UNITED STATE SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q/A
AMENDMENT NO. 3
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2004 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:
COMMON STOCK, PAR VALUE $0.01 PER SHARE
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 November 12, 2004, there were 13,042,081 shares of common stock outstanding.
ALLIS-CHALMERS ENERGY INC.
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2004
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..................................... 5
Signatures and Certifications............................................... 6
Unaffected items have not been repeated in this Amendment No. 3.
PLEASE NOTE THAT THE INFORMATION CONTAINED IN THIS AMENDMENT NO. 3,
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 ANNUAL REPORT ON FORM 10-K FOR THE YEAR
ENDED DECEMBER 31, 2004, OUR QUARTERLY REPORTS ON FORM 10-Q FOR THE PERIODS
ENDED MARCH 31, 2005 AND JUNE 30, 2005 AND CURRENT REPORTS ON FORM 8-K
SUBSEQUENT TO THE ORIGINAL FILING DATE. FOR A DESCRIPTION OF THESE EVENTS,
PLEASE READ OUR EXCHANGE ACT REPORTS FILED SINCE THE ORIGINAL FILING DATE.
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INTRODUCTORY NOTE
Allis-Chalmers Energy Inc. is filing this Amendment No. 3 to the Company's
Quarterly report on Form 10-Q for the quarter ended September 30, 2004 to revise
its disclosure set forth in Item 4 relating to changes in internal control over
financial reporting.
PART I. FINANCIAL INFORMATION
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.
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 2 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.
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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.
There were the following 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 August 2004, we hired a new chief financial officer.
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PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The exhibits listed on the Exhibit Index located at Page 7 of this Quarterly
Report are filed as part of this Form 10-Q.
(b) Reports on Form 8-K
None.
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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 CORPORATION
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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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