Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Nov. 30, 2013 | Jan. 15, 2014 | |
Document and Entity Information | ' | ' |
Entity Registrant Name | 'MOKITA, INC. | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Nov-13 | ' |
Amendment Flag | 'false | ' |
Entity Central Index Key | '0001493212 | ' |
Current Fiscal Year End Date | '--02-28 | ' |
Entity Common Stock, Shares Outstanding | ' | 63,000,000 |
Entity Filer Category | 'Smaller Reporting Company | ' |
Entity Current Reporting Status | 'Yes | ' |
Entity Voluntary Filers | 'No | ' |
Entity Well-known Seasoned Issuer | 'No | ' |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q3 | ' |
Balance_Sheets
Balance Sheets (USD $) | Nov. 30, 2013 | Feb. 28, 2013 |
ASSETS: | ' | ' |
Cash | $1,263 | $1,704 |
Accounts receivable | 0 | 214 |
Other receivable - sale of oil and gas working interest | 0 | 40,000 |
Total Assets | 1,263 | 41,918 |
Current Liabilities | ' | ' |
Accounts payable and accrued liabilities | 44,942 | 42,362 |
Due to related party | 71,300 | 58,150 |
Loan payable | 215,000 | 215,000 |
Derivative liability | 253,410 | 227,507 |
Current Liabilities | 584,652 | 543,019 |
Asset retirement obligation | 377 | 247 |
Loan payable. | 35,015 | 0 |
Total Liabilities | 620,044 | 543,266 |
STOCKHOLDERS' DEFICIT | ' | ' |
Common Stock Authorized: 1,000,000,000 common shares, par value of $0.001 per share Issued and outstanding: 63,000,000 and 78,000,000 common shares, respectively | 63,000 | 78,000 |
Additional paid-in capital | 48,357 | 33,357 |
Accumulated deficit | -74,615 | -74,615 |
Accumulated deficit during the exploration stage | -655,523 | -538,090 |
Total Stockholders' Deficit | -618,781 | -501,348 |
Total Liabilities and Stockholders' Deficit | $1,263 | $41,918 |
Balance_Sheets_Parentheticals
Balance Sheets Parentheticals (USD $) | Nov. 30, 2013 | Feb. 28, 2013 |
Parentheticals | ' | ' |
Common Stock, par value | $0.00 | $0.00 |
Common Stock, shares authorized | 1,000,000,000 | 1,000,000,000 |
Common Stock, shares issued | 63,000,000 | 78,000,000 |
Common Stock, shares outstanding | 63,000,000 | 78,000,000 |
Statements_of_Operations_unaud
Statements of Operations (unaudited) (USD $) | 3 Months Ended | 9 Months Ended | 55 Months Ended | ||
Nov. 30, 2013 | Nov. 30, 2012 | Nov. 30, 2013 | Nov. 30, 2012 | Nov. 30, 2013 | |
Revenue: | ' | ' | ' | ' | ' |
Revenues | $0 | $735 | $0 | $6,021 | $12,027 |
Operating expenses | ' | ' | ' | ' | ' |
Accretion expense | 43 | 6 | 130 | 18 | 243 |
Depreciation, depletion, and amortization | 0 | 0 | 0 | 304 | 1,059 |
General and administrative | 9,395 | 6,755 | 28,991 | 54,760 | 225,262 |
Impairment of oil & gas properties | 0 | 0 | 0 | 3,256 | 81,245 |
Lease operating expenses | 0 | 145 | 0 | 2,028 | 3,864 |
Professional fees | 8,798 | 8,554 | 45,281 | 37,594 | 166,494 |
Total operating expenses | 18,236 | 15,460 | 74,402 | 97,960 | 478,167 |
Loss before other income (expenses) | -18,236 | -14,725 | -74,402 | -91,939 | -466,140 |
Other income (expense) | ' | ' | ' | ' | ' |
Change in fair value of derivative liability | -54,538 | 4,736 | -25,903 | -59,319 | -38,063 |
Gain on sale of oil and gas working interest | 0 | 0 | 0 | 0 | 40,000 |
Interest expense | -6,134 | -5,360 | -17,128 | -15,243 | -50,588 |
Loss on debt modification | 0 | 0 | 0 | -215,347 | -215,347 |
Total other income (expense) | -60,672 | -624 | -43,031 | -289,909 | -263,998 |
Net loss | ($78,908) | ($15,349) | ($117,433) | ($381,848) | ($730,138) |
Net loss per share - basic and diluted | $0 | $0 | $0 | $0 | ' |
Weighted average shares outstanding - basic and diluted (restated for forward stock split of 10 for 1) | 63,000,000 | 78,000,000 | 72,490,433 | 78,000,000 | ' |
Statements_of_Cash_Flows_unaud
Statements of Cash Flows (unaudited) (USD $) | 9 Months Ended | 55 Months Ended | |
Nov. 30, 2013 | Nov. 30, 2012 | Nov. 30, 2013 | |
Operating Activities | ' | ' | ' |
Net loss | ($117,433) | ($381,848) | ($730,138) |
Adjustments to reconcile net loss to net cash used in operating activities: | ' | ' | ' |
Accretion expense | 130 | 18 | 243 |
Change in fair value of derivative liability. | 25,903 | 59,319 | 38,063 |
Depreciation, depletion, and amortization | 0 | 304 | 1,059 |
Impairment of oil & gas properties | 0 | 3,256 | 81,245 |
Imputed interest | 0 | 0 | 12,857 |
Loss on debt modification | 0 | 215,347 | 215,347 |
Shares issued for management bonuses | 0 | 0 | 30,000 |
Changes in operating assets and liabilities: | ' | ' | ' |
Accounts receivable | 214 | 1,837 | 0 |
Other receivable - sale of oil and gas working interest | 40,000 | 0 | 0 |
Accounts payable and accrued liabilities | 2,580 | 24,818 | 44,942 |
Due to related parties | 13,150 | 14,150 | 62,800 |
Net Cash Used In Operating Activities | -35,456 | -62,799 | -243,582 |
Investing Activities | ' | ' | ' |
Purchase of oil and gas property | 0 | 0 | -49,500 |
Net Cash Used in Investing Activities | 0 | 0 | -49,500 |
Financing Activities | ' | ' | ' |
Proceeds from issuance of common shares | 0 | 0 | 48,000 |
Proceeds from loans payable | 35,015 | 65,000 | 217,345 |
Proceeds from a related party | 0 | 0 | 49,000 |
Repayments to a related party | 0 | 0 | -20,000 |
Net Cash Provided By Financing Activities | 35,015 | 65,000 | 294,345 |
Change in Cash | -441 | 2,201 | 1,263 |
Cash - Beginning of Period | 1,704 | 191 | 0 |
Cash - End of Period | 1,263 | 2,392 | 1,263 |
Non-cash investing and financing activities | ' | ' | ' |
Asset retirement obligation - change in estimate | 0 | 1,036 | 1,036 |
Oil and gas property acquired with note payable | 0 | 0 | 32,670 |
Related party debt forgiven | 0 | 0 | 20,500 |
Asset retirement obligation assumed on oil and gas properties | 0 | 1,170 | 1,170 |
