Item 1. Financial Statements
PARK PLACE ENERGY INC.
Consolidated Balance Sheets
|
|
|
|
|
|
|
|
|
|
|
March 31,
2016
|
|
|
December 31,
2015
|
|
|
|
(unaudited)
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
29,196
|
|
|
$
|
75,561
|
|
Receivables
|
|
|
143
|
|
|
|
583
|
|
Prepaid expenses and deposits
|
|
|
17,612
|
|
|
|
13,347
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
46,951
|
|
|
|
89,491
|
|
Oil and gas properties
|
|
|
2,769,557
|
|
|
|
2,701,182
|
|
Deposit for Tiway acquisition
|
|
|
500,000
|
|
|
|
500,000
|
|
Note receivable
|
|
|
41,063
|
|
|
|
39,490
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
3,357,571
|
|
|
$
|
3,330,163
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS EQUITY
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
$
|
263,647
|
|
|
$
|
119,006
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
263,647
|
|
|
|
119,006
|
|
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
Stockholders equity:
|
|
|
|
|
|
|
|
|
Common stock
|
|
|
|
|
|
|
|
|
Authorized: 250,000,000 shares, par value $0.00001
|
|
|
|
|
|
|
|
|
Issued and outstanding: 45,731,482 shares
|
|
|
457
|
|
|
|
457
|
|
Additional paid-in capital
|
|
|
17,289,158
|
|
|
|
17,258,619
|
|
Stock subscriptions and stock to be issued
|
|
|
375,000
|
|
|
|
350,000
|
|
Accumulated other comprehensive gain
|
|
|
965
|
|
|
|
1,190
|
|
Accumulated deficit
|
|
|
(14,571,656
|
)
|
|
|
(14,399,109
|
)
|
|
|
|
|
|
|
|
|
|
Total stockholders equity
|
|
|
3,093,924
|
|
|
|
3,211,157
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders equity
|
|
$
|
3,357,571
|
|
|
$
|
3,330,163
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements.
3
PARK PLACE ENERGY INC.
Consolidated Statements of Operations
(unaudited)
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|
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|
Three Months Ended
March 31,
|
|
|
|
2016
|
|
|
2015
|
|
Expenses
|
|
|
|
|
|
|
|
|
General and administrative
|
|
$
|
177,528
|
|
|
$
|
216,431
|
|
|
|
|
|
|
|
|
|
|
Total expenses
|
|
|
177,528
|
|
|
|
216,431
|
|
|
|
|
|
|
|
|
|
|
Loss before other expenses
|
|
|
(177,528
|
)
|
|
|
(216,431
|
)
|
|
|
|
|
|
|
|
|
|
Other income (expenses)
|
|
|
|
|
|
|
|
|
Foreign exchange gain (loss)
|
|
|
4,981
|
|
|
|
(49,089
|
)
|
|
|
|
|
|
|
|
|
|
Total other income (expenses)
|
|
|
4,981
|
|
|
|
(49,089
|
)
|
|
|
|
|
|
|
|
|
|
Net loss for the period
|
|
$
|
(172,547
|
)
|
|
$
|
(265,520
|
)
|
|
|
|
|
|
|
|
|
|
Loss per share, basic and diluted
|
|
$
|
(0.00
|
)
|
|
$
|
(0.01
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding
|
|
|
49,827,636
|
|
|
|
45,725,535
|
|
See accompanying notes to consolidated financial statements.
PARK PLACE ENERGY INC.
Consolidated Statements of
Comprehensive Loss
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
2016
|
|
|
2015
|
|
Net loss for the period
|
|
$
|
(172,547
|
)
|
|
$
|
(265,520
|
)
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
Foreign currency cumulative translation adjustment
|
|
|
(225
|
)
|
|
|
643
|
|
|
|
|
|
|
|
|
|
|
Comprehensive loss for the period
|
|
$
|
(172,772
|
)
|
|
$
|
(264,877
|
)
|
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements.
