-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PoYIpi007oJuMucIbEbg5lUGIlpFe7CRFF3jhz9nn8n26IhKsulW4zbpH8tg3qbU nU5G2f0KvQmCaxEcC59v+w== 0001137091-01-500587.txt : 20020411 0001137091-01-500587.hdr.sgml : 20020411 ACCESSION NUMBER: 0001137091-01-500587 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010930 FILED AS OF DATE: 20011123 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GEO PETROLEUM INC CENTRAL INDEX KEY: 0001016275 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 330328958 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-20915 FILM NUMBER: 1798428 BUSINESS ADDRESS: STREET 1: 2 APPALOOSA LANE CITY: ROLLING HILLS STATE: CA ZIP: 90274 BUSINESS PHONE: 3102650721 MAIL ADDRESS: STREET 1: 2 APPALOOSA LANE CITY: ROLLING HILLS STATE: CA ZIP: 20274 10QSB 1 geo_10qsb093001.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB (X)QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2001 ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ----------------- ---------------- Commission File Number: 0-20915 Geo Petroleum, Inc. ------------------ (Exact name of small business issuer as specified in its charter) California 33-0328958 - ---------- (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 18281 Lemon Drive, Yorba Linda, California, 92886 - -------------------------------------------------------------------------------- (Address of principal executive offices) 714.779.9897 ------------ (Issuer's Telephone Number) APPLICABLE ONLY TO CORPORATE ISSUERS State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practical date. As of September 30, 2001, there were 17,839,423 shares of the issuer's no par value common stock issued and outstanding. 1 PART I - FINANCIAL INFORMATION Item 1. Financial Statements Geo Petroleum, Inc. Financial Statements (Unaudited) As of September 30, 2001 and For Each of the Three-Month and Nine-Month Periods Ended September 30, 2001 and 2000 2 Geo Petroleum, Inc. Index to the Financial Statements (Unaudited) As of September 30, 2000 and For Each of the Three-Month and Nine-Month Periods Ended September 30, 2001 and 2000 Financial Statements of Geo Petroleum, Inc.: Balance Sheet (Unaudited) September 30, 2001...............................4-5 Statements of Operations (Unaudited) For Each of the Three-Month and Nine-Month Periods Ended September 30, 2001 and 2000........................6 Statement of Shareholders' Equity (Unaudited) For the Nine-Month Period Ended September 30, 2001..........................................................7 Statements of Cash Flows (Unaudited) For Each of the Nine-Month Periods Ended September 30, 2001 and 2000..............................................8-9 Notes to the Financial Statements.........................................10-13 3 Geo Petroleum, Inc. Balance Sheet (Unaudited) September 30, 2001 - -------------------------------------------------------------------------------- ASSETS Current assets: Accounts receivable, no allowance for doubtful accounts $ 50,489 Prepaid legal and consulting fees 27,081 ----------------- Total current assets 77,570 ----------------- Restoration and utility deposits 271,392 ----------------- Property and equipment: Oil and gas properties 305,251 Vehicles 36,884 Facilities and equipment 185,447 ----------------- Total property and equipment 527,582 Less: accumulated depreciation and depletion (37,841) ----------------- Total property and equipment, net 489,741 ----------------- Total assets $ 838,703 ================= The accompanying notes are an integral part of the financial statements. 4 Geo Petroleum, Inc. Balance Sheet (Unaudited) September 30, 2001 - -------------------------------------------------------------------------------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable: Trade and other $ 265,761 Related party 54,805 Accrued expenses 71,661 Line of credit - related party 115,000 Other liabilities 4,300 Note payable - other, current portion 4,926 ----------------- Total current liabilities 516,453 ----------------- Total liabilities 516,453 ----------------- Shareholders' equity: Preferred stock; no par value; 100,000 shares authorized; no shares issued and outstanding at June 30, 2001. - Common stock; no par value; 50,000,000 shares authorized; 19,212,231 shares issued and outstanding 11,566,483 Accumulated deficit (11,244,233) ----------------- Total shareholders' equity 322,250 ----------------- Total liabilities and shareholders' equity $ 838,703 ================= The accompanying notes are an integral part of the financial statements. 5 Geo Petroleum, Inc. Statements of Operations (Unaudited)
