NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
|
1
|
ACCOUNTING POLICIES AND
ESTIMATES
|
The accompanying unaudited condensed
financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”)
for interim financial information with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, these unaudited
condensed financial statements do not include all of the information and disclosures required by U.S. GAAP for complete financial
statements. In the opinion of management, the accompanying unaudited condensed financial statements include all adjustments (consisting
only of normal recurring adjustments), which we consider necessary, for a fair presentation of those financial statements. The
results of operations and cash flows for the three months ended March 31, 2018 may not necessarily be indicative of results that
may be expected for any succeeding quarter or for the entire fiscal year. The information contained in this quarterly report on
Form 10-Q should be read in conjunction with our audited financial statements included in our annual report on Form 10-K as of
and for the year ended December 31, 2017 as filed with the Securities and Exchange Commission (the “SEC”).
Significant accounting policies
are described in Note 2 to the consolidated financial statements included in Item 8 of our annual report on Form 10-K as of December
31, 2017.
The preparation of unaudited consolidated
financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions, which are evaluated on
an ongoing basis, that affect the amounts reported in the unaudited consolidated financial statements and accompanying notes. Management
bases its estimates on historical experience and on various other assumptions that it believes are reasonable under the circumstances,
the results of which form the basis for making judgments about the carrying values of assets and liabilities and the amounts of
revenues and expenses that are not readily apparent from other sources. Actual results could differ from those estimates and judgments.
In particular, significant estimates and judgments include those related to: the estimated useful lives for plant and equipment,
the fair value of warrants and stock options granted for services or compensation, estimates of the probability and potential magnitude
of contingent liabilities, derivative liabilities, the valuation allowance for deferred tax assets due to continuing operating
losses, those related to revenue recognition and the allowance for doubtful accounts.
Making estimates requires management
to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation
or set of circumstances that existed at the date of the unaudited consolidated financial statements, which management considered
in formulating its estimate could change in the near-term due to one or more future confirming events. Accordingly, the actual
results could differ significantly from our estimates.
All amounts referred to in the notes
to the unaudited consolidated financial statements are in United States Dollars ($) unless stated otherwise.
|
b)
|
Principles of Consolidation
|
The unaudited consolidated financial
statements include the financial statements of the Company and its subsidiaries in which it has a majority voting interest. All
significant inter-company accounts and transactions have been eliminated in the unaudited consolidated financial statements. The
entities included in these unaudited consolidated financial statements are as follows:
Pledge Petroleum Corp – Parent
Company
Novas Energy USA Inc. (wholly owned).
PLEDGE PETROLEUM CORP.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
|
1
|
ACCOUNTING POLICIES AND
ESTIMATES (continued)
|
|
c)
|
Recent Accounting Pronouncements
|
In February 2018, the FASB issued
ASU 2018-2, Income Statement- Reporting Comprehensive Income (Topic 220), Reclassification of certain tax effects from accumulated
other comprehensive income.
The amendments in this Update allow
a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the
Tax Cuts and Jobs Act. Consequently, the amendments eliminate the stranded tax effects resulting from the Tax Cuts and Jobs Act
and will improve the usefulness of information reported to financial statement users. However, because the amendments only relate
to the reclassification of the income tax effects of the Tax Cuts and Jobs Act, the underlying guidance that requires that the
effect of a change in tax laws or rates be included in income from continuing operations is not affected. The amendments in this
Update also require certain disclosures about stranded tax effects.
The amendments in this Update are
effective for all entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early
adoption of the amendments in this Update is permitted, including adoption in any interim period, (1) for public business entities
for reporting periods for which financial statements have not yet been issued and (2) for all other entities for reporting periods
for which financial statements have not yet been made available for issuance. The amendments in this Update should be applied either
in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal
corporate income tax rate in the Tax Cuts and Jobs Act is recognized.