4
PARK PLACE ENERGY INC.
Consolidated Statement of Stockholders Equity
(
unaudited
)
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Stock
|
|
|
Additional
paid-in capital
|
|
|
Stock
subscriptions
and stock
to be issued
|
|
|
Accumulated
other
comprehensive
income
|
|
|
Accumulated
deficit
|
|
|
Total
|
|
|
|
Shares
|
|
|
Amount
|
|
|
|
|
|
|
Balance, December 31, 2015
|
|
|
45,731,482
|
|
|
$
|
457
|
|
|
$
|
17,258,619
|
|
|
$
|
350,000
|
|
|
$
|
1,190
|
|
|
$
|
(14,399,109
|
)
|
|
$
|
3,211,157
|
|
Stock subscriptions received
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
Stock-based compensation expense
|
|
|
|
|
|
|
|
|
|
|
18,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,200
|
|
Capitalized stock based compensation
|
|
|
|
|
|
|
|
|
|
|
12,339
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,339
|
|
Currency translation adjustment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(225
|
)
|
|
|
|
|
|
|
(225
|
)
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(172,547
|
)
|
|
|
(172,547
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2016
|
|
|
45,731,482
|
|
|
$
|
457
|
|
|
$
|
17,289,158
|
|
|
$
|
375,000
|
|
|
$
|
965
|
|
|
$
|
(14,571,656
|
)
|
|
$
|
3,093,924
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying notes to consolidated financial statements.
5
PARK PLACE ENERGY INC.
Consolidated Statements of Cash Flows
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
2016
|
|
|
2015
|
|
Operating activities:
|
|
|
|
|
|
|
|
|
Net loss for the period
|
|
$
|
(172,547
|
)
|
|
$
|
(265,520
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
|
|
|
|
|
Stock-based compensation
|
|
|
18,200
|
|
|
|
10,375
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Receivables
|
|
|
440
|
|
|
|
2,858
|
|
Prepaid expenses and deposits
|
|
|
(4,265
|
)
|
|
|
(1,296
|
)
|
Accounts payable and accrued liabilities
|
|
|
99,976
|
|
|
|
(57,175
|
)
|
|
|
|
|
|
|
|
|
|
Net cash used in operating activities
|
|
|
(58,196
|
)
|
|
|
(310,758
|
)
|
|
|
|
|
|
|
|
|
|
Investing activities:
|
|
|
|
|
|
|
|
|
Issuance of note receivable
|
|
|
(1,573
|
)
|
|
|
|
|
Oil and gas properties expenditures
|
|
|
(11,371
|
)
|
|
|
(97,599
|
)
|
|
|
|
|
|
|
|
|
|
Net cash used in investing activities
|
|
|
(12,944
|
)
|
|
|
(97,599
|
)
|
|
|
|
|
|
|
|
|
|
Financing activities:
|
|
|
|
|
|
|
|
|
Proceeds from stock subscriptions received
|
|
|
25,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by financing activities
|
|
|
25,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
(225
|
)
|
|
|
643
|
|
|
|
|
|
|
|
|
|
|
Decrease in cash
|
|
|
(46,365
|
)
|
|
|
(407,714
|
)
|
Cash, beginning of period
|
|
|
75,561
|
|
|
|
1,539,439
|
|
|
|
|
|
|
|
|
|
|
Cash, end of period
|
|
$
|
29,196
|
|
|
$
|
1,131,725
|
|
|
|
|
|
|
|
|
|
|
Non-cash investing and financing activities:
|
|
|
|
|
|
|
|
|
Oil and gas expenditures included in accounts payable
|
|
$
|
44,665
|
|
|
$
|
19,678
|
|
Restricted stock issued for oil and gas properties
|
|
$
|
19,059
|
|
|
$
|
85,200
|
|
Stock issued for restricted stock units
|
|
$
|
|
|
|
$
|
46,116
|
|
See accompanying notes to consolidated financial statements.
