form10ksba.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
FORM
10-KSB/A
Amendment
No. 1
Mark
One:
þ Annual Report under
Section 13 or 15(d) of the Securities Exchange Act of 1934.
For the fiscal year ended December 31, 2005;
or
¨ Transition Report under
Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from
__________ to __________.
Commission
File No. 1-32158
GEOGLOBAL
RESOURCES INC.
(Name
of small business issuer in its charter)
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Delaware
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33-0464753
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(State
or other jurisdiction of incorporation or organization)
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(IRS
Employer Identification No.)
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Suite
200, 630- 4 Avenue SW, Calgary, Alberta,
Canada T2P
0J9
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(Address
of principal executive
offices) (Zip
Code)
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(403)
777-9250
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(Issuer’s
telephone number)
Securities
registered under Section 12(b) of the Exchange Act:
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Title
of each class
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Name
of each exchange on which registered
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None
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Securities
registered under Section 12(g) of the Exchange Act:
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Common
Stock, par value $.001 per share
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(Title
of Each Class)
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Check
whether the issuer is not required to file reports pursuant to Section 13 or
15(d) of the Exchange
Act ¨
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 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. þ Yes ¨ No
Check if
there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant’s knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. ¨
Indicate
by check whether the registrant is a shell company (as defined in Rule 12b-2 of
the Exchange Act.¨ Yes þ No
Issuer’s
revenues for its most recent fiscal
year: $-0-
The
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
sold, or the average bid and asked price of such common equity, as of April 11,
2006, was $252,479,960. (See definition
of affiliate in Rule 12b-2 of the Exchange Act).
The
number of shares outstanding of each of the issuer’s classes of common equity,
as of April 11, 2006,
was 63,934,755.
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,
2005. 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 13, 2006. The following items have been amended as a result
of the restatement:
Annual
Report on Form 10-KSB/A
December
31, 2005
Table
of Contents
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Page
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Item
6.
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Management’s
Discussion and Analysis or Plan of Operation
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3
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Item
7.
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Financial
Statements
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18
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Item
8A.
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Controls
and Procedures
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19
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Item
13.
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Exhibits
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20
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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.
Our
Business Activities
We are
engaged, through subsidiaries and joint ventures in which we are a participant,
in the exploration for and development of oil and gas reserves. We
initiated these activities in 2003. Through December 31, 2005, our
activities have been undertaken in locations where we and our joint venture
participants have been granted exploration rights pursuant to Production Sharing
Contract's ("PSC's") entered into with the GOI.
At April
11, 2006, we have not reported any proved reserves of oil or natural
gas. We have entered into five PSC’s and one Deed of Assignment and
Assumption whereby we agreed to acquire a 20% participating interest in a sixth
PSC. Each PSC relates to a separate drilling block onshore or
offshore India and each provides for multi-year and multi-phase exploration and
drilling activities. Exploration and development activities pursuant
to the terms of these agreements are expected to continue throughout
2006.
Statements
of Operations
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.
On June
28, 2005, we announced a discovery of natural gas at the KG#8 well
location. This discovery is subject to further delineation drilling
and testing before a commercial discovery can be declared in accordance with the
provisions of the PSC.
Years
ended December 31, 2005 and 2004
During
the year ended December 31, 2005, we had expenses of $3,693,281 compared with
expenses of $1,216,094 during the year ended December 31, 2004. This
increase is primarily the result of the increased scale of our participation in
oil and gas exploration activities.
Our
general and administrative expenses increased to $495,326 from
$451,788. These general and administrative expenses include costs
related to the corporate head office including administrative salaries and
services, rent and office costs, insurance, American Stock Exchange listing and
filing fees and transfer agent fees and services. Our
consulting fees increased to $2,947,126 during the year ended December 31, 2005
from $541,617 in the prior year. The majority of this increase can be
attributed to an increase in the compensation costs recognized during the year
of $2,681,680 for stock arrangements with non-employee consultants of the
Company as compared to $304,002 for the year ending December 31,
2004. Further, these consulting fees reflect $62,000 (2004 - $50,000)
paid under our Technical Services Agreement with a corporation wholly owned by
Mr. Roy and other fees and expenses we incurred in employing various technical
and corporate consultants who advised us on a variety of
matters. Professional fees increased to $201,298 during the year
ended December 31, 2005 from $161,381 during the year ended December 31,
2004. Professional fees include those paid to our auditors for
pre-approved audit, accounting and tax services and fees paid to our legal
advisors primarily for services provided with regard to filing various periodic
reports and other documents and reviewing our various oil and gas and other
agreements. The increase is attributable to an approximately $40,000
increase in our fees paid to our auditors for additional work incurred during
the year ending December 2005 as compared to 2004.
Our other
expenses and income during the year ended December 31, 2005 resulted in income
of $530,621 versus $44,596 for the same period in 2004. Included in
other expenses and income is a
foreign
exchange gain of $319 compared to a loss in 2004 of $3,495. During
the year ended December 31, 2005, we recovered fees and costs of $25,900 (2004 -
$16,500) resulting from services provided and billed out to the
GSPC. Other expenses and income include a gain on the sale of
computer equipment of $42,228 during the year ended December 31,
2005. Our increase in interest income to $462,174 from $31,591 for
the year ended December 31, 2004 is a result of the significant increase in the
size of our cash balances we held during the year as compared to 2004 as well as
an increase in the US prime rate.
Reflecting
the increase in our consulting fees offset by the increase in our interest
income during the year ended December 31, 2005 as compared to the year ended
December 31, 2004, our net loss increased to $3,162,660 compared to a net loss
of $1,171,498 in 2004.
We
capitalized overhead costs directly related to our exploration activities in
India. During the year ended December 31, 2005, these capitalized
overhead costs were $2,141,844 as compared to $382,788 during the year ended
December 31, 2004. This increase is mostly attributed to an increase
in the capitalized compensation costs recognized during the year of $1,672,576
for stock-based compensation with non-employee consultants of the Company as
compared to $46,253 in the year ending December 31, 2004. The
remaining increase is consistent with the increased scale of our participation
in oil and gas exploration activities.
Years
ended December 31, 2004 and 2003
During
the year ended December 31, 2004, we had expenses of $1,216,094 compared with
expenses of $544,626 during the year ended December 31, 2003. This
increase is primarily the result of the increased scale of our participation in
oil and gas exploration activities as well as the additional costs incurred in
compliance with periodic reporting and other requirements in having our
securities publicly traded and listed on the American Stock Exchange for 12
months in 2004 versus four months in 2003.
Our
general and administrative expenses increased to $451,788 from
$151,404. These general and administrative expenses include costs
related to the corporate head office including administrative salaries and
services, rent and office costs, insurance, American Stock Exchange listing and
filing fees and transfer agent fees and services. Our
consulting fees increased to $541,617 during the year ended December 31, 2004
from $210,953 in the prior year. The majority of this increase can be
attributed to an increase in the compensation costs recognized during the year
of $304,002 for stock arrangements with non-employee consultants of the Company
as compared to $40,682 for the year ending December 31,
2003. Further, these consulting fees reflect $50,000 (2003 - $16,667)
paid under our Technical Services Agreement with a corporation wholly owned by
Mr. Roy and other fees and expenses we incurred in employing various technical
and corporate consultants who advised us on a variety of
matters. Professional fees increased to $161,381 during the year
ended December 31, 2004 from $131,819 during the year ended December 31,
2003. Professional fees include those paid to our auditors for audit,
accounting and tax advice and fees paid to our legal advisors primarily for
services provided with regard to filing various periodic reports and other
documents and reviewing our various oil and gas and other
agreements.
Our other
expenses and income during the year ended December 31, 2004 resulted in income
of $44,596 versus $26,249 for the same period in 2003. Included in
other expenses and income is a foreign exchange loss of $3,495 (2003 - $18,634)
which loss declined mainly as a result of a more stable US dollar in 2004 as
compared to 2003. During the year ended December 31, 2004, we recovered fees and
costs of $16,500 (2003 - $38,775) resulting from services provided and billed
out to the Gujarat State Petroleum Corporation. The decline in these
recovered fees and costs was primarily the result of the consultants billing for
their fees and costs directly to third parties versus through our
company. Our interest income of $31,591 (2003 - $1,863) arose out of
interest earned on our cash balances we held during the year as compared to 4
months in 2003.
Reflecting
the increased scope of our activities during the year ended December 31, 2004 as
compared to the year ended December 31, 2003, we had a net loss of
$1,171,498 compared to a net loss of $518,377 in
2003.
Liquidity and Capital
Resources
Years
ended December 31, 2005 and 2004
Our net
cash used in operating activities during the year ended December 31, 2005 was
$165,558 as compared to $1,075,637 for the year ended December 31,
2004. This decrease is mostly as a result of our reduced net loss for
the year ended December 31, 2005 as compared to 2004.
Cash used
by investing activities during the year ended December 31, 2005 was $1,679,352
as compared to $748,222 during the year ended December 31, 2004. This
increase is a result of the increased scale of our participation in oil and gas
exploration activities. Funds of $1,615,000 were used for exploration
activities and the acquisition of property and equipment as compared to $547,357
in 2004. The property and equipment acquired included computer and
office equipment totaling $36,876 with the balance of $1,578,124 incurred as
exploration costs for our oil and gas interests in India. The
restricted cash of $185,689 represents additional term deposits we made in 2005
which are used as collateral for two letters of credit given to the GOI as a
minimum work commitment guarantee on the Cambay Blocks.
Cash
provided by financing activities for the year ended December 31, 2005 was
$33,462,700 as compared to cash used in financing activities of $786,450 during
the year ended December 31, 2004. As further described below, during
the year ended December 31, 2005, we completed the sale of 3,252,400 Units of
our securities at $6.50 per Unit, together with a concurrent sale of an
additional 1,000,000 Units on the same terms, for aggregate cash gross proceeds
of $27,640,600. This amount combined with cash of $7,352,985 which
was provided from the issuance of 3,494,400 shares of common stock on the
exercise of options, purchase warrants and broker warrants issued in our 2003
financing, less financing costs of $1,541,685 incurred in connection with the
2005 financing accounts for the increase in our cash and cash
equivalents. Cash provided by financing activities for the year ended
December 31, 2005 in the amount of $786,450 included the full repayment of
$1,000,000 of the note payable, net of $213,550 realized from the issuance of
154,100 shares of common stock on the exercise of options and broker
warrants.
The sale
of the 3,252,400 Units of securities was completed in September
2005. The securities were sold at $6.50 per Unit, together with a
concurrent sale of an additional 1,000,000 Units on the same terms, for
aggregate gross cash total proceeds of $27,640,600.
Each Unit
is comprised of one common share and one half of one warrant. One
full warrant ("2005 Purchase Warrant") entitles the holder to purchase one
additional common share for $9.00, for a term of two years expiring September
2007. The 2005 Purchase Warrants are subject to accelerated
expiration in the event that the price of the Company's common shares on the
American Stock Exchange is $12.00 or more for 20 consecutive trading days, the
resale of the shares included in the Units and issuable on exercise of the 2005
Purchase Warrants has been registered under the US Securities Act of 1933, as
amended (the “Act”), and the hold period for Canadian subscribers has
expired. In such events, the warrant term will be reduced to 30 days
from the date of issuance of a news release announcing such accelerated
expiration of the warrant term.
Costs of
$1,541,685 were incurred in issuing shares in these transactions which included
a fee of $1,268,436 paid to Jones Gable & Company Limited with respect to
the sale of the 3,252,400 Units, and, in addition, Compensation Options were
issued to Jones Gable & Company Limited entitling it to purchase an
additional 195,144 Units at an exercise price of $6.50 per Unit through their
expiration in September 2007. Compensation Options are also
subject to accelerated expiration on the same terms and conditions as the
warrants issued in the transaction.
At
December 31, 2005, our cash and cash equivalents were $36,037,388 (December 31,
2004 - $4,419,598). 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.
Years
ended December 31, 2004 and 2003
Our net
cash used in operating activities during the year ended December 31, 2004 was
$1,069,706 as compared to $297,873 to December 31, 2003. This
increase is mostly as a result of our increased activities and the additional
compliance costs incurred as a public reporting company for 12 months in 2004
versus four months in 2003.
Cash used
by investing activities during the year ended December 31, 2004 was $754,153 as
compared to cash provided by investing activities during the year ended December
31, 2003 of $2,737,821. This latter amount included cash of
$3,034,666 acquired by GeoGlobal India from our legal parent on the
acquisition. Funds of $547,357 were used for the acquisition of
property and equipment as compared to $296,845 in 2003. The property
and equipment acquired included computer equipment totaling $87,341 with the
balance of $460,016 incurred as exploration costs for our oil and gas interests
in India. The restricted cash of $206,796 represents term deposits we
made which are used as collateral for two letters of credit given to the
Government of India ("GOI") as a minimum work commitment guarantee on the Cambay
Blocks.
Cash used
in financing activities was $786,450 for the year ended December 31, 2004 versus
$4,589,687 provided by financing activities during the year ended December 31,
2003. As partial consideration for the purchase of GeoGlobal India,
we incurred indebtedness of $2,000,000 to Mr. Roy 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 was paid on June 30, 2004. During the year ended
December 31, 2004, proceeds from the issuance of common shares was $213,550
resulting from options exercised to purchase an aggregate of 115,000 common
shares at various prices between $1.18 and $1.50 for gross proceeds of $154,000
and broker warrants exercised at $1.50 for gross proceeds of
$58,650. This compared to the prior year when $5,800,000 was provided
from the issuance of our securities in a brokered private placement together
with a concurrent private placement for an additional $200,000 both of which
were completed on December 23, 2003. The balance of gross
proceeds of $101,650 was provided from the exercise of options to acquire
396,668 shares at various prices between $0.17 and $0.50. Share
issuance costs of $550,175 were expended in issuing the above securities in the
brokered private placement and in the acquisition of GeoGlobal
India.
At
December 31, 2004, our cash and cash equivalents were $4,419,598 (December 31,
2003 - $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.
The
KG Block and Our Carried Interest Agreement
At
December 31, 2005, GSPC, the Operator of the KG Block, has expended on
exploration activities approximately $14.1 million attributable to us under the
CIA as compared to $5.0 million at December 31, 2004. Of this amount,
50% is for the account of RGM. Under the terms of the CIA, GeoGlobal
and RGM are carried by GSPC for 100% of all our share of any costs during the
exploration phase on the KG Block prior to the start date of initial commercial
production.
Under the
terms of the PSC, GSPC is committed to expend further funds for the exploration
of and drilling on the KG Block. Preliminary estimate are that these
expenditures attributable to us will total approximately $22.0 million over the
6.5 year term of the PSC, including the $14.1 million attributable to us through
December 31, 2005. Additional drilling costs incurred in drilling to
depths in excess of 5,000 meters versus shallower depths as originally
anticipated, as well as the testing and completion costs of these wells, has
resulted in our actual costs exceeding our original budgeted
expenditures. As of April 11, 2006, the annual budget for the period
April 1, 2006 to March 31, 2007 has not yet been approved. We are
unable to estimate the amount of additional expenditures GSPC will make
attributable to us prior to the start date of initial commercial production
under the CIA or when, if ever, any commercial production will
commence. As provided in the CIA, we will be required to bear the
expenditures attributable to us after the start date of initial commercial
production on the KG Block.
We will
not realize cash flow from the KG venture until such time as the expenditures
attributed to us, including those expenditures made for the account of RGM under
the CIA have been recovered by GSPC from future production
revenue. Under the terms of the CIA, all of our proportionate share
of capital costs for exploration and development activities must be repaid to
GSPC without interest over the projected production life or ten years, whichever
is less.
The NELP IV Cambay Block
Agreements
We have
committed to expend a minimum aggregate of approximately $2.5 million for
exploration activities under the terms of the PSC's on the Mehsana and
Sanand/Miroli Cambay Blocks over a period of 6 years. At December 31,
2005, we have incurred costs of approximately $500,000 with respect to these two
contracts. We estimate that our expenditures for exploration
activities during the 2006 fiscal year will be approximately $2.3 million based
upon our 10% PI in these PSC's.
At December 31, 2005, we have provided
to the GOI two irrevocable letters of credit totaling $392,485 (Mehsana $195,055
and Sanand/Miroli $197,430) (December 31, 2004 – $206,796) secured by term
deposits of the Company in the same amount. These letters of credit
serve as guarantees for the performance of the minimum work commitments for the
budget period ending March 31, 2006 of Phase I of both of these Cambay
Blocks.
