As Filed with the Securities and Exchange Commission on April 30, 2004
Registration No. 333-[_____]
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
GEOGLOBAL RESOURCES INC.
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(Name of small business issuer in its charter)
DELAWARE 1311 33-0464753
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(State or other jurisdiction of (Primary Standard Industrial (IRS Employer
incorporation or organization) Classification Code Number) Identification Number)
630 4TH AVENUE, SW - SUITE 200,
CALGARY, ALBERTA T2P 0J9
403-777-9251
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(Address, and telephone number, of principal executive offices)
630 4TH AVENUE, SW - SUITE 200,
CALGARY, ALBERTA T2P 0J9
..9--------------------------------------------------------------------------------
(Address of principal place of business or intended principal place of business)
ALLAN J. KENT, PRESIDENT
630 4TH AVENUE, SW - SUITE 200,
CALGARY, ALBERTA T2P 0J9
403-777-9251
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(Name, address, and telephone number, of agent for service)
Copy to:
WILLIAM S. CLARKE, ESQUIRE
WILLIAM S. CLARKE, P.A.
457 NORTH HARRISON STREET, SUITE 103
PRINCETON, NEW JERSEY 08540
(609) 921-3663
FACSIMILE (609) 921-3933
Approximate date of proposed sale to the public:
AS SOON AS PRACTICABLE AFTER THE REGISTRATION STATEMENT HAS BECOME EFFECTIVE.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act, check
the following box: |X|
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. | |
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. | |
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. | |
CALCULATION OF REGISTRATION FEE
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TITLE OF EACH
CLASS OF PROPOSED MAXIMUM PROPOSED MAXIMUM
SECURITIES TO BE AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
REGISTERED REGISTERED PER UNIT OFFERING PRICE REGISTRATION FEE
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Common Stock, 6,728,334 $ 2.70(1) $18,166,502 $ 2,302
$.001 par value
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Common Stock, $.001 par 3,000,000 $ 2.70(1) $ 8,100,000 $ 1,026
value(2)
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Common Stock, $.001 par 580,000 $ 2.70(1) $ 1,566,000 $ 198
value(2)
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TOTAL $ 3,526
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(1) The registration fee has been calculated in accordance with rule
457(c). On April 28, 2004, the average of the closing price for the Company's
Common Stock on the NASD Bulletin Board was $2.70.
(2) Shares issuable on exercise of outstanding common stock purchase
warrants. Also included are such additional shares as may be issued pursuant to
the anti-dilution provisions of the warrants.
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its Effective Date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
Pursuant to Rule 429 under the Securities Act of 1933, the prospectus
included herein shall be deemed to be a combined prospectus also relating to the
Registrant's Registration Statements on Form S-8 filed March 11, 1999 (File No.
333-74245) and on June 16, 2000 (File No. 333-39450).
2
PRELIMINARY PROSPECTUS SUBJECT TO COMPLETION, DATED APRIL 30 2004
PROSPECTUS
GEOGLOBAL RESOURCES INC.
COMMON STOCK
This Prospectus relates to the resale by the holders of an aggregate
of 10,308,334 shares of our common stock, including 6,728,334 shares that are
issued and outstanding and 3,580,000 shares that are issuable on exercise of
our outstanding comon stock purchase warrants. We will not receive any of the
proceeds from the sale of the shares sold pursuant to this Prospectus. We will
bear substantially all of the expenses incident to the registration of the
shares. .
Our common stock is traded on the OTC Bulletin Board(R) under the
symbol GEOG. On April 28, 2004, the closing sale price of our common stock on
the OTC Bulletin Board(R) was $2.70.
SEE "RISK FACTORS" ON PAGE 8 FOR INFORMATION YOU SHOULD CONSIDER BEFORE
BUYING SHARES OF OUR COMMON STOCK.
We expect that these shares of common stock may be sold or
distributed from time to time by or for the account of the holders through
underwriters or dealers, through brokers or other agents, or directly to one or
more purchasers, including pledgees, at market prices prevailing at the time of
sale or at prices otherwise negotiated. The holders may also sell shares under
Rule 144 under the Securities Act, if available, rather than under this
prospectus. The registration of these shares for resale does not necessarily
mean that the selling stockholders will sell any of their shares.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED THESE SECURITIES OR DETERMINED THAT THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
PROSPECTUS DATED APRIL ____, 2004
TABLE OF CONTENTS
Prospectus Summary.........................................................................4-6
Risk Factors..............................................................................7-13
Risks Relating to Our Oil and Gas Activities
Because We Are In the Early Stage of Developing Our Activities, There Are
Considerable Risks We Will Be Unsuccessful..............................................7
Our Interest In the Production Sharing Contracts Involve Highly Speculative
Exploration Opportunities That Involve Material Risks That We Will Be
Unsuccessful............................................................................7
Because Our Activities Have Only Recently Commenced And We Have No
Operating History And Reserves of Oil and Gas, We Anticipate Future Losses;
There Is No Assurance of Our Profitability..............................................8
India's Regulatory Regime May Increase Our Risks And Expenses In Doing
Business................................................................................8
Our Reliance On A Limited Number Of Key Management Personnel Imposes
Risks On Us That We Will Have Insufficient Management Personnel Available
If The Services Of Any Of Them Are Unavailable..........................................8
Our Success Is Largely Dependent On The Success Of The Operators Of The
Ventures In Which We Participate And Their Failure Or Inability To Operate
The Oil And Gas Exploration, Development And Production Activities On An
Exploration Block Properly Or Successfully Could Materially Adversely Affect Us........10
Certain Terms Of The Production Sharing Contracts May Create Additional
Expenses And Risks That Could Adversely Affect Our Revenues And Profitability..........10
Oil And Gas Prices Fluctuate Widely And Low Oil And Gas Prices Could
Adversely Affect Our Financial Results.................................................11
We May Have Substantial Requirements For Capital In The Future That May
Be Unavailable To Us Which Could Limit Our Ability To Participate In
Additional Ventures Or Pursue Other Opportunities......................................11
Our Ability To Locate And Participate In Additional Exploration Opportunities
And To Manage Growth May Be Limited By Reason Of Our Limited History Of
Operations And The Limited Size Of Our Staff ..........................................12
Our Future Performance Depends Upon Our Ability And The Ability Of The
Ventures In Which We Participate To Find Or Acquire Oil And Gas Reserves That
Are Economically Recoverable ..........................................................12
Estimating Reserves And Future Net Revenues Involves Uncertainties And
Oil And Gas Price Declines May Lead To Impairment Of Oil And Gas Assets................13
Risks Relating To The Market For Our Common Stock
Volatility Of Stock Price..............................................................13
Cautionary Statement for Purposes of The "Safe Harbor" Provisions of
The Private Securities Litigation Reform Act of 1995........................................14
Use of Proceeds.............................................................................15
Price Range of Common Stock.................................................................15
Capitalization..............................................................................16
Management's Discussion and Analysis of
Financial Condition or Plan of Operation.................................................17-20
Our Business.............................................................................21-28
Management...............................................................................29-30
2
Executive and Director Compensation......................................................30-32
Certain Relationships and Related Transactions...........................................32-34
Principal and Other Stockholders.........................................................35-36
Selling Securityholders..................................................................37-38
Plan of Distribution.....................................................................39-40
Description of Capital Stock................................................................41
Indemnification of Officers and Directors...................................................41
Legal Matters...............................................................................41
Experts.....................................................................................41
Where You Can Find More Information.........................................................42
Financial Statements.......................................................................F-1
3
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information, financial statements and other data appearing elsewhere in this
Prospectus. At various places in this Prospectus, we may make reference to the
"company" or "us" or "we." When we use those terms, unless the context otherwise
requires, we mean GeoGlobal Resources Inc. and its wholly-owned subsidiaries.
GEOGLOBAL RESOURCES INC.
GeoGlobal Resources Inc. is engaged, through subsidiaries and joint
ventures in which we are a participant, in the exploration for and development
of oil and natural gas reserves. At present, these activities are being
undertaken in locations where we and our joint venture participants have been
granted exploration rights pursuant to three Production Sharing Contracts
entered into in 2003 and 2004 with the Government of India. One of our
Production Sharing Contracts, entered into in February 2003, grants exploration
rights in an area offshore eastern India. We refer to this as the "KG Block."
The second and third Production Sharing Contracts, entered into in February
2004, grant exploration rights in two areas onshore in the Cambay Basin in the
State of Gujarat in western India. We refer to these as the "CB-9 Block" and the
"CB-10 Block."
All of our exploration activities should be considered highly
speculative.
THE OFFERING
OFFERING OF COMMON STOCK BY THE SELLING SECURITYHOLDERS 10,308,334 shares (1)
Shares to be outstanding after the Offering of 58,643,355 shares (1)
common stock and exercise of the Warrants, assuming
all the Warrants are exercised.
------------------------------
(1) Based on the number of shares of common stock issued and outstanding on
April 1, 2004. Inclusive of 3,580,000 shares issuable on exercise of
outstanding common stock purchase warrants.
USE OF PROCEEDS We will not realize any of the proceeds
from the sale of the shares offered by
the Selling Securityholders. See "Use
of Proceeds." Of the shares included in
this Prospectus, 3,580,000 are issuable
on exercise of our outstanding common
stock purchase warrants. In the event
our outstanding common stock purchase
warrants are exercised, we will receive
proceeds of $8.37 million which will be
added to our general corporate funds
and used for working capital. There can
be no assurance those warrants will be
exercised or the proceeds received.
MARKET SYMBOL (OTC BULLETIN BOARD(R)) GEOG
RISK FACTORS
For a discussion of certain risks you should consider in connection with a
purchase of the shares of our common stock, see "Risk Factors" on page 8.
These risk factors include, among others, the followingRisks Relating to
Our Oil and Gas Activities
4
o Because We Are in the Early Stage of Developing Our Activities,
There Are Considerable Risks We Will Be Unsuccessful
o Our Interest In the Production Sharing Contracts Involve Highly
Speculative Exploration Opportunities That Involve Material Risks
That We Will Be Unsuccessful
o Because Our Activities Have Only Recently Commenced and We Have No
Operating History and Reserves of Oil and Gas, We Anticipate
Future Losses; There is No Assurance of Our Profitability
o India's Regulatory Regime May Increase Our Risks and Expenses In
Doing Business
o Our Reliance On A Limited Number of Key Management Personnel
Imposes Risks On Us That We Will Have Insufficient Management
Personnel Available If The Services Of Any Of Them Are Unavailable
o Our Success Is Largely Dependent On The Success Of The Operators
Of The Ventures In Which We Participate And Their Failure Or
Inability To Operate The Oil And Gas Exploration, Development And
Production Activities On An Exploration Block Properly Or
Successfully Could Materially Adversely Affect Us
o Certain Terms Of The Production Sharing Contracts May Create
Additional Expenses And Risks That Could Adversely Affect Our
Revenues And Profitability
o Oil and Gas Prices Fluctuate Widely and Low Oil and Gas Prices
Could Adversely Affect Our Financial Results
o We May Have Substantial Requirements For Capital In The Future
That May Be Unavailable To Us Which Could Limit Our Ability To
Participate In Additional Ventures Or Pursue Other Opportunities
o Our Ability to Locate And Participate In Additional Exploration
Opportunities And To Manage Growth May Be Limited By Reason Of our
Limited History Of Operations And The Limited Size Of Our Staff
o Our Future Performance Depends Upon Our Ability and the Ability of
the Ventures in Which We Participate To Find Or Acquire Oil and
Gas Reserves That Are Economically Recoverable
o Estimating Reserves and Future Net Revenues Involves Uncertainties
and Oil and Gas Price Declines May Lead to Impairment of Oil and
Gas Assets
o Risks Relating To The Market For Our Common Stock
o Volatility of Stock Price
OUR OFFICES
Our executive offices are located at 630 - 4th Avenue, SW, Suite 200,
Calgary, Alberta, Canada T2P 0J9. Our telephone number is 403-777-9250.
RECENT DEVELOPMENTS
Change of Corporate Name. Until January 8, 2004, our corporate name was
Suite101.com, Inc. On January 8, 2004, our stockholders approved an amendment to
our certificate of incorporation to change our corporate name to GeoGlobal
Resources Inc. Our corporate name was changed effective that date by filing with
the office of the Secretary of State of the State of Delaware of a Certificate
of Amendment.
Change of Control. On August 29, 2003, we acquired all the outstanding
capital stock of GeoGlobal Resources (India) Inc. from Mr. Jean Paul Roy. Mr.
Roy is currently our President, Chief Executive Officer and a Director. As at
December 31, 2003, Mr. Roy held approximately 61.8% of our outstanding shares of
common stock. GeoGlobal Resources (India) Inc. is now our wholly-owned
subsidiary.
5
SUMMARY HISTORICAL FINANCIAL DATA
The summary historical financial information presented below has been
derived from our financial statements for the ended December 31, 2003, the
period from inception on August 21, 2002 to December 31, 2002 and for the
cumulative period from inception on August 21, 2002 to December 31, 2003.
PERIOD FROM PERIOD FROM
INCEPTION, INCEPTION,
YEAR ENDED AUGUST 21-2002 TO AUGUST 21-2002 TO
DECEMBER 31-2003 DECEMBER 31-2002 DECEMBER 31-2003
---------------- ----------------- -----------------
STATEMENTS OF OPERATIONS
Expenses $ 503,944 $ 13,813 $ 517,757
Other income $ 26,249 -- $ 26,249
Net loss and comprehensive loss
for the period $ (477,695) $ (13,813) $ (491,508)
Net loss per share - basic and diluted $ (0.02) $ (0.00) --
Weighted Average Common Shares
Outstanding 19,737,035 14,500,000 --
YEAR ENDED DECEMBER 31,
--------------------------
2003 2002
----------- ------------
BALANCE SHEETS
Cash and cash equivalents $ 7,029,907 $ 272
Property and equipment $ 295,543 $ 49,148
Total assets $ 7,406,937 $ 49,420
Current liabilities $ 1,239,946 $ 63,169
Capital stock $ 40,461 $ 64
Additional paid-in capital $ 6,618,038 $--
Deficit accumulated during the development
Stage $ (491,508) $ (13,749)
Total liabilities and stockholders' equity $ 7,406,937 $ 49,420
6
RISK FACTORS
An investment in shares of our common stock involves a high degree of
risk. You should consider the following factors, in addition to the other
information contained in this Prospectus, in evaluating our business and current
and proposed activities before you purchase any shares of our common stock. You
should also see the "Cautionary Statement for Purposes of the Safe Harbor
Provisions of the Private Securities Litigation Reform Act of 1995" regarding
risks and uncertainties relating to us and to forward-looking statements in this
Prospectus.
There can be no assurance that the exploratory drilling to be conducted
on the exploration blocks in which we hold an interest will result in any
discovery of hydrocarbons or that any hydrocarbons that are discovered will be
in commercially recoverable quantities. In addition, the realization of any
revenues from commercially recoverable hydrocarbons is dependent upon the
ability to deliver, store and market any hydrocarbons that are discovered. The
presence of hydrocarbon reserves on contiguous properties is no assurance or
necessary indication that hydrocarbons will be found in commercially marketable
quantities on the exploration blocks in which we hold an interest.
RISKS RELATING TO OUR OIL AND GAS ACTIVITIES
BECAUSE WE ARE IN THE EARLY STAGE OF DEVELOPING OUR ACTIVITIES, THERE ARE
CONSIDERABLE RISKS WE WILL BE UNSUCCESSFUL
We are in the early stage of developing our operations. Our only
activities in the oil and natural gas exploration and production industry have
involved entering into three Production Sharing Contracts involving 3D seismic
acquisition and exploratory drilling in India. We have realized no revenues from
our oil and natural gas exploration and development activities to date and claim
no reserves of oil or natural gas. Our current plans are to conduct the
exploration and development activities on the areas offshore and onshore India
in accordance with the terms of the three Production Sharing Contracts we have
entered into. There can be no assurance that the exploratory drilling to be
conducted on the exploration blocks in which we hold an interest will result in
any discovery of hydrocarbons or that any hydrocarbons that are discovered will
be in commercially recoverable quantities. In addition, the realization of any
revenues from commercially recoverable hydrocarbons is dependent upon the
ability to deliver, store and market any hydrocarbons that are discovered. The
presence of hydrocarbon reserves on contiguous properties is no assurance or
necessary indication that hydrocarbons will be found in commercially marketable
quantities on the exploration blocks in which we hold an interest. Our
exploration opportunities are highly speculative and should any of these
opportunities not result in the discovery of commercial quantities of oil and
gas reserves, our investment in the venture could be lost.
OUR INTEREST IN THE PRODUCTION SHARING CONTRACTS INVOLVE HIGHLY SPECULATIVE
EXPLORATION OPPORTUNITIES THAT INVOLVE MATERIAL RISKS THAT WE WILL BE
UNSUCCESSFUL
Our interests in the exploration blocks should be considered to be
highly speculative exploration opportunities that will involve material risks.
None of the exploration blocks in which we have an interest has any proven
reserves and is not producing any quantities of oil or natural gas. Exploratory
drilling activities are subject to many risks, including the risk that no
commercially productive reservoirs will be encountered. There can be no
assurance that wells drilled on any of the exploration blocks in which we have
an interest or by any venture in which we may acquire an interest in the future
will be productive or that we will receive any return or recover all or any
portion of our investment. Drilling for oil and gas may involve unprofitable
efforts, not only from dry wells, but from wells that are productive but do not
produce sufficient net revenues to return a profit after drilling, operating and
other costs. The cost of drilling, completing and operating wells is often
uncertain. Drilling operations may be curtailed, delayed or canceled as a result
of numerous factors, many of which are beyond the operator's control, including
economic conditions, mechanical problems, title problems, weather conditions,
compliance with governmental requirements and shortages or delays of equipment
and services. Future drilling activities on the exploration blocks in which we
hold an interest may not be successful and, if unsuccessful, such failure may
have a material adverse effect on our future results of operations and financial
condition.
7
BECAUSE OUR ACTIVITIES HAVE ONLY RECENTLY COMMENCED AND WE HAVE NO OPERATING
HISTORY AND RESERVES OF OIL AND GAS, WE ANTICIPATE FUTURE LOSSES; THERE IS NO
ASSURANCE OF OUR PROFITABILITY
Our oil and natural gas operations have been only recently established
and we have no operating history, oil and gas reserves or assets upon which an
evaluation of our business, our current business plans and our prospects can be
based. Our prospects must be considered in light of the risks, expenses and
problems frequently encountered by all companies in their early stages of
development and, in particular, those engaged in exploratory oil and gas
activities. Such risks include, without limitation,
o We will experience failures to discover oil and gas in commercial
quantities,
o There are uncertainties as to the costs to be incurred in our
exploratory drilling activities and cost overruns are possible,
o There are uncertain costs inherent in drilling into unknown
formations, such as over-pressured zones and tools lost in the
hole, and
o We may make changes in our drilling plans and locations as a
result or prior exploratory drilling.
We have a carried interest in the exploration activities on KG Block.
Our interests in CB-9 Block and CB-10 Block are participating interests.
Unexpected or additional costs can affect the commercial viability of producing
oil and gas from a well and will affect the time when and amounts that we can
expect to receive from any production from a well. Because our carried costs of
exploration and drilling on KG Bock are to be repaid in full before we are
entitled to any share of production, additional exploration and development
expenses will reduce and delay any share of production and revenues we will
receive.
There can be no assurance that the ventures in which we are a
participant will be successful in addressing these risks, and any failure to do
so could have a material adverse effect on our prospects for the future. Due to
the foregoing factors, the development of our business plan, prospects and
exploratory drilling activities, as well as our quarterly and annual operating
results, are difficult to forecast. Consequently, we believe that period to
period comparisons of our exploration, development, drilling and operating
results will not necessarily be meaningful and should not be relied upon as an
indication of our stage of development or future prospects. It is likely that in
some future quarters our stage of development or operating or drilling results
may fall below our expectations or the expectations of securities analysts and
investors and that some of our drilling results will be unsuccessful and the
wells plugged. In such event, the trading price of our common stock may be
materially and adversely affected.
INDIA'S REGULATORY REGIME MAY INCREASE OUR RISKS AND EXPENSES IN DOING BUSINESS
All phases of the oil and gas exploration, development and production
activities in which we are participating are regulated in varying degrees by the
Indian government, either directly or through one or more governmental entities.
The areas of government regulation include matters relating to restrictions on
production, price controls, export controls, income taxes, expropriation of
property, environmental protection and rig safety. As a consequence, all future
drilling and production programs and operations we undertake or are undertaken
by the ventures in which we participate must be approved by the Indian
government. Shifts in political conditions in India could adversely affect the
business in India and the ability to obtain requisite government approvals in a
timely fashion or at all. We, and our joint venture participants, must maintain
satisfactory working relationships with the Indian government. This regulatory
environment may increase the risks associated with our intended exploration and
productivity activities and increase our costs of doing business.
