-----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, WG/PapcPFdVsgOxo4Dlo1TBsoN7fgvrlXqj8yZtViGjBO9C+V4UpWbmicPE+hpvs OS7C/gGZMWFS3BH4MAPGSg== 0000890566-99-001170.txt : 19990817 0000890566-99-001170.hdr.sgml : 19990817 ACCESSION NUMBER: 0000890566-99-001170 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990816 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: 99691613 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 JUNE 30, 1999 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 Number) incorporation or organization) 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 June 30, 1999, there were 19,332,480 shares of Registrant's common stock ($.01 par value) outstanding. GEOKINETICS INC. INDEX PART I. FINANCIAL INFORMATION PAGE NO. Item 1. Financial Statements.................................... 3 Condensed Statements of Financial Position June 30, 1999 and December 31, 1998................ 3 Condensed Statements of Operations Three Months and Six Months Ended June 30, 1999 and 1998.............................. 5 Condensed Statements of Cash Flows Three Months Ended June 30, 1999 and 1998............................. 6 Pro forma Financial Statement Information................. 7 Notes to Interim Financial Statements..................... 9 Item 2. Management's Discussion and Analysis or Plan of Operation....................... 10 PART II. OTHER INFORMATION Item 3. Defaults Upon Senior Securities........................ 13 Item 5. Other Information...................................... 13 Item 6. Exhibits and Reports on Form 8-K....................... 13 2 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS GEOKINETICS INC. Condensed Statements of Financial Position ASSETS June 30 December 31 1999 1998 Unaudited Unaudited ----------- ----------- Current Assets: Cash ......................................... $ 1,620,317 $ 2,705,581 Receivables .................................. 2,858,756 7,385,425 Prepaid expenses ............................. 421,322 490,098 ----------- ----------- Total Current Assets ..................... 4,900,395 10,581,104 Property and Equipment: Proved oil and gas Properties (net of depletion) ................................. 694,143 695,439 (successful efforts method for oil and gas properties) Equipment (net of depreciation) .............. 23,163,773 26,376,730 Buildings (net of depreciation) .............. 275,024 279,893 Land ......................................... 23,450 23,450 ----------- ----------- Total Property and Equipment ............ 24,156,390 27,375,512 Other Assets: Deferred charges ............................. 483,199 417,938 Restricted investments ....................... 106,700 106,700 Other assets ................................. 64,633 99,632 Goodwill ..................................... 29,488,380 30,957,183 ----------- ----------- Total Other Assets ....................... 30,142,912 31,581,453 ----------- ----------- Total Assets ......................... $59,199,697 $69,538,069 =========== =========== 3 LIABILITIES AND STOCKHOLDERS' EQUITY June 30 December 31 1999 1998 Unaudited Unaudited ------------ ------------ Current Liabilities: Current maturities of long-term debt ....... $ 3,513,505 $ 5,210,380 Accounts payable ........................... 1,668,297 4,822,802 Accrued liabilities ........................ 6,748,347 4,352,380 Notes payable .............................. 2,177,872 2,151,405 Advances for lease bank .................... 260,500 260,500 Other current liabilities .................. 40,979 51,848 ------------ ------------ Total Current Liabilities .............. 14,409,500 16,849,315 Long-Term Liabilities: Long-term debt, net of current maturities .. 41,612,214 40,062,071 Deferred income tax ........................ 222,045 222,045 ------------ ------------ Total Liabilities ..................... 56,243,759 57,133,431 Stockholders' Equity: Common stock, $.01 par value, 100,000,000 shares authorized, 19,332,480 outstanding 193,325 193,325 Additional paid in capital ................. 29,112,344 29,112,344 Accumulated deficit ........................ (26,349,731) (16,901,031) ------------ ------------ Total Stockholders' Equity ............. 2,955,938 12,404,638 ------------ ------------ Total Liabilities and Stockholders' Equity ............................. $ 59,199,697 $ 69,538,069 ============ ============ 4 GEOKINETICS INC. Condensed Statement of Operations
