-----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, HTzFUjNibKnjNd0LZ9wq/pXJHJVIAFOpc1hxwwaUjuWsytnMwZTZHR3sD2gI+G+W 1YixtwYzJKnaKCguX0L+XA== 0000890566-97-002487.txt : 19971117 0000890566-97-002487.hdr.sgml : 19971117 ACCESSION NUMBER: 0000890566-97-002487 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971114 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: GEOKINETICS INC CENTRAL INDEX KEY: 0000314606 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 941690082 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-09268 FILM NUMBER: 97722142 BUSINESS ADDRESS: STREET 1: MARATHON OIL TOWER STREET 2: 5555 SAN FELIPE SUITE 780 CITY: HOUSTON STATE: TX ZIP: 77056 BUSINESS PHONE: 7138507600 MAIL ADDRESS: STREET 1: MARATHON OIL TOWER STREET 2: 5555 SAN FELIPE, ST 780 CITY: HOUSTON STATE: TX ZIP: 77056 10QSB 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended SEPTEMBER 30, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number 0-9268 GEOKINETICS INC. (Exact name of small business issuer as specified in its charter) DELAWARE 94-1690082 (State or other jurisdiction of (I.R.S. Employer Identification incorporation or organization) Number) 5555 SAN FELIPE, SUITE 780 HOUSTON, TEXAS 77056 (Address of principal executive offices) (Zip Code) Small Business Issuer's telephone number, including area code (713)850-7600 Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No On September 30, 1997, there were 10,860,788 shares of Registrant's common stock ($.20 par value) outstanding. GEOKINETICS INC. INDEX PART I. FINANCIAL INFORMATION Item 1. Financial Statements Condensed Statements of Financial Position September 30, 1997 and December 31, 1996 Condensed Statements of Operations Three Months and Nine Months Ended September 30, 1997 and 1996 Condensed Statements of Cash Flows Three Months Ended September 30, 1997 and 1996 Notes to Interim Financial Statements Pro Forma Financial Statement Information Item 2. Management's Discussion and Analysis or Plan of Operation PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K
PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS GEOKINETICS INC. Condensed Statements of Financial Position ASSETS September 30 December 31 1997 1996 Unaudited (*) --------------- -------------- Current Assets: Cash ........................................ $ 1,739,395 $ 97,905 Cash-Restricted .............................. 268,762 316,030 Receivables .................................. 2,067,992 199,150 Prepaid expenses ............................ 91,946 13,347 Oil and gas properties held for resale ..... 417,072 597,822 ----------- ---------- Total Current Assets .................... 4,585,167 1,224,254 Property and Equipment: Proved oil and gas Properties (net of depletion) ...................................... 593,234 637,028 (successful efforts method for oil and gas properties) Equipment (net of depreciation) ............. 16,842,221 2,938,598 Buildings (net of depreciation) ............. 128,106 128,106 Land ........................................ 23,450 23,450 ----------- ---------- Total Property and Equipment ........... 17,587,011 3,727,182 Other Assets: Deferred tax benefit ........................ 2,292,430 1,620,000 Deferred charges ............................ 71,130 76,317 Restricted investments ...................... 21,700 21,700 Deposits on software and equipment .......... 4,146 180,357 Goodwill .................................... 2,103,538 154,466 ----------- ---------- Total Other Assets ...................... 4,492,944 2,052,840 ----------- ---------- Total Assets ........................ $26,665,122 $7,004,276 =========== ========== * CONDENSED FROM AUDITED FINANCIAL STATEMENTS LIABILITIES AND STOCKHOLDERS' EQUITY September 30 December 31 1997 1996 Unaudited (*) --------------- -------------- Current Liabilities: Current maturities on long-term debt ........ $ 3,645,823 $ 331,825 Accounts payable - trade .................... 1,492,220 721,535 Accrued liabilities ......................... 780,584 434,526 Notes payable ............................... 725,713 1,028,733 Customer deposit ............................ 0 10,000 Due to officers ............................. 92,042 152,223 Due to shareholders ......................... 34,457 0 Advances for lease bank ..................... 260,500 360,500 Site restoration costs payable .............. 6,418 6,418 ------------ ----------- Total Current Liabilities ............... 7,037,757 3,045,760 Long -Term Liabilities: Long- term debt ............................. 13,447,826 4,860,123 ------------ ----------- Total Liabilities ...................... 20,485,583 7,905,883 Stockholders' Equity: Preferred Stock (287,500 shares issued) ..... 2,875,000 0 Common stock (15,000,000 shares authorized; 10,860,788 shares issued and outstanding @ 9/30/97 and 4,953,288 shares issued and outstanding @ 12/31/96)............... 2,178,227 990,657 Additional paid in capital .................. 7,867,735 3,924,345 Accumulated deficit ......................... (6,741,423) (5,816,609) ------------ ----------- Total Stockholders' Equity .............. 6,179,539 (901,607) ------------ ----------- Total Liabilities and Stockholders' Equity ............................ $ 26,665,122 $ 7,004,276 ============ =========== * CONDENSED FROM AUDITED FINANCIAL STATEMENTS GEOKINETICS INC. Condensed Statement of Operations
