Document and Entity Information
Document and Entity Information - shares | 12 Months Ended | |
Dec. 31, 2017 | Mar. 26, 2018 | |
Document And Entity Information | ||
Entity Registrant Name | Strata Oil & Gas, Inc. | |
Entity Central Index Key | 1,227,282 | |
Document Type | 20-F | |
Document Period End Date | Dec. 31, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
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 Common Stock, Shares Outstanding | 16,593,719 | |
Document Fiscal Period Focus | FY | |
Document Fiscal Year Focus | 2,017 |
BALANCE SHEETS
BALANCE SHEETS - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 |
Current | ||
Cash | $ 18,591 | $ 7,881 |
GST receivables | 945 | 1,660 |
Prepaid expenses | 0 | 1,365 |
Total current assets | 19,536 | 10,906 |
Reclamation deposits | 96,738 | 121,391 |
Total assets | 116,274 | 132,297 |
Current liabilities | ||
Accounts payable and accrued liabilities | 76,951 | 91,326 |
Accounts payable and accrued liabilities - related party | 14,749 | 93,278 |
Notes payable | 7,718 | 6,963 |
Derivative liability | 273,170 | 779,796 |
Total current liabilities | 372,588 | 971,363 |
Asset retirement obligation | 163,020 | 138,728 |
Total liabilities | 535,608 | 1,110,091 |
Stockholders' equity (deficit) | ||
Preferred stock: no par value, unlimited shares authorized and none issued | 0 | 0 |
Common stock: no par value, unlimited shares authorized; 15,853,719 and 14,215,016 shares issued and outstanding at December 31, 2017 and 2016; respectively | 0 | 0 |
Additional paid-in capital | 23,232,255 | 22,919,431 |
Accumulated deficit | (23,245,776) | (23,525,737) |
Accumulated other comprehensive income | (405,813) | (371,488) |
Total stockholders' equity (deficit) | (419,334) | (977,794) |
Total liabilities and Stockholders' equity (deficit) | $ 116,274 | $ 132,297 |
BALANCE SHEETS (Parenthetical)
BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Preferred stock, no par value | $ 0 | $ 0 |
Common stock, no par value | $ 0 | $ 0 |
Common stock shares issued | 15,853,719 | 14,215,016 |
Common stock shares outstanding | 15,853,719 | 14,215,016 |
STATEMENTS OF OPERATIONS AND CO
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Operating Expenses: | |||
Professional fees | $ 30,835 | $ 64,740 | $ 70,364 |
Office and sundry | 5,660 | 8,443 | 20,973 |
Consulting fees | 81,665 | 6,172 | 128,630 |
Transfer agent fees | 4,640 | 1,861 | 4,787 |
Accretion expense | 13,970 | 6,566 | 13,622 |
Impairment of oil & gas properties | 164,566 | 7,831,570 | 0 |
Total operating expenses | 301,336 | 7,919,352 | 238,376 |
Other income (expense): | |||
Interest income | 815 | 998 | 0 |
Interest income, related party | 0 | 1,153 | 8,015 |
Interest expense | (282) | (264) | 0 |
Gain (loss) on disposal of properties | 42,502 | 0 | (45,355) |
Foreign exchange loss | (564) | 111 | 23,104 |
Change in fair value of derivative liability | 538,826 | 584,880 | 3,006,205 |
Total other income | 581,297 | 586,878 | 2,991,969 |
Net income (loss) | 279,961 | (7,332,474) | 2,753,593 |
Other comprehensive income (loss) | |||
Foreign currency translation adjustment | (34,325) | 161,864 | (725,671) |
Comprehensive (loss) income | $ 245,636 | $ (7,170,610) | $ 2,027,922 |
Basis and diluted earnings (loss) per share (Note 10) | |||
Basic income (loss) per common share | $ .02 | $ (0.56) | $ 0.30 |
Diluted income (loss) per common share | $ .02 | $ (0.56) | $ 0.30 |
Basic weighted average number of shares outstanding | 14,880,909 | 13,035,203 | 9,115,416 |
Diluted weighted average number of shares outstanding | 15,310,909 | 13,035,203 | 9,161,527 |
STATEMENTS OF CHANGES IN STOCKH
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) - USD ($) | Common Stock | Additional Paid-In Capital | Stock Subscriptions Payable | Accumulated Deficit | Accumulated Other Comprehensive Income | Total |
Beginning balance, shares at Dec. 31, 2014 | 8,938,318 | |||||
Beginning balance, value at Dec. 31, 2014 | $ 21,905,643 | $ 0 | $ (18,946,856) | $ 192,319 | $ 3,151,106 | |
Stock compensation, non-employees | 41,845 | 41,845 | ||||
Private placement, common stock and warrants issuance for cash, shares | 231,100 | |||||
Private placement, common stock and warrants issuance for cash | 219,990 | 219,990 | ||||
Derivative liability adjustment | (191,490) | |||||
Stock subscriptions received | 21,514 | 21,514 | ||||
Stock options issued | 4,444 | |||||
Ending balance, shares at Dec. 31, 2015 | 9,169,418 | |||||
Ending balance, value at Dec. 31, 2015 | 21,975,988 | 21,514 | (16,193,263) | (533,352) | 5,270,887 | |
Derivative liability adjustment | (191,490) | (169,700) | ||||
Private placement, common stock and warrants issuance for cash and subscriptions payable, shares | 668,167 | |||||
Private placement, common stock and warrants issuance for cash and subscriptions payable, value | 169,700 | (21,514) | 148,486 | |||
Private placement, common stock, shares | 380,000 | |||||
Private placement, common stock, value | 76,000 | 76,000 | ||||
Issuance of stock for purchase of oil properties from related parties, Shares | 3,997,431 | |||||
Issuance of stock for purchase of oil properties from related parties, value | 867,443 | 867,443 | ||||
Stock subscriptions received | (7,332,474) | 161,864 | (7,170,610) | |||
Reclassification of warrant derivative liability due to warrant exercise | 169,700 | |||||
Stock options issued | 0 | |||||
Ending balance, shares at Dec. 31, 2016 | 14,215,106 | |||||
Ending balance, value at Dec. 31, 2016 | 22,919,431 | 0 | (23,525,737) | (371,488) | (977,794) | |
Private placement, common stock and warrants issuance for cash, shares | 1,380,495 | |||||
Private placement, common stock and warrants issuance for cash | 176,052 | 176,052 | ||||
Derivative liability adjustment | 0 | |||||
Reclassification of warrant derivative liability due to warrant exercise | 0 | |||||
Issuance of stock for services | $ 258,208 | 83,060 | 83,060 | |||
Stock options issued | 53,712 | 0 | ||||
Net income/loss and comprehensive loss | 279,961 | (34,325) | 245,636 | |||
Ending balance, shares at Dec. 31, 2017 | 15,853,719 | |||||
Ending balance, value at Dec. 31, 2017 | $ 23,232,255 | $ 0 | $ (23,245,776) | $ (405,813) | $ (419,334) |
STATEMENTS OF CASH FLOWS
STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Cash flows from operating activities | |||
Net income (loss) | $ 279,961 | $ (7,332,474) | $ 2,753,593 |
Adjustments to reconcile net income (loss) to net cash used in operating activities: | |||
Stock based compensation for consulting fees | 136,774 | 0 | 41,845 |
Accrued interest | 282 | 0 | 0 |
Accretion expense | 13,970 | 6,566 | 13,622 |
Change in fair value of derivative liability | (538,826) | (584,880) | (3,006,205) |
(Gain) Loss on disposal of oil and gas properties | (42,502) | 0 | 45,355 |
Impairment of oil and gas properties | 164,566 | 7,831,570 | 0 |
Change in assets and liabilities | |||
Interest receivable | 0 | (1,153) | (8,693) |
GST receivable | (715) | (468) | 7,837 |
Prepaid expenses | 1,365 | (1,385) | 4,012 |
Accounts payable | 375 | 48,871 | (35,056) |
Accrued liabilities | (29,679) | 15,329 | (30,437) |
Net cash used in operating activities | (14,429) | (18,024) | (214,127) |
Cash flows from investing activities | |||
Deposits | 0 | (998) | (4,996) |
Acquisition of oil and gas interests | (127,805) | (156,060) | (62,285) |
Proceeds from the sale of the property | 42,502 | 0 | 0 |
Notes receivable advances | 0 | 0 | (33,353) |
Notes receivable advances to related party | 0 | (42,063) | (20,315) |
Net cash used in investing activities | (85,303) | (199,121) | (120,949) |
Cash flows from financing activities | |||
Proceeds from issuance of common stock and warrants | 0 | 76,000 | 0 |
Proceeds from the issuance of common stock | 176,052 | 147,000 | 219,990 |
Stock subscriptions received | 0 | 0 | 21,514 |
Proceeds from loan financing | 0 | 0 | 13,835 |
Repayment of loan financing | 0 | 0 | (7,225) |
Net cash provided by financing activities | 176,052 | 223,000 | 248,114 |
Foreign exchange effect on cash | (34,797) | (515) | (29,370) |
Net increase (decrease) in cash | 41,523 | 5,340 | (116,332) |
Cash, beginning balance | 7,881 | 2,541 | 118,873 |
Cash, ending balance | 18,591 | 7,881 | 2,541 |
Supplemental disclosure of cash paid for: | |||
Interest | 0 | 0 | 0 |
Income taxes | 0 | 0 | 0 |
Non-cash investing and financing activities | |||
Reclass of additional paid-in capital to derivative liability | 0 | 169,700 | |
Oil and gas acquisitions accrued | 36,761 | 94,654 | 0 |
Shares issued for acquisition of oil and gas properties | 0 | 867,443 | 0 |
Note receivable used for acquisition of oil and gas properties | 0 | 271,380 | 0 |
Common stock issued for subscription payable | $ 0 | $ 21,514 | $ 0 |
1. NATURE OF BUSINESS AND OPERA
1. NATURE OF BUSINESS AND OPERATIONS | 12 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
NATURE OF BUSINESS AND OPERATIONS | Strata Oil & Gas Inc. (the ‘Company’) is currently engaged in the acquisition, exploration and if warranted feasible development of heavy oil projects in the Peace River oil sands region in Northern Alberta, Canada. The Company was incorporated under the laws of the State of Nevada on November 18, 1998 and commenced operations in January 1999. The Company completed its initial public offering in February 2000. The Company is presently incorporated under the Canada Business Corporations Act. As of December 31, 2017, the Company has a 100% interest in 56 oil sands leases located in the Peace River oil sands area, totaling 58,368 hectares. The Company owns 3 non-producing wells on these leases. |
2. ABILITY TO CONTINUE AS A GOI
2. ABILITY TO CONTINUE AS A GOING CONCERN | 12 Months Ended |
Dec. 31, 2017 | |
Risks and Uncertainties [Abstract] | |
ABILITY TO CONTINUE AS A GOING CONCERN | As shown in the accompanying financial statements, the Company has not realized any revenue from its present operations. During the year ended December 31, 2017, the Company incurred a net income of $279,961, due to a gain in the fair value of derivatives, and had negative cash flows from operations of $14,429 and is expected to incur further negative operating cash flows in the foreseeable future. The Company has an accumulated deficit of $23,245,776 at December 31, 2017. These conditions raise substantial doubt regarding the Company’s ability to continue as a going concern. The financial statements have been prepared on a going concern basis, which contemplates realization of assets and liquidation of liabilities in the ordinary course of business. The Company's ability to continue as a going concern is dependent on its ability to develop its oil and gas properties and ultimately achieve profitable operations and to generate sufficient cash flow from financing and operations to meet its obligations as they become payable. The Company expects that it will need approximately $525,000 to fund its operations during the next twelve months which will include minimum annual property lease payments, expected exploration expenditures for permitting and drilling, as well as operating expenses. Management has plans to seek additional capital through a private placement and public offering of its common stock. Although there are no assurances that management’s plans will be realized, management believes that the Company will be able obtain sufficient capital to continue operations in the next 12 months. Accordingly, no adjustment relating to the recoverability and classification of recorded asset amounts and the classification of liabilities has been made to the accompanying financial statements in anticipation of the Company not being able to continue as a going concern. |