Three Months Ended Six Months Ended June 30 June 30 (unaudited) (unaudited) ---------------------------- ---------------------------- 1999 1998 1999 1998 ------------ ------------ ------------ ------------ Revenues: Seismic revenues ......... $ 1,268,750 $ 5,895,795 $ 3,241,791 $ 11,587,134 Data processing operations 1,818,889 2,400,236 4,828,420 2,400,236 Oil and gas sales ........ 58,989 57,213 98,650 106,958 Operating fees ........... 61,752 57,654 120,445 115,078 ------------ ------------ ------------ ------------ Total Revenues ....... 3,208,380 8,410,898 8,289,306 14,209,406 Expenses: General and administrative $ 775,759 $ 1,244,315 $ 1,648,916 $ 2,368,408 Seismic operating expenses 1,795,426 3,689,509 4,378,111 6,566,032 Data processing expense .. 1,636,695 636,209 3,253,871 636,209 Lease operating expenses . 52,939 69,774 129,175 150,206 Amortization expense ..... 935,489 635,524 1,866,672 683,294 Depletion expense ........ 3,843 3,843 7,686 7,686 Depreciation expense ..... 1,660,237 973,417 3,317,585 1,819,516 ------------ ------------ ------------ ------------ Total Expenses ....... 6,860,388 7,252,591 14,602,016 12,231,351 ------------ ------------ ------------ ------------ Income (Loss) from operations $ (3,652,008) $ 1,158,307 $ (6,312,710) $ 1,978,055 Other Income: Interest income ......... 26,010 76,515 56,261 93,517 Other income ............ 42,889 10 45,657 4,910 Interest expense ........ (1,605,383) (1,271,365) (3,237,907) (1,731,162) ------------ ------------ ------------ ------------ Total Other Income (Expense) ........ (1,536,484) (1,194,840) (3,135,989) (1,632,735) Income (Loss) before provision for income tax ............. $ (5,188,492) $ (36,533) $ (9,448,699) $ 345,320 Provision for income tax ..... 0 0 0 0 ------------ ------------ ------------ ------------ Total income tax .......... 0 0 0 0 ------------ ------------ ------------ ------------ Net Income (Loss) ............ $ (5,188,492) $ (36,533) $ (9,448,699) $ 345,320 ============ ============ ============ ============ Earnings (Loss) per Common Share ...................... $ (0.27) $ (0.002) $ (0.49) $ 0.02 ============ ============ ============ ============ Earnings (Loss) per Share-assuming Dilution .... (0.12) $ (0.001) (0.22) $ 0.01 ============ ============ ============ ============ Weighted average Common Shares Outstanding ................ 19,322,480 19,008,135 19,322,480 18,615,352 ============ ============ ============ ============ Fully Diluted Common Shares .. 42,655,719 42,938,788 42,655,719 42,546,005 ============ ============ ============ ============
5 GEOKINETICS INC. Condensed Statements of Cash Flows Three Months Ended June 30 (unaudited) --------------------------- 1999 1998 ------------ ------------ Cash flows from operating activities: Cash received from customers ............... $ 4,925,782 $ 6,687,407 Interest and dividends received ............ 26,010 76,515 Cash paid to suppliers and employees ....... (5,511,906) (2,659,463) Interest paid .............................. (341,938) (467,637) ------------ ------------ Net cash provided (used) by operating activities ........................... (902,052) 3,636,822 ------------ ------------ Cash flows from investing activities: Proceeds from insurance settlement ......... 21,504 0 Payments for purchase of property and equipment ................................ (80,717) (10,571,642) Acquisition of Geophysical Development Corp. 0 (26,000,000) Acquisition earnest money refunded ......... 0 1,000,000 ------------ ------------ Net cash provided (used) by investing activities ........................... (59,213) (35,571,642) ------------ ------------ Cash flows from financing activities: Proceeds from issuance of short-term debt .. 66,152 0 Proceeds from issuance of long-term debt ... 0 40,000,000 Principal payments on long-term debt ....... (260,229) (937,760) Principal payments on short-term debt ...... (392,509) (1,661,257) Principal payments on loans from officers .. 0 (24,696) ------------ ------------ Net cash provided (used) by financing activities ........................... (586,586) 37,376,287 ------------ ------------ Net increase (decrease) in cash ............... (1,547,851) 5,441,467 Cash acquired in acquisition ................... 0 50,805 Cash, beginning of period ...................... 