Attached files
file | filename |
---|---|
EX-31.1 - CERTIFICATION - Park Place Energy Corp. | exhibit31-1.htm |
EX-32.1 - CERTIFICATION - Park Place Energy Corp. | exhibit32-1.htm |
EX-10.32 - CONVERTIBLE PROMISSORY NOTE DATED APRIL 6, 2011 WITH PIKKA ASSET MANAGEMENT LTD - Park Place Energy Corp. | exhibit10-32.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
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 March 31, 2011
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____to _____
Commission File Number: 000-51712
PARK PLACE ENERGY CORP.
(Exact
name of small business issuer as specified in its charter)
Nevada | 71-0971567 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
300-840 6th Avenue SW | |
Calgary, Alberta, Canada | T2P 3E5 |
(Address of principal executive offices) | (Zip Code) |
(403) 360-5375
Registrants telephone number,
including area code
N/A
(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 Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [ x ] 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 during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).
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 smaller reporting company in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] | Accelerated filer [ ] |
Non-accelerated filer [ ] (Do not check if a smaller reporting company) | 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).
Yes [ ] No [ x ]
State the number of shares outstanding of each of the issuers classes of common equity, as of the latest practicable date. 5,598,909 shares of common stock as of May 13, 2011.
PARK PLACE ENERGY CORP. |
Quarterly Report On Form 10-Q |
For The Quarterly Period Ended |
March 31, 2011 |
INDEX |
FORWARD-LOOKING STATEMENTS
This quarterly report on Form 10-Q contains forward-looking statements that involve risks and uncertainties. Forward-looking statements in this quarterly report include, among others, statements regarding our capital needs, business plans and expectations. Such forward-looking statements include, but are not limited to, statements with respect to the following:
-
our need for additional financing;
-
our exploration activities may not result in commercially exploitable quantities of oil and gas on our properties;
-
the risks inherent in the exploration for oil and gas such as weather, accidents, equipment failures and governmental restrictions;
-
our limited operating history;
-
our history of operating losses;
-
the potential for environmental damage;
-
our lack of insurance coverage;
-
the competitive environment in which we operate;
-
the level of government regulation, including environmental regulation;
-
changes in governmental regulation and administrative practices;
-
our dependence on key personnel;
-
conflicts of interest of our directors and officers;
-
our ability to fully implement our business plan;
-
our ability to effectively manage our growth; and
-
other regulatory, legislative and judicial developments.
Forward-looking statements are made, without limitation, in relation to operating plans, property exploration and development, availability of funds, environmental reclamation, operating costs and permit acquisition. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as may, will, should, expect, plan, intend, anticipate, believe, estimate, predict, potential or continue, the negative of such terms or other comparable terminology. Actual events or results may differ materially. In evaluating these statements, you should consider various factors, including the risks outlined in our annual report on Form 10-K for the year ended December 31, 2009, this quarterly report on Form 10-Q, and, from time to time, in other reports that we file with the Securities and Exchange Commission (the SEC). These factors may cause our actual results to differ materially from any forward-looking statement. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
The following unaudited interim financial statements of Park Place Energy Corp.(sometimes referred to as we, us or our Company) are included in this quarterly report on Form 10-Q:
PARK PLACE ENERGY CORP. |
CONSOLIDATED BALANCE SHEETS |
(An Exploration Stage Company) |
(Expressed in Canadian Dollars) |
(Unaudited) |
March 31, | December 31, | |||||
2011 | 2010 | |||||
ASSETS | ||||||
Current | ||||||
Cash | $ | 1,877 | $ | 22 | ||
Receivables | 6,087 | 5,680 | ||||
Prepaid expenses | 1,270 | 2,204 | ||||
Total current assets | 9,234 | 7,906 | ||||
Fixed assets | ||||||
Property and equipment, net | 7,360 | 7,829 | ||||
Oil and gas properties (Note 3) | 76,691 | 76,860 | ||||
Total assets | $ | 93,285 | $ | 92,595 | ||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||
Current liabilities | ||||||
Accounts payable and accrued liabilities | $ | 91,984 | $ | 169,835 | ||
Loan payable (Note 4) | 81,500 | - | ||||
Total current liabilities | 173,484 | 169,835 | ||||
Stockholders' equity | ||||||
Common stock (Note 5) | ||||||
Authorized
40,000,000 par value $0.00001 |
||||||
Issued
and outstanding
5,598,909 common shares (December 31, 2010 5,598,909) |
56 |
56 |
||||
Additional paid-in capital (Note 5) | 11,571,924 | 11,571,924 | ||||
Accumulated other comprehensive income | 228,535 | 228,480 | ||||
Deficit accumulated during the exploration stage | (11,880,714 | ) | (11,877,700 | ) | ||
Total stockholders equity | (80,199 | ) | (77,240 | ) | ||
Total liabilities and stockholders equity | $ | 93,285 | $ | 92,595 |
Nature and continuance of operations (Note 1)
Subsequent events (Note 10)
The accompanying notes are an integral part of these consolidated financial statements.
PARK PLACE ENERGY CORP. |
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS |
(An Exploration Stage Company) |
(Expressed in Canadian Dollars) |
(Unaudited) |
Cumulative | |||||||||
Amounts | |||||||||
From Inception | Three Months | Three Months | |||||||
May 4, 2006 to | Ended | Ended | |||||||
March 31, | March 31, | March 31, | |||||||
2011 | 2011 | 2010 | |||||||
REVENUE | |||||||||
Oil and gas | $ | 1,619,047 | $ | - | $ | - | |||
DIRECT COSTS | |||||||||
Depletion | 1,235,574 | - | - | ||||||
Operating expenses | 1,140,050 | - | - | ||||||
(756,577 | ) | - | - | ||||||
EXPENSES | |||||||||
Office and general | 731,125 | 8,534 | 24,461 | ||||||
Depreciation | 4,518 | 469 | 299 | ||||||
Exploration expenses | 308,534 | - | - | ||||||
Foreign exchange loss | 122,046 | 860 | 2,236 | ||||||
Professional fees | 919,702 | (544 | ) | 20,047 | |||||
Consulting | 1,872,262 | 6,571 | 83,876 | ||||||
Investor relations | 884,140 | 102 | 4,285 | ||||||
Management fees | 631,638 | - | - | ||||||
Travel | 192,719 | - | - | ||||||
Stock-based compensation (Note 5) | 2,004,083 | - | 163,000 | ||||||
(7,670,767 | ) | (15,992 | ) | (298,204 | ) | ||||
Loss before other items and income taxes | (8,427,344 | ) | (15,992 | ) | (298,204 | ) | |||
OTHER ITEMS | |||||||||
Interest and other revenue | 122,683 | 12,978 | 23,691 | ||||||
Gain on sale of oil and gas properties | 381,166 | - | - | ||||||
Gain on sale of the marketable securities | 4,635 | - | - | ||||||
Loss on sale of disposal of properties | (53,869 | ) | - | - | |||||
Loss on write-down of promissory note | (254,997 | ) | - | - | |||||
Gain on settlement of debt | 341,777 | - | - | ||||||
Write off oil and gas costs and exploration advances | (4,244,676 | ) | - | - | |||||
Loss before income tax | (12,130,625 | ) | (3,014 | ) | (274,513 | ) | |||
Future income tax recovery | 291,060 | - | - | ||||||
Net loss for the period | (11,839,565 | ) | (3,014 | ) | (274,513 | ) | |||
OTHER COMPREHENSIVE INCOME | |||||||||
Foreign currency translation adjustment | 237,861 | 55 | (3,093 | ) | |||||
COMPREHENSIVE LOSS | $ | (11,601,704 | ) | $ | (2,959 | ) | $ | (277,606 | ) |
Basic and diluted loss per share | $ | (0.00 | ) | $ | (0.08 | ) | |||
Weighted average number of shares outstanding basic and diluted | 5,598,909 | 3,314,467 |
The accompanying notes are an integral part of these consolidated financial statements.
