Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Nov. 30, 2018 | Jan. 14, 2019 | |
Document And Entity Information | ||
Entity Registrant Name | QUANTUM ENERGY INC. | |
Entity Central Index Key | 1,295,961 | |
Document Type | 10-Q | |
Trading Symbol | QEGY | |
Document Period End Date | Nov. 30, 2018 | |
Current Fiscal Year End Date | --02-28 | |
Amendment Flag | false | |
Entity's Reporting Status Current | Yes | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Elected Not To Use the Extended Transition Period | false | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 48,491,485 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,019 |
CONSOLIDATED BALANCE SHEETS (UN
CONSOLIDATED BALANCE SHEETS (UNAUDITED) - USD ($) | Nov. 30, 2018 | Feb. 28, 2018 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 7,021 | $ 19,864 |
Prepaid legal fees | 37,500 | |
TOTAL CURRENT ASSETS | 7,021 | 57,364 |
Deposit on land purchase | 7,822 | 7,822 |
TOTAL ASSETS | 14,843 | 65,186 |
CURRENT LIABILITIES: | ||
Accounts payable and accrued liabilities | 25,376 | 19,339 |
Accounts payable and accrued liabilities, related parties | 134,134 | 28,444 |
Promissory notes payable | 7,980 | 2,980 |
Promissory notes payable, related party | 64,300 | 4,300 |
TOTAL CURRENT LIABILITIES | 231,790 | 55,063 |
LONG-TERM LIABILITIES: | ||
Common stock payable | 152,198 | |
TOTAL LONG-TERM LIABILITIES | 152,198 | |
TOTAL LIABILITIES | 231,790 | 207,261 |
COMMITMENTS AND CONTINGENCIES (NOTE 6) | ||
STOCKHOLDERS' EQUITY (DEFICIT) | ||
Preferred Stock, $.001 par value; 5,000,000 shares authorized, none issued and outstanding | ||
Common Stock, $.001 par value; 495,000,000 shares authorized; 48,491,485 and 47,361,683 shares issued and outstanding, respectively | 48,491 | 47,362 |
Additional paid-in capital | 11,001,551 | 10,828,079 |
Accumulated deficit | (11,266,989) | (11,017,516) |
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) | (216,947) | (142,075) |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | $ 14,843 | $ 65,186 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Nov. 30, 2018 | Feb. 28, 2018 |
Statement of Financial Position [Abstract] | ||
Preferred Stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred Stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred Stock, shares issued | ||
Preferred Stock, shares outstanding | ||
Common Stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common Stock, shares authorized | 495,000,000 | 495,000,000 |
Common Stock, shares isssued | 48,491,485 | 47,361,683 |
Common Stock, shares outstanding | 48,491,485 | 47,361,683 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Nov. 30, 2018 | Nov. 30, 2017 | Nov. 30, 2018 | Nov. 30, 2017 | |
OPERATING EXPENSE | ||||
Advertising and marketing | $ 6,836 | |||
Management fees and compensation | 5,131 | |||
Office and public company expense | 8,468 | 6,710 | 30,659 | 18,760 |
Amortization of land purchase option agreements | 120,032 | |||
Legal and professional fees | 25,901 | 49,653 | 211,430 | 160,403 |
TOTAL OPERATING EXPENSES | 34,369 | 56,363 | 247,220 | 306,031 |
LOSS FROM OPERATIONS | (34,369) | (56,363) | (247,220) | (306,031) |
OTHER INCOME (EXPENSE) | ||||
Interest expense | (433) | (433) | ||
Foreign exchange gain (loss) | (30) | 81 | (1,820) | 766 |
TOTAL OTHER INCOME (EXPENSE) | (463) | 81 | (2,253) | 766 |
NET LOSS | $ (34,832) | $ (56,282) | $ (249,473) | $ (305,265) |
Basic and diluted loss per share (in dollars per share) | $ 0 | $ 0 | $ (0.01) | $ 0 |
Basic and diluted weighted average number shares outstanding (in shares) | 48,491,485 | 68,238,692 | 48,347,692 | 61,801,546 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - USD ($) | 9 Months Ended | |
Nov. 30, 2018 | Nov. 30, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (249,473) | $ (305,265) |
Adjustments to reconcile net loss to cash used by operating activities: | ||
Amortization of land purchase option agreements | 120,032 | |
Stock based compensation | 5,131 | |
Issuance of common shares for professional services | 17,272 | 85,000 |
Changes in operating assets and liabilities: | ||
Accounts payable and accrued liabilities | 6,037 | 45,726 |
Accounts payable and accrued liabilities, related parties | 105,690 | (11,990) |
Prepaid legal fees | 37,500 | |
Net cash used by operating activities | (77,843) | (66,496) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from sales of common stock | 50,000 | |
Proceeds from promissory note | 5,000 | |
Proceeds from promissory note, related party | 60,000 | |
Net cash provided by financing activities | 65,000 | 50,000 |
Net decrease in cash and cash equivalents | (12,843) | (16,496) |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 19,864 | 20,478 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | 7,021 | 3,982 |
NON-CASH FINANCING AND INVESTING ACTIVITIES: | ||
Common stock issued for common stock payable | $ 152,198 |
NATURE OF OPERATIONS
NATURE OF OPERATIONS | 9 Months Ended |
Nov. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
NATURE OF OPERATIONS | NOTE 1 - NATURE OF OPERATIONS QUANTUM ENERGY INC. (“the Company”) was under Development under of of Nevada On The Company is a development stage diversified holding company with an emphasis in land holdings, refinery and fuel distribution. The Company is domiciled in the Unites States of OTC market under symbol QEGY. |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Nov. 30, 2018 | |
Accounting Policies [Abstract] | |
SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation This summary of significant accounting policies is presented to assist in understanding the financial statements. The financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. The accompanying unaudited financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, as well as the instructions to Form 10-Q. Accordingly, the financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, the accompanying unaudited financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of its financial position as of November 30, 2018, and its results of operations for the three and nine month periods ended November 30, 2018 and 2017, and cash flows for the nine month periods ended November 30, 2018 and 2017. The balance sheet at February 28, 2018, was derived from audited annual financial statements but does not contain all of the footnote disclosures from the annual financial statements. All amounts presented are in U.S. dollars. For further information, refer to the financial statements as of and for the year ended February 28, 2018 and footnotes thereto in the Company’s Registration Form S-1/A filed December 6, 2018. Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries FTPM Resources Ltd. and Dominion Energy Processing Group, Inc. after elimination of the intercompany accounts and transactions. Going Concern These consolidated financial statements have been prepared in accordance with U.S. GAAP to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for the next twelve months. As shown in the accompanying financial statements, the Company has incurred operating losses since inception. As of November 30, 2018, the Company has limited financial resources with which to achieve the objectives and obtain profitability and positive cash flows. As shown in the accompanying balance sheets and statements of operations, the Company has an accumulated deficit of $11,266,989 at November 30, 2018, and a working capital deficit of $224,769. Achievement of the Company's objectives will be dependent upon the ability to obtain additional financing, generate revenue from current and planned business operations, and control costs. The Company plans to fund its future operations by joint venturing, obtaining additional financing from investors, and/or lenders, and attaining additional commercial revenue. However, there is no assurance that the Company will be able to achieve these objectives, therefore substantial doubt about its ability to continue as a going concern exists. The financial statements do not include adjustments relating to the recoverability of recorded assets nor the implications of associated bankruptcy costs should the Company be unable to continue as a going concern. In the event the Company is unable to fulfill the terms as specified in the Farm Contract of Purchase and Sale (Note 4), the Company could default on the agreement and surrender its right to future claims on the respective property. Use of Estimates The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the dates of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant areas requiring the use of management assumptions and estimates relate to long-lived asset impairments and stock-based compensation. Actual results could differ from these estimates and assumptions and could have a material effect on the Company’s reported financial position and results of operations. Risks and uncertainties The Company’s operations are subject to significant risks and uncertainties, including financial, operational, technological and other risks associated with operating an emerging oil and gas business, including the potential risk of business failure. Cash and cash equivalents The Company considers all highly liquid investments with original maturities of three months or less when acquired to be cash equivalents. Income taxes The Company accounts for income taxes using the liability method. The liability method requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of (i) temporary differences between financial statement carrying amounts of assets and liabilities and their basis for tax purposes and (ii) operating loss and tax credit carry-forwards for tax purposes. Deferred tax assets are reduced by a valuation allowance when management concludes that it is more likely than not that a portion of the deferred tax assets will not be realized in a future period. Fair value of financial instruments The Company's financial instruments include cash and cash equivalents, promissory notes payable, and promissory notes payable, related parties. All instruments are accounted for on a cost basis, which, due to the short maturity of these financial instruments, approximates fair value at November 30, 2018 and February 28, 2018, respectively. Long-Lived Assets The Company reviews long-lived assets which include a deposit on land purchase for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Events relating to recoverability may include significant unfavorable changes in business conditions or a forecasted inability to achieve break-even operating results over an extended period. The Company evaluates the recoverability of long-lived assets based upon forecasted undiscounted cash flows and reports any impairment at the lower of the carrying amount or the fair value less costs to sell. Fair value measurements When required to measure assets or liabilities at fair value, the Company uses a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used. The Company determines the level within the fair value hierarchy in which the fair value measurements in their entirety fall. The categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Level 1 uses quoted prices in active markets for identical assets or liabilities, Level 2 uses significant other observable inputs, and Level 3 uses significant unobservable inputs. The amount of the total gains or losses for the period are included in earnings that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date. The Company has no financial assets or liabilities that are adjusted to fair value on a recurring basis. At November 30, 2018 and February 28, 2018, the Company had no assets or liabilities accounted for at fair value on a recurring basis. Stock-based Compensation The Company estimates the fair value of options to purchase common stock using the Black-Scholes model, which requires the input of some subjective assumptions. These assumptions include estimating the length of time employees will retain their vested stock options before exercising them (“expected life”), the estimated volatility of the Company’s common stock price over the expected term (“volatility”), employee forfeiture rate, the risk-free interest rate