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BASIS OF PRESENTATION</b> </font> </font> </p> <p align="justify"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">The accompanying unaudited condensed consolidated financial statements of Manas Petroleum Corporation ("Manas" or the &#8220;Company") and its subsidiaries (&#8220;Group&#8221;) for the three and six months periods ended June 30, 2011 have been prepared in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto, included in the Group's Annual Report on Form 10-K for the year ended December 31, 2010.</font> </font> </p> <p align="justify"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">In terms of the oil and gas industry lifecycle, the Company considers itself to be an exploration stage company. Since it has not realized any revenues from its planned principal operations, the Company presents its financial statements in conformity with accounting principles generally accepted in the United States of America (US GAAP) that apply in establishing operating enterprises, i.e. development stage companies. As an exploration stage enterprise, the Company discloses the deficit accumulated during the exploration stage and the cumulative statements of operations and cash flows from inception to the current balance sheet date.</font> </font> </p> <p align="justify"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">The Company, formerly known as Express Systems Corporation, was incorporated in the State of Nevada on July 9, 1988.</font> </font> </p> <p align="justify"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">On April 10, 2007, the Company completed the Exchange Transaction whereby it acquired its then sole subsidiary DWM Petroleum AG, Baar (&#8220;DWM&#8221;) pursuant to an exchange agreement signed in November 2006 whereby 100% of the shares of DWM were exchanged for 80,000,000 common shares of the Company. As part of the closing of this exchange transaction, the Company issued 800,000 shares as finders&#8217; fees at the closing price of $3.20.</font> </font> </p> <p align="justify"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">The acquisition of DWM has been accounted for as a merger of a private operating company into a non-operating public shell. Consequently, the Company is the continuing legal registrant for regulatory purposes and DWM is treated as the continuing accounting acquirer for accounting and reporting purposes. The assets and liabilities of DWM remained at historic cost. Under US GAAP in transactions involving the merger of a private operating company into a non-operating public shell, the transaction is equivalent to the issuance of stock by DWM for the net monetary assets of the Company, accompanied by a recapitalization. The accounting is identical to a reverse acquisition, except that no goodwill or other intangibles are recorded.</font> </font> </p> <p align="justify"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">The Group follows a strategy focused on the exploration and development of oil and gas resources in Central and East Asia (Kyrgyz Republic, Republic of Tajikistan and Republic of Mongolia) and in the Balkan Region (participation in Petromanas Energy Inc. with activities in Albania). Although we are currently focused primarily on projects located in certain geographic regions, we remain open to attractive opportunities in other areas. We do not have any known reserves on any of our properties.</font> </font> </p> <p align="justify"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;"> <b>2. ACCOUNTING POLICIES</b> </font> </font> </p> <p align="justify"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">The Group&#8217;s condensed consolidated financial statements are prepared in accordance with US GAAP. The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and disclosures, if any, of contingent assets and liabilities at the date of the financial statements. Actual results could differ from these estimates.</font> </font> </p> <p align="justify"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">The accompanying financial data as of June 30, 2011 and December 31, 2010 and for the three and six month periods ended June 30, 2011 and 2010 and for the period from inception, May 25, 2004, to June 30, 2011 has been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC).</font> </font> </p> <p align="justify"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">The complete accounting policies followed by the Group are set forth in Note 3 to the audited consolidated financial statements contained in the Group's Annual Report on Form 10-K for the year ended December 31, 2010.