0001640334-18-002067.txt : 20181105 0001640334-18-002067.hdr.sgml : 20181105 20181105130434 ACCESSION NUMBER: 0001640334-18-002067 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 41 CONFORMED PERIOD OF REPORT: 20180930 FILED AS OF DATE: 20181105 DATE AS OF CHANGE: 20181105 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PetroGas Co CENTRAL INDEX KEY: 0001609258 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 981153516 STATE OF INCORPORATION: NV FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 333-196409 FILM NUMBER: 181159483 BUSINESS ADDRESS: STREET 1: 2800 POST OAK BOULEVARD STREET 2: SUITE 4100 CITY: HOUSTON STATE: TX ZIP: 77056 BUSINESS PHONE: (832) 899-8597 MAIL ADDRESS: STREET 1: 2800 POST OAK BOULEVARD STREET 2: SUITE 4100 CITY: HOUSTON STATE: TX ZIP: 77056 FORMER COMPANY: FORMER CONFORMED NAME: America Resources Exploration Inc. DATE OF NAME CHANGE: 20150506 FORMER COMPANY: FORMER CONFORMED NAME: Alazzio Entertainment Corp DATE OF NAME CHANGE: 20140527 10-Q 1 ptco_10q.htm FORM 10-Q ptco_10q.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

(Mark One)

 

x

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

 

 

 

For the quarterly period ended September 30, 2018

 

 

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 333-196409

 
 

PETROGAS COMPANY

(Exact name of registrant as specified in its charter)

   

Nevada

 

98-1153516

(State or other jurisdiction of incorporation or organization)

 

(IRS Employer Identification No.)

 

 

 

2800 Post Oak Boulevard, Suite 4100, Houston TX

 

77056

(Address of principal executive offices)

 

(Zip Code)

 

(832) 899-8597

(Registrant’s telephone number, including area code)

 

N/A

(Former name, former address and former fiscal year, if changed since last report)

 

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. x YES    ¨ 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). x YES    ¨ NO

 

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

 

Large accelerated filer

¨

Accelerated filer

¨

Non-accelerated filer

¨

(Do not check if a smaller reporting company)

Smaller reporting company

x

 

Emerging growth company

x

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) ¨ YES    x NO

 

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS

 

Check whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. ¨ YES    ¨ NO

 

APPLICABLE ONLY TO CORPORATE ISSUERS

 

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

 

30,099,230 common shares issued and outstanding as of November 1, 2018.

 

 
 
 
 

 

TABLE OF CONTENTS

 

PART I - FINANCIAL INFORMATION

 

 

 

 

 

 

Item 1.

Financial Statements

 

 

3

 

Item 2.

Management's Discussion and Analysis of Financial Condition or Plan of Operation

 

 

11

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

 

 

18

 

Item 4.

Controls and Procedures

 

 

18

 

 

PART II - OTHER INFORMATION

 

Item 1.

Legal Proceedings

 

 

19

 

Item 1A.

Risk Factors

 

 

19

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

 

 

19

 

Item 3.

Defaults Upon Senior Securities

 

 

19

 

Item 4.

Mine Safety Disclosures

 

 

19

 

Item 5.

Other Information

 

 

19

 

Item 6.

Exhibits

 

 

20

 

SIGNATURES

21

 

 
2
 
 

 

PART I - FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

PETROGAS COMPANY

BALANCE SHEETS

 

 

 

September 30,

 

 

March 31,

 

 

 

2018

 

 

2018

 

 

 

(Unaudited)

 

 

 

 

ASSETS

Current Assets

 

 

 

 

 

 

Cash and cash equivalents

 

$ 1,397

 

 

$ 5,176

 

Total Current Assets

 

 

1,397

 

 

 

5,176

 

 

 

 

 

 

 

 

 

 

Oil and gas, on the basis of full cost accounting

 

 

 

 

 

 

 

 

Unproved Property

 

 

-

 

 

 

29,158

 

TOTAL ASSETS

 

$ 1,397

 

 

$ 34,334

 

 

 

 

 

 

 

 

 

 

LIABILITIES & SHAREHOLDERS' EQUITY

Current Liabilities

 

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

$ 21,904

 

 

$ 20,550

 

Accrued interest

 

 

18,710

 

 

 

8,238

 

Advances from related party

 

 

28,541

 

 

 

28,541

 

