SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-KSB

|[x] | Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 [No Fee Required] for the fiscal year ended December 31, 2000.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------
|[ ] | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 [No Fee Required]                                         

Commission file number: 33-61888-FW

COMPRESSCO, INC.
(Exact name of small business issuer in its charter)

|DELAWARE
(State or other jurisdiction of
incorporation or organization)              | 72-1235449
(I.R.S. Employer
Identification No.)
|------------------------------------------------------------------------------------ | -----------------------------------------------
|8224 SW 3rd Street, OKLAHOMA CITY, OKLAHOMA
(Address of principal executive offices) | 73128
(Zip Code)                               
|Registrant's telephone number, including area code:                                  | (405) 787-2808                                 
|Securities registered pursuant to Section 12(b) of the Act:                          | NONE                                           
|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   /   /

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B not contained in this form, and no disclosure will be contained, to the best of
registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [ X ]

| | State issuer's revenues for its most recent fiscal year: $5,304,001                                                            
| | -------------------------------------------------------------------------------------------------------------------------------
| | The aggregate market value of the voting stock held by non-affiliates of the registrant as of December 31, 2000 was $3,110,850.
| | The number of shares outstanding of the issuer's classes of Common Stock as of December 31, 2000:                              
| | Common Stock, $1.00 Par Value - 153,235 shares                                                                                 

DOCUMENTS INCORPORATED BY REFERENCE: NONE

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PART I

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-KSB (this "Report" or this "Form 10-KSB") contains certain forward-looking statements and information relating to Compressco, Inc. and its
subsidiaries, their industry and the oil and gas industry that is based on the beliefs of our management, as well as assumptions made by and information currently available to management. All statements other than statements of historical facts contained
in this Report, including statements regarding our future financial position, growth strategy, budgets, projected costs and plans and objectives of management for future operations, are forward-looking statements. Although we believe our expectations
reflected in these forward-looking statements are based on reasonable assumptions, no assurance can be given that these expectations will prove to have been correct. Important factors that could cause actual results to differ materially from the
expectations reflected in the forward-looking statements include, among other things:

| | conditions in the gas and oil industry, including the demand for natural gas and the price of oil and natural gas,     
|- | -----------------------------------------------------------------------------------------------------------------------
| | competition among the various providers of compression services and products,                                          
| | changes in safety, health and environmental regulations pertaining to the production and transportation of natural gas,
| | changes in economic or political conditions in the markets in which we operate, and                                    
| | introduction of competing technologies by other companies.                                                             

In addition, the factors described in "Item 6. Management's Discussion and Analysis of Financial Condition and Results of Operations--Risk Factors" could cause
our actual results to differ materially from the expectations reflected in the forward-looking statements contained herein. These statements relate to future events or our future financial performance. These forward-looking statements may be found in
"Item. 1. Description of Business," "Item 6. Management's Discussion and Analysis of Financial Condition and Results of Operations" and other sections of this Report. In some cases, you can identify forward-looking statements by terminology such as "may,"
"will," "should," "expect," "plan," "intend," "anticipate," "believe," "estimate," "predict," "potential," or "continue," the negative of such terms or other comparable terminology. The forward-looking statements in this Report are based largely on our
expectations and are subject to a number of risks and uncertainties which may be beyond our control. Actual results may differ materially from the anticipated or implied results in the forward-looking statements. We do not intend to publicly update or
revise any forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks and uncertainties, we can give no assurances that the forward-looking events and circumstances included in this Report will
occur.

|ITEM 1. | DESCRIPTION OF BUSINESS
|------- | -----------------------

HISTORY AND ORGANIZATION

Compressco, Inc., formerly Emerging Alpha Corporation (together with its subsidiaries unless the context indicates otherwise, the "Company"), was incorporated in the State
of Delaware on February 10, 1993 for the purpose of creating a corporate vehicle to seek, investigate and, if the results of such investigation warrants, acquire a business opportunity presented to it by persons or firms who or which desire to employ the
Company's funds in their business or to seek the perceived advantages of a publicly held corporation. Prior to October 1999, the primary activity of the Company has been devoted to organizational activities and obtaining initial funding. After careful
investigation and analysis, the Company determined in 1999 to enter into the natural gas compression business and, in October 1999, completed an acquisition of companies that provide compression and measurement services to the natural gas and oil industry.

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COMPANY OVERVIEW AND STRATEGY

OVERVIEW

Compressco, Inc. is a provider of compression services, natural gas measurement and production enhancement strategies. We provide products and services to customers who
are producing and transporting natural gas from relatively low-pressure, low-volume gas and oil wells and gathering systems. As part of our operations, we also design and fabricate low-pressure natural gas compressors, which include our patented designs.

Through our principal operating subsidiary, we have been involved in the compression services industry since 1990, and have been continually improving our products and
services since that time. We offer for rental or sale two models of Gas Jack® brand compressors, which we believe are superior to our competitors' compressors because they are more fuel efficient and more reliably handle variable liquid conditions in
the wellbore. Our Gas Jack® compressors utilize patented designs that allow operators to increase production from and to extend the productive lives of low-volume or marginal gas wells. In addition, with the introduction of our new E-Pumper
product, a remote operation monitoring and alarm system, our customers are able to better monitor their wells, thereby reducing costly down time. We provide natural gas measurement services and natural gas well monitoring.

In connection with the acquisition of our principal operating subsidiary by a new investor group in October 1999, we installed a new management team, and placed a new emphasis
on leveraging our proprietary technology to aggressively grow our business. As of December 31, 2000, we had 375 compressors in service, which represented an increase of approximately 88% in the past twelve months. Total revenues for the year ended
December 31, 2000 were $5.3 million compared to $3.8 million ($3.0 million from predecessor company, Gas Jack Inc., an Oklahoma corporation ("Gas Jack"), through October 29, 1999 and $0.8 million after October 29, 1999) for the twelve months
ended December 31, 1999, an increase of $1.5 million, or 39%. For the year ended December 31, 2000, our revenue related to compressor rentals was $4.0 million compared to $2.6 million for the twelve months ended December 31, 1999, an
increase of $1.4 million, or 54%. Based on our December 2000 revenue, our annualized compressor rental revenue currently exceeds $6.3 million.

We service our rental compressor fleet as well as provide maintenance services through our 22 mobile field technicians. Currently, all of our technicians are based in the
south central United States, the area in which the majority of our customers operate. As a result, we are able to provide quality maintenance service without the expense of maintaining many costly service centers.

INDUSTRY CONDITIONS

As natural gas fields age, they lose pressure, thereby requiring compression to produce the remaining reserves at historic volumes. At the end of 1998, there was
approximately 14.8 million horsepower of field compression equipment in the United States, of which approximately 4.1 million horsepower was outsourced. From 1993 to 1998, the compression rental industry grew at a rate of approximately 15.4% per year in
the United States in terms of horsepower. Our industry also has recently begun to grow rapidly internationally.

The demand for compression services is linked to natural gas consumption rather than exploration activities. As a result, our financial performance historically has been less
affected by the short-term market cycles and volatile commodity prices of oil and natural gas than companies operating in other sectors of the energy industry. Demand for compression services has increased over time, even during periods of volatile
natural gas prices. We believe the natural gas compression services industry will continue to have significant growth potential, especially as it relates to marginal wells, due to the following factors:



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| | the number of new gas wells drilled in the United States has been on the decline for the past several years, which has resulted in more mature gas wells that have lost pressure over time and require compression to produce
remaining reserves at historic volumes;
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | newer gas fields in the United States are experiencing more rapid loss of pressure than older fields and are requiring compression at earlier stages to maintain production levels;                                                                                  
| | natural gas consumption is increasing in the United States at an average rate of 2.0% to 2.5% per year and internationally at an average rate of 3.0% to 4.0% per year; and                                                                                          
| | natural gas producers are increasingly outsourcing gas compression requirements to reduce overall cost of compression, improve run-time performance, reduce capital requirements and better meet changing compression needs.                                         

We believe that we are well positioned to participate in the future growth in this industry as we are one of the few compression service providers with
fuel-efficient compressors that are designed to maximize and extend the reserve life of marginal wells.

OUR GROWTH STRATEGY

Our growth strategy is to continue to focus on meeting the evolving needs and demands of our customers by providing consistent, superior services and dependable, high
quality products. We will continue to serve existing customers in and increase market share of our core service area located in the south central United States. The key elements of our strategy are described below:

| | Expanding our sales and service coverage in our core markets. We intend to expand the coverage of our sales force by increasing the number of sales and marketing personnel that we employ to market to, advise and
service our customers in the south central United States.                                                                                                           
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Expanding into new geographic areas. Currently the majority of our customers operate in the south central United States. We believe there are, however, gas fields in other regions of the United States that would be
benefited by our compression products. Accordingly, we intend to expand our presence by engaging sales and service personnel outside our core geographic markets.
| | Offering complementary products and services. We intend to expand our range of compression services and products to meet the needs of our customers. Our new E-Pumper product allows customers to obtain real-time
information regarding the operation of production equipment.                                                                                                        
| | Continuing a standardized approach to our business. Since we design and fabricate two models of compressors, we are able to develop expertise in operating and maintaining our compressors, provide our customers with
consistent, high quality service, optimize our inventory, reduce our costs and train our service technicians faster and more effectively.                        

OPERATIONS

Compressor Fleet

The Company has manufactured a total of 679 compressors including 262 units in the year ended December 31, 2000. As of the end of 2000, the Company has a compressor
fleet of 471 units; of these units, 375 are currently on rent. The Company's rental agreements are for monthly and annual terms. These units, as well as contracted maintenance on certain sold units, are maintained by company personnel and contracted third
parties.

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Since inception in 1990, an aggregate of 223 units have been sold to customers in the United States, Canada, Holland, Indonesia and Argentina. During year 2000 the Company repurchased 16 used compressors it had sold in
prior years and added these back to our rental fleet.

The Gas Jack compressor utilizes an integral design as the frame for the compressor. A Ford industrial 460 cubic inch V-8 is modified so that one bank of four cylinders uses
natural gas from the well to power the other bank of four cylinders that provide compression. This configuration is capable of handling suction pressures from vacuum conditions of up to 12 inches vacuum and discharge pressures of up to 250 PSIG. This
configuration allows the Company to provide a moderately priced, reliable well head compressor that is easy to maintain and does not require special parts, tools, fluids or training to operate. The design also allows for a compact unit that is easily
transported and requires minimal site preparation, which assists the producer in testing and evaluating subject properties.

Fabrication

The Company's current manufacturing staff and facility is capable of producing up to 60 new units per month, as well as the required reconditioning of units that are
returned from rental. Over the last few years, the Company has improved its shop and suppliers scheduling, implemented shop and supplier's quality control, maximized the use of its existing facility and personnel. This has resulted in cost reductions,
minimized rework, improved inventory control and increased production efficiency.

COMPETITION

Primary competition for the compression manufacturing and service end of the Company is from various local and regional packagers that generally use a screw compressor
with a separate engine driver or a reciprocating compressor with a separate engine driver. The existing Gas Jack business competes with these packagers by making use of the engine for both compression and drive thereby eliminating a significant amount of
the cost associated with the competitor offerings. The Company believes that its patented technology helps it to maintain a competitive position in the marginal well application of compressor technology. The gas compression industry is highly competitive
but Gas Jack is positioned well because it has focused its products and efforts on low volume, low pressure oil and gas wells.

EMPLOYEES AND CONSULTANTS

As of December 31, 2000 the Company and its subsidiaries had a total of 60 employees. None of our employees is subject to a collective bargaining agreement.

CUSTOMERS AND SUPPLIERS

During the year ended December 31, 2000, the Company did not have sales to any one customer comprising more than 10% of its revenues. During the nine months ended December
31, 1999, the Company had sales to one customer which amounted to approximately 11% of the Company's total 1999 revenue. As of December 31, 2000, one customer represented approximately 13% of the Company's total accounts receivable balance. The Company
purchases a substantial portion of its equipment, specifically, compressor engines and related items, from one supplier, Ford Motor Company.

|ITEM 2. | DESCRIPTION OF PROPERTY
|------- | -----------------------

We lease approximately 50,000 square feet of space that we use for our administrative offices, fabrication facilities and warehouse space in Oklahoma City,
Oklahoma pursuant to month-to-month leases.

|ITEM 3. | LEGAL PROCEEDINGS
|------- | -----------------

None.