</font> </font> </p> <p> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">In the opinion of management, all adjustments (which include normal recurring adjustments, except as disclosed herein) necessary to present a fair statement of financial position as of June 30, 2011 and December 31, 2010, results of operations for the three and six month periods ended June 30, 2011 and 2010 and for the period from inception, May 25, 2004, to June 30, 2011, cash flows for the six month periods ended June 30, 2011 and 2010 and for the period from inception, May 25, 2004, to June 30, 2011 and statement of shareholders&#8217; equity (deficit) for the period from inception, May 25, 2004, to June 30, 2011, as applicable, have been made. 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style="font-family: times new roman,times,serif;">0.70</font> </font> </td> <td align="left" bgcolor="#e6efff" width="2%">&#160;</td> </tr> </table> </div> <p align="justify"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">For the six-month periods ended June 30, 2011 and 2010 we recorded in changes in fair value of warrants $0 and $533,223, respectively. For the three month periods ended June 30, 2011 and 2010, we recorded in changes in fair value of warrants $0 and $421,981, respectively.</font> </font> </p> <p align="justify"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;"> <b>10. CONTINGENTLY CONVERTIBLE LOAN</b> </font> </font> </p> <p align="justify"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">On August 18, 2008, the Company issued contingently convertible loans (the &#8220;Loans&#8221;) with a principal amount of $2,000,000 and disposed of 8% of its interest in its operations in Mongolia related to Blocks 13 and 14 for aggregate proceeds of $2,000,000. The net proceeds after paying finder&#8217;s fee were $1,860,000. The Company is responsible for the Loan holder&#8217;s share of the exploration costs attributable to Blocks 13 and 14 through phases 1, 2 and 3, hereinafter referred to as the Participation Liability.</font> </font> </p> <p align="justify"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">The Company has allocated part of the gross proceeds to a Participation Liability for the exploration costs related to the 8% interest in Blocks 13 and 14 in Mongolia provided to the unit holder. The Company has estimated that there is a range of costs that could be incurred through exploration phases 1, 2 and 3. The total minimum estimated spends for phase 1, the only phase that is currently probable, is $4,000,000 and therefore, a Participation Liability of $320,000 has been recorded. This liability was reduced as expenses incurred and amounted to $0 as of December 31, 2009.</font> </font> </p> <p align="justify"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">The Loans carry an interest rate of 8% per annum and all principal and accrued interest is payable in full two years from the date of issuance (August 18, 2010). The Loans are secured by the Group&#8217;s assets in the Kyrgyz Republic.</font> </font> </p> <p align="justify"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;"> The principal and any accrued but unpaid interest on the Loans are convertible, in whole or in part, at the option of the holders if the Group conducts a public offering at the prevailing market price. The loan was accounted for as a liability in accordance with FASB ASC 480-10-25 ( <i>Prior authoritative literature:</i> FAS150 <i>&#8220;Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity&#8221;</i> ). Because the financial instrument embodies a conditional obligation that the Company must or may settle by issuing a variable number of equity shares and the monetary value of the obligation is based on a fixed monetary amount known at inception. </font> </font> </p> <p align="justify"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">The initial carrying amount of the Loans of $1,680,000 will be accreted to the redemption amount of $2,000,000 over the term of the loans using the effective interest method.</font> </font> </p> <p align="justify"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">On March 9, 2010, we fully repaid prior to its maturity the principal and interest accrued.</font> </font> </p> <p align="justify"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">For the six month periods ended June 30, 2011 and 2010 we amortized debt issuance costs related to Contingently Convertible Loans of $0 and $45,219, respectively. For the three month periods ended June 30, 2011 and 2010 we amortized debt issuance costs of $0 and $0, respectively.</font> </font> </p> <p align="justify"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">For the six month periods ended June 30, 2011 and 2010 we had interest expense on contingently convertible loan of $0 and $29,893, respectively.