Petrolia Energy Corp - FORM 10-Q

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EXCEL - IDEA: XBRL DOCUMENT - Petrolia Energy Corp	Financial_Report.xls
EX-31.1 - EX-31.1 - Petrolia Energy Corp	ex31-1.htm
EX-31.2 - EX-31.2 - Petrolia Energy Corp	ex31-2.htm
EX-32 - EX-32 - Petrolia Energy Corp	ex32.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x Quarterly Report Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2014

o Transition Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from __________ to __________

Commission File Number: 000-52690

ROCKDALE RESOURCES CORPORATION

(Exact name of registrant as specified in its charter)

Colorado	86-1061005
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

5114 Balcones Woods Dr., Suite 307-511 Austin, Texas		78759
(Address of principal executive offices)		(Zip Code)

(512) 537-2257

(Issuer’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Name of each exchange on which registered

None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock

(Title of class)

Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the issuer was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

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

Large accelerated filer o Accelerated filer o

Non-accelerated filer o Smaller reporting company x

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

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: 19,678,085 shares of common stock as of August 11, 2014.

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TABLE OF CONTENTS

Part I Financial Information

Item 1.	Financial Statements	3

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	8

Item 4.	Controls and Procedures	11

Part II Other Information

Item 6.	Exhibits	12

Signatures		13

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PART I

Item 1. Financial Statements

ROCKDALE RESOURCES CORPORATION

BALANCE SHEETS

(Unaudited)

	June 30, 2014			December 31, 2013
ASSETS
Current assets
Cash	$	24,811		$	122,162
Accounts receivable		76,382			58,472
Other current assets		37,949			53,680
Total current assets		139,142			234,314

Property & equipment
Oil and gas, on the basis of full cost accounting
Evaluated properties		3,558,977			2,954,854
Furniture, equipment & software		155,468			82,051
Less accumulated depreciation		(215,134	)		(126,642	)
Net property and equipment		3,499,311			2,910,263

Total Assets	$	3,638,453		$	3,144,577

LIABILITIES & STOCKHOLDERS' EQUITY

Current liabilities
Accounts payable	$	31,858		$	50,939
Accrued liabilities		10,997			9,916
Current maturities of installment notes payable		26,486			7,625
Deferred rent		4,689			4,061
Total current liabilities		74,030			72,541

Deferred rent		430			2,926
Asset retirement obligations		22,788			12,804
Convertible debt - related party, net of discount of $369,742 and $410,677		180,257			139,323
Installment note payable		63,335			34,011

Total Liabilities		340,840			261,605

Stockholders' Equity
Preferred stock, $.10 par value; 1,000,000 shares authorized; No shares issued & outstanding		-			-
Common stock, $.001 par value; 50,000,000 shares authorized; 19,678,085 and 14,178,041 shares issued and outstanding		19,678			14,178
Additional paid in capital		7,102,123			5,429,488
Accumulated deficit		(3,824,188	)		(2,560,694	)

Total Stockholders' Equity		3,297,613			2,882,972
Total Liabilities and Stockholders' Equity	$	3,638,453		$	3,144,577

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

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ROCKDALE RESOURCES CORPORATION

STATEMENT OF OPERATIONS

(Unaudited)

	Three Months Ended June 30, 2014			Three Months Ended June 30, 2013			Six Months Ended June 30, 2014			Six Months Ended June 30, 2013
Oil and gas sales	$	235,775		$	38,572		$	360,644		$	94,449
Operating expenses
Lease operating expense		64,954			26,900			163,136			63,181
Production tax		10,865			1,778			16,072			4,353
General and administrative expenses		752,007			230,396			1,296,628			597,520
Depreciation, depletion and amortization		54,222			14,221			88,492			34,456
Asset retirement obligation accretion		398			1,907			547			3,502

Total operating expenses		882,446			275,202			1,564,875			703,012
Loss from operations		(646,671	)		(236,630	)		(1,204,231	)		(608,563	)
Interest (expense)		(26,167	)		-			(59,263	)		-
Net loss from continuing operations before taxes		(672,838	)		(236,630	)		(1,263,494	)		(608,563	)
Net loss	$	(672,838	)	$	(236,630	)	$	(1,263,494	)	$	(608,563	)