3. SIGNIFICANT ACCOUNTING POLIC
3. SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
SIGNIFICANT ACCOUNTING POLICIES | Basis of Presentation The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Management’s Estimates and Assumptions The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the balance sheet date, and revenues and expenses for the period then ended. Actual results could differ significantly from those estimates. Oil and Gas Property Payments and Exploration Costs The Company follows the full cost method of accounting for natural gas and oil operations. Under the full cost method all costs incurred in the acquisition, exploration and development of natural gas and oil interests are initially capitalized into cost centers on a country-by-country basis. The Company’s current cost center is located in Canada. Such costs include land acquisition costs, geological and geophysical expenditures, carrying charges on non-producing properties, costs of drilling and overhead charges directly related to acquisition, exploration and development activities. Costs capitalized, together with the costs of production equipment, are depleted and amortized on the unit-of-production method based on the estimated net proved reserves, as determined by independent petroleum engineers. The accounting standards require that the average, first-day-of-the-month price during the 12-month period before the end of the year rather than the year-end price, must be used when estimating whether reserve quantities are economical to produce. This same 12-month average price is also used in calculating the aggregate amount of (and changes in) future cash inflows related to the standardized measure of discounted future net cash flows. Costs of acquiring and evaluating unproved properties are initially excluded from depletion calculations. These unproved properties are assessed periodically to ascertain whether impairment has occurred. When proved reserves are assigned or the property is considered to be impaired, the cost of the property or the amount of the impairment is added to costs subject to depletion calculations. Under full cost accounting rules, capitalized costs, less accumulated amortization and related deferred income taxes, shall not exceed an amount (the ceiling) equal to the sum of: (i) the after tax present value of estimated future net revenues computed by applying current prices of oil and gas reserves to estimated future production of proved oil and gas reserves as of the date of the latest balance sheet presented, less estimated future expenditures (based on currents costs) to be incurred in developing and producing any proved reserves computed using a discount factor of ten percent and assuming continuation of existing economic conditions; (ii) the cost of properties not being amortized; and (iii) the lower of cost or estimated fair value of unproved properties included in the costs being amortized. If unamortized costs capitalized within a cost center, less related deferred income taxes, exceed the ceiling, the excess shall be charged to expense and separately disclosed during the period in which the excess occurs. Amounts thus required to be written off shall not be reinstated for any subsequent increase in the cost center ceiling. On an annual basis management evaluates the carrying value of the Company’s leases and associated assets and assesses them for impairment, considering historical experience and other data such as primary lease terms of the properties, average holding period of unproved properties, geographic and geologic data, and also the commodity price forecast. As of December 31, 2017, and 2016, the Company determined to fully impair certain assets primarily relating to unproved leases and legacy wells for a total impairment of $164,566 and $7,831,570, respectively. Cash and Cash Equivalents The Company considers all highly liquid investments purchased with a maturity of 90 days or less to be cash equivalents. The Company maintains cash and cash equivalent balances with financial institutions that may exceed federally insured limits. There were no cash equivalent balances for the years ended December 31, 2017 or 2016. GST Receivables Goods and Services Tax (GST) receivables are presented net of an allowance for doubtful accounts. Receivables consist of goods and services input tax credits. The allowance for doubtful accounts on GST receivables was $nil at December 31, 2017 and 2016. Impairment of Long-lived Assets In accordance with ASC 360, Property, Plant and Equipment, Asset Retirement Obligations In accordance with ASC 410, Asset Retirement and Environmental Obligations, Income Taxes The Company follows the asset and liability method of accounting for income taxes whereby deferred tax assets and liabilities are recognized for the future tax consequences of differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. If it is determined that the realization of the future tax benefit is not more likely than not, the Company establishes a valuation allowance. Foreign Exchange Translation The Company's functional currency is the Canadian dollar, but reports its financial statements in US dollars. The Company translates its Canadian dollar balances to US dollars in the following manner: Assets and liabilities have been translated using the rate of exchange at the balance sheet date. Equity transactions have been translated at historical rates. The Company’s results of operations have been translated using the average daily exchange rate for the fiscal year. Translation gains or losses resulting from the changes in the exchange rates are accumulated as other comprehensive income or loss in a separate component of stockholders' equity. All amounts included in the accompanying financial statements and footnotes are stated in U.S. dollars. Derivative Financial Instruments The Company reviews the terms of its equity instruments and other financing arrangements to determine whether there are embedded derivative instruments that are required to be accounted for separately as a derivative financial instrument. Also, in connection with the issuance of financing instruments, the Company has issued freestanding warrants that are accounted for as derivative instrument liabilities because they are exercisable in a currency other than the functional currency of the Company and thus do not meet the “fixed-for-fixed” criteria of ASC 815-40-15. The warrants are exercisable in United States dollars and the Company’s functional currency is the Canadian dollar. Derivative financial instruments are initially measured at their fair value. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported as charges or credits to income. For option and warrant-based derivative financial instruments, the Company uses the Black-Scholes option pricing model to value the derivative instruments. Any exercise or cancellation of an equity instrument which meets the classification of a derivative financial instrument is trued-up to fair value at that date and the fair value of the exercised instrument is then re-classed from liability to additional paid in capital. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is reassessed at the end of each reporting period. If reclassification is required, the fair value of the derivative instrument, as of the determination date, is reclassified. Any previous charges or credits to income for changes in the fair value of the derivative instrument are not reversed. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date. Stock Options The Company measures all employee stock-based compensation awards using a fair value method on the date of grant and recognizes such expense in its financial statements over the requisite service period. The Company uses the Black-Scholes pricing model to determine the fair value of stock-based compensation awards on the date of grant. The Black-Scholes pricing model requires management to make assumptions regarding option lives, expected volatility, and risk free interest rates. The Company accounts for non-employee stock-based awards in accordance with the provision of ASC 505, “Equity Based Payments to Non-Employees” (“ASC 505”), which requires that such equity instruments are recorded at their fair value on the measurement date. The measurement of stock-based compensation is subject to periodic adjustment as the underlying equity instruments vest. The Company uses the Black-Scholes pricing model to determine the fair value of stock-based compensation awards. The Black-Scholes pricing model requires management to make assumptions regarding option lives, expected volatility, and risk free interest rates. The Company uses historical data to estimate option exercise, forfeiture and employee termination within the valuation model. For non-employees, the expected term of the options approximates the full term of the options. The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected term of the stock options. The Company has not paid and does not anticipate paying dividends on its common stock; therefore, the expected dividend yield is assumed to be zero. In addition, accounting standard requires companies to utilize an estimated forfeiture rate when calculating the expense for the reporting period. Based on its best estimate, management applied the estimated forfeiture rate of nil in determining the expense recorded in the accompanying Statements of Operations and Comprehensive Income (Loss). Expected volatilities are calculated using the historical volatility of the Company’s stock. When applicable, the Company will use historical data to estimate option exercise, forfeiture and employees’ termination within the valuation model. For non-employees, the expected term of the options approximates the full term of the options. Earnings (Loss) Per Share of Common Stock Basic earnings (loss) per share of common stock is computed by dividing net income (loss) available to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted earnings per share of common stock reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company. Dilutive potential common shares are calculated in accordance with the treasury stock method, which assumes that proceeds from the exercise of all warrants and options are used to repurchase common stock at market value. The amount of shares remaining after the proceeds are exhausted represents the potentially dilutive effect of the securities. For the year ended December 31, 2017, 307,000 of the outstanding common stock options and 4,367,297 outstanding warrants had an exercise price above the weighted average stock price for the twelve-month period. Accordingly, these potentially dilutive shares were anti-dilutive. 