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, 2002.

[ ]      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                                          72-1235449
    (State or other jurisdiction of                         (I.R.S. Employer
    incorporation or organization)                         Identification No.)

  1313 SE 25th Street, OKLAHOMA CITY, OKLAHOMA                   73129
  (Address of principal executive offices)                      (Zip Code)

Registrant's telephone number, including area code:              (405) 677-0221

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: $14,921,504

         The aggregate  market value of the voting stock held by  non-affiliates
         of the registrant as of December 31, 2002 was $6,751,875.

         The  number of shares  outstanding  of the  issuer's  classes of Common
         Stock as of December 31, 2002:

         Common Stock, $1.00 Par Value - 153,235 shares

                    DOCUMENTS INCORPORATED BY REFERENCE: NONE



                                       1
<PAGE>


                                     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, 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:

     o     conditions  in the gas and oil  industry,  including  the  demand for
           natural gas and the price of oil and natural gas,

     o     competition among the various  providers of compression  services and
           products,

     o     changes in safety, health and environmental regulations pertaining to
           the production and transportation of natural gas,

     o     changes in economic or political  conditions  in the markets in which
           we operate, and

     o     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, was incorporated in
the State of Delaware on February 10, 1993 for the purpose of acquiring business
opportunities.  On October 29, 1999,  we purchased  Compressco  Field  Services,
Inc., an Oklahoma corporation,  and Compressco Testing L.L.C.  Subsequent to the
acquisition, the two companies became our wholly owned subsidiaries.

     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 was not  successful  in this
endeavor and  management  has elected to sell the  acquired  natural gas well in
January 2003 and cease operations.

     In  October  2001,  we  established  a wholly  owned  Canadian  subsidiary,
Compressco  Canada,  Inc., to make the sale and rental of compressors in Canada.
During the fall of 2001, the Company hired a Canadian representative,  opened an
office and began to service the Canadian market.


                                       2
<PAGE>

COMPANY OVERVIEW AND STRATEGY

OVERVIEW

     Compressco,  Inc. is a unique leading  provider of natural gas and oil well
production  enhancement  strategies.  These enhancement  strategies  principally
involve  reducing  bottom  hole  pressures,  removing  well  bore  liquids,  and
overcoming high delivery  pressures in older mature fields. Our Sales Engineers,
Senior Gas Production  Specialists and Service  Representatives,  in conjunction
with our patented  Gas Jack(R)  compressor/production  unit fleet,  provide well
operators  with the  ability  to  increase  daily  produced  volumes  and proved
producing  reserves.  As part of our  operations,  we also design and  fabricate
low-pressure natural gas compressors, which include our patented designs.

     Central to our marketing and expansion  efforts is our emphasis on geologic
research and well data analysis.  By focusing on geologic  basins with reservoir
characteristics known to be conducive to our technology,  we can greatly improve
our success  rates.  Furthermore,  with the data  available  publicly at various
regional geologic  libraries,  we are able to identify  candidate wells that our
customers  operate  for  testing.  By  doing  so we are  able  to  differentiate
ourselves from others in the industry by showing up with specific  solutions and
ideas to make them more money.

     Through our principal operating  subsidiary,  Compressco Field Services, we
have been involved in the natural gas and oil services  industry since 1990, and
have been  continually  improving our products and services  since that time. We
offer   for   rental   or   sale   four    models   of   Gas    Jack(R)    brand
compressors/productions units, 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.  In addition,  the Gas Jack(R) unit
includes  compression,  liquid  separation  and optional gas metering all on one
economic compact skid. Our Gas Jack(R) units utilize patented designs that allow
operators  to increase  production  from and to extend the  productive  lives of
low-volume  or marginal gas and oil wells.  In addition,  with our  E-Pumper(TM)
product, a remote operation  monitoring and alarm system, our customers are able
to better  monitor  their  wells,  thereby  reducing  costly down time.  Through
Compressco Testing,  LLC we provide natural gas measurement  products,  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, 2002, we had 761  compressors in service,
which  represented an increase of approximately  16% during the past year. Total
revenues  for the year ended  December 31, 2002 were $14.9  million  compared to
$10.8 million for the year ended  December 31, 2001, an increase of $4.1 million
or 38%. For the year ended December 31, 2002, our revenue  related to compressor
rentals was $12.7 million  compared to $8.9 million for the year ended  December
31, 2001, an increase of $3.8 million, or 43%.

     We service  our  rental  compressor  fleet as well as  provide  maintenance
services  through  our  40  mobile  field  technicians.  Currently,  all  of our
technicians are based in the mid-continent  hydrocarbon producing regions of the
United States and western  Canada.  These are the areas 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  new
production  enhancement  technologies  to  produce  the  remaining  reserves  at
economic volumes.

     The demand for our  productions  enhancement  service is linked somewhat to
natural gas  pricing,  although we are  certainly  not as affected by  commodity
pricing as, for example, a drilling rig contractor..  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  some  companies
operating in other sectors of the energy  industry.  Demand for our services has
increased  over time,  even during  periods of volatile  natural gas prices.  We
believe the natural gas compression and production  enhancement service industry
will continue to have significant growth potential,  especially as it relates to
marginal wells, due to the following factors:


                                       3
<PAGE>

     o     The number of new gas wells  drilled in the United States has been on
           a downward trend for the past several years;

     o     Existing,  mature gas fields in the  United  States are  experiencing
           more  rapid loss of  pressure  than  older  fields and are  requiring
           production  enhancement  at  earlier  stages to  maintain  production
           levels;

     o     High activity can not overcome geologic  reality-reduced  supply from
           older basins;

     o     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

     o     Natural  gas  producers  are  increasingly   outsourcing   production
           enhancement  services to reduce  overall cost,  improve  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:

     o     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
           and Canada.

     o     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
           and  Canada  that  would   benefit  by  our   compression   products.
           Accordingly,  we intend to expand our presence by engaging  sales and
           service personnel outside our core geographic markets.

     o     Offering complementary products and services. We intend to expand our
           range of  compression  services and products to meet the needs of our
           customers.  Our  E-Pumper(TM)  product  allows  customers  to  obtain
           real-time   information   regarding   the   operation  of  production
           equipment.

     o     Continuing a standardized  approach to our business.  Since we design
           and  fabricate  four  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

     We have manufactured a total of 1,086 compressors including 70 units in the
year ended  December 31, 2002. As of the end of 2002, we had a compressor  fleet
of 841 units; of these units,  761 are currently on rent. Our rental  agreements
are  primarily on a month to month basis.  These units,  as well as certain sold
units,  are  maintained by our company  personnel.  Since  inception in 1990, an
aggregate of 255 units have been sold to customers in the United States, Canada,
Holland, Indonesia and Argentina.

                                       4
<PAGE>

     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 350 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

     Our 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,  we have  improved our shop and
suppliers scheduling,  implemented shop and supplier quality control,  maximized
the use of our  existing  facility  and  personnel.  This has  resulted  in cost
reductions,   minimized  rework,   improved   inventory  control  and  increased
production efficiency.

COMPETITION

     Our  competitors  include  compressor  rental,   plunger  lift,  and  other
artificial lift product and service providers. In many instances, we utilize our
technology in conjunction  with other  artificial lift  technologies in order to
effectively maximize a well's production.

     Primary  competition for our compression  manufacturing and rental services
business 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. Our Gas Jack compressor 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.  We
believe that our patented technology helps us to maintain a competitive position
in the marginal well application of compressor  technology.  The gas compression
industry is highly  competitive but we believe we are positioned well because we
have focused our  products  and efforts on low volume,  low pressure oil and gas
wells.

