| Summary of Significant Accounting Policies | Note 2 – Summary of Significant
Accounting Policies Principles of Consolidation The accompanying consolidated financial
statements include the accounts of T-Rex Oil, Inc. and its wholly owned subsidiaries. All intercompany balances have been eliminated
during consolidation. The Company owns a 14.29% interest in T-Rex
Oil, LLC #3, a Colorado limited liability company (LLC #3”) and the remaining 85.71% economic interest is held by a former
director and shareholder of the Company. The Company has identified LLC #3 as a variable interest entity (VIE). The Company holds
current rights that gives it the power to direct the activities of the VIE which most significantly impact the VIE’s economic
performance including provisions that give the Company the right to receive potentially significant benefits. As member manager
of LLC #3, the Company continuously evaluates whether it has a controlling interest in LLC#3. Therefore, the Company has included
LLC #3 as a wholly owned subsidiary eliminating all intercompany balances during consolidation. Use of Estimates in the Preparation
of Consolidated Financial Statements The preparation of consolidated
financial statements in conformity with generally accepted accounting principles in the United States requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities
at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting periods.
Actual results could differ from those estimates. Significant estimates include the fair value of assets and liabilities, oil and
natural gas reserves, income taxes and the valuation allowances related to deferred tax assets, asset retirement obligations and
contingencies. Cash and Cash Equivalents The Company considers all liquid
investments purchased with an initial maturity of three months or less to be cash equivalents. Cash and cash equivalents include
demand deposits and money market funds carried at cost which approximates fair value. The Company maintains its cash in institutions
insured by the Federal Deposit Insurance Corporation (“FDIC”), although such deposits are in excess of the insurance
coverage. At March 31, 2016, the Company had $111,641 of cash deposits in excess of FDIC insured limits. Concentration of Credit Risk
The Company’s producing properties
are primarily located in Wyoming and the oil and gas production is sold to various purchasers based on market index prices. The
risk of non-payment by these purchasers is considered minimal and the Company does not generally obtain collateral for sales. The
Company continually monitors the credit standing of the primary purchasers. During the year ended March 31, 2017 and 2016, two
purchasers accounted for all of the total revenues. Oil and Gas Producing Activities The Company uses the successful
efforts method of accounting for oil and gas activities. Under this method, the costs of productive exploratory wells, all development
wells, related asset retirement obligation assets, and productive leases are capitalized and amortized, principally by field, on
a units-of-production basis over the life of the remaining proved reserves. Exploration costs, including personnel costs, geological
and geophysical expenses, and delay rentals for oil and gas leases are charged to expense as incurred. Exploratory drilling costs
are initially capitalized, but charged to expense if and when the well is determined not to have found reserves in commercial quantities.
The sale of a partial interest in a proved property is accounted for as a cost recovery, and no gain or loss is recognized as long
as this treatment does not significantly affect the units-of-production amortization rate. A gain or loss is recognized for all
other sales of producing properties. There were capitalized costs of $11,679,817 and $11,368,626 at March 31, 2017 and 2016, respectively. Unproved oil and gas properties
are assessed annually to determine whether they have been impaired by the drilling of dry holes on or near the related acreage
or other circumstances, which may indicate a decline in value. When impairment occurs, a loss is recognized. When leases for unproved
properties expire, the costs thereof, net of any related allowance for impairment, is removed from the accounts and charged to
expense. During the years ended March 31, 2017 and 2016, there was impairment to unproved properties in the amount of $18,715 and
$3,096,931, respectively. The sale of a partial interest in an unproved property is accounted for as a recovery of cost when substantial
uncertainty exists as to the ultimate recovery of the cost applicable to the interest retained. A gain on the sale is recognized
to the extent that the sales price exceeds the carrying amount of the unproved property. A gain or loss is recognized for all other
sales of unproved properties. There were capitalized costs of $4,758,798 and $4,745,917 at March 31, 2017 and 2016, respectively. Costs associated with development
wells that are unevaluated or are waiting on access to transportation or processing facilities are reclassified into developmental
