10-K

10-K 1 skpi2014123110k.htm 10-K 10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K



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

For the fiscal year ended December 31, 2014



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: 333-99455

SKY PETROLEUM, INC.

(Exact Name of Registrant as Specified in its Charter)



Nevada		32-0027992
(State of other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

15950 N. Dallas Parkway, Suite 400
Dallas, Texas		75248
(Address of Principal Executive Offices)		(Zip Code)

(888) 344-9964

(Registrant’s Telephone Number, including Area Code)

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: None

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: Common Stock, $0.001 par value

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No x

Indicate by check mark whether the registrant (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 o No x

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 o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to the Form 10-K 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. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (Check one):



Large Accelerated Filer o	Non-Accelerated Filer o	Accelerated Filer o	Smaller Reporting Company x

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

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter: $1,346,068

The number of shares of the Registrant’s Common Stock outstanding as of August 28, 2015 was 76,533,709.

TABLE OF CONTENTS

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS	3

PART I	4

ITEM 1. BUSINESS	4

ITEM 1A. RISK FACTORS	8

ITEM 1B. UNRESOLVED STAFF COMMENTS	13

ITEM 2. PROPERTIES	13

ITEM 3. LEGAL PROCEEDINGS	13

ITEM 4. MINE SAFETY DISCLOSURE	14

PART II	15

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES	15

ITEM 6. SELECTED FINANCIAL DATA	17

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	17

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	21

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA	22

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	39

ITEM 9A CONTROLS AND PROCEDURES	39

ITEM 9B. OTHER INFORMATION	40

PART III	41

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE	41

ITEM 11. EXECUTIVE COMPENSATION	45

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDERS MATTERS	47

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE	48

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES	48

PART IV	49

SIGNATURES	49

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K and the exhibits attached hereto contain certain statements that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements concern our anticipated results and developments in our operations in future periods, planned exploration and development of our properties, plans related to our business and matters that may occur in the future. These statements relate to analysis and other information that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management.

Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as “expects” or “does not expect”, “is expected”, “anticipates” or “does not anticipate”, “plans”, “estimates” or “intends”, or stating that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved) are not statements of historical fact and may be forward-looking statements. Forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors which could cause actual events or results to differ from those expressed or implied by the forward-looking statements, including, without limitation:



-	risks related to default judgment in Western District of Austin District Court (Federal) related to AKBN litigation;
-	risks related to our limited operating history:
-	risks related to our need to raise additional capital to fund working capital requirements;
-	risks related to the historical losses and expected losses in the future and our ability to continue as a going concern;
-	risks related to our dependence on our executive officers;
-	risks related to fluctuations in oil and natural gas prices;
-	risks related to exploratory activities, drilling for and producing oil and natural gas;
-	risks related to liability claims from oil and gas operations;
-	risks related to legal compliance costs and litigation expenditures;
-	risks related to the unavailability of drilling equipment and supplies;
-	risks related to competition in the oil and natural gas industry;
-	risks related to period to period comparison of our financial results;
-	risks related to our securities, including trading activity, price fluctuation and volatility;
-	risks related to our ability to raise capital or enter into joint venture or working interest arrangements to complete exploration and development programs on acceptable terms, if at all; and
-	political, social and cultural risks associated with operations and conducting business in foreign countries.

This list is not exhaustive of the factors that may affect our forward-looking statements. Some of the important risks and uncertainties that could affect forward-looking statements are described further under the sections titled “Business”, “Risk Factors”, and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Annual Report. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, believed, estimated or expected. Our management has included projections and estimates in this Annual Report, which are based primarily on management’s experience in the industry, assessments of our results of operations, discussions and negotiations with third parties and a review of information filed by our competitors with the Securities and Exchange Commission (which we refer to as the “SEC”) or otherwise publicly available. We caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. We disclaim any obligation subsequently to revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events, except as required by law.

We qualify all the forward-looking statements contained in this Annual Report by the foregoing cautionary statements.

PART I

ITEM 1. BUSINESS

Overview

Our primary business is to identify opportunities to either make direct property acquisitions or to fund exploration or development of oil and natural gas properties of others under arrangements in which we will finance the costs in exchange for interests in the oil or natural gas revenue generated by the properties. Such arrangements are commonly referred to as farm-ins to us, or farm-outs by the property owners farming out to us.

As used herein, the terms, “Sky Petroleum,” “Sky,” “Company,” “we,” “us,” and “our” refer to Sky Petroleum, Inc. and related subsidiaries.

We were incorporated in the State of Nevada in August 2002 under the corporate name The Flower Valet. In 2004, we began to reassess our business plan and to seek business opportunities in other industries, including the oil and gas industry. On December 20, 2004, at our annual meeting of stockholders, our stockholders approved an amendment to our Articles of Incorporation, changing our name from The Flower Valet to Seaside Exploration, Inc. Subsequently, on March 28, 2005, we changed our name from Seaside Exploration, Inc. to Sky Petroleum, Inc. and began actively identifying opportunities to make direct property acquisitions and to fund exploration and development of oil and natural gas properties.

On October 8, 2010, the Company filed a Certificate of Designation with the Secretary of State for the State of Nevada to designate 5,000,000 shares of the Company’s preferred stock as shares of Series B Preferred Stock (the "Series B Preferred Shares"). The Company issued 3,863,636 Series B Preferred Shares to a consultant (“the Consultant”) under the terms of a consultant agreement related to the final approval of the PSC.

As of December 31, 2014, the Company had four wholly-owned subsidiaries, two incorporated in Cyprus: Sastaro Limited (“Sastaro”) and Bekata Limited ("Bekata”) which owns 100% of Sastaro and a third Sky Petroleum (Albania) Inc., a Cayman Islands corporation and qualified branch in Albania, incorporated for the purposes of holding interests in Albania. On October 31, 2013, the Company entered into a Joint Venture Shareholders agreement, with Hyde Resources Ltd., incorporated in Northern Ireland (the " JV Corporation"). The Company established Sky Petroleum UK Limited, incorporated in England and Wales (the "Sky JV Sub"), a wholly owned subsidiary of the Company. Sky JV Sub owns 75% of the Joint Venture shares.

SKY PETROLEUM, INC.

ORGANIZATION STRUCTURE

Sastaro was incorporated on March 28, 2005. Bekata was incorporated on February 7, 2005. Sky Petroleum (Albania) Inc. was incorporated on February 17, 2011.

Our principal corporate and executive offices are located at 15950 N. Dallas Parkway, Suite 400, Dallas, Texas 75248. Our telephone number is (888) 344-9964. We maintain a website at www.skypetroleum.com. Information contained on our website is not part of this Annual Report.

The Company cannot be certain that its existing sources of cash will be adequate to meet our liquidity requirements. However, management has implemented plans to improve liquidity through slowing or stopping certain planned expenditures and improvements to results from operations. Management plans to continue to obtain funding through equity, debt or other securities offerings. There can be no assurance that the capital raising efforts will be successful or that our results of operations will materially improve in either the short-term or long-term and accordingly, we may be unable to meet our obligations as they become due.

A fundamental principle of the preparation of financial statements in accordance with generally accepted accounting principles is the assumption that an entity will continue in existence as a going concern, which contemplates continuity of operations and the realization of assets and settlement of liabilities occurring in the ordinary course of business. However, this principle is applicable to all entities except for entities in liquidation or entities for which liquidation appears imminent. In accordance with this requirement, our policy is to prepare our consolidated financial statements on a going concern basis unless we intend to liquidate or have no other alternative but to liquidate. The Company's consolidated financial statements have been prepared on a going concern basis and do not reflect any adjustments that might specifically result from the outcome of this uncertainty.

History

On June 24, 2010, Sky Petroleum, Inc. (the "Company") entered into a Production Sharing Contract (“PSC”) with the Ministry of Economy, Trade and Energy of Albania, acting through the National Agency of Natural Resources of Albania (“AKBN”). The PSC granted Sky Petroleum exclusive rights to three exploration blocks (Block Four, Block Five and Block Dumre) in the Republic of Albania (the “Concession Area”).

On December 23, 2011, the Company delivered Notice of Arbitration under the Arbitration Rules of the United Nations Commission on Internal Trade Law to National Agency of Natural Resources and to the Ministry of Economy, Trade and Energy of Albania (the "Arbitration") to institute an arbitration proceeding against the Ministry of Economy, Trade and Energy of Albania, acting by and through AKBN, for breach of the PSC in accordance with Article XXI of the PSC. The arbitration proceeding arose out of the termination of the PSC.

On May 7, 2013, the Arbitration Tribunal ruled that (i) AKBN provided proper notice of the termination of the PSC to Sky Petroleum on July 22, 2011, for Sky Petroleum's failure to deliver a conforming bank guarantee to AKBN by July 22, 2011, and

(ii) the PSC was properly terminated on November 17, 2011. The Arbitration Tribunal ruled Sky Petroleum to reimburse AKBN for total fees and expenses in connection with the Arbitration proceeding in the amount of EUR 382,774($501,511). As a result of the ruling, Sky Petroleum impaired its Investment in Oil and Gas Properties, net, related to acquisition and development costs for oil and gas projects in Albania by $10,205,220 to $0. See "Investment in Oil and Gas Properties" in the Notes to Condensed Consolidated Financial Statements for further details. As a result of the ruling Sky Petroleum impaired Investment in Oil and Gas Properties, net, related to acquisition and development costs for oil and gas projects in Albania to $0. The Company had an impairment charge of $10,205,220; and accrued a liability of $501,511 (EUR 382,774) related to liability arising from the obligation to reimburse AKBN for total fees and expenses in connection with the Arbitration proceeding plus interest at the rate of 6% per annum from May 7, 2013 through the end of December 31, 2014.

On May 20, 2015, the Company received a copy of a Notice of Default Judgment issued by the United States District Court for the Western District of Texas Austin Division (the “Court”) in the matter: Ministry of Energy and Industry of the Government of the Republic of Albania, formerly known as the Ministry of Economy, Trade and Energy (acting by and through the National Agency of Natural Resources) vs. Sky Petroleum, Inc. (Case No. 14-cv-0112-SS), issued on February 11, 2015 (the “Judgment”). The complaint was filed with the Court on December 12, 2014, as an application to confirm the foreign arbitration award arising out of the decision by an arbitration tribunal issued under the 1976 UNICITRAL RULES related to the arbitration proceeding between the Company and AKBN arising from the termination of a Production Sharing Contract dated June 24, 2010. The Judgment affirmed AKBN damages as described above in the May 7, 2013 ruling. The Company is currently in settlement discussions with AKBN.

Joint Venture Agreement

On October, 31, 2013, the Company entered into a Joint Venture Shareholders’ Agreement (the “JV Agreement”) with Hyde Resources Ltd., incorporated in Northern Ireland (the “JV Corporation”), Sky Petroleum UK Limited, incorporated in England and Wales ( “Sky JV Sub”), and SO Ventures Ltd., incorporated in Northern Ireland (the “SO Ventures”). Sky JV Sub, is a wholly owned subsidiary of Sky Petroleum. Sky JV Sub owns 300 ordinary shares of the JV Corporation, while the Irish SO Ventures owns 100 ordinary shares of the JV Corporation. Each ordinary share was issued for 1 British Pound.

The purpose of the JV Corporation is to obtain licenses and to conduct technical, environmental and exploration due diligence; raise capital and commence into one or more joint venture projects (each a “JVC Project”) for the purposes of conducting,

Exploration, Development and Commercialization of oil and gas in the Area of Interest (as those terms are defined in the JV Agreement). Pursuant to the terms of the JV Agreement, the Parties will jointly use commercially reasonable efforts to jointly identify and secure property, rights and concessions in the Area of Interest. The Parties will also jointly determine the capital requirements of each JVC Project and use commercially reasonable efforts to obtain the required capital.

Sky JV Sub has undertaken to advance funds through loans or use commercially reasonable efforts to identify and secure loans or advancement of funds from bona fide arms’ length third party lenders, on commercially reasonable terms, to fund the reasonable business costs and general and administrative expenses of the JV Corporation and to fund the business from Exploration through to Discovery and onto the Delivery of a Development Plan (as those terms are defined in the JV Agreement). We have guaranteed the due and punctual performance of all obligations of Sky JV Sub under or in connection with the JV Agreement if and when they become performable in accordance with the terms of the JV Agreement (the “Guaranteed Obligations”). We further agreed to indemnify the SO Ventures against any losses, costs and expenses suffered or incurred by the SO Ventures arising out of, or in connection with: (a) any failure of Sky JV Sub to perform or discharge the Guaranteed Obligations; or (b) any of the Guaranteed Obligations being or becoming totally or partially unenforceable; but our obligations or liability under the indemnity shall be no greater than Sky JV Sub’s obligations or liability under the JV Agreement. There has been no activity or operations in the Joint Venture and no property acquired as of December 31, 2014.

The Board of Directors of the JV Corporation has responsibility for the supervision and management of the JV Corporation and its Business. The JV Corporation shall have a minimum of 5 directors, three of whom are appointed by Sky JV Sub and 2 of whom are appointed by SO Ventures. At all times, the Sky JV Sub appointees will make up a majority of the board of directors. The JV Agreement contains other customary terms and agreements between the parties.

The JV Corporation is also governed by the terms of its Articles of Association, which adopt the model articles for private companies limited by shares contained in Schedule 1 of the Companies (Model Articles) Regulations 2008 of Northern Ireland. The foregoing description of the JV Agreement and the Articles of Association is qualified in its entirety by reference to the full-text of the JV Agreement and the Articles of Association, a copies of which are filed on Form 8-K dated October 28, 2013.

Production Sharing Contract with the Ministry of Economy, Trade and Energy of Albania:

On June 24, 2010, Sky entered into a Production Sharing Contract with the Ministry of Economy, Trade and Energy of Albania, acting through the AKBN. The PSC granted Sky Petroleum exclusive rights to three exploration blocks (Block Four, Block Five and Block Dumre) in the Republic of Albania.

The Company's expenditures related to the Albania exploration blocks consisted of acquisition costs totaling $50,000, and $850,000 for fees to consultants for locating and negotiating the Company's investment in the Albania exploration blocks, $850,000 for fees related to evaluations and assessments of the concession area, and $50,000 towards the $100,000 allocation for training and education for the first year exploration period. In addition, 3 million shares of common stock with a fair value of $1,170,000, plus 3,863,636 Preferred Shares Series B with a value of $7,820,000, were issued to a consultant for expertise provided to the Company in acquiring and negotiating the acquisition of oil and gas properties.

