UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the quarterly period ended
| TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ___________ to ___________
Commission
File Number:
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(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
| (Address of principal executive offices) | (Zip Code) |
(
Registrant’s telephone number, including area code
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| None | N/A | N/A |
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the 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 ☐
Indicate
by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data
File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period
that the registrant was required to submit and post such files).
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,” “non-accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer ☐ | Accelerated filer ☐ | |
| (Do not check if a smaller reporting company) | Smaller
reporting company |
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐
State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: The registrant had shares of common stock outstanding as of November 15, 2021.
TRILLION ENERGY INTERNATIONAL INC.
Form 10-Q
Table of Contents
Caption
| Page | ||
| PART I – FINANCIAL INFORMATION | 3 | |
| Item 1. | Financial Statements | 3 |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 25 |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 30 |
| Item 4. | Controls and Procedures | 30 |
| PART II – OTHER INFORMATION | 31 | |
| Item 1. | Legal Proceedings | 31 |
| Item 1A. | Risk Factors | 31 |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 31 |
| Item 3. | Defaults Upon Senior Securities | 31 |
| Item 4. | Mine Safety Disclosures | 31 |
| Item 5. | Other Information | 31 |
| Item 6. | Exhibits | 31 |
| SIGNATURES | 32 | |
| 2 |
PART I
Item 1. Financial Statements
TRILLION ENERGY INTERNATIONAL INC.
Unaudited Interim Condensed Consolidated Balance Sheets
(Expressed in U.S. dollars)
| September 30, 2021 | December 31, 2020 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Receivables | ||||||||
| Prepaid expenses and deposits | ||||||||
| Notes receivable | - | |||||||
| Total current assets | ||||||||
| Oil and gas properties, net | ||||||||
| Property and equipment, net | ||||||||
| Notes receivable | - | |||||||
| Restricted cash | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | $ | ||||||
| Loans payable - current | ||||||||
| Lease liability - current | ||||||||
| Total current liabilities | ||||||||
| Asset retirement obligation | ||||||||
| Loans payable – long term | - | |||||||
| Convertible debt | - | |||||||
| Derivative liability | ||||||||
| Lease liability | ||||||||
| Total liabilities | ||||||||
| Stockholders’ equity: | ||||||||
| Common stock Authorized: shares, par value $; issued and outstanding: shares. | ||||||||
| Additional paid-in capital | ||||||||
| Stock subscriptions and stock to be issued | ||||||||
| Shares to be cancelled | - | |||||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total stockholders’ equity | ( | ) | ||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||
| 3 |
TRILLION ENERGY INTERNATIONAL INC.
Unaudited Interim Condensed Consolidated Statements of Operations and Comprehensive Loss
(Expressed in U.S. dollars)
(unaudited)
| Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Revenue | ||||||||||||||||
| Oil and natural gas sales | $ | $ | $ | $ | ||||||||||||
| Cost and expenses | ||||||||||||||||
| Production | ||||||||||||||||
| Depletion | ||||||||||||||||
| Depreciation | ||||||||||||||||
| Accretion of asset retirement obligation | ||||||||||||||||
| Investor relations | ||||||||||||||||
| Stock based compensation | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Total expenses | ||||||||||||||||
| Loss before other income (expenses) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expenses) | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Interest income | ||||||||||||||||
| Finance cost | ( | ) | ( | ) | ||||||||||||
| Foreign exchange gain (loss) | ( | ) | ( | ) | ||||||||||||
| Other income (expense) | ( | ) | ( | ) | ||||||||||||
| Loss on debt extinguishment | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Change in fair value of derivative liability | ( | ) | ( | |||||||||||||
| Total other income (expenses) | ( | ) | ( | ) | ||||||||||||
| Net income/(loss) for the period | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Earnings (loss) per share - basic | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Weighted average number of shares outstanding | ||||||||||||||||
Earnings (loss) per share - diluted | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Weighted average number of shares outstanding | ||||||||||||||||
| Other comprehensive income (loss): | ||||||||||||||||
| Foreign currency translation adjustments | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
| Comprehensive income (loss) | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||
See accompanying condensed notes to these interim consolidated financial statements.
| 4 |
TRILLION ENERGY INTERNATIONAL INC.
Unaudited Interim Condensed Consolidated Statements of Stockholders’ Equity
(Expressed in U.S. dollars)
(unaudited)
| Common stock | Additional paid-in | Stock subscriptions and stock to | Accumulated other comprehensive | Accumulated | ||||||||||||||||||||||||||
| Shares | Amount | capital | be issued | income (loss) | deficit | Total | ||||||||||||||||||||||||
| Balance, December 31, 2019 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||
| Stock subscriptions received | – | |||||||||||||||||||||||||||||
| Currency translation adjustment | – | ( | ) | ( | ) | |||||||||||||||||||||||||
| Net loss | – | ( | ) | ( | ) | |||||||||||||||||||||||||
| Balance, March 31, 2020 | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Stock subscriptions received | – | |||||||||||||||||||||||||||||
| Issuance of common stock | ( | ) | ||||||||||||||||||||||||||||
| Currency translation adjustment | – | ( | ) | ( | ) | |||||||||||||||||||||||||
| Net loss | – | ( | ) | ( | ) | |||||||||||||||||||||||||
| Balance, June 30, 2020 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||
| Private placement | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||
| Shares to be issued | – | |||||||||||||||||||||||||||||
| Stock-based compensation expense | – | |||||||||||||||||||||||||||||
| Stock-based compensation expense – Restricted stock units | ||||||||||||||||||||||||||||||
| Shares issued upon conversion of debentures | ||||||||||||||||||||||||||||||
| Currency translation adjustment | - | ( | ) | ( | ) | |||||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||||||||
| Balance, September 30, 2020 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||
See accompanying condensed notes to these interim consolidated financial statements.
| 5 |
TRILLION ENERGY INTERNATIONAL INC.
Unaudited Interim Condensed Consolidated Statements of Stockholders’ Equity
(Expressed in U.S. dollars)
(unaudited)
| Common stock | Additional paid-in | Stock subscriptions and stock to | Shares to be | Accumulated other comprehensive |
Accumulated | |||||||||||||||||||||||||||
| Shares | Amount | capital | be issued | cancelled | income (loss) | deficit | Total | |||||||||||||||||||||||||
| Balance, December 31, 2020 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Issuance of common stock | ( | ) | ||||||||||||||||||||||||||||||
| Stock issued for debt settlement | ||||||||||||||||||||||||||||||||
| Stock issued for services | ||||||||||||||||||||||||||||||||
| Restricted stock unit grants and vesting | ||||||||||||||||||||||||||||||||
| Warrants exercised | ||||||||||||||||||||||||||||||||
| Options exercised | ||||||||||||||||||||||||||||||||
| Conversion of debentures | ||||||||||||||||||||||||||||||||
| Warrants issued for loan | - | |||||||||||||||||||||||||||||||
| Currency translation adjustment | - | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Net loss | - | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Balance, March 31, 2021 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Issuance of common stock | ||||||||||||||||||||||||||||||||
| Stock issued for debt settlement | ||||||||||||||||||||||||||||||||
| Warrants exercised | ||||||||||||||||||||||||||||||||
| Options exercised | ||||||||||||||||||||||||||||||||
| Stock issued for services | ||||||||||||||||||||||||||||||||
| Options issued | - | |||||||||||||||||||||||||||||||
| Warrants issued | - | |||||||||||||||||||||||||||||||
| Currency translation adjustment | - | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Net income | - | |||||||||||||||||||||||||||||||
| Balance, June 30, 2021 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Issuance of common stock | ||||||||||||||||||||||||||||||||
| Stock issued for services | ||||||||||||||||||||||||||||||||
| Warrants exercised | ||||||||||||||||||||||||||||||||
| Stock issued for debt settlement | ||||||||||||||||||||||||||||||||
| Currency translation adjustment | - | |||||||||||||||||||||||||||||||
| Net income | - | |||||||||||||||||||||||||||||||
| Balance, September 30, 2021 | $ | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||
See accompanying condensed notes to these interim consolidated financial statements.
| 6 |
TRILLION ENERGY INTERNATIONAL INC.
Unaudited Interim Condensed Consolidated Statements of Cash Flows
(Expressed in U.S. dollars)
(unaudited)
| Nine Months Ended September 30, | ||||||||
| 2021 | 2020 | |||||||
| Operating activities: | ||||||||
| Net loss for the period | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depletion | ||||||||
| Depreciation | ||||||||
| Accretion of asset retirement obligation | ||||||||
| Accretive interest | ||||||||
| Interest from loans payable | ||||||||
| Interest income | ( | ) | ||||||
| Stock based compensation | ||||||||
| Stock issued for services | ||||||||
| Unrealized foreign exchange gain | ( | ) | ||||||
| Change in fair value of derivative liability | ( | ) | ||||||
| Loss on debt extinguishment | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Receivables | ( | ) | ||||||
| Prepaid expenses and deposits | ( | ) | ||||||
| Accounts payable and accrued liabilities | ||||||||
| Operating lease liabilities | ( | ) | ( | ) | ||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| Investing activities: | ||||||||
| Property and equipment additions | ( | ) | ( | ) | ||||
| Issuance of note receivable | ( | ) | ||||||
| Oil and natural gas properties expenditures | ( | ) | ( | ) | ||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| Financing activities: | ||||||||
| Proceeds from stock subscriptions received | ||||||||
| Proceeds from exercise of options | ||||||||
| Proceeds from the exercise of warrants | ||||||||
| Proceeds from loans payable | ||||||||
| Repayments of loans payable | ( | ) | ( | ) | ||||
| Repayments of notes receivable | ||||||||
| Net cash provided by financing activities | ||||||||
| Effect of exchange rate changes on cash, cash equivalents and restricted cash | ( | ) | ||||||
| Change in cash and cash equivalents and restricted cash | ( | ) | ||||||
| Cash and cash equivalents and restricted cash at beginning of period | ||||||||
| Cash and cash equivalents and restricted cash at end of period | $ | $ | ||||||
| Reconciliation of cash, cash equivalents and restricted cash: | ||||||||
| Cash and cash equivalents, end of period | $ | $ | ||||||
| Restricted cash, end of period | ||||||||
| Cash, cash equivalents and restricted cash, end of period | $ | $ | ||||||
| 7 |
TRILLION ENERGY INTERNATIONAL INC.
Unaudited Interim Condensed Consolidated Statements of Cash Flows
(Expressed in U.S. dollars)
(unaudited)
| Nine Months Ended September 30, | ||||||||
| 2021 | 2020 | |||||||
| Non-cash investing and financing activities: | ||||||||
| Operating lease right-of-use asset addition | $ | $ | ||||||
| Interest paid on credit facilities | $ | $ | ||||||
| Stock issued for debt settlement | $ | $ | ||||||
| Stock issued conversion of debentures | $ | $ | ||||||
See accompanying condensed notes to these interim consolidated financial statements.
| 8 |
TRILLION ENERGY INTERNATIONAL INC.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
(Expressed in U.S. dollars)
(unaudited)
| 1. | Organization |
Trillion Energy International Inc. and its consolidated subsidiaries, (collectively referred to as the “Company”) is an international oil and natural gas exploration and production company. Our corporate headquarters are located at Turan Gunes Bulvari, Park Oran Ofis Plaza, 180-y, Daire:45, Kat:14, 06450, Oran, Cankaya, Anakara, Turkey. The Company has oil and gas operations in Turkey and an exploration license in Bulgaria. The Company was incorporated in Delaware in 2015.
| 2. | Summary of Significant Accounting Policies |
| (a) | Basis of Presentation and Going Concern |
Basis of Presentation
The unaudited interim condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2021 are not necessarily indicative of the results that may be expected for the year ended December 31, 2021.
The consolidated balance sheet at December 31, 2020, has been derived from the audited consolidated financial statements at that date but does not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2020.
Going Concern
The Company has suffered recurring losses and negative cash flows from operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The Company will need to raise funds through either the sale of its securities, issuance of corporate bonds, joint venture agreements and/or bank financing to accomplish its goals. If additional financing is not available when needed, the Company may need to cease operations. The Company may not be successful in raising the capital needed to drill and/or rework existing oil wells. Any additional wells that the Company may drill may be non-productive. Management believes that actions presently being taken to secure additional funding for the reworking of its existing infrastructure will provide the opportunity for the Company to continue as a going concern. Since the Company has an oil producing asset, its goal is to increase the production rate by optimizing its current infrastructure. The accompanying financial statements have been prepared assuming the Company will continue as a going concern; no adjustments to the financial statements have been made to account for this uncertainty.
In March 2020, the World Health Organization declared the outbreak of the coronavirus, also known as “COVID-19”. The pandemic has spread across the globe and is impacting worldwide economic activity. Conditions surrounding the coronavirus continue to rapidly evolve and government authorities have implemented emergency measures to mitigate the spread of the virus. The outbreak and the related mitigation measures has had an adverse impact on global economic conditions as well as on the Company’s business activities. The extent coronavirus has caused a modest drop in economic activity and oil and gas prices, due to reduced demand. The Company has implemented work from home measures for its employees in its offices in Canada and Turkey. The coronavirus has caused delay in realizing the Company’s funding efforts. To which the coronavirus may impact the Company’s business activities in the future will depend on future developments, such as the ultimate geographic spread of the disease, vaccine approvals and effectiveness, the duration of the outbreak, travel restrictions, business disruptions, and the effectiveness of actions taken in Canada and other countries to contain and treat the disease. These events are highly uncertain and as such, the Company cannot determine their financial impact at this time. While certain restrictions are presently in the process of being relaxed, it is unclear when the world will return to the previous normal, if ever. This may adversely impact the expected implementation of the Company’s plans moving forward.
| 9 |
TRILLION ENERGY INTERNATIONAL INC.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
(Expressed in U.S. dollars)
(unaudited)
Consolidation
The unaudited interim condensed consolidated financial statements include the accounts of Trillion Energy International Inc. and its wholly-owned subsidiaries Park Place Energy Corp., Park Place Energy Bermuda, BG Exploration EOOD, and Park Place Energy Turkey. All intercompany accounts, transactions and profits were eliminated in consolidation.
| (b) | Use of Estimates |
The preparation of consolidated financial statements 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 revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the estimated useful lives and recoverability of long-lived assets, impairment of oil and gas properties, fair value of stock-based compensation, fair value of derivative liabilities, interest rates used for lease calculations and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience, and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. There were no new estimates in the period.
| (c) | Reclassifications |
Certain prior year amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations or cash flow.
| (d) | New Accounting Pronouncements |
Any recent accounting pronouncements issued by FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s interim condensed consolidated financial statements.
| 3. | Restricted Cash |
The restricted cash relates to drilling bonds provided to GDPA (General Directorate of Petroleum Affairs) for the exploration licenses due to Turkish Petroleum Law. The amounts are for 2% of the annual work budget of the different Turkish licenses which is submitted to GDPA on an annual basis.
