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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 13, 1997
REGISTRATION NO. 33-97132
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
POST EFFECTIVE AMENDMENT NO. 2
TO
FORM SB-2
REGISTRATION STATEMENT ON FORM S-3
UNDER
THE SECURITIES ACT OF 1933
Venture Seismic Ltd.
(Exact name of registrant as specified in its charter)
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Alberta, Canada N/A
(State or other jurisdiction of Incorporation) (I.R.S. employer I.D. number)
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VENTURE SEISMIC LTD.
3110 80th Avenue, SE
Calgary, Alberta T2C 1J3
(403) 777-9070
(Address and telephone number of Registrant's principal executive offices)
Brian Kozun
Chief Executive Officer and President
VENTURE SEISMIC LTD.
3110 80th Avenue, SE
Calgary, Alberta T2C 1J3
(403) 777-9070
(Address and telephone number of agent for service)
Copies to:
JILL M. COHEN, ESQ.
BACHNER, TALLY, POLEVOY & MISHER LLP
380 MADISON AVENUE
NEW YORK, NEW YORK 10017
(212) 687-7000
APPROXIMATE DATE OF PROPOSED COMMENCEMENT OF SALE TO PUBLIC: As soon as
practicable after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. _
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, other than securities offered only in connection with dividend or
interest reinvestment plans, please check the following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. _ _________________
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. _ _______________________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. _
THE REGISTRANT HEREBY AMENDS THIS POST EFFECTIVE AMENDMENT TO THE
REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS
EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH
SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME
EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR
UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE
COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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CALCULATION OF REGISTRATION FEE
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TITLE OF EACH PROPOSED MAXIMUM PROPOSED MAXIMUM
CLASS OF AMOUNT OFFERING PRICE AGGREGATE ADDITIONAL AMOUNT OF
SECURITIES TO BE TO BE REGISTERED PER UNIT (1) OFFERING PRICE (1) REGISTRATION FEE
REGISTERED
Common Shares, no par
value................... - $ - $ - $ *
Redeemable Warrants..... - $ - $ - $ *
Total................... - $ - $ - $ *
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* Fee previously paid by the Company in connection with the Company's
Registration Statement on Form SB-2 (File No. 333-97132) as declared
effective by the Securities and Exchange Commission on November 6, 1995.
(1) Estimated solely for purposes of calculating the additional registration
fee pursuant to Rule 457(a) under the Securities Act.
Pursuant to Rule 416, there are also being registered for resale such
additional Common Shares as may become issuable pursuant to "anti-dilution"
provisions of the warrants.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY STATE.
SUBJECT TO COMPLETION,
DATED NOVEMBER 13, 1997
PROSPECTUS
VENTURE SEISMIC LTD.
1,610,000 COMMON SHARES
ISSUABLE UPON EXERCISE OF REDEEMABLE WARRANTS
140,000 COMMON SHARES
140,000 REDEEMABLE WARRANTS AND 140,000 COMMON SHARES
ISSUABLE UPON EXERCISE OF REDEEMABLE WARRANTS
Venture Seismic Ltd. (the "Company") hereby offers 1,610,000 Common
Shares, no par value ("Common Shares") issuable upon exercise of the Redeemable
Warrants ("Warrants") issued in connection with the Company's underwritten
initial public offering (the "IPO"). On November 6, 1995 a registration
statement under the Securities Act was declared effective by the Securities and
Exchange Commission (the "Commission") with respect to the IPO by the Company
of 1,610,000 Units (including 210,000 Units subject to the underwriter's
over-allotment option, which was exercised in full), each Unit consisting of
one Common Share and one Redeemable Warrant. The Company received
approximately $7,400,000 in net proceeds from the IPO after payment of
underwriting discounts and commissions and expenses of the IPO.
Each Warrant entitles the registered holder thereof to purchase one Common
Share at $6.00 per share, subject to adjustment, on or prior to November 5,
2000. The Warrants are subject to redemption by the Company at $.10 per
Warrant on 30 days' prior written notice if the closing bid price of the Common
Shares averages at least $9.00 for 20 consecutive business days ending within
3 days of the date of notice of redemption. As of November 12, 1997, none of
the Warrants had been exercised.
This Prospectus also relates to the offer and sale by certain stockholders
of the Company named herein (the "Selling Securityholders") of (i) 140,000
Common Shares issuable upon exercise of other warrants and 140,000 Common Shares
issuable upon exercise of Redeemable Warrants (the "Selling Securityholder
Shares") and (ii) 140,000 Redeemable Warrants (the "Selling Securityholder
Warrants" and together with the Selling Securityholder Shares, the "Selling
Securityholder Securities"). Each Selling Securityholder Warrant entitles the
holder to purchase one Common Share at $7.00 per share, subject to adjustment,
at any time from November 6, 1996 until on or prior to November 5, 2000. As of
November 12, 1997, none of the Selling Securityholder Warrants had been
exercised.
Except as otherwise set forth in a Prospectus Supplement, the Selling
Securityholder Securities and the Common Shares covered by this Prospectus may
be offered and sold from time to time in transactions to purchase in certain
states or U.S. territories on the Nasdaq National Market or other exchanges or
markets on which the Common Shares or Warrants may be traded, in the over-the
counter market, in negotiated transactions, through the writing of options on
other Common Shares or a combination of such methods of sale or through other
means. Sales may be effected at market prices prevailing at the time of sale,
at prices related to such prevailing market prices or at negotiated prices,
through registered broker-dealers (including broker-dealers which may be
affiliated with a Selling Securityholder) receiving compensation in the form
of discounts, concessions or commissions from the seller of the Common Shares,
the Selling Securityholders or the purchasers of the Common Shares or
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Warrants for whom such broker-dealers may act as agent or to whom they
sell as principal or both (which compensation to a particular broker-dealer
might be in excess of customary commissions). See "Selling Securityholders"
and "Plan of Distribution."
None of the proceeds from the sale of the Common Shares or the sale of
Selling Securityholder Securities will be received by the Company, although the
Company will receive proceeds from any exercise of the Warrants or the Selling
Securityholder Warrants. In the event that all of the Warrants and Selling
Securityholder Warrants are exercised, the Company will receive aggregate gross
proceeds of $10,640,000. The Company has agreed to pay a solicitation fee (the
"Solicitation Fee") equal to 5% of the exercise price in connection with the
exercise of Warrants under certain conditions. The exercise prices of the
Warrants were determined by negotiation between the Company and Whale
Securities Corp., L.P. ("Whale"), the underwriter of the Company's IPO, and are
not necessarily related to the Company's asset value, net worth or other
established criteria of value. The net proceeds, if any, received from any
exercise of the Warrants will be used for equipment purchases, repayment of
indebtedness and general corporate purposes. The Company has agreed to bear
certain expenses in connection with the registration and sale of the Selling
Securityholder Securities being offered by the Selling Securityholders. The
Company has agreed to indemnify certain of the Selling Securityholders against
certain liabilities, including certain liabilities under the Securities Act of
1933, as amended. See "Use of Proceeds" and "Plan of Distribution."
The Company's Common Shares and Warrants are traded on the Nasdaq National
Market ("Nasdaq") under the symbols VSEIF and VSEIW. On November 11, 1997, the
closing bid prices of these securities on Nasdaq was $8.25 and $2.00,
respectively.
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK
AND SHOULD BE CONSIDERED ONLY BY PERSONS WHO CAN AFFORD TO SUSTAIN A TOTAL
LOSS OF THEIR INVESTMENT.
