UAPC United American Petroleum Corporation (PK)

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 September 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 November 23, 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

		Page
Item 1.	Financial Statements (Unaudited)	3-5
Item 1.1	Notes to the Consolidated Financial Statements (Unaudited)	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	7-11
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	11
Item 4.	Controls and Procedures	11
Item 5.	Prior-Period-Adjustment	12
	PART II
	OTHER INFORMATION
Item 1.	Legal Proceedings	12
Item 1A.	Risk Factors	12
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	13
Item 3.	Defaults Upon Senior Securities	13
Item 4.	Mine Safety Disclosures	13
Item 5.	Other Information	13
Item 6.	Exhibits	14
	Signatures	15-18

PART I - FINANCIAL INFORMATION

 

Item 1. Financial Statements.

 

United American Petroleum Corp.

Consolidated Balance Sheets

 (Unaudited)

		September 30,				December 31,
		2015				2014
ASSETS
Current assets:
Cash and cash equivalents		$	109,814			$	358,156
Accounts receivable, net of allowance of $395,550 and $267,790, respectively			72,390				48,392
Related party receivables			243				41,513
Total current assets			182,447				448,061
Oil and gas properties (full cost method):
net of accumulated depletion of $310,669 and $282,458 respectively			85,000				418,380
Total assets		$	267,447			$	866,441
LIABILITIES AND STOCKHOLDER’S DEFICIT
Current liabilities:
Accounts payable and accrued liabilities		$	951,965			$	780,890
Deferred gain on sale of assets			7,500				7,500
Other payable			485,048				499,048
Total current liabilities			1,444,513				1,287,438
Asset retirement obligation			202,362				193,362
Total liabilities			1,646,875				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 September 30, 2015 and December 31, 2014			321,868				321,868
Additional paid-in capital			8,506,218				8,506,218
Accumulated deficit			(10,207,515	)			(9,442,446	)
Total stockholders’ deficit			(1,379,428	)			(614,359	)
Total liabilities and stock holder’s deficit		$	267,447			$	866,441

 

See accompanying notes to unaudited consolidated financial statements.

United American Petroleum Corp.

Consolidated Statements of Operations

(Unaudited)

 

		Three Months				Three Months				Nine Months				Nine Months
		Ended September 30,				Ended September 30,				Ended September 30,				Ended September 30,
		2015				2014				2015				2014
Revenues
Oil and Gas Revenues		$	60,265			$	177,057			$	346,967			$	482,339
Administrative Revenues			2,175				11,311				7,275				16,411
Revenues, net of sales returns and allowances			62,440				188,368				354,242				498,750
Operating Expenses
Lease operating expenses			145,022				42,274				384,526				295,410
Bad debt expense			175,000				—				175,000				12,660
Impairment loss of well assets			178,494				—				178,494				—
Recovery of bad debt			—				—				(47,232	)			—
Accretion expense			3,000				3,000				9,000				9,186
Depletion expense			10,797				26,725				28,211				72,268
General and administrative			134,547				163,564				391,317				562,876
Total Operating Expenses			646,860				235,563				1,119,316				952,400
Net Loss Before Other Expenses		$	(584,420	)		$	(47,195	)		$	(765,074	)		$	(453,650	)
Other Income (Expense)
Interest Income (expense)			1				(10,019	)			5				(189,559	)
Gain on embedded derivatives			—				(29,874	)			—				96,523
Loss on Conversion of Debt			—				(47,688	)			—				(47,688	)
Total other income (expense)			1				(87,581	)			5				(140,724	)
Net Loss		$	(584,419	)		$	(134,776	)		$	(765,069	)		$	(594,374	)
Basic and Diluted Loss Per Share			(0.00	)			(0.00	)			(0.00	)			(0.00	)
Weighted average number of shares outstanding - Basic and Diluted			321,867,909				181,276,760				321,867,909				126,198,617

 

See accompanying notes to unaudited consolidated financial statements.

Consolidated Statements of Cash Flow

(Unaudited)

 

		Six Months				Six Months
		Ended September 30, 2015				Ended September 30, 2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		$	(765,069	)		$	(594,374	)
Adjustments to reconcile net loss to net cash used in operating activities:
Bad debt expense			175,000				12,660
Accretion expense			9,000				9,186
Depletion expense			28,211				72,268
Amortization of debt discount			—				179,540
(Gain) loss on embedded derivatives			—				(96,523	)
Loss on convertible note conversion			—				47,688
Impairment loss of well assets			178,494				—
Reduction in full cost pool due to operator income from owned wells			126,676				138,986
Change in assets and liabilities:
Accounts receivable			(198,998	)			(1,751	)
Related party receivable			41,270				2,043
Decrease in accounts payable and accrued expenses			171,074				(417,588	)
Decrease in Other payable			(14,000	)			(1,817	)
Net cash used in operating activities			(248,342	)			(649,656	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of oil and gas properties			—				450,000
Net cash provided by investing activities			—				450,000
NET DECREASE IN CASH AND CASH EQUIVALENTS			(248,342	)			(199,656	)
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD			358,156				557,298
CASH AND CASH EQUIVALENTS - END OF PERIOD		$	109,814			$	357,642
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		$	—			$	201,533
Reclassification of detachable warrants to derivative liability		$	—			$	153,426
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.

