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 ~~March~~June 3130, 2018

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

For the transition period from to

Commission File Number: 000-53488

PLEDGE PETROLEUM CORP.

(Exact name of registrant as specified in its charter)

Delaware		26-1856569
(State or other jurisdiction of		(I.R.S. employer
incorporation or organization)		Identification No.)

~~11811~~1701 ~~North~~Commerce ~~Freeway~~Street, ~~5th~~2nd Floor,

~~Suite 513~~HOUSTON, ~~Houston,~~Texas. ~~TX 77060~~77002

(Address of principal executive offices) (Zip Code)

(832) 328- 0169

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

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). Yes x No ¨

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

Large accelerated filer	¨		Accelerated filer	¨
Non-accelerated filer	¨	(Do not check if a smaller reporting company)	Smaller reporting company	x
			Emerging growth 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 x No ¨

The Registrant has 234,256,464 shares of ~~common~~ common stock outstanding as of ~~June~~August 1213, 2018.

Documents incorporated by reference: None

PLEDGE PETROLEUM CORP.

NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In particular, statements contained in this Quarterly Report on Form 10-Q, including but not limited to, statements regarding the sufficiency of our cash, our ability to finance our operations and business initiatives and obtain funding for such activities; our future results of operations and financial position, business strategy and plan prospects, or costs and objectives of management for future acquisitions, are forward looking statements. These forward-looking statements relate to our future plans, objectives, expectations and intentions and may be identified by words such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “intends,” ’‘targets,” “projects,” “contemplates,” ’‘believes,” “seeks,” “goals,” “estimates,” ’‘predicts,” ’‘potential” and “continue” or similar words. Readers are cautioned that these forward-looking statements are based on our current beliefs, expectations and assumptions and are subject to risks, uncertainties, and assumptions that are difficult to predict. Therefore, actual results may differ materially and adversely from those expressed, projected or implied in any forward-looking statements. We undertake no obligation to revise or update any forward-looking statements for any reason.

NOTE REGARDING COMPANY REFERENCES

Throughout this Quarterly Report on Form 10-Q, “Pledge,” the “Company,” “we,” “us” and “our” refer to Pledge Petroleum Corp.

PLEDGE PETROLEUM CORP.

FORM 10-Q

FOR THE ~~THREE~~SIX MONTHS ENDED ~~MARCH~~JUNE 3130, 2018

TABLE OF CONTENTS

		Page
	PART I-FINANCIAL INFORMATION
Item l.	Financial Statements	F-1
	Condensed Consolidated Balance Sheets as of March 31, 2018 (Unaudited) and December 31, 2017	F-1
	Condensed Consolidated Balance Sheets as of June 30, 2018 (Unaudited) and December 31, 2017	F-1
	Unaudited Condensed Consolidated Statements of Operations for the three months ended March 31, 2018 and 2017	F-2
	Unaudited Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2018 and 2017	F-2
	Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2018 and 2017	F-3
	Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2018 and 2017	F-3
	Notes to the Unaudited Condensed Consolidated Financial Statements	F-4
Item 2.	Management’s Discussion and Analysis of Financial Information and Results of Operations	3
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	56
Item 4.	Controls and Procedures	56
	PART II-OTHER INFORMATION
Item 1.	Legal Proceedings	67
Item 1A.	Risk Factors	67
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	67
Item 3.	Defaults Upon Senior Securities	67
Item 4.	Mine Safety Disclosures	67
Item 5.	Other Information	67
Item 6.	Exhibits	78
SIGNATURES		78

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

PLEDGE PETROLEUM CORP.

CONDENSED CONSOLIDATED BALANCE SHEETS

	March 31,			December 31,
	June 30,			December 31,
	2018			2017
	(Unaudited)
Assets
Current Assets
Cash	$	~~637~~379,~~787~~232		$	749,620
Restricted cash		-			7,850,000
Prepaid expenses		1716,~~209~~262			25,816
Total Current Assets		~~654~~395,~~996~~494			8,625,436
Non-Current Assets
Plant and equipment, net		76,~~673~~410			8,935
Deposits		~~530~~1,750			530
Total Non-Current Assets		8,~~203~~160			9,465
Total Assets	$	~~663~~403,~~199~~654		$	8,634,901
Liabilities and Stockholders' Equity
Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable	$	8548,~~724~~838		$	38,849
Accrued expenses and other payables		436,~~426~~654			27,852
Notes payable		3,000			3,000
Total Current Liabilities		~~132~~58,~~150~~492			69,701
Stockholders' Equity
Series A-1 Convertible Preferred stock, $0.01 par value; 5,000,000 shares designated, 3,137,500 shares issued as of March 31, 2018 and December 31, 2017 and 0 and 3,137,500 shares outstanding as of March 31, 2018 and December 31, 2017, respectively. (liquidation preference $251,000)		-			3,138
Series A-1 Convertible Preferred stock, $0.01 par value; 5,000,000 shares designated, 3,137,500 shares issued, 0 and 3,137,500 shares outstanding at June 30, 2018 and December 31, 2017, respectively. (liquidation preference $251,000)		-			3,138
Series B Convertible, Redeemable Preferred Stock, $0.001 par value; 500,000 shares designated; 40,000 issued and outstanding as of March 31, 2018 and December 31, 2017. (liquidation preference $480,000 )		40			40
Series B Convertible, Redeemable Preferred Stock, $0.001 par value; 500,000 shares designated; 40,000 issued and outstanding at June 30 2017 and December 31, 2017, respectively. (liquidation preference $480,000)		40			40
Series C Convertible, Preferred Stock, $0.001 par value, 4,500,000 shares designated, 4,500,000 issued as of March 31, 2018 and December 31, 2017 and 0 and 4,500,000 shares outstanding as of March 31, 2018 and December 31, 2017. (liquidation preference $14,750,000)		-			4,500
Series C Convertible, Preferred Stock, $0.001 par value, 4,500,000 shares designated, 4,500,000 issued, 0 and 4,500,000 shares outstanding at June 30, 2018 and December 31, 2017, respectively. (liquidation preference $14,750,000)		-			4,500
Common stock, $0.001 par value; 500,000,000 shares authorized, and 268,558,931 shares issued as of March 31, 2018 and December 31, 2017 and 204,256,464 and 268,558,931 shares outstanding as of March 31, 2018 and December 31, 2017, respectively.		204,257			268,559
Common stock, $0.001 par value; 500,000,000 shares authorized, 268,558,931 shares issued, 234,256,464 and 268,558,931 shares outstanding at June 30, 2018 and December 31, 2017, respectively.		234,257			268,559
Treasury Stock, 3,137,500 and 0 Series A-1 Convertible Preferred Stock, $0.01 par value, 4,500,000 and 0 Series C Convertible Preferred Stock, $0.001 par value and 64,302,467 and 0 Common Stock $0.001 par value, as of March 31, 2018 and December 31, 2017, respectively).		(8,428,060	)		-
Treasury Stock		(8,428,060	)		-
Additional paid-in-capital		28,~~053~~139,~~296~~964			27,403,296
Accumulated deficit		(19,~~298~~601,~~484~~039	)		(19,114,333	)
Total Stockholders' Equity		~~531~~345,~~049~~162			8,565,200
Total Liabilities and Stockholders' Equity	$	~~663~~403,~~199~~654		$	8,634,901

