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PROSPECTUS
 GEOGLOBAL
RESOURCES INC.
COMMON
STOCK
This
prospectus relates to the resale from time to time by the holders
of an
aggregate of 8,860,800 shares of our common stock, including 5,680,000
shares that are issued and outstanding, 340,800 shares issuable on
exercise of our outstanding compensation options and 2,840,000 shares
that
are issuable on exercise of common stock purchase
warrants. These securities were issued by us on June 21, 2007
in a transaction not subject to the registration requirements of
the
Securities Act of 1933, as amended, (the “Securities Act”). We
will not receive any of the proceeds from the sale of the shares
sold
pursuant to this prospectus. We will bear the entire expense
incident to the registration of the shares.
Our
common stock is traded on the American Stock Exchange under the symbol
GGR. On November 27, 2007, the closing sale price of our common
stock on the American Stock Exchange was $3.13.
See
“Risk Factors” on page 6 for information you should consider before buying
shares of our common stock.
We
expect that these shares of common stock may be sold or distributed
from
time to time by or for the account of the holders through underwriters
or
dealers, through brokers or other agents, or directly to one or more
purchasers, including pledgees, at market prices prevailing at the
time of
sale or at prices otherwise negotiated. The holders may also
sell shares under Rule 144 under the Securities Act, if available,
rather
than under this prospectus. The registration of these shares
for resale does not necessarily mean that the selling securityholders
will
sell any of their shares. See “Plan of Distribution” beginning
on page 18.
Neither
The Securities And Exchange Commission Nor Any State Securities Commission
Has Approved or Disapproved These Securities Or Determined That This
Prospectus Is Truthful Or Complete. Any Representation To The
Contrary Is A Criminal Offense.
Prospectus
dated December 3, 2007
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TABLE
OF CONTENTS
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4
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6
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Risks
Relating to Our Oil and Gas Activities Because
We Are
In the Early Stage of Developing Our Activities, There Are Considerable
Risks That We Will Be Unsuccessful
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6
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Our
Interest In the Production Sharing Contracts Involve Highly Speculative
Exploration Opportunities That Involve Material Risks That We Will
Be
Unsuccessful
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6
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GSPC
Is Seeking A Payment From Us In The Amount Of Approximately $45.4
Million
On Account of GSPC’s Exploration Costs On The KG Offshore
Block.
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7
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Possible
Inability of Contracting Parties to Fulfill Phase One of the Minimum
Work
Programs forCertain Of Our PSCs
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7
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Because
Our Activities Have Only Recently Commenced And We Have No Operating
History And Reserves of Oil and Gas, We Anticipate Future Losses;
There Is
No Assurance of Our Profitability
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8
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We
Expect to Have Substantial Requirements For Additional Capital That
May Be
Unavailable To Us Which Could Limit Our Ability To Participate In
Our
Existing And Additional Ventures Or Pursue Other
Opportunities. Our Available Capital is
Limited
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9
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India’s
Regulatory Regime May Increase Our Risks And Expenses Of Doing
Business
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9
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Our
Control by Directors and Executive Officers May Result In Those Persons
Having Interests Divergent From Our Other Stockholders
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10
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Our
Reliance On A Limited Number Of Key Management Personnel Imposes
Risks On
Us That We Will
Have
Insufficient Management Personnel Available If The Services Of Any
Of Them
Are Unavailable
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10
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Our
Success Is Largely Dependent On The Success Of The Operators Of The
Ventures In Which We Participate And Their Failure Or Inability To
Properly Or Successfully Operate The Oil And Gas Exploration, Development
And Production Activities On An Exploration Block, Could Materially
Adversely Affect Us
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10
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Certain
Terms Of The Production Sharing Contracts May Create Additional Expenses
And Risks That Could Adversely Affect Our Revenues And
Profitability
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11
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The
Requirements of Section 404 Of The Sarbanes-Oxley Act Of 2002 Require
That
We Undertake An Evaluation Of Our Internal Controls That May Identify
Internal Control Weaknesses
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12
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Oil
And Gas Prices Fluctuate Widely And Low Oil And Gas Prices Could
Adversely
Affect Our Financial Results
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12
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Our
Ability To Locate And Participate In Additional Exploration Opportunities
And To Manage Growth
May
Be Limited By Reason Of Our Limited History Of Operations And The
Limited
Size Of Our Staff
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13
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Page
2
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Our
Future Performance Depends Upon Our Ability And The Ability Of The
Ventures In Which We
Participate
To Find Or Acquire Oil And Gas Reserves That Are Economically
Recoverable
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13
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Estimating
Reserves And Future Net Revenues Involves Uncertainties And Oil And
Gas
Price Declines
May
Lead To Impairment Of Oil And Gas Assets
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13
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Risks
Relating To The Market For Our Common Stock
Volatility
Of Our Stock Price
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14
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14
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15
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16
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18
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20
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20
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20
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You
should rely only on the information included in or incorporated by reference
into this prospectus. We have not authorized anyone to provide you
with information that is different. This prospectus may only be used
where it is legal to sell these shares. The information contained in
this prospectus is accurate only as of the date of this prospectus, regardless
of the time of delivery of this prospectus or of any sale of our common
stock.
Page
3
The
following summary is qualified in its entirety by the more detailed information,
financial statements and other data appearing elsewhere in this
prospectus. At various places in this prospectus, we may make
reference to the “company” or “us” or “we.” When we use those terms,
unless the context otherwise requires, we mean GeoGlobal Resources Inc. and
its
wholly-owned subsidiaries.
GeoGlobal
Resources Inc.
GeoGlobal
Resources Inc. is engaged, through our subsidiaries and joint ventures in which
we are a participant, in the exploration for and development of oil and natural
gas reserves. At present, these activities are being undertaken in
locations where we and our joint venture participants have been granted
exploration rights pursuant to production sharing contracts (“PSCs”) we have
entered into with the Government of India ("GOI") under its New Exploration
Licensing Policy (“NELP”) bidding processes. As of November 28, 2007,
we have entered into contracts with respect to ten of these exploration blocks
as follows:
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The
first of our agreements, entered into in February 2003 under NELP-III,
grants exploration rights in an area offshore eastern India in the
Krishna
Godavari Basin in the State of Andhra Pradesh. We refer to this
KG-OSN-2001/3 exploration block as the “KG Offshore Block” and we have a
net 5% carried interest (“CI”) under this
agreement.
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We
entered into two agreements which grant exploration rights in areas
onshore in the Cambay Basin in the State of Gujarat in western
India. These agreements were entered into in February 2004
under NELP-IV and we have a 10% participating interest (“PI”) under each
of these agreements. We refer to the CB-ONN-2002/2 exploration
block as the “Mehsana Block” and the CB-ONN-2002/3 exploration block as
the “Sanand/Miroli Block.”
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Pursuant
to an agreement entered into in April 2005, we purchased from Gujarat
State Petroleum Corporation Limited (“GSPC”), a 20% PI in the agreement
granting exploration rights granted under NELP-III to an onshore
exploration block in the Cambay Basin in the State of Gujarat in
western
India. We refer to this CB-ON/2 exploration block as the
“Tarapur Block”.
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In
September 2005, we entered into agreements with respect to two areas
under
NELP-V. One area is located onshore in the Cambay Basin located
in the State of Gujarat south-east of our three existing Cambay blocks,
in
which we hold a 10% PI. We refer to this CB-ONN-2003/2
exploration block as the “Ankleshwar Block”. The second area is
located onshore in the Deccan Syneclise Basin located in the northern
portion of the State of Maharashtra in west-central India for which
we
hold a 100% PI interest and are the operator. We refer to this
DS-ONN-2003/1 exploration block as the “DS 03
Block”.
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In
March 2007, we signed agreements with respect to four additional
locations
awarded under NELP-VI. One location is onshore in the Krishna
Godavari Basin in the State of Andhra Pradesh adjacent to our KG
Offshore
Block in eastern India in which we hold a 10% PI. We currently
refer to this KG-ONN-2004/1 exploration block as the “KG Onshore
Block”. The second and third locations include two agreements
onshore in north-west India in the Rajasthan Basin in the State of
Rajasthan and we hold a 25% PI in each of these agreements. We
currently refer to the RJ-ONN-2004/2 exploration block as the “RJ Block
20” and the RJ-ONN-2004/3 exploration block as the “RJ Block
21”. The fourth location is onshore in the Deccan Syneclise
Basin in the State of Maharashtra adjacent to our DS 03 Block in
west-central India in which we hold a 100% PI and are the
operator. We currently refer to this DS-ONN-2004/1 exploration
block as the "DS 04 Block"
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All
of
our exploration activities should be considered highly speculative.
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4
The
Offering
Offering
of Common Stock by the Selling
Securityholders 8,860,800
Shares
to
be outstanding after the offering of common stock and exercise of the (1) 75,386,556
Purchase
Warrants and Compensation Options assuming all are exercised
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(1)
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Based
on the number of shares of common stock issued and outstanding on
September 30, 2007, inclusive of 340,800 shares issuable on exercise
of
compensation options issued in June 2007 and 2,840,000 shares issuable
on
exercise of common stock purchase warrants issued in June
2007.