Supplemental disclosures | ' | ' | ' |
Income tax paid | 0 | 0 | 0 |
Interest paid | $0 | $0 | $0 |
Nature_of_Operations_and_Conti
Nature of Operations and Continuance of Business | 9 Months Ended |
Nov. 30, 2013 | |
Nature of Operations and Continuance of Business | ' |
Nature of Operations | ' |
1 | |
Nature of Operations and Continuance of Business – Going Concern Issue | |
Nature of Operations | |
Mokita, Inc. (the “Company”) was incorporated in the State of Nevada on April 21, 2009. The Company is an exploration stage company, as defined by Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 915, Development Stage Entities. The Company’s principal operations were to provide credit card payment systems. In May 2011, the Company acquired working interests in oil and gas properties and changed its’ principal operations to the acquisition and development of oil and gas properties. | |
Going Concern Issue | |
These financial statements have been prepared on a going concern basis, which implies that the Company will continue to realize its assets and discharge its liabilities in the normal course of business. As at November 30, 2013, the Company has a working capital deficit of $583,389 and an accumulated deficit of $730,138. The Company currently has no income-producing assets, refer to the accompanying note 3(c). The continuation of the Company as a going concern is dependent upon the continued financial support from its management, and its ability to identify future investment opportunities and obtain the necessary debt or equity financing, and generating profitable operations from the Company’s future operations. 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. |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 9 Months Ended | |||||
Nov. 30, 2013 | ||||||
Summary of Significant Accounting Policies | ' | |||||
Summary of Significant Accounting Policies | ' | |||||
2 | ||||||
Summary of Significant Accounting Policies | ||||||
a) | ||||||
Basis of Presentation | ||||||
The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) and are expressed in U.S. dollars. The Company’s fiscal year end is February 28. | ||||||
b) | ||||||
Use of Estimates | ||||||
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 and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. | ||||||
A significant item that requires management's estimates and assumptions is the estimate of proved oil reserves which are used in the calculation of depletion, impairment of its properties and asset retirement obligations. Other items subject to estimates and assumptions include the carrying amount of property, plant and equipment, valuation allowances for income taxes, valuation of derivatives instruments and accrued liabilities, among others. Although management believes these estimates are reasonable, actual results could differ from these estimates. | ||||||
c) | ||||||
Interim Financial Statements | ||||||
These interim unaudited financial statements have been prepared on the same basis as the annual financial statements and in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s financial position, results of operations and cash flows for the periods shown. The results of operations for such periods are not necessarily indicative of the results expected for a full year or for any future period. | ||||||
d) | ||||||
Cash and cash equivalents | ||||||
The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents. As at November 30 and February 28, 2013, the Company did not hold any cash equivalents. | ||||||
e) | ||||||
Basic and Diluted Net Loss per Share | ||||||
The Company computes net loss per share in accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti dilutive. As at November 30, 2013, the Company had 995,084 (February 28, 2013 – 191,111) potentially dilutive shares outstanding. | ||||||
f) | ||||||
Financial Instruments | ||||||
Pursuant to ASC 820, Fair Value Measurements and Disclosures, an entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value: | ||||||
Level 1 | ||||||
Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. | ||||||
Level 2 | ||||||
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. | ||||||
f) | ||||||
Financial Instruments (continued) | ||||||
Level 3 | ||||||
Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. | ||||||
The Company’s financial instruments consist principally of cash, accounts receivable, other receivable, accounts payable and accrued liabilities, amounts due to a related party, convertible debenture, and loans payable. Pursuant to ASC 820, the fair value of our cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. We believe that the recorded values of all of our other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations. | ||||||
Assets and liabilities measured at fair value on a recurring basis were presented on the Company’s balance sheet as at November 30, 2013 and February 28, 2013, respectively, as follows: | ||||||
Fair Value Measurements Using | ||||||
Quoted | Significant | Significant | Balance, | Total | ||
prices in | other | Unobservable | November 30, | Gains and | ||
active markets | observable | inputs | 2013 | (Losses) | ||
for identical | Inputs | (Level 3) | $ | $ | ||
instruments | (Level 2) | $ | ||||
(Level 1) | $ | |||||
$ | ||||||
Derivative liability | – | – | -253,410 | -253,410 | -25,903 | |
Assets and liabilities measured at fair value on a recurring basis were presented on the Company’s balance sheet as at February 28, 2013 as follows: | ||||||
Fair Value Measurements Using | ||||||
Quoted | Significant | Significant | Balance, | Total | ||
prices in | other | Unobservable | February 28, | Gains and | ||
active markets | observable | inputs | 2013 | (Losses) | ||