PARK PLACE ENERGY CORP. |
CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY |
(An Exploration Stage Company) |
(Expressed in Canadian Dollars) |
(Unaudited) |
Common Stock | ||||||||||||||||||
Deficit | ||||||||||||||||||
Accumulated | Accumulated | |||||||||||||||||
Additional | Other | During the | ||||||||||||||||
Number of | Paid-In | Comprehensive | Exploration | |||||||||||||||
Shares | Amount | Capital | Income | Stage | Total | |||||||||||||
December 31, 2007 | 1,100,011 | $ | 330 | $ | 7,932,363 | $ | 114,837 | $ | (4,594,798 | ) | $ | 3,452,732 | ||||||
Issuance of common stock for cash | 784,071 | 235 | 1,983,713 | - | - | 1,983,948 | ||||||||||||
Issuance of common stock in settlement of debt | 71,429 | 21 | 149,979 | - | - | 150,000 | ||||||||||||
Issuance of common stock for consulting | 183,333 | 56 | 560,702 | - | - | 560,758 | ||||||||||||
Stock-based compensation | - | - | 310,444 | - | - | 310,444 | ||||||||||||
Share issuance costs | - | - | (69,465 | ) | - | - | (69,465 | ) | ||||||||||
Cumulative translation adjustment | - | - | - | 79,005 | - | 79,005 | ||||||||||||
Net loss | - | - | - | - | (5,195,292 | ) | (5,195,292 | ) | ||||||||||
December 31, 2008 | 2,138,844 | $ | 642 | $ | 10,867,736 | $ | 193,842 | $ | (9,790,090 | ) | $ | 1,272,130 | ||||||
Issuance of common stock for cash | 155,000 | 46 | 92,390 | - | - | 92,436 | ||||||||||||
Cumulative translation adjustment | - | - | - | 35,602 | - | 35,602 | ||||||||||||
Stock-based compensation | - | - | 109,806 | - | - | 109,806 | ||||||||||||
Net loss | - | - | - | - | (1,806,007 | ) | (1,806,007 | ) | ||||||||||
December 31, 2009 | 2,293,844 | $ | 688 | $ | 11,069,932 | $ | 229,444 | $ | (11,596,097 | ) | $ | (296,033 | ) | |||||
Issuance of common stock for cash | 1,296,311 | 399 | 120,088 | - | - | 120,487 | ||||||||||||
Issuance of common stock in settlement of debt | 1,638,754 | 518 | 125,670 | - | - | 126,188 | ||||||||||||
Issuance of common stock for consulting | 370,000 | 111 | 184,519 | - | - | 184,630 | ||||||||||||
Stock-based compensation | - | - | 59,129 | - | - | 59,129 | ||||||||||||
Cumulative translation adjustment | - | - | - | (964 | ) | - | (964 | ) | ||||||||||
Warrants | - | - | 10,926 | - | - | 10,926 | ||||||||||||
Adjustment for par value | - | (1,660 | ) | 1,660 | - | - | - | |||||||||||
Net loss | - | - | - | - | (281,603 | ) | (281,603 | ) | ||||||||||
December 31, 2010 | 5,598,909 | $ | 56 | $ | 11,571,924 | $ | 228,480 | $ | (11,877,700 | ) | $ | (77,240 | ) | |||||
Cumulative translation adjustment | - | - | - | 55 | - | 55 | ||||||||||||
Net loss | - | - | - | - | (3,014 | ) | (3,014 | ) | ||||||||||
March 31, 2011 | 5,598,909 | $ | 56 | $ | 11,571,924 | $ | 228,535 | $ | (11,880,714 | ) | $ | (80,199 | ) |
The accompanying notes are an integral part of these consolidated financial statements.
PARK PLACE ENERGY CORP. |
(An Exploration Stage Company) |
CONSOLIDATED STATEMENTS OF CASH FLOWS |
(Expressed in Canadian Dollars) |
Cumulative Amounts | |||||||||
From Inception | Three Months | Three Months | |||||||
May 4, 2006 to | Ended | Ended | |||||||
March 31, | March 31, | March 31, | |||||||
2011 | 2011 | 2010 | |||||||
CASH FLOW FROM OPERATING ACTIVITIES | |||||||||
Loss for the period | $ | (11,839,565 | ) | $ | (3,014 | ) | $ | (274,513 | ) |
Depreciation | 4,518 | 469 | 299 | ||||||
Stock-based compensation | 2,004,083 | - | 163,000 | ||||||
Warrants issued for consulting services | 10,926 | - | - | ||||||
Interest accrued on notes payable | 12,530 | - | - | ||||||
Impairment of oil and gas | 2,924,647 | - | - | ||||||
Gain on sale of oil and gas interest | (381,166 | ) | - | - | |||||
Debt paid by issuance of common stock | 376,049 | - | - | ||||||
Gain on sale of marketable securities | (4,635 | ) | - | - | |||||
Gain on settlement of debt | (341,777 | ) | - | - | |||||
Write off of exploration advances | 37,558 | - | - | ||||||
Investor relation and consulting fees paid by | - | - | |||||||
issuance of common stock | 508,785 | - | - | ||||||
Depletion | 1,235,574 | - | - | ||||||
Future income tax recovery | (291,060 | ) | - | - | |||||
Changes in non-cash working capital items: | |||||||||
Decrease (increase) in receivables | (6,087 | ) | (407 | ) | (4,342 | ) | |||
Decrease (increase) in prepaid expenses | (1,310 | ) | 934 | (3,263 | ) | ||||
Decrease (increase) in accounts payable and | |||||||||
accrued liabilities | 937,815 | (76,637 | ) | 136,252 | |||||
Increase (decrease) in due to related parties | 65,449 | - | (48,513 | ) | |||||
Net cash used in operating activities | (4,747,666 | ) | (78,655 | ) | (31,080 | ) | |||
CASH FLOW FROM INVESTING ACTIVITIES | |||||||||
Oil and gas interests | (3,741,761 | ) | - | - | |||||
Proceeds from oil and gas properties | 50,000 | - | - | ||||||
Proceeds from sale of marketable securities | 79,635 | - | - | ||||||
Exploration advances | (270,919 | ) | - | (36,172 | ) | ||||
Loan payable | (572,000 | ) | - | - | |||||
Cash acquired through recapitalization | 320 | - | - | ||||||
Acquisition of property and equipment | (11,878 | ) | - | - | |||||
Net cash used in investing activities | (4,466,603 | ) | - | (36,172 | ) | ||||
CASH FLOW FROM FINANCING ACTIVITIES | |||||||||
Proceeds from issuance of capital stock | 8,287,009 | - | 66,883 | ||||||
Proceeds from loans | 706,500 | 81,500 | - | ||||||
Repurchase of common stock | (15,028 | ) | - | - | |||||
Net cash provided by financing activities | 8,978,481 | 81,500 | 92,414 | ||||||
Effect of foreign exchange on cash | 237,665 | 990 | (3,093 | ) | |||||
Change in cash during the period | 1,877 | 1,855 | (3,462 | ) | |||||
Cash position, beginning of period | - | 22 | 4,414 | ||||||
Cash position, end of period | $ | 1,877 | $ | 1,877 | $ | 952 |
Supplemental disclosure with respect to cash flows (Note 6)
The accompanying notes are an integral part of these consolidated financial statements.