Loss per share (Basic and fully diluted)	$	(0.04	)	$	(0.02	)	$	(0.08	)	$	(0.04	)

Weighted average number of common shares outstanding		17,648,316			13,963,481			16,548,923			15,423,667

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

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ROCKDALE RESOURCES CORPORATION

STATEMENTS OF CASH FLOWS

(Unaudited)

	Six Months Ended June 30, 2014			Six Months Ended June 30, 2013
Cash Flows from Operating Activities
Net loss	$	(1,263,494	)	$	(608,563	)
Adjustment to reconcile net income to net cash used in operating activities:
Depletion, depreciation and amortization		88,492			34,456
Amortization of debt discount		40,934			-
Loss on sale/disposal of assets		-			5,609
ARO accretion		547			3,502
Stock-based compensation expense – employees		589,130			5,400
Stock-based compensation expense – consultants		399,000			-
Changes in operating assets and liabilities
Accounts receivable - related party		-			4,805
Accounts receivable		(17,910	)		-
Other assets		15,731			(677	)
Accounts payable		(26,185	)		(21,200	)
Accounts payable - related party		-			6,586
Accrued liabilities		1,081			16,564
Deferred rent		(1,867	)		(1,228	)

Net cash flows from operating activities		(174,541	)		(554,746	)

Cash Flows from Investing Activities
Purchase property and equipment		(18,876	)		(6,200	)
Proceeds from sale of property and equipment		-			20,000
Capital expenditures on oil and gas properties		(587,582	)		(207,955	)

Cash flows from investing activities		(606,458	)		(194,155	)

Cash Flows from Financing Activities
Amounts borrowed from related parties		-			350,000
Purchase of treasury stock		-			(900	)
Proceeds from issuance of common stock		690,004			-
Payments on notes payable		(6,356)			-

Cash flows from financing activities		683,648			349,100

Net change in cash and cash equivalents		(97,351	)		(399,801	)

Cash and cash equivalents
Beginning of period		122,162			731,043

End of period	$	24,811		$	331,242

SUPPLEMENTAL DISCLOSURES
Interest paid	$	18,329	$	-
NON-CASH INVESTING AND FINANCIAL DISCLOSURES
Discount on related party debt	$	-	$	251,184
Cancellation of treasury shares	$	-	$	5,000
Initial recognition of asset retirement obligations	$	9,437	$	-
Change in accounts payable for expenditures on oil and gas properties	$	7,103	$	-
Fair value of stock issued for oil properties	$	-	$	395,000
Note payable for equipment	$	54,541	$	-

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

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ROCKDALE RESOURCES CORPORATION

NOTES TO FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2014

(Unaudited)

NOTE 1. ORGANIZATION AND BASIS OF PRESENTATION:

Rockdale Resources Corporation (“we”, “us”, the “Company”) was formed for the purpose of oil and gas exploration, development, and production. The financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”).

Basis of Presentation

The accompanying unaudited interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (“SEC”), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s latest Annual Report filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the results of operations for the interim periods presented have been reflected herein. The results of operations for such interim periods are not necessarily indicative of operations for a full year. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for the most recent fiscal year, 2013, as reported in Form 10-K, have been omitted.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of the significant accounting policies applied in the preparation of the accompanying financial statements follows.

Management Estimates—The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect 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. Actual results could differ from those estimates.

Recent Accounting Pronouncements

The Company has evaluated all the recent accounting pronouncements through the filing date and believes that none of them will have a material effect on the Company.

NOTE 3. GOING CONCERN

The Company has suffered recurring losses from operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The Company plans to generate profits by drilling productive oil or gas wells. However, the Company will need to raise the funds required to drill new wells through the sale of its securities, through loans from third parties or from third parties willing to pay the Company’s share of drilling and completing the wells. The Company does not have any commitments or arrangements from any person to provide the Company with any additional capital. 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 oil or gas wells. Any wells which the Company may drill may not be productive of oil or gas. Management believes that actions presently being taken to obtain additional funding provide the opportunity for the Company to continue as a going concern. We have plans to finance our activities through private offerings of our securities, issuance of corporate bonds and/or joint venture agreements. 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.