6
PARK PLACE ENERGY INC.
Notes to the Consolidated Financial Statements
(unaudited)
1)
|
Summary of Significant Accounting Policies
|
|
(a)
|
Basis of Presentation
|
These consolidated financial statements are unaudited and have been
prepared from the books and records of Park Place Energy Inc. and its consolidated subsidiaries (Park Place, the Company, we, or our). In our opinion, all normal and recurring adjustments necessary for
a fair presentation of the financial position of the Company as of March 31, 2016, and the results of operations for the three months ended March 31, 2016 and 2015, and cash flows for the three months ended March 31, 2016 and 2015,
have been made in conformity with generally accepted accounting principles. All significant intercompany accounts and transactions have been eliminated. These interim financial statements and notes are condensed as permitted by the instructions to
Form 10-Q and should be read in conjunction with the audited consolidated financial statements of the Company included in its Form 10-K for the year ended December 31, 2015.
The Company computes loss per share of Company stock in accordance with ASC 260
(Earnings per Share), which requires presentation of both basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing the loss available to common shareholders (numerator)
by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock
using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes dilutive
potential shares if their effect is anti-dilutive. For the three months ended March 31, 2016 and 2015, the Company had 15,268,001 and 14,370,993 potentially dilutive shares outstanding that were excluded for the diluted EPS calculation,
respectively.
As shown in the accompanying consolidated financial statements, the Company has no revenues and has incurred continuous
losses from operations and had an accumulated deficit of $14,571,656 at March 31, 2016. These factors raise substantial doubt about the Companys ability to continue as a going concern. Management is actively pursuing new ventures to
increase revenues. In addition, the Company is currently seeking additional sources of capital to fund short term operations. The Company, however, is dependent upon its ability to secure equity and/or debt financing and there are no assurances that
the Company will be successful, therefore, without sufficient financing it would be unlikely for the Company to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of any
uncertainty as to the Companys ability to continue as a going concern. The financial statements also do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classifications of
liabilities that might be necessary should the Company be unable to continue as a going concern.
7
3.)
|
Oil and Gas Properties
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
2016
|
|
|
December 31,
2015
|
|
Unproven properties
|
|
|
|
|
|
|
|
|
Bulgaria
|
|
$
|
2,769,557
|
|
|
$
|
2,701,182
|
|
The Company holds a 98,205 acre oil and gas exploration claim in the Dobrudja Basin located in northeast
Bulgaria. The Company intends to conduct exploration for natural gas and test production activities over a five year period in accordance with or exceeding its minimum work program obligation. The Company intends to commence its work program efforts
once it receives all regular regulatory approvals of its work programs.
In April 2015, the Company loaned $38,570 to a Bulgarian company pursuant to a revolving credit facility, enabling such
Bulgarian company to buy and manage land in Bulgaria to be leased by the Company for future well sites. The credit facility has a maximum loan obligation of BGN 1,000,000 ($576,900 at March 31, 2016), bears interest at 6.32%, has a five-year
term and is secured by the land the Bulgarian company buys. Payment on the facility is due the earlier of the end of the five-year term (April 6, 2020) or demand by the Company. As of March 31, 2016 the outstanding balance on the loan
obligation was $41,063.
The Company entered into a share purchase agreement on December 22, 2015 to acquire the three subsidiaries of Tiway Oil
B.V. (Tiway), a company currently in bankruptcy in the Netherlands. These Tiway subsidiaries are oil and gas exploration and production companies operating in the Republic of Turkey. They own interests in 3 producing oil and gas fields,
one offshore and two onshore, as well as a number of exploration licenses and operate one of the onshore fields. Current production for the Tiway subsidiaries is about 430 Boe/d (barrels per day equivalent). The purchase price is $2.1 million USD
and the Company paid at signing a $500,000 deposit toward the purchase price. Prior to submitting the winning bid in the bankruptcy auction, the Company spent the prior 6 months actively gathering and evaluating a large amount of data derived from
earlier exploration and production activities on Tiway properties.
