--12-31 mnap MNP Petroleum Corp 2014-09-30 0001074447 No Smaller Reporting Company No 10-Q false 166987792 Yes 2014 Q3 0001074447 2014-11-15 0001074447 2014-01-01 2014-09-30 0001074447 2014-09-30 0001074447 2013-12-31 0001074447 2014-07-01 2014-09-30 0001074447 2013-07-01 2013-09-30 0001074447 2013-01-01 2013-09-30 0001074447 2012-12-31 0001074447 2013-09-30 0001074447 us-gaap:CommonStockMember 2013-12-31 0001074447 us-gaap:AdditionalPaidInCapitalMember 2013-12-31 0001074447 us-gaap:RetainedEarningsMember 2013-12-31 0001074447 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2013-12-31 0001074447 us-gaap:AdditionalPaidInCapitalMember 2014-01-01 2014-09-30 0001074447 us-gaap:TreasuryStockMember 2014-01-01 2014-09-30 0001074447 us-gaap:RetainedEarningsMember 2014-01-01 2014-09-30 0001074447 us-gaap:CommonStockMember 2014-09-30 0001074447 us-gaap:AdditionalPaidInCapitalMember 2014-09-30 0001074447 us-gaap:TreasuryStockMember 2014-09-30 0001074447 us-gaap:RetainedEarningsMember 2014-09-30 0001074447 us-gaap:AccumulatedOtherComprehensiveIncomeMember 2014-09-30 0001074447 2013-01-01 2013-12-31 shares iso4217:USD iso4217:USD shares pure utr:Y iso4217:CAD 5054630 3063947 210959 46738 17723 32508 1577276 7478799 395545 302713 7256133 10924705 109812 132374 947458 772855 10000000 10111656 11057270 11016885 18313403 21941590 819141 447736 0 312000 93445 332835 912586 1092571 142271 142271 142271 142271 1054857 1234842 172592 172592 78593604 78527990 452403 0 -61106248 -58044835 51001 51001 17258546 20706748 18313403 21941590 600000000 600000000 0.001 0.001 166987792 172592292 166987792 172592292 0 0 0 0 0 0 0 0 403644 448736 1180666 1752471 516405 468191 1178469 1002946 12487 23655 36757 40385 363052 446174 1132519 1442126 315092 280780 1048395 1008877 1610680 1667536 4576806 5246805 -144126 -52786 -189384 -88509 -971744 3116895 1714684 -4370840 0 5 0 703 197 391 350 246 -1116067 3063723 1524950 -4458892 -2726747 1396187 -3051856 -9705697 4468 7 9557 233 -2731215 1396180 -3061413 -9705929 -2731215 1396180 -3061413 -9705929 169440183 172592292 171371039 172592292 169440183 172592292 171371039 172592292 -0.02 -0.01 -0.02 -0.06 -0.02 -0.01 -0.02 -0.06 0 238304 65614 701550 -78047 163478 371405 1545626 -239390 9220 -4430374 -2548017 -486603 0 14195 6099 7570842 0 52565 -3255 7017479 -2844 452403 0 0 8112 0 -130354 -452403 -122242 2134702 -2673103 2842495 -144019 -128894 40498 312000 0 111656 0 172592292 172592 78527990 -58044835 51001 65614 65614 452403 452403 -3061413 172592292 172592 78593604 -452403 -61106248 51001 <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <b>1.</b> <b>BASIS OF PRESENTATION</b></p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> The financial statements presented in this Form 10-Q comprise MNP Petroleum Corporation (&#8220;MNP&#8221; or the &#8220;Company&#8221;) and its subsidiaries (collectively, the &#8220;Group&#8221;). The unaudited interim <i>Consolidated Financial Statements</i> included in this Form 10-Q have been prepared in accordance with accounting principles generally accepted in the United States of America (&#8220;US GAAP&#8221;) and present our financial position, results of operations, cash flows and changes in stockholder&#8217;s equity. These financial statements should be read in conjunction with the consolidated financial statements and the notes thereto, included in the Company&#8217;s Annual Report on Form 10-K for the year ended December 31, 2013.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> The Company is in the business of exploring for oil and gas, primarily in Central and East Asia. If we discover sufficient reserves of oil or gas, we intend to exploit them. The Company has not commenced planned principal operations and therefore has not realized any revenues to date. We carry out our operations both directly and through participation in ventures with other oil and gas companies. We are actively involved in exploration projects in Tajikistan and Mongolia. In addition we have agreed to purchase a producing oilfield in Tajikistan, though this acquisition remains subject to closing conditions and regulatory approvals. As we currently depend upon funding from various sources to continue operations and to implement our growth strategy, the Company&#8217;s activities are subject to significant risks and uncertainties, including failing to secure additional funding to operationalize the Company&#8217;s licenses.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> The Company, formerly known as Express Systems Corporation, was incorporated in the State of Nevada on July 9, 1988.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> On April 10, 2007, the Company completed the Exchange Transaction whereby it acquired its then sole subsidiary DWM Petroleum AG (&#8220;DWM Petroleum&#8221;) pursuant to an exchange agreement signed in November 2006 whereby 100% of the shares of DWM Petroleum 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 finder&#8217;s fees at the closing price of USD 3.20.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> The acquisition of DWM Petroleum was accounted for as a merger of a private operating company into a non-operating public shell. Consequently, the Company was the continuing legal registrant for regulatory purposes and DWM Petroleum was treated as the continuing accounting acquirer for accounting and reporting purposes. The assets and liabilities of DWM Petroleum 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 Petroleum 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.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> The Group has a focused strategy on exploration and developing oil and gas resources in Central Asia (Tajikistan and Mongolia). The Company holds an investment in associate in Petromanas Energy Inc.</p> 1.00 80000000 800000 3.20 <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <b>3.</b> <b>ACCOUNTING POLICIES</b> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The accompanying financial data as of September 30, 2014 and December 31, 2013 and for the three and nine month periods ended September 30, 2014 and 2013, has been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (SEC).</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The complete accounting policies followed by the Group are set forth in Note 2 to the audited consolidated financial statements contained in the Group's Annual Report on Form 10-K for the year ended December 31, 2013.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">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.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">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 September 30, 2014 and December 31, 2013, results of operations for the three and nine month periods ended September 30, 2014 and 2013, cash flows for the nine month period ended September 30, 2014 and 2013 and statement of shareholders&#8217; equity (deficit) for the period from January 1, 2014 to September 30, 2014, as applicable, have been made. The result of operations for the three and nine month periods ended September 30, 2014 is not necessarily indicative of the operating results for the full fiscal year or any future periods.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <b>4.</b> <b>RECENT ACCOUNTING PRONOUNCEMENTS</b> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <b>Recently adopted accounting pronouncements</b> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> In June 2014, the FASB released ASU 2014-10 &#8212; Accounting Standards Update 2014-10, <i>Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation</i> . </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">This update was issued to improve financial reporting by reducing the cost and complexity associated with the incremental reporting requirements for development stage entities. Users of financial statements of development stage entities determined that the inception-to-date information, and certain other disclosures currently required under U.S. generally accepted accounting principles (GAAP) in the financial statements of development stage entities provide information that has limited relevance and is generally not decision useful. As a result, the amendments in this Update remove all incremental financial reporting requirements from U.S. GAAP for development stage entities, thereby improving financial reporting by eliminating the cost and complexity associated with providing that information.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> This update eliminates the requirements for development stage entities to (1) present inception-to-date information in the statements of income, cash flows, and shareholder equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage. The amendments also clarify that the guidance in <i>Topic 275, Risks and Uncertainties</i> , is applicable to entities that have not commenced planned principal operations. </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">This ASU has been early adopted by the Company as of July 1, 2014 and therefore for the current period ended September 30, 2014 as such early adoption is permitted for all financial statements that have not been issued or made available for issuance. This ASU had an impact on the Company&#8217;s consolidated financial statements, as the corresponding inception to date information, labeling financial statements as those of a development stage entity, etc. will no longer be provided.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <b>5.</b> <b>CASH AND CASH EQUIVALENTS</b> </p> <div> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%"> <tr valign="top"> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">&#160;</td> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="11%"> <b>USD</b> <br/> <b>(held in USD)</b> </td> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="11%"> <b>USD</b> <br/> <b>(held in EUR)</b> </td> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="11%"> <b>USD</b> <br/> <b>(held in CHF)</b> </td> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="11%"> <b>USD</b> <br/> <b>(held in other</b> <br/> <b>currencies)</b> </td> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="11%"> <b>USD Total</b> <br/> <b>Sept 30, 2014</b> </td> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="11%"> <b>USD Total</b> <br/> <b>Dec 31, 2013</b> </td> </tr> <tr> <td>&#160;</td> <td width="11%">&#160;</td> <td width="11%">&#160;</td> <td width="11%">&#160;</td> <td width="11%">&#160;</td> <td width="11%">&#160;</td> <td width="11%">&#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">Cash and cash equivalents</td> <td align="right" bgcolor="#e6efff" width="11%"> 3,486,582 </td> <td align="right" bgcolor="#e6efff" width="11%"> 3,054 </td> <td align="right" bgcolor="#e6efff" width="11%"> 1,549,316 </td> <td align="right" bgcolor="#e6efff" width="11%"> 15,678 </td> <td align="right" bgcolor="#e6efff" width="11%"> 5,054,630 </td> <td align="right" bgcolor="#e6efff" width="11%"> 3,063,947 </td> </tr> </table> </div> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Cash and cash equivalents are available to the Group without restriction or limitation on withdrawal and/or use of these funds. The Group&#8217;s cash equivalents are placed with high credit rated financial institutions. The carrying amount of these assets approximates their fair value.</p> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%"> <tr valign="top"> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom">&#160;</td> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="11%"> <b>USD</b> <br/> <b>(held in USD)</b> </td> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="11%"> <b>USD</b> <br/> <b>(held in EUR)</b> </td> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="11%"> <b>USD</b> <br/> <b>(held in CHF)</b> </td> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="11%"> <b>USD</b> <br/> <b>(held in other</b> <br/> <b>currencies)</b> </td> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="11%"> <b>USD Total</b> <br/> <b>Sept 30, 2014</b> </td> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" valign="bottom" width="11%"> <b>USD Total</b> <br/> <b>Dec 31, 2013</b> </td> </tr> <tr> <td>&#160;</td> <td width="11%">&#160;</td> <td width="11%">&#160;</td> <td width="11%">&#160;</td> <td width="11%">&#160;</td> <td width="11%">&#160;</td> <td width="11%">&#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">Cash and cash equivalents</td> <td align="right" bgcolor="#e6efff" width="11%"> 3,486,582 </td> <td align="right" bgcolor="#e6efff" width="11%"> 3,054 </td> <td align="right" bgcolor="#e6efff" width="11%"> 1,549,316 </td> <td align="right" bgcolor="#e6efff" width="11%"> 15,678 </td> <td align="right" bgcolor="#e6efff" width="11%"> 5,054,630 </td> <td align="right" bgcolor="#e6efff" width="11%"> 3,063,947 </td> </tr> </table> 3486582 3054 1549316 15678 5054630 3063947 <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <b>6.</b> <b>PLAN FOR ACQUISITION</b></p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <b><i>Plan for Acquisition</i> </b></p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> On December 31, 2012, DWM Petroleum AG, our wholly-owned Swiss subsidiary, entered into a Share Purchase Agreement with an unrelated third party, a small, private company known only in Tajikistan, to purchase, for USD 21,000,000 in cash, 80% of the equity interest in a Swiss company which, at the time of closing of the transaction described in the Share Purchase Agreement, will own a Tajik company (&#8220;target company&#8221;) which in turn will own 100% of the interest in certain producing oilfield assets located in Tajikistan. The seller&#8217;s (&#8220;Kavsar&#8221;) wholly-owned subsidiary, a small, private company known only in Tajikistan, currently owns the majority of the equity in the target company.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> DWM Petroleum has already advanced an aggregate of USD 10,111,656 as a deposit on account of the purchase price. If the seller satisfied certain conditions by March 31, 2013, (&quot;conditions for the next advance&quot;) DWM Petroleum would have been required to make an additional advance payment of USD 7,000,000 to Kavsar. DWM Petroleum would have been required to pay the remaining balance of the purchase price to the seller on the closing date being September 27, 2013.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> If the transaction was not completed because the seller did not satisfy the conditions to the next advance, the seller must refund to DWM Petroleum the USD 10,111,656 deposit, subject to payment by DWM Petroleum of a termination fee in the amount of USD 2,000,000 intended to compensate the seller for expenses it has incurred in connection with the transaction. The conditions for the next advance were originally required to be fulfilled on or before March 31, 2013. Effective December 31, 2012, this date was extended to May 30, 2013 pursuant to Amendment 1 to the Share Purchase Agreement. Effective April 30, 2013, this date was further extended to June 30, 2013 pursuant to Amendment 3 to the Share Purchase Agreement. Effective June 27, 2013, seller has fulfilled all conditions for the next payment. Effective June 27, 2013 pursuant to Amendment 4, the date for next advance payment is ninety days of the date the seller has satisfied the requisite conditions.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> Completion of the purchase is subject to conditions and the completion of certain ancillary transactions by the seller in respect of the assets to be owned at closing by the target company (&quot;the closing conditions&quot;). These conditions were originally required to be fulfilled or waived on or before April 30, 2013. Effective December 31, 2012, this date was extended to June 27, 2013 pursuant to Amendment 1 to the Share Purchase Agreement. Effective April 30, 2013, this date was further extended to September 27, 2013 pursuant to Amendment 3 to the Share Purchase Agreement.