See notes to the unaudited condensed consolidated financial statements

F- 1

PLEDGE PETROLEUM CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

	Three months ended			Three months ended
	Three months			Three months			Six months			Six months
	March 31			March 31
	ended			ended			ended			ended
	2018			2017
	June 30			June 30			June 30			June 30
Net Revenue	$	-		$	-
	2018			2017			2018			2017
Cost of Goods Sold		-			-
Net Revenue	$	-		$	25,000		$	-		$	25,000
Gross Profit		-			-
Cost of Goods Sold		-			-			-			-
Sales and Marketing		1,497			1,497
Gross Profit		-			25,000			-			25,000
Professional fees		116,691			67,381
Sales and Marketing		1,497			1,497			2,994			2,994
Consulting fees		8,260			19,131
Professional fees		41,824			83,606			158,515			148,361
General and administrative		71,200			120,867
Consulting fees		64,890			8,305			73,150			27,436
Depreciation, amortization and impairment charges		1,262			1,555
General and administrative		193,084			46,991			264,284			170,482
Total Expense		198,910			210,431
Depreciation, amortization and impairment charges		1,263			1,311			2,525			2,866
Loss from Operations		(198,910	)		(210,431	)
Total Expense		302,558			141,710			501,468			352,139
Other income		14,658			-
Loss from Operations		(302,558	)		(116,710	)		(501,468	)		(327,139	)
Finance costs		101			(15	)
Other income		-			-			14,658			-
Loss before Provision for Income Taxes		(184,151	)		(210,446	)
Finance costs		4			59			105			44
Provision for Income Taxes		-			-
Loss before Provision for Income Taxes		(302,554	)		(116,651	)		(486,705	)		(327,095	)
Net loss	$	(184,151	)	$	(210,446	)
Provision for Income Taxes		-			-			-			-
Undeclared Series B and Series C Preferred stock dividends		(8,877	)		(154,356	)
Net loss		(302,554	)		(116,651	)		(486,705	)		(327,095	)
Net loss available to common stock holders	$	(193,028	)	$	(364,802	)
Undeclared Series B and Series C Preferred stock dividends		(8,975	)		(156,071	)		(17,852	)		(310,427	)
Net Loss Per Share - Basic and Diluted	$	-		$	-
Net loss available to common stock holders	$	(311,529	)	$	(272,722	)	$	(504,557	)	$	(637,522	)
Weighted Average Number of Shares Outstanding -
Net Loss Per Share - Basic and Diluted	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)
Basic and Diluted		262,843,156			268,558,931
Weighted Average Number of Shares Outstanding - Basic and Diluted		210,739,980			268,558,931			236,647,637			268,558,931

See notes to the unaudited condensed consolidated financial statements

F- 2

PLEDGE PETROLEUM CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Three months ended			Three months ended
	Six months			Six months
	March 30			March 30
	ended			ended
	June 30			June 30
	2018			2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(~~184~~486,~~151~~705	)	$	(~~210~~327,~~446~~095	)
Adjustment to reconcile net loss to net cash used in operating activities:
Depreciation expense		12,~~262~~525			12,~~555~~866
Equity based compensation charge		-			18,066
Deposit forfeited					6,968
Equity based compensation charge		116,667			18,066
Changes in Assets and Liabilities
Prepaid expenses and other current assets		89,~~607~~554			(238,~~655~~125	)
Accounts payable		469,~~875~~988			~~(20~~48,~~355~~618	)
Accrued liabilities		15(21,~~574~~198	)		(19,~~814~~815	)
Cash Used in Operating Activities		(~~111~~369,~~833~~169	)		(~~254~~278,~~649~~517	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds on disposal of plant and equipment		650,000			-
Cash provided by investing activities		650,000			-
Investment in deposit		(1,220	)		(530	)
Cash provided by (used in) investing activities		648,780			(530	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Share repurchase		(8,500,000	)		-
Cash used in financing activities		(8,500,000	)		-
NET DECREASE IN CASH		(78,~~961~~220,~~833~~389	)		(~~254~~279,~~649~~047	)
CASH, INCLUDING RESTRICTED AT BEGINNING OF PERIOD		8,599,620			9,170,286
CASH AT BEGINNING OF PERIOD		8,599,620			9,170,286
CASH AT END OF PERIOD	$	~~637~~379,~~787~~232		$	8,~~915~~891,~~637~~239
CASH PAID FOR INTEREST AND TAXES:
Cash paid for income taxes	$	-		$	-
Cash paid for interest	$	-		$	-

See notes to the unaudited condensed consolidated financial statements

F- 3

PLEDGE PETROLEUM CORP.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

ACCOUNTING POLICIES AND ESTIMATES

Basis of Presentation

The accompanying unaudited condensed financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, these unaudited condensed financial statements do not include all of the information and disclosures required by U.S. GAAP for complete financial statements. In the opinion of management, the accompanying unaudited condensed financial statements include all adjustments (consisting only of normal recurring adjustments), which we consider necessary, for a fair presentation of those financial statements. The results of operations and cash flows for the ~~three~~six months ended ~~March~~June 3130, 2018 may not necessarily be indicative of results that ~~may~~ may be expected for any succeeding quarter or for the entire fiscal year. The information contained in this quarterly report on ~~Form~~ Form 10-Q should be read in conjunction with our audited financial statements included in our annual report on Form 10-K as of and for the year ended December 31, 2017 as filed with the Securities and Exchange Commission (the “SEC”).

Significant accounting policies are described in Note 2 to the consolidated financial statements included in Item 8 of our annual report on Form 10-K as of December 31, 2017.

The preparation of unaudited consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions, which are evaluated on an ongoing basis, that affect the amounts reported in the unaudited consolidated financial statements and accompanying notes. Management bases its estimates on historical experience and on various other assumptions that it believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the amounts of revenues and expenses that are not readily apparent from other sources. Actual results could differ from those estimates and judgments. In particular, significant estimates and judgments include those related to: the estimated useful lives for plant and equipment, the fair value of warrants and stock options granted for services or compensation, estimates of the probability and potential magnitude of contingent liabilities, derivative liabilities, the valuation allowance for deferred tax assets due to continuing operating losses, those related to revenue recognition and the allowance for doubtful accounts.

Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the unaudited consolidated financial statements, which management considered in formulating its estimate could change in the near-term due to one or more future confirming events. Accordingly, the actual results could differ significantly from our estimates.

All amounts referred to in the notes to the unaudited consolidated financial statements are in United States Dollars ($) unless stated otherwise.

Principles of Consolidation

The unaudited consolidated financial statements include the financial statements of the Company and its subsidiaries in which it has a majority voting interest. All significant inter-company accounts and transactions have been eliminated in the unaudited consolidated financial statements. The entities included in these unaudited consolidated financial statements are as follows:

Pledge Petroleum Corp – Parent Company

~~Novas~~Nova’s Energy USA Inc. (wholly owned).

F- 4

PLEDGE PETROLEUM CORP.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

ACCOUNTING POLICIES AND ESTIMATES (continued)

Recent Accounting Pronouncements

In ~~February~~June 2018, the FASB issued ASU 2018-207, ~~Income~~Compensation—Stock ~~Statement-~~Compensation ~~Reporting Comprehensive Income~~ (Topic ~~220~~718), ~~Reclassification~~Improvements ofto ~~certain~~Nonemployee ~~tax~~Share-Based ~~effects~~Payment ~~from accumulated other comprehensive income~~Accounting.