EMPLOYEES

     As of  December  31,  2002  we  and  our  subsidiaries  had a  total  of 77
employees.  None  of  our  employees  are  subject  to a  collective  bargaining
agreement.

CUSTOMERS AND SUPPLIERS

     At December 31, 2002, we had approximately  250 customers.  During the year
ended December 31, 2002, we had sales to one customer,  BP American  Production,
comprising  approximately 11.9% of our total revenues. At December 31, 2002, the
Company had one customer, BP American Production, that amounted to approximately
18%  of the  Company's  total  accounts  receivable  balance.  This  balance  is
unusually high due to including a significant  accounts  receivable balance from
the sale of several  compressor  units in December  2002 that was  collected  in
early 2003.

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   20,000   square  feet  of  space,   located  on
approximately three acres, that is used for administrative offices,  fabrication
facilities,  warehouse  and outside  storage  space in Oklahoma  City,  Oklahoma
pursuant to a lease agreement  expiring on August 31, 2004. We have an option to
purchase the facility for $550,000 in August 2004.


                                       5
<PAGE>


ITEM 3.    LEGAL PROCEEDINGS

     None.

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, 2002.

                                     PART II

ITEM 5.    MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     Our  Common  Stock is not and has not been  traded on a stock  exchange  or
national  quotation system. As of December 31, 2002, there were 333 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
subordinated  promissory notes and warrants to purchase our common stock through
a private  placement.  At December  31,  2002,  $5,550,000  of the  subordinated
promissory  notes  were  issued.   These  notes  are   subordinated,   unsecured
obligations  of ours and rank junior to all of our  existing  and future  senior
indebtedness.  The notes are  convertible by the holder into common stock of the
Company at anytime  prior to maturity at a  conversion  price of $150 per share.
The notes  mature on the  earlier  of (1) the  consummation  of an  underwritten
public offering of our capital stock or (2) March 31, 2005. We 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,  10% effective April 1, 2003, and is payable  quarterly in arrears.  Each
purchaser of the 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 46,620 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

     On October 29, 1999, the Company purchased Compressco Field Services, Inc.,
and Compressco  Testing  L.L.C..  Compressco  Field  Services,  Inc., 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 rented to natural gas
producers  located primarily in Oklahoma,  Kansas,  Texas,  Arkansas,  Colorado,
Louisiana  and  New  Mexico.   Compressco   Testing  L.L.C.  is  a  natural  gas
measurement, testing and service company, based in Oklahoma City.

     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 was not  successful  in this
endeavor and  management  has elected to sell the  acquired  natural gas well in
January 2003 and cease operations.

     In  October  2001,   the  Company   established  a  wholly  owned  Canadian
subsidiary,   Compressco  Canada,  Inc.,  to  market  the  sale  and  rental  of
compressors in Canada.  During the fall of 2001 the Company has hired a Canadian
representative, opened an office and began to service the Canadian market.

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<PAGE>

     The following table sets forth selected financial information for the years
ended and as of December  31, 2002 and 2001 and is  qualified in its entirety by
the consolidated financial statements appearing elsewhere in this Form 10-KSB.

RESULTS OF OPERATIONS
<TABLE>
<CAPTION>

               SELECTED CONSOLIDATED FINANCIAL DATA FOR COMPRESSCO

                                                                      Year Ended                 Year Ended
                                                                  December 31, 2002           December 31, 2001
                                                                ----------------------     ---------------------
<S>                                                                    <C>                     <C>

STATEMENT OF OPERATIONS DATA:
Operating Revenues...............................................  $  14,921,504              $  10,845,107
Cost of Sales and Expenses.......................................     11,471,968                  8,484,025
Operating Income.................................................      3,449,536                  2,361,082
Net Income.......................................................      1,217,339                    671,366

BALANCE SHEET DATA (AT END OF PERIOD):
Cash............................................................   $     317,707              $      53,624
Total Assets....................................................      21,529,399                 20,158,420
Total Liabilities...............................................      16,744,890                 16,591,250
Stockholders' Equity............................................       4,784,509                  3,567,170

</TABLE>

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

YEAR ENDED DECEMBER 31, 2002 COMPARED TO YEAR ENDED DECEMBER 31, 2001

     The total  revenue for the year ended  December  31,  2002 was  $14,921,504
compared to  $10,845,107  for the year ended  December 31, 2001,  an increase of
$4,076,397 or 38%. The increase is primarily in rental revenue that increased in
2002 to $12,674,142  from $8,943,963 in 2001 or an increase of 42%. The increase
in rental revenue was due to the Company's compressor units on rental increasing
16% from 658 at December  31, 2001 to 761 units at  December  31, 2002  combined
with a full years of rental  revenue from the 283 units placed on rental  during
2001.

     The total cost of sales and operating  expenses for the year ended December
31, 2002 were $9,871,293  compared to $7,299,641 for the year ended December 31,
2001. The total cost of sales and operating expenses for the year ended December
31,  2002 were  66.2% of total  revenues  compared  to 67.3% for the year  ended
December 31, 2001.

     For the year ended  December 31,  2002,  the Company had  depreciation  and
amortization  expense of $1,600,675  compared to  $1,184,384  for the year ended
December  31,  2001.  The  increase  is  due to the  increase  in the  Company's
compressor  fleet in 2002 from 800 units at  December  31,  2001 to 841 units at
December 31, 2002 combined  with a full years of  depreciation  expense  revenue
from the 329 units added to the compressor fleet during 2001.

     Operating  income  for the year  ended  December  31,  2002 was  $3,449,536
compared to $2,361,082  for the year ended December 31, 2001.  Operating  income
for the year ended  December  31,  2002 was 23.1% of total  revenue for the year
ended  December 31, 2002 compared to 21.8% for the year ended December 31, 2001.
The increase in operating  income as a percent of total  revenue in 2002 was due
to the continued  growth in rental revenue in 2002 as a result of increasing the
rental  units in service with lower  increases in operating  expenses to support
the increased units.

     For the year ended December 31, 2002,  the Company had interest  expense of
$1,268,413  compared  to  $1,248,854  of  interest  expense  for the year  ended
December 31, 2001.

                                       7
<PAGE>

     The year  ended  December  31,  2002  resulted  in  pre-tax  net  income of
$2,181,123  compared  to a pre-tax net income of  $1,118,049  for the year ended
December 31, 2001.

CRITICAL ACCOUNTING POLICIES AND PRACTICES

     The use of  estimates  is necessary  in the  preparation  of the  Company's
financial  statements.  The circumstances  that make these judgments  difficult,
subjective  and  complex  have to do with the need to make  estimates  about the
effect of  matters  that are  inherently  uncertain.  The use of  estimates  and
assumptions  affects the reported  amounts of assets and liabilities at the date
of the  financial  statements,  as well as, the amounts of revenues and expenses
recognized  during the  reporting  period.  The most  significant  estimates and
assumptions  that affect reported  results are those related to the depreciation
of the Company's  compressor  fleet and the  capitalization  of fabrication shop
costs  related to the building of  compressors.  Changes in the lives or salvage
value of the compressors would impact the Company's  calculation of depreciation
expense.  The capitalization of fabrication shop costs is based on the number of
units fabricated and will vary with the level of production. Management believes
it is necessary to understand  the Company's  significant  accounting  policies,
"Item 7,  Financial  Statements  and  Supplementary  Data--Note  2 - Summary  of
Significant Accounting Policies" of this Form 10-KSB, in order to understand the
Company's  financial  condition,  changes in financial  condition and results of
operations.

