UNITED STATES 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, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE EXCHANGE ACT OF 1934
Commission file number 0-27070
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VENTURE SEISMIC LTD.
(Exact name of small business issuer as
specified in its charter)
ALBERTA, CANADA N/A
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation of organization)
3110 - 80th Avenue S.E.
Calgary, Alberta T2C 1J3
(Address of principal executive offices)
(403) 777-9070
(Issuer's telephone number)
----------------------------------------------------------
Check whether the issuer (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act 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
--- ---
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: 3,097,683 shares of Common
Stock, no par value, were outstanding as of August 9, 1996.
Transitional Small Business Disclosure Format (Check one):
Yes No X
--- ---
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VENTURE SEISMIC LTD.
INDEX TO FORM 10QSB
FOR THE QUARTER ENDED JUNE 30, 1996
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements PAGE
Consolidated Balance Sheets
June 30, 1996 and September 30, 1995 ........................... 3
Consolidated Income Statements
Three and nine months ended June 30, 1996 and 1995 ............. 4
Consolidated Statements of Cash Flows
Nine months ended June 30, 1996 and 1995 ....................... 5
Notes to Consolidated Financial Statements ........................ 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations ............................ 9
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K ................................ 13
Signatures ............................................................... 15
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<PAGE>
PART 1. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
VENTURE SEISMIC LTD.
CONSOLIDATED BALANCE SHEETS
(IN U.S. DOLLARS)
<TABLE>
<S> <C> <C>
JUNE 30, 1996 SEPTEMBER 30, 1995
------------- ------------------
ASSETS
CURRENT
Cash and cash equivalents $ 205,792 $ -
Accounts receivable 2,264,734 1,420,599
Income taxes recoverable 216,561 -
Work-in-progress 472,786 58,760
Other receivables 119,478 35,712
Current portion of advances to shareholders 7,399 7,399
Prepaid expenses and deposits 69,289 385,442
------------ ---------
3,356,039 1,907,912
ADVANCES TO SHAREHOLDERS 22,197 22,197
FIXED ASSETS 9,169,457 5,071,686
INTANGIBLE ASSETS 1,517,250 -
------------ ---------
$14,064,943 $7,001,795
=========== =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Bank indebtedness $ 109,830 $ 373,081
Accounts payable and accrued liabilities 1,189,960 1,598,435
Income taxes payable 18,500 7,374
Current portion of long term debt 1,873,689 836,775
------------ -----------
3,191,979 2,815,665
------------ -----------
LONG TERM DEBT 1,784,738 2,440,594
------------ -----------
DEFERRED INCOME TAXES 682,079 454,323
------------ -----------
SHAREHOLDERS' EQUITY
Share capital 7,021,003 131,671
Retained earnings 1,302,421 1,159,542
Cumulative translation adjustment 82,723 -
----------- -----------
8,406,147 1,291,213
----------- -----------
$14,064,943 $7,001,795
=========== ==========
</TABLE>
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VENTURE SEISMIC LTD.
