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EX-31.2 - EX312 - DELTA OIL & GAS INCex312.htm
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-Q

x
Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
   
 
For the quarterly period ended June 30, 2010
   
o
Transition Report pursuant to 13 or 15(d) of the Securities Exchange Act of 1934
   
 
For the transition period _________  to __________
   
 
Commission File Number:  000-52001

Delta Oil & Gas, Inc.
(Exact name of registrant as specified in its charter)

Colorado
91-2102350
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)

Suite 604 – 700 West Pender Street, Vancouver, British Columbia, Canada V6C 1G8
(Address of principal executive offices)

866-355-3644
(Registrant’s telephone number, including area code)
_______________________________________________________________
(Former name, former address and former fiscal year, if changed since last report)
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  x  Yes   o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   ý Yes   ¨ No
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer,” “non-accelerated filer,” and “a smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  o                                                                                          Accelerated filer                  o
Non-accelerated filer    o                                                                                        Smaller reporting company  x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  o  Yes  o  No

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:
 
Class
 
Outstanding at August 10, 2010
Common Stock, $0.001 par value
 
13,857,107
 
 
 
 

 
logo
 
 
 
 
 
Page
 
PART I – FINANCIAL INFORMATION
 
Item 1.
Financial Statements.
3
 
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
4
 
Item 3.
Quantitative and Qualitative Disclosures About Market Risk.
15
 
Item 4T.
Controls and Procedures.
15
 
 
PART II – OTHER INFORMATION
 
Item 1.
Legal Proceedings.
17
 
Item 1A.
Risk Factors.
17
 
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds.
17
 
Item 3.
Defaults Upon Senior Securities.
17
 
Item 4.
(Removed and Reserved).
17
 
Item 5.
Other Information.
17
 
Item 6.
Exhibits.
17
     
 
Signatures
 
 
 
Exhibits
 
 
 
Certifications
 
 
 
 
 
 
PART I - FINANCIAL INFORMATION

Item 1.           Financial Statements.

Our unaudited consolidated financial statements included in this Form 10-Q for the three and six months ended June 30, 2010 are as follows:
 
 
F-1
 
Unaudited Consolidated Balance Sheet as of  June 30, 2010 and December 31, 2009 (audited);
 
F-2
 
Unaudited Consolidated Statements of Operations for the three and six months ended June 30, 2010 and 2009;
 
F-3
 
Unaudited Consolidated Statements of Cash Flows for the six months ended June 30, 2010 and 2009;
 
F-4
 
Unaudited Consolidated Statement of Changes in Stockholders' Equity from inception on January 9, 2001 to June 30, 2010;
 
F-5
 
Notes to Unaudited Consolidated Financial Statements;

These unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the SEC instructions to Form 10-Q.  In the opinion of management, all adjustments considered necessary for a fair presentation have been included.  Operating results for the interim period ended June 30, 2010 are not necessarily indicative of the results that can be expected for the full year.
 
 
 
 

 
DELTA OIL & GAS, INC.
 
             
Consolidated Balance Sheets
 
(Stated in U.S. Dollars)
 
             
   
June 30,
   
December 31,
 
   
2010
   
2009
 
ASSETS
 
(Unaudited)
 
(Audited)
 
             
Current
           
Cash and cash equivalents
  $ 33,829     $ 446,808  
Restricted cash
    216,294       -  
Accounts receivable
    87,448       70,496  
Franchise tax prepaid
    -       1,004  
Prepaid expenses
    25,195       17,464  
Advancement for oil and gas exploration costs
    -       49,898  
                 
      362,766       585,670  
                 
Natural Gas And Oil Properties
               
Proved property
    498,556       380,483  
Unproved property
    659,359       484,887  
                 
      1,157,915       865,370  
                 
Property, Plant and Equipment (net)
    2,320       3,499  
                 
TOTAL ASSETS
  $ 1,523,001     $ 1,454,539  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
         
                 
LIABILITIES
               
                 
Current
               
Accounts payable and accrued liabilities
  $ 34,743     $ 37,882  
Project cost advanced received
    130,071       -  
Due to related party
    -       1,527  
                 
      164,814       39,409  
Long Term
               
Asset retirement obligation
    22,776       21,487  
                 
TOTAL LIABILITIES
    187,590       60,896  
                 
STOCKHOLDERS' EQUITY
               
                 
Share Capital
               
Preferred Shares, 25,000,000 shares authorized of $0.001
 
par value of which none have been issued
         
Common stock, 100,000,000 shares authorized of $0.001
 
par value, 13,857,107 and 13,557,107 shares issued
       
and outstanding, respectively
    13,857       13,557  
Additional paid-in capital
    7,173,508       7,115,308  
                 
