UNITED
STATES

SECURITIES
AND EXCHANGE COMMISSION

WASHINGTON, DC 20549












FORM
10-Q/A

(Amendment No. 1)












| | x | QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
| | - | ----------------------------------------------------------------------------------------



For the quarterly period ended March
31, 2016



or



| |  ̈ | TRANSITION
REPORTS PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
| | - | ------------------------------------------------------------------------------------------



For the transition period from _____________to
_____________



Commission File Number: 333-190836












FOOTHILLS
EXPLORATION, INC.

(Exact name of registrant as specified
in its charter)










|Delaware
        (State or other jurisdiction of
        incorporation or organization) |  | 27-3439423
        (IRS Employer
        Identification No.)
|--------------------------------------------------------------------------------------- |  | ------------------------------------------------------------



633 17th Street, Suite 1700-A

Denver, Colorado 80202

(720) 449-7478

(Address, including zip code, and telephone
number, including area code, of registrant’s principal executive offices)










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. YesxNo ̈



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). YesxNo ̈



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 |  ̈ |                                               | Accelerated filer         |  ̈
|----------------------- | - | --------------------------------------------- | ------------------------- | -
|                        |   |                                               |                           |  
|Non-accelerated filer   |  ̈ | (Do not check if a smaller reporting company) | Smaller reporting company | x



|Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2) | Yes ̈ | Nox
|-------------------------------------------------------------------------------------------------------- | ---- | ---



As
of September 15, 2016, the registrant had 11,536,278 shares of common stock outstanding.




















TABLE OF CONTENTS





|Explanatory Note               | i                                                                                            
|------------------------------ | ---------------------------------------------------------------------------------------------
|                               |                                                                                              
|PART I – FINANCIAL INFORMATION | 3                                                                                            
|                               |                                                                                              
|                               | Item 1. Financial Statements                                                                 
|                               |                                                                                              
|                               | Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
|                               |                                                                                              
|                               | Item 3. Quantitative and Qualitative Analysis About Market Risk                              
|                               |                                                                                              
|                               | Item 4. Controls and Procedures                                                              
|                               |                                                                                              
|PART II – OTHER INFORMATION    | 22                                                                                           
|                               |                                                                                              
|                               | Item 1. Legal Proceedings                                                                    
|                               |                                                                                              
|                               | Item 1A. Risk Factors                                                                        
|                               |                                                                                              
|                               | Item 2. Unregistered Sales of Equity Securities and Use of Proceeds                          
|                               |                                                                                              
|                               | Item 3. Defaults Upon Senior Securities                                                      
|                               |                                                                                              
|                               | Item 4. Mine Safety Disclosures                                                              
|                               |                                                                                              
|                               | Item 5. Other Information                                                                    
|                               |                                                                                              
|                               | Item 6. Exhibits                                                                             
|                               |                                                                                              
|Signatures                     | 24                                                                                           





2







EXPLANATORY NOTE



Foothills Exploration Inc., formerly
known as Key Link Assets Corp. (the “Company”), is filing this Amendment No. 1 to Form 10-Q/A (the
“Amendment”) for the purpose of re-filing Exhibits 31.1 and 31.2 as well as Exhibit 32.1, to reflect, as
appropriate, the signed certifications of B.P. Allaire, in his capacity as Chief Executive Officer and in his capacity as
Chief Financial and Accounting Officer. The certifications included with the original Form 10-Q filed with the Securities and
Exchange Commission on May 12, 2016 (the “Original Filing”) were executed solely by Shawn Clark, the
Company’s then interim chief financial officer and director. Mr. Clark resigned his positions with the Company in
September 2016.



Except as described above, no other
information in the Form 10-Q has been changed or updated and this Amendment to the Form 10-Q continues to speak as of the date
of the Original Filing. This Amendment is part of the Original Filing and should be read in conjunction with the Form 10-Q. Other
events occurring after the Original Filing date or other disclosures necessary to reflect subsequent events have been or will be
addressed in other reports filed with or furnished to the SEC subsequent to the date of the Original Filing.



i







PART I - FINANCIAL INFORMATION



Item 1. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA



FOOTHILLS EXPLORATION, INC.

Condensed Consolidated Balance Sheets





|                                                                                                                                     |  | June 30, |             |   | December 31, |  
|------------------------------------------------------------------------------------------------------------------------------------ |  | -------- | ----------- | - | ------------ | -
|                                                                                                                                     |  | 2016     |             |   | 2015         |  
|Assets                                                                                                                               |  |          | (Unaudited) |   |              |  
|Current Assets                                                                                                                       |  |          |             |   |              |  
|Cash and cash equivalents                                                                                                            |  | $        | 87,150      |   |              | $
|Prepaid expenses                                                                                                                     |  |          | 7,144       |   |              |  
|Total Current Assets                                                                                                                 |  |          | 94,294      |   |              |  
|Restricted cash                                                                                                                      |  |          | -           |   |              |  
|Oil and gas properties                                                                                                               |  |          | 105,672     |   |              |  
|Total Assets                                                                                                                         |  | $        | 199,966     |   |              | $
|                                                                                                                                     |  |          |             |   |              |  
|Liabilities and Stockholders’ Equity                                                                                                 |  |          |             |   |              |  
|Current Liabilities                                                                                                                  |  |          |             |   |              |  
|Accounts payable and accrued liabilities                                                                                             |  | $        | 8,935       |   |              | $
|Accrued interest                                                                                                                     |  |          | -           |   |              |  
|Total Current Liabilities                                                                                                            |  |          | 8,935       |   |              |  
|Long-Term Liabilities:                                                                                                               |  |          |             |   |              |  
|Long-term debt                                                                                                                       |  |          | -           |   |              |  
|Total Liabilities                                                                                                                    |  |          | 8,935       |   |              |  
|                                                                                                                                     |  |          |             |   |              |  
|Stockholders’ Equity                                                                                                                 |  |          |             |   |              |  
|Preferred stock, $0.0001 par value; 25,000,000 shares authorized; no shares outstanding                                              |  |          | -           |   |              |  
|Common stock, $0.0001 par value; 100,000,000 shares authorized; 11,536,278 and 4,500,000 shares issued and outstanding, respectively |  |          | 1,154       |   |              |  
|Common stock subscribed                                                                                                              |  |          | (2,000,000  | ) |              |  
|Additional paid in capital                                                                                                           |  |          | 3,111,471   |   |              |  
|Accumulated deficit                                                                                                                  |  |          | (921,594    | ) |              |  
|Total stockholders’ equity                                                                                                           |  |          | 191,031     |   |              |  
|Total Liabilities and Stockholders’ Equity                                                                                           |  | $        | 199,966     |   |              | $



See accompanying notes to unaudited condensed
consolidated financial statements.



3







FOOTHILLS EXPLORATION, INC.

Condensed Consolidated Statement Of Operations

(Unaudited)



|                                                   |  | For the three months ended |           |   | For the six months ended |  
|-------------------------------------------------- |  | -------------------------- | --------- | - | ------------------------ | -
|                                                   |  | June 30, 2016              |           |   | June 30, 2016            |  
|Revenue                                            |  | $                          | -         |   |                          | $
|                                                   |  |                            |           |   |                          |  
|Operating expenses                                 |  |                            |           |   |                          |  
|Selling, general and administrative                |  |                            | 651,378   |   |                          |  
|Total operating expenses                           |  |                            | 651,378   |   |                          |  
|                                                   |  |                            |           |   |                          |  
|Loss from operations                               |  |                            | (651,378  | ) |                          |  
|                                                   |  |                            |           |   |                          |  
|Other income (expenses):                           |  |                            |           |   |                          |  
|Interest expense                                   |  |                            | (16,043   | ) |                          |  
|Total other income (expenses)                      |  |                            | (16,043   | ) |                          |  
|                                                   |  |                            |           |   |                          |  
|Loss from operations before income taxes           |  |                            | (667,421  | ) |                          |  
|                                                   |  |                            |           |   |                          |  
|Provision for income taxes                         |  |                            | -         |   |                          |  
|                                                   |  |                            |           |   |                          |  
|Net Loss                                           |  |                            | (667,421  | ) |                          |  
|                                                   |  |                            |           |   |                          |  
|Net loss per share – basic and diluted             |  |                            | (0.11     | ) |                          |  
|                                                   |  |                            |           |   |                          |  
|Weighted average common shares – basic and diluted |  |                            | 6,047,723 |   |                          |  





See accompanying notes to unaudited condensed
consolidated financial statements.



4







FOOTHILLS EXPLORATION, INC.

Condensed Consolidated Statement Of Cash Flows

(Unaudited)





|                                                   |  | For the six months ended |          
|-------------------------------------------------- |  | ------------------------ | ---------
|                                                   |  | June 30, 2016            |          
|Cash Flows from Operating Activities               |  |                          |          
|Net loss                                           |  | $                        | (888,138 
|Common stock issued for services                   |  |                          | 9,250    
|Changes in operating assets and liabilities:       |  |                          |          
|Prepaid expenses                                   |  |                          | 165,833  
|Accounts payable and accrued liabilities           |  |                          | 29,647   
|Accrued interest                                   |  |                          | 28,801   
|Net cash used in operating activities              |  |                          | (654,607 
|                                                   |  |                          |          
|Cash Flows from Investing Activities               |  |                          |          
|Payments for acquisition of oil and gas property   |  |                          | (33,243  
|Net cash from investing activities                 |  |                          | (33,243  
|                                                   |  |                          |          
|Cash Flows from Financing Activities               |  |                          |          
|Proceeds from notes payable                        |  |                          | 400,000  
|Net cash provided by financing activities          |  |                          | 400,000  
|                                                   |  |                          |          
|Net decrease in cash and cash equivalents          |  |                          | (287,850 
|                                                   |  |                          |          
|Cash and Cash Equivalents, beginning of period     |  |                          | 375,000  
|                                                   |  |                          |          
|Cash and Cash Equivalents, end of period           |  | $                        | 87,150   
|                                                   |  |                          |          
|Supplemental disclosures of cash flow information: |  |                          |          
|Prepaid warrants issued for services               |  | $                        | 2,144    
|Stock issued for conversion of notes payable       |  | $                        | 1,000,000
|Accrued interest forgiven by related party         |  | $                        | 28,801   
|Accounts payable settled with restricted cash      |  | $                        | 25,000   



See accompanying notes to unaudited condensed
consolidated financial statements.



