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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 5, 1998
REGISTRATION NO. 333
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
REGISTRATION STATEMENT ON FORM S-3
UNDER
THE SECURITIES ACT OF 1933
Venture Seismic Ltd.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Alberta, Canada N/A
(State or other jurisdiction of Incorporation) (I.R.S. employer I.D. number)
</TABLE>
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. _ _______________________
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If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. _
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT OFFERING PRICE AGGREGATE ADDITIONAL AMOUNT OF
SECURITIES TO BE REGISTERED TO BE REGISTERED PER UNIT (1) OFFERING PRICE (1) REGISTRATION FEE (2)
<S> <C> <C> <C> <C>
Common Shares,
no par value................. 100,000 $5.44(2) $544,000.00 $160.48
Total......................... 100,000 $5.44(2) $544,000.00 $160.48
</TABLE>
(1) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(a) under the Securities Act of 1933.
(2) Fee for common shares to be sold by the selling securityholders is based on
the average of the high and low price of the common shares on February 2,
1998, as reported by the Nasdaq National Market
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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<PAGE> 3
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 such State.
PROSPECTUS
SUBJECT TO COMPLETION
DATED FEBRUARY 5, 1998
VENTURE SEISMIC LTD.
100,000 COMMON SHARES
This Prospectus relates to 100,000 Common Shares, no par value (the "Common
Shares"), of Venture Seismic Ltd. (the "Company") issuable upon exercise of
warrants, which Common Shares may be offered and sold by certain stockholders
named herein (the "Selling Securityholders").
Except as otherwise set forth in a Prospectus Supplement, 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 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 or the
purchasers of the Common Shares 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 will be received
by the Company, although the Company will receive proceeds from any exercise of
the warrants. The Company has agreed to bear certain expenses in connection
with the registration and sale of the shares being offered by the Selling
Stockholders.
The Company's Common Shares are traded on the Nasdaq National Market
("Nasdaq") under the symbol VSEIF. On February 2, 1998, the closing bid price
of the Common Shares on Nasdaq was $5.25.
_______________
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 3 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 February , 1998
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AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission"), Washington, D.C. a Registration Statement on Form S-3 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 are listed on the Nasdaq National Market under the
symbol "VSEIF". 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.
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, 1997 including any documents or portions thereof
incorporated by reference therein;
2. The Company's definitive proxy statement dated January 27, 1998,
filed pursuant to Section 14 of the Exchange Act.
3. 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 under the
Exchange Act; and
4. 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
80th Avenue SE, Calgary, Alberta T2C 1J3,
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Attention: Chief Financial Officer, telephone (403) 777-9074.
<PAGE> 6
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. 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,
1996 and 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 nine land and transition zone crews in
North America, six of which operate in Canada and three of which operate in the
southern United States. Channel capacity of its crews in Canada is
approximately 5,700 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 9,600 channels use telemetry technology to
transmit the seismic data from the remote acquisition modules 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. These units gave the Company the capability of performing
vibroseis projects for the first time in Western Canada (the Company does not
currently have vibroseis capability in the United States). Vibroseis projects
accounted for approximately 17% and 20% of the Company's revenues during fiscal
1997 and 1996, respectively.
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 fiscal 1997
year approximately 35% 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 continued to increase its channel capacity, which
included, as of September 30, 1997 approximately 2,900 channels leased on a
short term basis with an option to purchase at the end of the lease term. In
December 1997 the Company exercised purchase options to purchase approximately
1,700 channels with the proceeds from the exercise of the Company's redeemable
warrants. Exercise of these purchase options will permit the Company to continue
to operate three 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).
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The Company was organized under the laws of Alberta in August 1984. The
Company has three wholly owned subsidiaries, Boone Geophysical, Inc.,
Hydrokinetic Surveys of Canada Inc. and an inactive subsidiary, 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.
RECENT DEVELOPMENTS
-------------------
Warrant Redemption. On November 7, 1997, the Company called for
redemption, at a redemption price of $.10 per Warrant, all of the outstanding
redeemable Warrants ("Warrants") of the Company which were outstanding after
5:00 p.m., New York Time, on January 5, 1998. As of January 6, 1998 1,513,690
Warrants had been exercised, resulting in the issuance of 1,513,690 Common
Shares (the "Shares") and aggregate proceeds of $9,082,140 to the Company. The
Company now has 4,634,584 Shares outstanding. The Warrants were exercisable at
an exercise price of $6.00 to purchase one Share of the Company. Under the
terms of the Warrant Agreement the remaining 96,310 Warrants were redeemed by
the Company at a price of $0.10 per Warrant, or $9,631 in the aggregate. The
Company used approximately $3,160,000 of the proceeds to exercise certain
purchase options on capital equipment leases in December 1997 and January 1998.
