0001493152-16-013022.txt : 20160831 0001493152-16-013022.hdr.sgml : 20160831 20160831162408 ACCESSION NUMBER: 0001493152-16-013022 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 62 CONFORMED PERIOD OF REPORT: 20160630 FILED AS OF DATE: 20160831 DATE AS OF CHANGE: 20160831 FILER: COMPANY DATA: COMPANY CONFORMED NAME: T-REX OIL, INC. CENTRAL INDEX KEY: 0001287900 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 980422451 STATE OF INCORPORATION: CO FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-51425 FILM NUMBER: 161863599 BUSINESS ADDRESS: STREET 1: 520 ZANG STREET, SUITE 250 CITY: BROOMFIELD STATE: CO ZIP: 80021 BUSINESS PHONE: (720) 502-4483 MAIL ADDRESS: STREET 1: 520 ZANG STREET, SUITE 250 CITY: BROOMFIELD STATE: CO ZIP: 80021 FORMER COMPANY: FORMER CONFORMED NAME: RANCHER ENERGY CORP. DATE OF NAME CHANGE: 20060418 FORMER COMPANY: FORMER CONFORMED NAME: METALEX RESOURCES INC DATE OF NAME CHANGE: 20040420 10-Q 1 form10-q.htm

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 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 June 30, 2016

 

OR

 

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

 

For the transition period from _____________ to _____________.

 

Commission file number: 000-51425

 

 

T-Rex Oil, Inc.

(Exact name of registrant as specified in its charter)

 

Colorado   98-0422451
(State or other jurisdiction of
incorporation or organization)
  (I.R.S. Employer
Identification No.)

 

520 Zang Street, Suite 250

Broomfield, CO 80021

(Address of principal executive offices)

 

(720) 502-4483

(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 (§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 [  ] No [  ]

 

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

 

Large accelerated filer [  ] Accelerated filer [  ]
Non-accelerated filer [  ] Smaller reporting company [X]
(Do not check if a smaller reporting company)  

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [  ] No [X]

 

APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

 

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

Yes [X] No [  ]

 

As of August 19, 2016, T-Rex Oil, Inc. has 16,502,262 shares of $0.001 par value common stock outstanding.

 

 

 

   
  

 

Table of Contents

 

  PART I - FINANCIAL INFORMATION  
     
Item 1. Financial Statements 3
     
  Consolidated Balance Sheet – June 30, 2016 (Unaudited) and Balance Sheet – March 31, 2016 (Audited) 3
     
  Consolidated Statements of Operations (Unaudited) for the Three Months Ended June 30, 2016 and 2015 4
     
  Consolidated Statement of Cash Flows (Unaudited) for the Three Months Ended June 30, 2016 and 2015 5
     
  Consolidated Statement of Changes in Stockholders’ Equity (Unaudited) for the Three Months Ended June 30, 2016 6
     
  Notes to Consolidated Financial Statements (Unaudited) 7
     
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 19
     
Item 3. Quantitative and Qualitative Disclosures About Market Risk 22
     
Item 4. Controls and Procedures 22
     
  PART II - OTHER INFORMATION  
     
Item 1. Legal Proceedings 23
     
Item 1A. Risk Factors 23
     
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 23
     
Item 3. Defaults Upon Senior Securities 24
     
Item 4. Mine Safety Disclosures 24
     
Item 5. Other Information 24
     
Item 6. Exhibits 24
     
SIGNATURES 25

 

 2 
  

 

PART I - FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

T-Rex Oil, Inc. and Subsidiaries

Consolidated Balance Sheets

 

   June 30, 2016   March 31, 2016 
ASSETS          
Current assets          
Cash and cash equivalents  $136,977   $428,204 
Accounts receivable, trade   358,385    132,391 
Loan to affiliate   -    - 
Prepaids   

107,565

    50,370 
Total current assets   602,927    610,965 
           
Property and equipment          
Oil and gas properties, successful efforts method of accounting          
Proved   11,754,817    11,368,626 
Unproved   4,754,620    4,745,917 
Other   404,514    404,514 
Total property and equipment   16,913,951    16,519,057 
Less accumulated depreciation, depletion, amortization and valuation allowance   14,644,958    14,621,873 
Net property and equipment   2,268,993    1,897,184 
Other assets          
Deposits and other assets   402,265    275,658 
Total other assets   402,265    275,658 
Total assets  $3,274,185   $2,783,807 
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
Current liabilities          
Accounts payable and accrued liabilities  $1,006,449   $758,832 
Asset retirement obligations, current   176,587    176,587 
Notes payable   778,161    783,210 
Total current liabilities   1,961,197    1,718,629 
           
Long-term liabilities          
Asset retirement obligations, net of current   1,176,190    1,020,556 
           
Total liabilities   3,137,387    2,739,185 
           
Commitments and Contingencies   -    - 
           
STOCKHOLDERS' EQUITY          
Preferred shares, $0.001 par value, 50,000,000 shares authorized; 409,019 and 409,019 shares issued and outstanding at June 30 2016 and March 31 2016, respectively   409    409 
Common shares, $0.001 par value, 275,000,000 shares authorized; 15,866,099 and 15,480,882 shares issued and outstanding at June 30, 2016 and March 31, 2016, respectively   15,866    15,481 
Additional paid in capital   27,625,852    26,785,705 
Accumulated deficit   (27,505,329)   (26,756,973)
Stockholders' equity   (58,891)   44,622 
Total liabilities and stockholders' equity  $3,274,185   $2,783,807 

 

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

 

 3 
  

 

T-Rex Oil, Inc. and Subsidiaries

Consolidated Statements of Operations

 

   For the Three Months Ended
June 30,
 
   2016   2015 
Revenues          
Oil and gas sales  $320,011   $163,911 
Total revenues   320,011    163,911 
           
Operating expenses:          
Lease operating expense   153,375    73,640 
Production taxes   42,343    5,550 
General and administrative expense   742,181    615,780 
Exploration expense   76,282    (40,622)
Depreciation, depletion, amortization and accretion   45,407    144,648 
Total operating expenses   1,059,588    798,996 
           
Loss from operations   739,577    635,085 
           
Other income (expense)          
Interest expense   (13,665)   (55,962)
Interest income   4,886    94 
           
Total other income   (8,779)   (55,868)
           
Loss before income taxes   (748,356)   (690,953)
           
Income taxes   -    - 
           
Net loss   (748,356)   (690,953)
           
Deemed dividend for beneficial conversion feature of preferred stock   (37,805)   - 
           
Net loss attributable to common shareholders   (786,161)   (690,953)
           
Net loss per common share Basic and diluted  $(0.05)  $(0.05)
           
Weighted average number of common shares   15,671,374    15,345,683 

 

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

 

 4 
  

 

T-Rex Oil, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

 

   For the Three Months Ended
June 30,
 
   2016   2015 
OPERATING ACTIVITIES          
Net loss attributable to common stockholders  $(748,356)  $(690,953)
Adjustments to reconcile net loss to net cash flows used in operating activities:          
Depreciation, depletion, amortization and accretion   45,407    144,648 
Equity based compensation   11,511    21,373 
Changes in:          
Accounts receivable, trade   (225,994)   (21,933)
Prepaids   11,925    4,510 
Accounts payable and accrued liabilities   242,569    27,305 
Net cash (used in) operating activities   (662,938)   (515,050)
INVESTING ACTIVITIES          
Additions to oil and gas properties   (261,583)   (123,877)
Loans to affiliates, net of repayments   -    25,000 
Proceeds from sale of mineral interest   -    30,000 
Additions to other assets   (38)   39,226 
Net cash (used in) investing activities   (261,621)   (29,651)
FINANCING ACTIVITIES          
Sale of shares and exercise of options   433,332    662,500 
Shareholder cash contribution   200,000    - 
Proceeds from notes payable, net of repayments   -    23,079 
Net cash provided by financing activities   633,332    685,579 
NET CHANGE IN CASH   (291,227)   140,878 
CASH, Beginning   428,204    636,542 
CASH, Ending  $136,977   $777,420 
SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION:          
Equity based compensation  $207,200   $207,200 
Beneficial conversion on feature of preferred stock  $37,805   $- 
Deemed dividend for beneficial conversion feature of preferred stock  $(37,805)  $- 
Interest paid  $74,883   $30,697 
Income taxes paid  $-   $- 

 

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

 

 5 
  

 

T-Rex Oil, Inc. and Subsidiaries

Consolidated Statement of Changes in Stockholders’ Equity

 

   Preferred Shares   Common Shares   Additional       Total 
   $0.001 Par Value   $0.001 Par Value   Paid-in   Accumulated   Stockholders’ 
   Shares   Amount   Shares   Amount   Capital   (Deficit)   Equity 
BALANCES, April 1, 2015   409,019   $409    15,480,882   $15,481   $26,785,705   $(26,756,973)  $10,042,717 
Sale of shares for cash at $0.75 per share   -    -    99,378    99    74,514    -    74,613 
Sale of shares for cash at $1.50 per share   -    -    235,839    236    353,483    -    353,719 
Shareholder cash contribution   -    -    -    -    200,000    -    200,000 
Issuance of shares for cash - exercise of options   -    -    50,000    50    4,950    -    5,000 
Equity based compensation   -    -    -    -    207,200    -    207,200 
Beneficial conversion feature of preferred stock                      37,805    -    37,805 
Deemed dividend for preferred stock’s                                   
beneficial conversion feature   -    -    -    -    (37,805)   -    (37,805)
Net loss for the period   -    -    -    -    -    (748,356)   (748,356)
BALANCES, June 30, 2016   409,019   $409    15,866,099   $15,866   $27,625,852   $(27,505,329)  $10,134,893 

 

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

 

 6 
  

 

T-REX OIL, INC. AND SUBSIDIARIES

Notes To The Consolidated Financial Statements

June 30, 2016

(Unaudited)

 

Note 1 – Organization and History

 

T-Rex Oil, Inc. (the “Company”) was incorporated in Colorado on September 2, 2014. Rancher Energy Corp was incorporated in Nevada on February 2, 2004. Effective October 20, 2014, T-Rex Oil, Inc. and Rancher Energy Corp were merged under the laws of the State of Colorado and T-Rex Oil, Inc. became the surviving entity.

 

The Company is currently engaged in the acquisition, exploration, and development of oil and gas prospects in the Rocky Mountain region of Wyoming.

 

On February 24, 2015, the Company entered into a Share Exchange Agreement with Western Interior Oil & Gas Corporation, a Wyoming private oil and natural gas company (“Western Interior”) and the shareholders of Western Interior. Under the Share Exchange Agreement the Company exchanged 7,465,168 shares of its restricted common stock for 170,878 shares of the issued and outstanding common stock of Western Interior thereby owning 83% of Western Interior. The acquisition was closed on March 27, 2014 and became effective March 31, 2015. On March 31, 2015, the Company entered into an amendment to the Share Exchange Agreement whereby the Company assumed certain repurchase agreements between Schwaben Kapital GmbH, Western Interior and its dissident shareholders and as a result acquired the remaining 17% of Western Interior. As part of these agreements, the Company assumed certain promissory notes issued to the dissenting shareholders in the total amount of $1,770,047 that were secured by Western Interior assets. As a result, Western Interior became a wholly-owned subsidiary of the Company. See Note 2 – Summary of Significant Accounting Policies – Principles of Consolidation.

 

On January 15, 2016, T-Rex Oil LLC #3 entered into a Purchase and Sale Agreement with Blue Tip Energy Wyoming, Inc. and Cole Creek Recompletions LLC and acquired approximately 82% of the working interest in certain leases located in the state of Wyoming known as the Cole Creek properties in exchange for $1,200,000 in cash plus the assumption of liabilities in the amount of $833,382 for a total purchase price of $2,033,382. On April 20, 2016, the T-Rex Oil LLC #3 entered into a Purchase and Sale Agreement with Black Hills Exploration & Production, Inc. and acquired the remaining approximately 18% working interest in the Cole Creek properties in exchange for $250,000 in cash plus the assumption of liabilities in the amount of $182,938 for a total purchase price of $432,938. These leases are proved developed and undeveloped leaseholds and include producing crude oil wells totaling approximately 13,328 gross acres. See Note 2 – Principles of Consolidation.

 

Note 2 – Summary of Significant Accounting Policies

 

Principles of Consolidation

 

The accompanying consolidated balance sheets at June 30, 2016 and 2015 and the consolidated statement of operations and cash flows for the three months ended June 30, 2016 include the accounts of Terex Energy Corporation, T-Rex Oil, Inc., Western Interior Oil and Gas Corporation and T-Rex Oil LLC #3. All intercompany balances have been eliminated during consolidation.

 

The Company owns a 14.29% equity interest in T-Rex Oil, LLC #3, the remaining 85.71% is held by a director and shareholder of the Company. The Company has identified T-Rex Oil LLC #3 as a Variable Interest Entity (VIE). We hold current rights that gives us the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance convened with provisions that give us the right to receive potentially significant benefits. As a result, we consolidate the accounts of T-Rex Oil, LLC #3, eliminating all intercompany balances during consolidation.

 

We continuously evaluate whether we have a controlling financial interest in T-Rex Oil LLC#3. Where we are a general partner, we consider substantive removal rights held by other partners in determining if we hold a controlling financial interest. We reevaluate whether we have a controlling financial interest in these entities when our voting or substantive participating rights change.

 

Use of Estimates in the Preparation of Consolidated Financial Statements

 

The preparation of consolidated financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Significant estimates include the fair value of assets and liabilities, oil and natural gas reserves, income taxes and the valuation allowances related to deferred tax assets, asset retirement obligations and contingencies.

 

Cash and Cash Equivalents

 

The Company considers all liquid investments purchased with an initial maturity of three months or less to be cash equivalents. Cash and cash equivalents include demand deposits and money market funds carried at cost which approximates fair value. The Company maintains its cash in institutions insured by the Federal Deposit Insurance Corporation (“FDIC”), although such deposits are in excess of the insurance coverage. At June 30, 2016, the Company did not have cash deposits in excess of FDIC insured limits.

 

 7 
  

 

T-REX OIL, INC. AND SUBSIDIARIES

Notes To The Consolidated Financial Statements

June 30, 2016

(Unaudited)

 

Concentration of Credit Risk

 

The Company’s producing properties are primarily located in Wyoming and the oil and gas production is sold to various purchasers based on market index prices. The risk of non-payment by these purchasers is considered minimal and the Company does not generally obtain collateral for sales. The Company continually monitors the credit standing of the primary purchasers.

 

During the three months ended June 30, 2016 and 2015, one purchaser accounted for 100% and 88% of total revenues, respectively.

 

Accounts Receivable

 

Accounts receivable are stated at their cost less any allowance for doubtful accounts. The allowance for doubtful accounts is based on the management’s assessment of the collectability of specific customer accounts and the aging of the accounts receivable. If there is deterioration in a major customer’s creditworthiness or if actual defaults are higher than the historical experience, the management’s estimates of the recoverability of amounts due to the Company could be adversely affected. Based on the management’s assessment, there is no reserve recorded at June 30, 2016 and 2015.

 

Oil and Gas Producing Activities

 

The Company uses the successful efforts method of accounting for oil and gas activities. Under this method, the costs of productive exploratory wells, all development wells, related asset retirement obligation assets, and productive leases are capitalized and amortized, principally by field, on a units-of-production basis over the life of the remaining proved reserves. Exploration costs, including personnel costs, geological and geophysical expenses, and delay rentals for oil and gas leases are charged to expense as incurred. Exploratory drilling costs are initially capitalized, but charged to expense if and when the well is determined not to have found reserves in commercial quantities. The sale of a partial interest in a proved property is accounted for as a cost recovery, and no gain or loss is recognized as long as this treatment does not significantly affect the units-of-production amortization rate. A gain or loss is recognized for all other sales of producing properties. There were capitalized costs of $11,754,817 and $10,281,659 at June 30, 2016 and 2015, respectively.

 

Unproved oil and gas properties are assessed annually to determine whether they have been impaired by the drilling of dry holes on or near the related acreage or other circumstances, which may indicate a decline in value. When impairment occurs, a loss is recognized. When leases for unproved properties expire, the costs thereof, net of any related allowance for impairment, is removed from the accounts and charged to expense. During the three months ended June 30, 2016 and 2015, there was no impairment to unproved properties. The sale of a partial interest in an unproved property is accounted for as a recovery of cost when substantial uncertainty exists as to the ultimate recovery of the cost applicable to the interest retained. A gain on the sale is recognized to the extent that the sales price exceeds the carrying amount of the unproved property. A gain or loss is recognized for all other sales of unproved properties. There were capitalized costs of $4,754,620 and $4,745,917 at June 30, 2016 and March 31, 2016, respectively.

 

Costs associated with development wells that are unevaluated or are waiting on access to transportation or processing facilities are reclassified into developmental wells-in-progress (“WIP”). These costs are not put into a depletable field basis until the wells are fully evaluated or access is gained to transportation and processing facilities. Costs associated with WIP are included in the cash flows from investing as part of investment in oil and gas properties. At June 30, 2016 and March 31, 2016, no capitalized development costs were included in WIP.

 

Depreciation, depletion and amortization of proved oil and gas properties is calculated using the units-of-production method based on proved reserves and estimated salvage values. For the three months ended June 30, 2016 and 2015, the Company recorded depreciation, depletion and amortization expense on oil and gas properties in the amount of $35,123 and $127,046, respectively.

 

 8 
  

 

T-REX OIL, INC. AND SUBSIDIARIES

Notes To The Consolidated Financial Statements

June 30, 2016

(Unaudited)

 

The Company reviews its proved oil and natural gas properties for impairment whenever events and circumstances indicate that a decline in the recoverability of its carrying value may have occurred. It estimates the undiscounted future net cash flows of its oil and natural gas properties and compares such undiscounted future cash flows to the carrying amount of the oil and natural gas properties to determine if the carrying amount is recoverable. If the carrying amount exceeds the estimated undiscounted future cash flows, the Company will adjust the carrying amount of the oil and natural gas properties to fair value. There was no impairment to prove properties for the three months ended June 30, 2016 and 2015, respectively.

 

Other Property and Equipment

 

Other property and equipment, such as computer hardware and software, are recorded at cost. Costs of renewals and improvements that substantially extend the useful lives of the assets are capitalized. Maintenance and repair costs are expensed when incurred. When other property and equipment is sold or retired, the capitalized costs and related accumulated depreciation are removed from their respective accounts. Depreciation expense of other property and equipment for the three months ended June 30, 2016 and 2015 was $10,284 and $9,594, respectively.

 

Asset Retirement Obligations

 

The Company records estimated future asset retirement obligations (“ARO”) related to its oil and gas properties. The Company records the estimated fair value of a liability for ARO in the period in which it is incurred with a corresponding increase in the carrying amount of the related long-lived asset. The increased carrying value is depleted using the units-of-production method, and the discounted liability is increased through accretion over the remaining life of the respective oil and gas properties.

 

The estimated liability is based on historical industry experience in abandoning wells, including estimated economic lives, external estimates as to the cost to abandon the wells in the future, and federal and state regulatory requirements. The Company’s liability is discounted using management’s best estimate of its credit-adjusted, risk-free rate. Revisions to the liability could occur due to changes in estimated abandonment costs, changes in well economic lives, or if federal or state regulators enact new requirements regarding the abandonment of wells.

 

   For the Three Months Ended 
   June 30, 
   2016   2015 
ARO - beginning of period  $1,197,143   $459,294 
Additions   133,311    - 
Deletions   -    (15,190)
Accretion expense   22,323    15,887 
           
    1,352,777    459,991 
           
Less current portion   176,587    169,126 
           
ARO - end of period  $1,176,190   $290,865 

 

Impairment of Long-Lived Assets

 

In accordance with authoritative guidance on accounting for the impairment or disposal of long-lived assets, as set forth in Topic 360 of the ASC, the Company assesses the recoverability of the carrying value of its non-oil and gas long-lived assets when events occur that indicate an impairment in value may exist. An impairment loss is indicated if the sum of the expected undiscounted future net cash flows is less than the carrying amount of the assets. If this occurs, an impairment loss is recognized for the amount by which the carrying amount of the assets exceeds the estimated fair value of the assets.

 

 9 
  

 

T-REX OIL, INC. AND SUBSIDIARIES

Notes To The Consolidated Financial Statements

June 30, 2016

(Unaudited)

 

Revenue Recognition

 

The Company recognizes revenue when it is realized or realizable and earned. Revenue is realized or realizable and earned when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered to the customer, the price to the buyer is fixed or determinable and collectability is reasonably assured. For goods, this is the point at which title and risk of loss is transferred and when payment has either been received or collection is reasonably assured. Revenues for services are recorded when the services have been provided. Revenue that does not meet these criteria is deferred until the criteria are met.

 

Other Comprehensive Loss

 

The Company has no material components of other comprehensive loss and accordingly, net loss is equal to comprehensive loss for the period.