wells-in-progress ("WIP"). These costs are not put into a depletable field basis until the wells are fully evaluated
or access is gained to transportation and processing facilities. Costs associated with WIP are included in the cash flows from
investing as part of investment in oil and gas properties. At March 31, 2017 and 2016, no capitalized developmental costs were
included in WIP. Depreciation, depletion and amortization
of proved oil and gas properties is calculated using the units-of-production method based on proved reserves and estimated salvage
values. For the years ended March 31, 2017 and 2016, the Company recorded depreciation, depletion and amortization expense on oil
and gas properties in the amount of $134,726 and $3,359,966, respectively. The Company reviews its proved
oil and natural gas properties for impairment whenever events and circumstances indicate that a decline in the recoverability of
its carrying value may have occurred. It estimates the undiscounted future net cash flows of its oil and natural gas properties
and compares such undiscounted future cash flows to the carrying amount of the oil and natural gas properties to determine if the
carrying amount is recoverable. If the carrying amount exceeds the estimated undiscounted future cash flows, the Company will adjust
the carrying amount of the oil and natural gas properties to fair value. For the years ended March 31, 2017 and 2016, there was
impairment to proved properties of $289,233 and $4,807,536, respectively. Other Property and Equipment Other property and equipment, such
as computer hardware and software, are recorded at cost. Costs of renewals and improvements that substantially extend the useful
lives of the assets are capitalized. Maintenance and repair costs are expensed when incurred. When other property and equipment
is sold or retired, the capitalized costs and related accumulated depreciation are removed from their respective accounts. Depreciation
expense of other property and equipment for the years ended March 31, 2017 and 2016 was $51,395 and $42,591, respectively. Asset Retirement Obligations The Company records estimated future
asset retirement obligations ("ARO") related to its oil and gas properties. The Company records the estimated fair value
of a liability for ARO in the period in which it is incurred with a corresponding increase in the carrying amount of the related
long-lived asset. The increased carrying value is depleted using the units-of-production method, and the discounted liability is
increased through accretion over the remaining life of the respective oil and gas properties. The estimated liability is based
on historical industry experience in abandoning wells, including estimated economic lives, external estimates as to the cost to
abandon the wells in the future, and federal and state regulatory requirements. The Company's liability is discounted using management's
best estimate of its credit-adjusted, risk-free rate. Revisions to the liability could occur due to changes in estimated abandonment
costs, changes in well economic lives, or if federal or state regulators enact new requirements regarding the abandonment of wells.
Year Ended March 31,
2017 2016
ARO - beginning of period $ 1,197,143 $ 459,294
Additions 133,311 721,860
Deletions — (15,190 )
Accretion expense 89,793 31,179
1,420,247 1,197,143
Less current portion 183,731 176,587
ARO - end of period $ 1,236,516 $ 1,020,556 Impairment of Long-Lived Assets In accordance with authoritative
guidance on accounting for the impairment or disposal of long-lived assets, as set forth in Topic 360 of the ASC, the Company assesses
the recoverability of the carrying value of its non-oil and gas long-lived assets when events occur that indicate an impairment
in value may exist. An impairment loss is indicated if the sum of the expected undiscounted future net cash flows is less than
the carrying amount of the assets. If this occurs, an impairment loss is recognized for the amount by which the carrying amount
of the assets exceeds the estimated fair value of the assets. Revenue Recognition The Company recognizes oil revenues
when production is sold to the purchaser, delivery occurs and title is transferred and recognizes natural gas revenues when the
title and risk of loss pass to the purchaser. The Company records its share of revenues based on its net revenue interest. The
Company sells the majority of its products soon after production at various locations, including the wellhead. Other Comprehensive Loss The Company has no material components
of other comprehensive loss and accordingly, net loss is equal to comprehensive loss for the period. Income Taxes The Company uses the liability method
of accounting for income taxes under which deferred tax assets and liabilities are recognized for the future tax consequences of
temporary differences between the accounting bases and the tax bases of the Company’s assets and liabilities. The deferred
tax assets and liabilities are computed using enacted tax rates in effect for the year in which the temporary differences are expected