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|ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
|------- | ---------------------------------------------------

No matters were submitted to a vote of security holders during the last quarter of the fiscal period ended December 31, 2000.

PART II

|ITEM 5. | MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
|------- | --------------------------------------------------------

The Company's Common Stock is not and has not been traded on a stock exchange or national quotation system. As of December 31, 2000, there were 338 stockholders
of record. No dividends have been paid and none are expected to be paid in the foreseeable future. In addition, our ability to pay dividends is restricted by our existing bank credit facility.

In March 2000, we issued 70,002 shares of our common stock through a private placement for $30.00 per share or total proceeds of $2.1 million. The equity proceeds were used in
part to repay borrowings under our credit facility and the remaining proceeds were used primarily to fund the growth in our compressor fleet.

In December 2000 and January 2001, we completed an offering of our 13% subordinated promissory notes and warrants to purchase our common stock through a private placement. At
December 31, 2000, $5,250,000 of the subordinated promissory notes were issued. An additional $250,000 of the subordinated promissory notes have been issued subsequent to December 31, 2000. These notes are subordinated, unsecured obligations of the
Company and rank junior to all existing and future senior indebtedness of the Company. The notes mature on the earlier of (1) the consummation of an underwritten public offering of the Company's capital stock or (2) December 31, 2003. The Company may, at
any time, prepay any part of the principal balance on the notes, in increments of $10,000, without premium or penalty prior to maturity. Interest is payable at 13% per annum and is payable quarterly in arrears commencing on March 31, 2001. Each purchaser
of notes also received warrants to purchase shares of our common stock at a purchase price of $120 per share. Each $1,000 of issued principal amount of notes received warrants to purchase 8.4 shares of common stock, or a total of 46,200 shares. Of the
total proceeds received, $100,000 was allocated to the stock warrants.

The offerings described above were completed in private placements pursuant to Section 4(2) of the Securities Act of 1933.

|ITEM 6. | MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
|------- | ----------------------------------------------------------

OVERVIEW

Prior to October 1999, the Company had no business operations; its only revenue since its inception in 1993 was from interest income and its only expenses related to
administrative expenses. In October 1999, the Company purchased a privately held natural gas compressor manufacturing and service company, Gas Jack, for $2.7 million in cash, and also purchase GJ Measurement, an Oklahoma L.L.C. ("GJ Measurement") for
33,333 shares of common stock. These acquisitions were accounted for under the purchase method of accounting.

In connection with the acquisitions, the Company's fiscal year end was changed from March 31 to December 31. The following sets forth selected financial information
for the year ended and as of December 31, 2000 and for the nine months ended December 31,1999 and as of December 31, 1999 and is qualified in its entirety by the financial statements appearing elsewhere in this Form 10-KSB.



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RESULTS OF OPERATIONS

SELECTED CONSOLIDATED FINANCIAL DATA FOR COMPRESSCO

|                                                                       | Year Ended
December 31, 2000
------------------------ |            | Nine Months Ended
December 31, 1999
------------------------
|---------------------------------------------------------------------- | ----------------------------------------------------- | ---------- | ------------------------------------------------------------
|STATEMENT OF OPERATIONS DATA:                                          |                                                       |            |                                                             
|Operating Revenues................................................     | $                                                     | 5,304,001  |                                                             
|Cost of Sales and Expenses.......................................      |                                                       | 4,979,537  |                                                             
|Operating Income (Expense) .....................................       | $                                                     | 324,464    |                                                             
|Net Income (Loss) .................................................    |                                                       | (10,569)   |                                                             
|                                                                       |                                                       |            |                                                             
|BALANCE SHEET DATA (AT END OF PERIOD):                                 |                                                       |            |                                                             
|Cash.................................................................. | $                                                     | 860,043    |                                                             
|Total Assets.........................................................  |                                                       | 13,250,067 |                                                             
|Total Liabilities..................................................... |                                                       | 10,354,263 |                                                             
|Stockholders' Equity................................................   |                                                       | 2,895,804  |                                                             

The following discussion regarding the consolidated financial statements of the Company should be read in conjunction with the financial statements and notes thereto.

YEAR ENDED DECEMBER 31, 2000 COMPARED TO NINE MONTH PERIOD ENDED DECEMBER 31, 1999

The Company's results of operations for the year ended December 31, 2000 and the nine months ended December 31, 1999 reflect the acquisition of Gas Jack on October 29,
1999. Prior to the acquisition, Compressco had no business operations. The year ended December 31, 2000 includes a full year of Gas Jack operations compared to the nine months ended December 31, 1999 that includes only two months of Gas Jack operations.
We have included the financial statements of Gas Jack for the ten month period of January 1, 1999 through October 29, 1999 on pages F-16 through F-21 of these audited financial statements.

The total revenue for the year ended December 31, 2000 was $5,304,001 compared to the nine month period in 1999 following the acquisition when the Company had revenues of
$786,159. The Company's compressor units on rental increased from approximately 200 at December 31, 1999 to approximately 375 units at December 31, 2000 an increase of 88%.

The total cost of sales and expenses for the year ended December 31, 2000 were $4,289,500 compared to the nine month period in 1999 following the acquisition when the Company
had total cost of sales and expenses of $602,672. The total cost of sales and expenses for the year ended December 31, 2000 were 81% of total revenues compared to 77% for the nine month period in 1999. The increase in the percent of total cost of sales
and expenses in 2000 over 1999 is due primarily to increasing sales and marketing expenditures in 2000 to increase the company revenue.

For the year ended December 31, 2000, the Company had depreciation and amortization expense of $690,037 compared to $112,350 for the nine months ended December 31, 1999. The
increase is due to the increase in the Company's compressor fleet in 2000 from 206 units at December 31, 1999 to 471 units at December 31, 2000. Effective July 1, 2000, the Company changed its estimate of the useful life and salvage value of its
compressors for purposes of computing depreciation. The useful life and salvage value was changed from seven years with no salvage to twelve years with ten percent salvage value. The effect of the change in the accounting estimate for the year ended
December 31, 2000 was to decrease depreciation expense by approximately $291,000 and decrease the net loss after taxes by approximately $180,000.

Operating income for the year ended December 31, 2000 was $324,464 compared to $71,137 for the nine months ended December 31, 1999. Operating income for the year ended
December 31, 2000 was 6.1% of total revenue for the year ended December 31, 2000 compared to 9.0% for the nine months ended December 31, 1999.

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The decrease in the operating income as a percent of total revenue in 2000 was due to the increased sales and marketing expense and increased depreciation on the increased rental fleet.

For the year ended December 31, 2000, the Company had interest expense of $338,648 compared to $46,823 of interest expense for the nine month period ended December 31, 1999.
The increase in interest expense in 2000 is due to interest on the loan to finance the acquisition of Gas Jack in October 1999 and interest on the bank financing of the increased compressor fleet in 2000.

The year ended December 31, 2000 resulted in pre-tax net income of $12,333 compared to a pre-tax net loss of $5,395 for the nine months ended December 31, 1999.

LIQUIDITY AND CAPITAL RESOURCES

In December 2000 and January 2001, the Company completed an offering of 13% subordinated promissory notes and stock warrants to qualified private investors. At December
31, 2000, $5,250,000 of the subordinated promissory notes were issued. An additional $250,000 of the subordinated promissory notes have been issued subsequent to December 31, 2000. The notes are subordinated unsecured obligations of the Company and rank
subordinate to all existing indebtedness of the Company. The notes mature on the earlier of (1) the consummation of an underwritten public offering of the Company's capital stock or (2) December 31, 2003. The Company may, at any time prepay any part of
the principal balance on the notes, in increments of $10,000, without premium or penalty prior to maturity. Interest is payable at 13% per annum and is payable quarterly in arrears commencing on March 31, 2001. Of the total proceeds received, $100,000 was
allocated to the stock warrants.

In March 2000, we issued 70,002 shares of our common stock through a private placement for $30.00 per share or total proceeds of $2.1 million. The equity proceeds were used in
part to repay borrowings under our credit facility and the remaining proceeds were used primarily to fund the growth in our compressor fleet.

On October 29, 1999, the Company borrowed $2,800,000 under a term loan agreement with Hibernia National Bank. The related note bears interest at a fixed rate of 8.8%.
Principal payments of $46,667, plus accrued interest, are due monthly until maturity on October 30, 2004. The loan is secured with the assets and compressor leases of the Company and a personal guarantee of the Company's President.

On October 29, 1999, the Company entered into a revolving line of credit agreement with Hibernia National Bank. Under the agreement, as amended and restated December 28, 2000,
the Company can borrow the lesser of (i) $7,500,000 and (ii) the sum of 80% of the aggregate amount of eligible receivables, plus 50% of the aggregate amount of eligible inventory, plus 85% of the appraised value of compressors fabricated since
acquisition of the business on October 29, 1999. The line of credit bears interest at Wall Street Journal Prime Rate (9.5% at December 31, 2000). Interest is payable monthly with all outstanding borrowings due at maturity on December 27, 2003. The loan is
secured with the assets and compressor leases of the Company and a personal guarantee of the Company's President. The Company's credit facility imposes a number of financial and restrictive covenants that among other things, limit the Company's ability to
incur additional indebtedness, create liens and pay dividends. At December 31, 2000, the Company was in violation of its Debt to EBITDA coverage ratio covenant. Subsequent to year-end, the Company has received a waiver from its lender for this covenant
violation. In addition, the Company's lender has amended the Debt to EBITDA coverage ratio for the period ending March 31, 2001. Management expects that the Company will be in compliance with the revised covenants under the amended credit facility
throughout 2001. Subsequent to December 31, 2000, all outstanding borrowings under the line of credit were repaid from a portion of the proceeds from subordinated promissory note offering.

The Company believes that cash flow from operations and funds available under its credit facilities will provide the necessary working capital to fund the Company's
requirements for current operations through 2001. However, in connection with any expansion of operations or acquisition activities, it is likely that the Company will need additional sources of debt or equity financing. The Company cannot provide
assurance that these funds will be available or if available will be available on satisfactory terms.

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RISK FACTORS

As described in "Part I. Special Note Regarding Forward-Looking Statements," this Report contains forward-looking statements regarding our business and industry. The risk
factors described below, among others, could cause our actual results to differ materially from the expectations reflected in the forward-looking statements. If any of the following risks actually occur, our business, financial condition and operating
results could be materially negatively impacted. Additional risks not presently known to us or which we currently consider immaterial may also negatively impact the Company.

RISKS INHERENT IN OUR INDUSTRY

We are significantly dependent on demand for natural gas, and a prolonged, substantial reduction in this demand could adversely affect the demand for our services and products.

Gas compression operations are materially dependent upon the demand for natural gas. Demand may be affected by, among other factors, natural gas prices, demand for energy
and availability of alternative energy sources. Any prolonged, substantial reduction in the demand for natural gas would, in all likelihood, depress the level of production, exploration and development activity and result in a decline in the demand for
our compression services and products. This could materially adversely affect our results of operations.

We intend to make substantial capital investments to implement our growth strategy.

We anticipate that we will continue to make substantial capital investments to increase expand our compressor rental fleet and enhance our sales and marketing and service
operations. For the year ended December 31, 2000, our capital expenditures totaled approximately $6.9 million, primarily associated with the expansion of our compressor rental fleet. Historically, we have financed these expenditures through equity
placements and bank facilities. These significant capital expenditures require cash that we could otherwise apply to other business needs. However, if we do not incur these expenditures while our competitors make substantial investments to improve their
rental fleets and other services, our market share may decline and our business may be adversely affected. In addition, if we are unable to generate sufficient cash internally or obtain alternative sources of capital, it could materially adversely affect
our growth.

Our business subjects us to potential liabilities which may not be covered by insurance.