The amendments in this Update ~~allow~~ aexpand ~~reclassification~~the ~~from~~scope ~~accumulated~~of ~~other~~Topic ~~comprehensive~~718 ~~income~~ to ~~retained~~include ~~earnings~~share-based payment transactions for ~~stranded~~acquiring ~~tax~~goods ~~effects~~and ~~resulting~~services from ~~the~~nonemployees. An ~~Tax~~entity ~~Cuts~~should ~~and~~apply ~~Jobs~~the ~~Act.~~requirements ~~Consequently,~~of ~~the~~Topic ~~amendments~~718 ~~eliminate~~to ~~the~~nonemployee ~~stranded~~awards ~~tax~~except ~~effects~~for ~~resulting~~specific ~~from~~guidance ~~the~~on ~~Tax~~inputs ~~Cuts~~to ~~and~~an ~~Jobs~~option ~~Act~~pricing model and ~~will~~the ~~improve~~attribution of cost (that is, the ~~usefulness~~period of ~~information~~time ~~reported~~over towhich ~~financial~~share-based ~~statement~~payment ~~users.~~awards ~~However,~~vest ~~because~~and the pattern of cost recognition over that period). The amendments ~~only~~specify ~~relate~~that Topic 718 applies to all share-based payment transactions in which a grantor acquires goods or services to ~~the~~be ~~reclassification~~used ofor ~~the~~consumed ~~income~~in ~~tax~~a ~~effects~~grantor’s ofown ~~the~~operations ~~Tax~~by ~~Cuts~~issuing ~~and~~share-based ~~Jobs~~payment ~~Act,~~awards. The ~~the~~amendments ~~underlying~~also ~~guidance~~clarify that ~~requires~~Topic ~~that~~718 ~~the effect~~does ofnot aapply ~~change~~to inshare-based ~~tax~~payments ~~laws~~used to effectively provide (1) financing to the issuer or ~~rates~~(2) beawards ~~included~~granted in ~~income~~conjunction ~~from~~with ~~continuing~~selling ~~operations~~goods isor ~~not~~services ~~affected.~~to ~~The~~customers ~~amendments~~as inpart ~~this Update~~of ~~also~~a ~~require~~contract ~~certain~~accounted ~~disclosures~~for under ~~about~~Topic ~~stranded~~606, ~~tax~~Revenue ~~effects~~from Contracts with Customers.

The amendments in this Update ~~are~~ are effective for ~~all~~public business entities for fiscal years beginning after December 15, 2018, ~~and~~including interim periods within that ~~those~~ fiscal ~~years~~year. ~~Early adoption~~For ofall ~~the~~other ~~amendments in this Update is permitted~~entities, ~~including~~the ~~adoption~~amendments inare ~~any~~effective ~~interim period, (1)~~ for ~~public~~fiscal ~~business~~years ~~entities for~~beginning ~~reporting~~after ~~periods~~December ~~for~~15, ~~which~~2019, ~~financial statements have not yet been issued~~ and interim ~~(2) for all other entities for reporting~~ periods ~~for~~ ~~which~~within ~~financial~~fiscal ~~statements~~years ~~have~~beginning ~~not~~after ~~yet~~December ~~been~~15, ~~made available for issuance~~2020. ~~The~~Early ~~amendments~~adoption inis ~~this~~permitted, ~~Update~~but ~~should~~no beearlier ~~applied~~than ~~either in~~an ~~the period of~~ entity’s adoption ordate ~~retrospectively to each period (or periods) in which the effect~~ of ~~the~~Topic ~~change in the U~~606.~~S. federal corporate income tax rate in the Tax Cuts and Jobs Act is recognized.~~

The impact of this ASU ~~will have~~ on ~~the~~ the Company’s ~~consolidated~~ financial statements ~~will~~is benot aexpected ~~reduction~~to inbe ~~the tax effect of net operating losses carried forward~~material.

In ~~March~~July 2018, the FASB issued ASU 2018-511, ~~Income~~Leases ~~Taxes~~ (Topic ~~740~~842) ~~Amendments~~Targeted ~~to SEC paragraphs pursuant to SEC Staff Accounting Bulletin No~~Improvements. ~~118~~

~~These~~The amendments ~~affect~~in this Update provide entities with an additional (and optional) transition method to adopt the ~~wording~~new leases standard. Under this new transition ofmethod, ~~SEC~~an ~~paragraphs~~entity ininitially applies the ~~accounting~~new leases standard ~~codification~~at ~~dealing~~the ~~with~~adoption ~~Income~~date ~~Taxes~~and ~~(Topic~~recognizes ~~740)~~a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption consistent with preparers’ requests.

The amendments in this ~~update are~~Update provide lessors with a practical expedient, by class of underlying asset, to not ~~expected~~separate non-lease components from the associated lease component and, instead, to ~~have~~account for those components as a ~~material~~single ~~impact~~component onif the ~~Company’~~non-lease components otherwise would be accounted for under the new revenue guidance (Topic 606) and both of the following are met: 1. The timing and pattern of transfer of the non-lease component(s) ~~consolidated~~and ~~financial~~associated ~~statements~~lease component are the same. 2. The lease component, if accounted for separately, would be classified as an operating lease.

The amendments in this Update related to separating components of a contract affect the amendments in Update 2016-02, which are not yet effective but can be early adopted.

The Company is currently considering the impact this ASU will have on its financial statements.

Any new accounting standards, not disclosed above, that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the financial statements upon adoption.

F- 5

PLEDGE PETROLEUM CORP.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

ACCOUNTING POLICIES AND ESTIMATES (continued)

Use of Estimates

Contingencies

Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company’s management assesses such contingent liabilities, and such assessment inherently involves an exercise of judgment.

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, then the estimated liability would be accrued in the Company’s financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material would be disclosed. Loss contingencies considered to be remote by management are generally not disclosed unless they involve guarantees, in which case the guarantee would be disclosed.

Cash and Cash Equivalents

The Company considers all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents. At ~~March~~June 3130, 2018 and December 31, 2017, respectively, the Company had no cash equivalents.

The Company assesses credit ~~risk~~ risk associated with cash by periodically evaluating the credit quality of its primary financial institution. The balance at times ~~may~~ may exceed federally insured limits. At ~~March~~June 3130, 2018, the Company had cash balances of $~~637~~379,~~787~~232, of which $~~370~~79,~~300~~435 are not covered by the federally insured limits.

F- 6

PLEDGE PETROLEUM CORP.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

ACCOUNTING POLICIES AND ESTIMATES (continued)

Related parties

Parties are considered to be related to the Company if the parties that, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company, or own in aggregate, on a fully diluted basis 5% or more of the Company’s stock. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. The Company discloses all related party transactions. All transactions are recorded at fair value of the goods or services exchanged. Property purchased from a related party is recorded at the cost to the related party and any payment to or on behalf of the related party in excess of the cost is reflected as a distribution to related party.

