NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
|
1
|
ACCOUNTING
POLICIES AND ESTIMATES
|
The accompanying unaudited condensed
financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”)
for interim financial information with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, these unaudited
condensed financial statements do not include all of the information and disclosures required by U.S. GAAP for complete financial
statements. In the opinion of management, the accompanying unaudited condensed financial statements include all adjustments (consisting
only of normal recurring adjustments), which we consider necessary, for a fair presentation of those financial statements. The
results of operations and cash flows for the six months ended June 30, 2018 may not necessarily be indicative of results that may
be expected for any succeeding quarter or for the entire fiscal year. The information contained in this quarterly report on Form
10-Q should be read in conjunction with our audited financial statements included in our annual report on Form 10-K as of and for
the year ended December 31, 2017 as filed with the Securities and Exchange Commission (the “SEC”).
Significant accounting policies
are described in Note 2 to the consolidated financial statements included in Item 8 of our annual report on Form 10-K as of December
31, 2017.
The preparation of unaudited
consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions, which are
evaluated on an ongoing basis, that affect the amounts reported in the unaudited consolidated financial statements and accompanying
notes. Management bases its estimates on historical experience and on various other assumptions that it believes are reasonable
under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities
and the amounts of revenues and expenses that are not readily apparent from other sources. Actual results could differ from those
estimates and judgments. In particular, significant estimates and judgments include those related to: the estimated useful lives
for plant and equipment, the fair value of warrants and stock options granted for services or compensation, estimates of the probability
and potential magnitude of contingent liabilities, derivative liabilities, the valuation allowance for deferred tax assets due
to continuing operating losses, those related to revenue recognition and the allowance for doubtful accounts.
Making estimates requires management
to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation
or set of circumstances that existed at the date of the unaudited consolidated financial statements, which management considered
in formulating its estimate could change in the near-term due to one or more future confirming events. Accordingly, the actual
results could differ significantly from our estimates.
All amounts referred to in the
notes to the unaudited consolidated financial statements are in United States Dollars ($) unless stated otherwise.
|
b)
|
Principles of Consolidation
|
The unaudited consolidated financial
statements include the financial statements of the Company and its subsidiaries in which it has a majority voting interest. All
significant inter-company accounts and transactions have been eliminated in the unaudited consolidated financial statements. The
entities included in these unaudited consolidated financial statements are as follows:
Pledge Petroleum Corp –
Parent Company
Nova’s Energy USA Inc.
(wholly owned).
PLEDGE PETROLEUM CORP.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
|
1
|
ACCOUNTING
POLICIES AND ESTIMATES (continued)
|
|
c)
|
Recent Accounting Pronouncements
|
In June 2018, the FASB issued
ASU 2018-07, Compensation—Stock Compensation (Topic 718) Improvements to Nonemployee Share-Based Payment Accounting.
The amendments in this Update
expand the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. An
entity should apply the requirements of Topic 718 to nonemployee awards except for specific guidance on inputs to an option pricing
model and the attribution of cost (that is, the period of time over which share-based payment awards vest and the pattern of cost
recognition over that period). The amendments specify that Topic 718 applies to all share-based payment transactions in which a
grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment awards.
The amendments also clarify that Topic 718 does not apply to share-based payments used to effectively provide (1) financing to
the issuer or (2) awards granted in conjunction with selling goods or services to customers as part of a contract accounted for
under Topic 606, Revenue from Contracts with Customers.
The amendments in this Update
are effective for public business entities for fiscal years beginning after December 15, 2018, including interim periods within
that fiscal year. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2019, and
interim periods within fiscal years beginning after December 15, 2020. Early adoption is permitted, but no earlier than an entity’s
adoption date of Topic 606.
The impact of this ASU on the
Company’s financial statements is not expected to be material.
In July 2018, the FASB issued
ASU 2018-11, Leases (Topic 842) Targeted Improvements.
