Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Oct. 31, 2014 | Dec. 18, 2014 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | FREEDOM PETROLEUM INC. | |
Entity Central Index Key | 1557798 | |
Trading Symbol | fpet | |
Current Fiscal Year End Date | -24 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 53,469,477 | |
Document Type | 10-Q | |
Document Period End Date | 31-Oct-14 | |
Amendment Flag | FALSE | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2015 |
BALANCE_SHEETS
BALANCE SHEETS (USD $) | Oct. 31, 2014 | Jul. 31, 2014 |
Current Assets | ||
Cash and cash equivalents | $22,935 | $76,108 |
Deposits | 1,318 | 1,318 |
Total Current Assets | 24,253 | 77,426 |
Oil and gas property | 61,299 | |
Total Assets | 85,552 | 77,426 |
Current Liabilities | ||
Accounts payable and accrued expenses | 78,844 | 6,300 |
Due to related party | 72,310 | 54,274 |
Total Current Liabilities | 151,154 | 60,574 |
Stockholders' Equity (Deficit) | ||
Preferred stock, $0.0001 par value; 20,000,000 shares authorized, 0 shares issued and outstanding | ||
Common stock, $0.0001 par value, 100,000,000 shares authorized; 53,297,602 and 52,828,852 shares issued and outstanding, respectively | 5,330 | 5,283 |
Common stock subscription | 31 | 150,000 |
Common stock subscriptions receivable | -100,000 | |
Additional paid-in capital | 545,437 | 295,515 |
Accumulated deficit | -516,400 | -433,946 |
Total Stockholders' Equity (Deficit) | -65,602 | 16,852 |
Total Liabilities and Stockholders' Equity (Deficit) | $85,552 | $77,426 |
BALANCE_SHEETS_Parentheticals
BALANCE SHEETS (Parentheticals) (USD $) | Oct. 31, 2014 | Jul. 31, 2014 |
Statement Of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $0.00 | $0.00 |
Preferred stock, shares authorized | 20,000,000 | 20,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $0.00 | $0.00 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 53,297,602 | 52,828,852 |
Common stock, shares outstanding | 53,297,602 | 52,828,852 |
STATEMENTS_OF_OPERATIONS_UNAUD
STATEMENTS OF OPERATIONS (UNAUDITED) (USD $) | 3 Months Ended | |
Oct. 31, 2014 | Oct. 31, 2013 | |
Income Statement [Abstract] | ||
Revenues | ||
Operating Expenses | ||
General and administrative | 13,708 | 1,417 |
Professional fees | 30,914 | 3,000 |
Consulting fees - related party | 30,000 | |
Website design | 7,832 | |
Total Operating Expenses | 82,454 | 4,417 |
Loss From Operations | -82,454 | -4,417 |
Other Income | 900 | |
Loss Before Provision for Income Taxes | -82,454 | -3,517 |
Provision for Income Taxes | ||
Net Loss | ($82,454) | ($3,517) |
Net Loss Per Share: Basic and Diluted (in dollars per share) | $0 | $0 |
Weighted Average Number of Shares Outstanding: Basic and Diluted (in shares) | 52,833,947 | 52,200,000 |
STATEMENT_OF_STOCKHOLDERS_EQUI
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT) (USD $) | Common Stock | Additional Paid in Capital | Common Stock Subscription | Common Stock Subscription Receivable | Accumulated Deficit | Total |
Balance at Jul. 31, 2013 | $5,220 | $62,740 | ($78,510) | ($10,550) | ||
Balance (in shares) at Jul. 31, 2013 | 52,200,000 | |||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Forgiveness of related party payable | 12,740 | 12,740 | ||||
Stock issued for debt | 13 | 45,085 | 45,098 | |||
Stock issued for debt (in shares) | 128,852 | |||||
Stock issued for compensation | 50 | 174,950 | 175,000 | |||
Stock issued for compensation (in shares) | 500,000 | |||||
Common stock subscription received | 150,000 | 150,000 | ||||
Net loss for the period | -355,436 | -355,436 | ||||
Balance at Jul. 31, 2014 | 5,283 | 295,515 | 150,000 | -433,946 | 16,852 | |
Balance (in shares) at Jul. 31, 2014 | 52,828,852 | 52,828,852 | ||||
Balance at Aug. 01, 2014 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Common stock issued for cash | 47 | 149,953 | -150,000 | |||
Common stock issued for cash (in shares) | 468,750 | 468,750 | ||||
Common stock subscription | 99,969 | 31 | -100,000 | |||
Net loss for the period | -82,454 | -82,454 | ||||
Balance at Oct. 31, 2014 | $5,330 | $545,437 | $31 | ($100,000) | ($516,400) | ($65,602) |
Balance (in shares) at Oct. 31, 2014 | 53,297,602 | 53,297,602 |
STATEMENTS_OF_CASH_FLOWS_UNAUD
STATEMENTS OF CASH FLOWS (UNAUDITED) (USD $) | 3 Months Ended | |
Oct. 31, 2014 | Oct. 31, 2013 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss for the period | ($82,454) | ($3,517) |
Change in operating assets and liabilities | ||
Accounts payable and accrued expenses | 52,544 | -3,300 |
Accrued compensation | 30,000 | |
Net Cash Provided by (Used in) Operating Activities | 90 | -6,817 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Acquisition of unproved oil and gas properties | -61,299 | |
Net Cash Used in Investing Activities | -61,299 | |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Advance received from a related party | 8,036 | 8,000 |
Net Cash Provided by (Used in) Financing Activities | 8,036 | 8,000 |
Net Increase (Decrease) in cash and cash equivalents | -53,173 | 1,183 |
Cash and cash equivalents, beginning of the period | 76,108 | 1,674 |
Cash and cash equivalents, end of the period | 22,935 | 2,857 |
SUPPLEMENTAL CASH FLOW INFORMATION: | ||
Cash paid for income taxes | ||
Cash paid for interest |
GENERAL_ORGANIZATION_AND_BUSIN
GENERAL ORGANIZATION AND BUSINESS | 3 Months Ended |
Oct. 31, 2014 | |
General Organization and Business [Abstract] | |
GENERAL ORGANIZATION AND BUSINESS | NOTE 1 – GENERAL ORGANIZATION AND BUSINESS |
Freedom Petroleum, Inc. ("the Company") was incorporated under the laws of the State of Nevada, U.S. on June 13, 2012. The Company intends to engage in the exploration and development of oil and gas properties. The Company's fiscal year end is July 31. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT
SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES | 3 Months Ended |
Oct. 31, 2014 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES |
Basis of Presentation | |
The interim financial information referred to above has been prepared and presented in conformity with accounting principles generally accepted in the United States applicable to interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. The interim financial information has been prepared on a basis consistent with prior interim periods and years and includes all disclosures that are necessary and required by applicable laws and regulations. This report on Form 10-Q should be read in conjunction with the Company's financial statements and notes thereto included in the Company's Form 10-K for the fiscal year ended April 30, 2014. | |