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Use
of Proceeds
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We
will not realize any of the proceeds from the sale of the shares
offered
by the Selling Securityholders. See “Use of
Proceeds.” Of the shares included in this prospectus, 2,840,000
are issuable on exercise of our outstanding common stock purchase
warrants
and 340,800 shares are issuable on exercise of compensation options
issued
in June 2007. In the event all our outstanding common stock
purchase warrants and compensation options are exercised, we will
receive
aggregate proceeds of $23,004,000 which will be added to our general
corporate funds and used for working capital. There can be no
assurance those warrants or options will be exercised or the proceeds
received.
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Market
Symbol (American Stock Exchange)
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GGR
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Risk
Factors
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Before
investing in our common stock, you should carefully read and consider
the
information set forth in “Risk Factors” beginning on page 6 of this
prospectus.
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Our
Offices
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Our
executive offices are located at 605 – 1st
Street S.W.,
Suite #310, Calgary, Alberta, Canada T2P 3S9. Our telephone
number is 403-777-9250.
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Page
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An
investment in shares of our common stock involves a high degree of
risk. You should consider the following factors, in addition to the
other information contained in this Prospectus and incorporated herein by
reference, in evaluating our business and current and proposed activities before
you purchase any shares of our common stock. You should also read the
"Cautionary Statement for Purposes of the Safe Harbor Provisions of the Private
Securities Litigation Reform Act of 1995" regarding risks and uncertainties
relating to us and to forward-looking statements in this
Prospectus.
There
can
be no assurance that the exploratory drilling to be conducted on the exploration
blocks in which we hold an interest will result in any discovery of reserves
of
hydrocarbons or that any hydrocarbons that are discovered will be in
commercially recoverable quantities. In addition, the realization of
any revenues from commercially recoverable hydrocarbons is dependent upon the
ability to deliver, store and market any hydrocarbons that are
discovered. The presence of hydrocarbon reserves on contiguous
properties is no assurance or necessary indication that hydrocarbons will be
found in commercially marketable quantities on the exploration blocks in which
we hold an interest.
Risks
Relating to Our Oil and Gas Activities
Because
We Are In the Early Stage Of Developing Our Activities, There Are Considerable
Risks That We Will Be Unsuccessful
We
are in
the early stage of developing our operations. Our only activities in
the oil and natural gas exploration and production industry have primarily
involved entering into ten PSCs with the GOI. We have realized no
revenues from our oil and natural gas exploration and development activities
and
do not claim any proved reserves of oil or natural gas.
Our
current plans are to conduct the exploration and development activities on
the
areas offshore and onshore India in accordance with the terms of the PSCs we
are
a party to. There can be no assurance that the exploratory drilling
to be conducted on the exploration blocks in which we hold an interest will
result in any discovery of hydrocarbons or that any hydrocarbons that are
discovered will be in commercially recoverable quantities. In
addition, the realization of any revenues from commercially recoverable
hydrocarbons is dependent upon the ability to deliver, store and market any
hydrocarbons that are discovered. As of November 14, 2007, there are
no or limited facilities for the delivery and storage of hydrocarbons on the
areas covered by our PSCs. The presence of hydrocarbon reserves on
contiguous properties is no assurance or necessary indication that hydrocarbons
will be found in commercially marketable quantities on the exploration blocks
in
which we hold an interest. Our exploration opportunities are highly
speculative and should any of these opportunities not result in the discovery
of
commercial quantities of oil and gas reserves, our investment in the venture
could be lost.
Our
business plans also include seeking to enter into additional joint ventures
or
other arrangements to acquire interests in additional government created and
granted hydrocarbon exploration opportunities, primarily located onshore or
in
the offshore waters of India and possibly elsewhere. Opportunities to
acquire interests in exploration opportunities will be dependent upon our
ability to identify, negotiate and enter into joint venture or other similar
arrangements with respect to specific exploration opportunities and upon our
ability to raise sufficient capital to fund our participation in those joint
ventures or other exploration activities. Our success will be
dependent upon the success of the exploration activities of the ventures in
which we acquire an interest and our ability to have adequate capital resources
available at the times required.
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Our
Interest In The Production Sharing Contracts Involve Highly Speculative
Exploration Opportunities That Involve Material Risks That We Will Be
Unsuccessful
Our
interests in the exploration blocks should be considered to be highly
speculative exploration opportunities that involve material
risks. None of the exploration blocks in which we have an interest
have any proven reserves and are not producing any quantities of oil or natural
gas. Exploratory drilling activities are subject to many risks,
including the risk that no commercially productive reservoirs will be
encountered. There can be no assurance that wells drilled on any of
the exploration blocks in which we have an interest or by any venture in which
we may acquire an interest in the future will be productive or that we will
receive any return or recover all or any portion of our
investment. Drilling for oil and gas may involve unsuccessful or
unprofitable efforts, not only from dry wells, but from wells that are
productive but do not produce sufficient net revenues to return a profit after
drilling, operating and other costs. The cost of drilling, completing
and operating wells is often uncertain. Drilling operations may be curtailed,
delayed or cancelled as a result of numerous factors, many of which are beyond
the operator’s control, including economic conditions, mechanical problems,
extreme downhole pressures and temperatures, title problems, weather conditions,
compliance with governmental requirements and shortages or delays of
exploration, drilling, completion and other equipment and
services. Drilling activities on the exploration blocks in which we
hold an interest may not be successful and, if unsuccessful, such failure may
have a material adverse effect on our future results of operations and financial
condition.
GSPC
Is Seeking a Payment From Us In the Amount Of Approximately $45.4 Million On
Account of GSPC’s Exploration Costs On the KG Offshore
Block
Gujarat
State Petroleum Corporation Ltd. (“GSPC”), the operator of the KG Offshore Block
in which we have a net 5% carried interest, has advised us that it is seeking
from us our pro rata portion of the amount by which the sums expended by GSPC
under Phase I of the work program set forth in the PSC for the KG Offshore
Block
in carrying out exploration activities on the block exceeds the amount that
GSPC
deems to be our pro rata portion of a financial commitment under Phase I
included in the parties’ joint bid for the award by the Government of India of
the KG Offshore Block.
GSPC
contends that this excess amount is not within the terms of the
CIA. GSPC asserts that we are required to pay 10% of the exploration
expenses over and above US$59.23 million (including the net 5% interest of
Roy
Group (Mauritius) Inc.).
Based
on
the most recent amount provided by GSPC in a letter dated September 6, 2007,
GSPC asserts that the amount payable is US$45.4 million as of July 31,
2007. GeoGlobal disputes this assertion of GSPC.
We
have
advised GSPC that, under the terms of the CIA, the terms of which are also
incorporated into the PSC and the Joint Operating Agreement dated August 7,
2003
between the parties, it has no right to seek the payment and that we believe
the
payment GSPC is seeking is in breach of the CIA. We further reminded
GSPC that we have fulfilled over the past five years our obligations under
the
CIA to provide extensive technical assistance without any further remuneration
other than the carried interest, all in accordance with the terms of the
CIA. In furtherance of our position, we have obtained the opinion of
prominent Indian legal counsel who has advised us that, among other things,
under the terms of the agreements between the parties, and in particular the
CIA, we are not liable to pay any amount to GSPC for either costs and expenses
incurred or otherwise before reaching the stage of commercial
production.
We
continue to be of the view that, under the terms of the CIA, we have a carried
interest in the exploration activities conducted by the parties on the KG
Offshore Block for 100% of our share (including the share of Roy Group
(Mauritius) Inc.) of costs during the exploration phase prior to the start
date
of initial commercial production on the KG Offshore Block. To date,
commercial production has not been achieved on the block.
We
intend
to vigorously protect our contractual rights in accordance with the dispute
resolution process under the CIA, the PSC and the JOA as may be
appropriate. However, there can be no assurance that GSPC will not
institute arbitration or other proceedings seeking to recover the sum or
otherwise contend we are in breach of the PSC or that the effect of GSPC seeking
payment of this sum may not hinder our capital raising and other
activities. We are currently having discussions with GSPC in an
effort to reach an amicable resolution.
Possible
Inability of Contracting Parties to Fulfill the Minimum Work Programs for
Certain of Our PSCs
Our
PSCs
relating to our exploration blocks in India provide that by the end of the
first
phase of the exploration phases the contracting parties shall have drilled
a
certain number of wells or performed certain exploration
activities. The first phase of the exploration period relating to the
PSC for the KG Offshore Block expired without the required minimum of at least
fourteen exploration wells being drilled during the first phase. The
first phase of the exploration period of the PSC relating to the Mehsana Block
also expired without the required minimum of seven wells having been drilled
and
the first phase of the exploration period of the PSC relating to the
Sanand/Miroli Block expired without the required minimum of twelve wells having
been drilled. GSPC is the operator on the KG Offshore Block and the
Sanand/Miroli Block and Jubilant Oil & Gas ("Jubilant") is the operator on
the Mehsana Block. The PSCs also have provisions for termination of
the PSC on account of various reasons specified therein including material
breach of the contract. This failure to timely complete the minimum
work commitment may be deemed to constitute such a
breach. Termination rights can be exercised after giving ninety days
written notice.