and the dividend yield. Changes in the subjective assumptions can materially affect the estimate of fair value of stock-based compensation. Options granted have a ten-year maximum term and varying vesting periods as determined by the Board of Directors. The value of shares of common stock awards is determined based on the closing price of the Company’s stock on the date of the award. Compensation expense for equity awards are recognized over the period during which the recipient is required to provide service in exchange for the award. Reclassifications Certain reclassifications have been made to the 2017 financial statements in order to conform to the 2018 presentation. These reclassifications have no effect on net loss, total assets or accumulated deficit as previously reported. New Accounting Pronouncements In August 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (“ASU”) No. 2016-15 Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The update provides guidance on classification for cash receipts and payments related to eight specific issues. The update is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. The Company adopted the provisions of the pronouncement effective March 1, 2018 and it did not result in a material change to the statement of cash flows. In January 2017, the FASB issued ASU No. 2017-01 Business Combinations (Topic 805): Clarifying the Definition of a Business. The update clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The update is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company will apply the provisions of the update to potential future acquisitions occurring after the effective date. In June 2018, the FASB issued ASU No. 2018-07, Compensation-Stock Compensation, Improvements to Nonemployee Share-Based Payment Accounting. ASU No. 2018-07 aligns accounting for share-based payment transactions for acquiring goods and services from nonemployees with transaction with employees. The update is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. The Company is currently evaluating the impact of this update on its consolidated financial statements and related disclosures.” Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption. The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its financial condition, results of operations, cash flows or disclosures. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 9 Months Ended |
Nov. 30, 2018 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | NOTE 3 – EARNINGS PER SHARE Basic Earnings Per Share ("EPS") is computed as net income (loss) available to common stockholders divided by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur from common shares issuable through stock options and warrants. The dilutive effect of outstanding securities as of November 30, 2018 and November 30, 2017, respectively, would be as follows: November 30, 2018 November 30, 2017 Stock options 986,666 4,845,000 Warrants 2,129,802 1,000,000 TOTAL POSSIBLE DILUTION 3,116,468 5,845,000 At November 30, 2018 and 2017, respectively, the effect of the Company's outstanding options and warrants would have been anti-dilutive. |
OTHER ASSETS
OTHER ASSETS | 9 Months Ended |
Nov. 30, 2018 | |
Other Assets [Abstract] | |
OTHER ASSETS | NOTE 4 – OTHER ASSETS Deposit on land purchase On December 5, 2016, the Company executed a Farm Contract of Purchase and Sale with a land owner in Stoughton, Saskatchewan (“the Stoughton Agreement”). The purchase price of the property is $500,000 (Canadian) subject to certain terms and conditions including approval of the purchase by the Saskatchewan Farm Land Review board, the Company completing various test for hydrology and land suitability, the proposed refinery project meeting all requirements of various Saskatchewan government laws and bylaws, and full approval by all levels of provincial government and agencies. The Company paid $7,822 as a deposit on the property. The purchase contract originally expired on December 15, 2017, however, the contract was amended to extend the closing date to July 10, 2018 for removal of all terms and conditions to the purchase. On June 8, 2018, the Company amended the Stoughton Agreement to a purchase price of $525,000 (Canadian) and extended the option to purchase the property until December 31, 2018. The Stoughton Agreement expired on December 31, 2018. Management is currently negotiating an additional extension of the Stoughton Agreement. |
NOTES PAYABLE
NOTES PAYABLE | 9 Months Ended |
Nov. 30, 2018 | |
Debt Disclosure [Abstract] | |
NOTES PAYABLE | NOTE 5 –NOTES PAYABLE On October 31, 2018, the Company executed a Promissory Note with a principal amount of $5,000. The note is due on demand and bears interest in the amount of eight percent (8%) per annum, computed on the basis of actual number of days based upon a 360-day year. As of November 30, 2018, the accrued interest payable on the promissory note was $33 which is included in “Accounts payable and accrued liabilities”. The Company’s outstanding notes payable are summarized as follows: November 30, 2018 February 28, 2018 0% unsecured note payable $ 2,980 $ 2,980 8% unsecured note payable 5,000 — TOTAL $ 7,980 $ 2,980 These notes are all due on demand. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Nov. 30, 2018 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 6 –RELATED PARTY TRANSACTIONS Certain officers and directors of the Company had personally incurred various expenses on behalf of the Company. As of November 30, 2018 and February 28, 2018, the balances due to the officers and directors were $133,734 and $28,444, respectively. On October 31, 2018, the Company entered into a promissory note with a principal amount of $60,000 with a limited partnership in which a director of the Company is the general partner. The note is due on demand and bears interest in the amount of eight percent (8%) per annum, computed on the basis of actual number of days based upon a 360-day year. As of November 30, 2018, the accrued interest payable on the promissory note was $400 which is included in “Accounts payable and accrued liabilities, related party”. November 30, 2018 February 28, 2018 0% unsecured note payable $ 4,300 $ 4,300 8% unsecured note payable 60,000 — TOTAL $ 64,300 $ 4,300 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Nov. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 7 – COMMITMENTS AND CONTINGENCIES On April 15, 2018, the Company executed a conditional binding letter of intent, pursuant to which upon satisfaction of certain conditions, IEC Arizona, Inc, a privately-held Wyoming corporation and affiliated company of IEC Arizona, Inc (“IEC”), would be merged into Quantum Energy, Inc. The proposed merger is conditioned upon, among other things, IEC’s successful completion of its due diligence examination of the Company, the negotiation and execution of a definitive agreement, and IEC raising in the aggregate $50,000,000. Provided such conditions are satisfied including IEC’s funding of the Total Capital Investment, Quantum will issue to IEC such number of shares of Quantum common stock as shall represent 60% of the then issued and outstanding shares of Quantum common stock. Quantum will also, based on valuations yet to be determined, issue additional shares (after the initial issuance to IEC), to additional investors, as necessary to accommodate the closing of the Total Capital Investment. The combined entity will also provide the necessary funds required to prove out the viability of the development of the refinery (the “Refinery”) currently planned to be developed in Stoughton Saskatchewan, Canada including (a) obtaining environmental and engineering studies to prove the viability of the intended site, (b) if the site is determined to be viable, to acquire the land, (c) obtain required permits and (d) pay other related costs. The transaction is expected to be completed on or before December 31, 2018 or 180 days following approval of the S-1 filing, whichever date is later and may be extended by written agreement of Quantum Energy, Inc. and IEC. Several members of the Company’s board of directors are also officers and directors of IEC Arizona, Inc. |
COMMON STOCK
COMMON STOCK | 9 Months Ended |
Nov. 30, 2018 | |
Equity [Abstract] | |
COMMON STOCK | NOTE 8 – COMMON STOCK Common stock The Company is authorized to issue 495,000,000 shares of its common stock with a par value of $0.001 per share. All shares of common stock are equal to each other with respect to voting, liquidation, dividend, and other rights. Owners of shares are entitled to one vote for each share owned at any Shareholders’ meeting. Preferred stock The Company is authorized to issue 5,000,000 shares of its preferred stock with a no-par value per share with no designation of rights and preferences. On December 13, 2017, the Company issued 1,000,000 shares of its common stock pursuant to a retirement of 1,000,000 shares of convertible Series A preferred stock. On February 6, 2018, the Company’s Board of Directors cancelled and rescinded the certificate of Designations, Preferences and Rights of the Series A Preferred Stock. This exchange resulted in a deemed distribution to the preferred shareholders based on the fair value of the common shares received compared to the carrying value of the preferred shares exchanged. Common shares issued for cash On February 28, 2018, the Company closed a private placement of its securities (the “2018 Offering). The 2018 Offering consisted of the sale of “units” of the Company’s securities at the per unit price of $0.15. Each unit consisted of one share of common stock and one warrant to purchase an additional share of common stock. Warrants issued pursuant to the 2018 Offering entitled the holders to purchase shares of common stock for the price of $0.15 per share. The term of each warrant is for twenty-four months from date of issuance. The proceeds of $125,000 for the 2018 Offering were received prior to February 28, 2018 but the shares had not been issued until after that date. Thus, the proceeds are classified as “Common Stock Payable” as of February 28, 2018. The Company issued 833,333 shares of its common stock on April 4, 2018. Common shares issued for services On April 12, 2017, the Company issued 850,000 shares of its common stock with a fair value of $85,000 based on the closing price of $0.10 per share for professional services. On April 4, 2018, the Company issued 181,323 shares of its common stock to two service providers in lieu of cash payment for accounts payable pursuant to the terms of the 2018 Offering. Based on a share price of $0.15, the fair value of the shares issued was $27,198 which approximates the fair value of the consideration given and were classified as “Common Stock Payable” as of February 28, 2018. On April 4, 2018, the Company issued 115,146 shares of its common to a service provider in lieu of cash for professional services provided during March and April 2018. Based on a share price of $0.15, the fair value of the shares issued is $17,272. Common stock retirement On January 27, 2018, the former chairman of the Company’s board of directors and a current director of the Company’s board of directors agreed to return 5,000,000 shares of the Company’s common stock, respectively for an aggregate total of 10,000,000 common shares for consideration of $Nil. The shares are held by the Company as authorized but unissued treasury shares as of November 30, 2018. |
STOCK OPTIONS
STOCK OPTIONS | 9 Months Ended |
Nov. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