The unaudited financial statement and notes are presented in accordance with accounting principles generally accepted in the United States of America (GAAP). These interim financial statements include all adjustments that, in the opinion of management, are necessary in order to make the financial statements not misleading. | |
Use of Estimates | |
The preparation of financial statements in conformity with generally accepted accounting principles of the United States 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 year. The more significant areas requiring the use of estimates include asset impairment, stock-based compensation, and future income tax amounts. Management bases its estimates on historical experience and on other assumptions considered to be reasonable under the circumstances. However, actual results may differ from the estimates. | |
Cash and Cash Equivalents | |
Cash and cash equivalents include cash in hand and cash in time deposits, certificates of deposit and all highly liquid debt instruments with original maturities of three months or less. The Company had $22,935 and $76,108 of cash at October 31, 2014 and July 31, 2014, respectively. | |
Fair Value of Financial Instruments | |
The Company's financial instruments consist of cash, accounts payable and accrued expenses, and amounts due to related parties. The fair value of these financial instruments approximate carrying amounts due either to length of maturity or interest rates that approximate prevailing rates unless otherwise disclosed in these financial statements. | |
Revenue Recognition | |
The Company has yet to realize revenues from operations. The Company will recognize revenue when delivery of goods or completion of services has occurred provided there is persuasive evidence of an agreement, acceptance has been approved by its customers, the fee is fixed or determinable based on the completion of stated terms and conditions, and collection of any related receivable is reasonably assured. | |
Oil and Gas Properties | |
The Company uses the full cost method of accounting for oil and natural gas properties. Under this method, all acquisition, exploration and development costs, including certain payroll, asset retirement costs, other internal costs, and interest incurred for the purpose of finding oil and natural gas reserves, are capitalized. Internal costs that are capitalized are directly attributable to acquisition, exploration and development activities and do not include costs related to production, general corporate overhead or similar activities. Costs associated with production and general corporate activities are expensed in the period incurred. Proceeds from the sale of oil and natural gas properties are applied to reduce the capitalized costs of oil and natural gas properties unless the sale would significantly alter the relationship between capitalized costs and proved reserves, in which case a gain or loss is recognized. | |
Capitalized costs associated with impaired properties and capitalized costs related to properties having proved reserves, plus the estimated future development costs, and asset retirement costs under ASC 410 "Asset Retirement and Environmental Obligations", are amortized using the unit-of-production method based on proved reserves. Capitalized costs of oil and natural gas properties, net of accumulated amortization and deferred income taxes, are limited to the total of estimated future net cash flows from proved oil and natural gas reserves, discounted at ten percent, plus the cost of unevaluated properties. | |
There are many factors, including global events that may influence the production, processing, marketing and price of oil and natural gas. A reduction in the valuation of oil and natural gas properties resulting from declining prices or production could adversely impact depletion rates and capitalized cost limitations. Capitalized costs associated with properties that have not been evaluated through drilling or seismic analysis are excluded from the unit-of-production amortization. Exclusions are adjusted annually based on drilling results and interpretative analysis. | |
Sales of oil and natural gas properties are accounted for as adjustments to the net full cost pool with no gain or loss recognized, unless the adjustment would significantly alter the relationship between capitalized costs and proved reserves. If it is determined that the relationship is significantly altered, the corresponding gain or loss will be recognized in the statements of operations. | |
Costs of oil and gas properties are amortized using the units of production method. | |
Ceiling test: Under the full cost method of accounting, the net book value of oil and gas properties, less related deferred income taxes, may not exceed a calculated "ceiling". The ceiling limitation is the estimated after-tax future net cash flows from proved oil and gas reserves, discounted at 10 percent per annum and adjusted for cash flow hedges. Estimated future net cash flows exclude future cash outflows associated with settling accrued asset retirement obligations. | |
The Company has adopted U.S. Securities and Exchange Commission ("SEC") Release 33-8995 and the amendments to ASC 932, "Extractive Industries – Oil and Gas" (the Modernization Rules). Under the Modernization Rules, estimated future net cash flows are calculated using end-of-period costs and an unweighted arithmetic average of commodity prices in effect on the first day of each of the previous 12 months, held flat for the life of production, except where prices are defined by contractual arrangements. | |
Any excess of the net book value of proved oil and gas properties, less related deferred income taxes, over the ceiling is charged to expense and reflected as additional depletion, depreciation and amortization expense ("DD&A") in the accompanying statement of operations. Such limitations are tested quarterly. As at October 31, 2014 and July 31, 2014, the Company had oil and gas property costs of $61,299 and $0, respectively. | |
Impairment of Oil and Gas Properties | |
