NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 – NATURE OF OPERATIONS
Aly Energy Services, Inc., ("Aly Energy" or "the Company"), together with its subsidiaries, provides oilfield services, including surface equipment rental, solids control services and directional drilling services, to exploration and production companies. Throughout this report, we refer to Aly Energy and its subsidiaries as "we", "our" or "us". We operate in select oil and natural gas basins of the contiguous United States.
NOTE 2 – LIQUIDITY
The industry in which we operate has been negatively impacted by the price of oil and natural gas and, as a result, the drilling rig count has dropped steadily since the end of 2014. Our activity is tied directly to the rig count and, even though we instituted cost cutting measures, we were unable to cut costs enough to match the decline in our business activity and we incurred losses for the year ended December 31, 2015 and for the first three months of 2016. As a result, at March 31, 2016 and at December 31, 2015, we were not in compliance with certain financial covenants set forth in our credit agreement. Therefore, on March 31, 2016, we completed the execution and delivery of a forbearance agreement and amendment to the credit agreement. We amended the forbearance agreement on May 13, 2016 in order to waive our compliance with an additional financial covenant, the fixed charge coverage ratio, for the period ended March 31, 2016.
Among other provisions, the lenders have agreed to forbear from exercising their remedies under the credit agreement until the earlier of July 10, 2016 or the date on which forbearance is terminated due to specified events, including (i) the occurrence of other defaults under the credit agreement, (ii) our failure to hire an independent financial advisor prior to April 10, 2016 or (iii) our failure to present a detailed plan for asset sales or equity capital acceptable to the lenders yielding net cash proceeds to us of at least $2.5 million by May 25, 2016. We hired an independent financial advisor and such advisor commenced the engagement prior to the deadline of April 10, 2016. In conjunction with agreeing to forbear from exercising their remedies under the credit agreement, the lenders reduced the revolving credit portion of the credit facility to zero thereby eliminating our ability to borrow additional funds under the existing credit facility.
We are currently in discussions with various stakeholders and advisors to develop and execute a plan to satisfy the requirements of the forbearance agreement. There can be no assurance that our actions will be deemed sufficient by the lender to extend the forbearance agreement and, if our actions are deemed insufficient, our outstanding debt will become immediately due and payable. If the debt becomes due and payable, we do not have sufficient liquidity to repay all of the outstanding debt to the lender (approximately $20.1 million at March 31, 2016) and we might need to file for protection under Chapter 11 of the U.S. Bankruptcy Code.
These unaudited condensed consolidated financial statements are prepared on a going concern basis of accounting, which contemplates that we will be able to operate in the normal course of business. The concerns around our liquidity raise substantial doubt about our ability to continue to operate as a going concern. These unaudited condensed consolidated financial statements do not include any adjustments that may relate to the going concern uncertainty. We have classified our indebtedness under the credit agreement as a current liability as the forbearance agreement remedies our breach for less than one year.
ALY ENERGY SERVICES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Principles of Consolidation:
Our accompanying condensed consolidated financial statements have not been audited by our independent registered public accounting firm, except the condensed consolidated balance sheet at December 31, 2015 is derived from audited consolidated financial statements. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for fair presentation have been included.
These unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") for interim financial information. Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States of America ("U.S. GAAP") for complete financial statements. Therefore, these unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and notes thereto for the year ended December 31, 2015, which are included in our Annual Report on Form 10-K filed with the SEC on April 15, 2016. The operating results for interim periods are not necessarily indicative of results that may be expected for any other interim period or for the full year.
These unaudited condensed consolidated financial statements include the accounts of Aly Energy and its subsidiaries. All significant inter-company transactions and accounts have been eliminated upon consolidation.
Reverse Stock Split:
On June 19, 2015, the Company effected a 1-for-20 reverse stock split of its common stock ("Reverse Split"), as approved by its Board of Directors and stockholders. All information in this Quarterly Report on Form 10-Q relating to the number of shares, price per share and per share amounts has been retroactively restated to give effect to the Reverse Split.