On December 23, 2011, Sky Petroleum delivered Notice of Arbitration under the Arbitration Rules of the United Nations Commission on Internal Trade Law to National Agency of Natural Resources and to the Ministry of Economy, Trade and Energy of Albania to institute an arbitration proceeding against the Ministry of Economy, Trade and Energy of Albania, acting by and through AKBN, for breach of the PSC in accordance with Article XXI of the PSC. The arbitration proceeding arose out of the termination of the PSC. On May 7, 2013, the Arbitration Tribunal ruled that (i) AKBN provided proper notice of the termination of the PSC to Sky Petroleum on July 22, 2011, for Sky Petroleum's failure to deliver a conforming bank guarantee to AKBN by July 22, 2011, and (ii) the PSC was properly terminated on November 17, 2011.

As a result of the ruling Sky Petroleum impaired Investment in Oil and Gas Properties, net, related to acquisition and development costs for oil and gas projects in Albania to $0. The Company had an impairment charge of $10,205,220; and accrued a liability of $501,511 (EUR 382,774) related to liability arising from the obligation to reimburse AKBN for total fees and expenses in connection with the Arbitration proceeding plus interest at the rate of 6% per annum from May 7, 2013 through the end of December 31, 2014.

tribunal issued under the 1976 UNICITRAL RULES related to the arbitration proceeding between the Company and AKBN arising from the termination of a PSC. The Judgment affirmed AKBN damages as described above in the May 7, 2013 ruling. The Company is currently in settlement discussions with AKBN.

Other Projects:

Komi Republic - Russian Federation

In 2007, we acquired a minority stake in the development of an oilfield in the Komi Republic of the Russian Federation by acquiring a 3.9% interest, subject to dilution, in Pechora Energy through its UK parent company, Concorde Oil & Gas Plc. (“Concorde”). This acquisition was essentially a carried interest. Pechora Energy holds the production license for the Luzskoye field in the Komi Republic. During March 2010, Concorde’s directors noted that Concorde was in the process of disposing its operating assets to one of its majority shareholders - Kuwait Energy Company (“KEC”). The completion of this transaction is subject to a number of conditions, including regulatory consents, bank consent, and approval of KEC shareholders. As a result of these events, and as of December 31, 2010, the investment in this project was impaired to zero. As of December 31, 2014, the Company has not received any proceeds related to the disposition of these assets.

Competition

The oil and natural gas industry is intensely competitive, and we compete with other companies that have greater resources. Many of these companies not only explore for and produce oil and natural gas, but also carry on midstream and refining operations and market petroleum and other products on a regional, national or worldwide basis. These companies may be able to pay more for productive oil and natural gas properties and exploratory prospects or define, evaluate, bid for and purchase a greater number of properties and prospects than our financial or human resources permit. In addition, these companies may have a greater ability to continue exploration activities during periods of low oil and natural gas market prices. Our larger or integrated competitors may be able to absorb the burden of existing, and any changes to, federal, state, local and tribal laws and regulations more easily than we can, which would adversely affect our competitive position. Our ability to acquire additional properties and to discover reserves in the future will be dependent upon our ability to evaluate and select suitable properties and to consummate transactions in a highly competitive environment. In addition, because we have fewer financial and human resources than many companies in our industry, we may be at a disadvantage in bidding for exploratory prospects and producing oil and natural gas properties.

SEC Rules and Regulations

Our oil and gas reporting disclosure obligations with the SEC are regulated under Section 1200 of Regulation S-K and Rule 4-10 of Regulation S-X.

Pursuant to the SEC rules and regulations:


•	Companies must use first-of the month pricing to calculate the 12-month average commodity price unless contractual arrangements designate the price to be used;


•	Companies that produce oil and natural gas from nontraditional resources (such as oil sands, bitumen and shale) may report such resources as oil and gas reserves instead of mining reserves;


•	Probable and possible reserves may be disclosed separately on a voluntary basis;


•	For reserves to be proved, production of the reserves must be reasonably certain, meaning there is a high degree of confidence that the quantities will be recovered and the well from which the reserves are to be recovered is scheduled to be drilled within the next five years, unless the specific circumstances justify a longer time;


•	Reserves must be estimated through the use of reliable technology in addition to flow tests and production history;


•	Additional disclosure is required regarding the qualifications of the chief technical person who oversees the reserves estimation process and a general discussion of our internal controls used to assure the objectivity of the reserves estimate;


•	Disclosure of reserves, production, drilling activity and additional information is required to be given by geographic area; and


•	Companies must provide disclosure in tabular format of proved developed reserves, proved undeveloped reserves and total proved reserves.

Reserves Reported to Other Agencies

No reserve estimates were filed with a federal authority or agency.

Productive Wells and Acreage

As of December 31, 2014, we had no productive wells or acreage.

Undeveloped Acreage

The Company does not have any undeveloped acreage.

Drilling Activities

The Company had no drilling activities during the years ended December 31, 2014 and 2013.

Present Activities and Delivery Commitments

As of the date of this Annual Report, the Company does not have any wells in the process of drilling, water floods being installed, pressure maintenance operations, or other similar oil and gas related activities which it is conducting.

As of the date of this Annual Report, the Company does not have any delivery commitments for oil and gas quantities in the future.

ITEM 1A. RISK FACTORS

There are many factors that affect our business, prospects, liquidity and the results of operations, some of which are beyond the control of the Company. The following is a discussion of some, but not all, of these and other important risk factors that may cause the actual results of our operations in future periods to differ materially from those currently expected or desired. Additional risks not presently known to management or risks that are currently believed to be immaterial, but which may become material, may also affect our business, prospects, liquidity and results of operations. Our failure to successfully address the risks and uncertainties described below would have a material adverse effect on our business, financial condition and/or results of operations, and the trading price of our common stock may decline and investors may lose all or part of their investment. We cannot assure you that we will successfully address these risks or other unknown risks that may affect our business. Readers should carefully consider the risks and uncertainties described below before deciding whether to invest in shares of our common stock.

Risks related to our company

We may be unable to satisfy the default judgment entered against us in Western District of Texas Austin Division Federal Court.

Resources) vs. Sky Petroleum, Inc. (Case No. 14-cv-0112-SS), issued on February 11, 2015. The complaint was filed with the Court on December 12, 2014, as an application to confirm the foreign arbitration award arising out of the decision by an arbitration tribunal issued under the 1976 UNICITRAL RULES related to the arbitration proceeding between the Company and AKBN arising from the termination of a PSC. The Judgment affirmed AKBN damages as described above in the May 7, 2013 ruling. The Company is currently in settlement discussions with AKBN.

We have a history of losses and will require additional financing to fund working capital requirements and ongoing efforts to secure oil and gas properties. Failure to obtain additional financing could have a material adverse effect on our financial condition and could cast uncertainty on our ability to continue as a going concern.

We have limited working capital and we will need to raise additional capital to fund working capital requirements. We will be required to raise additional funds during 2015. We cannot be certain that additional capital or other types of financing will be available if needed or that, if available, the terms of such financing will be favorable or acceptable to us. Our ability to arrange additional financing in the future will depend, in part, on the prevailing capital market conditions as well as our business performance. Our ability to continue on a going concern basis beyond the next twelve months depends on its ability to successfully raise additional financing for the substantial capital expenditures required to achieve planned principal operations.

We do not have sufficient capital to file our periodic reports under Section 13 of the Securities Exchange Act of 1934, and are not current in our reporting obligations. Our inability to file reports on a timely basis may adversely affect our ability to raise capital through the issuance of equity securities and our shareholders’ ability to sell or trade our equity securities.

Because of our historical losses and expected losses in the future, it will be difficult to forecast when we will achieve profitability, if ever.

We have incurred net losses since our inception and expect to incur further losses for the foreseeable future. It is difficult to determine when we will achieve profitability, if ever. If we are unable to generate revenues and achieve profitability, we may be forced to go out of business.

We depend on our executive officers for critical management decisions and industry contacts.

We are dependent upon the continued services of Karim Jobanputra, our principal executive officer and principal accounting officer and chairman of the board who have significant experience in the oil and gas industry. We do not carry key person insurance on their lives. Mr. Jobanputra is an entrepreneur and may not dedicate 100% of their business efforts to the business of Sky. Our executive officer and directors have other business interests, some of which may be in the oil and gas industry, and may serve on the board of directors or provide consulting services for other companies. The loss of the services of our executive officer and board members, through incapacity or otherwise, would be costly to us and would require us to seek and retain other qualified personnel. See “Directors, Executive Officers, and Corporate Governance” below.

A substantial or extended decline in oil and natural gas prices could reduce our future revenue and earnings.

The price we receive for future oil and natural gas production will heavily influence our revenue, profitability, access to capital and rate of growth. Oil and natural gas are commodities and their prices are subject to wide fluctuations in response to relatively minor changes in supply and demand. Historically, the markets for oil and natural gas have been volatile and in the recent past oil and natural gas prices have been significantly above historic levels. These markets will likely continue to be volatile in the future and current prices for oil and natural gas may decline in the future. The prices we may receive for any future production, and the levels of this production, depend on numerous factors beyond our control. These factors include the following:


•	changes in global supply and demand for oil and natural gas


•	actions by the Organization of Petroleum Exporting Countries, or OPEC;


•	actions by non OPEC countries;


•	political conditions, including embargoes, which affect other oil-producing activities;


•	levels of global oil and natural gas exploration and production activity;


•	levels of global oil and natural gas inventories;


•	weather conditions affecting energy consumption;


•	technological advances affecting energy consumption; and


•	prices and availability of alternative fuels.

Lower oil and natural gas prices may not only decrease our future revenues but also may reduce the amount of oil and natural gas that we can produce economically. A substantial or extended decline in oil or natural gas prices may reduce our earnings, cash flow and working capital and the ability to obtain funding either through debt or equity.

Drilling for and producing oil and natural gas are high risk activities with many uncertainties that could substantially increase our costs and reduce our profitability.

Oil and natural gas exploration is subject to numerous risks beyond our control; including the risk that drilling will not result in any commercially viable oil or natural gas reserves.

The total cost of drilling, completing and operating wells will be uncertain before drilling commences. Overruns in budgeted expenditures are common risks that can make a particular project uneconomic. Further, many factors may curtail, delay or cancel drilling, including the following:


•	delays imposed by or resulting from compliance with regulatory requirements;


•	pressure or irregularities in geological formations;


•	shortages of or delays in obtaining equipment and qualified personnel;


•	equipment failures or accidents;


•	adverse weather conditions;


•	reductions in oil and natural gas prices; and


•	limitations in the market for oil and natural gas.

We may incur substantial losses and be subject to substantial liability claims as a result of our oil and natural gas operations.

Our operations will be subject to risks associated with oil and natural gas operations. Losses and liabilities arising from uninsured and under insured events could materially and adversely affect the payment of production revenues to us, if any. Our oil and natural gas exploration activities will be subject to all of the operating risks associated with drilling for and producing oil and natural gas, including the possibility of:


•	environmental hazards, such as uncontrollable flows of oil, natural gas, brine, well fluids, toxic gas or other pollution into the environment, including groundwater contamination;


•	abnormally pressured formations;


•	mechanical difficulties, such as stuck oilfield drilling and service tools and casing collapse;


•	Unexpected failures of key equipment used in the oil and gas production process;


•	fires and explosions;


•	personal injuries and death; and


•	natural disasters.

Any of these risks could adversely affect our ability to operate or result in substantial losses. These risks may not be insurable or we may elect not to obtain insurance if the cost of available insurance is excessive relative to the risks presented. In addition, pollution and environmental risks generally are not fully insurable. If a significant accident or other event that is not fully covered by insurance occurs, it could adversely affect our operations.

Market conditions or operational impediments may hinder our access to oil and natural gas markets or delay our production.

Market conditions or the unavailability of satisfactory oil and natural gas transportation arrangements may hinder access to oil and natural gas markets or delay production, if any, on our properties. The availability of a ready market for our future oil and natural gas production will depend on a number of factors, including the demand for and supply of oil and natural gas and the proximity of reserves to pipelines and terminal facilities.

We are subject to complex laws that can affect the cost, manner and feasibility of doing business thereby increasing our costs and reducing our profitability.

Development, production and sale of oil and natural gas are subject to laws and regulations. Matters subject to regulation include:


•	permits for drilling operations;


•	reports concerning operations;


•	spacing of wells;


•	unitization and pooling of properties; and


•	taxation.

Failure to comply with these laws may also result in the suspension or termination of operations and liabilities under administrative, civil and criminal penalties. Moreover, these laws could change in ways that substantially increase the costs of doing business. Any such liabilities, penalties, suspensions, terminations or regulatory changes could materially and adversely affect our financial condition and results of operations.

The unavailability or high cost of drilling rigs, equipment, supplies, personnel and oilfield services could adversely affect our ability to execute our plans on a timely basis and within our budget.

Shortages or the high cost of drilling rigs, equipment, supplies or personnel could delay or adversely affect development operations on our properties, which could have a material adverse effect on our business, financial condition or results of operations. Rising or unforeseen costs related to drilling and technical engineering may increase the cost related to drilling and completing the wells, which may either require us to contribute additional capital to drilling of the wells or cause dilution in our right to receive revenue from production, if any.

Competition in the oil and natural gas industry is intense, which may increase our costs and otherwise adversely affect our ability to compete.

We operate in a highly competitive environment for prospects suitable for exploration, marketing of oil and natural gas and securing the services of trained personnel. Many of our competitors possess and employ financial, technical and personnel resources substantially greater than ours, which can be particularly important in the areas in which we operate. Those companies may be able to pay more for prospective oil and natural gas properties and prospects and to evaluate, bid for and purchase a greater number of properties and prospects than our financial or personnel resources permit. In order for us to compete with these companies, we may have to increase the amounts we pay for prospects, thereby reducing our profitability.

We may not be able to compete successfully in acquiring prospective reserves, developing reserves, marketing oil and natural gas, attracting and retaining quality personnel and raising additional capital.

Our ability to acquire additional prospects and to find and develop reserves in the future will depend on our ability to evaluate and select suitable properties and to consummate transactions in a highly competitive environment. In addition, there is substantial competition for capital available for investment in the oil and natural gas industry. Our inability to compete successfully in these areas could have a material adverse effect on our business, financial condition or results of operations.

Recent market events and general economic conditions.

The recent unprecedented events in global financial markets have had a profound impact on the global economy. Many industries, including the oil and gas industry, are impacted by these market conditions. Notwithstanding various actions by the United States. and foreign governments, concerns about the general condition of the capital markets, financial instruments, banks, investment banks, insurers and other financial institutions could cause the broader credit markets to further deteriorate and stock markets to decline substantially. In addition, general economic indicators have deteriorated, including declining consumer sentiment, increased unemployment and declining economic growth and uncertainty about corporate earnings.

