form10ksba.htm
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
FORM
10-KSB/A
Amendment
No. 1
Mark
One:
þ Annual Report pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934.
For the fiscal year ended December 31, 2003;
or
¨ Transition Report
pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934
For the transition period from
__________ to __________.
Commission
File No. 0-25136
GEOGLOBAL
RESOURCES INC.
(Name
of Small Business Issuer in its Charter)
|
Delaware
|
33-0464753
|
(State
or Other Jurisdiction of Incorporation or Organization)
|
(IRS
Employer Identification No.)
|
Suite
200, 630- 4 Avenue SW, Calgary, Alberta T2P
0J9 Canada
|
(Address
of Principal Executive
Offices) (Zip
Code)
|
(403)
777-9250
|
(Issuer’s
Telephone Number, Including Area Code)
Securities
registered under Section 12(b) of the Exchange Act:
|
Title
of Each Class
|
Name
of Each Exchange on Which Registered
|
|
None
|
Securities
Registered Pursuant to Section 12(g) of the Exchange
Act:
|
Common
Stock, par value $.001 per share
|
(Title
of Each Class)
|
Check
whether the Issuer (1) filed all reports required to be filed by Section 13 or
15(d) of the Exchange Act during the past twelve (12) months (or for such
shorter period that the Issuer was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. þ Yes ¨ No
Check if there is no disclosure of
delinquent filers in response to Item 405 of Regulation S-B in this form, and no
disclosure will be contained, to the best of Issuer’s knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-KSB, or any amendment to this Form 10-KSB. ¨
State Issuer’s revenues for its most
recent fiscal year: $-0-.
The aggregate market value of the
voting and non-voting equity held by non-affiliates computed by reference to the
price at which the common equity was sold, or the average bid and asked prices
of such common equity, as of April 1, 2004, was $46,998,047. (Non-affiliates
have been determined on the basis of holdings set forth in Item 11 of this
Annual Report on Form 10-KSB.)
The number of shares outstanding of
each of the Issuer’s classes of common equity, as of April 1, 2004, was
55,053,355.
DOCUMENTS
INCORPORATED BY REFERENCE
None
This Form
10-KSB/A Amendment No. 1 is being filed to amend the GeoGlobal Resources Inc.
(the “Company”) Annual Report on Form 10-KSB for the year ended December 31,
2003. The amendment arose out of a need to restate certain financial statements
previously filed with the Securities and Exchange Commission in order to correct
certain errors relating to the Company’s reporting of stock based compensation
in compliance with FAS 123R.
This Form
10-KSB/A does not reflect events occurring after the filing of the original Form
10-KSB or modify or update those disclosures. Information not
affected by the amendment is unchanged and reflects the disclosure made at the
time of the original filing of the Form 10-KSB with the Securities and Exchange
Commission on April 2, 2004. The following items have been amended as a result
of the restatement:
Annual
Report on Form 10-KSB/A
December
31, 2003
Table
of Contents
|
|
Page
|
|
|
|
Item
6.
|
Management’s
Discussion and Analysis or Plan of Operation
|
3
|
|
|
|
Item
7.
|
Financial
Statements
|
15
|
|
|
|
Item
13.
|
Exhibits
|
16
|
|
|
|
Item 6 - Management’s
Discussion and Analysis 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 Financial Statements and the
related Notes appearing elsewhere in this Annual Report. This Annual Report
contains forward-looking statements that involve risks and
uncertainties. 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 Annual
Report.
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. These consolidated financial statements are issued under the
name of our parent, GeoGlobal Resources Inc. but are a continuation of the
financial statements of the accounting acquirer. GeoGlobal India’s
assets and liabilities are included in the consolidated financial statements at
their historical carrying amounts. As a result, the stockholders' equity of
GeoGlobal Resources Inc. is eliminated and these consolidated
financial statements reflect the results of operations of GeoGlobal Resources
Inc. only from the date of the acquisition.
