Company Quick10K Filing
Citadel Exploration
Price0.16 EPS-0
Shares49 P/E-3
MCap8 P/FCF-38
Net Debt-0 EBIT-2
TEV8 TEV/EBIT-4
TTM 2019-09-30, in MM, except price, ratios
10-Q 2019-09-30 Filed 2019-11-19
10-Q 2019-06-30 Filed 2019-08-19
10-Q 2019-03-31 Filed 2019-05-20
10-K 2018-12-31 Filed 2019-04-16
10-Q 2018-09-30 Filed 2018-11-14
10-Q 2018-06-30 Filed 2018-08-13
10-Q 2018-03-31 Filed 2018-05-21
10-K 2017-12-31 Filed 2018-04-16
10-Q 2017-09-30 Filed 2017-11-13
10-Q 2017-06-30 Filed 2017-08-09
10-Q 2017-03-31 Filed 2017-05-12
10-K 2016-12-31 Filed 2017-03-31
10-Q 2016-09-30 Filed 2016-11-14
10-Q 2016-06-30 Filed 2016-08-15
10-Q 2016-03-31 Filed 2016-05-16
10-K 2015-12-31 Filed 2016-04-15
10-Q 2015-09-30 Filed 2015-11-16
10-Q 2015-06-30 Filed 2015-08-14
10-Q 2015-03-31 Filed 2015-05-20
10-K 2014-12-31 Filed 2015-04-16
10-Q 2014-09-30 Filed 2014-11-14
10-Q 2014-06-30 Filed 2014-08-19
10-Q 2014-03-31 Filed 2014-05-15
10-K 2013-12-31 Filed 2014-04-14
10-Q 2013-09-30 Filed 2013-11-14
10-Q 2013-06-30 Filed 2013-08-13
10-K 2012-12-31 Filed 2013-04-01
10-Q 2012-09-30 Filed 2012-11-19
10-Q 2012-06-30 Filed 2012-08-20
10-Q 2012-03-31 Filed 2012-05-17
10-K 2011-12-31 Filed 2012-04-16
10-Q 2011-09-30 Filed 2011-11-21
10-Q 2011-06-30 Filed 2011-08-19
10-Q 2011-03-31 Filed 2011-05-16
10-K 2010-12-31 Filed 2011-02-16
10-Q 2010-11-12 Filed 2010-11-15
8-K 2019-09-11
8-K 2019-02-04
8-K 2018-09-27
8-K 2018-09-27
8-K 2018-07-18
8-K 2018-04-16
8-K 2018-03-21
8-K 2017-12-29
8-K 2017-02-15

COIL 10Q Quarterly Report

Part I - Financial Information
Item 1. Financial Statements.
Note 1 - Summary of Significant Accounting Policies
Note 2 - Going Concern
Note 3 - Oil and Gas Properties
Note 4 - Restricted Cash
Note 5 - Notes Payable
Note 6 - Stockholders' Equity
Note 7 - Stock Option Plan
Note 8 - Warrants
Note 9 - Subsequent Events
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Item 3. Quantitative and Qualitative Disclosure About Market Risk
Item 4T. Controls and Procedures
Part Ii-Other Information
Item 1. Legal Proceedings.
Item 1A. Risk Factors.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Item 3. Defaults Upon Senior Securities.
Item 4. Mine Safety Disclosures.
Item 5. Other Information.
Item 6. Exhibits.
EX-31.1 ex31-1.htm
EX-31.2 ex31-2.htm
EX-32.1 ex32-1.htm
EX-32.2 ex32-2.htm

Citadel Exploration Earnings 2014-06-30

Balance SheetIncome StatementCash Flow
10.07.34.72.0-0.6-3.32012201420172020
Assets, Equity
1.00.4-0.2-0.8-1.4-2.02012201420172020
Rev, G Profit, Net Income
2.91.80.7-0.3-1.4-2.52012201420172020
Ops, Inv, Fin

10-Q 1 coil10q6-30.htm FORM 10-Q coil10q6-30.htm


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 June 30, 2014

¨  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 000-54639
LOGO
CITADEL EXPLORATION, INC.
(Exact name of registrant as specified in its charter)

Nevada
 
27-1550482
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)

417 31st Street, Unit A
Newport Beach, California 92663
(Address of principal executive offices)

(949) 612-8040
(Registrant’s telephone number, including area code)

Copies of Communications to:
Rutan & Tucker
611 Anton Blvd, 14th Floor Costa Mesa, CA 92626
(714) 641-3487
Fax (714) 546-9035

Indicate by check mark whether the issuer (1) 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.
Yes x    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 x    No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Ruble 12b-2 of the Exchange Act.

Large accelerated filer  ¨
Accelerated filer  ¨
   
Non-accelerated filer  ¨ (Do not check if a smaller reporting company)
Smaller reporting company  x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ¨    No x

The number of shares of Common Stock, $0.001 par value, outstanding on August 14, 2014 was 30,914,000 shares.
 
 



 
1

 

CITADEL EXPLORATION, INC.
QUARTERLY PERIOD ENDED JUNE 30, 2014

Index to Report on Form 10-Q



     
Page No.
   
PART I - FINANCIAL INFORMATION
 
       
Item 1.
 
Financial Statements
3
       
Item 2.
 
Management's Discussion and Analysis of Financial Condition and Results of Operations
13
       
Item 3.
 
Quantitative and Qualitative Disclosures About Market Risk
16
       
Item 4T.
 
Controls and Procedures
16
       
   
PART II - OTHER INFORMATION
 
       
Item 1.
 
Legal Proceedings
16
       
Item1A.
 
Risk Factors
17
       
Item 2.
 
Unregistered Sales of Equity Securities and Use of Proceeds
17
       
Item 3.
 
Defaults Upon Senior Securities
18
       
Item 4.
 
Mine Safety Disclosures
18
       
Item 5.
 
Other Information
18
       
Item 6.
 
Exhibits
18
       
   
Signature
19

 
2

 

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements.
   
