Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 08, 2016 | Jun. 30, 2015 | |
Document And Entity Information | |||
Entity Registrant Name | VIKING INVESTMENTS GROUP, INC. | ||
Entity Central Index Key | 1,102,432 | ||
Document Type | 10-K/A | ||
Document Period End Date | Dec. 31, 2015 | ||
Amendment Flag | true | ||
Amendment Description | This Amendment No. 2 of Form 10-K/A for the year ended December 31, 2015, amends in its entirety the Annual Report on Form 10-K/A that was originally filed on May 16, 2016 to reflect a restatement of the Companys financial statements for the year ended December 31, 2015 (the 2015 Financial Statements) to correct various account balances as summarized below, and because the Companys new independent registered public accounting firm has recently completed its audit of the Companys 2015 Financial Statements. The restatements are being made in accordance with ASC 250, Accounting Changes and Error Corrections. The disclosure provision of ASC 250 requires a company that corrects an error to disclose that its previously issued financial statements have been restated, a description of the nature of the error, the effect of the correction on each financial statement line item and any per share amount affected for each prior period presented, and the cumulative effect on retained earnings (deficit) in the statement of financial position as of the beginning of each period presented. | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filer | No | ||
Entity's Reporting Status Current | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 1,841,964 | ||
Entity Common Stock, Shares Outstanding | 51,986,940 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,015 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
CURRENT ASSETS | ||
Cash | $ 1,345 | |
Other receivable - related party | ||
Total current assets | 1,345 | |
Oil and gas properties, full cost method | ||
Proved developed producing oil and gas properties, net | 21,310 | |
Undeveloped and non-producing oil and gas properties, net | 333,858 | |
Total Oil and gas properties, net | $ 516,470 | 355,168 |
Long term investment | 68,128 | |
TOTAL ASSETS | 424,641 | |
Current liabilities: | ||
Accrued expenses and other current liabilities | 116,149 | |
Accounts payable | 39,314 | |
Derivative liability | 810,647 | |
Amount due to directors | 614,991 | 326,439 |
Convertible notes - current, net of debt discount | 16,770 | |
Total current liabilities | 481,902 | |
Convertible notes - net of current portion and debt discount | 6,778 | |
Asset retirement obligation | 416,246 | |
TOTAL LIABILITIES | 481,902 | |
Commitments and contingencies (Note 9) | ||
STOCKHOLDERS' DEFICIT | ||
Preferred stock, $0.001 par value, 5,000,000 shares authorized, 28,092 Shares issued and outstanding as of December 31, 2015 and 2014 | 28 | |
Common stock, $0.001 par value, 100,000,000 shares authorized, 30,333,993 and 24,094,551 shares issued and outstanding as of December 31, 2015 and 2014 | 24,095 | |
Shares to be issued | 675 | |
Additional Paid-In Capital | 7,960,372 | 7,162,660 |
Prepaid equity-based compensation | ||
Accumulated Deficit | (177,452) | |
Accumulated other comprehensive loss | (7,067,267) | |
TOTAL STOCKHOLDERS' DEFICIENCY | (1,277,693) | (57,261) |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY | $ 424,641 | |
Restated [Member] | ||
CURRENT ASSETS | ||
Cash | 30,585 | |
Other receivable - related party | 153,877 | |
Total current assets | 184,462 | |
Oil and gas properties, full cost method | ||
Proved developed producing oil and gas properties, net | 30,989 | |
Undeveloped and non-producing oil and gas properties, net | 485,481 | |
Total Oil and gas properties, net | 516,470 | |
Long term investment | 87,156 | |
TOTAL ASSETS | 788,088 | |
Current liabilities: | ||
Accrued expenses and other current liabilities | 95,575 | |
Accounts payable | 104,774 | |
Derivative liability | 810,647 | |
Amount due to directors | 614,991 | |
Convertible notes - current, net of debt discount | 16,770 | |
Total current liabilities | 1,642,757 | |
Convertible notes - net of current portion and debt discount | 6,778 | |
Asset retirement obligation | 416,246 | |
TOTAL LIABILITIES | 2,065,781 | |
Commitments and contingencies (Note 9) | ||
STOCKHOLDERS' DEFICIT | ||
Preferred stock, $0.001 par value, 5,000,000 shares authorized, 28,092 Shares issued and outstanding as of December 31, 2015 and 2014 | 28 | |
Common stock, $0.001 par value, 100,000,000 shares authorized, 30,333,993 and 24,094,551 shares issued and outstanding as of December 31, 2015 and 2014 | 30,334 | |
Shares to be issued | ||
Additional Paid-In Capital | 7,960,372 | |
Prepaid equity-based compensation | (145,562) | |
Accumulated Deficit | (158,424) | |
Accumulated other comprehensive loss | (8,964,441) | |
TOTAL STOCKHOLDERS' DEFICIENCY | (1,277,693) | |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY | $ 788,088 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2015 | Dec. 31, 2014 |
STOCKHOLDERS' EQUITY | ||
Preferred stock Series, par value | $ 0.001 | $ 0.001 |
Preferred stock Series, authorized | 5,000,000 | 5,000,000 |
Preferred stock Series, issued | 28,092 | 28,092 |
Preferred stock Series, outstanding | 28,092 | 28,092 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, authorized | 100,000,000 | 100,000,000 |
Common stock, issued | 30,333,993 | 24,094,551 |
Common stock, outstanding | 30,333,993 | 24,094,551 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Loss - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Revenue | ||
Oil and gas sales | ||
Operating expenses | ||
Lease operating costs | ||
Impairment of oil and gas properties | $ 210,032 | |
General and administrative | 377,484 | |
Stock based compensation | 189,167 | |
Accretion - ARO | 10,032 | |
Depreciation, depletion & amortization | ||
Total operating expenses | 566,651 | |
Loss from operations | (566,651) | |
Other income (expenses) | ||
Interest expense | ||
Change in fair value of derivative liability | 266,378 | (96,748) |
Derivative expense | (1,065,808) | |
Gain on settlement of debt | 9,485 | |
Other income | 2,440 | |
Total other income (expenses) | (84,823) | |
Net loss | (1,897,174) | (651,474) |
Other comprehensive income (loss) | ||
Unrealized gain (loss) on securities available-for-sale | 19,028 | (179,316) |
Foreign currency translation adjustment | 53 | |
Net Comprehensive loss | $ (830,737) | |
Loss per weighted average number of common shares outstanding ? basic and diluted | $ (0.03) | |
Weighted average number of common shares outstanding - basic and diluted | 24,094,551 | |
Restated [Member] | ||
Revenue | ||
Oil and gas sales | 95,924 | |
Operating expenses | ||
Lease operating costs | 49,965 | |
Impairment of oil and gas properties | 210,032 | |
General and administrative | 492,647 | |
Stock based compensation | 127,438 | |
Accretion - ARO | 10,032 | |
Depreciation, depletion & amortization | 34,881 | |
Total operating expenses | 924,995 | |
Loss from operations | (829,071) | |
Other income (expenses) | ||
Interest expense | (288,281) | |
Change in fair value of derivative liability | 266,378 | |
Derivative expense | (1,065,808) | |
Gain on settlement of debt | 19,608 | |
Other income | ||
Total other income (expenses) | (1,068,103) | |
Net loss | (1,897,174) | |
Other comprehensive income (loss) | ||
Unrealized gain (loss) on securities available-for-sale | 19,028 | |
Foreign currency translation adjustment | ||
Net Comprehensive loss | $ (1,878,146) | |
Loss per weighted average number of common shares outstanding ? basic and diluted | $ (0.07) | |
Weighted average number of common shares outstanding - basic and diluted | 27,283,026 |
Consolidated Statement Of Cash
Consolidated Statement Of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Cash flows from operating activities: | ||
Net loss | $ (1,897,174) | $ (651,474) |
Adjustments to reconcile net loss to cash used in operating activities: | ||
Change in fair value of derivative liability | (266,378) | 96,748 |
Derivative expense | 1,065,808 | |
Gain on settlement of debt | (9,485) | |
Stock based compensation | 189,167 | |
Depreciation, depletion and amortization | 5,053 | |
Impairment of oil and gas properties | 210,032 | |
Accretion - Asset retirement obligation | ||
Amortization of debt discount | ||
Changes in operating assets and liabilities | ||
Accounts payable | (123,734) | |
Accrued expenses and other current liabilities | 113,284 | |
Prepaid expenses and deposits | 9,641 | |
Amounts due to directors | ||
Net cash used in operating activities | (370,800) | |
Cash flows from investing activities: | ||
Investment in Tanager Energy | (247,444) | |
Investment in oil and gas properties | (302,367) | |
Net cash used in investing activities | (549,811) | |
Cash flows from financing activities: | ||
Proceeds from amount due to directors | 248,724 | |
Repayment of amount due to directors | ||
Proceeds from issuance of units | 607,942 | |
Proceeds from convertible notes | 53,000 | |
Repayment of convertible notes | ||
Net cash provided by financing activities | 909,666 | |
Effect of exchange rate changes on cash | 51 | |
Net increase (decrease) in cash | (10,894) | |
Cash at beginning of year | 1,345 | 12,239 |
Cash at ending of year | 1,345 | |
Supplemental Cash Flow Information | ||
Cash paid for: Interest | ||
Cash paid for: Income taxes | ||
Supplemental Disclosure of Non-Cash Investing and Financing Activities: | ||
Issuances of shares for convertible debt and accrued expenses | 188,007 | |
Recognition of asset retirement obligation | ||
Settlement and reacquisition of derivative liabilities | ||
Convertible notes paid through advances from directors | ||
Payments to vendors from debt proceeds | ||
Loan to Tanager advanced from directors | ||
Debt discount on convertible debt | ||
Restated [Member] | ||
Cash flows from operating activities: | ||
Net loss | (1,897,174) | |
Adjustments to reconcile net loss to cash used in operating activities: | ||
Change in fair value of derivative liability | (266,378) | |
Derivative expense | 1,065,808 | |
Gain on settlement of debt | (19,608) | |
Stock based compensation | 127,438 | |
Depreciation, depletion and amortization | 34,881 | |
Impairment of oil and gas properties | 210,032 | |
Accretion - Asset retirement obligation | 10,032 | |
Amortization of debt discount | 183,548 | |
Changes in operating assets and liabilities | ||
Accounts payable | 86,459 | |
Accrued expenses and other current liabilities | 79,885 | |
Prepaid expenses and deposits | ||
Amounts due to directors | 233,770 | |
Net cash used in operating activities | (151,307) | |
Cash flows from investing activities: | ||
Investment in Tanager Energy | ||
Investment in oil and gas properties | ||
Net cash used in investing activities | ||
Cash flows from financing activities: | ||
Proceeds from amount due to directors | 11,692 | |
Repayment of amount due to directors | (115,145) | |
Proceeds from issuance of units | ||
Proceeds from convertible notes | 348,000 | |
Repayment of convertible notes | (64,000) | |
Net cash provided by financing activities | 180,547 | |
Effect of exchange rate changes on cash | ||
Net increase (decrease) in cash | 29,240 | |
Cash at beginning of year | 1,345 | |
Cash at ending of year | 30,585 | $ 1,345 |
Supplemental Cash Flow Information | ||
Cash paid for: Interest | ||
Cash paid for: Income taxes | ||
Supplemental Disclosure of Non-Cash Investing and Financing Activities: | ||
Issuances of shares for convertible debt and accrued expenses | 252,101 | |
Recognition of asset retirement obligation | 406,214 | |
Settlement and reacquisition of derivative liabilities | 278,175 | |
Convertible notes paid through advances from directors | 205,459 | |
Payments to vendors from debt proceeds | 21,000 | |
Loan to Tanager advanced from directors | 153,877 | |
Debt discount on convertible debt | $ 337,278 |
Consolidated Statement of Chang
Consolidated Statement of Changes in Stockholders' Equity - USD ($) | Common Stock | Shares to be issued | Preferred Stock | Additional Paid-in Capital | Prepaid Equity-Based Compensation | Accumulated Other Comprehensive Income | Deficit | Total |
Beginning Balance, Shares at Dec. 31, 2013 | 18,758,657 | 28,092 | ||||||
Beginning Balance, Amount at Dec. 31, 2013 | $ 18,760 | $ 28 | $ 6,116,054 | $ 1,811 | $ (6,415,793) | $ (279,140) | ||
Foreign currency translation adjustment | 53 | 53 | ||||||
Shares issued for legal services, Shares | 1,406,331 | |||||||
Shares issued for legal services, Amount | $ 1,406 | 187,761 | 189,167 | |||||
Shares issued to investors, Shares | 2,330,534 | |||||||
Shares issued to investors, Amount | $ 2,331 | 605,611 | 607,942 | |||||
Shares to be issued to investors, Shares | 675,000 | |||||||
Shares to be issued to investors, Amount | $ 675 | 66,825 | 67,500 | |||||
Shares issued for convertible debt, Shares | 1,599,029 | |||||||
Shares issued for convertible debt, Amount | $ 1,598 | 186,409 | 188,007 | |||||
Unrealized gain (loss) on securities held for sale | (179,316) | (179,316) | ||||||
Net Loss | (651,474) | (651,474) | ||||||
Ending Balance, Shares at Dec. 31, 2014 | 24,094,551 | 675,000 | 28,092 | |||||
Ending Balance, Amount at Dec. 31, 2014 | $ 24,095 | $ 675 | $ 28 | 7,162,660 | (177,452) | (7,067,267) | (57,261) | |
Shares issued to investors, Shares | 675,000 | (675,000) | ||||||
Shares issued to investors, Amount | $ 675 | $ (675) | ||||||
Shares issued for convertible debt, Shares | 550,000 | |||||||
Shares issued for convertible debt, Amount | $ 550 | 20,450 | 21,000 | |||||
Shares issued as prepaid equity-based compensation, Shares | 1,000,000 | |||||||
Shares issued as prepaid equity-based compensation, Amount | $ 1,000 | 164,000 | (165,000) | |||||
Unrealized gain (loss) on securities held for sale | 19,028 | 19,028 | ||||||
Amortization of prepaid equity-based compensation | 19,438 | 19,438 | ||||||
Shares issued in satisfaction of debt, Shares | 3,294,442 | |||||||
Shares issued in satisfaction of debt, Amount | $ 3,294 | 227,807 | 231,101 | |||||
Shares issued for consulting services, Shares | 720,000 | |||||||
Shares issued for consulting services, Amount | $ 720 | 107,280 | 108,000 | |||||
Derivative liability adjustment - satisfaction of convertible debt | 278,175 | 278,175 | ||||||
Net Loss | (1,897,174) | (1,897,174) | ||||||
Ending Balance, Shares at Dec. 31, 2015 | 30,333,993 | 28,092 | ||||||
Ending Balance, Amount at Dec. 31, 2015 | $ 30,334 | $ 28 | $ 7,960,372 | $ (145,562) | $ (158,424) | $ (8,964,441) | $ (1,277,693) |
Nature of Business and Going Co
Nature of Business and Going Concern | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Note 1. Nature of Business and Going Concern | The Company was incorporated under the laws of the State of Florida on May 3, 1989, as Sparta Ventures Corp. and remained inactive until June 27, 1998. After several name changes, the Company merged with and into a wholly-owned subsidiary, SinoCubate, Inc., which remained the surviving entity of the merger. SinoCubate, Inc. was formed in the State of Nevada on September 11, 2008. The merger resulted in a change of name of the Company from Synthenol Inc. to SinoCubate, Inc., and a change in the state of incorporation of the Company from Florida to Nevada. On June 13, 2012, the Company changed its name to Viking Investments Group, Inc., and the Company's ticker symbol was changed to "VKIN." The Company's business plan is to engage in the acquisition, exploration, development and production of oil and natural gas properties, both individually and through collaborative partnerships with other companies in this field of endeavor. On March 8, 2016, the Company incorporated a wholly owned subsidiary, Viking Oil & Gas (Canada) ULC, in Alberta, Canada, to hold its Canadian oil and gas interests. In November of 2014, the Company entered its first contract of this kind as explained in Note 4. These consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company had a net loss of $1,897,174 and $651,474 for the years ended December 31, 2015 and December 31, 2014, respectively. The Company had a working capital deficiency in the amount of $1,458,295 as of December 31, 2015. The Company had accumulated a stockholders deficit of $1,277,693 as of December 31, 2015, as compared to a stockholder' deficit of $57,261 as of December 31, 2014. These conditions raise substantial doubt about the Companys ability to continue as a going concern. The Company's ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management has no formal plan in place to address this concern but believes that the Company will be able to obtain additional funds by equity financing and/or related party advances; however, there is no assurance of additional funding being available. These consolidated financial statements do not include any adjustments to the recorded assets or liabilities that might be necessary should the Company have to curtail operations or be unable to continue in existence. |
Restatement and Reclassificatio
Restatement and Reclassification | 12 Months Ended |
Dec. 31, 2015 | |
Equity [Abstract] | |
