10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended January 31, 2018

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______.

Commission file number: 000-49760

PETRO RIVER OIL CORP.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	98-0611188
(State or Other Jurisdiction of	(I.R.S. Employer
Incorporation or Organization)	Identification No.)

55 5thAvenue, Suite 1702, New York, New York 10003

(Address of Principal Executive Offices, Zip Code)

(469) 828-3900

(Registrant’s Telephone Number, Including Area Code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Sec.232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [  ]	Accelerated filer [  ]	Non-accelerated filer [  ]	Smaller reporting company [X]
			Emerging growth company [  ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided to Section 7(a)(2)(B) of the Securities Act. [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [  ] No [X]

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class	Outstanding at March 23, 2018
Common Stock, $0.00001 par value per share	17,309,809 shares

TABLE OF CONTENTS

		Page
PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements	1
	Consolidated Balance Sheets (Unaudited)	1
	Consolidated Statements of Operations (Unaudited)	2
	Consolidated Statements of Cash Flows (Unaudited)	3
	Notes to Consolidated Financial Statements (Unaudited)	4
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operation	22
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	32
Item 4.	Controls and Procedures	32
PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	34
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 3.	Default Upon Senior Securities	34
Item 4.	Mine Safety Disclosures	34
Item 5.	Other Information	34
Item 6.	Exhibits	35
SIGNATURES		36

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

Petro River Oil Corp. and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

	As of
	January 31, 2018	April 30, 2017
Assets
Current Assets:
Cash and cash equivalents	$844,487	$631,232
Accounts receivable - oil and gas	106,034	8,423
Accounts receivable - real estate - related party	-	2,123,175
Accrued interest on notes receivable - related party	-	797,710
Accounts receivable - other	17,449	-
Interest in real estate rights	-	309,860
Prepaid expenses and other current assets	58,440	207,831
Prepaid oil and gas asset development costs	1,060,336	613,480
Notes receivable - related party, current portion	-	24,786,382
Total Current Assets	2,086,746	29,478,093
Oil and gas assets, full cost method
Costs subject to amortization, net	2,398,783	1,234,806
Costs not being amortized, net	861,444	858,830
Property, plant and equipment, net of accumulated depreciation of $184,710 and $184,140, respectively	1,012	1,582
Investment in Horizon Energy Partners, LLC	1,592,418	1,213,000
Other assets	17,133	17,133
Total Long-term Assets	4,870,790	3,325,351
Total Assets	$6,957,536	$32,803,444
Liabilities and Equity
Current Liabilities:
Accounts payable and accrued expenses	$240,731	$120,233
Accrued interest on notes payable – related party	192,887	-
Deferred tax liability	-	3,442,724
Redetermination liability	259,313	-
Asset retirement obligations, current portion	406,403	406,403
Total Current Liabilities	1,099,334	3,969,360
Long-term Liabilities:
Asset retirement obligations, net of current portion	230,801	152,293
Note payable – related parties, net of debt discount of $2,279,227 and $0, respectively	2,220,773	-
Total Long-term Liabilities	2,451,574	152,293
Total Liabilities	3,550,908	4,121,653
Commitments and contingencies
Equity:
Preferred shares - 5,000,000 authorized; par value $0.00001; 0 shares issued and outstanding	-	-
Preferred B shares - 29,500 authorized; par value $0.00001; 0 shares issued and outstanding	-	-
Common shares - 150,000,000 authorized; par value $0.00001; 17,309,809 and 15,827,921 issued and outstanding, respectively	173	158
Additional paid-in capital	52,312,075	46,681,073
Accumulated deficit	(48,905,620)	(30,609,910)
Total Petro River Oil Corp. Equity	3,406,628	16,071,321
Non-controlling interests	-	12,610,470
Total Equity	3,406,628	28,681,791
Total Liabilities and Equity	$6,957,536	$32,803,444

The accompanying notes are an integral part of these consolidated financial statements.

-1-

Petro River Oil Corp. and Subsidiaries

Consolidated Statements of Operations

(Unaudited)

	For the Three Months Ended January 31,		For the Nine Months Ended January 31,
	2018	2017	2018	2017
Revenues
Oil and natural gas sales	$250,877	$7,117	$275,918	$7,117
Total Revenues	250,877	7,117	275,918	7,117
Operating Expenses
Lease operating expenses	12,445	8,586	70,049	40,710
Depreciation, depletion and accretion	96,540	7,621	117,405	14,789
Gain on sale of oil and gas properties	-	-	-	(216,580)
Impairment of oil and gas assets	730,607	20,942	972,488	20,942
General and administrative	686,680	777,702	2,162,759	3,315,914
Total Operating Expenses	1,526,272	814,851	3,322,701	3,175,775
Operating Loss	(1,275,395)	(807,734)	(3,046,783)	(3,168,658)
Other Income (Expense)
Interest income (expense) - net	(50,173)	163,809	184,134	462,575
Loss on assumption of Pearsonia interests	(3,351,965)	-	(3,351,965)	-
Loss on redetermination	(11,914,204)	-	(11,914,204)	-
Net (loss) gain on real estate rights	(3,756)	(7,208)	267,734	686,096
Other Income (Expense)	(15,320,098)	156,601	(14,814,301)	1,148,671
Net Loss Before Income Tax Provision	(16,595,493)	(651,133)	(17,861,084)	(2,019,987)
Income Tax Provision	50,284	22,200	333,203	443,349
Net Loss	(16,645,777)	(673,333)	(18,194,287)	(2,463,336)
Net Income (Loss) Attributable to Non-controlling Interest	28,198	(3,648)	101,423	131,861
Net Loss Attributable to Petro River Oil Corp. and Subsidiaries	$(16,673,975)	$(669,685)	$(18,295,710)	$(2,595,197)
Basic and Diluted Net Loss Per Common Share	$(0.97)	$(0.04)	$(1.12)	$(0.17)
Weighted average number of common shares outstanding - basic and diluted	17,214,081	15,827,998	16,298,951	15,702,300

The accompanying notes are an integral part of these consolidated financial statements.

-2-

Petro River Oil Corp. and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

	For the Nine Months
	Ended
	January 31, 2018	January 31, 2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$(18,194,287)	$(2,463,336)
Adjustments to reconcile net loss to net cash used in by operating activities:
Stock-based compensation	811,123	1,850,462
Depreciation, depletion and accretion	117,408	14,789
Amortization of debt discount	224,000	-
Gain on sale of oil and gas properties	-	(216,580)
Impairment of oil and gas assets	972,488	20,942
Net gain on interest in real estate rights	(267,734)	(686,096)
Loss on redetermination	11,914,204	-
Loss on assumption of Pearsonia interests	3,351,965	-
Deferred income tax expense	333,203	443,349
Changes in operating assets and liabilities:
Accounts receivable – oil and gas	(97,611)	(8,894)
Accounts receivable – related party	-	5,021
Accrued interest on notes receivable – related party	(593,021)	(462,028)
Prepaid expenses and other assets	149,391	(12,269)
Accounts payable and accrued expenses	309,341	(78,017)
Net Cash Used in Operating Activities	(969,530)	(1,592,657)
Cash Flows from Investing Activities:
Proceeds from the sale of interest in real estate rights	1,553,884	3,709,178
Prepaid oil and gas assets	(446,856)	(538,348)
Issuance of notes receivable – related party	(1,558,501)	(3,742,803)
Capitalized expenditures on oil and gas assets	(2,116,602)	(304,297)
Cash paid in MegaWest exchange transaction	(119,722)	-
Cash received from acquisition of Horizon Investments	-	3,364,817
Cash paid for cost method investment	(379,418)	(525,000)
Proceeds from deposit	-	91,802
Net Cash(Used in) Provided by Investing Activities	(3,067,215)	2,055,349
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from notes payable – related party	4,500,000	-
Cash paid for debt inducement	(250,000)	-
Cash received from non-controlling interest contributions	-	176,000
Net Cash Provided by Financing Activities	4,250,000	176,000
Change in cash and cash equivalents	213,255	638,692
Cash and cash equivalents, beginning of period	631,232	774,751
Cash and cash equivalents, end of period	$844,487	$1,413,443
SUPPLEMENTARY CASH FLOW INFORMATION:
Cash paid during the period for:
Income taxes	$86,876	$3,789
Interest paid	$-	$-
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Reclassification from prepaid oil and gas development costs to oil and gas assets not subject to amortization	$-	$761,444
Receivable and payable for sale of oil and gas properties	$17,449	$-
Accrual of oil and gas development costs	$77,307	$-
Additions to asset retirement obligation from new drilling	$16,875	$-
Change in estimate of asset retirement obligations	$55,098	$-
Warrants issued with notes payable	$2,003,227	$-
Overriding interest contributed as debt inducement	$250,000	$-

The accompanying notes are an integral part of these consolidated financial statements. 

-3-

PETRO RIVER OIL CORP.

Notes to the Consolidated Financial Statements

(Unaudited)

1. Organization

Petro River Oil Corp. (the “Company”) is an independent energy company focused on the exploration and development of conventional oil and gas assets with low discovery and development costs. The Company is currently focused on moving forward with drilling wells on several of its properties owned directly and indirectly through its interest in Horizon Energy Partners, LLC (“Horizon Energy”), as well as entering into highly prospective plays with Horizon Energy and other industry-leading partners. Diversification over a number of projects, each with low initial capital expenditures and strong risk reward characteristics, reduces risk and provides cross-functional exposure to a number of attractive risk adjusted opportunities.

The Company’s core holdings are in Osage and Kay County, Oklahoma. Following the acquisition of Horizon I Investments, LLC (“Horizon Investments”), the Company also has exposure to a portfolio of several additional domestic and international oil and gas assets consisting of highly prospective conventional plays diversified across project type, geographic location and risk profile, as well as access to a broad network of industry leaders from Horizon Investment’s interest in Horizon Energy. Horizon Energy is an oil and gas exploration and development company owned and managed by former senior oil and gas executives. It has a portfolio of domestic and international assets, including two assets located in the United Kingdom adjacent to the giant Wytch Farm oil field, the largest onshore oil field in Western Europe. Each of the assets in the Horizon Energy portfolio is characterized by low initial capital expenditure requirements and strong risk reward characteristics.

In light of the challenging oil price environment and capital markets, management is focusing on specific target acquisitions and investments, limiting operating expenses, and exploring farm-in and joint venture opportunities for the Company’s oil and gas assets. No assurances can be given that management will be successful.  

Recent Developments

Working Interest Exchange.

On February 14, 2018, the Company entered into a Purchase and Exchange Agreement with Red Fork Resources (“Red Fork”), pursuant to which (i) the Company agreed to convey to Mountain View Resources, LLC, an affiliate of Red Fork, 100% of its 13.7% working interest in and to an area of mutual interest (“AMI”) in the Mountain View Project in Kern County, California, and (ii) Red Fork agreed to convey to the Company 64.7% of its 85% working interest in and to an AMI situated in Kay County, Oklahoma. The fair value of the assets acquired was $108,333 as of the date of the agreement. Following the exchange, the Company and Red Fork each retain a 2% overriding royalty interest in the projects that they respectively conveyed. Under the terms of the agreement, all revenues and all costs, expenses, obligations and liabilities earned or incurred prior to January 1, 2018 (the “Effective Date”) shall be borne by the original owners of such working interests, and all of such costs, expenses, obligations and liabilities that occur subsequent to the Effective Date shall be borne by the new owners of such working interests.

The acquisition of the additional concessions in Kay County, Oklahoma adds additional prospect locations adjacent to the Company’s 106,000-acre concession in Osage County, Oklahoma. The similarity of the prospects in Kay and Kern County allows for the leverage of assets, infrastructure and technical expertise.

Dilution of Company’s Indirect Interest in Horizon Energy.

On February 2, 2018, Horizon Investments received from Horizon Energy a capital call in the amount of $600,227. Horizon Investments did not have the required funds to fund the capital call. The capital call was not mandatory and the consequence of Horizon Investments’ failure to fund the capital call was a dilution in Horizon Investments’ interest in Horizon Energy by 27.43%, therefore reducing Horizon Investments’ interest in Horizon Energy from 20.01% to 14.52%. Scot Cohen, a member of the Company’s Board of Directors and a substantial stockholder, and a member of Horizon Energy, participated with other Horizon Energy members to make the requested capital call in light of Horizon Investment’s inability to make the requested capital call. The determination not to make the requested capital call, and therefore allow Mr. Cohen to increase his membership interest in Horizon Energy, was discussed and approved by the independent members of the Company’s Board of Directors.

-4-

MegaWest Exchange Transaction.

On January 31, 2018, the Company entered into an Assignment and Assumption of Membership Interest with MegaWest Energy Kansas Corp. (“MegaWest”), a wholly-owned subsidiary of the Company (“Assignment Agreement”), whereby the Company transferred its interest in MegaWest in exchange for MegaWest’s membership interests in Bandolier Energy, LLC (“Bandolier”) (the “Bandolier Interests”). The exchange transaction followed the receipt by the Company of a notice of Redetermination, as defined below, of MegaWest’s assets, including MegaWest’s interest in the Bandolier Interests (together, “MegaWest Assets”), conducted by Fortis Property Group, LLC (“Fortis”).

The Redetermination was conducted pursuant to a Contribution Agreement, dated October 30, 2015. Under the terms of the Contribution Agreement, the Board of MegaWest was entitled to engage a qualified appraiser to determine the value of the MegaWest Assets and Bandolier Interests, and upon completion thereof (a “Redetermination”), in the event the MegaWest Assets were determined to be less than $40.0 million, then a Shortfall, as defined in the Contribution Agreement, exists. As a result, the Company would be required to make cash contributions to MegaWest in an amount equal to the amount of the Shortfall (the “Shortfall Capital Contribution”). The Contribution Agreement further provided that, in the event that the Company was unable to deliver to MegaWest the Shortfall Capital Contribution required after the Redetermination, if any, MegaWest would have the right to exercise certain remedies, including a right to foreclose on the Company’s entire equity interest in MegaWest. In the event of foreclosure, the Bandolier Interest would revert back to the Company.  

In lieu of engaging a qualified appraiser to quantify the Shortfall Capital Contribution, and in lieu of requiring MegaWest to exercise its remedies under the terms of the Contribution Agreement, the Company and MegaWest entered into the exchange transaction. As a result, the Company has no further rights or interest in MegaWest, and MegaWest has no further rights or interest in any assets associated with the Bandolier Interests. Pursuant to the Contribution Agreement and the Assignment Agreement, the Company continues to be responsible for a reimbursement payment to MegaWest in the amount of $259,313, together with interest accrued thereon at an annual rate of 10%, which will be due and payable one year after the date of the Assignment Agreement and included as a payable as of January 31, 2018.

As a result of the Redetermination, the Company recorded a loss on redetermination of $11,914,204 reflecting the write-off of the related assets, liabilities and non-controlling interests of Fortis’ interests in MegaWest as shown below:

Assets
Cash and cash equivalents	$119,722
Accounts receivable - real estate - related party	1,146,885
Accrued interest on notes receivable - related party	1,390,731
Interest in Bandolier	259,313
Notes receivable - related party, current portion	26,344,883
Total Assets	$29,261,534
Liabilities
Accounts payable and accrued expenses	$74,212
Deferred tax liability	3,775,927
Total Liabilities	3,850,139
Non-controlling interest	13,497,191
Loss on redetermination	$11,914,204

At the time the parties entered into the Contribution Agreement, management anticipated that the market price for crude oil would return to prices reached prior to 2015, and that additional wells would be drilled, resulting in greater revenue from the Bandolier Interests. Subsequent to the execution of the Contribution Agreement, only two wells had been drilled as of January 2018. That fact, together with the relatively low price of crude oil and the anticipated delays in drilling additional wells to demonstrate the value of the Bandolier Interests, contributed to Fortis’ election to terminate the Contribution Agreement at the end of its term, as amended. Had the market price of oil supported the value of developing the Bandolier oil and gas properties at this time, under the terms of the Contribution Agreement, Fortis would have been required to fund the planned drilling program.

-5-

Acquisition of Membership Interest in the Osage County Concession.

On November 6, 2017, the Company entered into an Assignment and Assumption of Membership Interest Agreement with Pearsonia West Investments, LLC (“Pearsonia”). The Company issued 1,466,667 shares of its common stock, $0.00001 par value (“Common Stock”) with a fair value of $1.75 per share, to Pearsonia in exchange for all membership interests in Bandolier held by Pearsonia. As result of this transaction, the Company wrote-off the receivable from Pearsonia’s non-controlling interest in Bandolier totaling $785,298, resulting in a loss of $3,351,965.

November 2017 $2.5 Million Secured Note Financing.

On September 20, 2017, the Company entered into a Securities Purchase Agreement (“Purchase Agreement II”) with Petro Exploration Funding II, LLC (“Funding Corp. II”), pursuant to which the Company issued to Funding Corp. II a senior secured promissory note on November 6, 2017 in the principal amount of $2.5 million (the “November 2017 Secured Note”) (the “November 2017 Note Financing”) and received total proceeds of $2.5 million. As additional consideration for the purchase of the November 2017 Secured Note, the Company issued to Funding Corp. II (i) a warrant to purchase 1.25 million shares of the Company’s Common Stock (the “November 2017 Warrant”), and (ii) an overriding royalty interest equal to 2% in all production from the Company’s interest in the Company’s concessions located in Osage County, Oklahoma currently held by Spyglass Energy Group, LLC, an indirect subsidiary of the Company (“Spyglass”) (the “ExistingOsage County Override”). The Existing Osage County Override was an existing override that was acquired by the Company from Scot Cohen, as discussed below.

The November 2017 Secured Note accrues interest at a rate of 10% per annum and matures on June 30, 2020. To secure the repayment of all amounts due under the terms of the November 2017 Secured Note, the Company entered into a Security Agreement, pursuant to which the Company granted to Funding Corp. II a security interest in all assets of the Company, which security interest is subordinate to the security interest granted to Petro Exploration Funding, LLC (“Funding Corp. I”) on June 13, 2017 in connection with a financing consummated in June 2017. The first interest payment will be due on June 1, 2018, and each six-month anniversary thereafter until the outstanding principal balance of the November 2017 Secured Note is paid in full.

The Company’s Executive Chairman, Scott Cohen, owns or controls 31.25% of Funding Corp. I and 41.20% of Funding Corp. II.

2. Going Concern and Management’s Plan

The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As of January 31, 2018, the Company had an accumulated deficit of $48.9 million. The Company has incurred significant losses since inception. These matters raise substantial doubt about the Company’s ability to continue as a going concern. The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset amounts or the classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

At January 31, 2018, the Company had working capital of approximately $1.0 million. As a result of the utilization of cash in its operating activities, and the development of its assets, the Company has incurred losses since it commenced operations. In addition, the Company has a limited operating history prior to acquisition of Bandolier. At January 31, 2018, the Company had cash and cash equivalents of approximately $0.8 million. The Company’s primary source of operating funds since inception has been debt and equity financings.

In light of the challenging oil price environment and capital markets, management is focusing on specific target acquisitions and investments, limiting operating expenses, and exploring farm-in and joint venture opportunities for the Company’s oil and gas assets. No assurances can be given that management will be successful. In addition, Management intends to raise additional capital through debt and equity instruments in order to execute its business, operating and development plans. Management can provide no assurances that the Company will be successful in its capital raising efforts. In order to conserve capital, from time to time, management may defer certain development activity. 

-6-

3. Basis of Preparation

The accompanying unaudited interim consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) and include the accounts of the Company and its wholly owned subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation. Non–controlling interest represents the minority equity investment in the Company’s subsidiaries, plus the minority investors’ share of the net operating results and other components of equity relating to the non–controlling interest.

These unaudited consolidated financial statements include the Company and the following subsidiaries:

Petro Spring, LLC; PO1, LLC; Petro River UK Limited; Horizon I Investments, LLC; and MegaWest Energy USA Corp. and MegaWest Energy USA Corp.’s wholly owned subsidiaries:

MegaWest Energy Texas Corp.

MegaWest Energy Kentucky Corp.

MegaWest Energy Missouri Corp.

As a result of the Acquisition of Membership Interest in the Osage County Concession (as discussed above), Bandolier is now a wholly-owned subsidiary of the Company and the Company consolidates 100% of the financial information of Bandolier. Bandolier operates the Company’s Oklahoma oil and gas properties.

Also contained in the unaudited consolidated financial statements for the period ending January 31, 2017 is the financial information of MegaWest, which, prior to January 31, 2018, was 58.51% owned by the Company. As a result of the exchange transaction, the unaudited consolidated financial statements for the nine months ended January 31, 2018, include the results of operations of MegaWest; however, the assets and liabilities have been written off and included in loss on redetermination of $11,914,204 on the income statement as of January 31, 2018.

The unaudited consolidated financial information furnished herein reflects all adjustments, consisting solely of normal recurring items, which in the opinion of management are necessary to fairly state the financial position of the Company and the results of its operations for the periods presented. This report should be read in conjunction with the Company’s consolidated financial statements and notes thereto included in the Company’s Form 10-K for the year ended April 30, 2017 filed with the Securities and Exchange Commission (the “SEC”) on July 31, 2017. The Company assumes that the users of the interim financial information herein have read or have access to the audited financial statements for the preceding fiscal year and that the adequacy of additional disclosure needed for a fair presentation may be determined in that context. Accordingly, footnote disclosure, which would substantially duplicate the disclosure contained in the Company’s Form 10-K for the year ended April 30, 2017, has been omitted. The results of operations for the interim periods presented are not necessarily indicative of results for the entire year ending April 30, 2018.

4. Significant Accounting Policies

 (a) Use of Estimates:

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The Company’s financial statements are based on a number of significant estimates, including oil and natural gas reserve quantities which are the basis for the calculation of depreciation, depletion and impairment of oil and natural gas properties, and timing and costs associated with its asset retirement obligations, as well as those related to the fair value of stock options, stock warrants and stock issued for services. While we believe that our estimates and assumptions used in preparation of the financial statements are appropriate, actual results could differ from those estimates. 

-7-

 (b) Cash and Cash Equivalents:

Cash and cash equivalents include all highly liquid monetary instruments with original maturities of three months or less when purchased. These investments are carried at cost, which approximates fair value. Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash deposits. The Company maintains its cash in institutions insured by the Federal Deposit Insurance Corporation (“FDIC”). At times, the Company’s cash and cash equivalent balances may be uninsured or in amounts that exceed the FDIC insurance limits. At January 31, 2018, approximately $549,000 of the Company’s cash balances were uninsured. The Company has not experienced any loses on such accounts.

 (c) Receivables:

Receivables that management has the intent and ability to hold for the foreseeable future are reported in the balance sheet at outstanding principal adjusted for any charge-offs and the allowance for doubtful accounts. Losses from uncollectible receivables are accrued when both of the following conditions are met: (a) information available before the financial statements are issued or are available to be issued indicates that it is probable that an asset has been impaired at the date of the financial statements, and (b) the amount of the loss can be reasonably estimated. These conditions may be considered in relation to individual receivables or in relation to groups of similar types of receivables. If the conditions are met, an accrual shall be made even though the particular receivables that are uncollectible may not be identifiable. The Company reviews individually each receivable for collectability and performs on-going credit evaluations of its customers and adjusts credit limits based upon payment history and the customer’s current credit worthiness, as determined by the review of their current credit information, and determines the allowance for doubtful accounts based on historical write-off experience, customer specific facts and general economic conditions that may affect a client’s ability to pay. Bad debt expense is included in general and administrative expenses, if any.

Credit losses for receivables (uncollectible receivables), which may be for all or part of a particular receivable, shall be deducted from the allowance. The related receivable balance shall be charged off in the period in which the receivables are deemed uncollectible. Recoveries of receivables previously charged off shall be recorded when received. The Company charges off its account receivables against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

The allowance for doubtful accounts at January 31, 2018 and April 30, 2017 was $0.

 (d) Interest in Real Estate Rights:

At January 31, 2017, interest in real estate rights contributed by Fortis related to real properties that Fortis planned to sell within one year. Since these properties were contributed by Fortis, a related party, the rights for the period ending January 31, 2017 are stated on the Company’s balance sheet at Fortis’ cost basis. As a result of the Exchange Agreement, no amounts are reflected in interests in real estate rights as of January 31, 2018.

 (e) Oil and Gas Operations:

Oil and Gas Properties: The Company uses the full-cost method of accounting for its exploration and development activities. Under this method of accounting, the costs of both successful and unsuccessful exploration and development activities are capitalized as oil and gas property and equipment. Proceeds from the sale or disposition of oil and gas properties are accounted for as a reduction to capitalized costs unless the gain or loss would significantly alter the relationship between capitalized costs and proved reserves of oil and natural gas attributable to a country, in which case a gain or loss would be recognized in the consolidated statements of operations. All of the Company’s oil and gas properties are located within the continental United States, its sole cost center.

Oil and gas properties may include costs that are excluded from costs being depleted. Oil and gas costs excluded represent investments in unproved properties and major development projects in which the Company owns a direct interest. These unproved property costs include non-producing leasehold, geological and geophysical costs associated with leasehold or drilling interests and in process exploration drilling costs. All costs excluded are reviewed at least annually to determine if impairment has occurred.

-8-

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the historical cost carrying value of an asset may no longer be appropriate. For the nine months ended January 31, 2018, the Company evaluated these properties and recorded an impairment in the amount of $972,488.

Proved Oil and Gas Reserves: Proved oil and gas reserves are the estimated quantities of crude oil, natural gas and natural gas liquids which geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions. All of the Company’s oil and gas properties with proven reserves were impaired to the salvage value prior to the Company’s acquisition of its interest in Bandolier. The price used to establish economic viability is the average price during the 12-month period preceding the end of the entity’s fiscal year and calculated as the un-weighted arithmetic average of the first-day-of-the-month price for each month within such 12-month period.

