Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Feb. 29, 2016 | May. 26, 2016 | Aug. 31, 2015 | |
Document And Entity Information | |||
Entity Registrant Name | Daybreak Oil & Gas, Inc. | ||
Entity Central Index Key | 1,164,256 | ||
Document Type | 10-K | ||
Document Period End Date | Feb. 29, 2016 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --02-29 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 1,970,295 | ||
Entity Common Stock, Shares Outstanding | 51,487,373 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,016 |
Balance Sheets
Balance Sheets - USD ($) | Feb. 29, 2016 | Feb. 28, 2015 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 6,995 | $ 496,772 |
Accounts receivable: | ||
Oil and natural gas sales | 69,192 | 202,732 |
Joint interest participants | 106,694 | 51,382 |
Other receivables, net | 71,237 | 160,996 |
Production revenue receivable, current | 45,000 | 120,000 |
Prepaid expenses and other current assets | 114,461 | 201,693 |
Deferred financing costs, net | 641,075 | 0 |
Note receivable - current | 420,901 | 1,320,944 |
Total current assets | 1,475,555 | 2,554,519 |
OIL AND NATURAL GAS PROPERTIES, successful efforts method, net | ||
Proved properties | 3,180,002 | 4,379,606 |
Unproved properties | 585,826 | 733,478 |
PREPAID DRILLING COSTS | 18,802 | 16,452 |
PRODUCTION REVENUE RECEIVABLE, NON-CURRENT | 0 | 35,000 |
DEFERRED FINANCING COSTS, NET | 0 | 1,058,751 |
NOTE RECEIVABLE, NON-CURRENT | 4,234,612 | 3,429,056 |
OTHER ASSETS | 106,282 | 106,199 |
Total assets | 9,601,079 | 12,313,061 |
CURRENT LIABILITIES: | ||
Accounts payable and other accrued liabilities | 1,777,236 | 1,435,677 |
Accounts payable - related parties | 990,483 | 905,891 |
Accrued interest | 175,283 | 158,797 |
Notes payable, related party | 250,100 | 250,100 |
12% Notes payable | 315,000 | 0 |
12% Note payable, related party | 250,000 | 0 |
Debt, current portion, net | 14,309,180 | 4,691,211 |
Line of credit | 843,807 | 869,865 |
Total current liabilities | 18,911,089 | 8,311,541 |
LONG TERM LIABILITIES: | ||
Debt, non-current portion, net | 0 | 8,591,507 |
12% Notes payable | 0 | 315,000 |
12% Note payable, related party | 0 | 250,000 |
Asset retirement obligation | 79,979 | 29,603 |
Total liabilities | $ 18,991,068 | $ 17,497,651 |
COMMITMENTS AND CONTINGENCIES | ||
STOCKHOLDERS' DEFICIT: | ||
Preferred stock | $ 0 | $ 0 |
Common stock | 51,487 | 51,457 |
Additional paid-in capital | 22,968,714 | 22,968,734 |
Accumulated deficit | (32,410,915) | (28,205,516) |
Total stockholders' deficit | (9,389,989) | (5,184,590) |
Total liabilities and stockholders' deficit | 9,601,079 | 12,313,061 |
Series A Convertible Preferred Stock | ||
STOCKHOLDERS' DEFICIT: | ||
Preferred stock | $ 725 | $ 735 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - $ / shares | Feb. 29, 2016 | Feb. 28, 2015 |
Preferred stock, par value in dollars | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value in dollars | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 51,487,373 | 51,457,373 |
Common stock, shares outstanding | 51,487,373 | 51,457,373 |
Series A Convertible Preferred Stock | ||
Preferred stock, par value in dollars | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 2,400,000 | 2,400,000 |
Preferred stock, shares issued | 724,565 | 734,565 |
Preferred stock, shares outstanding | 724,565 | 734,565 |
Preferred stock, cumulative dividend rate | 6.00% | 6.00% |
Statements of Operations
Statements of Operations - USD ($) | 12 Months Ended | |
Feb. 29, 2016 | Feb. 28, 2015 | |
REVENUE: | ||
Crude oil and natural gas sales | $ 1,253,686 | $ 3,083,797 |
OPERATING EXPENSES: | ||
Production | 268,448 | 329,917 |
Exploration and drilling | 76,053 | 42,997 |
Depreciation, depletion, and amortization | 517,870 | 570,110 |
Impairment of oil and gas properties | 1,108,683 | 0 |
General and administrative | 1,172,206 | 1,103,042 |
Total operating expenses | 3,143,260 | 2,046,066 |
OPERATING INCOME (LOSS) | (1,889,574) | 1,037,731 |
OTHER INCOME (EXPENSE): | ||
Interest income | 1,039,951 | 1,081,214 |
Interest expense | (3,355,776) | (2,795,369) |
Loss on debt extinguishment | 0 | (56,519) |
Total other income (expense) | (2,315,825) | (1,770,674) |
NET LOSS | (4,205,399) | (732,943) |
Cumulative convertible preferred stock dividend requirement | (130,925) | (132,634) |
NET LOSS AVAILABLE TO COMMON SHAREHOLDERS | $ (4,336,324) | $ (865,577) |
NET LOSS PER COMMON SHARE, Basic and diluted | $ (0.08) | $ (0.02) |
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING, Basic and diluted | 51,484,673 | 54,126,721 |
Statements of Changes in Stockh
Statements of Changes in Stockholders' Deficit - USD ($) | Series A Convertible Preferred Stock | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Beginning balance, value at Feb. 28, 2014 | $ 738 | $ 55,509 | $ 24,607,582 | $ (27,472,573) | $ (2,808,744) |
Beginning balance, shares at Feb. 28, 2014 | 737,565 | 55,509,411 | |||
Warrant exercise - Notes, value | $ 50 | 6,950 | 7,000 | ||
Warrant exercise - Notes, shares | 50,000 | ||||
Warrants cashless exercise, value | $ 1,874 | (1,874) | 0 | ||
Warrants cashless exercise, shares | 1,873,554 | ||||
Company stock plan | 2,515 | 2,515 | |||
Cancellation of stock plan issuances, value | $ (2) | (488) | (490) | ||
Cancellation of stock plan issuances, shares | (2,040) | ||||
Conversion of preferred stock, value | $ (3) | $ 9 | (6) | 0 | |
Conversion of preferred stock, shares | (3,000) | 9,000 | |||
Transfer agent balancing adjustment, value | $ 140 | (140) | 0 | ||
Transfer agent balancing adjustment, shares | 140,000 | ||||
Shares purchase and cancellation, value | $ (5,695) | (1,702,752) | (1,708,447) | ||
Shares purchase and cancellation, shares | (5,694,823) | ||||
Share-for-warrant exchange, value | $ (428) | 428 | 0 | ||
Share-for-warrant exchange, shares | (427,729) | ||||
Extension of Note warrants | 56,519 | 56,519 | |||
Net loss | (732,943) | (732,943) | |||
Ending balance, value at Feb. 28, 2015 | $ 735 | $ 51,457 | 22,968,734 | (28,205,516) | (5,184,590) |
Ending balance, shares at Feb. 28, 2015 | 734,565 | 51,457,373 | |||
Conversion of preferred stock, value | $ (10) | $ 30 | (20) | 0 | |
Conversion of preferred stock, shares | (10,000) | 30,000 | |||
Net loss | (4,205,399) | (4,205,399) | |||
Ending balance, value at Feb. 29, 2016 | $ 725 | $ 51,487 | $ 22,968,714 | $ (32,410,915) | $ (9,389,989) |
Ending balance, shares at Feb. 29, 2016 | 724,565 | 51,487,373 |
Statements of Cash Flows
Statements of Cash Flows - USD ($) | 12 Months Ended | |
Feb. 29, 2016 | Feb. 28, 2015 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
NET LOSS | $ (4,205,399) | $ (732,943) |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ||
Stock compensation | 0 | 2,515 |
Depreciation, depletion and ARO expense | 517,870 | 570,110 |
Impairment of oil and gas properties | 1,108,683 | 0 |
Amortization of debt discount | 132,114 | 168,722 |
Amortization of deferred financing costs | 427,331 | 422,408 |
Loss on debt extinguishment | 0 | 56,519 |
Non-cash interest income | (83) | (85) |
Changes in assets and liabilities: | ||
Accounts receivable - oil and gas sales | 133,540 | 127,611 |
Accounts receivable - joint interest participants | (55,312) | 287,568 |
Accounts receivable - other | (483,255) | (11,447) |
Prepaid expenses and other current assets | 87,232 | (172,296) |
Accounts payable and other accrued liabilities | 251,755 | (515,776) |
Accounts payable - related parties | 84,592 | (46,761) |
Accrued interest | 1,504,265 | 156,555 |
Net cash provided by (used in) operating activities | (496,667) | 312,700 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Prepaid drilling costs | (2,350) | (1,537) |
Additions to oil and gas properties | (170,697) | (1,516,201) |
Proceeds from Sale of O&G properties | 31,581 | 0 |
Additions to note receivable | 0 | (4,762,500) |
Collections of note receivable | 777,500 | 3,562,500 |
Deferred interest | 0 | 655 |
Net cash provided by (used in) investing activities | 636,034 | (2,717,083) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from non-current debt | 25,000 | 5,700,000 |
Principal payments on non-current debt | (618,431) | (2,948,772) |
Proceeds from warrant conversion | 0 | 7,000 |
Payment of deferred financing fees | (9,655) | (345,000) |
Payments to line of credit | (26,058) | (12,504) |
Net cash provided by (used in) financing activities | (629,144) | 2,400,724 |
NET DECREASE IN CASH AND CASH EQUIVALENTS | (489,777) | (3,659) |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 496,772 | 500,431 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | 6,995 | 496,772 |
Cash paid for Interest | 1,292,066 | 2,077,418 |
Cash paid for Income taxes | 0 | 0 |
SUPPLEMENTAL CASH FLOW INFORMATION: | ||
Unpaid additions to oil and natural gas properties | 89,804 | 16,552 |
Interest and fees converted to principal | 1,487,779 | 0 |
Increase in note receivable for deferred interest and fees | 683,013 | 0 |
Increase in note payable for stock acquisition and subsequent retirement | 0 | 1,708,447 |
ARO asset and liability increase due to timing differences | 47,362 | 5,337 |
Share-to-warrant exchange | 0 | 428 |
Conversion of warrants | 0 | 1,874 |
Repurchase of stock through payment of payroll taxes | 0 | 490 |
Conversion of preferred stock to common stock | $ 30 | $ 9 |
Organization and Basis of Prese
Organization and Basis of Presentation | 12 Months Ended |
Feb. 29, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Basis of Presentation | NOTE 1 — ORGANIZATION AND BASIS OF PRESENTATION: Originally incorporated as Daybreak Uranium, Inc., (“Daybreak Uranium”) under the laws of the State of Washington on March 11, 1955, Daybreak Uranium was organized to explore for, acquire, and develop mineral properties in the Western United States. During 2005, management of the Company decided to enter the oil and natural gas exploration and production industry. On October 25, 2005, the Company’s shareholders approved a name change from Daybreak Mines, Inc. to Daybreak Oil and Gas, Inc. (referred to herein as “Daybreak” or the “Company”) to better reflect the business of the Company. All of the Company's oil and natural gas production is sold under contracts that are market-sensitive. Accordingly, the Company's financial condition, results of operations, and capital resources are highly dependent upon prevailing market prices of, and demand for, oil and natural gas. These commodity prices are subject to wide fluctuations and market uncertainties due to a variety of factors that are beyond the control of the Company. These factors include the level of global demand for petroleum products, foreign supply of oil and gas, the establishment of and compliance with production quotas by oil-exporting countries, the relative strength of the U.S. dollar, weather conditions, the price and availability of alternative fuels, and overall economic conditions, both foreign and domestic. |
Going Concern
Going Concern | 12 Months Ended |
Feb. 29, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Going Concern | NOTE 2 — GOING CONCERN: Financial Condition Daybreak’s financial statements for the year ended February 29, 2016 have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities in the normal course of business. Daybreak has incurred net losses since inception and has accumulated a deficit of $32,410,915 and a working capital deficit of $17,435,534, which raises substantial doubt about the Company’s ability to continue as a going concern. Management Plans to Continue as a Going Concern The Company continues to implement plans to enhance its ability to continue as a going concern. Daybreak currently has a net revenue interest in 20 producing wells in its East Slopes Project located in Kern County, California (the “East Slopes Project”). The revenue from these wells has created a steady and reliable source of revenue. The Company’s average working interest in these wells is 36.6% and the average net revenue interest is 28.4% for these same wells. Additionally, the Company has a working interest in a shallow oil play in an existing natural gas field in Lawrence County, Kentucky, through its acquisition of a 25% working interest in approximately 7,300 acres in two large contiguous blocks in the Twin Bottoms Field in Lawrence County, Kentucky. Daybreak currently has a net revenue interest in 14 producing horizontal oil wells in the Twin Bottoms Field. The Company’s average working interest in these 14 horizontal oil wells is 22.6% and the average net revenue interest is 19.7% in these same wells. We anticipate revenues will continue to increase as the Company participates in the drilling of more wells in the Twin Bottoms Field in Kentucky and the East Slopes Project in California. However given the current decline and instability in hydrocarbon prices, the timing of any drilling activity in Kentucky and California will be dependent on a sustained improvement in hydrocarbon prices and a successful refinancing or restructuring of our credit facility. We believe that our liquidity will improve when there is a sustained improvement in hydrocarbon prices. The Company’s sources of funds in the past have included the debt or equity markets and the sale of assets. While the Company has experienced revenue growth, which has resulted in positive cash flow from its oil and natural gas properties, it has not yet established a positive cash flow on a company-wide basis. It will be necessary for the Company to obtain additional funding from the private or public debt or equity markets in the future. However, the Company cannot offer any assurance that it will be successful in executing the aforementioned plans to continue as a going concern. Daybreak’s financial statements as of February 29, 2016 do not include any adjustments that might result from the inability to implement or execute Daybreak’s plans to improve our ability to continue as a going concern. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Feb. 29, 2016 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | NOTE 3 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Cash and Cash Equivalents Cash equivalents include demand deposits with banks and all highly liquid investments with original maturities of three months or less. The Company has historically maintained balances in financial institutions where deposits may exceed the Federally insured deposit limit of $250,000. The Company has not experienced any losses from such accounts and does not believe it is exposed to any significant credit risk on cash. Accounts Receivable The Company routinely assesses the recoverability of all material trade and other receivables. The Company accrues a reserve on a receivable when, based on the judgment of management, it is probable that a receivable will not be collected and the amount of any reserve may be reasonably estimated. Actual write-offs may exceed the recorded allowance. Substantially all of the Company’s trade accounts receivable result from crude oil and natural gas sales in Kentucky and California or joint interest billings to its working interest partners in California. This concentration of customers and joint interest owners may impact the Company’s overall credit risk as these entities could be affected by similar changes in economic conditions as well as other related factors. Trade accounts receivable are generally not collateralized. There were no allowances for doubtful accounts for the Company’s trade accounts receivable at February 29, 2016 and February 28, 2015. Oil and Gas Properties The Company uses the successful efforts method of accounting for oil and natural gas property acquisition, exploration, development, and production activities. Costs to acquire mineral interests in oil and natural gas properties, to drill and equip exploratory wells that find proved reserves, and to drill and equip development wells are capitalized as incurred. Costs to drill exploratory wells that are unsuccessful in finding proved reserves are expensed as incurred. In addition, the geological and geophysical costs, and costs of carrying and retaining unproved properties are expensed as incurred. Costs to operate and maintain wells and field equipment are expensed as incurred. Capitalized proved property acquisition costs are amortized by field using the unit-of-production method based on estimated proved reserves. Capitalized exploration well costs and development costs (plus estimated future dismantlement, surface restoration, and property abandonment costs, net of equipment salvage values) are amortized in a similar fashion (by field) based on their estimated proved developed reserves. Support equipment and other property and equipment are depreciated over their estimated useful lives. Pursuant to the provisions of Financial Accounting Standards Codification (“ASC”) Topic 360, “Property, Plant and Equipment” The Company recognized asset impairments of $1,108,683 and $-0- for the years ended February 29, 2016 and February 28, 2015, respectively. On the retirement or sale of a partial unit of proved property, the cost is charged to accumulated DD&A with a resulting gain or loss recognized in income. Property and Equipment Fixed assets are stated at cost. Depreciation on vehicles is provided using the straight-line method over expected useful lives of three years. Depreciation on machinery and equipment is provided using the straight-line method over expected useful life of three years. Depreciation of production facilities and natural gas pipelines are recorded using the unit-of-production method based on estimated reserves. Long Lived Assets The Company reviews long-lived assets and identifiable intangibles whenever events or circumstances indicate that the carrying amounts of such assets may not be fully recoverable. The Company evaluates the recoverability of long-lived assets by measuring the carrying amounts of the