PARK PLACE ENERGY CORP. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(An Exploration Stage Company) |
(Expressed in Canadian Dollars) |
MARCH 31, 2011 |
(Unaudited) |
1. |
NATURE AND CONTINUANCE OF OPERATIONS |
Park Place Energy Corp., formerly ST Online Corp. (the Company), was incorporated under the laws of the State of Nevada on August 27, 2004. On June 22, 2007, the Company entered into a Business Combination Agreement with Park Place Energy Inc., a private company incorporated under the laws of the Province of Alberta, Canada, and 0794403 B.C. Ltd., a British Columbia corporation and wholly-owned subsidiary of the Company. | |
On July 6, 2007, the Company affected a forward split of its shares of common stock on the basis of eight new shares of common stock for each one share of common stock outstanding on that date and increased the authorized share capital from 100,000,000 shares of common stock to 800,000,000 shares of common stock. At the same time, the Company merged with a wholly-owned subsidiary, Park Place Energy Corp. which incorporated under the laws of the State of Nevada in contemplation of the acquisition of all of the issued and outstanding shares of Park Place Energy Inc. and the name of the Company was then changed to Park Place Energy Corp. On July 23, 2007, the Company effected a forward split of its shares of common stock on the basis of one and one-half new shares of common stock for each one share of common stock outstanding on that date and increased authorized share capital from 800,000,000 shares of common stock to 1,200,000,000 shares of common stock. Pursuant to the terms of the Business Combination Agreement, the Company issued to each shareholder of record of Park Place Energy Inc. at the time of the acquisition one share of our common stock for every two shares they held of Park Place Energy Inc. On August 31, 2009, the Company affected a forward split of its shares of common stock on a one old share for ten new shares basis on that date and increased the authorized share capital from 1,200,000,000 shares of common stock to 12,000,000,000 shares of common stock. Subsequent to December 31, 2009, the Company affected a reverse stock split of its common shares on a three hundred old shares for one new share basis, decreasing the authorized share capital from 12,000,000,000 common shares to 40,000,000 common shares. All references to number of shares outstanding, earnings per share, stock options and warrants have been adjusted to reflect the above mentioned stock splits. | |
On July 30, 2007, the Company acquired Park Place Energy Inc. which was renamed to Park Place Energy (Canada) Inc. (Park Place Canada) on September 14, 2007. The business of the Company is now the acquisition and exploration of oil and gas properties. Park Place Energy Corp. held exploration interests in a property in Tennessee, USA. Park Place Canada holds the exploration interests in three properties in the provinces of British Columbia and Alberta, in Canada. For accounting purposes, the merger was treated as a recapitalization with Park Place Energy Inc. being the accounting acquirer and the go-forward financial statements reflect the history of Park Place Energy Inc. from its inception on May 4, 2006. The fiscal year-end of Park Place Energy Corp. was changed to December 31 from September 30. | |
On November 22, 2007 a new private company, Park Place Energy (International) Inc. (Park Place International) was incorporated under the laws of British Columbia, Canada. This company is a wholly owned subsidiary of Park Place Energy Corp. | |
On July 24, 2008, the Company acquired the interest in certain 5 Year Northern Petroleum and Natural Gas Leases located in Alberta, Canada. The Company sold this interest on April 6, 2010 for consideration of $50,000. | |
These consolidated financial statements have been prepared on a going concern basis, which assumes the realization of assets and settlement of liabilities in the normal course of business. The Company has had a history of negative cash flows from operating activities. In addition, the Company has an accumulated deficit of $11,880,714 as of March 31, 2011. These considerations raise substantial doubt about the Companys ability to continue as going concern. Accordingly, the Company will require continued financial support from its shareholders and creditors until it is able to generate sufficient cash flow from operations on a sustained basis. Failure to obtain the ongoing support of its stockholders and creditors may make the going concern basis of accounting inappropriate, in which case the Companys assets and liabilities would need to be recognized at their liquidation values. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts and classification of liabilities that might arise from this uncertainty. |
PARK PLACE ENERGY CORP. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(An Exploration Stage Company) |
(Expressed in Canadian Dollars) |
MARCH 31, 2011 |
(Unaudited) |
2. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
Recent accounting pronouncements | |
In February 2010, the FASB issued Accounting Standards Update ASU 2010-09, Subsequent Events (Topic 855), amending ASC 855. ASU 2010-09 removes the requirement for an SEC filer to disclose a date relating to its subsequent events in both issued and revised financial statements. ASU 2010-09 also eliminates potential conflicts with the SECs literature. Most of ASU 2010-09 is effective upon issuance of the update. The adoption of this standard did not have a material impact on the Companys financial position or results of operations. | |
In January 2010, the FASB issued ASU 2010-06, Fair Value Measurements and Disclosures (Topic 820), Improving Disclosures about Fair Value Measurements, amending ASC 820. ASU 2010-06 requires entities to provide new disclosures and clarify existing disclosures relating to fair value measurements. The new disclosures and clarifications of existing disclosures are effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances, and settlements in Level 3 fair value measurements, which are effective for fiscal years beginning after December 15, 2010 and for interim periods within those fiscal years. The adoption of this standard did not have a material impact on the Companys financial position or results of operations. | |
In June 2009, the FASB issued ASC 810, which revised the consolidation guidance for variable interest entities. The amendments include: (1) the elimination of the exemption for qualifying special purpose entities, (2) a new approach for determining who should consolidate a variable-interest entity, and (3) changes to when it is necessary to reassess who should consolidate a variable-interest entity. ASC 810 is effective for the first annual reporting period beginning after November 15, 2009 and for interim periods within that first annual reporting period. The Company adopted FASB ASC 810 and the adoption of this standard had no material impact on our financial statements for the three month period ended March 31, 2011. | |
In September 2009, the FASB issued authoritative guidance regarding multiple-deliverable revenue arrangements. This guidance addresses how to separate deliverables and how to measure and allocate consideration to one or more units of accounting. Specifically, the guidance requires that consideration be allocated among multiple deliverables based on relative selling prices. The guidance establishes a selling price hierarchy of (1) vendor specific objective evidence, (2) third-party evidence and (3) estimated selling price. This guidance is effective for annual periods beginning after June 15, 2010 but may be early adopted as of the beginning of an annual period. The Company is currently evaluating the effect that this guidance will have on its consolidated financial position and results of operations but does not expect its adoption to have a material impact on the Companys financial reporting and disclosures. | |