Natural gas service operations are subject to inherent risks, such as equipment defects, malfunction and failures and natural disasters which can result in uncontrollable
flows of gas or well fluids, fires and explosions. These risks could expose us to substantial liability for personal injury, wrongful death, property damage, pollution and other environmental damages. Although we have obtained insurance against many of
these risks, there can be no assurance that our insurance will be adequate to cover our liabilities. Further, there can be no assurance that insurance will be generally available in the future or, if available, that premiums will be commercially
justifiable. If we were to incur substantial liability and such damages were not covered by insurance or were in excess of policy limits, or if we were to incur liability at a time when we are not able to obtain liability insurance, our business, results
of operations and financial condition could be materially adversely affected.

We are subject to substantial environmental regulation, and changes in these regulations could increase our costs or liabilities.

We are subject to stringent and complex federal, state and local laws and regulatory standards, including regulations regarding the discharge of materials into the
environment, emission controls and other environmental protection concerns. Environmental laws and regulations may, in certain circumstances, impose "strict liability" for environmental contamination, rendering us liable for cleanup costs, natural
resource damages and other damages as a result of our conduct that was lawful at the time it occurred or the conduct of, or conditions caused by, prior

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operators or other third parties. In addition, it is not uncommon for the neighboring land owners and other third parties to file claims for personal injury, property damage and recovery of response costs. Cleanup costs
and other damages arising as a result of environmental laws, and costs associated with changes in existing environmental laws and regulations or the adoption of new laws and regulations could be substantial and could have a material adverse effect on our
operations and financial condition. Moreover, failure to comply with these environmental laws and regulations may result in the imposition of administrative, civil and criminal penalties.

We routinely deal with natural gas, oil and other petroleum products. As a result of our engineered products and overhaul and field operations, we generate, manage and dispose
of or otherwise recycle hazardous wastes and substances, such as solvents, thinner, waste paint, waste oil, washdown wastes and sandblast material. Although it is our policy to utilize generally accepted operating and disposal practices in accordance with
applicable environmental laws and regulations, hydrocarbons or other wastes may have been disposed or released on, under or from properties owned, leased, or operated by us or on or under other locations where such wastes have been taken for disposal.
These properties and the wastes disposed on them may be subject to investigatory, remedial and monitoring requirements under federal, state and local environmental laws.

We believe that our operations are in substantial compliance with applicable environmental laws and regulations. Nevertheless, the modification or interpretation of existing
federal, state and local environmental laws or regulations, the more vigorous enforcement of existing environmental laws or regulations, or the adoption of new environmental laws or regulations may also negatively impact oil and natural gas exploration
and production companies, which in turn could have a material adverse effect on us and other similarly situated service companies.

We operate in a highly competitive industry.

The natural gas compression service and engineered products business is highly competitive. Our main competitors are large national and multinational companies, which have
significantly greater financial resources than our company. These competitors offer a wide range of compressors for sale or rental. If these companies substantially increase the resources they devote to the development and marketing of competitive
products and services, we may not be able to compete effectively.

RISKS SPECIFIC TO AN INVESTMENT IN OUR COMPANY

We are dependent on particular suppliers and are vulnerable to product shortages and price increases.

Both models of Gas Jack® compressors that we fabricate are powered by a Ford 460 cubic inch V-8 engine. Ford recently announced that it has discontinued the production
of this engine model. As a result, we recently implemented a strategy of purchasing remanufactured Ford 460 engines. Although we have not yet experienced a significant delay in receiving the requisite engines, a prolonged delay or substantial increase in
the cost of new or remanufactured Ford 460 engines could materially adversely affect our results of operations.

In addition, both of our compressor models share many components that we obtain from a single source or a limited group of suppliers. Our reliance on these suppliers involves
several risks, including price increases, inferior component quality and a potential inability to obtain an adequate supply of required components in a timely manner. The partial or complete loss of certain of these sources could have at least a temporary
material adverse effect on our results of operations and could damage our customer relationships. Further, a significant increase in the price of one or more of these components could have a material adverse effect on our results of operations.





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We have a limited operating history with our current management team.

Although we acquired Compressco Field Services, Inc., formerly Gas Jack, Inc., in October 1999, our management team, including our Chief Executive Officer, has a limited
operating history in compressor fabricating. Although we believe we have made major improvements to our fabrication activities, we cannot offer any assurances that we will be successful and profitable in the future.

We are highly leveraged and vulnerable to interest rate changes.

As of December 31, 2000, we had approximately $8.3 million in outstanding indebtedness, including capital lease obligations and the current portion of long-term debt,
representing approximately 73% of our total capitalization. Of this amount, approximately $1.0 million bore interest at floating rates. Changes in economic conditions could result in higher interest and lease payment rates, thereby increasing our interest
expense and lease payments and reducing our funds available for capital investment, operations or other purposes. In addition, a substantial portion of our cash flow must be used to service our debt, which may affect our ability to capital expenditures.

Our patents may not be adequate or enforceable and others may use our proprietary technology.

We have applied for and have received four patents related to the fully integrated engine design that we use in our Gas Jack® compressors. It is our understanding that
our patents are narrowly drafted. We can offer no assurances, however, that these patents will be enforceable. In addition, we know of one fabricator using a design, for which he also obtained a patent, that is similar to our patented design. If the
protection of our intellectual property proves to be inadequate, others may use our proprietary developments without compensating us and in competition against us, giving cost advantages to our competitors.

Our success depends on key members of our management team, the loss of whom could disrupt our business.

Our success depends to a significant degree upon the continued contributions of key management, operations, engineering, sales and marketing, customer support, finance and
manufacturing personnel. We are particularly dependent on Brooks Mims Talton, our Chief Executive Officer. Currently, we are in the process of obtaining a $1.0 million key employee policy on Mr. Talton. However, do not have yet have such a policy in place
and we cannot offer any assurances that we will be able to obtain one on agreeable economic terms. Furthermore, we do not maintain and do not intend to obtain key employee life insurance for any of our other employees. The departure of any of our key
personnel could have a material adverse effect on our business, operating results and financial condition. In addition, we believe that our success depends on our ability to attract and retain additional qualified employees. If we fail to recruit other
skilled personnel, we could be unable to compete effectively.

We are a holding company and rely on our subsidiaries for operating income.

We are a holding company and, as such, we derive all of our operating income from our operating subsidiaries. We do not have any significant assets other than the equity
of our operating subsidiaries. Consequently, we are dependent on the earnings and cash flow of our subsidiaries to meet our obligations and pay dividends. Our subsidiaries are separate legal entities that are not legally obligated to make funds available
to us. We cannot assure you that our subsidiaries will be able to, or be permitted to, pay to us amounts necessary to meet our obligations or to pay dividends.





11



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A third party could be prevented from acquiring control of us because of the anti-takeover provisions in our charter and bylaws.

There are provisions in our certificate of incorporation and bylaws that may make it more difficult for a third party to acquire, or attempt to acquire, control of us,
even if a change in control would result in the purchase of your shares at a premium to the market price or would otherwise be beneficial to you. For example, our certificate of incorporation authorizes our board of directors to issue preferred stock
without stockholder approval. If our board of directors elects to issue preferred stock, it could be more difficult for a third party to acquire us. In addition, provisions of our certificate of incorporation could make it more difficult for a third party
to acquire control of us. Delaware corporation law may also discourage takeover attempts that have not been approved by our board of directors.

|ITEM 7. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|------- | -------------------------------------------

The consolidated financial statements of the Company required to be included in Item 7 are set forth in the Financial Statements beginning on page F-1.

|ITEM 8. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|------- | ------------------------------------------------------------------------------------

Not Applicable.

PART III

|ITEM 9. | DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT.
|------- | ----------------------------------------------------------------------------------------------------------------

DIRECTORS AND EXECUTIVE OFFICERS

Directors are elected to serve until the annual meeting of shareholders and until their successors have been elected and have qualified. Officers are appointed to serve,
subject to the discretion of the Board of Directors, until the meeting of the Board following the annual meeting of shareholders and until their successors have been elected and have qualified.

|NAME
----------         | AGE
------- | YEAR
ELECTED
------------- | OFFICE WITH
COMPANY
------------------
|----------------------- | ----------- | -------------------------- | --------------------------------------
|Burt H. Keenan          | 61          | 1993                       | Chairman of the Board                 
|Brooks Mims Talton, III | 34          | 1999                       | Chief Executive Officer and Director  
|Jerry W. Jarrell        | 59          | 1994                       | Director                              
|Gary McBride            | 48          | 2000                       | Chief Financial Officer               
|D. B. H. Chaffe III     | 67          | 1993                       | Director                              
|Jack Rettig             | 47          | 1999                       | Director                              
|J. Michael Drennen      | 48          | 2000                       | Director                              

Each officer and director will devote only such time to the business affairs of the Company as he deems appropriate, as discussed under the caption "Executive Compensation".

12



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Burt H. Keenan has served as our Chairman of the Board since inception in February 1993. He also served as President until October 1999. From August 1999
to September 2000, he was a non-executive Director of Independent Energy Holdings PLC. From April 1991 to August 1999, Mr. Keenan served as Executive Chairman of Independent Energy. In September 2000, Independent Energy became the subject of a
receivership proceeding under U.K. law. Since 1987, he has been associated with Chaffe & Associates, Inc., an investment banking firm located in New Orleans, Louisiana, where he specializes in capital formation for emerging and middle market
companies. From 1969 to 1986, Mr. Keenan was the founder, Chairman and CEO of Offshore Logistics, Inc., a public oil and gas service company operating a fleet of marine service vessels and helicopters worldwide. Mr. Keenan was a member of the National
Advisory Council on Oceans and Atmosphere, a United States Presidential Commission, and of various industry associations. Mr. Keenan received Bachelors and Masters degrees in business administration from Tulane University.

Brooks Mims Talton, III has served as our Chief Executive Officer and a Director since October 1999. He is also the founder and President of GJ Measurement, L.L.C.,
which we acquired in October 1999, operating since 1994 as a natural gas measurement, monitoring and control systems company. Customers range from small independents to major oil and gas companies. From 1991 to 1994, he was founder and Co-owner of Well
Link Corporation. From 1989 to 1991 he operated as a sole proprietor, Mims Oil Tools specializing in automated plunger lift production systems. Prior to 1989, Mr. Talton worked for two oil and gas exploration and production companies performing prospect
research and development. Mr. Talton holds a B.A., in Political Science with an emphasis on Energy/Public Policy from the University of Oklahoma.

Jerry W. Jarrell served as our Chief Financial Officer since inception in February 1993 through December 2000. Effective January 1, 2001, Mr. Jarrell resigned as
Chief Financial Officer and was replaced by Gary McBride. Mr. Jarrell will continue to serve as a director of the Company. From May 1998 to September 2000, he was a non-executive Director of Independent Energy Holdings PLC. From April 1991 to May 1998,
Mr. Jarrell was an Executive Director and Chief Financial Officer of Independent Energy. In September 2000, Independent Energy became the subject of a receivership proceeding under U.K. law. He served as Chief Financial Officer for the Woodson Companies,
an oil field construction company, from 1977 to 1990. From 1971 to 1977, he was Secretary-Controller for Offshore Logistics. From 1966 to 1971, he was a Certified Public Accountant with Arthur Andersen and Company, and holds a B.S. degree in accounting
from Louisiana Tech University.

Gary McBride was employed in November 2000 and, effective January 1, 2001, replaced Jerry W. Jarrell as the Chief Financial Officer. Mr. McBride previously served as
Vice-President of Finance with Cain's Coffee Company in Oklahoma City and had been with Cain's since 1980. Cain's is a regional roaster, manufacturer and distributor of coffee, tea and spices with annual revenue of approximately $90 million and 550
employees. Mr. McBride attended the University of Central Oklahoma earning a B. S. degree in accounting and is a certified public accountant.

D.B.H. Chaffe III has been President and CEO of Chaffe & Associates, Inc., an investment banking firm located in New Orleans, Louisiana, since 1982. From 1981 to
1985, Mr. Chaffe was President, CEO and Treasurer of Becker & Associates, Inc., a marine contracting firm, following a leveraged buy-out by Mr. Chaffe and two other individuals. From 1969 to 1981, he was Executive Vice President and Director and head
of corporate finance at Howard, Weil, Labouisse, Friedrichs, Inc., Prior to 1969, Mr. Chaffe was a registered representative and principal of investment banking firms. He has served on advisory committees and has been a member of National Securities
Associations and stock exchanges. Mr. Chaffe received a bachelors degree in engineering from Tulane University.

