Document and Entity Information
Document and Entity Information - shares | 12 Months Ended | |
Dec. 31, 2020 | Mar. 31, 2021 | |
Cover [Abstract] | ||
Entity Registrant Name | Strata Power Corp | |
Entity Central Index Key | 0001227282 | |
Document Type | 20-F | |
Document Period End Date | Dec. 31, 2020 | |
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 | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 20,085,119 | |
Document Fiscal Period Focus | FY | |
Document Fiscal Year Focus | 2020 | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Interactive Data Current | Yes | |
Entity Incorporation State Country Code | A0 | |
Entity File Number | 000-500934 |
BALANCE SHEETS
BALANCE SHEETS - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 |
Current | ||
Cash | $ 21,717 | $ 4,557 |
GST receivables | 2,348 | 2,282 |
Prepaid expenses | 0 | 461 |
Total current assets | 24,065 | 7,300 |
Reclamation deposits | 99,916 | 96,838 |
PetroSteam License | 59,828 | 59,828 |
Total assets | 183,809 | 163,966 |
Current liabilities | ||
Accounts payable and accrued liabilities | 101,367 | 57,409 |
Accounts payable and accrued liabilities - related party | 21,958 | 21,458 |
Notes payable | 8,537 | 8,105 |
Derivative liability | 24,336 | 48,055 |
Total current liabilities | 156,198 | 135,027 |
Deferred revenue - royalty agreement (Note 8) | 300,000 | 300,000 |
Asset retirement obligation | 197,904 | 180,535 |
Total long-term liabilities | 497,904 | 480,535 |
Total liabilities | 654,102 | 615,562 |
Commitments and Contingencies | ||
Stockholders' equity (deficit) | ||
Preferred stock: no par value, unlimited shares authorized and none issued | 0 | 0 |
Common stock: no par value, unlimited shares authorized; 20,085,119 shares issued and outstanding at December 31, 2020 and 2019 | 0 | 0 |
Additional paid-in capital | 23,404,083 | 23,404,083 |
Common shares to be issued | 5,000 | 0 |
Accumulated deficit | (23,474,066) | (23,451,107) |
Accumulated other comprehensive income | (405,310) | (404,572) |
Total stockholders' equity (deficit) | (470,293) | (451,596) |
Total liabilities and Stockholders' equity (deficit) | $ 183,809 | $ 163,966 |
BALANCE SHEETS (Parenthetical)
BALANCE SHEETS (Parenthetical) - $ / shares | Dec. 31, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Preferred stock, no par value | $ 0 | $ 0 |
Common stock, no par value | $ 0 | $ 0 |
Common stock shares issued | 20,085,119 | 20,085,119 |
Common stock shares outstanding | 20,085,119 | 20,085,119 |
STATEMENTS OF OPERATIONS AND CO
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Operating Expenses: | |||
Professional fees | $ 15,378 | $ 28,889 | $ 46,373 |
Office and sundry | 1,604 | 14,497 | 12,590 |
Consulting fees | 0 | 26,395 | 18,816 |
Transfer agent fees | 2,263 | 2,125 | 1,075 |
Accretion expense | 12,669 | 13,951 | 9,381 |
Oil & gas properties expense | 38,069 | 180,481 | 137,329 |
Total operating expenses | 69,983 | 266,338 | 225,564 |
Other income (expense): | |||
Interest income | 952 | 2,005 | 1,510 |
Miscellaneous income | 0 | 0 | 12,620 |
Interest expense | (240) | (339) | (315) |
Gain on disposal of properties | 29,437 | 44,569 | 0 |
Foreign exchange gain (loss) | (7,812) | (7,964) | 18,660 |
Change in fair value of derivative liability | 24,687 | 8,724 | 207,101 |
Total other income (expense) | 47,024 | 46,995 | 239,576 |
Net income (loss) | (22,959) | (219,343) | 14,012 |
Other comprehensive income (loss) | |||
Foreign currency translation adjustment | (738) | (1,560) | 2,801 |
Comprehensive income (loss) | $ (23,697) | $ (220,903) | $ 16,813 |
Basis and diluted earnings (loss) per share (Note 3) | |||
Basic income (loss) per common share | $ 0 | $ (0.01) | $ 0 |
Diluted income (loss) per common share | $ 0 | $ (0.01) | $ 0 |
Basic weighted average number of shares outstanding | 20,085,119 | 19,322,927 | 16,891,966 |
Diluted weighted average number of shares outstanding | 20,085,119 | 19,322,927 | 16,891,966 |
STATEMENTS OF CHANGES IN STOCKH
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) (Unaudited) - USD ($) | Common Stock Shares | Additional Paid-In Capital | Common Shares To Be Issued | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) | Total |
Beginning balance, shares at Dec. 31, 2017 | 15,853,719 | |||||
Beginning balance, value at Dec. 31, 2017 | $ 23,232,255 | $ (23,245,776) | $ (405,813) | $ (419,334) | ||
Private placement, common stock issuance for cash, shares | 1,000,000 | |||||
Private placement, common stock issuance for cash | 100,000 | 100,000 | ||||
Stock options exercised, shares | 240,000 | |||||
Stock options exercised, value | 12,000 | 12,000 | ||||
Net income/loss and comprehensive loss | 14,012 | 2,801 | 16,813 | |||
Ending balance, shares at Dec. 31, 2018 | 17,093,719 | |||||
Ending balance, value at Dec. 31, 2018 | 23,344,255 | (23,231,764) | (403,012) | (290,521) | ||
Private placement, common stock issuance for license agreement, shares | 2,991,400 | |||||
Private placement, common stock issuance for license agreement, value | 59,828 | 59,828 | ||||
Net income/loss and comprehensive loss | (219,343) | (1,560) | (220,903) | |||
Ending balance, shares at Dec. 31, 2019 | 20,085,119 | |||||
Ending balance, value at Dec. 31, 2019 | 23,404,083 | (23,451,107) | (404,572) | (451,596) | ||
Common shares to be issued from exercise of options and warrants | 5,000 | 5,000 | ||||
Net income/loss and comprehensive loss | (22,959) | (738) | (23,697) | |||
Ending balance, shares at Dec. 31, 2020 | 20,085,119 | |||||
Ending balance, value at Dec. 31, 2020 | $ 23,404,083 | $ 5,000 | $ (23,474,066) | $ (405,813) | $ (470,293) |