CONSOLIDATED INCOME STATEMENTS
(IN U.S. DOLLARS)
<TABLE>
THREE MONTHS ENDED NINE MONTHS ENDED
JUNE 30, JUNE 30,
<S> <C> <C> <C> <C>
1996 1995 1996 1995
---- ---- ---- ----
REVENUE $2,370,983 $485,661 $9,835,269 $7,709,608
DIRECT EXPENSES 2,016,155 323,356 7,532,388 5,404,262
---------- ------- --------- ---------
GROSS MARGIN 354,828 162,305 2,302,881 2,305,346
---------- ------- --------- ---------
OTHER INCOME
Interest and other income 23,963 12,406 105,228 14,240
Gain on sale of fixed assets -- -- -- 9,518
---------- ------- --------- ---------
23,963 12,406 105,228 23,758
---------- ------- --------- ---------
378,791 174,711 2,408,109 2,329,104
---------- ------- --------- ---------
EXPENSES
General and administrative 340,299 237,659 971,965 596,145
Depreciation and amortization 385,300 276,287 962,915 639,452
Interest 61,670 75,221 218,925 198,507
---------- ------- --------- ---------
787,269 589,167 2,153,805 1,434,104
---------- ------- --------- ---------
INCOME (LOSS) BEFORE INCOME TAXES (408,478) (414,456) 254,304 895,000
INCOME TAXES
Current (274,900) (158,944) (130,920) 297,343
Deferred 95,355 (19,481) 242,345 101,347
----------- --------- --------- -------
(179,545) (178,425) 111,425 398,690
----------- --------- ------- -------
NET INCOME (LOSS) $(228,933) $(236,031) $142,879 $496,310
=========== ========= ======== ========
EARNINGS PER COMMON SHARE (SEE NOTE 5)
Basic (0.08) (0.17) 0.05 0.35
WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING (SEE NOTE 5)
Basic 3,022,571 1,400,000 2,771,255 1,400,000
</TABLE>
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VENTURE SEISMIC LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN U.S. DOLLARS)
<TABLE>
NINE MONTHS ENDED
JUNE 30,
<S> <C> <C>
1996 1995
--------------------------
OPERATING ACTIVITIES:
Net income $ 142,879 $ 496,310
Items not involving cash:
Gain on sale of fixed assets -- (9,518)
Depreciation and amortization 962,915 639,452
Deferred income taxes 227,756 101,347
--------- ---------
1,333,550 1,227,591
Cumulative translation adjustment 82,723 --
Net change in non-cash working capital (1,839,684) 834,494
--------- ---------
(423,411) 2,062,085
--------- ---------
FINANCING ACTIVITIES:
Proceeds on issuance of shares 6,889,332 --
Decrease in bank indebtedness (263,251) (433,550)
Decrease in long term debt 381,058 757,072
--------- ---------
7,007,139 323,522
--------- ---------
INVESTMENT ACTIVITIES:
Purchase of fixed assets (4,837,936) (2,395,125)
Acquisition of Boone Geophysical, Inc. (1,740,000) --
Net change in non-cash working capital 200,000 --
Proceeds from sale of fixed assets -- 9,518
--------- ---------
(6,377,936) (2,385,607)
--------- ---------
INCREASE IN CASH AND CASH EQUIVALENTS 205,792 --
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD -- --
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 205,792 --
========= =========
</TABLE>
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<PAGE>
VENTURE SEISMIC LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1996
1. Basis of Financial Statement Presentation
The consolidated financial statements of Venture Seismic Ltd. are unaudited and
reflect all adjustments (consisting only of normal recurring adjustments) which
are, in the opinion of management, necessary for a fair presentation of the
financial position as of June 30, 1996, operating results for the three months
and the nine months ended June 30, 1996 and June 30, 1995 and statements of cash
flows for the nine months ended June 30, 1996 and June 30, 1995. The foregoing
interim results are not necessarily indicative of the results for the entire
fiscal year ending September 30, 1996.
The consolidated financial statements are prepared in accordance with Canadian
generally accepted accounting principles ("Canadian GAAP"). Certain of these
principles differ in respect from those applicable in the United States ("U.S.
GAAP"). Differences, if material, are disclosed in note 5 - United States
Accounting Principles.
2. Currency Presentation and Exchange Rates
All dollar amounts, unless otherwise stated, are expressed in United States
dollars. The Company has selected U.S. dollars as its currency for financial
reporting and display purposes and accordingly applies the current rate method
to translate its accounts measured in Canadian dollars to U.S. dollars. Under
this method, average exchange rates are used for items included in the
consolidated income statement and period end exchange rates for the assets and
liabilities. Any significant gains or losses are included as a separate
component of shareholders' equity.
For translation purposes the exchange rates of the Canadian dollar in exchange
for U.S. dollars, is calculated from the exchange rates reported by the Federal
Reserve Bank of New York as the noon buying rate in New York for cable transfers
in Canadian dollars as certified for custom purposes. The average exchange rates
for the three months ended June 30, 1996 and June 30, 1995 are $0.7327 = $1.00
Canadian and $0.7291 = $1.00 Canadian respectively. The average exchange rates
for the nine months ended June 30, 1996 and June 30, 1995 are $0.7335=$1.00
Canadian and $0.7271=$1.00 Canadian respectively. The period end exchange rates
at June 30, 1996 and September 30, 1995 are $0.7322 = $1.00 Canadian and $0.7438
= $1.00 Canadian respectively.