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The
termination of a PSC by the GOI would result in the loss of our
interest in the PSC other than contract areas of the PSC determined to encompass
"commercial discoveries". The PSC sets forth procedures whereby the
operator can obtain the review of the Management Committee under the PSC as
to
whether a discovery on the exploration block should be declared a commercial
discovery under the PSC. Those procedures have not been completed at
present with respect to the discovery on the KG Offshore Block and, accordingly,
as of November 14, 2007, no areas on the KG Offshore Block have been determined
formally to encompass "commercial discoveries" as that term is defined under
the
PSC. Likewise, no areas of the Mehsana Block or the Sanand/Miroli
Block have been determined to encompass commercial discoveries.
GSPC,
as
operator of the Tarapur Block, has submitted an application for an extension
beyond Phase III of the PSC for an additional twelve months to complete an
additional work program of drilling four wells under the GOI new extension
policy. The parties to the PSC have agreed to provide a 35% bank
guarantee of US$3.1 million and a 30% cash payment of US$2.7 million for this
additional work programme. GOI consent to this application has not
yet been approved or received. GSPC has previously notified the GOI
under the terms of the PSC of two discoveries of hydrocarbons in this block,
the
Tarapur 1 and Tarapur G. Through September 30, 2007, we have incurred
costs of approximately $6.0 million under the terms of our agreement with GSPC
for our 20% PI share of exploration costs. If the above request for
an additional 12 months is not granted, the third and final phase of exploratory
activities on the Tarapur Block will have expired on November 22,
2007. The work commitment to drill one well to a depth of 3,000
meters or to the Deccan trap has been completed and, under the terms of the
PSC,
all areas not encompassing a commercial discovery after November 22, 2007 would
be relinquished back to the GOI. These requests remain pending at November
28,
2007.
In
the
event a PSC is terminated by the GOI, or in the event the work program is not
fulfilled by the end of the relevant exploration phase, the PSC provides that
each party to the PSC is to pay to the GOI its participating interest share
of
an amount which is equal to the amount that would be required to complete the
minimum work program for that phase.
With
respect to the KG Offshore Block, we are of the view that GSPC, under the terms
of our CIA, would be liable for our participating interest share of the amount
required to complete the minimum work program for the phase.
Because
Our Activities Have Only Recently Commenced And We Have No Operating History
And
Reserves Of Oil And Gas, We Anticipate Future Losses; There Is No Assurance
Of
Our Profitability
Our
oil
and natural gas operations have been only recently established and we have
very
limited operating history, no oil and gas reserves and limited assets upon
which
an evaluation of our business, our current business plans and our prospects
can
be based. Our prospects must be considered in light of the risks,
expenses and problems frequently encountered by all companies in their early
stages of development and, in particular, those engaged in exploratory oil
and
gas activities. Such risks include, without limitation:
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We
will experience failures to discover oil and gas in commercial
quantities;
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There
are uncertainties as to the costs to be incurred in our exploratory
drilling activities, cost overruns are possible and we may encounter
mechanical difficulties and failures in completing
wells;
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There
are uncertain costs inherent in drilling into unknown formations,
such as
over-pressured zones, high temperatures and tools lost in the hole;
and
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We
may make changes in our drilling plans and locations as a result
of prior
exploratory drilling.
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During
the exploration phase prior to the start date of initial commercial production,
we have a carried interest in the exploration activities on the KG Offshore
Block. Our interests in our other exploration blocks are
participating interests which require us to pay our proportionate share of
exploration, drilling and development expenses on these blocks substantially
as
those expenses are incurred. Unexpected or additional costs can
affect the commercial viability of producing oil and gas from a well and will
affect the time when and amounts that we can expect to receive from any
production from a well. Because our carried costs of exploration and
drilling on the KG Offshore Block are to be repaid in full to the operator,
GSPC, before we are entitled to any share of production, additional exploration
and development expenses will reduce and delay any share of production and
revenues we will receive.
There
can
be no assurance that the ventures in which we are a participant will be
successful in addressing these risks, and any failure to do so could have a
material adverse effect on our prospects for the future. Our
operations were recently established, and as such, we have no substantial
operating history to serve as the basis to predict our ability to further the
development of our business plan. Likewise, the outcome of our
exploratory drilling activities, as well as our quarterly and annual operating
results cannot be predicted. Consequently, we believe that period to period
comparisons of our exploration, development, drilling and operating results
will
not necessarily be meaningful and should not be relied upon as an indication
of
our stage of development or future prospects. In the future,
operating or drilling results may fall below our expectations or the
expectations of securities analysts and investors and that some of our drilling
results will be unsuccessful and the wells abandoned. In such event,
the trading price of our common stock may be materially and adversely
affected.
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We
Expect to Have Substantial Requirements For Additional Capital That May Be
Unavailable To Us Which Could Limit Our Ability To Participate In Our Existing
and Additional Ventures Or Pursue Other Opportunities. Our Available
Capital is Limited
In
order
to participate under the terms of our PSCs as well as in further joint venture
arrangements leading to the possible grant of exploratory drilling
opportunities, we will be required to contribute or have available to us
material amounts of capital. Under the terms of our CIA relating to
the KG Offshore Block, after the start date of initial commercial production
on
the KG Offshore Block, and under the terms of the nine other PSCs we are parties
to, we are required to bear our proportionate share of costs during the
exploration phases of those agreements. There can be no assurance
that our currently available capital will be sufficient for these purposes
or
that any additional capital that is required will be available to us in the
amounts and at the times required. Such capital also may be required
to secure bonds in connection with the grant of exploration rights, to conduct
or participate in exploration activities or be engaged in drilling and
completion activities. We intend to seek the additional capital to
meet our requirements from equity and debt offerings of our
securities. Our ability to access additional capital will depend in
part on the success of the ventures in which we are a participant in locating
reserves of oil and gas and developing producing wells on the exploration
blocks, the results of our management in locating, negotiating and entering
into
joint venture or other arrangements on terms considered acceptable, as well
as
the status of the capital markets at the time such capital is
sought.
There
can
be no assurance that capital will be available to us from any source or that,
if
available, it will be at prices or on terms acceptable to us. Should
we be unable to access the capital markets or should sufficient capital not
be
available, our activities could be delayed or reduced and, accordingly, any
future exploration opportunities, revenues and operating activities may be
adversely affected and could also result in our breach of the terms of a PSC
which could result in the loss of our rights under the contract.
As
of
September 30, 2007, we had cash and cash equivalents of approximately $49.3
million. We currently expect that our available cash will be
sufficient to fund us through the budget periods ending March 31, 2008 and
through the balance of 2008 at our present level of operations on the ten
exploration blocks in which we are currently a participant including our newly
acquired NELP-VI exploration blocks. Although exploration activity
budgets are subject to ongoing review and revision, our present estimate of
our
commitments of capital pursuant to the terms of our PSCs relating to our six
exploration blocks, excluding our newly acquired NELP-VI exploration blocks,
totals approximately $12.7 million during the period April 1, 2007 to March
31,
2008. We anticipate total expenditures on the four newly acquired
NELP-VI blocks for the first exploration phase which covers four years to be
approximately $28 million. Any further PSC's we may seek to enter
into or any expanded scope of our operations or other transactions that we
may
enter into may require us to fund our participation or capital expenditures
with
amounts of capital not currently available to us. We may be
unsuccessful in raising the capital necessary to meet these capital
requirements. There can be no assurance that we will be able to raise
the capital.
India’s
Regulatory Regime May Increase Our Risks And Expenses In Doing
Business
All
phases of the oil and gas exploration, development and production activities
in
which we are participating are regulated in varying degrees by the Indian
government, either directly or through one or more governmental
entities. The areas of government regulation include matters relating
to restrictions on production, price controls, export controls, income taxes,
expropriation of property, environmental protection and rig
safety. In addition, the award of a PSC is subject to GOI consent and
matters relating to the implementation and conduct of operations under the
PSC
are subject, under certain circumstances, to GOI consent. As a
consequence, all future drilling and production programs and operations we
undertake or are undertaken by the ventures in which we participate in India
must be approved by the Indian government. Shifts in political
conditions in India could adversely affect our business in India and our ability
to obtain requisite government approvals in a timely fashion or at
all. We, and our joint venture participants, must maintain
satisfactory working relationships with the Indian government. This
regulatory environment and possible delays inherent in that environment may
increase the risks associated with our exploration and production activities
and
increase our costs of doing business.