Depletion, Depreciation and Amortization: Depletion, depreciation and amortization is provided using the unit-of-production method based upon estimates of proved oil and gas reserves with oil and gas production being converted to a common unit of measure based upon their relative energy content. Investments in unproved properties and major development projects are not amortized until proved reserves associated with the projects can be determined or until impairment occurs. If the results of an assessment indicate that the properties are impaired, the amount of the impairment is deducted from the capitalized costs to be amortized. Once the assessment of unproved properties is complete and when major development projects are evaluated, the costs previously excluded from amortization are transferred to the full cost pool and amortization begins. The amortizable base includes estimated future development costs and, where significant, dismantlement, restoration and abandonment costs, net of estimated salvage value. 

In arriving at rates under the unit-of-production method, the quantities of recoverable oil and natural gas reserves are established based on estimates made by the Company’s geologists and engineers which require significant judgment, as does the projection of future production volumes and levels of future costs, including future development costs. In addition, considerable judgment is necessary in determining when unproved properties become impaired and in determining the existence of proved reserves once a well has been drilled. All of these judgments may have significant impact on the calculation of depletion expenses. There have been no material changes in the methodology used by the Company in calculating depletion, depreciation and amortization of oil and gas properties under the full cost method during the nine months ended January 31, 2018 and 2017.  

 (f) Investments:

Investments held in stock of entities other than subsidiaries, namely corporate joint ventures and other non-controlled entities, usually are accounted for by one of three methods: (i) the fair value method, (ii) the equity method, or (iii) the cost method. The equity method tends to be most appropriate if an investment enables the investor to influence the operating or financial policies of the investee. The cost basis is utilized for investments that are less than 20% owned, and the Company does not exercise significant influence over the operating and financial policies of the investee. Under the cost method, investments are held at historical cost.

 (g) Fair Value of Financial Instruments:

The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in U.S. GAAP and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:

-9-

Level 1	Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
Level 2	Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
Level 3	Pricing inputs that are generally observable inputs and not corroborated by market data.

Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.

The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

The carrying amount of the Company’s financial assets and liabilities, such as cash, prepaid expenses, and accounts payable and accrued liabilities approximate their fair value because of the short maturity of those instruments.

Transactions involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated.

 (h) Stock-Based Compensation:

Generally, all forms of stock-based compensation, including stock option grants, warrants, and restricted stock grants are measured at their fair value utilizing an option pricing model on the award’s grant date, based on the estimated number of awards that are ultimately expected to vest.

Under fair value recognition provisions, the Company recognizes equity–based compensation net of an estimated forfeiture rate and recognizes compensation cost only for those shares expected to vest over the requisite service period of the award.

The fair value of option award is estimated on the date of grant using the Black–Scholes option valuation model. The Black–Scholes option valuation model requires the development of assumptions that are input into the model. These assumptions are the expected stock volatility, the risk–free interest rate, the option’s expected life, the dividend yield on the underlying stock and the expected forfeiture rate. Expected volatility is calculated based on the historical volatility of the Company’s Common Stock over the expected option life and other appropriate factors. Risk–free interest rates are calculated based on continuously compounded risk–free rates for the appropriate term. The dividend yield is assumed to be zero, as the Company has never paid or declared any cash dividends on its Common Stock and does not intend to pay dividends on the Common Stock in the foreseeable future. The expected forfeiture rate is estimated based on historical experience.

Determining the appropriate fair value model and calculating the fair value of equity–based payment awards requires the input of the subjective assumptions described above. The assumptions used in calculating the fair value of equity–based payment awards represent management’s best estimates, which involve inherent uncertainties and the application of management’s judgment. As a result, if factors change and the Company uses different assumptions, the equity–based compensation expense could be materially different in the future. In addition, the Company is required to estimate the expected forfeiture rate and recognize expense only for those shares expected to vest. If the actual forfeiture rate is materially different from our estimate, the equity–based compensation expense could be significantly different from what the Company has recorded in the current period. 

The Company determines the fair value of the stock–based payments to non-employees as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. If the fair value of the equity instruments issued is used, it is measured using the stock price and other measurement assumptions as of the earlier of either (1) the date at which a commitment for performance by the counterparty to earn the equity instruments is reached, or (2) the date at which the counterparty’s performance is complete.

-10-

The expenses resulting from stock-based compensation are recorded as general and administrative expenses in the consolidated statement of operations, depending on the nature of the services provided.

 (i) Income Taxes:

Income Tax Provision

On December 22, 2017, the Tax Cuts and Jobs Act (“Tax Act”) was signed into law. ASC 740, Accounting for Income Taxes requires companies to recognize the effects of changes in tax laws and rates on deferred tax assets and liabilities and the retroactive effects of changes in tax laws in the period in which the new legislation is enacted. The Company’s gross deferred tax assets were revalued based on the reduction in the federal statutory tax rate from 35% to 21%, which will result in a reduction in our effective tax rate from approximately 36.64% to 24.16% for the nine months ended January 31, 2018. A corresponding offset has been made to the valuation allowance, and any potential other taxes arising due to the Tax Act will result in reductions to the Company’s net operating loss carryforward and valuation allowance. The Company will continue to analyze the Tax Act to assess its full effects on the Company’s financial results, including disclosures, for the Company’s fiscal year ending April 30, 2018, but the Company does not expect the Tax Act to have a material impact on the Company’s consolidated financial statements.

Uncertain Tax Positions

The Company evaluates uncertain tax positions to recognize a tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. Those tax positions failing to qualify for initial recognition are recognized in the first interim period in which they meet the more likely than not standard or are resolved through negotiation or litigation with the taxing authority, or upon expiration of the statute of limitations. De-recognition of a tax position that was previously recognized occurs when an entity subsequently determines that a tax position no longer meets the more likely than not threshold of being sustained.

At January 31, 2018 and April 30, 2017, the Company had approximately $0 and $3.4 million, respectively, of liabilities for uncertain tax positions. Interpretation of taxation rules relating to net operating loss utilization in real estate transactions give rise to uncertain positions. In connection with the uncertain tax position, there were no interest or penalties recorded as the position is expected but the tax returns are not yet due.

The Company is subject to ongoing tax exposures, examinations and assessments in various jurisdictions. Accordingly, the Company may incur additional tax expense based upon the outcomes of such matters. In addition, when applicable, the Company will adjust tax expense to reflect the Company’s ongoing assessments of such matters, which require judgment and can materially increase or decrease its effective rate as well as impact operating results.

The number of years with open tax audits varies depending on the tax jurisdiction. The Company’s major taxing jurisdictions include the United States (including applicable states).

 (j) Per Share Amounts:

Basic net income (loss) per common share is computed by dividing net loss attributable to stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted net income (loss) per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents. For the nine months ended January 31, 2018 and 2017, potentially dilutive securities were not included in the calculation of diluted net loss per share because to do so would be anti-dilutive.

-11-

The Company had the following common stock equivalents at January 31, 2018 and 2017:

	January 31, 2018	January 31, 2017
Stock Options	2,555,385	2,495,182
Stock Purchase Warrants	2,223,669	133,333
Total	4,779,054	2,628,515

  (k) Recent Accounting Pronouncements:

In May 2014, the FASB issued a comprehensive new revenue recognition standard that will supersede nearly all existing revenue recognition guidance under U.S. GAAP. The standard’s core principle (issued as ASU 2014-09 by the FASB), is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. The new guidance must be adopted using either a full retrospective approach for all periods presented in the period of adoption or a modified retrospective approach. In August 2015, the FASB issued ASU No. 2015-14, which defers the effective date of ASU 2014-09 by one year, and would allow entities the option to early adopt the new revenue standard as of the original effective date. This ASU is effective for public reporting companies for interim and annual periods beginning after December 15, 2017. The Company is currently evaluating its adoption method and the impact of the standard on its consolidated financial statements and has not yet determined the method by which the Company will adopt the standard in 2018.

In April 2016, the FASB issued ASU No. 2016-10, “Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing” (Topic 606). In March 2016, the FASB issued ASU No. 2016-08, “Revenue from Contracts with Customers: Principal versus Agent Considerations (Reporting Revenue Gross versus Net)” (Topic 606). These amendments provide additional clarification and implementation guidance on the previously issued ASU 2014-09, “Revenue from Contracts with Customers.” The amendments in ASU 2016-10 provide clarifying guidance on materiality of performance obligations; evaluating distinct performance obligations; treatment of shipping and handling costs; and determining whether an entity’s promise to grant a license provides a customer with either a right to use an entity’s intellectual property or a right to access an entity’s intellectual property. The amendments in ASU 2016-08 clarify how an entity should identify the specified good or service for the principal versus agent evaluation and how it should apply the control principle to certain types of arrangements. The adoption of ASU 2016-10 and ASU 2016-08 is to coincide with an entity’s adoption of ASU 2014-09, which we intend to adopt for interim and annual reporting periods beginning after December 15, 2017. The Company does not expect the new standard to have a material effect on its consolidated financial statements.

In April 2016, the FASB issued ASU No. 2016-09, “Compensation – Stock Compensation” (Topic 718). The FASB issued this update to improve the accounting for employee share-based payments and affect all organizations that issue share-based payment awards to their employees. Several aspects of the accounting for share-based payment award transactions are simplified, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows. The updated guidance is effective for annual periods beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption of the update is permitted. Adoption of ASU 2016-09 did not have a material impact on the consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments” (“ASU 2016-15”). ASU 2016-15 will make eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016-15 is effective for fiscal years beginning after December 15, 2017. The new standard will require adoption on a retrospective basis unless it is impracticable to apply, in which case it would be required to apply the amendments prospectively as of the earliest date practicable. The Company is currently in the process of evaluating the impact of ASU 2016-15 on its consolidated financial statements. 

The Company does not expect the adoption of any other recently issued accounting pronouncements to have a significant impact on its financial position, results of operations, or cash flows. 

-12-

 (l) Subsequent Events:

The Company has evaluated all transactions through the date the consolidated financial statements were issued for subsequent event disclosure consideration. 

5.

Accounts Receivable – Related Party

On October 15, 2015, the Company entered into the Contribution Agreement with MegaWest and Fortis pursuant to which the Company and Fortis each agreed to contribute certain assets to MegaWest in exchange for shares of MegaWest common stock (“MegaWest Shares”) (the “MegaWest Transaction”) in order to participate in the development of the Company’s Bandolier prospect. 

Upon execution of the Contribution Agreement, Fortis transferred its interest in 30 condominium units and the right to any profits and proceeds therefrom. For the three months ended January 31, 2018 and 2017, MegaWest recorded a net loss on interest in real estate rights of $3,756 and $7,208, respectively. For the nine months ended January 31, 2018 and 2017, Fortis sold one and two condominium units, respectively, and MegaWest recorded a net gain on interest in real estate rights of $267,734 and $686,096, respectively.

The accounts receivable and the Company’s interest in real estate reflected on the Company’s balance sheet for the year ended April 30, 2017 were assets held by MegaWest, and were controlled by MegaWest’s board of directors, which consisted of two members appointed by Fortis and one by the Company. 

Proceeds from the amounts receivable from Fortis were to be available when the Company completed its evaluation of the Bandolier prospects. In this regard, the Contribution Agreement provided for a redetermination of the fair market value of the Bandolier Interest at any time following the six-month anniversary after the execution thereof (the “Redetermination”), which expired on December 31, 2017. On December 29, 2017, the Company obtained an extension of the Redetermination to allow the Company to complete the initial test well program on the Bandolier prospect in order to value the Redetermination. Under the terms of the Contribution Agreement, upon a Redetermination, in the event there was a shortfall from the valuation ascribed to the Bandolier Interest at the time of the Redetermination, as compared to the value ascribed to the Bandolier Interest in the Contribution Agreement, the Company would have been entitled to the value of the receivable but would be required to provide MegaWest with a cash contribution in an amount equal to the shortfall. In the event the Company was unable to deliver to MegaWest the cash contribution required after the Redetermination, if any, the board of directors of MegaWest would have had the right to exercise certain remedies against the Company, including a right to foreclose on the Company’s entire equity in MegaWest, which equity interest was pledged to Fortis under the terms of the Contribution Agreement. In the event of foreclosure, the Bandolier Interest would have reverted back to the Company, and the Company would have recorded a reduction in noncontrolling interest for Fortis’ interest in MegaWest for (i) the amount of the notes receivable, (ii) interest in real estate rights, (iii) accounts receivable - related party, and (iv) any accrued interest.

As described in Note 1, the Company entered into the Assignment Agreement with MegaWest, pursuant to which the Company transferred its MegaWest Shares in MegaWest in exchange for MegaWest’s membership interests in Bandolier. In lieu of engaging a qualified appraiser to quantify the Shortfall Capital Contribution, and in lieu of requiring MegaWest to exercise its remedies under the terms of the Contribution Agreement, the Company and MegaWest entered into the exchange transaction. Following the execution of the Assignment Agreement, the Company has no further rights or interest in the MegaWest Shares or assets, and MegaWest has no further rights or interest in any assets associated with the Bandolier Interests. Pursuant to the Contribution Agreement and Assignment Agreement, the Company agreed to reimburse MegaWest in the amount of $259,313, together with interest accrued thereon at an annual rate of 10%, which will be due and payable one year after the date of the Assignment Agreement.

6.

Notes Receivable – Related Party

Since December 2015, the Company has entered into ten promissory note agreements with Fortis with aggregate principal amounts of $26,344,883. The notes receivable bear interest at an annual rate of 3% and mature on January 31, 2018. As of January 31, 2018 and April 30, 2017, the outstanding balance of the notes receivable was $0 and $24,786,382, respectively. See Note 1 for further discussion regarding the exchange transaction.

-13-

7.

Interest in Real Estate Rights

As discussed in Note 5, MegaWest received an interest in real estate rights to 30 condominium units from Fortis pursuant to the MegaWest Transaction. For the nine months ended January 31, 2018, the Company recognized a net gain of $686,096 related to the sale of one condominium unit by Fortis.

The following table summarizes the activity for interest in real estate rights:

	Nine Months Ended January 31,2018
Balance at April 30, 2017	$309,860
Cost of sales – 1 condominium unit	(309,860)
Balance at January 31, 2018	$-

As described in Note 1, as a result of the exchange agreement, no amounts are recorded at January 31, 2018 for interests in real estate rights.

8. Oil and Gas Assets

The following table summarizes the activity of the oil and gas assets by project for the nine months ended January 31, 2018:

	Oklahoma	Larne Basin	Other (1)	Total
Balance May 1, 2017	$1,232,192	$761,444	$100,000	$2,093,636
Additions	2,265,882	-	-	2,265,882
Dispositions	(16,500)	-	-	(16,500)
Depreciation, depletion and amortization	(110,303)	-	-	(110,303)
Impairment of oil and gas assets	(972,488)	-	-	(972,488)
Balance January 31, 2018	$2,398,783	761,444	100,000	3,260,227

(1)

Other property consists primarily of four used steam generators and related equipment that will be assigned to future projects. As of January 31, 2018, and April 30, 2017, management concluded that impairment was not necessary as all other assets were carried at salvage value.

Kern County Project. On March 4, 2016, the Company executed an Asset Purchase and Sale and Exploration Agreement to acquire a 13.75% working interest in certain oil and gas leases located in southern Kern County, California. Horizon Energy also purchased a 27.5% working interest in the project.

Under the terms of the agreement, the Company paid $108,333 to the sellers on the closing date, and is obligated to pay certain other costs and expenses after the closing date related to existing and new leases as more particularly set forth in the agreement.Costs incurred to date for this property have aggregated to $1,060,336 as of January 31, 2018 and are recorded as prepaid oil and gas development costs on the consolidated balance sheet. In addition, the sellers are entitled to an overriding royalty interest in certain existing and new leases acquired after the closing date, and the Company is required to make certain other payments, each in amounts set forth in the agreement.

As described in Note 1, on February 14, 2018, the Company exchanged its interest in the Kern County, California properties for a working interest in and to an AMI situated in Kay County, Oklahoma.

-14-

Acquisition of Interest in Larne Basin.  On January 19, 2016, Petro River UK Limited, (“Petro UK”), a wholly owned subsidiary of the Company, entered into a Farmout Agreement to acquire a 9% interest in Petroleum License PL 1/10 and P2123 (the “Larne Licenses”) located in the Larne Basin in Northern Ireland (the “Larne Transaction”). The two Larne Licenses, one onshore and one offshore, together encompass approximately 130,000 acres covering the large majority of the prospective Larne Basin. The other parties to the Farmout Agreement are Southwestern Resources Ltd, a wholly owned subsidiary of Horizon Energy, which acquired a 16% interest, and Brigantes Energy Limited, which retained a 10% interest. Third parties own the remaining 65% interest.

Under the terms of the Farmout Agreement, Petro UK deposited approximately $735,000 into an escrow agreement (“Escrow Agreement”), which amount represented Petro UK’s obligation to fund the total projected cost to drill the first well under the terms of the Farmout Agreement.The total deposited amount to fund the cost to drill the first well is approximately $6,159,452, based on an exchange rate of 1.0 British Pound for 1.44 U.S. Dollars. Petro UK was and will continue to be responsible for its pro-rata costs of additional wells drilled under the Farmout Agreement. Drilling of the first well was completed in June 2016 and was unsuccessful. The initial costs incurred by the Company were reclassified from prepaid oil and gas development costs to oil and gas assets not being amortized on the consolidated balance sheets.

Oklahoma Properties. During the nine months ended January 31, 2018, the Company recorded additions related to development costs incurred of approximately $2,255,589 and $10,293 for proven and unproven oil and gas assets, respectively. During the nine months ended January 31, 2018, the Company disposed of oil and gas assets of $16,500.

The Company’s prospects in Oklahoma are owned directly by the Company and indirectly by Spyglass Energy Group, LLC, a wholly owned subsidiary of Bandolier. As a result of the Exchange Transaction consummated on January 31, 2018, as discussed above, Bandolier is wholly-owned by the Company. Bandolier has a 75% working interest in the 106,500-acre concession in Osage County, Oklahoma. The remaining 25% working interest is held by the operator, Performance Energy, LLC.

Impairment of Oil & Gas Properties. As of January 31, 2018, the Company assessed its oil and gas assets for impairment and recognized a charge of $972,488 related to its oil and gas properties. As of April 30, 2017, the Company assessed its oil and gas assets for impairment and recognized a charge of $20,942 related to the Oklahoma oil and gas assets.

9. Asset Retirement Obligations

The total future asset retirement obligations were estimated based on the Company’s ownership interest in all wells and facilities, the estimated legal obligations required to retire, dismantle, abandon and reclaim the wells and facilities and the estimated timing of such payments. The Company estimated the present value of its asset retirement obligations at both January 31, 2018 and April 30, 2017 based on a future undiscounted liability of $713,969 and $639,755, respectively. These costs are expected to be incurred within 1 to 24 years. A credit-adjusted risk-free discount rate of 10% and an inflation rate of 2% were used to calculate the present value.

Changes to the asset retirement obligations were as follows:

	Nine Months Ended January 31, 2018	Year Ended April 30, 2017
Balance, beginning of period	558,696	$763,062
Additions	16,875	-
Changes in estimates	55,098	-
Disposals	-	(216,580)
Accretion	6,535	12,214
	637,204	558,696
Less: Current portion for cash flows expected to be incurred within one year	(406,403)	(406,403)
Long-term portion, end of period	230,801	$152,293

-15-

During the nine months ended January 31, 2018 and 2017, the Company recorded accretion expense of $9,212 and $10,780, respectively.

Expected timing of asset retirement obligations:

Year Ending April 30,
2018 (remainder of year)	$406,403
2019	-
2020	-
2021	-
2022	-
Thereafter	307,566
Subtotal	661,549
Effect of discount	(76,765)
Total	$637,204

10. Related Party Transactions

Accounts Receivable - Related Party

As discussed in Notes 1 and 5 above, on October 15, 2015, the Company entered into the Contribution Agreement with MegaWest and Fortis pursuant to which the Company and Fortis each agreed to assign certain assets to MegaWest in exchange for the MegaWest Shares.

Upon execution of the Contribution Agreement, Fortis transferred certain indirect interests held in 30 condominium units and the rights to any profits and proceeds therefrom, with its basis of $15,544,382, to MegaWest. As of April 30, 2017, the Company had an accounts receivable – related party in the amount of $2,123,175, which was due from Fortis for the profits belonging to MegaWest. See Note 5 above. As a result of the exchange agreement, all amounts for accounts receivable – related party were written off at January 31, 2018.

Notes Receivable – Related Party

As discussed in Note 6, the Company entered into ten promissory note agreements with Fortis. The notes receivable accrued interest at an annual interest rate of 3% and mature on January 31, 2018. For the three and nine months ended January 31, 2018, the Company recorded $199,211 and $593,021 of interest income on the notes receivable, respectively. As of April 30, 2017, the outstanding balance of the notes receivable was $24,786,382, which was written off as a result of the exchange transaction (see Note 1). As a result of the exchange agreement, no amounts were recorded as interest income on the notes receivable at January 31, 2018.

-16-

Advances from Related Party

In September 2017, Scot Cohen, a member of the Company’s Board of Directors and a substantial stockholder of the Company, advanced the Company $250,000 in order to satisfy working capital needs, including the purchase of the Existing Osage County Override as discussed below. These advances are due on demand and are non-interest bearing. The advances were repaid in November 2017.

On August 14, 2017, following a review of the Company’s capital requirements necessary to fund its 2017 development program, the Company’s independent directors consented to Scot Cohen’s purchase of the Existing Osage County Override from various prior holders to be issued in connection with the November 2017 Note Financing, for $250,000. Mr. Cohen agreed to sell the Existing Osage County Override to the Company at the same price paid by him (plus market interest on his capital) upon determination by the Company to finance the Osage County development plan. On November 6, 2017, upon consummation of the November 2017 Note Financing, the Company acquired the Existing Osage County Override from Mr. Cohen.

June 2017 $2.0 Million Secured Note Financing

Scot Cohen owns or controls 31.25% of Funding Corp. I, the holder of the senior secured promissory note in the principal amount of $2.0 million (the “June 2017 Secured Note”) issued by the Company on June 13, 2017. The June 2017 Secured Note accrues interest at a rate of 10% per annum, and matures on June 30, 2020. The June 2017 Secured Note is presented as “Note payable – related party, net of debt discount” on the consolidated balance sheets.

In connection with the issuance of the June 2017 Secured Note, the Company issued to Funding Corp. I a warrant to purchase 840,336 shares of the Company’s Common Stock (the “June 2017 Warrant”). Upon issuance of the June 2017 Secured Note, the Company valued the June 2017 Warrant using the Black-Scholes Option Pricing model and accounted for it using the relative fair value of $952,056 as debt discount on the consolidated balance sheet. See Note 11 for the assumptions and inputs utilized to value the June 2017 Warrant.

As additional consideration for the purchase of the June 2017 Secured Note, the Company issued to Funding Corp. I an overriding royalty interest equal to 2% in all production from the Company’s interest in the Company’s concessions located in Osage County, Oklahoma, originally held by Spyglass, valued at $250,000, which was recorded as contributed capital and debt discount on the consolidated balance sheet.

The debt discount is amortized over the earlier of (i) the term of the debt or (ii) conversion of the debt, using the effective interest method. The amortization of debt discount is included as a component of interest expense in the consolidated statements of operations. There was unamortized debt discount of $1,057,307 as of January 31, 2018. During the nine months ended January 31, 2018 and 2017, the Company recorded amortization of debt discount totaling $144,749 and $0, respectively.

As of January 31, 2018, the outstanding balance, net of debt discount, and accrued interest on the June 2017 Secured Note due to related party was $942,693 and $125,000, respectively. 

November 2017 $2.5 Million Secured Note Financing

Scot Cohen owns or controls 41.20% of Funding Corp. II, the holder of the November 2017 Secured Note issued by the Company in connection with the November 2017 Note Financing in the principal amount of $2.5 million. The November 2017 Secured Note accrues interest at a rate of 10% per annum and matures on June 30, 2020. (See Note 1). The November 2017 Secured Note is presented as “Note payable – related party, net of debt discount” on the consolidated balance sheets.

-17-

Pursuant to the financing agreement, the Company issued the November 2017 Warrant to Funding Corp. II to purchase 1.25 million shares of the Company’s Common Stock. Upon issuance of the November 2017 Note, the Company valued the November 2017 Warrant using the Black-Scholes Option Pricing model and accounted for it using the relative fair value of $1,051,171 as debt discount on the consolidated balance sheet. In relation to the financing, Scot Cohen paid $250,000 for an overriding royalty interest from Funding Corp. I (as discussed below), which was recorded as additional debt discount on the consolidated balance sheet. See Note 11 for the assumptions and inputs utilized to value the November 2017 Warrant.

As additional consideration for the purchase of the November 2017 Secured Note, the Company issued to Funding Corp. II an overriding royalty interest equal to 2% in all production from the Company’s interest in the Company’s concessions located in Osage County, Oklahoma, originally held by Spyglass (the “ExistingOsage County Override”) then transferred to Funding Corp. I as inducement for the June 2017 Secured Note. The Existing Osage County Override was then acquired by the Company from Scot Cohen. As noted above, the override was accounted for as a debt discount and amortized over the term of the debt.

The debt discount is amortized over the earlier of (i) the term of the debt or (ii) conversion of the debt, using the effective interest method. The amortization of debt discount is included as a component of interest expense in the consolidated statements of operations. There was unamortized debt discount of $1,221,920 as of January 31, 2018. During the nine months ended January 31, 2018 and 2017, the Company recorded amortization of debt discount totaling $79,251 and $0, respectively.