 

Income Taxes

 

The Company uses the liability method of accounting for income taxes under which deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the accounting bases and the tax bases of the Company’s assets and liabilities. The deferred tax assets and liabilities are computed using enacted tax rates in effect for the year in which the temporary differences are expected to reverse.

 

The Company’s deferred income taxes include certain future tax benefits. The Company records a valuation allowance against any portion of those deferred income tax assets when it believes, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred income tax asset will not be realized.

 

The Company has adopted ASC guidance regarding accounting for uncertainty in income taxes. This guidance clarifies the accounting for income taxes by prescribing the minimum recognition threshold an income tax position is required to meet before being recognized in the consolidated financial statements and applies to all income tax positions. Each income tax position is assessed using a two-step process. A determination is first made as to whether it is more likely than not that the income tax position will be sustained, based upon technical merits, upon examination by the taxing authorities. If the income tax position is expected to meet the more likely than not criteria, the benefit recorded in the consolidated financial statements equals the largest amount that is greater than 50% likely to be realized upon its ultimate settlement. At June 30, 2016, there were no uncertain tax positions that required accrual.

 

Business Combination

 

The Company accounts for acquisitions in accordance with guidance found in ASC 805, Business Combinations. The guidance requires consideration given, including contingent consideration, assets acquired and liabilities assumed to be valued at their fair values at the date of acquisition. The guidance further provides that acquisition costs will generally be expenses as incurred and changes in deferred tax asset valuations and income tax uncertainties after the acquisition date generally will affect income tax expense.

 

ASC 805 requires that any excess of purchase price over the fair value of assets acquired, including identifiable intangibles and liabilities assumed be recognized as goodwill and any excess of fair value of acquired net assets, including identifiable intangible assets over the acquisition consideration results in a gain from bargain purchase. Prior to recording a gain, the acquiring entity must reassess whether ass acquired assets and assumed liabilities have been identified and recognized and perform re-measurements to verify that the consideration paid, assets acquired and liabilities assumed have been properly valued.

 

 10 
  

 

T-REX OIL, INC. AND SUBSIDIARIES

Notes To The Consolidated Financial Statements

June 30, 2016

(Unaudited)

 

Net Loss per Share

 

Basic net loss per common share of stock is calculated by dividing net loss available to common stockholders by the weighted-average number of common shares outstanding during each period.

 

Diluted net loss per common share is calculated by dividing net loss by the weighted-average number of common shares outstanding, including the effect of other dilutive securities. The Company’s potentially dilutive securities consist of in-the-money outstanding options and warrants to purchase the Company’s common stock. Diluted net loss per common share does not give effect to dilutive securities as their effect would be anti-dilutive.

 

The treasury stock method is used to measure the dilutive impact of stock options and warrants. The following table details the weighted-average dilutive and anti-dilutive securities related to stock options and warrants for the periods presented:

 

   For the Three Months Ended 
   June 30, 
   2016   2015 
Dilutive   -    - 
Anti Dilutive   2,644,462    1,878,088 

 

Equity Based Payments

 

The Company recognizes compensation cost for equity based awards based on estimated fair value of the award and records capitalized cost or compensation expense over the requisite service period. See Note 9 – Equity Based Payments.

 

Major Customers

 

During the three months ended June 30, 2016 and 2015, one purchaser accounted for 100% and 88% of total revenues, respectively.

 

Beneficial Conversion Feature and Deemed Dividend Related to Series A Shares

 

Pursuant to ASC 470-20, when the $558,171 of convertible Series A Shares of preferred stock were issued at a discount from the if-converted $682,989 fair value as of the issuance date, the Company recognized this difference between the fair value per share of its common stock and the conversion price, multiplied by the number of shares issuable upon conversion. This total Beneficial Conversion Feature of $124,818 will be recorded as additional paid-in-capital for common shares. The offsetting amount will be amortizable over the period from the issue date to the first conversion date or 9 months. Therefore, since the 409,019 Series A Shares of preferred stock are convertible between July and December of 2016, a deemed dividend of $37,805 to the Series A Shares of preferred stock has been recorded during the three months ended June 30, 2016 in its statement of operations and cash flows. As the Company is in an accumulated deficit position, the deemed dividend of $37,805 has been charged against additional paid-in-capital for common shares as there being no retained earnings from which to declare a dividend.

 

Off-Balance Sheet Arrangements

 

As part of its ongoing business, the Company has not participated in transactions that generate relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities (SPEs), which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. From its incorporation on February 11, 2014 through June 30, 2016, the Company has not been involved in any unconsolidated SPE transactions.

 

 11 
  

 

T-REX OIL, INC. AND SUBSIDIARIES

Notes To The Consolidated Financial Statements

June 30, 2016

(Unaudited)

 

Recent Accounting Pronouncements

 

In June 2014, the FASB issued ASU No. 2014-10, Development Stage Entities (Topic915) – Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation. This standard update is to improve financial reporting by reducing the cost and complexity associated with the incremental reporting requirements for development stage entities, and as a result removes all incremental financial reporting requirements. This standard update also eliminates an exception provided to development stage entities in Topic 810, Consolidation, for determining whether an entity is a variable interest entity on the basis of the amount of the investment equity that is at risk. ASU 2014-10 is effective for annual reporting periods beginning after December 15, 2016, and interim reporting periods beginning after December 15, 2017. Entities are allowed to apply the guidance early for any annual reporting period or interim period for which the entity’s financial statements have not yet been issued or made available for issuance. The Company adopted these standards and they did not have a material impact on the Company’s consolidated financial statements.

 

In August 2014, the FASB issued Update No. 2014-15 - Presentation of Financial Statements – Going Concern that requires management to evaluate whether there are conditions or events that raise substantial doubt about an entity’s ability to continue as a going concern within one year after the date that the entity’s financial statements are issued, or within one year after the date that the entity’s financial statements are available to be issued, and to provide disclosures when certain criteria are met. This guidance is effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company is currently evaluating the provisions of this guidance and assessing its impact, but does not currently believe it will have a material effect on the Company’s consolidated financial statements or disclosures.

 

In November 2015, the FASB issued ASU No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes ASU 2015-17”). ASU 2015-17 is part of the FASB’s initiative to reduce the complexity in accounting standards. ASU 2015-17 requires entities to present deferred tax assets and deferred tax liabilities as non-current in a classified balance sheet. The amendments in this ASU simplify current guidance in ASC 740-10-45-4 that requires separate presentation of deferred tax assets and liabilities as current and non-current in a classified balance sheet based on the classification of the related asset or liability. ASU 2015-17 is effective for public companies for annual periods beginning after December 15, 2017 and interim periods beginning after December 15, 2018. Earlier application is permitted as of the beginning of an interim or annual reporting period. The Company adopted this ASU as of March 31, 2016. The adoption of this ASU did not have a material impact on our consolidated balance sheets as of March 31, 2016 and 2015.

 

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). ASU 2016-02 requires lessees to recognize all leases, including operating leases, on the balance sheet as a lease asset or lease liability, unless the lease is a short-term lease. ASU 2016-02 also requires additional disclosures regarding leasing arrangements. ASU 2016-02 is effective for interim periods and fiscal years beginning after December 15, 2018, and early application is permitted. The Company is in the process of determining the method of adoption and the impact this guidance will have on its financial condition, results of operations and cash flows.

 

There were other accounting standards and interpretations issued during the three months ended June 30, 2016, none of which are expected to have a material impact on the Company’s financial position, operations or cash flows.

 

Subsequent Events

 

The Company evaluates events and transactions after the balance sheet date but before the financial statements are issued.

 

Note 3 – Going Concern and Managements’ Plan

 

The Company’s consolidated financial statements for the three months ended June 30, 2016 and 2015 have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The Company reported a net loss of $786,161 and $690,953 for the three months ended June 30, 2016 and 2015, respectively, and an accumulated deficit of $27,505,329 as of June 30, 2016. At June 30, 2016, the Company had a working capital deficit of $(1,427,390).

 

 12 
  

 

T-REX OIL, INC. AND SUBSIDIARIES

Notes To The Consolidated Financial Statements

June 30, 2016

(Unaudited)

 

The future success of the Company is dependent on its ability to attract additional capital and ultimately, upon its ability to develop future profitable operations. There can be no assurance that the Company will be successful in obtaining such financing, or that it will attain positive cash flow from operations. Management believes that actions presently being taken to revise the Company’s operating and financial requirements provide the opportunity for the Company to continue as a going concern.

 

Note 4 – Fair Value Measurements

 

The Company applies the authoritative guidance applicable to all financial assets and liabilities required to be measured and reported on a fair value basis, as well as to non-financial assets and liabilities measured at fair value on a non-recurring basis, including impairments of proved oil and gas properties and other long-lived assets and AROs initially measured at fair value. The fair value of an asset or liability is the amount that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. The Company maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. Observable inputs are inputs that market participants would use in valuing the asset or liability based on market data obtained from sources independent of the Company. Unobservable input are inputs that reflect the Company’s assumptions of what market participants would use in valuing the asset or liability based on the information available in the circumstances.

 

Financial and non-financial assets and liabilities are classified within the valuation hierarchy based upon the lowest level of input that is significant to the fair value measurement. The Company’s policy is to recognize transfers in and out of the fair value hierarchy as of the end of the reporting period in which the event or change in circumstances caused the transfer. The Company has consistently applied the valuation techniques discussed below in all periods presented. The hierarchy is organized into three levels based on the reliability of the inputs as follows:

 

Level 1: Quoted prices in active markets for identical assets or liabilities; or

 

Level 2: Quoted prices in active markets for similar assets and liabilities and inputs, quoted prices for identical or similar assets or liabilities in markets that are not active and model-derived valuations whose inputs or significant value drivers are observable; or

 

Level 3: Unobservable pricing inputs in which there is little or no market data, which requires the reporting entity to develop its own assumptions.

 

The following table presents the Company’s non-financial assets and liabilities that were measured at fair value on a non-recurring basis at June 30, 2016 by level within the fair value hierarchy:

 

Description  Level 1   Level 2   Level 3   Total 
Assets                    
Oil and gas properties  $-   $930,238   $-   $930,238 

 

Effective January 1, 2016, the Company acquired approximately 82% of the working interest in certain leases located in the state of Wyoming known as the Cole Creek properties and recorded the oil and gas properties at a fair value of $2,033,382. Thus, due to the significance of this event, the oil and gas properties were tested under ASC 360 as to its recoverability. Therefore, the oil and gas properties were recorded at fair value if impairment is required under the accounting guidance. The Company uses Level 2 inputs and the income valuation techniques of undiscounted oil and gas future net cash flows to measure the fair value of the oil and gas properties and thus the model forecast including discount rates and commodity prices were selected by the independent engineers of Netherland, Sewell & Associates, Inc. As such, there was an impairment to the oil and gas properties during the year ended March 31, 2016, the amount of $1,103,144.

 

 13 
  

 

T-REX OIL, INC. AND SUBSIDIARIES

Notes To The Consolidated Financial Statements

June 30, 2016

(Unaudited)

 

The following table presents the Company’s non-financial assets and liabilities that were measured at fair value on a non-recurring basis at March 31, 2016 by level within the fair value hierarchy:

 

Description  Level 1   Level 2   Level 3   Total 
Assets                    
Oil and gas properties  $-   $930,238   $-   $930,238 

 

Fair value in the initial recognition of other equipment is determined based on the quoted fair value of the vehicle using inputs from valuation techniques used by industry participants. Accordingly, the fair value is based on observable pricing inputs and is considered a Level 2 value measurement. During the three months ended June 30, 2016 and 2015 there was no impairment.

 

Note 5 – Significant Acquisition

 

Effective January 1, 2016, the Company acquired approximately 82% of the working interest in certain leases located in the state of Wyoming known as the Cole Creek properties.

 

The following table presents the allocation of the consideration given to the assets acquired and liabilities assumed, based on their fair values at January 1, 2016:

 

 

Consideration Given      
Cash   $ 1,200,000  
         
Total purchase price   $ 1,200,000  
         
Allocation of Consideration Given      
Oil and gas properties Proved   $ 2,033,382  
         
Total assets     2,033,382  
         
Current liabilities     111,522  
Long-term liabilities     721,860  
         
Total liabilities     833,382  
         
Net assets acquired   $ 1,200,000  

 

Effective April 29, 2016, the Company acquired the remaining 17% of the working interest in the leases known as the Cole Creek properties.

 

The following table presents the allocation of the consideration given to the assets acquired and the liabilities assumed,

 

Consideration Given     
Cash  $250,000 
      
Total purchase price  $250,000 
      
Allocation of Consideration Given     
Oil and gas properties     
Proved  $383,311 
      
Total assets   383,311 
      
Current liabilities   - 
Long-term liabilities   133,311 
      
Total liabilities   133,311 
      
Net assets acquired  $250,000 

 

As a result the Company owns approximately 100% of the WI in the Cole Creek properties.

 

Note 6 – Debt

 

Promissory Notes

 

The Company during the year ended March 31, 2016 paid $341,405 in principal towards the repayment of promissory notes relative to the repurchase of 18,717 shares of Western Interior common stock owned by dissident shareholders as part of agreements effective March 31, 2015 to repurchase a total of 33,085 shares of Western Interior common stock. The Company at June 30, 2016 owes a balance in the amount of $488,298 on one of the promissory notes plus accrued interest of $17,043.60 with the remaining three promissory notes being paid in full.

 

On August 1, 2015, the Company, relative to the repurchase by the Company on March 31, 2015 of the remaining 14,368 shares of Western Interior common stock entered into an agreement with the note holder to settle the amount owed under the promissory note. As such, the parties agreed the amount owed on such promissory note by the Company would be reduced from $768,715 to $393,795 and the difference of $374,920 be considered a reduction in the purchase price by the Company of the 14,368 shares of Western Interior common stock. In addition, the $393,795 was paid in full effective August 1, 2015 by the transfer to the note holder of certain oil and gas properties owned by Western Interior which resulted in the Company reporting a gain on disposal of assets in the amount of $44,100.

 

On January 14, 2016, the Company borrowed $50,000 each from two directors in exchange for secured promissory notes including interest at the rate of 5% per annum with accrued and unpaid interest and principal due at September 30, 2016. The promissory notes are collateralized by certain oil and gas properties located in the State of Wyoming. Holders may, at any time prior to payment of the promissory notes elect to convert all or any portion of the promissory notes, including accrued interest, into common shares of the Company at a price determined by the average ten consecutive day trading closing price less 30%. The Company at June 30, 2016 owes $100,000 on the two promissory notes plus accrued interest of $2,298.50.

 

Line-of-Credit

 

The Company has a line-of-credit with a bank in the amount of $350,000 collateralized by certain oil and gas properties of the Company. The line-of-credit matures in November 2016. Annual interest is at prime plus 2.50% with a floor of 7%). The Company owes $130,52 on the line-of-credit at June 30, 2016.

 

Installment Notes

 

The Company during the year ended March 31, 2016, borrowed $34,374 from unrelated parties to finance their insurance policies. The unsecured notes are repaid during the year ended March at $3,437 per month including interest at the rate of 5.81% per annum. The Company owed $9,810.94 at June 30, 2016, respectively.

 

Note 7 – Stockholders’ Equity

 

The Company’s capital stock at June 30, 2016 consists of 325,000,000 authorized shares of which 50,000,000 shares are $0.001 par value preferred stock and 275,000,000 shares are $0.001 par value common stock.

 

 14 
  

 

T-REX OIL, INC. AND SUBSIDIARIES

Notes To The Consolidated Financial Statements

June 30, 2016

(Unaudited)

 

Preferred Shares

 

At June 30, 2016 and 2015, there are a total of 409,019 and 0 shares of preferred stock issued and outstanding, respectively.

 

On October 28, 2015, the Company filed an Amendment to its Articles of Incorporation to designate a class of preferred stock as the Series A Convertible Preferred Stock.

 

The Amendment sets aside 5,000,000 shares of the authorized 50,000,000 shares of the Company’s $0.001 par value preferred stock as the Series A Convertible Preferred Stock (“the Series A Shares.”) The Series A Shares are convertible at the option of the Holder into common shares of the Company’s stock 9 months after the date of issuance. Further, the Series A Shares have a conversion price based upon 80% of the 10 day average of the Company’s closing market price at the time of conversion.

 

In October 2015, the Company commenced a private placement financing of $7,000,000 in Units, a Unit consisting of one share of its Series A Shares and an Unit Warrant. The Unit Warrant has an exercise price of $3.00 per share and a term of 3 years. The Unit Warrant is exercisable 9 months after issuance and is callable by the Company upon the Company’s common stock closing at a market price of $5.00 or above for a period of 10 days.

 

Pursuant to ASC 470-20, when the $558,171 of convertible Series A Shares of preferred stock were issued at a discount from the if-converted $682,989 fair value as of the issuance date, the Company recognized this difference between the fair value per share of its common stock and the conversion price, multiplied by the number of shares issuable upon conversion. This total Beneficial Conversion Feature of $124,818 will be recorded as additional paid-in-capital for common shares. The offsetting amount will be amortizable over the period from the issue date to the first conversion date or 9 months. Therefore, since the 409,019 Series A Shares of preferred stock are convertible between July and December of 2016, a deemed dividend of $37,805 to the Series A Shares of preferred stock has been recorded during the three months ended June 30, 2016 in its statement of operations and cash flows. As the Company is in an accumulated deficit position, the deemed dividend of $37,805 has been charged against additional paid-in-capital for common shares as there being no retained earnings from which to declare a dividend.

 

During the year ended March 31, 2016, the Company received $818,038, including cash of $793,037, in exchange for the issuance of 409,019 shares of its Series A Preferred Stock and Unit Warrants exercisable for 419,019 shares of common stock.

 

We apply the guidance enumerated in ASC 480 “Distinguishing Liabilities from Equity” when determining the classification and measurement of preferred shares. Preferred shares subject to mandatory redemption (if any) are classified as liability instruments and are measured at fair value. We classify conditionally redeemable preferred shares (if any), which includes preferred shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control, as equity. At all other times, we classified our preferred shares in stockholders’ equity.

 

We have applied the guidance of ASC 470 “Debt” in accounting for the unit warrants and as such have valued the Unit Warrants using the Black-Scholes option pricing model. The option-pricing model requires a number of assumptions, of which the most significant are the stock price at the valuation date that was at a range of $1.10 to $1.50 per share as well as the following assumptions:

 

Volatility   82% - 134%
Expected Option/Warrant Term   3 years 
Risk-free interest rate   .25%
Expected dividend yield   0.00%

 

The expected term of the Unit Warrants granted were estimated to be the contractual term. The expected volatility was based on an average of the volatility disclosed based upon comparable companies who had similar expected option and warrant terms. The risk-free rate was based on the one-year U.S. Treasury bond rate.

 

As a result, the Unit Warrants exercisable for 409,019 shares of our restricted common stock were valued at $135,049 and as such $67,830 was credited to additional paid in capital during the year ended March 31, 2016.

 

 15 
  

 

T-REX OIL, INC. AND SUBSIDIARIES

Notes To The Consolidated Financial Statements

June 30, 2016

(Unaudited)

 

Common Shares

 

At June 30, 2016 and March 31, 2016, there are a total of 15,866,099 and 15,480,882 shares of common stock issued and outstanding, respectively.

 

During the three months ended June 30, 2016, the Company as part of a private placement sold 99,378 shares of its restricted common stock for $74,613 in cash and 235,839 shares for $353,719 in cash.

 

During the three months ended June 30, 2016, the Company issued 50,000 shares of common stock in connection with the cash exercise of options at an exercise price $0.10 per share.

 

Additional Paid-in Capital

 

During the year ended March 31, 2016, as the Company is in an accumulated deficit position, the deemed dividend in the amount of $37,805 was charged against additional paid-in-capital as there being no retained earnings from which to declare a dividend.

 

During the year ended June 30, 2016, the Company realized additional paid in capital relative to the fair value of equity based payments in the amount of $207,200 of which $11,520 was expensed and $195,680 was capitalized. See Note 9 – Equity Based Payments.

 

Note 8 – Equity Based Payments

 

The Company accounts for equity based payment accruals under authoritative guidance as set forth in the Topics of the ASC. The guidance requires all equity based payments to employees and non-employees, including grants of employee and non-employee stock options and warrants, to be recognized in the consolidated financial statements based at their fair values.

 

The Black-Scholes option-pricing model is used to estimate the option and warrant fair values. The option-pricing model requires a number of assumptions, of which the most significant are the stock price at the valuation date that ranged from $0.01 to $3.50 per share as well as the following assumptions:

 

Volatility   82.00% - 134.00%
Expected Option/Warrant Term   9 months - 3 years 
Risk-free interest rate   .12% - .25%
Expected dividend yield   0.00%

 

The expected term of the options and warrants granted were estimated to be the contractual term. The expected volatility was based on an average of the volatility disclosed based upon comparable companies who had similar expected option and warrant terms. The risk-free rate was based on the one-year U.S. Treasury bond rate.

