RECENT 10Q <========OverviewPolar Petroleum Corp. was incorporated in the State of Nevada on March 22, 2011 as Post Data, Inc. We were previously a development stage company formed for purposes of decommissioning electronic data storage devices for permanent inoperability and unrecoverability of electronic data contained therein. On July 30, 2012, our management changed and we entered into the oil and gas business to engage in the exploration, development and production of oil and gas properties primarily in the State of Alaska.On August 22, 2012, we formed a wholly-owned subsidiary, Polar Petroleum (AK) Corp. (the “Subsidiary”), in the State of Alaska for purposes of operating our oil and gas business in the State of Alaska. On October 30, 2012, our wholly-owned subsidiary, the Subsidiary entered into a purchase agreement (the “Hemi/Franklin Purchase Agreement”) with Daniel K. Donkel and Samuel H. Cade (together, the “Sellers”) pursuant to which the Subsidiary acquired 100% of the record title of the Sellers to 17 onshore oil and gas leases located in in the North Slope region of the State of Alaska, which include both the Hemi Springs Project and the Franklin Bluffs Project, while reserving a royalty of 16.67% for the State of Alaska and an overriding royalty of 4% for the Sellers, in exchange for a total purchase price of $1,250,000, with $150,000 of the purchase price paid in cash at closing and the remaining $1,100,000 payable under a promissory note from the Subsidiary to the Sellers (the “Hemi/Franklin Promissory Note”). The Hemi/Franklin Promissory Note was due on October 31, 2014, and bears interest at 0.3% per annum (10% after a default). We were obligated to pay $125,000.00 (plus accrued interest) every three months for the first twelve months, $100,000 (plus accrued interest) every three months for the 13th through 21st months, and $300,000 (plus accrued interest) by the maturity date. The more detailed description of the Hemi/Franklin Purchase Agreement and related transactions set forth under the caption “Business—First Purchase of Oil & Gas Leases” in the 2013 Form 10-K is incorporated herein by reference.An installment payment under the Hemi/Franklin Promissory Note of $125,000.00 (plus accrued interest) was due on July 31, 2013, and a second installment payment of $125,000.00 (plus accrued interest) is due on October 31, 2013. We requested that the Sellers grant us an extension on these payments. 12 On October 16, 2013, the Subsidiary entered into an amendment to the Hemi/Franklin Purchase Agreement with the Sellers, under which the Subsidiary will pay a $12,500 non-refundable extension fee, and Sellers will extend, until December 2, 2013, the payment of the installment amounts otherwise due on July 31 and October 31, 2013. On December 2, 2013, the Subsidiary will be obligated to pay the entire outstanding principal balance due under the Hemi/Franklin Promissory Note, together with all accrued interest thereon, in the total sum of $865,229.On May 31, 2013, the Subsidiary entered into a purchase agreement (the “North Point Thomson Purchase Agreement”) with the same Sellers to acquire a 100% working interest in twelve offshore oil and gas leases in the property known as the North Point Thomson Property for an aggregate purchase price of $1,100,000, with $100,000 payable at closing and $1,000,000 evidenced by a promissory note from the Subsidiary to the Sellers (the “North Point Thomson Promissory Note”). Seven of the leases are subject to a 12.5% royalty retained by the State of Alaska and the rest are subject to a royalty of 16.67% retained by the State of Alaska, and all of them carry an overriding royalty of 4% for the Sellers. The North Point Thomson Promissory Note was due on June 14, 2015, and bears interest at 0.3% per annum (12% after a default). We were obligated to pay $125,000 (plus accrued interest) every three months during the term and on the maturity date. The more detailed description of the North Point Thomson Purchase Agreement and related transactions set forth under the caption “Business—Second Purchase of Oil & Gas Leases” in the 2013 Form 10-K is incorporated herein by reference.An installment payment under the North Point Thomson Promissory Note of $125,000 (plus accrued interest) was due on September 14, 2013. We requested that the Sellers grant us an extension on this payment.On October 16, 2013, the Subsidiary entered into an amendment to the North Point Thomson Purchase Agreement with the Sellers, under which the Subsidiary will pay a $12,500 non-refundable extension fee, and Sellers will extend, until December 2, 2013, the payment of the installment amount otherwise due on September 14, 2013. On December 2, 2013, the Subsidiary will be obligated to pay the entire outstanding principal balance due under the North Point Thomson Promissory Note, together with all accrued interest thereon, in the total sum of $1,020,875.Our BusinessWe are an exploration stage company focused on exploration, production and development of oil and natural gas in the United States. We currently own interests in certain oil and gas drilling areas and land leases located in the North Slope region of the State of Alaska.Recent DevelopmentsOn October 16, 2013, we entered into amendments to the Hemi/Franklin Purchase Agreement and the North Point Thomson Purchase Agreement and the associated promissory notes, as described above.Effective September 6, 2013, we issued to US Energy Investments Ltd. (“US Energy”) a convertible promissory note in the principal amount of $75,000 evidencing a loan in that amount received by the Company from US Energy. The note is due on September 5, 2016, and bears interest at 10% per annum, payable on the maturity date or earlier prepayment. The Company may prepay all or any portion of the principal amount of the note without penalty. Subject to a customary 4.99% “blocker” provision, US Energy may convert all or any portion of the outstanding principal amount of the note, together with accrued and unpaid interest thereon to the date of conversion, into shares of common stock of the Company, at a conversion price per share of common stock to be mutually agreed by the Company and US Energy, which in no event shall be less than $0.20 per share. The note contains customary events of default and acceleration and customary representations by the Company.Effective October 16, 2013, we issued to US Energy a convertible promissory note in the principal amount of $50,000 evidencing a loan in that amount received by the Company from US Energy. The note is due on October 15, 2016, and bears interest at 10% per annum, payable on the maturity date or earlier prepayment. The Company may prepay all or any portion of the principal amount of the note without penalty. Subject to a customary 4.99% “blocker” provision, US Energy may convert all or any portion of the outstanding principal amount of the note, together with accrued and unpaid interest thereon to the date of conversion, into shares of common stock of the Company, at a conversion price per share of common stock to be mutually agreed by the Company and US Energy, which in no event shall be less than $0.10 per share. The note contains customary events of default and acceleration and customary representations by the Company.