Total Current Liabilities

 

 

69,155

 

 

 

57,329

 

 

 

 

 

 

 

 

 

 

Long-term liabilities

 

 

 

 

 

 

 

 

Asset retirement obligations

 

 

83,580

 

 

 

83,580

 

Convertible promissory notes, net of discount of $60,832 and $77,968, respectively

 

 

103,005

 

 

 

68,035

 

Promissory note

 

 

42,683

 

 

 

42,683

 

Total long-term liabilities

 

 

229,268

 

 

 

194,298

 

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES

 

 

298,423

 

 

 

251,627

 

 

 

 

 

 

 

 

 

 

SHAREHOLDERS' DEFICIT

 

 

 

 

 

 

 

 

Common stock: 300,000,000 authorized; $0.001 par value

 

 

 

 

 

 

 

 

30,099,230 and 30,099,230 shares issued and outstanding, respectively

 

 

30,099

 

 

 

30,099

 

Additional paid in capital

 

 

1,284,032

 

 

 

1,266,198

 

Accumulated deficit

 

 

(1,611,157 )

 

 

(1,513,590 )

TOTAL SHAREHOLDERS' DEFICIT

 

 

(297,026 )

 

 

(217,293 )

 

 

 

 

 

 

 

 

 

TOTAL LIABILITIES & SHAREHOLDERS' DEFICIT

 

$ 1,397

 

 

$ 34,334

 

 

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

 

 
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PETROGAS COMPANY

STATEMENTS OF OPERATIONS

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Royalty Revenue

 

$ 251

 

 

$ 418

 

 

$ 916

 

 

$ 693

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative expense

 

 

20,433

 

 

 

17,634

 

 

 

23,884

 

 

 

29,887

 

TOTAL OPERATING EXPENSES

 

 

20,433

 

 

 

17,634

 

 

 

23,884

 

 

 

29,887

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from Operations

 

 

(20,182 )

 

 

(17,216 )

 

 

(22,968 )

 

 

(29,194 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Impairment of oil and gas leases

 

 

-

 

 

 

-

 

 

 

29,158

 

 

 

-

 

Interest expense

 

 

21,734

 

 

 

21,263

 

 

 

45,441

 

 

 

22,466

 

Total other expenses

 

 

21,734

 

 

 

21,263

 

 

 

74,599

 

 

 

22,466

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET LOSS

 

 

(41,916 )

 

 

(38,479 )

 

 

(97,567 )

 

 

(51,660 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET LOSS PER SHARE, BASIC AND DILUTED

 

$ (0.00 )

 

$ (0.13 )

 

$ (0.00 )

 

$ (0.17 )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

WEIGHTED AVERAGE SHARES OUTSTANDING, BASIC AND DILUTED

 

 

30,099,229

 

 

 

296,839

 

 

 

30,099,230

 

 

 

296,839

 

 

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

 

 
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PETROGAS COMPANY

STATEMENT OF CASH FLOWS

 

 

 

Six Months Ended

 

 

 

September 30,

 

 

 

2018

 

 

2017

 

 

 

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

Net Loss

 

$ (97,567 )

 

$ (51,660 )

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Impairment of oil and gas leases

 

 

29,158

 

 

 

 

 

Amortization of debt discount

 

 

34,970

 

 

 

19,576

 

Changes in operating assets and liabilities:

 

 

 

 

 

 

 

 

Prepaid expenses

 

 

-

 

 

 

129

 

Accounts payable and accrued liabilities

 

 

1,354

 

 

 

20,448

 

Accrued interest

 

 

10,472

 

 

 

-

 

Net cash used in Operating Activities

 

 

(21,613 )

 

 

(11,507 )

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Advances from related party

 

 

-

 

 

 

17,704

 

Promissory note

 

 

-

 

 

 

(174,000 )

Issuance of convertible promissory notes

 

 

17,834

 

 

 

174,000

 

Net cash provided by Financing Activities

 

 

17,834

 

 

 

17,704

 

 

 

 

 

 

 

 

 

 

Net increase (decrease) in cash and cash equivalents

 

 

(3,779 )

 

 

6,197

 

Cash and cash equivalents, beginning of period

 

 

5,176

 

 

 

1,016

 

Cash and cash equivalents, end of period

 

$ 1,397

 

 

$ 7,213

 

 

 

 

 

 

 

 

 

 

Supplemental cash flow information

 

 

 

 

 

 

 

 

Cash paid for interest

 

 

-

 

 

 

-

 

Cash paid for taxes

 

 

-

 

 

 

-

 

 

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

 

 
5
 
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PETROGAS COMPANY

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2018

(Unaudited)

 

NOTE 1 – DESCRIPTION OF BUSINESS AND BASIS OF PERSENTATION

 

Organization and nature of business

 

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. All share amounts in these financial statements have been adjusted to reflect this stock split.