Page
9
Our
Control By Directors And Executive Officers May Result In Those Persons Having
Interests Divergent From Our Other Stockholders
As
of
November 14, 2007, our Directors and executive officers and their respective
affiliates, in the aggregate, beneficially hold 32,523,667 shares or
approximately 45.0% of our outstanding Common Stock. As a result,
these stockholders possess significant influence over us, giving them the
ability, among other things, to elect a majority of our Board of Directors
and
approve significant corporate transactions. These persons will retain
significant control over our present and future activities and our other
stockholders and investors may be unable to meaningfully influence the course
of
our actions. These persons may have interests regarding the future
activities and transactions in which we engage which may diverge from the
interests of our other stockholders. Such share ownership and control
may also have the effect of delaying or preventing a change in control of us,
impeding a merger, consolidation, takeover or other business combination
involving us, or discourage a potential acquiror from making a tender offer
or
otherwise attempting to obtain control of us which could have a material adverse
effect on the market price of our Common Stock. Although management
has no intention of engaging in such activities, there is also a risk that
the
existing management will be viewed as pursuing an agenda which is beneficial
to
themselves at the expense of other stockholders.
Our
Reliance On A Limited Number Of Key Management Personnel Imposes Risks On Us
That We Will Have Insufficient Management Personnel Available If The Services
Of
Any Of Them Are Unavailable
We
are
dependent upon the services of our President and Chief Executive Officer, Jean
Paul Roy, and Executive Vice President and Chief Financial Officer, Allan J.
Kent. The loss of either of their services could have a material
adverse effect upon us. We currently do not have employment
agreements with either of such persons or key man life insurance. The
services of Mr. Roy are provided pursuant to the terms of an agreement with
a
corporation wholly-owned by Mr. Roy. We have no direct contractual
agreement with Mr. Roy and, therefore, he is not directly obligated to provide
services to us or refrain from engaging in other activities. At
present, Mr. Kent’s services are provided through an oral agreement with
him. There is no written agreement between us and Mr. Kent which
obligates him to refrain from engaging in other
activities. .
At
present, our future is substantially dependent upon the geological and
geophysical capabilities of Mr. Roy to locate oil and gas exploration
opportunities for us and the ventures in which we are a
participant. His inability to do the foregoing could materially
adversely affect our future activities. We entered into a three-year
TSA with Roy Group Barbados, Inc. (“RBG”) dated August 29, 2003, a company owed
100% by Mr. Roy, to perform such geological and geophysical duties and exercise
such powers related thereto as we may from time to time assign to
it. The expiration term of this contract has subsequently been
extended to December 31, 2007.
Our
Success Is Largely Dependent On The Success Of The Operators Of The Ventures
In
Which We Participate And Their Failure Or Inability To Properly Or Successfully
Operate The Oil And Gas Exploration, Development And Production Activities
On An
Exploration Block, Could Materially Adversely Affect Us
At
present, our only oil and gas interests are our contractual rights under the
terms of the ten PSCs with the GOI that we have entered into. We are
not and will not be the operator of any of the exploration, drilling and
production activities conducted on our exploration blocks, with the exception
of
the DS 03 Block and the DS 04 Block in which we hold a 100% interest and are
the
operators. Accordingly, the realization of successes in the
exploration of the blocks is substantially dependent upon the success of the
operators in exploring for and developing reserves of oil and gas and their
ability to market those reserves at prices that will yield a return to
us.
Under
the
terms of our CIA for the KG Offshore Block, we have a carried interest in the
exploration activities conducted by the parties on the KG Offshore Block prior
to the start date of initial commercial production. However, under
the terms of that agreement, all of our proportionate share of capital costs
for
exploration and development activities must be repaid without interest over
the
projected production life or ten years, whichever is less. Our
proportionate share of these costs and expenses expected to be incurred over
the
6.5 year term of the PSC for which our interest is carried was originally
estimated to be approximately $22.0 million. Additional drilling
costs including the drilling to depths in excess of 5,000 meters, where higher
downhole temperatures and pressures are encountered, versus shallower depths
as
originally anticipated, as well as the testing and completion costs of these
wells, has resulted in additional costs exceeding originally estimated
expenditures. As a consequence of these additional drilling costs
incurred, the annual budget for the period April 1, 2007 to March 31, 2008
submitted to the Management Committee under the PSC for the KG Offshore Block
estimates that GSPC will expend approximately $50.4 million attributed to us
(including the amount attributable to RGM) under the CIA over the period April
1, 2007 to March 31, 2008. Further additional expenditures may be
required for cost overruns and completions of commercially successful
wells. We are unable to estimate the amount of additional
expenditures GSPC will make as operator attributable to us prior to the start
date of initial commercial production under the CIA or when, if ever, any
commercial production will commence. Of these expenditures, 50% are
for the account of Roy Group (Mauritius) Inc. under the terms of the
Participating Interest Agreement between us and Roy Group (Mauritius)
Inc. We are not entitled to any share of production from the KG
Offshore Block until such time as the expenditures attributed to us, including
those expenditures made for the account of Roy Group (Mauritius) Inc., under
the
CIA, have been recovered by GSPC from future production
revenue. Therefore, we are unable to estimate when we may commence to
receive distributions from any production of hydrocarbon reserves found on
the
KG Offshore Block. As provided in the CIA, in addition to repaying
our proportionate share of capital costs incurred for which we were carried,
we
will be required to bear our proportionate share of the expenditures
attributable to us after the start date of initial commercial production on
the
KG Offshore Block.
Page
10
Certain
Terms Of The Production Sharing Contracts May Create Additional Expenses And
Risks That Could Adversely Affect Our Revenues And
Profitability
The
PSCs
contain certain terms that may affect the revenues of the joint venture
participants to the agreements and create additional risks for
us. These terms include, possibly among others, the
following:
|
·
|
The
venture participants are required to complete certain minimum work
programs during the two or three phases of the terms of the
PSCs. In the event the venture participants fail to fulfill any
of these minimum work programs, the parties to the venture must pay
to the
GOI their proportionate share of the amount that would be required
to
complete the minimum work program. Accordingly, we could be
called upon to pay our proportionate share of the estimated costs
of any
incomplete work programs.
|
|
·
|
Until
such time as the GOI attains self sufficiency in the production of
crude
oil and condensate and is able to meet its national demand, the parties
to
the venture are required to sell in the Indian domestic market their
entitlement under the PSCs to crude oil and condensate produced from
the
exploration blocks. In addition, the Indian domestic market has
the first call on natural gas produced from the exploration blocks
and the
discovery and production of natural gas must be made in the context
of the
government’s policy of utilization of natural gas and take into account
the objectives of the government to develop its resources in the
most
efficient manner and promote conservation
measures. Accordingly, this provision could interfere with our
ability to realize the maximum price for our share of production
of
hydrocarbons;
|
|
·
|
The
parties to each agreement that are not Indian companies, which includes
us, are required to negotiate technical assistance agreements with
the GOI
or its nominee whereby such foreign company can render technical
assistance and make available commercially available technical information
of a proprietary nature for use in India by the government or its
nominee,
subject, among other things, to confidentiality
restrictions. Although not intended, this could increase each
venture’s and our cost of operations;
and
|
|
·
|
The
parties to each venture are required to give preference, including
the use
of tender procedures, to the purchase and use of goods manufactured,
produced or supplied in India provided that such goods are available
on
equal or better terms than imported goods, and to employ Indian
subcontractors having the required skills insofar as their services
are
available on comparable standards and at competitive prices and
terms. Although not intended, this could increase the ventures
and our cost of operations.
|
These
provisions of the PSCs, possibly among others, may increase our costs of
participating in the ventures and thereby affect our
profitability. Failure to fully comply with the terms of the PSCs
creates additional risks for us.
Page
11
The
Requirements Of Section 404 Of The Sarbanes-Oxley Act Of 2002 Require That
We
Undertake An Evaluation Of Our Internal Controls That May Identify Internal
Control Weaknesses
The
Sarbanes-Oxley Act of 2002 imposes new duties on us and our executives,
directors, attorneys and independent registered public accounting
firm. In order to comply with the Sarbanes-Oxley Act, we are
evaluating our internal controls systems to allow management to report on,
and
our independent auditors to attest to, our internal controls. We have
initiated the establishment of the procedures for performing the system and
process evaluation and testing required in an effort to comply with the
management certification and auditor attestation requirements of Section 404
of
the Sarbanes-Oxley Act. We anticipate being able to fully implement
the requirements relating to reporting on internal controls and all other
aspects of Section 404 in a timely fashion. If we are not able to
implement the reporting requirements of Section 404 in a timely manner or with
adequate compliance, our management and/or our auditors may not be able to
render the required certification and/or attestation concerning the
effectiveness of the internal controls over financial reporting, we may be
subject to investigation and/or sanctions by regulatory authorities, such as
the
Securities and Exchange Commission or American Stock Exchange, and our
reputation may be harmed. Any such action could adversely affect our
financial results and the market price of our common stock.