STOCK OPTIONS | NOTE 9 - STOCK OPTIONS Options issued for consulting services In consideration of various agreements in exchange for consulting services, the Company issued stock options to purchase shares of the Company’s common stock based on "fair market price" which is typically the closing price of the Company's common stock on the issue dates. On March 15, 2018, by mutual agreement, the Company amended 666,666 fully-vested options to purchase common stock at an exercise price of $0.40 per share to an exercise price of $1.00 per share. The expiration date of the options was extended from August 13, 2018 to December 31, 2018. By mutual agreement, the Company and the holder also rescinded 333,334 non-vested options to purchase common stock. The Company recognized an expense of $5,131 which represents the excess of fair value of the options post-modification compared to the fair value of the options pre-modification as of March 15, 2018. On March 15, 2018, by mutual agreement, the Company amended 1,100,000 options to purchase common stock at an exercise price of $0.22 per share to 320,000 fully-vested options to purchase common stock at an exercise price of $1.00. The expiration date of the options was modified from August 13, 2018 to December 31, 2018. The fair value of the options after modification of terms did not exceed the fair value of the options prior to modification. On March 23, 2018, 1,000,000 options, of which 666,666 were fully vested, were terminated at the request of the option holder. Prior to termination the options had an exercise price of $0.40 per share. As of November 30, 2018, there was no unrecognized stock option expense for consulting services. Options issued for land purchase option agreements In consideration for option agreements to purchase land located in the State of Montana, the Company issued stock options to purchase shares of the Company’s common stock based on "fair market price" which is typically considered the closing price of the Company's common stock on the issue dates. All the options for land purchase options expired on July 21, 2017 and August 22, 2017. The following table summarizes additional information about all options granted by the Company as of November 30, 2018: Date of Grant Options outstanding Options exercisable Price (a) Remaining term (b) August 13, 2015 666,666 666,666 $ 1.00 0.03 December 2, 2016 320,000 320,000 1.00 0.03 Total options 986,666 986,666 $ 1.00 0.08 (a) Weighted average exercise price per shares (b) Weighted average remaining contractual term in years. |
WARRANTS
WARRANTS | 9 Months Ended |
Nov. 30, 2018 | |
Warrants and Rights Note Disclosure [Abstract] | |
WARRANTS | NOTE 10 - WARRANTS On March 15, 2018, by mutual agreement, the Company amended 500,000 common stock purchase warrants from an exercise price of $0.13 per share to $1.00 per share. On or about March 15, 2018, by mutual agreement, the Company amended 500,000 common stock purchase warrants from an exercise price of $0.21 per share to $1.00 per share and extended the expiration date to June 9, 2020. The following is a summary of the Company’s warrants issued and outstanding: For the nine months ended November 30, 2018 For the nine months ended November 30, 2017 Warrants Price (a) Warrants Price (a) Beginning balance 2,129,802 $ 1.00 1,177,934 $ 0.19 Issued — — 500,000 0.10 Exercised — — — — Expired — — (677,934 ) (0.90 ) Ending balance 2,129,802 $ 1.00 1,000,000 $ 0.17 (a) Weighted average exercise price per shares The following table summarizes additional information about the warrants granted by the Company as of November 30, 2018: Date of Grant Warrants outstanding Warrants exercisable Price Remaining term (years) November 19, 2016 500,000 500,000 1.00 0.97 July 10, 2017 500,000 500,000 1.00 1.53 February 28, 2018 1,129,802 1,129,802 1.00 1.25 Total warrants 2,129,802 2,129,802 1.00 1.27 |
SIGNIFICANT ACCOUNTING POLICI_2
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Nov. 30, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation This summary of significant accounting policies is presented to assist in understanding the financial statements. The financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. The accompanying unaudited financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information, as well as the instructions to Form 10-Q. Accordingly, the financial statements do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, the accompanying unaudited financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of its financial position as of November 30, 2018, and its results of operations for the three and nine month periods ended November 30, 2018 and 2017, and cash flows for the nine month periods ended November 30, 2018 and 2017. The balance sheet at February 28, 2018, was derived from audited annual financial statements but does not contain all of the footnote disclosures from the annual financial statements. All amounts presented are in U.S. dollars. For further information, refer to the financial statements as of and for the year ended February 28, 2018 and footnotes thereto in the Company’s Registration Form S-1/A filed December 6, 2018. |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries FTPM Resources Ltd. and Dominion Energy Processing Group, Inc. after elimination of the intercompany accounts and transactions. |
Going Concern | Going Concern These consolidated financial statements have been prepared in accordance with U.S. GAAP to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for the next twelve months. As shown in the accompanying financial statements, the Company has incurred operating losses since inception. As of November 30, 2018, the Company has limited financial resources with which to achieve the objectives and obtain profitability and positive cash flows. As shown in the accompanying balance sheets and statements of operations, the Company has an accumulated deficit of $11,266,989 at November 30, 2018, and a working capital deficit of $224,769. Achievement of the Company's objectives will be dependent upon the ability to obtain additional financing, generate revenue from current and planned business operations, and control costs. The Company plans to fund its future operations by joint venturing, obtaining additional financing from investors, and/or lenders, and attaining additional commercial revenue. However, there is no assurance that the Company will be able to achieve these objectives, therefore substantial doubt about its ability to continue as a going concern exists. The financial statements do not include adjustments relating to the recoverability of recorded assets nor the implications of associated bankruptcy costs should the Company be unable to continue as a going concern. In the event the Company is unable to fulfill the terms as specified in the Farm Contract of Purchase and Sale (Note 4), the Company could default on the agreement and surrender its right to future claims on the respective property. |