</font> </font> </p> <p align="justify"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">For the three month periods ended June 30, 2011 and 2010 had interest expense on contingently convertible loan of $0 and $0, respectively.</font> </font> </p> <p align="justify"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">At June 30, 2011 and December 31, 2010, the unamortized debt discount relating the contingently convertible loan amounted to $0 and $0 respectively. To account for the unamortized debt discount we recorded in loss on extinguishment of contingently convertible loan for the six month periods ended June 30, 2011 and 2010 $0 and $83,202, respectively.</font> </font> </p> <p align="justify"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;"> <b>11. PROMISSORY NOTE</b> </font> </font> </p> <p align="justify"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">On December 5, 2008, the Company borrowed $540,646 from four Directors at no discount to the principal amount by selling promissory notes to shareholders (&#8220;Shareholder Notes&#8221;). The parties agreed that no interest shall accrue on the Shareholder Notes unless the Company breaches the repayment schedule. The repayment of the principal amount of the Shareholder Notes has to occur if the Company raises greater than $1,000,000 in financing or 90 days after written demand for repayment by the Shareholder Notes holder, whichever is first. The Company may also repay any or all principal amount of the Shareholder Notes at any time without notice, bonus or penalty. In the event that the Company fails to make a payment when it is due, the Company will pay interest on the outstanding principal amount of the Shareholder Notes at the rate of 12% per annum until the Shareholder Notes are paid in full. On May 1, 2009, the Company received $1,000,000 in financing. Therefore, as the payment falls due immediately, but so far has not been paid yet, interest is being accrued.</font> </font> </p> <p align="justify"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">On March 9, 2010, we fully repaid the principal of $540,646 and a total interest accrued of $54,568.</font> </font> </p> <p align="justify"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">For the six month periods ended June 30, 2011 and 2010, we recorded $0 and $11,198 interest expense, respectively.</font> </font> </p> <p align="justify"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">For the three month period ended June 30, 2011 and 2010, we recorded $0 and $0 interest expense, respectively.</font> </font> </p> <p align="justify"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;"> <b>12. SALE OF MANAS ADRIATIC</b> </font> </font> </p> <p align="justify"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">On February 12, 2010 we signed a formal share purchase agreement with WWI Resources Ltd. At closing, WWI Resources changed its name to Petromanas Energy Inc. (&#8220;Petromanas&#8221;, TSXV: PMI). On February 24, 2010, we completed the sale of all of the issued and outstanding shares of Manas Adriatic to Petromanas.</font> </font> </p> <p align="justify"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">As consideration for these shares, DWM Petroleum received CAD $2,000,000 ($1,937,396) in cash on March 3, 2010, $350,000 on May 17, 2010 for compensation of operational expenses in Albania for January and February 2010 and 100,000,000 Petromanas common shares in addition to the $917,723 advanced from Petromanas in December 2009. Pursuant to the purchase agreement, DWM Petroleum was entitled to receive an aggregate of up to an additional 150,000,000 Petromanas common shares as follows:</font> </font> </p> <ul style="text-align: justify;"> <li> <p> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">100,000,000 Petromanas common shares upon completion of the first well on the Albanian project by Manas Adriatic, or on the date that is 16 months after the Closing Date, whichever occurs first;</font> </font> </p> </li> <li> <p> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">25,000,000 Petromanas common shares if, on or before the tenth anniversary of the Closing Date, Manas Adriatic receives a report prepared pursuant to Canada&#8217;s National Instrument 51-101, Standards of Disclosure for Oil and Gas Activities, confirming that the Albanian project has 2P reserves of not less than 50,000,000 barrels of oil (BOE); and</font> </font> </p> </li> </ul> <ul style="text-align: justify;"> <li> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">if, on or before the tenth anniversary of the Closing Date, Manas Adriatic receives a report prepared pursuant to Canada&#8217;s National Instrument 51-101, Standards of Disclosure for Oil and Gas Activities, confirming that the Albanian project has 2P reserves in excess of 50,000,000 BOEs, then for each 50,000,000 BOEs over and above 50,000,000 BOEs, Petromanas will be required to issue 500,000 Petromanas common shares to DWM Petroleum to a maximum of 25,000,000 Petromanas common shares.