Three Months Ended Nine Months Ended September 30 September 30 (unaudited) (unaudited) ----------------------- ------------------------- 1997 1996 1997 1996 ---------- ---------- ----------- ------------ Revenues: Oil and gas sales ........ $ 117,872 $ 156,903 $ 342,219 $ 413,488 Operating fees ........... 57,444 59,893 174,099 191,710 Gain (Loss) on sale of assets ................. 0 (57,913) (73,441) (57,913) Seismic .................. 3,015,635 0 3,015,635 0 ------------ ----------- ------------ ----------- Total Revenues ....... 3,190,951 158,883 3,458,512 547,285 Expenses: General and administrative $ 975,539 $ 262,590 $ 1,453,590 $ 1,075,626 Lease operating expenses . 61,701 72,928 175,581 233,301 Seismic operating expenses 1,989,565 0 1,989,565 0 Depletion, depreciation and amortization............. 369,943 21,790 410,444 66,474 ------------ ----------- ------------ ----------- Total Expenses ....... 3,396,748 357,308 4,029,180 1,375,401 ------------ ----------- ------------ ----------- Loss from operations ......... $ (205,797) $ (198,425) $ (570,668) $ (828,116) Other Income: Interest income ......... 31,871 1,716 32,041 10,365 Interest expense ........ (392,538) (164,243) (761,187) (413,756) ------------ ----------- ------------ ----------- Total Other Income (Expense).. (360,667) (162,527) (729,146) (403,391) Income (Loss) before provision for income tax ............. $ (566,464) $ (360,952) $ (1,299,814) $(1,231.507) Provision for income tax ..... (150,000) 0 (375,000) 0 ------------ ----------- ------------ ----------- Total income tax ......... (150,000) 0 (375,000) 0 ------------ ----------- ------------ ----------- Net Income (Loss) ............ $ (416,464) $ (360,952) $ (924,814) $(1,231,507) ============ =========== ============ =========== Earnings (Loss) per share .... $ (0.04) $ (0.07) $ (0.09) $ (0.25) ============ =========== ============ =========== Weighted average common shares and equivalents outstanding 10,860,788 4,953,288 10,860,788 4,953,288 ============ =========== ============ ===========
GEOKINETICS INC. Condensed Statements of Cash Flows Three Months Ended September 30 (unaudited) -------------------------- 1997 1996 ---------- ---------- Cash flows from operating activities: Cash received from customers $2,385,352 $246,001 Interest and dividends received 31,871 1,969 Cash paid to suppliers and employees (3,810,558) (265,390) Interest paid (411,756) (161,467) ---------- ---------- Net cash provided (used) by operating activities (1,805,091) (178,887) ---------- ---------- Cash flows from investing activities: Cash payments for purchase of property and equipment (4,042,378) (40,122) Cash proceeds for redemption of certificate of deposit 0 79,639 Cash payment for escrow deposit-property investment 0 (320,968) ---------- ---------- Net cash provided (used) by investing activities (4,042,378) (281,451) ---------- ---------- Cash flows from financing activities: Lease bank payments (655,593) 2,500 Proceeds from issuance of stock, net 6,481,160 0 Proceeds from long-term debt 3,292,427 65,000 Principal payments on long-term debt (520,487) (75,918) Principal payments on short-term debt (939,453) 0 Payments on amounts due officers (31,130) 0 ---------- ---------- Net cash provided (used) by financing activities 7,628,584 (8,418) ---------- ---------- Net increase (decrease) in cash 1,779,455 (468,756) Cash, beginning of period 268,805 527,064 Cash deficit from acquired subsidiary (18,404) 0 ---------- ---------- Cash, end of period $2,029,856 $58,308 ========== ========== NOTES TO INTERIM FINANCIAL STATEMENTS 1. METHOD OF PRESENTATION. The interim financial statements contained herein have been prepared in accordance with the instructions to Form 10-QSB and include all adjustments which are, in the opinion of management, necessary to provide a fair statement of the financial position and results of operations for the interim period reported. The financial statements are condensed and should be read in conjunction with the financial statements and related notes included in the Registrant's Form 10-KSB filed with the Securities Exchange Commission for the fiscal year ended December 31, 1996. A summary of accounting policies and other significant information is included therein. 