NOTE 4. EQUITY

Preferred Stock – 1,000,000 shares authorized, none issued or outstanding.

During the six-month period ended June 30,2014, the Company sold 2,300,044 shares to private investors as part of the private placement detailed in the 8-K filed on February 14, 2014. The shares were all purchased at a price of $0.30 per share and include warrants to purchase additional shares (one-for-one) at $0.75 per share any time before August 5, 2019. The purchasers included David Baker, who after his investment on February 16, 2014 subsequently joined our Board of Directors on May 8, 2014 and became the Company’s Chief Executive Officer on June 2, 2014. On May 28, 2014 the Company entered into a financing services agreement (“Service Agreement”) with ViewTrade Securities Corporation (“ViewTrade”). The Company will pay a commission in an amount equal to 10% of the gross proceeds received from any purchaser of Units directly introduced to the Company by ViewTrade, together with a five-year warrant to purchase up to 10% of the Securities sold by ViewTrade at an exercise price of 110% of the Offering Price. The Service Agreement resulted in $2,500 of commission expense and 8,333 warrants issued at a strike price of $0.33 in the second quarter of 2014. As of the end of the second quarter of 2014 the Service Agreement has been terminated. The Company evaluated the warrants for derivative accounting consideration under ASC Topic 815-40, Derivatives and Hedging – Contracts in Entity’s own stock. We concluded that the warrants meet the criteria for classification in stockholders' equity. Therefore, derivative accounting is not applicable for the warrants.

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ROCKDALE RESOURCES CORPORATION

NOTES TO FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2014

(Unaudited)

As reported on Form 8-K filed January 31, 2014, on January 27, 2014, 800,000 shares were granted to David Baker in the first quarter of 2014 as consideration for his services as a consultant. The consulting agreement can be found in the 8-K filed on January 27, 2014. The shares granted to David Baker resulted in $380,000 of general and administrative expense in the first quarter of 2014. On June 2, 2014 we issued 50,000 shares to an analyst for one year of service to research surrounding production near future oil and gas properties the Company is evaluating. The shares granted resulted in $19,000 of general and administrative expense in the second quarter of 2014.

As reported on Form 8-K filed June 4, 2014, on June 2, 2014, David Baker and Marc Spezialy entered into employment agreements with the Company. In addition to a base salary and in consideration for both Mr. Baker’s and Mr. Spezialy’s future services as officers and directors, each received restricted shares of the Company’s common stock according to the terms of their respective employment agreements which can be found in the 8-K filed on June 4, 2014. Mr. Baker received a one-time grant of 800,000 restricted shares of the Company’s common stock effective June 1, 2014 for his service as Chief Executive Officer. The shares shall be forfeited should the employment agreement be terminated for any reason prior to the conclusion of the initial 18 month term at a rate equal to 44,445 of the shares for each whole month that the employment period is terminated prior to the conclusion of the initial 18 month term. The Company is accounting for the expense of these shares over the term of Mr. Baker’s employment. Mr. Baker also received a separate grant of an additional 100,000 restricted shares of the Company’s common stock for his services as a Director effective June 1, 2014. These shares are not subject to potential forfeiture. Mr. Spezialy received a one-time grant of 1,000,000 restricted shares of the Company’s common stock, effective June 1, 2014 for his service as Chief Operating Officer. Mr. Spezialy also received a separate grant of an additional 100,000 restricted shares of the Company’s common stock for his services as a Director, effective June 1, 2014. Matthew Ferguson received a grant of 100,000 restricted shares of the Company’s common stock as compensation for his services as a Director and a separate grant of an additional 100,000 restricted shares of the Company’s stock for his services as a board advisor. Both grants are effective June 1, 2014. The shares granted to our employees and directors in the second quarter of 2014 resulted in $548,889 of general and administrative expense for the same period.

Additionally 150,000 shares related to stock compensation for employees and directors vested during the six-month period ended June 30, 2014. Stock based compensation expense relating to these shares was $40,241 and $0 for the six-month periods ended June 30, 2014 and 2013, respectively.