430,000 of the common stock options are included as dilutive shares for purposes of calculating the diluted weighted average stock price. For the year ended December 31, 2016, all of the outstanding 347,000 options and outstanding 4,533,963 warrants had an exercise price above the weighted average stock price for yearend period. Accordingly, all of the potentially dilutive shares were anti-dilutive. Fair Value of Financial Instruments The book values of GST receivables, notes receivable, accounts payable and accrued expenses approximate their respective fair values due to the short-term nature of these instruments. The fair value hierarchy under GAAP distinguishes between assumptions based on market data (observable inputs) and an entity’s own assumptions (unobservable inputs). The hierarchy consists of three levels: · Level one · Level two · Level three Determining which category an asset or liability falls within the hierarchy requires significant judgment. We evaluate our hierarchy disclosures each balance sheet date. Liabilities measured at fair value are summarized as follows as of: Fair Value Measurement at Fair Value Measurement at December 31, 2017 December 31, 2016 Using Using Level 3 Total Level 3 Total Liabilities: Derivative liabilities $ 273,170 $ 273,170 $ 779,796 $ 779,796 The Company measures and reports the fair value liability for warrants with a strike price currency different than the functional currency of the Company on a recurring basis. The fair value liabilities for warrants have been recorded as determined utilizing the Black-Scholes option pricing model. A slight change in an unobservable input like historical volatility could have a significant impact on the fair value measurement of the derivative liabilities. See Note 5 “Derivative Liabilities” for further discussion of the inputs used in determining the fair value. Comprehensive Income (Loss) Comprehensive income (loss) is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. The Company's items of other comprehensive income (loss) are foreign currency translation adjustments. Related Party Transactions A related party is generally defined as (i) any person who holds 10% or more of the Company’s securities and their immediate families, (ii) the Company’s management, (iii) someone who directly or indirectly controls, is controlled by or is under common control with the Company, or (iv) anyone who can significantly influence the financial and operating decisions of the Company. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. New Accounting Pronouncements In March 2016, the FASB issued ASU No. 2016-09, Compensation-Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting. Under ASU No. 2016-09, companies will no longer record excess tax benefits and certain tax deficiencies in additional paid-in capital (“APIC”). Instead, they will record all excess tax benefits and tax deficiencies as income tax expense or benefit in the income statement and the APIC pools will be eliminated. In addition, ASU No. 2016-09 eliminates the requirement that excess tax benefits be realized before companies can recognize them. ASU No. 2016-09 also requires companies to present excess tax benefits as an operating activity on the statement of cash flows rather than as a financing activity. Furthermore, ASU No. 2016-09 will increase the amount an employer can withhold to cover income taxes on awards and still qualify for the exception to liability classification for shares used to satisfy the employer’s statutory income tax withholding obligation. An employer with a statutory income tax withholding obligation will now be allowed to withhold shares with a fair value up to the amount of taxes owed using the maximum statutory tax rate in the employee’s applicable jurisdiction(s). ASU No. 2016-09 requires a Company to classify the cash paid to a tax authority when shares are withheld to satisfy its statutory income tax withholding obligation as a financing activity on the statement of cash flows. Under current U.S. GAAP, it was not specified how these cash flows should be classified. In addition, companies will now have to elect whether to account for forfeitures on share-based payments by (1) recognizing forfeitures of awards as they occur or (2) estimating the number of awards expected to be forfeited and adjusting the estimate when it is likely to change, as is currently required. The amendments of this ASU are effective for reporting periods beginning after January 1, 2016, with early adoption permitted but all of the guidance must be adopted in the same period. The Company adopted this on January 1, 2016. The Company has evaluated the impact of ASU No. 2016-09 and has determined that the adoption of the impact of forfeitures, net of income taxes, will not have a material impact on the Company’s future financial statements. In August 2016, the FASB issued ASU No. 2016-15 which addresses how certain cash receipts and cash payments are presented and classified in the statement of cash flows with the objective of reducing existing differences in the presentation of these items. The amendments in ASU No. 2016-15 are to be adopted retrospectively and will become effective in the first quarter of fiscal 2019. The Company is evaluating the impact of adopting this standard on its consolidated statement of cash flows. We do not expect the adoption of this standard to have a material effect on our consolidated financial statements and related disclosures. In November 2016, the FASB issued ASU No. 2016-18 which require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. As a result, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amendments do not provide a definition of restricted cash or restricted cash equivalents. The guidance is effective for annual reporting periods beginning after December 15, 2017, and interim periods within those fiscal years. The amendments should be applied using a retrospective transition method to each period presented. The Company is evaluating the impact of adopting this standard on its statement of cash flows. In February 2017, the FASB has issued ASU No. 2017-05, Other Income – Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20) This is effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations. |
4. NOTES RECEIVABLE, RELATED PA
4. NOTES RECEIVABLE, RELATED PARTIES | 12 Months Ended |
Dec. 31, 2017 | |
Notes Receivable Related Parties | |
NOTE RECEIVABLE, RELATED PARTIES | During the period December 27, 2013 through February 22, 2016, the Company entered into several unsecured short-term note receivable agreements with a related party through common directors. On February 22, 2016, the Company and the borrowers entered into a purchase and sale agreement whereby the Company elected to acquire all the rights and obligations associated with 45 oilsands leases representing 39,680 hectares (98,051 acres) in the Peace River area of Alberta. As part of the purchase price, the notes receivable were applied towards the purchase of the oilsands lease rights. Accordingly, the notes receivable plus accrued interest were $nil as of December 31, 2017 and 2016. See Note 6 “Oil and Gas Properties” for additional discussion of the lease acquisitions. For the years ended December 31, 2017, 2016 and 2015 the Company recognized $0, $1,153 and $8,015, respectively of interest income under the terms of the note agreements. |
5. DERIVATIVE LIABILITIES
5. DERIVATIVE LIABILITIES | 12 Months Ended |
Dec. 31, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE LIABILITIES | Derivative liabilities consist of common stock warrants with an exercise price in a different currency than the Company’s functional currency and they are accounted for as separate liabilities measured at their respective fair values as follows: Balance, December 31, 2015 $ 1,153,491 Fair value of warrants issued in private placements reclassified from equity 169,700 Fair value of warrants issued in private placements recognized as derivative expense 59,064 Change in fair value of derivative liabilities (643,944 ) Foreign exchange effect on derivative liability 41,485 Balance, December 31, 2016 779,796 Fair value of expired warrant (140 ) Change in fair value of derivative liabilities (542,834 ) Foreign exchange effect on derivative liability 36,348 Balance, December 31, 2017 $ 273,170 The fair value of the derivative liabilities has been determined using the Black-Scholes option pricing model using the following range of assumptions: 2017 2016 2015 Volatility 383.07% 254.90% 202.10% Expected life .2 to 4 years .2 to 7 years 1 to 8 years Risk-free interest rate 1.73% - 1.9% 0.74% - 1.4% .048 % to 1.36% Dividend yield 0.00% 0.00% 0.00% |
6. OIL AND GAS PROPERTY INTERES
6. OIL AND GAS PROPERTY INTERESTS | 12 Months Ended |
Dec. 31, 2017 | |
Oil and Gas Exploration and Production Industries Disclosures [Abstract] | |