 

NOTE 2 – GOING CONCERN

 

The Company had no significant revenues from the inception through September 30, 2018. As of September 30, 2018, the Company has an accumulated deficit of $1,611,157. 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 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.

 

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation of Interim Financial Statements

 

The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions for Form 10-Q and Article 210 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All such adjustments are of a normal recurring nature. Operating results for the six months ended September 30, 2018, are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2019. For further information, refer to the financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2018 as filed with the Securities and Exchange Commission on July 23, 2018.

 

Use of Estimates

 

The preparation of 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 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.

 

 
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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.

 

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.

 

Revenue Recognition

 

Oil and gas sales result from undivided interests held by the Company in oil and gas properties and royalty revenues. 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.

 

Revenue from royalties is recognized as they are earned, when collection is reasonably assured. Royalty revenue is recorded in the same period as the sales that generate the royalty payment.

 

 
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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 September 30, 2018 and March 31, 2018, 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.

 

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. The Company regularly reviews and analyses the recent accounting pronouncements.

 

NOTE 4 – OIL AND GAS PROPERTIES

 

As at September 30, 2018, the Company evaluated the capitalized value of the unproven oil and gas leases and determined to impair the amount in full due to the fact that the Company had no historical cost basis for the leases to perform full-coast ceiling test, and no immediate development plans for the lease land. A total of $29,158 has been expensed as Impairment loss on oil and gas lease during the six months ended September 30, 2018.

 

As of September 30, 2018, and March 31, 2018, a total of $0, and $29,158 is recorded as Unproved Property, respectively.

 

 
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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.

 

Inflation Rate

 

 

3 %

Estimated asset life

 

20 years

 

Credit adjusted risk free interest rate

 

 

18 %

 

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.

 

As at September 30, 2018 and March 31, 2018, a total of $83,580 is recorded as asset retirement obligations, respectively

 

NOTE 6 – PROMISSORY NOTE

 

On December 31, 2016, the Company entered into a promissory note with a majority shareholder, Rise Fast Limited, for an amount of $240,683. The promissory note bears interest at a rate of 2% per annum, and is payable on December 31, 2019.

 

On July 10, 2017, the Company, along with the holder of the promissory note to assigned $174,000 of the promissory note to four individuals not related to the Company. Refer to Note 7 for further details. On October 6, 2017, the Company issued 24,000,000 common shares to the holder of the promissory note for the assignment of the notes of $24,000.

 

As of September 30, 2018, the promissory note payable was $42,683 and accrued interest payable was $3,680.

 

NOTE 7 – CONVERTIBLE PROMISSORY NOTES

 

On July 10, 2017, a total of $174,000 was assigned from a promissory note to four individuals not related to the Company. Each of the convertible promissory notes has a principal value of $43,500, maturity date of July 10, 2019, bears interest at 4% per annum, and are convertible at a rate of $0.03 per share. On October 6, 2017, the four convertible promissory notes were amended to an interest rate of 0.5% per annum, the maturity date was amended to July 10, 2020, and the conversion price was amended to $0.01 per share.

 

On October 11, 2017, four individual holders that have $174,000 of convertible promissory notes, converted a total of $58,000, or $14,500 each, for a total of 5,800,000, or 1,450,000 common shares each.

 

A debt discount on the notes was recognized of $174,000. During the six months ended September 30, 2018, a total of $17,136 of the debt discount has been amortized and recorded in interest expense. As of September 30, 2018, the unamortized amount of the debt discounts is $60,832.

 

On December 31, 2017, the Company entered into a convertible promissory note for $9,230 with an individual not related to the Company. The convertible promissory note is due on demand, bears interest at 55% per annum, and is convertible at $0.01 per share. The debt discount of $9,230 was expensed upon issuance of the note.

