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Capital Stock
3 Months Ended
Mar. 31, 2016
Capital stock [Abstract]  
CAPITAL STOCK

NOTE 3 – CAPITAL STOCK

 

Common Stock

 

2016 Activity

 

No shares of common stock have been issued during the first three months of 2016.

 

2015 Activity

 

The Company failed to repay the convertible debt loan in full on the November 30, 2015 maturity date. Under the terms of the debt agreements, the Company issued a total of 300,000 shares of common stock to the note holders. This issuance was valued at $0.04 per share ($12,000) which was determined by management to be the fair value of a share of common stock based upon a third party valuation performed in 2014. The issuance was accounted for as financing expense. See Note 7.

 

The Thirteenth Amendment to the Investment Agreement with DMRJ Group (see Note 9) dated August 2015 contained provisions for shares of common stock to be issued to the Company’s President, Rick Havenstrite, if he operates within 10% of the approved budget over twelve months from the date of the amendment. The number of shares to potentially be issued to the Company’s President will be equal to 2.5% of the amount of fully outstanding shares of the Company on a fully diluted basis.

 

Preferred Stock

 

2016 Activity

 

No shares of preferred stock have been issued during the first three months of 2016.

 

2015 Activity

 

On August 31, 2015, as part of the Thirteenth Amendment to the Investment Agreement with DMRJ Group (see Note 9), the Company issued 185,194 shares of Series B Preferred Stock to DMRJ Group. The issuance of these shares was determined to meet the requirements of a substantial modification and thus was accounted for using debt extinguishment accounting guidelines. During the year ended December 31, 2015, financing expense of $740,776 was recorded in association with this share issuance, using an estimated fair value of the equivalent shares of $0.04. As a result of this issuance, DMRJ Group beneficially owned approximately 77% of the Company (on a fully-diluted basis). DMRJ Group is considered a related party.

 

In connection with the 300,000 shares of common stock issued to note holders of convertible debt (see above), the Company issued 9,733 shares of Series B Preferred Stock to satisfy the anti-dilution provisions associated with Series B Preferred Stock. During the year ended December 31, 2015, financing expense in the amount of $38,930 was recorded in association with this share issuance, using an estimated fair value of the equivalent shares of $0.04. This issuance maintains the current 77% beneficial ownership of the Company by DMRJ Group, with total preferred shares convertible into 47,211,002 shares of common stock.