Note 2. Restatement and Reclassification | Restatement of Financial Statements for the year ended December 31, 2015 The Company is restating its financial statements for the year ended December 31, 2015 (the 2015 Financial Statements) to correct various account balances as summarized below, and because the Companys new independent registered public accounting firm has recently completed its audit of the Companys 2015 Financial Statements. The restatements are being made in accordance with ASC 250, Accounting Changes and Error Corrections. The disclosure provision of ASC 250 requires a company that corrects an error to disclose that its previously issued financial statements have been restated, a description of the nature of the error, the effect of the correction on each financial statement line item and any per share amount affected for each prior period presented, and the cumulative effect on retained earnings (deficit) in the statement of financial position as of the beginning of each period presented. The effects of the adjustments on the Companys previously issued 2015 Financial Statements are summarized as follows: Selected Consolidated Balance Sheets Information as of December 31, 2015 Previously Increase Reported (Decrease) Restated Petroleum and natural gas rights / oil and gas properties 818,230 (301,760 ) 516,470 Derivative liability 154,297 656,350 810,647 Additional paid in capital 7,864,085 96,287 7,960,372 Accumulated deficit (7,979,257 ) (985,184 ) (8,964,441 ) Selected Consolidated Statements of Operations and Comprehensive Loss for the year ended December 31, 2015 Previously Increase Reported (Decrease) Restated Impairment of oil and gas properties - 210,032 210,032 Derivative gain (loss) / change in fair value (5,686 ) 272,064 266,378 Derivative expense - 1,065,808 1,065,808 Loss from operations (608,480 ) (220,591 ) (829,071 ) Net loss (911,990 ) (985,184 ) (1,897,174 ) Net comprehensive loss (892,962 ) (985,184 ) (1,878,146 ) Basic and diluted loss per common share (0.03 ) (0.04 ) (0.07 ) Selected Consolidated Statements of Cash Flows for the year ended December 31, 2015 Previously Increase Reported (Decrease) Restated Net Loss (911,990 ) (985,184 ) (1,897,174 ) Derivative (gain) loss / change in fair value 5,686 793,744 799,430 Impairment of oil and gas properties - 210,032 210,032 Stock based compensation 108,000 19,438 127,438 The Company uses the full cost method of accounting for its oil and gas properties, which requires a capitalized cost limitation test (ceiling test) at each report date. This analysis utilizes information included in an annual reserve report. The report originally used did not contemplate the pricing requirements for proved reserves promulgated by the Securities and Exchange Commission (SEC). The Company obtained a revised reserve report in October 2016, which met the SEC pricing requirements for proved reserves. Based on this report, the Company determined that an impairment of $210,032 should be recorded for the year ended December 31, 2015. The Company also reevaluated the methodology originally used to estimate the derivative liabilities associated with the conversion features of certain debt instruments, and the impact on additional paid in capital associated with these transactions. The Company determined that the original accounting for these transactions understated the derivative liability at December 31, 2015 by $656,350, and understated expense at inception of $1,065,808. The change in the estimated fair value of these derivatives resulted in a gain of $266,378 for the year ended December 31, 2015 as compared to originally recording a loss of $5.686. Reclassification of Prior Year Presentation Certain prior year amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Note 3. Summary of Significant Accounting Policies | a) Basis of Presentation The consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States ("US GAAP") and are expressed in U.S. dollars. The Company's fiscal year-end is December 31. The foregoing audited consolidated financial statements have been prepared in accordance with ("U.S. GAAP") for consolidated financial information and with the instructions to Form 10-K as promulgated by the Securities and Exchange Commission (the "SEC"). Accordingly, these consolidated financial statements include all of the disclosures required by generally accepted accounting principles for complete consolidated financial statements. b) Basis of Consolidation The financial statements presented herein reflect the consolidated financial results of the Company and its wholly owned subsidiary, Viking Investments Group LLC, a Delaware limited liability company through December 2, 2015, when the Company sold for $1, all of its ownership interest to its member interest in Viking Investments Group LLC to Tom Simeo, the Company's Chairman. Viking Investments Group, LLC was never an operational entity, did not have any assets, liabilities, or operations, and therefore is not presented as a discontinued operation. c) Use of Estimates in the Preparation of Financial Statements The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts and timing of revenues and expenses, the reported amounts and classification of assets and liabilities, and disclosure of contingent assets and liabilities. The Company's actual results could vary materially from management's estimates and assumptions. Significant areas requiring the use of management estimates relate to the determination of expected tax rates for future income tax recoveries, stock-based compensation, embedded derivative assets and liabilities, asset retirement obligations and impairment of long-term investment. The estimates of proved, probable and possible oil and gas reserves are used as significant inputs in determining the depletion of oil and gas properties and the impairment of proved and unproved oil and gas properties. There are numerous uncertainties inherent in the estimation of quantities of proved, probable and possible reserves and in the projection of future rates of production and the timing of development expenditures. Similarly, evaluations for impairment of proved and unproved oil and gas properties are subject to numerous uncertainties including, among others, estimates of future recoverable reserves and commodity price outlooks. Actual results could differ from the estimates and assumptions utilized. d) Financial Instruments ASC Topic 820-10, "Fair Value Measurement" requires disclosure of the fair value of financial instruments held by the Company. ASC Topic 820-10, "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 other receivables related party, accrued expenses and other current liabilities, accounts payable, derivative liabilities, amount due to directors, and convertible notes 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 (unadjusted) 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. Assets and liabilities measured at fair value as of December 31, 2015 are classified below based on the three fair value hierarchy described above: Description Quoted Prices (Level 1) Significant (Level 2) Significant Unobservable Inputs (Level 3) Total Gains (Losses) Financial Assets Long term investment $ 87,156 $ - $ - $ 19,028 $ 87,156 $ - $ - $ 19,028 Financial liabilities Derivative liabilities $ - $ - $ 810,647 $ 266,378 $ - $ - $ 810,647 $ 266,378 Assets and liabilities measured at fair value as of December 31, 2014 are classified below based on the three fair value hierarchy described above: Description Quoted (Level 1) Significant (Level 2) Significant Unobservable (Level 3) Total Gains (Losses) Financial Assets Long term investment $ 68,128 $ - $ - $ (179,316 ) $ 68,128 $ - $ - $ (179,316 ) The Companys long term investment consists of 3,437,500 common shares of Tanager Energy, Inc., which is traded on the TSX Venture Exchange (Toronto Stock Exchange). The change in the fair value of this investment recognized as an unrealized gain (loss) in other comprehensive income on the statement of operations and comprehensive loss was $19,028 and ($179,316) for the years ended December 31, 2015 and 2014, respectively. The Company uses the Black-Scholes model to value its derivative liabilities. This model takes into account inputs such as contract terms, including maturity and market parameters, including assumptions associated with interest rates, volatility and credit worthiness. The derivative liabilities of the Company were $0 and $810,647 as of December 31, 2015 and 2014 respectively. e) Cash and Cash Equivalents Cash and cash equivalents include cash in banks and highly liquid investment securities that have original maturities of three months or less. At December 31, 2015, the Company does not have any cash deposits in excess of FDIC insured limits. f) Prepaid equity-based compensation Prepaid equity-based expenses represent amounts paid in advance through the issuance of restricted shares of stock, for future contractual benefits to be received. These expenses paid in advance are recorded as prepaid equity-based compensation as a component of Stockholders Equity and then amortized to the statements of operations over the life of the contract using the straight-line method. At December 31, 2015 and December 31, 2014, the balances of the prepaid equity-based compensation were comprised of the following: December 31, 2015 December 31, 2014 In November, 2015, a one-year consulting agreement with an unrelated party for services related to the petroleum industry in the amount of $165,000. $ 145,562 - $ 145,562 $ - g) Oil and Gas Properties The Company uses the full cost method of accounting for its investment in oil and natural gas properties. Under this method of accounting, all costs associated with acquisition, exploration and development of oil and gas reserves, including directly related overhead costs, are capitalized. General and administrative costs related to production and general overhead are expensed as incurred. All capitalized costs of oil and gas properties, including the estimated future costs to develop proved reserves, are amortized on the unit of production method using estimates of proved reserves. Disposition of oil and gas properties are accounted for as a reduction of capitalized costs, with no gain or loss recognized unless such adjustment would significantly alter the relationship between capitalized costs and proved reserves of oil and gas, in which case the gain or loss is recognized to income. Investment in unproved properties and major development projects are not amortized until proved reserves associated with the projects can be determined or until impairment occurs. If the results of an assessment indicate that the properties are impaired, the amount of the impairment is included in loss from continuing operations before income taxes and the adjusted carrying amount of the unproved properties is amortized on the unit-of-production method. Depreciation, depletion and amortization expense utilizing the unit-of-production method for the Companys oil and gas properties in Canada for the years ended December 31, 2015 and 2014 were as follows: Oil and Gas Properties by Geographical Cost Center Years ended, December 31, Cost Center 2015 2014 Canada $ 34,881 $ - $ 34,881 $ - h) Limitation on Capitalized Costs Under the full-cost method of accounting, we are required, at the end of each reporting date, to perform a test to determine the limit on the book value of our oil and natural gas properties (the Ceiling test). If the capitalized costs of our oil and natural gas properties, net of accumulated amortization and related deferred income taxes, exceed the Ceiling, this excess or impairment is charged to expense. The expense may not be reversed in future periods, even though higher oil and natural gas prices may subsequently increase the Ceiling. The Ceiling is defined as the sum of: (a) the present value, discounted at 10 percent, and assuming continuation of existing economic conditions, of 1) estimated future gross revenues from proved reserves, which is computed using oil and natural gas prices determined as the unweighted arithmetic average of the first-day-of-the-month price for each month within the 12-month hedging arrangements pursuant to SAB 103, less 2) estimated future expenditures (based on current costs) to be incurred in developing and producing the proved reserves, plus (b) the cost of properties not being amortized; plus (c) the lower of cost or estimated fair value of unproven properties included in the costs being amortized, net of (d) the related tax effects related to the difference between the book and tax basis of our oil and natural gas properties. i) Oil and Gas Reserves Our proved oil and gas reserves are estimated by independent petroleum engineers. Reserve engineering is a subjective process that is dependent upon the quality of available data and the interpretation thereof, including evaluations and extrapolations of well flow rates and reservoir pressure. Estimates by different engineers often vary sometimes significantly. In addition, physical factors such as the results of drilling, testing and production subsequent to the date of an estimate, as well as economic factors such as changes in product prices, may justify revision of such estimates. Because proved reserves are required to be estimated using recent prices of the evaluation, estimated reserve quantities can be significantly impacted by changes in product prices. The standardized measure of discounted future net cash flows and changes in such cash flows are prepared using assumptions required by the Financial Accounting Standards Board and the Securities and Exchange Commission. Such assumptions include using a 10% discount rate. Changes in any of these assumptions could have a significant impact on the standardized measure. Accordingly, the standardized measure does not represent managements estimated current market value of proved reserves. At December 31, 2015, the Companys net book value of oil and natural gas properties exceeded the ceiling amount, and the Company has recognized an impairment of oil and gas properties of $210,032 for the year ended December 31, 2015. The Company did not recognize an impairment loss for the year ended December 31, 2014. j) Loss per Share Basic net loss per share is computed by dividing the net loss by the weighted-average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing the net loss by the weighted-average number of common shares and, adjusted by any effects of warrants and options outstanding, if dilutive, that may add to the number of common shares during the period. At December 31, 2015 there were approximately 6,059,537 common stock equivalents that were anti-dilutive and were not included in the calculation. k) Revenue Recognition All revenue is recognized when persuasive evidence of an arrangement exists, the service or sale is complete, the price is fixed or determinable and collectability is reasonably assured. Revenue is derived from the sale of crude oil and natural gas. Revenue from crude oil and natural gas sales is recognized when the product is delivered to the purchaser and collectability is reasonably assured. The Company follows the sales method of accounting for oil and natural gas revenue, so it recognizes revenue on all natural gas or crude oil sold to purchasers. l) Comprehensive Loss FASB ASC 220 "Comprehensive Income," establishes standards for the reporting and display of comprehensive income and its components in the consolidated statement of operations and comprehensive loss. For the fiscal years ended December 31, 2015 and 2014, comprehensive income (loss) was $19,028 and ($179,263) respectively, and consisted primarily of unrealized gains and (losses) on available for sale securities. m) Income Taxes The Company accounts for income taxes under FASB Codification Topic 740-10-25 ("ASC 740-10-25"). Under ASC 740-10-25, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740-10-25, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company provides a valuation allowance for deferred tax assets for which it does not consider realization of such assets likely. The Company did not incur any material impact to its financial condition or results of operations due to the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company is subject to U.S federal jurisdiction income tax examinations for the tax years 2007 through 2015. In addition, the Company is subject to state and local income tax examinations for the tax years 2007 through 2015. n) Stock-Based Compensation The Company may issue stock options to employees and stock options or warrants to non-employees in non-capital raising transactions for services and for financing costs. The Company has adopted ASC Topic 718, "Stock based Compensation", which establishes a fair value method of accounting for stock-based compensation plans. In accordance with guidance now incorporated in ASC Topic 718, the cost of stock options and warrants issued to employees and non-employees is measured on the grant date based on the fair value. The fair value is determined using the Black-Scholes option pricing model. The resulting amount is charged to expense on the straight-line basis over the period in which the Company expects to receive the benefit, which is generally the vesting period. The fair value of stock warrants was determined at the date of grant using the Black-Scholes option pricing model. The Black-Scholes option model requires management to make various estimates and assumptions, including expected term, expected volatility, risk-free rate, and dividend yield. The expected term represents the period of time that stock-based compensation awards granted are expected to be outstanding and is estimated based on considerations including the vesting period, contractual term and anticipated employee exercise patterns. Expected volatility is based on the historical volatility of the Company's stock. The risk-free rate is based on the U.S. Treasury yield curve in relation to the contractual life of stock-based compensation instrument. The dividend yield assumption is based on historical patterns and future expectations for the Company dividends. o) Long-term Investment Management determines the appropriate classification of investment securities at the time of purchase. Securities are classified held-to-maturity when the Company has both the positive intent and ability to hold the securities to maturity. Held-to-maturity securities are stated at amortized cost. Securities that are bought and held principally for the purpose of selling in the near term are classified as trading securities and reported at fair value, with unrealized gains and losses included in earnings. Securities not classified as held-to-maturity or trading are classified as available-for-sale. Available-for-sale securities are stated at fair value, the changes in the market value of available-for-sale securities, excluding other-than-temporary impairments, are reflected in Other Comprehensive Loss, with the impairment losses, net of income taxes, charged to loss in the period in which it occurs. The fair value of securities is based on quoted market prices. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities. A decline in the market value of any available-for-sale or held-for-maturity security below cost that is deemed to be other-then-temporary results in a reduction in carrying amount to fair value. Impairments that are considered other-than-temporary are recognized as a loss in the consolidated statements of operations and comprehensive loss. The Company considers various factors in reviewing impairments, including the length of time and extent to which fair value has been less than the Company's cost basis, the financial condition and near-term prospects of the issuer, and the Company's intent and ability to hold the investments for a period of time sufficient to allow for any anticipated recovery in market value. As at December 31, 2015 and 2014, the Company had no trading or held-to-maturity securities. On September 9, 2014, the Company subscribed for 1,250,000 units of Tanager Energy Inc. ("Tanager"), a Canadian mining company listed on the Canadian TSX Venture Exchange as a Tier 2 company and trading under the stock symbol "TAN," at a price of C$0.08 per unit. Each unit consists of one share of Tanager's common stock and one warrant. Each warrant entitles the Company to subscribe for one additional Common Share at a price of C$0.15 at any time until October 5, 2016. The Warrants expired without exercise on October 5, 2016. The total price for the units subscribed is C$101,247.47. The Company paid US$92,000, which was equivalent to C$101,247.47 on September 11, 2014. On October 6, 2014, the Company subscribed for an additional 2,187,500 units of Tanager at a price of C$0.08 per unit. Each unit consists of one share of Tanager's common stock and one warrant. Each warrant entitles the Company to subscribe for one additional Common Share at a price of $ 0.15 at any time until October 5, 2016. The Warrants expire on October 5, 2016. The total price for the units subscribed is C$175,000. The Company paid US$155,444, which was equivalent to C$175,000 on October 17, 2014. The Company's investment in Tanager is considered as "available-for-sale" securities, and an unrealized gain of $19,028 was recorded in other comprehensive income for the year ended December 31, 2015. An unrealized loss of $179,316 was recorded in other comprehensive loss for the year ended December 31, 2014. p) Impairment of long-lived assets In accordance with ASC 360, "Accounting for the Impairment or Disposal of Long-Lived Assets", the Company is required to review its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through the estimated undiscounted cash flows expected to result from the use and eventual disposition of the assets. Whenever any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair value. Assets are grouped and evaluated at the lowest level for their identifiable cash flows that are largely independent of the cash flows of other groups of assets. The Company considers historical performance and future estimated results in its evaluation of potential impairment and then compares the carrying amount of the asset to the future estimated cash flows expected to result from the use of the asset. If the carrying amount of the asset exceeds estimated expected undiscounted future cash flows, the Company measures the amount of impairment by comparing the carrying amount of the asset to its fair value. The estimation of fair value is generally determined by using the asset's expected future discounted cash flows or market value. The Company estimates fair value of the assets based on certain assumptions such as budgets, internal projections, and other available information as considered necessary. There was no impairment of long-lived assets recorded during the years ended December 31, 2015 and 2014, except oil and gas properties. q) Foreign Currency Exchange An entity's functional currency is the currency of the primary economic environment in which it operates, normally that is the currency of the environment in which the entity primarily generates and expends cash. Management's judgment is essential to determine the functional currency by assessing various indicators, such as cash flows, sales price and market, expenses, financing and inter-company transactions and arrangements. Functional currency of the parent company is the U.S. Dollar. The reporting currency of the Company is the U.S. Dollar, and the functional currency of its oil and gas operations is the Canadian Dollar ("CAD" or "C$" herein). The oil and gas operations of the Company are located in Alberta, Canada, in which the CAD is the primary economic environment. The reporting currency of these consolidated financial statements is the U.S. Dollar. For financial reporting purposes, the operational results of the Company's oil and gas operations are prepared using the CAD, and are translated into the Company's reporting currency, the U.S. Dollar. Assets and liabilities are translated using the exchange rate at each balance sheet date. Revenue and expenses are translated using average rates prevailing during each reporting period, and stockholders deficit is translated at historical exchange rates. r) Convertible Notes Payable The Company accounts for conversion options embedded in convertible notes in accordance with ASC 815. ASC 815 generally requires companies to bifurcate conversion options embedded in convertible notes from their host instruments and to account for them as free standing derivative financial instruments. The Company has evaluated the terms and conditions of the convertible note under the guidance of ASC 815. The conversion feature did not meet the definition of "indexed to a company's own stock" provided for in ASC 815 due to the down round protection feature. Therefore, the conversion feature requires bifurcation and liability classification. Additionally, the default put requires bifurcation because it is indexed to risks that are not associated with credit or interest risk. As a result, the compound embedded derivative comprises of (i) the embedded conversion feature and (i) the default put. Rather than bifurcating and recording the compound embedded derivative as a derivative liability, the Company elected to initially and subsequently measure the convertible note in its entirety at fair value, with changes in fair value recognized in earnings in accordance with ASC 815-15-25-4. s) Derivative Liability We review the terms of convertible debt issues to determine whether there are embedded derivative instruments, including embedded conversion options, which are required to be bifurcated and accounted for separately as derivative financial instruments. In circumstances where the host instrument contains more than one embedded derivative instrument, including the conversion option, that is required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument. Bifurcated embedded derivatives are initially recorded at fair value and are then revalued at each reporting date with changes in the fair value reported as non-operating income or expense. When the equity or convertible debt instruments contain embedded derivative instruments that are to be bifurcated and accounted for as liabilities, the total proceeds received are first allocated to the fair value of all the bifurcated derivative instruments. The remaining proceeds, if any, are then allocated to the host instruments themselves, usually resulting in those instruments being recorded at a discount from their face value. The discount from the face value of the convertible debt, together with the stated interest on the instrument, is amortized over the life of the instrument through periodic charges to interest expense. t) Accounting for Asset Retirement Obligations Asset retirement obligations (ARO) primarily represent the estimated present value of the amount we will incur to plug, abandon and remediate our producing properties at the projected end of their productive lives, in accordance with applicable federal, state and local laws. We determined our ARO by calculating the present value of estimated cash flows related to the obligation. The retirement obligation is recorded as a liability at its estimated present value as of the obligations inception, with an offsetting increase to proved properties. On July 1, 2015, the Company recorded an asset retirement obligation and a related asset retirement cost in the amount of $406,214. This asset retirement cost was determined and discounted to present value using a credit-adjusted risk-free rate. After its initial recording, the liability is increased for the passage of time, with the increase being reflected as accretion expense in the consolidated statement of operations and comprehensive loss. Subsequent adjustments in the cost estimate are reflected in the liability and the amounts continue to be amortized over the useful life of the related long-lived asset. The following table describes the changes in the Company's asset retirement obligations for the year ended December 31, 2015: Asset retirement obligation at December 31, 2014 $ - Additions 406,214 Accretion expense 10,032 Asset retirement obligation at December 31, 2015 $ 416,246 u) Reclassification of Prior Year Presentation Certain prior year amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations. v) Recently Adopted Accounting Pronouncements The Financial Accounting Standards Board and other entities issued new or modifications to, or interpretations of, existing accounting guidance during 2015. Management has carefully considered the new pronouncements that altered generally accepted accounting principles and does not believe that any other new or modified principles will have a material impact on the Company's reported financial position or operations in the near term. w) Subsequent Events The Company has evaluated all transactions through the date of filing of this Form 10-K/A for disclosure consideration. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Note 4. Related Party Transactions | During April 2015, the Company made an advance to Tanager Energy Inc., in conjunction with a joint investment in the second oil well of the Joffre Project (as defined and described in Note 4). As of December 31, 2015, the balance owed by Tanager to the Company is $153,877, which is shown as "Other receivable related party" on the balance sheet. On June 5, 2015, the Company authorized and approved the issuance of 2,000,000 and 872,871 restricted shares of common stock in settlement and cancellation of a total of $201,101 of amounts owed to directors, at a cost basis of $0.07 per share. During the year ended December 31, 2015, the Company's Executive Chairman and Director, Tom Simeo, accrued payroll and made advances to the Company in the amount of $56,692 in order to provide the Company with funds to carry on its operations. These accruals and advances do not bear interest, are unsecured and have no specific terms of repayment. As of December 31, 2015, the net amount due to Mr. Simeo for accrued payroll and expenses paid on behalf of the Company is $37,159. The Company has not imputed interest as the amount is deemed immaterial. During the year ended December 31, 2015, the Company's CEO and Director, James Doris, incurred expenses on behalf of, and made net advances to the Company in the amount of $128,770 in order to provide the Company with funds to carry on its operations. These advances do not bear interest, are unsecured and have no specific terms of repayment. The Company has not imputed interest as the amount is deemed immaterial. Additionally, Mr. Doris made several loans to the Company totaling $359,336, all accruing interest at 12%, and payable on demand. As of December 31, 2015, the total amount due to Mr. Doris for advances and expenses paid on behalf of the Company and loans is $577,832. Accrued interest of $20,401 is included in other payables at December 31, 2015. As at December 31, 2014, the net amount due to Mr. Simeo for accrued payroll and payment of certain expenses on behalf of the Company was $236,713. The balance is non-interest bearing, has no fixed term of repayment and is payable on demand. As at December 31, 2014, the amount due to Mr. Doris for the expenses paid on behalf of the Company was $89,726. The balance is non-interest bearing, has no fixed term of repayment and is payable on demand. The following table reflects the balances of related- parties' transactions as of December 31, 2015 and 2014: Years ended December 31, 2015 2014 Due to Mr. Tom Simeo $ 37,159 $ 236,713 Due to Mr. James A. Doris advances 218,496 89,726 Due to Mr. James A. Doris demand loans 359,336 - $ 614,991 $ 326,439 |
Oil and Gas Properties
Oil and Gas Properties | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Note 5. Oil and Gas Properties | The following table summarizes the Companys oil and gas activities by classification and geographical cost center for the year ended December 31, 2015: December 31, 2014 December 31, 2015 Additions Impairments Proved developed producing oil and gas properties Canada cost center $ 21,310 $ 24,374 $ (12,602 ) $ 33,082 Accumulated depreciation, depletion and amortization - (2,093 ) - (2,093 ) Proved developed producing oil and gas properties, net $ 21,310 $ 22,281 $ (12,602 ) $ 30,989 Undeveloped and non-producing oil and gas properties Canada cost center $ 333,858 $ 381,841 $ (197,430 ) $ 518,269 Accumulated depreciation, depletion and amortization - (32,788 ) - (32,788 ) Undeveloped and non-producing oil and gas properties, net $ 333,858 $ 349,053 $ (197,430 $ 485,481 Total Oil and Gas Properties, Net $ 355,168 $ 371,334 $ (210,032 ) $ 516,470 On November 3, 2014, the Company entered into a Purchase and Sale, Petroleum and Natural Gas Conveyance Agreement (the "Agreement"), with Tanager Energy Inc., a Canadian corporation listed on the TSX Venture Exchange as a Tier 2 company and trading under the stock symbol "TAN" ("Tanager Energy"). Pursuant to the Agreement, the Company was to receive a 50% working interest in the Joffre oil and gas property located in Alberta, Canada (the "Joffre Property"), and the Company was obligated to pay Tanager C$400,000 for the interest in the Joffre Property, with C$340,000 payable at closing. On November 4, 2014, the Company closed the transaction by paying Tanager $302,367, with the balance of $52,801 (C$60,000) paid in January of 2015. Tanager owns the remaining 50% working interest in the property and operates and manages the property in accordance with an operating agreement pursuant to the Canadian Association of Petroleum Landman Operating Procedure. The Company's (and Tanager's) working interest in the Joffre Property will generally terminate when future production, if any, ceases (or in the case of the water disposal well on the Joffre Property, on the date that production ceases after 5 years have elapsed). |
Income Tax