The Company intends to use the remaining proceeds from the exercise of the
Warrants to fund the acquisition of capital equipment and, pending finalization
of the acquisition of Continental Holdings Ltd., a portion of the Warrant
exercise proceeds will be applied to the acquisition cost.
Potential Acquisition. On December 2, 1997, the Company announced it had
entered into a letter of intent to acquire (the "Potential Acquisition") 100%
of the outstanding capital stock of Continental Holdings Ltd. ("Continental")
for consideration (the "Purchase Price") in cash and stock of the Company, with
a value in the aggregate of approximately $14,525,000. The letter of intent
also includes provision for employment agreements with the existing management
of Continental.
Continental is a privately held marine seismic data acquisition company,
based in Calgary, which currently leases and operates one marine seismic vessel
capable of performing 2D or 3D seismic surveys. Continental has completed
seismic surveys in the Persian-gulf, the North Sea, the Falkland Islands area,
the Mediterranean and off the coasts of West Africa and Norway. According to
audited financial information of Continental, its revenue for the year ended
December 31, 1996 was approximately $8.6 million and net income, adjusted for
normalized owner/management compensation, was approximately $600,000; and for
the nine months ended September 30, 1997 Continental has recognized unaudited
revenues of approximately $7.1 million and unaudited net income of approximately
$1.6 million. Reference is made to the Company's Annual Report on Form 10-KSB,
which includes certain financial information relating to Continental.
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 $2.7 million. In addition Continental will be required to
purchase capital assets, at an estimated cost of $10 million to equip the
vessel. If Continental is unable to fulfill the lease commitment the vessel will
be returned to the leaseholder and Continental will incur an estimated liability
of $1.5 million. A definitive agreement regarding these terms is expected to be
entered into in February 1998.
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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, amongst other items, those set forth herein under "Risk Factors" and
those set forth in the Company's Form 10-KSB for its fiscal year ended September
30, 1997, as filed with the Securities and Exchange Commission on December 24,
1997 and as incorporated by reference herein.
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 September 30, 1997 the Company had a
working capital deficit of $4,857,227 which included an aggregate of $6,580,703
relating to the current portion of long term debt. Included in the current
portion of long term debt at September 30, 1997 are equipment lease purchase
contracts (the "Equipment Contracts") in the amount of $5,082,543 which bear
interest at an effective rate of 20%. Of the $9,082,140 in proceeds from the
exercise of the Redeemable Warrants, the Company used approximately $3.6 million
towards the payment of Equipment Contracts in December 1997 and January 1998.
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. Although the Company has funded
equipment purchases through bank borrowings and equipment lease purchase
contracts, 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 September 30, 1997, the Company had term loans and Equipment
Contracts of approximately $10.3 million representing approximately 52% of the
Company's capitalization. As at January 30, 1998 the Company has repaid
approximately $4.6 million of the obligation outstanding at September 30, 1997
including $3.6 million in connection with the Equipment Contracts and received
an additional $980,000 of term debt for the purchase of two additional 2D
systems. The Company will require substantial cash flow to meet its debt service
requirements relating to the term loans, which, based on the lender's current
interest rate are estimated to aggregate approximately $1,960,000 (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 December 31, 1997 the Company had advances of approximately
$400,000 under the operating line of credit and the Company believes
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
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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.
Dependence Upon Principal Customers. During the fiscal years ended September
30, 1995, 1996 and 1997 three, two and two 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 32% in fiscal 1997; one other customer accounted
for over 10% in fiscal 1996 and two other customers accounted for over 10% of
revenues in fiscal 1995. The Company's three largest customers accounted for
71%, 71%, and 53% of revenues during fiscal 1995, 1996 and 1997, respectively,
and at September 30, 1997, approximately 35% 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.
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
associated with the Company's Canadian operations. However, 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 years ended September 30, 1997, 1996 and 1995, projects which were
performed for a single customer and which accounted for approximately 32%, 54%
and 43%, 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.