These unprecedented disruptions in the current credit and financial markets have had a significant material adverse impact on a number of financial institutions and have limited access to capital and credit for many companies. These disruptions could, among other things, make it more difficult for us to obtain, or increase its cost of obtaining, capital and financing for its operations. A continued or worsened slowdown in the financial markets or other economic conditions, including but not limited to, consumer spending, employment rates, business conditions, inflation, fuel and energy costs, consumer debt levels, lack of available credit, the state of the financial markets, interest rates, and tax rates may adversely affect our growth and profitability. Specifically:


•	the global credit/liquidity crisis could impact the cost and availability of financing and our overall liquidity;


•	the volatility of oil and gas prices may impact our revenues, profits and cash flow;


•	volatile energy prices, commodity and consumables prices and currency exchange rates impact potential production costs; and


•	the devaluation and volatility of global stock markets impacts the valuation of our equity securities

These factors could have a material adverse effect on our financial condition and results of operations.

We have never declared or paid cash dividends on our common stock. We currently intend to retain future earnings to finance the operation, development and expansion of our business.

We do not anticipate paying cash dividends on our common stock in the foreseeable future. Payment of future cash dividends, if any, will be at the discretion of our board of directors and will depend on our financial condition, results of operations, contractual restrictions, capital requirements, business prospects and other factors that our board of directors considers relevant.

Accordingly, investors will only see a return on their investment if the value of our securities appreciates.

The market for our common shares has been volatile in the past, and may be subject to fluctuations in the future.

The market price of our common stock on the OTCBB has ranged from a high of $0.10 and a low of $0.01 during the twelve-month period ended December 31, 2014. As of August 28, 2015, the market price for our common stock closed at $0.02 on the OTCBB. See “Market for Registrant’s Common Equity, and Related Stockholder Matters and Issuer Purchases of Equity Securities”. We cannot assure you that the market price of our common stock will not significantly fluctuate from its current level. The market price of our common stock may be subject to wide fluctuations in response to quarterly variations in operating results, changes in financial estimates by securities analysts, or other events or factors. In addition, the financial markets have experienced significant price and volume fluctuations for a number of reasons, including the failure of the operating results of certain companies to meet market expectations that have particularly affected the market prices of equity securities of many companies that have often been unrelated to the operating performance of such companies. These broad market fluctuations, or any industry-specific market fluctuations, may adversely affect the market price of our common stock. In the past, following periods of volatility in the market price of a company’s securities, class action securities litigation has been instituted against such a company. Such litigation, whether with or without merit, could result in substantial costs and a diversion of management’s attention and resources, which would have a material adverse effect on our business, operating results and financial condition.

Broker-dealers may be discouraged from effecting transactions in our common stock because our common shares are considered a penny stock and are subject to the penny stock rules.

Rules 15g-1 through 15g-9 promulgated under the Securities Exchange Act of 1934 as amended (“Exchange Act”), impose sales practice and disclosure requirements on certain brokers-dealers who engage in certain transactions involving a penny stock. Subject to certain exceptions, a penny stock generally includes any non-NASDAQ equity security that has a market price of less than $5.00 per share. The market price of our common stock on the OTCBB during the period from November 6, 2003 to December 31, 2014 ranged between a high of $3.20 and a low of $0.01 per share, and our common stock is deemed penny stock for the purposes of the Exchange Act. The additional sales practice and disclosure requirements imposed upon brokers-dealers may discourage broker-dealers from effecting transactions in our common stock, which could severely limit the market liquidity of the stock and impede the sale of our stock in the secondary market.

A broker-dealer selling penny stock to anyone other than an established customer or accredited investor, generally, an individual with net worth in excess of $1,000,000 or an annual income exceeding $200,000, or $300,000 together with his or her spouse, must make a special suitability determination for the purchaser and must receive the purchaser’s written consent to the transaction prior to sale, unless the broker-dealer or the transaction is otherwise exempt. In addition, the penny stock regulations require the broker-dealer to deliver, prior to any transaction involving a penny stock, a disclosure schedule prepared by the SEC relating to the penny stock market, unless the broker-dealer or the transaction is otherwise exempt. A broker-dealer is also required to disclose commissions payable to the broker-dealer and the registered representative and current quotations for the securities. Finally, a broker-dealer is required to send monthly statements disclosing recent price information with respect to the penny stock held in a customer’s account and information with respect to the limited market in penny stocks.

There is substantial doubt about our ability to continue our activities as a going concern, which may hinder our ability to obtain future financing.

The continuation of the Company as a going concern is dependent upon the Company attaining and maintaining profitable operations, and raising additional capital. The financial statements do not include any adjustment relating to the recovery and classification of recorded asset amounts or the amount and classification of liabilities that might be necessary should our company discontinue operations. Due to the uncertainty of our ability to meet our current operating expenses, in their report on the annual financial statements for the years ended December 31, 2014, our independent auditors included an explanatory paragraph regarding the doubt about our ability to continue as a going concern. Our financial statements contain additional note disclosures describing the status of the Company. The continuation of our business is dependent upon us raising additional financial support, and maintaining profitable operations. The issuance of additional equity securities by us could result in a substantial dilution in the

equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments. If the Company should fail to continue as a going concern, you may lose the value of your investment in the Company.

ITEM 1B. UNRESOLVED STAFF COMMENTS

Not Applicable

ITEM 2. PROPERTIES

Our principal corporate and executive offices are located at 15950 N. Dallas Parkway, Suite 400, Dallas, Texas 75248. Our telephone number is (888) 344-9964. We rent our corporate office space on a month-to-month basis. We do not currently maintain any investments in real estate, real estate mortgages or securities of persons primarily engaged in real estate activities, nor do we expect to do so in the foreseeable future.

ITEM 3. LEGAL PROCEEDINGS

We are not aware of any material pending or threatened litigation or of any proceedings known to be contemplated by governmental authorities which are, or would be, likely to have a material adverse effect upon us or our operations, taken as a whole other than stated below. There are no material proceedings pursuant to which any of our directors, officers or affiliates or any owner of record or beneficial owner of more than 5% of our securities or any associate of any such director, officer or security holder is a party adverse to us or has a material interest adverse to us.

On May 7, 2013, the Arbitration Tribunal ruled that the PSC was properly terminated on November 17, 2011, and ruled Sky Petroleum to reimburse AKBN for total fees and expenses in connection with the Arbitration proceeding in the amount of EUR 382,774 ($501,511). As a result of the ruling Sky Petroleum impaired Investment in Oil and Gas Properties, net, related to acquisition and development costs for oil and gas projects in Albania to $ 0, and for the year ended December 31, 2014, Sky Petroleum had an impairment charge of $10,205,220; and accrued a liability of $501,511 (EUR 382,774) related to liability arising from the obligation to reimburse AKBN for total fees and expenses in connection with the Arbitration proceeding. As a result of the ruling Sky Petroleum impaired Investment in Oil and Gas Properties, net, related to acquisition and development costs for oil and gas projects in Albania to $0. The Company had an impairment charge of $10,205,220; and accrued a liability of $501,511 (EUR 382,774) related to liability arising from the obligation to reimburse AKBN for total fees and expenses in connection with the Arbitration proceeding plus interest at the rate of 6% per annum from May 7, 2013 through the end of December 31, 2014.

On May 20, 2015, the Company received a copy of a Notice of Default Judgment issued by the United States District Court for the Western District of Texas Austin Division in the matter: Ministry of Energy and Industry of the Government of the Republic of Albania, formerly known as the Ministry of Economy, Trade and Energy (acting by and through the National Agency of Natural Resources) vs. Sky Petroleum, Inc. (Case No. 14-cv-0112-SS), issued on February 11, 2015. The complaint was filed with the Court on December 12, 2014, as an application to confirm the foreign arbitration award arising out of the decision by an arbitration tribunal issued under the 1976 UNICITRAL RULES related to the arbitration proceeding between the Company and AKBN arising from the termination of a PSC.

The Company’s registered agent, Paracorp Incorporated (the “Registered Agent”), in Nevada was served the complaint and summons on December 22, 2014, notice of default judgment on February 12, 2015, and a request for production of documents on March 27, 2015. The Registered Agent failed to deliver the documents served on the Company to the Company. The Company contacted the Registered Agent on April 24, 2015, regarding an inquiry about the Judgment and was informed that no service had been made on the Company. After receipt of a demand letter from AKBN counsel dated May 20, 2015, the Registered Agent confirmed it had received prior service and indicated that it was unable to provide notice of the service to the Company. On May 21, 2015, the Company received copies of the documents served on the Registered Agent.

The Judgment affirmed AKBN damages as described above in the May 7, 2013 ruling. The Company is currently in settlement discussions with AKBN.

ITEM 4. MINE SAFETY DISCLOSURE

Not applicable.

PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our common stock is quoted as “SKPI” on the Over the Counter Bulletin Board ( “OTCBB”), which is sponsored by the Financial Industry Regulatory Authority ( “FINRA”). The OTCBB is a network of security dealers who buy and sell stock. The dealers are connected by a computer network, which provides information on current “bids” and “asks” as well as volume information. The OTCBB is not considered a “national exchange.” Our common stock commenced trading on the OTCBB on November 3, 2003.

The high and low bid quotations of our common stock on the OTCBB as reported by the FINRA were as follows:



Period	High		Low
2014
First Quarter	$	0.09	$	0.04
Second Quarter	$	0.08	$	0.04
Third Quarter	$	0.06	$	0.03
Fourth Quarter	$	0.10	$	0.01
2013
First Quarter	$	0.17	$	0.09
Second Quarter	$	0.18	$	0.05
Third Quarter	$	0.12	$	0.07
Fourth Quarter	$	0.12	$	0.06

The above quotations reflect inter-dealer prices, without retail mark-up, markdown or commission and may not necessarily represent actual transactions.

As of December 31, 2014, the closing bid quotation for our common stock was $0.03 per share as quoted by the OTCBB. On August 28, 2015, the closing bid quotation on our common stock was $0.02 as quoted by the OTCBB.

Holders

As of August 28, 2015, we had 76,533,709 shares of common stock outstanding, held by 36 registered stockholders.

Dividends

The declaration of dividends on our common shares is within the discretion of our board of directors and will depend upon the assessment of, among other factors, results of operations, capital requirements and the operating and financial condition of the Company. The Board has never declared a dividend on the common shares. At the present time, we anticipate that all available funds will be invested to finance the growth of our business.

Securities Authorized for Issuance under Equity Compensation Plans

EQUITY COMPENSATION PLAN INFORMATION



	Number of securities to be issued upon exercise of outstanding options, warrants, and rights	Weighted-average exercise price of outstanding options, warrants, and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
	(a)	(b)		(c)
Equity compensation plans approved by security holders ⁽¹⁾	2,400,000	$	0.49	4,200,959
Equity compensation plans not approved by security holders	N/A	N/A		N/A

(1)

We have two stock option plans: a stock incentive plan for non-U.S. residents and a stock incentive plan for U.S. residents. Our stock incentive plan for non-U.S. residents authorizes the issuance of stock options to acquire up to 10% of our issued and outstanding shares of common stock (currently 7,653,371 shares, based on 76,533,709 issued shares of common stock at December 31, 2014) , and our stock incentive plan for U.S. residents authorizes the issuance of stock options to acquire up to a maximum of 3,321,600 shares of common stock (less the number of shares issuable upon exercise of options granted by us under all other stock incentive plans on the date of any grant under the U.S. plan). As of December 31, 2014, 1,150,000 options were granted under the U.S. plan and 1,250,000 options were granted under the non-U.S. plan. A total of 6,403,371 options are available for grant under the Non-U.S. Plan and a total of 2,171,600 are available for grant under the U.S. Plan.

Adoption of Non-U.S. Stock Option Plan

On July 26, 2005, we adopted, and on July 31, 2006, our stockholders approved, the Sky Petroleum, Inc. Non-U.S. Stock Option Plan, effective as of April 1, 2005. The Non-U.S. Plan authorizes the issuance of stock options to acquire up to 10% of our issued and outstanding shares of common stock. The purpose of the Non-U.S. Plan is to aid us in retaining and attracting Non-U.S. residents that are capable of enhancing our prospects for future success, to offer such personnel additional incentives to exert maximum efforts for the success of our business, and to afford such personnel an opportunity to acquire a proprietary interest in the Company through stock options. Our Compensation Committee administers the Non-U.S. Plan and determines the terms and conditions under which options to purchase shares of our common stock may be awarded. The term of an option granted under the Non-U.S. Plan cannot exceed seven years and the exercise price for options granted under the Non-U.S. Plan cannot be less than the fair market value of our common stock on the date of grant.

Adoption of 2005 U.S. Stock Incentive Plan

On August 25, 2005, we adopted, and on July 31, 2006 our stockholders approved, the Sky Petroleum, Inc. 2005 U.S. Stock Incentive Plan for U.S. residents. The U.S. Plan authorizes the issuance of stock options and other awards to acquire up to a maximum of 3,321,600 shares of our common stock (less the number of shares issuable upon exercise of options granted by us under all other stock incentive plans on the date of any grant under the plan). The purpose of the U.S. Plan is to aid the Company in retaining and attracting U.S. personnel capable of enhancing our prospects for future success, to offer such personnel additional incentives to exert maximum efforts for the success of our business, and to afford such personnel an opportunity to acquire a proprietary interest in the Company through stock options and other awards. The U.S. Plan provides for the grant of incentive stock options (within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended), options that are not incentive stock options, stock appreciation rights and various other stock-based grants. Our Compensation Committee administers the U.S. Plan and determines the terms and conditions under which options to purchase shares of our common stock or other awards may be granted to eligible participants. The term of an incentive stock option granted under the U.S. Plan cannot exceed ten years and the exercise price for options granted under the U.S. Plan cannot be less than the fair market value of our common stock on the date of grant.

Repurchase of Securities

During the period covered by this Annual Report, neither us nor any of our affiliates repurchased common shares of the Company registered under Section 12 of the Exchange Act of 1934, as amended.

ITEM 6. SELECTED FINANCIAL DATA

Not applicable.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and related notes appearing elsewhere in this Annual Report. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including, but not limited to, those set forth under “Risk Factors” above and elsewhere in this Annual Report. See section” Cautionary Note Regarding Forward-Looking Statements” above.

This discussion and analysis should be read in conjunction with the accompanying consolidated financial statements of the Company and related notes. The discussion and analysis of the financial condition and results of operations are based upon the consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of any contingent liabilities at the financial statement date and reported amounts of revenue and expenses during the reporting period. On an on-going basis the Company reviews its estimates and assumptions. The estimates were based on historical experience and other assumptions that the Company believes to be reasonable under the circumstances. Actual results are likely to differ from those estimates under different assumptions or conditions, but the Company does not believe such differences will materially affect our financial position or results of operations. Critical accounting policies, the policies the Company believes are most important to the presentation of its financial statements and require the most difficult, subjective and complex judgments, are outlined below in the sub-section "Management’s Discussion and Analysis of Financial Condition and Results of Operations - Critical Accounting Policies,” and have not changed significantly.