| 10 |
TRILLION ENERGY INTERNATIONAL INC.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
(Expressed in U.S. dollars)
(unaudited)
| 4. | Oil and Gas Properties |
| Unproven properties | Proven properties | |||||||||||
| Bulgaria | Turkey | Total | ||||||||||
| December 31, 2019 | $ | $ | $ | |||||||||
| Expenditures | - | |||||||||||
| Depletion | - | ( | ) | ( | ) | |||||||
| Foreign currency translation change | - | |||||||||||
| December 31, 2020 | ||||||||||||
| Expenditures | - | |||||||||||
| Depletion | - | ( | ) | ( | ) | |||||||
| Foreign currency translation change | ( | ) | - | ( | ) | |||||||
| September 30, 2021 | $ | $ | $ | |||||||||
Bulgaria
The
Company holds a
Turkey
Cendere oil field
The
primary asset of the PPE Turkey Companies is the Cendere onshore oil field, which is a profitable oil field located in South East Turkey
having a total of
The
Cendere Field is a long-term low decline oil reserve. The Company has a
At
September 30, 2021,
The South Akcakoca Sub-Basin (“SASB”)
The
Company owns offshore production licenses called the South Akcakoca Sub-Basin (“SASB”). The Company now owns a
| 11 |
TRILLION ENERGY INTERNATIONAL INC.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
(Expressed in U.S. dollars)
(unaudited)
Bakuk gas field
The
Company also owns a
| 5. | Property and Equipment |
| Right-of-use asset | Leasehold improvements | Other equipment | Total | |||||||||||||
| January 1, 2020 | $ | $ | $ | $ | ||||||||||||
| Additions | ||||||||||||||||
| Depreciation | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Disposals | ( | ) | ( | ) | ||||||||||||
| Foreign currency translation change | ( | ) | ( | ) | ||||||||||||
| December 31, 2020 | ||||||||||||||||
| Additions | - | - | ||||||||||||||
| Depreciation | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Disposals | - | - | - | |||||||||||||
| Foreign currency translation change | ( | ) | - | - | ( | ) | ||||||||||
| September 30, 2021 | $ | $ | $ | $ | ||||||||||||
| 6. | Loans Payable |
| As at | September 30, 2021 | December 31, 2020 | ||||||
| Unsecured,
interest bearing loans at | $ | $ | ||||||
| Unsecured,
interest bearing loans at | ||||||||
| Unsecured,
interest bearing loan at | ||||||||
| Unsecured,
interest bearing loan at | ||||||||
| Unsecured,
interest bearing loan at | - | |||||||
| Non-interest bearing loans | ||||||||
| Total loans payable | ||||||||
| Current portion of loans payable | ( | ) | ( | ) | ||||
| Long term portion of loans payable | $ | $ | ||||||
Loans bearing interest, accrue at
On
August 2, 2019, Garanti Bank extended a long-term loan to Park Place Turkey Limited in the amount of ₺
On
February 4, 2020, Garanti Bank extended a long-term loan to Park Place Turkey Limited in the amount of ₺
On
March 4, 2021, the Company received $
| 12 |
TRILLION ENERGY INTERNATIONAL INC.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
(Expressed in U.S. dollars)
(unaudited)
| 7. | Leases |
The Company leases certain assets under lease agreements. On January 1, 2020 the Company entered into a -year lease for office space, which the Company elected the short-term lease measurement and recognition exemption. On January 3, 2020 the Company entered into a -year lease for an office space that was classified as an operating lease on recognition.
During
the three and nine months ended September 30, 2021, the Company recognized operating lease expense of $
| Right-of-use asset | September 30, 2021 | December 31, 2020 | ||||||
| Beginning balance | $ | $ | ||||||
| Additions, cost | - | |||||||
| Amortization | ( | ) | ( | ) | ||||
| Foreign currency translation change | ( | ) | ( | ) | ||||
| Net book value | $ | $ | ||||||
Operating
lease liabilities are measured at the commencement date based on the present value of future lease payments. As the Company’s lease
did not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement
date in determining the present value of future payments. The Company used a weighted average discount rate of
Operating lease right-of-use assets include any prepaid lease payments and exclude any lease incentives and initial direct costs incurred. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. The lease terms may include options to extend or terminate the lease if it is reasonably certain that the Company will exercise that option.
As at September 30, 2021, the Company’s lease liability is as follows:
| Lease liability | September 30, 2021 | December 31, 2020 | ||||||
| Current portion of operating lease liabilities | $ | $ | ||||||
| Long-term portion of operating lease liabilities | ||||||||
| $ | $ | |||||||
Future minimum lease payments to be paid by the Company as a lessee as of September 30, 2021 are as follows:
| Operating lease commitments and lease liability | ||||
| Remainder of 2021 | $ | |||
| 2022 | ||||
| 2023 | ||||
| 2024 | ||||
| Total future minimum lease payments | ||||
| Discount | ( | ) | ||
| Total | $ | |||
| 13 |
TRILLION ENERGY INTERNATIONAL INC.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
(Expressed in U.S. dollars)
(unaudited)
| 8. | Notes Receivable |
| September 30, 2021 | ||||
| Current notes receivable | $ | |||
| Non-current notes receivable | ||||
| $ | ||||
During the nine-month period ended September 30, 2021, the Company entered into agreements with certain warrant holders for the following notes receivables as consideration for the exercise of warrants:
Current
On
July 31, 2021, the Company entered into a promissory note agreement with a principal sum of $
On
July 31, 2021, the Company entered into a promissory note agreement with a principal sum of $
On
July 31, 2021, the Company entered into a promissory note agreement with a principal sum of $
On
July 31, 2021, the Company entered into a promissory note agreement with a principal sum of $
On
July 31, 2021, the Company entered into a promissory note agreement with a principal sum of $
Non-Current
On
July 31, 2021, the Company entered into a promissory note agreement with the CFO of the Company with a principal sum of $
On
July 31, 2021, the Company entered into a promissory note agreement with a principal sum of $
On
July 31, 2021, the Company entered into a promissory note agreement with a principal sum of $
On
July 31, 2021, the Company entered into a promissory note agreement with the CEO of the Company with a principal sum of $
On
July 31, 2021, the Company entered into a promissory note agreement with the CEO of the Company with a principal sum of $
| # of warrants exercised | Principal | Maturity date | Interest rate | Accrued interest | Balance as at Sept 30, 2021 | |||||||||||||||||
| Current | ||||||||||||||||||||||
| $ | % | |||||||||||||||||||||
| $ | % | |||||||||||||||||||||
| $ | % | |||||||||||||||||||||
| $ | % | |||||||||||||||||||||
| $ | % | |||||||||||||||||||||
| Total Current | $ | $ | ||||||||||||||||||||
| Non-current | ||||||||||||||||||||||
| $ | % | |||||||||||||||||||||
| $ | % | |||||||||||||||||||||
| $ | % | |||||||||||||||||||||
| $ | % | |||||||||||||||||||||
| $ | % | |||||||||||||||||||||
| Total Non-current | $ | $ | ||||||||||||||||||||
| Total | $ | $ | $ | |||||||||||||||||||
The following is a continuity of the Company’s promissory note receivable:
| Notes Receivable | September 30, 2021 | |||
| Beginning balance | $ | |||
| Additions | ||||
| Repayments | ( | ) | ||
| Accrued interest | ||||
| Foreign currency translation change | ( | ) | ||
| Net book value | $ | |||
| 14 |
TRILLION ENERGY INTERNATIONAL INC.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
(Expressed in U.S. dollars)
(unaudited)
| 9. | Asset Retirement Obligations |
Asset retirement obligations (“AROs”) associated with the retirement of tangible long-lived assets are recognized as liabilities with an increase to the carrying amounts of the related long-lived assets in the period incurred. The fair value of AROs is recognized as of the acquisition date for business combinations. The cost of the tangible asset, including the asset retirement cost, is depleted over the life of the asset. AROs are recorded at estimated fair value, measured by reference to the expected future cash outflows required to satisfy the retirement obligations discounted at the Company’s credit-adjusted risk-free interest rate. Accretion expense is recognized over time as the discounted liabilities are accreted to their expected settlement value. If estimated future costs of AROs change, an adjustment is recorded to both the ARO and the long-lived asset. Revisions to estimated AROs can result from changes in retirement cost estimates, revisions to estimated inflation rates and changes in the estimated timing of abandonment. The Company’s ARO is measured using primarily Level 3 inputs. The significant unobservable inputs to this fair value measurement include estimates of plugging costs, remediation costs, inflation rate and well life. The inputs are calculated based on historical data as well as current estimated costs.
The following is a continuity of the Company’s asset retirement obligations:
| September 30, 2021 | December 31, 2020 | |||||||
| Asset retirement obligations at beginning of period | $ | $ | ||||||
| Accretion expense | ||||||||
| Change in estimate | - | - | ||||||
| Asset retirement obligations at end of period | $ | $ | ||||||
| 10. | Convertible Debentures |
On
September 30, 2019, the Company closed an unbrokered private placement of convertible debt, issuing $
As the September 30, 2019 convertible debt included an embedded conversion feature denominated in Canadian dollars, the debt was determined to be a financial instrument comprising an embedded derivative representing the conversion feature with a residual host debt component. On initial recognition, the Company used the residual value method to allocate the principal amount of the debentures between the embedded derivative conversion feature and host debt components. The conversion feature was valued first with the residual allocated to the host debt component.
On
initial recognition of the convertible debt granted on September 30, 2019, the Company recognized a derivative liability of $
On
July 1, 2020, the Company amended the conversion price of the convertible debentures. Under the amended terms, they are convertible any
time during the term of the debenture into units (each unit consists of one share and one warrant; each warrant can acquire one share
at an exercise price of $ CAD per share, or approximately US$
On
initial recognition of the amended convertible debt on July 1, 2020, the Company recognized a derivative liability of $
| 15 |
TRILLION ENERGY INTERNATIONAL INC.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
(Expressed in U.S. dollars)
(unaudited)
On
September 15, 2020, debt in the principal amount of $
On
March 8, 2021, the Company amended the terms of the convertible debentures such that any warrants issued with the units upon the conversion
of the debentures is exercisable at US$
On
March 8, 2021, the debt in the principal amount of $
On
March 30, 2021, the debt in the principal amount of $
The following is a continuity of the Company’s convertible debt:
| Host debt instrument | Embedded conversion feature | Total | ||||||||||
| Balance, January 1, 2020 | $ | $ | $ | |||||||||
| Extinguished during the period | ( | ) | ( | ) | ( | ) | ||||||
| Re-issued during the period | - | |||||||||||
| Allocated to derivative | ( | ) | ||||||||||
| Accretion | - | |||||||||||
| Change in fair value of derivative | - | ( | ) | ( | ) | |||||||
| Conversion | ( | ) | ( | ) | ( | ) | ||||||
| Foreign currency translation change | ( | ) | - | ( | ) | |||||||
| Balance, December 31, 2020 | ||||||||||||
| Accretion | - | |||||||||||
Conversion | ( | ) | ( | ) | ( | ) | ||||||
| Balance, September 30, 2021 | $ | $ | $ | |||||||||
| 11. | Common Stock |
For the nine months ended September 30, 2021
On
March 8, 2021, the Company closed a non-brokered private placement financing for aggregate gross proceeds of $
On
March 8, 2021, the Company settled a total of $
On
March 8, 2021, the Company closed a private placement for aggregate proceeds of $
| 16 |
TRILLION ENERGY INTERNATIONAL INC.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
(Expressed in U.S. dollars)
(unaudited)
On
March 8, 2021, debt in the principal amount of $
On
March 30, 2021, debt in the principal amount of $
On
March 30, 2021, the Company granted restricted share units which vested immediately. In connection with the grant, Common
Shares with a fair value of $
On
March 30, 2021, the Company issued
On
March 30, 2021, the Company issued Common Shares for the exercise of options at $ for gross proceeds of $
On
March 30, 2021, the Company issued Common Shares for the exercise of warrants, with a fair value of $
On
March 30, 2021, the Company issued Common Shares with a fair value of $
On
March 30, 2021, the Company issued Common Shares with a fair value of $
On
April 16, 2021, the Company issued Common Shares for the exercise of
On
April 16, 2021, the Company issued Common Shares with a fair value of $
On
April 16, 2021, the Company issued Common Shares with a fair value of $
On
April 16, 2021, the Company issued
On
April 28, 2021, the Company issued Common Shares at $ CAD (approximately US$) per share for gross proceeds of $
On
April 28, 2021, the Company issued
On
April 28, 2021, the Company issued Common Shares with a fair value of $
On
June 28, 2021, the Company issued Common Shares for the exercise of warrants at prices ranging from $ CAD - $
CAD (approximately US$
| 17 |
TRILLION ENERGY INTERNATIONAL INC.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
(Expressed in U.S. dollars)
(unaudited)
On
June 28, 2021, the Company issued Common Shares with a fair value of $
On
June 28, 2021, the Company issued Common Shares with a fair value of $
On
June 28, 2021, the Company issued
On
July 20, 2021, the Company issued
On
August 9, 2021, the Company issued shares, as a result of the exercise of
On
August 20, 2021, the Company issued shares, as a result of the exercise of warrants with exercise prices varying from
$ - $ CAD (US$ - $) for gross proceeds of $
On
September 7, 2021, the Company issued shares, as a result of the exercise of warrants at $CAD (approximately US$)
for gross proceeds of $
On
September 7, 2021, the Company issued Common Shares with a fair value of $
On
September 7, 2021, the Company issued Common Shares with fair value of $
For the year ended December 31, 2020
On
June 19, 2020 the Company closed a non-brokered private placement financing for aggregate gross proceeds of $
On July 31, 2020 the Company closed a non-brokered private placement financing, by:
| ● | issuing
units for cash at a price of $ CAD per unit (approximately US$ per unit), for proceeds of $ | |
| ● | issuing
Units for services, valued at US$ | |
| ● | issuing Units for debt settlement of US$. |
Each
unit was comprised of one Common Share and one Warrant. Each Warrant entitles the holder to purchase one Common Share at a price of $
CAD (approximately US$
On July 31, 2020, the Company granted restricted share units which vested immediately. In connection with the grant, Common Shares with a fair value of $ were issued.
On
September 4, 2020, the Company closed a private placement of units at $ CAD per unit, for gross proceeds of $
On
September 15, 2020, the Company issued units with a fair value of $
On
November 17, 2020, the Company closed a non-brokered private placement financing for aggregate gross proceeds of $
On November 17, 2020, the Company granted restricted share units which vested immediately. In connection with the grant, Common Shares with a fair value of $ were issued.