Statements
of Operations
YEARS
ENDED DECEMBER 31, 2003 AND 2002
Oil
and Gas Operations
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 $544,626 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
$210,953 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. Further, our consulting fees include $40,682
which is attributable to compensation costs for stock-based compensation with
non-employee consultants for the year ended December 31, 2003. We
incurred no consulting fees nor stock-based compensation during the period
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, accounting and tax advice, 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 August 21, 2002 to
December 31, 2002. During the year ended December 31, 2003, we
recovered fees and costs resulting from services provided and billed out to
Gujarat State Petroleum Corporation. Our interest income in 2003
arose out of interest earned on our cash balances we held during the
year. We held no such cash balances during the period 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 August 21, 2002 to December 31, 2002, we had a net loss of $518,377 in 2003
compared to a net loss of $13,813 in 2002.
Prior
Operations
We discontinued our Internet-based
activities on May 31, 2002. Accordingly, prior to our acquisition of
GeoGlobal India, we had no income from continuing operations of Internet-based
activities in either the years ended December 31, 2003 or December 31,
2002. Substantially all our activities during 2002 and 2003 prior to
the acquisition of GeoGlobal India related to the redirection of our
activities.
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 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.
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 in Item 1. – Description of
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.
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.
|
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 annual report 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 annual report 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, 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: Item 1. - Description of Business, Item 6. - Management’s
Discussion and Analysis or Plan of Operations, and Risk Factors. 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. 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. 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,
beginning below. They are also described in 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 annual report and could adversely affect our financial
condition and our ability to pursue our business strategy and
plans.
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 annual report, 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 annual report.
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 business plans also include seeking
to enter into additional joint ventures or other arrangements to acquire
interests in additional government created and granted hydrocarbon exploration
opportunities, primarily located onshore or in the offshore waters of
India. Opportunities to acquire interests in exploration
opportunities will be dependent upon our ability to identify, negotiate and
enter into joint venture or other similar arrangements with respect to specific
exploration opportunities and upon our ability to raise sufficient capital to
fund our participation in those joint ventures or other exploration activities.
Our success will be dependent upon the success of the exploration activities of
the ventures in which we acquire an interest.
Our
Interests 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
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. 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.
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:
·
|
We
will experience failures to discover oil and gas in commercial
quantities;
|
·
|
There
are uncertainties as to the costs to be incurred in our exploratory
drilling activities and cost overruns are
possible;
|
·
|
There
are uncertain costs inherent in drilling into unknown formations, such as
over-pressured zones and tools lost in the hole;
and
|
·
|
We
may make changes in our drilling plans and locations as a result or prior
exploratory drilling.
|
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 Block 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 any of 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,
investors and others 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. The Production Sharing
Contracts we are a party to grant to the Government of India considerable
oversight and approval of our activities under those contracts. 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 and are subject to oversight by the Government
of India. 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 may affect our
operations. 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
Control by Directors and Executive Officers May Result in Those Persons Having
Interests Divergent From Our Other Stockholders
As of
April 1, 2004, our Directors and executive officers and their respective
affiliates, in the aggregate, beneficially hold 34,165,334 shares or
approximately 62.1% of our outstanding Common Stock. As a result,
these stockholders possess significant influence over us, giving them the
ability, among other things, to elect a majority of our Board of Directors and
approve significant corporate transactions. These persons will retain
significant control over our present and future activities and our other
stockholders and investors may be unable to meaningfully influence the course of
our actions. These persons may have interests regarding our future
activities and transactions we engage in that diverge from the interests of our
other stockholders. Such share ownership and control may also have
the effect of delaying or preventing a change in control of us, impeding a
merger, consolidation, takeover or other business combination involving us, or
discourage a potential acquiror from making a tender offer or otherwise
attempting to obtain control of us which could have a material adverse effect on
the market price of our Common Stock. Although management has no
intention of engaging in such activities, there is also a risk that the existing
management will be viewed as pursuing an agenda which is beneficial to
themselves at the expense of other stockholders.
We
Are Substantially Dependent Upon Our President and Executive Vice President and
Chief Financial Officer and Their Loss Could Materially Adversely Affect Our
Future Activities
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. At present, we do not have any employment agreements with any of
our executive officers. The services of both Mr. Roy and Mr. Kent are
provided pursuant to the terms of agreements with corporations 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 also 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. 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.
