Attached files
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EXCEL - IDEA: XBRL DOCUMENT - Park Place Energy Corp. | Financial_Report.xls |
EX-31.1 - EXHIBIT 31.1 - Park Place Energy Corp. | exhibit31-1.htm |
EX-32.1 - EXHIBIT 32.1 - Park Place Energy Corp. | exhibit32-1.htm |
EX-31.2 - EXHIBIT 31.2 - Park Place Energy Corp. | exhibit31-2.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 June 30, 2014
[ ] 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.) |
2200 Ross Ave., Suite 4500E | 75201 |
Dallas, TX USA | |
(Address of principal executive offices) | (Zip Code) |
(214) 220-4340
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 website, 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
[X] 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 [ ] |
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: 45,602,677 shares of common stock as of August 12, 2014.
1
PARK PLACE ENERGY CORP.
Quarterly Report On Form 10-Q
For The Quarterly
Period Ended
June 30, 2014
INDEX
2
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
PARK PLACE ENERGY CORP.
Consolidated financial
statements
June 30, 2014
(Expressed in US dollars)
(unaudited)
Index | |
Consolidated balance sheets | 4 |
Consolidated statements of operations | 5 |
Consolidated statements of cash flows | 6 |
Notes to the consolidated financial statements | 7 |
3
PARK PLACE ENERGY CORP.
Consolidated balance sheets
(Expressed in US dollars)
June 30, | December 31, | |||||
2014 | 2013 | |||||
$ | $ | |||||
(unaudited) | ||||||
ASSETS | ||||||
Current assets | ||||||
Cash | 1,917,090 | 32,782 | ||||
Amounts receivable | 1,574 | 91,375 | ||||
Prepaid expenses and deposits | 18,336 | 5,256 | ||||
Total current assets | 1,937,000 | 129,413 | ||||
Restricted cash | 2,300 | 2,300 | ||||
Oil and gas properties (Notes 3 and 7) | 1,767,542 | 1,206,201 | ||||
Total assets | 3,706,842 | 1,337,914 | ||||
LIABILITIES AND STOCKHOLDERS EQUITY | ||||||
Current liabilities | ||||||
Accounts payable and accrued liabilities (Note 7) | 387,118 | 197,777 | ||||
Total liabilities | 387,118 | 197,777 | ||||
Nature of operations and continuance of business (Note 1) | ||||||
Commitments (Note 8) | ||||||
Subsequent events (Note 11) | ||||||
Stockholders equity | ||||||
Common stock | ||||||
Authorized: 250,000,000 shares, par value $0.00001 | ||||||
Issued and outstanding: 36,579,877 and 32,063,447 shares, respectively | 366 | 321 | ||||
Additional paid-in capital | 14,693,016 | 13,748,758 | ||||
Stock subscriptions received (Note 4) | 1,765,124 | 153,286 | ||||
Deficit | (13,138,782 | ) | (12,762,228 | ) | ||
Total stockholders equity | 3,319,724 | 1,140,137 | ||||
Total liabilities and stockholders equity | 3,706,842 | 1,337,914 |
(The accompanying notes are an integral part of these consolidated financial statements)
4
PARK PLACE ENERGY CORP.
Consolidated statements of
operations
(Expressed in US dollars)
(unaudited)
Three months | Three months | Six months | Six months | |||||||||
ended | ended | ended | ended | |||||||||
June 30, | June 30, | June 30, | June 30, | |||||||||
2014 | 2013 | 2014 | 2013 | |||||||||
$ | $ | $ | $ | |||||||||
(Refer to | (Refer to | |||||||||||
Note 10) | Note 10) | |||||||||||
Expenses | ||||||||||||
Depreciation | | 242 | | 537 | ||||||||
Foreign exchange loss | 5,337 | 870 | 9,083 | 1,902 | ||||||||
General and administrative (Note 7) | 193,786 | 50,414 | 367,471 | 118,819 | ||||||||
Total expenses | 199,123 | 51,526 | 376,554 | 121,258 | ||||||||
Loss before other expenses | (199,123 | ) | (51,526 | ) | (376,554 | ) | (121,258 | ) | ||||
Other expenses | ||||||||||||
Loss on settlement of debt | | (3,414 | ) | | (3,414 | ) | ||||||
Loss on disposal of property and equipment | | (112 | ) | | (112 | ) | ||||||
Total other expenses | | (3,526 | ) | | (3,526 | ) | ||||||
Net loss for the period | (199,123 | ) | (55,052 | ) | (376,554 | ) | (124,784 | ) | ||||
Loss per share, basic and diluted | (0.01 | ) | | (0.01 | ) | (0.01 | ) | |||||
Weighted average number of shares outstanding | 36,579,877 | 20,831,963 | 34,982,907 | 20,750,226 |
(The accompanying notes are an integral part of these consolidated financial statements)
5
PARK PLACE ENERGY CORP.
Consolidated statements of
cash flows
(Expressed in US dollars)
(unaudited)
Six months | Six months | |||||
ended | ended | |||||
June 30, | June 30, | |||||
2014 | 2013 | |||||
$ | $ | |||||
(Refer to | ||||||
Note 10) | ||||||
Operating activities | ||||||
Net loss for the period | (376,554 | ) | (124,784 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||
Depreciation | | 537 | ||||
Loss on settlement of debt | | 3,414 | ||||
Loss on disposal of property and equipment | | 112 | ||||
Stock-based compensation | 48,517 | 2,537 | ||||
Changes in operating assets and liabilities: | ||||||
Amounts receivable | 89,801 | 2,436 | ||||
Prepaid expenses and deposits | (13,080 | ) | 6,810 | |||
Accounts payable and accrued liabilities | 18,165 | 50,722 | ||||
Due to/from related parties | | 700 | ||||
Net cash used in operating activities | (233,151 | ) | (57,516 | ) | ||
Investing activities | ||||||
Restricted cash | | 6,325 | ||||
Oil and gas properties expenditures | (387,541 | ) | (62,540 | ) | ||
Net cash used in investing activities | (387,541 | ) | (56,215 | ) | ||
Financing activities | ||||||
Proceeds from loans payable | | 83,125 | ||||
Proceeds from issuance of common stock / stock subscriptions received | 2,512,500 | 284,499 | ||||
Share issuance costs | (7,500 | ) | | |||
Net cash provided by financing activities | 2,505,000 | 367,624 | ||||
Change in cash | 1,884,308 | 253,893 | ||||
Cash, beginning of period | 32,782 | 12,130 | ||||
Cash, end of period | 1,917,090 | 266,023 | ||||
Non-cash investing and financing activities: | ||||||
Common stock issued to settle debt | | 9,104 | ||||
Common stock to be issued for oil and gas properties expenditures | 2,624 | | ||||
Oil and gas property expenditures included in accounts payable | 171,176 | | ||||
Supplemental disclosures: | ||||||
Interest paid | | | ||||
Income taxes paid | | |
(The accompanying notes are an integral part of these consolidated financial statements)
6
PARK PLACE ENERGY CORP.