As of January 31, 2018, the outstanding balance, net of debt discount, and accrued interest on the November 2017 Secured Note due to related party was $1,278,080 and $62,500, respectively. 

11.  Equity

As of January 31, 2018 and April 30, 2017, the Company had 5,000,000 shares of preferred stock, par value $0.00001 per share, authorized. As of January 31, 2018, and April 30, 2017, the Company had 29,500 shares of Series B Preferred Stock, par value $0.00001 per share (“Series B Preferred”), authorized. No Series B Preferred shares are currently issued or outstanding, and no other series of preferred stock have been designated. 

As of January 31, 2018 and April 30, 2017, the Company had 150,000,000 shares of Common Stock authorized. During the nine months ended January 31, 2018, the Company issued 15,145 shares of Common Stock related to a cashless exercise of 35,000 options.

As discussed above in Note 1, pursuant to the Membership Interest Assignment with Pearsonia, the Company issued 1,466,667 shares of Common Stock to Pearsonia in exchange for all membership interests in Bandolier held by Pearsonia.

There were 17,309,809 and 15,827,921 shares of common stock issued and outstanding as of January 31, 2018 and April 30, 2017, respectively. 

Options

The following table summarizes information about the changes of options for the period from April 30, 2017 to January 31, 2018 and options outstanding and exercisable at January 31, 2018:

	Options	Weighted Average Exercise Prices
Outstanding April 30, 2017	2,599,682	$2.13
Granted	25,703	1.40
Exercised	(35,000)	1.38
Forfeited/Cancelled	(35,000)	1.38
Outstanding – January 31, 2018	2,555,385	$2.14
Exercisable – January 31, 2018	2,319,349	$2.20
Outstanding – Aggregate Intrinsic Value		$673,501
Exercisable – Aggregate Intrinsic Value		$597,519

-18-

The following table summarizes information about the options outstanding and exercisable at January 31, 2018:

	Options Outstanding		Options Exercisable
Exercise Price	Options	Weighted Avg. Life Remaining (Years)	Options
1.38	1,795,958	9.45	1,614,916
1.40	25,703	9.89	18,167
1.98	5,000	9.51	5,000
2.00	457,402	8.50	419,223
2.87	65,334	8.50	64,611
3.00	51,001	9.16	42,445
3.39	12,000	9.14	12,000
6.00	10,000	8.25	10,000
12.00	132,987	6.98	132,987
	2,555,385		2,319,349

During the three months ended January 31, 2018 and 2017, the Company expensed $102,425 and $335,462, respectively, related to the vesting of outstanding options to general and administrative expense for stock-based compensation pursuant to employment and consulting agreements.During the nine months ended January 31, 2018 and 2017, the Company expensed $811,123 and $1,850,462, respectively, related to the vesting of outstanding options to general and administrative expense for stock-based compensation pursuant to employment and consulting agreements.

As of January 31, 2018, the Company has approximately $703,100 in unrecognized stock-based compensation expense related to unvested options, which will be amortized over a weighted average exercise period of approximately 3 years.

Warrants

The fair values of the 840,336 June 2017 Warrants granted in conjunction with the June 2017 Note Financing and the 1.25 million November 2017 Warrants granted in connection with the November 2017 Note Financing (as discussed in Note 10) were estimated on the date of grant using the Black-Scholes option-pricing model.

The assumptions used for the warrants granted during the nine months ended January 31, 2018 are as follows:

	January 31, 2018
Exercise price $	1.75 - 2.38
Expected dividends	0%
Expected volatility	160.70 - 169.63%
Risk free interest rate	1.49 – 1.73%
Expected life of warrant	3 years

-19-

The following is a summary of the Company’s warrant activity:

	Number of Warrants	Weighted Average Exercise Price	Weighted Average Life Remaining (Years)
Outstanding and exercisable – April 30, 2017	133,333	$50.00	2.83
Forfeited	-	-	-
Granted	2,090,336	2.15	2.57
Outstanding and exercisable – January 31, 2018	2,223,669	5.02	2.57

The aggregate intrinsic value of the outstanding warrants was $0.

12.  Non-Controlling Interest

For the nine months ended January 31, 2018, the changes in the Company’s non–controlling interest were as follows:

	Bandolier	Fortis	Total
Non–controlling interest at April 30, 2017	$(699,873)	$13,310,343	$12,610,470
Acquisition of non-controlling interest	785,298	(13,497,191)	(12,711,893)
Non–controlling interest share of income (losses)	(85,425)	186,848	101,423
Non–controlling interest at January 31, 2018	$-	-	-

As discussed above in “Recent Developments” in Note 1, as a result of the MegaWest Transaction and the Membership Interest Assignment, the non-controlling interests in Bandolier and Fortis’ interest in MegaWest were written down to $0.

13.   Contingency and Contractual Obligations

Ongoing Litigation.

(a) In January 2010, the Company experienced a flood in its Calgary office premises as a result of a broken water pipe. There was significant damage to the premises rendering them unusable until the landlord had completed remediation. Pursuant to the lease contract, the Company asserted that rent should be abated during the remediation process and accordingly, the Company did not pay any rent after December 2009. During the remediation process, the Company engaged an independent environmental testing company to test for air quality and for the existence of other potentially hazardous conditions. The testing revealed the existence of potentially hazardous mold and the consultant provided specific written instructions for the effective remediation of the premises. During the remediation process, the landlord did not follow the consultant’s instructions and correct the potentially hazardous mold situation and subsequently in June 2010 gave notice and declared the premises to be ready for occupancy. The Company re-engaged the consultant to re-test the premises and the testing results again revealed the presence of potentially hazardous mold. The Company determined that the premises were not fit for re-occupancy and considered the landlord to be in default of the lease. The Landlord subsequently terminated the lease.

On January 30, 2014, the landlord filed a Statement of Claim against the Company for rental arrears in the amount aggregating CAD $759,000 (approximately USD $615,100 as of January 31, 2018). The Company filed a defense and on October 20, 2014, it filed a summary judgment application stating that the landlord’s claim is barred, as it was commenced outside the 2-year statute of limitation period under the Alberta Limitations Act. The landlord subsequently filed a cross-application to amend its Statement of Claim to add a claim for loss of prospective rent in an amount of CAD $665,000 (approximately USD $538,900 as of January 31, 2018). The applications were heard on June 25, 2015 and the court allowed both the Company’s summary judgment application and the landlord’s amendment application. Both of these orders were appealed through two levels of the Alberta courts and the appeals were dismissed at both levels. The net effect is that the landlord’s claim for loss of prospective rent is to proceed.

(b) In September 2013, the Company was notified by the Railroad Commission of Texas (the “Railroad Commission”) that the Company was not in compliance with regulations promulgated by the Railroad Commission. The Company was therefore deemed to have lost its corporate privileges within the State of Texas and as a result, all wells within the state would have to be plugged. The Railroad Commission therefore collected $25,000 from the Company, which was originally deposited with the Railroad Commission, to cover a portion of the estimated costs of $88,960 to plug the wells, which the net present value of has been included in asset retirement obligations as of January 31, 2018. In addition to the above, the Railroad Commission also reserved its right to separately seek any remedies against the Company resulting from its noncompliance.

-20-

(c) On August 11, 2014, Martha Donelson and John Friend amended their complaint in an existing lawsuit by filing a class action complaint styled: Martha Donelson and John Friend, et al. v. United States of America, Department of the Interior, Bureau of Indian Affairs and Devon Energy Production, LP, et al., Case No. 14-CV-316-JHP-TLW, United States District Court for the Northern District of Oklahoma (the “Proceeding”).  The plaintiffs added as defendants twenty-seven (27) specifically named operators, including Spyglass, as well as all Osage County lessees and operators who have obtained a concession agreement, lease or drilling permit approved by the Bureau of Indian Affairs (“BIA”) in Osage County allegedly in violation of National Environmental Policy Act (“NEPA”).  Plaintiffs seek a declaratory judgment that the BIA improperly approved oil and gas leases, concession agreements and drilling permits prior to August 12, 2014, without satisfying the BIA’s obligations under federal regulations or NEPA, and seek a determination that such oil and gas leases, concession agreements and drilling permits are void ab initio. Plaintiffs are seeking damages against the defendants for alleged nuisance, trespass, negligence and unjust enrichment. The potential consequences of such complaint could jeopardize the corresponding leases.

On October 7, 2014, Spyglass, along with other defendants, filed a Motion to Dismiss the August 11, 2014 Amended Complaint on various procedural and legal grounds. Following the significant briefing, the Court, on March 31, 2016, granted the Motion to Dismiss as to all defendants and entered a judgment in favor of the defendants against the plaintiffs. On April 14, 2016, Spyglass with the other defendants, filed a Motion seeking its attorneys’ fees and costs. The motion remains pending. On April 28, 2016, the plaintiffs filed three motions: a Motion to Amend or Alter the Judgment; a Motion to Amend the Complaint; and a Motion to Vacate Order. On November 23, 2016, the Court denied all three of Plaintiffs’ motions. On December 6, 2016, Plaintiffs filed a Notice of Appeal to the Tenth Circuit Court of Appeals. That appeal is pending as of the effective date of this response. There is no specific timeline by which the Court of Appeals must render a ruling. Spyglass intends to continue to vigorously defend its interest in this matter. 

(d) MegaWest Energy Missouri Corp. (“MegaWest Missouri”), a wholly owned subsidiary of the Company, is involved in two cases related to oil leases in West Central, Missouri. The first case (James Long and Jodeane Long v. MegaWest Energy Missouri and Petro River Oil Corp., case number 13B4-CV00019) is a case for unlawful detainer, pursuant to which the plaintiffs contend that MegaWest Missouri oil and gas lease has expired and MegaWest Missouri is unlawfully possessing the plaintiffs’ real property by asserting that the leases remain in effect. The case was originally filed in Vernon County, Missouri on September 20, 2013. MegaWest Missouri filed an Answer and Counterclaims on November 26, 2013 and the plaintiffs filed a motion to dismiss the counterclaims. MegaWest Missouri filed a motion for Change of Judge and Change of Venue and the case was transferred to Barton County. The court granted the motion to dismiss the counterclaims on February 3, 2014. As to the other allegations in the complaint, the matter is still pending.

MegaWest Missouri filed a second case on October 14, 2014 (MegaWest Energy Missouri Corp. v. James Long, Jodeane Long, and Arrow Mines LLC, case number 14VE-CV00599). This case is pending in Vernon County, Missouri. Although the two cases are separate, they are interrelated. In the Vernon County case, MegaWest Missouri has made claims for: (1) replevin for personal property; (2) conversion of personal property; (3) breach of the covenant of quiet enjoyment regarding the lease; (4) constructive eviction of the lease; (5) breach of fiduciary obligation against James Long; (6) declaratory judgment that the oil and gas lease did not terminate; and (7) injunctive relief to enjoin the action pending in Barton County, Missouri. The plaintiffs filed a motion to dismiss on November 4, 2014, and Arrow Mines, LLC filed a motion to dismiss on November 13, 2014. Both motions remain pending, and MegaWest Missouri will file an opposition to the motions in the near future. 

The Company is from time to time involved in legal proceedings in the ordinary course of business. It does not believe that any of these claims and proceedings against it is likely to have, individually or in the aggregate, a material adverse effect on its financial condition or results of operations.

14.   Subsequent Events

As discussed in Note 1, the following events occurred subsequent to January 31, 2018:

On February 14, 2018, the Company entered into the Agreement with Red Fork pursuant to which the Company and Red Fork agreed to participate in the Exchange, resulting in the conveyance by the Company to Mountain View Resources, LLC, an affiliate of Red Fork, of 100% of the Company 13.7% working interest in and to an AMI in the Mountain View Project in Kern County, California, and Red Fork conveyed to the Company 64.7% of its 85% working interest in and to an AMI situated in Kay County, Oklahoma.

On February 2, 2018, Horizon Investments received from Horizon Energy a capital call in the amount of $600,227, which was not made due to lack of required capital. As a result, Horizon Investments’ interest in Horizon Energy was decreased by 27.43%, therefore reducing Horizon Investments’ interest in Horizon Energy from 20.01% to 14.52%.

-21-

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Except as otherwise indicated by the context, references in this Quarterly Report to “we,” “us,” “our,” or the “Company” are to the consolidated businesses of Petro River Oil Corp. and its wholly-owned direct and indirect subsidiaries and majority-owned subsidiaries, except that references to “our common stock” or “our capital stock” or similar terms refer to the common stock, par value $0.00001 per share (“Common Stock”), of Petro River Oil Corp., a Delaware corporation (the “Company”).

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is designed to provide information that is supplemental to, and should be read together with, the Company’s consolidated financial statements and the accompanying notes contained in this Quarterly Report. Information in this Item 2 is intended to assist the reader in obtaining an understanding of the consolidated financial statements, the changes in certain key items in those financial statements from quarter to quarter, the primary factors that accounted for those changes, and any known trends or uncertainties that the Company is aware of that may have a material effect on the Company’s future performance, as well as how certain accounting principles affect the consolidated financial statements. This includes discussion of (i) Liquidity, (ii) Capital Resources, (iii) Results of Operations, and (iv) Off-Balance Sheet Arrangements, and any other information that would be necessary to an understanding of the Company’s financial condition, changes in financial condition and results of operations.

Forward Looking Statements

The following is management’s discussion and analysis of certain significant factors which have affected our financial position and operating results during the periods included in the accompanying consolidated financial statements, as well as information relating to the plans of our current management and should be read in conjunction with the accompanying financial statements and their related notes included in this Quarterly Report. References in this section to “we,” “us,” “our,” or the “Company” are to the consolidated business of Petro River Oil Corp. and its wholly owned and majority owned subsidiaries.

This Quarterly Report contains forward-looking statements. Generally, the words “believes,” “anticipates,” “may,” “will,” “should,” “expects,” “intends,” “estimates,” “continues,” and similar expressions or the negative thereof or comparable terminology are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties, including the matters set forth in this Quarterly Report or other reports or documents we file with the Securities and Exchange Commission (“SEC”) from time to time, which could cause actual results or outcomes to differ materially from those projected. Undue reliance should not be placed on these forward-looking statements, which speak only as of the date hereof. We undertake no obligation to update these forward-looking statements.

The following discussion of our financial condition and results of operations is based upon and should be read in conjunction with our consolidated financial statements and their related notes included in this Quarterly Report and our Annual Report on Form 10-K filed with the SEC on July 31, 2017 for the year ended April 30, 2017.

Business Overview

The Company is an independent energy company focused on the exploration and development of conventional oil and gas assets with low discovery and development costs. The Company is currently focused on moving forward with drilling wells on several of its properties owned directly and indirectly through its interest in Horizon Energy Partners, LLC (“Horizon Energy”), as well as taking advantage of the relative depressed market in oil prices to enter highly prospective plays with Horizon Energy and other industry-leading partners. Diversification over a number of projects, each with low initial capital expenditures and strong risk reward characteristics, reduces risk and provides cross-functional exposure to a number of attractive risk adjusted opportunities.

The Company’s core holdings are in the Mid-Continent Region in Oklahoma. Following the acquisition of Horizon I Investments, LLC (“Horizon Investments”), the Company has additional exposure to a portfolio of several domestic and international oil and gas assets consisting of highly prospective conventional plays diversified across project type, geographic location and risk profile, as well as access to a broad network of industry leaders from Horizon Investment’s interest in Horizon Energy. Horizon Energy is an oil and gas exploration and development company owned and managed by former senior oil and gas executives. It has a portfolio of domestic and international assets.  Each of the assets in the Horizon Energy portfolio is characterized by low initial capital expenditure requirements and strong risk reward characteristics.

-22-

The Company’s prospects in Oklahoma are owned directly by the Company and indirectly by Spyglass Energy Group, LLC, a wholly owned subsidiary of Bandolier Energy, LLC (“Bandolier”). As a result of the Exchange Transaction consummated on January 31, 2018, as discussed below, Bandolier is wholly-owned by the Company. Bandolier has a 75% working interest in the 106,500-acre concession in Osage County, Oklahoma. The remaining 25% working interest is held by the operator, Performance Energy, LLC.

In 2017, Bandolier discovered two oil fields with the successful drilling of the W. Blackland 1-3 and S. Blackland 2-11 exploration wells. On December 15, 2017, the Company received permits from the Bureau of Indian Affairs to drill eight additional wells in the W. Blackland Field. Drilling and completion costs are estimated to be approximately $200,000 per well.

In addition to our current development plans, within our current 3D seismic additional structures in Osage County have been identified. It will cost the Company approximately $300,000 to test three new structures totaling 2,362 acres of potential productive Mississippian chat reservoirs.  

The execution of our business plan is dependent on obtaining necessary working capital. While no assurances can be given, in the event management is able to obtain additional working capital, we plan to acquire high-quality oil and gas properties, primarily proved producing, and proved undeveloped reserves. We also intend to explore low-risk development drilling and work-over opportunities. Management is also exploring farm-in and joint venture opportunities for our oil and gas assets.

Recent Developments

Working Interest Exchange.

On February 14, 2018, the Company entered into a Purchase and Exchange Agreement (the “Agreement”) with Red Fork Resources (“Red Fork”), pursuant to which (i) the Company agreed to convey to Mountain View Resources, LLC, an affiliate of Red Fork, 100% of its 13.7% working interest in and to an area of mutual interest (“AMI”) in the Mountain View Project in Kern County, California, and (ii) Red Fork agreed to convey to the Company 64.7% of its 85% working interest in and to an AMI situated in Kay County, Oklahoma (the “Red ForkExchange”). The fair value of the assets acquired was $108,333 as of the date of the agreement. Following the Red Fork Exchange, the Company and Red Fork each retain a 2% overriding royalty interest in the projects that they respectively conveyed. Under the terms of the Agreement, all revenues and all costs, expenses, obligations and liabilities earned or incurred prior to January 1, 2018 (the “Effective Date”) shall be borne by the original owners of such working interests, and all of such costs, expenses, obligations and liabilities that occur subsequent to the Effective Date shall be borne by the new owners of such working interests.

The acquisition of the additional concessions in Kay County, Oklahoma adds additional prospect locations adjacent to the Company’s 106,000-acre concession in Osage County, Oklahoma. The similarity of the prospects in Kay and Kern County allows for the leverage of assets, infrastructure and technical expertise.

Dilution of Company’s Indirect Interest in Horizon Energy.

On February 2, 2018, Horizon Investments received from Horizon Energy a capital call in the amount of $600,227. Horizon Investments did not have the required funds to fund the capital call. The capital call was not mandatory and the consequence of Horizon Investments’ failure to fund the capital call was a dilution in Horizon Investments’ interest in Horizon Energy by 27.43%, therefore reducing Horizon Investments’ interest in Horizon Energy from 20.01% to 14.52%. Scot Cohen, a member of the Company’s Board of Directors and a substantial stockholder, and a member of Horizon Energy, participated with other Horizon Energy members to make the requested capital call in light of Horizon Investment’s inability to make the requested capital call. The determination not to make the requested capital call, and therefore allow Mr. Cohen to increase his membership interest in Horizon Energy was discussed and approved by the independent members of the Company’s Board of Directors.

-23-

MegaWest Exchange Transaction.

On January 31, 2018, the Company entered into an Assignment and Assumption of Membership Interest with MegaWest Energy Kansas Corp. (“MegaWest”), a wholly-owned subsidiary of the Company (“Assignment Agreement”), whereby the Company transferred its interest in MegaWest in exchange for MegaWest’s membership interests in Bandolier (the “Bandolier Interests”) (the “MegaWestExchangeTransaction”). The MegaWest Exchange Transaction followed the receipt by the Company of a notice of Redetermination, as defined below, of MegaWest’s assets, including MegaWest’s interest in the Bandolier Interests (together, “MegaWest Assets”), conducted by Fortis Property Group, LLC (“Fortis”).

The Redetermination was conducted pursuant to a Contribution Agreement, dated October 30, 2015 (“Contribution Agreement”). Under the terms of the Contribution Agreement, the Board of MegaWest was entitled to engage a qualified appraiser to determine the value of the MegaWest Assets and Bandolier Interests, and upon completion thereof (a “Redetermination”), in the event the MegaWest Assets were determined to be less than $40.0 million, then a Shortfall, as defined in the Contribution Agreement, exists. As a result, the Company would be required to make cash contributions to MegaWest in an amount equal to the amount of the Shortfall (the “Shortfall Capital Contribution”). The Contribution Agreement further provided that, in the event that the Company was unable to deliver to MegaWest the Shortfall Capital Contribution required after the Redetermination, if any, MegaWest would have the right to exercise certain remedies, including a right to foreclose on the Company’s entire equity interest in MegaWest. In the event of foreclosure, the Bandolier Interest would revert back to the Company.  

In lieu of engaging a qualified appraiser to quantify the Shortfall Capital Contribution, and in lieu of requiring MegaWest to exercise its remedies under the terms of the Contribution Agreement, the Company and MegaWest entered into the MegaWest Exchange Transaction. As a result, the Company has no further rights or interest in MegaWest, and MegaWest has no further rights or interest in any assets associated with the Bandolier Interests. Pursuant to the Contribution Agreement and Assignment Agreement, the Company continues to be responsible for a reimbursement payment to MegaWest in the amount of $259,313, together with interest accrued thereon at an annual rate 10%, which will be due and payable one year after the date of the Assignment Agreement and included as a payable as of January 31, 2018. As a result of the Redetermination, the Company recorded a loss on redetermination of $11,914,204 reflecting the write-off of the related assets, liabilities and non-controlling interests of Fortis.

At the time the parties entered into the Contribution Agreement, management anticipated that the market price for crude oil would return to prices reached prior to 2015, and that additional wells would be drilled, resulting in greater revenue from the Bandolier Interests. Subsequent to the execution of the Contribution Agreement, only two wells had been drilled as of January 2018. That fact, together with the relatively low price of crude oil and the anticipated delays in drilling additional wells to demonstrate the value of the Bandolier Interests, contributed to Fortis’ election to terminate the Contribution Agreement at the end of its term, as amended. Had the market price of oil supported the value of developing the Bandolier oil and gas properties at this time, under the terms of the Contribution Agreement, Fortis would have been required to fund the planned drilling program..

Acquisition of Membership Interest in the Osage County Concession.

On November 6, 2017, the Company entered into an Assignment and Assumption of Membership Interest Agreement (the “Membership Interest Assignment”) with Pearsonia West Investments, LLC (“Pearsonia”). Pursuant to the Membership Interest Assignment, the Company issued 1,466,667 shares of its common stock, with a fair value of $1.75 per share, to Pearsonia in exchange for all membership interests in Bandolier held by Pearsonia. As result of this transaction, the Company wrote-off the non-controlling interest in Bandolier totaling $785,298 and recorded a loss of $3,351,965.

November 2017 $2.5 Million Secured Note Financing.

On September 20, 2017, the Company entered into a Securities Purchase Agreement (“Purchase Agreement II”) with Petro Exploration Funding II, LLC (“Funding Corp. II”), pursuant to which the Company issued to Funding Corp. II a senior secured promissory note on November 6, 2017 in the principal amount of $2.5 million (the “November 2017 Secured Note”) (the “November 2017 Note Financing”) and received total proceeds of $2.5 million. As additional consideration for the purchase of the November 2017 Secured Note, the Company issued to Funding Corp. II (i) a warrant to purchase 1.25 million shares of the Company’s Common Stock (the “November 2017 Warrant”), and (ii) an overriding royalty interest equal to 2% in all production from the Company’s interest in the Company’s concessions located in Osage County, Oklahoma currently held by Spyglass Energy Group, LLC, an indirect subsidiary of the Company (“Spyglass”) (the “ExistingOsage County Override”). The Existing Osage County Override was an existing override that was acquired by the Company from Scot Cohen.

-24-

The November 2017 Secured Note accrues interest at a rate of 10% per annum and matures on June 30, 2020. To secure the repayment of all amounts due under the terms of the November 2017 Secured Note, the Company entered into a Security Agreement, pursuant to which the Company granted to Funding Corp. II a security interest in all assets of the Company, which security interest is subordinate to the security interest granted to Petro Exploration Funding, LLC (“Funding Corp. I”) on June 13, 2017 in connection with a financing consummated in June 2017. The first interest payment will be due on June 1, 2018, and each six-month anniversary thereafter until the outstanding principal balance of the November 2017 Secured Note is paid in full.

Scott Cohen owns or controls 31.25% of Funding Corp. I and 41.20% of Funding Corp. II.

Critical Accounting Policies and Estimates

The Company’s significant accounting policies are described in Note 3 to the annual consolidated financial statements for the year ended April 30, 2017 and 2016 on Form 10-K filed with the SEC on July 31, 2017 for the year ended April 30, 2017.

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements. These consolidated financial statements are prepared in accordance with U.S. GAAP, which requires us to make estimates and assumptions that affect the reported amounts of our assets and liabilities and revenues and expenses, to disclose contingent assets and liabilities on the date of the consolidated financial statements, and to disclose the reported amounts of revenues and expenses incurred during the financial reporting period. The most significant estimates and assumptions include the valuation of accounts receivable, and the useful lives and impairment of property and equipment, goodwill and intangible assets, the valuation of deferred tax assets and inventories and the provision for income taxes. We continue to evaluate these estimates and assumptions that we believe to be reasonable under the circumstances. We rely on these evaluations as the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Since the use of estimates is an integral component of the financial reporting process, actual results could differ from those estimates. Some of our accounting policies require higher degrees of judgment than others in their application. We believe critical accounting policies as disclosed in this Quarterly Report reflect the more significant judgments and estimates used in preparation of our consolidated financial statements. We believe there have been no material changes to our critical accounting policies and estimates.