Risks Associated with the Consummation of the Potential Acquisition. The
consummation of the Potential Acquisition is subject to a 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. There can be no assurance that all
preconditions to the Potential Acquisition will be met in a timely or
satisfactory matter, or without undue expense to the Company, or that the
parties will enter into a definitive agreement on substantially the terms
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proposed. If the Company consummates the Potential Acquisition, it will be
subject to a number of risks in completing such transaction, including the need
to rely upon certain representations and warranties made by Continental with
respect to Continental and its operations as well as it own due diligence
investigation of Continental. There can be no assurance that such
representations and warranties will be true in all respects or that the
Company's due diligence will uncover all materially adverse facts relating to
the assets, liabilities, capabilities and operations of Continental.
Risks Associated with the Operations of the Company upon Consummation of the
Potential Acquisition. In the event that the Potential Acquisition is
consummated, the Company will be subject to a number of potential risks,
including risks relating to accounting treatment of the Potential Acquisition
(including possible charges to earnings for costs related to the Potential
Acquisition); capital requirements; assimilation of new operations and
personnel, including management; adverse short-term effects on reported
operating results; the potential loss of key employees; the diversion of
resources from the Company's existing business, capabilities, equipment and
technologies; coordination of geographically separated facilities and work
forces; management challenges associated with the integration of the companies
in addition to the other requirements associated with growth of the Company's
infrastructure and capabilities; and maintenance of the Company's existing
standards, controls, procedures and policies. No assurance can be given that
difficulties encountered in integrating the operations of Continental will be
overcome. In the event that the Company consummates the Potential Acquisition,
the process of integrating Continental's operations, including its personnel,
could cause interruption of, or loss of momentum in, the activities of the
Company's business and operations, including those of the business to be
acquired.
In addition, there can be no assurance that the Company will not incur
additional charges in subsequent periods to reflect other costs associated with
the Potential Acquisition or from the integration of operations after the
Potential Acquisition. There can be no assurance that the Potential
Acquisition will not have a material adverse effect on the business, financial
condition and results of operations of the Company, will not result in
significant unexpected liabilities or that the Company will realize the
benefits and strategic objectives sought through the Potential Acquisition,
including the addition of new capabilities, equipment and technologies. Costs
associated with the Potential Acquisition, or liabilities and expenses
associated with the operations of Continental, that exceed the expectations of
the Company, could have a material adverse effect on the Company's financial
condition and results of operations.
In order to manage any future growth, the Company will be required to continue
to improve its operating systems, attract and retain superior management, and
update and expand the Company's equipment. If the Company is unable to
effectively manage its growth, the Company's business, operating results and
financial condition could be adversely affected. Future growth, if achieved,
may also strain the Company's capital resources. There can be no assurance
that the Company will be able to successfully negotiate or obtain additional
financing, or that such financing will be on terms favorable or acceptable to
the Company. The failure to secure necessary financing could have a material
adverse impact on the Company.
In December 1997 Continental entered into a preliminary agreement to lease a
second marine vessel, for a five year term 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
equip the vessel. If Continental is unable to fulfill the lease commitment the
vessel will be returned to the leaseholder and Continental will incur an
estimated liability of $1.5 million. A definitive agreement regarding these
terms is expected to be entered into in February 1998.
Dilution to Existing Shareholders as a Result of the Potential Acquisition. In
the event that the Potential Acquisition is consummated, the Purchase Price for
the Potential Acquisition will involve cash and the issuance of a significant
number of Common Shares or warrants to purchase Common Shares, depending on the
definitive agreement executed by the parties, which may result in dilution to
existing shareholders of the Company and which may not be accretive in earnings
per share.
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 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
- 9 -
<PAGE> 11
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 expense.
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.
Geographical Concentration of Operations; Risks Associated with International
Expansion. Until fiscal 1997, other than a number of projects conducted in the
United States and one project conducted in Pakistan, the Company's operations
had been conducted exclusively in Western Canada, and the majority of the
Company's revenues were derived therefrom. The Company is still currently highly
dependent upon demand for data acquisition services in Western Canada and
approximately 65% of revenue in fiscal 1997 revenues resulted from operations
based 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
- 10 -
<PAGE> 12
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.