for identical | Inputs | (Level 3) | $ | $ | ||
instruments | (Level 2) | $ | ||||
(Level 1) | $ | |||||
$ | ||||||
Derivative liability | – | – | -227,507 | -227,507 | -227,507 | |
g) | ||||||
Derivative Financial Instruments | ||||||
The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks. | ||||||
The Company reviews the terms of the common stock, warrants and convertible debt it issues to determine whether there are embedded derivative instruments, including embedded conversion options, which are required to be bifurcated and accounted for separately as derivative financial instruments. In circumstances where the host instrument contains more than one embedded derivative instrument, including the conversion option, that is required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument. | ||||||
g) | ||||||
Derivative Financial Instruments (continued) | ||||||
Bifurcated embedded derivatives are initially recorded at fair value and are then revalued at each reporting date with changes in the fair value reported as non-operating income or expense. The Company uses a Black-Scholes model for valuation of the derivative. When the equity or convertible debt instruments contain embedded derivative instruments that are to be bifurcated and accounted for as liabilities, the total proceeds received are first allocated to the fair value of all the bifurcated derivative instruments. The remaining proceeds, if any, are then allocated to the host instruments themselves, usually resulting in those instruments being recorded at a discount from their face value. | ||||||
The discount from the face value of the convertible debt, together with the stated interest on the instrument, is amortized over the life of the instrument through periodic charges to interest expense, using the effective interest method. | ||||||
Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether net cash settlement of the derivative instrument could be required within the twelve months of the balance sheet date. | ||||||
h) | ||||||
Comprehensive Loss | ||||||
ASC 220, Comprehensive Income, establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at November 30 and February 28, 2013, the Company has no items that represent a comprehensive loss and, therefore, has not included a schedule of comprehensive loss in the financial statements. | ||||||
i) | ||||||
Oil and Gas Properties | ||||||
The Company utilizes the full-cost method of accounting for petroleum and natural gas properties. Under this method, the Company capitalizes all costs associated with acquisition, exploration and development of oil and natural gas reserves, including leasehold acquisition costs, geological and geophysical expenditures, lease rentals on undeveloped properties and costs of drilling of productive and non-productive wells into the full cost pool on a country by country basis. When the Company obtains proven oil and gas reserves, capitalized costs, including estimated future costs to develop the reserves proved and estimated abandonment costs, net of salvage, will be depleted on the units-of-production method using estimates of proved reserves. The costs of unproved properties are not amortized until it is determined whether or not proved reserves can be assigned to the properties. Until such determination is made the Company assesses annually whether impairment has occurred, and includes in the amortization base drilling exploratory dry holes associated with unproved properties. | ||||||
The Company applies a ceiling test to the capitalized cost in the full cost pool. The ceiling test limits such cost to the estimated present value, using a ten percent discount rate, of the future net revenue from proved reserves, based on current economic and operating conditions. Specifically, the Company computes the ceiling test so that capitalized cost, less accumulated depletion and related deferred income tax, do not exceed an amount (the ceiling) equal to the sum of: (a) The present value of estimated future net revenue computed by applying constant prices of oil and gas reserves based on an average of prices during the year (with consideration of price changes only to the extent provided by contractual arrangements) to estimated future production of proved oil and gas reserves as of the date of the latest balance sheet presented, less estimated future expenditures (based on current cost) to be incurred in developing and producing the proved reserves computed using a discount factor of ten percent and assuming continuation of existing economic conditions; plus (b) the cost of property not being amortized; plus (c) the lower of cost or estimated fair value of unproven properties included in the costs being amortized; less (d) income tax effects related to differences between the book and tax basis of the property. | ||||||
i) | ||||||
Oil and Gas Properties (continued) | ||||||
Management’s assumptions used in calculating oil and gas reserves or regarding the future net cash flows or fair value of the Company’s properties are subject to change in the future. Any change, such as changes in reserves or commodity price forecasts, could cause changes in the fair value estimates of the properties or impairment expense to be recorded, impacting net income or loss of the Company. Any change in reserves directly impacts future cash flows and fair values of the properties. | ||||||
Estimated reserve quantities and future net cash flows have the most significant impact on the Company. These estimates are also used in the quarterly calculations of depletion, depreciation and impairment of the Company’s proved properties. Estimating accumulations of gas and oil is complex and is not exact because of the numerous uncertainties inherent in the process. Refer to Note 3 – Oil and Gas Properties for estimates recorded relating to the oil and gas properties. | ||||||