The following critical accounting policies rely upon assumptions and estimates and were used in the preparation of our consolidated financial statements:

Oil and Gas Operations

The Company follows the full cost method of accounting for oil and gas operations, whereby all costs related to exploration and development of oil and gas reserves are capitalized. Under this method, the Company capitalizes all acquisition, exploration and development costs incurred for the purpose of finding oil and natural gas reserves, including salaries, benefits and other internal costs directly attributable to these activities. Costs associated with production and general corporate activities, however, are expensed in the period incurred. Costs are capitalized on a country-by-country basis. To date, there has only been one cost center, the United States.

The present value of estimated future net cash flows is computed by applying the average first-day-of-the-month prices during the previous twelve-month period of oil and natural gas to estimated future production of proved oil and natural gas reserves as of year-end less estimated future expenditures to be incurred in developing and producing the proved reserves and assuming continuation of existing economic conditions. Prior to December 31, 2009, prices and costs used to calculate future net cash flows were those as of the end of the appropriate quarterly period.

Following the discovery of reserves and the commencement of production, the Company will compute depletion of oil and natural gas properties using the unit-of-production method based upon production and estimates of proved reserve quantities. Costs associated with unproved properties are excluded from the depletion calculation until it is determined whether or not proved reserves can be assigned to such properties. Unproved properties are assessed for impairment annually. Significant properties are assessed individually.

The Company assesses all items classified as unproved property on an annual basis for possible impairment. The Company assesses properties on an individual basis or as a group if properties are individually insignificant. The assessment includes consideration of the following factors, among others: land relinquishment; intent to drill; remaining lease term; geological and geophysical evaluations; drilling results and activity; the assignment of proved reserves; and the economic viability of development if proved reserves are assigned. During any period in which these factors indicate impairment, the related exploration costs incurred are transferred to the full cost pool and are then subject to depletion and the ceiling limitations on development oil and natural gas expenditures.

-25-

Proceeds from the sale of oil and gas assets are applied against capitalized costs, with no gain or loss recognized, unless a sale would alter the rate of depletion and depreciation by 25% or more.

Significant changes in these factors could reduce our estimates of future net proceeds and accordingly could result in an impairment of our oil and gas assets. Management will perform annual assessments of the carrying amounts of its oil and gas assets as additional data from ongoing exploration activities becomes available.

Income Taxes

On December 22, 2017, the Tax Cuts and Jobs Act (“Tax Act”) was signed into law. ASC 740, Accounting for Income Taxes requires companies to recognize the effects of changes in tax laws and rates on deferred tax assets and liabilities and the retroactive effects of changes in tax laws in the period in which the new legislation is enacted.  The Company’s gross deferred tax assets were revalued based on the reduction in the federal statutory tax rate from 35% to 21%, which will result in a reduction in our effective tax rate from approximately 36.64% to 24.16% for the nine months ended January 31, 2018. A corresponding offset has been made to the valuation allowance, and any potential other taxes arising due to the Tax Act will result in reductions to the Company’s net operating loss carryforward and valuation allowance. The Company will continue to analyze the Tax Act to assess its full effects on the Company’s financial results, including disclosures, for the Company’s fiscal year ending April 30, 2018, but the Company does not expect the Tax Act to have a material impact on the Company’s consolidated financial statements. Because the Act became effective mid-way through the Company’s tax year, the Company will have a federal statutory income tax rate of approximately 28% for the fiscal year ending April 30, 2018 and will have an approximate 21% statutory income tax rate for fiscal years thereafter.

Uncertain Tax Positions

The Company evaluates uncertain tax positions pursuant to ASC Topic 740-10-25 “Accounting for Uncertainty in Income Taxes,” which allows companies to recognize a tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. Those tax positions failing to qualify for initial recognition are recognized in the first interim period in which they meet the more likely than not standard, or are resolved through negotiation or litigation with the taxing authority, or upon expiration of the statute of limitations. De-recognition of a tax position that was previously recognized occurs when an entity subsequently determines that a tax position no longer meets the more likely than not threshold of being sustained.

At January 31, 2018 and April 30, 2017, the Company had approximately $0 and $3,443,000, respectively, of liabilities for uncertain tax positions. Interpretation of taxation rules relating to net operating loss utilization in real estate transactions give rise to uncertain positions. In connection with the uncertain tax position, there was no interest or penalties recorded as the position is expected but the tax returns are not yet due.

The Company is subject to ongoing tax exposures, examinations and assessments in various jurisdictions. Accordingly, the Company may incur additional tax expense based upon the outcomes of such matters. In addition, when applicable, the Company will adjust tax expense to reflect the Company’s ongoing assessments of such matters, which require judgment and can materially increase or decrease its effective rate as well as impact operating results.

The number of years with open tax audits varies depending on the tax jurisdiction. The Company’s major taxing jurisdictions include the United States (including applicable states).

-26-

NEW ACCOUNTING STANDARDS

Recently Issued Accounting Standards

In May 2014, the FASB issued a comprehensive new revenue recognition standard that will supersede nearly all existing revenue recognition guidance under U.S. GAAP. The standard’s core principle (issued as ASU 2014-09 by the FASB), is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. The new guidance must be adopted using either a full retrospective approach for all periods presented in the period of adoption or a modified retrospective approach. In August 2015, the FASB issued ASU No. 2015-14, which defers the effective date of ASU 2014-09 by one year, and would allow entities the option to early adopt the new revenue standard as of the original effective date. This ASU is effective for public reporting companies for interim and annual periods beginning after December 15, 2017. The Company is currently evaluating its adoption method and the impact of the standard on its consolidated financial statements and has not yet determined the method by which the Company will adopt the standard in 2018.

In April 2016, the FASB issued ASU No. 2016-10, “Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing” (Topic 606). In March 2016, the FASB issued ASU No. 2016-08, “Revenue from Contracts with Customers: Principal versus Agent Considerations (Reporting Revenue Gross versus Net)” (Topic 606). These amendments provide additional clarification and implementation guidance on the previously issued ASU 2014-09, “Revenue from Contracts with Customers.” The amendments in ASU 2016-10 provide clarifying guidance on materiality of performance obligations; evaluating distinct performance obligations; treatment of shipping and handling costs; and determining whether an entity's promise to grant a license provides a customer with either a right to use an entity's intellectual property or a right to access an entity's intellectual property. The amendments in ASU 2016-08 clarify how an entity should identify the specified good or service for the principal versus agent evaluation and how it should apply the control principle to certain types of arrangements. The adoption of ASU 2016-10 and ASU 2016-08 is to coincide with an entity's adoption of ASU 2014-09, which we intend to adopt for interim and annual reporting periods beginning after December 15, 2017. The Company does not expect the new standard to have a material effect on its consolidated financial statements.

In April 2016, the FASB issued ASU No. 2016-09, “Compensation – Stock Compensation” (Topic 718). The FASB issued this update to improve the accounting for employee share-based payments and affect all organizations that issue share-based payment awards to their employees. Several aspects of the accounting for share-based payment award transactions are simplified, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows. The updated guidance is effective for annual periods beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption of the update is permitted. The Company is currently evaluating the impact of the new standard.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments” (“ASU 2016-15”). ASU 2016-15 will make eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016-15 is effective for fiscal years beginning after December 15, 2017. The new standard will require adoption on a retrospective basis unless it is impracticable to apply, in which case it would be required to apply the amendments prospectively as of the earliest date practicable. The Company is currently in the process of evaluating the impact of ASU 2016-15 on its consolidated financial statements. 

The Company does not expect the adoption of any other recently issued accounting pronouncements to have a significant impact on its financial position, results of operations, or cash flows. 

-27-

Results of Operations

Results of Operations for the Three Months Ended January 31, 2018 Compared to Three Months Ended January 31, 2017

Oil Sales

During the three months ended January 31, 2018, the Company recognized $250,877 in oil and gas sales, compared to $7,117 for the three months ended January 31, 2017. The overall increase in sales of $243,760 is primarily due to the Company commencing production in Osage County, Oklahoma. The Company anticipates increasing revenue in subsequent quarters as a result of the Company’s discoveries in Osage County, Oklahoma following the successful drilling of the Company’s W. Blackland #1-3 Well and S. Blackland #2-11 Well. Given current oil and gas prices, however, and the Company’s limited development budget, management does not anticipate deriving substantial revenue from existing oil and gas assets in the short-term; provided, however, in the event oil and gas prices rise from current levels, or in the event current drilling activity and re-completions results in additional proven reserves that can be extracted profitably at current oil and gas prices, management anticipates the addition of material oil and gas sales, although no assurances can be given.

Lease Operating Expense

During the three months ended January 31, 2018, lease operating expense was $12,445, as compared to $8,586 for the three months ended January 31, 2017. The overall increase in lease operating expense of $3,859 was primarily attributable to increased activity in the Company’s drilling activity in Osage County, Oklahoma.

Impairment of Oil and Gas Assets

The Company assesses all items classified as unproved property on an annual basis for possible impairment. The Company assesses properties on an individual basis or as a group if properties are individually insignificant. The assessment includes consideration of the following factors, among others: land relinquishment; intent to drill; remaining lease term; geological and geophysical evaluations; drilling results and activity;the assignment of proved reserves; and the economic viability of development if proved reserves are assigned. Significant changes in these factors could reduce our estimates of future net proceeds and accordingly could result in an impairment of our oil and gas assets. During the three months ended January 31, 2018, the Company reviewed the oil and gas assets for impairment and recognized an impairment charge of $730,607.

General and Administrative Expense

General and administrative expense for the three months ended January 31, 2018 was $686,680, as compared to $777,702for the three months ended January 31, 2017. The decrease was primarily attributable to decreases in salaries, professional fees and benefits, and office and administrative expenses. These changes are outlined below:

	For the Three Months Ended	For the Three Months Ended
	January 31, 2018	January 31, 2017
Salaries and benefits	$149,082	$397,593
Professional fees	311,680	265,543
Office and administrative	225,918	114,566
Total	$686,680	$777,702

Salaries and benefits include non-cash stock-based compensation of $102,425 for three months ended January 31, 2018 compared to $335,462 for the three months ended January 31, 2017. The decrease in stock-based compensation of $233,037 from the three months ended January 31, 2018, was due to fewer awards made during the current period. General and administrative expenses decreased due to management’s commitment to substantially reduce expenses in light of the current challenging oil price environment.

-28-

Interest Income (Expense)

During the three months ended January 31, 2018, the Company recognized $(50,173) of net interest expense compared to interest income of $163,809 for the three months ended January 31, 2017. During the three months ended January 31, 2018, the Company recorded interest income $199,211 accrued on the related party notes receivable. The interest income was offset by $139,384 and $110,000 which were the accretion of the debt discount and interest expense, respectively, related to the June 2017 $2.0 million and November 2017 $2.5 million Secured Note financings.

Loss on Assumption of Pearsonia Interests

On November 6, 2017, the Company entered into Membership Interest Assignment with Pearsonia, the owner of a 46.81% membership interest in Bandolier. Pursuant to the Membership Interest Assignment, the Company issued 1,466,667 shares of its Common Stock to Pearsonia in exchange for all membership interests in Bandolier held by Pearsonia, resulting in the Company acquiring an additional 46.81% stake in Bandolier’s 106,500-acre concession in Osage County, Oklahoma. Upon recording this transaction, the Company recorded a loss on assumption of $3,351,965.

Loss on Redetermination

On January 31, 2018, the Company entered into the Assignment Agreement with MegaWest, whereby the Company will transfer its MegaWest Shares in exchange for MegaWest’s membership interests in Bandolier (the “Exchange Transaction”). The Exchange Transaction followed the receipt by the Company of a notice of Redetermination of MegaWest’s Assets conducted by Fortis. Upon execution of the agreement, the Company wrote-off the MegaWest Assets and recorded a loss of $11,914,204.

Results of Operations for the Nine Months Ended January 31, 2018 Compared to Nine Months Ended January 31, 2017

Oil Sales

During the nine months ended January 31, 2018, the Company recognized $275,918 in oil and gas sales compared to $7,117 for the nine months ended January 31, 2017, consisting of $266,250 in oil sales and $9,668 in gas sales. The overall increase in sales of $268,801 is primarily due to the Company commencing production in Osage County, Oklahoma. The Company anticipates increasing revenue in subsequent quarters as a result of the Company’s prospects in Osage County, Oklahoma following the successful drilling of the Company’s W. Blackland #1-3 Well and S. Blackland #2-11 Well. Given current oil and gas prices, however, and the Company’s limited development budget, management does not anticipate deriving substantial revenue from existing oil and gas assets in the short-term; provided, however, in the event oil and gas prices rise from current levels, or in the event current drilling activity and re-completions results in additional proven reserves that can be extracted profitably at current oil and gas prices, management anticipates the addition of material oil and gas sales, although no assurances can be given.

Lease Operating Expense

During the nine months ended January 31, 2018, lease operating expense was $70,049, as compared to lease operating expense of $40,710 for the nine months ended January 31, 2017. The overall increase in lease operating expense of $29,339 was primarily attributable to increased activity in the Company’s drilling activity in Osage County, Oklahoma.  

Impairment of Oil and Gas Assets

The Company assesses all items classified as unproved property on an annual basis for possible impairment. The Company assesses properties on an individual basis or as a group if properties are individually insignificant. The assessment includes consideration of the following factors, among others: land relinquishment; intent to drill; remaining lease term; geological and geophysical evaluations; drilling results and activity; the assignment of proved reserves; and the economic viability of development if proved reserves are assigned. Significant changes in these factors could reduce our estimates of future net proceeds and accordingly could result in an impairment of our oil and gas assets. During the nine months ended January 31, 2018, the Company reviewed the oil and gas assets for impairment and recognized an impairment charge of $972,488.

-29-

General and Administrative Expense

General and administrative expense for the nine months ended January 31, 2018 was $2,162,759, as compared to $3,315,914 for the nine months ended January 31, 2017. The decrease was primarily attributable to decreases in salaries and benefits, professional fees and office and administrative expenses. These changes are outlined below:

	For the Nine Months Ended	For the Nine Months Ended
	January 31, 2018	January 31, 2017
Salaries and benefits	$959,721	$2,051,320
Professional fees	730,812	797,189
Office and administrative	472,226	467,405
Total	$2,162,759	$3,315,914

Salaries and benefits include non-cash stock-based compensation of $811,123 for nine months ended January 31, 2018 compared to $1,850,462 for the nine months ended January 31, 2017. The decrease in stock-based compensation of $1,039,339 from the prior comparable period was due to fewer awards made during the current period. General and administrative expenses decreased due to management’s commitment to substantially reduce expenses in light of the current challenging oil price environment.

Interest Income (Expense)

During the nine months ended January 31, 2018, the Company recognized $184,134 of net interest income compared to interest income of $462,575 for the nine months ended January 31, 2017. The income recorded in the 2018 period was attributable to $593,021 of interest income accrued on the related party notes receivable, which was offset by $224,000 and $184,887, the accretion of the debt discount and interest expense related to the June 2017 $2.0 million and November 2017 $2.5 million Secured Note Financings.

Loss on Assumption of Pearsonia Interests

On November 6, 2017, the Company entered into the Membership Interest Assignment with Pearsonia, the owner of a 46.81% membership interest in Bandolier. Pursuant to the Membership Interest Assignment, the Company issued 1,466,667 shares of its Common Stock to Pearsonia in exchange for all membership interests in Bandolier held by Pearsonia, resulting in the Company acquiring an additional 46.81% stake in Bandolier’s 106,500-acre concession in Osage County, Oklahoma. Upon recording this transaction, the Company recorded a loss on assumption of $3,351,965.

Loss on Redetermination

On January 31, 2018, the Company entered into the Assignment Agreement with MegaWest, whereby the Company will transfer its MegaWest Shares in exchange for MegaWest’s membership interests in Bandolier (the “Exchange Transaction”). The Exchange Transaction followed the receipt by the Company of a notice of Redetermination of MegaWest’s Assets conducted by Fortis. Upon execution of the agreement, the Company wrote-off the MegaWest Assets and recorded a loss of $11,914,204.

Liquidity and Capital Resources

At January 31, 2018, the Company had working capital of approximately $1.0 million, of which approximately $844,000, $106,000, and $1.1 million is attributable to ending cash balances, oil and gas accounts receivable, and prepaid oil and gas assets, respectively. These amounts are offset by current liabilities of approximately $434,000, $259,000 and $406,000 are attributable to accounts payable and accrued expenses, the redetermination liability and asset retirement obligation, respectively.

-30-

As a result of the utilization of cash in its operating activities, and the development of its assets, the Company has incurred losses since it commenced operations. In addition, the Company has a limited operating history. At January 31, 2018, the Company had cash and cash equivalents of approximately $844,000. The Company’s primary source of operating funds since inception has been equity and note financings, as well as through the consummation of the Horizon Acquisition. While management believes that the current level of working capital is sufficient to maintain current operations as well as the planned added operations for the next 12 months, no assurances can be given. Management intends to raise additional capital through debt and equity instruments in order to execute its business, operating and development plans. Management can provide no assurances that the Company will be successful in its capital raising efforts. In order to conserve capital, from time to time, management may defer certain development activity.

Operating Activities

During the nine months ended January 31, 2018, operating activities used cash of $969,530 compared to $1,592,657 used in operating activities during the nine months ended January 31, 2017. The Company incurred a net loss during the nine months ended January 31, 2018 of $18,194,287 as compared to a net loss of $2,463,336 for the nine months ended January 31, 2017. For the nine months ended January 31, 2018, the net loss was offset by non-cash items such as stock-based compensation, depreciation, depletion and accretion of asset retirement obligation and the deferred tax liability. Cash used in operations was also influenced by changes in accounts receivable, accrued interest on notes receivable, prepaid expenses and accounts payable and accrued expenses. For the nine months ended January 31, 2017, the net loss was offset by non-cash items such as stock-based compensation, depreciation, depletion and accretion of asset retirement obligation, impairment of oil and gas assets, and the deferred tax liability. Cash used in operations was also influenced by changes in accounts receivable, accrued interest on notes receivable, prepaid expenses and accounts payable and accrued expenses.

Investing Activities

Investing activities during the nine months ended January 31, 2018, resulted in cash used of $3,067,215, as compared to cash provided of $2,055,349 during the nine months ended January 31, 2017. During the nine months ended January 31, 2018, the Company invested an additional $379,418 in Horizon Energy, compared to $525,000 in the comparable period in 2017. During the nine months ended January 31, 2018, the Company received proceeds of $1,553,884 from profits in its real estate rights compared to $3,709,178 for the nine months ended January 31, 2017. During the nine months ended January 31, 2018, the Company incurred $2,116,602 of expenditures on oil and gas assets compared to $304,297 for the nine months ended January 31, 2017. During the nine months ended January 31, 2018, the Company executed notes receivable agreements with related parties resulting in the outlay of $1,558,501 compared to $3,742,803 during the period ended January 31, 2017.

Financing Activities

Financing activities during the nine months ended January 31, 2018, resulted in cash provided of $4,250,000, as compared to $176,000during the nine months ended January 31, 2017. The increase was due to the issuance of $4.5 million in notes payable which were offset by cash paid for debt discount of $250,000.

Capitalization

The number of outstanding shares and the number of shares that could be issued if all Common Stock equivalents are converted to shares is as follows: 

As of	January 31, 2018	January 31, 2017
Common shares	17,309,809	15,827,998
Stock options	2,555,385	1,495,182
Stock purchase warrants	2,223,669	133,333
	22,088,863	18,456,513

-31-

Off-Balance Sheet Arrangements

None.

ITEM 3. QUANTITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable

ITEM 4. CONTROLS AND PROCEDURES

A. Material Weaknesses

As discussed in Item 9A of our Annual Report on Form 10-K for the fiscal year ended April 30, 2017, we identified material weaknesses in the design and operation of our internal controls. The material weaknesses are due to the limited number of employees, which impacts our ability to conduct a thorough internal review, and the Company’s reliance on external accounting personnel to prepare financial statements.

To remediate the material weakness, the Company is developing a plan to design and implement the operation of our internal controls. Upon the Company obtaining additional capital, the Company intends to hire additional accounting staff, and operations and administrative executives in the future to address its material weaknesses.

We will continue to monitor and assess our remediation initiatives to ensure that the aforementioned material weaknesses are remediated.

B. Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures and internal controls designed to ensure that information required to be disclosed in the Company’s filings under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. The Company’s management, with the participation of its principal executive and principal financial officers, has evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. Based upon that evaluation and solely due to the unremediated material weaknesses described above, the Company’s principal executive and financial officers have concluded that such disclosure controls and procedures were not effective for the purpose for which they were designed as of the end of such period. As a result of this conclusion, the financial statements for the period covered by this report were prepared with particular attention to the unremediated material weaknesses previously disclosed. Accordingly, management believes that the consolidated financial statements included in this report fairly present, in all material respects, the Company’s financial condition, results of operations and cash flows as of and for the periods presented, in accordance with U.S. GAAP, notwithstanding the unremediated weaknesses.

C. Changes in Internal Control over Financial Reporting

There was no change in the Company’s internal control over financial reporting that was identified in connection with such evaluation that occurred during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

-32-

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

(a) In January 2010, the Company experienced a flood in its Calgary office premises as a result of a broken water pipe. There was significant damage to the premises rendering them unusable until the landlord had completed remediation. Pursuant to the lease contract, the Company asserted that rent should be abated during the remediation process and accordingly, the Company did not pay any rent after December 2009. During the remediation process, the Company engaged an independent environmental testing company to test for air quality and for the existence of other potentially hazardous conditions. The testing revealed the existence of potentially hazardous mold and the consultant provided specific written instructions for the effective remediation of the premises. During the remediation process, the landlord did not follow the consultant’s instructions and correct the potentially hazardous mold situation and subsequently in June 2010 gave notice and declared the premises to be ready for occupancy. The Company re-engaged the consultant to re-test the premises and the testing results again revealed the presence of potentially hazardous mold. The Company determined that the premises were not fit for re-occupancy and considered the landlord to be in default of the lease. The Landlord subsequently terminated the lease.

On January 30, 2014, the landlord filed a Statement of Claim against the Company for rental arrears in the amount aggregating CAD $759,000 (approximately USD $615,100 as of January 31, 2018). The Company filed a defense and on October 20, 2014, it filed a summary judgment application stating that the landlord’s claim is barred as it was commenced outside the 2-year statute of limitation period under the Alberta Limitations Act. The landlord subsequently filed a cross-application to amend its Statement of Claim to add a claim for loss of prospective rent in an amount of CAD $665,000 (approximately USD $538,900 as of January 31, 2018). The applications were heard on June 25, 2015 and the court allowed both the Company’s summary judgment application and the landlord’s amendment application. Both of these orders were appealed though two levels of the Alberta courts and the appeals were dismissed at both levels. The net effect is that the landlord's claim for loss of prospective rent is to proceed.

(b) In September 2013, the Company was notified by the Railroad Commission of Texas (the “Railroad Commission”) that the Company was not in compliance with regulations promulgated by the Railroad Commission. The Company was therefore deemed to have lost its corporate privileges within the State of Texas and as a result, all wells within the state would have to be plugged. The Railroad Commission therefore collected $25,000 from the Company, which was originally deposited with the Railroad Commission, to cover a portion of the estimated costs of $88,960 to plug the wells. In addition to the above, the Railroad Commission also reserved its right to separately seek any remedies against the Company resulting from its noncompliance.

(c) On August 11, 2014, Martha Donelson and John Friend amended their complaint in an existing lawsuit by filing a class action complaint styled: Martha Donelson and John Friend, et al. v. United States of America, Department of the Interior, Bureau of Indian Affairs and Devon Energy Production, LP, et al., Case No. 14-CV-316-JHP-TLW, United States District Court for the Northern District of Oklahoma (the “Proceeding”).  The plaintiffs added as defendants twenty-seven (27) specifically named operators, including Spyglass, as well as all Osage County lessees and operators who have obtained a concession agreement, lease or drilling permit approved by the Bureau of Indian Affairs (“BIA”) in Osage County allegedly in violation of National Environmental Policy Act (“NEPA”). Plaintiffs seek a declaratory judgment that the BIA improperly approved oil and gas leases, concession agreements and drilling permits prior to August 12, 2014, without satisfying the BIA’s obligations under federal regulations or NEPA, and seek a determination that such oil and gas leases, concession agreements and drilling permits are void ab initio. Plaintiffs are seeking damages against the defendants for alleged nuisance, trespass, negligence and unjust enrichment. The potential consequences of such complaint could jeopardize the corresponding leases.

On October 7, 2014, Spyglass, along with other defendants, filed a Motion to Dismiss the August 11, 2014 Amended Complaint on various procedural and legal grounds. Following the significant briefing, the Court, on March 31, 2016, granted the Motion to Dismiss as to all defendants and entered a judgment in favor of the defendants against the plaintiffs. On April 14, 2016, Spyglass with the other defendants, filed a Motion seeking its attorneys’ fees and costs. The motion remains pending. On April 28, 2016, the plaintiffs filed three motions: a Motion to Amend or Alter the Judgment; a Motion to Amend the Complaint; and a Motion to Vacate Order. On November 23, 2016, the Court denied all three of Plaintiffs’ motions. On December 6, 2016, Plaintiffs filed a Notice of Appeal to the Tenth Circuit Court of Appeals. That appeal is pending as of the effective date of this response. There is no specific timeline by which the Court of Appeals must render a ruling. Spyglass intends to continue to vigorously defend its interest in this matter. 