assets against the estimated undiscounted cash flows associated with these assets. If this evaluation indicates that the future undiscounted cash flows of certain long-lived assets are not sufficient to recover the assets' carrying value, the assets are adjusted to their fair values (based upon discounted cash flows). Fair Value of Financial Instruments The carrying value of short-term financial instruments including cash, receivables, prepaid expenses, accounts payable, and other accrued liabilities, short-term liabilities and the line of credit approximated their fair values due to the relatively short period to maturity for these instruments. The long-term notes payable approximates fair value since the related rates of interest approximate current market rates. Share Based Payments Stock awards are accounted for under FASB ASC Topic 718, “Compensation-Stock Compensation” . The Company estimates the fair value of stock purchase warrants on the grant date using the Black-Scholes option pricing model (“Black-Scholes Model”) as its method of valuation for warrant awards granted during the year. The Company’s determination of fair value of warrant awards on the date of grant using an option-pricing model is affected by the Company’s stock price, as well as assumptions regarding a number of subjective variables. These variables include, but are not limited to, the Company’s expected price volatility over the term of the awards and discount rates assumed. Loss per Share of Common Stock Basic loss per share of Common Stock is calculated by dividing net loss available to common stockholders by the weighted average number of common shares issued and outstanding during the year. Diluted net loss per share is computed based on the weighted average number of common shares outstanding, increased by dilutive Common Stock equivalents. Common Stock equivalents are excluded from the calculations when their effect is anti-dilutive. Concentration of Credit Risk Substantially all of the Company’s accounts receivable result from crude oil and natural gas sales in Kentucky and California or joint interest billings to its working interest partners in California. This concentration of customers and joint interest owners may impact the Company’s overall credit risk as these entities could be affected by similar changes in economic conditions as well as other related factors. At the Company’s Twin Bottoms Field project located in Lawrence County, Kentucky, there is only one buyer available for the purchase of its crude oil production and only one buyer available for the purchase of its natural gas production. At the Company’s East Slopes project in California there is only one buyer available for the purchase of all crude oil production. The Company has no natural gas production in California. At February 29, 2016 and February 28, 2015 these three individual customers represented 100.0% of crude oil and natural gas sales receivable. If these buyers are unable to resell its products or if they lose a significant sales contract then the Company may incur difficulties in selling its oil and natural gas production. The Company’s accounts receivable from Kentucky and California oil and natural gas sales at February 29, 2016 and February 28, 2015 are set forth in the table below. February 29, 2016 February 28, 2015 Project Customer Revenue Receivable Percentage Revenue Receivable Percentage Kentucky – Twin Bottoms Field (Oil) Appalachian Oil $ 23,257 33.6% $ 90,906 44.9% Kentucky – Twin Bottoms Field (Natural gas) Jefferson Gas 6,767 9.8% 16,676 8.2% California – East Slopes Project (Oil) Plains Marketing 39,168 56.6% 95,150 46.9% $ 69,192 100.0% $ 202,732 100.0% Revenue Recognition The Company uses the sales method to account for sales of crude oil and natural gas. Under this method, revenues are recognized based on actual volumes of oil and natural gas sold to purchasers. The volumes sold may differ from the volumes to which the Company is entitled based on its interests in the properties. These differences create imbalances that are recognized as a liability only when the imbalance exceeds the estimate of remaining reserves. The Company had no significant imbalances as of February 29, 2016 and February 28, 2015. Reclamation Bonds Included in other assets as of February 29, 2016, are funds that have been pledged as collateral in connection with asset retirement obligations for future plugging, abandonment and site remediation. The amount pledged for an operator bond in California is approximately $100,000 plus accrued interest. The pledging of these funds is required by any state in which the Company operates as the project Operator. Asset Retirement Obligation The Company follows the provisions of FASB ASC Topic 410, “Asset Retirement and Environmental Obligations” , Suspended Well Costs The Company accounts for any suspended well costs in accordance with FASB ASC Topic 932, “Extractive Activities – Oil and Gas In addition, ASC 932 requires annual disclosure of: (1) net changes from period to period of capitalized exploratory well costs for wells that are pending the determination of proved reserves, (2) the amount of exploratory well costs that have been capitalized for a period greater than one year after the completion of drilling and (3) an aging of exploratory well costs suspended for greater than one year, designating the number of wells the aging is related to. Further, the disclosures should describe the activities undertaken to evaluate the reserves and the projects, the information still required to classify the associated reserves as proved and the estimated timing for completing the evaluation. Income Taxes The Company follows the provisions of FASB ASC Topic 740, “Income Taxes ASC 740 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Under ASC 740, the Company recognizes tax benefits only for tax positions that are more likely than not to be sustained upon examination by tax authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50% (percent) likely to be realized upon settlement. A liability for “unrecognized tax benefits” is recorded for any tax benefits claimed in our tax returns that do not meet these recognition and measurement standards. Use of Estimates and Assumptions In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions. These estimates and assumptions may affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, and reported amounts of revenues and expenses during the reporting periods. Actual results could differ materially from those estimates. The accounting policies most affected by management’s estimates and assumptions are as follows: • The reliance on estimates of proved reserves to compute the provision for depreciation, depletion and amortization and to determine the amount of any impairment of proved properties; • The valuation of unproved acreage and proved oil and natural gas properties to determine the amount of any impairment of oil and natural gas properties; • Judgment regarding the productive status of in-progress exploratory wells to determine the amount of any provision for abandonment; and • Estimates regarding the timing and cost of future abandonment obligations. Recent Accounting Pronouncements There are no new accounting pronouncements issued or effective that had, or are expected to have, a material impact on the Company’s financial statements. Reclassifications Certain reclassifications have been made to conform the prior period’s financial information to the current period’s presentation. These reclassifications had no effect on previously reported net loss or accumulated deficit. |
Accounts Receivable
Accounts Receivable | 12 Months Ended |
Feb. 29, 2016 | |
Receivables [Abstract] | |
Accounts Receivable | NOTE 4 — ACCOUNTS RECEIVABLE: Accounts receivable consists primarily of receivables from the sale of crude oil and natural gas production by the Company and receivables from the Company’s working interest partners in oil and natural gas projects in which the Company acts as Operator of the project. Crude oil and natural gas sales receivables balances of $69,192 and $202,732 at February 29, 2016 and February 28, 2015 represent crude oil sales that occurred in February 2016 and 2015, respectively. Natural gas sales balances represent sales that occurred during the months of January and February 2016 and 2015, respectively. Joint interest participant receivables balances of $106,694 and $51,382 at February 29, 2016 and February 28, 2015, respectively represent amounts due from working interest partners in California, where the Company is the Operator. There were no allowances for doubtful accounts for the Company’s trade accounts receivable at February 29, 2016 and February 28, 2015. Other receivables balances primarily include the monthly interest due on the App Energy loan and amounts advanced to certain minority working interest partners in Kentucky. |
Production Revenue Receivable
Production Revenue Receivable | 12 Months Ended |
Feb. 29, 2016 | |
Deferred Revenue Disclosure [Abstract] | |
Production Revenue Receivable | NOTE 5 — PRODUCTION REVENUE RECEIVABLE: The production revenue receivable balance of $45,000 represents amounts due the Company from a portion of the sale price of a 25% working interest in East Slopes Project in Kern County, California that was acquired through the default of certain original working interest partners in the project. Production revenue receivable balances at February 29, 2016 and February 28, 2015 are set forth in the table below: February 29, 2016 February 28, 2015 Production revenue receivable – current $ 45,000 $ 120,000 Production revenue receivable – non-current - 35,000 $ 45,000 $ 155,000 |
Deferred Financing Costs
Deferred Financing Costs | 12 Months Ended |
Feb. 29, 2016 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Deferred Financing Costs | NOTE 6 — DEFERRED FINANCING COSTS: Deferred financing costs at February 29, 2016 and February 28, 2015 relating to the original and the amended credit facility with Maximilian Resources LLC, a Delaware limited liability company and successor by assignment to Maximilian Investors LLC (either party, as appropriate, is referred to in these notes to the financial statements as “Maximilian”), are set forth in the table below: February 29, 2016 February 28, 2015 Deferred financing costs – loan fees $ 160,794 $ 151,139 Deferred financing costs – loan commissions 630,662 630,662 Deferred financing costs – fair value of warrants 530,488 530,488 Deferred financing costs – fair value of common stock 419,832 419,832 1,741,776 1,732,121 Accumulated amortization (1,100,701) (673,370) $ 641,075 $ 1,058,751 Amortization expense of deferred financing costs was $427,331 and $422,408 for the years ended February 29, 2016 and February 28, 2015, respectively. Deferred financing costs of $950,320 at February 29, 2016 include the fair value of common shares and warrants issued to Maximilian and to a third party that assisted in both the original and the amended financing transactions. Refer to the discussion in Note 11 |
Oil and Gas Properties
Oil and Gas Properties | 12 Months Ended |
Feb. 29, 2016 | |
Oil and Gas Exploration and Production Industries Disclosures [Abstract] | |
Oil and Gas Properties | NOTE 7 — OIL AND GAS PROPERTIES: Oil and gas property balances at February 29, 2016 and February 28, 2015 are set forth in the table below: February 29, 2016 February 28, 2015 Proved leasehold costs $ 654.445 $ 695,231 Unproved leasehold costs 585,826 733,478 Costs of wells and development 604,684 542,563 Capitalized exploratory well costs 5,461,677 5,308,876 Capitalized asset retirement costs 28,901 - Total cost of oil and gas properties 7,335,533 7,280,148 Accumulated depletion, depreciation amortization and impairment (3,569,705) (2,167,064) Oil and gas properties, net $ 3,765,828 $ 5,113,084 For the twelve months ended February 29, 2016, the Company received $31,581 from a third party for the sale of the deep rights on certain mineral leases in Kentucky. Asset Retirement Obligation (“ARO”) The Company’s financial statements reflect the provisions of ASC 410. The ARO primarily represents the estimated present value of the amount the Company will incur to plug, abandon and remediate its producing properties at the end of their productive lives, in accordance with applicable state laws. The Company determines the ARO on its oil and natural gas properties by calculating the present value of estimated cash flows related to the liability. As of February 29, 2016 and February 28, 2015, ARO obligations were considered to be long-term based on the estimated timing of the anticipated cash flows. For the years ended February 29, 2016 and February 28, 2015, the Company recognized accretion expense of $3,014 and $2,187, respectively which is included in DD&A in the statement of operations. Changes in the asset retirement obligations for the years ended February 29, 2016 and February 28, 2015 are set forth in the table below. February 29, 2016 February 28, 2015 Asset retirement obligation, beginning of period $ 29,603 $ 22,079 Accretion expense 3,014 2,187 Change in asset retirement estimates 47,362 5,337 Asset retirement obligation, end of period $ 79,979 $ 29,603 |
Note Receivable
Note Receivable | 12 Months Ended |
Feb. 29, 2016 | |
Receivables [Abstract] | |
Note Receivable | NOTE 8 — NOTE RECEIVABLE: On August 28, 2013, the Company amended its credit facility with Maximilian as a part of a financing transaction in which the Company extended to App Energy, LLC, a Kentucky limited liability company (“App”) a credit facility for the development of a shallow oil project in an existing gas field, the Twin Bottoms Field, in Lawrence County, Kentucky. (see Note 11 – Short-Term and Long-Term Borrowings). The Company’s loan agreement with App, dated August 28, 2013, provides for a revolving credit facility of up to $40 million, maturing on August 28, 2017, with a minimum commitment of $2.65 million (the “Initial Advance”). All funds advanced to App, as borrower, by Daybreak, as lender, are to be borrowed by Daybreak under its amended loan agreement with Maximilian. The Initial Advance bears interest of 16.8% per annum, and subsequent loans under the loan agreement bear interest at a rate of 12% per annum. The App loan agreement also provides for a monthly commitment fee of 0.6% on the outstanding principal balance of the loans. The obligations under the App loan agreement are secured by a perfected first priority security interest in substantially all of the assets of App, including its leases (“Kentucky Acreage”) in Lawrence County, Kentucky; an indemnity provided by App’s manager, John A. Piedmonte, Jr.; and, a guarantee by certain affiliates of App. The proceeds of the initial borrowing by App of $2.65 million under the App revolving credit facility were primarily used to (a) pay loan fees and closing costs, (b) repay App’s indebtedness and (c) finance the drilling of three wells by App in the Kentucky Acreage. Future advances under the facility will primarily be used for oil and gas exploration and development activities. The App loan agreement contains customary covenants for loan of such type, including, among other things, covenants that restrict App’s ability to make capital expenditures, incur indebtedness, incur liens and dispose of property. The App loan agreement also contains various events of default, including failure to pay principal and interest when due, breach of covenants, materially incorrect representations and bankruptcy or insolvency. If an event of default occurs, all of App’s obligations under the App loan agreement could be accelerated by the Company, causing all loans outstanding (including accrued interest and fees payable thereunder) to be declared immediately due and payable. In connection with the App loan agreement, App also granted to the Company an average 25% working interest in the Kentucky Acreage, as described above. The fair value of the 25% working interest was determined to be $1,073,091 and was recorded as unproved oil and gas properties. (see Note 11 - Short-Term and Long-Term Borrowings). On August 21, 2014, a First Amendment to the Loan and Security Agreement by and between the Company and App was executed whereby Section 1.5 (f) of the original Loan and Security Agreement was deleted and intentionally left blank. The affected section removed App’s ability to have the Required Monthly Payment be equal to zero for a maximum of three payments. All other terms of the original agreement remained unchanged. On May 20, 2015, a Second Amendment to the Loan and Security Agreement by and between Daybreak and App was executed whereby the Required Monthly Payment definition was modified for the months of March, April, May and June of 2015. All other terms of the original agreement remained unchanged. In connection with entering into the Third Amendment with Maximilian on October 14, 2015, the Company concurrently entered into a Third Amendment to Loan and Security Agreement with App Energy (the “App Amendment”), which amended the Company’s loan agreement with App Energy in which the Company, as lender, lends to App Energy, as borrower, a portion of the advances it receives pursuant to its loan agreement with Maximilian. The App Amendment provides for a reduction in interest rate from 19.2% to 17.0% and a reduction in monthly payments to be made by App Energy to the Company for the same payment cycles as the reduced payment to be made by the Company under the Maximilian Amendment. The reduction in monthly payments by App Energy will allow App Energy to fund its share of drilling and completing additional wells in Kentucky with the Company. As consideration for the reduction in the monthly payment amount, App Energy agreed that certain amounts will be treated as additional advances under the App Energy loan agreement, and that it would fund a portion of the Company’s drilling and development expenses with respect to two wells. App Energy also agreed to grant to Maximilian an overriding royalty interest on the same terms as the overriding royalty interest agreed to by the Company. For the twelve months ended February 29, 2016, the Company received principal payments of $777,500 from App Energy. Since November 2015, App Energy has been unable to make any required interest or principal payments under terms of the amended loan agreements, but is not considered to be in default under the terms of the amended agreements because Daybreak has granted a series of waivers for the required payments as App Energy seeks to refinance their loan with alternative lenders. The Company retains all of its rights under the loan agreements to declare App Energy in default on the loan in the future. The App Energy loan is secured by a perfected first priority security interest in substantially all of the assets of App Energy, including its leases in Lawrence County, Kentucky. Note receivable balances at February 29. 2016 and February 28, 2015 are set forth in the table below: February 29, 2016 February 28, 2015 Note receivable – current $ 420,901 $ 1,320,944 Note receivable – non-current 4,234,612 3,429,056 $ 4,655,513 $ 4,750,000 |