On
December 10, 2020, the Company closed a non-brokered private placement financing for aggregate gross proceeds of $
| 18 |
TRILLION ENERGY INTERNATIONAL INC.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
(Expressed in U.S. dollars)
(unaudited)
On
December 17, 2020, the Company closed a non-brokered private placement financing for aggregate gross proceeds of $
On
December 17, 2020, the Company issued for the exercise of stock options. In lieu of cash, the Company settled $
| 12. | Earnings Per Share |
| 9 Months ended September 30, 2021 | 3 Months ended September 30, 2021 | |||||||||||||||||||||||
| Income (Numerator) | Shares (Denominator) | Per-Share Amount | Income (Numerator) | Shares (Denominator) | Per-Share Amount | |||||||||||||||||||
| Basic EPS | ||||||||||||||||||||||||
| Income (loss) | ( |
) | ( |
) | ||||||||||||||||||||
| Effect of Dilutive Securities | ||||||||||||||||||||||||
| Options | ||||||||||||||||||||||||
| Warrants | ||||||||||||||||||||||||
| Diluted EPS | ||||||||||||||||||||||||
| Income (loss) | ( |
) | ( |
) | ||||||||||||||||||||
Options to purchase common shares at $per share were issued and outstanding during the period ended September 30, 2021 but were not included in the computation of diluted EPS because the options’ exercise price was greater than the average market price of the common shares. The options, which expire on June 22, 2024 () and 2026 (), were still outstanding as at September 30, 2021.
| 19 |
TRILLION ENERGY INTERNATIONAL INC.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
(Expressed in U.S. dollars)
(unaudited)
| 13. | Stock Options |
The Incentive Plan authorizes the following types of awards:
| ● | incentive stock options and nonqualified stock options to purchase Common Stock at a set price per share; | |
| ● | stock appreciation rights (“SARs”) to receive upon exercise Common Stock or cash equal to the appreciation in value of a share of Common Stock; | |
| ● | restricted stock, which are shares of Common Stock granted subject to a restriction period and/or a condition which, if not satisfied, may result in the complete or partial forfeiture of the shares; and | |
| ● | other stock-based awards, which provide for awards denominated in or payable in, valued in whole or in part by reference to, or otherwise based on or related to, shares of Common Stock of the Company, which may include performance shares or options and restricted stock units which provide for shares to be issued or cash to be paid upon the lapse of predetermined restrictions. |
Under the 2013 Plan, the maximum number of shares of authorized stock that may be delivered is % of the total number of shares of common stock issued and outstanding of the Company as determined on the applicable date of grant of an award under the 2013 Plan. Under the 2013 Plan, the exercise price of each option (or other stock-based award) shall not be less than the market price of the Company’s stock as calculated immediately preceding the day of the grant. The vesting schedule for each option or other stock-based award shall be specified by the Board of Directors at the time of grant. The maximum term of options or other stock-based award granted is ten years or such lesser time as determined by the Board of Directors at the time of grant.
| Number of options | Weighted average exercise price | |||||||
| Outstanding, December 31, 2019 | $ | |||||||
| Granted | ||||||||
| Exercised | ( | ) | ||||||
| Expired | ( | ) | ||||||
| Outstanding, December 31, 2020 | ||||||||
| Granted | ||||||||
| Exercised | ( | ) | ||||||
| Expired | ( | ) | ||||||
| Outstanding, September 30, 2021 | $ | |||||||
| Outstanding | Exercise Price | Expiry Date | Vested | ||||||||
| 20 |
TRILLION ENERGY INTERNATIONAL INC.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
(Expressed in U.S. dollars)
(unaudited)
As of September 30, 2021, all stock options have fully vested. The weighted average remaining contractual life of outstanding stock options is years. The aggregate intrinsic value of the stock options at September 30, 2021 is $.
For the nine months ended September 30, 2021, the Company recognized $in stock-based compensation expense (2020 - $) for options granted and vested. At September 30, 2021, the Company has unrecognized compensation expense related to stock options.
| 14. | Warrants |
The following is a continuity of the Company’s outstanding stock purchase warrants:
| Number of warrants | Weighted average exercise price | |||||||
| Outstanding, December 31, 2019 | $ | |||||||
| Issued | ||||||||
| Expired | ( | ) | ||||||
| Outstanding, December 31, 2020 | ||||||||
| Issued | ||||||||
| Exercised* | ( | ) | ||||||
| Expired | ( | ) | ||||||
| Outstanding, September 30, 2021 | $ | |||||||
At September 30, 2021, the Company had the following outstanding stock purchase warrants:
| Outstanding | Exercise Price | Expiry Date | ||||||
| USD | ||||||||
| USD | ||||||||
| USD | ||||||||
| USD | ||||||||
| USD | ||||||||
| USD | ||||||||
| USD | ||||||||
The
weighted average remaining contractual life of outstanding warrants as at September 30, 2021 is
On July 6, 2021, the Company elected to accelerate the exercise terms of warrants issued during the year ended December 31, 2020. As per the terms of the warrants, if the Company’s shares price reached the threshold of $0.25 or $0.30 depending on the agreements for 10 consecutive trading days, the Company had the option to accelerate the exercise terms.
The
Company’s warrants which are exercisable in Canadian dollars are considered to be derivative financial instruments as they have
an exercise price denominated in a currency other than the Company’s functional currency of the US dollar. Under US GAAP, the Company
is required to present these warrants as derivative liabilities on the balance sheet and to measure them at fair value at the end of
each reporting period. As at September 30, 2021, the balance of the derivative liability associated with these warrants is $
| 21 |
TRILLION ENERGY INTERNATIONAL INC.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
(Expressed in U.S. dollars)
(unaudited)
On March 4, 2021, the Company issued
On
March 8, 2021, in connection with a private placement of units, the Company issued
On
March 8, 2021, in connection with a debt settlement, the Company issued
On March 8, 2021, debt in the principal
amount of $
On March 30, 2021, debt in the principal
amount of $
On March 30, 2021, in connection with
a private placement of units, the Company issued
On
June 7, 2021, in connection to a prior private placement in which warrants were owed to certain subscribers, the Company issued
The following is a continuity of the Company’s derivative warrant liability:
| Total | ||||
| Balance, January 1 and December 31, 2020 | $ | |||
| Issued during the period | ||||
| Extinguished during the period | ( | ) | ||
| Change in fair value of derivative | ( | ) | ||
| Balance, September 30, 2021 | $ | |||
| 15. | Restricted Stock Units |
During
the nine months ended September 30, 2021, the Company granted restricted stock units (“RSUs”) as consideration for
management and consulting contracts. The RSUs were valued at $
For the three and nine months ended September 30, 2021, the Company recognized and (2020 – ) in stock-based compensation expense for RSUs granted and vested. At September 30, 2021, the Company has unrecognized compensation expense related to RSUs.
| Number of restricted stock units | Weighted average fair value per award | |||||||
| Balance, December 31, 2019 | $ | |||||||
| Granted | ||||||||
| Vested | ( | ) | ||||||
| Balance, December 31, 2020 | ||||||||
| Granted | ||||||||
| Vested | ( | ) | ||||||
| Balance, September 30, 2021 | $ | |||||||
| 22 |
TRILLION ENERGY INTERNATIONAL INC.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
(Expressed in U.S. dollars)
(unaudited)
| 16. | Related Party Transactions |
At
September 30, 2021, accounts payable and accrued liabilities included $
During the nine month period ended September 30, 2021, the Company issued units for the settlement of accounts payable owed to related parties in the amount of , resulting in no gain or loss and issued common shares pursuant to the options exercised by related parties to settle the accounts payable. Refer to Note 11.
During the nine month period ended
September 30, 2021, the Company issued common shares relating to the exercise of
As
at September 30, 2021, notes receivable included $
During
the nine months ended September 30, 2021, $
| 17. | Segment Information |
The Company’s operations are in the resource industry in Bulgaria and Turkey with head offices in the United States and a satellite office in Sofia, Bulgaria. The Company’s operating segments include a head office in Canada, oil and gas operations in Turkey and oil and gas properties located in Bulgaria.
As at and for the nine month period ended September 30, 2021
| Bulgaria | North America | Turkey | Total | |||||||||||||
| Revenue | ||||||||||||||||
| Oil and natural gas sales | $ | $ | $ | $ | ||||||||||||
| Cost and expenses | ||||||||||||||||
| Production | ||||||||||||||||
| Depletion | ||||||||||||||||
| Depreciation | ||||||||||||||||
| Accretion of asset retirement obligation | ||||||||||||||||
| Investor relations | ||||||||||||||||
| Stock based compensation | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Total expenses | ||||||||||||||||
| Loss before other income (expenses) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expenses) | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ||||||||||||
| Interest income | ||||||||||||||||
| Finance cost | ( | ) | ( | ) | ||||||||||||
| Foreign exchange gain (loss) | ( | ) | ( | ) | ||||||||||||
| Other income (expense) | ( | ) | ( | ) | ||||||||||||
| Change in fair value of derivative liability | ||||||||||||||||
| Loss on debt extinguishment | ( | ) | ( | ) | ||||||||||||
| Total other income (expenses) | ( | ) | ||||||||||||||
| Net loss for the period | $ | ( | ) | $ | ( | ) | ( | ) | ||||||||
| Long lived assets | $ | $ | $ | $ | ||||||||||||
| 23 |
TRILLION ENERGY INTERNATIONAL INC.
Notes to the Unaudited Interim Condensed Consolidated Financial Statements
(Expressed in U.S. dollars)
(unaudited)
As at and for the nine month period ended September 30, 2020
| Bulgaria | North America | Turkey | Total | |||||||||||||
| Revenue | ||||||||||||||||
| Oil and natural gas sales | $ | $ | $ | $ | ||||||||||||
| Cost and expenses | ||||||||||||||||
| Production | ||||||||||||||||
| Depletion | ||||||||||||||||
| Depreciation | ||||||||||||||||
| Share-based payments | ||||||||||||||||
| Accretion of asset retirement obligation | ||||||||||||||||
| General and administrative | ||||||||||||||||
| Total expenses | ||||||||||||||||
| Loss before other income (expenses) | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expenses) | ||||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Interest income | ||||||||||||||||
| Foreign exchange gain (loss) | ||||||||||||||||
| Other income (expense) | ||||||||||||||||
| Change in fair value of derivative liability | ( | ) | ( | ) | ||||||||||||
| Loss on debt extinguishment | ( | ) | ( | ) | ||||||||||||
| Total other income (expenses) | ( | ) | ( | ) | ||||||||||||
| Net loss for the period | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Long lived assets | $ | $ | $ | $ | ||||||||||||
| 18. | Subsequent Events |
On November 8, 2021, the Company announced a special shareholder’s meeting to be held on December 17, 2021 to vote on the Company’s plans to redomicile from a Delaware to a British Columbia corporation pursuant to a planned merger and amalgamation transaction with the Company’s subsidiary.
On November 10, 2021, the Company issued Common Shares pursuant to RSU’s previously issued to management, directors and officers of the Company.
On November 10, 2021, the Company issued
Common Shares at $ per share for gross proceeds of $
On November 10, 2021, the Company issued
Common Shares at $ per share for gross proceeds of $
On November 10, 2021, the Company issued
Common Shares ranging from $ - $ per share for gross proceeds of $
On November 10, 2021, the Company issued
shares, as a result of the exercise of
| 24 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to provide readers of our financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity, and certain other factors that may affect our future results. Our MD&A is presented in the following sections:
| ● | Executive Summary | |
| ● | Results of Operations | |
| ● | Liquidity and Capital Resources | |
| ● | Forward-Looking Statements. |
Our MD&A should be read in conjunction with our unaudited financial statements of Trillion Energy International Inc. (“Trillion Energy”, Company”, “we”, and “our”) and related Notes in Part I, Item 1 of the Quarterly Report on Form 10-Q and Item 8, Financial Statements and Supplementary Data, of the Annual Report on Form 10-K for the year ended December 31, 2020.
Our website can be found at www.trillionenergy.com. Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed with or furnished to the U.S. Securities and Exchange Commission (“SEC”), pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (“Exchange Act”), can be accessed free of charge by linking directly from our website under the “Investor Relations - SEC Filings” caption to the SEC’s Edgar Database.
Executive Summary
Trillion Energy International Inc. is focused on its oil and gas producing assets in Turkey and a coal bed methane exploration license in Bulgaria.
Turkey
As at September 30, 2021, net production to us from such fields was 172 barrels of oil equivalent per day or Boe/d.. With this base of operations in Turkey and its experienced management team, the Company is poised to exploit these assets and for further growth in the region.
At September 30, 2021, the gross oil production rate for the producing wells in Cendere was 595 bbls/day; the average daily 2021 gross production rate for the field was 896 bbls/day. At the end of September 2021, oil is currently sold at a price of approximately US$73.34 per barrel for a netback per barrel of approximately US$38.13/bbl. At September 30, 2021, the Cendere field was producing 94 barrels of oil per day net to the PPE Turkey; and averaged 130 barrels per day during 2021 net to the us.
SASB has four producing fields, each with a production platform plus subsea pipelines that connect the fields to an onshore gas plant. The SASB fields are located off the north coast of Turkey towards the western end of the Black Sea. Total gross production to date from the four fields is approximately 41.8 Bcf.
As at September 30, 2021, the gross gas production rate for the remaining producing wells in SASB was 0.574 MMcfd; the average daily 2021 gross production rate for the field was 0.723 MMcfd. The average gas sale price year to date was, US$5.36/Mcf and US$5.99 per Mcf for the quarter ending September 30, 2021, for a netback per Mcf of approximately minus US$4.35. The lower net back is a result of relatively lower production levels being incurred due to natural decline, down approximately 96% since peak production rates occurred during 2011, given no new wells have been drilled since 2011. The Company anticipates that as new wells come online, the netback will increase substantially. At the end of September 2021, gas is currently sold at a price of approximately $6.57/MCF.
| 25 |
The Company continues to produce gas from SASB as a loss to avoid shutting down the field and facilities. Commencing in November 2021, the Company plans to commence a revitalization program by drilling new wells, which may ramp up production and generate positive net backs and earnings.
The current drilling schedule is dependant upon the timing of receipt of significant investment capital, to finance the program, and is tentatively scheduled to commence later this year or Q1 2022, due to COVID and other delays. A total of approximately 17 new wells are contemplated to be drilled in stages which include production and exploration wells. 3-D seismic will be reprocessed to delineate existing targets and expand the drilling program, as 13 additional targets have been identified and merit further study. Those additional targets may result in additional reserves and resources.
In March 2021, the Company announced its plans to investigate around the SASB development license area, which is currently 12,385 hectares, by applying for a Technical Investigation Survey Permit for 200,000 hectares of surrounding area (“the Permit”). Upon receiving the Permit, the Company plans to reprocess existing 3D and 2D seismic with new technology. Such new technology is expected to improve the resolution of the data and define new exploration targets around the SASB.
Bulgaria license
In October of 2010, the Company was awarded an exploration permit for the “Vranino 1-11 Block”, a 98,205 acre oil and gas exploration land located in Dobrudja Basin, Bulgaria, by the Bulgarian Counsel of Ministers. On April 1, 2014, the Company entered into an Agreement for Crude Oil and Natural Gas Prospecting and Exploration in the Vranino 1-11 Block with the Ministry of Economy and Energy of Bulgaria (the “License Agreement”). The initial term of the License Agreement is five years. This five-year period will commence once the Bulgarian regulatory authorities approve of the Company’s work programs for the permit area. The License Agreement (or applicable legislation) provides for possible extension periods for up to five additional years during the exploration phase, as well as the conversion of the License Agreement to an exploitation concession, which can last for up to 35 years. Under the License Agreement, the Company will submit a yearly work program that is subject to the approval of the Bulgarian regulatory authorities.
Before the license for the Bulgarian CBM project is “effective”, the Company’s overall work program and first year annual work program must be approved by both the Bulgarian environmental ministry and the energy ministry. The Company is currently working on an environmental assessment in order to finalize the exploration permit.
Strategic Focus
Our focus currently is obtaining funding to produce our reserves in our oil and gas fields in Turkey, which we expect will generate significant cash-flow and profits for the Company. Further development is contingent upon receiving further funding, and our plan is to further develop the fields when funding is received. The Bulgaria license area holds great upside attraction as a potential coal bed methane exploration project. The license area was extensively drilled for coal exploration from 1964 to 1990. It was determined that coal mining was not technically feasible. However, the coal exploration drilling provided us with an extensive database.
Results of Operations
The following summary of our results of operations should be read in conjunction with our unaudited interim condensed consolidated financial statements for the three and nine months ended September 30, 2021 and 2020 which are included herein.