5







FOOTHILLS EXPLORATION,
INC.

Notes To The Condensed Consolidated Financial
Statements

Three and six months ended June 30, 2016
and 2015

(Unaudited)



| | Note 1. | Nature of Operations and Summary of Significant Accounting
Policies
| | ------- | -------------------------------------------------------------------



Business



Foothills Exploration,
Inc., (“Company” or “Foothills Exploration”) was incorporated in the State of Delaware on May 13, 2010
under the name of “Key Link Assets Corp.” for the purpose of acquiring a portfolio of heavily discounted real estate
properties in the Chicago metropolitan area. The Company changed its focus and planned to acquire small and medium sized grocery
stores in non-urban locales that are not directly served by large national supermarket chains.



On May 2, 2016, Foothills
Petroleum Inc. a Nevada corporation (“FPI”) acquired over 14.1 pre split (56.4 post split) million shares of the Company’s
common stock constituting approximately 96% of our then issued and outstanding shares (“FPI Acquired Shares”). As of
May 16, 2016 we effected a 4:1 forward split of our shares of common stock.



On May 27, 2016
we entered into a Share Exchange Agreement with shareholders of FPI whereby we acquired all of the outstanding shares of FPI
for 4,500,000 shares and also issued 1,503,759 shares on automatic conversion of debt (please see discussion below under
Company's Business Overview) for an aggregate of 6,003,759 shares of our common stock (the “Share Exchange”). As
a result of the Share Exchange, FPI became our wholly owned subsidiary and the FPI Acquired Shares were returned to treasury
and deemed cancelled. For accounting purposes, this transaction is being accounted for as a reverse acquisition and has been
treated as a recapitalization of the Company with FPI considered the accounting acquirer, and the financial statements of the
accounting acquirer became the financial statements of the registrant. The completion of the Share Exchange resulted in a
change of control. The Share Exchange was accounted for as a reverse acquisition and re-capitalization. The FPI Shareholders
obtained approximately 96% of voting control on the date of Share Exchange. FPI was the acquirer for financial reporting
purposes and the Company was the acquired company. The unaudited condensed consolidated financial statements after the
acquisition include the balance sheets of both companies at historical cost, the historical results of FPI and the results of
the Company from the acquisition date. All share and per share information in the accompanying unaudited condensed
consolidated financial statements and footnotes has been retroactively restated to reflect the recapitalization.



Prior to the Share
Exchange, we had minimal assets and recognized no revenues from operations, and were accordingly classified as a shell company.
On June 24, 2016, we filed an amendment to our Current Report on Form 8-K originally filed on June 10, 2016, indicating that we
were no longer a shell company as defined by Rule 12b-2 of the Exchange Act. In light of closing the Share Exchange transaction
with the shareholders of FPI the Company became actively engaged in oil and gas operations through its wholly owned subsidiary.



On June 30, 2016,
we entered into a securities purchase agreement to sell 3,007,519 shares of our common stock to a single investor for proceeds
totaling $2,000,000 subsequent to the closing of quarter ending June 30, 2016, the Company received the funds. For a more complete
description of this transaction please see our Form 8-K filed with the Securities and Exchange Commission ("SEC") on
July 7, 2016.



On August 4, 2016
we were advised that the Financial Industry Regulatory Association had approved (i) our name change from Key Link Assets Corp.
to Foothills Exploration, Inc., and (ii) a change of trading symbol from KYLK to FTXP. Please see our Form 8-K filed with the SEC
on August 9, 2016.



Nature of Operations



FPI was incorporated
in Nevada in December 2015. FPI is an independent oil and gas exploration company with a focus on the acquisition and development
of oil and natural gas properties in the Rockies and Mid-Continent. FPI seeks to acquire dislocated and underdeveloped oil and
gas assets and maximize those assets to create shareholder value (the "Business"). Its principal obligations, consisting
of convertible promissory notes in the aggregate amount of approximately $1,000,000 plus interest accruing at a rate of 8% per
annum (the "Note"), issued to a single investor as part of convertible debt financing, was converted into 1,503,759 shares
of common stock of the Company at the closing of the Share Exchange transaction at a conversion price of $0.665 per share with
any accrued and outstanding interest under the Note waived.



From its inception
in December 2015 through the date of the Share Exchange, FPI has produced no revenues from its business and principal properties
and is currently an exploration stage company. Prior to January 2016, FPI had minimal operations that were focused mainly on administrative
activities connected to the identification and evaluation of potential oil and gas prospects and other potential leasehold acquisitions
in our geographical areas of interest. As of December 31, 2015, FPI had acquired the rights to 38,120 acres of oil and gas property
in the state of Wyoming, through Foothills Exploration, LLC, a wholly owned subsidiary acquired by FPI in connection with its organization
in December 2015.



6







FPI’s technical
team and strategic advisors have a proven track record of finding, exploiting and developing oil resources in the Rockies, with
a deep technical and operational knowledge of the area.



Basis of Presentation and Functional Currency



These financial statements and related notes
are presented in accordance with accounting principles generally accepted in the United States of America, and are expressed in
United States dollars (USD), and should be read in conjunction with the Company’s audited financial statements for the year
ended December 31, 2015. In the opinion of management all adjustments, consisting of normal recurring adjustments, necessary for
a fair presentation of the financial position and the results of operations for the interim period presented have been reflected
herein. The results of operations for the interim period are not necessarily indicative of the results to be expected for the full
year. The Company was formed on December 17, 2015, therefore there are no comparative financial statements for the period for three
and six months statement of operations and cash flows.



Exploration Stage



The Company has not produced revenues from
its principal business and is in the exploration stage.  The Company is engaged in the acquisition, exploration, development
and production of oil and gas properties.  As of June 30, 2016, the Company had acquired the rights to 38,120 acres of
oil and gas property in the state of Wyoming through its transaction with the shareholders of FPI.



The Company’s success will depend in
large part on its ability to obtain and develop oil and gas interests within the Rocky Mountain and Mid-Continent regions. There
can be no assurance that oil and gas properties obtained by the Company will contain reserves or that properties with reserves
will be profitable to extract. The Company will be subject to local and national laws and regulations which could impact its ability
to execute its business plan.



As discussed in Note 2, the accompanying unaudited condensed consolidated financial statements have been
prepared assuming the Company will continue as a going concern. On June 30, 2016, the Company
sold 3,007,519 shares of its common stock for an aggregate amount of $2,000,000, andsubsequent to the closing of the quarter
ending June 30, 2016, the Company received the $2,000,000 funding.



Use of Estimates



The preparation of financial statements in
conformity with accounting principles generally accepted in the United States of America requires management to make estimates
and assumptions that affect the 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 reported periods.  Actual
results could materially differ from those estimates.



Cash and Cash Equivalents



The Company considers all highly liquid investments
purchased with an original maturity of six months or less to be cash equivalents. The carrying value of those investments approximates
their fair market value due to their short maturity and liquidity. Cash and cash equivalents include cash on hand and amount on
deposit with financial institutions, which amounts may at times exceed federally insured limits. The Company has not experienced
any losses on such accounts and it does not believe it is exposed to any significant credit risk. As of June 30, 2016, the Company
had no cash equivalents.



Oil and Gas Properties



The Company follows the full cost method of
accounting for its investments in oil and gas properties. Under the full cost method, all costs associated with the exploration
of properties are capitalized into appropriate cost centers within the full cost pool. Internal costs that are capitalized are
limited to those costs that can be directly identified with acquisition, exploration, and development activities undertaken and
do not include any costs related to production, general corporate overhead, or similar activities. Cost centers are established
on a country-by-country basis.



Capitalized costs within the cost centers are
amortized on the unit-of-production basis using proved oil and gas reserves. The cost of investments in unevaluated properties
and major development projects are excluded from capitalized costs to be amortized until it is determined whether or not proved
reserves can be assigned to the properties. Until such a determination is made, the properties are assessed annually to ascertain
whether impairment has occurred. The costs of drilling exploratory dry holes are included in the amortization base immediately
upon determination that the well is dry.



For each cost center, capitalized costs are
subject to an annual ceiling test, in which the costs shall not exceed the cost center ceiling. The cost center ceiling is equal
to: (i) the present value of estimated future net revenues computed by applying current prices of oil and gas reserves (with consideration
of price changes only to the extent provided by contractual arrangements) to estimated future production of proved oil and gas
reserves as of the date of the latest balance sheet presented, less estimated future expenditures (based on current costs) to be
incurred in developing and producing the proved reserves computed using a discount factor of ten percent and assuming continuation
of existing economic conditions; plus (ii) the cost of properties not being amortized; plus (iii) the lower of cost or estimated
fair value of unproven properties included in the costs being amortized; and less (iv) income tax effects related to differences
between the book and tax basis of the properties. If unamortized costs capitalized within a cost center, less related deferred
income taxes, exceed the cost center ceiling, the excess is charged to expense and separately disclosed during the period in which
the excess occurs.



7









Fair Value of Financial Instruments



For certain of the Company’s financial
instruments, including cash and equivalents, restricted cash, accounts receivable, accounts payable, accrued liabilities and short-term
debt, the carrying amounts approximate their fair values due to their short maturities. ASC Topic 820, “Fair Value Measurements
and Disclosures,” requires disclosure of the fair value of financial instruments held by the Company. ASC Topic 825, “Financial
Instruments,” defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement
that enhances disclosure requirements for fair value measures. The carrying amounts reported in the consolidated balance sheets
for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their fair values
because of the short period of time between the origination of such instruments and their expected realization and their current
market rate of interest. The three levels of valuation hierarchy are defined as follows:



| | · | Level 1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets.
| | - | --------------------------------------------------------------------------------------------------------------------



| | · | Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Level 3 inputs to the valuation methodology are unobservable and significant to the fair value measurement.
| | - | -----------------------------------------------------------------------------------------------------------



The Company analyzes all financial instruments
with features of both liabilities and equity under ASC 480, “Distinguishing Liabilities from Equity,” and ASC 815.