Property and Equipment
: Major classifications of property and equipment and their respective useful lives are as follows (in thousands):
|
|
March 31,
2016
|
|
|
December 31,
2015
|
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Machinery and Equipment
|
|
$
|
55,707
|
|
|
$
|
55,553
|
|
Vehicles, Trucks & Trailers
|
|
|
4,615
|
|
|
|
5,789
|
|
Office Furniture, Fixtures and Equipment
|
|
|
835
|
|
|
|
835
|
|
Lease hold Improvements
|
|
|
221
|
|
|
|
217
|
|
Buildings
|
|
|
212
|
|
|
|
212
|
|
|
|
|
|
|
|
|
|
|
|
|
|
61,590
|
|
|
|
62,606
|
|
Less: Accumulated Depreciation and Amortization
|
|
|
(9,579
|
)
|
|
|
(9,086
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
52,011
|
|
|
|
53,520
|
|
Assets Not Yet Placed In Service
|
|
|
27
|
|
|
|
202
|
|
|
|
|
|
|
|
|
|
|
Property and Equipment, Net
|
|
$
|
52,038
|
|
|
$
|
53,722
|
|
ALY ENERGY SERVICES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Intangible Assets
: Intangible assets consist of the following (in thousands):
|
|
Customer Relationships
|
|
|
Tradename
|
|
|
Non-Compete
|
|
|
Sales Contract
|
|
|
Supply Agreements
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Useful Lives
|
|
2 - 10 years
|
|
|
4 - 10 years
|
|
|
4 - 5 years
|
|
|
4 years
|
|
|
4 years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of March 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
|
|
$
|
5,441
|
|
|
$
|
2,355
|
|
|
$
|
2,586
|
|
|
$
|
524
|
|
|
$
|
1,686
|
|
|
$
|
12,592
|
|
Accumulated Amortization
|
|
|
(1,618
|
)
|
|
|
(656
|
)
|
|
|
(1,313
|
)
|
|
|
(262
|
)
|
|
|
(825
|
)
|
|
|
(4,674
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Book Value
|
|
$
|
3,823
|
|
|
$
|
1,699
|
|
|
$
|
1,273
|
|
|
$
|
262
|
|
|
$
|
861
|
|
|
$
|
7,918
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
|
|
$
|
5,441
|
|
|
$
|
2,355
|
|
|
$
|
2,586
|
|
|
$
|
524
|
|
|
$
|
1,686
|
|
|
$
|
12,592
|
|
Accumulated Amortization
|
|
|
(1,485
|
)
|
|
|
(592
|
)
|
|
|
(1,157
|
)
|
|
|
(225
|
)
|
|
|
(720
|
)
|
|
|
(4,179
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Book Value
|
|
$
|
3,956
|
|
|
$
|
1,763
|
|
|
$
|
1,429
|
|
|
$
|
299
|
|
|
$
|
966
|
|
|
$
|
8,413
|
|
Fair Value of Financial Instruments
:
As of March 31, 2016 and December 31, 2015, the fair value of our liability for contingent payments based on Level 3 measurements was $1.2 million.
Income Taxes
: There were no amounts recognized relating to interest and penalties in the condensed consolidated statements of operations for the three months ended March 31, 2016 and 2015. We had no uncertain tax positions as of March 31, 2016 or as of December 31, 2015.
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.
ALY ENERGY SERVICES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Recent Accounting Pronouncements:
In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-09,
Revenue from Contracts with Customers
(ASU 2014-09), which supersedes nearly all existing revenue recognition guidance under U.S. GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing U.S. GAAP. In August 2015, the FASB issued ASU 2015-14,
Revenue from Contracts with Customers
which deferred the effective date of ASU 2014-09 for all entities by one year with the standard now effective for annual reporting periods beginning after December 15, 2017, and interim periods within annual periods beginning after December 15, 2018. In April 2016, the FASB issued ASU No. 2016-10,
"Identifying Performance Obligations and Licensing"
which gives further guidance on identifying performance obligations and clarification of the licensing implementation guidance. Early application is permitted to the original effective date of January 1, 2017. Entities are permitted to apply the amendments either retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying the ASU recognized at the date of initial application. We are still evaluating the impact, if any, from this guidance and has not yet selected a method of transition.
In June 2014, the FASB issued Accounting Standards Update No. 2014-12,
Compensation — Stock Compensation (Topic 718), Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (a consensus of the FASB Emerging Issues Task Force)
. The guidance applies to all reporting entities that grant their employees share-based payments in which the terms of the award provide that a performance target that affects vesting could be achieved after the requisite service period. The amendments require that a performance target that affects vesting and that could be achieved after the requisite service period is treated as a performance condition. We adopted this guidance as of January 1, 2016 and the adoption did not have a material impact on our financial position, results of operations or cash flows.