Notes to the consolidated
financial statements
June 30, 2014
(Expressed in US dollars)
(unaudited)
1. |
Nature of Business 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. The Company is in the business of acquiring and exploring oil and gas properties. | ||
These consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has a history of negative cash flows from operating activities and the continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to obtain necessary equity financing to continue operations, and the attainment of profitable operations. As at June 30, 2014, the Company has an accumulated deficit of $13,138,782 since inception. These factors raise substantial doubt regarding the Companys ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. | ||
The Company requires additional funds over the next twelve months to fully implement its business plan and cover its operating expenses. Management will evaluate various alternatives to obtain additional funding, which include, without limitation, financing through the sale of equity, borrowings or farm outs or similar arrangements under which third parties would pay all or a portion of the costs to implement the Companys business plan in exchange for an interest in the assets of the Company. In connection with a possible financing through the sale of equity, the Company will consider a listing on a domestic or foreign stock exchange. There can be no certainty that these sources will provide the additional funds required for the next twelve months. | ||
2. |
Summary of Significant Accounting Policies | |
(a) |
Reclassifications | |
Certain reclassifications have been made to the prior periods financial statements to conform to the current periods presentation. | ||
(b) |
Recent Accounting Pronouncements | |
The Company has limited operations and is considered to be in the development stage. In the period ended June 30, 2014, the Company has elected to early adopt Accounting Standards Update No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements. The adoption of this ASU allows the Company to remove the inception to date information and all references to development stage. | ||
The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations. | ||
3. |
Oil and Gas Properties |
June 30, | December 31, | ||||||
2014 | 2013 | ||||||
$ | $ | ||||||
Unproven properties | |||||||
Bulgaria | 1,767,542 | 1,206,201 |
The Company holds a 98,205 acre oil and gas exploration claim in the Dobroudja Basin located in northeast Bulgaria (the Block).
Pursuant to an exploration permit originally awarded in October 2010, on April 1, 2014, the Company entered into an Agreement for Crude Oil and Natural Gas Prospecting and Exploration in the Block with the Ministry of Economy and Energy of Bulgaria (the License Agreement). The initial term of the License Agreement is 5 years. The License Agreement (or applicable legislation) provides for possible extension periods for up to 5 additional years during the exploration phase, as well as the conversion of the License Agreement to an exploitation concession, which can last up to 35 years.
7
PARK PLACE ENERGY CORP.
Notes to the consolidated
financial statements
June 30, 2014
(Expressed in US dollars)
(unaudited)
3. |
Oil and Gas Properties (continued) |
Under the License Agreement, the Company will submit a yearly work program that is subject to approval of the Bulgarian regulatory authorities. The Companys commitment is to perform geological and geophysical exploration activities in the first 3 years of the initial term (the Exploration and Geophysical Work Stage), followed by drilling activities in years 4 and 5 of the initial term (the Data Evaluation and Drilling Stage). The Company is required to drill 10,000 meters (approximately 32,800 feet) of new wellbore (may be vertical, horizontal or diagonal) and conduct other exploration activities at certain intervals during the initial term. | |
Pursuant to the License Agreement, the Company is obligated to incur minimum costs during the initial term as follows: |
(i) |
$925,000 for the Exploration and Geophysical Work Stage; and | |
(ii) |
$3,675,000 for the Data Evaluation and Drilling Stage. |
In addition, during the term of the license, the Company is obligated to pay an annual fee of $11,134 (15,897 BGN). | ||
The Company is permitted to commence limited production during the exploration phase. Upon declaration of a commercial discovery, the Company is entitled to convert the productive area of the license to an exploitation concession which may last for up to 35 years provided that the minimum work commitments are satisfied. | ||
4. |
Common Stock | |
(a) |
On March 5, 2014, the Company issued 4,516,430 shares of common stock at a price of $0.20 per share for proceeds of $903,286, of which $153,286 was received as at December 31, 2013. Included in this private placement was 125,000 common shares issued to the Corporate Secretary of the Company for proceeds of $25,000. In connection with this private placement, the Company incurred $7,500 in share issuance costs to a director of the Company. Refer to Note 7(g). | |
(b) |
As at June 30, 2014, the Company had received subscriptions for 7,050,000 shares of common stock at a price of $0.25 per share for proceeds of $1,762,500, which is included in stock subscriptions received. Included in this private placement were proceeds of $250,000 received from a significant shareholder of the Company. Refer to Note 11(a). | |
(c) |
As at June 30, 2014, the Company had 32,800 shares of common stock with a fair value of $2,624 to be issued to the Vice President of Exploration pursuant to a consulting agreement. Refer to Notes 8(a) and 11(b). | |
5. |
Stock Options | |
The Company has issued stock options pursuant to two stock option plans, the 2013 Long-term Incentive Plan the 2013 LTIP and the 2011 Stock Option Plan (which was replaced by the 2013 LTIP). Under the 2013 LTIP, the total number of authorized options which may be granted is up to a total of 10% of the total number of shares of common stock issued and outstanding of the company on a rolling basis. Under the 2013 LTIP, 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 Board of Directors at the time of grant. The maximum term of options granted is ten years or such lesser time as determined by the Company at the time of grant. | ||
The following table summarizes the continuity of the Companys stock options: |
Weighted | ||||||||||
average | Aggregate | |||||||||
exercise | intrinsic | |||||||||
Number | price | value | ||||||||
of options | $ | $ | ||||||||
Outstanding, December 31, 2013 | 1,800,000 | 0.15 | ||||||||
Granted | 250,000 | 0.22 | ||||||||
Expired | (50,000 | ) | 0.10 | |||||||
Outstanding, June 30, 2014 | 2,000,000 | 0.16 | 139,500 |
8
PARK PLACE ENERGY CORP.
