☑
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES AND EXCHANGE ACT OF 1934
|
Nevada
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98-1153516
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(State or jurisdiction of incorporation or organization)
|
(IRS Employer Identification No.)
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Large accelerated filer ☐
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Accelerated filer ☐
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Non-accelerated filer ☐
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Smaller reporting company ☑
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ITEM NUMBER AND CAPTION
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PAGE
|
|
PART I
|
||
ITEM 1.
|
DESCRIPTION OF BUSINESS
|
3 |
ITEM 1A.
|
RISK FACTORS
|
6 |
ITEM 2.
|
PROPERITES
|
11 |
ITEM 3.
|
LEGAL PROCEEDINGS
|
11 |
ITEM 4.
|
MINE SAFETY DISCLOSURE
|
11 |
PART II
|
||
ITEM 5.
|
MARKET FOR REGISTRANTS COMMON EQUITY & RELATED STOCKHOLDER MATTERS
|
12 |
ITEM 6.
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SELECTED FINANCIAL DATA
|
14 |
ITEM 7.
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
14 |
ITEM 8.
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FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
16 |
ITEM 9.
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CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
18 |
ITEM 9A.
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CONTROLS AND PROCEDURES
|
18 |
ITEM 9B.
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OTHER INFORMATION
|
19 |
PART III
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||
ITEM 10.
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DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
19 |
ITEM 11.
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EXECUTIVE COMPENSATION
|
20 |
ITEM 12.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
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20 |
ITEM 13.
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
|
21 |
ITEM 14.
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PRINCIPAL ACCOUNTANT FEES AND SERVICES
|
21 |
PART IV
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||
ITEM 15.
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EXHIBITS, FINANCIAL STATEMENT SCHEDULES
|
22 |
Name of The Property
|
Type of Property
|
Location
|
||||
June 11th, 2015
|
Ellis County
|
Overriding Royalty Int.
|
Oklahoma
|
|||
June 11th, 2015
|
Hemphill County
|
Overriding Royalty Int
|
Texas
|
|||
June 11th, 2015
|
Madison County
|
Wellbore Interest
|
Texas
|
|||
June 11th, 2015
|
Shelby County
|
Wellbore Interest
|
Texas
|
|||
June 11th, 2015
|
Emergy County
|
Lease Purchase
|
Utah
|
Assignment Date
|
Name of The Property
|
Type of Property
|
Location
|
|||
June 11th, 2015
|
Ellis County
|
Overriding Royalty Int.
|
Oklahoma
|
|||
June 11th, 2015
|
Hemphill County
|
Overriding Royalty Int
|
Texas
|
|||
June 11th, 2015
|
Madison County
|
Wellbore Interest
|
Texas
|
|||
June 11th, 2015
|
Shelby County
|
Wellbore Interest
|
Texas
|
|||
June 11th, 2015
|
Emergy County
|
Lease Purchase
|
Utah
|
-
|
Substantially greater financial resources, which gives them greater access to the types of distressed properties that we are targeting and flexibility when developing their exploration and drilling programs;
|
|
-
|
greater recognition in the industry, which influences a potential partners’ decision to participate in programs;
|
-
|
larger operations, which provides economies of scale and operating efficiencies not available to us;
|
|
-
|
longer operating histories; and
|
-
|
more established relationships with strategic partners.
|
·
|
decline in oil prices;
|
·
|
compliance with governmental regulations, which may include limitations on hydraulic fracturing, access to water or the discharge of greenhouse gases;
|
·
|
inadequate capital resources;
|
·
|
inability to attract and retain qualified personnel;
|
·
|
unavailability or high cost of drilling and completion equipment, services or materials;
|
·
|
unexpected drilling conditions, pressure or irregularities in formations, equipment failures or accidents;
|
·
|
adverse weather conditions;
|
·
|
surface access restrictions;
|
·
|
mechanical difficulties.
|
·
|
domestic and foreign supply of oil;
|
·
|
domestic and foreign consumer demand for oil;
|
·
|
overall United States and global economic conditions;
|
·
|
price and availability of alternative fuels;
|
·
|
governmental regulations;
|
·
|
technological advances affecting oil consumption.
|
Quarter Ended
|
High
|
Low
|
||||||
March 31, 2016
|
$
|
2.10
|
$
|
0.025
|
||||
December 31, 2015
|
$
|
8.30
|
$
|
1.05
|
||||
September 30, 2015
|
$
|
0
|
$
|
0
|
||||
June 30, 2015
|
$
|
0
|
$
|
0
|
||||
March 31, 2015
|
$
|
0
|
$
|
0
|
||||
December 31, 2014
|
$
|
0
|
$
|
0
|
||||
September 30, 2014
|
$
|
0
|
$
|
0
|
||||
June 30, 2014
|
$
|
0
|
$
|
0
|
Assignment Date
|
Name of The Property
|
Type of Property
|
Location
|
|||
June 11th, 2015
|
Ellis County
|
Overriding Royalty Int.
|
Oklahoma
|
|||
June 11th, 2015
|
Hemphill County
|
Overriding Royalty Int
|
Texas
|
|||
June 11th, 2015
|
Madison County
|
Wellbore Interest
|
Texas
|
|||
June 11th, 2015
|
Shelby County
|
Wellbore Interest
|
Texas
|
|||
June 11th, 2015
|
Emergy County
|
Lease Purchase
|
Utah
|
Page
|
|
Independent Auditor’s Reports
|
F-1
|
Balance Sheets
|
F-2
|
Statements of Operations
|
F-3
|
Statement of Changes in Shareholder’s Equity
|
F-4
|
Statements of Cash Flows
|
F-5
|
Notes to the Financial Statements
|
F-6 to F-14
|
March 31,
2016
|
March 31,
2015
|
|||||||
ASSETS
|
||||||||
Current assets
|
||||||||
Cash and cash equivalents
|
$
|
-
|
$
|
5,971
|
||||
Total current assets
|
- |
5,971
|
||||||
Total assets
|
$
|
-
|
$
|
5.971
|
||||
Current liabilities
|
||||||||
Accounts payable and accrued liabilities
|
$
|
9,552
|
$
|
6,000
|
||||
Advances from related party
|
118,433
|
-
|
||||||
Convertible notes
|
55,245
|
-
|
||||||
Total current liabilities
|
183,230
|
6,000
|
||||||
Long-term liabilities
|
||||||||
Asset retirement obligations
|
83,580
|
-
|
||||||
Total long term liabilities
|
83,580
|
-
|
||||||
Total liabilities
|
266,810
|
6,000
|
||||||
Commitments and contingencies
|
-
|
|||||||
Stockholders’ (deficit) equity
|
||||||||
Common stock, par value $0.001;
|
||||||||
300,000,000 shares authorized, 1,326,281 and 1,254,781 shares issued and
|
||||||||
outstanding as of March 31, 2016 and March 31, 2015 respectively
|
1,326
|
1,254
|
||||||
Additional paid in capital
|
970,038
|
28,265
|
||||||
Accumulated deficit
|
(1,238,174
|
)
|
(29,548
|
)
|
||||
Total stockholders’ (deficit) equity
|
(266,810
|
)
|
(29
|
)
|
||||
Total liabilities and stockholders’ (deficit) equity
|
$
|
-
|
$
|
5,971
|
Fiscal Year Ended
|
||||||||
March 31,
|
||||||||
2016
|
2015
|
|||||||
Revenue
|
$
|
-
|
$
|
-
|
||||
Operating Expenses
|