SEE "RISK FACTORS" BEGINNING ON PAGE 7 OF THIS PROSPECTUS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED
BY THE SECURITIES AND EXCHANGE COMMISSION OR
ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS NOVEMBER 13, 1997
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AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission"), Washington, D.C. a Post-Effective Amendment on Form S-3 to its
Registration Statement on Form SB-2 under the Securities Act of 1993, as
amended ("Act") covering the securities offered by this Prospectus. This
Prospectus does not contain all of the information set forth in such
Registration Statement and the exhibits thereto. For further information with
respect to the Company and the securities offered by this Prospectus reference
is hereby made to the Registration Statement and the exhibits thereto, which
may be inspected without charge at the public reference facilities maintained
at the principal office of the Commission at 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549 and at the Commission's regional offices at 7 World
Trade Center, New York, New York 10048 and Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such materials
may be obtained upon written request from the public reference section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. Electronic registration statements made through the Electronic Data
Gathering, Analysis and Retrieval System are publicly available through the
Commission's Web site (http://www.sec.gov). Statements contained in the
Prospectus as to the contents of any contract or other document referred to
herein are not necessarily complete and in each instance reference is made to
the copy of such contract or other document filed (or incorporated by
reference) as an exhibit to the Registration Statement, each such statement
being qualified in all respects by such reference.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and, in accordance
therewith, files reports and other information with the Commission. Such
reports and other information filed by the Company may be inspected and copied
at the public reference facilities maintained by the Commission at the
addresses shown above. Copies of such material can be obtained from the Public
Reference Section of the Commission at the address shown above at prescribed
rates or through the Commission's Web site. Reports and other information
concerning the Company may also be inspected at the offices of the National
Association of Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C.
20006.
The Common Shares and the Warrants are listed on the Nasdaq National
Market under the symbols "VSEIF" and "VSEIW", respectively. Certain
information, reports and proxy statements of the Company are also available for
inspection at the offices of the Nasdaq National Market Reports Section, 1735 K
Street, N.W., Washington, D.C. 20006.
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INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission (File No. 0-27070)
pursuant to the Exchange Act are incorporated herein by reference:
1. The Company's Annual Report on Form 10-KSB for the fiscal year ended
September 30, 1996, as amended, including any documents or portions thereof
incorporated by reference therein;
2. The Company's definitive Proxy Statement, dated March 25, 1997, as
filed with the Commission in connection with the Company's Annual Meeting of
Shareholders held on April 30, 1997.
3. The Company's Quarterly Report on Form 10-QSB for the quarter ended
December 31, 1996;
4. The Company's Quarterly Report on Form 10-QSB for the quarter ended
March 31, 1997;
5. The Company's Quarterly Report on Form 10-QSB for the quarter ended
June 30, 1997;
6. The description of the Company's Common Shares contained in the
Company's Registration Statement on Form 8-A declared effective on November 6,
1995, as amended, registering the Common Shares and Warrants under the Exchange
Act; and
7. All other documents filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of this offering.
Any statement contained in any document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as
modified or superseded, to constitute a part of this Prospectus. The Company
will provide without charge to each person to whom this Prospectus is
delivered, upon written or oral request of any such person, a copy of any or
all of the documents incorporated herein by reference (other than exhibits to
such documents which are not specifically incorporated by reference into such
documents). Requests for such documents should be directed to the Company,
3110 South Avenue SE, Calgary, Alberta T2C 1J3, Attention: Chief Financial
Officer, telephone (403) 777-9074.
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the detailed
information and financial statements (including the notes thereto) appearing
elsewhere in this Prospectus or incorporated by reference herein. Unless
otherwise indicated, the information in this Prospectus does not give effect to
the exercise of: (i) the Warrants; (ii) the Underwriter's Warrant received by
Whale in connection with the Offering ("Underwriter's Warrant"); or (iii)
options granted or available for grant under the Company's 1995 Stock Option
Plan, as amended ("Plan"). Investors should also carefully consider the
information set forth under the heading "Risk Factors."
THE COMPANY
Venture Seismic Ltd. (the "Company") is engaged primarily in the
acquisition of land and water-based seismic data for use in the exploration for
and development and field management of oil and natural gas reserves. The
Company acquires both traditional two-dimensional ("2D") and three-dimensional
("3D") seismic data on possible oil and gas reserves for its customers, which
range from junior exploration companies to fully-integrated multi-national
corporations. Acquisition of seismic data, a principal technique used in oil
and gas exploration to determine geological conditions, involves using either
explosives, vibroseis (vibrations) or airguns to generate and transmit acoustic
energy downward into the earth and subsequently capturing and recording the
information which is reflected back toward the surface by the various
intervening geological layers.
The Company acquires seismic data only on a contract basis for its
customers, who retain all rights to the information obtained, and the Company's
seismic data acquisition crews operate at the customers' exploration and
development field locations. During the fiscal years ended September 30, 1995
and 1996 and the nine month period ended June 30, 1997, the Company performed a
total of approximately 500 projects for over 100 different customers. The
Company believes its seismic data technology assists its customers in enhancing
their exploration for new reserves, better delineating their existing oil and
gas fields and improving their reservoir management techniques. Use of the
Company's seismic data acquisition technology may also result in decreased oil
and gas finding costs and associated drilling risks and the elimination of
prospects that are unlikely to be successful.
The Company currently operates eight land and transition zone crews in
North America, five of which operate in Canada and three of which operate in
the southern United States. Channel capacity of its crews in Canada is
approximately 4,500 channels and channel capacity in the United States is
approximately 5,000 channels. All of the Company's equipment employs 24 bit
technology and approximately 8,300 channels use telemetry technology to
transmit the seismic data from the remote acquisition modules to the central
recording unit. The remaining
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1,200 channels use cables to transmit the data to the central recording
unit. The telemetry technology employed by the Company permits the Company to
operate efficiently in marsh or swamp areas, rivers and shallow lakes, areas of
difficult terrain and areas of dense population. The telemetry systems also
operate very well in sensitive environmental areas by limiting environmental
contact and damage. Although there are several geophysical services companies
in Canada, the Company believes that it is currently the only one providing
telemetry technology based services in Canada.
The Company acquired a set of vibroseis units in December 1995 and in
October 1996. Vibroseis projects accounted for approximately 25% of the
Company's Canadian revenues during the nine month period ended June 30, 1997.
Although the Company does not currently have vibroseis capability in the United
States, it continues to enhance and upgrade its equipment to expand capacity
and intends to use a substantial portion of the proceeds of this offering for
equipment purchases.
In addition the Company has expanded its operations through certain
strategic acquisitions. In June 1996 the Company acquired Boone Geophysical,
Inc. ("Boone"), a Texas based company engaged in the acquisition of land and
transition zone seismic data in the southern United States. For the nine
months ended June 30, 1997 approximately 26% of the consolidated revenue of the
Company was derived from projects conducted by Boone. In April 1997 the
Company acquired Hydrokinetic Surveys of Canada Inc. ("Hydrokinetic"), a
company based in Western Canada which provides shallow marine airgun and survey
services.
Since 1994, the Company has continuously increased its channel capacity,
which includes a substantial number of channels that are being leased on a
short term basis with an option to purchase at the end of the lease term. It
is the Company's intention to exercise these purchase options with the proceeds
from this Offering. Exercise of these purchase options will permit the Company
to operate two 3D crews in the United States (with a combined channel capacity
of approximately 5,000 channels) and three 3D crews in Canada (with a channel
capacity of approximately 4,500 channels). In the event that the Company does
not obtain sufficient funds from this Offering to finance such purchases, the
Company will either continue to lease such equipment or seek other means to
finance the exercise of such purchases, although there can be no assurance
that the Company will be successful in doing so.