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. 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:
·
|
The
venture participants are required to complete certain minimum work
programs during the three phases of the terms 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;
|
·
|
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;
|
·
|
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
|
·
|
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.
|
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:
·
|
political
conditions in oil producing regions, including the Middle East and
elsewhere;
|
·
|
the
domestic and foreign supply of oil and
gas;
|
·
|
quotas
imposed by OPEC upon its members;
|
·
|
the
level of consumer demand;
|
·
|
domestic
and foreign government regulations;
|
·
|
the
price and availability of alternative
fuels;
|
·
|
overall
economic conditions; and
|
·
|
international
political conditions.
|
In
addition, various factors may adversely affect the ability to market oil and gas
production from the exploration block, including:
·
|
the
capacity and availability of oil and gas gathering systems and
pipelines;
|
·
|
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;
|
·
|
the
proximity of future hydrocarbon discoveries to oil and gas transmission
facilities and processing equipment (as well as the capacity of such
facilities);
|
·
|
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);
|
·
|
the
imposition of trade sanctions or embargoes by other
countries;
|
·
|
the
availability and frequency of delivery
vessels;
|
·
|
changes
in supply due to drilling by
others;
|
·
|
the
availability of drilling rigs; and
|
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 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 extended 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 as 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 partner or
through some other arrangement. Our ability to enter into additional
exploration activities will be dependent to 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 claimed 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 there from
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 which have affected the market price for
many companies which fluctuations have been unrelated to the operating
performance of these companies. These market fluctuations, 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.
Item 7 - Financial
Statements:
Our
Financial Statements are included in a separate section of this
report. See page F-1.
Item 13 - Exhibits and
Reports on Form 8-K:
(a) Exhibits:
Exhibit
|
|
|
|
|
|
3.1
|
|
Certificate
of Incorporation of the Registrant, as amended.
(1)
|
3.2
|
|
Bylaws
of the Registrant, as amended. (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)
|
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)
|
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)
|
14
|
|
Code
of Ethics. (9)
|
21
|
|
Subsidiaries
of the Registrant:
|
|
|
|
Name
|
|
State
or Jurisdiction of Incorporation
|
GeoGlobal
Resources
(India)
Inc.
|
|
Barbados
|
GeoGlobal
Resources (Canada) Inc.
|
|
Alberta
|
GeoGlobal
Resources (Barbados) Inc.
|
|
Barbados
|
|
|
|
23
|
|
Consent
of experts and counsel:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Filed
as an Exhibit to Neuro Navigational Corporation Form 10-KSB No. 0-25136
dated September 30, 1994.
|
(2)
|
Filed
as Exhibit to Neuro Navigational Corporation Form 8-K dated July 17,
1995.
|
(3)
|
Filed
as an Exhibit to our Current Report on Form 8-K dated December 10,
1998.
|
(4)
|
Filed
as an Exhibit to our Current Report on Form 8-K dated February 14,
2002.
|
(5)
|
Filed
as an Exhibit to our Current Report on Form 8-K dated March 15,
2002.
|
(6)
|
Filed
as an Exhibit to our Form 10-KSB dated March 28,
2003
|
(7)
|
Filed
as exhibit 10.1 to our Quarterly Report on Form 10-QSB for the quarter
ended March 31, 2003.
|
(8)
|
Filed
as an exhibit to our Current Report on Form 8-K for August 29,
2003.
|
(9)
|
Filed
as an Exhibit to our Annual Report on Form 10-KSB (File No. 0-25136) for
the year ended December 31, 2003.
|
(10)
|
Filed
as an Exhibit to Amendment No. 1 to our Annual Report on Form 10-KSB (File
No. 0-25136) for the year ended December 31,
2003.
|
Reports
on Form 8-K
During the quarter ended December 31,
2003, we filed Current Reports on Form 8-K as follows:
Date Filed
|
Item Nos.
|
|
|
Form
8-K filed October 14, 2003
|
4
and 7
|
Form
8-K filed October 22, 2003
|
1,
2 and 7
|
Form
8-K filed November 7, 2003
|
7
|
Form
8-K/A filed November 14, 2003
|
7
|
Form
8-K filed December 24, 2003
|
7
|
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)
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-24
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The
Board of Directors and Stockholders Of
GeoGlobal
Resources Inc.