Income Tax | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Note 6. Income Tax | The Company accounts for income taxes under ASC 740. Deferred income tax assets and liabilities are determined based upon differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Accounting standards require the consideration of a valuation allowance for deferred tax assets if it is "more likely than not" that some component or all of the benefits of deferred tax assets will not be realized. The Company has estimated net operating losses of $7,979,257 and $7,067,267 as of December 31, 2015 and 2014 respectively. The potential benefit of these net operating losses have not been recognized in these financial statements because the Company cannot be assured it is more likely than not that it will utilize the net operating losses carried forward in future years. The tax returns have not been filed; hence the taxation years of 2012, 2013 and 2014 are open for audit by both federal and state taxing authorities. The components of the net deferred tax asset at December 31, 2015 and December 31, 2014 and the statutory tax rate, the effective tax rate and the elected amount of the valuation allowance are indicated below: December 31, December 31, 2015 2014 Net Operating Losses $ 8,964,441 $ 7,067,267 Statutory Tax Rate 35 % 35 % Effective Tax Rate - - Deferred Tax Asset 3,137,554 2,473,543 Valuation Allowance (3,137,554 ) (2,473,543 ) Net Deferred Tax Asset $ - $ - |
Capital Stock and Additional Pa
Capital Stock and Additional Paid-in Capital | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Note 7. Capital Stock and Additional Paid-in Capital | December 31, 2015 Number of shares December 31, 2014 Number of shares Authorized Outstanding Amount Authorized Outstanding Amount Capital Stock $ $ Preferred stock, $0.001 par value 5,000,000 28,092 28 5,000,000 28,092 28 Common stock, $0.001 par value 100,000,000 30,333,993 30,334 100,000,000 24,094,551 24,095 Common shares to be issued - - 675,000 675 Additional Paid-in Capital 7,960,372 7,162,660 (a) Preferred Stock The Company is authorized to issue 5,000,000 shares of Series C Preferred Stock, par value $0.001 per share (the "Preferred Stock"). Each share of Series C Preferred Stock shall entitle the holder thereof to two thousand (2,000) votes on all matters submitted to a vote of the stockholders of the Corporation. In the event the Corporation shall at any time on or after the date that Preferred Stock has been issued ("Distribution Date) declare or pay any dividend on common stock payable in shares of common stock, or effect a subdivision or combination or consolidation of the outstanding shares of common stock (by reclassification or otherwise than by payment of a dividend in shares of common stock) into a greater or lesser number of shares of common stock, then in each such case the number of votes per share to which holders of shares of Series C Preferred Stock were entitled immediately prior to such event shall be adjusted by multiplying such number by a fraction of the numerator of which is the number of shares of common stock outstanding immediately after such event and the denominator of which is the number of shares of common stock that were outstanding immediately prior to such event. Each share of Series C Preferred Stock shall be convertible, at the option of the holder thereof, at any time after the date of issuance of such share, at the office of the Corporation or any transfer agent for such stock, into one share of fully paid and non-assessable common stock (the "Conversion Rate"). On October 3, 2012, the Company issued 28,092 shares of Series C Preferred Stock to Tom Simeo in exchange for the return of the equal amount of shares of common stock, owned by Tom Simeo, deposited in a brokerage account, to the Company for cancellation. On or about September 1, 2015, Tom Simeo instructed the Company's Stock Transfer Agent, VStock Transfer LLC, to cancel stock certificate number 3032, representing 28,092 shares of common stock, in consideration for the missing 28,092 shares of common stock. Neither the common stock, nor the preferred stock, were assessed any value. On July 16, 2015, Tom Simeo, Executive Chairman, and a director of the Company, who owned 28,092 shares of the Company's Series C Preferred Stock (the "Shares"), transferred 50% (14,046) of the Shares to James A. Doris, President, CEO and a director of the Company in consideration of the purchase price of $10,000, paid from the personal funds of Mr. Doris. Mr. Simeo retained 14,046 shares of the Company's Series C Preferred Stock, and no other shares of Series C Preferred Stock are issued or outstanding. Since each of the preferred shares entitles the holder to 2,000 votes per share, Mr. Simeo and Mr. Doris effectively control the Company jointly, neither of them solely controls the Company, and the transfer of the preferred shares constituted a change of control of the Company. (b) Common Stock The Company is authorized to issue 100,000,000 shares of common stock, par value $0.001 per share. On February 20, 2014, a convertible note holder elected to convert $25,000 of the principal amount of the convertible note dated May 21, 2013, into 615,764 shares of the Company's common stock at a fair value of $0.11 per share in accordance with the convertible note agreement. These shares were issued on March 5, 2014. On March 12, 2014, a convertible note holder elected to convert $21,000 of the principal amount of the convertible note dated May 21, 2013, into 532,454 shares of the Company's common stock at a fair value of $0.10 per share in accordance with the convertible note agreement. These shares were issued on March 20, 2014. On May 5, 2014, a convertible note holder elected to convert $16,000 of the principal amount of the convertible note dated October 28, 2013, into 235,294 shares of the Company's common stock at a fair value of $0.21 per share in accordance with the convertible note agreement. These shares were issued on June 9, 2014. On September 8, 2014, the Company sold 300,000 units to Talem Investments, LLC ("Talem") at a purchase price of $0.50 per unit. Each unit consisted of one share of the Company's common stock, $0.001 par value per share, and one warrant. Each warrant entitled the holder to purchase one share of the Company's common shares at an exercise price of $0.50 per share, was exercisable immediately, and had a term of exercise through June 30, 2015. The Company estimated that the fair value of the warrants was approximately $60,674 ($0.20 per unit) using a Black-Scholes option pricing model at the time of issuance. The total proceeds of $150,000 were paid by Talem in September 2014. The Company approved the issuance of 300,000 shares of the Company's common stock to Talem on November 5, 2014. On October 16, 2014, the Company sold 518,348 units to Sackville Holdings, LLC ("Sackville") at a purchase price of $0.30 per unit. Each unit consisted of one share of the Company's common stock, $0.001 par value per share, and one warrant. Each warrant entitles the holder to purchase one share of the Company's common shares at an exercise price of $0.30 per share, was exercisable immediately, and has a term of exercise through October 15, 2015. The total proceeds of $155,515 were paid by Sackville on October 16, 2014. The Company approved the issuance of 518,348 restricted shares of the Company's common stock to Sackville on November 5, 2014. On October 30, 2014, the Company sold 622,665 units to Diana Dodge ("Dodge") at a purchase price of $0.20 per unit. Each unit consisted of one share of the Company's common stock, $0.001 par value per share, and one warrant. Each warrant entitled the holder to purchase one share of the Company's common shares at an exercise price of $0.20 per share, was exercisable immediately, and has a term of exercise through October 30, 2015. The total proceeds of $124,533 were paid by on October 30, 2014. The Company approved the issuance of 622,665 restricted shares of the Company's common stock to Dodge on November 5, 2014. On October 30, 2014, the Company sold 889,521 units to L.A. Knapp Inc. ("Knapp") at a purchase price of $0.20 per unit. Each unit consisted of one share of the Company's common stock, $0.001 par value per share, and one warrant. Each warrant entitled the holder to purchase one share of the Company's common shares at an exercise price of $0.20 per share, was exercisable immediately, and has a term of exercise through October 30, 2015. The total proceeds of $177,904 were paid by Knapp on October 30, 2014. The Company approved the issuance of 889,521 restricted shares of the Company's common stock to Knapp on November 5, 2014. On September 18, 2014, the Company authorized and approved the issuance of 540,000 shares of common stock to the Company's lawyer for the provision of $66,668 in legal services rendered to the Company, at a cost basis of $0.1235 per share. During the year ended December 31, 2014, the Company authorized and approved the issuance of 44,118, 59,055, 81,591, and 31,597 restricted shares of common stock in June, July, September and October, respectively, to one of the Company's consultants for the provision of $149,784 in consulting services rendered to the Company, at a cost basis of $0.34, $0.254, $0.3677 and $0.475 per share, respectively. During the year ended December 31, 2014, the Company authorized and approved the issuance of 500,000 and 150,000 shares of common stock in September and November, respectively, to one of the Company's consultants for the provision of $47,500 in consulting services rendered to the Company, at a cost basis of $0.05 and $0.15 per share, respectively. In May 2015, the Company authorized and approved the issuance of 720,000 shares of its common stock in conjunction with a six-month consulting agreement, at a cost basis of $0.15 per share, the current fair market value at the time of the agreement. On August 3, 2015, the Company issued 421,571 restricted shares of common stock in settlement and cancellation of $30,000 of accrued payroll, and 2,000,000 and 872,871 restricted shares of common stock in settlement and cancellation of a total of $201,101 of amounts owed to directors, at a cost basis of $0.07 per share. On November 18, 2015, the Company issued 1,000,000 restricted shares of its common stock in conjunction with a one year consulting agreement, at a cost of $0.165 per share, the current fair market value at the time of agreement.. On November 23, 2015, a convertible note holder elected to convert $4,200 of the principal amount of the convertible note dated May 22, 2015, into 100,000 shares of the Company's common stock in accordance with the convertible note agreement. On December 1, 2015, a convertible note holder elected to convert $8,400 of the principal amount of the convertible note dated May 22, 2015, into 200,000 shares of the Company's common stock in accordance with the convertible note agreement. On December 24, 2015, a convertible note holder elected to convert $8,400 of the principal amount of the convertible note dated May 22, 2015, into 250,000 shares of the Company's common stock in accordance with the convertible note agreement. |
Convertible Notes
Convertible Notes | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Note 8. Convertible Notes | Convertible notes payable at December 31, 2015 and 2014 as detailed below, is summarized as follows: December 31, December 31, 2015 2014 (h) - JMJ Financial $ 6,778 $ - (i) - LG Capital 63,000 - (j) - GW Holdings 30,000 - (k) - EMA Financial 50,000 - (l) - JDF Capital 27,500 - 177,278 - Net of unamortized debt discount (153,730 ) - $ 23,548 $ - Less current portion (16,770 ) - $ 6,778 $ - (a) May 21, 2013 Convertible Note On May 21, 2013, the Company issued a $58,000, 8% convertible note with a term expiring on February 28, 2014 (the "Maturity Date"). The principal amount of the note and interest is payable on the maturity date. The note is convertible into common stock beginning 180 days after the issuance date, at the holder's option, at a 42% discount to the average of the five lowest closing bid prices of the common stock during the ten trading day period prior to conversion. In the event the Company prepays the note in full, the Company is required to pay off all principal, interest and any other amounts owing multiplied by (i) 110% if prepaid during the period commencing on the closing date through 30 days thereafter, (ii) 115% if prepaid 31 days following the closing through 60 days following the closing, (iii) 120% if prepaid 61 days following the closing through 90 days following the closing, (iv) 125% if prepaid 91 days following the closing through 120 days following the closing, (v) 130% if prepaid 121 days following the closing through the 150 days following the closing, (vi) 135% if prepaid 151 days following the closing through the 180 days following the closing, and (vii) the Company shall have no right of prepayment after the expiration of 180 days following the closing. The terms of the convertible note provide for certain redemption features which include features indexed to equity risks. In the event of default, the amount of principal and interest not paid when due bear interest at the rate of 22% per annum and the note becomes immediately due and payable. The Company has evaluated the terms and conditions of the convertible note under the guidance of ASC 815. The conversion feature did not meet the definition of "indexed to a company's own stock" provided for in ASC 815 due to the down round protection feature. Therefore, the conversion feature requires bifurcation and liability classification. Additionally, the default put requires bifurcation because it is indexed to risks that are not associated with credit or interest risk. As a result, the compound embedded derivative comprises of (i) the embedded conversion feature and (i) the default put. Rather than bifurcating and recording the compound embedded derivative as a derivative liability, the Company elected to initially and subsequently measure the convertible note in its entirety at fair value, with changes in fair value recognized in earnings in accordance with ASC 815-15-25-4. The following table reflects the allocation of the purchase on the inception date: Convertible Note, Face Value $ 58,000 Convertible promissory note, Fair Value 106,522 Day-one derivative loss (48,522 ) On December 5, 2013, the note holder elected to convert $12,000 of the principal amount of the convertible note dated May 21, 2013, into 159,151 shares of the Company's common stock at a fair value of $0.13 per share in accordance with the agreement. These shares were issued on December 17, 2013. A gain of $422 was recorded on the extinguishment of the debt. On February 20, 2014, a convertible note holder elected to convert $25,000 of the principal amount of the convertible note dated May 21, 2013, into 615,764 shares of the Company's common stock at a fair value of $0.11 per share in accordance with the convertible note agreement. These shares were issued on March 5, 2014. A gain of $138 was recorded on the extinguishment of the debt. On March 12, 2014, a convertible note holder elected to convert $21,000 of the principal amount of the convertible note dated May 21, 2013, into 532,454 shares of the Company's common stock at a fair value of $0.10 per share in accordance with the convertible note agreement. These shares were issued on March 20, 2014. As of December 31, 2014, this convertible note had been fully converted. A loss of $47,940 associated with the changes in the fair value of convertible note was recorded for the year ended December 31, 2014. (b) October 28, 2013 Convertible Note On October 28, 2013, the Company issued a $16,000, 8% convertible note with a term expiring on July 30, 2014 (the "Maturity Date"). The principal amount of the note and interest is payable on the maturity date. The note is convertible into common stock beginning 180 days after the issuance date, at the holder's option, at a 60% discount to the average of the three lowest closing bid prices of the common stock during the ten trading day period prior to conversion. The terms of the convertible note provide for certain redemption features which include features indexed to equity risks. In the event of default, the amount of principal and interest not paid when due bear interest at the rate of 22% per annum and the note becomes immediately due and payable. The Company has evaluated the terms and conditions of the convertible note under the guidance of ASC 815. The conversion feature did not meet the definition of "indexed to a company's own stock" provided for in ASC 815 due to the down round protection feature. Therefore, the conversion feature requires bifurcation and liability classification. Additionally, the default put requires bifurcation because it is indexed to risks that are not associated with credit or interest risk. As a result, the compound embedded derivative comprises of (i) the embedded conversion feature and (i) the default put. Rather than bifurcating and recording the compound embedded derivative as a derivative liability, the Company elected to initially and subsequently measure the convertible note in its entirety at fair value, with changes in fair value recognized in earnings in