Revenue
For the three months ended September 30, 2021, the Company had oil and gas revenue of $879,207, compared to $493,609 for the three months ended September 30, 2020. Revenue increased mainly due to the increase in production and also due to the increase in oil price. Oil and gas revenue denominated in Turkish Liras was ₺7,538,910 for the three months ended September 30, 2021, compared to ₺4,544,765 for the three months ended September 30, 2020.
For the nine months ended September 30, 2021, the Company had oil and gas revenue of $2,837,024, compared to $1,773,073 for the nine months ended September 30, 2020. Revenue increased mainly due to the increase in production and also due to the increase in oil price. Oil and gas revenue denominated in Turkish Liras was ₺22,935,637 for the nine months ended September 30, 2021, compared to ₺12,836,819 for the nine months ended September 30, 2020.
| 26 |
Expenses
For the three months ended September 30, 2021, the Company incurred production expenses related to its Turkey operations of $774,249 (2020 - $488,930), depletion charges of $55,690 (2020 - $65,630), depreciation expense of $6,982 (2020 - $22,132) and asset retirement obligation accretion expense of $105,341 (2020 - $95,435). Production expenses increased by $285,199 largely due to increase in production volumes as discussed above. Depletion and depreciation expenses were consistent with the prior period. Accretion of asset retirement costs increased by $9,906 for the three months ended September 30, 2021 primarily due to revaluation of the asset retirement obligation at December 31, 2020 which increased the carrying value of the obligation.
For the nine months ended September 30, 2021, the Company incurred production expenses related to its Turkey operations of $2,008,383 (2020 - $1,688,342), depletion charges of $191,263 (2020 - $201,875), depreciation expense of $20,790 (2020 - $35,106) and asset retirement obligation accretion expense of $308,379 (2020 - $279,377). Production expenses increased by $320,041 largely due to increase in production volumes as discussed above. Depletion and depreciation expenses were consistent with the prior period. Accretion of asset retirement costs increased by $29,002 for the nine months ended September 30, 2021 primarily due to revaluation of the asset retirement obligation at December 31, 2020 which increased the carrying value of the obligation.
For the three months ended September 30, 2021, the Company had general and administrative expenses of $509,335, compared to $548,500 for the three months ended September 30, 2020. $236,178 in expenses were from the North American head office and $273,157 for the Turkey office.
For the nine months ended September 30, 2021, the Company had general and administrative expenses of $1,540,132, compared to $1,328,863 for the nine months ended September 30, 2020. $839,102 in expenses were from the North American head office and $701,030 for the Turkey office.
For the three months ended September 30, 2021, the Company had investor relations expenses of $70,721, compared to $149,505 for the three months ended September 30, 2020. $70,721 in expenses were from the North American head office and $nil for the Turkey office.
For the nine months ended September 30, 2021, the Company had investor relations expenses of $794,295, compared to $361,504 for the nine months ended September 30, 2020. $794,295 in expenses were from the North American head office and $nil for the Turkey office.
Other Income (Expense)
For the three months ended September 30, 2021, the Company had other income of $6,061,754 compared to other expenses of $139,663 for the three months ended September 30, 2020. Other income for the three months ended September 30, 2021 consists mainly of the change in the fair value of the derivative liability of $6,205,914. The derivative liability arises from the Company’s warrants which are exercisable in Canadian dollars as they have an exercise price denominated in a currency other than the Company’s functional currency of the US dollar.
For the nine months ended September 30, 2021, the Company had other income of $25,119 compared to other expenses of $114,477 for the nine months ended September 30, 2020. Other income for the nine months ended September 30, 2021 consists mainly of the gain from the change in the fair value of the derivative liability of $507,446 offset by loss on debt extinguishment of $238,724, finance costs of $137,884, and interest expense of $119,871. The derivative liability arises from the Company’s warrants which are exercisable in Canadian dollars as they have an exercise price denominated in a currency other than the Company’s functional currency of the US dollar. Over the period, the value of the derivative liability increased substantially as a result of the increase in the Company’s share price from $0.06 as at December 31, 2020 to a $0.21 as at September 30, 2021. The Company has changed its policy from denominating warrants in CND to USD, to avoid future derivative liabilities being recorded in the future.
Net Income (Loss)
The changes in overall net income or loss for the three and nine months ended September 30, 2021, compared to the three and nine months ended September 30, 2020 a result of the factors as described above.
| 27 |
Liquidity and Capital Resources
The following table summarizes our liquidity position:
| September 30, 2021 | December 31, 2020 | |||||||
| (Unaudited) | ||||||||
| Cash | $ | 1,465,568 | $ | 202,712 | ||||
| Working capital | 1,057,977 | (1,057,725 | ) | |||||
| Total assets | 8,537,273 | 6,487,261 | ||||||
| Total liabilities | 7,405,315 | 7,929,696 | ||||||
| Stockholders’ equity | 1,131,958 | (1,442,435 | ) | |||||
Cash Used in Operating Activities
Net cash used in operating activities for the nine months ended September 30, 2021 was $1,111,154, compared to $1,152,763 cash used in operating activities for the nine months ended September 30, 2020. The current period loss of $2,162,396 was coupled with $319,227 in changes in working capital items and offset by $1,370,465 in net non-cash items for the nine months ended September 30, 2021. This compares to a prior year loss of $2,403,660, offset by $818,438 in net non-cash items and $432,459 in changes in working capital items.
Cash Used in Investing Activities
Net cash used in investing activities for the nine months ended September 30, 2021 was $52,332, compared to $104,270 used for the nine months ended September 30, 2020. Oil and gas properties expenditures increased to $51,615 from $4,821 in the comparative period whereas property and equipment expenditures decreased to $717 from $91,995 in the comparative period.
Cash Provided by Financing Activities
We have funded our business to date from sales of our common stock through private placements and loans from shareholders.
Net cash provided by financing activities for the nine months ended September 30, 2021 was $2,369,025, compared to $787,752 for the nine months ended September 30, 2020. Cash provided by financing activities in the current period was primarily related to $2,154,994 in proceeds for the issuance of shares related to private placements and warrant and option exercises. The Company also received a $500,000 loan during the period. In the comparative period cash from financing activities was primarily related to $751,400 in stock subscriptions received related to a private placement and a new bank loan in the Company’s Turkey subsidiary.
Future Operating Requirements
Based
on our current plan of operations, we estimate that we will require approximately $20,000,000 to cover our plan of operations over the
next 12 months. We will require approximately $20,000,000 for drilling wells at SASB.
Our current plan of operations is the drilling of up to five (5) new wells at SASB and to reenter three existing wells to perform workovers
to increase gas production. An additional 9 wells are planned to be drilled after these first eight wells are drilled. Depending on the
timing of the drilling operations at our current interest (currently 49%), we project we will incur up to an additional $16 to $25 million
in capital expenditures of which approximately $12,000,000 will be incurred over the next 12 months to enable us to conduct such operations
As of September 30, 2021 the Company had unrestricted cash of $1,465,568 and current liabilities of $1,632,758. The Company is attempting to raise additional capital to fund its future exploration and operating requirements.
| 28 |
Off-Balance Sheet Arrangements
On October 1, 2018 the Company entered into an agreement to grant to a consultant of the Company a 2% (two percent) gross overriding royalty on petroleum substances produced from certain of its currently undeveloped exploration properties, namely: Block 1-11 Vranino situated in Dobrich District, Bulgaria and seven contiguous exploration licences in the province of Hakkari Yuksekova Semdiali Derecik, Turkey. The Grant of the royalty agreement was for services involving technical and corporate advisory services.
On October 1, 2018 the Company entered into an agreement to grant to the CEO of the Company a 0.5% (one half of one percent) gross overriding royalty on petroleum substances produced from certain of its currently undeveloped exploration properties, namely: Block 1-11 Vranino situated in Dobrich District, Bulgaria and seven contiguous exploration licences in the province of Hakkari Yuksekova Semdiali Derecik, Turkey. The Grant of the royalty agreement was for services involving technical and corporate advisory services.
Forward-Looking Information
Certain statements in this Quarterly Report on Form 10-Q constitute “forward-looking statements” within the meaning of applicable U.S. securities legislation. Additionally, forward-looking statements may be made orally or in press releases, conferences, reports, on our website or otherwise, in the future, by us or on our behalf. Such statements are generally identifiable by the terminology used such as “plans,” “expects,” “estimates,” “budgets,” “intends,” “anticipates,” “believes,” “projects,” “indicates,” “targets,” “objective,” “could,” “should,” “may” or other similar words.
By their very nature, forward-looking statements require us to make assumptions that may not materialize or that may not be accurate. Forward-looking statements are subject to known and unknown risks and uncertainties and other factors that may cause actual results, levels of activity and achievements to differ materially from those expressed or implied by such statements, including the factors discussed under Item 1A. Risk Factors in our most recent Annual Report on Form 10-K. Such factors include, but are not limited to, the following: fluctuations in and volatility of the market prices for oil and natural gas products; the ability to produce and transport oil and natural gas; the results of exploration and development drilling and related activities; global economic conditions, particularly in the countries in which we carry on business, especially economic slowdowns; actions by governmental authorities including increases in taxes, legislative and regulatory initiatives related to fracture stimulation activities, changes in environmental and other regulations, and renegotiations of contracts; political uncertainty, including actions by insurgent groups or other conflicts; the negotiation and closing of material contracts; future capital requirements and the availability of financing; estimates and economic assumptions used in connection with our acquisitions; risks associated with drilling, operating and decommissioning wells; actions of third-party co-owners of interests in properties in which we also own an interest; our ability to effectively integrate companies and properties that we acquire; our limited operating history; our history of operating losses; our lack of insurance coverage; and the other factors discussed in other documents that we file with or furnish to the U.S. Securities and Exchange Commission. The impact of any one factor on a particular forward-looking statement is not determinable with certainty as such factors are interdependent upon other factors and our course of action would depend upon our assessment of the future, considering all information then available. In that regard, any statements as to: future oil or natural gas production levels; capital expenditures; the allocation of capital expenditures to exploration and development activities; sources of funding for our capital expenditure programs; drilling of new wells; demand for oil and natural gas products; expenditures and allowances relating to environmental matters; dates by which certain areas will be developed or will come on-stream; expected finding and development costs; future production rates; ultimate recoverability of reserves, including the ability to convert probable and possible reserves to proved reserves; dates by which transactions are expected to close; future cash flows, uses of cash flows, collectability of receivables and availability of trade credit; expected operating costs; changes in any of the foregoing and other statements using forward-looking terminology are forward-looking statements, and there can be no assurance that the expectations conveyed by such forward-looking statements will, in fact, be realized.
Although we believe that the expectations conveyed by the forward-looking statements are reasonable based on information available to us on the date such forward-looking statements were made, no assurances can be given as to future results, levels of activity, achievements or financial condition.
Readers should not place undue reliance on any forward-looking statement and should recognize that the statements are predictions of future results, which may not occur as anticipated. Actual results could differ materially from those anticipated in the forward-looking statements and from historical results, due to the risks and uncertainties described above, as well as others not now anticipated. The foregoing statements are not exclusive and further information concerning us, including factors that potentially could materially affect our financial results, may emerge from time to time. We do not intend to update forward-looking statements to reflect actual results or changes in factors or assumptions affecting such forward-looking statements.
| 29 |
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable because we are a smaller reporting company.
Item 4. Controls and Procedures
Evaluation of Disclosure of Controls and Procedures
We carried out an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of June 30, 2021 (the “Evaluation Date”). This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer. Based upon that evaluation, we concluded that our disclosure controls and procedures were effective.
We believe that our consolidated financial statements contained in our Quarterly Report on Form 10-Q for the period ended June 30, 2021 fairly present our financial condition, results of operations and cash flows in all material respects.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II – OTHER INFORMATION
Item 1. Legal Proceedings
We are not currently involved in any legal proceedings and we are unaware of any pending proceedings.
Item 1A. Risk Factors
Not applicable because we are a smaller reporting company. See risk factors described in Item 1A of the Company’s most recent Annual Report on Form 10-K.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Not applicable.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mining Safety Disclosures
Not applicable.
Item 5. Other Information
None.
| Item 6. | Exhibits | |
| 31.1 | Certification of Chief Executive Officer pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the Securities and Exchange Act of 1934, as amended | |
| 31.2 | Certification of Chief Financial Officer pursuant to Rule 13a-14 and Rule 15d-14(a), promulgated under the Securities and Exchange Act of 1934, as amended | |
| 32.1 | Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 32.2 | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 101 | The Company’s unaudited Condensed Consolidated Financial Statements and related Notes for the quarterly period ended September 30, 2021 from this Quarterly Report on Form 10-Q, formatted in XBRL (extensible Business Reporting Language). |
| 31 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| TRILLION ENERGY INTERNATIONAL INC. | ||
| By: | /s/ “Arthur Halleran” | |
| Arthur Halleran | ||
| President and CEO (Principal Executive Officer) | ||
| Date: November 15, 2021 | ||
| By: | /s/ “David Thompson” | |
| David Thompson | ||
| Chief Financial Officer (Principal Financial Officer) | ||
| Date: November 15, 2021 |
| 32 |
Exhibit 31.1
Rule 13a-14(a)/15d-14(a) Certification
I, Arthur Halleran, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2021 of Trillion Energy International Inc. (the “registrant”);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15-d-15(f)) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the Audit Committee of the registrant’s board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting
Date: November 15, 2021
| /s/ Arthur Halleran | |
| Arthur Halleran, Chief Executive Officer | |
| (Principal Executive Officer) |
Exhibit 31.2
Rule 13a-14(a)/15d-14(a) Certification
I, David Thompson, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2021 of Trillion Energy International Inc. (the “registrant”);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15-d-15(f)) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the Audit Committee of the registrant’s board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: November 15, 2021
| /s/ David Thompson | |
| David Thompson, Chief Financial Officer | |
| (Principal Financial Officer) |
Exhibit 32.1
Section 1350 Certification
In connection with the Quarterly Report on Form 10-Q of Trillion Energy International Inc., (the “Company”) for the quarterly period ended September 30, 2021 as filed with the U.S. Securities and Exchange Commission (the “Report”), I, Arthur Halleran, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of our knowledge:
| 1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. |
| Date: November 15, 2021 | /s/ Arthur Halleran |
Arthur Halleran, Chief Executive Officer (Principal Executive Officer) |
This certification accompanies this Quarterly Report on Form 10-Q pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by such Act, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.
Exhibit 32.2
Section 1350 Certification
In connection with the Quarterly Report on Form 10-Q of Trillion Energy International Inc., (the “Company”) for the quarterly period ended September 30, 2021 as filed with the U.S. Securities and Exchange Commission (the “Report”), I, David Thompson, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of our knowledge:
| 1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and | |
| 2. | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. |
| Date: November 15, 2021 | /s/ David Thompson |
David Thompson, Chief Financial Officer (Principal Financial Officer) |
This certification accompanies this Quarterly Report on Form 10-Q pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by such Act, be deemed filed by the Company for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the Company specifically incorporates it by reference.