Accumulative Other Comprehensive Income
    100,700       94,418  
                 
Accumulated Deficit
    (6,035,037 )     (5,911,527 )
                 
      1,253,028       1,311,756  
                 
Noncontrolling Interest
    82,383       81,887  
                 
TOTAL STOCKHOLDERS' EQUITY
    1,335,411       1,393,643  
                 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
  $ 1,523,001     $ 1,454,539  
The accompanying notes are an integral part of these consolidated financial statements
 
 
DELTA OIL & GAS, INC.
 
                         
Consolidated Statements Of Operations
 
(Stated in U.S. Dollars)
 
(Unaudited)
 
                         
   
THREE MONTHS ENDED
   
SIX MONTHS ENDED
 
   
JUNE 30,
   
JUNE 30,
 
   
2010
   
2009
   
2010
   
2009
 
Revenue
 
 
   
 
   
 
   
 
 
                         
Natural gas and oil sales
  $ 206,319     $ 64,040     $ 331,751     $ 132,091  
Gain on sale of natural gas and oil properties
    -       142,481       -       142,481  
                                 
      206,319       206,521       331,751       274,572  
Costs And Expenses
                               
                                 
Natural gas and oil operating costs
    41,529       36,403       81,562       73,176  
General and administrative
    131,426       199,897       329,294       292,222  
Accretion
    645       813       1,289       1,548  
Depreciation and depletion
    28,340       4,941       39,635       25,704  
Impairment of natural gas and oil properties
    -       71,794       -       202,486  
Loss on sale of natural gas and oil properties
    -       750,305       -       750,305  
                                 
      201,940       1,064,153       451,780       1,345,441  
                                 
Net Operating Income/(Loss)
    4,378       (857,632 )     (120,029 )     (1,070,869 )
                                 
Other Income
                               
                                 
                                 
Interest income
    51       2,713       192       5,672  
                                 
      51       2,713       192       5,672  
                                 
Loss Before Income Taxes
    4,430       (854,919 )     (119,837 )     (1,065,197 )
                                 
Income taxes
    (2,427 )     -       (3,177 )     (5,205 )
                                 
Net Loss
    2,003       (854,919 )     (123,014 )     (1,070,402 )
                                 
Less: Net loss attributable to the noncontrolling interest
    (308 )     4,175       (496 )     4,321  
                                 
Net Loss Attributable to Delta Oil & Gas, Inc.
  $ 1,695     $ (850,744 )   $ (123,510 )   $ (1,066,081 )
                                 
Basic And Diluted Loss Per Common Share
  $ -     $ (0.06 )   $ (0.01 )   $ (0.09 )
                                 
Weighted Average Number Of
                               
Common Shares Outstanding
    13,857,107       13,538,645       13,746,058       11,572,877  
                                 
                                 
Consolidated Statement of Comprehensive Loss
                         
                                 
Comprehensive Loss
                               
                                 
Net Income/(Loss)
  $ 2,003     $ (854,919 )   $ (123,014 )   $ (1,070,402 )
                                 
Other Comprehensive Income (Loss)
                               
Foreign Currency Translation
    (6,738 )     67,250       6,282       31,924  
                                 
Comprehensive Loss
  $ (4,735 )   $ (787,669 )   $ (116,732 )   $ (1,038,478 )
The accompanying notes are an integral part of these consolidated financial statements
 
 
 
DELTA OIL & GAS, INC.
 
             
Consolidated Statements Of Cash Flows
 
(Stated in U.S. Dollars)
 
(Unaudited)
 
   
SIX MONTHS ENDED
 
   
JUNE 30,
 
   
2010
   
2009
 
Cash Flows From Operating Activities:
           
             
Net loss for the period
  $ (123,510 )   $ (1,066,081 )
                 
Adjustments to reconcile net loss to net cash
               
  used in operating activities:
               
Accretion
    1,289       1,548  
Depreciation and depletion
    39,635       25,704  
Impairment of natural gas and oil properties
    -       202,486  
Loss on sale of natural gas and oil properties
    -       750,305  
Stock-based compensation expense
    -       13,750  
Shares issued to President & CEO for servicess rendered
    39,000       30,000  
Shares issued to CFO for services rendered
    19,500       12,000  
Realized foreign exchange loss
    6,282       32,194  
Net loss attributable to the noncontrolling interest
    496       (4,321 )
Gain on sale of natural gas and oil properties
    -       (142,481 )
                 