The transaction is subject to obtaining the approval of two regulatory
agencies in Turkey, the GDPA which regulates the oil and gas licenses and EMRA which regulates gas marketing. The applications plus supplementary materials have been submitted. During the period prior to closing, in consultation with the Tiway staff
and partners in the various fields, the Company has prepared work programs for 2016 and into the future.
The transaction was scheduled for
closing April 28, 2016, that date has been extended until May 26, 2016 to allow sufficient time to secure the approvals from the respective regulatory agencies. To facilitate closing, the Company has formed a new wholly owned subsidiary,
Park Place Energy (Bermuda) Ltd. which will become the acquirer of the shares of the Tiway subsidiaries
In March 2016, the Company received subscriptions for 250,000 shares of common stock at $0.10 per share for total proceeds
of $25,000 which is included in stock subscriptions received.
8
The following table summarizes the Companys stock options as of March 31, 2016.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
of options
|
|
|
Weighted
average
exercise
price
|
|
|
Weighted
average
fair
value
|
|
|
Aggregate
intrinsic
value
|
|
Outstanding, December 31, 2015
|
|
|
2,250,000
|
|
|
$
|
0.17
|
|
|
$
|
0.14
|
|
|
$
|
|
|
Granted
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expired
|
|
|
(100,000
|
)
|
|
$
|
0.10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding, March 31, 2016
|
|
|
2,150,000
|
|
|
$
|
0.17
|
|
|
$
|
0.14
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional information regarding stock options as of March 31, 2016, is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding
|
|
Exercisable
|
Range of
exercise prices
|
|
Number
of shares
|
|
Weighted
average
remaining
contractual
life
(years)
|
|
Weighted
average
exercise price
|
|
Number
of shares
|
|
Weighted
average
exercise price
|
$0.10
|
|
950,000
|
|
1.7
|
|
$ 0.10
|
|
950,000
|
|
$ 0.10
|
$0.14
|
|
150,000
|
|
2.0
|
|
$ 0.14
|
|
150,000
|
|
$ 0.14
|
$0.20
|
|
100,000
|
|
0.8
|
|
$ 0.20
|
|
50,000
|
|
$ 0.20
|
$0.23-0.235
|
|
850,000
|
|
0.6
|
|
$ 0.23
|
|
825,000
|
|
$ 0.23
|
$0.28
|
|
100,000
|
|
1.3
|
|
$ 0.28
|
|
50,000
|
|
$ 0.28
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,150,000
|
|
1.3
|
|
$ 0.17
|
|
2,025,000
|
|
$ 0.16
|
|
|
|
|
|
|
|
|
|
|
|
There was no compensation expense related to stock options recognized during the three months ended
March 31, 2016 and 2015. At March 31, 2016, the Company had $25,130 in unrecognized compensation expense related to stock options that will be expensed through January 2017.
8.)
|
Restricted Stock Units
|
|
|
|
|
|
|
|
|
|
|
|
Number of
restricted stock
units
|
|
|
Weighted average
fair value per
award
|
|
Balance, December 31, 2015
|
|
|
2,118,001
|
|
|
$
|
0.18
|
|
Issued
|
|
|
|
|
|
$
|
|
|
Vested
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2016
|
|
|
2,118,001
|
|
|
$
|
0.18
|
|
|
|
|
|
|
|
|
|
|
For the three months ended March 31, 2016 and 2015, restricted stock expense recorded as stock-based
compensation was $18,200 and $10,375, respectively, and capitalized stock based compensation was $12,339 and $85,200, respectively.
At
March 31, 2016 unrecognized compensation expense related to RSUs totaled $81,435 that will be recognized over a weighted average period of approximately eight months.