The amendments in this Update
provide entities with an additional (and optional) transition method to adopt the new leases standard. Under this new transition
method, an entity initially applies the new leases standard at the adoption date and recognizes a cumulative-effect adjustment
to the opening balance of retained earnings in the period of adoption consistent with preparers’ requests.
The amendments in this Update
provide lessors with a practical expedient, by class of underlying asset, to not separate non-lease components from the associated
lease component and, instead, to account for those components as a single component if the non-lease components otherwise would
be accounted for under the new revenue guidance (Topic 606) and both of the following are met: 1. The timing and pattern of transfer
of the non-lease component(s) and associated lease component are the same. 2. The lease component, if accounted for separately,
would be classified as an operating lease.
The amendments in this Update
related to separating components of a contract affect the amendments in Update 2016-02, which are not yet effective but can be
early adopted.
The Company is currently considering
the impact this ASU will have on its financial statements.
Any new accounting standards,
not disclosed above, that have been issued or proposed by FASB that do not require adoption until a future date are not expected
to have a material impact on the financial statements upon adoption.
PLEDGE PETROLEUM CORP.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
|
1
|
ACCOUNTING
POLICIES AND ESTIMATES (continued)
|
The preparation of unaudited
consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions, which are
evaluated on an ongoing basis, that affect the amounts reported in the unaudited consolidated financial statements and accompanying
notes. Management bases its estimates on historical experience and on various other assumptions that it believes are reasonable
under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities
and the amounts of revenues and expenses that are not readily apparent from other sources. Actual results could differ from those
estimates and judgments. In particular, significant estimates and judgments include those related to: the estimated useful lives
for plant and equipment, the fair value of warrants and stock options granted for services or compensation, estimates of the probability
and potential magnitude of contingent liabilities, derivative liabilities, the valuation allowance for deferred tax assets due
to continuing operating losses, those related to revenue recognition and the allowance for doubtful accounts.
Making estimates requires management
to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation
or set of circumstances that existed at the date of the unaudited consolidated financial statements, which management considered
in formulating its estimate could change in the near-term due to one or more future confirming events. Accordingly, the actual
results could differ significantly from our estimates.
Certain conditions may exist
as of the date the financial statements are issued, which may result in a loss to the Company, but which will only be resolved
when one or more future events occur or fail to occur. The Company’s management assesses such contingent liabilities, and
such assessment inherently involves an exercise of judgment.
If the assessment of a contingency
indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the
estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potential
material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of
the contingent liability, together with an estimate of the range of possible loss if determinable and material would be disclosed.
Loss contingencies considered to be remote by management are generally not disclosed unless they involve guarantees, in which case
the guarantee would be disclosed.
|
f)
|
Cash and Cash Equivalents
|
The Company considers all highly
liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents. At June 30,
2018 and December 31, 2017, respectively, the Company had no cash equivalents.
The Company assesses credit
risk associated with cash by periodically evaluating the credit quality of its primary financial institution. The balance at times
may exceed federally insured limits. At June 30, 2018, the Company had cash balances of $379,232, of which $79,435 are not covered
by the federally insured limits.
PLEDGE PETROLEUM CORP.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
|
1
|
ACCOUNTING
POLICIES AND ESTIMATES (continued)
|
Parties are considered to be
related to the Company if the parties that, directly or indirectly, through one or more intermediaries, control, are controlled
by, or are under common control with the Company, or own in aggregate, on a fully diluted basis 5% or more of the Company’s
stock. Related parties also include principal owners of the Company, its management, members of the immediate families of principal
owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly
influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented
from fully pursuing its own separate interests. The Company discloses all related party transactions. All transactions are recorded
at fair value of the goods or services exchanged. Property purchased from a related party is recorded at the cost to the related
party and any payment to or on behalf of the related party in excess of the cost is reflected as a distribution to related party.
The Company has cash balances
of $379,232 as of June 30, 2018, which is not sufficient to meet current expenses for at least the next twelve month period. On
March 23, 2018, after obtaining approval of the majority shareholder and the majority of the minority of the shareholders the Company
sold substantially all of its assets for $650,000 and simultaneously therewith the entire shareholding of the majority shareholder,
Ervington, was purchased by the Company for gross proceeds of $8,500,000. The ability of the Company to conclude an acquisition
based on current cash balances and continue as a going concern is uncertain.