LIQUIDITY AND CAPITAL RESOURCES

     In December  2000 and January  2001,  the Company  completed an offering of
subordinated promissory notes and stock warrants to qualified private investors.
At December 31,  2002,  $5,550,000  of the  subordinated  promissory  notes were
issued. The notes are subordinated unsecured obligations of the Company and rank
subordinate  to all  existing  indebtedness  of the  Company.  In March 2003 the
Company and the holders of the subordinated promissory notes agreed to amend the
promissory notes to extend the maturity date from December 31, 2002 to March 31,
2005,  change the interest from 13% to 10% effective  April 1, 2003 and make the
notes  convertible  by the holder  into  common  stock of the Company at anytime
prior to maturity at a conversion  price of $150 per share.  The notes mature on
the earlier of (1) the  consummation of an  underwritten  public offering of the
Company's  capital  stock or (2) March 31,  2005.  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, 10% effective April 1, 2003, and is payable quarterly in arrears.  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 1%
over Wall Street Prime Rate (5.25% at December 31, 2002).  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.

     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  November 28, 2001, the Company can borrow the lesser of (i) $8,883,997
or (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 the acquisition of the business on October 29,
1999. At December 31, 2002, the amount utilized on the revolving line of credit,
including  a  letter  of  credit,  was  $7,094,554  with  $1,789,443   remaining
availability. The line of credit bears interest at 0.5% over Wall Street Journal
Prime Rate (4.75% at December 31,  2002).  Interest is payable  monthly with all
outstanding  borrowings due at maturity on April 2, 2004, that was extended from
December  27,2003 by the bank in March 2003. The loan is secured with the assets
and compressor  leases of the Company.  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, 2002,  the Company was in  compliance  with all such
covenants.  Management  expects that the Company will be in compliance  with the
revised covenants under the amended credit facility throughout 2003.

                                       8
<PAGE>

     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 2003.  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's  projected  capital  expenditures  for 2003,  based on
current  market  conditions,  is  approximately  $4 million.  The Company cannot
provide  assurance  that these funds will be available  or if available  will be
available on satisfactory terms.

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, 2002,  our
capital expenditures totaled approximately $2 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  that 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

                                       9
<PAGE>

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  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, wash own 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(R)  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.

We are highly leveraged and vulnerable to interest rate changes.

     As of December 31, 2002, we had approximately  $13.6 million in outstanding
indebtedness,  including  the current  portion of long-term  debt,  representing
approximately  74% of our total  capitalization.  Of this amount,  approximately
$8.1 million bears 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.

                                       10
<PAGE>

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(R)  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.  The Company has a
$1.0 million key employee policy on Mr. Talton.  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.

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.

                                       11
<PAGE>


                                    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.

<TABLE>
<CAPTION>

                                                YEAR              OFFICE WITH
      NAME                        AGE          ELECTED             COMPANY
    ----------                  -------     -------------        ----------------
<S>                              <C>            <C>                 <C>
Burt H. Keenan                    63            1993        Chairman of the Board
Brooks Mims Talton, III           36            1999        Chief Executive Officer and Director
Kenneth R. Reagan                 68            2001        Chief Operating Officer
Gary McBride                      50            2000        Chief Financial Officer
Jerry W. Jarrell                  61            2000        Director
D. B. H. Chaffe III               69            1993        Director
Jack Rettig                       49            1999        Director
J. Michael Drennen                50            2000        Director
</TABLE>

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".

     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  President,  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 serves on the Board of Advisory of the Greater Oklahoma
City  Chamber of  Commerce,  in addition to being active in a number of regional
and  national  industry  associations.  Mr.  Talton  is a  member  of the  Young
President's  Organization and TEC, an  international  organization of CEO's. Mr.
Talton holds a B. A. Political Science with an emphasis on Energy/Public  Policy
from the University of Oklahoma.

                                       12
<PAGE>

     Kenneth R. Reagan was employed in February 2001 as Chief Operating Officer.
Mr. Reagan was with Weatherford Compression Company from 1988 to 1998 serving as
Senior Area Sales Manager in Oklahoma  City in 1997 and 1998; as Vice  President
of Sales and  Marketing in Houston and Oklahoma  City from 1991 to 1996;  and as
Vice  President of Service in Corpus  Christi from 1988 to 1990.  He worked with
Waukesha-Pierce  Industries,  Inc. from 1960 to 1988  including  service as Vice
President of Operations - Engine  Division from 1984 to 1988 and Vice  President
of  Marketing  from 1981 to 1984.  Mr.  Reagan  received a  bachelors  degree in
geology from the University of Oklahoma in 1958.

     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.

     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.

     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 and
is a registered professional engineer.

     J. Michael  Drennen is currently a Vice  President  with Crawley  Petroleum
Corporation,  an independent oil and gas producer in Oklahoma City, Oklahoma. He
was with  Devon  Energy  from  1974 to 2001.  During  this  time he had held the
positions of Manager of Corporate Acquisitions Engineering, 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

                                       13
<PAGE>

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

BOARD COMMITTEES

AUDIT COMMITTEE

     Our audit committee consists of Jerry W. Jarrell, Burt H. Keenan and D.B.H.
Chaffe III. 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.

COMPENSATION COMMITTEE

     Our  compensation  committee  consists of Burt H.  Keenan,  Jack Rettig 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  officers for the years ended December 31, 2002 and
2001. The  remuneration  described in the table includes 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.


                                       14
<PAGE>
<TABLE>
<CAPTION>


                                                                               LONG-TERM
                                                       ANNUAL                COMPENSATION
                                                    COMPENSATION              SECURITIES
                                              ------------------------  ------------------------
                                                                              UNDERLYING              ALL OTHER
NAME AND PRINCIPAL POSITION                      SALARY        BONUS           OPTIONS              COMPENSATION
---------------------------------------------  ------------  ----------- ----------------------   -------------------
<S>                                                <C>         <C>              <C>                 <C>

Year ended December 31, 2002:
Burt H. Keenan, Chairman of the Board              --           --              --                     --
Brooks Mims Talton, CEO                          $86,154     $50,000            --                   $7,636
Kenneth R. Reagan, COO                           $77,881     $19,000            --                   $6,068
Gary McBride, CFO                                $93,000     $18,000            --                   $8,407

Year ended December 31, 2001:
Burt H. Keenan, Chairman of the Board              --           --              --                     --
Brooks Mims Talton, CEO                         $80,000      $40,000            --                   $6,063
Kenneth R. Reagan, COO                           $56,096     $20,000            --                  $   963
Gary McBride, CFO                               $93,000      $20,000            --                   $6,041

</TABLE>

OPTION GRANTS

     No options were  granted to the named  executive  officers  during the year
ended December 31, 2002.

2002 OPTION EXERCISES AND YEAR-END OPTION VALUES

     The following  table sets forth  information  concerning the value realized
upon  exercise of options  during  2002 and the number and value of  unexercised
options held by the named executive  officers at December 31, 2002. The value of
the  unexercised  in-the-money  options is based on the fair market value of our
common stock as of December 31, 2002, determined by the board of directors to be
$65.00 per share,  minus the per share exercise price,  multiplied by the number
of shares  underlying the option.  The fair market value of our common stock was
determined  based on the results of the year ending  December 31, 2002 and using
industry  wide  multiplies of earnings per share and earnings  before  interest,
taxes, depreciation and amortization expenses and a 35% discount for the lack of
marketability of the common stock at this time.