GOING CONCERN

The Company has cash balances of of $~~637~~379,~~787~~232 as of ~~March~~June 3130, 2018, which is not sufficient to meet current expenses for at least the next twelve month period. On ~~March~~ March 23, 2018, after obtaining approval of the majority shareholder and the majority of the minority of the shareholders the Company sold substantially all of its assets for $650,000 and simultaneously therewith the entire shareholding of the majority shareholder, Ervington, was purchased by the Company for gross proceeds of $8,500,000. The ability of the Company to conclude an acquisition based on current cash balances and continue as a going concern is uncertain.

43 PREPAID EXPENSES

Prepaid expenses consisted of the following:

	March 31, 2018		December 31, 2017
	June 30, 2018		December 31, 2017
Prepaid insurance	$	1613,~~376~~762	$	22,483
Prepaid professional fees		~~833~~2,500		3,333
	$	1716,~~209~~262	$	25,816

~~F-7~~4 PLANT AND EQUIPMENT

PLEDGE PETROLEUM CORP.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

5 PLANT AND EQUIPMENT

Plant and Equipment consisted of the following:

	March 31, 2018							December 31, 2017
	June 30, 2018							December 31, 2017
	Cost		Accumulated depreciation			Net book value		Net book value
Furniture and equipment		6,700		(23,~~791~~127	)		3,~~909~~573		4,243
Computer equipment		11,130		(78,~~366~~293	)		32,~~764~~837		4,692
	$	17,830	$	(1011,~~157~~420	)	$	76,~~673~~410	$	8,935

Depreciation expense was $1,~~262 and~~263 and $1,~~555~~311 for the three months ended ~~March~~June 30, 2018 and 2017, respectively, and $2,525 and $2,866 for the six months ended June 30, 2018 and 2017, respectively.

On March 23, 2018, the Company concluded an Asset Purchase Agreement with an affiliate (the “Purchaser”) of Ervington Investment Limited, the previous holder of a majority of the Company’s outstanding voting securities, pursuant to which the Company sold to the Purchaser substantially all of its assets, including all pertinent intellectual property rights, comprising its business of implementing its plasma pulse technology, for $650,000 (the “Asset Sale”).

The Asset Sale is to a related party and the profit realized of $650,000 was credited to additional paid in capital.

6F- ~~ACCRUED LIABILITIES AND OTHER PAYABLES~~7

Accrued liabilities consisted of the following:

	March 31, 2018		December 31, 2017
Royalties Payable	$	-	$	14,653
Other		43,426		13,199
	$	43,426	$	27,852

F-8

PLEDGE PETROLEUM CORP.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

75 ~~STOCKHOLDERS’~~ACCRUED ~~EQUITY~~EXPENSES AND OTHER PAYABLES

Accrued expenses and other payables consisted of the following:

	June 30, 2018		December 31, 2017

Royalties Payable	$	-	$	14,653
Other		6,654		13,199
	$	6,654	$	27,852

STOCKHOLDERS’ EQUITY

Common stock

The Company has authorized 500,000,000 common shares with a par value of $0.001 each. The Company has issued 298,558,931 and 268,558,931 shares of common stock as of June ~~March 31~~30, 2018 and December 31, 2017 respectively, and has outstanding ~~204~~234,256,464 and 268,558,931 shares of common stock as of June ~~March 31~~30, 2018 and December 31, 2017, respectively.

On March 23, 2018, the Company concluded an Asset Sale agreement as discussed in note 5 above, simultaneously with the Asset Sale Agreement, the Company concluded a Share Repurchase Agreement with Ervington to repurchase all of the outstanding securities held by Ervington for $8,500,000 (the “Share Repurchase”). The repurchase constituted a change of control. Upon conclusion of the Repurchase Agreement, Ivan Persiyanov, resigned from all positions he holds as an officer and director of the Company and its subsidiaries. After the completion of the Asset Sale, the Company ceased all activities related to its existing business while evaluating other business opportunities, which include potentially acquiring a technology and oilfield services business, of which two of the Company’s current directors (Messrs. Huemoeller and Zotos) own a minority equity interest. The Company has not entered into an agreement with any potential acquisition candidate and has only been in the early stages of discussion.

In terms of the above, the Company repurchased 64,302,467 shares of common stock from Ervington, which shares are being retained as treasury shares.

NoOn ~~shares~~May ~~were~~2, 2018 the Company issued 30,000,000 ~~during~~restricted shares of common stock to the ~~current~~directors ~~period~~of the Company as compensation for services rendered. These shares vest as to one third immediately, one third on May 2, 2019 and one third on May 2, 2020.

The restricted stock granted and exercisable at June 30, 2018 is as follows:

		Restricted Stock Granted			Restricted Stock Vested
Grant date price		Number granted	Weighted average exercise price		Number vested	Weighted average exercise price

$	0.01	30,000,000	$	0.01	30,000,000	$	0.01

The Company recorded an expense of $116,667 and $0 for the three and six months ended June 30, 2018 and 2017, respectively, related to the restricted stock options granted to the directors.

Preferred stock

The Company has 10,000,000 authorized preferred shares with a par value of $0.001 each, with 5,000,000 preferred shares designated as Series A-1 Convertible Preferred Stock (“Series A-1 Shares”), 500,000 preferred shares designated as Series B Preferred Stock and 4,500,000 preferred shares designated as Series C Preferred Stock.

In terms of the Share Repurchase Agreement entered into, discussed above, the Company repurchased 3,137,500 shares of Series A-1 Preferred Stock and 4,500,000 shares of Series C Preferred Stock from Ervington, which shares are being retained as treasury shares.

Series A-1 Convertible Preferred Stock

The Company has designated 5,000,000 preferred shares as Series A-1 Convertible Preferred Stock (“Series A-1 Shares”), with 3,137,500 shares of Series A-1 Stock issued as of ~~March 31~~June 30, 2018 and December 31, 2017, and has outstanding 0 and 3,137,500 shares of Series A-1 Stock as of ~~March~~June 3130, 2018 and December 31, 2017, respectively.

F-9 8

PLEDGE PETROLEUM CORP.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

76 STOCKHOLDERS’ EQUITY (continued)

Preferred stock (continued)

ii)

Series B Convertible Preferred Stock

The Company has designated 500,000 preferred shares as Series B Convertible Preferred Stock (“Series B Shares”), with 40,000 Series B Shares issued and outstanding as of ~~March~~June 3130, 2018 and December 31, 2017, which are convertible into 4,000,000 shares of common stock.

The rights, privileges and preferences of the Series B Shares are summarized as follows:

Conversion

The holders of the Series B Preferred Shares ~~shall~~ have conversion rights as follows:

(a)

Each share of the Series B Shares is convertible at any time prior to the issuance of a redemption notice by the Company into such number of shares of Common Stock by dividing the Stated value ($10) of the Series B Shares by $0.10 and is subject to adjustment for dividends or distributions made in common stock, the issue of securities convertible into common stock, stock splits, reverse stock splits, or reclassifications of common stock. No adjustments will be made to the conversion rights or conversion price for any reorganization other than to be entitled to receive the same benefits as if the shares were converted immediately prior to such reorganization. No conversion will take place if the holder of the Series B Shares will beneficially own in excess of 4.99% of the shares of Common Stock outstanding immediately after conversion. As of the date hereof, each Series B Share converts into 100 shares of common stock.

(b)

The conversion right of the holders of Series B Shares are exercised by the surrender of the certificates representing shares to be converted to the Company, accompanied by written notice electing conversion.