Interim Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares |
Sep. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Statement of Financial Position [Abstract] | ||
| Common stock, shares authorized | 250,000,000 | 250,000,000 |
| Common stock, par value | $ 0.00001 | $ 0.00001 |
| Common stock, shares issued | 155,102,806 | 155,102,806 |
| Common stock, shares outstanding | 155,102,806 | 155,102,806 |
Interim Condensed Consolidated Statements of Operations and Comprehensive Loss (unaudited) - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
| Revenue | ||||
| Oil and natural gas sales | $ 879,207 | $ 493,609 | $ 2,837,024 | $ 1,773,073 |
| Cost and expenses | ||||
| Production | 774,249 | 488,930 | 2,008,383 | 1,688,342 |
| Depletion | 55,690 | 65,630 | 191,263 | 201,875 |
| Depreciation | 6,982 | 22,132 | 20,790 | 35,106 |
| Accretion of asset retirement obligation | 105,341 | 95,435 | 308,379 | 279,377 |
| Investor relations | 70,721 | 149,505 | 794,295 | 361,504 |
| Stock based compensation | 167,189 | 161,291 | 167,189 | |
| General and administrative | 509,335 | 548,500 | 1,540,138 | 1,328,863 |
| Total expenses | 1,522,318 | 1,537,321 | 5,024,539 | 4,062,256 |
| Loss before other income (expenses) | (643,111) | (1,043,712) | (2,187,515) | (2,289,183) |
| Other income (expenses) | ||||
| Interest expense | (46,116) | (34,155) | (119,871) | (86,829) |
| Interest income | 16,520 | 5,308 | 27,450 | 12,771 |
| Finance cost | (88,502) | (137,884) | ||
| Foreign exchange gain (loss) | (12,340) | 4,393 | (13,258) | 31,803 |
| Other income (expense) | (4) | (40) | ||
| Loss on debt extinguishment | (13,718) | (29,001) | (238,724) | (29,001) |
| Change in fair value of derivative liability | 6,205,914 | (86,208) | 507,446 | (43,221) |
| Total other income (expenses) | 6,061,754 | (139,663) | 25,119 | (114,477) |
| Net income/(loss) for the period | $ 5,418,643 | $ (1,183,375) | $ (2,162,396) | $ (2,403,660) |
| Earnings (loss) per share - basic | $ 0.03 | $ (0.01) | $ (0.01) | $ (0.03) |
| Weighted average number of shares outstanding | 166,527,850 | 110,299,171 | 150,439,108 | 95,897,700 |
| Earnings (loss) per share - diluted | $ 0.03 | $ (0.01) | $ (0.01) | $ (0.03) |
| Weighted average number of shares outstanding | 178,410,202 | 110,299,171 | 150,439,108 | 95,897,700 |
| Other comprehensive income (loss): | ||||
| Foreign currency translation adjustments | $ 66,194 | $ (74,807) | $ (119,650) | $ (230,936) |
| Comprehensive income (loss) | $ 5,484,837 | $ (1,258,182) | $ (2,282,046) | $ (2,634,596) |
Organization |
9 Months Ended | ||
|---|---|---|---|
Sep. 30, 2021 | |||
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
| Organization |
Trillion Energy International Inc. and its consolidated subsidiaries, (collectively referred to as the “Company”) is an international oil and natural gas exploration and production company. Our corporate headquarters are located at Turan Gunes Bulvari, Park Oran Ofis Plaza, 180-y, Daire:45, Kat:14, 06450, Oran, Cankaya, Anakara, Turkey. The Company has oil and gas operations in Turkey and an exploration license in Bulgaria. The Company was incorporated in Delaware in 2015. |
Summary of Significant Accounting Policies |
9 Months Ended | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | |||||||||||||||
| Accounting Policies [Abstract] | |||||||||||||||
| Summary of Significant Accounting Policies |
Basis of Presentation
The unaudited interim condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2021 are not necessarily indicative of the results that may be expected for the year ended December 31, 2021.
The consolidated balance sheet at December 31, 2020, has been derived from the audited consolidated financial statements at that date but does not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2020.
Going Concern
The Company has suffered recurring losses and negative cash flows from operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The Company will need to raise funds through either the sale of its securities, issuance of corporate bonds, joint venture agreements and/or bank financing to accomplish its goals. If additional financing is not available when needed, the Company may need to cease operations. The Company may not be successful in raising the capital needed to drill and/or rework existing oil wells. Any additional wells that the Company may drill may be non-productive. Management believes that actions presently being taken to secure additional funding for the reworking of its existing infrastructure will provide the opportunity for the Company to continue as a going concern. Since the Company has an oil producing asset, its goal is to increase the production rate by optimizing its current infrastructure. The accompanying financial statements have been prepared assuming the Company will continue as a going concern; no adjustments to the financial statements have been made to account for this uncertainty.
In March 2020, the World Health Organization declared the outbreak of the coronavirus, also known as “COVID-19”. The pandemic has spread across the globe and is impacting worldwide economic activity. Conditions surrounding the coronavirus continue to rapidly evolve and government authorities have implemented emergency measures to mitigate the spread of the virus. The outbreak and the related mitigation measures has had an adverse impact on global economic conditions as well as on the Company’s business activities. The extent coronavirus has caused a modest drop in economic activity and oil and gas prices, due to reduced demand. The Company has implemented work from home measures for its employees in its offices in Canada and Turkey. The coronavirus has caused delay in realizing the Company’s funding efforts. To which the coronavirus may impact the Company’s business activities in the future will depend on future developments, such as the ultimate geographic spread of the disease, vaccine approvals and effectiveness, the duration of the outbreak, travel restrictions, business disruptions, and the effectiveness of actions taken in Canada and other countries to contain and treat the disease. These events are highly uncertain and as such, the Company cannot determine their financial impact at this time. While certain restrictions are presently in the process of being relaxed, it is unclear when the world will return to the previous normal, if ever. This may adversely impact the expected implementation of the Company’s plans moving forward.
TRILLION ENERGY INTERNATIONAL INC. Notes to the Unaudited Interim Condensed Consolidated Financial Statements (Expressed in U.S. dollars) (unaudited)
Consolidation
The unaudited interim condensed consolidated financial statements include the accounts of Trillion Energy International Inc. and its wholly-owned subsidiaries Park Place Energy Corp., Park Place Energy Bermuda, BG Exploration EOOD, and Park Place Energy Turkey. All intercompany accounts, transactions and profits were eliminated in consolidation.
The preparation of consolidated financial statements 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 revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the estimated useful lives and recoverability of long-lived assets, impairment of oil and gas properties, fair value of stock-based compensation, fair value of derivative liabilities, interest rates used for lease calculations and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience, and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. There were no new estimates in the period.
Certain prior year amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations or cash flow.
Any recent accounting pronouncements issued by FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s interim condensed consolidated financial statements.
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Restricted Cash |
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| Receivables [Abstract] | |||
| Restricted Cash |
The restricted cash relates to drilling bonds provided to GDPA (General Directorate of Petroleum Affairs) for the exploration licenses due to Turkish Petroleum Law. The amounts are for 2% of the annual work budget of the different Turkish licenses which is submitted to GDPA on an annual basis.
TRILLION ENERGY INTERNATIONAL INC. Notes to the Unaudited Interim Condensed Consolidated Financial Statements (Expressed in U.S. dollars) (unaudited) |
Oil and Gas Properties |
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| Extractive Industries [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Oil and Gas Properties |
Bulgaria
The Company holds a 98,205-acre oil and gas exploration claim in the Dobrudja Basin located in northeast Bulgaria. The Company intends to conduct exploration for natural gas and test production activities over a five-year period in accordance with or exceeding its minimum work program obligation. The Company’s commitment is to perform geological and geophysical exploration activities in the first 3 years of the initial term (the “Exploration and Geophysical Work Stage”), followed by drilling activities in years 4 and 5 of the initial term (the “Data Evaluation and Drilling Stage”). The Company is required to drill 10,000 meters (approximately 32,800 feet) of new wellbore (which may be vertical, horizontal or diagonal) and conduct other exploration activities during the initial term. The Company intends to commence its work program efforts once it receives all regular regulatory approvals of its work programs.
Turkey
Cendere oil field
The primary asset of the PPE Turkey Companies is the Cendere onshore oil field, which is a profitable oil field located in South East Turkey having a total of 25 wells. The Cendere Field was first discovered in 1988. Oil production commenced during 1990. The operator of the Cendere Field is TPAO. The Company’s interest is 19.6% for all wells except for wells C-13, C-15 and C-16, for which its interest is 9.8%. The produced oil has a gravity of 27.5o API.
The Cendere Field is a long-term low decline oil reserve. The Company has a 19.6% interest in the Cendere oil field located in Southeast Turkey. This mature oilfield consistently produces 144 barrels oil per day net to the Company.
At September 30, 2021, the Cendere field was producing 94 barrels of oil per day, net to the PPE Turkey Companies; and averaged 130 barrels of oil equivalent per day during the nine month period ending September 30, 2021 net to the PPE Turkey Companies. The field started to produce water during the first year of production.
The South Akcakoca Sub-Basin (“SASB”)
The Company owns offshore production licenses called the South Akcakoca Sub-Basin (“SASB”). The Company now owns a 49% working interest in SASB. SASB has four producing fields, each with a production platform plus subsea pipelines that connect the fields to an onshore gas plant. The four SASB fields are located off the north coast of Turkey towards the western end of the Black Sea in water depths ranging from 60 to100 meters. Gas is produced from Eocene age sandstone reservoirs at subsea depths ranging from 1,100 to 1,800 meters.
TRILLION ENERGY INTERNATIONAL INC. Notes to the Unaudited Interim Condensed Consolidated Financial Statements (Expressed in U.S. dollars) (unaudited)
Bakuk gas field
The Company also owns a 50% operated interest in the Bakuk gas field located near the Syrian border. The Bakuk field is shut-in with no plans to revive production in the near term. |
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Property and Equipment |
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| Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property and Equipment |
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Loans Payable |
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| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans Payable |
Loans bearing interest, accrue at 10% and 12% per annum are all unsecured.
On August 2, 2019, Garanti Bank extended a long-term loan to Park Place Turkey Limited in the amount of ₺300,000 (or approximately US$53,600). The loan matures on August 2, 2022 and bears interest at 20.5% per annum. Principal and accrued interest are paid monthly.
On February 4, 2020, Garanti Bank extended a long-term loan to Park Place Turkey Limited in the amount of ₺500,000 (or approximately US$83,500). The loan matures on February 4, 2022 and bears interest at 13.25% per annum. Principal and accrued interest are paid monthly.
On March 4, 2021, the Company received $500,000 from a third party (the “Lender”) repayable in one year from the date of disbursement. The amount is subject to an interest at a rate of 15% per annum. The Company granted 1,000,000 common share purchase warrants to the lender in conjunction with the loan. The warrants expire in two years and have an exercise price of $0.16 per warrant. The fair value of the share purchase warrants has been accounted as a debt issuance cost and offset against the loan and will be recognized as financing cost over the term of the loan. The fair value of the warrants was determined to be $152,751 based on the Black-Scholes Option Pricing Model using the following assumptions: expected dividend yield - 0%, expected volatility - 229%, risk-free interest rate - 0.08% and an expected remaining life – 2.00 years. During the nine months ended September 30, 2021, the Company recognized $87,884 as financing cost and an accrued interest of $43,151.
TRILLION ENERGY INTERNATIONAL INC. Notes to the Unaudited Interim Condensed Consolidated Financial Statements (Expressed in U.S. dollars) (unaudited) |
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Leases |
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| Leases |
The Company leases certain assets under lease agreements. On January 1, 2020 the Company entered into a -year lease for office space, which the Company elected the short-term lease measurement and recognition exemption. On January 3, 2020 the Company entered into a -year lease for an office space that was classified as an operating lease on recognition.
During the three and nine months ended September 30, 2021, the Company recognized operating lease expense of $2,995 and $8,349, respectively (2020- $7,456 and $19,299, respectively), which is included in general and administrative expenses. As of September 30, 2021, the Company’s leases had a weighted average remaining lease term of 3.25 years. Operating right-of-use assets have been included within property and equipment as follows:
Operating lease liabilities are measured at the commencement date based on the present value of future lease payments. As the Company’s lease did not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of future payments. The Company used a weighted average discount rate of 10% in determining its lease liabilities. The discount rate was derived from the Company’s assessment of current borrowings.
Operating lease right-of-use assets include any prepaid lease payments and exclude any lease incentives and initial direct costs incurred. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. The lease terms may include options to extend or terminate the lease if it is reasonably certain that the Company will exercise that option.
As at September 30, 2021, the Company’s lease liability is as follows:
Future minimum lease payments to be paid by the Company as a lessee as of September 30, 2021 are as follows:
TRILLION ENERGY INTERNATIONAL INC. Notes to the Unaudited Interim Condensed Consolidated Financial Statements (Expressed in U.S. dollars) (unaudited) |
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Notes Receivable |
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| Receivables [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Notes Receivable |
During the nine-month period ended September 30, 2021, the Company entered into agreements with certain warrant holders for the following notes receivables as consideration for the exercise of warrants:
Current
On July 31, 2021, the Company entered into a promissory note agreement with a principal sum of $48,087 ($60,000 CAD) as consideration for the exercise of 500,000 warrants at approximately $0.10 ($ CAD). See summary table below for terms specific to the promissory note.
On July 31, 2021, the Company entered into a promissory note agreement with a principal sum of $48,087 ($60,000 CAD) as consideration for the exercise of 500,000 warrants at approximately $0.10 ($ CAD). See summary table below for terms specific to the promissory note.
On July 31, 2021, the Company entered into a promissory note agreement with a principal sum of $48,087 ($60,000 CAD) as consideration for the exercise of 500,000 warrants at approximately $0.10 ($ CAD). See summary table below for terms specific to the promissory note.
On July 31, 2021, the Company entered into a promissory note agreement with a principal sum of $24,044 ($30,000 CAD) as consideration for the exercise of 250,000 warrants at approximately $0.10 ($ CAD). See summary table below for terms specific to the promissory note.
On July 31, 2021, the Company entered into a promissory note agreement with a principal sum of $14,426 ($18,000 CAD) as consideration for the exercise of 150,000 warrants at approximately $0.10 ($ CAD). See summary table below for terms specific to the promissory note.
Non-Current
On July 31, 2021, the Company entered into a promissory note agreement with the CFO of the Company with a principal sum of $48,088 ($60,000 CAD) as consideration for the exercise of 500,000 warrants at approximately $0.10 ($ CAD). See summary table below for terms specific to the promissory note.
On July 31, 2021, the Company entered into a promissory note agreement with a principal sum of $144,261 ($180,000 CAD) as consideration for the exercise of 1,500,000 warrants at approximately $0.10 ($ CAD). See summary table below for terms specific to the promissory note.
On July 31, 2021, the Company entered into a promissory note agreement with a principal sum of $96,174 ($120,000 CAD) as consideration for the exercise of 1,000,000 warrants at approximately $0.10 ($ CAD). See summary table below for terms specific to the promissory note.
On July 31, 2021, the Company entered into a promissory note agreement with the CEO of the Company with a principal sum of $19,235 ($24,000 CAD) as consideration for the exercise of 200,000 warrants at approximately $0.10 ($ CAD). See summary table below for terms specific to the promissory note.
On July 31, 2021, the Company entered into a promissory note agreement with the CEO of the Company with a principal sum of $226,971($283,200 CAD) as consideration for the exercise of 2,360,000 warrants at approximately $0.10 ($ CAD). See summary table below for terms specific to the promissory note.