Notes to the consolidated
financial statements
June 30, 2014
(Expressed in US dollars)
(unaudited)
5. |
Stock Options (continued) |
Additional information regarding stock options as of June 30, 2014, is as follows: |
Outstanding | Exercisable | |||||||||||||||
Weighted | ||||||||||||||||
average | Weighted | Weighted | ||||||||||||||
Range of | remaining | average | average | |||||||||||||
exercise prices | Number of | contractual life | exercise price | Number of | exercise price | |||||||||||
$ | shares | (years) | $ | shares | $ | |||||||||||
0.10 | 1,050,000 | 3.2 | 0.10 | 1,050,000 | 0.10 | |||||||||||
0.20 | 100,000 | 2.5 | 0.20 | 50,000 | 0.20 | |||||||||||
0.23 - 0.235 | 850,000 | 2.4 | 0.23 | 825,000 | 0.23 | |||||||||||
2,000,000 | 2.8 | 0.16 | 1,925,000 | 0.16 |
The fair values for stock options granted have been estimated using the Black-Scholes option pricing model assuming no expected dividends and the following weighted average assumptions:
Six months | Six months | ||||||
ended | ended | ||||||
June 30, | June 30, | ||||||
2014 | 2013 | ||||||
Risk-free interest rate | 0.75% | | |||||
Expected life (in years) | 3.0 | | |||||
Expected volatility | 175% | |
The fair value of stock options vested during the six months ended June 30, 2014 was $48,517 (2013 $2,537) which was recorded as stock-based compensation and charged to operations. The weighted average fair value of stock options granted during the six months ended June 30, 2014 was $0.19 (2013 $0.06) per option. | |
6. |
Share Purchase Warrants |
The following table summarizes the continuity of share purchase warrants: |
Weighted | |||||||
average | |||||||
exercise | |||||||
Number of | price | ||||||
warrants | $ | ||||||
Balance December 31, 2013 and June 30, 2014 | 11,000,000 | 0.20 |
As at June 30, 2014, the following share purchase warrants were outstanding:
Number of | Exercise | ||||||
warrants | price | ||||||
outstanding | $ |
Expiry date |
|||||
11,000,000 | 0.20 |
August 29, 2016 |
7. |
Related Party Transactions | |
(a) |
During the six months ended June 30, 2014, the Company incurred management fees of $nil (2013 $12,000) to a company controlled by the former President of the Company. | |
(b) |
During the six months ended June 30, 2014, the Company incurred oil and gas consulting costs of $56,550 (2013 $nil) and consulting fees of $21,450 (2013 $nil) to a company controlled by the President of the Company, of which $13,175 (December 31, 2013 $13,773) was included in accounts payable and accrued liabilities as at June 30, 2014. |
9
PARK PLACE ENERGY CORP.
Notes to the consolidated
financial statements
June 30, 2014
(Expressed in US dollars)
(unaudited)
7. |
Related Party Transactions (continued) | ||
(c) |
During the six months ended June 30, 2014, the Company incurred wages of $10,938 (2013 $9,500) to the Chief Financial Officer of the Company, of which $2,174 (December 31, 2013 $nil) was included in accounts payable and accrued liabilities as at June 30, 2014. | ||
(d) |
During the six months ended June 30, 2014, the Company incurred oil and gas consulting costs of $29,021 (2013 $nil) and management fees of $49,654 (2013 $nil) to the Corporate Secretary, of which $31,470 (December 31, 2013 $7,250) was included in accounts payable and accrued liabilities as at June 30, 2014. | ||
(e) |
During the six months ended June 30, 2014, the Company incurred oil and gas consulting costs of $86,287 (2013 $nil) to a company controlled by the Vice President of Exploration of the Company, of which $15,888 (December 31, 2013 $nil) was included in accounts payable and accrued liabilities as at June 30, 2014. | ||
(f) |
During the six months ended June 30, 2014, the Company incurred accounting fees of $12,738 (2013 $4,500) to a company controlled by the Treasurer of the Company, of which $1,874 (December 31, 2013 $nil) was included in accounts payable and accrued liabilities as at June 30, 2014. | ||
(g) |
During the six months ended June 30, 2014, the Company incurred share issuance costs of $7,500 (2013 $nil) to a director of the Company. | ||
(h) |
During the six months ended June 30, 2014, the Company granted 250,000 stock options with a fair value of $38,320 to officers and directors of the Company. | ||
8. |
Commitments | ||
(a) |
On July 25, 2013 (as amended on February 1, 2014 and August 1, 2014), the Company entered into an agreement with a company controlled by the Vice President of Exploration for a period of four months, which was later extended to commence on February 1, 2014 to December 31, 2014, and may be continued on a month to month basis upon the Company providing written notice of intent to extend at least thirty days prior to the end of each month or until as otherwise mutually agreed. Pursuant to the agreement, the Company is to pay the consultant 10,000 GBP per month, issue 120,000 shares of common stock (issued), and grant 100,000 stock options (granted) with an exercise price of $0.10 per share expiring three years from the date of grant, of which 50,000 stock options vested on July 26, 2013 and 50,000 expired unvested on January 26, 2014, for the initial term of four months. For the period from February 2, 2014 to December 31, 2014, the Company is to pay the consultant 11,000 GBP per month, issue 32,800 shares of common stock vesting on June 1, 2014, and grant 100,000 stock options with an exercise price of $0.28 per share expiring three years from August 1, 2014 and vesting as follows: 50,000 stock options shall vest on the date of grant and 50,000 shall vest on the Qualified Transaction Date. Qualified Transaction Date is defined as the earlier of the following: | ||
a. |
The date the Company completes raising in the aggregate $10,000,000 in one or a series of capital raises, the calculation of which commences June 15, 2013; or | ||
b. |
The date in which the Company completes a farmout or other infusion of capital for the project (under a financing or other arrangement) in an amount of $20,000,000 or greater. | ||
(b) |
On September 1, 2013, the Company entered into an agreement with a consultant whereby the Company is to pay the consultant Cdn$7,500 per month, increasing to Cdn$10,000 per month when the Company raises at least Cdn$10,000,000 in financing, for a period of two years. The Company has the right to terminate this agreement after the expiration of one year if the Company has not secured a financing of at least Cdn$10,000,000 during the first year of this agreement. |
10
PARK PLACE ENERGY CORP.