(c)

No fractional shares of Common Stock or script will be issued upon conversion of Series B Shares. The Company will pay a cash adjustment in respect to such fractional interest based upon the fair value of a share of Common Stock, as determined in good faith by the Company’s Board of Directors.

(d) All shares of Common Stock issued upon conversion of Series B Shares will upon issuance be validly issued, fully paid and non-assessable. All certificates representing Series B Shares surrendered for conversion ~~shall~~will be appropriately ~~canceled~~cancelled on the books of the Company and the shares so converted represented by such certificates ~~shall~~will be restored to the status of authorized but unissued shares of preferred stock of the Company.

Company Redemption

The Company has the right, at any time after the date the Series B Shares have been issued, to redeem all or a portion of any Holder's Series B Shares at a price per Series B Share equal to the issue price per Series B Share multiplied by 120%

Voting Rights

Each holder of Series B Shares is entitled to vote on all matters submitted to a vote of the stockholders of the Company and is entitled to votes equal to the number of shares of Common Stock into which Series B Shares could be converted, and the holders of shares of Series B Shares and Common Stock ~~shall~~will vote together as a single class on all matters submitted to the stockholders of the Company.

F-10 9

PLEDGE PETROLEUM CORP.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

76 STOCKHOLDERS’ EQUITY (continued)

Preferred stock (continued)

ii)

Series B Convertible Preferred Stock (continued)

Dividends

(a)

The holders of the Series B Shares are entitled to receive cumulative dividends at the rate of eight percent per annum of the issue price per share, accrued daily and payable annually in arrears on December 31st of each year (“Dividend Date”). Such dividends accrue on any given share from the day of original issuance of such share. Such dividends are cumulative, whether or not declared by the Board of Directors, but are non-compounding.

(b)

Any dividend payable on a dividend payment date may be paid, at the option of the Company, either (i) in cash or (ii) in shares of common stock at an issue price of $0.10 per common share.

(c)

Nothing contained herein is deemed to establish or require any payment or other charges in excess of the maximum permitted by applicable law.

(d)

In the event that pursuant to applicable law or contract the Company is prohibited or restricted from paying in cash the full dividends to which the holders of the Series B Shares are entitled, the cash amount available pursuant to applicable law or contract will be distributed among the holders of the Series B Shares ratably in proportion to the full amounts to which they would otherwise be entitled and any remaining amount due to holders of the Series B Shares will be payable in cash.

Liquidation Preference

In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, the holders of the Series B Shares are entitled to receive, prior and in preference to any distribution of any assets of the Company to the holders of any other preferred stock of the Company and subordinate to any distribution to the Series A-1 Shares, and prior and in preference to any distribution of any assets of the Company to the holders of the Common Stock, the amount of 120% of the issue price per share. In addition, the Series B holder has agreed to vote to subordinate the series B Preferred stock liquidation preferences to the Series C Preferred stock preferences.

No Circumvention

The Company may not amend its certificate of incorporation, or participate in any reorganization, sale or transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action for the purpose of avoiding or seeking to avoid the observance or performance of any of the terms to be observed or performed by the Company.

The Company has undeclared dividends on the Series B Preferred stock amounting to $~~172~~181,~~504~~479 as of ~~March~~June 3130, 2018. If the dividends are paid in stock, the beneficial ~~conversion~~ conversion feature of these undeclared dividends will be recorded upon the declaration of these dividends. The computation of loss per common share for the ~~three~~six months ended ~~March~~June 3130, 2018 takes into account these undeclared dividends.

F-11 10

PLEDGE PETROLEUM CORP.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

76 STOCKHOLDERS’ EQUITY (continued)

Preferred stock (continued)

iii)

Series C Convertible Preferred Stock

The Company has designated 4,500,000 preferred shares as Series C Convertible Preferred Stock (“Series C Shares”), with 4,500,000 shares of Series C Stock issued as of ~~March~~June 3130, 2018 and December 31, 2017, and 0 and 4,500,000 shares of Series C Stock outstanding as of ~~March~~June 3130, 2018 and December 31, 2017, respectively.

Stock Options

The Company’s Board of Directors approved the Company’s 2008 Stock Option Plan (the “Stock Plan”) for the issuance of up to 5,000,000 shares of common stock to be granted through incentive stock options, nonqualified stock options, stock appreciation rights, dividend equivalent rights, restricted stock, restricted stock units and other stock-based awards to officers, other employees, directors and consultants of the Company and its subsidiaries. After the reverse stock split in August 2012, a total of 100,000 shares were available for grant. Subsequent to the reverse split the Board of Directors approved an increase in the number of awards available for grant to 2,100,000 shares. The exercise price of stock options under the Stock Plan is determined by the Board of Directors, and may be equal to or greater than the fair market value of the Company’s common stock on the date the option is granted. Options become exercisable over various periods from the date of grant, and generally expire ten years after the grant date.

At ~~March~~June 3130, 2018 and December 31, 2017 there were 380,950 Plan options issued, and 342,854 and 380,950 outstanding, respectively, under the Stock Option Plan.

The vesting provisions for these stock options are determined by the board of directors at the time of grant, there are no unvested options outstanding as of ~~March~~June 3130, 2018.

No options were issued during ~~the~~ ~~three~~the six months ended ~~March~~June 3130, 2018 and the year ended December 31, 2017.

In the event of the employees’ termination, the Company will cease to recognize compensation expense.

A summary of all of our option activity during the period January 1, 2017 to ~~March~~June 3130, 2018 is as follows:

	No. of shares			Exercise price per share		Weighted average exercise price
Outstanding January 1, 2017		3,380,950		$	0.08 to $13.50	$	0.18
Granted – non-plan options		-			-		-
Forfeited/cancelled		(3,000,000	)	$	0.08		0.08
Exercised		-			-		-
Outstanding December 31, 2017		380,950		$	0.08 to $13.50	$	0.90
Granted - non-plan options		-			-		-
Forfeited/cancelled		-(38,096	)		-0.63		-
Exercised		-			-		-
Outstanding March 31, 2018		380,950		$	0.51 to $13.50	$	0.90
Outstanding June 30, 2018		342,854		$	0.51 to $13.50	$	0.93

Stock options outstanding as of ~~March~~of 31June 30, 2018 and December 31, 2017 as disclosed in the above table, have an intrinsic value of $0 and $0, respectively.

F-12 11

PLEDGE PETROLEUM CORP.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

76 STOCKHOLDERS’ EQUITY (continued)

Stock Options (continued)

The options outstanding and exercisable at ~~March~~June 3130, 2018 are as follows:

		Options outstanding						Options exercisable
Exercise price		No. of shares		Weighted average remaining years		Weighted average exercise price		No. of shares		Weighted average exercise price
$	13.50		3,480		10.2196				3,480
$	12.50		2,000		2.5328				2,000
$	8.50		500		3.2500				500
$	5.00		14,800		3.5429				14,800
$	0.65		36,924		54.0075				36,924
$	0.6351		38285,~~096~~150		01.2579				38285,~~096~~150
$	0.51		285,150		2.04				285,150
			342,854		2.17		0.93		342,854		0.93
			380,950		2.20		0.90		380,950		0.90

The Company has recorded an ~~expense~~ expense of $0 and $18,066 for the ~~three~~six months ended ~~March~~June 3130, 2018 and 2017, respectively relating to options issued.