Tarapur Block
Agreement
As the
holder of a participating interest in the Tarapur Block, we are required to fund
a 20% share of all exploration and development costs incurred on the exploration
block. To December 31, 2005, $579,572 has been paid to GSPC under the
terms of our agreement with GSPC. Subsequent to the year end through
April 11, 2006, a further $397,000 has been paid to GSPC. We
originally committed to expend an aggregate of approximately $1.2 million for
exploration activities under the terms of the agreement entered into covering
the Tarapur block over the period ending November 22, 2007. It is
expected however, that GSPC will increase its current drilling activities and we
have increased our estimated expenditures to $2.5 million over the period ending
November 22, 2007. Under the terms of the agreement, the Company will
be required to keep in force a Financial and Performance Guarantee in an amount
sufficient to secure its performance under the Tarapur PSC.
The NELP V Block
Agreements
On
September 28, 2005, we entered into two PSC’s with the GOI covering two new
onshore exploration blocks in India. The first block is the DS Block
(DS-ONN-2003/1), which covers an area of approximately 3,155 sq. kms. onshore in
the Deccan Syneclise Basin located in the northern portion of the State of
Maharashtra in west-central India and in which we will hold a 100% participating
interest ("PI") and be the operator. The second block is the
Ankleshwar Block (CB-ONN-2003/2), which covers an area of approximately 448 sq.
km onshore in the State of Gujarat south-east of our three existing Cambay
blocks. We are part of a consortium and holds a 10% PI in the
Ankleshwar Block. GSPC is the operator of the Ankleshwar Block and
holds a 50% PI, with the remainder held by GAIL (India) Ltd. as to a 20% PI and
Jubilant as to a 20% PI.
Under the
terms of the new PSC’s for these exploration blocks, we have committed to expend
funds on the exploration and drilling of these new exploration
blocks. No budgets have yet been approved by the Management
Committees on these new exploration blocks, however preliminary estimates of our
expenditures are approximately $1.7 million on the Ankleshwar Block and $9.6
million on the DS Block for exploration activities over a period of seven
years. As at December 31, 2005, we have incurred costs of
approximately $20,000 with respect to these agreements. We estimate
our expenditures for exploration activities during the 2006 fiscal year will be
approximately $700,000 based upon our PI in these PSC’s.
Plan of Operations in
2006
We expect
our exploration and development activities pursuant to the PSC's we are parties
to will continue throughout 2006 in accordance with the terms of those
agreements.
In
addition, we may seek to participate in joint ventures bidding for the award of
further PSC's for exploration blocks expected to be awarded by the GOI in the
future. As of April 11, 2006, we have no specific plans to join with others in
bidding for any specific PSC's in India. We expect that our interest
in any such ventures would involve a minority PI in the venture. In
addition, as opportunities arise, we may seek to acquire minority PI's in
exploration blocks where PSC's have been heretofore awarded by the
GOI. The acquisition of any such interests would be subject to the
execution of a definitive agreement and obtaining the requisite government
consents and other approvals. Depending upon the scope of our activities during
the year 2006, we may require additional capital for the possible acquisition of
further
minority
PI's in PSC's in drilling blocks heretofore awarded by the GOI. We
may also require additional capital in order to participate in ventures bidding
for the grant of PSC's for future exploration blocks to be awarded by the
GOI. We believe it can be expected that our interest in such ventures
would be a PI. As of April 11, 2006, the scope of any possible such
activities has not been definitively established and, accordingly, we are unable
to disclose the amount of any funds that may be required for these
purposes. As the holder of a PI in any such possible activities, it
can be expected that we will be required to contribute capital to any such
ventures.
We may
during the year 2006 seek to participate in joint venture bidding for the
acquisition of oil and gas interests in other international
countries. As of April 11, 2006, we have not been awarded any such
interests.
We may
during the year 2006 also seek to raise additional capital to support an
expanded level of activities as well as our ongoing operations. No
specific plans or arrangements have been made to raise additional capital and we
have not entered into any agreements in that regard. We expect that
if we seek to raise additional capital it will be through the sale of equity
securities. As of April 11, 2006, we are unable to estimate the terms
on which any such capital may be raised, the price per share or possible number
of shares involved.
We
believe that our available cash resources will be sufficient to meet all our
expenses and cash requirements during the year ended December 31, 2006 for our
present level of operations. We do not expect to have any
significant change in 2006 in our number of employees.
Critical
Accounting Policies and Estimates
The
Company’s Significant Accounting Policies are outlined in Note 2 to our
Consolidated Financial Statements in Item 7 of this Annual Report. In
the ordinary course of business, we have made a number of estimates and
assumptions relating to the reporting of our consolidated financial position and
the consolidated results of our operations and our cash flows in conformity with
U.S. generally accepted accounting principles. Actual results could
differ significantly from those estimates under different assumptions and
conditions. We believe that the following discussion addresses our
most critical accounting policies.
Property and
equipment
The
Company follows the full cost method of accounting for its petroleum and natural
gas operations. Upon the commencement of economic production
quantities of petroleum and natural gas, depletion of our exploration costs in
India included in Property and 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 our unproven properties in India will not be depleted
until it is determined whether or not proven reserves are attributable to the
properties, the major development projects are completed, or impairment
occurs. To date we are currently in the development stage and have
not yet found any commercial reserves in India. We are continuing
with our exploratory drilling programs in India and have no basis for impairment
of the costs incurred to date.
Recent
Accounting Standards
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a)
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On
December 16, 2004, the Financial Accounting Standards Board (FASB) issued
FASB Statement No. 123 (revised 2004), Share-Based Payment, which is a
revision of FASB Statement No. 123, Accounting for Stock-Based
Compensation. Statement 123(R) supersedes APB Opinion No. 25, Accounting
for Stock Issued to Employees, and amends FASB Statement No. 95, Statement
of Cash Flows. Generally, the approach in Statement 123(R) is similar to
the approach described in Statement 123. However, Statement
123(R) requires all share-based payments to employees, including grants of
employee stock options, to be recognized in the statement of operations
based on their fair values. Pro forma disclosure is no longer an
alternative. Statement 123(R) must be adopted no later than
January 1, 2006. Early adoption will be permitted in periods in
which financial statements have not yet been issued. The
Company was planning to adopt Statement 123(R) on January 1, 2005,
however, on April 14, 2005, the Securities Exchange Commission provided
for a phased-in implementation process for Statement 123(R). As such, the
Company delayed the implementation until January 1,
2006.
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|
The
Company adopted Statement 123(R) using the modified prospective method on
January 1, 2006 which will require the Company to recognize in the income
statement a charge of $593,023 over the next 4
years.
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b)
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In
May 2005, the FASB issued FASB Statement No. 154, Accounting Changes and
Error Corrections (FAS 154), a replacement of APB Opinion No. 20,
Accounting Changes, and FASB Statement No. 3, Reporting Accounting Changes
in Interim Financial Statements (FAS 3). FAS 154 replaces the
provisions of FAS 3 with respect to reporting accounting changes in
interim financial statements. FAS 154 is effective for
accounting changes and corrections of errors made in fiscal years
beginning after December 15, 2005. Early adoption is permitted
for accounting changes and corrections of errors made in fiscal years
beginning after June 1, 2005.
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|
The
Company adopted FAS 154 on January 1, 2006, and there is no current
impact.
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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 in which we have interests, 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 or acquire
interests in additional Production Sharing Contracts with the
GOI. Our assumptions, plans and expectations regarding our future
capital requirements, our plans and intentions regarding our plans to raise
additional capital, the costs and expenses to be incurred in conducting any
exploration, well drilling, development and production activities and the
adequacy of our capital to meet our requirements for our present and anticipated
levels of 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 in 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. Our ability to successfully drill, test and complete
producing wells 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. We cannot assure you that we
will be successful in joining any further ventures seeking to be granted
Production Sharing Contracts by the GOI or that we will be successful in
acquiring interests in existing ventures. We cannot assure you that
the GOI will consent to the assignment by GSPC of the 20% participating interest
in the Tarapur Block or that the Company will be successful in entering into
alternative acceptable arrangements on commercially favorable terms with GSPC
should that consent not be forthcoming. If our plans fail to
materialize, your investment will be in jeopardy. We cannot assure
you that the outcome of testing of one or more wells on the KG Block will be
satisfactory and result in a commercially-productive well or that any further
wells drilled on the KG Block will have commercially-successful
results. Our inability to meet our goals and objectives or the
consequences to us from adverse developments in general economic or capital
market conditions, events having international consequences, or military
activities could have a material adverse effect on us. We caution you
that various risk factors accompany those forward-looking statements and are
described, among other places, under the caption "Risk Factors"
herein. They are also described in our 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.
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 reserves of
hydrocarbons or that any hydrocarbons that are discovered will be in
commercially recoverable quantities. In addition, the realization of
any revenues from commercially recoverable hydrocarbons is dependent upon the
ability to deliver, store and market any hydrocarbons that are
discovered. The presence of hydrocarbon reserves on contiguous
properties is no assurance or necessary indication that hydrocarbons will be
found in commercially marketable quantities on the exploration blocks in which
we hold an interest.
Risks
Relating to Our Oil and Gas Activities
Because We Are In the Early
Stage Of Developing Our Activities, There Are Considerable Risks That 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 primarily involved entering
into five Production Sharing Contracts with the GOI. In addition, we
have entered into an agreement to acquire a participating interest in a sixth
PSC, subject to GOI consent. We have realized no revenues from our
oil and natural gas exploration and development activities and do not claim any
proved reserves of oil or natural gas. As of April 11, 2006 a venture
in which we have a net 5% interest, has drilled and abandoned two wells, has
drilled and tested a third well and has drilled a fourth well which is currently
being tested.
As of
April 11, 2006, we do not claim any proved reserves of hydrocarbons as a result
of those drilling, testing and evaluation activities. 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 PSC's we are a
party to. There can be no assurance that the exploratory drilling to
be conducted on the exploration blocks in which we hold or have agreed to
acquire 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
Interest In The Production Sharing Contracts Involve Highly Speculative
Exploration Opportunities That Involve Material Risks That We Will Be
Unsuccessful
Our
interests in the exploration blocks should be considered to be highly
speculative exploration opportunities that will involve material
risks. None of the exploration blocks in which we have an interest
have any proven reserves and are 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.
Possible Inability of
Contracting Parties to Fulfill Phase One of the Minimum Work Program for the KG
Block
Under the
terms of our PSC relating to the KG Block, the first phase of the exploration
period expired on September 11, 2005. On August 5, 2005, a written notice
requesting the six month extension was submitted and on August 29, 2005, the
management committee consented to the extension of six months to March 11, 2006
and deducted the six month extension from the Phase II exploration
period. On February 24, 2006, the management committee for the KG
Block recommended a further extension of twelve months to March 11, 2007 which
will also be deducted from the second phase of the exploration
program. As at April 11, 2006, approval of this extension from the
GOI is still outstanding. The PSC provides that by the end of the
first phase of the exploration period the contracting parties shall have drilled
at least fourteen wells. Through April 11, 2006, four wells have been
drilled on the exploration block, leaving ten wells to be
drilled. The PSC provides that, if at the end of an exploration phase
a work program for that phase is not completed, the time for completion of the
exploration program for that phase is to be extended for a period necessary to
enable completion but not exceeding six months, provided the parties (i) submit
a request by written notice to the GOI at least thirty days prior to the
expiration of the relevant phase, (ii) can show technical or other good reasons
for the non-completion of the work program, and (iii) the management committee
gives its consent to the extension. Any such extension that is
granted is to be deducted from the next succeeding exploration
phase.
In the
event the twelve month extension is granted and the ten additional wells are not
drilled by March 11, 2007, the GOI would have the right to assert that the
contracting parties have failed to comply with or have contravened a material
provision of the PSC. Under such circumstances, the PSC will be
subject to termination by the GOI on ninety days written notice, unless such
failure of compliance or contravention is remedied within the ninety-day period
or such extended period as may be granted by the GOI. In the event
the PSC is terminated by the GOI, or in the event the work program is not
fulfilled by the end of the relevant exploration phase, each party to the PSC is
to pay to the GOI its participating interest share of an amount which is equal
to the amount that would be required to complete the minimum work program for
that phase. We are of the view that GSPC, under the terms of our
Carried Interest Agreement, would be liable for our participating interest share
of the amount required to complete the minimum work program for the
phase. However, termination of the PSC by the GOI would result in the
loss of our interest in the KG Block other than areas determined to encompass
commercial discoveries. No areas on the KG Block have been determined
to encompass commercial discoveries as of April 11, 2006.
Because Our Activities Have
Only Recently Commenced And We Have No Operating History And Reserves Of Oil And
Gas, We Anticipate Future Losses; There Is No Assurance Of Our
Profitability
Our oil
and natural gas operations have been only recently established and we have no
operating history, oil and gas reserves or assets upon which an evaluation of
our business, our current business plans and our prospects can be
based. Our prospects must be considered in light of the risks,
expenses and problems frequently encountered by all companies in their early
stages of development and, in particular, those engaged in exploratory oil and
gas activities. Such risks include, without limitation:
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We
will experience failures to discover oil and gas in commercial
quantities;
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There
are uncertainties as to the costs to be incurred in our exploratory
drilling activities, cost overruns are possible and we may encounter
mechanical difficulties and failures in completing
wells;
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There
are uncertain costs inherent in drilling into unknown formations, such as
over-pressured zones, high temperatures and tools lost in the hole;
and
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We
may make changes in our drilling plans and locations as a result of prior
exploratory drilling.
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During
the exploration phase prior to the start date of initial commercial production,
we have a carried interest in the exploration activities on the KG
Block. Our interests in our other five exploration blocks are
participating interests which require us to pay our proportionate share of
exploration, drilling and development expenses on these blocks substantially as
those expenses are incurred. 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 the KG Block are to be repaid in full to the operator, GSPC, before
we are entitled to any share of production, additional exploration and
development expenses will reduce and delay any share of production and revenues
we will receive.
There can
be no assurance that the ventures in which we are a participant will be
successful in addressing these risks, and any failure to do so could have a
material adverse effect on our prospects for the future. Our
operations were recently established, and as such, we have no substantial
operating history to serve as the basis to predict our ability to further the
development of our business plan. Likewise, the outcome of our
exploratory drilling activities, as well as our quarterly and annual operating
results cannot be predicted. 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. Through December 31,
2005, we abandoned two wells drilled on the KG Block and it is likely that in
some future quarter our stage of development or operating or drilling results
may fall below our expectations or the expectations of securities analysts and
investors and that some of our drilling results will be unsuccessful and the
wells abandoned. In such event, the trading price of our common stock
may be materially and adversely affected.
We Expect to Have
Substantial Requirements For Additional Capital That May Be Unavailable To Us
Which Could Limit Our Ability To Participate In Our Existing and Additional
Ventures Or Pursue Other Opportunities. Our Available Capital is
Limited
In order
to participate under the terms of our Production Sharing Contracts as well as in
further joint venture arrangements leading to the possible grant of exploratory
drilling opportunities, we will be required to contribute or have available to
us material amounts of capital. Under the terms of our carried
interest agreement relating to the KG Block, after the start date of initial
commercial production on the KG Block, and under the terms of the five
additional Production Sharing Contracts we are parties to, as well as the
agreement relating to the acquisition of the 20% participating interest in the
Tarapur Block, we are required to bear our proportionate share of costs during
the exploration phases of those agreements. There can be no assurance
that our currently available capital will be sufficient for these purposes or
that any additional capital that is required will be available to us in the
amounts and at the times required. Such capital also 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 intend 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 and could also
result in our breach of the terms of a Production Sharing Contracts which could
result in the loss of our rights under the contract.
As of
December 31, 2005, we had cash and cash equivalents of approximately $36.0
million. We currently expect that our available cash will be
sufficient to fund through December 2006 at the present level of operations our
required capital expenditures on the five exploration blocks in which we are
currently a participant and our participation in the Tarapur Block in which we
agreed to acquire a 20% participating interest. Although exploration
activity budgets are subject to ongoing review and revision, our present
estimate of our commitments of capital pursuant to the terms of our PSC’s
relating to these exploration blocks, including the agreements signed on
September 23, 2005, totals approximately $4.0 million during 2006 fiscal
year. Any further PSC's we may seek to enter into or any expanded
scope of our operations or other transactions that we may enter into may require
us to fund our participation or capital expenditures 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.
Pursuant
to our agreement executed on April 7, 2005 to acquire a 20% participating
interest from GSPC in the Tarapur Block, we paid to GSPC the sum of
$976,572. In addition, it is expected that under the terms of our
agreement with GSPC the total capital we will be required to contribute to
exploration activities on Tarapur during the period ending November 22, 2007,
based on our 20% participating interest, will be approximately $1.5
million.