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> Effective April 30, 2013, pursuant to Amendment 2 to the Share Purchase Agreement, a condition for the next advance that requires the target company to enter into a certain contract with the Tajik government was changed to the extent that the seller is only required to confirm to DWM Petroleum that the target company has agreed with the responsible government authority, the terms for the aforementioned contract &#8211; and not actually signed such contract.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> Effective June 27, 2013, the seller has met all conditions and completed certain ancillary transactions required for the next advance payment. Pursuant to the SPA and the amendments mentioned above, the payment of USD 7,000,000 is due by September 27, 2013.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> DWM did not make the next advance payment by September 27, 2013. Accordingly pursuant to the SPA effective September 27, 2013, DWM has opted to take a 65% interest in the company that owns the majority of shares in the Tajik operating company holding the oilfield assets subject to the conditions that the target company is debt free as well as government approval. After the closing of the transaction pursuant to the SPA, DWM has agreed to compensate the seller for its expenses capped at USD 2,000,000.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> On March 31, 2014 DWM Petroleum and Kavsar signed a Supplement Agreement, which is effective September 27, 2013, to the Share Purchase Agreement. The Supplement Agreement outlines pursuant to Article 3.4.2 of the Share Purchase Agreement that DWM Petroleum is entitled to receive from Kavsar 65% of the participation certificates in Energy Partners Austria, the beneficial owner of 57.42% shares in Petroleum Sugd, a joint venture with limited liability incorporated under the laws of Tajikistan and operator of the oil fields in Tajikistan, subject to the payment of USD 2,000,000 by DWM Petroleum. The 65% participation certificates will be transferred to TF Petroleum AG upon closing. Furthermore, the Supplement Agreement outlines that Kavsar shall transfer all shares of TF Petroleum AG, a company incorporated under the Laws of Switzerland for the purpose of this transaction to DWM Petroleum, for a consideration of CHF 100,000 (approx. USD 111,656). DWM Petroleum will then be eligible to future profits and dividends from Energy Partners Austria from January 1, 2014 onwards. The closing of the transaction is subject to the capital restructuring requirement of Energy Partners Austria by Kavsar, the notary act and regulatory approval. After the finalization of the Supplement Agreement the Share Purchase Agreement is concluded.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> On April 4, 2014, DWM Petroleum gained control of TF Petroleum AG, which resulted in an increase in restricted cash and a decrease in transaction prepayment of CHF 100,000 (approx. USD 111,656). No further amendments are required to the line item &#8220;Transaction prepayment&#8221;, as the transfer of the participation certificates in Energy Partners Austria to TF Petroleum AG has not taken place as of September 30, 2014 as the notary act has yet to be finalized. The transaction is also included in the supplement schedule of non-cash operating, investing and financing activities of the consolidated cash flow statement.</p> 21000000 0.80 1.00 10111656 7000000 10111656 2000000 7000000 0.65 2000000 0.65 0.5742 2000000 0.65 100000 111656 100000 111656 <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <b>7.</b> <b>TANGIBLE FIXED ASSETS</b></p> <div> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%"> <tr valign="top"> <td align="left" style="border-right: 1px solid rgb(0, 0, 0); border-top: 2px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" valign="middle"> <b>2014 (in USD)</b></td> <td align="right" nowrap="nowrap" style="border-top: 2px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" valign="middle" width="14%"> Office equipment<br /> &amp; furniture</td> <td align="right" nowrap="nowrap" style="border-top: 2px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" valign="middle" width="14%"> Vehicles</td> <td align="right" nowrap="nowrap" style="border-top: 2px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" valign="middle" width="14%"> Leasehold<br /> improvements</td> <td align="right" nowrap="nowrap" style="border-top: 2px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" valign="middle" width="14%"> Computer<br /> software</td> <td align="right" nowrap="nowrap" style="border-top: 2px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" valign="middle" width="14%"> Total</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="border-right: 1px solid rgb(0, 0, 0);"> <b>Cost at Dec 31, 2013</b></td> <td align="right" bgcolor="#e6efff" width="14%"> <b>157,717 </b></td> <td align="right" bgcolor="#e6efff" width="14%"> <b>140,366 </b></td> <td align="right" bgcolor="#e6efff" width="14%"> <b>47,375 </b></td> <td align="right" bgcolor="#e6efff" width="14%"> <b>35,697 </b></td> <td align="right" bgcolor="#e6efff" width="14%"> <b>381,155 </b></td> </tr> <tr valign="top"> <td align="left" style="border-right: 1px solid rgb(0, 0, 0);"> Additions</td> <td align="right" width="14%"> 6,262</td> <td align="right" width="14%"> -</td> <td align="right" width="14%"> 7,252</td> <td align="right" width="14%"> 680</td> <td align="right" width="14%"> 14,194</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="border-right: 1px solid rgb(0, 0, 0);"> Disposals</td> <td align="right" bgcolor="#e6efff" width="14%"> -</td> <td align="right" bgcolor="#e6efff" width="14%"> -</td> <td align="right" bgcolor="#e6efff" width="14%"> -</td> <td align="right" bgcolor="#e6efff" width="14%"> -</td> <td align="right" bgcolor="#e6efff" width="14%"> -</td> </tr> <tr valign="top"> <td align="left" style="border-right: 1px solid rgb(0, 0, 0);"> Cost at Sept 30, 2014</td> <td align="right" width="14%"> 163,979</td> <td align="right" width="14%"> 140,366</td> <td align="right" width="14%"> 54,627</td> <td align="right" width="14%"> 36,377</td> <td align="right" width="14%"> 395,349</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="border-right: 1px solid rgb(0, 0, 0);"> <b>Accumulated depreciation at Dec 31, 2013</b></td> <td align="right" bgcolor="#e6efff" width="14%"> <b>(124,364) </b></td> <td align="right" bgcolor="#e6efff" width="14%"> <b>(55,567) </b></td> <td align="right" bgcolor="#e6efff" width="14%"> <b>(47,375) </b></td> <td align="right" bgcolor="#e6efff" width="14%"> <b>(21,474) </b></td> <td align="right" bgcolor="#e6efff" width="14%"> <b>(248,780) </b></td> </tr> <tr valign="top"> <td align="left" style="border-right: 1px solid rgb(0, 0, 0);"> Depreciation</td> <td align="right" width="14%"> (8,709)</td> <td align="right" width="14%"> (14,438)</td> <td align="right" width="14%"> (728)</td> <td align="right" width="14%"> (12,882)</td> <td align="right" width="14%"> (36,757)</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="border-right: 1px solid rgb(0, 0, 0);"> Disposals</td> <td align="right" bgcolor="#e6efff" width="14%"> -</td> <td align="right" bgcolor="#e6efff" width="14%"> -</td> <td align="right" bgcolor="#e6efff" width="14%"> -</td> <td align="right" bgcolor="#e6efff" width="14%"> -</td> <td align="right" bgcolor="#e6efff" width="14%"> -</td> </tr> <tr valign="top"> <td align="left" style="border-right: 1px solid rgb(0, 0, 0);"> Accumulated depreciation at Sept 30, 2014</td> <td align="right" width="14%"> (133,073)</td> <td align="right" width="14%"> (70,005)</td> <td align="right" width="14%"> (48,103)</td> <td align="right" width="14%"> (34,356)</td> <td align="right" width="14%"> (285,537)</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="border-right: 1px solid rgb(0, 0, 0);"> <b>Net book value at Dec 31, 2013</b></td> <td align="right" bgcolor="#e6efff" width="14%"> <b>33,353 </b></td> <td align="right" bgcolor="#e6efff" width="14%"> <b>84,799 </b></td> <td align="right" bgcolor="#e6efff" width="14%"> <b>- </b></td> <td align="right" bgcolor="#e6efff" width="14%"> <b>14,223 </b></td> <td align="right" bgcolor="#e6efff" width="14%"> <b>132,374 </b></td> </tr> <tr valign="top"> <td align="left" style="border-right: 1px solid rgb(0, 0, 0); border-bottom: 2px solid rgb(0, 0, 0);"> <b>Net book value at Sept 30, 2014</b></td> <td align="right" style="border-bottom: 2px solid rgb(0, 0, 0);" width="14%"> <b>30,906 </b></td> <td align="right" style="border-bottom: 2px solid rgb(0, 0, 0);" width="14%"> <b>70,361 </b></td> <td align="right" style="border-bottom: 2px solid rgb(0, 0, 0);" width="14%"> <b>6,524 </b></td> <td align="right" style="border-bottom: 2px solid rgb(0, 0, 0);" width="14%"> <b>2,021 </b></td> <td align="right" style="border-bottom: 2px solid rgb(0, 0, 0);" width="14%"> <b>109,812 </b></td> </tr> </table> </div> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> Depreciation expense for the nine month period ended September 30, 2014 and 2013 was USD 36,757 and USD 40,385 respectively. Depreciation for the three month period ended September 30, 2014 and 2013 was USD 12,488 and USD 23,655 respectively.</p> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%"> <tr valign="top"> <td align="left" style="border-right: 1px solid rgb(0, 0, 0); border-top: 2px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" valign="middle"> <b>2014 (in USD)</b> </td> <td align="right" nowrap="nowrap" style="border-top: 2px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" valign="middle" width="14%"> Office equipment <br/> &amp; furniture </td> <td align="right" nowrap="nowrap" style="border-top: 2px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" valign="middle" width="14%">Vehicles</td> <td align="right" nowrap="nowrap" style="border-top: 2px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" valign="middle" width="14%"> Leasehold <br/> improvements </td> <td align="right" nowrap="nowrap" style="border-top: 2px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" valign="middle" width="14%"> Computer <br/> software </td> <td align="right" nowrap="nowrap" style="border-top: 2px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" valign="middle" width="14%">Total</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="border-right: 1px solid rgb(0, 0, 0);"> <b>Cost at Dec 31, 2013</b> </td> <td align="right" bgcolor="#e6efff" width="14%"> <b> 157,717 </b> </td> <td align="right" bgcolor="#e6efff" width="14%"> <b> 140,366 </b> </td> <td align="right" bgcolor="#e6efff" width="14%"> <b> 47,375 </b> </td> <td align="right" bgcolor="#e6efff" width="14%"> <b> 35,697 </b> </td> <td align="right" bgcolor="#e6efff" width="14%"> <b> 381,155 </b> </td> </tr> <tr valign="top"> <td align="left" style="border-right: 1px solid rgb(0, 0, 0);">Additions</td> <td align="right" width="14%"> 6,262 </td> <td align="right" width="14%"> - </td> <td align="right" width="14%"> 7,252 </td> <td align="right" width="14%"> 680 </td> <td align="right" width="14%"> 14,194 </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="border-right: 1px solid rgb(0, 0, 0);">Disposals</td> <td align="right" bgcolor="#e6efff" width="14%"> - </td> <td align="right" bgcolor="#e6efff" width="14%"> - </td> <td align="right" bgcolor="#e6efff" width="14%"> - </td> <td align="right" bgcolor="#e6efff" width="14%"> - </td> <td align="right" bgcolor="#e6efff" width="14%"> - </td> </tr> <tr valign="top"> <td align="left" style="border-right: 1px solid rgb(0, 0, 0);">Cost at Sept 30, 2014</td> <td align="right" width="14%"> 163,979 </td> <td align="right" width="14%"> 140,366 </td> <td align="right" width="14%"> 54,627 </td> <td align="right" width="14%"> 36,377 </td> <td align="right" width="14%"> 395,349 </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="border-right: 1px solid rgb(0, 0, 0);"> <b>Accumulated depreciation at Dec 31, 2013</b> </td> <td align="right" bgcolor="#e6efff" width="14%"> <b> (124,364) </b> </td> <td align="right" bgcolor="#e6efff" width="14%"> <b> (55,567) </b> </td> <td align="right" bgcolor="#e6efff" width="14%"> <b> (47,375) </b> </td> <td align="right" bgcolor="#e6efff" width="14%"> <b> (21,474) </b> </td> <td align="right" bgcolor="#e6efff" width="14%"> <b> (248,780) </b> </td> </tr> <tr valign="top"> <td align="left" style="border-right: 1px solid rgb(0, 0, 0);">Depreciation</td> <td align="right" width="14%"> (8,709) </td> <td align="right" width="14%"> (14,438) </td> <td align="right" width="14%"> (728) </td> <td align="right" width="14%"> (12,882) </td> <td align="right" width="14%"> (36,757) </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="border-right: 1px solid rgb(0, 0, 0);">Disposals</td> <td align="right" bgcolor="#e6efff" width="14%"> - </td> <td align="right" bgcolor="#e6efff" width="14%"> - </td> <td align="right" bgcolor="#e6efff" width="14%"> - </td> <td align="right" bgcolor="#e6efff" width="14%"> - </td> <td align="right" bgcolor="#e6efff" width="14%"> - </td> </tr> <tr valign="top"> <td align="left" style="border-right: 1px solid rgb(0, 0, 0);">Accumulated depreciation at Sept 30, 2014</td> <td align="right" width="14%"> (133,073) </td> <td align="right" width="14%"> (70,005) </td> <td align="right" width="14%"> (48,103) </td> <td align="right" width="14%"> (34,356) </td> <td align="right" width="14%"> (285,537) </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="border-right: 1px solid rgb(0, 0, 0);"> <b>Net book value at Dec 31, 2013</b> </td> <td align="right" bgcolor="#e6efff" width="14%"> <b> 33,353 </b> </td> <td align="right" bgcolor="#e6efff" width="14%"> <b> 84,799 </b> </td> <td align="right" bgcolor="#e6efff" width="14%"> <b> - </b> </td> <td align="right" bgcolor="#e6efff" width="14%"> <b> 14,223 </b> </td> <td align="right" bgcolor="#e6efff" width="14%"> <b> 132,374 </b> </td> </tr> <tr valign="top"> <td align="left" style="border-right: 1px solid rgb(0, 0, 0); border-bottom: 2px solid rgb(0, 0, 0);"> <b>Net book value at Sept 30, 2014</b> </td> <td align="right" style="border-bottom: 2px solid rgb(0, 0, 0);" width="14%"> <b> 30,906 </b> </td> <td align="right" style="border-bottom: 2px solid rgb(0, 0, 0);" width="14%"> <b> 70,361 </b> </td> <td align="right" style="border-bottom: 2px solid rgb(0, 0, 0);" width="14%"> <b> 6,524 </b> </td> <td align="right" style="border-bottom: 2px solid rgb(0, 0, 0);" width="14%"> <b> 2,021 </b> </td> <td align="right" style="border-bottom: 2px solid rgb(0, 0, 0);" width="14%"> <b> 109,812 </b> </td> </tr> </table> 157717 140366 47375 35697 381155 6262 0 7252 680 14194 0 0 0 0 0 163979 140366 54627 36377 395349 -124364 -55567 -47375 -21474 -248780 -8709 -14438 -728 -12882 -36757 0 0 0 0 0 -133073 -70005 -48103 -34356 -285537 33353 84799 0 14223 132374 30906 70361 6524 2021 109812 36757 40385 12488 23655 <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <b>8.</b> <b>OIL AND GAS PROPERTIES</b></p> <div align="center"> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="50%"> <tr valign="top"> <td align="left" style="BORDER-RIGHT: #000000 1px solid; BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid"> <b>Capitalized exploration costs</b></td> <td align="right" style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid" width="23%"> <b>Sept 30, 2014</b></td> <td align="right" style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid" width="23%"> <b>Dec 31, 2013</b></td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="BORDER-RIGHT: #000000 1px solid"> Unproved, not subject to depletion</td> <td align="right" bgcolor="#e6efff" width="23%"> 947,458</td> <td align="right" bgcolor="#e6efff" width="23%"> 772,855</td> </tr> <tr valign="top"> <td align="left" style="BORDER-RIGHT: #000000 1px solid"> Proved subject to depletion</td> <td align="right" width="23%"> -</td> <td align="right" width="23%"> -</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="BORDER-RIGHT: #000000 1px solid"> Accumulated depletion</td> <td align="right" bgcolor="#e6efff" width="23%"> -</td> <td align="right" bgcolor="#e6efff" width="23%"> -</td> </tr> <tr valign="top"> <td align="left" style="BORDER-RIGHT: #000000 1px solid; BORDER-BOTTOM: #000000 2px solid"> <b>Total capitalized exploration costs</b></td> <td align="right" style="BORDER-BOTTOM: #000000 2px solid" width="23%"> <b>947,458 </b></td> <td align="right" style="BORDER-BOTTOM: #000000 2px solid" width="23%"> <b>772,855 </b></td> </tr> </table> </div> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> During 2012, two wells were drilled as part of one large campaign which included three drillings in Mongolia. At the beginning of the year, the Company had no recorded unproved properties in Mongolia. During 2012, the Company capitalized USD 2,998,636 of which USD 2,225,781 was expensed as &#8220;Exploration Costs&#8221; in the Statement of Operations during the third quarter of 2012 as the two wells were found dry. The Company had a remaining capitalized balance of USD 772,855 as of December 31, 2013. This balance related to specific costs for wells still to be drilled including capitalized costs recorded as accruals for USD 312,000. These costs were not paid at that time due to the moratorium in place.