
|
|
|
|
|
|
Net Assets Aquired
|
|
$
|
22,511
|
|
Other intangible assets have a total value of $4.7 million with a weighted average amortization period of 9 years. Other intangible assets consist of customer relationships of $3.1 million, amortizable over 10 years, trade name of $1.1 million, amortizable over 10 years, and a non-compete agreement of $0.5 million, amortizable over 5 years. The amount allocated to goodwill represents the excess of the purchase price over the fair value of the identifiable net assets acquired.
NOTE 4 - LONG-TERM DEBT
Long-term debt consists of the following (in thousands):
|
|
December 31,
2013
|
|
|
December 31,
2012
|
|
|
|
|
|
|
|
|
Term Loan
|
|
$
|
6,188
|
|
|
$
|
8,250
|
|
Delayed Draw Term Loan
|
|
|
4,375
|
|
|
|
-
|
|
Revolving Credit Facility
|
|
|
-
|
|
|
|
-
|
|
Capital Leases
|
|
|
850
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,413
|
|
|
|
8,250
|
|
Less: Current Portion
|
|
|
(2,881
|
)
|
|
|
(2,062
|
)
|
Long-Term Debt, Net of Current Portion
|
|
$
|
8,532
|
|
|
$
|
6,188
|
|
Credit Facility: Term Loan, Delayed Draw Term Loan, and Revolving Credit Facility
On October 26, 2012, simultaneous with the acquisition of Austin Chalk, we entered into a credit agreement and obtained debt financing of $8.3 million (before deferred loan costs of $0.5 million). The credit facility includes an $8.3 million term loan facility with a maturity date of October 26, 2016 and a revolving credit facility up to the lesser of (i) the borrowing base and (ii) $5.0 million with a maturity date of October 26, 2016. The borrowing base is determined monthly based on our inventory and receivables.
On April 19, 2013, we entered into Amendment No.1 to the credit agreement in order to, among other things, provide for a $5.0 million delayed draw term loan to be added to the credit facility for the purpose of financing capital expenditures. We were permitted to draw on the delayed draw term loan from time to time up until December 31, 2013 in order to fund up to 80% of the cost of capital expenditures subject to a $5.0 million limit on aggregate borrowings.
The obligations under the agreement are guaranteed by Austin Chalk and secured by substantially all of our assets and the assets of Austin Chalk. The credit agreement contains customary events of default and covenants including restrictions on our ability, and the ability of Austin Chalk, to incur additional indebtedness, make capital expenditures, pay dividends or make other distributions, grant liens and sell assets.
On December 30, 2013, we entered into Amendment No.3 to our credit agreement which modified certain of the financial covenants set forth in the original credit agreement. The revised financial covenants include requirements to maintain (i) a consolidated funded debt to EBITDA ratio of not more than 3.00 to 1.00 for any fiscal quarter ending on or prior to March 31, 2014, 2.75 to 1.00 for the fiscal quarter ended June 30, 2014, and 2.50 to 1.00 for any fiscal quarter ended on or after September 30, 2014 and (ii) a fixed charge coverage ratio of not less than 1.5 to 1.0. The amendment also modified our permitted capital expenditure basket for capital expenditures not funded by debt or equity from $6.0 million to $3.0 million. As of December 31, 2013, we were in compliance with all financial covenants and we had received a waiver of the requirement to submit consolidated financial statements to our lender within 90 days of December 31, 2013.
Borrowings under the credit facility bear interest, at our option, at the base rate or LIBOR. The annual interest rate on each base rate borrowing is (i) the greatest of Wells Fargo’s Prime Rate, the Federal Funds Rate plus 0.5% and the one-month LIBOR rate on such day plus 1.00%, plus (ii) a margin between 2.50% and 3.50% (depending on the then-current leverage ratio). The interest rate on each LIBOR loan will be the LIBOR rate for the applicable interest period plus a margin between 3.50% and 4.50% (depending on the then-current leverage ratio). For the year ended December 31, 2013, interest rates on our borrowings under the credit facility ranged from 3.67% to 4.05% and, for the period from inception (July 17, 2012) through December 31, 2012, the interest rate on our borrowings under the credit facility was 4.05%.
Borrowings under the term loan facility are repayable quarterly in an amount of $0.4 million with a balloon payment of the remaining outstanding borrowings on October 26, 2016.
Beginning with the fiscal quarter ended March 31, 2014, borrowings under the delayed draw term facility will be payable quarterly in an amount of $0.3 million with a balloon payment of the remaining outstanding borrowings on October 26, 2016.
At December 31, 2013, there was $6.2 million of outstanding borrowings under the term loan, $4.4 million of outstanding borrowings under the delayed draw term loan facility, and no borrowings under the revolving credit facility. As of December 31, 2013, we had a borrowing base of $2.7 million under the revolving credit facility that could be borrowed against if necessary.
Future maturities of long-term debt as of December 31, 2013 are as follows (in thousands):
Year Ending December 31,
|
|
|
|
|
|
|
|
2014
|
|
$
|
2,744
|
|
2015
|
|
|
2,744
|
|
2016
|
|
|
5,075
|
|
|
|
$
|
10,563
|
|
Capital Leases
On each of July 18, 2013, August 6, 2013 and August 16, 2013, the Company entered into a financial lease agreement with Wells Fargo Equipment Finance, Inc. (“WFEFI”) for a total of five winch trucks with the intent to purchase the trucks at the end of the term. The cost of the equipment under the capital leases, in the amount of approximately $910,000, is included in the consolidated balance sheets as property, plant and equipment. Accumulated depreciation of the leased equipment at December 31, 2013 was approximately $61,000. The lease terms are 60 months with cumulative equal monthly installments of approximately $14,000. The basic rent or sum of all rental payments due during the term of the leases is approximately $0.8 million, including interest of approximately $0.1 million. The implicit interest rates on the leases range from 3.72% to 3.79%. The end of term lease provisions are structured as a Terminal Rental Adjustment Clause (“TRAC”). At the expiration of the lease terms, the equipment will be sold to either the Company or a third party. The proceeds of the sale shall be retained by WFEFI until it has recovered 20% of the original equipment cost plus all costs and expenses and unpaid amounts owed by the Company (“Lessor’s Balance”). If the net proceeds are less than the Lessor’s Balance, the Company will be responsible for the shortfall as a terminal rent adjustment. If the net proceeds exceed the Lessor’s Balance, the Company shall receive such excess as an adjustment to rent.
Payments under capital leases for the next five years are as follows (in thousands):
Year Ending December 31,
|
|
|
|
|
|
|
|
2014
|
|
$
|
167
|
|
2015
|
|
|
167
|
|
2016
|
|
|
167
|
|
2017
|
|
|
167
|
|
2018
|
|
|
273
|
|
|
|
|
|
|
Total Payments
|
|
|
941
|
|
Less: Amount Representing Interest
|
|
|
(91
|
)
|
|
|
|
|
|
Present Value of Minimum Lease Payments
|
|
|
850
|
|
Less: Current Portion of Capital Leases
|
|
|
(137
|
)
|
Long-Term Capital Lease Obligations, Net of Current Portion
|
|
$
|
713
|
|
NOTE 5 - SIGNIFICANT CUSTOMERS
During the year ended December 31, 2013, a substantial portion of the Company’s revenues was derived from two customers with revenues totaling approximately $8.8 million or 48.1% of total revenues. Amounts from these customers included in accounts receivable and unbilled receivables on the balance sheet at December 31, 2013 are approximately $1.4 million.
For the period from inception (July 17, 2012) through December 31, 2012, a substantial portion of the Company’s revenues was derived from two customers with revenues totaling approximately $2.5 million or 71.2% of total revenues. Amounts from these customers included in accounts receivable on the balance sheet at December 31, 2012 are approximately $3.3 million.