Our
agreement with GSPC is subject to obtaining the GOI consent. In the
event such consent is not obtained, the assignment would be
terminated. Under such circumstances, we intend to seek to negotiate
an alternative acceptable arrangement with GSPC. In the event the GOI
does not reject in writing the application for consent to the assignment within
180 days, it is deemed approved. We intend that such an alternative
acceptable arrangement would include provisions that would place us in an
economic position substantially equivalent to the position we would have held if
the consent of the GOI had been obtained and the assignment of the interest
effected. We do not have an alternative agreement or understanding
with GSPC in effect, and we cannot make any assurance that such an alternative
arrangement can be entered into with GSPC. In the event such an
arrangement is not entered into we would seek to have the moneys advanced by us
to GSPC returned to us. There can be no assurance that the GOI
consent will be obtained or that we will be successful in having the moneys
advanced to GSPC returned to us if an acceptable alternative arrangement is not
available to us.
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. In addition, the award of a PSC is subject to GOI consent and
matters relating to the implementation and conduct of operations under the PSC
is subject, under certain circumstances, to GOI consent. As a consequence, all
future drilling and production programs and operations we undertake or are
undertaken by the ventures in which we participate in India must be approved by
the Indian government. Shifts in political conditions in India could
adversely affect our business in India and the ability to obtain requisite
government approvals in a timely fashion or at all. We, and our joint
venture participants, must maintain satisfactory working relationships with the
Indian government. This regulatory environment may increase the risks
associated with our intended exploration and productivity activities and
increase our costs of doing business.
Our Control By Directors And
Executive Officers May Result In Those Persons Having Interests Divergent From
Our Other Stockholders
As of
April 11, 2006, our Directors and executive officers and their respective
affiliates, in the aggregate, beneficially hold 32,216,167 shares or
approximately 50.4% 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 the future
activities and transactions in which we engage which may 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.
Our
Reliance On A Limited Number Of Key Management Personnel Imposes Risks On Us
That We Will Have Insufficient Management Personnel Available If The Services Of
Any Of Them Are Unavailable
We are
dependent upon the services of our President and Chief Executive Officer, Jean
Paul Roy, and Executive Vice President and Chief Financial Officer, Allan J.
Kent. The loss of either of their services could have a material
adverse effect upon us. We currently do not have employment
agreements with either of such persons or key man life insurance. The
services of both Mr. Roy and Mr. Kent are provided pursuant to the terms of
agreements with corporations 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 contractual obligations to us to
provide services or refrain from other activities.
At
present, our future is substantially dependent upon the geological and
geophysical capabilities of Mr. Roy to locate oil and gas exploration
opportunities for us and the ventures in which we are a
participant. His inability to do the foregoing could materially
adversely affect our future activities. We entered into a three-year
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. The expiration term of this contract has subsequently
been extended to December 31, 2007. We have no agreement directly
with Mr. Roy regarding his services to us.
Our
Success Is Largely Dependent On The Success Of The Operators Of The Ventures In
Which We Participate And Their Failure Or Inability To Properly Or Successfully
Operate The Oil And Gas Exploration, Development And Production Activities On An
Exploration Block, Could Materially Adversely Affect Us
At
present, our only oil and gas interests are our rights under the terms of the
five PSC's with the GOI that we have entered into and the Deed of Assignment and
Assumption agreement with GSPC, effective only upon obtaining GOI consent,
relating to an interest in the Tarapur Block. We are not and will not
be the operator of any of the exploration, drilling and production activities
conducted on our exploration blocks, with the exception of the DS block in which
we are the operator. 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 KG Block
prior to the start date of initial commercial production. However,
under the terms of that agreement, all of our proportionate share of capital
costs for exploration and development activities must be repaid without interest
over the projected production life or ten years, whichever is
less. Our proportionate share of these costs and expenses expected to
be incurred over the 6.5 year term of the PSC for which our interest is carried
is estimated to be approximately $22.0 million, including the $14.1 million
attributable to us as of December 31, 2005
($5.0
million attributable to us as of December 31, 2004), of which 50% is for the
account of Roy Group (Mauritius) Inc. Additional expenditures may be
required for cost overruns and completions of commercially successful
wells. We are unable to estimate the amount of additional
expenditures GSPC will make as operator attributable to us prior to the start
date of initial commercial production under the carried interest agreement or
when, if ever, any commercial production will commence. Of these
expenditures, 50% are for the account of Roy Group (Mauritius) Inc. under the
terms of the Participating Interest Agreement between us and Roy Group
(Mauritius) Inc. We are not entitled to any share of production from
the KG Block until such time as the expenditures attributed to us, including
those expenditures made for the account of Roy Group (Mauritius) Inc., under the
carried interest agreement, have been recovered by GSPC from future production
revenue. Therefore, we are unable to estimate when we may commence to
receive distributions from any production of hydrocarbon reserves found on the
KG Block. As provided in the carried interest agreement, in addition
to repaying our proportionate share of capital costs incurred for which we were
carried, we will be required to bear our proportionate share of the expenditures
attributable to us after the start date of initial commercial production 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 PSC's
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:
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The
venture participants are required to complete certain minimum work
programs during the three phases of the terms of the PSC's. In
the event the venture participants fail to fulfill any of these minimum
work programs, the parties to the venture must pay to the GOI 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;
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Until
such time as the GOI 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 PSC's 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;
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The
parties to each agreement that are not Indian companies, which includes
us, are required to negotiate technical assistance agreements with the GOI
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 each
venture’s and our cost of operations;
and
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The
parties to each 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.
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These
provisions of the PSC's, 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:
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political
conditions in oil producing regions, including the Middle East and
elsewhere;
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the
domestic and foreign supply of oil and
gas;
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quotas
imposed by the Organization of Petroleum Exporting Countries upon its
members;
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the
level of consumer demand;
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domestic
and foreign government regulations;
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the
price and availability of alternative
fuels;
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overall
economic conditions; and
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international
political conditions.
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In
addition, various factors may adversely affect the ability to market oil and gas
production from the exploration block, including:
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the
capacity and availability of oil and gas gathering systems and
pipelines;
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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;
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the
proximity of future hydrocarbon discoveries to oil and gas transmission
facilities and processing equipment (as well as the capacity of such
facilities);
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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);
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the
imposition of trade sanctions or embargoes by other
countries;
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the
availability and frequency of delivery
vessels;
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changes
in supply due to drilling by
others;
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the
availability of drilling rigs; and
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Our
Ability To Locate And Participate In Additional Exploration Opportunities And To
Manage Growth May Be Limited By Reason Of Our Limited History Of Operations And
The Limited Size Of Our Staff
While our
President and Executive Vice President have had extensive experience in the oil
and gas exploration business, we have been engaged in limited activities in the
oil and gas business over approximately the past three years and have a limited
history of activities upon which you may base your evaluation of our
performance. As a result of our brief operating history and limited
activities in oil and gas exploration activities, our success to date in
entering into ventures to acquire interests in exploration blocks may not be
indicative that we will be successful in entering into any further
ventures. There can be no assurance that we will be successful in
growing our oil and gas exploration and development activities.
Any
future significant growth in our oil and gas exploration and development
activities will place demands on our executive officers, and any increased scope
of our operations will present challenges to us due to our current limited
management resources. Our future performance will depend upon our
management and their ability to locate and negotiate opportunities to
participate in joint venture and other arrangements whereby we can participate
in exploration opportunities. There can be no assurance that we will
be successful in these efforts. Our inability to locate additional
opportunities, to hire additional management and other personnel or to enhance
our management systems could have a material adverse effect on our results of
operations.
Our Future Performance
Depends Upon Our Ability And The Ability Of The Ventures In Which We Participate
To Find Or Acquire Oil And Gas Reserves That Are Economically
Recoverable
Our
success in developing our oil and gas exploration and development activities
will be dependent upon establishing, through our participation with others in
joint ventures and other similar activities, reserves of oil and gas and
maintaining and possibly expanding the levels of those reserves. We
and the joint ventures in which we may participate may not be able to locate and
thereafter replace reserves from exploration and development activities at
acceptable costs. Lower prices of oil and gas may further limit the kinds of
reserves that can be developed at an acceptable cost. The business of
exploring for, developing or acquiring reserves is capital intensive. We may not
be able to make the necessary capital investment to enter into joint ventures or
similar arrangements to maintain or expand our oil and gas reserves if capital
is unavailable to us and the ventures in which we participate. In
addition, exploration and development activities involve numerous risks that may
result in dry holes, the failure to produce oil and gas in commercial
quantities, the inability to fully produce discovered reserves and the inability
to enhance production from existing wells.
We expect
that we will continually seek to identify and evaluate joint venture and other
exploration opportunities for our participation as a joint venture participant
or through some other arrangement. Our ability to enter into
additional exploration activities will be dependent to 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 do not claim any proved reserves of oil or natural gas . Any
reserve information that we may provide in the future will represent estimates
based on reports prepared by independent petroleum engineers, as well as
internally generated reports. Petroleum engineering is not an exact
science. Information relating to proved oil and gas reserves is based
upon engineering estimates derived after analysis of information we furnish or
furnished by the operator of the property. Estimates of economically
recoverable oil and gas reserves and of future net cash flows necessarily depend
upon a number of variable factors and assumptions, such as historical production
from the area compared with production from other producing areas, the assumed
effects of regulations by governmental agencies and assumptions concerning
future oil and gas prices, future operating costs, severance and excise taxes,
capital expenditures and workover and remedial costs, all of which may in fact
vary considerably from actual results. Oil and gas prices, which
fluctuate over time, may also affect proved reserve estimates. For
these reasons, estimates of the economically recoverable quantities of oil and
gas attributable to any particular group of properties, classifications of such
reserves based on risk of recovery and estimates of the future net cash flows
expected therefrom prepared by different engineers or by the same engineers at
different times may vary substantially. Actual production, revenues
and expenditures with respect to reserves we may claim will likely vary from
estimates, and such variances may be material. Either
inaccuracies
in estimates of proved undeveloped reserves or the inability to fund development
could result in substantially reduced reserves. In addition, the
timing of receipt of estimated future net revenues from proved undeveloped
reserves will be dependent upon the timing and implementation of drilling and
development activities estimated by us for purposes of the reserve
report.
Quantities
of proved reserves are estimated based on economic conditions in existence in
the period of assessment. Lower oil and gas prices may have the impact of
shortening the economic lives on certain fields because it becomes uneconomic to
produce all recoverable reserves on such fields, thus reducing proved property
reserve estimates. If such revisions in the estimated quantities of proved
reserves occur, it will have the effect of increasing the rates of depreciation,
depletion and amortization on the affected properties, which would decrease
earnings or result in losses through higher depreciation, depletion and
amortization expense. The revisions may also be sufficient to trigger impairment
losses on certain properties that would result in a further non-cash charge to
earnings.
Risks
Relating To The Market For Our Common Stock
Volatility Of Our Stock
Price
The
public market for our common stock has been characterized by significant price
and volume fluctuations. There can be no assurance that the market
price of our common stock will not decline below its current or historic price
ranges. The market price may bear no relationship to the prospects, stage of
development, existence of oil and gas reserves, revenues, earnings, assets or
potential of our Company and may not be indicative of our future business
performance. The trading price of our common stock could be subject to wide
fluctuations. Fluctuations in the price of oil and gas and related
international political events can be expected to affect the price of our common
stock. In addition, the stock market in general has experienced
extreme price and volume fluctuations that have affected the market price for
many companies which fluctuations have been unrelated to the operating
performance of these companies. These market fluctuations, 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 8A. Controls
and Procedures
Under the
supervision and with the participation of our management, including Jean Paul
Roy, our President and Chief Executive Officer, and Allan J. Kent, our Executive
Vice President and Chief Financial Officer, we have evaluated the effectiveness
of the design and operation of our disclosure controls and procedures within 90
days of the filing date of this annual report, and, based on their evaluation,
Mr. Roy and Mr. Kent have concluded that these controls and procedures are
effective. There were no significant changes in our internal controls or in
other factors that could significantly affect these controls subsequent to the
date of their evaluation.
Disclosure
controls and procedures are our controls and other procedures that are designed
to ensure that information required to be disclosed by us in the reports that we
file or submit under the Exchange Act are recorded, processed, summarized and
reported, within the time periods specified in the Securities and Exchange
Commission's rules and forms. Disclosure controls and procedures
include, without limitation, controls and procedures designed to ensure that
information required to be disclosed by us in the reports that we file or submit
under the Exchange Act is accumulated and communicated to our management,
including Mr. Roy and Mr. Kent, as appropriate to allow timely decisions
regarding required disclosure.
Based on
the restatement of the financial statements for the year ended December 31, 2005
due to an error in the classification and calculation for stock-based
compensation for non-employee consultants, the Chief Executive Officer and the
Chief Financial Officer have concluded that the Company's disclosure controls
and procedures were not effective as of December 31, 2005.
Item
13. Exhibits
Exhibit
|
Description
|
3.1
|
Certificate
of Incorporation of the Registrant, as amended.
(1)
|
3.2
|
Bylaws
of the Registrant, as amended. (4)
|
3.3
|
Certificate
of Amendment filed with the State of Delaware on November 25, 1998. (2)
|
3.4
|
Certificate
of Amendment filed with the State of Delaware on December 4, 1998. (2)
|
3.5
|
Certificate
of Amendment filed with the State of Delaware on March 18, 2003. (5)
|
3.6
|
Certificate
of Amendment filed with the State of Delaware on January 8, 2004. (5)
|
4.1
|
Specimen
stock certificate of the Registrant. (5)
|
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
|
1998
Stock Incentive Plan. (2)
|
10.6
|
Stock
Purchase Agreement dated April 4, 2003 by and among Suite101.com, Inc.,
Jean Paul Roy and GeoGlobal Resources (India) Inc. (3)
|
10.7
|
Amendment
dated August 29, 2003 to Stock Purchase Agreement dated April 4, 2003.
(4)
|
10.8
|
Technical
Services Agreement dated August 29, 2003 between Suite101.com, Inc. and
Roy Group (Barbados) Inc. (4)
|
10.8.1
|
Amendment
to Technical Services Agreement dated January 31, 2006 between GeoGlobal
Resources Inc. and Roy Group (Barbados) Inc. (8)
|
10.9
|
Participating
Interest Agreement dated March 27, 2003 between GeoGlobal Resources
(India) Inc. and Roy Group (Mauritius) Inc. (4)
|
10.10
|
Escrow
Agreement dated August 29, 2003 among Registrant, Jean Paul Roy and
Computershare Trust Company of Canada. (4)
|
10.11
|
Promissory
Note dated August 29, 2003 payable to Jean Paul Roy. (4)
|
10.12
|
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. (6)
|
10.13
|
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. (6)
|
10.14
|
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. (6)
|
10.15
|
Carried
Interest Agreement dated August 27, 2002 between Gujarat State Petroleum
Corporation Limited and GeoGlobal Resources (India) Inc. (5)
|
10.16
|
Agency
Agreement dated September 9, 2005 between the Company and Jones, Gable
& Company Limited.
(7)
|
10.17
|
Form
of Subscription Agreement entered into by subscribers relating to offers
and sales of Units by Jones, Gable & Company Limited.
(7)
|
|
Form
of Subscription Agreement with respect to sales of an aggregate of
1,000,000 of the Units.
(7)
|
10.18
|
Registration
Rights Agreement dated September 9, 2005 between the Company and
Jones, Gable & Company Limited.
(7)
|
10.19
|
Production
Sharing Contract dated September 23, 2005, between the Government of
India and the Company.
(7)
|
10.20
|
Production
Sharing Contract dated September 23, 2005, between the Government of
India, Gujarat State Petroleum Corporation Limited, GAIL (India) Ltd.,
Jubilant Capital Pvt. Ltd. and the Company.
(7)
|
14
|
Code
of Ethics. (5)
|
|
|
|
|
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 an Exhibit to our Current Report on Form 8-K dated December 10,
1998.
|
(3)
|
Filed
as exhibit 10.1 to our Quarterly Report on Form 10-QSB for the quarter
ended March 31, 2003.
|
(4)
|
Filed
as an exhibit to our Current Report on Form 8-K for August 29,
2003.
|
(5)
|
Filed
as an Exhibit to our Form 10-KSB dated April 1,
2004.
|
(6)
|
Filed
as an Exhibit to our Form 10-KSB/A dated April 28,
2004.
|
(7)
|
Filed
as an Exhibit to our Quarterly Report on Form 10-QSB for the quarter ended
September 30, 2005.
|
(8)
|
Filed
as an Exhibit to our Current Report on Form 8-K dated January 31,
2006.
|
GEOGLOBAL
RESOURCES INC.
(a
development stage enterprise)
CONSOLIDATED
FINANCIAL STATEMENTS
DECEMBER
31, 2005 AND DECEMBER 31, 2004
(in
United States dollars)
GeoGlobal
Resources Inc.