||||||||
Lease Operating expense
|
59,370
|
-
|
||||||
Accretion expense
|
83,580
|
-
|
||||||
Total operating expenses
|
(142,950
|
)
|
-
|
|||||
General and administrative expense
|
(248,865
|
)
|
(29,976
|
)
|
||||
Other Expenses:
|
||||||||
Loss on acquisition of royalty interest and unproven property
|
(46,238
|
)
|
-
|
|||||
Impairment of oil and gas leases, proven and unproven
|
(713,550
|
)
|
-
|
|||||
Gain on debt extinguishment
|
-
|
9,050
|
||||||
Loss on disposal of equipment
|
-
|
(8,565
|
)
|
|||||
Interest expenses
|
(57,023
|
)
|
-
|
|||||
Total other expenses
|
(816,811
|
)
|
485
|
|||||
Net loss
|
$
|
(1,208,626
|
)
|
$
|
(29,491
|
)
|
||
Net loss per share – basic and diluted
|
$
|
(0.92
|
)
|
$
|
(0.02
|
)
|
||
Weighted average shares outstanding – basic and diluted
|
1,308,325
|
1,099,500
|
Common Stock
|
Additional
Paid-in
|
Retained
|
Total
Stockholders’
(Deficit)
|
|||||||||||||||||
Shares
|
Amount
|
Capital
|
Deficit
|
Equity
|
||||||||||||||||
Balance, March 31, 2014
|
900,000
|
900
|
5,100
|
(57
|
)
|
5,943
|
||||||||||||||
Shares issued for cash
|
354,000
|
354
|
23,165
|
-
|
23,519
|
|||||||||||||||
Fraction shares due to splits
|
781
|
-
|
-
|
-
|
-
|
|||||||||||||||
Net loss
|
- | - | - |
(29,491
|
)
|
(29,491
|
)
|
|||||||||||||
Balance, March 31, 2015
|
1,254,781
|
1,254
|
28,265
|
(29,548
|
)
|
(29
|
)
|
|||||||||||||
Debt discount
|
- | - |
55,245
|
- |
55,245
|
|||||||||||||||
Shares issued for cash
|
10,000
|
10
|
149,990
|
- |
150,000
|
|||||||||||||||
Shares issued for stock-based compensation
|
10,000
|
10
|
30,590
|
- |
30,600
|
|||||||||||||||
Shares issued for acquisitions
|
51,500
|
52
|
705,948
|
- |
706,000
|
|||||||||||||||
Net loss
|
- | - | - |
(1,208,626
|
)
|
(1,208,626
|
)
|
|||||||||||||
Balance, March 31, 2016
|
1,326,281
|
$
|
1,326
|
$
|
970,038
|
$
|
(1,238,174
|
)
|
$
|
(266,810
|
)
|
Fiscal Year Ended
March 31,
|
||||||||
2016
|
2015
|
|||||||
Cash flows from operating activities
|
||||||||
Net loss
|
$
|
(1,208,626
|
)
|
$
|
(29,491
|
)
|
||
Adjustments to reconcile net loss to net cash from operating activities:
|
||||||||
Gain on debt extinguishment
|
-
|
(9,050
|
)
|
|||||
Loss on deposal of assets
|
-
|
8,565
|
||||||
Asset retirement obligation accretion
|
83,580
|
|||||||
Impairment of oil and gas leases
|
713,550
|
-
|
||||||
Loss on acquisition of royalty interests and unproven property
|
46,237
|
-
|
||||||
Amortization of debt discount
|
55,245
|
- | ||||||
Stock-based compensation
|
30,600
|
- | ||||||
Change in operating assets and liabilities:
|
||||||||
Accounts payable and accrued liabilities
|
4,777
|
6,000
|
||||||
Net cash from operating activities
|
(274,637
|
)
|
(23,976
|
)
|
||||
Cash flows from investing activities
|
||||||||
Improvements to proven oil and gas assets
|
(77,044
|
)
|
-
|
|||||
Refund on assets
|
23,257
|
- | ||||||
Net cash from investing activities
|
(53,787
|
)
|
-
|
|||||
Cash flows from financing activities
|
||||||||
Advances from related party
|
118,433
|
6,250
|
||||||
Proceeds from notes payable
|
110,000
|
-
|
||||||
Repayment on notes payable
|
(55,980
|
)
|
- | |||||
Proceeds from sale of common stock
|
150,000
|
23,519
|
||||||
Net cash from financing activities
|
322,453
|
29,769
|
||||||
Net change in cash and cash equivalents
|
(5,971
|
)
|
5,793
|
|||||
Beginning of period
|
5,971
|
178
|
||||||
End of period
|
$
|
-
|
$
|
5,971
|
||||
Noncash investing and financing activities:
|
||||||||
Issuance of common stock for acquisition of oil and gas properties
|
$
|
160,000
|
$
|
-
|
||||
Issuance of common stock for acquisition of overriding royalties and unproved property
|
97,500
|
-
|
||||||
Issuance of common stock for unproven oil and gas property
|
448,500
|
-
|
||||||
Asset retirement obligations incurred
|
83,580
|
-
|
||||||
Loan payable to convertible notes
|
54,020
|
- | ||||||
Accrued interest to convertible notes
|
1,225
|
- |
Name of The Property
|
Type of Property
|
Location
|
||||
June 11, 2015
|
Ellis County
|
Overriding Royalty Int.
|
Oklahoma
|
|||
June 11, 2015
|
Hemphill County
|
Overriding Royalty Int
|
Texas
|
|||
June 11, 2015
|
Madison County
|
Wellbore Interest
|
Texas
|
|||
June 11, 2015
|
Shelby County
|
Wellbore Interest
|
Texas
|
|||
June 11, 2015
|
Emergy County
|
Lease Purchase
|
Utah
|
Inflation Rate
|
3%
|
Estimated asset life
|
20 years
|
Credit adjusted risk free interest rate
|
18%
|
$
|
-
|
|||
Asset retirement obligations incurred
|
9,075
|
|||
Accretion expense
|
89
|
|||
Adjust obligation to reflect impairment of non producing wells
|
74,594
|
|||
Asset retirement obligations at March 31, 2016
|
$
|
83,580
|
Principal
Amount
($)
|
Debt
Discount
($)
|
Carrying Value
($)
|
Accrued interest payable ($)
|
|||||||||||||
March 31, 2015
|
- | - | - | - | ||||||||||||
Additions
|
55,245 | (55,245 | ) | - | - | |||||||||||
Amortization of debt discount
|
- | 55,245 | 55,245 | - | ||||||||||||
Interest expenses
|
- | - | - | 552 | ||||||||||||
March 31, 2016
|
55,245 | - | 55,245 | 552 |
Name
|
Age
|
Positions Held
|
Date of
Appointment
|
|||
Huang Yu
|
33
|
Member of the Board of Directors; President, Secretary and Treasurer
|
April 3, 2015
|
|||
Title of Class
|
Name and Address
of beneficial owner
|
Amount and nature of
beneficial ownership(1)
|
Percent
of class
|
||||
Common Stock
|
Zheng Xiang Wu (2)
Central Office at 9th Floor
Amtel Building
148 Des Voeux Road
Central, Hong Kong China
|
956,500
|
72.12%
|
||||
Common Stock
|
Huang Yu
Gao Xin Kai Fa Qu Gao Xin Si Lu Zhong
Jian San Ju Rong He Tian Yu Xiang Mu Bu,
Liu Zhou
Guang Xi, China
|
-0-
|
-
|
||||
(1)
|
A beneficial owner of a security includes any person who, directly or indirectly, through any contract, arrangement, understanding, relationship, or otherwise has or shares: (i) voting power, which includes the power to vote, or to direct the voting of shares; and (ii) investment power, which includes the power to dispose or direct the disposition of shares. Certain shares may be deemed to be beneficially owned by more than one person (if, for example, persons share the power to vote or the power to dispose of the shares). In addition, shares are deemed to be beneficially owned by a person if the person has the right to acquire the shares (for example, upon exercise of an option) within 60 days of the date as of which the information is provided. In computing the percentage ownership of any person, the amount of shares outstanding is deemed to include the amount of shares beneficially owned by such person (and only such person) by reason of these acquisition rights. As a result, the percentage of outstanding shares of any person as shown in this table does not necessarily reflect the person’s actual ownership or voting power with respect to the number of shares of common stock actually outstanding on August 18, 2016. As of August 18, 2016, there were 1,326,281 shares of our common stock issued and outstanding.