For the Predecessor period (January 1, 2012 through October 26, 2012), a substantial portion of the Company’s revenues was derived from two customers with revenues totaling approximately $8.6 million or 68.8% of total revenues.
NOTE 6 - COMMITMENTS AND CONTINGENCIES
Litigation
The Company is subject to certain claims arising in the ordinary course of business. Management does not believe that any claims will have a material adverse effect on the Company’s consolidated financial position or results of operations.
Operating Leases
The Company leases certain property and equipment under non-cancelable operating leases. The term of the operating leases generally range from one to five years.
Lease expense under all operating leases totaled approximately $136,000, $72,000, and $66,000 for the year ended December 31, 2013, for the period from inception (July 17, 2012) through December 31, 2012, and for the Predecessor period (January 1, 2012 through October 26, 2012), respectively. As of December 31, 2013, the future minimum lease payments under non-cancelable operating leases were as follows (in thousands):
Year Ending December 31,
|
|
|
|
|
|
|
|
2014
|
|
$
|
156
|
|
2015
|
|
|
82
|
|
2016
|
|
|
48
|
|
2017
|
|
|
34
|
|
2018
|
|
|
17
|
|
Total
|
|
$
|
337
|
|
NOTE 7 -
RELATED PARTY TRANSACTIONS
Rent expense paid to an affiliate was approximately $57,000, $8,000, and $40,000 for the year ended December 31, 2013, the period from inception (July 17, 2012) through December 31, 2012, and for the Predecessor period (January 1, 2012 through October 26, 2012), respectively.
As of December 31, 2012, the Company had a related party payable to the previous owner of Austin Chalk in the amount of approximately $0.8 million. Payment in full was made during the year ended December 31, 2013 and there was no related party payable balance as of December 31, 2013.
NOTE 8 - INCOME TAXES
The tables below reflect results for the year ended December 31, 2013 and the period from inception (July 17, 2012) to December 31, 2012. Prior to the acquisition by Aly Operating on October 26, 2012, Austin Chalk was subject to Texas franchise tax but it was not subject to federal income tax because it operated as an S-corporation.
The provision for income taxes consists of the following (in thousands):
|
|
Year Ended December
31,
2013
|
|
|
Inception
(July 17, 2012)
through
December
31,
2012
|
|
|
|
|
|
|
|
|
Current Provision:
|
|
|
|
|
|
|
Federal
|
|
$
|
(228
|
)
|
|
$
|
304
|
|
State
|
|
|
123
|
|
|
|
25
|
|
|
|
|
|
|
|
|
|
|
Total Current Provision
|
|
|
(105
|
)
|
|
|
329
|
|
|
|
|
|
|
|
|
|
|
Deferred Benefit:
|
|
|
|
|
|
|
|
|
Federal
|
|
|
745
|
|
|
|
(101
|
)
|
Provision for Income Taxes
|
|
$
|
640
|
|
|
$
|
228
|
|
The following table reconciles the statutory tax rates to the Company’s effective tax rate:
|
|
Year Ended December
31,
2013
|
|
|
Inception
(July 17, 2012)
through
December
31,
2012
|
|
|
|
|
|
|
|
|
Federal Statutory Rate
|
|
|
34.00
|
%
|
|
|
34.00
|
%
|
State Taxes, Net of Federal Benefit
|
|
|
6.26
|
%
|
|
|
2.00
|
%
|
Permanent Differences
|
|
|
8.12
|
%
|
|
|
(8.40
|
%)
|
Other
|
|
|
0.81
|
%
|
|
|
0.00
|
%
|
Effective Income Tax Rate
|
|
|
49.19
|
%
|
|
|
27.60
|
%
|
The Company’s deferred tax assets and liabilities consist of the following (in thousands):
|
|
December 31,
2013
|
|
|
December 31,
2012
|
|
|
|
|
|
|
|
|
Deferred Tax Assets:
|
|
|
|
|
|
|
Net Operating Loss
|
|
$
|
111
|
|
|
$
|
-
|
|
Start-Up Costs
|
|
|
20
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Non-Current Deferred Tax Assets
|
|
|
131
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Total Deferred Tax Assets
|
|
|
131
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Deferred Tax Liabilities:
|
|
|
|
|
|
|
|
|
Cash to Accrual Adjustment
|
|
|
194
|
|
|
|
178
|
|
Prepaid Assets
|
|
|
83
|
|
|
|
101
|
|
|
|
|
|
|
|
|
|
|
Current Deferred Tax Liabilities
|
|
|
277
|
|
|
|
279
|
|
|
|
|
|
|
|
|
|
|
Property, Plant and Equipment
|
|
|
5,544
|
|
|
|
5,709
|
|
Intangibles
|
|
|
1,401
|
|
|
|
-
|
|
Cash to Accrual Adjustment
|
|
|
-
|
|
|
|
359
|
|
|
|
|
|
|
|
|
|
|
Non-Current Deferred Tax Liabilities
|
|
|
6,945
|
|
|
|
6,068
|
|
|
|
|
|
|
|
|
|
|
Total Deferred Tax Liabilities
|
|
|
7,222
|
|
|
|
6,347
|
|
|
|
|
|
|
|
|
|
|
Net Deferred Tax Liabilities
|
|
$
|
7,091
|
|
|
$
|
6,347
|
|
The Company has identified its major taxing jurisdictions as the United States of America and Texas. The Company’s U.S. federal income tax returns for the period from inception (July 17, 2012) through December 31, 2012 and for the period from January 1, 2013 through May 14, 2013 remain open to examination under the applicable federal statute of limitations provisions. The Company’s Texas franchise tax returns for the period from inception (July 17, 2012) through December 31, 2012 and for the year ended December 31, 2013 remain open to examination under Texas statute of limitations provisions. None of the Company’s federal or state income tax returns are currently under examination by the Internal Revenue Service (“IRS”) or state authorities.
The Company is subject to the Texas Franchise Tax, which is determined by applying a tax rate to a base that considers both revenues and expenses and therefore has the characteristics of an income tax.
NOTE 9 - PREFERRED STOCK
As part of the acquisition of Austin Chalk, Aly Operating agreed to issue up to 4 million shares of Series A Preferred Stock, with a par value of $0.01, to the seller. The shares were issued in two tranches. The first tranche of 2 million shares was issued on December 31, 2012 and the second tranche of 2 million shares was issued on March 31, 2013.
The Series A Preferred Stock is entitled to a cumulative dividend of 5% per year on its liquidation preference, compounded quarterly. The liquidation preference was $4.0 million on the closing date and will increase by the amount of dividends paid in kind. Aly Operating is not required to pay cash dividends.
The holder of the preferred stock and Aly Operating can, at either’s option, require the other party to redeem the preferred stock for cash on the fourth anniversary of the closing date of the sale or October 26, 2016. However, there is no requirement for either party to redeem the preferred stock.
The preferred stock agreement also provides for conversion into shares of Company common stock or redemption should the Company transact a liquidity event, as defined in the agreement, or if the Company transacts an initial public offering.
The Series A Preferred Stock is classified outside of permanent equity in the Company’s consolidated balance sheet because the settlement provisions provide the holder the option to require Aly Operating to redeem the Series A Preferred Stock at the liquidation price plus any accrued dividends.