 

2.

Going Concern

 

The Company has incurred a net loss and negative operating cash flows since inception through September 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 September 30, 2015, the Company had a receivable in the amount of $243 due from this related party, with working interest amounts payable. This represents a $41,270 decrease from an amount of $41,513 as of December 31, 2014.

 

For the nine months ended September 30, 2015 Phoenix Oil and Gas, LLC had a total of $5,441 in revenue for the wells it has an interest in. They also incurred $40,007 in joint interest billings and paid a total amount of $4,700 towards those joint interest billings for the nine months ended September 30, 2015.  This is noted on the balance sheet in related parted receivable, as of September 30, 2015.

 

4.	Impairment of Well Assets

 

The Company evaluated the value of its well assets at September 30, 2015. Using the full cost pool method the Company determined that the fair value of its well assets was below net book value. The Company has impaired its well asset by $178,494, with a balance of $85,000, as of September 30, 2015.

 

5.	Accounts Receivable

 

The Company evaluates the collectability of its accounts receivable on a quarterly basis. The Company reviewed its aging and determined that several balances would not be collectible, primarily based on current economic conditions that effect the industry as a whole. The Company estimated $175,000, of its outstanding accounts receivable balance to be uncollectible. An allowance was created for those accounts receivable. The accounts receivable balance was $72,390, at September 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 September 30, 2015, as compared to the three months ended September 30, 2014

 

Revenues. We had total revenues of $62,440 for the three months ended September 30, 2015 which were generated from oil and gas sales of $60,265 and well operating revenues of $2,175. This was a $125,928 decrease from total revenues of $188,368 for the three months ended September 30, 2014, which were generated from oil and gas sales of $177,057 and well operation revenues of $11,311. Barrels of oil per day produced (BOPD) increased to 26.40 BOPD from 22.12 BOPD for the three months ended September 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 andproduction 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 $42,074 for the three months ended September 30, 2015 compared to $83,869 for the three months ended September 30, 2014.

 

The following table sets forth the revenue and production data for the three months ended September 30, 2015 and 2014.

 

		THREE MONTHS
		ENDED SEPTEMBER 30, 2015				ENDED SEPTEMBER 30, 2014				INCREASE (DECREASE)				% INCREASE (DECREASE)
REVENUES
Oil and Gas Revenues		$	60,265			$	177,075			$	(116,792	)			-65.96	%
Administrative revenues			2,175				11,311				(9,136	)			-80.77	%
Total Revenues			62,440				188,368				(125,928	)			-66.85	%
PRODUCTION:
Total production (Barrel of Oil Equivalent)			2,376				1,991				385				19.34	%
Barrels of Oil Equivalent per day			26.40				22.12				4.28				9.6	%
AVERAGE SALES PRICES:
Price per Barrel of Oil Equivalent		$	25.36			$	88.93			$	(63.57	)			-71.48	%

 

 

Operating Expenses. For the three months ended September 30, 2015, our total operating expenses were $646,860 which consisted of lease operating expenses of $145,022, accretion expense of $3,000, depletion expenses of $10,797, bad debt of $175,000, and general and administrative expenses of $134,547. By comparison, for the three months ended September 30, 2014, our total operating expenses were $235,563, which consisted of lease operating expenses of $42,274, accretion expense of $3,000, depletion expense of $26,725, and general and administrative expenses of $163,564.