As of June 30, 2016, the Company did not identify
any assets and liabilities that are required to be presented on the balance sheet at fair value.



Net Earnings (Loss) Per Common Share



The Company computes earnings per share under
ASC 260-10, “Earnings Per Share”. Basic earnings (loss) per share is computed by dividing the net income (loss) attributable
to the common stockholders (the numerator) by the weighted average number of shares of common stock outstanding (the denominator)
during the reporting periods.  Diluted loss per share is computed by increasing the denominator by the weighted average number
of additional shares that could have been outstanding from securities convertible into common stock (using the “treasury
stock” method), unless their effect on net loss per share is anti-dilutive. There were 225,000 potentially dilutive shares,
which include outstanding warrants, for the period ended June 30, 2016.The potential shares are excluded from the determination of basic and diluted net loss per share as their effect is anti-dilutive.



Stock-Based Compensation



All share-based payments, including grants
of stock to employees, directors and consultants, are recognized in the consolidated financial statements based upon their estimated
fair values.



The Company’s accounting policy for equity
instruments issued to consultants and vendors in exchange for goods and services follows ASC Topic 505. As such, the value of the
applicable stock-based compensation is periodically re-measured and income or expense is recognized during their vesting terms.
The measurement date for the fair value of the equity instruments issued is determined at the earlier of (i) the date at which
a commitment for performance by the consultant or vendor is reached or (ii) the date at which the consultant or vendor’s
performance is complete. In the case of equity instruments issued to consultants, the fair value of the equity instrument is primarily
recognized over the term of the consulting agreement. In accordance with FASB guidance, an asset acquired in exchange for the issuance
of fully vested, non-forfeitable equity instruments should not be presented or classified as an offset to equity on the grantor’s
balance sheet once the equity instrument is granted for accounting purposes.



Principles of Consolidation



These consolidated financial statements include
the accounts of Foothills Exploration, Inc., and its wholly-owned subsidiary Foothills Petroleum Inc. All intercompany balances
and transactions have been eliminated in consolidation.



Recent Accounting Pronouncements



There were various updates recently issued,
most of which represented technical corrections to the accounting literature or application to specific industries and are not
expected to a have a material impact on the Company's financial position, results of operations or cash flows.



8







| | Note 2. | Going Concern
| | ------- | -------------





As shown in the accompanying financial
statements, the Company has incurred an accumulated loss of $921,594 through June 30, 2016, and had working capital of $85,359
at June 30, 2016. The Company is subject to those risks associated with exploration stage companies.  The Company has
sustained losses since inception and additional debt and equity financing will be required by the Company to fund its development
activities and to monetize economically recoverable oil and gas reserves.





On June 30, 2016, the Company sold 3,007,519 shares of its common stock for an aggregate amount of $2,000,000
and subsequent to the closing of the quarter ending June
30, 2016, the Company received the $2,000,000 funding. As a result,Management believes
that its existing cash on hand will be sufficient to fund its operations for the next 12 months. However, no assurance can be given
that the Company will be able to obtain additional financing to further its ongoing activities so that profitable operations can
be attained. The Company also continues to search for producing and/or additional productive properties and seeks to strategically
lease additional acreage positions adjoining leases currently owned by the Company.  There can be no assurance that the
Company's efforts will be successful, or that those efforts will translate in a beneficial manner to the Company. The accompanying
statements do not include any adjustments relating to the recoverability and classification of assets and/or liabilities that might
be necessary, should the Company be unable to continue as a going concern.



| | Note 3. | Share Exchange Agreement
| | ------- | ------------------------





On May 2, 2016, Foothills Petroleum Inc.,
a Nevada corporation ("FPI”) acquired over 14.1 pre split (56.4 post split) million shares of Key Link’s common
stock from five persons constituting approximately 96% of our issued and outstanding shares (the "FPI Acquired Shares").
In conjunction with this purchase we incurred a charge of $316,035 for the purchase of these shares. Please see our Form 8-K filed
with the SEC on May 6, 2016.





As of May 16, 2016, the Company effected a
4:1 forward split of our shares of common stock. Please see our Form 8-K filed with the SEC on May 19, 2016.



On May 27, 2016, the Company entered into a
Share Exchange Agreement ("Share Exchange Agreement") with the shareholders of FPI whereby the Company acquired all of
the outstanding shares of FPI for an aggregate of 6,003,759 shares of common stock of which 4,500,000 shares of common stock were
issued to Wilshire Energy Partners, LLC ("Wilshire") and 1,503,759 of shares of common stock were issuable to Alternus
Capital Holdings Ltd. ("Alternus") (the “Share Exchange”). As a result of the Share Exchange, FPI became
the Company’s wholly owned subsidiary and the FPI Acquired Shares were subsequently returned to treasury, deemed canceled
and no longer outstanding.



The Company also exchanged warrants to purchase 700,000 shares of FPI’s common stock that
were issued to Wilshire for a like amount of warrants to purchase shares of Key Link’s common stock (the "Wilshire Warrants").
The Wilshire Warrants:



| | · | have a term of five years;
| | - | --------------------------



| | · | are exercisable at $1.25 per share as to 100,000 shares;
| | - | --------------------------------------------------------



| | · | are exercisable at $2.00 per share as to 200,000 shares;
| | - | --------------------------------------------------------



| | · | are exercisable at $3.00 per share as to 400,000 shares;
| | - | --------------------------------------------------------



| | · | do not have a cashless exercise feature; and
| | - | --------------------------------------------



| | · | are not exercisable for one year.
| | - | ---------------------------------



Following the closing of the Share Exchange
transaction the Company had approximately 8,363,759 shares of common stock outstanding (excluding the FPI Acquired Shares, which
are deemed canceled following the Share Exchange), of which Wilshire and Alternus own in the aggregate 6,003,759 shares, or approximately
71.8% of the outstanding common stock. As of the date of this filing the Company has 25,000,000 shares of preferred stock authorized
of which no shares are issued and outstanding.



| | Note 4. | Oil and Gas Properties
| | ------- | ----------------------



On December 24, 2015, Wilshire Energy Partners,
LLC sold its 100% membership interest in Foothills Exploration, LLC, a Wyoming limited liability company, which at the time owned
38,120 acres of productive oil and gas leases to the Company in return for 4,500,000 shares of the Company’s common stock.
Foothills Exploration, LLC is now a wholly owned subsidiary of the Company and retains title to these oil and gas leases. This
transaction is treated as the founding transaction by the Company. The asset was valued at $72,430 at the time of transfer based
on costs associated with the payment of lease bonuses, fees and taxes paid during the formation of the asset.



On March 29, 2016, FPI acquired a 35% working
interest in the Ladysmith Anticline prospect that is located in Fremont County, Wyoming. Total acreage position is 3,061 acres
located between the Great Divide/Greater Green River Basin and the Wind River Basin. The primary target zones are the variable
Phosphoria and Tensleep sandstone with secondary considerations in the Madison limestone and Flathead sandstone. The prospect generation
was based on a licensed 2-D seismic comprising of two seismic lines covering the Chevron/Echo – Greater Green River Basin.
The asset is valued at $20,000 based on the agreement. During the six months ended June 30, 2016, the Company capitalized an additional
$33,243 in costs related to this asset.



9







| | Note 5. | Notes Payable
| | ------- | -------------



On December 24, 2015, FPI entered into a
convertible promissory note in the amount of $600,000 with Alternus Capital Holdings Limited, a BVI company. The two year
note matures on December 23, 2017, and accrues interest at 8% per year. By its terms the note was automatically required to
convert the outstanding principal and interest due under the terms of the note upon a merger or other combination occurring
between FPI and an entity with shares listed for trading (“Pubco”). The conversion price in the note was
established at $0.665 per share, (the “Conversion Price”) subject to adjustment as described below. On April 5,
2016, and under substantially similar terms described herein, FPI received an additional $400,000 from Alternus Capital
Holdings Limited. Under the agreements between Alternus and FPI, Alternus had the right but not the obligation to subscribe
for an aggregate of up to $3,500,000 of convertible notes which, in the event of that full subscription would convert into
not less than 30% of the outstanding shares of Pubco. Through May 27, 2016, the date of the Share Exchange, Alternus had
invested $1,000,000 and based on the Conversion Price was issued 1,503,759 shares of Common Stock of Pubco (Key Link) in full
satisfaction of its two notes.



During the period ended June 30, 2016, Alternus
transferred to Berwin Trading Limited its right to purchase the remaining $2,500,000 in equity
in the Company at substantially the same terms as the conversion of the convertible note purchase agreement. Berwin agreed to purchase
$2,000,000 and completed the documents related to the purchase of equity on June 30, 2016, and subsequent to the period ended June
30, 2016, funded its investment on July 6, 2016. The additional investment option has expired.



| | Note 6. | Common Stock
| | ------- | ------------



On December 24, 2015, FPI issued 4,500,000 shares of its common
stock to Wilshire Energy Partners, LLC, as more fully discussed in Note 4 of these financial statements.



On April 5, 2016, FPI issued a convertible
promissory note in the amount of $400,000 to Alternus Capital Holding Limited. The note matures 12 months from the later of (i)
April 5, 2017 or (ii) the next business day after FPI received the funds, and accrues interest at a rate of 8% per annum. On May
27, 2016, the shareholders of FPI entered into the Share Exchange Agreement with Key Link, pursuant to which the principal amount
of the note together with any accrued, but unpaid interest was converted into the shares of the Company at a conversion price of
$0.665 per share. The total amount of shares issued to Alternus Capital Holdings Limited pursuant to the conversion of the note
is 1,503,759. All accrued interest was waived and recorded as additional paid in capital.



Effective April 1, 2016, FPI appointed two
directors to its board. Each director was granted 125,000 shares of its common stock (the "FPI Directors Shares"), vesting
according to the following schedule: (i) 40% vesting ninety (90) days from the Effective Date; (ii) 20% vesting one hundred eighty
(180) days from the Effective Date; (iii) 20% vesting two hundred seventy (270) days following the Effective Date; (iv) 20% vesting
three hundred sixty (360) days following the Effective Date. As of June 30, 2016, 50,000 shares were issued to each director. These
shares were valued at $1,000.