The following is a continuity of the Company’s promissory note receivable:
TRILLION ENERGY INTERNATIONAL INC. Notes to the Unaudited Interim Condensed Consolidated Financial Statements (Expressed in U.S. dollars) (unaudited) |
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Asset Retirement Obligations |
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| Asset Retirement Obligation Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Asset Retirement Obligations |
Asset retirement obligations (“AROs”) associated with the retirement of tangible long-lived assets are recognized as liabilities with an increase to the carrying amounts of the related long-lived assets in the period incurred. The fair value of AROs is recognized as of the acquisition date for business combinations. The cost of the tangible asset, including the asset retirement cost, is depleted over the life of the asset. AROs are recorded at estimated fair value, measured by reference to the expected future cash outflows required to satisfy the retirement obligations discounted at the Company’s credit-adjusted risk-free interest rate. Accretion expense is recognized over time as the discounted liabilities are accreted to their expected settlement value. If estimated future costs of AROs change, an adjustment is recorded to both the ARO and the long-lived asset. Revisions to estimated AROs can result from changes in retirement cost estimates, revisions to estimated inflation rates and changes in the estimated timing of abandonment. The Company’s ARO is measured using primarily Level 3 inputs. The significant unobservable inputs to this fair value measurement include estimates of plugging costs, remediation costs, inflation rate and well life. The inputs are calculated based on historical data as well as current estimated costs.
The following is a continuity of the Company’s asset retirement obligations:
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Convertible Debentures |
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| Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Convertible Debentures |
On September 30, 2019, the Company closed an unbrokered private placement of convertible debt, issuing $123,095 ($163,000 CAD) in debentures to two investors. The convertible debentures bear interest at 10% per annum, payable annually in advance. They are convertible any time during the term of the debenture into units (each unit consists of one share and one warrant; each warrant can acquire one share at an exercise price of $0.20 USD or $ CAD per share, based on the currency initially subscribed) at a conversion price of $0.12 USD or $ CAD per unit, based on the currency initially subscribed. The convertible debt matures on September 30, 2021 and is secured by a general security agreement over the assets of the Company.
As the September 30, 2019 convertible debt included an embedded conversion feature denominated in Canadian dollars, the debt was determined to be a financial instrument comprising an embedded derivative representing the conversion feature with a residual host debt component. On initial recognition, the Company used the residual value method to allocate the principal amount of the debentures between the embedded derivative conversion feature and host debt components. The conversion feature was valued first with the residual allocated to the host debt component.
On initial recognition of the convertible debt granted on September 30, 2019, the Company recognized a derivative liability of $81,956 and an offsetting convertible debt discount of $81,956.
On July 1, 2020, the Company amended the conversion price of the convertible debentures. Under the amended terms, they are convertible any time during the term of the debenture into units (each unit consists of one share and one warrant; each warrant can acquire one share at an exercise price of $ CAD per share, or approximately US$0.09 per share) at a conversion price of $ CAD per unit (approximately US$0.06 per unit). In accordance with ASC 470-50-40-10, the carrying value of the debt of $90,264 was considered to be extinguished and a new issuance of $120,295 was recognized. A loss of $30,031 was recognized on the extinguishment.
On initial recognition of the amended convertible debt on July 1, 2020, the Company recognized a derivative liability of $132,184 and an offsetting convertible debt discount of $120,295. As the fair value of the derivative liability is higher than the carrying value of the debt of $120,295, the difference has been recognized as a loss on the extinguishment of the debt of $11,889.
TRILLION ENERGY INTERNATIONAL INC. Notes to the Unaudited Interim Condensed Consolidated Financial Statements (Expressed in U.S. dollars) (unaudited)
On September 15, 2020, debt in the principal amount of $9,870 ($13,000 CAD) was converted by the holder to units with a fair value of $8,840. The Company recognized a loss on the conversion of the debt of $1,030 and a derivative liability of $7,647 for the warrants attached to the units.
On March 8, 2021, the Company amended the terms of the convertible debentures such that any warrants issued with the units upon the conversion of the debentures is exercisable at US$0.10 per share.
On March 8, 2021, the debt in the principal amount of $89,198 ($112,500 CAD) was converted to units with a fair value of $439,485. The Company recognized a loss on extinguishment of debt of $52,904.
On March 30, 2021, the debt in the principal amount of $29,528 ($37,500 CAD) and an accrued interest of $12,000 was converted to units with a fair value of $162,360. The company recognized a loss on extinguishment of debt of $26,437.
The following is a continuity of the Company’s convertible debt:
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Common Stock |
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| Equity [Abstract] | ||||||||||||
| Common Stock |
For the nine months ended September 30, 2021
On March 8, 2021, the Company closed a non-brokered private placement financing for aggregate gross proceeds of $481,350 CAD (approximately US$400,792) (the “March Offering”). Under the March Offering, the Corporation issued an aggregate of units, at a price of $ CAD per unit (approximately US$ per unit). Each unit was comprised of one Common Share and one-half of one share purchase warrant. Each warrant entitles the holder to purchase one Common Share at a price of $ CAD (approximately $0.08) for a period of 30 months from the closing date.
On March 8, 2021, the Company settled a total of $265,000 CAD (US$220,833) in outstanding debt through the issuance to a creditor of units, at a price of $ CAD (US$0.05) per unit. Each unit issued in the Debt Settlement consists of one Common Share and one warrant under the same terms as the March Offering.
On March 8, 2021, the Company closed a private placement for aggregate proceeds of $235,808 (the “US Private Placement”). Under the US Private Placement, the corporation issued an aggregate of units at a price of $0.05 per unit. Each unit was comprised of one Common Share and one-half of one share purchase warrant. Each warrant entitles the holder to purchase one Common Share at a price of $0.08 for a period of 30 months from the closing date.
TRILLION ENERGY INTERNATIONAL INC. Notes to the Unaudited Interim Condensed Consolidated Financial Statements (Expressed in U.S. dollars) (unaudited)
On March 8, 2021, debt in the principal amount of $112,500 CAD (US$89,198) was converted to units at $ CAD per unit (approximately US$0.06). Each unit issued consists of one Common Share and one warrant. Each warrant entitles the holder to purchase one Common Share at a price of US$0.10 for a period of 24 months from the closing date.
On March 30, 2021, debt in the principal amount of $37,500 CAD (US$29,528) and accrued interest of $12,000 CAD (US$9,478) was converted to units at $ CAD per unit (approximately US$0.06). Each unit issued consists of one Common Share and one warrant. Each warrant entitles the holder to purchase one Common Share at a price of US$0.10 for a period of 24 months from the closing date.
On March 30, 2021, the Company granted restricted share units which vested immediately. In connection with the grant, Common Shares with a fair value of $36,900 were issued.
On March 30, 2021, the Company issued 3,304,600 Common Shares for the exercise of warrants at $0.10 for gross proceeds of $330,460.
On March 30, 2021, the Company issued Common Shares for the exercise of options at $ for gross proceeds of $27,358. In addition, the Company also issued Common Shares for the exercise of options. In lieu of cash, the Company settled $109,427 of outstanding debt.
On March 30, 2021, the Company issued Common Shares for the exercise of warrants, with a fair value of $98,400 to settle long-term notes payable in the amount of $38,062. The Company recognized the loss on settlement of debt of $60,338.
On March 30, 2021, the Company issued Common Shares with a fair value of $396,108 for services provided.
On March 30, 2021, the Company issued Common Shares with a fair value of $41,608 to settle debt of $8,602. A loss of $33,006 was recognized pursuant to the issuance.
On April 16, 2021, the Company issued Common Shares for the exercise of 1,000,000 warrants at $ CAD (approximately US$0.10). In lieu of cash, debt in the amount of $120,000 CAD (US$95,959) was settled.
On April 16, 2021, the Company issued Common Shares with a fair value of $188,729 for services provided.
On April 16, 2021, the Company issued Common Shares with a fair value of $23,989 to settle accounts payable in the same amount.
On April 16, 2021, the Company issued 150,000 Common Shares with a fair value of $43,549 to settle debt in the amount of $7,908. A loss of $36,451 was recognized pursuant to the issuance.
On April 28, 2021, the Company issued Common Shares at $ CAD (approximately US$) per share for gross proceeds of $169,776 CAD (US$135,670) relating to the exercise of warrants.
On April 28, 2021, the Company issued 30,000 Common Shares at $CAD (approximately US$0.08) per share for gross proceeds of $3,000 CAD (US$2,403) relating to the exercise of 30,000 options.
On April 28, 2021, the Company issued Common Shares with a fair value of $85,739 for services provided.
On June 28, 2021, the Company issued Common Shares for the exercise of warrants at prices ranging from $ CAD - $ CAD (approximately US$0.08 – US$0.10) for gross proceeds of $16,500 CAD (US$12,438). On September 8, 2021, the remaining common shares were issued.
TRILLION ENERGY INTERNATIONAL INC. Notes to the Unaudited Interim Condensed Consolidated Financial Statements (Expressed in U.S. dollars) (unaudited)
On June 28, 2021, the Company issued Common Shares with a fair value of $36,939 to settle accounts payable in the same amount.
On June 28, 2021, the Company issued Common Shares with a fair value of $5,210 to settle debt in the amount of $1,101. A loss of $4,107 was recognized pursuant to the issuance.
On June 28, 2021, the Company issued 50,000 Common Shares at $ CAD (approximately US$0.24) per share for gross proceeds of $15,000 CAD (US$12,151).
On July 20, 2021, the Company issued 50,000 Common Shares at $ CAD (approximately US$0.24) per share for gross proceeds of $15,000 CAD (US$11,905).
On August 9, 2021, the Company issued shares, as a result of the exercise of 16,134,000 warrants with exercise prices varying from $ - $ CAD (US$ - $) for gross proceeds of $1,925,747 CAD (US$1,538,887). The shares issued include issued to related parties where the Company entered into promissory note agreements with the related parties for total principal receivable by the Company of $367,200 CAD (US$294,293). The notes bear interest at 5% per annum and mature in July 2023.
On August 20, 2021, the Company issued shares, as a result of the exercise of warrants with exercise prices varying from $ - $ CAD (US$ - $) for gross proceeds of $439,920 CAD (US$351,164). shares were issued in error. On September 22, 2021, of the shares issued in error were cancelled. Subsequent to September 30, 2021, the remaining shares issued in error were cancelled.
On September 7, 2021, the Company issued shares, as a result of the exercise of warrants at $CAD (approximately US$) for gross proceeds of $24,000 CAD (US$19,062). shares were issued pursuant to the exercise of warrants on June 28, 2021.
On September 7, 2021, the Company issued Common Shares with a fair value of $95,000 for services provided.
On September 7, 2021, the Company issued Common Shares with fair value of $47,445 to settle accounts payable of $38,729. A loss of $8,716 was recognized pursuant to the issuance.
For the year ended December 31, 2020
On June 19, 2020 the Company closed a non-brokered private placement financing for aggregate gross proceeds of $720,000 CAD (approximately US$529,968) (the “Offering”). Under the Offering, the Corporation issued an aggregate of units (“Units”), at a price of $ CAD per Unit (approximately US$ per Unit). Each Unit was comprised of one common share in the capital of the Corporation (each a “Common Share”) and one Common Share purchase warrant (“Warrant”). Each Warrant entitles the holder to purchase one Common Share at a price of $ CAD (approximately US$0.09) for a period of 24 months from the closing date. In addition, with the Offering, the Corporation settled a total of $30,000 CAD (US$22,115) in outstanding debt through the issuance to certain creditors of Units, at a price of $ CAD per Unit (the “Debt Settlement”). Each Unit issued in the Debt Settlement consists of one Common Share and one Warrant under the same terms as the Offering.
On July 31, 2020 the Company closed a non-brokered private placement financing, by:
Each unit was comprised of one Common Share and one Warrant. Each Warrant entitles the holder to purchase one Common Share at a price of $ CAD (approximately US$0.09) for a period of 24 months from the closing date.
On July 31, 2020, the Company granted restricted share units which vested immediately. In connection with the grant, Common Shares with a fair value of $ were issued.
On September 4, 2020, the Company closed a private placement of units at $ CAD per unit, for gross proceeds of $216,080 CAD (approximately US$156,538). Each unit consists of one Common Share and one Warrant. Each Warrant entitles the holder to purchase one Common Share at a price of $ CAD (or US$0.09) for a period of 24 months from the closing date. In connection with the private placement, the Company issued 149,800 broker warrants with a fair value of $7,117. The broker warrants have the same terms as the warrants attached to the units.
On September 15, 2020, the Company issued units with a fair value of $11,644 in settlement of convertible debt of $9,870. Each unit consists of one share and one warrant; each warrant can acquire one share at an exercise price of $ CAD per share, or approximately US$0.09 per share.
On November 17, 2020, the Company closed a non-brokered private placement financing for aggregate gross proceeds of $222,600 CAD (approximately US$170,875) (the “November Offering”). Under the November Offering, the Corporation issued an aggregate of units, at a price of $ CAD per unit (approximately US$ per unit). Each unit was comprised of one Common Share and one warrant. Each warrant entitles the holder to purchase one Common Share at a price of $ CAD (approximately US$0.09) for a period of 24 months from the closing date. In addition, the Company settled a total of $18,000 (US$14,140) in outstanding debt through the issuance to a creditor of units, at a price of $ per unit. Each unit issued in the Debt Settlement consists of one Common Share and one warrant under the same terms as the November Offering.
On November 17, 2020, the Company granted restricted share units which vested immediately. In connection with the grant, Common Shares with a fair value of $ were issued.
On December 10, 2020, the Company closed a non-brokered private placement financing for aggregate gross proceeds of $30,000 CAD (approximately US$23,566) (the “December Offering”). Under the December Offering, the Corporation issued an aggregate of units, at a price of $ CAD per unit (approximately US$ per unit). Each unit was comprised of one Common Share and one warrant. Each warrant entitles the holder to purchase one Common Share at a price of $ CAD (approximately US$0.09) for a period of 30 months from the closing date. In addition, with the December Offering, the Corporation issued units valued at $2,100 CAD (US$1,650), at a price of $ CAD per unit, for services. Each unit issued for services consists of one Common Share and one warrant under the same terms as the December Offering.
TRILLION ENERGY INTERNATIONAL INC. Notes to the Unaudited Interim Condensed Consolidated Financial Statements (Expressed in U.S. dollars) (unaudited)
On December 17, 2020, the Company closed a non-brokered private placement financing for aggregate gross proceeds of $116,200 CAD (US$89,217) (the “December 17 Offering”). Under the December 17 Offering, the Company issued an aggregate of units, at a price of $ CAD per unit (approximately US$ per unit). Each unit was comprised of one Common Share and one-half warrant. Each warrant entitles the holder to purchase one Common Share at a price of $ CAD (approximately US$0.09) for a period of 30 months from the closing date. In addition, with the December 17 Offering, the Company settled a total of $28,000 CAD (US$21,498) in outstanding debt through the issuance to a creditor of units, at a price of $ CAD per unit. In addition to this, the Company also issued units at a price of $ CAD per unit, for services valued at $28,000 CAD (US$21,498). Each unit issued in the Debt Settlement and issued for services consists of one Common Share and one-half of warrant under the same terms as the December 17 Offering. In connection with the December 17 Offering, the Company issued broker warrants with a fair value of $18,287. The broker warrants have the same terms as the warrants attached to the units.
On December 17, 2020, the Company issued for the exercise of stock options. In lieu of cash, the Company settled $19,655 of outstanding debt. |
Earnings Per Share |
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| Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Earnings Per Share |
Options to purchase common shares at $per share were issued and outstanding during the period ended September 30, 2021 but were not included in the computation of diluted EPS because the options’ exercise price was greater than the average market price of the common shares. The options, which expire on June 22, 2024 () and 2026 (), were still outstanding as at September 30, 2021.