Jack Rettig was President of Moores Wireline, a oilfield service company, from 1993 to 1998 and currently is an independent consultant. During 1978 to 1993 he worked
with various exploration and production companies including Exxon, Tee Operating, Pacific Enterprises and Walter International. He graduated from Louisiana State University in 1978 with a BS in mechanical engineering.



13



---

J. Michael Drennen is currently the Manager of Corporate Acquisitions Engineering with Devon Energy Corporation in Oklahoma City. He has been with Devon
Energy since 1974. With Dover, he previously held the positions of Manager of Reservoir and Acquisitions Engineering, Manager of Production and District Engineer. Mr. Drennen is a registered petroleum engineer and graduated from the University of Oklahoma
in 1974 with BS in petroleum engineering.

INDEMNIFICATION

The Delaware Supreme Court has held that directors' duty of care to a corporation and its stockholders requires the exercise of an informed business judgment. Having
become informed of all material information reasonably available to them, directors must act with requisite care in the discharge of their duties. The Delaware General Corporation Law permits a corporation through its certificate of incorporation to
exonerate or indemnify its directors from personal liability to the corporation or its stockholders for monetary damages or breach of fiduciary duty of care as a director, with certain exceptions. The Companies have adopted these exoneration and
indemnification provisions in the Delaware General Corporation Law in their respective certificates of incorporation and bylaws. The exceptions include a breach of the director's duty of loyalty, acts or omissions not in good faith or which involve
intentional misconduct or knowing violations of law, improper declarations of dividends, and transaction from which the directors derived an improper personal benefit. The Company's Certificate of Incorporation exonerates its directors, acting in such
capacity, from monetary liability to the extent permitted by this statutory provision. The limitation of liability provision does not eliminate a stockholder's right to seek non-monetary, equitable remedies such as an injunction or recision to redress an
action taken by directors. However, as a practical matter, equitable remedies may not be available in all situations, and there may be instances in which no effective remedy is available.

The extent to which the indemnification provisions of the Delaware General Corporation Law and the Companies' certificates of incorporation and bylaws provide indemnification
to officers and directors for violations of the federal securities laws has not been settled by court precedent. The Companies understand that, in the position of the Securities and Exchange Commission, such indemnification is against public policy and is
unenforceable.

|ITEM 10. | EXECUTIVE COMPENSATION
|-------- | ----------------------

The following table sets forth the cash compensation of the Company's executive officers during each of the last three fiscal periods. The remuneration described
in the table does not include the cost to the Company of benefits furnished to the named executive officers, including premiums for health insurance and other benefits provided to such individual that are extended in connection with the conduct of the
Company's business. The value of such benefits cannot be precisely determined, but the executive officers named below did not receive other compensation in excess of the lesser of $25,000 or 10% of such officer's cash compensation.

BOARD COMMITTEES

AUDIT COMMITTEE

Our audit committee consists of Jerry W. Jarrell, Burt H. Keenan and Brooks Mims Talton. The audit committee makes recommendations to the board of directors regarding the
selection of independent auditors, reviews the results and scope of the audit and other services provided by our independent auditors and evaluates our internal accounting procedures.





14



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COMPENSATION COMMITTEE

Our compensation committee consists of Burt H. Keenan and Jerry W. Jarrell. The compensation committee reviews and approves compensation and benefits for our executive
officers. The compensation committee also administers our compensation and stock plans and makes recommendations to the board of directors regarding such matters.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Until October 1999, the Company had no employees and no compensation committee. No member of the compensation committee is or has been an employee of the Company at any
time. None of our executive officers serves as a member of the board of directors or compensation committee of any other company that has one or more executive officers serving as a member of our board of directors or compensation committee.

DIRECTOR COMPENSATION

Other than reimbursing directors for customary and reasonable expenses incurred in attending board of directors and committee meetings, we do not currently compensate our
directors.

EXECUTIVE COMPENSATION

The following table sets forth all compensation awarded to, earned by or paid to the named executive officer for the year ended December 31, 2000, and the nine month
period ended December 31, 1999.

SUMMARY COMPENSATION TABLE

|                                                                            | ANNUAL
COMPENSATION
------------------------ | LONG-TERM
COMPENSATION
SECURITIES
------------------------ |                                          
|--------------------------------------------------------------------------- | -------------------------------------------- | ---------------------------------------------------------- | -----------------------------------------
|NAME AND PRINCIPAL POSITION
----------------------------------------------- | SALARY
------------                          | BONUS
-----------                                          | UNDERLYING
OPTIONS
----------------------
|Year ended December 31, 2000:                                               |                                              |                                                            |                                          
|Burt H. Keenan (1)...........................                               | --                                           | --                                                         | 1,500                                    
|Brooks Mims Talton(2).....................                                  | $80,000                                      | $25,000                                                    | --                                       
|Nine months ended December 31, 1999:                                        |                                              |                                                            |                                          
|Burt H. Keenan (1)...........................                               | --                                           | --                                                         | 5,000                                    
|Brooks Mims Talton(2).....................                                  | $13,333                                      | $20,000                                                    | --                                       



|(1) | Mr. Keenan served as President until the date of the Gas Jack acquisition on October 29, 1999, and serves as chairman of the board.
|--- | -----------------------------------------------------------------------------------------------------------------------------------
|(2) | Mr. Talton became CEO in connection with the Gas Jack acquisition on October 29, 1999.                                             

OPTION GRANTS

The following table sets forth information regarding options granted to the named executive officer during the year ended December 31, 2000.

15



---

|NAME
---------            | NUMBER
OF
OPTIONS
GRANTED
--------------- | PERCENT OF
TOTAL
OPTIONS
GRANTED TO
EMPLOYEES
IN YEAR
------------- | EXERCISE
PRICE
($/SHARE)
-------------- | EXPIRATION
DATE
-------- | POTENTIAL
REALIZABLE
VALUE AT
ASSUMED ANNUAL
RATES OF
STOCK PRICE
APPRECIATION FOR
OPTION TERM
-------------------
|------------------------- | ----------------------------------------- | ------------------------------------------------------------------- | --------------------------------------- | ------------------------ | ------------------------------------------------------------------------------------------------------------------
|5%
------                 | 10%
------                               
|                          |                                           |                                                                     |                                         |                          |                                                                                                                   
|Burt H. Keenan........... | 1,500                                     | 9.8%                                                                | $30.00                                  | 11-15-06                 | $15,304                                                                                                           
|Brooks Mims Talton....    | --                                        | --                                                                  | --                                      | --                       | --                                                                                                                

The percent of total options granted to employees in the above table is based on 15,250 options granted to employees in this period.

Options were granted at an exercise price equal to the fair market value of our common stock, as determined by our board of directors on the date of grant. In making this
determination, the board of directors considered a number of factors, including:

| | our historical and prospective future revenue and profitability;
|- | ----------------------------------------------------------------
| | our cash balance and rate of cash consumption;                  
| | the development and size of the market for our services;        
| | the status of our financing activities;                         
| | the stability of our management team; and                       
| | the breadth of our service offerings.                           

The amounts reflected in the "Potential Realizable Value" column of the foregoing table are calculated assuming that the fair market value of the common stock on
the date of the grant as determined by the board of directors appreciates at the indicated annual rate compounded annually for the entire term of the option, and that the option is exercised and the common stock received therefor is sold on the last day
of the term of the option for the appreciated price. The 5% and 10% rates of appreciation are mandated by the rules of the Securities and Exchange Commission and do not represent our estimate or projection of future increases in the price of the common
stock.

2000 OPTION EXERCISES AND YEAR-END OPTION VALUES

The following table sets forth information concerning the value realized upon exercise of options during 2000 and the number and value of unexercised options held by the
named executive officers at December 31, 2000. The value of the unexercised in-the-money options is based on the fair market value of our common stock as of December 31, 2000, determined by the board of directors in the manner discussed above to be $30.00
per share, minus the per share exercise price, multiplied by the number of shares underlying the option.

|NAME
----------                  | SHARES
ACQUIRED
ON
EXERCISE
--------------- | VALUE
REALIZED
----------------  | NUMBER OF UNEXERCISED
OPTIONS AT DECEMBER 31, 2000 | VALUE OF UNEXERCISED IN-
THE -MONEY OPTIONS AT
DECEMBER 31, 2000
|-------------------------------- | ------------------------------------------- | -------------------------------- | -------------------------------------------------- | ----------------------------------------------------------------
|EXERCISABLE
-------------------- | UNEXERCISABLE
--------------------------    | EXERCISABLE
-------------------- | UNEXERCISABLE
------------------------            
|Burt H. Keenan...............    | --                                          | --                               | --                                                 | 6,500                                                           
|Brooks Mims Talton........       | --                                          | --                               | --                                                 | --                                                              



|ITEM 11. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
|-------- | --------------------------------------------------------------

The following table sets forth, as of December 31, 2000, the stock ownership of all persons known to own beneficially five percent or more of the Company's Common
Stock and all directors and officers of the Company, individually and as a group. Each person has sole voting and investment power over the shares indicated, except as noted.

16



---



|NAME
----------                                       | NUMBER OF SHARES OF
COMMON STOCK
BENEFICIALLY OWNED
---------------------------------- | PERCENT
-------------
|----------------------------------------------------- | -------------------------------------------------------------------------------------- | ---------------------
|5% Stockholders:                                      |                                                                                        |                      
|John E. Koerner (1)                                   | 14,200                                                                                 |                      
|A.F. Lundy (2)                                        | 11,273                                                                                 |                      
|Officers and Directors:                               |                                                                                        |                      
|Burt H. Keenan (3)                                    | 14,150                                                                                 |                      
|Brooks Mims Talton                                    | 28,333                                                                                 |                      
|Jerry W. Jarrell (4)                                  | 2,965                                                                                  |                      
|Gary McBride                                          | --                                                                                     |                      
|D. B. H. Chaffe III                                   | 4,320                                                                                  |                      
|Jack Rettig (5)                                       | 8,172                                                                                  |                      
|J. Michael Drennen                                    | --                                                                                     |                      
|All officers and directors as a group (7 persons) (6) | 57,940                                                                                 |                      



|(1) | Includes 4,200 shares issuable upon exercise of stock warrants held by Koerner Capital Corporation.               
|--- | ------------------------------------------------------------------------------------------------------------------
|(2) | Includes 2,940 shares issuable upon exercise of stock warrants held by Mr. Lundy.                                 
|(3) | Includes 6,300 shares issuable upon exercise of stock warrants held by Mr. Keenan.                                
|(4) | Includes 840 shares issuable upon exercise of stock warrants held by Mr. Jarrell.                                 
|(5) | Includes 1,260 shares issuable upon exercise of stock warrants held by Mr. Rettig.                                
|(6) | Includes 8,400 shares issuable upon exercise of stock warrants held by the named executive officers and directors.



|ITEM 12. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
|-------- | ----------------------------------------------

Consulting Agreement

The Company has an oral agreement with Jerry W. Jarrell, a director, to provide consulting services to the Company. The agreement, which commenced on January 1, 1995, and
was renewed in 1997 and 1999, currently provides for $2,000 compensation per month and expires in October 2001. See "Stock Option Plan" below.

Purchases of Subordinated Notes

Certain directors, officers and 5% stockholders purchased the Company's 13% subordinated promissory notes in our offering of such securities in December 2000. All such
persons purchased on the same terms and conditions as the other investors in the offering. Mr. Keenan, Mr. Koerner, Mr. Lundy, Mr. Rettig and Mr. Jarrell purchased $750,000, $500,000, $350,000, $150,000 and $100,000 of principal amount of notes,
respectively.

Registration Rights Agreement

In connection with our offering of 13% subordinated promissory notes, Mr. Keenan, Mr. Koerner, Mr. Lundy, Mr. Rettig and Mr. Jarrell received warrants to purchase 6,300,
4,200, 2,940, 1,260 and 840 shares of common stock, respectively. The Company entered into a registration rights agreement with each investor, including each of such persons. Under the terms of the agreement, these warrantholders have the right to require
the Company to register the sale of all of the common stock exercised pursuant to the warrants upon the earlier of (i) June 30, 2002 and (ii) 180 days after the consummation of an underwritten public offering of our capital stock. The holders are entitled
to one to one registration required by the holders of a majority of the outstanding warrants covering all or part of the shares issued upon exercise of the warrants (but in no event for less than 50% of all such shares). Holders of such common stock are
also entitled to "piggy-back" registration rights prior to December 31, 2003. Holders of a majority of the outstanding warrants may bind all of the warrantholders to a lock-up agreement related to an underwritten public offering.