</font> </font> </li> </ul> <p align="justify"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">In addition, at closing Petromanas funded Manas Adriatic with $8,500,000 to be used by Manas Adriatic to repay advances made by DWM Petroleum and its predecessors in respect of the Albanian project. At closing, Petromanas appointed to its six member board of directors three directors nominated by our company (Michael Velletta, Heinz Scholz and Peter-Mark Vogel). In addition, and also at closing, the board of directors of Petromanas appointed Erik Herlyn (our former Chief Executive Officer) and Ari Muljana (our Chief Financial Officer) as the Chief Executive Officer and Chief Financial Officer, respectively, of Petromanas. The assignments of Erik Herlyn as Chief Executive Officer and Ari Muljana were terminated with effect of July 15, 2010 and August 31, 2010, respectively.</font> </font> </p> <p align="justify"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">Contemporaneously with the completion of its purchase of Manas Adriatic, Petromanas completed a private placement offering in which it sold 100,000,000 of its common shares for gross proceeds of CAD $25,000,000 (approximately $24,518,000). After adjustment for the 100,000,000 common shares issued to DWM Petroleum at the completion of the sale of Manas Adriatic and the 100,000,000 common shares issued in this private placement, Petromanas had 328,231,466 common shares issued and outstanding, of which DWM Petroleum owned 100,000,000, or approximately 30.47% .</font> </font> </p> <p align="justify"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">After closing, we analyzed whether we obtained control of Petromanas by considering undiluted and diluted voting interests, board members, executive officers, terms of the exchange of equity interest and the relative size of Petromans and Manas Adriatic. Based on this analysis we concluded that:</font> </font> </p> <ul style="text-align: justify;"> <li> <p> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">Manas Petroleum Corporation did not have majority voting interest in Petromanas. DWM, a wholly-owned subsidiary of Manas Petroleum Corporation, held 100,000,000 outstanding shares of Petromanas, and another 100,000,000 shares were issuable at the earlier of 16 months or the completion of the drilling of the first well in Albania, i.e. DWM held 30.47% or 46.70% of Petromanas. We also determined that Manas shareholders did not represent the majority shareholders.</font> </font> </p> </li> <li> <p> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">Manas Petroleum Corporation did not have a majority in the Board, nor does it have the ability to appoint, elect or remove a Director.</font> </font> </p> </li> <li> <p> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">Two out of three executive officers were officers of Manas, which due to conflicts of interest was subject to change in near future.</font> </font> </p> </li> <li> <p> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">Regarding the terms of the exchange of equity interests we concluded that no assessment could be made concerning whether or not a significant premium was paid by either party.</font> </font> </p> </li> <li> <p> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">Regarding the relative size of Petromanas and Manas Adriatic, we concluded that both entities were small and had not yet generated any revenue and that neither one of the entities was significantly larger than the other.</font> </font> </p> </li> </ul> <p align="justify"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">Based on the above, Manas Petroleum Corporation did not obtain control over Petromanas after closing of the transaction. The transaction therefore was accounted for in accordance with ASC 810-10-40, which resulted in a de-recognition of the subsidiary, Manas Adriatic GmbH, in exchange for cash received, liabilities assumed and 200,000,000 of Petromanas common shares issued.</font> </font> </p> <p align="justify"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">The shares of Petromanas are traded on the TSX-V, which we deem an active market and we therefore believe that the quoted market price of the Petromanas share (PMI.V) is generally a readily determinable fair value and it can be taken as a basis for the calculation of the fair value.