The following table describes the changes in temporary equity, currently consisting of Series A Preferred Stock (in thousands, except for shares, and per share amounts):
|
|
Carrying Value of Series A Preferred Stock
|
|
|
Number of Outstanding Series A Preferred Shares
|
|
|
Liquidation Value of Series A Preferred Stock
|
|
|
|
|
|
|
|
|
|
|
|
Inception (July 17, 2012)
|
|
$
|
-
|
|
|
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
|
|
|
1,920
|
|
|
|
2,000,000
|
|
|
|
4,000
|
|
Accrued Dividends
|
|
|
18
|
|
|
|
-
|
|
|
|
36
|
|
Accretion
|
|
|
5
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2012
|
|
|
1,943
|
|
|
|
2,000,000
|
|
|
|
4,036
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
|
|
|
1,943
|
|
|
|
2,000,000
|
|
|
|
-
|
|
Accrued Dividends
|
|
|
209
|
|
|
|
-
|
|
|
|
209
|
|
Accretion
|
|
|
37
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2013
|
|
$
|
4,132
|
|
|
|
4,000,000
|
|
|
$
|
4,245
|
|
NOTE 10 - EARNINGS PER SHARE
Basic earnings per share is based on the weighted average number of shares of common stock (“common shares”) outstanding during the applicable period and excludes shares subject to outstanding stock options and shares of restricted stock. Diluted earnings per share is computed based on the weighted average number of common shares outstanding during the period plus, when their effect is dilutive, incremental shares consisting of shares subject to outstanding stock options and restricted stock as appropriate. A reconciliation of the denominator used in the basic and diluted per share calculations for the year ending December 31, 2013, for the period from inception (July 17, 2012) through December 31, 2012, and for the Predecessor period (January 1, 2012 through October 26, 2012) is as follows:
|
|
|
|
|
Successor
|
|
|
Predecessor
|
|
|
|
Year Ended
December
31,
2013
|
|
|
Inception
(July 17, 2012)
through
December
31,
2012
|
|
|
January 1, 2012
through
October
26, 2012
|
|
|
|
|
|
|
|
|
|
|
|
Denominator for Basic Earnings Per Share
|
|
|
72,129,439
|
|
|
|
32,743,269
|
|
|
|
67,967,763
|
|
Effect of Potentially Dilutive Securities
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Denominator for Diluted Earnings per Share
|
|
|
72,129,439
|
|
|
|
32,743,269
|
|
|
|
67,967,763
|
|
The denominator calculated for the period from inception (July 17, 2012) through December 31, 2012 uses the weighted average number of shares outstanding of Aly Operating for that period and a conversion rate of 19.91 per Aly Operating share to reflect the impact of the subsequent reverse merger.
The denominator calculated for the Predecessor period (January 1, 2012 through October 26, 2012) uses the outstanding shares of Aly Operating as of October 26, 2012, prior to the reverse merger with Preferred Voice, and the conversion rate of 19.91 per Aly Operating share to reflect the impact of the subsequent reverse merger.
The computation of basic and diluted earnings per share excludes 6,769,400 unvested stock options.
NOTE 11 - STOCK-BASED COMPENSATION
Share-Based Payments
The Company issued 199,100 shares of company stock during the year ended December 31, 2013 as part of compensation to an officer of the Company. The Company recognized share-based compensation expense of approximately $76,000 for the year ended December 31, 2013 and no expense for the period from inception (July 17, 2012) through December 31, 2012 and the Predecessor period, respectively.
Stock Options
The Company has a stock-based compensation plan available to grant incentive stock options, non-qualified stock options and restricted stock to employees and non-employee members of the Board of Directors.
The Omnibus Incentive Plan (the “Plan”) was approved by the board of directors on May 2, 2013. A maximum of 6,769,400 shares of common stock may be awarded. As of December 31, 2013, options to purchase 6,769,400 shares of common stock were granted from the Plan, of which 6,769,400 were outstanding.
The option contract term is 10 years and the exercise price is $0.20. The options vest and are exercisable if a “Liquidity Event” occurs and certain conditions are met. A Liquidity Event is defined as an IPO or a change of control, as defined in the plan. Pursuant to the plan, an IPO is defined as an underwritten public offering of shares. If the first Liquidity Event is an IPO, then the options vest and are exercisable immediately if the IPO is effected at $0.40 per share. If the IPO is not effected at $0.40 per share, but the stock price post-IPO reaches $0.40 per share during the six month period immediately following the IPO, then the options vest and are exercisable. If the IPO is not effected at $0.40 per share, but the share price does not reach $0.40 per share prior to the sixth month anniversary of the IPO the options do not vest and expire. If the first Liquidity Event to occur is a change of control, then the options vest if the change of control takes place at a price of $0.40 per share or more. If such change in control occurs at a price less than $0.40 per share, the options do not vest and expire.
The fair value of each option award granted under the Plan is estimated on the date of grant using the Monte Carlo simulation method. The same Monte Carlo simulation method is used to determine the derived service period of five years. In addition, expected volatilities have been based on comparable public company data, with consideration given to the Company’s limited historical data. The Company makes estimates with respect to employee termination and forfeiture rates of the options within the valuation model. The risk-free rate is based on the approximate U.S. Treasury yield rate in effect at the time of grant. For options granted prior to the Company’s acquisition of Preferred Voice, which closed on May 14, 2013, the calculation of the Company’s stock price involved the use of different valuation techniques, including a combination of an income and/or market approach. Determination of the fair value was a matter of judgment and often involved the use of significant estimates and assumptions. The following table presents the assumptions used in determining the fair value of option awards during the period:
Expected Volatility
|
|
|
80.00
|
%
|
Expected Forfeiture Rate
|
|
|
0.00
|
%
|
Risk Free Interest Rate
|
|
|
1.66
|
%
|
Fair Value of Company Stock on May 2, 2013
|
|
$
|
0.171
|
|
At December 31, 2013, there is approximately $494,200 of total unrecognized compensation cost related to non-vested stock option awards. Such amount will be recognized in the future upon occurrence of a Liquidity Event that results in a vesting of the options. No options vested during the year ended December 31, 2013, as no vesting events occurred during the period.
NOTE 12 - STOCKHOLDERS’ EQUITY
On December 27, 2013, we raised $2.4 million in proceeds from completing a private placement of an aggregate of 15,744,997 shares of our common stock at a price of $0.15 per share. A portion of the proceeds were used to pay down the outstanding balance on our revolving credit facility prior to December 31, 2013 and the remainder of the proceeds will be used in 2014 for growth capital expenditures, primarily to meet demand in the Permian Basin.
NOTE 13 - SUBSEQUENT EVENTS
The Company evaluated all activity through the date of the issuance of this Annual Report on Form 10-K, and concluded that no subsequent events have occurred that would require recognition in the consolidated financial statements or disclosures in the notes to the consolidated financial statements.
