Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | May. 10, 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. 1of Form 10-K/A for the year ended December 31, 2015, amends in its entirety the Form 10-K that was originally filed on April 14, 2016 to reflect the completion of the audits of the Companys consolidated financial statements as of and for the year ended December 31, 2015, to update various disclosures throughout this Form 10-K/A and to include all appropriate certifications by the Principal Executive and Principal Financial Officers of the Company | ||
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 | 35,634,919 | ||
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 | $ 30,585 | $ 1,345 |
Other receivable - joint venture | 76,719 | |
Prepaid expenses | 145,561 | |
Total current assets | 252,865 | $ 1,345 |
Long term investment | 87,156 | 68,128 |
Petroleum and natural gas rights - net | 818,230 | $ 355,168 |
Loan costs | 11,458 | |
TOTAL ASSETS | 1,169,709 | $ 424,641 |
CURRENT LIABILITIES | ||
Other payable | 81,700 | 116,149 |
Accounts payable | 118,649 | $ 39,314 |
Derivative liability | 154,297 | |
Amount due to directors | 614,991 | $ 326,439 |
Convertible notes - current | 20,282 | |
Total current liabilities | 989,919 | $ 481,902 |
Convertible notes - net of current | 6,778 | |
Asset retirement obligation | 416,246 | |
TOTAL LIABILITIES | $ 1,412,943 | $ 481,902 |
STOCKHOLDERS' EQUITY (DEFICIENCY) | ||
Capital Stock | ||
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 | $ 28 |
Common stock, $0.001 par value, 100,000,000 shares Authorized, 30,333,993 shares issued and outstanding as of December 31, 2015, 24,094,551 shares issued and outstanding as of December 31, 2014 | $ 30,334 | 24,095 |
Shares to be issued | 675 | |
Additional Paid-In Capital | $ 7,864,085 | 7,162,660 |
Deficit | (7,979,257) | (7,067,267) |
Accumulated other comprehensive income (loss) | (158,424) | (177,452) |
TOTAL STOCKHOLDERS' DEFICIENCY | (243,234) | (57,261) |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY | $ 1,169,709 | $ 424,641 |
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 | |
Consolidated Statements Of Operations And Comprehensive Loss | ||
Revenue | $ 95,924 | |
Direct costs | 49,965 | |
Gross profit | 45,959 | |
Operating expenses | ||
General and administrative expenses | 211,470 | $ 42,596 |
Stock based compensation | 108,000 | 189,167 |
Professional fees | 212,964 | 61,620 |
Rent | 18,653 | 18,608 |
Wages | 69,000 | 249,607 |
Amortization and depreciation | 34,352 | 5,053 |
Total operating expenses | 654,439 | 566,651 |
Loss from operations | (608,480) | $ (566,651) |
Interest expense | (297,824) | |
Derivative loss | $ (5,686) | |
Change in fair value of convertible notes | $ (96,748) | |
Gain on extinguishment of debt | 9,485 | |
Other income | 2,440 | |
Net loss | $ (911,990) | (651,474) |
Unrealized gain on securities available-for-sale | $ 19,028 | (179,316) |
Foreign currency translation adjustment | 53 | |
Comprehensive loss | $ (892,962) | $ (830,737) |
Loss per weighted average number of common shares outstanding - basic and diluted | $ (0.03) | $ (0.03) |
Weighted average number of common shares outstanding - basic and diluted | 26,767,594 | 24,094,551 |
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 | $ (911,990) | $ (651,474) |
Adjustments to reconcile net loss to cash used in operating activities: | ||
Derivative loss | $ 5,686 | |
Change in fair value of convertible notes | $ 96,748 | |
Gain on extinguishment of debt | (9,485) | |
Stock based compensation | $ 108,000 | 189,167 |
Amortization and depreciation | 34,352 | $ 5,053 |
Accretion - Asset retirement obligation | 10,032 | |
Amortization of debt discount | 183,060 | |
Changes in operating assets and liabilities | ||
Increase (decrease) in accounts payable | 79,335 | $ (123,734) |
Increase (decrease) in other payables | 93,352 | 113,284 |
(Increase) decrease in prepaid expenses and deposits | 19,439 | $ 9,641 |
(Increase) decrease in other receivable | (76,719) | |
Net cash used in operating activities | $ (455,453) | $ (370,800) |
Cash flows from investing activities: | ||
Investment in Tanager Energy | (247,444) | |
Investment in petroleum and natural gas rights | $ (77,158) | (302,367) |
Net cash used in investing activities | (77,158) | (549,811) |
Cash flows from financing activities: | ||
Amount due to Director | 444,652 | $ 248,724 |
Payment of investment obligation | $ (52,801) | |
Proceeds from issuance of units | $ 607,942 | |
Proceeds from convertible notes | $ 369,000 | $ 53,000 |
Repayment of convertible notes | (199,000) | |
Net cash provided by financing activities | $ 561,851 | $ 909,666 |
Effect of exchange rate changes on cash | 51 | |
Net decrease in cash | $ 29,240 | (10,894) |
Cash at beginning of year | 1,345 | 12,239 |
Cash at ending of year | 30,585 | $ 1,345 |
Supplemental Cash Flow Information | ||
Cash paid for: Interest | $ 80,901 | |
Cash paid for: Income taxes | ||
Non-Cash transactions: | ||
Conversion of debt to equity | $ 252,101 | $ 188,007 |