j) | ||||||
Asset Retirement Obligations | ||||||
The Company follows the provisions of ASC 410, Asset Retirement and Environmental Obligations, which establishes standards for the initial measurement and subsequent accounting for obligations associated with the sale, abandonment or other disposal of long-lived tangible assets arising from the acquisition, construction or development and for normal operations of such assets. As at November 30, 2013, the Company recorded asset retirement obligations of $377. During the period ended November 30, 2013, the Company recorded an accretion expense of $130 (2012 - $18). | ||||||
k) | ||||||
Stock-based Compensation | ||||||
The Company records stock-based compensation in accordance with ASC 718, Compensation – Stock Based Compensation and ASC 505-50 - Equity-Based Payments to Non-Employees. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. | ||||||
l) | ||||||
Revenue Recognition | ||||||
Revenues associated with the sale of oil is accounted for using the sales method, whereby revenue is recognized by the operator of the mineral properties for oil is sold to purchasers with the Company recognizing the portion of its share of the revenues. | ||||||
m) | ||||||
Recent Accounting Pronouncements | ||||||
The recent accounting 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 |
Oil_and_Gas_Properties
Oil and Gas Properties | 9 Months Ended | |
Nov. 30, 2013 | ||
Oil and Gas Properties | ' | |
Oil and Gas Properties | ' | |
3 | ||
Oil and Gas Properties | ||
a) | ||
Capitalized Costs | ||
Noble County, Oklahoma | ||
$ | ||
Capitalized costs, February 29, 2012 | 21,594 | |
Revision to asset retirement cost | -1,036 | |
Depreciation, depletion, and amortization | -339 | |
Impairment | -20,219 | |
Capitalized costs, February 28 and November 30, 2013 | – | |
b) | ||
Sale of Working Interest | ||
On February 1, 2013, the Company entered into a Letter of Intent for the sale of its 1% working interest in the oil and gas properties located in Stephens County, Oklahoma for proceeds of $40,000. The sale of Company’s working interest on February 28, 2013 resulted in a gain of $40,000. | ||
c) | ||
Non-Consent Penalty Charges and Impairment Charge – Noble County, Oklahoma | ||
On September 14, 2012, the Company was deemed a non-consenting investor, pursuant to the Operators Agreement, in a proposal to stimulate the Noble County property to increase production. As a result, and per the operating agreement with the property operator, the Company will lose its revenue for the Noble County property for a period of time sufficient to recover 500% of the Company’s invoiced proportionate share of the total expenses for the stimulation project. Revenues earned from this property were approximately $1,000 for the year ended February 28, 2013. The proportionate expenses for the stimulation project that were charged to the Company by the Operator were approximately $6,000 for the year ended February 28, 2013. Therefore, approximately $30,000 of future revenue from this project will be paid to the other investors in this project who have consented to the stimulation project and who paid their allocable share of the approximate $6,000 of expenses that was charged to the Company, but which the Company elected not to pay, before the Company can earn future revenue from its interest in this property. This elective non-consent by the Company and 500% penalty charged pursuant to the Operators Agreement results in a full impairment of this property which was recorded at February 28, 2013. |
Accounts_Payables_and_Accrued_
Accounts Payables and Accrued Liabilities | 9 Months Ended | ||||
Nov. 30, 2013 | |||||
Accounts Payables and Accrued Liabilities: | ' | ||||
Accounts Payables and Accrued Liabilities | ' | ||||
4 | |||||
Accounts Payable and Accrued Liabilities | |||||
November 30, | 28-Feb-13 | ||||
2013 | $ | ||||
$ | |||||
Trade accounts payable | 6,909 | 4,009 | |||
Accrued liabilities | 302 | 17,750 | |||
Accrued interest payable | 37,731 | 20,603 | |||
44,942 | 42,362 |
Convertible_Debenture
Convertible Debenture. | 9 Months Ended |
Nov. 30, 2013 | |
Convertible Debenture. | ' |
Convertible debenture. | ' |
5 | |
Convertible Debenture | |
As at November 30, 2013, the Company owes $215,000 (February 28, 2013 - $215,000) to a non-related party for an outstanding note payable. Included in this amount is $32,670 which was paid by the note holder for the acquisition of oil and gas properties. The amount owing is unsecured, bears interest at 10%, and due on demand. The note is convertible into the Company’s common stock at a rate of 75% of the weighted average closing price for the ten days prior to the conversion date. As at November 30, 2013, the Company accrued $36,801 (February 28, 2013 - $20,603) of interest payable. | |
On September 18, 2013, the Company entered into a convertible loan agreement for $35,015, of which $15,015 was received on July 24, 2013 and $20,000 was received on September 18, 2013. The amount owing is unsecured, bears interest at 10%, and due on September 18, 2015. The note is convertible into the Company’s common stock at a rate of 75% of the weighted average closing price for the ten days prior to the conversion date. As at November 30, 2013, the Company accrued $930 (February 28, 2013 - $nil) of interest payable. |
Derivative_Liability
Derivative Liability | 9 Months Ended | ||||
Nov. 30, 2013 | |||||
Derivative Liability {1} | ' | ||||
Derivative Liability | ' | ||||
6 | |||||
Derivative Liability | |||||