accordance with ASC 815-15-25-4. The following table reflects the allocation of the purchase on the inception date: Convertible Note, Face Value $ 16,000 Convertible promissory note, Fair Value 44,410 Day-one derivative loss (28,410 ) On May 5, 2014, a convertible note holder elected to convert $16,000 of the principal amount of the convertible note dated October 28, 2013, into 235,294 shares of the Company's common stock at a fair value of $0.10 per share in accordance with the convertible note agreement. These shares were issued on June 9, 2014. A gain of $1,094 was recorded on the extinguishment of the debt. As of December 31, 2014, this convertible note had been fully converted. A loss of $8,437 associated with the changes in the fair value of convertible note was recorded for the year ended December 31, 2014. (c) April 8, 2014 Convertible Note On April 8, 2014, the Company issued a $53,000, 8% convertible note with a term expiring on January 14, 2015 (the "Maturity Date"). The principal amount of the note and interest is payable on the maturity date. The note is convertible into common stock beginning 180 days after the issuance date, at the holder's option, at a 42% discount to the average of the five lowest closing bid prices of the common stock during the twelve trading day period prior to conversion. The terms of the convertible note provide for certain redemption features which include features indexed to equity risks. In the event of default, the amount of principal and interest not paid when due bear interest at the rate of 22% per annum and the note becomes immediately due and payable. The Company has evaluated the terms and conditions of the convertible note under the guidance of ASC 815. The conversion feature did not meet the definition of "indexed to a company's own stock" provided for in ASC 815 due to the down round protection feature. Therefore, the conversion feature requires bifurcation and liability classification. Additionally, the default put requires bifurcation because it is indexed to risks that are not associated with credit or interest risk. As a result, the compound embedded derivative comprises of (i) the embedded conversion feature and (i) the default put. Rather than bifurcating and recording the compound embedded derivative as a derivative liability, the Company elected to initially and subsequently measure the convertible note in its entirety at fair value, with changes in fair value recognized in earnings in accordance with ASC 815-15-25-4. The following table reflects the allocation of the purchase on the inception date: Convertible Note, Face Value $ 53,000 Convertible promissory note, Fair Value 102,414 Day-one derivative loss (49,414 ) On November 7, 2014, a convertible note holder elected to convert $10,000 of the principal amount of the convertible note dated April 8, 2014, into 215,517 shares of the Company's common stock at a fair value of $0.046 per share in accordance with the convertible note agreement. These shares were issued on November 25, 2014. On November 20, 2014, Talem paid $67,500 to the convertible note holder on behalf the Company as the settlement of the remaining principal balance of $43,000. In consideration for the $67,000 paid by Talem, the Company shall issue 675,000 units to Talem with each unit consists of one share of the Company's common stock, $0.001 par value per share, and one warrant. Each warrant will entitle the holder to purchase one share of the Company's common shares at an exercise price of $0.10 per share, be exercisable immediately, and have a term of exercise through January 2, 2016. The agreement was signed between Talem and the Company on January 2, 2015. As of December 31, 2014, this convertible note had been fully settled. A loss of $40,371 associated with the changes in the fair value of convertible note, and a gain of $8,253 due to extinguishment of the debt were recorded for the year ended December 31, 2014. (d) March 11, 2015 Convertible Note On March 11, 2015, the Company issued a $50,000 8% convertible note with a term expiring on March 11, 2016 (the "Maturity Date"). The principal amount of the note and interest is payable on the maturity date. The note is convertible into common stock at any time, at the holder's option, at a price equal to 58% of the lowest trading price of the common stock for the fifteen prior trading days including the day upon which a Notice of Conversion is received by the Company. In the event the Company prepays the note in full, the Company is required to pay off all principal, interest and any other amounts owing multiplied by (i) 115% if prepaid during the period commencing on the closing date through 30 days thereafter, (ii) 121% if prepaid 31 days following the closing through 60 days following the closing, (iii) 127% if prepaid 61 days following the closing through 90 days following the closing, (iv) 133% if prepaid 91 days following the closing through 120 days following the closing, (v) 139% if prepaid 121 days following the closing through the 150 days following the closing, (vi) 145% if prepaid 151 days following the closing through the 180 days following the closing, and (vii) the Company shall have no right of prepayment after the expiration of 180 days following the closing. This note was paid in full on September 8, 2015. (e) March 12, 2015 Convertible Note On March 12, 2015, the Company issued a $25,000 8% convertible note with a term expiring on March 12, 2016 (the "Maturity Date"). The principal amount of the note and interest is payable on the maturity date. The note is convertible into common stock at any time, at the holder's option, at a price equal to 58% of the lowest trading price of the common stock for the fifteen prior trading days including the day upon which a Notice of Conversion is received by the Company. In the event the Company prepays the note in full, the Company is required to pay off all principal, interest and any other amounts owing multiplied by (i) 115% if prepaid during the period commencing on the closing date through 30 days thereafter, (ii) 121% if prepaid 31 days following the closing through 60 days following the closing, (iii) 127% if prepaid 61 days following the closing through 90 days following the closing, (iv) 133% if prepaid 91 days following the closing through 120 days following the closing, (v) 139% if prepaid 121 days following the closing through the 150 days following the closing, (vi) 145% if prepaid 151 days following the closing through the 180 days following the closing, and (vii) the Company shall have no right of prepayment after the expiration of 180 days following the closing. This note was paid in full on September 8, 2015. (f) March 12, 2015 Convertible Note On March 12, 2015, the Company issued a $25,000 8% convertible note with a term expiring on March 12, 2016 (the "Maturity Date"). The principal amount of the note and interest is payable on the maturity date. The note is convertible into common stock at any time, at the holder's option, at a price equal to 58% of the lowest trading price of the common stock for the fifteen prior trading days including the day upon which a Notice of Conversion is received by the Company. In the event the Company prepays the note in full, the Company is required to pay off all principal, interest and any other amounts owing multiplied by (i) 115% if prepaid during the period commencing on the closing date through 30 days thereafter, (ii) 121% if prepaid 31 days following the closing through 60 days following the closing, (iii) 127% if prepaid 61 days following the closing through 90 days following the closing, (iv) 133% if prepaid 91 days following the closing through 120 days following the closing, (v) 139% if prepaid 121 days following the closing through the 150 days following the closing, (vi) 145% if prepaid 151 days following the closing through the 180 days following the closing, and (vii) the Company shall have no right of prepayment after the expiration of 180 days following the closing. This note was paid in full on September 8, 2015. (g) March 25, 2015 Convertible Note On March 25, 2015, the Company issued a $35,000 12% convertible note with a term expiring on March 24, 2016 (the "Maturity Date"), and which was funded on April 23 2015. The principal amount of the note and interest is payable on the maturity date. The note is convertible into common stock at any time, at the holder's option, at a price equal to 58% of the lowest trading price of the common stock for the fifteen prior trading days including the day upon which a Notice of Conversion is received by the Company. This note was paid in full on October 22, 2015. (h) May 22, 2015 Convertible Note On May 22, 2015, the Company issued a convertible promissory note with a cap of $50,000 with a 0% interest rate for the first three months. The terms of the note include a $5,000 Original Issue Discount, providing for a maximum funding of $45,000. The amount of the note funded as of December 31, 2015 was $25,000. The Company may repay this Note at any time on or before 90 days from the effective date. If the Company does not make a payment on or before 90 days from the notes effective date, a one-time interest charge of 12%shall be applied to the principal sum. The maturity date of the note is two years from the effective date of the note. The investor has the right, at any time after the Effective Date, at its election, to convert all of part of the outstanding and unpaid Principal Sum and accrued interest. The conversion price is the lesser of $0.10 or 60% of the lowest trade price in the 25 trading days previous to the conversion. As of December 31, 2015, $21,000 of this note had been converted to common shares. The principal balance of $6,778 is accounted for as a non - current liability due to being satisfied through the issuance of equity in January 2016. (i) November 3, 2015 Convertible Note On November 3, 2015, the Company issued a $63,000 8% convertible note with a term expiring on November 3, 2016 (the "Maturity Date"). The principal amount of the note and interest is payable on the maturity date. The note is convertible into common stock at any time, at the holder's option, at a price equal to 58% of the lowest trading price of the common stock for the fifteen prior trading days including the day upon which a Notice of Conversion is received by the Company. (j) November 20, 2015 Convertible Note On November 20, 2015, the Company issued a $30,000 12% convertible note with a term expiring on November 20, 2016 (the "Maturity Date"). The principal amount of the note and interest is payable on the maturity date. The note is convertible into common stock at any time, at the holder's option, at a price equal to 52% of the lowest trading price of the common stock for the twenty prior trading days including the day upon which a Notice of Conversion is received by the Company. (k) November 19, 2015 Convertible Note On November 19, 2015, the Company issued a $50,000 12% convertible note with a term expiring on November 19, 2016 (the "Maturity Date"). The principal amount of the note and interest is payable on the maturity date. The note is convertible into common stock at any time, at the holder's option, at a price equal to 52% of the lowest trading price of the common stock for the twenty prior trading days including the day upon which a Notice of Conversion is received by the Company. (l) November 25, 2015 Convertible Note On November 25, 2015, the Company issued a $27,500 8% convertible note with a term expiring on November 25, 2016 (the "Maturity Date"). The principal amount of the note and interest is payable on the maturity date. The note is convertible into common stock at any time, at the holder's option, at a price equal to 42% of the lowest trading price of the common stock for the twenty-five prior trading days including the day upon which a Notice of Conversion is received by the Company. |
Commitments and contingencies
Commitments and contingencies | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Note 9. Commitments and contingencies | From time to time the Company may be a party to litigation matters involving claims against the Company. Management believes that there are no current matters that would have a material effect on the Companys financial position or results of operations. |
Risk Management
Risk Management | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Note 10. Risk Management | The Company is exposed to financial risks due to the nature of its business and the financial assets it holds. A summary of the Company's risk exposures as it relates to financial instruments are reflected below: (a) Market risk Market risk is the risk that the fair value from a financial instrument will fluctuate because of changes in market prices. The Company will be exposed to potential losses if the price of the long-term investment it hold decreases. (b) Liquidity risk The Company manages liquidity risk by maintaining sufficient cash balances to meet operation expense requirement in additional to expenses assumed by majority shareholders. (c) Credit Risk Credit risk also arises from cash and deposits with banks and financial institutions. To minimize the credit risk the Company places these instruments with a high credit quality financial institution. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Note 11. Subsequent Events | The Company has evaluated subsequent events from December 31, 2015 through the date of filing this report, and determined there are no other items to disclose other than those disclosed below: On January 12, 2016 the Company issued 300,926 common shares for convertible debt. On February 23, 2016, the Company closed on the acquisition of working interests (Net Revenue Interests from 80 to 87%) in four leases with access to the mineral rights (oil and gas) concerning approximately 281 acres of property in Miami and Franklin Counties in eastern Kansas. This project produces oil from the Cherokee formation at a depth of approximately 600 feet. These leases offer the potential for several future drilling locations. The purchase includes an undivided interest in all oil and gas wells, equipment, fixtures and other personal property located upon the leased properties and used in connection with oil and gas operations upon the leases attributable to the working interests purchased by the Company. The effective date of the acquisitions is February 1, 2016, so the Company was entitled to net revenues from its share of production as of such date. As consideration for this transaction, the Company made a cash payment of $1,305,000 at closing to the vendors and issued a promissory note in the amount of $45,000. The note was paid in full on or about March 11, 2016. The note bears interest at a rate of 0% per annum and was due at the end of February. The Company also agreed to issue the vendors 4,500,000 shares of common stock. Immediately prior to the above-noted acquisition, the Company also purchased a 100% working interest (Net Revenue Interest of 83%) in: (i) three leases with access to the mineral rights (oil and gas) concerning approximately 270 acres of property in Miami and Franklin Counties in eastern Kansas; and (ii) 31 leases with access to the mineral rights (oil and gas) concerning approximately 5,500 acres of property in Cass and Bates Counties in Missouri. The purchase includes an undivided interest in all oil and gas wells, equipment, fixtures and other personal property located upon the leased properties and used in connection with oil and gas operations upon the leases attributable to the working interests purchased by Viking. As consideration for this transaction, Viking agreed to issue the vendors 5,150,000 shares of common stock of Viking. To facilitate these acquisitions, the Company borrowed $1,450,000 from private lenders pursuant to a 15% Senior Secured Convertible Promissory Note (the "Note"), arranged through a licensed broker/dealer, with the primary terms of the loan being as follows: (i) Term Rate Security st Conversion Warrants As of February 1, 2016, the Company issued 9,650,000 common shares as part of the consideration for the acquisition of the oil and gas investment made at that time. On March 16, 2016, the Company issued 1,000,000 common shares for services, valued at $102,500. On March 21, 2016, the Company executed two one-year consulting agreements requiring the issuance of 2,000,000 common shares for each contract. Both of these contracts were terminated, the shares were returned to the Company, and were cancelled in August 2016. On March 21, 2016, the Company executed a one-year advisory services agreement requiring the issuance of 1,000,000 common shares for the contract. The shares are to be issued as 375,002 upon execution of the contract, with 56,818 shares being issued at the beginning of each month for the remaining eleven months. As of April 29, 2016, the Company issued a total of $375,000 of 10% Secured Subordinated promissory notes with a term expiring January 12, 2017 (the Maturity Date), and an original issue discount of fifty percent (50%). Interest