Overview and Plan of Operations

Comparison of 2014 Statement of Operations to 2013 Statement of Operations

Net Income/Loss:

During the year ended December 31, 2014 we had net income of $66,014 as compared to a net loss of $12,918,008 during the year ended December 31, 2013.

We did not generate any revenue from operations in 2014 or 2013.

We do not expect to generate any operating revenue until we complete exploration and development on our properties.

Operating expenses:

Total operating income in 2014 of $134,675 as compared to total operating expenses of $12,906,438 for 2013, a decrease of $13,041,113. The operating income in 2014 primarily attributable to the Company negotiating a settlement reducing legal costs owed of $760,202 and a one-time impairment of Albanian assets in 2013 for the Albania oil and gas property of $10,205,220 and related arbitration expenses of $941,314. Additionally, a reduction in travel expenses for 2014 of $224,519 ($44,068 in 2014;

$268,587 in 2013) and decreases in other general and administrative expenses of $175,144 ($310,122 in 2014; $485,266 in 2013); decreases in consulting fees of $173,661 ($54,727 in 2014; $228,388 in 2013), and legal and accounting expenses decreased by $556,849 related to the Arbitration matter ($210,613 in 2014; $767,462 in 2013). We expect operating expenses to decrease in 2015 as our arbitration dispute was decided.

Liquidity and Capital Resources

A component of our operating plan is the ability to obtain additional capital through additional equity and/or debt financing to fund new projects. We had cash on hand of approximately $13,534 at December 31, 2014.

The current market conditions could make it difficult or impossible for us to raise necessary funds to meet our capital requirements. If we are unable to obtain financing through equity investments, we will seek alternative financing solutions including, but not limited to, credit facilities, debenture issuances or third party funding of our arbitration.

Net cash used in operating activities during the year ended December 31, 2014 was $458,461 as compared to net cash used in operating activities of $1,418,063 for the comparable period in 2013, a decrease of $959,602. This decrease in cash used in operations is primarily due to decreased operating results including reduced legal and consulting expenses. Cash provided by investing activities in 2014 of $0 as compared to $1,500,000 in 2013 from a maturing CD released. Cash from financing activities was $194,000 for issuance of shares in 2014 reduced by debt payments compared to $150,000 in 2013 for issuance of shares from the private placement proceeds of convertible debt.

Total assets as of December 31, 2014 were $33,041 compared to total assets of $303,499 as of December 31, 2013. Stockholder’s deficit as of December 31, 2014 was $1,759,074 compared to $2,101,261 as of December 31, 2013. The decrease in assets was related to cash outflows for operating expenses.

As of December 31, 2014 we had current assets of $13,534 which consists of cash and cash equivalents. We had current liabilities of $1,760,811 resulting in a working capital deficit of $1,747,277 for the twelve months ended December 31, 2014 as compared to $2,126,765 for the same period ended 2013. Total liabilities were $1,792,115 and $2,404,760 at December 31, 2014 and 2013, respectively.

In May 2014, the Company initiated subscriptions agreements for a non-brokered private placement to raise $400,000. Upon receipt of proceeds the Company will issue up to 8,000,000 Class D Units at $0.05 per unit to investors. Each Class D Unit consists of one share of common stock of the Company, par value US$0.001 (a “Common Share”) and one Class D Warrant (each, a “Class D Warrant”). Each Class D Warrant is exercisable to acquire one Common Share of the Company, par value US$0.001 at an exercise price of US$0.10 per Class D Warrant Share until May 29, 2016 (the two (2) year anniversary of the Closing Date). A related party entity invested $325,000 in units and paid in multiple transactions. The first payment was on June 23, 2014 for $55,000. The second payment was on June 25, 2014 for $45,000. A third payment was received on July 7, 2014 for $69,000 leaving a balance of $156,000 receivable from shareholder as of the date of this filing. Another accredited investor invested $75,000 worth in units and paid on June 12, 2014. On, September 9, 2014, the 8,000,000 Common Shares were issued to the investors as restricted stock.

On January 8, 2013 the Company obtained loans through the offer of 8% Convertible Promissory Notes due May 8, 2014 (the “Notes”) in the aggregate amount of $150,000 (the “Offering”). The Notes are convertible into shares of Common Shares of the Company (“Common Shares”) at a conversion price of $0.25 per share (the “Conversion Price”) and interest on the Notes is payable in cash or, at the option of the Company, in-kind in Common Shares at the Conversion Price. The note was extended to May 8, 2016.

Subsequent to December 31, 2014, effective May 5, 2015, the Company entered into a Note Purchase Agreement (“Note Purchase Agreement”) with an accredited investor (as defined under Rule 501(a) of Regulation D under the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”) outside the United States, in connection with the sale of a Convertible Promissory Note, due May 5, 2017 (the “Note”), in the principal amount of US$500,000. The Note is convertible into shares of common stock of the Company at a conversion price of US$0.08 per share. The Note Purchase Agreement contained customary representations and warranties. Under the terms of the Note Purchase Agreement, the Company issued a Note, due May 5, 2017, in the principal amount of US$500,000. The Note is convertible into Common Shares at the Conversion Price. Interest on the Note shall accrue at a rate equal to three percent (3%) per annum and interest on the Note is payable on the Maturity Date in cash or, at the option of the Company, in-kind in shares of common stock of the Company at the Conversion Price.

Default Interest shall increase to six percent (6%) per annum commencing immediately upon an Event of Default. Default Interest shall be paid in cash. An “Event of Default” is deemed to occur upon:


(a)	failure to pay principal and interest on any of the Notes when due;


(b)	proceedings are commenced for the winding-up, liquidation or dissolution of the Company, unless the Company in good faith actively and diligently contests such proceedings, decree, order or approval, resulting in a dismissal or stay thereof within 60 days of commencement;


(c)	a decree or order of a court of competent jurisdiction is entered adjudging the Company to be bankrupt or insolvent, or a petition seeking reorganization, arrangement or adjustment of or in respect of the Company is approved under applicable law relating to bankruptcy, insolvency or relief of debtors;

(d)

the Company makes an assignment for the benefit of its creditors, or petitions or applies to any court or tribunal for the appointment of a receiver or trustee for itself or any substantial part of its property, or commences for itself or acquiesces in any proceeding under any bankruptcy, insolvency, reorganization, arrangement or readjustment of debt law or statute or any proceeding for the appointment of a receiver or trustee for itself or any substantial part of its property, or suffers any such receivership or trusteeship; or


(e)	a resolution is passed for the winding-up or liquidation of the Company.

The Holder shall have the right, at its sole option, to declare this Note immediately due and payable, irrespective of the stated Maturity Date, upon an Event of Default.

Our lack of operating history makes predictions of future operating results difficult to ascertain. Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stage of development, particularly companies searching for opportunities in the oil and gas industry. Such risks include, but are not limited to, our ability to secure a drilling rig, our ability to successfully drill for hydrocarbons, commodity price fluctuations, delays in drilling or bringing production, if any, on line, an evolving business model and unpredictable availability of qualified oil and gas exploration prospects and the management of growth. To address these risks we must, among other things, implement and successfully execute our business and development plan, successfully identify future drilling locations, continue to rely on qualified independent consultants, respond to competitive developments, and attract, retain and motivate qualified personnel. There can be no assurance that we will be successful in addressing such risks, and the failure to do so can have a material adverse effect on our business prospects, financial condition and results of operations.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Inflation

We do not believe that inflation has had a significant impact on our consolidated results of operations or financial condition.

Critical Accounting Policies

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.

Investment in oil and gas properties

The Company follows the full cost method of accounting for oil and gas operations whereby exploration and development expenditures are capitalized. Such costs may include geological and geophysical, drilling, equipment and technical consulting directly related to exploration and development activities. The aggregate of net capitalized costs and estimated future development costs is amortized using the units of production method based on estimated proved oil and gas reserves.

Advances for oil and gas interests are transferred to oil and gas properties as actual exploration and development expenditures are incurred.

Costs related to unproved properties and major development projects may be excluded from costs subject to depletion until proved reserves have been determined or their value is impaired. These properties are assessed periodically and any impairment is transferred to costs subject to depletion.

Under the full cost method of accounting, the net book value of oil and natural gas properties, less related deferred income taxes, may not exceed a calculated "ceiling”. The ceiling limitation is the discounted estimated after-tax future net cash flows from proved oil and natural gas properties. In calculating future net cash flows, current prices and costs are generally held constant indefinitely. The net book value of oil and natural gas properties, less related deferred income taxes is compared to the ceiling on a quarterly and annual basis. Any excess of the net book value, less related deferred income taxes, is generally written off as an expense. Under rules and regulations of the SEC, all or a portion of the excess above the ceiling may not be written off if, subsequent to the end of the quarter or year but prior to the release of the financial results, prices have increased sufficiently that all or a portion of such excess above the ceiling would not have existed if the increased prices were used in the calculations.

Revenue is recognized in the period in which title to the petroleum or natural gas transfers to the purchaser.

Income taxes

We follow U.S. GAAP, for recording the provision for income taxes. Deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled. Deferred income tax expenses or benefits are based on the changes in the asset or liability each period. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change. Deferred income taxes may arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes in different periods. Deferred taxes are classified as current or non-current, depending on the classification of assets and liabilities to which they relate. Deferred taxes arising from temporary differences that are not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse.

Undistributed earnings of the Company’s foreign subsidiaries are considered to be indefinitely reinvested and, accordingly, no provision for U.S. federal income taxes has been provided thereon. Upon distribution of those earnings in the form of dividends or otherwise, the Company may be subject to both U.S. income taxes (subject to an adjustment for foreign tax credits) and withholding taxes payable to the foreign countries.

The Company’s wholly owned subsidiaries have prepared required foreign tax returns that were due for the years ended December 31, 2005 through 2013, approximately $33,000 has been included for potential tax liabilities, penalties and interest which will be due upon filing the returns with the appropriate countries.

The current Company policy classifies any interest recognized on an underpayment of income taxes as interest expense and classifies any statutory penalties recognized on a tax position taken as other general and administrative expense. We have recorded penalty and interest in the amount of $46,000 for 2006 and 2007 tax years. However, we have filed a request with the Internal Revenue Service for abatement of these penalties and interest and are awaiting the outcome of our request. There was no interest or other general and administrative expenses accrued or recognized related to income taxes for the years ended December 31, 2014 and 2013, respectively. The Company has not taken a tax position that would have a material effect on the financial statements or the effective tax rate for the year ended December 31, 2014 or during any prior years.

Contractual Obligations

Leases

The Company rents office facilities in Dallas, Texas on a month to month basis, totaling approximately $3,600 per year.

The Company leases office facilities in Dubai, United Arab Emirates, under a one year operating lease agreement that expires October 13, 2015, totaling approximately$36,000 in 2014 an $22,000 for 2015 .

Oil and Gas Properties Commitments and Contingencies

PSC Arbitration

On May 7, 2013, the Arbitration Tribunal ruled that the PSC was properly terminated on November 17, 2011, and ruled Sky Petroleum to reimburse AKBN for total fees and expenses in connection with the Arbitration proceeding in the amount of EUR 382,774 ($501,511). As a result of the ruling Sky Petroleum impaired Investment in Oil and Gas Properties, net, related to acquisition and development costs for oil and gas projects in Albania to $0, and for the year ended December 31, 2014, Sky Petroleum had an impairment charge of $10,205,220; and accrued a liability of $501,511(EUR 382,774) related to liability arising from the obligation to reimburse AKBN for total fees and expenses in connection with the Arbitration proceeding. (See "Legal Proceedings", above). As a result of the ruling Sky Petroleum impaired Investment in Oil and Gas Properties, net, related to acquisition and development costs for oil and gas projects in Albania to $0. The Company had an impairment charge of $10,205,220; and accrued a liability of $501,511 (EUR 382,774) related to liability arising from the obligation to reimburse AKBN for total fees and expenses in connection with the Arbitration proceeding plus interest at the rate of 6% per annum from May 7, 2013 through the end of December 31, 2014.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA



TABLE OF CONTENTS
	Page
Report of Independent Registered Public Accounting Firm	23
Consolidated Balance Sheets as of December 31, 2014 and 2013	24
Consolidated Statements of Operations for the years ended December 31, 2014 and 2013	25
Consolidated Statements of Changes in Stockholders' Deficit for years ended December 31, 2014 and 2013	26
Consolidated Statements of Cash Flows for the years ended December 31, 2014 and 2013	27
Notes to the Consolidated Financial Statements	28

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Sky Petroleum, Inc.

We have audited the accompanying consolidated balance sheets of Sky Petroleum, Inc. and subsidiaries (the “Company”), as of December 31, 2014 and 2013, and the related consolidated statements of operations, changes in stockholders’ deficit, and cash flows for the years then ended. The Company’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company, as of December 31, 2014 and 2013, and the consolidated results of their operations and their cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 1, the Company will need additional working capital to fund operations. This condition raises substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets, or the amounts and classification of liabilities that may result from the outcome of this uncertainty.

/s/ WHITLEY PENN LLP

Dallas, Texas

August 28, 2015

Sky Petroleum, Inc.

Consolidated Balance Sheets



	December 31,
	2014			2013
Assets
Current assets:
Cash and cash equivalents	$	13,534		$	277,995
Total Current Assets	13,534			277,995

Fixed assets, net	7,578			13,575
Deposits and other assets	11,929			11,929
Total Assets	$	33,041		$	303,499

Liabilities and Stockholders’ Deficit
Current liabilities:
Accounts payable and accrued liabilities	$	979,913		$	2,004,712
Accounts payable, related party	370,385			238,344
Current portion of long term note payable	254,529			—
Accrued interest	5,984			11,704
Note payable, related party	150,000			150,000
Total Current Liabilities	1,760,811			2,404,760
Long term note payable	31,304			—
Total Liabilities	1,792,115			2,404,760

Stockholders’ deficit:
Series A Preferred stock, $0.001 par value, 10,000,000 shares authorized, none outstanding	—			—
Series B Preferred stock, no par value, 5,000,000 shares authorized, 3,863,636 issued and outstanding	7,820,000			7,820,000
Common stock, $0.001 par value, 150,000,000 shares authorized, 76,183,709 and 68,133,709 issued, and 76,533,709 and 68,383,709 outstanding, respectively	76,184			68,134
Additional paid-in capital	43,740,178			43,316,055
Subscriptions due from Shareholders, related party	(156,000		)	—
Accumulated deficit	(53,239,436		)	(53,305,450		)
Total Stockholders’ Deficit	(1,759,074		)	(2,101,261		)
Total Liabilities and Stockholders’ Deficit	$	33,041		$	303,499

The accompanying notes are an integral part of these consolidated financial statements

Sky Petroleum, Inc. Consolidated Statements of Operations

	Years Ended December 31.
	2014			2013
Oil revenues	$	—		$	—
Expenses:
Depreciation	5,997			10,201
Arbitration costs	—			941,314
Legal and accounting	210,613			767,462
Travel	44,068			268,587
Consulting services	54,727			228,388
Impairment expense of oil & gas investment in Albania	—			10,205,220
Gain on settlement of accounts payable	(760,202		)	—
Other general and administrative	310,122			485,266
Total (income) expenses	(134,675		)	12,906,438
Net operating income (loss)	134,675			(12,906,438		)
Interest expense	(68,661		)	(11,570		)
Net income (loss)	$	66,014		$	(12,918,008	)

Net income (loss) per share - basic and diluted	$	—		$	(0.19	)
Weighted average number of common shares outstanding basic and diluted	73,167,151			68,383,709

The accompanying notes are an integral part of these consolidated financial statements.