OUR RELIANCE ON A LIMITED NUMBER OF KEY MANAGEMENT PERSONNEL IMPOSES RISKS ON US
THAT WE WILL HAVE INSUFFICIENT MANAGEMENT PERSONNEL AVAILABLE IF THE SERVICES OF
ANY OF THEM ARE UNAVAILABLE
We are dependent upon the services of our President and Chief Executive
Officer, Jean Paul Roy, and Executive Vice President and Chief Financial
Officer, Allan J. Kent. The loss of either of their services would have a
material adverse effect upon us. We currently do not have employment agreements
with either of such persons or key man life insurance. The services of both Mr.
Roy and Mr. Kent are provided pursuant to the terms of agreements with
corporations
8
wholly-owned by each of them. At present, Mr. Kent's services are provided
through an oral agreement with the corporation he owns. Accordingly, these
agreements do not contain any provisions whereby Mr. Roy and Mr. Kent have
direct obligations to us to provide services or refrain from other activities.
At present, our future is substantially dependent upon the geological
and geophysical capabilities of Mr. Roy to locate oil and gas exploration
opportunities for us and the ventures in which we are a participant. His
inability to do the foregoing could materially adversely affect our future
activities. We have entered into a Technical Services Agreement with Roy Group
(Barbados) Inc. ("RGB") dated August 29, 2003, a company owed 100% by Mr. Roy,
to perform such geological and geophysical duties and exercise such powers
related thereto as we may from time to time assign to it. We have no agreement
directly with Mr. Roy regarding his services to us.
9
OUR SUCCESS IS LARGELY DEPENDENT ON THE SUCCESS OF THE OPERATORS OF THE VENTURES
IN WHICH WE PARTICIPATE AND THEIR FAILURE OR INABILITY TO OPERATE THE OIL AND
GAS EXPLORATION, DEVELOPMENT AND PRODUCTION ACTIVITIES ON AN EXPLORATION BLOCK
PROPERLY OR SUCCESSFULLY COULD MATERIALLY ADVERSELY AFFECT US
At present, our only oil and gas interests are our rights under the
terms of the three Production Sharing Contracts. We are not the operator of any
of the exploration, drilling and production activities conducted on any of the
three exploration blocks. Accordingly, the realization of successes in the
exploration of the blocks is substantially dependent upon the success of the
operators in exploring for and developing reserves of oil and gas and their
ability to market those reserves at prices that will yield a return to us.
Under the terms of our Carried Interest Agreement for the KG Block, we
have a carried interest in the exploration activities conducted by the parties
on the exploration block. However, under the terms of that agreement, all of our
proportionate share of capital costs for exploration and development activities
will be repaid without interest over the projected production life or ten years,
whichever is less. Our proportionate share of these costs and expenses for which
our interest is carried is estimated to be approximately $11.0 million over the
6.5 year term of the Production Sharing Contract. We are not entitled to any
share of production from the KG Block until our share of the costs and expenses
for which we have been carried are repaid. Therefore, we are unable to estimate
when we may commence to receive distributions from any production of hydrocarbon
reserves found on the KG Block.
CERTAIN TERMS OF THE PRODUCTION SHARING CONTRACTS MAY CREATE ADDITIONAL EXPENSES
AND RISKS THAT COULD ADVERSELY AFFECT OUR REVENUES AND PROFITABILITY
The Production Sharing Contracts contain certain terms that may affect
the revenues of the joint venture participants to the agreements and create
additional risks for us. These terms include, possibly among others, the
following:
o The venture participants are required to complete certain minimum
work programs during the three phases of the term of the
Production Sharing Contracts. In the event the venture
participants fail to fulfill any of these minimum work programs,
the parties to the venture must pay to the Government of India
their proportionate share of the amount that would be required to
complete the minimum work program. Accordingly, we could be called
upon to pay our proportionate share of the estimated costs of any
incomplete work programs;
o Until such time as the Government of India attains self
sufficiency in the production of crude oil and condensate and is
able to meet its national demand, the parties to the venture are
required to sell in the Indian domestic market their entitlement
under the Production Sharing Contracts to crude oil and condensate
produced from the exploration blocks. In addition, the Indian
domestic market has the first call on natural gas produced from
the exploration blocks and the discovery and production of natural
gas must be made in the context of the government's policy of
utilization of natural gas and take into account the objectives of
the government to develop its resources in the most efficient
manner and promote conservation measures. Accordingly, this
provision could interfere with our ability to realize the maximum
price for our share of production of hydrocarbons;
o The parties to the agreement that are not Indian companies, which
includes us, are required to negotiate technical assistance
agreements with the Government of India or its nominee whereby
such foreign company can render technical assistance and make
available commercially available technical information of a
proprietary nature for use in India by the government or its
nominee, subject, among other things, to confidentiality
restrictions. Although not intended, this could increase the
venture's and our cost of operations; and
o The parties to the venture are required to give preference,
including the use of tender procedures, to the purchase and use of
goods manufactured, produced or supplied in India provided that
such goods are available on equal or better terms than imported
goods, and to employ Indian subcontractors having the required
skills insofar as their services are available on comparable
standards and at competitive prices and terms. Although not
intended, this could increase the venture's and our cost of
operations.
10
These provisions of the Production Sharing Contracts, possibly among others, may
increase our costs of participating in the ventures and thereby affect our
profitability.
OIL AND GAS PRICES FLUCTUATE WIDELY AND LOW OIL AND GAS PRICES COULD ADVERSELY
AFFECT OUR FINANCIAL RESULTS.
There is no assurance that there will be any market for oil or gas
produced from the exploration blocks in which we hold an interest and our
ability to deliver the production from any wells may be constrained by the
absence of or limitations on collector systems and pipelines. Future price
fluctuations could have a major impact on the future revenues from any oil and
gas produced on these exploration blocks and thereby our revenue, and materially
affect the return from and the financial viability of any reserves that are
claimed. Historically, oil and gas prices and markets have been volatile, and
they are likely to continue to be volatile in the future. A significant decrease
in oil and gas prices could have a material adverse effect on our cash flow and
profitability and would adversely affect our financial condition and the results
of our operations. In addition, because world oil prices are quoted in and trade
on the basis of U.S. dollars, fluctuations in currency exchange rates that
affect world oil prices could also affect our revenues. Prices for oil and gas
fluctuate in response to relatively minor changes in the supply of and demand
for oil and gas, market uncertainty and a variety of additional factors that are
beyond our control, including:
o political conditions in oil producing regions, including the
Middle East and elsewhere;
o the domestic and foreign supply of oil and gas;
o quotas imposed by the Organization of Petroleum Exporting
Countries upon its members;
o the level of consumer demand;
o weather conditions;
o domestic and foreign government regulations;
o the price and availability of alternative fuels;
o overall economic conditions; and
o international political conditions.
In addition, various factors may adversely affect the ability to market
oil and gas production from the exploration block, including:
o the capacity and availability of oil and gas gathering systems and
pipelines;
o the ability to produce oil and gas in commercial quantities and to
enhance and maintain production from existing wells and wells
proposed to be drilled;
o the proximity of future hydrocarbon discoveries to oil and gas
transmission facilities and processing equipment (as well as the
capacity of such facilities);
o the effect of governmental regulation of production and
transportation (including regulations relating to prices, taxes,
royalties, land tenure, allowable production, importing and
exporting of oil and condensate and matters associated with the
protection of the environment);
o the imposition of trade sanctions or embargoes by other countries;
o the availability and frequency of delivery vessels;
o changes in supply due to drilling by others;
o the availability of drilling rigs; and
o changes in demand.
WE MAY HAVE SUBSTANTIAL REQUIREMENTS FOR CAPITAL IN THE FUTURE THAT MAY BE
UNAVAILABLE TO US WHICH COULD LIMIT OUR ABILITY TO PARTICIPATE IN ADDITIONAL
VENTURES OR PURSUE OTHER OPPORTUNITIES
We expect that in order to participate in further joint venture
arrangements leading to the possible grant of exploratory drilling
opportunities, we may be required to contribute or have available to us material
amounts of capital. There can be no assurance that this capital will be
available to us in the amounts and at the times required. Such capital may be
required to secure
11
bonds in connection with the grant of exploration rights, to conduct or
participate in exploration activities or be engaged in drilling and completion
activities. We expect to seek the additional capital to meet our requirements
from equity and debt offerings of our securities. Our ability to access
additional capital will depend in part on the success of the ventures in which
we are a participant in locating reserves of oil and gas and developing
producing wells on the exploration blocks, the results of our management in
locating, negotiating and entering into joint venture or other arrangements on
terms considered acceptable, as well as the status of the capital markets at the
time such capital is sought. There can be no assurance that capital will be
available to us from any source or that, if available, it will be at prices or
on terms acceptable to us. Should we be unable to access the capital markets or
should sufficient capital not be available, our activities could be delayed or
reduced and, accordingly, any future exploration opportunities, revenues and
operating activities may be adversely affected.
We currently expect that available cash, including the proceeds from
the sale of our securities in December 2003, will be sufficient to fund required
capital expenditures on the three exploration blocks in which we are a
participant through 2004. However, any further production sharing agreements we
enter into may require us to fund our participation with amounts of capital not
currently available to us. We may be unsuccessful in raising the capital
necessary to meet these capital requirements. There can be no assurance that we
will be able to raise the capital.
OUR ABILITY TO LOCATE AND PARTICIPATE IN ADDITIONAL EXPLORATION OPPORTUNITIES
AND TO MANAGE GROWTH MAY BE LIMITED BY REASON OF OUR LIMITED HISTORY OF
OPERATIONS AND THE LIMITED SIZE OF OUR STAFF
While our President and Executive Vice President have had extensive
experience in the oil and gas exploration business, we have been engaged in
limited activities in the oil and gas business over the past approximately
twelve months and have a limited history of activities upon which you may base
your evaluation of our performance. As a result of our brief operating history
and limited activities in oil and gas exploration activities, our success to
date in entering into ventures to acquire interests in exploration blocks may
not be indicative that we will be successful in entering into any further
ventures. There can be no assurance that we will be successful in growing our
oil and gas exploration and development activities.
Any future significant growth in our oil and gas exploration and
development activities will place demands on our executive officers, and any
increased scope of our operations will present challenges to us due to our
current limited management resources. Our future performance will depend upon
our management and their ability to locate and negotiate opportunities to
participate in joint venture and other arrangements whereby we can participate
in exploration opportunities. There can be no assurance that we will be
successful in these efforts. Our inability to locate additional opportunities,
to hire additional management and other personnel or to enhance our management
systems could have a material adverse effect on our results of operations.
OUR FUTURE PERFORMANCE DEPENDS UPON OUR ABILITY AND THE ABILITY OF THE VENTURES
IN WHICH WE PARTICIPATE TO FIND OR ACQUIRE OIL AND GAS RESERVES THAT ARE
ECONOMICALLY RECOVERABLE.
Our success in developing our oil and gas exploration and development
activities will be dependent upon establishing, through our participation with
others in joint ventures and other similar activities, reserves of oil and gas
and maintaining and possibly expanding the levels of those reserves. We and the
joint ventures in which we may participate may not be able to locate and
thereafter replace reserves from exploration and development activities at
acceptable costs. Lower prices of oil and gas may further limit the kinds of
reserves that can be developed at an acceptable cost. The business of exploring
for, developing or acquiring reserves is capital intensive. We may not be able
to make the necessary capital investment to enter into joint ventures or similar
arrangements to maintain or expand our oil and gas reserves if capital is
unavailable to us and the ventures in which we participate. In addition,
exploration and development activities involve numerous risks that may result in
dry holes, the failure to produce oil and gas in commercial quantities, the
inability to fully produce discovered reserves and the inability to enhance
production from existing wells.
We expect that we will continually seek to identify and evaluate joint
venture and other exploration opportunities for our participation as a joint
venture participant or through some other arrangement. Our ability to enter into
additional exploration activities will be dependent to
12
a large extent on our ability to negotiate arrangements with others and with
various governments and governmental entities whereby we can be granted a
participation in such ventures. There can be no assurance that we will be able
to locate and negotiate such arrangements, have sufficient capital to meet the
costs involved in entering into such arrangements or that, once entered into,
that such exploration activities will be successful. Successful acquisition of
exploration opportunities can be expected to require, among other things,
accurate assessments of potential recoverable reserves, future oil and gas
prices, projected operating costs, potential environmental and other liabilities
and other factors. Such assessments are necessarily inexact, and as estimates,
their accuracy is inherently uncertain. We cannot assure you that we will
successfully consummate any further exploration opportunities or joint venture
or other arrangements leading to such opportunities.
ESTIMATING RESERVES AND FUTURE NET REVENUES INVOLVES UNCERTAINTIES AND OIL AND
GAS PRICE DECLINES MAY LEAD TO IMPAIRMENT OF OIL AND GAS ASSETS.
Currently, we have no proved reserves of oil or gas. Any reserve
information that we may provide in the future will represent estimates based on
reports prepared by independent petroleum engineers, as well as internally
generated reports. Petroleum engineering is not an exact science. Information
relating to proved oil and gas reserves is based upon engineering estimates
derived after analysis of information we furnish or furnished by the operator of
the property. Estimates of economically recoverable oil and gas reserves and of
future net cash flows necessarily depend upon a number of variable factors and
assumptions, such as historical production from the area compared with
production from other producing areas, the assumed effects of regulations by
governmental agencies and assumptions concerning future oil and gas prices,
future operating costs, severance and excise taxes, capital expenditures and
workover and remedial costs, all of which may in fact vary considerably from
actual results. Oil and gas prices, which fluctuate over time, may also affect
proved reserve estimates. For these reasons, estimates of the economically
recoverable quantities of oil and gas attributable to any particular group of
properties, classifications of such reserves based on risk of recovery and
estimates of the future net cash flows expected therefrom prepared by different
engineers or by the same engineers at different times may vary substantially.
Actual production, revenues and expenditures with respect to reserves we may
claim will likely vary from estimates, and such variances may be material.
Either inaccuracies in estimates of proved undeveloped reserves or the inability
to fund development could result in substantially reduced reserves. In addition,
the timing of receipt of estimated future net revenues from proved undeveloped
reserves will be dependent upon the timing and implementation of drilling and
development activities estimated by us for purposes of the reserve report.
Quantities of proved reserves are estimated based on economic
conditions in existence in the period of assessment. Lower oil and gas prices
may have the impact of shortening the economic lives on certain fields because
it becomes uneconomic to produce all recoverable reserves on such fields, thus
reducing proved property reserve estimates. If such revisions in the estimated
quantities of proved reserves occur, it will have the effect of increasing the
rates of depreciation, depletion and amortization on the affected properties,
which would decrease earnings or result in losses through higher depreciation,
depletion and amortization expense. The revisions may also be sufficient to
trigger impairment losses on certain properties that would result in a further
non-cash charge to earnings.
RISKS RELATING TO THE MARKET FOR OUR COMMON STOCK
VOLATILITY OF OUR STOCK PRICE.
The public market for our common stock has been characterized by
significant price and volume fluctuations. There can be no assurance that the
market price of our common stock will not decline below its current or historic
price ranges. The market price may bear no relationship to the prospects, stage
of development, existence of oil and gas reserves, revenues, earnings, assets or
potential of our company and may not be indicative of our future business
performance. The trading price of our common stock could be subject to wide
fluctuations. Fluctuations in the price of oil and gas and related international
political events can be expected to affect the price of our common stock. In
addition, the stock market in general has experienced extreme price and volume
fluctuations that have affected the market price for many companies which
fluctuations have been unrelated to the operating performance of these
companies. These market fluctuations,
13
as well as general economic, political and market conditions, may have a
material adverse effect on the market price of our company's common stock. In
the past, following periods of volatility in the market price of a company's
securities, securities class action litigation has often been instituted against
such companies. Such litigation, if instituted, and irrespective of the outcome
of such litigation, could result in substantial costs and a diversion of
management's attention and resources and have a material adverse effect on our
company's business, results of operations and financial condition.
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995
With the exception of historical matters, the matters discussed in this
Prospectus are "forward-looking statements" as defined under the Securities Act
of 1933, as amended, and the Securities Exchange Act of 1934, as amended, that
involve risks and uncertainties. Forward-looking statements made herein include,
but are not limited to, the statements in this Prospectus regarding our plans
and objectives relating to our future operations, plans and objectives regarding
the exploration, development and production activities conducted on the
exploration blocks in India which are the subject of the three Production
Sharing Contracts we have entered into, the timing of those anticipated
activities, plans regarding drilling activities intended to be conducted through
the ventures in which we are a participant, the success of those drilling
activities and our ability and the ability of the ventures to complete any wells
on the exploration blocks, to develop reserves of hydrocarbons in commercially
marketable quantities, to establish facilities for the collection, distribution
and marketing of hydrocarbons, to produce oil and natural gas in commercial
quantities, and to realize revenues from the sales of those hydrocarbons.
Forward-looking statements also include our plans and objectives to join with
others or to directly seek to enter into additional production sharing contracts
with the Government of India. Our assumptions, plans and expectations regarding
our future capital requirements, the costs and expenses to be incurred in
conducting any exploration, well drilling, development, and production
activities are all forward-looking statements. These statements appear, among
other places, under the following captions: "Risk Factors", "Management's
Discussion and Analysis of Financial Condition or Plan of Operation", and "Our
Business". We cannot assure you that our assumptions or our business plans and
objectives discussed herein will prove to be accurate or be able to be attained
or be successful. We cannot assure you that any commercially recoverable
quantities of hydrocarbon reserves will be discovered on the exploration blocks
in which we have an interest. There can be no assurance that the discovery of
hydrocarbons on exploration blocks adjacent to or in the proximity of
exploration blocks in which we have an interest will result in the discovery of
hydrocarbons on the blocks in which we have an interest. Our ability to realize
revenues cannot be assured. We cannot assure you that we will have available to
us the capital required to meet our plans and objectives at the times and in the
amounts required. If our plans fail to materialize, your investment will be in
jeopardy. Our inability to meet our goals and objectives or the consequences to
us from adverse developments in general economic or capital market conditions,
events having international consequences or military activities could have a
material adverse effect on us. We caution you that various risk factors
accompany those forward-looking statements and are described, among other
places, under the caption "Risk Factors" herein. They are also described in our
Annual Reports on Form 10-KSB, our Quarterly Reports on Form 10-QSB, and our
Current Reports on Form 8-K. These risk factors could cause our operating
results, financial condition and ability to fulfill our plans to differ
materially from those expressed in any forward-looking statements made in this
Prospectus and could adversely affect our financial condition and our ability to
pursue our business strategy and plans.
14
USE OF PROCEEDS
This Prospectus relates solely to the securities being offered and sold
for the account of the Selling Securityholders. We will not receive any of the
proceeds from the sale of the securities being offered by the Selling
Securityholders but will pay substantially all of the expenses related to the
registration of the securities. We estimate that these expenses will be
approximately $[__________].
Of the shares included in this Prospectus, 3,580,000 are issuable on
exercise of our outstanding common stock purchase warrants. In the event all
3,580,000 common stock purchase warrants are exercised by the Selling
Securityholders, we will receive proceeds of $8.37 million. There can be no
assurance those warrants will be exercised or the proceeds received. Such
proceeds will be added to our general corporate funds and used for working
capital purposes.
PRICE RANGE OF COMMON STOCK
Our common shares are traded on the OTC Bulletin Board(R) under the
symbol GEOG. The reported high and low bid prices for the common shares, as
reported by the OTC Bulletin Board(R), on a calendar quarterly basis for the
most recent two calendar years ended December 31, 2003 and the first two
calendar quarters of 2004 through April 28, 2004 are as follows.
BID PRICES
-----------------
HIGH LOW
----------------------------------------------------------
2002
First Quarter $0.72 $0.20
Second Quarter $0.80 $0.26
Third Quarter $0.51 $0.17
Fourth Quarter $0.52 $0.18
-----------------------------------------------------------
2003
First Quarter $1.67 $0.35
Second Quarter $1.38 $0.89
Third Quarter $1.52 $0.96
Fourth Quarter $1.69 $1.18
-----------------------------------------------------------
2004
First Quarter $2.62 $2.13
Second Quarter (through April 28) $2.90 $2.63
The foregoing amounts, represent inter-dealer quotations without
adjustment for retail markups, markdowns or commissions and do not represent the
prices of actual transactions. On April 28, 2004, the closing bid quotation for
our common stock, as reported on the OTC Bulletin Board(R) was $2.70.
As of December 31, 2003, we had approximately 195 stockholders of
record.
DIVIDEND POLICY
We do not intend to pay any dividends on our common stock for the
foreseeable future. Any determination as to the payment of dividends on our
common stock in the future will be made by our Board of Directors and will
depend on a number of factors, including future earnings, capital requirements,
financial condition and future prospects as well as such other factors as our
Board of Directors may deem relevant.