On May 2, 2016,
Foothills Petroleum Inc., a Nevada corporation ("FPI”) acquired 14,112,250 pre-split shares of the common stock of Key
Link Assets Corp. (“Key Link” or the “Company”) from five persons constituting approximately 96% of our
issued and outstanding shares (the "FPI Acquired Shares"). These shares were acquired for cash of $316,035, which was
expensed in the period it was incurred. Please see our Form 8-K filed with the Securities and Exchange Commission on May 6, 2016.





As of May 16, 2016, we effected a 4:1 forward
split of our shares of common stock. Please see our Form 8-K filed with the SEC on May 19, 2016. All
references to the number of shares issued and outstanding in these financial states have been retrospectively restated for the
forward split.



The 14,112,250 pre-split
shares were converted into 56,449,000 shares, and were returned to treasury for cancellation. A total of 2,360,000 shares were retained from the public company post the reverse merger acquisition.



On May 2, 2016, after obtaining the FPI Acquired
Shares, FPI caused the Company to appoint its two non-executive directors to the Board of the Company. These directors exchanged
their rights to the FPI Directors Shares for Company shares having substantially the same terms and provisions. On May 2, 2016
the Company also granted 150,000 shares of its common stock to its CEO as a part of his compensation package. The shares have the
same vesting schedule as directors’ shares described above. As of June 30, 2016, 60,000 shares were issued to the Company’s
CEO. These shares were valued at $600.



During the six months ended June 30, 2016,
the Company issued 5,000 shares to a service provider per consulting agreement. The shares were valued at $7,650.



On May 27, 2016, we
entered into a Share Exchange Agreement ("Share Exchange Agreement") with the shareholders of FPI whereby we acquired
all of the outstanding shares of FPI for an aggregate of 6,003,759 shares of our common stock, of which 4,500,000 shares of our
common stock were issued to Wilshire Energy Partners, LLC ("Wilshire") and 1,503,759 of our shares of common stock were
issuable to Alternus Capital Holdings Ltd. ("Alternus") (“Share Exchange”). As a result of the Share Exchange,
FPI became our wholly owned subsidiary and the FPI Acquired Shares were to be returned to treasury, deemed canceled and no longer
outstanding.  We also exchanged warrants to purchase 700,000 shares of FPI common stock, that were issued to Wilshire on May
4, 2016, for a like amount of warrants to purchase shares of Company common stock (the "Wilshire Warrants"). The Wilshire
Warrants:



| | · | have a term of five years;                              
| | - | --------------------------------------------------------
| | · | are exercisable at $1.25 per share as to 100,000 shares;
| | · | are exercisable at $2.00 per share as to 200,000 shares;



10







| | · | are exercisable at $3.00 per share as to 400,000 shares;
| | - | --------------------------------------------------------
| | · | do not have a cashless exercise feature; and            
| | · | are not exercisable for one year.                       



Following the closing
of the Share Exchange transaction we had 8,363,759 shares of common stock outstanding (excluding the FPI Acquired Shares, which
were deemed canceled following the Share Exchange), of which Wilshire and Alternus own in the aggregate 6,003,759 shares, or approximately
71.8% of the outstanding common stock. As of the date of this filing the Company has no shares of preferred stock issued and outstanding.



On June
30, 2016, we entered into a Securities Purchase Agreement with Berwin Trading Limited, a British Virgin Islands company (“Berwin”),
pursuant to which we sold and agreed to issue 3,007,519 shares of our common stock, $0.0001 par value, at a purchase price of $0.665
per share for an aggregate amount of $2,000,000.



As of June 30, 2016, the Company had 11,536,278 shares of common
stock issued and outstanding.



Warrants



On May 27, 2016, the Company granted to Wilshire
Energy Partners warrants for services (“Wilshire Warrants”) to purchase (i) 100,000 shares at a strike price of $1.25
per share, (ii) 200,000 shares at a strike price of $2.00 per share and (iii) 400,000 shares at a strike price of $3.00 per share.
The Wilshire Warrants commence to be exercisable on the earlier of (i) 12 month anniversary of the closing of a going public transaction
or (ii) June 30, 2017, and will expire on June 1, 2021.



On May 27, 2016, the Company granted to Zhuge
Liang LLC warrants for services to purchase (i) 125,000 shares at a strike price of $1.25 per share, (ii) 100,000 shares at a strike
price of $2.00 per share and (iii) 100,000 shares at a strike price of $3.00 per share. The warrants commence to be exercisable
on the earlier of (i) 12 month anniversary of the closing of a going public transaction or (ii) June 30, 2017, and will expire
on June 1, 2021.



The fair value of all warrants was determined
to be $2,144 using the Black-Scholes option-pricing model based on the following assumptions: (i) volatility rate of 120%, (ii)
discount rate of 0%, (iii) zero expected dividend yield, and (iv) expected life of 5 years.



The following table summarizes all stock warrant
activity for the six months ended June 30, 2016:



|                                       |  | Number of Warrants |           |  | Weighted Average Exercise Price |   |      | Weighted Average Remaining Contractual Term | 
|-------------------------------------- |  | ------------------ | --------- |  | ------------------------------- | - | ---- | ------------------------------------------- | 
|Balance outstanding, December 31, 2015 |  |                    | -         |  |                                 | $ | -    |                                             | 
|Granted                                |  |                    | 1,025,000 |  |                                 |   | 2.32 |                                             | 
|Exercised                              |  |                    | -         |  |                                 |   | -    |                                             | 
|Cancelled or expired                   |  |                    | -         |  |                                 |   | -    |                                             | 
|Balance outstanding, June 30, 2016     |  |                    | 1,025,000 |  |                                 | $ | 2.32 |                                             | 
|Exercisable, June 30, 2016             |  |                    | -         |  |                                 | $ | -    |                                             | 



Options



On May 19, 2016, the Company granted to each
of its three directors options to purchase (i) 50,000 shares at a strike price of $2 per share, vesting when the Company achieves
and maintains a total average daily production level of 100 boe/d for at least 30 days, (ii) 50,000 shares at a strike price of
$3 per share,vesting when the Company achieves and maintains a total average daily production
level of 200 boe/d for at least 60 days, and (iii) 50,000 shares at a strike price of $4 per share, vesting when the Company achieves
and maintains a total average daily production level of 500 boe/d for at least 90 days.



The following table summarizes all stock option
activity for the six months ended June 30, 2016:



|                                       |  | Number of Option |         |  | Weighted Average Exercise Price |   |      | Weighted Average Remaining Contractual Term | 
|-------------------------------------- |  | ---------------- | ------- |  | ------------------------------- | - | ---- | ------------------------------------------- | 
|Balance outstanding, December 31, 2015 |  |                  | -       |  |                                 | $ | -    |                                             | 
|Granted                                |  |                  | 450,000 |  |                                 |   | 3.00 |                                             | 
|Exercised                              |  |                  | -       |  |                                 |   | -    |                                             | 
|Cancelled or expired                   |  |                  | -       |  |                                 |   | -    |                                             | 
|Balance outstanding, June 30, 2016     |  |                  | 450,000 |  |                                 | $ | 3.00 |                                             | 
|Exercisable, June 30, 2016             |  |                  | -       |  |                                 | $ | -    |                                             | 



11







| | Note 7. | Related Party Transactions
| | ------- | --------------------------



Wilshire Energy Partners, LLC and Aegis
International LLC



Effective as of December 18, 2015, in connection
with the then formation and organization of Foothills Petroleum Inc., Wilshire Energy Partners, LLC (“Wilshire”), Aegis
International LLC (“Aegis”) and Foothills entered into a Business Development Services Agreement (“BDSA”).
Under the BDSA the parties agreed that:



| | 1. | Wilshire would transfer 100% of Foothills Exploration LLC, a Wyoming limited liability company (“FEL”) to Foothills Petroleum, and that Foothills would issue 4.5 million shares of its common stock to Wilshire on its organization or as soon thereafter as may be practicable.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 2. | Wilshire would endeavor in good faith, with the assistance of Aegis, to obtain $3 to $3.5 million of financing in the form of equity and/or convertible notes to implement the business plan that is under formation on behalf of Foothills.                                     
| | 3. | Aegis would perform the following business development services:                                                                                                                                                                                                                 



| | · | provide senior management principally in the form of services of B.P. Allaire;                                                                                                      
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | · | deliver or oversee administrative services on day to day basis;                                                                                                                     
| | · | assist in securing a chief financial officer;                                                                                                                                       
| | · | formulate, craft and deliver a detailed business plan including forecasts;                                                                                                          
| | · | formulate or assist in formulating, budgets and other financial information;                                                                                                        
| | · | recruit or assist in recruiting experienced executive directors with proven track records whose backgrounds will be attractive to the oil and gas community and potential investors;
| | · | create and deliver a website that depicts the Foothills operations; and                                                                                                             
| | · | provide such other services as may be appropriate and necessary to implement and execute upon the business plan of Foothills.                                                       



| | 4. | For its services as outlined under the BDSA, Foothills Petroleum would pay to Aegis from funds received, $150,000 through June 30, 2016 (the “Foothills Initial Organizational Term”). As of June 30, 2016, the payment was made in full.                                               
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 5. | Following the Foothills Initial Organizational Term, Foothills on at-will basis would pay B.P. Allaire $5,000 per month for his services as chief operating officer and executive director, on terms subject to cancellation, on 30 days notice, by either of Foothills or B.P. Allaire.
| | 6. | Wilshire would assign, effective no later than December 29, 2015, all right, title and interest in FEL in exchange for 4.5 million shares of common stock of Foothills.                                                                                                                 



In furtherance of the BDSA, Wilshire assigned
FEL to Foothills Petroleum on its organization in exchange for 4.5 million shares of Foothills Petroleum, and Foothills Petroleum
thereby acquired control of the Springs Prospect, owned by FEL, consisting of 38,120 contiguous acres. Foothills’ regards
the Springs Prospect as a valuable multiple objective oil resource play in the Greater Green River Basin of Wyoming. Through Wilshire’s
assistance Foothills Petroleum entered into two agreements with Alternus Capital Holdings Ltd whereby Foothills obtained a total
of $1,000,000 of financing in the form of convertible notes that upon completion of the Share Exchange were converted, at $0.665
per share, into 1,503,759 shares of common stock of Key Link.