We have
audited the accompanying restated 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 restated consolidated financial statements are the responsibility of the
Company’s management. Our responsibility is to express an opinion on these
restated 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 restated 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.
As
explained in note 5(c), the consolidated balance sheets as at December 31, 2003
and 2002 and the related consolidated statements of operations, stockholders'
equity and cash flows for the years 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 have been
restated.
"Ernst & Young LLP"
(signed)
CALGARY,
ALBERTA CHARTERED
ACCOUNTANTS
March 25,
2004, except for Note 5(c),
which is
as of June 5, 2008
GEOGLOBAL
RESOURCES INC.
(a
development stage enterprise)
CONSOLIDATED
BALANCE SHEETS
|
|
December
31
|
|
2003
US
$
|
|
|
2002
US
$
|
|
|
|
Restated
note
5c
|
|
|
|
|
Assets
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
|
7,029,907 |
|
|
|
272 |
|
Accounts
receivable
|
|
|
81,487 |
|
|
|
-- |
|
|
|
|
7,111,394 |
|
|
|
272 |
|
|
|
|
|
|
|
|
|
|
Property
and equipment (note 3)
|
|
|
317,774 |
|
|
|
49,148 |
|
|
|
|
7,429,168 |
|
|
|
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$0.01 each
|
|
|
|
|
|
|
|
|
Issued
|
|
|
|
|
|
|
|
|
55,053,355
common shares (2002 – 34,000,000)
|
|
|
40,461 |
|
|
|
64 |
|
Additional
paid-in capital (note 4)
|
|
|
6,680,951 |
|
|
|
-- |
|
Deficit
accumulated during the development stage
|
|
|
(532,190 |
) |
|
|
(13,813 |
) |
|
|
|
6,189,222 |
|
|
|
(13,749 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
7,429,168 |
|
|
|
49,420 |
|
See
Commitments (note 8)
The
accompanying notes are an integral part of these Consolidated Financial
Statements
|
|
GEOGLOBAL
RESOURCES INC.
(a
development stage enterprise)
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
|
|
|
Year
ended December 31-2003
US$
|
|
|
Period
from
Inception,
August
21-2002 to December 31-2002
US$
|
|
|
Period
from
Inception,
August
21-2002 to December 31-2003
US$
|
|
|
|
Restated
note
5c
|
|
|
|
|
|
Restated
note
5c
|
|
Expenses
(notes 7b and 7c)
|
|
|
|
|
|
|
|
|
|
General
and administrative
|
|
|
151,404 |
|
|
|
6,198 |
|
|
|
157,602 |
|
Consulting
fees
|
|
|
210,953 |
|
|
|
-- |
|
|
|
210,953 |
|
Professional
fees
|
|
|
131,819 |
|
|
|
6,917 |
|
|
|
138,736 |
|
Depreciation
and depletion
|
|
|
50,450 |
|
|
|
698 |
|
|
|
51,148 |
|
|
|
|
544,626 |
|
|
|
13,813 |
|
|
|
558,439 |
|
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)
|
|
|
(518,377 |
) |
|
|
(13,813 |
) |
|
|
(532,190 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss per share – basic and diluted
|
|
|
(0.03 |
) |
|
|
(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
|
|
|
|
Capital Stock
US
$
|
|
|
Additional
paid-in
capital
US
$
|
|
|
Accumulated
Deficit
US
$
|
|
|
Stockholders'
Equity
US
$
|
|
|
|
|
|
|
Restated
note
5c
|
|
|
Restated
note
5c
|
|
|
Restated
note
5c
|
|
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 |
) |
Stock-based
compensation
|
|
|
-- |
|
|
|
62,913 |
|
|
|
-- |
|
|
|
62,913 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss and comprehensive loss
for
the year
|
|
|
-- |
|
|
|
-- |
|
|
|
(518,377 |
) |
|
|
(518,377 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at December 31, 2003
|
|
|
40,461 |
|
|
|
6,680,951 |
|
|
|
(532,190 |
) |
|
|
6,189,222 |
|
See
note 4 for further information
The
accompanying notes are an integral part of these Consolidated Financial
Statements
|
|
GEOGLOBAL
RESOURCES INC.