15
CAPITALIZATION
The following table sets forth our cash and cash equivalents and our
capitalization at December 31, 2003:
December 31, 2003
-----------------
Cash and cash equivalents $ 7,029,907
Total assets $ 7,406,937
Capital Stock
Authorized: 100,000,000 common shares, par value
$0.001 per share, issued 55,053,355
common shares(2)(3) $ 40,461
Additional paid-in capital $ 6,618,038
Deficit accumulated during the development state $ (491,508)
Total stockholders' equity $ 6,166,991
Total liabilities and stockholders' equity $ 7,406,937
(1) On December 23, 2003, we completed the sale of 6,000,000 shares of our
common stock and warrants to purchase 3,000,000 shares of common stock
exercisable through December 23, 2005 at a price of $2.50 per share,
subject to anti-dilution adjustment and the acceleration of the expiration
date under certain circumstances. In addition, as part of the transaction
and as partial compensation to the brokers that participated in the
transaction, we issued warrants to purchase 580,000 shares of common stock
exercisable through December 23, 2005 at a price of $1.50 per share,
subject to anti-dilution adjustment and acceleration of the expiration date
under certain circumstances.
(2) Excludes 3,005,000 shares issuable on exercise of outstanding options at
exercise prices ranging from $1.18 to $1.50 and expiring on various dates
through August 31, 2005.
(3) Excludes the 3,580,000 shares issuable on exercise of outstanding warrants.
16
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF OPERATION
GENERAL
The following discussion and analysis of our financial condition or
plan of operation should be read in conjunction with, and is qualified in its
entirety by, the more detailed information including our Consolidated Financial
Statements and the related Notes appearing elsewhere in this Prospectus. This
Prospectus contains forward-looking statements that involve risks and
uncertainties. See "Cautionary Statement For Purposes of the `Safe Harbor'
Provisions of the Private Securities Litigation Reform Act of 1995" in this
Prospectus. Our actual results may differ materially from the results and
business plans discussed in the forward-looking statements. Factors that may
cause or contribute to such differences include those discussed in "Risk
Factors," as well as those discussed elsewhere in this Prospectus.
On August 29, 2003, we completed the acquisition of all of the issued
and outstanding stock of GeoGlobal Resources (India) Inc. ("GeoGlobal India")
which thereby became our wholly-owned subsidiary. The completion of the
transaction resulted in the issuance by us of 34,000,000 shares of our common
stock, among other things. Under generally accepted accounting principles, this
transaction is accounted for as a reverse takeover transaction and for
accounting purposes, this transaction is considered an acquisition of GeoGlobal
Resources Inc. (the legal parent treated as the accounting subsidiary) by
GeoGlobal India (the legal subsidiary treated as the accounting parent) and has
been accounted for as a purchase of the net assets of GeoGlobal Resources Inc.
by GeoGlobal India. Accordingly, this transaction represents a recapitalization
of GeoGlobal India, the legal subsidiary, effective August 29, 2003. As a
result, the former shareholders' equity of our company was eliminated and our
financial statements as of and for the year ended December 31, 2002, included in
this Prospectus, reflect only the results of our operations from the date of the
acquisition. Our consolidated financial statements for year ended December 31,
2003, included in this Prospectus, reflect the results of operations of
GeoGlobal Resources Inc. only from the date of the acquisition. See Note 6 to
Notes to the Consolidated Financial Statements.
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 2003 AND DECEMBER 31, 2002
Our oil and gas exploration and development activities commenced at our
inception on August 21, 2002. We have not since our inception earned any
revenues from these operations.
During the year ended December 31, 2003, we had expenses of $503,944
compared with expenses of $13,813 during the period August 21, 2002 through
December 31, 2002. Our general and administrative expenses increased to $151,404
from $6,198 reflecting the expenses incurred relating to our initial Production
Sharing Contract entered into in February 2003 and the expenses we incurred in
connection with the acquisition of GeoGlobal India by our legal parent
corporation. These general and administrative expenses also include costs
related to the corporate head office including administrative services, rent and
office costs and transfer agent fees and services. Our consulting fees of
$170,271 during the year ended December 31, 2003 reflect $83,333 paid under our
Technical Services Agreement and other fees and expenses we incurred in
employing various technical and corporate consultants who advised us on a
variety of matters. We incurred no consulting fees during the period from
inception August 21, 2002 through December 31, 2002 because our activities had
not developed to the point where we required such services of consultants.
Professional fees increased to $131,819 during the year ended December 31, 2003
from $6,917 during the period from August 21, 2002 to December 31, 2002.
Professional fees include those paid to our auditors for audit and tax services,
fees paid to our legal advisors for services provided with regard to filing
various SEC documents and review of our oil and gas agreements.
Our other expenses and income during the year ended December 31, 2003
resulted in income of $26,249. Included in other income is a foreign exchange
loss of $18,634. We had no such loss during the period from inception on August
21, 2002 to December 31, 2002. During the year ended December 31, 2003, we
recovered consulting fees of $38,775 and equipment costs of $4,245 resulting
from services provided and billed out to Gujarat State Petroleum
17
Corporation. Our interest income in 2003 arose out of interest earned on our
cash balances we held during the year. We held small cash balances during the
period from inception on August 21, 2002 to December 31, 2002.
Reflecting the increased scope of our activities during the year ended
December 31, 2003 as compared to the period from inception on August 21, 2002 to
December 31, 2002, we had a net loss of $477,695 in 2003 compared to a net loss
of $13,813 in 2002.
LIQUIDITY AND CAPITAL RESOURCES
Our net cash used in operating activities during the year ended
December 31, 2003 was $297,873.
Cash provided by investing activities during the year ended December
31, 2003 was $2,737,821. This amount included the cash of $3,034,666 acquired by
GeoGlobal India from the legal parent on the acquisition. Financing funds of
$296,845 were used for the acquisition of property and equipment and $37,998 for
the repayment to the shareholder. During the period from inception on August 21,
2002 through December 31, 2002, reflecting the limited scope of our activities,
$49,846 was used for the purchase of property and equipment which was offset by
cash provided by a shareholder and related companies in that amount.
Cash provided by financing activities included gross proceeds of
$5,800,000 from the issuance of our securities in a brokered private placement
together with a concurrent private placement for an additional $200,000 that
closed on December 23, 2003. Also during the year ended December 31, 2003,
options to purchase an aggregate of 396,668 shares of common stock were
exercised at various prices between $0.17 and $0.50 for gross proceeds of
$101,650. Share issuance costs of $550,175 were expended in issuing the above
securities and in the acquisition of GeoGlobal India.
18
Upon the completion of the acquisition of GeoGlobal India on August 29,
2003, our current assets (primarily cash and cash equivalents) were $3,109,666.
At that time we had current liabilities of $2,706. As partial consideration for
the purchase of GeoGlobal India, we incurred indebtedness of $2,000,000 of which
$1,000,000 was paid by December 31, 2003, $500,000 was paid on January 15, 2004
and the remaining balance of $500,000 is to be paid on June 30, 2004.
At December 31, 2003, our cash and cash equivalents were $7,029,907.
The majority of these funds are currently held as US funds in our bank accounts
and in term deposits earning interest based on the US prime rate.
At December 31, 2003, the Operator of the KG Block, Gujarat State
Petroleum Corporation, has expended on exploration activities approximately
$1,001,191 attributable to us under the Carried Interest Agreement. Under the
terms of the Production Sharing Contract, the Operator is committed to expend
further funds for the exploration of and drilling on the KG Block. We estimate
that these expenditures attributable to us will total approximately $11 million
over the 6.5 year term of the Production Sharing Agreement. Additional
expenditures may be required for the completion of commercially successful
wells. Of these expenditures, 50% are for the account of Roy Group (Mauritius)
Inc. under the terms of the Participating Interest Agreement.
We will not realize cash flow from this venture until such time as the
expenditures attributed to us, and including those expenditures made for the
account of Roy Group (Mauritius) Inc. under the Carried Interest Agreement, have
been recovered by Gujarat State Petroleum Corporation from future production
revenue. We further describe this agreement under "Our Business - Our Carried
Interest Agreement."
We have committed to expend an aggregate of approximately $2.5 million
for exploration activities under the terms of the Production Sharing Contracts
on the Cambay Blocks over a period of 6 years. We estimate that our expenditures
for these purposes during the 2004 fiscal year will be approximately $300,000,
based upon our 10% participating interest in these Production Sharing Contracts.
We believe that our available cash resources will be sufficient to meet
all our expenses and cash requirements during the year ended December 31, 2004.
OUR PLAN OF OPERATION
We intend, during the year ended December 31, 2004, to continue our
participation in the exploration and development activities on the exploration
blocks in which we have an interest. In addition, we intend to seek to enter
into further joint venture and other opportunities to enter into production
sharing contracts with the Government of India. We do not expect to acquire any
significant plant or equipment during 2004; however, any joint ventures in which
we participate may acquire plant and equipment in conjunction with any well
drilling activities they engage in. We do not expect to hire any significant
number of employees during 2004.
19
FUTURE CAPITAL REQUIREMENTS AND RESOURCES
We expect that, in order to participate in further joint venture
arrangements leading to the possible grant of exploratory drilling
opportunities, we will be required to contribute or have available to us
material amounts of capital. Such capital may be required to secure bonds in
connection with the grant of exploration rights, to conduct or participate in
exploration activities or be engaged in drilling and completion activities. Some
or all of such capital may be unavailable to us when required. We expect to seek
any additional capital required from equity and debt offerings of our
securities. Our ability to access additional capital will depend in part on our
success in developing the exploration blocks in which we are a participant, the
results of our management in locating, negotiating and entering into joint
ventures or other arrangements on terms considered acceptable, as well as the
status of the capital markets at the time such capital is sought. There can be
no assurance that capital will be available to us from any source or that, if
available, it will be at prices or on terms acceptable to us. Should we be
unable to access the capital markets or should sufficient capital not be
available, our activities could be delayed or reduced and, accordingly, any
future exploration opportunities, revenues and operating activities may be
adversely affected.
We currently expect that available cash, including the funds raised
from the private placement financing in December 2003, will be sufficient to
fund planned capital expenditures for our existing activities through 2004.
However, we may need to raise additional capital to fund the development of
properties in which we acquire an interest in the future, which capital may not
be available to us when required. There can be no assurance that we will be able
to raise the capital required to meet our intended purposes.
20
OUR BUSINESS
We are engaged, through subsidiaries and ventures in which we are a
participant, in the exploration for and development of oil and natural gas
reserves. These activities are being undertaken in locations where we and our
joint venture participants have been granted exploration rights pursuant to
three Production Sharing Contracts entered into with the Government of India. We
intend to seek to enter into additional Production Sharing Contracts as and when
the opportunities arise.
OUR PRESENT ACTIVITIES
At March 31, 2004, we have been granted exploration rights in three
exploration blocks, of which two are located onshore in the State of Gujarat in
western India and the third is offshore eastern India. The first of our
Production Sharing Contracts was entered into on February 4, 2003 and relates to
an approximately 1,850 square kilometer (457,145 acre) area off the east coast
of India, designated as Block KG-OSN-2001/3 (which we refer to as the "KG
Block") under New Exploration Licensing Policy III (NELP-III). We have a net 5%
carried interest in this exploration block. Our second and third Production
Sharing Contracts were entered into on February 6, 2004. The second contract
relates to a 125 square kilometer (30,888 acre) area onshore in the Cambay Basin
in the State of Gujarat and is designated Block CB-ONN-2002/2 (which we refer to
as the "CB-9 Block") under New Exploration Licensing Policy IV (NELP-IV). The
third contract relates to a 285 square kilometer (70,425 acre) area also onshore
in the Cambay Basin and is designated Block CB-ONN-2002/3 (which we refer to as
the "CB-10 Block") under NELP-IV. We have a 10% working interest in each of CB-9
Block and CB-10 Block (which we collectively refer to as the "CB Blocks").
At April 1, 2004, the operator of the KG Block, Gujarat State Petroleum
Corporation, has completed the acquisition, processing and interpretation of a
1,298 square kilometer marine 3D seismic program. Drilling targets have been
mapped and identified by the operator. On April 15, 2004, a four-well 200-day
drilling contract was entered into to conduct exploratory drilling on the KG
Block. The agreement contains an option to extend the term of the contract to
include six additional wells. Drilling is expected to commence in the middle of
May 2004 and we believe that drilling will be generally continuous thereafter
throughout the balance of 2004, subject however, among other conditions, to
drilling rig availability, satisfactory weather and technical conditions and the
approval and implementation by the operator of a final drilling program for
2004.
With respect to the CB Blocks, we expect that the operators, Jubilant
Enpro Private Ltd., with respect to the CB-9 Block, and Gujarat State Petroleum
Corporation, with respect to the CB-10 Block, will commence an onshore 3D
seismic acquisition program in the fourth quarter of 2004. Thereafter, this data
will be processed and interpreted. We do not expect any drilling activities to
be conducted on either of these blocks during 2004. We estimate the total
capital that we will be required to contribute to the exploration activities on
the CB Blocks during 2004 based on our 10% participating interest will be
approximately $300,000.
21
OUR INITIAL PRODUCTION SHARING CONTRACT RELATING TO THE KG BLOCK
We, along with Gujarat State Petroleum Corporation Limited and Jubilant
Enpro Limited are parties to a Production Sharing Contract dated February 4,
2003 with The Government of India which grants to the three parties the right to
conduct seismic surveying and exploratory drilling activities on the KG Block.
The exploration period for this Production Sharing Contract extends for a term
of up to 6.5 years. The first two phases cover a period of 2.5 years each, and
the last phase covers a period of 1.5 years. The exploration period under the
agreement commenced on February 4, 2003. During the first exploration phase, the
parties are to acquire, process and interpret 1,250 square kilometers of 3D
seismic data. In addition, we are to reprocess 2,298.4 line kilometers of 2D
seismic data, conduct a bathymetric survey and drill a total of fourteen
exploratory wells between 900 to 4,118 meters. During the second and third
phases, if the parties elect to proceed with them, in addition to bathymetric
surveys in connection with each phase, the parties are to drill four exploratory
wells between 1,100 to 2,850 meters and two exploratory wells to 1,550 and 1,950
meters, respectively.
Our net 5% interest in KG Block reflects our agreement to prospectively
assign half of the original 10% interest under the Production Sharing Contract
to Roy Group (Mauritius) Inc., a Mauritius corporation wholly-owned by Mr. Jean
Paul Roy, our President, a Director and principal stockholder, pursuant to a
Participating Interest Agreement we entered into on March 27, 2003, which
assignment is subject to Government of India consent. Absent such consent, the
assignment will not occur and we are to provide Roy Group (Mauritius) Inc. with
an economic benefit equivalent to the interest to be assigned.
OUR CARRIED INTEREST AGREEMENT RELATING TO THE KG BLOCK
Pursuant to an agreement we entered into with Gujarat State Petroleum
Corporation Limited dated August 27, 2002, we, along with Roy Group (Mauritius)
Inc., have a carried interest in the exploration activities conducted by the
parties in the KG Block that is the subject of the Production Sharing Contract
on the KG Block. Under the terms of the Carried Interest Agreement, we and Roy
Group (Mauritius) Inc. are carried by Gujarat State Petroleum Corporation
Limited for 100% of all our share of any costs during the exploration phase
prior to the start date of initial commercial production. However all of our
share and the share of Roy Group (Mauritius) Inc. of any capital costs for the
development phase will be paid back to Gujarat State Petroleum Corporation
Limited without interest over the projected production life or ten years
whichever is less. We are not entitled to any share of production until Gujarat
State Petroleum Corporation Limited has recovered our share and the share of Roy
Group (Mauritius) Inc. of the costs and expenses that were paid by Gujarat State
Petroleum Corporation Limited.
CB-9 BLOCK AND CB-10 BLOCK PRODUCTION SHARING CONTRACTS
On February 6, 2004, we, along with our joint venture participants,
signed Production Sharing Contracts with respect to two onshore exploration
blocks in the Cambay Basin, located in the State of Gujarat in northwest India.
The first of these contracts, relating to CB-9 Block, also referred to
as Blocks 9A and 9B under NELP-IV, covers an area of approximately 125 square
kilometers (30,888 acres) onshore in the Cambay Basin. We hold a 10%
participating interest, Gujarat State Petroleum Corporation Limited holds a 60%
participating interest, and Jubilant Enpro Private Ltd., who is the operator,
holds the remaining 30% participating interest. The contract provides that the
exploration activities are to be conducted in three phases with the first phase
covering a period of 2.5 years, the second phase covering a period of 2.0 years
and the last phase covering a period of 1.5 years, for a maximum total duration
of 6.0 years for all three phases. The exploration period under this contract
commenced on February 6, 2004. During the first exploration phase on CB-9 Block,
the parties are to acquire 75 square kilometers of 3D seismic data, reprocess
650 line kilometers of 2D seismic data, conduct a geochemical survey and drill a
total of seven exploratory wells between 1,000 and 2,200 meters. During each of
the second and third phases, if the parties elect to proceed with them, the
parties are to drill two exploratory wells to 2,000 meters, respectively.
CB-10 Block, which is also referred to as Blocks 10A and 10B under
NELP-IV, covers an area of approximately 285 square kilometers (70,425 acres)
onshore in the Cambay Basin. We hold a 10% participating interest. Gujarat State
Petroleum Corporation Limited is the operator and holds a 55% participating
interest, with a 20% participating interest held by Enpro and a 15%
participating interest held by Prize Petroleum Company Limited. Exploration
22
activities on CB-10 Block are to be conducted over the same three-phase term as
is provided under the CB-9 Block described above. The exploration period under
this contract commenced on February 6, 2004. During the first exploration phase
on CB-10 Block, the parties are to acquire 200 square kilometers of 3D seismic
data, reprocess 1,000 line kilometers of 2D seismic data, conduct a geochemical
survey and drill a total of twelve exploratory wells between 1,500 and 3,000
meters. During the second and third phases, if the parties elect to proceed with
them, the parties are to drill three and two exploratory wells, respectively, to
2,000 meters.
Map of India
[GRAPHIC OMITTED
[this map denotes our locations in general and does not indicate specific
size of blocks or basins]
23
ADDITIONAL TERMS OF OUR PRODUCTION SHARING CONTRACTS
Except for the size and location of the exploration blocks and the work
programs to be conducted, the three Production Sharing Contracts contain
substantially similar terms. Under the Production Sharing Contracts, the
Government of India has granted to the parties the right to engage in oil and
natural gas exploration activities on the exploration blocks for specified terms
of years with each contract setting forth the exploration activities to be
conducted over periods of years in three phases. Under each of the three
contracts, if the parties elect to continue into the second exploratory phase,
the contracts provide that the parties retain up to 75% of the original contract
area, including any developed areas or areas of discoveries of hydrocarbons, and
relinquish the remainder. Similarly, if the parties elect to continue into the
third exploration phase, the contracts provide that the parties retain up to 50%
of the original contract area, including any developed areas or areas of
discovery of hydrocarbons, and relinquish the remainder. In the event the
parties fail to complete the minimum work programs under the contracts, the
parties must pay to the Government of India their proportionate share of the
amount that would be required to complete the minimum program.
The Production Sharing Contracts contain provisions relating to
procedures to be followed once a discovery of hydrocarbons is determined to have
been made within the exploration block and for the further development of that
discovery. Following the completion of a development plan for a discovery, the
parties are to apply to the relevant government entity for a lease with respect
to the area to be developed with an initial term of 20 years for the lease. The
Government of India and the other parties to the Production Sharing Contracts
are allocated, after deduction of the costs of exploration, development, and
production to be recovered, percentages of any remaining production with the
Government of India allocated between 20% to 40% of the production from the KG
Block and 30% to 55% of the production from the CB Blocks The balance of the
production is to be allocated to the other joint venture participants in
proportion to their participating interests.
The contracts contain restrictions on the assignment of a participating
interest, including a change in control of a party, without the consent of the
Government of India, subject to certain exceptions which include, among others,
a party encumbering its interest subject to certain limitations.
Each of the three ventures are managed by a management committee
representing the parties to the agreement, including the Government of India.
The contracts contain various other provisions, including, among others,
obligations of the parties to maintain insurance, the maintenance of books and
records, confidentiality, the protection of the environment, arbitration of
disputes, matters relating to income taxes on the parties, royalty payments, and
the valuation of hydrocarbons produced. Until India attains self sufficiency in
the production of crude oil and condensate and is able to meet its national
demand, the parties to the ventures are required to sell their entitlement to
production in the Indian domestic market. Also, the Indian domestic market has
the first call on natural gas produced. The contracts also contain provisions
whereby we are required to negotiate technical assistance agreements with the
Government of India or its nominee whereby we render technical assistance and
make available commercially available technical information of a proprietary
nature for use in India by the government or its nominee, subject, among other
things, to confidentiality restrictions. In addition, the parties to the venture
are required to give preference, including the use of tender procedures, to the
purchase and use of goods manufactured, produced or supplied in India provided
that such goods are available on equal or better terms than imported goods, and
to employ Indian subcontractors having the required skills insofar as their
services are available on comparable standards and at competitive prices and
terms. The contracts provide that they are interpreted under the laws of India.