Accounting for asset retirement cost and obligation | 406,214 | |
Stock issued as prepayment for consulting services | 165,000 | |
Discount on convertible debt | $ 330,500 |
Consolidated Statement of Chang
Consolidated Statement of Changes in Stockholders' Equity - USD ($) | Common Stock | Shares to be issued | Preferred Stock | Additional Paid-in Capital | 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 | |||||
Issuance of new shares for legal service, Shares | 1,406,331 | ||||||
Issuance of new shares for legal service, Amount | $ 1,406 | $ 187,761 | 189,167 | ||||
Issuance of new shares to investor, Shares | 2,330,534 | ||||||
Issuance of new shares to investor, 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 | ||||
Issuance of new shares - convertible notes, Shares | 1,599,029 | ||||||
Issuance of new shares - convertible notes, Amount | $ 1,598 | $ 186,409 | 188,007 | ||||
Unrealized gain (loss) on securities available-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 to be issued to investors, Shares | 675,000 | (675,000) | |||||
Shares to be issued to investors, Amount | $ 675 | $ (675) | |||||
Issuance of new shares - convertible notes, Shares | 550,000 | ||||||
Issuance of new shares - convertible notes, Amount | $ 550 | $ 20,450 | 21,000 | ||||
Unrealized gain (loss) on securities available-for-sale | $ (19,028) | (19,028) | |||||
Debt discount convertible debt | $ 330,500 | 330,500 | |||||
Derivative Liabilities | (286,839) | (286,839) | |||||
Issuance of new shares in satisfaction of debt, Shares | 421,571 | ||||||
Issuance of new shares in satisfaction of debt, Amount | $ 421 | 29,579 | 30,000 | ||||
Issuance of new shares in satisfaction of related party debt, Shares | 2,872,871 | ||||||
Issuance of new shares in satisfaction of related party debt, Amount | $ 2,873 | 198,228 | 201,101 | ||||
Issuance of new shares for consulting services, Shares | 720,000 | ||||||
Issuance of new shares for consulting services, Amount | $ 720 | 107,280 | 108,000 | ||||
Derivative liability adjustment | 138,227 | 138,227 | |||||
Issuance of new shares as prepayment for consulting services, Shares | 1,000,000 | ||||||
Issuance of new shares as prepayment for consulting services, Amount | $ 1,000 | $ 164,000 | 165,000 | ||||
Net Loss | $ (911,990) | (911,990) | |||||
Ending Balance, Shares at Dec. 31, 2015 | 30,333,993 | 28,092 | |||||
Ending Balance, Amount at Dec. 31, 2015 | $ 30,334 | $ 28 | $ 7,864,085 | $ (158,424) | $ (7,979,257) | $ (243,234) |
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 relative to providing professional advisory and consulting services is to help companies undergoing or anticipating periods of rapid growth, significant change or ownership transition, and when justified, staffing, financing, and/or providing operational support to such companies. Target companies must have superior management, intimate knowledge of their particular industry and a sound business plan, along with a desire and receptiveness for specific expertise to advance the company's business objectives. Viking's primary focus is directed toward North America, targeting various industries. Viking targets under-valued businesses with realistic appreciation potential and a defined exit strategy. The Company's business plan as it pertains to the oil and gas industry is to explore and develop oil and gas properties through collaborative partnerships with other companies in this field of endeavor. In November of 2014, the Company entered its first contract of this kind as explained in Note 4. Viking Investments is neither an underwriter as the term is defined in Section 2(a)(11) of the Securities Act of 1933, nor an investment company pursuant to the Investment Company Act of 1940. Viking Investments is not an investment adviser pursuant to the Investment Advisers Act of 1940. Viking Investments is not registered with FINRA or SIPC. 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 $892,962 and $830,737 for the years ended December 31, 2015 and December 31, 2014, respectively. The Company had a working capital deficiency in the amount of $743,832 as of December 31, 2015. The Company had accumulated a negative shareholders' deficiency of $243,234 as of December 31, 2015, and a negative shareholders' deficiency of $57,261 as of December 31, 2014. 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 considers 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. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Note 2. 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 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 generally accepted accounting principles in the United States of America ("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 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 and impairment of long-term investment. d) Financial Instruments ASC Topic 820-10, "Fair Value Measurements and Disclosures," 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 balance sheets for other receivables, other payable, accrued liabilities, short term loan and due to director each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows: · Level 1: inputs to the valuation methodology are quoted prices (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. The changes in the Level 3 investments during the year ended December 31, 2015 consisted of an investment by the Company in well #2 of the Joffre project in the amount of $77,158, and the recording of an Asset Retirement Cost for the Joffre project of $406,214 minus depreciation of $20,310. 