For Each of the Three-Month and Nine-Month Periods Ended September 30, 2001 and 2000 - ------------------------------------------------------------------------------------------------------------------------------------ For the Three-Month Periods Ended September 30, For the Nine-Month Periods Ended September 30, ---------------------------------------------- ---------------------------------------------- 2001 2000 2001 2000 ----------------- ----------------- ----------------- ----------------- Revenues: Oil and gas sales $ 8,491 - $ 8,623 $ 588 Waste water disposal services 86,734 $ 13,405 208,631 14,107 Other revenue - - 8,341 ----------------- ----------------- ----------------- ----------------- Total revenues 95,225 13,405 217,254 23,036 ----------------- ----------------- ----------------- ----------------- Expenses: Lease operating expenses 89,405 140,902 279,028 245,677 Lease environmental remediation expenses 1,500 1,000 1,028 2,000 Depletion and depreciation 5,138 - 15,414 - Professional fees 56,482 75,247 227,611 145,061 General and administrative 68,792 28,818 246,250 145,903 ----------------- ----------------- ----------------- ----------------- Total expenses 221,317 245,967 769,331 538,641 ----------------- ----------------- ----------------- ----------------- Loss from operations (126,092) (232,562) (552,077) (515,605) ----------------- ----------------- ----------------- ----------------- Reorganization items: Professional fees (21,618) (20,617) (35,773) (90,598) ----------------- ----------------- ----------------- ----------------- Total reorganization items (21,618) (20,617) (35,773) (90,598) ----------------- ----------------- ----------------- ----------------- Other income (expenses): Interest income 1,522 4,617 7,904 6,517 Interest expense (4,684) (797) (9,958) (2,783) ----------------- ----------------- ----------------- ----------------- Total other income (expense) (3,162) 3,820 (2,054) 3,734 ----------------- ----------------- ----------------- ----------------- Loss before provision for income taxes (150,872) (249,359) (589,904) (602,469) Provision for income taxes - (440) (800) ----------------- ----------------- ----------------- ----------------- Net loss $ (150,872) $ (249,359) $ (590,344) $ (603,269) ================= ================= ================= ================= Net loss per share, basic and diluted $ (0.01) $ (0.01) $ (0.01) $ (0.04) ================= ================= ================= =================
The accompanying notes are an integral part of the financial statements. 6 Geo Petroleum, Inc. Statements of Shareholders' Equity (Unaudited) For the Nine-Month Period Ended September 30, 2001 - -------------------------------------------------------------------------------
Common Common Accumulated Shares Stock Deficit Total ------------------ ---------------------- -------------------- ---------------- Balance, December 31, 2000 18,177,805 $ 11,225,293 $ (10,653,889) $ 571,404 Common shares issued 635,426 208,188 - 208,188 Common shares issued for services 399,000 133,002 - 133,002 Net loss (590,344) (590,344) ------------------ ---------------------- -------------------- ---------------- Balance, September 30, 2001 19,212,231 $ 11,566,483 $ (11,244,233) $ 322,250 ================== ====================== ==================== ================
The accompanying notes are an integral part of the financial statements. 7 Geo Petroleum, Inc. Statements of Cash Flows (Unaudited) For Each of the Nine-Month Periods Ended September 30, 2001 and 2000 - --------------------------------------------------------------------------------
For the Nine-Month Periods Ended September 30, ---------------------------------------- 2001 2000 ------------------ ----------------- Cash flows from operating activities: Net loss $ (590,344) $ (603,269) Adjustments to reconcile net loss to net cash used in operating activities: Depletion and depreciation 15,414 4,069 Common shares issued for services 48,500 - Decrease (increase) in assets: Accounts receivable (16,528) 70,000 Prepaid legal and consulting fees 148,147 - Other prepaid expenses 9,000 2,356 Restoration and utility deposits 19,544 (80,273) Increase (decrease) in liabilities: Accounts payable - trade 104,860 160,822 Accounts payable - related party - (14,149) Accrued expenses - (145,005) Income tax payable - (3,039) Other liabilities (19,974) (69,717) Accrued expenses - related party - 54,805 ------------------ ----------------- Net cash used in operating activities (281,381) (623,400) ------------------ ----------------- Cash flows provided by (used in) investing activities: Purchases of facilities and equipment (972) (438,574) Capital expenditures on oil and gas properties (43,940) - Payments on notes receivable 7,100 25,000 ------------------ ----------------- Net cash used in investing activities (37,812) (413,574) ------------------ ----------------- Cash flows provided by (used in) financing activities: Proceeds from line of credit - related party 30,000 - Proceeds from issuance of note payable - 35,000 Payments on notes payable (23,670) (19,604) Net proceeds from the issuance of common stock 242,690 584,723 ------------------ ----------------- Cash provided by financing activities 249,020 600,119 ------------------ ----------------- Net increase (decrease) in cash (70,173) (436,855) Cash and equivalents at beginning of period 70,173 436,916 ------------------ ----------------- Cash and equivalents at end of period $ - $ 61 ================== =================