(a
development stage enterprise)
Index
to Consolidated Financial Statements
December
31, 2005 and December 31, 2004
Report of Independent Registered
Public Accounting Firm F-3
Financial
Statements
Consolidated Balance
Sheets F-4
Consolidated Statements of
Operations F-5
Consolidated Statements of Changes in
Stockholders’ Equity F-6
Consolidated Statements of Cash
Flows F-7
Notes to the Consolidated Financial
Statements F-8 to F-32
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, as of December 31, 2005 and 2004
and the related consolidated statements of operations, stockholders' equity and
cash flows for the years ended December 31, 2005, 2004 and 2003, and for the
cumulative period from inception on August 21, 2002 to December 31, 2005. These
financial statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. We were not engaged to perform an
audit of the Company's internal control over financial reporting. An audit
includes consideration of internal control over financial reporting as a basis
for designing audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the
Company's internal control over financial reporting. Accordingly, we express no
such opinion. An audit also includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
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 GeoGlobal
Resources Inc. as at December 31, 2005 and 2004 and the consolidated results of
its operations and its cash flows for the years ended December 31, 2005, 2004,
and 2003, and for the cumulative period from inception on August 21, 2002 to
December 31, 2005 in conformity with United States generally accepted accounting
principles.
As
explained in note 5(c), the consolidated balance sheets as at December 31, 2005,
2004 and 2003 and the related consolidated statements of operations,
stockholders' equity and cash flows for the years ended December 31, 2005, 2004
and 2003, and for the cumulative period from inception on August 21, 2002 to
December 31, 2005 have been restated.
"Ernst & Young LLP"
(signed)
CALGARY,
ALBERTA CHARTERED
ACCOUNTANTS
April 11,
2006 except for Note 5(c),
which is
as of June 5, 2008
GEOGLOBAL
RESOURCES INC.
(a
development stage enterprise)
CONSOLIDATED
BALANCE SHEETS
|
|
December
31
|
|
2005
US
$
|
|
|
2004
US
$
|
|
|
|
Restated
note
5c
|
|
|
Restated
note
5c
|
|
Assets
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
Cash
and cash equivalents (note 2g)
|
|
|
36,037,388 |
|
|
|
4,419,598 |
|
Restricted
cash (note 10a)
|
|
|
392,485 |
|
|
|
206,796 |
|
|
|
|
36,429,873 |
|
|
|
4,626,394 |
|
Accounts
receivable and prepaids
|
|
|
144,753 |
|
|
|
181,237 |
|
Cash
call receivable
|
|
|
49,947 |
|
|
|
27,511 |
|
|
|
|
36,624,573 |
|
|
|
4,835,142 |
|
|
|
|
|
|
|
|
|
|
Property
and equipment (note 3)
|
|
|
|
|
|
|
|
|
Exploration
costs, not subject to depletion
|
|
|
3,957,723 |
|
|
|
707,023 |
|
Computer
and office equipment, net
|
|
|
89,826 |
|
|
|
143,053 |
|
|
|
|
4,047,549 |
|
|
|
850,076 |
|
|
|
|
|
|
|
|
|
|
|
|
|
40,672,122 |
|
|
|
5,685,218 |
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
Current
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
|
159,145 |
|
|
|
29,623 |
|
Accrued
liabilities
|
|
|
43,500 |
|
|
|
54,442 |
|
Due
to related companies (notes 7c, 7d and 7e)
|
|
|
244,452 |
|
|
|
19,624 |
|
|
|
|
447,097 |
|
|
|
103,689 |
|
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
|
|
|
|
|
|
|
|
|
62,954,255
common shares (December 31, 2004 – 55,207,455)
|
|
|
48,361 |
|
|
|
40,615 |
|
Additional
paid-in capital (note 4)
|
|
|
45,043,012 |
|
|
|
7,244,602 |
|
Deficit
accumulated during the development stage
|
|
|
(4,866,348 |
) |
|
|
(1,703,688 |
) |
|
|
|
40,225,025 |
|
|
|
5,581,529 |
|
|
|
|
|
|
|
|
|
|
|
|
|
40,672,122 |
|
|
|
5,685,218 |
|
See
Commitments, Contingencies and Guarantees (note 3e, 3f and
10)
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
Dec
31, 2005
US
$
|
|
|
Year
ended
Dec
31, 2004
US
$
|
|
|
Year
ended
Dec
31, 2003
US
$
|
|
|
Period
from
Inception,
Aug
21, 2002
to
Dec 31, 2005
US
$
|
|
|
|
Restated
note
5c
|
|
|
Restated
note
5c
|
|
|
Restated
note
5c
|
|
|
Restated
note
5c
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
(notes 7c, 7d and 7e)
|
|
|
|
|
|
|
|
|
|
|
|
|
General
and administrative
|
|
|
495,326 |
|
|
|
451,788 |
|
|
|
151,404 |
|
|
|
1,104,716 |
|
Consulting
fees
|
|
|
2,947,126 |
|
|
|
541,617 |
|
|
|
210,953 |
|
|
|
3,699,696 |
|
Professional
fees
|
|
|
201,298 |
|
|
|
161,381 |
|
|
|
131,819 |
|
|
|
501,415 |
|
Depreciation
|
|
|
49,531 |
|
|
|
61,308 |
|
|
|
50,450 |
|
|
|
161,987 |
|
|
|
|
3,693,281 |
|
|
|
1,216,094 |
|
|
|
544,626 |
|
|
|
5,467,814 |
|
Other
expenses (income)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consulting
fees recovered
|
|
|
(12,950 |
) |
|
|
(14,300 |
) |
|
|
(38,775 |
) |
|
|
(66,025 |
) |
Equipment
costs recovered
|
|
|
(12,950 |
) |
|
|
(2,200 |
) |
|
|
(4,245 |
) |
|
|
(19,395 |
) |
Gain
on sale of equipment
|
|
|
(42,228 |
) |
|
|
-- |
|
|
|
-- |
|
|
|
(42,228 |
) |
Foreign
exchange (gain) loss
|
|
|
(319 |
) |
|
|
3,495 |
|
|
|
18,634 |
|
|
|
21,810 |
|
Interest
(note 2g)
|
|
|
(462,174 |
) |
|
|
(31,591 |
) |
|
|
(1,863 |
) |
|
|
(495,628 |
) |
|
|
|
(530,621 |
) |
|
|
(44,596 |
) |
|
|
(26,249 |
) |
|
|
(601,466 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss and comprehensive loss for
the
period (note 8)
|
|
|
(3,162,660 |
) |
|
|
(1,171,498 |
) |
|
|
(518,377 |
) |
|
|
(4,866,348 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss per share
–
basic and diluted (note 4f)
|
|
|
(0.06 |
) |
|
|
(0.03 |
) |
|
|
(0.03 |
) |
|
|
|
|
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 year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
shares issued during the year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercise
of options
|
|
|
115 |
|
|
|
154,785 |
|
|
|
-- |
|
|
|
154,900 |
|
Exercise
of warrants
|
|
|
39 |
|
|
|
58,611 |
|
|
|
-- |
|
|
|
58,650 |
|
Stock
based compensation
|
|
|
-- |
|
|
|
350,255 |
|
|
|
-- |
|
|
|
350,255 |
|
Net
loss and comprehensive loss for the year
|
|
|
-- |
|
|
|
-- |
|
|
|
(1,171,498 |
) |
|
|
(1,171,498 |
) |
Balance
at December 31, 2004
|
|
|
40,615 |
|
|
|
7,244,602 |
|
|
|
(1,703,688 |
) |
|
|
5,581,529 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
shares issued during the year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options
exercised for cash (note 4e)
|
|
|
739 |
|
|
|
1,004,647 |
|
|
|
-- |
|
|
|
1,005,386 |
|
2003
Purchase warrants exercised for cash
(note
4d(i))
|
|
|
2,214 |
|
|
|
5,534,036 |
|
|
|
-- |
|
|
|
5,536,250 |
|
Broker
warrants exercised for cash
(note
4d(ii))
|
|
|
541 |
|
|
|
810,809 |
|
|
|
-- |
|
|
|
811,350 |
|
Private
placement financing (note 4b)
|
|
|
4,252 |
|
|
|
27,636,348 |
|
|
|
-- |
|
|
|
27,640,600 |
|
Share
issuance costs on private placement
(note
4b)
|
|
|
-- |
|
|
|
(1,541,686 |
) |
|
|
-- |
|
|
|
(1,541,686 |
) |
Stock
based compensation
|
|
|
-- |
|
|
|
4,354,256 |
|
|
|
-- |
|
|
|
4,354,256 |
|
Net
loss and comprehensive loss for the year
|
|
|
-- |
|
|
|
-- |
|
|
|
(3,162,660 |
) |
|
|
(3,162,660 |
) |
Balance
at December 31, 2005
|
|
|
48,361 |
|
|
|
45,043,012 |
|
|
|
(4,866,348 |
) |
|
|
40,225,025 |
|
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
Dec
31, 2005
US
$
|
|
|
Year
ended
Dec
31, 2004
US
$
|
|
|
Year
ended
Dec
31, 2003
US
$
|
|
|
Period
from
Inception,
Aug
21, 2002
to
Dec 31, 2005
US
$
|
|
|
|
Restated
note
5c
|
|
|
Restated
note
5c
|
|
|
Restated
note
5c
|
|
|
Restated
note
5c
|
|
Cash
flows provided by (used in) operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
|
(3,162,660 |
) |
|
|
(1,171,498 |
) |
|
|
(518,377 |
) |
|
|
(4,866,348 |
) |
Adjustments
to reconcile net loss to
net
cash used in operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
49,531 |
|
|
|
61,308 |
|
|
|
50,450 |
|
|
|
161,987 |
|
Stock-based
compensation
|
|
|
2,681,680 |
|
|
|
304,002 |
|
|
|
40,682 |
|
|
|
3,026,364 |
|
Gain
on sale of equipment
|
|
|
(42,228 |
) |
|
|
-- |
|
|
|
-- |
|
|
|
(42,228 |
) |
Changes
in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
receivable and prepaids
|
|
|
36,484 |
|
|
|
(99,750 |
) |
|
|
(6,487 |
) |
|
|
(69,753 |
) |
Accounts
payable
|
|
|
24,307 |
|
|
|
(147,060 |
) |
|
|
121,304 |
|
|
|
4,922 |
|
Accrued
liabilities
|
|
|
22,500 |
|
|
|
4,600 |
|
|
|
16,400 |
|
|
|
43,500 |
|
Due
to shareholder
|
|
|
-- |
|
|
|
-- |
|
|
|
(6,952 |
) |
|
|
-- |
|
Due
to related companies
|
|
|
224,828 |
|
|
|
(27,239 |
) |
|
|
5,107 |
|
|
|
202,696 |
|
|
|
|
(165,558 |
) |
|
|
(1,075,637 |
) |
|
|
(297,873 |
) |
|
|
(1,538,860 |
) |
Cash
flows provided by (used in) investing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property
and equipment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exploration
costs
|
|
|
(1,578,124 |
) |
|
|
(460,016 |
) |
|
|
(156,598 |
) |
|
|
(2,216,663 |
) |
Computer
and office equipment
|
|
|
(36,876 |
) |
|
|
(87,341 |
) |
|
|
(140,247 |
) |
|
|
(292,385 |
) |
Proceeds
on sale of equipment
|
|
|
82,800 |
|
|
|
|
|
|
|
|
|
|
|
82,800 |
|
Cash
acquired on acquisition (note 6)
|
|
|
-- |
|
|
|
-- |
|
|
|
3,034,666 |
|
|
|
3,034,666 |
|
Restricted
cash (note 10a)
|
|
|
(185,689 |
) |
|
|
(206,796 |
) |
|
|
-- |
|
|
|
(392,485 |
) |
Changes
in investing assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
call receivable
|
|
|
(22,436 |
) |
|
|
(27,511 |
) |
|
|
-- |
|
|
|
(49,947 |
) |
Accounts
payable
|
|
|
94,415 |
|
|
|
-- |
|
|
|
-- |
|
|
|
94,415 |
|
Accrued
liabilities
|
|
|
(33,442 |
) |
|
|
33,442 |
|
|
|
-- |
|
|
|
-- |
|
|
|
|
(1,679,352 |
) |
|
|
(748,222 |
) |
|
|
2,737,821 |
|
|
|
260,401 |
|
Cash
flows provided by (used in) financing activities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds
from issuance of common shares
|
|
|
34,993,586 |
|
|
|
213,550 |
|
|
|
6,101,650 |
|
|
|
41,308,850 |
|
Share
issuance costs
|
|
|
(1,541,686 |
) |
|
|
-- |
|
|
|
(550,175 |
) |
|
|
(2,091,861 |
) |
Changes
in financing liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note
payable (note 7a)
|
|
|
-- |
|
|
|
(1,000,000 |
) |
|
|
(1,000,000 |
) |
|
|
(2,000,000 |
) |
Accounts
payable
|
|
|
10,800 |
|
|
|
-- |
|
|
|
61,078 |
|
|
|
71,878 |
|
Due
to shareholder
|
|
|
-- |
|
|
|
-- |
|
|
|
(37,998 |
) |
|
|
-- |
|
Due
to related companies
|
|
|
-- |
|
|
|
-- |
|
|
|
15,132 |
|
|
|
26,980 |
|
|
|
|
33,462,700 |
|
|
|
(786,450 |
) |
|
|
4,589,687 |
|
|
|
37,315,847 |
|
Net
increase (decrease) in cash and
cash
equivalents
|
|
|
31,617,790 |
|
|
|
(2,610,309 |
) |
|
|
7,029,635 |
|
|
|
36,037,388 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents, beginning of period
|
|
|
4,419,598 |
|
|
|
7,029,907 |
|
|
|
272 |
|
|
|
-- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents, end of period
|
|
|
36,037,388 |
|
|
|
4,419,598 |
|
|
|
7,029,907 |
|
|
|
36,037,388 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
bank accounts
|
|
|
127,803 |
|
|
|
90,670 |
|
|
|
36,631 |
|
|
|
127,803 |
|
Term
deposits
|
|
|
35,909,585 |
|
|
|
4,328,928 |
|
|
|
6,993,276 |
|
|
|
35,909,585 |
|
|
|
|
36,037,388 |
|
|
|
4,419,598 |
|
|
|
7,029,907 |
|
|
|
36,037,388 |
|
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, 2005
1. Nature
of Operations
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
(“PSC”) with the Gujarat State Petroleum Corporation ("GSPC") and the Government
of India ("GOI") 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 recoverability of the costs incurred to date
is uncertain and dependent upon achieving commercial production or sale, the
ability of the Company to obtain sufficient financing to fulfill its obligations
under the PSC’s in India and upon future profitable operations and upon
finalizing agreements with GSPC.
On August
29, 2003, all of the issued and outstanding shares of GeoGlobal Resources
(India) Inc. ("GeoGlobal India") were acquired by GeoGlobal Resources Inc.,
formerly Suite101.com, Inc. As a result of the transaction, the
former shareholder of GeoGlobal India held approximately 69.3% of the issued and
outstanding shares of GeoGlobal Resources Inc. This transaction is
considered an acquisition of GeoGlobal Resources Inc. (the accounting subsidiary
and legal parent) by GeoGlobal India (the accounting parent and legal
subsidiary) 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 GeoGlobal Resources Inc. but are a
continuation of the financial statements of the accounting acquirer, GeoGlobal
India. The assets and liabilities of GeoGlobal India 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.
GeoGlobal
Resources Inc. changed its name from Suite101.com, Inc. after receiving
shareholder approval at the Annual Shareholders Meeting held on January 8,
2004. Collectively, GeoGlobal Resources Inc., GeoGlobal India and its
other wholly-owned direct and indirect subsidiaries, are referred to as the
"Company" or “GeoGlobal”.
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 (i) GeoGlobal
Resources Inc., from the date of acquisition, being August 29, 2003, (ii)
GeoGlobal Resources (India) Inc., incorporated under the Business Corporations Act
(Alberta), Canada on August 21, 2002 which was continued under the Companies Act of Barbados,
West Indies on June 27, 2003, which is a wholly-owned subsidiary of GeoGlobal
Resources Inc., (iii) GeoGlobal Resources (Canada) Inc., incorporated under the
Business Corporations Act
(Alberta), Canada on September 4, 2003, which is a wholly-owned
subsidiary of GeoGlobal Resources Inc., and (iv) GeoGlobal Resources (Barbados)
Inc. incorporated under the Companies Act of Barbados,
West Indies on September 24, 2003, which is the wholly-owned subsidiary of
GeoGlobal Resources (Canada) Inc.
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.
Notes
to the Consolidated Financial Statements
GeoGlobal
Resources Inc.