STATEMENTS OF CASH FLOWS
STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Cash flows from operating activities | |||
Net income (loss) | $ (22,959) | $ (219,343) | $ 14,012 |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||
Stock based compensation for consulting fees | 0 | 0 | 9,000 |
Accrued interest | 229 | 334 | 315 |
Accretion expense | 12,669 | 13,951 | 9,381 |
Change in fair value of derivative liability | (24,687) | (8,724) | (207,101) |
Gain on disposal of oil and gas properties | (29,437) | (44,569) | 0 |
Impairment of oil and gas properties | 0 | 180,481 | 137,329 |
Change in assets and liabilities | |||
GST receivable | (66) | (1,387) | 51 |
Prepaid expenses | 461 | (461) | 0 |
Accounts payable and accrued liabilities | 43,956 | 14,846 | (34,388) |
Accrued liabilities - related party | (27) | 0 | 9,823 |
Deferred revenue - royalty agreement | 0 | 190,000 | 110,000 |
Net cash provided by (used in) operating activities | (19,861) | 125,128 | 48,422 |
Cash flows from investing activities | |||
Reclamation deposits | (882) | (2,005) | (1,665) |
Acquisition of oil and gas interests | 0 | (180,481) | (137,329) |
Proceeds from the sale of the property | 29,437 | 44,569 | 0 |
Net cash provided by (used in) operating activities | 28,555 | (137,917) | (138,994) |
Cash flows from financing activities | |||
Proceeds from exercise of options and warrants | 5,000 | 0 | 0 |
Proceeds from the issuance of common stock | 0 | 0 | 100,000 |
Net cash provided by financing activities | 5,000 | 0 | 100,000 |
Foreign exchange effect on cash | 3,466 | 5,452 | (16,125) |
Net increase (decrease) in cash | 17,160 | (7,337) | (6,697) |
Cash, beginning balance | 4,557 | 11,894 | 18,591 |
Cash, ending balance | 21,717 | 4,557 | 11,894 |
Supplemental disclosure of cash paid for: | |||
Interest | 0 | 0 | 0 |
Income taxes | 0 | 0 | 0 |
Non-cash investing and financing activities | |||
Common stock issued in exchange for license agreement | 0 | 59,828 | 0 |
Issuance of common stock in lieu of accrued liability | $ 0 | $ 0 | $ 3,000 |
1. NATURE OF BUSINESS
1. NATURE OF BUSINESS | 12 Months Ended |
Dec. 31, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
NATURE OF BUSINESS AND OPERATIONS | NOTE 1. NATURE OF BUSINESS Strata Power Corporation (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. On December 27, 2018, the Company filed a Certificate of Amendment with Corporations Canada changing its name from Strata Oil & Gas Inc. to Strata Power Corporation. As of December 31, 2020, the Company has a 50% interest in 7 oil sands leases, totaling 8,704 hectares, all located in the Peace River oil sands area. In addition, the Company has a royalty interest in 10 oil sands leases and owns 3 non-producing wells. The Company also has a Metallic and Industrial Minerals Permit in Alberta, totaling 9,800 hectares. |
2. ABILITY TO CONTINUE AS A GOI
2. ABILITY TO CONTINUE AS A GOING CONCERN | 12 Months Ended |
Dec. 31, 2020 | |
Risks and Uncertainties [Abstract] | |
ABILITY TO CONTINUE AS A GOING CONCERN | NOTE 2. 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, 2020, the Company incurred a net loss of $41,233, primarily due to expenses related to the oil and gas properties, had cash flows used in operations of $19,861 and is expected to incur negative operating cash flows in the foreseeable future. The Company has an accumulated deficit of $23,474,066 at December 31, 2020. 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 $115,000 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 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, 2020 | |
Accounting Policies [Abstract] | |
SIGNIFICANT ACCOUNTING POLICIES | NOTE 3. 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”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate so as to make the information presented not misleading. Risks and Uncertainties The Company is subject to additional risks and uncertainties due to the COVID-19 pandemic. The extent of the impact on the Company’s business is uncertain and difficult to predict, as the response to the pandemic varies by jurisdiction and medical treatments are still uncertain. The Company considered the impact of COVID-19 on the assumptions and estimates used and determined that there has been no material impact on the Company’s year-to-date results of operations. The Company cannot reasonably estimate with any degree of certainty the future impact COVID-19 may have on the Company’s results of operations, financial position and liquidity. Reclassification Certain amounts related to the prior year financial presentation have been reclassified to conform with the presentation as of December 31, 2020. 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. Management believes that all applicable estimates and adjustments are appropriate. Actual results could differ significantly from those estimates. Oil and Gas Property Payments and Exploration Costs All costs incurred in the acquisition, exploration and development of natural gas and oil interests are expensed as incurred. When it has been determined that the natural gas and oil properties can be economically developed as a result of proven and probable reserves, the costs incurred to acquire and develop such property will be capitalized. Such costs will be amortized using the units-of-production method over the estimated life of the probable reserve. No costs have been capitalized through December 31, 2020. 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, 2020 or 2019. 