Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Nov. 30, 2017 | Jan. 19, 2018 | |
Document And Entity Information | ||
Entity Registrant Name | INTERNATIONAL WESTERN PETROLEUM, INC. | |
Entity Central Index Key | 1,603,793 | |
Document Type | 10-Q | |
Document Period End Date | Nov. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --02-28 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 89,443,013 | |
Trading Symbol | INWP | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,018 |
Balance Sheets (Unaudited)
Balance Sheets (Unaudited) - USD ($) | Nov. 30, 2017 | Feb. 28, 2017 |
Current Assets | ||
Cash and cash equivalents | $ 576,991 | $ 76,365 |
Accounts receivable - oil & gas | 30,796 | 8,170 |
Prepaid expenses | 269,396 | |
Deposit on purchase of oil & gas properties | 132,320 | 105,000 |
Total Current Assets | 740,107 | 458,931 |
Oil & Gas Properties - Full Cost Method | ||
Properties subject to depletion | 955,316 | 955,316 |
Less: accumulated depletion | (63,724) | (56,340) |
Total Oil & Gas Properties, net | 891,592 | 898,976 |
Fixed Assets, net | 12,646 | 17,546 |
Total Assets | 1,644,345 | 1,375,453 |
Current Liabilities | ||
Accounts payable and accrued expenses | 4,716 | 1,000 |
Accounts payable and accrued expenses - related parties | 7,397 | 379,428 |
Loan payable | 750,000 | 50,000 |
Stock payable | 32,000 | 12,000 |
Total Current Liabilities | 794,113 | 442,428 |
Asset Retirement Obligations | 10,789 | 10,045 |
Total Liabilities | 804,902 | 452,473 |
Stockholders' Equity | ||
Preferred stock, $0.001 par value per share, 10,000,000 shares authorized, none issued and outstanding | ||
Common stock, $0.001 par value per share, 90,000,000 shares authorized, 89,411,013 and 48,696,012 shares issued and outstanding | 89,411 | 48,696 |
Additional paid-in capital | 5,440,724 | 3,060,724 |
Accumulated deficit | (4,690,692) | (2,186,440) |
Total Stockholders' Equity | 839,443 | 922,980 |
Total Liabilities and Stockholders' Equity | $ 1,644,345 | $ 1,375,453 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - $ / shares | Nov. 30, 2017 | Feb. 28, 2017 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred Stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred Stock, shares issued | ||
Preferred Stock, shares outstanding | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 90,000,000 | 90,000,000 |
Common stock, shares issued | 89,411,013 | 48,696,012 |
Common stock, shares outstanding | 89,411,013 | 48,696,012 |
Statements of Operations (Unaud
Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Nov. 30, 2017 | Nov. 30, 2016 | Nov. 30, 2017 | Nov. 30, 2016 | |
Revenues | ||||
Oil & gas sales | $ 12,466 | $ 25,427 | $ 51,128 | $ 82,227 |
Service income | 45,000 | |||
Total Revenues | 12,466 | 25,427 | 51,128 | 127,227 |
Operating Expenses | ||||
Depletion, depreciation and accretion | 4,867 | 39,157 | 13,028 | 158,150 |
Lease operating expenses | 7,815 | 290,819 | 27,588 | 661,100 |
General and administrative | 376,158 | 92,829 | 1,275,809 | 295,847 |
Total Operating Expenses | 388,840 | 422,805 | 1,316,425 | 1,115,097 |
Other Income (Expense) | ||||
Gain on sale of oil & gas properties | 20,324 | |||
Loss on extinguishment of debt | (1,228,322) | |||
Loss on investment | (30,000) | (30,000) | ||
Interest expense | (7,633) | (10,633) | ||
Total Other Income (Expense) | (7,633) | (30,000) | (1,238,955) | (9,676) |
Net Loss | $ (384,007) | $ (427,378) | $ (2,504,252) | $ (997,546) |
Net Loss per Share - Basic and Diluted | $ 0 | $ (0.01) | $ (0.04) | $ (0.02) |
Weighted Average Number of Shares Outstanding - Basic and Diluted | 89,411,013 | 46,565,247 | 66,529,049 | 45,718,827 |
Statements of Cash Flows (Unaud
Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Nov. 30, 2017 | Nov. 30, 2016 | |
Cash Flows from Operating Activities | ||
Net loss | $ (2,504,252) | $ (997,546) |
Adjustments to reconcile net loss to net cash from operating activities: | ||
Depletion, depreciation and accretion | 13,028 | 23,840 |
Stock-based compensation | 737,361 | 331,755 |
Loss on extinguishment of debt | 1,228,322 | |
Gain on sale of oil & gas properties | (20,324) | |
Loss on investment | 30,000 | |
Changes in operating assets and liabilities | ||
Accounts receivable - oil & gas | (22,626) | (48,483) |
Refundable deposit | (90,000) | |
Accounts payable and accrued expenses | 11,113 | (8,138) |
Net Cash from Operating Activities | (537,054) | (778,896) |
Cash Flows from Investing Activities | ||
Deposit made on purchase of oil & gas properties | (27,320) | |
Sale of oil & gas properties | 70,000 | |
Net Cash from Investing Activities | (27,320) | 70,000 |
Cash Flows from Financing Activities | ||
Repayment of loan payable | (50,000) | |
Proceeds from loan payable - related party | 750,000 | |
Payment on related party advances | (138,619) | |
Common stock issued for cash | 365,000 | 806,234 |
Net Cash from Financing Activities | 1,065,000 | 667,615 |
Net Increase (Decrease) in Cash and Cash Equivalents | 500,626 | (41,281) |
Cash and Cash Equivalents - beginning of period | 76,365 | 542,228 |
Cash and Cash Equivalents - end of period | 576,991 | 500,947 |
Supplemental Cash Flow Information | ||
Interest paid | ||
Income tax paid | ||
Noncash Investing and Financing Activities | ||
Common stock issued for conversion of debt | $ 1,607,750 |
Organization, Nature of Operati
Organization, Nature of Operations and Summary of Significant Accounting Policies | 9 Months Ended |
