Discovery Energy (DENR) 10-Q 13 Oct 15 2015 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Aug. 31, 2015	Sep. 30, 2015
Document and Entity Information [Abstract]
Entity Registrant Name	Discovery Energy Corp.
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Aug. 31, 2015
Document Fiscal Year Focus	2,015
Document Fiscal Period Focus	Q2
Trading Symbol	denr
Entity Central Index Key	1,435,387
Current Fiscal Year End Date	--02-28
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		140,089,501
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well Known Seasoned Issuer	No

Balance Sheets (Unaudited)

Balance Sheets (Unaudited) - USD ($)	Aug. 31, 2015	Feb. 28, 2015
Current Assets
Cash	$ 20,887	$ 859
Prepaid expenses	6,025	16,176
Total Current Assets	26,912	17,035
Oil and gas property - unproved (successful efforts method)	2,421,415	2,421,415
Total Assets	2,448,327	2,438,450
Current Liabilities
Accounts payable and accrued liabilities	63,418	97,256
Accounts payable- related parties	117,071	134,299
Other liabilities	9,501	13,860
Promissory notes-related parties	86,600	143,600
Promissory notes	542,294	542,294
Total Current Liabilities	$ 818,884	$ 931,309
Stockholders' Equity
Preferred Stock- 10,000,000 shares authorized, zero issued and outstanding
Common Stock - 500,000,000 shares authorized, $0.001 par value - 140,006,167 and 139,239,500 shares issued and outstanding as of August 31, 2015 and February 28, 2015, respectively	$ 140,089	$ 139,239
Additional paid in capital	3,933,047	3,633,897
Accumulated deficit	(2,446,155)	(2,259,311)
Accumulated other comprehensive income (loss)	2,462	(6,684)
Total Stockholders' Equity	1,629,443	1,507,141
Total Liabilities and Stockholders' Equity	$ 2,448,327	$ 2,438,450

Balance Sheets (Parenthetical)

Balance Sheets (Parenthetical) (Unaudited) - $ / shares	Aug. 31, 2015	Feb. 28, 2015
Balance Sheets (Unaudited) [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)	$ .001	$ .001
Common Stock, shares issued (in Shares)	140,006,167	139,239,500
Common Stock, shares outstanding (in Shares)	140,006,167	139,239,500

Statements of Expenses and Othe

Statements of Expenses and Other Comprehensive Income (Loss) (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Aug. 31, 2015	Aug. 31, 2014	Aug. 31, 2015	Aug. 31, 2014
Expenses
General and administrative	$ 17,868	$ 29,571	$ 43,484	$ 47,088
Exploration costs	33,747	5,625	36,297	9,095
Professional fees	38,066	29,799	56,733	210,919
Rent	3,089	3,231	8,615	6,341
Travel	0	566	40,000	29,366
Total expenses	92,770	68,792	185,129	302,809
Other (Income) Expenses
Interest expense	5,270	4,308	10,613	9,403
Miscellaneous income	(9)	(22)	(25)	(34)
Foreign exchange loss/(gain)	(3,306)	(5,129)	(8,873)	(1,518)
Other (income) expenses	1,955	(843)	1,715	7,851
Net loss	(94,725)	(67,949)	(186,844)	(310,660)
Comprehensive loss
Net loss	(94,725)	(67,949)	(186,844)	(310,660)
Foreign currency translation adjustments	(2,097)	(100)	9,146	(2,100)
Total comprehensive loss	$ (96,822)	$ (68,049)	$ (177,698)	$ (312,760)
Net loss per share - basic and diluted (in Dollars per Share)	$ 0	$ 0	$ 0	$ 0
Weighted average number of shares outstanding - basic and diluted (in Shares)	139,975,732	138,667,994	139,872,109	138,667,994

