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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 December 31, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE EXCHANGE ACT OF 1934
Commission file number 0-27070
___________________________________________________
VENTURE SEISMIC LTD.
(Exact name of small business issuer as
specified in its charter)
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<S> <C>
ALBERTA, CANADA N/A
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation of organization)
</TABLE>
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: 4,634,584 Common Shares, no
par value, were outstanding as of February 12, 1997.
Transitional Small Business Disclosure Format (Check one):
Yes ____ No [X]
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VENTURE SEISMIC LTD.
INDEX TO FORM 10-QSB
FOR THE QUARTER ENDED DECEMBER 31, 1997
PART I. FINANCIAL INFORMATION
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Page
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Item 1. Financial Statements
Consolidated Balance Sheets
December 31, 1997 and September 30, 1997.......................... 3
Consolidated Statements of Income
Three months ended December 31, 1997 and 1996..................... 4
Consolidated Statements of Cash Flows
Three months ended December 31, 1997 and 1996..................... 5
Notes to Consolidated Financial Statements............................. 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations............................................. 10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings................................................. 14
Item 6. Exhibits and Reports on Form 8-K.................................. 14
Signatures.................................................................. 17
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PART 1. FINANCIAL INFORMATION
- ------------------------------
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
VENTURE SEISMIC LTD.
CONSOLIDATED BALANCE SHEETS
(IN U.S. DOLLARS)
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<CAPTION>
December 31, September 30,
1997 1997
---------- -----------
<S> <C> <C>
ASSETS
CURRENT
Cash $ 1,553,319 $ 68,066
Accounts receivable 5,054,269 2,586,688
Work-in-progress 1,545,000 521,594
Other receivables 271,964 297,707
Prepaid expenses and deposits 172,750 204,276
----------- -----------
8,597,302 3,678,331
CAPITAL ASSETS 18,155,485 17,383,026
INTANGIBLE ASSETS 1,509,923 1,554,503
----------- -----------
$28,262,710 $22,615,860
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Bank indebtedness $ 452,500 $ --
Accounts payable and accrued
liabilities 4,455,881 1,036,147
Deferred revenue 770,000 800,000
Income taxes payable 102,360 118,708
Current portion of long term debt
(note 4) 2,110,012 6,580,703
----------- -----------
7,890,753 8,535,558
----------- -----------
LONG TERM DEBT (NOTE 4) 4,822,134 3,746,490
----------- -----------
DEFERRED INCOME TAXES 882,990 674,076
----------- -----------
SHAREHOLDERS' EQUITY
Share capital (note 5) 12,339,329 7,671,366
Retained earnings 2,340,252 1,949,549
Cumulative translation
adjustment (12,748) 38,821
----------- -----------
14,666,833 9,659,736
----------- -----------
$28,262,710 $22,615,860
=========== ===========
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VENTURE SEISMIC LTD.