Nov. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization, Nature of Operations and Summary of Significant Accounting Policies | Note 1 – Organization, Nature of Operations and Summary of Significant Accounting Policies International Western Petroleum, Inc. (“IWP” or the “Company”) was incorporated on February 19, 2014, as a Nevada corporation. The Company was formed to conduct exploration, development and production operations in the oil and gas industry. The accompanying unaudited interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s Annual Report on Form 10-K filed with the SEC for the year ended February 28, 2017. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the unaudited interim financial statements that would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal year as reported in the Form 10-K have been omitted. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expense during the period. Actual results could differ from those estimates. Fair Value of Financial Instruments The carrying amount of the Company’s accounts payable and accrued expenses and advances from officer approximates its estimated fair value due to the short-term nature of that financial instrument. Cash and Cash Equivalents The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. The Company had $576,991 and $76,365 of cash and cash equivalents at November 30, 2017 and February 28, 2017, respectively. Concentrations of Credit Risk Financial instruments which potentially subject the Company to concentrations of credit risk include cash deposits placed with financial institutions. The Company maintains its cash in bank accounts which, at times, may exceed federally insured limits as guaranteed by the Federal Deposit Insurance Corporation (“FDIC”). At November 30, 2017, $326,991 of the Company’s cash balances were uninsured. The Company has not experienced any losses on such accounts. Accounts Receivable Accounts receivable typically consist of oil and gas receivables. The Company has classified these as short-term assets in the balance sheet because the Company expects repayment or recovery within the next 12 months. The Company evaluates these accounts receivable for collectability considering the results of operations of these related entities and when necessary records allowances for expected unrecoverable amounts. To date, no allowances have been recorded. Oil & Gas Properties The Company follows the full cost method of accounting for its investments in oil and gas properties, whereby all costs incurred in connection with the acquisition, exploration for and development of petroleum and natural gas reserves, including unproductive wells, are capitalized. Such costs include lease acquisition, geological and geophysical activities, rentals on non-producing leases, drilling, completing and equipping of oil and gas wells and administrative costs directly attributable to those activities, and asset retirement costs. General and administrative costs related to production and general overhead are expensed as incurred. Disposition of oil and gas properties are accounted for as a reduction of capitalized costs, with no gain or loss recognized unless such adjustment would significantly alter the relationship between capital costs and proved reserves of oil, in which case the gain or loss is recognized in the statement of operations. Future development, site restoration, dismantlement and abandonment costs, are estimated property by property, based upon current economic conditions and regulatory requirements, and are included in amortization of our oil and natural gas property costs. Depletion of capitalized oil properties and estimated future development costs, excluding unproved properties, are based on the unit-of-production method based on proved reserves. At the end of each quarter, the unamortized cost of oil and natural gas properties, net of related deferred income taxes, is limited to the sum of the estimated future after-tax net revenues from proved properties, after giving effect to cash flow hedge positions, discounted at 10%, and the lower of cost or fair value of unproved properties, adjusted for related income tax effects. This limitation is known as the “ceiling test,” and is based on SEC rules for the full cost oil and gas accounting method. There was no ceiling test write-down recorded during the three and nine months ended November 30, 2017 and 2016. The Company assesses the carrying value of its unproved properties for impairment periodically. If the results of an assessment indicate that an unproved property is impaired (which was assessed in connection with the Company’s evaluation of goodwill impairment), then the carrying value of the unproved properties is added to the proved oil property costs to be amortized and subject to the ceiling test. Fixed assets Fixed assets are stated at cost and depreciated using the straight-line method over the five-year estimated useful life of the asset. Asset Retirement Obligations If a reasonable estimate of the fair value of an obligation to perform site reclamation, dismantle facilities or plug and abandon wells can be made, the Company will record a liability (an asset retirement obligation or “ARO”) on its consolidated balance sheet and capitalize the present value of the asset retirement cost in oil and gas properties in the period in which the retirement obligation is incurred. In general, the amount of an ARO and the costs capitalized will be equal to the estimated future cost to satisfy the abandonment obligation assuming the normal operation of the asset, using current prices that are escalated by an assumed inflation factor up to the estimated settlement date, which is then discounted back to the date that the abandonment obligation was incurred using an assumed cost of funds for the Company. After recording these amounts, the ARO will be accreted to its future estimated value using the same assumed cost of funds and the capitalized costs are depreciated on a unit-of-production basis over the estimated proved developed reserves. Both the accretion and the depreciation will be included in depreciation, depletion and amortization expense on our consolidated statements of operations. Revenue Recognition All revenue is recognized when persuasive evidence of an arrangement exists, the service or sale is complete, the price is fixed or determinable and collectability is reasonably assured. Revenue is derived from the sale of crude oil and natural gas. Revenue from crude oil and natural gas sales is recognized when the product is delivered to the purchaser and collectability is reasonably assured. The Company follows the “sales method” of accounting for oil and natural gas revenue, so it recognizes revenue on all natural gas or crude oil sold to purchasers, regardless of whether the sales are proportionate to its ownership in the property. A receivable or liability is recognized only to the extent that the Company has an imbalance on a specific property greater than its share of the expected remaining proved reserves. If collection is uncertain, revenue is recognized when cash is collected. Income Taxes Income taxes are accounted for in accordance with the provisions of ASC Topic No. 740. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amounts expected to be realized. Fair Value of Financial Instruments ASC 820 defines fair value, establishes a framework for measuring fair value and enhances disclosures about fair value measurements. It defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value: ● Level 1 – Quoted prices in active markets for identical assets or liabilities. ● Level 2 – Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities that are not active; and model-driven valuations whose inputs are observable or whose significant value drivers are observable. Valuations may be obtained from, or corroborated by, third-party pricing services. ● Level 3 – Unobservable inputs to measure fair value of assets and liabilities for which there is little, if any market activity at the measurement date, using reasonable inputs and assumptions based upon the best information at the time, to the extent that inputs are available without undue cost and effort. Stock-Based Compensation The Company measures stock-based compensation cost at the grant date based on the fair value of the award and recognize it as expense, over the vesting or service period, as applicable, of the stock award. Basic and Diluted Net Income (Loss) per Common Share Basic net loss per common share amounts are computed by dividing the net loss available to International Western Petroleum, Inc. shareholders by the weighted average number of common shares outstanding over the reporting period. In periods in which the Company reports a net loss, dilutive securities are excluded from the calculation of diluted earnings per share as the effect would be anti-dilutive. For the nine months ended November 30, 2017 and 2016, the Company’s potentially dilutive shares, which include outstanding common stock options to purchase 1,440,000 shares of the Company’s common stock, have not been included in the computation of diluted net loss per share as the result would have been anti-dilutive. Reclassifications Certain reclassifications have been made to amounts in prior periods to conform to the current period presentation. All reclassifications have been applied consistently to the periods presented. Subsequent Events The Company evaluated all transactions from November 30, 2017, through the financial statement issuance date for subsequent event disclosure consideration. Recent Accounting Pronouncements The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on its financial position, results of operations or cash flows. In August 2016, the FASB issued Accounting Standards Update (ASU) 2016-15, Statement of Cash Flows (Topic 230). ASU 2016-15 seeks to reduce the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. This update is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the provisions of ASU 2016-15 and assessing the impact, if any, it may have on its statement of consolidated cash flows. |
Going Concern
Going Concern | 9 Months Ended |
Nov. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Going Concern | Note 2 – Going Concern As reflected in the accompanying financial statements, the Company has generated a net loss of $2,504,252 for the nine months ended November 30, 2017, and had negative cash flows of $537,054 from its operations for the same period. Revenues generated by the Company from oil and gas sales currently have not reached a level that allows the Company to support its ongoing business. The Company remains dependent upon funding from non-operating sources, principally related parties and the sale of common equity securities. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of these uncertainties. Management has a reasonable expectation that the Company has access to adequate funding resources from related parties to continue in operational existence for the foreseeable future although there are no firm commitments to provide funding. The Company will be required to raise additional funds to fully execute its business plan; however, the Company believes it has sufficient cash on hand and limited near term obligations to sustain its current operations for the next twelve months. |
Oil & Gas Properties
Oil & Gas Properties | 9 Months Ended |
Nov. 30, 2017 | |
Extractive Industries [Abstract] | |
Oil & Gas Properties | Note 3 – Oil & Gas Properties The following table summarizes the Company’s oil and gas activities by classification for the nine months ended November 30, 2017: February 28, 2017 Additions November 30, 2017 Oil and gas properties, subject to amortization $ 946,878 $ - $ 946,878 Asset retirement costs 8,438 - 8,438 Accumulated depletion (56,340 ) (7,384 ) (63,724 ) Total oil and gas assets $ 898,976 $ (7,384 ) $ 891,592 For the three and nine months ended November 30, 2017, the Company recorded depletion of $2,157 and $7,384, respectively, for production on proved properties. For the three and nine months ended November 30, 2016, the Company recorded depletion of $5,124 and $19,459, respectively, for production on proved properties. The Company recorded no impairment of its oil and gas properties during the nine months ended November 30, 2017 and 2016. On August 28, 2017, the Company made a deposit of $168,000 to a Trust Fund account designated by Stober Oil and Gas Services, LLC with the intention to acquire certain oil lease interests located in Texas. The deposit was returnable during a designated due diligence period, at the determination of the Company. The deposit was returned in October 2017. During the quarter ended November 30, 2017, the Company made a deposit of $27,320 for a potential acquisition of certain oil and gas properties. |
Fixed Asset
Fixed Asset | 9 Months Ended |
Nov. 30, 2017 | |
Property, Plant and Equipment [Abstract] | |