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<PAGE>
3. Acquisition of Boone Geophysical, Inc.
Effective June 1, 1996 the Company acquired the shares of Boone Geophysical,
Inc. for an aggregate purchase price of $1,790,000, consisting of $1,250,000 in
cash, $500,000 of Venture common shares and $40,000 of direct acquisition costs.
The payment of $100,000 in cash and the issuance of $100,000 of common shares
has, in accordance with the terms of the acquisition agreement, been deferred
and is scheduled to occur at various times ending June 1, 1997. The assigned
fair value of net assets acquired is:
Cash $ 50,000
Fixed assets 210,000
---------
260,000
Excess of cost over net tangible assets
acquired, assigned to goodwill 1,530,000
---------
$1,790,000
---------
4. Intangible assets
Intangible assets consist of goodwill which represents the excess purchase price
over the fair value of net assets acquired and is amortized on a straight-line
basis over ten years from the date of acquisition.
5. United States Accounting Principles and Earnings per Share
<TABLE>
THREE MONTHS ENDED NINE MONTHS ENDED
JUNE 30, JUNE 30,
<S> <C> <C> <C> <C>
1996 1995 1996 1995
---------- ----------- --------- --------
Net income using Canadian basis $(228,933) $(236,031) $142,878 $496,310
Compensation expense (1) (212,692) - (212,692)
---------- ---------- --------- --------
Net income using U.S. basis $(228,933) $(448,723) $142,878 $283,618
========== ========== ========= ========
</TABLE>
(1) Compensation expense represents the difference between the estimated fair
market value of $3.50 per share and the consideration given for shares received
from a principal shareholder by a member of senior management as part of an
employment contract. The employment contract was entered into in July 1994 and
contains a clause whereby the employee would receive a certain number of shares
should certain events not occur on or before July 1, 1995. As at September 30,
1994 management was of the opinion that these events would occur. In April, 1995
it became evident that these events would not occur and that it was probable
that the employee would become entitled to the shares and the associated
compensation expense was recognized in the accounts for U.S. accounting
purposes.
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<PAGE>
Under U.S. GAAP the calculation of primary income per share is based on the
number of issued and outstanding shares plus common share equivalents, including
stock options, if they would have a dilutive effect.
Three months ended Nine months ended
June 30, June 30,
1996 1995 1996 1995
----------------------- ---------------------
Primary and fully
diluted earnings
per common share
using U.S. basis $(0.08) $(0.32) $0.05 $0.20
Weighted average
number of common
shares 3,022,571 1,400,000 2,771,255 1,400,000
-8-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Except for the description of historical facts contained herein, this Form
10-QSB contains certain forward-looking statements that involve risks and
uncertainties as detailed herein and from time to time in the Company's SEC
filings under "Risk Factors" and elsewhere. These risks include, among other
factors, the capital intensive nature of the Company's business and its need for
additional funds for operations and debt service requirements, fluctuations in
operating results, dependence upon principal customers and on the activity of
the oil and gas industry, risks associated with international operations and
regulatory, competitive and contractual risks.
RESULTS OF OPERATIONS
Revenue for the three and nine month periods ended June 30, 1996 ("1996 three
and nine months") increased by approximately 388% and 27.6% to $2,370,983 and
$9,835,269, respectively, as compared to $485,661 and $7,709,608 for the three
and nine month periods ended June 30, 1995 ("1995 three and nine months"). These
increases are attributable to increased activity in the Canadian market and
additional revenues in the third quarter of fiscal 1996 related to the
acquisition of Boone Geophysical, Inc. ("Boone") and the startup of
international operations in Pakistan. Revenue from the Canadian market increased
228% and 17.5% for the 1996 three and nine months to $1,594,540 and $9,058,826,
respectively, from $485,661 and $7,709,608 for the 1995 three and nine months.
As a percentage of revenue Canadian based operations contributed 67.3% and 92.1%
for 1996 three and nine months, respectively, as compared to 100% for the 1995
three and nine months.
