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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)
  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 0-18754

  Black Warrior Wireline Corp.  
 
 
  (Exact name of registrant as specified in its charter)  

Delaware   11-2904094
 
(State or other jurisdiction of
incorporation of organization)		   (I.R.S employer
identification no.)

  100 Rosecrest Lane, Columbus, Mississippi 39701  
 
 
  (Address of principal executive offices, zip code)  

  (662) 329-1047  
 
 
  (Issuer’s Telephone Number, Including Area Code)  

       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 issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES         NO      

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).     YES          NO  

APPLICABLE ONLY TO CORPORATE ISSUERS:

As of November 16, 2004, 12,499,528 shares of the Registrant’s Common Stock, $.0005 par value, were outstanding.



BLACK WARRIOR WIRELINE CORP.

QUARTERLY REPORT ON FORM 10-Q

INDEX

PART I – FINANCIAL INFORMATION

    Page  
   
 
Item 1.
Financial Statements
    
       
  3  
       
  4  
       
  5  
       
  6  
       
  7  
       
Item 2. 14  
Item 3. 23  
       
Item 4. 23  
       
PART II – OTHER INFORMATION    
       
Item 6. 24  

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PART I – FINANCIAL INFORMATION
Item 1. Financial Statements

Black Warrior Wireline Corp.
Condensed Balance Sheets

    September 30,
2004 		  December 31,
2003		  
   
 
 
    (Unaudited)        
ASSETS              
Current assets:              
Cash and cash equivalents
   $ 213,728   $ 4,661,030  
Restricted cash
     457,109     961,551  
Accounts receivable, less allowance of $756,130 and $588,101, respectively
     7,903,801     8,952,348  
Other receivables
     280,804     179,317  
Prepaid expenses
     1,109,769     92,471  
Other current assets
     1,725,416     1,188,079  
   
 
 
Total current assets
     11,690,627     16,034,796  
               
Inventories of tool components and sub-assemblies held for sale, net     —     5,206,639  
Property, plant and equipment, less accumulated depreciation     12,748,769     18,219,437  
Other assets     312,158     448,507  
Other intangible assets     —     254,634  
Goodwill     1,237,416     1,237,416  
   
 
 
Total assets
   $ 25,988,970   $ 41,401,429  
   
 
 
LIABILITIES AND STOCKHOLDERS’ DEFICIT              
               
Current liabilities:              
Accounts payable
   $ 2,864,349   $ 4,981,558  
Accrued salaries and vacation
     1,188,500     866,267  
Other accrued expenses
     2,026,994     1,523,447  
Accrued interest payable
     43,833     94,981  
Current maturities of long-term debt
     409,165     18,035,237  
Accrued interest payable to related parties
     —     14,534,437  
Notes payable to related parties, net of unamortized discount
     —     24,402,569  
   
 
 
Total current liabilities
     6,532,841     64,438,496  
               
Long-term debt, less current maturities     4,556,710     356,952  
Non current accrued interest payable to related parties     16,913,420        
Notes payable to related parties, net of unamortized discount     23,903,420        
Deferred revenue     109,975     109,975  
   
 
 
Total liabilities
     52,016,366     64,905,423  
   
 
 
Stockholders’ deficit:              
Preferred stock, $.0005 par value, 2,500,000 shares authorized, none issued at September 30, 2004 or December 31, 2003
     —     —  
Common stock, $.0005 par value, 175,000,000 shares authorized, 12,499,528 shares issued and outstanding at September 30, 2004 and December 31, 2003
     6,252     6,252  
Additional paid-in capital
     20,275,963     20,275,963  
Accumulated deficit
     (45,726,218 )   (43,141,023 )
Treasury stock, at cost, 4,620 shares at September 30, 2004 and December 31, 2003
     (583,393 )   (583,393 )
Loan to shareholder
     —     (61,793 )
   
 
 
Total stockholders’ deficit
     (26,027,396 )   (23,503,994 )
   
 
 
Total liabilities and stockholders’ deficit
   $ 25,988,970   $ 41,401,429  
   
 
 

See accompanying notes to the condensed financial statements.

