UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-Q
| x |
QUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934:
For
the quarterly period ended June 30, 2015
|
| o |
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934:
For
the transition period from ____to____ |
Commission
File Number: 000-51465
| |
United
American Petroleum Corp. |
|
| (Exact
name of registrant as specified in its charter) |
| Nevada |
|
|
|
20-1904354 |
| (State
or other jurisdiction of |
|
(I.R.S.
Employer |
| incorporation
or organization) |
|
Identification
No.) |
| |
9600
Great Hills Trail, Suite 150W, Austin, TX 78759 |
|
| (Address
of principal executive offices) (Zip Code) |
| |
| |
(512)
852-7888 |
|
| (Registrant’s
Telephone Number, including area code) |
Indicate
by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during
the past 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. x
Yes o No
Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive
Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files). x Yes o No
Indicate
by check mark whether the registrant is a large accelerated file, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
| Large
accelerated filer |
o |
|
Accelerated
filer |
o |
| Non-accelerated
filer |
o |
(Do not check
if a smaller reporting company) |
Smaller reporting
company |
x |
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act). o Yes x
No
As
of June 30, 2015, there were 321,867,909 shares of the issuer’s $0.001 par value common stock issued and outstanding.
TABLE
OF CONTENTS
PART
I - FINANCIAL INFORMATION
Item
1. Financial Statements.
| United
American Petroleum Corp. |
| Consolidated
Balance Sheets |
| | |
| | |
| |
| | |
June 30, | | |
December 31, | |
| | |
2015 | | |
2014 | |
| | |
(Unaudited) | | |
| |
| ASSETS | |
| | | |
| | |
| Current assets: | |
| | | |
| | |
| Cash and cash equivalents | |
$ | 189,308 | | |
$ | 358,156 | |
| Accounts receivable, net | |
| 27,556 | | |
| 48,392 | |
| Related party receivables | |
| 6,243 | | |
| 41,513 | |
| Total current assets | |
| 223,107 | | |
| 448,061 | |
| | |
| | | |
| | |
| Oil and gas properties (full cost method): | |
| | | |
| | |
| net of accumulated depletion of $299,872 and
$282,458 respectively | |
| 316,367 | | |
| 418,380 | |
| Total assets | |
$ | 539,474 | | |
$ | 866,441 | |
| | |
| | | |
| | |
| LIABILITIES AND STOCKHOLDER’S DEFICIT | |
| | | |
| | |
| Current liabilities: | |
| | | |
| | |
| Accounts payable and accrued liabilities | |
$ | 642,573 | | |
$ | 780,890 | |
| Deferred gain on sale of assets | |
| 7,500 | | |
| 7,500 | |
| Other payable | |
| 485,048 | | |
| 499,048 | |
| Total current liabilities | |
| 1,135,121 | | |
| 1,287,438 | |
| | |
| | | |
| | |
| Asset retirement obligation | |
| 199,362 | | |
| 193,362 | |
| Total liabilities | |
| 1,334,483 | | |
| 1,480,800 | |
| | |
| | | |
| | |
| Stockholders’ Deficit | |
| | | |
| | |
| Preferred Stock, Series B, $0.001 par value, 1,000 shares authorized, 1,000 shares issued and 1,000 share outstanding and no shares issued and outstanding, respectively | |
| 1 | | |
| 1 | |
| Common stock, $0.001 par value, 750,000,000 shares authorized,
321,867,909 shares issued and 321,867,909 shares outstanding at June 30, 2015 and December 31, 2014 | |
| 321,868 | | |
| 321,868 | |
| Additional paid-in capital | |
| 8,506,218 | | |
| 8,506,218 | |
| Accumulated deficit | |
| (9,623,096 | ) | |
| (9,442,446 | ) |
| Total stockholders’ deficit | |
| (795,009 | ) | |
| (614,359 | ) |
| | |
| | | |
| | |
| Total liabilities and stock holder’s deficit | |
$ | 539,474 | | |
$ | 866,441 | |
See
accompanying notes to unaudited consolidated financial statements.