3,168,168 1,111,330 ------------ ------------ Cash, end of period ............................ $ 1,620,317 $ 6,603,602 ============ ============ 6 GEOKINETICS INC. Pro Forma Financial Statement Information ACQUISITIONS On April 30, 1998, the Company completed the acquisition of Geophysical Development Corporation (GDC) pursuant to the terms of a Stock Purchase Agreement, whereby the Company acquired 100% of the shares of the outstanding common stock of GDC in exchange for $26,000,000 in cash and 1,000,000 newly-issued shares of the Company's common stock. GDC is engaged in the business of providing seismic data processing, software and consultation services to the oil and gas industry. The acquisition has been accounted for as a purchase and the results of operations of GDC are included in the consolidated financial statements from the date of acquisition, April 30, 1998. The following represents the unaudited pro forma results of operations as if the acquisition had occurred at the beginning of the first quarter of 1998, and therefore includes the results of operations of GDC during the periods January 1, 1998 through March 31, 1998 for the first quarter and April 1, 1998 through April 30, 1998 on a pro forma basis for the second quarter. In addition to combining the historical results of operations of the two companies, the pro forma calculations include amortization of goodwill. Excess of cost over the fair value of net assets acquired of $27,961,807 is being amortized on a straight-line basis over 10 years. 7
For the Quarter Ended June 30, 1998 ---------------------------------------------------------------- Geophysical Development Pro-Forma Geokinetics Inc. Corporation Adjustments Combined ---------------- ------------ ------------ ------------ Revenues Seismic Revenues ............... 5,895,795 5,895,795 Oil & Gas Sales ................ 57,213 57,213 Operator Overhead Fee .......... 57,654 57,654 Data Processing Revenues ....... 2,400,236 2,097,038 4,497,274 ---------------- ------------ ------------ ------------ Total Revenues .............. 8,410,898 2,097,038 10,507,936 Expenses: Seismic Operating Expenses ..... (3,689,509) (3,689,509) General & Administrative ....... (1,244,315) (92,283) (1,336,598) Depl. Depr. & Amort. ........... (1,612,784) (55,041) (235,657) (1,903,482) Lease Operating Expenses ....... (69,774) (69,774) Other Income ................... 10 10 Data Processing Expenses ....... (636,209) (681,263) (1,317,472) Interest Income ................ 76,515 16,114 92,629 Interest Expense ............... (1,271,365) (9,795) (461,192) (1,742,352) Income Tax (expense) benefit ... (433,422) 156,805 (276,617) ---------------- ------------ ------------ ------------ Net Income (Loss) ........... (36,533) 841,348 (540,044) 264,771 ================ ============ ============ ============ Income (Loss) per Share ..... (0.002) 0.014 ================ ============ Income (Loss) Fully Diluted . (0.001) 0.006 ================ ============ Weighted Average Common Shares and Equivalents Outstanding ............... 19,008,135 19,008,135 ================ ============ Fully Diluted ............... 42,938,788 42,938,788 ================ ============ For the Six Months Ended June 30, 1998 ---------------------------------------------------------------- Geophysical Development Pro-Forma Geokinetics Inc. Corporation Adjustments Combined ---------------- ------------ ------------ ------------ Revenues Seismic Revenues ............... 11,587,134 11,587,134 Oil & Gas Sales ................ 106,958 106,958 Operator Overhead Fee .......... 115,078 115,078 Data Processing Revenues ....... 2,400,236 6,007,539 8,407,775 ---------------- ------------ ------------ ------------ Total Revenues .............. 14,209,406 6,007,539 20,216,945 Expenses: Seismic Operating Expenses ..... (6,566,032) (6,566,032) General & Administrative ....... (2,368,408) (369,133) (2,737,541) Depl. Depr. & Amort. ........... (2,510,496) (220,164) (942,628) (3,673,288) Lease Operating Expenses ....... (150,206) (150,206) Other Income ................... 4,910 4,910 Data Processing Expenses ....... (636,209) (2,257,435) (2,893,644) Interest Income ................ 93,517 43,460 136,977 Interest Expense ............... (1,731,162) (29,932) (1,834,532) (3,595,626) Income Tax (expense) benefit ... (1,079,274) 623,741 (455,533) ---------------- ------------ ------------ ------------ Net Income (Loss) ........... 345,320 2,095,061 (2,153,419) 286,962 ================ ============ ============ ============ Income (Loss) per Share ..... 0.019 0.015 ================ ============ Income (Loss) Fully Diluted . 0.008 0.007 ================ ============ Weighted Average Common Shares and Equivalents Outstanding ............... 18,615,352 18,615,352 ================ ============ Fully Diluted ............... 42,546,005 42,546,005 ================ ============