NOTE 14 - QUARTERLY FINANCIAL DATA (unaudited)
Summarized quarterly financial data for the year ended December 31, 2013, the period from inception (July 17, 2012) through December 31, 2012, and the Predecessor period (January 1, 2012 through October 26, 2012) are presented below (in thousands, except per share amounts):
|
|
Quarters Ended
|
|
|
|
March 31,
2013
|
|
|
June 30,
2013
|
|
|
September 30,
2013
|
|
|
December 31,
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
4,397
|
|
|
$
|
4,793
|
|
|
$
|
4,372
|
|
|
$
|
4,856
|
|
Operating Income
|
|
|
641
|
|
|
|
348
|
|
|
|
390
|
|
|
|
550
|
|
Net Income Before Income Taxes
|
|
|
522
|
|
|
|
202
|
|
|
|
208
|
|
|
|
368
|
|
Net Income
|
|
|
397
|
|
|
|
51
|
|
|
|
101
|
|
|
|
111
|
|
Net Income/(Loss) Available to Common Stockholders
|
|
|
338
|
|
|
|
(10
|
)
|
|
|
39
|
|
|
|
47
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income/(Loss) per Common Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.01
|
|
|
$
|
(0.00
|
)
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
Diluted
|
|
$
|
0.01
|
|
|
$
|
(0.00
|
)
|
|
$
|
0.00
|
|
|
$
|
0.00
|
|
|
|
Predecessor
|
|
|
Predecessor
|
|
|
Predecessor
|
|
|
Successor
|
|
|
|
March 31,
2012
|
|
|
Quarter Ended
June 30,
2012
|
|
|
September 30,
2012
|
|
|
December 31,
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
3,009
|
|
|
|
3,649
|
|
|
|
4,354
|
|
|
$
|
4,934
|
|
Operating Income
|
|
|
1,523
|
|
|
|
1,634
|
|
|
|
1,696
|
|
|
|
1,526
|
|
Net Income Before Income Taxes
|
|
|
1,514
|
|
|
|
1,631
|
|
|
|
1,744
|
|
|
|
1,430
|
|
Net Income
|
|
|
1,474
|
|
|
|
1,631
|
|
|
|
1,689
|
|
|
|
1,297
|
|
Net Income Available to Common Stockholders
|
|
|
1,474
|
|
|
|
1,631
|
|
|
|
1,689
|
|
|
|
1,251
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income per Common Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.02
|
|
|
$
|
0.02
|
|
|
$
|
0.02
|
|
|
$
|
0.04
|
|
Diluted
|
|
$
|
0.02
|
|
|
$
|
0.02
|
|
|
$
|
0.02
|
|
|
$
|
0.04
|
|
Item 9. Changes In and Disagreements With Accountants on Accounting and Financial Disclosure.
None.
Item 9A. Controls and Procedures.
Evaluation of disclosure controls and procedures
: The Chief Executive Officer and Chief Financial Officer, of the Company have evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the quarter covered by this Annual Report on Form 10-K. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer of the Company have concluded that the Company’s disclosure controls and procedures as of the end of the year covered by this Annual Report on Form 10-K are effective as defined in Rule 13a-15(e) and Rule 15d-15(e) under the Exchange Act.
Management is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is a process designed under the supervision of its Chief Executive Officer and Chief Financial Officer to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external purposes in accordance with generally accepted accounting principles. As of December 31, 2013, management of the Company conducted an evaluation of the effectiveness of the Company's internal control over financial reporting based on the
Internal Control-Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that evaluation, the Company's management concluded that its internal control over financial reporting was effective as of December 31, 2013.
Changes in Internal Controls over Financial Reporting:
There have been no changes in our system of internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the quarter ended December 31, 2013 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
This Annual Report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting due to an exemption provided by the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) enacted into law in July 2010. The Dodd-Frank Act provides smaller public companies and debt-only issuers with a permanent exemption from the requirement to obtain an external audit on the effectiveness of internal financial reporting controls provided in Section 404(b) of the Sarbanes-Oxley Act. Aly Energy is a smaller reporting company and is eligible for this exemption under the Dodd-Frank Act.
Item 9B. Other Information.
None.
PART III
Item 10. Directors, Executive Officers and Corporate Governance.
The table below sets forth information about our directors and executive officers as of December 31, 2013:
Name
|
|
Age
|
|
Position
|
|
|
|
|
|
Munawar H. Hidayatallah
|
|
69
|
|
Chairman and Chief Executive Officer
|
Mark Patterson
|
|
55
|
|
President and Chief Operating Officer
|
Alya Hidayatallah
|
|
38
|
|
Chief Financial Officer
|
Kurt Chew
|
|
51
|
|
President, Austin Chalk Petroleum Services Corp.
|
Ali H M Afdhal
|
|
69
|
|
Director
|
Kouros Sariri
|
|
58
|
|
Director
|
Saeed M. Sheikh
|
|
77
|
|
Director
|
Nadine C. Smith
|
|
56
|
|
Director
|
Zane Tankel
|
|
74
|
|
Director
|
Munawar H. “Micki” Hidayatallah has served on the board of directors of Aly Operating since it was founded in July 2012 and has served as a director of Aly Energy since the Share Exchange. Mr. Hidayatallah founded Aly Operating in 2012 and has served as its chairman and chief executive officer since such date and also served as its chief financial officer during 2012. From 2001 to 2011, he served as chairman, chief executive officer and a director of Allis-Chalmers Energy Inc. (“Allis-Chalmers”), where he was responsible for the overall management of the company. From 2004 to 2010, Allis-Chalmers’ revenues increased by more than tenfold (from $47.7 million to $659.7 million) and market capitalization increased by over seven times (from $72.2 million to $565.4 million). In February 2011, Archer Ltd. acquired Allis-Chalmers for $1.1 billion. Mr. Hidayatallah began his career at a major conglomerate in Pakistan with holdings in publishing, hotels, progressive manufacturing of automobiles and trading. During that time, Mr. Hidayatallah served as a senior executive and a member of the board of directors. In 1972, Mr. Hidayatallah came to the United States and undertook several successful entrepreneurial ventures through opportunistic purchases in areas such as cement processing, hotel and resorts, vending and cafeteria management and franchising and distribution of dairy products. From 1982 to 1994, he served as president and chief executive officer of Crescott Inc., a holding company with interests in financial services, food processing and franchising, as well as President and Chief Executive Officer of its subsidiary, Beverly Hills Securities Company. In 1994, Mr. Hidayatallah was appointed Executive Vice President of Corporate Development and member of the board of directors of IRI International Corporation (“IRI”) and in 1997 was appointed Chief Financial Officer. IRI was a manufacturer and distributor of oil rigs, workover rigs, fishing tools, top drives and other ancillary products. As Chief Financial Officer, Mr. Hidayatallah oversaw IRI’s initial public offering and listing on the New York Stock Exchange. Mr. Hidayatallah remained in that position until 2000, when National Oilwell Varco, Inc. acquired IRI. In 2000, Mr. Hidayatallah formed OilQuip Rentals, Inc., which acquired Mountain Compressed Air Inc. as a platform acquisition and then merged with Allis-Chalmers in 2001. Mr. Hidayatallah is a qualified chartered accountant and serves as a director and as Chairman of the Audit Committee of Stewart & Stevenson LLC.
Mark C. Patterson has served as our President, Chief Operating Officer and Secretary since the Share Exchange and has served as President and Chief Operating Officer of Aly Operating since its inception. He worked with Mr. Hidayatallah at Allis-Chalmers as the President of the Rental Division and as a member of the Executive Team as Senior Vice President of the Rental Services Segment from 2008 to 2011. He is also a consultant for merger and acquisition opportunities focused in the oilfield services marketplace. During his tenure at Allis-Chalmers, Mr. Patterson directed and managed the complete merger and reorganization of the Rental Services Division. Mr. Patterson was responsible for integrating and expanding Allis-Chalmers’ product fleet and geographical presence in North America, specifically in the Marcellus Shale, and internationally. As a result of his efforts, Allis-Chalmers expanded into new and additional international markets such as Colombia and Brazil. Mr. Patterson also opened a new service facility through a joint venture in the Kingdom of Saudi Arabia, where he served as a member of the board of directors. Additionally, Mr. Patterson was instrumental in facilitating the acquisition of American Well Control by Allis-Chalmers, and the integration of American Well Control into Allis-Chalmers’ Rental Segment. The successful merger and integration of American Well Control marked the first manufacturing company bought by Allis-Chalmers. Mr. Patterson’s 33 years of experience includes sales, business development, division and segment management, mergers, acquisitions, joint venture creation, and consulting, both domestically and internationally
.