Fixed Asset | Note 4 – Fixed Asset The Company’s fixed asset consists of a vehicle with estimated useful life of five years. Balance of the fixed asset consisted of the following at: November 30, 2017 February 28, 2017 Vehicle $ 24,500 $ 24,500 Less: accumulated depreciation (11,854 ) (6,954 ) Total $ 12,646 $ 17,546 The Company recorded depreciation expense of $2,456 and $3,249 during the three months ended November 30, 2017 and 2016, respectively. The Company recorded depreciation expense of $4,900 and $5,719 during the nine months ended November 30, 2017 and 2016, respectively. |
Asset Retirement Obligations
Asset Retirement Obligations | 9 Months Ended |
Nov. 30, 2017 | |
Asset Retirement Obligation Disclosure [Abstract] | |
Asset Retirement Obligations | Note 5 – Asset Retirement Obligations The following table summarizes the change in the Company’s asset retirement obligations during the nine months ended November 30, 2017: Amount Asset retirement obligations as of February 28, 2017 $ 10,045 Additions - Revision of previous estimates - Accretion 744 Asset retirement obligations as of November 30, 2017 $ 10,789 During the three months ended November 30, 2017 and 2016, the Company recognized accretion expense of $254 and $232, respectively. During the nine months ended November 30, 2017 and 2016, the Company recognized accretion expense of $744 and $676 respectively. |
Loan Payable
Loan Payable | 9 Months Ended |
Nov. 30, 2017 | |
Debt Disclosure [Abstract] | |
Loan Payable | Note 6 – Loan Payable On May 30, 2017, International Western Oil Corporation, a related party of the Company, sold its existing debt with the Company in an aggregate amount of $379,428 to Riggs Capital, Inc., an unrelated third party of the Company. The debt was unsecured, had no stated interest rate, was due on demand and had no conversion features. On August 2, 2017, the Company and Riggs Capital, Inc. consummated a Debt Conversion Agreement to convert the outstanding debt of $379,428 into 5,900,000 shares of Common Stock which were distributed to Riggs Capital, Inc. and its related party Patrick Riggs. The Debt Conversion Agreement provided for a one-year lock-up on the sale of shares issued in the transaction. The Company recorded a loss on extinguishment of debt of $1,228,322 to recognize the difference between the reacquisition price, (the fair value of the stock issued) and the net carrying amount of the extinguished debt. ASC Topic 470-50-40 provides for the difference between the net carrying amount of the extinguished debt and the reacquisition price be recognized currently in the period of extinguishment. |
Loan Payable - Related Party
Loan Payable - Related Party | 9 Months Ended |
Nov. 30, 2017 | |
Debt Disclosure [Abstract] | |
Loan Payable - Related Party | Note 7 – Loan Payable – Related Party On April 7, 2017, the Company entered into a secured promissory note (the “Secured Promissory Note”) with JBB Partners, Inc. (“JBB”). Pursuant to the terms of the Secured Promissory Note, the Company borrowed from JBB $200,000 (the “Loan”). The Loan was funded on April 11, 2017. The Loan was secured by all of the Company’s assets until August 2, 2017 was additionally secured by 17,920,000 shares of the Company’s common stock then owned by two of the then officers of the Company. The Loan carried interest at the rate of 3% per annum and the maturity date was April 7, 2018. On July 27, 2017, to be effective as of August 2, 2017, JBB and the Company (a) modified the Secured Promissory Note and restated the same to increase the loan principal to an aggregate of $750,000, which includes the advance made on April 11, 2017, and (b) modified and added certain other provisions, including elimination of the share collateral that secured the Loan, changing the maturity date to July 27, 2018, and adding a provision to automatically convert the outstanding principal and interest into 1,000,000 shares of Series A Preferred Stock once the Company creates a new class of Series A Preferred Stock. The stockholders approved the creation of the new class of Series A Preferred Stock on November 30, 2017. The Company has yet to take action to create the Series A Preferred Stock, which is expected to be completed by the end of March 2018. During the three months ended November 30, 2017 and 2016, the Company recognized interest expense of $7,633 and $0, respectively. During the nine months ended November 30, 2017 and 2016, the Company recognized interest expense of $10,633 and $0, respectively. As of November 30, 2017, the Company accrued interest payable of $7,397 to JBB. The balance of this loan was $750,000 at November 30, 2017, plus interest that is due at maturity. |
Equity Transactions
Equity Transactions | 9 Months Ended |
Nov. 30, 2017 | |
Equity [Abstract] | |
Equity Transactions | Note 8 – Equity Transactions Common Stock: In July 2017, effective as of August 2, 2017, the Company sold 34,500,000 shares of its common stock to Mr. Patrick Norris and several individuals for $0.01 per share, and the Company received total cash proceeds of $345,000. On August 2, 2017, Ross Henry Ramsey, former CEO and current COO current of the Company, and Benjamin Tran, former Chairman of the Company, sold 17,920,000 shares of common stock and 12,000,000 shares of common stock, respectively, to JBB Partners, Inc. in a private transaction. A principal of JBB Partners, Inc. is Mr. Patrick Norris. The Company’s related party, International Western Oil Corporation, also sold 500,000 shares of the Company’s common stock to Mr. Patrick Norris in a private transaction. At the same time, Mr. Norris was appointed the new CEO, President, CFO, Secretary and a director of the Company. Mr. Ramsey continued as a director of the Company, and Mr. Tran resigned as a director of the Company effective September 15, 2017. A change of control event occurred as a result of these transactions. On August 2, 2017, the Company and Riggs Capital, Inc. consummated a Debt Conversion Agreement to convert the outstanding debt of $379,428 into 5,900,000 shares of Common Stock which were distributed to Riggs Capital, Inc. and its related party Patrick Riggs. The Debt Conversion Agreement provided for a