UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(X)QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2001
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the transition period from to
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Commission File Number: 0-20915
Geo Petroleum, Inc.
------------------
(Exact name of small business issuer as specified in its charter)
California 33-0328958
- ----------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
18281 Lemon Drive, Yorba Linda, California, 92886
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(Address of principal executive offices)
714.779.9897
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(Issuer's Telephone Number)
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practical date. As of September 30, 2001, there were
17,839,423 shares of the issuer's no par value common stock issued and
outstanding.
1
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Geo Petroleum, Inc.
Financial Statements
(Unaudited)
As of September 30, 2001 and
For Each of the Three-Month and Nine-Month Periods
Ended September 30, 2001 and 2000
2
Geo Petroleum, Inc.
Index to the Financial Statements
(Unaudited)
As of September 30, 2000 and
For Each of the Three-Month and Nine-Month Periods
Ended September 30, 2001 and 2000
Financial Statements of Geo Petroleum, Inc.:
Balance Sheet (Unaudited) September 30, 2001...............................4-5
Statements of Operations (Unaudited) For Each of the Three-Month and
Nine-Month Periods Ended September 30, 2001 and 2000........................6
Statement of Shareholders' Equity (Unaudited) For the Nine-Month Period Ended
September 30, 2001..........................................................7
Statements of Cash Flows (Unaudited) For Each of the Nine-Month Periods Ended
September 30, 2001 and 2000..............................................8-9
Notes to the Financial Statements.........................................10-13
3
Geo Petroleum, Inc.
Balance Sheet
(Unaudited)
September 30, 2001
- --------------------------------------------------------------------------------
ASSETS
Current assets:
Accounts receivable, no allowance for
doubtful accounts $ 50,489
Prepaid legal and consulting fees 27,081
-----------------
Total current assets 77,570
-----------------
Restoration and utility deposits 271,392
-----------------
Property and equipment:
Oil and gas properties 305,251
Vehicles 36,884
Facilities and equipment 185,447
-----------------
Total property and equipment 527,582
Less: accumulated depreciation and depletion (37,841)
-----------------
Total property and equipment, net 489,741
-----------------
Total assets $ 838,703
=================
The accompanying notes are an integral part of the financial statements.
4
Geo Petroleum, Inc.
Balance Sheet
(Unaudited)
September 30, 2001
- --------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable:
Trade and other $ 265,761
Related party 54,805
Accrued expenses 71,661
Line of credit - related party 115,000
Other liabilities 4,300
Note payable - other, current portion 4,926
-----------------
Total current liabilities 516,453
-----------------
Total liabilities 516,453
-----------------
Shareholders' equity:
Preferred stock; no par value; 100,000 shares
authorized; no shares issued and outstanding at June 30, 2001. -
Common stock; no par value; 50,000,000 shares
authorized; 19,212,231 shares issued and outstanding 11,566,483
Accumulated deficit (11,244,233)
-----------------
Total shareholders' equity 322,250
-----------------
Total liabilities and shareholders' equity $ 838,703
=================
The accompanying notes are an integral part of the financial statements.
5
Geo Petroleum, Inc.
Statements of Operations
(Unaudited)
For Each of the Three-Month and Nine-Month Periods Ended September 30, 2001 and 2000
- ------------------------------------------------------------------------------------------------------------------------------------
For the Three-Month Periods Ended September 30, For the Nine-Month Periods Ended September 30,
---------------------------------------------- ----------------------------------------------
2001 2000 2001 2000
----------------- ----------------- ----------------- -----------------
Revenues:
Oil and gas sales $ 8,491 - $ 8,623 $ 588
Waste water disposal services 86,734 $ 13,405 208,631 14,107
Other revenue - - 8,341
----------------- ----------------- ----------------- -----------------
Total revenues 95,225 13,405 217,254 23,036
----------------- ----------------- ----------------- -----------------
Expenses:
Lease operating expenses 89,405 140,902 279,028 245,677
Lease environmental remediation expenses 1,500 1,000 1,028 2,000
Depletion and depreciation 5,138 - 15,414 -
Professional fees 56,482 75,247 227,611 145,061
General and administrative 68,792 28,818 246,250 145,903
----------------- ----------------- ----------------- -----------------
Total expenses 221,317 245,967 769,331 538,641
----------------- ----------------- ----------------- -----------------
Loss from operations (126,092) (232,562) (552,077) (515,605)
----------------- ----------------- ----------------- -----------------
Reorganization items:
Professional fees (21,618) (20,617) (35,773) (90,598)
----------------- ----------------- ----------------- -----------------
Total reorganization items (21,618) (20,617) (35,773) (90,598)
----------------- ----------------- ----------------- -----------------
Other income (expenses):
Interest income 1,522 4,617 7,904 6,517
Interest expense (4,684) (797) (9,958) (2,783)
----------------- ----------------- ----------------- -----------------
Total other income (expense) (3,162) 3,820 (2,054) 3,734
----------------- ----------------- ----------------- -----------------
Loss before provision for income taxes (150,872) (249,359) (589,904) (602,469)
Provision for income taxes - (440) (800)
----------------- ----------------- ----------------- -----------------
Net loss $ (150,872) $ (249,359) $ (590,344) $ (603,269)
================= ================= ================= =================
Net loss per share, basic and diluted $ (0.01) $ (0.01) $ (0.01) $ (0.04)
================= ================= ================= =================
The accompanying notes are an integral part of the financial statements.
