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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;">In terms of the oil and gas industry lifecycle, the Company considers itself to be an exploration stage company. Since it has not realized any revenues from its planned principal operations, the Company presents its financial statements in conformity with US GAAP that apply in establishing operating enterprises, i.e. development stage companies. As an exploration stage enterprise, the Company discloses the deficit accumulated during the exploration stage and the cumulative statements of operations and cash flows from inception to the current balance sheet date.</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 USD3.20. </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). 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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 March 31, 2014 and December 31, 2013, results of operations for the three -month period ended March 31, 2014 and 2013 and for the period from inception,</p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">May 25, 2004, to March 31, 2014, cash flows for the three-month period ended March 31, 2014 and 2013 and for the period from inception, May 25, 2004, to March 31, 2014 and statement of shareholders&#8217; equity (deficit) for the period from inception, May 25, 2004, to March 31, 2014, as applicable, have been made. 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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. 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DWM Petroleum will be required to pay the remaining balance (USD3,888,344) of the purchase price to the seller on the closing date, no later than the seventh Business Day after the closing conditions are satisfied. </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> If the transaction is not completed because the seller does not satisfy the conditions to the next advance, the seller must refund to DWM Petroleum the USD10,111,656 deposit, subject to payment by DWM Petroleum of a termination fee in the amount of USD2,000,000 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;"> If DWM Petroleum is required to make the next advance but fails to do so, the seller will be required to refund to DWM Petroleum the USD10,111,656 deposit previously paid by delivering to DWM Petroleum 65% shares of the company that is the majority owner of the producing oilfield assets being purchased. In that event, DWM </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> Petroleum will also be required to pay to the seller the sum of USD2,000,000, which is intended to compensate the seller for its expenses. </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 ("the closing conditions"). 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 USD7,000,000 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 that the target company is debt free as well as government approvals. After the closing of the transaction pursuant to the SPA, DWM has agreed to compensate Seller for its expenses capped at USD2,000,000. </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. 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At the beginning of the year, the Company had no recorded unproved properties in Mongolia. During 2012, the Company capitalized USD2,998,636 of which USD2,225,781 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 USD772,855 as of December 31, 2013. This balance relates to specific costs for wells still to be drilled including capitalized costs recorded as accruals for USD312,000. These costs have not been paid due to the current 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). 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border-bottom: 1px solid rgb(0, 0, 0);">Forfeit or expired</td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%">&#160;</td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> - </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%">&#160;</td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%">&#160;</td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> - </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="border-right: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);"> <b>Outstanding at March 31, 2014</b> </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%">&#160;</td> <td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> 44,450,500 </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%">&#160;</td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%">&#160;</td> <td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="12%"> USD0.70 </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%">&#160;</td> </tr> </table> 44450500 0.70 0 0 0 0 0 0 44450500 0.70 <p style="font-family: times new roman,times,serif; font-size: 10pt;"> <b>10.</b> <b>INVESTMENT IN PETROMANAS</b> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> On February 12, 2010, the Company&#8217;s wholly-owned subsidiary DWM Petroleum A.G., signed a Share Purchase Agreement and completed the sale of all of the issued and outstanding shares of Manas Adriatic to Petromanas Energy Inc. (&#8220;Petromanas&#8221;). After closing, the Share Purchase Agreement was amended by an amending agreement dated May 25, 2010. As a result of this transaction, the Company acquired 200,000,000 common shares of Petromanas. 100,000,000 of these were issued on March 3, 2010 pursuant to the original terms of the Share Purchase Agreement; the additional 100,000,000 were received on May 26, 2010, pursuant to the amending agreement. The shares were subject to a hold period expiring September 24, 2011 and bore a legend to that effect. </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">In addition, all of these shares were deposited into an escrow pursuant to the requirements of the TSX Venture Exchange which provided for the release of the shares from escrow according to the following schedule:</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="80%"> <tr valign="top"> <td align="left" style="border-right: 1px solid rgb(0, 0, 0); border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);"> <b>Release dates</b> </td> <td align="left" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="1%">&#160;</td> <td align="right" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="47%"> <b>Number