VGS Seismic Canada Inc.
TSX VENTURE : VGS

VGS Seismic Canada Inc.

March 20, 2007 22:14 ET

VGS Seismic Canada Inc. Announces Financial Results

CALGARY, ALBERTA--(CCNMatthews - March 20, 2007) - VGS Seismic Canada Inc. ("VGS" or "the Company") (TSX VENTURE:VGS) is pleased to announce the results of operations for the six month period ended December 31, 2006.

In its early stages and focused on growing its seismic data library, VGS has achieved net income of $7.5 million ($0.40 per share basic and $0.24 per share fully diluted) from gross revenues of $23.9 million for the six months ended December 31, 2006. This includes a one time non-recurring expenses incurred for becoming public through the reverse take over of $0.83 million. Fully diluted per share amounts are calculated assuming conversion of the $10 million convertible debt.

At December 31, 2006, VGS had positive working capital of $0.5 million, and has entered into a second contract with its current lender granting access to an additional $10 million in convertible debt for added liquidity.

The Company exits the 2006 year with a total net data library of 2,989 square kilometers of 3D seismic data and approximately 5,000 linear kilometers of 2D seismic data with a total capital cost of $47.4 million. Over 84% of the 3D library was created in 2000 or later.

Highlights

- On December 20, the Company was moved from the NEX and began trading on the TSX Venture exchange under the symbol VGS.

- During the period, VGS Capital Ltd. completed private equity placements of 10,545,090 common shares for gross cash proceeds of $12,654,209. The proceeds of this offering were used to secure the public listing and grow the seismic database.

- On July 22, 2006, VGS issued a $5 million 9.5% convertible debenture for cash.

- Completion of contracts for 2 large data creation projects in North East British Columbia adding 630 square kilometers of brand new 3D seismic data to the library available for sale.

Effective November 20, 2006, VGS Database International Inc. ("VGS Database") entered into an arrangement with AldeaVision Inc. ("AldeaVision") and subsequent to the arrangement and name change to VGS Seismic Canada Inc., VGS Database agreed to amalgamate with the Company and VGS Capital Ltd. ("VGS Capital"). The Company remained the legal parent, however, VGS Database was the acquirer for accounting purposes and the transaction was accounted for as a reverse take-over that does not constitute a business combination since both Aldeavision and VGS Capital were inactive. These financial statements are presented as a continuation of VGS Database and the comparative amounts are those of VGS Database. Following the reorganization, the Company changed its year end to December 31, and therefore the period ended December 31, 2006 is six months for the purposes of financial reporting.



Financial Highlights

Six months Year
ended ended
December 31, June 30,
2006 2006

Revenue 23,877,544 1,079,536
--------------------------

Non-recurring reverse take over costs 833,927 -
Operating Expenses 1,659,991 1,867,808
--------------------------
2,493,918 1,687,808

EBITDA 21,383,626 (788,272)

Interest 1,122,626 353,478

Amortization 12,755,323 554,893
--------------------------
Income (loss) before taxes 7,505,677 (1,696,643)

Net income (loss) 7,451,996 (1,696,643)

Earnings (loss) per share
Basic 0.40 (0.10)
Diluted 0.24 (0.10)

Shares outstanding 30,979,771 16,658,053
Weighted average shares outstanding
Basic 18,708,058 17,532,325
Diluted 32,881,404 -

Working Capital (deficiency) 490,064 (27,150,829)


VGS Seismic Canada Inc.
Balance Sheets
(Continuation of VGS Database International Inc.)
---------------------------------------------------------------------------
December 31, June 30,
2006 2006
$ $
Assets

Current assets
Cash and cash equivalents 540,834 1,925,874
Accounts receivable 3,276,128 5,157,818
Due from related party 40,000 -
GST receivable 369,663 1,358,073
Prepaid expenses and deposits 39,115 90,310
------------------------
4,265,740 8,532,075

Seismic data libraries 34,258,181 37,536,495

Property and equipment 2,023,088 834,309
------------------------

40,547,009 46,902,879
------------------------
------------------------

Liabilities

Current liabilities
Accounts payable and accrued liabilities 2,554,615 14,493,780
Due to related party - 2,048
Deferred revenue 1,159,592 21,187,076
Current portion of mortgage payable 7,788 -
Income taxes payable 53,681 -
------------------------
3,775,676 35,682,904