The conversion option of the convertible debenture disclosed in Note 5 is required to record a derivative at its estimated fair value on each balance sheet date with changes in fair value reflected in the statement of operations. | |||||
During the nine months ended November 30, 2013, the Company recorded a loss on the change in fair value of the conversion option derivative liability of $25,903 (2012 - $59,319). As of November 30, 2013, the fair value of the conversion option derivative liability was $253,410 (February 28, 2013 - $227,507). | |||||
The fair value of the derivative financial liability was determined using the Black-Scholes option pricing model, using the following assumptions: | |||||
Expected | Risk-free | Expected | Expected | ||
Volatility | Interest | Dividend | Life (in | ||
Rate | Yield | years) | |||
As at issuance date: | |||||
$215,000 convertible debenture | 268% | 0.13% | 0% | 2 | |
$35,015 convertible debenture | 285% | 0.34% | 0% | 2 | |
As at November 30, 2013 | |||||
$215,000 convertible debenture | 390% | 0.06% | 0% | 0.28 | |
$35,015 convertible debenture | 210% | 0.34% | 0% | 1.8 |
Related_Party_Transactions
Related Party Transactions | 9 Months Ended |
Nov. 30, 2013 | |
Related Party Transactions | ' |
Related Party Transactions | ' |
7 | |
Related Party Transactions | |
a) | |
During the period ended November 30, 2013, the Company incurred salary expenses of $18,000 (2012 - $18,000) to the President and CEO of the Company. | |
b) | |
As at November 30, 2013, the Company owes $71,300 (February 28, 2013 - $58,150) to the President and CEO of the Company for the funding of general operations and management fees. The amount owing is unsecured, non-interest bearing, and due on demand. |
Share_Capital
Share Capital | 9 Months Ended |
Nov. 30, 2013 | |
Share Capital | ' |
Share Capital | ' |
8 | |
Share Capital | |
On August 22, 2013, a shareholder of the Company voluntarily cancelled 15,000,000 common shares. | |
On August 23, 2013, the Company effected a 10-for-1 forward split of the issued and outstanding shares of common stock. All share amounts have been retroactively restated for all periods presented. The Company also increased the number of authorized shares of common stock from 100,000,000 shares of common stock to 1,000,000,000 shares of common stock with no change in par value. |
Subsequent_Events
Subsequent Events | 9 Months Ended |
Nov. 30, 2013 | |
Subsequent Events | ' |
Subsequent Events | ' |
9 | |
Subsequent Events | |
We have evaluated subsequent events through the date of issuance of the financial statements, and did not have any material recognizable subsequent events. |
Significant_Accounting_Policie
Significant Accounting Policies (POLICIES) | 9 Months Ended | |||||
Nov. 30, 2013 | ||||||
Significant Accounting Policies (POLICIES): | ' | |||||
Basis of Presentation | ' | |||||
a) | ||||||
Basis of Presentation | ||||||
The financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“US GAAP”) and are expressed in U.S. dollars. The Company’s fiscal year end is February 28. | ||||||
Use of Estimates | ' | |||||
b) | ||||||
Use of Estimates | ||||||
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 and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. | ||||||
A significant item that requires management's estimates and assumptions is the estimate of proved oil reserves which are used in the calculation of depletion, impairment of its properties and asset retirement obligations. Other items subject to estimates and assumptions include the carrying amount of property, plant and equipment, valuation allowances for income taxes, valuation of derivatives instruments and accrued liabilities, among others. Although management believes these estimates are reasonable, actual results could differ from these estimates. | ||||||
Interim Financial Statements | ' | |||||
c) | ||||||
Interim Financial Statements | ||||||
These interim unaudited financial statements have been prepared on the same basis as the annual financial statements and in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s financial position, results of operations and cash flows for the periods shown. The results of operations for such periods are not necessarily indicative of the results expected for a full year or for any future period. | ||||||
Cash and Cash Equivalents, Policy | ' | |||||
d) | ||||||
Cash and cash equivalents | ||||||
The Company considers all highly liquid instruments with a maturity of three months or less at the time of issuance to be cash equivalents. As at November 30 and February 28, 2013, the Company did not hold any cash equivalents. | ||||||
Basic and Diluted Net Loss per Share Policy | ' | |||||
e) | ||||||
Basic and Diluted Net Loss per Share | ||||||
The Company computes net loss per share in accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net loss available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti dilutive. As at November 30, 2013, the Company had 995,084 (February 28, 2013 – 191,111) potentially dilutive shares outstanding. | ||||||
Financial Instruments | ' | |||||
f) | ||||||
Financial Instruments | ||||||
Pursuant to ASC 820, Fair Value Measurements and Disclosures, an entity is required to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value: | ||||||
Level 1 | ||||||
Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. | ||||||
Level 2 | ||||||
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. | ||||||
Level 3 | ||||||
Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. | ||||||