<TABLE>
<CAPTION>

                         SHARES                                                             VALUE OF UNEXERCISED IN-
                        ACQUIRED                         NUMBER OF UNEXERCISED                THE-MONEY OPTIONS AT
                          ON              VALUE      OPTIONS AT DECEMBER 31, 2002                DECEMBER 31, 2002
NAME                    EXERCISE        REALIZED      EXERCISABLE    UNEXERCISABLE        EXERCISABLE        UNEXERSISABLE
---------              ------------    ----------     -------------  -------------        -------------      -------------
<S>                       <C>             <C>            <C>             <C>                 <C>                <C>
Burt H. Keenan             --             --            5,000           1,500              $250,000            $ 52,500
Brooks Mims Talton         --             --             --              --                   --                    --
Kenneth R. Reagan          --             --             --             3,000                 --               $105,000
Gary McBride               --             --             --             3,000                 --               $105,000

</TABLE>



ITEM 11.   SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The  following  table  sets  forth,  as of  December  31,  2002,  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.


                                       15
<PAGE>
<TABLE>
<CAPTION>


                                                                       NUMBER OF SHARES OF
                                                                          COMMON STOCK
                              NAME                                     BENEFICIALLY OWNED                 PERCENT
                           ----------                             -----------------------------        -------------
<S>                                                                           <C>                         <C>

5% Stockholders:
John E. Koerner (1)                                                           14,200                      9.0%
Antony F. Lundy (2)                                                           11,273                      7.2%

Officers and Directors:
Burt H. Keenan (3)                                                            18,970                     11.5%
Brooks Mims Talton                                                            28,333                     18.5%
Kenneth Reagan                                                                    --                        --
Gary McBride                                                                      --                        --
Jerry W. Jarrell (4)                                                           6,965                      4.4%
D. B. H. Chaffe III (5)                                                        6,320                      4.1%
Jack Rettig (6)                                                               10,172                      6.5%
Michael Drennen                                                                   --                        --
All officers and directors as a group (8 persons) (7)                         70,760                     40.5%

(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 and 5,000 shares  issuable upon exercise of
          stock options held by Mr. Keenan.
(4)       Includes 840 shares  issuable  upon exercise of stock  warrants and 4,000 shares  issuable upon exercise of
          stock options held by Mr. Jarrell.
(5)       Includes 2,000 shares issuable upon exercise of stock options held by Mr. Chaffe.
(6)       Includes 1,260 shares  issuable upon exercise of stock warrants and 2,000 shares  issuable upon exercise of
          stock options held by Mr. Rettig.
(7)       Includes 8,400 shares  issuable upon exercise of stock warrants and 13,000 shares issuable upon exercise of
          stock options held by the named executive officers and directors.
</TABLE>

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  2003.  See "Stock  Option  Plan"
below.

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  32,050  shares are issuable  under  options
granted to officers,  directors  and key  employees  at December  31, 2002.  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.


                                       16
<PAGE>


     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.

     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.


                                       17
<PAGE>


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     Restated Certificate of Incorporation
                     *3.2     Bylaws
                     *3.3     Proposed  Certificate of Amendment to the Restated
                                Certificate of Incorporation

     10.   Material Contracts

                    *10.1     1993 Stock Option Plan
                    *10.2     Form  of  Stock  Option  Agreements  with  Messrs.
                                Keenan,   Killeen,   Jarrell   and  Chaffe  with
                                Schedule of Details
                   **10.3     Stock Purchase Agreement,  dated as of October 29,
                                1999,   by  and  between  the  Company  and  the
                                Stockholders of Gas Jack, Inc.
                   **10.4     Loan  Agreement,  dated as of October 29, 1999, by
                                and  between  Hibernia  National  Bank  and  the
                                Company
                    +10.5     Modification   to   Promissory   Note   and   Loan
                                Agreement, dated as of December 28, 2000, by and
                                between the Company and Hibernia National Bank.
                    +10.6     Amended and Restated Loan  Agreement,  dated as of
                                November  28,  2001,   by  and  among   Hibernia
                                National Bank, the Company and Compressco  Field
                                Services, Inc.
                  ***10.7     Securities   Purchase   Agreement,   dated  as  of
                                December 22, 2000,  between the Company and each
                                investor party thereto
                  ***10.8     Stock Warrant Agreement,  dated as of December 22,
                                2000,  between  the  Company  and each  investor
                                party thereto
                  ***10.9     Subordinated  Promissory  Note, dated December 22,
                                2000, issued by the Company to each purchaser of
                                the notes
                 ***10.10     Registration   Rights   Agreement,   dated  as  of
                                December 22, 2000,  between the Company and each
                                investor party thereto
                    +99.1     Certification  Pursuant  to  Section  906  of  the
                                Sarbanes-Oxley Act of 2002
------------------

     +Filed herewith.

     *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.

   ***Filed with Annual  Report on 10-K SB for the year ended  December 31, 2000
      and incorporated by reference herein.


                                       18
<PAGE>



ITEM 14.   CONTROLS AND PROCEDURES

     (a)  Evaluation  of  disclosure   controls  and  procedures.   We  maintain
disclosure controls and procedures designed to provide reasonable assurance that
information  required  to be  disclosed  in the  reports we file with the SEC is
recorded,  processed,  summarized and reported within the time periods specified
in the rules of the SEC. Within 90 days prior to the filing of the Annual Report
on Form  10KSB,  we carried out an  evaluation,  under the  supervision  and the
participation of our management, including our Chief Executive Officer and Chief
Financial Officer,  of the design and operation of these disclosure controls and
procedures pursuant to the Exchange Act Rule 13a-14. Based upon that evaluation,
our Chief  Executive  Officer and Chief  Financial  Officer  concluded  that our
disclosure  controls and  procedures  are  effective in timely  alerting them to
material  information  relating  to  the  company  (including  our  consolidated
subsidiaries) required to be included in our periodic SEC filings.

     (b)  Changes in internal  controls.  There were no  significant  changes in
internal controls or other factors that could significantly  affect our internal
controls subsequent to the date of our evaluation.

ITEM 15.   INFORMATION WITH RESPECT TO THE INDEPENDENT PUBLIC ACCOUNTANTS

Audit Fees

     Ernst &  Young  LLP's  aggregate  fees  billed  for  professional  services
rendered for the audit of our annual  financial  statements  for the 2002 fiscal
year and the review of the financial statements included in our Forms 10-QSB for
the 2002 fiscal year were $43,000.

Financial Information Systems Design and Implementation Fees

     Ernst & Young LLP did not render any services with respect to our financial
information systems design and implementation for the fiscal year 2002.

All Other Fees

     Ernst & Young LLP's fees for all other services rendered to us in 2002 were
$4,261 for tax consulting fees.


                                       19
<PAGE>
<TABLE>
<CAPTION>

                          INDEX TO FINANCIAL STATEMENTS

                                COMPRESSCO, INC.


<S>                                                                                               <C>

Report of Independent Public Auditors                                                             F-2

Report of Predecessor Independent Public Accountants                                              F-3

Consolidated Balance Sheet as of December 31, 2002                                                F-4

Consolidated Statements of Operations for the Years Ended December 31, 2002 and 2001              F-5

Consolidated Statements of Stockholders' Equity for the Years Ended
December 31, 2002 and 2001                                                                        F-6

Consolidated Statements of Cash Flows for the Years Ended December 31, 2002 and 2001              F-7

Notes to Consolidated Financial Statements                                                        F-8

</TABLE>





                                     F - 1

<PAGE>


REPORT OF INDEPENDENT PUBLIC AUDITORS

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,  2002,  and  the  related  consolidated
statements of operations, stockholders' equity and cash flows for the year ended
December 31, 2002.  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. The financial statements of Compressco,
Inc. as of December 31, 2001,  and for the year then ended were audited by other
auditors who have ceased  operations.  Those  auditors  expressed an unqualified
opinion on those financial statements in their report dated March 1, 2002.

