Zargon Oil & Gas Ltd ZARFF

RE:ZAR's new Presentation with the 10 "drill-ready" locations

[rad10]

(e) Going Concern: These financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. As of September 30, 2018, the Company has working capital of $1.17 million and generated a net loss for the nine months ended September 30, 2018 of $6.66 million. The Company has obligations to pay $1.68 million in interest payments on the convertible debentures on March 31 and September 30 of 2019, respectively. The recent increase in the differential between world oil price benchmarks and the Company field prices received for oil has resulted in the Company projections on cash flows over the next six months to have deteriorated. As a result, there is material uncertainty related to future events that may cast substantial doubt on the Company’s ability to continue as a going concern and therefore, it may be unable to realize its assets and discharge its liabilities in the normal course of business. The continuation of the Company as a going concern is dependent upon the occurrence of all or some of these future events: actual prices exceeding the current estimates in the coming six months, accessing additional capital, negotiating changes in the terms of the convertible debentures, or other unforeseen events. These financial statements do not reflect adjustments that would be necessary if the going concern assumption were not appropriate. If the going concern basis were not appropriate for these financial statements, then adjustments would be necessary in the carrying value of the assets and liabilities, the reported revenues and expenses, and the balance sheet classifications used. These adjustments could be material.