The Company was organized under the laws of Alberta in August 1984. The
Company has three subsidiaries, Boone Geophysical, Inc., Hydrokinetic Surveys of
Canada Inc. and Venture Seismic Inc. (Texas). The Company's executive offices
are located at 3110 80th Avenue SE, Calgary, Alberta T2C 1J3 and its telephone
number is (403) 777-9070.
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RISK FACTORS
The securities offered hereby are highly speculative in nature and involve
a high degree of risk. Prior to making an investment decision, prospective
investors in the Company's securities should give careful consideration to,
among other things, the risk factors set forth below. This Prospectus contains
forward-looking statements within the meaning of the "safe harbor" provisions
of the Private Securities Litigation Reform Act of 1995. Reference is made in
particular to the description of the Company's plans and objectives for future
operations, assumptions underlying such plans and objectives and other
forward-looking terminology such as "may," "will," "expect," "believe,"
"estimate," "anticipate," "continue," or similar terms, variations of such
terms or the negative of such terms. Such statements are based on management's
current expectations and are subject to a number of factors and uncertainties
which could cause actual results to differ materially from those described in
the forward-looking statements. The Company expressly disclaims any obligation
or undertaking to release publicly any updates or revisions to any
forward-looking statements contained herein to reflect any change in the
Company's expectations with regard thereto or any change in events, conditions
or circumstances on which any such statement is based. Factors which could
cause such results to differ materially from those described in the
forward-looking statements include those set forth below.
CAPITAL INTENSIVE BUSINESS; CASH FLOW SHORTAGES; NEED FOR ADDITIONAL
FUNDS. The Company's business is highly capital intensive requiring continuous
upgrading and expansion of its equipment base. In addition, capital is
required to operate and expand the Company's operations. At June 30, 1997, the
Company had working capital of approximately $641,000. Because of the
development of its 3D seismic data acquisition infrastructure, the Company's
working capital requirements increased significantly over the last few years
and are expected to continue to do so. In addition, because the Company
generally does not receive payment for a project until 30 to 60 days following
its completion, the Company is often required to commit significant
expenditures during the course of performing a project, prior to its receipt of
any payments from the customer. In addition, because fixed costs account for a
significant portion of the Company's costs and expenses, a reduction in
productivity or inability to obtain new contracts would result in significant
operating losses and cash flow shortages. In July 1997, the Company entered
into an offer to finance whereby the Company's existing lender agreed to
provide approximately $1.52 million of additional term debt to finance a
portion of the purchase price of three 2D data acquisition systems. Although
the Company has funded these and other equipment purchases through bank
borrowings, it has no commitments to obtain any other additional debt or equity
financing for equipment purchases and there can be no assurance that additional
funds will be available, when required, on terms favorable to the Company or at
all. Any future issuances of equity securities would likely result in dilution
to the Company's then existing shareholders while the incurring of additional
indebtedness would result in increased interest expense and debt service
charges.
DEBT SERVICE REQUIREMENTS; CONSEQUENCES OF DEFAULT AND COVENANTS UNDER
DEBENTURE. At June 30, 1997, the Company had term loans of $5.1 million
representing approximately 35%
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of the Company's capitalization. The Company will require substantial
cash flow to meet its debt service requirements relating to these loans, which,
based on the lender's interest rate at July 15, 1997, are estimated to
aggregate approximately $2,040,000 (including principal and interest payments)
during the next twelve months. In addition, the Company maintains an operating
line of credit with a bank, under which advances of up to $1,200,000 could be
available to the Company subject to certain limitations. As of June 30, 1997,
the Company had outstanding approximately $500,000 in advances under the
operating line of credit and the Company believes, as a result of these
limitations, substantially all of the additional amounts under the operating
line were available for borrowing. All of the foregoing indebtedness is
subject to various financial and operating covenants, including requirements to
maintain certain financial ratios. The Company's ability to meet its debt
service obligations will depend on the Company's future operations, which are
subject to prevailing industry conditions and other factors, many of which are
beyond the Company's control. Because both the Company's term loan and its
operating line of credit bear interest at rates that fluctuate with prevailing
interest rates, increases in such prevailing rates would increase the Company's
interest payment obligations and could have a material adverse effect on the
Company's financial condition and results of operations. Further, the
Company's term indebtedness is secured by substantially all of the Company's
assets including all of its seismic data acquisition equipment. In the event
of a violation by the Company of any of its loan covenants or any other default
by the Company on its obligations relating to its term indebtedness the lenders
could declare such indebtedness to be immediately due and payable and in
certain cases foreclose on the Company's assets. There can be no assurance
that in the event that the Company is in default of certain of its loan
covenants in the future, that the Company will be able to secure a waiver from
the lender. Moreover, to the extent that all of the Company's assets continue
to be pledged to secure outstanding indebtedness under the term loan and its
line of credit, such assets will not be available to secure additional
indebtedness, which may adversely affect the Company's ability to borrow in the
future. In the event of a default relating to the Company's indebtedness it is
likely that the Company's shareholders would forfeit all or a substantial
portion of their investment in the Company.
SEASONALITY OF OPERATIONS; FLUCTUATIONS IN QUARTERLY PERFORMANCE. 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 temporarily 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 cash flow and results of operation with generally increased
activity in the Company's first and second fiscal quarters and a significant
decrease in revenues and net income during the third and fourth fiscal
quarters. With the acquisition of Boone in June 1996 the Company has expanded
and diversified its operations into the United States, which has somewhat
reduced the seasonality traditionally
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associated with the 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.
FIXED PRICE CONTRACTS; LACK OF WRITTEN CONTRACTS. A substantial portion
of the Company's contracts with its customers are fixed price or "turn-key"
contracts pursuant to which the Company bears substantially all the risk
associated with inclement weather or other productivity delays. To the extent
the Company incurs costs in excess of those estimated to complete a project its
margins are reduced, and, in some cases, the Company has incurred, and may in
the future incur, a loss on a particular contract as a result of such excess
costs. In addition, a large portion of the projects entered into by the
Company are not governed by any written contract or other documentation,
including, for the fiscal year ended September 30, 1996 and the nine month
period ended June 30, 1997, projects which were performed for a single customer
and which accounted for approximately 54% and 42%, respectively, of the
Company's revenues. As a result, in the event of a dispute with regard to work
performed in connection with a project or relating to the collection of fees
for a project, the Company may not be able to resolve such dispute as quickly
or effectively as it might have been able to do if a written contract existed.
In addition, in the absence of a written agreement, there may be discrepancies
with regard to payment terms, project scope or other matters which may, in
turn, result in delays, cash flow shortages, increased costs and lower revenues
or profits.
DEPENDENCE UPON PRINCIPAL CUSTOMERS. During the fiscal years ended
September 30, 1995 and 1996 and the nine month period ended June 30, 1997,
three, two and one customers, respectively, each accounted for over 10% of the
Company's revenues. One customer accounted for over 10% of the Company's
revenues in each period, including 43% in fiscal 1995, 54% in fiscal 1996 and
42% in the nine month period ended June 30, 1997; two other customers accounted
for over 10% in fiscal 1995 and a fourth customer accounted for over 10% of
revenues in fiscal 1996. The Company's three largest customers accounted for
71%, 71%, and 56% of revenues during fiscal 1995, 1996 and the nine month
period ended June 30, 1997, respectively, and at June 30, 1997, approximately
80% of the Company's accounts receivable were represented by three customers.