OIL AND GAS PROPERTY INTERESTS | During the period June 2006 through January 2007, the Company acquired the rights to multiple oilsands leases within the Peace River area of Alberta, Canada (the “Peace River Properties”). The leases were granted by the Province of Alberta. All the leases are for a 15-year term, require minimum annual lease payments, and grant the Company the right to explore and develop oil sands on the respective leases. On February 22, 2016, the Company acquired an additional 45 oilsands leases by entering into two purchase and sale agreements. The oilsands leases represent 39,680 hectares (98,051 acres) in the Peace River area of Alberta. One of the purchase / sale agreements was with a related party. The Company paid for the acquisition of these leases by the issuance of restricted 3,997,431 shares of its common stock valued at $0.217 per share reduced by the carrying value of notes receivable, including accrued interest, from the two parties. As of February 22, 2016, the total notes receivable, plus accrued interest, was $271,380 and the value of the share issuance was $867,433 resulting in a net purchase price of $1,138,823. All the Company’s leases in the Peace River area are subject to royalties payable to the government of the Province of Alberta. The royalty is calculated using a revenue-less-cost formula. In years prior to the recovery of the project’s capital investment, the royalty is 1% of gross revenue. Once the project costs have been recovered, the royalty is the greater of 1% of gross revenue or 25% of net revenue. The Company completed drilling four exploratory wells during the fiscal year ended December 31, 2007. Since then, the Company has completed several third-party technical reports on its oilsands leases including a prefeasibility study and has developed an oilsands exploration program. The Company intends to move forward on the program and projects when adequate funding is available. As of December 31, 2017 and 2016, the Company decided to fully impair certain of its assets primarily relating to unproved leases and legacy wells for a total impairment of $164,566 and $7,831,570, respectively. This decision was made due to: the historically low commodity prices; the general lack of investment activity in the sector; the general lack of new oil sands lease activity in the region; and the need to update the Company’s 51-101 studies to reflect the new COGEH standards. On May 5, 2017, the Company sold one of its impaired legacy wells for total proceeds of $42,502 (CDN$55,000) which has been recorded in the Statement of Comprehensive Income / (Loss). |
7. ASSET RETIREMENT OBLIGATIONS
7. ASSET RETIREMENT OBLIGATIONS | 12 Months Ended |
Dec. 31, 2017 | |
Asset Retirement Obligation Disclosure [Abstract] | |
ASSET RETIREMENT OBLIGATIONS | During 2007, the Company drilled four wells on its Peace River Property. Total future asset retirement obligations were estimated by management based on the Company’s working interest in its wells and facilities, estimated costs to remediate, reclaim and abandon the wells and facilities and the estimated timing of the costs to be incurred in future periods. The Company has estimated the net present value of its total asset retirement obligations to be approximately $140,346 at September 30, 2016, based on an undiscounted total future liability of $225,229 (CDN$293,000). These payments are expected to be incurred between 2020 and 2030. The Company used a credit adjusted discount rate of 10% per annum and an inflation rate of 2% to calculate the present value of the asset retirement obligation. Accretion expense of $13,970, $6,566 and $13,622 for the years ended December 31, 2017, 2016 and 2015, respectively, has been recorded in the Statements of Operations and Comprehensive Income / (Loss). |
8. RELATED PARTY TRANSACTIONS
8. RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2017 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | Related party transactions not disclosed elsewhere in these financial statements include: Stock purchases During the year ended December 31, 2017, the Company received total proceeds of $176,052 from private placements for 1,380,260 common shares issued to a related party by common director. Notes payable to related party In December 2015, the Company borrowed $13,835 ($19,000 Canadian) under two separate note agreements for $7,282 ($10,000 Canadian) and $6,553 ($9,000 Canadian) with related parties. The lenders were related parties through an immediate family relationship with officers or directors of the Company and a common director. The $7,282 loan from the immediate family relationship was repaid in its entirety at December 31, 2015. The notes payable bore interest at the Bank of Canada Prime rate plus 1%. The Company could repay the loan and outstanding interest thereon by giving notice to the lender 15 days prior to the anticipated repayment. At December 31, 2016, the effective interest rate on these notes payable was 3.7%. The balance of notes payable, including interest, to related parties at December 31, 2017 and 2016 was $7,718 and $6,963, respectively. The Company recognized interest expense of $282, $264 and $nil for the years ended December 31, 2017, 2016 and 2015, respectively, in its Statement of Operations and Comprehensive Income. Consulting fees Mr. Newton is the President and a member of the Board of Directors of the Company. Mr. Newton does not bill the Company for his services as President; however, he has a service agreement with the Company. Pursuant to this agreement, the Company capitalized oil and gas exploration costs and an accrued liability of $75,240 as of December 31, 2016. The Company recognized $16,001 as consulting fees during the year ended December 31, 2015. The Company and Mr. Newton agreed to issue stock in lieu of cash for the amount of $75,240 by issuing restricted common stock of the Company. Mr. Michael Ranger is a member of the Board of Directors of the Company. Mr. Ranger does not receive compensation for his services as a member of the board; however, he has a service agreement with the Company. Pursuant to this agreement, the Company capitalized oil and gas exploration costs and an accrued liability of $12,662 and $nil during the years ended December 31, 2016 and 2015, respectively. The Company and Mr. Ranger agreed to issue stock in lieu of cash for a portion of this services billed in the amount of $7,448. |
9. SHARE CAPITAL
9. SHARE CAPITAL | 12 Months Ended |
Dec. 31, 2017 | |
Equity [Abstract] | |
SHARE CAPITAL | Pursuant to its articles of incorporation, the Company has an unlimited number of common stock shares available for issuance with no par value. As of December 31, 2017, the Company had 15,853,719 shares of common stock outstanding. For the year ended December 31, 2015, 65,250 common share warrants were exercised at exercise prices of $0.90 to $1.50 for total proceeds of $69,600. Upon exercise, the fair value of these liability instruments of $110,049 was re-classified from liability to additional paid in capital. During the year ended December 31, 2015 the Company closed a series of private placements totaling 23,110 units at $0.90 to $1.00 per unit for total offering proceeds of $219,990. Each unit consisted of one share of common stock of the Company and one Class A Warrant exercisable for one share of common stock at an exercise price of $1.50 for a period of five years from the date of placement. During the year ended December 31, 2016, the Company closed a series of private placements for a total of 623,167 units at $0.30 to $0.50 per unit for total offering proceeds of $138,000 and the payment of a subscription payable for cash received in 2015 of $21,514. Each unit consisted of one share of common stock for the Company and one Class A Warrant exercisable for one share of common stock at an exercise price of $0.20 to $0.50 for a period of five years from the date of placement. Warrants vest on the one year anniversary date. On October 17, 2016, the Company closed a private placement with the President of the Company, totaling 45,000 units for total proceeds of $9,000. Each unit consisted of one share of common stock for the Company and one Class A Warrant exercisable for one share of common stock at an exercise price of $0.30 for a period of five years from the date of placement. Warrants vest on the one year anniversary date. During the year ended December 31, 2016, the Company closed two private placements totaling 380,000 shares of common stock at $0.20 per common stock share for total proceeds of $76,000. A related party, a company with a common director, participated in the transactions. For the year ended December 31, 2017, the Company received proceeds of $126,052 from private placements totaling 880,260 common shares issued to a related party by common director. For the year ended December 31, 2017, the Company issued 258,208 common shares as stock in-lieu of cash to directors of the Company for services provided during the year ended December 31, 2016. On July 18, 2017, the Company affected a reverse stock split of the Company’s Common Stock at a reverse split ratio of 1-for-10, pursuant to a plan approved by the Company’s Board of Directors. The reverse stock split was declared effective by the Financial Industry Regulatory Authority (“FINRA”) on December 1, 2017. All shares throughout these financial statements have been retroactively adjusted to reflect the reverse stock split. The following table summarizes the assumptions used in the Black-Scholes models to estimate the grant date fair value of the warrants: The following table summarizes warrant activity during the years ended December 31, 2017, 2016 and 2015. Number of Weighted Warrants Weighted Outstanding December 31, 2015 3,865,797 $ 2.00 3,509,697 $ 2.00 Issued 668,166 $ 0.40 – – Canceled / exercised – – – – Expired – – – – Outstanding December 31, 2016 4,533,963 $ 1.70 3,865,797 $ 2.00 Issued – Canceled / exercised – Expired 166,666 Outstanding December 31, 2017 4,367,297 $ 1.75 4,367,297 $ 1.75 The following tables summarizes outstanding warrants as of December 31, 2017: Warrants Outstanding Range of Exercise Price Number of Weighted Remaining $0.20 - $22.50 4,367,297 $ 1.75 .5 – 4.75 The Company classified proceeds on December 31, 2017, 2016, and 2015 of $0, $169,700 and $191,490, respectively, from the private placements of common stock plus warrants as a derivative liability. |
10. EARNINGS PER SHARE
10. EARNINGS PER SHARE | 12 Months Ended |
Dec. 31, 2017 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | Basic income per common share is computed by dividing income available to the Company’s common stockholders by the weighted average number of common shares outstanding during the period. Diluted income per common share reflects the potential dilution that could occur from common share issuable through stock options and warrants. Diluted income per common share is computed similarly to basic income per common stock except that weighted average common stock is increased to include the potential issuance of dilutive common stock. The following table sets forth the basic and diluted net income per share computed for the years ended December 31, 2017, 2016 and 2015: For the years ended December 31, 2017 2016 2015 Net income (loss) $ 279,961 $ (7,332,474 ) $ 2,753,593 Less: Non-cash income from changes in fair value of derivative liabilities – – (133,395 ) Net loss - diluted $ 279,961 $ (7,332,474 ) $ 2,620,198 Weighted average common shares outstanding - basic 14,880,909 13,035,203 9,115,416 Common stock options – – 4,444 Common stock warrants - liability treatment – – 41,666 Weighted average common shares outstanding - diluted 15,310,909 13,035,203 9,161,527 Net income per share data: Basic $ 0.02 $ (0.56 ) $ 0.30 Diluted 0.02 $ (0.56 ) $ 0.30 The weighted average number of shares outstanding used in the computation of the basic and diluted net income per share does not include the effect of the following potential outstanding shares of common stock. The effects of these potentially outstanding shares were not included in the calculation of basic and diluted net income per share because the effect would have been anti-dilutive. For the years ended December 31, 2017 2016 2015 Common stock options – – 347,000 Common stock warrants - liability treatment 4,367,297 4,533,963 3,740,797 Potentially dilutive securities 4,367,297 4,533,963 4,087,797 |