The impact this ASU will have on
the Company’s consolidated financial statements will be a reduction in the tax effect of net operating losses carried forward.
In March 2018, the FASB issued
ASU 2018-5, Income Taxes (Topic 740) Amendments to SEC paragraphs pursuant to SEC Staff Accounting Bulletin No. 118
These amendments affect the wording
of SEC paragraphs in the accounting standard codification dealing with Income Taxes (Topic 740).
The amendments in this update are
not expected to have a material impact on the Company’s consolidated financial statements.
Any new accounting standards, not
disclosed above, that have been issued or proposed by FASB that do not require adoption until a future date are not expected to
have a material impact on the financial statements upon adoption.
PLEDGE PETROLEUM CORP.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
1
|
ACCOUNTING POLICIES AND ESTIMATES (continued)
|
The preparation of unaudited consolidated
financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions, which are evaluated on
an ongoing basis, that affect the amounts reported in the unaudited consolidated financial statements and accompanying notes. Management
bases its estimates on historical experience and on various other assumptions that it believes are reasonable under the circumstances,
the results of which form the basis for making judgments about the carrying values of assets and liabilities and the amounts of
revenues and expenses that are not readily apparent from other sources. Actual results could differ from those estimates and judgments.
In particular, significant estimates and judgments include those related to: the estimated useful lives for plant and equipment,
the fair value of warrants and stock options granted for services or compensation, estimates of the probability and potential magnitude
of contingent liabilities, derivative liabilities, the valuation allowance for deferred tax assets due to continuing operating
losses, those related to revenue recognition and the allowance for doubtful accounts.
Making estimates requires management
to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation
or set of circumstances that existed at the date of the unaudited consolidated financial statements, which management considered
in formulating its estimate could change in the near-term due to one or more future confirming events. Accordingly, the actual
results could differ significantly from our estimates.
Certain conditions may exist as
of the date the financial statements are issued, which may result in a loss to the Company, but which will only be resolved when
one or more future events occur or fail to occur. The Company’s management assesses such contingent liabilities, and such
assessment inherently involves an exercise of judgment.
If the assessment of a contingency
indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the
estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potential
material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of
the contingent liability, together with an estimate of the range of possible loss if determinable and material would be disclosed.
Loss contingencies considered to be remote by management are generally not disclosed unless they involve guarantees, in which case
the guarantee would be disclosed.
|
f)
|
Cash and Cash Equivalents
|
The Company considers all highly
liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents. At March 31,
2018 and December 31, 2017, respectively, the Company had no cash equivalents.
The Company assesses credit risk
associated with cash by periodically evaluating the credit quality of its primary financial institution. The balance at times may
exceed federally insured limits. At March 31, 2018, the Company had cash balances of $637,787, of which $370,300 are not covered
by the federally insured limits.
PLEDGE PETROLEUM CORP.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
|
1
|
ACCOUNTING POLICIES AND
ESTIMATES (continued)
|
Parties are considered to be related
to the Company if the parties that, directly or indirectly, through one or more intermediaries, control, are controlled by, or
are under common control with the Company, or own in aggregate, on a fully diluted basis 5% or more of the Company’s stock.
Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners
of the Company and its management and other parties with which the Company may deal if one party controls or can significantly
influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented
from fully pursuing its own separate interests. The Company discloses all related party transactions. All transactions are recorded
at fair value of the goods or services exchanged. Property purchased from a related party is recorded at the cost to the related
party and any payment to or on behalf of the related party in excess of the cost is reflected as a distribution to related party.
The Company has cash balances of
$637,787 as of March 31, 2018, which is not sufficient to meet current expenses for at least the next twelve month period. On March
23, 2018, after obtaining approval of the majority shareholder and the majority of the minority of the shareholders the Company
sold substantially all of its assets for $650,000 and simultaneously therewith the entire shareholding of the majority shareholder,
Ervington was purchased by the Company for gross proceeds of $8,500,000. The ability of the Company to conclude an acquisition
based on current cash balances and continue as a going concern is uncertain.