The accompanying notes are an integral part of the financial statements. 8 Geo Petroleum, Inc. Statements of Cash Flows (Unaudited) For Each of the Nine-Month Periods Ended September 30, 2001 and 2000 - -------------------------------------------------------------------------------- Supplemental Disclosures of Cash Flow Information For the Nine-Month Periods Ended September 30, --------------------------------- 2001 2000 -------------- ---------------- Interest paid $ 2,654 $ 2,783 Income taxes paid $ 800 $ 3,839 Supplemental Disclosure of Non-Cash Investing and Financing Activities Issuance of common stock for prepaid legal fees: Prepaid legal and consulting fees $ 50,000 - Issuance of common stock $ (50,000) - Liabilities satisfied through the issuance of common stock: Accrued expenses - $ 169,246 Common stock - $ (169,246) 9 Geo Petroleum, Inc. Notes to the Financial Statements (Unaudited) As of September 30, 2001 and For Each of the Three-Month and Nine-Month Periods Ended September 30, 2001 and 2000 - ------------------------------------------------------------------------------- 1. Description of the Company's Business - ------------------------------------------ Geo Petroleum, Inc. (the "Company") is an oil and gas production company founded in 1986 and incorporated in the State of California. The Company engages in the development, production and management of oil and gas properties. All of the Company's properties are located in California. Certain of the wells on one of the Company's properties are used for waste water disposal services. 2. Basis of Presentation - -------------------------- In the opinion of the management of Geo Petroleum, Inc., the accompanying unaudited condensed financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary to present fairly its financial position as of September 30, 2001, the results of its operations, shareholders' equity, and cash flows for the three-month and nine-month periods ended September 30, 2001 and 2000. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted principles have been condensed or omitted pursuant to the rules and regulations promulgated by the Securities and Exchange Commission. The statements should be read in conjunction with the financial statements and footnotes for the year ended December 31, 2000 included in the Company's Form 10K-SB. The results of operations for the interim period are not necessarily indicative of the results to be expected for the full year. 3. Commitments and Contingencies - ---------------------------------- Minimum Royalties The Company has commitments for minimum royalty payments on certain of its oil and gas properties, which total approximately $36,000 annually. Concentration of Credit Risk Financial instruments, which potentially subject the Company to concentrations of credit risk, consist primarily of cash and cash equivalents and accounts receivable. The Company places its cash and cash equivalents with high quality financial institutions. Exposure to losses on accounts receivable is principally dependent on the individual customer's financial condition, as credit sales are not collateralized. The Company monitors its exposure to credit loss and reserves those accounts receivable that it deems to be uncollectible. Cash in Excess of Federal Deposit Insurance Corporation Insured Limits The Company maintains its cash in bank deposit accounts, which, at times, may exceed federally insured limits. Accounts are guaranteed by the Federal Deposit Insurance Corporation ("FDIC") up to $100,000. At September 30, 2001, the Company had 10 Geo Petroleum, Inc. Notes to the Financial Statements (Unaudited) As of September 30, 2001 and For Each of the Three-Month and Nine-Month Periods Ended September 30, 2001 and 2000 - ------------------------------------------------------------------------------- 3. Commitments and Contingencies, Continued - --------------------------------------------- Cash in Excess of Federal Deposit Insurance Corporation Insured Limits, Continued approximately $10,400 in excess of FDIC insured limits. The Company has not experienced any losses in such accounts. Risks of the Industry in Which the Company Operates The Company participates in an industry that is characterized by competitive pressure, changes in the prices of oil and gas on a world-wide basis, federal, state, and local regulations governing production and development of its oil and gas reserves and compliance with various environmental laws and regulations. The Company's results of operations are affected by a wide variety of factors, including world events, general economic conditions, changes in average selling prices over the productive life of oil and gas reserves, the timing of production from new and existing proved developed and undeveloped reserves by the Company, its competitors, and others, the ability to produce sufficient quantities of oil and gas reserves in a timely manner, and the timely implementation of new and alternative reserve recovery process technologies. Based on the factors noted herein, the Company may experience substantial period-to-period fluctuations in future operating results. Property Lease Risks The Company's oil and gas leases on its Vaca Tar Sands and Rosecrans properties contain provisions, which provide for minimum production requirements and periods. The