(a
development stage enterprise)
December
31, 2005
2. Significant
Accounting Policies (continued)
ii)
|
Depreciation
and depletion
|
Computer
and office equipment is recorded at cost, with depreciation provided for on a
declining-balance basis at 30% per annum.
Upon the
commencement of economic 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 subject to depletion 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.
d) Net
loss per share
|
Net
loss per share is calculated based upon the weighted-average number of
shares outstanding during the period. The treasury stock method
is used to determine the dilutive effect of the stock
options. The treasury stock method assumes any proceeds
obtained upon exercise of options would be used to purchase common shares
at the average market price during the period. There are no
differences between net loss and the weighted-average number of shares
used in the calculation of the basic net loss per share and that used in
the calculation of diluted net loss per share as the affect of the options
and warrants on the net loss per share calculations are
anti-dilutive.
|
|
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.
|
Notes
to the Consolidated Financial Statements
GeoGlobal
Resources Inc.
(a
development stage enterprise)
December
31, 2005
2. Significant
Accounting Policies (continued)
|
The
Company has estimated the fair value of its financial instruments which
include cash and cash equivalents, restricted cash, accounts receivable
and prepaids, cash call receivable, accounts payable, 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. Of the Company’s accounts receivable, US$74,907
(December 31, 2004 – US$154,884) is due from one entity in the oil and gas
industry. If these amounts were uncollectible, they would be
capitalized as part of the property and equipment exploration
costs.
|
|
It
is management’s opinion that the Company is not exposed to significant
interest, currency or credit risks arising from its financial
instruments.
|
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,
earning interest based upon the US prime rate. Interest earned
during the year ended December 31, 2005 was $462,174 which included
interest earned on our cash and cash equivalents held in term deposits of
$454,887 which is an average rate of
2.57%.
|
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 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 or loss in the period in which the change is
enacted.
Revenue
associated with the production and sales of crude oil, natural gas and natural
gas liquids owned by the Company will be recognized when title passes from the
Company to its customer.
k)
|
Stock-based
compensation plan
|
|
The
Company has a stock-based compensation plan which includes stock
options. Consideration received from employees or directors on
the exercise of stock options under the stock option plan is recorded as
capital stock.
|
|
The
Company uses the intrinsic value method of accounting for employee and
director stock-based compensation. As all options have been
granted at exercise prices based on the market value of the Company's
common shares at the date of the grant, no compensation cost is
recognized. Non-employee stock-based compensation costs are
measured using the fair value based method and is charged to earnings on
the measurement date.
|
|
The
Company adopted Statement 123(R) using the modified prospective method on
January 1, 2006 (note 13a)
|
Notes
to the Consolidated Financial Statements
GeoGlobal
Resources Inc.
(a
development stage enterprise)
December
31, 2005
2. Significant
Accounting Policies (continued)
|
Comprehensive
loss includes all changes in equity except those resulting from
investments made by owners and distributions to owners. Other
accumulated comprehensive loss consists only of net loss for all periods
presented.
|
3. Property
and Equipment
|
|
Balance
Sheet as at
December
31,
US
$
|
|
|
Exploration
costs incurred in
US
$
|
|
|
|
2005
|
|
|
2004
|
|
|
2005
|
|
|
2004
|
|
|
2003
|
|
|
2002
|
|
|
|
Restated
note
5c
|
|
|
Restated
note
5c
|
|
|
Restated
note
5c
|
|
|
Restated
note
5c
|
|
|
Restated
note
5c
|
|
|
|
|
Exploration
and development
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exploration
costs – India
|
|
|
3,957,723 |
|
|
|
707,023 |
|
|
|
3,250,700 |
|
|
|
506,269 |
|
|
|
178,829 |
|
|
|
21,925 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Computer
and office equipment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Computer
and office equipment
|
|
|
209,585 |
|
|
|
255,509 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
depreciation
|
|
|
(119,759 |
) |
|
|
(112,456 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
89,826 |
|
|
|
143,053 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,047,549 |
|
|
|
850,076 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
a) Exploration
costs – India
The
exploration costs incurred to date are not subject to depletion and cover six
exploration blocks, known as the KG Block, the Mehsana Block, the Sanand/Miroli
Block, the Ankleshwar Block, the DS Block and the Tarapur Block. It
is anticipated that all or certain of these exploration costs may be subject to
depletion no earlier than the 2007 fiscal year.
b) Capitalized
overhead costs (Restated note 5c)
Included
in the US$3,250,700 of exploration cost additions during the year ended December
31, 2005 (year ended December 31, 2004 – US$506,269) are certain overhead costs
capitalized by the Company in the amount of US$2,141,844 (year ended December
31, 2004 – US$382,788) directly related to the exploration activities in
India. The capitalized overhead amount includes capitalized
stock-based compensation of US$1,672,576 (year ended December 31, 2004 –
US$46,253) (see note 5c). Further, the capitalized overhead amount
includes US$145,773 (year ended December 31, 2004 - US$49,370) paid to third
parties and $51,800 (year ended December 31, 2004 – US$nil) recovered from third
parties. The balance of US$375,295 was paid to and on behalf of a
related party (year ended December 31, 2004 – US$287,165) (see note
7c). These costs are incurred solely by and on behalf of the Company
in providing its services under the Carried Interest Agreement (“CIA”) and are
therefore not reimbursable under the CIA (see note 3c).
|
c)
|
Carried
Interest Agreement
|
|
On
August 27, 2002, GeoGlobal entered into a CIA with GSPC, which grants the
Company a 10% Carried Interest (“CI”) (net 5% - see note 3d) in the KG
Block. The CIA provides that GSPC is responsible for GeoGlobal's entire
share of any and all costs incurred during the Exploration Phase prior to
the date of initial commercial
production.
|
Notes
to the Consolidated Financial Statements
GeoGlobal
Resources Inc.
(a
development stage enterprise)
December
31, 2005
|
3.
|
Property
and Equipment (continued)
|
Under the
terms of the CIA, all of GeoGlobal's and Roy Group (Mauritius) Inc.'s (“RGM”), a
related party (note 7b) 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.
As at
December 31, 2005, GSPC has incurred costs of Rs 63.31 crore (approximately
US$14.1 million) (December 31, 2004 – Rs 22.77 crore (approximately US$5.01
million)) attributable to GeoGlobal under the CIA of which 50% is for the
account of RGM.
|
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 GOI
consent, 50% of the benefits and obligations of the PSC covering the Exploration
Block KG-OSN-2001/3 ("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 GOI 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, RGM has agreed to be bound by and be 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 has 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%
PI.
e) Deed
of Assignment and Assumption
On April
7, 2005, the Company entered into a Deed of Assignment and Assumption with GSPC
whereby, subject to the terms of the agreement, the Company agreed to acquire
and assume and GSPC agreed to assign a 20% participating interest in the onshore
Tarapur Exploration Block (CB-ON/2). The assignment of the 20%
interest is subject to obtaining the consent of the GOI to the assignment which
consent has not yet been obtained. Based on the Company’s past
experience as a party to other PSC’s with GSPC and its relationship with GSPC,
the Company believes that such consent from the GOI will be
forthcoming. In the event such consent is not obtained, the
assignment would be terminated. Under such circumstances, the Company
intends to negotiate an alternative acceptable arrangement with
GSPC. The payment of the US$579,523 to GSPC under the terms of the
Company’s agreement with GSPC has been included in Exploration costs – India at
December 31, 2005.
Notes
to the Consolidated Financial Statements
GeoGlobal
Resources Inc.
(a
development stage enterprise)
December
31, 2005
3. Property
and Equipment (continued)
f) Production
Sharing Contracts
|
i)
|
Exploration
Block KG-OSN-2001/3 (also referred to as “KG
Block”)
|
|
On
February 4, 2003, GeoGlobal, as to a 10% Participating Interest ("PI")
(net 5% - see note 3d) together with its joint venture participants,
Jubilant Enpro Limited ("Enpro") and GSPC, as to their 10% and 80% PI
respectively, entered into a PSC with the GOI with respect to PSC-KG
located offshore on the east coast of India in the Krishna Godavari
Basin. See also Carried Interest Agreement note
3c.
|
|
The
PSC-KG allows the joint venture participants to explore for petroleum and
natural gas over a 6.5 year period commencing March 12, 2003 on the KG
Block subject to the work commitment as outlined in note
10d.
|
|
ii)
|
Exploration Block CB-ONN-2002/2
(also referred to as “Mehsana
Block”)
|
|
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,
entered into a PSC with the GOI with respect to onshore Exploration Block
CB-ONN-2002/2 ("PSC-Mehsana") covering an area of approximately 125 square
kilometers ("sq. kms.") in the Cambay Basin, located in the province of
Gujarat in Northwest India.
|
|
The
PSC-Mehsana allows the joint venture participants to explore for petroleum
and natural gas over a 6 year period commencing May 31, 2004 on the
Exploration Block subject to the work commitment as outlined in note
10b.
|
|
iii)
|
Exploration
Block CB-ONN-2002/3 (also
referred to as “Sanand/Miroli
Block”)
|
|
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, entered into a PSC with the GOI with
respect to onshore Exploration Block CN-ONN-2002/3 ("PSC-Sanand/Miroli")
covering an area of approximately 285 sq. kms. in the Cambay
Basin.
|
|
The
PSC-Sanand/Miroli allows the joint venture participants to explore for
petroleum and natural gas over a 6 year period commencing July 29, 2004 on
the Exploration Block subject to the work commitment as outlined in note
10b.
|
|
iv)
|
Exploration
Block CB-ONN-2003/2 (also
referred to as “Ankleshwar
Block”)
|
|
On
August 15, 2005, the Company announced that it was awarded, under the
fifth round of the National Exploration Licensing Policy ("NELP-V"), a 10%
PI in a new onshore Exploration Block CB-ONN-2003/2 covering an area of
approximately 448 sq. kms. in the Cambay
Basin.
|
|
On
September 28, 2005, GeoGlobal as to its 10% PI, along with its joint
venture participants, Gail (India) Ltd., Jubilant Capital Pvt. Ltd. and
GSPC as to their 20%, 20% and 50% PI respectively, entered into a PSC with
the GOI with respect to this Exploration Block
("PSC-Ankleshwar").
|
|
The
PSC-Ankleshwar allows the joint venture participants to explore for
petroleum and natural gas over a 7 year period commencing upon the receipt
of the Petroleum Exploration Licence, on the Exploration Block subject to
the work commitment as outlined in note
10b.
|
Notes
to the Consolidated Financial Statements
GeoGlobal
Resources Inc.
(a
development stage enterprise)
December
31, 2005
|
3.
|
Property
and Equipment (continued)
|
|
v)
|
Exploration
Block DS-ONN-2003/1 (also
referred to as “DS Block”)
|
|
On
August 15, 2005, the Company also announced that it was awarded, under
NELP-V, a 100% PI in a new onshore Exploration Block DS-ONN-2003/1
covering an area of approximately 3,155 sq. kms. in the Deccan Syneclise
Basin.
|
|
On
September 28, 2005, GeoGlobal as to its 100% PI entered into a PSC with
the GOI with respect to this Exploration Block
("PSC-DS").
|
|
The
PSC-DS allows GeoGlobal to explore for petroleum and natural gas over a 7
year period commencing upon the receipt of the Petroleum Exploration
Licence, on the Exploration Block subject to the work commitment as
outlined in note 10b.
|
4. Capital
Stock
a) Common
shares
|
|
Number
of
shares
|
|
|
Capital
stock
US
$
|
|
|
Additional
paid-in
capital
US
$
|
|
|
|
|
|
|
|
|
|
Restated
note
5c
|
|
|
|
|
|
|
|
|
|
|
|
Balance
at December 31, 2002
|
|
|
1,000 |
|
|
|
64 |
|
|
|
-- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2003
Transactions
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
stock of GeoGlobal at August 29, 2003
|
|
|
14,656,687 |
|
|
|
14,657 |
|
|
|
10,914,545 |
|
Common
shares issued by GeoGlobal to acquire
GeoGlobal
India
|
|
|
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 6)
|
|
|
(1,000 |
) |
|
|
(14,657 |
) |
|
|
(10,914,545 |
) |
Options
exercised for cash
|
|
|
396,668 |
|
|
|
397 |
|
|
|
101,253 |
|
December
2003 private placement financing (note 4c)
|
|
|
6,000,000 |
|
|
|
6,000 |
|
|
|
5,994,000 |
|
Share
issuance costs on private placement
|
|
|
-- |
|
|
|
-- |
|
|
|
(483,325 |
) |
Stock-based
compensation (note 5c)
|
|
|
-- |
|
|
|
-- |
|
|
|
62,913 |
|
|
|
|
55,052,355 |
|
|
|
40,397 |
|
|
|
6,680,951 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
as at December 31, 2003
|
|
|
55,053,355 |
|
|
|
40,461 |
|
|
|
6,680,951 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2004
Transactions
|
|
|
|
|
|
|
|
|
|
|
|
|
Options
exercised for cash
|
|
|
115,000 |
|
|
|
115 |
|
|
|
154,785 |
|
Broker
warrants exercised for cash
|
|
|
39,100 |
|
|
|
39 |
|
|
|
58,611 |
|
Stock-based
compensation (note 5c)
|
|
|
-- |
|
|
|
-- |
|
|
|
350,255 |
|
|
|
|
154,100 |
|
|
|
154 |
|
|
|
563,651 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
as at December 31, 2004
|
|
|
55,207,455 |
|
|
|
40,615 |
|
|
|
7,244,602 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2005
Transactions
|
|
|
|
|
|
|
|
|
|
|
|
|
Options
exercised for cash (note 4e)
|
|
|
739,000 |
|
|
|
739 |
|
|
|
1,004,647 |
|
2003
Purchase warrants exercised for cash (note 4d(i))
|
|
|
2,214,500 |
|
|
|
2,214 |
|
|
|
5,534,036 |
|
Broker
warrants exercised for cash (note 4d(ii))
|
|
|
540,900 |
|
|
|
541 |
|
|
|
810,809 |
|
September
2005 private placement financing (note 4b)
|
|
|
4,252,400 |
|
|
|
4,252 |
|
|
|
27,636,348 |
|
Share
issuance costs on private placement (note 4b)
|
|
|
-- |
|
|
|
-- |
|
|
|
(1,541,686 |
) |
Stock-based
compensation (note 5c)
|
|
|
-- |
|
|
|
-- |
|
|
|
4,354,256 |
|
|
|
|
7,746,800 |
|
|
|
7,746 |
|
|
|
37,798,410 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
as at December 31, 2005
|
|
|
62,954,255 |
|
|
|
48,361 |
|
|
|
45,043,012 |
|
Notes
to the Consolidated Financial Statements
GeoGlobal
Resources Inc.
(a
development stage enterprise)
December
31, 2005
4. Capital
Stock (continued)
b) September
2005 Financing
During
September 2005, GeoGlobal completed the sale of 3,252,400 Units of its
securities at US$6.50 per Unit, together with a concurrent sale of an additional
1,000,000 Units on the same terms, for aggregate gross cash total proceeds of
US$27,640,600.
Each Unit
is comprised of one common share and one half of one warrant. One
full warrant ("2005 Purchase Warrant") entitles the holder to purchase one
additional common share for US$9.00, for a term of two years expiring September
2007. The 2005 Purchase Warrants are subject to accelerated
expiration in the event that the price of the Company's common shares on the
American Stock Exchange is US$12.00 or more for 20 consecutive trading days, the
resale of the shares included in the Units and issuable on exercise of the 2005
Purchase Warrants has been registered under the US Securities Act of 1933, as
amended (the “Act”), and the hold period for Canadian subscribers has
expired. In such events, the warrant term will be reduced to 30 days
from the date of issuance of a news release announcing such accelerated
expiration of the warrant term.
Costs of
US$1,541,685 were incurred in issuing shares in these transactions which
included a fee of US$1,268,436 paid to Jones Gable & Company Limited with
respect to the sale of the 3,252,400 Units, and, in addition, Compensation
Options were issued to Jones Gable & Company Limited entitling it to
purchase an additional 195,144 Units at an exercise price of US$6.50 per Unit
through their expiration in September 2007. Compensation Options
are also subject to accelerated expiration on the same terms and conditions as
the warrants issued in the transaction.
c) December
2003 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 US$6,000,000.
Each unit
is comprised of one common share and one half of one warrant. One
full warrant ("2003 Purchase Warrant"), entitles the holder to purchase one
additional common share for US$2.50, for a term of two years from date of
closing. The 2003 Purchase Warrants are 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$4.00 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. Also issued as
additional consideration for this transaction were 580,000 Broker
Warrants.