As of June 30, 2014, we had $458,949 of total unrecognized compensation expense associated with restricted shares granted to employees and director. Of that amount, $296,949 (830,556 unvested shares) will be recognized over a seventeen month period.

The remainder is subject to performance conditions and is not currently being amortized. As of June 30, 2014, there were 600,000 unvested shares subject to performance conditions. All of the aforementioned shares had a grant-date fair value, as determined by closing stock prices on August 5, 2013, of $0.27 per share.

Summary information regarding common stock warrants issued and outstanding as of June 30, 2014, is as follows:

	Warrants		Weighted Average Exercise Price		Aggregate intrinsic value		Weighted average remaining contractual life (years)
Outstanding at year ended December 31, 2013		1,570,000	$	0.80	$	-		9.1
Granted		2,308,378		0.75		-		5.1
Exercised		-		-		-
Expired		-		-		-
Outstanding at six-month period ended June 30, 2014		3,878,378	$	0.77	$	-		6.7

NOTE 5. COMMITMENTS AND CONTINGENCIES

The Company, as a lessee of oil and gas properties, is subject to various federal, state and local laws and regulations relating to discharge of materials into, and protection of, the environment. These laws and regulations may, among other things, impose liability on the Company for the cost of pollution clean-up resulting from operations and subject the Company to liability for pollution damages. In some instances, the Company may be directed to suspend or cease operations in the affected area. The Company is not aware of any environmental claims existing as of June 30, 2014, which have not been provided for, or covered by insurance or which may have a material impact on its financial position or results of operations. There can be no assurance, however, that current regulatory requirements will not change, or past noncompliance with environmental laws will not be discovered on the Company’s properties.

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FORWARD LOOKING STATEMENTS

This report contains statements which, to the extent that they do not recite historical fact, constitute forward-looking statements. These statements can be identified by the fact that they do not relate strictly to historical or current facts and may include the words ‘‘may,’’ ‘‘will,’’ ‘‘could,’’ ‘‘should,’’ ‘‘would,’’ ‘‘believe,’’ ‘‘expect,’’ ‘‘anticipate,’’ ‘‘estimate,’’ ‘‘intend,’’ ‘‘plan’’ or other words or expressions of similar meaning. We have based these forward-looking statements on our current expectations about future events. The forward-looking statements include statements that reflect management’s beliefs, plans, objectives, goals, expectations, anticipations and intentions with respect to our financial condition, results of operations, future performance and business, including statements relating to our business strategy and our current and future development plans.

The potential risks and uncertainties that could cause our actual financial condition, results of operations and future performance to differ materially from those expressed or implied in this report include:

●	The sale prices of crude oil;

●	The amount of production from oil wells in which we have an interest;

●	Lease operating expenses;

●	International conflict or acts of terrorism;

●	General economic conditions; and

●	Other factors disclosed in this report.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Many factors discussed in this report, some of which are beyond our control, will be important in determining our future performance. Consequently, actual results may differ materially from those that might be anticipated from the forward-looking statements. In light of these and other uncertainties, you should not regard the inclusion of a forward-looking statement in this report as a representation by us that our plans and objectives will be achieved, and you should not place undue reliance on such forward-looking statements. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Background

We were incorporated in Colorado on January 16, 2002.

In April 2012 we became active in the exploration and development of oil and gas properties.

On May 4, 2012 we amended our articles of incorporation and changed our name to Rockdale Resources Corporation.

Plan of Operation

We evaluate undeveloped oil and gas prospects and participate in drilling activities on those prospects which, in the opinion of management, are favorable for the production of oil or gas. If, through our review, a geographical area indicates geological and economic potential, we will attempt to acquire leases or other interests in the area. We may then attempt to sell portions of our leasehold interests in a prospect to third parties, thus sharing the risks and rewards of the exploration and development of the prospect with the other owners. One or more wells may be drilled on a prospect, and if the results indicate the presence of sufficient oil and gas reserves, additional wells may be drilled on the prospect.