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 consolidated  financial statements referred to above present
fairly, in all material respects, the financial position of Compressco,  Inc. as
of December 31, 2002,  and the results of their  operations and their cash flows
for the year ended December 31, 2002, in conformity with  accounting  principles
generally accepted in the United States.

As discussed above, the financial statements of Compressco,  Inc. as of December
31, 2001,  and for the year then ended were  audited by other  auditors who have
ceased  operations.  As  disclosed  in  Note 2 under  the  heading  Stock  Based
Compensation,  the Company  accounts for fixed price stock options in accordance
with  Accounting   Principles  Bulletin  Opinion  No.  25.  The  2001  financial
statements have been revised to include the additional  disclosures  required by
Statement of Financial  Accounting Standards No. 148, Accounting for Stock-Based
Compensation - Transition and Disclosure, which was adopted by the Company as of
December 31, 2002.  Our audit  procedures  with respect to these  disclosures in
Note 2 relating to 2001 included (a) agreeing the previously reported net income
to the previously issued financial statements, the previously reported pro forma
net  income to the  previously  issued  financial  statements  and the pro forma
compensation  cost to  underlying  records  obtained  from  management,  and (b)
testing the mathematical  accuracy of the  reconciliation of reported net income
to pro forma net  income,  and the related  basic and  diluted  income per share
amounts.  In our opinion,  the disclosures  for 2001 in Note 2 are  appropriate.
However,  we were not engaged to audit,  review,  or apply any procedures to the
2001  financial  statements  of the  Company  other  than with  respect  to such
disclosures and, accordingly,  we do not express an opinion or any other form of
assurance on the 2001 financial statements taken as a whole.



Oklahoma City, Oklahoma
                                         Ernst & Young LLP
March 5, 2003



                                      F - 2

<PAGE>




REPORT OF PREDECESSOR 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,  2001,  and  the  related  consolidated
statements  of  operations,  stockholders'  equity  and cash flows for the years
ended  December  31,  2001  and  2000.   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, 2001,  and the results of their  operations and their cash flows
for the years ended  December 31, 2001 and 2000, in conformity  with  accounting
principles generally accepted in the United States.



Oklahoma City, Oklahoma
                                         Arthur Andersen LLP
March 1, 2002


The above report is a copy of the previously  issued report and the  predecessor
auditor has not reissued the report.



                                      F - 3


<PAGE>

<TABLE>
<CAPTION>

                                COMPRESSCO, INC.
                           CONSOLIDATED BALANCE SHEET
                                DECEMBER 31, 2002

                                           ASSETS
<S>                                                                                                <C>
CURRENT ASSETS:
       Cash                                                                                  $    317,707
       Accounts receivable, net of allowance of $95,000                                         2,238,850
       Inventories                                                                              2,028,662
       Prepaid expenses                                                                           245,359
       Deferred income tax asset                                                                   57,570
                                                                                             ------------
           Total current assets                                                                 4,888,148
                                                                                             ------------

COMPRESSORS, cost                                                                              18,617,232
           Less- Accumulated depreciation                                                      (3,020,925)
                                                                                             ------------
           Total compressors, net                                                              15,596,307
                                                                                             ------------

VEHICLES, EQUIPMENT and OTHER PROPERTY, cost                                                    1,473,982
           Less- Accumulated depreciation                                                        (489,090)
                                                                                             ------------
           Total vehicles, equipment and other property, net                                      984,892
                                                                                             ------------

OTHER ASSETS                                                                                       60,052
                                                                                             ------------

           Total assets                                                                      $ 21,529,399
                                                                                             ============

                 LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
       Accounts payable                                                                      $    523,089
       Accrued liabilities                                                                        608,119
       Deferred revenues                                                                          266,239
       Current portion of long-term debt                                                          560,012
                                                                                             ------------
           Total current liabilities                                                            1,957,459
                                                                                             ------------

LONG-TERM DEBT, net of current portion                                                         13,077,850
                                                                                             ------------

DEFERRED INCOME TAXES                                                                           1,709,581
                                                                                             ------------

           Total liabilities                                                                   16,744,890
                                                                                             ------------

COMMITMENTS (Note 8)

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                                                  153,235
       Warrants outstanding                                                                       100,000
       Additional paid-in capital                                                               2,663,715
       Retained earnings                                                                        1,867,559
                                                                                             ------------
           Total stockholders' equity                                                           4,784,509
                                                                                             ------------

           Total liabilities and stockholders' equity                                        $ 21,529,399
                                                                                             ============

 The accompanying notes are an integral part of this consolidated balance sheet.

</TABLE>

                                      F - 4

<PAGE>
<TABLE>
<CAPTION>


                                COMPRESSCO, INC.

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001


<S>                                                                       <C>                       <C>
                                                                          2002                      2001
REVENUES:
       Rental revenue                                                 $ 12,674,142               $ 8,943,963
       Sales - Compressors and parts                                     1,248,076                   980,186
       Service and other                                                   999,286                   920,958
                                                                      ------------               -----------
           Total revenues                                               14,921,504                10,845,107
                                                                      ------------               -----------

COST OF SALES AND EXPENSES:
       Cost of sales                                                       705,797                   603,998
       Operating expenses                                                9,165,496                 6,695,643
       Depreciation and amortization expense                             1,600,675                 1,184,384
                                                                      ------------               -----------
           Total cost of sales and expenses                             11,471,968                 8,484,025
                                                                      ------------               -----------

OPERATING INCOME                                                         3,449,536                 2,361,082

OTHER INCOME (EXPENSE):
       Interest income                                                        ---                      5,821
       Interest expense                                                 (1,268,413)               (1,248,854)
                                                                      -------------              ------------
           Total other income (expense)                                 (1,268,413)               (1,243,033)
                                                                      -------------              ------------

INCOME BEFORE PROVISION
     FOR INCOME TAXES                                                    2,181,123                 1,118,049

PROVISION FOR INCOME TAXES                                                 963,784                   446,683
                                                                      ------------               -----------

NET INCOME                                                            $  1,217,339                $  671,366
                                                                     ==============               ==========

BASIC EARNINGS PER  COMMON SHARE                                          $   7.94                  $   4.38
                                                                         =========                  ========

DILUTED  EARNINGS  PER  COMMON SHARE                                      $   7.00                  $   4.15
                                                                         =========                  ========

 The accompanying notes are an integral part of these consolidated financial statements.

</TABLE>


                                      F - 5


<PAGE>
<TABLE>
<CAPTION>

                                COMPRESSCO, INC.

                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                 FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001


                                           COMMON STOCK
                                       ---------------------                                RETAINED
                                                                  STOCK        PAID-IN      EARNINGS
                                     SHARES       PAR VALUE      WARRANTS      CAPITAL      (DEFICIT)        TOTAL
                                     ------       ---------      --------      -------      ----------     ---------
<S>                                   <C>           <C>            <C>          <C>          <C>            <C>
Balance December 31, 2000           153,235       $ 153,235     $ 100,000   $2,663,715      $  (21,146)   $2,895,804

Net income                               -                -           -             -          671,366       671,366
                                   --------       ---------     ---------    ---------      ----------     ---------

Balance December 31, 2001           153,235         153,235       100,000    2,663,715         650,220     3,567,170

Net income                               -               -             -            -        1,217,339     1,217,339
                                  ---------      ----------    ----------    ---------      ----------     ---------

Balance December 31, 2002           153,235       $ 153,235     $ 100,000   $2,663,715     $ 1,867,559    $4,784,509
                                  =========       =========     =========   ==========     ===========    =========


 The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>


                                      F - 6

<PAGE>
<TABLE>
<CAPTION>

                                COMPRESSCO, INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                 FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001