Convertible debentures 5,869,455 3,310,001

Mortgage payable 292,441 -
------------------------

9,937,572 38,992,905
------------------------

Shareholders' Equity
Share capital 20,276,468 7,715,540
Contributed surplus 19,806 327,182
Warrants 939,647 321,673
Equity portion of convertible debentures 3,618,203 1,242,262
Retained earnings (deficit) 5,755,313 (1,696,683)
------------------------
30,609,437 7,909,974
------------------------

40,547,009 46,902,879
------------------------
------------------------


VGS Seismic Canada Inc.
Statements of Operations and Retained Earnings (Deficit)
(Continuation of VGS Database International Inc.)
---------------------------------------------------------------------------
Six months Year
ended ended
December 31, June 30,
2006 2006
$ $
Revenue
Data acquisition 20,835,183 -
Data sales 2,852,778 471,621
brokerage and other 189,583 607,915
--------------------------
23,877,544 1,079,536
--------------------------

Expenses
Amortization 12,755,323 554,893
Interest on long-term debt 1,122,626 353,478
Reverse take-over costs 833,927 -
General and administrative 671,607 940,087
Sales commissions 537,790 452,120
Consulting and professional fees 394,810 93,757
Stock-based compensation 30,203 329,003
Advertising and promotion 25,581 52,841
--------------------------
16,371,867 2,776,179
--------------------------

Income (loss) for the period before income taxes 7,505,677 (1,696,643)

Income taxes - Current 53,681 -
--------------------------

Net income (loss) for the period 7,451,996 (1,696,643)

Deficit - Beginning of period (1,696,683) (40)
--------------------------

Retained earnings (deficit) - End of period 5,755,313 (1,696,683)
--------------------------
--------------------------

Earnings (loss) per share
Basic 0.40 (0.10)
Diluted 0.24 (0.10)


VGS Seismic Canada Inc.
Statements of Cash Flows
(Continuation of VGS Database International Inc.)
---------------------------------------------------------------------------
Six months
ended Year ended
December 31, June 30,
2006 2006
$ $
Cash provided by (used in)

Operating activities
Net income (loss) for the period 7,451,996 (1,696,643)
Items not affecting cash
Amortization of seismic database libraries 12,636,313 459,679
Amortization of property and equipment 46,567 51,996
Amortization of deferred financing costs 72,443 43,218
Stock based compensation 30,203 329,003
Accretion of convertible debentures 594,680 151,754
Common shares issued for services 76,960 -
--------------------------
20,909,162 (660,993)
Net change in non-cash working capital items
Accounts receivable 1,881,690 (2,603,586)
GST receivable 988,410 (16,030)
Prepaid expenses and deposits 51,195 (60,456)
Accounts payable and accrued liabilities (12,923,656) 1,766,780
Deferred revenue (20,690,193) 21,187,076
Income taxes payable 53,681 -
--------------------------
(9,729,711) 19,612,791
--------------------------

Financing activities
Issue of common shares 12,288,125 7,360,606
Deferred financing costs (255,490) (446,803)
Due to related party (2,048) (31)
Due from related party (40,000) -
Issue of convertible debentures 5,000,000 5,000,000
Repayment of office condominium mortgage (1,088) (259,776)
Proceeds from office condominium mortgage 301,317 -
--------------------------
17,290,816 11,653,996
--------------------------

Investing activities
Purchase of property and equipment (1,235,346) (447,919)
Additions to seismic data libraries (8,695,290) (37,770,774)
Acquisition - 1,189,557
Non-cash working capital 984,491 7,686,183
--------------------------
(8,946,145) (29,342,953)
--------------------------

(Decrease) increase in cash and cash equivalents (1,385,040) 1,923,834

Cash and cash equivalents - Beginning of period 1,925,874 2,040
--------------------------

Cash and cash equivalents - End of period 540,834 1,925,874
--------------------------
--------------------------


The terms working capital and EBITDA are not measures that have any standardized meaning prescribed by Canadian Generally Accepted Accounting Principles (GAAP) and are considered non-GAAP measures. Therefore, these measures may not be comparable to similar measures presented by other issuers. Accordingly, these measures have been described and presented in this press release to provide shareholders and potential investors with additional information regarding the Company's financial position, results, liquidity, and its ability to generate future cash flows.

These non-GAAP measures are calculated as follows: working capital is current assets less current liabilities and EBITDA is used to describe earnings before any deduction for net interest, taxes, depreciation and amortization.

The Company trades on the TSX Venture Exchange under the symbol VGS.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • VGS Seismic Canada Inc.
    Scott Milroy
    Chief Financial Officer
    (403) 263-6050
    or
    VGS Seismic Canada Inc.
    Steven Vasey
    President and Chief Executive Officer
    (403) 263-6050