of shares released from escrow</b> </td> <td align="left" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="border-right: 1px solid rgb(0, 0, 0);">June 24, 2010</td> <td align="left" bgcolor="#e6efff" width="1%">&#160;</td> <td align="right" bgcolor="#e6efff" width="47%"> 10,000,000 </td> <td align="left" bgcolor="#e6efff" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left" style="border-right: 1px solid rgb(0, 0, 0);">August 24, 2010</td> <td align="left" width="1%">&#160;</td> <td align="right" width="47%"> 15,000,000 </td> <td align="left" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="border-right: 1px solid rgb(0, 0, 0);">February 24, 2011</td> <td align="left" bgcolor="#e6efff" width="1%">&#160;</td> <td align="right" bgcolor="#e6efff" width="47%"> 15,000,000 </td> <td align="left" bgcolor="#e6efff" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left" style="border-right: 1px solid rgb(0, 0, 0);">June 24, 2011</td> <td align="left" width="1%">&#160;</td> <td align="right" width="47%"> 40,000,000 </td> <td align="left" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="border-right: 1px solid rgb(0, 0, 0);">August 24, 2011</td> <td align="left" bgcolor="#e6efff" width="1%">&#160;</td> <td align="right" bgcolor="#e6efff" width="47%"> 30,000,000 </td> <td align="left" bgcolor="#e6efff" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left" style="border-right: 1px solid rgb(0, 0, 0);">February 24, 2012</td> <td align="left" width="1%">&#160;</td> <td align="right" width="47%"> 30,000,000 </td> <td align="left" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="border-right: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);">August 24, 2012</td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%">&#160;</td> <td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="47%"> 30,000,000 </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="border-right: 1px solid rgb(0, 0, 0); border-top: 1px solid rgb(0, 0, 0);">February 24, 2013</td> <td align="left" bgcolor="#e6efff" style="border-top: 1px solid rgb(0, 0, 0);" width="1%">&#160;</td> <td align="right" bgcolor="#e6efff" style="border-top: 1px solid rgb(0, 0, 0);" width="47%"> 30,000,000 </td> <td align="left" bgcolor="#e6efff" style="border-top: 1px solid rgb(0, 0, 0);" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left" style="border-right: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);"> <b>Total</b> </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%">&#160;</td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="47%"> <b> 200,000,000 </b> </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%">&#160;</td> </tr> </table> </div> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> On July 6, 2012, DWM Petroleum sold 10,000,000 of these shares to one unrelated party at a price of CAD0.17 per common share for gross proceeds of CAD1,700,000 (USD1,670,598). On August 17, 2012, pursuant to agreements dated August 13, 2012, DWM Petroleum sold an additional 90,000,000 of these Petromanas shares to twelve purchasers at a price of CAD0.115 per common share for gross proceeds of CAD10,350,000 (USD10,445,050) together with the right to receive 22.5% of the Performance Shares if and when any Performance Shares are issued by Petromanas. As of December 31, 2012 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. </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> During the Period of October 18, 2013 to October 29, 2013, DWM Petroleum sold 1,000,000 shares at a price of CAD0.12 per common share for gross proceeds of CAD120,000 (USD114,900) on the open market. On October 25, 2013, DWM Petroleum sold an additional 3,000,000 shares at a price of CAD0.10 per common shares for gross proceeds of CAD300,000 (USD288,510) on the open market. </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> On November 8, 2013, DWM Petroleum sold an additional 46,000,000 shares at a volume weighted price of CAD0.12 per common shares for gross proceeds of CAD5,595,710 (USD5,366,286) on the open market. </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 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. 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;">Since February 25, 2013 the fair value of the investment in Petromanas has been reclassified to Level 1 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 CAD0.23 per common share for gross proceeds of CAD337,500 (USD300,602). On March 5, 2014, DWM Petroleum sold an additional 40,000,000 shares at a price of CAD0.20 per common share for gross proceeds of CAD8,000,000 (USD7,214,632) on the open market. On March 06, 2014 DWM Petroleum sold 500,000 shares at a price of CAD0.22 for gross proceeds of CAD110,000 (USD98,751). </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> As of March 31, 2014 DWM Petroleum holds 8,000,000 million shares in Petromanas, representing 1.2% of the outstanding shares. 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style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%">&#160;</td> <td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="47%"> 30,000,000 </td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="border-right: 1px solid rgb(0, 0, 0); border-top: 1px solid rgb(0, 0, 0);">February 24, 2013</td> <td align="left" bgcolor="#e6efff" style="border-top: 1px solid rgb(0, 0, 0);" width="1%">&#160;</td> <td align="right" bgcolor="#e6efff" style="border-top: 1px solid rgb(0, 0, 0);" width="47%"> 30,000,000 </td> <td align="left" bgcolor="#e6efff" style="border-top: 1px solid rgb(0, 0, 0);" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left" style="border-right: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);"> <b>Total</b> </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="1%">&#160;</td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="47%"> <b> 200,000,000 </b> </td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="2%">&#160;</td> </tr> </table> 10000000 15000000 15000000 40000000 30000000 30000000 30000000 30000000 200000000 200000000 100000000 100000000 10000000 0.17 1700000 1670598 90000000 0.115 10350000 10445050 0.225 1000000 0.12 120000 114900 3000000 0.10 300000 288510 46000000 0.12 5595710 5366286 50000000 38750000 50000000 0.072 1500000 0.23 337500 300602 40000000 0.20 8000000 7214632 500000 0.22 110000 98751 8000000000000 0.012 38750000 0.205 0.185 <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;"> <b>11.