-33-

(d) MegaWest Energy Missouri Corp. (“MegaWest Missouri”), a wholly owned subsidiary of the Company, is involved in two cases related to oil leases in West Central, Missouri. The first case (James Long and Jodeane Long v. MegaWest Energy Missouri and Petro River Oil Corp., case number 13B4-CV00019) is a case for unlawful detainer, pursuant to which the plaintiffs contend that MegaWest Missouri oil and gas lease has expired and MegaWest Missouri is unlawfully possessing the plaintiffs’ real property by asserting that the leases remain in effect. The case was originally filed in Vernon County, Missouri on September 20, 2013. MegaWest Missouri filed an Answer and Counterclaims on November 26, 2013 and the plaintiffs filed a motion to dismiss the counterclaims. MegaWest Missouri filed a motion for Change of Judge and Change of Venue and the case was transferred to Barton County. The court granted the motion to dismiss the counterclaims on February 3, 2014. As to the other allegations in the complaint, the matter is still pending.

MegaWest Missouri filed a second case on October 14, 2014 (MegaWest Energy Missouri Corp. v. James Long, Jodeane Long, and Arrow Mines LLC, case number 14VE-CV00599). This case is pending in Vernon County, Missouri. Although the two cases are separate, they are interrelated. In the Vernon County case, MegaWest Missouri has made claims for: (1) replevin for personal property; (2) conversion of personal property; (3) breach of the covenant of quiet enjoyment regarding the lease; (4) constructive eviction of the lease; (5) breach of fiduciary obligation against James Long; (6) declaratory judgment that the oil and gas lease did not terminate; and (7) injunctive relief to enjoin the action pending in Barton County, Missouri. The plaintiffs filed a motion to dismiss on November 4, 2014, and Arrow Mines, LLC filed a motion to dismiss on November 13, 2014. Both motions remain pending, and MegaWest Missouri will file an opposition to the motions in the near future. 

The Company is from time to time involved in legal proceedings in the ordinary course of business. It does not believe that any of these claims and proceedings against it is likely to have, individually or in the aggregate, a material adverse effect on its financial condition or results of operations.

ITEM 1A. RISK FACTORS

Our results of operations and financial condition are subject to numerous risks and uncertainties described in our Annual Report on Form 10-K for our fiscal year ended April 30, 2017, filed on July 31, 2017. You should carefully consider these risk factors in conjunction with the other information contained in this Quarterly Report. Should any of these risks materialize, our business, financial condition and future prospects could be negatively impacted. As of January 31, 2018, there have been no material changes to the disclosures made in the above-referenced Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

(a)

There is no information required to be disclosed on Form 8-K during the period covered by this Form 10-Q that was not so reported.

(b)

There were no material changes to the procedures by which security holders may recommend nominees to the registrant’s Board of Directors during the quarter ended January 31, 2018.

-34-

ITEM 6. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) Financial Statements.

Our financial statements as set forth in the Index to Financial Statements attached hereto commencing on page F-1 are hereby incorporated by reference.

(b) Exhibits.

The following exhibits, which are numbered in accordance with Item 601 of Regulation S-K, are filed herewith or, as noted, incorporated by reference herein:

Exhibit Number	Exhibit Description
31.1*	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.1*	Report of Pinnacle Energy Services, LLC with respect to oil and reserves, dated June 9, 2016
99.2*	Report of Pinnacle Energy Services, LLC with respect to oil and reserves, dated June 8, 2017
101.INS*	XBRL Instance Document
101.SCH*	XBRL Taxonomy Extension Schema Document
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	XBRL Taxonomy Extension Labels Linkbase Document
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith.

-35-

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	PETRO RIVER OIL CORP.
	By:	/s/ Scot Cohen
	Name:	Scot Cohen
	Title:	Executive Chairman
	By:	/s/ David Briones
	Name:	David Briones
	Title	Chief Financial Officer
Date: March 26, 2018

-36-

EX-31.1

Exhibit 31.1

CERTIFICATION BY PRINCIPAL EXECUTIVE OFFICER

I, Scot Cohen, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Petro River Oil Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and we have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this quarterly report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: March 26, 2018

By:	/s/ Scot Cohen
	Scot Cohen
	Executive Chairman

EX-31.2

Exhibit 31.2

CERTIFICATION BY PRINCIPAL FINANCIAL OFFICER

I, David Briones, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Petro River Oil Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and we have:

a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) disclosed in this quarterly report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):

a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. 

Date: March 26, 2018

By:	/s/ David Briones
	David Briones
	Chief Financial Officer (Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)

In connection with the Quarterly Report of Petro River Oil Corp. (the “Company”) on Form 10-Q for the period ended January 31, 2018, as filed with the Securities Exchange Commission on the date hereof (the “Report”), I, Scot Cohen, Executive Chairman of the Company, certify, pursuant to 18 U. S. C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: March 26, 2018

/s/ Scot Cohen

Scot Cohen

Executive Chairman

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

Exhibit 32.2

CERTIFICATION

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)

In connection with the Quarterly Report of Petro River Oil Corp (the “Company”) on Form 10-Q for the period ended January 31, 2018, as filed with the Securities Exchange Commission on the date hereof (the “Report”), I, David Briones, Chief Financial Officer of the Company, certify, pursuant to 18 U. S. C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: March 26, 2018

/s/ David Briones

David Briones

Chief Financial Officer (Principal Financial Officer)

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

EX-99.1

Exhibit 99.1

-1-

-2-

-3-

-4-

-5-

-6-

-7-

-8-

-9-

-10-

-11-

-12-

-13-

-14-

-15-

-16-

-17-

-18-

-19-

-20-

EX-99.2

Exhibit 99.2

-1-

-2-

-3-

-4-

-5-

-6-

-7-

-8-

-9-

-10-

-11-

-12-

-13-

-14-

-15-

-16-

-17-

-18-

-19-

-20-

-21-

-22-

-23-

-24-

-25-

-26-

XML

Document and Entity Information - shares	9 Months Ended
	Jan. 31, 2018	Mar. 23, 2018
Document And Entity Information
Entity Registrant Name	Petro River Oil Corp.
Entity Central Index Key	0001172298
Document Type	10-Q
Document Period End Date	Jan. 31, 2018
Amendment Flag	false
Current Fiscal Year End Date	--04-30
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		17,309,809
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2018

XML

Consolidated Balance Sheets (Unaudited) - USD ($)	Jan. 31, 2018	Apr. 30, 2017
Current Assets:
Cash and cash equivalents	$ 844,487	$ 631,232
Accounts receivable - oil and gas	106,034	8,423
Accounts receivable - real estate - related party	0	2,123,175
Accrued interest on notes receivable - related party	0	797,710
Accounts receivable - other	17,449	0
Interest in real estate rights	0	309,860
Prepaid expenses and other current assets	58,440	207,831
Prepaid oil and gas development costs	1,060,336	613,480
Notes receivable - related party, current portion	0	24,786,382
Total Current Assets	2,086,746	29,478,093
Oil and gas assets, full cost method
Costs subject to amortization, net	2,398,783	1,234,806
Costs not being amortized, net	861,444	858,830
Property, plant and equipment, net of accumulated depreciation of $184,710 and $184,140, respectively	1,012	1,582
Investment in Horizon Energy Partners, LLC	1,592,418	1,213,000
Other assets	17,133	17,133
Total Long-term Assets	4,870,790	3,325,351
Total Assets	6,957,536	32,803,444
Current Liabilities:
Accounts payable and accrued expenses	240,731	120,233
Accrued interest on notes payable – related party	192,887	0
Deferred tax liability	0	3,442,724
Redetermination liability	259,313	0
Asset retirement obligations, current portion	406,403	406,403
Total Current Liabilities	1,099,334	3,969,360
Long-term liabilities:
Asset retirement obligations, net of current portion	230,801	152,293
Note payable – related parties, net of debt discount of $2,279,227 and $0, respectively	2,220,773	0
Total Long-term Liabilities	2,451,574	152,293
Total Liabilities	3,550,908	4,121,653
Commitments and contingencies
Equity:
Preferred shares	0	0
Common shares - 150,000,000 authorized; par value $0.00001; 17,309,809 and 15,827,921 issued and outstanding, respectively	173	158
Additional paid-in capital	52,312,075	46,681,073
Accumulated deficit	(48,905,620)	(30,609,910)
Total Petro River Oil Corp. Equity	3,406,628	16,071,321
Non-controlling interest	0	12,610,470
Total Equity	3,406,628	28,681,791
Total Liabilities and Equity	6,957,536	32,803,444
Preferred B Shares [Member]
Equity:
Preferred shares	$ 0	$ 0

XML

Consolidated Balance Sheets (Parenthetical) - USD ($)	Jan. 31, 2018	Apr. 30, 2017
Accumulated depreciation of property, plant and equipment	$ 184,710	$ 184,140
Note payable debt discount	$ 2,239,173	$ 0
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, par value	$ .00001	$ 0.00001
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	$ 0.00001	$ 0.00001
Common stock, shares issued	17,309,809	15,827,921
Common stock, shares outstanding	17,309,809	15,827,921
Preferred B Shares [Member]
Preferred stock, shares authorized	295,00.	29,500
Preferred stock, par value	$ 0.00001	$ 0.00001
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0

XML

Consolidated Statements of Operations - USD ($)	3 Months Ended		9 Months Ended
	Jan. 31, 2018	Jan. 31, 2017	Jan. 31, 2018	Jan. 31, 2017
Revenues
Oil and natural gas sales	$ 250,877	$ 7,117	$ 275,918	$ 7,117
Total Revenues	250,877	7,117	275,918	7,117
Operating Expenses
Lease operating expenses	12,445	8,586	70,049	40,710
Depreciation, depletion and accretion	96,540	7,621	117,405	14,789
Gain on sale of oil and gas properties	0	0	0	(216,580)
Impairment of oil and gas assets	730,607	20,942	972,488	20,942
General and administrative	686,680	777,702	2,162,759	3,315,914
Total Operating Expenses	1,526,272	814,851	3,322,701	3,175,775
Operating Loss	(1,275,395)	(807,734)	(3,046,783)	(3,168,658)
Other Income (Expense)
Interest income (expense) - net	(50,173)	163,809	184,134	462,575
Loss on assumption of Pearsonia interests	(3,351,965)	0	(3,351,965)	0
Loss on redetermination	(11,914,204)	0	(11,914,204)	0
Net gain on real estate rights	(3,756)	(7,208)	267,734	686,096
Other Income (Expense)	(15,320,098)	156,601	(14,814,301)	1,148,671
Net Loss Before Income Tax Provision	(16,595,493)	(651,133)	(17,861,084)	(2,019,987)
Income Tax Provision	50,284	22,200	333,203	443,349
Net Loss	(16,645,777)	(673,333)	(18,194,287)	(2,463,336)
Net Income (Loss) Attributable to Non-controlling Interest	28,198	(3,648)	101,423	131,861
Net Loss Attributable to Petro River Oil Corp. and Subsidiaries	$ (16,673,975)	$ (669,685)	$ (18,295,710)	$ (2,595,197)
Basic and Diluted Net Loss Per Common Share	$ (0.97)	$ (0.04)	$ (1.12)	$ (0.17)
Weighted average number of common shares outstanding - Basic and diluted	17,214,081	15,827,998	16,298,951	15,702,300

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($)	9 Months Ended
	Jan. 31, 2018	Jan. 31, 2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (18,194,287)	$ (2,463,336)
Adjustments to reconcile net loss to net cash used in by operating activities:
Stock-based compensation	811,123	1,850,462
Depreciation, depletion and accretion	117,408	14,789
Amortization of debt discount	224,000	0
Gain on sale of oil and gas properties	0	(216,580)
Impairment of oil and gas assets	972,488	20,942
Net gain on interest in real estate rights	(267,734)	(686,096)
Loss on redetermination	11,914,204	0
Loss on assumption of Pearsonia interests	3,351,965	0
Deferred income tax expense	333,203	443,349
Changes in operating assets and liabilities:
Accounts receivable - oil and gas	(97,611)	(8,894)
Accounts receivable - related party	0	5,021
Accrued interest on notes receivable- related party	(593,021)	(462,028)
Prepaid expenses and other current assets	149,391	(12,269)
Accounts payable and accrued expenses	309,341	(78,017)
Net Cash Used in Operating Activities	(969,530)	(1,592,657)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from the sale of interest in real estate rights	1,553,884	3,709,178
Prepaid oil and gas assets	(446,856)	(538,348)
Issuance of notes receivable - related party	(1,558,501)	(3,742,803)
Capitalized expenditures on oil and gas assets	(2,116,602)	(304,297)
Cash paid in MegaWest exchange transaction	(119,722)	0
Cash received from acquistion of Horizon Investments	0	3,364,817
Cash paid for cost method investment	(379,418)	(525,000)
Proceeds from deposit	0	91,802
Net Cash (Used in) Provided by Investing Activities	(3,067,215)	2,055,349
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable - related party	4,500,000	0
Cash paid for debt inducement	(250,000)	0
Cash received from non-controlling interest contributions	0	176,000
Net Cash Provided by Financing Activities	4,250,000	176,000
Change in cash and cash equivalents	213,255	638,692
Cash and cash equivalents, beginning of period	631,232	774,751
Cash and cash equivalents, end of period	844,487	1,413,443
Cash paid during the period for:
Income taxes	86,876	3,789
Interest paid	0	0
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Reclassification from prepaid oil and gas development costs to oil and gas assets not being amortized	0	761,444
Receivable and payable for sale of oil and gas properties	17,449	0
Accrual of oil and gas development costs	77,307	0
Additions to asset retirement obligation from new drilling	16,875	0
Change in estimate of asset retirement obligations	55,098	0
Warrants issued with notes payable	2,003,227	0
Overriding interest contributed as debt inducement	$ 250,000	$ 0

XML

Organization

9 Months Ended

Jan. 31, 2018

Organization And Liquidity

Organization

Petro River Oil Corp. (the “Company”) is an independent energy company focused on the exploration and development of conventional oil and gas assets with low discovery and development costs. The Company is currently focused on moving forward with drilling wells on several of its properties owned directly and indirectly through its interest in Horizon Energy Partners, LLC (“Horizon Energy”), as well as entering into highly prospective plays with Horizon Energy and other industry-leading partners. Diversification over a number of projects, each with low initial capital expenditures and strong risk reward characteristics, reduces risk and provides cross-functional exposure to a number of attractive risk adjusted opportunities.

The Company’s core holdings are in Osage and Kay County, Oklahoma. Following the acquisition of Horizon I Investments, LLC (“Horizon Investments”), the Company also has exposure to a portfolio of several additional domestic and international oil and gas assets consisting of highly prospective conventional plays diversified across project type, geographic location and risk profile, as well as access to a broad network of industry leaders from Horizon Investment’s interest in Horizon Energy. Horizon Energy is an oil and gas exploration and development company owned and managed by former senior oil and gas executives. It has a portfolio of domestic and international assets, including two assets located in the United Kingdom adjacent to the giant Wytch Farm oil field, the largest onshore oil field in Western Europe. Each of the assets in the Horizon Energy portfolio is characterized by low initial capital expenditure requirements and strong risk reward characteristics.

In light of the challenging oil price environment and capital markets, management is focusing on specific target acquisitions and investments, limiting operating expenses, and exploring farm-in and joint venture opportunities for the Company’s oil and gas assets. No assurances can be given that management will be successful.  

Recent Developments

Working Interest Exchange.

On February 14, 2018, the Company entered into a Purchase and Exchange Agreement with Red Fork Resources (“Red Fork”), pursuant to which (i) the Company agreed to convey to Mountain View Resources, LLC, an affiliate of Red Fork, 100% of its 13.7% working interest in and to an area of mutual interest (“AMI”) in the Mountain View Project in Kern County, California, and (ii) Red Fork agreed to convey to the Company 64.7% of its 85% working interest in and to an AMI situated in Kay County, Oklahoma. The fair value of the assets acquired was $108,333 as of the date of the agreement. Following the exchange, the Company and Red Fork each retain a 2% overriding royalty interest in the projects that they respectively conveyed. Under the terms of the agreement, all revenues and all costs, expenses, obligations and liabilities earned or incurred prior to January 1, 2018 (the “Effective Date”) shall be borne by the original owners of such working interests, and all of such costs, expenses, obligations and liabilities that occur subsequent to the Effective Date shall be borne by the new owners of such working interests.

The acquisition of the additional concessions in Kay County, Oklahoma adds additional prospect locations adjacent to the Company’s 106,000-acre concession in Osage County, Oklahoma. The similarity of the prospects in Kay and Kern County allows for the leverage of assets, infrastructure and technical expertise.

Dilution of Company’s Indirect Interest in Horizon Energy.

On February 2, 2018, Horizon Investments received from Horizon Energy a capital call in the amount of $600,227. Horizon Investments did not have the required funds to fund the capital call. The capital call was not mandatory and the consequence of Horizon Investments’ failure to fund the capital call was a dilution in Horizon Investments’ interest in Horizon Energy by 27.43%, therefore reducing Horizon Investments’ interest in Horizon Energy from 20.01% to 14.52%. Scot Cohen, a member of the Company’s Board of Directors and a substantial stockholder, and a member of Horizon Energy, participated with other Horizon Energy members to make the requested capital call in light of Horizon Investment’s inability to make the requested capital call. The determination not to make the requested capital call, and therefore allow Mr. Cohen to increase his membership interest in Horizon Energy, was discussed and approved by the independent members of the Company’s Board of Directors.

MegaWest Exchange Transaction.

On January 31, 2018, the Company entered into an Assignment and Assumption of Membership Interest with MegaWest Energy Kansas Corp. (“MegaWest”), a wholly-owned subsidiary of the Company (“Assignment Agreement”), whereby the Company transferred its interest in MegaWest in exchange for MegaWest’s membership interests in Bandolier Energy, LLC (“Bandolier”) (the “Bandolier Interests”). The exchange transaction followed the receipt by the Company of a notice of Redetermination, as defined below, of MegaWest’s assets, including MegaWest’s interest in the Bandolier Interests (together, “MegaWest Assets”), conducted by Fortis Property Group, LLC (“Fortis”).

The Redetermination was conducted pursuant to a Contribution Agreement, dated October 30, 2015. Under the terms of the Contribution Agreement, the Board of MegaWest was entitled to engage a qualified appraiser to determine the value of the MegaWest Assets and Bandolier Interests, and upon completion thereof (a “Redetermination”), in the event the MegaWest Assets were determined to be less than $40.0 million, then a Shortfall, as defined in the Contribution Agreement, exists. As a result, the Company would be required to make cash contributions to MegaWest in an amount equal to the amount of the Shortfall (the “Shortfall Capital Contribution”). The Contribution Agreement further provided that, in the event that the Company was unable to deliver to MegaWest the Shortfall Capital Contribution required after the Redetermination, if any, MegaWest would have the right to exercise certain remedies, including a right to foreclose on the Company’s entire equity interest in MegaWest. In the event of foreclosure, the Bandolier Interest would revert back to the Company.  

In lieu of engaging a qualified appraiser to quantify the Shortfall Capital Contribution, and in lieu of requiring MegaWest to exercise its remedies under the terms of the Contribution Agreement, the Company and MegaWest entered into the exchange transaction. As a result, the Company has no further rights or interest in MegaWest, and MegaWest has no further rights or interest in any assets associated with the Bandolier Interests. Pursuant to the Contribution Agreement and the Assignment Agreement, the Company continues to be responsible for a reimbursement payment to MegaWest in the amount of $259,313, together with interest accrued thereon at an annual rate of 10%, which will be due and payable one year after the date of the Assignment Agreement and included as a payable as of January 31, 2018.

As a result of the Redetermination, the Company recorded a loss on redetermination of $11,914,204 reflecting the write-off of the related assets, liabilities and non-controlling interests of Fortis’ interests in MegaWest as shown below:

Assets
Cash and cash equivalents	$	119,722
Accounts receivable - real estate - related party		1,146,885
Accrued interest on notes receivable - related party		1,390,731
Interest in Bandolier		259,313
Notes receivable - related party, current portion		26,344,883
Total Assets	$	29,261,534
Liabilities
Accounts payable and accrued expenses	$	74,212
Deferred tax liability		3,775,927
Total Liabilities		3,850,139
Non-controlling interest	$	13,497,191
Loss on redetermination	$	11,914,204

At the time the parties entered into the Contribution Agreement management anticipated that the market price for crude oil would return to the previous highs reached during 2014, and that additional wells would be drilled resulting in greater revenue from the Bandolier Interests.  Subsequent to the execution of the Contribution Agreement, only two wells had been drilled at the time of execution of the Assignment Agreement.   That fact, together with the relative low price of crude oil, and the anticipated delays in drilling additional wells to demonstrate the value of the Bandolier Interests, contributed to the parties election to enter into the Assignment Agreement.

Acquisition of Membership Interest in the Osage County Concession.

On November 6, 2017, the Company entered into an Assignment and Assumption of Membership Interest Agreement with Pearsonia West Investments, LLC (“Pearsonia”). The Company issued 1,466,667 shares of its common stock, $0.00001 par value (“Common Stock”) with a fair value of $1.75 per share, to Pearsonia in exchange for all membership interests in Bandolier held by Pearsonia. As result of this transaction, the Company wrote-off the receivable from the non-controlling interest in Bandolier totaling $785,298, resulting in a loss of $3,351,965.

November 2017 $2.5 Million Secured Note Financing.

On September 20, 2017, the Company entered into a Securities Purchase Agreement (“Purchase Agreement II”) with Petro Exploration Funding II, LLC (“Funding Corp. II”), pursuant to which the Company issued to Funding Corp. II a senior secured promissory note on November 6, 2017 in the principal amount of $2.5 million (the “November 2017 Secured Note”) (the “November 2017 Note Financing”) and received total proceeds of $2.5 million. As additional consideration for the purchase of the November 2017 Secured Note, the Company issued to Funding Corp. II (i) a warrant to purchase 1.25 million shares of the Company’s Common Stock (the “November 2017 Warrant”), and (ii) an overriding royalty interest equal to 2% in all production from the Company’s interest in the Company’s concessions located in Osage County, Oklahoma currently held by Spyglass Energy Group, LLC, an indirect subsidiary of the Company (“Spyglass”) (the “Existing Osage County Override”). The Existing Osage County Override was an existing override that was acquired by the Company from Scot Cohen, as discussed below.

The November 2017 Secured Note accrues interest at a rate of 10% per annum and matures on June 30, 2020. To secure the repayment of all amounts due under the terms of the November 2017 Secured Note, the Company entered into a Security Agreement, pursuant to which the Company granted to Funding Corp. II a security interest in all assets of the Company, which security interest is subordinate to the security interest granted to Petro Exploration Funding, LLC (“Funding Corp. I”) on June 13, 2017 in connection with a financing consummated in June 2017. The first interest payment will be due on June 1, 2018, and each six-month anniversary thereafter until the outstanding principal balance of the November 2017 Secured Note is paid in full.

The Company’s Executive Chairman, Scott Cohen, owns or controls 31.25% of Funding Corp. I and 41.20% of Funding Corp. II.

XML

Going Concern and Management’s Plan

9 Months Ended

Jan. 31, 2018

Going Concern And Managements Plan

Going Concern and Management's Plan

The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As of January 31, 2018, the Company had an accumulated deficit of $48.9 million.  The Company has incurred significant losses since inception. These matters raise substantial doubt about the Company’s ability to continue as a going concern. The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset amounts or the classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

At January 31, 2018, the Company had working capital of approximately $1.0 million.  As a result of the utilization of cash in its operating activities, and the development of its assets, the Company has incurred losses since it commenced operations. In addition, the Company has a limited operating history prior to acquisition of Bandolier.  At January 31, 2018, the Company had cash and cash equivalents of approximately $0.8 million.  The Company’s primary source of operating funds since inception has been debt and equity financings.

In light of the challenging oil price environment and capital markets, management is focusing on specific target acquisitions and investments, limiting operating expenses, and exploring farm-in and joint venture opportunities for the Company’s oil and gas assets. No assurances can be given that management will be successful.  

XML

Basis of Preparation

9 Months Ended

Jan. 31, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Preparation

The accompanying unaudited interim consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”) and include the accounts of the Company and its wholly owned subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation. Non–controlling interest represents the minority equity investment in the Company’s subsidiaries, plus the minority investors’ share of the net operating results and other components of equity relating to the non–controlling interest.

These unaudited consolidated financial statements include the Company and the following subsidiaries:

Petro Spring, LLC; PO1, LLC; Petro River UK Limited; Horizon I Investments, LLC; and MegaWest Energy USA Corp. and MegaWest Energy USA Corp.’s wholly owned subsidiaries:

MegaWest Energy Texas Corp.

MegaWest Energy Kentucky Corp.

MegaWest Energy Missouri Corp.

As a result of the Acquisition of Membership Interest in the Osage County Concession (as discussed above), the Bandolier is now a wholly-owned subsidiary of the Company and the Company consolidates 100% of the financial information of Bandolier. Bandolier operates the Company’s Oklahoma oil and gas properties.

Also contained in the unaudited consolidated financial statements for the period ending January 31, 2017 is the financial information of MegaWest, which, prior to January 31, 2018, was 58.51% owned by the Company. As a result of the Exchange Transaction, the unaudited consolidated financial statements for the nine months ended January 31, 2018, include the results of operations of MegaWest; however, the assets and liabilities have been written off and included in loss on redetermination of $11,914,204 on the income statement as of January 31, 2018.

The unaudited consolidated financial information furnished herein reflects all adjustments, consisting solely of normal recurring items, which in the opinion of management are necessary to fairly state the financial position of the Company and the results of its operations for the periods presented. This report should be read in conjunction with the Company’s consolidated financial statements and notes thereto included in the Company’s Form 10-K for the year ended April 30, 2017 filed with the Securities and Exchange Commission (the “SEC”) on July 31, 2017. The Company assumes that the users of the interim financial information herein have read or have access to the audited financial statements for the preceding fiscal year and that the adequacy of additional disclosure needed for a fair presentation may be determined in that context. Accordingly, footnote disclosure, which would substantially duplicate the disclosure contained in the Company’s Form 10-K for the year ended April 30, 2017, has been omitted. The results of operations for the interim periods presented are not necessarily indicative of results for the entire year ending April 30, 2018.