Direct expenses for the 1996 three and nine month period increased by
approximately 523% and 39.4% to $2,016,155 and $7,532,388, respectively, as
compared to $323,356 and $5,404,262 for the 1995 three and nine months. Direct
expenses as a percentage of revenue increased to 85% and 76.6% in the 1996 three
and nine months, respectively, compared to 66.6% and 70.1% for the 1995 three
and nine months. The increase in direct costs as a percentage of revenue in the
1996 three months is due to the reduced activity in the Canadian market in April
and early May due to "spring breakup" (see Quarterly Fluctuations) and the
reduced margins for international operations due to the start up phase of
operations. The effect of spring breakup is greater in the 1996 three months
than the 1995 three months due to the Company's larger equipment and operational
base which resulted in an increased amount of direct costs of a fixed nature.
The increase in direct costs as a percentage of revenue in the 1996 nine months
as compared to 1995 nine months results from extremely cold weather during parts
of the second quarter which decreased daily production, increased costs due to
the leasing of certain equipment to outfit the Company's sixth crew during the
second quarter, the greater impact of spring breakup in 1996 and international
operations in Pakistan earning reduced margins due to the start up phase of
operations.
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<PAGE>
Other income for the 1996 three and nine months increased by 93.2% and 638% to
$23,963 and $105,228, respectively, as compared to $12,406 and $14,240 for the
1995 three and nine months. This increase is primarily attributable to increased
interest income from funds invested on completion of the Company's initial
public offering in November 1995.
General and administrative expenses for the three and nine months increased by
43.2% and 63% to $340,299 and $971,965, respectively, as compared to $237,659
and $596,145 for the 1995 three and nine months. As a percentage of revenue
general and administrative expenses decreased to 14.4% for the 1996 three months
as compared to 48.9% for the 1995 three months. This decrease is primarily
attributable to the increased revenue in the 1996 three months as compared to
revenue in the 1995 three months. As a percentage of revenue general and
administrative expenses increased to 9.9% for the 1996 nine months as compared
to 7.7% in the 1995 nine months. This increase results from increased marketing
activities related to Company's expansion of operations outside of its Western
Canadian base, higher personnel costs related to the expansion of operations and
additional costs associated with the Company's public company status.
Depreciation and amortization expense for the 1996 three and nine months
increased by 39.5% and 50.6% to $385,300 and $962,915, respectively, as compared
to $276,287 and $639,452 for the 1995 three and nine months. The increase in
depreciation is primarily attributable to the Company's acquisition of its third
telemetry system and four vibroseis units in December 1995 and additional
auxiliary equipment acquired in conjunction with the startup of international
operations. The 1996 three and nine months also includes a $12,750 charge
related to the amortization of goodwill recognized on the acquisition of Boone
Geophysical, Inc. in June 1996. Amortization of this goodwill will result in an
annualized charge of $153,000.
Interest expense for the 1996 nine months increased by 10.3% to $218,925 as
compared to $198,507 for the 1995 nine months. The increase results from overall
higher levels of indebtedness, primarily related to debt on the financing of the
Company's second telemetry system.
The income tax provisions for the 1996 and 1995 three and nine months correspond
to income before income tax for the periods at an expected statutory rate of
approximately 44%. As a result of the loss before income taxes for the 1996 and
1995 three months the Company recognized a reduction of previously recorded
income tax provisions for the three months ended June 30, 1996 and 1995.
The Company had a net loss of $228,933 for the 1996 three months as compared to
a net loss of $236,031 for the 1995 three months. The net loss for the 1996
three months is attributable to lower operating margins and increased general
and administrative and depreciation expenses which more than offset increased
revenues. Net income for the 1996 nine months decreased to $142,879 from
$496,310 for the 1995 nine months. This decrease is attributable to reduced
operating margins and increased general and administrative and depreciation
expenses.
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<PAGE>
QUARTERLY FLUCTUATIONS
The Company's business is subject to substantial quarterly variations as a
result of activity variations in the Canadian seismic industry. Generally
increased activity occurs in the Canadian seismic industry during the Canadian
winter season, from November to March. During this period the colder weather
freezes the ground and permits easier access to marshy terrain in the northern
areas of Western Canada and agricultural areas. During the spring, bans are
placed on road use, which limits access to many areas where the Company conducts
its operations. Further, due to the soft wet ground conditions and marshy
terrain in the northern areas of Western Canada, both of which are extremely
sensitive to traffic and heavy equipment, the extent to which the Company can
conduct its operations during the spring and summer is significantly reduced. As
a result the Company has historically experienced a fluctuation in quarterly
results with generally increased activity in the Company's first and second
quarters and a significant decrease in revenues and net income during the third
and fourth quarters. The Company is focusing on expanding its operations into
certain regions of the United States and internationally, and if successful,
this expansion will reduce the seasonality traditionally associated with
Company's Canadian operations. Due to the factors noted above, the Company's
results of operations may be subject to fluctuations, particularly on a
quarterly basis and the Company's stock price may be affected by such results.
