2. Going Concern
The Company has not achieved its planned principal operations and is considered to be in the development stage. The Company's exploration activities and overhead expenses are financed by way of equity issuance and to-date, oil and gas sales are incidental to the exploration process.
The Company's financial statements as at and for the period ended March 31, 2012 have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. During the three months ended March 31, 2012, the Company incurred a net loss of approximately $0.9 million, used approximately $1.0 million of cash flow in its operating activities, used approximately $4.8 million in its investing activities and had an accumulated deficit of approximately $61.0 million. These matters raise doubt about the Company's ability to continue as a going concern.
The Company's ability to continue as a going concern is dependent upon obtaining the necessary financing to complete further exploration and development activities and generate profitable operations from its oil and natural gas interests in the future. The Company must make an assessment of its ability to fulfill current liabilities and to meet future exploration requirements in the normal course of business. The assessment requires estimates regarding future uncommitted financing, future costs of exploration programs, timing of activities, future oil and gas prices, amongst other things. Should those estimates be materially incorrect, the Company's ability to continue as a going concern would be impaired and these unaudited consolidated financial statements could require material adjustments to the value of assets and liabilities. These unaudited consolidated financial statements do not reflect any such adjustments or reclassifications.
The Company's cash balance at March 31, 2012 and anticipated cash flow from operating activities are not sufficient to satisfy its current liabilities and meet its exploration commitments of $19.2 million and $38.5 million, over the twelve months ending March 31, 2013 and the three years ending March 31, 2015, respectively. As at March 31, 2012 the Company has $5.2 million of cash and cash equivalents, of which $4.3 million is committed to carry out the exploration activities of the Myra and Sara joint venture - see note 17. To meet these obligations, it will be necessary to raise capital through equity markets, debt markets or other financing arrangements, which could include the sale of oil and gas interests or participation arrangements in oil and gas interests. If these activities are unsuccessful, the Company may be forced to substantially curtail or cease exploration, appraisal and development expenditures and possibly curtail other of our activities.