|
(2)
|
Zheng Xiangwu is the sole owner of Rise Fast Limited, a Hong Kong corporation, which owns 910,000 shares of the Company’s common stock. Mr. Zheng owns 46,500 shares in his own name.
|
Fee Category
|
Year Ended March 31, 2016
|
Year Ended March 31, 2015
|
||||||
Audit Fees
|
$
|
17,500
|
$
|
6,000
|
||||
Audit-Related Fees
|
-
|
-
|
||||||
Tax Fees
|
-
|
-
|
||||||
All Other Fees
|
-
|
-
|
||||||
Total Fees
|
$
|
17,500
|
$
|
6,000
|
(a)(1)
|
Financial Statements
|
(2)
|
Schedules
|
(3)
|
Exhibits
|
Exhibit No. | Description | |
3.1
|
Articles of Incorporation of the Registrant incorporated by reference to Exhibit 3.1 to the Registrant’s registration statement on Form S-1 filed with the SEC on May 20, 2014, file number 333-196409.
|
|
3.2
|
Bylaws of Registrant incorporated by reference to Exhibit 3.2 to the Registrant’s registration statement on Form S-1 filed with the SEC on May 20, 2014, file number 333-196409.
|
|
10.1
|
Asset Purchase Agreement, among the Registrant, Zheng Xiangwu and Nelaco Operating Inc., dated June 10, 2015 incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the SEC on June 16, 2015, file number 333-196409.
|
|
31.1
|
Certification of the Principal Executive Officer and Principal Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. (1)
|
|
32.1
|
Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350). (1)
|
|
101.INS
|
XBRL INSTANCE DOCUMENT (1)
|
|
101.INS
|
XBRL TAXONOMY EXTENSION SCHEMA (1)
|
|
101.INS
|
XBRL TAXONOMY EXTENSION CALCULATION LINKBASE (1)
|
|
101.INS
|
XBRL TAXONOMY EXTENSION DEFINITION LINKBASE (1)
|
|
101.INS
|
XBRL TAXONOMY EXTENSION LABEL LINKBASE (1)
|
|
101.INS
|
XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE (1)
|
|
(1)
|
Filed herewith electronically
|
PETROGAS COMPANY | |||
Date: September 27, 2016
|
By:
|
/s/ Huang Yu | |
Huang Yu | |||
President and Chief Financial Officer | |||
Signatures
|
Title
|
Date
|
||
/s/ Huang Yu
|
President, Secretary, Treasurer, and Director
|
September 27, 2016
|
||
Huang Yu
|
||||
Document and Entity Information - USD ($) |
12 Months Ended | ||
---|---|---|---|
Mar. 31, 2016 |
Aug. 18, 2016 |
Sep. 30, 2015 |
|
Document And Entity Information [Abstract] | |||
Entity Registrant Name | Petrogas Co | ||
Entity Central Index Key | 0001609258 | ||
Trading Symbol | ptco | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --03-31 | ||
Document Type | 10-K | ||
Document Period End Date | Mar. 31, 2016 | ||
Document Fiscal Year Focus | 2016 | ||
Document Fiscal Period Focus | FY | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 107,700,000 | ||
Entity Common Stock, Shares Outstanding | 1,326,281 |
Consolidated Balance Sheets - USD ($) |
Mar. 31, 2016 |
Mar. 31, 2015 |
---|---|---|
Current assets | ||
Cash and cash equivalents | $ 5,971 | |
Total current assets | 5,971 | |
Total assets | 5,971 | |
Current liabilities | ||
Accounts payable and accrued liabilities | 9,552 | 6,000 |
Advances from related party | 118,433 | |
Convertible notes | 55,245 | |
Total current liabilities | 183,230 | 6,000 |
Long-term liabilities | ||
Asset retirement obligations | 83,580 | |
Total long term liabilities | 83,580 | |
Total liabilities | 266,810 | 6,000 |
Commitments and contingencies | ||
Stockholders' (deficit) equity | ||
Common stock, par value $0.001; 300,000,000 shares authorized, 1,326,281 and 1,254,781 shares issued and outstanding as of March 31, 2016 and March 31, 2015 respectively | 1,326 | 1,254 |
Additional paid in capital | 970,038 | 28,265 |
Accumulated deficit | (1,238,174) | (29,548) |
Total stockholders' (deficit) equity | (266,810) | (29) |
Total liabilities and stockholders' (deficit) equity | $ 5,971 |
Consolidated Balance Sheets (Parenthetical) - $ / shares |
Mar. 31, 2016 |
Mar. 31, 2015 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 300,000,000 | 300,000,000 |
Common stock, shares issued | 1,326,281 | 1,254,781 |
Common stock, shares outstanding | 1,326,281 | 1,254,781 |
Consolidated Statements of Operations - USD ($) |
12 Months Ended | |
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Mar. 31, 2016 |
Mar. 31, 2015 |
|
Income Statement [Abstract] | ||
Revenue | ||
Operating Expenses | ||
Lease Operating expense | 59,370 | |
Accretion expense | 83,580 | |
Total operating expenses | (142,950) | |
General and administrative expense | (248,865) | (29,976) |
Other Expenses: | ||
Loss on acquisition of royalty interest and unproven property | (46,238) | |
Impairment of oil and gas leases, proven and unproven | (713,550) | |
Gain on debt extinguishment | 9,050 | |
Loss on disposal of equipment | (8,565) | |
Interest expenses | (57,023) | |
Total other expenses | (816,811) | 485 |
Net loss | $ (1,208,626) | $ (29,491) |
Net loss per share - basic and diluted | $ (0.92) | $ (0.02) |
Weighted average shares outstanding - basic and diluted | 1,308,325 | 1,099,500 |
Statements of Changes in Stockholders' (Deficit) Equity - USD ($) |
Total |
Common Stock |
Additional Paid-in Capital |
Retained Deficit |
---|---|---|---|---|
Balance at Mar. 31, 2014 | $ 5,943 | $ 900 | $ 5,100 | $ (57) |
Balance, shares at Mar. 31, 2014 | 900,000 | |||
Shares issued for cash | 23,519 | $ 354 | 23,165 | |
Shares issued for cash, shares | 354,000 | |||
Fraction shares due to splits | ||||
Fraction shares due to splits, shares | 781 | |||
Net loss | (29,491) | (29,491) | ||
Balance at Mar. 31, 2015 | (29) | $ 1,254 | 28,265 | (29,548) |
Balance, shares at Mar. 31, 2015 | 1,254,781 | |||
Debt discount | 55,245 | 55,245 | ||
Shares issued for cash | 150,000 | $ 10 | 149,990 | |
Shares issued for cash, shares | 10,000 | |||
Shares issued for stock-based compensation | 30,600 | $ 10 | 30,590 | |
Shares issued for stock-based compensation, shares | 10,000 | |||
Shares issued for acquisitions | 706,000 | $ 52 | 705,948 | |
Shares issued for acquisitions, shares | 51,500 | |||
Net loss | (1,208,626) | (1,208,626) | ||
Balance at Mar. 31, 2016 | $ (266,810) | $ 1,326 | $ 970,038 | $ (1,238,174) |
Balance, shares at Mar. 31, 2016 | 1,326,281 |
Description of Business and Basis of Persentation |
12 Months Ended |
---|---|
Mar. 31, 2016 | |
Description of Business and Basis of Persentation [Abstract] | |
DESCRIPTION OF BUSINESS AND BASIS OF PERSENTATION | NOTE 1 – DESCRIPTION OF BUSINESS AND BASIS OF PERSENTATION PetroGas Company (Formerly America Resources Exploration Inc. (the “Company”)), was incorporated in the State of Nevada on January 24, 2014. The Company was incorporated under the name Alazzio Entertainment Corp. and changed its name to America Resources Exploration Inc. on April 17, 2015. Subsequently, on January 20, 2016, the Company changed its name to PetroGas Company. On June 12, 2015, the Company completed an acquisition of working interests in certain oil & gas properties as discussed in Note 4 below. On April 16, 2015, the Company filed a Certificate of Amendment with the Nevada Secretary of State whereby it amended its Articles of Incorporation by increasing the Company's authorized number of shares of common stock from 75 million to 300 million and increasing all of its issued and outstanding shares of common stock at a ratio of fifteen (15) shares for every one (1) share held. On January 20, 2016, the Company filed a Certificate of Amendment with the Nevada Secretary of State (the “Nevada SOS”) whereby decreasing all of its issued and outstanding shares of common stock at a ratio of one (1) share for every one hundred (100) shares held. The Company’s Board of Directors approved this amendment on January 13, 2016 and shareholders holding 68.65% of the Company’s issued and outstanding shares approved this amendment via a written consent executed on January 14, 2016. All share amounts in these financial statements have been adjusted to reflect this stock split. |
Summary of Significant Accounting Policies |
12 Months Ended |
---|---|
Mar. 31, 2016 | |