(a
development stage enterprise)
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
|
|
Year
ended December 31-2003
US$
|
|
|
Period
from
Inception,
August
21-2002 to December 31-2002
US$
|
|
|
Period
from
Inception,
August
21-2002 to December 31-2003
US$
|
|
|
|
Restated
note
5c
|
|
|
|
|
|
Restated
note
5c
|
|
Cash
flows provided by (used in) operating activities
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
|
(518,377 |
) |
|
|
(13,813 |
) |
|
|
(532,190 |
) |
Adjustment
to reconcile net loss to net cash
used
in operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
and depletion
|
|
|
50,450 |
|
|
|
698 |
|
|
|
51,148 |
|
Stock-based
compensation
|
|
|
40,682 |
|
|
|
-- |
|
|
|
40,682 |
|
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
|
|
Notes
to the Consolidated 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.
Notes
to the Consolidated Financial Statements
GeoGlobal
Resources Inc.
(a
development stage enterprise)
December
31, 2003
2. SIGNIFICANT
ACCOUNTING POLICIES (continued)
b) Property
and equipment
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.
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.
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.
Notes
to the Consolidated Financial Statements
GeoGlobal
Resources Inc.
(a
development stage enterprise)
December
31, 2003
2. SIGNIFICANT
ACCOUNTING POLICIES (continued)
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.
|
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.
|
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.
|
Notes
to the Consolidated Financial Statements
GeoGlobal
Resources Inc.
(a
development stage enterprise)
December
31, 2003
2. SIGNIFICANT
ACCOUNTING POLICIES (continued)
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.
|
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
US
$
|
|
|
December
31-2002
US
$
|
|
|
|
Restated
note
5c
|
|
|
|
|
|
|
|
|
|
|
|
Exploration
costs – India
|
|
|
200,754 |
|
|
|
21,925 |
|
Accumulated
depletion
|
|
|
-- |
|
|
|
-- |
|
|
|
|
200,754 |
|
|
|
21,925 |
|
|
|
|
|
|
|
|
|
|
Computer
equipment
|
|
|
168,168 |
|
|
|
27,921 |
|
Accumulated
depreciation
|
|
|
(51,148 |
) |
|
|
(698 |
) |
|
|
|
117,020 |
|
|
|
27,223 |
|
|
|
|
|
|
|
|
|
|
|
|
|
317,774 |
|
|
|
49,148 |
|
a)
|
Capitalized
overhead costs (Restated note 5c)
|
During
the year ended December 31, 2003, the Company capitalized certain overhead costs
of US$150,309 (2002 - US$21,925) directly related to the exploration activities
in India. This capitalized overhead amount includes capitalized
stock-based compensation of US$22,231 (2002 – US$nil). The balance
was paid to and on behalf of 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.
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.
|
3. PROPERTY
AND EQUIPMENT (continued)
|
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.
|
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.
Notes
to the Consolidated Financial Statements
GeoGlobal
Resources Inc.
(a
development stage enterprise)
December
31, 2003
3.
|
PROPERTY
AND EQUIPMENT (continued)
|
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.
4. CAPITAL
STOCK
a) Common
shares
|
|
Number
of
shares
|
|
|
Capital
stock
US
$
|
|
|
Additional
paid-in
capital
US
$
|
|
|
|
|
|
|
|
|
|
Restated
note
5c
|
|
|
|
|
|
|
|
|
|
|
|
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 |
) |
Stock-based
compensation
|
|
|
-- |
|
|
|
-- |
|
|
|
62,913 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
as at December 31, 2003
|
|
|
55,053,355 |
|
|
|
40,461 |
|
|
|
6,680,951 |
|
4. CAPITAL
STOCK
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.
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.
Notes
to the Consolidated Financial Statements
GeoGlobal
Resources Inc.
(a
development stage enterprise)
December
31, 2003
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.