Unproved oil and gas properties are assessed at each reporting period for impairment of value, and a loss is recognized at the time of the impairment by providing an impairment allowance. An asset would be impaired if the undiscounted cash flows were less than its carrying value. Impairments are measured by the amount by which the carrying value exceeds its fair value. Because the Company uses the successful efforts method, the Company assesses its properties individually for impairment, instead of on an aggregate pool of costs. Impairment of unproved properties is based on the facts and circumstances surrounding each lease and is recognized based on management's evaluation. Management's evaluation follows a two-step process where (1) recoverability of the carrying value of the asset is reviewed to determine if there is sufficient value recoverable to support the capitalized value at the report date; and, (2) if assets fail the recoverability test, impairment testing is conducted, including the evaluation of various criteria such as: prior history of successful operations; production currently in place and/or future projected cash flows (if any); reserve reports or evaluations from which management can prepare future cash flow analyses; the Company's ability to monetize the asset(s) under evaluation; and Management's intent regarding future development. | |
Stock-Based Compensation | |
The Company accounts for employee stock-based compensation in accordance with the guidance of FASB ASC Topic 718, Compensation – Stock Compensation which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. The fair value of the equity instrument is charged directly to compensation expense and credited to additional paid-in capital over the period during which services are rendered. The Company had no stock-based expenses, for the three months ended October 31, 2014 and 2013. | |
The Company follows ASC Topic 505-50, formerly EITF 96-18, "Accounting for Equity Instruments that are Issued to Other than Employees for Acquiring, or in Conjunction with Selling Goods and Services," for stock options and warrants issued to consultants and other non-employees. In accordance with ASC Topic 505-50, these stock options and warrants issued as compensation for services provided to the Company are accounted for based upon the fair value of the services provided or the estimated fair market value of the option or warrant, whichever can be more clearly determined. There has been no stock-based compensation issued to non-employees. | |
Income Taxes | |
The Company provides for income taxes using an asset and liability approach. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect currently. Deferred tax assets are reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. No provision for income taxes is included in the statement due to its immaterial amount, net of the allowance account, based on the likelihood of the Company to utilize the loss carry-forward. | |
Basic and Diluted Earnings (Loss) Per Share | |
Basic income (loss) per share is calculated by dividing the Company's net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share is calculated by dividing the Company's net income available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. There are no such common stock equivalents outstanding as at October 31, 2014 and 2013. | |
Recent Accounting Pronouncements | |
The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company's financial position, results of operations, or cash flow. |
DUE_TO_RELATED_PARTY
DUE TO RELATED PARTY | 3 Months Ended |
Oct. 31, 2014 | |
Related Party Transactions [Abstract] | |
DUE TO RELATED PARTIES | NOTE 3 – DUE TO RELATED PARTY |
During the year ended July 31, 2014, the current sole director and officer, who is also a majority shareholder, advanced the Company $24,274 for operating expenses. During the three months ended October 31, 2014, the director advanced another $8,036 to the Company for operating expenses and the total balance of $32,310 was included in amount due to related party as at October 31, 2014. The loan is unsecured, non-interest bearing, and has no specific terms of repayment. | |
Pursuant to an employee agreement effective on March 1, 2014, the Company was obligated to pay $10,000 per month to the current sole officer and director for management service. During the year ended July 31, 2014, $20,000 was paid to this officer and $30,000 was included in amount due to related parties as at July 31, 2014. On August 1, 2014, $20,000 was paid to the officer. As at October 31, 2014, $40,000 unpaid consulting fees were included in the amount due to related party. | |
As at October 31, 2014 and July 31, 2014, our sole officer and director was owed $72,310 and $54,274, respectively. |
OIL_AND_NATURAL_GAS_PROPERTIES
OIL AND NATURAL GAS PROPERTIES | 3 Months Ended | ||||
Oct. 31, 2014 | |||||
Oil and Gas Property [Abstract] | |||||
OIL AND NATURAL GAS PROPERTIES | NOTE 4 – OIL AND NATURAL GAS PROPERTIES | ||||
On October 10, 2014, the Company entered into a Purchase and Sale Agreement with Shalex Corporation ("Shalex") (the "Agreement") whereby the Company purchased a one hundred percent (100%) undivided working interest and shall receive 87% Net Revenue Interest (NRI) in certain oil and gas interests (Crown Land) and properties arising from the oil and gas leases (the "Leases"), which together comprise a parcel of 2,304 hectares in the Bentley area of Alberta, Canada (the "Property") and (ii) the Pre-Existing Well (the "Well"). In exchange for the Leases, the Company will pay an aggregate of four hundred thousand dollars (US$400,000) (the "Purchase Price") incrementally, at an agreed upon payment schedule, following the completion of certain administrative benchmarks as set forth in the Agreement, such as the requirement to provide certain financial materials regarding the Leases to the Company; such benchmarks are also therefore a condition to closing the transaction. The closing of the transaction, and transfer of title from Shalex to the Company, shall occur within 30 days after payment of the full Purchase Price; provided however, that it shall not take place later than 135 days following the signing of the Agreement. The Purchase Price shall be reduced to $360,000 if a continuation application for one of the Leases on the Property is not approved. | |||||
In consideration for the Agreement, the Company has agreed to pay the following amounts on or before the dates specified in the following schedule: | |||||
Cash Payments (USD) | |||||
On or before November 5, 2014 (paid) | $ | 50,000 | |||
On or before December 8, 2014 | 125,000 | ||||
On or before January 20, 2015 | 125,000 | ||||
On or before March 6, 2015 | 100,000 | ||||
