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GeoGlobal Resources Inc. ("GeoGlobal" or the "Company") (NYSE MKT: GGR) today announced that the Company has not filed with the US and Canadian Regulatory authorities its audited consolidated financial statements for the year ended December 31, 2012, that were due to be filed on April 16, 2013. The Company did not have sufficient funding to file its audited financial statements by the due date. As previously announced, the Company and Sarus Energy Ltd. ("Sarus") had agreed to close the first part of the sale of certain of the Company's Indian assets (the "Indian Asset Sale") for proceeds to the Company of $2 million on April 12, 2013. Sarus did not close the first part of the transaction on time and has requested an extension. The Company continues to focus on closing the transaction with Sarus and on finding other sources of capital. There is a substantial risk it will not prove to be successful.
The Company anticipates filing its audited financial statements upon the closing and funding of the first part of Indian Asset Sale or upon obtaining funding from other sources.
Financial Review
Set forth below is certain financial information from our unaudited financial statements as at and for the year ended December 31, 2012. All amounts in the release are in U.S. dollars unless otherwise noted:
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Oil and gas sales 487,467 Interest Income 14,319 Impairment of oil and gas properties 15,861,223 Net loss and comprehensive loss 21,812,552 Net loss per share - basic and diluted 0.17 Current assets 22,336,143 Property and equipment 42,256,456 Total assets 67,503,267 Current liabilities 41,417,139 Total liabilities 42,251,973 Stockholders' equity 25,251,294 Cash dividends -0-
Going Concern
The Company has not achieved its planned principal operations and is considered to be in the development stage. The Company's exploration activities and overhead expenses are financed by way of equity issuance and to-date, oil and gas sales are incidental to the exploration process.
The Company's financial statements as at and for the year ended December 31, 2012 have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. During the year ended December 31, 2012, the Company incurred a net loss of approximately $21.8 million, used approximately $1.8 million of cash flow in its operating activities, used approximately $9.7 million in its investing activities and had an accumulated deficit of approximately $82.0 million. As at December 31, 2012, the Company has working capital deficiency of approximately $19.1 million. These matters raise substantial doubt about the Company's ability to continue as a going concern.
The Company's cash balance at December 31, 2012 and anticipated cash flow from operating activities are not sufficient to satisfy its current liabilities and meet its exploration commitments of $12.1 million and $21.9 million, over the twelve months ending December 31, 2013 and the twenty-four months ending December 31, 2014, respectively. As at December 31, 2012 the Company has $0.8 million of cash and cash equivalents, of which $0.1 million is committed to carry out activities of the Myra and Sara joint venture. The residual cash of $0.7 million is available for general operations of the Company and to meet its current liabilities and exploration commitments of $12.1 million and $21.9 million as described above.
To meet its obligations, the Company must divest certain oil and gas interests, subsidiaries or other available assets, including entering into other financing arrangements typical in the industry such as farming out interests in oil and natural gas properties. The Company will also continue to seek to raise capital through equity and debt markets.
The Company's cash as at December 31, 2012, available for general operations of $0.7 million is not sufficient to meet its ongoing operational requirements. In the fourth quarter of 2012, the Company has curtailed staffing at its Canadian and Indian offices and rationalized other expenditures to minimize the ongoing operational requirements pending the outcome of uncommitted financing activities described above. If these activities are unsuccessful, the Company will be forced to substantially curtail or cease exploration, appraisal and development expenditures and other operating activities.
The Company's ability to continue as a going concern is dependent on the success of the operational and financing initiatives and the successful completion of further exploration and development activities that will generate profitable operations from its oil and natural gas interests in the future. The Company must make an assessment of its ability to fulfill current liabilities and to meet future exploration requirements in the normal course of business. The assessment requires estimates regarding future uncommitted financing, future costs of exploration programs, timing of activities, future oil and gas prices, amongst other things. Such estimates are subject to uncertainty and should our estimates be materially incorrect, the Company's ability to continue as a going concern would be impaired and these consolidated financial statements could require material adjustments to the value of assets and liabilities. These consolidated financial statements do not reflect any such adjustments or reclassifications.
Subsequent to December 31, 2012, the Company entered into share purchase agreement with Sarus Energy Limited, sold its office premise in India and entered into agreement with a private Israeli investment group. Proceeds received from these transactions will be used to reduce the working capital deficiency. As of today, these transactions, except for sale of office premise in India, have not closed and there can be no certainty that these transactions will successfully close. The Company's ability to continue to meet our ongoing financial commitments and pay our creditors is dependent on closing these transactions.
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