| United
American Petroleum Corp. |
| Consolidated
Statements of Operations |
| (Unaudited)
|
| | |
Three Months | | |
Three Months | | |
Six Months | | |
Six Months | |
| | |
Ended June 30, | | |
Ended June 30, | | |
Ended June 30, | | |
Ended June 30, | |
| | |
2015 | | |
2014 | | |
2015 | | |
2014 | |
| Revenues | |
| | | |
| | | |
| | | |
| | |
| Oil and Gas Revenues | |
$ | 125,950 | | |
$ | 171,022 | | |
$ | 286,702 | | |
$ | 305,282 | |
| Administrative Revenues | |
| 2,175 | | |
| 2,175 | | |
| 5,100 | | |
| 5,100 | |
| Revenues, net of sales returns and allowances | |
| 128,125 | | |
| 173,197 | | |
| 291,802 | | |
| 310,382 | |
| | |
| | | |
| | | |
| | | |
| | |
| Operating Expenses | |
| | | |
| | | |
| | | |
| | |
| Lease operating expenses | |
| 49,577 | | |
| 113,878 | | |
| 239,504 | | |
| 253,136 | |
| Bad debt expense | |
| — | | |
| — | | |
| — | | |
| 12,660 | |
| Recovery of bad debt | |
| — | | |
| — | | |
| (47,232 | ) | |
| — | |
| Accretion expense | |
| 3,000 | | |
| 3,000 | | |
| 6,000 | | |
| 6,186 | |
| Depletion expense | |
| 6,871 | | |
| 25,655 | | |
| 17,414 | | |
| 45,542 | |
| General and administrative | |
| 168,489 | | |
| 145,078 | | |
| 256,770 | | |
| 399,312 | |
| Total Operating Expenses | |
| 227,937 | | |
| 287,611 | | |
| 472,456 | | |
| 716,836 | |
| | |
| | | |
| | | |
| | | |
| | |
| Net Loss Before Other Expenses | |
$ | (99,812 | ) | |
$ | (114,414 | ) | |
$ | (180,654 | ) | |
$ | (406,454 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Other Income (Expense) | |
| | | |
| | | |
| | | |
| | |
| Interest Income (expense) | |
| — | | |
| (74,804 | ) | |
| 4 | | |
| (179,540 | ) |
| Gain on embedded derivatives | |
| — | | |
| 40,661 | | |
| — | | |
| 126,397 | |
| Other income | |
| — | | |
| 102,810 | | |
| — | | |
| — | |
| Total other income (expense) | |
| — | | |
| 68,667 | | |
| 4 | | |
| (53,143 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Net Loss | |
$ | (99,812 | ) | |
$ | (45,747 | ) | |
$ | (180,650 | ) | |
$ | (459,597 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Loss per share - Basic and Diluted | |
| (0.00 | ) | |
| (0.00 | ) | |
| (0.00 | ) | |
| (0.00 | ) |
| | |
| | | |
| | | |
| | | |
| | |
| Weighted average number of shares outstanding - Basic and Diluted | |
| 321,867,909 | | |
| 100,147,625 | | |
| 321,867,909 | | |
| 98,401,988 | |
| | |
| | | |
| | | |
| | | |
| | |
| Loss per share-Diluted | |
| (0.00 | ) | |
| (0.00 | ) | |
| (0.00 | ) | |
| (0.00 | ) |
See
accompanying notes to unaudited consolidated financial statements.
| Consolidated
Statements of Cash Flow |
| (Unaudited) |
| | |
Six Months | | |
Six Months | |
| | |
Ended
June 30, 2015 | | |
Ended
June 30, 2014 | |
| CASH FLOWS FROM OPERATING ACTIVITIES: | |
| | | |
| | |
| Net loss | |
$ | (180,650 | ) | |
$ | (459,597 | ) |
| | |
| | | |
| | |
| Adjustments
to reconcile net loss to net cash used in operating activities: | |
| | | |
| | |
| Bad debt expense | |
| — | | |
| 12,660 | |
| Accretion expense | |
| 6,000 | | |
| 6,186 | |
| Depletion expense | |
| 17,414 | | |
| 45,542 | |
| Amortization of debt discount | |
| — | | |
| 179,540 | |
| | |
| | | |
| | |
| (Gain) loss on embedded derivatives | |
| — | | |
| (126,397 | ) |
| | |
| | | |
| | |
| Reduction in full cost pool due to operator income from owned wells | |
| 84,600 | | |
| 105,297 | |
| | |
| | | |
| | |
| Change in assets and liabilities: | |
| | | |
| | |
| Accounts receivable | |
| 20,836 | | |
| 38,736 | |
| Related party receivable | |
| 35,270 | | |
| 2,043 | |
| | |
| | | |
| | |
| Decrease in accounts payable and accrued expenses | |
| (138,318 | ) | |
| (406,361 | ) |
| | |
| | | |
| | |
| Decrease in Other payable | |
| (14,000 | ) | |
| (5,800 | ) |
| | |
| | | |
| | |
| Net cash used in operating activities | |
| (168,848 | ) | |
| (608,151 | ) |
| | |
| | | |
| | |
| CASH FLOWS USED IN INVESTING ACTIVITIES: | |
| | | |
| | |
| Proceeds from sale of oil and gas properties | |
| — | | |
| 400,000 | |
| Net cash used in investing activities | |
| — | | |
| 400,000 | |
| | |
| | | |
| | |
| NET DECREASE IN CASH AND CASH EQUIVALENTS | |
| (168,848 | ) | |
| (208,151 | ) |
| | |
| | | |
| | |
| CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD | |
| 358,156 | | |
| 557,298 | |
| | |
| | | |
| | |
| CASH AND CASH EQUIVALENTS - END OF PERIOD | |
$ | 189,308 | | |
$ | 349,147 | |
| | |
| | | |
| | |
| NON CASH TRANSACTIONS: | |
| | | |
| | |
| Change in asset retirement liability (change in estimate) | |
$ | — | | |
$ | 3,127 | |
| Discount from derivative liabilities | |
$ | — | | |
$ | 152,810 | |
| Conversion of principal and interest to common shares | |
$ | — | | |
$ | 53,550 | |
| Reclassification of detachable warrants to derivative liability | |
$ | — | | |
$ | 58,384 | |
| Settlement of legal expenses through exchange of property | |
$ | — | | |
$ | 93,525 | |
See
accompanying notes to unaudited consolidated financial statements.
UNITED
AMERICAN PETROLEUM CORP.
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
| 1. | Nature
of Operations and Basis of Presentation |
Nature
of Operations
United
American Petroleum Corp. (“United”) is incorporated under the laws of the state of Nevada.
United’s principal business is the acquisition and management of leasehold interests in petroleum and natural gas rights,
either directly or indirectly, and the exploitation and development of properties subject to these leases.