 

Warrant

 

During May 2016, the Company issued a warrant exercisable for 350,000 shares of the Company’s common stock in exchange for business development services pursuant to a Consulting Agreement. The warrant has a term of 3 years and an exercise price of $2.00 per share.

 

Using the Black-Scholes option-pricing model, the warrant was found to have a fair value of $207,200. Assumptions used in the pricing were:

 

Volatility   89.00%
Expected Option/Warrant Term   1 year
Risk-free interest rate   .25%
Expected dividend yield   0.00%

 

As the warrant was issued for services to be rendered under a 3 year Consulting Agreement, the Company is amortizing the warrant over the life of the Consulting Agreement.

 

2014 Stock Incentive Plan

 

Effective October 1, 2014, the Company’s 2014 Stock Option and Award Plan (the “2014 Stock Incentive Plan”) was approved by its Board of Directors. Under the 2014 Stock Incentive Plan, the Board of Directors may grant options or purchase rights to purchase common stock to officers, employees, and other persons who provide services to the Company or any related company. The participants to whom awards are granted, the type of awards granted, the number of shares covered for each award, and the purchase price, conditions and other terms of each award are determined by the Board of Directors, except that the term of the options shall not exceed 10 years. A total of 2 million shares of the Company’s common stock are subject to the 2014 Stock Incentive Plan. The shares issued for the 2014 Stock Incentive Plan may be either treasury or authorized and unissued shares.

 

 16 
  

 

T-REX OIL, INC. AND SUBSIDIARIES

Notes To The Consolidated Financial Statements

June 30, 2016

(Unaudited)

 

The following table summarizes the non-qualified stock option and warrant activity at June 30, 2016:

 

   2016 
   Number of   Weighted 
   Options/   Average 
    Warrants    Exercise Price 
Outstanding at          
beginning of year          
Options   1,127,750   $0.039 
Warrants   1,351,877   $1.462 
           
Granted          
Options   -   $- 
Warrants   350,000   $2.000 
           
Exercised          
Options   (50,000)  $0.100 
Warrants   -   $- 
           
Cancelled          
Options   -   $- 
Warrants   -   $- 
           
Outstanding at June 30,          
Options   1,077,750   $0.316 
Warrants   1,701,877   $1.980 
           
Exercisable at June 30,          
Options   1,077,750   $0.316 
Warrants   1,701,877   $1.980 

 

Weighted average      Aggregate  
remaining contractual      Intrinsic  
life  Life   Value  
Options   0.85   $1,115,084  
Warrants   1.70   $511,500  

 

The aggregate intrinsic value of outstanding securities is the amount by which the fair value of underlying (common) shares exceed the amount paid for and the exercise price of the options and warrants issued and outstanding.

 

Note 9 – Commitments and Contingencies

 

Operating Lease

 

The Company leases an office space in Colorado at the rate of $4,572 per month and the lease expires in August 2017. In addition, the Company leases an office space in Wyoming at the rate of $5,838 per month and the lease expires in June 2019. In addition, the Company leases a corporate apartment at a rate of $1,990 per month and the lease will expire May 2017. Total rent expense under these leases for June 30, 2016 is $35,527.

 

 17 
  

 

T-REX OIL, INC. AND SUBSIDIARIES

Notes To The Consolidated Financial Statements

June 30, 2016

(Unaudited)

 

The following is a schedule of minimum future rental annual payments under the operating lease for the stated fiscal year ends:

 

3/31/2017    147,333 
3/31/2018    83,111 
3/31/2019    62,940 
3/31/2020    15,735 
    $309,119 

 

Employment Agreements

 

In August 2014, Terex entered into an Employment Agreement for services with its Chief Executive Officer, President and director. The Employment Agreement has a term of 3 years and provides for an annual compensation of $204,000 and a monthly car allowance of $600. It also provides for an annual bonus as determined by the board of directors.

 

In November 2014, Terex entered into an Employment Agreement for services with its Vice President of Operations and director. The Employment Agreement has a term of 3 years and provides for an annual compensation of $150,000. It also provides for an annual bonus as determined by the board of directors.

 

In November 2014, Terex entered into an Employment Agreement for services with its Vice President of Geology and director. The Employment Agreement has a term of 3 years and provides for an annual compensation of $150,000. It also provides for an annual bonus as determined by the board of directors.

 

In January 2015, T-Rex entered into an Employment Agreement for services with its Vice President of Operations and director. The Employment Agreement has a term of 3 years and provides for an annual compensation of $150,000. It also provides for an annual bonus as determined by the board of directors.

 

Consulting Agreement

 

The Company entered into a three-year agreement effective September 1, 2014 with a consultant to perform services at the base rate of $150,000 per year under certain terms and conditions including with an auto allowance of $600 per month. In addition, the consultant has been granted cashless options to acquire up to 500,000 shares of T-Rex’s common stock at an option price of $0.10 per share for a period of three years from April 1, 2014. The options vested ratably over the year ended March 31, 2015. See Note 8 – Equity Based Payments.

 

Note 10 – Related Party Transactions

 

T-Rex Oil LLC #1

 

The Company is the manager of T-Rex Oil LLC #1 that was formed during December 2014 for the purpose of drilling and producing oil and gas wells. During the year ended March 31, 2015, the Company loaned the LLC $50,000 and at March 31, 2016 and 2015, the Company is owed $0 and $50,000, respectively.

 

The Company in December 2014 entered into put agreements with the members of T-Rex #1 whereby the Company granted a right to put the purchase of their interest of T-Rex #1 in the amount of $425,000 back to the Company at an exercise price of $2.00 per share or a total of 212,500 shares of the Company’s common stock.

 

In August 2016, the members exercised the put at $1.00 per share and a total of 425,000 shares of restricted common stock were issued.

 

T-Rex Oil LLC #3

 

The Company is the manager of T-Rex Oil LLC #3 that was formed in January 2016 for the purpose of acquiring and developing oil and gas leases known as the Cole Creek properties in Wyoming. T-Rex Oil LLC #3 is included as part of the consolidated financial statements as of and for the year ended March 31, 2016. See Note 1 – Organization and History.

 

Note 11 – Subsequent Events

 

Sale of Common Shares

 

During the period of July 1, 2016 through August 15, 2016, the Company sold 142,670 shares of its common stock in exchange for $213,443 in cash or at $1.50 per share as part of a private placement.

 

Exercise of Option

 

During the period of July 1, 2016 through August 15, 2016, an option holder exercised his option for a total of 50,000 shares of restricted common stock.

 

T-Rex Oil, LLC #3

 

On August 15, 2016, T-Rex Oil, LLC #3 was erroneously dissolved with the Secretary of State of Colorado, the entity was re-instated upon discovery of this on August 25, 2016.

 

 18 
  
 

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

 

The following discussion should be read in conjunction with our consolidated financial statements and notes thereto included herein. In connection with, and because we desire to take advantage of, the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995, we caution readers regarding certain forward looking statements in the following discussion and elsewhere in this report and in any other statement made by, or on our behalf, whether or not in future filings with the Securities and Exchange Commission. Forward-looking statements are statements not based on historical information and which relate to future operations, strategies, financial results or other developments. Forward looking statements are necessarily based upon estimates and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward looking statements made by, or on our behalf. We disclaim any obligation to update forward-looking statements.

 

Unless the context requires otherwise, references in this document to “T-Rex Oil”, “we”, “our”, “us” or the “Company” are to T-Rex Oil, Inc. and our subsidiaries.

 

The independent registered public accounting firm’s report on the Company’s financial statements as of March 31, 2016, and for each of the years in the two-year period then ended, includes a “going concern” explanatory paragraph, that describes substantial doubt about the Company’s ability to continue as a going concern.

 

PLAN OF OPERATIONS

 

We are an energy company, focused on the acquisition, exploration, development and production of oil and natural gas. We have acquired oil and natural gas properties located in the western United States, mainly in the Rocky Mountain region. Our goal is to drill and produce oil and gas cost effectively by concentrating our efforts in proven oil rich areas where we have in-house geologic and operating experience.

 

We are focusing on the acquisition of proven properties that we believe can be economically enhanced in this current commodity price environment. In certain market conditions, we believe there could be additional upside realized through the development of deeper productive horizons, or applying tertiary recovery applications to these acquired fields.

 

To date, we have focused our activities in Eastern Wyoming along the Salt Creek/Big Muddy trend. Starting with the Salt Creek field in Natrona County, following the Salt Creek/Big Muddy trend down to the South Glenrock field in Converse County, we believe there are a series of analogous fields that could provide ideal targets for us to execute this business strategy.

 

Our acquisition strategy includes taking older wells that are shut in or have lower production results and applying new and existing technologies to work-over and/or recomplete those wells so as to increase production and ultimate recovery. Technologies to be deployed include 3-D seismic imaging to target undeveloped areas of the reservoir that contain remaining primary reserves and horizontal drilling to increase recoveries, as well as secondary and tertiary recovery methods to increase produced reserves.

 

We will require substantial additional capital to support our existing and proposed future operations. We have no committed source for any additional funds as of the date hereof. No representation is made that any funds will be available when needed. In the event funds cannot be raised when needed, we may not be able to carry out our business plan, may never achieve sales or royalty income and could fail in business as a result of these uncertainties.

 

 19 
  

 

RESULTS OF OPERATIONS

 

For the Three Months Ended June 30, 2016 and June 30, 2015

 

Overview. During the three months ended June 30, 2016, the Company recognized a net loss of $786,161 compared to a net loss of $690,953 for the three months ended June 30, 2015. The increase of $95,208 is primarily the result of an increase in oil sales offset by an increase in operational activities. Discussions of individually significant line items follow:

 

Revenues: During the three months ended June 30, 2016, the Company recognized revenues of $320,011 compared to $163,911 during the three months ended June 30, 2015. Management expects to see continued increases in its production numbers as it begins to institute re-work plans during the year and from the Company’s purchase of outstanding working interests in these properties during April 2016.

 

Operating Expenses: During the three months ended June 30, 2016, the Company had an increase of $260,592 in total operating expenses as a result of the following:

 

An increase in costs of $79,735 related to its oil and gas operational activities as a result of its take over of the operations of the T-Rex Oil LLC#3 properties. General and administrative expenses increased by $126,401 primarily as a result of increases in staffing and costs associated with reporting requirements. Depletion, depreciation, amortization and accretion decreased by $99,241and production taxes increased by $36,793.

 

LIQUIDITY

 

We have incurred a net loss of $786,161 for the three months ended June 30, 2016 and have had a limited operating history.

 

During the three months ended June 30, 2016, the Company as part of a private placement sold 99,378 shares of its restricted common stock for $74,613 in cash and 235,839 shares for $353,719 in cash. During the three months ended June 30, 2016, the Company issued 50,000 shares or restricted common stock in connection with the cash exercise of $2,500.

 

The Company will need substantial additional capital to support its proposed future energy operations. We only began to recognize revenues in the first quarter of this fiscal year and they are not sufficient to support operations. The Company has no committed source for any funds but as of June 30, 2016, we have $136,977 in cash. No representation is made that any funds will be available when needed. In the event funds cannot be raised when needed, we may not be able to carry out our business plan and we may never achieve sales sufficient to support our operations.

 

Decisions regarding future participation in oil and gas development or geophysical studies or other activities will be made on a case-by-case basis. We may, in any particular case, decide to participate or decline participation. If participating, we may pay our proportionate share of costs to maintain our proportionate interest through cash flow or debt or equity financing. If participation is declined, we may elect to farmout, non-consent, sell or otherwise negotiate a method of cost sharing in order to maintain some continuing interest in the prospect.

 

The Company used cash flows in operations of $662,938 during the three months ended June 30, 2016 that was adjusted by non-cash items including: depreciation, depletion, amortization and accretion of $45,407 and equity based compensation of $11,511.

 

The Company used cash flows in investing activities of $261,621 during the three months ended June 30, 2016 that was primarily comprised of: additions to oil and gas properties of $261,583 and additions to other assets of $38.

 

The Company was provided cash flows from financing activities of $633,332 during the three months ended June 30, 2,016 through $433,332 from the sale of restricted common stock and the cash exercise of an option and the cash contribution of a director and shareholder of $200,000.

 

 20 
  

 

Promissory Notes

 

The Company during the year ended March 31, 2016 paid $341,405 in principal towards the repayment of promissory notes relative to the repurchase of 18,717 shares of Western Interior common stock owned by dissident shareholders as part of agreements effective March 31, 2015 to repurchase a total of 33,085 shares of Western Interior common stock. The Company at June 30, 2016 owes a balance in the amount of $488,298 on one of the promissory notes plus accrued interest of $17,043.60 with the remaining three promissory notes being paid in full.

 

On August 1, 2015, the Company, relative to the repurchase by the Company on March 31, 2015 of the remaining 14,368 shares of Western Interior common stock entered into an agreement with the note holder to settle the amount owed under the promissory note. As such, the parties agreed the amount owed on such promissory note by the Company would be reduced from $768,715 to $393,795 and the difference of $374,920 be considered a reduction in the purchase price by the Company of the 14,368 shares of Western Interior common stock. In addition, the $393,795 was paid in full effective August 1, 2015 by the transfer to the note holder of certain oil and gas properties owned by Western Interior which resulted in the Company reporting a gain on disposal of assets in the amount of $44,100.

 

On January 14, 2016, the Company borrowed $50,000 each from two directors in exchange for secured promissory notes including interest at the rate of 5% per annum with accrued and unpaid interest and principal due at September 30, 2016. The promissory notes are collateralized by certain oil and gas properties located in the State of Wyoming. Holders may, at any time prior to payment of the promissory notes elect to convert all or any portion of the promissory notes, including accrued interest, into common shares of the Company at a price determined by the average ten consecutive day trading closing price less 30%. The Company at June 30, 2016 owes $100,000 on the two promissory notes plus accrued interest of $2,298.50.

 

Line-of-Credit

 

The Company has a line-of-credit with a bank in the amount of $350,000 collateralized by certain oil and gas properties of the Company. The line-of-credit matures in November 2016. Annual interest is at prime plus 2.50% with a floor of 7%). The Company owes $130,52 on the line-of-credit at June 30, 2016.

 

Short Term

 

On a short-term basis, we have not generated revenues sufficient to cover operations. Based on prior history, we will continue to have insufficient revenue to satisfy current and recurring liabilities as the Company continues exploration activities.

 

Capital Resources

 

The Company has only equity as its capital resource.

 

We have no material commitments for capital expenditures within the next year; however, our plans to develop our existing oil properties are capital intensive and capital will be needed to pay for participation, investigation, exploration, acquisition and working capital.

 

Need for Additional Financing

 

We do not have capital sufficient to meet our cash needs. The Company will have to seek loans or equity placements to cover such cash needs. Recompletions and re-works on existing wells, along with exploration activities will spur the need for additional financing is likely to increase substantially.

 

No commitments to provide additional funds have been made by the Company’s management or other shareholders. Accordingly, there can be no assurance that any additional funds will be available to us to allow us to cover the Company’s expenses as they may be incurred.

 

 21 
  

 

The Company will need substantial additional capital to support its proposed future energy operations. We have insufficient revenues to cover our corporate costs. The Company has no committed source for any funds as of the date hereof. No representation is made that any funds will be available when needed. In the event funds cannot be raised when needed, we may not be able to carry out our business plan, may never achieve sufficient sales or royalty income and could fail in business as a result of lack of capital.

 

Decisions regarding future participation in exploration wells or geophysical studies or other activities will be made on a case-by-case basis. The Company may, in any particular case, decide to participate or decline participation. If participating, we may pay the proportionate share of costs to maintain the Company’s proportionate interest through cash flow or debt or equity financing. If participation is declined, the Company may elect to farmout, non-consent, sell or otherwise negotiate a method of cost sharing in order to maintain some continuing interest in the prospect.

 

Off-Balance Sheet Arrangements

 

We have no material off-balance sheet arrangements nor do we have any unconsolidated subsidiaries.

 

Critical Accounting Policies

 

Critical accounting policies and estimates are provided in our Annual Report on Form 10-K for the fiscal year ended March 31, 2016, in Item 7 – Management’s Discussion and Analysis of Financial Condition and Results of Operations, and Item 8 – Financial Statements and Supplementary Data. Additional disclosures are provided in Notes to Consolidated Financial Statements (unaudited) which are included in Item 1 – Consolidated Financial Statements to this Quarterly Report.

 

Item 3. Quantitative and Qualitative Disclosure About Market Risk

 

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item.

 

Item 4. Controls and Procedures

 

We conducted an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer and Acting Chief Accounting Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (Exchange Act), means controls and other procedures of a company that are designed to ensure that information required to be disclosed by the company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures also include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. We identified multiple material weaknesses in our internal control over financial reporting and, as a result of this material weakness, we concluded as of June 30, 2016, that our disclosure controls and procedures were not effective.

 

Internal Control-Integrated Framework

 

A material weakness is a control deficiency, or combination of control deficiencies, that result in more than a remote likelihood that a material misstatement of annual or interim financial statements will not be prevented or detected. As of June 30, 2016 and as determined in the fiscal year ended March 31, 2016, the Company identified the following material weakness:

 

The Company did not adequately segregate the duties of different personnel within our accounting department due to an insufficient complement of staff and inadequate management oversight.

 

 22 
  

 

We have limited accounting personnel with sufficient expertise in generally accepted accounting principles to enable effective segregation of duties with respect to recording journal entries and to allow for appropriate monitoring of financial reporting matters and internal control over financial reporting. Specifically, the Acting Chief Accounting Officer has involvement in the creation and review of journal entries and note disclosures without adequate independent review and authorization. This control deficiency is pervasive in nature and impacts all significant accounts. This control deficiency also affects the financial reporting process including financial statement preparation and the related note disclosures. Other significant control deficiencies at this time are lack of independent review and approval of journal entries before they are entered into the general ledger, not effectively implementing comprehensive entity-level controls, and the Company has not implemented procedures for timely review and approval of bank reconciliations.

 

As a result of the aforementioned material weakness, management concluded that the Company’s internal control over financial reporting as of June 30, 2016 was not effective.

 

Changes in Internal Control over Financial Reporting

 

There have been no changes in our internal control over financial reporting during the most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

PART II - OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

There is no ongoing litigation to which the Company is subject.

 

ITEM 1A. RISK FACTORS

 

As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide information required by this Item. However, our current risk factors are set forth in our Annual Report on Form 10-K for the year ended March 31, 2016, which risk factors are incorporated herein by this reference.

 

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

 

During the period of April 1, 2016 through June 30, 2016, the Company made the following issuances of its equity securities.

 

DATE OF SALE   TITLE OF SECURITIES   NO. OF SHARES   CONSIDERATION   CLASS OF PURCHASER
April 2016 (1)    Common Shares    99,378   $74,613   Business Associates
May 2016 (1)    Common Shares    116,668   $175,002   Business Associates
May 2016 – June 2016 (2)    Common Shares    119,172   $178,756   Business Associates

 

Exemption from Registration Claimed

 

 23 
  

 

(1)The above issuances by the Company of its unregistered securities were made by the Company in reliance upon Rule 506 of Regulation D and Section 4(2) of the Securities Act of 1933, as amended (the "1933 Act"). The parities that purchased the unregistered securities was known to the Company and its management, through pre-existing business relationships and as a long standing business associate. The purchasers were provided access to all material information, which they requested, and all information necessary to verify such information and was afforded access to management of the Company in connection with their purchase. The purchasers of the unregistered securities acquired such security for investment and not with a view toward distribution, acknowledging such intent to the Company. The certificate or agreement representing such securities that was issued contained a restrictive legend, prohibiting further transfer of the certificate or agreement representing such security, without such security either being first registered or otherwise exempt from registration in any further resale or disposition.

 

(2)The above issuance by the Company of its unregistered securities was made by the Company in reliance upon Regulation S of the 1933 Act. The party that purchased the unregistered securities was known to the Company and its management, through a pre-existing business relationship. The purchaser was provided access to all material information, which they requested and all information necessary to verify such information and was afforded access to management of the Company in connection with their purchase. The purchasers of the unregistered securities acquired such security for investment and not with a view toward distribution, acknowledging such intent to the Company. The certificate or agreement representing such securities that was issued contained a restrictive legend, prohibiting further transfer of the certificate or agreement representing such security, without such security either being first registered or otherwise exempt from registration in any further resale or disposition.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

NONE.

 

ITEM 4. MINE AND SAFETY DISCLOSURE

 

NOT APPLICABLE.

 

ITEM 5. OTHER INFORMATION

 

NONE.

 

ITEM 6. EXHIBITS

 

The following is a complete list of exhibits filed as part of this Form 10-Q. Exhibit numbers correspond to the numbers in the Exhibit Table of Item 601 of Regulation S-K.