CITADEL EXPLORATION, INC. AND SUBSIDIARY
 
(AN EXPLORATION STAGE COMPANY)
 
CONSOLIDATED BALANCE SHEETS
 
(unaudited)
 
             
   
June 30,
   
December 31,
 
   
2014
   
2013
 
ASSETS
           
             
Current assets:
           
Cash
  $ 25,631     $ 402,649  
Other receivable
    22,507       40,660  
Prepaid expenses
    83,669       41,589  
Product inventory
    4,881       4,881  
Total current assets
    136,688       489,779  
                 
Deposits
    4,900       4,000  
Restricted cash
    70,000       45,000  
Oil and gas properties
    1,914,437       1,373,363  
Fixed asset, net
    33,599       12,633  
                 
Total assets
  $ 2,159,624     $ 1,924,775  
                 
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
               
                 
Current liabilities:
               
Accounts payable and accrued liabilities
  $ 479,124     $ 435,332  
Accrued interest payable
    -       8,316  
Notes payable, net
    487,450       314,134  
Total current liabilities
    966,574       757,782  
                 
Asset retirement obligation
    48,923       31,407  
                 
Total liabilities
    1,015,497       789,189  
                 
Stockholders' equity:
               
Common stock, $0.001 par value, 100,000,000 shares
               
authorized, 29,714,000 and 28,949,823 shares issued and
 outstanding
               
as of June 30, 2014 and December 31, 2013, respectively
    29,714       28,950  
Additional paid-in capital
    4,206,452       3,332,982  
Deficit accumulated during development stage
    (3,092,039 )     (2,226,346 )
Total stockholders' equity
    1,144,127       1,135,586  
                 
Total liabilities and stockholders' equity
  $ 2,159,624     $ 1,924,775  
 
 
 
 
3

 

 
         
CITADEL EXPLORATION, INC. AND SUBSIDIARY
(AN EXPLORATION STAGE COMPANY)
 
CONSOLIDATED STATEMENTS OF OPERATIONS
 
(unaudited)
 
                           
(Inception)
 
   
For the three months
   
For the six months
   
November 6, 2006
 
   
ended
   
ended
   
To
 
   
June 30,
   
June 30,
   
June 30,
 
   
2014
   
2013
   
2014
   
2013
   
2014
 
                               
Revenue
  $ 19     $ -     $ 19     $ -     $ 9,242  
Operating expenses:
                                       
Lease operating expense
    1,369       -       29,251       -       114,586  
Geological & geophysical
    296       -       2,396       -       8,700  
General and administrative
    82,860       74,758       179,332       130,041       741,368  
Depreciation, amortization and accretion
    4,060       2,079       7,307       4,158       19,687  
Professional fees
    42,613       55,296       95,052       205,655       853,880  
Executive compensation
    391,992       121,633       511,475       219,132       1,217,659  
Gain on sale of interest in oil & gas properties
    -       -       -       -       (267,856 )
Gain on settlement of accounts payable
    -       -       -       -       (6,161 )
Total operating expenses
    523,190       253,766       824,813       558,986       2,681,863  
Other expenses:
                                       
Gain – other
    -        -       8,316       -       8,316  
Gain - note payable settlement
    -       -       33,545       -       33,545  
Interest expense
    (88,088 )     (1,422 )     (91,255 )     (113,591 )     (460,746 )
Total other expenses
    (88,088 )     (1,422 )     (49,394 )     (113,591 )     (418,885 )
Net loss before provision for income taxes
    (611,259 )     (255,188 )     (874,188 )     (672,577 )     (3,091,506 )
Provision for income taxes
    8,494       -       8,495       -       (534 )
Net loss
  $ (602,765 )   $ (255,188 )   $ (865,693 )   $ (672,577 )   $ (3,092,040 )
Weighted average number of common shares
    27,484,783       25,813,834       27,484,783       25,813,834          
outstanding - basic
                                       
Net loss per share - basic
  $ (0.02 )   $ (0.01 )   $ (0.03 )   $ (0.03 )        

See Accompanying Notes to Consolidated Financial Statements.
 
 
 
4

 
 
 
CITADEL EXPLORATION, INC. AND SUBSIDIARY
 
(AN EXPLORATION STAGE COMPANY)
 
CONSOLIDATED STATEMENTS OF CASH FLOWS
 
(unaudited)
 
                   
                   
               
(Inception)
 
   
For the six months
   
November 6, 2006
 
   
ended
   
to
 
   
June 30,
   
June 30,
 
   
2014
   
2013
   
2014
 
CASH FLOWS FROM OPERATING ACTIVITIES
                 
Net loss
  $ (865,693 )   $ (672,577 )   $ (2,861,091 )
Adjustments to reconcile net loss
                       
to net cash used in operating activities:
                       
      Depreciation, amortization and accretion
    7,307       4,158       19,688  
Amortization of prepaid stock compensation
    -       -       80,000  
Amortization of debt discount
    76,821       84,517       387,901  
Non cash interest expense
    -       22,500       22,500  
Gain on sale of interest in oil & gas properties
    -       -       (267,856 )
Gain on settlement of accounts payable
    -       -       (6,161 )
Gain other
    (8,316 )     -       (8,316 )
Gain on settlement of note payable
    (33,545 )     -       -  
Stock based compensation expense
    339,492       74,997       374,984  
Shares issued for consulting
    110,775       116,000       275,205  
Changes in operating assets and liabilities:
                    -  
(Increase) decrease in other receivable
    18,153       (34,576 )     (22,507 )
Decrease (increase) in prepaid expenses
    31,751       (61,879 )     55,338  
Decrease (increase) in product inventory
    -       -       (4,881 )
Increase in deposits
    (900 )     (3,150 )     (4,900 )
Increase in accounts payable and accrued payables
    51,291       58,978       522,335  
Increase in accrued interest payable
    -       (6,508 )     8,316  
                         
Net cash used in operating activities
    (272,864 )     (417,540 )     (1,429,445 )
                         
