UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________________________
Form 10-Q
| x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended March 31, 2015
| o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ______________ to _______________
Commission file number 000-30563
DELTA INTERNATIONAL OIL & GAS INC.
(Exact Name of Registrant as Specified in Its Charter)
| Delaware | 14-1818394 | |
| (State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) |
| 8655 East Via de Ventura, Suite F127, Scottsdale, AZ | 85258 | |
| (Address of principal executive offices) | (Zip Code) |
(480) 483-0420
(Registrant's Telephone Number, Including Area Code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes o No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No x
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. (Check One):
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| Non-accelerated filer | ☐ | Smaller reporting company | ☒ |
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x
The number of shares outstanding of the issuer's common stock, $0.0001 par value per share, was 32,338,826 as of May 15, 2015.
DELTA INTERNATIONAL OIL & GAS INC.
INDEX
| Page | |
| Part I. Financial Information | 1 |
| Item 1. Financial Statements. | 1 |
| Consolidated Balance Sheets as of March 31, 2015 (unaudited) and December 31, 2014 | 2 |
| Consolidated Statements of Operations for the three months ended March 31, 2015 and 2014 (unaudited) | 3 |
| Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2015 and 2014 (unaudited) | 4 |
| Consolidated Statements of Cash Flows for the three months ended March 31, 2015 and 2014 (unaudited) | 5 |
| Notes to Unaudited Consolidated Financial Statements | 6 |
| Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. | 7 |
| Item 3. Quantitative and Qualitative Disclosures About Market Risk. | 10 |
| Item 4. Controls and Procedures. | 10 |
| Part II. Other Information | 11 |
| Item 6. Exhibits. | 11 |
| Signatures | 12 |
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Certain information and footnote disclosures required under accounting principles generally accepted in the United States of America have been condensed or omitted from the following consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission. It is suggested that the following consolidated financial statements be read in conjunction with the year-end consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.
The results of operations for the three months ended March 31, 2015 and 2014 are not necessarily indicative of the results for the entire fiscal year or for any other period.
| 1 |
| DELTA INTERNATIONAL OIL & GAS INC. AND SUBSIDIARIES | |||||
| CONSOLIDATED BALANCE SHEETS | |||||
| (Unaudited) |
| March 31, 2015 | December 31, 2014 | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash | $ | 1,060,212 | $ | 1,206,177 | ||||
| Receivable from sale of bidding rights and oil and gas properties (net of allowance for doubtful accounts of $3,200,069 as of March 31, 2015 and December 31, 2014, respectively) | - | - | ||||||
| Total current assets | 1,060,212 | 1,206,177 | ||||||
| Investment in mineral properties | 53,255 | 55,023 | ||||||
| Investments in unproved oil and gas properties | 325,563 | 336,383 | ||||||
| Other assets | 6,368 | 6,368 | ||||||
| TOTAL ASSETS | $ | 1,445,398 | $ | 1,603,951 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | 16,173 | $ | 13,679 | ||||
| Accrued expenses | 55,505 | 57,614 | ||||||
| Note payable | 15,000 | 15,000 | ||||||
| Liabilities for uncertain tax positions | 26,663 | 27,549 | ||||||
| Total current liabilities | 113,341 | 113,842 | ||||||
| Total liabilities | 113,341 | 113,842 | ||||||
| Commitments and Contingencies | ||||||||
| Stockholders' Equity: | ||||||||
| Preferred stock $0.0001 par value-authorized 10,000,000 shares; no shares issued and outstanding at December 31, 2014 and 2013, respectively | - | - | ||||||
| Common stock $0.0001 par value - authorized 250,000,000 shares; 32,338,826 shares issued and outstanding at March 31, 2015 and December 31, 2014, respectively | 3,233 | 3,233 | ||||||
| Additional paid-in capital | 7,143,356 | 7,118,982 | ||||||
| Accumulated deficit | (5,241,169 | ) | (5,100,542 | ) | ||||
| Accumulated other comprehensive loss | (573,363 | ) | (531,564 | ) | ||||
| Total stockholders' equity | 1,332,057 | 1,490,109 | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 1,445,398 | $ | 1,603,951 | ||||
The accompanying notes are an integral part of the unaudited consolidated financial statements.