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Black Warrior Wireline Corp.
Condensed Statements of Operations
For the three months ended September 30, 2004 and September 30, 2003

                                          September 30, 2004     September 30, 2003  
                                       
 
 
                                          (Unaudited)     (Unaudited)  
                                                   
Revenues         $ 14,950,787   $ 12,731,883  
                                                   
Operating costs     9,184,912     8,230,466  
                                                   
Selling, general and administrative expenses     2,368,328     2,203,058  
                                                   
Depreciation and amortization     1,209,383     1,155,706  
                                       
 
 
   Income from continuing operations     2,188,164     1,142,653  
                                                   
Interest expense and amortization of debt discount     (1,233,916 )   (1,391,984 )
                                                   
Net loss on sale of fixed assets     (6,396 )   —  
                                                   
Other income (expense)     3,512     (26,261 )
                                       
 
 
   Income (loss) from continuing operations before income taxes     951,364     (275,592 )
                                                   
Provision for income taxes     110,332     —  
                                       
 
 
   Income (loss) before discontinued operations     841,032     (275,592 )
                                                   
Discontinued operations (Note 6)              
                                                   
   Income from operations of discontinued directional              
    drilling segment     6,594     225,716  
                                                   
   Provision for income taxes     —     —  
                                       
 
 
      Net income (loss)   $ 847,626   $ (49,876 )
                                       
 
 
Net income (loss) per share – basic and diluted:              
                                                   
   Income (loss) before discontinued operations   $ .07   $ (.01 )
   Discontinued operations     .00     .01  
                                       
 
 
Net income per share – basic and diluted   $ .07   $ .00  
                                       
 
 

See accompanying notes to the condensed financial statements.

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Black Warrior Wireline Corp.
Condensed Statements of Operations
For the nine months ended September 30, 2004 and September 30, 2003

                                          September 30,
2004		     September 30,
2003		  
                                       
 
 
                                          (Unaudited)     (Unaudited)  
                                                   
Revenues         $ 38,660,455   $ 35,250,375  
                                                   
Operating costs     25,049,994     23,316,224  
                                                   
Selling, general and administrative expenses     6,939,348     6,919,375  
                                                   
Depreciation and amortization     3,946,585     3,520,687  
                                       
 
 
   Income from continuing operations     2,724,528     1,494,089  
                                                   
Interest expense and amortization of debt discount     (3,772,353 )   (4,064,908 )
                                                   
Net gain on sale of fixed assets     47,660     236,566  
                                                   
Other income     9,876     9,440  
                                       
 
 
   Loss from continuing operations before income taxes     (990,289 )   (2,324,813 )
                                                   
Provision for income taxes     110,332     —  
                                       
 
 
   Loss before discontinued operations     (1,100,621 )   (2,324,813 )
                                                   
Discontinued operations (Note 6)              
                                                   
   Income (loss) from operations of discontinued directional              
    drilling segment (including loss on disposal of              
    $1,130,894 and $0 for the nine months ended              
    September 30, 2004 and 2003, respectively)     (1,484,574 )   1,580,881  
                                                   
   Provision for income taxes     —     —  
                                       
 
 
      Net loss   $ (2,585,195 ) $ (743,932 )
                                       
 
 
Net loss per share – basic and diluted:              
                                                   
   Loss before discontinued operations   $ (.09 ) $ (.20 )
   Discontinued operations     (.12 )   .13  
                                       
 
 
Net loss per share – basic and diluted   $ (.21 ) $ (.07 )
                                       
 
 

See accompanying notes to the condensed financial statements.

 

5

Black Warrior Wireline Corp.
Condensed Statements of Cash Flows
For the nine months ended September 30, 2004 and September 30, 2003

                                          September 30, 2004     September 30, 2003  
   
 
 
                                          (Unaudited)     (Unaudited)  
                                                   
Cash flows from operating activities:   $ 4,626,801   $ 9,510,604  
   
 
 
                                                   
Cash flows from investing activities:              
  Acquisitions of property, plant and equipment     (6,010,500 )   (2,499,324 )
  Decrease in restricted cash     504,442     —  
  Proceeds from sale of property, plant and equipment     10,715,521     682,549  
   
 
 
        Cash provided by (used in) investing activities     5,209,463     (1,816,775 )
   
 
 
Cash flows from financing activities:              
      Debt issuance costs     (234,875 )   (27,653 )
      Proceeds from bank and other borrowings     3,279,892     5,434,052  
      Principal payments on long-term debt, notes payable and              
        capital lease obligations     (14,168,654 )   (5,517,480 )
      Payments on working revolver, net     (3,159,929 )   (713,174 )
   
 
 
        Cash used in financing activities     (14,283,566 )   (824,255 )
   
 
 
        Net increase (decrease) in cash and cash equivalents     (4,447,302 )   6,869,574