Summary of Significant Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Because a precise determination of many assets and liabilities is dependent upon future events, the preparation of financial statements for a period necessarily involves the use of estimates, which have been made using careful judgment. Actual results may vary from these estimates. The financial statements have, in management’s opinion, been properly prepared within reasonable limits of materiality and within the framework of the significant accounting policies summarized below: Basis of Consolidation These consolidated financial statements include the accounts of the Company and its 94% owned subsidiary, Seabourn Oil Company, LLC. All intercompany balances and transactions have been eliminated in consolidation. Fiscal Year End The Company has selected March 31 as its fiscal year end. Cash and Cash Equivalents Cash and cash equivalents consist of commercial accounts and interest-bearing bank deposits and are carried at cost, which approximates current value. Items are considered to be cash equivalents if the original maturity is three months or less. Equipment and Facilities Equipment and facilities are recorded at cost. Depreciation is recorded using the straight-line method over the estimated useful lives of the related assets, ranging from one to twenty-five years. Intangible Assets Acquired intangible assets are recognized at cost and are classified as assets with finite useful lives. The Company amortizes the intangible assets with five years using the straight-line method over the estimated economic lives of the assets. Intangible assets are evaluated for impairment to determine if current circumstances and market conditions indicate the carrying amount may not be recoverable. Oil and Gas Properties – Full Cost Method The Company follows the full cost accounting method to account for oil and natural gas properties, whereby costs incurred in the acquisition, exploration and development of oil and gas reserves are capitalized. Such costs include lease acquisition, geological and geophysical activities, rentals on nonproducing leases, drilling, completing and equipping of oil and gas wells and administrative costs directly attributable to those activities and asset retirement costs. Disposition of oil and gas properties are accounted for as a reduction of capitalized costs, with no gain or loss recognized unless such adjustment would significantly alter the relationship between capital costs and proved reserves of oil and gas, in which case the gain or loss is recognized to operations. The capitalized costs of oil and gas properties, excluding unevaluated and unproved properties, are amortized as depreciation, depletion and amortization expense using the units-of-production method based on estimated proved recoverable oil and gas reserves. The costs associated with unevaluated and unproved properties, initially excluded from the amortization base, relate to unproved leasehold acreage, wells and production facilities in progress and wells pending determination of the existence of proved reserves, together with capitalized interest costs for these projects. Unproved leasehold costs are transferred to the amortization base with the costs of drilling the related well once a determination of the existence of proved reserves has been made or upon impairment of a lease. Costs associated with wells in progress and completed wells that have yet to be evaluated are transferred to the amortization base once a determination is made whether or not proved reserves can be assigned to the property. Costs of dry wells are transferred to the amortization base immediately upon determination that the well is unsuccessful. All items classified as unproved property are assessed on a quarterly basis for possible impairment or reduction in value. Properties are assessed on an individual basis or as a group if properties are individually insignificant. The assessment includes consideration of various factors, including, but not limited to, the following: intent to drill; remaining lease term; geological and geophysical evaluations; drilling results and activity; assignment of proved reserves; and economic viability of development if proved reserves are assigned. During any period in which these factors indicate an impairment, the cumulative drilling costs incurred to date for such property and all or a portion of the associated leasehold costs are transferred to the full cost pool and become subject to
amortization. Under full cost accounting rules for each cost center, capitalized costs of evaluated oil and gas properties, including asset retirement costs, less accumulated amortization and related deferred income taxes, may not exceed an amount (the "cost ceiling") equal to the sum of (a) the present value of future net cash flows from estimated production of proved oil and gas reserves, based on current prices and operating conditions, discounted at ten percent (10%), plus (b) the cost of properties not being amortized, plus (c) the lower of cost or estimated fair value of any unproved properties included in the costs being amortized, less (d) any income tax effects related to differences between the book and tax basis of the properties involved. If capitalized costs exceed this limit, the excess is charged to operations. For purposes of the ceiling test calculation, current prices are defined as the unweighted arithmetic average of the first day of the month price for each month within the 12-month period prior to the end of the reporting period. Prices are adjusted for basis or location differentials. Unless sales contracts specify otherwise, prices are held constant for the productive life of each well. Similarly, current costs are assumed to remain constant over the entire calculation period. The Company’s proved properties have not operated for in excess of two years and under present circumstances, can not be placed on production. Given the decline and continuing volatility of oil and gas prices which has prevented the Company from bringing its proven wells online, an estimate of discounted future net cash flows from proved oil and gas reserves is indeterminable. In addition, development of the Company’s unproved properties in not viable, nor are revenues from the Company’s ORR’s. As a result, the Company has evaluated its proved and unproven assets as at March 31, 2016 and has fully impaired these assets. We recognized a cumulative total of $713,550 and $0 of impairment costs during the years ended March 31, 2016 and 2015, respectively in respect of our proven and unproven oil and gas assets, in addition to a total of $46,237 which was impaired during the third quarter ended September 30, 2015 as a result of the loss on acquisition of certain ORR’s. Impairment FASB ASC 360-10-35-21 requires that assets to be held and used be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Oil and gas properties accounted for using the full cost method of accounting (which the Company uses) are excluded from this requirement but continue to be subject to the full cost method's impairment rules. Revenue Recognition Oil and gas sales result from undivided interests held by the Company in oil and gas properties. Sales of oil and gas produced from oil and gas operations are recognized when the product is delivered to the purchaser and title transfers to the purchaser. Charges for gathering and transportation are included in production expenses. The Company had no sales of oil and gas during the fiscal years ended March 31, 2016 and 2015. Asset Retirement Obligations The Company records a liability for asset retirement obligations ("ARO") associated with its oil and gas wells when those assets are placed in service. The corresponding cost is capitalized as an asset and included in the carrying amount of oil and gas properties and is depleted over the useful life of the properties. Subsequently, the ARO liability is accreted to its then-present value. Inherent in the fair value calculation of an ARO are numerous assumptions and judgments including the ultimate settlement amounts, inflation factors, credit adjusted discount rates, timing of settlement, and changes in the legal, regulatory, environmental and political environments. To the extent future revisions to these assumptions impact the fair value of the existing ARO liability, a corresponding