Statements of Cash Flows (Unaud

Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Aug. 31, 2015	Aug. 31, 2014
Cash flows used in operating activities
Net loss	$ (186,844)	$ (310,660)
Adjustments to reconcile net loss to net Cash used in operating activities
Shares issued for services		99,520
Changes in assets and liabilities:
Prepaid expenses	$ 10,151	9,545
Accounts payable - related party	(17,228)	$ 56,261
Interest payable	8,566
Accounts payable and accrued liabilities	(46,763)	$ (22,036)
Net cash used in operating activities	(232,118)	$ (167,370)
Cash flows from financing activities
Repayments on notes payable-related party	(64,000)
Common stock issued	250,000
Stock subscription proceeds	50,000	$ 55,000
Proceeds from notes payable-related party	7,000	112,200
Net cash flows from financing activities	243,000	$ 167,200
Foreign exchange effect on cash	9,146
Change in cash during the period	20,028	$ (170)
Cash beginning of the period	859	2,483
Cash end of the period	$ 20,887	$ 2,313

Nature of Operations and Basis

Nature of Operations and Basis of Presentation	6 Months Ended
	Aug. 31, 2015
Nature of Operations and Basis of Presentation [Abstract]
Nature of Operations and Basis of Presentation	1. Nature of Operations and Basis of Presentation The principal business of Discovery Energy, Inc. (the “Company”) 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 “License”). 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. In May 2012, the Company incorporated a wholly-owned Australian subsidiary, Discovery Energy SA Ltd. for purposes of acquiring the License. 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, 2014 Annual Report on Form 10-K filed with the SEC. 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, 2015, as reported on Form 10-K, have been omitted.

Going Concern

Going Concern	6 Months Ended
	Aug. 31, 2015
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, 2015, the Company has not generated any revenues and has an accumulated loss of $2,446,155 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.

Related Party Transactions

Related Party Transactions	6 Months Ended
	Aug. 31, 2015
Related Party Transactions [Abstract]
Related Party Transactions	3. Related Party Transactions As of August 31 and February 28, 2015, the Company owed $117,071 and $134,299, respectively, to certain Company directors for reimbursement of expenses paid on behalf of the Company. In addition, as of August 31 and February 28, 2015, the Company owed $86,600 and $143,600, respectively, for promissory notes issued to various related parties. These amounts are unsecured, non-interest bearing and due on demand.

Oil and Gas Properties

Oil and Gas Properties	6 Months Ended
	Aug. 31, 2015
Oil and Gas Properties [Abstract]
Oil and Gas Properties	4. Oil and Gas Properties On May 19, 2014, the Company received notice from the Government of South Australia that it had issued certain modifications to the License and suspended the License for a period of six months. Under the amended License, the Company will be required to drill 7 exploratory wells rather than 12, as originally required. These required wells must now be drilled in years 3, 4, and 5 (2, 2, and 3 wells, respectively) giving the Company additional time to execute its work plan. The amount of required 2D seismic was also reduced to 100 kilometers (in year 3) from 250 kilometers (in year 2) but the total 3D seismic work guaranteed increased to 500 square kilometers from 400 square kilometers. However, the 3D seismic survey requirement is spread over years 2, 3 and 4 (100, 200 and 200 sq. km. respectively). The effect of the suspension was to move the end date of the four years remaining in the initial term of the License six months into the future. Hence, year 2 would end on April 27, 2015, year 3 on April 27, 2016, year 4 on April 27, 2017 and the fifth and final year of the initial term would end on April 27, 2018. On February 15, 2015, the Company received notice from the government of South Australia that it had suspended the License for a further period of six months. The effect of the suspension was to move the end date of the four years remaining in the initial term of the License six months into the future. Hence, year 2 would end on October 25, 2015, year 3 on October 25, 2016, year 4 on October 25, 2017 and the fifth and final year of the initial term would end October 25, 2018. On July 13, 2015, the Company received confirmation from the government of South Australian that the Company’s application for a further six-month suspension of the work commitment relating to the Petroleum Exploration License (PEL) 512 covering the Company’s 584,651-acre prospect in South Australia had been approved effective July 9, 2015. As further extended, the Company’s remaining work commitments are due to be completed by April 27, 2019, as set out below: * Year 2 ending April 27, 2016 - Conduct a new 3D seismic survey totaling at least 100 kilometers. * Year 3 ending April 27, 2017 - Acquire new 2D seismic data totaling at least 100 kilometers, acquire 3D seismic data totaling at least 200 square kilometers and drill two wells. * Year 4 ending April 27, 2018 - Acquire new 3D seismic data totaling at least 200 square kilometers and drill two wells. * Year 5 ending April 27, 2019 - Drill three wells The modification extends the time that the Company has to meet its commitments. If the Company is unable to honor this work commitment, the result could be a need for a further modification or amendment to the most recently approved, amended work plan, or the assignment of the License to Liberty Petroleum Corporation (“Liberty”) pursuant to the terms of the Novation Deed or its reversion to the South Australian Government. Liberty had previously assigned to the Company Liberty’s prospective rights to the License.