CONSOLIDATED STATEMENTS OF INCOME
(IN U.S. DOLLARS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
DECEMBER 31,
--------------------------
1997 1996
--------------------------
<S> <C> <C>
REVENUE $8,627,748 $5,584,771
DIRECT EXPENSES 6,388,399 4,246,748
---------- ----------
GROSS MARGIN 2,239,349 1,338,023
---------- ----------
EXPENSES
General and administrative 501,444 397,954
Depreciation 702,846 498,604
Amortization 44,580 38,580
---------- ----------
1,248,870 935,138
---------- ----------
INCOME FROM OPERATIONS 990,479 402,885
OTHER INCOME (EXPENSE)
Interest and other income 20,271 5,707
Gain on sale of capital assets 32,870 --
Interest expense (354,417) (138,570)
-------- ----------
(301,276) (132,863)
-------- ----------
INCOME BEFORE INCOME TAXES 689,203 270,022
INCOME TAXES
Current -- --
Deferred 298,500 120,000
---------- ----------
298,500 120,000
---------- ----------
NET INCOME FOR THE PERIOD $ 390,703 $ 150,022
========== ==========
EARNINGS PER COMMON SHARE (NOTE 3)
Basic $0.12 $0.05
Fully diluted $0.09 $0.05
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VENTURE SEISMIC LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN U.S. DOLLARS)
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<CAPTION>
THREE MONTHS ENDED
DECEMBER 31,
-------------------------
1997 1996
-------------------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income for the period $ 390,703 $ 150,022
Items not involving cash:
Depreciation and amortization 747,426 537,184
Deferred income taxes 298,500 120,000
Gain on sale of capital assets (32,870) --
Cumulative translation adjustment (107,760) (49,697)
Net change in non-cash working capital 9,668 (222,660)
----------- -----------
1,305,667 534,849
----------- -----------
FINANCING ACTIVITIES:
Proceeds on issuance of shares 4,667,963 50,000
Increase (decrease) in bank indebtedness 452,500 (73,328)
Proceeds from long term debt 980,000 5,946,157
Principal payments on long term debt (4,375,047) (3,875,960)
Net change in non-cash working capital (70,000) (50,000)
----------- -----------
1,655,416 1,996,869
----------- -----------
INVESTMENT ACTIVITIES:
Purchase of capital assets (1,531,822) (2,502,916)
Proceeds on sale of capital assets 55,992 --
----------- -----------
(1,475,830) (2,502,916)
----------- -----------
INCREASE IN CASH FOR THE PERIOD 1,485,253 28,802
CASH, BEGINNING OF PERIOD 68,066 --
----------- -----------
CASH, END OF PERIOD $ 1,553,319 $ 28,802
=========== ===========
</TABLE>
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VENTURE SEISMIC LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997
1. Basis of Financial Statement Presentation
The consolidated financial statements of Venture Seismic Ltd. (the "Company")
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 of the Company as of December 31, 1997,
operating results for the three months ended December 31, 1997 and 1996 and
statements of cash flows for the three months ended December 31, 1997 and 1996.
The consolidated financial statements should be read in conjunction with the
consolidated financial statements and notes thereto, together with management's
discussion and analysis of financial condition and results of operations,
contained herein and in the Company's Annual Report on Form 10-KSB for its
fiscal year ended September 30, 1997. The foregoing interim results for the
three months ended December 31, 1997 are not necessarily indicative of the
results for the entire fiscal year ending September 30, 1998.
The consolidated financial statements are prepared in accordance with Canadian
generally accepted accounting principles ("Cdn GAAP"). Certain of these
principles differ from those applicable in the United States ("U.S. GAAP").
Differences, if material, are disclosed in note 3 -- United States Accounting
Principles and Earnings per Share.
2. Currency Presentation and Exchange Rates
All dollar amounts, unless otherwise stated, are expressed in U.S. dollars.
Since the completion of its initial public offering in November 1995, the
Company has selected U.S. dollars as its currency for financial reporting and
display purposes on the basis that the securities of the Company are listed for
trading on the Nasdaq National Market ("Nasdaq") and the primary users of the
financial statements of the Company are U.S. residents. Accordingly, the
Company applies the "current rate" method to translate to U.S. dollars
those of its accounts which are measured in Canadian dollars. Under this
method, average exchange rates are used for items included in the consolidated
income statement and period end exchange rates are used for items included in
the consolidated balance sheet. Any significant gains or losses are included as
a separate component of shareholders' equity.
For translation purposes, the exchange rate of Canadian dollars to U.S. dollars,
are calculated using 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, on the applicable dates. The average
exchange rates for the three months ended December 31, 1997 and December
31, 1996 are US $0.7098 = $1.00 Cdn and US $0.7405 = $1.00 Cdn, respectively.
The period end exchange rates at December 31, 1997 and September 30, 1997 are US
$0.6999 = $1.00 Cdn and US $0.7234 = $1.00 Cdn, respectively.