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> If the third well is found to be a dry hole, all remaining capitalized costs related to the campaign will de facto be expensed, with the exception of the tangible equipment, which will continue to have a salvage value (it will be either sold or written off). If the well is found to have proven reserves, the capitalized drilling costs will be reclassified as part of the cost of the well.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> As of June 27, 2013, we entered into a Moratorium with the Petroleum Authority of Mongolia. The exploration term was suspended for a period of one year and the initial five year exploration term, extended until May 20, 2015; thereafter we would have the possibility to extend the licenses for an additional two years if required. The basis for the Moratorium was the lack of drillable economic structures to fulfill our outstanding PSC commitments. Drilling activities will commence once the full evaluation of the new area is completed and drillable economic structures are available to fulfill our outstanding commitments, which is currently four wells.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> As of March 31, 2014 the Company impaired USD 312,000 relating to 3 well designs out of the remaining 4 well designs initially capitalized. These have been recorded under exploration costs. Furthermore, during the three month period ended March 31, 2014 the Company renegotiated the cost related to 4 well designs due to the fact that the supplier did not fulfill its responsibilities as per the contract. It was agreed to offset the penalty that the supplier should have paid with the remaining outstanding accrual of USD 312,000 and to record the penalty as a credit to exploration costs.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> Additionally, as of September 30, 2014 the Company has capitalized USD 486,603 relating to the well site preparation of Kayrakkum B in the Republic of Tajikistan.</p> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="50%"> <tr valign="top"> <td align="left" style="BORDER-RIGHT: #000000 1px solid; BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid"> <b>Capitalized exploration costs</b> </td> <td align="right" style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid" width="23%"> <b>Sept 30, 2014</b> </td> <td align="right" style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid" width="23%"> <b>Dec 31, 2013</b> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="BORDER-RIGHT: #000000 1px solid">Unproved, not subject to depletion</td> <td align="right" bgcolor="#e6efff" width="23%"> 947,458 </td> <td align="right" bgcolor="#e6efff" width="23%"> 772,855 </td> </tr> <tr valign="top"> <td align="left" style="BORDER-RIGHT: #000000 1px solid">Proved subject to depletion</td> <td align="right" width="23%"> - </td> <td align="right" width="23%"> - </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="BORDER-RIGHT: #000000 1px solid">Accumulated depletion</td> <td align="right" bgcolor="#e6efff" width="23%"> - </td> <td align="right" bgcolor="#e6efff" width="23%"> - </td> </tr> <tr valign="top"> <td align="left" style="BORDER-RIGHT: #000000 1px solid; BORDER-BOTTOM: #000000 2px solid"> <b>Total capitalized exploration costs</b> </td> <td align="right" style="BORDER-BOTTOM: #000000 2px solid" width="23%"> <b> 947,458 </b> </td> <td align="right" style="BORDER-BOTTOM: #000000 2px solid" width="23%"> <b> 772,855 </b> </td> </tr> </table> 947458 772855 0 0 0 0 947458 772855 2998636 2225781 772855 312000 312000 312000 486603 <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <b>9.</b> <b>STOCK COMPENSATION PROGRAM</b></p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <b>Amended 2011 Stock Option Plan</b></p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> The Amended 2011 Stock Option Plan, which was approved at Annual Shareholders Meeting dated February 20, 2014, authorizes the Company to issue options to purchase such number of the Company&#8217;s common shares as is equal to on aggregate, together with options issued under any prior plan, of up to 34,500,000 shares of the Company&#8217;s common stock (it is the type of stock option plan referred to as a &#8220;fixed&#8221; stock option plan).</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> If all or any portion of any stock option granted under the 2011 Stock Option Plan expires or terminates without having been exercised in full, the unexercised balance will be returned to the pool of stock available for grant under the 2011 Stock Option Plan.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <b>Recognition of Stock-based Compensation Costs</b></p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> Stock-based compensation costs are recognized in earnings using the fair-value based method for all awards granted. For employees fair value is estimated at the grant date and for non-employees fair value is re-measured at each reporting date. Compensation costs for unvested stock options and unvested share grants are expensed over the requisite service period on a straight-line basis.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <b>Grants</b></p> <p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;"> <b>9.1.</b> <b>Stock Option Grants</b></p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> The Company calculates the fair value of options granted by applying the Black-Scholes option pricing model. Expected volatility is based on the Company&#8217;s own historical share price volatility. The Company&#8217;s share price data can be traced back to April 2, 2007, and the Company believes that this set of data is sufficient to determine expected volatility as input for the Black-Scholes option pricing model.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> On July 7, 2014, the Company granted 300,000 stock options to a certain employee. Subject to vesting, each stock option is exercisable at a price of USD 0.06 per share for a period of ten years and vesting over two years in quarterly installments.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> On August 20, 2014, the Company granted 750,000 stock options to Streicher Capital LLC. 250,000 of these stock options are exercisable at a price of USD 0.076 per share, 250,000 are exercisable at a price of USD 0.084 per share, and 250,000 are exercisable at a price of USD 0.09 per share. Subject to vesting, each stock option is exercisable for a period of five years, vesting over a period of less than one year on specific dates agreed by both parties. Streicher Capital LLC provides marketing and investment relations consulting services to MNP Petroleum Corp. and its affiliates.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> During the nine month period ended September 30, 2014 the Company granted 1,050,000 options. During the same period in 2013, the Company granted 3,500,000 options.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> The following table shows the Company's outstanding and exercisable stock options as of September 30, 2014:</p> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%"> <tr valign="top"> <td align="left" style="BORDER-RIGHT: #000000 1px solid; BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid" valign="middle"> <b>Outstanding Options 2014</b></td> <td align="right" nowrap="nowrap" style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid" valign="middle" width="23%"> Shares under option</td> <td align="right" nowrap="nowrap" style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid" valign="middle" width="23%"> Weighted-average<br /> exercise price</td> <td align="right" nowrap="nowrap" style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid" valign="middle" width="23%"> Weighted-average<br /> remaining contractual<br /> term (years)</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="BORDER-RIGHT: #000000 1px solid"> <b>Outstanding at December 31, 2013</b></td> <td align="right" bgcolor="#e6efff" width="23%"> <b>12,100,000 </b></td> <td align="right" bgcolor="#e6efff" width="23%"> <b>USD0.25 </b></td> <td align="right" bgcolor="#e6efff" width="23%"> <b>7.07 </b></td> </tr> <tr valign="top"> <td align="left" style="BORDER-RIGHT: #000000 1px solid"> Granted</td> <td align="right" width="23%"> 1,050,000</td> <td align="right" width="23%"> USD0.08</td> <td align="right" width="23%"> 6.10</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="BORDER-RIGHT: #000000 1px solid"> Exercised</td> <td align="right" bgcolor="#e6efff" width="23%"> -</td> <td align="right" bgcolor="#e6efff" width="23%"> -</td> <td align="right" bgcolor="#e6efff" width="23%"> -</td> </tr> <tr valign="top"> <td align="left" style="BORDER-RIGHT: #000000 1px solid"> Forfeited, canceled or expired</td> <td align="right" width="23%"> (750,000)</td> <td align="right" width="23%"> USD0.30</td> <td align="right" width="23%"> 3.98</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="BORDER-RIGHT: #000000 1px solid"> Outstanding at Sept 30, 2014</td> <td align="right" bgcolor="#e6efff" width="23%"> 12,400,000</td> <td align="right" bgcolor="#e6efff" width="23%"> USD0.24</td> <td align="right" bgcolor="#e6efff" width="23%"> 6.49</td> </tr> <tr valign="top"> <td align="left" style="BORDER-RIGHT: #000000 1px solid; BORDER-BOTTOM: #000000 2px solid"> <b>Exercisable at Sept 30, 2014</b></td> <td align="right" style="BORDER-BOTTOM: #000000 2px solid" width="23%"> <b>10,912,500 </b></td> <td align="right" style="BORDER-BOTTOM: #000000 2px solid" width="23%"> <b>USD0.26 </b></td> <td align="right" style="BORDER-BOTTOM: #000000 2px solid" width="23%"> <b>6.57 </b></td> </tr> </table> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> The following table depicts the Company&#8217;s non-vested options as of September 30, 2014 and changes during the period:</p> <div align="center"> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="70%"> <tr valign="top"> <td align="left" style="BORDER-RIGHT: #000000 1px solid; BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid" valign="middle"> <b>Non-vested options</b></td> <td align="right" nowrap="nowrap" style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid" valign="middle" width="23%"> Shares under option</td> <td align="right" nowrap="nowrap" style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid" width="23%"> Weighted-average<br /> grant date fair value</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="BORDER-RIGHT: #000000 1px solid"> <b>Non-vested at December 31, 2013</b></td> <td align="right" bgcolor="#e6efff" width="23%"> 1,468,750</td> <td align="right" bgcolor="#e6efff" width="23%"> USD0.06</td> </tr> <tr valign="top"> <td align="left" style="BORDER-RIGHT: #000000 1px solid"> Non-vested granted</td> <td align="right" width="23%"> 1,050,000</td> <td align="right" width="23%"> USD0.06</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="BORDER-RIGHT: #000000 1px solid"> Vested</td> <td align="right" bgcolor="#e6efff" width="23%"> (1,031,250)</td> <td align="right" bgcolor="#e6efff" width="23%"> USD0.05</td> </tr> <tr valign="top"> <td align="left" style="BORDER-RIGHT: #000000 1px solid"> Non-vested, forfeited or canceled</td> <td align="right" width="23%"> -</td> <td align="right" width="23%"> -</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="BORDER-RIGHT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"> <b>Non-vested at Sept 30, 2014</b></td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="23%"> 1,487,500</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="23%"> USD0.06</td> </tr> </table> </div> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> As of September 30, 2014, the expected total of unrecognized compensation costs related to unvested stock-option grants was USD 68,173. The Company expects to recognize this amount over a weighted average period of 0.90 years.</p> <p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;"> <b>9.2.</b> <b>Summary of Stock-based Compensation Expenses</b></p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> A summary of stock-based compensation expense for the respective reporting periods is presented in the following table:</p> <div align="center"> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="80%"> <tr valign="top"> <td align="left" style="BORDER-RIGHT: #000000 1px solid; BORDER-TOP: #000000 2px solid"> <b>Stock based compensation</b></td> <td align="center" colspan="2" nowrap="nowrap" style="BORDER-TOP: #000000 2px solid"> <i>Three month period ended</i></td> <td align="center" colspan="2" nowrap="nowrap" style="BORDER-TOP: #000000 2px solid"> <i>Nine month period ended</i></td> </tr> <tr valign="top"> <td align="left" style="BORDER-RIGHT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"> <b>expenses</b></td> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="15%"> <b>Sept 30, 2014</b></td> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="15%"> <b>Sept 30, 2013</b></td> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="15%"> <b>Sept 30, 2014</b></td> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="15%"> <b>Sept 30, 2013</b></td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="BORDER-RIGHT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"> Option grants</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="15%"> 23,319</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="15%"> 201,976</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="15%"> 65,613</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="15%"> 701,550</td> </tr> <tr valign="top"> <td align="left" style="BORDER-RIGHT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"> <b>Total</b></td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" width="15%"> 23,319</td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" width="15%"> 201,976</td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" width="15%"> 65,613</td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" width="15%"> 701,550</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="BORDER-RIGHT: #000000 1px solid"> Recorded under &#8220;Personnel&#8221;</td> <td align="right" bgcolor="#e6efff" width="15%"> 10,454</td> <td align="right" bgcolor="#e6efff" width="15%"> 193,207</td> <td align="right" bgcolor="#e6efff" width="15%"> 27,204</td> <td align="right" bgcolor="#e6efff" width="15%"> 695,915</td> </tr> <tr valign="top"> <td align="left" style="BORDER-RIGHT: #000000 1px solid; BORDER-BOTTOM: #000000 2px solid"> Recorded under &#8220;Consulting fees&#8221;</td> <td align="right" style="BORDER-BOTTOM: #000000 2px solid" width="15%"> 12,865</td> <td align="right" style="BORDER-BOTTOM: #000000 2px solid" width="15%"> 8,769</td> <td align="right" style="BORDER-BOTTOM: #000000 2px solid" width="15%"> 38,409</td> <td align="right" style="BORDER-BOTTOM: #000000 2px solid" width="15%"> 5,635</td> </tr> </table> </div> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%"> <tr valign="top"> <td align="left" style="BORDER-RIGHT: #000000 1px solid; BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid" valign="middle"> <b>Outstanding