In August 2014, the FASB issued ASU 2014-15,
Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern
, which defines management's responsibility to evaluate whether there is substantial doubt about the company's ability to continue as a going concern and provides guidance on the related footnote disclosure. Management should evaluate whether there are conditions or events that raise substantial doubt about the company's ability to continue as a going concern within one year after the date the annual or interim financial statements are issued. We adopted these provisions in the first quarter of 2016 and the adoption did not have a material impact on our financial position, results of operations or cash flows.
In February 2015, the FASB issued ASU No. 2015-02,
Consolidation (Topic 810): Amendments to the Consolidation Analysis,
which changes the guidance with respect to the analysis that a reporting entity must perform to determine whether it should consolidate certain types of legal entities. Companies have an option of using either a full retrospective or modified retrospective adoption approach.
We adopted these provisions in the first quarter of 2016 and the adoption did not have a material impact on our financial position, results of operations or cash flows.
In April 2015, the FASB issued ASU 2015-03,
Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs.
The amendments in the ASU change the balance sheet presentation requirements for debt issuance costs by requiring them to be presented as a direct reduction to the carrying amount of the related debt liability.
We adopted this guidance as of January 1, 2016 and the adoption did not have a material impact on our financial position, results of operations or cash flows. The adoption did result in a reclassification of deferred debt costs related to long-term debt from an asset to an offset of the related liability.
ALY ENERGY SERVICES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
In August 2015, the FASB issued ASU 2015-15,
Interest - Imputation of Interest: Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements
, which adds comments from the Securities and Exchange Commission (SEC) addressing ASU 2015-03, as discussed above, and debt issuance costs related to line-of-credit arrangements. The SEC commented it would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. We adopted ASU 2015-15 in connection with our adoption of ASU 2015-03 effective January 1, 2016
and the adoption did not have a material impact on our financial position, results of operations or cash flows
.
In March 2016, the FASB issued ASU No. 2016-09,
Compensation - Stock Compensation
which modifies several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for annual reporting periods beginning after December 15, 2016 with early adoption permitted. We are currently evaluating what impact this standard will have on our consolidated financial statements.
Reclassifications:
Reclassifications related to the adoption of ASU 2015-03,
Simplifying the Presentation of Debt Issuance Costs
, have been made to prior period consolidated financial statements to conform to the current period presentations. These reclassifications had no effect on our consolidated financial position, results of operations or cash flows.
NOTE 4 – LONG-TERM DEBT
Long-term debt consists of the following (in thousands):
|
|
March 31,
2016
|
|
|
December 31,
2015
|
|
|
|
(unaudited)
|
|
|
|
|
Credit Facility
|
|
|
|
|
|
|
Term Loan
|
|
$
|
15,573
|
|
|
$
|
15,573
|
|
Delayed Draw Term Loan
|
|
|
4,500
|
|
|
|
4,500
|
|
Subordinated Note Payable
|
|
|
1,500
|
|
|
|
1,500
|
|
Equipment Financing and Capital Leases
|
|
|
2,219
|
|
|
|
2,389
|
|
|
|
|
|
|
|
|
|
|
|
|
|
23,792
|
|
|
|
23,962
|
|
Less: Debt Issuance Cost, Net of Amortization
|
|
|
(306
|
)
|
|
|
(383
|
)
|
Less: Current Portion
|
|
|
(20,783
|
)
|
|
|
(20,765
|
)
|
|
|
|
|
|
|
|
|
|
Long-Term Debt, Net
|
|
$
|
2,703
|
|
|
$
|
2,814
|
|
ALY ENERGY SERVICES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Credit Facility: Term Loan, Delayed Draw Term Loan, and Revolving Credit Facility
On October 13, 2015, we entered into Amendment No. 2 to the existing credit facility ("Amendment") which had an effective date of September 30, 2015. The Amendment modified multiple components of the credit facility including, but not limited to, the terms listed below. The Amendment:
|
(i)
|
defers all further principal payments on outstanding borrowings under the credit facility until March 31, 2017; and
|
|
|
|
|
(ii)
|
reduced the size of the revolving credit facility to $1.0 million.
|
The obligations under the agreement are guaranteed by all of our subsidiaries and secured by substantially all of our assets. The credit agreement contains customary events of default and covenants including restrictions on our ability to incur additional indebtedness, make capital expenditures, pay dividends or make other distributions, grant liens and sell assets.