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3. United States Accounting Principles and Earnings per Share
For the periods ended December 31, 1997 and 1996 there were no material
differences in net income between Cdn GAAP and U.S. GAAP.
For purposes of U.S. GAAP, basic earnings per share ("EPS") is based on the
weighted average number of common shares (the "Shares") outstanding during the
period. Under U.S. GAAP fully-diluted EPS gives effect to all dilutive
potential Shares of the Company that were outstanding at the end of the period.
The dilutive effect of outstanding options and warrants is determined by the
application of the treasury stock method.
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<CAPTION>
Three months ended December 31, 1997
----------------------------------------------
Income Shares Per Share
(Numerator) (Denominator) Amount
----------- ------------- ---------
<S> <C> <C> <C>
Basic EPS:
Net income for the period $390,703 3,253,000 $0.12
Effect of dilutive securities:
Redeemable warrants 334,842
Underwriter warrants 19,310
Employee stock options 101,631
Investor relation options 35,345
-------- --------- -----
Diluted EPS $390,703 3,843,203 $0.10
======== ========= =====
</TABLE>
During the period ended December 31, 1997 the average closing price of the
Shares, as reported by Nasdaq was $8.12. At December 31, 1997 there were an
aggregate of 1,840,000 potential dilutive Shares outstanding at exercise
prices ranging from $3.38 to $7.00. Underwriter's Options to purchase 140,000
Shares at an exercise price of $8.25 were not included in the calculation of
fully diluted EPS (U.S. GAAP) for the period ended December 31, 1997 since the
exercise price was greater than $8.12. The options, which expire in November,
2000, were still outstanding at December 31, 1997.
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4. Long term debt
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<CAPTION>
December 31, September 30,
1997 1997
------------ -------------
<S> <C> <C>
Capital loans, bearing interest at the lender's cost
of funds plus 2.75% and repayable in monthly
installments of $141,205 ($201,750 Cdn),
plus interest, due in installments through
September 15, 2001 $ 5,685,485 $ 5,244,650
Equipment lease purchase contract, bearing interest
at 20%, repayable in monthly installments of $135,000
comprised of principal and interest, due February
1998 (see note 6) $ 1,246,661 --
Equipment lease purchase contracts (see note 6) -- 5,082,543
----------- -----------
6,932,146 10,327,193
Less current portion (2,110,012) (6,580,703)
----------- -----------
$ 4,822,134 $ 3,746,490
=========== ===========
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A general security agreement on all equipment and a fixed charge on certain
equipment have been pledged as collateral for the capital loans. Aggregate
principal repayments for long term debt are as follows:
<TABLE>
<S> <C>
1998, remainder of fiscal year $1,582,500
1999 2,110,000
2000 2,110,000
2001 1,129,646
----------
$6,932,146
==========
</TABLE>
5. Share capital
On November 10, 1997, the Company called for redemption, at a redemption price
of $0.10 per Warrant, all of the Company's 1,610,000 outstanding redeemable
Warrants ("Warrants") which were not exercised prior to 5:00 p.m. on January 5,
1998 (the "Redemption Date"). During the period ended December 31, 1997,
811,162 Warrants were exercised, at an exercise price of $6.00 per Warrant
to purchase one Share of the Company, resulting in the issuance of 811,162
Shares and proceeds of $4,866,972.
During the three months ended December 31, 1997 the Company recorded in the
share capital account an income tax benefit of $89,312 associated with expenses
related to the issuance of Shares in the fiscal year ended September 30, 1996.
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6. Subsequent events
Subsequent to December 31, 1997:
i) 702,528 of the Company's Warrants were exercised resulting in the
issuance of 702,528 Shares and proceeds of $4,215,168 to the Company and
on January 6, 1998 the Company redeemed the remaining 96,310 Warrants
outstanding at a price of $.10 per Warrant for an aggregate of $9,631.
ii) the Company entered into an equipment lease agreement whereby the lender
agreed to provide approximately $2,000,000 to refinance an existing lease
purchase contract and provide additional funds for the purchase of seismic
equipment. This lease will bear interest at approximately 10.00%, is
repayable in monthly installments of approximately $63,500, including
principal and interest, and matures in January 2001. A fixed charge on the
leased equipment has been pledged as collateral for the financing.