| 2 |
DELTA INTERNATIONAL OIL & GAS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| Three months ending March 31, | ||||||||
| 2015 | 2014 | |||||||
| Costs and Expenses: | ||||||||
| General and administrative | $ | 169,730 | $ | 241,835 | ||||
| 169,730 | 241,835 | |||||||
| Loss from operations | (169,730 | ) | (241,835 | ) | ||||
| Other Income (Expense): | ||||||||
| Foreign exchange gain (loss) | 29,103 | (229,089 | ) | |||||
| Interest expense | - | (3,238 | ) | |||||
| Other Income (expense) | 29,103 | (232,327 | ) | |||||
| Income (loss) before income taxes | (140,627 | ) | (474,162 | ) | ||||
| Provision (benefit) for income taxes | - | - | ||||||
| Net Income (loss) | $ | (140,627 | ) | $ | (474,162 | ) | ||
| Net income (loss) per common share: | ||||||||
| Basic | $ | (0.00 | ) | $ | (0.01 | ) | ||
| Diluted | $ | (0.00 | ) | $ | (0.01 | ) | ||
| Weighted average common shares - Basic | 32,338,826 | 32,338,826 | ||||||
| Weighted average common shares - Diluted | 32,338,826 | 32,338,826 | ||||||
The accompanying notes are an integral part of the unaudited consolidated financial statements.
| 3 |
DELTA INTERNATIONAL OIL & GAS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
| Three months ending March 31, | ||||||||
| 2015 | 2014 | |||||||
| Net earnings (loss) | $ | (140,627 | ) | $ | (474,162 | ) | ||
| Other comprehensive income (loss): | ||||||||
| Foreign currency translation adjustment | (41,799 | ) | (92,307 | ) | ||||
| Net change in other comprehensive income (loss) | (41,799 | ) | (92,307 | ) | ||||
| Comprehensive income (loss) | $ | (182,426 | ) | $ | (566,469 | ) | ||
The accompanying notes are an integral part of the unaudited consolidated financial statements.
| 4 |
| DELTA INTERNATIONAL OIL & GAS INC. AND SUBSIDIARIES | |||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS |
(Unaudited)
| Three months ending March 31, | ||||||||
| 2015 | 2014 | |||||||
| Cash flows from Operating Activities: | ||||||||
| Net income (loss) | $ | (140,627 | ) | $ | (474,162 | ) | ||
| Warrants issued for services | 24,375 | 24,375 | ||||||
| Adjustments to reconcile net earnings (loss) to net cash used in operating activities: | ||||||||
| Changes in operating assets and liabilities | 384 | 9,223 | ||||||
| Net cash used in operating activities | (115,868 | ) | (440,564 | ) | ||||
| Effect of Exchange Rates on Cash | (30,097 | ) | 266,478 | |||||
| Net increase (decrease) in cash | (145,965 | ) | (174,086 | ) | ||||
| Cash - Beginning of period | 1,206,177 | 1,833,407 | ||||||
| Cash - End of period | $ | 1,060,212 | $ | 1,659,321 | ||||
| Changes in operating assets and liabilities consists of: | ||||||||
| Increase (decrease) in accounts payable and accrued expenses | $ | 384 | $ | 9,223 | ||||
| Increase (decrease) in liabilities for uncertain tax positions | - | - | ||||||
| Changes in assets and liabilities | $ | 384 | $ | 9,223 | ||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid for interest | $ | - | $ | - | ||||
| Cash paid for income taxes | $ | - | $ | - | ||||
The accompanying notes are an integral part of the unaudited consolidated financial statements.
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DELTA INTERNATIONAL OIL & GAS INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying unaudited interim consolidated financial statements of Delta International Oil & Gas Inc. (“Delta” or the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for the most recent fiscal year end December 31, 2014 as reported on Form 10-K, have been omitted.