The
580,000 Broker Warrants described above entitled the holder to purchase 580,000
common shares at an exercise price of US$1.50 per share which expired on
December 23, 2005.
d) Warrants
i) 2003
Purchase Warrants
During
the year ended December 31, 2005, 2,214,500 of the 2003 Purchase
Warrants were exercised for gross proceeds of US$5,536,250. As
at December 31, 2005, there remained 785,500 of the 2003 Purchase Warrants which
had not yet been exercised. Subsequent to the year end, all of the
remaining 2003 Purchase Warrants were exercised for gross proceeds of
US$1,963,750.
ii) Broker
Warrants
During
the year ended December 31, 2005, 540,900 of the Broker Warrants were
exercised for gross proceeds of US$811,350. As at December 31,
2005, all of the Broker Warrants have been exercised.
Notes
to the Consolidated Financial Statements
GeoGlobal
Resources Inc.
(a
development stage enterprise)
December
31, 2005
4. Capital
Stock (continued)
iii) 2005
Purchase Warrants
|
As
at December 31, 2005, all of the 2005 Purchase Warrants remained
outstanding, which if exercised, would result in the issuance of 2,126,200
common shares for gross proceeds of
US$19,135,800.
|
iv) Compensation
Option Warrants
|
As
at December 31, 2005, none of the 97,572 Compensation Option Warrants
have been issued as a result of the Compensation Options not being
exercised. If the Compensation Options are exercised and the
Compensation Option Warrants issued, if exercised, would result in gross
proceeds of US$878,148.
|
e) Options
i) Stock
Options
During
the year ended December 31, 2005, 739,000 (December 31, 2004 – 115,000) options
were exercised at various prices between US$1.01 and US$1.50 for gross proceeds
of US$1,005,385 (December 31, 2004 - US$154,900).
ii) Compensation
Options
|
As
at December 31, 2005, none of the 195,144 Compensation Options were
exercised. When fully exercised, the Compensation Options would
result in gross proceeds of
US$1,268,436.
|
|
f)
|
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, 2005 was 53,058,660 (December 31, 2004 – 41,671,136, December 31, 2003
– 19,737,035, December 31, 2002 - 14,500,000). The amount for
the years ended December 31, 2005 and 2004 exclude the 5,000,000 shares
currently held in escrow. The amount for the year ended
December 31, 2003 also excludes the 5,000,000 shares currently held in
escrow plus 14,500,000 shares which were not released from escrow until
August 27, 2004. 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 take-over transaction described in note 6, reduced
by the 19,500,000 shares which were held in
escrow.
|
5. Stock
Options
a) The
Company’s 1998 Stock Incentive Plan
Under the
terms of the 1998 Stock Incentive Plan (the "Plan"), as amended, 8,000,000
common shares have been reserved for issuance on exercise of options granted
under the Plan. As at December 31, 2005, the Company had 1,875,697
(December 31, 2004 – 385,697) common shares remaining for issuance 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.
On
January 17, 2005, the Board of Directors resolved to amend the Plan to increase
the shares reserved for grant of options from 3,900,000 to 8,000,000 subject to
shareholder approval. Shareholder approval was obtained at the annual
stockholder meeting held on June 14, 2005.
Notes
to the Consolidated Financial Statements
GeoGlobal
Resources Inc.
(a
development stage enterprise)
December
31, 2005
5. Stock
Options (continued)
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, 2005
US
$
|
|
|
Year
ended
Dec
31, 2004
US
$
|
|
|
Year
ended
Dec
31, 2003
US
$
|
|
|
Period
from
Inception,
Aug
21, 2002 to
Dec
31, 2005
US
$
|
|
|
|
|
|
|
Restated
note
5c
|
|
|
Restated
note
5c
|
|
|
Restated
note
5c
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pro-forma
basis
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
Exploration
costs – India
|
|
|
337,113 |
|
|
|
56,654 |
|
|
|
44,542 |
|
|
|
438,309 |
|
General
and administrative
|
|
|
458,766 |
|
|
|
132,767 |
|
|
|
88,349 |
|
|
|
679,882 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exploration
costs - India
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
reported
|
|
|
3,957,723 |
|
|
|
707,023 |
|
|
|
200,754 |
|
|
|
3,957,723 |
|
Pro-forma
|
|
|
4,396,032 |
|
|
|
808,219 |
|
|
|
245,296 |
|
|
|
4,396,032 |
|
Net
loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
reported
|
|
|
(3,162,660 |
) |
|
|
(1,171,498 |
) |
|
|
(518,377 |
) |
|
|
(4,866,348 |
) |
Pro-forma
|
|
|
(3,621,426 |
) |
|
|
(1,304,265 |
) |
|
|
(606,726 |
) |
|
|
(5,546,230 |
) |
Net
loss per share - basic and diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
reported
|
|
|
(0.06 |
) |
|
|
(0.03 |
) |
|
|
(0.03 |
) |
|
|
|
|
Pro-forma
|
|
|
(0.07 |
) |
|
|
(0.03 |
) |
|
|
(0.03 |
) |
|
|
|
|
Black-Scholes
Assumptions
|
|
|
|
|
|
|
|
|
|
Fair
value of stock options granted
|
|
$ |
1.06 |
|
|
|
-- |
|
|
$ |
0.20 |
|
Risk-free
interest rate
|
|
|
2.75 |
% |
|
|
-- |
|
|
|
2.61 |
% |
Volatility
|
|
|
102 |
% |
|
|
-- |
|
|
|
55 |
% |
Weighted
average expected life
|
|
1.8
years
|
|
|
|
-- |
|
|
0.8
years
|
|
Dividend
yield
|
|
|
0 |
% |
|
|
-- |
|
|
|
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, 2005
US
$
|
|
|
Year
ended
Dec
31, 2004
US
$
|
|
|
Year
ended
Dec
31, 2003
US
$
|
|
|
Period
from
Inception,
Aug
21, 2002 to
Dec
31, 2005
US
$
|
|
|
|
Restated
note
5c
|
|
|
Restated
note
5c
|
|
|
Restated
note
5c
|
|
|
Restated
note
5c
|
|
Stock-based
compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
Statements of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
Consulting
fees
|
|
|
2,681,680 |
|
|
|
304,002 |
|
|
|
40,682 |
|
|
|
3,026,364 |
|
Consolidated
Balance Sheets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property
and equipment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exploration
costs – India
|
|
|
1,672,576 |
|
|
|
46,253 |
|
|
|
22,231 |
|
|
|
1,741,060 |
|
|
|
|
4,354,256 |
|
|
|
350,255 |
|
|
|
62,913 |
|
|
|
4,767,424 |
|
The years
ended December 31, 2005, 2004, 2003 and the period from inception August 21,
2002 to December 31, 2005 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, 2005
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, 2005 and 2004 and 2003 and the Consolidated Statements of Operations for the
years ended December 31, 2005 and 2004 and 2003 and the period from inception of
August 21, 2002 to December 31, 2005.
|
|
As
Reported
|
|
Adjustment
|
|
|
As
Restated
|
|
|
Dec
31, 2005
US$
|
|
|
|
Dec
31, 2005
US$
|
|
|
Period
of Inception,
Aug
21, 2002
to
Dec 31, 2004
US$
|
|
|
Dec
31, 2005
US$
|
|
|
Balance
Sheets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil
and gas interests
|
|
|
2,216,663 |
|
|
|
|
1,672,576 |
|
|
|
68,484 |
|
|
|
3,957,723 |
|
|
Additional
paid-in
capital
|
|
|
40,275,588 |
|
|
|
|
4,354,256 |
|
|
|
413,168 |
|
|
|
45,043,012 |
|
|
Deficit
accumulated
|
|
|
(1,839,984 |
) |
|
|
|
(2,681,680 |
) |
|
|
(344,684 |
) |
|
|
(4,866,348 |
) |
|
Stockholders'
equity
|
|
|
38,483,965 |
|
|
|
|
1,672,576 |
|
|
|
68,484 |
|
|
|
40,225,025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement
of
Stockholders'
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
paid-in
capital
|
|
|
40,275,588 |
|
|
|
|
4,354,256 |
|
|
|
413,168 |
|
|
|
45,043,012 |
|
|
Accumulated
deficit
|
|
|
(1,839,984 |
) |
|
|
|
(2,681,680 |
) |
|
|
(344,684 |
) |
|
|
(4,866,348 |
) |
|
Stockholders'
equity
|
|
|
38,483,965 |
|
|
|
|
1,672,576 |
|
|
|
68,484 |
|
|
|
40,225,025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
Reported
|
|
Adjustment
|
|
|
As
Restated
|
|
|
Year
ended
Dec
31, 2005
US$
|
|
Period
of Inception,
Aug
21, 2002
to
Dec 31, 2005
US$
|
|
Year
ended
Dec
31, 2005
US$
|
|
|
Period
of Inception,
Aug
21, 2002
to
Dec 31, 2005
US$
|
|
|
Year
ended
Dec
31, 2005
US$
|
|
Period
of Inception,
Aug
21, 2002
to
Dec 31, 2005
US$
|
Statements
of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consulting
fees
|
|
|
265,446 |
|
673,332
|
|
|
2,681,680 |
|
|
|
3,026,364 |
|
|
|
2,947,126 |
|
3,699,696
|
Net
loss and
comprehensive
loss
|
|
|
(480,980 |
) |
(1,839,984)
)
|
|
|
(2,681,680 |
) |
|
|
(3,026,364 |
) |
|
|
(3,162,660 |
) |
(4,866,348)
)
|
Net
loss per share
-
basic and diluted
|
|
|
(0.01 |
) |
|
|
|
(0.05 |
) |
|
|
|
|
|
|
(0.06 |
) |
|
Notes
to the Consolidated Financial Statements
GeoGlobal
Resources Inc.
(a
development stage enterprise)
December
31, 2005
5. Stock
Options (continued)
|
|
As
Reported
|
|
Adjustment
|
|
|
As
Restated
|
|
|
Dec
31, 2004
US$
|
|
|
|
Dec
31, 2004
US$
|
|
|
Period
of Inception,
Aug
21, 2002
to
Dec 31, 2003
US$
|
|
|
Dec
31, 2004
US$
|
|
|
Balance
Sheets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil
and gas interests
|
|
|
638,539 |
|
|
|
|
46,253 |
|
|
|
22,231 |
|
|
|
707,023 |
|
|
Additional
paid-in
capital
|
|
|
6,831,434 |
|
|
|
|
350,255 |
|
|
|
62,913 |
|
|
|
7,244,602 |
|
|
Deficit
accumulated
|
|
|
(1,359,004 |
) |
|
|
|
(304,002 |
) |
|
|
(40,682 |
) |
|
|
(1,703,688 |
) |
|
Stockholders'
equity
|
|
|
5,513,045 |
|
|
|
|
46,253 |
|
|
|
22,231 |
|
|
|
5,581,529 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Statement
of
Stockholders'
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
paid-in
capital
|
|
|
6,831,434 |
|
|
|
|
350,255 |
|
|
|
62,913 |
|
|
|
7,244,602 |
|
|
Accumulated
deficit
|
|
|
(1,359,004 |
) |
|
|
|
(304,002 |
) |
|
|
(40,682 |
) |
|
|
(1,703,688 |
) |
|
Stockholders'
equity
|
|
|
5,513,045 |
|
|
|
|
46,253 |
|
|
|
22,231 |
|
|
|
5,581,529 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
Reported
|
|
Adjustment
|
|
|
As
Restated
|
|
|
Year
ended
Dec
31, 2004
US$
|
|
Period
of Inception,
Aug
21, 2002
to
Dec 31, 2004
US$
|
|
Year
ended
Dec
31, 2004
US$
|
|
|
Period
of Inception,
Aug
21, 2002
to
Dec 31, 2004
US$
|
|
|
Year
ended
Dec
31, 2004
US$
|
|
Period
of Inception,
Aug
21, 2002
to
Dec 31, 2004
US$
|
Statements
of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consulting
fees
|
|
|
237,615 |
|
407,886
|
|
|
304,002 |
|
|
|
344,684 |
|
|
|
541,617 |
|
752,570
|
Net
loss and
comprehensive
loss
|
|
|
(867,496 |
) |
(1,359,004)
)
|
|
|
(304,002 |
) |
|
|
(344,684 |
) |
|
|
(1,171,498 |
) |
(1,703,688)
)
|
Net
loss per share
-
basic and diluted
|
|
|
(0.02 |
) |
|
|
|
(0.01 |
) |
|
|
|
|
|
|
(0.03 |
) |
|
Notes
to the Consolidated Financial Statements
GeoGlobal
Resources Inc.
(a
development stage enterprise)
December
31, 2005
5. Stock
Options (continued)
|
|
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, 2005 and from inception of August 21, 2002 to December
31, 2005 and therefore, no changes have been reflected.
Notes
to the Consolidated Financial Statements
GeoGlobal
Resources Inc.
(a
development stage enterprise)
December
31, 2005
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, 2005
US
$
|
|
|
Year
ended
Dec
31, 2004
US
$
|
|
|
Year
ended
Dec
31, 2003
US
$
|
|
|
|
Restated
note
5c
|
|
|
Restated
note
5c
|
|
|
Restated
Note
5c
|
|
Black-Scholes
Assumptions
|
|
|
|
|
|
|
|
|
|
Fair
value of stock options at reporting date
|
|
$ |
4.52 |
|
|
$ |
0.73 |
|
|
$ |
0.67 |
|
Risk-free
interest rate
|
|
|
3.33 |
% |
|
|
1.67 |
% |
|
|
1.32 |
% |
Volatility
|
|
|
103 |
% |
|
|
98 |
% |
|
|
89 |
% |
Expected
life
|
|
0.5
years
|
|
|
0.5
years
|
|
|
1.1
years
|
|
Dividend
yield
|
|
|
0 |
% |
|
|
0 |
% |
|
|
0 |
% |
e) Stock
option table
These
options were granted for services provided to the Company:
|
Option
|
|
|
|
Granted
|
Cancelled
(c)
|
|
Balance
|
Grant
|
exercise
|
Expiry
|
Vesting
|
Balance
|
during
|
Exercised
(e)
|
Balance
|
exercisable
|
date
|
price
|
date
|
date
|
Dec
31, 2004
|
the
year
|
during
the year
|
Dec
31, 2005
|
Dec
31, 2005
|
(mm/dd/yy)
|
US
$
|
(mm/dd/yy)
|
(mm/dd/yy)
|
#
|
#
|
#
|
#
|
#
|
|
|
|
|
|
|
|
|
|
12/09/03
|
1.18
|
08/31/06
|
Vested
|
1,945,000
|
--
|
193,500
(e)
|
1,751,500
|
1,751,500
|
12/30/03
|
1.50
|
08/31/06
|
Vested
|
945,000
|
--
|
150,000
(c)
|
|
|
|
|
|
|
|
|
450,000
(e)
|
345,000
|
345,000
|
01/17/05
|
1.01
|
08/31/06
|
Vested
|
--
|
790,000
|
60,500
(e)
|
729,500
|
729,500
|
01/18/05
|
1.10
|
08/31/08
|
Vested
|
--
|
450,000
|
--
|
450,000
|
450,000
|
01/18/05
|
1.10
|
08/31/08
|
08/15/06
|
|
150,000
|
--
|
150,000
|
--
|
01/25/05
|
1.17
|
08/31/06
|
Vested
|
--
|
60,000
|
35,000
(e)
|
25,000
|
25,000
|
06/14/05
|
3.49
|
06/14/15
|
Vested
|
--
|
150,000
|
--
|
150,000
|
150,000
|
08/24/05
|
6.50
|
08/24/08
|
Vested
|
--
|
60,000
|
--
|
60,000
|
60,000
|
08/24/05
|
6.50
|
08/24/08
|
08/31/06
|
--
|
50,000
|
--
|
50,000
|
--
|
10/03/05
|
6.81
|
10/03/15
|
10/03/06
|
--
|
16,666
|
-
|
16,666
|
--
|
10/03/05
|
6.81
|
10/03/15
|
10/03/07
|
--
|
16,667
|
--
|
16,667
|
--
|
10/03/05
|
6.81
|
10/03/15
|
10/03/08
|
--
|
16,667
|
--
|
16,667
|
--
|
|
|
|
|
2,890,000
|
1,760,000
|
889,000
|
3,761,000
|
3,511,000
|
|
i)
|
On
January 17, 2005, the Board of Directors of the Company passed a
resolution with respect to stock options issued in 2003 to extend the
expiry date of all then outstanding options from August 31, 2005 to August
31, 2006.
|
|
ii)
|
During
the year ended December 31, 2005, the Company granted options to purchase
1,760,000 shares exercisable at various prices and expiry
dates.
|
|
iii)
|
As
at December 31, 2005, there were 3,761,000 options outstanding at various
prices which, if exercised, would result in total proceeds of
US$5,589,315.
|
|
iv)
|
Of
the 889,000 options exercised or cancelled in the period, 150,000 were
cancelled during the three months ended March 31, 2005 and the remaining
739,000 options were all exercised in the period from April 1 to December
31, 2005.
|
|
v)
|
At
the annual stockholder meeting held on June 14, 2005, the stockholders of
the Company approved amendments to the Plan to a) increase the shares of
Common Stock reserved for issuance under the Plan from 3,900,000 shares to
8,000,000 shares and b) amend the terms of the Automatic Option Grant
Program of the Plan to increase the number of shares subject to the annual
automatic option grant to non-employee Board members from 5,000 shares to
50,000 shares.
|
Notes
to the Consolidated Financial Statements
GeoGlobal
Resources Inc.
