Discovery Energy (DENR) 10-Q 17 Oct 13 2013 Q2 Quarterly report Financial data

Document_and_Entity_Informatio

Document and Entity Information	6 Months Ended
	Aug. 31, 2013	Oct. 16, 2013
Document and Entity Information [Abstract]
Entity Registrant Name	Discovery Energy Corp.
Document Type	10-Q
Amendment Flag	FALSE
Document Period End Date	31-Aug-13
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q2
Trading Symbol	denr
Entity Central Index Key	1435387
Current Fiscal Year End Date	-26
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		138,295,500

Balance_Sheets_Unaudited

Balance Sheets (Unaudited) (USD $)	Aug. 31, 2013	Feb. 28, 2013
Current Assets
Cash	$5,903	$430,007
Prepaid expenses	5,253	26,041
Total Current Assets	11,156	456,048
Oil and gas property - unproved (successful efforts method)	2,421,415	2,421,415
Total Assets	2,432,571	2,877,463
Liabilities and Stockholders' Equity
Accounts payable and accrued liabilities	39,404	22,144
Accounts payable- related party	60,000	104,601
Other liabilities	24,282	7,212
Promissory notes	525,000	650,000
Total Current Liabilities	648,686	783,957
Stockholders' Equity
Preferred Stock- 10,000,000 shares authorized, zero issued and outstanding	0	0
Common Stock - 500,000,000 shares authorized, $0.001 par value - 138,295,500 shares issued and outstanding as of August 31, 2013 and February 28, 2013	138,296	138,296
Additional paid in capital	3,288,383	3,288,383
Accumulated other comprehensive income (loss)	2,806	0
Deficit accumulated during the exploration stage	-1,645,600	-1,333,173
Total Stockholders' Equity	1,783,885	2,093,506
Total Liabilities and Stockholders' Equity	$2,432,571	$2,877,463

Balance_Sheets_Parenthetical_U

Balance Sheets (Parenthetical) (Unaudited) (USD $)	Aug. 31, 2013	Feb. 28, 2013
Balance Sheets [Abstract]
Preferred Stock, shares authorized (in Shares)	10,000,000	10,000,000
Preferred Stock, issued (in Shares)	0	0
Preferred Stock, outstanding (in Shares)	0	0
Common Stock, shares authorized (in Shares)	500,000,000	500,000,000
Common Stock, par value (in Dollars per Share)	$0.00	$0.00
Common Stock, shares issued (in Shares)	138,295,500	138,295,500
Common Stock, shares outstanding ( in Shares)	138,295,500	138,295,500

Statements_of_Expenses_and_Oth

Statements of Expenses and Other Comprehensive Income (Loss) (Unaudited) (USD $)	3 Months Ended		6 Months Ended		87 Months Ended
	Aug. 31, 2013	Aug. 31, 2012	Aug. 31, 2013	Aug. 31, 2012	Aug. 31, 2013
Expenses
General and administrative	$22,711	$10,232	$47,618	$32,470	$198,057
Exploration costs	39,950	123,080	75,114	170,592	432,363
Professional fees	36,748	69,931	105,167	133,723	693,801
Rent	2,735	1,104	5,898	3,170	15,296
Travel	22,664	980	70,088	4,143	289,316
Total expenses	124,808	205,327	303,885	344,098	1,628,833
Other Income
Gain on debt for settlement of accounts payable	0	0	0	0	-17,980
Interest expense	4,316	0	8,870	0	28,347
Miscellaneous income	-119	-6,730	-160	-7,973	11
Foreign exchange loss (gain)	-35	250	-168	250	6,389
Other (income) expenses	4,162	-6,480	8,542	-7,723	16,767
Net loss	-128,970	-198,847	-312,427	-336,375	-1,645,600
Comprehensive loss
Net loss	-128,970	-198,847	-312,427	-336,375	-1,645,600
Foreign currency translation adjustments	2,806	0	2,806	0	2,806
Total comprehensive loss	($126,164)	($198,847)	($309,621)	($336,375)	($1,642,794)
Net loss per share - basic and diluted (in Dollars per Share)	$0	$0	$0	($0.01)
Weighted average number of shares outstanding - basic and diluted (in Shares)	138,295,500	62,448,500	138,295,500	62,228,283