6
Geo Petroleum, Inc.
Statements of Shareholders' Equity
(Unaudited)
For the Nine-Month Period Ended September 30, 2001
- -------------------------------------------------------------------------------
Common Common Accumulated
Shares Stock Deficit Total
------------------ ---------------------- -------------------- ----------------
Balance,
December 31, 2000 18,177,805 $ 11,225,293 $ (10,653,889) $ 571,404
Common shares issued 635,426 208,188 - 208,188
Common shares issued
for services 399,000 133,002 - 133,002
Net loss (590,344) (590,344)
------------------ ---------------------- -------------------- ----------------
Balance,
September 30, 2001 19,212,231 $ 11,566,483 $ (11,244,233) $ 322,250
================== ====================== ==================== ================
The accompanying notes are an integral part of the financial statements.
7
Geo Petroleum, Inc.
Statements of Cash Flows
(Unaudited)
For Each of the Nine-Month Periods Ended September 30, 2001 and 2000
- --------------------------------------------------------------------------------
For the Nine-Month Periods
Ended September 30,
----------------------------------------
2001 2000
------------------ -----------------
Cash flows from operating activities:
Net loss $ (590,344) $ (603,269)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depletion and depreciation 15,414 4,069
Common shares issued for services 48,500 -
Decrease (increase) in assets:
Accounts receivable (16,528) 70,000
Prepaid legal and consulting fees 148,147 -
Other prepaid expenses 9,000 2,356
Restoration and utility deposits 19,544 (80,273)
Increase (decrease) in liabilities:
Accounts payable - trade 104,860 160,822
Accounts payable - related party - (14,149)
Accrued expenses - (145,005)
Income tax payable - (3,039)
Other liabilities (19,974) (69,717)
Accrued expenses - related party - 54,805
------------------ -----------------
Net cash used in operating activities (281,381) (623,400)
------------------ -----------------
Cash flows provided by (used in) investing activities:
Purchases of facilities and equipment (972) (438,574)
Capital expenditures on oil and gas properties (43,940) -
Payments on notes receivable 7,100 25,000
------------------ -----------------
Net cash used in investing activities (37,812) (413,574)
------------------ -----------------
Cash flows provided by (used in) financing activities:
Proceeds from line of credit - related party 30,000 -
Proceeds from issuance of note payable - 35,000
Payments on notes payable (23,670) (19,604)
Net proceeds from the issuance of common stock 242,690 584,723
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Cash provided by financing activities 249,020 600,119
------------------ -----------------
Net increase (decrease) in cash (70,173) (436,855)
Cash and equivalents at beginning of period 70,173 436,916
------------------ -----------------
Cash and equivalents at end of period $ - $ 61
================== =================
The accompanying notes are an integral part of the financial statements.
8
Geo Petroleum, Inc.