17



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STOCK OPTION PLAN

The Company, by resolution of its Board of Directors and stockholders, adopted a 1993 Stock Option Plan (the "Plan") on February 16, 1993. The Plan enables each Company to
offer an incentive based compensation system to employees, officers and directors and to employees of companies who do business with the Company.

In the discretion of a committee comprised of non-employee directors (the "Committee"), directors, officers, and key employees of the Company and its subsidiaries or employees
of companies with which the Company does business become participants in the Plan upon receiving grants in the form of stock options or restricted stock. A total of 2,000,000 shares are authorized for issuance under the Plan, of which 30,500 shares are
issuable under options granted to officers, directors and key employees at December 31, 2000. The Company may increase the number of shares authorized for issuance under the Plan or may make other material modifications to the Plan without shareholder
approval. However, no amendment may change the existing rights of any option holder.

Any shares which are subject to an award but are not used because the terms and conditions of the award are not met, or any shares which are used by participants to pay all or
part of the purchase price of any option may again be used for awards under the Plan. However, shares with respect to which a stock appreciation right has been exercised may not again be made subject to an award.

Stock options may be granted as non-qualified stock options or incentive stock options, but incentive stock options may not be granted at a price less than 110% of the fair
market value of the stock as of the date of grant; non-qualified stock options may not be granted at a price less than 85% of fair market value of the stock as of the date of grant. Restricted stock may not be granted under the Plan in connection with
incentive stock options.

Stock options may be exercised during a period of time fixed by the Committee except that no stock option may be exercised more than ten years after the date of grant or three
years after death or disability, whichever is later. In the discretion of the Committee, payment of the purchase price for the shares of stock acquired through the exercise of a stock option may be made in cash, shares of the Company's Common Stock or by
delivery of recourse promissory notes or a combination of notes, cash and shares of the Company's Common Stock or a combination thereof. Incentive stock options may only be issued to directors, officers and employees of the Company.

Stock options granted under the Plan may include the right to acquire an Accelerated Ownership Non-Qualified Stock Option ("AO"). If an option grant contains the AO feature
and if a participant pays all or part of the purchase price of the option with shares of the Company's Common Stock, then upon exercise of the option the participant is granted an AO to purchase, at the fair market value as of the date of the AO grant,
the number of shares of common stock of the Company equal to the sum of the number of whole shares used by the participant in payment of the purchase price and the number of whole shares, if any, withheld by the Company as payment for withholding taxes.
An AO may be exercised between the date of grant and the date of expiration, which will be the same as the date of expiration of the option to which the AO is related.

Stock appreciation rights and/or restricted stock may be granted in conjunction with, or may be unrelated to stock options. A stock appreciation right entitles a participant
to receive a payment, in cash or common stock or a combination thereof, in an amount equal to the excess of the fair market value of the stock at the time of exercise over the fair market value as of the date of grant. Stock appreciation rights may be
exercised during a period of time fixed by the Committee not to exceed ten years after the date of grant or three years after death or disability, whichever is later.





18



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Restricted stock requires the recipient to continue in service as an officer, director, employee or consultant for a fixed period of time for ownership of the
shares to vest. If restricted shares or stock appreciation rights are issued in tandem with options, the restricted stock or stock appreciation right is canceled upon exercise of the option and the option will likewise terminate upon vesting of the
restricted shares.

|ITEM 13. | EXHIBITS AND REPORTS ON FORM 8-K
|-------- | --------------------------------



| | (a) | Exhibits.     The following exhibits of the Company are included herein.
| | --- | ------------------------------------------------------------------------
| | 3.  | Certificate of Incorporation and Bylaws                                 
| |     | *3.1                                                                    
| |     | *3.2                                                                    
| |     | *3.3                                                                    
| | 10. | Material Contracts                                                      
| |     | *10.1                                                                   
| |     | *10.2                                                                   
| |     | **10.3                                                                  
| |     | **10.4                                                                  
| |     | 10.5                                                                    
| |     | 10.6                                                                    
| |     | 10.7                                                                    
| |     | 10.8                                                                    
| |     | 10.9                                                                    

------------------

|*  | Filed with Registration Statement on Form SB-2, File No. 33-61888-FW and incorporated by reference herein.
|-- | ----------------------------------------------------------------------------------------------------------
|** | Filed with Current Report on Form 8-K (October 29, 1999) and incorporated by reference herein.            











19



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INDEX TO FINANCIAL STATEMENTS

COMPRESSCO, INC.:

|                | Report of Independent Public Accountants                                                                                         |  | F-2 
|--------------- | -------------------------------------------------------------------------------------------------------------------------------- |  | ----
|                | Balance Sheet as of December 31, 2000                                                                                            |  | F-3 
|                | Statements of Operations for the Year Ended December 31, 2000 and the Nine Months Ended December 31, 1999                        |  | F-4 
|                | Consolidated Statements of Stockholders' Equity for the Year Ended December 31, 2000 and the Nine Months Ended December 31, 1999 |  | F-5 
|                | Consolidated Statements of Cash Flows for the Year Ended December 31, 2000 and the Nine Months Ended December 31, 1999           |  | F-6 
|                | Notes to Consolidated Financial Statements                                                                                       |  | F-7 
|GAS JACK, INC.: |                                                                                                                                  | 
|                | Report of Independent Public Accountants                                                                                         |  | F-15
|                | Statement of Operations for the Period from January 1, 1999 through October 29, 1999                                             |  | F-16
|                | Statement of Stockholders' Equity for the Period from January 1, 1999 through October 29, 1999                                   |  | F-17
|                | Statement of Cash Flows for the Period from January 1, 1999 through October 29, 1999                                             |  | F-18
|                | Notes to Financial Statements                                                                                                    |  | F-19

















F-1



---

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders of Compressco, Inc.:

We have audited the accompanying consolidated balance sheet of Compressco, Inc. and subsidiaries as of December 31, 2000, and the related statements of operations, stockholders' equity and cash flows for the year ended
December 31, 2000 and the nine months ended December 31, 1999. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Compressco, Inc. as of December 31, 2000, and the results of their operations and their cash
flows for the year ended December 31, 2000 and for the nine months ended December 31, 1999, in conformity with accounting principles generally accepted in the United States.

|Oklahoma City, Oklahoma |  | Arthur Andersen LLP
|----------------------- |  | -------------------
|January 26, 2001        |  |                    





















F-2



---

COMPRESSCO, INC.
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 2000

|ASSETS                                                                          |                                                                                                     
|------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------
|CURRENT ASSETS:                                                                 |                                                                                                     
|                                                                                | Cash and cash equivalents                                                                           
|                                                                                | Accounts receivable, net of allowance of $50,000                                                    
|                                                                                | Inventories                                                                                         
|                                                                                | Notes receivable, current portion                                                                   
|                                                                                | Prepaids and other                                                                                  
|                                                                                | Deferred income tax asset                                                                           
|                                                                                | Total current assets                                                                                
|                                                                                |                                                                                                     
|COMPRESSORS                                                                     |                                                                                                     
|                                                                                | Less- Accumulated depreciation                                                                      
|                                                                                | Total compressors, net                                                                              
|VEHICLES, EQUIPMENT and OTHER PROPERTY                                          | 659,068                                                                                             
|                                                                                | Less- Accumulated depreciation                                                                      
|                                                                                | Total vehicles, equipment and other property, net                                                   
|OTHER ASSETS                                                                    | 120,831                                                                                             
|                                                                                | Total assets                                                                                        
|                                                                                | LIABILITIES AND STOCKHOLDERS' EQUITY                                                                
|CURRENT LIABILITIES:                                                            |                                                                                                     
|                                                                                | Accounts payable                                                                                    
|                                                                                | Accrued liabilities                                                                                 
|                                                                                | Current portion of long-term debt                                                                   
|                                                                                | Total current liabilities                                                                           
|LONG-TERM DEBT, net of current portion                                          | 7,784,330                                                                                           
|DEFERRED INCOME TAXES                                                           | 260,734                                                                                             
|                                                                                | Total liabilities                                                                                   
|COMMITMENTS (Note 9)                                                            |                                                                                                     
|STOCKHOLDERS' EQUITY:                                                           |                                                                                                     
|                                                                                | Preferred stock, $1 par value; 2,000,000 shares authorized; no 
    shares issued or outstanding    
|                                                                                | Common stock, $1 par value; 20,000,000 shares authorized; 
    153,235 shares issued and outstanding
|                                                                                | Warrants outstanding                                                                                
|                                                                                | Additional paid-in capital                                                                          
|                                                                                | Retained deficit                                                                                    
|                                                                                | Total stockholders' equity                                                                          
|                                                                                | Total liabilities and stockholders' equity                                                          
|                                                                                |                                                                                                     
|The accompanying notes are an integral part of this consolidated balance sheet.
|                                                                               
|F-3                                                                            





---

COMPRESSCO, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2000 AND
THE NINE MONTHS ENDED DECEMBER 31, 1999

|                                                                                        | YEAR ENDED
DECEMBER 31,
2000          | NINE MONTHS ENDED
DECEMBER 31,
1999
|--------------------------------------------------------------------------------------- | ------------------------------------- | -----------------------------------
|REVENUES:                                                                               |                                       |                                    
|                                                                                        | Rental revenue                        | $ 4,035,317                        
|                                                                                        | Sales - Compressors and parts         | 763,488                            
|                                                                                        | Service and other                     | 505,196                            
|                                                                                        | Total revenues                        | 5,304,001                          
|COST OF SALES AND EXPENSES:                                                             |                                       |                                    
|                                                                                        | Cost of sales                         | 473,312                            
|                                                                                        | Operating expenses                    | 3,816,188                          
|                                                                                        | Depreciation and amortization expense | 690,037                            
|                                                                                        | Total cost of sales and expenses      | 4,979,537                          
|OPERATING INCOME                                                                        | 324,464                               |                                    
|OTHER INCOME (EXPENSE):                                                                 |                                       |                                    
|                                                                                        | Interest income                       | 26,517                             
|                                                                                        | Interest expense                      | (338,648)                          
|                                                                                        | Other expenses, net                   | -                                  
|                                                                                        | Total other income (expense)          | (312,131)                          
|INCOME (LOSS) BEFORE PROVISION 
     FOR INCOME TAXES                                   | 12,333                                |                                    
|PROVISION FOR INCOME TAXES                                                              | 22,902                                |                                    
|NET INCOME (LOSS)                                                                       | $      (10,569)                       |                                    
|BASIC EARNINGS (LOSS) PER 
     COMMON SHARE                                            | $            (.08)                    |                                    
|                                                                                       
|                                                                                       
|                                                                                       
|The accompanying notes are an integral part of these consolidated financial statements.
|                                                                                       
|                                                                                       
|F-4                                                                                    





---

COMPRESSCO, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 2000 AND
THE NINE MONTHS ENDED DECEMBER 31, 1999

|                                                                                         | COMMON STOCK | STOCK     | PAID-IN  | RETAINED   |           
|---------------------------------------------------------------------------------------- | ------------ | --------- | -------- | ---------- | ----------
|                                                                                         | SHARES       | PAR VALUE | WARRANTS | CAPITAL    | DEFICIT   
|BALANCE, March 31, 1999                                                                  | 43,600       | $ 43,600  | $   -    | $  251,460 | $  (5,182)
|Issuance of common stock                                                                 | 33,333       | 33,333    | -        | 299,997    | -         
|Exercise of common stock 
    options                                                    | 6,300        | 6,300     | -        | 82,200     | -         
|Net loss                                                                                 | -            | -         | -        | -          | (5,395)   
|BALANCE, December 31,
    1999                                                           | 83,233       | $  83,233 | -        | $  633,657 | $ (10,577)
|Issuance of common stock                                                                 | 70,002       | 70,002    | -        | 2,030,058  | -         
|Issuance of stock warrants                                                               | -            | -         | 100,000  | -          | -         
|Net loss                                                                                 | -            | -         | -        | -          | (10,569)  
|Balance December 31, 2000                                                                | 153,235      | $153,235  | $100,000 | $2,663,715 | $ (21,146)
|                                                                                        
|The accompanying notes are an integral part of these 
consolidated financial statements.
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|F-5                                                                                     