Accounts Payable
Accounts Payable | 12 Months Ended |
Feb. 29, 2016 | |
Payables and Accruals [Abstract] | |
Accounts Payable | NOTE 9 — ACCOUNTS PAYABLE: On March 1, 2009, the Company became the operator for the East Slopes Project located in Kern County, California. Additionally, the Company then assumed certain original defaulting partners’ approximate $1.5 million liability representing a 25% working interest in the drilling and completion costs associated with the East Slopes Project four earning wells program. The Company subsequently sold the 25% working interest on June 11, 2009. Approximately $244,849 of the $1.5 million default remains unpaid and is included in the February 29, 2016 accounts payable balance. |
Accounts Payable - Related Part
Accounts Payable - Related Parties | 12 Months Ended |
Feb. 29, 2016 | |
Related Party Transactions [Abstract] | |
Accounts Payable - Related Parties | NOTE 10 — ACCOUNTS PAYABLE- RELATED PARTIES: The February 29, 2016 and February 28, 2015 accounts payable – related parties balances of $990,483 and $905,891, respectively, were comprised primarily of deferred salaries of the Company’s Executive Officers and certain employees; deferred directors’ fees; expense reimbursements; related party consulting fees; and deferred interest payments on the 12% Subordinated Note to the Company’s Chairman, President and Chief Executive Officer. Payment of these deferred items has been delayed until the Company’s cash flow situation improves. |
Short-Term and Long-Term Borrow
Short-Term and Long-Term Borrowings | 12 Months Ended |
Feb. 29, 2016 | |
Debt Disclosure [Abstract] | |
Short-Term and Long-Term Borrowings | NOTE 11 — SHORT-TERM AND LONG-TERM BORROWINGS: Current Debt Note Payable – Related Party At February 29, 2016 and February 28, 2015, the Company’s Chairman, President and Chief Executive Officer had loaned the Company an aggregate $250,100 during the years ended February 29, 2012 and February 28, 2013, that was used for a variety of corporate purposes including an escrow requirement on a loan commitment; extension fees on third party loans; and a reduction of principal on the Company’s credit line with UBS Bank. These loans are non-interest bearing loans and repayment will be made upon a mutually agreeable date in the future. Line of Credit The Company has an existing $890,000 line of credit for working capital purposes with UBS Bank USA (“UBS”), established pursuant to a Credit Line Agreement dated October 24, 2011 that is secured by the personal guarantee of the Company’s Chairman, President and Chief Executive Officer. At February 29, 2016 and February 28, 2015, the Line of Credit had an outstanding balance of $843,807 and $869,865, respectively. Interest is payable monthly at a stated reference rate of 0.249% + 337.5 basis points and totaled $31,442 and $31,498 for the years ended February 29, 2016 and February 28, 2015, respectively. The reference rate is based on the 30 day LIBOR (“London Interbank Offered Rate”) and is subject to change from UBS. 12% Subordinated Notes The Company’s 12% Subordinated Notes (“the Notes”) issued pursuant to a March 2010 private placement (of which $250,000 was from a related party) accrue interest at 12% per annum, payable semi-annually on January 29th and July 29th. On January 29, 2015, the Company and 12 of the 13 note holders agreed to extend the maturity date of the Notes from January 29, 2015 for an additional two years. The note principal is payable in full at the amended maturity date of the Notes, which is January 29, 2017. Should the Board of Directors, on the amended maturity date, decide that the payment of the principal and any unpaid interest would impair the financial condition or operations of the Company, the Company may then elect a mandatory conversion of the unpaid principal and interest into the Company’s common stock at a conversion rate equal to 75% of the average closing price of the Company’s common stock over the 20 consecutive trading days preceding December 31, 2016. The Notes consist of the following: February 29, 2016 February 28, 2015 12% Subordinated Notes $ 315,000 $ 315,000 12% Subordinated Notes – related party 250,000 250,000 $ 565,000 $ 565,000 In conjunction with the Notes private placement, a total of 1,190,000 common stock purchase warrants were issued at a rate of two warrants for every dollar raised through the private placement. The warrants have an exercise price of $0.14 and an amended expiration date of January 29, 2017. The 12% Note warrants that have been exercised are set forth in the table below. Fiscal Period Warrants Exercised Shares of Common Stock Issued Number of Accredited Investors Year Ended February 28, 2014 100,000 100,000 1 Year Ended February 28, 2015 50,000 50,000 1 Year Ended February 29, 2016 - - - Totals 150,000 150,000 2 Maximilian Loan On October 31, 2012, the Company entered into a loan agreement with Maximilian, which provided for a revolving credit facility of up to $20 million, maturing on October 31, 2016, with a minimum commitment of $2.5 million. The loan had annual interest of 18% and a monthly commitment fee of 0.5%. The Company also granted Maximilian a 10% working interest in its share of the oil and gas leases in Kern County, California. The relative fair value of this 10% working interest amounting to $515,638 was recognized as a debt discount and is being amortized over the term of the loan. Amortization expense was $132,114 and $138,988 for the years ended February 29, 2016 and February 28, 2015, respectively. Unamortized debt discount amounted to $71,951 as of February 29, 2016. In 2012, the Company also issued 2,435,517 warrants to third parties who assisted in the closing of the loan. The warrants have an exercise price of $0.044; contain a cashless exercise provision; have piggyback registration rights; and are exercisable for a period of five years expiring on October 31, 2017. The fair value of the warrants, as determined by the Black-Scholes option pricing model, was $98,084 and included the following assumptions: a risk free interest rate of 0.72%; stock price of $0.04, volatility of 153.44%; and a dividend yield of 0.0%. The fair value of the warrants was recognized as a financing cost and is being amortized as a part of deferred financing cost over the term of the loan. Amortization expense for the year ended February 29, 2016 amounted to $127,513. Unamortized deferred financing cost of these warrants was $191,270 as of February 29, 2016. There were 316,617 of these warrants that remained unexercised as of February 29, 2016. Maximilian Loan - Amended and Restated Loan Agreement In connection with the Company’s acquisition of a working interest from App in the Twin Bottoms Field in Lawrence County, Kentucky, the Company amended its loan agreement with Maximilian on August 28, 2013. The amended loan agreement provided for an increase in the revolving credit facility from $20 million to $90 million and a reduction in the annual interest rate from 18% to 12%. The monthly commitment fee of 0.5% per month on the outstanding principal balance remained unchanged. Advances under the amended loan agreement will mature on August 28, 2017. The obligations under the amended loan agreement continue to be secured by a perfected first priority security interest in substantially all of the personal property of the Company, and a mortgage on the Company’s leases in Kern County, California. The amended loan agreement also provided for the revolving credit facility to be divided into two borrowing sublimits. The first borrowing sublimit is $50 million and is for borrowing by the Company, primarily for its ongoing oil and gas exploration and development activities. The second borrowing sublimit, of $40 million, is for loans to be extended by the Company, as lender, to App, as borrower pursuant to a Loan and Security Agreement entered into between the Company and App on August 28, 2013 (See Note 8 – Note Receivable). The amended loan agreement contains customary covenants for loan of such type, including among other things, covenants that restrict the Company’s ability to make capital expenditures, incur indebtedness, incur liens and dispose of property. The amended loan agreement also contains various events of default, including failure to pay principal and interest when due, breach of covenants, materially incorrect representations and bankruptcy or insolvency. If an event of default occurs, all of the Company’s obligations under the amended loan agreement could be accelerated by Maximilian, causing all loans outstanding (including accrued interest and fees payable thereunder) to be declared immediately due and payable. As consideration for Maximilian facilitating the Company’s transactions with App and entering into the amended loan agreement, the Company (a) issued to Maximilian approximately 6.1 million common shares, representing 9.99% of the Company’s outstanding common stock on a fully-diluted basis at the time of grant, and (b) issued approximately 6.1 million warrants to purchase shares of the Company’s common stock representing the right to purchase up to an additional 9.99% of the Company’s outstanding common stock on a fully-diluted basis, calculated as of the date of grant. The warrants have an exercise price of $0.10; contain a cash exercise provision and are exercisable for a period of three years expiring on August 28, 2016 shares and warrants as described in the paragraph below. The Company also granted to Maximilian a 50% net profits interest in the Company’s 25% working interest, after the Company recovers its investment, in the Company’s working interest in its Kentucky Acreage, pursuant to an Assignment of Net Profits Interest entered into as of August 28, 2013 by and between the Company and Maximilian. The fair value of the 6.1 million shares was determined to be $979,609 based on the Company’s stock price on the grant date of $0.16. The fair value of the warrants, as determined by the Black-Scholes option pricing model, was $898,299 and included the following assumptions: a risk free interest rate of 2.48%; stock price of $0.16, volatility of 184.53%; and a dividend yield of 0.0%. The Company determined that the common shares and warrants were issued in connection with the increase in Company’s borrowing limit and App’s $40 million revolving credit facility for which the Company was granted a 25% working interest. Consequently, the fair value of the common shares and warrants totaling $1,877,907 was allocated to deferred financing costs ($804,816) and unproved oil and gas properties ($1,073,091) based on the amount of the increase in the revolving credit facility that is attributable to Daybreak and App. On February 14, 2014, the Company at the request of Maximilian, amended the warrant agreement related to the above issuance of approximately 6.1 million warrants to include a warrant exercise blocker provision that would effectively prevent any exercise of the warrants if such exercise and related issuance of common stock would increase the Maximilian holdings of the Company’s common stock to more than 9.99% of the currently issued and outstanding shares at the time of the exercise. All other terms of the original warrant agreement remained unchanged. The Company also issued 309,503 warrants to third parties who assisted in the closing of the amended and restated loan agreement. The warrants have an exercise price of $0.214; contain a cashless exercise provision; have piggyback registration rights; and are exercisable for a period of five years expiring on August 28, 2018. The fair value of the warrants, as determined by the Black-Scholes option pricing model, was $47,420 and included the following assumptions: a risk free interest rate of 2.48%; stock price of $0.16, volatility of 184.53%; and a dividend yield of 0.0%. The fair value of the warrants was recognized as a financing cost and is being amortized as a part of deferred financing cost over the term of the revolving credit facility. The Company evaluated the amendment of the revolving credit facility under ASC 470-50-40 and determined that the Company’s borrowing capacity under the amended loan agreement exceeded its borrowing capacity under the old loan agreement. Consequently, the unamortized discount and deferred financing costs as of the date of amendment of approximately $400,349 and the new deferred financing costs, as mentioned above, were amortized over the term of the amended loan agreement. On May 28, 2014, at Maximilian’s request, the Company finalized a share-for-warrant exchange agreement in which Maximilian returned to the Company 427,729 common shares and was in turn issued the same number of warrants containing the same provisions as the originally issued warrants. This share-for-warrant exchange occurred so that Maximilian would hold no more than 9.99% of the Company’s common shares, issued and outstanding. The Company determined that the share-for-warrant exchange did not result in any incremental fair value. On August 21, 2014, the Company entered into a First Amendment to Amended and Restated Loan and Security Agreement and Share Repurchase Agreement (the “Amendment”) with Maximilian under its Amended and Restated Loan and Security Agreement dated as of August 28, 2013. The Amendment secured for the Company an additional advance of $2,200,000 under its credit facility with Maximilian since the advances made by Maximilian had already exceeded its minimum funding commitment. Additionally, Maximilian agreed to temporarily reduce the required monthly payment made by the Company until it has paid $1,000,000 less than principal payments required by the previous agreement. As of February 28, 2015, the Company had recognized $700,000 of the reduced monthly principal payments program. Furthermore, Maximilian agreed to reduce the regular interest rate applicable to the loan from 12% per annum to 9% per annum and the default interest rate by 3%. The additional advance, the reduction in the required monthly payment and the reduction in the interest rate were facilitated through the Company’s acquisition of 5,694,823 shares of its common stock held by Maximilian. The repurchased shares were cancelled and restored to the status of authorized, but unissued stock. The Company paid for the share repurchase transaction through an advance of $1,708,447 under the existing loan agreement with Maximilian. On May 20, 2015, the Company entered into a Second Amendment to Amended and Restated Loan and Security Agreement (the “Second Amendment”) with Maximilian. The Second Amendment modified the calculation of the required monthly payment for a three-month period ending June 30, 2015. As consideration for entering into the loan modification, the Company agreed to modify the exercise price of the warrants Maximilian currently holds from $0.10 to $0.04. No other terms of the warrant agreement were changed. The modification did not result to any accounting since these warrants were deemed to be investor warrants. On October 14, 2015, the Company entered into a Third Amendment to the Amended and Restated Loan and Security Agreement and Second Warrant Amendment with Maximilian, (the “Third Amendment”). Pursuant to the Third Amendment, Maximilian agreed to a reduction in the Company’s monthly payments under the loan agreement to $50,000 per month for a period of six months ending on February 29, 2016. The reduction in monthly payments allows for additional funds to be used by the Company in drilling and completing additional wells in Kentucky. As consideration for the reduction in the monthly payment amount, the Company agreed that twenty percent (20%) of the amount by which the monthly payment was reduced would be added to the loan balance, and the portion of the monthly payment savings that constitutes savings in interest or commitment fees would be treated as an additional advance of principal under the loan agreement (the “Deemed Advances”). The 20% fee is being recognized as additional interest expense. The Company also agreed to grant to Maximilian an overriding royalty interest of 1.5% of its working interest in four wells in Kentucky. As part of the Maximilian Amendment, the Company also agreed to extend the expiration date of the warrants held by Maximilian to purchase up to 6,550,281 shares of common stock of the Company to August 28, 2018. The Company determined that the accounting of the loan modification was not substantial. Likewise, the Company determined that the modification of the warrant term did not result in any accounting since these warrants were deemed to be investor warrants. With the cooperation of Maximilian, the Company is currently working with an investment banking firm to assist in securing refinancing of its debt with Maximilian, since the long-term commitment needed to develop the Kentucky and California projects no longer fits the Maximilian business model. As a result of the decline in hydrocarbon prices, we are currently unable to make the interest or principal payments required under the terms of our credit facility with our lender, Maximilian. A series of waivers have been granted by Maximilian for the principal and interest payments that have not been made since December 2015. Due to the waivers granted by Maximilian, the Company is currently not considered to be in default under terms of the credit facility. Maximilian is continuing to work with the Company in modifying the credit facility terms during this period of lower hydrocarbon prices, but there can be no assurances that this cooperation will continue. Further, there can be no assurances that Maximilian will not declare the Company to be in default under the credit facility. In accordance with guidance from ASC-470-10-45, since the Company has been unable to make the above referenced payments the entire balance of the Maximilian credit facility is presented under the current liabilities section of the financial statements. Current debt balances at February 29, 2016 and February 28, 2015 are set forth in the table below: February 29, 2016 February 28, 2015 Maximilian Note $ 14,381,131 $ 4,823,325 Maximilian Note Discount (71,951) (132,114) $ 14,309,180 $ 4,691,211 Non-current debt balances at February 29, 2016 and February 28, 2015 are set forth in the table below: February 29, 2016 February 28, 2015 Maximilian Note $ - $ 8,663,458 Maximilian Note Discount - (71,951) $ - $ 8,591,507 |