In April 1996 the Company entered into a contract to perform a seismic data
acquisition survey in Pakistan and in June 1996 the Company completed its
acquisition of a seismic data acquisition company based in Texas. Both of these
developments were undertaken with management's expectation that these operations
would expand and diversify the Company's customer base thereby reducing the
seasonality currently associated with the Company's operations.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1996 the Company had working capital of approximately $164,000,
including cash and cash equivalents of approximately $206,000. Included in the
June 30, 1996 accounts receivable balance of $2,264,734 and the accounts payable
and accrued liabilities balance of $1,189,960 were certain reimbursable amounts
which are not included in the Company's revenue or direct costs. In accordance
with the terms of various project agreements, certain costs are paid by the
Company and passed on or flowed through to the customer at cost. As a result
these reimbursable costs are included in accounts receivables and accounts
payable even though they do not impact revenue or direct expenses. The
collection of accounts receivable and the payment of accounts payable are
expected to occur in the normal 30 to 60 day time period following billing.
During the nine months ended June 30, 1996 the Company completed its initial
public offering which resulted in net proceeds of approximately $6.5 million.
This increase in cash and cash equivalents was offset by capital expenditures of
approximately $4.8 million, primarily for the acquisition of the Company's third
and fourth telemetry systems and the acquisition of four vibroseis units.
Approximately $1 million of the capital expenditures were funded by financing
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<PAGE>
provided by the equipment manufacturer and during the period the Company repaid
approximately $650,000 in long term debt. During the period ended June 30, 1996
the Company also acquired Boone Geophysical, Inc. which resulted in a net cash
expenditure of approximately $1.1 million.
At June 30, 1996 the Company had a capital term loan of approximately $2.6
million. This loan is evidenced by a debenture bearing interest at a rate equal
to the lender's cost of funds plus 3.25% (which based on the lender's cost of
funds at July 15, 1996 aggregated approximately 8.5% at such date), is payable
in monthly principal installments of $68,653 plus interest, and matures in
September 1999. Based on the lender's cost of funds at July 15, 1996 the
Company's debt service requirements in connection with the capital term loan are
expected to aggregate approximately $1,005,000 for the next twelve months. In
addition the Company has entered into a promissory note with an equipment
manufacturer to pay annual installments, including principal and interest, of
$91,000 for the twelve month period ending July 15, 1997. This financing was
provided as part of the acquisition of the Company's fourth telemetry data
acquisition system.
The Company continues to maintain its operating line of credit which provides
for an aggregate of up to $875,000 in advances available to the Company subject
to a limit of: i) the excess in value of current assets over current liabilities
(excluding the current portion of long-term debt) and ii) 70% of the value of
the accounts receivable of the Company which are less than ninety days old.
Borrowings under the operating line are payable on demand, bear interest at the
bank's prime rate plus 1%. The Company's trade receivables have been pledged as
collateral for the operating line.
The Company anticipates, based on its current plans and assumptions, that its
existing cash resources combined with funds expected to be generated from
operations will be sufficient to satisfy its currently anticipated cash
requirements for the next twelve months. However the Company may seek to obtain
additional funds to strengthen its working capital position or to permit the
growth of operations.