8 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 company is working to complete its audit for the fiscal year ended December 31, 1998. When completed, audited financial statements will be included in an amendment to the Company's Form 10-KSB filed for the fiscal year ended December 31, 1998. A summary of accounting policies and other significant information is included therein. 2. LONG TERM DEBT At June 30, 1999, the Company's long-term debt was $45,125,719 including $3,513,506 which represents current maturities. Long-term debt is presented net of unamortized Original Issue Discount, totaling $8,141,920. Long term debt consists primarily of (i) 12% senior subordinated notes, in the amount of $40,000,000, (ii) a note to a financial institution, bearing interest at prime plus 1-1/2%, in the amount of $3,874,713, (iii) a note to an equipment supplier, bearing interest at 12%, in the amount of $6,174,430, (iv) a note to an equipment supplier, bearing interest at 10%, in the amount of $2,127,425 and (v) a note to a financial institution bearing interest at prime, in the amount of $589,715. 9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION GENERAL At June 30, 1999, the Company's financial position reflects (i) the seismic acquisition services being conducted by Quantum Geophysical, Inc., Signature Geophysical Services, Inc. and Reliable Exploration, Inc., (ii) the seismic data processing, software and consultation services being provided by Geophysical Development Corporation, and (iii) the Company's ongoing oil and gas operations. The Company's financial results continue to be severely impacted by the ongoing downturn in the oil service industry. This downturn resulted from the deterioration of the price of oil which occurred in mid 1998 and continued into early 1999. While there has been a continuing increase in the price of oil, in relation to where it was in early 1999, the demand for the services provided by the Company has not as yet been positively affected. The Company has taken steps to reduce its operating expenses in response to weakened demand for its services. During the quarter ended June 30, 1999, the Company operated two crews, although only one was operating on a continuous basis. The Company anticipates that demand for its seismic acquisition and seismic data processing services will remain weak during the next fiscal quarter. RESULTS OF OPERATIONS Revenues for the six months ended June 30, 1999 were $8,289,306 as compared to $14,209,406 for the same period of fiscal 1998, a decrease of 42%. For the three months ended June 30, 1999 revenues totaled $3,208,380 as compared to $8,410,898 for the same period of fiscal 1998, a decrease of 62%. The Company entered the seismic data processing business by acquiring Geophysical Development Corporation (GDC) on April 30, 1998. Revenues for the six month period ended June 30, 1998, on a pro forma basis, would have been $20,216,945 had the Company acquired GDC at the beginning of 1998. On this basis, 1999 six month revenues declined by 60% from the levels attained during the same period of fiscal 1998. Revenues declined not only due to a weakened demand for the Company's services but also due to a significant reduction in the pricing that the Company is able to charge its customers for the services it is currently providing. Operating expenses for the six month period ended June 30, 1999 were $7,761,157 as compared to $7,352,447 for the same period of fiscal 1998, an increase of 6%. For the three month period ended June 30, operating expenses decreased from $4,395,492 in 1998 to $3,485,060 in 1999, a decrease of 21%. Operating expenses for the six month period ended June 30, 1998, on a pro forma basis, would have been $9,609,882 had the GDC acquisition occurred on January 1, 1998. On this basis, 1999 operating expenses for the six months ended June 30 decreased 19% from the same period in 1998. During this quarter, the Company continued in its effort to reduce its operating expenditures by implementing additional staff reductions and limiting third party expenditures. 