Changes in operating assets and liabilities:
               
Accounts receivable
    (16,952 )     26,884  
Accounts payable and accrued liabilities
    (3,139 )     (2,189 )
Project cost advance received
    130,071       -  
Due to related party
    (1,527 )     -  
Franchise tax prepaid
    1,004       (1,004 )
Prepaid expenses
    (7,731 )     3,512  
Advancement for oil and gas exploration costs
    49,898       -  
                 
Net Cash Generated/(Used) In Operating Activities
    134,316       (117,693 )
                 
Cash Flows From Investing Activities:
               
                 
Purchase of other equipment
    -       (4,886 )
Sale proceeds of natural gas nad oil working interests
    -       407,629  
Investment in natural gas and oil working interests
    (331,001 )     (324,143 )
                 
Net Cash Generated /(Used) In Investing Activities
    (331,001 )     78,600  
                 
Cash Flows From Financing Activities:
               
 
               
Restricted Cash
    (216,294 )     -  
Share issue expenses
    -       (48,045 )
                 
Net Cash Provided/(Used) By Financing Activities
    (216,294 )     (48,045 )
                 
Net Increase/(Decrease) In Cash And Cash Equivalents
    (412,978 )     (87,138 )
                 
Cash And Cash Equivalents At Beginning Of Period
               
(Excess Of Deposits Over Checks Issued)
    446,808       980,562  
                 
Cash And Cash Equivalents at end of Period
  $ 33,830     $ 893,424  
                 
Supplemental Disclosures Of Non-Cash, Investing and Financing Activities
         
200,000 shares issued to the President & CEO as part of their
  $ 39,000     $ -  
compensation package
               
                 
100,000 shares issued to the CFO for services rendered
  $ 19,500     $ -  
                 
3,909,005 shares issued for the acquisition of Oil and Gas properties
  $ -     $ 879,526  
                 
Supplemental Disclosures
               
Income taxes paid
  $ 3,177     $ 5,205  
The accompanying notes are an integral part of these consolidated financial statements
 
 
 
DELTA OIL & GAS INC.
 
                                                       
Consolidated Statements Of Changes In Stockholders' Equity
 
Period From Inception, January 9, 2001, to June 30, 2010
 
(Stated in U.S. Dollars)
 
(Unaudited)
 
                                                       
                                                       
   
COMMON STOCK
                         
   
NUMBER
         
SHARE
   
SHARE
         
CUMULATIVE
   
 
       
   
OF COMMON
 
PAR
   
ADDITIONAL
   
SUBSCRIPTIONS
   
SUBSCRIPTIONS
   
DEFICIT
   
COMPREHENSIVE
   
  NONCONTROLLING
 
   
SHARES VALUE
 
VALUE
 
PAID-IN CAPITAL
   
RECEIVED
   
RECEIVABLE
   
ACCUMULATED
   
INCOME/(LOSS)
   
INTEREST
   
TOTAL
 
                                                       
Shares issued for cash at $0.00018
    2,750,000     $ 2,750     $ (250 )   $ -     $ -     $ -     $ -     $ -     $ 2,500  
                                                                         
Shares issued for cash at $0.0036
    5,500,000       5,500       94,500       -       -       -       -       -       100,000  
                                                                         
Shares issued for cash at $0.045
    9,350       9       2,116       -       -       -       -       -       2,125  
                                                                         
Net (loss) for the period ended
    -       -       -       -       -       (184,407 )     -       -       (184,407 )
                                                                         
Balance, December 31, 2001
    8,259,350       8,259       96,366       -       -       (184,407 )     -       -       (79,782 )
                                                                         
Net (loss) for the year
    -       -       -       -       -       (62,760 )     -       -       (62,760 )
                                                                         
Balance, December 31, 2002
    8,259,350       8,259       96,366       -       -       (247,167 )     -       -       (142,542 )
                                                                         
Net (loss) for the year
    -       -       -       -       -       (24,423 )     -       -       (24,423 )
                                                                         
Balance, December 31, 2003
    8,259,350       8,259       96,366       -       -       (271,590 )     -       -       (166,965 )
                                                                         