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, 2020 and 2019. Impairment of Long-lived Assets In accordance with ASC 360, Property, Plant and Equipment, Intangible Assets The Company has acquired an exclusive right to patented and proprietary technologies, which is recorded as an intangible asset on the balance sheet (see Note 4). Once the Company commences the use of these technologies, the intangible asset will be amortized on a straight-line basis over the remaining life of the underlying patent. The Company evaluates the recoverability of the intangible asset whenever events or changes in circumstances indicate that the intangible asset’s carrying amount may not be recoverable. During the years ended December 31, 2020 and 2019, the Company did not record an impairment loss. 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 and results of operations have been translated at historical rates. 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 reclassified 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 Based Compensation In accordance with ASC 718, “Compensation – Stock Compensation” (“ASC 718”), which was adopted as of January 1, 2019, 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 number of shares remaining after the proceeds are exhausted represents the potentially dilutive effect of the securities. For the years ended December 31, 2020 and 2019, all of the outstanding options and warrants had an exercise price above the average stock price for year-end period. Accordingly, all of the potentially dilutive shares were excluded from the computation of diluted shares outstanding as they would have had an anti-dilutive impact on the Company’s income (loss) from continuing operations. 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. Hierarchy disclosures are evaluated at 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, 2020 December 31, 2019 Using Using Level 3 Total Level 3 Total Derivative liabilities $ 24,366 $ 24,366 $ 48,055 $ 48,055 Asset Retirement Obligation (see Note 7) 197,904 197,904 180,535 180,535 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) an entity or person who directly or indirectly controls, is controlled by or is under common control and/or management 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 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. PETROSTEAM LICENSE
4. PETROSTEAM LICENSE | 12 Months Ended |
Dec. 31, 2020 | |
Warrants exercised | |
PETROSTEAM LICENSE | NOTE 4. PETROSTEAM LICENSE On March 20, 2019, the Company entered into an exclusive license agreement with PetroSteam LLC to obtain an exclusive right to deploy patented and field-tested proprietary technologies utilizing steam generation applied to bitumen and heavy oil recovery in the Provinces of Alberta and Saskatchewan. In exchange, the Company has issued 2,991,400 restricted common shares. In addition, the Company has agreed, subject to certain qualifications and milestones being met, to purchase steam generation equipment from PetroSteam totaling $12,500,000 to be used on its bitumen/heavy-oil projects. |
5. DERIVATIVE LIABILITIES
5. DERIVATIVE LIABILITIES | 12 Months Ended |
Dec. 31, 2020 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE LIABILITIES | NOTE 5. 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, 2018 $ 54,626 Fair value of expired warrant (210 ) Change in fair value of derivative liabilities (8,513 ) Foreign exchange effect on derivative liability 2,152 Balance, December 31, 2019 48,055 Exercise of warrants (1,487 ) Fair value of expired warrant (16 ) Change in fair value of derivative liabilities (23,155 ) Foreign exchange effect on derivative liability 969 Balance, December 31, 2020 $ 24,366 The fair value of the derivative liabilities has been determined using the Black-Scholes option pricing model using the following range of assumptions: 2020 2019 2018 Volatility 411.10% 425.91% 557.60% Expected life 0.33 to 3.12 years 0.18 to 4.38 years 0.04 to 3 years Risk-free interest rate 0.20% - 0.67% 1.37% - 1.58% 1.86% - 1.96% Dividend yield 0.00% 0.00% 0.00% |
6. OIL AND GAS PROPERTIES
6. OIL AND GAS PROPERTIES | 12 Months Ended |
Dec. 31, 2020 | |
Oil and Gas Exploration and Production Industries Disclosures [Abstract] | |
OIL AND GAS PROPERTIES | NOTE 6. OIL AND GAS PROPERTIES During the period June 2006 through January 2007, the Company acquired the rights to multiple oil sands 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 oil sands leases by entering into two purchase and sale agreements. The oil sands 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. On May 14, 2019, the Company sold the shallower oil sands rights on two of its oil sands lease blocks in the Cadotte East area to an unrelated third party, but has retained the deeper oil sands rights, including the Debolt-Elkton formations. The Company has also retained a 2.5% overriding royalty on all petroleum substances produced from the shallower oil sands rights on those two lease blocks. The Company will continue to pay annual lease fees on those two oil sands lease blocks, but at a rate of 50%, and the unrelated third party will pay the other 50%. On three of its oil sands lease blocks in the Reno area, the Company has sold 100% of its interest to an unrelated third party and has retained a 2.5% overriding royalty on all petroleum substances produced from those oil sands lease blocks. On those three oil sands lease blocks, the unrelated third party will take over 100% of the annual lease fees. In connection with these sales, the Company recorded a gain of $44,569. On June 11, 2020, the Company sold the shallower oil sands rights on five of its oil sands leases in the Cadotte Central area to an unrelated third party, but has retained the deeper oil sands rights, including the Debolt-Elkton formations. The Company has also retained a 2.5% overriding royalty on all petroleum substances produced from those oil sands lease blocks. The Company will continue to pay annual lease fees on those two oil sands lease blocks, but at a rate of 50%, and the unrelated third party will pay the other 50%. In connection with this sale, the Company recorded a gain of $29,437. Throughout 2020, the Company has chosen to not renew their remaining oil sands leases due to weak conditions in the Alberta heavy oil sector. 