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<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
3.1 Articles of Incorporation of the Registrant and Certificates
of Amendment thereto (1)
3.2 By-laws of the Registrant (1)
4.1 Revised Form of Warrant Agreement (1)
4.2 Revised Form of Underwriter's Warrant (1)
10.1 Debenture issued by Registrant to Roynat Inc. dated July 19,
1995 and the amendments thereto dated September 6, 1995 and
September 19, 1995. (1)
10.3 Priorities Agreement between Province of Alberta Treasury
Branches, Roynat Inc., and Registrant, dated July 25, 1995(1)
10.4 Buy-Back Agreement between Opseis Inc., Roynat Inc. and
Registrant, dated July 25, 1995 (1)
10.5 Agreement to Assign Life Insurance between Brian Kozun,
Registrant and Roynat Inc. dated July 19, 1995 (1)
10.6 Outline of Credit between Registrant and Province of Alberta
Treasury Branches, dated June 21, 1995 (1)
10.7 Waiver letter from Alberta Treasury Branches, dated August
18,1995 (1)
10.8 Representative Agreement between Registrant and S. Antonio
Velarde, dated July 1, 1995 (1)
10.9 Joint Venture Agreement, and amendment thereto, between
Registrant and Aguasuelos Ingenieria, C.A. dated March 17,
1995 and English translation thereto (1)
10.10 1995 Stock Option Plan (1)
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<PAGE>
10.11 Employment Agreement between Registrant and Brian Kozun dated
September 14, 1995 (1)
10.12 Employment Agreement between Registrant and P. Daniel
McArthur dated July 11, 1994, Clarification and
Amendment Agreement effective as of July 11, 1994,
Novation Agreement, dated June 28,1995 and Waiver
letter dated September 8, 1995 (1)
10.13 Form of Indemnity Agreement (1)
10.14 Lease between Registrant and BRL Corporation, dated September 2,
1994 (1)
10.15 Revised Form of Consulting Agreement between the Registrant and
the Underwriter (1)
10.16 Representative Agreement between the Registrant and Geotrex, dated
July 1, 1995 (1)
10.17 Memorandum of Understanding between Registrant and Shiv-Vani
Drilling Limited, dated February 28, 1995 (1)
10.18 Lease between Registrant and Opseis, Inc. dated September 27, 1995
(1)
10.20 Securities Purchase Agreement dated as of May 31, 1996 between
Registant, Boone Geophysical, Inc. and Lynn Boone (2)
10.21 Promissory Note dated as of June 20, 1996 between Registrant and
Opseis, Inc.
27 Financial Data Schedule
(1) Incorporated by reference from Registrant's Registration Statement on
Form SB-2 (File No. 33-97132) declared effective on November 6,
1995
(2) Incorporated by reference to the Registrant's Form 8-K dated June 12,
1996
(b) Reports on Form 8-K
The Company filed a Report on Form 8-K dated June 12, 1996 reporting
information under Item 2 and Item 7.
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<PAGE>
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.
Venture Seismic Ltd.
/S/ GREGORY B. WIEBE
--------------------
By: Gregory B. Wiebe
Vice President Finance and Chief Financial
Officer
Dated: August 9, 1996
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<PAGE>
EXHIBIT 27
FINANCIAL DATA SCHEDULE
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE BALANCE SHEET AND STATEMENT OF OPERATIONS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
<TABLE>
<S> <C> <C>
ITEM NUMBER ITEM DESCRIPTION AT JUNE 30, 1996
- ----------- ---------------- -----------------
5-02(1) Cash and cash items $ 205,792
5-02(2) Marketable securities -0-
5-02(3)(a)(1) Notes and accounts receivable-trade 2,264,734
5-02(4) Allowance for doubtful accounts -0-
5-02(6) Inventory -0-
5-02(9) Total current assets 3,356,039
5-02(13) Property, plant and equipment 11,722,827
5-02(14) Accumulated depreciation 2,553,370
5-02(18) Total assets 14,064,943
5-02(21) Total current liabilities 3,191,979
5-02(22) Bonds, mortgages and similar debt 1,784,738
5-02(28) Preferred stock - mandatory redemption -0-
5-02(29) Preferred stock - no mandatory redemption -0-
5-02(30) Common stock 7,021,003
5-02(31) Other stockholders' equity* 1,385,144
5-02(32) Total liabilities and stockholders' equity 14,064,943
</TABLE>
* Retained earnings - $1,302,421
Cumulative translation adjustment - $ 82,723
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<PAGE>
EXHIBIT 27 (CONT'D)
<TABLE>
<S> <C> <C>
Three months
ITEM NUMBER ITEM DESCRIPTION ENDED JUNE 30, 1996
- ----------- ---------------- -------------------
5-03(b)1(a) Net sales of tangible products $ -0-
5-03(b)1 Total revenues 2,370,983
5-03(b)2(a) Cost of tangible goods sold -0-
5-03(b)2 Total costs and expense applicable to
sales and revenues 2,016,155
5-03(b)3 Other costs and expenses 725,599
5-03(b)5 Provision for doubtful accounts -0-
5-03(b)8 Interest and amortization of debt discount 61,670
5-03(b)10 Income before taxes and other items (408,478)
5-03(b)11 Income tax expense (179,545)
5-03(b)14 Income from continuing operations (228,933)
5-03(b)15 Discontinued operations -0-
5-03(b)17 Extraordinary item -0-
5-03(b)18 Cumulative effect - changes in accounting
principles -0-
5-03(b)19 Net income or loss (228,933)
5-03(b)20 Earnings per share - primary (0.08)
5-03(b)20 Earnings per share - fully diluted (0.08)
</TABLE>
-17-
Exhibit 10.21
PROMISSORY NOTE - Fixed or Variable Rate - Commercial
DEBTOR(S) NAME AND ADDRESS: Venture Seismic Ltd. DATE OF NOTE: June 20, 1996
3110 - 80th Avenue S.E.