$ | 400,000 | ||||
The parties agreed to pay all maintenance costs, as such term is defined in the Agreement, associated with the leases for the fiscal years ending December 31, 2014 and 2015, on a pro-rata basis based upon the date the Agreement was signed and such costs were previously paid by Shalex. The Company maintains the right to surrender in whole or part any of the Leases by non-payment of delay rentals, provided that the Company gives Shalex at least 60 days prior written notice. If Shalex does not agree to the surrender, the Company must assign all interest conveyed pursuant to the Agreement on the Lease(s) to Shalex absolutely free and clear of any liens, overriding royalty or other encumbrances of any kind whatsoever other than those in existence at the time of the Agreement or placed thereon pursuant thereto. | |||||
The Agreement contains representations, warranties and covenants by the Company and Shalex that are customary for transactions of this type such as (i) in the case of the Company: organization, good standing and qualification to do business; capitalization; authorization and enforceability of the transaction and transaction documents; consents being obtained or not required to consummate the transaction; and compliance with securities laws; and (ii) in the case of Shalex: ownership of the property and lack of asserted defaults. | |||||
The Agreement may be terminated, (i) by the Company if they identify an issue, prior to the final payment of the Purchase Price, that would prevent them from being able to use the Property in a manner consistent with the spirit and intended purpose of this Agreement; (ii) by Shalex if the Company does not make the payments by the contractually agreed to deadline; and (iii) upon mutual consent of the parties. | |||||
During the three months ended October 31, 2014, the company capitalized $50,000 acquisition costs and $11,299 maintenance costs for this oil and gas properties. |
CAPITAL_STOCK
CAPITAL STOCK | 3 Months Ended |
Oct. 31, 2014 | |
Equity [Abstract] | |
CAPITAL STOCK | NOTE 5 – CAPITAL STOCK |
Preferred Stock | |
The Company has 20,000,000 authorized preferred shares with a par value of $0.0001 per share. The Board of Directors are authorized to divide the authorized shares of Preferred Stock into one or more series, each of which shall be so designated as to distinguish the shares thereof from the shares of all other series and classes. | |
There were no shares of preferred stock issued and outstanding as of October 31, 2014 and July 31, 2014 | |
Common Stock | |
The Company has authorized 100,000,000 common shares with a par value of $0.0001 per share. Each common share entitles the holder to one vote, in person or proxy, on any matter on which action of the stockholders of the corporation is sought. | |
During the year ended July 31, 2014, the Company issued to the sole officer and director, who is also a majority stockholder, 128,852 shares of common stock at a price of approximately $0.35 per share for debt cancellation of $45,098. | |
During the year ended July 31, 2014, the Company issued to the sole officer and director, who is also a majority stockholder, 500,000 shares of common stock at a price of $0.35 per share for compensation of $175,000, pursuant to an employee agreement. | |
During the year ended July 31, 2014, related parties forgave loans of $12,740 which was recorded as additional paid in capital. | |
During the three months ended October 31, 2014, the Company issued 468,750 shares of common stock at a price of approximately $0.32 per share for total cash proceeds of $150,000, which was received prior to the year ended of July 31, 2014. | |
On October 20, 2014, the Company entered into a Share Purchase Agreement with an unaffiliated investor. Pursuant to the purchase agreement, the investor subscribed for 312,500 shares of the Company's common stock for $100,000, at a value of $0.32 per share. | |
There were 53,297,602 and 52,828,852 shares of common stock issued and outstanding as of October 31, 2014 and July 31, 2014, respectively. |
INCOME_TAXES
INCOME TAXES | 3 Months Ended | ||||||||
Oct. 31, 2014 | |||||||||
Income Tax Disclosure [Abstract] | |||||||||
INCOME TAXES | NOTE 6 – INCOME TAXES | ||||||||
For the three months ended October 31, 2014 and 2013, the Company has incurred a net loss and, therefore, has no tax liability. The net deferred tax asset generated by the loss carry-forward has been fully reserved. The cumulative net operating loss carry-forward was approximately $516,400 at October 31, 2014 and will expire beginning in the year 2032. | |||||||||
The provision for Federal income tax consists of the following for the years ended October 31, 2014 and 2013: | |||||||||
2014 | 2013 | ||||||||
Federal income tax benefit attributable to: | |||||||||
Current operations | $ | 28,034 | $ | 1,196 | |||||
Less: valuation allowance | (28,034 | ) | (1,196 | ) | |||||
Net provision for Federal income taxes | $ | - | $ | - | |||||
The cumulative tax effect at the expected rate of 34% of significant items comprising our net deferred tax amount is as follows as of October 31, 2014 and July 31, 2014: | |||||||||
31-Oct-14 | 31-Jul-14 | ||||||||
Deferred tax asset attributable to: | |||||||||
Net operating loss carryover | $ | 175,575 | $ | 147,541 | |||||
Less: valuation allowance | (175,575 | ) | (147,541 | ) | |||||
Net deferred tax asset | $ | - | $ | - | |||||
Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry-forwards of $516,400 for Federal income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carry-forwards may be limited as to use in future years. |
ENVIRONMENTAL_AND_OTHER_CONTIN
ENVIRONMENTAL AND OTHER CONTINGENCIES | 3 Months Ended |
Oct. 31, 2014 | |
Environmental Remediation Obligations [Abstract] | |
ENVIRONMENTAL AND OTHER CONTINGENCIES | NOTE 7 – ENVIRONMENTAL AND OTHER CONTINGENCIES |