Oil
And Gas Prices Fluctuate Widely And Low Oil And Gas Prices Could Adversely
Affect Our Financial Results
There
is
no assurance that there will be any market for oil or gas produced from the
exploration blocks in which we hold an interest and our ability to deliver
the
production from any wells may be constrained by the absence of or limitations
on
collector systems and pipelines. Future price fluctuations could have
a major impact on the future revenues from any oil and gas produced on these
exploration blocks and thereby our revenue, and materially affect the return
from and the financial viability of any reserves that are
claimed. Historically, oil and gas prices and markets have been
volatile, and they are likely to continue to be volatile in the
future. A significant decrease in oil and gas prices could have a
material adverse effect on our cash flow and profitability and would adversely
affect our financial condition and the results of our operations. In
addition, because world oil prices are quoted in and trade on the basis of
U.S.
dollars, fluctuations in currency exchange rates that affect world oil prices
could also affect our revenues. Prices for oil and gas fluctuate in
response to relatively minor changes in the supply of and demand for oil and
gas, market uncertainty and a variety of additional factors that are beyond
our
control, including:
|
·
|
political
conditions and civil unrest in oil producing regions, including the
Middle
East and elsewhere;
|
|
·
|
the
domestic and foreign supply of oil and
gas;
|
|
·
|
quotas
imposed by the Organization of Petroleum Exporting Countries upon
its
members;
|
|
·
|
the
level of consumer demand;
|
|
·
|
weather
conditions;
|
|
·
|
domestic
and foreign government regulations;
|
|
·
|
the
price and availability of alternative
fuels;
|
|
·
|
overall
economic conditions; and
|
|
·
|
international
political conditions.
|
In
addition, various factors may adversely affect the ability to market oil and
gas
production from our exploration blocks, including:
|
·
|
the
capacity and availability of oil and gas gathering systems and
pipelines;
|
|
·
|
the
ability to produce oil and gas in commercial quantities and to enhance
and
maintain production from existing wells and wells proposed to be
drilled;
|
|
·
|
the
proximity of future hydrocarbon discoveries to oil and gas transmission
facilities and processing equipment (as well as the capacity of such
facilities);
|
|
·
|
the
effect of governmental regulation of production and transportation
(including regulations relating to prices, taxes, royalties, land
tenure,
allowable production, importing and exporting of oil and condensate
and
matters associated with the protection of the
environment);
|
|
·
|
the
imposition of trade sanctions or embargoes by other
countries;
|
|
·
|
the
availability and frequency of delivery
vessels;
|
|
·
|
changes
in supply due to drilling by
others;
|
|
·
|
the
availability of drilling rigs and qualified personnel;
and
|
|
·
|
changes
in demand.
|
Page
12
Our
Ability To Locate And Participate In Additional Exploration Opportunities And
To
Manage Growth May Be Limited By Reason Of Our Limited History Of Operations
And
The Limited Size Of Our Staff
While
our
President and Executive Vice President have had extensive experience in the
oil
and gas exploration business, we have been engaged in limited activities in
the
oil and gas business over approximately the past four years and have a limited
history of activities upon which you may base your evaluation of our
performance. As a result of our brief operating history and limited
activities in oil and gas exploration activities, our success to date in
entering into ventures to acquire interests in exploration blocks may not be
indicative that we will be successful in entering into any further
ventures. There can be no assurance that we will be successful in
growing our oil and gas exploration and development activities.
Any
future significant growth in our oil and gas exploration and development
activities will place demands on our executive officers, and any increased
scope
of our operations will present challenges to us due to our current limited
management resources. Our future performance will depend upon our
management and its ability to locate and negotiate opportunities to participate
in joint venture and other arrangements whereby we can participate in
exploration opportunities. There can be no assurance that we will be
successful in these efforts. Our inability to locate additional
opportunities, to hire additional management and other personnel or to enhance
our management systems could have a material adverse effect on our results
of
operations.
Our
Future Performance Depends Upon Our Ability And The Ability Of The Ventures
In
Which We Participate To Find Or Acquire Oil And Gas Reserves That Are
Economically Recoverable
Our
success in developing our oil and gas exploration and development activities
will be dependent upon establishing, through our participation with others
in
joint ventures and other similar activities, reserves of oil and gas and
maintaining and possibly expanding the levels of those reserves. We
and the joint ventures in which we may participate may not be able to locate
and
thereafter replace reserves from exploration and development activities at
acceptable costs. Lower prices of oil and gas may further limit the kinds of
reserves that can be developed at an acceptable cost. The business of
exploring for, developing or acquiring reserves is capital intensive. We may
not
be able to make the necessary capital investment to enter into joint ventures
or
similar arrangements to maintain or expand our oil and gas reserves if capital
is unavailable to us and the ventures in which we participate. In
addition, exploration and development activities involve numerous risks that
may
result in dry holes, the failure to produce oil and gas in commercial
quantities, the inability to fully produce discovered reserves and the inability
to enhance production from existing wells.
We
expect
that we will continually seek to identify and evaluate joint venture and other
exploration opportunities for our participation as a joint venture participant
or through some other arrangement. Our ability to enter into
additional exploration activities will be dependent to a large extent on our
ability to negotiate arrangements with others and with various governments
and
governmental entities whereby we can be granted a participation in such
ventures. There can be no assurance that we will be able to locate
and negotiate such arrangements, have sufficient capital to meet the costs
involved in entering into such arrangements or that, once entered into, that
such exploration activities will be successful. Successful acquisition of
exploration opportunities can be expected to require, among other things,
accurate assessments of potential recoverable reserves, future oil and gas
prices, projected operating costs, potential environmental and other liabilities
and other factors. Such assessments are necessarily inexact, and as
estimates, their accuracy is inherently uncertain. We cannot assure
you that we will successfully consummate any further exploration opportunities
or joint venture or other arrangements leading to such
opportunities.
Estimating
Reserves And Future Net Revenues Involves Uncertainties And Oil And Gas Price
Declines May Lead To Impairment Of Oil And Gas Assets
Currently,
we do not claim any proved reserves of oil or natural gas. Any
reserve information that we may provide in the future will represent estimates
based on reports prepared by independent petroleum engineers, as well as
internally generated reports. Petroleum engineering is not an exact
science. Information relating to proved oil and gas reserves is based
upon engineering estimates derived after analysis of information we furnish
or
furnished by the operator of the property. Estimates of economically
recoverable oil and gas reserves and of future net cash flows necessarily depend
upon a number of variable factors and assumptions, such as historical production
from the area compared with production from other producing areas, the assumed
effects of regulations by governmental agencies and assumptions concerning
future oil and gas prices, future operating costs, severance and excise taxes,
capital expenditures and workover and remedial costs, all of which may in fact
vary considerably from actual results. Oil and gas prices, which
fluctuate over time, may also affect proved reserve estimates. For
these reasons, estimates of the economically recoverable quantities of oil
and
gas attributable to any particular group of properties, classifications of
such
reserves based on risk of recovery and estimates of the future net cash flows
expected therefrom prepared by different engineers or by the same engineers
at
different times may vary substantially. Actual production, revenues
and expenditures with respect to reserves we may claim will likely vary from
estimates, and such variances may be material. Either inaccuracies in
estimates of proved undeveloped reserves or the inability to fund development
could result in substantially reduced reserves. In addition, the
timing of receipt of estimated future net revenues from proved undeveloped
reserves will be dependent upon the timing and implementation of drilling and
development activities estimated by us for purposes of the reserve
report.
Page
13
Quantities
of proved reserves are estimated based on economic conditions in existence
in
the period of assessment. Lower oil and gas prices may have the impact of
shortening the economic lives on certain fields because it becomes uneconomic
to
produce all recoverable reserves on such fields, thus reducing proved property
reserve estimates. If such revisions in the estimated quantities of proved
reserves occur, it will have the effect of increasing the rates of depreciation,
depletion and amortization on the affected properties, which would decrease
earnings or result in losses through higher depreciation, depletion and
amortization expense. The revisions may also be sufficient to trigger impairment
losses on certain properties that would result in a further non-cash charge
to
earnings.
Risks
Relating To The Market For Our Common Stock
Volatility
Of Our Stock Price
The
public market for our common stock has been characterized by significant price
and volume fluctuations. There can be no assurance that the market
price of our common stock will not decline below its current or historic price
ranges. The market price may bear no relationship to the prospects, stage of
development, existence of oil and gas reserves, revenues, earnings, assets
or
potential of our company and may not be indicative of our future business
performance. The trading price of our common stock could be subject to wide
fluctuations. Fluctuations in the price of oil and gas and related
international political events can be expected to affect the price of our common
stock. In addition, the stock market in general has experienced
extreme price and volume fluctuations that have affected the market price for
many companies which fluctuations have been unrelated to the operating
performance of these companies. These market fluctuations, as well as general
economic, political and market conditions, may have a material adverse effect
on
the market price of our company's common stock. In the past, following periods
of volatility in the market price of a company's securities, securities class
action litigation has often been instituted against such companies. Such
litigation, if instituted, and irrespective of the outcome of such litigation,
could result in substantial costs and a diversion of management's attention
and
resources and have a material adverse effect on our company's business, results
of operations and financial condition.