Due to the significant downturn in the oilfield services industry throughout 2015, at December 31, 2015, we were not in compliance with certain financial covenants set forth in our credit agreement due to our poor financial results. We are not in compliance with such covenants for the first quarter ending March 31, 2016. Therefore, on March 31, 2016 we completed the execution and delivery of a forbearance agreement and amendment to the credit agreement. We amended the forbearance agreement on May 13, 2016 in order to waive our compliance with an additional financial covenant, the fixed charge coverage ratio, for the period ended March 31, 2016.
Among other provisions, the lenders have agreed to forbear from exercising their remedies under the credit agreement until the earlier of July 10, 2016 or the date on which forbearance is terminated due to specified events, including (i) the occurrence of other defaults under the credit agreement, (ii) our failure to hire an independent financial advisor prior to April 10, 2016 or (iii) our failure to present a detailed plan for asset sales or equity capital acceptable to the lenders yielding net cash proceeds to us of at least $2.5 million by May 25, 2016. We hired an independent financial advisor and such advisor commenced the engagement prior to the deadline of April 10, 2016. In conjunction with agreeing to forbear from exercising their remedies under the credit agreement, the lenders reduced the revolving credit portion of the credit facility to zero thereby eliminating our ability to borrow additional funds under the existing credit facility. There were no outstanding borrowings under the revolving credit facility as of March 31, 2016 and December 31, 2015.
We are currently in discussions with various stakeholders and advisors to develop and execute a plan to satisfy the requirements of the forbearance agreement. There can be no assurance that our actions will be deemed sufficient by the lender to extend the forbearance agreement and, if our actions are deemed insufficient, our outstanding debt will become immediately due and payable. Therefore, we have classified our indebtedness under the credit agreement as a current liability.
ALY ENERGY SERVICES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Subordinated Note Payable
On March 18, 2015, the Subordinated Note Payable was amended to extend the final maturity date to June 30, 2017 and to increase the interest rate to 10% per annum. Subsequent to an aggregate principal and interest payment of approximately $0.6 million on March 31, 2015, additional payments of interest and principal are not required until June 30, 2017. Interest and principal payments may be paid in amounts determined by our board of directors on any date or dates prior to June 30, 2017, subject to approval of both our board of directors and our lenders. The Subordinated Note Payable is generally subordinated in right of payment to our indebtedness to its lenders.
Equipment Financing and Capital Leases
We finance the purchase of certain vehicles and equipment using long-term equipment loans and using non-cancelable capital leases. Repayment occurs over the term of the loan or lease, typically three to five years, in equal monthly installments which include principal and interest.
Some of the leases have end of term lease provisions structured as a Terminal Rental Adjustment Clause. At the expiration of the lease terms, the equipment will be sold to either us or a third party. The proceeds of the sale shall be retained by the lender until they have recovered 20% of the original equipment cost plus all costs and expenses and unpaid amounts owed by us ("Lessor's Balance"). If the net proceeds are less than the Lessor's Balance, we will be responsible for the shortfall as a terminal rent adjustment. If the net proceeds exceed the Lessor's Balance, we shall receive such excess as an adjustment to rent.
NOTE 5 – COMMITMENTS AND CONTINGENCIES
Litigation
We are 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 our financial position or results of operations.
On February 3, 2015, multiple plaintiffs filed a proposed collective action against us under the Fair Labor Standards Act, in the Western District of Texas, San Antonio Division. On February 20, 2015, a proposed collective action alleging overtime violations under the Fair Labor Standards Act and Pennsylvania law, in the Southern District of Texas, Houston Division, was amended to include us as a defendant. Both actions were consolidated within the Southern District of Texas, Houston Division. We have settled this matter for business purposes, with no admission of liability. The settlement amount was fully accrued at December 31, 2015 and the case was fully paid and dismissed with prejudice, by the end of January 2016.