one-year lock-up on the sale of shares issued in the transaction. The Company recorded a loss on extinguishment of debt of $1,228,322 to recognize the difference between the reacquisition price, (the fair value of the stock issued) and the net carrying amount of the extinguished debt. ASC Topic 470-50-40 provides for the difference between the net carrying amount of the extinguished debt and the reacquisition price be recognized currently in the period of extinguishment. During the nine months ended November 30, 2017, the Company issued 115,000 shares of its common stock for consulting services. These shares were valued at their fair value of $115,000 on the date of issuance. During the nine months ended November 30, 2017, the Company received $20,000 for 20,000 shares subscribed by one investor. As of the period end, these shares have not been issued and total outstanding stock payable is $32,000. The Company previously had a consulting arrangement with Odyssey Enterprises, LLC (“Odyssey”). This consulting agreement was terminated by the Company and Odyssey on August 2, 2017. The Company obtained a general release from Odyssey in return for the issuance of 200,000 shares of common stock. In September 2017, the Company issued these 200,000 shares to Odyssey. These shares were valued at their fair value of $54,000 using the closing price of the Company’s stock traded in the open market on the grant date. During the nine months ended November 30, 2017 and 2016, the Company recorded stock-based compensation expense of $737,361 and $331,755, respectively. Stock Option: Following is a summary of option activities for the nine months ended November 30, 2017: Number of Units Weighted Average Exercise Price Weighted Average Remaining Contractual Term (in years) Aggregate Intrinsic Value Outstanding, February 28, 2017 - $ - - - Granted 1,440,000 0.01 2.00 417,600 Cancelled - - - - Outstanding, November 30, 2017 1,440,000 0.01 1.67 360,000 Exercisable, November 30, 2017 - - - - During the nine months ended November 30, 2017, the Company granted two of its employees 1,440,000 options to purchase the Company’s common stock with an exercise price of $0.01 per share, a term of 2 years, and a vesting period of 2 years. The options have an aggregated fair value of $431,956 that was calculated using the Black-Scholes option-pricing model. Variables used in the Black-Scholes option-pricing model include: (1) discount rate range of 1.34%; (2) expected life of 2 years; (3) expected volatility of 482.51%; and (4) zero expected dividends. The fair values of all options issued and outstanding are being amortized over their respective vesting periods. The unrecognized compensation expense at November 30, 2017 was approximately $360,000. During the three and nine months ended November 30, 2017, the Company recorded total option expense of $72,000. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Nov. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 9 – Subsequent Events On December 28, 2017, the Company borrowed $1,550,000 from JBB Partners to complete the purchases of a series of oil and lease leases. The loan has an interest rate of 3% per annum, has a maturity date of December 28, 2018 and is secured by all assets of the Company. The loan is convertible to the Company’s common stock at the conversion rate of $0.20 per share. Also on December 28, 2017, the Company paid $1.6 million for 11 oils and gas leases, totaled 2,790.9 acres. These leases are located in the Jack County and Palo Pinto County in Texas. These wells have existing production and the Company plans to invest additional funds into the oil and gas production. Subsequent to November 30, 2017, the Company issued 32,000 shares of common stock for the stock payable of $32,000 previously recorded by the Company is Stock Payable. |
Organization, Nature of Opera15
Organization, Nature of Operations and Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Nov. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expense during the period. Actual results could differ from those estimates. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying amount of the Company’s accounts payable and accrued expenses and advances from officer approximates its estimated fair value due to the short-term nature of that financial instrument. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents. The Company had $576,991 and $76,365 of cash and cash equivalents at November 30, 2017 and February 28, 2017, respectively. |
Concentrations of Credit Risk | Concentrations of Credit Risk Financial instruments which potentially subject the Company to concentrations of credit risk include cash deposits placed with financial institutions. The Company maintains its cash in bank accounts which, at times, may exceed federally insured limits as guaranteed by the Federal Deposit Insurance Corporation (“FDIC”). At November 30, 2017, $326,991 of the Company’s cash balances were uninsured. The Company has not experienced any losses on such accounts. |
Accounts Receivable | Accounts Receivable Accounts receivable typically consist of oil and gas receivables. The Company has classified these as short-term assets in the balance sheet because the Company expects repayment or recovery within the next 12 months. The Company evaluates these accounts receivable for collectability considering the results of operations of these related entities and when necessary records allowances for expected unrecoverable amounts. To date, no allowances have been recorded. |