Prepaid expenses consisted of the following:
|
|
June 30,
2018
|
|
|
December 31,
2017
|
|
|
|
|
|
|
|
|
Prepaid insurance
|
|
$
|
13,762
|
|
|
$
|
22,483
|
|
Prepaid professional fees
|
|
|
2,500
|
|
|
|
3,333
|
|
|
|
$
|
16,262
|
|
|
$
|
25,816
|
|
Plant and Equipment consisted of the following:
|
|
June 30,
2018
|
|
|
December 31,
2017
|
|
|
|
Cost
|
|
|
Accumulated
depreciation
|
|
|
Net book
value
|
|
|
Net book
value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Furniture and equipment
|
|
|
6,700
|
|
|
|
(3,127
|
)
|
|
|
3,573
|
|
|
|
4,243
|
|
Computer equipment
|
|
|
11,130
|
|
|
|
(8,293
|
)
|
|
|
2,837
|
|
|
|
4,692
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
17,830
|
|
|
$
|
(11,420
|
)
|
|
$
|
6,410
|
|
|
$
|
8,935
|
|
Depreciation expense was $1,263
and $1,311 for the three months ended June 30, 2018 and 2017, respectively, and $2,525 and $2,866 for the six months ended June
30, 2018 and 2017, respectively.
On March 23, 2018, the Company
concluded an Asset Purchase Agreement with an affiliate (the “Purchaser”) of Ervington Investment Limited, the previous
holder of a majority of the Company’s outstanding voting securities, pursuant to which the Company sold to the Purchaser
substantially all of its assets, including all pertinent intellectual property rights, comprising its business of implementing
its plasma pulse technology, for $650,000 (the “Asset Sale”).
The Asset Sale is to a related
party and the profit realized of $650,000 was credited to additional paid in capital.
PLEDGE PETROLEUM CORP.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
|
5
|
ACCRUED
EXPENSES AND OTHER PAYABLES
|
Accrued expenses and other payables consisted of
the following:
|
|
June 30,
2018
|
|
|
December 31,
2017
|
|
|
|
|
|
|
|
|
Royalties Payable
|
|
$
|
-
|
|
|
$
|
14,653
|
|
Other
|
|
|
6,654
|
|
|
|
13,199
|
|
|
|
$
|
6,654
|
|
|
$
|
27,852
|
|
The Company has authorized 500,000,000
common shares with a par value of $0.001 each. The Company has issued 298,558,931 and 268,558,931 shares of common stock as of
June 30, 2018 and December 31, 2017 respectively, and has outstanding 234,256,464 and 268,558,931 shares of common stock as of
June 30, 2018 and December 31, 2017, respectively.
On March 23, 2018, the Company
concluded an Asset Sale agreement as discussed in note 5 above, simultaneously with the Asset Sale Agreement, the Company concluded
a Share Repurchase Agreement with Ervington to repurchase all of the outstanding securities held by Ervington for $8,500,000 (the
“Share Repurchase”). The repurchase constituted a change of control. Upon conclusion of the Repurchase Agreement,
Ivan Persiyanov, resigned from all positions he holds as an officer and director of the Company and its subsidiaries. After the
completion of the Asset Sale, the Company ceased all activities related to its existing business while evaluating other business
opportunities, which include potentially acquiring a technology and oilfield services business, of which two of the Company’s
current directors (Messrs. Huemoeller and Zotos) own a minority equity interest. The Company has not entered into an agreement
with any potential acquisition candidate and has only been in the early stages of discussion.
In terms of the above, the Company
repurchased 64,302,467 shares of common stock from Ervington, which shares are being retained as treasury shares.
On May 2, 2018 the Company issued
30,000,000 restricted shares of common stock to the directors of the Company as compensation for services rendered. These shares
vest as to one third immediately, one third on May 2, 2019 and one third on May 2, 2020.