Use of Estimates | Use of Estimates The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the dates of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant areas requiring the use of management assumptions and estimates relate to long-lived asset impairments and stock-based compensation. Actual results could differ from these estimates and assumptions and could have a material effect on the Company’s reported financial position and results of operations. |
Risks and uncertainties | Risks and uncertainties The Company’s operations are subject to significant risks and uncertainties, including financial, operational, technological and other risks associated with operating an emerging oil and gas business, including the potential risk of business failure. |
Cash and cash equivalents | Cash and cash equivalents The Company considers all highly liquid investments with original maturities of three months or less when acquired to be cash equivalents. |
Income taxes | Income taxes The Company accounts for income taxes using the liability method. The liability method requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of (i) temporary differences between financial statement carrying amounts of assets and liabilities and their basis for tax purposes and (ii) operating loss and tax credit carry-forwards for tax purposes. Deferred tax assets are reduced by a valuation allowance when management concludes that it is more likely than not that a portion of the deferred tax assets will not be realized in a future period. |
Fair value of financial instruments | Fair value of financial instruments The Company's financial instruments include cash and cash equivalents, promissory notes payable, and promissory notes payable, related parties. All instruments are accounted for on a cost basis, which, due to the short maturity of these financial instruments, approximates fair value at November 30, 2018 and February 28, 2018, respectively. |
Long-Lived Assets | Long-Lived Assets The Company reviews long-lived assets which include a deposit on land purchase for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Events relating to recoverability may include significant unfavorable changes in business conditions or a forecasted inability to achieve break-even operating results over an extended period. The Company evaluates the recoverability of long-lived assets based upon forecasted undiscounted cash flows and reports any impairment at the lower of the carrying amount or the fair value less costs to sell. |
Fair value measurements | Fair value measurements When required to measure assets or liabilities at fair value, the Company uses a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used. The Company determines the level within the fair value hierarchy in which the fair value measurements in their entirety fall. The categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Level 1 uses quoted prices in active markets for identical assets or liabilities, Level 2 uses significant other observable inputs, and Level 3 uses significant unobservable inputs. The amount of the total gains or losses for the period are included in earnings that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date. The Company has no financial assets or liabilities that are adjusted to fair value on a recurring basis. At November 30, 2018 and February 28, 2018, the Company had no assets or liabilities accounted for at fair value on a recurring basis. |
Stock-based Compensation | Stock-based Compensation The Company estimates the fair value of options to purchase common stock using the Black-Scholes model, which requires the input of some subjective assumptions. These assumptions include estimating the length of time employees will retain their vested stock options before exercising them (“expected life”), the estimated volatility of the Company’s common stock price over the expected term (“volatility”), employee forfeiture rate, the risk-free interest rate and the dividend yield. Changes in the subjective assumptions can materially affect the estimate of fair value of stock-based compensation. Options granted have a ten-year maximum term and varying vesting periods as determined by the Board of Directors. The value of shares of common stock awards is determined based on the closing price of the Company’s stock on the date of the award. Compensation expense for equity awards are recognized over the period during which the recipient is required to provide service in exchange for the award. |
Reclassifications | Reclassifications Certain reclassifications have been made to the 2017 financial statements in order to conform to the 2018 presentation. These reclassifications have no effect on net loss, total assets or accumulated deficit as previously reported. |
New Accounting Pronouncements | New Accounting Pronouncements In August 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (“ASU”) No. 2016-15 Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The update provides guidance on classification for cash receipts and payments related to eight specific issues. The update is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. The Company adopted the provisions of the pronouncement effective March 1, 2018 and it did not result in a material change to the statement of cash flows. In January 2017, the FASB issued ASU No. 2017-01 Business Combinations (Topic 805): Clarifying the Definition of a Business. The update clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The update is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company will apply the provisions of the update to potential future acquisitions occurring after the effective date. In June 2018, the FASB issued ASU No. 2018-07, Compensation-Stock Compensation, Improvements to Nonemployee Share-Based Payment Accounting. ASU No. 2018-07 aligns accounting for share-based payment transactions for acquiring goods and services from nonemployees with transaction with employees. The update is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. The Company is currently evaluating the impact of this update on its consolidated financial statements and related disclosures.” Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption. The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its financial condition, results of operations, cash flows or disclosures. |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 9 Months Ended |