Statements of Cash Flows
(Unaudited)
For Each of the Nine-Month Periods Ended September 30, 2001 and 2000
- --------------------------------------------------------------------------------
Supplemental Disclosures of Cash Flow Information
For the Nine-Month Periods
Ended September 30,
---------------------------------
2001 2000
-------------- ----------------
Interest paid $ 2,654 $ 2,783
Income taxes paid $ 800 $ 3,839
Supplemental Disclosure of Non-Cash Investing and Financing Activities
Issuance of common stock for prepaid
legal fees:
Prepaid legal and consulting fees $ 50,000 -
Issuance of common stock $ (50,000) -
Liabilities satisfied through the issuance
of common stock:
Accrued expenses - $ 169,246
Common stock - $ (169,246)
9
Geo Petroleum, Inc.
Notes to the Financial Statements
(Unaudited)
As of September 30, 2001 and
For Each of the Three-Month and Nine-Month Periods
Ended September 30, 2001 and 2000
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1. Description of the Company's Business
- ------------------------------------------
Geo Petroleum, Inc. (the "Company") is an oil and gas production company founded
in 1986 and incorporated in the State of California. The Company engages in the
development, production and management of oil and gas properties. All of the
Company's properties are located in California. Certain of the wells on one of
the Company's properties are used for waste water disposal services.
2. Basis of Presentation
- --------------------------
In the opinion of the management of Geo Petroleum, Inc., the accompanying
unaudited condensed financial statements contain all adjustments, consisting of
only normal recurring adjustments, necessary to present fairly its financial
position as of September 30, 2001, the results of its operations, shareholders'
equity, and cash flows for the three-month and nine-month periods ended
September 30, 2001 and 2000. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted principles have been condensed or omitted pursuant to the rules and
regulations promulgated by the Securities and Exchange Commission. The
statements should be read in conjunction with the financial statements and
footnotes for the year ended December 31, 2000 included in the Company's Form
10K-SB. The results of operations for the interim period are not necessarily
indicative of the results to be expected for the full year.
3. Commitments and Contingencies
- ----------------------------------
Minimum Royalties
The Company has commitments for minimum royalty payments on certain of its oil
and gas properties, which total approximately $36,000 annually.
Concentration of Credit Risk
Financial instruments, which potentially subject the Company to concentrations
of credit risk, consist primarily of cash and cash equivalents and accounts
receivable. The Company places its cash and cash equivalents with high quality
financial institutions. Exposure to losses on accounts receivable is principally
dependent on the individual customer's financial condition, as credit sales are
not collateralized. The Company monitors its exposure to credit loss and
reserves those accounts receivable that it deems to be uncollectible.
Cash in Excess of Federal Deposit Insurance Corporation Insured Limits
The Company maintains its cash in bank deposit accounts, which, at times, may
exceed federally insured limits. Accounts are guaranteed by the Federal Deposit
Insurance Corporation ("FDIC") up to $100,000. At September 30, 2001, the
Company had
10
Geo Petroleum, Inc.
Notes to the Financial Statements
(Unaudited)
As of September 30, 2001 and
For Each of the Three-Month and Nine-Month Periods
Ended September 30, 2001 and 2000
- -------------------------------------------------------------------------------
3. Commitments and Contingencies, Continued
- ---------------------------------------------
Cash in Excess of Federal Deposit Insurance Corporation Insured Limits,
Continued
approximately $10,400 in excess of FDIC insured limits. The Company has not
experienced any losses in such accounts.
Risks of the Industry in Which the Company Operates
The Company participates in an industry that is characterized by competitive
pressure, changes in the prices of oil and gas on a world-wide basis, federal,
state, and local regulations governing production and development of its oil and
gas reserves and compliance with various environmental laws and regulations. The
Company's results of operations are affected by a wide variety of factors,
including world events, general economic conditions, changes in average selling
prices over the productive life of oil and gas reserves, the timing of
production from new and existing proved developed and undeveloped reserves by
the Company, its competitors, and others, the ability to produce sufficient
quantities of oil and gas reserves in a timely manner, and the timely
implementation of new and alternative reserve recovery process technologies.
Based on the factors noted herein, the Company may experience substantial
period-to-period fluctuations in future operating results.
Property Lease Risks
The Company's oil and gas leases on its Vaca Tar Sands and Rosecrans properties
contain provisions, which provide for minimum production requirements and
periods. The Company's failure to meet those minimum requirements could result
in a termination of the lease(s) and loss of all its rights thereunder. However,
the Company believes it is in compliance with the lease(s) provisions and has
not received notification from anyone to the contrary.