The restricted stock granted and exercisable at June
30, 2018 is as follows:
|
|
|
Restricted Stock Granted
|
|
Restricted Stock Vested
|
Grant date price
|
|
|
Number
granted
|
|
Weighted
average exercise
price
|
|
|
Number
vested
|
|
Weighted
average exercise
price
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0.01
|
|
|
30,000,000
|
|
$
|
0.01
|
|
|
30,000,000
|
|
$
|
0.01
|
|
The Company recorded an expense of $116,667 and
$0 for the three and six months ended June 30, 2018 and 2017, respectively, related to the restricted stock options granted to
the directors.
The Company has 10,000,000
authorized preferred shares with a par value of $0.001 each, with 5,000,000 preferred shares designated as Series A-1 Convertible
Preferred Stock (“Series A-1 Shares”), 500,000 preferred shares designated as Series B Preferred Stock and 4,500,000
preferred shares designated as Series C Preferred Stock.
In terms of the Share Repurchase
Agreement entered into, discussed above, the Company repurchased 3,137,500 shares of Series A-1 Preferred Stock and 4,500,000 shares
of Series C Preferred Stock from Ervington, which shares are being retained as treasury shares.
|
i)
|
Series A-1 Convertible Preferred Stock
|
The Company has designated 5,000,000
preferred shares as Series A-1 Convertible Preferred Stock (“Series A-1 Shares”), with 3,137,500 shares of Series
A-1 Stock issued as of June 30, 2018 and December 31, 2017, and has outstanding 0 and 3,137,500 shares of Series A-1 Stock as
of June 30, 2018 and December 31, 2017, respectively.
PLEDGE PETROLEUM CORP.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
|
6
|
STOCKHOLDERS’
EQUITY (continued)
|
|
b)
|
Preferred stock (continued)
|
|
ii)
|
Series B Convertible Preferred Stock
|
The Company has designated 500,000
preferred shares as Series B Convertible Preferred Stock (“Series B Shares”), with 40,000 Series B Shares issued and
outstanding as of June 30, 2018 and December 31, 2017, which are convertible into 4,000,000 shares of common stock.
The rights, privileges and preferences
of the Series B Shares are summarized as follows:
Conversion
The holders of the Series B Preferred
Shares have conversion rights as follows:
|
(a)
|
Each
share of the Series B Shares is convertible at any time prior to the issuance of a redemption notice by the Company into such
number of shares of Common Stock by dividing the Stated value ($10) of the Series B Shares by $0.10 and is subject to adjustment
for dividends or distributions made in common stock, the issue of securities convertible into common stock, stock splits, reverse
stock splits, or reclassifications of common stock. No adjustments will be made to the conversion rights or conversion price for
any reorganization other than to be entitled to receive the same benefits as if the shares were converted immediately prior to
such reorganization. No conversion will take place if the holder of the Series B Shares will beneficially own in excess of 4.99%
of the shares of Common Stock outstanding immediately after conversion. As of the date hereof, each Series B Share converts into
100 shares of common stock.
|
|
(b)
|
The conversion right of the holders of Series B Shares are exercised by the surrender of the certificates representing shares to be converted to the Company, accompanied by written notice electing conversion.
|
|
(c)
|
No fractional shares of Common Stock or script will be issued upon conversion of Series B Shares. The Company will pay a cash adjustment in respect to such fractional interest based upon the fair value of a share of Common Stock, as determined in good faith by the Company’s Board of Directors.
|
|
(d)
|
All shares of Common Stock issued upon conversion of Series B Shares will upon issuance be validly issued,
fully paid and non-assessable. All certificates representing Series B Shares surrendered for conversion will be appropriately cancelled
on the books of the Company and the shares so converted represented by such certificates will be restored to the status of authorized
but unissued shares of preferred stock of the Company.
|
Company Redemption
The Company has the right, at any
time after the date the Series B Shares have been issued, to redeem all or a portion of any Holder's Series B Shares at a price
per Series B Share equal to the issue price per Series B Share multiplied by 120%
Voting Rights
Each holder of Series B Shares is entitled to vote on all matters submitted to a vote of the stockholders
of the Company and is entitled to votes equal to the number of shares of Common Stock into which Series B Shares could be converted,
and the holders of shares of Series B Shares and Common Stock will vote together as a single class on all matters submitted to
the stockholders of the Company.