Basis
of Presentation
These
condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in
the United States for interim consolidated financial information and with the instructions to Securities and Exchange Commission
(“SEC”) Form 10-Q and Article 8 of SEC Regulation S-X. The principles for interim consolidated financial information
do not require the inclusion of all the information and footnotes required by generally accepted accounting principles for complete
consolidated financial statements. Therefore, these condensed consolidated financial statements should be read in conjunction
with the Company’s audited consolidated financial statements on Form 10-K for the year ended December 31, 2014. The condensed
consolidated financial statements included herein are unaudited; however, in the opinion of management, they contain all normal
recurring adjustments necessary for a fair statement of the condensed results for the interim periods. Operating results for the
three month period ended June 30, 2015 are not necessarily indicative of the results that may be expected for the year ending
December 31, 2014. We made certain reclassifications to prior-period amounts to conform to the current presentation.
The
Company has incurred a net loss and negative operating cash flows since inception through June 30, 2015. These factors raise
substantial doubt about the Company’s ability to continue as a going concern. The Company’s management is implementing plans to
sustain the Company’s cash flow from operating activities and/or acquire additional capital funding. The consolidated financial
statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
| 3. | Related
Party Transactions |
Our
officers are also directors of a related-party company with which we do business. As of June 30, 2015, the Company had a receivable
in the amount of $6,243 due from this related party, with working interest amounts payable. This represents a $35,270 decrease
from an amount of $41,513 as of December 31, 2014.
For
the six months ended June 30, 2015 Phoenix Oil and Gas, LLC had a total of $7,303 in revenue for the wells it has an interest
in. They also incurred $38,306 in joint interest billings and paid a total amount of $3,772 towards those joint interest billings
for the six months ended June 30, 2015.
Item
2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Forward
Looking Statements
This
Quarterly Report of United American Petroleum Corp. on Form 10-Q contains forward-looking statements, particularly those identified
with the words “anticipates,” “believes,” “expects,” “plans,” “intends,”
“objectives” and similar expressions. These statements reflect management’s best judgment based on factors known
at the time of such statements. The reader may find discussions containing such forward-looking statements in the material set
forth under “Management’s Discussion and Analysis and Plan of Operations,” generally, and specifically therein
under the captions “Liquidity and Capital Resources” as well as elsewhere in this Quarterly Report on Form 10-Q. Actual
events or results may differ materially from those discussed herein. The forward-looking statements specified in the following
information have been compiled by our management on the basis of assumptions made by management and considered by management to
be reasonable. Our future operating results, however, are impossible to predict and no representation, guarantee, or warranty
is to be inferred from those forward-looking statements.
The
assumptions used for purposes of the forward-looking statements specified in the following information represent estimates of
future events and are subject to uncertainty as to possible changes in economic, legislative, industry, and other circumstances.
As a result, the identification and interpretation of data and other information and their use in developing and selecting assumptions
from and among reasonable alternatives require the exercise of judgment. To the extent that the assumed events do not occur, the
outcome may vary substantially from anticipated or projected results, and, accordingly, no opinion is expressed on the achievability
of those forward-looking statements. No assurance can be given that any of the assumptions relating to the forward-looking statements
specified in the following information are accurate, and we assume no obligation to update any such forward-looking statements.
Critical
Accounting Policy and Estimates.
Our
Business. We are an exploration company engaged in the acquisition, exploration, development and production of oil and gas
properties. Our principal business is the acquisition of leasehold interests in petroleum and natural gas rights, either directly
or indirectly, and the exploitation and development of properties subject to these leases. Our primary focus is to develop our
properties that have potential for near-term production. We also provide operational expertise for several third-party well owners
out of our operation base in Austin, Texas. We currently have proved reserves in the State of Texas.
The
following discussion of our financial condition and results of operations should be read in conjunction with our financial statements
for the year ended December 31, 2014, together with notes thereto, which are included in this Quarterly Report.
Results
of operations for the three months ended June 30, 2015, as compared to the three months ended June 30, 2014
Revenues.
We had total revenues of $128,125 for the three months ended June 30, 2015 which were generated from oil and gas sales of $125,950
and well operating revenues of $2,175. This was a $45,072 decrease from total revenues of $173,197 for the three months
ended June 30, 2014, which were generated from oil and gas sales of $171,022 and well operation revenues of $2,175. Barrels of
oil per day produced (BOPD) decreased to 16.80 BOPD from 21.73 BOPD for the three months ended June 30, 2014.
Our
administrative revenue is derived from well administrative/operator fees charged through United Operating, LLC, our wholly-owned
subsidiary, to third party well owners for managing and accounting for the development and production of their oil and gas property
interests. Administrative revenue was only recognized on wells where the Company did not own an interest. The Company also operates
certain wells where the Company also has an ownership interest. For these partially owned wells, no administrative income is recognized.
Rather, operating fees received from other well interest owners are recorded as a reduction to the full cost pool per the full
cost rules. The full cost pool was reduced by $42,675 for the three months ended June 30, 2015 compared to $66,730 for the three
months ended June 30, 2014.