Under
this method compensation cost is measured at fair value at grant date using the
Black-Scholes option pricing method and recognized over the vesting
period. If the fair value based method had been used, the stock based
compensation costs, pro-forma exploration costs – India, net loss and pro-forma
net loss per share would be as follows:
|
|
Year
ended
Dec
31, 2003
US
$
|
|
|
Period
from Inception,
Aug
21, 2002 to Dec 31, 2002
US
$
|
|
|
Period
from
Inception,
Aug
21, 2002 to
Dec
31, 2003
US
$
|
|
|
|
Restated
note
5c
|
|
|
Restated
note
5c
|
|
|
Restated
note
5c
|
|
Pro-forma
basis
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
|
|
|
|
|
|
|
|
|
Exploration
costs - India
|
|
|
44,542 |
|
|
|
-- |
|
|
|
44,542 |
|
General
and administrative
|
|
|
88,349 |
|
|
|
-- |
|
|
|
88,349 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exploration
costs - India
|
|
|
|
|
|
|
|
|
|
|
|
|
As
reported
|
|
|
200,754 |
|
|
|
21,925 |
|
|
|
200,754 |
|
Pro-forma
|
|
|
245,296 |
|
|
|
21,925 |
|
|
|
245,296 |
|
Net
loss
|
|
|
|
|
|
|
|
|
|
|
|
|
As
reported
|
|
|
(518,377 |
) |
|
|
(13,813 |
) |
|
|
(532,190 |
) |
Pro-forma
|
|
|
(606,726 |
) |
|
|
(13,813 |
) |
|
|
(620,539 |
) |
Net
loss per share - basic and diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
As
reported
|
|
|
(0.03 |
) |
|
|
(0.00 |
) |
|
|
|
|
Pro-forma
|
|
|
(0.03 |
) |
|
|
(0.00 |
) |
|
|
|
|
Black-Scholes
Assumptions
|
|
|
|
Fair
value of stock options granted
|
$0.20
|
--
|
|
Risk-free
interest rate
|
2.61%
|
--
|
|
Volatility
|
55%
|
--
|
|
Expected
life
|
0.8
years
|
--
|
|
Dividend
yield
|
0%
|
--
|
|
i)
|
The
risk-free rate is based on the U.S. Treasury yield curve in effect at the
time of grant.
|
ii)
|
Expected
volatilities are based on historical volatility of the Company's stock and
other factors.
|
iii)
|
The
expected life of options granted represents the period of time that the
options are expected to be outstanding and is derived from historical
exercise behavior and current
trends.
|
5. STOCK
OPTIONS (continued)
c) Restatement
|
|
Year
ended
Dec
31, 2003
US
$
|
|
|
Period
from Inception,
Aug
21, 2002 to Dec 31, 2002
US
$
|
|
|
Period
from
Inception,
Aug
21, 2002 to
Dec
31, 2003
US
$
|
|
|
|
Restated
note
5c
|
|
|
|
|
|
Restated
note
5c
|
|
Stock-based
compensation
|
|
|
|
|
|
|
|
|
|
Consolidated
Statements of Operations
|
|
|
|
|
|
|
|
|
|
Consulting
fees
|
|
|
40,682 |
|
|
|
-- |
|
|
|
40,682 |
|
Consolidated
Balance Sheets
|
|
|
|
|
|
|
|
|
|
|
|
|
Property
and equipment
|
|
|
|
|
|
|
|
|
|
|
|
|
Exploration
costs - India
|
|
|
22,231 |
|
|
|
-- |
|
|
|
22,231 |
|
|
|
|
62,913 |
|
|
|
-- |
|
|
|
62,913 |
|
The year
ended December 31, 2003 and the period from inception August 21, 2002 to
December 31, 2003 have been restated due to an error in the classification and
calculation for stock-based compensation for non-employee
consultants.
Notes
to the Consolidated Financial Statements
GeoGlobal
Resources Inc.