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 oil sands leases including a prefeasibility study and has developed an oil sands exploration program. The Company intends to move forward on the program and projects when adequate funding is available. |
7. ASSET RETIREMENT OBLIGATIONS
7. ASSET RETIREMENT OBLIGATIONS | 12 Months Ended |
Dec. 31, 2020 | |
Asset Retirement Obligation Disclosure [Abstract] | |
ASSET RETIREMENT OBLIGATIONS | NOTE 7. 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 $197,904 at December 31, 2020, based on an undiscounted total future liability of $225,229 (CDN$293,000). These payments are expected to be incurred between 2021 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 $12,669, $13,951 and $9,381 for the years ended December 31, 2020, 2019 and 2018, respectively, has been recorded in the Statements of Operations and Comprehensive Income (Loss). However, the Company is currently in the process of carrying out abandonment and remediation of its wells through the federally funded Site Rehabilitation Program. As a result, the actual Asset Retirement Obligation costs on these wells could be substantially lower than its current value but the actual amount cannot be reasonably estimated at this time. |
8. RELATED PARTY TRANSACTIONS
8. RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2020 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 8. RELATED PARTY TRANSACTIONS Related party transactions not disclosed elsewhere in these financial statements include: Deferred Revenue - Royalty Agreement The Company has negotiated a royalty agreement with a related party by common CEO and director. In exchange for a non-refundable payment of $300,000, the Company intends to provide a royalty stream to this related party based on the gross production of Vanadium Oxide (“Vanadium”) from the company’s the oil sands leases. For each barrel of bitumen produced from the specified oil sands until March 21, 2039, or upon termination of mining, whichever is earlier, the Company will pay a royalty equal to 25 grams of Vanadium per barrel of bitumen produced, multiplied by the price of Vanadium Pentoxide 98% min in-warehouse Rotterdam published on the last business day of the month in which the gross production of bitumen occurred. The $300,000 is recorded as deferred revenue and will be recognized at such time as the Company begins to produce Vanadium. Notes payable to related party In December 2015, the Company borrowed $6,553 ($9,000 Canadian) under a note agreement 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 note 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, 2020, the effective interest rate on these notes payable was 3.45%. The balance of note payable, including interest, to related parties at December 31, 2020 and 2019 was $8,537 and $8,105, respectively. The Company recognized interest expense of $240, $339 and $315 for the years ended December 31, 2020, 2019 and 2018, respectively, in its Statements of Operations and Comprehensive Income (Loss). 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 recognized consulting expenses of $0, $25,856 and $0 for the years ended December 31, 2020, 2019 and 2018, respectively. Dr. Michael Ranger is a member of the Board of Directors of the Company. Dr. Ranger does not receive compensation for his services as a member of the board; however, he has a service agreement with the Company, including consulting time and expense reimbursement. Pursuant to this agreement, the Company recognized consulting expenses of $0, $0 and $9,346 for the years ended December 31, 2020, 2019 and 2018, respectively. |
9. SHARE CAPITAL
9. SHARE CAPITAL | 12 Months Ended |
Dec. 31, 2020 | |
Equity [Abstract] | |
SHARE CAPITAL | NOTE 9. 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, 2020, the Company had 20,085,119 shares of common stock outstanding and an additional 91,000 shares of common stock to be issued in connection with the exercise of warrants and options. On March 20, 2019, the Company entered into an exclusive license agreement to obtain an exclusive right to deploy patented and field-tested proprietary technologies utilizing steam generation applied to bitumen and heavy oil recovery in the Provinces of Alberta and Saskatchewan. In exchange, the Company has issued 2,991,400 restricted common shares at a value of $0.02 per share, for a total value of $59,828. For the year ended December 31, 2018, the Company received proceeds of $100,000 from private placements totaling 1,000,000 common shares issued to a related party by common director. The following table summarizes warrant activity during the years ended December 31, 2020, 2019 and 2018. Number of Weighted Warrants Weighted Outstanding December 31, 2017 4,367,297 $ 1.75 4,367,297 $ 1.75 Issued – Canceled / exercised – Expired (1,235,741 ) $ 1.54 Outstanding December 31, 2018 3,131,556 $ 1.84 3,131,556 $ 1.84 Issued – Canceled / exercised – Expired (300,218 ) $ 1.54 Outstanding December 31, 2019 2,831,338 $ 1.87 2,831,338 $ 1.87 Issued – Canceled / exercised (81,000 ) $ 0.56 Expired (231,100 ) $ 1.54 Outstanding December 31, 2020 2,519,238 $ 1.73 2,519,238 $ 1.73 The following tables summarizes outstanding warrants as of December 31, 2020: Warrants Outstanding Range of Exercise Price Number of Weighted Remaining $0.20 - $22.50 2,519,238 $1.73 0.08 – 3.12 |