Stockholders' Deficit
Stockholders' Deficit | 12 Months Ended |
Feb. 29, 2016 | |
Equity [Abstract] | |
Stockholders' Deficit | NOTE 12 — STOCKHOLDERS’ DEFICIT: Preferred Stock The Company is authorized to issue up to 10,000,000 shares of preferred stock with a par value of $0.001. The Company’s preferred stock may be entitled to preference over the common stock with respect to the distribution of assets of the Company in the event of liquidation, dissolution, or winding-up of the Company, whether voluntarily or involuntarily, or in the event of any other distribution of assets of the Company among its shareholders for the purpose of winding-up its affairs. The authorized but unissued shares of preferred stock may be divided into and issued in designated series from time to time by one or more resolutions adopted by the Board of Directors. The directors in their sole discretion shall have the power to determine the relative powers, preferences, and rights of each series of preferred stock. Series A Convertible Preferred Stock The Company has designated 2,400,000 shares of the 10,000,000 preferred shares as Series A Convertible Preferred Stock (“Series A Preferred”), with a $0.001 par value. In July 2006, we completed a private placement of the Series A Preferred that resulted in the issuance of 1,399,765 shares to 100 accredited investors. The following is a summary of the rights and preferences of the Series A Preferred. Voluntary Conversion: The Series A Preferred that is currently issued and outstanding is eligible to be converted by the shareholder at any time into three shares of the Company’s common stock. During the years ended February 29, 2016 and February 28, 2015, there was one conversion each year of 10,000 and 3,000 shares of Series A Preferred that resulted in 30,000 and 9,000 shares of our common stock being issued, respectively. At February 29, 2016 there were 724,565 shares issued and outstanding that had not been converted into our common stock. As of February 29, 2016, there are 43 accredited investors who have converted 675,200 Series A Preferred shares into 2,025,600 shares of Daybreak common stock. The conversions of Series A Preferred that have occurred since the Series A Preferred was first issued in July 2006 is set forth in the table below. Fiscal Period Shares of Series A Preferred Converted to Common Stock Shares of Common Stock Issued from Conversion Number of Accredited Investors Year Ended February 29, 2008 102,300 306,900 10 Year Ended February 28, 2009 237,000 711,000 12 Year Ended February 28, 2010 51,900 155,700 4 Year Ended February 28, 2011 102,000 306,000 4 Year Ended February 29, 2012 - - - Year Ended February 28, 2013 18,000 54,000 2 Year Ended February 28, 2014 151,000 453,000 9 Year Ended February 28, 2015 3,000 9,000 1 Year Ended February 29, 2016 10,000 30,000 1 Totals 675,200 2,025,600 43 Automatic Conversion: The Series A Preferred shall be automatically converted into the Company’s common stock if the common stock into which the Series A Preferred are convertible the Company’s common stock closes at or above $3.00 per share for 20 out of 30 trading days. Dividend: Holders of Series A Preferred shall be paid dividends, in the amount of 6% of the original purchase price per annum. Dividends may be paid in cash or common stock at the discretion of the Company. Dividends are cumulative from the date of the final closing of the private placement, whether or not in any dividend period or periods we have assets legally available for the payment of such dividends. Accumulations of dividends on shares of Series A Preferred do not bear interest. Dividends are payable upon declaration by the Board of Directors. Cumulative dividends earned for each fiscal year since issuance are set forth in the table below: Fiscal Year Ended Shareholders at Period End Accumulated Dividends February 28, 2007 100 $ 155,311 February 29, 2008 90 242,126 February 28, 2009 78 209,973 February 28, 2010 74 189,973 February 28, 2011 70 173,707 February 29, 2012 70 163,624 February 28, 2013 68 161,906 February 28, 2014 59 151,323 February 28, 2015 58 132,634 February 29, 2016 57 130,925 $ 1,711,502 Liquidation Preference: In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, the holders of the Series A Preferred shall be entitled to receive, prior and in preference to any distribution of any of the assets or surplus funds of the Company to the holders of common stock by reason of their ownership thereof, and subject to the rights of any series of preferred stock that may rank on liquidation prior to the Series A Preferred, an amount equal to all accrued or declared but unpaid dividends on such shares, for each share of Series A Preferred then held by them. The remaining assets shall be distributed ratably to the holders of common stock and Series A Preferred on a common equivalent basis. Certain other events, as described in our Amended and Restated Articles of Incorporation, including a consolidation or merger of the Company or the disposition of the Company’s assets, may trigger the payment of the liquidation preference to the holders of Series A Preferred. Voting Rights: The holders of the Series A Preferred will vote together with the common stock and not as a separate class except as specifically provided or as otherwise required by law. Each share of the Series A Preferred shall have a number of votes equal to the number of shares of common stock then issuable upon conversion of such shares of Series A Preferred. Common Stock The Company is authorized to issue up to 200,000,000 shares of $0.001 par value Common Stock of which 51,487,373 shares were issued and outstanding as of February 29, 2016. In comparison, at February 28, 2015, a total of 51,457,373 shares were issued and outstanding. This change of 30,000 shares was attributable as shown in the table below: Common Stock Balance Par Value Common stock, Issued and Outstanding, February 28, 2014 55,509,411 Conversion of Series A Convertible Preferred Stock to common stock 9,000 $ 9 Exercise of warrants issued with 12% Subordinated Notes 50,000 $ 50 Cashless exercise of warrants 1,873,554 $ 1,874 Common stock-for-warrant exchange (Maximilian) (427,729) $ (428) Transfer agent balancing adjustment 140,000 $ 140 Share purchase and cancellation (Maximilian) (5,694,823) $ (5,695) Common stock returned to 2009 Stock Plan (tax withholding liability) (2,040) $ (2) Common stock, Issued and Outstanding, February 28, 2015 51,457,373 Conversion of Series A Convertible Preferred Stock to Common Stock 30,000 $ 30 Common stock, Issued and Outstanding, February 29, 2016 51,487,373 All shares of common stock are equal to each other with respect to voting, liquidation, dividend and other rights. Owners of shares of common stock are entitled to one vote for each share of common stock owned at any shareholders’ meeting. Holders of shares of common stock are entitled to receive such dividends as may be declared by the Board of Directors out of funds legally available therefore; and upon liquidation, are entitled to participate pro rata in a distribution of assets available for such a distribution to shareholders. There are no conversion, preemptive, or other subscription rights or privileges with respect to any shares of our common stock. Our stock does not have cumulative voting rights, which means that the holders of more than 50% of the shares voting in an election of directors may elect all of the directors if they choose to do so. In such event, the holders of the remaining shares aggregating less than 50% would not be able to elect any directors. Common Stock Issued through Restricted Stock and Restricted Stock Unit Plan On April |
Warrants
Warrants | 12 Months Ended |
Feb. 29, 2016 | |
Equity [Abstract] | |
Warrants | NOTE 13 — WARRANTS: Warrants outstanding and exercisable as of February 29, 2016 are set forth in the table below: Warrants Exercise Price Remaining Life (Years) Exercisable Warrants Remaining 12% Subordinated notes 1,190,000 $0.14 0.92 980,000 Warrants issued in 2012 for debt financing 2,435,517 $0.044 1.67 316,617 Warrants issued for Kentucky oil project 3,498,601 $0.04 2.50 3,498,601 Warrants issued for Kentucky debt financing 2,623,951 $0.04 2.50 2,623,951 Warrants issued for Kentucky debt financing 309,503 $0.214 2.50 309,503 Warrants issued in share-for-warrant exchange 427,729 $0.04 2.50 427,729 10,485,301 8,156,401 For the years ended February 29, 2016 and February 28, 2015, a total of 150,000 and 60,000 warrants expired, respectively. The 150,000 warrants that expired during the year ended February 29, 2016 had been issued for services in conjunction with the 12% Subordinated Note offering in 2010. During the years ended February 29, 2016 and February 28, 2015, there were -0- and 2,168,900 warrants exercised, respectively. For the years ended February 29, 2016 and February 28, 2015, there were -0- and 427,729 warrants issued, respectively. The outstanding warrants as of February 29, 2016 and February 28, 2015, had a weighted average exercise price of $0.06 and $0.11; a weighted average remaining life of 2.28 and 1.64 years; and an intrinsic value of $-0- and $14,564, respectively. |
Restricted Stock and Restricted
Restricted Stock and Restricted Stock Unit Plan | 12 Months Ended |
Feb. 29, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Restricted Stock and Restricted Stock Unit Plan | NOTE 14 RESTRICTED STOCK and RESTRICTED STOCK UNIT PLAN: On April The Company believes that awards of this type further align the interests of its employees and its shareholders by providing significant incentives for these employees to achieve and maintain high levels of performance. Restricted stock and restricted stock units also enhance the CompanyÂ’s ability to attract and retain the services of qualified individuals. During the year ended February 28, 2009, the Compensation Committee of the Board awarded a total of 2,550,000 restricted shares of the CompanyÂ’s common stock to members of the Board of Directors, officers and employees of the Company. These shares were granted pursuant to the 2009 Plan and fully vest equally over a period ranging from three to four years. On July 22, 2010, the Compensation Committee of the Board awarded 25,000 restricted shares of its common stock to the five non-employee Directors as a part of the director compensation policy. These shares were granted pursuant to the 2009 Plan and fully vest equally over a period of three years. On July 22, 2010, the Compensation Committee of the Board awarded 425,000 restricted shares of its common stock to five employees of Daybreak. These shares were granted pursuant to the 2009 Plan and fully vest equally over a period of four years. For the years ended February 29, 2016 and February 28, 2015, an aggregate of -0- and 106,250 shares vested, respectively. At February 29, 2016, all issued and outstanding shares in the 2009 stock plan had fully vested. For the years ended February 29, 2016 and February 28, 2015, the number of common shares available for issuance under the Plan increased by -0- and 2,040 shares, respectively. This increase was attributable to the return of common shares that were withheld pursuant to the settlement of the number of shares with a fair market value equal to such tax withholding liability, to satisfy such tax liability upon vesting of a restricted award by a Plan Participant. At February 29, 2016, a total of 3,000,000 shares of restricted stock had been awarded and 2,986,220 shares of the 2009 Plan had fully vested. A total of 1,013,780 common stock shares remained available for issuance pursuant to the 2009 Plan at February 29, 2016. For the years ended February 29, 2016 and February 28, 2015, an aggregate of -0- and 106,250 shares vested, respectively. A summary of the 2009 Plan issuances is set forth in the table below: Grant Date Shares Awarded Vesting Period Shares Vested (1) Shares Returned (2) Shares Outstanding (Unvested) 4/7/2009 1,900,000 3 Years 1,900,000 - - 7/16/2009 25,000 3 Years 25,000 - - 7/16/2009 625,000 4 Years 619,130 5,870 - 7/22/2010 25,000 3 Years 25,000 - - 7/22/2010 425,000 4 Years 417,090 7,910 - 3,000,000 2,986,220 (1) 13,780 - (1) Does not include the number of common shares that were withheld to satisfy such tax liability upon vesting of a restricted award by a Plan Participant, and subsequently returned to the 2009 Plan. (2) Reflects the number of common shares that were withheld pursuant to the settlement of the number of shares with a fair market value equal to such tax withholding liability, to satisfy such tax liability upon vesting of a restricted award by a Plan Participant. For the years ended February 29, 2016 and February 28, 2015, the Company recognized compensation expense related to the above restricted stock grants of $-0- and $2,515, respectively. There was no unamortized stock compensation expense remaining as of February 29, 2016. |
Income Taxes
Income Taxes | 12 Months Ended |
Feb. 29, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE 15 INCOME TAXES: Reconciliation between actual tax expense (benefit) and income taxes computed by applying the U.S. federal income tax rate and state income tax rate to income from continuing operations before income taxes is as follows: February 29, 2016 February 28, 2015 Computed at U.S. and state statutory rates (40%) $ (1,616,023) $ (293,176) Permanent differences 143,946 142,925 Changes in valuation allowance 1,472,077 150,251 Total $ - $ - Tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred liabilities are presented below: February 29, 2016 February 28, 2015 Deferred tax assets: Net operating loss carryforwards $ 10,217,121 $ 9,188,905 Oil and gas properties (944,342) (1,436,249) Stock based compensation 88,723 88,723 Other (150,945) (102,899) Less valuation allowance (9,210,557) (7,738,480) Total $ - $ - At February 29, 2016, the Company had a net operating loss (“NOL”) carryforwards for federal and state income tax purposes of approximately $25,542,800, which will begin to expire, if unused, beginning in 2024. The valuation allowances increased by $1,472,077 and $150,251 for the years ended February 29, 2016 and February 28, 2015, respectively. Section 382 Rule of the Internal Revenue Code will place annual limitations on the Company’s NOL carryforward. The above estimates are based upon management’s decisions concerning certain elections that could change the relationship between net income and taxable income. Management decisions are made annually and could cause the estimates to vary significantly. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Feb. 29, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 16 — COMMITMENTS AND CONTINGENCIES: Various lawsuits, claims and other contingencies arise in the ordinary course of the Company’s business activities. While the ultimate outcome of the aforementioned contingencies are not determinable at this time, management believes that any liability or loss resulting therefrom will not materially affect the financial position, results of operations or cash flows of the Company. The Company, as an owner or lessee and operator of oil and gas properties, is subject to various federal, state and local laws and regulations relating to discharge of materials into, and protection of, the environment. These laws and regulations may, among other things, impose liability on the lessee under an oil and gas lease for the cost of pollution cleanup resulting from operations and subject the lessee to liability for pollution damages. In some instances, the Company may be directed to suspend or cease operations in the affected area. The Company maintains insurance coverage that is customary in the industry, although the Company is not fully insured against all environmental risks. The Company is not aware of any environmental claims existing as of February 29, 2016. There can be no assurance, however, that current regulatory requirements will not change, or past non-compliance with environmental issues will not be discovered on the Company’s oil and gas properties. |