OUR AUGUST 2003 ACQUISITION
On August 29, 2003, we completed the acquisition of all of the issued
and outstanding shares of GeoGlobal Resources (India) Inc., a corporation then
wholly-owned by Mr. Jean Paul Roy. The completion of the acquisition resulted in
the issuance and delivery by us of 34,000,000 common shares and delivery of our
$2.0 million promissory note to Mr. Roy. Of such shares, we issued and delivered
14.5 million shares at the closing of the acquisition with the remaining shares
delivered in escrow. Of the remaining 19.5 million shares issued in escrow, 14.5
million shares will be released for delivery only if the results of a 3D seismic
program conducted on the KG Block during the initial exploration phase
establishes the existence of a commercial basis for the commencement of an
exploratory drilling program, or upon the actual commencement of a
24
drilling program and the final 5.0 million shares will be released only if a
commercial discovery is declared on the KG Block. Shares not released from the
escrow will be surrendered back to us. common shares held during the term of the
escrow retain their voting rights. As a result of the transaction, Mr. Roy held
approximately 69.3% of our issued and outstanding shares. Mr. Roy was also
elected our President, Chief Executive Officer and a Director on August 29,
2003. This transaction was accounted for as a reverse takeover transaction, and
for accounting purposes GeoGlobal Resources (India) Inc., which is our legal
subsidiary, is deemed to have acquired our parent corporation and is the
continuing entity for accounting purposes.
As a consequence of this transaction, a change in control of our
company may be deemed to have occurred.
Because of the expected commencement of the drilling activities on the
KG Block beginning in mid-May 2004, it is anticipated that the 14.5 million
shares held in escrow will be released from escrow to Mr. Roy at that time.
OIL AND GAS OPERATIONS
We are engaged in the exploration for and development of oil and
natural gas reserves. At December 31, 2003, we did not claim any probable or
proved reserves of oil or natural gas. We have not reported since January 1,
2003 any reserves of oil or natural gas to any United States Federal authority
or made any statement to any such authority that there were no such reserves. We
have not produced any oil or natural gas.
We do not own any oil or natural gas wells as of April 1, 2004 and at
that date have not been granted any leases to properties under the terms of our
Production Sharing Contracts. At April 1, 2004, we had not conducted any oil or
gas well drilling operations and no wells were in the process of drilling.
25
DEVELOPMENT EXPLORATION AND ACQUISITION EXPENDITURES
The following table sets forth information regarding costs we incurred
in our development, exploration and acquisition activities during the periods
ended December 31, 2003 and December 31, 2002.
Period from Inception,
Year Ended August 21, 2002 to
December 31, 2003 December 31, 2002
----------------- -----------------
Development Costs -- --
Exploration Costs $178,523 $ 21,925
Acquisition Costs -- --
Capitalized Interest -- --
-------- --------
TOTAL $178,523(1) $ 21,925(1)
======== ========
(1) These costs are not reimbursable under the Carried Interest
Agreement
As at December 31, 2003, Gujarat State Petroleum Corporation has
incurred costs (stated in Indian currency) of Rs 4,55,61,213 (approximately
$1,001,191, using an average currency conversion rate of Rs 45.51 to the $1.00)
attributable to GeoGlobal under the Carried Interest Agreement of which 50% is
for the account of Roy Group (Mauritius) Inc..
ACREAGE
At April 1, 2004, under the terms of the three Production Sharing
Contracts to which we are a party, we had an interest in approximately 558,313
gross acres (32,988 net). Leases to such acreage have not yet been granted.
Under the terms of the Production Sharing Contracts, following the completion of
a development plan for a discovery, the parties are to apply for a lease from
the relevant government authority to the area to be developed. Leases are to
have an initial term of twenty (20) years.
All of such acreage is located offshore the east coast of India and
onshore in western India as follows:
Undeveloped Acreage
-------------------------
Location Gross Net(1)
-------- ------- --------
Krishna Godavari Basin (offshore)
KG Block 457,145 22,857
Cambay Basin (onshore)
CB-9 30,888 3,088
CB-10 70,425 7,043
------- ------
558,450 32,988
======= ======
(1) Net acres represent our net participating interest under our Production
Sharing Contracts and our Participating Interest Agreement with Mr. Roy.
26
OUR PRESENT OIL AND GAS EXPLORATION ACTIVITIES
At April 1, 2004, the Operator of KG Block, Gujarat State Petroleum
Corporation has completed the acquisition, processing and interpretation of a
1,298 square kilometer marine 3D seismic program. Drilling targets have been
mapped and identified by the Operator. On April 15, 2004, a four-well 200-day
drilling contract was entered into to conduct exploratory drilling on the KG
Block. The agreement contains an option to extend the term of the contract to
include six additional wells. Drilling is expected to commence in the middle of
May 2004 and we believe that drilling will be generally continuous thereafter
throughout the balance of 2004, subject however, among other conditions, to
drilling rig availability, satisfactory weather and technical conditions and the
approval and implementation by the operator of a final drilling program for
2004.
With respect to the CB Blocks, we expect that the operators, Jubilant
Enpro Private Ltd., with respect to the CB-9 Block, and Gujarat State Petroleum
Corporation, with respect to the CB-10 Block, will commence an onshore 3D
seismic acquisition program in the fourth quarter of 2004. Thereafter, this data
will be processed and interpreted. We do not expect any drilling activities to
be conducted on either of these blocks during 2004. We estimate the total
capital that we will be required to contribute to the exploration activities on
the CB Blocks during 2004 based on our 10% participating interest will be
approximately $300,000.
HEDGING ACTIVITIES
During the year ended December 31, 2003, we did not utilize any hedging
activities to hedge the price of any future oil and gas production.
MARKETING
Under the terms of our Production Sharing Contracts, until the total
production of crude oil and condensate meets the Indian national demand, we are
required to sell in the Indian domestic market our entitlement to crude oil and
condensate. When and so long as India attains self-sufficiency in the production
of crude oil and condensate, our domestic sale obligation is suspended and we
will have the right to export our entitlement. The Production Sharing Contracts
also provide that the Indian domestic market will have the first call on natural
gas produced from the areas that are the subject of the contracts.
The Production Sharing Contracts provide that the parties are to agree
monthly on a price for crude oil which is intended to be on an import parity
basis. Prices of natural gas are intended to be based on Indian domestic market
prices.
Our ability to market any production of crude oil and natural gas will
be dependent upon the existence and availability of pipeline or other gathering
system, storage facilities and an ability to transport the hydrocarbons to
market. Such facilities are yet to be constructed.
We are not a party to any agreements providing for the delivery of
fixed quantities of hydrocarbons.
27
COMPETITION
We experience competition from others in seeking to participate in
joint ventures and other arrangements to participate in exploratory drilling
ventures in India. In addition, the ventures in which we participate will
experience competition from other ventures and persons in seeking from the
Government of India and, possibly others, its agreement to grant and enter into
production sharing contracts. Management of our company believes that
competition in entering into such agreements with the Government of India is
based on the extent and magnitude of exploratory activities that the applicants
will propose to undertake on the exploration blocks under consideration as well
as the financial and technical ability of the applicants to complete such
activities.
PAST ACTIVITIES AND OUR ORGANIZATION
Through late 2001, we were engaged in the creation, operation and
maintenance of a World Wide Web-based community, known as Suite101.com, Inc.
During the period January 1, 1999 through December 31, 2001, our total revenues
from these activities were $43,600 and our available cash fell from $9,322,000
at the end of March 2000 to $4,049,000 at the end of December 2001. At the end
of 2001, our management at that time determined to redirect our activities and
by mid-2002, we were no longer engaged in our former Web-based activities. In
March 2003, we entered into an agreement to acquire all the outstanding stock of
GeoGlobal Resources (India) Inc. Following obtaining the consent of the
Government of India to the transaction, we completed the transaction on August
29, 2003.
We are a corporation organized under the laws of the State of Delaware
in December 1993. From December 1998 to January 2004, our corporate name was
Suite101.com, Inc. At a meeting held January 8, 2004, our stockholders approved
an amendment to our Certificate of Incorporation to change our corporate name to
GeoGlobal Resources Inc.
EMPLOYEES
The services of our President and Chief Executive Officer, Jean Paul
Roy, are provided pursuant to the terms of a Technical Services Agreement we
entered into with Roy Group (Barbados) Inc., a corporation wholly-owned by Mr.
Roy. The services of Allan J. Kent, our Executive Vice President and Chief
Financial Officer are provided through D.I. Investments Ltd., a corporation
wholly-owned by Mr. Kent. At April 15, 2004, our agreement with D.I. Investments
Ltd. is an oral agreement. Messrs. Roy and Kent each devote substantially all of
their time to our affairs. Neither of such persons are our direct employees.
In addition to Messrs. Roy and Kent, we employ 10 additional persons in
various capacities as part-time consultants to us.
As of December 31, 2003, we employed two persons and one full time
consultant in administrative capacities in Calgary, Alberta, Canada and two
persons in administration capacities in Gandhinagar, Gujarat State, India.
OFFICES AND PROPERTIES
As of April 1, 2004, our executive offices are at Suite 200, 630 - 4
Avenue SW, Calgary, Alberta, T2P 0J9 Canada. Our leased premises currently
include approximately 1,275 square feet and are subleased on a month to month
basis for a term expiring in April 2005. These premises are subleased at cost
from D.I. Investments Ltd., a company controlled by Mr. Kent. The facilities are
considered adequate for our present activities.
We do not own any interests in any leasehold or other interests in oil
and gas properties as of December 31, 2003. Our interests are derived under our
contractual arrangements in the Production Sharing Contracts we have entered
into.
LEGAL PROCEEDINGS
There are no legal proceedings that are pending against us.
28
MANAGEMENT
DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES
The following table contains information concerning the current
Directors, executive officers and significant employees of the Company:
NAME AGE POSITION
---- --- --------
DIRECTORS AND EXECUTIVE OFFICERS:
Jean Paul Roy (1) 47 President, Chief Executive Officer and Director
Allan J. Kent (2) 50 Executive Vice President, Chief Financial
Officer and Director
John K. Campbell (1) (2) 71 Director
Brent J. Peters (1) (2) 32 Director
Peter R. Smith 56 Director and Chairman of the Board
--------------------
(1) Member of our Audit Committee.
(2) Member of our Compensation Committee.
Each Director of our company has been elected to serve until our next
annual meeting of stockholders and until his successor has been elected and
qualified.
Mr. Roy was elected a Director of our company on August 29, 2003. He
was also elected President and Chief Executive Officer on August 29, 2003. For
more than the past five years, Mr. Roy has been consulting in the oil and gas
industry through his private company, GeoGlobal Technologies Inc. which he owns
100%. Mr. Roy has in excess of 20 years of geological and geophysical experience
in basins worldwide as he has worked on projects throughout India, North and
South America, Europe, the Middle East, the former Soviet Union and South East
Asia. His specialties include modern seismic data acquisition and processing
techniques, and integrated geological and geophysical data interpretation. Since
1981 he has held geophysical positions with Niko Resources Ltd., Gujarat State
Petroleum Corporation, Reliance Industries, Cubacan Exploration Inc.,
PetroCanada, GEDCO, Eurocan USA and British Petroleum. Mr. Roy graduated from
St. Mary's University of Halifax, Nova Scotia in 1982 with a B.Sc. in Geology
and has been certified as a Professional Geophysicist. Mr. Roy is a resident of
Guatemala.
Mr. Kent was elected as Executive Vice President, Chief Financial
Officer and a Director of our company on August 29, 2003. Mr. Kent has in excess
of 20 years experience in the area of oil and gas exploration finance and has,
since 1987, held a number of senior management positions and directorships with
Cubacan Exploration Inc., Endeavour Resources Inc. and MacDonald Oil Exploration
Ltd., all publicly listed companies in Canada. Prior thereto, beginning in 1980,
he was a consultant in various capacities to a number of companies in the oil
and gas industry. He received his Bachelor of Mathematics degree in 1977 from
the University of Waterloo, Ontario.
Mr. Campbell was elected a Director of our company in February 2002. Mr.
Campbell has been President of Transamerica Industries Ltd., a natural resource
company, for more than the past five years. He is a former practicing lawyer and
he is presently a retired member of the British Columbia Law Society. Mr.
Campbell is also a Director of American Natural Energy Corporation, a reporting
issuer in the United States.
Mr. Peters was elected a Director of our company in February 2002.
Since 1997, Mr. Peters has been Vice President of Finance and Treasurer of
Northfield Capital Corporation, a publicly traded investment company acquiring
shares in public and private corporations. Mr. Peters has a Bachelor of Business
Administration degree, specializing in accounting.
Mr. Smith was elected a Director of our company on January 8, 2004.
Since 1989, Mr. Smith has been President and co-owner of Andrin Limited, a large
developer/builder of housing in Canada. Mr. Smith was appointed, and held the
position of Chairman of the Board of Directors, Canada Mortgage and Housing
Corporation (CMHC), from September 6, 1995 to September 6, 2003. On February 14,
2001, the Governor General of Canada announced the appointment of Mr. Smith as a
Member of the Order of Canada, effective November 15, 2000.
29
Mr. Smith holds a Masters Degree in Political Science (Public Policy) from the
State University of New York, and an Honours B.A. History and Political Science,
Dean's Honour List, McMaster University, Ontario.
AUDIT COMMITTEE
Our Board of Directors has appointed an Audit Committee consisting of
Messrs. Peters, Campbell and Roy. Our Audit Committee, among other things, meets
with our independent accountants to review our accounting policies, internal
controls and other accounting and auditing matters; approves the engagement of
our independent accountants to render audit and non-audit services; and reviews
the letter of engagement and statement of fees relating to the scope of the
annual audit and special audit work which may be recommended or required by the
independent accountants. Our securities are not listed on a registered national
securities exchange or in an automated inter-dealer quotation system and,
accordingly, we are not subject to the listing standards imposed by rules
adopted under the U.S. Securities Exchange Act of 1934, as amended, relating to
audit committees.
Our Board of Directors has determined that we do not have an Audit
Committee Financial Expert serving on our Audit Committee. We do not have an
Audit Committee Financial Expert serving on our Audit Committee because at this
time the limited magnitude of our revenues and operations does not, in the view
of our Board of Directors, justify or require that we obtain the services of a
person having the attributes required to be an Audit Committee Financial Expert
on our Board of Directors and Audit Committee. The Board of Directors may in the
future determine that a member elected to the Board in the future has the
attributes to be determined to be an Audit Committee Financial Expert.
COMPENSATION COMMITTEE
Our Compensation Committee consists of Messrs. Peters, Campbell and
Kent. Our Compensation Committee, among other things, exercises general
responsibility regarding overall employee and executive compensation. Our
Compensation Committee sets the annual salary, bonus and other benefits of the
President and the Chief Executive Officer and approves compensation for all our
other executive officers, consultants and employees after considering the
recommendations of our President and Chief Executive Officer.
EXECUTIVE AND DIRECTOR COMPENSATION
The following table sets forth the annual and long-term compensation
paid during the three fiscal years ended December 31, 2003 to each of our chief
executive officers who served in that capacity during the year ended December
31, 2003. No other executive officers received compensation exceeding $100,000
during the year ended December 31, 2003:
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
COMPENSATION
OTHER -------------------------------
NAME AND ANNUAL ANNUAL LONG-TERM ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMP. AWARDS/ OPTION (#) COMP.
------------------ ---- ------ ----- ----- ------------------ ---------
Mitchell G. Blumberg (1) 2001 Nil Nil Nil Nil Nil
2002 $20,666 Nil Nil 130,000 Nil
2003 Nil Nil Nil Nil Nil
Jean Paul Roy (2) 2003 (3) Nil Nil 550,000 Nil
---------------------
(1) Mr. Blumberg served as President from February 25, 2002 to August 29, 2003.
(2) Mr. Jean Paul Roy was elected President, Chief Executive Officer and a
Director on August 29, 2003
(3) See Certain Relationships and Related Transactions for information
regarding a Technical Services Agreement entered into by us with Roy Group
(Barbados) Inc. of which Mr. Roy is the sole stockholder, providing for
payment of $250,000 per year.
30
OPTION GRANTS IN YEAR ENDED DECEMBER 31, 2003
The following table provides information with respect to the above
named executive officers regarding options granted to such persons during the
year ended December 31, 2003.
% OF TOTAL
NUMBER OF OPTIONS/ MARKET
SECURITIES SARS GRANTED TO EXERCISE OR PRICE ON
UNDERLYING SARS/ EMPLOYEES IN BASE PRICE DATE OF
NAME OPTIONS GRANTED (#) FISCAL YEAR ($/SHARE) EXPIRATION DATE GRANT
---- ------------------- ----------- --------- --------------- -----
Jean Paul Roy 550,000 18.7% $1.18 August 31, 2005 $1.18
31
STOCK OPTIONS EXERCISED DURING THE YEAR ENDED DECEMBER 31, 2003 AND HOLDINGS AT
DECEMBER 31, 2003.
The following table provides information with respect to the
above-named executive officers regarding options exercised during the year ended
December 31, 2003 and options held at the end of the year ended December 31,
2003.
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES DECEMBER 31, 2003 DECEMBER 31, 2003 (3)
ACQUIRED VALUE --------------------------- -----------------------------
NAME ON EXERCISE REALIZED EXERCISABLE NEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- -------- ----------- ------------ ----------- -------------
Jean Paul Roy -- -- 250,000 (1) 300,000 (1) $82,500 $99,000
Mitchell G. Blumberg 5,000 $ 850 -- -- -- --
95,000 $3,750 -- -- -- --
16,667 $4,500 -- -- -- --
5,000 $2,500 60,000 (2) -- $ 600 --
------------------------
(1) The options are exercisable at $1.18 per share.
(2) The options are exercisable at $1.50 per share.
(3) Based on the closing sales price on December 31, 2003 of $1.51.
We do not have any employment contracts, termination agreements or
change of control arrangements with any of our executive officers. See Certain
Relationships and Related Transactions for information regarding a Technical
Services Agreement entered into by us with Roy Group (Barbados) Inc. of which
Mr. Roy is the sole stockholder.
Our Directors do not receive any cash compensation for serving in that
capacity; however, they are reimbursed for their out-of-pocket expenses in
attending meetings. Pursuant to the terms of our 1998 Stock Incentive Plan, each
non-employee Director automatically receives an option grant for 50,000 shares
on the date such person joins the Board. In addition, on the date of each annual
stockholder meeting, provided such person has served as a non-employee Director
for at least six months, each non-employee Board member who is to continue to
serve as a non-employee Board member will automatically be granted an option to
purchase 5,000 shares. Each such option has a term of ten years, subject to
earlier termination following such person's cessation of Board service, and is
subject to certain vesting provisions. For the purposes of the automatic grant
provisions of the Plan, all of our Directors, other than Messrs. Roy and Kent,
are considered non-employee Board members.
Both Mr. John K. Campbell and Mr. Brent J. Peters waived the automatic
grant of options to purchase 5,000 shares of common stock they were entitled to
receive under the automatic grant provisions of the Plan upon the occurrence of
the Annual Meeting of Stockholders held January 8, 2004. In addition, Mr. Peter
R. Smith waived the automatic grant of options to purchase 50,000 shares he was
entitled to receive upon his election as a Director. Messrs. Campbell, Peters
and Smith had each been granted options on December 9, 2003 to purchase 25,000,
80,000, and 50,000 shares, respectively, exercisable at $1.18 per share. Of such
options granted to each of such persons, 20,000 shares were immediately vested,
5,000 shares granted to Messrs. Campbell and Peters vested on January 8, 2004,
30,000 Mr. Peters options vest on August 29, 2004, and the remaining options
will vest on January 8, 2005. On December 9, 2003, the closing market price for
shares of our common stock was $1.18 per share.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On August 29, 2003, pursuant to an agreement dated April 4, 2003 and
amended August 29, 2003, we completed a transaction with Mr. Roy and GeoGlobal
Resources (India) Inc. ("GeoGlobal India"), a corporation then wholly-owned by
Mr. Roy, whereby we acquired from Mr. Roy all of the outstanding capital stock
of GeoGlobal India. In exchange for the outstanding capital stock of GeoGlobal
India, we issued 34.0 million shares of our common stock. Of the 34.0 million
shares, 14.5 million shares were issued and delivered to Mr. Roy at the closing
of the transaction being August 29, 2003 and an aggregate of 19.5 million shares
are held in escrow by an escrow agent. The terms of the escrow provide for the
release of the shares upon the occurrence of certain developments relating to
the outcome of oil and natural gas exploration and development activities
conducted on our KG Block. In addition to our shares of common stock, we
delivered to Mr. Roy a $2.0 million promissory note, of which $500,000 was paid
on the
32
closing of the transaction on August 29, 2003, $500,000 was paid on October 15,
2003, $500,000 was paid on January 15, 2004 and $500,000 is to be paid on June
30, 2004. The note does not accrue interest. The note is secured by the
outstanding stock of GeoGlobal India. As a consequence of the transaction, Mr.
Roy holds an aggregate of 34.0 million shares of our outstanding common stock,
or approximately 69.3% of the shares outstanding, assuming all shares held in
escrow are released to him. The terms of the transaction provide that Mr. Roy is
to have the right to vote all 34.0 million shares following the closing,
including the shares during the period they are held in escrow.