Prepaid expenses consisted of the following:
|
|
March 31,
2018
|
|
|
December 31,
2017
|
|
|
|
|
|
|
|
|
Prepaid insurance
|
|
$
|
16,376
|
|
|
$
|
22,483
|
|
Prepaid professional fees
|
|
|
833
|
|
|
|
3,333
|
|
|
|
$
|
17,209
|
|
|
$
|
25,816
|
|
PLEDGE PETROLEUM CORP.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
Plant and Equipment consisted of the following:
|
|
March 31,
2018
|
|
|
December 31,
2017
|
|
|
|
Cost
|
|
|
Accumulated
depreciation
|
|
|
Net book value
|
|
|
Net book value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Furniture and equipment
|
|
|
6,700
|
|
|
|
(2,791
|
)
|
|
|
3,909
|
|
|
|
4,243
|
|
Computer equipment
|
|
|
11,130
|
|
|
|
(7,366
|
)
|
|
|
3,764
|
|
|
|
4,692
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
17,830
|
|
|
$
|
(10,157
|
)
|
|
$
|
7,673
|
|
|
$
|
8,935
|
|
Depreciation expense was $1,262 and
$1,555 for the three months ended March 30, 2018 and 2017, respectively.
On March 23, 2018, the Company concluded
an Asset Purchase Agreement with an affiliate (the “Purchaser”) of Ervington Investment Limited, the previous holder
of a majority of the Company’s outstanding voting securities, pursuant to which the Company sold to the Purchaser substantially
all of its assets, including all pertinent intellectual property rights, comprising its business of implementing its plasma pulse
technology, for $650,000 (the “Asset Sale”).
The Asset Sale is to a related party
and the profit realized of $650,000 was credited to additional paid in capital.
|
6
|
ACCRUED LIABILITIES AND
OTHER PAYABLES
|
Accrued liabilities consisted of the following:
|
|
March 31,
2018
|
|
|
December 31,
2017
|
|
|
|
|
|
|
|
|
Royalties Payable
|
|
$
|
-
|
|
|
$
|
14,653
|
|
Other
|
|
|
43,426
|
|
|
|
13,199
|
|
|
|
$
|
43,426
|
|
|
$
|
27,852
|
|
PLEDGE PETROLEUM CORP.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
The Company has authorized 500,000,000 common shares with a par
value of $0.001 each. The Company has issued 268,558,931 shares of common stock as of March 31, 2018 and December 31, 2017, and
has outstanding 204,256,464 and 268,558,931 shares of common stock as of March 31, 2018 and December 31, 2017, respectively.
On March 23, 2018, the Company concluded an Asset Sale agreement
as discussed in note 5 above, simultaneously with the Asset Sale Agreement, the Company concluded a Share Repurchase Agreement
with Ervington to repurchase all of the outstanding securities held by Ervington for $8,500,000 (the “Share Repurchase”).
The repurchase constituted a change of control. Upon conclusion of the Repurchase Agreement, Ivan Persiyanov, resigned from all
positions he holds as an officer and director of the Company and its subsidiaries. After the completion of the Asset Sale, the
Company ceased all activities related to its existing business while evaluating other business opportunities, which include potentially
acquiring a technology and oilfield services business, of which two of the Company’s current directors (Messrs. Huemoeller
and Zotos) own a minority equity interest. The Company has not entered into an agreement with any potential acquisition candidate
and has only been in the early stages of discussion.
In terms of the above, the Company repurchased 64,302,467 shares
of common stock from Ervington, which shares are being retained as treasury shares.
No shares were issued during the current period.
The Company has 10,000,000 authorized preferred shares with a par
value of $0.001 each with 5,000,000 preferred shares designated as Series A-1 Convertible Preferred Stock (“Series A-1 Shares”),
500,000 preferred shares designated as Series B Preferred Stock and 4,500,000 preferred shares designated as Series C Preferred
Stock.