Alya H. Hidayatallah became Chief Financial Officer of Aly Operating in January 2013 and has served as our Chief Financial Officer since the Share Exchange. Previously, from 2005 through 2012, she served as Director of Planning and Budgeting at Allis-Chalmers, which was acquired in 2011 and subsequently named Archer. From 2000 until 2004, Ms. Hidayatallah was an investment banker in the Financial Restructuring Group of Houlihan Lokey Howard & Zukin. Ms. Hidayatallah graduated
summa cum laude
with a degree in Business Economics from the University of California at Los Angeles in 1997. Ms. Hidayatallah is Mr. Hidayatallah’s daughter.
Kurt Chew has 35 years of experience in creating companies and servicing the oil & gas industry. He founded Austin Chalk in 2001 and, subsequent to the sale of Austin Chalk to Aly Operating in 2012, he has continued to manage Austin Chalk on a daily basis. In 2005, Mr. Chew co-founded B.E.G. Liquid Mud, LLC, which specialized in pre-mixed liquid drilling mud. Mr. Chew utilized his fabricating experience to design and build the liquid mud plants. B.E.G. Liquid Mud Services was acquired by Omni Energy Services in 2008. Mr. Chew also co-founded Worldwide Deepwater Solutions, LLC in 2009. WDS continues to offer experienced technical support services in project management, drilling and completions operations and asset integrity management services, both internationally and domestically.
Ali H M Afdhal joined the board of directors of Aly Operating in October 2012 and has served as our non-executive Vice Chairman of the Board, a director, and a member of the Audit Committee since the Share Exchange. Since 2001, he has operated and managed his family's international property portfolio and agricultural interests. He also served as a director of Allis-Chalmers from 2006 to 2009. Mr. Afdhal is a graduate of the Institute of Chartered Accountants in England and Wales.
Kouros Sariri joined the board of directors of Aly Operating in October 2012, and has served as our director since the Share Exchange. Mr. Sariri is the founder and CEO of Frequency Management International (“FMI”) Inc. Founded in 2003, FMI is a manufacturer of high reliability & extreme environment electronic components used in advanced electronic system applications. In 2003, Mr. Sariri also founded Chronos Technology (merged with FMI) which serves in a Research and Development capacity, conducting advanced research
for NASA and DOE
in the area of extreme environment electronic solutions and the related manufacturing processes. Innovations envisioned and introduced by Mr. Sariri have been used in commercial satellites and scientific/robotic space missions as well as in numerous oil, gas and geothermal fields worldwide. FMI is a globally recognized brand for the high reliability solutions used successfully in LWD, MWD, wire-line and digital oilfield systems. Mr. Sariri was the Vice President of Engineering and Manufacturing at OE Waves (2001-2002), an optoelectronic technology startup associated with the California Institute of Technology & NASA, specializing in patented optical and RF signal generation used in advanced radar and communications systems. From 1987 to 2000, Mr. Sariri served as the Senior Applications Engineer, Engineering Manager, Executive Vice President and President at Q-Tech Corp., a manufacturer of electronic components. Mr. Sariri holds B.S. and M.S. degrees in Electrical Engineering from the University of California, Los Angeles (UCLA) and an MBA from the Anderson School of Management at UCLA.
Saeed M. Sheikh joined the board of directors of Aly Operating in October 2012 and has served as our director since the Share Exchange. He founded Star Trading & Marine, Inc., a transportation and shipping company, in 1973 and has served as its President since inception.
In October 2013, Mr. Sheikh was appointed to serve as Ambassador at Large for the Government of Pakistan.
In 1991, Mr. Sheikh was appointed to serve as the Honorary Consul General of Pakistan in Baltimore, Maryland. He served in this capacity from 1991 until 1993 and then again from 1997 until 1999. Mr. Sheikh served as Executive Vice President of Crescent Marine Co, Inc. from 1969 until 1973, where he was responsible for all ship chartering functions. In 1969, Mr. Sheikh moved to the United States from Pakistan to serve as a Commercial Officer in the Embassy of Pakistan. Mr. Sheikh graduated from the Halley College of Commerce in Lahore, Pakistan.
Nadine Smith joined the board of directors of Aly Operating in October 2012 and has served as our director since the Share Exchange. Ms. Smith is currently the President and Chairman of La Cortez Energy, Inc., an oil and gas exploration company operating in South America, and has served on its board of directors since February 2008. During her time at La Cortez Energy, she also served as vice president, interim chief financial officer and interim treasurer. Previously Ms. Smith was a management consultant with McKinsey & Company and an investment banker in the Houston office of The First Boston Corporation. Ms. Smith has previously served as a director and on the Audit, Compensation, and Corporate Governance Committees of several public companies including Patterson-UTI Energy Inc., Gran Tierra Energy Inc., American Retirement Corporation (currently Brookdale Senior Living, Inc.), Frac Water Systems, Inc., WaferGen Bio-systems, Inc., and Loreto Resources Corporation. Ms. Smith holds a B.S. in economics from Smith College and an MBA from Yale University.
Zane Tankel has served on the board of directors of Aly Energy since October 2012, and has served as our director since the Share Exchange. Mr. Tankel is the Chairman and CEO of Apple-Metro, Inc., a multi-unit operator of family restaurants in the New York metropolitan area, which he co-founded in 1994. Mr. Tankel was a director of Morton’s Restaurant Group, Inc. from February 2006 until February 2012, and a director of Allis-Chalmers Energy Inc. from February 2007 until February
2011, as well as the Caribbean Restaurant Group, the San Juan, Puerto Rico based owner/operator of Burger King restaurants in and around the Caribbean. Mr. Tankel has served on its board from 2006 to present. Prior to 1994, he served as the founder/president and CEO of Collier Graphics Services (from 1964 to 1990), and founder/partner of a music management company (American Entertainment Management, from 1975 to 1982) and a public relations company (Sage Communications, from 1982 to 1986). Mr. Tankel is a graduate of the University
of Pennsylvania’s Wharton School of Business.
Director Independence
We have six directors serving on our board. Using the definition of independence set forth in the rules of the NYSE Mkt, all of our directors except Mr. Hidayatallah are independent.
Board Committees and Charters
Audit Committee: The members of the Audit Committee are Nadine C. Smith (Chair) and Ali Afdhal. Each of such members is independent in accordance with the independence standards for audit committees under the NYSE Mkt listing rules. Our board of directors has determined that Ms. Smith is an “audit committee financial expert” as defined in the SEC rules. Our board of directors has adopted a written Audit Committee Charter and a copy may be obtained, at no cost, from the Company’s investor relations website (www.alyenergy.com), by writing or by telephoning the Company at: Aly Energy Services, Inc., 3 Riverway, Suite 200, Houston, Texas 77056, 713-333-4000, Attn: Secretary.
Compensation Committee: The Compensation Committee consists of one member, Zane Tankel, who is independent in accordance with the independence standards for compensation committees under the NYSE Mkt listing rules. Our board of directors has adopted a written Compensation Committee Charter and a copy may be obtained, at no cost, from the Company’s investor relations website at (www.alyenergy.com), by writing or by telephoning the Company at: Aly Energy Services, Inc., 3 Riverway, Suite 200, Houston, Texas 77056, 713-333-4000, Attn: Secretary.
Nominating Committee:
Our board of directors has not appointed a Nominating Committee.
Code of Ethics
The Board of Directors has adopted a code of business ethics that applies to its directors, officers and management employees generally. A copy of this code of business ethics may be obtained, at no cost, from the Company’s investor relations website (www.alyenergy.com), by writing or by telephoning the Company at: Aly Energy Services, Inc., 3 Riverway, Suite 200, Houston, Texas 77056, 713-333-4000, Attn: Secretary.
Stockholder Communications
We do not have a formal policy regarding communications with our board of directors; however, stockholders may communicate with the board of directors by writing to us at: Aly Energy Services, Inc. 3 Riverway, Suite 920, Houston, Texas 77056, Attention: Chief Financial Officer. Stockholders who would like their submission directed to a member of the board of directors may so specify and the communication will be forwarded, as appropriate.