Alternus Capital Holdings Limited



On December 24, 2015, FPI entered into a convertible
promissory note in the amount of $600,000 with Alternus Capital Holdings Limited, a British Virgin Islands company. The two year
note matures on December 23, 2017, and accrues interest at 8% per year. By its terms the note was automatically required to convert
the outstanding principal and interest due under the terms of the note upon a merger or other combination occurring between FPI
and an entity with shares listed for trading (“Pubco”). The conversion price in the note was established at $0.665
per share (the “Conversion Price”), subject to adjustment as described below. On April 5, 2016, and under substantially
similar terms described herein, FPI received an additional $400,000 from Alternus Capital Holdings Limited. Under the agreements
between Alternus and FPI, Alternus had the right but not the obligation to subscribe for an aggregate of up to $3,500,000 of convertible
notes which, in the event of that full subscription would convert into not less than 30% of the outstanding shares of Pubco. Through
May 27, 2016, the date the Share Exchange, Alternus had invested $1,000,000 and based on the Conversion Price was issued 1,503,759
shares of Common Stock of Pubco (Key Link) in full satisfaction of its two notes. All accrued interest was waived and recorded
as additional paid in capital.



| | Note 8. | Subsequent Events
| | ------- | -----------------



On June 30, 2016, we entered into a securities
purchase agreement to sell 3,007,519 shares of our common stock to a single investor for proceeds totaling $2,000,000. Subsequent
to the closing of quarter ending June 30, 2016, the Company received the funds.



The pro
forma consolidated balance sheet as of June 30, 2016, gives effect to the transaction described above, and is based on the historical
financial statements of the Company, as if the funds were received on June 30, 2016, for purposes of the pro forma consolidated
balance sheet.



12







Foothills Petroleum

Pro Forma Condensed Consolidated Balance Sheet

(Unaudited)





|                                                                                                                                     |  | June 30, |           |   | December 31, |  
|------------------------------------------------------------------------------------------------------------------------------------ |  | -------- | --------- | - | ------------ | -
|                                                                                                                                     |  | 2016     |           |   | 2015         |  
|Assets                                                                                                                               |  |          |           |   |              |  
|Current Assets                                                                                                                       |  |          |           |   |              |  
|Cash and cash equivalents                                                                                                            |  | $        | 2,087,150 |   |              | $
|Prepaid expenses                                                                                                                     |  |          | 7,144     |   |              |  
|Total Current Assets                                                                                                                 |  |          | 2,094,294 |   |              |  
|Restricted cash                                                                                                                      |  |          | -         |   |              |  
|Oil and gas property                                                                                                                 |  |          | 105,672   |   |              |  
|Total Assets                                                                                                                         |  | $        | 2,199,966 |   |              | $
|                                                                                                                                     |  |          |           |   |              |  
|Liabilities and Stockholders’ Equity                                                                                                 |  |          |           |   |              |  
|Current Liabilities:                                                                                                                 |  |          |           |   |              |  
|Accounts payable and accrued liabilities                                                                                             |  | $        | 8,935     |   |              | $
|Accrued interest                                                                                                                     |  |          | -         |   |              |  
|Total Current Liabilities                                                                                                            |  |          | 8,935     |   |              |  
|Long-Term Liabilities:                                                                                                               |  |          |           |   |              |  
|Long-term debt                                                                                                                       |  |          | -         |   |              |  
|Total Liabilities                                                                                                                    |  |          | 8,935     |   |              |  
|                                                                                                                                     |  |          |           |   |              |  
|Stockholders’ Equity:                                                                                                                |  |          |           |   |              |  
|Preferred stock, $0.0001 par value; 25,000,000 shares authorized; no shares issued and outstanding                                   |  |          | -         |   |              |  
|Common stock, $0.0001 par value; 100,000,000 shares authorized; 11,536,278 and 4,500,000 shares issued and outstanding, respectively |  |          | 1,154     |   |              |  
|Additional paid in capital                                                                                                           |  |          | 3,111,471 |   |              |  
|Accumulated deficit                                                                                                                  |  |          | (921,594  | ) |              |  
|Total stockholders’ equity                                                                                                           |  |          | 2,191,031 |   |              |  
|Total Liabilities and Stockholders’ Equity                                                                                           |  | $        | 2,199,966 |   |              | $





13







Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS



The following discussion should be read
in conjunction with our financial statements, including the notes thereto, appearing elsewhere in this Report. The discussions
of results, causes and trends should not be construed to imply any conclusion that these results or trends will necessarily occur. This
discussion includes forward-looking statements that involve risks and uncertainties. As a result of many factors, such as those
set forth under “Risk Factors” and elsewhere in this Report, our actual results may differ materially from those anticipated
in these forward-looking statements.



FORWARD-LOOKING
STATEMENTS



This Quarterly Report on Form 10-Q, including
"Management's Discussion and Analysis of Financial Condition and Results of Operations" in Item 2 of Part I of this report
include forward-looking statements. Additionally, forward-looking statements may be made orally or in press releases, conferences,
reports, on our website or otherwise, in the future, by us or on our behalf. Such statements are generally identifiable by the
terminology used such as “anticipate,” “believe,” “continue,” “could,” “estimate,”
“expect,” “intend,” “may,” “might,” “potential,” “predict,”
“project,” “should” or other similar words.



By their very nature, forward-looking statements
require us to make assumptions that may not materialize or that may not be accurate. Forward-looking statements are subject to
known and unknown risks and uncertainties and other factors that may cause actual results, levels of activity and achievements
to differ materially from those expressed or implied by such statements. Such factors include, among others: changes in oil or
natural gas prices, the success of our drilling program, the timing of planned capital expenditures, availability of acquisitions,
uncertainties in estimating proved reserves and forecasting production results, operational factors affecting the commencement
or maintenance of producing wells, the condition of the capital markets generally, as well as our ability to access them, the proximity
to and capacity of transportation facilities, uncertainties regarding environmental regulations or litigation and other legal or
regulatory developments affecting our business, and the other factors discussed below and elsewhere in this prospectus and in other
documents that we file with or furnish to the SEC, all of which are difficult to predict. Forward-looking statements may include
statements about:



| | • |  | our business strategy;
| | - |  | ----------------------



| | • |  | our reserves or reserves that may expect to develop;
| | - |  | ----------------------------------------------------



| | • |  | our cash flows and liquidity;
| | - |  | -----------------------------



| | • |  | our financial strategy, budget, projections and operating results;
| | - |  | ------------------------------------------------------------------



| | • |  | oil and natural gas prices that we may realize;
| | - |  | -----------------------------------------------



| | • |  | the timing and amount of future production of oil and natural gas;
| | - |  | ------------------------------------------------------------------



| | • |  | the availability of drilling and production equipment;
| | - |  | ------------------------------------------------------



| | • |  | the availability of oil field labor;
| | - |  | ------------------------------------



| | • |  | the amount, nature and timing of capital expenditures, including future exploration and development costs;
| | - |  | ----------------------------------------------------------------------------------------------------------



| | • |  | the availability and terms of capital;
| | - |  | --------------------------------------



| | • |  | our drilling of wells;
| | - |  | ----------------------



| | • |  | government regulation and taxation of the oil and natural gas industry;
| | - |  | -----------------------------------------------------------------------



| | • |  | our marketing of oil and natural gas;
| | - |  | -------------------------------------



| | • |  | our exploitation projects or our ability to make property acquisitions on terms that meet our acquisition criteria;
| | - |  | -------------------------------------------------------------------------------------------------------------------



| | • |  | our costs of exploiting and developing our properties and conducting other operations;
| | - |  | --------------------------------------------------------------------------------------



| | • |  | general economic conditions;
| | - |  | ----------------------------



| | • |  | competition in the oil and natural gas industry;
| | - |  | ------------------------------------------------



| | • |  | the effectiveness of our risk management and hedging activities;
| | - |  | ----------------------------------------------------------------



| | • |  | environmental liabilities;
| | - |  | --------------------------



| | • |  | our future operating results;
| | - |  | -----------------------------



| | • |  | estimated future reserves and the present value thereof; and
| | - |  | ------------------------------------------------------------



| | • |  | our plans, objectives, expectations and intentions contained in this report that are not historical.
| | - |  | ----------------------------------------------------------------------------------------------------



Although we believe that the expectations conveyed
by the forward-looking statements are reasonable based on information available to us on the date such forward-looking statements
were made, no assurances can be given as to future results, levels of activity, achievements or financial condition.



14







You should not place undue reliance on any
forward-looking statement and should recognize that the statements are predictions of future results, which may not occur as anticipated.
Actual results could differ materially from those anticipated in the forward-looking statements and from historical results, due
to the risks and uncertainties described above, as well as others not now anticipated. The impact of any one factor on a particular
forward-looking statement is not determinable with certainty as such factors are interdependent upon other factors. The foregoing
statements are not exclusive and further information concerning us, including factors that potentially could materially affect
our financial results, may emerge from time to time. We do not intend to update forward-looking statements to reflect actual results
or changes in factors or assumptions affecting such forward-looking statements, except as required by law, including the securities
laws of the United States and the rules and regulations of the SEC.



Unless otherwise noted, the terms "Foothills
Exploration", the "Company", "we", "us", and "our" refer to the ongoing business operations
of Foothills Exploration, Inc. and our wholly-owned subsidiary, Foothills Petroleum, Inc., as well as, the past operations of Foothills
Petroleum, Inc. The terms “Key Link Assets Corp.” or “Key Link” refer to the operations of Key Link Assets
Corp. prior to May 27, 2016.