---

COMPRESSCO, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 2000 AND
THE NINE MONTHS ENDED DECEMBER 31, 1999

|                                                                                         |                                                                                              | YEAR ENDED
DECEMBER 31, 2000 |            | NINE MONTHS
ENDED
DECEMBER 31, 1999
|---------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------- | ---------------------------- | ---------- | -----------------------------------
|                                                                                         |                                                                                              |                              |            |                                    
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                    |                                                                                              |                              |            |                                    
|                                                                                         | Net loss                                                                                     | $                            | (10,569    | )                                  
|                                                                                         | Adjustments to reconcile net loss to net 
  cash provided by (used in) operating activities- |                              |            |                                    
|                                                                                         | Depreciation and amortization                                                                |                              | 690,037    |                                    
|                                                                                         | Provision for bad debts                                                                      |                              | 23,000     |                                    
|                                                                                         | Other assets                                                                                 |                              | (28,830    | )                                  
|                                                                                         | Deferred income taxes                                                                        |                              | 22,902     |                                    
|                                                                                         | Changes in current assets and liabilities:                                                   |                              |            |                                    
|                                                                                         | Accounts receivable                                                                          |                              | (572,237   | )                                  
|                                                                                         | Inventories                                                                                  |                              | (1,167,484 | )                                  
|                                                                                         | Prepaids and other                                                                           |                              | (25,635    | )                                  
|                                                                                         | Accounts payable                                                                             |                              | 1,016,652  |                                    
|                                                                                         | Accrued liabilities                                                                          |                              | 96,014     |                                    
|                                                                                         | Other current liabilities                                                                    |                              | (8,273     | )                                  
|                                                                                         | Net cash provided by 
   operating activities                                                |                              | 35,604     |                                    
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                    |                                                                                              |                              |            |                                    
|                                                                                         | Additions to compressors                                                                     |                              | (6,480,579 | )                                  
|                                                                                         | Additions to vehicles and other property                                                     |                              | (374,014   | )                                  
|                                                                                         | Acquisition of business                                                                      |                              | --         |                                    
|                                                                                         | Cash acquired in acquisition of business                                                     |                              | --         |                                    
|                                                                                         | Net cash used in investing activities                                                        |                              | (6,854,593 | )                                  
|CASH FLOWS FROM FINANCING ACTIVITIES:                                                    |                                                                                              |                              |            |                                    
|                                                                                         | Proceeds from issuance of common stock                                                       |                              | 2,100,060  |                                    
|                                                                                         | Proceeds from issuance of stock warrants                                                     |                              | 100,000    |                                    
|                                                                                         | Proceeds from issuance of subordinated debt                                                  |                              | 5,150,000  |                                    
|                                                                                         | Deferred financing costs                                                                     |                              | (89,443    | )                                  
|                                                                                         | Proceeds from notes payable                                                                  |                              | --         |                                    
|                                                                                         | Principal payments on notes payable                                                          |                              | (628,369   | )                                  
|                                                                                         | Proceeds from line of credit                                                                 |                              | 5,335,842  |                                    
|                                                                                         | Principal payments on line of credit                                                         |                              | (4,385,314 | )                                  
|                                                                                         | Proceeds from issuance of common stock from exercise of stock options                        |                              | --         |                                    
|                                                                                         | Net cash provided by financing activities                                                    |                              | 7,582,776  |                                    
|NET INCREASE (DECREASE) IN CASH AND CASH
     EQUIVALENTS                                |                                                                                              | 763,787                      |            |                                    
|CASH AND CASH EQUIVALENTS, BEGINNING
     OF PERIOD                                      |                                                                                              | 96,256                       |            |                                    
|CASH AND CASH EQUIVALENTS, END OF PERIOD                                                 | $                                                                                            | 860,043                      |            |                                    
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW
     INFORMATION:                                  |                                                                                              |                              |            |                                    
|                                                                                         | Cash paid during the period for Interest                                                     |                              |            |                                    
|                                                                                         | Interest                                                                                     | $                            | 344,553    |                                    
|                                                                                         | Income taxes                                                                                 | $                            | --         |                                    
|SUPPLEMENTAL DISCLOSURES OF NONCASH
     INVESTING AND FINANCING ACTIVITIES:             |                                                                                              |                              |            |                                    
|                                                                                         | Long-term debt assumed in acquisition of
     subsidiaries                                   | $                            | --         |                                    
|                                                                                         | Current liabilities assumed in acquisition of
     subsidiaries                              | $                            | --         |                                    
|                                                                                         | Issuance of common stock in acquisition of
     subsidiaries                                 | $                            | --         |                                    
|                                                                                         | Issuance of notes receivable on Compressor sales                                             | $                            | 102,900    |                                    
|                                                                                         |                                                                                              |                              |            |                                    
|The accompanying notes are an integral part of these 
consolidated financial statements.
|                                                                                        
|F-6                                                                                     





---

COMPRESSCO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.     ORGANIZATION:

Compressco, Inc, formerly Emerging Alpha Corporation, (the "Company") was incorporated in the State of Delaware on February 10, 1993, for the purpose of creating a corporate vehicle to seek, investigate and, if the results of such
investigations warrant, acquire business opportunities. Since its inception, the primary activity of the Company has been devoted to organizational activities and obtaining initial funding. Upon investigation and analysis by the Company's management, the
Company decided to enter certain segments of the natural gas industry including equipment manufacturing, compression services and production of natural gas reserves.

On October 29, 1999, the Company purchased all outstanding shares of the capital stock of Gas Jack Inc., an Oklahoma corporation ("Gas Jack"), for $2.7 million and all outstanding units of GJ Measurement, an Oklahoma L.L.C., ("GJ
Measurement") in exchange for 33,333 shares of the Company's common stock. Both acquisitions, which are discussed in more detail in Note 4, were accounted for using the purchase method of accounting. Subsequent to the acquisition, both Gas Jack and GJ
Measurement are wholly-owned subsidiaries of the Company. In connection with the acquisitions, the Company changed its fiscal year-end from March 31 to December 31. In 2000 the name of Gas Jack was changed to Compressco Field Services, Inc. and the name
of GJ Measurement was changed to Compressco Testing L.L.C.

The Company is engaged primarily in the manufacture, rental and service of natural gas compressors that provide economical well head compression to mature, low pressure natural gas wells. The Company's compressors are currently sold
and leased to natural gas producers located primarily in Oklahoma, Kansas, Texas, Arkansas and New Mexico. Compressco Testing L.L.C. is a natural gas measurement, testing and service company, based in Oklahoma City, that began operations in September 1999.

In January 2000 the Company established a wholly owned energy production subsidiary, Providence Natural Gas, Inc., ("Providence") to acquire certain pressure depleted reservoirs, having key reservoir characteristics known to be
receptive to well-head compression. The Company plans to install compressors at the sites to enhance production and then market and sell the natural gas. Since its inception, Providence has acquired interests in one natural gas well.

2.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

BASIS OF PRESENTATION

The accompanying consolidated financial statements include the accounts and operations of the Company as of and for the year ended December 31, 2000, and for the nine months ending December 31, 1999, that include the accounts and
operations as of and for the period from October 29, 1999 to December 31,1999, for Gas Jack and GJ Measurement. All significant intercompany accounts and transactions have been eliminated in the consolidated financial statements.

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments with initial maturities of three months or less to be cash equivalents.

INVENTORIES

Inventories consist primarily of compressor components and parts, and work-in-progress, and are stated at the lower of cost or market using average cost.

F-7



---

NOTES RECEIVABLE

The Company has financed the sale of several compressors through the issuance of notes receivable secured by a lien on the compressor. The notes are for two years with interest rates ranging from 10 to 12 percent. The Company
recognizes the sale and gain from the sale upon delivery of the compressor to the customer. The total amount of receivable under these notes is approximately $79,000 as of December 31, 2000.

OTHER ASSETS

The Company includes in other assets deferred financing costs of approximately $90,000 related to the subordinated promissory notes and bank revolver facility. These costs are being amortized on a straight line basis over the
three-year life of the related financing.

COMPRESSORS, VEHICLES, EQUIPMENT AND OTHER PROPERTY

Compressors include units currently being rented and available for rent. Compressors, vehicles and equipment are recorded at cost. Depreciation is computed using the straight-line method based on the following estimated useful lives:

| | Compressors         | 12 years
| | ------------------- | --------
| | Vehicles            | 5 years 
| | Equipment and other | 7 years 

Effective July 1, 2000, the Company changed its estimate of the useful life and salvage value of its compressors for purposes of computing depreciation. The estimated useful life and salvage value of its compressors was
changed from seven years with no salvage value to 12 years with a 10% salvage value. Based upon the Company's data relating to the service history of its compressor fleet, the Company believes that the new estimated useful life and salvage value more
accurately reflects the service life of its compressor fleet. The change is accounted for prospectively. The effect of the change in accounting estimate was as follows for the year ended December 31, 2000.

| | Depreciation expense was decreased by | $ | 290,696
| | ------------------------------------- | - | -------
| | Net loss decreased by                 | $ | 180,232
| | Basic loss per share decreased by     | $ | 1.30   

REVENUE RECOGNITION

Revenue on the sale of compressors and parts is recorded upon shipment. The Company rents compressors to customers on terms ranging from two weeks to one year. As of December 31, 2000, all rental agreements are cancellable within 30
days written notice by the customer. Certain of the rental agreements provide that in case of early cancellation by the customer increased rental payments are due for the previous periods the customer rented the compressor. Revenues from rental and
service agreements are recorded as earned over the lives of the respective contracts.

INCOME TAXES

Deferred income taxes are provided to reflect the future tax consequences of differences between the tax bases of assets and liabilities and their reported amounts in the financial statements. Deferred income tax assets and liabilities

F-8



---

are computed using the currently enacted tax laws and rates that apply to the periods in which they are expected to affect taxable income. Income tax expense is the current tax payable or refundable benefit for the period
plus or minus the net change in the deferred tax assets and liabilities.

Deferred taxes are classified as current or noncurrent, depending on the classification of the assets and liabilities to which they relate. Deferred tax arising from temporary differences that are not related to an asset or liability
are classified as current or noncurrent depending on the period in which the temporary differences are expected to be used. A valuation allowance is established when it is more likely than not that some portion or all of the deferred tax assets will not
be realized.

EARNINGS (LOSS) PER COMMON SHARE

Basic earnings (loss) per common share includes no dilution and is computed by dividing income available to common stockholders by the weighted-average number of shares outstanding for the period. The weighted-average number of shares
used to compute earnings (loss) per common share was 138,851 for the year ending December 31, 2000, and 49,526 for the nine months ended December 31, 1999. The effect of outstanding stock options and stock warrants is not shown as their effects would be
anti-dilutive.

BUSINESS SEGMENTS

The Company operates in one business segment pursuant to Statement of Financial Accounting Standards (SFAS) No. 131, "Disclosures about Segments of an Enterprise and Related Information".

USE OF ESTIMATES

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

3.     INVENTORIES:

Inventories consist of the following at December 31, 2000:

| | Components and parts | $1,395,808   
| | -------------------- | -------------
| | Work-in-progress     | 575,087      
| |                      | -------------
| |                      | $1,970,895   
| |                      | ========     

4.     ACQUISITIONS:

On October 29, 1999, the Company purchased all outstanding shares of the capital stock of Gas Jack for $2.7 million in cash. In addition, on October 29, 1999, the Company acquired all outstanding units of GJ Measurement in exchange for
33,333 shares of the Company's common stock. Both acquisitions were accounted for using the purchase method of accounting. The Company did not recognize any goodwill as a result of these acquisitions.