Management's Plan
The accompanying financial statements have been prepared on a going-concern
basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. The Company incurred net losses of
$743,257 and $1,028,762 and negative cash flows from operations of $893,126 and
$69,945 for the years ended December 31, 2000 and 1999, respectively. In
addition, during the three-month and nine-month periods ended September 30,
2001, the Company incurred net losses of $150,872 and $590,344, respectively,
and negative cash flow from operations of $281,381 for the nine-month period
ended September 30, 2001. At December 31, 2000 and September 30, 2001, the
Company had an accumulated deficit of $10,653,889 and $11,244,233 respectively,
and its current liabilities exceed its current assets by $179,775 and $438,883,
respectively. In December 1999, the Company emerged from bankruptcy and in the
fourth quarter of 2000, and
11
Geo Petroleum, Inc.
Notes to the Financial Statements
(Unaudited)
As of September 30, 2001 and
For Each of the Three-Month and Nine-Month Periods
Ended September 30, 2001 and 2000
- -------------------------------------------------------------------------------
3. Commitments and Contingencies
- ----------------------------------
Management's Plan, Continued
the Company began oil production, using steam injection recovery techniques, and
waste water disposal services at its Vaca Tar Sands properties. Due to
inordinately high natural gas costs for the steam injection process, the Company
curtailed its oil production efforts.
The Company's continuation as a going concern is dependent upon its ability to
obtain additional financing, generate sufficient cash flow to meet its current
obligations, and to attain profitable operations. The Company obtained
additional equity financing through private placements of its common stock of
approximately $930,000 during the year ended December 31, 2000 and $208,188
during the nine-month period ended September 30, 2001, respectively. The Company
is continuing its efforts to obtain additional financing and, in 2001, engaged
an investment capital firm to assist the Company. There can be no assurance that
any of these efforts will be successful. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty
4. Related Party Transactions
- -------------------------------
The Company rents on a month-to-month basis its office facilities at $5,000 per
month from an entity that is wholly-owned by a company officer, who is a major
shareholder.
5. Loss Per Share
- -------------------
Basic and diluted loss per common share have been computed by dividing the loss
available to common shareholders by the weighted-average number of common shares
for the period.
The computations of basic and diluted loss per common share are as follows:
For the Three-Month Periods
Ended September 30,
-------------------------------
2001 2000
------------- -------------
Numerator:
Net loss available to common shareholders $ (150,872) $ (281,416)
Denominator:
Weighted-average shares basic and diluted 18,890,133 17,401,314
------------- -------------
Loss per common share, basic and diluted $ (0.01) $ ( 0.01)
12
Geo Petroleum, Inc.
Notes to the Financial Statements
(Unaudited)
As of September 30, 2001 and
For Each of the Three-Month and Nine-Month Periods
Ended September 30, 2001 and 2000
- -------------------------------------------------------------------------------
5. Loss Per Share, Continued
- -------------------------------
For the Nine-Month Periods
Ended September 30,
-------------------------------
2001 2000
------------- -------------
Numerator:
Net loss available to common shareholders $ (150,872) $ (603,269)
Denominator:
Weighted-average shares basic and diluted 18,775,795 16,492,175
-------------------------------
Loss per common share, basic and diluted $ (0.01) $ (0.04)
The following additional potential common shares were outstanding during
2001 and 2000, but were not included in the computation of diluted loss per
share, because to do so would have been antidilutive for the periods
presented.
For the Three-Month Periods
Ended September 30,
-------------------------------
2001 2000
------------- -------------
Shares of common stock issuable under:
Warrants 655,151 856,821
Options 4,000,000 4,000,000
------------- ----------
Total shares of common stock issuable 4,655,151 4,856,821
============== =============
6. Stock and Warrant Transactions
- -----------------------------------
Common Shares Sold to Private Investors
During the period January 1, 2001 through April 30, 2001, the Company sold
322,500 shares of its common stock at $0.50 per share to private investors and
received total cash proceeds of $161,249. In September 2001, the Company sold
312,926 shares of its common stock to private investors and received total cash
proceeds of $46,939.
In August 2001, the Company issued 184,000 shares of its common stock for
services based on the market value of the shares totaling $34,502.
The Company issued 100,000 shares of its common stock for legal services for the
period from January 2000 through December 2000. The shares were valued at the
market price of the stock at the date the services were agreed to be provided.