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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. Actual results could differ from those anticipated due to a
number of factors including 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.
Factors which could cause such results to differ materially from those described
in the forward looking statements include those set forth in the Company's
Annual Report on Form 10-KSB for its fiscal year ended September 30, 1997 as
filed with the Securities and Exchange Commission on December 24, 1997.
RESULTS OF OPERATIONS
Revenue for the three months ended December 31, 1997 ("1997 three months")
increased by approximately 54% to $8,627,748 as compared to $5,584,771 for the
three months ended December 31, 1996 ("1996 three months"). This increase was
primarily attributable to additional revenue generated from increased operations
in the United States by the Company's wholly owned subsidiary, Boone
Geophysical, Inc. ("Boone"). Boone contributed revenue of $4,675,923 for the
1997 three months as compared to $1,765,206 for the 1996 three months. As a
percentage of revenue, Boone contributed approximately 54% of the Company's
revenue for the 1997 three months as compared to approximately 44% for the 1996
three months. Revenue for the 1997 three months from the Canadian market
increased by approximately 3% to $3,951,825 as compared to $3,819,565 for the
1996 three months.
During the 1997 three months four customers accounted for 57% of the
Company's revenue and during the 1996 three months three customers accounted for
63% of the Company's revenue and the same customer accounted for 7% for the 1997
three months and 38% for the 1996 three months. Although the projects performed
by the Company were generally short term, the inability to replace significant
customers would cause the Company's revenue and operating results to fluctuate
significantly from period to period, and the loss of certain customers would
have a material adverse impact on the business. Because of the limited number of
data acquisition crews owned by the Company, and thus the limited number of
crews 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 time to time.
Direct expenses for the 1997 three months increased by 49% to $6,338,399 as
compared to $4,246,748 for the 1996 three months. Direct expenses as a
percentage of revenue decreased to approximately 74% for the 1997 three months
as compared to approximately 76% for the 1996 three months. The decrease in
direct costs as a percentage of revenue in the 1997 three months was due to
increased activity, which decreased the effect of
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fixed direct costs, and the completion of a greater number of 3D projects, which
typically generate higher margins than 2D projects, during the period.
General and administrative expenses for the 1997 three months increased by
approximately 26% to $501,444 as compared to $397,954 for the 1996 three months.
This increase was primarily attributable to increased activity levels in the
United States market.
Depreciation expense for the 1997 three months increased by 41% to $702,846 as
compared to $498,604 for the 1996 three months. The increase in depreciation is
primarily attributable to acquisition of equipment related to the expansion of
Boone's operations, but also includes the acquisition of three 2D systems used
in operations in Canada.
Amortization expense for the 1997 three months of $44,580 is related to the
amortization of goodwill recognized on the acquisition of Boone, which the
Company acquired in June 1996, and the acquisition of Hydrokinetic Surveys of
Canada Ltd. ("Hydrokinetic"). The comparable charge for the 1996 three months of
$38,580 did not include a charge for the amortization of Hydrokinetic goodwill
since this acquisition occurred in April 1997.
Other income for the 1997 three months increased to $53,141 as compared to
$5,707 for the 1996 three months. The 1997 three month period includes a gain
on the sale of capital assets of $32,870.
Interest expense for the 1997 three months increased by approximately 156% to
$354,417 as compared to $138,570 for the 1996 three months. This increase
primarily resulted from financing costs related to short term lease purchase
commitments entered into for the lease of seismic equipment for the Company's
United States operations. The purchase options on these lease contracts were
exercised in December, 1997 and January, 1998 for an aggregate purchase price of
approximately $3.2 million.