Sky Petroleum, Inc.

Consolidated Statements of Changes in Stockholders’ Deficit

For the Years Ended December 31, 2014 and 2013



	Preferred Series B Shares	Preferred Series B Amount		Common Shares	Common Shares Amount		Additional Paid-in Capital			Subscriptions due from Shareholders, related party			Accumulated Deficit			Total Stockholders’ Equity(Deficit)
Balance at December 31, 2012	3,863,636	$	7,820,000	68,118,709	$	68,119	$	43,274,539		$	—		$	(40,387,442	)	$	10,775,216
Stock issued	—	—		15,000	15		(15		)	—			—			—
Stock based compensation	—	—		—	—		41,531			—			—			41,531
Net loss	—	—		—	—		—			—			(12,918,008		)	(12,918,008		)
Balance at December 31, 2013	3,863,636	7,820,000		68,133,709	68,134		43,316,055			—			(53,305,450		)	(2,101,261		)
Stock issued				8,000,000	8,000		392,000			—						400,000
Obligations due from shareholders, related party	—	—		—	—		—			(156,000		)	—			(156,000		)
Stock based compensation	—	—		50,000	50		32,123			—			—			32,173
Net income	—	—		—	—		—			—			66,014			66,014
Balance at December 31, 2014	3,863,636	$	7,820,000	76,183,709	$	76,184	$	43,740,178		$	(156,000	)	$	(53,239,436	)	$	(1,759,074	)

The accompanying notes are an integral part of these consolidated financial statements

Sky Petroleum, Inc.

Consolidated Statements of Cash Flows



	Twelve Months Ended
	December 31, 2014			December 31, 2013
Cash flows from operating activities:
Net income (loss)	$	66,014		$	(12,918,008	)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation	5,997			10,201
Share based compensation	32,173			41,531
Amortization of debt discount	7,149			—
Impairment of oil and gas investment in Albania	—			10,205,220
Gain on settlement of accounts payable	(760,202		)	—
Changes in operating assets and liabilities:
Deposits and other current assets	—			172,411
Accounts payable and accrued liabilities	190,408			1,070,582
Net cash used in operating activities	(458,461		)	(1,418,063		)
Cash flows from investing activities:
Redemption of certificate of deposit for letter of credit	—			1,500,000
Net cash provided by investing activities	—			1,500,000
Cash flows from financing activities:
Proceeds from convertible debt issuance	—			150,000
Proceeds from issuance of shares	244,000			—
Payments on debt	(50,000		)	—
Net cash provided by financing activities	194,000			150,000
Net (decrease) increase in cash and cash equivalents	(264,461		)	231,937
Cash and cash equivalents at the beginning of period	277,995			46,058
Cash and cash equivalents at the end of period	$	13,534		$	277,995

Supplemental disclosures of cash flow information:
Total non-cash exchange of accounts payable for debt	$	350,000		$	—
Total cash paid for interest - related party	$	17,589		$	—

The accompanying notes are an integral part of these consolidated financial statements.

Sky Petroleum, Inc.

Notes to Consolidated Financial Statements

Note 1 - Organization and Basis of Presentation

The Company was organized on August 22, 2002 under the laws of the State of Nevada, as The Flower Valet. On December 20, 2004, the Company amended its articles of incorporation to change its name to Seaside Explorations, Inc. Subsequently, on March 28, 2005, the Company changed its name to Sky Petroleum, Inc. The Company has three wholly-owned subsidiaries, two incorporated in Cyprus: Sastaro Limited (“Sastaro”) and Bekata Limited ("Bekata”) which owns 100% of Sastaro, of which the companies relate to our Mubarek field operations, and a third Sky Petroleum (Albania) Inc., ("Sky Petroleum Albania") a Cayman Islands corporation and qualified branch in Albania, incorporated for the purposes of holding and operating our interests in the Concession Area (as defined below) in Albania. The company owns 100% of Sky Petroleum UK Limited (the "JV Sub"), incorporated in England and Wales which owns 75% of Hyde Resources Limited (the "JV Corporation"). The purpose of the JV Corporation is to obtain licenses and to conduct technical, environmental and exploration due diligence; raise capital and commence into one or more joint venture projects (each a “JVC Project”) for the purposes of conducting, Exploration, Development and Commercialization of oil and gas in the Area of Interest.

The Company is engaged in the exploration and development of oil and natural gas properties of others under arrangements in which we finance the costs in exchange for interests in the oil or natural gas revenue generated by the properties. Such arrangements are commonly referred to as farm-ins to us, or farm-outs by the property owners farming out to us.

The Company cannot be certain that its existing sources of cash will be adequate to meet our liquidity requirements. However, management has implemented plans to improve liquidity through slowing or stopping certain planned expenditures and negotiations with creditors to reduce its debt obligations. Management plans to obtain funding through equity, debt or other securities offerings. There can be no assurance that the capital raising efforts will be successful or that our results of operations will materially improve in either the short-term or long-term and accordingly, we may be unable to meet our obligations as they become due.

Note 2 - Summary of Significant Accounting Policies

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") pursuant to the rules and regulations of the SEC and stated in US dollars.

Basis of Consolidation

The financial statements present the consolidated accounts of the Company and its wholly owned subsidiaries, Bekata, Sastaro and Sky Petroleum (Albania) and Sky Petroleum UK Limited (which owns 75% of Hyde Resources Limited (the "JV Corporation"). All intercompany account balances and transactions have been eliminated.

Nature of Operations

The Company's focus is on the acquisition, development and exploitation of long-lived oil and natural gas reserves and, to a lesser extent, exploration for new oil and natural gas reserves.

Oil and natural gas properties

The Company uses the full cost method of accounting for its oil and natural gas producing activities. Accordingly, all costs associated with acquisition, exploration, and development of oil and natural gas reserves, including directly related overhead costs, are

capitalized. Management and service fees received under contractual arrangements, if any, are treated as reimbursement of costs, offsetting the costs incurred to provide those services.

Depletion is provided using the units-of-production method based upon estimates of proved oil and natural gas reserves with oil and natural gas production being converted to a common unit of measure based upon their relative energy content. Investments in unproved properties and major development projects are not amortized until proved reserves associated with the projects can be determined or until impairment occurs. If the results of an assessment indicate that the properties are impaired, the carrying value of the assets is reduced accordingly. Once the assessment of unproved properties is complete and when major development projects are evaluated, the costs previously excluded from amortization are transferred to the full cost pool and amortization begins.

Under the full cost method of accounting, the net book value of oil and natural gas properties, less related deferred income taxes, may not exceed a calculated “ceiling”. The ceiling limitation is the discounted estimated after-tax future net cash flows from proved oil and natural gas properties. In calculating future net cash flows, current prices and costs are generally held constant indefinitely. The net book value of oil and natural gas properties, less related deferred income taxes is compared to the ceiling on a quarterly and annual basis. Any excess of the net book value, less related deferred income taxes, is generally written off as an expense. Under rules and regulations of the SEC, all or a portion of the excess above the ceiling may not be written off if, subsequent to the end of the quarter or year but prior to the release of the financial results, prices have increased sufficiently that all or a portion of such excess above the ceiling would not have existed if the increased prices were used in the calculations.

As of December 31, 2014, the net carrying value of the Company's acquisition and development costs for oil and gas projects was $0.

Sales of proved and unproved properties are accounted for as an adjustment of capitalized costs with no gain or loss recognized, unless such adjustments would significantly alter the relationship between capitalized costs and proved oil and natural gas reserves, in which case the gain or loss is recognized.

Other Property and Equipment

Maintenance and repairs are charged to operations. Renewals and betterments are capitalized to the appropriate property and equipment accounts.

Upon retirement or disposition of assets other than oil and natural gas properties, the cost and related accumulated depreciation are removed from the accounts with the resulting gains or losses, if any, recognized in income. Depreciation of other property and equipment is computed using the straight-line method based on the estimated useful lives of the property and equipment.

Income Taxes

Deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled. Deferred income tax expenses or benefits are based on the changes in the asset or liability each period. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change. Deferred income taxes may arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes in different periods. Deferred taxes are classified as current or non-current, depending on the classification of assets and liabilities to which they relate. Deferred taxes arising from temporary differences that are not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse.

Undistributed earnings of the Company's foreign subsidiaries are considered to be indefinitely reinvested and, accordingly, no provision for U.S. federal income taxes has been provided thereon. Upon distribution of those earnings in the form of dividends or otherwise, the Company may be subject to both U.S. income taxes (subject to an adjustment for foreign tax credits) and withholding taxes payable to the foreign countries.

The Company's wholly owned subsidiaries have prepared required foreign tax returns that were due for the years ended December 31, 2005 through 2013. The Company has accrued approximately $33,000. This amount includes potential tax liabilities, penalties and interest which will be due upon filing the returns with the appropriate countries.

Stock-Based Compensation

The Company measures all share-based payments, including grants of employee stock options, using a fair-value based method in accordance with U.S. GAAP. The cost of services received in exchange for awards of equity instruments is recognized in the consolidated statement of operations based on the grant date fair value of those awards amortized over the requisite service period.

Basic and Diluted Net Income (Loss) Per Share

Basic net income (loss) per share is computed based on the weighted average shares of common stock outstanding for the period which included 350,000 shares outstanding and earned but unissued. Common stock equivalents which represent stock options (approximately 2,400,000 stock options) have been excluded from the computation of diluted net income per share as their effect is anti-dilutive. Convertible debentures (principal and accrued interest) outstanding at December 31, 2014, and 2013 totaling $155,984 and $0, respectively, were convertible into common stock at a price of $.25 have been excluded from the computation of diluted net income (loss) per share as their effect is anti-dilutive. There were 8,000,000 remaining warrants that are outstanding as of December 31, 2014.

Use of Estimates in the Preparation of Consolidated Financial Statements

Preparation of the accompanying consolidated financial statements in conformity with U.S. GAAP 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Fair Value of Financial Instruments

The Company calculates the fair value of its assets and liabilities which qualify as financial instruments and includes this additional information in the notes to consolidated financial statements when the fair value is different than the carrying value of these financial instruments. The estimated fair value of accounts payable and accrued liabilities approximate their carrying amounts due to the relatively short maturity of these instruments. None of these instruments are held for trading purposes. The carrying value of note payable, related party approximates face value since this instrument bears market rate of interest. Additional non-interest bearing long-term instruments has been reduced by a market interest rate.

U.S. GAAP establishes a framework for measuring fair value and requires certain disclosures about fair value measurements. In general, fair values of financial instruments are based upon quoted market prices, where available (Level 1). If such quoted market prices are not available, fair value is based upon internally developed models that primarily use, as inputs, observable market- based parameters (Level 2). Valuation adjustments may be made to ensure that financial instruments are recorded at fair value. These adjustments may include amounts to reflect counterparty credit quality and the customer's creditworthiness, among other things, as well as unobservable parameters (Level 3). Any such valuation adjustments are applied consistently over time.

Cash Equivalents

For purposes of the consolidated statements of cash flows, the Company considers all demand deposits, money market accounts and certificates of deposit purchased with an original maturity of three months or less to be cash equivalents.

Revenue Recognition

Oil and natural gas revenues are recorded using the sales method, whereby the Company recognizes oil and natural gas revenue based on the amount of oil and natural gas sold to purchasers. As of December 31, 2014 and 2013, the Company did not have any oil or natural gas imbalances recorded. The Company does not recognize revenues until they are realized or realizable and earned. Revenues are considered realized or realizable and earned when: (i) persuasive evidence of an arrangement exists; (ii) delivery has occurred or services have been rendered; (iii) the seller's price to the buyer is fixed or determinable; and (iv) collectability is reasonably assured.

In May 2014, the FASB issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers (Topic 606). The guidance in this update supersedes the revenue recognition requirements in Topic 605, "Revenue Recognition". Under the new guidance, an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The amendments in ASU No, 2014-09 are effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early application is not permitted. The Company is currently evaluating the impact of

adopting the guidance on our consolidated financial statements.

Note 3 - Investment in Oil and Gas Properties

As of December 31, 2014 the Company's investment in oil and gas properties was zero.

On June 24, 2010, Sky entered into a Production Sharing Contract (“PSC”) with the Ministry of Economy, Trade and Energy of Albania, acting through the National Agency of Natural Resources of Albania (“AKBN”). The PSC granted Sky Petroleum exclusive rights to three exploration blocks (Block Four, Block Five and Block Dumre) in the Republic of Albania (the “Concession Area”).

The Company's expenditures related to the Albania exploration blocks consisted of acquisition costs totaling $50,000, and $700,000 for fees to consultants for locating and negotiating the Company's investment in the Albania exploration blocks, $415,220 for fees related to evaluations and assessments of the concession area, and $50,000 towards the $100,000 allocation for training and education for the first year exploration period. In addition, 3 million shares of common stock with a fair value of $1,170,000, plus 3,863,636 Preferred Shares Series B with a value of $7,820,000, were issued to a consultant for expertise provided to the Company in acquiring and negotiating the acquisition of oil and gas properties.

On May 7, 2013, the Arbitration Tribunal ruled that the PSC was properly terminated on November 17, 2011, and ruled Sky Petroleum to reimburse AKBN for fees and expenses in connection with the Arbitration.

On May 18, 2005, our wholly owned subsidiary Sastaro entered into a Participation Agreement with Buttes Gas and Oil Co. International Inc. (which we refer to as “Buttes”), a wholly-owned subsidiary of Crescent Petroleum Company International Limited (which we refer to as “Crescent”) for the financing of a drilling program in the Mubarek field. The field is an offshore region in a concession area surrounding Abu Musa Island in the Arabian Gulf. Under the terms of the Participation Agreement, the Company participated in a share of the future production revenue by contributing $25 million in drilling and completion costs related to two wells in an off-shore oil and natural gas project in the United Arab Emirates. The operator of the drilling program, Crescent completed the first well in 2006 and the second well in 2007. As of December 31, 2009, the first well produced a total of 150,413 gross barrels, and the second well produced a total of 149,471 gross barrels. Both wells terminated production in 2009.