Oil & Gas Properties | Oil & Gas Properties The Company follows the full cost method of accounting for its investments in oil and gas properties, whereby all costs incurred in connection with the acquisition, exploration for and development of petroleum and natural gas reserves, including unproductive wells, are capitalized. Such costs include lease acquisition, geological and geophysical activities, rentals on non-producing leases, drilling, completing and equipping of oil and gas wells and administrative costs directly attributable to those activities, and asset retirement costs. General and administrative costs related to production and general overhead are expensed as incurred. Disposition of oil and gas properties are accounted for as a reduction of capitalized costs, with no gain or loss recognized unless such adjustment would significantly alter the relationship between capital costs and proved reserves of oil, in which case the gain or loss is recognized in the statement of operations. Future development, site restoration, dismantlement and abandonment costs, are estimated property by property, based upon current economic conditions and regulatory requirements, and are included in amortization of our oil and natural gas property costs. Depletion of capitalized oil properties and estimated future development costs, excluding unproved properties, are based on the unit-of-production method based on proved reserves. At the end of each quarter, the unamortized cost of oil and natural gas properties, net of related deferred income taxes, is limited to the sum of the estimated future after-tax net revenues from proved properties, after giving effect to cash flow hedge positions, discounted at 10%, and the lower of cost or fair value of unproved properties, adjusted for related income tax effects. This limitation is known as the “ceiling test,” and is based on SEC rules for the full cost oil and gas accounting method. There was no ceiling test write-down recorded during the three and nine months ended November 30, 2017 and 2016. The Company assesses the carrying value of its unproved properties for impairment periodically. If the results of an assessment indicate that an unproved property is impaired (which was assessed in connection with the Company’s evaluation of goodwill impairment), then the carrying value of the unproved properties is added to the proved oil property costs to be amortized and subject to the ceiling test. |
Fixed Assets | Fixed assets Fixed assets are stated at cost and depreciated using the straight-line method over the five-year estimated useful life of the asset. |
Asset Retirement Obligations | Asset Retirement Obligations If a reasonable estimate of the fair value of an obligation to perform site reclamation, dismantle facilities or plug and abandon wells can be made, the Company will record a liability (an asset retirement obligation or “ARO”) on its consolidated balance sheet and capitalize the present value of the asset retirement cost in oil and gas properties in the period in which the retirement obligation is incurred. In general, the amount of an ARO and the costs capitalized will be equal to the estimated future cost to satisfy the abandonment obligation assuming the normal operation of the asset, using current prices that are escalated by an assumed inflation factor up to the estimated settlement date, which is then discounted back to the date that the abandonment obligation was incurred using an assumed cost of funds for the Company. After recording these amounts, the ARO will be accreted to its future estimated value using the same assumed cost of funds and the capitalized costs are depreciated on a unit-of-production basis over the estimated proved developed reserves. Both the accretion and the depreciation will be included in depreciation, depletion and amortization expense on our consolidated statements of operations. |
Revenue Recognition | Revenue Recognition All revenue is recognized when persuasive evidence of an arrangement exists, the service or sale is complete, the price is fixed or determinable and collectability is reasonably assured. Revenue is derived from the sale of crude oil and natural gas. Revenue from crude oil and natural gas sales is recognized when the product is delivered to the purchaser and collectability is reasonably assured. The Company follows the “sales method” of accounting for oil and natural gas revenue, so it recognizes revenue on all natural gas or crude oil sold to purchasers, regardless of whether the sales are proportionate to its ownership in the property. A receivable or liability is recognized only to the extent that the Company has an imbalance on a specific property greater than its share of the expected remaining proved reserves. If collection is uncertain, revenue is recognized when cash is collected. |
Income Taxes | Income Taxes Income taxes are accounted for in accordance with the provisions of ASC Topic No. 740. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amounts expected to be realized. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments ASC 820 defines fair value, establishes a framework for measuring fair value and enhances disclosures about fair value measurements. It defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value: ● Level 1 – Quoted prices in active markets for identical assets or liabilities. ● Level 2 – Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities that are not active; and model-driven valuations whose inputs are observable or whose significant value drivers are observable. Valuations may be obtained from, or corroborated by, third-party pricing services. ● Level 3 – Unobservable inputs to measure fair value of assets and liabilities for which there is little, if any market activity at the measurement date, using reasonable inputs and assumptions based upon the best information at the time, to the extent that inputs are available without undue cost and effort. |
Stock-Based Compensation | Stock-Based Compensation The Company measures stock-based compensation cost at the grant date based on the fair value of the award and recognize it as expense, over the vesting or service period, as applicable, of the stock award. |
Basic and Diluted Net Income (Loss) Per Common Share | Basic and Diluted Net Income (Loss) per Common Share Basic net loss per common share amounts are computed by dividing the net loss available to International Western Petroleum, Inc. shareholders by the weighted average number of common shares outstanding over the reporting period. In periods in which the Company reports a net loss, dilutive securities are excluded from the calculation of diluted earnings per share as the effect would be anti-dilutive. For the nine months ended November 30, 2017 and 2016, the Company’s potentially dilutive shares, which include outstanding common stock options to purchase 1,440,000 shares of the Company’s common stock, have not been included in the computation of diluted net loss per share as the result would have been anti-dilutive. |