adjustment is made to the oil and gas property balance. Settlements greater than or less than amounts accrued as ARO are recorded as a gain or loss upon settlement. Fair Value of Financial Instruments The Company measures its financial assets and liabilities in accordance with the requirements of ASC 820, Fair Value Measurements and Disclosures. ASC 820 clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows: Level 1- Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date. Level 2- Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data. Level 3- Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information, The carrying value of all assets and liabilities approximated their fair values as of March 31, 2016 and 2015, respectively. Stock-Based Compensation The Company follows the guidance included in ASC 718 Compensation-Stock Compensation (“ASC 718”) using the modified prospective transition method. The Company recognizes compensation expense in the financial statements for share-based awards based on the grant date fair value of those awards. Income Taxes The Company accounts for income taxes pursuant to ASC 740, Income Taxes . Deferred tax assets and liabilities are recorded for differences between the financial statements and tax basis of the assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is recorded for the amount of income tax payable or refundable for the period increased or decreased by the change in deferred tax assets and liabilities during the period. Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the 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 period. Actual results could differ from those estimates. These estimates are reviewed periodically, and, as adjustments become necessary, they are reported in earnings in the period in which they become known. The estimates on depreciation were based on the estimated useful lives of the Company's assets. Any estimates during the period have had an immaterial effect on earnings. Earnings or Loss Per Share In accordance with ASC Topic 280 – “Earnings Per Share”, the basic loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding. Diluted loss per common share is computed similar to basic loss per common share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. Recent Accounting Pronouncements The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations. |
Going Concern |
12 Months Ended |
---|---|
Mar. 31, 2016 | |
Going Concern [Abstract] | |
GOING CONCERN | NOTE 3– GOING CONCERN The Company has experienced net losses to date, and it has not generated revenue from operations, we will need additional working capital to service debt and for ongoing operations, which raises substantial doubt about its ability to continue as a going concern. Management of the Company has developed a strategy to meet operational shortfalls which may include equity funding, short term or long term financing or debt financing, to enable the Company to reach profitable operations. The accompanying consolidated financial statements do not include any adjustments that might be necessary should we be unable to continue as a going concern. If we fail to generate positive cash flow or obtain additional financing, when required, we may have to modify, delay, or abandon some or all of our business and expansion plans. |
Oil and Gas Properties |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Oil and Gas Properties [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||
OIL AND GAS PROPERTIES | NOTE 4– OIL AND GAS PROPERTIES On May 27, 2015, the Company incorporated a limited liability corporation in the State of Texas called Seabourn Oil Company, LLC (“Seabourn LLC”) for the purpose of acquiring certain oil and gas leases. On May 27, 2015 Seabourn completed the acquisition of the leases from Nelaco Operating Company, Inc., a company controlled by Mr. Joe Seabourn, a member of our board of directors. Under the terms of the assignment and bill of sale Seabourn LLC acquired a 100% working interest and an 80% net revenue interest in a total of 960 acres located in two tracts in Callahan County, Texas. Under the terms of the agreements Mr. Seabourn retains a 6% ownership interest in Seabourn LLC. The Company capitalized this property at a nominal value of $100 in respect of the transaction due to the fact that Mr. Seabourn was unable to provide historical cost for the acquired lease land. On June 10, 2015, the Company entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with Zheng Xiangwu (“Zheng”), a resident of Guang Dong Province, China, and the Company’s controlling shareholder (see Note 5 ), whereby the Company issued 40,000 shares of its common stock in exchange for rights to certain oil and gas leases located in Frio and Atascosa Counties, Texas, consisting of a total of 714 total acres of land, two (2) working wells and a total of seven (7) wells (the “Leases”). The 40,000 shares were valued at Zheng’s historical cost totalling $160,000. The transaction closed on June 12, 2015. On June 11, 2015 the Company entered into various assignment agreements for the acquisition of multiple oil and gas leases and ORR’s as set out in the table below. On July 6 and July 9, 2015 respectively the Company concluded Asset Purchase Agreements with respect to the aforementioned assignments whereunder the Company issued a total of 6,500 shares of its common stock to Mr. Zheng. The Company valued the transaction at the market price of the shares as at the date of issue, or $15 per share for a total value of $97,500. The Company capitalized the historical cost of the acquired assets totaling $51,263 and recorded a loss on acquisition of $46,237.
On August 13, 2015 the Company entered into an Asset Purchase Agreement with Inceptus Resources, LLC whereunder the Company acquired a 78% net revenue interest in 200 acres located in Callahan County, Texas, and a 78% net revenue interest in 522 acres also located in Callahan County, Texas. In respect of the acquired leases the Company issued a total of 5,000 shares of common stock on the closing date, August 19, 2015 which shares were valued at market price on the date of the transaction, totaling $448,500, which amount was capitalized. As at September 30, 2015 the Company evaluated the capitalized value of the leases and determined to impair the amount in full due to the fact that the Company had no historical cost basis for the leases, and no immediate development plans for the lease land. A total of $448,500 has been expensed as Impairment loss on oil and gas lease during the quarter ended September 30, 2015. During the period the Company completed various workovers and other improvements to certain of its existing wellbores, which amounts totaling $53,687 were capitalized under Proved Properties. As at the fiscal year ended March 31, 2016, a total of $53,587 was expensed as the Company has not yet determined when the wells will be brought online. Further a total of $211,363 in proven and unproven oil and gas assets and ORR’s was fully impaired at March 31, 2016 following an evaluation by the Company’s management. |
Asset Retirement Obligations |
12 Months Ended | |||||||||||||||||||||||||||||||
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Mar. 31, 2016 | ||||||||||||||||||||||||||||||||
Asset Retirement Obligations [Abstract] | ||||||||||||||||||||||||||||||||
ASSET RETIREMENT OBLIGATIONS |
NOTE 5 – ASSET RETIREMENT OBLIGATIONS
The Company has asset retirement obligations for any wells that are permanently removed from service. The primary obligations involve the removal and disposal of surface equipment, plugging and abandoning the wells and site restoration. For the purpose of determining the fair value of ARO incurred during the fiscal year ended March 31, 2016, the Company used the following assumptions.
As at March 31, 2016, the Company determined to fully impair its shut in wells given a lack of production over a period in excess of two years, and the uncertainty in returning the wells to production in the future. As a result, the Company has recorded a long term liability equal to the full value of the ARO.