The
following table sets forth the revenue and production data for the three months ended June 30, 2015 and 2014.
| | |
THREE MONTHS | | |
| | |
| |
| | |
ENDED JUNE 30,
2015 | | |
ENDED JUNE 30,
2014 | | |
INCREASE
(DECREASE) | | |
% INCREASE
(DECREASE) | |
| REVENUES | |
| | | |
| | | |
| | | |
| | |
| Oil and Gas Revenues | |
$ | 125,950 | | |
$ | 171,022 | | |
$ | (45,072 | ) | |
| -26.35 | % |
| Administrative revenues | |
| 2,175 | | |
| 2,175 | | |
| — | | |
| 0.00 | % |
| Total Revenues | |
| 128,125 | | |
| 173,197 | | |
| (45,072 | ) | |
| -26.02 | % |
| | |
| | | |
| | | |
| | | |
| | |
| PRODUCTION: | |
| | | |
| | | |
| | | |
| | |
| Total production (Barrel of Oil Equivalent) | |
| 1,512 | | |
| 1,956 | | |
| (444 | ) | |
| -22.69 | % |
| Barrels of Oil Equivalent per day | |
| 16.80 | | |
| 21.73 | | |
| (2 | ) | |
| -11.34 | % |
| | |
| | | |
| | | |
| | | |
| | |
| AVERAGE SALES PRICES: | |
| | | |
| | | |
| | | |
| | |
| Price per Barrel of Oil Equivalent | |
$ | 83.29 | | |
$ | 87.43 | | |
$ | (4.14 | ) | |
| -4.74 | % |
Operating
Expenses. For the three months ended June 30, 2015, our total operating expenses were $227,937
which consisted of lease operating expenses of $49,577, accretion expense of $3,000, depletion expenses of $6,871, and general
and administrative expenses of $168,489. By comparison, for the three months ended June 30,
2014, our total operating expenses were $287,611, which consisted of lease operating expenses of $113,878, accretion expense of
$3,000, depletion expense of $25,655, and general and administrative expenses of $145,078.
The
following table sets forth information relating to our operating expenses for the three months ended June 30, 2015 and 2014
| | |
THREE MONTHS | | |
| | |
| |
| | |
ENDED JUNE 30,
2015 | | |
ENDED JUNE 30,
2014 | | |
INCREASE
(DECREASE) | | |
% INCREASE
(DECREASE) | |
| LEASE OPERATING EXPENSES | |
| | | |
| | | |
| | | |
| | |
| Lease operating expenses | |
$ | 45,695 | | |
$ | 110,346 | | |
$ | (64,651 | ) | |
| -58.59 | % |
| Workover expenses | |
| 1,167 | | |
| 1,167 | | |
| — | | |
| 0.03 | % |
| Legal, title and administrative well expenses | |
| 2,715 | | |
| 2,365 | | |
| 350 | | |
| 14.80 | % |
| Total Lease Operating expenses | |
| 49,577 | | |
| 113,878 | | |
| (64,301 | ) | |
| -56.46 | % |
| | |
| | | |
| | | |
| | | |
| | |
| DEPLETION AND ACCRETION EXPENSE | |
| | | |
| | | |
| | | |
| | |
| Depreciation, depletion, amortization and accretion expense | |
| 9,871 | | |
| 28,655 | | |
| (18,784 | ) | |
| -65.55 | % |
| | |
| | | |
| | | |
| | | |
| | |
| BAD DEBT EXPENSE | |
| | | |
| | | |
| | | |
| | |
| Bad debt expense | |
| — | | |
| — | | |
| — | | |
| 0.00 | % |
| | |
| | | |
| | | |
| | | |
| | |
| RECOVERY OF BAD DEBT | |
| | | |
| | | |
| | | |
| | |
| Recover of bad debt | |
| — | | |
| — | | |
| — | | |
| 0.00 | % |
| | |
| | | |
| | | |
| | | |
| | |
| GENERAL AND ADMINISTRATIVE EXPENSES | |
| | | |
| | | |
| | | |
| | |
| SEC related general and administrative expenses | |
$ | 41,910 | | |
$ | 6,998 | | |
$ | 34,913 | | |
| 498.89 | % |
| Employee and officer expenses | |
| 104,102 | | |
| 52,446 | | |
| 51,656 | | |
| 98.49 | % |
| Other general and administrative | |
| 22,477 | | |
| 85,634 | | |
| (63,157 | ) | |
| -73.75 | % |
| Total General and Administrative expenses | |
| 168,489 | | |
| 145,078 | | |
| 23,411 | | |
| 16.14 | % |
| | |
| | | |
| | | |
| | | |
| | |
| TOTAL
OPERATING EXPENSES | |
| 227,937 | | |
| 287,611 | | |
| (59,674 | ) | |
| -20.75 | % |
For
the three months ended June 30, 2015 we incurred lease operating expenses of $49,577, a decrease of $64,301 or 56% compared to
the three months ended June 30, 2014, For the three months ended June 30, 2015 we incurred workover expenses of $1,167, which
is comparable to $1,167 for the three months ended June 30, 2014. We also incurred legal, title, and administrative well expenses
of $2,715 for the three months ended June 30, 2015 compared to $2,365 for the three months ended June 30, 2014, an increase of
$350 or 12.89% resulting from increased legal costs related to operating the wells.
During
the three months ended June 30, 2015 compared to the three months ended June 30, 2014, our depreciation, depletion, amortization,
and accretion expenses decreased by $18,784 or 66%
Net
Operating Loss. For the three months ended June 30, 2015, our total net operating loss
was $99,812 as compared to a net operating loss of $114,414 for the three months ended June 30, 2014, an improvement of $14,602
or 12.76% from the prior period.