</font> </font> </p> <p align="justify"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">We reached this conclusion based on an assessment on the following criteria:</font> </font> </p> <ul style="text-align: justify;"> <li> <p> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">The shares are traded in a foreign market of breadth and scope comparable to the OTCBB, which according to ASC 820 provides readily determinable fair value for equity securities;</font> </font> </p> </li> <li> <p> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">Bid/ask-spreads are narrow; and</font> </font> </p> </li> <li> <p> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">Trading activity is regular and frequent.</font> </font> </p> </li> </ul> <p align="justify"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">Since the shares are held in escrow and are subject to an escrow release schedule, we deem the shares as a Level 2 input for the calculation of the fair value in accordance with ASC 820 (fair value measurements and disclosures). We apply an annual discount rate of 12% on the quoted market price based on the time before the shares become freely tradable. The discount rate is an estimate of the cost of capital, based on previous long-term debt the company has issued. The following table outlines the escrow release schedule:</font> </font> </p> <div> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; border-collapse: collapse; font-size: 10pt;" width="50%"> <tr valign="top"> <td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0); border-left: 1px solid rgb(0, 0, 0); border-top: 1px solid rgb(0, 0, 0);"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;"> <b>Release Dates</b> </font> </font> </td> <td align="center" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0); border-top: 1px solid rgb(0, 0, 0); border-right: 1px solid rgb(0, 0, 0);" width="50%"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;"> <b>Number of Shares</b> <br/> <b>Released from Escrow</b> </font> </font> </td> </tr> <tr> <td align="center" style="border-left: 1px solid rgb(0, 0, 0);">&#160;</td> <td style="border-right: 1px solid rgb(0, 0, 0);" width="50%">&#160;</td> </tr> <tr valign="top"> <td align="center" bgcolor="#e6efff" style="border-left: 1px solid rgb(0, 0, 0);"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">24.06.2010</font> </font> </td> <td align="center" bgcolor="#e6efff" style="border-right: 1px solid rgb(0, 0, 0);" width="50%"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">10'000'000</font> </font> </td> </tr> <tr valign="top"> <td align="center" style="border-left: 1px solid rgb(0, 0, 0);"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">24.08.2010</font> </font> </td> <td align="center" style="border-right: 1px solid rgb(0, 0, 0);" width="50%"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">15'000'000</font> </font> </td> </tr> <tr valign="top"> <td align="center" bgcolor="#e6efff" style="border-left: 1px solid rgb(0, 0, 0);"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">24.02.2011</font> </font> </td> <td align="center" bgcolor="#e6efff" style="border-right: 1px solid rgb(0, 0, 0);" width="50%"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">15'000'000</font> </font> </td> </tr> <tr valign="top"> <td align="center" style="border-left: 1px solid rgb(0, 0, 0);"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">24.06.2011</font> </font> </td> <td align="center" style="border-right: 1px solid rgb(0, 0, 0);" width="50%"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">40'000'000</font> </font> </td> </tr> <tr valign="top"> <td align="center" bgcolor="#e6efff" style="border-left: 1px solid rgb(0, 0, 0);"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">24.08.2011</font> </font> </td> <td align="center" bgcolor="#e6efff" style="border-right: 1px solid rgb(0, 0, 0);" width="50%"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">30'000'000</font> </font> </td> </tr> <tr valign="top"> <td align="center" style="border-left: 1px solid rgb(0, 0, 0);"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">24.02.2012</font> </font> </td> <td align="center" style="border-right: 1px solid rgb(0, 0, 0);" width="50%"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">30'000'000</font> </font> </td> </tr> <tr valign="top"> <td align="center" bgcolor="#e6efff" style="border-left: 1px solid rgb(0, 0, 0);"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">24.08.2012</font> </font> </td> <td align="center" bgcolor="#e6efff" style="border-right: 1px solid rgb(0, 0, 0);" width="50%"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">30'000'000</font> </font> </td> </tr> <tr valign="top"> <td align="center" style="border-bottom: 1px solid