 

The following table sets forth information relating to our operating expenses for the three months ended September 30, 2015 and 2014

 

		THREE MONTHS
		ENDED SEPTEMBER 30, 2015				ENDED SEPTEMBER 30, 2014				INCREASE (DECREASE)				% INCREASE (DECREASE)
LEASE OPERATING EXPENSES
Lease operating expenses		$	143,905			$	28,868			$	115,037				398.49	%
Workover expenses			778				3,021				(2,243	)			-74.24	%
Legal, title and administrative well expenses			339				10,385				(10,046	)			-96.74	%
Total Lease Operating expenses			145,022				42,274				102,748				243.05	%
DEPLETION AND ACCRETION EXPENSE
Depreciation, depletion, amortization and accretion expense			13,797				29,725				(15,928	)			-53.58	%
IMPAIRMENT LOSS OF WELL ASSETS
Impairment loss of  well assets			178,494				—				178,494				100.00	%
BAD DEBT EXPENSE
Bad debt expense			175,000				—				175,000				100.00	%
RECOVERY OF BAD DEBT
Recover of bad debt			—				—				—				—
GENERAL AND ADMINISTRATIVE EXPENSES
SEC related general and administrative expenses		$	3,500			$	5,276			$	(1,776	)			33.66	%
Employee and officer expenses			54,888				35,000				19,888				56.82	%
Other general and administrative			76,159				123,288				(47,129	)			-38.23	%
Total General and Administrative expenses			134,547				163,564				(29,017	)			-17.74	%
TOTAL OPERATING EXPENSES			646,860				235,563				411,297				174.60	%

For the three months ended September 30, 2015 we incurred lease operating expenses of $145,022, a increase of $102,748 or 243% compared to the three months ended September 30, 2014, For the three months ended September 30, 2015 we incurred workover expenses of $778, compared to $3,021 for the three months ended September 30, 2014, a $2,243 decrease or 74.24%. The Company impaired $178,494 of it well assets, compared to $0, of the three months ended September 30, 2014. We also incurred legal, title, and administrative well expenses of $339 for the three months ended September 30, 2015 compared to $10,385 for the three months ended September 30, 2014, a decrease of $10,046 or 96.74% resulting from decreased legal costs related to operating the wells.

 

During the three months ended September 30, 2015 compared to the three months ended September 30, 2014, our depreciation, depletion, amortization, and accretion expenses decreased by $15,928 or 54%

 

Net Operating Loss. For the three months ended September 30, 2015, our total net operating loss was $584,420 as compared to a net operating loss of $47,195 for the three months ended September 30, 2014, an increase of $537,225 or 1,178% from the prior period.

 

Other Income (Expense). For the three months ended September 30, 2015, we had interest income of $1 compared to interest expense of $10,019 for the three months ended September 30, 2014, relating to our outstanding convertible promissory notes. We recorded a gain on embedded derivatives of $29,874 for the three months ended September 30, 2014, with no such activity occurred in the current year. We had $0 in loss on conversion of debt for the three months ended September 30, 2015 compared to $47,688 for the three months ended September 30, 2014.

 

Net Loss. For the three months ended September 30, 2015, our net loss was $584,419 as compared to a net loss of $134,776 for the three months ended September 30, 2014, an increase of $449,643 or 374% 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 nine months ended September 30, 2015, as compared to the nine months ended September 30, 2014

 

Revenues. We had total revenues of $354,242 for the nine months ended September 30, 2015 which were generated from oil and gas sales of $346,967 and well operating revenues of $7,275. This was a $144,508 or 41% decrease from total revenues of $498,750 for the nine months ended September 30, 2014, which were generated from oil and gas sales of $482,339 and well operation revenues of $16,411. Barrels of oil per day produced (BOPD) increased to an average of 68.99 BOPD from 19.83 BOPD for the nine months ended September 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 $126,675 for the nine months ended September 30, 2015 compared to $138,986 for the nine months ended September 30, 2014.

The following table sets forth the revenue and production data for the six months ended September 30, 2015 and 2014.

 

		NINE MONTHS ENDED								INCREASE				% INCREASE
		SEPTEMBER 30, 2015				SEPTEMBER 30, 2014				(DECREASE)				(DECREASE)
REVENUES
Oil and Gas Revenues		$	346,967			$	482,339			$	(135,372	)			-28.07	%
Administrative revenues			7,275				16,411				(9,136	)			-55.67	%
Total Revenues			354,242				498,750				(144,508	)			-41.00	%
PRODUCTION:
Total production (Barrel of Oil Equivalent)			6,209				5,355				854				15.95	%
Barrels of Oil Equivalent per day			23.00				19.83				3				15.97	%
AVERAGE SALES PRICES:
Price per Barrel of Oil Equivalent		$	56			$	90			$	(34	)			-37.96	%

 

Operating Expenses. For the nine months ended September 30, 2015, our total operating expenses were $1,119,316 which consisted of lease operating expenses of $384,526, accretion expense of $9,000, depletion expenses of $28,211, recovery of bad debt of $47,232, bad debt expense of $175,000, and general and administrative expenses of $391,317 and impairment loss of well assets of $178,494. By comparison, for the nine months ended September 30, 2014, our total operating expenses were $952,400, which consisted of lease operating expenses of $295,410, accretion expenseof $9,186, depletion expense of $72,268, bad debt expense of $12,660, and general and administrative expenses of $562,876.