TRILLION ENERGY INTERNATIONAL INC. Notes to the Unaudited Interim Condensed Consolidated Financial Statements (Expressed in U.S. dollars) (unaudited) |
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Stock Options |
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| Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock Options |
The Board of Directors adopted the 2013 Long-Term Incentive Equity Plan (the “Incentive Plan” or “2013 Plan”) effective as of October 29, 2013. The Incentive Plan permits grants of stock options (including incentive stock options and nonqualified stock options), stock appreciation rights, restricted stock awards, and other stock-based awards.
The Incentive Plan authorizes the following types of awards:
Under the 2013 Plan, the maximum number of shares of authorized stock that may be delivered is % of the total number of shares of common stock issued and outstanding of the Company as determined on the applicable date of grant of an award under the 2013 Plan. Under the 2013 Plan, the exercise price of each option (or other stock-based award) shall not be less than the market price of the Company’s stock as calculated immediately preceding the day of the grant. The vesting schedule for each option or other stock-based award shall be specified by the Board of Directors at the time of grant. The maximum term of options or other stock-based award granted is ten years or such lesser time as determined by the Board of Directors at the time of grant.
TRILLION ENERGY INTERNATIONAL INC. Notes to the Unaudited Interim Condensed Consolidated Financial Statements (Expressed in U.S. dollars) (unaudited)
As of September 30, 2021, all stock options have fully vested. The weighted average remaining contractual life of outstanding stock options is years. The aggregate intrinsic value of the stock options at September 30, 2021 is $.
For the nine months ended September 30, 2021, the Company recognized $in stock-based compensation expense (2020 - $) for options granted and vested. At September 30, 2021, the Company has unrecognized compensation expense related to stock options. |
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Warrants |
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| Warrants |
The following is a continuity of the Company’s outstanding stock purchase warrants:
At September 30, 2021, the Company had the following outstanding stock purchase warrants:
The weighted average remaining contractual life of outstanding warrants as at September 30, 2021 is 1.91 years.
On July 6, 2021, the Company elected to accelerate the exercise terms of warrants issued during the year ended December 31, 2020. As per the terms of the warrants, if the Company’s shares price reached the threshold of $0.25 or $0.30 depending on the agreements for 10 consecutive trading days, the Company had the option to accelerate the exercise terms.
The Company’s warrants which are exercisable in Canadian dollars are considered to be derivative financial instruments as they have an exercise price denominated in a currency other than the Company’s functional currency of the US dollar. Under US GAAP, the Company is required to present these warrants as derivative liabilities on the balance sheet and to measure them at fair value at the end of each reporting period. As at September 30, 2021, the balance of the derivative liability associated with these warrants is $1,439,091.
TRILLION ENERGY INTERNATIONAL INC. Notes to the Unaudited Interim Condensed Consolidated Financial Statements (Expressed in U.S. dollars) (unaudited)
On March 4, 2021, the Company issued 1,000,000 warrants to a lender in conjunction with a $500,000 loan. See Note 6.
On March 8, 2021, in connection with a private placement of units, the Company issued 4,007,916 warrants with an exercise price of $0.10 CAD (approximately US$0.08) per warrant and a contractual life of 30 months. As the warrants have an exercise price denominated in a currency other than the Company’s functional currency, they are derivative financial instruments measured at fair value at the end of each reporting period. The fair value of the derivative warrants on issuance was determined to be $400,712 based on the Black-Scholes Option Pricing Model using the following assumptions: expected dividend yield - 0%, expected volatility - 234%, risk-free interest rate - 0.34% and an expected remaining life - 2.5 years.
On March 8, 2021, in connection with a debt settlement, the Company issued 4,416,667 warrants with an exercise price of $0.12 CAD (approximately US$0.10) per warrant and a contractual life of 30 months. As the warrants have an exercise price denominated in a currency other than the Company’s functional currency, they are derivative financial instruments measured at fair value at the end of each reporting period. The fair value of the derivative warrants on issuance was determined to be $220,789 based on the Black-Scholes Option Pricing Model using the following assumptions: expected dividend yield - 0%, expected volatility - 234%, risk-free interest rate - 0.34% and an expected remaining life - 2.5 years.
On March 8, 2021, debt in the principal amount of $112,500 CAD (US$89,198) was converted to units at $ CAD per unit (approximately US$0.06). Each unit issued consists of one Common Share and one warrant. Each warrant entitles the holder to purchase one Common Share at a price of US$0.10 for a period of 24 months from the closing date.
On March 30, 2021, debt in the principal amount of $37,500 CAD (US$29,528) and accrued interest of $12,000 CAD (US$9,478) was converted to units at $ CAD per unit (approximately US$0.06). Each unit issued consists of one Common Share and one warrant. Each warrant entitles the holder to purchase one Common Share at a price of US$0.10 for a period of 24 months from the closing date.
On March 30, 2021, in connection with a private placement of units, the Company issued 2,358,080 warrants with an exercise price of $ per warrant and a contractual life of 30 months.
On June 7, 2021, in connection to a prior private placement in which warrants were owed to certain subscribers, the Company issued 75,000 warrants with an exercise price of US$0.32 per warrant and a contractual life of 24 months. The fair value of the warrants on issuance was determined to be $15,616 based on the Black-Scholes Option Pricing Model using the following assumptions: expected dividend yield - 0%, expected volatility - 215%, risk-free interest rate - 0.16% and an expected remaining life - 2.0 years. At issuance, the fair value of these warrants was recognized in the consolidated statement of comprehensive loss as stock based compensation expense.
The following is a continuity of the Company’s derivative warrant liability:
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Restricted Stock Units |
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| Restricted Stock Units |
During the nine months ended September 30, 2021, the Company granted restricted stock units (“RSUs”) as consideration for management and consulting contracts. The RSUs were valued at $36,900 based on the fair market value of the closing price of the common stock of the Company at the grant date and are recognized evenly over the vesting period.
For the three and nine months ended September 30, 2021, the Company recognized and (2020 – ) in stock-based compensation expense for RSUs granted and vested. At September 30, 2021, the Company has unrecognized compensation expense related to RSUs.
TRILLION ENERGY INTERNATIONAL INC. Notes to the Unaudited Interim Condensed Consolidated Financial Statements (Expressed in U.S. dollars) (unaudited) |
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Related Party Transactions |
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| Related Party Transactions [Abstract] | |||
| Related Party Transactions |
At September 30, 2021, accounts payable and accrued liabilities included $32,806 (December 31, 2020 - $117,000) due to related parties for outstanding management and consulting fees. The amounts are unsecured, non-interest bearing and due on demand.
During the nine month period ended September 30, 2021, the Company issued units for the settlement of accounts payable owed to related parties in the amount of , resulting in no gain or loss and issued common shares pursuant to the options exercised by related parties to settle the accounts payable. Refer to Note 11.
During the nine month period ended September 30, 2021, the Company issued common shares relating to the exercise of 3,060,000 warrants held by related parties. As consideration, the Company entered into promissory note agreements with the related parties for total principal receivable by the Company of $294,293 (CAD$367,200). The notes bear interest at 5% per annum and mature in July 2023. Refer to Note 11.
As at September 30, 2021, notes receivable included $291,316 (December 31, 2020 - ) due from related parties. The amounts are unsecured, bear interest at 5% per annum and mature two years from grant.
During the nine months ended September 30, 2021, $218,930 (September 30, 2020 - $215,766) is included in general and administrative expenses in respect to directors and management fees. |
Segment Information |
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| Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment Information |
The Company’s operations are in the resource industry in Bulgaria and Turkey with head offices in the United States and a satellite office in Sofia, Bulgaria. The Company’s operating segments include a head office in Canada, oil and gas operations in Turkey and oil and gas properties located in Bulgaria.
As at and for the nine month period ended September 30, 2021
TRILLION ENERGY INTERNATIONAL INC. Notes to the Unaudited Interim Condensed Consolidated Financial Statements (Expressed in U.S. dollars) (unaudited)
As at and for the nine month period ended September 30, 2020
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Subsequent Events |
9 Months Ended | ||
|---|---|---|---|
Sep. 30, 2021 | |||
| Subsequent Events [Abstract] | |||
| Subsequent Events |
On November 8, 2021, the Company announced a special shareholder’s meeting to be held on December 17, 2021 to vote on the Company’s plans to redomicile from a Delaware to a British Columbia corporation pursuant to a planned merger and amalgamation transaction with the Company’s subsidiary.
On November 10, 2021, the Company issued Common Shares pursuant to RSU’s previously issued to management, directors and officers of the Company.
On November 10, 2021, the Company issued Common Shares at $ per share for gross proceeds of $59,400 relating to the exercise of options.
On November 10, 2021, the Company issued Common Shares at $ per share for gross proceeds of $60,000 relating to the exercise of options.
On November 10, 2021, the Company issued Common Shares ranging from $ - $ per share for gross proceeds of $177,600 relating to the exercise of options.
On November 10, 2021, the Company issued shares, as a result of the exercise of 4,966,667 warrants. The shares issued include issued to a related party where the Company entered into a promissory note agreement with the related party for total principal receivable by the Company of approximately $136,363 (CAD$170,000). The note bear interest at 5% per annum and matures in November 2023. |
Summary of Significant Accounting Policies (Policies) |
9 Months Ended | |||
|---|---|---|---|---|
Sep. 30, 2021 | ||||
| Accounting Policies [Abstract] | ||||
| Basis of Presentation and Going Concern |
Basis of Presentation
The unaudited interim condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”) and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2021 are not necessarily indicative of the results that may be expected for the year ended December 31, 2021.
The consolidated balance sheet at December 31, 2020, has been derived from the audited consolidated financial statements at that date but does not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2020.
Going Concern
The Company has suffered recurring losses and negative cash flows from operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The Company will need to raise funds through either the sale of its securities, issuance of corporate bonds, joint venture agreements and/or bank financing to accomplish its goals. If additional financing is not available when needed, the Company may need to cease operations. The Company may not be successful in raising the capital needed to drill and/or rework existing oil wells. Any additional wells that the Company may drill may be non-productive. Management believes that actions presently being taken to secure additional funding for the reworking of its existing infrastructure will provide the opportunity for the Company to continue as a going concern. Since the Company has an oil producing asset, its goal is to increase the production rate by optimizing its current infrastructure. The accompanying financial statements have been prepared assuming the Company will continue as a going concern; no adjustments to the financial statements have been made to account for this uncertainty.
In March 2020, the World Health Organization declared the outbreak of the coronavirus, also known as “COVID-19”. The pandemic has spread across the globe and is impacting worldwide economic activity. Conditions surrounding the coronavirus continue to rapidly evolve and government authorities have implemented emergency measures to mitigate the spread of the virus. The outbreak and the related mitigation measures has had an adverse impact on global economic conditions as well as on the Company’s business activities. The extent coronavirus has caused a modest drop in economic activity and oil and gas prices, due to reduced demand. The Company has implemented work from home measures for its employees in its offices in Canada and Turkey. The coronavirus has caused delay in realizing the Company’s funding efforts. To which the coronavirus may impact the Company’s business activities in the future will depend on future developments, such as the ultimate geographic spread of the disease, vaccine approvals and effectiveness, the duration of the outbreak, travel restrictions, business disruptions, and the effectiveness of actions taken in Canada and other countries to contain and treat the disease. These events are highly uncertain and as such, the Company cannot determine their financial impact at this time. While certain restrictions are presently in the process of being relaxed, it is unclear when the world will return to the previous normal, if ever. This may adversely impact the expected implementation of the Company’s plans moving forward.