rgb(0, 0, 0); border-left: 1px solid rgb(0, 0, 0);"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">24.02.2013</font> </font> </td> <td align="center" style="border-bottom: 1px solid rgb(0, 0, 0); border-right: 1px solid rgb(0, 0, 0);" width="50%"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">30'000'000</font> </font> </td> </tr> <tr> <td bgcolor="#e6efff" style="border-left: 1px solid rgb(0, 0, 0);">&#160;</td> <td bgcolor="#e6efff" style="border-right: 1px solid rgb(0, 0, 0);" width="50%">&#160;</td> </tr> <tr valign="top"> <td align="center" style="border-bottom: 1px solid rgb(0, 0, 0); border-left: 1px solid rgb(0, 0, 0);"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;"> <b>Total</b> </font> </font> </td> <td align="center" style="border-bottom: 1px solid rgb(0, 0, 0); border-right: 1px solid rgb(0, 0, 0);" width="50%"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;"> <b>200'000'000</b> </font> </font> </td> </tr> </table> </div> <p align="justify"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">Each escrowed and issued share entitles Manas Petroleum Corporation to exercise voting rights and each escrowed and issued share corresponds to one vote.</font> </font> </p> <p align="justify"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">The 50,000,000 additional Petromanas common shares which are issuable upon achievement of certain conditions (see above (i) and (ii)) will be accounted for in accordance with ASC 450 (Contingencies). 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INVESTMENT IN PETROMANAS</b> </font> </font> </p> <p align="justify"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">On February 12, 2010, our wholly-owned subsidiary DWM signed a formal Share Purchase Agreement and completed the sale of all of the issued and outstanding shares of Manas Adriatic to Petromanas Energy Inc. (&#8220;Petromanas&#8221;). As a result of this transaction, the Company owns 100,000,000 common shares of Petromanas, received on March 3, 2010, and another 100,000,000 common shares will be received upon completion of the first well on the Albanian project by Manas Adriatic, or on the date that is 16 months after the closing date of the transaction, whichever occurs first.</font> </font> </p> <p align="justify"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">Pursuant to an Amending Agreement dated May 25, 2010, Petromanas has issued to DWM an additional 100,000,000 common shares. The shares are subject to a hold period expiring June 24, 2011 and bear a legend to that effect.</font> </font> </p> <p align="justify"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">DWM now has ownership and control over 200,000,000 common shares of Petromanas and the right to acquire a further 50,000,000 common shares upon certain conditions. The 200,000,000 common shares represent approximately 31.7 % of the issued and outstanding common shares of Petromanas.</font> </font> </p> <p align="justify"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">Refer to Note 12 for details on the initial measurement of the shares.</font> </font> </p> <p align="justify"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">Since the shares are held in escrow and are subject to a hold period of four and thirteen months, respectively and an escrow release schedule, we deem the shares a Level 2 input for the calculation of the fair value in accordance with ASC 820 (Fair value measurements and disclosures). We apply an annual discount rate of 12% on the quoted market price based on the time before the shares become freely tradable. The discount rate is an estimate of the cost of capital, based on previous long-term debt the company has issued.</font> </font> </p> <p align="justify"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">The quoted market price of Petromanas on June 30, 2011 was CAD 0.29 (approximately $0.2969) .</font> </font> </p> <p align="justify"> <font style="font-size:10pt;"> <font style="font-family: times new roman,times,serif;">In order to calculate the fair value of our investment in Petromanas we discount the market price of the shares based on the escrow release schedule. 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width="10%"> <font style="font-size: 10pt;"><font style="font-family: times new roman,times,serif;">45'934'015</font> </font></td> <td align="left" width="2%"> &#160;</td> <td align="left" width="1%"> &#160;</td> <td align="right" width="10%"> <font style="font-size: 10pt;"><font style="font-family: times new roman,times,serif;">4'000'000</font> </font></td> <td align="left" width="2%"> &#160;</td> <td align="left" width="1%"> &#160;</td> <td align="right" width="10%"> <font style="font-size: 10pt;"><font style="font-family: times new roman,times,serif;">45'934'015</font> </font></td> <td align="left" width="2%"> &#160;</td> <td align="left" width="1%"> &#160;</td> <td align="right" width="10%"> <font style="font-size: 10pt;"><font style="font-family: times new roman,times,serif;">n.a.