The Company's effective income tax rate was approximately 44% for all reported
periods. Variances from this rate are primarily due to certain non-deductible
expenses.
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 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
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the Company has historically experienced a fluctuation in quarterly results with
generally increased activity in the Company's first and second fiscal quarters
and a significant decrease in revenues and net income during its third and
fourth fiscal quarters. With the acquisition of Boone in June 1996 the Company
has diversified its operations by expanding into the United States, which has
somewhat reduced the seasonality traditionally 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.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1997 the Company had cash of $1,553,319 and working capital of
$706,549, which includes the current portion of long term debt in the amount of
$2,110,012.
The Company maintains operating lines of credit in Canada and the United States.
The Canadian line of credit provides for an aggregate of up to $1,200,000 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 Canadian
operating line are payable on demand and bear interest at the bank's prime rate
plus .75%. The Company's Canadian trade receivables have been pledged as
collateral for borrowings under the Canadian operating line. The United States
line of credit provides for an aggregate of up to $250,000 in advances available
to the Company. Borrowings under the United States operating line are payable
on demand and bear interest at prime plus 1.00%. The Company's United States
trade receivables have been pledged as collateral for borrowings under the
United States operating line. Advances under the Company's operating lines of
credit were $452,500 and approximately $750,000 was available for advances to
the Company at December 31, 1997.
In addition to operating lines of credit at December 31, 1997 the Company had
long term debt consisting of capital loans of $5,685,485 and an equipment
financing of $1,246,661. The capital loans bear interest at the lender's cost
of funds plus 2.75% and are repayable in monthly installments of approximately
$141,200 plus interest and mature in February and September 2001. All of the
Company's equipment is pledged as collateral for the capital loans. Debt
service requirements relating to the capital loans, based on the lender's
interest rate of 7.9% at January 15, 1998 are estimated to aggregate
approximately $2,085,000 (including principal and interest payments) during the
twelve month period ending December 31, 1998. In February 1998 the Company
refinanced its one remaining lease purchase contract, for 1,200 channels of
seismic data acquisition equipment, with a three year capital lease (the
"capital lease") with an aggregate obligation of approximately $2 million, as
well as a purchase option. The capital lease, which also provides additional
funds for the purchase of 300 channels of seismic data acquisition equipment,
bears interest at 10.0% and is repayable in monthly installments of $63,500
including principal and interest.
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Net operating cash flows provided by operating activities for the 1997 three
months amounted to $1,574,326 as compared to $534,849 for the 1996 three months.
The increase in operating cash flow for the 1997 three months as compared to the
1996 three months is attributable to (i) increased operating activity in the
United States and increased profitability from higher margin projects, both of
which resulted in increased cash generated from operations, (ii) a greater
impact of non-cash items such as depreciation and deferred income taxes and
(iii) a positive change in non-cash working capital amounts.
Net cash provided by financing activities for the 1997 three months of
$1,655,416 is attributable to proceeds to the Company on the exercise of 811,162
of the Company's Warrants during the period combined with increases in the
Company long term debt and bank indebtedness. This increase in cash was reduced
by the repayment of approximately $4.4 million of long term debt during the 1997
three months, including approximately $3 million used to exercise equipment
lease contract purchase options. The increase in net cash provided by financing
activities for the 1996 three months primarily reflects an increase in the
Company's term debt position.
Cash used in investing activities of $1,475,830 for the 1997 three months and
$2,502,916 for the 1996 three months resulting from the purchase of additional
seismic data acquisition equipment during the respective periods.
The Company will require satisfactory operating cash flows to continue
operations, complete capital expenditures and meet its principal and interest
obligations with respect to the Company's long term debt. The Company
anticipates, based on its current plans and assumptions, funds expected to be
generated from operations will be sufficient to satisfy the Company's existing
cash requirements over the next twelve month period.
On December 2, 1997 the Company announced it had entered into a letter of intent
to acquire 100% of the outstanding capital stock of Continental Holdings Ltd.