XML

Significant Accounting Policies

9 Months Ended

Jan. 31, 2018

Accounting Policies [Abstract]

Significant Accounting Policies

 (a) Use of Estimates:

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The Company’s financial statements are based on a number of significant estimates, including oil and natural gas reserve quantities which are the basis for the calculation of depreciation, depletion and impairment of oil and natural gas properties, and timing and costs associated with its asset retirement obligations, as well as those related to the fair value of stock options, stock warrants and stock issued for services. While we believe that our estimates and assumptions used in preparation of the financial statements are appropriate, actual results could differ from those estimates. 

 (b) Cash and Cash Equivalents:

Cash and cash equivalents include all highly liquid monetary instruments with original maturities of three months or less when purchased. These investments are carried at cost, which approximates fair value. Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash deposits. The Company maintains its cash in institutions insured by the Federal Deposit Insurance Corporation (“FDIC”). At times, the Company’s cash and cash equivalent balances may be uninsured or in amounts that exceed the FDIC insurance limits. At January 31, 2018, approximately $549,000 of the Company’s cash balances were uninsured. The Company has not experienced any loses on such accounts.

 (c) Receivables:

Receivables that management has the intent and ability to hold for the foreseeable future are reported in the balance sheet at outstanding principal adjusted for any charge-offs and the allowance for doubtful accounts. Losses from uncollectible receivables are accrued when both of the following conditions are met: (a) information available before the financial statements are issued or are available to be issued indicates that it is probable that an asset has been impaired at the date of the financial statements, and (b) the amount of the loss can be reasonably estimated. These conditions may be considered in relation to individual receivables or in relation to groups of similar types of receivables. If the conditions are met, an accrual shall be made even though the particular receivables that are uncollectible may not be identifiable. The Company reviews individually each receivable for collectability and performs on-going credit evaluations of its customers and adjusts credit limits based upon payment history and the customer’s current credit worthiness, as determined by the review of their current credit information, and determines the allowance for doubtful accounts based on historical write-off experience, customer specific facts and general economic conditions that may affect a client’s ability to pay. Bad debt expense is included in general and administrative expenses, if any.

Credit losses for receivables (uncollectible receivables), which may be for all or part of a particular receivable, shall be deducted from the allowance. The related receivable balance shall be charged off in the period in which the receivables are deemed uncollectible. Recoveries of receivables previously charged off shall be recorded when received. The Company charges off its account receivables against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

The allowance for doubtful accounts at January 31, 2018 and April 30, 2017 was $0.

 (d) Interest in Real Estate Rights:

At January 31, 2017, interest in real estate rights contributed by Fortis related to real properties that Fortis planned to sell within one year. Since these properties were contributed by Fortis, a related party, the rights for the period ending January 31, 2017 are stated on the Company’s balance sheet at Fortis’ cost basis. As a result of the Exchange Agreement, no amounts are reflected in interests in real estate rights as of January 31, 2018.

 (e) Oil and Gas Operations:

Oil and Gas Properties: The Company uses the full-cost method of accounting for its exploration and development activities. Under this method of accounting, the costs of both successful and unsuccessful exploration and development activities are capitalized as oil and gas property and equipment. Proceeds from the sale or disposition of oil and gas properties are accounted for as a reduction to capitalized costs unless the gain or loss would significantly alter the relationship between capitalized costs and proved reserves of oil and natural gas attributable to a country, in which case a gain or loss would be recognized in the consolidated statements of operations. All of the Company’s oil and gas properties are located within the continental United States, its sole cost center.

Oil and gas properties may include costs that are excluded from costs being depleted. Oil and gas costs excluded represent investments in unproved properties and major development projects in which the Company owns a direct interest. These unproved property costs include non-producing leasehold, geological and geophysical costs associated with leasehold or drilling interests and in process exploration drilling costs. All costs excluded are reviewed at least annually to determine if impairment has occurred.

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the historical cost carrying value of an asset may no longer be appropriate. For the nine months ended January 31, 2018, the Company evaluated these properties and recorded an impairment in the amount of $972,488.

Proved Oil and Gas Reserves: Proved oil and gas reserves are the estimated quantities of crude oil, natural gas and natural gas liquids which geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions. All of the Company’s oil and gas properties with proven reserves were impaired to the salvage value prior to the Company’s acquisition of its interest in Bandolier. The price used to establish economic viability is the average price during the 12-month period preceding the end of the entity’s fiscal year and calculated as the un-weighted arithmetic average of the first-day-of-the-month price for each month within such 12-month period.

Depletion, Depreciation and Amortization: Depletion, depreciation and amortization is provided using the unit-of-production method based upon estimates of proved oil and gas reserves with oil and gas production being converted to a common unit of measure based upon their relative energy content. Investments in unproved properties and major development projects are not amortized until proved reserves associated with the projects can be determined or until impairment occurs. If the results of an assessment indicate that the properties are impaired, the amount of the impairment is deducted from the capitalized costs to be amortized. Once the assessment of unproved properties is complete and when major development projects are evaluated, the costs previously excluded from amortization are transferred to the full cost pool and amortization begins. The amortizable base includes estimated future development costs and, where significant, dismantlement, restoration and abandonment costs, net of estimated salvage value. 

In arriving at rates under the unit-of-production method, the quantities of recoverable oil and natural gas reserves are established based on estimates made by the Company’s geologists and engineers which require significant judgment, as does the projection of future production volumes and levels of future costs, including future development costs. In addition, considerable judgment is necessary in determining when unproved properties become impaired and in determining the existence of proved reserves once a well has been drilled. All of these judgments may have significant impact on the calculation of depletion expenses. There have been no material changes in the methodology used by the Company in calculating depletion, depreciation and amortization of oil and gas properties under the full cost method during the nine months ended January 31, 2018 and 2017.  

 (f) Investments:

Investments held in stock of entities other than subsidiaries, namely corporate joint ventures and other non-controlled entities, usually are accounted for by one of three methods: (i) the fair value method, (ii) the equity method, or (iii) the cost method. The equity method tends to be most appropriate if an investment enables the investor to influence the operating or financial policies of the investee. The cost basis is utilized for investments that are less than 20% owned, and the Company does not exercise significant influence over the operating and financial policies of the investee. Under the cost method, investments are held at historical cost.

 (g) Fair Value of Financial Instruments:

The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in U.S. GAAP and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:

Level 1	Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
Level 2	Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
Level 3	Pricing inputs that are generally observable inputs and not corroborated by market data.

Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.

The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

The carrying amount of the Company’s financial assets and liabilities, such as cash, prepaid expenses, and accounts payable and accrued liabilities approximate their fair value because of the short maturity of those instruments.

Transactions involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated.

 (h) Stock-Based Compensation:

Generally, all forms of stock-based compensation, including stock option grants, warrants, and restricted stock grants are measured at their fair value utilizing an option pricing model on the award’s grant date, based on the estimated number of awards that are ultimately expected to vest.

Under fair value recognition provisions, the Company recognizes equity–based compensation net of an estimated forfeiture rate and recognizes compensation cost only for those shares expected to vest over the requisite service period of the award.

The fair value of option award is estimated on the date of grant using the Black–Scholes option valuation model. The Black–Scholes option valuation model requires the development of assumptions that are input into the model. These assumptions are the expected stock volatility, the risk–free interest rate, the option’s expected life, the dividend yield on the underlying stock and the expected forfeiture rate. Expected volatility is calculated based on the historical volatility of the Company’s Common Stock over the expected option life and other appropriate factors. Risk–free interest rates are calculated based on continuously compounded risk–free rates for the appropriate term. The dividend yield is assumed to be zero, as the Company has never paid or declared any cash dividends on its Common Stock and does not intend to pay dividends on the Common Stock in the foreseeable future. The expected forfeiture rate is estimated based on historical experience.

Determining the appropriate fair value model and calculating the fair value of equity–based payment awards requires the input of the subjective assumptions described above. The assumptions used in calculating the fair value of equity–based payment awards represent management’s best estimates, which involve inherent uncertainties and the application of management’s judgment. As a result, if factors change and the Company uses different assumptions, the equity–based compensation expense could be materially different in the future. In addition, the Company is required to estimate the expected forfeiture rate and recognize expense only for those shares expected to vest. If the actual forfeiture rate is materially different from our estimate, the equity–based compensation expense could be significantly different from what the Company has recorded in the current period. 

The Company determines the fair value of the stock–based payments to non-employees as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. If the fair value of the equity instruments issued is used, it is measured using the stock price and other measurement assumptions as of the earlier of either (1) the date at which a commitment for performance by the counterparty to earn the equity instruments is reached, or (2) the date at which the counterparty’s performance is complete.

The expenses resulting from stock-based compensation are recorded as general and administrative expenses in the consolidated statement of operations, depending on the nature of the services provided.

 (i) Income Taxes:

Income Tax Provision

On December 22, 2017, the Tax Cuts and Jobs Act (“Tax Act”) was signed into law. ASC 740, Accounting for Income Taxes requires companies to recognize the effects of changes in tax laws and rates on deferred tax assets and liabilities and the retroactive effects of changes in tax laws in the period in which the new legislation is enacted. The Company’s gross deferred tax assets were revalued based on the reduction in the federal statutory tax rate from 35% to 21%, which will result in a reduction in our effective tax rate from approximately 36.64% to 24.16% for the nine months ended January 31, 2018. A corresponding offset has been made to the valuation allowance, and any potential other taxes arising due to the Tax Act will result in reductions to the Company’s net operating loss carryforward and valuation allowance. The Company will continue to analyze the Tax Act to assess its full effects on the Company’s financial results, including disclosures, for the Company’s fiscal year ending April 30, 2018, but the Company does not expect the Tax Act to have a material impact on the Company’s consolidated financial statements.

Uncertain Tax Positions

The Company evaluates uncertain tax positions to recognize a tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. Those tax positions failing to qualify for initial recognition are recognized in the first interim period in which they meet the more likely than not standard or are resolved through negotiation or litigation with the taxing authority, or upon expiration of the statute of limitations. De-recognition of a tax position that was previously recognized occurs when an entity subsequently determines that a tax position no longer meets the more likely than not threshold of being sustained.

At January 31, 2018 and April 30, 2017, the Company had approximately $0 and $3.4 million, respectively, of liabilities for uncertain tax positions. Interpretation of taxation rules relating to net operating loss utilization in real estate transactions give rise to uncertain positions. In connection with the uncertain tax position, there were no interest or penalties recorded as the position is expected but the tax returns are not yet due.

The Company is subject to ongoing tax exposures, examinations and assessments in various jurisdictions. Accordingly, the Company may incur additional tax expense based upon the outcomes of such matters. In addition, when applicable, the Company will adjust tax expense to reflect the Company’s ongoing assessments of such matters, which require judgment and can materially increase or decrease its effective rate as well as impact operating results.

The number of years with open tax audits varies depending on the tax jurisdiction. The Company’s major taxing jurisdictions include the United States (including applicable states).

 (j) Per Share Amounts:

Basic net income (loss) per common share is computed by dividing net loss attributable to stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted net income (loss) per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents. For the nine months ended January 31, 2018 and 2017, potentially dilutive securities were not included in the calculation of diluted net loss per share because to do so would be anti-dilutive.

The Company had the following common stock equivalents at January 31, 2018 and 2017:

	January 31, 2018		January 31, 2017
Stock Options		2,555,385		2,495,182
Stock Purchase Warrants		2,223,669		133,333
Total		4,779,054		2,628,515

  (k) Recent Accounting Pronouncements:

In May 2014, the FASB issued a comprehensive new revenue recognition standard that will supersede nearly all existing revenue recognition guidance under U.S. GAAP. The standard’s core principle (issued as ASU 2014-09 by the FASB), is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. The new guidance must be adopted using either a full retrospective approach for all periods presented in the period of adoption or a modified retrospective approach. In August 2015, the FASB issued ASU No. 2015-14, which defers the effective date of ASU 2014-09 by one year, and would allow entities the option to early adopt the new revenue standard as of the original effective date. This ASU is effective for public reporting companies for interim and annual periods beginning after December 15, 2017. The Company is currently evaluating its adoption method and the impact of the standard on its consolidated financial statements and has not yet determined the method by which the Company will adopt the standard in 2018.

In April 2016, the FASB issued ASU No. 2016-10, “Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing” (Topic 606). In March 2016, the FASB issued ASU No. 2016-08, “Revenue from Contracts with Customers: Principal versus Agent Considerations (Reporting Revenue Gross versus Net)” (Topic 606). These amendments provide additional clarification and implementation guidance on the previously issued ASU 2014-09, “Revenue from Contracts with Customers.” The amendments in ASU 2016-10 provide clarifying guidance on materiality of performance obligations; evaluating distinct performance obligations; treatment of shipping and handling costs; and determining whether an entity’s promise to grant a license provides a customer with either a right to use an entity’s intellectual property or a right to access an entity’s intellectual property. The amendments in ASU 2016-08 clarify how an entity should identify the specified good or service for the principal versus agent evaluation and how it should apply the control principle to certain types of arrangements. The adoption of ASU 2016-10 and ASU 2016-08 is to coincide with an entity’s adoption of ASU 2014-09, which we intend to adopt for interim and annual reporting periods beginning after December 15, 2017. The Company does not expect the new standard to have a material effect on its consolidated financial statements.

In April 2016, the FASB issued ASU No. 2016-09, “Compensation – Stock Compensation” (Topic 718). The FASB issued this update to improve the accounting for employee share-based payments and affect all organizations that issue share-based payment awards to their employees. Several aspects of the accounting for share-based payment award transactions are simplified, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows. The updated guidance is effective for annual periods beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption of the update is permitted. Adoption of ASU 2016-09 did not have a material impact on the consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments” (“ASU 2016-15”). ASU 2016-15 will make eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016-15 is effective for fiscal years beginning after December 15, 2017. The new standard will require adoption on a retrospective basis unless it is impracticable to apply, in which case it would be required to apply the amendments prospectively as of the earliest date practicable. The Company is currently in the process of evaluating the impact of ASU 2016-15 on its consolidated financial statements. 

The Company does not expect the adoption of any other recently issued accounting pronouncements to have a significant impact on its financial position, results of operations, or cash flows. 

 (l) Subsequent Events:

The Company has evaluated all transactions through the date the consolidated financial statements were issued for subsequent event disclosure consideration. 

XML

Accounts Receivable - Related Party

9 Months Ended

Jan. 31, 2018

Accounting Policies [Abstract]

Accounts Receivable - Related Party

On October 15, 2015, the Company entered into the Contribution Agreement with MegaWest and Fortis pursuant to which the Company and Fortis each agreed to contribute certain assets to MegaWest in exchange for shares of MegaWest common stock (“MegaWest Shares”) (the “MegaWest Transaction”) in order to participate in the development of the Company’s Bandolier prospect. 

Upon execution of the Contribution Agreement, Fortis transferred its interest in 30 condominium units and the right to any profits and proceeds therefrom. For the three months ended January 31, 2018 and 2017, MegaWest recorded a net loss on interest in real estate rights of $3,756 and $7,208, respectively. For the nine months ended January 31, 2018 and 2017, Fortis sold one and two condominium units, respectively, and MegaWest recorded a net gain on interest in real estate rights of $267,734 and $686,096, respectively.

The accounts receivable and the Company’s interest in real estate reflected on the Company’s balance sheet for the year ended April 30, 2017 were assets held by MegaWest, and were controlled by MegaWest’s board of directors, which consisted of two members appointed by Fortis and one by the Company. 

Proceeds from the amounts receivable from Fortis were to be available when the Company completed its evaluation of the Bandolier prospects. In this regard, the Contribution Agreement provided for a redetermination of the fair market value of the Bandolier Interest at any time following the six-month anniversary after the execution thereof (the “Redetermination”), which expired on December 31, 2017. On December 29, 2017, the Company obtained an extension of the Redetermination to allow the Company to complete the initial test well program on the Bandolier prospect in order to value the Redetermination. Under the terms of the Contribution Agreement, upon a Redetermination, in the event there was a shortfall from the valuation ascribed to the Bandolier Interest at the time of the Redetermination, as compared to the value ascribed to the Bandolier Interest in the Contribution Agreement, the Company would have been entitled to the value of the receivable but would be required to provide MegaWest with a cash contribution in an amount equal to the shortfall. In the event the Company was unable to deliver to MegaWest the cash contribution required after the Redetermination, if any, the board of directors of MegaWest would have had the right to exercise certain remedies against the Company, including a right to foreclose on the Company’s entire equity in MegaWest, which equity interest was pledged to Fortis under the terms of the Contribution Agreement. In the event of foreclosure, the Bandolier Interest would have reverted back to the Company, and the Company would have recorded a reduction in noncontrolling interest for Fortis’ interest in MegaWest for (i) the amount of the notes receivable, (ii) interest in real estate rights, (iii) accounts receivable - related party, and (iv) any accrued interest.

As described in Note 1, the Company entered into the Assignment Agreement with MegaWest, pursuant to which the Company transferred its MegaWest Shares in MegaWest in exchange for MegaWest’s membership interests in Bandolier. In lieu of engaging a qualified appraiser to quantify the Shortfall Capital Contribution, and in lieu of requiring MegaWest to exercise its remedies under the terms of the Contribution Agreement, the Company and MegaWest entered into the exchange transaction. Following the execution of the Assignment Agreement, the Company has no further rights or interest in the MegaWest Shares or assets, and MegaWest has no further rights or interest in any assets associated with the Bandolier Interests. Pursuant to the Contribution Agreement and Assignment Agreement, the Company agreed to reimburse MegaWest in the amount of $259,313, together with interest accrued thereon at an annual rate of 10%, which will be due and payable one year after the date of the Assignment Agreement.

XML

Notes Receivable - Related Party

9 Months Ended

Jan. 31, 2018

Notes Receivable - Related Party

Notes Receivable - Related Party

Since December 2015, the Company has entered into ten promissory note agreements with Fortis with aggregate principal amounts of $26,344,883. The notes receivable bear interest at an annual rate of 3% and mature on January 31, 2018. As of January 31, 2018 and April 30, 2017, the outstanding balance of the notes receivable was $0 and $24,786,382, respectively. See Note 1 for further discussion regarding the exchange transaction.

XML

Interest in Real Estate Rights

9 Months Ended

Jan. 31, 2018

Notes to Financial Statements

Interest in Real Estate Rights

As discussed in Note 5, MegaWest received an interest in real estate rights to 30 condominium units from Fortis pursuant to the MegaWest Transaction. For the nine months ended January 31, 2018, the Company recognized a net gain of $686,096 related to the sale of one condominium unit by Fortis.

The following table summarizes the activity for interest in real estate rights:

	Nine Months Ended January  31, 2018
Balance at April 30, 2017	$	309,860
Cost of sales – 1 condominium unit		(309,860	)
Balance at January 31, 2018	$	-

As described in Note 1, as a result of the Exchange Agreement, no amounts are recorded at January 31, 2018 for interests in real estate rights.

XML

Oil and Gas Assets

9 Months Ended

Jan. 31, 2018

Extractive Industries [Abstract]

Oil and Gas Assets

The following table summarizes the activity of the oil and gas assets by project for the nine months ended January 31, 2018:

	Oklahoma			Larne Basin		Other (1)		Total
Balance May 1, 2017	$	1,232,192		$	761,444	$	100,000	$	2,093,636
Additions		2,265,882			-		-		2,265,882
Dispositions		(16,500	)		-		-		(16,500	)
Depreciation, depletion and amortization		(110,303	)		-		-		(110,303	)
Impairment of oil and gas assets		(972,488	)		-		-		(972,488	)
Balance January 31, 2018	$	2,398,783			761,444		100,000		3,260,227

(1) Other property consists primarily of four used steam generators and related equipment that will be assigned to future projects. As of January 31, 2018, and April 30, 2017, management concluded that impairment was not necessary as all other assets were carried at salvage value.

Kern County Project. On March 4, 2016, the Company executed an Asset Purchase and Sale and Exploration Agreement to acquire a 13.75% working interest in certain oil and gas leases located in southern Kern County, California. Horizon Energy also purchased a 27.5% working interest in the project.

Under the terms of the agreement, the Company paid $108,333 to the sellers on the closing date, and is obligated to pay certain other costs and expenses after the closing date related to existing and new leases as more particularly set forth in the agreement. Costs incurred to date for this property have aggregated to $1,060,336 as of January 31, 2018 and are recorded as prepaid oil and gas development costs on the consolidated balance sheet. In addition, the sellers are entitled to an overriding royalty interest in certain existing and new leases acquired after the closing date, and the Company is required to make certain other payments, each in amounts set forth in the agreement.

As described in Note 1, on February 14, 2018, the Company exchanged its interest in the Kern County, California properties for a working interest in and to an AMI situated in Kay County, Oklahoma.

Acquisition of Interest in Larne Basin.  On January 19, 2016, Petro River UK Limited, (“Petro UK”), a wholly owned subsidiary of the Company, entered into a Farmout Agreement to acquire a 9% interest in Petroleum License PL 1/10 and P2123 (the “Larne Licenses”) located in the Larne Basin in Northern Ireland (the “Larne Transaction”). The two Larne Licenses, one onshore and one offshore, together encompass approximately 130,000 acres covering the large majority of the prospective Larne Basin. The other parties to the Farmout Agreement are Southwestern Resources Ltd, a wholly owned subsidiary of Horizon Energy, which acquired a 16% interest, and Brigantes Energy Limited, which retained a 10% interest. Third parties own the remaining 65% interest.

Under the terms of the Farmout Agreement, Petro UK deposited approximately $735,000 into an escrow agreement (“Escrow Agreement”), which amount represented Petro UK’s obligation to fund the total projected cost to drill the first well under the terms of the Farmout Agreement.The total deposited amount to fund the cost to drill the first well is approximately $6,159,452, based on an exchange rate of 1.0 British Pound for 1.44 U.S. Dollars. Petro UK was and will continue to be responsible for its pro-rata costs of additional wells drilled under the Farmout Agreement. Drilling of the first well was completed in June 2016 and was unsuccessful. The initial costs incurred by the Company were reclassified from prepaid oil and gas development costs to oil and gas assets not being amortized on the consolidated balance sheets.

Oklahoma Properties. During the nine months ended January 31, 2018, the Company recorded additions related to development costs incurred of approximately $2,255,589 and $10,293 for proven and unproven oil and gas assets, respectively. During the nine months ended January 31, 2018, the Company disposed of oil and gas assets of $16,500.

The Company’s prospects in Oklahoma are owned directly by the Company and indirectly by Spyglass Energy Group, LLC, a wholly owned subsidiary of Bandolier. As a result of the Exchange Transaction consummated on January 31, 2018, as discussed above, Bandolier is wholly-owned by the Company. Bandolier has a 75% working interest in the 106,500-acre concession in Osage County, Oklahoma. The remaining 25% working interest is held by the operator, Performance Energy, LLC.

Impairment of Oil & Gas Properties. As of January 31, 2018, the Company assessed its oil and gas assets for impairment and recognized a charge of $972,488 related to its oil and gas properties. As of April 30, 2017, the Company assessed its oil and gas assets for impairment and recognized a charge of $20,942 related to the Oklahoma oil and gas assets.

XML

Asset Retirement Obligations

9 Months Ended

Jan. 31, 2018

Asset Retirement Obligation Disclosure [Abstract]

Asset Retirement Obligations

The total future asset retirement obligations were estimated based on the Company’s ownership interest in all wells and facilities, the estimated legal obligations required to retire, dismantle, abandon and reclaim the wells and facilities and the estimated timing of such payments. The Company estimated the present value of its asset retirement obligations at both January 31, 2018 and April 30, 2017 based on a future undiscounted liability of $713,969 and $639,755, respectively. These costs are expected to be incurred within 1 to 24 years. A credit-adjusted risk-free discount rate of 10% and an inflation rate of 2% were used to calculate the present value.

Changes to the asset retirement obligations were as follows:

	Nine Months ended January 31, 2018			Year Ended April 30, 2017
Balance, beginning of period		558,696		$	763,062
Additions		16,875			-
Changes in estimates		55,098			-
Disposals		-			(216,580	)
Accretion		6,535			12,214
		637,204			558,696
Less: Current portion for cash flows expected to be incurred within one year		(406,403	)		(406,403	)
Long-term portion, end of period		230,801		$	152,293

During the nine months ended January 31, 2018 and 2017, the Company recorded accretion expense of $9,212 and $10,780, respectively.

Expected timing of asset retirement obligations:

Year Ending April 30,
2018 (remainder of year)	$	406,403
2019		-
2020		-
2021		-
2022		-
Thereafter		307,566
Subtotal		661,549
Effect of discount		(76,765	)
Total	$	637,204

XML

Related Party Transactions

9 Months Ended

Jan. 31, 2018

Related Party Transactions [Abstract]

Related Party Transactions

Accounts Receivable - Related Party

As discussed in Notes 1 and 5 above, on October 15, 2015, the Company entered into the Contribution Agreement with MegaWest and Fortis pursuant to which the Company and Fortis each agreed to assign certain assets to MegaWest in exchange for the MegaWest Shares.

Upon execution of the Contribution Agreement, Fortis transferred certain indirect interests held in 30 condominium units and the rights to any profits and proceeds therefrom, with its basis of $15,544,382, to MegaWest. As of April 30, 2017, the Company had an accounts receivable – related party in the amount of $2,123,175, which was due from Fortis for the profits belonging to MegaWest. See Note 5 above. As a result of the exchange agreement, all amounts for accounts receivable – related party were written off at January 31, 2018.