In addition, the Company issued 90,000 common shares that were valued at the
fair value of the services of $36,000. Also, the Company issued 25,000 common
shares for services, which were valued based on the market value of the shares
at the date of issuance totaling $12,500.
13
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
This following information specifies certain forward-looking statements of
management of the company. Forward-looking statements are statements that
estimate the happening of future events and are not based on historical fact.
Forward-looking statements may be identified by the use of forward-looking
terminology, such as "may", "shall", "will", "could", "expect", "estimate",
"anticipate", "predict", "probable", "possible", "should", "continue", or
similar terms, variations of those terms or the negative of those terms. The
forward-looking statements specified in the following information have been
compiled by our management on the basis of assumptions made by management and
considered by management to be reasonable. Our future operating results,
however, are impossible to predict and no representation, guaranty, or warranty
is to be inferred from those forward-looking statements.
The assumptions used for purposes of the forward-looking statements specified in
the following information represent estimates of future events and are subject
to uncertainty as to possible changes in economic, legislative, industry, and
other circumstances. As a result, the identification and interpretation of data
and other information and their use in developing and selecting assumptions from
and among reasonable alternatives require the exercise of judgment. To the
extent that the assumed events do not occur, the outcome may vary substantially
from anticipated or projected results, and, accordingly, no opinion is expressed
on the achievability of those forward-looking statements. No assurance can be
given that any of the assumptions relating to the forward-looking statements
specified in the following information are accurate, and we assume no obligation
to update any such forward-looking statements.
Our Business. Geo Petroleum, Inc. is a California corporation formed in 1986
primarily to develop a large tar sand deposit in Ventura County, California and
to engage in the oil field waste disposal business. We are a minor factor in the
California oil and gas industry and face competition from numerous companies,
which have considerably more financial resources, property and manpower, than do
we. We are in a weak financial condition and must rely upon third party sources
of funds to conduct our proposed operations. Essentially, our only revenue
producing operations are expected to be our Vaca Tar Sands, Rosecrans and Waste
Disposal properties, each of which require significant cash expenditures to
operate and develop. During the year 2000, we produced and sold small amounts of
oil from our Vaca properties, none from our Rosecrans properties and steadily
increased our revenues from our Waste Disposal operations. The results of our
operations for the third quarter of 2001 are discussed below.
In 1998, we filed for protection under Chapter 11 of the U.S. Bankruptcy Code.
In December, 1999 we emerged from bankruptcy under a plan which, among other
things, provided for the issuance of approximately 1,900,000 shares of our
common stock to our creditors and a change in our management. Present management
was installed as part of our reorganization. At the time of our bankruptcy
filing, we had sold or otherwise transferred a substantial portion of our oil
and gas holdings and had interests in approximately 2,230 gross acres (2,030 net
acres) of oil and gas leases or mineral rights, of which approximately 1,630
gross acres (1,410 net acres) were developed for oil and gas production and
approximately 600 gross and net acres were undeveloped. After emerging from
bankruptcy, our oil and gas holdings were approximately 2,000 gross and 1,830
net acres.
Since we emerged from bankruptcy, our income from operations has not been
sufficient to maintain the Company. Our president does not receive cash
compensation. Were it not for the fact that we have sold equity during the year
2000, the Company would not be able to continue operating. At year-end 2000,
only our waste disposal facility was producing significant revenues.
Results of Operations. The following discussion and analysis for the quarters
ended September 30, 2001 and September 30, 2000, are to be read in combination
with the Financial Statements presented elsewhere herein.
14
Third quarter 2001 compared with third quarter 2000. During the quarter ended
September 30, 2001, we had a net loss of $150,872 compared to a net loss of
$249,359 for the comparable 2000 period. Revenues from waste disposal operations
increased from $13,405 during the 2000 period, to $86,734 for the third quarter
of 2001. This increase is due to the fact that we had just begun restoration of
our waste disposal operations during the third quarter of 2000 but by the third
quarter of 2001, we had fully restored operations. A limited amount of oil was
produced and sold from our Rosecrans property during the third quarter of 2001
in order to retain our leases on the property. This production generated $8,491
in revenues for the quarter ended September 30, 2001 compared to none in 2000.