10. STOCK OPTION PLANS
10. STOCK OPTION PLANS | 12 Months Ended |
Dec. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
STOCK OPTION PLANS | NOTE 10. STOCK OPTION PLANS Approval of the 2016 Stock Option 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 12,000,000 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, 2020, there were 11,810,000 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 who is a director of the Company. The options vest over two years, have a price of $0.05 and expire between June 16, 2022 and June 16, 2024. On November 12, 2017, the Company granted stock options to purchase up to 340,000 shares of common stock to four individuals, of which 320,000 were to directors of the Company. The options vested upon issuance, have a price of $0.05 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, 2017 737,000 $ 0.85 7.75 0.00 Option granted – $ – Options cancelled (50,000 ) $ 1.40 Options exercised (240,000 ) 0.05 Balance December 31, 2018 447,000 $ 0.79 6.68 0.00 Option granted – – Options cancelled – $ – Options exercised – $ – Balance December 31, 2019 447,000 $ 0.79 5.68 0.00 Option granted – – Options cancelled – $ – Options exercised (10,000 ) $ 0.05 Balance December 31, 2020 437,000 $ 0.81 3.80 0.00 Exercisable at December 31, 2020 437,000 $ 0.81 3.80 0.00 The exercise price for outstanding and exercisable common stock options under the 2006 and 2016 Plans at December 31, 2020 range from $0.05 to $1.40 per share. As of December 31, 2020, 2019 and 2018, there was no unrecognized compensation cost related to all options granted and outstanding. |
11. INCOME TAXES
11. INCOME TAXES | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 11. INCOME TAXES The tax effects of temporary differences that give rise to the Company’s deferred tax assets are as follows: 2020 2019 2018 Loss carryforwards $ 791,000 $ 782,300 $ 766,600 Capital losses – – 5,000 Office equipment – – 12,500 Oil & Gas properties 1,857,700 1,817,700 1,733,500 Asset retirement obligation 134,800 117,800 99,300 Deferred tax asset 2,783,500 2,717,800 2,616,900 Less valuation allowance (2,783,500 ) (2,717,800 ) (2,616,900 ) Deferred tax asset recognized $ – $ – $ – Upon continuation to Canada in 2004, all losses carried forward at that time expired. As of December 31, 2020, the Company had a net Canadian operating loss carryforwards of approximately $3.2 million available to offset future taxable income. The carry-forwards began expiring in 2014 and unless utilized will continue to expire. The Company also has approximately $7.4 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, 2020, 2019 and 2018, changes in valuation allowance were $65,700, $100,900, and ($138,500), 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: 2020 2019 2018 Statutory federal income tax rate -25% -25% -25% Change in valuation allowance 2% 4% -6% Non-deductible change in fair value of derivative liability -6% -3% -45% Non-deductible accretion expense 13% 4% 2% Effect of foreign exchange 16% 20% 74% 0% 0% 0% The Company has evaluated its tax positions for the years ended December 31, 2020, 2019 and 2018 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. Interest and penalties are accrued on uncertain tax positions as a component of the provision for income taxes. There was no amount of interest and penalties recognized as an expense during 2020, 2019 and 2018. The Company’s income tax returns are generally considered closed to examination when a notice of determination is filed with the taxing authority. No such notice has been filed to date. The most recent tax return filed by the Company is for the year ended December 31, 2017. |
12. COMMITMENTS AND CONTINGENCI
12. COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 12. 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. |
13. SUBSEQUENT EVENTS
13. SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2020 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 13. 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. |
3. SIGNIFICANT ACCOUNTING POL_2
3. SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2020 | |
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”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate so as to make the information presented not misleading. |
Risks and Uncertainties | Risks and Uncertainties The Company is subject to additional risks and uncertainties due to the COVID-19 pandemic. The extent of the impact on the Company’s business is uncertain and difficult to predict, as the response to the pandemic varies by jurisdiction and medical treatments are still uncertain. The Company considered the impact of COVID-19 on the assumptions and estimates used and determined that there has been no material impact on the Company’s year-to-date results of operations. The Company cannot reasonably estimate with any degree of certainty the future impact COVID-19 may have on the Company’s results of operations, financial position and liquidity. |
Reclassification | Reclassification Certain amounts related to the prior year financial presentation have been reclassified to conform with the presentation as of December 31, 2020. |