The Company’s financial instruments consist principally of cash, accounts receivable, other receivable, accounts payable and accrued liabilities, amounts due to a related party, convertible debenture, and loans payable. Pursuant to ASC 820, the fair value of our cash is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. We believe that the recorded values of all of our other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations. | ||||||
Assets and liabilities measured at fair value on a recurring basis were presented on the Company’s balance sheet as at November 30, 2013 and February 28, 2013, respectively, as follows: | ||||||
Fair Value Measurements Using | ||||||
Quoted | Significant | Significant | Balance, | Total | ||
prices in | other | Unobservable | November 30, | Gains and | ||
active markets | observable | inputs | 2013 | (Losses) | ||
for identical | Inputs | (Level 3) | $ | $ | ||
instruments | (Level 2) | $ | ||||
(Level 1) | $ | |||||
$ | ||||||
Derivative liability | – | – | -253,410 | -253,410 | -25,903 | |
Assets and liabilities measured at fair value on a recurring basis were presented on the Company’s balance sheet as at February 28, 2013 as follows: | ||||||
Fair Value Measurements Using | ||||||
Quoted | Significant | Significant | Balance, | Total | ||
prices in | other | Unobservable | February 28, | Gains and | ||
active markets | observable | inputs | 2013 | (Losses) | ||
for identical | Inputs | (Level 3) | $ | $ | ||
instruments | (Level 2) | $ | ||||
(Level 1) | $ | |||||
$ | ||||||
Derivative liability | – | – | -227,507 | -227,507 | -227,507 | |
Derivative Financial Instruments | ' | |||||
g) | ||||||
Derivative Financial Instruments | ||||||
The Company does not use derivative instruments to hedge exposures to cash flow, market or foreign currency risks. | ||||||
The Company reviews the terms of the common stock, warrants and convertible debt it issues to determine whether there are embedded derivative instruments, including embedded conversion options, which are required to be bifurcated and accounted for separately as derivative financial instruments. In circumstances where the host instrument contains more than one embedded derivative instrument, including the conversion option, that is required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument. | ||||||
Bifurcated embedded derivatives are initially recorded at fair value and are then revalued at each reporting date with changes in the fair value reported as non-operating income or expense. The Company uses a Black-Scholes model for valuation of the derivative. When the equity or convertible debt instruments contain embedded derivative instruments that are to be bifurcated and accounted for as liabilities, the total proceeds received are first allocated to the fair value of all the bifurcated derivative instruments. The remaining proceeds, if any, are then allocated to the host instruments themselves, usually resulting in those instruments being recorded at a discount from their face value. | ||||||
The discount from the face value of the convertible debt, together with the stated interest on the instrument, is amortized over the life of the instrument through periodic charges to interest expense, using the effective interest method. | ||||||
Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether net cash settlement of the derivative instrument could be required within the twelve months of the balance sheet date. | ||||||
Comprehensive Loss, Policy | ' | |||||
h) | ||||||
Comprehensive Loss | ||||||
ASC 220, Comprehensive Income, establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at November 30 and February 28, 2013, the Company has no items that represent a comprehensive loss and, therefore, has not included a schedule of comprehensive loss in the financial statements. | ||||||
Oil and Gas Properties Policy | ' | |||||
i) | ||||||
Oil and Gas Properties | ||||||
The Company utilizes the full-cost method of accounting for petroleum and natural gas properties. Under this method, the Company capitalizes all costs associated with acquisition, exploration and development of oil and natural gas reserves, including leasehold acquisition costs, geological and geophysical expenditures, lease rentals on undeveloped properties and costs of drilling of productive and non-productive wells into the full cost pool on a country by country basis. When the Company obtains proven oil and gas reserves, capitalized costs, including estimated future costs to develop the reserves proved and estimated abandonment costs, net of salvage, will be depleted on the units-of-production method using estimates of proved reserves. The costs of unproved properties are not amortized until it is determined whether or not proved reserves can be assigned to the properties. Until such determination is made the Company assesses annually whether impairment has occurred, and includes in the amortization base drilling exploratory dry holes associated with unproved properties. | ||||||
The Company applies a ceiling test to the capitalized cost in the full cost pool. The ceiling test limits such cost to the estimated present value, using a ten percent discount rate, of the future net revenue from proved reserves, based on current economic and operating conditions. Specifically, the Company computes the ceiling test so that capitalized cost, less accumulated depletion and related deferred income tax, do not exceed an amount (the ceiling) equal to the sum of: (a) The present value of estimated future net revenue computed by applying constant prices of oil and gas reserves based on an average of prices during the year (with consideration of price changes only to the extent provided by contractual arrangements) to estimated future production of proved oil and gas reserves as of the date of the latest balance sheet presented, less estimated future expenditures (based on current cost) to be incurred in developing and producing the proved reserves computed using a discount factor of ten percent and assuming continuation of existing economic conditions; plus (b) the cost of property not being amortized; plus (c) the lower of cost or estimated fair value of unproven properties included in the costs being amortized; less (d) income tax effects related to differences between the book and tax basis of the property. | ||||||