A summary of the values assigned to the assets acquired, liabilities assumed, and equity securities issued in connection with these acquisitions, is as follows:

F-9



---



| | Current assets                      | $ | 1,544,764    
| | ----------------------------------- | - | -------------
| | Compressors, vehicles and equipment |   | 2,764,542    
| | Other noncurrent assets             |   | 27,316       
| | Current liabilities                 |   | (425,611)    
| | Long-term liabilities               |   | (877,681)    
| |                                     |   | -------------
| | Net assets acquired                 | $ | 3,033,330    
| |                                     |   | ========     



|Purchase price consisting of:
|-----------------------------
|                             
|                             
|                             
|                             
|                             

The liabilities assumed and common stock issued in connection with these acquisitions are noncash financing activities and are not included on the accompanying consolidated statements of cash flows for the nine months
ended December 31, 1999.

The following unaudited pro forma financial information presents total operating revenues, net income and net income per share of the Company after giving effect to the acquisitions. The unaudited pro forma financial information for
the nine months ended December 31, 1999, gives effect to the acquisition as if it had occurred at April 1, 1999.

The following information is not necessarily indicative of the operating results that would have occurred had the transaction been consummated at the beginning of the periods for which the transaction is being given effect, nor is it
necessarily indicative of future operating results.

| |                                 | (Unaudited, pro forma)
| | ------------------------------- | ----------------------
| | Operating revenues              | $3,006,623            
| | Net income                      | 18,798                
| |                                 |                       
| | Basic earnings per common share | 0.24                  

5.     LONG-TERM DEBT:

Long-term debt consists of the following at December 31, 2000:

| | Subordinated promissory notes (a)               | $5,250,000   
| | ----------------------------------------------- | -------------
| | Term loan (b)                                   | 2,146,653    
| | Revolving line of credit (c)                    | 1,047,689    
| | Note payable, other                             | 2,206        
| |                                                 | -------------
| | Total outstanding debt                          | 8,446,548    
| |                                                 |              
| | Less- Discount on subordinated promissory notes | (100,000)    
| | Less- Current portion                           | (562,218)    
| |                                                 | -------------
| | Total long-term debt                            | $7,784,330   
| |                                                 | ========     

F-10



---



|(a) | On December 22, 2000, the Company offered an issue of 13% subordinated promissory notes and stock warrants (see Note 11) to qualified private investors. At December 31, 2000, $5,250,000 of the subordinated promissory notes
were issued. Of the $5,250,000 in proceeds, $100,000 was allocated to the stock warrants. An additional $250,000 of the subordinated promissory notes have been issued subsequent to December 31, 2000. The notes are subordinated unsecured obligations of the
Company and rank subordinate to all existing indebtedness of the Company. The Notes mature on the earlier of (1) the consummation of an underwritten public offering of the Company's capital stock or (2) December 31, 2003. The Company may, at any time
prepay any part of the principal balance on the Notes, in increments of $10,000, without premium or penalty prior to maturity. Interest is payable at 13% per annum and is payable quarterly in arrears commencing on March 31, 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) | On October 29, 1999, the Company borrowed $2,800,000 under a term loan agreement with a bank. The note bears interest at a fixed rate of 8.8%. Principal payments of $46,667 plus accrued interest are due monthly until
maturity on October 30, 2004 The loan is secured with the assets and compressor leases of the Company and a personal guarantee of the Company's President.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|(c) | On October 29, 1999, the Company entered into a revolving line of credit agreement with a bank. Under the agreement, as amended December 28, 2000, the Company can borrow the lesser of $7,500,000 or the sum of 80% of the
aggregate amount of eligible receivables, plus 50% of the aggregate amount of eligible inventory, plus 85% of the appraised value of compressors fabricated since acquisition of the business on October 29, 1999. The line of credit bears interest at Wall
Street Journal Prime Rate (9.5% at December 31, 2000). Interest is due monthly with all outstanding borrowings due at maturity on December 27, 2003. The loan is secured with the assets and compressor leases of the Company and a personal guarantee of the
Company's President. The Company's credit facility imposes a number of financial and restrictive covenants that among other things, limit the Company's ability to incur additional indebtedness, create liens and pay dividends. At December 31, 2000, the
Company was in violation of its Debt to EBITDA coverage ratio covenant. Subsequent to year-end, the Company has received a waiver from its lender for this covenant violation. In addition, the Company's lender has amended the Debt to EBITDA coverage ratio
for the period ending March 31, 2001. Management expects that the Company will be in compliance with the revised covenants under the amended credit facility throughout 2001. Subsequent to December 31, 2000, all outstanding borrowings under the line of
credit were repaid from a portion of the subordinated promissory notes proceeds.

The annual maturities of long-term debt subsequent to December 31, 2000, are as follows:

| | 2001  | $ | 562,218   
| | ----- | - | ----------
| | 2002  |   | 560,012   
| | 2003  |   | 6,857,689 
| | 2004  |   | 466,629   
| |       |   | ----------
| | Total | $ | 8,446,548 
| |       |   | =======   

Unless otherwise noted, the carrying value of the Company's financial instruments approximates fair value. The Company estimates the fair value of its long-term debt based on market prices or on the current rates available
to the Company for debt with similar terms and remaining maturity.



F-11



---

6.     INCOME TAXES:

The components of income taxes are set forth as follows:

| |                              | YEAR ENDED
DECEMBER 31, 2000 |            | NINE MONTHS ENDED
DECEMBER 31, 1999
| | ---------------------------- | ---------------------------- | ---------- | -----------------------------------
| | Current provision (benefit)  | $                            | -          |                                    
| | Deferred provision (benefit) |                              | 22,902     |                                    
| |                              |                              | ---------- |                                    
| | Income taxes                 | $                            | 22,902     |                                    
| |                              |                              | ======     |                                    

The differences between the provision for income taxes at the expected Federal statutory rates and the provision for income taxes recorded in the consolidated statements of operations are summarized as follows:

| |                                                            | YEAR ENDED
DECEMBER 31, 2000 | NINE MONTHS ENDED
DECEMBER 31, 1999
| | ---------------------------------------------------------- | ---------------------------- | -----------------------------------
| | Federal income tax at statutory rates                      | $                            | 4,193                              
| | State income taxes, net of Federal
     income tax benefit |                              | 2,561                              
| | Nondeductible expenses                                     |                              | 16,148                             
| | Other                                                      |                              | -                                  
| |                                                            |                              | ---------                          
| | Provision for income taxes                                 | $                            | 22,902                             
| |                                                            |                              | ======                             

The significant components of the Company's deferred tax assets and liabilities are as follows at December 31, 2000:

| | Deferred tax assets:     
| | -------------------------
| |                          
| |                          
| |                          
| |                          
| | Deferred tax liabilities:
| |                          
| |                          
| |                          
| |                          
| |                          

In connection with the acquisition of Gas Jack and GJ Measurement, the Company recorded a net deferred tax liability associated with Gas Jack's cumulative temporary differences of approximately $203,000. In addition, as a
result of the acquisitions the Company eliminated its previously recorded valuation allowance of $2,945 as part of the purchase accounting.

At December 31, 2000, the Company has cumulative net operating loss carryforwards of approximately $574,000 which will begin to expire in 2011.

F-12



---

7.     STOCK OWNERSHIP AND INCENTIVE STOCK OPTION PLANS:

The Company's 1993 Stock Option Plan provides for the issuance of up to 2 million shares of common stock at no less than 85% of market value at the time of grant (for non-qualified options) and no less than 110% of market value for
incentive stock options.

A summary of the Company's stock options as of December 31, 2000 and 1999 and changes during the periods ended on those dates is presented below:

| |                                  | Number
of Shares | Weighted-Average
Exercise Price
| | -------------------------------- | ---------------- | -------------------------------
| | Outstanding at March 31, 1999    | 6,300            |                                
| | Granted                          | 19,000           |                                
| | Exercised                        | (6,300)          |                                
| | Outstanding at December 31, 1999 | 19,000           |                                
| | Granted                          | 15,250           |                                
| | Canceled                         | (3,750)          |                                
| | Outstanding at December 31, 2000 | 30,500           |                                
| | Exercisable at December 31, 2000 | None             |                                

In October 1995, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 123 ("SFAS 123"), "Accounting for Stock-Based Compensation," effective for the Company at March 31, 1997.
Under SFAS 123, companies can either record expense based on the fair value of stock-based compensation upon issuance or elect to remain under the current APB Opinion No. 25 method whereby no compensation cost is recognized upon grant. The Company
accounts for its stock-based compensation plan under APB Opinion No. 25. Entities electing to remain with the accounting in APB Opinion No. 25 must make disclosures as if SFAS 123 had been applied. The disclosure requirements of this Statement are
effective for options granted in fiscal 1996 and later.

The SFAS No 123 method of accounting is based on several assumptions and should not be viewed as indicative of the operations of the Company in future periods. The fair value of each option grant is estimated on the date of grant using
the Black-Scholes option pricing model with the following weighted-average assumptions used for grants in 2000 and 1999, respectively as follows:

| |                     | 2000    | 1999
| | ------------------- | ------- | ----
| | Interest rate       | 6.40%   |     
| | Dividend yield      | 0.00%   |     
| | Expected volatility | 110.00% |     
| | Expected life       | 6 years |     

The weighted average fair value of options granted using the Black-Scholes option pricing model for 2000 and 1999, respectively is as follows:

| |                                 | 2000   |  | 1999  | 
| | ------------------------------- | ------ |  | ----- | 
| | Black-Scholes model weighted    |        | 
| | average fair value option price | $15.03 |  | $8.20 | 

The Company applies APB Opinion No. 25 in accounting for its fixed price stock options. Accordingly, no compensation cost for options has been recognized in the financial statements. The chart below sets forth the
Company's net income and loss per share for year ended December 31, 2000 and the nine month period ended December 31, 1999, as reported and on a pro forma basis as if the compensation cost of stock options had been determined consistent with SFAS 123.

F-13



---



| |                       |             |   | 2000     |  | 1999
| | --------------------- | ----------- | - | -------- |  | ----
| | Net Income:           |             |   |          | 
| |                       | As reported | $ | (10,569) |  | $   
| |                       | Pro forma   |   | (54,304) |  |     
| | Basic Loss per Share: |             |   |          |  |     
| |                       | As reported | $ | (.08)    |  | $   
| |                       | Pro forma   |   | (.39)    |  |     

Diluted loss per share is not shown as the effect would be anti-dultive.

8.     RELATED PARTIES:

Certain directors and their family members purchased a total of $1,550,000 of the subordinated promissory notes including 13,020 stock warrants from the offering made to private investors in December 2000. The directors and their
family members purchased the Notes and Warrants under the same terms and conditions as all other investors.

Certain officers and directors are compensated based on actual time and expenses devoted to the Company's business. During the nine months ended December 31, 1999, and the year ended December 31, 2000, a consulting fee of $750 per
month was paid to the Company's chief financial officer. This consulting fee was increased to $2,000 per month effective November 1, 1999.

9.     COMMITMENTS:

PURCHASE COMMITMENTS

The Company entered into a purchase agreement on December 14, 2000, with a supplier to purchase 1,000 compressor engines by December 31, 2002. At December 31, 2000 the Company has taken delivery of 47 engines from the supplier. The
purchase agreement provides that the Company's liability to the supplier for any failure to purchase the full amount of engines is limited to (i) pay for engines delivered, (ii) reasonable direct out of pocket cost incurred by the supplier in acquiring
material for production of the number of engines contemplated by the agreement and (iii) the reasonable costs incurred by the supplier for work in progress at the time of termination of the agreement including labor costs and reasonable quantities of
parts and materials ordered by the supplier.

FACILITIES LEASES

The Company has a month-to-month lease for its manufacturing, warehouse and office facilities.

VEHICLE LEASES

The Company leases certain vehicles with original terms ranging up to two years. As of December 31, 2000, future annual minimum lease payments under noncancellable operating leases were approximately $203,000 for 2001 and $111,000 for
2002. There are no amounts due under the vehicle leases in 2003 or thereafter.

Rent expense under all operating leases was approximately $176,000 and $84,000 for the year ended December 31, 2000 and for the nine months ended December 31, 1999, respectively.

10.     MAJOR CUSTOMERS:

During the year ended December 31, 2000, the Company had no customers which amounted to more than 10% of the Company's total 2000 revenue. During the nine months ended December 31, 1999, the Company had sales to one customer which
amounted to approximately 11% of the Company's total 1999 revenue. As of December 31, 2000, one customer represented approximately 13% of the Company's total accounts receivable balance.