Nov. 30, 2018 | |
Earnings Per Share [Abstract] | |
Schedule of earning per share basic and diluted | The dilutive effect of outstanding securities as of November 30, 2018 and November 30, 2017, respectively, would be as follows: November 30, 2018 November 30, 2017 Stock options 986,666 4,845,000 Warrants 2,129,802 1,000,000 TOTAL POSSIBLE DILUTION 3,116,468 5,845,000 |
NOTES PAYABLE (Tables)
NOTES PAYABLE (Tables) | 9 Months Ended |
Nov. 30, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of outstanding note payable | The Company’s outstanding notes payable are summarized as follows: November 30, 2018 February 28, 2018 0% unsecured note payable $ 2,980 $ 2,980 8% unsecured note payable 5,000 — TOTAL $ 7,980 $ 2,980 |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 9 Months Ended |
Nov. 30, 2018 | |
Related Party Transactions [Abstract] | |
Schedule of account payable and accured liabilities related party | As of November 30, 2018, the accrued interest payable on the promissory note was $400 which is included in “Accounts payable and accrued liabilities, related party”. November 30, 2018 February 28, 2018 0% unsecured note payable $ 4,300 $ 4,300 8% unsecured note payable 60,000 — TOTAL $ 64,300 $ 4,300 |
STOCK OPTIONS (Tables)
STOCK OPTIONS (Tables) | 9 Months Ended |
Nov. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of stock option granted | The following table summarizes additional information about all options granted by the Company as of November 30, 2018: Date of Grant Options outstanding Options exercisable Price (a) Remaining term (b) August 13, 2015 666,666 666,666 $ 1.00 0.03 December 2, 2016 320,000 320,000 1.00 0.03 Total options 986,666 986,666 $ 1.00 0.08 (a) Weighted average exercise price per shares (b) Weighted average remaining contractual term in years. |
WARRANTS (Tables)
WARRANTS (Tables) | 9 Months Ended |
Nov. 30, 2018 | |
Warrants and Rights Note Disclosure [Abstract] | |
Schedule of warrant issued and outstanding | The following is a summary of the Company’s warrants issued and outstanding: For the nine months ended November 30, 2018 For the nine months ended November 30, 2017 Warrants Price (a) Warrants Price (a) Beginning balance 2,129,802 $ 1.00 1,177,934 $ 0.19 Issued — — 500,000 0.10 Exercised — — — — Expired — — (677,934 ) (0.90 ) Ending balance 2,129,802 $ 1.00 1,000,000 $ 0.17 (a) Weighted average exercise price per shares |
Schedule of warrant granted | The following table summarizes additional information about the warrants granted by the Company as of November 30, 2018: Date of Grant Warrants outstanding Warrants exercisable Price Remaining term (years) November 19, 2016 500,000 500,000 1.00 0.97 July 10, 2017 500,000 500,000 1.00 1.53 February 28, 2018 1,129,802 1,129,802 1.00 1.25 Total warrants 2,129,802 2,129,802 1.00 1.27 |
SIGNIFICANT ACCOUNTING POLICI_3
SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 9 Months Ended | |
Nov. 30, 2018 | Feb. 28, 2018 | |
Accounting Policies [Abstract] | ||
Accumulated deficit | $ (11,266,989) | $ (11,017,516) |
Working capital deficit | $ (224,769) |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) | 9 Months Ended | |
Nov. 30, 2018 | Nov. 30, 2017 | |
TOTAL POSSIBLE DILUTION | $ 3,116,468 | $ 5,845,000 |
Warrant [Member] | ||
TOTAL POSSIBLE DILUTION | 2,129,802 | 1,000,000 |
Stock Options [Member] | ||
TOTAL POSSIBLE DILUTION | $ 986,666 | $ 4,845,000 |
OTHER ASSETS (Details Narrative
OTHER ASSETS (Details Narrative) - The Stoughton Agreement [Member] | Dec. 05, 2016USD ($) | Jun. 08, 2018CAD ($) | Dec. 05, 2016CAD ($) |
Deposit on land purchase | $ 7,822 | ||
Maturity date | Jul. 10, 2018 | ||
Extension of maturity date | Dec. 31, 2018 | ||
CAD | |||
Purchase price of property | $ 525,000 | $ 500,000 |
NOTES PAYABLE (Details)
NOTES PAYABLE (Details) - USD ($) | Nov. 30, 2018 | Feb. 28, 2018 |
TOTAL | $ 7,980 | $ 2,980 |
0% Unsecured Note Payable [Member] | ||
TOTAL | 2,980 | 2,980 |
8% Unsecured Note Payable [Member] | ||
TOTAL | $ 5,000 |
NOTES PAYABLE (Details Narrativ
NOTES PAYABLE (Details Narrative) - USD ($) | Oct. 31, 2018 | Nov. 30, 2018 | Feb. 28, 2018 |
Accrued interest payable | $ 25,376 | $ 19,339 | |
Interest rate | 8.00% | ||
8% Unsecured Note Payable [Member] | |||
Principal amount | $ 5,000 | ||
Accrued interest payable | $ 33 | ||
Description of payment term | The note is due on demand and bears interest in the amount of eight percent (8%) per annum, computed on the basis of actual number of days based upon a 360-day year. | ||
Interest rate | 8.00% |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) | Nov. 30, 2018 | Feb. 28, 2018 |
TOTAL | $ 64,300 | $ 4,300 |
0% Unsecured Not Payable [Member] | ||
TOTAL | 4,300 | 4,300 |
8% Unsecured Not Payable [Member] | ||
TOTAL | $ 60,000 |
RELATED PARTY TRANSACTIONS (D_2
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | Nov. 30, 2018 | Oct. 31, 2018 | Feb. 28, 2018 |
Balances due to the officers and directors | $ 133,734 | $ 28,444 | |
Interest rate | 8.00% | ||
Accounts Payable And Accrued Liabilities, Related Party [Member] | |||
Accrued interest payable | $ 400 | ||
8% Unsecured Not Payable [Member] | General Partner [Member] | |||
Principal amount | $ 60,000 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Narrative) - I E C Arizona Inc [Member] | Apr. 15, 2018USD ($) |
Total capital investment | $ 50,000,000 |
Percentage of common stock issued | 60.00% |
COMMON STOCK (Details Narrative
COMMON STOCK (Details Narrative) - USD ($) | Apr. 04, 2018 | Feb. 28, 2018 | Jan. 27, 2018 | Dec. 13, 2017 | Apr. 12, 2017 | Nov. 30, 2018 |