On March 27, 2003, GeoGlobal India entered into a Participating
Interest Agreement with Roy Group (Mauritius) Inc. a company organized under the
laws of Mauritius and wholly owned by Mr. Roy, whereby, subject to Government of
India consent, GeoGlobal India assigned to Roy Group (Mauritius) Inc., one-half
of its original 10% interest under the Production Sharing Contract for KG Block
and its rights under the Carried Interest Agreement with Gujarat State Petroleum
Corporation Limited. Under the terms of the agreement, until the Government of
India consent is obtained, GeoGlobal India retains the exclusive right to deal
with the other parties to the Production Sharing Contract and the Carried
Interest Agreement and is entitled to make all decisions regarding the interest
assigned to Roy Group (Mauritius) Inc. and Roy Group (Mauritius) Inc. agreed to
be bound by and responsible for the actions taken by, obligations undertaken and
costs incurred by GeoGlobal India in regard to the Roy Group (Mauritius) Inc.
interest and to be liable to GeoGlobal India for its share of all costs,
interests, liabilities and obligations arising out of or relating to the Roy
Group (Mauritius) Inc. interest. Roy Group (Mauritius) Inc. agreed to indemnify
GeoGlobal India against any and all costs, expenses, losses, damages or
liabilities incurred by reason of Roy Group (Mauritius) Inc.'s failure to pay
the same. Subject to obtaining the government consent to the assignment, Roy
Group (Mauritius) Inc. is entitled to all income, receipts, credits,
reimbursements, monies receivable, rebates and other benefits in respect of its
5% interest which relate to the Production Sharing Contract. GeoGlobal India has
a right of set-off against sums owing to Roy Group (Mauritius) Inc. any sums
owing to GeoGlobal India by Roy Group (Mauritius) Inc.. In the event that the
Indian government consent is delayed or denied resulting in either Roy Group
(Mauritius) Inc. or GeoGlobal India being denied an economic benefit it would
have realized under the agreement, the parties agreed to amend the agreement or
take other reasonable steps to assure that an equitable result is achieved
consistent with the parties intentions contained in the agreement. In the event
the consent is denied, neither party is entitled to assert any claim against the
other except as is specifically set forth in the agreement. The agreement
provides that in the absence of such consent, the assignment will not occur and
we are to provide Roy Group (Mauritius) Inc. with an economic benefit equivalent
to the interest to be assigned.
Roy Group (Mauritius) Inc. further agreed in the Participating Interest
Agreement that it would not dispose of any interest in the agreement, its 5%
interest, or the shares of Roy Group (Mauritius) Inc. without first giving
notice to GeoGlobal India of the transaction, its terms, including price, and
the identity of the intended assignee and any other material information, and
GeoGlobal India has the first right to purchase the interest proposed to be sold
on the terms contained in the notice to GeoGlobal India. GeoGlobal India is now
our wholly-owned subsidiary corporation.
On August 29, 2003, we entered into a Technical Services Agreement with
Roy Group (Barbados) Inc., a company organized under the laws of Barbados and
wholly-owned by Mr. Roy. Under the agreement, Roy Group (Barbados) Inc. agreed
to perform such geologic and geophysical duties as are assigned to it by us. The
term of the agreement extends through August 29, 2006 and continues for
successive periods of one year thereafter unless otherwise agreed by the parties
or either party has given notice that the agreement will terminate at the end of
the term. Roy Group (Barbados) Inc. receives a fee of $250,000 per year under
the agreement and is reimbursed for authorized travel and other out-of-pocket
expenses. The agreement prohibits Roy Group (Barbados) Inc. from disclosing any
of our confidential information and from competing directly or indirectly with
us for a period of three years from August 29, 2003 with respect to any
acquisition, exploration, or development of any crude oil, natural gas or
related hydrocarbon interests within the area of the country of India. The
agreement may be terminated by either party on 30 days' prior written notice,
provided, however, the confidentiality and non-competition provisions will
survive the termination. Roy Group (Barbados) Inc. received $83,333 from us
during 2003 under the terms of this agreement.
33
Roy Group (Barbados) Inc. was also reimbursed for travel, hotel, meals
and entertainment expenses incurred by Mr. Roy during 2003 totalling $102,061.
At December 31, 2003, the Company owed Roy Group (Barbados) Inc. $41,115 for
services provided and expenses incurred pursuant to the Technical Services
Agreement which bears no interest and has no set terms of repayment.
During the year ended December 31, 2003, D.I. Investments Ltd. a
company controlled by Mr. Kent, was reimbursed $33,802 for office costs,
including rent, parking, supplies and telephone. D.I. Investments Ltd. was also
reimbursed $39,045 for travel, hotel, meals and entertainment incurred
throughout 2003.
34
PRINCIPAL AND OTHER STOCKHOLDERS
Set forth below is information concerning the common stock ownership of
all persons known by us to own beneficially 5% or more of our common stock, and
the common stock ownership of each of our Directors and all Directors and
officers as a group, as of April 1, 2004. As of April 1, 2004, we had 55,063,355
shares of common stock outstanding.
NUMBER OF SHARES PERCENTAGE OF OUTSTANDING
NAME AND ADDRESS OF BENEFICIAL OWNER BENEFICIALLY OWNED (1) COMMON STOCK
------------------------------------ ---------------------- ------------
Jean Paul Roy (2) 34,250,000 (3) 61.9%
c/o GeoGlobal Resources Inc.
Suite 200, 630 - 4 Avenue SW
Calgary, Alberta T2P 0J9
Allan J. Kent 250,000 (4) Less than 0.5%
c/o GeoGlobal Resources Inc.
Suite 200, 630 - 4 Avenue SW
Calgary, Alberta T2P 0J9
John K. Campbell 91,667 (5) Less than 0.5%
950 West Pender Street - Suite 300
Vancouver, British Columbia V6C 1L7
Brent J. Peters 123,667 (6) Less than 0.5%
c/o Northfield Capital Corporation
347 Bay Street - Suite 301
Toronto, Ontario M5H 2R7
Peter R. Smith 20,000 (7) Less than 0.5%
c/o Andrin Limited
197 County Court Boulevard, Suite 202
Brampton, Ontario L6W 4P6
All officers and directors as a group 34,735,334 (8) 62.4% (8)
(5 persons)
------------------------------
(1) For purposes of the above table, a person is considered to "beneficially
own" any shares with respect to which he or she exercises sole or shared
voting or investment power or of which he or she has the right to acquire
the beneficial ownership within 60 days following April 1, 2004.
(2) Of the shares held beneficially by Mr. Roy, an aggregate of 19.5 million
shares are held in escrow pursuant to the terms of the agreement whereby we
purchased the outstanding capital stock of GeoGlobal Resources (India) Inc.
from Mr. Roy.
(3) Includes 34,000,000 shares of common stock and options to purchase 250,000
shares of common stock exercisable within 60 days of April 1, 2004.
(4) Includes options to purchase 250,000 shares of common stock exercisable
within 60 days of April 1, 2004.
(5) Includes 66,667 shares of common stock and options to purchase 25,000
shares of common stock exercisable within 60 days of April 1, 2004.
(6) Includes 98,667 shares of common stock and options to purchase 25,000
shares of common stock exercisable within 60 days of April 1, 2004.
(7) Includes options to purchase 20,000 shares of common stock exercisable
within 60 days of April 1, 2004.
(8) Includes options exercisable within 60 days of April 1, 2004.
On December 9, 2003, our Board of Directors granted options of
2,000,000 at $1.18 and on December 30, 2003, our Board of Directors granted
options of 945,000 at $1.50.
RECENT CHANGE IN CONTROL
On August 29, 2003, pursuant to an agreement dated April 4, 2003, and
amended August 29, 2003, we completed a transaction with Mr. Roy and GeoGlobal
India, a corporation wholly-owned by Mr. Roy, whereby we acquired from Mr. Roy
all of the outstanding capital stock of GeoGlobal India. In exchange for the
outstanding capital stock of GeoGlobal held by Mr. Roy, we issued 34.0 million
shares of our common stock. Of the 34.0 million shares, 14.5 million shares were
issued and delivered to Mr. Roy at the closing of the transaction and an
aggregate of 19.5 million shares are held in escrow by an escrow agent. The
terms of the escrow provide for the release of the shares upon the occurrence of
certain developments relating to the outcome of oil and natural gas exploration
and development activities conducted on an exploration block off the east coast
of India in which GeoGlobal India holds a net 5% interest. On the closing of the
transaction, Mr. Roy and Mr. Kent were elected Directors and Mitchell G.
Blumberg and
35
Douglas F. Loblaw resigned as Directors. Messrs. John Campbell and Brent Peters
continued in office as Directors. Mr. Roy was elected our President and Chief
Executive Officer and Mr. Kent was elected Executive Vice President and Chief
Financial Officer. As a consequence of the transaction, Mr. Roy holds with the
right to vote an aggregate of 34.0 million shares of our outstanding common
stock or approximately 69.3% of the shares outstanding. The terms of the
transaction provide that Mr. Roy is to have the right to vote all 34.0 million
shares following the closing, including the shares during the period they are
held in escrow. The election of Messrs. Roy and Kent as Directors and officers
were conditions to the closing of the transaction. Except for the foregoing,
there are no understandings or arrangements among Mr. Roy and Mr. Kent and their
associates or our other current Directors with respect to the election of
Directors or other matters in the future. As a consequence of his acquisition of
shares of the Company, Mr. Roy may be deemed to be in control of our company.
36
SELLING SECURITYHOLDERS
The following table sets forth the aggregate numbers of securities
beneficially owned by each Selling Securityholder as of March 31, 2004 and the
aggregate number of securities registered hereby that each Selling
Securityholder may offer and sell pursuant to this Prospectus. Because the
Selling Securityholders may sell all or a portion of the securities at any time
and from time to time after the date hereof, no estimate can be made of the
number of shares of common stock that each Selling Securityholder may retain
upon the completion of the Offering. The shares of common stock have been
included in this Prospectus pursuant to contractual rights granted to the
Selling Securityholders to have their shares of common stock registered under
the Securities Act. The registration of these shares for resale does not
necessarily mean that the selling securityholder will sell any of the shares.
TOTAL NUMBER OF SHARES
OF COMMON STOCK BENEFICIALLY
COMMON STOCK OWNED
BENEFICIALLY OWNED OFFERED FOR SELLING
NAME OF SELLING SECURITYHOLDER PRIOR TO THIS OFFERING(1) SECURITYHOLDERS' ACCOUNT(1)
-----------------------------------------------------------------------------------------------------------
Robin F. Adams 30,000 30,000
AIG Global Investment Corp. (Canada) 525,000 525,000
Bank Julius Baer & Co. Ltd. 300,000 300,000
Bank Sal. Oppenheim Jr. & Cie Switzerland 375,000 375,000
Brian Bayley 150,000 150,000
Laura Bestor 150,000 150,000
John Boreta 247,500 247,500
Julie Bradshaw 112,500 112,500
Brimstone Limited(2) 250,000 250,000
BTR Global Opportunity Trading Limited 600,000 600,000
John Campbell(3) 91,667 66,667
Thane Campbell 30,000 30,000
Continental Trust Corporation Limited 150,000 150,000
Dakepa Holdings Inc. 15,000 15,000
Robert Depoe 75,000 75,000
Martin Doane 18,750 18,750
Dynamic Powerhedge Fund 300,000 300,000
Mikel W. Edwards 75,000 75,000
Richard Elder 75,000 75,000
Jana Ewart 150,000 150,000
Alice Gardner 37,500 37,500
Genevest Inc. 450,000 450,000
Robin Goad 30,000 30,000
Jennifer Goldman 15,000 15,000
Deborah B. Goldstein 37,500 37,500
Stuart B. Goldstein 120,000 120,000
John Gracie 30,000 30,000
37
TOTAL NUMBER OF SHARES
OF COMMON STOCK BENEFICIALLY
COMMON STOCK OWNED
BENEFICIALLY OWNED OFFERED FOR SELLING
NAME OF SELLING SECURITYHOLDER PRIOR TO THIS OFFERING(1) SECURITYHOLDERS' ACCOUNT(1)
-----------------------------------------------------------------------------------------------------------
Dr. Alan Green 30,000 30,000
John D. Gunther 150,000 150,000
Nicole Gunther 37,500 37,500
Gregory R. Harris 300,000 300,000
Robert C. Heilig 15,000 15,000
Brad N. Hollingsworth 75,000 75,000
Gus Itzek 300,000 300,000
JMM Trading LP 112,500 112,500
John Kehl 150,000 150,000
Scott Kelly 15,000 15,000
K2 Principal Fund LP 900,000 900,000
Terry MacGibbon 112,500 112,500
Andrew Martyn 37,500 37,500
John D. McBride 112,500 112,500
Middlemarch Partners Limited 705,000 705,000
Michael P. Murphy 37,500 37,500
Orion Capital Incorporated 270,000 270,000
Chris Paliare 18,750 18,750
G. Scott Paterson 75,000 75,000
Brent Peters(3) 123,667 91,667
John A. Pollock, Sr. 150,000 150,000
Bob Richardson 75,000 75,000
Stephen Sharpe 75,000 75,000
Donald A. Sheldon 37,500 37,500
Mary Sinclair 150,000 150,000
Mary Sinclair ITF Candice Sinclair 150,000 150,000
Mary Sinclair ITF Christopher Sinclair 150,000 150,000
SM Investors, LP(2) 25,314 25,314
SM Investors II, LP(2) 30,209 30,209
SM Investors Offshore Ltd.(2) 14,477 14,477
William Stanimir 75,000 75,000
Morris Tenaglia 75,000 75,000
Donald Whalen 112,500 112,500
West Indies Trust Company Ltd. 150,000 150,000
Patricia White 97,500 97,500
Whitmill Nominees Limited(2) 250,000 250,000
Yendor Investment Ltd. 150,000 150,000
---------------------------------
(1) Unless otherwise indicated, the securities were purchased from us in a
transaction that was completed on December 23, 2003. The securities were
sold in units, each unit consisting of one share and one-half of a warrant
to purchase one share. The number of shares includes the shares issuable on
exercise of the warrants.
(2) Shares purchased in July 2003 on exercise of outstanding common stock
purchase warrants.
(3) Shares purchased in August 2003 on exercise of options granted under our
1998 Stock Incentive Plan. Each of Messrs. Campbell and Peters hold vested
options to purchase 25,000 shares of our common stock that are included in
their beneficial holdings. Both Mr. Campbell and Mr. Peters are Directors
of our company.
38
PLAN OF DISTRIBUTION
The Selling Securityholders may sell or distribute some or all of the
common stock from time to time through underwriters or dealers or brokers or
other agents or directly to one or more purchasers, including pledgees, in
transactions (which may involve block transactions) or in privately negotiated
transactions (including sales pursuant to pledges), or in a combination of such
transactions. Such transactions may be effected by the Selling Securityholders
on the OTC Bulletin Board(R) at market prices prevailing at the time of sale, at
prices related to such prevailing market prices, at negotiated prices, or at
fixed prices, which may be changed. Brokers, dealers, agents or underwriters
participating in such transactions as agent may receive compensation in the form
of discounts, concessions or commissions from the Selling Securityholders (and,
if they act as agent for the purchaser of such shares, from such purchaser).
Such discounts, concessions or commissions as to a particular broker, dealer,
agent or underwriter might be in excess of those customary in the type of
transaction involved.
Persons who are pledges, donees, transferees, or other successors in
interest of any of the named Selling Securityholders (including, but not limited
to, persons who receive shares from a named Selling Securityholder as a gift,
partnership distribution, or other non-sale-related transfer after the date of
this Prospectus) may also use this Prospectus and are included when we refer to
Selling Securityholder in this Prospectus. If necessary, we would file a
supplement to this Prospectus under Rule 424(b)(3) or other applicable provision
of the Securities Act of 1933 amending the list of Selling Securityholders to
include the pledgee, donee, transferee or other successors in interest as
Selling Securityholders under this Prospectus. Selling Securityholders may sell
the shares by one or more of the following methods, without limitation:
o block trades (which may include cross trades) in which the broker
or dealer so engaged will attempt to sell the shares as agent but
may position and resell a portion of the block as principal to
facilitate the transaction;
o purchases by a broker or dealer as principal and resale by the
broker or dealer for its own account;
o an exchange distribution or secondary distribution in accordance
with the rules of any stock exchange or market on which the shares
are listed;
o ordinary brokerage transactions and transactions in which the
broker solicits purchases;
o an offering at other than a fixed price on or through the
facilities of any stock exchange or market on which the shares are
listed or to or through a market maker other than on that stock
exchange or market;
o privately negotiated transactions, directly or through agents;
o short sales of shares and sales to cover short sales;
o through the writing of options on the shares, whether the options
are listed on an options exchange or otherwise;
o through the distribution of the shares by any selling shareholder
to its partners, members of shareholders;
o one or more underwritten offerings;
o agreements between a broker or dealer and one or more of the
selling shareholders to sell a specified number of the securities
at a stipulated price per share; and
o any combination of any of these methods of sale or distribution,
or any other method permitted by applicable law.
39
The Selling Securityholders and any such underwriters, brokers, dealers
or agents that participate in such distribution may be deemed to be
"underwriters" within the meaning of the Securities Act, and any discounts,
commissions or concessions received by any such underwriters, brokers, dealers
or agents might be deemed to be underwriting discounts and commissions under the
Securities Act. Neither we nor the Selling Securityholders can presently
estimate the amount of such compensation. We do not know of any existing
arrangements between the Selling Securityholders and any underwriter, broker,
dealer or other agent relating to the sale or distribution of the Selling
Securityholders' Securities. If necessary, we will file a supplement to this
Prospectus under Rule 424(b)(3) or other applicable provision of the Securities
Act of 1933 to disclose any such arrangements made known to us by the Selling
Securityholders.
Under applicable rules and regulations currently in effect under the
Exchange Act, any person engaged in a distribution of any of the shares of
common stock may not simultaneously engage in market activities with respect to
the common stock for a period of five business days prior to the commencement of
such distribution. In addition, and without limiting the foregoing, the Selling
Securityholders will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder, including without limitation Regulation M
thereunder, which provisions may limit the timing of purchases and sales of any
of the shares of common stock by the Selling Securityholders. All of the
foregoing may affect the marketability of the common stock .
We will pay substantially all of the expenses incident to this offering
of the Securities to the public other than commissions and discounts of
underwriters, brokers, dealers or agents. The Selling Securityholders may
indemnify any broker, dealer, agent or underwriter that participates in
transactions involving sales of the securities against certain liabilities,
including liabilities arising under the Securities Act. We estimate these
expenses will total $40.000.
The Selling Stockholders may also sell shares under Rule 144 under the
Securities Act of 1933 if available, rather than under this Prospectus. Rule 144
is available for the sale of restricted securities after a period of twelve
months has expired from the date the securities are purchased and fully paid
for. Under the tacking provisions of Rule 144, the twelve-month period will
begin to run on the date the Debentures were purchased and fully paid for. The
holding period relates to the entire time period the Debentures and shares
issuable on conversion are held. It is not necessary that the shares issued on
conversion be held for twelve months after conversion in order to meet the
holding period requirement. Rule 144 also imposes limitations on the amount of
securities that can be sold and the manner of sale of the shares during the
twelfth to twenty-fourth month period after the purchase of the Debentures. The
limitation on the amount of securities that can be sold limits a Selling
Securityholder to selling, including sales of shares made during the preceding
three months, an amount of shares not exceeding 1% of the shares outstanding.
This calculation is made without reflecting as outstanding shares issuable on
conversion or exercise of debt securities, including the Debentures, options or
warrants. The manner of sale provisions require that the shares be sold in
brokers' transactions and that the person making the sale not solicit or arrange
for the solicitation of orders to purchase the securities in anticipation of or
in connection with the sale or make any payment in connection with the offer or
sale to any person other than the broker who executes the sale.
In order to be a broker's transaction, the broker executing the sale
can do nothing more than execute the order to sell as agent for the person
selling the shares and receive no more than the customary commission. In
addition, the broker cannot solicit or arrange for the solicitation of orders to
buy the shares or be aware of circumstances indicating that the sale is a part
of an unlawful distribution of the shares in violation of the registration
requirements of the Securities Act of 1933. A notice of sale on Form 144 is to
be filed with the U.S. Securities and Exchange Commission at the time of making
a Rule 144 sale.
After a period of twenty-four months has expired from the date the
securities are purchased and fully paid for and provided the shares are intended
to be sold by a person who is not an "affiliate" of ours, the shares can be
resold without complying with the limitations on the amount of securities sold,
the manner of sale provisions and the notice filing requirements of Rule 144
described above. This would be characterized as a Rule 144(k) transaction.
Persons who are deemed to be "affiliates" of ours will continue to be required
to comply with the provisions of Rule 144 described above in making re-sales of
shares after the twenty-four month holding period.
40
DESCRIPTION OF CAPITAL STOCK
GENERAL
Under our Certificate of Incorporation, the total number of shares of
all classes of stock that we have authority to issue is 101,000,000 consisting
of 1,000,000 shares of preferred stock, par value $0.01 per share, and
100,000,000 shares of common stock , par value $0.001 per share.