Company's failure to meet those minimum requirements could result in a termination of the lease(s) and loss of all its rights thereunder. However, the Company believes it is in compliance with the lease(s) provisions and has not received notification from anyone to the contrary. Management's Plan The accompanying financial statements have been prepared on a going-concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company incurred net losses of $743,257 and $1,028,762 and negative cash flows from operations of $893,126 and $69,945 for the years ended December 31, 2000 and 1999, respectively. In addition, during the three-month and nine-month periods ended September 30, 2001, the Company incurred net losses of $150,872 and $590,344, respectively, and negative cash flow from operations of $281,381 for the nine-month period ended September 30, 2001. At December 31, 2000 and September 30, 2001, the Company had an accumulated deficit of $10,653,889 and $11,244,233 respectively, and its current liabilities exceed its current assets by $179,775 and $438,883, respectively. In December 1999, the Company emerged from bankruptcy and in the fourth quarter of 2000, and 11 Geo Petroleum, Inc. Notes to the Financial Statements (Unaudited) As of September 30, 2001 and For Each of the Three-Month and Nine-Month Periods Ended September 30, 2001 and 2000 - ------------------------------------------------------------------------------- 3. Commitments and Contingencies - ---------------------------------- Management's Plan, Continued the Company began oil production, using steam injection recovery techniques, and waste water disposal services at its Vaca Tar Sands properties. Due to inordinately high natural gas costs for the steam injection process, the Company curtailed its oil production efforts. The Company's continuation as a going concern is dependent upon its ability to obtain additional financing, generate sufficient cash flow to meet its current obligations, and to attain profitable operations. The Company obtained additional equity financing through private placements of its common stock of approximately $930,000 during the year ended December 31, 2000 and $208,188 during the nine-month period ended September 30, 2001, respectively. The Company is continuing its efforts to obtain additional financing and, in 2001, engaged an investment capital firm to assist the Company. There can be no assurance that any of these efforts will be successful. The financial statements do not include any adjustments that might result from the outcome of this uncertainty 4. Related Party Transactions - ------------------------------- The Company rents on a month-to-month basis its office facilities at $5,000 per month from an entity that is wholly-owned by a company officer, who is a major shareholder. 5. Loss Per Share - ------------------- Basic and diluted loss per common share have been computed by dividing the loss available to common shareholders by the weighted-average number of common shares for the period. The computations of basic and diluted loss per common share are as follows: For the Three-Month Periods Ended September 30, ------------------------------- 2001 2000 ------------- ------------- Numerator: Net loss available to common shareholders $ (150,872) $ (281,416) Denominator: Weighted-average shares basic and diluted 18,890,133 17,401,314 ------------- ------------- Loss per common share, basic and diluted $ (0.01) $ ( 0.01) 12 Geo Petroleum, Inc. Notes to the Financial Statements (Unaudited) As of September 30, 2001 and For Each of the Three-Month and Nine-Month Periods Ended September 30, 2001 and 2000 - ------------------------------------------------------------------------------- 5. Loss Per Share, Continued - -------------------------------
For the Nine-Month Periods Ended September 30, ------------------------------- 2001 2000 ------------- ------------- Numerator: Net loss available to common shareholders $ (150,872) $ (603,269) Denominator: Weighted-average shares basic and diluted 18,775,795 16,492,175 ------------------------------- Loss per common share, basic and diluted $ (0.01) $ (0.04) The following additional potential common shares were outstanding during 2001 and 2000, but were not included in the computation of diluted loss per share, because to do so would have been antidilutive for the periods presented. For the Three-Month Periods Ended September 30, ------------------------------- 2001 2000 ------------- ------------- Shares of common stock issuable under: Warrants 655,151 856,821 Options 4,000,000 4,000,000 ------------- ---------- Total shares of common stock issuable 4,655,151 4,856,821 ============== =============