Contractual Commitments
We have numerous contractual commitments in the ordinary course of business including debt service requirements and operating leases. We lease land, facilities and equipment from non-affiliates. Certain of these leases extend to 2020.
ALY ENERGY SERVICES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 6 – INCOME TAXES
We recognized an income tax benefit of $1.0 million and $0.6 million for the three months ended March 31, 2016 and 2015, respectively. Effective income tax rates were 33.8% and 29.4% percent for the three months ended March 31, 2016 and 2015, respectively. The effective tax rate is affected by recurring items such as tax rates and income in jurisdictions, which we expect to be fairly consistent in the near term.
We currently project a taxable loss for the year ended December 31, 2016, for federal income tax purposes and in certain state income tax jurisdictions. We have net operating losses that can be carried forward to offset future taxable income. Our net operating loss carryforwards begin to expire in 2033 if not utilized.
NOTE 7 – REDEEMABLE PREFERRED STOCK
Two of our subsidiaries have redeemable preferred stock outstanding as of March 31, 2016. Aly Operating issued redeemable preferred stock in connection with the acquisition of Austin Chalk Petroleum Services Corp ("Aly Operating Redeemable Preferred Stock") and Aly Centrifuge issued redeemable preferred stock in connection with the acquisition of the equity interests of United Centrifuge, LLC ("United") as well as certain assets used in United's business that were owned by related parties of United ("Aly Centrifuge Redeemable Preferred Stock").
The following table describes the changes in Aly Operating Redeemable Preferred Stock (in thousands, except for shares):
|
|
Carrying Value of Aly Operating Redeemable Preferred Stock
|
|
|
Number of Outstanding Aly Operating Redeemable Preferred Shares
|
|
|
Liquidation Value of Aly Operating Redeemable Preferred Stock
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2015
|
|
$
|
4,647
|
|
|
|
4,000,000
|
|
|
$
|
4,685
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued Dividends
|
|
|
58
|
|
|
|
-
|
|
|
|
58
|
|
Accretion
|
|
|
10
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2016
|
|
$
|
4,715
|
|
|
|
4,000,000
|
|
|
$
|
4,743
|
|
ALY ENERGY SERVICES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following table describes the changes in the Aly Centrifuge Redeemable Preferred Stock (in thousands, except for shares, and per share amounts):
|
|
Carrying Value of Aly Centrifuge Redeemable Preferred Stock
|
|
|
Number of Outstanding Aly Centrifuge Redeemable Preferred Shares
|
|
|
Liquidation Value of Aly Centrifuge Redeemable Preferred Stock
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2015
|
|
$
|
9,755
|
|
|
|
8,876
|
|
|
$
|
9,590
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accrued Dividends
|
|
|
120
|
|
|
|
-
|
|
|
|
120
|
|
Amortization
|
|
|
(39
|
)
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2016
|
|
$
|
9,836
|
|
|
|
8,876
|
|
|
$
|
9,710
|
|
NOTE 8 – 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. 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 or other convertible instruments, as appropriate.
ALY ENERGY SERVICES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended March 31, 2016 and 2015, the effect of incremental shares is antidilutive so the diluted earnings per share will be equivalent to basic earnings per share. Securities excluded from the computation of diluted earnings per share for the three months ended March 31, 2016 and 2015 are shown below:
|
|
For the Three Months
Ended March 31,
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
|
Unvested Stock Options
(1)
|
|
|
338,474
|
|
|
|
338,474
|
|
Exchange of Aly Centrifuge Redeemable Preferred Stock
|
|
|
633,999
|
|
|
|
642,857
|
|
Exchange of Aly Operating Redeemable Preferred Stock
(2)
|
|
|
|
(2)
|
|
|
|
(2)
|
____________
(1)
|
The stock options vest upon the occurrence of certain events as defined in the Omnibus Incentive Plan.
|
|
|
(2)
|
The Aly Operating Redeemable Preferred Stock becomes exchangeable upon the occurrence of certain events, as defined in the Aly Operating Redeemable Preferred Stock Agreement. Upon occurrence of such events, the Aly Operating Redeemable Preferred Stock may, at the holder's option, be converted into Common Shares. The conversion ratio, determined by a calculation defined in the agreement of which the components include trailing twelve month financial performance and magnitude of investment in new equipment, is undeterminable until the Aly Operating Redeemable Preferred Stock becomes exchangeable into Common Shares.
|
NOTE 9 – STOCK-BASED COMPENSATION
Stock Options
At March 31, 2016 and December 31, 2015, options to purchase 338,474 common shares under the Plan were outstanding and there is approximately $0.5 million 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 were granted during the three months ended March 31, 2016 and 2015. No options were vested at March 31, 2016 and December 31, 2015.