In July 2010, the FASB issued an Accounting Standards Update No. 2010-20, Receivables, Disclosure about the Credit Quality of Financing Receivables and Allowances for Credit Losses. The standard requires additional disclosure related to the credit quality of financing receivables, troubled debt restructurings and significant purchases or sales of financing receivables during the period. The standard requires that these disclosures and existing disclosures be presented on a disaggregated basis, similar to the manner that the entity uses to evaluate its credit losses. Disclosures of information as of the end of a reporting period are effective for interim and annual periods ending after December 15, 2010, and disclosures of activity that occurred during a reporting period are effective for interim and annual periods beginning after December 15, 2010. The Company has adopted this standard on January 1, 2010, and it will have no impact on our consolidated financial statements for the three month period ended March 31, 2011, due to the receivables being short-term in nature and are therefore not financing receivables. |
PARK PLACE ENERGY CORP. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(An Exploration Stage Company) |
(Expressed in Canadian Dollars) |
MARCH 31, 2011 |
(Unaudited) |
2. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (contd ) |
Recent accounting pronouncements (contd ) | |
In December 2010, the FASB issued ASU 2010-29, which contains updated accounting guidance to clarify the acquisition date that should be used for reporting pro forma financial information when comparative financial statements are issued. This update requires that a company should disclose revenue and earnings of the combined entity as though the business combination(s) that occurred during the current year had occurred as of the beginning of the comparable prior annual reporting period only. This update also requires disclosure of the nature and amount of material, nonrecurring pro forma adjustments. The provisions of this update, which are to be applied prospectively, are effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010, with early adoption permitted. The impact of this update on the Companys consolidated financial statements will depend on the size and nature of future business combinations. | |
3. |
OIL AND GAS PROPERTIES |
As at | As at | ||||||
March 31, | December 31, | ||||||
2011 | 2010 | ||||||
OIL AND GAS INTERESTS | |||||||
Unproven Properties | |||||||
Canada | $ | 76,691 | $ | 76,860 | |||
Total Unproved Properties | $ | 76,691 | $ | 76,860 | |||
Total Proven and Unproved Properties | $ | 76,691 | $ | 76,860 |
PARK PLACE ENERGY CORP. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(An Exploration Stage Company) |
(Expressed in Canadian Dollars) |
MARCH 31, 2011 |
(Unaudited) |
3. |
OIL AND GAS PROPERTIES (contd ) |
On January 28, 2010, the Company bought a 50% interest in an oil and gas exploration property located in Saskatchewan, Canada by issuing a US$150,000 note payable. This note payable was later settled by issuing 500,000 common shares of the company. | |
On May 11, 2010, the Company assigned one-half of its 50% working interest in its Saskatchewan oil and gas property to a privately held exploration company. As consideration for the assignment, the Company received 750,000 shares of the private company. As the shares had no active market they were valued based on the consideration given up, US $75,000. | |
On October 12, 2010 the Bulgarian Council of Ministers granted to the Company a permit for the exploration and prospecting of oil and natural gas properties known as the Vranino Blocks. | |
On October 25, 2010 an appeal against the Bulgarian Council of Ministers decision to award the Vranino Block to Park Place was filed with the Supreme Administrative Court of Bulgaria. | |
4. |
LOAN PAYABLE |
The Company has received a refundable $81,500 of a $150,000 convertible promissory note. The terms of the note are currently under negotiations. | |
5. |
COMMON STOCK |
On July 6, 2007 the Company implemented a stock split of its common stock by issuing eight new shares for every one old share. Effective July 23, 2007 the Company implemented a further a stock split of its common stock by issuing one and a half new shares for every old share. On August 31, 2009, the Company affected a forward split of its shares of common stock on a one (1) old share for ten (10) new shares on that date and increased the authorized share capital from 1,200,000,000 shares of common stock to 12,000,000,000 shares of common stock. Subsequent to December 31, 2009, the Company affected a reverse stock split of its common shares on a three hundred old shares for one new share basis, decreasing the authorized share capital from 12,000,000,000 common shares to 40,000,000 common shares. Except as otherwise stated to the contrary in these financial statements, all references to shares and prices per shares have been adjusted to give retroactive effect to the stock splits. | |
On February 14, 2008, the Company issued 147,857 units at a price of US$2.10 for gross proceeds of US$310,500. Each unit contained one share of common stock and one warrant exercisable at US$3.00 during the first year and US$4.50 in the second year. | |
On February 26, 2008, the Company issued 25,000 shares of common stock for consulting services at a value of US$3.00 per share. | |
On March 3, 2008, the Company issued 284,548 units at a price of US$2.10 for gross proceeds of US$597,550. Each unit contained one share of common stock and one warrant exercisable at US$3.00 during the first year and US$6.00 in the second year. |
PARK PLACE ENERGY CORP. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(An Exploration Stage Company) |
(Expressed in Canadian Dollars) |
MARCH 31, 2011 |
(Unaudited) |
5. |
COMMON STOCK (contd ) |
On March 6, 2008, the Company issued 71,429 units at a price of US$2.10 to the holders of the loan payable as outlined in Note 4. Each unit contained one share of common stock and one warrant exercisable at US$3.00 during the first year and US$4.50 during the second year. | |
In April, 2008, the Company issued 300,000 units at a price of US$3.00 per unit for gross proceeds of US$900,000. Each unit consisted of one common share and one share purchase warrant entitling the holder to purchase a common share up to one year at a price of US$6.00. The Company paid a Finders Fee of $45,000 and issued Finders Warrants with a fair value of $27,986 to acquire 15,000 common shares of the Company at US$3.00 for one year. | |
On June 20, 2008, the Company issued 80,000 shares of common stock for consulting services at a value of US$2.70 per share. | |
On July 3, 2008, the Company issued 49,167 shares of common stock at a price of US$3.00 for gross proceeds of US$147,500 and 2,500 shares of common stock at a price of US$4.50 for gross proceeds of US$11,250. | |
On September 8, 2008, the Company issued 20,000 shares of common stock for consulting services at a value of US$3.75 per share. | |
On September 8, 2008, the Company issued 58,333 shares of common stock for consulting services at a value of US$3.00 per share. | |
On July 2, 2009, the Company issued 33,330 shares of common stock at a price of US$0.30 for gross proceeds of US$10,000. | |
On July 16, 2009, the Company issued 44,334 shares of common stock at a price of US$0.60 for gross proceeds of US$26,600. | |