Statements_of_Cash_Flows_Unaud

Statements of Cash Flows (Unaudited) (USD $)	6 Months Ended		87 Months Ended
	Aug. 31, 2013	Aug. 31, 2012	Aug. 31, 2013
Cash flows used in operating activities
Net loss	($312,427)	($336,375)	($1,645,600)
Adjustments to reconcile net loss to net Cash used in operating activities
Shares issued for property acquisition	0	0	11,250
Amortization of debt discount	0	0	11,765
Gain on debt for shares issued for settlement of accounts payable	0	0	-17,980
Unrealized foreign exchange loss (gain)	0	250	3,717
Services provided by founders in exchange for shares	0	0	15,520
Interest on convertible note	0	0	500
Changes in assets and liabilities:
Prepaid expenses	20,788	-4,842	-5,253
Accounts receivable	0	2,821	0
Accounts payable and accrued liabilities	-10,271	97,713	171,767
Net cash used in operating activities	-301,910	-240,433	-1,454,314
Cash flows from investing activities
Acquisition of oil and gas property	0	-250,000	-988,415
Net cash flows used in investing activities	0	-250,000	-988,415
Cash flows from financing activities
Subscription proceeds	0	0	10,000
Proceeds from notes payable-related party	0	0	25,000
Repayments on promissory notes	-125,000	0	-125,000
Common stock issued	0	198,750	2,458,496
Private placement fees	0	0	-4,713
Repayments on shareholder advances	0	-50,000	-65,000
Advances from shareholders	0	0	149,061
Net cash flows from financing activities	-125,000	148,750	2,447,844
Foreign exchange effect on cash	2,806	-250	788
Change in cash during the period	-424,104	-341,933	5,903
Cash beginning of the period	430,007	504,742	0
Cash end of the period	5,903	162,809	5,903
Supplemental disclosures:
Interest paid in the period	0	0	0
Income taxes paid in the period	0	0	0
Noncash investing and financing activities:
Promissory notes issued for O&G property	0	0	650,000
Shares issued for conversion of note	0	0	110,556
Discount on convertible note	0	0	11,765
Shares issued for settlement of accounts payable	0	0	29,400
Shares issued for O&G property	$0	$0	$783,000

Nature_of_Operations_and_Basis

Nature of Operations and Basis of Presentation	6 Months Ended
	Aug. 31, 2013
Nature of Operations and Basis of Presentation [Abstract]
Nature of Operations and Basis of Presentation	1	Nature of Operations and Basis of Presentation
	Discovery Energy Corp. (the “Company”) was incorporated in Nevada on May 24, 2006 under the name “Santos Resource Corp.” The Company is an Exploration Stage Company. The Company's principal business is the proposed exploration and development of the 584,651 gross acres (the “Prospect”) in the State of South Australia covered by Petroleum Exploration License (PEL) 512. The Prospect involves a 100% working interest in the preceding acreage, which overlies portions of the Cooper and Eromanga basins. The Company has not presently determined whether the Prospect contains any crude oil and natural gas reserves that are economically recoverable. While the Company’s present focus is on the Prospect, the Company may consider the acquisition of other attractive oil and gas properties under the right circumstances. On May 7, 2012, the Company changed its name to Discovery Energy Corp.
	In May 2012, the Company incorporated a wholly-owned Australian subsidiary, Discovery Energy SA Ltd. for purposes of acquiring the Prospect.
	The accompanying unaudited interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s February 28, 2013 Annual Report filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements, which would substantially duplicate the disclosure contained in the audited financial statements for the most recent fiscal year end February 28, 2013, as reported on Form 10-K, have been omitted.

Going_Concern

Going Concern	6 Months Ended
	Aug. 31, 2013
Going Concern [Abstract]
Going Concern	2	Going Concern
	The accompanying financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has not generated revenues since inception and has never paid dividends and is unlikely to pay dividends or generate earnings in the immediate or foreseeable future. The continuation of the Company as a going concern is dependent upon the ability of the Company to obtain necessary equity or debt financing to continue operations, the successful development of the Prospect or one or more alternative oil and gas properties, and the attainment of profitable operations. As of August 31, 2013, the Company has not generated any revenues and has an accumulated loss of $1,645,600 since inception. These factors raise substantial doubt regarding the Company's ability to continue as a going concern. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
	During October 2012, the Company entered into a services agreement with Chrystal Capital Partners LLP (“Chrystal”), a corporate finance firm based in London regulated by the British Financial Services Authority. Chrystal has agreed to assist the Company in connections with its efforts to complete a major capital raising transaction of up to US$20.0 million. The term of the Engagement Agreement was initially for two months, and it continued on a month-to-month basis. The Company and Chrystal recently modified their agreements so that Chrystal is not expected to introduce to the Company any further potential investors or joint venture partners, and the Company will no longer pay a monthly fee to Chrystal. Notwithstanding these modifications, Chrystal will be entitled to success fees for any transaction completed within 18 months commencing May 1, 2013 with any prospect previously presented by Chrystal.