Notes Payable

Notes Payable	6 Months Ended
	Aug. 31, 2015
Notes Payable [Abstract]
Notes Payable	5. 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 original terms of the note were: (i) One note in the original principal amount of $500,000 was originally due on April 26, 2013. (ii) The other note in the original principal amount of $150,000 was originally 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%. These promissory notes had undergone a number of amendments, including extensions of the due dates. On September 26, 2013, these promissory notes were combined into a single consolidation promissory note (the “Consolidated Note”) in the original principal amount of $542,294, as some of the principal had been reduced and some interest had accrued. Effective June 2, 2015, the Consolidation Note was amended and extended to September 2, 2015 and if the Company makes prepayments in the aggregate amount of $250,000 prior to the new Initial Due Date, then the due date for the remainder of the principal amount of and accrued interest on the Consolidation Note would be extended until November 2, 2015. On March 9, 2015, the Company entered into an unsecured corporate demand note with William Begley, a related party. The note was in the amount of $4,000, 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 the note, the note becomes due and payable in full on its first anniversary. The note is non-interest bearing. On March 31, 2015, the Company repaid three unsecured corporate demand notes with Keith Spickelmier totaling $50,000. The notes were dated September 26, 2013, December 16, 2013, and January 8, 2014 for $7,500, $17,500, and $25,000, respectively. On May 5, 2015, the Company entered into an amendment of a previous unsecured corporate demand note with related party, Keith Spickelmier. The note was in the amount of $3,100 and the maximum term was amended and extended to the second anniversary from the date of the note. None of the other provisions of the original notes were changed. On June 9, 2015, the Company repaid an unsecured corporate demand note with William Begley totaling $2,000. The note was dated February 21, 2015. On July 3, 2015, the Company repaid two unsecured corporate demand notes with William Begley totaling $12,000. The notes were dated December 17, 2014 and January 1, 2015 for $6,000 each. On August 11, 2015, the Company entered into an unsecured corporate demand note with William Begley, a related party. The note was in the amount of $3,000, 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 the note, the note becomes due and payable in full on its first anniversary. The note is non-interest bearing.

Common Stock

Common Stock	6 Months Ended
	Aug. 31, 2015
Common Stock [Abstract]
Common Stock	6. Common Stock On March 20, 2015, the Company issued 666,667 shares at a price of $0.30. On June 15, 2015, the board of directors approved a private placement of up to 3,000,000 Common Shares at a price of $0.50 per share. On June 26, 2015, the Company received $50,000 from a private investor and subsequently issued 100,000 Common Shares at a price of $0.50 per share. On August 25, 2015, the Company received $50,000 from a private investor. The related 83,334 Common Shares were issued on September 4, 2015 at a price of $0.60 per share.

Subsequent Events

Subsequent Events	6 Months Ended
	Aug. 31, 2015
Subsequent Events [Abstract]
Subsequent Events	7. Subsequent Events Effective September 2, 2015, the Company and Liberty Petroleum Corporation amended the Consolidaton Note so that the Initial Due Date will be January 5, 2016, and provided that if the Company makes prepayments in the aggregate amount of $250,000 prior to the new Initial Due Date of Janaury 5, 2016, then the due date for the remainder of the principal amount of and accrued interest on the Consolidation Note would be extended until March 2, 2016.