CASH FLOWS FROM INVESTING ACTIVITIES
                       
Purchase of oil and gas properties
    (523,558 )     (752,831 )     (1,947,724 )
Proceeds from sale of interest in oil & gas properties
    -       -       350,000  
Website
    -       -       (1,375 )
Purchase of fixed assets
    (28,273 )     -       (51,845 )
Restricted cash
    (25,000 )     -       (70,000 )
                         
Net cash provided by (used in) investing activities
    (576,831 )     (752,831 )     (1,720,944 )
                         
CASH FLOWS FROM FINANCING ACTIVITIES
                       
                         
Member contributions
    -       -       105,523  
Member distribution
    -       -       10,000  
Proceeds from sale of common stock, net of costs
    (654 )     1,410,711       2,035,771  
Proceeds from note payable
    500,000       -       1,318,274  
Repayments for notes payable
    (26,669 )     (46,170 )     (293,548 )
Net cash provided by financing activities
    472,677       1,364,541       3,176,020  
                         
NET CHANGE IN CASH
    (377,018 )     194,170       25,631  
                         
CASH AT BEGINNING OF YEAR
    402,649       112,580       -  
                         
CASH AT END OF PERIOD
  $ 25,631     $ 306,750     $ 25,631  
SUPPLEMENTAL INFORMATION:
                       
Interest paid
  $ (1,568 )   $ -     $ (4,768 )
Income taxes paid
  $ -     $ -     $ (3,200 )
                         
NON-CASH INVESTING AND FINANCING ACTIVITIES:
                       
Liabilities assumed with the acquisition of Citadel Exploration, LLC
  $ -     $ -     $ 29,265  
Shares issued for prepaid stock compensation
  $ -     $ -     $ 80,000  
Financing of insurance
  $ 70,268     $ 52,190     $ 150,137  
Forgiveness of debt due to related party
  $ -     $ -     $ 50,953  
Issuance of common stock for settlement of note payable and accrued
interest
  $ 307,501     $ 310,298     $ 617,799  
Asset retirement obligation
  $ 17,408       -     $ 17,408  
                         


 
5

 


CITADEL EXPLORATION, INC. AND SUBSIDIARY
(AN EXPLORATION STAGE COMPANY)
Notes to Consolidated Financial Statements
(Unaudited)


NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation
The interim financial statements included herein, presented in accordance with United States generally accepted accounting principles and stated in US dollars, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.
 
These statements reflect all adjustments, consisting of normal recurring adjustments, which in the opinion of management, are necessary for fair presentation of the information contained therein. It is suggested that these interim financial statements be read in conjunction with the financial statements of the Company for the year ended December 31, 2013 and notes thereto included in the Company’s 10-K annual report and all amendments. The Company follows the same accounting policies in the preparation of interim reports.
 
Results of operations for the interim period are not indicative of annual results.

Principles of consolidation
The consolidated financial statements include the accounts of Citadel Exploration, Inc. and Citadel Exploration, LLC.  All significant intercompany balances and transactions have been eliminated. Citadel Exploration, Inc. and Citadel Exploration, LLC will be collectively referred herein to as the “Company”.

Nature of operations
Currently, the Company is focused on the acquisition and development of oil and gas resources in California.  The Company has not yet found oil and gas resources in commercially exploitable quantities and is engaged in exploring land in an effort to discover them.  The Company has been in the exploration stage since its formation and has not realized revenues from its planned principal operations.

Use of estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ significantly from those estimates.

Fair value of financial instruments
The carrying value of the Company’s financial instruments, including cash, due to shareholders/related parties and accounts and other payables approximate their fair values due to the immediate or short-term maturity of these instruments. It is management’s opinion that the Company is not exposed to significant interest, price or credit risks arising from these financial instruments.

Cash and cash equivalents
The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents.

Earnings per share
The Company follows ASC Topic 260 to account for the earnings per share. Basic earnings per common share (“EPS”) calculations are determined by dividing net income by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per common share calculations are determined by dividing net income by the weighted average number of common shares and dilutive common share equivalents outstanding. During periods when common stock equivalents, if any, are anti-dilutive they are not considered in the computation.

 
6

 


CITADEL EXPLORATION, INC. AND SUBSIDIARY
(AN EXPLORATION STAGE COMPANY)
Notes to Consolidated Financial Statements
(Unaudited)
Recent pronouncements
The Company has evaluated the recent accounting pronouncements through June 2014 and believes that none of them will have a material effect on the Company’s financial statements.

NOTE 2 – GOING CONCERN
 
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the recoverability of assets and the satisfaction of liabilities in the normal course of business. As noted above, the Company is in the exploration stage and, accordingly, has not yet generated revenues from operations. Since its inception, the Company has been engaged substantially in financing activities and developing its business plan and incurring startup costs and expenses. As a result, the Company incurred accumulated net losses from Inception (November 6, 2006) through the period ended June 30, 2014 of $3,092,040. In addition, the Company’s development activities since inception have been financially sustained through debt and equity financing.
 
The ability of the Company to continue as a going concern is dependent upon its ability to raise additional capital from the sale of common stock and, ultimately, the achievement of significant operating revenues. These consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.

NOTE 3 – OIL AND GAS PROPERTIES

The costs capitalized in oil and gas properties as of June 30, 2014 and December 31, 2013 are as follows:

   
2014
   
2013
 
Exploration
  $ 1,914,437     $ 1,373,363  

The following table reflects the net changes in capitalized exploratory well costs that have been capitalized for a period of one year or less since completion of drilling as of June 30, 2014:

      2014       2013  
Beginning balance at January 1,
  $ 1,373,363       159,833  
Additions to capitalized exploratory well costs pending the determination of proved reserves
    523,557       752,831  
Asset retirement obligation
    17,517       0  
Ending balance at June 30,
  $ 1,914,437     $ 912,664  
 
Project Indian
 
On January 31, 2009, the Company entered into an oil, gas and mineral lease in San Benito County, California with an unrelated third party for the right to develop and operate the leased premises for an initial term of three years. The lease will continue as long as the Company continues actual drilling operations and continued development. The Company is obligated to pay royalties to the unrelated third party on oil and gas from all wells on the leased premises, and the royalty is a total of 20% of the market value. On February 1, 2012, the Company renegotiated this oil, gas and mineral lease for an additional minimum term of two years. The terms of the renegotiated lease are substantially the same as the original lease disclosed above. On February 1, 2013, the Company paid the final amount due to the mineral owner for this lease.