PLEDGE PETROLEUM CORP.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
|
6
|
STOCKHOLDERS’
EQUITY (continued)
|
|
b)
|
Preferred stock (continued)
|
|
ii)
|
Series B Convertible Preferred Stock (continued)
|
Dividends
|
(a)
|
The holders of the Series B Shares are entitled to receive cumulative dividends at the rate of eight percent per annum of the issue price per share, accrued daily and payable annually in arrears on December 31st of each year (“Dividend Date”). Such dividends accrue on any given share from the day of original issuance of such share. Such dividends are cumulative, whether or not declared by the Board of Directors, but are non-compounding.
|
|
(b)
|
Any dividend payable on a dividend payment date may be paid, at the option of the Company, either (i) in cash or (ii) in shares of common stock at an issue price of $0.10 per common share.
|
|
(c)
|
Nothing contained herein is deemed to establish or require any payment or other charges in excess of the maximum permitted by applicable law.
|
|
(d)
|
In the event that pursuant to applicable law or contract the Company is prohibited or restricted from paying in cash the full dividends to which the holders of the Series B Shares are entitled, the cash amount available pursuant to applicable law or contract will be distributed among the holders of the Series B Shares ratably in proportion to the full amounts to which they would otherwise be entitled and any remaining amount due to holders of the Series B Shares will be payable in cash.
|
Liquidation Preference
In the event of any liquidation,
dissolution or winding up of the Company, either voluntary or involuntary, the holders of the Series B Shares are entitled to receive,
prior and in preference to any distribution of any assets of the Company to the holders of any other preferred stock of the Company
and subordinate to any distribution to the Series A-1 Shares, and prior and in preference to any distribution of any assets of
the Company to the holders of the Common Stock, the amount of 120% of the issue price per share. In addition, the Series B holder
has agreed to vote to subordinate the series B Preferred stock liquidation preferences to the Series C Preferred stock preferences.
No Circumvention
The Company may not amend its certificate
of incorporation, or participate in any reorganization, sale or transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action for the purpose of avoiding or seeking to avoid the observance or performance
of any of the terms to be observed or performed by the Company.
The Company has undeclared dividends
on the Series B Preferred stock amounting to $181,479 as of June 30, 2018. If the dividends are paid in stock, the beneficial conversion
feature of these undeclared dividends will be recorded upon the declaration of these dividends. The computation of loss per common
share for the six months ended June 30, 2018 takes into account these undeclared dividends.
PLEDGE PETROLEUM CORP.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
|
6
|
STOCKHOLDERS’
EQUITY (continued)
|
|
b)
|
Preferred stock (continued)
|
|
iii)
|
Series C Convertible Preferred Stock
|
The Company has designated 4,500,000
preferred shares as Series C Convertible Preferred Stock (“Series C Shares”), with 4,500,000 shares of Series C Stock
issued as of June 30, 2018 and December 31, 2017, and 0 and 4,500,000 shares of Series C Stock outstanding as of June 30, 2018
and December 31, 2017, respectively.
The Company’s Board of
Directors approved the Company’s 2008 Stock Option Plan (the “Stock Plan”) for the issuance of up to 5,000,000
shares of common stock to be granted through incentive stock options, nonqualified stock options, stock appreciation rights, dividend
equivalent rights, restricted stock, restricted stock units and other stock-based awards to officers, other employees, directors
and consultants of the Company and its subsidiaries. After the reverse stock split in August 2012, a total of 100,000 shares were
available for grant. Subsequent to the reverse split the Board of Directors approved an increase in the number of awards available
for grant to 2,100,000 shares. The exercise price of stock options under the Stock Plan is determined by the Board of Directors,
and may be equal to or greater than the fair market value of the Company’s common stock on the date the option is granted.