The following table shows the change in the Company’s ARO during the fiscal year ended March 31, 2016:
|
Income Taxes |
12 Months Ended |
---|---|
Mar. 31, 2016 | |
Income Taxes [Abstract] | |
INCOME TAXES | NOTE 6 – INCOME TAXES The Company estimates its annual effective income tax rate in recording its quarterly provision for income taxes in the various jurisdictions in which the Company operates. Statutory tax rate changes and other significant or unusual items are recognized as discrete items in the quarter in which they occur. The Company recorded no income tax expense for the fiscal years ended March 31, 2016 and 2015. The Company has a valuation allowance that fully offsets net deferred tax assets. |
Common Stock |
12 Months Ended |
---|---|
Mar. 31, 2016 | |
Common Stock [Abstract] | |
COMMON STOCK | NOTE 7 – COMMON STOCK On April 16, 2015, the Company filed a Certificate of Amendment with the Nevada Secretary of State whereby it amended its Articles of Incorporation by increasing the Company's authorized number of shares of common stock from 75 million to 300 million and increasing all of its issued and outstanding shares of common stock at a ratio of fifteen (15) shares for every one (1) share held. On January 20, 2016, the Company filed a Certificate of Amendment with the Nevada Secretary of State (the “Nevada SOS”) whereby decreasing all of its issued and outstanding shares of common stock at a ratio of one (1) share for every one hundred (100) shares held. The Company’s Board of Directors approved this amendment on January 13, 2016 and shareholders holding 68.65% of the Company’s issued and outstanding shares approved this amendment via a written consent executed on January 14, 2016. All share amounts in these financial statements have been adjusted to reflect this stock split. On June 12, 2015, Company issued 40,000 shares of common stock related to the acquisition of oil and gas property to (see Note 2) Zheng Xiangwu. Mr. Zheng is the owner of Rise Fast Limited, a Hong Kong corporation (“Rise Fast”), which is the majority shareholder of the Company. Rise Fast owned 900,000 shares of the Company’s common stock representing 68.94% of the Company’s issued and outstanding common stock at the date of the transaction. On June 12, 2015, the Company accepted a Subscription Agreement for the sale of up to 25,500 shares of its common stock from the Company’s majority shareholder, Rise Fast. No underwriters were utilized in connection with this sale of securities. The Subscription Agreement provides that the shares shall be sold as follows: (i) upon execution thereof, the purchase irrevocably agrees to purchase 10,000 at $15 per share; (ii) within sixty (60) days of the date of the Subscription Agreement, the purchaser has the right to purchase an additional 7,500 shares at the price of $20 per share; and (iii) within one hundred twenty (120) days of the date of the Subscription Agreement, the purchaser has the right to purchase an additional 8,000 shares at the price of $20 per share. On July 23, 2015, the Company approved the issuance of 10,000 shares of common stock for cash proceeds of $150,000. The shares were issued subsequent to the period covered by this report. Between July 6 and July 9, 2015 the Company issued a further 6,500 shares of common stock to Mr. Zheng Xiangwu related to the acquisition of certain lease land and ORR’s. (see Note 4). On August 19, 2015 the Company issued a total of 5,000 shares to Hans Johnson, owner of Inceptus Resources LLC in respect of the acquisition of certain lease lands. (see Note 4). On November 2, 2015, the Company issued 10,000 shares of common stock to Mr. Joe Seabourn as part of an employee compensation agreement, which shares were valued at market price on the date of the transaction, totaling $30,600. As at March 31, 2016 the Company had a total of 1,326,281 shares issued and outstanding. |
Loans Payable and Convertible Notes |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans Payable and Convertible Notes [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
LOANS PAYABLE AND CONVERTIBLE NOTES | NOTE 8 – LOANS PAYABLE AND CONVERTIBLE NOTES On August 10, 2015 the Company received loan proceeds of $60,000 from the Company’s majority shareholder, Rise Fast which amount bears interest at a rate of 5% per annum and is due and payable on December 31, 2017. During the period ended December 31, 2015, the Company repaid $55,980 of this loan leaving a total of $4,020 in principal outstanding. On September 1, 2015 the Company received a further $50,000 in loan proceeds from Rise Fast which amount bears interest at 5% per annum and is due and payable on December 31, 2017. On January 2, 2016, the remaining principal balance of the aforementioned loans payable totaling $54,020 and accrued interest of $1,225 thereon were converted to several 4% convertible notes with varying conversion prices. A portion of these notes were concurrently assigned to several third parties. A total of $21,635 of the principal value of the convertible notes have a conversion price at $0.001 per share, and the remaining $33,610 in principal value of the convertible notes have a conversion price at $0.005 per share. On the transaction date, the Company recognized the intrinsic value of the embedded beneficial conversion feature of $55,245 as additional paid-in capital and the debt discount in full was recorded as interest expense. The following table summarizes information in respect to the convertible notes:
The Company analyzed the conversion feature of above Convertible Notes for derivative accounting consideration under FASB ASC 470 and determined that the conversion feature did not create embedded derivatives. |
Related Party Transactions |
12 Months Ended |
---|---|
Mar. 31, 2016 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 9 – RELATED PARTY TRANSACTIONS On April 3, 2015, the Company accepted the resignations of Dmitri Kapsumun as the sole officer of the Company and as a member of the Company's board of directors. Concurrently the Company appointed Mr. Huang Yu as sole officer and director. On June 12, 2015 the Company appointed Joe Seabourn and Robert Wiener to the Company’s Board of Directors. On June 24, 2015 the Company approved a consulting contract with Mr. Joe Seabourn, a member of the Company’s Board of Directors, for a monthly fee of $3,000, payable on the first of each month, commencing July 1, 2015. During the period ended September 30, 2015 Mr. Seabourn was paid $9,000 under the terms of the contract. On September 26, 2015 Mr. Huang Yu, a member of the Company’s Board of Directors was appointed Chief Financial Officer. Effective October 1, 2015 the Company entered into an amendment to the consulting agreement with Mr. Joe Seabourn, member of the Company’s Board of Directors. Under the terms of the Amendment, Mr. Seabourn shall cease charging a monthly fee for services and accepted 10,000 shares of the Company’s common stock as consideration for services between October 2015 and June 30, 2016. On November 2, 2015, the Company issued 10,000 shares of common stock to Mr. Joe Seabourn as part of an employee compensation agreement, which shares were valued at market price on the date of the transaction, totaling $30,600. During the fiscal year the Company received a total of $110,000 in gross proceeds from its majority shareholder which amounts were payable on December 31, 2017 and bore interest at a rate of 5% per annum. During the year a total of $55,980 was repaid to reduce the loan balance and subsequently a total of $54,020 in principal and $1,225 in accrued interest were converted into several 4% convertible notes with varying prices of conversion. (Ref Note: 8 above). During the fiscal year ended March 31, 2016 the Company received advances totaling $108,433 from its majority shareholder in order to fund ongoing operations in the normal course. The amounts are unsecured, non-interest bearing and have no specific terms of repayment. |
Other Events |
12 Months Ended |
---|---|
Mar. 31, 2016 | |
Other Events [Abstract] | |
OTHER EVENTS | NOTE 10 - OTHER EVENTS On August 21, 2015 the Company appointed Mr. Mark Corrao as the Company’s Chief Financial Officer. Mr. Corrao will receive fees of $2,500 per month in consideration for his services as CFO. On September 26, 2015 the Company terminated Mr. Corrao’s position and consulting contract. |
Subsequent Events |
12 Months Ended |
---|---|
Mar. 31, 2016 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 11 – SUBSEQUENT EVENTS On July 1, 2016 the Company issued 21,635,730 shares of common stock to settle certain convertible notes in the principal amount of $21,635. (ref: Note 8 above) On July 11, 2016 the Company issued 6,721,920 shares of common stock to settle certain convertible notes in the principal amount of $33,610. (ref: Note 8 above) |