Options 2014</b> </td> <td align="right" nowrap="nowrap" style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid" valign="middle" width="23%">Shares under option</td> <td align="right" nowrap="nowrap" style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid" valign="middle" width="23%"> Weighted-average <br/> exercise price </td> <td align="right" nowrap="nowrap" style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid" valign="middle" width="23%"> Weighted-average <br/> remaining contractual <br/> term (years) </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="BORDER-RIGHT: #000000 1px solid"> <b>Outstanding at December 31, 2013</b> </td> <td align="right" bgcolor="#e6efff" width="23%"> <b> 12,100,000 </b> </td> <td align="right" bgcolor="#e6efff" width="23%"> <b> USD0.25 </b> </td> <td align="right" bgcolor="#e6efff" width="23%"> <b> 7.07 </b> </td> </tr> <tr valign="top"> <td align="left" style="BORDER-RIGHT: #000000 1px solid">Granted</td> <td align="right" width="23%"> 1,050,000 </td> <td align="right" width="23%"> USD0.08 </td> <td align="right" width="23%"> 6.10 </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="BORDER-RIGHT: #000000 1px solid">Exercised</td> <td align="right" bgcolor="#e6efff" width="23%"> - </td> <td align="right" bgcolor="#e6efff" width="23%"> - </td> <td align="right" bgcolor="#e6efff" width="23%"> - </td> </tr> <tr valign="top"> <td align="left" style="BORDER-RIGHT: #000000 1px solid">Forfeited, canceled or expired</td> <td align="right" width="23%"> (750,000) </td> <td align="right" width="23%"> USD0.30 </td> <td align="right" width="23%"> 3.98 </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="BORDER-RIGHT: #000000 1px solid">Outstanding at Sept 30, 2014</td> <td align="right" bgcolor="#e6efff" width="23%"> 12,400,000 </td> <td align="right" bgcolor="#e6efff" width="23%"> USD0.24 </td> <td align="right" bgcolor="#e6efff" width="23%"> 6.49 </td> </tr> <tr valign="top"> <td align="left" style="BORDER-RIGHT: #000000 1px solid; BORDER-BOTTOM: #000000 2px solid"> <b>Exercisable at Sept 30, 2014</b> </td> <td align="right" style="BORDER-BOTTOM: #000000 2px solid" width="23%"> <b> 10,912,500 </b> </td> <td align="right" style="BORDER-BOTTOM: #000000 2px solid" width="23%"> <b> USD0.26 </b> </td> <td align="right" style="BORDER-BOTTOM: #000000 2px solid" width="23%"> <b> 6.57 </b> </td> </tr> </table> 12100000 0.25 7.07 1050000 0.08 6.10 0 0 0 -750000 0.30 3.98 12400000 0.24 6.49 10912500 0.26 6.57 <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="70%"> <tr valign="top"> <td align="left" style="BORDER-RIGHT: #000000 1px solid; BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid" valign="middle"> <b>Non-vested options</b> </td> <td align="right" nowrap="nowrap" style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid" valign="middle" width="23%">Shares under option</td> <td align="right" nowrap="nowrap" style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid" width="23%"> Weighted-average <br/> grant date fair value </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="BORDER-RIGHT: #000000 1px solid"> <b>Non-vested at December 31, 2013</b> </td> <td align="right" bgcolor="#e6efff" width="23%"> 1,468,750 </td> <td align="right" bgcolor="#e6efff" width="23%"> USD0.06 </td> </tr> <tr valign="top"> <td align="left" style="BORDER-RIGHT: #000000 1px solid">Non-vested granted</td> <td align="right" width="23%"> 1,050,000 </td> <td align="right" width="23%"> USD0.06 </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="BORDER-RIGHT: #000000 1px solid">Vested</td> <td align="right" bgcolor="#e6efff" width="23%"> (1,031,250) </td> <td align="right" bgcolor="#e6efff" width="23%"> USD0.05 </td> </tr> <tr valign="top"> <td align="left" style="BORDER-RIGHT: #000000 1px solid">Non-vested, forfeited or canceled</td> <td align="right" width="23%"> - </td> <td align="right" width="23%"> - </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="BORDER-RIGHT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"> <b>Non-vested at Sept 30, 2014</b> </td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="23%"> 1,487,500 </td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="23%"> USD0.06 </td> </tr> </table> 1468750 0.06 1050000 0.06 -1031250 0.05 0 0 1487500 0.06 <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="80%"> <tr valign="top"> <td align="left" style="BORDER-RIGHT: #000000 1px solid; BORDER-TOP: #000000 2px solid"> <b>Stock based compensation</b> </td> <td align="center" colspan="2" nowrap="nowrap" style="BORDER-TOP: #000000 2px solid"> <i>Three month period ended</i> </td> <td align="center" colspan="2" nowrap="nowrap" style="BORDER-TOP: #000000 2px solid"> <i>Nine month period ended</i> </td> </tr> <tr valign="top"> <td align="left" style="BORDER-RIGHT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"> <b>expenses</b> </td> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="15%"> <b>Sept 30, 2014</b> </td> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="15%"> <b>Sept 30, 2013</b> </td> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="15%"> <b>Sept 30, 2014</b> </td> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="15%"> <b>Sept 30, 2013</b> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="BORDER-RIGHT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid">Option grants</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="15%"> 23,319 </td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="15%"> 201,976 </td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="15%"> 65,613 </td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="15%"> 701,550 </td> </tr> <tr valign="top"> <td align="left" style="BORDER-RIGHT: #000000 1px solid; BORDER-BOTTOM: #000000 1px solid"> <b>Total</b> </td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" width="15%"> 23,319 </td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" width="15%"> 201,976 </td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" width="15%"> 65,613 </td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" width="15%"> 701,550 </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="BORDER-RIGHT: #000000 1px solid">Recorded under &#8220;Personnel&#8221;</td> <td align="right" bgcolor="#e6efff" width="15%"> 10,454 </td> <td align="right" bgcolor="#e6efff" width="15%"> 193,207 </td> <td align="right" bgcolor="#e6efff" width="15%"> 27,204 </td> <td align="right" bgcolor="#e6efff" width="15%"> 695,915 </td> </tr> <tr valign="top"> <td align="left" style="BORDER-RIGHT: #000000 1px solid; BORDER-BOTTOM: #000000 2px solid">Recorded under &#8220;Consulting fees&#8221;</td> <td align="right" style="BORDER-BOTTOM: #000000 2px solid" width="15%"> 12,865 </td> <td align="right" style="BORDER-BOTTOM: #000000 2px solid" width="15%"> 8,769 </td> <td align="right" style="BORDER-BOTTOM: #000000 2px solid" width="15%"> 38,409 </td> <td align="right" style="BORDER-BOTTOM: #000000 2px solid" width="15%"> 5,635 </td> </tr> </table> 23319 201976 65613 701550 23319 201976 65613 701550 10454 193207 27204 695915 12865 8769 38409 5635 34500000 300000 0.06 750000 250000 0.076 250000 0.084 250000 0.09 1050000 3500000 68173 0.90 <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <b>10.</b> <b>WARRANTS</b></p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <b>Warrant activity</b></p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> The following table summarizes the Company&#8217;s warrant activity for the nine month period ended September 30, 2014:</p> <div align="center"> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="90%"> <tr valign="top"> <td align="left" style="BORDER-RIGHT: #000000 1px solid; BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid"> <b>Warrants 2014</b></td> <td align="right" nowrap="nowrap" style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid" width="30%"> <b>Number of warrants</b></td> <td align="right" nowrap="nowrap" style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid" width="30%"> <b>Weighted average exercise price</b></td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="BORDER-RIGHT: #000000 1px solid"> Outstanding at December 31, 2013</td> <td align="right" bgcolor="#e6efff" width="30%"> 44,450,500</td> <td align="right" bgcolor="#e6efff" width="30%"> USD 0.70</td> </tr> <tr valign="top"> <td align="left" style="BORDER-RIGHT: #000000 1px solid"> Granted</td> <td align="right" width="30%"> -</td> <td align="right" width="30%"> -</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="BORDER-RIGHT: #000000 1px solid"> Exercised</td> <td align="right" bgcolor="#e6efff" width="30%"> -</td> <td align="right" bgcolor="#e6efff" width="30%"> -</td> </tr> <tr valign="top"> <td align="left" style="BORDER-RIGHT: #000000 1px solid; BORDER-BOTTOM: #000000 2px solid"> Forfeit or expired</td> <td align="right" style="BORDER-BOTTOM: #000000 2px solid" width="30%"> 44,450,500</td> <td align="right" style="BORDER-BOTTOM: #000000 2px solid" width="30%"> USD 0.70</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="BORDER-RIGHT: #000000 1px solid; BORDER-BOTTOM: #000000 2px solid"> <b>Outstanding at Sept 30, 2014</b></td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" width="30%"> -</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" width="30%"> -</td> </tr> </table> </div> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="90%"> <tr valign="top"> <td align="left" style="BORDER-RIGHT: #000000 1px solid; BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid"> <b>Warrants 2014</b> </td> <td align="right" nowrap="nowrap" style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid" width="30%"> <b>Number of warrants</b> </td> <td align="right" nowrap="nowrap" style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid" width="30%"> <b>Weighted average exercise price</b> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="BORDER-RIGHT: #000000 1px solid">Outstanding at December 31, 2013</td> <td align="right" bgcolor="#e6efff" width="30%"> 44,450,500 </td> <td align="right" bgcolor="#e6efff" width="30%"> USD0.70 </td> </tr> <tr valign="top"> <td align="left" style="BORDER-RIGHT: #000000 1px solid">Granted</td> <td align="right" width="30%"> - </td> <td align="right" width="30%"> - </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="BORDER-RIGHT: #000000 1px solid">Exercised</td> <td align="right" bgcolor="#e6efff" width="30%"> - </td> <td align="right" bgcolor="#e6efff" width="30%"> - </td> </tr> <tr valign="top"> <td align="left" style="BORDER-RIGHT: #000000 1px solid; BORDER-BOTTOM: #000000 2px solid">Forfeit or expired</td> <td align="right" style="BORDER-BOTTOM: #000000 2px solid" width="30%"> 44,450,500 </td> <td align="right" style="BORDER-BOTTOM: #000000 2px solid" width="30%"> USD0.70 </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="BORDER-RIGHT: #000000 1px solid; BORDER-BOTTOM: #000000 2px solid"> <b>Outstanding at Sept 30, 2014</b> </td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" width="30%"> - </td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" width="30%"> - </td> </tr> </table> 44450500 0.70 0 0 0 0 44450500 0.70 0 0 <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <b>11.</b> <b>SHAREHOLDERS&#8217; EQUITY</b></p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <b>Share repurchase program</b></p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> On May 13, 2014, MNP Petroleum Corp. announced that, subject to regulatory approval, it intends to repurchase up to 8,296,614 of its common shares, or up to five percent of the 172,592,292 common shares that are currently issued, in a normal course issuer bid to be conducted by Jennings Capital Inc. All purchases of common shares under the bid will be effected on the TSX Venture Exchange or the OTCQB in the United States (or such other stock exchange or quotation system upon which the company&#8217;s shares may then be listed or quoted) and, in any event, in accordance with the rules and policies of the TSX Venture Exchange and applicable securities laws. The shares are being purchased because MNP believes that its common shares currently trade in a price range that does not adequately reflect their underlying value, based on its business prospects, assets and financial position. The Company repurchased shares of its common stock in the open market, which were booked as treasury shares upon repurchase. Under the normal course issuer bid, MNP will not repurchase any securities when it is in possession of undisclosed material information or during any &#8216;blackout&#8217; periods imposed by its Insider Trading Policy. The program will expire May 18, 2015.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> During the nine month period ended September 30, 2014, the Company repurchased 5,604,500 shares of common stock for a total of USD 452,403.</p> 8296614 172592292 5604500 452403 <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <b>12.</b> <b>INVESTMENT IN PETROMANAS</b></p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> On December 31, 2013, DWM Petroleum owned and controlled 50,000,000 common shares of Petromanas Energy Inc. (&#8220;Petromanas&#8221;) and it had the right to acquire a further 38,750,000 common shares (referred to as &#8220;Performance Shares&#8221;) upon the occurrence of certain conditions. No proceeds were allocated to these performance shares as they are only issuable upon achievement of certain conditions and the likelihood of the contingent event is not reasonably determined. The 50,000,000 common shares represent approximately 7.2% of the issued and outstanding common shares of Petromanas.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> The fair value of the investment in Petromanas has been classified as Level 1 as the shares are freely tradable and no additional discount rate is being used for the current calculation of the investment.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> Between February 26, 2014 and February 27, 2014 DWM Petroleum sold 1,500,000 shares of Petromanas (PMI) at a weighted average price of CAD 0.23 per common share for gross proceeds of CAD 337,500 (USD 300,602). On March 5, 2014, DWM Petroleum sold an additional 40,000,000 shares at a price of CAD 0.20 per common share for gross proceeds of CAD 8,000,000 (USD 7,214,632) on the open market. On March 6, 2014 DWM Petroleum sold 500,000 shares at a price of CAD 0.22 for gross proceeds of CAD 110,000 (USD 98,751).</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> As of September 30, 2014, DWM Petroleum holds 8,000,000 shares in Petromanas, representing 1.2% of the outstanding shares. Additionally, it has the right to acquire a further 38,750,000 common shares (referred to as &#8220;Performance Shares&#8221;) upon the occurrence of certain conditions.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> The quoted market price for one common share of Petromanas on September 30, 2014 was CAD 0.22 (USD 0.20).</p> 50000000 38750000 50000000 0.072 1500000 0.23 337500 300602 40000000 0.20 8000000 7214632 500000 0.22 110000 98751 8000000 0.012 38750000 0.22 0.20 <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <b>13.