Nature of Operations and Basi13

Nature of Operations and Basis of Presentation (Narrative) (Details)	6 Months Ended
	Aug. 31, 2015$ / shares
Nature of Operations and Basis of Presentation [Abstract]
Principal business, proposed exploration and development area (in Acres)	584,651
Percent working interest of preceeding acreas owned by company (in Percent)	100.00%

Going Concern (Narrative) (Deta

Going Concern (Narrative) (Details) - USD ($)	6 Months Ended
	Aug. 31, 2015	Feb. 28, 2015
Going Concern [Abstract]
Revenues since inception	$ 0
Accumulated loss since inception	$ 2,446,155	$ 2,259,311

Related Party Transactions (Nar

Related Party Transactions (Narrative) (Details) - USD ($)	Aug. 31, 2015	Feb. 28, 2015
Related Party Transactions [Abstract]
Accounts payable- related parties	$ 117,071	$ 134,299
Promissory notes-related parties	$ 86,600	$ 143,600

Oil and Gas Properties (Narrati

Oil and Gas Properties (Narrative) (Details) - $ / shares	Jul. 13, 2015	Feb. 15, 2015	May. 19, 2014
Oil And Gas Delivery Commitments And Contracts [Line Items]
Period of suspension of the License subsequent to certain modifications (in Duration)			6 months
Original License Agreement [Member]
Oil And Gas Delivery Commitments And Contracts [Line Items]
Number of exploratory wells required to be drilled under license (in Wells)			12
3D seismic survey work required to be completed (in Square Kilometers)			400
Original License Agreement [Member] | Year 2 [Member]
Oil And Gas Delivery Commitments And Contracts [Line Items]
2D seismic survey work required to be completed (in Kilometers)			250
License Amendment [Member]
Oil And Gas Delivery Commitments And Contracts [Line Items]
Number of exploratory wells required to be drilled under license (in Wells)			7
3D seismic survey work required to be completed (in Square Kilometers)			500
Period the initial end date of the license will move forward, subsequent to suspension (in Duration)	6 months	6 months	6 months
Oil and gas property prospect acreage (in Acres)	584,651
License Amendment [Member] | Year 2 [Member]
Oil And Gas Delivery Commitments And Contracts [Line Items]
2D seismic survey work required to be completed (in Kilometers)			100
Oil and gas commitment, end date of license (Date)	Apr. 27, 2016	Oct. 25, 2015	Apr. 27, 2015
Seismic survey work required to be completed (in Square Kilometers)	100
License Amendment [Member] | Year 3 [Member]
Oil And Gas Delivery Commitments And Contracts [Line Items]
Number of exploratory wells required to be drilled under license (in Wells)	2
Number of wells required to be drilled (in Wells)			2
2D seismic survey work required to be completed (in Kilometers)			100
3D seismic survey work required to be completed (in Square Kilometers)			200
Oil and gas commitment, end date of license (Date)	Apr. 27, 2017	Oct. 25, 2016	Apr. 27, 2016
Seismic survey work required to be completed (in Square Kilometers)	100
License Amendment [Member] | Year 4 [Member]
Oil And Gas Delivery Commitments And Contracts [Line Items]
Number of exploratory wells required to be drilled under license (in Wells)	2
Number of wells required to be drilled (in Wells)			2
3D seismic survey work required to be completed (in Square Kilometers)			200
Oil and gas commitment, end date of license (Date)	Apr. 27, 2018	Oct. 25, 2017	Apr. 27, 2017
Seismic survey work required to be completed (in Square Kilometers)	200
License Amendment [Member] | Year 5 [Member]
Oil And Gas Delivery Commitments And Contracts [Line Items]
Number of exploratory wells required to be drilled under license (in Wells)	3
Number of wells required to be drilled (in Wells)			3
Oil and gas commitment, end date of license (Date)	Apr. 27, 2019	Oct. 25, 2018	Apr. 27, 2018