 

Exhibit No   Description of Exhibits
     
31.1   Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act.*
31.2   Certification of Chief Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act.*
32.1   Certification of Chief Executive Officer pursuant to 18 U.S. C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act.*
32.2   Certification of Chief Accounting Officer pursuant to 18 U.S. C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act.*
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 Label Linkbase Document(*)
101.PRE   XBRL Taxonomy Extension Presentation Linkbase Document(*)

 

* Filed herewith.

 

 24 
  

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

  T-REX OIL, INC.
     
Dated: August 31, 2016 By: /s/ Donald Walford
    Donald Walford,
    Chief Executive Officer 
     
  By: /s/ Kristi J. Kampmann
    Kristi J. Kampmann,
    Chief Accounting Officer

 

 25 
  

 

EX-31.1 2 ex31-1.htm

 

Exhibit 31.1

 

CERTIFICATION PURSUANT TO RULE 13a-14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934

 

I, Donald Walford, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of T-Rex Oil, Inc.;

 

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. I am 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 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 report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

 

5. 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.

 

Dated: August 31, 2016

 

Signature: /s/ Donald Walford  
  Donald Walford,  
  Chief Executive Officer  

 

   
  

 

EX-31.2 3 ex31-2.htm

 

Exhibit 31.2

 

CERTIFICATION PURSUANT TO RULE 13a-14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934

 

I, Kristi J. Kampmann, certify that:

 

6. I have reviewed this quarterly report on Form 10-Q of T-Rex Oil, Inc.;

 

7. 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;

 

8. 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;

 

9. I am 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 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 report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

 

10. 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.

 

Dated: August 31, 2016

 

Signature: /s/ Kristi J. Kampmann  
  Kristi J. Kampmann  
  Chief Accounting Officer  

 

   
  

 

EX-32.1 4 ex32-1.htm

 

Exhibit 32.1

 

CERTIFICATION PURSUANT TO

18 U.S.C. §1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

I, Donald Walford, Chief Executive Officer of T-Rex Oil, Inc. (the Company), certify, that pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code:

 

1. The Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2016, as filed with the Securities and Exchange Commission on the date hereof (the Report) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

 

2. Information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.

 

/s/ Donald Walford  
Donald Walford  
Chief Executive Officer  

 

Dated: August 31, 2016

 

   
  

 

EX-32.2 5 ex32-2.htm

 

Exhibit 32.2

 

CERTIFICATION PURSUANT TO

18 U.S.C. §1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

I, Kristi J. Kampmann, Chief Accounting Officer of T-Rex Oil, Inc. (the Company), certify, that pursuant to Section 1350 of Chapter 63 of Title 18 of the United States Code:

 

1. The Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2016, as filed with the Securities and Exchange Commission on the date hereof (the Report) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

 

2. Information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods expressed in the Report.

 

/s/ Kristi J. Kampmann  
Kristi J. Kampmann  
Chief Accounting Officer  

 

Dated: August 31, 2016

 

   
  

 

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for cash - exercise of options Issuance of shares for cash - exercise of options, shares Equity based compensation Beneficial conversion feature of preferred stock Deemed dividend for preferred stock's beneficial conversion feature Net loss for the period Balance Balance, Shares Statement of Stockholders' Equity [Abstract] Equity issuance price per share Equity issuance price per share Statement of Cash Flows [Abstract] OPERATING ACTIVITIES Net loss attributable to common stockholders Adjustments to reconcile net loss to net cash flows used in operating activities: Depreciation, depletion, amortization and accretion Equity based compensation Changes in: Accounts receivable, trade Prepaids Accounts payable and accrued liabilities Net cash (used in) operating activities INVESTING ACTIVITIES Additions to oil and gas properties Loans to affiliates, net of repayments Proceeds from sale of mineral interest Additions to other assets Net cash (used in) investing activities FINANCING ACTIVITIES Sale of shares and exercise of options Shareholder cash contribution Proceeds from notes payable, net of repayments Net cash provided by financing activities NET CHANGE IN CASH CASH, Beginning CASH, Ending SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION: Beneficial conversion on feature of preferred stock Deemed dividend for beneficial conversion feature of preferred stock Interest paid Income taxes paid Organization, Consolidation and Presentation of Financial Statements [Abstract] Organization and History Accounting Policies [Abstract] Summary of Significant Accounting Policies Going Concern and Managements Plan [Abstract] Going Concern and Managements' Plan Fair Value Disclosures [Abstract] Fair Value Measurements Business Combinations [Abstract] Significant Acquisition Debt Disclosure [Abstract] Debt Equity [Abstract] Stockholders' Equity Disclosure of Compensation Related Costs, Share-based Payments [Abstract] Equity Based Payments Commitments and Contingencies Disclosure [Abstract] Commitments and Contingencies Related Party Transactions [Abstract] Related Party Transactions Subsequent Events [Abstract] Subsequent Events Principles of Consolidation Use of Estimates in the Preparation of Consolidated Financial Statements Cash and Cash Equivalents Concentration of Credit Risk Accounts Receivable Oil and Gas Producing Activities Other Property and Equipment Asset Retirement Obligations Impairment of Long-Lived Assets Revenue Recognition Other Comprehensive Loss Income Taxes Business Combination Net Loss per Share Equity Based Payments Major Customers Beneficial Conversion Feature and Deemed Dividend Related to Series A Shares Off-Balance Sheet Arrangements Recent Accounting Pronouncements Subsequent Events Schedule of Reconciliation of Changes in Company's liability Weighted-Average Dilutive and Anti-dilutive Securities to Stock Options and Warrants Summary of Non-financial Assets and Liabilities Measured at Fair Value Schedule of Allocation of Consideration to Assets Acquired and Liabilities Schedule of Assumptions Used for Stock Option/Warrants Price Valuation Schedule of Valuation Assumptions Schedule of Schedule of Warrants Valuation Assumptions Summary of Non-qualified Stock Option and Warrant Activity Schedule of Minimum Future Rental Annual Payments under Operating Lease Shares of restricted common stock issued Percentage of issued and outstanding common stock owned Promissory notes issued Percentage of acquired working interest Exchange for cash plus Purchase price Gross acres Percentage of equity interest Percentage of revenues Oil and natural gas proved properties capitalized costs Oil and natural gas unproved properties capitalized costs Depreciation, depletion and amortization expense on oil and gas properties Impairment of proved properties Depreciation expense Percentage of largest amount that is greater than likely to be realized upon its ultimate settlement Stock were issued at discount value Fair value of issuance of preferred stock Preferred shares, shares Deemed dividend for beneficial conversion feature of preferred stock ARO - beginning of period Additions Deletions Accretion expense ARO - end of period Less current portion ARO - non-current portion Dilutive Anti Dilutive Net loss Accumulated deficit Working capital deficit Oil and gas properties at fair value Impairment to oil and gas properties Impairement Oil and gas properties Percentage of voting interest acquired Cash Total purchase price Proved Total assets Current liabilities Long-term liabilities Total liabilities Net assets acquired Repayment of promissory notes Issuance of shares for debt Debt owned amount Accrued interest payable Business combination reduction in purchase price Proceeds from convertible debt Debt instrument interest rate Debt instrument maturity date Debt conversion rate Debt face amount Line-of-credit maturity date Debt variable interest rate Gain on disposal of assets Debt floor rate Line-of-credit Amount of monthly installment Sale of Stock [Axis] Capital stock, authorized shares Preferred Stock, authorized shares Preferred Stock, par value per share Shares conversion price percentage Stock issued during period, value, new issues Warrant exercise price per share Warrant Exercise Term Common stock closing market price Convertible preferred stock issued at discount value Fair value issuance of convertible preferred stock Beneficial conversion feature Conversion of stock, shares issued Deemed dividend preferred stock Proceeds from issuance of convertible preferred stock Number of preferred stock exchange for cash Number of preferred stock shares exchange for cash Warrants exercisable for shares of common stock Warrants exercisable price per share Stock price Exercise of warrants for restricted stock shares Exercise of warrants for restricted stock value Number of common stock shares sold during the period Number of common stock shares sold during the period, value Number of shares issued of common stock Options at an exercise price per share Fair value of equity based payment amount Equity based payment expense Capitalized equity based payment Volatility, Minimum Volatility, Maximum Expected Option/Warrant Term Risk-free interest rate Expected dividend yield Number of warrant exercisable during period Warrant term Fair value of warrants Term of award Number of shares issued Risk-free interest rate, Minimum Risk-free interest rate, Maximum Volatility Number of Options/Warrants Outstanding, Beginning Number of Options/Warrants Outstanding, Granted Number of Options/Warrants Outstanding, Exercised Number of Options/Warrants Outstanding, Cancelled Number of Options/Warrants Outstanding, Ending Number of Options/Warrants Exercisable Weighted Average Exercise Price Outstanding, Beginning Weighted Average Exercise Price, Granted Weighted Average Exercise Price, Exercised Weighted Average Exercise Price, Cancelled Weighted Average Exercise Price Outstanding, Ending Weighted Average Exercise Price Exercisable Weighted average remaining contractual life Aggregate Intrinsic Value Leases of office per month Lease expiration date Rent expense Term of agreement with annual compensation Compensation of base salary per year Car allowance Granted options to acquire common stock Option price Option expiration period 3/31/2017 3/31/2018 3/31/2019 3/31/2020 Total Schedule of Related Party Transactions, by Related Party [Table] Related Party Transaction [Line Items] Amount loaned to related party Amount owned to related party Granted rights outstanding Granted an exercise price per share Number of common stock issued Number of shares of restricted common stock issued Number of common stock sold during the period Sale of stock, price per share Number of stock options shares issued during the period Going concern and managements' plan [Text Block] Tabular disclosure for non-qualified stock option and warrant activity. Terex Energy Corporation [Member] The percentage of issued and outstanding common stock owned. T-Rex Oil, Inc [Member] Western Interiors Oil and Gas Inc [Member] Stock Exchange Agreement [Member] Working capital deficit. Promissory Notes [Member] Installment Notes [Member] "Represents the maximum number of shares permitted to be issued by an entity's charter and bylaws.&#13;" Related Party [Member] Represent lease and rental expense per month. Represents the amount of auto allowance paid as per agreement. Consultant [Member] Executive of the entity that is appointed to the position by the board of directors and person serving on the board of directors (who collectively have responsibility for governing the entity). Represents information pertaining to T-Rex Oil LLC. Wyoming [Member] Beneficial conversion on feature of preferred stock Deemed dividend for beneficial conversion feature of preferred stock. Sale of shares for cash at $2.15 per share. Sale of shares for cash at $2.15 per share, Shares. Sale of Shares for Cash Per Share One [Member] Sale of Shares for Cash Per Share Two [Member] Sale of Shares for Cash Per Share Three [Member] Sale of Warrants for Cash Per Share [Member] Black Hills Exploration & Production, Inc [Member] April 20, 2016 [Member] Major Customers [Member] Stock were issued at discount value. Fair value of issuance of preferred stock. Convertible Series A Shares Preferred Stock [Member] Cole Creek Properties [Member] Western Interiors [Member] Subscription Agreement [Member] Exchange Agreement [Member] Office Space [Member] Beneficial Conversion Feature and Deemed Dividend Related to Series A Shares [Policy Text Block] The reduction in purchase price for the business combination. Secured Promissory Notes [Member] Director One [Member] Director Two [Member] Two Directors [Member] Bank [Member] Floor rate on an interest rate debt instrument such as an interest rate floor or collar. Unrelated Parties [Member] The conversion price percentage of shares for future issuance. Market price prevailing per common stock share in the market on closing date. 2014 Stock Incentive Plan [Member] Non Qualified Stock Options [Member] Colorado Lease [Member] Wyoming Lease [Member] Warrants exercise term period. Convertible preferred stock issued at discount value. July and December 2016 [Member] Number of preferred stock exchange for cash. Number of preferred stock shares exchange for cash. Unit Warrants [Member] Represents the number of exercise of warrants for restricted stock shares. Represents the amount exercise of warrants for restricted stock. Terex Shareholders [Member] Western Interior Oil and Gas Corporation [Member] Settlement Agreements [Member] Four Shareholders [Member] Sale of Shares for Cash Per Share Four [Member] Chief Executive Officer, President And Director [Member] Vice President of Operations And Director [Member] Vice President of Geology And Director [Member] Equity Issuance Price Per Share One. Equity Issuance Price Per Share Two. Purchaser One [Member]. Warrants Exercisable Price Per Share. Private Placement [Member] Warrant term. Corporate Apartment [Member] August 2016 [Member] Adjustments To Additional PaidIn Capital Shareholder Cash Contribution. Schedule of Schedule of Warrants Valuation Assumptions [Table Text Block] Fair value of equity based payment amount. Equity based payment expense. Capitalized equity based payment. The amount of oil and gas properties proved acquired and recognized as of the acquisition date. T-Rex Oil, LLC #3 [Member] Director And Shareholder [Member] PrivatePlacementOneMember Assets, Current Property, Plant and Equipment, Gross Property, Plant and Equipment, Net Other Assets, Noncurrent Assets Liabilities, Current Liabilities Stockholders' Equity Attributable to Parent Liabilities and Equity Revenues [Default Label] Operating Expenses Operating Income (Loss) Interest Expense, Other Other Nonoperating Income (Expense) Income (Loss) from Continuing Operations before Income Taxes, Noncontrolling Interest Preferred Stock Dividends and Other Adjustments Net Income (Loss) Available to Common Stockholders, Basic Shares, Outstanding EquityIssuancePricePerShareTwo Depreciation, Depletion and Amortization Share-based Compensation Increase (Decrease) in Accounts Receivable Increase (Decrease) in Prepaid Expense Increase (Decrease) in Accounts Payable and Accrued Liabilities Net Cash Provided by (Used in) Operating Activities Payments to Acquire Oil and Gas Property Payments for (Proceeds from) Other Investing Activities Net Cash Provided by (Used in) Investing Activities Proceeds from Issuance of Private Placement Net Cash Provided by (Used in) Financing Activities Cash and Cash Equivalents, Period Increase (Decrease) Cash and Cash Equivalents, at Carrying Value Commitments and Contingencies Disclosure [Text Block] Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block] Subsequent Events, Policy [Policy Text Block] Asset Retirement Obligation Business Combination Recognized Identifiable Assets Acquired and Liabilities Assumed Oil and Gas Properties Proved Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Assets Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Liabilities Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Noncurrent Liabilities Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Liabilities Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Exercisable, Number Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price Share-based Compensation Arrangement by Share-based Payment Award, Options, Vested and Expected to Vest, Exercisable, Weighted Average Exercise Price Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Intrinsic Value Operating Leases, Future Minimum Payments Due TerexEnergyCorporationMember TrexOilIncMember RelatedPartyMember Officer and Director [Member] WyomingMember SaleOfSharesForCashOneMember SaleOfSharesForCashTwoMember SaleOfSharesForCashThreeMember SaleOfWarrantSharesForCashMember MajorCustomersMember SubscriptionAgreementMember ExchangeAgreementMember OfficeSpaceMember SecuredPromissoryNotesMember DirectorOneMember DirectorTwoMember TerexShareholdersMember WesternInteriorOilandGasCorporationMember SettlementAgreementsMember FourShareholdersMember SaleOfSharesForCashFourMember EX-101.PRE 12 trxo-20160630_pre.xml XBRL PRESENTATION FILE XML 13 R1.htm IDEA: XBRL DOCUMENT v3.5.0.2
Document and Entity Information - shares
3 Months Ended
Jun. 30, 2016
Aug. 19, 2016
Document And Entity Information    
Entity Registrant Name T-REX OIL, INC.  
Entity Central Index Key 0001287900  
Document Type 10-Q  
Document Period End Date Jun. 30, 2016  
Amendment Flag false  
Current Fiscal Year End Date --03-31  
Entity Filer Category Smaller Reporting Company  
Entity Common Stock, Shares Outstanding   16,502,262
Trading symbol TRXO  
Document Fiscal Period Focus Q1  
Document Fiscal Year Focus 2017  
XML 14 R2.htm IDEA: XBRL DOCUMENT v3.5.0.2
Consolidated Balance Sheets - USD ($)
Jun. 30, 2016
Mar. 31, 2016
Current assets    
Cash and cash equivalents $ 136,977 $ 428,204
Accounts receivable, trade 358,385 132,391
Loan to affiliate
Prepaids 107,565 50,370
Total current assets 602,927 610,965
Oil and gas properties, successful efforts method of accounting    
Proved 11,754,817 11,368,626
Unproved 4,754,620 4,745,917
Other 404,514 404,514
Total property and equipment 16,913,951 16,519,057
Less accumulated depreciation, depletion, amortization and valuation allowance 14,644,958 14,621,873
Net property and equipment 2,268,993 1,897,184
Other assets    
Deposits and other assets 402,265 275,658
Total other assets 402,265 275,658
Total assets 3,274,185 2,783,807
Current liabilities    
Accounts payable and accrued liabilities 1,006,449 758,832
Asset retirement obligations, current 176,587 176,587
Notes payable 778,161 783,210
Total current liabilities 1,961,197 1,718,629
Long-term liabilities    
Asset retirement obligations, net of current 1,176,190 1,020,556
Total liabilities 3,137,387 2,739,185
Commitments and Contingencies
STOCKHOLDERS' EQUITY    
Preferred shares, $0.001 par value, 50,000,000 shares authorized; 409,019 and 409,019 shares issued and outstanding at June 30 2016 and March 31 2016, respectively 409 409
Common shares, $0.001 par value, 275,000,000 shares authorized; 15,866,099 and 15,480,882 shares issued and outstanding at June 30, 2016 and March 31, 2016, respectively 15,866 15,481
Additional paid in capital 27,625,852 26,785,705
Accumulated deficit (27,505,329) (26,756,973)
Stockholders' equity (58,891) 44,622
Total liabilities and stockholders' equity $ 3,274,185 $ 2,783,807
XML 15 R3.htm IDEA: XBRL DOCUMENT v3.5.0.2
Consolidated Balance Sheets (Parenthetical) - $ / shares
Jun. 30, 2016
Mar. 31, 2016
Statement of Financial Position [Abstract]    
Preferred stock, par value $ 0.001 $ 0.001
Preferred stock, shares authorized 50,000,000 50,000,000
Preferred shares, shares issued 409,019 409,019
Preferred shares, shares outstanding 409,019 409,019
Common stock, par value $ 0.001 $ 0.001
Common stock, shares authorized 275,000,000 275,000,000
Common stock, shares issued 15,866,099 15,480,882
Common stock, shares outstanding 15,866,099 15,480,882
XML 16 R4.htm IDEA: XBRL DOCUMENT v3.5.0.2
Consolidated Statements of Operations - USD ($)
3 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Revenues    
Oil and gas sales $ 320,011 $ 163,911
Total revenues 320,011 163,911
Operating expenses:    
Lease operating expense 153,375 73,640
Production taxes 42,343 5,550
General and administrative expense 742,181 615,780
Exploration expense 76,282 (40,622)
Depreciation, depletion, amortization and accretion 45,407 144,648
Total operating expenses 1,059,588 798,996
Loss from operations 739,577 635,085
Other income (expense)    
Interest expense (13,665) (55,962)
Interest income 4,886 94
Total other income (8,779) (55,868)
Loss before income taxes (748,356) (690,953)
Income taxes
Net loss (748,356) (690,953)
Deemed dividend for beneficial conversion feature of preferred stock (37,805)
Net loss attributable to common shareholders $ (786,161) $ (690,953)
Net loss per common share Basic and diluted $ (0.05) $ (0.05)
Weighted average number of common shares 15,671,374 15,345,683
XML 17 R5.htm IDEA: XBRL DOCUMENT v3.5.0.2
Consolidated Statement of Changes in Stockholders' Equity - USD ($)
Preferred Stock [Member]
Common Stock [Member]
Additional Paid-In Capital [Member]
Accumulated (Deficit) [Member]
Total
Balance at Mar. 31, 2015 $ 409 $ 15,481 $ 26,785,705 $ (26,756,973) $ 10,042,717
Balance, Shares at Mar. 31, 2015 409,019 15,480,882      
Beneficial conversion feature of preferred stock         67,830
Balance at Mar. 31, 2016         44,622
Balance at Mar. 31, 2015 $ 409 $ 15,481 26,785,705 (26,756,973) 10,042,717
Balance, Shares at Mar. 31, 2015 409,019 15,480,882      
Sale of shares for cash at $0.75 per share $ 99 74,514 74,613
Sale of shares for cash at $0.75 per share, Shares 99,378      
Sale of shares for cash at $1.50 per share $ 236 353,483 353,719
Sale of shares for cash at $1.50 per share, Shares 235,839      
Shareholder cash contribution 200,000 200,000
Issuance of shares for cash - exercise of options $ 50 4,950 5,000
Issuance of shares for cash - exercise of options, shares 50,000      
Equity based compensation 207,200 207,200
Beneficial conversion feature of preferred stock 37,805 37,805
Deemed dividend for preferred stock's beneficial conversion feature (37,805) (37,805)
Net loss for the period (748,356) (748,356)
Balance at Jun. 30, 2016 $ 409 $ 15,866 27,625,852 (27,505,329) (58,891)
Balance, Shares at Jun. 30, 2016 409,019 15,866,099      
Balance at Mar. 31, 2016         44,622
Sale of shares for cash at $0.75 per share         74,613
Equity based compensation         207,200
Beneficial conversion feature of preferred stock         37,805
Deemed dividend for preferred stock's beneficial conversion feature         (37,805)
Net loss for the period         (748,356)
Balance at Jun. 30, 2016 $ 409 $ 15,866 $ 27,625,852 $ (27,505,329) $ (58,891)
Balance, Shares at Jun. 30, 2016 409,019 15,866,099      
XML 18 R6.htm IDEA: XBRL DOCUMENT v3.5.0.2
Consolidated Statement of Changes in Stockholders' Equity (Parenthetical)
3 Months Ended
Jun. 30, 2016
$ / shares
Statement of Stockholders' Equity [Abstract]  
Preferred stock, par value $ 0.001
Common stock, par value 0.001
Equity issuance price per share 0.75
Equity issuance price per share $ 1.50
XML 19 R7.htm IDEA: XBRL DOCUMENT v3.5.0.2
Consolidated Statements of Cash Flows - USD ($)
3 Months Ended 15 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Jun. 30, 2016
OPERATING ACTIVITIES      
Net loss attributable to common stockholders $ (748,356) $ (690,953) $ (748,356)
Adjustments to reconcile net loss to net cash flows used in operating activities:      
Depreciation, depletion, amortization and accretion 45,407 144,648  
Equity based compensation 11,511 21,373  
Changes in:      
Accounts receivable, trade (225,994) (21,933)  
Prepaids 11,925 4,510  
Accounts payable and accrued liabilities 242,569 27,305  
Net cash (used in) operating activities (662,938) (515,050)  
INVESTING ACTIVITIES      
Additions to oil and gas properties (261,583) (123,877)  
Loans to affiliates, net of repayments 25,000  
Proceeds from sale of mineral interest 30,000  
Additions to other assets (38) 39,226  
Net cash (used in) investing activities (261,621) (29,651)  
FINANCING ACTIVITIES      
Sale of shares and exercise of options 433,332 662,500  
Shareholder cash contribution 200,000  
Proceeds from notes payable, net of repayments 23,079  
Net cash provided by financing activities 633,332 685,579  
NET CHANGE IN CASH (291,227) 140,878  
CASH, Beginning 428,204 636,542 636,542
CASH, Ending 136,977 777,420 136,977
SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION:      
Equity based compensation 207,200 207,200 $ 207,200
Beneficial conversion on feature of preferred stock 37,805  
Deemed dividend for beneficial conversion feature of preferred stock (37,805)  
Interest paid 74,883 30,697  
Income taxes paid  
XML 20 R8.htm IDEA: XBRL DOCUMENT v3.5.0.2
Organization and History
3 Months Ended
Jun. 30, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Organization and History