Supplementary Information for O
Supplementary Information for Oil and Gas Producing Activities | 12 Months Ended |
Feb. 29, 2016 | |
Oil and Gas Exploration and Production Industries Disclosures [Abstract] | |
Supplementary Information for Oil and Gas Producing Activities | NOTE 18 SUPPLEMENTARY INFORMATION FOR OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED) All of the Company’s continuing operations are directly related to oil and natural gas producing activities located in Kern County, California and Lawrence County, Kentucky. Capitalized Costs Relating to Oil and Gas Producing Activities As of February 29, 2016 As of February 28, 2015 Proved leasehold costs Mineral Interests $ 654,445 $ 695,231 Wells, equipment and facilities 6,095,262 5,851,439 Total Proved Properties 6,749,707 6,546,670 Unproved properties Mineral Interests 585,826 733,478 Uncompleted wells, equipment and facilities - - Total unproved properties 585,826 733,478 Less accumulated depreciation, depletion amortization and impairment (3,569,705) (2,167,064) Net capitalized costs $ 3,765,828 $ 5,113,084 Costs Incurred in Oil and Gas Producing Activities 12 Months Ended 12 Months Ended February 29, 2016 February 28, 2015 Acquisition of proved properties $ - $ 165,317 Acquisition of unproved properties - - Development costs 243,823 1,339,570 Exploration costs 76,053 42,997 Total costs incurred $ 319,876 $ 1,547,884 Results of Operations from Oil and Gas Producing Activities 12 Months Ended 12 Months Ended February 29, 2016 February 28, 2015 Oil and gas revenues $ 1,253,686 $ 3,083,797 Production costs (268,448) (329,917) Exploration expenses (76,053) (42,997) Depletion, depreciation and amortization (517,870) (570,110) Impairment of oil properties (1,108,683) - Result of oil and gas producing operations before income taxes (717,368) 2,140,773 Provision for income taxes - - Results of oil and gas producing activities $ (717,368) $ 2,140,773 Proved Reserves The Company’s proved oil and natural gas reserves have been estimated by the certified independent engineering firm, PGH Petroleum and Environmental Engineers, LLC. Proved reserves are the estimated quantities that geologic and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions. Proved developed reserves are the quantities expected to be recovered through existing wells with existing equipment and operating methods when the estimates were made. Due to the inherent uncertainties and the limited nature of reservoir data, such estimates are subject to change as additional information becomes available. The reserves actually recovered and the timing of production of these reserves may be substantially different from the original estimate. Revisions result primarily from new information obtained from development drilling and production history; acquisitions of oil and natural gas properties; and changes in economic factors. Our proved reserves are summarized in the table below: Oil (Barrels) Natural Gas (Mcf) BOE (Barrels) Proved reserves: February 28, 2014 745,830 26,090 750,178 Revisions (1) 49,103 192,589 88,882 Discoveries and extensions 88,611 58,180 90,627 Production (37,885) (21,999) (41,551) February 28, 2015 845,659 254,860 888,136 Revisions (1) (120,001) 390,693 (54,886) Discoveries and extensions 76,270 161,320 103,157 Production (28,818) (28,853) (33,627) February 29, 2016 773,110 778,020 902,780 (1) The revisions of previous estimates resulted from a decline in the estimated economic life of the reserves due to lower hydrocarbon prices in the energy markets. The Company’s proved reserves are set forth in the table below. Developed Undeveloped Total Reserves Oil (Bbls) BOE (Bbls) Oil (Bbls) BOE (Bbls) Oil (Bbls) BOE (Bbls) February 29, 2016 203,131 231,778 569,979 671,002 773,110 902,780 February 28, 2015 278,233 294,585 567,426 593,551 845,659 888,136 February 28, 2014 263,010 264,062 482,820 486,116 745,830 750,178 Standardized Measure of Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves The following information is based on the Company’s best estimate of the required data for the Standardized Measure of Discounted Future Net Cash Flows as of February 29, 2016 and February 28, 2015 in accordance with ASC 932, “Extractive Activities – Oil and Gas” Future cash inflows for the years ended February 29, 2016 and February 28, 2015 were estimated as specified by the SEC through calculation of an average price based on the 12-month unweighted arithmetic average of the first-day-of-the-month price for the period from March through February during each respective fiscal year. The resulting net cash flows are reduced to present value by applying a 10% discount factor. 12 Months Ended February 29, 2016 February 28, 2015 Future cash inflows $ 34,077,610 $ 73,348,130 Future production costs (1) (16,255,030) (25,378,830) Future development costs (7,278,930) (6,789,770) Future income tax expenses (2) - - Future net cash flows 10,543,650 41,179,530 10% annual discount for estimated timing of cash flows (6,570,720) (23,674,830) Standardized measure of discounted future net cash flows at the end of the fiscal year $ 3,972,930 $ 17,504,700 (1) Production costs include oil and gas operations expense, production ad valorem taxes, transportation costs and G&A expense supporting the Company’s oil and gas operations. (2) The Company has sufficient tax deductions and allowances related to proved oil and gas reserves to offset future net revenues. Average hydrocarbon prices are set forth in the table below. Average Price Natural Crude Oil (Bbl) Gas (Mcf) Year ended February 29, 2016 (1) $ 47.45 $ 2.51 Year ended February 28, 2015 (1) $ 85.53 $ 2.99 Year ended February 29, 2014 (1) $ 95.94 $ 2.44 (1) Average prices were based on 12-month unweighted arithmetic average of the first-day-of-the-month prices for the period from March through February during each respective fiscal year. Future production and development costs, which include dismantlement and restoration expense, are computed by estimating the expenditures to be incurred in developing and producing the Company’s proved crude oil and natural gas reserves at the end of the year, based on year-end costs, and assuming continuation of existing economic conditions. Sources of Changes in Discounted Future Net Cash Flows Principal changes in the aggregate standardized measure of discounted future net cash flows attributable to the Company’s proved crude oil and natural gas reserves, as required by ASC 932, at fiscal year-end are set forth in the table below. 12 Months Ended February 29, 2016 February 28, 2015 Standardized measure of discounted future net cash flows at the beginning of the year $ 17,504,700 $ 21,424,440 Extensions, discoveries and improved recovery, less related costs 271,190 1,565,310 Revisions of previous quantity estimates (408,300) 2,040,090 Net changes in prices and production costs (10,040,886) (3,214,934) Accretion of discount 1,750,470 2,142,444 Sales of oil produced, net of production costs (985,238) (2,753,880) Development costs incurred during the period 213,576 1,516,201 Changes in future development costs 526,413 (1,385,033) Changes in timing of future production (4,858,995) (3,829,938) Net changes in income taxes - - Standardized measure of discounted future net cash flows at the end of the year $ 3,972,930 $ 17,504,700 |
Accounting Policies (Policies)
Accounting Policies (Policies) | 12 Months Ended |
Feb. 29, 2016 | |
Accounting Policies [Abstract] | |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash equivalents include demand deposits with banks and all highly liquid investments with original maturities of three months or less. The Company has historically maintained balances in financial institutions where deposits may exceed the Federally insured deposit limit of $250,000. The Company has not experienced any losses from such accounts and does not believe it is exposed to any significant credit risk on cash. |
Accounts Receivable | Accounts Receivable The Company routinely assesses the recoverability of all material trade and other receivables. The Company accrues a reserve on a receivable when, based on the judgment of management, it is probable that a receivable will not be collected and the amount of any reserve may be reasonably estimated. Actual write-offs may exceed the recorded allowance. Substantially all of the CompanyÂ’s trade accounts receivable result from crude oil and natural gas sales in Kentucky and California or joint interest billings to its working interest partners in California. This concentration of customers and joint interest owners may impact the CompanyÂ’s overall credit risk as these entities could be affected by similar changes in economic conditions as well as other related factors. Trade accounts receivable are generally not collateralized. |
Oil and Gas Properties | Oil and Gas Properties The Company uses the successful efforts method of accounting for oil and natural gas property acquisition, exploration, development, and production activities. Costs to acquire mineral interests in oil and natural gas properties, to drill and equip exploratory wells that find proved reserves, and to drill and equip development wells are capitalized as incurred. Costs to drill exploratory wells that are unsuccessful in finding proved reserves are expensed as incurred. In addition, the geological and geophysical costs, and costs of carrying and retaining unproved properties are expensed as incurred. Costs to operate and maintain wells and field equipment are expensed as incurred. Capitalized proved property acquisition costs are amortized by field using the unit-of-production method based on estimated proved reserves. Capitalized exploration well costs and development costs (plus estimated future dismantlement, surface restoration, and property abandonment costs, net of equipment salvage values) are amortized in a similar fashion (by field) based on their estimated proved developed reserves. Support equipment and other property and equipment are depreciated over their estimated useful lives. Pursuant to the provisions of Financial Accounting Standards Codification (“ASC”) Topic 360, “Property, Plant and Equipment” On the retirement or sale of a partial unit of proved property, the cost is charged to accumulated DD&A with a resulting gain or loss recognized in income. |
Property and Equipment | Property and Equipment Fixed assets are stated at cost. Depreciation on vehicles is provided using the straight-line method over expected useful lives of three years. Depreciation on machinery and equipment is provided using the straight-line method over expected useful life of three years. Depreciation of production facilities and natural gas pipelines are recorded using the unit-of-production method based on estimated reserves. |
Long Lived Assets | Long Lived Assets The Company reviews long-lived assets and identifiable intangibles whenever events or circumstances indicate that the carrying amounts of such assets may not be fully recoverable. The Company evaluates the recoverability of long-lived assets by measuring the carrying amounts of the assets against the estimated undiscounted cash flows associated with these assets. If this evaluation indicates that the future undiscounted cash flows of certain long-lived assets are not sufficient to recover the assets' carrying value, the assets are adjusted to their fair values (based upon discounted cash flows). |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying value of short-term financial instruments including cash, receivables, prepaid expenses, accounts payable, and other accrued liabilities, short-term liabilities and the line of credit approximated their fair values due to the relatively short period to maturity for these instruments. The long-term notes payable approximates fair value since the related rates of interest approximate current market rates. |
Share Based Payments | Share Based Payments Stock awards are accounted for under FASB ASC Topic 718, “Compensation-Stock Compensation” . The Company estimates the fair value of stock purchase warrants on the grant date using the Black-Scholes option pricing model (“Black-Scholes Model”) as its method of valuation for warrant awards granted during the year. The Company’s determination of fair value of warrant awards on the date of grant using an option-pricing model is affected by the Company’s stock price, as well as assumptions regarding a number of subjective variables. These variables include, but are not limited to, the Company’s expected price volatility over the term of the awards and discount rates assumed. |
Loss per Share of Common Stock | Loss per Share of Common Stock Basic loss per share of Common Stock is calculated by dividing net loss available to common stockholders by the weighted average number of common shares issued and outstanding during the year. Diluted net loss per share is computed based on the weighted average number of common shares outstanding, increased by dilutive Common Stock equivalents. Common Stock equivalents are excluded from the calculations when their effect is anti-dilutive. |
Concentration of Credit Risk | Concentration of Credit Risk Substantially all of the CompanyÂ’s accounts receivable result from crude oil and natural gas sales in Kentucky and California or joint interest billings to its working interest partners in California. This concentration of customers and joint interest owners may impact the CompanyÂ’s overall credit risk as these entities could be affected by similar changes in economic conditions as well as other related factors. At the CompanyÂ’s Twin Bottoms Field project located in Lawrence County, Kentucky, there is only one buyer available for the purchase of its crude oil production and only one buyer available for the purchase of its natural gas production. At the CompanyÂ’s East Slopes project in California there is only one buyer available for the purchase of all crude oil production. The Company has no natural gas production in California. At February 29, 2016 and February 28, 2015 these three individual customers represented 100.0% of crude oil and natural gas sales receivable. If these buyers are unable to resell its products or if they lose a significant sales contract then the Company may incur difficulties in selling its oil and natural gas production. |
Revenue Recognition | Revenue Recognition The Company uses the sales method to account for sales of crude oil and natural gas. Under this method, revenues are recognized based on actual volumes of oil and natural gas sold to purchasers. The volumes sold may differ from the volumes to which the Company is entitled based on its interests in the properties. These differences create imbalances that are recognized as a liability only when the imbalance exceeds the estimate of remaining reserves. |
Reclamation Bonds | Reclamation Bonds Included in other assets as of February 29, 2016, are funds that have been pledged as collateral in connection with asset retirement obligations for future plugging, abandonment and site remediation. The amount pledged for an operator bond in California is approximately $100,000 plus accrued interest. The pledging of these funds is required by any state in which the Company operates as the project Operator. |
Asset Retirement Obligation | Asset Retirement Obligation The Company follows the provisions of FASB ASC Topic 410, “Asset Retirement and Environmental Obligations” , |
Suspended Well Costs | Suspended Well Costs The Company accounts for any suspended well costs in accordance with FASB ASC Topic 932, “Extractive Activities – Oil and Gas In addition, ASC 932 requires annual disclosure of: (1) net changes from period to period of capitalized exploratory well costs for wells that are pending the determination of proved reserves, (2) the amount of exploratory well costs that have been capitalized for a period greater than one year after the completion of drilling and (3) an aging of exploratory well costs suspended for greater than one year, designating the number of wells the aging is related to. Further, the disclosures should describe the activities undertaken to evaluate the reserves and the projects, the information still required to classify the associated reserves as proved and the estimated timing for completing the evaluation. |
Income Taxes | Income Taxes The Company follows the provisions of FASB ASC Topic 740, “Income Taxes ASC 740 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. Under ASC 740, the Company recognizes tax benefits only for tax positions that are more likely than not to be sustained upon examination by tax authorities. The amount recognized is measured as the largest amount of benefit that is greater than 50% (percent) likely to be realized upon settlement. A liability for “unrecognized tax benefits” is recorded for any tax benefits claimed in our tax returns that do not meet these recognition and measurement standards. |
Use of Estimates and Assumptions | Use of Estimates and Assumptions In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions. These estimates and assumptions may affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, and reported amounts of revenues and expenses during the reporting periods. Actual results could differ materially from those estimates. The accounting policies most affected by management’s estimates and assumptions are as follows: • The reliance on estimates of proved reserves to compute the provision for depreciation, depletion and amortization and to determine the amount of any impairment of proved properties; • The valuation of unproved acreage and proved oil and natural gas properties to determine the amount of any impairment of oil and natural gas properties; • Judgment regarding the productive status of in-progress exploratory wells to determine the amount of any provision for abandonment; and • Estimates regarding the timing and cost of future abandonment obligations. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements There are no new accounting pronouncements issued or effective that had, or are expected to have, a material impact on the CompanyÂ’s financial statements. |