("Continental") for consideration in cash and stock of the Company, with a value
in the aggregate of approximately $14,525,000 (the "Potential Acquisition"). In
December 1997 Continental entered into a preliminary agreement to lease a second
marine vessel, for a five year period commencing in March 1998, at an annual
cost of approximately $2.7 million. In addition Continental will be required to
purchase capital assets, at an estimated cost of $10 million to the equip the
vessel. If Continental, or in the event the Potential Acquisition is
consummated, the Company, is unable to fulfill the lease commitment, the vessel
will be returned to the leaseholder and an estimated liability of $1.5 million
will be incurred. In connection with the Potential Acquisition the Company
anticipates entering into a definitive purchase and sale agreement in February
1998. The consummation of the Potential Acquisition is subject to number of
conditions any of which may not occur, including execution of a definitive
purchase and sale agreement, receipt of requisite shareholder, regulatory and/or
third party approvals and completion of due diligence. For a discussion of
these conditions, and potential risks associated with the Potential Acquisition,
reference is made to the Company's Annual Report on Form 10-KSB for its fiscal
year ended September 30, 1997 as filed with the Securities and Exchange
Commission on December 24, 1997. Upon closing of the Potential
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Acquisition, the Company may be required to assist in the financing of
obligations incurred by Continental to lease and equip a second marine seismic
vessel. This may require the Company to obtain, or to guarantee, additional
financing, although there can be no assurance that the Company will be able to
do so.
The Company's ability to meet its debt service and other obligations depends on
its future performance which is subject to general economic conditions, oil and
gas commodity prices and other business factors beyond the Company's control. If
the Company is unable to generate sufficient cash flow from operations or to
comply with the terms of its long term debt it may be required to refinance all
or a portion of its existing debt or to obtain additional financing, although
there can be no assurance that the Company will be able to obtain such
refinancing or additional financing.
Included in the December 31, 1997 accounts receivable balance of $5,054,269 and
the accounts payable and accrued liabilities balance of $4,455,881 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 receivable
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 continue to occur in the normal 30 to 60 day time period following
billing.
Work-in-progress at December 31, 1997 was $1,545,000 as compared to $521,594 as
at September 30, 1997. The increased value of work-in-progress primarily
reflects a larger component of project work which was still in progress at
December 31, 1997 and, in accordance with the project terms, will be billed and
recognized in accounts receivable upon completion of the project.
The Company had deferred revenue at December 31, 1997 of $770,000 as compared to
$800,000 at September 30, 1997. Deferred revenue represents billings in excess
of revenue amounts earned on projects, and varies depending upon the completion
status of projects.
PART II. OTHER INFORMATION
- --------------------------
Item 1. Legal Proceedings
Reference is made to the Registrant's Annual Report on Form 10-KSB for its
fiscal year ended September 30, 1997 for a description of certain legal
proceedings involving the Registrant.
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, as amended (6)
4.1 Revised Form of Warrant Agreement (1)
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4.2 Revised Form of Underwriter's Warrant (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)
10.10 1995 Stock Option Plan, as amended (6)
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)
10.16 Representative Agreement between the Registrant and Geotrex, dated
July 1, 1995 (1)
10.20 Securities Purchase Agreement dated as of May 31, 1996 between
Registrant, Boone Geophysical, Inc. and Lynn Boone (2)
10.22 Debenture issued by the Registrant dated December 6, 1996 (4)
10.24 Addendum No. 1 to Supplemental Agreement No. 3 between Boone
Geophysical, Inc. and H.S. Resources, Inc. dated March 20, 1997 (6)
10.25 Debenture issued by the Registrant dated April 29, 1997 (6)
10.26 (Representative Form of one of three agreements) Conditional Sale
Agreement Venture Seismic Ltd. and Geo-X Systems Ltd. dated June 19,
1997 (7)(9)
10.27 Offer to Finance between Roynat, Inc. and Venture Seismic Ltd. dated
July 16, 1997 (7)
15
<PAGE> 16
10.28 Outline of credit between the Registrant and Alberta Treasury (8)
10.29 Lease Amendment Agreement between the Registrant and BRL Corporation
dated June 3, 1997 (8)
10.30 Waiver letter from Alberta Treasury Branches, dated December 1, 1997
(8)
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
(4) Incorporated by reference to the Registrant's Annual Report on
Form 10-KSB for year ended September 30, 1996.