On July 27, 2009, the Company issued 15,834 shares of common stock at a price of US$0.60 for gross proceeds of US$9,500. | |
On August 13, 2009, the Company issued 10,918 shares of common stock at a price of US$0.60 for gross proceeds of US$6,550. | |
On August 18, 2009, the Company issued 50,584 shares of common stock at a price of US$0.60 for gross proceeds of US$30,350. | |
On January 15, 2010, the Company issued 21,667 common shares at a price of US$0.30 on the exercise of options for gross proceeds of US$6,500. | |
On January 25, 2010, the Company issued 8,424 common shares at a price of US$0.45 on the exercise of options for gross proceeds of US$3,971. | |
On January 28, 2010 the Company issued a total of 1,248,163 common shares at a value of US$0.07 per share for payment of outstanding payables of $169,235 (US$154,553), loans payable of $35,000, amounts due to related parties of $34,085 (US$32,101) and a note payable of $159,270 ($US150,000). A gain of $304,819 (US$287,078) was recorded |
PARK PLACE ENERGY CORP. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(An Exploration Stage Company) |
(Expressed in Canadian Dollars) |
MARCH 31, 2011 |
(Unaudited) |
5. |
COMMON STOCK (contd ) |
On February 16, 2010, the Company issued 6,576 common shares at a price of US$0.45 and 21,786 of common shares at a price of US$0.51 on the exercise of options for gross proceeds of US$2,959 and US$11,111. | |
On February 16, 2010 the Company issued 187,857 shares and warrants on the close of its unit offering for gross proceeds of US $39,450. | |
On March 11, 2010, the Company issued 150,000 common shares at a value of US$0.06 in satisfaction of outstanding accounts payable of $46,197 (US$45,000). A gain of $ 36,958 (US$36,000) was reported as the difference in accounts payable settled and the fair market value of shares issued. | |
On March 24, 2010 the Company affected a reverse stock split of its common shares on a three hundred old shares for one new share basis, decreasing the authorized share capital from 12,000,000,000 common shares to 40,000,000 common shares. | |
On August 19, 2010, the Company completed a private placement issuing 850,000 common shares at a price of US $0.05 for gross proceeds of $42,500. The Company also issued 169,163 shares for the settlement of $8,718 (US$8,458) in accounts payable. A stock based compensation expense of US $27,066 was recorded for the difference between the market value of the Companys shares when issued and the debt settlement value. | |
On August 19, 2010, the Company issued 71,428 common shares at a price of US$0.21 for settlement of accounts payable of $15,460 (US$15,000). | |
On November 10, 2010, the Company issued 200,000 restricted shares at a price of US$0.50 per share to a consultant pursuant to the terms of a consulting agreement. | |
On November 10, 2010, the Company issued 170,000 restricted shares at a price of US$0.50 per share to a consultant pursuant to the terms of a consulting agreement. | |
On November 29, 2010, the Company issued 200,000 common shares at a price of US$0.05 for gross proceeds of US$10,000. | |
On January 5, 2011 the Company proposed to issue and sell by private placement up to 2,857,143 units in the capital of the Company at price of $0.07 per share for aggregate gross proceeds of up to $200,000. The Company reserved for issuance up to 2,857,143 Warrant Shares. | |
Stock options | |
The Company adopted an official incentive stock option plan as at October 11, 2007 whereby the total number of authorized options to be granted is up to a total of 200,000 Common Shares. Under the plan the exercise price of each option shall not be less than the market price of the Companys stock as calculated immediately preceding the day of the grant. The vesting schedule for each option shall be specified by the Company at the time of grant. | |
On June 24, 2009 the Company amended the stock option plan to increase common shares approved to 216,667. |
PARK PLACE ENERGY CORP. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(An Exploration Stage Company) |
(Expressed in Canadian Dollars) |
MARCH 31, 2011 |
(Unaudited) |
5. |
COMMON STOCK (contd ) |
On January 25, 2010 the Company amended and restated its 2007 Stock Option Plan to increase the maximum number of common shares that may be reserved for issuance under the Plan from 216,667 common shares to 533,333 common shares.
As at March 31, 2011, the Company had outstanding stock options, enabling the holders to acquire further common shares as follows:
Exercise | ||||||||||
Number | Price | |||||||||
of Options | (US$) | Expiry Date | ||||||||
294,881 | 0.51 | January 25, 2012 | ||||||||
Balance as at March 31, 2011 | 294,881 |
Stock option transactions are summarized as follows:
March 31, | December 31, | ||||||||||||
2011 | 2010 | ||||||||||||
Weighted | Weighted | ||||||||||||
Average | Average | ||||||||||||
Exercise | Exercise | ||||||||||||
Number of | Price | Number of | Price | ||||||||||
Options | (US$) | Options | (US$) | ||||||||||
Balance, beginning of the year | 294,881 | $ | 0.51 | 46,665 | $ | 1.20 | |||||||
Granted | - | - | 331,667 | 0.51 | |||||||||
Exercised | - | - | (58,453 | ) | 0 .42 | ||||||||
Expired / cancelled | - | - | (24,998 | ) | 1.78 | ||||||||
Balance, end of period | 294,881 | $ | 0.51 | 294,881 | $ | 0.51 | |||||||
Options exercisable, end of period | 294,881 | $ | 0.51 | 294,881 | $ | 0.51 |
PARK PLACE ENERGY CORP. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(An Exploration Stage Company) |
(Expressed in Canadian Dollars) |
MARCH 31, 2011 |
(Unaudited) |
5. |
COMMON STOCK (contd ) |
During the three month period ended March 31, 2011 the Company granted Nil options of common stock (2010 $331,667). The weighted average fair value of the options granted during the three month period ended March 31, 2011 is $Nil (2010 - $0.62) per option. | |
The aggregate intrinsic value for the options vested as of March 31, 2011 is approximately $Nil (2010 - $Nil) and for total options outstanding is approximately $Nil (2010 - $Nil). | |
Options Stock-Based Compensation | |
The following weighted-average assumptions were used for the Black-Scholes valuation of stock options granted during the year ended December 31: |
2010 | ||||
Risk-free interest rate | 1.18% | |||
Expected life of options | 2.00 years | |||
Annualized volatility | 271.77% | |||
Dividend rate | 0.00% |
Warrants
As at March 31, 2010, the Company had outstanding warrants, enabling the holders to acquire further common shares as follows:
Exercise | ||||||||||
Number | Price | |||||||||
of Warrants | (US$) | Expiry Date | ||||||||
187,857 | 0.26 | January 16, 2012 | ||||||||
66,666 | 0.30 | May 19, 2012 | ||||||||
33,333 | 0.60 | July 2, 2011 | ||||||||
Balance as March 31, 2011 | 287,856 | 0.31 |
Warrants transactions are summarized as follows:
PARK PLACE ENERGY CORP. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(An Exploration Stage Company) |
(Expressed in Canadian Dollars) |
MARCH 31, 2011 |
(Unaudited) |
5. | COMMON STOCK (contd ) |
March 31, | December 31, | ||||||||||||
2011 | 2010 | ||||||||||||
Weighted | Weighted | ||||||||||||
Average | Average | ||||||||||||
Exercise | Exercise | ||||||||||||
Number of | Price | Number of | Price | ||||||||||
Warrants | (US$) | Warrants | (US$) | ||||||||||
Balance, beginning of year | 287,856 | $ | 0.31 | 537,167 | $ | 4.20 | |||||||
Granted | - | - | 254,523 | 0.27 | |||||||||
0.27 | |||||||||||||
Expired / cancelled | - | - | (503,834 | ) | 4.50 | ||||||||
Balance, end of the period | 287,856 | $ | 0.31 | 287,856 | $ | 0.31 |
During the three month period ended March 31, 2011 the Company issued no warrants.