</b> <b>RELATED PARTY DISCLOSURE</b></p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> The consolidated financial statements include the financial statements of MNP Petroleum Corporation and the entities listed in the following table:</p> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%"> <tr valign="top"> <td align="left" style="BORDER-BOTTOM: #000000 2px solid" valign="middle"> <b>Company</b></td> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="middle" width="19%"> <b>Country</b></td> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" width="19%"> <b>Equity share</b><br /> <b>Sept 30, 2014</b></td> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" width="19%"> <b>Equity share</b><br /> <b>Dec 31, 2013</b></td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid"> DWM Petroleum AG, Baar (1)</td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> Switzerland</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> 100%</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> 100%</td> </tr> <tr valign="top"> <td align="left" style="BORDER-BOTTOM: #000000 1px solid"> DWM Energy AG Baar (2)</td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> Switzerland</td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> 100%</td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> 100%</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid"> Petromanas Energy Inc., Calgary (3)</td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> Canada</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> 1.2%</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> 7.2%</td> </tr> <tr valign="top"> <td align="left" style="BORDER-BOTTOM: #000000 1px solid"> CJSC South Petroleum Company, Jalalabat (4)</td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> Kyrgyz Republic</td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> 25%</td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> 25%</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid"> CJSC Somon Oil Company, Dushanbe (5)</td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> Republic of Tajikistan</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> 90%</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> 90%</td> </tr> <tr valign="top"> <td align="left" style="BORDER-BOTTOM: #000000 1px solid"> Manas Management Services Ltd., Nassau (6)</td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> Bahamas</td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> 100%</td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> 100%</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid"> Manas Chile Energia Limitada, Santiago (7)</td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> Chile</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> 100%</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> 100%</td> </tr> <tr valign="top"> <td align="left" style="BORDER-BOTTOM: #000000 1px solid"> Gobi Energy Partners LLC, Ulaan Baator (8)</td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> Mongolia</td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> 74%</td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> 74%</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid"> Gobi Energy Partners GmbH (9)</td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> Switzerland</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> 74%</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> 74%</td> </tr> <tr valign="top"> <td align="left" style="BORDER-BOTTOM: #000000 1px solid"> TF Petroleum AG (10)</td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> Switzerland</td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> 100%</td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> -</td> </tr> </table> <br /> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%"> <tr> <td width="5%"> &nbsp;</td> <td valign="top" width="5%"> (1)</td> <td> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;margin:inherit;"> Included Branch in Albania that was sold in February 2010.</p> </td> </tr> <tr> <td width="5%"> &nbsp;</td> <td valign="top" width="5%"> (2)</td> <td> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;margin:inherit;"> Founded in 2007.</p> </td> </tr> <tr> <td width="5%"> &nbsp;</td> <td valign="top" width="5%"> (3)</td> <td> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;margin:inherit;"> Petromanas Energy Inc. participation resulted from partial sale of Manas Adriatic GmbH; fair value method applied.</p> </td> </tr> <tr> <td width="5%"> &nbsp;</td> <td valign="top" width="5%"> (4)</td> <td> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;margin:inherit;"> CJSC South Petroleum Company was founded by DWM Petroleum AG; equity method investee that is not consolidated.</p> </td> </tr> <tr> <td width="5%"> &nbsp;</td> <td valign="top" width="5%"> (5)</td> <td> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;margin:inherit;"> CJSC Somon Oil Company was founded by DWM Petroleum AG. As CJSC Somon Oil has been in a loss position since its inception its inception and MNP is legally required to fund the losses, no no-controlling interest has been recorded.</p> </td> </tr> <tr> <td width="5%"> &nbsp;</td> <td valign="top" width="5%"> (6)</td> <td> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;margin:inherit;"> Founded in 2008.</p> </td> </tr> <tr> <td width="5%"> &nbsp;</td> <td valign="top" width="5%"> (7)</td> <td> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;margin:inherit;"> Manas Chile Energia Limitada was founded by Manas Management Services Ltd.; founded in 2008.</p> </td> </tr> <tr> <td width="5%"> &nbsp;</td> <td valign="top" width="5%"> (8)</td> <td> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;margin:inherit;"> Gobi Energy Partners LLC was founded in 2009 by DWM Petroleum AG (formerly Manas Gobi LLC). Gobi Energy Partners GmbH holds record title to 100% of Gobi Energy Partners LLC.</p> </td> </tr> <tr> <td width="5%"> &nbsp;</td> <td valign="top" width="5%"> (9)</td> <td> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;margin:inherit;"> Gobi Energy Partners GmbH was founded in 2010. DWM Petroleum AG holds 74% of Gobi Energy Partners GmbH. The Company determined that no value needs to be ascribed to the non-controlling interest due to the fact that the non-controlling parties do not carry any costs.</p> </td> </tr> <tr> <td width="5%"> &nbsp;</td> <td valign="top" width="5%"> (10)</td> <td> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;margin:inherit;"> TF Petroleum was founded in 2012 Pursuant to the Supplement Agreement date March 31, 2014 DWM Petroleum AG acquired 100% for a purchase price of CHF 1.00 (USD 1.13) pursuant to a Share Purchase Agreement signed on April 4, 2014.</p> </td> </tr> </table> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> &nbsp;&nbsp;&nbsp;&nbsp; -&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <b>CJSC South Petroleum Company</b></p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> On October 4, 2006 a contract was signed with Santos International Holdings PTY Ltd. (&#8220;Santos&#8221;) to sell a 70% interest in CJSC South Petroleum Company, Jalalabat for a payment of USD 4,000,000, a two phase work program totalling USD 53,500,000 (Phase 1: USD 11,500,000, Phase 2: USD 42,000,000), additional working capital outlays of USD 1,000,000 per annum and an earn-out of USD 1,000,000 to former DWM shareholders to be settled in shares of Santos if they elect to enter into Phase 2 of the work program. If Santos does not exercise the option to enter into Phase 2, the 70% interest is returned to DWM Petroleum at no cost. On December 2, 2008, Santos announced to enter into Phase 2 and the earn-out was paid to former DWM shareholders.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> In phase 2 of the work program, in the event Santos spends in excess of USD 42,000,000 on the appraisal wells, the Company would be obligated to pay 30% of the excess expenditure.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> The Group has never recorded its share of the losses.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> Due to political uncertainty in the country, Santos and DWM have decided to exit Kyrgyzstan. On July 2013 the board of directors took the decision to exit Kyrgyzstan. Since then all of the licenses have expired and Santos is in the process of winding up South Petroleum at its expense. There will be no liquidated damages as a result of exiting the venture. We wrote off our investment in associate of USD 238,304 during 2013.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> South Petroleum Company has been formally liquidated as of October 24, 2014.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> &nbsp;&nbsp;&nbsp;&nbsp; -&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <b>CJSC Somon Oil (Tajikistan)</b></p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> Santos International Ventures Pty Ltd had an option to enter into a farm in agreement in respect of these licenses, but decided on December 31, 2012 not to pursue this option. Santos continued to fund current capital expenditures, as well as certain general and administrative costs of Somon Oil until January 2013. DWM is in negotiations to setup a new consortium for this acreage, and we anticipate the financial commitment amounts to change. To date no liquidated damages have occurred.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> &nbsp;&nbsp;&nbsp;&nbsp; -&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <b>Related parties</b></p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> The following table provides the total amount of transactions, which have been entered into with related parties for the specified period:</p> <div> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%"> <tr valign="top"> <td align="left" rowspan="2" style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid" valign="middle"> <b>Related parties&#8217; transactions</b></td> <td align="center" colspan="2" nowrap="nowrap" style="BORDER-TOP: #000000 2px solid"> <i>Three months ended</i></td> <td align="center" colspan="2" nowrap="nowrap" style="BORDER-TOP: #000000 2px solid"> <i>Nine months ended</i></td> </tr> <tr valign="top"> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="15%"> <b>Sept 30, 2014</b></td> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="15%"> <b>Sept 30, 2013</b></td> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="15%"> <b>Sept 30, 2014</b></td> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="15%"> <b>Sept 30, 2013</b></td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff"> <b>Affiliates</b></td> <td align="right" bgcolor="#e6efff" valign="bottom" width="15%"> &nbsp;</td> <td align="right" bgcolor="#e6efff" valign="bottom" width="15%"> &nbsp;</td> <td align="right" bgcolor="#e6efff" valign="bottom" width="15%"> &nbsp;</td> <td align="right" bgcolor="#e6efff" valign="bottom" width="15%"> &nbsp;</td> </tr> <tr valign="top"> <td align="left"> Management services performed to Petromanas*</td> <td align="right" valign="bottom" width="15%"> -</td> <td align="right" valign="bottom" width="15%"> ( 2,542)</td> <td align="right" valign="bottom" width="15%"> ( 278)</td> <td align="right" valign="bottom" width="15%"> ( 14,734)</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff"> <b>Board of directors</b></td> <td align="right" bgcolor="#e6efff" valign="bottom" width="15%"> &nbsp;</td> <td align="right" bgcolor="#e6efff" valign="bottom" width="15%"> &nbsp;</td> <td align="right" bgcolor="#e6efff" valign="bottom" width="15%"> &nbsp;</td> <td align="right" bgcolor="#e6efff" valign="bottom" width="15%"> &nbsp;</td> </tr> <tr valign="top"> <td align="left"> Payments to directors for office rent</td> <td align="right" valign="bottom" width="15%"> 6,532</td> <td align="right" valign="bottom" width="15%"> 6,355</td> <td align="right" valign="bottom" width="15%"> 19,995</td> <td align="right" valign="bottom" width="15%"> 18,919</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid"> Payments to related companies controlled by directors for rendered consulting services</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="15%"> 72,020</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="15%"> 90,079</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="15%"> 220,452</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="15%"> 282,179</td> </tr> </table> </div> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> * Services invoiced or accrued are recorded as contra-expense in personnel cost and administrative cost.</p> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%"> <tr valign="top"> <td align="left" style="BORDER-BOTTOM: #000000 2px solid" valign="middle"> <b>Company</b> </td> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" valign="middle" width="19%"> <b>Country</b> </td> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" width="19%"> <b>Equity share</b> <br/> <b>Sept 30, 2014</b> </td> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 2px solid" width="19%"> <b>Equity share</b> <br/> <b>Dec 31, 2013</b> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid">DWM Petroleum AG, Baar (1)</td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="19%">Switzerland</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> 100% </td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> 100% </td> </tr> <tr valign="top"> <td align="left" style="BORDER-BOTTOM: #000000 1px solid">DWM Energy AG Baar (2)</td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" width="19%">Switzerland</td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> 100% </td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> 100% </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid">Petromanas Energy Inc., Calgary (3)</td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="19%">Canada</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> 1.2% </td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> 7.2% </td> </tr> <tr valign="top"> <td align="left" style="BORDER-BOTTOM: #000000 1px solid">CJSC South Petroleum Company, Jalalabat (4)</td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" width="19%">Kyrgyz Republic</td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> 25% </td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> 25% </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid">CJSC Somon Oil Company, Dushanbe (5)</td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="19%">Republic of Tajikistan</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> 90% </td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> 90% </td> </tr> <tr valign="top"> <td align="left" style="BORDER-BOTTOM: #000000 1px solid">Manas Management Services Ltd., Nassau (6)</td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" width="19%">Bahamas</td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> 100% </td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> 100% </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid">Manas Chile Energia Limitada, Santiago (7)</td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="19%">Chile</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> 100% </td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> 100% </td> </tr> <tr valign="top"> <td align="left" style="BORDER-BOTTOM: #000000 1px solid">Gobi Energy Partners LLC, Ulaan Baator (8)</td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" width="19%">Mongolia</td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> 74% </td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> 74% </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid">Gobi Energy Partners GmbH (9)</td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="19%">Switzerland</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> 74% </td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> 74% </td> </tr> <tr valign="top"> <td align="left" style="BORDER-BOTTOM: #000000 1px solid">TF Petroleum AG (10)</td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" width="19%">Switzerland</td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> 100% </td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> - </td> </tr> </table> 1.00 1.00 1.00 1.00 0.012 0.072 0.25 0.25 0.90 0.90 1.00 1.00 1.00 1.00 0.74 0.74 0.74 0.74 1.00 0 <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%"> <tr valign="top"> <td align="left" rowspan="2" style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid" valign="middle"> <b>Related parties&#8217; transactions</b> </td> <td align="center" colspan="2" nowrap="nowrap" style="BORDER-TOP: #000000 2px solid"> <i>Three months ended</i> </td> <td align="center" colspan="2" nowrap="nowrap" style="BORDER-TOP: #000000 2px solid"> <i>Nine months ended</i> </td> </tr> <tr valign="top"> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="15%"> <b>Sept 30, 2014</b> </td> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="15%"> <b>Sept 30, 2013</b> </td> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="15%"> <b>Sept 30, 2014</b> </td> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="15%"> <b>Sept 30, 2013</b> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff"> <b>Affiliates</b> </td> <td align="right" bgcolor="#e6efff" valign="bottom" width="15%">&#160;</td> <td align="right" bgcolor="#e6efff" valign="bottom" width="15%">&#160;</td> <td align="right" bgcolor="#e6efff" valign="bottom" width="15%">&#160;</td> <td align="right" bgcolor="#e6efff" valign="bottom" width="15%">&#160;</td> </tr> <tr valign="top"> <td align="left">Management services performed to Petromanas*</td> <td align="right" valign="bottom" width="15%"> - </td> <td align="right" valign="bottom" width="15%"> ( 2,542) </td> <td align="right" valign="bottom" width="15%"> ( 278) </td> <td align="right" valign="bottom" width="15%"> ( 14,734) </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff"> <b>Board of directors</b> </td> <td align="right" bgcolor="#e6efff" valign="bottom" width="15%">&#160;</td> <td align="right" bgcolor="#e6efff" valign="bottom" width="15%">&#160;</td> <td align="right" bgcolor="#e6efff" valign="bottom" width="15%">&#160;</td> <td align="right" bgcolor="#e6efff" valign="bottom" width="15%">&#160;</td> </tr> <tr valign="top"> <td align="left">Payments to directors for office rent</td> <td align="right" valign="bottom" width="15%"> 6,532 </td> <td align="right" valign="bottom" width="15%"> 6,355 </td> <td align="right" valign="bottom" width="15%"> 19,995 </td> <td align="right" valign="bottom" width="15%"> 18,919 </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid">Payments to related companies controlled by directors for rendered consulting services</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="15%"> 72,020 </td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="15%"> 90,079 </td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="15%"> 220,452 </td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="15%"> 282,179 </td> </tr> </table> 0 2542 278 14734 6532 6355 19995 18919 72020 90079 220452 282179 1.00 0.74 1.00 1.00 1.13 0.70 4000000 53500000 11500000 42000000 1000000 1000000 0.70 42000000 0.30 238304 <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <b>14.