PREFERRED STOCK
Up to 1,000,000 shares of preferred stock, par value $0.01 per share,
may be issued from time to time in one or more series. Our Board of Directors,
without further approval of the stockholders, is expressly authorized to issue
shares of our preferred stock in one or more series, and to fix for each such
series such voting powers, full or limited, and such designations, preferences
and relative, participating, optional or special rights and such qualifications,
limitations or restrictions thereof as may be stated and expressed in the
resolution or resolutions adopted by the Board of Directors providing for the
issue of such series and as may be permitted by the General Corporation Law of
the State of Delaware. The issuance of preferred stock, while providing
flexibility in connection with possible financings, acquisitions and other
corporate purposes, could, among other things, adversely affect the voting power
of the holders of our common stock and, under certain circumstances, be used as
a means of discouraging, delaying or preventing a change in control of our
company. As of December 31, 2003, we had no shares of preferred stock
outstanding.
COMMON STOCK
The holders of common stock are entitled to one vote per share on all
matters voted on by stockholders, including elections of Directors, and, except
as otherwise required by law or provided in any resolution adopted by the Board
of Directors with respect to any series of preferred stock establishing the
powers, designations, preferences and relative, participating, option or other
special rights of such series, the holders of our shares of common stock
exclusively possess all voting power. The Certificate of Incorporation does not
provide for cumulative voting in the election of directors. Subject to any
preferential rights of any outstanding series of preferred stock, the holders of
common stock are entitled to such distributions as may be declared from time to
time by the Board of Directors from funds available therefor, and upon
liquidation are entitled to receive pro rata all our assets available for
distribution to such holders. All shares of our common stock outstanding are
fully paid and non-assessable and the holders thereof have no preemptive rights.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
Section 5.1 of our corporate By-laws and Section 145 of the Delaware
General Corporation Law provide for indemnification of our officers and
Directors and others. Insofar as indemnification for liabilities arising under
the Securities Act of 1933, as amended (the "Act") may be permitted to our
directors, officers and controlling persons pursuant to the foregoing
provisions, or otherwise, we have been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public policy
as expressed in the Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by us
of expenses incurred or paid by a director, officer or controlling person in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, we will, unless in the opinion of our counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by us is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
LEGAL MATTERS
The validity of the issuance of the common stock offered hereby has
been passed upon for us by William S. Clarke, P.A., Princeton, New Jersey.
EXPERTS
The consolidated financial statements as of December 31, 2003 and 2002
and for the year ended December 31, 2003, and for the period from inception on
August 21, 2002 to December 31, 2002 and for the cumulative period from
inception on August 21, 2002 to December 31, 2003, included in this Prospectus
have been so included in reliance on the report of Ernst & Young, LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
41
WHERE YOU CAN FIND MORE INFORMATION
We are subject to the informational filing requirements of the U.S.
Securities Exchange Act of 1934, as amended, and its rules and regulations. This
means that we file reports, proxy and information statements and other
information with the U.S. Securities and Exchange Commission. The reports, proxy
and information statements and other information that we file can be read and
copied at the public reference facilities maintained by the Commission at Room
1024, 450 Fifth Street, Northwest, Washington, DC 20549. Please call the
Commission at 1-800-SEC-0330 for information on the operation of the public
reference room. Copies of such material can also be obtained from the Commission
at prescribed rates through its Public Reference Section at 450 Fifth Street,
Northwest, Washington, DC 20549. The Commission maintains a Web site that
contains the reports, proxy and information statements and other information
that we file electronically with the Commission and the address of that Web site
is http://www.sec.gov.
This Prospectus is part of a registration statement we filed with the
Commission. Securityholders should rely only on the information or
representations provided in this Prospectus. We have authorized no one to
provide you with any information other than that provided in this Prospectus. We
have authorized no one to provide you with different information. We are not
making an offer of these securities in any state where the offer is not
permitted. You should not assume that the information in this Prospectus is
accurate as of any date other than the date on the front of the document.
Holders of shares of our common stock may obtain a copy of our annual
report on Form 10-KSB as filed with the Commission, which contains our audited
year-end financial statements, by mailing their request to GeoGlobal Resources
Inc., Suite 200, 630 - 4th Avenue, SW, Calgary, Alberta T2P 0J9 Canada or to
obtain an electronic copy visit the SEC website at www.sec.gov.
42
GEOGLOBAL RESOURCES INC.
(A DEVELOPMENT STAGE ENTERPRISE)
(FORMERLY SUITE101.COM, INC.)
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND DECEMBER 31, 2002
(IN UNITED STATES DOLLARS)
F-1
GEOGLOBAL RESOURCES INC.
(A DEVELOPMENT STAGE ENTERPRISE)
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2003 AND DECEMBER 31, 2002
REPORT OF INDEPENDENT AUDITORS F-3
FINANCIAL STATEMENTS
Consolidated Balance Sheets F-4
Consolidated Statements of Operations F-5
Consolidated Statements of Changes in Stockholders' Equity F-5
Consolidated Statements of Cash Flows F-6
Notes to the Consolidated Financial Statements F-7 to F-21
F-2
REPORT OF INDEPENDENT AUDITORS
TO THE STOCKHOLDERS OF
GeoGlobal Resources Inc.
We have audited the accompanying consolidated balance sheets of GeoGlobal
Resources Inc., a development stage enterprise (formerly Suite101.com, Inc.) as
of December 31, 2003 and 2002 and the related consolidated statements of
operations, stockholders' equity and cash flows for the year ended December 31,
2003, the period from inception on August 21, 2002 to December 31, 2002 and for
the cumulative period from inception on August 21, 2002 to December 31, 2003.
These consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
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 an audit
to obtain reasonable assurance about whether the consolidated 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 financial statements referred to above present fairly, in
all material respects, the consolidated financial position of the Company at
December 31, 2003 and 2002 and the consolidated results of its operations and
its cash flows for the year ended December 31, 2003, the period from inception
on August 21, 2002 to December 31, 2002 and for the cumulative period from
inception on August 21, 2002 to December 31, 2003 in conformity with accounting
principles generally accepted in the United States.
"Ernst & Young LLP" (signed)
CALGARY, ALBERTA CHARTERED CCOUNTANTS
March 25, 2004
F-3
GEOGLOBAL RESOURCES INC.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED BALANCE SHEETS
DECEMBER 31 2003 2002
US $ US $
---------- ----------
(note 11a)
ASSETS
Current
Cash and cash equivalents 7,029,907 272
Accounts receivable 81,487 --
--------------------------
7,111,394 272
Property and equipment (note 3) 295,543 49,148
--------------------------
7,406,937 49,420
==========================
LIABILITIES
Current
Accounts payable and accruals 200,471 6,371
Due to shareholder (note 7d) -- 44,950
Due to related companies (notes 7a, 7b and 7c) 39,475 11,848
Note payable (note 7e) 1,000,000 --
--------------------------
1,239,946 63,169
--------------------------
STOCKHOLDERS' EQUITY
Capital stock (note 4)
Authorized
100,000,000 common shares with a par value of US$0.001 each
1,000,000 preferred shares with a par value of US$0.01 each
Issued
55,053,355 common shares (2002 - 34,000,000) 40,461 64
Additional paid-in capital (note 4) 6,618,038 --
Deficit accumulated during the development stage (491,508) (13,813)
--------------------------
6,166,991 (13,749)
--------------------------
7,406,937 49,420
==========================
See Commitments (note 8)
The accompanying notes are an integral part of these
Consolidated Financial Statements
F-4
GEOGLOBAL RESOURCES INC.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF OPERATIONS
Period from Period from
YEAR ENDED Inception, Inception,
DECEMBER 31- August 21-2002 to August 21-2002 to
2003 December 31-2002 December 31-2003
US$ US$ US$
(note 11b)
EXPENSES (NOTES 7B AND 7C)
General and administrative 151,404 6,198 157,602
Consulting fees 170,271 -- 170,271
Professional fees 131,819 6,917 138,736
Depreciation and depletion 50,450 698 51,148
----------------------------------------------
503,944 13,813 517,757
----------------------------------------------
OTHER EXPENSES (INCOME)
Consulting fees recovered (38,775) -- (38,775)
Equipment costs recovered (4,245) -- (4,245)
Foreign exchange loss 18,634 -- 18,634
Interest income (1,863) -- (1,863)
----------------------------------------------
(26,249) -- (26,249)
NET LOSS AND COMPREHENSIVE LOSS
FOR THE PERIOD (NOTE 10) (477,695) (13,813) (491,508)
==============================================
NET LOSS PER SHARE - BASIC AND DILUTED (0.02) (0.00)
============================
The accompanying notes are an integral part of these
Consolidated Financial Statements
GEOGLOBAL RESOURCES INC.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Additional Accumulated Stockholders'
Capital Stock paid-in capital Deficit Equity
US $ US $ US $ US $
----------------------------------------------------------------------------
Common shares issued on incorporation
on August 21, 2002 64 -- -- 64
Net loss and comprehensive loss
for the period -- -- (13,813) (13,813)
--------------------------------------------------------------------
Balance at December 31, 2002 64 -- (13,813) (13,749)
COMMON SHARES ISSUED DURING THE PERIOD
On acquisition (note 6) 34,000 1,072,960 -- 1,106,960
Exercise of options 397 101,253 -- 101,650
Private placement financing 6,000 5,994,000 -- 6,000,000
Share issuance costs -- (550,175) -- (550,175)
NET LOSS AND COMPREHENSIVE LOSS
FOR THE YEAR -- -- (477,695) (477,695)
--------------------------------------------------------------------
BALANCE AT DECEMBER 31, 2003 40,461 6,618,038 (491,508) 6,166,991
====================================================================
See note 4 for further information
The accompanying notes are an integral part of these
Consolidated Financial Statements
F-5
GEOGLOBAL RESOURCES INC.
(A DEVELOPMENT STAGE ENTERPRISE)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Period from Period from
Inception, Inception,
YEAR ENDED August 21-2002 to August 21-2002 to
DECEMBER 31-2003 December 31-2002 December 31-2003
US$ US$ US$
--------------------------------------------------------------------
(note 11b)
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES
Net loss (477,695) (13,813) (491,508)
Adjustment to reconcile net loss to net cash
used in operating activities:
Depreciation and depletion 50,450 698 51,148
-------------------------------------------------------------
(427,245) (13,115) (440,360)
Changes in operating assets and liabilities:
Accounts receivable (6,487) -- (6,487)
Accounts payable and accruals 130,316 6,371 136,687
Due to shareholder (6,952) 6,952 --
Due to related companies 12,495 -- 12,495
-------------------------------------------------------------
(297,873) 208 (297,665)
-------------------------------------------------------------
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES
Property and equipment (296,845) (49,846) (346,691)
Cash acquired on acquisition (note 6) 3,034,666 -- 3,034,666
-------------------------------------------------------------
2,737,821 (49,846) 2,687,975
-------------------------------------------------------------
CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES
Proceeds from issuance of common shares 6,101,650 64 6,101,714
Share issuance costs (550,175) -- (550,175)
Changes in financing liabilities:
Note payable (note 7e) (1,000,000) -- (1,000,000)
Accounts payable and accruals 61,078 -- 61,078
Due to shareholder (37,998) 37,998 --
Due to related companies 15,132 11,848 26,980
-------------------------------------------------------------
4,589,687 49,910 4,639,597
-------------------------------------------------------------
NET INCREASE 7,029,635 272 7,029,907
Cash and cash equivalents, beginning of period 272 -- --
CASH AND CASH EQUIVALENTS, END OF PERIOD 7,029,907 272 7,029,907
=============================================================
CASH AND CASH EQUIVALENTS
Current bank accounts 36,631 272 36,631
Term deposits 6,993,276 -- 6,993,276
-------------------------------------------------------------
7,029,907 272 7,029,907
=============================================================
The accompanying notes are an integral part of these
Consolidated Financial Statements
F-6
NOTES TO THE CONSOLDIDATED FINANCIAL STATEMENTS
GEOGLOBAL RESOURCES INC.
(A DEVELOPMENT STAGE ENTERPRISE)
DECEMBER 31, 2003
1. NATURE OF OPERATIONS
On August 29, 2003, all of the issued and outstanding shares of GeoGlobal
Resources (India) Inc. ("GGRI") were acquired by GeoGlobal Resources
Inc., formerly Suite101.com, Inc. ("GeoGlobal"). As a result of the
transaction, the former shareholder of GGRI held approximately 69.3% of
the issued and outstanding shares of GeoGlobal. This transaction is
considered an acquisition of GeoGlobal (the accounting subsidiary and
legal parent) by GGRI (the accounting parent and legal subsidiary) and
has been accounted for as a purchase of the net assets of GeoGlobal by
GGRI. Accordingly, this transaction represents a recapitalization of
GGRI, the legal subsidiary, effective August 29, 2003. These consolidated
financial statements are issued under the name of GeoGlobal but are a
continuation of the financial statements of the accounting acquirer,
GGRI. GGRI's assets and liabilities are included in the consolidated
financial statements at their historical carrying amounts. As a result,
the stockholders' equity of GeoGlobal is eliminated and these
consolidated financial statements reflect the results of operations of
GeoGlobal only from the date of the acquisition (refer to acquisition
note 6). Collectively, GeoGlobal and GGRI are referred to as the
"Company".
GeoGlobal changed its name from Suite101.com, Inc. on January 8, 2004
after receiving shareholder approval at the Annual Shareholders Meeting
held on January 8, 2004.
The Company is engaged primarily in the pursuit of petroleum and natural
gas through exploration and development in India. Since inception, the
efforts of GeoGlobal have been devoted to the pursuit of Production
Sharing Contracts with the Gujarat State Petroleum Corporation and the
Government of India and the development thereof. To date, the Company has
not earned revenue from these operations and is considered to be in the
development stage. The costs incurred to date with respect to the
acquisition of these contracts and the development thereof, are
recognized in these financial statements in accordance with the
accounting policies summarized in note 2. The recoverability of these
amounts is uncertain and dependent upon achieving commercial production
or sale, the ability of the Company to obtain sufficient financing to
complete its obligations in India and upon future profitable operations.
2. SIGNIFICANT ACCOUNTING POLICIES
a) BASIS OF PRESENTATION
These consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the
United States within the framework of the accounting policies
summarized below.
These consolidated financial statements include the accounts of
GeoGlobal Resources Inc., from the date of acquisition, being
August 29, 2003 as well as the accounts of GeoGlobal's wholly
owned legal subsidiaries: (i) GeoGlobal Resources (India) Inc.,
incorporated under the Business Corporations Act (Alberta), Canada
on August 21, 2002 and continued under the Companies Act of
Barbados, West Indies on April 11, 2003 and (ii) GeoGlobal
Resources (Canada) Inc., incorporated under the Business
Corporations Act (Alberta), Canada on September 4, 2003 and its
wholly owned subsidiary GeoGlobal Resources (Barbados) Inc.
incorporated under the Companies Act of Barbados, West Indies on
September 24, 2003.
F-7
NOTES TO THE CONSOLDIDATED FINANCIAL STATEMENTS
GEOGLOBAL RESOURCES INC.
(A DEVELOPMENT STAGE ENTERPRISE)
DECEMBER 31, 2003
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
b) PROPERTY AND EQUIPMENT
I) CAPITALIZED COSTS
The Company follows the full cost method of accounting for
its petroleum and natural gas operations. Under this method
all costs related to the exploration for and development of
petroleum and natural gas reserves are capitalized. Costs
include land acquisition costs, geological and geophysical
expenditures, costs of drilling both productive and
non-productive wells and related overhead costs. Proceeds
from the sale of properties will be applied against
capitalized costs, without any gain or loss being realized,
unless such sale would significantly alter the relationship
between capital costs and proven reserves of petroleum and
natural gas attributable to the cost center.
II) DEPRECIATION AND DEPLETION
Computer equipment is recorded at cost, with depreciation
provided for on a declining-balance basis at 30% per annum.
Upon the commencement of economic production quantities of
oil and gas, depletion of exploration and development costs
and depreciation of production equipment will be provided on
a country-by-country basis using the unit-of-production
method based upon estimated proven petroleum and natural gas
reserves. The costs of acquiring and evaluating unproven
properties and major development properties will be excluded
from costs until it is determined whether or not proven
reserves are attributable to the properties, the major
development projects are completed, or impairment occurs.
For depletion and depreciation purposes, relative volumes of
petroleum and natural gas production and reserves will be
converted into equivalent units based upon estimated
relative energy content.
III) CEILING TEST
In applying the full cost method, the Company will be
calculating a ceiling test whereby the carrying value of
petroleum and natural gas properties and production
equipment, net of recorded deferred income taxes is limited
to the present value of after tax future net revenues from
proven reserves, discounted at 10% (based on prices and
costs at the balance sheet date calculated quarterly), plus
the lower of cost and fair value of unproven properties.
Should this comparison indicate an excess carrying value,
the excess will be charged against earnings as additional
depletion and depreciation.
IV) ASSET RETIREMENT OBLIGATIONS
The Company recognizes the fair value of a liability for an
asset retirement obligation in the period in which it is
incurred and a corresponding increase in the carrying value
of the related long-lived asset. The fair value is
determined through a review of engineering and environmental
studies, industry guidelines, and management's estimate on a
site by site basis. The liability is subsequently adjusted
for the passage of time, and is recognized as accretion
expense in the consolidated statement of operations. The
liability is also adjusted due to revisions in either the
timing or the amount of the original estimated cash flows
associated with the liability. The increase in the carrying
value of the asset is amortized over the useful life of the
related productive assets.
c) JOINT OPERATIONS
All of the Company's petroleum and natural gas activities are
conducted jointly with others. The Company's undivided interests
in joint ventures are consolidated on a proportionate basis.
F-8
NOTES TO THE CONSOLDIDATED FINANCIAL STATEMENTS
GEOGLOBAL RESOURCES INC.
(A DEVELOPMENT STAGE ENTERPRISE)
DECEMBER 31, 2003
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
d) NET LOSS PER SHARE
Net loss per share is calculated based upon the weighted average
number of shares outstanding during the period. The treasury stock
method is used to determine the dilutive effect of the stock
options. The treasury stock method assumes any proceeds obtained
upon exercise of options would be used to purchase common shares
at the average market price during the period. There are no
differences between net loss and the weighted average number of
shares used in the calculation of the basic net loss per share and
that used in the calculation of diluted net loss per share.
e) FINANCIAL INSTRUMENTS
The Company has estimated the fair value of its financial
instruments which include cash and cash equivalents, accounts
receivable, accounts payable and accruals, note payable, due to
shareholder, and due to related companies. The Company used
valuation methodologies and market information available as at
period end to determine that the carrying amounts of such
financial instruments approximate fair value in all cases, unless
otherwise noted. It is management's opinion that the Company is
not exposed to significant interest, currency or credit risks
arising from its financial instruments.
f) MEASUREMENT UNCERTAINTY
The preparation of the consolidated financial statements in
accordance 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 at the date of the consolidated financial statements
and the reported amounts of revenues and expenses during the
reporting period. Actual results may differ from these estimated
amounts.
g) CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash on hand, balances with
banks and short-term deposits with original maturities of three
months or less. Bank borrowings are considered to be financing
activities.
h) FOREIGN CURRENCY TRANSLATION
The Company translates integrated foreign operations into the
functional currency of the parent. Monetary assets and liabilities
denominated in foreign currencies are translated into U.S. dollars
at rates of exchange in effect at the date of the balance sheet.
Non-monetary items are translated at the rate of exchange in
effect when the assets are acquired or obligations incurred.
Revenues and expenses are translated at average rates in effect
during the period, with the exception of depreciation which is
translated at historic rates. Exchange gains and losses are
charged to operations.
i) INCOME TAXES
The Company follows the liability method of tax allocation. Under
this method, assets and liabilities are determined based on
deferred income tax, differences between the tax basis of an asset
or liability and its carrying value using enacted tax rates
anticipated to apply in the periods when the temporary differences
are expected to reverse.
The effect on deferred income tax assets and liabilities of
changes in tax rates is recognized in income in the period in
which the change is enacted.
F-9
NOTES TO THE CONSOLDIDATED FINANCIAL STATEMENTS
GEOGLOBAL RESOURCES INC.
(A DEVELOPMENT STAGE ENTERPRISE)
DECEMBER 31, 2003
2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
j) REVENUE RECOGNITION
Revenue associated with the production and sales of crude oil,
natural gas and natural gas liquids owned by the Company will be
recognized when title passes from the Company to its customer.
k) STOCK-BASED COMPENSATION PLAN
The Company has a stock-based compensation plan, which includes
stock options. Consideration received from employees or directors
on the exercise of stock options under the stock option plan is
recorded as capital stock.
The Company uses the intrinsic value method of accounting for
employee and director stock-based compensation. As all options
have been granted at exercise prices based on the market value of
the Company's common shares at the date of the grant, no
compensation cost is recognized.
Non-employee stock-based compensation costs are measured using the
fair value based method and are charged to earnings on the
measurement date.
l) COMPREHENSIVE INCOME
Comprehensive income (loss) includes all changes in equity except
those resulting from investments made by owners and distributions
to owners. Other accumulated comprehensive income (loss) consists
only of net income (loss) for all periods presented.