 
7

 
 
 
CITADEL EXPLORATION, INC. AND SUBSIDIARY
(AN EXPLORATION STAGE COMPANY)
Notes to Consolidated Financial Statements
(Unaudited)

On February 22, 2012, the Company sold 40% of its interest in the property disclosed above in exchange for $350,000 to its joint venture partner. The Company recorded a gain on the sale of the partial interest totaling $267,856. Drilling commenced on this property in January 2014. Indian #1-15 was drilled and cased with Citadel paying 100% of the costs.

On May 5, 2014 the Company received its steam injection permit from DOGGR, and expects steam injection to begin in the month of May.

On July 11, 2014 the Company announced it had ended its joint venture with Sojitz Energy Ventures at Project Indian.  As part of the agreement, Citadel now owns 100% of the working interest at Project Indian.

On August 13, 2014 the Company announced that it had completed a successful steam cycle on the Indian #1-15.  The cycle consisted of injected approximately 3,600 barrels of steam.  The Company then allowed the well to soak for approximately 7 days.  The well was then turned onto production.  After recovering approximately 50% of the injected steam volume, the well began to produce oil.  Oil production has gradually increased and produced in a range of 3-7 barrels per day.  The oil produced has been tested and is 11.6 degrees API in nature, with lower viscosity than traditional heavy oil.  This lower viscosity indicates that the oil is mobile at room temperature, which we believe improves the economics of this oil field.

Per ASC 932, these wells qualify as exploratory wells and review of the capitalized costs incurred to prove up reserves must to be evaluated in the period of one year after the completion of the drilling date.

Yowlumne

In May 2013, the Company entered into a one year lease for approximately 3,000 acres from AERA Energy, LLC. This acreage has been mapped using a combination of both 2D and 3D seismic, and is in close proximity to the Yowlumne oil field in Kern County, California. The Company is obligated to pay royalties to AERA Energy, LLC on oil and gas from all wells on the leased premises, and the royalty is a total of 20% of the market value. In August of 2013, the Company entered into an agreement to sell 75% of the interest in the Yowlumne lease, recouping approximately 85% of its cost, while retaining a 25% interest in the lease and operatorship.  Additionally, as part of this transaction, the Company retained 100% interest in the Yowlumne #2 well, which was originally drilled in 2007. After performing a workover job on this well, it has produced approximately 120 barrels of oil which were sold in December 2013. As of year-end 2013, the well had produced approximately 50 barrels of oil which were stored in a tank and valued at net realizable value on the balance sheet as product inventory.  On July 11, 2014 the Company announced that it had ended its joint venture with Sojitz Energy Ventures at Yowlumne.  As part of that agreement, Citadel now owns 80% of the working interest at Yowlumne and remains operator.

NOTE 4 – RESTRICTED CASH

Restricted cash consists of three Bonds totaling $70,000.  The Bonds are required in the normal course of business in the oil and gas industry.  The first two bonds totaling $45,000 were purchased in November 2008. The third bond purchased for $25,000 in May 2014 was required to move forward with work on the Indian Oil Development Project.  The bonds will not be released until after the project has been completed, all the wells are properly abandoned, and the property has been restored to its original condition.

NOTE 5 – NOTES PAYABLE

Notes payable consists of the following at:
   
June 30,
2014
   
December 31, 2013
 
Three notes payable to individuals, 10% interest, due January 1, 2014
  $ -     $ 300,000  
Three notes payable to an entity for the financing of insurance premiums, unsecured; 14% interest, due December 2013; 14% interest, due February 2014; 11% interest, due August 2014
    57,733       14,134  
Two notes payable to individuals, 10% interest, due September 30, 2014
    500,000       -  
Debt discount for 500,000 warrants issued with notes payable
    (70,238 )     -  
                 
    $ 487,450     $ 314,134  


 
8

 


CITADEL EXPLORATION, INC. AND SUBSIDIARY
(AN EXPLORATION STAGE COMPANY)
Notes to Consolidated Financial Statements
(Unaudited)

Interest expense for the quarter ended June 30, 2014 was $91,256. Of that amount, $1,444 relates to notes payable and insurance financing, $76,821 is amortization of debt discount, and $12,991 relates to interest accrued on the bridge loans. Interest expense for the quarter ended June 30, 2013 was $113,591.

In March 2014, the Company closed on a $500,000 bridge loan from two individuals. These notes have a 180 day term and bear interest of 10%.  Additionally the investors received 500,000 warrants to purchase the Company’s stock at $1.00 per share for a term of two years.

NOTE 6 – STOCKHOLDERS’ EQUITY
 
The Company is authorized to issue 100,000,000 shares of its $0.001 par value common stock.

In January 2014, the Company issued 205,085 shares of common stock for services rendered and prepaid expenses with a value of $114,338. Also in January 2014, the Company issued 1,477,275 shares of common stock at a price of $0.55 per share. This included the conversion of $300,000 in previously issued bridge loans plus accrued interest and new equity capital of $500,000. These shares were approved by the Company's board during the previous year, and as such were shown as issued and outstanding as of December 31, 2013.
 
On August 7, 2014 the Company issued 400,000 shares of common stock at a price for $0.34 for legal, accounting and investor relation services.
 
NOTE 7 – STOCK OPTION PLAN

On September 1, 2012, the Board of Directors of the Company ratified, approved, and adopted a Stock Option Plan for the Company allowing for the grant of up to 10,000,000 shares of common stock or stock options to acquire common shares. In the event an optionee ceases to be employed by or to provide services to the Company for reasons other than cause, any Stock Option that is vested and held by such optionee may be exercisable within up to thirty days after the effective date that his position ceases. No Stock Option granted under the Stock Option Plan is transferable. Any Stock Option held by an optionee at the time of his death may be exercised by his estate within six months of his death or such longer period as the Board of Directors may determine.