6. Stock and Warrant Transactions - ----------------------------------- Common Shares Sold to Private Investors During the period January 1, 2001 through April 30, 2001, the Company sold 322,500 shares of its common stock at $0.50 per share to private investors and received total cash proceeds of $161,249. In September 2001, the Company sold 312,926 shares of its common stock to private investors and received total cash proceeds of $46,939. In August 2001, the Company issued 184,000 shares of its common stock for services based on the market value of the shares totaling $34,502. The Company issued 100,000 shares of its common stock for legal services for the period from January 2000 through December 2000. The shares were valued at the market price of the stock at the date the services were agreed to be provided. In addition, the Company issued 90,000 common shares that were valued at the fair value of the services of $36,000. Also, the Company issued 25,000 common shares for services, which were valued based on the market value of the shares at the date of issuance totaling $12,500. 13 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. This following information specifies certain forward-looking statements of management of the company. Forward-looking statements are statements that estimate the happening of future events and are not based on historical fact. Forward-looking statements may be identified by the use of forward-looking terminology, such as "may", "shall", "will", "could", "expect", "estimate", "anticipate", "predict", "probable", "possible", "should", "continue", or similar terms, variations of those terms or the negative of those terms. The forward-looking statements specified in the following information have been compiled by our management on the basis of assumptions made by management and considered by management to be reasonable. Our future operating results, however, are impossible to predict and no representation, guaranty, or warranty is to be inferred from those forward-looking statements. The assumptions used for purposes of the forward-looking statements specified in the following information represent estimates of future events and are subject to uncertainty as to possible changes in economic, legislative, industry, and other circumstances. As a result, the identification and interpretation of data and other information and their use in developing and selecting assumptions from and among reasonable alternatives require the exercise of judgment. To the extent that the assumed events do not occur, the outcome may vary substantially from anticipated or projected results, and, accordingly, no opinion is expressed on the achievability of those forward-looking statements. No assurance can be given that any of the assumptions relating to the forward-looking statements specified in the following information are accurate, and we assume no obligation to update any such forward-looking statements. Our Business. Geo Petroleum, Inc. is a California corporation formed in 1986 primarily to develop a large tar sand deposit in Ventura County, California and to engage in the oil field waste disposal business. We are a minor factor in the California oil and gas industry and face competition from numerous companies, which have considerably more financial resources, property and manpower, than do we. We are in a weak financial condition and must rely upon third party sources of funds to conduct our proposed operations. Essentially, our only revenue producing operations are expected to be our Vaca Tar Sands, Rosecrans and Waste Disposal properties, each of which require significant cash expenditures to operate and develop. During the year 2000, we produced and sold small amounts of oil from our Vaca properties, none from our Rosecrans properties and steadily increased our revenues from our Waste Disposal operations. The results of our operations for the third quarter of 2001 are discussed below. In 1998, we filed for protection under Chapter 11 of the U.S. Bankruptcy Code. In December, 1999 we emerged from bankruptcy under a plan which, among other things, provided for the issuance of approximately 1,900,000 shares of our common stock to our creditors and a change in our management. Present management was installed as part of our reorganization. At the time of our bankruptcy filing, we had sold or otherwise transferred a substantial portion of our oil and gas holdings and had interests in approximately 2,230 gross acres (2,030 net acres) of oil and gas leases or mineral rights, of which approximately 1,630 gross acres (1,410 net acres) were developed for oil and gas production and approximately 600 gross and net acres were undeveloped. After emerging from bankruptcy, our oil and gas holdings were approximately 2,000 gross and 1,830 net acres. Since we emerged from bankruptcy, our income from operations has not been sufficient to maintain the Company. Our president does not receive cash compensation. Were it not for the fact that we have sold equity during the year 2000, the Company would not be able to continue operating. At year-end 2000, only our waste disposal facility was producing significant revenues. Results of Operations. The following discussion and analysis for the quarters ended September 30, 2001 and September 30, 2000, are to be read in combination with the Financial Statements presented elsewhere herein. 