11. STOCK OPTION PLANS
11. STOCK OPTION PLANS | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
STOCK OPTION PLANS | Approval of the 2016 Stock Plan In November 2016, the Board of Directors approved and the Company adopted the 2016 Stock Option Plan (“the 2016 Plan”). The 2016 Plan provides for the granting of up to 1,200,000 stock options to key employees, directors and consultants, of common shares of the Company. Under the 2016 Plan, the granting of incentive and non-qualified stock options, exercise prices and terms are determined by the Company's Option Committee, a committee designated to administer the 2016 Plan by the Board of Directors. For incentive options, the exercise price shall not be less than the fair market value of the Company's common stock on the grant date. (In the case of options granted to an employee who owns stock possessing more than 10% of the voting power of all classes of the Company's stock on the date of grant, the option price must not be less than 110% of the fair market value of common stock on the grant date.) Options granted are not to exceed terms beyond ten years (five years in the case of an incentive stock option granted to a holder of 10 percent of the Company's common stock). As of December 31, 2016, there were 1,200,000 shares available for grant. 2006 Stock Option Plan In June 2006 the stockholders approved and the Company adopted its 2006 Stock Option Plan (“the 2006 Plan”). The 2006 Plan provides for the granting of up to 800,000 stock options to key employees, directors and consultants, of common shares of the Company. Under the 2006 Plan, the granting of incentive and non-qualified stock options, exercise prices and terms are determined by the Company's Option Committee, a committee designated to administer the 2006 Plan by the Board of Directors. For incentive options, the exercise price shall not be less than the fair market value of the Company's common stock on the grant date. (In the case of options granted to an employee who owns stock possessing more than 10% of the voting power of all classes of the Company's stock on the date of grant, the option price must not be less than 110% of the fair market value of common stock on the grant date.) Options granted are not to exceed terms beyond ten years (five years in the case of an incentive stock option granted to a holder of 10 percent of the Company's common stock). In June 2016, the 2006 Plan expired so that no common stock options may be issued under this Plan. Stock Option Activity On June 16, 2017, the Company granted stock options to purchase up to 90,000 shares of common stock to an individual. The options vest over two years, have a price of $0.50 and expire on November 12, 2027. On November 12, 2017, the Company granted stock options to purchase up to 340,000 shares of common stock to four individuals. The options vested upon issuance, have a price of $0.50 and expire on November 12, 2027. Activity under the 2016 and 2006 Plan is summarized as follows: Number of Weighted Weighted Aggregate Balance, December 31, 2014 477,000 2.90 0.00 Option granted – – Options cancelled (110,000 ) 2.50 Options exercised – – Balance, December 31, 2015 367,000 3.00 0.00 Option granted – – Options cancelled (20,000 ) 2.90 Options exercised – – Balance December 31, 2016 347,000 1.20 2.60 0.00 Option granted 430,000 .50 Options cancelled (40,000 ) Options exercised Balance December 31, 2017 737,000 0.85 7.75 0.00 Exercisable at December 31, 2017 677,000 0.88 7.91 0.00 The following table summarizes information concerning outstanding and exercisable common stock options under the 2006 and 2016 Plans at December 31, 2016: Options Outstanding and Exercisable Range of Exercise Price Number of Weighted Remaining $0.13 – 1.40 737,000 $ 0.85 7.75 As of December 31, 2017, 2016 and 2015, there was no unrecognized compensation cost related to all options granted and outstanding. During the year ended December 31, 2015, the Company recorded consulting fees of $41,845 in the statement of operations related to stock options granted to non-employees. |
12. INCOME TAXES
12. INCOME TAXES | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | The tax effects of temporary differences that give rise to the Company’s deferred tax assets are as follows: 2017 2016 2015 Loss carryforwards $ 763,000 $ 661,000 $ 627,200 Capital losses 5,000 5,000 5,000 Office equipment 12,500 12,500 12,500 Oil & Gas properties 2,871,000 2,222,000 1,691,000 Asset retirement obligation 89,900 83,300 76,700 Deferred tax asset 3,741,400 2,983,800 2,412,400 Less valuation allowance (3,741,400 ) (2,983,800 ) (2,412,400 ) Deferred tax asset recognized $ – $ – $ – Upon continuation to Canada in 2004, all losses carried forward at that time expired. As of December 31, 2016, the Company had available to offset future taxable income a net Canadian operating loss carry-forwards of approximately $2.7 million. The carry-forwards began expiring in 2014 and unless utilized will continue to expire. The Company also has approximately $8.9 million in Canadian oil and gas dedication pools that can be used to offset income of future periods. The amount of oil and gas dedication pools available for deduction in any year may be limited to 30% of the amount available. The Company evaluates its valuation allowance requirements based on projected future operations. When circumstances change and this causes a change in management's judgment about the recoverability of deferred tax assets, the impact of the change on the valuation allowance is reflected in current income. During the years ended December 31, 2017, 2016 and 2015, changes in valuation allowance were $757,600, $571,400 and ($758,000), respectively. The (benefit) provision for income taxes differs from the amount of income tax determined by applying the applicable Canadian statutory federal income tax rate to pre-tax income loss as a result of the following differences: 2017 2016 2015 Statutory federal income tax rate -25% -25% -25% Change in valuation allowance 20% 19% -24% %Non-deductible stock-based compensation 0% 0% -1% Non%-deductible change in fair value of derivative liability -64% -117% 107% Non-deductible accretion expense 15% 1% 4% Effect of foreign exchange 54% 122% -61% Effect of change in income tax rate 0% 0% 0% 0% 0% 0% The Company has evaluated its tax positions for the years ended December 31, 2017, 2016 and 2015 and determined that it has no uncertain tax positions requiring financial statement recognition. Under ASC 740-10-25, the impact of an uncertain income tax position on income tax expense must be recognized at the largest amount that is more-likely-than-not to be sustained. An uncertain income tax position will not be recognized if it has 50% or less likelihood of being sustained. We accrue interest and penalties on our uncertain tax positions as a component of our provision for income taxes. There was no amount of interest and penalties recognized as an expense during 2017, 2016 and 2015. Our income tax returns are generally considered closed to examination when we file a notice of determination with the taxing authority. No such notice has been filed to date. |
13. COMMITMENTS AND CONTINGENCI
13. COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | Environmental Matters The Company is engaged in oil and gas exploration and may become subject to certain liabilities as they relate to environmental cleanup of sites or other environmental restoration procedures as they relate to the exploration of oil and gas. Should it be determined that a liability exists with respect to any environmental clean up or restoration, the liability to cure such a violation could fall upon the Company. No claim has been made, nor is the Company aware of any liability, which it may have, as it relates to any environmental clean-up, restoration or the violation of any rules or regulations relating thereto. Liabilities for expenditures are recorded when environmental assessment and/or remediation is probable and the costs can be reasonably estimated. |
14. SUBSEQUENT EVENTS
14. SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2017 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | In accordance with SFAS 165 (ASC 855-10) management has performed an evaluation of subsequent events through the date that the financial statements were available to be issued and has determined that it does not have any material subsequent events to disclose in these financial statements other the following. Subsequent to December 31, 2017, the Company received proceeds of $50,000 from private placements for 500,000 common shares issued to a related party by common director. Subsequent to December 31, 2017, the Company’s President exercised 240,000 of his options for $12,000. |
3. SIGNIFICANT ACCOUNTING POL21
3. SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). |
Managements Estimates and Assumptions | Management’s Estimates and Assumptions The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the balance sheet date, and revenues and expenses for the period then ended. Actual results could differ significantly from those estimates. |