Options become exercisable over various periods from the date of grant, and generally expire ten years after the grant date.
At June 30, 2018 and December
31, 2017 there were 380,950 Plan options issued, and 342,854 and 380,950 outstanding, respectively, under the Stock Option Plan.
The vesting provisions for these
stock options are determined by the board of directors at the time of grant, there are no unvested options outstanding as of June
30, 2018.
No options were issued during
the six months ended June 30, 2018 and the year ended December 31, 2017.
In the event of the employees’
termination, the Company will cease to recognize compensation expense.
A summary of all of our option
activity during the period January 1, 2017 to June 30, 2018 is as follows:
|
|
No. of shares
|
|
|
Exercise price
per share
|
|
|
Weighted
average exercise
price
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding January 1, 2017
|
|
|
3,380,950
|
|
|
$
|
0.08 to $13.50
|
|
|
$
|
0.18
|
|
Granted – non-plan options
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Forfeited/cancelled
|
|
|
(3,000,000
|
)
|
|
$
|
0.08
|
|
|
|
0.08
|
|
Exercised
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Outstanding December 31, 2017
|
|
|
380,950
|
|
|
$
|
0.08 to $13.50
|
|
|
$
|
0.90
|
|
Granted - non-plan options
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Forfeited/cancelled
|
|
|
(38,096
|
)
|
|
|
0.63
|
|
|
|
-
|
|
Exercised
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Outstanding June 30, 2018
|
|
|
342,854
|
|
|
$
|
0.51 to $13.50
|
|
|
$
|
0.93
|
|
Stock options outstanding as
of June 30, 2018 and December 31, 2017 as disclosed in the above table, have an intrinsic value of $0 and $0, respectively.
PLEDGE PETROLEUM CORP.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
|
6
|
STOCKHOLDERS’
EQUITY (continued)
|
|
c)
|
Stock Options (continued)
|
The options outstanding and exercisable at June 30,
2018 are as follows:
|
|
|
Options
outstanding
|
|
|
Options
exercisable
|
|
Exercise price
|
|
|
No.
of shares
|
|
|
Weighted
average
remaining
years
|
|
|
Weighted
average exercise
price
|
|
|
No.
of shares
|
|
|
Weighted
average exercise
price
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
13.50
|
|
|
|
3,480
|
|
|
|
0.96
|
|
|
|
|
|
|
|
3,480
|
|
|
|
|
|
$
|
12.50
|
|
|
|
2,000
|
|
|
|
2.28
|
|
|
|
|
|
|
|
2,000
|
|
|
|
|
|
$
|
8.50
|
|
|
|
500
|
|
|
|
3.00
|
|
|
|
|
|
|
|
500
|
|
|
|
|
|
$
|
5.00
|
|
|
|
14,800
|
|
|
|
3.29
|
|
|
|
|
|
|
|
14,800
|
|
|
|
|
|
$
|
0.65
|
|
|
|
36,924
|
|
|
|
4.75
|
|
|
|
|
|
|
|
36,924
|
|
|
|
|
|
$
|
0.51
|
|
|
|
285,150
|
|
|
|
1.79
|
|
|
|
|
|
|
|
285,150
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
342,854
|
|
|
|
2.17
|
|
|
|
0.93
|
|
|
|
342,854
|
|
|
|
0.93
|
|
The Company has recorded an
expense of $0 and $18,066 for the six months ended June 30, 2018 and 2017, respectively relating to options issued.