On December 31, 2009, Sastaro received written notice from Buttes that Buttes unilaterally and solely determined that the Mubarek Field had reached the end of its economic life. Buttes also notified Sastaro that the Concession Agreement, dated December 29, 1969, between the His Highness Sheikh Sultan bin Mohamed Al-Qassimi III, The Ruler of Sharjah, UAE and Buttes with respect to the Mubarek Field was terminated. Buttes stated it handed over the Mubarek Field operations and facilities to representatives of His Highness Sheikh Sultan bin Mohamed Al-Qassimi III on December 28, 2009.

Note 4 – Bank Guarantee

On August 10, 2011, the Company delivered a bank guarantee in the form of a letter of credit under the terms of the PSC with AKBN. In connection with the bank guarantee, Sky Petroleum made a cash deposit of $1,500,000 with Texas Citizens Bank N.A. in 2011. The cash deposit was considered restricted cash.

The Letter of Credit was effective through February 22, 2013. The principal under the Letter of Credit shall be reduced every month or three months, as agreed between AKBN and the Company during the First Exploration Period, as defined under the PSC, by an amount equal to the sum spent by the Company on its Work Program obligations, as defined under the PSC, during such month or three months, such reductions to be effected in accordance with monthly or quarterly written statements issued by AKBN to the Company. As of March 29, 2013 the Letter of Credit had matured and the proceeds were moved to unrestricted cash.

Note 5 - Stockholders' Equity

Preferred Stock

We have authorized 10 million shares of $0.001 par value Series A Preferred Stock. There were no shares of Series A Preferred Stock outstanding as of December 31, 2014 and December 31, 2013, respectively.

On October 8, 2010, pursuant to the terms of a consulting agreement (the "Consulting Agreement"), dated May 18, 2010, as amended September 29, 2010 and October 3, 2010, by and between the Company and Orsett, the Company filed a Certificate of Designation with the Secretary of State for the State of Nevada to designate 5,000,000 shares of the Company's preferred stock as shares of Series B Preferred Stock (the "Series B Preferred Shares").

The Series B Preferred Shares are participating with no preferences or voting rights, and shall not be converted by any holder, in whole or in part for a period of twelve months from the date of initial issuance. Each Series B Preferred Share is convertible into 4.4 shares of common stock of the Company, however, the shares may not be converted into more than 4.99% of beneficial ownership unless the holder waives the beneficial ownership limitation with 61 days notice.

In connection with the Series B designation and the Consulting Agreement, the Company issued 3,863,636 shares, with a fair value of $7,820,000. These shares were issued to a consultant for expertise provided to the Company in acquiring and negotiating the acquisition of oil and gas properties in Albania. As of December 31, 2014 and December 31, 2013, 3,863,636 shares of Series B Preferred Stock were outstanding.

On June 25, 2012, the Company issued a stop order notice to its transfer agent under which the transfer agent was instructed to: "not to remove the restrictive legends from the share certificates representing the consultant's shares ("Orsett Shares"); not to effect or facilitate the transfer, assignment, conveyance or sale of any of the Orsett Shares; and not to effect the conversion of the Series B Preferred Stock into shares of common stock of the Company, unless the transfer agent receives the expressed written instructions of the Secretary of the Registrant." The Company has determined that Orsett breached numerous terms of the Consulting Agreement and committed other actions that resulted in substantial harm and damage to the Company and its shareholders.

Common Stock and Stock Options

On July 26, 2005, the Company adopted the Sky Petroleum, Inc. Non-U.S. Stock Option Plan (the “Non-U.S. Plan”), effective as of April 1, 2005. The Non-U.S. Plan authorizes the issuance of stock options to acquire up to 10% of the Company's issued and outstanding shares of common stock.

On August 25, 2005, the Company adopted the Sky Petroleum, Inc. 2005 U.S. Stock Incentive Plan (the “U.S. Plan”). The U.S. Plan authorizes the issuance of stock options and other awards to acquire up to a maximum of 3,321,600 shares of the Company's common stock (less the number of shares issuable upon exercise of options granted by the Company under all other stock incentive plans on the date of any grant under the U.S. Plan). The U.S. Plan provides for the grant of incentive stock options (within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended), options that are not incentive stock options, stock appreciation rights and various other stock-based grants.

On August 7, 2012, the Company granted 300,000 stock options under the Non-US Plan. The options are exercisable at $0.25 per share with vesting over the next three years and were valued at $56,767.

On November 12, 2014, the Company granted 300,000 stock options under the Non-US Plan. The options are exercisable at $0.08 per share with vesting over the next three years and were valued at approximately $20,000. Additionally, the Board member was granted 50,000 shares of common stock of the Company as a signing bonus. The shares were valued using the fair market value of the shares at grant date of $.07 and expensed in 2014 for $3,500. The shares were not issued as of the date of this filing.

The 2012 and 2014 stock options fair value was determined using the following attributes and assumptions for each separate issuance: share prices ranging from $0.07 to $0.19, risk-free interest rates of approximately 1.55%, expected dividend yields of 0%, expected life of 4 years, and expected volatility of 173% to 291%. The Company estimates forfeitures based on historical experience.

For the twelve months ended December 31, 2014, the Company recorded $32,173 in total stock-based compensation expense, $27,628 of expense based on its use of the Black Scholes model to estimate the grant-date fair value of these stock option awards and the balance related to restricted stock awards (see "Restricted Stock" below). No options were exercised for the year ended December 31, 2014. Compensation expense is based upon straight-line amortization of the grant-date fair value over the vesting period of the underlying stock option. The fair value of each stock option grant was estimated on the date of the grant, using the Black-Scholes option-pricing model. As of December 31, 2014, there was approximately $29,000 of unrecognized compensation expenses related to non-vested stock option agreements.

A summary of stock options outstanding as of December 31, 2014, is as follows:



Shares Underlying Options Outstanding						Shares Underlying Options Exercisable
Range of Exercise Prices		Shares Underlying Options Outstanding	Weighted Average Remaining Contractual Life (Years)	Weighted Average Exercise Price		Shares Underlying Options Exercisable	Weighted Average Exercise Price
$	0.08	300,000	6.87	$	0.08	—	$	—
$	0.18	750,000	3.46	$	0.18	750,000	$	0.18
$	0.25	550,000	3.75	$	0.25	450,000	$	0.25
$	0.50	200,000	1.85	$	0.50	200,000	$	0.50
$	1.29	600,000	0.74	$	1.29	600,000	$	1.29

The aggregate intrinsic value of exercisable options as of December 31, 2014 is $0. The aggregate intrinsic value of options outstanding as of December 31, 2014 is $0.

The following is a summary of stock option activity for the years ended December 31, 2014 and December 31, 2013:



	Number Of Shares		Weighted Average Exercise Price	Weighted Average Remaining Contract Life (Years)
Balance at December 31, 2012	2,100,000	$	0.55	4.61
Options canceled	—		—
Options granted	—		—
Balance at December 31, 2013	2,100,000		0.55	3.61
Options canceled	—		—
Options granted	300,000		0.08	6.87
Balance at December 31, 2014	2,400,000		0.49	3.14

Exercisable at December 31, 2014	2,000,000	$	0.56	2.56

Class A Units and Class A Warrants and Class B Units and Class B Warrants

In October 2011, the Company initiated subscriptions agreements for a non-brokered private placement to raise $1,000,000. Upon receipt of proceeds the Company issued 4,000,000 Class A Units at $0.25 per unit to investors. Each Class A Unit consisted of one share of common stock of the Company, par value $0.001and one Class A Warrant. Each Class A Warrant is exercisable to acquire one Class B Unit of the Company at an exercise price of $0.35 per Class B Unit until January 20, 2013, which expired.

Each Class B Unit consists of one share of common stock of the Company, par value $0.001 and one Class B Warrant. Each Class B Warrant is exercisable to acquire one common share of the Company, par value $0.001 at an exercise price of $0.60 per Class B Warrant Share until January 20, 2014, which expired. The Company received $860,000 in proceeds prior to the year ended December 31, 2011 for the offering, and received $140,000 in 2012.The Company had received all $1,000,000 in proceeds as of December 31, 2012.

In May 2012, the Company initiated subscriptions agreements for a non-brokered private placement to raise $500,000. The Company issued 2,000,000 Class A Units at $0.25 per unit to an investor in May 2012. Each Class A Unit consisted of one share of common stock of the Company, par value $0.001and one Class A Warrant. Each Class A Warrant is exercisable to acquire one Class B Unit of the Company at an exercise price of $0.35 per Class B Unit until May 14, 2013, which expired. Each Class B Unit consists of one share of common stock of the Company, par value $0.001 and one Class B Warrant. Each Class B Warrant is exercisable to acquire one Common Share of the Company, par value $0.001 at an exercise price of $0.60 per Class B Warrant Share until May 14, 2014, which expired. The Company received $500,000 in proceeds as of December 31, 2012.

Class D Units

In May 2014, the Company initiated subscriptions agreements for a non-brokered private placement to raise $400,000. The Company issued 8,000,000 Class D Units at $0.05 per unit to investors. Each Class D Unit consists of one share of common stock of the Company, par value US$0.001 (a “Common Share”) and one Class D Warrant (each, a “Class D Warrant”). Each Class D Warrant is exercisable to acquire one Common Share of the Company, par value US$0.001 at an exercise price of US$0.10 per Class D Warrant Share until May 29, 2016 (the two (2) year anniversary of the Closing Date). A related party invested $325,000 in units and paid in multiple transactions. The first payment was on June 23, 2014 for $55,000. The second payment was on June 25, 2014 for $45,000. A third payment was received on July 7, 2014 for $69,000 leaving a balance of $156,000 as of the date of this filing. A receivable from shareholder of $156,000 is due as of December 31, 2014, see Note 9, Related Party Transactions. Another accredited investor invested $75,000 in units and paid on June 12, 2014. As of December 31, 2014, the 8,000,000 Common Shares were granted to the investors.

In connection with the offering of the Class D Units, the Company issued a reservation order reserving Common Shares for issuance as follows:



Warrant Class/ Exercise Price	Number of Shares Common Stock (Reserved)	Aggregate Exercise Price
Class D Warrants (US$0.10)	8,000,000	$800,000
Total	8,000,000	$800,000

Restricted Stock

Restricted stock awards are awards of common stock that are subject to the restrictions on transfer and to a risk of forfeiture if the awardee terminates with the Company prior to the lapse of the restrictions. On June 26, 2014, the Company issued 100,000 shares of restricted stock. The shares vest 50,000 over 90 days and 50,000 over one year. The fair value of such stock was determined using the closing price on the grant date and compensation expense is recorded over the applicable vesting periods. For the year ended December 31, 2014 we recognized $4,545 of stock-based compensation expense related to restricted stock awards. As of December 31, 2014 there was approximately $1,455 of unrecognized compensation expense related to restricted stock awards.

The following table summarizes the restricted stock activity for the twelve months ended December 31, 2014:



	Number Of Shares	Weighted Average Grant Date Fair Value Per Share
Nonvested, December 31, 2013	—	$	—
Granted	100,000	$	0.06
Vested	50,000	$	0.06
Canceled/Forfeited	—
Nonvested, December 31, 2014	50,000	$	0.06

Note 6 - Income Taxes

For the year ended December 31, 2014 the Company had net income. However, no provision for income taxes has been recorded. In addition, no benefit for income taxes has been recorded due to the uncertainty of the realization of any tax assets. At December 31, 2014, the Company has accumulated operating losses totaling approximately $60.0 million. The net operating loss carry forwards will begin to expire in 2020 if not utilized. The Company had recorded net operating losses in each year since its inception through December 31, 2013. Based upon all available objective evidence, including the Company’s loss history, management believes it is more likely than not that, the net deferred assets will not be fully realized. Therefore, the Company has provided a valuation allowance against its deferred tax assets at December 31, 2014 and December 31, 2013.

Non-current deferred tax assets were as follows for the dates ended below:



	December 31,
	2014		2013
Net operating loss carryfowards	16,271,073		16,339,012
Impairment of investment	350,000		350,000
Accrued expenses	210,239		180,779
Less: valuation allowance	(16,831,312	)	(16,869,791	)
Net non-current deferred tax asset	—		—

The Company’s wholly owned subsidiaries have prepared the required foreign tax returns for the years ended through December 31, 2005 through 2013. Foreign taxes have been estimated at approximately $33,000. The Company believes amounts due, if any, would not be material due to changes in Cyprus tax laws during those periods, and due to net operating losses from foreign operations carried forward. The Company filed its U.S. tax returns for the years ended December 31, 2005 through 2008, the late filing fees for 2005 and 2008 were abated, however, 2006 and 2007 were not. We received correspondence related to those penalties and have accrued approximately $46,000 as of December 31, 2014. We have filed a request with the Internal Revenue Service for abatement of these penalties and interest and are awaiting the outcome of our request.

Reconciliation between the income tax benefit determined by applying the applicable Federal statutory income tax rate to the pre-tax loss is as follows for the period indicated:



	Year Ended December 31,
	2014		2013
Tax benefit at statutory income tax rate	23,105		(4,521,303	)
Stock based compensation	11,255		14,536
Meals and entertainment	—		159
Change in valuation allowance	(34,360	)	4,506,608
Tax benefit reported	—		—

Note 7 - Contingencies

Leases

The Company rents office facilities in Dallas, Texas on a month to month basis, totaling approximately $3,600 per year.

The Company leases office facilities in Dubai, United Arab Emirates, under a one year operating lease agreement that expires October 13, 2015, totaling approximately $22,000 per year.

A second lease that terminated June 30, 2013 with the Company resulting from the resignation of the former Interim Chief Financial Officer. The Tirana, Albania lease is on a month to month cancelable basis and was terminated on March 31, 2014.

Total rent expense was $42,202 in 2014, and $91,252 in 2013.

Future non-cancelable commitments related to these items at December 31, 2014 are summarized below:



	Operating Leases
For the twelve months ending:
December 31, 2015	$	22,466
Total future minimum lease payments	$	22,466

Oil and Gas Properties Commitments and Contingencies

The Company has guaranteed to, the due and punctual performance of all obligations of the JV Sub under or in connection with the JV Agreement if and when they become performable in accordance with the terms of the joint venture agreement (the "Guaranteed Obligations"). The Company further agreed to indemnify in full and on demand from and against all and any losses, costs and expenses suffered or incurred arising out of, or in connection with: (a) any failure of the JV Sub to perform or discharge the Guaranteed Obligations; or (b) any of the Guaranteed Obligations being or becoming totally or partially unenforceable by reason of illegality, incapacity, lack or exceeding of powers, ineffectiveness or execution or any other matters; but the Company's obligations or liability under the indemnity shall be no greater than the JV Sub's obligations or liability under the JV Agreement. As of December 31, 2014 no obligation have risen and no activity has occurred within the JV Sub.