Notes to the consolidated
financial statements
June 30, 2014
(Expressed in US dollars)
(unaudited)
8. |
Commitments (continued) | ||
(c) |
On September 20, 2013 (as amended on August 1, 2014), the Company entered into an agreement with a consultant whereby the Company is to pay the consultant $1,800 per calendar day for services provided. A calendar day will be broken into quarter days where less than a full working calendar day is spent providing services. 50% of the consultant fee is deferred and will be paid in restricted stock units (RSUs). Fees accrued from the inception of the agreement to June 30, 2014 shall be paid by RSUs issued as of August 1, 2014. From and after July 1, 2014 until the Qualified Transaction Date, the deferral fee shall be paid in RSUs on a quarterly basis. Pricing for the RSUs accruing from and after July 1, 2014 will be determined based on the average closing price of the Companys common shares for the last ten days of the calendar quarter in which such RSUs accrued. After the Qualified Transaction Date, the fees and deferrals shall no longer apply. The Company is to pay the consultant $1,500 per calendar day after the Qualified Transaction Date. | ||
(d) |
On November 1, 2013 (as amended on August 1, 2014), the Company entered into an agreement with the President of the Company and a company controlled by the President of the Company whereby the Company is to pay $13,000 per month for a period of two years effective September 1, 2013. The term will renew on a month-to-month basis thereafter. For the period following the month during which a Phase I Capital Raise has been completed by the company not later than March 31, 2015, the monthly payment increases to $18,000 per month. Phase I Capital Raise is defined as the following: | ||
a. |
Raising in the aggregate $10,000,000 in one or a series of capital raises, the calculation of which commences June 15, 2013; or | ||
b. |
A farmout or other infusion of capital for the project (under a financing or other arrangement) in an amount of $20,000,000 or greater. | ||
If the Phase I Capital Raise is completed on or before March 31, 2015, the President would also be issued 300,000 fully vested RSUs which will be subject to a minimum two year hold period upon completion of this financing. The Company will issue the President 100,000 fully vested RSUs upon each anniversary of this agreement dated upon completion of the financing so long as the agreement remains in effect. If the Company completes any additional cash financing of $10,000,000 or more in addition to the first $10,000,000 of equity financing, the Company will issue the President 250,000 fully vested RSUs upon the first subsequent capital raise and 200,000 upon completion of a second subsequent capital raise. On August 1, 2014, the Company shall also issue 80,000 RSUs to the President of the Company. Commencing with the month of August 2014 and for every month through and including the month that a Phase I Capital Raise transaction is completed, the President of the Company shall accrue RSUs equivalent to $5,000 per month to be issued at the end of each calendar quarter. The pricing for such RSUs will be determined based on the average closing price of the Companys common shares for the last ten days of the calendar quarter in which such RSUs accrued. | |||
9. |
Segmented Information | ||
The Companys operations are in the resource industry in Bulgaria with head offices in the United States and an administration office in Canada. Geographical information is as follows: |
June 30, 2014 | Canada | Bulgaria | Total | |||||||
$ | $ | $ | ||||||||
Restricted cash | 2,300 | | 2,300 | |||||||
Oil and gas properties | | 1,767,542 | 1,767,542 |
December 31, 2013 |
Canada | Bulgaria | Total | |||||||
$ | $ | $ | ||||||||
Restricted cash | 2,300 | | 2,300 | |||||||
Oil and gas properties | | 1,206,201 | 1,206,201 |
11
PARK PLACE ENERGY CORP.
Notes to the consolidated
financial statements
June 30, 2014
(Expressed in US dollars)
(unaudited)
10. |
Change in Reporting Currency | |
On December 31, 2013, the Company changed its reporting currency from Canadian dollars to US dollars. In preparing the Companys prior period comparative balances in US dollars, the Company has adjusted and reclassified amounts previously reported in the financial statements in Canadian dollars. The changes made to the consolidated statements of operations for the three and six months ended June 30, 2013, and the consolidated statement of cash flows for the six months ended June 30, 2013 are shown below. | ||
(a) |
Reconciliation of statement of operations for the three months ended June 30, 2013: |
Effect of change | ||||||||||
in reporting | ||||||||||
As previously | currency and | Revised | ||||||||
reported | reclassifications | amount | ||||||||
Cdn$ | $ | US$ | ||||||||
Expenses | ||||||||||
Consulting | 14,520 | (14,520 | ) | | ||||||
Depreciation | 248 | (6 | ) | 242 | ||||||
Foreign exchange loss | 1,918 | (1,048 | ) | 870 | ||||||
General and administrative | | 50,414 | 50,414 | |||||||
Insurance | 3,484 | (3,484 | ) | | ||||||
Office and general | 9,610 | (9,610 | ) | | ||||||
Professional fees | 14,601 | (14,601 | ) | | ||||||
Stock-based compensation | 2,603 | (2,603 | ) | | ||||||
Travel | 1,893 | (1,893 | ) | | ||||||
Wages | 4,945 | (4,945 | ) | | ||||||
Total expenses | 53,822 | (2,296 | ) | 51,526 | ||||||
Loss before other expenses | (53,822 | ) | 2,296 | (51,526 | ) | |||||
Other expenses | ||||||||||
Loss on settlement of debt | (3,467 | ) | 53 | (3,414 | ) | |||||
Loss on disposal of property and equipment | (114 | ) | 2 | (112 | ) | |||||
Total other expenses | (3,581 | ) | 55 | (3,526 | ) | |||||
Net loss for the period | (57,403 | ) | 2,351 | (55,052 | ) | |||||
Foreign currency translation adjustment | 15,891 | (15,891 | ) | | ||||||
Comprehensive loss | (41,512 | ) | (13,540 | ) | (55,052 | ) |
12
PARK PLACE ENERGY CORP.
Notes to the consolidated
financial statements
June 30, 2014
(Expressed in US dollars)
(unaudited)
10. |
Change in Reporting Currency (continued) | |
(b) |
Reconciliation of statement of operations for the six months ended June 30, 2013: |
Effect of change | ||||||||||
in reporting | ||||||||||
As previously | currency and | Revised | ||||||||
reported | reclassifications | amount | ||||||||
Cdn$ | $ | US$ | ||||||||
Expenses | ||||||||||
Consulting | 37,193 | (37,193 | ) | | ||||||
Depreciation | 545 | (8 | ) | 537 | ||||||
Foreign exchange loss | 2,235 | (333 | ) | 1,902 | ||||||
General and administrative | | 118,819 | 118,819 | |||||||
Insurance | 6,916 | (6,916 | ) | | ||||||
Investor relations | 794 | (794 | ) | | ||||||
Management fees | 12,092 | (12,092 | ) | | ||||||
Office and general | 12,417 | (12,417 | ) | | ||||||
Professional fees | 35,100 | (35,100 | ) | | ||||||
Stock-based compensation | 2,603 | (2,603 | ) | | ||||||
Travel | 3,468 | (3,468 | ) | | ||||||
Wages | 10,005 | (10,005 | ) | | ||||||
Total expenses | 123,368 | (2,110 | ) | 121,258 | ||||||
Loss before other expenses | (123,368 | ) | 2,110 | (121,258 | ) | |||||
Other expenses | ||||||||||
Loss on settlement of debt | (3,467 | ) | 53 | (3,414 | ) | |||||
Loss on disposal of property and equipment | (114 | ) | 2 | (112 | ) | |||||
Total other expenses | (3,581 | ) | 55 | (3,526 | ) | |||||
Net loss for the period | (126,949 | ) | 2,165 | (124,784 | ) | |||||
Foreign currency translation adjustment | 20,411 | (20,411 | ) | | ||||||
Comprehensive loss | (106,538 | ) | (18,246 | ) | (124,784 | ) |
13
PARK PLACE ENERGY CORP.