Notes Payable (Narrative) (Deta

Notes Payable (Narrative) (Details)	Aug. 11, 2015USD ($)	Jun. 09, 2015USD ($)	Jun. 02, 2015USD ($)	Mar. 31, 2015USD ($)	Mar. 09, 2015	Oct. 26, 2012USD ($)	Aug. 31, 2015USD ($)	Aug. 31, 2014USD ($)	Jul. 03, 2015USD ($)	May. 05, 2015USD ($)	Sep. 26, 2013USD ($)$ / shares
Short Term Debt [Line Items]
Repayments on notes payable-related party							$ 64,000
Liberty Note 1 [Member]
Short Term Debt [Line Items]
Debt instrument, issuance date (Date)						Oct. 26, 2012
Debt instrument, maturity date (Date)						Apr. 26, 2013
Original principal amount						$ 500,000
Debt instrument, variable rate basis (in Description)						LIBOR
Debt instrument, basis spread on variable rate (in Percent)						3.00%
Liberty Note 2 [Member]
Short Term Debt [Line Items]
Debt instrument, issuance date (Date)						Oct. 26, 2012
Debt instrument, maturity date (Date)						Jul. 26, 2013
Original principal amount						$ 150,000
Debt instrument, variable rate basis (in Description)						LIBOR
Debt instrument, basis spread on variable rate (in Percent)						3.00%
Liberty Notes Aggregate Original [Member]
Short Term Debt [Line Items]
Debt instrument, issuance date (Date)						Oct. 26, 2012
Original principal amount						$ 650,000
Liberty Notes Aggregate Amended [Member]
Short Term Debt [Line Items]
Debt instrument, maturity date (Date)			Sep. 2, 2015
Original principal amount											$ 542,294
Aggregate prepayments required to extend amended due date			$ 250,000
Note extended maturity date with required prepayment (in Date)			Nov. 2, 2015
Debt instrument, related party, face amount											$ 4,000
Number of notes (in Notes) | $ / shares											3
Unsecured Corporate Demand Note 1 - Chief Financial Officer [Member]
Short Term Debt [Line Items]
Duration of notice required for redemption of note after 20 business days from date of note (in Duration)					5 days
Duration after date of note required before redemption of note, with 5-days notice (in Duration)					20 days
Unsecured Corporate Demand Note 1 - Chairman of the Board [Member]
Short Term Debt [Line Items]
Original amount of repaid related party note				$ 7,500
Unsecured Corporate Demand Note 2 - Chairman of the Board [Member]
Short Term Debt [Line Items]
Original amount of repaid related party note				17,500
Unsecured Corporate Demand Note 3 - Chief Financial Officer [Member]
Short Term Debt [Line Items]
Original principal amount									$ 12,000
Unsecured Corporate Demand Note 3A - Chief Financial Officer [Member]
Short Term Debt [Line Items]
Original principal amount									6,000
Unsecured Corporate Demand Note 3B - Chief Financial Officer [Member]
Short Term Debt [Line Items]
Original principal amount									$ 6,000
Unsecured Corporate Demand Note 3 - Chairman of the Board [Member]
Short Term Debt [Line Items]
Original amount of repaid related party note				25,000
Unsecured Corporate Demand Note 4 - Chief Financial Officer [Member]
Short Term Debt [Line Items]
Original principal amount	$ 3,000
Duration of notice required for redemption of note after 20 business days from date of note (in Duration)	5 days
Duration after date of note required before redemption of note, with 5-days notice (in Duration)	20 days
Unsecured Corporate Demand Note 4 - Chairman of the Board [Member]
Short Term Debt [Line Items]
Principal amount of related party note with term amendment to second anniversary date										$ 3,100
Unsecured Corporate Demand Notes - Chairman of the Board [Member]
Short Term Debt [Line Items]
Repayments on notes payable-related party				$ 50,000
Unsecured Corporate Demand Notes - Chief Financial Officer [Member]
Short Term Debt [Line Items]
Repayments on notes payable-related party		$ 2,000

Common Stock (Narrative) (Detai

Common Stock (Narrative) (Details) - USD ($)	Sep. 04, 2015	Aug. 25, 2015	Jun. 26, 2015	Mar. 20, 2015	Aug. 31, 2015	Aug. 31, 2014	Jun. 15, 2015
Common Stock [Abstract]
Number of common stock shares issued (in Shares)	83,334		100,000	666,667
Price of common shares sold (in Dollars per Share)	$ .60		$ .50	$ .30
Private placement, maximum number of common shares approved to be issued (in Shares)							3,000,000
Price of common shares to be sold (in Dollars per Share)							$ .50
Proceeds from issuance of common stock in private placement		$ 50,000	$ 50,000		$ 250,000

Subsequent Events (Narrative) (

Subsequent Events (Narrative) (Details) - Subsequent Event Debt [Member]	Sep. 02, 2015USD ($)
Subsequent Event [Line Items]
Liberty consolidated note, extended maturity date (in Date)	Jan. 5, 2016
Liberty note, prepayment required to further extend amended due date	$ 250,000
Liberty note extended due date if $250,000 prepayment is made by January 5, 2015 (in Date)	Mar. 2, 2016