Note 1 – Organization and History

 

T-Rex Oil, Inc. (the “Company”) was incorporated in Colorado on September 2, 2014. Rancher Energy Corp was incorporated in Nevada on February 2, 2004. Effective October 20, 2014, T-Rex Oil, Inc. and Rancher Energy Corp were merged under the laws of the State of Colorado and T-Rex Oil, Inc. became the surviving entity.

 

The Company is currently engaged in the acquisition, exploration, and development of oil and gas prospects in the Rocky Mountain region of Wyoming.

 

On February 24, 2015, the Company entered into a Share Exchange Agreement with Western Interior Oil & Gas Corporation, a Wyoming private oil and natural gas company (“Western Interior”) and the shareholders of Western Interior. Under the Share Exchange Agreement the Company exchanged 7,465,168 shares of its restricted common stock for 170,878 shares of the issued and outstanding common stock of Western Interior thereby owning 83% of Western Interior. The acquisition was closed on March 27, 2014 and became effective March 31, 2015. On March 31, 2015, the Company entered into an amendment to the Share Exchange Agreement whereby the Company assumed certain repurchase agreements between Schwaben Kapital GmbH, Western Interior and its dissident shareholders and as a result acquired the remaining 17% of Western Interior. As part of these agreements, the Company assumed certain promissory notes issued to the dissenting shareholders in the total amount of $1,770,047 that were secured by Western Interior assets. As a result, Western Interior became a wholly-owned subsidiary of the Company. See Note 2 – Summary of Significant Accounting Policies – Principles of Consolidation.

 

On January 15, 2016, T-Rex Oil LLC #3 entered into a Purchase and Sale Agreement with Blue Tip Energy Wyoming, Inc. and Cole Creek Recompletions LLC and acquired approximately 82% of the working interest in certain leases located in the state of Wyoming known as the Cole Creek properties in exchange for $1,200,000 in cash plus the assumption of liabilities in the amount of $833,382 for a total purchase price of $2,033,382. On April 20, 2016, the T-Rex Oil LLC #3 entered into a Purchase and Sale Agreement with Black Hills Exploration & Production, Inc. and acquired the remaining approximately 18% working interest in the Cole Creek properties in exchange for $250,000 in cash plus the assumption of liabilities in the amount of $182,938 for a total purchase price of $432,938. These leases are proved developed and undeveloped leaseholds and include producing crude oil wells totaling approximately 13,328 gross acres. See Note 2 – Principles of Consolidation.

XML 21 R9.htm IDEA: XBRL DOCUMENT v3.5.0.2
Summary of Significant Accounting Policies
3 Months Ended
Jun. 30, 2016
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies

Note 2 – Summary of Significant Accounting Policies

 

Principles of Consolidation

 

The accompanying consolidated balance sheets at June 30, 2016 and 2015 and the consolidated statement of operations and cash flows for the three months ended June 30, 2016 include the accounts of Terex Energy Corporation, T-Rex Oil, Inc., Western Interior Oil and Gas Corporation and T-Rex Oil LLC #3. All intercompany balances have been eliminated during consolidation.

 

The Company owns a 14.29% equity interest in T-Rex Oil, LLC #3, the remaining 85.71% is held by a director and shareholder of the Company. The Company has identified T-Rex Oil LLC #3 as a Variable Interest Entity (VIE). We hold current rights that gives us the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance convened with provisions that give us the right to receive potentially significant benefits. As a result, we consolidate the accounts of T-Rex Oil, LLC #3, eliminating all intercompany balances during consolidation.

 

We continuously evaluate whether we have a controlling financial interest in T-Rex Oil LLC#3. Where we are a general partner, we consider substantive removal rights held by other partners in determining if we hold a controlling financial interest. We reevaluate whether we have a controlling financial interest in these entities when our voting or substantive participating rights change.

 

Use of Estimates in the Preparation of Consolidated Financial Statements

 

The preparation of consolidated financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Significant estimates include the fair value of assets and liabilities, oil and natural gas reserves, income taxes and the valuation allowances related to deferred tax assets, asset retirement obligations and contingencies.

 

Cash and Cash Equivalents

 

The Company considers all liquid investments purchased with an initial maturity of three months or less to be cash equivalents. Cash and cash equivalents include demand deposits and money market funds carried at cost which approximates fair value. The Company maintains its cash in institutions insured by the Federal Deposit Insurance Corporation (“FDIC”), although such deposits are in excess of the insurance coverage. At June 30, 2016, the Company did not have cash deposits in excess of FDIC insured limits.

 

Concentration of Credit Risk

 

The Company’s producing properties are primarily located in Wyoming and the oil and gas production is sold to various purchasers based on market index prices. The risk of non-payment by these purchasers is considered minimal and the Company does not generally obtain collateral for sales. The Company continually monitors the credit standing of the primary purchasers.

 

During the three months ended June 30, 2016 and 2015, one purchaser accounted for 100% and 88% of total revenues, respectively.

 

Accounts Receivable

 

Accounts receivable are stated at their cost less any allowance for doubtful accounts. The allowance for doubtful accounts is based on the management’s assessment of the collectability of specific customer accounts and the aging of the accounts receivable. If there is deterioration in a major customer’s creditworthiness or if actual defaults are higher than the historical experience, the management’s estimates of the recoverability of amounts due to the Company could be adversely affected. Based on the management’s assessment, there is no reserve recorded at June 30, 2016 and 2015.

 

Oil and Gas Producing Activities

 

The Company uses the successful efforts method of accounting for oil and gas activities. Under this method, the costs of productive exploratory wells, all development wells, related asset retirement obligation assets, and productive leases are capitalized and amortized, principally by field, on a units-of-production basis over the life of the remaining proved reserves. Exploration costs, including personnel costs, geological and geophysical expenses, and delay rentals for oil and gas leases are charged to expense as incurred. Exploratory drilling costs are initially capitalized, but charged to expense if and when the well is determined not to have found reserves in commercial quantities. The sale of a partial interest in a proved property is accounted for as a cost recovery, and no gain or loss is recognized as long as this treatment does not significantly affect the units-of-production amortization rate. A gain or loss is recognized for all other sales of producing properties. There were capitalized costs of $11,754,817 and $10,281,659 at June 30, 2016 and 2015, respectively.

 

Unproved oil and gas properties are assessed annually to determine whether they have been impaired by the drilling of dry holes on or near the related acreage or other circumstances, which may indicate a decline in value. When impairment occurs, a loss is recognized. When leases for unproved properties expire, the costs thereof, net of any related allowance for impairment, is removed from the accounts and charged to expense. During the three months ended June 30, 2016 and 2015, there was no impairment to unproved properties. The sale of a partial interest in an unproved property is accounted for as a recovery of cost when substantial uncertainty exists as to the ultimate recovery of the cost applicable to the interest retained. A gain on the sale is recognized to the extent that the sales price exceeds the carrying amount of the unproved property. A gain or loss is recognized for all other sales of unproved properties. There were capitalized costs of $4,754,620 and $4,745,917 at June 30, 2016 and March 31, 2016, respectively.

 

Costs associated with development wells that are unevaluated or are waiting on access to transportation or processing facilities are reclassified into developmental wells-in-progress (“WIP”). These costs are not put into a depletable field basis until the wells are fully evaluated or access is gained to transportation and processing facilities. Costs associated with WIP are included in the cash flows from investing as part of investment in oil and gas properties. At June 30, 2016 and March 31, 2016, no capitalized development costs were included in WIP.

 

Depreciation, depletion and amortization of proved oil and gas properties is calculated using the units-of-production method based on proved reserves and estimated salvage values. For the three months ended June 30, 2016 and 2015, the Company recorded depreciation, depletion and amortization expense on oil and gas properties in the amount of $35,123 and $127,046, respectively.

 

The Company reviews its proved oil and natural gas properties for impairment whenever events and circumstances indicate that a decline in the recoverability of its carrying value may have occurred. It estimates the undiscounted future net cash flows of its oil and natural gas properties and compares such undiscounted future cash flows to the carrying amount of the oil and natural gas properties to determine if the carrying amount is recoverable. If the carrying amount exceeds the estimated undiscounted future cash flows, the Company will adjust the carrying amount of the oil and natural gas properties to fair value. There was no impairment to prove properties for the three months ended June 30, 2016 and 2015, respectively.

 

Other Property and Equipment

 

Other property and equipment, such as computer hardware and software, are recorded at cost. Costs of renewals and improvements that substantially extend the useful lives of the assets are capitalized. Maintenance and repair costs are expensed when incurred. When other property and equipment is sold or retired, the capitalized costs and related accumulated depreciation are removed from their respective accounts. Depreciation expense of other property and equipment for the three months ended June 30, 2016 and 2015 was $10,284 and $9,594, respectively.

 

Asset Retirement Obligations

 

The Company records estimated future asset retirement obligations (“ARO”) related to its oil and gas properties. The Company records the estimated fair value of a liability for ARO in the period in which it is incurred with a corresponding increase in the carrying amount of the related long-lived asset. The increased carrying value is depleted using the units-of-production method, and the discounted liability is increased through accretion over the remaining life of the respective oil and gas properties.

 

The estimated liability is based on historical industry experience in abandoning wells, including estimated economic lives, external estimates as to the cost to abandon the wells in the future, and federal and state regulatory requirements. The Company’s liability is discounted using management’s best estimate of its credit-adjusted, risk-free rate. Revisions to the liability could occur due to changes in estimated abandonment costs, changes in well economic lives, or if federal or state regulators enact new requirements regarding the abandonment of wells.

 

    For the Three Months Ended  
    June 30,  
    2016     2015  
ARO - beginning of period   $ 1,197,143     $ 459,294  
Additions     133,311       -  
Deletions     -       (15,190 )
Accretion expense     22,323       15,887  
                 
      1,352,777       459,991  
                 
Less current portion     176,587       169,126  
                 
ARO - end of period   $ 1,176,190     $ 290,865  

 

Impairment of Long-Lived Assets

 

In accordance with authoritative guidance on accounting for the impairment or disposal of long-lived assets, as set forth in Topic 360 of the ASC, the Company assesses the recoverability of the carrying value of its non-oil and gas long-lived assets when events occur that indicate an impairment in value may exist. An impairment loss is indicated if the sum of the expected undiscounted future net cash flows is less than the carrying amount of the assets. If this occurs, an impairment loss is recognized for the amount by which the carrying amount of the assets exceeds the estimated fair value of the assets.

 

Revenue Recognition

 

The Company recognizes revenue when it is realized or realizable and earned. Revenue is realized or realizable and earned when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered to the customer, the price to the buyer is fixed or determinable and collectability is reasonably assured. For goods, this is the point at which title and risk of loss is transferred and when payment has either been received or collection is reasonably assured. Revenues for services are recorded when the services have been provided. Revenue that does not meet these criteria is deferred until the criteria are met.

 

Other Comprehensive Loss

 

The Company has no material components of other comprehensive loss and accordingly, net loss is equal to comprehensive loss for the period.

 

Income Taxes

 

The Company uses the liability method of accounting for income taxes under which deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the accounting bases and the tax bases of the Company’s assets and liabilities. The deferred tax assets and liabilities are computed using enacted tax rates in effect for the year in which the temporary differences are expected to reverse.

 

The Company’s deferred income taxes include certain future tax benefits. The Company records a valuation allowance against any portion of those deferred income tax assets when it believes, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred income tax asset will not be realized.

 

The Company has adopted ASC guidance regarding accounting for uncertainty in income taxes. This guidance clarifies the accounting for income taxes by prescribing the minimum recognition threshold an income tax position is required to meet before being recognized in the consolidated financial statements and applies to all income tax positions. Each income tax position is assessed using a two-step process. A determination is first made as to whether it is more likely than not that the income tax position will be sustained, based upon technical merits, upon examination by the taxing authorities. If the income tax position is expected to meet the more likely than not criteria, the benefit recorded in the consolidated financial statements equals the largest amount that is greater than 50% likely to be realized upon its ultimate settlement. At June 30, 2016, there were no uncertain tax positions that required accrual.

 

Business Combination

 

The Company accounts for acquisitions in accordance with guidance found in ASC 805, Business Combinations. The guidance requires consideration given, including contingent consideration, assets acquired and liabilities assumed to be valued at their fair values at the date of acquisition. The guidance further provides that acquisition costs will generally be expenses as incurred and changes in deferred tax asset valuations and income tax uncertainties after the acquisition date generally will affect income tax expense.

 

ASC 805 requires that any excess of purchase price over the fair value of assets acquired, including identifiable intangibles and liabilities assumed be recognized as goodwill and any excess of fair value of acquired net assets, including identifiable intangible assets over the acquisition consideration results in a gain from bargain purchase. Prior to recording a gain, the acquiring entity must reassess whether ass acquired assets and assumed liabilities have been identified and recognized and perform re-measurements to verify that the consideration paid, assets acquired and liabilities assumed have been properly valued.

 

Net Loss per Share

 

Basic net loss per common share of stock is calculated by dividing net loss available to common stockholders by the weighted-average number of common shares outstanding during each period.

 

Diluted net loss per common share is calculated by dividing net loss by the weighted-average number of common shares outstanding, including the effect of other dilutive securities. The Company’s potentially dilutive securities consist of in-the-money outstanding options and warrants to purchase the Company’s common stock. Diluted net loss per common share does not give effect to dilutive securities as their effect would be anti-dilutive.

 

The treasury stock method is used to measure the dilutive impact of stock options and warrants. The following table details the weighted-average dilutive and anti-dilutive securities related to stock options and warrants for the periods presented:

 

    For the Three Months Ended  
    June 30,  
    2016     2015  
Dilutive     -       -  
Anti Dilutive     2,644,462       1,878,088  

 

Equity Based Payments

 

The Company recognizes compensation cost for equity based awards based on estimated fair value of the award and records capitalized cost or compensation expense over the requisite service period. See Note 9 – Equity Based Payments.

 

Major Customers

 

During the three months ended June 30, 2016 and 2015, one purchaser accounted for 100% and 88% of total revenues, respectively.

 

Beneficial Conversion Feature and Deemed Dividend Related to Series A Shares

 

Pursuant to ASC 470-20, when the $558,171 of convertible Series A Shares of preferred stock were issued at a discount from the if-converted $682,989 fair value as of the issuance date, the Company recognized this difference between the fair value per share of its common stock and the conversion price, multiplied by the number of shares issuable upon conversion. This total Beneficial Conversion Feature of $124,818 will be recorded as additional paid-in-capital for common shares. The offsetting amount will be amortizable over the period from the issue date to the first conversion date or 9 months. Therefore, since the 409,019 Series A Shares of preferred stock are convertible between July and December of 2016, a deemed dividend of $37,805 to the Series A Shares of preferred stock has been recorded during the three months ended June 30, 2016 in its statement of operations and cash flows. As the Company is in an accumulated deficit position, the deemed dividend of $37,805 has been charged against additional paid-in-capital for common shares as there being no retained earnings from which to declare a dividend.

 

Off-Balance Sheet Arrangements

 

As part of its ongoing business, the Company has not participated in transactions that generate relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities (SPEs), which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. From its incorporation on February 11, 2014 through June 30, 2016, the Company has not been involved in any unconsolidated SPE transactions.

 

Recent Accounting Pronouncements

 

In June 2014, the FASB issued ASU No. 2014-10, Development Stage Entities (Topic915) – Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation. This standard update is to improve financial reporting by reducing the cost and complexity associated with the incremental reporting requirements for development stage entities, and as a result removes all incremental financial reporting requirements. This standard update also eliminates an exception provided to development stage entities in Topic 810, Consolidation, for determining whether an entity is a variable interest entity on the basis of the amount of the investment equity that is at risk. ASU 2014-10 is effective for annual reporting periods beginning after December 15, 2016, and interim reporting periods beginning after December 15, 2017. Entities are allowed to apply the guidance early for any annual reporting period or interim period for which the entity’s financial statements have not yet been issued or made available for issuance. The Company adopted these standards and they did not have a material impact on the Company’s consolidated financial statements.

 

In August 2014, the FASB issued Update No. 2014-15 - Presentation of Financial Statements – Going Concern that requires management to evaluate whether there are conditions or events that raise substantial doubt about an entity’s ability to continue as a going concern within one year after the date that the entity’s financial statements are issued, or within one year after the date that the entity’s financial statements are available to be issued, and to provide disclosures when certain criteria are met. This guidance is effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company is currently evaluating the provisions of this guidance and assessing its impact, but does not currently believe it will have a material effect on the Company’s consolidated financial statements or disclosures.

 

In November 2015, the FASB issued ASU No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes ASU 2015-17”). ASU 2015-17 is part of the FASB’s initiative to reduce the complexity in accounting standards. ASU 2015-17 requires entities to present deferred tax assets and deferred tax liabilities as non-current in a classified balance sheet. The amendments in this ASU simplify current guidance in ASC 740-10-45-4 that requires separate presentation of deferred tax assets and liabilities as current and non-current in a classified balance sheet based on the classification of the related asset or liability. ASU 2015-17 is effective for public companies for annual periods beginning after December 15, 2017 and interim periods beginning after December 15, 2018. Earlier application is permitted as of the beginning of an interim or annual reporting period. The Company adopted this ASU as of March 31, 2016. The adoption of this ASU did not have a material impact on our consolidated balance sheets as of March 31, 2016 and 2015.

 

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). ASU 2016-02 requires lessees to recognize all leases, including operating leases, on the balance sheet as a lease asset or lease liability, unless the lease is a short-term lease. ASU 2016-02 also requires additional disclosures regarding leasing arrangements. ASU 2016-02 is effective for interim periods and fiscal years beginning after December 15, 2018, and early application is permitted. The Company is in the process of determining the method of adoption and the impact this guidance will have on its financial condition, results of operations and cash flows.