3. PROPERTY AND EQUIPMENT
DECEMBER 31-2003 December 31-2002
US $ US $
-----------------------------------
Exploration costs - India 178,523 21,925
Accumulated depletion -- --
--------------------------
178,523 21,925
--------------------------
Computer equipment 168,168 27,921
Accumulated depreciation (51,148) (698)
--------------------------
117,020 27,223
--------------------------
295,543 49,148
==========================
a) CAPITALIZED OVERHEAD COSTS
During the year ended December 31, 2003, the Company capitalized
certain overhead costs of US$128,078 (2002 - US$21,925) directly
related to the exploration activities in India. This amount was
paid to a related party and is made up of consulting fees of
US$66,666, and travel, meals and entertainment of US$61,412 (2002
- US$21,925) (note 7b). These costs are not reimbursable under the
Carried Interest Agreement.
F-10
NOTES TO THE CONSOLDIDATED FINANCIAL STATEMENTS
GEOGLOBAL RESOURCES INC.
(A DEVELOPMENT STAGE ENTERPRISE)
DECEMBER 31, 2003
3. PROPERTY AND EQUIPMENT (CONTINUED)
b) PRODUCTION SHARING CONTRACTS
I) EXPLORATION BLOCK KG-OSN-2001/3
On August 27, 2002, GeoGlobal together with its joint
venture participants, Jubilant Enpro Limited ("Enpro") and
Gujarat State Petroleum Corporation Limited ("GSPC") entered
into a Joint Bidding Agreement for the purpose of submitting
a bid for Exploration Block KG-OSN-2001/3 offered by the
Government of India under the New Exploration Licensing
Policy Third Round (NELP-III). This Exploration bid was
successful and was awarded on November 29, 2002, by the
Directorate General of Hydrocarbons under the Ministry of
Petroleum & Natural Gas of India.
On February 4, 2003, GeoGlobal, as to a 10% Participating
Interest ("PI") (net 5% - see note 3d) along with Enpro and
GSPC, as to their 10% and 80% PI respectively, entered into
a Production Sharing Contract ("PSC-KG") with the Government
of India with respect to this Exploration Block. See also
Carried Interest Agreement note 3c.
The PSC-KG allows the joint venture participants to explore
for petroleum and natural gas over the next 6.5 years on the
Exploration Block subject to the work commitment as outlined
in note 8a.
II) EXPLORATION BLOCK CB-ONN-2002/2 (also referred to as Blocks
9A and 9B under NELP-IV) Subsequent to the year end, on
January 8, 2004, the Company announced that it was awarded
by the Government of India a 10% PI in a new onshore
Exploration Block CB-ONN-2002/2 covering an area of
approximately 125 square kilometers ("sq. kms.") in the
Cambay Basin, located in the province of Gujarat in
Northwest India, under the Fourth Round of the New
Exploration Licensing Policy (NELP-IV) bidding which closed
on September 30, 2003.
On February 6, 2004, GeoGlobal as to its 10% PI, along with
its joint venture participants, Enpro and GSPC as to their
30% and 60% PI respectively, signed the Production Sharing
Contract ("PSC-CB9") with the Government of India with
respect to this Exploration Block.
The PSC-CB9 allows the joint venture participants to explore
for petroleum and natural gas over the next 6 years on the
Exploration Block subject to the work commitment as outlined
in note 8b.
III) EXPLORATION BLOCK CB-ONN-2002/3 (also referred to as Block
10A and 10B under NELP-IV) Subsequent to the year end, on
January 8, 2004, the Company also announced that it was
awarded a 10% PI in a second new onshore Exploration Block
CB-ONN-2002/3 covering an area of approximately 285 sq. kms.
also in the Cambay Basin under NELP-IV.
Similarly, on February 6, 2004, GeoGlobal as to its 10% PI,
along with its joint venture participants, Enpro, GSPC, and
Prize Petroleum Company Limited as to their 20%, 55% and 15%
PI respectively, signed the Production Sharing Contract
("PSC-CB10") with the Government of India with respect to
this Exploration Block.
The PSC-CB10 allows the joint venture participants to
explore for petroleum and natural gas over the next 6 years
on the Exploration Block subject to the work commitment as
outlined in note 8c.
F-11
NOTES TO THE CONSOLDIDATED FINANCIAL STATEMENTS
GEOGLOBAL RESOURCES INC.
(A DEVELOPMENT STAGE ENTERPRISE)
DECEMBER 31, 2003
3. PROPERTY AND EQUIPMENT (CONTINUED)
c) CARRIED INTEREST AGREEMENT
On August 27, 2002, GeoGlobal entered into a Carried Interest
Agreement ("CIA") with GSPC, which grants the Company a 10%
carried interest (net 5% - see note 3d) in the Exploration Block
KG-OSN-2001/3. The CIA provides that GSPC is responsible for all
of GeoGlobal's share of any and all costs incurred during the
Exploration Phase prior to the date of initial commercial
production.
As at December 31, 2003, GSPC has incurred costs of Rs 4,55,61,213
(approximately US$1,001,191) attributable to GeoGlobal under the
CIA of which 50% is for the account of Roy Group (Mauritius) Inc.
("RGM"), a related party (note 7a) under the terms of the
Participating Interest Agreement as further described in note 3d.
d) PARTICIPATING INTEREST AGREEMENT
On March 27, 2003, GeoGlobal entered into a Participating Interest
Agreement ("PIA") with RGM, whereby GeoGlobal assigned and holds
in trust for RGM subject to Government of India consent, 50% of
the benefits and obligations of the PSC-KG and the CIA leaving
GeoGlobal with a net 5% Participating Interest in the PSC-KG and a
net 5% carried interest in the CIA. Under the terms of the PIA,
until the Government of India consent is obtained, GeoGlobal
retains the exclusive right to deal with the other parties to the
PSC-KG and the CIA and is entitled to make all decisions regarding
the interest assigned to RGM and RGM agreed to be bound by and
responsible for the actions taken by, obligations undertaken and
costs incurred by GeoGlobal in regard to RGM's interest and to be
liable to GeoGlobal for its share of all costs, interests,
liabilities and obligations arising out of or relating to the RGM
interest. RGM agreed to indemnify GeoGlobal against any and all
costs, expenses, losses, damages or liabilities incurred by reason
of RGM's failure to pay the same. Subject to obtaining the
government consent to the assignment, RGM is entitled to all
income, receipts, credits, reimbursements, monies receivable,
rebates and other benefits in respect of its 5% interest which
relate to the PSC-KG. GeoGlobal has a right of set-off against
sums owing to GeoGlobal by RGM. In the event that the Indian
government consent is delayed or denied, resulting in either RGM
or GeoGlobal being denied an economic benefit it would have
realized under the PIA, the parties agreed to amend the PIA or
take other reasonable steps to assure that an equitable result is
achieved consistent with the parties' intentions contained in the
PIA. As a consequence of this transaction the Company reports its
holdings under the PSC-KG and CIA as a net 5% Participating
Interest.
F-12
NOTES TO THE CONSOLDIDATED FINANCIAL STATEMENTS
GEOGLOBAL RESOURCES INC.
(A DEVELOPMENT STAGE ENTERPRISE)
DECEMBER 31, 2003
4. CAPITAL STOCK
a) COMMON SHARES
Additional
Number of Capital stock paid-in capital
shares US $ US $
Capital stock of GGRI issued August 21, 2002 1,000 64 --
-----------------------------------------------
Balance at December 31, 2002 1,000 64 --
Capital stock of GeoGlobal at August 29, 2003 14,656,687 14,657 10,914,545
Common shares issued by GeoGlobal to acquire
GGRI (note 6) 34,000,000 34,000 1,072,960
Share issuance costs on acquisition -- -- (66,850)
Elimination of GeoGlobal capital stock in recognition of
reverse takeover (note 1) (1,000) (14,657) (10,914,545)
Options exercised for cash 396,668 397 101,253
Private Placement Financing 6,000,000 6,000 5,994,000
Share issuance costs on private placement -- -- (483,325)
-----------------------------------------------
BALANCE AS AT DECEMBER 31, 2003 55,053,355 40,461 6,618,038
===============================================
b) PRIVATE PLACEMENT
I) PRIVATE PLACEMENT FINANCING
On December 23, 2003, GeoGlobal completed a brokered private
placement of 5,800,000 units at US$1.00 each, together with
a concurrent private placement of an additional 200,000
units on the same terms, for aggregate gross cash total
proceeds of $6,000,000. Each unit was comprised of one
common share and one half of one warrant ("Private Placement
Warrant"), where one full Private Placement Warrant entitles
the holder to purchase one additional common share for
US$2.50, for a term of two years from date of closing.
Costs of US$483,325 were incurred in issuing shares under
this Private Placement Financing which included a fee equal
to 6% of the gross proceeds raised in the brokered offering.
Also issued as additional consideration for this transaction
were 580,000 Broker Warrants.
II) PRIVATE PLACEMENT WARRANTS
The 3,000,000 Private Placement Warrants described above are
subject to accelerated expiration in the event that the
trading price of the Company's common shares trade at
US$4.00 or more for 20 consecutive trading days and if the
resale of the shares has been registered under the US
Securities Act of 1933 (the "1933 Act") and the hold period
for Canadian subscribers has expired. In such events, the
Private Placement Warrant term will be reduced to 30 days
from the date of issuance of a news release announcing such
change to the warrant term.
F-13
NOTES TO THE CONSOLDIDATED FINANCIAL STATEMENTS
GEOGLOBAL RESOURCES INC.
(A DEVELOPMENT STAGE ENTERPRISE)
DECEMBER 31, 2003
4. CAPITAL STOCK (CONTINUED)
III) BROKER WARRANTS
The 580,000 Broker Warrants described above entitle the
holder to purchase 580,000 common shares at an exercise
price of US$1.50 per share, expiring on December 23, 2005.
The Broker Warrants are also subject to accelerated
expiration 30 days after issuance of a news release to that
effect in the event that the common shares trade at US$3.00
or more for 20 consecutive trading days and if the resale of
the shares has been registered under the 1933 Act and the
hold period for Canadian subscribers has expired.
None of the above Private Placement Warrants or Broker Warrants
were exercised as at December 31, 2003.
c) OPTIONS
During the period ended December 31, 2003, 396,668 options were
exercised at various prices between US$0.17 and US$0.50 for gross
proceeds of US$101,650.
d) WEIGHTED AVERAGE NUMBER OF SHARES
For purposes of the determination of net loss per share, the basic
and diluted weighted average number of shares outstanding for the
year ended December 31, 2003 was 19,737,035 (December 31, 2002 -
14,500,000). The amount for the period ended December 31, 2002 is
deemed to be the number of shares issued to the legal subsidiary
pursuant to the reverse takeover transaction described in note 6,
reduced by the 19,500,000 shares currently held in escrow. The
basic and diluted weighted average number of shares outstanding
for the year ended December 31, 2003 has also been reduced by the
19,500,000 shares currently held in escrow.
5. STOCK OPTIONS
a) THE COMPANY'S 1998 STOCK INCENTIVE PLAN
Under the terms of the 1998 Stock Incentive Plan (the "Plan"),
3,900,000 common shares have been reserved for issuance on
exercise of options granted under the Plan. The Board of Directors
of the Company may amend or modify the Plan at any time, subject
to any required stockholder approval. The Plan will terminate on
the earliest of: (i) 10 years after the Plan Effective Date, being
December 2008; (ii) the date on which all shares available for
issuance under the Plan have been issued as fully-vested shares;
or, (iii) the termination of all outstanding options in connection
with certain changes in control or ownership of the Company.
b) STOCK-BASED COMPENSATION
Under the Statement of Financial Accounting Standards 123, the
Company is required to measure and disclose on a pro-forma basis
the impact on net loss and net loss per share of applying the fair
value based method to stock-based compensation arrangements with
employees and directors.
F-14
NOTES TO THE CONSOLDIDATED FINANCIAL STATEMENTS
GEOGLOBAL RESOURCES INC.
(A DEVELOPMENT STAGE ENTERPRISE)
DECEMBER 31, 2003
5. STOCK OPTIONS (CONTINUED)
Under this method compensation cost is measured at fair value at
grant date and recognized over the vesting period. If the fair
value based method had been used, the stock based compensation
costs, pro-forma net loss and pro-forma net loss per share would
be as follows:
DECEMBER 31-2003
US$
----------------
Stock based compensation 175,233
Net loss
As reported (477,695)
Pro-forma (652,928)
Net loss per share - basic and diluted
As reported (0.02)
Pro-forma (0.03)
BLACK-SCHOLES ASSUMPTIONS
Fair value of stock options granted (1) $0.27
Risk-free interest rate 2.61%
Volatility 55%
Expected life (1) 0.9 YEARS
(1) Weighted average
The stock options previously outstanding in the legal parent prior
to the reverse takeover transaction described in note 6 have been
excluded from the pro forma disclosures above.
c) STOCK OPTION TABLE
These options were granted for services provided to the Company:
Balance
Option Expiry Vesting Balance Granted Exercised Balance Exercisable
Exercise Date Date December 31, During During December 31, December 31,
Price (mm/dd/yy) (mm/dd/yy) 2002 the Year The Year 2003 2003
----------------------------------------------------------------------------------------------------------
1.50 08/29/04 Vested 50,000 -- -- 50,000 50,000
1.50 08/29/04 Vested 5,000 -- -- 5,000 5,000
1.50 08/29/04 Vested 5,000 -- -- 5,000 5,000
0.25 01/04/06 Vested 20,000 -- 20,000 -- --
0.17 06/04/11 Vested 5,000 -- 5,000 -- --
0.27 02/25/12 02/25/03 50,001 -- 50,001 -- --
0.27 02/27/07 02/27/03 16,667 -- 16,667 -- --
0.50 06/11/12 06/11/03 5,000 -- 5,000 -- --
0.25 11/27/07 01/01/03 300,000 -- 300,000 -- --
1.18 08/31/05 Vested -- 740,000 -- 740,000 740,000
1.18 08/31/05 01/08/04 -- 10,000 -- 10,000 --
1.18 08/31/05 08/29/04 -- 875,000 -- 875,000 --
1.18 08/31/05 01/08/05 -- 375,000 -- 375,000 --
1.50 08/31/05 Vested -- 50,000 -- 50,000 50,000
1.50 08/31/05 08/29/04 -- 425,000 -- 425,000 --
1.50 08/31/05 01/08/05 -- 470,000 -- 470,000 --
-----------------------------------------------------------------
456,668 2,945,000 396,668 3,005,000 850,000
=================================================================
At December 31, 2003, there were 60,000 options outstanding which
can be exercised at US$1.50 per common share until August 29,
2004; 2,000,000 options outstanding which can be exercised at
US$1.18 per common share until August 31, 2005 and 945,000
options outstanding which can be exercised at US$1.50 per common
share until August 31, 2005.
F-15
NOTES TO THE CONSOLDIDATED FINANCIAL STATEMENTS
GEOGLOBAL RESOURCES INC.
(A DEVELOPMENT STAGE ENTERPRISE)
DECEMBER 31, 2003
6. ACQUISITION
On August 29, 2003, all of the issued and outstanding shares of GGRI were
acquired by GeoGlobal. The completion of the acquisition resulted in the
issuance and delivery by GeoGlobal of 34,000,000 common shares and
delivery of GeoGlobal's US$2.0 million promissory note (see note 7e) to
the sole shareholder of GGRI. Of such shares, GeoGlobal issued and
delivered 14.5 million shares at the closing of the acquisition with the
remaining shares delivered in escrow. Of the remaining 19.5 million
shares issued in escrow, 14.5 million shares will be released for
delivery only if the results of a 3D seismic program conducted on the
KG-OSN-2001/3 Exploration Block during the initial exploration phase
establishes the existence of a commercial basis for the commencement of
an exploratory drilling program, or upon the actual commencement of a
drilling program, and the final 5.0 million shares will be released only
if a commercial discovery is declared on Exploration Block KG-OSN-2001/3.
Shares not released from the escrow will be surrendered back to
GeoGlobal. Common shares held during the term of the escrow retain their
voting rights.
As discussed in note 1, the acquisition of GGRI by GeoGlobal was
accounted for as a reverse takeover transaction. As a result, the cost of
the transaction was determined based upon the net assets of GeoGlobal
deemed to have been acquired. These consolidated financial statements
include the results of operations of GeoGlobal from the date of
acquisition. The net identifiable assets acquired of GeoGlobal are as
follows:
US $
----------
Net assets acquired
Cash 3,034,666
Other current assets 75,000
Current liabilities (2,706)
----------
Net book value of identifiable assets acquired 3,106,960
==========
Consideration paid
Promissory note issued 2,000,000
34,000,000 common shares issued par value $0.001 34,000
Additional paid-in capital 1,072,960
----------
3,106,960
==========
7. RELATED PARTY TRANSACTIONS
Related party transactions are measured at the exchange amount which is
the amount of consideration established and agreed by the related
parties.
a) ROY GROUP (MAURITIUS) INC.
Roy Group (Mauritius) Inc. is related to the Company by common
management and is controlled by a director of the Company. On
March 27, 2003, the Company entered into a PIA with the related
party as outlined in note 3d.
F-16
NOTES TO THE CONSOLDIDATED FINANCIAL STATEMENTS
GEOGLOBAL RESOURCES INC.
(A DEVELOPMENT STAGE ENTERPRISE)
DECEMBER 31, 2003
7. RELATED PARTY TRANSACTIONS (CONTINUED)
b) ROY GROUP (BARBADOS) INC.
Roy Group (Barbados) Inc. is related to the Company by common
management and is controlled by a director of the Company. On
August 29, 2003, the Company entered into a Technical Services
Agreement ("TSA") with the related party to provide services to
the Company as assigned by the Company and to bring new oil and
gas opportunities to the Company. The related party receives
consideration of US$250,000 per year for an initial term of three
years. During the year ended December 31, 2003, US$16,667 was
charged as consulting fees in the Statement of Operations and
US$66,666 was charged to the Property and Equipment account (note
3a) for services provided pursuant to the TSA.
The related party was also reimbursed for travel, hotel, meals and
entertainment expenses incurred during the year totaling
US$102,061. Of this amount, US$61,412 was charged to the Property
and Equipment account (note 3a) and US$40,649 was charged to
general and administrative in the Statement of Operations.
At December 31, 2003, the Company owed the related party US$41,115
for services provided and expenses incurred pursuant to the TSA.
These amounts bear no interest and have no set terms of repayment.
c) D.I. INVESTMENTS LTD.
D.I. Investments Ltd. is related to the Company by common
management and is controlled by a director of the Company. During
the year ended December 31, 2003, US$61,715 was charged as
consulting fees in the Statement of Operations.
The related party was reimbursed US$33,802 for office costs,
including rent, parking, supplies and telephone. The related party
was also reimbursed US$39,045 for travel, hotel, meals and
entertainment. These amounts, totaling US$72,847 were charged as
general and administrative in the Statement of Operations.
At December 31, 2003, the D.I. Investments Ltd. owed the Company
US$1,640 (December 31, 2002 the Company owed D.I. Investments Ltd.
US$11,848 as a result of cash advances). These amounts bear no
interest and have no set terms of repayment.
d) DUE TO SHAREHOLDER
At December 31, 2002, the Company owed the sole shareholder of
GGRI US$44,950 as a result of cash advances. These cash advances
bear no interest and have been repaid in full prior to December
31, 2003.
e) NOTE PAYABLE
On August 29, 2003, as part of the Acquisition (note 6), a
US$2,000,000 promissory note was issued to the sole shareholder of
GGRI. The promissory note bears no interest and the capital stock
of GGRI has been provided as security. US$500,000 of the note was
paid on August 29, 2003, US$500,000 was paid on October 15, 2003,
US$500,000 was paid on January 15, 2004 and US$500,000 is to be
paid on June 30, 2004.
F-17
NOTES TO THE CONSOLDIDATED FINANCIAL STATEMENTS
GEOGLOBAL RESOURCES INC.
(A DEVELOPMENT STAGE ENTERPRISE)
DECEMBER 31, 2003
8. COMMITMENTS
a) EXPLORATION BLOCK KG-OSN-2001/3 BLOCK
Under the terms of this Production Sharing Contract, GeoGlobal,
along with its joint venture participants to the PSC-KG, have
committed to the Government of India an exploration work program
as outlined below. All of GeoGlobal's share of any and all costs
incurred during the exploration phase prior to the date of initial
commercial production are the responsibility of GSPC pursuant to
the CIA executed on August 27, 2002, as described in note 3c.
PHASE I (2.5 YEARS)
(i) 1250 km2 3D seismic program consisting of
acquisition, processing and interpretation*
(ii) reprocessing of 2298.4 km of 2D seismic data*
(iii) bathymetric survey and seabed sampling*
(iv) drill 14 exploratory wells between 900 to 4118 meters
(asterisk denotes work completed)*
PHASE II (2.5 YEARS)
(i) bathymetric survey and seabed sampling
(ii) drill 4 exploratory wells between 1100 to 2850 meters
PHASE III (1.5 YEARS)
(i) bathymetric survey and seabed sampling
(ii) drill 2 exploratory wells to 1550 and 1950 meters
LAND RELINQUISHMENT
(i) Phase I - 25%
(ii) Phase II - 25%
(iii) Phase III - 100% except for development and discovery
areas
Under the terms of the CIA, all of GeoGlobal's and RGM's
proportionate share of capital costs for exploration and
development activities will be recovered by GSPC without interest
over the projected production life or ten years, whichever is
less, from oil and natural gas produced on the Exploration Block.