History



Foothills Exploration,
Inc., (“Company” or “Foothills Exploration”) was incorporated in the State of Delaware on May 13, 2010
under the name of “Key Link Assets Corp.” for the purpose of acquiring a portfolio of heavily discounted real estate
properties in the Chicago metropolitan area. The Company changed its focus and planned to acquire small and medium sized grocery
stores in non-urban locales that are not directly served by large national supermarket chains.



On May 2, 2016, Foothills Petroleum Inc., a Nevada corporation (“FPI”) acquired approximately
14.1 pre split (56.4 post split) million shares of the Company’s common stock constituting approximately 96% of our then
issued and outstanding shares (“FPI Acquired Shares”). As of May 16, 2016, we effected a 4:1 forward split of our shares
of common stock. On May 27, 2016, we entered into a Share Exchange Agreement with the shareholders of FPI whereby we acquired all
of the outstanding shares of FPI for 4,500,000 shares and also issued 1,503,759
shares on automatic conversion of debt (please see discussion below under Company's Business Overview) for an aggregate of 6,003,759
shares of our common stock (the “Share Exchange”). As a result of the Share Exchange, FPI became our wholly owned subsidiary
and the FPI Acquired Shares were returned to treasury and deemed cancelled.



Prior to the Share
Exchange, we had minimal assets and recognized no revenues from operations, and were accordingly classified as a shell company.
On June 24, 2016, we filed an amendment to our Current Report on Form 8-K originally filed on June 10, 2016, indicating that we
were no longer a shell company as defined by Rule12b-2 of the Exchange Act. In light of closing of Share Exchange transaction with
FPI, the Company became actively engaged in oil and gas operations through its wholly owned subsidiary.



On June 30, 2016,
we completed a sale of 3,007,519 shares of our common stock to a single investor for proceeds totaling $2,000,000. For a more complete
description of this transaction please see our Form 8-K filed with the SEC on July 7, 2016. Subsequent to the closing of the quarter
ending June 30, 2016, we received the funds.



Subsequent to the
period ending June 30, 2016, and on August 4, 2016, we were advised that the Financial Industry Regulatory Association had approved
(i) our name change from Key Link Assets Corp. to Foothills Exploration, Inc., and (ii) a change of trading symbol from KYLK to
FTXP. Please see our Form 8-K filed with the SEC on August 9, 2016.



FPI’s
Business Overview



FPI was incorporated
in Nevada in December 2015. FPI is an independent oil and gas exploration company with a focus on the acquisition and development
of oil and natural gas properties in the Rockies and Mid-Continent. FPI seeks to acquire dislocated and underdeveloped oil and
gas assets and maximize those assets to create shareholder value (the "Business"). Its principal obligations, consisting
of convertible promissory notes in the aggregate amount of approximately $1,000,000, plus interest accruing at a rate of 8% per
annum (the "Note"), issued to a single investor as part of convertible debt financing, was converted into 1,503,759 shares
of common stock of the Company at the closing of the Share Exchange transaction at a conversion price of $0.665 per share with
any accrued and outstanding interest under the Note waived.



From its inception
in December 2015 through the date of the Share Exchange, FPI has produced no revenues from its business and principal properties
and is currently an exploration stage company. Prior to January 2016, FPI had minimal operations that were focused mainly on administrative
activities connected to the identification and evaluation of potential oil and gas prospects and other potential leasehold acquisitions
in our geographical areas of interest. As of December 31, 2015, FPI had acquired the rights to 38,120 acres of oil and gas property
in the state of Wyoming, through Foothills Exploration, LLC, a wholly owned subsidiary acquired by FPI in connection with its organization
in December 2015.



FPI’s technical
team and strategic advisors have a proven track record of finding, exploiting and developing oil resources in the Rockies, with
a deep technical and operational knowledge of the area.



15







Market Environment



Oil pricing has declined
significantly over the last 18-months from a one time high of over $120 a barrel and have, in the opinion of the Company, created
attractive new opportunities to acquire oil and gas assets at what we believe to be favorable pricing. The International Energy
Agency recently highlighted that capital expenditures on new energy (exploration) declined 16% year-over-year in 2014, followed
up by another 20% decline in 2015 year-over-year, respectively. With oil prices falling below $30 a barrel in 2016 at one point,
and WTI currently trading at about $40 a barrel on August 1, 2016, the Company currently anticipates a 3rd consecutive year of
material spending cutbacks for new supply globally.



In the U.S., the Energy
Information Administration (EIA) in its January 12, 2016 short-term energy outlook highlighted that consumption for gasoline increased
by 270,000 barrels per day in 2015 to an average of 9.2 million barrels per day, representing a year-over-year growth of 2.6% and
just below the record high set in 2007 of 9.3 million barrels per day. The EIA forecasts that total global demand for petroleum
to grow by 1.4 million barrels per day from 2015’s 93.7 million per day to 95.2 million by the end of 2016, and similar growth
in 2017 to 96.6 million per day where demand out strips supplies by the 4Q 2017. For these and other domestic reasons, FPI medium
to long-term outlook are for oil and gas prices to be at sustainable higher levels. No assurance can be given that this outlook
will prove to be accurate.



Our Strategy



FPI’s strategic
objective is to build a portfolio of producing properties that have low operating costs, long lived reserves and upside development
potential. FPI’s goal is to build a land bank of over 200,000 acres of proven, probable and prospective reserves during this
period of relatively low commodity pricing. FPI intends to accomplish this by acquiring oil and gas properties with attractive
valuation metrics and appealing geological risk/reward profiles that are better positioned to benefit from an improvement in commodity
prices.



FPI's primary focus
is the Rockies and Mid-Continent regions, where its consultants and technical staff have successfully conducted oil and gas operations.
FPI believes its geographical focus and regional experience coupled with strategic industry relationships will advantageously position
them to acquire quality oil and gas assets at attractive valuations in the current environment.



FPI’s acquisitions
and roll up strategy is based on identifying undercapitalized, yet attractive oil and gas assets selling at a discount to intrinsic
value. FPI focuses on acquiring oil and gas assets that have existing production, with existing infrastructure and future developmental
potential. Once it acquires oil and gas assets, FPI expects to target adjacent oil and gas properties with similar characteristics
to bolt on and increase its geographical acreage position. By consolidating and exploiting additional acreage and rolling it up
into FPI, management believes that it may achieve efficiencies and be able to further create shareholder value.



FPI’s Wyoming Properties



The principal assets
currently owned by FPI consist of non-producing, prospective mineral leases located in Wyoming.



Springs Prospect



The Springs Prospect,
consisting of 38,120 contiguous acres, is a multiple objective oil resource play in the Greater Green River Basin. The prospect’s
unconventional target is a Niobrara and Mowry fractured shale. Numerous oil and gas shows in the Niobara and Mowry shales surround
the prospect acreage. FPI has also identified and mapped conventional drilling targets in the Muddy and Tensleep throughout the
prospect area. Although FPI plans to acquire 3-D Seismic and complete its geologic assessment in the current fiscal year, no assurance
can be given that it will be able to do so.



Ladysmith Prospect



On March 29, 2016,
FPI acquired a 35% working interest in the Ladysmith Anticline prospect that is located in Fremont County, Wyoming. This prospect
in entirety amounts to 3,061 acres and is located between the Great Divide/Greater Green River Basin and the Wind River Basin.
The primary target zones are the variable Phosphoria and Tensleep sandstone with secondary considerations in the Madison limestone
and Flathead sandstone. The prospect generation was based on a licensed 2-D seismic comprising of two seismic lines covering the
Chevron/Echo – Greater Green River Basin.



Plan of Operations



Over the near-term
with energy prices depressed, FPI believes that it is well positioned to capitalize on the current low price environment. Current
energy prices have exposed attractive U.S. based assets that are poorly capitalized, which are now selling at discounted prices,
providing multiple entry points to acquire attractive oil and gas assets. FPI intends to acquire distressed oil and gas assets
as well as non-core assets from larger exploration and production companies seeking to raise cash to pay down debt and shore up
their balance sheets.



In addition to what
management believes to be a favorable macroeconomic environment for acquiring attractive oil and gas assets, FPI intends to leverage
its geographical focus in the Rockies and Mid-Continent. FPI is focused on acquiring smaller operators in a considerably fragmented
oil and gas market and through consolidation, management believes FPI can effectively scale its production and acreage position
and collectively unlock value in the acquired oil and gas assets thereby increasing shareholder value.



16







Acquiring additional assets and companies
throughout Rockies



FPI is targeting acquisitions
in a tightly defined geographical area of interest, which meet certain metrics and future development potential to increase shareholder
value. FPI anticipates that these acquisitions will be funded through the sale of common stock, and from issuance of convertible
debt, other institutional and private borrowing, as well as future reserve based borrowing activities.



Pursuing the initial
development of the Greater Green River conventional and unconventional assets, FPI plans to drill one or two vertical wells in
2016 on the Springs Prospect acreage. FPI anticipates that drilling activities will target the well-established conventional Muddy
and Tensleep formations and unconventional Niobrara and Mowry shale formations.



Retain Operational Control and Significant
Working Interest



In its principal acquisition
and development targets, FPI expects to preserve operational control of its development and drilling activities. As the operator
for its projects, FPI retains more control over the timing, selection and process of drilling prospects and completion design,
which enhances its ability to maximize the return on invested capital and gives greater control over the timing, allocation and
amounts of capital expenditures.



Leasing of Prospective Acreage



In the course of its
day-to-day business, FPI regularly identifies drilling and development opportunities on additional acreage in its area of interest
that has not yet been leased. Subject to securing additional capital, FPI may take the initiative to lease prospective acreage
in an area of interest and may sell all or any portion of the leased acreage to other companies that want to participate in the
drilling and development of the prospect acreage.



Government Regulations



Governmental Regulation
and Environmental Consideration.



The oil and gas business
in the United States is subject to regulation by both federal and state authorities, particularly with respect to pricing, allowable
rates of production, marketing and environmental matters.



The production of
crude oil and gas has, in recent years, been the subject of increasing state and federal controls.  No assurance can be given
that newly imposed or changed federal laws will not adversely affect the economic viability of any oil and gas properties we may
acquire in the future.  Federal income and "windfall profit" taxes have in the past affected the economic viability
of such properties.