</b> <b>COMMITMENTS &amp; CONTINGENT LIABILITIES</b> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <b>Legal actions and claims (Kyrgyz Republic, Republic of Tajikistan, Mongolia and Chile)</b> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">In the ordinary course of business, members of the Group doing business in Mongolia, Republic of Tajikistan, the Kyrgyz Republic, and Chile may be subject to legal actions and complaints from time-to-time. Management believes that the ultimate liability, if any, arising from such actions or complaints will not have a material adverse effect on the financial condition, the results of future operations or cash flows of the associates/subsidiaries in Mongolia, Republic of Tajikistan, the Kyrgyz Republic and Chile.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">During the initial phase of applying for its Chilean Exploration license, the Company formed a joint bidding group with Improved Petroleum Recovery Tranquillo Chile (commonly referred to as &#8220;IPR&#8221;) and a start-up company called Energy Focus Limitada (&#8220;Energy Focus&#8221;). Each had a one-third interest. Of its own accord, Energy Focus left the bidding group. The three parties signed a side letter which provided that Energy Focus would have an option to rejoin the bidding group under certain conditions.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Even though Energy Focus was asked many times to re-join the group and contribute its prorated share of capital, it failed or neglected to do so. Despite this, Energy Focus maintains that it is entitled to participation in a consortium that was subsequently formed. The Company and IPR believe that Energy Focus no longer has a right to join the bidding group or consortium because the conditions specified in the side letter were not met, and cannot now be met.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Energy Focus commenced litigation for specific performance and damages in an unspecified amount in Santiago de Chile, claiming interest in the Tranquilo Block from the Company and IPR, and their respective subsidiaries. The Company, IPR and their respective legal counsel were of the view that the Energy Focus claim was without merit, that it was brought in the wrong jurisdiction and that Energy Focus failed to properly serve the parties. The trial court in Santiago dismissed the Energy Focus case. Energy Focus took an Appeal, which was also dismissed. Energy Focus took a second Appeal and the matter is returned to the trial court. The Company&#8217;s legal advisors are of the opinion that Energy Focus will not succeed at trial on several grounds, including jurisdiction, service and on the substantive issues. The Company and IPR are also considering a further Appeal. The Company&#8217;s management believe that ultimate liability, if any, arising from the Energy Focus litigation will not have a material adverse effect on the financial condition, the results of future operations or cash flows of the Company.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">As of September 30, 2014, there had been no legal actions against any member of the Group in the Kyrgyz Republic, Republic of Tajikistan and Mongolia.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Management believes that the members of the Group are in substantial compliance with the tax laws affecting their respective operations in the Kyrgyz Republic, Republic of Tajikistan and Mongolia. However, the risk remains that relevant authorities could take differing positions with regards to interpretative issues.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <b>15.</b> <b>PERSONNEL COSTS AND EMPLOYEE BENEFIT PLANS</b></p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <b>Defined benefit plan</b></p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> The Company maintains Swiss defined benefit plans for eight of its employees. These plans are part of independent collective funds providing pensions combined with life and disability insurance. The assets of the funded plans are held independently of the Company&#8217;s assets in a legally distinct and independent collective trust fund which serves various unrelated employers. The funds&#8217; benefit obligations are fully reinsured by AXA Winterthur Insurance Company. The plans are valued by independent actuaries using the projected unit credit method. The liabilities correspond to the projected benefit obligations of which the discounted net present value is calculated based on years of employment, expected salary increases, and pension adjustments.</p> <div align="center"> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="80%"> <tr valign="top"> <td align="left" style="BORDER-TOP: #000000 2px solid"> &nbsp;</td> <td align="left" style="BORDER-TOP: #000000 2px solid" width="1%"> &nbsp;</td> <td align="center" colspan="4" nowrap="nowrap" style="BORDER-TOP: #000000 2px solid"> <i>Three months ended</i></td> <td align="center" nowrap="nowrap" style="BORDER-TOP: #000000 2px solid" width="2%"> &nbsp;</td> <td align="center" nowrap="nowrap" style="BORDER-TOP: #000000 2px solid" width="1%"> &nbsp;</td> <td align="center" colspan="4" nowrap="nowrap" style="BORDER-TOP: #000000 2px solid"> <i>Nine months ended</i></td> <td align="right" style="BORDER-TOP: #000000 2px solid" width="2%"> &nbsp;</td> </tr> <tr valign="top"> <td align="left" style="BORDER-BOTTOM: #000000 1px solid"> <b>Pension expense</b></td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" width="1%"> &nbsp;</td> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="14%"> <b>Sept 30, 2014</b></td> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="2%"> &nbsp;</td> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="1%"> &nbsp;</td> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="14%"> <b>Sept 30, 2013</b></td> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="2%"> &nbsp;</td> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="1%"> &nbsp;</td> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="14%"> <b>Sept 30, 2014</b></td> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="2%"> &nbsp;</td> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="1%"> &nbsp;</td> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="14%"> <b>Sept 30, 2013</b></td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" width="2%"> &nbsp;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff"> Net service cost</td> <td align="left" bgcolor="#e6efff" width="1%"> &nbsp;</td> <td align="right" bgcolor="#e6efff" width="14%"> 12,318</td> <td align="left" bgcolor="#e6efff" width="2%"> &nbsp;</td> <td align="left" bgcolor="#e6efff" width="1%"> &nbsp;</td> <td align="right" bgcolor="#e6efff" width="14%"> 10,164</td> <td align="left" bgcolor="#e6efff" width="2%"> &nbsp;</td> <td align="left" bgcolor="#e6efff" width="1%"> &nbsp;</td> <td align="right" bgcolor="#e6efff" width="14%"> 24,636</td> <td align="left" bgcolor="#e6efff" width="2%"> &nbsp;</td> <td align="left" bgcolor="#e6efff" width="1%"> &nbsp;</td> <td align="right" bgcolor="#e6efff" width="14%"> 30,491</td> <td align="left" bgcolor="#e6efff" width="2%"> &nbsp;</td> </tr> <tr valign="top"> <td align="left"> Interest cost</td> <td align="left" width="1%"> &nbsp;</td> <td align="right" width="14%"> 16,213</td> <td align="left" width="2%"> &nbsp;</td> <td align="left" width="1%"> &nbsp;</td> <td align="right" width="14%"> 4,802</td> <td align="left" width="2%"> &nbsp;</td> <td align="left" width="1%"> &nbsp;</td> <td align="right" width="14%"> 32,426</td> <td align="left" width="2%"> &nbsp;</td> <td align="left" width="1%"> &nbsp;</td> <td align="right" width="14%"> 14,405</td> <td align="left" width="2%"> &nbsp;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff"> Expected return on assets</td> <td align="left" bgcolor="#e6efff" width="1%"> &nbsp;</td> <td align="right" bgcolor="#e6efff" width="14%"> (13,250</td> <td align="left" bgcolor="#e6efff" width="2%"> )</td> <td align="left" bgcolor="#e6efff" width="1%"> &nbsp;</td> <td align="right" bgcolor="#e6efff" width="14%"> (3,853</td> <td align="left" bgcolor="#e6efff" width="2%"> )</td> <td align="left" bgcolor="#e6efff" width="1%"> &nbsp;</td> <td align="right" bgcolor="#e6efff" width="14%"> (26,501</td> <td align="left" bgcolor="#e6efff" width="2%"> )</td> <td align="left" bgcolor="#e6efff" width="1%"> &nbsp;</td> <td align="right" bgcolor="#e6efff" width="14%"> (11,558</td> <td align="left" bgcolor="#e6efff" width="2%"> )</td> </tr> <tr valign="top"> <td align="left"> Amortization of loss</td> <td align="left" width="1%"> &nbsp;</td> <td align="right" width="14%"> 17,437</td> <td align="left" width="2%"> &nbsp;</td> <td align="left" width="1%"> &nbsp;</td> <td align="right" width="14%"> 4,931</td> <td align="left" width="2%"> &nbsp;</td> <td align="left" width="1%"> &nbsp;</td> <td align="right" width="14%"> 34,874</td> <td align="left" width="2%"> &nbsp;</td> <td align="left" width="1%"> &nbsp;</td> <td align="right" width="14%"> 14,794</td> <td align="left" width="2%"> &nbsp;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid"> <b>Net periodic pension cost</b></td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" width="1%"> &nbsp;</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" width="14%"> <b>32,717 </b></td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" width="2%"> &nbsp;</td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" width="1%"> &nbsp;</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" width="14%"> <b>16,044 </b></td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" width="2%"> &nbsp;</td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" width="1%"> &nbsp;</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" width="14%"> <b>65,435 </b></td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" width="2%"> &nbsp;</td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" width="1%"> &nbsp;</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" width="14%"> <b>48,132 </b></td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" width="2%"> &nbsp;</td> </tr> </table> </div> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> During the nine month period ended September 30, 2014 and 2013, the Company made cash contributions of USD 121,407 and USD 91,343, respectively, to its defined benefit pension plan. 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valign="top"> <td align="left" style="BORDER-BOTTOM: #000000 1px solid"> <b>Pension expense</b> </td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" width="1%">&#160;</td> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="14%"> <b>Sept 30, 2014</b> </td> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="2%">&#160;</td> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="1%">&#160;</td> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="14%"> <b>Sept 30, 2013</b> </td> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="2%">&#160;</td> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="1%">&#160;</td> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="14%"> <b>Sept 30, 2014</b> </td> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="2%">&#160;</td> <td align="left" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="1%">&#160;</td> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="14%"> <b>Sept 30, 2013</b> </td> <td align="left" style="BORDER-BOTTOM: #000000 1px solid" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">Net service cost</td> <td align="left" bgcolor="#e6efff" width="1%">&#160;</td> <td align="right" bgcolor="#e6efff" width="14%"> 12,318 </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="14%"> 10,164 </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="14%"> 24,636 </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="14%"> 30,491 </td> <td align="left" bgcolor="#e6efff" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left">Interest cost</td> <td align="left" width="1%">&#160;</td> <td align="right" width="14%"> 16,213 </td> <td align="left" width="2%">&#160;</td> <td align="left" width="1%">&#160;</td> <td align="right" width="14%"> 4,802 </td> <td align="left" width="2%">&#160;</td> <td align="left" width="1%">&#160;</td> <td align="right" width="14%"> 32,426 </td> <td align="left" width="2%">&#160;</td> <td align="left" width="1%">&#160;</td> <td align="right" width="14%"> 14,405 </td> <td align="left" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff">Expected return on assets</td> <td align="left" bgcolor="#e6efff" width="1%">&#160;</td> <td align="right" bgcolor="#e6efff" width="14%"> (13,250 </td> <td align="left" bgcolor="#e6efff" width="2%">)</td> <td align="left" bgcolor="#e6efff" width="1%">&#160;</td> <td align="right" bgcolor="#e6efff" width="14%"> (3,853 </td> <td align="left" bgcolor="#e6efff" width="2%">)</td> <td align="left" bgcolor="#e6efff" width="1%">&#160;</td> <td align="right" bgcolor="#e6efff" width="14%"> (26,501 </td> <td align="left" bgcolor="#e6efff" width="2%">)</td> <td align="left" bgcolor="#e6efff" width="1%">&#160;</td> <td align="right" bgcolor="#e6efff" width="14%"> (11,558 </td> <td align="left" bgcolor="#e6efff" width="2%">)</td> </tr> <tr valign="top"> <td align="left">Amortization of loss</td> <td align="left" width="1%">&#160;</td> <td align="right" width="14%"> 17,437 </td> <td align="left" width="2%">&#160;</td> <td align="left" width="1%">&#160;</td> <td align="right" width="14%"> 4,931 </td> <td align="left" width="2%">&#160;</td> <td align="left" width="1%">&#160;</td> <td align="right" width="14%"> 34,874 </td> <td align="left" width="2%">&#160;</td> <td align="left" width="1%">&#160;</td> <td align="right" width="14%"> 14,794 </td> <td align="left" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid"> <b>Net periodic pension cost</b> </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" width="1%">&#160;</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" width="14%"> <b> 32,717 </b> </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" width="2%">&#160;</td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" width="1%">&#160;</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" width="14%"> <b> 16,044 </b> </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" width="2%">&#160;</td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" width="1%">&#160;</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" width="14%"> <b> 65,435 </b> </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" width="2%">&#160;</td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" width="1%">&#160;</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" width="14%"> <b> 48,132 </b> </td> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" width="2%">&#160;</td> </tr> </table> 12318 10164 24636 30491 16213 4802 32426 14405 -13250 -3853 -26501 -11558 17437 4931 34874 14794 32717 16044 65435 48132 121407 91343 <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <b>16.