Particle Drilling Technologies to Restate
Financial Results for Equity Compensation Costs Related to
Early Implementation of SFAS No. 123(R)
HOUSTON, Feb. 10 /PRNewswire-FirstCall/ -- Particle
Drilling Technologies, Inc. (Nasdaq: PDRT) ("PDTI" or
"Company") announced today that it will restate its financial
results to properly reflect for fiscal 2005 an additional
$437,350 in non-cash compensation expense related to
restricted stock and stock options granted in fiscal 2004 and
2005. In connection with the receipt of comments from the
Staff of the Securities and Exchange Commission on the
Company's Annual Report on Form 10-K for the year ended
September 30, 2005, the Company determined that its policy for
recording equity compensation was inconsistent with the
guidance set forth under Statement of Financial Accounting
Standards (" SFAS") No. 123(R). Historically, the Company has
calculated the compensation expense associated with equity
awards using the Black Scholes model and amortized that
expense over the service period as the equity awards vest,
commencing with the first vesting dates of the awards. To
fully comply with the guidance set forth in SFAS No. 123(R),
the Company is now recording such expense on a straight line
basis over the relevant service periods, commencing with the
dates of grant of the awards.
The restatement will increase the net loss for fiscal
2005 by $437,350, from $ 5,287,068 to $5,724,418. In addition,
the Company will restate the third and fourth quarters of
fiscal 2005 and will revise its previously released results
for the first quarter of fiscal 2006 to reflect the proper
compensation expense. The net loss in the third quarter of
fiscal 2005 will increase by $125,033 to $ 1,631,673, the net
loss in the fourth quarter of fiscal 2005 will increase by $
312,317 to $2,050,270 and the net loss in the first quarter of
fiscal 2006 will increase by $383,074 to $2,167,983. The
Company determined that a restatement of its
previously-reported financial results is appropriate to
reflect these adjustments.
The Company does not expect these non-cash adjustments or
the restatement to have a significant effect on its
operations, future results, financial obligations or
liquidity. The Company will delay the filing of its Quarterly
Report on Form 10-Q for the period ended December 31, 2005,
but expects to make such filing no later than February 14,
2006. The Company currently expects to file amendments to its
previously filed Annual Report on Form 10-K for the year ended
September 30, 2005 and Quarterly Report on Form 10-Q for the
period ended June 30, 2005 by the end of February 2006.
J. Chris Boswell, Senior Vice President and CFO
commented, "The restatement is unfortunate but necessary so
that our financial statements properly reflect the cost of
equity incentive awards as the employee earns the awards over
the requisite service period. Our decision to restate was made
after we conducted an extensive review of the applicable
accounting rules and after thorough discussion with our Audit
Committee and external advisors. We will complete the
restatement process as quickly as possible and look forward to
moving ahead with our planned commercialization of the PID
technology."
Particle Drilling Technologies, Inc., headquartered in
Houston, Texas, is a development stage oilfield service and
technology company owning certain patents and pending patents
related to the Particle Impact Drilling technology. The
Company's technology is designed to enhance the rate-of-
penetration function in the drilling process, particularly in
hard rock drilling environments.
Certain statements in this press release that are not
historical but are forward-looking are subject to known and
unknown risks and uncertainties, which may cause PDTI's actual
results in future periods to be materially different from any
future performance that may be suggested in this press
release. Such risks and uncertainties may include, but are not
limited to, PDTI's ability to raise equity capital, if
necessary, and its ability to obtain equity financing on
acceptable terms, if at all, a severe worldwide slowdown in
the energy services sector and working capital constraints.
Further, PDTI is a development stage company that operates in
an industry sector where securities values are highly volatile
and may be influenced by economic and other factors beyond
PDTI's control such as announcements by competitors and
service providers.
Contacts:
J. Chris
Boswell, SVP & CFO Particle Drilling Technologies,
Inc. 713-223-3031 ext. 2049
Ken Dennard, Managing Partner
Jack Lascar, Partner
DRG&E / 713-529-6600 | 