Related_Party_Transactions

Related Party Transactions	6 Months Ended
	Aug. 31, 2013
Related Party Transactions [Abstract]
Related Party Transactions	3	Related Party Transactions
	During January 2012, the Company entered into an assignment agreement (the “Assignment”) with Keith D. Spickelmier, who is now (but was not then) the Company’s Chairman of the Board. The transactions provided for by the Assignment were fully consummated in the Company’s third quarter 2013. Because Mr. Spickelmier is now the Company’s Chairman of the Board, the Company regards the consummation of the the transactions provided for by the Assignment as related party transactions. Moreover, because certain transactions between Mr. Spickelmier and other members of the Company’s management required the Company to issue certain Company shares to these other members instead of Mr. Spickelmier, the Company regards these share issuances to be related party transactions with those members for purposes of this footnote.
	On September 12, 2011, Mr. Spickelmier entered into an agreement (the “Liberty Agreement”) with Liberty Petroleum Corporation (“Liberty”) granting to Mr. Spickelmier an exclusive right to negotiate an option to acquire the Petroleum Exploration License (PEL) 512 (the “License”) regarding the Prospect. Per the terms of the Liberty Agreement, Mr. Spickelmier paid to Liberty a $50,000 initial deposit. In anticipation of the assignment of the Liberty Agreement to the Company, the Company paid to Liberty (a) an additional $100,000 deposit to extend the exclusive right provided for by the Liberty Agreement, and (b) an additional $200,000 deposit to modify certain terms of the Liberty Agreement, including the further extension of the exclusive right. The preceding amounts were part of the $800,000 that the Company paid to Liberty. Subsequent to the assignment to the Company of the Liberty Agreement and pursuant to its terms, the Company reached the agreements whereby the Company would take the direct issuance of the License in place of Liberty. The purchase price for the assignment of Mr. Spickelmier's rights in the Liberty Agreement is as follows:
		*	$50,000 in cash - This amount was paid during the quarter ended May 31, 2012 to reimburse for this amount paid by Mr. Spickelmier to Liberty.
		*	$100,000 in cash - This amount was paid after the issuance of the License, and after the Company and Mr. Spickelmier decided not to defer its payment.
		*	Twenty million shares of the Company’s common shares valued at $180,000 – These shares were issued upon the assignment of the Liberty Agreement in fiscal 2012.
		*	Fifty-five million shares of the Company’s common shares valued at $495,000– These shares became due to Mr. Spickelmier after the issuance of the License. Mr. Spickelmier assigned to other members of the Company’s management his right to receive certain of these shares. As a result, these shares were issued to the following persons in the denominations indicated:
	Name of Recipient of		Position with Company	Number of Shares Received
	Shares
	Keith Spickelmier		Chairman of the Board		30,000,000
	Keith McKenzie		Director & CEO		16,700,000
	William E. Begley Jr.		Director & CFO		7,500,000
	Mark S. Thompson		Corporate Secretary		800,000
	As of August 31, 2013, $60,000 is due to directors of the Company for expenses paid on behalf of the Company. This amount is unsecured, non-interest bearing, and due on demand.