</font> </font></td> <td align="left" width="2%"> &#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff"> <font style="font-size: 10pt;"><font style="font-family: times new roman,times,serif;">Non-vested shares</font> </font></td> <td align="left" bgcolor="#e6efff" width="1%"> &#160;</td> <td align="right" bgcolor="#e6efff" width="10%"> <font style="font-size: 10pt;"><font style="font-family: times new roman,times,serif;">500'000</font> </font></td> <td align="left" bgcolor="#e6efff" width="2%"> &#160;</td> <td align="left" bgcolor="#e6efff" width="1%"> &#160;</td> <td align="right" bgcolor="#e6efff" width="10%"> <font style="font-size: 10pt;"><font style="font-family: times new roman,times,serif;">700'000</font> </font></td> <td align="left" bgcolor="#e6efff" width="2%"> &#160;</td> <td align="left" bgcolor="#e6efff" width="1%"> &#160;</td> <td align="right" bgcolor="#e6efff" width="10%"> <font style="font-size: 10pt;"><font style="font-family: times new roman,times,serif;">500'000</font> </font></td> <td align="left" bgcolor="#e6efff" width="2%"> &#160;</td> <td align="left" bgcolor="#e6efff" width="1%"> &#160;</td> <td align="right" bgcolor="#e6efff" width="10%"> <font style="font-size: 10pt;"><font style="font-family: times new roman,times,serif;">n.a.</font> </font></td> <td align="left" bgcolor="#e6efff" width="2%"> &#160;</td> </tr> <tr valign="top"> <td align="left"> <font style="font-size: 10pt;"><font style="font-family: times new roman,times,serif;"><b>Total stock equivalents</b> </font> </font></td> <td align="left" width="1%"> &#160;</td> <td align="right" width="10%"> <font style="font-size: 10pt;"><font style="font-family: times new roman,times,serif;"><b>54'684'015</b> </font> </font></td> <td align="left" width="2%"> &#160;</td> <td align="left" width="1%"> &#160;</td> <td align="right" width="10%"> <font style="font-size: 10pt;"><font style="font-family: times new roman,times,serif;"><b>16'000'000</b> </font> </font></td> <td align="left" width="2%"> &#160;</td> <td align="left" width="1%"> &#160;</td> <td align="right" width="10%"> <font style="font-size: 10pt;"><font style="font-family: times new roman,times,serif;"><b>54'684'015</b> </font> </font></td> <td align="left" width="2%"> &#160;</td> <td align="left" width="1%"> &#160;</td> <td align="right" width="10%"> <font style="font-size: 10pt;"><font style="font-family: times new roman,times,serif;"><b>n.a.</b> </font> </font></td> <td align="left" width="2%"> &#160;</td> </tr> </table> </div> <p> &#160;</p> <p align="justify"> <font style="font-size: 10pt;"><font style="font-family: times new roman,times,serif;"><b>19. SHARE PLACEMENT/PURCHASE AGREEMENT &#8211; TEMPORARY EQUITY</b> </font> </font></p> <p align="justify"> <font style="font-size: 10pt;"><font style="font-family: times new roman,times,serif;">On September 26, 2010, we entered into a share placement/purchase agreement with Alexander Becker, a holder of 14,144,993 shares of our common stock. Mr. Becker expressed an interest in selling all of his shares of our common stock to a third party or back to our company. The share placement/purchase agreement provided that in the event any of Mr. Becker's shares of our common stock are not placed with buyers within 6 months from September 26, 2010, we will be obligated to purchase such shares from Mr. Becker 30 days subsequent to March 26, 2011. This purchase deadline can be extended on mutual consent. The price of the shares was determined by the first offering. The first offering price was determined on October 25, 2010 pursuant to a share transfer agreement between Mr. Becker and a third party investor and amount to $0.39 per share.</font> </font></p> <p align="justify"> <font style="font-size: 10pt;"><font style="font-family: times new roman,times,serif;">As of December 31, 2010 we calculated the exposure, i.e. the maximum cash obligation of the Company according to ASC 480-10-S99 for all redeemable shares. The following table shows the Company&#8217;s exposure, i.e. the number of redeemable shares and their aggregate value as of December 31, 2010:</font> </font></p> <div> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; border-collapse: collapse; font-size: 10pt;" width="50%"> <tr valign="top"> <td align="left" bgcolor="#e6efff"> <font style="font-size: 10pt;"><font style="font-family: times new roman,times,serif;">Number of redeemable shares</font> </font></td> <td align="left" bgcolor="#e6efff" width="1%"> &#160;</td> <td