(a
development stage enterprise)
December
31, 2005
6. Acquisition
On August
29, 2003, pursuant to an agreement dated April 4, 2003 and amended August 29,
2003, the Company completed a transaction with Mr. Roy and GeoGlobal Resources
(India) Inc. ("GeoGlobal India"), a corporation then wholly-owned by Mr. Roy,
whereby the Company acquired from Mr. Roy all of the outstanding capital stock
of GeoGlobal India. In exchange for the outstanding capital stock of
GeoGlobal India, the Company issued 34.0 million shares of our Common
Stock. Of the 34.0 million shares, 14.5 million shares were delivered
to Mr. Roy at the closing of the transaction on August 29, 2003 and an aggregate
of 19.5 million shares were held in escrow by an escrow agent. The
terms of the escrow provide for the release of the shares upon the occurrence of
certain developments relating to the outcome of oil and natural gas exploration
and development activities conducted on the KG Block. On August 27,
2004, 14.5 million shares were released to Mr. Roy from escrow upon the
commencement of a drilling program on the KG Block. The final 5.0
million shares remaining in escrow will be released only if a commercial
discovery is declared on the KG Block. In addition to the shares of
Common Stock, the Company delivered to Mr. Roy a US$2.0 million promissory note,
of which US$500,000 was paid on the closing of the transaction 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 was paid on June 30, 2004. The note did not
accrue interest. The note was secured by the outstanding stock of
GeoGlobal India which has subsequently been released. As a
consequence of the transaction, Mr. Roy held as of the closing of the
transaction an aggregate of 34.0 million shares of our outstanding Common Stock,
or approximately 69.3% of the shares outstanding, assuming all shares held in
escrow are released to him. The terms of the transaction provide that
Mr. Roy is to have the right to vote all 34.0 million shares following the
closing, including the shares during the period they are held in
escrow. Shares not released from the escrow will be surrendered
back to GeoGlobal.
As
discussed in note 1, the acquisition of GeoGlobal India 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 were
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 |
|
Notes
to the Consolidated Financial Statements
GeoGlobal
Resources Inc.
(a
development stage enterprise)
December
31, 2005
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) 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 GeoGlobal India. On each of
August 29, 2003, October 15, 2003, January 15, 2004 and June 30, 2004,
US$500,000 of the note was repaid. The promissory note was
non-interest bearing and the capital stock of GeoGlobal India collateralized the
repayment of the note. The collateral has been released.
b) 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 who is also a principal shareholder of
the Company. On March 27, 2003, the Company entered into a
Participating Interest Agreement (note 3d) with the related party.
c) Roy
Group (Barbados) Inc. (“Roy Group”)
Roy Group
is related to the Company by common management and is controlled by a director
of the Company who is also a principal shareholder of the Company. On
August 29, 2003, the Company entered into a Technical Services Agreement ("TSA")
with Roy Group to provide services to the Company as assigned by the Company and
to bring new oil and gas opportunities to the Company. Roy Group
receives consideration of US$250,000 per year for an initial term of three years
plus a bonus for the year ended December 31, 2005 of US$60,000 as outlined
and recorded below:
|
|
Year
ended
Dec
31, 2005
|
|
|
Year
ended
Dec
31, 2004
|
|
|
Year
ended
Dec
31, 2003
|
|
|
Period
from
Inception,
Aug
21, 2002
to
Dec 31, 2005
|
|
|
|
US
$
|
|
|
US
$
|
|
|
US
$
|
|
|
US$
|
|
Consolidated
Statement of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
Consulting
fees
|
|
|
62,000 |
|
|
|
50,000 |
|
|
|
16,667 |
|
|
|
128,667 |
|
Consolidated
Balance Sheets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property
and equipment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exploration
costs - India (note 3a)
|
|
|
248,000 |
|
|
|
200,000 |
|
|
|
66,666 |
|
|
|
514,666 |
|
|
|
|
310,000 |
|
|
|
250,000 |
|
|
|
83,333 |
|
|
|
643,333 |
|
Roy Group
was also reimbursed for medical insurance and expenses; travel, hotel, meals and
entertainment expenses; computer costs; and amounts billed by third parties
incurred during the periods as outlined and recorded below:
Consolidated
Statement of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
General
and administrative
|
|
|
45,430 |
|
|
|
19,640 |
|
|
|
40,649 |
|
|
|
105,719 |
|
Consolidated
Balance Sheets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
1,020 |
|
|
|
20,350 |
|
|
|
-- |
|
|
|
21,370 |
|
Property
and equipment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exploration
costs - India (note 3a)
|
|
|
127,295 |
|
|
|
87,165 |
|
|
|
61,412 |
|
|
|
297,797 |
|
Computer
and office equipment
|
|
|
1,610 |
|
|
|
8,064 |
|
|
|
-- |
|
|
|
37,595 |
|
|
|
|
175,355 |
|
|
|
135,219 |
|
|
|
102,061 |
|
|
|
462,481 |
|
At
December 31, 2005, the Company owed Roy Group (Barbados) Inc.
US$169,181 (December 31, 2004 - US$16,103) for services provided and
expenses incurred on behalf of the Company and pursuant to the
TSA. These amounts bear no interest and have no set terms of
repayment.
Notes
to the Consolidated Financial Statements
GeoGlobal
Resources Inc.
(a
development stage enterprise)
December
31, 2005
7. Related
Party Transactions
(continued)
d) D.I.
Investments Ltd. (“D.I.”)
D.I. is
related to the Company by common management and is controlled by a director of
the Company. DI charged consulting fees for services rendered as
outlined and recorded below:
|
|
Year
ended
Dec
31, 2005
|
|
|
Year
ended
Dec
31, 2004
|
|
|
Year
ended
Dec
31, 2003
|
|
|
Period
from
Inception,
Aug
21, 2002
to
Dec 31, 2005
|
|
|
|
US
$
|
|
|
US
$
|
|
|
US
$
|
|
|
US$
|
|
Consolidated
Statement of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
Consulting
fees
|
|
|
150,000 |
|
|
|
120,000 |
|
|
|
61,715 |
|
|
|
331,715 |
|
DI was
also reimbursed for office costs, including rent, parking, office supplies and
telephone as well as travel, hotel, meals and entertainment expenses incurred
during the periods as outlined and recorded below:
Consolidated
Statement of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
General
and administrative
|
|
|
|
|
|
|
|
|
|
|
|
|
Office
costs
|
|
|
54,062 |
|
|
|
65,073 |
|
|
|
33,802 |
|
|
|
159,135 |
|
Travel,
hotel, meals and entertainment
|
|
|
5,121 |
|
|
|
3,344 |
|
|
|
39,045 |
|
|
|
47,510 |
|
Consolidated
Balance Sheets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
14,165 |
|
|
|
-- |
|
|
|
-- |
|
|
|
14,165 |
|
|
|
|
73,348 |
|
|
|
68,417 |
|
|
|
72,847 |
|
|
|
220,810 |
|
At
December 31, 2005, the Company owed D.I. US$70,309 (December 31, 2004
–US$nil) as a result of services provided and expenses incurred on behalf of the
Company. These amounts bear no interest and have no set terms of
repayment.
e) Amicus
Services Inc. (“Amicus”)
Amicus is
related to the Company by virtue of being controlled by the brother of a
director of the Company. Amicus charged as consulting fees for
services rendered as outlined below:
|
|
Year
ended
Dec
31, 2005
|
|
|
Year
ended
Dec
31, 2004
|
|
|
Year
ended
Dec
31, 2003
|
|
|
Period
from
Inception,
Aug
21, 2002
to
Dec 31, 2005
|
|
|
|
US
$
|
|
|
US
$
|
|
|
US
$
|
|
|
US$
|
|
Consolidated
Statement of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
Consulting
fees
|
|
|
35,713 |
|
|
|
33,921 |
|
|
|
14,469 |
|
|
|
84,103 |
|
Amicus
was also reimbursed for office costs, including parking, office supplies and
telephone as well as travel and hotel expenses incurred during the periods as
outlined and recorded below:
Consolidated
Statement of Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
General
and administrative
|
|
|
685 |
|
|
|
1,961 |
|
|
|
168 |
|
|
|
2,814 |
|
Consolidated
Balance Sheets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
2,530 |
|
|
|
967 |
|
|
|
3,052 |
|
|
|
6,549 |
|
Computer
and office equipment
|
|
|
-- |
|
|
|
1,599 |
|
|
|
-- |
|
|
|
1,599 |
|
|
|
|
3,215 |
|
|
|
4,527 |
|
|
|
3,220 |
|
|
|
10,962 |
|
At
December 31, 2005, the Company owed Amicus Services Inc. US$4,962 (December
31, 2004 – US$3,521) as a result of services provided and expenses incurred on
behalf of the Company. These amounts bear no interest and have no set
terms of repayment.
Notes
to the Consolidated Financial Statements
GeoGlobal
Resources Inc.
(a
development stage enterprise)
December
31, 2005
8. Income
Taxes
a) Income
tax expense
The
provision for income taxes in the consolidated 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:
|
|
Year
ended
Dec
31, 2005
|
|
|
Year
ended
Dec
31, 2004
|
|
|
Year
ended
Dec
31, 2003
|
|
|
Period
from
Inception,
Aug
21, 2002
to
Dec 31, 2005
|
|
|
|
US
$
|
|
|
US
$
|
|
|
US
$
|
|
|
US$
|
|
|
|
Restated
note
5c
|
|
|
Restated
note
5c
|
|
|
Restated
note
5c
|
|
|
Restated
note
5c
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
|
(3,162,660 |
) |
|
|
(1,171,498 |
) |
|
|
(518,377 |
) |
|
|
(4,866,348 |
) |
Expected
tax rate
|
|
|
35.0 |
% |
|
|
35.0 |
% |
|
|
35.0 |
% |
|
|
|
|
Expected
income tax recovery
|
|
|
(1,106,931 |
) |
|
|
(410,024 |
) |
|
|
(181,432 |
) |
|
|
(1,704,205 |
) |
Excess
of expected tax rate over tax rate
of foreign
affiliates
|
|
|
55,912 |
|
|
|
54,623 |
|
|
|
24,804 |
|
|
|
137,299 |
|
Non-deductible
expenditures
|
|
|
965,779 |
|
|
|
122,589 |
|
|
|
22,020 |
|
|
|
1,110,388 |
|
Acquisition
of losses
|
|
|
-- |
|
|
|
-- |
|
|
|
4,355,268 |
|
|
|
4,355,268 |
|
Other
|
|
|
165,772 |
|
|
|
298,110 |
|
|
|
316,029 |
|
|
|
789,693 |
|
|
|
|
80,532 |
|
|
|
65,298 |
|
|
|
4,536,689 |
|
|
|
4,688,443 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Valuation
allowance
|
|
|
(80,532 |
) |
|
|
(65,298 |
) |
|
|
(4,536,689 |
) |
|
|
(4,688,443 |
) |
Provision
for income taxes
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
b) Deferred
income taxes
The
Company has not recognized the deferred income tax asset because the benefit is
not more likely than not to be realized. The components of the net
deferred income tax asset consist of the following temporary
differences:
|
|
Dec
31, 2005
US
$
|
|
|
Dec
31, 2004
US
$
|
|
|
|
|
|
|
|
|
Difference
between tax base and reported amounts of depreciable
assets
|
|
|
25,871 |
|
|
|
2,679 |
|
Non-capital
loss carry forwards
|
|
|
18,907,135 |
|
|
|
524,904 |
|
|
|
|
18,933,006 |
|
|
|
527,583 |
|
Valuation
allowance
|
|
|
(18,933,006 |
) |
|
|
(527,583 |
) |
Deferred
income tax asset
|
|
|
-- |
|
|
|
-- |
|
Notes
to the Consolidated Financial Statements
GeoGlobal
Resources Inc.
(a
development stage enterprise)
December
31, 2005
8. Income
Taxes (continued)
c) Loss
carry forwards
|
i)
|
At
December 31, 2004, the Company has US$7,865,527 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
|
7,489,826
|
2006
|
Canada
|
35,513
|
2010
|
Barbados
|
340,188
|
2012
|
|
7,865,527
|
|
|
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
|
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, 2005
|
|
|
December
31, 2004
|
|
|
|
Property
and equipment
US
$
|
|
|
Property
and equipment
US
$
|
|
|
|
Restated
note
5c
|
|
|
Restated
note
5c
|
|
|
|
|
|
|
|
|
Canada
|
|
|
89,826 |
|
|
|
97,482 |
|
India
|
|
|
3,957,723 |
|
|
|
752,594 |
|
|
|
|
4,047,549 |
|
|
|
850,076 |
|
10. Commitments,
Contingencies and Guarantees
a) Restricted
cash
The
Company has provided to the GOI two irrevocable letters of credit totalling
US$392,485 (Mehsana US$195,055 and Sanand/Miroli US$197,430) (December 31, 2004
– US$206,796) secured by term deposits of the Company in the same amount as
guarantees for the performance of the minimum work commitments for the budget
period ending March 31, 2006 of Phase I of both of these Cambay
Blocks.
Notes
to the Consolidated Financial Statements
GeoGlobal
Resources Inc.
(a
development stage enterprise)
December
31, 2005
10. Commitments,
Contingencies and Guarantees (continued)
|
b)
|
Production
Sharing Contracts
|
|
The
Company is required to expend funds on the exploration activities to
fulfill the terms of the minimum work commitment based on our
participating interest for Phase I pursuant to the PSC’s in respect of
each of our exploration blocks as
follows:
|
|
i)
|
Mehsana
- Acquire, process and interpret 75 square kilometers of 3D seismic and
drill 7 exploratory wells between 1,000 and 2,200
meters.
|
|
ii)
|
Sanand/Miroli
- Acquire, process and interpret 200 square kilometers of 3D seismic and
drill 12 exploratory wells between 1,500 and 3,000
meters.
|
|
iii)
|
Ankleshwar
- Acquire, process and interpret 448 square kilometers of 3D seismic and
drill 14 exploratory wells between 1,500 and 2,500
meters.
|
|
iv)
|
DS
Block - Gravity and geochemical surveys and a 12,000 line kilometer aero
magnetic survey.
|
Under the
terms of all the PSC's, the Company is required to keep in force a financial and
performance guarantee.
|
As
the holder of a participating interest in the Tarapur Block, the Company
will be required to fund its 20% share of all further exploration and
development costs incurred on the exploration block. To
December 31, 2005, US$579,572 has been paid to GSPC under the terms of the
Company's agreement with GSPC. Subsequent to the year end, a
further US$397,000 has been paid to GSPC. The Company has
committed to expend an aggregate of approximately US$1.2 million for
exploration activities under the terms of the agreement entered into
covering the Tarapur block over the period ending November 22,
2007. Under the terms of the agreement, the Company will be
required to keep in force a financial and performance guarantee securing
its performance under the Tarapur
PSC.
|
|
Under
the terms of our PSC relating to the KG Block, the first phase of the
exploration period was to expire on September 11, 2005. The PSC
provides that by the end of the first phase, the contracting parties, in
addition to other parts of the work program which have been completed,
shall have drilled at least fourteen wells. Through March 11,
2006, four wells had been drilled on the exploration block, leaving ten
wells to be drilled. The PSC provides that, if at the end of an
exploration phase a work program for that phase is not completed, the time
for completion of the exploration program for that phase is to be extended
for a period necessary to enable completion but not exceeding six months
provided the parties (i) submit a request by written notice to the
Government of India at least thirty days prior to the expiration of the
relevant phase, (ii) can show technical or other good reasons for the
non-completion of the work program, and (iii) the management committee
gives its consent to the extension. Any such extension that is
granted is to be deducted from the next succeeding exploration
phase.
|
|
On
August 5, 2005, a written notice requesting the six month extension was
submitted and on August 29, 2005, the management committee consented to
the extension of six months to March 11, 2006 and deducted the six month
extension from the Phase II exploration
period.
|
|
On
February 24, 2006, the management committee for the KG Block recommended a
further extension of twelve months to March 11, 2007 which is also to be
deducted from the second phase of the exploration program. As a
further condition to the extension, the management committee recommended
that GSPC be required to provide a bank guarantee as to 50% of the
unfinished work program, which GSPC has agreed to provide. As
at April 12, 2006, approval of this extension from the Government of India
is still pending.
|
Notes
to the Consolidated Financial Statements
GeoGlobal
Resources Inc.