                                                                                      2002                   2001
<S>                                                                                   <C>                     <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income                                                                   $   1,217,339            $   671,366
   Adjustments to reconcile net income to net
   cash provided by (used in) operating activities-
      Depreciation and amortization                                                 1,600,675              1,184,384
      Provision for bad debts                                                         109,353                 46,916
      Amortization of discount on subordinated promissory notes                        33,333                 33,333
      Amortization of deferred financing costs                                         38,532                 37,858
      Other assets                                                                     12,192                (26,726)
      Loss (gain) on sale of operating equipment                                         (140)                11,240
      Deferred income taxes                                                           963,784                446,683
      Changes in current assets and liabilities:
          Accounts receivable                                                        (750,792)              (606,466)
          Notes receivable                                                             23,662                 54,957
          Inventories                                                                 (67,317)                 9,549
          Prepaids and other                                                          (58,449)              (100,241)
          Accounts payable                                                             40,862             (1,071,992)
          Accrued liabilities                                                         (43,472)               458,828
          Deferred revenues                                                           266,239                    --
                                                                                -------------              ---------
                      Net cash provided by operating activities                     3,385,801              1,149,689
                                                                                -------------            -----------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Additions to compressors                                                        (1,630,577)            (7,775,521)
   Additions to vehicles and other property                                          (360,516)              (556,873)
   Proceeds from sale of operating equipment                                            8,980                 38,200
                                                                                -------------            -----------
      Net cash used in investing activities                                        (1,982,113)            (8,294,194)
                                                                                -------------            -----------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Proceeds from issuance of subordinated debt                                           --                  300,000
   Deferred financing costs                                                              --                  (26,166)
   Principal payments on notes payable                                               (559,999)              (562,217)
   Proceeds from line of credit                                                    12,750,842             11,391,734
   Principal payments on line of credit                                           (13,330,448)            (4,765,265)
                                                                                -------------            -----------
      Net cash (used in) provided by financing activities                          (1,139,605)             6,338,086
                                                                                -------------             ----------

NET INCREASE (DECREASE) IN CASH AND
  CASH  EQUIVALENTS                                                                   264,083               (806,419)

CASH AND CASH EQUIVALENTS, BEGINNING
   OF PERIOD                                                                           53,624                860,043
                                                                                -------------            -----------

CASH AND CASH EQUIVALENTS, END OF PERIOD                                        $     317,707           $     53,624
                                                                                =============            ===========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW
     INFORMATION:
      Cash paid during the period for:
               Interest                                                         $   1,201,224           $    977,653
               Income taxes                                                              --                     --

SUPPLEMENTAL DISCLOSURES OF NONCASH
     INVESTING AND FINANCING ACTIVITIES                                                 None                   None

 The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>



                                       F-7

<PAGE>




                                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
acquiring  business  opportunities.  On October 29, 1999, the Company  purchased
Compressco Field Services, Inc., an Oklahoma corporation, and Compressco Testing
L.L.C.  Subsequent  to the  acquisition  the  two  companies  are  wholly  owned
subsidiaries of the Company

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,  Colorado,  Louisiana 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 was not  successful  in this
endeavor and  management  has elected to sell the  acquired  natural gas well in
January 2003 and cease operations.

In October 2001,  the Company  established a wholly owned  Canadian  subsidiary,
Compressco Canada, Inc., to market the sale and rental of compressors in Canada.
During the fall of 2001 the Company hired a Canadian  representative,  opened an
office  and began to  service  the  Canadian  market.  In 2002 the  Company  was
successful in placing 26 compressors on rental and selling 2 compressors  during
the year.  At December 31,  2002,  the Company had 5  compressors  in transit to
Canada to be placed on rental in January 2003.

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 years ended  December  31, 2002 and
2001.  All  significant  inter  company  accounts  and  transactions  have  been
eliminated in the consolidated financial statements.

CASH

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  the
standard cost method.

OTHER ASSETS

The Company includes in other assets gross deferred  financing costs of $115,609
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.  Accumulated  amortization  as of December  31, 2002 was
$76,390.


                                     F-8

<PAGE>




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


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, 2002, 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.

FABRICATION SHOP OVERHEAD COSTS

The Company  capitalizes  certain fabrication shop overhead costs as part of the
total cost of the compressors fabricated. The amount capitalized is based on the
ratio of time and/or floor space spent on fabricating  compressors and will vary
with the level of  production.  The  fabrication  shop  costs  include  payroll,
burden,  supplies,  utilities,  rent, freight and other miscellaneous costs. The
portion of the  fabrication  shop overhead costs that is not capitalized as part
of the compressors is expensed in the period incurred.

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
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 PER COMMON SHARE

Basic earnings 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 basic earnings per common share was 153,235 for each year.

Diluted earnings per common share for each year was determined on the assumption
that the  stock  options  and  stock  warrants  outstanding  were  exercised  at
beginning of each year.  The  weighted-average  of fully diluted  shares used to
calculate  diluted basic  earnings for the year ended December 31, 2002 and 2001
were 173,989 and 161,860 respectively.

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".


                                       F-9
<PAGE>

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.

STOCK BASED COMPENSATION

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, 2002 and 2001, as reported and on
a pro  forma  basis  as if the  compensation  cost of  stock  options  had  been
determined consistent with SFAS 123.

                                                2002                    2001
       Net Income:
             As reported               $     1,217,339            $    671,366
             Pro forma                       1,112,661                 584,309
       Basic Income per Share:
                As reported            $          7.94            $       4.38
                Pro forma                         7.26                    3.81
       Diluted Income per Share:
             As reported               $          7.00            $       4.15
             Pro forma                            6.40                    3.61


RECENTLY  ISSUED ACCOUNTING PRONOUNCEMENTS

Statement of Financial  Accounting Standards (SFAS) No. 144, "Accounting for the
Impairment  or Disposal of Long-Lived  Assets," was issued in August 2001.  This
statement  addresses  financial  accounting  and reporting for the impairment or
disposal  of  long-lived  assets.  This  statement   supersedes  SFAS  No.  121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of". This statement  requires (a)  recognition of an impairment loss
only if the carrying amount of a long-lived  asset is not  recoverable  from its
undiscounted  cash  flows  and  (b)  measurement  of an  impairment  loss as the
difference  between  the  carrying  amount and the fair value of the asset.  The
Company  adopted the  statement  January 1, 2002 with no material  impact on the
Company's results of operations or financial position.

RECLASSIFICATIONS

Certain  reclassifications have been made to the 2001 balances to conform to the
2002 presentation.  Such  reclassifications had no effect on total assets or net
income.

3.     INVENTORIES:

Inventories consist of the following at December 31, 2002:

             Components and parts                     $1,796,748
             Work-in-progress                            231,914
                                                         -------
                                                      $2,028,662
                                                      ==========


                                       F-10


<PAGE>


4.     LONG-TERM DEBT:

Long-term debt consists of the following at December 31, 2002:

       Subordinated promissory notes (a)                              $5,550,000
       Term loan (b)                                                   1,026,641
       Revolving line of credit (c)                                    7,094,554
                                                                    ------------
       Total outstanding debt                                         13,671,195

            Less- Discount on subordinated promissory notes             (33,333)
            Less- Current portion                                      (560,012)
                                                                    ------------
                 Total long-term debt                                $13,077,850
                                                                    ============

(a)    On  December  22,  2000,  the  Company  offered an issue of  subordinated
       promissory  notes and stock  warrants (see Note 10) to qualified  private
       investors.   At  December  31,  2002,   $5,550,000  of  the  subordinated
       promissory notes were issued. Of the $5,550,000 in proceeds, $100,000 was
       allocated to the stock  warrants.  The notes are  subordinated  unsecured
       obligations  of  the  Company  and  rank   subordinate  to  all  existing
       indebtedness of the Company. In March 2003 the Company and the holders of
       the subordinated promissory notes agreed to amend the promissory notes to
       extend the maturity to March 31, 2005,  change the interest rate from 13%
       to 10% effective  April 1, 2003 and make  convertible  by the holder into
       common stock of the Company at anytime  prior to maturity at a conversion
       price of $150 per  share.  The  Notes  mature on the  earlier  of (1) the
       consummation of an underwritten  public offering of the Company's capital
       stock or (2) March 31, 2005. 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,  10%  effective  April 1, 2003,  and is payable  quarterly  in
       arrears.