Although the projects performed by the Company for its customers are generally
short term, the inability to replace significant customers would cause the
Company's revenues and operating results to fluctuate significantly from period
to period and the loss of certain customers would have a material adverse
impact on the Company's business. Because of the limited number of data
acquisition systems owned by the Company and thus the limited number of data
acquisition crews that the Company is able to deploy at any given time, the
Company anticipates that a substantial portion of future revenues will continue
to be attributable to a few customers, who may change from period to period.
DEPENDENCE ON ACTIVITY OF OIL AND GAS INDUSTRY. Demand for the Company's
services depends primarily upon the level of spending by oil and gas companies
for exploration, production and development and field management activities.
These spending levels, in turn, tend to correspond to fluctuations in the
commodity prices for oil and gas. Consequently, demand for the Company's
services is affected to some degree by market prices for natural gas
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and crude oil, which have historically been very volatile. A decrease in oil
and gas exploration expenditures could result from such factors as unfavorable
tax and other legislation, international economic or political turmoil or
uncertainty concerning governmental energy policies. A substantial or extended
decline in oil and gas prices could have a material adverse effect on the
Company's financial position and results of operations and could cause the
Company to alter its capital spending plans. There can be no assurance that
current levels of oil and gas activities will be maintained or that demand for
the Company's services will reflect the level of such activities.
WEATHER AND PRODUCTIVITY. Since the Company's operations are especially
sensitive to hazardous conditions and certain inclement weather, particularly
rain, the Company may periodically experience equipment failures, accidents,
shortages and delays in the delivery of equipment or loss of productivity as a
result of such conditions. Loss of productivity could materially adversely
affect the Company due to the high fixed costs associated with the Company's
business, including debt service costs, equipment acquisition and lease costs,
and depreciation expenses.
COMPETITION AND TECHNOLOGICAL OBSOLESCENCE. The seismic data acquisition
industry is highly competitive. Many of the Company's competitors are
substantially larger than the Company or are subsidiaries or divisions of major
industrial enterprises with much greater financial and technical resources and
longer operating histories than the Company. In addition, the Company is
experiencing and will continue to face substantially increased competition as
it expands outside of Canada, particularly in the United States. There can be
no assurance that the Company will compete effectively in the industry. In
addition, the seismic data services industry is characterized by constantly
evolving technology. There can be no assurance that the Company's current
systems will not become obsolete before the Company has the resources to
replace them or that, in the future, the Company will have sufficient resources
to acquire new technology, as needed, or be able to use new technology to
compete effectively.
RISKS RELATING TO GROWTH AND EXPANSION. Growth of the Company's business
may place significant pressure on the Company's management, operational and
technical resources. The Company intends to pursue a strategy for expansion
and to acquire equipment to enable it to expand its operations both
domestically and internationally. The success of the Company's growth and
expansion will depend upon a number of factors not entirely within the
Company's control, including, among others, the cost and availability of
equipment, the ability to meet project schedules, the securing of required
government permits and other regulatory approvals, the hiring and training of
management and other personnel, competition in the industry, demand for seismic
data, the terms and availability of financing and other general economic and
business conditions. Any problems or delays encountered in any one of these
areas could result in substantial increases in costs to the Company. In
connection with any growth or expansion, the Company will be required to
develop and improve operational, management and financial systems and controls.
There can be no assurance that the Company will be able to effectively manage
its expanding operations and anticipate all of the changing demands that growth
will impose on its systems and controls. Failure to manage growth would have a
material adverse effect on the Company's business.
-10-
<PAGE> 13
GEOGRAPHICAL CONCENTRATION OF OPERATIONS; RISKS ASSOCIATED WITH
INTERNATIONAL EXPANSION. To date, other than a number of projects conducted
in the United States and one project conducted in Pakistan, the Company's
operations have been conducted exclusively in Western Canada, and the majority
of the Company's revenues have been derived therefrom. The Company is currently
highly dependent upon demand for data acquisition services in Western Canada.
To the extent that the Company continues to conduct substantially all of its
operations in this region, the Company's operating results may be materially
adversely affected by unfavorable economic, weather, industry trends or other
conditions in this region that are beyond the Company's control. The Company
may be unable to mitigate the effects of any unfavorable regional condition due
to the lack of geographical diversity of its operations. In part to alleviate
any risks associated with such geographical concentration of operations, the
Company may, from time to time, as market conditions permit, consider pursuing
operations in the international market through joint ventures or other
arrangements with strategic partners in geophysics services or related
industries in the United States, South America and Asia and/or by contracting
directly with oil and gas exploration companies located in such markets. There
can be no assurance that the Company will be successful in penetrating
international markets or that any international operations will be profitable.
International operations can also be expected to be subject to a number of
risks, including greater difficulties in accounts receivable collection, longer
payment cycles, exposure to currency fluctuations, political and economic
instability and the burdens of complying with a wide variety of foreign laws and
regulatory requirements. With the acquisition of Boone in June 1996 the Company
has expanded and diversified its operations into the United States, which has
somewhat reduced its dependence on demand for data acquisition services in
Canada. In addition, in the United States and other international markets, the
Company will face intense competition from established entities offering
competitive technology.
DEPENDENCE ON SUPPLIERS. Currently, the Company obtains its seismic data
acquisition equipment from a few select vendors, and, in the case of its
telemetry based 3D, 24 bit data acquisition systems, from a sole source. The
Company does not have long-term supply contracts with any of its suppliers and
purchases its equipment on a purchase order basis. No assurance can be given
that shortages will not occur in the future or that the sole or limited sources
of such equipment will be able to support the future equipment requirements of
the Company. In addition, there can be no assurance that the Company will not
experience delays or other supply problems that may materially adversely affect
the Company's operations or that the Company will be able to obtain supplies,
including additional data acquisition systems, in a timely manner in the event
of an increase in demand for its services. The inability to obtain seismic
data acquisition equipment as required, or to develop alternative sources as
required in the future, could materially adversely affect the Company's
business, operating results and financial condition.
OPERATING HAZARDS AND INSURANCE. The Company's operations are subject to
the general risks incident to land and water based seismic data acquisition
activities, including the use of explosives, which subject personnel to risk of
injury due to accidental explosions resulting from the mishandling of equipment
and supplies. Further, the Company operates in remote areas,
-11-
<PAGE> 14
often characterized by difficult terrain, and under extreme weather conditions.
The Company's crews are mobile and its equipment and personnel are subject to
vehicular accidents. Some or all of these hazards may result in personal
injury and loss of life, severe damage to or destruction of property and
equipment, environmental damage or suspension of operations. The Company has
not experienced any material losses or environmental claims to date, but there
can be no assurance that it will not experience such losses or claims in the
future. To the extent available, the Company maintains general liability
insurance coverage against these potential claims, the nature and amount of
which the Company believes to be customary in the industry. There can be no
assurance that adequate insurance will be available in the future or that the
Company will be able to maintain adequate insurance on terms and conditions it
finds acceptable. In the event of an uninsured or inadequately insured claim,
the Company's business and financial condition could be materially adversely
affected.
COMPLIANCE WITH GOVERNMENTAL REGULATIONS. The oil and gas industry is
subject to an extensive array of federal, provincial, state and local laws and
regulations, which may be changed from time to time in response to economic or
political conditions. Laws and regulations that have the effect of reducing or
curtailing exploration and production activities by energy companies could also
adversely affect the Company's operations and its financial condition by
reducing the demand for its services. In addition, oil and gas exploration is
subject to regulations governing environmental quality and pollution control.