With
the
exception of historical matters, the matters discussed in this Prospectus are
“forward-looking statements” as defined under the Securities Act of 1933, as
amended, and the Securities Exchange Act of 1934, as amended, that involve
risks
and uncertainties. Forward-looking statements made herein include,
but are not limited to:
|
·
|
the
statements in this Prospectus regarding our plans and objectives
relating
to our future operations,
|
|
·
|
plans
and objectives regarding the exploration, development and production
activities conducted on the exploration blocks in India in which
we have
interests,
|
|
·
|
plans
regarding drilling activities intended to be conducted through the
ventures in which we are a participant, the success of those drilling
activities and our ability and the ability of the ventures to complete
any
wells on the exploration blocks, to develop reserves of hydrocarbons
in
commercially marketable quantities, to establish facilities for the
collection, distribution and marketing of hydrocarbons, to produce
oil and
natural gas in commercial quantities and to realize revenues from
the
sales of those hydrocarbons,
|
|
·
|
our
ability to maintain compliance with the terms and conditions of our
PSCs,
including the related work commitments, to obtain consents, waivers
and
extensions from the DGH or GOI as and when required, and our ability
to
fund those work commitments,
|
|
·
|
our
plans and objectives to join with others or to directly seek to enter
into
or acquire interests in additional PSCs with the GOI and
others,
|
|
·
|
our
assumptions, plans and expectations regarding our future capital
requirements,
|
|
·
|
our
plans and intentions regarding our plans to raise additional
capital,
|
|
·
|
the
costs and expenses to be incurred in conducting exploration, well
drilling, development and production activities and the adequacy
of our
capital to meet our requirements for our present and anticipated
levels of
activities are all forward-looking
statements.
|
Page
14
These
statements appear, among other places, under the caption "Risk
Factors". If our plans fail to materialize, your investment will be
in jeopardy.
|
·
|
We
cannot assure you that our assumptions or our business plans and
objectives discussed herein or incorporated herein by reference will
prove
to be accurate or be able to be
attained.
|
|
·
|
We
cannot assure you that any commercially recoverable quantities of
hydrocarbon reserves will be discovered on the exploration blocks
in which
we have an interest.
|
|
·
|
Our
ability to realize revenues cannot be assured. Our ability to
successfully drill, test and complete producing wells cannot be
assured.
|
|
·
|
We
cannot assure you that we will have available to us the capital required
to meet our plans and objectives at the times and in the amounts
required
or we will have available to us the amounts we are required to fund
under
the terms of the PSCs we are a party
to.
|
|
·
|
We
cannot assure you that we will be successful in joining any further
ventures seeking to be granted PSCs by the GOI or that we will be
successful in acquiring interests in existing
ventures.
|
|
·
|
We
cannot assure you that we will obtain all required consents, waivers
and
extensions from the DGH or GOI as and when required to maintain compliance
with our PSCs , that we may not be adversely affected by any delays
we may
experience in receiving those consents, waivers and extensions, that
we
may not incur liabilities under the PSCs for our failure to maintain
compliance with and timely complete the related work programs, or
that
GSPC may not be successful in its efforts to obtain payment from
us on
account of exploration costs it has expended on the KG Offshore Block
for
which it asserts we are liable or otherwise seek to hold us in breach
of
that PSC or commence arbitration proceedings against
us.
|
|
·
|
We
cannot assure you that the outcome of testing of one or more wells
on the
exploration blocks under our PSCs will be satisfactory and result
in
commercially-productive wells or that any further wells drilled will
have
commercially-successful results.
|
Our
inability to meet our goals and objectives or the consequences to us from
adverse developments in general economic or capital market conditions, events
having international consequences, or military or terrorist activities could
have a material adverse effect on us. We caution you that various
risk factors accompany those forward-looking statements and are described,
among
other places, under the caption "Risk Factors" herein. They are also
described in our Annual Reports on Form 10-KSB and Form 10-K, our Quarterly
Reports on Form 10-QSB and 10-Q, and our Current Reports on Form
8-K. These risk factors could cause our operating results, financial
condition and ability to fulfill our plans to differ materially from those
expressed in any forward-looking statements made in this Report and could
adversely affect our financial condition and our ability to pursue our business
strategy and plans.
This
prospectus relates solely to the common stock being offered and sold for the
account of the Selling Securityholders. We will not receive any of
the proceeds from the sale of the common stock being offered by the Selling
Securityholders but will pay all of the expenses related to the registration
of
the securities. We estimate that these expenses will be approximately
$120,843.
Of
the
shares included in this prospectus, 3,180,800 are issuable on exercise of
outstanding common stock purchase warrants and compensation options issued
in
June 2007. In the event all such common stock purchase warrants and
compensation options are exercised by the Selling Securityholders, we will
receive aggregate proceeds of $23,004,000. There can be no assurance
those warrants or options will be exercised or the proceeds
received. If those securities are exercised, the proceeds will
be added to our general corporate funds and used for working capital
purposes.
Page
15
The
following table sets forth the aggregate numbers of securities beneficially
owned by each Selling Securityholder as of September 30, 2007 and the aggregate
number of securities registered hereby that each Selling Securityholder may
offer and sell pursuant to this prospectus. Because the Selling
Securityholders may sell all or a portion of the securities at any time and
from
time to time after the date hereof, no estimate can be made of the number of
shares of common stock that each Selling Securityholder may retain upon the
completion of the offering. The shares of common stock have been
included in this prospectus pursuant to contractual rights granted to the
Selling Securityholders to have their shares of common stock registered under
the Securities Act. The registration of these shares for resale does
not necessarily mean that the Selling Securityholder will sell any of the
shares. Except as otherwise noted below, none of the Selling
Securityholders has held any position or office, or has had any other material
relationship with us or any of our affiliates within the past three
years.
Information
about other or additional Selling Securityholders will be set forth in
prospectus supplements or post-effective amendments, as and if
required. Information about the Selling Securityholders may change
from time to time. Any changed information with respect to which we
are given notice will be set forth in prospectus supplements.
|
Name
of Selling Securityholder
|
Shares
Beneficially
Owned
Prior
to this Offering (3)
|
Shares
Beneficially Owned Offered for Selling
Securityholder
Account (1)(2)
|
Shares
Beneficially Owned After Offering
|
Percentage of
Shares Beneficially Owned After Offering
|
|
Penang
Property Holdings Ltd. (4)
|
150,000
|
150,000
|
-0-
|
*
|
|
Richard
Elder
|
45,000
|
45,000
|
-0-
|
*
|
|
Tony
Cruz
|
150,000
|
*
|
||
|
Parkwood
GP Inc. (5)
|
30,000
|
30,000
|
-0-
|
*
|
|
EAM
Inc. (6)
|
30,000
|
30,000
|
-0-
|
*
|
|
GWL
Canadian Resources Fund (7)
|
69,150
|
40,350
|
28,800
|
*
|
|
GWL
Growth Equity Fund (7)
|
48,150
|
24,450
|
23,700
|
*
|
|
London
Life Growth Equity Fund (7)
|
189,300
|
96,300
|
93,000
|
*
|
|
London
Life Canadian Resources Fund (7)
|
36,900
|
25,350
|
11,550
|
*
|
|
AGF
Canadian Resources Fund (7)
|
253,950
|
159,300
|
94,650
|
*
|
|
AGF
Canadian Growth Equity Fund (7)
|
659,700
|
324,750
|
334,950
|
*
|
|
IG
AGF Canadian Diversified Growth Class (7)
|
7,800
|
5,550
|
2,250
|
*
|
|
IG
AGF Canadian Diversified Growth Fund (7)
|
145,050
|
73,950
|
71,100
|
*
|
|
Pinetree
Resource Partnership (8)
|
337,500
|
225,000
|
112,500
|
*
|
|
Sheldon
Inwentash
|
228,100
|
225,000
|
3,100
|
*
|
|
Laura
Mary Bester
|
150,000
|
150,000
|
-0-
|
*
|
|
Stan
Rozicki
|
7,500
|
*
|
||
|
Norman
Shelson
|
37,000
|
7,500
|
29,500
|
*
|
|
Compagnia
Financiere Des Isles S.A (4)
|
150,000
|
150,000
|
-0-
|
*
|
|
Centrum
Bank AG (9)
|
150,000
|
150,000
|
-0-
|
*
|
|
Robert
Pollock
|
127,860
|
27,000
|
100,860
|
*
|
|
Dynamic
Power Hedge Fund (10)
|
3,868,385
|
1,844,639
|
2,023,756
|
2.7
|
|
Dynamic
Power Emerging Markets Fund (10)
|
911,229
|
555,361
|
355,777
|
*
|
|
2035718
Ontario Inc. (11)
|
117,500
|
90,000
|
27,500
|
*
|
|
The
Royal Trust Company SA (12)
|
75,000
|
*
|
||
|
John
A. Pollock
|
74,000
|
45,000
|
29,000
|
*
|
|
Orion
Capital Incorporated (13)
|
440,600
|
75,000
|
365,600
|
*
|
|
Sherrie
Ann Pollock
|
4,000
|
3,000
|
1,000
|
*
|
|
Morris
Tenaglia
|
50,000
|
30,000
|
20,000
|
*
|
|
John
Bruce Kehl
|
23,000
|
6,000
|
17,000
|
*
|
|
John
Campbell
|
105,000
|
105,000
|
-0-
|
*
|
|
Gregory
R. Harris
|
199,500
|
37,500
|
162,000
|
*
|
|
Bowie
Holdco Ltd. (14)
|
27,000
|
27,000
|
-0-
|
*
|
|
Sharon
Regan
|
7,500
|
7,500
|
-0-
|
*
|
|
Felicia
Ross
|
252,000
|
*
|
||
|
John
Boreta
|
337,500
|
75,000
|
262,500
|
*
|
|
Garth
Davis
|
75,000
|
*
|
||
|
Matthew
Regan
|
7,500
|
7,500
|
-0-
|
*
|
|
Gustav
Itzek
|
260,000
|
75,000
|
185,000
|
*
|
|
Thomas
Flynn
|
7,500
|
*
|
||
|
Primary
Capital Inc. (15)
|
170,400
|
170,400
|
-0-
|
*
|
|
Jones
Gable & Company Limited (16)
|
170,400
|
|||
|
The
K2 Principal Fund LP (17)
|
300,000
|
300,000
|
-0-
|
*
|
* Less
than 1%
Page
16
|
(1)
|
The
securities were purchased from us in a transaction that was completed
on
June 21, 2007. The securities were sold in units, each unit
consisting of one share and one-half of a purchase warrant to purchase
one
share. The number of shares includes the shares issuable on
exercise of the warrants.