Management’s assumptions used in calculating oil and gas reserves or regarding the future net cash flows or fair value of the Company’s properties are subject to change in the future. Any change, such as changes in reserves or commodity price forecasts, could cause changes in the fair value estimates of the properties or impairment expense to be recorded, impacting net income or loss of the Company. Any change in reserves directly impacts future cash flows and fair values of the properties. | ||||||
Estimated reserve quantities and future net cash flows have the most significant impact on the Company. These estimates are also used in the quarterly calculations of depletion, depreciation and impairment of the Company’s proved properties. Estimating accumulations of gas and oil is complex and is not exact because of the numerous uncertainties inherent in the process. Refer to Note 3 – Oil and Gas Properties for estimates recorded relating to the oil and gas properties. | ||||||
Asset Retirement Obligations Policy | ' | |||||
j) | ||||||
Asset Retirement Obligations | ||||||
The Company follows the provisions of ASC 410, Asset Retirement and Environmental Obligations, which establishes standards for the initial measurement and subsequent accounting for obligations associated with the sale, abandonment or other disposal of long-lived tangible assets arising from the acquisition, construction or development and for normal operations of such assets. As at November 30, 2013, the Company recorded asset retirement obligations of $377. During the period ended November 30, 2013, the Company recorded an accretion expense of $130 (2012 - $18). | ||||||
Stock-based Compensation Policy | ' | |||||
k) | ||||||
Stock-based Compensation | ||||||
The Company records stock-based compensation in accordance with ASC 718, Compensation – Stock Based Compensation and ASC 505-50 - Equity-Based Payments to Non-Employees. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. | ||||||
Revenue Recognition | ' | |||||
l) | ||||||
Revenue Recognition | ||||||
Revenues associated with the sale of oil is accounted for using the sales method, whereby revenue is recognized by the operator of the mineral properties for oil is sold to purchasers with the Company recognizing the portion of its share of the revenues. | ||||||
Recent Accounting Pronouncements, Policy | ' | |||||
m) | ||||||
Recent Accounting Pronouncements | ||||||
The recent accounting 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 |
Fair_Value_Measurements_Tables
Fair Value Measurements (Tables) | 9 Months Ended | |||||
Nov. 30, 2013 | ||||||
Fair Value Measurements: | ' | |||||
Fair Value Measurements | ' | |||||
Assets and liabilities measured at fair value on a recurring basis were presented on the Company’s balance sheet as at November 30, 2013 and February 28, 2013, respectively, as follows: | ||||||
Fair Value Measurements Using | ||||||
Quoted | Significant | Significant | Balance, | Total | ||
prices in | other | Unobservable | November 30, | Gains and | ||
active markets | observable | inputs | 2013 | (Losses) | ||
for identical | Inputs | (Level 3) | $ | $ | ||
instruments | (Level 2) | $ | ||||
(Level 1) | $ | |||||
$ | ||||||
Derivative liability | – | – | -253,410 | -253,410 | -25,903 | |
Assets and liabilities measured at fair value on a recurring basis were presented on the Company’s balance sheet as at February 28, 2013 as follows: | ||||||
Fair Value Measurements Using | ||||||
Quoted | Significant | Significant | Balance, | Total | ||
prices in | other | Unobservable | February 28, | Gains and | ||
active markets | observable | inputs | 2013 | (Losses) | ||
for identical | Inputs | (Level 3) | $ | $ | ||
instruments | (Level 2) | $ | ||||
(Level 1) | $ | |||||
$ | ||||||
Derivative liability | – | – | -227,507 | -227,507 | -227,507 |
Capitalized_costs_of_Oil_and_G
Capitalized costs of Oil and Gas properties (Tables) | 9 Months Ended | |
Nov. 30, 2013 | ||
Capitalized costs of Oil and Gas properties | ' | |
Capitalized costs of Oil and Gas properties | ' | |
Noble County, Oklahoma | ||
$ | ||
Capitalized costs, February 29, 2012 | 21,594 | |
Revision to asset retirement cost | -1,036 | |
Depreciation, depletion, and amortization | -339 | |
Impairment | -20,219 | |
Capitalized costs, February 28 and November 30, 2013 | – |
Payables_And_Liabilities_Table
Payables And Liabilities (Tables) | 9 Months Ended | ||||
Nov. 30, 2013 | |||||
Payables And Liabilities: | ' | ||||
Payables And Liabilities | ' | ||||
November 30, | 28-Feb-13 | ||||
2013 | $ | ||||
$ | |||||
Trade accounts payable | 6,909 | 4,009 | |||
Accrued liabilities | 302 | 17,750 | |||
Accrued interest payable | 37,731 | 20,603 | |||
44,942 | 42,362 |
Fair_Value_Of_derivative_Liabi
Fair Value Of derivative Liabilities (Tables) | 9 Months Ended | ||||
Nov. 30, 2013 | |||||
Fair Value Of derivative Liabilities: | ' | ||||
Fair Value Of derivative Liabilities | ' | ||||
The fair value of the derivative financial liability was determined using the Black-Scholes option pricing model, using the following assumptions: | |||||
Expected | Risk-free | Expected | Expected | ||
Volatility | Interest | Dividend | Life (in | ||
Rate | Yield | years) | |||