Notes to the consolidated
financial statements
June 30, 2014
(Expressed in US dollars)
(unaudited)
10. |
Change in Reporting Currency (continued) | |
(c) |
Reconciliation of statement of cash flows for the six months ended June 30, 2013: |
Effect of change | ||||||||||
As previously | in reporting | Revised | ||||||||
reported | currency | amount | ||||||||
Cdn$ | $ | US$ | ||||||||
Operating activities | ||||||||||
Net loss for the period | (126,949 | ) | 2,165 | (124,784 | ) | |||||
Adjustments to reconcile
net loss to net cash
used in operating activities: |
||||||||||
Depreciation | 545 | (8 | ) | 537 | ||||||
Loss on settlement of debt | 3,467 | (53 | ) | 3,414 | ||||||
Loss on disposal of property and equipment | 114 | (2 | ) | 112 | ||||||
Stock-based compensation | 2,603 | (66 | ) | 2,537 | ||||||
Changes in operating assets and liabilities: | ||||||||||
Amounts receivable | 2,335 | 101 | 2,436 | |||||||
Prepaid expenses and deposits | 6,500 | 310 | 6,810 | |||||||
Accounts payable and accrued liabilities | 55,031 | (4,309 | ) | 50,722 | ||||||
Due from related party | 700 | | 700 | |||||||
Net cash used in operating activities | (55,654 | ) | (1,862 | ) | (57,516 | ) | ||||
Investing activities | ||||||||||
Restricted cash | 6,242 | 83 | 6,325 | |||||||
Oil and gas properties expenditures | (75,695 | ) | 13,155 | (62,540 | ) | |||||
Net cash provided by investing activities | (69,453 | ) | 13,238 | (56,215 | ) | |||||
Financing activities | ||||||||||
Proceeds from loans payable | 87,500 | (4,375 | ) | 83,125 | ||||||
Proceeds from issuance of common
stock/ subscriptions received |
291,630 | (7,131 | ) | 284,499 | ||||||
Net cash provided by financing activities | 379,130 | (11,506 | ) | 367,624 | ||||||
Effect of exchange rate changes on cash | 13,530 | (13,530 | ) | | ||||||
Change in cash | 267,553 | (13,660 | ) | 253,893 | ||||||
Cash, beginning of period | 12,181 | (51 | ) | 12,130 | ||||||
Cash, end of period | 279,734 | (13,711 | ) | 266,023 |
11. |
Subsequent Events |
(a) |
On July 24, 2014, the Company issued 8,990,000 shares of common stock at a price of $0.25 per share for proceeds of $2,247,500, of which $1,762,500 was included in stock subscriptions received as at June 30, 2014. Refer to Note 4(b). |
|
(b) |
On August 4, 2014, the Company issued 32,800 shares of common stock to the Vice President of Exploration pursuant to a consulting agreement. Refer to Note 4(c). |
14
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with our Unaudited Financial Statements and Notes thereto included herein and our Financial Statements and Notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2013 (the Form 10-K), along with Managements Discussion and Analysis of Financial Condition and Results of Operations contained in the Form 10-K. Any terms used but not defined herein have the same meaning given to them in the Form 10-K. Our discussion and analysis includes forward-looking information that involves risks and uncertainties and should be read in conjunction with Risk Factors under Item 1A of Part II of this report, along with Forward-Looking Information at the end of this section for information on the risks and uncertainties that could cause our actual results to be materially different than our forward-looking statements.
Throughout this Quarterly Report on Form 10-Q, the terms "Park Place" "we" "us," "the Company", "our" and "our company" refer to Park Place Energy Corp. and its subsidiaries.
Our website can be found at www.parkplaceenergy.com. Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed with or furnished to the U.S. Securities and Exchange Commission ("SEC"), pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 ("Exchange Act"), can be accessed free of charge by linking directly from our website under the "Investor Relations - SEC Filings" caption to the SEC's Edgar Database.
Executive overview
Park Place Energy Corp. is an energy company engaged in exploration for oil and natural gas in Bulgaria.
Today, the operations of our Company and its subsidiary concentrate on natural gas exploration in the Dobrich region of northeast Bulgaria. Our goal is to become a producer of natural gas in Bulgaria.
Our head offices are located in Texas and we established a registered office in Bulgaria and satellite offices in British Columbia, Canada.
Our primary oil and gas exploration permit is located in the Dobrudja Basin, northeast Bulgaria, which was awarded to the Company in October 2010. The award of the exploration permit was in dispute until mid-2013, due to litigation regarding the tender process that was resolved in our favor. The term of the initial period of the exploration permit is five years. This five-year period will commence once the Bulgarian regulatory authorities approve the Park Place work programs for the permit area. The specific proposed work programs are presently under review by the Bulgairan authorities. The initial term of the exploration permit may be extended up to an additional 5 years so long as we satisfy our minimum work commitments. Upon declaration of a commercial discovery, a portion of the exploration permit may be converted into an exploitation concession, which may have a duration of up to 35 years so long as we satisfy our minimum work commitments.
In 2010, we revamped our business strategy to focus on obtaining gas properties in Europe. We were attracted to the high price of natural gas and shortage of supply on the European continent. We also saw the possibility of prolonged depressed natural gas prices in North America.
In October of 2010, we were awarded our first exploration block in Europe, the Vranino 1-11 Block located in Dobrudja Basin, Bulgaria covering an area of 98,205 acres (397.42 square kilometers) by the Bulgarian Counsel of Ministers. Thereafter, on April 1, 2014, the Company entered into a license agreement titled Agreement for Crude Oil and Natural Gas Prospecting and Exploration in Block 1-11 Vranino, situated in Dobrich District with the Ministry of Economy and Energy of Bulgaria (the License Agreement).
Notwithstanding the execution of the License Agreement, under Bulgarian law, the exploration license granted therein will not become effective until all of the following conditions have been satisfied (the License Conditions Precedent): (i) the approval of the Companys work programs by the Ministry of Environment as well as by the Ministry of Energy (the Ministry Approvals); (ii) the posting of a bond by the Company, the amount of which must be approved by the Ministry of Energy; (iii) plus the payment of a signature bonus by the Company in the amount of 100,007 Euros, within thirty days after the Ministry Approvals.
The initial term of the License Agreement is five (5) years. This five-year period will commence after the License Conditions Precedent have been satisfied, which is expected to occur mid-2014. The License Agreement (or applicable legislation) provides for possible extension periods for up to 5 additional years during the exploration phase, as well as the conversion of the License Agreement to an exploitation concession, which can last up to 35 years. Such extensions and conversion are at the Companys election, subject to the Companys satisfaction of minimum work commitments and Government approval.
15
Under the License Agreement, the Company will submit a yearly work program that is subject to approval of the Bulgarian regulatory authorities. The Companys commitment is to perform geological and geophysical exploration activities in the first 3 years of the initial term, followed by drilling activities in years 4 and 5 of the initial term. The Company is expected to drill approximately 32,800 feet (10,000 meters) of new wellbore (may be vertical, horizontal or diagonal) and conduct other exploration activities at certain intervals during the initial term. The Company has flexibility to adjust the yearly work program based on negotiations with the Bulgarian regulatory authorities.