(b)    On October 29, 1999, the Company  borrowed  $2,800,000  under a term loan
       agreement  with a bank.  The note bears  interest  at 1% over Wall Street
       Prime Rate (5.25% at December 31,  2002).  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.

(c)    On October 29, 1999, the Company  entered into a revolving line of credit
       agreement with a bank.  Under the  agreement,  as amended and restated on
       November 28, 2001, the Company can borrow the lesser of $8,883,997 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 0.5% over Wall
       Street  Journal Prime Rate (4.75% at December 31, 2002).  Interest is due
       monthly with all outstanding borrowings due at maturity on April 2, 2004,
       that was extended in March 2003.  The loan is secured with the assets and
       compressor leases of the Company. 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,  2002,  the  Company  was in
       compliance with the loan covenants.  Management  expects that the Company
       will be in compliance with the revised covenants under the amended credit
       facility  throughout  2003.

The annual  maturities of long-term debt subsequent to December 31, 2002, are as
follows:

                2003                                 560,012
                2004                               7,561,183
                2005                               5,550,000
                                                 -----------
                    Total                      $  13,671,195
                                                 ===========

                                       F-11

<PAGE>

The carrying  value of the Company's  financial  instruments  approximates  fair
value at December 31, 2002.

5.     INCOME TAXES:

The  components  of income taxes for the years ended  December 31, 2002 and 2001
are set forth as follows:

                                           2002                         2001
       Current provision               $      -                     $      -
       Deferred provision                 963,784                     446,683
                                       ----------                  ----------
       Income taxes                    $  963,784                   $ 446,683
                                        =========                   =========


The differences  between the provision for income taxes at the expected  Federal
statutory rate and the provision for income taxes  recorded in the  consolidated
statements  of  operations  for the years ended  December  31, 2002 and 2001 are
summarized as follows:


                                                     2002                2001
       Federal income tax at statutory rate      $  741,582          $  380,137
       State income taxes, net of Federal
            income tax benefit                       95,533              48,971
       Nondeductible expenses                        35,300              21,030
       Canadian operations net loss                  91,369                 ---
       Other                                            ---              (3,455)
                                                  ---------            --------
            Provision for income taxes           $  963,784          $  446,683
                                                     ======            ========


The significant components of the Company's deferred tax assets and liabilities
are as follows at December 31, 2002:

       Deferred tax assets:
             Accounts receivable                                 $        57,570
                                                                    ------------
             Net current deferred tax asset                      $        57,570
                                                                     ===========
       Deferred tax liabilities:
             Depreciation                                        $   (2,280,055)
             Net operating losses                                        570,474
                                                                    ------------
                  Net non-current deferred tax liability         $   (1,709,581)
                                                                     ===========

At December 31, 2002,  the Company has  cumulative  United  States net operating
loss carry forwards of  approximately  $1,444,000  which will begin to expire in
2011. The Company has  cumulative  Canadian net operating loss carry forwards of
approximately $228,000 which will begin to expire in 2009.

6.     EMPLOYEE BENEFIT PLANS:

401(k) Plan

The Company  implemented a 401(k) plan on October 1, 2001 in which substantially
all full time employees of the Company are eligible to  participate.  The 401(k)
plan  provides  that the  Company  will  match  100% of the  first  1%  employee
contribution  and 50% of the next 2% of employee  contributions to the plan. The
employee vests in the Company's  contribution  50% after one year and 100% after
two years. The Company  contributions to the 401(k) plan were $40,154 and $5,900


                                       F-12


<PAGE>

for the years ended  December 31, 2002 and 2001  respectively.  Hartford Life is
the plan  provider and provides the  investment,  administrative  and  reporting
services for the  participants.  The plan assets are invested,  at the employees
discretion, in a choice of several Hartford funds.

 Stock Ownership and Incentive Stock Option Plan

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, 2002 and 2001 and
changes during the years then ended are presented below:


                                                  Number        Weighted-Average
                                                of Shares         Exercise Price

       Outstanding at December 31, 2000          30,500               $17.95
            Granted                               7,700               $30.00
            Canceled                             (7,250)              $15.00
                                                -------
       Outstanding at December 31, 2001          30,950               $21.64
                                                =======
            Granted                               3,500               $39.00
            Canceled                             (2,400)              $30.00
                                                -------
       Outstanding at December 31, 2002          32,050               $22.91
                                                =======
       Exercisable at December 31, 2002          15,250               $15.00
                                                -------

The stock  options  outstanding  that are not  exercisable  at December 31, 2002
become  exercisable  beginning in January 2003  through  August 2005.  The stock
options are exercisable for a period of three years.

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 if the exercise
price of options are 100% or greater than the stock price at the grant date. 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 2002 and 2001, as follows:

                                                2002                 2001
       Interest rate                            3.74%               4.60%
       Dividend yield                           0.00%               0.00%
       Expected volatility                     110.0%             110.00%
       Expected life                          6 years            6 years

The  weighted  average  fair  value  per  share of  options  granted  using  the
Black-Scholes option pricing model for 2002 and 2001, respectively is $38.38 and
$25.37.

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, 2002 and 2001, 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


<PAGE>


                                                2002                      2001
       Net Income:
             As reported                 $     1,217,339            $    671,366
             Pro forma                         1,112,661                 584,309
       Basic Income per Share:
                As reported              $          7.94            $       4.38
                Pro forma                           7.26                    3.81
       Diluted Income per Share:
             As reported                 $          7.00            $       4.15
             Pro forma                              6.40                    3.61


7.     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 years ended December 31, 2002 and
2001, a consulting  fee of $2,000 per month was paid to a director who served as
the Company's secretary.

8.     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, 2002 the Company has taken  delivery of 247 engines from the  supplier.  The
purchase agreement was amended on February 24, 2003, to provide that the Company
shall purchase 13 engines per month commencing January 1, 2003 and not less than
156  engines  per year  until the  remaining  balance of 753  engines  have been
purchased.  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 AND VEHICLE LEASES

The Company has a three year lease terminating  August 31, 2004 for its Oklahoma
City  manufacturing,  warehouse and office  facilities.  The Company has a three
year lease terminating September 5, 2004 for its warehouse and office facilities
in New Mexico.  The Company leases certain  vehicles with original terms ranging
up to two years.

As  of  December  31,  2002,   future  annual   minimum  lease   payments  under
noncancellable  operating leases were approximately  $332,000 for 2003, $153,000
for 2004 and $7,000 for 2005.

Rent expense under all operating leases was approximately  $516,732 and $472,000
for the years ended December 31, 2002 and 2001, respectively.

9.     MAJOR CUSTOMERS:

At December 31, 2002, the Company had  approximately  250 customers.  During the
year ended  December 31, 2002,  the Company had one  customer  that  amounted to
approximately 12% of the Company's total 2002 revenue. At December 31, 2002, the
Company had one customer  that  amounted to  approximately  18% of the Company's
total  accounts  receivable  balance.  This  balance  is  unusually  high due to
including a  significant  accounts  receivable  balance from the sale of several
compressor units in December 2002 that was collected in early 2003.