The Company is required to expend financial and managerial resources to comply
with such laws in its operations, and anticipates that it will continue to be
required to do so in the future. Further, in many instances, the Company must
abide by permit requirements in order to conduct its operations and must abide
by environmental operating restrictions during the breeding period of certain
specific wildlife. There can be no assurance that in the future the Company
will be able to acquire all of the necessary permits to conduct its business or
that the costs associated with complying with laws and regulations affecting
its business will not have a material adverse effect upon the Company. In the
past, certain environmental operating restrictions by which the Company was
required to abide have adversely affected the Company's operating results, and
contributed to a significant decrease in revenues and a net loss, during
certain periods. Further, there can be no assurance that such laws or
regulations will not change frequently. In recent years, there has been a
trend toward more expansive and stricter environmental laws and regulations.
DEPENDENCE ON KEY PERSONNEL. The Company is highly dependent on the
services and expertise provided to it by its executive officers and key
personnel, especially those of its President, Chief Executive Officer, and
principal shareholder, Mr. Brian Kozun, the loss of which could substantially
impair the Company's operations. The Company has a key person life insurance
policy on the life of Mr. Kozun in the amount of $2,160,000 ($3,000,000 Canadian
dollars), the proceeds of which are pledged as collateral to the Company's
lenders. Because of the specialized nature of the business of the Company, the
future success of the Company depends in large part upon its ability to attract
and retain highly qualified personnel. The Company faces intense competition
for such highly qualified personnel from other geophysical services companies,
as well as from oil, gas and other natural resource organizations, and may have
to pay higher salaries to attract and retain such personnel. There can be no
assurance that the Company will be able to hire sufficient
-12-
<PAGE> 15
qualified personnel on a timely basis or retain such personnel. Although the
Company has entered into multiple-year employment contracts with each of its
executive officers, the loss of these or other personnel or the failure to
recruit additional key personnel by the Company could have a material adverse
effect on the Company's business, financial condition and results of
operations.
CONTROL BY CURRENT MANAGEMENT. The Company's current officers and
directors own approximately 30% of the Company's outstanding Common Shares. As
a result, such individuals will likely be able to determine the outcome of
corporate transactions or other matters submitted for shareholder approval.
Such control by management could preclude any unsolicited acquisition of the
Company and consequently adversely affect the market price of the Common
Shares. In addition, the terms of the Company's indebtedness require the
lenders' prior approval of any change in voting control of the Company, which
control is currently held by Mr. Kozun.
POTENTIAL ANTI-TAKEOVER PROVISIONS. The Company's Board is authorized to
issue from time to time, without shareholder authorization, an unlimited number
of preferred shares in one or more designated series or classes. Further,
Alberta law requires that at least 50% of the Board of Directors of the Company
be residents of Canada. In addition, the Company's term loan requires the
lender's prior approval of any change in the voting control of the Company,
which control is currently held by Mr. Kozun. Any of these provisions could
discourage, hinder or preclude an unsolicited acquisition of the Company and
could make it less likely that shareholders receive a premium for their shares
as a result of any such attempt.
LIMITATION OF LIABILITY AND INDEMNIFICATION OF OFFICERS AND DIRECTORS.
Pursuant to the Company's By-laws, as authorized under applicable Alberta law,
directors and officers of the Company are not liable for monetary damages for
breach of fiduciary duty, except in connection with a breach of the duty of
loyalty, for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of the law. Further, the Company's By-laws
provide that the Company shall indemnify its directors, officers, employees or
agents to the full extent permitted by the Business Corporations Act (Alberta),
and the Company shall have the right to purchase and maintain insurance on
behalf of any such person against the liability except where the liability
relates to the directors' failure to act honestly and in good faith with a view
to the best interests of the Company. The Company maintains an insurance policy
covering its officers and directors and indemnifying them against loss on
account of claims made against them. The Company has entered into
indemnification agreements with each of its directors and officers, which
provide that the Company will indemnify the indemnitee to the fullest extent
permitted by applicable law, provided the indemnitee acted in good faith and in
a matter he reasonably believed to be in the best interest of the Company and,
with respect to any criminal action, had reasonable cause to believe his conduct
was lawful.
RISK OF ENFORCING JUDGMENTS AGAINST FOREIGN PERSONS AND CORPORATIONS. The
Company is an Alberta, Canada corporation. The majority of the Company's
directors and officers and the experts named herein are residents of Canada and
most of their and the Company's assets are located outside of the United
States. As a result, it may be difficult for shareholders resident in the
United States to effect service within the United States upon the Company and
such persons,
-13-
<PAGE> 16
or to realize in the United States upon judgments of courts of the United
States predicated upon the civil liability provisions of the United States
federal securities laws. The Company has been advised by its Canadian counsel,
Burstall Ward, that there is doubt as to whether Canadian courts would (i)
enforce judgments of United States courts obtained against the Company or such
other persons predicated upon the civil liabilities provisions of such
securities laws or (ii) impose liabilities in original actions against the
Company or such other persons predicated solely upon such securities laws.
NO DIVIDENDS. The Company has paid cash dividends on its Common Shares
only once in connection with proceeds received by the Company from an insurance
policy upon the death of an officer of the Company and does not expect to
declare or pay any cash or other dividends in the foreseeable future. In
addition, pursuant to the terms of the Company's bank operating line of credit,
the extent to which the Company may pay dividends in the future is restricted
to a maximum of $72,000 ($100,000 Canadian dollars) per annum.
CURRENT PROSPECTUS AND STATE REGISTRATION REQUIRED TO EXERCISE WARRANTS.
Holders of Warrants will be able to exercise the Warrants only if (i) a current
prospectus under the Securities Act relating to the securities underlying the
Warrants is then in effect and (ii) such securities are qualified for sale or
exempt from qualification under the applicable securities laws of the states in
which the various holders of Warrants reside. Although the Company has
undertaken and intends to use its best efforts to maintain a current prospectus
covering the securities underlying the Warrants to the extent required by
Federal securities laws, there can be no assurance that the Company will be
able to do so. The value of the Warrants may be greatly reduced if a
prospectus covering the securities issuable upon the exercise of the Warrants
is not kept current or if the securities are not qualified, or exempt from
qualification, in the states in which the holders of Warrants reside. Persons
holding Warrants who reside in jurisdictions in which such securities are not
qualified and in which there is no exemption will be unable to exercise their
Warrants and would either have to sell their Warrants in the open market or
allow them to expire unexercised.
POTENTIAL ADVERSE EFFECT OF REDEMPTION OF WARRANTS. The Warrants are
subject to redemption by the Company, upon the consent of Whale, at a
redemption price of $.10 per Warrant on 30 days' written notice; provided that
the average closing bid quotation of the Common Shares for the twenty trading
days ending on the third day prior to the day on which the Company gives notice
has been at least 150% (currently $9.00, subject to adjustment) of the then
effective exercise price of the Warrants. Redemption of the Warrants could
force the holders (i) to exercise the Warrants and pay the exercise price
therefor at a time when it may be disadvantageous for the holders to do so,
(ii) to sell the Warrants at the then current market price when they might
otherwise wish to hold the Warrants, or (iii) to accept the nominal redemption
price which, at the time the Warrants are called for redemption, is likely to
be substantially less than the market value of the Warrants. Although the
Warrant Agreement requires the Company to have a current prospectus under the
Securities Act, relating to the securities underlying the Warrants, as of the
date of redemption (if and when the Warrants become redeemable by the terms
thereof), the Company will not be required to qualify the underlying securities
for sale
-14-
<PAGE> 17
under all applicable state securities laws prior to exercising its redemption
rights.