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 in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Gains (Losses) Financial Assets Long term investment $ 87,156 $ - $ - $ 19,028 Petroleum and natural gas rights - net - - 818,230 - $ 87,156 $ - $ 818,230 $ 19,028 Financial liabilities Derivative liabilities $ - $ 154,297 $ - $ (5,686 ) $ - $ 154,297 $ - $ (5,686 ) 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 Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Gains (Losses) Financial Assets Long term investment $ 68,128 $ - $ - $ (179,316 ) Petroleum and natural gas rights - net - - 355,168 - $ 68,128 $ - $ 355,168 $ (179,316 ) Financial liabilities Derivative liabilities $ - $ - $ - $ - $ - $ - $ - $ - e) Cash Cash includes bank deposits and cash on hand. f) 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 2,500,00 common stock equivalents that were anti-dilutive and were not included in the calculation. g) Revenue Recognition Revenues from contracts for consulting services with fees based on time and materials are recognized as the services are performed and amounts are earned in accordance with the Securities and Exchange Commission (the "SEC") Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial Statements" ("SAB 101"), as amended by SAB No. 104, "Revenue Recognition" ("SAB 104"). The Company considers amounts to be earned once evidence of an arrangement has been obtained, services are delivered, fees are fixed or determinable, and collectability is reasonably assured. In such contracts, the Company's efforts, measured by time incurred, typically represent the contractual milestones or output measure, which is the contractual earnings pattern. For consulting contracts with fixed fees, the Company recognizes revenues in accordance with contract terms, and when the services are delivered, price is determinable and the revenue is earned or collectable. Revenues from oil and gas properties are recognized under the entitlements method of accounting, whereby revenue is recognized on the amount the Company is entitled to, based on its interest in the property after all costs associated with exploration, gathering, marketing and sales relative to the volumes of product sold. h) Comprehensive Income FASB ASC 220 "Comprehensive Income," establishes standards for the reporting and display of comprehensive income and its components in the consolidated financial statements. For the fiscal years ended December 31, 2015 and 2014, comprehensive loss was $892,962 and $830,737, respectively. i) 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. j) 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 (formerly SFAS 123R), "Accounting for 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. k) 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 Income, with the impairment losses, net of income taxes, charged to net income 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. 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 and held-to-maturity securities. On September 9, 2014, the Company subscribed for 1,265,593 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 expire 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. l) 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 is no impairment of long-lived assets during the year ended December 31, 2015 and 2014. m) 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 shareholders' equity is translated at historical exchange rates. n) 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. o) 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. p) Accounting for Asset Retirement Obligations On July 1, 2015, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 143, Accounting for Asset Retirement Obligations, With the adoption of SFAS No. 143, an asset retirement obligation and the related asset retirement cost in the amount of $406,214 have been recorded. This asset retirement cost was determined and discounted to present value using a credit-adjusted risk-free rate. After the initial recording, the liability is increased for the passage of time, with the increase being reflected as accretion expense in the statement of operations. 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 $ - Liability recorded on July 1, 2015 with adoption of SFAS 143 406,214 Accretion expense 10,032 Asset retirement obligation at December 31, 2015 $ 416,246 q) 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. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Note 3. 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 $76,719, which is shown as "Other receivable joint venture" 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 |