 

There were other accounting standards and interpretations issued during the three months ended June 30, 2016, none of which are expected to have a material impact on the Company’s financial position, operations or cash flows.

 

Subsequent Events

 

The Company evaluates events and transactions after the balance sheet date but before the financial statements are issued.

XML 22 R10.htm IDEA: XBRL DOCUMENT v3.5.0.2
Going Concern and Managements' Plan
3 Months Ended
Jun. 30, 2016
Going Concern and Managements Plan [Abstract]  
Going Concern and Managements' Plan

Note 3 – Going Concern and Managements’ Plan

 

The Company’s consolidated financial statements for the three months ended June 30, 2016 and 2015 have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The Company reported a net loss of $786,161 and $690,953 for the three months ended June 30, 2016 and 2015, respectively, and an accumulated deficit of $27,505,329 as of June 30, 2016. At June 30, 2016, the Company had a working capital deficit of $(1,427,390).

 

The future success of the Company is dependent on its ability to attract additional capital and ultimately, upon its ability to develop future profitable operations. There can be no assurance that the Company will be successful in obtaining such financing, or that it will attain positive cash flow from operations. Management believes that actions presently being taken to revise the Company’s operating and financial requirements provide the opportunity for the Company to continue as a going concern.

XML 23 R11.htm IDEA: XBRL DOCUMENT v3.5.0.2
Fair Value Measurements
3 Months Ended
Jun. 30, 2016
Fair Value Disclosures [Abstract]  
Fair Value Measurements

Note 4 – Fair Value Measurements

 

The Company applies the authoritative guidance applicable to all financial assets and liabilities required to be measured and reported on a fair value basis, as well as to non-financial assets and liabilities measured at fair value on a non-recurring basis, including impairments of proved oil and gas properties and other long-lived assets and AROs initially measured at fair value. The fair value of an asset or liability is the amount that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. The Company maximizes the use of observable inputs and minimizes the use of unobservable inputs when measuring fair value. Observable inputs are inputs that market participants would use in valuing the asset or liability based on market data obtained from sources independent of the Company. Unobservable input are inputs that reflect the Company’s assumptions of what market participants would use in valuing the asset or liability based on the information available in the circumstances.

 

Financial and non-financial assets and liabilities are classified within the valuation hierarchy based upon the lowest level of input that is significant to the fair value measurement. The Company’s policy is to recognize transfers in and out of the fair value hierarchy as of the end of the reporting period in which the event or change in circumstances caused the transfer. The Company has consistently applied the valuation techniques discussed below in all periods presented. The hierarchy is organized into three levels based on the reliability of the inputs as follows:

 

Level 1: Quoted prices in active markets for identical assets or liabilities; or

 

Level 2: Quoted prices in active markets for similar assets and liabilities and inputs, quoted prices for identical or similar assets or liabilities in markets that are not active and model-derived valuations whose inputs or significant value drivers are observable; or

 

Level 3: Unobservable pricing inputs in which there is little or no market data, which requires the reporting entity to develop its own assumptions.

 

The following table presents the Company’s non-financial assets and liabilities that were measured at fair value on a non-recurring basis at June 30, 2016 by level within the fair value hierarchy:

 

Description   Level 1     Level 2     Level 3     Total  
Assets                                
Oil and gas properties   $ -     $ 930,238     $ -     $ 930,238  

 

Effective January 1, 2016, the Company acquired approximately 82% of the working interest in certain leases located in the state of Wyoming known as the Cole Creek properties and recorded the oil and gas properties at a fair value of $2,033,382. Thus, due to the significance of this event, the oil and gas properties were tested under ASC 360 as to its recoverability. Therefore, the oil and gas properties were recorded at fair value if impairment is required under the accounting guidance. The Company uses Level 2 inputs and the income valuation techniques of undiscounted oil and gas future net cash flows to measure the fair value of the oil and gas properties and thus the model forecast including discount rates and commodity prices were selected by the independent engineers of Netherland, Sewell & Associates, Inc. As such, there was an impairment to the oil and gas properties during the year ended March 31, 2016, the amount of $1,103,144.

 

The following table presents the Company’s non-financial assets and liabilities that were measured at fair value on a non-recurring basis at March 31, 2016 by level within the fair value hierarchy:

 

Description   Level 1     Level 2     Level 3     Total  
Assets                                
Oil and gas properties   $ -     $ 930,238     $ -     $ 930,238  

 

Fair value in the initial recognition of other equipment is determined based on the quoted fair value of the vehicle using inputs from valuation techniques used by industry participants. Accordingly, the fair value is based on observable pricing inputs and is considered a Level 2 value measurement. During the three months ended June 30, 2016 and 2015 there was no impairment.

XML 24 R12.htm IDEA: XBRL DOCUMENT v3.5.0.2
Significant Acquisition
3 Months Ended
Jun. 30, 2016
Business Combinations [Abstract]  
Significant Acquisition

Note 5 – Significant Acquisition

 

Effective January 1, 2016, the Company acquired approximately 82% of the working interest in certain leases located in the state of Wyoming known as the Cole Creek properties.

 

The following table presents the allocation of the consideration given to the assets acquired and liabilities assumed, based on their fair values at January 1, 2016:

 

Consideration Given      
Cash   $ 1,200,000  
         
Total purchase price   $ 1,200,000  
         
Allocation of Consideration Given      
Oil and gas properties Proved   $ 2,033,382  
         
Total assets     2,033,382  
         
Current liabilities     111,522  
Long-term liabilities     721,860  
         
Total liabilities     833,382  
         
Net assets acquired   $ 1,200,000  

 

Effective April 29, 2016, the Company acquired the remaining 17% of the working interest in the leases known as the Cole Creek properties.

 

The following table presents the allocation of the consideration given to the assets acquired and the liabilities assumed,

 

Consideration Given        
Cash   $ 250,000  
         
Total purchase price   $ 250,000  
         
Allocation of Consideration Given        
Oil and gas properties        
Proved   $ 383,311  
         
Total assets     383,311  
         
Current liabilities     -  
Long-term liabilities     133,311  
         
Total liabilities     133,311  
         
Net assets acquired   $ 250,000  

 

As a result the Company owns approximately 100% of the WI in the Cole Creek properties.

XML 25 R13.htm IDEA: XBRL DOCUMENT v3.5.0.2
Debt
3 Months Ended
Jun. 30, 2016
Debt Disclosure [Abstract]  
Debt

Note 6 – Debt

 

Promissory Notes

 

The Company during the year ended March 31, 2016 paid $341,405 in principal towards the repayment of promissory notes relative to the repurchase of 18,717 shares of Western Interior common stock owned by dissident shareholders as part of agreements effective March 31, 2015 to repurchase a total of 33,085 shares of Western Interior common stock. The Company at June 30, 2016 owes a balance in the amount of $488,298 on one of the promissory notes plus accrued interest of $17,043.60 with the remaining three promissory notes being paid in full.

 

On August 1, 2015, the Company, relative to the repurchase by the Company on March 31, 2015 of the remaining 14,368 shares of Western Interior common stock entered into an agreement with the note holder to settle the amount owed under the promissory note. As such, the parties agreed the amount owed on such promissory note by the Company would be reduced from $768,715 to $393,795 and the difference of $374,920 be considered a reduction in the purchase price by the Company of the 14,368 shares of Western Interior common stock. In addition, the $393,795 was paid in full effective August 1, 2015 by the transfer to the note holder of certain oil and gas properties owned by Western Interior which resulted in the Company reporting a gain on disposal of assets in the amount of $44,100.

 

On January 14, 2016, the Company borrowed $50,000 each from two directors in exchange for secured promissory notes including interest at the rate of 5% per annum with accrued and unpaid interest and principal due at September 30, 2016. The promissory notes are collateralized by certain oil and gas properties located in the State of Wyoming. Holders may, at any time prior to payment of the promissory notes elect to convert all or any portion of the promissory notes, including accrued interest, into common shares of the Company at a price determined by the average ten consecutive day trading closing price less 30%. The Company at June 30, 2016 owes $100,000 on the two promissory notes plus accrued interest of $2,298.50.

 

Line-of-Credit

 

The Company has a line-of-credit with a bank in the amount of $350,000 collateralized by certain oil and gas properties of the Company. The line-of-credit matures in November 2016. Annual interest is at prime plus 2.50% with a floor of 7%). The Company owes $130,52 on the line-of-credit at June 30, 2016.

 

Installment Notes

 

The Company during the year ended March 31, 2016, borrowed $34,374 from unrelated parties to finance their insurance policies. The unsecured notes are repaid during the year ended March at $3,437 per month including interest at the rate of 5.81% per annum. The Company owed $9,810.94 at June 30, 2016, respectively.

XML 26 R14.htm IDEA: XBRL DOCUMENT v3.5.0.2
Stockholders' Equity
3 Months Ended
Jun. 30, 2016
Equity [Abstract]  
Stockholders' Equity

Note 7 – Stockholders’ Equity

 

The Company’s capital stock at June 30, 2016 consists of 325,000,000 authorized shares of which 50,000,000 shares are $0.001 par value preferred stock and 275,000,000 shares are $0.001 par value common stock.

 

Preferred Shares

 

At June 30, 2016 and 2015, there are a total of 409,019 and 0 shares of preferred stock issued and outstanding, respectively.

 

On October 28, 2015, the Company filed an Amendment to its Articles of Incorporation to designate a class of preferred stock as the Series A Convertible Preferred Stock.

 

The Amendment sets aside 5,000,000 shares of the authorized 50,000,000 shares of the Company’s $0.001 par value preferred stock as the Series A Convertible Preferred Stock (“the Series A Shares.”) The Series A Shares are convertible at the option of the Holder into common shares of the Company’s stock 9 months after the date of issuance. Further, the Series A Shares have a conversion price based upon 80% of the 10 day average of the Company’s closing market price at the time of conversion.

 

In October 2015, the Company commenced a private placement financing of $7,000,000 in Units, a Unit consisting of one share of its Series A Shares and an Unit Warrant. The Unit Warrant has an exercise price of $3.00 per share and a term of 3 years. The Unit Warrant is exercisable 9 months after issuance and is callable by the Company upon the Company’s common stock closing at a market price of $5.00 or above for a period of 10 days.

 

Pursuant to ASC 470-20, when the $558,171 of convertible Series A Shares of preferred stock were issued at a discount from the if-converted $682,989 fair value as of the issuance date, the Company recognized this difference between the fair value per share of its common stock and the conversion price, multiplied by the number of shares issuable upon conversion. This total Beneficial Conversion Feature of $124,818 will be recorded as additional paid-in-capital for common shares. The offsetting amount will be amortizable over the period from the issue date to the first conversion date or 9 months. Therefore, since the 409,019 Series A Shares of preferred stock are convertible between July and December of 2016, a deemed dividend of $37,805 to the Series A Shares of preferred stock has been recorded during the three months ended June 30, 2016 in its statement of operations and cash flows. As the Company is in an accumulated deficit position, the deemed dividend of $37,805 has been charged against additional paid-in-capital for common shares as there being no retained earnings from which to declare a dividend.

 

During the year ended March 31, 2016, the Company received $818,038, including cash of $793,037, in exchange for the issuance of 409,019 shares of its Series A Preferred Stock and Unit Warrants exercisable for 419,019 shares of common stock.

 

We apply the guidance enumerated in ASC 480 “Distinguishing Liabilities from Equity” when determining the classification and measurement of preferred shares. Preferred shares subject to mandatory redemption (if any) are classified as liability instruments and are measured at fair value. We classify conditionally redeemable preferred shares (if any), which includes preferred shares that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control, as equity. At all other times, we classified our preferred shares in stockholders’ equity.

 

We have applied the guidance of ASC 470 “Debt” in accounting for the unit warrants and as such have valued the Unit Warrants using the Black-Scholes option pricing model. The option-pricing model requires a number of assumptions, of which the most significant are the stock price at the valuation date that was at a range of $1.10 to $1.50 per share as well as the following assumptions:

 

Volatility     82% - 134 %
Expected Option/Warrant Term     3 years  
Risk-free interest rate     .25 %
Expected dividend yield     0.00 %

 

The expected term of the Unit Warrants granted were estimated to be the contractual term. The expected volatility was based on an average of the volatility disclosed based upon comparable companies who had similar expected option and warrant terms. The risk-free rate was based on the one-year U.S. Treasury bond rate.

 

As a result, the Unit Warrants exercisable for 409,019 shares of our restricted common stock were valued at $135,049 and as such $67,830 was credited to additional paid in capital during the year ended March 31, 2016.

 

Common Shares

 

At June 30, 2016 and March 31, 2016, there are a total of 15,866,099 and 15,480,882 shares of common stock issued and outstanding, respectively.

 

During the three months ended June 30, 2016, the Company as part of a private placement sold 99,378 shares of its restricted common stock for $74,613 in cash and 235,839 shares for $353,719 in cash.

 

During the three months ended June 30, 2016, the Company issued 50,000 shares of common stock in connection with the cash exercise of options at an exercise price $0.10 per share.

 

Additional Paid-in Capital

 

During the year ended March 31, 2016, as the Company is in an accumulated deficit position, the deemed dividend in the amount of $37,805 was charged against additional paid-in-capital as there being no retained earnings from which to declare a dividend.

 

During the year ended June 30, 2016, the Company realized additional paid in capital relative to the fair value of equity based payments in the amount of $207,200 of which $11,520 was expensed and $195,680 was capitalized. See Note 9 – Equity Based Payments.

XML 27 R15.htm IDEA: XBRL DOCUMENT v3.5.0.2
Equity Based Payments
3 Months Ended
Jun. 30, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Equity Based Payments

Note 8 – Equity Based Payments

 

The Company accounts for equity based payment accruals under authoritative guidance as set forth in the Topics of the ASC. The guidance requires all equity based payments to employees and non-employees, including grants of employee and non-employee stock options and warrants, to be recognized in the consolidated financial statements based at their fair values.

 

The Black-Scholes option-pricing model is used to estimate the option and warrant fair values. The option-pricing model requires a number of assumptions, of which the most significant are the stock price at the valuation date that ranged from $0.01 to $3.50 per share as well as the following assumptions:

 

Volatility     82.00% - 134.00 %
Expected Option/Warrant Term     9 months - 3 years  
Risk-free interest rate     .12% - .25 %
Expected dividend yield     0.00 %

 

The expected term of the options and warrants granted were estimated to be the contractual term. The expected volatility was based on an average of the volatility disclosed based upon comparable companies who had similar expected option and warrant terms. The risk-free rate was based on the one-year U.S. Treasury bond rate.

 

Warrant

 

During May 2016, the Company issued a warrant exercisable for 350,000 shares of the Company’s common stock in exchange for business development services pursuant to a Consulting Agreement. The warrant has a term of 3 years and an exercise price of $2.00 per share.

 

Using the Black-Scholes option-pricing model, the warrant was found to have a fair value of $207,200. Assumptions used in the pricing were:

 

Volatility     89.00 %
Expected Option/Warrant Term     1 year  
Risk-free interest rate     .25 %
Expected dividend yield     0.00 %

 

As the warrant was issued for services to be rendered under a 3 year Consulting Agreement, the Company is amortizing the warrant over the life of the Consulting Agreement.

 

2014 Stock Incentive Plan

 

Effective October 1, 2014, the Company’s 2014 Stock Option and Award Plan (the “2014 Stock Incentive Plan”) was approved by its Board of Directors. Under the 2014 Stock Incentive Plan, the Board of Directors may grant options or purchase rights to purchase common stock to officers, employees, and other persons who provide services to the Company or any related company. The participants to whom awards are granted, the type of awards granted, the number of shares covered for each award, and the purchase price, conditions and other terms of each award are determined by the Board of Directors, except that the term of the options shall not exceed 10 years. A total of 2 million shares of the Company’s common stock are subject to the 2014 Stock Incentive Plan. The shares issued for the 2014 Stock Incentive Plan may be either treasury or authorized and unissued shares.

 

The following table summarizes the non-qualified stock option and warrant activity at June 30, 2016:

 

    2016  
    Number of     Weighted  
    Options/     Average  
      Warrants       Exercise Price  
Outstanding at                
beginning of year                
Options     1,127,750     $ 0.039  
Warrants     1,351,877     $ 1.462  
                 
Granted                
Options     -     $ -  
Warrants     350,000     $ 2.000  
                 
Exercised                
Options     (50,000 )   $ 0.100  
Warrants     -     $ -  
                 
Cancelled                
Options     -     $ -  
Warrants     -     $ -  
                 
Outstanding at June 30,                
Options     1,077,750     $ 0.316  
Warrants     1,701,877     $ 1.980  
                 
Exercisable at June 30,                
Options     1,077,750     $ 0.316  
Warrants     1,701,877     $ 1.980  

 

Weighted average         Aggregate  
remaining contractual         Intrinsic  
life   Life     Value  
Options     0.85     $ 1,115,084  
Warrants     1.70     $ 511,500  

 

The aggregate intrinsic value of outstanding securities is the amount by which the fair value of underlying (common) shares exceed the amount paid for and the exercise price of the options and warrants issued and outstanding.

XML 28 R16.htm IDEA: XBRL DOCUMENT v3.5.0.2
Commitments and Contingencies
3 Months Ended
Jun. 30, 2016
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies

Note 9 – Commitments and Contingencies

 

Operating Lease

 

The Company leases an office space in Colorado at the rate of $4,572 per month and the lease expires in August 2017. In addition, the Company leases an office space in Wyoming at the rate of $5,838 per month and the lease expires in June 2019. In addition, the Company leases a corporate apartment at a rate of $1,990 per month and the lease will expire May 2017. Total rent expense under these leases for June 30, 2016 is $35,527.

 

The following is a schedule of minimum future rental annual payments under the operating lease for the stated fiscal year ends:

 

3/31/2017       147,333  
3/31/2018       83,111  
3/31/2019       62,940  
3/31/2020       15,735  
      $ 309,119  

 

Employment Agreements

 

In August 2014, Terex entered into an Employment Agreement for services with its Chief Executive Officer, President and director. The Employment Agreement has a term of 3 years and provides for an annual compensation of $204,000 and a monthly car allowance of $600. It also provides for an annual bonus as determined by the board of directors.

 

In November 2014, Terex entered into an Employment Agreement for services with its Vice President of Operations and director. The Employment Agreement has a term of 3 years and provides for an annual compensation of $150,000. It also provides for an annual bonus as determined by the board of directors.

 

In November 2014, Terex entered into an Employment Agreement for services with its Vice President of Geology and director. The Employment Agreement has a term of 3 years and provides for an annual compensation of $150,000. It also provides for an annual bonus as determined by the board of directors.

 

In January 2015, T-Rex entered into an Employment Agreement for services with its Vice President of Operations and director. The Employment Agreement has a term of 3 years and provides for an annual compensation of $150,000. It also provides for an annual bonus as determined by the board of directors.

 

Consulting Agreement

 

The Company entered into a three-year agreement effective September 1, 2014 with a consultant to perform services at the base rate of $150,000 per year under certain terms and conditions including with an auto allowance of $600 per month. In addition, the consultant has been granted cashless options to acquire up to 500,000 shares of T-Rex’s common stock at an option price of $0.10 per share for a period of three years from April 1, 2014. The options vested ratably over the year ended March 31, 2015. See Note 8 – Equity Based Payments.

XML 29 R17.htm IDEA: XBRL DOCUMENT v3.5.0.2
Related Party Transactions
3 Months Ended
Jun. 30, 2016
Related Party Transactions [Abstract]  
Related Party Transactions

Note 10 – Related Party Transactions

 

T-Rex Oil LLC #1

 

The Company is the manager of T-Rex Oil LLC #1 that was formed during December 2014 for the purpose of drilling and producing oil and gas wells. During the year ended March 31, 2015, the Company loaned the LLC $50,000 and at March 31, 2016 and 2015, the Company is owed $0 and $50,000, respectively.

 

The Company in December 2014 entered into put agreements with the members of T-Rex #1 whereby the Company granted a right to put the purchase of their interest of T-Rex #1 in the amount of $425,000 back to the Company at an exercise price of $2.00 per share or a total of 212,500 shares of the Company’s common stock.

 

In August 2016, the members exercised the put at $1.00 per share and a total of 425,000 shares of restricted common stock were issued.

 

T-Rex Oil LLC #3

 

The Company is the manager of T-Rex Oil LLC #3 that was formed in January 2016 for the purpose of acquiring and developing oil and gas leases known as the Cole Creek properties in Wyoming. T-Rex Oil LLC #3 is included as part of the consolidated financial statements as of and for the year ended March 31, 2016. See Note 1 – Organization and History.

XML 30 R18.htm IDEA: XBRL DOCUMENT v3.5.0.2
Subsequent Events
3 Months Ended
Jun. 30, 2016
Subsequent Events [Abstract]  
Subsequent Events

Note 11 – Subsequent Events

 

Sale of Common Shares

 

During the period of July 1, 2016 through August 15, 2016, the Company sold 142,670 shares of its common stock in exchange for $213,443 in cash or at $1.50 per share as part of a private placement.