Notes_Payable

Notes Payable	6 Months Ended
	Aug. 31, 2013
Notes Payable [Abstract]
Notes Payable	4	Notes Payable
	Two promissory notes were issued on October 26, 2012 to Liberty upon delivery of the License with aggregate principal amount of $650,000. The terms of the note are:
		(i)	One note in the original principal amount of $500,000 is due on April 26, 2013.
		(ii)	The other note in the original principal amount of $150,000 is due on July 26, 2013.
		(iii)	Both notes bear interest at a floating rate equal to the one month term LIBOR rate, plus an additional 3%.
	On March 7, 2013, in consideration of a partial payment of the outstanding principal on the $500,000 Liberty Note in the amount of $100,000, the Company and Liberty agreed to amend the $500,000 Note so that the remaining outstanding principal amounting to $400,000 and accrued interest became due and payable on June 12, 2013.
	On June 4, 2013, in consideration of a partial payment of the outstanding principal of $400,000 on the $500,000 Liberty Note in the amount of $25,000, the Company and Liberty agreed to amend the $500,000 Note so that the remaining outstanding principal amounting to $375,000 and accrued interest will become due and payable on July 1, 2013. On July 1, 2013, by mutual agreement of the parties, the due date of the $500,000 Liberty note was extended to July 26, 2013.
	On July 26, 2013, the Company and Liberty agreed to amend both the $500,000 and $150,000 Liberty Notes so that the remaining outstanding principal on and accrued interest on each of the Notes will become due and payable on the earlier to occur of (a) the completion of a private placement of the Company's common stock or (b) August 26, 2013.
	On August 26, 2013, the Company and Liberty agreed to amend each of the Notes so that the remaining outstanding principal on and accrued interest on each of the Notes will become due and payable on September 26, 2013.

Subsequent_Events

Subsequent Events	6 Months Ended
	Aug. 31, 2013
Subsequent Events [Abstract]
Subsequent Events	5	Subsequent Events
	On September 26, 2013, the two Liberty notes totaling with a total remaining balance of $525,000 were amended wherein the notes were consolidated including accrued interest to date into one note with a balance of $542,294. The maturity date was extended to December 10, 2013 (the “Initial Due Date”); provided, however, that if the Company makes prepayments in the aggregate amount of $250,000 prior to the Initial Due Date, then the due date for the remainder of the principal amount of and accrued interest on the consolidation note shall be extended until February 3, 2014. The note bears interest at a floating rate equal to one-month term LIBOR rate, plus an additional 3%.
	On September 26, 2013, the Company entered into two unsecured corporate demand notes with two related parties, William Begley and Keith Spickelmier. Each note was in the amount of $7,500, and repayment can be demanded, with 5-days notice, at any time after the passage of 20 business days from the date of the note. If no demand is made on a note, the note become due and payable in full on its first annual anniversary. The notes are non-interest bearing.

Related_Party_Transactions_Tab

Related Party Transactions (Tables)	6 Months Ended
	Aug. 31, 2013
Related Party Transactions [Abstract]
Related Party Transactions
	Name of Recipient of Shares	Position with Company	Number of Shares Received
	Keith Spickelmier	Chairman of the Board		30,000,000
	Keith McKenzie	Director & CEO		16,700,000
	William E. Begley Jr.	Director & CFO		7,500,000
	Mark S. Thompson	Corporate Secretary		800,000

Nature_of_Operations_and_Basis1

Nature of Operations and Basis of Presentation (Narrative) (Details) (USD $)	6 Months Ended
	Aug. 31, 2013
Nature of Operations and Basis of Presentation [Abstract]
Date of incorporation (Date)	24-May-06
Gross area of principal business of the company (in Acres)	$584,651
Percent working interest of preceeding acreas owned by company (in Percent)	100.00%
Date of name change (Date)	7-May-12

Going_Concern_Narrative_Detail

Going Concern (Narrative) (Details) (USD $)	6 Months Ended
	Aug. 31, 2013	Feb. 28, 2013
Going Concern [Abstract]
Accumulated loss since inception	$1,645,600	$1,333,173
Maximum amount of planned major capital raising transaction	$20,000,000
Term of services agreement with Chrystal Capital Partners LLP (in Duration)	18 months

Related_Party_Transactions_Nar

Related Party Transactions (Narrative) (Details) (USD $)	Aug. 31, 2013	Feb. 28, 2013	Aug. 31, 2013
			The Liberty Agreement [Member]
Related Party Transactions [Line Items]
Amount of transaction			$50,000
Date of related party transaction (Date)			12-Sep-11
Cash paid to Liberty to extend exclusive right			100,000
Additional cash deposit paid to Liberty			200,000
Cash paid to Liberty prior to issuance of license			800,000
Cash paid to reimburse payment to third party			50,000
Amount paid after license issuance			100,000
Common shares issued upon assignment of agreement (in Shares)			20,000,000
Value of common shares issued upon assignment of agreement			180,000
Common stock issued to related party			55,000,000
Value of common shares issued to related party			495,000
Accounts payable- related party	$60,000	$104,601