(a
development stage enterprise)
December
31, 2003
5. STOCK
OPTIONS (continued)
The
following is a summary of the effects of this restatement on the Company's
Consolidated Balance Sheets and Statements of Stockholders' Equity at December
31, 2003 and the Consolidated Statements of Operations for the year ended
December 31, 2003 and the period from inception of August 21, 2002 to December
31, 2003.
|
|
As
Reported
|
|
Adjustment
|
|
|
As
Restated
|
|
|
Dec
31, 2003
US$
|
|
|
|
Dec
31, 2003
US$
|
|
|
Period
of Inception,
Aug
21, 2002
to
Dec 31, 2002
US$
|
|
|
Dec
31, 2003
US$
|
|
|
Balance
Sheets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil
and gas interests
|
|
|
295,543 |
|
|
|
|
22,231 |
|
|
|
-- |
|
|
|
317,774 |
|
|
Additional
paid-in
capital
|
|
|
6,618,038 |
|
|
|
|
62,913 |
|
|
|
-- |
|
|
|
6,680,951 |
|
|
Deficit
accumulated
|
|
|
(491,508 |
) |
|
|
|
(40,682 |
) |
|
|
-- |
|
|
|
(532,190 |
) |
|
Stockholders'
equity
|
|
|
6,166,991 |
|
|
|
|
22,231 |
|
|
|
-- |
|
|
|
6,189,222 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement
of
Stockholders'
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
paid-in
capital
|
|
|
6,618,038 |
|
|
|
|
62,913 |
|
|
|
-- |
|
|
|
6,680,951 |
|
|
Accumulated
deficit
|
|
|
(491,508 |
) |
|
|
|
(40,682 |
) |
|
|
-- |
|
|
|
(532,190 |
) |
|
Stockholders'
equity
|
|
|
6,166,991 |
|
|
|
|
22,231 |
|
|
|
-- |
|
|
|
6,189,222 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
Reported
|
|
Adjustment
|
|
|
As
Restated
|
|
|
Year
ended
Dec
31, 2003
US$
|
|
Period
of Inception,
Aug
21, 2002
to
Dec 31, 2003
US$
|
|
Year
ended
Dec
31, 2003
US$
|
|
|
Period
of Inception,
Aug
21, 2002
to
Dec 31, 2003
US$
|
|
|
Year
ended
Dec
31, 2003
US$
|
|
Period
of Inception,
Aug
21, 2002
to
Dec 31, 2003
US$
|
Statements
of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consulting
fees
|
|
|
170,271 |
|
170,271
|
|
|
40,682 |
|
|
|
40,682 |
|
|
|
210,953 |
|
210,953
|
Net
loss and
comprehensive
loss
|
|
|
(477,695 |
) |
(491,508)
|
|
|
(40,682 |
) |
|
|
(40,682 |
) |
|
|
(518,377 |
) |
(532,190)
|
Net
loss per share
-
basic and diluted
|
|
|
(0.02 |
) |
|
|
|
(0.01 |
) |
|
|
|
|
|
|
(0.03 |
) |
|
The
restatement had no impact on the Consolidated Statements of Cash Flows for the
year ended December 31, 2003 and from inception of August 21, 2002 to December
31, 2003 and therefore, no changes have been reflected
Notes
to the Consolidated Financial Statements
GeoGlobal
Resources Inc.
(a
development stage enterprise)
December
31, 2003
5. STOCK
OPTIONS (continued)
d) Black-Scholes
Assumptions
The
Company believes that the estimated fair value of the stock options is more
readily measurable than the fair value of services rendered. The fair
value of the stock options granted to non-employee consultants is calculated at
each reporting date using the Black-Scholes option-pricing
model. Weighted average assumptions used in the valuation are
disclosed in the following table:
|
|
Year
ended
Dec
31, 2003
US
$
|
|
|
Period
from Inception,
Aug
21, 2002 to Dec 31, 2002
US
$
|
|
|
|
Restated
note
5c
|
|
|
|
|
Black-Scholes
Assumptions
|
|
|
|
|
|
|
Fair
value of stock options at reporting date
|
|
$ |
0.67 |
|
|
$ |
0.00 |
|
Risk-free
interest rate
|
|
|
1.32 |
% |
|
|
-- |
|
Volatility
|
|
|
89 |
% |
|
|
-- |
|
Expected
life
|
|
1.1
years
|
|
|
|
-- |
|
Dividend
yield
|
|
|
0 |
% |
|
|
-- |
|
e) 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.
Notes
to the Consolidated 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.
Notes
to the Consolidated 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.