Oil and Gas Property Payments and Exploration Costs | Oil and Gas Property Payments and Exploration Costs The Company follows the full cost method of accounting for natural gas and oil operations. Under the full cost method all costs incurred in the acquisition, exploration and development of natural gas and oil interests are initially capitalized into cost centers on a country-by-country basis. The Company’s current cost center is located in Canada. Such costs include land acquisition costs, geological and geophysical expenditures, carrying charges on non-producing properties, costs of drilling and overhead charges directly related to acquisition, exploration and development activities. Costs capitalized, together with the costs of production equipment, are depleted and amortized on the unit-of-production method based on the estimated net proved reserves, as determined by independent petroleum engineers. The accounting standards require that the average, first-day-of-the-month price during the 12-month period before the end of the year rather than the year-end price, must be used when estimating whether reserve quantities are economical to produce. This same 12-month average price is also used in calculating the aggregate amount of (and changes in) future cash inflows related to the standardized measure of discounted future net cash flows. Costs of acquiring and evaluating unproved properties are initially excluded from depletion calculations. These unproved properties are assessed periodically to ascertain whether impairment has occurred. When proved reserves are assigned or the property is considered to be impaired, the cost of the property or the amount of the impairment is added to costs subject to depletion calculations. Under full cost accounting rules, capitalized costs, less accumulated amortization and related deferred income taxes, shall not exceed an amount (the ceiling) equal to the sum of: (i) the after tax present value of estimated future net revenues computed by applying current prices of oil and gas reserves to estimated future production of proved oil and gas reserves as of the date of the latest balance sheet presented, less estimated future expenditures (based on currents costs) to be incurred in developing and producing any proved reserves computed using a discount factor of ten percent and assuming continuation of existing economic conditions; (ii) the cost of properties not being amortized; and (iii) the lower of cost or estimated fair value of unproved properties included in the costs being amortized. If unamortized costs capitalized within a cost center, less related deferred income taxes, exceed the ceiling, the excess shall be charged to expense and separately disclosed during the period in which the excess occurs. Amounts thus required to be written off shall not be reinstated for any subsequent increase in the cost center ceiling. On an annual basis management evaluates the carrying value of the Company’s leases and associated assets and assesses them for impairment, considering historical experience and other data such as primary lease terms of the properties, average holding period of unproved properties, geographic and geologic data, and also the commodity price forecast. As of December 31, 2017, and 2016, the Company determined to fully impair certain assets primarily relating to unproved leases and legacy wells for a total impairment of $164,566 and $7,831,570, respectively. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments purchased with a maturity of 90 days or less to be cash equivalents. The Company maintains cash and cash equivalent balances with financial institutions that may exceed federally insured limits. There were no cash equivalent balances for the years ended December 31, 2017 or 2016. |
GST Receivables | GST Receivables Goods and Services Tax (GST) receivables are presented net of an allowance for doubtful accounts. Receivables consist of goods and services input tax credits. The allowance for doubtful accounts on GST receivables was $nil at December 31, 2017 and 2016. |
Impairment of Long-lived Assets | Impairment of Long-lived Assets In accordance with ASC 360, Property, Plant and Equipment, |
Asset Retirement Obligations | Asset Retirement Obligations In accordance with ASC 410, Asset Retirement and Environmental Obligations, |
Income Taxes | Income Taxes The Company follows the asset and liability method of accounting for income taxes whereby deferred tax assets and liabilities are recognized for the future tax consequences of differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. If it is determined that the realization of the future tax benefit is not more likely than not, the Company establishes a valuation allowance. |
Foreign Exchange Translation | Foreign Exchange Translation The Company's functional currency is the Canadian dollar, but reports its financial statements in US dollars. The Company translates its Canadian dollar balances to US dollars in the following manner: Assets and liabilities have been translated using the rate of exchange at the balance sheet date. Equity transactions have been translated at historical rates. The Company’s results of operations have been translated using the average daily exchange rate for the fiscal year. Translation gains or losses resulting from the changes in the exchange rates are accumulated as other comprehensive income or loss in a separate component of stockholders' equity. All amounts included in the accompanying financial statements and footnotes are stated in U.S. dollars. |
Derivative Financial Instruments | Derivative Financial Instruments The Company reviews the terms of its equity instruments and other financing arrangements to determine whether there are embedded derivative instruments that are required to be accounted for separately as a derivative financial instrument. Also, in connection with the issuance of financing instruments, the Company has issued freestanding warrants that are accounted for as derivative instrument liabilities because they are exercisable in a currency other than the functional currency of the Company and thus do not meet the “fixed-for-fixed” criteria of ASC 815-40-15. The warrants are exercisable in United States dollars and the Company’s functional currency is the Canadian dollar. Derivative financial instruments are initially measured at their fair value. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported as charges or credits to income. For option and warrant-based derivative financial instruments, the Company uses the Black-Scholes option pricing model to value the derivative instruments. Any exercise or cancellation of an equity instrument which meets the classification of a derivative financial instrument is trued-up to fair value at that date and the fair value of the exercised instrument is then re-classed from liability to additional paid in capital. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is reassessed at the end of each reporting period. If reclassification is required, the fair value of the derivative instrument, as of the determination date, is reclassified. Any previous charges or credits to income for changes in the fair value of the derivative instrument are not reversed. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date. |
Stock Options | Stock Options The Company measures all employee stock-based compensation awards using a fair value method on the date of grant and recognizes such expense in its financial statements over the requisite service period. The Company uses the Black-Scholes pricing model to determine the fair value of stock-based compensation awards on the date of grant. The Black-Scholes pricing model requires management to make assumptions regarding option lives, expected volatility, and risk free interest rates. The Company accounts for non-employee stock-based awards in accordance with the provision of ASC 505, “Equity Based Payments to Non-Employees” (“ASC 505”), which requires that such equity instruments are recorded at their fair value on the measurement date. The measurement of stock-based compensation is subject to periodic adjustment as the underlying equity instruments vest. The Company uses the Black-Scholes pricing model to determine the fair value of stock-based compensation awards. The Black-Scholes pricing model requires management to make assumptions regarding option lives, expected volatility, and risk free interest rates. The Company uses historical data to estimate option exercise, forfeiture and employee termination within the valuation model. For non-employees, the expected term of the options approximates the full term of the options. The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected term of the stock options. The Company has not paid and does not anticipate paying dividends on its common stock; therefore, the expected dividend yield is assumed to be zero. In addition, accounting standard requires companies to utilize an estimated forfeiture rate when calculating the expense for the reporting period. Based on its best estimate, management applied the estimated forfeiture rate of nil in determining the expense recorded in the accompanying Statements of Operations and Comprehensive Income (Loss). Expected volatilities are calculated using the historical volatility of the Company’s stock. When applicable, the Company will use historical data to estimate option exercise, forfeiture and employees’ termination within the valuation model. For non-employees, the expected term of the options approximates the full term of the options. |
Earnings (Loss) Per Share of Common Stock | Earnings (Loss) Per Share of Common Stock Basic earnings (loss) per share of common stock is computed by dividing net income (loss) available to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted earnings per share of common stock reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company. Dilutive potential common shares are calculated in accordance with the treasury stock method, which assumes that proceeds from the exercise of all warrants and options are used to repurchase common stock at market value. The amount of shares remaining after the proceeds are exhausted represents the potentially dilutive effect of the securities. For the year ended December 31, 2017, 307,000 of the outstanding common stock options and 4,367,297 outstanding warrants had an exercise price above the weighted average stock price for the twelve-month period. Accordingly, these potentially dilutive shares were anti-dilutive. 430,000 of the common stock options are included as dilutive shares for purposes of calculating the diluted weighted average stock price. For the year ended December 31, 2016, all of the outstanding 347,000 options and outstanding 4,533,963 warrants had an exercise price above the weighted average stock price for yearend period. Accordingly, all of the potentially dilutive shares were anti-dilutive. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The book values of GST receivables, notes receivable, accounts payable and accrued expenses approximate their respective fair values due to the short-term nature of these instruments. The fair value hierarchy under GAAP distinguishes between assumptions based on market data (observable inputs) and an entity’s own assumptions (unobservable inputs). The hierarchy consists of three levels: · Level one · Level two · Level three Determining which category an asset or liability falls within the hierarchy requires significant judgment. We evaluate our hierarchy disclosures each balance sheet date. Liabilities measured at fair value are summarized as follows as of: Fair Value Measurement at Fair Value Measurement at December 31, 2017 December 31, 2016 Using Using Level 3 Total Level 3 Total Liabilities: Derivative liabilities $ 273,170 $ 273,170 $ 779,796 $ 779,796 The Company measures and reports the fair value liability for warrants with a strike price currency different than the functional currency of the Company on a recurring basis. The fair value liabilities for warrants have been recorded as determined utilizing the Black-Scholes option pricing model. A slight change in an unobservable input like historical volatility could have a significant impact on the fair value measurement of the derivative liabilities. See Note 5 “Derivative Liabilities” for further discussion of the inputs used in determining the fair value. |