Reclassifications | Reclassifications Certain reclassifications have been made to amounts in prior periods to conform to the current period presentation. All reclassifications have been applied consistently to the periods presented. |
Subsequent Events | Subsequent Events The Company evaluated all transactions from November 30, 2017, through the financial statement issuance date for subsequent event disclosure consideration. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on its financial position, results of operations or cash flows. In August 2016, the FASB issued Accounting Standards Update (ASU) 2016-15, Statement of Cash Flows (Topic 230). ASU 2016-15 seeks to reduce the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. This update is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the provisions of ASU 2016-15 and assessing the impact, if any, it may have on its statement of consolidated cash flows. |
Oil & Gas Properties (Tables)
Oil & Gas Properties (Tables) | 9 Months Ended |
Nov. 30, 2017 | |
Extractive Industries [Abstract] | |
Summary of Oil and Gas Activities | The following table summarizes the Company’s oil and gas activities by classification for the nine months ended November 30, 2017: February 28, 2017 Additions November 30, 2017 Oil and gas properties, subject to amortization $ 946,878 $ - $ 946,878 Asset retirement costs 8,438 - 8,438 Accumulated depletion (56,340 ) (7,384 ) (63,724 ) Total oil and gas assets $ 898,976 $ (7,384 ) $ 891,592 |
Fixed Asset (Tables)
Fixed Asset (Tables) | 9 Months Ended |
Nov. 30, 2017 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Fixed Asset | The Company’s fixed asset consists of a vehicle with estimated useful life of five years. Balance of the fixed asset consisted of the following at: November 30, 2017 February 28, 2017 Vehicle $ 24,500 $ 24,500 Less: accumulated depreciation (11,854 ) (6,954 ) Total $ 12,646 $ 17,546 |
Asset Retirement Obligations (T
Asset Retirement Obligations (Tables) | 9 Months Ended |
Nov. 30, 2017 | |
Asset Retirement Obligation Disclosure [Abstract] | |
Schedule of Asset Retirement Obligation | The following table summarizes the change in the Company’s asset retirement obligations during the nine months ended November 30, 2017: Amount Asset retirement obligations as of February 28, 2017 $ 10,045 Additions - Revision of previous estimates - Accretion 744 Asset retirement obligations as of November 30, 2017 $ 10,789 |
Equity Transactions (Tables)
Equity Transactions (Tables) | 9 Months Ended |
Nov. 30, 2017 | |
Equity [Abstract] | |
Summary of Stock Option Activity | Following is a summary of option activities for the nine months ended November 30, 2017: Number of Units Weighted Average Exercise Price Weighted Average Remaining Contractual Term (in years) Aggregate Intrinsic Value Outstanding, February 28, 2017 - $ - - - Granted 1,440,000 0.01 2.00 417,600 Cancelled - - - - Outstanding, November 30, 2017 1,440,000 0.01 1.67 360,000 Exercisable, November 30, 2017 - - - - |
Organization, Nature of Opera20
Organization, Nature of Operations and Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 9 Months Ended | |||
Nov. 30, 2017 | Nov. 30, 2016 | Feb. 28, 2017 | Feb. 29, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Cash | $ 576,991 | $ 500,947 | $ 76,365 | $ 542,228 |
Cash balances were uninsured | $ 326,991 | |||
Cash flow hedge, discount | 10.00% | |||
Fixed assets estimated useful lives | 5 years | |||
Potentially dilutive securities outstanding | 1,440,000 | 1,440,000 |
Going Concern (Details Narrativ
Going Concern (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Nov. 30, 2017 | Nov. 30, 2016 | Nov. 30, 2017 | Nov. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Net loss | $ 384,007 | $ 427,378 | $ 2,504,252 | $ 997,546 |
Cash flows from operations | $ 537,054 | $ 778,896 |
Oil & Gas Properties (Details N
Oil & Gas Properties (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Nov. 30, 2017 | Nov. 30, 2016 | Nov. 30, 2017 | Nov. 30, 2016 | Aug. 28, 2017 | |
Accumulated depletion | $ 2,157 | $ 5,124 | $ 7,384 | $ 19,459 | |
Impairment oil and gas properties | |||||
Deposit made on purchase of oil & gas properties | $ (27,320) | ||||
Stober Oil and Gas Services [Member] | |||||
Deposit | $ 168,000 |
Oil & Gas Properties - Summary
Oil & Gas Properties - Summary of Oil and Gas Activities (Details) - USD ($) | Nov. 30, 2017 | Feb. 28, 2017 |
Oil and gas properties, subject to amortization | $ 946,878 | $ 946,878 |
Asset retirement costs | 8,438 | 8,438 |
Accumulated depletion | (63,724) | (56,340) |
Total oil and gas assets | $ 891,592 | 898,976 |
Additions [Member] | ||
Oil and gas properties, subject to amortization | ||
Asset retirement costs | ||
Accumulated depletion | (7,384) | |
Total oil and gas assets | $ (7,384) |
Fixed Asset (Details Narrative)
Fixed Asset (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Nov. 30, 2017 | Nov. 30, 2016 | Nov. 30, 2017 | Nov. 30, 2016 | |
Fixed assets estimated useful life | 5 years | |||
Depreciation expense | $ 2,456 | $ 3,249 | $ 4,900 | $ 5,719 |
Used Vehicle [Member] | ||||
Fixed assets estimated useful life | 5 years |
Fixed Asset - Schedule of Fixed
Fixed Asset - Schedule of Fixed Asset (Details) - USD ($) | Nov. 30, 2017 | Feb. 28, 2017 |
Property, Plant and Equipment [Abstract] | ||
Vehicle | $ 24,500 | $ 24,500 |
Less accumulated depreciation | (11,854) | (6,954) |
Total | $ 12,646 | $ 17,546 |
Asset Retirement Obligations (D
Asset Retirement Obligations (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Nov. 30, 2017 | Nov. 30, 2016 | Nov. 30, 2017 | Nov. 30, 2016 | |
Asset Retirement Obligation Disclosure [Abstract] | ||||
Accretion expense | $ 254 | $ 232 | $ 744 | $ 676 |
Asset Retirement Obligations -
Asset Retirement Obligations - Schedule of Asset Retirement Obligation (Details) | 9 Months Ended |
Nov. 30, 2017USD ($) | |