The Companys operations are in the resource industry in Bulgaria with head offices in the United States and a
satellite office in Sofia, Bulgaria. The Company operates as a single reportable segment and its oil and gas properties are located in Bulgaria.
9
The Company is subject to United States federal and state income taxes at a rate of 34%. The reconciliation of the provision
for income taxes at the United States federal statutory rate compared to the Companys income tax expense as reported is as follows:
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
|
|
|
2016
|
|
|
2015
|
|
Benefit at statutory rate
|
|
$
|
(58,666
|
)
|
|
$
|
(90,277
|
)
|
Permanent differences and other
|
|
|
134
|
|
|
|
161
|
|
Valuation allowance change
|
|
|
58,532
|
|
|
|
90,116
|
|
|
|
|
|
|
|
|
|
|
Income tax provision
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
10
Item 2.
|
Managements Discussion and Analysis of Financial Condition and Results of Operations
|
Managements Discussion and Analysis of Financial Condition and Results of Operations (MD&A) is intended to provide readers of our
financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity, and certain other factors that may affect our future results. Our MD&A is presented in the following
sections:
|
|
|
Liquidity and Capital Resources
|
|
|
|
Recent Accounting Pronouncements
|
|
|
|
Forward-Looking Statements.
|
Our MD&A should be read in conjunction with our unaudited financial
statements of Park Place Energy Inc. (Park Place, Company, we, and our) and related Notes in Part I, Item 1 of the Quarterly Report on Form 10-Q and Item 8, Financial Statements and
Supplementary Data, of the Annual Report on Form 10-K for the year ended December 31, 2015.
Our website can be found at www.parkplaceenergy.com. Our
Annual Reports on Form 10-K, Quarterly Reports on
Form 10-Q,
Current Reports on Form 8-K and amendments to those reports filed with or furnished to the U.S. Securities and Exchange Commission
(SEC), pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (Exchange Act), can be accessed free of charge by linking directly from our website under the Investor RelationsSEC
Filings caption to the SECs Edgar Database.
Executive Summary
Park Place is an energy company engaged in oil and gas exploration in Bulgaria.
On November 12, 2015, Park Place became the successor registrant to Park Place Energy Corp, a Nevada corporation (PPEC Nevada),
following a reincorporation merger, approved by the stockholders of PPEC Nevada to provide a better organizational structure for future acquisitions and management of operations. See Park Places Annual Report on
Form 10-K
for the year ended December 31, 2015 for more information on the reincorporation.
The Company
holds a 98,205 acre oil and gas exploration claim in the Dobrudja Basin located in northeast Bulgaria. The Company intends to conduct exploration for natural gas and test production activities over a five year period in accordance with or exceeding
its minimum work program obligation. The Company intends to commence its work program efforts once it receives all regular regulatory approvals of its work programs.
On August 26, 2014, the Bulgarian environmental agency approved the Companys overall work program and first year annual work program. A number of
parties appealed the decision of the environmental agency and an appeal proceeding was commenced before an administrative judge panel. Since then, there have been several hearings resulting in a number of appellants being dismissed and empaneling a
panel of experts to confirm the correctness of the approval by the environmental agency. The next hearing has not yet been scheduled. The Company is participating in that proceeding as an interested party. The Company is continuing its data
gathering, evaluation and planning, is acquiring the land for future well sites and is performing an environmental baseline survey of the license area. The initial term of the License Agreement will not begin until (i) the appeal proceeding is
completed and the decision upheld and (ii) the Bulgarian energy agency has approved the Companys work programs.
The Company entered into a
share purchase agreement on December 22, 2015 to acquire the three subsidiaries of Tiway Oil B.V. (Tiway), a company currently in bankruptcy in the Netherlands. These Tiway subsidiaries are oil and gas exploration and
production companies operating in the Republic of Turkey. They own interests in 3 producing oil and gas fields, one offshore and two onshore, as well as a number of exploration licenses and operate one of the onshore fields. Current production for
the Tiway subsidiaries is about 430 Boe/d (barrels per day equivalent). The purchase price is $2.1 million USD and the Company paid at signing a $500,000 deposit toward the purchase price. Prior to submitting the winning bid in the bankruptcy
auction, the Company spent the prior 6 months actively gathering and evaluating a large amount of data derived from earlier exploration and production activities on Tiway properties.