is payable on the outstanding principal of these notes at 10% per annum on the Maturity Date. As of April 29, 2016, the Company, pursuant to a securities purchase agreement, sold 1,250,000 shares of its common stock at $0.15 per share. On September 28, 2016, the Company issued 2,400,000 common shares, at the current market value of $288,000 as a portion of the purchase price of additional oil and gas properties acquired on October 4, 2016. During September 2016, the Company negotiated the payment of certain convertible notes, and committed to the issuance of 375,000 common shares at the current market value of $52,500 as additional interest. As of September 30, 2016, the Company, pursuant to a securities purchase agreement, sold $1,337,500 shares of its common stock at $0.15 per share. As of October 2016, the Company issued a total of $610,000 of 10% Secured promissory notes with a term expiring April 3, 2017 (the Maturity Date), and an original issue discount of thirty seven and one half percent (37.5%). Interest is payable on the outstanding principal of these notes at 10% per annum on the Maturity Date. On October 4, 2016, the Company closed on the purchase of working interests in various oil and gas leases in Eastern Kansas. Simultaneously, to facilitate the purchase, the Company closed on its initial funding from Crossfirst Bank under the September 30, 2016 Revolver Agreement in the amount of $1,800,000. Additionally, on October 4, 2016, the Company committed to the issuance of 2,752,021 common shares as a part of the consideration for the acquisition of this oil and gas investment. The shares were issued in December 2016. During November 2016, the Company issued 1,400,000 common shares as part of a negotiated settlement on convertible notes. During November, 2016, the Company issued 187,500 common shares pursuant to a securities purchase agreement. SUPPLEMENTAL INFORMATION - PETROLEUM AND NATURAL GAS PRODUCTION (unaudited) Results of Operations The results of operations for petroleum and natural gas production as of December 31, 2015 consist exclusively of the Company's 50% working interest in the Joffre oil and gas property located in Alberta, Canada as follows; Canada 2015 2014 Results of Operations Revenue $ 95,924 $ - Production costs 49,965 - $ 45,959 $ - Oil and Gas Production and Sales by geographic area for the years ended December 31, 2015 and 2014: Geographic Unit of December 31, Area Measure 2015 2014 Sales - Volumes Oil Canada Barrels 1,639 - Natural Gas Canada Mcf 5,404 - Natural Gas Liquids Canada Barrels 849 - Sulphur Canada Tonnes 36 - Sales Oil Canada Barrels $ 76,619 $ - Natural Gas Canada Mcf $ 12,340 $ - Natural Gas Liquids Canada Barrels $ 5,646 $ - Sulphur Canada Tonnes $ 1,319 $ - Average Sales Prices Oil Canada Barrels $ 46.75 $ - Natural Gas Canada Mcf $ 2.28 $ - Natural Gas Liquids Canada Barrels $ 6.65 $ - Sulphur Canada Tonnes $ 36.69 $ - Mcf = thousands of cubic feet Tonnes = Metric tons Petroleum and Natural Gas Reserves Reserves are estimated remaining quantities of oil and natural gas and related substances, which by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible from a given date forward, from known reservoirs, and under existing economic conditions, operating methods and government regulations prior to the time at which contracts providing the right to operate expire. The reserve information disclosed herein is representative of the one producing well, and the re-activation of the three suspended wells expected to begin production in 2016. Reserves Reconciliation Summary The following table is a reconciliation of reserve balances for the year ended December 31, 2015: Joffre Project - Canada Proved Probable Oil (Mbbl) Natural Gas (MMcf) Natural Gas Liquids (Mbbl) Barrels of Oil Equivalent (Mboe) Oil (Mbbl) Natural Gas (MMcf) Natural Gas Liquids (Mbbl) Barrels of Oil Equivalent (Mboe) Opening Balance 216.2 907.6 38.2 390.2 198.0 848.1 35.2 374.6 Production (1.6 ) (5.4 ) (0.8 ) (3.3 ) - - - - Closing Balance 214.6 902.2 37.4 386.9 198.0 848.1 35.2 374.6 Reserves Summary Oil Natural Gas Natural Gas Liquids Barrels of Oil Equivalent (Mbbl) (MMcf) (Mbbl) (Mboe) Proved Developed - Producing 16.2 44.0 1.8 24.5 Developed - Non-Producing 198.4 858.2 35.6 362.4 Undeveloped - - - - Total Proved 214.6 902.2 37.4 386.9 Probable 198.0 848.1 35.2 360.1 Total Proved plus Probable 412.60 1,750.3 72.6 747.0 Mbbl = thousands of barrels MMcf = millions of cubic feet Mboe - thousands of barrels of oil equivalent Standardized Measure of Discounted Future Net Cash Flows Relating to Proved Reserves The standardized measure of discounted future net cash flows relating to proved oil and natural gas reserves and the changes in standardized measure of discounted future net cash flows relating to proved oil and natural gas reserves were prepared in accordance with provisions of ASC 932 - Extractive Activities - Oil and Gas Future income tax expenses are calculated by applying appropriate year-end tax rates to future pretax net cash flows relating to proved oil and natural gas reserves, less the tax basis of properties involved. Future income tax expenses give effect to permanent differences, tax credits and loss carry forwards relating to the proved oil and natural gas reserves. Future net cash flows are discounted at a rate of 10% annually to derive the standardized measure of discounted future net cash flows. This calculation procedure does not necessarily result in an estimate of the fair market value of the Companys oil and natural gas properties. The standardized measure of discounted future net cash flows relating to proved oil and natural gas reserves for the year ended December 31, 2015 are as follows: Future cash inflows $ 6,096,432 Future production costs (5,019,577 ) Future development costs (870,645 ) Future income tax expense - Future net cash flows 206,210 10% annual discount for estimated timing of cash flows - Standardized measure of DFNCF $ 206,210 There was no production activity for the year ended December 31, 2014. Changes in Standardized Measure of Discounted Future Net Cash Flows The changes in the standardized measure of discounted future net cash flows relating to proved oil and natural gas reserves for the year ended December 31, 2015 are as follows: Balance at January 1, 2015 $ 175,671 Net changes in prices and production costs - Net changes in future development costs - Sales of oil and gas produced, net (45,959 ) Extensions, discoveries and improved recovery - Purchases of reserves - Sales of reserves - Revisions of previous quantity estimates - Previously estimated development costs incurred - Net change in income taxes 4,022 Accretion of discount 6,146 Other (6,145 ) Balance at December 31, 2015 $ 133,735 There was no production activity for the year ended December 31, 2014. In accordance with SEC requirements, the pricing used in the Companys standardized measure of future net revenues is based on the 12-month un-weighted arithmetic average of the first-day-of-the-month price for the period January through December for each period presented and adjusted by lease for transportation fees and regional price differentials. The use of SEC pricing rules may not be indicative of actual prices realized by the Company in the future. |
Summary of Significant Accoun18
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Summary Of Significant Accounting Policies Policies | |
Basis of Presentation | The consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States ("US GAAP") and are expressed in U.S. dollars. The Company's fiscal year-end is December 31. The foregoing audited consolidated financial statements have been prepared in accordance with ("U.S. GAAP") for consolidated financial information and with the instructions to Form 10-K as promulgated by the Securities and Exchange Commission (the "SEC"). Accordingly, these consolidated financial statements include all of the disclosures required by generally accepted accounting principles for complete consolidated financial statements. |
Basis of Consolidation | The financial statements presented herein reflect the consolidated financial results of the Company and its wholly owned subsidiary, Viking Investments Group LLC, a Delaware limited liability company through December 2, 2015, when the Company sold for $1, all of its ownership interest to its member interest in Viking Investments Group LLC to Tom Simeo, the Company's Chairman. Viking Investments Group, LLC was never an operational entity, did not have any assets, liabilities, or operations, and therefore is not presented as a discontinued operation. |
Use of Estimates in the Preparation of Financial Statements | The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make certain estimates and assumptions that affect the reported amounts and timing of revenues and expenses, the reported amounts and classification of assets and liabilities, and disclosure of contingent assets and liabilities. The Company's actual results could vary materially from management's estimates and assumptions. Significant areas requiring the use of management estimates relate to the determination of expected tax rates for future income tax recoveries, stock-based compensation, embedded derivative assets and liabilities, asset retirement obligations and impairment of long-term investment. The estimates of proved, probable and possible oil and gas reserves are used as significant inputs in determining the depletion of oil and gas properties and the impairment of proved and unproved oil and gas properties. There are numerous uncertainties inherent in the estimation of quantities of proved, probable and possible reserves and in the projection of future rates of production and the timing of development expenditures. Similarly, evaluations for impairment of proved and unproved oil and gas properties are subject to numerous uncertainties including, among others, estimates of future recoverable reserves and commodity price outlooks. Actual results could differ from the estimates and assumptions utilized. |
Financial Instruments | ASC Topic 820-10, "Fair Value Measurement" requires disclosure of the fair value of financial instruments held by the Company. ASC Topic 820-10, "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 other receivables related party, accrued expenses and other current liabilities, accounts payable, derivative liabilities, amount due to directors, and convertible notes 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 (unadjusted) 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. Assets and liabilities measured at fair value as of December 31, 2015 are classified below based on the three fair value hierarchy described above: Description Quoted Prices (Level 1) Significant (Level 2) Significant Unobservable Inputs (Level 3) Total Gains (Losses) Financial Assets Long term investment $ 87,156 $ - $ - $ 19,028 $ 87,156 $ - $ - $ 19,028 Financial liabilities Derivative liabilities $ - $ - $ 810,647 $ 266,378 $ - $ - $ 810,647 $ 266,378 Assets and liabilities measured at fair value as of December 31, 2014 are classified below based on the three fair value hierarchy described above: Description Quoted (Level 1) Significant (Level 2) Significant Unobservable (Level 3) Total Gains (Losses) Financial Assets Long term investment $ 68,128 $ - $ - $ (179,316 ) $ 68,128 $ - $ - $ (179,316 ) The Companys long term investment consists of 3,437,500 common shares of Tanager Energy, Inc., which is traded on the TSX Venture Exchange (Toronto Stock Exchange). The change in the fair value of this investment recognized as an unrealized gain (loss) in other comprehensive income on the statement of operations and comprehensive loss was $19,028 and ($179,316) for the years ended December 31, 2015 and 2014, respectively. The Company uses the Black-Scholes model to value its derivative liabilities. This model takes into account inputs such as contract terms, including maturity and market parameters, including assumptions associated with interest rates, volatility and credit worthiness. The derivative liabilities of the Company were $0 and $810,647 as of December 31, 2015 and 2014 respectively. |
Cash and Cash Equivalents | Cash and cash equivalents include cash in banks and highly liquid investment securities that have original maturities of three months or less. At December 31, 2015, the Company does not have any cash deposits in excess of FDIC insured limits. |
Prepaid equity-based compensation | Prepaid equity-based expenses represent amounts paid in advance through the issuance of restricted shares of stock, for future contractual benefits to be received. These expenses paid in advance are recorded as prepaid equity-based compensation as a component of Stockholders Equity and then amortized to the statements of operations over the life of the contract using the straight-line method. At December 31, 2015 and December 31, 2014, the balances of the prepaid equity-based compensation were comprised of the following: December 31, 2015 December 31, 2014 In November, 2015, a one-year consulting agreement with an unrelated party for services related to the petroleum industry in the amount of $165,000. $ 145,562 - $ 145,562 $ - |
Oil and Gas Properties | The Company uses the full cost method of accounting for its investment in oil and natural gas properties. Under this method of accounting, all costs associated with acquisition, exploration and development of oil and gas reserves, including directly related overhead costs, are capitalized. General and administrative costs related to production and general overhead are expensed as incurred. All capitalized costs of oil and gas properties, including the estimated future costs to develop proved reserves, are amortized on the unit of production method using estimates of proved reserves. Disposition of oil and gas properties are accounted for as a reduction of capitalized costs, with no gain or loss recognized unless such adjustment would significantly alter the relationship between capitalized costs and proved reserves of oil and gas, in which case the gain or loss is recognized to income. Investment in unproved properties and major development projects are not amortized until proved reserves associated with the projects can be determined or until impairment occurs. If the results of an assessment indicate that the properties are impaired, the amount of the impairment is included in loss from continuing operations before income taxes and the adjusted carrying amount of the unproved properties is amortized on the unit-of-production method. Depreciation, depletion and amortization expense utilizing the unit-of-production method for the Companys oil and gas properties in Canada for the years ended December 31, 2015 and 2014 were as follows: Oil and Gas Properties by Geographical Cost Center Years ended, December 31, Cost Center 2015 2014 Canada $ 34,881 $ - $ 34,881 $ - |
Limitation on Capitalized Costs | Under the full-cost method of accounting, we are required, at the end of each reporting date, to perform a test to determine the limit on the book value of our oil and natural gas properties (the Ceiling test). If the capitalized costs of our oil and natural gas properties, net of accumulated amortization and related deferred income taxes, exceed the Ceiling, this excess or impairment is charged to expense. The expense may not be reversed in future periods, even though higher oil and natural gas prices may subsequently increase the Ceiling. The Ceiling is defined as the sum of: (a) the present value, discounted at 10 percent, and assuming continuation of existing economic conditions, of 1) estimated future gross revenues from proved reserves, which is computed using oil and natural gas prices determined as the unweighted arithmetic average of the first-day-of-the-month price for each month within the 12-month hedging arrangements pursuant to SAB 103, less 2) estimated future expenditures (based on current costs) to be incurred in developing and producing the proved reserves, plus (b) the cost of properties not being amortized; plus (c) the lower of cost or estimated fair value of unproven properties included in the costs being amortized, net of (d) the related tax effects related to the difference between the book and tax basis of our oil and natural gas properties. |