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. Management believes that all applicable estimates and adjustments are appropriate. Actual results could differ significantly from those estimates. |
Oil and Gas Property Payments and Exploration Costs | Oil and Gas Property Payments and Exploration Costs All costs incurred in the acquisition, exploration and development of natural gas and oil interests are expensed as incurred. When it has been determined that the natural gas and oil properties can be economically developed as a result of proven and probable reserves, the costs incurred to acquire and develop such property will be capitalized. Such costs will be amortized using the units-of-production method over the estimated life of the probable reserve. No costs have been capitalized through December 31, 2020. |
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, 2020 or 2019. |
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, 2020 and 2019. |
Impairment of Long-lived Assets | Impairment of Long-lived Assets In accordance with ASC 360, Property, Plant and Equipment, |
Intangible Assets | Intangible Assets The Company has acquired an exclusive right to patented and proprietary technologies, which is recorded as an intangible asset on the balance sheet (see Note 4). Once the Company commences the use of these technologies, the intangible asset will be amortized on a straight-line basis over the remaining life of the underlying patent. The Company evaluates the recoverability of the intangible asset whenever events or changes in circumstances indicate that the intangible asset’s carrying amount may not be recoverable. During the years ended December 31, 2020 and 2019, the Company did not record an impairment loss. |
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 and results of operations have been translated at historical rates. 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 reclassified 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 Based Compensation | Stock Based Compensation In accordance with ASC 718, “Compensation – Stock Compensation” (“ASC 718”), which was adopted as of January 1, 2019, 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 number of shares remaining after the proceeds are exhausted represents the potentially dilutive effect of the securities. For the years ended December 31, 2020 and 2019, all of the outstanding options and warrants had an exercise price above the average stock price for year-end period. Accordingly, all of the potentially dilutive shares were excluded from the computation of diluted shares outstanding as they would have had an anti-dilutive impact on the Company’s income (loss) from continuing operations. |
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. Hierarchy disclosures are evaluated at 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, 2020 December 31, 2019 Using Using Level 3 Total Level 3 Total Derivative liabilities $ 24,366 $ 24,366 $ 48,055 $ 48,055 Asset Retirement Obligation (see Note 7) 197,904 197,904 180,535 180,535 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) an entity or person who directly or indirectly controls, is controlled by or is under common control and/or management 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 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 POL_3
3. SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Liabilities measured at fair value | Liabilities measured at fair value are summarized as follows as of: Fair Value Measurement at Fair Value Measurement at December 31, 2020 December 31, 2019 Using Using Level 3 Total Level 3 Total Derivative liabilities $ 24,366 $ 24,366 $ 48,055 $ 48,055 Asset Retirement Obligation (see Note 7) 197,904 197,904 180,535 180,535 |
5. DERIVATIVE LIABILITIES (Tabl
5. DERIVATIVE LIABILITIES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
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, 2018 $ 54,626 Fair value of expired warrant (210 ) Change in fair value of derivative liabilities (8,513 ) Foreign exchange effect on derivative liability 2,152 Balance, December 31, 2019 48,055 Exercise of warrants (1,487 ) Fair value of expired warrant (16 ) Change in fair value of derivative liabilities (23,155 ) Foreign exchange effect on derivative liability 969 Balance, December 31, 2020 $ 24,366 |
Assumptions used for derivatives | The fair value of the derivative liabilities has been determined using the Black-Scholes option pricing model using the following range of assumptions: 2020 2019 2018 Volatility 411.10% 425.91% 557.60% Expected life 0.33 to 3.12 years 0.18 to 4.38 years 0.04 to 3 years Risk-free interest rate 0.20% - 0.67% 1.37% - 1.58% 1.86% - 1.96% Dividend yield 0.00% 0.00% 0.00% |
9. SHARE CAPITAL (Tables)
9. SHARE CAPITAL (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Equity [Abstract] | |
Warrant activity | The following table summarizes warrant activity during the years ended December 31, 2020, 2019 and 2018. Number of Weighted Warrants Weighted Outstanding December 31, 2017 4,367,297 $ 1.75 4,367,297 $ 1.75 Issued – Canceled / exercised – Expired (1,235,741 ) $ 1.54 Outstanding December 31, 2018 3,131,556 $ 1.84 3,131,556 $ 1.84 Issued – Canceled / exercised – Expired (300,218 ) $ 1.54 Outstanding December 31, 2019 2,831,338 $ 1.87 2,831,338 $ 1.87 Issued – Canceled / exercised (81,000 ) $ 0.56 Expired (231,100 ) $ 1.54 Outstanding December 31, 2020 2,519,238 $ 1.73 2,519,238 $ 1.73 |
Warrants outstanding | The following tables summarizes outstanding warrants as of December 31, 2020: Warrants Outstanding Range of Exercise Price Number of Weighted Remaining $0.20 - $22.50 2,519,238 $1.73 0.08 – 3.12 |