If the Company is successful in its exploration efforts during the exploration phase, the Company would file to establish a geological discovery. The Company is permitted to commence limited production during the exploration phase. After additional exploration work is completed on the area covered by the License Agreement and upon declaration of a commercial discovery, the Company may, subject to Government approval, convert a portion of the License Agreement to an exploitation concession. The duration of the exploitation concession may last for up to 35 years so long as minimum work commitments are satisfied.
The costs of the exploration plan will vary depending on a variety of factors, including, inter alia, the market price and availability of services in the area, taxes, and transportation costs relating to delivering equipment to the area.
During the quarter, we continued to engage in the collection of historical data regarding the Bulgarian license block. We have accumulated a solid body of data that will assist us in making the exploration project successful. We have submitted our overall five year work program and our first year work program and budget to the government authorities for their approval.
Patents and Trademarks
We do not own, either legally or beneficially, any patent or trademark.
Research and Development Expenditures
We have not incurred any research or development expenditures since our incorporation.
Government Regulation
Our current or future operations, including exploration and development activities on our properties, require permits from various governmental authorities, and such operations are and will be governed by laws and regulations of the jurisdiction in which we are conducting business, which at the present time is Bulgaria. These laws and regulations concern exploration, development, production, exports, taxes, labor laws and standards, occupational health, waste disposal, toxic substances, land use, environmental protection and other matters. Compliance with these requirements may prove to be difficult and expensive. Due to our international operations, we are subject to the following issues and uncertainties that can affect our operations adversely:
-
the risk of expropriation, nationalization, war, revolution, political instability, border disputes, renegotiation or modification of existing contracts, and import, export and transportation regulations and tariffs;
-
laws of foreign governments affecting our ability to fracture stimulate oil or natural gas wells, such as the legislation enacted in Bulgaria in January 2012, discussed in greater detail below;
-
the risk of not being able to procure residency and work permits for our expatriate personnel;
-
taxation policies, including royalty and tax increases and retroactive tax claims;
-
exchange controls, currency fluctuations and other uncertainties arising out of foreign government sovereignty over international operations;
16
-
laws and policies of the United States affecting foreign trade, taxation and investment;
-
the possibility of being subjected to the exclusive jurisdiction of foreign courts in connection with legal disputes and the possible inability to subject foreign persons to the jurisdiction of courts in the United States; and
-
the possibility of restrictions on repatriation of earnings or capital from foreign countries.
Permits and Licenses
In order to carry out exploration and development of oil and natural gas interests or to place these into commercial production, we may require certain licenses and permits from various governmental authorities. There can be no guarantee that we will be able to obtain all necessary licenses and permits that may be required. In addition, such licenses and permits are subject to change and there can be no assurances that any application to renew any existing licenses or permits will be approved.
Repatriation of Earnings
Currently, there are no restrictions on the repatriation of earnings or capital to foreign entities from Bulgaria. However, there can be no assurance that any such restrictions on repatriation of earnings or capital from the aforementioned countries or any other country where we may invest will not be imposed in the future.
Environmental
The oil and natural gas industry is subject to extensive environmental regulations in Bulgaria. Environmental regulations establish standards respecting health, safety and environmental matters and place restrictions and prohibitions on emissions of various substances produced concurrently with oil and natural gas. The regulatory requirements cover the handling and disposal of drilling and production waste products and waste created by water and air pollution control procedures. These regulations may have an impact on the selection of drilling locations and facilities, potentially resulting in increased capital expenditures. In addition, environmental legislation may require those wells and production facilities to be abandoned and sites reclaimed to the satisfaction of local authorities. Such regulation has increased the cost of planning, designing, drilling, operating and, in some instances, abandoning wells. We are committed to complying with environmental and operation legislation wherever we operate.
There has been a recent surge in interest among the media, government regulators and private citizens concerning the possible negative environmental and geological effects of fracture stimulation. Some have alleged that fracture stimulation results in the contamination of aquifers and may even contribute to seismic activity. In January 2012, the government of Bulgaria enacted legislation that banned the fracture stimulation of oil and natural gas wells in the Republic of Bulgaria and imposed large monetary penalties on companies that violate that ban. Such legislation or regulations could impact our ability to drill and complete wells, and could increase the cost of planning, designing, drilling, completing and operating wells. We are committed to complying with legislation and regulations involving fracture stimulation wherever we operate.
Such laws and regulations not only expose us to liability for our own negligence, but may also expose us to liability for the conduct of others or for our actions that were in compliance with all applicable laws at the time those actions were taken. We may incur significant costs as a result of environmental accidents, such as oil spills, natural gas leaks, ruptures, or discharges of hazardous materials into the environment, including clean-up costs and fines or penalties. Additionally, we may incur significant costs in order to comply with environmental laws and regulations and may be forced to pay fines or penalties if we do not comply.
Competition
We operate in Bulgaria, where currently one Russian company supplies Bulgaria with virtually all gas being marketed and consumed in Bulgaria through a pipeline that runs through Ukraine from Russia. On a regional level, we compete with other oil and gas exploration companies and independent producers for license blocks and capital, which are actively seeking oil and gas properties throughout the world.
The principal area of competition is encountered in the financial ability of our Company to acquire acreage positions and drill wells to explore for oil and gas, then, if warranted, install production equipment. Competition for the acquisition of oil and gas license areas is high in Europe.
17
Therefore, we may or may not be successful in acquiring additional blocks in the face of this competition. Presently, we are not seeking additional license blocks.
From a general standpoint, we operate in the highly competitive areas of oil and natural gas exploration, development, production and acquisition with a substantial number of other companies, including U.S.-based and international companies doing business in each of the countries in which we operate. We face intense competition from independent, technology-driven companies as well as from both major and other independent oil and natural gas companies in each of the following areas:
-
seeking oil and natural gas exploration licenses and production licenses and leases;
-
acquiring desirable producing properties or new leases for future exploration;
-
marketing oil and natural gas production;
-
integrating new technologies; and
-
contracting for drilling services and equipment and securing the expertise necessary to develop and operate properties.
Many of our competitors have substantially greater financial, managerial, technological and other resources than we do. To the extent competitors are able to pay more for properties than we are paying, we will be at a competitive disadvantage. Further, many of our competitors enjoy technological advantages over us and may be able to implement new technologies more rapidly than we can. Our ability to explore for and produce oil and natural gas prospects and to acquire additional properties in the future will depend upon our ability to successfully conduct operations, implement advanced technologies, evaluate and select suitable properties and consummate transactions in this highly competitive environment.