Notes Receivable – Related Party

As discussed in Note 6, the Company entered into ten promissory note agreements with Fortis. The notes receivable accrued interest at an annual interest rate of 3% and mature on January 31, 2018. For the three and nine months ended January 31, 2018, the Company recorded $199,211 and $593,021 of interest income on the notes receivable, respectively. As of April 30, 2017, the outstanding balance of the notes receivable was $24,786,382, which was written off as a result of the exchange transaction (see Note 1). As a result of the exchange agreement, no amounts were recorded as interest income on the notes receivable at January 31, 2018.

Advances from Related Party

In September 2017, Scot Cohen, a member of the Company’s Board of Directors and a substantial stockholder of the Company, advanced the Company $250,000 in order to satisfy working capital needs, including the purchase of the Existing Osage County Override as discussed below. These advances are due on demand and are non-interest bearing. The advances were repaid in November 2017.

On August 14, 2017, following a review of the Company’s capital requirements necessary to fund its 2017 development program, the Company’s independent directors consented to Scot Cohen’s purchase of the Existing Osage County Override from various prior holders to be issued in connection with the November 2017 Note Financing, for $250,000. Mr. Cohen agreed to sell the Existing Osage County Override to the Company at the same price paid by him (plus market interest on his capital) upon determination by the Company to finance the Osage County development plan. On November 6, 2017, upon consummation of the November 2017 Note Financing, the Company acquired the Existing Osage County Override from Mr. Cohen.

June 2017 $2.0 Million Secured Note Financing

Scot Cohen owns or controls 31.25% of Funding Corp. I, the holder of the senior secured promissory note in the principal amount of $2.0 million (the “June 2017 Secured Note”) issued by the Company on June 13, 2017. The June 2017 Secured Note accrues interest at a rate of 10% per annum, and matures on June 30, 2020. The June 2017 Secured Note is presented as “Note payable – related party, net of debt discount” on the consolidated balance sheets.

In connection with the issuance of the June 2017 Secured Note, the Company issued to Funding Corp. I a warrant to purchase 840,336 shares of the Company’s Common Stock (the “June 2017 Warrant”). Upon issuance of the June 2017 Secured Note, the Company valued the June 2017 Warrant using the Black-Scholes Option Pricing model and accounted for it using the relative fair value of $952,056 as debt discount on the consolidated balance sheet. See Note 11 for the assumptions and inputs utilized to value the June 2017 Warrant.

As additional consideration for the purchase of the June 2017 Secured Note, the Company issued to Funding Corp. I an overriding royalty interest equal to 2% in all production from the Company’s interest in the Company’s concessions located in Osage County, Oklahoma, originally held by Spyglass, valued at $250,000, which was recorded as contributed capital and debt discount on the consolidated balance sheet.

The debt discount is amortized over the earlier of (i) the term of the debt or (ii) conversion of the debt, using the effective interest method. The amortization of debt discount is included as a component of interest expense in the consolidated statements of operations. There was unamortized debt discount of $1,057,307 as of January 31, 2018. During the nine months ended January 31, 2018 and 2017, the Company recorded amortization of debt discount totaling $144,749 and $0, respectively.

As of January 31, 2018, the outstanding balance, net of debt discount, and accrued interest on the June 2017 Secured Note due to related party was $942,693 and $125,000, respectively.  

November 2017 $2.5 Million Secured Note Financing

Scot Cohen owns or controls 41.20% of Funding Corp. II, the holder of the November 2017 Secured Note issued by the Company in connection with the November 2017 Note Financing in the principal amount of $2.5 million. The November 2017 Secured Note accrues interest at a rate of 10% per annum and matures on June 30, 2020. (See Note 1). The November 2017 Secured Note is presented as “Note payable – related party, net of debt discount” on the consolidated balance sheets.

Pursuant to the financing agreement, the Company issued the November 2017 Warrant to Funding Corp. II to purchase 1.25 million shares of the Company’s Common Stock. Upon issuance of the November 2017 Note, the Company valued the November 2017 Warrant using the Black-Scholes Option Pricing model and accounted for it using the relative fair value of $1,051,171 as debt discount on the consolidated balance sheet. In relation to the financing, Scot Cohen paid $250,000 for an overriding royalty interest from Funding Corp. I (as discussed below), which was recorded as additional debt discount on the consolidated balance sheet. See Note 11 for the assumptions and inputs utilized to value the November 2017 Warrant.

As additional consideration for the purchase of the November 2017 Secured Note, the Company issued to Funding Corp. II an overriding royalty interest equal to 2% in all production from the Company’s interest in the Company’s concessions located in Osage County, Oklahoma, originally held by Spyglass (the “Existing Osage County Override”) then transferred to Funding Corp. 1 as inducement for the June 2017 Secured Note. The Existing Osage County Override was then acquired by the Company from Scot Cohen. As noted above, the override was accounted for as a debt discount and amortized over the term of the debt.

The debt discount is amortized over the earlier of (i) the term of the debt or (ii) conversion of the debt, using the effective interest method. The amortization of debt discount is included as a component of interest expense in the consolidated statements of operations. There was unamortized debt discount of $1,221,920 as of January 31, 2018. During the nine months ended January 31, 2018 and 2017, the Company recorded amortization of debt discount totaling $79,251 and $0, respectively.

As of January 31, 2018, the outstanding balance, net of debt discount, and accrued interest on the November 2017 Secured Note due to related party was $1,278,080 and $62,500, respectively. 

XML

Equity

9 Months Ended

Jan. 31, 2018

Stockholders' Equity Note [Abstract]

Equity

As of January 31, 2018 and April 30, 2017, the Company had 5,000,000 shares of preferred stock, par value $0.00001 per share, authorized. As of January 31, 2018, and April 30, 2017, the Company had 29,500 shares of Series B Preferred Stock, par value $0.00001 per share (“Series B Preferred”), authorized. No Series B Preferred shares are currently issued or outstanding, and no other series of preferred stock have been designated. 

As of January 31, 2018 and April 30, 2017, the Company had 150,000,000 shares of Common Stock authorized. During the nine months ended January 31, 2018, the Company issued 15,145 shares of Common Stock related to a cashless exercise of 35,000 options.

As discussed above in Note 1, pursuant to the Membership Interest Assignment with Pearsonia, the Company issued 1,466,667 shares of Common Stock to Pearsonia in exchange for all membership interests in Bandolier held by Pearsonia.

There were 17,309,809 and 15,827,921 shares of Common Stock issued and outstanding as of January 31, 2018 and April 30, 2017, respectively. 

Options

The following table summarizes information about the changes of options for the period from April 30, 2017 to January 31, 2018 and options outstanding and exercisable at January 31, 2018:

	Options			Weighted Average Exercise Prices
Outstanding April 30, 2017		2,599,682		$	2.13
Granted		25,703			1.40
Exercised		(35,000	)		1.38
Forfeited/Cancelled		(35,000	)		1.38
Outstanding – January 31, 2018		2,555,385		$	2.14
Exercisable – January 31, 2018		2,319,349		$	2.20
Outstanding – Aggregate Intrinsic Value				$	673,501
Exercisable – Aggregate Intrinsic Value				$	597,519

The following table summarizes information about the options outstanding and exercisable at January 31, 2018:

		Options Outstanding				Options Exercisable
Exercise Price		Options		Weighted Avg. Life Remaining (Years)		Options
	1.38		1,795,958		9.45		1,614,916
	1.40		25,703		9.89		18,167
	1.98		5,000		9.51		5,000
	2.00		457,402		8.50		419,223
	2.87		65,334		8.50		64,611
	3.00		51,001		9.16		42,445
	3.39		12,000		9.14		12,000
	6.00		10,000		8.25		10,000
	12.00		132,987		6.98		132,987
			2,555,385				2,319,349

During the three months ended January 31, 2018 and 2017, the Company expensed $102,425 and $335,462, respectively, related to the vesting of outstanding options to general and administrative expense for stock-based compensation pursuant to employment and consulting agreements. During the nine months ended January 31, 2018 and 2017, the Company expensed $811,123 and $1,850,462, respectively, related to the vesting of outstanding options to general and administrative expense for stock-based compensation pursuant to employment and consulting agreements. 

As of January 31, 2018, the Company has approximately $703,100 in unrecognized stock-based compensation expense related to unvested options, which will be amortized over a weighted average exercise period of approximately 3 years.

Warrants

The fair values of the 840,336 June 2017 Warrants granted in conjunction with the June 2017 Note Financing and the 1.25 million November 2017 Warrants granted in connection with the November 2017 Note Financing (as discussed in Note 10) were estimated on the date of grant using the Black-Scholes option-pricing model.

The assumptions used for the warrants granted during the nine months ended January 31, 2018 are as follows:

	January 31, 2018
Exercise price $	1.75 - 2.38
Expected dividends	0%
Expected volatility	160.70 - 169.63%
Risk free interest rate	1.49 – 1.73%
Expected life of warrant	3 years

The following is a summary of the Company’s warrant activity:

	Number of Warrants		Weighted Average Exercise Price		Weighted Average Life Remaining (Years)
Outstanding and exercisable – April 30, 2017		133,333	$	50.00		2.83
Forfeited		-		-		-
Granted		2,090,336		2.15		2.57
Outstanding and exercisable – January 31, 2018		2,223,669		5.02		2.57

The aggregate intrinsic value of the outstanding warrants was $0.

XML

Non-Controlling Interest

9 Months Ended

Jan. 31, 2018

Noncontrolling Interest [Abstract]

Non-Controlling Interest

For the nine months ended January 31, 2018, the changes in the Company’s non–controlling interest were as follows:

	Bandolier			Fortis			Total
Non–controlling interest at April 30, 2017	$	(699,873	)	$	13,310,343		$	12,610,470
Acquisition of non-controlling interest		785,298			(13,497,191	)		(12,711,893	)
Non–controlling interest share of income (losses)		(85,425	)		186,848			101,423
Non–controlling interest at January 31, 2018	$	-			-			-

As discussed above in “Recent Developments” in Note 1, as a result of the MegaWest Transaction and the Membership Interest Assignment, the non-controlling interests in Bandolier and Fortis’ interest in MegaWest were written down to $0.

XML

Contingency and Contractual Obligations

9 Months Ended

Jan. 31, 2018

Commitments and Contingencies Disclosure [Abstract]

Contingency and Contractual Obligations

Ongoing Litigation.

(a) In January 2010, the Company experienced a flood in its Calgary office premises as a result of a broken water pipe. There was significant damage to the premises rendering them unusable until the landlord had completed remediation. Pursuant to the lease contract, the Company asserted that rent should be abated during the remediation process and accordingly, the Company did not pay any rent after December 2009. During the remediation process, the Company engaged an independent environmental testing company to test for air quality and for the existence of other potentially hazardous conditions. The testing revealed the existence of potentially hazardous mold and the consultant provided specific written instructions for the effective remediation of the premises. During the remediation process, the landlord did not follow the consultant’s instructions and correct the potentially hazardous mold situation and subsequently in June 2010 gave notice and declared the premises to be ready for occupancy. The Company re-engaged the consultant to re-test the premises and the testing results again revealed the presence of potentially hazardous mold. The Company determined that the premises were not fit for re-occupancy and considered the landlord to be in default of the lease. The Landlord subsequently terminated the lease.

On January 30, 2014, the landlord filed a Statement of Claim against the Company for rental arrears in the amount aggregating CAD $759,000 (approximately USD $615,100 as of January 31, 2018). The Company filed a defense and on October 20, 2014, it filed a summary judgment application stating that the landlord’s claim is barred, as it was commenced outside the 2-year statute of limitation period under the Alberta Limitations Act. The landlord subsequently filed a cross-application to amend its Statement of Claim to add a claim for loss of prospective rent in an amount of CAD $665,000 (approximately USD $538,900 as of January 31, 2018). The applications were heard on June 25, 2015 and the court allowed both the Company’s summary judgment application and the landlord’s amendment application. Both of these orders were appealed through two levels of the Alberta courts and the appeals were dismissed at both levels. The net effect is that the landlord’s claim for loss of prospective rent is to proceed.

(b) In September 2013, the Company was notified by the Railroad Commission of Texas (the “Railroad Commission”) that the Company was not in compliance with regulations promulgated by the Railroad Commission. The Company was therefore deemed to have lost its corporate privileges within the State of Texas and as a result, all wells within the state would have to be plugged. The Railroad Commission therefore collected $25,000 from the Company, which was originally deposited with the Railroad Commission, to cover a portion of the estimated costs of $88,960 to plug the wells, which the net present value of has been included in asset retirement obligations as of January 31, 2018. In addition to the above, the Railroad Commission also reserved its right to separately seek any remedies against the Company resulting from its noncompliance.

(c) On August 11, 2014, Martha Donelson and John Friend amended their complaint in an existing lawsuit by filing a class action complaint styled: Martha Donelson and John Friend, et al. v. United States of America, Department of the Interior, Bureau of Indian Affairs and Devon Energy Production, LP, et al., Case No. 14-CV-316-JHP-TLW, United States District Court for the Northern District of Oklahoma (the “Proceeding”).  The plaintiffs added as defendants twenty-seven (27) specifically named operators, including Spyglass, as well as all Osage County lessees and operators who have obtained a concession agreement, lease or drilling permit approved by the Bureau of Indian Affairs (“BIA”) in Osage County allegedly in violation of National Environmental Policy Act (“NEPA”).  Plaintiffs seek a declaratory judgment that the BIA improperly approved oil and gas leases, concession agreements and drilling permits prior to August 12, 2014, without satisfying the BIA’s obligations under federal regulations or NEPA, and seek a determination that such oil and gas leases, concession agreements and drilling permits are void ab initio. Plaintiffs are seeking damages against the defendants for alleged nuisance, trespass, negligence and unjust enrichment. The potential consequences of such complaint could jeopardize the corresponding leases.

On October 7, 2014, Spyglass, along with other defendants, filed a Motion to Dismiss the August 11, 2014 Amended Complaint on various procedural and legal grounds. Following the significant briefing, the Court, on March 31, 2016, granted the Motion to Dismiss as to all defendants and entered a judgment in favor of the defendants against the plaintiffs. On April 14, 2016, Spyglass with the other defendants, filed a Motion seeking its attorneys’ fees and costs. The motion remains pending. On April 28, 2016, the plaintiffs filed three motions: a Motion to Amend or Alter the Judgment; a Motion to Amend the Complaint; and a Motion to Vacate Order. On November 23, 2016, the Court denied all three of Plaintiffs’ motions. On December 6, 2016, Plaintiffs filed a Notice of Appeal to the Tenth Circuit Court of Appeals. That appeal is pending as of the effective date of this response. There is no specific timeline by which the Court of Appeals must render a ruling. Spyglass intends to continue to vigorously defend its interest in this matter. 

(d) MegaWest Energy Missouri Corp. (“MegaWest Missouri”), a wholly owned subsidiary of the Company, is involved in two cases related to oil leases in West Central, Missouri. The first case (James Long and Jodeane Long v. MegaWest Energy Missouri and Petro River Oil Corp., case number 13B4-CV00019) is a case for unlawful detainer, pursuant to which the plaintiffs contend that MegaWest Missouri oil and gas lease has expired and MegaWest Missouri is unlawfully possessing the plaintiffs’ real property by asserting that the leases remain in effect. The case was originally filed in Vernon County, Missouri on September 20, 2013. MegaWest Missouri filed an Answer and Counterclaims on November 26, 2013 and the plaintiffs filed a motion to dismiss the counterclaims. MegaWest Missouri filed a motion for Change of Judge and Change of Venue and the case was transferred to Barton County. The court granted the motion to dismiss the counterclaims on February 3, 2014. As to the other allegations in the complaint, the matter is still pending.

MegaWest Missouri filed a second case on October 14, 2014 (MegaWest Energy Missouri Corp. v. James Long, Jodeane Long, and Arrow Mines LLC, case number 14VE-CV00599). This case is pending in Vernon County, Missouri. Although the two cases are separate, they are interrelated. In the Vernon County case, MegaWest Missouri has made claims for: (1) replevin for personal property; (2) conversion of personal property; (3) breach of the covenant of quiet enjoyment regarding the lease; (4) constructive eviction of the lease; (5) breach of fiduciary obligation against James Long; (6) declaratory judgment that the oil and gas lease did not terminate; and (7) injunctive relief to enjoin the action pending in Barton County, Missouri. The plaintiffs filed a motion to dismiss on November 4, 2014, and Arrow Mines, LLC filed a motion to dismiss on November 13, 2014. Both motions remain pending, and MegaWest Missouri will file an opposition to the motions in the near future. 

The Company is from time to time involved in legal proceedings in the ordinary course of business. It does not believe that any of these claims and proceedings against it is likely to have, individually or in the aggregate, a material adverse effect on its financial condition or results of operations.

XML

Subsequent Events

9 Months Ended

Jan. 31, 2018

Subsequent Events [Abstract]

Subsequent Events

As discussed in Note 1, the following events occurred subsequent to January 31, 2018:

On February 14, 2018, the Company entered into the Agreement with Red Fork pursuant to which the Company and Red Fork agreed to participate in the Exchange, resulting in the conveyance by the Company to Mountain View Resources, LLC, an affiliate of Red Fork, of 100% of the Company 13.7% working interest in and to an AMI in the Mountain View Project in Kern County, California, and Red Fork conveyed to the Company 64.7% of its 85% working interest in and to an AMI situated in Kay County, Oklahoma.

On February 2, 2018, Horizon Investments received from Horizon Energy a capital call in the amount of $600,227, which was not made due to lack of required capital. As a result, Horizon Investments’ interest in Horizon Energy was decreased by 27.43%, therefore reducing Horizon Investments’ interest in Horizon Energy from 20.01% to 14.52%.

XML

Significant Accounting Policies (Policies)

9 Months Ended

Jan. 31, 2018

Accounting Policies [Abstract]

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The Company’s financial statements are based on a number of significant estimates, including oil and natural gas reserve quantities which are the basis for the calculation of depreciation, depletion and impairment of oil and natural gas properties, and timing and costs associated with its asset retirement obligations, as well as those related to the fair value of stock options, stock warrants and stock issued for services. While we believe that our estimates and assumptions used in preparation of the financial statements are appropriate, actual results could differ from those estimates. 

Cash and Cash Equivalents

Cash and cash equivalents include all highly liquid monetary instruments with original maturities of three months or less when purchased. These investments are carried at cost, which approximates fair value. Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash deposits. The Company maintains its cash in institutions insured by the Federal Deposit Insurance Corporation (“FDIC”). At times, the Company’s cash and cash equivalent balances may be uninsured or in amounts that exceed the FDIC insurance limits. At January 31, 2018, approximately $549,000 of the Company’s cash balances were uninsured. The Company has not experienced any loses on such accounts.

Receivables

Receivables that management has the intent and ability to hold for the foreseeable future are reported in the balance sheet at outstanding principal adjusted for any charge-offs and the allowance for doubtful accounts. Losses from uncollectible receivables are accrued when both of the following conditions are met: (a) information available before the financial statements are issued or are available to be issued indicates that it is probable that an asset has been impaired at the date of the financial statements, and (b) the amount of the loss can be reasonably estimated. These conditions may be considered in relation to individual receivables or in relation to groups of similar types of receivables. If the conditions are met, an accrual shall be made even though the particular receivables that are uncollectible may not be identifiable. The Company reviews individually each receivable for collectability and performs on-going credit evaluations of its customers and adjusts credit limits based upon payment history and the customer’s current credit worthiness, as determined by the review of their current credit information, and determines the allowance for doubtful accounts based on historical write-off experience, customer specific facts and general economic conditions that may affect a client’s ability to pay. Bad debt expense is included in general and administrative expenses, if any.

Credit losses for receivables (uncollectible receivables), which may be for all or part of a particular receivable, shall be deducted from the allowance. The related receivable balance shall be charged off in the period in which the receivables are deemed uncollectible. Recoveries of receivables previously charged off shall be recorded when received. The Company charges off its account receivables against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

The allowance for doubtful accounts at January 31, 2018 and April 30, 2017 was $0.

Interest in Real Estate Rights

At January 31, 2017, interest in real estate rights contributed by Fortis related to real properties that Fortis planned to sell within one year. Since these properties were contributed by Fortis, a related party, the rights for the period ending January 31, 2017 are stated on the Company’s balance sheet at Fortis’ cost basis. As a result of the Exchange Agreement, no amounts are reflected in interests in real estate rights as of January 31, 2018.

Oil and Gas Operations

Oil and Gas Properties: The Company uses the full-cost method of accounting for its exploration and development activities. Under this method of accounting, the costs of both successful and unsuccessful exploration and development activities are capitalized as oil and gas property and equipment. Proceeds from the sale or disposition of oil and gas properties are accounted for as a reduction to capitalized costs unless the gain or loss would significantly alter the relationship between capitalized costs and proved reserves of oil and natural gas attributable to a country, in which case a gain or loss would be recognized in the consolidated statements of operations. All of the Company’s oil and gas properties are located within the continental United States, its sole cost center.

Oil and gas properties may include costs that are excluded from costs being depleted. Oil and gas costs excluded represent investments in unproved properties and major development projects in which the Company owns a direct interest. These unproved property costs include non-producing leasehold, geological and geophysical costs associated with leasehold or drilling interests and in process exploration drilling costs. All costs excluded are reviewed at least annually to determine if impairment has occurred.

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the historical cost carrying value of an asset may no longer be appropriate. For the nine months ended January 31, 2018, the Company evaluated these properties and recorded an impairment in the amount of $972,488.

Proved Oil and Gas Reserves: Proved oil and gas reserves are the estimated quantities of crude oil, natural gas and natural gas liquids which geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions. All of the Company’s oil and gas properties with proven reserves were impaired to the salvage value prior to the Company’s acquisition of its interest in Bandolier. The price used to establish economic viability is the average price during the 12-month period preceding the end of the entity’s fiscal year and calculated as the un-weighted arithmetic average of the first-day-of-the-month price for each month within such 12-month period.

Depletion, Depreciation and Amortization: Depletion, depreciation and amortization is provided using the unit-of-production method based upon estimates of proved oil and gas reserves with oil and gas production being converted to a common unit of measure based upon their relative energy content. Investments in unproved properties and major development projects are not amortized until proved reserves associated with the projects can be determined or until impairment occurs. If the results of an assessment indicate that the properties are impaired, the amount of the impairment is deducted from the capitalized costs to be amortized. Once the assessment of unproved properties is complete and when major development projects are evaluated, the costs previously excluded from amortization are transferred to the full cost pool and amortization begins. The amortizable base includes estimated future development costs and, where significant, dismantlement, restoration and abandonment costs, net of estimated salvage value. 

In arriving at rates under the unit-of-production method, the quantities of recoverable oil and natural gas reserves are established based on estimates made by the Company’s geologists and engineers which require significant judgment, as does the projection of future production volumes and levels of future costs, including future development costs. In addition, considerable judgment is necessary in determining when unproved properties become impaired and in determining the existence of proved reserves once a well has been drilled. All of these judgments may have significant impact on the calculation of depletion expenses. There have been no material changes in the methodology used by the Company in calculating depletion, depreciation and amortization of oil and gas properties under the full cost method during the nine months ended January 31, 2018 and 2017.  

Investments

Investments held in stock of entities other than subsidiaries, namely corporate joint ventures and other non-controlled entities, usually are accounted for by one of three methods: (i) the fair value method, (ii) the equity method, or (iii) the cost method. The equity method tends to be most appropriate if an investment enables the investor to influence the operating or financial policies of the investee. The cost basis is utilized for investments that are less than 20% owned, and the Company does not exercise significant influence over the operating and financial policies of the investee. Under the cost method, investments are held at historical cost.

Fair Value of Financial Instruments

The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in U.S. GAAP and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:

Level 1	Quoted market prices available in active markets for identical assets or liabilities as of the reporting date.
Level 2	Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.
Level 3	Pricing inputs that are generally observable inputs and not corroborated by market data.

Financial assets are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques and at least one significant model assumption or input is unobservable.

The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.

The carrying amount of the Company’s financial assets and liabilities, such as cash, prepaid expenses, and accounts payable and accrued liabilities approximate their fair value because of the short maturity of those instruments.

Transactions involving related parties cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions of competitive, free-market dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party transactions were consummated on terms equivalent to those that prevail in arm’s-length transactions unless such representations can be substantiated.

Stock-Based Compensation

Generally, all forms of stock-based compensation, including stock option grants, warrants, and restricted stock grants are measured at their fair value utilizing an option pricing model on the award’s grant date, based on the estimated number of awards that are ultimately expected to vest.

Under fair value recognition provisions, the Company recognizes equity–based compensation net of an estimated forfeiture rate and recognizes compensation cost only for those shares expected to vest over the requisite service period of the award.

The fair value of option award is estimated on the date of grant using the Black–Scholes option valuation model. The Black–Scholes option valuation model requires the development of assumptions that are input into the model. These assumptions are the expected stock volatility, the risk–free interest rate, the option’s expected life, the dividend yield on the underlying stock and the expected forfeiture rate. Expected volatility is calculated based on the historical volatility of the Company’s Common Stock over the expected option life and other appropriate factors. Risk–free interest rates are calculated based on continuously compounded risk–free rates for the appropriate term. The dividend yield is assumed to be zero, as the Company has never paid or declared any cash dividends on its Common Stock and does not intend to pay dividends on the Common Stock in the foreseeable future. The expected forfeiture rate is estimated based on historical experience.

Determining the appropriate fair value model and calculating the fair value of equity–based payment awards requires the input of the subjective assumptions described above. The assumptions used in calculating the fair value of equity–based payment awards represent management’s best estimates, which involve inherent uncertainties and the application of management’s judgment. As a result, if factors change and the Company uses different assumptions, the equity–based compensation expense could be materially different in the future. In addition, the Company is required to estimate the expected forfeiture rate and recognize expense only for those shares expected to vest. If the actual forfeiture rate is materially different from our estimate, the equity–based compensation expense could be significantly different from what the Company has recorded in the current period. 