We have chosen to combine the Chief Executive Officer and Chairman of the board of directors positions. We believe that this board of directors leadership structure is the most appropriate for us. Because we are a small company, it is more efficient to have the leadership of the board of directors in the same hands as the chief executive officer. The challenges faced by us at this stage – obtaining financing and implementing our business and marketing plan – are most efficiently dealt with by one person who is familiar with both the operational aspects as well as the strategic aspects of our business.
Board Assessment of Risk
Our board of directors oversees our risk management function. Our management intends to keep the board of directors apprised of material risks and provide directors access to all information necessary for them to understand and evaluate how these risks interrelate and how management addresses those risks. If the identified risk poses an actual or potential conflict with management, our independent directors may conduct the assessment. Currently, the primary risks affecting us are our ability to grow our business and manage our expected growth.
Board Diversity
While we do not have a formal policy on diversity, our board of directors considers diversity to include the skill set, background, reputation, type and length of business experience of our board of directors members as well as a particular nominee’s contributions to that mix. Our board of directors believes that diversity brings a variety of ideas, judgments and considerations that benefit our stockholders and us. Although there are many other factors, the board of directors seeks individuals with experience in operating growing businesses.
Item 11. Executive Compensation.
Executive Compensation
Summary Compensation Table
|
|
|
|
Salary
|
|
|
Bonus
|
|
|
All Other Compensation
|
|
Total
|
|
Name and Principal Position
|
|
Year
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Micki Hidayatallah
|
|
2013
|
|
|
396,154
|
|
|
|
–
|
|
|
|
–
|
|
|
|
396,154
|
|
Chairman and Chief Executive Officer (1)
|
|
2012
|
|
|
53,077
|
|
|
|
–
|
|
|
|
–
|
|
|
|
53,077
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark Patterson
|
|
2013
|
|
|
203,077
|
|
|
|
11,000
|
|
|
|
74,897
|
(2
|
)
|
|
288,974
|
|
President and Chief Operating Officer
|
|
2012
|
|
|
31,846
|
|
|
|
–
|
|
|
|
32,243
|
(3
|
)
|
|
64,089
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kurt Chew
|
|
2013
|
|
|
226,000
|
|
|
|
–
|
|
|
|
–
|
|
|
|
226,000
|
|
President, Austin Chalk Petroleum Services, Inc.
|
|
2012
|
|
|
223,461
|
|
|
|
–
|
|
|
|
3,565,325
|
(4
|
)
|
|
3,788,786
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alya Hidayatallah
|
|
2013
|
|
|
200,000
|
|
|
|
–
|
|
|
|
–
|
|
|
|
200,000
|
|
Chief Financial Officer (5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
______________________
(1)
|
Mr. Hidayatallah became Chairman and Chief Executive Officer of Aly Operating in July 2012 and has served as Chairman and Chief Executive Officer of Aly Energy since the Share Exchange.
|
(2)
|
Mr. Patterson received $74,897 in stock compensation, which amounts are reflected in “All Other Compensation” in the table.
|
(3)
|
From July 2012 through October 2012, Mr. Patterson was a consultant to Aly Operating and, in that capacity, received consulting fees, consisting of $26,500 in fees and $5,743 in expense reimbursements, which amounts are reflected in “All Other Compensation” in the table. Mr. Patterson became President and Chief Operating Officer of Aly Operating on October 26, 2012 and has served as President and Chief Operating Officer of Aly Energy since the Share Exchange.
|
(4)
|
Reflects distributions received by Mr. Chew as the sole stockholder of Austin Chalk prior to the acquisition of Austin Chalk by Aly Energy.
|
(5)
|
Ms. Hidayatallah became Chief Financial Officer of Aly Operating in January 2013 and has served as Chief Financial Officer of Aly Energy since the Share Exchange.
|
Executive Employment Agreements
Aly Operating
Each of the Employment Agreements described below was entered into by Aly Operating prior to the Share Exchange. We assumed each agreement effective with the closing of the Share Exchange.
Effective May 2013, Aly Operating entered into an employment agreement with Mr. Hidayatallah to serve as our Chairman and Chief Executive Officer. The term of the agreement expires December 31, 2016. Mr. Hidayatallah is paid a base salary of $420,000 per year and is eligible to receive an annual performance bonus based upon the achievement of pre-established performance milestones. The bonus will range from 80% to 120% of base salary if pre-established performance milestones are met. No bonus will be payable in such periods if we do not achieve at least 90% of the EBITDA (earnings before interest, taxes, depreciation and amortization) forecast approved by the board of directors of Aly Energy for the applicable year. Mr. Hidayatallah also received 50% of the shares allocated to the management team in the equity compensation plan that was adopted in May 2013. The employment agreement restricts Mr. Hidayatallah from competing with us for a two-year period after termination of his employment.
Effective February 2013, Aly Operating entered into an employment agreement with Mr. Patterson to serve as our President and Chief Operating Officer. The term of the agreement expires December 31, 2016. In 2013, Mr. Patterson was paid a base salary of $210,000 per year in 2013 which increased to $250,000 per year effective January 1, 2014. In 2013, Mr. Patterson received 199,100 shares of Aly Energy common stock as additional compensation. Mr. Patterson is eligible to receive an annual performance bonus ranging from 40% to 80% of base salary based upon the achievement of pre-established performance milestones. No bonus will be payable in such periods if we do not achieve at least 90% of the EBITDA forecast approved by the board of directors of Aly Energy for the applicable year. Mr. Patterson received 20% of the shares allocated to the management team in the equity compensation plan that was adopted in May 2013. The employment agreement restricts Mr. Patterson from competing with us for a two-year period after termination of his employment.
Effective February 2013, Aly Energy entered into an employment agreement with Ms. Hidayatallah to serve as our chief financial officer. The term of the agreement expires December 31, 2016. Ms. Hidayatallah is paid a base salary of $200,000 per year and is eligible to receive an annual performance bonus based upon the achievement of pre-established performance milestones. The bonus will range from 40% to 80% of base salary if pre-established performance milestones are met. No bonus will be payable in such periods if we do not achieve at least 90% of the EBITDA forecast approved by the board of directors of Aly Energy for the applicable year. Ms. Hidayatallah received 5% of the shares allocated to the management team in the equity compensation plan that was adopted in May 2013. The employment agreement restricts Ms. Hidayatallah from competing with us for a two-year period after termination of her employment.
Austin Chalk
Effective October 2012, Austin Chalk entered into an employment agreement with Kurt Chew to serve as its President. The term of the agreement expires October 26, 2015. Mr. Chew is paid a base salary of $220,000 per year and is eligible to receive an annual performance bonus of between 40% to 100% of base salary based upon the achievement of goals set by the Compensation Committee of the board of directors. The employment agreement restricts Mr. Chew from competing with us for a two-year period after termination of his employment.
Termination Provisions
Each of Munawar Hidayatallah, Mark Patterson and Alya Hidayatallah will receive 24 months of base salary, and Mr. Chew will receive 12 months of base salary, upon their respective resignation with good reason or dismissal without cause. They will not be entitled to severance payments in connection with a termination of their employment upon death, disability, dismissal without cause, a change of control or the non-renewal of their employment at the board of directors’ discretion.
“Good reason” in the above agreements generally includes the material diminution of the executives’ duties, any material reduction in base salary and the relocation of the geographical location where the executive performs services.