Other
Income (Expense). For the three months ended June 30, 2015, we had interest
expense of $0 compared to interest expense of $74,804 for the three months ended June 30, 2014, relating to our outstanding convertible
promissory notes. We recorded a gain on embedded derivatives of $40,661 for the three months ended June 30, 2014, with no such
activity occurred in the current year. We had $0 in other income for the three months ended June 30, 2015 compared to $102,810
for the three months ended June 30, 2014 which resulted from reversing $102,810 in penalties due to default on a convertible note
for the three months ended June 30, 2014
Net
Loss. For the three months ended June 30, 2015, our net
loss was $99,812 as compared to a net loss of $45,747 for the three months ended June 30, 2014, an increase of $54,065 or 54.17%
from the prior period. The increase in net loss for the current quarter was largely due to the reversed penalties in the 2014
period with no such activity in the 2015 period, and a decrease in revenue.
Results
of operations for the six months ended June 30, 2015, as compared to the six months ended June 30, 2014
Revenues.
We had total revenues of $291,802 for the six months ended June 30, 2015 which were generated from oil and gas sales
of $286,702 and well operating revenues of $5,100. This was a $18,580 or 6% decrease from
total revenues of $310,382 for the six months ended June 30, 2014, which were generated from oil and gas sales of $305,282 and
well operation revenues of $5,100. Barrels of oil per day produced (BOPD) increased to an average of 42.85 BOPD from 19.29 BOPD
for the six months ended June 30, 2014.
Our
administrative revenue is derived from well administrative/operator fees charged through United Operating, LLC, our wholly-owned
subsidiary, to third party well owners for managing and accounting for the development and production of their oil and gas property
interests. The Company also operates certain wells where the Company also has an ownership interest.
For these partially owned wells, no administrative income is recognized. Rather, operating fees received from other well interest
owners are recorded as a reduction to the full cost pool per the full cost rules. The full cost pool was reduced by $84,600 for
the six months ended June 30, 2015 compared to $105,297 for the six months ended June 30, 2014.
The
following table sets forth the revenue and production data for the six months ended June 30, 2015 and 2014.
| | |
SIX MONTHS ENDED | | |
INCREASE | | |
% INCREASE | |
| | |
JUNE 30, 2015 | | |
JUNE 30, 2014 | | |
(DECREASE) | | |
(DECREASE) | |
| REVENUES | |
| | | |
| | | |
| | | |
| | |
| Oil and Gas Revenues | |
$ | 286,702 | | |
$ | 305,282 | | |
$ | (18,580 | ) | |
| -6.09 | % |
| Administrative revenues | |
| 5,100 | | |
| 5,100 | | |
| — | | |
| 0.00 | % |
| Total Revenues | |
| 291,802 | | |
| 310,382 | | |
| (18,580 | ) | |
| -5.99 | % |
| | |
| | | |
| | | |
| | | |
| | |
| PRODUCTION: | |
| | | |
| | | |
| | | |
| | |
| Total production (Barrel of Oil Equivalent) | |
| 3,833 | | |
| 3,472 | | |
| 361 | | |
| 10.39 | % |
| Barrels of Oil Equivalent per day | |
| 42.58 | | |
| 19.29 | | |
| 2 | | |
| 10.39 | % |
| | |
| | | |
| | | |
| | | |
| | |
| AVERAGE SALES PRICES: | |
| | | |
| | | |
| | | |
| | |
| Price per Barrel of Oil Equivalent | |
$ | 75 | | |
$ | 88 | | |
$ | (13 | ) | |
| -14.91 | % |
Operating
Expenses. For the six months ended June 30, 2015, our total operating expenses were $472,456
which consisted of lease operating expenses of $239,504, accretion expense of $6,000, depletion expenses of $17,414, recovery
of bad debt of $47,232, and general and administrative expenses of $256,770. By comparison,
for the six months ended June 30, 2014, our total operating expenses were $716,836, which consisted of lease operating expenses
of $253,136, accretion expense of $6,186, depletion expense of $45,542, bad debt expense of $12,660, and general and
administrative expenses of $399,312.