(a
development stage enterprise)
December
31, 2005
10. Commitments,
Contingencies and Guarantees (continued)
|
Under
the terms of the PSC, in the event the ten remaining wells are not drilled
by March 11, 2007, the Government of India would have the right to assert
that the contracting parties have failed to comply with or have
contravened a material provision of the PSC. Under such
circumstances, the PSC will be subject to termination by the Government of
India on ninety days written notice, unless such failure of compliance or
contravention is remedied within the ninety-day period or such extended
period as may be granted by the Government of India. In the
event the PSC is terminated by the Government of India, or in the event
the work program is not fulfilled by the end of the relevant exploration
phase, each party to the PSC is to pay to the Government of India its
participating interest share of an amount which is equal to the amount
that would be required to complete the minimum work program for that
phase. We are of the view that GSPC, under the terms of our
CIA, would be liable for our participating interest share of the amount
required to complete the minimum work program for the
phase. However, termination of the PSC by the Government of
India would result in the loss of our interest in the KG Block other than
areas determined to encompass commercial discoveries. To December 31,
2005, exploration costs related to the KG Block capitalized in the
Company’s accounts amount to
US$977,692.
|
11. Comparative
Figures
|
a)
|
As
a result of the reverse takeover outlined in note 6, the comparatives are
those of the continuing entity for accounting purposes and are for the
years ended December 31, 2005, 2004 and
2003.
|
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, 2005.
|
12. Subsequent
Event
On
January 25, 2006, the registration statement filed by the Company with the US
Securities and Exchange Commission under the Act with respect to the
registration for resale of 6,573,744 shares of the Company’s common stock by the
holders was declared effective. The shares registered for resale
include the common stock issued in the Company’s September 2005 financing, the
shares of common stock issuable on exercise of the 2005 Purchase Warrants and
the Compensation Options issued in this financing.
Notes
to the Consolidated Financial Statements
GeoGlobal
Resources Inc.
(a
development stage enterprise)
December
31, 2005
13. Recent
Accounting Standards
|
a)
|
On
December 16, 2004, the Financial Accounting Standards Board (FASB) issued
FASB Statement No. 123 (revised 2004), Share-Based Payment, which is a
revision of FASB Statement No. 123, Accounting for Stock-Based
Compensation. Statement 123(R) supersedes APB Opinion No. 25, Accounting
for Stock Issued to Employees, and amends FASB Statement No. 95, Statement
of Cash Flows. Generally, the approach in Statement 123(R) is similar to
the approach described in Statement 123. However, Statement
123(R) requires all share-based payments to employees, including grants of
employee stock options, to be recognized in the statement of operations
based on their fair values. Pro forma disclosure is no longer an
alternative. Statement 123(R) must be adopted no later than
January 1, 2006. Early adoption will be permitted in periods in
which financial statements have not yet been issued. The
Company was planning to adopt Statement 123(R) on January 1, 2005,
however, on April 14, 2005, the Securities Exchange Commission provided
for a phased-in implementation process for Statement 123(R). As such, the
Company delayed the implementation until January 1,
2006.
|
|
The
Company adopted Statement 123(R) using the modified prospective method on
January 1, 2006 which will require the Company to recognize in the income
statement a charge of $367,596 over the next 3
years.
|
|
b)
|
In
May 2005, the FASB issued FASB Statement No. 154, Accounting Changes and
Error Corrections (FAS 154), a replacement of APB Opinion No. 20,
Accounting Changes, and FASB Statement No. 3, Reporting Accounting Changes
in Interim Financial Statements (FAS 3). FAS 154 replaces the
provisions of FAS 3 with respect to reporting accounting changes in
interim financial statements. FAS 154 is effective for
accounting changes and corrections of errors made in fiscal years
beginning after December 15, 2005. Early adoption is permitted
for accounting changes and corrections of errors made in fiscal years
beginning after June 1, 2005.
|
The
Company adopted FAS 154 on January 1, 2006, and there is no current
impact.
Notes
to the Consolidated Financial Statements
GeoGlobal
Resources Inc.
(a
development stage enterprise)
December
31, 2005
14. Selected
Quarterly Information (Unaudited)
The
following represents selected quarterly financial information:
|
|
3
months ended
|
|
|
3
months ended
|
|
|
6
months ended
|
|
|
3
months ended
|
|
|
9
months ended
|
|
|
Year
ended
|
|
|
|
Mar
31
|
|
|
June
30
|
|
|
June
30
|
|
|
Sept
30
|
|
|
Sept
30
|
|
|
Dec
31
|
|
2005
|
|
US$
|
|
|
US$
|
|
|
US$
|
|
|
US$
|
|
|
US$
|
|
|
US$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
|
14,677 |
|
|
|
19,609 |
|
|
|
34,286 |
|
|
|
77,693 |
|
|
|
111,979 |
|
|
|
462,174 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
earnings (loss) and
comprehensive
earnings (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
previously reported
|
|
|
(176,847 |
) |
|
|
(198,511 |
) |
|
|
(375,358 |
) |
|
|
(217,348 |
) |
|
|
(592,706 |
) |
|
|
(480,980 |
) |
Adjustment
- current period
|
|
|
(78,791 |
) |
|
|
(1,187,023 |
) |
|
|
(1,265,814 |
) |
|
|
(316,583 |
) |
|
|
(1,582,397 |
) |
|
|
(2,681,680 |
) |
As
restated
|
|
|
(255,638 |
) |
|
|
(1,385,534 |
) |
|
|
(1,641,172 |
) |
|
|
(533,931 |
) |
|
|
(2,175,103 |
) |
|
|
(3,162,660 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
earnings (loss) per share
-
basic and diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
previously reported
|
|
|
0.00 |
|
|
|
0.00 |
|
|
|
(0.01 |
) |
|
|
0.00 |
|
|
|
(0.01 |
) |
|
|
(0.01 |
) |
Adjustment
- current period
|
|
|
(0.01 |
) |
|
|
(0.03 |
) |
|
|
(0.02 |
) |
|
|
(0.01 |
) |
|
|
(0.03 |
) |
|
|
(0.05 |
) |
As
restated
|
|
|
(0.01 |
) |
|
|
(0.03 |
) |
|
|
(0.03 |
) |
|
|
(0.01 |
) |
|
|
(0.04 |
) |
|
|
(0.06 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
previously reported
|
|
|
(1,535,851 |
) |
|
|
|
|
|
|
(1,734,362 |
) |
|
|
|
|
|
|
(1,951,710 |
) |
|
|
(1,839,984 |
) |
Adjustment
- prior years
|
|
|
(344,684 |
) |
|
|
|
|
|
|
(344,684 |
) |
|
|
|
|
|
|
(344,684 |
) |
|
|
(344,684 |
) |
Adjustment
- current period
|
|
|
(78,791 |
) |
|
|
|
|
|
|
(1,265,814 |
) |
|
|
|
|
|
|
(1,582,397 |
) |
|
|
(2,681,680 |
) |
As
restated
|
|
|
(1,959,326 |
) |
|
|
|
|
|
|
(3,344,860 |
) |
|
|
|
|
|
|
(3,878,791 |
) |
|
|
(4,866,348 |
) |
|
|
|
|
|
|
|
|
|
|
|
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil
and gas interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
previously reported
|
|
|
916,506 |
|
|
|
38,742 |
|
|
|
955,248 |
|
|
|
146,809 |
|
|
|
1,102,057 |
|
|
|
1,578,124 |
|
Adjustment
- current period
|
|
|
31,153 |
|
|
|
744,651 |
|
|
|
775,804 |
|
|
|
200,732 |
|
|
|
976,536 |
|
|
|
1,672,576 |
|
As
restated - current period
|
|
|
947,659 |
|
|
|
783,393 |
|
|
|
1,731,052 |
|
|
|
347,541 |
|
|
|
2,078,593 |
|
|
|
3,250,700 |
|
Opening
balance - beginning of year
|
|
|
707,023 |
|
|
|
|
|
|
|
707,023 |
|
|
|
|
|
|
|
707,023 |
|
|
|
707,023 |
|
As
restated
|
|
|
1,654,682 |
|
|
|
|
|
|
|
2,438,075 |
|
|
|
|
|
|
|
2,785,616 |
|
|
|
3,957,723 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
previously reported
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consulting
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
Oil
and gas interests
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consulting
|
|
|
78,791 |
|
|
|
1,187,023 |
|
|
|
1,265,814 |
|
|
|
316,583 |
|
|
|
1,582,397 |
|
|
|
2,681,680 |
|
Oil
and gas interests
|
|
|
31,153 |
|
|
|
744,651 |
|
|
|
775,804 |
|
|
|
200,732 |
|
|
|
976,536 |
|
|
|
1,672,576 |
|
|
|
|
109,944 |
|
|
|
1,931,674 |
|
|
|
2,041,618 |
|
|
|
517,315 |
|
|
|
2,558,933 |
|
|
|
4,354,256 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
restated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consulting
|
|
|
78,791 |
|
|
|
1,187,023 |
|
|
|
1,265,814 |
|
|
|
316,583 |
|
|
|
1,582,397 |
|
|
|
2,681,680 |
|
Oil
and gas interests
|
|
|
31,153 |
|
|
|
744,651 |
|
|
|
775,804 |
|
|
|
200,732 |
|
|
|
976,536 |
|
|
|
1,672,576 |
|
|
|
|
109,944 |
|
|
|
1,931,674 |
|
|
|
2,041,618 |
|
|
|
517,315 |
|
|
|
2,558,933 |
|
|
|
4,354,256 |
|
Notes
to the Consolidated Financial Statements
GeoGlobal
Resources Inc.
(a
development stage enterprise)
December
31, 2005
15. Selected
Quarterly Information (Unaudited) (continued)
|
|
3
months ended
|
|
|
3
months ended
|
|
|
6
months ended
|
|
|
3
months ended
|
|
|
9
months ended
|
|
|
Year
ended
|
|
|
Year
ended
|
|
|
|
Mar
31
|
|
|
June
30
|
|
|
June
30
|
|
|
Sept
30
|
|
|
Sept
30
|
|
|
Dec
31/04
|
|
|
Dec
31/03
|
|
2004
|
|
US$
|
|
|
US$
|
|
|
US$
|
|
|
US$
|
|
|
US$
|
|
|
US$
|
|
|
US$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
|
5,883 |
|
|
|
7,092 |
|
|
|
12,975 |
|
|
|
6,386 |
|
|
|
19,361 |
|
|
|
31,591 |
|
|
|
1,863 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
earnings (loss) and
comprehensive
earnings (loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
previously reported
|
|
|
(201,539 |
) |
|
|
(306,205 |
) |
|
|
(507,744 |
) |
|
|
(163,165 |
) |
|
|
(670,909 |
) |
|
|
(867,496 |
) |
|
|
(477,695 |
) |
Adjustment
- current period
|
|
|
(396,065 |
) |
|
|
(240,838 |
) |
|
|
(636,903 |
) |
|
|
111,139 |
|
|
|
(525,764 |
) |
|
|
(304,002 |
) |
|
|
(40,682 |
) |
As
restated
|
|
|
(597,604 |
) |
|
|
(547,043 |
) |
|
|
(1,144,647 |
) |
|
|
(52,026 |
) |
|
|
(1,196,673 |
) |
|
|
(1,171,498 |
) |
|
|
(518,377 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
earnings (loss) per share
-
basic and diluted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
previously reported
|
|
|
(0.01 |
) |
|
|
(0.01 |
) |
|
|
(0.01 |
) |
|
|
(0.01 |
) |
|
|
(0.02 |
) |
|
|
(0.02 |
) |
|
|
(0.02 |
) |
Adjustment
- current period
|
|
|
(0.01 |
) |
|
|
(0.01 |
) |
|
|
(0.02 |
) |
|
|
0.01 |
|
|
|
(0.01 |
) |
|
|
(0.01 |
) |
|
|
(0.01 |
) |
As
restated
|
|
|
(0.02 |
) |
|
|
(0.02 |
) |
|
|
(0.03 |
) |
|
|
0.00 |
|
|
|
(0.03 |
) |
|
|
(0.03 |
) |
|
|
(0.03 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
previously reported
|
|
|
(693,047 |
) |
|
|
|
|
|
|
(999,252 |
) |
|
|
|
|
|
|
(1,162,417 |
) |
|
|
(1,359,004 |
) |
|
|
(491,508 |
) |
Adjustment
- prior years
|
|
|
(40,682 |
) |
|
|
|
|
|
|
(40,682 |
) |
|
|
|
|
|
|
(40,682 |
) |
|
|
(40,682 |
) |
|
|
-- |
|
Adjustment
- current period
|
|
|
(396,065 |
) |
|
|
|
|
|
|
(636,903 |
) |
|
|
|
|
|
|
(525,764 |
) |
|
|
(304,002 |
) |
|
|
(40,682 |
) |
As
restated
|
|
|
(1,129,794 |
) |
|
|
|
|
|
|
(1,676,837 |
) |
|
|
|
|
|
|
(1,728,863 |
) |
|
|
(1,703,688 |
) |
|
|
(532,190 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Oil
and gas interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
previously reported
|
|
|
83,568 |
|
|
|
186,650 |
|
|
|
270,218 |
|
|
|
67,741 |
|
|
|
337,959 |
|
|
|
460,016 |
|
|
|
156,598 |
|
Adjustment
- current period
|
|
|
59,424 |
|
|
|
35,918 |
|
|
|
95,342 |
|
|
|
(14,789 |
) |
|
|
80,553 |
|
|
|
46,253 |
|
|
|
22,231 |
|
As
restated - current period
|
|
|
142,992 |
|
|
|
222,568 |
|
|
|
365,560 |
|
|
|
52,952 |
|
|
|
418,512 |
|
|
|
506,269 |
|
|
|
178,829 |
|
Opening
balance - beginning of year
|
|
|
200,754 |
|
|
|
|
|
|
|
200,754 |
|
|
|
|
|
|
|
200,754 |
|
|
|
200,754 |
|
|
|
21,925 |
|
As
restated
|
|
|
343,746 |
|
|
|
|
|
|
|
566,314 |
|
|
|
|
|
|
|
619,266 |
|
|
|
707,023 |
|
|
|
200,754 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
previously reported
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consulting
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
Oil
and gas interests
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consulting
|
|
|
396,065 |
|
|
|
240,838 |
|
|
|
636,903 |
|
|
|
(111,139 |
) |
|
|
525,764 |
|
|
|
304,002 |
|
|
|
40,682 |
|
Oil
and gas interests
|
|
|
59,424 |
|
|
|
35,918 |
|
|
|
95,342 |
|
|
|
(14,789 |
) |
|
|
80,553 |
|
|
|
46,253 |
|
|
|
22,231 |
|
|
|
|
455,489 |
|
|
|
276,756 |
|
|
|
732,245 |
|
|
|
(125,928 |
) |
|
|
606,317 |
|
|
|
350,255 |
|
|
|
62,913 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As
restated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consulting
|
|
|
396,065 |
|
|
|
240,838 |
|
|
|
636,903 |
|
|
|
(111,139 |
) |
|
|
525,764 |
|
|
|
304,002 |
|
|
|
40,682 |
|
Oil
and gas interests
|
|
|
59,424 |
|
|
|
35,918 |
|
|
|
95,342 |
|
|
|
(14,789 |
) |
|
|
80,553 |
|
|
|
46,253 |
|
|
|
22,231 |
|
|
|
|
455,489 |
|
|
|
276,756 |
|
|
|
732,245 |
|
|
|
(125,928 |
) |
|
|
606,317 |
|
|
|
350,255 |
|
|
|
62,913 |
|
Quarterly
net earnings (loss) and comprehensive earnings (loss) and net earnings (loss)
per share - basic and diluted have been restated due to an error in the
classification and calculation for stock-based compensation for non-employee
consultants.
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/ Peter R. Smith
Peter
R. Smith
|
|
Chairman
of the Board and Director
|
|
June
3, 2008
|
|
|
|
|
|
/s/ Michael J. Hudson
Michael
J. Hudson
|
|
Director
|
|
June
3, 2008
|
|
|
|
|
|
/s/ Dr. Avinash Chandra
Dr.
Avinash Chandra
|
|
Director
|
|
June
3, 2008
|