“Cause” in the above agreements means that employee (a) has engaged in gross negligence, gross incompetence or willful misconduct in the performance of employee’s duties with respect to Aly Energy or any of its affiliates, (b) has refused without proper legal reason to perform employee’s duties and responsibilities to Aly Energy or any of its affiliates, (c) has breached any provision of the agreement, (d) has materially breached any provision of any written agreement or corporate policy or code of conduct established by Aly Energy or any of its affiliates (and as amended from time to time), (e) has engaged in conduct that is materially injurious to Aly Energy or any of its affiliates, (f) has disclosed without specific authorization from Aly Energy confidential information of Aly Energy or any of its affiliates that is injurious to any such entity, (g) has committed an act of theft, fraud, embezzlement, misappropriation or breach of a fiduciary duty to Aly Energy or any of its affiliates or (h) has been convicted of (or pleaded no contest to) a crime involving fraud, dishonesty or moral turpitude or any felony.
Director Compensation
During the year ended December 31, 2013, Aly Operating granted stock options to its directors, as provided in “
Adoption of Equity Awards Plan
” below. Aly Operating did not compensate its directors for their service in fiscal 2012.
Related Person Transactions
Stock Purchase of Aly Operating Stock and Share Exchange
On October 26, 2012, Aly Operating sold an aggregate of approximately 3.4 million shares of common stock for a purchase price of $4.00 per share (equivalent to 68 million shares at a purchase price of $0.20 per share after giving effect to the Share Exchange) to obtain the initial funding of Aly Operating to acquire Austin Chalk. The purchasers of such shares included our current directors and executive officers.
On May 14, 2013, Preferred Voice, Aly Operating and the common stockholders of Aly Operating entered into the Exchange Agreement. Shares of Preferred Voice common stock were issued to each of our shareholders, including directors and executive officers, at an exchange ratio of 19.91 shares of Preferred Voice common stock for each one share of Aly Operating common stock. The shares issued included shares issued to our directors and executive officers, including entities with which they are affiliated, in the following amounts:
|
|
Number of Shares of Aly Operating Purchased on 10/26/12
|
|
|
Number of Shares of Preferred Voice After Share Exchange
|
|
Purchaser
|
|
|
|
|
|
|
Micki Hidayatallah
|
|
|
500,000
|
|
|
|
9,955,000
|
|
Zane Tankel
|
|
|
250,000
|
|
|
|
4,977,500
|
|
Kouros Sariri
|
|
|
125,000
|
|
|
|
2,488,750
|
|
Saeed M. Sheikh
|
|
|
106,250
|
|
|
|
2,115,438
|
|
Nadine C. Smith
|
|
|
62,500
|
|
|
|
1,244,375
|
|
Mark Patterson (1)
|
|
NA
|
|
|
|
39,820
|
|
_____________________
(1)
|
Mark Patterson did not purchase Aly Operating shares of common stock on October 26, 2012 but he was issued 4,000 shares and 4,000 shares of Aly Operating common stock in March 2013 and April 2013, respectively, prior to taking the effect of the Share Exchange into account, as compensation. As such, he was issued shares in the Share Exchange.
|
Purchase of Austin Chalk
In October 2012, Aly Energy completed its acquisition of Austin Chalk from Kurt Chew, the president of Austin Chalk, for $22.5 million. The cash portion of the consideration was $18.7 million (net of cash acquired) of which $17.9 million and $0.8 million was paid in cash during the years ended December 31, 2013 and December 31, 2012, respectively. The consideration also included the issuance of $3.8 million of preferred stock of Aly Operating of which $1.9 million and $1.9 million was issued in the years ended December 31, 2013 and December 31, 2012, respectively.
Lease Agreement with Kurt Chew, President of Austin Chalk
Austin Chalk leases certain of its facilities from Kurt Chew LLC, a limited liability company owned by Kurt Chew. Rent paid to Kurt Chew LLC was approximately $48,000 and $12,000 during the years ended December 31, 2013 and December 31, 2012, respectively. The term of the current lease on the property is until December 31, 2014, with rent at a rate of $48,000 per year. Austin Chalk has the option to extend the lease term by an additional three year period.
Private Placement of Common Stock
On December 27, 2013, we completed a private placement of an aggregate of 15,744,997 shares of our common stock at a price of $0.15 per share. The private placement was exempt from registration under the Securities Act of 1933, as amended, pursuant to Section 4(2) and Rule 506 thereunder. The table below indicates the shares purchased by the directors and executive officers, including entities with which they are affiliated, in the private placement:
|
|
Number of Shares Purchased in Private Offering
|
|
Purchaser
|
|
|
|
Kurt Chew
|
|
|
2,666,667
|
|
Micki Hidayatallah
|
|
|
1,565,072
|
|
Zane Tankel
|
|
|
666,666
|
|
Kouros Sariri
|
|
|
401,059
|
|
Saeed M. Sheikh
|
|
|
340,901
|
|
Nadine C. Smith
|
|
|
200,530
|
|
Adoption of Equity Awards Plan
In May 2013, Aly Operating adopted the Aly Energy Services Inc. Omnibus Incentive Plan (the “Plan”) and reserved 6,769,400 shares of common stock under the Plan for grants of awards, including stock options. At the time of adoption of the Plan, all of the shares reserved under the Plan were granted in the form of stock options to various executives and directors of Aly Operating, which converted to stock options of Aly Energy common stock in connection with the Share Exchange, as follows:
|
|
Number of Options Held
|
|
Individual
|
|
|
|
Micki Hidayatallah
|
|
|
3,384,700
|
|
Mark Patterson
|
|
|
1,353,880
|
|
Alya Hidayatallah
|
|
|
796,400
|
|
Nadine C. Smith
|
|
|
398,200
|
|
Ali Afdhal
|
|
|
167,244
|
|
Allen Morton (1)
|
|
|
167,244
|
|
Kouros Sariri
|
|
|
167,244
|
|
Zane Tankel
|
|
|
167,244
|
|
Saeed M. Sheikh
|
|
|
167,244
|
|
___________________
(1)
|
Allen Morton resigned from our Board in December 2013.
|
The stock options have a ten year term and will vest and become exercisable only if (i) a Change in Control (as defined in the Plan) occurs and the per share price of the common stock is at least $0.40 per share (or $8.00 per share prior to the Share Exchange) in the Change in Control or (ii) an Initial Public Offering (as defined in the Plan) occurs and the per share price of the common stock is at least $0.40 per share (or $8.00 per share prior to the Share Exchange) at any time during the six month period following the Initial Public Offering. The exercise price of the stock options is $0.20 per share.
Aly Energy intends to adopt a stock incentive plan providing for approximately 10% of the fully diluted shares of Aly energy to be available for equity awards to employees and directors.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information regarding beneficial ownership of our common stock as of December 31, 2013 by (i) each person or group who is known by us to beneficially own more than 5% of our common stock; (ii) each director; (iii) our president, our chief executive officer and each other executive officer whose cash compensation for the most recent fiscal year exceeded $100,000 and (iv) all such executive officers and directors as a group. Except as indicated in the footnotes to this table, the persons named in the table to our knowledge have sole voting and investment power with respect to all shares of securities shown as beneficially owned by them. Each of our executive officers and directors may be contacted at 3 Riverway, Suite 920, Houston, Texas 77056. The information in this table is based upon 90,042,044 shares of common stock outstanding as of December 31, 2013.