The
following table sets forth information relating to our operating expenses for the six months ended June 30, 2015 and 2014
| | |
SIX MONTHS ENDED | | |
INCREASE | | |
% INCREASE | |
| | |
JUNE 30, 2015 | | |
JUNE 30, 2014 | | |
(DECREASE) | | |
(DECREASE) | |
| LEASE OPERATING EXPENSES | |
| | | |
| | | |
| | | |
| | |
| Lease operating expenses | |
$ | 229,781 | | |
$ | 246,070 | | |
$ | (16,289 | ) | |
| -6.62 | % |
| Workover expenses | |
| 4,657 | | |
| 1,946 | | |
| 2,711 | | |
| 139.29 | % |
| Legal, title and administrative well expenses | |
| 5,066 | | |
| 5,120 | | |
| (54 | ) | |
| -1.05 | % |
| Total Lease Operating expenses | |
| 239,504 | | |
| 253,136 | | |
| (13,632 | ) | |
| -5.39 | % |
| | |
| | | |
| | | |
| | | |
| | |
| DEPLETION AND ACCRETION EXPENSE | |
| | | |
| | | |
| | | |
| | |
| Depreciation, depletion, amortization and accretion expense | |
| 23,414 | | |
| 51,728 | | |
| (28,314 | ) | |
| -54.74 | % |
| | |
| | | |
| | | |
| | | |
| | |
| BAD DEBT EXPENSE | |
| | | |
| | | |
| | | |
| | |
| Bad debt expense | |
| — | | |
| 12,660 | | |
| (12,660 | ) | |
| -100.00 | % |
| | |
| | | |
| | | |
| | | |
| | |
| RECOVERY OF BAD DEBT | |
| | | |
| | | |
| | | |
| | |
| Recover of bad debt | |
| (47,232 | ) | |
| — | | |
| (47,232 | ) | |
| 0.00 | % |
| | |
| | | |
| | | |
| | | |
| | |
| GENERAL AND ADMINISTRATIVE EXPENSES | |
| | | |
| | | |
| | | |
| | |
| SEC related general and administrative expenses | |
$ | 70,382 | | |
$ | 45,592 | | |
$ | 24,790 | | |
| 54.38 | % |
| Employee and officer expenses | |
| 149,523 | | |
| 204,998 | | |
| (55,475 | ) | |
| -27.06 | % |
| Other general and administrative | |
| 36,866 | | |
| 148,722 | | |
| (111,856 | ) | |
| -75.21 | % |
| Total General and Administrative expenses | |
| 256,770 | | |
| 399,312 | | |
| (142,541 | ) | |
| -35.70 | % |
| | |
| | | |
| | | |
| | | |
| | |
| TOTAL
OPERATING EXPENSES | |
| 472,456 | | |
| 716,836 | | |
| (244,379 | ) | |
| -34.09 | % |
For
the six months ended June 30, 2015 we incurred lease operating expenses of $229,781, an decrease of $16,289 or 6.62% compared
to the six months ended June 30, 2014. For the six months ended June 30, 2015 we incurred workover expenses of $4,657, an increase
of $2,711 or 139.29% compared to the six months ended June 30, 2014 as
a
result in repairs to keep wells in operating condition. We also incurred legal, title, and administrative well expenses of $5,066
for the six months ended June 30, 2015 compared to $5,120 for the six months ended June 30, 2014, a decrease of $54 or 1.05% resulting
from lower legal costs related to operating the wells.
During
the six months ended June 30, 2015 compared to the six months ended June 30, 2014, our depreciation, depletion, amortization,
and accretion expenses decreased by $28,314 or 55%
During
the six months ended June 30, 2015 there was $47,232 of recovered bad debt that was previously written off with no such activity
in the six months that ended June 30, 2014
The
decrease in general and administrative expenses of $142,541 or 36% during the six months ended June 30, 2015, compared to the
prior period, was largely due to an decrease in officer compensation and other general and administrative expenses.
Net
Operating Loss. For the six months ended June 30, 2015, our total net operating loss was
$180,654 as compared to a net operating loss of $406,454 for the six months ended June 30, 2014, an improvement of $225,800 or
56% from the prior period.
Other
Income (Expense). For the six months ended June 30, 2015, we had interest income
of $4 compared to interest expense of $179,540 for the six months ended June 30, 2014, relating to our outstanding convertible
promissory notes. We recorded a gain on embedded derivatives of $126,397 for the six months ended June 30, 2014, with no such
activity occurred in the current year.
Net
Loss. For the six months ended June 30, 2015, our net
loss was $180,650 as compared to a net loss of $459,597 for the six months ended June 30, 2014, an improvement of $278,947 or
61% from the prior period. The decrease in net loss for the current quarter was largely due to decrease in general & admin
expense, collection of previously written off receivables, lower depletion expense, and the fully converted notes.
Liquidity
and Capital Resources. During the six months ended June 30, 2015, we used $168,848 in
operations. For the six months ended June 30, 2014 we had cash provided by investing activities of $400,000 related to the sale
of oil properties, no such activity occurred in the current year.
Off-Balance
Sheet Arrangements. We have no off-balance sheet arrangements as of June 30, 2015.
Item
3. Quantitative and Qualitative Disclosures about Market Risk.
Pursuant
to Item 305(e) of Regulation S-K (§ 229.305(e)), the Company is not required to provide the information required by this
Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).
Item
4. Controls and Procedures.
Evaluation
of disclosure controls and procedures. We maintain controls and procedures that are designed to ensure that information required
to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed,
summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated
and communicated to our management including our principal executive and principal financial officer, to allow timely decisions
regarding required disclosures. Based upon the evaluation by our principal executive and principal financial officer, of those
controls and procedures, performed as of the end of the period covered by this report, our principal executive and principal
financial
officer concluded that our disclosure controls and procedures were not effective due to our over reliance on consultants in our
accounting and financial statement closing processes. To address the need for more effective internal controls, management has
plans to improve the existing controls and implement new controls as our financial position and capital availability improves.
Changes
in internal controls. There were no changes in our internal control over financial reporting that occurred during the fiscal
quarter covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control
over financial reporting.
Item
5. Prior-Period-Adjustment.
During
the three months ended June 30, 2015, we recorded adjustments to administrative revenue for amounts that should have been recorded
in prior reporting periods. The adjustments were identified in connection with our preparation and review of our second quarter
financials and form 10-Q. Recording these out-of-period adjustments for the three months ended June 30, 2015 had the effect of
decreasing administrative revenue income by $41,925. Retained earnings were not affected by the adjustment. The principal components
of the adjustments resulted from improperly recognizing revenue for wells owned by the Company instead of offsetting the full
cost pool by the total revenue from those wells. As a result of the control deficiency relating to the Company’s accounting
for administrative revenue, the Company’s management concluded that, as of August 14, 2015, a material weakness existed
in the Company’s internal control over financial reporting related to accounting for administrative revenue.