 

On March 31, 2018, the Company entered into a convertible promissory note for $20,773 with an individual not related to the Company. The convertible promissory note is due on demand, bears interest at 55% per annum, and is convertible at $0.01 per share. The debt discount of $20,773 was expensed upon issuance of the note.

 

 
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On June 30, 2018, the Company entered into a convertible promissory note for $10,667 with an individual not related to the Company. The convertible promissory note is due on demand, bears interest at 55% per annum, and is convertible at $0.01 per share. The debt discount of $10,667 was expensed upon issuance of the note.

 

On September 30, 2018, the Company entered into a convertible promissory note for $7,167 with an individual not related to the Company. The convertible promissory note is due on demand, bears interest at 55% per annum, and is convertible at $0.01 per share. The debt discount of $7,167 was expensed upon issuance of the note.

 

As of September 30, 2018, the convertible note payable was $103,005 and accrued interest payable was $13,888.

 

NOTE 8 – COMMON STOCK

 

The Company has 300,000,000 authorized common shares at $0.001 par value.

 

Year Ended March 31, 2018

 

During the year ended March 31, 2018, the Company issued 29,800,000 common shares.

 

On July 26, 2017, the Company performed a 100:1 reverse stock split. All outstanding shares have been adjusted retrospectively.

 

As at September 30, 2018 and March 31, 2017, the Company had a total of 30,099,230 shares issued and outstanding, respectively.

 

NOTE 9 – RELATED PARTY TRANSACTIONS

 

During the year ended March 31, 2018, the Company received advances totaling $24,156 from its majority shareholder, Rise Fast Limited, in order to fund ongoing operations in the normal course.

 

As at September 30, 2018 and March 31, 2018, the Company had advances from related party of $28,541 and $28,541, respectively.

 

NOTE 10 – SUBSEQUENT EVENTS

 

Management has evaluated subsequent events through the date these financial statements were available to be issued. Based on our evaluation no material events have occurred that require disclosure.

 

 
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Item 2. Management's Discussion and Analysis of Financial Condition or Plan of Operation

 

FORWARD-LOOKING STATEMENTS

 

This quarterly report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

 

Our consolidated unaudited financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. The following discussion should be read in conjunction with our financial statements and the related notes that appear elsewhere in this quarterly report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this quarterly report.

 

Unless otherwise specified in this quarterly report, all dollar amounts are expressed in United States dollars and all references to “common stock” refer to shares of our common stock.

 

As used in this quarterly report, the terms “we”, “us”, “our” and “our company” means PetroGas Company, unless otherwise indicated.

 

Corporate Overview

 

We were incorporated under the name Alazzio Entertainment Corp. on January 24, 2014, under the laws of the State of Nevada. Our original business plan was to operate photo booth rentals.

 

On April 3, 2015, a change in control occurred by virtue of our company’s largest shareholder, Dmitri Kapsumun selling 900,000 shares (split adjusted) of our common stock to Rise Fast Limited, a Hong Kong corporation. Such shares represented 71.77% of our total issued and outstanding shares of common stock. As part of the sale of the shares, Rise Fast Limited arranged with the resigning member of our company’s Board of Directors, to appoint Mr. Huang Yu as the sole officer and director of our company.

 

On April 16, 2015, we filed a Certificate of Amendment with the Nevada Secretary of State (the “Nevada SOS”) whereby we amended our Articles of Incorporation by increasing our authorized number of shares of common stock from 75 million to 300 million (not adjusted for the one (1) for one hundred (100) stock split) and increasing all of our issued and outstanding shares of common stock at a ratio of fifteen (15) shares for every one (1) share held. Our Board of Directors approved this amendment on April 15, 2015 and shareholders holding 71.77% of our issued and outstanding shares approved this amendment via a written consent executed on April 16, 2015.

 

 
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Effective April 29, 2015 we changed our name to America Resources Exploration Inc. by way of a merger with our wholly-owned subsidiary, incorporated solely for the purpose of the change of name.

 

On June 10, 2015, we entered into an Asset Purchase Agreement with Zheng Xiangwu, a resident of Guang Dong Province, China, whereby we issued 40,000 million 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 acquisition of the Leases pursuant to the Asset Purchase Agreement was completed on June 1, 2015. As a result of the completion of this acquisition, 40,000 shares of our company’s common stock were issued to Mr. Zheng Xiangwu, who owns our company’s largest shareholder, Rise Fast Limited. The number of shares issued to Mr. Zheng was determined by valuing the Leases at $160,000 and valuing the Company’s stock at $0.04 per share. At the completion of the Asset Purchase Agreement, we entered into the oil and gas industry.