The following weighted average assumptions were used for the Black Scholes valuation of stock options granted during the year ended December 31:
2010 | ||||
Risk-free interest rate | 1.83% | |||
Expected life of warrants | 2 years | |||
Annualized volatility | 279.66% | |||
Dividend rate | 0.00% |
6. | SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS |
Cumulative | ||||||||||
Amounts from | ||||||||||
Inception | ||||||||||
on May 2, | Three Months | Year | ||||||||
2006 to | Ended | Ended | ||||||||
March 31, | March 31, | December 31, | ||||||||
2011 | 2011 | 2010 | ||||||||
Cash paid during the period for interest | $ | - | $ | - | $ | - | ||||
Cash paid during the period for income taxes | $ | - | $ | - | $ | - |
PARK PLACE ENERGY CORP. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(An Exploration Stage Company) |
(Expressed in Canadian Dollars) |
MARCH 31, 2011 |
(Unaudited) |
6. |
SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS (contd ) | |
Significant non-cash transaction during the three month period ended March 31, 2010 include: | ||
a) |
The Company issued 1,248,163 shares of common stock at a price of $0.30 per share for payment of outstanding payables in the amount of US $374,449. A gain of US $287,078 was recorded as the difference between the market value of shares issued and the amount of debt settled. | |
b) |
The Company issued 150,000 shares of common stock at a price of $0.30 per share for payment of outstanding payables in the amount of US $45,000. A gain of US $36,000 was recorded as the difference between the market value of shares issued and the amount of debt settled. | |
There are no significant non-cash transaction during the three month period ended March 31, 2011. | ||
7. |
RELATED PARTY TRANSACTIONS | |
During the three month period ended March 31, 2011 the Company entered into the following transactions with related parties: | ||
The Company paid or accrued consulting fees of $3,571 (March 31, 2010 - $18,250) to the directors of the Company. The amount is unsecured, non-interest bearing and has no specific terms of repayment. | ||
Related party transactions are in the normal course of operations, occurring on terms and conditions that are similar to those of transactions with unrelated parties and, therefore, are measured at the exchange amount. | ||
8. |
SEGMENTED INFORMATION | |
The Company's operations are in the resource industry in Canada and the United States. | ||
Geographical information is as follows: |
March 31, | December 31, | ||||||
2011 | 2010 | ||||||
Oil and gas properties | |||||||
Canada | $ | 76,691 | $ | 76,860 | |||
United States | - | - | |||||
$ | 76,691 | $ | 76,860 |
All of the Companys oil and gas revenues were from Canada.
PARK PLACE ENERGY CORP. |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
(An Exploration Stage Company) |
(Expressed in Canadian Dollars) |
MARCH 31, 2011 |
(Unaudited) |
9. |
FINANCIAL INSTRUMENTS |
Financial instruments, including receivables, prepaids, accounts payable and accrued liabilities are carried at cost, which management believes approximates fair value due to the short-term nature of these instruments. Unless otherwise noted, it is management's opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments. The companys investments are classified as held-for-trading and are marked-to-market at each reporting date with the unrealized gains or losses being recognized in net income. | |
Under GAAP, fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. A fair value hierarchy is also established, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. There are three levels of inputs that may be used to measure fair value: |
Level 1 quoted prices in active markets for identical assets or liabilities | |
Level 2 quoted prices for similar assets and liabilities in active markets or inputs that are observable | |
Level 3 inputs that are unobservable (for example cash flow modeling inputs based on assumptions) |
At March 31, 2011 our cash and investments were measured using level one inputs. | |
10. |
SUBSEQUENT EVENTS |
On April 6, 2011, the Company entered into a Convertible Promissory Note (the Note), to evidence the Companys promise to repay the noteholder (the Holder) $150,000 (the Principal), together with interest (the Interest) from April 6, 2011 at a rate of 10% per annum on the unpaid balance of the Principal. Pursuant to the terms of the Note, the Principal and the Interest thereon shall be due and payable in full on April 6, 2012 (the Due Date). The Note may be prepaid at any time without penalty. | |
Pursuant to the terms of the Note, the Principal and the Interest thereon is convertible, in whole and not in part, at the option of the lender at any time prior to the Due Date by notice to the Company into shares of the Companys common stock at the conversion price equal to $0.04 per common share. Pursuant to the terms of the Note on or about May 4, 2011, the Company issued to the Holder 5,000,000 restricted shares of the Companys common stock (the Collateral Shares), as collateral under the Note. Such Collateral Shares are being held in escrow by the Holder. Upon conversion by the Holder of the Principal and Interest into the Companys common shares, or upon payment in full of the Note and all Interest thereon, the Collateral Shares shall be cancelled and returned to Treasury. The Company relied on Regulation S as an exemption from the registration requirements of the Securities Act for the issuance of the Collateral Shares to the Holder. |
Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations |
The following discussion of our financial condition, changes in financial condition and results of operations for the three months ended March 31, 2011 and 2010 should be read in conjunction with our unaudited interim financial statements and related notes for the three months ended March 31, 2011 and 2010. The following discussion contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including, but not limited to, those set forth under the heading Risk Factors in our Annual Report on Form 10-K.
Overview of our Business
We are currently an exploration stage company engaged in exploring for conventional oil and natural gas. In the projects in which we hold interests, another party typically acts as the operator of the project. With respect to the projects that we participate in, we provide to the operator funding for our proportionate share of costs as well as technical input on how best to develop the property. As a way to keep our overhead down, we engage the services of consultants who have technical expertise to best represent our interests.
Plan of Operations
Overview
Our initial Plan of Operations for the next 12 months is to work with the Bulgarian Ministry of Economy, Energy and Tourism, as well as negotiate with Overgas Inc. directly, to attempt to find a positive conclusion to the current court case in front of the Supreme Administrative Court of Bulgaria. If the original permit is upheld or if the Company can enter into a Joint Venture agreement with Overgas Inc., we plan to undertake an exploration program in the Dobroudja Basin. The first year program includes perforating and testing the Vranino #1 well, and procuring a seismic program of the license area which will cost approximately $350,000. While the Company awaits the outcome in Bulgaria representatives are actively seeking further domestic and international exploration opportunities either through direct acquisition or joint venture agreements. We anticipate spending approximately $150,000 in the next 12 months in office and general expenses, as well as approximately $500,000 in professional, consulting and management fees.
Estimated Capital Costs
Based on our current plan of operations as set forth above, we estimate that we will require approximately $1.000,000 to pursue our plan of operations over the next 12 months. As at March 31, 2011, we had cash of $1,877 and a working capital deficit of $167,250. Consequently, we will require additional financing to pursue our plan of operations over the next 12 months. There can be no assurance that we will obtain any additional financing in the amounts required or on terms favorable to us. If we are unable to obtain additional financing, we may have to re-evaluate or abandon our business activities and revise our plan of operations.
We believe that debt financing will not be an alternative for funding as we do not have any significant tangible assets to secure any debt financing. We anticipate that additional funding will be in the form of equity financing from the sale of our common stock. However, we cannot provide investors with any assurance that we will be able to raise sufficient funding from the sale of our common stock to fund our plan of operations going forward. In the absence of such financing, our business plan will fail. Even if we are successful in obtaining equity financing, there is no assurance that we will obtain the funding necessary to pursue our business plan. If we do not continue to obtain additional financing going forward, we will be forced to re-evaluate or abandon our plan of operations.
Results of Operations
The following table sets forth our results of operations from inception on May 2, 2006 to March 31, 2011 as well as for the three month periods ended March 31, 2011 and 2010.