The following discussion
provides a brief overview of potential state and federal regulations.  Because FPI to date has acquired specific properties,
and because of the wider range of activities in which it expects to participate, management believes that it is not practical to
set forth in detail the potential impact federal and state regulations may have on FPI.



The Department of Energy



The Department of
Energy Organization Act (Pub. L. No. 95-91) became effective October 1, 1977.  Under this Act various agencies, including
the Federal Energy Administration (FEA) and the Federal Power Commission (FPC), have been consolidated to constitute the cabinet-level
Department of Energy (DOE).  The Economic Regulatory Administration (ERA), a semi-independent administration within the DOE,
now administers most of the regulatory programs formerly managed by the FEA, including oil pricing and allocation.  The Federal
Energy Regulatory Commission (FERC), an independent agency within the DOE, has assumed the FPC's responsibility for natural gas
regulation.



Crude Oil and Natural Gas Liquids Price
and Allocation Regulation



Pursuant to Executive
Order Number 12287, issued January 28, 1981, President Reagan lifted all existing federal price and allocation controls over the
sale and distribution of crude oil and natural gas liquids.  Executive Order Number 12287 was made effective as of January
28, 1981, and consequently, sales of crude oil and natural gas liquids after January 27, 1981 are free from federal regulation. 
The price for such sales and the supplier-purchaser relationship will be determined by private contract and prevailing market conditions. 
As a result of this action, oil which may be sold by us will be sold at deregulated or free market prices.  At various times,
certain groups have advocated the reestablishment of regulations and control on the sale of domestic oil and gas.



State Regulations



FPI production of
oil and gas, if any, will be subject to regulation by state regulatory authorities in the states in which we may produce oil and
gas.  In general, these regulatory authorities are empowered to make and enforce regulations to prevent waste of oil and gas
and to protect correlative rights and opportunities to produce oil and gas as between owners of a common reservoir.  Some
regulatory authorities may also regulate the amount of oil and gas produced by assigning allowable rates of production.



17







Environmental Laws



Oil and gas exploration
and development are specifically subject to existing federal and state laws and regulations governing environmental quality and
pollution control.  Such laws and regulations may substantially increase the costs of exploring for, developing, or producing
oil and gas and may prevent or delay the commencement or continuation of a given operation.



All of our operations
involving the exploration for or the production of any minerals are subject to existing laws and regulations relating to exploration
procedures, safety precautions, employee health and safety, air quality standards, pollution of stream and fresh water sources,
odor, noise, dust, and other environmental protection controls adopted by federal, state and local governmental authorities as
well as the right of adjoining property owners.  We may be required to prepare and present to federal, state or local authorities
data pertaining to the effect or impact that any proposed exploration for or production of minerals may have upon the environment. 
All requirements imposed by any such authorities may be costly, time consuming, and may delay commencement or continuation of exploration
or production operations.



It may be anticipated
that future legislation will significantly emphasize the protection of the environment, and that, as a consequence, our activities
may be more closely regulated to further the cause of environmental protection.  Such legislation, as well as future interpretation
of existing laws, may require substantial increases in equipment and operating costs to us and delays, interruptions, or a termination
of operations, the extent to which cannot now be predicted.



Title to Properties



FPI owns the interest
in its properties and also at times relies on contracts with the owner or operator of the property, pursuant to which, among other
things, we have the right to have our interest placed of record.  As is customary in the oil and gas industry, a preliminary
title examination will be conducted at the time unproved properties or interests are acquired by us and prior to commencement of
drilling on unproved properties and prior to acquisition of proved properties we will conduct a full title examination and attempt
to take such further corrective steps as may be appropriate to address material title defect.



FPI properties are
subject to royalty, overriding royalty and other interests customary in the industry, liens incident to agreements, current taxes
and other burdens, minor encumbrances, easements and restrictions.  Although FPI is not aware of any material title defects
or disputes with respect to its undeveloped acreage as of the date of this filing, to the extent such defects or disputes exist,
FPI would suffer title failures which could result in material adverse consequences to the operations of the company.



Results of Operations



The successor entity as a result of the reverse
acquisition is FPI, which was formed on December 17, 2015. Since this is the entity for which we are now reporting, no operating
results were available for the comparative period in 2015 since the entity had not yet been formed.



Three months ended
June 30, 2016 compared to three months ended June 30, 2015



Revenue



We have not earned any revenues for the three
months ended June 30, 2016 and 2015. We can provide no assurance that we will commence operations or that such operations, if commenced,
will be successful.



Operating Expenses





Selling, general
and administrative expenses consist primarily of salaries and related expenses for our management and personnel, and professional
fees, such as accounting, consulting and legal. We also incurred a non-recurring expense of $316,035 in conjunction with the purchase
of 14.1 million shares related to our reverse acquisition.Our total selling, general and administrative expenses for the
three months ended June 30, 2016, were $651,378.





Other Expenses



Interest expense for
the three months ended June 30, 2016, was $16,043.



Net Loss





As
a result of the foregoing, during the three months ended June 30, 2016, we recorded a net loss of $667,421.





Six months ended
June 30, 2016 compared to six months ended June 30, 2015



Revenue



We have not earned any revenues for the six
months ended June 30, 2016 and 2015. We can provide no assurance that we will commence operations or that such operations, if commenced,
will be successful.



18







Operating Expenses





Selling, general
and administrative expenses consist primarily of salaries and related expenses for our management and personnel, and professional
fees, such as accounting, consulting and legal. We also incurred a non-recurring expense of $316,035 in conjunction with the purchase
of 14.1 million shares related to our reverse acquisition.Our total selling, general and administrative expenses for the
six months ended June 30, 2016, were $860,128.





Other Expenses



Interest expense for
the six months ended June 30, 2016, was $28,010.



Net Loss





As
a result of the foregoing, during the six months ended June 30, 2016, we recorded a net loss of $888,138.





Liquidity and Capital Resources





As shown in the accompanying financial
statements, we incurred an accumulated loss of $921,594 through June 30, 2016, and have working capital of $85,359 at June 30,
2016. The Company is subject to those risks associated with exploration stage companies.  The Company has sustained losses
since inception and additional debt and equity financing will be required by the Company to fund its development activities and
to monetize economically recoverable oil and gas reserves.





On June 30, 2016, we entered into a securities
purchase agreement to sell 3,007,519 shares of our common stock to a single investor for proceeds totaling $2,000,000. Subsequent
to the closing of quarter ending June 30, 2016, the Company received the funds.



The pro
forma consolidated balance sheet as of June 30, 2016, gives effect to the transaction described above, and is based on the historical
financial statements of the Company, as if the funds were received on June 30, 2016, for purposes of the pro forma consolidated
balance sheet.



Foothills Petroleum

Pro Forma Condensed Consolidated Balance Sheet

(Unaudited)





|                                                                                                                                     |  | June 30, |           |   | December 31, |  
|------------------------------------------------------------------------------------------------------------------------------------ |  | -------- | --------- | - | ------------ | -
|                                                                                                                                     |  | 2016     |           |   | 2015         |  
|Assets                                                                                                                               |  |          |           |   |              |  
|Current Assets                                                                                                                       |  |          |           |   |              |  
|Cash and cash equivalents                                                                                                            |  | $        | 2,087,150 |   |              | $
|Prepaid expenses                                                                                                                     |  |          | 7,144     |   |              |  
|Total Current Assets                                                                                                                 |  |          | 2,094,294 |   |              |  
|Restricted cash                                                                                                                      |  |          | -         |   |              |  
|Oil and gas property                                                                                                                 |  |          | 105,672   |   |              |  
|Total Assets                                                                                                                         |  | $        | 2,199,966 |   |              | $
|                                                                                                                                     |  |          |           |   |              |  
|Liabilities and Stockholders’ Equity                                                                                                 |  |          |           |   |              |  
|Current Liabilities:                                                                                                                 |  |          |           |   |              |  
|Accounts payable and accrued liabilities                                                                                             |  | $        | 8,935     |   |              | $
|Accrued interest                                                                                                                     |  |          | -         |   |              |  
|Total Current Liabilities                                                                                                            |  |          | 8,935     |   |              |  
|Long-Term Liabilities:                                                                                                               |  |          |           |   |              |  
|Long-term debt                                                                                                                       |  |          | -         |   |              |  
|Total Liabilities                                                                                                                    |  |          | 8,935     |   |              |  
|                                                                                                                                     |  |          |           |   |              |  
|Stockholders’ Equity:                                                                                                                |  |          |           |   |              |  
|Preferred stock, $0.0001 par value; 25,000,000 shares authorized; no shares outstanding                                              |  |          | -         |   |              |  
|Common stock, $0.0001 par value; 100,000,000 shares authorized; 11,536,278 and 4,500,000 shares issued and outstanding, respectively |  |          | 1,154     |   |              |  
|Additional paid in capital                                                                                                           |  |          | 3,111,471 |   |              |  
|Accumulated deficit                                                                                                                  |  |          | (921,594  | ) |              |  
|Total stockholders’ equity                                                                                                           |  |          | 2,191,031 |   |              |  
|Total Liabilities and Stockholders’ Equity                                                                                           |  | $        | 2,199,966 |   |              | $





19







Management believes that its existing cash
on hand will be sufficient to fund its operations for the next 12 months. The Company also continues to search for producing and/or
additional productive properties and seeks to strategically lease additional acreage positions adjoining leases currently owned
by the Company.  There can be no assurance that the Company's efforts will be successful, or that those efforts will
translate in a beneficial manner to the Company. The accompanying statements do not include any adjustments relating to the recoverability
and classification of assets and/or liabilities that might be necessary, should the Company be unable to continue as a going concern.



Operating Activities



During
the six months ended June 30, 2016, we used $654,607 of cash in operating activities. Non-cash adjustments included $9,250 related
to stock compensation expense, and net changes in operating assets and liabilities
of $224,281.



Investing Activities



During the six months ended
June 30, 2016, we used $33,243 of cash in investing activities for acquisition of an oil and gas property.