</b> <b>FAIR VALUE MEASUREMENT</b> </p> <p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;"> <b>16.1.</b> <b>Fair Value Measurements</b> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. Financial assets carried at fair value are classified in one of the three categories as follows.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Financial assets and liabilities carried at fair value as of September 30, 2014:</p> <div align="center"> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="70%"> <tr valign="top"> <td align="left" style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid"> <b>Financial assets 2014 (in USD)</b> </td> <td align="right" style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid" width="18%"> <b>Level 1</b> </td> <td align="right" style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid" width="18%"> <b>Level 2</b> </td> <td align="right" style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid" width="18%"> <b>Level 3</b> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid">Investment in associate (Petromanas)</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" width="18%"> 1,577,276 </td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" width="18%"> - </td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" width="18%"> - </td> </tr> <tr valign="top"> <td align="left" style="BORDER-BOTTOM: #000000 2px solid"> <b>Total</b> </td> <td align="right" style="BORDER-BOTTOM: #000000 2px solid" width="18%"> <b> 1,577,276 </b> </td> <td align="right" style="BORDER-BOTTOM: #000000 2px solid" width="18%"> <b> - </b> </td> <td align="right" style="BORDER-BOTTOM: #000000 2px solid" width="18%"> <b> - </b> </td> </tr> </table> </div> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">Financial assets and liabilities carried at fair value as of December 31, 2013:</p> <div align="center"> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="70%"> <tr valign="top"> <td align="left" style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid"> <b>Financial assets 2013 (in USD)</b> </td> <td align="right" style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid" width="18%"> <b>Level 1</b> </td> <td align="right" style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid" width="18%"> <b>Level 2</b> </td> <td align="right" style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid" width="18%"> <b>Level 3</b> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid">Investment in associate (Petromanas)</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" width="18%"> 7,478,799 </td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" width="18%"> - </td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" width="18%"> - </td> </tr> <tr valign="top"> <td align="left" style="BORDER-BOTTOM: #000000 2px solid"> <b>Total</b> </td> <td align="right" style="BORDER-BOTTOM: #000000 2px solid" width="18%"> 7,478,799 </td> <td align="right" style="BORDER-BOTTOM: #000000 2px solid" width="18%"> <b> - </b> </td> <td align="right" style="BORDER-BOTTOM: #000000 2px solid" width="18%"> <b> - </b> </td> </tr> </table> </div> <p align="justify" style="margin-left: 5%; font-family: times new roman,times,serif; font-size: 10pt;"> <b>16.2.</b> <b>Fair Value of Financial Instruments</b> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">In addition to the methods and assumptions the Company uses to record the fair value of financial instruments as discussed in the Fair Value Measurements section above, the Company used the following methods and assumptions to estimate the fair value of its financial instruments.</p> <ul style="TEXT-ALIGN: justify"> <li style="font-family: times new roman,times,serif; font-size: 10pt;"> <b>Cash and cash equivalents &#8211;</b> carrying amount approximated fair value. </li> <li style="font-family: times new roman,times,serif; font-size: 10pt;"> <b>Restricted cash &#8211;</b> carrying amount approximated fair value. </li> <li style="font-family: times new roman,times,serif; font-size: 10pt;"> <b>Accounts receivable &#8211;</b> carrying amount approximated fair value. </li> <li style="font-family: times new roman,times,serif; font-size: 10pt;"> <b>Transaction prepayment &#8211;</b> carrying amount approximated fair value. </li> <li style="font-family: times new roman,times,serif; font-size: 10pt;"> <b>Investment in Petromanas</b> &#8211;the fair value was calculated based on quoted market prices. </li> <li style="font-family: times new roman,times,serif; font-size: 10pt;"> <b>Accounts Payable</b> &#8211; carrying amount approximated fair value. </li> </ul> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">The fair value of the Company&#8217;s financial instruments is presented in the table below (in USD):</p> <div align="center"> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="90%"> <tr valign="top"> <td align="left" style="BORDER-RIGHT: #000000 1px solid; BORDER-TOP: #000000 2px solid">&#160;</td> <td align="center" colspan="2" nowrap="nowrap" style="BORDER-TOP: #000000 2px solid"> <b>Sept 30, 2014</b> </td> <td align="center" colspan="2" nowrap="nowrap" style="BORDER-TOP: #000000 2px solid"> <b>Dec 31, 2013</b> </td> <td align="center" colspan="2" nowrap="nowrap" style="BORDER-TOP: #000000 2px solid"> <b>Fair Value</b> </td> </tr> <tr valign="top"> <td align="left" style="BORDER-RIGHT: #000000 1px solid">&#160;</td> <td align="center" nowrap="nowrap" width="12%"> <b>Carrying</b> </td> <td align="center" nowrap="nowrap" width="12%"> <b>Fair Value</b> </td> <td align="center" nowrap="nowrap" width="12%"> <b>Carrying</b> </td> <td align="center" nowrap="nowrap" width="12%"> <b>Fair Value</b> </td> <td align="center" nowrap="nowrap" width="12%"> <b>Levels</b> </td> <td align="center" nowrap="nowrap" width="12%"> <b>Reference</b> </td> </tr> <tr valign="top"> <td align="left" style="BORDER-RIGHT: #000000 1px solid">&#160;</td> <td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="12%"> <b>Amount</b> </td> <td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="12%">&#160;</td> <td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="12%"> <b>Amount</b> </td> <td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="12%">&#160;</td> <td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="12%">&#160;</td> <td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="12%">&#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="BORDER-RIGHT: #000000 1px solid">Cash and cash equivalents</td> <td align="right" bgcolor="#e6efff" width="12%"> 5,054,630 </td> <td align="right" bgcolor="#e6efff" width="12%"> 5,054,630 </td> <td align="right" bgcolor="#e6efff" width="12%"> 3,063,947 </td> <td align="right" bgcolor="#e6efff" width="12%"> 3,063,947 </td> <td align="center" bgcolor="#e6efff" width="12%">1</td> <td align="right" bgcolor="#e6efff" width="12%">Note 4</td> </tr> <tr valign="top"> <td align="left" style="BORDER-RIGHT: #000000 1px solid">Restricted cash</td> <td align="right" width="12%"> 210,959 </td> <td align="right" width="12%"> 210,959 </td> <td align="right" width="12%"> 46,738 </td> <td align="right" width="12%"> 46,738 </td> <td align="center" width="12%">1</td> <td align="left" width="12%">&#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="BORDER-RIGHT: #000000 1px solid">Transaction prepayment</td> <td align="right" bgcolor="#e6efff" width="12%"> 10,000,000 </td> <td align="right" bgcolor="#e6efff" width="12%"> 10,000,000 </td> <td align="right" bgcolor="#e6efff" width="12%"> 10,111,656 </td> <td align="right" bgcolor="#e6efff" width="12%"> 10,111,656 </td> <td align="center" bgcolor="#e6efff" width="12%">1</td> <td align="right" bgcolor="#e6efff" width="12%">Note 5</td> </tr> <tr valign="top"> <td align="left" style="BORDER-RIGHT: #000000 1px solid">Accounts receivable</td> <td align="right" width="12%"> 17,723 </td> <td align="right" width="12%"> 17,723 </td> <td align="right" width="12%"> 32,508 </td> <td align="right" width="12%"> 32,508 </td> <td align="center" width="12%">1</td> <td align="left" width="12%">&#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="BORDER-RIGHT: #000000 1px solid">Investment in Petromanas</td> <td align="right" bgcolor="#e6efff" width="12%"> 1,577,276 </td> <td align="right" bgcolor="#e6efff" width="12%"> 1,577,276 </td> <td align="right" bgcolor="#e6efff" width="12%"> 7,478,799 </td> <td align="right" bgcolor="#e6efff" width="12%"> 7,478,799 </td> <td align="center" bgcolor="#e6efff" width="12%">1</td> <td align="right" bgcolor="#e6efff" width="12%">Note 11</td> </tr> <tr valign="top"> <td align="left" style="BORDER-RIGHT: #000000 1px solid; BORDER-BOTTOM: #000000 2px solid">Accounts Payable</td> <td align="right" style="BORDER-BOTTOM: #000000 2px solid" width="12%"> 819,141 </td> <td align="right" style="BORDER-BOTTOM: #000000 2px solid" width="12%"> 819,141 </td> <td align="right" style="BORDER-BOTTOM: #000000 2px solid" width="12%"> 447,736 </td> <td align="right" style="BORDER-BOTTOM: #000000 2px solid" width="12%"> 447,736 </td> <td align="center" style="BORDER-BOTTOM: #000000 2px solid" width="12%">1</td> <td align="left" style="BORDER-BOTTOM: #000000 2px solid" width="12%">&#160;</td> </tr> </table> </div> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="70%"> <tr valign="top"> <td align="left" style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid"> <b>Financial assets 2014 (in USD)</b> </td> <td align="right" style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid" width="18%"> <b>Level 1</b> </td> <td align="right" style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid" width="18%"> <b>Level 2</b> </td> <td align="right" style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid" width="18%"> <b>Level 3</b> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid">Investment in associate (Petromanas)</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" width="18%"> 1,577,276 </td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" width="18%"> - </td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" width="18%"> - </td> </tr> <tr valign="top"> <td align="left" style="BORDER-BOTTOM: #000000 2px solid"> <b>Total</b> </td> <td align="right" style="BORDER-BOTTOM: #000000 2px solid" width="18%"> <b> 1,577,276 </b> </td> <td align="right" style="BORDER-BOTTOM: #000000 2px solid" width="18%"> <b> - </b> </td> <td align="right" style="BORDER-BOTTOM: #000000 2px solid" width="18%"> <b> - </b> </td> </tr> </table> 1577276 0 0 1577276 0 0 <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="70%"> <tr valign="top"> <td align="left" style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid"> <b>Financial assets 2013 (in USD)</b> </td> <td align="right" style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid" width="18%"> <b>Level 1</b> </td> <td align="right" style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid" width="18%"> <b>Level 2</b> </td> <td align="right" style="BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid" width="18%"> <b>Level 3</b> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid">Investment in associate (Petromanas)</td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" width="18%"> 7,478,799 </td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" width="18%"> - </td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" width="18%"> - </td> </tr> <tr valign="top"> <td align="left" style="BORDER-BOTTOM: #000000 2px solid"> <b>Total</b> </td> <td align="right" style="BORDER-BOTTOM: #000000 2px solid" width="18%"> 7,478,799 </td> <td align="right" style="BORDER-BOTTOM: #000000 2px solid" width="18%"> <b> - </b> </td> <td align="right" style="BORDER-BOTTOM: #000000 2px solid" width="18%"> <b> - </b> </td> </tr> </table> 7478799 0 0 7478799 0 0 <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="90%"> <tr valign="top"> <td align="left" style="BORDER-RIGHT: #000000 1px solid; BORDER-TOP: #000000 2px solid">&#160;</td> <td align="center" colspan="2" nowrap="nowrap" style="BORDER-TOP: #000000 2px solid"> <b>Sept 30, 2014</b> </td> <td align="center" colspan="2" nowrap="nowrap" style="BORDER-TOP: #000000 2px solid"> <b>Dec 31, 2013</b> </td> <td align="center" colspan="2" nowrap="nowrap" style="BORDER-TOP: #000000 2px solid"> <b>Fair Value</b> </td> </tr> <tr valign="top"> <td align="left" style="BORDER-RIGHT: #000000 1px solid">&#160;</td> <td align="center" nowrap="nowrap" width="12%"> <b>Carrying</b> </td> <td align="center" nowrap="nowrap" width="12%"> <b>Fair Value</b> </td> <td align="center" nowrap="nowrap" width="12%"> <b>Carrying</b> </td> <td align="center" nowrap="nowrap" width="12%"> <b>Fair Value</b> </td> <td align="center" nowrap="nowrap" width="12%"> <b>Levels</b> </td> <td align="center" nowrap="nowrap" width="12%"> <b>Reference</b> </td> </tr> <tr valign="top"> <td align="left" style="BORDER-RIGHT: #000000 1px solid">&#160;</td> <td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="12%"> <b>Amount</b> </td> <td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="12%">&#160;</td> <td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="12%"> <b>Amount</b> </td> <td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="12%">&#160;</td> <td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="12%">&#160;</td> <td align="center" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="12%">&#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="BORDER-RIGHT: #000000 1px solid">Cash and cash equivalents</td> <td align="right" bgcolor="#e6efff" width="12%"> 5,054,630 </td> <td align="right" bgcolor="#e6efff" width="12%"> 5,054,630 </td> <td align="right" bgcolor="#e6efff" width="12%"> 3,063,947 </td> <td align="right" bgcolor="#e6efff" width="12%"> 3,063,947 </td> <td align="center" bgcolor="#e6efff" width="12%">1</td> <td align="right" bgcolor="#e6efff" width="12%">Note 4</td> </tr> <tr valign="top"> <td align="left" style="BORDER-RIGHT: #000000 1px solid">Restricted cash</td> <td align="right" width="12%"> 210,959 </td> <td align="right" width="12%"> 210,959 </td> <td align="right" width="12%"> 46,738 </td> <td align="right" width="12%"> 46,738 </td> <td align="center" width="12%">1</td> <td align="left" width="12%">&#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="BORDER-RIGHT: #000000 1px solid">Transaction prepayment</td> <td align="right" bgcolor="#e6efff" width="12%"> 10,000,000 </td> <td align="right" bgcolor="#e6efff" width="12%"> 10,000,000 </td> <td align="right" bgcolor="#e6efff" width="12%"> 10,111,656 </td> <td align="right" bgcolor="#e6efff" width="12%"> 10,111,656 </td> <td align="center" bgcolor="#e6efff" width="12%">1</td> <td align="right" bgcolor="#e6efff" width="12%">Note 5</td> </tr> <tr valign="top"> <td align="left" style="BORDER-RIGHT: #000000 1px solid">Accounts receivable</td> <td align="right" width="12%"> 17,723 </td> <td align="right" width="12%"> 17,723 </td> <td align="right" width="12%"> 32,508 </td> <td align="right" width="12%"> 32,508 </td> <td align="center" width="12%">1</td> <td align="left" width="12%">&#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="BORDER-RIGHT: #000000 1px solid">Investment in Petromanas</td> <td align="right" bgcolor="#e6efff" width="12%"> 1,577,276 </td> <td align="right" bgcolor="#e6efff" width="12%"> 1,577,276 </td> <td align="right" bgcolor="#e6efff" width="12%"> 7,478,799 </td> <td align="right" bgcolor="#e6efff" width="12%"> 7,478,799 </td> <td align="center" bgcolor="#e6efff" width="12%">1</td> <td align="right" bgcolor="#e6efff" width="12%">Note 11</td> </tr> <tr valign="top"> <td align="left" style="BORDER-RIGHT: #000000 1px solid; BORDER-BOTTOM: #000000 2px solid">Accounts Payable</td> <td align="right" style="BORDER-BOTTOM: #000000 2px solid" width="12%"> 819,141 </td> <td align="right" style="BORDER-BOTTOM: #000000 2px solid" width="12%"> 819,141 </td> <td align="right" style="BORDER-BOTTOM: #000000 2px solid" width="12%"> 447,736 </td> <td align="right" style="BORDER-BOTTOM: #000000 2px solid" width="12%"> 447,736 </td> <td align="center" style="BORDER-BOTTOM: #000000 2px solid" width="12%">1</td> <td align="left" style="BORDER-BOTTOM: #000000 2px solid" width="12%">&#160;</td> </tr> </table> 5054630 5054630 3063947 3063947 210959 210959 46738 46738 10000000 10000000 10111656 10111656 17723 17723 32508 32508 1577276 1577276 7478799 7478799 819141 819141 447736 447736 <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <b>17.