Calgary, Alberta MATURITY DATE:June 20, 1997
Canada T2C 1J3
PRINCIPAL AMOUNT: US$1,050,000.00
NEW LOAN AT A FIXED INTEREST
RATE OF 7.30338% PER ANNUM.
INTEREST PAYABLE: MONTHLY
COLLATERAL CATEGORIES: Equipment
PAYMENT TERMS: Monthly payments of $91,000* beginning July 20, 1996 and on the
20th day of each month thereafter with the final $91,000* payment due at the
maturity date (June 20, 1997). All payments applied first to interest and then
to principal.
PURPOSE: Purchase of Equipment from Opseis, Inc.
FOR VALUE RECEIVED, the undersigned Debtor(s), jointly and severally if more
than one, agree to the terms of this Note and promise to pay to the order of
Lender named below at its place of business as indicated herein or at such other
place as may be designated in writing by holder, the Principal Amount of this
Note together with interest until maturity at the per annum interest rate or
rates stated above. If the writing above indicates that the per annum interest
rate is to vary with changes made from time to time in the base or prime rate of
Lender or other financial institution, each change in the rate will become
effective without notice to Debtor on the same day such base or prime rate is
changed, unless a different effective date is specified above. The base or prime
rate set forth above is determined by the named Financial Institution in its
sole discretion primarily on a basis of its cost of funds, is not necessarily
the lowest or highest rate the named Financial Institution is charging its
customers, and is not necessarily a published rate. In the event the named
Financial Institution fixing the base or prime rate ceases to exist or ceases to
announce such a rate, lender may specify a new Financial Institution to fix such
rate, in its sole discretion. Interest on this Note is calculated on the actual
number of days elapsed on a basis of a 360 day year unless otherwise indicated
herein. For purposes of computing interest and determining the date principal
and interest payments are received, all payments made under this Note will not
be deemed to have been made until such payments are received in collected funds.
PAYMENTS NOT MADE WHEN DUE. Any principal and/or interest amount not paid when
due shall bear interest at a rate six percent (6%) per annum greater than the
per annum interest rate prevailing on this Note at the time the unpaid amount
became due, but in no event at a rate less than fifteen percent (15%) per annum.
In addition or in the alternative to the interest rate provided for in this
paragraph Lender may assess a charge of ten dollars ($10.00) times the number of
days late to cover cost of past due notices and other expenses. In no event
shall the rate and related charges either before or after maturity be greater
than permitted by law.
ALL PARTIES PRINCIPALS. All parties liable for payment hereunder shall each be
regarded as a principal and each party agrees that any party hereto with
approval of holder and without notice to other parties may from time to time
renew this Note or consent to one or more extensions or deferrals of Maturity
Date for any term or terms, and all parties shall be liable in same manner as on
original note. All parties liable for payment hereunder waive presentment,
notice of dishonor and protest and consent to partial payments, substitutions or
release of collateral and to addition or release of any party or guarantor.