POSSIBLE RESTRICTIONS ON MARKET-MAKING ACTIVITIES IN THE COMPANY'S
SECURITIES. Whale has advised the Company that it may make a market in the
Company's securities. Regulation M under the Exchange Act may prohibit Whale
from engaging in any market-making activities with regard to the Company's
securities for a specified period prior to any solicitation by Whale of the
exercise of Warrants until the later of the termination of such solicitation
activity or the termination (by waiver or otherwise) of any right that Whale
may have to receive a fee for the exercise of Warrants following such
solicitation. As a result, Whale may be unable to provide a market for the
Company's securities during certain periods while the Warrants are exercisable.
Any temporary cessation of such market-making activities could have an adverse
effect on the market price of the Company's securities.
SHARES ELIGIBLE FOR FUTURE SALE. Future sales of Common Shares by
existing shareholders pursuant Rule 144 under the Securities Act could have an
adverse effect on the price of the Company's securities. Of the Company's
3,120,894 Common Shares outstanding at November 12, 1997, 1,045,623 are
"restricted securities" as that term is defined in Rule 144 promulgated under
the Securities Act of 1933, as amended, (the "Act") and under certain
circumstances may be sold without registration pursuant to such Rule and the
remaining 2,075,271 are freely transferable without restriction or further
registration under the Act. The Company is unable to predict the effect that
sales made under Rule 144, or otherwise, may have on the then prevailing market
price of the Company's securities although any substantial sale of restricted
securities pursuant to Rule 144 may have an adverse effect. Sales of Common
Shares, or the possibility of such sales, in the public market may adversely
affect the market price of the securities offered hereby. None of the existing
shareholders of the Company has any registration rights with respect to the
Common Shares; however Whale has demand and piggy-back registration rights with
respect to the securities underlying the Underwriter's Warrant.
ARBITRARY DETERMINATION OF EXERCISE PRICE. The exercise price of the
Warrants were determined by negotiation between the Company and Whale in
connection with the IPO and are not necessarily related to the Company's asset
value, net worth or any other established criteria of value.
EFFECT OF OUTSTANDING OPTIONS AND WARRANTS. The Company has outstanding
(i) 1,610,000 Warrants, (ii) Underwriter's Warrants to purchase an aggregate of
280,000 Common Shares, and (iii) options to purchase 261,500 Common Shares
under the Company's 1995 Stock Option Plan, as amended. For the respective
terms of such securities, the holders thereof are given an opportunity to
profit from a rise in the market price of the Company's Common Shares with a
resulting dilution in the interests of the other shareholders. Further, the
terms on which the Company may obtain additional financing during that period
may be adversely affected by the existence of such options and warrants. The
holders of such securities may exercise them at a time when the Company might
be able to obtain additional capital through a new offering of securities on
terms more favorable than those provided by therein.
-15-
<PAGE> 18
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of any of the
Underwriter's Warrants or any of the Selling Securityholder Warrants, although
the Company will receive proceeds from any exercise of the Warrants or the
Selling Securityholder Warrants.
Holders of Warrants and Selling Securityholder Warrants are not obligated
to exercise their Warrants or Selling Securityholder Warrants, as the case may
be, and there can be no assurance that such holders will choose to exercise all
or any of their Warrants. In the event that all of the 1,610,000 outstanding
Warrants and all of the 140,000 outstanding Selling Securityholder Warrants are
exercised, the net proceeds to the Company would be $10,157,000, after deducting
the Solicitation Fee and excluding other expenses of this Offering.
The Company intends to use the net proceeds received upon exercise of the
Warrants and the Selling Securityholder Warrants, if any, approximately as
follows:
<TABLE>
<CAPTION>
<S> <C>
Use of Proceeds Amount
Equipment acquisition(1) $4,500,000
Debt repayment(2) $4,000,000
General corporate purposes/working capital $1,657,000
Total $10,157,000
</TABLE>
____________________________
(1) Represents the amount required to exercise certain equipment purchase
options relating to data acquisition equipment currently being leased by the
Company.
(2) Includes amounts outstanding under the Company's term loans, which, as of
June 30, 1997 totalled approximately $5.1 million.
The allocation of the estimated net proceeds from this Offering set forth
above represents the Company's best estimate based upon its current plans and
assumptions regarding general economic and industry conditions and its
anticipated future revenues and expenditures, including that no events occur
(such as a significant decline in the demand for its services) which would
cause the Company to abandon any particular efforts and that competitive
conditions remain stable. If any of these factors change, or if cash flow
generated from operations does not meet expectations, the Company may find it
necessary or advisable to reallocate some of the proceeds within the
above-described categories or to use portions thereof for other purposes.
Accordingly, the Company reserves the right, as unanticipated events occur, to
reallocate the proceeds from this Offering, including possibly for the
acquisition of or merger with similar or complementary companies. However, the
Company has no agreements, understandings or commitments with respect to any
such transaction.
Prior to expenditure, the net proceeds from the exercise of the Warrants
and the Selling Securityholder Warrants will be invested in highly-liquid
interest bearing securities or money market funds.
-16-
<PAGE> 19
SELLING SECURITYHOLDERS
The following table sets forth the names of each Selling Securityholder
and for each, the number of Common Shares and/or Warrants beneficially owned at
the commencement of this Offering, and the number of Common Shares and/or
Warrants offered for sale, based on information provided to the Company by such
Selling Securityholders. The Common Shares and Warrants are being registered
to permit public secondary trading of the Common Shares and/or Warrants, and
the Selling Securityholders may offer the Common Shares and Warrants for resale
from time to time. See "Plan of Distribution."
The Company has filed with the Commission under the Act a Registration
Statement on Form S-3, of which this Prospectus forms a part, with respect to
the resale of the Common Shares and/or Warrants. The Company has agreed, among
other things, to bear certain expenses in connection with the registration and
sale of the Common Shares and Warrants being offered by the Selling
Securityholders. See "Plan of Distribution."
Certain of the Selling Securityholders hold Underwriter's Warrants issued
by the Company which, upon exercise, allow such Selling Securityholder to
purchase Common Shares and Warrants to purchase Common Shares. Such Selling
Securityholders are expected to exercise their warrants and pay for their
Warrants and Common Shares immediately prior to offering such Warrants and
Common Shares pursuant to this Prospectus.
None of the Selling Securityholders are officers or directors of the
Company. Each of the Selling Securityholders listed below with a reference to
footnote (3) is employed by Whale Securities Co., L.P. ("Whale"), an
investment banking firm which acted as underwriter for the initial public
offering of securities by the Company in November 1995. All of the individuals
listed under "Underwriter's Warrant Securities" received the securities listed
under "Amount Being Offered" in connection with such initial public offering.
Except as noted below, each Selling Securityholder beneficially owns less
than one percent of the outstanding Common Shares of the Company.
-17-
<PAGE> 20
Selling Securityholders
- -----------------------
Underwriter's Warrant Securities(1)(2)
<TABLE>
<CAPTION>
Amount Beneficially Owned
Prior to Offering Amount Being Offered
------------------------- -------------------------
Common Shares Warrants Common Shares Warrants
<S> <C> <C> <C>
William G.
Walters (3) 100,000 50,000 100,000 50,000
Elliot J. Smith 3,736 1,868 3,736 1,868
Estate of
Howard Harlow 2,772 1,386 2,772 1,386
James D.