Reclassifications | Reclassifications Certain reclassifications have been made to conform the prior periodÂ’s financial information to the current periodÂ’s presentation. These reclassifications had no effect on previously reported net loss or accumulated deficit. |
Summary of Significant Accoun25
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Feb. 29, 2016 | |
Accounting Policies [Abstract] | |
Schedule of Concentration of Risk, by Risk Factor | February 29, 2016 February 28, 2015 Project Customer Revenue Receivable Percentage Revenue Receivable Percentage Kentucky – Twin Bottoms Field (Oil) Appalachian Oil $ 23,257 33.6% $ 90,906 44.9% Kentucky – Twin Bottoms Field (Natural gas) Jefferson Gas 6,767 9.8% 16,676 8.2% California – East Slopes Project (Oil) Plains Marketing 39,168 56.6% 95,150 46.9% $ 69,192 100.0% $ 202,732 100.0% |
Production Revenue Receivable (
Production Revenue Receivable (Tables) | 12 Months Ended |
Feb. 29, 2016 | |
Deferred Revenue Disclosure [Abstract] | |
Schedule of Production Revenue Receivable | February 29, 2016 February 28, 2015 Production revenue receivable – current $ 45,000 $ 120,000 Production revenue receivable – non-current - 35,000 $ 45,000 $ 155,000 |
Deferred Financing Costs (Table
Deferred Financing Costs (Tables) | 12 Months Ended |
Feb. 29, 2016 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of Deferred Costs, Capitalized, Prepaid, and Other Assets | February 29, 2016 February 28, 2015 Deferred financing costs – loan fees $ 160,794 $ 151,139 Deferred financing costs – loan commissions 630,662 630,662 Deferred financing costs – fair value of warrants 530,488 530,488 Deferred financing costs – fair value of common stock 419,832 419,832 1,741,776 1,732,121 Accumulated amortization (1,100,701) (673,370) $ 641,075 $ 1,058,751 |
Oil and Gas Properties (Tables)
Oil and Gas Properties (Tables) | 12 Months Ended |
Feb. 29, 2016 | |
Oil and Gas Exploration and Production Industries Disclosures [Abstract] | |
Schedule of Oil and Gas Properties | February 29, 2016 February 28, 2015 Proved leasehold costs $ 654.445 $ 695,231 Unproved leasehold costs 585,826 733,478 Costs of wells and development 604,684 542,563 Capitalized exploratory well costs 5,461,677 5,308,876 Capitalized asset retirement costs 28,901 - Total cost of oil and gas properties 7,335,533 7,280,148 Accumulated depletion, depreciation amortization and impairment (3,569,705) (2,167,064) Oil and gas properties, net $ 3,765,828 $ 5,113,084 |
Schedule of Change in Asset Retirement Obligations | February 29, 2016 February 28, 2015 Asset retirement obligation, beginning of period $ 29,603 $ 22,079 Accretion expense 3,014 2,187 Change in asset retirement estimates 47,362 5,337 Asset retirement obligation, end of period $ 79,979 $ 29,603 |
Note Receivable (Tables)
Note Receivable (Tables) | 12 Months Ended |
Feb. 29, 2016 | |
Receivables [Abstract] | |
Schedule of Accounts, Notes, Loans and Financing Receivables | February 29, 2016 February 28, 2015 Note receivable – current $ 420,901 $ 1,320,944 Note receivable – non-current 4,234,612 3,429,056 $ 4,655,513 $ 4,750,000 |
Short-Term and Long-Term Borr30
Short-Term and Long-Term Borrowings (Tables) | 12 Months Ended |
Feb. 29, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of Short-Term Debt | February 29, 2016 February 28, 2015 12% Subordinated Notes $ 315,000 $ 315,000 12% Subordinated Notes – related party 250,000 250,000 $ 565,000 $ 565,000 |
Schedule of 12% Subordinated Note Warrants | Fiscal Period Warrants Exercised Shares of Common Stock Issued Number of Accredited Investors Year Ended February 28, 2014 100,000 100,000 1 Year Ended February 28, 2015 50,000 50,000 1 Year Ended February 29, 2016 - - - Totals 150,000 150,000 2 |
Schedule of Line of Credit Facilities | Current February 29, 2016 February 28, 2015 Maximilian Note $ 14,381,131 $ 4,823,325 Maximilian Note Discount (71,951) (132,114) $ 14,309,180 $ 4,691,211 Non-Current February 29, 2016 February 28, 2015 Maximilian Note $ - $ 8,663,458 Maximilian Note Discount - (71,951) $ - $ 8,591,507 |
Stockholders' Deficit (Tables)
Stockholders' Deficit (Tables) | 12 Months Ended |
Feb. 29, 2016 | |
Equity [Abstract] | |
Schedule of Stockholder's Equity | Fiscal Period Shares of Series A Preferred Converted to Common Stock Shares of Common Stock Issued from Conversion Number of Accredited Investors Year Ended February 29, 2008 102,300 306,900 10 Year Ended February 28, 2009 237,000 711,000 12 Year Ended February 28, 2010 51,900 155,700 4 Year Ended February 28, 2011 102,000 306,000 4 Year Ended February 29, 2012 - - - Year Ended February 28, 2013 18,000 54,000 2 Year Ended February 28, 2014 151,000 453,000 9 Year Ended February 28, 2015 3,000 9,000 1 Year Ended February 29, 2016 10,000 30,000 1 Totals 675,200 2,025,600 43 |
Schedule of Dividends Payable | Fiscal Year Ended Shareholders at Period End Accumulated Dividends February 28, 2007 100 $ 155,311 February 29, 2008 90 242,126 February 28, 2009 78 209,973 February 28, 2010 74 189,973 February 28, 2011 70 173,707 February 29, 2012 70 163,624 February 28, 2013 68 161,906 February 28, 2014 59 151,323 February 28, 2015 58 132,634 February 29, 2016 57 130,925 $ 1,711,502 |
Schedule of Common Stock Outstanding | Common Stock Balance Par Value Common stock, Issued and Outstanding, February 28, 2014 55,509,411 Conversion of Series A Convertible Preferred Stock to common stock 9,000 $ 9 Exercise of warrants issued with 12% Subordinated Notes 50,000 $ 50 Cashless exercise of warrants 1,873,554 $ 1,874 Common stock-for-warrant exchange (Maximilian) (427,729) $ (428) Transfer agent balancing adjustment 140,000 $ 140 Share purchase and cancellation (Maximilian) (5,694,823) $ (5,695) Common stock returned to 2009 Stock Plan (tax withholding liability) (2,040) $ (2) Common stock, Issued and Outstanding, February 28, 2015 51,457,373 Conversion of Series A Convertible Preferred Stock to Common Stock 30,000 $ 30 Common stock, Issued and Outstanding, February 29, 2016 51,487,373 |
Warrants (Tables)
Warrants (Tables) | 12 Months Ended |
Feb. 29, 2016 | |
Equity [Abstract] | |
Schedule of Stockholders' Equity Note Warrants and Rights | Warrants Exercise Price Remaining Life (Years) Exercisable Warrants Remaining 12% Subordinated notes 1,190,000 $0.14 0.92 980,000 Warrants issued in 2012 for debt financing 2,435,517 $0.044 1.67 316,617 Warrants issued for Kentucky oil project 3,498,601 $0.04 2.50 3,498,601 Warrants issued for Kentucky debt financing 2,623,951 $0.04 2.50 2,623,951 Warrants issued for Kentucky debt financing 309,503 $0.214 2.50 309,503 Warrants issued in share-for-warrant exchange 427,729 $0.04 2.50 427,729 10,485,301 8,156,401 |
Restricted Stock and Restrict33
Restricted Stock and Restricted Stock Unit Plan (Tables) | 12 Months Ended |
Feb. 29, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Restricted Stock and Restricted Stock Unit Activity | Grant Date Shares Awarded Vesting Period Shares Vested (1) Shares Returned (2) Shares Outstanding (Unvested) 4/7/2009 1,900,000 3 Years 1,900,000 - - 7/16/2009 25,000 3 Years 25,000 - - 7/16/2009 625,000 4 Years 619,130 5,870 - 7/22/2010 25,000 3 Years 25,000 - - 7/22/2010 425,000 4 Years 417,090 7,910 - 3,000,000 2,986,220 (1) 13,780 - (1) Does not include the number of common shares that were withheld to satisfy such tax liability upon vesting of a restricted award by a Plan Participant, and subsequently returned to the 2009 Plan. (2) Reflects the number of common shares that were withheld pursuant to the settlement of the number of shares with a fair market value equal to such tax withholding liability, to satisfy such tax liability upon vesting of a restricted award by a Plan Participant. |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Feb. 29, 2016 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of Income Tax Expense Benefit | February 29, 2016 February 28, 2015 Computed at U.S. and state statutory rates (40%) $ (1,616,023) $ (293,176) Permanent differences 143,946 142,925 Changes in valuation allowance 1,472,077 150,251 Total $ - $ - |
Schedule of Deferred Tax Assets and Liabilities | February 29, 2016 February 28, 2015 Deferred tax assets: Net operating loss carryforwards $ 10,217,121 $ 9,188,905 Oil and gas properties (944,342) (1,436,249) Stock based compensation 88,723 88,723 Other (150,945) (102,899) Less valuation allowance (9,210,557) (7,738,480) Total $ - $ - |
Supplementary Information for35
Supplementary Information for Oil and Gas Producing Activities (Tables) | 12 Months Ended |
Feb. 29, 2016 | |
Oil and Gas Exploration and Production Industries Disclosures [Abstract] | |
Capitalized Costs Relating to Oil and Gas Producing Activities | As of February 29, 2016 As of February 28, 2015 Proved leasehold costs Mineral Interests $ 654,445 $ 695,231 Wells, equipment and facilities 6,095,262 5,851,439 Total Proved Properties 6,749,707 6,546,670 Unproved properties Mineral Interests 585,826 733,478 Uncompleted wells, equipment and facilities - - Total unproved properties 585,826 733,478 Less accumulated depreciation, depletion amortization and impairment (3,569,705) (2,167,064) Net capitalized costs $ 3,765,828 $ 5,113,084 |
Cost Incurred in Oil and Gas Producing Activities | 12 Months Ended 12 Months Ended February 29, 2016 February 28, 2015 Acquisition of proved properties $ - $ 165,317 Acquisition of unproved properties - - Development costs 243,823 1,339,570 Exploration costs 76,053 42,997 Total costs incurred $ 319,876 $ 1,547,884 |
Results of Operations from Oil and Gas Producing Activities | 12 Months Ended 12 Months Ended February 29, 2016 February 28, 2015 Oil and gas revenues $ 1,253,686 $ 3,083,797 Production costs (268,448) (329,917) Exploration expenses (76,053) (42,997) Depletion, depreciation and amortization (517,870) (570,110) Impairment of oil properties (1,108,683) - Result of oil and gas producing operations before income taxes (717,368) 2,140,773 Provision for income taxes - - Results of oil and gas producing activities $ (717,368) $ 2,140,773 |
Schedule of Proved Developed and Undeveloped Oil and Gas Reserves | Oil (Barrels) Natural Gas (Mcf) BOE (Barrels) Proved reserves: February 28, 2014 745,830 26,090 750,178 Revisions (1) 49,103 192,589 88,882 Discoveries and extensions 88,611 58,180 90,627 Production (37,885) (21,999) (41,551) February 28, 2015 845,659 254,860 888,136 Revisions (1) (120,001) 390,693 (54,886) Discoveries and extensions 76,270 161,320 103,157 Production (28,818) (28,853) (33,627) February 29, 2016 773,110 778,020 902,780 (1) The revisions of previous estimates resulted from a decline in the estimated economic life of the reserves due to lower hydrocarbon prices in the energy markets. Developed Undeveloped Total Reserves Oil (Bbls) BOE (Bbls) Oil (Bbls) BOE (Bbls) Oil (Bbls) BOE (Bbls) February 29, 2016 203,131 231,778 569,979 671,002 773,110 902,780 February 28, 2015 278,233 294,585 567,426 593,551 845,659 888,136 February 28, 2014 263,010 264,062 482,820 486,116 745,830 750,178 |
Standardized Measure of Discounted Future Cash Flows Relating to Proved Reserves | 12 Months Ended February 29, 2016 February 28, 2015 Future cash inflows $ 34,077,610 $ 73,348,130 Future production costs (1) (16,255,030) (25,378,830) Future development costs (7,278,930) (6,789,770) Future income tax expenses (2) - - Future net cash flows 10,543,650 41,179,530 10% annual discount for estimated timing of cash flows (6,570,720) (23,674,830) Standardized measure of discounted future net cash flows at the end of the fiscal year $ 3,972,930 $ 17,504,700 (1) Production costs include oil and gas operations expense, production ad valorem taxes, transportation costs and G&A expense supporting the CompanyÂ’s oil and gas operations. (2) The Company has sufficient tax deductions and allowances related to proved oil and gas reserves to offset future net revenues. |
Oil and Gas Net Production, Average Sales Price and Average Production Costs Disclosure | Average Price Natural Crude Oil (Bbl) Gas (Mcf) Year ended February 29, 2016 (1) $ 47.45 $ 2.51 Year ended February 28, 2015 (1) $ 85.53 $ 2.99 Year ended February 29, 2014 (1) $ 95.94 $ 2.44 (1) Average prices were based on 12-month unweighted arithmetic average of the first-day-of-the-month prices for the period from March through February during each respective fiscal year. |
Schedule of Changes in Standardized Measure of Discounted Future Net Cash Flows | 12 Months Ended February 29, 2016 February 28, 2015 Standardized measure of discounted future net cash flows at the beginning of the year $ 17,504,700 $ 21,424,440 Extensions, discoveries and improved recovery, less related costs 271,190 1,565,310 Revisions of previous quantity estimates (408,300) 2,040,090 Net changes in prices and production costs (10,040,886) (3,214,934) Accretion of discount 1,750,470 2,142,444 Sales of oil produced, net of production costs (985,238) (2,753,880) Development costs incurred during the period 213,576 1,516,201 Changes in future development costs 526,413 (1,385,033) Changes in timing of future production (4,858,995) (3,829,938) Net changes in income taxes - - Standardized measure of discounted future net cash flows at the end of the year $ 3,972,930 $ 17,504,700 |
Going Concern (Details Narrativ
Going Concern (Details Narrative) | Feb. 29, 2016USD ($)aNumber | Feb. 28, 2015USD ($) |
Oil and Gas Delivery Commitments and Contracts [Line Items] | ||
Accumulated deficit | $ | $ 32,410,915 | $ 28,205,516 |
Working capital deficit | $ | $ 17,435,534 | |
East Slopes Project | ||
Oil and Gas Delivery Commitments and Contracts [Line Items] | ||
Number of producing wells, net revenue interest | Number | 20 | |
Average working interest | 36.60% | |
Average net revenue interest | 28.40% | |
Twin Bottoms Field | ||
Oil and Gas Delivery Commitments and Contracts [Line Items] | ||
Number of producing wells, net revenue interest | Number | 14 | |
Average working interest | 22.60% | |
Average net revenue interest | 19.70% | |
Kentucky acreage | a | 7,300 |
Summary of Significant Accoun37
Summary of Significant Accounting Policies - Schedule of Concentration of Risk, by Risk Factor (Details) - USD ($) | 12 Months Ended | |
Feb. 29, 2016 | Feb. 28, 2015 | |
Concentration Risk [Line Items] | ||
Revenue receivable | $ 69,192 | $ 202,732 |
Percent of revenue | 100.00% | 100.00% |
Customer Concentration Risk | Accounts Receivable | Plains Marketing (California - East Slopes Project (Oil)) | ||
Concentration Risk [Line Items] | ||
Revenue receivable | $ 39,168 | $ 95,150 |
Percent of revenue | 56.60% | 46.90% |
Customer Concentration Risk | Accounts Receivable | Jefferson Gas (Kentucky - Twin Bottoms Field (Gas)) | ||
Concentration Risk [Line Items] | ||
Revenue receivable | $ 6,767 | $ 16,676 |
Percent of revenue | 9.80% | 8.20% |
Customer Concentration Risk | Accounts Receivable | Appalachian Oil (Kentucky - Twin Bottoms Field (Oil)) | ||
Concentration Risk [Line Items] | ||
Revenue receivable | $ 23,257 | $ 90,906 |
Percent of revenue | 33.60% | 44.90% |
Summary of Significant Accoun38
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 12 Months Ended | |
Feb. 29, 2016 | Feb. 28, 2015 | |
Oil and Gas Properties | ||
Asset impairment of oil and gas properties | $ 1,108,683 | $ 0 |
Concentration Risk | ||
Concentration risk, customer | Three individual customers | |
Crude oil and gas sales receivables, customer concentration | 100.00% | 100.00% |
Asset Retirement Obligation | ||
Reclamation bond | $ 100,000 |
Accounts Receivable (Details Na
Accounts Receivable (Details Narrative) - USD ($) | Feb. 29, 2016 | Feb. 28, 2015 |
Receivables [Abstract] | ||
Accounts receivable - oil and natural gas sales | $ 69,192 | $ 202,732 |
Accounts receivable - joint interest participants | $ 106,694 | $ 51,382 |
Production Revenue Receivable -
Production Revenue Receivable - Schedule of Production Revenue Receivable (Details) - USD ($) | Feb. 29, 2016 | Feb. 28, 2015 |
Deferred Revenue Disclosure [Abstract] | ||
Production revenue receivable, current | $ 45,000 | $ 120,000 |
Production revenue receivable, non-current | 0 | 35,000 |
Production revenue receivables | $ 45,000 | $ 155,000 |
Production Revenue Receivable41
Production Revenue Receivable (Details Narrative) - USD ($) | Feb. 29, 2016 | Feb. 28, 2015 |
Deferred Revenue Disclosure [Abstract] | ||
Production revenue receivables | $ 45,000 | $ 155,000 |
Deferred Financing Costs - Sche
Deferred Financing Costs - Schedule of Deferred Financing Costs (Details) - USD ($) | Feb. 29, 2016 | Feb. 28, 2015 |
Deferred financing costs, gross | $ 1,741,776 | $ 1,732,121 |
Accumulated amortization | (1,100,701) | (673,370) |
Deferred finance costs, net | 0 | 1,058,751 |
Revolving Credit Facility | Warrants | ||
Deferred financing costs, gross | 530,488 | 530,488 |
Revolving Credit Facility | Common Stock | ||
Deferred financing costs, gross | 419,832 | 419,832 |
Revolving Credit Facility | Loan Commissions | ||
Deferred financing costs, gross | 630,662 | 630,662 |
Revolving Credit Facility | Loan Fees | ||
Deferred financing costs, gross | $ 160,794 | $ 151,139 |
Deferred Financing Costs (Detai
Deferred Financing Costs (Details Narrative) - USD ($) | 12 Months Ended | |
Feb. 29, 2016 | Feb. 28, 2015 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Amortization of deferred financing costs | $ 427,331 | $ 422,408 |
Oil and Gas Properties - Schedu
Oil and Gas Properties - Schedule of Oil and Gas Properties (Details) - USD ($) | Feb. 29, 2016 | Feb. 28, 2015 |
Oil and Gas Property, Successful Effort Method, Net | ||
Proved leasehold costs | $ 654,445 | $ 695,231 |
Unproved leasehold costs | 585,826 | 733,478 |
