Natural Gas Services (NGS) 8-K/A Financial Statements and Exhibits

Exhibit 99.1

SCREW COMPRESSION SYSTEMS, INC.

CONSOLIDATED BALANCE SHEET
(UNAUDITED)
AUGUST31, 2004

ASSETS

CURRENT ASSETS:
Cash and cash equivalents	$	1,241,723
Short-term investments		690,180
Trade accounts receivable, net		2,621,309
Inventory, net		4,770,208
Prepaid expenses and other		45,507
Total current assets		9,368,927
LEASE EQUIPMENT,net		163,674
PROPERTY AND EQUIPMENT,net		2,980,485
GOODWILL AND OTHER INTANGIBLES		550,000
OTHER ASSETS		18,551
Total assets	$	13,081,637
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt	$	77,877
Line of credit		850,000
Accounts payable and accrued liabilities		2,963,398
Dividends payable		247,850
Total current liabilities		4,139,125
LONG-TERM DEBT,less current portion		1,338,231
STOCKHOLDERS’ EQUITY:
Common stock, 200,000 shares authorized, par value $0.01; 100,000 shares issued and outstanding		1,000
Retained earnings		7,603,281
Total stockholders’ equity		7,604,281
Total liabilities and stockholders’ equity	$	13,081,637

See accompanying note to these consolidated financial statements.

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SCREW COMPRESSION SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF INCOME AND RETAINED EARNINGS
(UNAUDITED)

	FOR THE EIGHT MONTHS
	ENDING AUGUST31,
	2004			2003
REVENUE:
Sales, net	$	12,856,398		$	6,347,844
Service and maintenance income		200,569			88,482
Leasing income and interest		63,600			63,600
Total revenue		13,120,567			6,499,926
COSTS OF REVENUE:
Cost of sales		9,778,279			4,704,023
Cost of service and maintenance		49,312			13,422
Total costs of revenue		9,827,591			4,717,445
GROSS PROFIT		3,292,976			1,782,481
OPERATING EXPENSES:
Selling expenses		119,110			149,255
General and administrative		981,809			773,259
Depreciation and amortization		166,797			167,765
Total operating expenses		1,267,716			1,090,279
INCOME FROM OPERATIONS		2,025,260			692,202
OTHER INCOME (EXPENSE):
Interest income		15,980			23,232
Interest expense		(65,629	)		(72,644	)
Other income (expense)		(13,982	)		6,523
Total other expense		(63,631	)		(42,889	)
NET INCOME	$	1,961,629		$	649,313
RETAINED EARNINGS, BEGINNING OF PERIOD	$	5,946,437		$	5,377,882
NET INCOME		1,961,629			649,313
DISTRIBUTIONS		(304,785	)		(221,034	)
RETAINED EARNINGS, END OF PERIOD	$	7,603,281		$	5,806,161
NET INCOME PER COMMON SHARE:
Basic and diluted	$	19.62		$	6.49
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic and diluted		100,000			100,000

See accompanying note to these consolidated financial statements.

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SCREW COMPRESSION SYSTEMS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

	FOR THE EIGHT MONTHS
	ENDING AUGUST 31,
	2004			2003
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	1,961,629		$	649,313
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		166,797			167,765
Changes in current assets:
Trade and other receivables		(1,304,987	)		640,140
Inventory		(2,740,849	)		(442,524	)
Prepaid expenses and other		27,778			104,064
Changes in current liabilities:
Accounts payable and accrued liabilities		2,264,819			477,117
Changes in other assets		422			15,806
Net cash provided by operating activities		375,609			1,611,681
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(184,147	)		(156,476	)
Acquisition of remaining interest in CIP		(550,000	)		—
Purchase of short-term investments		(6,580	)		(14,343	)
Net cash used in investing activities		(740,727	)		(170,819	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from line of credit		850,000			—
Repayments of long-term debt		(63,463	)		(111,948	)
Dividends on common stock		(118,679	)		(221,034	)
Change in due to/from stockholder		(28,995	)		40,000
Net cash provided by (used in) financing activities		638,863			(292,982	)
NET CHANGE IN CASH		273,745			1,147,880
CASH,beginning of year		967,978			353,129
CASH,end of year	$	1,241,723		$	1,501,009
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid	$	65,629		$	72,644
Non-cash distribution	$	186,106		$	—

See accompanying note to these consolidated financial statements.

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SCREW COMPRESSION SYSTEMS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.Unaudited information

The consolidated balance sheet as of August 31, 2004 and the consolidated income statements for the eight months ending August 31, 2004 and 2003 were taken from the Company’s books and records without audit. However, in the opinion of management, such information includes all adjustments (consisting only of normal accruals) which are necessary to properly reflect the consolidated financial position of the Company as of August 31, 2004 and the results of operations for the eight months ending August 31, 2004 and 2003. These unaudited consolidated financial statements should be read in conjunction with the December 31, 2003 and 2002 financial statements of Screw Compression Systems, Inc. included in this Form 8-k/A.

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