Asset Retirement Obligation Disclosure [Abstract] | |
Asset retirement obligations as of February 28, 2017 | $ 10,045 |
Additions | |
Revision of previous estimates | |
Accretion | 744 |
Asset retirement obligations as of November 30, 2017 | $ 10,789 |
Loan Payable (Details Narrative
Loan Payable (Details Narrative) - USD ($) | Aug. 02, 2017 | May 30, 2017 | Nov. 30, 2017 | Nov. 30, 2016 | Nov. 30, 2017 | Nov. 30, 2016 |
Related party payables | $ 138,619 | |||||
Loss on extinguishment of debt | $ 1,228,322 | |||||
Riggs Capital, Inc. [Member] | ||||||
Related party payables | $ 379,428 | |||||
Debt conversion of price, value | $ 379,428 | |||||
Debt conversion of price, shares | 5,900,000 |
Loan Payable - Related Party (D
Loan Payable - Related Party (Details Narrative) - USD ($) | Aug. 02, 2017 | Jul. 27, 2017 | Apr. 07, 2017 | Nov. 30, 2017 | Nov. 30, 2016 | Nov. 30, 2017 | Nov. 30, 2016 | Feb. 28, 2017 |
Number of common stock shares | 34,500,000 | |||||||
Loan payable | $ 750,000 | $ 750,000 | $ 50,000 | |||||
Accrued interest payable | 7,397 | 7,397 | $ 379,428 | |||||
Interest expense | $ 7,633 | $ 10,633 | ||||||
JBB Partners, Inc. [Member] | Series A Preferred Stock [Member] | ||||||||
Debt conversion of price, shares | 1,000,000 | |||||||
JBB Partners, Inc. [Member] | Ross Henry Ramsey [Member] | ||||||||
Number of common stock shares | 17,920,000 | |||||||
Secured Promissory Note [Member] | Ross Henry Ramsey [Member] | ||||||||
Number of common stock shares | 17,920,000 | |||||||
Secured Promissory Note [Member] | JBB Partners, Inc. [Member] | ||||||||
Proceed from loan payable | $ 200,000 | |||||||
Loan bears interest rate | 3.00% | |||||||
Loan maturity date | Jul. 27, 2018 | Apr. 7, 2018 | ||||||
Debt instrument principal amount | $ 750,000 |
Equity Transactions (Details Na
Equity Transactions (Details Narrative) - USD ($) | Aug. 02, 2017 | Sep. 30, 2017 | Nov. 30, 2017 | Nov. 30, 2016 | Nov. 30, 2017 | Nov. 30, 2016 | Feb. 28, 2017 |
Number of common stock issued | 34,500,000 | ||||||
Common stock issued during period, value | $ 345,000 | $ (365,000) | $ (806,234) | ||||
Shares issued, price per share | $ 0.01 | ||||||
Loss on extinguishment of debt | 1,228,322 | ||||||
Share-based compensation expense | 737,361 | $ 331,755 | |||||
Stock payable | 32,000 | 32,000 | $ 12,000 | ||||
Fair value of equity | 54,000 | $ 54,000 | |||||
Options to purchase common stock shares | 1,440,000 | 1,440,000 | |||||
Stock option exercise price per share | $ 0.01 | ||||||
Stock option term | 2 years | ||||||
Options vesting period | 2 years | ||||||
Fair value of stock option granted | $ 431,956 | ||||||
Discount rate | 1.34% | ||||||
Expected life of years | 2 years | ||||||
Expected volatility | 482.51% | ||||||
Expected dividend | |||||||
Unrecognized compensation expense | $ 360,000 | $ 360,000 | |||||
Stock option expense | $ 72,000 | ||||||
Consulting Service [Member] | |||||||
Number of common stock issued for service | 115,000 | ||||||
Common stock issued for services | $ 115,000 | ||||||
Riggs Capital, Inc. [Member] | Debt Conversion Agreement [Member] | |||||||
Debt conversion of price, value | $ 379,428 | ||||||
Debt conversion of price, shares | 5,900,000 | ||||||
Odyssey [Member] | |||||||
Number of common stock issued | 200,000 | ||||||
Return for issuance shares of common stock | 200,000 | ||||||
Ross Henry Ramsey [Member] | JBB Partners, Inc. [Member] | |||||||
Number of common stock issued | 17,920,000 | ||||||
Benjamin Tran [Member] | JBB Partners, Inc. [Member] | |||||||
Number of common stock issued | 12,000,000 | ||||||
Mr. Patrick Norris [Member] | |||||||
Number of common stock issued | 500,000 | ||||||
One Investor [Member] | |||||||
Number of common stock issued | 20,000 | ||||||
Common stock issued during period, value | $ 20,000 |
Equity Transactions - Summary o
Equity Transactions - Summary of Stock Option Activity (Details) | 9 Months Ended |
Nov. 30, 2017USD ($)$ / sharesshares | |
Equity [Abstract] | |
Options outstanding number of units beginning balance | |
Options outstanding number of units granted | 1,440,000 |
Options outstanding number of units cancelled | |
Options outstanding number of units ending balance | 1,440,000 |
Options outstanding number of units exercisable, ending | |
Weighted average exercise price, beginning balance | $ / shares | |
Weighted average exercise price, granted | $ / shares | 0.01 |
Weighted average exercise price, cancelled | $ / shares | |
Weighted average exercise price, ending balance | $ / shares | 0.01 |
Weighted average exercise price, exercisable, ending | $ / shares | |
Weighted average remaining contractual term in years beginning balance | 0 years |
Weighted average remaining contractual term in years granted | 2 years |
Weighted average remaining contractual term in years cancelled | 0 years |
Weighted average remaining contractual term in years ending balance | 1 year 8 months 2 days |
Weighted average remaining contractual term in years exercisable, ending | 0 years |
Aggregate intrinsic value, beginning balance | $ | |
Aggregate intrinsic value, granted | 417,600 |
Aggregate intrinsic value, cancelled | |
Aggregate intrinsic value, ending balance | $ | $ 360,000 |
Aggregate intrinsic value, exercisable, ending | $ |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) | Dec. 28, 2017USD ($)a$ / shares | Nov. 30, 2017USD ($)shares | Aug. 02, 2017USD ($)shares | Nov. 30, 2017USD ($) | Nov. 30, 2016USD ($) |
Number of common stock issued for stock payable | shares | 34,500,000 | ||||
Issuance of common stock for stock payable value | $ 345,000 | $ (365,000) | $ (806,234) | ||
Subsequent Event [Member] | |||||
Oil and gas lease paid | $ 1,600,000 | ||||
Acres of oil and gas lease | a | 2,790.9 | ||||
Number of common stock issued for stock payable | shares | 32,000 | ||||
Issuance of common stock for stock payable value | $ 32,000 | ||||
Subsequent Event [Member] | JBB Partners [Member] | Loan [Member] | |||||
Debt instrument face amount | $ 1,550,000 | ||||
Debt instrument interest rate | 3.00% | ||||
Debt instrument maturity date | Dec. 28, 2018 | ||||
Conversion price per share | $ / shares | $ 0.20 |