GeoGlobal is not entitled to any share of production until GSPC
has recovered the Company's share of the costs and expenses that
were paid by GSPC on behalf of the Company and RGM. The total of
these costs and expenses is estimated to be approximately US$11
million over the 6.5 year term of the Production Sharing Contract.
b) EXPLORATION BLOCK CB-ONN-2002/2
Under the terms of this Production Sharing Contract, GeoGlobal,
along with its joint venture participants to the PSC-CB9, have
committed to the Government of India an exploration work program
as outlined below. The Company will be required to fund its
proportionate share of costs incurred in these activities which
are estimated to be approximately US$1.0 million over the 6 years.
PHASE I (2.5 YEARS)
(i) Acquire 75 sq kms 3D seismic
(ii) Reprocess 650 kms of 2D seismic
(iii) Drill 7 exploratory wells between 1000 and 2200
meters
PHASE II (2.0 YEARS)
(i) Drill 2 exploratory wells 2000 meters
PHASE III (1.5 YEARS)
(i) Drill 2 exploratory wells 2000 meters
LAND RELINQUISHMENT
(i) Phase I - 25%
(ii) Phase II - 25%
(iii) Phase III - 100% except for development and discovery
areas
F-18
NOTES TO THE CONSOLDIDATED FINANCIAL STATEMENTS
GEOGLOBAL RESOURCES INC.
(A DEVELOPMENT STAGE ENTERPRISE)
DECEMBER 31, 2003
8. COMMITMENTS (CONTINUED)
c) EXPLORATION BLOCK CB-ONN-2002/3 BLOCK
Under the terms of this Production Sharing Contract, GeoGlobal,
along with its joint venture participants to the PSC-CB10, have
committed to the Government of India an exploration work program
as further outlined below. The Company will be required to fund
its proportionate share of costs incurred in these activities
which are estimated to be approximately US$1.5 million over the 6
years.
PHASE I (2.5 YEARS)
(i) Acquire 200 sq kms 3D seismic
(ii) Reprocess 1000 kms of 2D seismic
(iii) Drill 12 exploratory wells between 1500 and 3000
meters
PHASE II (2.0 YEARS)
(i) Drill 3 exploratory wells 2000 meters
PHASE III (1.5 YEARS)
(i) Drill 2 exploratory wells 2000 meters
LAND RELINQUISHMENT
(i) Phase I - 25%
(ii) Phase II - 25%
(iii) Phase III - 100% except for development and discovery
areas
9. SEGMENTED INFORMATION
The Company's petroleum and natural gas exploration and development
activities are conducted in India. Management of the Company considers
the operations of the Company as one operating segment. The following
information relates to the Company's geographic areas of operation.
DECEMBER 31-2003 December 31-2002
---------------------- ----------------------
PROPERTY AND EQUIPMENT Property and equipment
US $ US $
---------------------- ----------------------
Canada 58,451 3,181
India 237,092 45,967
----------------------------------
295,543 49,148
==================================
F-19
NOTES TO THE CONSOLDIDATED FINANCIAL STATEMENTS
GEOGLOBAL RESOURCES INC.
(A DEVELOPMENT STAGE ENTERPRISE)
DECEMBER 31, 2003
10. INCOME TAXES
a) INCOME TAX EXPENSE
The provision for income taxes in the financial statements differs
from the result which would have been obtained by applying the
combined Federal, State and Provincial tax rates to the loss
before income taxes. This difference results from the following
items:
DECEMBER 31-2003 December 31-2002
US $ US $
------------------------------------
Net loss (477,695) (13,813)
Expected tax rate
(2003 - US tax rate; 2002 - Canada tax rate) 40.66% 42.12%
----------------------------
Expected income tax recovery (194,231) (5,818)
Excess of expected tax rate over tax rate of
foreign affiliates 70,932 --
Valuation allowance 122,208 5,925
Other 1,091 (107)
----------------------------
INCOME TAX RECOVERY -- --
============================
b) DEFERRED INCOME TAXES
The Company has not recognized the deferred income tax asset. The
components of the net deferred income tax asset consist of the
following temporary differences:
Difference between tax base and reported
amounts of depreciable assets 5,078 294
Non-capital loss carryforwards 117,130 5,631
----------------------------
122,208 5,925
Valuation allowance (122,208) (5,925)
----------------------------
DEFERRED INCOME TAX ASSET -- --
============================
c) LOSS CARRY FORWARDS
The Company has approximately US$322,000 of available loss carry
forwards for income tax purposes in the various jurisdictions
which have not been reflected in these financial statements. The
losses available to reduce US taxable income are approximately
$84,000 and expire within 20 years. The losses available to reduce
Canadian taxable income are approximately $225,000 and expire
within seven years. The losses available to reduce Barbados
taxable income are approximately $13,000 and expire within nine
years.
11. COMPARATIVE FIGURES
a) The comparatives have been restated to conform with the current
period's presentation. As a result of the reverse takeover
outlined in note 1, the comparatives are those of the continuing
entity for accounting purposes and are for the period from
inception, being August 21, 2002, to December 31, 2002.
b) As the Company is in its development stage, these are the
accumulated amounts of the continuing entity for the period from
inception, being August 21, 2002 to December 31, 2003.
F-20
NOTES TO THE CONSOLDIDATED FINANCIAL STATEMENTS
GEOGLOBAL RESOURCES INC.
(A DEVELOPMENT STAGE ENTERPRISE)
DECEMBER 31, 2003
12. NEW ACCOUNTING STANDARDS
In January 2003, the FASB issued Statement No. 148 "Accounting for
Stock-Based Compensation - Transition and Disclosure, an Amendment of FASB
Statement No. 123". SFAS 148 amends SFAS 123 "Accounting for Stock-Based
Compensation", to provide alternative methods of transition for a voluntary
change to the fair value based method of accounting for stock-based employee
compensation. In addition, SFAS 148 amends the disclosure requirements of SFAS
123 to require prominent disclosures in both annual and interim financial
statements about the method of accounting for stock-based employee compensation
and the effect of the method used on reported results. SFAS 148 has no material
impact on the Company, as it does not plan to adopt the fair value method of
accounting for stock options at the current time. The Company has included the
required disclosures in these financial statements.
The following standards issued by the FASB do not impact the Company at
this time:
- SFAS No. 150, "Accounting for Certain Financial Instruments
with Characteristics of both Liabilities and Equity", effective
for financial statements issued after June 15, 2003;
- In January 2003, the FASB issued FASB Interpretation No. 46
"Consolidation of Variable Interest Entities" ("FIN 46"). FIN
46 provides criteria for identifying variable interest entities
("VIEs") and further criteria for determining what entity, if
any, should consolidate them. In general, VIEs are entities
that either do not have equity investors with voting rights or
have equity investors that do not provide sufficient financial
resources for the entity to support its activities. In December
2003, the FASB issued FIN 46(R) to clarify some of the
provisions of FIN 46 and to exempt certain entities from its
requirements. Adoption and application of FIN 46(R) is required
for reporting periods ending after December 15, 2004.
13. SUBSEQUENT EVENTS
On February 6, 2004, GeoGlobal, along with its joint venture
participants, signed Production Sharing Contracts on two new onshore Exploration
Blocks in the Cambay Basin, located in the province of Gujarat in Northwest
India. The signing on February 6, 2004 was part of the signing of 20 new
exploration blocks which were awarded by the Government of India under the
NELP-IV (see notes 3b(ii) and 3b(iii)).
The Production Sharing Contracts each provide for work commitments to be
performed over three phases over an exploration period of a total of six years
with specified 3D seismic and exploration drilling activities to be conducted
during those work commitment periods. The Company will be required to fund its
proportionate share of costs incurred in these activities. The Company's share
of these costs is estimated to total approximately US$2.5 million for both
blocks over the 6 years (see notes 8b and 8c).
F-21
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law and Section 5.1 of
the Registrant's By-Laws provide for indemnification of present and former
officers, directors, employees and agents.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Expenses in connection with the issuance and distribution of the
securities being registered hereunder, other than underwriting commissions and
expenses, are estimated to be as follows:
Registration Fee $3,526
Printing Expenses $ *
Accounting Fees and Expenses $ *
Legal Fees and Expenses $ *
Miscellaneous Expenses $ *
------
TOTAL $ *
======
--------------
* To be provided by amendment.
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
During the period January 1, 2001 through March 31, 2004, the
Registrant has issued the following unregistered securities.
1. On August 29, 2003, pursuant to an agreement dated April 4, 2003 and amended
August 29, 2003, we issued and sold to Jean Paul Roy 34.0 million shares of our
Common Stock in consideration for all the outstanding capital stock of GeoGlobal
Resources (India) Inc. Of the 34.0 million shares, 14.5 million shares were
issued and delivered to Mr. Roy at the closing of the transaction and an
aggregate of 19.5 million shares are held in escrow by an escrow agent. The
terms of the escrow provide for the release of the shares upon the occurrence of
certain developments relating to the outcome of oil and natural gas exploration
and development activities. In addition to our shares of common stock, we
delivered to Mr. Roy a $2.0 million promissory note, of which $500,000 was paid
on the closing of the transaction, $500,000 was paid on October 15, 2003,
$500,000 was paid on
Part II - 1
January 15, 2004 and $500,000 is to be paid on June 30, 2004. The note does not
accrue interest. Mr. Roy represented that he was acquiring the shares for its
own account, for investment and not with a view to the distribution of the
shares. The certificates for the shares bear a restrictive legend and stop
transfer instructions have been placed against the transfer of the shares. No
underwriter participated in the sale of the securities.
2. On December 23, 2003, we completed the sale of 6,000,000 units of our
securities, each unit consisting of one (1) share of our common stock and
one-half (1/2) warrant to purchase one (1) share of our common stock. The units
were sold at a price of $1.00 per unit. The warrants are exercisable at $2.50
per full share and expire on December 23, 2005, subject to anti-dilution
adjustments and possible acceleration of the expiration date under certain
circumstances. The units were issued in a transaction exempt from and not
requiring registration under the U.S. Securities Act of 1933, as amended, by
virtue of Regulation D and Regulation S adopted under that Act. The securities
sold pursuant to Regulation D were sold to persons who represented themselves to
be "accredited investors", as defined in Regulation D. All of the persons
purchasing units pursuant to Regulation S represented to us that they resided
outside of and were not citizens of the United States. Dundee Securities
Corporation and Jones Gable & Company Limited, broker-dealers in Canada,
participated in the sale of the units pursuant to Regulation S. A fee of
$348,000 was paid to the brokers and warrants entitling them to purchase 580,000
common shares at an exercise price of $1.50 per share were issued to them as
compensation in connection with the sales pursuant to Regulation S. The
certificates for all the shares and warrants bear a restrictive legend and stop
transfer instructions have been placed against the transfer of the shares and
warrants.
Part II - 2
ITEM 27. EXHIBITS
(A) EXHIBITS:
EXHIBIT DESCRIPTION
------ --------------------------------------------------------
3.1 Certificate of Incorporation of the Registrant, as
amended. (1)
3.2 Bylaws of the Registrant, as amended through August 29,
2003. (8)
3.3 Certificate of Amendment filed with the State of
Delaware on November 25, 1998. (3)
3.4 Certificate of Amendment filed with the State of
Delaware on December 4, 1998(3)
3.5 Certificate of Amendment filed with the State of
Delaware on March 18, 2003(9)
3.6 Certificate of Amendment filed with the State of
Delaware on January 8, 2004(9)
4.1 Specimen stock certificate of the Registrant. (9)
5.1 Opinion of William S. Clarke, P.A.(12)
10.1 Restated 1993 Stock Incentive Plan. (1)
10.2 1994 Directors Stock Option Plan. (1)
10.3 1994 Stock Option Plan. (1)
10.4 1993 Stock Incentive Plan. (1)
10.5 Form of Indemnification Agreement between the Registrant
and its officers and directors. (1)
10.6 Stock Purchase and Option Agreement dated July 17, 1995
between the Registrant and Ballard Medical Products,
including all exhibits thereto. (2)
10.7 Amendment dated November 18, 1998 to Purchase Agreement
among Registrant and Northfield Capital Corporation,
284085 B.C. Ltd. and i5ive communications inc. (3)
10.8 Amendment dated December 1, 1998 to Purchase Agreement
among Registrant and Northfield Capital Corporation,
284085 B.C. Ltd. and i5ive communications inc. (3)
10.9 Amendment dated December 3, 1998 to Purchase Agreement
among Registrant and Northfield Capital Corporation,
284085 B.C. Ltd. and i5ive communications inc. (3)
10.10 1998 Stock Incentive Plan. (3)
10.11 Management and Operating Services Agreement dated
February 14, 2002 with Creative Marketeam Canada, Ltd.
(4)
10.12 Option Agreement dated March 15, 2002 with Double B
Holdings, LLC (5)
10.13 Agreement of Purchase and Sale entered into as of June
1, 2002 between creative Marketeam Canada Ltd. and
i5ive.(6)
Part II - 3
EXHIBIT DESCRIPTION
------ --------------------------------------------------------
10.14 Stock Purchase Agreement dated April 4, 2003 by and
among Suite101.com, Inc., Jean Paul Roy and GeoGlobal
Resources (India) Inc.(7)
10.15 Amendment dated August 29, 2003 to Stock Purchase
Agreement dated April 4, 2003(8)
10.16 Technical Services Agreement dated August 29, 2003
between Suite101.com, Inc. and Roy Group (Barbados)
Inc.(8)
10.17 Participating Interest Agreement dated March 27, 2003
between GeoGlobal Resources (India) Inc. and Roy Group
(Mauritius) Inc.(8)
10.18 Escrow Agreement dated August 29, 2003 among Registrant,
Jean Paul Roy and Computershare Trust Company of
Canada.(8)
10.19 Promissory Note dated August 29, 2003 payable to Jean
Paul Roy.(8)
10.20 Production Sharing Contract dated February 4, 2003,
among The Government of India, Gujarat State Petroleum
Corporation Limited, Jubilant Enpro Limited and
GeoGlobal Resources (India) Inc.(10)
10.21 Production Sharing Contract dated February 6, 2004 among
The Government of India, Gujarat State Petroleum
Corporation Limited, Jubilant Enpro Private Limited and
GeoGlobal Resources (Barbados) Inc.(10)
10.22 Production Sharing Contract dated February 6, 2004 among
The Government of India, Gujarat State Petroleum
Corporation Limited, Jubilant Enpro Private Limited,
Prize Petroleum Company Limited and GeoGlobal Resources
(Barbados) Limited(10)
10.23 Carried Interest Agreement dated August 27, 2002 between
Gujarat State Petroleum Corporation Limited and
GeoGlobal Resources (India) Inc.(9)
21.0 Subsidiaries of the Registrant
NAME STATE OR JURISDICTION OF INCORPORATION
----------------------------------- --------------------------------------
GeoGlobal Resources (India) Inc. Barbados
GeoGlobal Resources (Canada) Inc. Alberta, Canada
GeoGlobal Resources (Barbados) Inc. Barbados
Endovascular, Inc. California (inactive)
Part II - 4
EXHIBIT DESCRIPTION
------ --------------------------------------------------------
23 Consent of experts and counsel:
23.1 Consent of Ernst & Young, L.L.P.(11)
-------------------
(1) Filed as an Exhibit to Neuro Navigational Corporation Form 10-KSB No.
0-25136 dated September 30, 1994. (File No. 0-25136).
(2) Filed as Exhibit to Neuro Navigational Corporation Form 8-K dated July 17,
1995. (File No. 0-25136).
(3) Filed as an Exhibit to our Current Report on Form 8-K dated December 10,
1998. (File No. 0-25136).
(4) Filed as an Exhibit to our Current Report on Form 8-K dated February 14,
2002. (File No. 0-25136).
(5) Filed as an Exhibit to our Current Report on Form 8-K dated March 15,
2002. (File No. 0-25136).
(6) Filed as an Exhibit to our Annual Report on Form 10-KSB for the year ended
December 31, 2002. File No. 0-25136).
(7) Filed as Exhibit 10.1 to our Quarterly Report on Form 10-QSB for the
quarter ended March 31, 2003. File No. 0-25136).
(8) Filed as an Exhibit to our Current Report on Form 8-K for August 29, 2003.
(File No. 0-25136).
(9) Filed as an Exhibit to our Annual Report on Form 10-KSB for the year ended
December 31, 2003. (File No. 0-25136).
(10) Filed as an Exhibit to Amendment No. 1 to our Annual Report on Form 10-KSB
for the year ended December 31, 2003. (File No. 0-25136).
(11) Filed as an Exhibit to this registration statement on Form SB-2.
(12) To be filed by amendment.
Part II - 5
ITEM 28. UNDERTAKINGS
A. The undersigned Registrant hereunder undertakes:
(1) to file, during any period in which it offers or sells
securities, a post-effective amendment to this Registration Statement to:
(i) include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended (the "Act");
(ii) reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the information in
the registration statement; and notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any deviation
from the low or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in the volume and price represent no
more than a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration statement.
(iii) include any additional or changed material information on
the plan of distribution.
(2) That, for the purpose of determining liability under the Act,
to treat each such post-effective amendment as a new Registration Statement of
the securities offered, and the offering of the securities at that time to be
the initial bona fide offering.
(3) File a post-effective amendment to remove from registration any
of the securities that remain unsold at the end of the offering.
(4) For purposes of determining any liability under the Act, to
treat the information omitted from the form of prospectus filed as part of a
registration statement in reliance upon Rule 430A and contained in the form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Act as part of this registration statement as of the time the
Commission declared it effective.
(5) For determining any liability under the Act, to treat each
post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the registration statement,
and that offering of the securities at that time as the initial bona fide
offering of those securities.
Part II - 6
B. Insofar as indemnification for liabilities arising under the Act may
be permitted to directors, officers and controlling persons of the Small
Business Issuer pursuant to the foregoing provisions, or otherwise, the Small
Business Issuer has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the Small
Business Issuer of expenses incurred or paid by a director, officer or
controlling person of the Small Business Issuer in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Small Business
Issuer will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
Part II - 7
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-2, and authorized this Registration
Statement to be signed on its behalf by the undersigned, in the City of Calgary,
Province of Alberta, Canada, on April 29, 2004.
GEOGLOBAL RESOURCES INC.
By: Jean Paul Roy
----------------------------
Jean Paul Roy, President and
Chief Executive Officer
/s/ Allan J. Kent
(pursuant to power of attorney)
-------------------------------
In accordance with the Securities Act of 1933, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.
/s/ Jean Paul Roy Director and President, April 29, 2004
------------------------------- Chief Executive Officer
/s/ Allan J. Kent (Principal Executive Officer)
pursuant to power of attorney
/s/ Allan J. Kent Director and Executive Vice April 29, 2004
Allan J. Kent President and Chief Financial
Officer (Principal Financial
and Accounting Officer)
John K. Campbell Director April 29, 2004
/s/ Allan J. Kent
(pursuant to power of attorney)
-------------------------------
Brent J. Peters Director April 29, 2004
/s/ Allan J. Kent
(pursuant to power of attorney)
-------------------------------
Peter R. Smith Director April 29, 2004
/s/ Allan J. Kent
(pursuant to power of attorney)
-------------------------------
GEOGLOBAL RESOURCES INC.
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each of the undersigned directors
and officers of GeoGlobal Resources Inc., a Delaware corporation, which is
filing a Registration Statement on Form SB-2 with the Securities and Exchange
Commission, Washington, D.C. 20549 under the provisions of the Securities Act of
1933, as amended (the "Securities Act"), hereby constitutes and appoints Jean
Paul Roy and Allan J. Kent, and each of them, the individual's true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for the person and in his name, place and stead, in any and all
capacities, to sign such Registration Statement and any or all amendments,
including post-effective amendments, to the Registration Statement, including a
Prospectus or an amended Prospectus therein and any registration statement for
the same offering that is to be effective upon filing pursuant to Rule 462(b)
under the Securities Act, and all other documents in connection therewith to be
filed with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact as agents or any of them, or their substitute or substitutes,
may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
/s/ Jean Paul Roy Director and President, Chief Executive April 29, 2004
-------------------- Officer
Jean Paul Roy (Principal Executive Officer)
/s/ Allan J. Kent Director and Executive Vice April 29, 2004
-------------------- President and Chief Financial Officer
Allan J. Kent (Principal Financial and Accounting
Officer)
/s/ John K. Campbell Director April 29, 2004
--------------------
John K. Campbell
/s/ Brent J. Peters Director April 29, 2004
--------------------
Brent J. Peters
/s/ Peter R. Smith Director April 29, 2004
--------------------
Peter R. Smith