Costs of wells and development | 604,684 | 542,563 |
Capitalized exploratory well costs | 5,461,677 | 5,308,876 |
Capitalized asset retirement obligations | 28,901 | 0 |
Total cost of oil and natural gas properties | 7,335,533 | 7,280,148 |
Accumulated depletion, depreciation, amortization and impairment | (3,569,705) | (2,167,064) |
Oil and gas properties, net | $ 3,765,828 | $ 5,113,084 |
Oil and Gas Properties - Sche45
Oil and Gas Properties - Schedule of Change in Asset Retirement Obligations (Details) - USD ($) | 12 Months Ended | |
Feb. 29, 2016 | Feb. 28, 2015 | |
Asset Retirement Obligation Roll Forward Analysis [Roll Forward] | ||
Asset retirement obligation, beginning of period | $ 29,603 | $ 22,079 |
Accretion expense | 3,014 | 2,187 |
Change in asset retirement estimates | 47,362 | 5,337 |
Asset retirement obligation, end of period | $ 79,979 | $ 29,603 |
Oil and Gas Properties (Details
Oil and Gas Properties (Details Narrative) - USD ($) | 12 Months Ended | |
Feb. 29, 2016 | Feb. 28, 2015 | |
OIL AND NATURAL GAS PROPERTIES, successful efforts method, net | ||
Accretion expense | $ 3,014 | $ 2,187 |
Proceeds from the sale of mineral leases | $ 31,581 |
Note Receivable - Schedule of N
Note Receivable - Schedule of Note Receivables (Details) - USD ($) | Feb. 29, 2016 | Feb. 28, 2015 |
Receivables [Abstract] | ||
Note receivable, current | $ 420,901 | $ 1,320,944 |
Note receivable, non-current | 4,234,612 | 3,429,056 |
Note receivable | $ 4,655,513 | $ 4,750,000 |
Note Receivable (Details Narrat
Note Receivable (Details Narrative) - USD ($) | 12 Months Ended | |
Feb. 29, 2016 | Feb. 28, 2015 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Principal payments received on notes receivable | $ 777,500 | $ 3,562,500 |
Note Receivable | App Energy, LLC | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Credit facility, initiation date | Aug. 28, 2013 | |
Credit facility, description | The Company acquired from App a 25% working interest in the Kentucky Acreage. The fair value of the 25% working interest was determined to $1,073,091 and was recorded as unproved oil and gas reserves | |
Credit facility, maximum borrowing | $ 40,000,000 | |
Credit facility, proceeds received | $ 2,650,000 | |
Credit facility, expiration date | Aug. 28, 2017 | |
Credit facility, covenant terms | The App loan agreement contains customary covenants for loan of such type, including, among other things, covenants that restrict AppÂ’s ability to make capital expenditures, incur indebtedness, incur liens and dispose of property. The App loan agreement also contains various events of default, including failure to pay principal and interest when due, breach of covenants, materially incorrect representations and bankruptcy or insolvency. If an event of default occurs, all of AppÂ’s obligations under the App loan agreement could be accelerated by the Company, causing all loans outstanding (including accrued interest and fees payable thereunder) to be declared immediately due and payable. | |
Credit facility, commitment fee percentage | 0.60% | |
Credit facility, interest rate | 16.80% | |
Credit facility, subsequent loans, interest rate | 12.00% | |
Principal payments received on notes receivable | $ 777,500 |
Accounts Payable (Details Narra
Accounts Payable (Details Narrative) - USD ($) | 4 Months Ended | |
Jun. 30, 2009 | Feb. 29, 2016 | |
Payables and Accruals [Abstract] | ||
Acquisition and disposition of East Slopes Project | On March 1, 2009, the Company became the operator for the East Slopes Project. The Company assumed certain original defaulting partners' approximate $1.5 million liability representing a 25% working interest in the drilling and completion costs associated with the East Slopes Project four earning well program. The Company subsequently sold the 25% working interest on June 11, 2009. | |
Accounts payable balance | $ 244,849 |
Accounts Payable - Related Pa50
Accounts Payable - Related Parties (Details Narrative) - USD ($) | Feb. 29, 2016 | Feb. 28, 2015 |
Related Party Transactions [Abstract] | ||
Accounts payable - related parties | $ 990,483 | $ 905,891 |
Short-Term and Long-Term Borr51
Short-Term and Long-Term Borrowings - Subordinated Notes (Details) - USD ($) | Feb. 29, 2016 | Feb. 28, 2015 |
Short-term Debt [Line Items] | ||
Notes payable | $ 565,000 | $ 565,000 |
12% Subordinated Notes | ||
Short-term Debt [Line Items] | ||
Notes payable | 315,000 | 315,000 |
12% Subordinated Notes | Chief Executive Officer | ||
Short-term Debt [Line Items] | ||
Notes payable | $ 250,000 | $ 250,000 |
Short-Term and Long-Term Borr52
Short-Term and Long-Term Borrowings - Schedule of 12% Subordinated Note Warrants (Details) | 12 Months Ended | ||
Feb. 29, 2016Numbershares | Feb. 28, 2015Numbershares | Feb. 28, 2014Numbershares | |
Warrants exercised | 0 | 2,168,900 | |
Accredited investors | Number | 43 | ||
12% Subordinated Notes | Warrants | |||
Warrants exercised | 0 | 50,000 | 100,000 |
Shares of common stock issued | 0 | 50,000 | 100,000 |
Accredited investors | Number | 0 | 1 | 1 |
Short-Term and Long-Term Borr53
Short-Term and Long-Term Borrowings - Schedule of Line of Credit Facility (Details) - Revolving Credit Facility - USD ($) | Feb. 29, 2016 | Feb. 28, 2015 |
Line of Credit Facility [Line Items] | ||
Current debt, note | $ 14,381,131 | $ 4,823,325 |
Current debt, note discount | (71,951) | (132,114) |
Current debt, note balance | 14,309,180 | 4,691,211 |
Non-current debt, note | 0 | 8,663,458 |
Non-current debt, note discount | 0 | (71,951) |
Non-current debt, note balance | $ 0 | $ 8,591,507 |
Short-Term and Long-Term Borr54
Short-Term and Long-Term Borrowings (Details Narrative) - USD ($) | 1 Months Ended | 6 Months Ended | 12 Months Ended | |||||||
Oct. 31, 2015 | May. 31, 2015 | May. 31, 2014 | Oct. 31, 2012 | Aug. 31, 2013 | Feb. 29, 2016 | Feb. 28, 2015 | Feb. 28, 2014 | Feb. 28, 2010 | May. 20, 2015 | |
Debt Instrument [Line Items] | ||||||||||
Warrants outstanding | 10,485,301 | |||||||||
Warrants, exercise price | $ 0.06 | $ 0.11 | ||||||||
Fair value of warrants | $ 0 | |||||||||
Amortization of debt discount | $ 132,114 | $ 168,722 | ||||||||
Common stock issued, shares | 51,487,373 | 51,457,373 | ||||||||
Stock repurchased and retired, value | $ 1,708,447 | |||||||||
Notes payable, related party | $ 250,100 | 250,100 | ||||||||
Unproved oil and gas properties | $ 585,826 | 733,478 | ||||||||
Maximilian Loan | Third Parties | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Warrants issued | 309,503 | |||||||||
Warrants, exercise price | $ 0.214 | |||||||||
Warrant expiration date | Aug. 28, 2018 | |||||||||
Fair value of warrants | $ 47,420 | |||||||||
Weighted average risk free interest rate | 2.48% | |||||||||
Weighted average volatility rate | 184.53% | |||||||||
Stock price, fair value assumption | $ 0.16 | |||||||||
Share-for-Warrant Exchange | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Warrants issued | 427,729 | |||||||||
Stock repurchased and retired, shares | 427,729 | |||||||||
12% Subordinated Notes | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Interest rate | 12.00% | |||||||||
Maturity date | Jan. 29, 2017 | |||||||||
Payment terms | Payable semi-annually on January 29th and July 29th. Should the Board of Directors, on the amended maturity date, decide that the payment of the principal and any unpaid interest would impair the financial condition or operations of the Company, the Company may then elect a mandatory conversion of the unpaid principal and interest into the CompanyÂ’s common stock at a conversion rate equal to 75% of the average closing price of the CompanyÂ’s common stock over the 20 consecutive trading days preceding December 31, 2016. | |||||||||
Warrants outstanding | 1,190,000 | |||||||||
Warrants issued | 1,190,000 | |||||||||
Warrants, exercise price | $ 0.14 | $ 0.14 | ||||||||
Warrant expiration date | Jan. 29, 2017 | |||||||||
Line of Credit | UBS Bank USA | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Maximum borrowing | $ 890,000 | 890,000 | ||||||||
Line of credit, amount outstanding | 843,807 | 869,865 | ||||||||
Line of credit, interest expense | $ 31,442 | $ 31,498 | ||||||||
Line of credit, interest rate description | Payable monthly at a stated reference rate of 0.249% + 337.5 basis points. The reference rate is based on the 30 day LIBOR ("London Interbank Offered Rate") and is subject to change from UBS. | Payable monthly at a stated reference rate of 0.249% + 337.5 basis points. The reference rate is based on the 30 day LIBOR ("London Interbank Offered Rate") and is subject to change from UBS. | ||||||||
Revolving Credit Facility | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Unamortized debt discount | $ 71,951 | $ 132,114 | ||||||||
Revolving Credit Facility | Maximilian Loan | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Warrants outstanding | 316,617 | |||||||||
Warrants issued | 2,435,517 | |||||||||
Warrants, exercise price | $ 0.044 | |||||||||
Warrant expiration date | Oct. 31, 2017 | |||||||||
Fair value of warrants | $ 98,084 | |||||||||
Weighted average risk free interest rate | 0.72% | |||||||||
Weighted average volatility rate | 153.44% | |||||||||
Stock price, fair value assumption | $ 0.04 | |||||||||
Amortization of debt discount | $ 515,638 | $ 132,114 | 138,988 | |||||||
Amortization expense | 127,513 | |||||||||
Unamortized debt discount | 71,951 | |||||||||
Unamortized deferred financing costs | 191,270 | |||||||||
Credit facility, description | The Company entered into a loan agreement with Maximilian Investors LLC which provided for a revolving credit facility of up to $20 million, maturing on October 31, 2016, with a minimum commitment of $2.5 million. The loan had annual interest of 18% and a monthly commitment fee of 0.5%. The Company also granted Maximilian a 10% working interest in its share of the oil and gas leases in Kern County, California. | |||||||||
Maximum borrowing | $ 20,000,000 | |||||||||
Credit facility, expiration date | Oct. 31, 2016 | |||||||||
Minimum commitment terms | Minimum commitment of $2,500,000 | |||||||||
Commitment fee percentage | 0.50% | |||||||||
Line of credit facility, interest rate | 18.00% | |||||||||
Revolving Credit Facility | Maximilian - Amended and Restated Loan Agreement | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Warrants issued | 6,100,000 | |||||||||
Warrants, exercise price | $ 0.10 | |||||||||
Warrants, exercisable date | Aug. 28, 2013 | |||||||||
Warrant expiration date | Aug. 28, 2016 | |||||||||
Fair value of warrants | $ 898,299 | |||||||||
Fair value of common stock | $ 979,609 | |||||||||
Weighted average risk free interest rate | 2.48% | |||||||||
Weighted average volatility rate | 184.53% | |||||||||
Stock price, fair value assumption | $ 0.16 | |||||||||
Amortization expense | $ 400,349 | |||||||||
Unamortized deferred financing costs | $ 804,816 | |||||||||
Credit facility, description | The Company's revolving credit facility was increased from $20 million to $90 million. The first borrowing sublimit is $50 million and is for borrowing by the Company, primarily for its ongoing oil and gas exploration and development activities. The second borrowing sublimit, of $40 million, is for loans to be extended by the Company, as lender, to App, as borrower pursuant to a Loan and Security Agreement entered into between the Company and App. | |||||||||
Maximum borrowing | $ 90,000,000 | |||||||||
Credit facility, expiration date | Aug. 28, 2017 | |||||||||
Commitment fee percentage | 0.50% | |||||||||
Line of credit facility, interest rate | 12.00% | |||||||||
Common stock issued, shares | 6,100,000 | |||||||||
Unproved oil and gas properties | $ 1,073,091 | |||||||||
Revolving Credit Facility | Maximilian- First Amendment to Amended and Restated Loan Agreement | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Credit facility, advances | $ 2,200,000 | |||||||||
Credit facility, reduction to required monthly payments | Maximilian agreed to temporarily reduce the required monthly payment made by the Company until it has paid $1,000,000 less than principal payments required by the previous agreement. Furthermore, Maximilian agreed to reduce the regular interest rate applicable to the loan from 12% per annum to 9% per annum and the default interest rate by 3%. | |||||||||
Stock repurchased and retired, shares | 5,694,823 | |||||||||
Stock repurchased and retired, value | $ 1,708,447 | |||||||||
Repayments of debt | 700,000 | |||||||||
Revolving Credit Facility | Maximilian- Second Amendment to Amended and Restated Loan Agreement | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Warrants, exercise price | $ 0.04 | |||||||||
Credit facility, reduction to required monthly payments | The 2nd Amendment modified the calculation of the required monthly payment for a three-month period ending June 30, 2015. As consideration for entering into the loan modification, the Company agreed to modify the exercise price of the warrants Maximilian currently holds from $0.10 to $0.04. | |||||||||
Revolving Credit Facility | Maximilian - Third Amendment to Amended and Restated Loan Agreement | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Payment terms | Maximilian agreed to a reduction in the Company’s monthly payments under the loan agreement to $50,000 per month for a period of six months ending on February 29, 2016. The reduction in monthly payments allows for additional funds to be used by the Company in drilling and completing additional wells in Kentucky. As consideration for the reduction in the monthly payment amount, the Company agreed that twenty percent of the amount by which the monthly payment was reduced would be added to the loan balance, and the portion of the monthly payment savings that constitutes savings in interest or commitment fees would be treated as an additional advance of principal under the loan agreement (the “Deemed Advances”). The Company also agreed to grant to Maximilian an overriding royalty interest of 1.5% of its working interest in four wells in Kentucky. As part of the Maximilian Amendment, the Company also agreed to extend the expiration date of the warrants held by Maximilian to purchase up to 6,550,281 shares of common stock of the Company to August 28, 2018. | |||||||||
Warrant expiration date | Aug. 28, 2018 | |||||||||
Credit facility, reduction to required monthly payments | Monthly payments in the amount of $50,000 per month for a period of six months ending on February 29, 2016. | |||||||||
Chief Executive Officer | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Notes payable, related party | $ 250,100 | $ 250,100 |
Stockholders' Deficit - Convers
Stockholders' Deficit - Conversions of Series A Preferred Stock (Details) | 12 Months Ended | |||||||||
Feb. 29, 2016Numbershares | Feb. 28, 2015Numbershares | Feb. 28, 2014Numbershares | Feb. 28, 2013Numbershares | Feb. 29, 2012Numbershares | Feb. 28, 2011Numbershares | Feb. 28, 2010Numbershares | Feb. 28, 2009Numbershares | Feb. 29, 2008Numbershares | Jul. 31, 2006Number | |
Shares of common stock issued from conversion | 2,025,600 | |||||||||
Accredited investors | Number | 43 | |||||||||
Series A Convertible Preferred Stock | ||||||||||
Series A preferred shares converted to common stock | (10,000) | (3,000) | (151,000) | (18,000) | 0 | (102,000) | (51,900) | (237,000) | (102,300) | |
Shares of common stock issued from conversion | 30,000 | 9,000 | 453,000 | 54,000 | 0 | 306,000 | 155,700 | 711,000 | 306,900 | |
Accredited investors | Number | 1 | 1 | 9 | 2 | 0 | 4 | 4 | 12 | 10 | 100 |
Stockholders' Deficit - Preferr
Stockholders' Deficit - Preferred Stock Dividends Earned (Details) | 12 Months Ended | |||||||||
Feb. 29, 2016USD ($)Number | Feb. 28, 2015USD ($)Number | Feb. 28, 2014USD ($)Number | Feb. 28, 2013USD ($)Number | Feb. 29, 2012USD ($)Number | Feb. 28, 2011USD ($)Number | Feb. 28, 2010USD ($)Number | Feb. 28, 2009USD ($)Number | Feb. 29, 2008USD ($)Number | Feb. 28, 2007USD ($)Number | |
Equity [Abstract] | ||||||||||
Preferred shareholders at period end | Number | 57 | 58 | 59 | 68 | 70 | 70 | 74 | 78 | 90 | 100 |
Earned dividends | $ 130,925 | $ 132,634 | $ 151,323 | $ 161,906 | $ 163,624 | $ 173,707 | $ 189,973 | $ 209,973 | $ 242,126 | $ 155,311 |
Total accumulated dividends | $ 1,711,502 |
Stockholders' Deficit - Schedul
Stockholders' Deficit - Schedule of Common Stock Outstanding (Details) - USD ($) | 12 Months Ended | |
Feb. 29, 2016 | Feb. 28, 2015 | |
Common Stock Outstanding [Roll Forward] | ||
Common Stock, Issued and Outstanding, February 28, 2014 | 51,457,373 | |
Common Stock, Issued and Outstanding, February 28, 2015 | 51,487,373 | 51,457,373 |
Conversion of Series A Convertible Preferred Stock to common stock, par value | $ 0 | $ 0 |
Exercise of warrants issued with 12% Subordinated Notes, par value | 7,000 | |
Cashless exercise of warrants, par value | 0 | |
Common stock for warrant exchange, Maximilian, par value | 0 | |
Transfer agent balancing adjustment, par value | 0 | |
Share purchase and cancellation (Maximilian), par value | (1,708,447) | |
Common stock returned to 2009 Stock Plan (tax withholding liability), par value | $ (490) | |
Common Stock | ||
Common Stock Outstanding [Roll Forward] | ||
Common Stock, Issued and Outstanding, February 28, 2014 | 51,457,373 | 55,509,411 |
Conversion of Series A Convertible Preferred Stock to common stock | 30,000 | 9,000 |
Exercise of warrants issued with 12% Subordinated Notes | 50,000 | |
Cashless exercise of warrants | 1,873,554 | |
Common stock for warrant exchange, Maximilian | (427,729) | |
Transfer agent balancing adjustment, shares | 140,000 | |
Share purchase and cancellation (Maximilian) | (5,694,823) | |
Common stock returned to 2009 Stock Plan (tax withholding liability) | (2,040) | |
Common Stock, Issued and Outstanding, February 28, 2015 | 51,487,373 | 51,457,373 |
Conversion of Series A Convertible Preferred Stock to common stock, par value | $ 30 | $ 9 |