ALY ENERGY SERVICES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10 – SUPPLEMENTAL CASH FLOW INFORMATION
Supplemental cash flows and non-cash investing and financing activities are as follows (in thousands):
|
|
Three Months Ended March 31,
|
|
|
|
2016
|
|
|
2015
|
|
Supplemental Disclosure of Cash Flow Information
|
|
|
|
|
|
|
Cash Paid for Interest
|
|
$
|
303
|
|
|
$
|
703
|
|
Cash Paid for State and Federal Income Taxes
|
|
|
5
|
|
|
|
600
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Cash Investing and Financing Activities
|
|
|
|
|
|
|
|
|
Purchase of Equipment through Capital Lease Obligations
|
|
$
|
-
|
|
|
$
|
1,068
|
|
Accretion of Preferred Stock Liquidation Preference, Net
|
|
|
(29
|
)
|
|
|
(33
|
)
|
Paid-in-Kind Dividends on Preferred Stock
|
|
|
178
|
|
|
|
175
|
|
Liability for Transaction Cost of Equity Raise
|
|
|
-
|
|
|
|
26
|
|
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (this "Form 10-Q") includes certain statements and information that may constitute "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The words "anticipate," "believe," "ensure," "expect," "if," "intend," "plan," "estimate," "project," "forecasts," "predict," "outlook," "aim," "will," "could," "should," "potential," "would," "may," "probable," "likely," and similar expressions that convey the uncertainty of future events or outcomes, and the negative thereof, are intended to identify forward-looking statements. Forward-looking statements, which are not generally historical in nature, include those that express a belief, expectation or intention regarding our future activities, plans and goals and our current expectations with respect to, among other things:
|
·
|
projected operating or financial results, including any accretion/dilution to earnings and cash flow;
|
|
|
|
|
·
|
any plans to obtain financing to fund future operations;
|
|
|
|
|
·
|
prospects for services and expected activity in potential and existing areas of operations;
|
|
|
|
|
·
|
the effects of competition in areas of operations;
|
|
|
|
|
·
|
the outlook of oil and gas prices;
|
|
|
|
|
·
|
the current economic conditions and expected trends in the industry we serve;
|
|
|
|
|
·
|
the amount, nature and timing of capital expenditures and availability of capital resources;
|
|
|
|
|
·
|
future financial condition or results of operations and future revenues and expenses; and
|
|
|
|
|
·
|
business strategy and other plans and objectives for future operations.
|
Forward-looking statements are not assurances of future performance and actual results could differ materially from our historical experience and our present expectations or projections. These forward-looking statements are based on management's current expectations and beliefs, forecasts for our existing operations, experience, expectations and perception of historical trends, current conditions, anticipated future developments and their effect on us, and other factors believed to be appropriate. Although management believes the expectations and assumptions reflected in these forward-looking statements are reasonable as and when made, no assurance can be given that these assumptions are accurate or that any of these expectations will be achieved (in full or at all). Our forward-looking statements involve significant risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond our control. Known material factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, the following:
|
·
|
general economic and business conditions;
|
|
|
|
|
·
|
prices of crude oil and natural gas and industry expectations about future prices;
|
|
|
|
|
·
|
fluctuations in the domestic land-based rig count;
|
|
|
|
|
·
|
business opportunities (or lack thereof) that may be presented to our company and may be pursued; and
|
|
|
|
|
·
|
changes in laws and regulations.
|
For additional information regarding known material factors that could affect our operating results and performance, please read (1) "Risk Factors" in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2015 and (2) "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part I, Item 2 of this Form 10-Q and in Part II, Item 7 in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015. Should one or more of these known material risks occur, or should the underlying assumptions prove incorrect, our actual results, performance, achievements or plans could differ materially from those expressed or implied in any forward-looking statement.
Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statements after the date they are made, whether as a result of new information, future events or otherwise, except as required by law.