The Company determines the fair value of the stock–based payments to non-employees as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. If the fair value of the equity instruments issued is used, it is measured using the stock price and other measurement assumptions as of the earlier of either (1) the date at which a commitment for performance by the counterparty to earn the equity instruments is reached, or (2) the date at which the counterparty’s performance is complete.

The expenses resulting from stock-based compensation are recorded as general and administrative expenses in the consolidated statement of operations, depending on the nature of the services provided.

Income Taxes

Income Tax Provision

On December 22, 2017, the Tax Cuts and Jobs Act (“Tax Act”) was signed into law. ASC 740, Accounting for Income Taxes requires companies to recognize the effects of changes in tax laws and rates on deferred tax assets and liabilities and the retroactive effects of changes in tax laws in the period in which the new legislation is enacted.  The Company’s gross deferred tax assets were revalued based on the reduction in the federal statutory tax rate from 35% to 21%, which will result in a reduction in our effective tax rate from approximately 36.64% to 24.16% for the fiscal year ending April 30, 2018. A corresponding offset has been made to the valuation allowance, and any potential other taxes arising due to the Tax Act will result in reductions to the Company’s net operating loss carryforward and valuation allowance. The Company will continue to analyze the Tax Act to assess its full effects on the Company’s financial results, including disclosures, for the Company’s fiscal year ending April 30, 2018, but the Company does not expect the Tax Act to have a material impact on the Company’s consolidated financial statements. Because the Act became effective mid-way through the Company’s tax year, the Company will have a federal statutory income tax rate of approximately 28% for the fiscal year ending April 30, 2018 and will have an approximate 21% statutory income tax rate for fiscal years thereafter.

Uncertain Tax Positions

The Company evaluates uncertain tax positions to recognize a tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. Those tax positions failing to qualify for initial recognition are recognized in the first interim period in which they meet the more likely than not standard or are resolved through negotiation or litigation with the taxing authority, or upon expiration of the statute of limitations. De-recognition of a tax position that was previously recognized occurs when an entity subsequently determines that a tax position no longer meets the more likely than not threshold of being sustained.

At January 31, 2018 and April 30, 2017, the Company had approximately $0 and $3.4 million, respectively, of liabilities for uncertain tax positions. Interpretation of taxation rules relating to net operating loss utilization in real estate transactions give rise to uncertain positions. In connection with the uncertain tax position, there were no interest or penalties recorded as the position is expected but the tax returns are not yet due.

The Company is subject to ongoing tax exposures, examinations and assessments in various jurisdictions. Accordingly, the Company may incur additional tax expense based upon the outcomes of such matters. In addition, when applicable, the Company will adjust tax expense to reflect the Company’s ongoing assessments of such matters, which require judgment and can materially increase or decrease its effective rate as well as impact operating results.

The number of years with open tax audits varies depending on the tax jurisdiction. The Company’s major taxing jurisdictions include the United States (including applicable states).

Per Share Amounts

Basic net income (loss) per common share is computed by dividing net loss attributable to stockholders by the weighted-average number of shares of Common Stock outstanding during the period. Diluted net income (loss) per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of Common Stock equivalents. For the nine months ended January 31, 2018 and 2017, potentially dilutive securities were not included in the calculation of diluted net loss per share because to do so would be anti-dilutive.

The Company had the following Common Stock equivalents at January 31, 2018 and 2017:

	January 31, 2018		January 31, 2017
Stock Options		2,555,385		2,495,182
Stock Purchase Warrants		2,223,669		133,333
Total		4,779,054		2,628,515

Recent Accounting Pronouncements

In May 2014, the FASB issued a comprehensive new revenue recognition standard that will supersede nearly all existing revenue recognition guidance under U.S. GAAP. The standard’s core principle (issued as ASU 2014-09 by the FASB), is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. The new guidance must be adopted using either a full retrospective approach for all periods presented in the period of adoption or a modified retrospective approach. In August 2015, the FASB issued ASU No. 2015-14, which defers the effective date of ASU 2014-09 by one year, and would allow entities the option to early adopt the new revenue standard as of the original effective date. This ASU is effective for public reporting companies for interim and annual periods beginning after December 15, 2017. The Company is currently evaluating its adoption method and the impact of the standard on its consolidated financial statements and has not yet determined the method by which the Company will adopt the standard in 2018.

In April 2016, the FASB issued ASU No. 2016-10, “Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing” (Topic 606). In March 2016, the FASB issued ASU No. 2016-08, “Revenue from Contracts with Customers: Principal versus Agent Considerations (Reporting Revenue Gross versus Net)” (Topic 606). These amendments provide additional clarification and implementation guidance on the previously issued ASU 2014-09, “Revenue from Contracts with Customers.” The amendments in ASU 2016-10 provide clarifying guidance on materiality of performance obligations; evaluating distinct performance obligations; treatment of shipping and handling costs; and determining whether an entity’s promise to grant a license provides a customer with either a right to use an entity’s intellectual property or a right to access an entity’s intellectual property. The amendments in ASU 2016-08 clarify how an entity should identify the specified good or service for the principal versus agent evaluation and how it should apply the control principle to certain types of arrangements. The adoption of ASU 2016-10 and ASU 2016-08 is to coincide with an entity’s adoption of ASU 2014-09, which we intend to adopt for interim and annual reporting periods beginning after December 15, 2017. The Company does not expect the new standard to have a material effect on its consolidated financial statements.

In April 2016, the FASB issued ASU No. 2016-09, “Compensation – Stock Compensation” (Topic 718). The FASB issued this update to improve the accounting for employee share-based payments and affect all organizations that issue share-based payment awards to their employees. Several aspects of the accounting for share-based payment award transactions are simplified, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows. The updated guidance is effective for annual periods beginning after December 15, 2016, including interim periods within those fiscal years. Early adoption of the update is permitted. Adoption of ASU 2016-09 did not have a material impact on the consolidated financial statements.

In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments” (“ASU 2016-15”). ASU 2016-15 will make eight targeted changes to how cash receipts and cash payments are presented and classified in the statement of cash flows. ASU 2016-15 is effective for fiscal years beginning after December 15, 2017. The new standard will require adoption on a retrospective basis unless it is impracticable to apply, in which case it would be required to apply the amendments prospectively as of the earliest date practicable. The Company is currently in the process of evaluating the impact of ASU 2016-15 on its consolidated financial statements. 

The Company does not expect the adoption of any other recently issued accounting pronouncements to have a significant impact on its financial position, results of operations, or cash flows. 

Subsequent Events

The Company has evaluated all transactions through the date the consolidated financial statements were issued for subsequent event disclosure consideration. 

XML

Organization (Tables)

9 Months Ended

Jan. 31, 2018

Organization Tables

Write-off of related assets, liabilities and non-controlling interests

Assets
Cash and cash equivalents	$	119,722
Accounts receivable - real estate - related party		1,146,885
Accrued interest on notes receivable - related party		1,390,731
Interest in Bandolier		259,313
Notes receivable - related party, current portion		26,344,883
Total Assets	$	29,261,534
Liabilities
Accounts payable and accrued expenses	$	74,212
Deferred tax liability		3,775,927
Total Liabilities		3,850,139
Non-controlling interest	$	13,497,191
Loss on redetermination	$	11,914,204

XML

Significant Accounting Policies (Tables)

9 Months Ended

Jan. 31, 2018

Accounting Policies [Abstract]

Schedule of Common Stock Equivalents

	January 31, 2018		January 31, 2017
Stock Options		2,555,385		2,495,182
Stock Purchase Warrants		2,223,669		133,333
Total		4,779,054		2,628,515

XML

Interest in Real Estate Rights (Tables)

9 Months Ended

Jan. 31, 2018

Notes to Financial Statements

Real estate held for sale

	Nine Months Ended January  31, 2018
Balance at April 30, 2017	$	309,860
Cost of sales – 1 condominium unit		(309,860	)
Balance at January 31, 2018	$	-

XML

Oil and Gas Assets (Tables)

9 Months Ended

Jan. 31, 2018

Extractive Industries [Abstract]

Schedule of Oil and Gas Assets

	Oklahoma			Larne Basin		Other (1)		Total
Balance May 1, 2017	$	1,232,192		$	761,444	$	100,000	$	2,093,636
Additions		2,265,882			-		-		2,265,882
Dispositions		(16,500	)		-		-		(16,500	)
Depreciation, depletion and amortization		(110,303	)		-		-		(110,303	)
Impairment of oil and gas assets		(972,488	)		-		-		(972,488	)
Balance January 31, 2018	$	2,398,783			761,444		100,000		3,260,227

(1) Other property consists primarily of four used steam generators and related equipment that will be assigned to future projects. As of January 31, 2018, and April 30, 2017, management concluded that impairment was not necessary as all other assets were carried at salvage value.

XML

Asset Retirement Obligations (Tables)

9 Months Ended

Jan. 31, 2018

Asset Retirement Obligation Disclosure [Abstract]

Schedule of Changes to Asset Retirement Obligation

	Nine Months ended January 31, 2018			Year Ended April 30, 2017
Balance, beginning of period		558,696		$	763,062
Additions		16,875			-
Changes in estimates		55,098			-
Disposals		-			(216,580	)
Accretion		6,535			12,214
		637,204			558,696
Less: Current portion for cash flows expected to be incurred within one year		(406,403	)		(406,403	)
Long-term portion, end of period		230,801		$	152,293

Schedule of Expected Timing of Asset Retirement Obligations

Year Ending April 30,
2018 (remainder of year)	$	406,403
2019		-
2020		-
2021		-
2022		-
Thereafter		307,566
Subtotal		661,549
Effect of discount		(76,765	)
Total	$	637,204

XML

Equity (Tables)

9 Months Ended

Jan. 31, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Changes in Stock Options

	Options			Weighted Average Exercise Prices
Outstanding April 30, 2017		2,599,682		$	2.13
Granted		25,703			1.40
Exercised		(35,000	)		1.38
Forfeited/Cancelled		(35,000	)		1.38
Outstanding – January 31, 2018		2,555,385		$	2.14
Exercisable – January 31, 2018		2,319,349		$	2.20
Outstanding – Aggregate Intrinsic Value				$	673,501
Exercisable – Aggregate Intrinsic Value				$	597,519

Summary of Options Outstanding and Exercisable

		Options Outstanding				Options Exercisable
Exercise Price		Options		Weighted Avg. Life Remaining (Years)		Options
	1.38		1,795,958		9.45		1,614,916
	1.40		25,703		9.89		18,167
	1.98		5,000		9.51		5,000
	2.00		457,402		8.50		419,223
	2.87		65,334		8.50		64,611
	3.00		51,001		9.16		42,445
	3.39		12,000		9.14		12,000
	6.00		10,000		8.25		10,000
	12.00		132,987		6.98		132,987
			2,555,385				2,319,349

Schedule of warrant assumptions

	January 31, 2018
Exercise price $	1.75 - 2.38
Expected dividends	0%
Expected volatility	160.70 - 169.63%
Risk free interest rate	1.49 – 1.73%
Expected life of warrant	3 years

Summary of Warrants Outstanding and Exercisable

	Number of Warrants		Weighted Average Exercise Price		Weighted Average Life Remaining (Years)
Outstanding and exercisable – April 30, 2017		133,333	$	50.00		2.83
Forfeited		-		-		-
Granted		2,090,336		2.15		2.57
Outstanding and exercisable – January 31, 2018		2,223,669		5.02		2.57

XML

Non-Controlling Interest (Tables)

9 Months Ended

Jan. 31, 2018

Noncontrolling Interest [Abstract]

Non-controlling interest

	Bandolier			Fortis			Total
Non–controlling interest at April 30, 2017	$	(699,873	)	$	13,310,343		$	12,610,470
Acquisition of non-controlling interest		785,298			(13,497,191	)		(12,711,893	)
Non–controlling interest share of income (losses)		(85,425	)		186,848			101,423
Non–controlling interest at January 31, 2018	$	-			-			-

XML

Organization (Details) - USD ($)	9 Months Ended
	Jan. 31, 2018	Apr. 30, 2017	Jan. 31, 2017	Apr. 30, 2016
Assets
Cash and cash equivalents	$ 844,487	$ 631,232	$ 1,413,443	$ 774,751
Accounts receivable - real estate - related party	0	2,123,175
Accrued interest on notes receivable - related party	0	797,710
Interest in Bandolier	0	309,860
Notes receivable - related party, current portion	0	24,786,382
Total Assets	6,957,536	32,803,444
Liabilities
Accounts payable and accrued expenses	240,731	120,233
Deferred tax liability	0	3,442,724
Total Liabilities	3,550,908	4,121,653
Non-controlling interest	0	$ 12,610,470
Loss on redetermination	11,914,204
Fortis [Member]
Assets
Cash and cash equivalents	119,722
Accounts receivable - real estate - related party	1,146,885
Accrued interest on notes receivable - related party	1,390,731
Interest in Bandolier	259,313
Notes receivable - related party, current portion	26,344,883
Total Assets	29,261,534
Liabilities
Accounts payable and accrued expenses	74,212
Deferred tax liability	3,775,927
Total Liabilities	3,850,139
Non-controlling interest	$ 13,497,191

XML

Organization (Details Narrative)	Jan. 31, 2018
Horizon Energy [Member]
Equity ownership	20.00%

XML

Going Concern and Management’s Plan (Details Narrative) - USD ($)	Jan. 31, 2018	Apr. 30, 2017	Jan. 31, 2017	Apr. 30, 2016
Going Concern And Managements Plan Details Narrative
Accumulated deficit	$ (48,905,620)	$ (30,609,910)
Cash and cash equivalents	$ 844,487	$ 631,232	$ 1,413,443	$ 774,751

XML

Basis of Preparation (Details Narrative)	Jan. 31, 2018
MegaWest [Member]
Equity ownership	58.51%
Bandolier [Member]
Equity ownership	50.00%

XML

Significant Accounting Policies (Details) - shares	9 Months Ended
	Jan. 31, 2018	Jan. 31, 2017
Common stock equivalent shares	4,779,054	2,628,515
Stock Options [Member]
Common stock equivalent shares	2,555,385	2,495,182
Stock Purchase Warrants [Member]
Common stock equivalent shares	2,223,669	133,333

XML

Significant Accounting Policies (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Jan. 31, 2018	Jan. 31, 2017	Jan. 31, 2018	Jan. 31, 2017	Apr. 30, 2017
Accounting Policies [Abstract]
Cash balance, uninsured	$ 549,000		$ 549,000
Allowance for doubtful accounts	0		0		$ 0
Impairment of proved oil and gas properties	730,607	$ 20,942	972,488	$ 20,942
Liabilities for uncertain tax positions	$ 0		$ 0		$ 3,442,724

XML

Accounts Receivable - Related Party (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Jan. 31, 2018	Jan. 31, 2017	Jan. 31, 2018	Jan. 31, 2017	Apr. 30, 2017
Accounting Policies [Abstract]
Net (loss) gain on real estate rights	$ (3,756)	$ (7,208)	$ 267,734	$ 686,096
Due from related party	$ 0		$ 0		$ 2,123,175

XML

Notes Receivable - Related Party (Details Narrative) - USD ($)	Jan. 31, 2018	Apr. 30, 2017
Receivables, Other, Related Parties and Retainage [Abstract]
Notes receivable related party	$ 0	$ 24,786,382

XML

Interest in Real Estate Rights (Details)	9 Months Ended
	Jan. 31, 2018 USD ($)
Notes to Financial Statements
Balance at beginning of period	$ 309,860
Cost of sales - one condominium unit	(309,860)
Balance at end of period	$ 0

XML

Oil and Gas Assets (Details)	9 Months Ended
	Jan. 31, 2018 USD ($)
Oil and gas assets, net	$ 2,093,636
Additions	2,265,882
Dispositions	(16,500)
Depreciation, depletion and amortization	(110,303)
Impairment of oil and gas assets	(972,488)
Oil and gas assets, net	3,260,227
Oklahoma [Member]
Oil and gas assets, net	1,232,192
Additions	2,265,882
Dispositions	(16,500)
Depreciation, depletion and amortization	(110,303)
Impairment of oil and gas assets	(972,488)
Oil and gas assets, net	2,398,783
Larne Basin
Oil and gas assets, net	761,444
Additions	0
Dispositions	0
Depreciation, depletion and amortization	0
Impairment of oil and gas assets	0
Oil and gas assets, net	761,444
Other [Member]
Oil and gas assets, net	100,000	[1]
Additions	0	[1]
Dispositions	0
Depreciation, depletion and amortization	0	[1]
Impairment of oil and gas assets	0	[1]
Oil and gas assets, net	$ 100,000	[1]

[1] Other property consists primarily of four used steam generators and related equipment that will be assigned to future projects. As of January 31, 2018, and April 30, 2017, management concluded that impairment was not necessary as all other assets were carried at salvage value.

XML

Asset Retirement Obligations (Details) - USD ($)	9 Months Ended	12 Months Ended
	Jan. 31, 2018	Apr. 30, 2017
Asset Retirement Obligation Disclosure [Abstract]
Balance, beginning of period	$ 558,696	$ 763,062
Additions	71,973	0
Changes in estimates	55,098	0
Disposals	0	(216,580)
Accretion	6,535	12,214
Total asset retirement obligations	637,204	558,696
Less: Current portion for cash flows expected to be incurred within one year	(406,403)	(406,403)
Long-term portion, end of period	$ 230,801	$ 152,293

XML

Asset Retirement Obligations (Details 1) - USD ($)	Jan. 31, 2018	Apr. 30, 2017	Apr. 30, 2016
Asset Retirement Obligation Disclosure [Abstract]
2018 (remainder of year)	$ 406,403
2019	0
2020	0
2021	0
2122	0
Thereafter	307,566
Subtotal	661,549	$ 573,069
Effect of discount	(76,765)
Total	$ 637,204	$ 558,696	$ 763,062

XML

Asset Retirement Obligations (Details Narrative) - USD ($)	9 Months Ended	12 Months Ended
	Jan. 31, 2018	Apr. 30, 2017
Asset Retirement Obligation, future liability	$ 661,549	$ 573,069
Accretion expense	$ 6,535	$ 12,214
Minimum
Costs are expected to be incurred, minimum period	1 year
Maximum
Costs are expected to be incurred, minimum period	24 years

XML

Related Party Transactions (Details Narrative) - USD ($)	9 Months Ended
	Jan. 31, 2018	Jan. 31, 2017	Apr. 30, 2017
Related Party Transactions [Abstract]
Accounts receivable, related party			$ 2,123,175
Note receivable	$ 0		$ 24,786,382
Amortization of debt discount	$ 224,000	$ 0

XML

Equity (Details)	9 Months Ended
	Jan. 31, 2018 USD ($) $ / shares shares
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Number of Options, Outstanding, beginning balance | shares	2,599,682
Number of Options, Exercisable, beginning balance | shares	2,599,682
Number of Options, Granted | shares	25,703
Number of Options, Exercised | shares	(35,000)
Number of Options, Forfeited/Cancelled | shares	(35,000)
Number of Options, Outstanding, ending balance | shares	2,555,385
Number of Options, Exercisable, ending balance | shares	2,319,349
Weighted Avg. Exercise Price, Outstanding | $ / shares	$ 2.13
Weighted Avg. Exercise Price, Exercisable | $ / shares	2.13
Weighted Avg. Exercise Price, Granted | $ / shares	1.40
Weighted Avg. Exercise Price, Exercised | $ / shares	1.38
Weighted Avg. Exercise Price, Forfeited/Cancelled | $ / shares	1.38
Weighted Avg. Exercise Price, Outstanding | $ / shares	2.14
Weighted Avg. Exercise Price, Exercisable | $ / shares	$ 2.20
Outstanding - Aggregate Intrinsic Value | $	$ 673,501
Exercisable - Aggregate Intrinsic Value | $	$ 597,519

XML

Equity (Details 1)	9 Months Ended
	Jan. 31, 2018 $ / shares shares
Options Outstanding	2,555,385
Options Exercisable	2,319,349
Exercise Price Range One [Member]
Exercise Price | $ / shares	$ 1.38
Options Outstanding	1,795,958
Options Outstanding, Weighted Avg. Life Remaining	9 years 5 months 12 days
Options Exercisable	1,614,916
Exercise Price Range Two [Member]
Exercise Price | $ / shares	$ 1.40
Options Outstanding	25,703
Options Outstanding, Weighted Avg. Life Remaining	9 years 10 months 20 days
Options Exercisable	18,167
Exercise Price Range Three [Member]
Exercise Price | $ / shares	$ 1.98
Options Outstanding	5,000
Options Outstanding, Weighted Avg. Life Remaining	9 years 6 months 4 days
Options Exercisable	5,000
Exercise Price Range Four [Member]
Exercise Price | $ / shares	$ 2.00
Options Outstanding	457,402
Options Outstanding, Weighted Avg. Life Remaining	8 years 6 months
Options Exercisable	419,223
Exercise Price Range Five [Member]
Exercise Price | $ / shares	$ 2.87
Options Outstanding	65,334
Options Outstanding, Weighted Avg. Life Remaining	8 years 6 months
Options Exercisable	64,611
Exercise Price Range Six [Member]
Exercise Price | $ / shares	$ 3.00
Options Outstanding	51,001
Options Outstanding, Weighted Avg. Life Remaining	9 years 1 month 28 days
Options Exercisable	42,445
Exercise Price Range Seven [Member]
Exercise Price | $ / shares	$ 3.39
Options Outstanding	12,000
Options Outstanding, Weighted Avg. Life Remaining	9 years 1 month 20 days
Options Exercisable	12,000
Exercise Price Range Eight [Member]
Exercise Price | $ / shares	$ 6.00
Options Outstanding	10,000
Options Outstanding, Weighted Avg. Life Remaining	8 years 3 months
Options Exercisable	10,000
Exercise Price Range Nine [Member]
Exercise Price | $ / shares	$ 12.00
Options Outstanding	132,987
Options Outstanding, Weighted Avg. Life Remaining	6 years 11 months 23 days
Options Exercisable	132,987

XML

Equity (Details 2) - Stock Purchase Warrants [Member]	9 Months Ended
	Jan. 31, 2018 $ / shares
Expected dividends	0.00%
Expected life of warrant	3 years
Minimum
Exercise price	$ 1.75
Expected volatility	160.70%
Risk free interest rate	1.49%
Maximum
Exercise price	$ 2.38
Expected volatility	169.63%
Risk free interest rate	1.73%

XML

Equity (Details 3)	9 Months Ended
	Jan. 31, 2018 $ / shares shares
Weighted Avg. Exercise Price, Granted	$ 1.40
Stock Purchase Warrants [Member]
Number of Warrants, Outstanding and exercisable, Beginning balance | shares	133,333
Number of Warrants, Forfeited | shares	0
Number of Warrants, Granted | shares	2,090,336
Number of Warrants, Outstanding and exercisable, Ending balance | shares	2,223,669
Weighted Avg. Exercise Price, Outstanding and exercisable	$ 50.00
Weighted Avg. Exercise Price, Forfeited	0.00
Weighted Avg. Exercise Price, Granted	2.15
Weighted Avg. Exercise Price, Outstanding and exercisable	$ 5.02
Weighted Avg. Life Remaining, Outstanding and exercisable, beginning	2 years 9 months 29 days
Weighted Avg. Life Remaining, Granted	2 years 6 months 25 days
Weighted Avg. Life Remaining, Outstanding and exercisable, ending	2 years 6 months 25 days

XML

Equity (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Jan. 31, 2018	Jan. 31, 2017	Jan. 31, 2018	Jan. 31, 2017	Apr. 30, 2017
Preferred stock, shares authorized	5,000,000		5,000,000		5,000,000
Preferred stock, par value	$ .00001		$ .00001		$ 0.00001
Preferred stock, shares issued	0		0		0
Preferred stock, shares outstanding	0		0		0
Common stock, shares authorized	100,000,000		100,000,000		100,000,000
Common stock, par value	$ 0.00001		$ 0.00001		$ 0.00001
Common stock, shares issued	17,309,809		17,309,809		15,827,921
Common stock, shares outstanding	17,309,809		17,309,809		15,827,921
Unrecognized stock based compensation expense	$ 703,100		$ 703,100
Unrecognized Share-based Compensation, Period for Recognition			3 years
Aggregate intrinsic value of warrants	$ 0		$ 0		$ 0
Preferred B Shares [Member]
Preferred stock, shares authorized	295,00.		295,00.		29,500
Preferred stock, par value	$ 0.00001		$ 0.00001		$ 0.00001
Preferred stock, shares issued	0		0		0
Preferred stock, shares outstanding	0		0		0
General and Administrative Expense [Member]
Allocated stock based compensation expense	$ 102,425	$ 335,462	$ 811,123	$ 1,850,462

XML

Non-Controlling Interest (Details)	9 Months Ended
	Jan. 31, 2018 USD ($)
Non-controlling interest at April 30, 2017	$ 12,610,470
Acquisition of non-controlling interest	(12,711,893)
Non-controlling interest share of income (losses)	101,423
Non-controlling interest at January 31, 2018	0
Bandolier [Member]
Non-controlling interest at April 30, 2017	(699,873)
Acquisition of non-controlling interest	785,298
Non-controlling interest share of income (losses)	(85,425)
Non-controlling interest at January 31, 2018	0
Fortis [Member]
Non-controlling interest at April 30, 2017	13,310,343
Acquisition of non-controlling interest	(13,497,191)
Non-controlling interest share of income (losses)	186,848
Non-controlling interest at January 31, 2018	$ 0