2. RECEIVABLE FROM SALE OF BIDDING RIGHTS AND OIL AND GAS PROPERTIES
On March 30, 2012 the Company entered into the Cooperation Agreement with PPL. Under the Cooperation Agreement, PPL agreed to pay us $7,000,000 for certain exploration and exploitation rights to oil and gas deposits and certain bidding rights held by Delta on the following areas: Valle de Lerma in the province of Salta; San Salvador de Jujuy; Libertador General San Martin in the province of Jujuy; and Selva Maria in the province of Formosa. Pursuant to a separate Agreement dated March 31, 2012, the Company agreed with PPL to assign and transfer 50% of SAHF's current ownership of the Tartagal and Morillo (i.e., a 9% interest in the concession) to PPL for a purchase price of $500,000. PPL has also agreed in an Undertaking to provide funds to the operating entities of Valle de Lerma (the San Salvador, Libertador, and Selva Maria concessions were awarded to another party, whose bid exceeded that of the Company for these concessions), in the aggregate amount of up to $10,000,000.
As of March 31, 2015, the Company had received deposits in the amount of $4,299,891 from PPL on account of remainder of the proceeds was recorded as a $3,200,109 receivable from the sale of bidding rights and oil and gas properties. As of December 31, 2014, the Company provided a reserve for doubtful accounts of $3,200,069. PPL is not current with the payment schedule set forth in the Cooperation Agreement, and the Company is in discussions with PPL to ensure that all payments provided for under the Cooperation Agreement are made. Because of PPL’s payment default, the Company has not transferred the Valle de Lerma, Tartagal, and Morillo interests.
As of May 13, 2015, the Company was working on an understanding of sale and settlement terms with PPL and a third party. The settlement terms would apply to all previous agreements signed with PPL.
3. RELATED PARTY TRANSACTIONS
Santiago Peralta, a major shareholder of the Company, was appointed on January 7, 2015 as the Interim CEO, President, Officer, and Director of Delta International Oil and Gas, Inc. The term of the agreement between the Company and Mr. Peralta is one year at an annual salary of US$80,000, plus a quarterly bonus of US$5,000.
Upon Mr. Malcolm W. Sherman’s retirement as of December 31, 2014, the Company chose to honor Mr. Sherman’s contract that extended until March 20, 2015 for his hard work and dedication. The Company did a one-time payout of US$50,357 on January 9, 2015.
4. SUBSEQUENT EVENTS
On April 30, 2015, the two-year term of Phillips W. Smith as a director terminated under the agreement pursuant to which Mr. Smith was retained as a director of the Company.
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| ITEM 2. | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
The following discussion of our consolidated financial condition and results of operations should be read in conjunction with the consolidated financial statements and notes thereto and the other financial information included elsewhere in this report.
Certain statements contained in this report, including, without limitation, statements containing the words "believes," "anticipates," "expects" and words of similar import, constitute "forward looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including our ability to create, sustain, manage or forecast our growth; our ability to attract and retain key personnel; changes in our business strategy or development plans; competition; business disruptions; adverse publicity; and international, national and local general economic and market conditions.
GENERAL
Delta International Oil & Gas Inc. (“Delta” or “the Company”) was incorporated in Delaware on November 17, 1999. Our name was changed from Delta Mutual Inc. to our present name on October 29, 2013, by the merger with a wholly-owned Delaware subsidiary, where the sole change resulting from the merger was the change of the Company’s name to Delta International Oil & Gas Inc. In 2003, we established business operations focused on providing environmental and construction technologies and services. Our operations in the Far East (Indonesia) and our construction operations in Puerto Rico were discontinued in 2008.
Effective March 4, 2008, we acquired 100% of the issued and outstanding membership interests in the parent of South American Hedge Fund LLC, a Delaware limited liability company (sometimes herein referred to as “SAHF”). For accounting purposes, the transaction was treated as a recapitalization of the Company, as of March 4, 2008, with the parent of SAHF as the acquirer. SAHF maintains a branch office in Argentina, where it has made investments in oil and gas exploration and development activities.
Overview
We are an independent oil and gas company, with the SIC Code classification 1311 (oil and gas production) for SEC filing purposes, engaged in oil and gas acquisition and exploration activities in Argentina. Our operating policies have been to secure oil and gas properties and concessions which are either producing economical quantities of oil and gas or which demonstrate favorable characteristics for well “workovers” with a history of excellent production.