</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"> <b>Company</b> </td> <td align="left" width="30%"> <b>Country</b> </td> <td align="right" width="20%"> <b>Equity share</b> </td> <td align="right" width="20%"> <b>Equity share</b> </td> </tr> <tr valign="top"> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);">&#160;</td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="30%">&#160;</td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="20%"> <b>Mar 31, 2014</b> </td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="20%"> <b>Dec 31, 2013</b> </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);">DWM Petroleum AG, Baar (1)</td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="30%">Switzerland</td> <td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="20%"> 100% </td> <td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="20%"> 100% </td> </tr> <tr valign="top"> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);">DWM Energy AG Baar (2)</td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="30%">Switzerland</td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="20%"> 100% </td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="20%"> 100% </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);">Petromanas Energy Inc., Calgary (3)</td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="30%">Canada</td> <td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="20%"> 1.2% </td> <td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="20%"> 7.2% </td> </tr> <tr valign="top"> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);">CJSC South Petroleum Company, Jalalabat (4)</td> <td align="left" style="border-bottom: 1px solid rgb(0, 0, 0);" width="30%">Kyrgyz Republic</td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="20%"> 25% </td> <td align="right" style="border-bottom: 1px solid rgb(0, 0, 0);" width="20%"> 25% </td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);">CJSC Somon Oil Company, Dushanbe (5)</td> <td align="left" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="30%">Republic of Tajikistan</td> <td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="20%"> 90% </td> <td align="right" bgcolor="#e6efff" style="border-bottom: 1px solid rgb(0, 0, 0);" width="20%"> 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roman,times,serif; font-size: 10pt;"> <b>12.</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 had been asked many times to join the group by contributing its prorated share of capital, it failed to do so. Despite this, Energy Focus claims that it is entitled to participate in the consortium at any future time, not just under certain conditions. The Company and IPR believe that Energy Focus no longer has any right to join the bidding group because the conditions specified in the side letter did not occur and can no longer occur.</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 has failed to properly serve the parties. The trial court in Santiago dismissed the case, but the verdict was open to appeal. Energy Focus took an Appeal, which was dismissed by the Chilean courts. Energy Focus has now taken a second Appeal. The Company&#8217;s legal advisors are of the opinion that Energy Focus will not succeed in the second Appeal. The Company&#8217;s management believes that the 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;">At March 31, 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;">Management believes that the members of the Group are in substantial compliance with the tax laws affecting their respective operations in the 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>13.</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. 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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; 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font-size: 10pt; border-collapse: collapse; font-family: times new roman,times,serif;" width="80%"> <tr valign="top"> <td align="left" style="border-right: 1px solid rgb(0, 0, 0); border-top: 1px solid rgb(0, 0, 0);">&#160;</td> <td align="left" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="1%">&#160;</td> <td align="center" colspan="4" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="27%"> <i>Three-month period ended</i> </td> <td align="left" style="border-top: 1px solid rgb(0, 0, 0); border-bottom: 1px solid rgb(0, 0, 0);" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left" style="border-right: 1px solid rgb(0, 0, 0);">&#160;</td> <td align="left" width="1%">&#160;</td> <td align="right" width="12%"> <b>Mar 31, 2014</b> </td> <td align="left" width="2%">&#160;</td> <td align="left" width="1%">&#160;</td> <td align="right" width="12%"> <b>Mar 31, 2013</b> </td> <td align="left" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="border-right: 1px solid rgb(0, 0, 0);">Company posted</td> <td align="left" bgcolor="#e6efff" width="1%">&#160;</td> <td align="right" bgcolor="#e6efff" width="12%">Net income</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="12%">Net loss</td> <td align="left" bgcolor="#e6efff" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left" style="border-right: 1px solid rgb(0, 0, 0);">Basic weighted average shares outstanding</td> <td align="left" width="1%">&#160;</td> <td align="right" width="12%"> 172,592,292 </td> <td align="left" width="2%">&#160;</td> <td align="left" width="1%">&#160;</td> <td align="right" width="12%"> 172,592,292 </td> <td align="left" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left" bgcolor="#e6efff" style="border-right: 1px solid rgb(0, 0, 0);">Dilutive effect of common stock equivalents:</td> <td align="left" bgcolor="#e6efff" width="1%">&#160;</td> <td align="right" bgcolor="#e6efff" width="12%"> - </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="12%"> - </td> <td align="left" bgcolor="#e6efff" width="2%">&#160;</td> </tr> <tr valign="top"> <td align="left" style="border-right: 1px solid rgb(0, 0, 0);">&#160;&#160;&#160;&#160; 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font-size: 10pt;"> <b>16.</b> <b>SUBSEQUENT EVENT(S)</b> </p> <p align="justify" style="font-family: times new roman,times,serif; font-size: 10pt;">None</p> 七次郎在线观看,久青草国产在线视频,,一夜七次郎免费线路