TRILLION ENERGY INTERNATIONAL INC. Notes to the Unaudited Interim Condensed Consolidated Financial Statements (Expressed in U.S. dollars) (unaudited)
Consolidation
The unaudited interim condensed consolidated financial statements include the accounts of Trillion Energy International Inc. and its wholly-owned subsidiaries Park Place Energy Corp., Park Place Energy Bermuda, BG Exploration EOOD, and Park Place Energy Turkey. All intercompany accounts, transactions and profits were eliminated in consolidation. |
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| Use of Estimates |
The preparation of consolidated financial statements 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 revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the estimated useful lives and recoverability of long-lived assets, impairment of oil and gas properties, fair value of stock-based compensation, fair value of derivative liabilities, interest rates used for lease calculations and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience, and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. There were no new estimates in the period. |
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| Reclassifications |
Certain prior year amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations or cash flow. |
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| New Accounting Pronouncements |
Any recent accounting pronouncements issued by FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s interim condensed consolidated financial statements. |
Oil and Gas Properties (Tables) |
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Sep. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Extractive Industries [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Oil and Gas Properties |
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Property and Equipment (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Property and Equipment |
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Loans Payable (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Loans Payable |
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Leases (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Leases | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Operating Right-of-use Assets and Lease Liabilities |
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| Schedule of Lease Liability | As at September 30, 2021, the Company’s lease liability is as follows:
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| Summary of Operating Future Minimum Lease Payments | Future minimum lease payments to be paid by the Company as a lessee as of September 30, 2021 are as follows:
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Notes Receivable (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Notes Receivable |
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| Schedule of Promissory Note |
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| Schedule of Company’s Promissory Note Receivable | The following is a continuity of the Company’s promissory note receivable:
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Asset Retirement Obligations (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Asset Retirement Obligation Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Asset Retriement Obligations | The following is a continuity of the Company’s asset retirement obligations:
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Convertible Debentures (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Convertible Debt and Embedded Derivative Conversion | The following is a continuity of the Company’s convertible debt:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Earnings Per Share Basic and Diluted and Diluted Securities |
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock Options (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Stock Options Activity |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Stock Options Outstanding |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warrants (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Warrants | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Stockholders’ Equity Note, Warrants or Rights, Activity | The following is a continuity of the Company’s outstanding stock purchase warrants:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Warrant Outstanding | At September 30, 2021, the Company had the following outstanding stock purchase warrants:
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Derivative Warrrant Liability | The following is a continuity of the Company’s derivative warrant liability:
|
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Restricted Stock Units (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Restricted Stock Units | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Restricted Stock Units Activity |
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Information (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Financial Information for Geographical Segments | As at and for the nine month period ended September 30, 2021
TRILLION ENERGY INTERNATIONAL INC. Notes to the Unaudited Interim Condensed Consolidated Financial Statements (Expressed in U.S. dollars) (unaudited)
As at and for the nine month period ended September 30, 2020
|
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Schedule of Oil and Gas Properties (Details) - USD ($) |
3 Months Ended | 9 Months Ended | 12 Months Ended | ||
|---|---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
Dec. 31, 2020 |
|
| Reserve Quantities [Line Items] | |||||
| Beginning balance | $ 5,346,916 | $ 5,574,295 | $ 5,574,295 | ||
| Expenditures | 51,615 | 5,084 | |||
| Depletion | $ (55,690) | $ (65,630) | (191,263) | (201,875) | (239,002) |
| Foreign currency translation change | (1,243) | 6,539 | |||
| Ending balance | 5,206,025 | 5,206,025 | 5,346,916 | ||
| Unproven Properties Bulgaria [Member] | |||||
| Reserve Quantities [Line Items] | |||||
| Beginning balance | 3,122,443 | 3,115,904 | 3,115,904 | ||
| Expenditures | |||||
| Depletion | |||||
| Foreign currency translation change | (1,243) | 6,539 | |||
| Ending balance | 3,121,200 | 3,121,200 | 3,122,443 | ||
| Proven Properties Turkey [Member] | |||||
| Reserve Quantities [Line Items] | |||||
| Beginning balance | 2,224,473 | $ 2,458,391 | 2,458,391 | ||
| Expenditures | 51,615 | 5,084 | |||
| Depletion | (191,263) | (239,002) | |||
| Foreign currency translation change | |||||
| Ending balance | $ 2,084,825 | $ 2,084,825 | $ 2,224,473 | ||
Schedule of Loans Payable (Details) - USD ($) |
Sep. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Short-term Debt [Line Items] | ||
| Total loans payable | $ 680,724 | $ 567,154 |
| Current portion of loans payable | (680,724) | (549,424) |
| Long term portion of loans payable | 17,730 | |
| Interest Bearing Loans at 10% p.a [Member] | ||
| Short-term Debt [Line Items] | ||
| Total loans payable | 119,850 | 184,235 |
| Interest Bearing Loans at 12% p.a. [Member] | ||
| Short-term Debt [Line Items] | ||
| Total loans payable | 94,046 | 309,806 |
| Interest Bearing Loans at 20.5% p.a. [Member] | ||
| Short-term Debt [Line Items] | ||
| Total loans payable | 12,702 | 41,533 |
| Interest Bearing Loans at 13.25% p.a. [Member] | ||
| Short-term Debt [Line Items] | ||
| Total loans payable | 13,038 | 25,625 |
| Interest Bearing Loans at 15% p.a. [Member] | ||
| Short-term Debt [Line Items] | ||
| Total loans payable | 435,133 | |
| Non-Interest Bearing Loans [Member] | ||
| Short-term Debt [Line Items] | ||
| Total loans payable | $ 5,955 | $ 5,955 |
Schedule of Loans Payable (Details) (Parenthetical) |
Sep. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Short-term Debt [Line Items] | ||
| Loans, interest rate | 5.00% | |
| Unsecured Loan Payable One [Member] | ||
| Short-term Debt [Line Items] | ||
| Loans, interest rate | 10.00% | 10.00% |
| Unsecured Loan Payable Two [Member] | ||
| Short-term Debt [Line Items] | ||
| Loans, interest rate | 12.00% | 12.00% |
| Unsecured Loan Payable Four [Member] | ||
| Short-term Debt [Line Items] | ||
| Loans, interest rate | 20.50% | 20.50% |
| Unsecured Loan Payable Five [Member] | ||
| Short-term Debt [Line Items] | ||
| Loans, interest rate | 13.25% | 13.25% |
| Unsecured Loan Payable Three [Member] | ||
| Short-term Debt [Line Items] | ||
| Loans, interest rate | 15.00% | 15.00% |
Summary of Operating Right-of-use Assets and Lease Liabilities (Details) - USD ($) |
9 Months Ended | 12 Months Ended |
|---|---|---|
Sep. 30, 2021 |
Dec. 31, 2020 |
|
| Leases | ||
| Beginning balance | $ 39,809 | $ 4,759 |
| Additions, cost | 57,919 | |
| Amortization | (5,901) | (11,999) |
| Foreign currency translation change | (5,963) | (10,870) |
| Net book value | $ 27,945 | $ 39,809 |
Schedule of Lease Liability (Details) - USD ($) |
Sep. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Leases | ||
| Current portion of operating lease liabilities | $ 10,836 | $ 12,116 |
| Long-term portion of operating lease liabilities | 14,463 | 27,693 |
| Total future minimum lease payments and total lease liability | $ 25,299 | $ 39,809 |
Summary of Operating Future Minimum Lease Payments (Details) - USD ($) |
Sep. 30, 2021 |
Dec. 31, 2020 |
|---|---|---|
| Leases | ||
| Remainder of 2021 | $ 2,527 | |
| 2022 | 10,107 | |
| 2023 | 10,107 | |
| 2024 | 10,107 | |
| Total future minimum lease payments | 32,848 | |
| Discount | (7,549) | |
| Total | $ 25,299 | $ 39,809 |
Leases (Details Narrative) - USD ($) |
3 Months Ended | 9 Months Ended | ||||
|---|---|---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
Jan. 03, 2020 |
Jan. 02, 2020 |
|
| Leases | ||||||
| Office space for lease | 5 years | 1 year | ||||
| Operating lease expense | $ 2,995 | $ 7,456 | $ 8,349 | $ 19,299 | ||
| Weighted average remaining lease term | 3 years 3 months | 3 years 3 months | ||||
| Weighted-average discounted rate | 10.00% | 10.00% | ||||
Schedule of Notes Receivable (Details) - USD ($) |
Sep. 30, 2021 |
Jul. 31, 2021 |
Dec. 31, 2020 |
|---|---|---|---|
| Receivables [Abstract] | |||
| Current notes receivable | $ 156,881 | ||
| Non-current notes receivable | 529,320 | ||
| Notes receivable | $ 686,201 | $ 686,201 |
Schedule of Company’s Promissory Note Receivable (Details) - USD ($) |
9 Months Ended | |
|---|---|---|
Sep. 30, 2021 |
Jul. 31, 2021 |
|
| Receivables [Abstract] | ||
| Beginning balance | ||
| Additions | 717,460 | |
| Repayments | (23,745) | |
| Accrued interest | 5,655 | $ 5,655 |
| Foreign currency translation change | (13,169) | |
| Net book value | $ 686,201 |
Schedule of Asset Retriement Obligations (Details) - USD ($) |
3 Months Ended | 9 Months Ended | 12 Months Ended | ||
|---|---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
Dec. 31, 2020 |
|
| Asset Retirement Obligation Disclosure [Abstract] | |||||
| Asset retirement obligations at beginning of period | $ 4,010,624 | $ 3,633,427 | $ 3,633,427 | ||
| Accretion expense | $ 105,341 | $ 95,435 | 308,379 | $ 279,377 | 377,197 |
| Change in estimate | |||||
| Asset retirement obligations at end of period | $ 4,319,003 | $ 4,319,003 | $ 4,010,624 | ||
Convertible Debentures (Details Narrative) |
3 Months Ended | 9 Months Ended | 12 Months Ended | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
Mar. 30, 2021
USD ($)
$ / shares
shares
|
Mar. 30, 2021
CAD ($)
shares
|
Mar. 08, 2021
USD ($)
$ / shares
shares
|
Mar. 08, 2021
USD ($)
$ / shares
shares
|
Mar. 08, 2021
USD ($)
$ / shares
shares
|
Sep. 15, 2020
USD ($)
$ / shares
shares
|
Jul. 02, 2020
USD ($)
$ / shares
|
Sep. 30, 2019
USD ($)
$ / shares
|
Sep. 30, 2021
USD ($)
|
Sep. 30, 2020
USD ($)
|
Sep. 30, 2021
USD ($)
|
Sep. 30, 2020
USD ($)
|
Dec. 31, 2020
USD ($)
|
Apr. 16, 2021
USD ($)
$ / shares
|
Apr. 16, 2021
CAD ($)
$ / shares
|
Mar. 30, 2021
CAD ($)
$ / shares
|
Mar. 08, 2021
CAD ($)
$ / shares
|
Sep. 15, 2020
CAD ($)
$ / shares
|
Jul. 02, 2020
$ / shares
|
Sep. 30, 2019
CAD ($)
$ / shares
|
|
| Short-term Debt [Line Items] | ||||||||||||||||||||
| Convertible debt | $ 29,528 | $ 89,198 | $ 89,198 | $ 89,198 | $ 9,870 | $ 37,500 | $ 112,500 | $ 13,000 | ||||||||||||
| Debt instrument interest rate | 5.00% | 5.00% | ||||||||||||||||||
| Warrant exercise price per share | (per share) | $ 0.10 | $ 0.10 | $ 0.10 | $ 0.10 | $ 0.09 | $ 0.10 | $ 0.12 | $ 0.12 | ||||||||||||
| Debt instrument conversion price | (per share) | $ 0.06 | $ 0.06 | $ 0.06 | $ 0.06 | $ 0.075 | $ 0.075 | ||||||||||||||
| Derivative liability | $ 7,647 | $ 132,184 | ||||||||||||||||||
| Offsetting convertible debt discount | $ 120,295 | |||||||||||||||||||
| Debt instrument, carrying value | $ 29,528 | $ 89,198 | $ 89,198 | $ 89,198 | $ 11,644 | $ 95,959 | $ 120,000 | |||||||||||||
| Extinguishment of debt | $ 52,904 | $ 90,264 | ||||||||||||||||||
| Loss on extinguishment of Debt | $ 26,437 | $ (13,718) | $ (29,001) | $ (238,724) | $ (29,001) | |||||||||||||||
| Converted units | shares | 660,000 | 660,000 | 1,500,000 | 1,500,000 | 1,500,000 | 173,333 | ||||||||||||||
| Fair value of debt converted | $ 162,360 | $ 439,485 | $ 439,485 | $ 439,485 | $ 8,840 | |||||||||||||||
| Loss on conversion of debt | $ 1,030 | |||||||||||||||||||
| Debt Instrument, Increase, Accrued Interest | $ 9,478 | $ 12,000 | ||||||||||||||||||
| Convertible Debtures [Member] | ||||||||||||||||||||
| Short-term Debt [Line Items] | ||||||||||||||||||||
| Warrant exercise price per share | (per share) | $ 0.09 | $ 0.12 | ||||||||||||||||||
| Debt instrument conversion price | (per share) | $ 0.06 | $ 0.075 | ||||||||||||||||||
| Debt instrument, carrying value | $ 90,264 | |||||||||||||||||||
| Extinguishment of debt | 120,295 | |||||||||||||||||||
| Loss on extinguishment of Debt | 30,031 | |||||||||||||||||||
| Convertible Debt [Member] | ||||||||||||||||||||
| Short-term Debt [Line Items] | ||||||||||||||||||||
| Extinguishment of debt | 120,295 | |||||||||||||||||||
| Loss on extinguishment of Debt | $ 11,889 | |||||||||||||||||||
| Unbrokered Private Placement [Member] | Two Investors [Member] | ||||||||||||||||||||
| Short-term Debt [Line Items] | ||||||||||||||||||||
| Convertible debt | $ 123,095 | $ 163,000 | ||||||||||||||||||
| Debt instrument interest rate | 10.00% | 10.00% | ||||||||||||||||||
| Warrant exercise price per share | (per share) | $ 0.20 | $ 0.25 | ||||||||||||||||||
| Debt instrument conversion price | (per share) | $ 0.12 | $ 0.15 | ||||||||||||||||||
| Debt instrument maturity date | Sep. 30, 2021 | |||||||||||||||||||
| Derivative liability | $ 81,956 | |||||||||||||||||||
| Offsetting convertible debt discount | $ 81,956 | |||||||||||||||||||
Schedule of Earnings Per Share Basic and Diluted and Diluted Securities (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
| Income (loss) | $ 5,418,643 | $ (1,183,375) | $ (2,162,396) | $ (2,403,660) |
| Weighted average number of shares outstanding | 166,527,850 | 110,299,171 | 150,439,108 | 95,897,700 |
| Loss per share - basic | $ 0.03 | $ (0.01) | $ (0.01) | $ (0.03) |
| Weighted average number of shares outstanding | 178,410,202 | 110,299,171 | 150,439,108 | 95,897,700 |
| Loss per share - diluted | $ 0.03 | $ (0.01) | $ (0.01) | $ (0.03) |
| Share-based Payment Arrangement, Option [Member] | ||||
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
| Effect of Dilutive Securities | 4,975,214 | |||
| Warrant [Member] | ||||
| Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
| Effect of Dilutive Securities | 6,907,138 | |||
Summary of Stock Options Activity (Details) - $ / shares |
9 Months Ended | 12 Months Ended |
|---|---|---|
Sep. 30, 2021 |
Dec. 31, 2020 |
|
| Share-based Payment Arrangement [Abstract] | ||
| Number of Options, Outstanding Beginning Balance | 11,900,000 | 8,250,000 |
| Weighted Average Exercise Price, Outstanding Beginning Balance | $ 0.11 | $ 0.13 |
| Number of Options, Granted | 450,000 | 4,070,000 |
| Weighted Average Exercise Price, Granted | $ 0.32 | $ 0.07 |
| Number of Options, Exercised | (780,000) | (320,000) |
| Weighted Average Exercise Price, Exercised | $ 0.18 | $ 0.06 |
| Number of Options, Expired | (150,000) | (100,000) |
| Weighted Average Exercise Price, Expired | $ 0.18 | $ 0.19 |
| Number of Options, Outstanding Ending Balance | 11,420,000 | 11,900,000 |
| Weighted Average Exercise Price, Outstanding Ending Balance | $ 0.11 | $ 0.11 |
Stock Options (Details Narrative) - USD ($) |
9 Months Ended | |
|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
|
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
| Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Remaining Contractual Term | 2 years 6 months 21 days | |
| Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures and Expirations in Period, Weighted Average Intrinsic Value | $ 1,289,220 | |
| Share-based Payment Arrangement, Expense | $ 124,391 | $ 0 |
| Share-based Payment Arrangement, Nonvested Award, Option, Cost Not yet Recognized, Amount | $ 0 | |
| 2013 Long-Term Incentive Equity Plan [Member] | ||
| Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
| Incentive plans | The Board of Directors adopted the 2013 Long-Term Incentive Equity Plan (the “Incentive Plan” or “2013 Plan”) effective as of October 29, 2013. | |
| Total number of shares of common stock issued and outstanding percentage | 10.00% | |
Schedule of Stockholders’ Equity Note, Warrants or Rights, Activity (Details) - $ / shares |
9 Months Ended | 12 Months Ended |
|---|---|---|
Sep. 30, 2021 |
Dec. 31, 2020 |
|
| Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding, Number, Ending Balance | 450,000 | |
| Warrant [Member] | ||
| Number of Warrants Outstanding, Beginning | 35,865,312 | 19,389,961 |
| Outstanding | $ 0.10 | $ 0.26 |
| Number of Warrants, Issued | 14,017,663 | 34,130,133 |
| Issued | $ 0.09 | $ 0.09 |
| Number of Warrants, Exercised | (26,303,647) | (17,654,782) |
| Exercised | $ 0.09 | $ 0.25 |
| Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Expirations | (10,768,332) | |
| Expired | $ 0.13 | |
| Share-based Compensation Arrangement by Share-based Payment Award, Non-Option Equity Instruments, Outstanding, Number, Ending Balance | 12,810,996 | 35,865,312 |
| Outstanding | $ 0.09 | $ 0.10 |
Schedule of Derivative Warrrant Liability (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
|---|---|---|---|---|
Sep. 30, 2021 |
Sep. 30, 2020 |
Sep. 30, 2021 |
Sep. 30, 2020 |
|
| Derivative, Gain (Loss) on Derivative, Net | $ 6,205,914 | $ (86,208) | $ 507,446 | $ (43,221) |
| Warrant [Member] | ||||
| Derivative Liability, Fair Value, Gross Liability | 1,804,572 | |||
| Stock and Warrants Issued During Period, Value, Preferred Stock and Warrants | 621,500 | |||
| Derivative, Gain (Loss) on Derivative, Net | (479,535) | |||
| Increase (Decrease) in Derivative Liabilities | (507,446) | |||
| Derivative Liability, Fair Value, Gross Liability | $ 1,439,091 | $ 1,439,091 | ||