                                       F-14


<PAGE>

10.    STOCK WARRANTS:

In connection with the offering of the  subordinated  promissory notes discussed
in Note 4, 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,  2002 total stock
warrants of 46,620 were issued and  outstanding.  The warrants  are  exercisable
upon issuance, and expire on March 31, 2005, that was extended in March 2003. No
stock warrants have been exercised as of December 31, 2002.

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.

11.    NET INCOME PER COMMON SHARE

Basic and diluted net income per common share are calculated as follows:

<TABLE>
<CAPTION>


                                                  Net Income              Shares             Per Share
                                                  (Numerator)          (Denominator)           Amount
                                                  -----------           -----------         ----------
<S>                                               <C>                     <C>                    <C>

Year Ended December 31, 2002

Basic:
Income available to common stockholders            $1,217,339             153,235             $   7.99
                                                                                              ========

Effect of stock options                                ----                20,754
                                                     --------             -------

Diluted:
Income available to common stockholders plus
assumed exercises of stock options                 $1,217,339             173,989             $   7.00
                                                   ==========             =======             ========

Year Ended December 31, 2001

Basic:
Income available to common stockholders              $671,366             153,235             $   4.38
                                                                                              ========

Effect of stock options                               ------                8,625
                                                    ---------           ---------

Diluted:
Income available to common stockholders plus
assumed exercises of stock options                   $671,366             161,860             $   4.15
                                                     ========             =======             ========
</TABLE>


Stock  warrants for 46,620  commons shares with an exercise price of $120.00 per
share were excluded from the  computation of diluted net income per common share
for the year ended  December  31, 2002  because the warrant  exercise  price was
greater than the average market price of the common shares.


                                       F-15


<PAGE>




                                            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 31, 2003.



                                             COMPRESSCO, INC.

                                             By:  /S/ 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 21, 2003.



By:     /S/ BURT H. KEENAN                   Chairman of Board and Director
         -------------------------
         Burt H. Keenan


By:     /S/ BROOKS MIMS TALTON               Chief Executive Officer, President
         -------------------------           and Director
         Brooks Mims Talton


By:     /S/ GARY MCBRIDE                     Chief Financial Officer
         -------------------------           (Principal Financial and Accounting
         Gary McBride                         Officer)


By:     /S/ JERRY W. JARRELL                 Director
         -------------------------
         Jerry W. Jarrell

                                     S - 1

<PAGE>


                                Certification of
                             Chief Executive Officer
                               of Compressco, Inc.

I, Brooks Mims Talton, certify that:

     1.  I have reviewed this annual report on Form 10-KSB of Compressco, Inc.;

     2.  Based on my  knowledge,  this annual report does not contain any untrue
         statement of a material fact or omit to state a material fact necessary
         to make the statements made, in light of the  circumstances  under with
         such  statements  were made, not misleading  with respect to the period
         covered by this annual report;

     3.  Based on my knowledge,  the financial  statements,  and other financial
         information  included  in this  annual  report,  fairly  present in all
         material  respects the financial  condition,  results of operations and
         cash flows of the  registrant as of, and for, the periods  presented in
         this annual report;

     4.  The registrant's  other  certifying  officers and I are responsible for
         establishing  and  maintaining  disclosure  controls and procedures (as
         defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
         have:

           a)   designed such disclosure  controls and procedures to ensure that
                material information  relating to the registrant,  including its
                consolidated subsidiaries,  is made known to us by others within
                those  entities,  particularly  during  the period in which this
                annual report is being prepared;

           b)   evaluated  the  effectiveness  of  the  registrant's  disclosure
                controls and procedures as of a date within 90 days prior to the
                filing of this annual report (the "Evaluation Date"); and

           c)   presented  in this  annual  report  our  conclusions  about  the
                effectiveness of the disclosure controls and procedures based on
                our evaluation as of the Evaluation Date;

     5.  The registrant's other certifying officers and I have disclosed,  based
         on our most recent  evaluation,  to the  registrant's  auditors and the
         audit  committee  of  registrant's   board  of  directors  (or  persons
         performing the equivalent functions):

           a)   all  significant  deficiencies  in the  design or  operation  of
                internal  controls which could adversely affect the registrant's
                ability to record, process,  summarize and report financial data
                and have identified for the  registrant's  auditors any material
                weaknesses in internal controls; and

           b)   any fraud, whether or not material,  that involves management or
                other employees who have a significant  role in the registrant's
                internal controls; and

     6.  The registrant's other certifying officers and I have indicated in this
         annual  report  whether  there were  Significant  changes  in  internal
         controls or in other factors that could  significantly  affect internal
         controls  subsequent  to  the  date  of  our  most  recent  evaluation,
         including   any   corrective   actions   with  regard  to   significant
         deficiencies and material weaknesses.

Dated:  March 31, 2003                       /S/ BROOKS MIMS TALTON
                                             -----------------------------------
                                             Brooks Mims Talton
                                             Chief Executive Officer


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<PAGE>


                                Certification of
                             Chief Financial Officer
                               of Compressco, Inc.

I, Gary McBride, certify that:

     1.  I have reviewed this annual report on Form 10-KSB of Compressco, Inc.;

     2.  Based on my  knowledge,  this annual report does not contain any untrue
         statement of a material fact or omit to state a material fact necessary
         to make the statements made, in light of the  circumstances  under with
         such  statements  were made, not misleading  with respect to the period
         covered by this annual report;

     3.  Based on my knowledge,  the financial  statements,  and other financial
         information  included  in this  annual  report,  fairly  present in all
         material  respects the financial  condition,  results of operations and
         cash flows of the  registrant as of, and for, the periods  presented in
         this annual report;

     4.  The registrant's  other  certifying  officers and I are responsible for
         establishing  and  maintaining  disclosure  controls and procedures (as
         defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and
         have:

           a)   designed such disclosure  controls and procedures to ensure that
                material information  relating to the registrant,  including its
                consolidated subsidiaries,  is made known to us by others within
                those  entities,  particularly  during  the period in which this
                annual report is being prepared;

           b)   evaluated  the  effectiveness  of  the  registrant's  disclosure
                controls and procedures as of a date within 90 days prior to the
                filing of this annual report (the "Evaluation Date"); and

           c)   presented  in this  annual  report  our  conclusions  about  the
                effectiveness of the disclosure controls and procedures based on
                our evaluation as of the Evaluation Date;

     5.  The registrant's other certifying officers and I have disclosed,  based
         on our most recent  evaluation,  to the  registrant's  auditors and the
         audit  committee  of  registrant's   board  of  directors  (or  persons
         performing the equivalent functions):

           a)   all  significant  deficiencies  in the  design or  operation  of
                internal  controls which could adversely affect the registrant's
                ability to record, process,  summarize and report financial data
                and have identified for the  registrant's  auditors any material
                weaknesses in internal controls; and

           b)   any fraud, whether or not material,  that involves management or
                other employees who have a significant  role in the registrant's
                internal controls; and

     6.  The registrant's other certifying officers and I have indicated in this
         annual  report  whether  there were  Significant  changes  in  internal
         controls or in other factors that could  significantly  affect internal
         controls  subsequent  to  the  date  of  our  most  recent  evaluation,
         including   any   corrective   actions   with  regard  to   significant
         deficiencies and material weaknesses.

Dated:  March 31, 2003                       /S/ GARY MCBRIDE
                                             -----------------------------------
                                             Gary McBride
                                             Chief Financial Officer




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