| Significant Accounting Policies | (a) Use of Estimates: The preparation of financial statements in conformity
with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue
and expense during the reporting period. Actual results could differ from those estimates. The Company’s financial statements are
based on a number of significant estimates, including oil and natural gas reserve quantities, which are the basis for the calculation
of depreciation, depletion and impairment of oil and natural gas properties, and timing and costs associated with its asset retirement
obligations, as well as those related to the fair value of stock options, stock warrants and stock issued for services. Although
management believes that its estimates and assumptions used in preparation of the financial statements are appropriate, actual
results could differ from those estimates.
(b) Cash and Cash Equivalents: Cash and cash equivalents include all highly
liquid monetary instruments with original maturities of three months or less when purchased. These investments are carried at cost,
which approximates fair value. Financial instruments that potentially subject the Company to concentrations of credit risk consist
primarily of cash deposits. The Company maintains its cash in institutions insured by the Federal Deposit Insurance Corporation
(“ FDIC
(c) Receivables: Receivables that management has the intent and
ability to hold for the foreseeable future are reported in the balance sheet at outstanding principal adjusted for any charge-offs
and the allowance for doubtful accounts. Losses from uncollectible receivables are accrued when both of the following conditions
are met: (a) information available before the financial statements are issued or are available to be issued indicates that it is
probable that an asset has been impaired at the date of the financial statements, and (b) the amount of the loss can be reasonably
estimated. These conditions may be considered in relation to individual receivables or in relation to groups of similar types of
receivables. If the conditions are met, an accrual shall be made even though the particular receivables that are uncollectible
may not be identifiable. The Company reviews each receivable individually for collectability and performs on-going credit evaluations
of its customers and adjusts credit limits based upon payment history and the customer’s current credit worthiness, as determined
by the review of their current credit information, and determines the allowance for doubtful accounts based on historical write-off
experience, customer specific facts and general economic conditions that may affect a client’s ability to pay. Bad debt expense
is included in general and administrative expenses, if any. Credit losses for receivables (uncollectible
receivables), which may be for all or part of a particular receivable, shall be deducted from the allowance. The related receivable
balance shall be charged off in the period in which the receivables are deemed uncollectible. Recoveries of receivables previously
charged off shall be recorded when received. The Company charges off its account receivables against the allowance after all means
of collection have been exhausted and the potential for recovery is considered remote. The allowance for doubtful accounts at October
31, 2018 and April 30, 2018 was $0.
(d) Oil and Gas Operations: Oil and Gas Properties Oil and gas properties may include costs that
are excluded from costs being depleted. Oil and gas costs excluded represent investments in unproved properties and major development
projects in which the Company owns a direct interest. These unproved property costs include non-producing leasehold, geological
and geophysical costs associated with leasehold or drilling interests and in process exploration drilling costs. All costs excluded
are reviewed at least annually to determine if impairment has occurred. Long-lived assets are reviewed for impairment
whenever events or changes in circumstances indicate that the historical cost carrying value of an asset may no longer be appropriate. Proved Oil and Gas Reserves Depletion, Depreciation and Amortization: In arriving at rates under the unit-of-production
method, the quantities of recoverable oil and natural gas reserves are established based on estimates made by the Company’s
geologists and engineers, which require significant judgment, as does the projection of future production volumes and levels of
future costs, including future development costs. In addition, considerable judgment is necessary in determining when unproved
properties become impaired and in determining the existence of proved reserves once a well has been drilled. All of these judgments
may have significant impact on the calculation of depletion expenses. There have been no material changes in the methodology used
by the Company in calculating depletion, depreciation and amortization of oil and gas properties under the full cost method during
the six months ended October 31, 2018 and 2017.
(e) Fair Value of Financial Instruments: The Company follows paragraph 825-10-50-10 of
the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37
of the FASB Accounting Standards Codification (“ Paragraph 820-10-35-37
Level 1 Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
Level 2 Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
Level 3 Pricing inputs that are generally observable inputs and not corroborated by market data. Financial assets are considered Level 3 when
their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one
significant model assumption or input is unobservable. The fair value hierarchy gives the highest priority
to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs.
If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization
is based on the lowest level input that is significant to the fair value measurement of the instrument. The carrying amount of the Company’s financial
assets and liabilities, such as cash, prepaid expenses, and accounts payable and accrued liabilities approximate their fair value
because of the short maturity of those instruments. Transactions involving related parties cannot
be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free-market dealings
may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions
were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be
substantiated.
(f) Revenue Recognition: ASU 2014-09, “ Revenue from Contracts
with Customers (Topic 606) Revenue
Recognition (Topic 605) Revenue
from Contracts with Customers The Company’s revenue is comprised entirely
of revenue from exploration and production activities. The Company’s oil is sold primarily to marketers, gatherers, and refiners.