</b> <b>EARNINGS PER SHARE</b></p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> Basic earnings per share result by dividing the Company&#8217;s net income (or net loss) by the weighted average number of shares outstanding for the contemplated period. Diluted earnings per share are calculated applying the treasury stock method. When there is a net income, dilutive effects of all stock-based compensation awards or participating financial instruments are considered. When the Company posts a loss, basic loss per share equals diluted loss per share.</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> The following table depicts how the denominator for the calculation of basic and diluted earnings per share was determined under the treasury stock method:</p> <div> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%"> <tr valign="top"> <td align="left" style="BORDER-RIGHT: #000000 1px solid; BORDER-TOP: #000000 2px solid"> &nbsp;</td> <td align="center" colspan="2" nowrap="nowrap" style="BORDER-TOP: #000000 2px solid"> <i>Three months ended</i></td> <td align="center" colspan="2" nowrap="nowrap" style="BORDER-TOP: #000000 2px solid"> <i>Nine months ended</i></td> </tr> <tr valign="top"> <td align="left" style="BORDER-RIGHT: #000000 1px solid"> &nbsp;</td> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="15%"> <b>Sept 30, 2014</b></td> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="15%"> <b>Sept 30, 2013</b></td> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="15%"> <b>Sept 30, 2014</b></td> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="15%"> <b>Sept 30, 2013</b></td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="BORDER-RIGHT: #000000 1px solid"> Company posted</td> <td align="right" bgcolor="#e6efff" valign="bottom" width="15%"> Net loss</td> <td align="right" bgcolor="#e6efff" valign="bottom" width="15%"> Net income</td> <td align="right" bgcolor="#e6efff" valign="bottom" width="15%"> Net loss</td> <td align="right" bgcolor="#e6efff" valign="bottom" width="15%"> Net loss</td> </tr> <tr valign="top"> <td align="left" style="BORDER-RIGHT: #000000 1px solid"> Basic weighted average shares outstanding</td> <td align="right" valign="bottom" width="15%"> 169,440,183</td> <td align="right" valign="bottom" width="15%"> 172,592,292</td> <td align="right" valign="bottom" width="15%"> 171,371,039</td> <td align="right" valign="bottom" width="15%"> 172,592,292</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="BORDER-RIGHT: #000000 1px solid"> Dilutive effect of common stock equivalents:</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="15%"> &nbsp;</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="15%"> &nbsp;</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="15%"> &nbsp;</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="15%"> &nbsp;</td> </tr> <tr valign="top"> <td align="left" style="BORDER-RIGHT: #000000 1px solid"> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; -&nbsp;&nbsp;&nbsp;&nbsp; stock options and non-vested stock under<br /> &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; employee compensation plans</td> <td align="right" valign="bottom" width="15%"> -</td> <td align="right" valign="bottom" width="15%"> -</td> <td align="right" valign="bottom" width="15%"> -</td> <td align="right" valign="bottom" width="15%"> -</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="BORDER-RIGHT: #000000 1px solid; BORDER-BOTTOM: #000000 2px solid"> <b>Diluted weighted average shares outstanding</b></td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="15%"> <b>169,440,183 </b></td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="15%"> <b>172,592,292 </b></td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="15%"> <b>171,371,039 </b></td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="15%"> <b>172,592,292 </b></td> </tr> </table> </div> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> The following table shows the total number of stock equivalents that was excluded from the computation of diluted earnings per share for the respective period because the effect would have been anti-dilutive:</p> <div align="center"> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="80%"> <tr valign="top"> <td align="center" rowspan="2" style="BORDER-RIGHT: #000000 2px solid; BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid" valign="middle"> <b>Stock equivalent</b></td> <td align="center" colspan="2" nowrap="nowrap" style="BORDER-TOP: #000000 2px solid"> <i>Three months ended</i></td> <td align="center" colspan="2" nowrap="nowrap" style="BORDER-TOP: #000000 2px solid"> <i>Nine months ended</i></td> </tr> <tr valign="top"> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> <b>Sept 30, 2014</b></td> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> <b>Sept 30, 2013</b></td> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> <b>Sept 30, 2014</b></td> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> <b>Sept 30, 2013</b></td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="BORDER-RIGHT: #000000 2px solid"> Options</td> <td align="right" bgcolor="#e6efff" width="19%"> 12,400,000</td> <td align="right" bgcolor="#e6efff" width="19%"> 13,100,000</td> <td align="right" bgcolor="#e6efff" width="19%"> 12,400,000</td> <td align="right" bgcolor="#e6efff" width="19%"> 14,100,000</td> </tr> <tr valign="top"> <td align="left" style="BORDER-RIGHT: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid"> Warrants</td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> -</td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> 44,450,500</td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> -</td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> 44,450,500</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="BORDER-RIGHT: #000000 2px solid; BORDER-BOTTOM: #000000 2px solid"> <b>Total</b></td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" width="19%"> <b>12,400,000 </b></td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" width="19%"> <b>57,550,000 </b></td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" width="19%"> <b>12,400,000 </b></td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" width="19%"> <b>58,550,500 </b></td> </tr> </table> </div> <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="100%"> <tr valign="top"> <td align="left" style="BORDER-RIGHT: #000000 1px solid; BORDER-TOP: #000000 2px solid">&#160;</td> <td align="center" colspan="2" nowrap="nowrap" style="BORDER-TOP: #000000 2px solid"> <i>Three months ended</i> </td> <td align="center" colspan="2" nowrap="nowrap" style="BORDER-TOP: #000000 2px solid"> <i>Nine months ended</i> </td> </tr> <tr valign="top"> <td align="left" style="BORDER-RIGHT: #000000 1px solid">&#160;</td> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="15%"> <b>Sept 30, 2014</b> </td> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="15%"> <b>Sept 30, 2013</b> </td> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="15%"> <b>Sept 30, 2014</b> </td> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="15%"> <b>Sept 30, 2013</b> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="BORDER-RIGHT: #000000 1px solid">Company posted</td> <td align="right" bgcolor="#e6efff" valign="bottom" width="15%">Net loss</td> <td align="right" bgcolor="#e6efff" valign="bottom" width="15%">Net income</td> <td align="right" bgcolor="#e6efff" valign="bottom" width="15%">Net loss</td> <td align="right" bgcolor="#e6efff" valign="bottom" width="15%">Net loss</td> </tr> <tr valign="top"> <td align="left" style="BORDER-RIGHT: #000000 1px solid">Basic weighted average shares outstanding</td> <td align="right" valign="bottom" width="15%"> 169,440,183 </td> <td align="right" valign="bottom" width="15%"> 172,592,292 </td> <td align="right" valign="bottom" width="15%"> 171,371,039 </td> <td align="right" valign="bottom" width="15%"> 172,592,292 </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="BORDER-RIGHT: #000000 1px solid">Dilutive effect of common stock equivalents:</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="15%">&#160;</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="15%">&#160;</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="15%">&#160;</td> <td align="left" bgcolor="#e6efff" valign="bottom" width="15%">&#160;</td> </tr> <tr valign="top"> <td align="left" style="BORDER-RIGHT: #000000 1px solid"> &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; -&#160;&#160;&#160;&#160; stock options and non-vested stock under <br/> &#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; employee compensation plans </td> <td align="right" valign="bottom" width="15%"> - </td> <td align="right" valign="bottom" width="15%"> - </td> <td align="right" valign="bottom" width="15%"> - </td> <td align="right" valign="bottom" width="15%"> - </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="BORDER-RIGHT: #000000 1px solid; BORDER-BOTTOM: #000000 2px solid"> <b>Diluted weighted average shares outstanding</b> </td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="15%"> <b> 169,440,183 </b> </td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="15%"> <b> 172,592,292 </b> </td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="15%"> <b> 171,371,039 </b> </td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" valign="bottom" width="15%"> <b> 172,592,292 </b> </td> </tr> </table> 169440183 172592292 171371039 172592292 0 0 0 0 169440183 172592292 171371039 172592292 <table border="0" cellpadding="0" cellspacing="0" style="border-color: black; font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="80%"> <tr valign="top"> <td align="center" rowspan="2" style="BORDER-RIGHT: #000000 2px solid; BORDER-TOP: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid" valign="middle"> <b>Stock equivalent</b> </td> <td align="center" colspan="2" nowrap="nowrap" style="BORDER-TOP: #000000 2px solid"> <i>Three months ended</i> </td> <td align="center" colspan="2" nowrap="nowrap" style="BORDER-TOP: #000000 2px solid"> <i>Nine months ended</i> </td> </tr> <tr valign="top"> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> <b>Sept 30, 2014</b> </td> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> <b>Sept 30, 2013</b> </td> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> <b>Sept 30, 2014</b> </td> <td align="right" nowrap="nowrap" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> <b>Sept 30, 2013</b> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="BORDER-RIGHT: #000000 2px solid">Options</td> <td align="right" bgcolor="#e6efff" width="19%"> 12,400,000 </td> <td align="right" bgcolor="#e6efff" width="19%"> 13,100,000 </td> <td align="right" bgcolor="#e6efff" width="19%"> 12,400,000 </td> <td align="right" bgcolor="#e6efff" width="19%"> 14,100,000 </td> </tr> <tr valign="top"> <td align="left" style="BORDER-RIGHT: #000000 2px solid; BORDER-BOTTOM: #000000 1px solid">Warrants</td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> - </td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> 44,450,500 </td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> - </td> <td align="right" style="BORDER-BOTTOM: #000000 1px solid" width="19%"> 44,450,500 </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="BORDER-RIGHT: #000000 2px solid; BORDER-BOTTOM: #000000 2px solid"> <b>Total</b> </td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" width="19%"> <b> 12,400,000 </b> </td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" width="19%"> <b> 57,550,000 </b> </td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" width="19%"> <b> 12,400,000 </b> </td> <td align="right" bgcolor="#e6efff" style="BORDER-BOTTOM: #000000 2px solid" width="19%"> <b> 58,550,500 </b> </td> </tr> </table> 12400000 13100000 12400000 14100000 0 44450500 0 44450500 12400000 57550000 12400000 58550500 <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <b>18.</b> <b>SUBSEQUENT EVENT(S)</b></p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> None.</p> <p style="font-family: times new roman,times,serif; font-size: 10pt;"> <font style="font-size: 10pt;"><font style="font-family: times new roman,times,serif;"><strong>2.&nbsp; GOING CONCERN</strong> </font> </font></p> <p style="font-family: times new roman,times,serif; font-size: 10pt;"> <font style="font-size: 10pt;"><font style="font-family: times new roman,times,serif;">The condensed consolidated financial statements have been prepared on the assumption that the Group will continue as a going concern. The Group has no operating income and therefore will remain dependent upon continued funding from its shareholders or other sources. Our cash balance as of September 30, 2009 was USD 5,265,589, of which USD 210,959 has been restricted leaving a balance of USD 5,054,630. Additionally, the Group has 8,000,000 shares in PMI valuing the investment at CDN $680,000 (USD 575,583). </font> </font></p> <p style="font-family: times new roman,times,serif; font-size: 10pt;"> <font style="font-size: 10pt;"><font style="font-family: times new roman,times,serif;">These matters raise substantial doubt about the Group&#8217;s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.</font> </font></p> <p style="font-family: times new roman,times,serif; font-size: 10pt;"> <font style="font-size: 10pt;"><font style="font-family: times new roman,times,serif;">Based on our expected monthly burn rate of USD 581,167 on basic operational activities and including the USD 2,000,000 payment to Kavsar, we estimate that we have sufficient working capital to fund operations for ten months. </font> </font></p> <p style="font-family: times new roman,times,serif; font-size: 10pt;"> <font style="font-size: 10pt;"><font style="font-family: times new roman,times,serif;">In order to continue to fund operations for the next twelve months and implement the geological work program for our projects in Central Asia as well as to finance continuing operations, the Group will require further funds. We expect these funds will be raised through additional equity and/or debt financing through the expected Stichting VB Vagobel transaction disclosed to the market on September 9, 2014. If we are not able to raise the required funds, we would consider farming-out projects in order to reduce our financial commitments. If the Company is unable to obtain such funding, or complete farming-out projects, the Company will not be able to continue its business. Any additional equity financing may be dilutive to shareholders, and debt financing, if available, will increase expenses and may involve restrictive covenants. The Company will be required to raise additional capital on terms which are uncertain, especially under the current capital market conditions. Under these circumstances, if the Company is unable to obtain capital or is required to raise it on undesirable terms, it may have a material adverse effect on the Company's financial condition.</font> </font></p> 5265589 210959 5054630 8000000 680000 575583 581167 2000000 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