Warrants

The warrants outstanding and exercisable at ~~March 31,~~June 30, 2018 are as follows:

		Warrants outstanding						Warrants exercisable
Exercise price		No. of shares		Weighted average remaining years		Weighted average exercise price		No. of shares		Weighted average exercise price
$	0.30		375,000		0.5833				375,000
$	0.25		1,751,667		10.2499				1,751,667
$	0.15		525,500		10.2499				525,500
$	0.25		1,508,333		1.3409				1,508,333
$	0.15		577,499		1.3510				577,499
$	0.25		968,166		1.3510				968,166
$	0.25		633,333		1.4015				633,333
			6,339,498		1.2702		0.24		6,339,498		0.24

The warrants outstanding have an intrinsic value of $0 and $0 as of ~~March~~June 3130, 2018 and December 31, 2017, respectively.

F-13 12

PLEDGE PETROLEUM CORP.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

87 NET LOSS PER SHARE

Basic loss per share is based on on the weighted-average number of common shares outstanding during each period. Diluted loss per share is based on basic shares as as determined above plus common stock equivalents, including convertible preferred shares and convertible notes as well as the ~~incremental~~ incremental shares that would be issued upon the assumed exercise of in-the-money stock options using the treasury stock method. The computation of diluted net loss per share does not assume the issuance of common shares that have an anti-dilutive effect on net loss per share. For the three months and six months ended ~~March~~June 3130, 2018 and 2017, all stock options, unvested restricted stock awards, warrants, convertible preferred stock and convertible notes were excluded from the computation of diluted net loss per share. Dilutive shares which could exist pursuant to the exercise of outstanding stock instruments and which were not included in the calculation because their affect would have been anti-dilutive are as follows:

	Three months ended March 31, 2018		Three months ended March 31, 2017
	Three and six months ended June 30, 2018		Three and six months ended June 30, 2017
Stock options		~~380~~342,~~950~~854		1,380,950
Warrants to purchase shares of common stock		6,339,498		6,339,498
Series A-1 convertible preferred shares		-		31,375,000
Series B convertible preferred shares		4,000,000		4,000,000
Series C convertible preferred shares		-		120,000,000
		10,720,448		163,095,448
Restricted common stock		20,000,000		-
		30,682,352		162,095,448

98 RELATED PARTY TRANSACTIONS

On May 2, 2018, we issued to each of our three directors, 10,000,000 shares of restricted common stock, vesting as to 1/3 of the grant immediately, 1/3 of the grant on the one year anniversary of the grant date and 1/3 of the grant on the two year anniversary of the grant date.

109 COMMITMENTS AND CONTINGENCIES

The Company disposed of its Crystal Magic, Inc. subsidiary effective December 31, 2013. In terms of the sale agreement entered into by the Company, the purchaser has been indemnified against all liabilities whether contingent or otherwise, claimed by third parties, this includes claims by creditors of the Company amounting to $372,090 and claims against long-term liabilities of $848,916. Management does not consider it likely that these claims will materialize and accordingly no provision has been made for these contingent liabilities.

F-14 13

PLEDGE PETROLEUM CORP.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1110 SUBSEQUENT EVENTS

OnIn ~~May~~accordance 2with ASC 855-10, the Company has analyzed its operations subsequent to June 30, 2018 to the date these financial statements were issued, ~~Christopher~~and has ~~Headrick~~determined ~~was~~that ~~appointed~~it asdoes anot ~~director~~have any material subsequent events to disclose in these financial statements.

OnF- May 2, 2018, we issued to each of our three directors, 10,000,000 shares of restricted common stock, vesting as to 1/3 of the grant immediately, 1/3 of the grant on the one year anniversary of the grant date and 1/3 of the grant on the two year anniversary of the grant date.14

Other than disclosed above, in accordance with ASC 855-10, the Company has analyzed its operations subsequent to March 31, 2018 to the date these financial statements were issued, and has determined that it does not have any material subsequent events to disclose in these financial statements.

F-15

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

The following discussion and analysis is intended as a review of significant factors affecting our financial condition and results of operations for the periods indicated. The discussion should be read in conjunction with our unaudited consolidated financial statements and the notes thereto presented herein and our audited consolidated financial statements and notes thereto for the year ended December 31, 2017 and the other information set forth in our Annual Report on Form 10-K for the year ended December 31, 2017 filed with the SEC on May 31, 2018. In addition to historical information, the following Management's Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that involve risks and uncertainties. Our actual results could differ significantly from those anticipated in these forward-looking statements as a result of many factors.

Cautionary Note Regarding Forward-Looking Statements

This report and other documents that we file with the SEC contain forward-looking statements that are based on current expectations, estimates, forecasts and projections about our future performance, our business, our beliefs and our management’s assumptions. Statements that are not historical facts are forward-looking statements. Words such as “expect,” “outlook,” “forecast,” “would,” “could,” “should,” “project,” “intend,” “plan,” “continue,” “sustain”, “on track”, “believe,” “seek,” “estimate,” “anticipate,” “may,” “assume,” and variations of such words and similar expressions are often used to identify such forward-looking statements, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not guarantees of future performance and involve risks, assumptions and uncertainties, including, but not limited to, those described in this Quarterly Report on Form 10-Q and other reports that we file or furnish with the SEC. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. Accordingly, you are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they are made. Except to the extent required by law, we undertake no obligation to update publicly any forward-looking statements after the date they are made, whether as a result of new information, future events, changes in assumptions or otherwise.

Overview and Financial Condition

Recent Developments

On March 23, 2018, upon the closing of the Asset Purchase Agreement and the Share Repurchase Agreement, Ivan Persiyanov resigned as director and Chief Executive Officer of the Company and Mr. John Zotos was appointed as the Company’s interim Chief Executive Officer.

On May 2, 2018, Christopher Headrick was appointed as a director.

On May 31, 2018, Mr. Zotos was also appointed as the Company’s interim Chief Financial Officer.

Our Company

During the 2017 year, our management, at the direction of the Board of Directors, evaluated, considered, and brought forward various opportunities to acquire producing oil fields; however, an oil field meeting the criteria acceptable to the Board of Directors (which criteria include among other things, low general and administrative costs, ability to generate cash flow and ability to fully utilize the Plasma Pulse Technology (“PPT”)) had not been found. As a result, and in lieu of a potential dissolution, on March 23, 2018, we sold substantially all of our assets, including all pertinent intellectual property rights comprising our business of implementing plasma pulse technology (the “Asset Sale”), to Norma Investments Limited (“Norma”), the parent company of Ervington Investments Limited (“Ervington”), the then holder of a majority of our outstanding voting securities, for $650,000 pursuant to an Asset Purchase Agreement (the “Asset Purchase Agreement”) with Norma, dated February 12, 2018 (the “Asset Purchase Agreement”). In connection with the Asset Sale, we also repurchased all of our outstanding securities held by Ervington for $8,500,000 (the “Share Repurchase”) pursuant to a Share Purchase Agreement with Ervington, dated February 12, 2018 (the “Share Purchase Agreement”).

At this point, the Board is ~~reevaluating its~~re-evaluating its business plan and strategy and has reduced operating expenses, including staffing, in order to preserve capital, while the ~~Board~~ Board evaluates its options including the possible acquisition of a technology and an oilfield services business, of which two of our current directors own a minority equity interest .