The Company's operations and earnings may be affected by various forms of governmental action in the United States and the countries that the oil & gas properties located. Examples of such governmental action include, but are by no means limited to: tax increases and retroactive tax claims; royalty and revenue sharing increases; import and export controls; price controls; currency controls; allocation of supplies of crude oil and petroleum products and other goods; expropriation of property; restrictions and preferences affecting the issuance of oil and gas or mineral leases; restrictions on drilling and/or production; laws and regulations intended for the promotion of safety and the protection and/or remediation of the environment; governmental support for other forms of energy; and laws and regulations affecting the Company's relationships with employees, suppliers, customers, stockholders and others. Because governmental actions are often motivated by political considerations and may be taken without full consideration of their consequences, and may be taken in response to actions of other governments, it is not practical to attempt to predict the likelihood of such actions, the form the actions may take or the effect such actions may have on the Company. | |
Companies in the oil and gas industry are subject to numerous federal, state, and local regulations dealing with the environment. Violation of federal or state environmental laws, regulations and permits can result in the imposition of significant civil and criminal penalties, injunctions and construction bans or delays. A discharge of hazardous substances into the environment could, to the extent such event is not insured, subject the Company to substantial expense, including both the cost to comply with applicable regulations and claims by neighboring landowners and other third parties for any personal injury and property damage that might result. | |
The Company currently leases a property at which hazardous substances could have been or are being handled. In addition, many of these properties have been operated by third parties whose treatment and disposal or release of hydrocarbons or other wastes were not under the Company's control. Under existing laws, the Company could be required to remove or remediate previously disposed wastes (including wastes disposed of or released by prior owners or operators), to clean up contaminated property (including contaminated groundwater) or to perform remedial plugging operations to prevent future contamination. The Company is investigating the extent of any such liability and the availability of applicable defenses and believes the costs related to these sites will not have a material adverse effect on the Company's net income, financial condition or liquidity in a future period. | |
The Company's liability for remedial obligations includes certain amounts that are based on anticipated regulatory approval for proposed remediation of former refinery waste sites. Although regulatory authorities may require more costly alternatives than the proposed processes, the cost of such potential alternative processes is not expected to be a material amount. Certain environmental expenditures are likely to be recovered by the Company from other sources, primarily environmental funds maintained by certain states. Since no assurance can be given that future recoveries from other sources will occur, the Company has not recorded a benefit for likely recoveries. | |
There is the possibility that environmental expenditures could be required at currently unidentified sites, and new or revised regulations could require additional expenditures at known sites. However, based on information currently available to the Company, the amount of future remediation costs incurred at known or currently unidentified sites is not expected to have a material adverse effect on the Company's future net income, cash flows or liquidity. The Company has recorded $0 for its estimated asset retirement obligations as at October 31, 2014 and July 31, 2014. |
COMMITMENTS_AND_CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Oct. 31, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 8 – COMMITMENTS AND CONTINGENCIES |
On December 20, 2013, the Company entered into an Office Services Agreement with Abby Office Centers for renting office space, furniture and equipment from January 1, 2014 to December 31, 2014 for a monthly price of $1,251. | |
On October 28, 2014, the Company entered into an agreement for Investor Relation services with MZ Group North America from November 1, 2014 to October 31, 2015 for a monthly price of $5,000. |
GOING_CONCERN
GOING CONCERN | 3 Months Ended |
Oct. 31, 2014 | |
Going Concern [Abstract] | |
GOING CONCERN | NOTE 9 – GOING CONCERN |
The financial statements have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company has a capital deficiency of $126,901 and has incurred losses since inception resulting in an accumulated deficit of $516,400 as at October 31, 2014. Further losses are anticipated in the development of the business, raising substantial doubt about the Company's ability to continue as a going concern. | |
The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management intends to finance operating costs over the next twelve months with loans from directors and/or private placement of common stock. |
SUBSEQUENT_EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Oct. 31, 2014 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 10 – SUBSEQUENT EVENTS |
On November 3, 2014, the Company received $55,000 and issued 171,875 shares of common stock, for the share subscription agreement signed on October 20, 2014. | |
On November 25, 2014, the Company entered into an Office Services Agreement with Key Business Centre for renting office space, furniture and equipment from December 1, 2014 to November 30, 2015 for monthly rent of $843. Accordingly, as of January 1, 2015 our offices will be located at Key Business Center, 702 W. Idaho Street, Suite 1100, Boise, ID 83702. | |
On December 11, 2014, the Company amended the Purchase and Sale Agreement with Shalex Corporation to defer the current payment due, for $125,000, to be made by January 1, 2015. | |
Management has evaluated subsequent events through the date these financial statements were available to be issued. Based on our evaluation no additional events have occurred that require disclosure. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT1
SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES (Policies) | 3 Months Ended |
Oct. 31, 2014 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation |
The interim financial information referred to above has been prepared and presented in conformity with accounting principles generally accepted in the United States applicable to interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. The interim financial information has been prepared on a basis consistent with prior interim periods and years and includes all disclosures that are necessary and required by applicable laws and regulations. This report on Form 10-Q should be read in conjunction with the Company's financial statements and notes thereto included in the Company's Form 10-K for the fiscal year ended April 30, 2014. | |