Petroleum and natural gas right
Petroleum and natural gas rights | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Note 4. Petroleum and natural gas rights | 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 proceeds were to be used by Tanager to complete and place on production the first of four suspended Devonian oil wells in the Joffre D-3 B oil pool (the "Joffre Project"). 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 has elapsed). In April 2015, the Company advanced to Tanager Energy Inc., an additional $153,877 (C$190,000) as an investment in the second well in the Joffre D-3 oil pool. As the Company and Tanager each own 50% of each phase of this project, the Company has accounted for this transaction as an investment by the Company of $77,158 (C$95,270), with a loan receivable from Tanager of $76,719 (C$94,730). The Company's petroleum and natural gas rights are recorded at cost as of December 31, 2015. The Company reviews its petroleum and natural gas properties for impairment whenever events and circumstances indicate that a decline in the recoverability of their carrying value may have occurred. We estimate the undiscounted future net cash flows of our petroleum and natural gas properties and compare such undiscounted future cash flows to the carrying amount to determine if the carrying amount is recoverable. If the carrying amount exceeds the estimated undiscounted future cash flows, we adjust the carrying amount to fair value. At December 31, 2015, the Company has determined that there has been no impairment to its carrying value as of that date. |
Income Tax
Income Tax | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Note 5. 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 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 net operating loss will expire at various times to December 31, 2036. 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 $ 7,979,257 $ 7,067,267 Statutory Tax Rate 35 % 35 % Effective Tax Rate - - Deferred Tax Asset 2,792,740 2,473,543 Valuation Allowance (2,792,740 ) (2,473,543 ) Net Deferred Tax Asset $ - $ - 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. |
Capital Stock and Additional Pa
Capital Stock and Additional Paid-in Capital | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Note 6. 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 - 0 - 675,000 675 Additional Paid-in Capital 7,864,085 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"). 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. 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 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 7. 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 (150,218 ) - $ 27,060 $ - Less current portion (20,282 ) - $ 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 March11, 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 March12, 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 March12, 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. |
Risk Management
Risk Management | 12 Months Ended |
Dec. 31, 2015 | |
Notes to Financial Statements | |
Note 8. 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 9. Subsequent Events | The Company has evaluated subsequent events from December 31, 2015 through April 14, 2016, the date this report was available to be issued, and determined there are no other items to disclose other than those disclosed below: 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 The Company has not completed the initial accounting for this business combination. Consequently, the Company is not providing the required proforma financial information relative to this acquisition, as it has not been able to engage outside professionals to complete this task as of the date of this report. On January 12, 2016 the Company issued 300,926 common shares for convertible debt. On March 16, 2016 the Company issued 1,000,000 common shares for services. On April 15, 2016 the Company issued 4,000,000 common shares for services. |
Summary of Significant Accoun16
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 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 generally accepted accounting principles in the United States of America ("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 | 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 and impairment of long-term investment. |
