UNITED STATE SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q/A
AMENDMENT NO. 2
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2005 OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _______ TO _______
COMMISSION FILE NUMBER 1-2199
ALLIS-CHALMERS ENERGY INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 39-0126090
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5075 WESTHEIMER, SUITE 890, HOUSTON, TEXAS 77056
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(Address of principal executive offices) (Zip code)
(713) 369-0550
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Registrant's telephone number, including area code
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Title of Security: Name of Exchange:
Common Stock, par value $0.01 per share American Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). Yes [ ] No [X]
At May 3, 2005 there were 13,852,797 shares of common stock outstanding.
ALLIS-CHALMERS ENERGY INC.
FORM 10-Q/A
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2005
INTRODUCTORY NOTE
Allis-Chalmers Energy Inc. is filing this Amendment No. 2 to the Company's
Quarterly report on Form 10-Q for the quarter ended March 31, 2005 to revise its
disclosure set forth in Item 4 relating to changes in internal control over
financial reporting.
TABLE OF CONTENTS
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PART I
ITEM PAGE
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4. Controls and Procedures................................................. 3
PART II
6. Exhibits and Reports on Form 8-K........................................ 4
Signatures and Certifications.............................................. 6
Unaffected items have not been repeated in this Amendment No. 2.
PLEASE NOTE THAT THE INFORMATION CONTAINED IN THIS AMENDMENT NO. 2,
INCLUDING THE FINANCIAL STATEMENTS AND THE NOTES THERETO, DOES NOT REFLECT
EVENTS OCCURRING AFTER THE ORIGINAL FILING DATE. SUCH EVENTS INCLUDE, AMONG
OTHERS, THE EVENTS DESCRIBED IN OUR QUARTERLY REPORT FOR THE PERIOD ENDED JUNE
30, 2005 AND OUR CURRENT REPORTS ON FORM 8-K FILED SUBSEQUENT TO THE ORIGINAL
FILING DATE. FOR A DESCRIPTION OF THESE EVENTS, PLEASE READ OUR EXCHANGE ACT
REPORTS FILED SINCE THE ORIGINAL FILING DATE INCLUDING ALL AMENDMENTS THERETO.
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PART I.
ITEM 4. CONTROLS AND PROCEDURES.
DISCLOSURE CONTROLS AND PROCEDURES. We maintain disclosure controls and
procedures that are designed to ensure that information required to be disclosed
in our reports under the Securities Exchange Act of 1934, as amended, are
recorded, processed, summarized and reported within the time periods specified
in the SEC's rules and forms, and that such information is accumulated and
communicated to management, including our chief executive officer and chief
financial officer, as appropriate, to allow timely decisions regarding required
disclosures. Our internal control system is designed to provide reasonable
assurance regarding the preparation and fair presentation of published financial
statements. All internal control systems are designed based in part upon certain
assumptions about the likelihood of future events, and, no matter how well
designed, have inherent limitations. Therefore, even those systems determined to
be effective can provide only reasonable assurance with respect to financial
statement preparation and presentation and may not prevent or detect all
misstatements.
Management, including our chief executive officer and our chief financial
officer has evaluated the effectiveness of our "disclosure controls and
procedures" (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of the
end of the period covered by this Report (the "Evaluation Date"). Management has
concluded that, as of the Evaluation Date, due to the deficiencies described
below, our controls and procedures over financial reporting were not effective
to enable us to record, process, summarize, and report information required to
be included in our SEC filings within the required time period, and to ensure
that such information is accumulated and communicated to our management,
including our chief executive officer and chief financial accounting officer, to
allow timely decisions regarding required disclosure. As described below, we are
taking steps to remediate the deficiencies in our control over the financial
reporting process.