Exercise of warrants issued with 12% Subordinated Notes, par value | 50 | |
Cashless exercise of warrants, par value | 1,874 | |
Common stock for warrant exchange, Maximilian, par value | (428) | |
Transfer agent balancing adjustment, par value | 140 | |
Share purchase and cancellation (Maximilian), par value | (5,695) | |
Common stock returned to 2009 Stock Plan (tax withholding liability), par value | $ (2) |
Stockholders' Deficit (Details
Stockholders' Deficit (Details Narrative) | 12 Months Ended | |||||||||
Feb. 29, 2016Number$ / sharesshares | Feb. 28, 2015Number$ / sharesshares | Feb. 28, 2014Numbershares | Feb. 28, 2013Numbershares | Feb. 29, 2012Numbershares | Feb. 28, 2011Numbershares | Feb. 28, 2010Numbershares | Feb. 28, 2009Numbershares | Feb. 29, 2008Numbershares | Jul. 31, 2006Numbershares | |
Class of Stock [Line Items] | ||||||||||
Preferred stock, par value in dollars | $ / shares | $ 0.001 | $ 0.001 | ||||||||
Preferred stock, shares authorized | 10,000,000 | 10,000,000 | ||||||||
Preferred stock, shares issued | 0 | 0 | ||||||||
Preferred stock, shares outstanding | 0 | 0 | ||||||||
Shares of common stock issued from conversion | 2,025,600 | |||||||||
Accredited investors | Number | 43 | |||||||||
Common stock, par value in dollars | $ / shares | $ 0.001 | $ 0.001 | ||||||||
Common stock, shares authorized | 200,000,000 | 200,000,000 | ||||||||
Common stock, shares issued | 51,487,373 | 51,457,373 | ||||||||
Common stock, shares outstanding | 51,487,373 | 51,457,373 | ||||||||
Series A Convertible Preferred Stock | ||||||||||
Class of Stock [Line Items] | ||||||||||
Preferred stock, par value in dollars | $ / shares | $ 0.001 | $ 0.001 | ||||||||
Preferred stock, shares authorized | 2,400,000 | 2,400,000 | ||||||||
Preferred stock, shares issued | 724,565 | 734,565 | 1,399,765 | |||||||
Preferred stock, shares outstanding | 724,565 | 734,565 | ||||||||
Series A preferred shares converted to common stock | (10,000) | (3,000) | (151,000) | (18,000) | 0 | (102,000) | (51,900) | (237,000) | (102,300) | |
Shares of common stock issued from conversion | 30,000 | 9,000 | 453,000 | 54,000 | 0 | 306,000 | 155,700 | 711,000 | 306,900 | |
Accredited investors | Number | 1 | 1 | 9 | 2 | 0 | 4 | 4 | 12 | 10 | 100 |
Preferred Stock | ||||||||||
Class of Stock [Line Items] | ||||||||||
Preferred stock, par value in dollars | $ / shares | $ 0.001 | |||||||||
Preferred stock, shares authorized | 10,000,000 | |||||||||
Preferred stock, cumulative dividend rate | 6.00% | |||||||||
Common Stock | ||||||||||
Class of Stock [Line Items] | ||||||||||
Series A preferred shares converted to common stock | 30,000 | 9,000 | ||||||||
Shares of common stock issued from conversion | 30,000 | 9,000 | ||||||||
Common stock, par value in dollars | $ / shares | $ 0.001 | |||||||||
Common stock, shares authorized | 200,000,000 | |||||||||
Common stock, shares issued | 51,487,373 | 51,457,373 | ||||||||
Common stock, shares outstanding | 51,487,373 | 51,457,373 | 55,509,411 |
Warrants - Schedule of Stockhol
Warrants - Schedule of Stockholders' Equity Note Warrants and Rights (Details) - $ / shares | 12 Months Ended | ||
Feb. 29, 2016 | Feb. 28, 2015 | Feb. 28, 2010 | |
Class of Warrant or Right [Line Items] | |||
Warrants | 10,485,301 | ||
Exercise price | $ 0.06 | $ 0.11 | |
Remaining life (years) | 2 years 3 months | 18 months | |
Exercisable warrants remaining | 8,156,401 | ||
Kentucky Oil Project | |||
Class of Warrant or Right [Line Items] | |||
Warrants | 3,498,601 | ||
Exercise price | $ 0.04 | ||
Remaining life (years) | 2 years 6 months | ||
Exercisable warrants remaining | 3,498,601 | ||
Share-for-Warrant Exchange | |||
Class of Warrant or Right [Line Items] | |||
Warrants | 427,729 | ||
Exercise price | $ 0.04 | ||
Remaining life (years) | 2 years 6 months | ||
Exercisable warrants remaining | 427,729 | ||
Debt Financing | |||
Class of Warrant or Right [Line Items] | |||
Warrants | 2,435,517 | ||
Exercise price | $ 0.044 | ||
Remaining life (years) | 1 year 8 months | ||
Exercisable warrants remaining | 316,617 | ||
Kentucky Debt Financing #1 | |||
Class of Warrant or Right [Line Items] | |||
Warrants | 2,623,951 | ||
Exercise price | $ 0.04 | ||
Remaining life (years) | 2 years 6 months | ||
Exercisable warrants remaining | 2,623,951 | ||
Kentucky Debt Financing #2 | |||
Class of Warrant or Right [Line Items] | |||
Warrants | 309,503 | ||
Exercise price | $ 0.214 | ||
Remaining life (years) | 2 years 6 months | ||
Exercisable warrants remaining | 309,503 | ||
12% Subordinated Notes | |||
Class of Warrant or Right [Line Items] | |||
Warrants | 1,190,000 | ||
Exercise price | $ 0.14 | $ 0.14 | |
Remaining life (years) | 11 months | ||
Exercisable warrants remaining | 980,000 |
Warrants (Details Narrative)
Warrants (Details Narrative) - USD ($) | 12 Months Ended | |
Feb. 29, 2016 | Feb. 28, 2015 | |
Equity [Abstract] | ||
Warrants exercised | 0 | 2,168,900 |
Warrants expired | 150,000 | 60,000 |
Warrants issued | 0 | 427,729 |
Outstanding warrants, weighted average exercise price | $ 0.06 | $ 0.11 |
Weighted average remaining life | 2 years 3 months | 18 months |
Intrinsic value | $ 0 | $ 14,564 |
Restricted Stock and Restrict61
Restricted Stock and Restricted Stock Unit Plan (Details) | 12 Months Ended | |
Feb. 29, 2016shares | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted shares, awarded | 3,000,000 | |
Restricted shares, vested | 2,986,220 | [1] |
Restricted shares, returned | 13,780 | [2] |
Grant Date - 04/07/2009 | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted shares, awarded | 1,900,000 | |
Restricted shares, vesting period | 3 years | |
Restricted shares, vested | 1,900,000 | [1] |
Restricted shares, returned | 0 | [2] |
Restricted shares, outstanding, unvested | 0 | |
Grant Date (A) - 07/16/2009 | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted shares, awarded | 25,000 | |
Restricted shares, vesting period | 3 years | |
Restricted shares, vested | 25,000 | [1] |
Restricted shares, returned | 0 | [2] |
Restricted shares, outstanding, unvested | 0 | |
Grant Date (B) - 07/16/2009 | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted shares, awarded | 625,000 | |
Restricted shares, vesting period | 4 years | |
Restricted shares, vested | 619,130 | [1] |
Restricted shares, returned | 5,870 | [2] |
Restricted shares, outstanding, unvested | 0 | |
Grant Date (A) - 07/22/2010 | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted shares, awarded | 25,000 | |
Restricted shares, vesting period | 3 years | |
Restricted shares, vested | 25,000 | [1] |
Restricted shares, returned | 0 | [2] |
Restricted shares, outstanding, unvested | 0 | |
Grant Date (B) - 07/22/2010 | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted shares, awarded | 425,000 | |
Restricted shares, vesting period | 4 years | |
Restricted shares, vested | 417,090 | [1] |
Restricted shares, returned | 7,910 | [2] |
Restricted shares, outstanding, unvested | 0 | |
[1] | Does not include the number of common shares that were withheld to satisfy such tax liability upon vesting of a restricted award by a Plan Participant, and subsequently returned to the 2009 Plan. | |
[2] | Reflects the number of common shares that were withheld pursuant to the settlement of the number of shares with a fair market value equal to such tax withholding liability, to satisfy such tax liability upon vesting of a restricted award by a Plan Participant. |
Restricted Stock and Restrict62
Restricted Stock and Restricted Stock Unit Plan (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | ||||
Jul. 31, 2010 | Feb. 28, 2009 | Feb. 29, 2016 | Feb. 28, 2015 | Apr. 30, 2009 | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Restricted shares, awarded | 3,000,000 | |||||
Restricted shares, vested | [1] | 2,986,220 | ||||
2009 Plan | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Common stock available for grant | 4,000,000 | |||||
2009 Plan | Restricted Stock | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Common stock available for grant | 1,013,780 | |||||
Restricted shares, awarded | 425,000 | 2,550,000 | 3,000,000 | |||
Restricted shares, vested | 2,986,220 | 106,250 | ||||
Restricted shares returned, tax withholding liability | 0 | 2,040 | ||||
Recognized compensation expense | $ 0 | $ 2,515 | ||||
2009 Plan | Restricted Stock | Minimum | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Restricted shares, vesting period | 3 years | |||||
2009 Plan | Restricted Stock | Maximum | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Restricted shares, vesting period | 4 years | |||||
2009 Plan | Restricted Stock | Directors | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Restricted shares, awarded | 25,000 | |||||
[1] | Does not include the number of common shares that were withheld to satisfy such tax liability upon vesting of a restricted award by a Plan Participant, and subsequently returned to the 2009 Plan. |
Income Taxes - Income Tax Expen
Income Taxes - Income Tax Expense Benefit Reconciliation (Details) - USD ($) | 12 Months Ended | |
Feb. 29, 2016 | Feb. 28, 2015 | |
Income Tax Expense Benefit Continuing Operations Income Tax Reconciliation | ||
Computed at U.S. and state statutory rates (40%) | $ (1,616,023) | $ (293,176) |
Permanent differences | 143,946 | 142,925 |
Changes in valuation allowance | 1,472,077 | 150,251 |
Income tax expense (benefit) | $ 0 | $ 0 |
Income Taxes - Deferred Tax Ass
Income Taxes - Deferred Tax Assets and Liabilities (Details) - USD ($) | Feb. 29, 2016 | Feb. 28, 2015 |
Deferred tax assets: | ||
Net operating loss carryforwards | $ 10,217,121 | $ 9,188,905 |
Oil and gas properties | (944,342) | (1,436,249) |
Stock based compensation | 88,723 | 88,723 |
Other | (150,945) | (102,899) |
Less valuation allowance | (9,210,557) | (7,738,480) |
Deferred tax assets, net | $ 0 | $ 0 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 12 Months Ended | |
Feb. 29, 2016 | Feb. 28, 2015 | |
Income Tax Disclosure [Abstract] | ||
Net operating loss carryforwards, federal and state, approximate | $ 25,542,800 | |
Net operating loss carryforwards, expiration date | Feb. 28, 2024 | |
Approximate increase in valuation allowance | $ 1,472,077 | $ 150,251 |
Supplementary Information - Cap
Supplementary Information - Capitalized Costs Relating to Oil and Gas Producing Activities (Details) - USD ($) | Feb. 29, 2016 | Feb. 28, 2015 |
Proved leasehold costs | ||
Mineral Interests | $ 654,445 | $ 695,231 |
Wells, equipment and facilities | 6,095,262 | 5,851,439 |
Total cost of oil and natural gas properties | 6,749,707 | 6,546,670 |
Unproved properties | ||
Mineral Interests | 585,826 | 733,478 |
Uncompleted wells, equipment and facilities | 0 | 0 |
Total unproved properties | 585,826 | 733,478 |
Less accumulated depreciation, depletion amortization and impairment | (3,569,705) | (2,167,064) |
Net oil and natural gas properties | $ 3,765,828 | $ 5,113,084 |
Supplementary Information - Cos
Supplementary Information - Cost Incurred in Oil and Gas Producing Activities (Details) - USD ($) | 12 Months Ended | |
Feb. 29, 2016 | Feb. 28, 2015 | |
Costs Incurred Acquisition Of Oil And Gas Properties | ||
Acquisition of proved properties | $ 0 | $ 165,317 |
Acquisition of unproved properties | 0 | 0 |
Development costs | 243,823 | 1,339,570 |
Exploration costs | 76,053 | 42,997 |
Total costs incurred | $ 319,876 | $ 1,547,884 |
Supplementary Information - Res
Supplementary Information - Results of Operations from Oil and Gas Producing Activities (Details) - USD ($) | 12 Months Ended | |
Feb. 29, 2016 | Feb. 28, 2015 | |
Results Of Operations From Oil And Gas Producing Activities | ||
Oil and gas revenues | $ 1,253,686 | $ 3,083,797 |
Production costs | (268,448) | (329,917) |
Exploration expenses | (76,053) | (42,997) |
Depletion, depreciation, amortization and impairment | (517,870) | (570,110) |
Impairment of oil properties | (1,108,683) | 0 |
Result of oil and gas producing operations before income taxes | (717,368) | 2,140,773 |
Provision for income taxes | 0 | 0 |
Results of oil and gas producing activities | $ (717,368) | $ 2,140,773 |
Supplementary Information - Sch
Supplementary Information - Schedule of Proved Oil and Gas Reserves (Details) | 12 Months Ended | ||
Feb. 29, 2016BoebblMcf | Feb. 28, 2015BoebblMcf | ||
Proved Developed and Undeveloped Reserves | |||
Proved reserves - beginning balance | bbl | 845,659 | 745,830 | |
Proved reserves - ending balance | bbl | 773,110 | 845,659 | |
Proved Developed and Undeveloped Reserve (Energy) | |||
Proved reserves - beginning balance | Boe | 888,136 | 750,178 | |
Proved reserves - ending balance | Boe | 902,780 | 888,136 | |
Oil (Barrels) | |||
Proved Developed and Undeveloped Reserves | |||
Proved reserves - beginning balance | bbl | 845,659 | 745,830 | |
Proved reserves - revisions | bbl | [1] | (120,001) | 49,103 |
Proved reserves - extensions and discoveries | bbl | 76,270 | 88,611 | |
Proved reserves - production | bbl | (28,818) | (37,885) | |
Proved reserves - ending balance | bbl | 773,110 | 845,659 | |
Natural Gas (Mcf) | |||
Proved Developed and Undeveloped Reserves | |||
Proved reserves - beginning balance | Mcf | 254,860 | 26,090 | |
Proved reserves - revisions | Mcf | [1] | 390,693 | 192,589 |
Proved reserves - extensions and discoveries | Mcf | 161,320 | 58,180 | |
Proved reserves - production | Mcf | (28,853) | (21,999) | |
Proved reserves - ending balance | Mcf | 778,020 | 254,860 | |
BOE (Barrels) | |||
Proved Developed and Undeveloped Reserve (Energy) | |||
Proved reserves - beginning balance | Boe | 888,136 | 750,178 | |
Proved reserves - revisions | Boe | [1] | (54,886) | 88,882 |
Proved reserves - extensions and discoveries | Boe | 103,157 | 90,627 | |
Proved reserves - production | Boe | (33,627) | (41,551) | |
Proved reserves - ending balance | Boe | 902,780 | 888,136 | |
[1] | The revisions of previous estimates resulted from a decline in the estimated economic life of the reserves due to lower hydrocarbon prices in the energy markets. |
Supplementary Information - S70
Supplementary Information - Schedule of Proved Developed and Undeveloped Reserves (Details) | Feb. 29, 2016Boebbl | Feb. 28, 2015Boebbl | Feb. 28, 2014Boebbl |
Reserve Quantities [Line Items] | |||
Proved developed and undeveloped reserves, net | bbl | 773,110 | 845,659 | 745,830 |
Proved developed and undeveloped reserves, net - BOE | Boe | 902,780 | 888,136 | 750,178 |
Developed | |||
Reserve Quantities [Line Items] | |||
Proved developed reserves | bbl | 203,131 | 278,233 | 263,010 |
Proved developed reserves - BOE | Boe | 231,778 | 294,585 | 264,062 |
Undeveloped | |||
Reserve Quantities [Line Items] | |||
Proved undeveloped reserves | bbl | 569,979 | 567,426 | 482,820 |
Proved undeveloped reserves - BOE | Boe | 671,002 | 593,551 | 486,116 |
Supplementary Information - Sta
Supplementary Information - Standardized Measure of Discounted Future Cash Flows Relating to Proved Reserves (Details) - USD ($) | Feb. 29, 2016 | Feb. 28, 2015 | Feb. 28, 2014 | |
Discounted Future Net Cash Flows Relating To Proved Oil And Gas Reserves Standardized Measure | ||||
Future cash inflows | $ 34,077,610 | $ 73,348,130 | ||
Future production costs | [1] | (16,255,030) | (25,378,830) | |
Future development costs | (7,278,930) | (6,789,770) | ||
Future income tax expenses | [2] | 0 | 0 | |
Future net cash flows | 10,543,650 | 41,179,530 | ||
10% annual discount for estimated timing of cash flows | (6,570,720) | (23,674,830) | ||
Standardized measure of discounted future net cash flows at the end of the fiscal year | $ 3,972,930 | $ 17,504,700 | $ 21,424,440 | |
[1] | Production costs include oil and gas operations expense, production ad valorem taxes, transportation costs and G&A expense supporting the Company's oil and gas operations. | |||
[2] | The Company has sufficient tax deductions and allowances related to proved oil and gas reserves to offset future net revenues. |
Supplementary Information - Oil
Supplementary Information - Oil and Gas Net Production, Average Sales Price and Production Costs (Details) | 12 Months Ended | |||
Feb. 29, 2016$ / bbl$ / Mcf | Feb. 28, 2015$ / bbl$ / Mcf | Feb. 28, 2014$ / bbl$ / Mcf | ||
Oil (Barrel) | ||||
Average Sales Price and Production Costs Per Unit of Production [Line Items] | ||||
Average oil and gas sales price | $ / bbl | [1] | 47.45 | 85.53 | 95.94 |
Natural Gas | ||||
Average Sales Price and Production Costs Per Unit of Production [Line Items] | ||||
Average oil and gas sales price | $ / Mcf | [1] | 2.51 | 2.99 | 2.44 |
[1] | Average prices were based on 12-month unweighted arithmetic average of the first-day-of-the-month prices for the period from March through February during each respective fiscal year. |
Supplementary Information - S73
Supplementary Information - Schedule of Changes in Standardized Measure of Discounted Future Net Cash Flows (Details) - USD ($) | 12 Months Ended | |
Feb. 29, 2016 | Feb. 28, 2015 | |
Sources Of Changes In Standardized Measure Of Discounted Future Net Cash Flow Relating To Proved Oil And Gas Reserves [Roll Forward] | ||
Standardized measure of discounted future net cash flows at the beginning of the year | $ 17,504,700 | $ 21,424,440 |
Extensions, discoveries and improved recovery, less related costs | 271,190 | 1,565,310 |
Revisions of previous quantity estimates | (408,300) | 2,040,090 |
Net changes in prices and production costs | (10,040,886) | (3,214,934) |
Accretion of discount | 1,750,470 | 2,142,444 |
Sales of oil produced, net of production costs | (985,238) | (2,753,880) |
Development costs incurred during the period | 213,576 | 1,516,201 |
Changes in future development costs | 526,413 | (1,385,033) |
Changes in timing of future production | (4,858,995) | (3,829,938) |
Net changes in income taxes | 0 | 0 |
Standardized measure of discounted future net cash flows at the end of the year | $ 3,972,930 | $ 17,504,700 |