As approved by the Board of Directors, on September 4, 2012, the Company granted 4,000,000 stock options to two officers of the Company at $0.20 per share for terms of seven years. Of the total stock options, 1,000,000 vested immediately and the remaining vest equally over the next 3 years at the anniversary date of the employment agreements.  The total fair value of these options at the date of grant was estimated to be $599,974 and was determined using the Black-Scholes option pricing model with an expected life of 7 years, a risk free interest rate of 1.01%, a dividend yield of 0% and expected volatility of 254%.  During six months ended June 30, 2014, $74,997 was recorded as a stock based compensation expense.

On June 18, 2014, the Company’s Board of Directors approved additional stock option grants.  The Company has granted 800,000 stock options at $0.55 for a term of seven years, to four of the five members of the Board of Directors.  These stock options vest immediately.  The total fair value of these options at the date of grant was estimated to be $264,495 and was determined using the Black-Scholes option pricing model with an expected life of 7 years, a risk free interest rate of .45%, a dividend yield of 0% and expected volatility of 236%.  This total amount was expensed in June 2014.

 
9

 


CITADEL EXPLORATION, INC. AND SUBSIDIARY
(AN EXPLORATION STAGE COMPANY)
Notes to Consolidated Financial Statements
(Unaudited)

The following is a summary of the status of all of the Company’s stock options as of June 30, 2014 and changes during the period ended on that date:
   
Number
of Options
   
Weighted-Average
Exercise Price
   
Weighted-Average
Remaining Life (Years)
 
Outstanding at January 1, 2013
    4,000,000     $  0.20       5.68  
Granted on June 18, 2014
    800,000     $ 0.55       7.00  
Exercised
    -     $ 0.00       -  
Cancelled
    -     $ 0.00       -  
Outstanding at June 30, 2014
    4,800,000     $  0.26       5.90  
Exercisable at June 30, 2014
    1,800,000     $  0.37       5.64  

NOTE 8 – WARRANTS

On November 15, 2012, the Company granted 500,000 stock warrants to a lender at $0.55 per share for terms of two years. The total fair value of these warrant at the date of grant was estimated to be $217,330 and was determined using the Black-Scholes option pricing model with an expected life of 2 years, a risk free interest rate of 0.28%, a dividend yield of 0% and expected volatility of 302%.  During year ended December 31, 2012, $132,813 was recorded amortization of debt discount and included in interest expense.

In September 2013, the Company closed on a $200,000 90-day bridge loan with two investors. The loans bear interest of 10%. Additionally each investor was granted 100,000 stock warrants to purchase stock at $1.00 per share for a period of one year valued at $56,283.  An additional $100,000 note payable with the same terms and warrants which were valued at $37,467 was issued in October 2013.

In March 2014, the Company closed on a $500,000 180-day bridge loan with two investors. The loans bear interest of 10%. Additionally, the investors were granted a total of 500,000 stock warrants to purchase stock at $1.00 per share for a period of two years valued at $147,104. The total fair value of these warrant at the date of grant  was determined using the Black-Scholes option pricing model with an expected life of 2 years, a risk free interest rate of 0.45%, a dividend yield of 0% and expected volatility of 333%.  During the quarter ended June 30, 2014, $2,450 was recorded as amortization of debt discount and included in interest expense.

The following is a summary of the status of all of the Company’s stock warrants as of June 30, 2014 and changes during the period ended on that date: please update with above information.

   
Number
of Warrants
   
Weighted-Average
Exercise Price
   
Weighted-Average
Remaining Life (Years)
 
Outstanding at January 1, 2014
    800,000     $ 0.72       0.86  
Granted
    500,000     $  1.00       1.99  
Exercised
    -     $ 0.00       -  
Cancelled
    -     $ 0.00       -  
Outstanding at June 30, 2014
    1,300,000     $  0.83       1.14  
Exercisable at June 30, 2014
    800,000     $  0.72       0.61  
 
 
 
10

 
 
 
NOTE 9 – SUBSEQUENT EVENTS

On July 11, 2014 the Company announced it had ended its joint venture with Sojitz Energy Ventures at Project Indian and Yowlumne.  As part of the agreement, Citadel now owns 100% of the working interest at Project Indian and 80% of Yowlumne.


In August of 2014, investors owning warrants for the company’s stock, converted early at a reduced price.  The first tranche of warrants equaled 500,000 shares at $0.55, which were reduced to $0.34 resulting in the issuance of 500,000 common stock shares for $170,000 or $0.34 per share.  The second tranche of warrants equaled 100,000 warrants at $1.00 per share.  These warrants were exchanged for the issuance of 300,000 shares at $0.34 for $102,000 in cash.

On August 7, 2014 investors owning warrants for the company’s stock, converted early at a reduced price.  The first tranche of warrants equaled 500,000 shares at $0.55, which were reduced to $0.34 resulting in the issuance of 500,000 common stock shares for $170,000 or $0.34 per share.  The second tranche of warrants equaled 100,000 warrants at $1.00 per share.  These warrants were exchanged for the issuance of 300,000 shares at $0.34 for $102,000 in cash.

On August 7, 2014 the Company issued 400,000 shares of common stock at a price for $0.34 for legal, accounting and investor relation services.

On August 13, 2014 the Company announced that it had completed a successful steam cycle on the Indian #1-15.  The cycle consisted of injected approximately 3,600 barrels of steam.  The Company then allowed the well to soak for approximately 7 days.  The well was then turned onto production.  After recovering approximately 50% of the injected steam volume, the well began to produce oil.  Oil production has gradually increased and produced in a range of 3-7 barrels per day.  The oil produced has been tested and is 11.6 degrees API in nature, with lower viscosity than traditional heavy oil.  This lower viscosity indicates that the oil is mobile at room temperature, which we believe improves the economics of this oil field.