 

The following table sets forth information relating to our operating expenses for the six months ended September 30, 2015 and 2014

 

		NINE MONTHS ENDED								INCREASE				% INCREASE
		SEPTEMBER 30, 2015				SEPTEMBER 30, 2014				(DECREASE)				(DECREASE)
LEASE OPERATING EXPENSES
Lease operating expenses		$	373,686			$	274,938			$	98,748				35.92	%
Workover expenses			5,435				4,967				468				9.43	%
Legal, title and administrative well expenses			5,405				15,505				(10,100	)			-65.14	%
Total Lease Operating expenses			384,526				295,410				89,116				30.17	%
DEPLETION AND ACCRETION EXPENSE
Depreciation, depletion, amortization and accretion expense			37,211				81,454				(44,243	)			-54.32	%
IMPAIRMENT LOSS OF WELL ASSETS
Impairment loss of well assets			178,494				—				178,494				100.00	%
BAD DEBT EXPENSE
Bad debt expense			175,000				12,660				162,340				1282.31	%
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			$	61,916			$	8,466				13.67	%
Employee and officer expenses			204,411				159,762				44,649				-27.95	%
Other general and administrative			116,524				341,198				(224,674	)			-65.85	%
Total General and Administrative expenses			391,317				562,876				(171,559	)			-43.84	%
TOTAL OPERATING EXPENSES			1,119,316				952,400				166,916				17.53	%

 

 

For the nine months ended September 30, 2015 we incurred lease operating expenses of $384,526, an increase of $89,116 or 30% compared to the nine months ended September 30, 2014. For the nine months ended September 30, 2015 we incurred workover expenses of $5,435, an increase of $468 or 9.43% compared to the nine months ended September 30, 2014 as a result in repairs to keep wells in operating condition. The Company impaired its well assets, during the nine months ended September 30, 2015, by $178,494. We also incurred legal, title, and administrative well expenses of $5,405 for the nine months ended September 30, 2015 compared to $15,505 for the nine months ended September 30, 2014, a decrease of $10,100 or 65.14% resulting from lower legal costs related to operating the wells.

 

During the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014, our depreciation, depletion, amortization, and accretion expenses decreased by $44,243 or 54%

 

During the nine months ended September 30, 2015 there was $47,232 of recovered bad debt that was previously written off with no such activity in the nine months that ended September 30, 2014. The Company also estimated that $175,000 of its outstanding accounts receivable uncollectible. As of September 30, 2015, the Company had an allowance for uncollectible accounts receivable of $395,558.

 

The decrease in general and administrative expenses of $171,559 or 44% during the nine months ended September 30, 2015, compared to the prior period, was largely due to a decrease in officer compensation and other general and administrative expenses.

 

Net Operating Loss. For the nine months ended September 30, 2015, our total net operating loss was $765,074 as compared to a net operating loss of $453,650 for the nine months ended September 30, 2014, an increase of $311,424 or 69% from the prior period.

 

Other Income (Expense). For the nine months ended September 30, 2015, we had interest income of $5 compared to interest expense of $189,559 for the nine months ended September 30, 2014, relating to our outstanding convertible promissory notes. We recorded a loss on embedded derivatives of $96,523 for the nine months ended September 30, 2014, with no such activity occurred in the current year.

 

Net Loss. For the nine months ended September 30, 2015, our net loss was $765,069 as compared to a net loss of $594,374 for the nine months ended September 30, 2014, an increase in net loss of $311,424 or 69% from the prior period. The increase 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. The Company has also incurred an impairment in its well assets of $178,494 and bad debt expense of $175,000 at the nine months ended September 30, 2015.

 

Liquidity and Capital Resources. During the nine months ended September 30, 2015, we used $248,342 in operations. For the nine months ended September 30, 2014 we had cash provided by investing activities of $450,000 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 September 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. 

 

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 September 30, 2015, the Company had a related party receivable in the amount of $243 due from two Companies with working interest amounts payable. This is a 99% 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 nine months ended September 30, 2015 Phoenix Oil and Gas, LLC had a total of $5,441 in revenue for the wells it has an interest in. They also incurred $40,007 in joint interest billings and paid a total amount of $4,700 towards those joint interest billings for the nine months ended September 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: November 23, 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: November 23, 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: November 23, 2015	By:	/s/ Michael Carey
		Michael Carey
		Chief Executive Officer and Chief Financial Officer, (Principal Executive Officer and Principal Financial Officer)