 

Exercise of Option

 

During the period of July 1, 2016 through August 15, 2016, an option holder exercised his option for a total of 50,000 shares of restricted common stock.

 

T-Rex Oil, LLC #3

 

On August 15, 2016, T-Rex Oil, LLC #3 was erroneously dissolved with the Secretary of State of Colorado, the entity was re-instated upon discovery of this on August 25, 2016.

XML 31 R19.htm IDEA: XBRL DOCUMENT v3.5.0.2
Summary of Significant Accounting Policies (Policies)
3 Months Ended
Jun. 30, 2016
Accounting Policies [Abstract]  
Principles of Consolidation

Principles of Consolidation

 

The accompanying consolidated balance sheets at June 30, 2016 and 2015 and the consolidated statement of operations and cash flows for the three months ended June 30, 2016 include the accounts of Terex Energy Corporation, T-Rex Oil, Inc., Western Interior Oil and Gas Corporation and T-Rex Oil LLC #3. All intercompany balances have been eliminated during consolidation.

 

The Company owns a 14.29% equity interest in T-Rex Oil, LLC #3, the remaining 85.71% is held by a director and shareholder of the Company. The Company has identified T-Rex Oil LLC #3 as a Variable Interest Entity (VIE). We hold current rights that gives us the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance convened with provisions that give us the right to receive potentially significant benefits. As a result, we consolidate the accounts of T-Rex Oil, LLC #3, eliminating all intercompany balances during consolidation.

 

We continuously evaluate whether we have a controlling financial interest in T-Rex Oil LLC#3. Where we are a general partner, we consider substantive removal rights held by other partners in determining if we hold a controlling financial interest. We reevaluate whether we have a controlling financial interest in these entities when our voting or substantive participating rights change.

Use of Estimates in the Preparation of Consolidated Financial Statements

Use of Estimates in the Preparation of Consolidated Financial Statements

 

The preparation of consolidated financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Significant estimates include the fair value of assets and liabilities, oil and natural gas reserves, income taxes and the valuation allowances related to deferred tax assets, asset retirement obligations and contingencies.

Cash and Cash Equivalents

Cash and Cash Equivalents

 

The Company considers all liquid investments purchased with an initial maturity of three months or less to be cash equivalents. Cash and cash equivalents include demand deposits and money market funds carried at cost which approximates fair value. The Company maintains its cash in institutions insured by the Federal Deposit Insurance Corporation (“FDIC”), although such deposits are in excess of the insurance coverage. At June 30, 2016, the Company did not have cash deposits in excess of FDIC insured limits.

Concentration of Credit Risk

Concentration of Credit Risk

 

The Company’s producing properties are primarily located in Wyoming and the oil and gas production is sold to various purchasers based on market index prices. The risk of non-payment by these purchasers is considered minimal and the Company does not generally obtain collateral for sales. The Company continually monitors the credit standing of the primary purchasers.

 

During the three months ended June 30, 2016 and 2015, one purchaser accounted for 100% and 88% of total revenues, respectively.

Accounts Receivable

Accounts Receivable

 

Accounts receivable are stated at their cost less any allowance for doubtful accounts. The allowance for doubtful accounts is based on the management’s assessment of the collectability of specific customer accounts and the aging of the accounts receivable. If there is deterioration in a major customer’s creditworthiness or if actual defaults are higher than the historical experience, the management’s estimates of the recoverability of amounts due to the Company could be adversely affected. Based on the management’s assessment, there is no reserve recorded at June 30, 2016 and 2015.

Oil and Gas Producing Activities

Oil and Gas Producing Activities

 

The Company uses the successful efforts method of accounting for oil and gas activities. Under this method, the costs of productive exploratory wells, all development wells, related asset retirement obligation assets, and productive leases are capitalized and amortized, principally by field, on a units-of-production basis over the life of the remaining proved reserves. Exploration costs, including personnel costs, geological and geophysical expenses, and delay rentals for oil and gas leases are charged to expense as incurred. Exploratory drilling costs are initially capitalized, but charged to expense if and when the well is determined not to have found reserves in commercial quantities. The sale of a partial interest in a proved property is accounted for as a cost recovery, and no gain or loss is recognized as long as this treatment does not significantly affect the units-of-production amortization rate. A gain or loss is recognized for all other sales of producing properties. There were capitalized costs of $11,754,817 and $10,281,659 at June 30, 2016 and 2015, respectively.

 

Unproved oil and gas properties are assessed annually to determine whether they have been impaired by the drilling of dry holes on or near the related acreage or other circumstances, which may indicate a decline in value. When impairment occurs, a loss is recognized. When leases for unproved properties expire, the costs thereof, net of any related allowance for impairment, is removed from the accounts and charged to expense. During the three months ended June 30, 2016 and 2015, there was no impairment to unproved properties. The sale of a partial interest in an unproved property is accounted for as a recovery of cost when substantial uncertainty exists as to the ultimate recovery of the cost applicable to the interest retained. A gain on the sale is recognized to the extent that the sales price exceeds the carrying amount of the unproved property. A gain or loss is recognized for all other sales of unproved properties. There were capitalized costs of $4,754,620 and $4,745,917 at June 30, 2016 and March 31, 2016, respectively.

 

Costs associated with development wells that are unevaluated or are waiting on access to transportation or processing facilities are reclassified into developmental wells-in-progress (“WIP”). These costs are not put into a depletable field basis until the wells are fully evaluated or access is gained to transportation and processing facilities. Costs associated with WIP are included in the cash flows from investing as part of investment in oil and gas properties. At June 30, 2016 and March 31, 2016, no capitalized development costs were included in WIP.

 

Depreciation, depletion and amortization of proved oil and gas properties is calculated using the units-of-production method based on proved reserves and estimated salvage values. For the three months ended June 30, 2016 and 2015, the Company recorded depreciation, depletion and amortization expense on oil and gas properties in the amount of $35,123 and $127,046, respectively.

 

The Company reviews its proved oil and natural gas properties for impairment whenever events and circumstances indicate that a decline in the recoverability of its carrying value may have occurred. It estimates the undiscounted future net cash flows of its oil and natural gas properties and compares such undiscounted future cash flows to the carrying amount of the oil and natural gas properties to determine if the carrying amount is recoverable. If the carrying amount exceeds the estimated undiscounted future cash flows, the Company will adjust the carrying amount of the oil and natural gas properties to fair value. There was no impairment to prove properties for the three months ended June 30, 2016 and 2015, respectively.

Other Property and Equipment

Other Property and Equipment

 

Other property and equipment, such as computer hardware and software, are recorded at cost. Costs of renewals and improvements that substantially extend the useful lives of the assets are capitalized. Maintenance and repair costs are expensed when incurred. When other property and equipment is sold or retired, the capitalized costs and related accumulated depreciation are removed from their respective accounts. Depreciation expense of other property and equipment for the three months ended June 30, 2016 and 2015 was $10,284 and $9,594, respectively.

Asset Retirement Obligations

Asset Retirement Obligations

 

The Company records estimated future asset retirement obligations (“ARO”) related to its oil and gas properties. The Company records the estimated fair value of a liability for ARO in the period in which it is incurred with a corresponding increase in the carrying amount of the related long-lived asset. The increased carrying value is depleted using the units-of-production method, and the discounted liability is increased through accretion over the remaining life of the respective oil and gas properties.

 

The estimated liability is based on historical industry experience in abandoning wells, including estimated economic lives, external estimates as to the cost to abandon the wells in the future, and federal and state regulatory requirements. The Company’s liability is discounted using management’s best estimate of its credit-adjusted, risk-free rate. Revisions to the liability could occur due to changes in estimated abandonment costs, changes in well economic lives, or if federal or state regulators enact new requirements regarding the abandonment of wells.

 

    For the Three Months Ended  
    June 30,  
    2016     2015  
ARO - beginning of period   $ 1,197,143     $ 459,294  
Additions     133,311       -  
Deletions     -       (15,190 )
Accretion expense     22,323       15,887  
                 
      1,352,777       459,991  
                 
Less current portion     176,587       169,126  
                 
ARO - end of period   $ 1,176,190     $ 290,865  

Impairment of Long-Lived Assets

Impairment of Long-Lived Assets

 

In accordance with authoritative guidance on accounting for the impairment or disposal of long-lived assets, as set forth in Topic 360 of the ASC, the Company assesses the recoverability of the carrying value of its non-oil and gas long-lived assets when events occur that indicate an impairment in value may exist. An impairment loss is indicated if the sum of the expected undiscounted future net cash flows is less than the carrying amount of the assets. If this occurs, an impairment loss is recognized for the amount by which the carrying amount of the assets exceeds the estimated fair value of the assets.

Revenue Recognition

Revenue Recognition

 

The Company recognizes revenue when it is realized or realizable and earned. Revenue is realized or realizable and earned when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered to the customer, the price to the buyer is fixed or determinable and collectability is reasonably assured. For goods, this is the point at which title and risk of loss is transferred and when payment has either been received or collection is reasonably assured. Revenues for services are recorded when the services have been provided. Revenue that does not meet these criteria is deferred until the criteria are met.

Other Comprehensive Loss

Other Comprehensive Loss

 

The Company has no material components of other comprehensive loss and accordingly, net loss is equal to comprehensive loss for the period.

Income Taxes

Income Taxes

 

The Company uses the liability method of accounting for income taxes under which deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the accounting bases and the tax bases of the Company’s assets and liabilities. The deferred tax assets and liabilities are computed using enacted tax rates in effect for the year in which the temporary differences are expected to reverse.

 

The Company’s deferred income taxes include certain future tax benefits. The Company records a valuation allowance against any portion of those deferred income tax assets when it believes, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred income tax asset will not be realized.

 

The Company has adopted ASC guidance regarding accounting for uncertainty in income taxes. This guidance clarifies the accounting for income taxes by prescribing the minimum recognition threshold an income tax position is required to meet before being recognized in the consolidated financial statements and applies to all income tax positions. Each income tax position is assessed using a two-step process. A determination is first made as to whether it is more likely than not that the income tax position will be sustained, based upon technical merits, upon examination by the taxing authorities. If the income tax position is expected to meet the more likely than not criteria, the benefit recorded in the consolidated financial statements equals the largest amount that is greater than 50% likely to be realized upon its ultimate settlement. At June 30, 2016, there were no uncertain tax positions that required accrual.

Business Combination

Business Combination

 

The Company accounts for acquisitions in accordance with guidance found in ASC 805, Business Combinations. The guidance requires consideration given, including contingent consideration, assets acquired and liabilities assumed to be valued at their fair values at the date of acquisition. The guidance further provides that acquisition costs will generally be expenses as incurred and changes in deferred tax asset valuations and income tax uncertainties after the acquisition date generally will affect income tax expense.

 

ASC 805 requires that any excess of purchase price over the fair value of assets acquired, including identifiable intangibles and liabilities assumed be recognized as goodwill and any excess of fair value of acquired net assets, including identifiable intangible assets over the acquisition consideration results in a gain from bargain purchase. Prior to recording a gain, the acquiring entity must reassess whether ass acquired assets and assumed liabilities have been identified and recognized and perform re-measurements to verify that the consideration paid, assets acquired and liabilities assumed have been properly valued.

Net Loss per Share

Net Loss per Share

 

Basic net loss per common share of stock is calculated by dividing net loss available to common stockholders by the weighted-average number of common shares outstanding during each period.

 

Diluted net loss per common share is calculated by dividing net loss by the weighted-average number of common shares outstanding, including the effect of other dilutive securities. The Company’s potentially dilutive securities consist of in-the-money outstanding options and warrants to purchase the Company’s common stock. Diluted net loss per common share does not give effect to dilutive securities as their effect would be anti-dilutive.

 

The treasury stock method is used to measure the dilutive impact of stock options and warrants. The following table details the weighted-average dilutive and anti-dilutive securities related to stock options and warrants for the periods presented:

 

    For the Three Months Ended  
    June 30,  
    2016     2015  
Dilutive     -       -  
Anti Dilutive     2,644,462       1,878,088  

Equity Based Payments

Equity Based Payments

 

The Company recognizes compensation cost for equity based awards based on estimated fair value of the award and records capitalized cost or compensation expense over the requisite service period. See Note 9 – Equity Based Payments.

Major Customers

Major Customers

 

During the three months ended June 30, 2016 and 2015, one purchaser accounted for 100% and 88% of total revenues, respectively.

Beneficial Conversion Feature and Deemed Dividend Related to Series A Shares

Beneficial Conversion Feature and Deemed Dividend Related to Series A Shares

 

Pursuant to ASC 470-20, when the $558,171 of convertible Series A Shares of preferred stock were issued at a discount from the if-converted $682,989 fair value as of the issuance date, the Company recognized this difference between the fair value per share of its common stock and the conversion price, multiplied by the number of shares issuable upon conversion. This total Beneficial Conversion Feature of $124,818 will be recorded as additional paid-in-capital for common shares. The offsetting amount will be amortizable over the period from the issue date to the first conversion date or 9 months. Therefore, since the 409,019 Series A Shares of preferred stock are convertible between July and December of 2016, a deemed dividend of $37,805 to the Series A Shares of preferred stock has been recorded during the three months ended June 30, 2016 in its statement of operations and cash flows. As the Company is in an accumulated deficit position, the deemed dividend of $37,805 has been charged against additional paid-in-capital for common shares as there being no retained earnings from which to declare a dividend.

Off-Balance Sheet Arrangements

Off-Balance Sheet Arrangements

 

As part of its ongoing business, the Company has not participated in transactions that generate relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities (SPEs), which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. From its incorporation on February 11, 2014 through June 30, 2016, the Company has not been involved in any unconsolidated SPE transactions.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

 

In June 2014, the FASB issued ASU No. 2014-10, Development Stage Entities (Topic915) – Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation. This standard update is to improve financial reporting by reducing the cost and complexity associated with the incremental reporting requirements for development stage entities, and as a result removes all incremental financial reporting requirements. This standard update also eliminates an exception provided to development stage entities in Topic 810, Consolidation, for determining whether an entity is a variable interest entity on the basis of the amount of the investment equity that is at risk. ASU 2014-10 is effective for annual reporting periods beginning after December 15, 2016, and interim reporting periods beginning after December 15, 2017. Entities are allowed to apply the guidance early for any annual reporting period or interim period for which the entity’s financial statements have not yet been issued or made available for issuance. The Company adopted these standards and they did not have a material impact on the Company’s consolidated financial statements.

 

In August 2014, the FASB issued Update No. 2014-15 - Presentation of Financial Statements – Going Concern that requires management to evaluate whether there are conditions or events that raise substantial doubt about an entity’s ability to continue as a going concern within one year after the date that the entity’s financial statements are issued, or within one year after the date that the entity’s financial statements are available to be issued, and to provide disclosures when certain criteria are met. This guidance is effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company is currently evaluating the provisions of this guidance and assessing its impact, but does not currently believe it will have a material effect on the Company’s consolidated financial statements or disclosures.

 

In November 2015, the FASB issued ASU No. 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes ASU 2015-17”). ASU 2015-17 is part of the FASB’s initiative to reduce the complexity in accounting standards. ASU 2015-17 requires entities to present deferred tax assets and deferred tax liabilities as non-current in a classified balance sheet. The amendments in this ASU simplify current guidance in ASC 740-10-45-4 that requires separate presentation of deferred tax assets and liabilities as current and non-current in a classified balance sheet based on the classification of the related asset or liability. ASU 2015-17 is effective for public companies for annual periods beginning after December 15, 2017 and interim periods beginning after December 15, 2018. Earlier application is permitted as of the beginning of an interim or annual reporting period. The Company adopted this ASU as of March 31, 2016. The adoption of this ASU did not have a material impact on our consolidated balance sheets as of March 31, 2016 and 2015.

 

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). ASU 2016-02 requires lessees to recognize all leases, including operating leases, on the balance sheet as a lease asset or lease liability, unless the lease is a short-term lease. ASU 2016-02 also requires additional disclosures regarding leasing arrangements. ASU 2016-02 is effective for interim periods and fiscal years beginning after December 15, 2018, and early application is permitted. The Company is in the process of determining the method of adoption and the impact this guidance will have on its financial condition, results of operations and cash flows.

 

There were other accounting standards and interpretations issued during the three months ended June 30, 2016, none of which are expected to have a material impact on the Company’s financial position, operations or cash flows.

Subsequent Events

Subsequent Events

 

The Company evaluates events and transactions after the balance sheet date but before the financial statements are issued.

XML 32 R20.htm IDEA: XBRL DOCUMENT v3.5.0.2
Summary of Significant Accounting Policies (Tables)
3 Months Ended
Jun. 30, 2016
Accounting Policies [Abstract]  
Schedule of Reconciliation of Changes in Company's liability

 

    For the Three Months Ended  
    June 30,  
    2016     2015  
ARO - beginning of period   $ 1,197,143     $ 459,294  
Additions     133,311       -  
Deletions     -       (15,190 )
Accretion expense     22,323       15,887  
                 
      1,352,777       459,991  
                 
Less current portion     176,587       169,126  
                 
ARO - end of period   $ 1,176,190     $ 290,865  

Weighted-Average Dilutive and Anti-dilutive Securities to Stock Options and Warrants

The following table details the weighted-average dilutive and anti-dilutive securities related to stock options and warrants for the periods presented:

 

    For the Three Months Ended  
    June 30,  
    2016     2015  
Dilutive     -       -  
Anti Dilutive     2,644,462       1,878,088  

XML 33 R21.htm IDEA: XBRL DOCUMENT v3.5.0.2
Fair Value Measurements (Tables)
3 Months Ended
Jun. 30, 2016
Fair Value Disclosures [Abstract]  
Summary of Non-financial Assets and Liabilities Measured at Fair Value

The following table presents the Company’s non-financial assets and liabilities that were measured at fair value on a non-recurring basis at June 30, 2016 by level within the fair value hierarchy:

 

Description   Level 1     Level 2     Level 3     Total  
Assets                                
Oil and gas properties   $ -     $ 930,238     $ -     $ 930,238  

 

The following table presents the Company’s non-financial assets and liabilities that were measured at fair value on a non-recurring basis at March 31, 2016 by level within the fair value hierarchy:

 

Description   Level 1     Level 2     Level 3     Total  
Assets                                
Oil and gas properties   $ -     $ 930,238     $ -     $ 930,238  

XML 34 R22.htm IDEA: XBRL DOCUMENT v3.5.0.2
Significant Acquisition (Tables)
3 Months Ended
Jun. 30, 2016
Business Combinations [Abstract]  
Schedule of Allocation of Consideration to Assets Acquired and Liabilities

The following table presents the allocation of the consideration given to the assets acquired and liabilities assumed, based on their fair values at January 1, 2016:

 

Consideration Given      
Cash   $ 1,200,000  
         
Total purchase price   $ 1,200,000  
         
Allocation of Consideration Given      
Oil and gas properties Proved   $ 2,033,382  
         
Total assets     2,033,382  
         
Current liabilities     111,522  
Long-term liabilities     721,860  
         
Total liabilities     833,382  
         
Net assets acquired   $ 1,200,000  

 

The following table presents the allocation of the consideration given to the assets acquired and the liabilities assumed,

 

Consideration Given        
Cash   $ 250,000  
         
Total purchase price   $ 250,000  
         
Allocation of Consideration Given        
Oil and gas properties        
Proved   $ 383,311  
         
Total assets     383,311  
         
Current liabilities     -  
Long-term liabilities     133,311  
         
Total liabilities     133,311  
         
Net assets acquired   $ 250,000  

 

As a result the Company owns approximately 100% of the WI in the Cole Creek properties.