11
The transaction is subject to obtaining the approval of two regulatory agencies in Turkey, the GDPA (which
regulates the oil and gas licenses) and EMRA (which regulates gas marketing). The applications, plus supplementary materials, have been submitted. During the period prior to closing, in consultation with the Tiway staff and partners in the various
fields, the Company has prepared work programs for 2016 and into the future.
The transaction was originally scheduled for closing April 28, 2016,
that date has been extended until May 26, 2016 to allow sufficient time to secure the approvals from the respective regulatory agencies. To facilitate closing, the Company has formed a new wholly owned subsidiary, Park Place Energy (Bermuda)
Ltd. which will become the acquirer of the shares of the Tiway subsidiaries.
Results of Operations
The following summary of our results of operations should be read in conjunction with our unaudited consolidated financial statements for the periods ended
March 31, 2016 and 2015, which are included herein.
Revenue
We are a pre-revenue stage company, and our future revenues depend upon successful exploration of oil and gas assets.
Expenses
Our general and administrative expenses
for the three months ended March 31, 2016 were $177,528 compared to $216,431 for the three months ended March 31, 2015. The decrease was primarily due to reduced consulting and professional services costs.
Other Income (Expenses)
For the three months
ended March 31, 2016, other income was $4,981 due to a foreign exchange gain. For the three months ended March 31, 2015, other expense was a loss of $49,089 attributable to foreign exchange losses.
Loss
Our net loss for the three months ended
March 31, 2016 was $172,547 compared to a loss of $265,520 for the three months ended March 31, 2015. The decrease in net loss was a result of decreased activities in all areas of operations and the factors described above.
12
Liquidity and Capital Resources
The following table summarizes our liquidity position:
|
|
|
|
|
|
|
|
|
|
|
March 31, 2016
(Unaudited)
|
|
|
December 31,
2015
|
|
Cash
|
|
$
|
29,196
|
|
|
$
|
75,561
|
|
Working deficit
|
|
|
(216,696
|
)
|
|
|
(29,515
|
)
|
Total assets
|
|
|
3,357,571
|
|
|
|
3,330,163
|
|
Total liabilities
|
|
|
263,647
|
|
|
|
119,006
|
|
Stockholders equity
|
|
|
3,093,924
|
|
|
|
3,211,157
|
|
Cash Used in Operating Activities
We used net cash of $58,196 in operating activities for the three months ended March 31, 2016 compared to $310,758 for the three months ended
March 31, 2015. The decrease was due to decreased activities in all areas of operations.
Cash Flow from Investing Activities
Net cash used in investing activities for the three months ended March 31, 2016 was $12,944 compared to $97,599 for the three months ended March 31,
2015. This decrease was primarily due to decreased expenditures on the Bulgarian project.
Cash Provided by Financing Activities
We have funded our business to date primarily from sales of our common stock through private placements. During the three months ended March 31, 2016, we
received cash of $25,000 for stock subscriptions. We did not have any common stock sales during the three months ended March 31, 2015.
Future
Operating Requirements
Based on our current plan of operations, we estimate that we will require approximately $3.6 million to pursue our plan of
operations over the next 12 months: $1.6 million to close the acquisition of the Tiway companies, $1.1 million for planned work programs on assets owned by the Tiway companies post-acquisition and $900,000 for ongoing operating costs and corporate
expenditures.