Summary of Significant Accounting Policies (Policies) |
12 Months Ended |
---|---|
Mar. 31, 2016 | |
Summary of Significant Accounting Policies [Abstract] | |
Basis of Consolidation | Basis of Consolidation These consolidated financial statements include the accounts of the Company and its 94% owned subsidiary, Seabourn Oil Company, LLC. All intercompany balances and transactions have been eliminated in consolidation. |
Fiscal Year End | Fiscal Year End The Company has selected March 31 as its fiscal year end. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents consist of commercial accounts and interest-bearing bank deposits and are carried at cost, which approximates current value. Items are considered to be cash equivalents if the original maturity is three months or less. |
Equipment and Facilities | Equipment and Facilities Equipment and facilities are recorded at cost. Depreciation is recorded using the straight-line method over the estimated useful lives of the related assets, ranging from one to twenty-five years. |
Intangible Assets | Intangible Assets Acquired intangible assets are recognized at cost and are classified as assets with finite useful lives. The Company amortizes the intangible assets with five years using the straight-line method over the estimated economic lives of the assets. Intangible assets are evaluated for impairment to determine if current circumstances and market conditions indicate the carrying amount may not be recoverable. |
Oil and Gas Properties - Full Cost Method | Oil and Gas Properties – Full Cost Method The Company follows the full cost accounting method to account for oil and natural gas properties, whereby costs incurred in the acquisition, exploration and development of oil and gas reserves are capitalized. Such costs include lease acquisition, geological and geophysical activities, rentals on nonproducing leases, drilling, completing and equipping of oil and gas wells and administrative costs directly attributable to those activities and asset retirement costs. Disposition of oil and gas properties are accounted for as a reduction of capitalized costs, with no gain or loss recognized unless such adjustment would significantly alter the relationship between capital costs and proved reserves of oil and gas, in which case the gain or loss is recognized to operations. The capitalized costs of oil and gas properties, excluding unevaluated and unproved properties, are amortized as depreciation, depletion and amortization expense using the units-of-production method based on estimated proved recoverable oil and gas reserves. The costs associated with unevaluated and unproved properties, initially excluded from the amortization base, relate to unproved leasehold acreage, wells and production facilities in progress and wells pending determination of the existence of proved reserves, together with capitalized interest costs for these projects. Unproved leasehold costs are transferred to the amortization base with the costs of drilling the related well once a determination of the existence of proved reserves has been made or upon impairment of a lease. Costs associated with wells in progress and completed wells that have yet to be evaluated are transferred to the amortization base once a determination is made whether or not proved reserves can be assigned to the property. Costs of dry wells are transferred to the amortization base immediately upon determination that the well is unsuccessful. All items classified as unproved property are assessed on a quarterly basis for possible impairment or reduction in value. Properties are assessed on an individual basis or as a group if properties are individually insignificant. The assessment includes consideration of various factors, including, but not limited to, the following: intent to drill; remaining lease term; geological and geophysical evaluations; drilling results and activity; assignment of proved reserves; and economic viability of development if proved reserves are assigned. During any period in which these factors indicate an impairment, the cumulative drilling costs incurred to date for such property and all or a portion of the associated leasehold costs are transferred to the full cost pool and become subject to amortization. Under full cost accounting rules for each cost center, capitalized costs of evaluated oil and gas properties, including asset retirement costs, less accumulated amortization and related deferred income taxes, may not exceed an amount (the "cost ceiling") equal to the sum of (a) the present value of future net cash flows from estimated production of proved oil and gas reserves, based on current prices and operating conditions, discounted at ten percent (10%), plus (b) the cost of properties not being amortized, plus (c) the lower of cost or estimated fair value of any unproved properties included in the costs being amortized, less (d) any income tax effects related to differences between the book and tax basis of the properties involved. If capitalized costs exceed this limit, the excess is charged to operations. For purposes of the ceiling test calculation, current prices are defined as the unweighted arithmetic average of the first day of the month price for each month within the 12-month period prior to the end of the reporting period. Prices are adjusted for basis or location differentials. Unless sales contracts specify otherwise, prices are held constant for the productive life of each well. Similarly, current costs are assumed to remain constant over the entire calculation period. The Company’s proved properties have not operated for in excess of two years and under present circumstances, can not be placed on production. Given the
decline and continuing volatility of oil and gas prices which has prevented the Company from bringing its proven wells online, an estimate of discounted future net cash flows from proved oil and gas reserves is indeterminable. In addition, development of the Company’s unproved properties in not viable, nor are revenues from the Company’s ORR’s. As a result, the Company has evaluated its proved and unproven assets as at March 31, 2016 and has fully impaired these assets. We recognized a cumulative total of $713,550 and $0 of impairment costs during the years ended March 31, 2016 and 2015, respectively in respect of our proven and unproven oil and gas assets, in addition to a total of $46,237 which was impaired during the third quarter ended September 30, 2015 as a result of the loss on acquisition of certain ORR’s. |
Impairment | Impairment FASB ASC 360-10-35-21 requires that assets to be held and used be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Oil and gas properties accounted for using the full cost method of accounting (which the Company uses) are excluded from this requirement but continue to be subject to the full cost method's impairment rules. |
Revenue Recognition | Revenue Recognition Oil and gas sales result from undivided interests held by the Company in oil and gas properties. Sales of oil and gas produced from oil and gas operations are recognized when the product is delivered to the purchaser and title transfers to the purchaser. Charges for gathering and transportation are included in production expenses. The Company had no sales of oil and gas during the fiscal years ended March 31, 2016 and 2015. |
Asset Retirement Obligations | Asset Retirement Obligations The Company records a liability for asset retirement obligations ("ARO") associated with its oil and gas wells when those assets are placed in service. The corresponding cost is capitalized as an asset and included in the carrying amount of oil and gas properties and is depleted over the useful life of the properties. Subsequently, the ARO liability is accreted to its then-present value. Inherent in the fair value calculation of an ARO are numerous assumptions and judgments including the ultimate settlement amounts, inflation factors, credit adjusted discount rates, timing of settlement, and changes in the legal, regulatory, environmental and political environments. To the extent future revisions to these assumptions impact the fair value of the existing ARO liability, a corresponding adjustment is made to the oil and gas property balance. Settlements greater than or less than amounts accrued as ARO are recorded as a gain or loss upon settlement. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company measures its financial assets and liabilities in accordance with the requirements of ASC 820, Fair Value Measurements and Disclosures. ASC 820 clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows: Level 1- Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date. Level 2- Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data. Level 3- Inputs are unobservable inputs which reflect the reporting entity’s own assumptions on what assumptions the market participants would use in pricing the asset or liability based on the best available information, The carrying value of all assets and liabilities approximated their fair values as of March 31, 2016 and 2015, respectively. |
