NOTE 15 – RESTATEMENT OF PRIOR PERIOD CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In connection with the preparation of its consolidated financial statements for the year ended December 31, 2017, the Company identified a mathematical error related to the calculation of the depletion, depreciation and amortization of oil and gas properties as recorded during the periods ended March 31, 2017, June 30, 2017 and September 30, 2017. The issue resulted from the application of an incorrect conversion factor when evaluating NGL volumes. The impact of the correction of this issue has been recorded during the quarter ended December 31, 2017.

In accordance with Staff Accounting Bulletin (“SAB”) No. 99, Materiality, the Company evaluated the error and determined that the related impact was not material to the Company’s results of operations or financial position for any prior interim period. Accordingly, the Company has corrected these errors in total for the year ended December 31, 2017 by revising the consolidated financial statements. Periods presented herein will be revised, as applicable, in future filings.

The following tables present the restatements to the consolidated balance sheets as of, and the consolidated statements of operations for the periods presented:

Consolidated Balance Sheets


	As of March 31, 2017
	As Reported		Adjustments		As Restated
Crude oil and natural gas properties, net:
Accumulated depletion, depreciation and amortization	$	(1,229,486)	$	115,254	$	(1,114,232)
Crude oil and natural gas properties, net	$	20,510,001	$	115,254	$	20,625,255
Total assets	$	28,739,336	$	115,254	$	28,854,590
Shareholders’ equity:
Accumulated deficit	$	(11,990,181)	$	115,254	$	(11,874,927)
Total shareholders’ equity	$	6,756,017	$	115,254	$	6,871,271
Total liabilities and shareholders’ equity	$	28,739,336	$	115,254	$	28,854,590

	As of June 30, 2017
	As Reported		Adjustments		As Restated
Crude oil and natural gas properties, net:
Accumulated depletion, depreciation and amortization	$	(2,765,660)	$	549,096	$	(2,216,564)
Crude oil and natural gas properties, net	$	24,958,027	$	549,096	$	25,507,123
Total assets	$	35,682,868	$	549,096	$	36,231,964
Shareholders’ equity:
Accumulated deficit	$	(12,723,650)	$	549,096	$	(12,174,554)
Total shareholders’ equity	$	7,532,947	$	549,096	$	8,082,043
Total liabilities and shareholders’ equity	$	35,682,868	$	549,096	$	36,231,964

	As of September 30, 2017
	As Reported		Adjustments		As Restated
Crude oil and natural gas properties, net:
Accumulated depletion, depreciation and amortization	$	(3,918,935)	$	865,697	$	(3,053,238)
Crude oil and natural gas properties, net	$	28,698,193	$	865,697	$	29,563,890
Total assets	$	32,918,686	$	865,697	$	33,784,383
Shareholders’ equity:
Accumulated deficit	$	(14,754,722)	$	865,697	$	(13,889,025)
Total shareholders’ equity	$	6,343,080	$	865,697	$	7,208,777
Total liabilities and shareholders’ equity	$	32,918,686	$	865,697	$	33,784,383

Consolidated Statements of Operations


	Three months ended		Three months ended		Six months ended		Three months ended		Nine months ended
	March 31, 2017		June 30, 2017		June 30, 2017		September 30, 2017		September 30, 2017
Net (loss), as reported	$	(2,139,139)	$	(733,469)	$	(2,872,608)	$	(2,031,072)	$	(4,903,680)
Adjustments:
Previously reported depletion, depreciation and amortization	$	(446,166)	$	(1,536,174)	$	(1,982,341)	$	(1,153,273)	$	(3,135,614)
Total adjustment		115,254		433,842		549,096		316,600		865,696
Corrected depletion, depreciation and amortization		(330,912)		(1,102,332)		(1,433,245)		(836,673)		(2,269,918)
Net (loss), as restated	$	(2,023,885)	$	(299,627)	$	(2,323,512)	$	(1,714,472)	$	(4,037,984)
Net (loss) per share, as reported	$	(0.10)	$	(0.03)	$	(0.13)	$	(0.09)	$	(0.22)
Net (loss) per share, as restated	$	(0.09)	$	(0.01)	$	(0.10)	$	(0.08)	$	(0.18)