Oil and Gas Reserves | Our proved oil and gas reserves are estimated by independent petroleum engineers. Reserve engineering is a subjective process that is dependent upon the quality of available data and the interpretation thereof, including evaluations and extrapolations of well flow rates and reservoir pressure. Estimates by different engineers often vary sometimes significantly. In addition, physical factors such as the results of drilling, testing and production subsequent to the date of an estimate, as well as economic factors such as changes in product prices, may justify revision of such estimates. Because proved reserves are required to be estimated using recent prices of the evaluation, estimated reserve quantities can be significantly impacted by changes in product prices. The standardized measure of discounted future net cash flows and changes in such cash flows are prepared using assumptions required by the Financial Accounting Standards Board and the Securities and Exchange Commission. Such assumptions include using a 10% discount rate. Changes in any of these assumptions could have a significant impact on the standardized measure. Accordingly, the standardized measure does not represent managements estimated current market value of proved reserves. At December 31, 2015, the Companys net book value of oil and natural gas properties exceeded the ceiling amount, and the Company has recognized an impairment of oil and gas properties of $210,032 for the year ended December 31, 2015. The Company did not recognize an impairment loss for the year ended December 31, 2014. |
Loss per Share | Basic net loss per share is computed by dividing the net loss by the weighted-average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing the net loss by the weighted-average number of common shares and, adjusted by any effects of warrants and options outstanding, if dilutive, that may add to the number of common shares during the period. At December 31, 2015 there were approximately 6,059,537 common stock equivalents that were anti-dilutive and were not included in the calculation. |
Revenue Recognition | All revenue is recognized when persuasive evidence of an arrangement exists, the service or sale is complete, the price is fixed or determinable and collectability is reasonably assured. Revenue is derived from the sale of crude oil and natural gas. Revenue from crude oil and natural gas sales is recognized when the product is delivered to the purchaser and collectability is reasonably assured. The Company follows the sales method of accounting for oil and natural gas revenue, so it recognizes revenue on all natural gas or crude oil sold to purchasers. |
Comprehensive Loss | FASB ASC 220 "Comprehensive Income," establishes standards for the reporting and display of comprehensive income and its components in the consolidated statement of operations and comprehensive loss. For the fiscal years ended December 31, 2015 and 2014, comprehensive income (loss) was $19,028 and ($179,263) respectively, and consisted primarily of unrealized gains and (losses) on available for sale securities. |
Income Taxes | The Company accounts for income taxes under FASB Codification Topic 740-10-25 ("ASC 740-10-25"). Under ASC 740-10-25, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740-10-25, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company provides a valuation allowance for deferred tax assets for which it does not consider realization of such assets likely. The Company did not incur any material impact to its financial condition or results of operations due to the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company is subject to U.S federal jurisdiction income tax examinations for the tax years 2007 through 2015. In addition, the Company is subject to state and local income tax examinations for the tax years 2007 through 2015. |
Stock-Based Compensation | The Company may issue stock options to employees and stock options or warrants to non-employees in non-capital raising transactions for services and for financing costs. The Company has adopted ASC Topic 718, "Stock based Compensation", which establishes a fair value method of accounting for stock-based compensation plans. In accordance with guidance now incorporated in ASC Topic 718, the cost of stock options and warrants issued to employees and non-employees is measured on the grant date based on the fair value. The fair value is determined using the Black-Scholes option pricing model. The resulting amount is charged to expense on the straight-line basis over the period in which the Company expects to receive the benefit, which is generally the vesting period. The fair value of stock warrants was determined at the date of grant using the Black-Scholes option pricing model. The Black-Scholes option model requires management to make various estimates and assumptions, including expected term, expected volatility, risk-free rate, and dividend yield. The expected term represents the period of time that stock-based compensation awards granted are expected to be outstanding and is estimated based on considerations including the vesting period, contractual term and anticipated employee exercise patterns. Expected volatility is based on the historical volatility of the Company's stock. The risk-free rate is based on the U.S. Treasury yield curve in relation to the contractual life of stock-based compensation instrument. The dividend yield assumption is based on historical patterns and future expectations for the Company dividends. |
Long-term Investment | Management determines the appropriate classification of investment securities at the time of purchase. Securities are classified held-to-maturity when the Company has both the positive intent and ability to hold the securities to maturity. Held-to-maturity securities are stated at amortized cost. Securities that are bought and held principally for the purpose of selling in the near term are classified as trading securities and reported at fair value, with unrealized gains and losses included in earnings. Securities not classified as held-to-maturity or trading are classified as available-for-sale. Available-for-sale securities are stated at fair value, the changes in the market value of available-for-sale securities, excluding other-than-temporary impairments, are reflected in Other Comprehensive Loss, with the impairment losses, net of income taxes, charged to loss in the period in which it occurs. The fair value of securities is based on quoted market prices. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities. A decline in the market value of any available-for-sale or held-for-maturity security below cost that is deemed to be other-then-temporary results in a reduction in carrying amount to fair value. Impairments that are considered other-than-temporary are recognized as a loss in the consolidated statements of operations and comprehensive loss. The Company considers various factors in reviewing impairments, including the length of time and extent to which fair value has been less than the Company's cost basis, the financial condition and near-term prospects of the issuer, and the Company's intent and ability to hold the investments for a period of time sufficient to allow for any anticipated recovery in market value. As at December 31, 2015 and 2014, the Company had no trading or held-to-maturity securities. On September 9, 2014, the Company subscribed for 1,250,000 units of Tanager Energy Inc. ("Tanager"), a Canadian mining company listed on the Canadian TSX Venture Exchange as a Tier 2 company and trading under the stock symbol "TAN," at a price of C$0.08 per unit. Each unit consists of one share of Tanager's common stock and one warrant. Each warrant entitles the Company to subscribe for one additional Common Share at a price of C$0.15 at any time until October 5, 2016. The Warrants expired without exercise on October 5, 2016. The total price for the units subscribed is C$101,247.47. The Company paid US$92,000, which was equivalent to C$101,247.47 on September 11, 2014. On October 6, 2014, the Company subscribed for an additional 2,187,500 units of Tanager at a price of C$0.08 per unit. Each unit consists of one share of Tanager's common stock and one warrant. Each warrant entitles the Company to subscribe for one additional Common Share at a price of $ 0.15 at any time until October 5, 2016. The Warrants expire on October 5, 2016. The total price for the units subscribed is C$175,000. The Company paid US$155,444, which was equivalent to C$175,000 on October 17, 2014. The Company's investment in Tanager is considered as "available-for-sale" securities, and an unrealized gain of $19,028 was recorded in other comprehensive income for the year ended December 31, 2015. An unrealized loss of $179,316 was recorded in other comprehensive loss for the year ended December 31, 2014. |
Impairment of long-lived assets | In accordance with ASC 360, "Accounting for the Impairment or Disposal of Long-Lived Assets", the Company is required to review its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through the estimated undiscounted cash flows expected to result from the use and eventual disposition of the assets. Whenever any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair value. Assets are grouped and evaluated at the lowest level for their identifiable cash flows that are largely independent of the cash flows of other groups of assets. The Company considers historical performance and future estimated results in its evaluation of potential impairment and then compares the carrying amount of the asset to the future estimated cash flows expected to result from the use of the asset. If the carrying amount of the asset exceeds estimated expected undiscounted future cash flows, the Company measures the amount of impairment by comparing the carrying amount of the asset to its fair value. The estimation of fair value is generally determined by using the asset's expected future discounted cash flows or market value. The Company estimates fair value of the assets based on certain assumptions such as budgets, internal projections, and other available information as considered necessary. There was no impairment of long-lived assets recorded during the years ended December 31, 2015 and 2014, except oil and gas properties. |
Foreign Currency Exchange | An entity's functional currency is the currency of the primary economic environment in which it operates, normally that is the currency of the environment in which the entity primarily generates and expends cash. Management's judgment is essential to determine the functional currency by assessing various indicators, such as cash flows, sales price and market, expenses, financing and inter-company transactions and arrangements. Functional currency of the parent company is the U.S. Dollar. The reporting currency of the Company is the U.S. Dollar, and the functional currency of its oil and gas operations is the Canadian Dollar ("CAD" or "C$" herein). The oil and gas operations of the Company are located in Alberta, Canada, in which the CAD is the primary economic environment. The reporting currency of these consolidated financial statements is the U.S. Dollar. For financial reporting purposes, the operational results of the Company's oil and gas operations are prepared using the CAD, and are translated into the Company's reporting currency, the U.S. Dollar. Assets and liabilities are translated using the exchange rate at each balance sheet date. Revenue and expenses are translated using average rates prevailing during each reporting period, and stockholders deficit is translated at historical exchange rates. |
Convertible Notes Payable | The Company accounts for conversion options embedded in convertible notes in accordance with ASC 815. ASC 815 generally requires companies to bifurcate conversion options embedded in convertible notes from their host instruments and to account for them as free standing derivative financial instruments. The Company has evaluated the terms and conditions of the convertible note under the guidance of ASC 815. The conversion feature did not meet the definition of "indexed to a company's own stock" provided for in ASC 815 due to the down round protection feature. Therefore, the conversion feature requires bifurcation and liability classification. Additionally, the default put requires bifurcation because it is indexed to risks that are not associated with credit or interest risk. As a result, the compound embedded derivative comprises of (i) the embedded conversion feature and (i) the default put. Rather than bifurcating and recording the compound embedded derivative as a derivative liability, the Company elected to initially and subsequently measure the convertible note in its entirety at fair value, with changes in fair value recognized in earnings in accordance with ASC 815-15-25-4. |
Derivative Liability | We review the terms of convertible debt issues to determine whether there are embedded derivative instruments, including embedded conversion options, which are required to be bifurcated and accounted for separately as derivative financial instruments. In circumstances where the host instrument contains more than one embedded derivative instrument, including the conversion option, that is required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument. Bifurcated embedded derivatives are initially recorded at fair value and are then revalued at each reporting date with changes in the fair value reported as non-operating income or expense. When the equity or convertible debt instruments contain embedded derivative instruments that are to be bifurcated and accounted for as liabilities, the total proceeds received are first allocated to the fair value of all the bifurcated derivative instruments. The remaining proceeds, if any, are then allocated to the host instruments themselves, usually resulting in those instruments being recorded at a discount from their face value. The discount from the face value of the convertible debt, together with the stated interest on the instrument, is amortized over the life of the instrument through periodic charges to interest expense. |
Accounting for Asset Retirement Obligations | Asset retirement obligations (ARO) primarily represent the estimated present value of the amount we will incur to plug, abandon and remediate our producing properties at the projected end of their productive lives, in accordance with applicable federal, state and local laws. We determined our ARO by calculating the present value of estimated cash flows related to the obligation. The retirement obligation is recorded as a liability at its estimated present value as of the obligations inception, with an offsetting increase to proved properties. On July 1, 2015, the Company recorded an asset retirement obligation and a related asset retirement cost in the amount of $406,214. This asset retirement cost was determined and discounted to present value using a credit-adjusted risk-free rate. After its initial recording, the liability is increased for the passage of time, with the increase being reflected as accretion expense in the consolidated statement of operations and comprehensive loss. Subsequent adjustments in the cost estimate are reflected in the liability and the amounts continue to be amortized over the useful life of the related long-lived asset. The following table describes the changes in the Company's asset retirement obligations for the year ended December 31, 2015: Asset retirement obligation at December 31, 2014 $ - Additions 406,214 Accretion expense 10,032 Asset retirement obligation at December 31, 2015 $ 416,246 |
Reclassification of Prior Year Presentation | Certain prior year amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations. |
Recently Adopted Accounting Pronouncements | The Financial Accounting Standards Board and other entities issued new or modifications to, or interpretations of, existing accounting guidance during 2015. Management has carefully considered the new pronouncements that altered generally accepted accounting principles and does not believe that any other new or modified principles will have a material impact on the Company's reported financial position or operations in the near term. |
Subsequent Events | The Company has evaluated all transactions through the date of filing of this Form 10-K/A for disclosure consideration. |
Restatement and Reclassificat19
Restatement and Reclassification (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Restatement And Reclassification Tables | |
Prior period adjustment of financial statements | Selected Consolidated Balance Sheets Information as of December 31, 2015 Previously Increase Reported (Decrease) Restated Petroleum and natural gas rights / oil and gas properties 818,230 (301,760 ) 516,470 Derivative liability 154,297 656,350 810,647 Additional paid in capital 7,864,085 96,287 7,960,372 Accumulated deficit (7,979,257 ) (985,184 ) (8,964,441 ) Selected Consolidated Statements of Operations and Comprehensive Loss for the year ended December 31, 2015 Previously Increase Reported (Decrease) Restated Impairment of oil and gas properties - 210,032 210,032 Derivative gain (loss) / change in fair value (5,686 ) 272,064 266,378 Derivative expense - 1,065,808 1,065,808 Loss from operations (608,480 ) (220,591 ) (829,071 ) Net loss (911,990 ) (985,184 ) (1,897,174 ) Net comprehensive loss (892,962 ) (985,184 ) (1,878,146 ) Basic and diluted loss per common share (0.03 ) (0.04 ) (0.07 ) Selected Consolidated Statements of Cash Flows for the year ended December 31, 2015 Previously Increase Reported (Decrease) Restated Net Loss (911,990 ) (985,184 ) (1,897,174 ) Derivative (gain) loss / change in fair value 5,686 793,744 799,430 Impairment of oil and gas properties - 210,032 210,032 Stock based compensation 108,000 19,438 127,438 |