Comprehensive Income (Loss) | Comprehensive Income (Loss) Comprehensive income (loss) is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. The Company's items of other comprehensive income (loss) are foreign currency translation adjustments. |
Related Party Transactions | Related Party Transactions A related party is generally defined as (i) any person who holds 10% or more of the Company’s securities and their immediate families, (ii) the Company’s management, (iii) someone who directly or indirectly controls, is controlled by or is under common control with the Company, or (iv) anyone who can significantly influence the financial and operating decisions of the Company. A transaction is considered to be a related party transaction when there is a transfer of resources or obligations between related parties. |
New Accounting Pronouncements | New Accounting Pronouncements In March 2016, the FASB issued ASU No. 2016-09, Compensation-Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting. Under ASU No. 2016-09, companies will no longer record excess tax benefits and certain tax deficiencies in additional paid-in capital (“APIC”). Instead, they will record all excess tax benefits and tax deficiencies as income tax expense or benefit in the income statement and the APIC pools will be eliminated. In addition, ASU No. 2016-09 eliminates the requirement that excess tax benefits be realized before companies can recognize them. ASU No. 2016-09 also requires companies to present excess tax benefits as an operating activity on the statement of cash flows rather than as a financing activity. Furthermore, ASU No. 2016-09 will increase the amount an employer can withhold to cover income taxes on awards and still qualify for the exception to liability classification for shares used to satisfy the employer’s statutory income tax withholding obligation. An employer with a statutory income tax withholding obligation will now be allowed to withhold shares with a fair value up to the amount of taxes owed using the maximum statutory tax rate in the employee’s applicable jurisdiction(s). ASU No. 2016-09 requires a Company to classify the cash paid to a tax authority when shares are withheld to satisfy its statutory income tax withholding obligation as a financing activity on the statement of cash flows. Under current U.S. GAAP, it was not specified how these cash flows should be classified. In addition, companies will now have to elect whether to account for forfeitures on share-based payments by (1) recognizing forfeitures of awards as they occur or (2) estimating the number of awards expected to be forfeited and adjusting the estimate when it is likely to change, as is currently required. The amendments of this ASU are effective for reporting periods beginning after January 1, 2016, with early adoption permitted but all of the guidance must be adopted in the same period. The Company adopted this on January 1, 2016. The Company has evaluated the impact of ASU No. 2016-09 and has determined that the adoption of the impact of forfeitures, net of income taxes, will not have a material impact on the Company’s future financial statements. In August 2016, the FASB issued ASU No. 2016-15 which addresses how certain cash receipts and cash payments are presented and classified in the statement of cash flows with the objective of reducing existing differences in the presentation of these items. The amendments in ASU No. 2016-15 are to be adopted retrospectively and will become effective in the first quarter of fiscal 2019. The Company is evaluating the impact of adopting this standard on its consolidated statement of cash flows. We do not expect the adoption of this standard to have a material effect on our consolidated financial statements and related disclosures. In November 2016, the FASB issued ASU No. 2016-18 which require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. As a result, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amendments do not provide a definition of restricted cash or restricted cash equivalents. The guidance is effective for annual reporting periods beginning after December 15, 2017, and interim periods within those fiscal years. The amendments should be applied using a retrospective transition method to each period presented. The Company is evaluating the impact of adopting this standard on its statement of cash flows. In February 2017, the FASB has issued ASU No. 2017-05, Other Income – Gains and Losses from the Derecognition of Nonfinancial Assets (Subtopic 610-20) This is effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations. |
3. SIGNIFICANT ACCOUNTING POL22
3. SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Accounting Policies [Abstract] | |
Liabilities measured at fair value | Fair Value Measurement at Fair Value Measurement at December 31, 2017 December 31, 2016 Using Using Level 3 Total Level 3 Total Liabilities: Derivative liabilities $ 273,170 $ 273,170 $ 779,796 $ 779,796 |
5. DERIVATIVE LIABILITIES (Tabl
5. DERIVATIVE LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative liabilities | Balance, December 31, 2015 $ 1,153,491 Fair value of warrants issued in private placements reclassified from equity 169,700 Fair value of warrants issued in private placements recognized as derivative expense 59,064 Change in fair value of derivative liabilities (643,944 ) Foreign exchange effect on derivative liability 41,485 Balance, December 31, 2016 779,796 Fair value of expired warrant (140 ) Change in fair value of derivative liabilities (542,834 ) Foreign exchange effect on derivative liability 36,348 Balance, December 31, 2017 $ 273,170 |
Assumptions used for derivatives | 2017 2016 2015 Volatility 383.07% 254.90% 202.10% Expected life .2 to 4 years .2 to 7 years 1 to 8 years Risk-free interest rate 1.73% - 1.9% 0.74% - 1.4% .048 % to 1.36% Dividend yield 0.00% 0.00% 0.00% |
9. SHARE CAPITAL (Tables)
9. SHARE CAPITAL (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Equity [Abstract] | |
Warrant activity | Number of Weighted Warrants Weighted Outstanding December 31, 2015 3,865,797 $ 2.00 3,509,697 $ 2.00 Issued 668,166 $ 0.40 – – Canceled / exercised – – – – Expired – – – – Outstanding December 31, 2016 4,533,963 $ 1.70 3,865,797 $ 2.00 Issued – Canceled / exercised – Expired 166,666 Outstanding December 31, 2017 4,367,297 $ 1.75 4,367,297 $ 1.75 |
Warrants outstanding | Warrants Outstanding Range of Exercise Price Number of Weighted Remaining $0.20 - $22.50 4,367,297 $ 1.75 .5 – 4.75 |
10. EARNINGS PER SHARE (Tables)
10. EARNINGS PER SHARE (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | For the years ended December 31, 2017 2016 2015 Net income (loss) $ 279,961 $ (7,332,474 ) $ 2,753,593 Less: Non-cash income from changes in fair value of derivative liabilities – – (133,395 ) Net loss - diluted $ 279,961 $ (7,332,474 ) $ 2,620,198 Weighted average common shares outstanding - basic 14,880,909 13,035,203 9,115,416 Common stock options – – 4,444 Common stock warrants - liability treatment – – 41,666 Weighted average common shares outstanding - diluted 15,310,909 13,035,203 9,161,527 Net income per share data: Basic $ 0.02 $ (0.56 ) $ 0.30 Diluted 0.02 $ (0.56 ) $ 0.30 |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | For the years ended December 31, 2017 2016 2015 Common stock options – – 347,000 Common stock warrants - liability treatment 4,367,297 4,533,963 3,740,797 Potentially dilutive securities 4,367,297 4,533,963 4,087,797 |
11. STOCK OPTION PLANS (Tables)
11. STOCK OPTION PLANS (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock Option Activity | Number of Weighted Weighted Aggregate Balance, December 31, 2014 477,000 2.90 0.00 Option granted – – Options cancelled (110,000 ) 2.50 Options exercised – – Balance, December 31, 2015 367,000 3.00 0.00 Option granted – – Options cancelled (20,000 ) 2.90 Options exercised – – Balance December 31, 2016 347,000 1.20 2.60 0.00 Option granted 430,000 .50 Options cancelled (40,000 ) Options exercised Balance December 31, 2017 737,000 0.85 7.75 0.00 Exercisable at December 31, 2017 677,000 0.88 7.91 0.00 |
Outstanding and exercisable common stock options | Options Outstanding and Exercisable Range of Exercise Price Number of Weighted Remaining $0.13 – 1.40 737,000 $ 0.85 7.75 |
12. INCOME TAXES (Tables)
12. INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Deferred tax assets | 2017 2016 2015 Loss carryforwards $ 763,000 $ 661,000 $ 627,200 Capital losses 5,000 5,000 5,000 Office equipment 12,500 12,500 12,500 Oil & Gas properties 2,871,000 2,222,000 1,691,000 Asset retirement obligation 89,900 83,300 76,700 Deferred tax asset 3,741,400 2,983,800 2,412,400 Less valuation allowance (3,741,400 ) (2,983,800 ) (2,412,400 ) Deferred tax asset recognized $ – $ – $ – |
Effective income tax rate schedule | 2017 2016 2015 Statutory federal income tax rate -25% -25% -25% Change in valuation allowance 20% 19% -24% %Non-deductible stock-based compensation 0% 0% -1% Non%-deductible change in fair value of derivative liability -64% -117% 107% Non-deductible accretion expense 15% 1% 4% Effect of foreign exchange 54% 122% -61% Effect of change in income tax rate 0% 0% 0% 0% 0% 0% |
1. NATURE OF BUSINESS AND OPE28
1. NATURE OF BUSINESS AND OPERATIONS (Details Narrative) | Dec. 31, 2017haLeases |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of Leases | Leases | 56 |
Land Area (in hectares) | ha | 58,368 |
2. ABILITY TO CONTINUE AS A G29
2. ABILITY TO CONTINUE AS A GOING CONCERN (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Notes to Financial Statements | |||
Net income | $ 279,961 | $ (7,332,474) | $ 2,753,593 |
Cash flows from operations | (14,429) | (18,024) | $ (214,127) |
Accumulated deficit | (23,245,776) | $ (23,525,737) | |
Funding requirements during the next twelve months | $ 525,000 |
3. SIGNIFICANT ACCOUNTING POL30
3. SIGNIFICANT ACCOUNTING POLICIES (Details - Fair value derivative liabilities) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Derivative liability | $ 273,170 | $ 779,796 | $ 1,153,491 |
Level 3 [Member] | |||
Derivative liability | $ 273,170 | $ 779,796 |
3. SIGNIFICANT ACCOUNTING POL31
3. SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Impairment of oil & gas properties | $ 164,566 | $ 7,831,570 | $ 0 |
Cash equivalent balances | 0 | 0 | 0 |
Allowance for doubtful accounts | $ 0 | $ 0 | $ 0 |
Antidilutive stock | 4,367,297 | 4,533,963 | 4,087,797 |
Common Stock Options [Member] | |||