ADVANCES AND PAYMENTS. It is agreed that the sum of all advances under this Note
may exceed the Principal Amount as shown above, but the unpaid balance shall
never exceed said Principal Amount. Advances and payments on Note shall be
recorded on records of Lender and such records shall be prima facie evidence of
such advances, payments and unpaid principal
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<PAGE>
balance. Subsequent advances and the procedures described herein shall not be
construed or interpreted as granting a continuing line of credit for Principal
Amount. Lender reserves the right to apply any payment by Debtor, or for account
of Debtor, toward this Note or any other obligation of Debtor to Lender.
COLLATERAL. This Note and all other obligations of Debtor to Lender, and all
renewals or extensions thereof, are secured by all collateral securing this Note
and by all other security interests heretofore or hereafter granted to Lender as
more specifically described in Security Agreements and other securing
documentation.
ACCELERATION. At option of holder, the unpaid balance of this Note and all other
obligations of Debtor to holder, whether direct or indirect, absolute or
contingent, now existing or hereafter arising, shall become immediately due and
payable without notice or demand upon the occurrence or existence of any of the
following events or conditions: (a) Any payment required by this Note or by any
other note or obligation of Debtor to holder or to others is not made when due
or the occurrence or existence of any event which results in acceleration of the
maturity of any obligation of Debtor to holder or to others under any promissory
note, agreement or undertaking; (b) Debtor defaults in performance of any
covenant, obligation, warranty or provision contained in any loan agreement or
in any instrument or document securing or relating to this Note or any other
note or obligation of Debtor to holder or to others; (c) Any warranty,
representation, financial information or statement made or furnished to Lender
by or in behalf of Debtor proves to have been false in any material respect when
made or furnished; (d) The making of any levy against or seizure, garnishment or
attachment of any collateral; (e) Any time Lender in good faith determines
prospect of payment of this Note is impaired; (f) When in the judgment of Lender
the collateral, if any, becomes unsatisfactory or insufficient either in
character or value and upon request, Debtor fails to provide additional
collateral as required by Lender; (g) Loss, theft, substantial damage or
destruction of collateral, if any; (h) Death, dissolution, change in senior
management, or termination of existence of any Debtor; or (I) Appointment of a
receiver over any part of the property of any Debtor, the assignment of property
by any Debtor for the benefit of creditors, or the commencement of any
proceedings under any bankruptcy or insolvency laws by or against any party
liable, directly or indirectly, hereunder.
WAIVERS. No waiver by holder of any payment or other right under this Note or
any related agreement or documentation shall operate as a waiver of any other
payment or right.
GOVERNING LAW. This Note and the obligations evidenced hereby are made, entered
into, to be construed and governed by the laws of the state indicated in the
address of Lender shown below. Debtor(s) consent to the jurisdiction and venue
of any Court sitting in the State indicted in the address of Lender.
COLLECTION COSTS. All parties liable for payment hereunder agree to pay
reasonable costs of collection, including an attorney's fee of a minimum of
fifteen percent (15%) of all sums due upon default.
RIGHT OF OFFSET. Any indebtedness due from holder hereof to Debtor or any party
hereto including, but without limitation , any deposits or credit balances due
from holder, is pledged to secure payment of this Note and any other obligation
to holder of Debtor or any party hereto, and may at any time while the whole or
any part of such obligation remains unpaid, either before or after Maturity
hereof, be appropriated, held or applied toward the payments of this Note or any
other obligation to holder of Debtor or any party hereto.
PURPOSE. Debtor affirms that the proceeds of this Note are to be used for a
business or agricultural purpose and not for a personal, family or household
purpose.
ENTIRE AGREEMENT. All parties acknowledge that this Note and related documents
contain the complete and entire agreement between Debtor and Lender and no
variation, modification, changes or amendments to this Note or related documents
shall be binding unless in writing and signed by all parties. No legal
relationship is created by the execution of this Note and related documents
except that of debtor and creditor or as stated in writing.
LENDER NAME AND ADDRESS: OPSEIS, INC. *Payments are in United States
7700 East 38th Dollars.
Tulsa, Oklahoma
U.S.A. 74145
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Debtor(s) Signature(s) Assigned to Bank of Oklahoma, N.A. with
recourse and pursuant to acknowledgment of
Acceptance of Assignment dated june 21, 1996.
Venture Seismic Ltd. OPSEIS, INC.
/S/ Brian Kozun /S/ Mahesh Chhabra
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Brian Kozun, President Mahesh Chhabra, President