In terms of the Share Repurchase Agreement entered into, discussed
above, the Company repurchased 3,137,500 shares of Series A-1 Preferred Stock and 4,500,000 shares of Series C Preferred Stock
from Ervington, which shares are being retained as treasury shares.
|
i)
|
Series A-1 Convertible Preferred Stock
|
The Company has designated 5,000,000 preferred shares as Series
A-1 Convertible Preferred Stock (“Series A-1 Shares”), with 3,137,500 shares of Series A-1 Stock issued as of March
31, 2018 and December 31, 2017, and has outstanding 0 and 3,137,500 shares of Series A-1 Stock as of March 31, 2018 and December
31, 2017, respectively.
PLEDGE PETROLEUM CORP.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
|
7
|
STOCKHOLDERS’ EQUITY
(continued)
|
|
b)
|
Preferred stock (continued)
|
|
ii)
|
Series B Convertible Preferred Stock
|
The Company has designated 500,000
preferred shares as Series B Convertible Preferred Stock (“Series B Shares”), with 40,000 Series B Shares issued and
outstanding as of March 31, 2018 and December 31, 2017, which are convertible into 4,000,000 shares of common stock.
The rights, privileges and preferences
of the Series B Shares are summarized as follows:
Conversion
The holders of the Series B Preferred
Shares shall have conversion rights as follows:
|
(a)
|
Each share of the Series B Shares is convertible at any
time prior to the issuance of a redemption notice by the Company into such number of shares of Common Stock by dividing the Stated
value ($10) of the Series B Shares by $0.10 and is subject to adjustment for dividends or distributions made in common stock,
the issue of securities convertible into common stock, stock splits, reverse stock splits, or reclassifications of common stock.
No adjustments will be made to the conversion rights or conversion price for any reorganization other than to be entitled to receive
the same benefits as if the shares were converted immediately prior to such reorganization. No conversion will take place if the
holder of the Series B Shares will beneficially own in excess of 4.99% of the shares of Common Stock outstanding immediately after
conversion. As of the date hereof, each Series B Share converts into 100 shares of common stock.
|
|
(b)
|
The conversion right of the holders of Series B Shares
are exercised by the surrender of the certificates representing shares to be converted to the Company, accompanied by written
notice electing conversion.
|
|
(c)
|
No fractional shares of Common Stock or script will be
issued upon conversion of Series B Shares. The Company will pay a cash adjustment in respect to such fractional interest based
upon the fair value of a share of Common Stock, as determined in good faith by the Company’s Board of Directors.
|
|
(d)
|
All shares of Common Stock issued upon conversion of Series
B Shares will upon issuance be validly issued, fully paid and non-assessable. All certificates representing Series B Shares surrendered
for conversion shall be appropriately canceled on the books of the Company and the shares so converted represented by such certificates
shall be restored to the status of authorized but unissued shares of preferred stock of the Company.
|
Company Redemption
The Company has the right, at any
time after the date the Series B Shares have been issued, to redeem all or a portion of any Holder's Series B Shares at a price
per Series B Share equal to the issue price per Series B Share multiplied by 120%
Voting Rights
Each holder of Series B Shares is
entitled to vote on all matters submitted to a vote of the stockholders of the Company and is entitled to votes equal to the number
of shares of Common Stock into which Series B Shares could be converted, and the holders of shares of Series B Shares and Common
Stock shall vote together as a single class on all matters submitted to the stockholders of the Company.