The Company has no revenues and has incurred continuous losses from operations and had an accumulated deficit of $14,571,656 at
March 31, 2016. These factors raise substantial doubt about the Companys ability to continue as a going concern. Management is actively pursuing new ventures to increase revenues. In addition, the Company is currently seeking additional
sources of capital to fund short term operations and fund the Tiway acquisition. The Company, however, is dependent upon its ability to secure equity and/or debt financing and there are no assurances that the Company will be successful, therefore,
without sufficient financing it would be unlikely for the Company to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of any uncertainty as to the Companys ability to
continue as a going concern. The financial statements also do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classifications of liabilities that might be necessary should the
Company be unable to continue as a going concern.
13
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
Forward-Looking Information
Certain statements in
this Quarterly Report on Form 10-Q constitute forward-looking statements within the meaning of applicable U.S. securities legislation. Additionally, forward-looking statements may be made orally or in press releases, conferences,
reports, on our website or otherwise, in the future, by us or on our behalf. Such statements are generally identifiable by the terminology used such as plans, expects, estimates, budgets,
intends, anticipates, believes, projects, indicates, targets, objective, could, should, may or other similar words.
By their very nature, forward-looking statements require us to make assumptions that may not materialize or that may not be accurate. Forward-looking
statements are subject to known and unknown risks and uncertainties and other factors that may cause actual results, levels of activity and achievements to differ materially from those expressed or implied by such statements, including the factors
discussed under Item 1A. Risk Factors in our most recent Annual Report on Form 10-K. Such factors include, but are not limited to, the following: fluctuations in and volatility of the market prices for oil and natural gas products; the ability
to produce and transport oil and natural gas; the results of exploration and development drilling and related activities; global economic conditions, particularly in the countries in which we carry on business, especially economic slowdowns; actions
by governmental authorities including increases in taxes, legislative and regulatory initiatives related to fracture stimulation activities, changes in environmental and other regulations, and renegotiations of contracts; political uncertainty,
including actions by insurgent groups or other conflicts; the negotiation and closing of material contracts; future capital requirements and the availability of financing; estimates and economic assumptions used in connection with our acquisitions;
risks associated with drilling, operating and decommissioning wells; actions of third-party co-owners of interests in properties in which we also own an interest; our ability to effectively integrate companies and properties that we acquire; our
limited operating history; our history of operating losses; our lack of insurance coverage; and the other factors discussed in other documents that we file with or furnish to the U.S. Securities and Exchange Commission. The impact of any one factor
on a particular forward-looking statement is not determinable with certainty as such factors are interdependent upon other factors and our course of action would depend upon our assessment of the future, considering all information then available.
In that regard, any statements as to: future oil or natural gas production levels; capital expenditures; the allocation of capital expenditures to exploration and development activities; sources of funding for our capital expenditure programs;
drilling of new wells; demand for oil and natural gas products; expenditures and allowances relating to environmental matters; dates by which certain areas will be developed or will come on-stream; expected finding and development costs; future
production rates; ultimate recoverability of reserves, including the ability to convert probable and possible reserves to proved reserves; dates by which transactions are expected to close; future cash flows, uses of cash flows, collectability of
receivables and availability of trade credit; expected operating costs; changes in any of the foregoing and other statements using forward-looking terminology are forward-looking statements, and there can be no assurance that the expectations
conveyed by such forward-looking statements will, in fact, be realized.
Although we believe that the expectations conveyed by the forward-looking
statements are reasonable based on information available to us on the date such forward-looking statements were made, no assurances can be given as to future results, levels of activity, achievements or financial condition.
Readers should not place undue reliance on any forward-looking statement and should recognize that the statements are predictions of future results, which may
not occur as anticipated. Actual results could differ materially from those anticipated in the forward-looking statements and from historical results, due to the risks and uncertainties described above, as well as others not now anticipated. The
foregoing statements are not exclusive and further information concerning us, including factors that potentially could materially affect our financial results, may emerge from time to time. We do not intend to update forward-looking statements to
reflect actual results or changes in factors or assumptions affecting such forward-looking statements.
14