The warrants outstanding and exercisable at June
30, 2018 are as follows:
|
|
|
Warrants
outstanding
|
|
|
Warrants
exercisable
|
|
Exercise price
|
|
|
No.
of shares
|
|
|
Weighted
average
remaining
years
|
|
|
Weighted
average exercise
price
|
|
|
No.
of shares
|
|
|
Weighted
average
exercise price
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0.30
|
|
|
|
375,000
|
|
|
|
0.33
|
|
|
|
|
|
|
|
375,000
|
|
|
|
|
|
$
|
0.25
|
|
|
|
1,751,667
|
|
|
|
0.99
|
|
|
|
|
|
|
|
1,751,667
|
|
|
|
|
|
$
|
0.15
|
|
|
|
525,500
|
|
|
|
0.99
|
|
|
|
|
|
|
|
525,500
|
|
|
|
|
|
$
|
0.25
|
|
|
|
1,508,333
|
|
|
|
1.09
|
|
|
|
|
|
|
|
1,508,333
|
|
|
|
|
|
$
|
0.15
|
|
|
|
577,499
|
|
|
|
1.10
|
|
|
|
|
|
|
|
577,499
|
|
|
|
|
|
$
|
0.25
|
|
|
|
968,166
|
|
|
|
1.10
|
|
|
|
|
|
|
|
968,166
|
|
|
|
|
|
$
|
0.25
|
|
|
|
633,333
|
|
|
|
1.15
|
|
|
|
|
|
|
|
633,333
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,339,498
|
|
|
|
1.02
|
|
|
|
0.24
|
|
|
|
6,339,498
|
|
|
|
0.24
|
|
The warrants outstanding have an intrinsic value
of $0 and $0 as of June 30, 2018 and December 31, 2017, respectively.
PLEDGE PETROLEUM CORP.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
Basic loss per share is based
on the weighted-average number of common shares outstanding during each period. Diluted loss per share is based on basic shares
as determined above plus common stock equivalents, including convertible preferred shares and convertible notes as well as the
incremental shares that would be issued upon the assumed exercise of in-the-money stock options using the treasury stock method.
The computation of diluted net loss per share does not assume the issuance of common shares that have an anti-dilutive effect on
net loss per share. For the three months and six months ended June 30, 2018 and 2017, all stock options, unvested restricted stock
awards, warrants, convertible preferred stock and convertible notes were excluded from the computation of diluted net loss per
share. Dilutive shares which could exist pursuant to the exercise of outstanding stock instruments and which were not included
in the calculation because their affect would have been anti-dilutive are as follows:
|
|
Three and six
months
ended
June 30,
2018
|
|
|
Three and six
months
ended
June 30,
2017
|
|
|
|
|
|
|
|
|
Stock options
|
|
|
342,854
|
|
|
|
380,950
|
|
Warrants to purchase shares of common stock
|
|
|
6,339,498
|
|
|
|
6,339,498
|
|
Series A-1 convertible preferred shares
|
|
|
-
|
|
|
|
31,375,000
|
|
Series B convertible preferred shares
|
|
|
4,000,000
|
|
|
|
4,000,000
|
|
Series C convertible preferred shares
|
|
|
-
|
|
|
|
120,000,000
|
|
Restricted common stock
|
|
|
20,000,000
|
|
|
|
-
|
|
|
|
|
30,682,352
|
|
|
|
162,095,448
|
|
|
8
|
RELATED
PARTY TRANSACTIONS
|
On May 2, 2018, we issued to
each of our three directors, 10,000,000 shares of restricted common stock, vesting as to 1/3 of the grant immediately, 1/3 of the
grant on the one year anniversary of the grant date and 1/3 of the grant on the two year anniversary of the grant date.
|
9
|
COMMITMENTS
AND CONTINGENCIES
|
The Company disposed of its
Crystal Magic, Inc. subsidiary effective December 31, 2013. In terms of the sale agreement entered into by the Company, the purchaser
has been indemnified against all liabilities whether contingent or otherwise, claimed by third parties, this includes claims by
creditors of the Company amounting to $372,090 and claims against long-term liabilities of $848,916. Management does not consider
it likely that these claims will materialize and accordingly no provision has been made for these contingent liabilities.
PLEDGE PETROLEUM CORP.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
In accordance with ASC 855-10,
the Company has analyzed its operations subsequent to June 30, 2018 to the date these financial statements were issued, and has
determined that it does not have any material subsequent events to disclose in these financial statements.