PLEDGE PETROLEUM CORP.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
|
7
|
STOCKHOLDERS’ EQUITY
(continued)
|
|
b)
|
Preferred stock (continued)
|
|
ii)
|
Series B Convertible Preferred Stock (continued)
|
Dividends
|
(a)
|
The holders of the Series B Shares are entitled to receive
cumulative dividends at the rate of eight percent per annum of the issue price per share, accrued daily and payable annually in
arrears on December 31st of each year (“Dividend Date”). Such dividends accrue on any given share from the day of
original issuance of such share. Such dividends are cumulative, whether or not declared by the Board of Directors, but are non-compounding.
|
|
(b)
|
Any dividend payable on a dividend payment date may be
paid, at the option of the Company, either (i) in cash or (ii) in shares of common stock at an issue price of $0.10 per common
share.
|
|
(c)
|
Nothing contained herein is deemed to establish or require
any payment or other charges in excess of the maximum permitted by applicable law.
|
|
(d)
|
In the event that pursuant to applicable law or contract
the Company is prohibited or restricted from paying in cash the full dividends to which the holders of the Series B Shares are
entitled, the cash amount available pursuant to applicable law or contract will be distributed among the holders of the Series
B Shares ratably in proportion to the full amounts to which they would otherwise be entitled and any remaining amount due to holders
of the Series B Shares will be payable in cash.
|
Liquidation Preference
In the event of any liquidation,
dissolution or winding up of the Company, either voluntary or involuntary, the holders of the Series B Shares are entitled to receive,
prior and in preference to any distribution of any assets of the Company to the holders of any other preferred stock of the Company
and subordinate to any distribution to the Series A-1 Shares, and prior and in preference to any distribution of any assets of
the Company to the holders of the Common Stock, the amount of 120% of the issue price per share. In addition, the Series B holder
has agreed to vote to subordinate the series B Preferred stock liquidation preferences to the Series C Preferred stock preferences.
No Circumvention
The Company may not amend its certificate
of incorporation, or participate in any reorganization, sale or transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action for the purpose of avoiding or seeking to avoid the observance or performance
of any of the terms to be observed or performed by the Company.
The Company has undeclared dividends
on the Series B Preferred stock amounting to $172,504 as of March 31, 2018. If the dividends are paid in stock, the beneficial
conversion feature of these undeclared dividends will be recorded upon the declaration of these dividends. The computation of loss
per common share for the three months ended March 31, 2018 takes into account these undeclared dividends.
PLEDGE PETROLEUM CORP.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
|
7
|
STOCKHOLDERS’ EQUITY
(continued)
|
|
b)
|
P
referred stock (continued)
|
|
iii)
|
Series C Convertible Preferred
Stock
|
The Company has designated 4,500,000
preferred shares as Series C Convertible Preferred Stock (“Series C Shares”), with 4,500,000 shares of Series C Stock
issued as of March 31, 2018 and December 31, 2017, and 0 and 4,500,000 shares of Series C Stock outstanding as of March 31, 2018
and December 31, 2017, respectively.
The Company’s Board of Directors approved the
Company’s 2008 Stock Option Plan (the “Stock Plan”) for the issuance of up to 5,000,000 shares of common stock
to be granted through incentive stock options, nonqualified stock options, stock appreciation rights, dividend equivalent rights,
restricted stock, restricted stock units and other stock-based awards to officers, other employees, directors and consultants
of the Company and its subsidiaries. After the reverse stock split in August 2012, a total of 100,000 shares were available for
grant. Subsequent to the reverse split the Board of Directors approved an increase in the number of awards available for grant
to 2,100,000 shares. The exercise price of stock options under the Stock Plan is determined by the Board of Directors, and may
be equal to or greater than the fair market value of the Company’s common stock on the date the option is granted. Options
become exercisable over various periods from the date of grant, and generally expire ten years after the grant date.
At March 31, 2018 and December 31,
2017 there were 380,950 Plan options issued and outstanding, respectively, under the Stock Option Plan.
The vesting provisions for these
stock options are determined by the board of directors at the time of grant, there are no unvested options outstanding as of March
31, 2018.
No options were issued during the
three months ended March 31, 2018 and the year ended December 31, 2017.