Employees and Directors
As of June 30, 2014, the Company had one full time employee, the Companys chief financial officer, while all of the other executive officers of Company work on a consulting contract basis. As of June 30, 2014, our business is generally conducted through our officers and directors and also through consultants of the company. A description of our officers and directors professional experience is contained on our website.
Working Capital
Based on our current plan of operations as set forth above, we estimate that we will require approximately $2,300,000 to pursue our plan of operations over the next 12 months. As at June 30, 2014, we had cash of $1,917,090 and working capital of $1,549,882.
The Company requires additional funds over the next twelve months to fully implement its business plan and cover its operating expenses. Management will evaluate various alternatives to obtain additional funding, which include, without limitation, financing through the sale of equity, borrowings from private lenders, or farm-outs or similar arrangements under which third parties would pay all or a portion of the costs to implement the Companys business plan in exchange for an interest in assets of the Company. In connection with a possible financing through the sale of equity, the Company will consider a listing on a domestic or foreign stock exchange. There can be no certainty that these sources will provide the additional funds required for the next twelve months. If we do not continue to obtain additional financing or less than anticipated going forward, we will re-evaluate our plans.
Results of Operations
The following summary of our results of operations should be read in conjunction with our unaudited consolidated financial statements for the quarter ended June 30, 2014 which are included herein.
18
Revenue
We are a pre-revenue stage company, and our future revenues depend upon successful extraction of oil and gas deposits for sale.
Expenses
Our total operating expenses for the six months ending June 30, 2014 was $376,554 compared to $121,258 for the same period in 2013.
Our primary expense categories are described below:
General and Administrative Expenses
Our office and general expenses increased to $367,471 for the six months ended June 30, 2014 from $118,819 for the six months ending June 30, 2013. Our overhead increased due to employing more consultants and increased general activity of the Company over the last year.
Loss
Our net loss for the six months ending June 30, 2014 was $376,554 compared to $124,784 for the six months ending June 30, 2013.
Liquidity and Capital Resources
Overview
For the six months ending June 30, 2014, we raised net proceeds of $2,505,000 in cash from the issuance of common stock and share subscriptions received (net of stock issuance costs) all which funds will be used for general operation and to commence the exploration in Bulgaria.
We used net cash of $233,151 in operating activities for the six months ended June 30, 2014 compared to $57,916 for the same period in 2013.
The following table summarizes our liquidity position as at June 30, 2014:
As at | |||
June 30, 2014 | |||
(Unaudited) | |||
$ | |||
Cash | 1,917,090 | ||
Working capital | 1,549,882 | ||
Total assets | 3,706,842 | ||
Total liabilities | 387,118 | ||
Shareholders equity | 3,319,724 |
We anticipate that we will require approximately $2,300,000 to pursue our plan of operations over the next 12 months. As at June 30, 2014, we had cash of $1,917,090 and working capital of $1,549,822. We anticipate raising additional funds over the next twelve months to pay for our exploration commitments in Bulgaria and general and administrative expenses.
Cash Flow Used In Operating Activities
Net cash used in operating activities was $233,151 for the six months ended June 30, 2014 compared to $57,516 for the six months ended June 30, 2013.
19
Cash Flow from Investing Activities
Net cash used in investing activities for the six months ended June 30, 2014 was $387,541 compared to net cash of $56,215 for the six months ending June 30, 2013. This increase was due to increased expenditures on the Bulgarian project compared to the prior period as the litigation regarding the exploration claim was concluded in June 2013.
Cash Provided By Financing Activities
For the six months ended June 30, 2014, cash provided by financing activities was $2,505,000 compared to $367,624 for the six months ended June 30, 2013.
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.
Critical Accounting Policies
Our consolidated financial statements and accompanying notes have been prepared in accordance with U.S. generally accepted accounting principles applied on a consistent basis. The preparation of financial statements in conformity with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.
We regularly evaluate the accounting policies and estimates that we use to prepare our consolidated financial statements. In general, managements estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.
We believe that our critical accounting policies and estimates include the following:
Oil and gas properties
The Company follows the full
cost method of accounting for oil and natural gas operations, whereby all costs
of exploring for and developing oil and natural gas reserves are capitalized and
accumulated in cost centers on a country-by-country basis. Costs include land
acquisition costs, geological and geophysical charges, carrying charges on
non-productive properties and costs of drilling both productive and
non-productive wells. General and administrative costs are not capitalized other
than to the extent of the Companys working interest in operated capital
expenditure programs on which operators fees have been charged equivalent to
standard industry operating agreements.
The costs in each cost center, including the costs of well equipment, are depleted and depreciated using the unit-of-production method based on the estimated proved reserves before royalties. Natural gas reserves and production are converted to equivalent barrels of crude oil based on relative energy content. The costs of acquiring and evaluating significant unproved properties are initially excluded from depletion calculations. These unevaluated properties are assessed periodically to ascertain whether impairment has occurred. When proved reserves are assigned or the property is considered to be impaired, the cost of the property or the amount of the impairment is added to costs subject to depletion.
The capitalized costs less accumulated depletion and depreciation in each cost center are limited to an amount equal to the estimated future net revenue from proved reserves (based on prices and costs at the balance sheet date) plus the cost (net of impairments) of unproved properties. The total capitalized costs less accumulated depletion and depreciation, site restoration provision and future income taxes of all cost centers are further limited to an amount equal to the future net revenue from proved reserves plus the cost (net of impairments) of unproved properties of all cost centers less estimated future site restoration costs, general and administrative expenses, financing costs and income taxes.
Proceeds from the sale of oil and natural gas properties are applied against capitalized costs, with no gain or loss recognized, unless such a sale would significantly alter the rate of depletion and depreciation.
20
Stock-based compensation
The Company accounts for share-based compensation under the provisions of ASC 718 Compensation Stock Compensation. ASC 718 requires that all stock-based compensation be recognized as an expense in the financial statements and that such cost be measured at the fair value of the award.
Recent Accounting Pronouncements
The Company has limited operations and is considered to be in the development stage. In the period ended June 30, 2014, the Company has elected to early adopt Accounting Standards Update No. 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements. The adoption of this ASU allows the Company to remove the inception to date information and all references to development stage.
The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations
Forward-Looking Information
Certain statements in this Quarterly Report on Form 10-Q constitute forward-looking statements within the meaning of applicable U.S. securities legislation. Additionally, forward-looking statements may be made orally or in press releases, conferences, reports, on our website or otherwise, in the future, by us or on our behalf. Such statements are generally identifiable by the terminology used such as plans, expects, estimates, budgets, intends, anticipates, believes, projects, indicates, targets, objective, could, should, may or other similar words.