|
|
(2)
|
May
include securities sold subsequent to March 31, 2004 through September
15,
2005 included in our prospectus dated June 14, 2004. Selling
Securityholders included in our prospectus dated June 14, 2004 who
have
sold all of their registered securities have been omitted from the
table.
|
|
(3)
|
The
number of shares includes the shares issuable on exercise of the
warrants.
|
(4) Valerie
E. Huxley is the natural person who exercises voting and investment control
over
the shares.
|
|
(5) Dan
Sternberg is the natural person who exercises voting and investment
control over the shares.
|
|
(6)
|
Gregory
Galanis is the natural person who exercises voting and investment
control
over the shares.
|
|
(7)
|
AGF
Funds Inc advises that the following persons are the authorized signing
officers and exercise voting and/or investment power over the
shares:
|
Tom
Nakamura, Idna Chistyakova, Coulter Wright, Alice Popescu, Ani Markova, James
Sorbo, Terry Chong, Jamie Horvat and Caterina Prato.
(8) Sheldon
Inwentash is the natural person who exercises voting and investment control
over
the shares.
(9) Centrum
Bank AG advises that the following persons exercise voting and/or investment
power over the shares:
Dr.
Peter
Marxer, Dr. Herbert Oberhuber, Dr. Peter Marxer, Jr., Urs Bolzern, Matthias
Trösch, Dr. Eelco Fiole, Bruno Huwyler, Peter Mag. Metzler, Aribert Schurte,
Rino Cantele, Leo Heeb, Hans-Peter Huber, Christian Kranz, Jürg Mühlethaler,
Hermann Neusüss, Wilfried Ospelt, Manfred Bauer, Viktor Beck, Walter Farner,
Krassimir Gueorguiev, Mario Konzett, Russell Pfeiffer, Markus Schlegel, Michael
Barbist, Valerio Gutgsell, Heini Hefti, Martin Kratochwil, Markus Laber, Bernd
Lauermann, Pasquale Marciello, Daniela Nicolussi, Brigitte Schlegel, Michael
Schwenzig, Daniela Walser, Christof Berkmann, Tino Blöchliger, Daniel Böhi,
Alessandro Dalla Favera, Manuela Gstöhl, Philipp Bubler, Rafael Guntli, Guntram
Hernler, Oliver Huber, Daniel Kieber, Bettina Kind-Lehmann, Gerhard Röösli,
Patricia Schönbächler, Sandra Schumacher, Daniel Steiner, Alexandra Sieber,
Ursula Vögeli.
(10)
Rohit Sehgal is the natural person who exercises voting and investment control
over the shares.
(11)
Richard King is the natural person who exercises voting and investment control
over the shares.
(12)
Fred
Baker is the natural person who exercises voting and investment control over
the
shares.
(13)
William Ballard and Morris Prychidny jointly exercise voting and investment
control over the shares.
(14)
Clare Bowie is the natural person who exercises voting and investment control
over the shares.
(15) Barry
Gordon is the natural person who exercises voting and investment control over
the shares.
(16) John
Gunther and Donald Ross are the natural persons who exercises voting and
investment control over the shares.
(17)
Shawn Kimel is the natural person who exercises voting and investment control
over the shares.
In
June
2007, Primary Capital Inc. and Jones Gable & Company Limited acted as agents
for us in connection with a sale of our securities in a transaction not
requiring registration under the Securities Act. In addition to a fee
of $1,704,000, the agents received an option to purchase up to an aggregate
of
340,800 shares of our common stock at an exercise price of $5.00 per share
through June 20, 2009. In September 2005, Jones Gable & Company
Limited also acted as agent for us in connection with a sale of our securities
in a transaction not requiring registration under the Securities Act and
received a fee of $1,268,436 and an option to purchase up to 195,144 units
of
our securities. The option is exercisable at a price of $6.50 per
unit and on exercise, Jones Gable & Company Limited will receive one share
of Common Stock and one-half of one common stock purchase
warrant. Each whole common stock purchase warrant is exercisable at
an exercise price of $9.00 per share through June 20, 2009, as such expiration
date was extended in September 2007.
Page
17
Following
the time that the registration statement of which this prospectus is a part
is
declared effective under the Securities Act of 1933, the Selling Securityholders
may sell or distribute some or all of the common stock from time to time through
underwriters or dealers or brokers or other agents or directly to one or more
purchasers, including pledgees, in transactions (which may involve block
transactions) or in privately negotiated transactions (including sales pursuant
to pledges), or in a combination of such transactions. Such
transactions may be effected by the Selling Securityholders on the American
Stock Exchange at market prices prevailing at the time of sale, at prices
related to such prevailing market prices, at negotiated prices, or at fixed
prices, which may be changed. Brokers, dealers, agents or
underwriters participating in such transactions as agent may receive
compensation in the form of discounts, concessions or commissions from the
Selling Securityholders (and, if they act as agent for the purchaser of such
shares, from such purchaser). Such discounts, concessions or commissions as
to a
particular broker, dealer, agent or underwriter might be in excess of those
customary in the type of transaction involved.
Persons
who are pledgees, donees, transferees, or other successors in interest of any
of
the named Selling Securityholders (including, but not limited to, persons who
receive shares from a named Selling Securityholder as a gift, partnership
distribution, or other non-sale-related transfer after the date of this
prospectus) may also use this prospectus and are included when we refer to
Selling Securityholder in this prospectus. If necessary, we would
file a supplement to this prospectus under Rule 424(b)(3) or other applicable
provision of the Securities Act of 1933 amending the list of Selling
Securityholders to include the pledgee, donee, transferee or other successors
in
interest as Selling Securityholders under this prospectus. Selling
Securityholders may sell the shares by one or more of the following methods,
without limitation:
|
·
|
block
trades (which may include cross trades) in which the broker or dealer
so
engaged will attempt to sell the shares as agent but may position
and
resell a portion of the block as principal to facilitate the
transaction;
|
|
·
|
purchases
by a broker or dealer as principal and resale by the broker or dealer
for
its own account;
|
|
·
|
an
exchange distribution or secondary distribution in accordance with
the
rules of any stock exchange or market on which the shares are
listed;
|
|
·
|
ordinary
brokerage transactions and transactions in which the broker solicits
purchases;
|
|
·
|
an
offering at other than a fixed price on or through the facilities
of any
stock exchange or market on which the shares are listed or to or
through a
market maker other than on that stock exchange or
market;
|
|
·
|
privately
negotiated transactions, directly or through
agents;
|
|
·
|
short
sales of shares and sales to cover short
sales;
|
|
·
|
through
the writing of options on the shares, whether the options are listed
on an
options exchange or otherwise;
|
|
·
|
through
the distribution of the shares by any selling shareholder to its
partners,
members or shareholders;
|
|
·
|
one
or more underwritten offerings;
|
|
·
|
agreements
between a broker or dealer and one or more of the selling shareholders
to
sell a specified number of the securities at a stipulated price per
share;
and
|
|
·
|
any
combination of any of these methods of sale or distribution, or any
other
method permitted by applicable law.
|
The
Selling Securityholders and any such underwriters, brokers, dealers or agents
that participate in such distribution may be deemed to be “underwriters” within
the meaning of the Securities Act, and any discounts, commissions or concessions
received by any such underwriters, brokers, dealers or agents might be deemed
to
be underwriting discounts and commissions under the Securities
Act. Neither we nor the Selling Securityholders can presently
estimate the amount of such compensation. We do not know of any
existing arrangements between the Selling Securityholders and any underwriter,
broker, dealer or other agent relating to the sale or distribution of the
Selling Securityholders’ Securities. If necessary, we will file a
supplement to this prospectus under Rule 424(b)(3) or other applicable provision
of the Securities Act to disclose any such arrangements made known to us by
the
Selling Securityholders.