to reverse. The Company's deferred income taxes include
certain future tax benefits. The Company records a valuation allowance against any portion of those deferred income tax assets
when it believes, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred
income tax asset will not be realized. The Company has adopted ASC guidance
regarding accounting for uncertainty in income taxes. This guidance clarifies the accounting for income taxes by prescribing the
minimum recognition threshold an income tax position is required to meet before being recognized in the consolidated financial
statements and applies to all income tax positions. Each income tax position is assessed using a two-step process. A determination
is first made as to whether it is more likely than not that the income tax position will be sustained, based upon technical merits,
upon examination by the taxing authorities. If the income tax position is expected to meet the more likely than not criteria, the
benefit recorded in the consolidated financial statements equals the largest amount that is greater than 50% likely to be realized
upon its ultimate settlement. At March 31, 2017 and 2016, there were no uncertain tax positions that required accrual. Net Loss per Share Basic net loss per common share
of stock is calculated by dividing net loss available to common stockholders by the weighted-average number of common shares outstanding
during each period. Diluted net loss per common share
is calculated by dividing net loss by the weighted-average number of common shares outstanding, including the effect of other dilutive
securities. The Company’s potentially dilutive securities consist of in-the-money outstanding options and warrants to purchase
the Company’s common stock. Diluted net loss per common share does not give effect to dilutive securities as their effect
would be anti-dilutive. The treasury stock method is used
to measure the dilutive impact of stock options and warrants. The following table details the weighted-average dilutive and anti-dilutive
securities related to stock options and warrants for the periods presented:
Year Ended March 31,
2017 2016
Dilutive - -
Anti Dilutive 3,840,024 2,494,571 Equity Based Payments The Company recognizes compensation
cost for equity based awards based on estimated fair value of the award and records capitalized cost or compensation expense over
the requisite service period. See Note 9 – Equity Based Payments. Major Customers During the year ended March 31,
2017 and 2016, two purchasers accounted for all of the Company’s revenues. Beneficial Conversion Feature and Deemed Dividend
Related to Series A Shares Pursuant to ASC 470-20, when the
$558,171 of convertible Series A Shares of preferred stock were issued at a discount from the if-converted $682,989 fair value
as of the issuance date, the Company recognized this difference between the fair value per share of its common stock and the conversion
price, multiplied by the number of shares issuable upon conversion. This total Beneficial Conversion Feature of $124,818 will be
recorded as additional paid-in-capital for common shares. The offsetting amount was amortizable over the period from the issue
date to the first conversion date or 9 months. Therefore, since the 409,019 Series A Shares of preferred stock are convertible
between July and December of 2016, a deemed dividend of $56,988 and $67,830 to the Series A Shares of preferred stock was recorded
during the years ended March 31, 2017 and 2016, respectively. As the Company is in an accumulated deficit position, the deemed
dividends were charged against additional paid-in-capital for common shares as there being no retained earnings from which to declare
a dividend. Off-Balance Sheet Arrangements As part of its ongoing business,
the Company has not participated in transactions that generate relationships with unconsolidated entities or financial partnerships,
such as entities often referred to as structured finance or special purpose entities (SPEs), which would have been established
for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. From its incorporation
on February 11, 2014 through March 31, 2017, the Company has not been involved in any unconsolidated SPE transactions. Recent Accounting Pronouncements In November 2015, the FASB issued
ASU No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes In February 2016, the FASB issued
ASU No. 2016-02, Leases (Topic 842). In February 2016, the FASB issued ASU No. 2016-02,
Leases (Topic 842). In March 2016, the FASB issued ASU No.
2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting In August 2016, the FASB issued ASU No. 2016-15,
Statement of Cash Flows (Topic 230) There were other accounting standards
and interpretations issued during the year ended March 31, 2017, none of which are expected to have a material impact on the Company’s
financial position, operations or cash flows. Subsequent Events The Company evaluates events and
transactions after the balance sheet date but before the financial statements are issued. |