Lease operating expenses decreased from $140,902 for the third quarter of 2000
to $89,405 for the period in 2001. This decrease is due to the fact that by the
third quarter of 2000, we were incurring significant lease operating costs in
connection with the process of returning certain properties back to production
(including the Vaca Tar Sands Unit), but oil production did not actually begin
until the fourth quarter of 2000. All oil production then ceased during the
first few months of 2001; however, operating costs associated with the waste
disposal property continued as well as certain costs necessary to maintain our
oil and gas leases ready to be reactivated.
General and administrative expenses increased from $28,818 for the period in
2000 to $68,792 for 2001. This increase is due primarily to the fact that our
operations were just beginning during 2000 as we emerged from bankruptcy in
December 1999. Professional fees during the third quarter of 2001 were $56,482
compared to $75,247 during the period in 2000. This decrease reflects the fact
that fees paid in 2000 were high due to legal and accounting services required
to restore Geo to a fully reporting entity to the SEC and to resolve remaining
issues related to the bankruptcy completed in 1999. Although we have attempted
to control these costs, continuing need for professional services during 2001
has resulted in fees higher than we prefer. However, as time passes, the need
for ongoing professional services has declined and we expect that trend to
continue.
Reorganization items were about the same for the third quarter of 2001 as they
were for the period in 2000. By the third quarter of 2000, most of the activity
related to the bankruptcy was completed and the costs associated with the
reorganization had decreased substantially.
Capital Resources and Liquidity
Financial Position. As of September 30, 2001, our working capital was $(438,883)
compared to $(131,155) as of September 30, 2000. Operating losses incurred
during 2001 have continued to erode our current position reflected both in the
reduction of current assets and the increase in current liabilities during the
third quarter of 2001. Fortunately, profitable operations of the waste disposal
facility have continued during the third quarter and are expected to increase in
the near future. As noted above, a small amount of revenue was generated from
operations on the Rosecrans property. We were able to raise some additional
capital through issuance of common stock, but no significant new sources of
financing were discovered during the third quarter of 2001.
During the third quarter of 2001, we did continue our efforts to identify new
sources of financing to facilitate resumption of operations on the Rosecrans
property, to provide funding for possible new acquisitions, and to secure
additional working capital. The letter agreement signed in the first of 2001
quarter with Virginia Capital Corp. has resulted in the issuance of a standby
letter of credit in the amount of $1,250,000. Although this letter of credit
requires certain performance standards before funds can be drawn, we anticipate
additional funding opportunities from Virginia Capital Corp. in the future. In
the meantime, other possible financing opportunities are being pursued with the
hope that we will be able to fund the restoration of our Rosecrans property and
engage in some additional activities, including potential joint venture
activities with Rothchild Oil & Gas, Inc.
Inflation. In recent years inflation has not had a significant impact on our
operations or financial condition.
Trends. Two trends have had a significant impact on our operations. First the
price of crude oil rose to a high of $34.12 per barrel in 2000 and has remained
relatively high in 2001. The high spot price for NYMEX sweet crude was $30.34 in
May. Forecasts predict future oil prices to remain in the range between 25$ and
$32 per barrel. The other significant trend is the rapid increase in the price
of natural gas. As a purchaser of natural gas for operations, the sharp rise in
gas prices has resulted in curtailment of production on the Vaca Tar Sands Unit.
Last winter (October 2000-March 2001) natural gas prices at the wellhead
averaged $5.74 per thousand cubic feet (MCF), more than double the previous
winter's price. Natural gas prices began climbing last summer primarily in
response to low levels of underground gas storage. Compared to this time last
year, storage levels are still low. As a result, spot prices have been averaging
as high as $4.55 per MCF during the second quarter of 2001. Currently, prices
have fallen to around $3.00 per MCF at the wellhead. We currently have no gas
production; however, we are investigating possible acquisitions that could
produce natural gas for either sale or to reduce operating costs on the Vaca Tar
Sands Unit.
15
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time, we may be involved in legal proceedings, including those
arising from our operations and the amounts due suppliers or royalty owners.
None of such proceedings are generally considered material to our operations or
financial condition.
Item 2. Changes in Securities.