Our strategy is to acquire other similar prospects in or adjacent to existing fields with further development potential and minimum risk in the same area.

We may also acquire a working interest in one or more prospects from others and participate with the other working interest owners in drilling, and if warranted, completing oil or gas wells on a prospect.

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Our activities will primarily be dependent upon available financing.

Oil and gas leases are considered real property. Title to properties which we may acquire will be subject to landowner’s royalties, overriding royalties, carried working and other similar interests and contractual arrangements customary in the oil and gas industry, to liens for current taxes not yet due, liens for amounts owing to persons operating wells, and to other encumbrances. As is customary in the industry, in the case of undeveloped properties little investigation of record title will be made at the time of acquisition (other than a preliminary review of local records). However, drilling title opinions may be obtained before commencement of drilling operations.

Minerva-Rockdale Field

The Minerva-Rockdale Field, which is located approximately 30 miles Northeast of Austin, was first discovered in 1921 and is approximately 50 square miles in size. The main producing formation for this field is the Upper Cretaceous Navarro Group of sands and shales. The Navarro is typically subdivided into several producing zones from the uppermost “A” and “B” sands to the lower “C” and “D” sands. The “B” sand is the primary producing zone. These sands are commonly fine grained and poorly sorted and were deposited close to a shoreline during a cycle of marine regression.

The cost to drill and complete the first five wells on the 200 acre lease was $275,000 per well. The cost to drill and complete the sixth well on the 200 acre lease was $191,000.

In April 2013, the Company entered into a lease pertaining to a 423 acre tract in Milam County, Texas, which is adjacent to the Company’s original 200 acre lease. The Company issued 500,000 shares of its common stock as consideration for a 100% working interest (75% net revenue interest) in such lease.

In June 2013 we drilled and completed two wells at approximately $120,000 each.

In August 2013, we became an oil and gas operator and took over the operating of 100% of our wells. We will work independently with vendors to drill wells on our lease with the supervision of the Company’s director, Matthew Ferguson.

In August 2013 we drilled and completed one well at a cost of approximately $120,000 and converted one existing well to an injection well.

On October 2, 2013, the Company executed a Paid Up Oil and Gas Lease (the “New Lease”) between Noack Farms, LLC (“Noack”), as Lessor, and the Company, as Lessee. Under the New Lease, Noack leased to the Company 623.29 acres in Milam County, Texas, for the purpose of exploring for, developing, producing, and marketing oil and gas, along with all hydrocarbon and hydrocarbon substances produced in association therewith. The New Lease provides for royalties of 1/6th of the production from the leased premises to be paid to Noack.

The land described in the New Lease was subject to a pre-existing Paid Up Oil and Gas Lease dated June 20, 2011, from Noack, as Lessor, to Ardent 1, LLC, as Lessee (the “Prior Lease”). The New Lease provided that it was subordinate to the Prior Lease, and that it would not become effective until the termination or release of the Prior Lease.

By virtue of a series of assignments, the Prior Lease previously had been assigned to the Company as Lessee effective as of March 20, 2012. (The assignment to the Company is filed as Exhibit 10.7 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2013, filed with the Securities and Exchange Commission on August 14, 2013, and the Prior Lease is filed as Exhibit 10.8 to such Quarterly Report.) All of the Company’s current wells are drilled on the 623.29 acres that constitute the leased premises under the New Lease and the Prior Lease.

On October 24, 2013, the Company filed a release of the Prior Lease.

In January 2014 the Company drilled and completed one well at a cost of approximately $120,000.

In March 2014 the Company drilled and completed three additional wells at a total cost per well of approximately $120,000.

In June 2014 the Company drilled three additional wells but did not complete them by August 11, 2014. Total cost per completed well will be approximately $120,000.

The cost to drill and complete any remaining wells on the 623 acre lease will be approximately $120,000 per well.

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As of June 30, 2014, we had drilled sixteen wells, eleven of which were actively producing. As of August 11, 2014 these eleven wells were producing approximately 35bbls of oil and 70bbls of water per day.

We are currently in the process of raising funds through the private placement discussed in our 8-K filed on February 14, 2014, with plans of using funds raised to complete three wells which have already been drilled and drill and complete one additional well on our lease in the Minerva-Rockdale field.