The Company's business is subject to the risks of its oil and gas investments in South America. Our investments at this time are in the oil and gas sector in Argentina, where recently proposed legislation would change the respective roles of the federal and provincial governments in the award of and participation in oil and gas concessions. If enacted these changes could necessitate renegotiation of certain of the concessions in which we have interests, and affect the value of our investments. As of the close of 2014, Argentina was in technical default on its external debt and, although negotiations to remedy this default are in process, it is likely that this situation, however resolved, will lead the government to impose further restrictions on exports of capital from Argentina.
The likelihood of success of the Company must be considered in light of the expenses, difficulties, delays and unanticipated challenges encountered in connection with the operations of oil and gas concessions in Argentina.
Our Oil and Gas Investments
As of March 31, 2015, the Company, through SAHF, retained 18% of the total concession in the carryover mode ("no cost obligations to SAHF") in the Tartagal and Morillo oil and gas concessions located in Northern Argentina. We do not operate the Tartagal and Morillo concession, and have a minority position in the joint venture. 9% of Tartagal and Morillo had been sold to PPL in March 2012, but due to payment defaults, the 9% were not transferred.
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We hold a 60% interest in the Valle de Lerma concession in Northern Argentina, where the joint venture partners are Grasta SA, PetroNEXUS and REMSA. 29.4% of Valle de Lerma had been sold to PPL via an agreement dating March 2012, but due to payment defaults, the Company has not transferred the 29.4% interest. The exploration terms are four years for the first period, three years for the second and two years for the last period. Currently our ability to reopen the existing well site is constrained by law, since the location of the well was within the city limits of Salta. Requests made for government approval to override the existing restrictions of the current policy have been rejected. The Company is looking to sell its full stake in Valle de Lerma. Currently, the Company is finalizing the terms of the sale; however, there is uncertainty regarding the time frame given the past experience with selling properties.
The Company no longer intends to pursue any of its own operating activities on its oil and gas properties that are not in a carry-over mode.
Lithium and Coltan Mining Properties
On March 1, 2010, SAHF purchased control of 51% of the Guayatayoc project via a partnership agreement with Oscar Chedrese and Servicios Mineros SA. The project holds the concession for a period of 20 years for the mineral rights to 143,000 hectares with 29 mines located in the Northwest part of Argentina, south of the border with Bolivia, with high lithium and borates brines concentration. We have performed sampling in the property to determine the value of the property, but the results have been inconclusive. We are seeking a purchaser for our concession interest in this property. Delta is not expecting a sale of the lithium property within the next year due to 1) the current price of lithium, 2) lithium’s abundance in the surrounding area, and 3) Delta’s primary focus on other projects.
RESULTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2015 COMPARED TO THE THREE MONTHS ENDED MARCH 31, 2014
During the three months ended March 31, 2015, we incurred a net loss of approximately $140,627, as compared to net loss of approximately $474,162 for the three months ended March 31, 2014. The decrease in the net loss for the three months ended March 31, 2015 compared to the three months ended March 31, 2014 is primarily due to higher general and administrative expense of approximately $242,000 in 2014, compared to approximately $170,000 in 2015, and a foreign exchange loss of approximately $229,000 in 2014 versus a foreign exchange gain of approximately $29,000 in 2015. Our loss from operations decreased from approximately $242,000 in 2014 to approximately $170,000 in 2015, due to lower general and administrative expense in 2015.
LIQUIDITY AND CAPITAL REQUIREMENTS
At March 31, 2015, we had a working capital surplus of approximately $950,000 compared with a working capital surplus of approximately $1.09 million at December 31, 2014.
At March 31, 2015, we had total assets of approximately $1.45 million compared to total assets of approximately $1.60 million at December 31, 2014. Net cash used in operating activities in the three months ended March 31, 2015 was $115,868, as compared with net cash used in operating activities of $440,564 in 2014; net cash generated by investing activities was $-0- in 2014 and 2015; and net cash generated from financing activities was $-0- in 2014 and 2015.