As at issuance date: | |||||
$215,000 convertible debenture | 268% | 0.13% | 0% | 2 | |
$35,015 convertible debenture | 285% | 0.34% | 0% | 2 | |
As at November 30, 2013 | |||||
$215,000 convertible debenture | 390% | 0.06% | 0% | 0.28 | |
$35,015 convertible debenture | 210% | 0.34% | 0% | 1.8 |
Going_Concern_Details
Going Concern (Details) (USD $) | Nov. 30, 2013 |
Going Concern Details | ' |
Working capital deficit | $583,389 |
Accumulated deficit. | $730,138 |
Fair_Value_Measurements_Using_
Fair Value Measurements Using (Details) (Derivative Liability, USD $) | Derivative Liability |
USD ($) | |
Balance at Feb. 28, 2013 | ($227,507) |
Quoted prices in active markets for identical instruments (Level 1). | 0 |
Significant other observable Inputs (Level 2). | 0 |
Significant Unobservable inputs (Level 3). | -227,507 |
Total Gains and (Losses). | -227,507 |
Quoted prices in active markets for identical instruments (Level 1) | 0 |
Significant other observable Inputs (Level 2) | 0 |
Significant Unobservable inputs (Level 3) | -253,410 |
Total Gains and (Losses) | -25,903 |
Balance at Nov. 30, 2013 | ($253,410) |
Asset_Retirement_Obligations_D
Asset Retirement Obligations (Details) (USD $) | 9 Months Ended | |
Nov. 30, 2013 | Nov. 30, 2012 | |
Asset Retirement Obligations: | ' | ' |
Asset retirement obligations recorded | $377 | ' |
Accretion expense recorded | $130 | $18 |
Oil_and_Gas_Properties_costs_D
Oil and Gas Properties costs (Details) (Noble County, Oklahoma, USD $) | Noble County, Oklahoma |
USD ($) | |
Capitalized costs, at Feb. 28, 2013 | $21,594 |
Revision to asset retirement cost | -1,036 |
Depreciation, depletion, and amortization on capitalized costs | -339 |
Impairment on capitalized costs | -20,219 |
Capitalized costs, at Nov. 30, 2013 | $0 |
Sale_of_working_interest_Detai
Sale of working interest (Details) (USD $) | Feb. 28, 2013 | Feb. 01, 2013 |
Sale of Working Interest: | ' | ' |
Working interest in the oil and gas properties located in Stephens County | ' | 1.00% |
Oklahoma for proceeds | ' | $40,000 |
Working interest resulted in a gain | $40,000 | ' |
NonConsent_Penalty_Charges_and
Non-Consent Penalty Charges and Impairment Charge (Details) (USD $) | Feb. 28, 2013 |
Non-Consent Penalty Charges and Impairment Charge: | ' |
Revenues earned from Noble County property | $1,000 |
Proportionate expenses for the stimulation project | 6,000 |
Revenue from this project will be paid to the other investors | 30,000 |
Allocable share expenses that was charged to the Company | $6,000 |
Accounts_Payable_and_Accrued_L
Accounts Payable and Accrued Liabilities (Details) (USD $) | Nov. 30, 2013 | Feb. 28, 2013 |
Accounts Payable and Accrued Liabilities: | ' | ' |
Trade accounts payable | $6,909 | $4,009 |
Accrued liabilities | 302 | 17,750 |
Accrued interest payable | 37,731 | 20,603 |
Total Accounts Payable and Accrued Liabilities | $44,942 | $42,362 |
Convertible_Debenture_Details
Convertible Debenture (Details) (USD $) | Nov. 30, 2013 | Sep. 18, 2013 | Feb. 28, 2013 |
Convertible Debenture: | ' | ' | ' |
Outstanding note payable to a non-related party | $215,000 | $0 | $215,000 |
Amount paid by the note holder for the acquisition of oil and gas properties | 32,670 | ' | ' |
Amount owing is unsecured, bears interest | 10.00% | 10.00% | ' |
Note convertible into the Company's common stock at a rate | 75.00% | 75.00% | ' |
Accrued of interest payable | 36,801 | 930 | 20,603 |
Convertible loan agreement | ' | $35,015 | ' |
Derivative_Liability_As_Follow
Derivative Liability As Follows (Details) (USD $) | 9 Months Ended | ||
Nov. 30, 2013 | Nov. 30, 2012 | Feb. 28, 2013 | |
Derivative Liability Consists Of: | ' | ' | ' |
Recorded a loss on the change in fair value of the conversion option derivative liability | $25,903 | $59,319 | ' |
Fair value of the conversion option derivative liability. | $253,410 | ' | $227,507 |
Derivative_financial_liability
Derivative financial liability using the Black-Scholes option pricing model (Details) | Nov. 30, 2013 |
Expected Volatility | ' |
As at issuance date: | ' |
$215,000 convertible debenture | 268.00% |
$35,015 convertible debenture | 285.00% |
As at November 30, 2013: | ' |
Convertible debenture $215,000 | 390.00% |
Convertible debenture $35,015 | 210.00% |
Risk-free Interest Rate | ' |
As at issuance date: | ' |
$215,000 convertible debenture | 0.13% |
$35,015 convertible debenture | 0.34% |
As at November 30, 2013: | ' |
Convertible debenture $215,000 | 0.06% |
Convertible debenture $35,015 | 0.34% |
Expected Dividend Yield | ' |
As at issuance date: | ' |
$215,000 convertible debenture | 0.00% |
$35,015 convertible debenture | 0.00% |
As at November 30, 2013: | ' |
Convertible debenture $215,000 | 0.00% |
Convertible debenture $35,015 | 0.00% |
Expected Life (in years) | ' |
As at issuance date. | ' |
$215,000 convertible debenture. | 2 |
$35,015 convertible debenture. | 2 |
As at November 30, 2013. | ' |
Convertible debenture $215,000. | 0.28 |
Convertible debenture $35,015 . | 1.8 |
Related_Party_Transactions_Det
Related Party Transactions (Details) (USD $) | 9 Months Ended | ||
Nov. 30, 2013 | Nov. 30, 2012 | Feb. 28, 2013 | |
Related Party Transaction: | ' | ' | ' |
Owes to the President and CEO | $71,300 | ' | $58,150 |
Incurred salary expenses | $18,000 | $18,000 | ' |
Share_Capital_Transactions_Det
Share Capital Transactions (Details) (USD $) | Nov. 30, 2013 | Aug. 23, 2013 |
Share Capital Transactions: | ' | ' |
Upon effect of the forward split, authorized capital shares of common stock increase to | 1,000,000,000 | 1,000,000,000 |
On August 22, 2013, a shareholder of the Company voluntarily cancelled common shares | 15,000,000 | ' |
Shares of common stock, par value | $0.00 | $0.00 |