2. LONG TERM DEBT At September 30, 1997, the Company's long-term debt was valued at $17,093,649 including $3,645,823 which represents current maturities. Long-term debt consists primarily of (i) a note to a financial institution, bearing interest at prime plus 1 1/2%, totaling $4,523,698, (ii) a note to Input/Output, Inc., bearing interest at 12%, totaling $8,874,778, representing indebtedness incurred by Signature Geophysical Services, Inc. to acquire geophysical acquisition equipment and (iii) a note to Input/Output, Inc., bearing interest at 10%, totaling $3,292,426, representing indebtedness incurred by Quantum Geophysical, Inc. to acquire geophysical acquisition equipment. GEOKINETICS INC. Pro Forma Financial Statement Information ACQUISITIONS On July 18, 1997, the Company completed the acquisition of Signature Geophysical Services, Inc. (SGS) pursuant to the terms of a Stock Purchase Agreement, whereby the Company acquired 500 shares of the outstanding common stock of SGS in exchange for 400,000 shares of the Company's common stock. SGS is engaged in the business of conducting 2-D and 3-D seismic surveys of oil and gas properties, focusing on the Permian Basin and the U.S. Gulf Coast, with special emphasis on coastal swamp work. The acquisition has been accounted for as a purchase and the results of operations of SGS are included in the consolidated financial statements from the date of acquisition, July 18, 1997, for the third quarter of 1997. The following represents the unaudited pro forma results of operations as if the acquisition had occurred at the beginning of the third quarter, and therefore includes the results of operations for SGS during the period July 1, 1997, through July 18, 1997. In addition to combining the historical results of operations of the two companies, the pro forma calculations include amortization of goodwill. The excess of cost over the fair value of net assets acquired of $1,974,301 is being amortized on a straight-line basis over 40 years. GEOKINETICS INC. QUARTER ENDED SEPTEMBER 30, 1997
Signature Geokinetics Geophysical Inc. SERVICES, INC. ADJUSTMENTS COMBINED ----------- --------------- ----------- --------- Revenues $ 3,190,951 $ 912,800 0 4,103,751 General and Administrative (975,539) (96,304) 0 (1,071,843) Lease Operating Expenses (61,701) 0 0 (61,701) Amortization, Depreciation and Depletion Expense (369,943) (82,776) (2,056) (454,775) Seismic Operations (1,989,565) (731,050) 0 (2,720,615) Interest Income 31,871 0 0 31,871 Interest Expense (392,538) (56,520) 0 (449,058) Income tax (expense) benefit 150,000 14,700 0 164,700 --------- -------- ------- --------- NET INCOME (LOSS) $(416,464) $(39,150) $(2,056) $(457,670) ========= ======== ======= ========= Income (loss) per share $ (0.04) $ (0.04) Weighted average common shares and equivalents outstanding 10,860,788 10,860,788
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION At September 30, 1997, the Company's financial position reflects (i) the Company's ongoing oil and gas operations, (ii) the continuous start-up costs relating to the seismic operations to be conducted by Quantum Geophysical, Inc., and (iii) the seismic survey operations being conducted by Signature Geophysical Services, Inc. The Company expects seismic survey operations in Quantum Geophysical, Inc. to commence on or about October 1, 1997. On July 18, 1997, the Company completed the acquisition of 100% of the issued and outstanding capital stock of Signature Geophysical Services, Inc., a Houston based provider of 3-D geophysical surveys for the oil and gas industry. The financial requirements of the oil and gas business as well as the start-up and acquisition costs incurred in diversifying the Company's business activities continues to require the Company to utilize a substantial portion of its current assets and incur additional indebtedness in order to acquire additional operating assets. As a result, on July 18, 1997, the company completed a private placement of both its common and preferred stock. The Company received $5,500,000 in cash and the exchange of other indebtedness in the principal amount of $500,000. On July 24, 1997, the company completed an additional private placement of its preferred stock with the same investment group. The Company received proceeds of $1,000,000 in cash from this transaction. PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits None (b) Reports on Form 8-K During the quarter ended September 30, 1997, the Company filed a Form 8-K dated July 18, 1997 relating to: 1. A change in control of the Registrant, whereby the Blackhawk Group acquired (i) 5,500,000 newly issued shares of Registrant's Common Stock, (ii) 187,500 newly issued shares of Registrant's Series A Preferred Stock, (iii) Shadow Warrants to purchase up to an additional 7,104,103 shares of Common Stock, and (iv) 100,000 shares of Registrant's Series B Preferred Stock. 2. On July 18, 1997, the Registrant acquired all of the outstanding stock of Signature Geophysical Services, Inc. 3. On July 18, 1997 certain changes in the directors and officers of Registrant took place. SIGNATURE Pursuant to the requirement of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. GEOKINETICS INC. (Registrant) Date: November 14, 1997 ___________________________ Jay D. Haber Chairman and Chief Executive Officer --------------------------- Thomas J. Concannon Vice President and Chief Financial Officer EX-27 2
5 9-MOS DEC-31-1997 SEP-30-1997 2,008,157 0 2,067,992 0 417,072 4,585,167 17,587,011 0 26,665,122 7,037,757 0 0 2,875,000 2,178,227 0 26,665,122 0 3,190,951 0 3,396,748 0 0 0 (566,464) 150,000 0 0 0 0 (416,464) (.04) 0
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