On August 4, 2005, our Board of Directors, upon the recommendation of the Audit
Committee of our Board of Directors, concluded that our previously issued
financial statements for the periods from July 1, 2003 through March 31, 2005,
were required to be restated to correct the understatement of net income per
share which resulted from a miscalculation of the number of basic and diluted
shares outstanding on a weighted average basis in accordance with SFAS No. 128,
EARNINGS PER SHARE. The deficiency resulted from errors discovered by our
independent accountants on August 1, 2005, while reviewing our financial
statements for the quarter ended June 30, 2005. The major components of the
errors were as follows:
o For all periods involved we had not applied the treasury stock
method of accounting for options and warrants as prescribed in
SFAS No. 128. Specifically, we overstated diluted shares
outstanding because we failed to reduce diluted shares
outstanding by the number of shares that could be purchased
with the proceeds to us from the exercise of dilutive warrants
and options.
o In 2003 and 2004, we overstated diluted shares by not
correctly calculating the number of common shares into which
our preferred stock was convertible; by not applying the "if
converted" method of calculating diluted net earnings which
requires that dividends actually paid on preferred stock be
added to net income attributed to common shares in calculating
diluted earnings per common share; and by continuing to report
the preferred shares as dilutive after the preferred shares
were converted to common stock on April 2, 2004.
o During the third quarter of 2004, we misstated the number of
common shares outstanding on a weighted average basis due to a
mathematical error in calculating the number of days certain
shares issued during the quarter were outstanding.
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In addition, in March 2005, we restated our financial statements for the year
ended December 31, 2003 and for the three quarters ended September 30, 2004,
relating to our acquisition of a 55% interest in our AirComp, LLC subsidiary in
2003. We originally accounted for the formation of AirComp as a joint venture,
but in February 2005, determined that the transaction should have been accounted
for using purchase accounting pursuant to SFAS No. 141, BUSINESS COMBINATIONS
and accounting for the sale of an interest in a subsidiary in accordance with
SAB No. 51.
We have restated our financial statements as set forth in Note 5 to the
Consolidated Financial Statements contained in Part I, Item 1.
Public Company Accounting Oversight Board ("PCAOB") Auditing Standard No. 2
identifies a number of circumstances that, because of their likely significant
negative effect on internal control over financial reporting, are to be regarded
as at least significant deficiencies as well as strong indicators that a
material weakness exists, including the restatement of previously-issued
financial statements to reflect the correction of a misstatement. Management
evaluated the impact of the restatement of our previously-issued financial
statements on our assessment of our system of internal control and has concluded
that the restatements resulted from the lack of sufficient experienced
accounting personnel resulting in a lack of effective control over the financial
reporting process.
We have implemented a number of actions that we believe address the deficiencies
in our financial reporting process, including the following:
o The addition of experienced accounting personnel with
appropriate experience and qualifications to perform quality
review procedures and to satisfy our financial reporting
obligation. During August 2004, we hired a new chief financial
officer and in October of 2004 we hired a full-time general
counsel. In March 2005, we hired a certified public accountant
as our financial reporting manager and in July 2005 we hired
as chief accounting officer a certified public accountant who
has significant prior experience as a chief accounting officer
of a publicly traded company.
o In the fourth quarter of 2004, we engaged an independent
internal controls consulting firm which is in the process of
documenting, analyzing, identifying and correcting weaknesses
and testing our internal controls and procedures, including
our controls over internal financial reporting.
o Our audit committee dismissed our prior independent auditors
in October 2004 and engaged new independent auditors who we
believe have greater experience with publicly traded
companies.
o We are in the process of implementing new accounting software
to facilitate timely and accurate reporting.
CHANGE IN INTERNAL CONTROL OVER FINANCIAL REPORTING.
The following were changes in our internal control over financial reporting (as
such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act)
that occurred during the period covered by this report that have materially
affected, or are reasonably likely to materially affect, our internal control
over financial reporting:
o In March 2005, we hired a certified public accountant to be
our financial reporting manager.
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PART II
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The exhibits listed on the Exhibit Index located at Page 7 of this
Quarterly Report are filed as part of this Form 10-Q/A.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, as amended, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized on August 17, 2005.
ALLIS-CHALMERS ENERGY INC.
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(REGISTRANT)
/S/ MUNAWAR H. HIDAYATALLAH
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MUNAWAR H. HIDAYATALLAH
CHIEF EXECUTIVE OFFICER AND CHAIRMAN
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EXHIBIT INDEX
31.1 Certification of Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
31.2 Certification of Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
32.1 Certification of the Chief Executive Officer and Chief Financial
Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
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