We have financed our operations primarily ~~from~~ from sales of our securities, both debt and equity, and to a lesser extent revenue from operations and we expect to continue to ~~obtain~~ obtain required capital in a similar manner. We have incurred an accumulated deficit of $19,~~298~~601,~~484~~039 through ~~March~~June 3130, 2018 and there can be no assurance that we will be able to achieve profitability.

Management Discussion and Analysis of financial condition

Our discussion and analysis of our financial condition and results of operations are based upon our unaudited consolidated financial statement as of ~~March~~June 3130, 2018 and 2017, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of any contingent liabilities at the financial statement date and reported amounts of revenue and expenses during the reporting period. On an on-going basis we review our estimates and assumptions. Our estimates are based on our historical experience and other assumptions that we believe to be reasonable under the circumstances. Actual results are likely to differ from those estimates under different assumptions or conditions.

Results of Operations for the three ~~months~~ months ended ~~March~~June 3130, 2018 and ~~March~~June 3130, 2017

Net revenues

Net revenues were $0 and $25,000 for the three months ended ~~March~~ 31June 30, 2018 and 2017 respectively. The revenue during the prior period was derived from one well treatment in Mexico. The Company ceased substantially all operating activities during November 2016 whilst considering its future direction.

Cost of goods sold

Cost of goods sold was $0 for the three months ended ~~March~~June 3130, 2018 and 2017.

Gross profit

Gross profit was $0 and $25,000 for the three months ended ~~March~~ 31June 30, 2018 and 2017 respectively.

Total expenses

Total expenses were $~~198~~302,~~910~~558 and $~~210~~141,~~431 for~~710 for the three months ended ~~March~~June 3130, 2018 and 2017, respectively, aan ~~decrease~~increase of $11160,~~521~~848 or 5113.5%. Total expenses consisted primarily of the following:

· Professional fees were $~~116~~41,~~691~~824 and $6783,~~381~~606 for the three months ended ~~March~~June 3130, 2018 and 2017, respectively, ana ~~increase~~decrease of $4941,~~310~~782 or 7250.70%. The ~~increase~~decrease is primarily due to; (i) ana ~~increase~~decrease in legal fees of $214,~~797~~037 due to ~~legal~~a ~~activity~~reduction ~~related~~in tocorporate ~~the sale of substantially all of the assets related to the plasma pulse technology and the repurchase of the shareholding of our majority shareholder Ervington Investments, Ltd~~activity; (ii) ana ~~increase~~decrease in accounting and audit related fees of $3833,~~049~~757 due to the delay in filing our quarterly results and annual results relating to 2017; (iii) ~~an increase in SEC printing costs of $6,465; and an increase in transfer agent costs of $378 due to the proxy statement related to the sale of substantially all of our assets; offset by~~ a decrease in corporate secretarial fees of $143,~~375~~750, due the cancellation of an arrangement we had with ZotoZulu, a Company owned by our interim CEO and CFO , John Zotos; offset by an increase in SEC printing costs of $2,536.

· Consulting fees were $864,~~260~~890 and $198,~~131~~305 for the three months ended ~~March~~June 3130, 2018 and 2017, respectively, aan ~~decrease~~increase of $1056,~~871~~585 or 56681.83%. The ~~decrease~~increase is primarily due to a ~~decrease~~technical inconsultant ~~merger~~employed ~~and~~to ~~acquisition~~analyse ~~related~~potential ~~consulting~~future ~~expenses~~business ofopportunities. ~~$4,131;~~The ~~and~~prior ~~ii)~~year aexpense ~~decrease~~related ~~in finance management consulting expenses of $6,740 due~~ to ~~lower~~merger ~~activity~~and ~~during~~acquisition ~~the current period~~activity.

· General and administrative expenses were $71193,~~200~~084 and $~~120~~46,~~867~~991 for the three months ended ~~March~~June 3130, 2018 and 2017, respectively, aan ~~decrease~~increase of $49146,~~667~~093 or 41310.19%. The ~~decrease~~increase primarily consists of the following; (i) aan ~~reduction~~increase in ~~payroll~~director’s ~~expenses~~fees of $5835,~~896~~000 due to ~~the~~an ~~resignation~~arrangement ofreached with our ~~previous~~current ~~CEO,~~directors ~~Brian~~who ~~Boutte~~are onpaid ~~March~~a ~~31,~~monthly ~~2017,~~fee ~~the~~for ~~last~~services ~~full~~provided; ~~time~~(ii) ~~employee~~an increase in meals and entertainment of ~~the~~$4,520 ~~Company~~due to expenses incurred by our directors; ii(iii) aan ~~reduction~~increase in ~~rent~~travel expenses of $86,~~626~~911 due totravel ~~relocation~~expenses toincurred ~~cheaper~~by ~~premises~~our directors on corporate activity and sourcing potential new business; and ~~iii~~(iv) aan ~~reduction~~increase in stock based compensation of $18116,~~066~~667 asdue ~~all~~to ~~options~~restricted ~~are~~stock ~~either~~granted ~~vested~~to orour ~~forfeited~~three directors; offset by an(v) ~~increase~~a reduction in ~~director’s~~rent ~~fees~~ of $306,~~000~~311 due to anrelocation ~~arrangement~~to ~~reached~~cheaper ~~with~~premises; ~~our~~(vi) ~~current~~a ~~directors~~reduction ~~who~~in ~~are~~insurance ~~paid~~expense of $6,813 due to lower premiums on reduced insurance exposure; and (vii) a ~~monthly~~reduction ~~fee~~in ~~for~~franchise ~~services~~taxes ~~provided~~of $3,772.

· Depreciation, and amortization and impairment charges was $1,~~262~~263 and $1,~~555~~311 for the three months ended ~~March~~June 3130, 2018 and 2017, respectively, a decrease of $~~293~~48 or 183.87%.

Other income

Other income was $~~14,658~~0 and $0 for the three months ended ~~March~~June 3130, 2018 and 2017, respectively~~, an increase of $14,658 or 100~~.~~0%. The increase represents a reversal of a royalty expense which is no longer due.~~

Net loss

We incurred a net loss of $~~184~~302,~~151~~554 and $~~210~~116,~~446~~651, for the three months ended ~~March~~June 3130, 2018 and 2017, respectively, aan ~~decrease~~increase of $26185,~~295~~903 or 12159.54%, which consists primarily of the ~~decrease~~ increase in total expenses discussed above.

Undeclared Series B and Series C preferred stock dividends

A deemed preferred stock dividend of $8,~~877~~975 and $~~154~~156,~~356~~071 has been disclosed for the three months ended ~~March~~June 3130, 2018 and 2017. This amount represents the dividends that are due, but remain undeclared, to Series B stock holders and to Series C preferred stock holders in the prior period.

Net loss available to common stockholders

We incurred a net loss available to common stockholders of $~~193~~311,~~028~~529 and $~~364~~272,~~802~~722 for the three months ended ~~March~~June 3130, 2018 and 2017, respectively, aan ~~decrease~~increase of $~~171~~38,~~774 or~~807 47or 14.12% which consists of the various items discussed above.