The unaudited financial statement and notes are presented in accordance with accounting principles generally accepted in the United States of America (GAAP). These interim financial statements include all adjustments that, in the opinion of management, are necessary in order to make the financial statements not misleading. | |
Use of Estimates | Use of Estimates |
The preparation of financial statements in conformity with generally accepted accounting principles of the United States 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 year. The more significant areas requiring the use of estimates include asset impairment, stock-based compensation, and future income tax amounts. Management bases its estimates on historical experience and on other assumptions considered to be reasonable under the circumstances. However, actual results may differ from the estimates. | |
Cash and Cash Equivalents | Cash and Cash Equivalents |
Cash and cash equivalents include cash in hand and cash in time deposits, certificates of deposit and all highly liquid debt instruments with original maturities of three months or less. The Company had $22,935 and $76,108 of cash at October 31, 2014 and July 31, 2014, respectively. | |
Fair Value of Financial Instruments | Fair Value of Financial Instruments |
The Company's financial instruments consist of cash, accounts payable and accrued expenses, and amounts due to related parties. The fair value of these financial instruments approximate carrying amounts due either to length of maturity or interest rates that approximate prevailing rates unless otherwise disclosed in these financial statements. | |
Revenue Recognition | Revenue Recognition |
The Company has yet to realize revenues from operations. The Company will recognize revenue when delivery of goods or completion of services has occurred provided there is persuasive evidence of an agreement, acceptance has been approved by its customers, the fee is fixed or determinable based on the completion of stated terms and conditions, and collection of any related receivable is reasonably assured. | |
Oil and Gas Properties | Oil and Gas Properties |
The Company uses the full cost method of accounting for oil and natural gas properties. Under this method, all acquisition, exploration and development costs, including certain payroll, asset retirement costs, other internal costs, and interest incurred for the purpose of finding oil and natural gas reserves, are capitalized. Internal costs that are capitalized are directly attributable to acquisition, exploration and development activities and do not include costs related to production, general corporate overhead or similar activities. Costs associated with production and general corporate activities are expensed in the period incurred. Proceeds from the sale of oil and natural gas properties are applied to reduce the capitalized costs of oil and natural gas properties unless the sale would significantly alter the relationship between capitalized costs and proved reserves, in which case a gain or loss is recognized. | |
Capitalized costs associated with impaired properties and capitalized costs related to properties having proved reserves, plus the estimated future development costs, and asset retirement costs under ASC 410 "Asset Retirement and Environmental Obligations", are amortized using the unit-of-production method based on proved reserves. Capitalized costs of oil and natural gas properties, net of accumulated amortization and deferred income taxes, are limited to the total of estimated future net cash flows from proved oil and natural gas reserves, discounted at ten percent, plus the cost of unevaluated properties. | |
There are many factors, including global events that may influence the production, processing, marketing and price of oil and natural gas. A reduction in the valuation of oil and natural gas properties resulting from declining prices or production could adversely impact depletion rates and capitalized cost limitations. Capitalized costs associated with properties that have not been evaluated through drilling or seismic analysis are excluded from the unit-of-production amortization. Exclusions are adjusted annually based on drilling results and interpretative analysis. | |
Sales of oil and natural gas properties are accounted for as adjustments to the net full cost pool with no gain or loss recognized, unless the adjustment would significantly alter the relationship between capitalized costs and proved reserves. If it is determined that the relationship is significantly altered, the corresponding gain or loss will be recognized in the statements of operations. | |
Costs of oil and gas properties are amortized using the units of production method. | |
Ceiling test: Under the full cost method of accounting, the net book value of oil and gas properties, less related deferred income taxes, may not exceed a calculated "ceiling". The ceiling limitation is the estimated after-tax future net cash flows from proved oil and gas reserves, discounted at 10 percent per annum and adjusted for cash flow hedges. Estimated future net cash flows exclude future cash outflows associated with settling accrued asset retirement obligations. | |
The Company has adopted U.S. Securities and Exchange Commission ("SEC") Release 33-8995 and the amendments to ASC 932, "Extractive Industries – Oil and Gas" (the Modernization Rules). Under the Modernization Rules, estimated future net cash flows are calculated using end-of-period costs and an unweighted arithmetic average of commodity prices in effect on the first day of each of the previous 12 months, held flat for the life of production, except where prices are defined by contractual arrangements. | |
Any excess of the net book value of proved oil and gas properties, less related deferred income taxes, over the ceiling is charged to expense and reflected as additional depletion, depreciation and amortization expense ("DD&A") in the accompanying statement of operations. Such limitations are tested quarterly. As at October 31, 2014 and July 31, 2014, the Company had oil and gas property costs of $61,299 and $0, respectively. | |
Impairment of Oil and Gas Properties | Impairment of Oil and Gas Properties |