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Effective March 30, 2012, we entered into an Asset Purchase and Cooperation Agreement (the “Cooperation Agreement”) with Principle Petroleum Limited (“PPL”), headquartered in the British Virgin Islands. Under the Cooperation Agreement, we agreed to sell to PPL, for a price of $7,000,000 certain exploration and exploitation rights to oil and gas deposits and certain bidding rights held by SAHF on the following areas: Valle de Lerma in the province of Salta; San Salvador de Jujuy; Libertador General San Martin in the province of Jujuy; and Selva Maria in the province of Formosa. The San Salvador, Libertador, and Selva Maria concessions have since been awarded by the government to another party. Pursuant to a separate Agreement dated March 31, 2012, we agreed with PPL to assign and transfer 50% of SAHF's current ownership of the Tartagal and Morillo (i.e., a 9% interest in the concession) to PPL for a purchase price of US$500,000. PPL had also agreed in an Undertaking to provide funds to the operating entity of Valle de Lerma (and the other concessions, if our bid had been approved) in the aggregate amount of up to US $10,000,000.
As part of PPL’s obligations under the Cooperation Agreement, PPL made partial payments of $2,000,000 in our 2012 first fiscal quarter, $999,979 in the second quarter and $499,979 in the third quarter towards the full amount of $7,000,000 provided under the Cooperation Agreement. Both parties are working to execute the full amount of PPL’s payment obligations as agreed. Further payments of $500,000, $50,000, $150,000, and $99,973 were made in January 2013, July 2014, August 2014, and November 2014, respectively. The interests in the Tartagal, Morillo, and Valle de Lerma concessions have not yet been transferred to PPL due to PPL’s payment defaults in all agreements.
For the past year, we have been in talks with PPL and a third party to settle the Cooperation Agreement as well as potentially sell a larger stake in our properties. As of May 13, 2015, we were in the process of formulating the final terms of the contract.
Estimated 2015 Capital Requirements
In the case of the Tartagal and Morillo oil and gas properties, we have carried interests; therefore, no further capital expenditures are required on our part.
Valle de Lerma’s target well, “La Troja,” has been deemed inside the city limits, and, therefore, unable to be drilled. Given the concession’s limited number of other potential “workover” drills, and the Company’s strategy to not engage in any exploratory drilling, the cost of Valle de Lerma for 2015 is expected to be US$100,000 in canons and other obligations. The Company is currently looking for buyers for the property.
USE OF ESTIMATES
The preparation of the financial statements requires the Company to make estimates and judgments that affect the reported amount of assets, liabilities, and expenses, and related disclosures of contingent assets and liabilities. On an on-going basis, the Company evaluates its estimates, including those related to oil and gas properties, intangible assets, income taxes and contingencies and litigation. The Company bases its estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. In the opinion of management, all normal recurring adjustments considered necessary for a fair presentation have been included in these financial statements. Certain amounts for prior periods have been reclassified to conform to the current presentation.
Management believes that it is reasonably possible that the following material estimates affecting the financial statements could happen in the coming two years:
| ● | Reserve reports in two of the properties; | |
| ● | Cash flow from exploratory drilling in two of the properties; and |
| ● | Future exploration and development costs that are carried. |
NEW FINANCIAL ACCOUNTING STANDARDS
For a summary of new financial accounting standards applicable to the Company, please refer to the notes to the financial statements set forth in our Annual Report on Form 10-K for the year ended December 31, 2014, filed with the SEC on April 15, 2015.
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Critical Accounting Policies and Estimates
The Securities and Exchange Commission recently issued “Financial Reporting Release No. 60 Cautionary Advice About Critical Accounting Policies” (“FRR 60”), suggesting companies provide additional disclosures, discussion and commentary on their accounting policies considered most critical to its business and financial reporting requirements. FRR 60 considers an accounting policy to be critical if it is important to the Company’s financial condition and results of operations, and requires significant judgment and estimates on the part of management in the application of the policy.
The Company assesses potential impairment of its long-lived assets, which include its property and equipment, investments, and its identifiable intangibles such as deferred charges under the guidance of SFAS 144 “Accounting for the Impairment or Disposal of Long-Lived Assets.” The Company must continually determine if a permanent impairment of its long-lived assets has occurred and write down the assets to their fair values and charge current operations for the measured impairment.