 
11

 


FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements and involves risks and uncertainties that could materially affect expected results of operations, liquidity, cash flows, and business prospects.  These statements include, among other things, statements regarding:

o  
exploration risks such as drilling unsuccessful wells;
o  
our ability to operate profitably;
o  
our ability to efficiently and effectively finance our operations;
o  
inability to achieve future sales levels or other operating results;
o  
inability to raise additional financing for working capital;
o  
inability to efficiently manage our operations;
o  
inability to hire or retain sufficient qualified operating field personnel;
o  
the inability of management to effectively implement our strategies and business plans;
o  
the unavailability of funds for capital expenditures and/or general working capital;
o  
deterioration in general or regional economic conditions;
o  
the fact that our accounting policies and methods are fundamental to how we report our financial condition and results of operations, and they may require management to make estimates about matters that are inherently uncertain;
o  
changes in U.S. GAAP or in the legal, regulatory and legislative environments in the markets in which we operate;
o  
adverse state or federal legislation or regulation that increases the costs of compliance, or adverse findings by a regulator with respect to existing operations;

As well as other statements regarding our future operations, financial condition and prospects, and business strategies. These forward-looking statements are subject to certain risks and uncertainties that could cause our actual results to differ materially from those reflected in the forward-looking statements.  Factors that could cause or contribute to such differences include, but are not limited to, those discussed in this Quarterly Report on Form 10-Q, and in particular, the risks discussed under the heading “Risk Factors” in Part II, Item 1A and those discussed in other documents we file with the Securities and Exchange Commission.  We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements.  Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

References in the following discussion and throughout this quarterly report to “we”, “our”, “us”, “Citadel”, “the Company”, and similar terms refer to Citadel Exploration, Inc. and its subsidiary, unless otherwise expressly stated or the context otherwise requires.

AVAILABLE INFORMATION

We file annual, quarterly and other reports and other information with the SEC. You can read these SEC filings and reports over the Internet at the SEC's website at www.sec.gov or on our website at www.citadelexploration.com. You can also obtain copies of the documents at prescribed rates by writing to the Public Reference Section of the SEC at 100 F Street, NE, Washington, DC 20549 on official business days between the hours of 10:00 am and 3:00 pm. Please call the SEC at (800) SEC-0330 for further information on the operations of the public reference facilities. We will provide a copy of our annual report to security holders, including audited financial statements, at no charge upon receipt to of a written request to us at Citadel Exploration, Inc., 417 31st Street, Unit A, Newport Beach, California 92663.

 
12

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Overview

Citadel is an energy company engaged in the exploration and development of oil and natural gas properties. Our properties are located in the Salinas and San Joaquin Basins of California. Subject to availability of capital, we strive to implement an accelerated development program utilizing capital resources, a regional operating focus, an experienced management and technical team, and enhanced recovery technologies to attempt to increase production and increase returns for our stockholders. Our corporate strategy is to build value in the Company through the acquisition of oil and gas leases with significant upside potential, successful exploration and exploitation and the efficient development of these assets.

Our revenues, profitability and future growth depend substantially on prevailing prices for oil and natural gas and our ability to find, develop and acquire oil and gas reserves that are economically recoverable.

Our Operations
 
Our principal strategy is to focus on the acquisition of oil and natural gas mineral leases that have known hydrocarbons or are in close proximity to known hydrocarbons that have been underdeveloped. Once acquired, we strive to implement an accelerated development program utilizing capital resources, a regional operating focus, an experienced management and technical team, and enhanced recovery technologies to attempt to increase production and increase returns for our stockholders. Our oil and natural gas acquisition and development activities are currently focused in the State of California.

To date, the Yowlumne 2-26 well has recovered approximately 120 barrels of oil, which were sold to Kern Oil Refinery (“KOR”) in the fourth quarter of 2013, marking the Company’s first revenue.  The well then experienced some mechanical issues, and the Company is currently working with its engineers on additional workover and stimulation plans. The Company expects to commence workover operations upon receiving its permit for such operations from the DOGGR. In 2014, the State of California passed Senate Bill #4 (“SB 4”) which required additional disclosures regarding fracturing (“fracking”), and/or well stimulation. The Company has submitted an updated permit application to comply with this new regulation.

Citadel has also started permitting two additional exploration wells on the Yowlumne acreage and expects to receive those drilling permits in the fourth quarter of 2014, with drilling to commence in the fourth quarter of 2014 or early 2015.  Both of these exploration wells will be targeting the Stephens Sands at a depth of 12,000 to 14,000 feet.  Citadel currently has a 80% working interest in these exploration prospects and is the operator.

Currently at Project Indian, we have drilled and completed our first well (Indian #1-15). On May 5, 2014 we received our permit from the DOGGR for steam injection at Project Indian.   On July 11th, the Company announced it had ended its joint venture with Sojitz Energy Ventures at Project Indian.  As part of the agreement, Citadel now owns 100% of the working interest at Project Indian.   On August 13, 2014 the Company announced that it had completed a successful steam cycle on the Indian #1-15.  The cycle consisted of injected approximately 3,600 barrels of steam.  The Company then allowed the well to soak for approximately 7 days.  The well was then turned onto production.  After recovering approximately 50% of the injected steam volume, the well began to produce oil.  Oil production has gradually increased and produced in a range of 3-7 barrels per day.  The oil produced has been tested and is 11.6 degrees API in nature, with lower viscosity than traditional heavy oil.  This lower viscosity indicates that the oil is mobile at room temperature, which we believe improves the economics of this oil field.

Starting in May of 2013, Citadel participated in three exploration wells at the Rancho Grande area, with a 20 to 22% non-operated working interest. Sojitz Energy Ventures of Houston was the operator. To date, the three exploration wells have not produced commercial quantities of oil. Citadel believes that these wells need further testing, however the operator has shifted its focus to deeper exploration targets in the same area, in which Citadel elected not to participate. Currently the joint venture partners are in negotiations on the next course of action at Rancho Grande, which we believe will be determined in the fourth quarter of 2014.