In August, 2001, the company issued 184,000 shares of its common stock for
services based on the market value of the shares totaling 34,502 dollars, in a
private placement transaction pursuant to section 4 (2) of the secrurities act
of 1933 as amended.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to Vote of Security Holders
On August 29, 2001, we held our annual meeting of shareholders. Matters
submitted for a vote of our security holders were: the election of four (4)
members to the Board of Directors of the Company; the approval and adoption of
the Company's Stock Option Plan and the issurance of stock options to Dennis
Timpe; the approval, adoption and ratification of the actions taken by the
Company's officers and directors during the last fiscal year; the approval of
the selection of Kelly & Company to audit the financial statements of the
Company for the fiscal year ended December 31, 2000; and the approval of the
selection of Kelly & Company to audit the financial statements of the Company
for the fiscal year beginning January 1, 2001.
Proxies for the meeting were solicited pursuant to Regulation 14A under the
Exchange Act, there was no solicitation in opposition to the management's
nominees as listed in the proxy statement, and all of such nominees were
elected; specifically, Lori Timpe-Long, Dennis Timpe, Greg Tolleson and
Christian Dillon. The number of votes cast for, against or withheld, and the
number of abstentions and broker non-votes, for each matter, and for each
director nominee individually, are as follows:
Lori Timpe-Long FOR: 14,232,961 AGAINST: 0 WITHHELD: 49,230 ABSTENTIONS: N/A BROKER NON-VOTES: N/A
Dennis Timpe FOR: 14,251,961 AGAINST: 0 WITHHELD: 30,230 ABSTENTIONS: N/A BROKER NON-VOTES: N/A
Greg Tolleson FOR: 14,236,961 AGAINST: 0 WITHHELD: 45,230 ABSTENTIONS: N/A BROKER NON-VOTES: N/A
Christian Dillon FOR: 14,236,961 AGAINST: 0 WITHHELD: 45,230 ABSTENTIONS: N/A BROKER NON-VOTES: N/A
The approval and adoption of the Company's Stock Option Plan and the issuance
of stock options to Dennis Timpe:
FOR: 9,550,736 AGAINST: 980,468 WITHHELD: N/A ABSTENTIONS: 33,374 BROKER NON-VOTES: 3,717,613
The approval, adoption and ratification of the actions taken by the Company's
officers and directors during the last fiscal year:
FOR: 13,427,961 AGAINST: 694,230 WITHHELD: N/A ABSTENTIONS: 160,000 BROKER NON-VOTES: N/A
The approval of the selection of Kelly & Company to audit the financial
statements of the Company for the fiscal year ended December 31, 2000:
FOR: 14,247,561 AGAINST: 19,630 WITHHELD: N/A ABSTENTIONS: 15,000 BROKER NON-VOTES: N/A
The approval of the selection of Kelly & Company to audit the financial
statements of the Company for the fiscal year beginning January 1, 2001:
FOR: 14,261,061 AGAINST: 21,130 WITHHELD: N/A ABSTENTIONS: N/A BROKER NON-VOTES: N/A
The total number of shares present in person and by proxy equaled 80% of the
total shares issued and outstanding, thereby constituting quorum for purposes of
the meeting. The total number of shares represented and voting in person or by
proxy at the meeting was 14,282,191.
16
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
2. Plan of Reorganization of Geo Petroleum, Inc. dated October 12, 1999,
and confirmed by the U.S. Bankruptcy Court for the Central District of
California, Santa Barbara Division, on December 15, 1999, was previously
filed as an exhibit to our Annual Report on Form 10-KSB for the year ended
December 31, 1999 and is incorporated herein by this reference.
3. Our Articles of Incorporation, and the First, Second and Third
Amendments to our Articles of Incorporation, as well as our Bylaws, were
filed as exhibits to our Form 10 Registration Statement dated June 6, 1996
and are incorporated herein by this reference.
4. Not applicable
10. Not applicable
11. Included in financial statements in Part I, Item 1 above.
15. Included in financial statements in Part I, Item 1 above.
18. Not applicable
19. Proxy Statement filed with the Securities and Exchange Commission on
July 2, 2001 and incorporated herein by this reference.
22. Not applicable
23. Not applicable
24. Not applicable
(b) We did not file any reports on Form 8-K during the third quarter of
2001.
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Geo Petroleum, Inc.,
a California corporation
November 20, 2001 By: /s/ Dennis Timpe
--------------------------
Dennis Timpe
Its: President and a Director