In the event of the employees’
termination, the Company will cease to recognize compensation expense.
A summary of all of our option
activity during the period January 1, 2017 to March 31, 2018 is as follows:
|
|
No. of shares
|
|
Exercise price
per share
|
|
Weighted
average exercise
price
|
|
|
|
|
|
|
|
Outstanding January 1, 2017
|
|
|
3,380,950
|
|
|
$
|
0.08 to $13.50
|
|
|
$
|
0.18
|
|
Granted – non-plan options
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Forfeited/cancelled
|
|
|
(3,000,000
|
)
|
|
$
|
0.08
|
|
|
|
0.08
|
|
Exercised
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Outstanding December 31, 2017
|
|
|
380,950
|
|
|
$
|
0.08 to $13.50
|
|
|
$
|
0.90
|
|
Granted - non-plan options
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Forfeited/cancelled
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Exercised
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Outstanding March 31, 2018
|
|
|
380,950
|
|
|
$
|
0.51 to $13.50
|
|
|
$
|
0.90
|
|
Stock options outstanding as of
March 31, 2018 and December 31, 2017 as disclosed in the above table, have an intrinsic value of $0 and $0, respectively.
PLEDGE PETROLEUM CORP.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
|
7
|
STOCKHOLDERS’ EQUITY
(continued)
|
|
c)
|
Stock Options (continued)
|
The options outstanding and exercisable at March 31,
2018 are as follows:
|
|
|
Options outstanding
|
|
|
Options exercisable
|
|
Exercise price
|
|
|
No. of shares
|
|
|
Weighted
average
remaining years
|
|
|
Weighted
average exercise
price
|
|
|
No. of shares
|
|
|
Weighted
average exercise
price
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
13.50
|
|
|
|
3,480
|
|
|
|
1.21
|
|
|
|
|
|
|
|
3,480
|
|
|
|
|
|
$
|
12.50
|
|
|
|
2,000
|
|
|
|
2.53
|
|
|
|
|
|
|
|
2,000
|
|
|
|
|
|
$
|
8.50
|
|
|
|
500
|
|
|
|
3.25
|
|
|
|
|
|
|
|
500
|
|
|
|
|
|
$
|
5.00
|
|
|
|
14,800
|
|
|
|
3.54
|
|
|
|
|
|
|
|
14,800
|
|
|
|
|
|
$
|
0.65
|
|
|
|
36,924
|
|
|
|
5.00
|
|
|
|
|
|
|
|
36,924
|
|
|
|
|
|
$
|
0.63
|
|
|
|
38,096
|
|
|
|
0.25
|
|
|
|
|
|
|
|
38,096
|
|
|
|
|
|
$
|
0.51
|
|
|
|
285,150
|
|
|
|
2.04
|
|
|
|
|
|
|
|
285,150
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
380,950
|
|
|
|
2.20
|
|
|
|
0.90
|
|
|
|
380,950
|
|
|
|
0.90
|
|
The Company has recorded an expense
of $0 and $18,066 for the three months ended March 31, 2018 and 2017, respectively relating to options issued.