14 Third quarter 2001 compared with third quarter 2000. During the quarter ended September 30, 2001, we had a net loss of $150,872 compared to a net loss of $249,359 for the comparable 2000 period. Revenues from waste disposal operations increased from $13,405 during the 2000 period, to $86,734 for the third quarter of 2001. This increase is due to the fact that we had just begun restoration of our waste disposal operations during the third quarter of 2000 but by the third quarter of 2001, we had fully restored operations. A limited amount of oil was produced and sold from our Rosecrans property during the third quarter of 2001 in order to retain our leases on the property. This production generated $8,491 in revenues for the quarter ended September 30, 2001 compared to none in 2000. Lease operating expenses decreased from $140,902 for the third quarter of 2000 to $89,405 for the period in 2001. This decrease is due to the fact that by the third quarter of 2000, we were incurring significant lease operating costs in connection with the process of returning certain properties back to production (including the Vaca Tar Sands Unit), but oil production did not actually begin until the fourth quarter of 2000. All oil production then ceased during the first few months of 2001; however, operating costs associated with the waste disposal property continued as well as certain costs necessary to maintain our oil and gas leases ready to be reactivated. General and administrative expenses increased from $28,818 for the period in 2000 to $68,792 for 2001. This increase is due primarily to the fact that our operations were just beginning during 2000 as we emerged from bankruptcy in December 1999. Professional fees during the third quarter of 2001 were $56,482 compared to $75,247 during the period in 2000. This decrease reflects the fact that fees paid in 2000 were high due to legal and accounting services required to restore Geo to a fully reporting entity to the SEC and to resolve remaining issues related to the bankruptcy completed in 1999. Although we have attempted to control these costs, continuing need for professional services during 2001 has resulted in fees higher than we prefer. However, as time passes, the need for ongoing professional services has declined and we expect that trend to continue. Reorganization items were about the same for the third quarter of 2001 as they were for the period in 2000. By the third quarter of 2000, most of the activity related to the bankruptcy was completed and the costs associated with the reorganization had decreased substantially. Capital Resources and Liquidity Financial Position. As of September 30, 2001, our working capital was $(438,883) compared to $(131,155) as of September 30, 2000. Operating losses incurred during 2001 have continued to erode our current position reflected both in the reduction of current assets and the increase in current liabilities during the third quarter of 2001. Fortunately, profitable operations of the waste disposal facility have continued during the third quarter and are expected to increase in the near future. As noted above, a small amount of revenue was generated from operations on the Rosecrans property. We were able to raise some additional capital through issuance of common stock, but no significant new sources of financing were discovered during the third quarter of 2001. During the third quarter of 2001, we did continue our efforts to identify new sources of financing to facilitate resumption of operations on the Rosecrans property, to provide funding for possible new acquisitions, and to secure additional working capital. The letter agreement signed in the first of 2001 quarter with Virginia Capital Corp. has resulted in the issuance of a standby letter of credit in the amount of $1,250,000. Although this letter of credit requires certain performance standards before funds can be drawn, we anticipate additional funding opportunities from Virginia Capital Corp. in the future. In the meantime, other possible financing opportunities are being pursued with the hope that we will be able to fund the restoration of our Rosecrans property and engage in some additional activities, including potential joint venture activities with Rothchild Oil & Gas, Inc. Inflation. In recent years inflation has not had a significant impact on our operations or financial condition. Trends. Two trends have had a significant impact on our operations. First the price of crude oil rose to a high of $34.12 per barrel in 2000 and has remained relatively high in 2001. The high spot price for NYMEX sweet crude was $30.34 in May. Forecasts predict future oil prices to remain in the range between 25$ and $32 per barrel. The other significant trend is the rapid increase in the price of natural gas. As a purchaser of natural gas for operations, the sharp rise in gas prices has resulted in curtailment of production on the Vaca Tar Sands Unit. Last winter (October 2000-March 2001) natural gas prices at the wellhead averaged $5.74 per thousand cubic feet (MCF), more than double the previous winter's price. Natural gas prices began climbing last summer primarily in response to low levels of underground gas storage. Compared to this time last year, storage levels are still low. As a result, spot prices have been averaging as high as $4.55 per MCF during the second quarter