Summary of Significant Accoun20
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Summary Of Significant Accounting Policies Tables | |
Financial Assets and liabilities measured at fair value | Assets and liabilities measured at fair value as of December 31, 2015 are classified below based on the three fair value hierarchy described above: Description Quoted Prices (Level 1) Significant (Level 2) Significant Unobservable Inputs (Level 3) Total Gains (Losses) Financial Assets Long term investment $ 87,156 $ - $ - $ 19,028 $ 87,156 $ - $ - $ 19,028 Financial liabilities Derivative liabilities $ - $ - $ 810,647 $ 266,378 $ - $ - $ 810,647 $ 266,378 Assets and liabilities measured at fair value as of December 31, 2014 are classified below based on the three fair value hierarchy described above: Description Quoted (Level 1) Significant (Level 2) Significant Unobservable (Level 3) Total Gains (Losses) Financial Assets Long term investment $ 68,128 $ - $ - $ (179,316 ) $ 68,128 $ - $ - $ (179,316 ) |
Summary of changes in the Company's asset retirement obligations | Asset retirement obligation at December 31, 2014 $ - Additions 406,214 Accretion expense 10,032 Asset retirement obligation at December 31, 2015 $ 416,246 |
Summary prepaid equity-based compensation | December 31, 2015 December 31, 2014 In November, 2015, a one-year consulting agreement with an unrelated party for services related to the petroleum industry in the amount of $165,000. $ 145,562 - $ 145,562 $ - |
Oil and gas properties | Oil and Gas Properties by Geographical Cost Center Years ended, December 31, Cost Center 2015 2014 Canada $ 34,881 $ - $ 34,881 $ - |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Related Party Transactions Tables | |
Summary of balances of related- parties transactions | Years ended December 31, 2015 2014 Due to Mr. Tom Simeo $ 37,159 $ 236,713 Due to Mr. James A. Doris advances 218,496 89,726 Due to Mr. James A. Doris demand loans 359,336 - $ 614,991 $ 326,439 |
Oil and Gas Properties(Tables)
Oil and Gas Properties(Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Oil And Gas Propertiestables | |
Summary of oil and gas activities | December 31, 2014 December 31, 2015 Additions Impairments Proved developed producing oil and gas properties Canada cost center $ 21,310 $ 24,374 $ (12,602 ) $ 33,082 Accumulated depreciation, depletion and amortization - (2,093 ) - (2,093 ) Proved developed producing oil and gas properties, net $ 21,310 $ 22,281 $ (12,602 ) $ 30,989 Undeveloped and non-producing oil and gas properties Canada cost center $ 333,858 $ 381,841 $ (197,430 ) $ 518,269 Accumulated depreciation, depletion and amortization - (32,788 ) - (32,788 ) Undeveloped and non-producing oil and gas properties, net $ 333,858 $ 349,053 $ (197,430 $ 485,481 Total Oil and Gas Properties, Net $ 355,168 $ 371,334 $ (210,032 ) $ 516,470 |
Income Tax (Tables)
Income Tax (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Tables | |
Summary of Deferred tax | December 31, December 31, 2015 2014 Net Operating Losses $ 8,964,441 $ 7,067,267 Statutory Tax Rate 35 % 35 % Effective Tax Rate - - Deferred Tax Asset 3,137,554 2,473,543 Valuation Allowance (3,137,554 ) (2,473,543 ) Net Deferred Tax Asset $ - $ - |
Capital Stock and Additional 24
Capital Stock and Additional Paid-in Capital (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Capital Stock And Additional Paid-in Capital Tables | |
Summary of capital stock | December 31, 2015 Number of shares December 31, 2014 Number of shares Authorized Outstanding Amount Authorized Outstanding Amount Capital Stock $ $ Preferred stock, $0.001 par value 5,000,000 28,092 28 5,000,000 28,092 28 Common stock, $0.001 par value 100,000,000 30,333,993 30,334 100,000,000 24,094,551 24,095 Common shares to be issued - - 675,000 675 Additional Paid-in Capital 7,960,372 7,162,660 |
Convertible Notes (Tables)
Convertible Notes (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Convertible notes payable | December 31, December 31, 2015 2014 (h) - JMJ Financial $ 6,778 $ - (i) - LG Capital 63,000 - (j) - GW Holdings 30,000 - (k) - EMA Financial 50,000 - (l) - JDF Capital 27,500 - 177,278 - Net of unamortized debt discount (153,730 ) - $ 23,548 $ - Less current portion (16,770 ) - $ 6,778 $ - |
May 21, 2013 Convertible Note [Member] | |
Allocation of Purchase of Convertible Notes | Convertible Note, Face Value $ 58,000 Convertible promissory note, Fair Value 106,522 Day-one derivative loss (48,522 ) |
October 28, 2013 Convertible Note [Member] | |
Allocation of Purchase of Convertible Notes | Convertible Note, Face Value $ 16,000 Convertible promissory note, Fair Value 44,410 Day-one derivative loss (28,410 ) |
April 8, 2014 Convertible Note [Member] | |
Allocation of Purchase of Convertible Notes | Convertible Note, Face Value $ 53,000 Convertible promissory note, Fair Value 102,414 Day-one derivative loss (49,414 ) |
Nature of Business and Going 26
Nature of Business and Going Concern (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Nature Of Business And Going Concern Details Narrative | |||
Net Loss | $ (1,897,174) | $ (651,474) | |
Total stockholders' deficiency | (1,277,693) | $ (57,261) | $ (279,140) |
Working capital deficiency | $ 1,458,295 |
Restatement and Reclassificat27
Restatement and Reclassification (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 13, 2014 | |
Petroleum and natural gas rights / oil and gas properties | $ 516,470 | $ 355,168 | $ 355,168 |
Derivative liability | 810,647 | ||
Accumulated deficit | (177,452) | ||
Impairment of oil and gas properties | 210,032 | ||
Derivative gain (loss) / change in fair value | 266,378 | (96,748) | |
Derivative expense | 1,065,808 | ||
Loss from operations | (566,651) | ||
Net loss | (1,897,174) | (651,474) | |
Net comprehensive loss | $ (830,737) | ||
Basic and diluted loss per common share | $ (0.03) | ||
Stock based compensation | $ 189,167 | ||
Previously Reported [Member] | |||
Petroleum and natural gas rights / oil and gas properties | 818,230 | ||
Derivative liability | 154,297 | ||
Additional paid in capital | 7,864,085 | ||
Accumulated deficit | (7,979,257) | ||
Impairment of oil and gas properties | |||
Derivative gain (loss) / change in fair value | (5,686) | ||
Derivative expense | |||
Loss from operations | (608,480) | ||
Net loss | (911,990) | ||
Net comprehensive loss | $ (892,962) | ||
Basic and diluted loss per common share | $ (0.03) | ||
Stock based compensation | $ 108,000 | ||
Increase (Decrease) [Member] | |||
Petroleum and natural gas rights / oil and gas properties | (301,760) | ||
Derivative liability | 656,350 | ||
Additional paid in capital | 96,287 | ||
Accumulated deficit | (985,184) | ||
Impairment of oil and gas properties | 210,032 | ||
Derivative gain (loss) / change in fair value | 272,064 | ||
Derivative expense | 1,065,808 | ||
Loss from operations | (220,591) | ||
Net loss | (985,184) | ||
Net comprehensive loss | $ (985,184) | ||
Basic and diluted loss per common share | $ (0.04) | ||
Stock based compensation | $ 19,438 | ||
Restated [Member] | |||
Petroleum and natural gas rights / oil and gas properties | 516,470 | ||
Derivative liability | 810,647 | ||
Additional paid in capital | 7,960,372 | ||
Accumulated deficit | (158,424) | ||
Impairment of oil and gas properties | 210,032 | ||
Derivative gain (loss) / change in fair value | 266,378 | ||
Derivative expense | 1,065,808 | ||
Loss from operations | (829,071) | ||
Net loss | (1,897,174) | ||
Net comprehensive loss | $ (1,878,146) | ||
Basic and diluted loss per common share | $ (0.07) | ||
Stock based compensation | $ 127,438 |
Restatement and Reclassificat28
Restatement and Reclassification (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Impairment of oil and gas properties | $ 210,032 | |
Derivative liability | 810,647 | |
Derivative expense | 1,065,808 | |
Derivative gain (loss) / change in fair value | 266,378 | $ (96,748) |
Previously Reported [Member] | ||
Impairment of oil and gas properties | ||
Derivative liability | 154,297 | |
Derivative expense | ||
Derivative gain (loss) / change in fair value | $ (5,686) |
Summary of Significant Accoun29
Summary of Significant Accounting Policies (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Financial Assets | ||
Long term investment | $ 68,128 | |
Financial Liabilities | ||
Derivative Liabilities | $ 810,647 | |
Quoted Prices in Active Markets for Identical Assets/Level 1 [Member] | ||
Financial Assets | ||
Long term investment | 87,156 | 68,128 |
Financial Liabilities | ||
Derivative Liabilities | ||
Significant Other Observable Inputs/Level 2 [Member] | ||
Financial Assets | ||
Long term investment | ||
Financial Liabilities | ||
Derivative Liabilities | ||
Significant Unobservable Inputs/Level 3 [Member] | ||
Financial Assets | ||
Long term investment | ||
Financial Liabilities | ||
Derivative Liabilities | 810,647 | |
Total Gain Loss [Member] | ||
Financial Assets | ||
Long term investment | 19,028 | $ (179,316) |
Financial Liabilities | ||
Derivative Liabilities | $ 266,378 |
Summary of Significant Accoun30
Summary of Significant Accounting Policies (Details 1) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Prepaid equity-based compensation | $ 145,562 | |
Prepaid Equity-Based Compensation | ||
Prepaid equity-based compensation | $ 145,562 |
Summary of Significant Accoun31
Summary of Significant Accounting Policies (Details 2) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Depreciation depletion and amortization expense | $ 34,881 | |
CANADA[Member] | ||
Depreciation depletion and amortization expense | $ 34,881 |
Summary of Significant Accoun32
Summary of Significant Accounting Policies (Details 3) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Summary Of Significant Accounting Policies Details 3 | ||
Asset retirement obligation at December 31, 2014 | ||
Additions | 406,214 | |
Accretion expense | 10,032 | |
Asset retirement obligation at December 31, 2015 | $ 416,246 |
Summary of Significant Accoun33
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Summary Of Significant Accounting Policies Details Narrative | ||
Common stock equivalents as anti dilutive | 6,059,537 | |
Unrealized gain (loss) on securities available-for-sale | $ 19,028 | $ (179,316) |
Derivative Liabilities | 810,647 | |
Impairment of oil and gas properties | $ 210,032 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Due to related party | $ 614,991 | $ 326,439 |
Mr. Tom Simeo [Member] | ||
Due to related party | 37,159 | 236,713 |
Mr. James A. Doris advances [Member] | ||
Due to related party | 218,496 | 89,726 |
Mr. James A. Doris demand loans [Member] | ||
Due to related party | $ 359,336 |
Related Party Transactions (D35
Related Party Transactions (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Due to related party | $ 614,991 | $ 326,439 |
Accrued interest | 20,401 | |
Mr. Tom Simeo [Member] | ||
Advances to related party | 56,692 | |
Due to related party | 37,159 | 236,713 |
Mr. James A. Doris [Member] | ||
Advances to related party | 128,770 | |
Due to related party | $ 577,832 | $ 89,726 |
Oil and Gas Properties (Details
Oil and Gas Properties (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 13, 2014 |
Total Oil and Gas Properties, Net | $ 516,470 | $ 355,168 | $ 355,168 |
Proved Developed Producing [Member] | |||
Canada cost center | 33,082 | 21,310 | |
Accumulated depletion and impairment | (2,093) | ||
Oil and gas properties, net | 30,989 | 21,310 | |
Undeveloped and Non-producing [Member] | |||
Canada cost center | 518,269 | 333,858 | |
Accumulated depletion and impairment | (32,788) | ||
Oil and gas properties, net | 485,481 | $ 333,858 | |
Additions Proved Developed Producing [Member] | |||
Canada cost center | 24,374 | ||
Accumulated depletion and impairment | (2,093) | ||
Oil and gas properties, net | 22,281 | ||
Additions Undeveloped and non-producing [Member] | |||
Canada cost center | 381,841 | ||
Accumulated depletion and impairment | (32,788) | ||
Oil and gas properties, net | 349,053 | ||
Total Oil and Gas Properties, Net | 371,334 | ||
Impairments Proved Developed Producing [Member] | |||
Canada cost center | (12,602) | ||
Accumulated depletion and impairment | |||
Oil and gas properties, net | (12,602) | ||
Impairments Undeveloped and non-producing [Member] | |||
Canada cost center | (197,430) | ||
Accumulated depletion and impairment | |||
Oil and gas properties, net | (197,430) | ||
Total Oil and Gas Properties, Net | $ (210,032) |
Oil and Gas Properties (Detai37
Oil and Gas Properties (Details Nrrative) - USD ($) | Nov. 04, 2014 | Nov. 03, 2014 |
Tanager Energy Inc. [Member] | ||
Working interest | 50.00% | |
Canadian Association of Petroleum Landman Operating Procedure [Member] | ||
Working interest | 50.00% | |
First transaction amount | $ 302,367 | |
Second transaction amount | $ 52,801 |
Income Tax (Details)
Income Tax (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Income Tax Details | ||
Net Operating Losses | $ 8,964,441 | $ 7,067,267 |
Statutory tax rate | 35.00% | 35.00% |
Effective Tax Rate | 0.00% | 0.00% |
Deferred Tax Asset | $ 2,792,740 | $ 2,473,543 |
Valuation Allowance | (3,137,554) | (2,473,543) |
Net Deferred Tax Asset |
Income Tax (Details Narrative)
Income Tax (Details Narrative) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Income Tax Details Narrative | ||
Net operating losses | $ 7,979,257 | $ 7,067,267 |
Capital Stock and Additional 40
Capital Stock and Additional Paid-in Capital (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Capital Stock | ||
Preferred stock, $0.001 par value, Authorized | 5,000,000 | 5,000,000 |
Preferred stock, $0.001 par value, Outstanding | 28,092 | 28,092 |
Preferred stock, $0.001 par value, Amount | $ 28 | $ 28 |
Common stock, $0.001 par value, Authorized | 100,000,000 | 100,000,000 |
Common stock, $0.001 par value, Outstanding | 30,333,993 | 24,094,551 |
Common stock, $0.001 par value, Amount | $ 30,334 | $ 24,095 |
Common shares to be issued, Outstanding | 675,000 | |
Common shares to be issued, Amount | $ 675 | |
Additional Paid-In Capital | $ 7,960,372 | $ 7,162,660 |
Capital Stock and Additional 41
Capital Stock and Additional Paid-in Capital (Details Narrative) | 12 Months Ended |
Dec. 31, 2014USD ($)$ / sharesshares | |
June [Member] | |
Issuance of restricted shares of common stock | shares | 44,118 |
Restricted shares price | $ / shares | $ 0.34 |
July [Member] | |
Issuance of restricted shares of common stock | shares | 59,055 |
Restricted shares price | $ / shares | $ 0.254 |
September [Member] | |
Issuance of restricted shares of common stock | shares | 81,591 |
Restricted shares price | $ / shares | $ 0.3677 |
Issuance of common stock | shares | 500,000 |
Common stock price | $ / shares | $ 0.05 |
October [Member] | |
Issuance of restricted shares of common stock | shares | 31,597 |
Restricted shares price | $ / shares | $ 0.475 |
November [Member] | |
Issuance of common stock | shares | 150,000 |
Common stock price | $ / shares | $ 0.15 |
Common Stock | |
Provision from consulting services | $ | $ 47,500 |
Restricted Stock [Member] | |
Provision from consulting services | $ | $ 149,784 |
Convertible Notes (Details)
Convertible Notes (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Gross convertable notes payable | $ 177,278 | |
Net of unamortized debt discount | (153,730) | |
Convertible notes payable | 27,060 | |
Less current portion | (16,770) | |
Convertible notes - net of current | 6,778 | |
JMJ Financial [Member] | ||
Gross convertable notes payable | 6,778 | |
LG Capital [Member] | ||
Gross convertable notes payable | 63,000 | |
GW Holding [Member] | ||
Gross convertable notes payable | 30,000 | |
EMA Financial [Member] | ||
Gross convertable notes payable | 50,000 | |
JDF Capita [Member] | ||
Gross convertable notes payable | $ 27,500 |
Convertible Notes (Details 1)
Convertible Notes (Details 1) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Convertible promissory note, Fair Value | $ 16,770 | |
May 21, 2013 Convertible Note [Member] | ||
Convertible Note, Face Value | 58,000 | |
Convertible promissory note, Fair Value | 106,522 | |
Day-one derivative loss | (48,522) | |
October 28, 2013 Convertible Note [Member] | ||
Convertible Note, Face Value | 16,000 | |
Convertible promissory note, Fair Value | 44,410 | |
Day-one derivative loss | (28,410) | |
April 8, 2014 Convertible Note [Member] | ||
Convertible Note, Face Value | 53,000 | |
Convertible promissory note, Fair Value | 102,414 | |
Day-one derivative loss | $ (49,414) |
Convertible Notes (Details Narr
Convertible Notes (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
May 21, 2013 Convertible Note [Member] | ||
Changes in fair value of convertible note recorded | $ 47,940 | |
October 28, 2013 Convertible Note [Member] | ||
Changes in fair value of convertible note recorded | 8,437 | |
April 8, 2014 Convertible Note [Member] | ||
Changes in fair value of convertible note recorded | 40,371 | |
Extinguishment of the debt | $ 8,253 | |
May 22, 2015 Convertible Note [Member] | ||
Amount of note funded | $ 25,000 | |
Amount of note converted to common shares | $ 21,000 |