 

XML 35 R23.htm IDEA: XBRL DOCUMENT v3.5.0.2
Stockholders' Equity (Tables)
3 Months Ended
Jun. 30, 2016
Equity [Abstract]  
Schedule of Assumptions Used for Stock Option/Warrants Price Valuation

Volatility     82% - 134 %
Expected Option/Warrant Term     3 years  
Risk-free interest rate     .25 %
Expected dividend yield     0.00 %

XML 36 R24.htm IDEA: XBRL DOCUMENT v3.5.0.2
Equity Based Payments (Tables)
3 Months Ended
Jun. 30, 2016
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Schedule of Valuation Assumptions

 

Volatility     82.00% - 134.00 %
Expected Option/Warrant Term     9 months - 3 years  
Risk-free interest rate     .12% - .25 %
Expected dividend yield     0.00 %

Schedule of Schedule of Warrants Valuation Assumptions

Using the Black-Scholes option-pricing model, the warrant was found to have a fair value of $207,200. Assumptions used in the pricing were:

 

Volatility     89.00 %
Expected Option/Warrant Term     1 year  
Risk-free interest rate     .25 %
Expected dividend yield     0.00 %

Summary of Non-qualified Stock Option and Warrant Activity

The following table summarizes the non-qualified stock option and warrant activity at June 30, 2016:

 

    2016  
    Number of     Weighted  
    Options/     Average  
      Warrants       Exercise Price  
Outstanding at                
beginning of year                
Options     1,127,750     $ 0.039  
Warrants     1,351,877     $ 1.462  
                 
Granted                
Options     -     $ -  
Warrants     350,000     $ 2.000  
                 
Exercised                
Options     (50,000 )   $ 0.100  
Warrants     -     $ -  
                 
Cancelled                
Options     -     $ -  
Warrants     -     $ -  
                 
Outstanding at June 30,                
Options     1,077,750     $ 0.316  
Warrants     1,701,877     $ 1.980  
                 
Exercisable at June 30,                
Options     1,077,750     $ 0.316  
Warrants     1,701,877     $ 1.980  

 

Weighted average         Aggregate  
remaining contractual         Intrinsic  
life   Life     Value  
Options     0.85     $ 1,115,084  
Warrants     1.70     $ 511,500  

XML 37 R25.htm IDEA: XBRL DOCUMENT v3.5.0.2
Commitments and Contingencies (Tables)
3 Months Ended
Jun. 30, 2016
Commitments and Contingencies Disclosure [Abstract]  
Schedule of Minimum Future Rental Annual Payments under Operating Lease

The following is a schedule of minimum future rental annual payments under the operating lease for the stated fiscal year ends:

 

3/31/2017       147,333  
3/31/2018       83,111  
3/31/2019       62,940  
3/31/2020       15,735  
      $ 309,119  

XML 38 R26.htm IDEA: XBRL DOCUMENT v3.5.0.2
Organization and History (Details Narrative)
3 Months Ended 12 Months Ended
Jan. 15, 2016
USD ($)
a
Jan. 01, 2016
USD ($)
Feb. 24, 2015
shares
Jun. 30, 2016
USD ($)
Mar. 31, 2016
USD ($)
Mar. 31, 2015
USD ($)
Apr. 29, 2016
Percentage of acquired working interest   82.00%   100.00%     17.00%
Purchase price            
Western Interiors Oil and Gas Inc [Member]              
Shares of restricted common stock issued | shares     170,878        
Percentage of issued and outstanding common stock owned     83.00%        
Western Interiors Oil and Gas Inc [Member] | Stock Exchange Agreement [Member]              
Percentage of issued and outstanding common stock owned           17.00%  
Promissory notes issued           $ 1,770,047  
Western Interiors Oil and Gas Inc [Member] | Restricted Stock [Member]              
Shares of restricted common stock issued | shares     7,465,168        
Cole Creek Properties [Member]              
Percentage of acquired working interest 82.00% 82.00%          
Exchange for cash plus $ 1,200,000     $ 833,382      
Purchase price $ 2,033,382 $ 2,033,382          
April 20, 2016 [Member] | Black Hills Exploration & Production, Inc [Member]              
Percentage of acquired working interest 18.00%            
Exchange for cash plus $ 250,000       $ 182,938    
Purchase price $ 432,938            
Gross acres | a 13,328            
XML 39 R27.htm IDEA: XBRL DOCUMENT v3.5.0.2
Summary of Significant Accounting Policies (Details Narrative) - USD ($)
3 Months Ended 12 Months Ended 15 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Mar. 31, 2016
Jun. 30, 2016
Oil and natural gas proved properties capitalized costs $ 11,754,817   $ 10,281,659 $ 11,754,817
Oil and natural gas unproved properties capitalized costs 4,754,620   4,745,917 4,754,620
Depreciation, depletion and amortization expense on oil and gas properties 35,123 $ 127,046    
Impairment of proved properties 0 0 1,103,144  
Depreciation expense $ 10,284 9,594    
Percentage of largest amount that is greater than likely to be realized upon its ultimate settlement 50.00%      
Beneficial conversion feature of preferred stock $ 37,805   $ 67,830 $ 37,805
Preferred shares, shares 409,019   409,019 409,019
Deemed dividend for beneficial conversion feature of preferred stock $ 37,805    
Deemed dividend for preferred stock's beneficial conversion feature (37,805)     $ (37,805)
Convertible Series A Shares Preferred Stock [Member]        
Stock were issued at discount value 558,171      
Fair value of issuance of preferred stock 682,989      
Beneficial conversion feature of preferred stock $ 124,818      
Preferred shares, shares 409,019     409,019
Deemed dividend for beneficial conversion feature of preferred stock $ 37,805      
Deemed dividend for preferred stock's beneficial conversion feature $ 37,805      
Purchaser One [Member]        
Percentage of revenues 100.00% 88.00%    
Director And Shareholder [Member]        
Percentage of equity interest 85.71%     85.71%
T-Rex Oil, LLC #3 [Member]        
Percentage of equity interest 14.29%     14.29%
XML 40 R28.htm IDEA: XBRL DOCUMENT v3.5.0.2
Summary of Significant Accounting Policies - Schedule of Reconciliation of Changes in Company's liability (Details) - USD ($)
3 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Mar. 31, 2016
Accounting Policies [Abstract]      
ARO - beginning of period $ 1,197,143 $ 459,294  
Additions 133,311  
Deletions (15,190)  
Accretion expense 22,323 15,887  
ARO - end of period 1,352,777 459,991  
Less current portion 176,587 169,126 $ 176,587
ARO - non-current portion $ 1,176,190 $ 290,865 $ 1,020,556
XML 41 R29.htm IDEA: XBRL DOCUMENT v3.5.0.2
Summary of Significant Accounting Policies - Weighted-Average Dilutive and Anti-dilutive Securities to Stock Options and Warrants (Details) - shares
3 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Accounting Policies [Abstract]    
Dilutive
Anti Dilutive 2,644,462 1,878,088
XML 42 R30.htm IDEA: XBRL DOCUMENT v3.5.0.2
Going Concern and Managements' Plan (Details Narrative) - USD ($)
3 Months Ended
Jun. 30, 2016
Jun. 30, 2015
Mar. 31, 2016
Going Concern and Managements Plan [Abstract]      
Net loss $ 786,161 $ 690,953  
Accumulated deficit 27,505,329   $ 26,756,973
Working capital deficit $ (1,427,390)    
XML 43 R31.htm IDEA: XBRL DOCUMENT v3.5.0.2
Fair Value Measurements (Details Narrative) - USD ($)
3 Months Ended 12 Months Ended
Jan. 15, 2016
Jan. 01, 2016
Jun. 30, 2016
Jun. 30, 2015
Mar. 31, 2016
Apr. 29, 2016
Percentage of acquired working interest   82.00% 100.00%     17.00%
Oil and gas properties at fair value          
Impairment to oil and gas properties     0 $ 0 $ 1,103,144  
Impairement     $ 0 $ 0    
Cole Creek Properties [Member]            
Percentage of acquired working interest 82.00% 82.00%        
Oil and gas properties at fair value $ 2,033,382 $ 2,033,382        
XML 44 R32.htm IDEA: XBRL DOCUMENT v3.5.0.2
Fair Value Measurements - Summary of Non-financial Assets and Liabilities Measured at Fair Value (Details) - USD ($)
Jun. 30, 2016
Mar. 31, 2016
Oil and gas properties $ 930,238 $ 930,238
Level 1 [Member]    
Oil and gas properties
Level 2 [Member]    
Oil and gas properties 930,238 930,238
Level 3 [Member]    
Oil and gas properties
XML 45 R33.htm IDEA: XBRL DOCUMENT v3.5.0.2
Significant Acquisition (Details Narrative)
Jun. 30, 2016
Apr. 29, 2016
Jan. 01, 2016
Business Combinations [Abstract]      
Percentage of voting interest acquired 100.00% 17.00% 82.00%
XML 46 R34.htm IDEA: XBRL DOCUMENT v3.5.0.2
Significant Acquisition - Schedule of Allocation of Consideration to Assets Acquired and Liabilities (Details) - USD ($)
Jun. 30, 2016
Jan. 01, 2016
Business Combinations [Abstract]    
Cash $ 250,000 $ 1,200,000
Total purchase price 250,000 1,200,000
Proved 383,311 2,033,382
Total assets 383,311 2,033,382
Current liabilities 111,522
Long-term liabilities 133,311 721,860
Total liabilities 133,311 833,382
Net assets acquired $ 250,000 $ 1,200,000
XML 47 R35.htm IDEA: XBRL DOCUMENT v3.5.0.2
Debt (Details Narrative) - USD ($)
3 Months Ended 12 Months Ended
Jan. 14, 2016
Aug. 01, 2015
Jun. 30, 2016
Mar. 31, 2016
Mar. 31, 2015
Promissory Notes [Member]          
Repayment of promissory notes   $ 393,795   $ 341,405  
Debt owned amount     $ 488,298    
Accrued interest payable     17,043    
Business combination reduction in purchase price   374,920      
Promissory Notes [Member] | Two Directors [Member]          
Debt owned amount     100,000    
Accrued interest payable     2,298    
Proceeds from convertible debt $ 50,000        
Debt instrument interest rate 5.00%        
Debt instrument maturity date Sep. 30, 2016        
Debt conversion rate 30.00%        
Promissory Notes [Member] | Maximum [Member]          
Debt owned amount   768,715      
Promissory Notes [Member] | Minimum [Member]          
Debt owned amount   $ 393,795      
Promissory Notes [Member] | Western Interiors [Member]          
Issuance of shares for debt   14,368   18,717 33,085
Gain on disposal of assets   $ 44,100      
Line of Credit [Member] | Bank [Member]          
Debt face amount     $ 350,000    
Line-of-credit maturity date     Nov. 30, 2016    
Debt floor rate     7.00%    
Line-of-credit     $ 13,052    
Line of Credit [Member] | Bank [Member] | Prime Rate [Member]          
Debt variable interest rate     2.50%    
Installment Notes [Member]          
Debt owned amount       $ 9,810  
Debt instrument interest rate       5.81%  
Amount of monthly installment       $ 3,437  
Installment Notes [Member] | Unrelated Parties [Member]          
Proceeds from convertible debt       $ 34,374  
XML 48 R36.htm IDEA: XBRL DOCUMENT v3.5.0.2
Stockholders' Equity (Details Narrative) - USD ($)
1 Months Ended 3 Months Ended 12 Months Ended 15 Months Ended
Oct. 28, 2015
Oct. 31, 2015
Jun. 30, 2016
Mar. 31, 2016
Jun. 30, 2016
Capital stock, authorized shares     325,000,000   325,000,000
Preferred Stock, authorized shares     50,000,000 50,000,000 50,000,000
Preferred Stock, par value per share     $ 0.001 $ 0.001 $ 0.001
Common stock, shares authorized     275,000,000 275,000,000 275,000,000
Common stock, par value     $ 0.001 $ 0.001 $ 0.001
Preferred shares, shares issued     409,019 409,019 409,019
Preferred shares, shares outstanding     409,019 409,019 409,019
Stock issued during period, value, new issues   $ 7,000,000 $ 74,613   $ 74,613
Warrant exercise price per share   $ 3.00      
Warrant Exercise Term   3 years      
Common stock closing market price   $ 5.00      
Beneficial conversion feature     $ 37,805 $ 67,830 $ 37,805
Warrants exercisable price per share   9 months      
Exercise of warrants for restricted stock shares       409,019  
Exercise of warrants for restricted stock value       $ 135,049  
Common stock, shares issued     15,866,099 15,480,882 15,866,099
Common stock, shares outstanding     15,866,099 15,480,882 15,866,099
Number of shares issued of common stock     50,000    
Options at an exercise price per share     $ 0.10    
Fair value of equity based payment amount     $ 207,200   $ 207,200
Equity based payment expense     11,520    
Capitalized equity based payment     $ 195,680   $ 195,680
Restricted Stock [Member] | Private Placement [Member]          
Number of common stock shares sold during the period     99,378    
Number of common stock shares sold during the period, value     $ 74,613    
Restricted Stock [Member] | Private Placement [Member]          
Number of common stock shares sold during the period     235,839    
Number of common stock shares sold during the period, value     $ 353,719    
Minimum [Member]          
Stock price     $ 0.01   $ 0.01
Maximum [Member]          
Stock price     $ 3.50   $ 3.50
Series A Preferred Stock [Member]          
Preferred Stock, authorized shares 50,000,000        
Preferred Stock, par value per share $ 0.001        
Preferred shares, shares issued 5,000,000        
Shares conversion price percentage 80.00%        
Convertible preferred stock issued at discount value     $ 558,171   $ 558,171
Fair value issuance of convertible preferred stock     682,989    
Beneficial conversion feature     124,818    
Deemed dividend preferred stock     $ 37,805    
Proceeds from issuance of convertible preferred stock       $ 818,038  
Number of preferred stock exchange for cash       $ 793,037  
Number of preferred stock shares exchange for cash       409,019  
Warrants exercisable for shares of common stock       419,019  
Series A Preferred Stock [Member] | July and December 2016 [Member]          
Conversion of stock, shares issued     409,019    
Unit Warrants [Member] | Minimum [Member]          
Stock price     $ 1.10   $ 1.10
Unit Warrants [Member] | Maximum [Member]          
Stock price     $ 1.50   $ 1.50
XML 49 R37.htm IDEA: XBRL DOCUMENT v3.5.0.2
Stockholders' Equity - Schedule of Assumptions Used for Stock Option/Warrants Price Valuation (Details)
3 Months Ended
Jun. 30, 2016
Equity [Abstract]  
Volatility, Minimum 82.00%
Volatility, Maximum 134.00%
Expected Option/Warrant Term 3 years
Risk-free interest rate 0.25%
Expected dividend yield 0.00%
XML 50 R38.htm IDEA: XBRL DOCUMENT v3.5.0.2
Equity Based Payments (Details Narrative) - USD ($)
1 Months Ended 3 Months Ended
May 31, 2016
Jun. 30, 2016
Oct. 31, 2015
Warrant exercise price per share     $ 3.00
Warrant [Member]      
Number of warrant exercisable during period 350,000    
Warrant term 3 years    
Warrant exercise price per share $ 2.00    
Fair value of warrants $ 207,200    
2014 Stock Incentive Plan [Member]      
Term of award   10 years  
Number of shares issued   2,000,000  
Minimum [Member]      
Stock price   $ 0.01  
Maximum [Member]      
Stock price   $ 3.50  
XML 51 R39.htm IDEA: XBRL DOCUMENT v3.5.0.2
Equity Based Payments - Schedule of Valuation Assumptions (Details)
3 Months Ended
Jun. 30, 2016
Volatility, Minimum 82.00%
Volatility, Maximum 134.00%
Expected Option/Warrant Term 3 years
Risk-free interest rate, Minimum 0.12%
Risk-free interest rate, Maximum 0.25%
Expected dividend yield 0.00%
Minimum [Member]  
Expected Option/Warrant Term 9 months
Maximum [Member]  
Expected Option/Warrant Term 3 years
XML 52 R40.htm IDEA: XBRL DOCUMENT v3.5.0.2
Equity Based Payments - Schedule of Schedule of Warrants Valuation Assumptions (Details)
3 Months Ended
Jun. 30, 2016
Expected Option/Warrant Term 3 years
Risk-free interest rate 0.25%
Expected dividend yield 0.00%
Warrant [Member]  
Volatility 89.00%
Expected Option/Warrant Term 1 year
Risk-free interest rate 0.25%
Expected dividend yield 0.00%
XML 53 R41.htm IDEA: XBRL DOCUMENT v3.5.0.2
Equity Based Payments - Summary of Non-qualified Stock Option and Warrant Activity (Details)
3 Months Ended
Jun. 30, 2016
USD ($)
$ / shares
shares
Non Qualified Stock Options [Member]  
Number of Options/Warrants Outstanding, Beginning | shares 1,127,750
Number of Options/Warrants Outstanding, Granted | shares
Number of Options/Warrants Outstanding, Exercised | shares (50,000)
Number of Options/Warrants Outstanding, Cancelled | shares
Number of Options/Warrants Outstanding, Ending | shares 1,077,750
Number of Options/Warrants Exercisable | shares 1,077,750
Weighted Average Exercise Price Outstanding, Beginning | $ / shares $ 0.039
Weighted Average Exercise Price, Granted | $ / shares
Weighted Average Exercise Price, Exercised | $ / shares 0.100
Weighted Average Exercise Price, Cancelled | $ / shares
Weighted Average Exercise Price Outstanding, Ending | $ / shares 0.316
Weighted Average Exercise Price Exercisable | $ / shares $ 0.316
Weighted average remaining contractual life 10 months 6 days
Aggregate Intrinsic Value | $ $ 1,115,084
Warrant [Member]  
Number of Options/Warrants Outstanding, Beginning | shares 1,351,877
Number of Options/Warrants Outstanding, Granted | shares 350,000
Number of Options/Warrants Outstanding, Exercised | shares
Number of Options/Warrants Outstanding, Cancelled | shares
Number of Options/Warrants Outstanding, Ending | shares 1,701,877
Number of Options/Warrants Exercisable | shares 1,701,877
Weighted Average Exercise Price Outstanding, Beginning | $ / shares $ 1.462
Weighted Average Exercise Price, Granted | $ / shares 2.000
Weighted Average Exercise Price, Exercised | $ / shares
Weighted Average Exercise Price, Cancelled | $ / shares
Weighted Average Exercise Price Outstanding, Ending | $ / shares 1.980
Weighted Average Exercise Price Exercisable | $ / shares $ 1.980
Weighted average remaining contractual life 1 year 8 months 12 days
Aggregate Intrinsic Value | $ $ 511,500
XML 54 R42.htm IDEA: XBRL DOCUMENT v3.5.0.2
Commitments and Contingencies (Details Narrative) - USD ($)
1 Months Ended 3 Months Ended
Sep. 02, 2014
Apr. 02, 2014
Jan. 31, 2015
Nov. 30, 2014
Aug. 31, 2014
Jun. 30, 2016
Rent expense           $ 35,527
Chief Executive Officer, President And Director [Member]            
Term of agreement with annual compensation         3 years  
Compensation of base salary per year         $ 204,000  
Car allowance         $ 600  
Vice President of Operations And Director [Member]            
Term of agreement with annual compensation     3 years 3 years    
Compensation of base salary per year     $ 150,000 $ 150,000    
Vice President of Geology And Director [Member]            
Term of agreement with annual compensation       3 years    
Compensation of base salary per year       $ 150,000    
Consultant [Member]            
Term of agreement with annual compensation 3 years          
Compensation of base salary per year $ 150,000          
Car allowance $ 600          
Granted options to acquire common stock   500,000        
Option price   $ 0.10        
Option expiration period   3 years        
Colorado Lease [Member]            
Leases of office per month           $ 4,572
Lease expiration date           Aug. 31, 2017
Wyoming Lease [Member]            
Leases of office per month           $ 5,838
Lease expiration date           Jun. 30, 2019
Corporate Apartment [Member]            
Leases of office per month           $ 1,990
Lease expiration date           May 31, 2017
XML 55 R43.htm IDEA: XBRL DOCUMENT v3.5.0.2
Commitments and Contingencies - Schedule of Minimum Future Rental Annual Payments under Operating Lease (Details)
Jun. 30, 2016
USD ($)
Commitments and Contingencies Disclosure [Abstract]  
3/31/2017 $ 147,333
3/31/2018 83,111
3/31/2019 62,940
3/31/2020 15,735
Total $ 309,119
XML 56 R44.htm IDEA: XBRL DOCUMENT v3.5.0.2
Related Party Transactions (Details Narrative) - USD ($)
3 Months Ended 12 Months Ended
Dec. 31, 2014
Jun. 30, 2016
Jun. 30, 2015
Mar. 31, 2015
Mar. 31, 2016
Oct. 31, 2015
Related Party Transaction [Line Items]            
Amount loaned to related party   $ (25,000)      
Granted an exercise price per share           $ 3.00
TRex Oil LLC [Member]            
Related Party Transaction [Line Items]            
Amount loaned to related party       $ 50,000    
Amount owned to related party       $ 50,000 $ 0  
Granted rights outstanding $ 425,000          
Granted an exercise price per share $ 2.00          
Number of common stock issued 212,500          
TRex Oil LLC [Member] | August 2016 [Member]            
Related Party Transaction [Line Items]            
Granted an exercise price per share   $ 1.00        
Number of shares of restricted common stock issued   425,000        
XML 57 R45.htm IDEA: XBRL DOCUMENT v3.5.0.2
Subsequent Events (Details Narrative) - Subsequent Event [Member]
1 Months Ended
Aug. 15, 2016
USD ($)
$ / shares
shares
Number of common stock shares sold during the period 142,670
Number of common stock sold during the period | $ $ 213,443
Sale of stock, price per share | $ / shares $ 1.50
Number of stock options shares issued during the period 50,000
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