Stock-Based Compensation | Stock-Based Compensation The Company follows the guidance included in ASC 718 Compensation-Stock Compensation (“ASC 718”) using the modified prospective transition method. The Company recognizes compensation expense in the financial statements for share-based awards based on the grant date fair value of those awards. |
Income Taxes | Income Taxes The Company accounts for income taxes pursuant to ASC 740, Income Taxes . Deferred tax assets and liabilities are recorded for differences between the financial statements and tax basis of the assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is recorded for the amount of income tax payable or refundable for the period increased or decreased by the change in deferred tax assets and liabilities during the period. |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the 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 period. Actual results could differ from those estimates. These estimates are reviewed periodically, and, as adjustments become necessary, they are reported in earnings in the period in which they become known. The estimates on depreciation were based on the estimated useful lives of the Company's assets. Any estimates during the period have had an immaterial effect on earnings. |
Earnings or Loss Per Share | Earnings or Loss Per Share In accordance with ASC Topic 280 – “Earnings Per Share”, the basic loss per common share is computed by dividing net loss available to common stockholders by the weighted average number of common shares outstanding. Diluted loss per common share is computed similar to basic loss per common share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations. |
Asset Retirement Obligations (Tables) |
12 Months Ended | ||||||
---|---|---|---|---|---|---|---|
Mar. 31, 2016 | |||||||
Asset Retirement Obligations [Abstract] | |||||||
Schedule of change in ARO | |||||||
Schedule of fair value of ARO |
|
Loans Payable and Convertible Notes (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2016 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans Payable and Convertible Notes [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of convertible notes |
|
Description of Business and Basis of Persentation (Details) - shares |
1 Months Ended | |||
---|---|---|---|---|
Apr. 16, 2015 |
Jan. 20, 2016 |
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Business Description and Basis of Presentation (Textual) | ||||
Common stock, shares authorized | 300,000,000 | 300,000,000 | ||
Common stock ratio | Increasing all of its issued and outstanding shares of common stock at a ratio of fifteen (15) shares for every one (1) share held. | Shares of common stock at a ratio of one (1) share for every one hundred (100) shares held. | ||
Shareholders holding ownership percentage | 68.65% | |||
Minimum [Member] | ||||
Business Description and Basis of Presentation (Textual) | ||||
Common stock, shares authorized | 75,000,000 | |||
Maximum [Member] | ||||
Business Description and Basis of Presentation (Textual) | ||||
Common stock, shares authorized | 300,000,000 |
Summary of Significant Accounting Policies (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Summary of Significant Accounting Policies (Textual) | ||
Ownership percentage | 94.00% | |
Estimated useful lives of intangible assets | 5 years | |
Description of oil and gas properties under full cost method | (a) the present value of future net cash flows from estimated production of proved oil and gas reserves, based on current prices and operating conditions, discounted at ten percent (10%), plus (b) the cost of properties not being amortized, plus (c) the lower of cost or estimated fair value of any unproved properties included in the costs being amortized, less (d) any income tax effects related to differences between the book and tax basis of the properties involved. | |
Impairment of oil and gas leases | $ 713,550 | |
Loss on acquisition of royalty interest and unproven property | $ (46,238) | |
Equipment [Member] | Maximum [Member] | ||
Summary of Significant Accounting Policies (Textual) | ||
Estimated useful lives | 25 years | |
Equipment [Member] | Minimum [Member] | ||
Summary of Significant Accounting Policies (Textual) | ||
Estimated useful lives | 1 year | |
Seabourn Oil Company, LLC [Member] | ||
Summary of Significant Accounting Policies (Textual) | ||
Ownership percentage | 94.00% |
Oil and Gas Properties (Details) - USD ($) |
3 Months Ended | 12 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Aug. 13, 2015 |
Jul. 09, 2015 |
Jul. 06, 2015 |
Jun. 10, 2015 |
May 27, 2015 |
Sep. 30, 2015 |
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Oil and Gas Properties (Textual) | ||||||||
Stock issued during acquisition period, value | $ 97,500 | $ 97,500 | $ 150,000 | $ 23,519 | ||||
Stock issued during acquisition period, shares | 6,500 | 6,500 | ||||||
Impairment loss on oil and gas leases | 713,550 | |||||||
Expenses incurred during acquisition period | 53,587 | |||||||
Proven and unproven gas assets | 211,363 | |||||||
Acquired assets | $ 51,263 | $ 51,263 | $ 53,687 | |||||
Loos on acquisition | $ 46,237 | $ 46,237 | ||||||
Market price, per share | $ 15 | $ 15 | ||||||
Seabourn Oil Company, LLC [Member] | ||||||||
Oil and Gas Properties (Textual) | ||||||||
Acquisition, description | Under the terms of the assignment and bill of sale Seabourn LLC acquired a 100% working interest and an 80% net revenue interest in a total of 960 acres located in two tracts in Callahan County, Texas. Under the terms of the agreements Mr. Seabourn retains a 6% ownership interest in Seabourn LLC. The Company capitalized this property at a nominal value of $100 in respect of the transaction due to the fact that Mr. Seabourn was unable to provide historical cost for the acquired lease land.
|
|||||||
Zheng Xiangwu [Member] | ||||||||
Oil and Gas Properties (Textual) | ||||||||
Acquisition, description | consisting of a total of 714 total acres of land, two (2) working wells and a total of seven (7) wells (the “Leases”).
|
|||||||
Stock issued during acquisition period, value | $ 160,000 | |||||||
Stock issued during acquisition period, shares | 40,000 | |||||||
Inceptus Resources Llc [Member] | ||||||||
Oil and Gas Properties (Textual) | ||||||||
Acquisition, description | The Company entered into an Asset Purchase Agreement with Inceptus Resources, LLC whereunder the Company acquired a 78% net revenue interest in 200 acres located in Callahan County, Texas, and a 78% net revenue interest in 522 acres also located in Callahan County, Texas.
|
|||||||
Stock issued during acquisition period, value | $ 448,500 | |||||||
Stock issued during acquisition period, shares | 5,000 | |||||||
Impairment loss on oil and gas leases | $ 448,500 |
Asset Retirement Obligations (Details) |
12 Months Ended |
---|---|
Mar. 31, 2016 | |
Asset Retirement Obligations [Abstract] | |
Inflation Rate | 3.00% |
Estimated asset life | 20 years |
Credit adjusted risk free interest rate | 18.00% |
Asset Retirement Obligations (Details 1) |
12 Months Ended |
---|---|
Mar. 31, 2016
USD ($)
| |
Asset Retirement Obligations [Abstract] | |
Asset retirement obligations at April 1, 2015 | |
Asset retirement obligations incurred | 9,075 |
Accretion expense | 83,580 |
Adjust obligation to reflect impairment of non producing wells | 74,594 |
Asset retirement obligations at March 31, 2016 | $ 83,580 |
Income Taxes (Details) - USD ($) |
12 Months Ended | |
---|---|---|
Mar. 31, 2016 |
Mar. 31, 2015 |
|
Income Tax (Textual) | ||
Income tax expense | $ 0 | $ 0 |
Other Events (Details) |
Aug. 21, 2015
USD ($)
|
---|---|
Mr. Mark Corrao [Member] | |
Deferred Compensation Arrangement with Individual, Excluding Share-based Payments and Postretirement Benefits [Line Items] | |
Monthly fees received for services | $ 2,500 |
Subsequent Events (Details) - Subsequent Events [Member] - USD ($) |
Jul. 11, 2016 |
Jul. 01, 2016 |
---|---|---|
Subsequent Event [Line Items] | ||
Common stock issued to settle convertible notes | 6,721,920 | 21,635,730 |
Convertible notes | $ 33,610 | $ 21,635 |
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