10. STOCK OPTION PLANS (Tables)
10. STOCK OPTION PLANS (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock Option Activity | Activity under the 2016 and 2006 Plan is summarized as follows: Number of Weighted Weighted Aggregate Balance December 31, 2017 737,000 $ 0.85 7.75 0.00 Option granted – $ – Options cancelled (50,000 ) $ 1.40 Options exercised (240,000 ) 0.05 Balance December 31, 2018 447,000 $ 0.79 6.68 0.00 Option granted – – Options cancelled – $ – Options exercised – $ – Balance December 31, 2019 447,000 $ 0.79 5.68 0.00 Option granted – – Options cancelled – $ – Options exercised (10,000 ) $ 0.05 Balance December 31, 2020 437,000 $ 0.81 3.80 0.00 Exercisable at December 31, 2020 437,000 $ 0.81 3.80 0.00 |
11. INCOME TAXES (Tables)
11. INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Income Tax Disclosure [Abstract] | |
Deferred tax assets | The tax effects of temporary differences that give rise to the Company’s deferred tax assets are as follows: 2020 2019 2018 Loss carryforwards $ 791,000 $ 782,300 $ 766,600 Capital losses – – 5,000 Office equipment – – 12,500 Oil & Gas properties 1,857,700 1,817,700 1,733,500 Asset retirement obligation 134,800 117,800 99,300 Deferred tax asset 2,783,500 2,717,800 2,616,900 Less valuation allowance (2,783,500 ) (2,717,800 ) (2,616,900 ) Deferred tax asset recognized $ – $ – $ – |
Effective income tax rate schedule | 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: 2020 2019 2018 Statutory federal income tax rate -25% -25% -25% Change in valuation allowance 2% 4% -6% Non-deductible change in fair value of derivative liability -6% -3% -45% Non-deductible accretion expense 13% 4% 2% Effect of foreign exchange 16% 20% 74% 0% 0% 0% |
1. NATURE OF BUSINESS (Details
1. NATURE OF BUSINESS (Details Narrative) | Dec. 31, 2020haLeases |
Alberta permits [Member] | |
Number of wells | 3 |
Land Area (in hectares) | ha | 9,800 |
Number of leases | 10 |
Peace River [Member] | |
Land Area (in hectares) | ha | 8,704 |
Ownership percentage | 50.00% |
Total oil sands leases owned | 7 |
2. ABILITY TO CONTINUE AS A G_2
2. ABILITY TO CONTINUE AS A GOING CONCERN (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Notes to Financial Statements | |||
Net loss | $ (22,959) | $ (219,343) | $ 14,012 |
Cash flows from operations | (19,861) | 125,128 | $ 48,422 |
Accumulated deficit | (23,474,066) | $ (23,451,107) | |
Funding requirements during the next twelve months | $ 115,000 |
3. SIGNIFICANT ACCOUNTING POL_4
3. SIGNIFICANT ACCOUNTING POLICIES (Details - Fair value derivative liabilities) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Derivative liability | $ 24,366 | $ 48,055 | $ 54,626 |
Asset Retirement Obligation | 197,904 | 180,535 | |
Level 3 [Member] | |||
Derivative liability | 24,366 | 48,055 | |
Asset Retirement Obligation | $ 197,904 | $ 180,535 |
3. SIGNIFICANT ACCOUNTING POL_5
3. SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Accounting Policies [Abstract] | ||
Cash equivalent balances | $ 0 | $ 0 |
Allowance for doubtful accounts | 0 | 0 |
Impairment loss on intangible assets | $ 0 | $ 0 |
4. PETROSTEAM LICENSE (Details
4. PETROSTEAM LICENSE (Details Narrative) - Petrosteam - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2020 | |
Stock issued for patent license, shares | 2,991,400 | |
Contractual obligation | $ 12,500,000 |
5. DERIVATIVE LIABILITIES (Deta
5. DERIVATIVE LIABILITIES (Details - Fair value) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||
Derivative liability, beginning balance | $ 48,055 | $ 54,626 |
Change in derivative due to exercise of warrants | (1,487) | |
Fair value of expired warrant | (16) | (210) |
Change in fair value of derivative liability | (23,155) | (8,513) |
Foreign exchange effect on derivative liability | 969 | 2,152 |
Derivative liability, ending balance | $ 24,366 | $ 48,055 |
5. DERIVATIVE LIABILITIES (De_2
5. DERIVATIVE LIABILITIES (Details - Assumptions) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Measurement Input Price Volatility [Member] | |||
Fair value assumptions for derviative liabilities | 411.10% | 425.91% | 557.60% |
Measurement Input Expected Term [Member] | |||
Fair value assumptions for derviative liabilities | 0.33 to 3.12 years | 0.18 to 4.38 years | 0.04 to 3 years |
Measurement Input Risk Free Interest Rate [Member] | |||
Fair value assumptions for derviative liabilities | 0.20% - 0.67% | 1.37% - 1.58% | 1.86% - 1.96% |
Measurement Input Expected Dividend Rate [Member] | |||
Fair value assumptions for derviative liabilities | 0.00% | 0.00% | 0.00% |
6. OIL AND GAS PROPERTY INTERES
6. OIL AND GAS PROPERTY INTERESTS (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Oil and Gas Exploration and Production Industries Disclosures [Abstract] | ||
Gain on sale of oil and gas property | $ 29,437 | $ 44,569 |
7. ASSET RETIREMENT OBLIGATIO_2
7. ASSET RETIREMENT OBLIGATIONS (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Asset Retirement Obligation Disclosure [Abstract] | |||
Asset retirement obligations | $ 197,904 | $ 180,535 | |
Undiscounted future liability | 225,229 | ||
Accretion expense | $ 12,669 | $ 13,951 | $ 9,381 |
8. RELATED PARTY TRANSACTIONS (
8. RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Notes payable to related parties | $ 8,537 | $ 8,105 | ||
Interest expense, related parties | 240 | 339 | $ 315 | |
Consulting Fees | 0 | 26,395 | 18,816 | |
Mr. Newton [Member] | ||||
Consulting Fees | 0 | 25,856 | 0 | |
Mr. Michael Ranger [Member] | ||||
Consulting Fees | 0 | $ 0 | $ 9,346 | |
Vanadium [Member] | ||||
Deferred revenue | $ 300,000 | |||
Notes Payable To Related Party [Member] | ||||