Below
is a chart outlining the accounts affected by the change
| United American Petroleum Corp. |
| (Unaudited) |
| | |
| | |
| | |
| | |
| |
| | |
Reported | | |
Actual | | |
Change $ | | |
Change % | |
| Consolidated Statements of Operations | |
| | | |
| | | |
| | | |
| | |
| Administrative Revenues | |
$ | 44,850 | | |
$ | 2,925 | | |
$ | (41,925 | ) | |
| -93.48 | % |
| | |
| | | |
| | | |
| | | |
| | |
| Consolidated Balance Sheets | |
| | | |
| | | |
| | | |
| | |
| Oil and gas properties (full cost method): | |
| | | |
| | | |
| | | |
| | |
| net of accumulated depletion | |
$ | 407,837 | | |
$ | 365,912 | | |
$ | (41,925 | ) | |
| -10.28 | % |
| | |
| | | |
| | | |
| | | |
| | |
| Consolidated Statements of Cash Flow | |
| | | |
| | | |
| | | |
| | |
| Reduction in full cost pool due to operator income from owned wells | |
$ | — | | |
$ | 41,925 | | |
$ | 41,925 | | |
| — | |
PART
II — OTHER INFORMATION
Item
1. Legal Proceedings.
None.
Item
1A. Risk Factors.
There
have been no material changes from the risk factors previously disclosed in the Company’s Form 10-K filed with the Commission
on April 16, 2015, which risk factors are incorporated by reference herein. Investors are encouraged to read and review the risk
factors included in the Form 10-K prior to making an investment in the Company.
Item
2. Certain Relationships and Related Transactions, and Director Independence.
Related
Party Transactions.
As
of June 30, 2015, the Company had a related party receivable in the amount of $6,243 due from two Companies with working interest
amounts payable. This is a 84.96% decrease from an amount of $41,513 as of December 31, 2014. Our directors are also officers
in these two companies.
Michael
Carey, our Chief Executive Officer and President, and Ryan Hudson, our Chief Operating Officer and Secretary, are members of 4
Phoenix Oil and Gas, LLC (“Phoenix”), which pays for fuel, meals, and other onsite location expenses, and field equipment
to facilitate field activities. The Company reimburses Phoenix for such expenses and services on an ongoing basis.
Effective
December 26, 2012, the Company issued 500 shares of its Series B Preferred Stock each to Mr. Carey and Mr. Hudson (1,000 shares
of Series B Preferred Stock in aggregate), in consideration for services rendered to the Company as the Company’s Chief
Executive Officer, President and Director, and Chief Operating Officer, Secretary and Director, respectively.
For
the six months ended June 30, 2015 Phoenix Oil and Gas, LLC had a total of $7,303 in revenue for the wells it has an interest
in. They also incurred $38,306 in joint interest billings and paid a total amount of $3,772 towards those joint interest billings
for the six months ended June 30, 2015.
There
have been no other related party transactions, or any other transactions or relationships required to be disclosed pursuant to
Item 404 of Regulation S-K.
Review,
Approval and Ratification of Related Party Transactions
Given
our small size and limited financial resources, we have not adopted formal policies and procedures for the review, approval or
ratification of transactions, such as those described above, with our executive officers, directors and significant stockholders.
We may establish formal policies and procedures in the future, once we have sufficient resources and have appointed additional
directors, so that such transactions will be subject to the review, approval or ratification of our Board of Directors, or an
appropriate committee thereof. On a moving forward basis, our directors will continue to approve any related party transaction.
Director
Independence. We do not have any independent directors.
Item
3. Defaults upon Senior Securities.
None.
Item
4. Mine Safety Disclosures.
Not
applicable.
Item
5. Other Information.
None.
Item
6. Exhibits.
| 2.4 |
Agreement
and Plan of Merger, by and among the Company, United American Petroleum Corp. and United PC Acquisition Corp., dated December
31, 2010 (1) |
| 2.5 |
Agreement
and Plan of Merger and Reorganization dated December 31, 2010, by and between the Company and United American Petroleum Corp.