Whitten (3) 278 139 278 139
Cynthia
Buckwalter (3) 276 138 276 138
Herbert Berman 28,478 14,239 28,478 14,239
Whale Securities
Co., L.P. (4) 144,460 72,230 144,460 72,230
------- ------- ------- -------
280,000 140,000 280,000 140,000
======= ======= ======= =======
</TABLE>
_______________
(1) The amount owned prior to this Offering includes Common Shares
outstanding and Common Shares issuable upon exercise of Underwriter's
Warrants and Selling Securityholder Warrants included therein; the amount
being offered represents only Common Shares issuable upon exercise of all
such warrants.
(2) For each person listed under "Underwriter's Warrant Securities", the
number of Common Shares owned prior to the Offering and the number of
Common Shares being offered includes the Common Shares issuable upon
exercise of the Selling Securityholder Warrants owned by such individual.
Each individual is registering for resale their Selling Securityholder
Warrants and the Selling Securityholder Shares issuable upon exercise of
their Selling Securityholder Warrants. Accordingly, they may either sell
the Selling Securityholder Warrants or exercise the Selling Securityholder
Warrants and sell the Selling Securityholder Shares issued upon such
exercise, or a combination of these methods.
(3) Individual is an employee of Whale.
(4) Includes securities held in the name of Whale for the account of certain
debt and equity owners and employees of Whale. Excludes Common Shares
held in any customer account by, and for any trading account of Whale.
-18-
<PAGE> 21
PLAN OF DISTRIBUTION
The Common Shares offered hereby by the Company are being offered directly
by the Company pursuant to the terms of the Warrants. The Selling
Securityholder Securities offered hereby by the Selling Securityholders may be
sold by the Selling Securityholders or by their transferees or other successors
in interest. The distribution of all securities offered hereby may be effected
from time to time in one or more transactions on the Nasdaq National Market or
on other exchanges on which the Common Shares and/or Warrants may be traded, in
the over-the-counter market, in negotiated transactions, through the writing of
options on the Common Shares or a combination of such methods of sale, or
through other means. Sales may be effected at fixed prices which may be
changed, at market prices prevailing at the time of sale, at prices related to
such prevailing market prices or at negotiated prices. The Selling
Securityholders are not restricted as to the price or prices at which they may
sell their Selling Securityholder Securities. Sales of Selling Securityholder
Securities by the Selling Securityholders may depress the market price of the
Company's Common Shares or Warrants.
Transactions may be effected by sales to or through broker-dealers, and
such broker-dealers may receive compensation in the form of discounts,
concessions or commissions from the sellers of the Common Shares, the Selling
Securityholders or the purchasers of the Common Shares or Warrants for whom
such broker-dealers may act as agent or to whom they sell as principal, or both
(which compensation to a particular broker-dealer might be in excess of
customary commissions). The Selling Securityholders and any broker-dealers or
agents who participate in the distribution of Selling Securityholder Securities
hereunder may be deemed to be "underwriters" as that term is defined in the
Act, and any commissions received by them and profit on any resale of the
Common Shares as principal might be deemed to be underwriting discounts and
commissions under the Act. No underwriter is being utilized in connection with
this Offering.
The Company has agreed, in connection with the exercise of the Warrants
(other than the Selling Securityholder Warrants) pursuant to solicitation
(commencing November 6, 1996), to pay to Whale a fee of 5% of the exercise price
for each Warrant exercised; provided, however, that Whale will not be entitled
to receive such compensation in Warrant exercise transactions in which (i) the
market price of the Common Shares at the time of exercise is lower than the
exercise price of the Warrants; (ii) the Warrants are held in any discretionary
account; (iii) disclosure of compensation arrangements is not made in documents
provided to holders of the Warrants at the time of exercise; (iv) the holder of
the Warrants has not confirmed in writing that Whale solicited such exercise; or
(v) the solicitation of exercise of the Warrants was in violation of Regulation
M promulgated under the Exchange Act. The Company has agreed not to solicit
Warrant exercises other than through Whale, unless Whale declines to make such
solicitation.
Whale acted as underwriter of the Company's IPO. Other than the
securities underlying the Underwriter's Warrants granted to Whale, the Company
is not aware of any other securities of the Company owned by Whale.
Regulation M may prohibit Whale from engaging in any market making
activities with regard to the Company's securities for a period from five
business days (or such other applicable period as Regulation M may provide)
prior to any solicitation by Whale of the exercise of Warrants until the later
of the termination of such solicitation activity or the
-19-
<PAGE> 22
termination (by waiver or otherwise) of any right that Whale may have to
receive a fee for the exercise of Warrants following such solicitation. As a
result, Whale may be unable to provide a market for the Company's securities
during certain periods, including while the Warrants are exercisable. In
addition, the Selling Securityholders are subject to applicable provisions of
the Exchange Act and the rules and regulations thereunder, including without
limitation Regulation M, which provisions may limit the timing of purchases
and sales of Common Shares, Warrants or Selling Securityholder Securities.
The Company has agreed to pay the expenses of registration in connection
with this Offering and to indemnify certain of the Selling Securityholders
against certain liabilities, including certain liabilities under the Act.
At the time a particular offer of Common Shares, Warrants or Selling
Securityholder Securities is made, to the extent required, a supplement to
this Prospectus will be distributed which will identify and set forth the
aggregate amount of Common Shares, Warrants or Selling Securityholder
Securities being offered and the terms of the offering.
In order to comply with certain states' securities laws, if applicable,
the Common Shares, Warrants or Selling Securityholder Securities may be sold
in such jurisdictions only through registered or licensed brokers or dealers.
In certain states the Common Shares, Warrants or Selling Securityholder
Securities may not be sold unless the Common Shares, Warrants or Selling
Securityholder Securities have been registered or qualified for sale in such
state, or unless an exemption from registration or qualification is available
and is obtained.
From time to time one or more of the selling Securityholders may transfer,
pledge, donate or assign Selling Securityholder Securities to lenders, family
members or others.
LEGAL MATTERS
The validity of the securities offered hereby have been passed upon for
the Company by Burstall Ward, Calgary, Alberta.
EXPERTS
The financial statements incorporated in this prospectus by reference to
the Annual Report on Form 10-KSB, as amended for the year ended September 30,
1996, have been incorporated herein in reliance on the report of Ernst & Young,
Chartered Accountants, given on their authority as experts in accounting and
auditing.
-20-
<PAGE> 23
NO DEALER, SALESPERSON OR OTHER
INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE
CONTAINED HEREIN AND, IF GIVEN OR VENTURE SEISMIC
MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED LTD.
UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR THE SELLING
SECURITYHOLDERS. THIS PROSPECTUS DOES
NOT CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF ANY OFFER TO BUY ANY
SECURITIES IN ANY JURISDICTION IN
WHICH SUCH OFFER OR SOLICITATION WOULD
BE UNLAWFUL. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE ANY IMPLICATION 1,610,000 COMMON SHARES
THAT THERE HAS BEEN NO CHANGE IN THE ISSUABLE UPON EXERCISE OF
AFFAIRS OF THE COMPANY SINCE THE DATE REDEEMABLE WARRANTS
HEREOF.