 
13

 


Going Concern

The financial statements included in this filing have been prepared in conformity with generally accepted accounting principles that contemplate the continuance of the Company as a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company is in the exploration stage and, accordingly, has not generated revenues from operations. As shown on the accompanying financial statements, the Company has incurred a net loss of $3,092,039 for the period from inception (November 6, 2006) to June 30, 2014. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

The future of the Company is dependent upon its ability to obtain financing and upon future profitable operations from the development of its oil and gas business opportunities.

RESULTS OF OPERATIONS

Results of Operations for the Six Months Ended June 30, 2014 and June 30, 2013

During the six month period ended June 30, 2014 and 2013 we generated minimal revenue.

Operating expenses totaled $824,813 during the six month period ended June 30, 2014 which was an increase over the period ended June 30, 2013. Operating expenses consisted of general and administrative costs, amortization and depreciation, professional fees, and executive compensation. During the period ended June 30, 2013 the Company's operating expenses totaled $558,986.

General and administrative fees increased from $130,041 to $179,332 from the six month period ended June 30, 2013 to the six month period ended June 30, 2014. This increase was primarily due to insurance, marketing and meals and entertainment expenses.

Professional fees decreased from $205,655 to $95,052 from the six month period ended June 30, 2013 to the six month period ended June 30, 2014. The decrease was primarily due to services provided to the Company for accounting, consulting and legal.

Executive compensation increased from $219,132 to $511,475 from the six month period ended June 30, 2013 to the six month period ended June 30, 2014. The increase was primarily due to the fair value of the vested stock options and monthly salary as part of the employment agreements with two officers, and the value of the 800,000 stock options that were granted June 18, 2014.

Liquidity and Capital Resources

The Company established a capital budget for 2014 of approximately $2,000,000 for Project Indian, Yowlumne and additional lease acquisitions. We may revise our capital budget during the year as a result of acquisitions and/or drilling outcomes or significant changes in cash flows.

As of June 30, 2014, we had $136,688 of current assets, of this amount $25,631 was cash. The following table provides detailed information about the net cash flow for the quarters ended June 30, 2014 and June 30, 2013 as presented in this quarterly report. To date, we have financed our operations through the issuance of stock and borrowings from related parties and an unrelated third party.

The following table sets forth a summary of our cash flows for the six months ended June 30, 2014 and 2013:

   
Six Months Ended
June 30,
 
   
2014
   
2013
 
Net cash used in operating activities
  $ (272,864 )   $ (417,540 )
Net cash used in investing activities
    (576,831 )     (752,831 )
Net cash provided by financing activities
    472,677       1,364,541  
Net change in cash
    (377,018 )     194,170  
Cash, beginning of period
    402,649       112,580  
Cash, end of period
  $ 25,631     $ 306,750  


 
14

 


Operating activities

The net loss in the period was greater than the non-cash adjustments to reconcile the changes in the balance sheet and statement of operations, which is the reason cash used in operating activities was negative.


Investing activities

The net cash used in investing activities consisted primarily of payment for drilling expenses on oil and gas properties of $523,558 on the Company’s properties.

Financing activities

The net cash provided by financing activities consisted primarily of cash provided from the issuance of two notes payable for $500,000, net of cash payments totaling $26,669.

As of June 30, 2014, we continue to use traditional and/or debt financing as well as through the issuance of stock to provide the capital we need to run our business.

Without cash flow from operations we will require additional cash resources, including the sale of equity or debt securities, to meet our planned capital expenditures and working capital requirements for the next 12 months. We will require additional cash resources due to changed business conditions, implementation of our strategy to successfully develop our Shallow Indian Oil Development Project, exploration drilling at Rancho Grande and or acquisitions we may decide to pursue. If our own financial resources and then current cash-flows from operations are insufficient to satisfy our capital requirements, we may seek to sell additional equity or debt securities or obtain a credit facility. The sale of additional equity securities will result in dilution to our stockholders. The incurrence of indebtedness will result in increased debt service obligations and could require us to agree to operating and financial covenants that could restrict our operations or modify our plans to grow the business. Financing may not be available in amounts or on terms acceptable to us, if at all. Any failure by us to raise additional funds on terms favorable to us, or at all, will limit our ability to expand our business operations and could harm our overall business prospects.

Our ability to obtain additional capital through additional equity and/or debt financing, and Joint Venture or Working Interest partnerships will also be important to our expansion plans. In the event we experience any significant problems assimilating acquired assets into our operations or cannot obtain the necessary capital to pursue our strategic plan, we may have to reduce the growth of our operations. This may materially impact our ability to increase revenue and develop our assets.

Contractual Obligations

An operating lease for rental office space was entered into beginning March 1, 2013 for two years at $2,150 per month. The original lease was amended to include additional space at a price of $1,100 per month for the same term.

Off-Balance Sheet Arrangements

As of the date of this report, we did not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Operation Plan

Our plan is to focus on the acquisition and drilling of prospective oil and natural gas mineral leases. Once we have tested a prospect as productive, subject to availability of capital, we will implement a development program with a regional operating focus in order to increase production and increase returns for our stockholders. Exploration, acquisition and development activities are currently focused in California. Depending on availability of capital, and other constraints, our goal is to increase stockholder value by finding and developing oil and natural gas reserves at costs that provide an attractive rate of return on our investments.

We expect to achieve these results by:

 
15

 


 
Investing capital in exploration and development drilling and in secondary and tertiary recovery of oil as well as natural gas;

 
Using the latest technologies available to the oil and natural gas industry in our operations;

 
Finding additional oil and natural gas reserves on the properties we acquire.

In addition to raising additional capital we plan to take on Joint Venture (JV) or Working Interest (WI) partners who may contribute to the capital costs of drilling and completion and then share in revenues derived from production. This economic strategy may allow us to utilize our own financial assets toward the growth of our leased acreage holdings, pursue the acquisition of strategic oil and gas producing properties or companies and generally expand our existing operations.