Notes
to the Consolidated 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
|
(italics
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
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
(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
US
$
|
|
|
Property
and equipment
US
$
|
|
|
|
Restated
note
5c
|
|
|
|
|
|
|
|
|
|
|
|
Canada
|
|
|
58,451 |
|
|
|
3,181 |
|
India
|
|
|
259,323 |
|
|
|
45,967 |
|
|
|
|
317,774 |
|
|
|
49,148 |
|
Notes
to the Consolidated 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
$
|
|
|
|
Restated
note
5c
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
|
(518,377 |
) |
|
|
(13,813 |
) |
Expected
tax rate
(2003
– US tax rate; 2002 – Canada tax rate)
|
|
|
35.0 |
% |
|
|
42.12 |
% |
Expected
income tax recovery
|
|
|
(181,432 |
) |
|
|
(5,818 |
) |
Excess
of expected tax rate over tax rate of
foreign
affiliates
|
|
|
24,804 |
|
|
|
-- |
|
Non-deductible
expenditures
|
|
|
22,020 |
|
|
|
-- |
|
Acquisition
of losses
|
|
|
4,355,268 |
|
|
|
-- |
|
Other
|
|
|
316,029 |
|
|
|
(107 |
) |
|
|
|
4,536,689 |
|
|
|
(5925 |
) |
|
|
|
|
|
|
|
|
|
Valuation
allowance
|
|
|
(4,536,689 |
) |
|
|
5,925 |
|
Provision
for income taxes
|
|
|
-- |
|
|
|
-- |
|
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:
|
|
December
31-2003
|
|
|
December
31-2002
|
|
|
|
US
$
|
|
|
US
$
|
|
|
|
Restated
note
5c
|
|
|
|
|
|
|
|
|
|
|
|
Difference
between tax base and reported
amounts
of depreciable assets
|
|
|
5,078 |
|
|
|
294 |
|
Non-capital
loss carry forwards
|
|
|
117,130 |
|
|
|
5,631 |
|
|
|
|
122,208 |
|
|
|
5,925 |
|
Valuation
allowance
|
|
|
(122,208 |
) |
|
|
(5,925 |
) |
Deferred
income tax asset
|
|
|
-- |
|
|
|
-- |
|
Notes
to the Consolidated Financial Statements
GeoGlobal
Resources Inc.
(a
development stage enterprise)
December
31, 2003
10. INCOME
TAXES (continued)
c) Loss
carry forwards
|
i)
|
At
December 31, 2003, the Company has US$322,108 of available non-cash
capital loss carry forwards to reduce taxable income for income tax
purposes in the various jurisdictions as outlined below which have not
been reflected in these consolidated financial
statements.
|
Tax
Jurisdiction
|
Amount
US
$
|
Expiry
Dates
Commence
|
United
States
|
256,595
|
2023
|
Canada
|
5,463
|
2010
|
Barbados
|
60,050
|
2012
|
|
322,108
|
|
|
ii)
|
At
December 31, 2003, the Company has US$5,890,659 of available capital loss
carry forwards to reduce capital gains for US income tax purposes expiring
in 2008, which have not been reflected in these consolidated financial
statements.
|
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.
|
Notes
to the Consolidated 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).
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of
1934, the Registrant has duly caused this Report to be signed on its behalf by
the undersigned, thereunto duly authorized.
GeoGlobal
Resources Inc.
By: /s/ Allan J.
Kent
Allan
J. Kent
Executive
Vice President and CFO
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the Company and in the
capacities and on the dates indicated.
Signature
|
|
Title
|
|
Date
|
/s/ Jean Paul Roy
Jean
Paul Roy
|
|
President,
Chief Executive Officer and Director
|
|
June
3, 2008
|
/s/ Allan J. Kent
Allan
J. Kent
|
|
Executive
Vice President, Chief Financial Officer and Director
|
|
June
3, 2008
|
/s/ Brent J. Peters
Brent
J. Peters
|
|
Director
|
|
June
3, 2008
|
/s/ John K. Campbell
John
K. Campbell
|
|
Director
|
|
June
3, 2008
|
/s/ Peter R. Smith
Peter
R. Smith
|
|
Chairman
of the Board and Director
|
|
June
3, 2008
|