Note 8 - Note Payable, Related Party

On January 8, 2013, Mark Rachovides, Director with the Company, gave proceeds in the amount of $150,000 for a convertible promissory note at 8% to mature on May 8, 2014. The note converts to 600,000 shares of Common Stock of the Company. The note was extended to May 8, 2016.

Note 9 - Related Party Transactions

In May 2014, OceanRidge Investments S.A., a company controlled by Karim Jobanputra, the Company's Chairman and Interim Principal Executive Officer, was issued share certificates representing 6,500,000 Class D Units representing shares of common stock at US$0.05per unit for aggregate consideration of US$325,000 in proceeds and one Class D Warrant. Each Class D Warrant is exercisable to acquire one Common Share of the Company, par value US$0.001 (a “Class D Warrant Share”) at an exercise price of US$0.10 per Class D Warrant Share until May 29, 2016 (the two (2) year anniversary of the Closing Date).

As of December 31, 2014, OceanRidge, paid the subscription price as follows: $169,000 in cash ($55,000 on June 23, 2014;

$45,000 on June 25, 2014 and $69,000 on July 7, 2014) and $156,000 was considered a subscription receivable from shareholder. This amount was still outstanding as of December 31, 2014.

Note 10 - Long-Term Note Payable

Effective May 15, 2014, the Company and Dorsey & Whitney LLP , ("Dorsey") entered into a Fee Settlement Arrangement to settle an obligation for professional fees for services rendered and for expenses and other disbursement through April 30, 2014 in an amount of $1,088,886. On the terms and subject to the conditions of this Agreement, the Company agreed to pay Dorsey an aggregate of $350,000 (the "Settlement Payment") in full satisfaction of these obligations. The Settlement Payment will be paid as follows: (a) $50,000 on or before May 30, 2014 (paid), and (b) $300,000 paid in eighteen (18) monthly installments of $16,667 beginning on September 1, 2014: provided, however, the Company will pay the balance of the settlement payment on the earlier of (i) the date the Company raises financing in the aggregate of $5,000,000 or more in one or more transactions or (ii) the date the Company closes an Acquisition Transaction. "Acquisition Transaction" means (i) any sale of equity securities or securities convertible into equity securities of the Company; (ii) any merger, consolidation, statutory share exchange or acquisition transaction involving the Company or any material subsidiary of the Company; (iii) any sale of substantially all of the assets of the Company or any material subsidiary of the Company; (iv) any similar transaction involving the issuance, cancellation or restructuring of equity securities of the Company unless, following the completion of such transaction, the then existing shareholder of Company own or control, directly or indirectly, at least 50% of the voting power or liquidation rights of Company or the successor of such merger, consolidation or statutory share exchange. This settlement resulted in the Company having a gain of $760,202 for the twelve months ended December 31, 2014.

The debt obligation is at a 0% interest rate, management calculated the imputed interest rates at 8% which is the rate the Company is currently paying for other debt obligations. Unamortized debt discount in the amount of $14,167 is netted against the note payable and is displayed net of discount.

Note 11 - Earnings Per Share

U.S. GAAP provides for the calculation of basic and diluted earnings per share. Basic earnings per share includes no dilution and is computed by dividing income available to common shareholders by the weighted average number of shares outstanding for the period. Diluted earnings per share reflect the potential dilution of securities that could share in the earnings of the Company.

Potential common stock shares consist of shares that may arise from outstanding dilutive common stock warrants and options (the number of which is computed using the "treasury stock method" and from outstanding convertible debentures (the number of which is computed using the "if converted method".

Diluted EPS considers the potential dilution that could occur if the Company's outstanding common stock options, warrants, and convertible debentures were converted into common stock that then shared in the Company's earnings (as adjusted for interest expense)t hat would longer occur if the debentures were converted.



	Twelve Months Ended December 31, 2014		Twelve Months Ended December 31, 2013
Basic earnings per share:
Net Income (Loss)	66,014		(12,918,008		)
Average number of common shares outstanding	73,167,151		68,383,709
Basic earnings per share - net income	$	—	$	(0.19	)

Net Income (Loss)	66,014		(12,918,008		)
Adjustment to net earnings from assumed conversion of debentures (1)	—		—
Adjusted Net Income (Loss)	$	66,014	$	(12,918,008	)

Average number of common share outstanding:
Common shares outstanding	73,167,151		68,383,709
Potential dilutive shares resulting from exercise of warrant and options (2)	—		—
Potential dilutive shares resulting from conversion of debentures (3)	—		—
Total average number of common shares outstanding used for dilution	73,167,151		68,383,709
Diluted earnings per share - net income (loss)	$	—	$	(0.19	)


(1)	Represents interest expense on dilutive convertible debentures that would not occurred if they were assumed converted.


(2)	All outstanding warrants and options were not considered for the EPS computation as they are anti-dilutive. These totaled 2,400,000 outstanding options, and 8,000,000 outstanding warrants.


(3)	Convertible debentures (principal) outstanding at the twelve months ended December 31, 2014 totaling $150,000 were convertible into common stock at a price of $0.25 per share in 2014. These have been excluded from earnings per share due to being anti-dilutive.

Note 12 - Subsequent Events

On May 5, 2015, the Company issued a note, due May 5, 2017, in the principal amount of US$500,000 under the terms of the note Purchase Agreement. Principal and accrued interest under the note is due and payable on May 5, 2017, (the “ Maturity

Date ”). The note is convertible into Common Shares at the Conversion Price of $0.08 per share. Interest on the note shall accrue at a rate equal to three percent (3%) per annum and interest on the note is payable on the Maturity Date in cash or, at the option of the Company, in-kind in shares of common stock of the Company at the Conversion Price.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

There have been no disagreements between the Company and its accountants regarding any matter or accounting principles or practice or financial statement disclosures.

ITEM 9A. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

At the end of the period covered by this Annual Report an evaluation was carried out under the supervision of and with the participation of the Company’s management, including the Interim Principal Executive Officer and Interim Principal Accounting Officer, of the effectiveness of the design and operations of the Company’s disclosure controls and procedures (as defined in Rule 13a - 15(e) and Rule 15d - 15(e) under the Exchange Act). Based on that evaluation the Principal Executive and Accounting Officer concluded that the Company’s disclosure controls and procedures are not adequately designed and not effective in ensuring that: (i) information required to be disclosed by the Company in reports that it files or submits to the SEC under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in applicable rules and forms and (ii) material information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our management, including our Principal Executive and Accounting Officer, as appropriate, to allow for accurate and timely decisions regarding required disclosure. We do not have sufficient capital to file our periodic reports under Section 13 of the Securities Exchange Act of 1934, and are not current in our reporting obligations. Our inability to file reports on a timely basis may adversely affect our ability to raise capital through the issuance of equity securities and our shareholders’ ability to sell or trade our equity securities.

Management’s Report on Internal Control over Financial Reporting

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation and fair presentation of financial statements for external purposes in accordance with generally accepted accounting principles.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness in future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Effective internal controls are necessary for us to provide reliable financial reports. If we cannot provide reliable financial reports, our operating results could be harmed. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Based on our evaluation, our management concluded that there is a material weakness in our internal control over financial reporting. The material weakness identified did not result in the restatement of any previously reported financial statements or any related financial disclosure, nor does management believe that it had any effect on the accuracy of the Company’s financial statements for the current reporting period. A material weakness is a deficiency, or a combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. The material weakness relates to the monitoring and review of work performed by our accounting consultant in the preparation of audit and financial statements, footnotes and financial data provided to the Company’s registered public accounting firm in connection with the annual audit. All of our financial reporting is carried out by our accounting consultant. This lack of accounting staff results in a lack of segregation of duties and accounting technical expertise necessary for an effective system of internal control. All unexpected results are investigated. At any time, if it appears that any control can be implemented to continue to mitigate such weaknesses, it is immediately implemented. As soon as our finances allow, we will hire sufficient accounting staff and implement appropriate procedures for monitoring and review of work performed by our accounting consultant. Because of the material weakness described above, management concluded that, as of December 31, 2014, our internal control over financial reporting was not effective based on the criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO’).

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the twelve months ended December 31, 2014, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE

The Company’s Board of Directors consists currently of four directors. Directors are elected for one-year terms and serve until their successors are elected and qualified. All of the executive officers of the Company are contractors of the Company. Executive officers of the Company are appointed for a one-year term and serve until their respective successors have been selected and qualified; provided, however, such officers are subject to removal at any time by the affirmative vote of a majority of the Board of Directors. The ages of the directors, executive officers and key employees are shown as of December 31, 2014.



Name	Position	Director/Officer Since	Age

Karim Jobanputra⁽¹⁾	Director (Principal Executive Officer and Interim Principal Accounting Officer), Corporate Secretary	November 2, 2005	49
Robert Curt⁽²⁾	Director	July 31, 2009	62
Mark Rachovides⁽³⁾	Director	August 8, 2012	50
Muriel Dube⁽⁴⁾	Director	November 12, 2014	42


(1)	Mr. Jobanputra was appointed Chief Executive Officer on September 12, 2007 until his resignation on December 1, 2011. He was reappointed as Interim Principal Executive Officer on July 23, 2012 and assumed the position of Interim Principal Accounting Officer on September 30, 2013 after the Chief Financial Officer resigned. He continues to serve as a director and Chairman of the Board.


(2)	Mr. Curt was appointed as director on July 31, 2009 pursuant to its powers under the Company's bylaws to fill vacant seats on the Board.


(3)	Mr. Rachovides was appointed as director on August 8, 2012, pursuant to its powers under the Company’s bylaws to fill vacant seats on the Board.


(4)	Ms.Dube was appointed as director on November 12, 2014, pursuant to its powers under the Company’s bylaws to fill vacant seats on the Board.

The following is a description of the principal occupations and other employment during the past five years and their directorships in certain companies of the directors of the Company. This information is as reported by the respective directors and executive officers.

Karim Jobanputra - Director/Interim Principal Executive Officer and Interim Principal Accounting Officer. Karim Jobanputra is an entrepreneur and owns companies that do business mostly in the Middle East and Europe. Mr. Jobanputra has experience in the areas of corporate finance and international business development. Mr. Jobanputra is an entrepreneur and dedicates less than 100% of his business efforts to the business of Sky. Mr. Jobanputra has other business interests, some of which may be in the oil and gas industry, and serves on the board of directors and as an officer for private companies. Mr. Jobanputra also works as a self-employed consultant based in the United Kingdom and has provided consulting services to companies in the areas of corporate finance and business development in the Asian and Middle East markets, including Indonesia, Qatar, Saudi Arabia, India and China.

Robert Curt – Director. Robert P. Curt has over thirty years of experience, primarily as an executive in marine transportation and supply related functions. He is currently a Director, Projects at Mallory, Jones, Lynch, Flynn and Assoc., an independent consultant to the marine industry. Mr. Curt retired from ExxonMobil in 2007 after assignments in a variety of positions up to and including General Manager Marine Transportation for ExxonMobil Refining & Supply Company and Managing Director, Qatar Gas Transport Company. He is also a Trustee of the US Merchant Marine Academy and a member of the American Bureau of Shipping’s Advisory Council and Nominating Committee and serves on the boards of two publicly traded shipping and ship building companies. Mr. Curt is a 1972 graduate of the U.S. Merchant Marine Academy and holds an MBA in Finance from Iona College.

Mark Rachovides - Director. Mr. Rachovides is a well-known specialist in South East Europe and President of the Euromines. Euromines is recognized as the representative body of the European metals and minerals mining industry. Mark Rachovides is a consultant to Eldorado Gold Corporation and until recently was Chairman of Deva Gold being Eldorado’s subsidiary in Romania. Previously he was Vice President, Europe at Dundee Resources Limited after spending 11 years at the European Bank for Reconstruction and Development (EBRD.) He was formerly an Executive Director of European Goldfields which was acquired by Eldorado in early 2012. He was also a director of Uzhuralzoloto, one of Russia’s largest gold producers until recently and remains on the Board of Eurogas International, a company developing oil and gas projects in Tunisia. He has been involved with a number of public companies and natural resource projects in the region both as a company director and a financier. He has also written a number of articles and conference presentations for Euromines, the LBMA, the World Gold Council, PDAC, the Mining Journal, the Russia-Canada mining group and other bodies. He has been involved in a wide variety of projects in the Former Soviet Union, Southern and Eastern Europe.

Muriel Dube - Director. Ms. Dube has over 15 years experience in senior operations, strategic management, investment banking and the policy development environments, globally. Ms. Dube is currently engaged at London-based investment bank, Investec Plc. As part of the Specialist Corporate Capital team, her role is to originate financing transactions for acquisition and recapitalisation activity in Europe. Prior to joining Investec (April 2009), Ms. Dube worked as Vice President-Strategy at London-based Environmental Services Investment Firm, SFM. She served as a Director in the Department of Environmental Affairs and Tourism (DEAT). As one of South Africa’s leading environmentalists, Ms. Dube has published several articles on sustainable development. Ms. Dube holds an MSc degree from Oxford University, graduate degrees in politics and social sciences from the University of Johannesburg, South Africa and executive development qualifications in finance and climate change from SAID Business School, Oxford University and HIID, Harvard, respectively. On the multilateral front, Ms. Dube has served as Chief Negotiator for the South African Government in major international climate negotiations and as the Africa representative on the United Nations Expert Group on Technology Transfer. Ms. Dube is a former non-executive director of JSE-listed Bidvest (Sep 2003-Nov 2012). She currently holds Non Executive Directorships on the holdings boards of Aim-listed Flourmin Plc, and Enviroserv (the largest waste management company on the African continent). She has also served on the Enviroserv Audit Committee from 2002 until 2008.

Relationships between Directors and Officers

None of our executive officers or directors or key employees are related by blood, marriage or adoption to any other director or executive officer.

Arrangements between Directors and Officers

To our knowledge, there is no arrangement or understanding between any of our officers and any other person pursuant to which the officer was selected to serve as an officer.

Legal Proceedings, Cease Trade Orders and Bankruptcy

As of the date of this Annual Report, no director or executive officer of the Company and no shareholder holding more than 5% of any class of voting securities in the Company, or any associate of any such director, officer or shareholder is a party adverse to the Company or any of our subsidiaries or has an interest adverse to the Company or any of our subsidiaries.