Unproved oil and gas properties are assessed at each reporting period for impairment of value, and a loss is recognized at the time of the impairment by providing an impairment allowance. An asset would be impaired if the undiscounted cash flows were less than its carrying value. Impairments are measured by the amount by which the carrying value exceeds its fair value. Because the Company uses the successful efforts method, the Company assesses its properties individually for impairment, instead of on an aggregate pool of costs. Impairment of unproved properties is based on the facts and circumstances surrounding each lease and is recognized based on management's evaluation. Management's evaluation follows a two-step process where (1) recoverability of the carrying value of the asset is reviewed to determine if there is sufficient value recoverable to support the capitalized value at the report date; and, (2) if assets fail the recoverability test, impairment testing is conducted, including the evaluation of various criteria such as: prior history of successful operations; production currently in place and/or future projected cash flows (if any); reserve reports or evaluations from which management can prepare future cash flow analyses; the Company's ability to monetize the asset(s) under evaluation; and Management's intent regarding future development. | |
Stock-Based Compensation | Stock-Based Compensation |
The Company accounts for employee stock-based compensation in accordance with the guidance of FASB ASC Topic 718, Compensation – Stock Compensation which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the financial statements based on their fair values. The fair value of the equity instrument is charged directly to compensation expense and credited to additional paid-in capital over the period during which services are rendered. The Company had no stock-based expenses, for the three months ended October 31, 2014 and 2013. | |
The Company follows ASC Topic 505-50, formerly EITF 96-18, "Accounting for Equity Instruments that are Issued to Other than Employees for Acquiring, or in Conjunction with Selling Goods and Services," for stock options and warrants issued to consultants and other non-employees. In accordance with ASC Topic 505-50, these stock options and warrants issued as compensation for services provided to the Company are accounted for based upon the fair value of the services provided or the estimated fair market value of the option or warrant, whichever can be more clearly determined. There has been no stock-based compensation issued to non-employees. | |
Income Taxes | Income Taxes |
The Company provides for income taxes using an asset and liability approach. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect currently. Deferred tax assets are reduced by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. No provision for income taxes is included in the statement due to its immaterial amount, net of the allowance account, based on the likelihood of the Company to utilize the loss carry-forward. | |
Basic and Diluted Earnings (Loss) Per Share | Basic and Diluted Earnings (Loss) Per Share |
Basic income (loss) per share is calculated by dividing the Company's net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share is calculated by dividing the Company's net income available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. There are no such common stock equivalents outstanding as at October 31, 2014 and 2013. | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements |
The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company's financial position, results of operations, or cash flow. |
OIL_AND_NATURAL_GAS_PROPERTIES1
OIL AND NATURAL GAS PROPERTIES (Tables) | 3 Months Ended | ||||
Oct. 31, 2014 | |||||
Oil and Gas Property [Abstract] | |||||
Schedule of cash payment | Cash Payments (USD) | ||||
On or before November 5, 2014 (paid) | $ | 50,000 | |||
On or before December 8, 2014 | 125,000 | ||||
On or before January 20, 2015 | 125,000 | ||||
On or before March 6, 2015 | 100,000 | ||||
$ | 400,000 |
INCOME_TAXES_Tables
INCOME TAXES (Tables) | 3 Months Ended | ||||||||
Oct. 31, 2014 | |||||||||
Income Tax Disclosure [Abstract] | |||||||||
Schedule of the provision for federal income tax | 2014 | 2013 | |||||||
Federal income tax benefit attributable to: | |||||||||
Current operations | $ | 28,034 | $ | 1,196 | |||||
Less: valuation allowance | (28,034 | ) | (1,196 | ) | |||||
Net provision for Federal income taxes | $ | - | $ | - | |||||
Schedule of deferred tax assets | 31-Oct-14 | 31-Jul-14 | |||||||
Deferred tax asset attributable to: | |||||||||
Net operating loss carryover | $ | 175,575 | $ | 147,541 | |||||
Less: valuation allowance | (175,575 | ) | (147,541 | ) | |||||
Net deferred tax asset | $ | - | $ | - | |||||
SUMMARY_OF_SIGNIFICANT_ACCOUNT2
SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES (Detail Textuals) (USD $) | Oct. 31, 2014 | Aug. 01, 2014 | Jul. 31, 2014 | Oct. 31, 2013 | Jul. 31, 2013 |
Accounting Policies [Abstract] | |||||
Cash and cash equivalents | $22,935 | $76,108 | $76,108 | $2,857 | $1,674 |
Oil and gas property costs | $61,299 | $0 |
DUE_TO_RELATED_PARTY_Detail_Te
DUE TO RELATED PARTY (Detail Textuals) (USD $) | 3 Months Ended | 12 Months Ended | 0 Months Ended | |
Oct. 31, 2014 | Jul. 31, 2014 | Mar. 01, 2014 | Aug. 01, 2014 | |
Related Party Transaction [Line Items] | ||||
Advance from related party for operating expenses | $32,310 | |||
Payment to related party for management services per month | 30,000 | |||
Due to related party | 72,310 | 54,274 | ||
Majority shareholder | ||||
Related Party Transaction [Line Items] | ||||
Advance from related party for operating expenses | 24,274 | |||
Majority shareholder | Common Stock | ||||
Related Party Transaction [Line Items] | ||||
Stock issued for debt (in shares) | 128,852 | |||
Director | ||||
Related Party Transaction [Line Items] | ||||
Advance from related party for operating expenses | 8,036 | |||
Employee agreement | Majority shareholder | ||||
Related Party Transaction [Line Items] | ||||
Payment to related party for management services per month | 10,000 | |||
Due to related party | 20,000 | 20,000 | ||
Amount included in due to related parties | 30,000 | |||
Unpaid consulting fees included in the amount due to related party | $40,000 |
OIL_AND_NATURAL_GAS_PROPERTIES2
OIL AND NATURAL GAS PROPERTIES - Dates specified in payment schedule (Details) (USD $) | 3 Months Ended | 0 Months Ended |