10 General and Administrative expenses for the six months ended June 30, decreased from $2,368,408 in 1998 to $1,648,916 in 1999, a decrease of 30%. For the three months ended June 30, 1999 General and Administrative expenses totaled $775,759 as compared to $1,244,315 for the same period of fiscal 1998, a decrease of 38%. During the fourth quarter of 1998, the Company reclassified certain costs previously recorded as General and Administrative expenses, to better reflect seismic industry standards. If this reclassification had occurred at the beginning of fiscal 1998, General and Administrative expenses would have been $1,481,917 for the six month period ended June 1998. General and Administrative expenses for the six months ended June 1998, on a pro forma basis, would have been $1,851,050 had the GDC acquisition occurred on January 1, 1998. On this basis, 1999 General and Administrative expenses decreased 11%. Depreciation and Amortization expense for the six months ended June 30, 1999 totaled $5,191,943, an increase of $2,681,447 from the same period of fiscal 1998. This increase is a result of continuing seismic acquisition equipment purchases during 1998 and the purchase of GDC in April of 1998, which created significant additional amortization of goodwill. Interest expense (net of interest income) for the six months ended June 30, 1999 totaled $3,135,989 as compared to $1,632,735 for the period ending June 30, 1998, an increase of 92%. For the three month period ending June 30, 1999 interest expense totaled $1,536,484, an increase of 29% from the same period of fiscal 1998. This increase in interest expense is a result of the Company's closing a $40,000,000 12% senior subordinated financing, due 2005, during April of 1998. The proceeds from this financing were utilized to acquire GDC and purchase additional seismic acquisition equipment. Interest expense for the six month period ended June 30, 1998, on a pro forma basis, would have been $3,453,739 had the GDC acquisition occurred on January 1, 1998. On this basis, 1999 interest expense for the six months ended June 30 decreased 9% from the same period in 1998. The Company had a net loss of $9,448,699, or ($0.49) per share, for the six months ended June 30, 1999 as compared to net income of $345,320, or $0.02 per share, for the six months ended June 30, 1998. For the three months ended June 30, 1999 the Company had a net loss of $5,188,492, or ($0.27) per share, as compared to a net loss of $36,533, or ($0.002) per share, for the three months ended June 30, 1998. This result is due primarily to the continuing weak demand for the Company's services as well as increased interest costs, depreciation expense and amortization of goodwill associated with the Company's 1998 acquisitions and expansion of its seismic acquisition fleet. LIQUIDITY AND CAPITAL RESOURCES In December of 1998 the Company temporarily suspended principal payments on approximately $9.9 million of indebtedness owed to its principal equipment supplier. The Company and such supplier are currently conducting negotiations to restructure the Company's 11 indebtedness and the Company believes that a satisfactory restructuring of the debt will be completed by September 15, 1999. At June 30, 1999 the Company had a working capital deficiency of $9,509,105 which includes the current portion of long-term debt of $3,513,505. At June 30, 1998 the Company had working capital of $2,018,016. On June 30, the Company had cash balances of $1,620,318. The Company believes this cash, anticipated cash flow from its seismic acquisition and data processing operations will be sufficient to meet the working capital requirements of its seismic acquistion and data processing operations for the immediate future. The Company is negotiating with its senior subordinated noteholders on a debt restructuring agreement and is also seeking to make a private placement of senior debt for its ongoing working capital requirements. The Company's ability to expand its business operations is dependent upon the availability of internally generated cash flow and external financing activities. Such financing may consist of bank or commercial debt, equity or debt securities or