Share subscriptions received
    -       -       -       160,000       -       -       -       -       160,000  
                                                                         
Net (loss) for the year
    -       -       -       -       -       (31,574 )     -       -       (31,574 )
                                                                         
Balance, December 31, 2004
    8,259,350       8,259       96,366       160,000       -       (303,164 )     -       -       (38,539 )
                                                                         
Units issued for cash at $1.00,
net of share issuance cost
    496,797       497       2,483,228       (160,000 )     -       -       -       -       2,323,725  
                                                                         
Options exercised for cash at $0.8
    49,000       49       195,951       -       (16,000 )     -       -       -       180,000  
                                                                         
Stock-based compensation
    -       -       370,267       -       -       -       -       -       370,267  
                                                                         
Net (loss) for the year
    -       -       -       -       -       (570,050 )     -       -       (570,050 )
                                                                         
Balance, December 31, 2005
    8,805,147       8,805       3,145,812       -       (16,000 )     (873,214 )     -       -       2,265,403  
                                                                         
Subscriptions receivable
    -       -       -       -       16,000       -       -       -       16,000  
                                                                         
Options exercised for cash at $0.8
    61,000       61       243,939       -       -       -       -       -       244,000  
                                                                         
Options exercised for cash at $1.00
    2,500       3       12,498       -       -       -       -       -       12,501  
                                                                         
Shares issued for cash at $2.75,
net of finders fee
    145,455       145       1,849,850       -       -       -       -       -       1,849,995  
                                                                         
Stock-based compensation
    -       -       195,719       -       -       -       -       -       195,719  
                                                                         
Net (loss) for the year
    -       -       -       -       -       (234,763 )     -       -       (234,763 )
                                                                         
Balance, December 31, 2006
    9,014,102       9,014       5,447,818       -       -       (1,107,977 )     -       -       4,348,855  
                                                                         
Options exercised for cash at $0.75
    12,000       12       44,988       -       -       -       -       -       45,000  
                                                                         
Shares issued to President & CEO as part of his compensation
package at $0.92
    100,000       100       459,900       -       -       -       -       -       460,000  
 
                                                 
                                                                         
Shares issued to Investor Relations Services, Inc. as part of the agreement
    12,000       12       40,788       -       -       -       -       -       40,800  
                                                                         
Shares issued to CFO for services rendered
    50,000       50       137,450       -       -       -       -       -       137,500  
                                                                         
Stock-based compensation
    -       -       42,097       -       -       -       -       -       42,097  
                                                                         
Comprehensive Income/(loss):
                                                               
Cumulative translation adjustment
    -       -       -       -       -       -       187,348       -       187,348  
Net (loss) for the year
    -       -       -       -       -       (2,249,959 )     -       -       (2,249,959 )
Comprehensive (loss)
                                                                    (2,062,611 )
                                                                         
Balance, December 31, 2007
    9,188,102       9,188       6,173,041       -       -       (3,357,936 )     187,348       -       3,011,641  
                                                                         
Shares issued to President & CEO & CFO as part of their compensation package at $0.053
    180,000       180       47,520       -       -       -       -       -       47,700  
 
                                                 
                                                                         
Registration of shares under Form S-4
    -       -       (132,289 )     -       -       -       -       -       (132,289 )
                                                                         
Comprehensive Income/(Loss):
                                                         
Cumulative translation adjustment
    -       -       -       -       -       -       (181,370 )     -       (181,370 )
Net loss for the year
    -       -       -       -       -       (215,826 )     -       -       (215,826 )
Comprehensive loss
                                                                    (397,196 )
                                                                         
Balance, December 31, 2008
    9,368,102       9,368       6,088,272       -       -       (3,573,762 )     5,978       -       2,529,856  
                                                                         
Shares issued for acquisition of oil & gas properties
    3,909,005       3,909       875,616       -       -       -       -       -       879,525  
 
                                                                       
Registration of shares under Form S-4
    -       -       (48,045 )     -       -       -       -       -       (48,045 )
                                                                         
Noncontrolling interest in subsidiary
    -       -       -       -       -       -       -       100,631       100,631  
                                                                         
Shares issued to President, CEO & CFO as
part of his compensation package at $0.15
    280,000       280       41,720       -       -       -       -       -       42,000  
                                                                         
Options issued to IR consultant
    -       -       35,998       -       -       -       -       -       35,998  
                                                                         
Options issued to CEO, CFO & director
    -       -       121,747       -       -       -       -       -       121,747