No director or executive officer of the Company is, as at the date of this Annual Report, or was within 10 years before the date of this Annual Report, a director, chief executive officer or chief financial officer of any company (including the Company), that:


(a)	was subject to a cease trade order, an order similar to a cease trade order or an order that denied the relevant company access to any exemption under securities legislation, for a period of more than 30 consecutive days, that was issued while the director or executive officer was acting in the capacity as director, chief executive officer or chief financial officer; or

(b)

was subject to a cease trade order, an order similar to a cease trade order or an order that denied the relevant company access to any exemption under securities legislation, for a period of more than 30 consecutive days, that was issued after the director or executive officer ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as director, chief executive officer or chief financial officer.

No director or executive officer of the Company, and no shareholder holding a sufficient number of securities of the Company to affect materially the control of the Company:

(a)

is, as at the date of this Annual Report, or has been within the 10 years before the date of this Annual Report, a director or executive officer of any company (including the Company) that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets;


(b)	has, within 10 years before the date of this Annual Report, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the director, executive officer or shareholder;

(c)

has, within 10 years before the date of this Annual Report, been the subject of, or a party to, any U.S. federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of: (i) any U.S. federal or state securities or commodities law or regulation; or (ii) any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or (iii) any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or

(d)

has, within 10 years before the date of this Annual Report, been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C.78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C.1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.

No director or executive officer of the Company, and no shareholder holding a sufficient number of securities of the Company to affect materially the control of the Company has been subject to:


(a)	any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority; or


(b)	any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable investor in making an investment decision.

Corporate Governance

The Company’s Board of Directors is responsible for the Company’s Corporate Governance policies and has separately designated standing Compensation, Nominating, and Audit Committees. During 2013, the full Board handled the responsibilities of the designated committees until such time as qualified independent directors could be nominated and appointed to the Board and assigned to the committees. The Company’s Board determines independence based on the criteria for independence and un-relatedness prescribed by the Sarbanes-Oxley Act of 2002, and section 803A of the NYSE Amex Company Guide.

Compensation Committee

Compensation of the Company’s Chairman and other officers is recommended to the Board for determination by the Compensation Committee. The Compensation Committee develops reviews and monitors director and executive compensation and policies. The Compensation Committee is also responsible for annually reviewing the adequacy of compensation for directors and others and the composition of compensation packages. The Company’s Chairman cannot be present during the Committee’s deliberations or vote.

During 2014 the Compensation Committee had no members. Accordingly, the members of the Company’s Board of Directors, as a whole, performed the functions and responsibilities of the Compensation Committee.

Nominating Committee

Nominees for the election to the Board of Directors are recommended by the Nominating Committee. The Company has adopted a formal written Board resolution addressing the nomination process and such related matters as may be required under federal securities laws. During 2014, the Corporate Governance and Nominating Committee had no members. Accordingly, the members of the Company’s Board of Directors, as a whole, performed the functions and responsibilities of the Nominating Committee.

There have been no material changes to the procedures by which security holders may recommend nominees to the Company’s Board of Directors.

Audit Committee

The Company’s Audit Committee Charter designated an Audit Committee established in accordance with section 3(a)(58)(A) of the Exchange Act.

During 2014, the Company’s Audit Committee had no members. Accordingly, the members of the Company’s Board of Directors, as a whole, performed the functions and responsibilities of the Audit Committee. The Company has not identified an independent financial expert our its Board of Directors.

Diversity of the Board

The Company does not have a formal policy regarding diversity in the selection of nominees for directors. The Board does however consider diversity as part of its overall selection strategy. In considering diversity of the Board as a criteria for selecting nominees, the Corporate Board takes into account various factors and perspectives, including differences of viewpoint, professional experience, education, skills and other individual qualities and attributes that contribute to Board heterogeneity, as well as race, gender and national origin. The Board seeks persons with leadership experience in a variety of contexts and, among public company leaders, across a variety of industries. The Board believes that this expansive conceptualization of diversity is the most effective means to implement Board diversity. The Board will assess the effectiveness of this approach as part of its annual assessment of the performance of the Board.

Code of Ethics

We have adopted a corporate code of ethics administered by our corporate secretary, Karim Jobanputra. We believe our code of ethics is reasonably designed to deter wrongdoing and promote honest and ethical conduct, to provide full, fair, accurate, timely and understandable disclosure in public reports, to comply with applicable laws, to ensure prompt internal reporting of code violations, and to provide accountability for adherence to the code. Our code of ethics provides written standards that are reasonably designed to deter wrongdoing and to promote:


•	Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;


•	Full, fair, accurate, timely and understandable disclosure in reports and documents that are filed with, or submitted to, the Commission and in other public communications made by an issuer;


•	Compliance with applicable governmental laws, rules and regulations;


•	The prompt internal reporting of violations of the code to an appropriate person or persons identified in the code; and


•	Accountability for adherence to the code.

Our Code of Ethics is available at our website at www.skypetroleum.com. We intend to disclose any waiver from a provision of our code of ethics that applies to any of our principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions that relates to any element of our code of ethics on our website. No waivers were granted from the requirements of our Code of Ethics during the year ended December 31, 2014, or during the subsequent period from January 1, 2015, through the date of this Annual Report.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act, as amended, requires the Company’s officers, directors, and persons who beneficially own more than 10% of the Company’s common stock (“10% stockholders”), to file reports of ownership and changes in ownership with the SEC. Such officers, directors and 10% stockholders are also required by SEC rules to furnish us with copies of all Section 16(a) forms that they file. Based solely upon our review of the copies of such forms received by us, or written representations from certain reporting persons, we believe that all of these filing requirements were satisfied by our officers, directors, and 10% stockholders in 2014.

ITEM 11. EXECUTIVE COMPENSATION

A summary of cash and other compensation paid in accordance with management consulting contracts for our Principal Executive Officer and other executives for the fiscal year ended December 31, 2014 is as follows:



Name and	Year	Salary	Bonus	Stock Awards	Option Awards	Non-Equity Incentive Plan	Nonqualified Deferred	All other	Total
Principal Position						Compensation	Compensation Earnings	Comp.
		($)	($)	($)	($)	($)	($)	($)	($)
(a)	(b)	(c)	(d)	(e)	(f)	(g)	(h)	(i)	(j)
Karim Jobanputra Chairman and Director⁽¹⁾	2014 2013	$15,000 $7,500							$15,000 $7,500
Robert Curt Director⁽²⁾	2014 2013	$15,000 $30,000							$15,000 $30,000
Mark Rachovides Director⁽³⁾	2014 2013	$15,000 $30,000							$15,000 $30,000
Muriel Dube Director	2014 2013	$0 $0							$0 $0


(1)	Mr. Jobanputra did not receive compensation for services in 2014 and $15,000 in directors fees. As of December 31, 2014 the amount due to Mr. Jobanputra is $149,200.


(2)	Mr. Curt did not receive compensation for services in 2014 and $15,000 in directors fees. As of December 31, 2014 the amount due to Mr. Curt is $30,358.


(3)	Mr. Rachovides did not receive compensation for services in 2014 and $15,000 in directors fees. As of December 31, 2014 the amount due to Mr. Curt is $22,500.

Executive Compensation Agreements and Summary of Executive Compensation

Report of the Board of Directors on Executive Compensation

During the year ended December 31, 2014, our Board of Directors was responsible for establishing compensation policy and administering the compensation programs of our executive officers.

The amount of compensation paid by us to each of our directors and officers and the terms of those persons’ employment is determined solely by the Board of Directors. We believe that the compensation paid to its directors and officers is fair to the Company.

The Board of Directors reviewed the compensation and benefits of all our executive officers and established and reviewed general policies relating to compensation and benefits of our employees. Directors do not participate in approving or authorizing their own salaries as executive officers.

Our Board of Directors believes that the use of direct stock awards is at times appropriate for employees, and in the future intends to use direct stock awards to reward outstanding service or to attract and retain individuals with exceptional talent and credentials. The use of stock options and other awards is intended to strengthen the alignment of interests of executive officers and other key employees with those of our stockholders.

Appointment of Karim Jobanputra - Director/Interim Principal Executive Officer and Interim Principal Accounting Officer.

Mr. Karim Jobanputra was appointed as our Interim Principal Executive Officer and Principal Accounting Officer on September 30, 2013. Mr. Jobanputra previously served as the Company's Chief Executive Officer from September 5, 2007 to December 1, 2011. Mr. Jobanputra assumed the office of Principal Executive officer on July 3, 2012 and Interim Principal Accounting Officer after the resignation of our Chief Financial Officer. Mr. Jobanputra currently serves the Company as Chairman of the Board of Directors.

Equity Awards

The following table sets forth certain information concerning our outstanding options for our named executive officers and directors at December 31, 2014. Under our U.S. and non-U.S. Employee Stock Option Plans there is 1/3 vesting on the first anniversary of the grant and 1/3 vested each anniversary thereafter with terms between 7 and 10 years.

Option Awards

Stock Awards

Name

Number of Securities Underlying Unexercised Options⁽¹⁾

(#) Exercisable

Number of Securities Underlying Unexercised Options

(#) Unexercisable

Equity Incentive Plan Awards: Number of Securities Unexercised Unearned Options

(#)

Option Exercise Price

($)

Option Expiration Date

Number of Shares or Units of Stock That Have Not Vested

(#)

Market Value of Shares or Units of Stock That Have Not Vested

($)

Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested

(#)

Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested

($)

(a)

(b)

(c)

(d)

(e)

(f)

(g)

(h)

(i)

(j)

Michael D. Noonan⁽¹⁾

600,000

1.29

9/28/2015

150,000

0.18

6/28/2020

Karim Jobanputra

300,000

0.18

6/28/2017

Robert Curt

150,000

0.50

7/31/2016

50,000

0.18

6/28/2020

Mark Rachovides

300,000

0.25

8/6/2018

8,000,000

400,000

Muriel Dube

—

300,000

0.08

11/11/2021

50,000

3,500


(1)	Mr. Noonan resigned from our Board of Directors on April 23, 2014.

Director Compensation Agreements and Summary of Director Compensation Policies

Board Compensation

On January 11, 2006, our Board of Directors approved a compensation plan, effective November 16, 2005, pursuant to which each director would receive the following compensation:


•	annual director fees of $30,000 per year, payable quarterly in arrears;


•	director compensation options consisting of between 150,000 and 300,000 options exercisable to acquire shares of common stock between $0.08 and $1.00 per share for non-U.S. directors and at fair market value on the date of grant for U.S. directors;


•	meeting fees of $1,200 per meeting and $600 per teleconference meeting, including committee meetings; and


•	reimbursement of expenses related to service in the capacity of a member of the Board.

Compensation Interlocks and Insider Participation

There were no compensation committee or board interlocks among the members of our Board of Directors.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDERS MATTERS

The following table sets forth certain information regarding the beneficial ownership of shares of our common stock as of August 28, 2015, by each person who is known by us to beneficially own more than 5% of our issued and outstanding shares of common stock; our named executive officers; our directors; and all of our executive officers and directors as a group.



Name of Stockholder	Address	Amount and Nature of Beneficial Ownership	Percent of Class
Directors and Officers:
Karim Jobanputra, Director, Interim Chief Executive Officer and Interim Chief Accounting Officer	P.O. Box 82 Doha, State of Qatar	12,140,200	17.89	%
Robert P. Curt⁽¹⁾ Director	15950 N. Dallas Parkway Suite 400 Dallas, Texas USA 75248	200,000	**
Mark Rachovides⁽²⁾ Director	15950 N. Dallas Parkway Suite 400 Dallas, Texas USA 75248	1,195,000	**
Muriel Dube Director	15950 N. Dallas Parkway Suite 400 Dallas, Texas USA 75248	—	**
All Officers & Directors as a Group		13,535,200	17.46	%
Others owning more than 5%:

n/a

** Less than 1%.

(1) Consists of 200,000 shares of common stock acquirable upon exercise of stock options.

(2) Includes 600,000 shares of common stock acquirable at $0.25 per share upon conversion of convertible note in the principal amount of $150,000, due May 8, 2015; and 300,000 shares of common stock acquirable upon exercise of stock options.

We have no knowledge of any other arrangements, including any pledge by any person of our securities, the operation of which may at a subsequent date result in a change in control of the Company.

We are not, to the best of our knowledge, directly or indirectly owned or controlled by another corporation or foreign government.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

During the year ended December 31, 2014, except for the transactions described below, none of our directors, named executive officers or more-than-five-percent shareholders, nor any associate or affiliate of the foregoing, have any interest, direct or indirect, in any transaction, or in any proposed transactions which has materially affected or will materially affect us.

Consulting Arrangement with Karim Jobanputra

On September 30, 2013, Mr. Jobanputra was appointed as Interim Principal Accounting Officer after the resignation of our Chief Financial Officer.

Director Independence

As of December 31, 2014, we had four directors, three of which are considered independent directors:


•	Karim Jobanputra


•	Robert P. Curt (Independent)


•	Mark Rachovides (Independent)


•	Muriel Dube (Independent)

An “independent” director is a director whom the Board of Directors has determined satisfies the requirements for independence section 803A of the NYSE MKT Company Guide.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

Audit Fees

The aggregate fees billed by the Company’s independent registered public accounting firm for professional services rendered in connection with the audit of the Company’s annual consolidated financial statements for 2014 and 2013 and reviews of the consolidated financial statements included in the Company’s Forms 10-K and 10-Q for 2014 and 2013 were approximately $41,000 and $51,000, respectively.

Audit-Related Fees

The aggregate fees billed by the Company’s independent registered public accounting firm for any additional fees for assurance and related services that are reasonably related to the performance of the audit or review of the Company’s financial statements and are not reported under “Audit Fees” above for 2014 and 2013 were $0.

Tax Fees

The aggregate fees billed by the Company’s independent registered public accounting firm for professional services for tax compliance, tax advice, and tax planning for 2014 and 2013 were approximately $4,500 and $6,785, respectively.

All Other Fees

The aggregate fees billed by the Company’s independent registered public accounting firm for all other non-audit services rendered to the Company, such as attending meetings and other miscellaneous financial consulting, for 2014 and 2013 were $0.

PART IV

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.




	SKY PETROLEUM, INC.

August 28, 2015	By:	/s/ KARIM JOBANPUTRA Karim Jobanputra Chairman

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant and in the capacities and on the date indicated.





Signature		Title	Date

/s/	KARIM JOBANPUTRA	Chairman	August 28, 2015
	Karim Jobanputra	(Principal Executive Officer and Principal Accounting Officer)

/s/	ROBERT CURT	Director	August 28, 2015
	Robert Curt

/s/	MARK RACHOVIDES	Director	August 28, 2015
	Mark Rachovides

/s/	MURIEL DUBE	Director	August 28, 2015
	Muriel Dube