The warrants outstanding and exercisable at March 31,
2018 are as follows:
|
|
|
Warrants outstanding
|
|
|
Warrants exercisable
|
|
Exercise price
|
|
|
No. of shares
|
|
|
Weighted
average
remaining years
|
|
|
Weighted
average exercise
price
|
|
|
No. of shares
|
|
|
Weighted
average
exercise price
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0.30
|
|
|
|
375,000
|
|
|
|
0.58
|
|
|
|
|
|
|
|
375,000
|
|
|
|
|
|
$
|
0.25
|
|
|
|
1,751,667
|
|
|
|
1.24
|
|
|
|
|
|
|
|
1,751,667
|
|
|
|
|
|
$
|
0.15
|
|
|
|
525,500
|
|
|
|
1.24
|
|
|
|
|
|
|
|
525,500
|
|
|
|
|
|
$
|
0.25
|
|
|
|
1,508,333
|
|
|
|
1.34
|
|
|
|
|
|
|
|
1,508,333
|
|
|
|
|
|
$
|
0.15
|
|
|
|
577,499
|
|
|
|
1.35
|
|
|
|
|
|
|
|
577,499
|
|
|
|
|
|
$
|
0.25
|
|
|
|
968,166
|
|
|
|
1.35
|
|
|
|
|
|
|
|
968,166
|
|
|
|
|
|
$
|
0.25
|
|
|
|
633,333
|
|
|
|
1.40
|
|
|
|
|
|
|
|
633,333
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,339,498
|
|
|
|
1.27
|
|
|
|
0.24
|
|
|
|
6,339,498
|
|
|
|
0.24
|
|
The warrants outstanding have an intrinsic value of $0
and $0 as of March 31, 2018 and December 31, 2017, respectively.
PLEDGE PETROLEUM CORP.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
Basic loss per share is based on
the weighted-average number of common shares outstanding during each period. Diluted loss per share is based on basic shares as
determined above plus common stock equivalents, including convertible preferred shares and convertible notes as well as the incremental
shares that would be issued upon the assumed exercise of in-the-money stock options using the treasury stock method. The computation
of diluted net loss per share does not assume the issuance of common shares that have an anti-dilutive effect on net loss per share.
For the three months ended March 31, 2018 and 2017, all stock options, unvested restricted stock awards, warrants, convertible
preferred stock and convertible notes were excluded from the computation of diluted net loss per share. Dilutive shares which could
exist pursuant to the exercise of outstanding stock instruments and which were not included in the calculation because their affect
would have been anti-dilutive are as follows:
|
|
Three
months
ended
March 31,
2018
|
|
|
Three
months
ended
March 31,
2017
|
|
|
|
|
|
|
|
|
Stock options
|
|
|
380,950
|
|
|
|
1,380,950
|
|
Warrants to purchase shares of common stock
|
|
|
6,339,498
|
|
|
|
6,339,498
|
|
Series A-1 convertible preferred shares
|
|
|
-
|
|
|
|
31,375,000
|
|
Series B convertible preferred shares
|
|
|
4,000,000
|
|
|
|
4,000,000
|
|
Series C convertible preferred shares
|
|
|
-
|
|
|
|
120,000,000
|
|
|
|
|
10,720,448
|
|
|
|
163,095,448
|
|
|
9
|
RELATED PARTY TRANSACTIONS
|
On May 2, 2018, we issued to each
of our three directors, 10,000,000 shares of restricted common stock, vesting as to 1/3 of the grant immediately, 1/3 of the grant
on the one year anniversary of the grant date and 1/3 of the grant on the two year anniversary of the grant date.
|
10
|
COMMITMENTS AND CONTINGENCIES
|
The Company disposed of its Crystal
Magic, Inc. subsidiary effective December 31, 2013. In terms of the sale agreement entered into by the Company, the purchaser has
been indemnified against all liabilities whether contingent or otherwise, claimed by third parties, this includes claims by creditors
of the Company amounting to $372,090 and claims against long-term liabilities of $848,916. Management does not consider it likely
that these claims will materialize and accordingly no provision has been made for these contingent liabilities.
PLEDGE PETROLEUM CORP.
NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
On May 2, 2018, Christopher
Headrick was appointed as a director.
On May 2, 2018, we issued to each
of our three directors, 10,000,000 shares of restricted common stock, vesting as to 1/3 of the grant immediately, 1/3 of the grant
on the one year anniversary of the grant date and 1/3 of the grant on the two year anniversary of the grant date.
Other than disclosed above, in accordance
with ASC 855-10, the Company has analyzed its operations subsequent to March 31, 2018 to the date these financial statements were
issued, and has determined that it does not have any material subsequent events to disclose in these financial statements.