(1) |
| 3.1 |
Amended and
Restated Articles of Incorporation, as filed with the Secretary of State of the State of Nevada, effective June 2, 2014 (incorporated
by reference to the Company’s Schedule 14C filed on May 6, 2014) |
| 3.2 |
Certificate
of Designation of Series B Preferred Stock (incorporated by reference as Exhibit 3.2 to the Company’s Current Report
on Form 8-K, filed November 14, 2012) |
| 3.3 |
Certificate
of Withdrawal of Certificate of Designation of Series A Convertible Preferred Stock (incorporated by reference as Exhibit
3.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2012, filed November 14, 2012) |
| 3.4 |
Bylaws (incorporated
by reference to Exhibit 3(ii) of the Company’s Registration Statement on Form SB-2, filed on April 15, 2005) |
| 3.5 |
Articles
of Merger, as filed with the Secretary of State of the State of Nevada, effective December 16, 2009 |
| 3.6 |
Certificate
of Correction to Articles of Merger, as filed with the Secretary of State of the State of Nevada, effective January 29, 2010
(incorporated by reference to Exhibit 3.6 of the Company’s Annual Report on Form 10-K, as amended, filed January 21,
2011) |
| 3.7 |
Articles
of Merger between United PC Acquisition Corp. and United American Petroleum Corp. (1) |
| 3.8 |
Articles
of Merger between United American Petroleum Corp. and Forgehouse, Inc. (1) |
| 3.9 |
Form of Note
and Warrant Purchase Agreement (1) |
| 3.10 |
Form of Senior
Secured Convertible Promissory Note (1) |
| 3.11 |
Form of Warrant
(1) |
| 3.12 |
Form of Security
Agreement (1) |
| 3.13 |
Form of Note
and Warrant Purchase Agreement (3) |
| 3.14 |
Form of Convertible
Promissory Note (3) |
| 3.15 |
Form of Warrant
(3) |
| 10.1 |
$400,000
Promissory Note – JMJ Financial (January 31, 2013) (6) |
| 10.2 |
Securities
Purchase Agreement – Asher Enterprises, Inc. (February 19, 2013) (6) |
| 10.3 |
$103,500
Convertible Promissory Note – Asher Enterprises, Inc. (February 19, 2013) (6) |
| 21 |
List of Subsidiaries
(7) |
| 31.1 |
Certification
of Principal Executive and Financial Officer, pursuant to Rule 13a-14 and 15d-14 of the Securities Exchange Act of 1934 (8) |
| 32.1 |
Certification
of Principal Executive and Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002 (8) |
| 101.ins* |
XBRL Instance
Document (8) |
| 101.sch* |
XBRL Taxonomy
Schema Document (8) |
| 101.cal* |
XBRL Taxonomy
Calculation Linkbase Document (8) |
| 101.lab* |
XBRL Taxonomy
Label Linkbase Document (8) |
| 101.pre* |
XBRL
Taxonomy Presentation Linkbase Document (8)
|
| (1) |
Incorporated by reference to the Registrant’s Current Report on Form 8-K filed on January 5, 2011. |
| (2) |
Incorporated by reference to the Registrant’s Current Report on Form 8-K filed on February 3, 2011. |
| (3) |
Incorporated by reference to the Registrant’s Current Report on Form 8-K filed on October 18, 2011. |
| (4) |
Incorporated by reference to the Registrant’s Current Report on Form 8-K filed on November 8, 2011. |
| (5) |
Incorporated by reference to the Registrant’s Current Report on Form 8-K filed on December 5, 2011. |
| (6) |
Incorporated by reference as to the Registrant’s Current Report on Form 8-K, filed with the Commission on March 7, 2013. |
| (7) |
Incorporated by reference to the Registrant’s Annual Report on Form 10-K filed on April 16, 2014. |
| (8) |
Filed herewith. |
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
| |
United
American Petroleum Corp.,
a Nevada corporation |
|
| |
|
|
|
| Date: August
___, 2015 |
By: |
/s/ Michael
Carey |
|
| |
|
Michael Carey |
|
| |
|
Chief Executive
Officer, Chief Financial Officer, President, Treasurer and a director
(Principal Executive Officer and Principal Financial Officer) |
|
Exhibit 31.1
United
American Petroleum Corp 10-Q
Certification
of Principal Executive and Financial Officer,
Required By Rule 13a-14(A) of the Securities Exchange Act of 1934, As Amended,
As Adopted Pursuant To Section 302 of the Sarbanes-Oxley Act of 2002
I,
Michael Cary, certify that:
| 1. |
I
have reviewed this Quarterly Report on Form 10-Q of United American Petroleum Corp.; |
| |
|
|
| 2. |
Based
on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect
to the period covered by this report; |
| |
|
|
| 3. |
Based
on my knowledge, the financial statements, and other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report; |
| |
|
|
| 4. |
I
am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for
the registrant and have: |
| |
|
|
| |
(a) |
Designed
such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision,
to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to
us by others within those entities, particularly during the period in which this report is being prepared; |
| |
|
|
| |
(b) |
Designed
such internal control over financial reporting, or caused such internal control over financial reporting to be designed under
our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles; |
| |
|
|
| |
(c) |
Evaluated
the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions
about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based
on such evaluation; and |
| |
|
|
| |
(d) |
Disclosed
in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s
most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
and |
| |
|
|
| 5. |
I
have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s
auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
| |
|
|
| |
(a) |
All
significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial
information; and |
| |
|
|
| |
(b) |
Any
fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s
internal control over financial reporting. |
| Date:
August __, 2015 |
By: |
/s/
Michael Carey |
| |
|
Michael
Carey |
| |
|
Chief
Executive Officer and Chief Financial Officer (Principal Executive and Financial Officer) |
Exhibit 32.1
United
American Petroleum Corp 10-Q
Certification
of Principal Executive and Financial Officer
Pursuant to 18 U.S.C. Section 1350, As Adopted Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
In
connection with the Quarterly Report of United American Petroleum Corp., a Nevada corporation (the “Company”) on Form
10-Q for the period ending March 31, 2014, as filed with the Securities and Exchange Commission on the date hereof (the “Report”),
Michael Carey, Chief Executive Officer, Chief Financial Officer, President, Treasurer and a director of the Company, certifies
to the best of his knowledge, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of
2002, that:
| (1) |
The
Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| |
|
| (2) |
The information
contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the
Registrant as of the dates and for the periods expressed in the Report. |
| Date:
August __, 2015 |
By: |
/s/
Michael Carey |
|
| |
|
Michael
Carey |
|
| |
|
Chief
Executive Officer and Chief Financial Officer,
(Principal Executive Officer and Principal Financial Officer) |
|
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