Income tax Contingency. The Company has recently received notice that the
Canadian taxation authorities have disallowed certain expenses related to the
1994, 1995 and 1996 taxation years. The Company has also deducted similar
expenses in 1997. These reassessments and the potential reassessment for the
current year, would result in additional income taxes of approximately $340,000
($485,000 Canadian). Based on a recently decided court case, involving another
company with a set of circumstances similar to the Company's situation, the
Company is in disagreement with the basis of the reassessment and has filed
notices of objection. The Company does not expect to receive a decision
regarding the outcome of these notice of objections until the similar court case
proceeds through the appeal process. There can be no assurance that the
reassessment will not be upheld. Should the reassessments be upheld, any
resulting loss would be charged to income in the year the outcome was
determined.
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, 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 $2,100,000 ($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 qualified personnel
on a timely basis or
- 11 -
<PAGE> 13
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 21% 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 indemnified for monetary damages except where
the liability relates to the failure to act honestly and in good faith with a
view to the best interests of the Company. 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, 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.
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 4,634,584
Common Shares outstanding at February 5, 1998, 1,045,623 are "restricted
securities" as that term is defined in Rule 144 promulgated under the "Act"
and under certain circumstances may be sold without registration pursuant to
such Rule and the remaining 3,588,961 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
- 12 -
<PAGE> 14
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 Securities Co. L.P. has
demand and piggy-back registration rights with respect to the securities
underlying the Underwriter's Warrant.
Effect of Outstanding Options and Warrants. The Company has outstanding (i)
Underwriter's Warrants to purchase an aggregate of 280,000 Common Shares, and
(ii) options to purchase 384,500 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.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of any of the
Common Shares by the Selling Securityholders, although the Company will receive
proceeds from any exercise of the warrants.
Holders of warrants to purchase Common Shares are not obligated to
exercise their warrants 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
100,000 outstanding warrants exercisable for Common Shares offered hereby are
exercised, the estimated net proceeds to the Company would be $525,000 after
deducting expenses of this Offering.
The Company intends to use the estimated net proceeds received upon
exercise of the warrants, if any, for working capital.
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.
SELLING SECURITYHOLDERS
The following table sets forth the names of each Selling Securityholder
and for each, the number of Common Shares beneficially owned at the
commencement of this Offering, and the number of Common Shares offered for
sale, based on information provided to the Company by such Selling
Securityholders. The Common Shares are being registered to permit public
secondary trading of the Common Shares, and the Selling Securityholders may
offer the Common Shares 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. The Company has agreed, among other things, to
bear certain expenses in connection with the registration and sale of the
Common Shares being offered by the Selling Securityholders. See "Plan of
Distribution."
Certain of the Selling Securityholders hold warrants issued by the Company
which, upon exercise, allow such Selling Securityholder to purchase Common
Shares. Such Selling Securityholders are expected to exercise their warrants
and pay for their Common Shares immediately prior to offering such Common
Shares pursuant to this Prospectus.
- 13 -
<PAGE> 15
None of the Selling Securityholders are officers or directors of the
Company.
Except as noted below, each Selling Securityholder beneficially owns less
than one percent of the outstanding Common Shares of the Company.
SELLING SECURITYHOLDERS
<TABLE>
<CAPTION>
AMOUNT BENEFICIALLY OWNED
PRIOR TO OFFERING (1)(3) AMOUNT BEING OFFERED (2)(3)
------------------------- ---------------------------
<S> <C> <C>
Thomas Payne............... 100,000 100,000
Total...................... 100,000 100,000
- ----- ========================= ===========================
</TABLE>
(1) The amount owned prior to this Offering includes Common Shares
outstanding and Common Shares issuable upon exercise of warrants; the
amount being offered represents only Common Shares issuable upon exercise
of all such warrants.
(2) For each person listed 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 warrants owned by such individual. Each
individual is registering for resale their Common Shares issuable upon
exercise of their warrants.
(3) Based on information provided by the Selling Stockholders.
- 14 -
<PAGE> 16
PLAN OF DISTRIBUTION
The Company has been advised that the Common Shares 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 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 Common Shares. Sales of Common Shares by the Selling Securityholders
may depress the market price of the Company's Common Shares.
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 or the purchasers of the Common
Shares 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 Common Shares
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 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.
The Company has agreed to pay the expenses of registration in connection
with this Offering.
At the time a particular offer of Common Shares 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 being offered and
the terms of the offering.
In order to comply with certain states' securities laws, if applicable,
the Common Shares may be sold in such jurisdictions only through registered or
licensed brokers or dealers. In certain states the Common Shares may not be
sold unless they have been registered or qualified for sale in such state, or
unless an exemption from registration or qualification is available and is
obtained.