Natural gas is sold primarily to interstate and intrastate natural-gas pipelines, direct end-users, industrial users, local distribution
companies, and natural-gas marketers. NGLs are sold primarily to direct end-users, refiners, and marketers. Payment is generally
received from the customer in the month following delivery. Contracts with customers have varying terms,
including spot sales or month-to-month contracts, contracts with a finite term, and life-of-field contracts where all production
from a well or group of wells is sold to one or more customers. The Company recognizes sales revenue for oil, natural gas, and
NGLs based on the amount of each product sold to a customer when control transfers to the customer. Generally, control transfers
at the time of delivery to the customer at a pipeline interconnect, the tailgate of a processing facility, or as a tanker lifting
is completed. Revenue is measured based on the contract price, which may be index-based or fixed, and may include adjustments for
market differentials and downstream costs incurred by the customer, including gathering, transportation, and fuel costs. Revenue is recognized for the sale of the Company’s
net share of production volumes. Sales on behalf of other working interest owners and royalty interest owners are not recognized
as revenues.
(g) Stock-Based Compensation: Generally, all forms of stock-based compensation,
including stock option grants, warrants, and restricted stock grants are measured at their fair value utilizing an option pricing
model on the award’s grant date, based on the estimated number of awards that are ultimately expected to vest. Under fair value recognition provisions, the
Company recognizes equity–based compensation net of an estimated forfeiture rate and recognizes compensation cost only for
those shares expected to vest over the requisite service period of the award. The fair value of an option award is estimated
on the date of grant using the Black–Scholes option valuation model. The Black–Scholes option valuation model requires
the development of assumptions that are input into the model. These assumptions are the expected stock volatility, the risk–free
interest rate, the option’s expected life, the dividend yield on the underlying stock and the expected forfeiture rate. Expected
volatility is calculated based on the historical volatility of the Company’s common stock over the expected option life and
other appropriate factors. Risk–free interest rates are calculated based on continuously compounded risk–free rates
for the appropriate term. The dividend yield is assumed to be zero, as the Company has never paid or declared any cash dividends
on its common stock and does not intend to pay dividends on the common stock in the foreseeable future. The expected forfeiture
rate is estimated based on historical experience. Determining the appropriate fair value model
and calculating the fair value of equity–based payment awards requires the input of the subjective assumptions described
above. The assumptions used in calculating the fair value of equity–based payment awards represent management’s best
estimates, which involve inherent uncertainties and the application of management’s judgment. As a result, if factors change
and the Company uses different assumptions, the equity–based compensation expense could be materially different in the future.
In addition, the Company is required to estimate the expected forfeiture rate and recognize expense only for those shares expected
to vest. If the actual forfeiture rate is materially different from the Company’s estimate, the equity–based compensation
expense could be significantly different from what the Company has recorded in the current period. The Company determines the fair value of the
stock–based payments to non-employees as either the fair value of the consideration received or the fair value of the equity
instruments issued, whichever is more reliably measurable. If the fair value of the equity instruments issued is used, it
is measured using the stock price and other measurement assumptions as of the earlier of either (1) the date at which a commitment
for performance by the counterparty to earn the equity instruments is reached, or (2) the date at which the counterparty’s
performance is complete. The expense resulting from stock-based compensation
is recorded as general and administrative expenses in the consolidated statement of operations, depending on the nature of the
services provided.
(h) Income Taxes: Income Tax Provision On December 22, 2017, the Tax Cuts and
Jobs Act (“ Tax Act Accounting for Income Taxes, Uncertain Tax Positions The Company evaluates uncertain tax positions
to recognize a tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained
on examination by the taxing authorities based on the technical merits of the position. Those tax positions failing to qualify
for initial recognition are recognized in the first interim period in which they meet the more likely than not standard or are
resolved through negotiation or litigation with the taxing authority, or upon expiration of the statute of limitations. De-recognition
of a tax position that was previously recognized occurs when an entity subsequently determines that a tax position no longer meets
the more likely than not threshold of being sustained. Interpretation of taxation rules relating to
net operating loss utilization in real estate transactions give rise to uncertain positions. In connection with the uncertain tax
position, there were no interest or penalties recorded as the position is expected but the tax returns are not yet due. The Company is subject to ongoing tax exposures,
examinations and assessments in various jurisdictions. Accordingly, the Company may incur additional tax expense based upon the
outcomes of such matters. In addition, when applicable, the Company will adjust tax expense to reflect the Company’s ongoing
assessments of such matters, which require judgment and can materially increase or decrease its effective rate as well as impact
operating results. The number of years with open tax audits varies
depending on the tax jurisdiction. The Company’s major taxing jurisdictions include the United States (including applicable
states).
(i) Per Share Amounts: Basic net income (loss) per common share is
computed by dividing net loss attributable to stockholders by the weighted-average number of shares of common stock outstanding
during the period. Diluted net income (loss) per common share is determined using the weighted-average number of common shares
outstanding during the period, adjusted for the dilutive effect of common stock equivalents. For the six months ended October
31, 2018 and 2017, potentially dilutive securities were not included in the calculation of diluted net loss per share because to
do so would be anti-dilutive. The Company had the following common stock equivalents
at October 31, 2018 and 2017:
October 31, 2018
October 31, 2017
Stock Options 2,607,385 2,529,682
Stock Purchase Warrants 2,223,669 973,669
Total 4,831,054 3,503,351
(j) Recent Accounting Pronouncements: In February 2016 , Leases In September 2016 , Financial Instruments - Credit Losses The Company does not expect the adoption of
any other recently issued accounting pronouncements to have a significant impact on its financial position, results of operations,
or cash flows.
(k) Subsequent Events: The Company has evaluated all transactions through
the date the consolidated financial statements were issued for subsequent event disclosure consideration. |