F-14



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11     STOCK WARRANTS:

In connection with the offering of the subordinated promissory notes discussed in Note 5, the Company issued stock warrants to purchase 420 shares of the Company's common stock per every $50,000 amount of Notes purchased. The warrants
have an exercise price of $120 per share. At December 31, 2000 total stock warrants of 44,100 had been issued and additional warrants of 2,100 were issued subsequent to December 31, 2000. The warrants are exercisable upon issuance, and expire on December
31, 2003.

The Company obtained a valuation as to the amount to be assigned to the warrants from the total proceeds received from the issuance of the subordinated promissory notes. Based on the valuation estimate, the value assigned to the
warrants is $100,000. This amount is shown as outstanding warrants in stockholders' equity and as a discount to the subordinated promissory notes. The discount will be amortized over the three-year life of the stock warrants as additional interest
expense. The effective interest rate on the Notes is 13.84% when the value of the warrants is taken into consideration.

The value was determined using the Valrex model, which is an option valuation model that uses established option pricing theory to price nontrading options and warrants.



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REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors and Stockholders of
Gas Jack, Inc.:

We have audited the accompanying statements of income, stockholders' equity and cash flows of Gas Jack, Inc. for the period from January 1, 1999 through October 29, 1999. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, Gas Jack, Inc.'s results of operations and its cash flows for the period from January 1, 1999 through October 29, 1999, in conformity
with accounting principles generally accepted in the United States.

|Oklahoma City, Oklahoma | Arthur Andersen LLP
|----------------------- | -------------------
|February 11, 2000       |                    

























F-16



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GAS JACK, INC.

STATEMENT OF OPERATIONS
FOR THE PERIOD FROM JANUARY 1, 1999, THROUGH OCTOBER 29, 1999

|REVENUES:                                |                                        |        
|---------------------------------------- | -------------------------------------- | -------
|                                         | Leasing revenue                        | $      
|                                         | Sales - Gas Jack Compressors and parts |        
|                                         | Service and other                      |        
|                                         |                                        |        
|                                         | Total revenues                         |        
|                                         |                                        |        
|COST OF SALES AND EXPENSES:              |                                        |        
|                                         | Cost of sales                          |        
|                                         | Operating expenses                     |        
|                                         | Depreciation expense                   |        
|                                         |                                        |        
|                                         | Total cost of sales and expenses       |        
|                                         |                                        |        
|OPERATING INCOME                         |                                        | 344,402
|OTHER INCOME (EXPENSES):                 |                                        |        
|                                         | Interest income                        |        
|                                         | Interest expense                       |        
|                                         | Other income                           |        
|                                         |                                        |        
|                                         | Total other expenses                   |        
|                                         |                                        |        
|INCOME BEFORE PROVISION FOR INCOME TAXES |                                        | 320,031
|PROVISION FOR INCOME TAXES               |                                        | 131,752
|                                         |                                        |        
|NET INCOME                               | $                                      | 188,279
|                                         |                                        |        



|The accompanying notes are an integral part of this financial statement.
|------------------------------------------------------------------------











F-17



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GAS JACK, INC.

STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM JANUARY 1, 1999, THROUGH OCTOBER 29, 1999

|         |                   | COMMON STOCK
-------------------------------------------- |   |                        |   |                                |   |                                     |   | NOTES
RECEIVABLE               
|-------- | ----------------- | --------------------------------------------------------- | - | ---------------------- | - | ------------------------------ | - | ----------------------------------- | - | -------------------------------
|         |                   | SHARES
-------------                                      |   | PAR
VALUE
------------ |   | PAID-IN
CAPITAL
-------------- |   | RETAINED
EARNINGS
----------------- |   | TREASURY
STOCK
----------------
|BALANCE, |                   |                                                           |   |                        |   |                                |   |                                     |   |                                
|         | December 31, 1998 | 2,364,753                                                 | $ | 236,475                | $ | 2,093,657                      | $ | 942,246                             | $ | (506,204)                      
|         | Net income        | --                                                        |   | --                     |   | --                             |   | 188,279                             |   | --                             
|         |                   | ---------                                                 |   | -----------            |   | -----------                    |   | -----------                         |   | -----------                    
|BALANCE, |                   |                                                           |   |                        |   |                                |   |                                     |   |                                
|         | October 29, 1999  | 2,364,753                                                 | $ | 236,475                | $ | 2,093,657                      | $ | 1,130,525                           | $ | (506,204)                      
|         |                   | =======                                                   |   | ======                 |   | =======                        |   | ======                              |   | =======                        



The accompanying notes are an integral part of this financial statement.





























F-18



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GAS JACK, INC.

STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM JANUARY 1, 1999, THROUGH OCTOBER 29, 1999

|CASH FLOWS FROM OPERATING ACTIVITIES:             
|--------------------------------------------------
|                                                  
|                                                  
|                                                  
|                                                  
|                                                  
|                                                  
|                                                  
|                                                  
|                                                  
|                                                  
|                                                  
|                                                  
|                                                  
|                                                  
|                                                  
|                                                  
|CASH FLOWS FROM INVESTING ACTIVITIES:             
|                                                  
|                                                  
|                                                  
|                                                  
|                                                  
|                                                  
|                                                  
|CASH FLOWS FROM FINANCING ACTIVITIES:             
|                                                  
|                                                  
|                                                  
|                                                  
|NET INCREASE IN CASH AND CASH EQUIVALENTS         
|CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD    
|                                                  
|CASH AND CASH EQUIVALENTS, END OF PERIOD          
|                                                  
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
|                                                  
|                                                  
|                                                  

The accompanying notes are an integral part of this financial statement.





F-19



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1.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

NATURE OF BUSINESS

Gas Jack Inc. (the "Company"), an Oklahoma corporation, engaged in the manufacturing of the Gas Jack Compressor that provides economical well head compression to mature, low pressure natural gas wells. The compressors are currently
sold and leased to natural gas producers primarily in Oklahoma, Kansas, Texas, Arkansas and New Mexico.

On October 29, 1999, pursuant to the terms of the Stock Purchase Agreement by and among Emerging Alpha Corporation ("Emerging Alpha") and the stockholders of the Company, Emerging Alpha acquired all of the outstanding capital stock of
the Company.

BASIS OF PRESENTATION

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

CASH FLOWS

For purposes of the statements of cash flows, the Company considers all short-term investments with initial maturities of three months or less to be cash equivalents.

COMPRESSORS, VEHICLES AND EQUIPMENT

Leased units include those compressors currently being leased and available for lease. Leased units, vehicles and equipment are recorded at cost. Depreciation is computed using the straight-line method based on the following estimated
useful lives:

| | Gas Jack Compressors | 7 years
| | -------------------- | -------
| | Vehicles             | 5 years
| | Other Equipment      | 7 years

REVENUE RECOGNITION

Sales revenue is recorded upon shipment of sold compressors. Revenues from lease and service agreements are recorded as earned over the lives of the respective contracts.

INCOME TAXES

The Company accounts for income taxes in accordance with the provisions of SFAS No. 109, "Accounting for Income Taxes," which requires an asset and liability approach to accounting for income taxes. Under SFAS No. 109, deferred tax
assets or liabilities are computed based on the difference between the financial statement and income tax bases of assets and liabilities ("temporary differences") using the enacted marginal tax rate. Deferred income tax provision or benefit is based on
the changes in the deferred tax asset or liability from period to period.

F-20



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2     INCOME TAXES:

The components of income taxes are set forth as follows:

| | Current      | $ | 92,655    
| | ------------ | - | ----------
| | Deferred     |   | 39,097    
| |              |   | ----------
| | Income taxes | $ | 131,752   
| |              |   | ======    

The differences between the provision for income taxes at the expected Federal statutory rates and the provision for income taxes recorded in the statements of operations are summarized as follows:

| | Federal income tax at statutory rates     | $ | 108,811   
| | ----------------------------------------- | - | ----------
| | State income taxes, net of Federal income |   |           
| | tax benefit                               |   | 15,036    
| | Nondeductible expenses                    |   | 7,905     
| |                                           |   | ----------
| | Provision for income taxes                | $ | 131,752   
| |                                           |   | ======    

3.     STOCK OWNERSHIP AND INCENTIVE STOCK OPTION PLANS:

During 1992, the Company implemented a Stock Ownership Plan (the "Ownership Plan") to reward employees for their service to the Company. Under the Ownership Plan, 80,000 shares of $0.10 par value common stock were awarded to the
employees on July 1, 1992, by the Board of Directors, with a four-year vesting period. As of October 29, 1999, 80,000 shares were vested under the Ownership Plan. According to the Ownership Plan, all shares vested were callable or putable within one year
after the employee's termination, based on the book value per share, as determined by the quarter ended immediately preceding the exercise of the call or put.

The Company has an Incentive Stock Option Plan (the "Option Plan") and has reserved 250,000 shares of the Company's common stock $.10 par value for issuance under the Option Plan. The Option Plan limits participation to employees, and
the option exercise price is established by the Board of Directors at a price not less than 100% of the fair value of the stock on the date of grant for employees who own less than 10% of the total combined voting power of all classes of stock of the
Company. The option exercise price for options granted to employees who own more than 10% of the total combined voting power of all classes of stock of the Company is established by the Board of Directors at a price not less than 110% of the fair value of
the stock on the date of grant, and such granted options expire five years from the date of grant. The maximum aggregate fair value of common stock for which any employee may be granted options which are exercisable for the first time in any one calendar
year shall not exceed $100,000. Options granted under the Option Plan are exercisable at such times as the Board of Directors shall determine, and the option period shall not be for more than ten years from the date of grant. No options shall be granted
after 2002.

The Company applies Accounting Principles Board Opinion 25, "Accounting for Stock Issued to Employees," and related interpretations in accounting for its stock ownership and option plans, as permitted by SFAS 123, "Accounting for
Stock-Based Compensation." SFAS 123 requires disclosure of pro forma net income as if the Company had adopted the fair value provisions of SFAS 123. No such disclosure has been provided as there were no options nor shares granted under the Ownership Plan
or Option Plan for the period ended October 29, 1999.



F-21



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4.     RELATED PARTIES:

The Company sold and leased certain units to another company affiliated through common ownership and management. The total revenue from this affiliate for the period ended October 29, 1999 was approximately $41,000.

5.     LEASE AGREEMENTS:

The Company leases certain vehicles with terms ranging up to two years. As of October 29, 1999, future annual minimum lease payments under noncancelable operating leases are approximately $53,000 and $43,000 for the years ending
October 29, 2000 and 2001, respectively. The Company leases its manufacturing facilities under a month-to-month lease.

Rent expense under all operating leases was approximately $69,000 for the period ended October 29, 1999.

6.     MAJOR CUSTOMERS:

The Company had sales to one customer which amounted to approximately 11% of the Company's total revenues for the period ended October 29, 1999.

7.     GAS JACK COMPRESSOR LEASES:

The Company leases Gas Jack Compressors to customers on terms ranging from two weeks to one year. As of October 29, 1999, future minimum lease payments receivable under noncancellable operating leases were approximately $506,000 for
2000 and none thereafter.























F-22



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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized on March 15, 2001.

| | COMPRESSCO, INC.                                                                                                                           
| | -------------------------------------------------------------------------------------------------------------------------------------------
| | By:     BROOKS MIMS TALTON
-----------------------------------------------
           Brooks Mims Talton
           Chief Executive Officer
|
|
|

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in
the capacities on March 15, 2001.

|By:     BURT H. KEENAN
           ------------------------------------------------------
           Burt H. Keenan         | Chairman of Board and Director                    
|-------------------------------------------------------------------------------------------------------------------------- | --------------------------------------------------
|By:     BROOKS MIMS TALTON
           ------------------------------------------------------
           Brooks Mims Talton | Chief Executive Officer, President
   and Director
|By:     GARY MCBRIDE
           ------------------------------------------------------
           Gary McBride             | Chief Financial Officer                           
|By:     JERRY W. JARRELL
           ------------------------------------------------------
           Jerry W. Jarrell     | Director                                          
|By:     D.B.H. CHAFFE
           ------------------------------------------------------
           D.B.H. Chaffe           | Director                                          



S-1