Because of our limited operating history we have yet to generate any revenues from the sale of oil or natural gas. Our activities have been limited to raising capital, negotiating WI agreements, becoming a publicly traded company and preliminary analysis of reserves and production capabilities from our exploratory test wells.

Our future financial results will depend primarily on: (i) the ability to continue to source and screen potential projects; (ii) the ability to discover commercial quantities of natural gas and oil; (iii) the market price for oil and natural gas; and (iv) the ability to fully implement our exploration and development program, which is dependent on the availability of capital resources. There can be no assurance that we will be successful in any of these respects, that the prices of oil and gas prevailing at the time of production will be at a level allowing for profitable production, or that we will be able to obtain additional funding to increase our currently limited capital resources.

Item 3. Quantitative and Qualitative Disclosure About Market Risk

This item in not applicable as we are currently considered a smaller reporting company.

Item 4T. Controls and Procedures
 
Evaluation of Disclosure Controls and Procedures

Our Chief Executive Officer, Armen Nahabedian, and our Chief Financial Officer, Philip McPherson evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this Report.  Based on that evaluation and assessment, Mr. Armen Nahabedian and Mr. Philip McPherson concluded that our disclosure controls and procedures are not designed at a reasonable assurance level and are not effective to provide reasonable assurance that information we are required to disclose in the reports that we file or submit under the Exchange Act 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 principal executive and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.  In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

 
16

 


From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We received notice on July 10, 2013 that the Center for Biological Diversity (“CBD”) had filed a law suit against the County of San Benito regarding the approval of our drilling permits for our Project Indian. The Board of Supervisors of San Benito County voted 5-0 in favor of our application to drill 15 exploration wells on our Project Indian lease. We believe the actions taken by the CBD are unwarranted and will vigorously defend our property rights that have been granted to us via our lease agreement.  On July 17, 2014 a judge from Monterey County Superior Court, issued an intended decision in favor of the CBD.  This ruling will require the preparation of an Environmental Impact Report (EIR) prior to further drilling at the Indian Oil Field.  As of this filing, Citadel has not yet received notice of entry of a final judgment in the case.

Item 1A. Risk Factors.

Our significant business risks are described in Item 1A. to Part I of Form 10-K for the year ended December 31, 2013 (filed April 14, 2014) to which reference is made herein.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Stock Issuances pursuant to Subscription Agreements

In December 2013, the Company approved the issuance of 918,183 common stock shares for $505,000 cash for payment to investors whose funds were received in December 2013. The shares were issued during January 2014.

In January 2014, the Company issued 205,085 common stock shares for cash for payment to investors for funds received in December 2013. Also in January 2014, the Company issued 1,477,275 shares at a price of $0.55 per share. This included the conversion of $300,000 in previously issued bridge loans plus accrued interest and new equity capital of $500,000. These shares were approved by the Company's board during the previous year, and such were shown as issued and outstanding as of December 31, 2013.
 
We believe that the issuance and sale of the above securities were exempt from the registration and prospectus delivery requirements of the Securities Act of 1933 by virtue of Section 4(2), Regulation D and/or Regulation S. The securities were issued directly by us and did not involve a public offering or general solicitation. The recipient of the securities was afforded an opportunity for effective access to files and records of our company that contained the relevant information needed to make her investment decision, including our financial statements and 34 Act reports. We reasonably believed that the recipient, immediately prior to issuing the securities, had such knowledge and experience in our financial and business matters that she was capable of evaluating the merits and risks of its investment. The recipient had the opportunity to speak with our management on several occasions prior to her investment decision. There were no commissions paid on the issuance and sale of the shares.

Option Grants

Our option grants are described in Form 10-K for the year ended December 31, 2013 (filed April 14, 2014) to which reference is made herein.

Subsequent Stock Issuances

On August 7, 2014 investors owning warrants for the company’s stock, converted early at a reduced price.  The first tranche of warrants equaled 500,000 shares at $0.55, which were reduced to $0.34 resulting in the issuance of 500,000 common stock shares for $170,000 or $0.34 per share.  The second tranche of warrants equaled 100,000 warrants at $1.00 per share.  These warrants were exchanged for the issuance of 300,000 shares at $0.34 for $102,000 in cash.

On August 7, 2014 the Company issued 400,000 shares of common stock at a price for $0.34 for legal, accounting and investor relation services.

Issuer Purchases of Equity Securities

 
17

 


We did not repurchase any of our equity securities from the time of our inception on November 6, 2006 through the period ended June 30, 2014.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

2012 Stock Incentive Plan

On September 1, 2012, we adopted the 2012 Stock Incentive Plan. We have reserved for issuance an aggregate of 10,000,000 shares of common stock under our 2012 Stock Incentive Plan.  To date 4,800,000 options and no shares of common stock have been granted under this plan.

Our employment agreements with executive officers are described in Form 10-K for the year ended December 31, 2013 (filed April 14, 2014) to which reference is made herein.

Item 6. Exhibits.

Exhibit No.
 
Description
10.4
 
2012 Stock Incentive Plan
     
31.1
 
Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
     
31.2
 
Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
     
32.1
 
Certifications 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
     
32.2
 
Certifications of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
     
101.INS*
 
XBRL Instance Document
     
101.SCH*
 
XBRL Taxonomy Extension Schema
     
101.CAL*
 
XBRL Taxonomy Extension Calculation Linkbase
     
101.DEF*
 
XBRL Taxonomy Extension Definition Linkbase
     
101.LAB*
 
XBRL Taxonomy Extension Label Linkbase
     
101.PRE*
 
XBRL Taxonomy Extension Presentation Linkbase

*
XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

 
18

 

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

   
CITADEL EXPLORATION, INC.
       
       
Date: August 18, 2014
 
By:
/S/ Armen Nahabedian
     
Armen Nahabedian
     
Chief Executive Officer
     
(Principal Executive Officer and duly authorized signatory)


 
19