Oct. 31, 2014 | Oct. 10, 2014 | |
Schedule Of Oil And Natural Gas Properties [Line Items] | ||
Amount agreed to pay | $61,299 | |
Purchase And Sale Agreement | Shalex Corporation | ||
Schedule Of Oil And Natural Gas Properties [Line Items] | ||
Amount agreed to pay | 400,000 | |
Purchase And Sale Agreement | Shalex Corporation | On or before November 5, 2014 (paid) | ||
Schedule Of Oil And Natural Gas Properties [Line Items] | ||
Amount agreed to pay | 50,000 | |
Purchase And Sale Agreement | Shalex Corporation | On or before December 8, 2014 | ||
Schedule Of Oil And Natural Gas Properties [Line Items] | ||
Amount agreed to pay | 125,000 | |
Purchase And Sale Agreement | Shalex Corporation | On or before January 20, 2015 | ||
Schedule Of Oil And Natural Gas Properties [Line Items] | ||
Amount agreed to pay | 125,000 | |
Purchase And Sale Agreement | Shalex Corporation | On or before March 6, 2015 | ||
Schedule Of Oil And Natural Gas Properties [Line Items] | ||
Amount agreed to pay | $100,000 |
OIL_AND_NATURAL_GAS_PROPERTIES3
OIL AND NATURAL GAS PROPERTIES (Detail Textuals) (USD $) | 3 Months Ended | 0 Months Ended |
Oct. 31, 2014 | Oct. 10, 2014 | |
ha | ||
Agreement [Line Items] | ||
Purchase price of lease | $61,299 | |
Acquisition costs | 50,000 | |
Maintenance costs | 11,299 | |
Purchase And Sale Agreement | Shalex Corporation | ||
Agreement [Line Items] | ||
Percentage of working interest | 100.00% | |
Area of lease (in hectares) | 2,304 | |
Purchase price of lease | 400,000 | |
Percentage of net revenue interest | 87.00% | |
Agreement description of leases | The closing of the transaction, and transfer of title from Shalex to the Company, shall occur within 30 days after payment of the full Purchase Price; provided however, that it shall not take place later than 135 days following the signing of the Agreement. | |
Reduced purchase price | $360,000 |
CAPITAL_STOCK_Detail_Textuals
CAPITAL STOCK (Detail Textuals) (USD $) | 3 Months Ended | 12 Months Ended | 1 Months Ended |
Oct. 31, 2014 | Jul. 31, 2014 | Oct. 20, 2014 | |
Class of Stock [Line Items] | |||
Preferred stock, shares authorized | 20,000,000 | 20,000,000 | |
Preferred stock, par value (in dollars per share) | $0.00 | $0.00 | |
Preferred stock, shares issued | 0 | 0 | |
Preferred stock, shares outstanding | 0 | 0 | |
Common stock, shares authorized | 100,000,000 | 100,000,000 | |
Common stock, par value (in dollars per share) | $0.00 | $0.00 | |
Common stock, shares issued | 53,297,602 | 52,828,852 | |
Common stock, shares outstanding | 53,297,602 | 52,828,852 | |
Common stock issued for cash (in shares) | 468,750 | ||
Purchase price of common stock issued (in dollars per share) | $0.32 | ||
Proceeds from the sale of common stock | $150,000 | ||
Forgiveness of related party payable | 12,740 | ||
Value of common stock issued for cancellation of debt | 45,098 | ||
Stock issued for compensation | 175,000 | ||
Common Stock | Majority shareholder | |||
Class of Stock [Line Items] | |||
Common stock issued for cancellation of debt (in shares) | 128,852 | ||
Common stock issued for cancellation of debt (in dollars per share) | $0.35 | ||
Value of common stock issued for cancellation of debt | 45,098 | ||
Stock issued for compensation (in shares) | 500,000 | ||
Stock issued during period for compensation (in dollars per share) | $0.35 | ||
Stock issued for compensation | 175,000 | ||
Common Stock | Unaffiliated Investor | Share Purchase Agreement | |||
Class of Stock [Line Items] | |||
Common stock issued for cash (in shares) | 312,500 | ||
Purchase price of common stock issued (in dollars per share) | $0.32 | ||
Proceeds from the sale of common stock | $100,000 |
INCOME_TAXES_Federal_income_ta
INCOME TAXES - Federal income tax benefit (Details) (USD $) | 3 Months Ended | |
Oct. 31, 2014 | Oct. 31, 2013 | |
Federal income tax benefit attributable to: | ||
Current operations | $28,034 | $1,196 |
Less: valuation allowance | -28,034 | -1,196 |
Net provision for Federal income taxes |
INCOME_TAXES_Deferred_tax_asse
INCOME TAXES - Deferred tax asset (Details 1) (USD $) | Oct. 31, 2014 | Jul. 31, 2014 |
Deferred tax asset attributable to: | ||
Net operating loss carryover | $175,575 | $147,541 |
Less: valuation allowance | -175,575 | -147,541 |
Net deferred tax asset |
INCOME_TAXES_Detail_Textuals
INCOME TAXES (Detail Textuals) (USD $) | 3 Months Ended |
Oct. 31, 2014 | |
Income Tax Disclosure [Abstract] | |
Cumulative net operating loss carry-forward | $516,400 |
Expected tax rate | 34.00% |
ENVIRONMENTAL_AND_OTHER_CONTIN1
ENVIRONMENTAL AND OTHER CONTINGENCIES (Detail Textuals) (USD $) | Oct. 31, 2014 | Jul. 31, 2014 |
Environmental Remediation Obligations [Abstract] | ||
Estimated asset retirement obligation | $0 | $0 |
COMMITMENTS_AND_CONTINGENCIES_
COMMITMENTS AND CONTINGENCIES (Detail Textuals) (USD $) | 1 Months Ended | |
Dec. 20, 2013 | Oct. 28, 2014 | |
Office Services Agreement | Abby Office Centers | ||
Commitments And Contingencies [Line Items] | ||
Monthly lease rent | $1,251 | |
Investor Relation Services Agreement | Mz Group North America | ||
Commitments And Contingencies [Line Items] | ||
Monthly lease rent | $5,000 |
GOING_CONCERN_Detail_Textuals
GOING CONCERN (Detail Textuals) (USD $) | Oct. 31, 2014 | Jul. 31, 2014 |
Going Concern [Abstract] | ||
Working capital | $126,901 | |
Accumulated deficit | ($516,400) | ($433,946) |
SUBSEQUENT_EVENTS_Detail_Textu
SUBSEQUENT EVENTS (Detail Textuals) (USD $) | 3 Months Ended | 0 Months Ended | 1 Months Ended | 0 Months Ended | |
Oct. 31, 2014 | Oct. 10, 2014 | Nov. 25, 2014 | Dec. 11, 2014 | Nov. 03, 2014 | |
Subsequent Event [Line Items] | |||||
Value of common stock issued | |||||
Number of shares issued | 468,750 | ||||
Purchase price of lease | 61,299 | ||||
Purchase And Sale Agreement | Shalex Corporation | |||||
Subsequent Event [Line Items] | |||||
Purchase price of lease | 400,000 | ||||
Subsequent Event | Office Services Agreement | Key Business Centre | |||||
Subsequent Event [Line Items] | |||||
Monthly rent for renting office space, furniture and equipment | 843 | ||||
Subsequent Event | Purchase And Sale Agreement | Shalex Corporation | |||||
Subsequent Event [Line Items] | |||||
Purchase price of lease | 125,000 | ||||
Subsequent Event | Share subscription agreement | Common Stock | |||||
Subsequent Event [Line Items] | |||||
Value of common stock issued | $55,000 | ||||
Number of shares issued | 171,875 |