align="right" bgcolor="#e6efff" width="12%"> <font style="font-size: 10pt;"><font style="font-family: times new roman,times,serif;">6'454'993</font> </font></td> <td align="left" bgcolor="#e6efff" width="2%"> &#160;</td> </tr> <tr valign="top"> <td align="left"> <font style="font-size: 10pt;"><font style="font-family: times new roman,times,serif;">Price to be paid</font> </font></td> <td align="left" width="1%"> <font style="font-size: 10pt;"><font style="font-family: times new roman,times,serif;">$</font> </font></td> <td align="right" width="12%"> <font style="font-size: 10pt;"><font style="font-family: times new roman,times,serif;">0.39</font> </font></td> <td align="left" width="2%"> &#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff"> <font style="font-size: 10pt;"><font style="font-family: times new roman,times,serif;"><b>Redemption value</b> </font> </font></td> <td align="left" bgcolor="#e6efff" width="1%"> <font style="font-size: 10pt;"><font style="font-family: times new roman,times,serif;"><b>$</b> </font> </font></td> <td align="right" bgcolor="#e6efff" width="20%"> <font style="font-size: 10pt;"><font style="font-family: times new roman,times,serif;"><b>2'517'447</b> </font> </font></td> <td align="left" bgcolor="#e6efff" width="2%"> &#160;</td> </tr> </table> </div> <p align="justify"> <font style="font-size: 10pt;"><font style="font-family: times new roman,times,serif;">The Company recognizes changes in the redemption value immediately as they occur and adjusts the carrying value of the temporary equity to equal the redemption value at each reporting date. According to ASC 480-10-S99 we classified these redeemable shares under Temporary Equity.</font> </font></p> <p align="justify"> <font style="font-size: 10pt;"><font style="font-family: times new roman,times,serif;">As of February 17, 2011 all remaining shares of Mr. Becker have been placed with third party investors. The Company&#8217;s exposure resulting from the share placement/purchase agreement with Mr. Becker, therefore, is nil as of June 30, 2011. The following table shows the development of Temporary Equity:</font> </font></p> <p align="center"> &nbsp;</p> <div> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; border-collapse: collapse; font-size: 10pt;" width="50%"> <tr valign="top"> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);"> <font style="font-size: 10pt;"><font style="font-family: times new roman,times,serif;"><b>Temporary Equity</b> </font> </font></td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> &#160;</td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> <font style="font-size: 10pt;"><font style="font-family: times new roman,times,serif;"><b>USD</b> </font> </font></td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> &#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff"> <font style="font-size: 10pt;"><font style="font-family: times new roman,times,serif;">Balance December 31, 2010</font> </font></td> <td align="left" bgcolor="#e6efff" width="1%"> &#160;</td> <td align="right" bgcolor="#e6efff" width="12%"> <font style="font-size: 10pt;"><font style="font-family: times new roman,times,serif;">2'517'447</font> </font></td> <td align="left" bgcolor="#e6efff" width="2%"> &#160;</td> </tr> <tr valign="top"> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);"> <font style="font-size: 10pt;"><font style="font-family: times new roman,times,serif;">Redeemable shares</font> </font></td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> &#160;</td> <td align="right" nowrap="nowrap" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> <font style="font-size: 10pt;"><font style="font-family: times new roman,times,serif;">-2'517'447</font> </font></td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> &#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);"> <font style="font-size: 10pt;"><font style="font-family: times new roman,times,serif;"><b>Balance June 30, 2011</b> </font> </font></td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%"> &#160;</td> <td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> <font style="font-size: 10pt;"><font style="font-family: times new roman,times,serif;"><b>0</b> </font> </font></td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%"> &#160;</td> </tr> </table> </div> <p> &#160;</p> <p align="justify"> <b>20. SUBSEQUENT EVENT(S)</b> </p> <p align="justify">On July 12, 2011, Gobi Energy Partners LLC signed an agreement for Seismic Services with Sinopec Mongolia LLC, a wholly-owned subsidiary of China Petrochemical Corporation (Sinopec Group). The total cost of the whole program, including mobilization and demobilization, is projected to be US$4.2 million.</p> 七次郎在线观看,久青草国产在线视频,,一夜七次郎免费线路