|
|
Common Stock
|
|
Name
|
|
Number of Shares Beneficially Owned
|
|
|
Percent of Class
|
|
|
|
|
|
|
|
|
J. Steven Emerson (1)
|
|
|
17,375,373
|
|
|
|
19.3
|
%
|
Cydas Investments Ltd. (2)
|
|
|
14,449,052
|
|
|
|
16.0
|
%
|
Munawar Hidayatallah (3)
|
|
|
11,520,072
|
|
|
|
12.8
|
%
|
Nezam Afdhal (4)
|
|
|
7,224,256
|
|
|
|
8.0
|
%
|
Armand Neff and Christoph Luthy (5)
|
|
|
6,454,272
|
|
|
|
7.2
|
%
|
Zane Tankel
|
|
|
5,644,166
|
|
|
|
6.3
|
%
|
Kouros Sariri (6)
|
|
|
2,889,809
|
|
|
|
3.2
|
%
|
Kurt Chew
|
|
|
2,666,667
|
|
|
|
3.0
|
%
|
Saeed M. Sheikh
|
|
|
2,456,339
|
|
|
|
2.7
|
%
|
Nadine C. Smith
|
|
|
1,444,905
|
|
|
|
1.6
|
%
|
Mark Patterson
|
|
|
199,100
|
|
|
|
0.2
|
%
|
Ali Afdhal
|
|
|
-
|
|
|
|
0.0
|
%
|
Alya Hidayatallah
|
|
|
-
|
|
|
|
0.0
|
%
|
|
|
|
|
|
|
|
|
|
All 10 directors and officers as a group
|
|
|
26,821,058
|
|
|
|
29.8
|
%
|
____________________
(1)
|
Includes 9,955,000 shares held in Mr. Emerson’s retirement accounts and 3,194,600 shares held by Emerson Partners. Mr. Emerson’s address is c/o TR Winston, 1999 Ave of the Stars #2530, Los Angeles, California 90067.
|
(2)
|
Consists of shares held of record by Cydas Investments Ltd. which is owned equally by Ali Afdhal's daughter (Laily Shirazi) and brother (Muhsin Afdhal). Mr. Ali Afdhal disclaims any beneficial ownership in the shares of common stock owned by Cydas Investments Ltd. The address for Cydas Investments Ltd. is PO Box 437, 13 Castle Street, St. Heller, Jersey, JE4 0ZE, Channel Islands.
|
(3)
|
Consists of 2,565,072 shares held in a trust of which Mr. Hidayatallah is the trustee and the remainder held jointly by Mr. Hidayatallah and his spouse.
|
(4)
|
Ali Afdhal and Nezam Afdhal are brothers. Ali Afdhal disclaims any beneficial ownership in the shares of common stock owned by his brother. Nezam Afdhal’s address is 59 Pier 7, Charlestown, Massachusetts 02129.
|
(5)
|
Held of record by Makini Enterprises S.A., whose address is c/o Prisma International Ltd., Bahnhofstrasse, PO Box 1055, CH-6304 Zug, Switzerland.
|
(6)
|
Consists of 816,589 shares held in Mr. Sariri’s retirement account, 550,591 shares held in Mr. Sariri’s spouse’s retirement account, and the remainder held jointly by Mr. Sariri and his spouse.
|
Item 14. Principal Accountant Fees and Services.
Our independent auditors, UHY LLP, have been the Company’s Independent Registered Public Accounting Firm since 2012. The following table sets forth the fees paid for services provided by UHY LLP:
|
|
|
|
|
Successor
|
|
|
Predecessor
|
|
|
|
Year Ended
December
31,
2013
|
|
|
Inception
(July 17, 2012)
through
December
31,
2012
|
|
|
January 1,
2012
through
October
26,
2012
|
|
|
|
|
|
|
|
|
|
|
|
Audit Fees (1)
|
|
$
|
228,050
|
|
|
$
|
82,236
|
|
|
$
|
-
|
|
Audit-Related Fees (2)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Tax Fees (3)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
_________________
(1)
|
Includes fees paid to UHY LLP for audit and quarterly reviews.
|
(2)
|
Includes fees for services related to accounting and acquisition audit fees.
|
(3)
|
Includes fees for services related to tax compliance, preparation and tax examination assistance.
|
Our Audit Committee established a policy whereby the outside auditors are required to seek pre-approval on an annual basis of all audit services by providing a description of the services to be performed. For the year ended December 31, 2013, all audit services were pre-approved by the Audit Committee, which concluded that the provision of such services by UHY LLP was compatible with the maintenance of that firm’s independence in the conduct of its auditing functions.
PART IV
Item 15. Exhibits.
Exhibit
Number
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|
Exhibit Description
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|
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2.1
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|
Share Exchange Agreement, dated May 14, 2013, by and among Preferred Voice, Inc., Aly Energy Services, Inc. and the stockholders of Aly Energy Services, Inc. (1)
|
2.2
|
|
Stock Purchase Agreement, dated as of September 27, 2012, by and between Aly Energy Services, Inc. and Kurt Chew (1)
|
3.1
|
|
Certificate of Incorporation, filed on August 3, 1992 with the Secretary of State of Delaware (1)
|
3.2
|
|
Certificate of Amendment, filed on May 2, 1994 with the Secretary of State of Delaware (1)
|
3.3
|
|
Certificate of Amendment, filed on March 21, 1995 with the Secretary of State of Delaware (1)
|
3.4
|
|
Certificate of Amendment, filed on July 27, 1995 with the Secretary of State of Delaware (1)
|
3.5
|
|
Certificate of Amendment, filed on March 7, 1997 with the Secretary of State of Delaware (1)
|
3.6
|
|
Certificate of Amendment, filed on April 27, 2007 with the Secretary of State of Delaware (1)
|
3.7
|
|
Certificate of Amendment, filed on May 14, 2013 with the Secretary of State of Delaware (1)
|
3.8
|
|
Bylaws of the Registrant (1)
|
4.1
|
|
Aly Energy Services, Inc. Investor Agreement dated October 26, 2012(1)
|
4.2
|
|
Credit Agreement, dated as of October 26, 2012, by and among Aly Energy Services, Inc., Wells Fargo Bank, National Association and the lenders named therein (2)
|
4.3
|
|
Amendment No. 1 to Credit Agreement, dated as of April 13, 2013 (2)
|
4.4
|
|
Amendment No. 2 and Waiver to Credit Agreement, effective May 14, 2013 (3)
|
4.5
|
|
Amendment No. 3, effective December 30, 2013 (4)
|
10.1
|
|
Employment Agreement, dated February 13, 2013, by and between Aly Energy Services, Inc. and Munawar Hidayatallah (1)
|
10.2
|
|
Employment Agreement, dated February 12, 2013, by and between Aly Energy Services, Inc. and Mark Patterson (1)
|
10.3
|
|
Employment Agreement, dated February 12, 2013, by and between Aly Energy Services, Inc. and Alya Hidayatallah (1)
|
10.4
|
|
Employment Agreement, dated February 12, 2013, by and between Aly Energy Services, Inc. and Kurt Chew (1)
|
10.5
|
|
Amended and Restated Lease Agreement, dated October 25, 2012, by and between Kurt Chew, LLC and Austin Chalk Petroleum Corp.(1)
|
10.6
|
|
Aly Energy Services, Inc. Omnibus Incentive Plan (1)
|
10.7
|
|
Form of Stock Option Agreement under Aly Energy Services, Inc. Omnibus Incentive Plan(1)
|
21
|
|
List of Subsidiaries (1)
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31.1
|
|
31.2
Certification of Chief Executive Officer (4)
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31.2
|
|
Certification of Chief Financial Officer (4)
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32.1
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|
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (4)
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32.2
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|
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (4)
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101.INS **
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XBRL Instance Document
|
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101.SCH **
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XBRL Taxonomy Extension Schema Document
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101.CAL **
|
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XBRL Taxonomy Extension Calculation Linkbase Document
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|
101.DEF **
|
|
XBRL Taxonomy Extension Definition Linkbase Document
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|
101.LAB **
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XBRL Taxonomy Extension Label Linkbase Document
|
|
101.PRE **
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
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