Page
18
Under
applicable rules and regulations currently in effect under the Securities
Exchange Act of 1934, as amended, any person engaged in a distribution of any
of
the shares of common stock may not simultaneously engage in market activities
with respect to the common stock for a period of five business days prior to
the
commencement of such distribution. In addition, and without limiting
the foregoing, the Selling Securityholders will be subject to applicable
provisions of the Exchange Act and the rules and regulations thereunder,
including without limitation Regulation M thereunder, which provisions may
limit
the timing of purchases and sales of any of the shares of common stock by the
Selling Securityholders. All of the foregoing may affect the
marketability of the common stock.
We
will
pay substantially all the expenses incident to this offering of the common
stock
to the public other than commissions and discounts of underwriters, brokers,
dealers or agents. The Selling Securityholders may indemnify any
broker, dealer, agent or underwriter that participates in transactions involving
sales of the securities against certain liabilities, including liabilities
arising under the Securities Act. We estimate these expenses will
total $120,843.
The
Selling Securityholders may also sell shares under Rule 144 under the Securities
Act if available, rather than under this prospectus. Rule 144 is
available for the sale of restricted securities after a period of twelve months
has expired from the date the securities are purchased and fully paid
for. Under the tacking provisions of Rule 144, the twelve-month
period will begin to run on the date the shares of common stock were purchased
and fully paid for. The holding period for the shares issued on
exercise of the common stock purchase warrants and the compensation options
begins on the date the consideration for the purchase is paid in
full. Rule 144 also imposes limitations on the amount of securities
that can be sold and the manner of sale of the shares during the twelfth to
twenty-fourth month period after the purchase of and payment in full for the
securities. The limitation on the amount of securities that can be
sold limits a Selling Securityholder to selling, including sales of shares
made
during the preceding three months, an amount of shares not exceeding 1% of
the
shares outstanding. This calculation is made without reflecting as
outstanding shares issuable on conversion or exercise of outstanding debt
securities, options or warrants. The manner of sale provisions
require that the shares be sold in brokers’ transactions and that the person
making the sale not solicit or arrange for the solicitation of orders to
purchase the securities in anticipation of or in connection with the sale or
make any payment in connection with the offer or sale to any person other than
the broker who executes the sale.
In
order
to be a broker’s transaction, the broker executing the sale can do nothing more
than execute the order to sell as agent for the person selling the shares and
receive no more than the customary commission. In addition, the
broker cannot solicit or arrange for the solicitation of orders to buy the
shares or be aware of circumstances indicating that the sale is a part of an
unlawful distribution of the shares in violation of the registration
requirements of the Securities Act. A notice of sale on Form 144 is
to be filed with the U.S. Securities and Exchange Commission at the time of
making a Rule 144 sale.
After
a
period of twenty-four months has expired from the date the securities are
purchased and fully paid for and provided the shares are intended to be sold
by
a person who is not an “affiliate” of ours, the shares can be resold without
complying with the limitations on the amount of securities sold, the manner
of
sale provisions and the notice filing requirements of Rule 144 described
above. This would be characterized as a Rule 144(k)
transaction. Persons who are deemed to be “affiliates” of ours will
continue to be required to comply with the provisions of Rule 144 described
above in making re-sales of shares after the twenty-four month holding
period.
The
Securities and Exchange Commission adopted on November 15, 2007 amendments
to
Rule 144. The effective date of the amendments is 60 days after the
publication of the amendments in the US Federal Register which had not occurred
as of November 19, 2007. As described by the Commission in a press
release dated November 15, 2007, the amendments:
|
·
|
shorten
the holding period for restricted securities of reporting companies
to six
months;
|
|
·
|
substantially
simplify Rule 144 compliance for non-affiliates by allowing non-affiliates
of reporting companies to freely resell restricted securities after
satisfying a six-month holding period (subject only to the Rule 144(c)
public information requirement until the securities have been held
for one
year) and by allowing non-affiliates of non-reporting companies to
freely
resell restricted securities after satisfying a 12-month holding
period;
|
|
·
|
for
affiliates' sales, revise the manner of sale requirements for equity
securities and eliminate them for debt securities and relax the volume
limitations for debt
securities;
|
|
·
|
for
affiliates' sales, raise the thresholds that trigger Form 144 filing
requirements from 500 shares or $10,000 to 5,000 shares or
$50,000;
|
|
·
|
simplify
and streamline the Preliminary Note to and other parts of Rule 144;
and
|
|
·
|
codify
certain staff interpretations relating to Rule
144.
|
Page
19
The
validity of the issuance of the common stock offered hereby has been passed
upon
for us by William S. Clarke, P.A., Pennington, New Jersey.
The
consolidated financial statements of GeoGlobal Resources Inc. incorporated
by
reference in GeoGlobal's Annual Report (Form 10-KSB) for the year ended December
31, 2006 have been audited by Ernst & Young LLP, independent registered
public accounting firm, as set forth in their report thereon, included therein,
and incorporated herein by reference. Such consolidated financial statements
are
incorporated herein by reference in reliance upon such report given on the
authority of such firm as experts in accounting and auditing.
We
are a
public company and file annual, quarterly and current reports, proxy statements
and other information with the Securities and Exchange Commission (SEC). Our
SEC
filings are available to the public over the Internet at the SEC's web site
at
http://www.sec.gov. You may also read and copy any document we file at
the SEC's public reference room at 100 F Street, N.E., Washington, D.C. 20549.
You may obtain information on the operation of the SEC's public reference room
in Washington, D.C. by calling the SEC at 1-800-SEC-0330. We also file
information with the American Stock Exchange.
The
SEC
allows us to "incorporate by reference" into this prospectus the information
we
file with the SEC in other documents, which means that we can disclose important
information to you by referring you to those documents. The information
incorporated by reference is considered to be a part of this prospectus, and
information that we file later with the SEC will automatically update and
supersede this information. We incorporate by reference the documents listed
below and any future filings we make with the SEC under Sections 13(a), 13(c),
14, or 15(d) of the Exchange Act, until the offering of securities by this
prospectus is completed:
|
·
|
our
Annual Report on Form 10-KSB for the fiscal year ended December 31,
2006
filed with the SEC on April 17,
2007;
|
|
·
|
our
amended Annual Report on Form 10-KSB/A for the fiscal year ended
December
31, 2006 filed with the SEC on May 11,
2007;
|
|
·
|
our
Quarterly Report on Form 10-Q for the quarter ended March 31, 2007
filed
with the SEC on May 15, 2007;
|
|
·
|
our
Quarterly Report on Form 10-Q for the quarter ended June 30, 2007
filed
with the SEC on August 14, 2007;
|
|
·
|
our
amended Quarterly Report on Form 10-Q/A for the quarter ended June
30,
2007 filed with the SEC on September 12,
2007;
|
|
·
|
our
Quarterly Report on Form 10-Q for the quarter ended September 30,
2007
filed with the SEC on November 14,
2007;
|
|
·
|
our
definitive Schedule 14A proxy statement for the 2007 Annual Meeting
of
Stockholders filed with the SEC on May 16,
2007;
|
|
·
|
our
Current Reports on Form 8-K filed with the SEC on: March 8,
2007, April 4, 2007, June 22, 2007, June 27, 2007, August 15,
2007 (as to Exhibit 10.15 only), and September 13, 2007;
and
|
Page
20
All
documents filed by us with the SEC pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this prospectus and prior to the
termination of the offering are incorporated by reference into this prospectus,
unless otherwise stated in such document.
We
have
filed with the SEC a registration statement on Form S-3 under the Securities
Act
covering the securities described in this prospectus. This prospectus does
not
contain all of the information included in the registration statement, some
of
which is contained in exhibits included with or incorporated by reference into
the registration statement. The registration statement, including the exhibits
contained or incorporated by reference therein, can be read at the SEC's website
or at the SEC offices referred to above. Any statement made in this prospectus
concerning the contents of any contract, agreement or other document is only
a
summary of the actual contract, agreement or other document. If we have filed
or
incorporated by reference any contract, agreement or other document as an
exhibit to the registration statement, you should read the exhibit for a more
complete understanding of the document or matter involved. Each statement
regarding a contract, agreement or other document is qualified in its entirety
by reference to the actual document.
You
may
request a copy of these filings at no cost, by writing or telephoning us at
the
following address or telephone number:
GeoGlobal
Resources Inc.
605
– 1 Street S.W.,
Suite
310,
Calgary,
Alberta T2P 3S9
Attention:
Investor Relations
+1
403-777-9250
Information
contained on our website is not part of this prospectus. You should rely only
on
the information contained or incorporated by reference in this prospectus.
We
have not authorized anyone to provide you with information different from that
contained in this prospectus. The information contained in this prospectus
is
accurate only as of the date of this prospectus and, with respect to material
incorporated herein by reference, the dates of such referenced
material.
Page
21