Financial Instruments | ASC Topic 820-10, "Fair Value Measurements and Disclosures," 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 balance sheets for other receivables, other payable, accrued liabilities, short term loan and due to director each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows: · Level 1: inputs to the valuation methodology are quoted prices (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. The changes in the Level 3 investments during the year ended December 31, 2015 consisted of an investment by the Company in well #2 of the Joffre project in the amount of $77,158, and the recording of an Asset Retirement Cost for the Joffre project of $406,214 minus depreciation of $20,310. 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 in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Gains (Losses) Financial Assets Long term investment $ 87,156 $ - $ - $ 19,028 Petroleum and natural gas rights net - - 818,230 - $ 87,156 $ - $ 818,230 $ 19,028 Financial liabilities Derivative liabilities $ - $ 154,297 $ - $ (5,686 ) $ - $ 154,297 $ - $ (5,686 ) 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 Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Gains (Losses) Financial Assets Long term investment $ 68,128 $ - $ - $ (179,316 ) Petroleum and natural gas rights - net - - 355,168 - $ 68,128 $ - $ 355,168 $ (179,316 ) Financial liabilities Derivative liabilities $ - $ - $ - $ - $ - $ - $ - $ - |
Cash | Cash includes bank deposits and cash on hand. |
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 2,500,00 common stock equivalents that were anti-dilutive and were not included in the calculation. |
Revenue Recognition | Revenues from contracts for consulting services with fees based on time and materials are recognized as the services are performed and amounts are earned in accordance with the Securities and Exchange Commission (the "SEC") Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial Statements" ("SAB 101"), as amended by SAB No. 104, "Revenue Recognition" ("SAB 104"). The Company considers amounts to be earned once evidence of an arrangement has been obtained, services are delivered, fees are fixed or determinable, and collectability is reasonably assured. In such contracts, the Company's efforts, measured by time incurred, typically represent the contractual milestones or output measure, which is the contractual earnings pattern. For consulting contracts with fixed fees, the Company recognizes revenues in accordance with contract terms, and when the services are delivered, price is determinable and the revenue is earned or collectable. Revenues from oil and gas properties are recognized under the entitlements method of accounting, whereby revenue is recognized on the amount the Company is entitled to, based on its interest in the property after all costs associated with exploration, gathering, marketing and sales relative to the volumes of product sold. |
Comprehensive Income | FASB ASC 220 "Comprehensive Income," establishes standards for the reporting and display of comprehensive income and its components in the consolidated financial statements. For the fiscal years ended December 31, 2015 and 2014, comprehensive loss was $892,962 and $830,737, respectively. |
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 (formerly SFAS 123R), "Accounting for 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 Income, with the impairment losses, net of income taxes, charged to net income 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. 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 and held-to-maturity securities. On September 9, 2014, the Company subscribed for 1,265,593 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 expire 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. |
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 is no impairment of long-lived assets during the year ended December 31, 2015 and 2014. |
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 shareholders' equity 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 | On July 1, 2015, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 143, Accounting for Asset Retirement Obligations, With the adoption of SFAS No. 143, an asset retirement obligation and the related asset retirement cost in the amount of $406,214 have been recorded. This asset retirement cost was determined and discounted to present value using a credit-adjusted risk-free rate. After the initial recording, the liability is increased for the passage of time, with the increase being reflected as accretion expense in the statement of operations. 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 $ - Liability recorded on July 1, 2015 with adoption of SFAS 143 406,214 Accretion expense 10,032 Asset retirement obligation at December 31, 2015 $ 416,246 |
Recently 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. |
Summary of Significant Accoun17
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 in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Gains (Losses Financial Assets Long term investment $ 87,156 $ - $ - $ 19,028 Petroleum and natural gas rights - net - - 818,230 - $ 87,156 $ - $ 818,230 $ 19,028 Financial liabilities Derivative liabilities $ - $ 154,297 $ - $ (5,686 ) $ - $ 154,297 $ - $ (5,686 ) 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 Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Gains (Losses) Financial Assets Long term investment $ 68,128 $ - $ - $ (179,316 ) Petroleum and natural gas rights - net - - 355,168 - $ 68,128 $ - $ 355,168 $ (179,316 ) Financial liabilities Derivative liabilities $ - $ - $ - $ - $ - $ - $ - $ - |