140,000 COMMON SHARES
140,000 REDEEMABLE WARRANTS
AND 140,000 COMMON SHARES
ISSUABLE UPON EXERCISE OF
REDEEMABLE WARRANTS
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
Page
AVAILABLE INFORMATION----------------3 PROSPECTUS
INCORPORATION OF CERTAIN
DOCUMENTS BY REFERENCE---------------4
PROSPECTUS SUMMARY-------------------5
THE COMPANY--------------------------5
RISK FACTORS-------------------------7
USE OF PROCEEDS---------------------16
SELLING SECURITYHOLDERS-------------17
PLAN OF DISTRIBUTION----------------19
LEGAL MATTERS-----------------------20
EXPERTS---------------------------- 20
</TABLE>
,1997
-21-
<PAGE> 24
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The estimated expenses payable by the Registrant in connection with the
issuance and distribution of the securities being registered are as follows:
<TABLE>
<CAPTION>
<S> <C>
SEC Registration Fee......................... $ -
Accounting Fees and Expenses ................ 1,500
Legal Fees and Expenses, including Blue Sky
Fees and Expenses.......................... 10,000
Miscellaneous Expenses....................... 2,500
-------
Total....................................... $14,000
=======
</TABLE>
Item 15. Indemnification of Directors and Officers.
The By-Laws of the Registrant provides that the Registrant shall indemnify
any person to the full extent permitted by the Business Corporations Act
(Alberta) (the "BCA"). Section 119 of the BCA, relating to indemnification, is
hereby incorporated herein by reference.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended (the "Securities Act"), may be permitted to directors,
officers or controlling persons of the Registrant pursuant to the Registrant's
By-laws, the Registrant has been informed that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is therefore unenforceable.
The Registrant's By-Laws include certain provisions permitted pursuant to
Alberta law whereby officers and directors of the Registrant are to be
indemnified against certain liabilities. The Registrant's By-Laws also limit,
to the fullest extent permitted by Alberta law, a director's liability for
monetary damages for breach of fiduciary duty, except liability for (i) breach
of the director's duty to act honestly and in good faith and (ii) acts or
omissions where the director did not have reasonable grounds for believing his
conduct was lawful.
The Registrant has entered into indemnification agreements with each of
its executive officers and directors, the form of which is filed as Exhibit
10.13 to the Registrant's Registration Statement on Form SB-2 (File No.
33-97132).
The Registrant has obtained and maintains a policy of insurance covering its
officers and
II-1
<PAGE> 25
directors and indemnifying them against loss on account of certain claims made
against them.
Item 16. Exhibits.
(a) 4.1 Form of Specimen Certificate of Company's Common Shares (1)
4.2 Form of Warrant Agreement (1)
4.3 Form of Specimen Certificate of Warrant (1)
5.1 Opinion of Burstall Ward regarding legality of securities being
registered
23.1 Consent of Ernst & Young, Chartered Accountants
23.2 Consent of Burstall Ward (contained in Exhibit 5.1)
24.1 Power of Attorney (contained on signature page hereof)
(1) Incorporated by reference from the Company's Registration Statement on
form SB-2 (File No. 33-97132)
Item 17. Undertakings
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or most
recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information
set forth in the registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low
or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission
pursuant to Rule 424 (b) if, in the aggregate, the changes in
volume and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
II-2
<PAGE> 26
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
(4) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers or
controlling persons pursuant to the foregoing provisions, or
otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against
public policy as expressed in the Act and is, therefore,
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
(5) For purposes of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a
form of prospectus shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
II-3
<PAGE> 27
SIGNATURE
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing Form S-3 and has duly caused this post-effective
amendment to the Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Calgary, Province of
Alberta, on the 12th day of November, 1997.
VENTURE SEISMIC LTD.
By: /s/ BRIAN KOZUN
Brian W. Kozun
Chairman, President and Chief
Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below under the heading "Signature" constitutes and appoints Brian W. Kozun and
Gregory B. Wiebe or either of them, his true and lawful attorney-in-fact and
agent with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities to sign any or all amendments
to this registration statement, and to file the same, with all exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, each acting alone,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully for all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, each acting alone, or
his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, this post
effective Amendment to the Registration Statement has been signed by the
following persons in the capacities and on the dates indicated.
<TABLE>
<S> <C> <C>
/s/ BRIAN KOZUN Chairman of the Board of November 12, 1997
- ------------------- Directors, President and Chief
Brian W. Kozun Executive Officer
(Principal Executive Officer)
/s/ GREG WIEBE Chief Financial Officer (Principal November 12, 1997
- -------------------- Financial and Accounting Officer)
Gregory B. Wiebe
/s/ DAN McARTHUR Director November 12, 1997
- --------------------
P. Daniel McArthur
/S/ JOSEPH CIAVARRA Director November 12, 1997
- --------------------
J. Joseph Ciavarra
/s/ STUART NORMAN Director November 12, 1997
- --------------------
Stuart Norman
/s/ MICHAEL BENINGER Director November 12, 1997
- --------------------
Michael J. Beninger
</TABLE>
II-4
<PAGE> 1
EXHIBIT 5.1
November 12, 1997
Venture Seismic Ltd.
3110 - 80 Avenue S.E.
Calgary, Alberta T2C 1J3
Dear Sirs:
You have requested our opinion with respect to the offering and sale of
1,610,000 common shares of Venture Seismic Ltd. (the "Corporation") issuable
upon the exercise of the redeemable warrants (the "Warrants") and the sale by
certain stockholders of the Corporation (the "Selling Stockholders") of 140,000
common shares issuable upon the exercise of other warrants and 140,000 common
shares issuable upon the exercise of Warrants (the 1,890,000 common shares are
referred to herein as the "Shares") pursuant to Post-effective Amendment No. 2
on Form S-3 to the Corporation's Registration Statement on Form SB-2 (the
"Registration Statement") under the Securities Act of 1933, as amended
(the "Act").
We have examined originals, or copies certified or otherwise identified to
our satisfaction of such documents and corporate and public records as we deem
necessary as a basis for the opinion hereinafter expressed. With respect to
such, we have assumed the genuineness of all signatures appearing on all
documents presented to us as originals, and the conformity to the originals of
all documents presented to us as conformed or reproduced copies. Where factual
matters relevant to such opinion were not independently established, we have
relied upon the certificates of officers and responsible employees and agents
of the Corporation.
We are members of the Law Society of Alberta, are not permitted to
practice law in any other province in Canada and are not experts in the laws or
other provinces of Canada or of any other jurisdiction. This opinion is
rendered solely with respect to the laws of the Province of Alberta and the
federal laws of Canada applicable therein.
Based upon the foregoing, it is our opinion that the Shares, when issued
and paid for in the manner described in the Registration Statement, will be
validly issued as fully paid and non-assessable common shares of the
Corporation.
We hereby consent to the use of this opinion as Exhibit 5.1 to the
Registration Statement, and to the use of our name as counsel to the
Corporation in connection with the Registration Statement and in the Prospectus
forming a part thereof. In giving this consent, we do not thereby concede that
we come within the categories of persons whose consent is required by the Act
or the General Rules and Regulations promulgated thereunder.
Yours truly,
/s/ Burstall Ward
BURSTALL WARD
<PAGE> 1
Exhibit 23.1
CONSENT OF INDEPENDENT CHARTERED ACCOUNTANTS
We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated December 4, 1996 with respect to the consolidated
financial statements of Venture Seismic Ltd. (the "Company") included in its
Annual Report on Form 10-KSB, incorporated by reference in this post-effective
amendment No. 2 on Form S-3 to the Company's Registration Statement on Form
SB-2 (File No. 33-97132), and related prospectus of the Company.
/s/ ERNST & YOUNG
Chartered Accountants
Calgary, Alberta
November 12, 1997