(5) Incorporated by reference to the Registrant's Quarterly Report
on Form 10-QSB for the quarter ended December 31, 1996
(6) Incorporated by reference to the Registrant's Quarterly Report
on Form 10-QSB for the quarter ended March 31, 1997
(7) Incorporated by reference to the Registrant's Quarterly Report
on Form 10-QSB for the quarter ended June 30, 1997
(8) Incorporated by reference to the Registrant's Annual Report on
Form 10-KSB for the year ended September 30, 1997
(9) Confidential Treatment requested for a portion of this Exhibit
(b) Reports on Form 8-K
The Registrant filed the following reports on Form 8-K:
1. November 10, 1997, reporting information under Item 5 relating
to the call for redemption of all of the Registrant's
outstanding Redeemable Warrants; and
2. December 3, 1997, reporting information under Item 2 and Item 5
relating to a potential acquisition of Continental.
16
<PAGE> 17
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/ Greg Wiebe
--------------------------
By: Gregory B. Wiebe
Vice President Finance and
Chief Financial Officer
Dated: February 12, 1998
17
<PAGE> 18
EXHIBITS
3.1 Articles of Incorporation of the Registrant and Certificates of Amendment
thereto (1)
3.2 By-laws of the Registrant, as amended (6)
4.1 Revised Form of Warrant Agreement (1)
4.2 Revised Form of Underwriter's Warrant (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)
10.10 1995 Stock Option Plan, as amended (6)
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)
10.16 Representative Agreement between the Registrant and Geotrex, dated July 1,
1995 (1)
10.20 Securities Purchase Agreement dated as of May 31, 1996 between Registrant,
Boone Geophysical, Inc. and Lynn Boone (2)
10.22 Debenture issued by the Registrant dated December 6, 1996 (4)
10.24 Addendum No. 1 to Supplemental Agreement No. 3 between Boone Geophysical,
Inc. and H.S. Resources, Inc. dated March 20, 1997 (6)
18
<PAGE> 19
10.25 Debenture issued by the Registrant dated April 29, 1997 (6)
10.26 (Representative Form of one of three agreements) Conditional Sale
Agreement Venture Seismic Ltd. and Geo-X Systems Ltd. dated June 19,
1997 (7)(9)
10.27 Offer to Finance between Roynat, Inc. and Venture Seismic Ltd. dated
July 16, 1997 (7)
10.28 Outline of credit between the Registrant and Alberta Treasury (8)
10.29 Lease Amendment Agreement between the Registrant and BRL Corporation
dated June 3, 1997 (8)
10.30 Waiver letter from Alberta Treasury Branches, dated December 1, 1997
(8)
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
(4) Incorporated by reference to the Registrant's Annual Report on
Form 10-KSB for year ended September 30, 1996.
(6) Incorporated by reference to the Registrant's Quarterly Report
on Form 10-QSB for the quarter ended December 31, 1996
(6) Incorporated by reference to the Registrant's Quarterly Report
on Form 10-QSB for the quarter ended March 31, 1997
(7) Incorporated by reference to the Registrant's Quarterly Report
on Form 10-QSB for the quarter ended June 30, 1997
(8) Incorporated by reference to the Registrant's Annual Report on
Form 10-KSB for the year ended September 30, 1997
(9) Confidential Treatment requested for a portion of this Exhibit
19
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THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
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TO SUCH FINANCIAL STATEMENTS
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