Antidilutive stock | 0 | 0 | 347,000 |
Warrants | |||
Antidilutive stock | 4,367,297 | 4,533,963 | 3,740,797 |
4. NOTES RECEIVABLE, RELATED 32
4. NOTES RECEIVABLE, RELATED PARTIES (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Notes Receivable Related Parties | |||
Interest income | $ 0 | $ 1,153 | $ 8,015 |
5. DERIVATIVE LIABILITIES (Deta
5. DERIVATIVE LIABILITIES (Details - Fair value) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Derivative liability, beginning balance | $ 779,796 | $ 1,153,491 |
Fair value of warrants issued in private placements reclassified from equity | 0 | 169,700 |
Fair value of expired warrant | (140) | |
Fair value of warrants issued in private placements recognized as derivative expense | 59,064 | |
Change in fair value of derivative liability | (542,834) | (643,944) |
Foreign exchange effect on derivative liability | 36,348 | 41,485 |
Derivative liability, ending balance | $ 273,170 | $ 779,796 |
5. DERIVATIVE LIABILITIES (De34
5. DERIVATIVE LIABILITIES (Details - Assumptions) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Volatility | 383.07% | 254.90% | 202.10% |
Dividend yield | 0.00% | 0.00% | 0.00% |
Minimum [Member] | |||
Expected life | 2 months 2 days | 2 months 2 days | 1 year |
Risk-free interest rate | 1.73% | 0.74% | 0.048% |
Maximum [Member] | |||
Expected life | 4 years | 7 years | 8 years |
Risk-free interest rate | 1.90% | 1.40% | 1.36% |
6. OIL AND GAS PROPERTY INTER35
6. OIL AND GAS PROPERTY INTERESTS (Details Narrative) | 12 Months Ended | |||
Dec. 31, 2017USD ($)haLeases | Dec. 31, 2017CAD ($) | Dec. 31, 2016USD ($)shares | Dec. 31, 2015USD ($) | |
Number of Leases | Leases | 56 | |||
Land Area (in hectares) | ha | 58,368 | |||
Impairment of oil and gas property | $ 164,566 | $ 7,831,570 | $ 0 | |
Oil and gas property | 0 | 6,237,026 | 7,423,966 | |
Stock issued for acquisition, value | 0 | 867,443 | 0 | |
Proceeds from sale of well | $ 42,502 | $ 0 | $ 0 | |
Canada, Dollars | ||||
Proceeds from sale of well | $ 55,000 | |||
Peace River [Member] | ||||
Number of Leases | Leases | 45 | |||
Land Area (in hectares) | ha | 39,680 | |||
Oil and gas property | $ 1,138,823 | |||
Stock issued for acquisition, shares | shares | 3,997,431 | |||
Consideration transferred | $ 271,380 | |||
Stock issued for acquisition, value | $ 867,443 |
7. ASSET RETIREMENT OBLIGATIO36
7. ASSET RETIREMENT OBLIGATIONS (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Asset Retirement Obligation Disclosure [Abstract] | |||
Asset retirement obligations | $ 163,020 | $ 138,728 | |
Accretion expense | $ 13,970 | $ 6,566 | $ 13,622 |
8. RELATED PARTY TRANSACTIONS (
8. RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Proceeds from sale of stock | $ 176,052 | $ 147,000 | $ 219,990 |
Notes payable to related parties | 6,963 | 7,718 | |
Interest expense, related parties | 282 | 264 | 0 |
Proceeds from related parties | 13,835 | ||
Consulting Fees | 6,172 | 128,630 | |
Stock issued for services, value | 83,060 | ||
Mr. Newton [Member] | |||
Capitalized oil and gas exploration costs and an accrued liability | 75,240 | ||
Stock Issued During Period, Value, Restricted Stock | 75,240 | ||
Consulting Fees | 16,001 | ||
Mr. Michael Ranger [Member] | |||
Capitalized oil and gas exploration costs and an accrued liability | 12,662 | 0 | |
Stock issued for services, value | 7,448 | ||
Private Placement [Member] | |||
Proceeds from sale of stock | $ 176,052 | $ 138,000 | $ 219,990 |
Stock issued new, shares | 1,380,260 | 623,167 | 23,110 |
9. SHARE CAPITAL (Details - War
9. SHARE CAPITAL (Details - Warrants activity) - Warrants [Member] - $ / shares | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Warrants outstanding, beginning balance | 4,533,963 | 3,865,797 | |
Warrants issued | 0 | 668,166 | |
Warrants canceled / exercised | 0 | 0 | |
Warrants expired | 166,666 | 0 | |
Warrants outstanding, ending balance | 4,367,297 | 4,533,963 | |
Weighted Average Exercise Price | |||
Weighted Average Exercise Price Outstanding beginning | $ 1.70 | $ 2 | |
Warrants issued | 0.40 | ||
Warrants canceled / exercised | |||
Warrants expired | |||
Weighted Average Exercise Price Outstanding, ending | $ 1.75 | $ 1.70 | |
Warrants Exercisable | |||
Warrants Exercisable outstanding | 4,367,297 | 3,865,797 | 3,509,697 |
Weighted Average Exercise Price outstanding | $ 1.75 | $ 2 | $ 2 |
9. SHARE CAPITAL (Details - W39
9. SHARE CAPITAL (Details - Warrant outstanding) - $ / shares | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Price $0.20 - $22.50 | |||
Warrants Outstanding | 4,367,297 | ||
Weighted Average Exercise Price | $ 1.75 | ||
Remaining Contractual Life | .5 - 4.75 years | ||
Warrants [Member] | |||
Warrants Outstanding | 4,367,297 | 4,533,963 | 3,865,797 |
9. SHARE CAPITAL (Details Narra
9. SHARE CAPITAL (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Common stock shares outstanding | 15,853,719 | 14,215,016 | |
Proceeds from warrants exercised | $ 0 | ||
Reclassification of warrant derivative liability due to warrant exercise | 0 | $ 169,700 | |
Proceeds from sale of stock | 176,052 | 147,000 | $ 219,990 |
Subscription payable | $ 0 | $ 0 | $ 21,514 |
Reverse stock split | 1-for-10 reverse stock split | ||
Directors [Member] | |||
Stock issued for services, shares | 258,208 | ||
Private Placement [Member] | |||
Stock issued new, shares | 1,380,260 | 623,167 | 23,110 |
Proceeds from sale of stock | $ 176,052 | $ 138,000 | $ 219,990 |
Subscription payable | $ 21,514 | ||
Private Placement [Member] | President [Member] | |||
Stock issued new, shares | 45,000 | ||
Proceeds from sale of stock | $ 9,000 | ||
Two Private Placements [Member] | |||
Stock issued new, shares | 380,000 | ||
Proceeds from sale of stock | $ 76,000 | ||
Private Placements [Member] | |||
Stock issued new, shares | 880,260 | ||
Proceeds from sale of stock | $ 126,052 | ||
Warrant Exercises [Mayo] | |||
Warrants exercised, shares issued | 62,650 | ||
Proceeds from warrants issued | $ 69,600 | ||
Reclassification of warrant derivative liability due to warrant exercise | $ 110,049 |
10. EARNINGS PER SHARE (Details
10. EARNINGS PER SHARE (Details- Basic and diluted net income per share) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Earnings Per Share [Abstract] | |||
Net income (loss) | $ 279,961 | $ (7,332,474) | $ 2,753,593 |
Less: Non cash income from changes in fair value of derivative liabilities | 0 | 0 | (133,395) |
Net loss - diluted | $ 279,961 | $ (7,332,474) | $ 2,620,198 |
Weighted average common shares outstanding - basic | 14,880,909 | 13,035,203 | 9,115,416 |
Common stock options | $ 0 | $ 0 | $ 4,444 |
Common stock warrants - liability treatment | $ 0 | $ 0 | $ 41,666 |
Weighted average common shares outstanding - diluted | 15,310,909 | 13,035,203 | 9,161,527 |
Net income per share data: | |||
Basic | $ .02 | $ (0.56) | $ 0.30 |
Diluted | $ .02 | $ (0.56) | $ 0.30 |
10. EARNINGS PER SHARE (Detai42
10. EARNINGS PER SHARE (Details - q) - shares | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 4,367,297 | 4,533,963 | 4,087,797 |
Common Stock Options [Member] | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 0 | 0 | 347,000 |
Warrants | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 4,367,297 | 4,533,963 | 3,740,797 |
11. STOCK OPTION PLANS (Details
11. STOCK OPTION PLANS (Details - Option activity) - Stock Options [Member] - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Options Outstanding | |||
Options Outstanding | 347,000 | 367,000 | 477,000 |
Options granted | 430,000 | 0 | 0 |
Options cancelled | (40,000) | (20,000) | (110,000) |
Options exercised | 0 | 0 | 0 |
Options Outstanding | 737,000 | 347,000 | 367,000 |
Options exercisable | 677,000 | ||
Weighted Average Exercise Price | |||
Weighted Average Exercise Price Outstanding, beginning | $ 1.20 | $ 3 | $ 2.90 |
Option granted | .50 | ||
Option cancelled | 2.90 | 2.50 | |
Options exercised | |||
Weighted Average Exercise Price Outstanding, ending | 0.85 | $ 1.20 | $ 3 |
Weighted Average Exercise Price Exercisable | $ 0.88 | ||
Weighted Average Remaining Contractual Life (Years) | |||
Options Outstanding | 7 years 9 months | 2 years 7 months 6 days | |
Options exercisable | 7 years 10 months 28 days | ||
Aggregate Intrinsic Value | |||
Options Outstanding | $ 0 | $ 0 | $ 0 |
Options exercisable | $ 0 | $ 0 | $ 0 |
11. STOCK OPTION PLANS (Detai44
11. STOCK OPTION PLANS (Details - Options by exercise price) - Price $0.13- $1.40 [Member] | 12 Months Ended |
Dec. 31, 2017$ / sharesshares | |
Number of Options Outstanding | 737,000 |
Number of Options Exercisable | 737,000 |
Weighted Average Exercise Price | $ / shares | $ 0.85 |
Remaining Contractual Life (yrs) | 7 years 9 months |
11. STOCK OPTION PLANS (Detai45
11. STOCK OPTION PLANS (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Unrecognized compensation cost | $ 0 | $ 0 |
Individual [Member] | ||
Options granted | 90,000 | |
Vesting period | 2 years | |
Option expiration date | Nov. 12, 2027 | |
Four Individuals [Member] | ||
Options granted | 340,000 | |
Option expiration date | Nov. 12, 2027 | |
Options vested | 340,000 | |
2016 Plan [Member] | ||
Shares authorized under plan | 1,200,000 |
12. INCOME TAXES (Details - Def
12. INCOME TAXES (Details - Deferred tax assets) - USD ($) | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Income Tax Disclosure [Abstract] | |||
Loss carry-forwards | $ 763,000 | $ 661,000 | $ 627,200 |
Capital losses | 5,000 | 5,000 | 5,000 |
Office equipment | 12,500 | 12,500 | 12,500 |
Oil and gas properties | 2,871,000 | 2,222,000 | 1,691,000 |
Asset retirement obligation | 89,900 | 83,300 | 76,700 |
Deferred tax asset | 3,741,400 | 2,983,800 | 2,412,400 |
Less: valuation allowance | (3,741,400) | (2,983,800) | (2,412,400) |
Deferred tax asset recognized | $ 0 | $ 0 | $ 0 |
12. INCOME TAXES (Details - Inc
12. INCOME TAXES (Details - Income tax rate) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |||
Statutory federal income tax rate | (25.00%) | (25.00%) | (25.00%) |
Change in valuation allowance | 20.00% | 19.00% | (24.00%) |
Non-deductible stock-based compensation | 0.00% | 0.00% | (1.00%) |
Non-deductible change in fair value of derivative Liability | (64.00%) | (117.00%) | 107.00% |
Non-deductible accretion expense | 15.00% | 1.00% | 4.00% |
Effect of foreign exchange | 54.00% | 122.00% | (61.00%) |
Effect of change in income tax rate | 0.00% | 0.00% | 0.00% |
Total | 0.00% | 0.00% | 0.00% |
12. INCOME TAXES (Details Narra
12. INCOME TAXES (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Changes in valuation allowance | $ 757,600 | $ 571,400 | $ (758,000) |
Canada Revenue Agency [Member] | |||
Operating loss carry-forwards | $ 2,700,000 | ||
Operating loss carry-forwards beginning expiration year | Dec. 31, 2014 | ||
Canadian oil and gas dedication pools | $ 8,900,000 |