Related_Party_Transactions_Rel

Related Party Transactions (Related Party Transactions) (Details)	6 Months Ended
	Aug. 31, 2013
Chairman of the Board [Member]
Related Party Transactions [Line Items]
Common stock issued to related party	30,000,000
Chief Executive Officer [Member]
Related Party Transactions [Line Items]
Common stock issued to related party	16,700,000
Chief Financial Officer [Member]
Related Party Transactions [Line Items]
Common stock issued to related party	7,500,000
Corporate Secretary [Member]
Related Party Transactions [Line Items]
Common stock issued to related party	800,000

Notes_Payable_Narrative_Detail

Notes Payable (Narrative) (Details) (USD $)	6 Months Ended		87 Months Ended
	Aug. 31, 2013	Aug. 31, 2012	Aug. 31, 2013
Notes Payable [Abstract]
Aggregate amount of promissory notes issued	$0	$0	$650,000
October 2012 Liberty Note Due April 26, 2013 [Member]
Short Term Debt [Line Items]
Date promissory notes issued (Date)	26-Oct-12
Due date of promissory note (Date)	26-Apr-13
Original principal amount	500,000		500,000
Promissory note monthly interest accrual rate (in Percent)	3.00%
October 2012 Liberty Note Due July 26, 2013 [Member]
Short Term Debt [Line Items]
Date promissory notes issued (Date)	26-Oct-12
Due date of promissory note (Date)	26-Jul-13
Original principal amount	150,000		150,000
Promissory note monthly interest accrual rate (in Percent)	3.00%
October 2012 Liberty Note Amended March 7, 2013 [Member]
Short Term Debt [Line Items]
Date promissory notes issued (Date)	26-Oct-12
Due date of promissory note (Date)	12-Jun-13
Original principal amount	500,000		500,000
Partial payment of principal amount	100,000		100,000
Remaining outstanding principal	400,000		400,000
October 2012 Liberty Note Amended June 4, 2013 [Member]
Short Term Debt [Line Items]
Date promissory notes issued (Date)	26-Oct-12
Due date of promissory note (Date)	1-Jul-13
Original principal amount	500,000		500,000
Partial payment of principal amount	25,000		25,000
Remaining outstanding principal	$375,000		$375,000
October 2012 Liberty Note Amended July 1, 2013 [Member]
Short Term Debt [Line Items]
Date promissory notes issued (Date)	26-Oct-12
Due date of promissory note (Date)	26-Jul-13
October 2012 Liberty Note Amended August 26, 2013 [Member]
Short Term Debt [Line Items]
Date promissory notes issued (Date)	26-Oct-12
Due date of promissory note (Date)	26-Sep-13

Subsequent_Events_Narrative_De

Subsequent Events (Narrative) (Details) (USD $)	6 Months Ended
	Aug. 31, 2013
2 Liberty Notes Amended and Consolidated [Member]
Subsequent Event [Line Items]
Subsequent event, date (Date)	26-Sep-13
Subsequent event, notes amended, outstanding principal amount	$525,000
Subsequent event, notes amended, new note balance	542,294
Subsequent event, notes amended, maturity date extended (Date)	10-Dec-13
Subsequent event, notes amended, aggregate prepayments required to extend initial maturity date	250,000
Subsequent event, notes amended, initial maturity date extended, provided prepayments made (Date)	3-Feb-14
Subsequent event, notes amended, interest rate (in Percent)	3.00%
Unsecured Corporate Demand Note - Chairman of the Board [Member]
Subsequent Event [Line Items]
Subsequent event, date (Date)	26-Sep-13
Subsequent event, unsecured debt, proceeds from each note	7,500
Subsequent event, duration of notice required for redemption of note after 20 business days from date of note (in Duration)	5 days
Subsequent event, duration after date of note required before redemption of note, with 5-days notice (in Duration)	20 days
Unsecured Corporate Demand Note - Chief Financial Officer [Member]
Subsequent Event [Line Items]
Subsequent event, date (Date)	26-Sep-13
Subsequent event, unsecured debt, proceeds from each note	$7,500
Subsequent event, duration of notice required for redemption of note after 20 business days from date of note (in Duration)	5 days
Subsequent event, duration after date of note required before redemption of note, with 5-days notice (in Duration)	20 days