any combination thereof. There can be no assurance that the Company will be successful in obtaining additional financing when required. Any substantial alteration or increase in the Company's capitalization through the issuance of debt or equity securities or otherwise may significantly decrease the financial flexibility of the Company. Due to uncertainties regarding the changing market for seismic services, technological changes, and other matters associated with the Company's operations, the Company is unable to estimate the amount of any financing that it may need to acquire, upgrade and maintain seismic equipment and continue its diversification as a full-scale geotechnology enterprise. If the Company is unable to obtain such financing when needed, it will be forced to curtail its business objectives, and to finance its business activities with only such internally generated funds as may then be available. 12 PART II. OTHER INFORMATION ITEM 3. DEFAULTS UPON SENIOR SECURITIES On April 30, 1998, the Company issued Senior Subordinated Notes in the original principal amount of $40,000,000 (the "Senior Subordinated Notes") to a group of nine investors. The Senior Subordinated Notes bear interest at a rate of 12% per annum, payable semi-annually. On April 20, May 7 and May 21, 1999, the holders of the Senior Subordinated Notes granted the Company extensions of the payment date for the semi-annual interest payment of $2,400,000 which was originally due to be paid on April 15, 1999. The third such extension expired on June 1, 1999. The Company has not paid the interest payment originally due on April 15, 1999. Since June 1, 1999, the Company has been negotiating with the holders of its Senior Subordinated Notes to restructure certain terms of that indebtedness. The holders of the Senior Subordinated Notes have taken no action to declare a default or accelerate the payment of the Senior Subordinated Notes. Although the Company believes that it has reached a tentative agreement on the terms of a restructuring of the Senior Subordinated Notes which will be completed by September 15, 1999, there can be no assurance that a successful restructuring will be completed by such date. ITEM 5. OTHER INFORMATION The Company conducts field operations in states under whose statutes certain of the services provided by the Company may be subject to state sales tax. The Company's financial statements currently reflect a liability of $142,734 for such taxes arising from prior operations of a subsidiary. The Company has determined that its subsidiary collected sales taxes from customers and failed, in certain instances, to remit such taxes to the appropriate taxing authorities. The Company is in the process of making the necessary tax filings and intends to pursue the former owners of the subsidiary for the entire liability which the subsidiary is obligated to pay. On July 28, 1999 the Company sold all of the outstanding stock of HOC Operating Co., Inc., a wholly-owed subsidiary of the Company, to Halex Oil Corporation pursuant to the terms of a Stock Purchase agreement. This transaction completes the Company's discontinuance of its oil and gas operations. The Company is evaluating the impact of the year 2000 on its computer systems in both operating and financial applications and has developed an action plan which includes a task force to evaluate the Company's major vendors' year 2000 compliance. The Company is in the process of installing a new, previously planned general ledger system that will be year 2000 compliant. The Company believes the impact of the year 2000 and related costs of compliance will not have any material impact on its operations or liquidity. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits: None. (b) Reports on Form 8-K: On August 12, 1999, the Registrant filed a Current Report on Form 8-K to report the sale of HOC Operating Co., Inc. (Item 2). No financial statements were included in such Form 8-K. 13 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: August 16, 1999 ___________________________ Thomas J. Concannon Vice President and CFO 14 EX-27 2
5 6-MOS DEC-31-1999 JUN-30-1999 1,620,317 0 2,858,756 0 0 4,900,395 24,156,390 0 59,199,697 14,409,500 0 0 0 193,325 0 59,199,697 0 3,208,380 0 6,860,388 1,536,484 0 0 (5,188,492) 0 0 0 0 0 (5,188,492) (.27) 0
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