Cumulative Amounts From Inception May 4, 2006 to March 31, 2011 |
Three Months Ended March 31, 2011 |
Three Months Ended March 31, 2010 |
|||||||
REVENUE | |||||||||
Oil and gas | $ | 1,619,047 | $ | - | $ | - | |||
DIRECT COSTS | |||||||||
Depletion | 1,235,574 | - | - | ||||||
Operating expenses | 1,140,050 | - | - | ||||||
(756,577 | ) | - | - | ||||||
EXPENSES | |||||||||
Office and general | 731,125 | 8,534 | 24,461 | ||||||
Depreciation | 4,518 | 469 | 299 | ||||||
Exploration expenses | 308,534 | - | - | ||||||
Foreign exchange loss | 122,046 | 860 | 2,236 | ||||||
Professional fees | 919,702 | (544 | ) | 20,047 | |||||
Consulting | 1,872,262 | 6,571 | 83,876 | ||||||
Investor relations | 884,140 | 102 | 4,285 | ||||||
Management fees | 631,638 | - | - | ||||||
Travel | 192,719 | - | - | ||||||
Stock-based compensation (Note 5) | 2,004,083 | - | 163,000 | ||||||
(7,670,767 | ) | (15,992 | ) | (298,204 | ) | ||||
Loss before other items and income taxes | (8,427,344 | ) | (15,992 | ) | (298,204 | ) | |||
OTHER ITEMS | |||||||||
Interest and other revenue | 122,683 | 12,978 | 23,691 | ||||||
Gain on sale of oil and gas properties | 381,166 | - | - | ||||||
Gain on sale of the marketable securities | 4,635 | - | - | ||||||
Loss on sale of disposal of properties | (53,869 | ) | - | - | |||||
Loss on write-down of promissory note | (254,997 | ) | - | - | |||||
Gain on settlement of debt | 341,777 | - | - | ||||||
Write off oil and gas costs and exploration advances | (4,244,676 | ) | - | - | |||||
Loss before income tax | (12,130,625 | ) | (3,014 | ) | (274,513 | ) | |||
Future income tax recovery | 291,060 | - | - | ||||||
Net loss for the period | (11,839,565 | ) | (3,014 | ) | (274,513 | ) | |||
OTHER COMPREHENSIVE INCOME | |||||||||
Foreign currency translation adjustment | 237,861 | 55 | (3,093 | ) |
Revenue
Our oil and gas revenue for the three months ended March 31, 2011 was $nil, compared to $nil for the three months ended March 31, 2010. This revenue is offset by direct costs of $nil in depletion and $nil in operating expenses for the three months ended March 31, 2011, compared to $nil in depletion and $nil in operating expenses for the three months ended March 31, 2010.
Expenses
Our primary expense categories are described below:
Office and General Expenses
Our office and general expenses decreased to $8,534 for the three months ended March 31, 2011 from $24,461 for the three months ended March 31, 2010.
Professional Fees
Our professional fees decreased to ($544) for the three months ended March 31, 2011 from $20,047 for the three months ended March 31, 2010.
Consulting Expenses
Our consulting expenses decreased to $6,571 for the three months ended March 31, 2011 from $83,876 for the three months ended March 31, 2010.
Investor Relations Expenses
Our investor relations expense for the three months ended March 31, 2011decreased to $102 compared to $4,285 for the three months ended March 31, 2010.
Management Fees
Our management fees were $nil for the three months ended March 31, 2011 compared to $nil for the three months ended March 31, 2010.
Stock-Based Compensation Expenses
Our stock-based compensation expenses decreased to $nil for the three months ended March 31, 2011 from $163,000 for the three months ended March 31, 2010.
Loss
Our net loss before other items and taxes for the three months ended March 31, 2011 was $3,014, compared to $274,513 for the three months ended March 31, 2010. Our comprehensive loss for the three months ended March 31, 2011 was $2,959, compared to $277,606 for the three months ended March 31, 2010.
Liquidity and Capital Resources
As at | As at | |||||
March 31, 2011 | December 31, 2010 | |||||
(Unaudited) | (Audited) | |||||
Cash | $ | 1,877 | $ | 22 | ||
Working capital (deficit) | (167,250 | ) | (161,929 | ) | ||
Total assets | 93,285 | 92,595 | ||||
Total liabilities | 173,484 | 169,835 | ||||
Shareholders equity (deficiency) | (80,199 | ) | (77,240 | ) |
We anticipate that we will require approximately $1,000,000 to pursue our plan of operations over the next 12 months. As at March 31, 2011, we had cash of $1,877 and a working capital deficit of $167,250. Consequently, we will require additional financing to pursue our plan of operations over the next 12 months. There can be no assurance that we will obtain any additional financing in the amounts required or on terms favorable to us. If we are unable to obtain additional financing, we may have to re-evaluate or abandon our business activities and plan of operations.
On April 6, 2011, we entered into a Convertible Promissory Note (the Note), to evidence our promise to repay the noteholder (the Holder) $150,000 (the Principal), together with interest (the Interest) from April 6, 2011 at a rate of 10% per annum on the unpaid balance of the Principal. Pursuant to the terms of the Note, the Principal and the Interest thereon shall be due and payable in full on April 6, 2012 (the Due Date). The Note may be prepaid at any time without penalty.
Pursuant to the terms of the Note, the Principal and the Interest thereon is convertible, in whole and not in part, at the option of the lender at any time prior to the Due Date by notice to us into shares of our common stock at the conversion price equal to $0.04 per common share. Pursuant to the terms of the Note on or about May 4, 2011, we issued to the Holder 5,000,000 restricted shares of our common stock (the Collateral Shares), as collateral under the Note. Such Collateral Shares are being held in escrow by the Holder. Upon conversion by the Holder of the Principal and Interest into common shares, or upon payment in full of the Note and all Interest thereon, the Collateral Shares shall be cancelled and returned to Treasury.
Cash Used in Operating Activities
Net cash used in operating activities in the three months ended March 31, 2011 was $78,655, compared to $31,080 in the three months ended March 31, 2010.
Cash Flow from Investing Activities
Net cash from investing activities in the three months ended March 31, 2011 was $nil, compared to $36,172 used in investing activities in the three months ended March 31, 2010.
Cash Provided By Financing Activities
In the three months ended March 31, 2011, we received cash of $81,500, compared to $92,414 in three months ended March 31, 2010.
Subsequent to the end of the period, on April 6, 2011, we entered into the Note referred to above, to evidence our promise to repay the Holder $150,000 together with interest from April 6, 2011 at a rate of 10% per annum on the unpaid balance of the principal.
Off-Balance Sheet Arrangements
There are no off balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources, which individually or in the aggregate is material to our investors.
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
Not applicable because we are a smaller reporting company.
Item 4. | Controls and Procedures |
Disclosure Controls and Procedures
David Johnson, our principal executive and our principal financial officer, is responsible for establishing and maintaining disclosure controls and procedures for our company.
Management has evaluated the effectiveness of our disclosure controls and procedures as of three months ended March 31, 2011 (under the supervision and with the participation of our principal executive officer and principal financial officer), pursuant to Rule 13a-15(b) promulgated under the Securities Exchange Act of 1934, as amended. Based on this evaluation, our principal executive officer and principal financial officer concluded that our companys disclosure controls and procedures were effective as three months ended March 31, 2011.
No Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II OTHER INFORMATION
Item 1. | Legal Proceedings |
We currently are not a party to any material legal proceedings and, to our knowledge, no such proceedings are threatened or contemplated.
Item 1A. | Risk Factors |
Not applicable because we are a smaller reporting company.