Proceeds from note payable | $ 6,553 | |||
Interest rate | 3.45% |
9. SHARE CAPITAL (Details - War
9. SHARE CAPITAL (Details - Warrants activity) - Warrants [Member] - $ / shares | 12 Months Ended | |||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Warrants outstanding, beginning balance | 2,831,338 | 3,131,556 | 4,367,297 | |
Warrants issued | 0 | 0 | 0 | |
Warrants canceled / exercised | (81,000) | 0 | 0 | |
Warrants expired | (231,100) | (300,218) | (1,235,741) | |
Warrants outstanding, ending balance | 2,519,238 | 2,831,338 | 3,131,556 | |
Weighted Average Exercise Price | ||||
Weighted Average Exercise Price Outstanding beginning | $ 1.87 | $ 1.84 | $ 1.75 | |
Warrants canceled / exercised | 0.56 | |||
Warrants expired | 1.54 | 1.54 | 1.54 | |
Weighted Average Exercise Price Outstanding, ending | $ 1.73 | $ 1.87 | $ 1.84 | |
Warrants Exercisable | ||||
Warrants Exercisable outstanding | 2,519,238 | 2,831,338 | 3,131,556 | 4,367,297 |
Weighted Average Exercise Price outstanding | $ 1.73 | $ 1.87 | $ 1.84 | $ 1.75 |
9. SHARE CAPITAL (Details - W_2
9. SHARE CAPITAL (Details - Warrant outstanding) - $ / shares | 12 Months Ended | |||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Warrants [Member] | ||||
Warrants Outstanding | 2,519,238 | 2,831,338 | 3,131,556 | 4,367,297 |
Price $0.20 - $22.50 | ||||
Weighted Average Exercise Price | $ 1.73 | |||
Remaining Contractual Life | 0.08 – 3.12 years |
9. SHARE CAPITAL (Details Narra
9. SHARE CAPITAL (Details Narrative) - USD ($) | 3 Months Ended | 12 Months Ended | ||
Mar. 20, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Common stock shares outstanding | 20,085,119 | 20,085,119 | ||
Additional shares of common stock | 91,000 | |||
Proceeds from the sale of stock | $ 0 | $ 0 | $ 100,000 | |
License Agreement [Member] | ||||
Stock issued for license agreement, shares | 2,991,400 | |||
Stock issued for license agreement, value | $ 59,828 | |||
Private Placement [Member] | ||||
Proceeds from the sale of stock | $ 100,000 | |||
Stock issued new, shares | 1,000,000 |
10. STOCK OPTION PLANS (Details
10. STOCK OPTION PLANS (Details - Option activity) - Stock Options [Member] - USD ($) | 12 Months Ended | |||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Options Outstanding | ||||
Options Outstanding | 447,000 | 447,000 | 737,000 | 347,000 |
Options granted | 0 | 0 | 0 | |
Options cancelled | 0 | 0 | (50,000) | |
Options exercised | (10,000) | 0 | (240,000) | |
Options Outstanding | 437,000 | 447,000 | 447,000 | 737,000 |
Options exercisable | 437,000 | |||
Weighted Average Exercise Price | ||||
Weighted Average Exercise Price Outstanding, beginning | $ 0.79 | $ 0.79 | $ 0.85 | $ 1.20 |
Option granted | ||||
Option cancelled | 1.4 | |||
Options exercised | 0.05 | 0.05 | ||
Weighted Average Exercise Price Outstanding, ending | 0.81 | $ 0.79 | $ 0.79 | $ 0.85 |
Weighted Average Exercise Price Exercisable | $ 0.81 | |||
Weighted Average Remaining Contractual Life (Years) | ||||
Options Outstanding | 3 years 9 months 18 days | 5 years 8 months 5 days | 6 years 8 months 5 days | 7 years 9 months |
Options exercisable | 3 years 9 months 18 days | |||
Aggregate Intrinsic Value | ||||
Options Outstanding | $ 0 | $ 0 | $ 0 | $ 0 |
Options exercisable | $ 0 |
10. STOCK OPTION PLANS (Detai_2
10. STOCK OPTION PLANS (Details Narrative) - USD ($) | 6 Months Ended | 10 Months Ended | |||
Jun. 16, 2017 | Nov. 12, 2017 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Unrecognized compensation cost | $ 0 | $ 0 | $ 0 | ||
Individual [Member] | |||||
Options granted | 90,000 | ||||
Vesting period | 2 years | ||||
Individual [Member] | Minimum [Member] | |||||
Option expiration date | Jun. 16, 2022 | ||||
Individual [Member] | Maximum [Member] | |||||
Option expiration date | Jun. 16, 2024 | ||||
Four Individuals [Member] | |||||
Options granted | 340,000 | ||||
Option expiration date | Nov. 12, 2027 | ||||
Four Individuals [Member] | Directors [Member] | |||||
Options granted | 320,000 | ||||
2016 Plan [Member] | |||||
Shares authorized under plan | 12,000,000 | ||||
Shares available for grant | 11,810,000 |
11. INCOME TAXES (Details - Def
11. INCOME TAXES (Details - Deferred tax assets) - USD ($) | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 |
Income Tax Disclosure [Abstract] | |||
Loss carry-forwards | $ 791,000 | $ 782,300 | $ 766,600 |
Capital losses | 0 | 0 | 5,000 |
Office equipment | 0 | 0 | 12,500 |
Oil and gas properties | 1,857,700 | 1,817,700 | 1,733,500 |
Asset retirement obligation | 134,800 | 117,800 | 99,300 |
Deferred tax asset | 2,783,500 | 2,717,800 | 2,616,900 |
Less: valuation allowance | (2,783,500) | (2,717,800) | (2,616,900) |
Deferred tax asset recognized | $ 0 | $ 0 | $ 0 |
11. INCOME TAXES (Details - Inc
11. INCOME TAXES (Details - Income tax rate) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |||
Statutory federal income tax rate | (25.00%) | (25.00%) | (25.00%) |
Change in valuation allowance | 2.00% | 4.00% | (6.00%) |
Non-deductible change in fair value of derivative Liability | (6.00%) | (3.00%) | (45.00%) |
Non-deductible accretion expense | 13.00% | 4.00% | 2.00% |
Effect of foreign exchange | 16.00% | 20.00% | 74.00% |
Total | 0.00% | 0.00% | 0.00% |
11. INCOME TAXES (Details Narra
11. INCOME TAXES (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Changes in valuation allowance | $ 65,700 | $ 100,900 | $ (138,500) |
Canada Revenue Agency [Member] | |||
Operating loss carry-forwards | $ 3,200,000 | ||
Operating loss carry-forwards beginning expiration year | Dec. 31, 2014 | ||
Canadian oil and gas dedication pools | $ 7,400,000 |