Common stock authorized | 495,000,000 | 495,000,000 | ||||
Common stock (in dollars per share) | $ 0.001 | $ 0.001 | ||||
Number of common stock issued | 833,333 | |||||
Share price (in dollars per share) | $ 0.15 | $ 0.10 | ||||
Number of share issued for professional services | 850,000 | |||||
Value of share issued for professional services | $ 85,000 | |||||
Number of share issued for two service providers for accounts payable | 181,323 | |||||
Value of share issued for two service providers for accounts payable | $ 27,198 | |||||
Number of share issued for service providers for professional services | 115,146 | |||||
Value of share issued for service providers for professional services | $ 17,272 | |||||
Number of common stock repurchase | 5,000,000 | |||||
Total number of common stock repurchase | 10,000,000 | |||||
Value of total number of common stock repurchase | $ 0 | |||||
Number of preferred stock with a no-par value, authorized | 5,000,000 | 5,000,000 | ||||
Private Placement [Member] | ||||||
Description of unit | Each unit consisted of one share of common stock and one warrant to purchase an additional share of common stock. | |||||
Per unit price (in dollars per share) | $ 0.15 | |||||
Share price (in dollars per share) | $ 0.15 | |||||
Warrant term | 24 months | |||||
Proceeds from private placement | $ 125,000 | |||||
Convertible Series A Preferred Stock [Member] | ||||||
Number of share retirement | 1,000,000 |
STOCK OPTIONS (Details)
STOCK OPTIONS (Details) | 9 Months Ended | |
Nov. 30, 2018$ / sharesshares | ||
Options outstanding | 986,666 | |
Options exercisable | 986,666 | |
Weighted average exercise price per shares (in dollars per share) | $ / shares | $ 1 | [1] |
Weighted average remaining contractual term (year) | 29 days | [2] |
August 13, 2015 [Member] | ||
Options outstanding | 666,666 | |
Options exercisable | 666,666 | |
Weighted average exercise price per shares (in dollars per share) | $ / shares | $ 1 | [1] |
Weighted average remaining contractual term (year) | 11 days | [2] |
December 2, 2016 [Member] | ||
Options outstanding | 320,000 | |
Options exercisable | 320,000 | |
Weighted average exercise price per shares (in dollars per share) | $ / shares | $ 1 | [1] |
Weighted average remaining contractual term (year) | 11 days | [2] |
[1] | Weighted average exercise price per shares | |
[2] | Weighted average remaining contractual term in years. |
STOCK OPTIONS (Details Narrativ
STOCK OPTIONS (Details Narrative) - USD ($) | Mar. 23, 2018 | Mar. 15, 2018 | Nov. 30, 2018 |
Number of fully-vested options | 666,666 | ||
Exercise price (in dollars per share) | $ 0.40 | ||
Options outstanding | 1,000,000 | 986,666 | |
Number of unrecognized stock option expense for consulting services | 0 | ||
Mutual Agreement [Member] | |||
Number of fully-vested options | 666,666 | ||
Expiration date | Dec. 31, 2018 | ||
Excess of fair value of the options post-modification | $ 5,131 | ||
Mutual Agreement [Member] | 0.22 Exercise price [Member] | |||
Number of fully-vested options | 1,100,000 | ||
Exercise price (in dollars per share) | $ 0.22 | ||
Expiration date | Dec. 31, 2018 | ||
Mutual Agreement [Member] | 1.00 Exercise price [Member] | |||
Number of fully-vested options | 320,000 | ||
Exercise price (in dollars per share) | $ 1 | ||
Expiration date | Dec. 31, 2018 | ||
Number of non-vested options rescinded | 333,334 | ||
Mutual Agreement [Member] | Maximum [Member] | |||
Exercise price (in dollars per share) | $ 0.40 | ||
Mutual Agreement [Member] | Minimum [Member] | |||
Exercise price (in dollars per share) | $ 1 |
WARRANTS (Details)
WARRANTS (Details) - $ / shares | 9 Months Ended | ||
Nov. 30, 2018 | Nov. 30, 2017 | ||
Warrants and Rights Note Disclosure [Abstract] | |||
Beginning balance | 2,129,802 | 1,177,934 | |
Issued | 500,000 | ||
Exercised | |||
Expired | (677,934) | ||
Ending balance | 2,129,802 | 1,000,000 | |
Beginning balance (in dollars per share) | [1] | $ 1 | $ 0.19 |
Issued (in dollars per share) | [1] | 0.10 | |
Exercised (in dollars per share) | [1] | ||
Expired (in dollars per share) | [1] | (0.90) | |
Ending balance (in dollars per share) | [1] | $ 1 | $ 0.17 |
[1] | Weighted average exercise price per shares |
WARRANTS (Details 1)
WARRANTS (Details 1) - $ / shares | 9 Months Ended | ||||
Nov. 30, 2018 | Feb. 28, 2018 | Nov. 30, 2017 | Feb. 28, 2017 | ||
Warrants outstanding | 2,129,802 | 2,129,802 | 1,000,000 | 1,177,934 | |
Warrants exercisable | 2,129,802 | ||||
Weighted average exercise Price (in dollars per share) | [1] | $ 1 | $ 1 | $ 0.17 | $ 0.19 |
Warrants remaining term | 1 year 3 months 7 days | ||||
Warrant One [Member] | |||||
Date of Grant | Nov. 19, 2016 | ||||
Warrants outstanding | 500,000 | ||||
Warrants exercisable | 500,000 | ||||
Weighted average exercise Price (in dollars per share) | $ 1 | ||||
Warrants remaining term | 11 months 19 days | ||||
Warrants Two [Member] [Member] | |||||
Date of Grant | Jul. 10, 2017 | ||||
Warrants outstanding | 500,000 | ||||
Warrants exercisable | 500,000 | ||||
Weighted average exercise Price (in dollars per share) | $ 1 | ||||
Warrants remaining term | 1 year 6 months 11 days | ||||
Warrants Three [Member] | |||||
Date of Grant | Feb. 28, 2018 | ||||
Warrants outstanding | 1,129,802 | ||||
Warrants exercisable | 1,129,802 | ||||
Weighted average exercise Price (in dollars per share) | $ 1 | ||||
Warrants remaining term | 1 year 3 months | ||||
[1] | Weighted average exercise price per shares |
WARRANTS (Details Narrative)
WARRANTS (Details Narrative) - $ / shares | Nov. 30, 2018 | Mar. 15, 2018 | Feb. 28, 2018 | Nov. 30, 2017 | Feb. 28, 2017 | |
Number of Securities called by warrants or rights | 500,000 | |||||
Warrants exercise price ( in dollar per share) | [1] | $ 1 | $ 1 | $ 0.17 | $ 0.19 | |
Warrants expiration date | Jun. 9, 2020 | |||||
Minimum [Member] | ||||||
Warrants exercise price ( in dollar per share) | $ 0.13 | |||||
Maximum [Member] | ||||||
Warrants exercise price ( in dollar per share) | $ 1 | |||||
[1] | Weighted average exercise price per shares |