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
On April 6, 2011, we entered into a Convertible Promissory Note (the Note), to evidence our promise to repay the noteholder (the Holder) $150,000 (the Principal), together with interest (the Interest) from April 6, 2011 at a rate of 10% per annum on the unpaid balance of the Principal. Pursuant to the terms of the Note, the Principal and the Interest thereon shall be due and payable in full on April 6, 2012 (the Due Date). The Note may be prepaid at any time without penalty.
Pursuant to the terms of the Note, the Principal and the Interest thereon is convertible, in whole and not in part, at the option of the lender at any time prior to the Due Date by notice to us into shares of the Companys common stock at the conversion price equal to $0.04 per common share. Pursuant to the terms of the Note on or about May 4, 2011, we issued to the Holder 5,000,000 restricted shares of our common stock (the Collateral Shares), as collateral under the Note. Such Collateral Shares are being held in escrow by the Holder. Upon conversion by the Holder of the Principal and Interest into the Companys common shares, or upon payment in full of the Note and all Interest thereon, the Collateral Shares shall be cancelled and returned to Treasury. We relied on Regulation S as an exemption from the registration requirements of the Securities Act for the issuance of the Note and the Collateral Shares to the Holder.
Item 3. | Defaults Upon Senior Securities |
None.
Item 4. | (Removed and Reserved) |
Not applicable.
Item 5. | Other Information |
None
Item 6. | Exhibits |
Articles of Incorporation and By-laws | |
3.1 | Articles of Incorporation(1) |
3.2 | Bylaws(2) |
3.3 | Certificate of Change Effective August 31, 2009(7) |
3.4 | Certificate of Change Effective March 24, 2010(8) |
Material Contracts | |
10.1 | Amalgamation agreement dated July 30, 2007 among the Company, Park Place Energy Inc., and 0794403 B.C. Ltd. (1) |
10.2 | Farmout Agreement dated May 30, 2006 between Bounty Developments Ltd. and the Company(1) |
10.3 | Oil Sands Lease No. 7406080083 dated August 10, 2006 (1) |
10.4 | Oil Sands Lease No. 7406080084 dated August 10, 2006 (1) |
10.5 | Seismic Option Agreement dated September 22, 2006 among the Company, Bounty Developments Ltd. and Damascus Energy Inc. (1) |
10.6 | Farmout and Option Agreement dated September 25, 2006 between the Company and Patch Energy Inc. (1) |
10.7 | Farmout Participation and Option Agreement dated October 12, 2006 among the Company, Terra Energy Corp., Regal Energy Ltd. and Patch Energy Inc. (1) |
10.8 | Amendment Agreement dated November 2, 2006 among Pine Petroleum Limited, Tidewater Resources Inc. and the Company (1) |
10.9 | Letter Agreement dated March 27, 2007 between the Company and Great Northern Oilsands, Inc. (1) |
10.10 | Letter Agreement dated April 4, 2007 between the Company and Great Northern Oilsands, Inc. (1) |
10.11 | Letter Agreement dated April 30, 2007 between the Company and Great Northern Oilsands, Inc. (1) |
10.12 | Earning Agreement dated June 1, 2007 among the Company, Great Northern Oilsands Inc. and Tidewater Resources Inc. (1) |
10.13 | Letter Agreement dated July 6, 2007 between Britcana Energy Ltd. and the Company (1) |
10.14 | Letter Agreement dated November 30, 2007 between Great Northern Oilsands, Inc. and the Company (5) |
10.15 | Participation Agreement dated August 8, 2007 between Montello Resources Ltd. and Great Northern Oilsands, Inc. (5) |
10.16 | Consulting Agreement dated January 1, 2007 between the Company and David Stadnyk(1) |
10.17 | Change of Control Agreement dated December 1, 2007 between the Company and Merchant Equities Capital Corp. (5) |
10.18 | Park Place Energy Corp. 2007 Stock Option Plan (5) |
10.19 | Park Place Energy Corp. 2007 Stock Option Plan, as amended June 2009(10) |
10.20 |
Purchase and Sale Agreement dated February 15, 2008 among the Company, Panther Minerals Inc. and Brasam Extracao Ltda.(3) | |
10.21 |
Amended Management Services Agreement dated April 10, 2008 between the Company and David Stadnyk (5) | |
10.22 |
Termination Agreement regarding the Worsley Area Properties between the Company and Bounty Developments Ltd. dated June 25, 2008(6) | |
10.23 |
Termination Agreement regarding the Atlee Buffalo Area Properties between the Company and Bounty Developments Ltd. dated June 25, 2008(6) | |
10.24 |
Offer to Purchase Agreement regarding the Kerrobert Area Properties between the Company and True Energy Inc. dated June 25, 2008(6) | |
10.25 |
Purchase and Sale Agreement between the Company and Brasam Extracao Minerals Ltda. dated June 26, 2008(6) | |
10.26 |
Petroleum and Natural Gas Lease dated July 24, 2008(6) | |
10.27 |
Termination Agreement regarding the Cecil (Eureka) Area Properties between the Company and Bounty Developments Ltd. dated March 30, 2009(6) | |
10.28 |
Seismic Earning Agreement dated August 19, 2009(7) | |
10.29 |
Purchase and Sale Agreement dated September 16, 2009(9) | |
10.30 |
Notice of Assignment(9) | |
10.31 |
Assignment Agreement dated May 11, 2010 with Canadian Rigger Energy Inc. (11) | |
10.32 |
Convertible Promissory Note dated April 6, 2011 with Pikka Asset Management Ltd (12) | |
14.1 |
Code of Ethics (4) | |
Subsidiaries of the Small Business Issuer |
| |
21.1 |
Subsidiaries of Small Business Issuer: |
|
Name of Subsidiary |
Jurisdiction of Incorporation | |
Park Place Energy (Canada) Inc. |
British Columbia | |
Park Place Energy (International) Inc. |
British Columbia | |
Certifications |
|
|
31.1 | ||
32.1 |
Notes | |
(1) | Incorporated by reference from our Current Report on Form 8-K/A, filed with the SEC on August 8, 2007. |
(2) | Incorporated by reference from our registration statement on Form SB-2, filed with the SEC on December 9, 2004. |
(3) | Filed with our Current Report on Form 8-K, filed with the SEC on March 6, 2008. |
(4) | Incorporated by reference from our Annual Report of Form 10-KSB, filed with the SEC on October 11, 2006. |
(5) | Incorporated by reference from our Annual Report on Form 10-KSB, filed with the SEC on April 15, 2008. |
(6) | Incorporated by reference from our Annual Report on Form 10-K, filed with the SEC on March 31, 2009. |
(7) | Incorporated by reference from our Current Report on Form 8-K, filed with the SEC on September 3, 2009. |
(8) | Incorporated by reference form our Current Report on Form 8-K, filed with the SEC on March 29, 2010. |
(9) | Incorporated by reference form our Current Report on Form 8-K, filed with the SEC on November 11, 2009. |
(10) | Incorporated by reference from our Annual Report on Form 10-K, filed with the SEC on April 15, 2010. |
(11) | Incorporated by reference from our Current Report on Form 8-K, filed with the SEC on May 25, 2010. |
(12) | Filed herewith. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
PARK PLACE ENERGYCORP.
By: | David Johnson |
David Johnson | |
President, Chief Executive Officer, Secretary, | |
Treasurer and a Director | |
(Principal Executive Officer and Principal Financial Officer) | |
Date: May 13, 2011 |