By their very nature, forward-looking statements require us to make assumptions that may not materialize or that may not be accurate. Forward-looking statements are subject to known and unknown risks and uncertainties and other factors that may cause actual results, levels of activity and achievements to differ materially from those expressed or implied by such statements, including the factors discussed under Item 1A. Risk Factors in our 2013 Annual Report on Form 10-K. Such factors include, but are not limited to, the following: fluctuations in and volatility of the market prices for oil and natural gas products; the ability to produce and transport oil and natural gas; the results of exploration and development drilling and related activities; global economic conditions, particularly in the countries in which we carry on business, especially economic slowdowns; actions by governmental authorities including increases in taxes, legislative and regulatory initiatives related to fracture stimulation activities, changes in environmental and other regulations, and renegotiations of contracts; political uncertainty, including actions by insurgent groups or other conflicts; the negotiation and closing of material contracts; future capital requirements and the availability of financing; estimates and economic assumptions used in connection with our acquisitions; risks associated with drilling, operating and decommissioning wells; actions of third-party co-owners of interests in properties in which we also own an interest; our ability to effectively integrate companies and properties that we acquire; our limited operating history; our history of operating losses; our lack of insurance coverage; and the other factors discussed in other documents that we file with or furnish to the U.S. Securities and Exchange Commission. The impact of any one factor on a particular forward-looking statement is not determinable with certainty as such factors are interdependent upon other factors and our course of action would depend upon our assessment of the future, considering all information then available. In that regard, any statements as to: future oil or natural gas production levels; capital expenditures; the allocation of capital expenditures to exploration and development activities; sources of funding for our capital expenditure programs; drilling of new wells; demand for oil and natural gas products; expenditures and allowances relating to environmental matters; dates by which certain areas will be developed or will come on-stream; expected finding and development costs; future production rates; ultimate recoverability of reserves, including the ability to convert probable and possible reserves to proved reserves; dates by which transactions are expected to close; future cash flows, uses of cash flows, collectability of receivables and availability of trade credit; expected operating costs; changes in any of the foregoing and other statements using forward-looking terminology are forward-looking statements, and there can be no assurance that the expectations conveyed by such forward-looking statements will, in fact, be realized.
Although we believe that the expectations conveyed by the forward-looking statements are reasonable based on information available to us on the date such forward-looking statements were made, no assurances can be given as to future results, levels of activity, achievements or financial condition.
Readers should not place undue reliance on any forward-looking statement and should recognize that the statements are predictions of future results, which may not occur as anticipated. Actual results could differ materially from those anticipated in the forward-looking statements and from historical results, due to the risks and uncertainties described above, as well as others not now anticipated. The foregoing statements are not exclusive and further information concerning us, including factors that potentially could materially affect our financial results, may emerge from time to time. We do not intend to update forward-looking statements to reflect actual results or changes in factors or assumptions affecting such forward-looking statements.
21
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable because we are a smaller reporting company.
Item 4. Controls and Procedures Evaluation of Disclosure of Controls and Procedures
We carried out an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of December 31, 2014 (the Evaluation Date). This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not entirely effective as of the Evaluation Date as a result of the material weaknesses disclosed in our Annual Report on Form 10-K for the year ended December 31, 2013 (2013 Annual Report).
Notwithstanding the assessment that our internal control over financial reporting was not entirely effective and that there were material weaknesses as identified in our 2013 Annual Report, we believe that our consolidated financial statements contained in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2014 fairly present our financial condition, results of operations and cash flows in all material respects.
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 are not currently involved in any legal proceedings and we are unaware of any pending proceedings.
Item 1A. Risk Factors
Not applicable because we are a smaller reporting company. See risk factors described in Item 1A of the Companys 2013 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
As of July 24, 2014, the Company issued 8,990,000 shares of common stock at price of $0.25 per share for proceeds of $2,247,500. Further details of this offering are disclosed on form 8-K filed July 30, 2014.
Item 3. Defaults Upon Senior Securities
None.
Item 4. (Removed and Reserved)
Not applicable.
Item 5. Other Information
None
22
Item 6. Exhibits
Articles of Incorporation and Bylaws | |
3.1 | Articles of Incorporation(1) |
3.2 | Amended and Restated Bylaws(2) |
3.3 | Certificate of Change Effective August 31, 2009(3) |
3.4 | Certificate of Change Effective March 24, 2010(4) |
Material Contracts | |
10.01 |
Larsen Energy Consulting Inc Agreement dated May 1, 2013 (5) |
10.02 |
Overgas Data and Consulting Agreement dated July 11, 2013 (6) |
10.03 |
Larsen Energy Consulting Inc. Agreement dated November 1, 2013 (7) |
10.04 |
De-registration of 2007 stock option plan dated December 27, 2013 (8) |
10.05 |
2011 Stock option plan dated November 21, 2011 (9) |
10.06 |
2013 Long-Term Equity Incentive Plan effective October 29, 2013 (10) |
10.07 |
Agreement with the Ministry of Economy and Energy of Bulgaria dated April 1, 2014(11) |
10.08 |
First Amendment to the Larsen Energy Consulting Inc. Agreement dated August 1, 2014 (12) |
Subsidiaries of the Small Business Issuer |
|
| |
21.1 |
Subsidiaries of Small Business Issuer: |
Name of Subsidiary | |
BG Explorations EOOD Bulgaria | |
Certifications |
|
| |
31.1 | |
31.2 | |
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 Current Report on Form 8-K, filed with the SEC on January 17, 2014. |
(3) |
Incorporated by reference from our Current Report on Form 8-K, filed with the SEC on September 3, 2009. |
(4) |
Incorporated by reference from our Current Report on Form 8-K, filed with the SEC on March 29, 2010. |
(5) |
Incorporated by reference from our Current Report on Form 8-K, filed with the SEC on July 18, 2013. |
(6) |
Incorporated by reference from our Current Report on Form 8-K, filed with the SEC on July 18, 2013. |
(7) |
Incorporated by reference from our Current Report on Form 8-K, filed with the SEC on November 7, 2013. |
(8) |
Incorporated by reference from our Current Report on Form 8-K, filed with the SEC on January 17, 2014. |
(9) |
Incorporated by reference from our Current Report on Form 8-K, filed with the SEC on November 25, 2011. |
(10) |
Incorporated by reference from our Schedule 14A filed on September 27, 2013. |
(11) |
Incorporated by reference from our Current Report on Form 8-K, filed with the SEC on April 7, 2014. |
(12) |
Incorporated by reference from our Current Report on Form 8-K, filed with the SEC on August 6, 2014 |
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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 ENERGY CORP.
By: | /s/ Taisiia Popova |
Taisiia Popova | |
Chief Financial Officer (Principal Financial Officer) | |
Date: August 14, 2014 | |
By: | /s/ Scott C. Larsen |
Scott C. Larsen | |
President and CEO (Principal Executive Officer) | |
Date: August 14, 2014 |
24