Summury of changes in the Company's asset retirement obligations | 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 $ - Liability recorded on July 1, 2015 with adoption of SFAS 143 406,214 Accretion expense 10,032 Asset retirement obligation at December 31, 2015 $ 416,246 |
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 | 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 |
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 $ 7,979,257 $ 7,067,267 Statutory Tax Rate 35 % 35 % Effective Tax Rate - - Deferred Tax Asset 2,792,740 2,473,543 Valuation Allowance (2,792,740 ) (2,473,543 ) Net Deferred Tax Asset $ - $ - |
Capital Stock and Additional 20
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 - 0 - 675,000 675 Additional Paid-in Capital 7,864,085 7,162,660 |
Convertible Notes (Tables)
Convertible Notes (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Convertible notes payable | 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 (150,218 ) - $ 27,060 $ - Less current portion (20,282 ) - $ 6,778 $ - |
May 21, 2013 Convertible Note [Member] | |
Allocation of Purchase of Convertible Notes | 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 ) |
October 28, 2013 Convertible Note [Member] | |
Allocation of Purchase of Convertible Notes | 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 ) |
April 8, 2014 Convertible Note [Member] | |
Allocation of Purchase of Convertible Notes | 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 ) |
Nature of Business and Going 22
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 | $ (892,962) | $ (830,737) | |
Total stockholders' deficiency | (243,234) | $ (57,261) | $ (279,140) |
Working capital deficiency | $ 743,832 |
Summary of Significant Accoun23
Summary of Significant Accounting Policies (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Financial Assets | ||
Long term investment | $ 87,156 | $ 68,128 |
Financial Liabilities | ||
Derivative Liabilities | 154,297 | |
Quoted Prices in Active Markets for Identical Assets/Level 1 [Member] | ||
Financial Assets | ||
Long term investment | $ 87,156 | $ 68,128 |
Petroleum and natural gas rights - net | ||
Financial Asset | $ 87,156 | $ 68,128 |
Financial Liabilities | ||
Derivative Liabilities | ||
Financial Liabilities | ||
Significant Other Observable Inputs/Level 2 [Member] | ||
Financial Assets | ||
Long term investment | ||
Petroleum and natural gas rights - net | ||
Financial Asset | ||
Financial Liabilities | ||
Derivative Liabilities | $ 154,297 | |
Financial Liabilities | $ 154,297 | |
Significant Unobservable Inputs/Level 3 [Member] | ||
Financial Assets | ||
Long term investment | ||
Petroleum and natural gas rights - net | $ 818,230 | $ 355,168 |
Financial Asset | $ 818,230 | $ 355,168 |
Financial Liabilities | ||
Derivative Liabilities | ||
Financial Liabilities | ||
Total Gain Loss [Member] | ||
Financial Assets | ||
Long term investment | $ 19,028 | $ (179,316) |
Petroleum and natural gas rights - net | ||
Financial Asset | $ 19,028 | $ (179,316) |
Financial Liabilities | ||
Derivative Liabilities | (5,686) | |
Financial Liabilities | $ (5,686) |
Summary of Significant Accoun24
Summary of Significant Accounting Policies (Details 1) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Summary Of Significant Accounting Policies Details 1 | ||
Asset retirement obligation at December 31, 2014 | ||
Liability recorded on July 1, 2015 with adoption of SFAS 143 | $ 406,214 | |
Accretion expense | 10,032 | |
Asset retirement obligation at December 31, 2015 | $ 416,246 |
Summary of Significant Accoun25
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Common stock equivalents as anti dilutive | 250,000 | |
Comprehensive loss | $ (892,962) | $ (830,737) |
Unrealized gain (loss) on securities available-for-sale | 19,028 | (179,316) |
Investment in petroleum and natural gas rights | (77,158) | $ (302,367) |
Joffre Project [Member] | ||
Investment in petroleum and natural gas rights | 77,158 | |
Asset Retirement Cost | 406,214 | |
Depreciation | $ 20,310 |
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 (D27
Related Party Transactions (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Other receivable - joint venture | $ 76,719 | |
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 |
Income Tax (Details)
Income Tax (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Income Tax Details | ||
Net Loss | $ 7,979,257 | $ 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 | $ (2,792,740) | $ (2,473,543) |
Net Deferred Tax Asset |
Income Tax (Details Narrative)
Income Tax (Details Narrative) | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Details Narrative | |
Operating loss carryforwards expiration date | Dec. 31, 2036 |
Capital Stock and Additional 30
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 | $ 7,864,085 | $ 7,162,660 |
Capital Stock and Additional 31
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 | (150,218) | |
Convertible notes payable | 27,060 | |
Less current portion | (20,282) | |
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 | $ 20,282 | |
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 |