The well will be drilled to sufficient depths to test the shallow Navarro B formation (approximate depth of 1,800 feet). Each well will take approximately seven days to drill.

If, in our sole discretion, the estimated future production from wells drilled on the leases in the Minerva-Rockdale Field does not warrant further drilling, we plan to drill wells in other areas.

Results of Operations/Liquidity and Capital Resources

Revenues

Our total revenue reported for the six-month period ended June 30, 2014 was $360,644, an increase of $266,195 from the prior year period. Our increased revenue for the six-month period ended June 30, 2014 as compared with the prior year quarter is a result of drilling and completing seven new wells.

Operating Expenses

Operating expenses increased to $1,564,875 for the six-month period ended June 30, 2014 from $703,012 for the prior six-month period ended June 30, 2013. Our major expenses for the six-month period ended June 30, 2014 were stock-based contract labor and employee expense of $988,130, lease operating expenses of $163,136, legal and professional fees of $128,663 and salaries and wages of $108,222. In comparison, major operating expenses for the six-month period ended June 30, 2013 were salaries and wages of $235,629, legal and professional expenses of $209,278 and lease operating expenses of $63,181.

Our lease operating expenses increased as we drilled additional wells. Our lease operating expenses was higher than we expected for the six-month period ended June 30, 2014 due to non-reoccurring maintenance issues with the wells and cold weather related production issues. Our general and administrative expenses decreased as a result of our efforts to operate more efficiently, offset by $988,130 in stock based-based employee, director and contract labor expenses in 2014.

Other Income/Expenses

Other expenses were $59,263 for the six-month period ended June 30, 2014, an increase from other expenses of $0 for the same period ended 2013. We had $59,263 of interest expenses in 2014, which accounted for the difference.

Net Loss

Net loss for the six-month period ended June 30, 2014 was $1,263,494 compared to a net loss of $608,563 for the prior six-month period ended June 30, 2013 due to the factors described above.

Our sources and (uses) of funds for the six months ended June 30, 2014 were:

Cash provided (used) in operations	$	(174,541	)
Purchase property and equipment		(18,876	)
Capital expenditures on oil and gas properties		(587,582	)
Proceeds from issuance of common stock		690,004
Payments on notes payable		(6,356	)

Critical Accounting Policies and New Accounting Pronouncements

See Note 2 to the financial statements included as part of our Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 31, 2014 for a description of our critical accounting policies and the potential impact of the adoption of any new accounting pronouncements.

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Item 4. Controls and Procedures.

(a) We maintain a system of controls and procedures designed to ensure that information required to be disclosed in reports filed or submitted under the Securities Exchange Act of 1934, as amended (“1934 Act”), is recorded, processed, summarized and reported within time periods specified in the SEC's rules and forms and to ensure that information required to be disclosed by us in the reports that we file or submit under the 1934 Act is accumulated and communicated to our management, including our Principal Executive and Financial Officer, as appropriate to allow timely decisions regarding required disclosure. As of June 30, 2014, our Principal Executive and Financial Officer evaluated the effectiveness of the design and operation of our disclosure controls and procedures. Based on that evaluation, our Principal Executive and Financial Officer concluded that our disclosure controls and procedures were effective.

(b) Changes in Internal Controls. There were no changes in our internal control over financial reporting during the quarter ended June 30, 2014 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II

Item 6. Exhibits

Exhibits

31.1	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32	Certification pursuant to Section 906 of the Sarbanes-Oxley Act.

101.INS	XBRL Instance Document

101.SCH	XBRL Taxonomy Extension Schema Document

101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF	XBRL Taxonomy Extension Definition Linkbase Document

101.LAB	XBRL Taxonomy Extension Label Linkbase Document

101.PRE	XBRL Taxonomy Presentation Linkbase Document

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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.

	ROCKDALE RESOURCES CORPORATION

August 12, 2014	By:	/s/ David Baker
		David Baker
		Chief Executive Officer



	By:	/s/ Marc Spezialy
		Marc Spezialy
		Principal Financial and Accounting Officer

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