of 2001. Currently, prices have fallen to around $3.00 per MCF at the wellhead. We currently have no gas production; however, we are investigating possible acquisitions that could produce natural gas for either sale or to reduce operating costs on the Vaca Tar Sands Unit. 15 PART II -- OTHER INFORMATION Item 1. Legal Proceedings. From time to time, we may be involved in legal proceedings, including those arising from our operations and the amounts due suppliers or royalty owners. None of such proceedings are generally considered material to our operations or financial condition. Item 2. Changes in Securities. In August, 2001, the company issued 184,000 shares of its common stock for services based on the market value of the shares totaling 34,502 dollars, in a private placement transaction pursuant to section 4 (2) of the secrurities act of 1933 as amended. Item 3. Defaults Upon Senior Securities None. Item 4. Submission of Matters to Vote of Security Holders On August 29, 2001, we held our annual meeting of shareholders. Matters submitted for a vote of our security holders were: the election of four (4) members to the Board of Directors of the Company; the approval and adoption of the Company's Stock Option Plan and the issurance of stock options to Dennis Timpe; the approval, adoption and ratification of the actions taken by the Company's officers and directors during the last fiscal year; the approval of the selection of Kelly & Company to audit the financial statements of the Company for the fiscal year ended December 31, 2000; and the approval of the selection of Kelly & Company to audit the financial statements of the Company for the fiscal year beginning January 1, 2001. Proxies for the meeting were solicited pursuant to Regulation 14A under the Exchange Act, there was no solicitation in opposition to the management's nominees as listed in the proxy statement, and all of such nominees were elected; specifically, Lori Timpe-Long, Dennis Timpe, Greg Tolleson and Christian Dillon. The number of votes cast for, against or withheld, and the number of abstentions and broker non-votes, for each matter, and for each director nominee individually, are as follows:
Lori Timpe-Long FOR: 14,232,961 AGAINST: 0 WITHHELD: 49,230 ABSTENTIONS: N/A BROKER NON-VOTES: N/A Dennis Timpe FOR: 14,251,961 AGAINST: 0 WITHHELD: 30,230 ABSTENTIONS: N/A BROKER NON-VOTES: N/A Greg Tolleson FOR: 14,236,961 AGAINST: 0 WITHHELD: 45,230 ABSTENTIONS: N/A BROKER NON-VOTES: N/A Christian Dillon FOR: 14,236,961 AGAINST: 0 WITHHELD: 45,230 ABSTENTIONS: N/A BROKER NON-VOTES: N/A The approval and adoption of the Company's Stock Option Plan and the issuance of stock options to Dennis Timpe: FOR: 9,550,736 AGAINST: 980,468 WITHHELD: N/A ABSTENTIONS: 33,374 BROKER NON-VOTES: 3,717,613 The approval, adoption and ratification of the actions taken by the Company's officers and directors during the last fiscal year: FOR: 13,427,961 AGAINST: 694,230 WITHHELD: N/A ABSTENTIONS: 160,000 BROKER NON-VOTES: N/A The approval of the selection of Kelly & Company to audit the financial statements of the Company for the fiscal year ended December 31, 2000: FOR: 14,247,561 AGAINST: 19,630 WITHHELD: N/A ABSTENTIONS: 15,000 BROKER NON-VOTES: N/A The approval of the selection of Kelly & Company to audit the financial statements of the Company for the fiscal year beginning January 1, 2001: FOR: 14,261,061 AGAINST: 21,130 WITHHELD: N/A ABSTENTIONS: N/A BROKER NON-VOTES: N/A
The total number of shares present in person and by proxy equaled 80% of the total shares issued and outstanding, thereby constituting quorum for purposes of the meeting. The total number of shares represented and voting in person or by proxy at the meeting was 14,282,191. 16 Item 5. Other Information None Item 6. Exhibits and Reports on Form 8-K (a) Exhibits 2. Plan of Reorganization of Geo Petroleum, Inc. dated October 12, 1999, and confirmed by the U.S. Bankruptcy Court for the Central District of California, Santa Barbara Division, on December 15, 1999, was previously filed as an exhibit to our Annual Report on Form 10-KSB for the year ended December 31, 1999 and is incorporated herein by this reference. 3. Our Articles of Incorporation, and the First, Second and Third Amendments to our Articles of Incorporation, as well as our Bylaws, were filed as exhibits to our Form 10 Registration Statement dated June 6, 1996 and are incorporated herein by this reference. 4. Not applicable 10. Not applicable 11. Included in financial statements in Part I, Item 1 above. 15. Included in financial statements in Part I, Item 1 above. 18. Not applicable 19. Proxy Statement filed with the Securities and Exchange Commission on July 2, 2001 and incorporated herein by this reference. 22. Not applicable 23. Not applicable 24. Not applicable (b) We did not file any reports on Form 8-K during the third quarter of 2001. SIGNATURES In accordance with the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Geo Petroleum, Inc., a California corporation November 20, 2001 By: /s/ Dennis Timpe -------------------------- Dennis Timpe Its: President and a Director -----END PRIVACY-ENHANCED MESSAGE-----