~~Liquidity~~Results of Operations for the six months ended June 30, 2018 and ~~Capital~~June ~~Resources.~~30, 2017

~~Although~~Net we had cash balances of $637,787 as of March 31, 2018, we have a history of annual losses from operations since inception and we have primarily funded our operations through sales of our unregistered equity securities. We have recently disposed of substantially all of our assets for $650,000 and simultaneously therewith acquired the entire shareholding of Ervington, for gross proceeds of $8,500,000. We are actively looking to acquire businesses in a similar field which may require substantial cash.revenues

Net revenues were $0 and $25,000 for the six months ended June 30, 2018 and 2017 respectively. The revenue during the prior period was derived from one well treatment in Mexico. The Company ceased substantially all operating activities during November 2016 whilst considering its future direction.

Cost of goods sold

Cost of goods sold was $0 for the six months ended June 30, 2018 and 2017.

Gross profit

Gross profit was $0 and $25,000 for the six months ended June 30, 2018 and 2017 respectively.

Total expenses

Total expenses were $501,468 and $352,139 for the six months ended June 30, 2018 and 2017, respectively, an increase of $149,329 or 42.4%. Total expenses consisted primarily of the following:

Professional fees were $158,515 and $148,361 for the six months ended June 30, 2018 and 2017, respectively, an increase of $10,154 or 6.8%. The increase is primarily due to; (i) an increase in legal fees of $14,987 due to legal activity related to the sale of substantially all of the assets related to the plasma pulse technology and the repurchase of the shareholding of our majority shareholder Ervington Investments, Ltd; (ii) an increase in accounting and audit related fees of $4,291 and SEC printing costs of $9,001 due to the delay in filing our quarterly results and annual results relating to 2017; offset by a decrease in corporate secretarial fees of $18,125, due the cancellation of an arrangement we had with ZotoZulu, a Company owned by our interim CEO and CFO , John Zotos.

Consulting fees were $73,150 and $27,436 for the six months ended June 30, 2018 and 2017, respectively, an increase of $45,714 or 166.6%. The increase is primarily due to an increase in technical consulting fees of $58,150 due to a technical consultant employed to analyse potential future business opportunities, offset by a decrease in merger and acquisition related consulting expenses of $12,436.

General and administrative expenses were $264,284 and $170,482 for the six months ended June 30, 2018 and 2017, respectively, an increase of $93,802 or 55.0%. The increase primarily consists of the following; (i) an increase in director’s fees of $65,000 due to an arrangement reached with our current directors who are paid a monthly fee for services provided; (ii) an increase in meals and entertainment of $6,221 due to expenses incurred by our directors in seeking new business opportunities; (iii) an increase in travel expenses of $4,903 due our directors seeking new business opportunities; and (iv) an increase in stock based compensation of $98,601 due to restricted stock awards to our directors during the current period and option expense in the prior period; offset by (v) a reduction in rent of $14,937 due to relocation to cheaper premises; (vi) a reduction in insurance expense of $9,307 due to lower premiums on reduced insurance exposure; (vii) a reduction in franchise taxes of $2,768; and (viii) a reduction in salary expense of $58,896 due to the resignation of our CEO in the prior period.

Depreciation, and amortization and impairment charges was $2,525 and $2,866 for the six months ended June 30, 2018 and 2017, respectively, a decrease of $341 or11.9%.

Other income

Other income was $14,658 and $0 for the six months ended June 30, 2018 and 2017, respectively, an increase of $14,658 or 100.0%. The increase represents a reversal of a royalty expense which is no longer due.

Net loss

We incurred a net loss of $486,705 and $327,095, for the six months ended June 30, 2018 and 2017, respectively, an increase of $159,610 or 48.8%, which consists primarily of the increase in total expenses discussed above.

Undeclared Series B and Series C preferred stock dividends

A deemed preferred stock dividend of $17,852 and $310,427 has been disclosed for the six months ended June 30, 2018 and 2017. This amount represents the dividends that are due, but remain undeclared, to Series B stock holders and Series C preferred stock holders in the prior period.

Net loss available to common stockholders

We incurred a net loss available to common stockholders of $504,557 and $637,522 for the six months ended June 30, 2018 and 2017, respectively, a decrease of $132,965 or 20.9% which consists of the various items discussed above.

Liquidity and Capital Resources

Although we had cash balances of $379,232 as of June 30, 2018, we have a history of annual losses from operations since inception and we have primarily funded our operations through sales of our unregistered equity securities. We have recently disposed of substantially all of our assets for $650,000 and simultaneously therewith acquired the entire shareholding of Ervington, for gross proceeds of $8,500,000. We are actively looking to acquire businesses in a similar field which may require substantial cash.

To date, our primary sources of cash have been funds raised from the sale of our securities and the issuance of convertible and non-convertible debt. No additional funds were raised during the current financial period.

We have incurred an accumulated deficit of of $19,~~298~~601,~~484~~039 through ~~March~~June 3130, 2018 and incurred a negative cash flow from operations of $~~111~~369,~~833~~169 for the ~~three~~six months ended ~~March~~June 3130, 2018.

Off Balance Sheet Arrangements

There are no off balance sheet arrangements.

Item 3. Quantitative and Qualitative Disclosures About Market Risks

None.

Item 4. Controls and Procedures

(a)

Evaluation of disclosure controls and procedures

Pursuant to Rule 13a-15(b) under the Securities Exchange Act of 1934 (“Exchange Act”), the Company carried out an evaluation, with the participation of the Company’s management, including the Company’s interim Chief Executive Officer (“CEO”), who also serves as our interim principal financial and accounting officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined under Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based upon that evaluation, the Company’s interim CEO who also serves as our interim principal financial and accounting officer concluded that due to a lack of segregation of duties and insufficient controls over review and accounting for certain complex transactions, that the Company’s disclosure controls and procedures as of ~~March~~June 3130, 2018 were not effective to ensure that information required to be disclosed by the Company in the reports that the Company files or submits under the Exchange Act, was recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s interim CEO, as appropriate, to allow timely decisions regarding required disclosure. Once we acquire a new business, we intend to retain additional individuals to remedy the ineffective controls. However, we cannot assure you that our internal control over financial reporting, as modified, will enable us to identify or avoid material weaknesses in the future.

(b)

Changes in Internal Control over Financial Reporting

There has been no change in ~~our~~ our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) that occurred ~~during~~ during our fiscal quarter ended ~~March~~June 3130, 2018 that has materially affected, or is reasonably likely to materially affect, our ~~internal~~ internal control over financial reporting.

Part II. OTHER INFORMATION

Item 1. Legal Proceedings

None.

Item 1A. Risk Factors

As a smaller reporting company, we are not required to provide Risk Factors.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds for the ~~three~~six months ended ~~March~~June 3130, 2018

None.

Item 3. Defaults upon senior Securities

None.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

None.

Item 6. Exhibits

Regulation Number		Exhibit
31.1		Certification of the Chief Executive Officer, Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification of the Chief Financial Officer, Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
32.2		Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted 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 Extension Presentation Linkbase Document

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.

DATE: June 12, 2018	PLEDGE PETROLEUM CORP.
DATE: August 14, 2018	PLEDGE PETROLEUM CORP.
	(Registrant)
	By:	/s/ John Zotos
		John Zotos, Interim President and interim Chief Executive Officer and interim Chief Financial Officer
		(Principal Executive Officer and Principal Financial Officer)

Filing Compare · PLEDGE PETROLEUM CORP