Investments in non-consolidated affiliates – These investments consist of the Company’s ownership interests in oil and gas development and exploration rights in Argentina, net of impairment losses if any.
We evaluate these investments for impairment when indicators of potential impairment are present. Indicators of impairment include, but are not limited to, levels of oil and gas reserves, availability of pipeline (or other transportation) capacity and infrastructure and management of the operations in which the investments were made.
The Company accounts for stock-based compensation to non-employees under ASC 718, "Compensation-Stock Compensation" ("ASC 718"). The compensation cost of the awards is based on the grant date fair-value of these awards and recognized over the requisite service period, which is typically the vesting period. The Company uses the Black-Scholes Option Pricing Model to determine the fair-value of stock options issued for compensation.
The Company accounts for non-employee share-based awards based upon ASC 505-50, “Equity-Based Payments to Non-Employees.” ASC 505-50 requires the costs of goods and services received in exchange for an award of equity instruments to be recognized using the fair value of the goods and services or the fair value of the equity award, whichever is more reliably measurable. The fair value of the equity award is determined on the measurement date, which is the earlier of the date that a performance commitment is reached or the date that performance is complete. Generally, our awards do not entail performance commitments. When an award vests over time such that performance occurs over multiple reporting periods, we estimate the fair value of the award as of the end of each reporting period and recognize an appropriate portion of the cost based on the fair value on that date. When the award vests, we adjust the cost previously recognized so that the cost ultimately recognized is equivalent to the fair value on the date the performance is complete.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Not applicable to smaller reporting companies.
Item 4. CONTROLS AND PROCEDURES
Evaluation of Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Securities Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management, including our chief executive and financial officer, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, as ours are designed to do, and management necessarily was required to apply its judgment in evaluating the cost- benefit relationship of possible controls and procedures.
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As of March 31, 2015, an evaluation was performed under the supervision and with the participation of our management, including our Chief Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based upon that evaluation, our Chief Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were not effective.
Changes in Internal Controls
There have been no changes in the Company's internal controls over financial reporting that occurred during the Company's last fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.
Limitations on the Effectiveness of Controls
A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. The Company's disclosure controls and procedures are designed to provide reasonable assurance of achieving its objectives. The Company's chief executive officer and principal financial officer concluded that the Company's disclosure controls and procedures are effective at that reasonable assurance level.
PART II—OTHER INFORMATION
ITEM 6. EXHIBITS.
| 31 | Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.* |
| 32 | Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.** |
* Filed herewith
** Furnished herewith
Copies of the following documents are included as exhibits to this report pursuant to Item 601 of Regulation S-K.
| SEC Ref. No. | Title of Document | |
| 101.INS | XBRL Instance Document | |
| 101.SCH | XBRL Taxonomy Extension Schema Document | |
| 101.CAL | XBRL Taxonomy Calculation Linkbase Document | |
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | XBRL Taxonomy Label Linkbase Document | |
| 101.PRE | XBRL Taxonomy Presentation Linkbase Document |
The XBRL related information in Exhibits 101 to this Quarterly Report on Form 10-Q shall not be deemed “filed” or a part of a registration statement or prospectus for purposes of Section 11 or 12 of the Securities Act of 1933, as amended, and is not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of those sections.
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SIGNATURES
In accordance with the requirements of the Exchange Act, the Company has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| DELTA INTERNATIONAL OIL & GAS INC. | |||
| BY: | /s/ Santiago Peralta | ||
| Santiago Peralta | |||
Interim President and Chief Executive Officer, and Principal Financial Officer | |||
Dated: May 15, 2015
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EXHIBIT INDEX
| 31 | Certification of Chief Executive Officer and Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| 32 | Certification of Chief Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| SEC Ref. No. | Title of Document | |
| 101.INS | XBRL Instance Document | |
| 101.SCH | XBRL Taxonomy Extension Schema Document | |
| 101.CAL | XBRL Taxonomy Calculation Linkbase Document | |
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | XBRL Taxonomy Label Linkbase Document | |
| 101.PRE | XBRL Taxonomy Presentation Linkbase Document |
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