Financing Activities





During
the six months ended June 30, 2016, we received $400,000 in proceeds from issuance of notes. On June 30, 2016, we executed a mutually
binding securities purchase agreement pursuant to which we have sold approximately 3,007,519 shares of our common stock to a single
investor for net proceeds of $2 million.





Off-Balance Sheet Arrangements



We do not have any off-balance sheet arrangements
that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition,
revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.



Critical Accounting Policies



Our discussion and analysis of our results
of operations and liquidity and capital resources are based on our financial statements which have been prepared in accordance
with accounting principles generally accepted in the United States of America (“GAAP”). In accordance with GAAP, we
are required to make estimates and assumptions that affect the reported amounts included in our financial statements. We base our
estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. On
an ongoing basis, management reviews and refines those estimates.



Judgments are based on information including,
but not limited to, historical experience, industry trends, conventional practices, expert opinions, terms of existing agreements
and information from outside sources. Judgments are subject to an inherent degree of uncertainty, and therefore actual results
could differ from these estimates.



| | Item 3. | QUANTITATIVE AND QUALITATIVE ANALYSIS ABOUT MARKET RISK
| | ------- | -------------------------------------------------------



As a smaller reporting company, we are not
required to provide this disclosure.



| | Item 4. | CONTROLS AND PROCEDURES
| | ------- | -----------------------



Evaluation of Disclosure
Controls and Procedures



We maintain disclosure
controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded,
processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and
forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief
Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the
disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated,
can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment
in evaluating the cost-benefit relationship of possible controls and procedures. Our disclosure controls and procedures were designed
to provide reasonable assurance that the controls and procedures would meet their objectives.



20







As required by SEC
Rule 13a-15(b), our management carried out an evaluation, with the participation of our Chief Executive and Chief Financial Officer,
of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered
by this report. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls
and procedures were not effective at the reasonable assurance level.



A material weakness
is a control deficiency (within the meaning of the Public Company Accounting Oversight Board (PCAOB) Auditing Standard No. 2) or
combination of control deficiencies that result in more than a remote likelihood that a material misstatement of the annual or
interim financial statements will not be prevented or detected. Management has identified the following two material weaknesses
in our disclosure controls and procedures:



1. We do
not have written documentation of our internal control policies and procedures. Written documentation of key internal controls
over financial reporting is a requirement of Section 404 of the Sarbanes-Oxley Act. Management evaluated the impact of our failure
to have written documentation of our internal controls and procedures on our assessment of our disclosure controls and procedures
and has concluded that the control deficiency that resulted represented a material weakness.



2. We do
not have sufficient segregation of duties within accounting functions, which is a basic internal control. Due to our size and nature,
segregation of all conflicting duties may not always be possible and may not be economically feasible. However, to the extent possible,
the initiation of transactions, the custody of assets and the recording of transactions should be performed by separate individuals.
Management evaluated the impact of our failure to have segregation of duties on our assessment of our disclosure controls and procedures
and has concluded that the control deficiency that resulted represented a material weakness.



To address these material
weaknesses, management performed additional analyses and other procedures to ensure that the financial statements included herein
fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented.



Changes in Internal
Controls



There were no changes
in our internal control over financial reporting during the quarter ended June 30, 2016 that have materially affected, or are reasonably
likely to materially affect, our internal control over financial reporting.





21







PART II – OTHER INFORMATION



| | Item 1. | LEGAL PROCEEDINGS
| | ------- | -----------------



From time to time, we may be involved in routine
legal proceedings, as well as demands, claims and threatened litigation that arise in the normal course of our business. The ultimate
amount of liability, if any, for any claims of any type (either alone or in the aggregate) may materially and adversely affect
our financial condition, results of operations and liquidity. In addition, the ultimate outcome of any litigation is uncertain.
Any outcome, whether favorable or unfavorable, may materially and adversely affect us due to legal costs and expenses, diversion
of management attention and other factors. We expense legal costs in the period incurred. We cannot assure you that additional
contingencies of a legal nature or contingencies having legal aspects will not be asserted against us in the future, and these
matters could relate to prior, current or future transactions or events.



We are not currently a party to any material
legal proceedings. However, legal claims are inherently uncertain, and we cannot assure you that we will not be adversely affected
in the future by legal proceedings.



| | Item 1A. | RISK FACTORS
| | -------- | ------------



In addition
to the other information set forth in this report, you should carefully consider the factors discussed in Part I, Item 1, “Risk
Factors” in our Current Report on Form 8-K filed on June 10, 2016 (the "June 8-K"), which could materially affect
our business, financial condition or operating results. The risks described in our Annual Report on Form 10-K and in our June 8-K
are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem
to be immaterial also may materially adversely affect our business, financial condition and/or operating results.



| | Item 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
| | ------- | -----------------------------------------------------------



On June 30, 2016, we sold 3,007,519 shares
of our common stock to an investor in exchange for proceeds of $2 million, received on July 6, 2016, that we may use for acquiring
oil and gas properties as well as for general operating and marketing expenses.



| | Item 3. | DEFAULTS UPON SENIOR SECURITIES
| | ------- | -------------------------------



None.



| | Item 4. | MINE SAFETY DISCLOSURES
| | ------- | -----------------------



Not Applicable.



| | Item 5. | OTHER INFORMATION
| | ------- | -----------------



None.



| | Item 6. | EXHIBITS
| | ------- | --------



Exhibits
required by Item 601 of Regulation S-K:



|                  |  |                                                                                                                                |  |                              |  | Incorporated by
      Reference Herein
|----------------- |  | ------------------------------------------------------------------------------------------------------------------------------ |  | ---------------------------- |  | --------------------------------------
|Exhibit
      No. |  | Exhibit Description                                                                                                            |  | Filed
      Here-
      with |  | Exhibit
      No.                     
|3.1               |  | Certificate of Incorporation                                                                                                   |  |                              |  | 3.1                                   
|                  |  |                                                                                                                                |  |                              |  |                                       
|3.2               |  | By-Laws                                                                                                                        |  |                              |  | 3.2                                   
|                  |  |                                                                                                                                |  |                              |  |                                       
|4.1               |  | Specimen common stock certificate                                                                                              |  |                              |  | 4.1                                   
|                  |  |                                                                                                                                |  |                              |  |                                       
|10.1              |  | Key Link Asset Corp. 2010 Incentive Compensation
      Plan                                                                    |  |                              |  | 10.1                                  
|                  |  |                                                                                                                                |  |                              |  |                                       
|10.2              |  | Form of Option Agreement under 2010 Incentive
      Compensation Plan                                                          |  |                              |  | 10.2                                  
|                  |  |                                                                                                                                |  |                              |  |                                       
|10.3              |  | Note Payable dated March 31, 2016 by the Company
      to Shawn Clark                                                          |  |                              |  | 10.3                                  
|                  |  |                                                                                                                                |  |                              |  |                                       
|31.1              |  | Certification of Principal Executive Officer Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
      Act of 2002 |  | X                            |  |                                       
|                  |  |                                                                                                                                |  |                              |  |                                       
|31.2              |  | Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley
      Act of 2002                   |  | X                            |  |                                       



22







|32.1    |  | Certification of Principal Executive Officer and
      Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted
      Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |  | X |  |  |  |  |  | 
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | - |  |  |  |  |  | 
|        |  |                                                                                                                                                                                                   |  |   |  |  |  |  |  | 
|101.INS |  | XBRL Instance Document*                                                                                                                                                                           |  | X |  |  |  |  |  | 
|        |  |                                                                                                                                                                                                   |  |   |  |  |  |  |  | 
|101.SCH |  | XBRL Taxonomy Extension Schema Document*                                                                                                                                                          |  | X |  |  |  |  |  | 
|        |  |                                                                                                                                                                                                   |  |   |  |  |  |  |  | 
|101.CAL |  | XBRL Taxonomy Extension Calculation Linkbase
      Document*                                                                                                                                      |  | X |  |  |  |  |  | 
|        |  |                                                                                                                                                                                                   |  |   |  |  |  |  |  | 
|101.DEF |  | XBRL Taxonomy Extension Definition Linkbase
      Document*                                                                                                                                       |  | X |  |  |  |  |  | 
|        |  |                                                                                                                                                                                                   |  |   |  |  |  |  |  | 
|101.LAB |  | XBRL Taxonomy Extension Label Linkbase
      Document*                                                                                                                                            |  | X |  |  |  |  |  | 
|        |  |                                                                                                                                                                                                   |  |   |  |  |  |  |  | 
|101.PRE |  | XBRL Taxonomy Extension Presentation Linkbase
      Document*                                                                                                                                     |  | X |  |  |  |  |  | 



*
Pursuant to Rule 406T of Regulation S-T, the interactive files on Exhibit 101
hereto are deemed not filed or part of a registration statement or prospectus
for purposes of Section 11 or 12 of the Securities Act of 1933, as amended, are
deemed not filed for purposes of Section 18 of the Securities Exchange Act of
1934, as amended, and otherwise are not subject to liability under those
sections.



23







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.



|                         | Second Sight Medical Products, Inc.                                                
|------------------------ | -----------------------------------------------------------------------------------
|                         | (Registrant)                                                                       
|                         |                                                                                    
|                         | /s/ B.P. Allaire                                                                   
|Date: September 15, 2016 | B.P. Allaire
        Chief Executive Officer, Chief Financial Officer and
 Director
|                         | (Principal Executive Officer and Principal Financial and Accounting Officer)       



24







EXHIBIT INDEX



|Exhibit 
No. |  | Description                                                                                                                                                                                                                                                                            
|------------ |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|31.1         |  | Certification of Principal Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended.                                                                                                                              
|             |  |                                                                                                                                                                                                                                                                                        
|31.2         |  | Certification of Principal Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated under the Securities Exchange Act of 1934, as amended.                                                                                                                              
|             |  |                                                                                                                                                                                                                                                                                        
|32.1         |  | Certifications of Principal Executive Officer and Principal Financial and Accounting Officer of Second Sight Medical Products, Inc. pursuant to Rule 13a-14(b) under the Exchange Act and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.



25