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,
1997, have been incorporated herein in reliance on the report of Ernst & Young,
Chartered Accountants, given on their authority as experts in accounting and
auditing.
- 15 -
<PAGE> 17
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 MADE, SUCH INFORMATION OR REPRESENTATIONS
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR THE SELLING SECURITYHOLDERS. THIS VENTURE SEISMIC LTD.
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 THAT THERE HAS BEEN
NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF.
_______________
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE 100,000 COMMON SHARES
----
<S> <C>
Available Information.......................... 4
Incorporation of Certain Documents by Reference 4
Prospectus Summary............................. 5
The Company.................................... 5
Risk Factors................................... 7
Use of Proceeds................................ 13
Selling Securityholders........................ 13
Plan of Distribution........................... 15 _______________
Legal Matters.................................. 15
Experts........................................ 15 PROSPECTUS
- ------- -- _______________
</TABLE>
February __, 1998
<PAGE> 18
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>
<S> <C>
SEC Registration Fee...................................$160.48
Accounting Fees and Expenses...........................$
Legal Fees and Expenses................................$
Miscellaneous Expenses.................................$
Total..................................................$
</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 directors and indemnifying them against loss on account of
certain claims made against them.
Item 16. Exhibits.
<TABLE>
<S> <C> <C>
(a) 4.1 Form of Specimen Certificate of Company's Common Shares (1)
4.3 Form of Warrant
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)
</TABLE>
(1) Incorporated by reference from the Company's Registration Statement on
form SB-2 (File No. 33-97132)
<PAGE> 19
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.
(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.
<PAGE> 20
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 Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Calgary, Province of Alberta, on the 4th day of February, 1998.
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 February 4, 1998
Brian W. Kozun Directors, President and Chief
Executive Officer
(Principal Executive Officer)
/s/ GREG WIEBE Chief Financial Officer (Principal February 4, 1998
Gregory B. Wiebe Financial and Accounting Officer)
/s/ DAN McARTHUR Director February 4, 1998
P. Daniel McArthur
/s/ JOSEPH CIAVARRA Director February 4, 1998
J. Joseph Ciavarra
/s/ STUART NORMAN Director February 4, 1998
Stuart Norman
/s/ MICHAEL BENINGER Director February 4, 1998
Michael J. Beninger
</TABLE>
<PAGE> 1
Exhibit 4.3
This addendum dated this 18th day of December, 1995 to the Consulting Agreement
between Venture Seismic Ltd. and Payne Financial Group, Inc. states the
following:
1. Venture Seismic Ltd. agrees to provide Payne Financial Group, Inc. upon
execution of the above referenced Consulting Agreement, warrants for
100,000 shares of common stock at $5.25 each, subject to the following:
i) 60,000 warrants to vest immediately and exercisable the four (4) year
period commencing one (1) year following the date of the above
referenced Consulting Agreement; and
ii) 40,000 warrants to vest one (1) year following the date of the above
referenced Consulting Agreement and exercisable during the three (3)
year period commencing two (2) years following the date of the said
Consulting Agreement.
In Witness Whereof the parties hereto, intending to be legally bound, have
executed the Addendum I.
Payne Financial Group
750 E. Sample Road, Suite 204
Pompano Beach, Florida
/s/ Paula LaPuma By: /s/ Tom Payne
- ---------------- ----------------------
Witness Tom Payne, President
Venture Seismic Ltd.
3110 80th Avenue S.E.
Calgary, Alberta, Canada, T2C 1J3
/s/ Greg Wiebe By: /s/ Brian Kozun
- -------------- ------------------------------
Witness Brian Kozun, President, CEO
<PAGE> 1
Exhibit 5.1
February 5, 1998
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 by
certain stockholders of the Corporation (the "Selling Stockholders") of 100,000
common shares (the "Shares")of Venture Seismic Ltd. (the "Corporation")
issuable upon the exercise of the warrants pursuant to the Corporation's
Registration Statement on Form S-3(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 incorporation by reference in the Registration Statement of Venture Seismic
Ltd. (the "Company") Form S-3 and the related Prospectus of the Company for the
registration of 100,000 of its common shares and to the incorporation by
reference therein of our report dated December 17, 1997 with respect to the
consolidated financial statements of the Company included in its Annual Report
(Form 10-KSB) for the year ended September 30, 1997, filed with the Securities
and Exchange Commission on December 24, 1997.
/s/ ERNST & YOUNG
Chartered Accountants
Calgary, Alberta
February 5, 1998