 

On June 11, 2015, we entered into various assignment agreements with Mr. Zheng for the acquisition of multiple oil and gas leases and overriding royalty interests (“ORR’s”) as set out in the table below. From July 6, 2015 through July 9, 2015, we completed the acquisition of such oil and gas leases and ORR’s, whereby we issued a total of 6,500 shares of our common stock to Mr. Zheng.

 

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

 

On August 13, 2015 we entered into an Asset Purchase Agreement with Inceptus Resources, LLC whereby our 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.

 

On January 20, 2016, we changed our name to PetroGas Company, by way of a merger with our wholly-owned subsidiary, incorporated solely for the purpose of the change of name. In addition, we amended our Articles of Incorporation for a reverse stock split by decreasing all of our issued and outstanding shares of common stock at a ratio one (1) new for one hundred (100) old shares of common stock. The reverse stock split was approved by our directors and shareholders holding 68.65% of our issued and outstanding shares of common stock on January 13, 2016 and the reverse stock split became effective with FINRA on March 7, 2016. The change of name resulted in a change of trading symbol to “PTCO”.

 

On September 13, 2017, the Company filed a Certificate of Amendment with the Nevada Secretary of State (the “Nevada SOS”) whereby it amended its Articles of Incorporation by 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 the Amendment on July 21, 2017 and Shareholders holding 75.95% of the Company’s shares approved the Amendment via written consent executed on July 21, 2017, with an effective date of October 5, 2017.

 

Our principal executive offices are located at 2800 Post Oak Boulevard, Suite 4100, Houston, Texas 77056. Our telephone number is (832) 899-8597.

 

We have never declared bankruptcy, been in receivership, or involved in any kind of legal proceeding.

 

CURRENT INVESTMENTS

 

On June 12, 2015, we acquired three (3) producing leases covering 714 acres situated in Atascosa and Frio Counties, Texas, located in the Eagle Ford Shale formation - the Jane Burns “C” (“Burns”), the Theo Rogers “C”, and the Theo Rogers “A” & “D” (“Rogers”) Leases. We acquired a 99.5% working interest (74.625% net revenue interest) in each lease.

 

 
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The Burns and Rogers Leases provide exploration and production opportunities in the Kyote Field pay zone, very near the Eagle Ford Shale play with access to available rig crews and other vendor-servicers, due to their close proximity to San Antonio, Texas.

 

The Burns and Rogers Leases hold collectively seven (7) oil wells, but none of which are operating wells. Although our company’s management and industry professionals believed at the time that they were acquired that our company could double or triple previous production on these wells, depressed oil prices indicate that the cost to bring these wells online an uneconomical venture.

 

On November 30, 2016, we acquired various royalty interests in Texas for $10,485. On December 14, 2016, we acquired two oil and gas leases in Ohio for $2,705. On January 1, 2017, our company acquired the lease for three oil and gas properties for $4,975.

 

Future Operations

 

We are actively seeking to acquire producing and non-producing leases that will allow us to explore and drill in high-profile pay zones.

 

We intend to raise capital at a low cost from private placements so that we may acquire numerous additional leases, and to commence drilling, and taking advantage of the inevitable uptick in oil prices to come.

 

In the current climate, our company believes that there are a very large number of oil & gas leases under distress due to the depressed gas prices and that we can strategically position our company to acquire as many of these leases as possible at a discount to market value, hence creating shareholder value.

 

We are planning an exploration strategy to drill new wells on the current Leases, as well as acquire deeper rights in order to drill some of the wells at great depths. We expect that reservoirs at those depths could yield a very high daily output of oil.

 

Results of Operations

 

We have earned limited royalty revenues since inception.

 

Three months ended September 30, 2018 compared to three months ended September 30, 2017.

 

 

 

Three Months

 

 

Three Months

 

 

 

 

 

Ended

 

 

Ended

 

 

 

 

 

September 30,

 

 

September 30,

 

 

 

 

 

2018

 

 

2017

 

 

Changes

 

 

 

 

 

 

 

 

 

 

 

Royalty Revenue

 

$ 251

 

 

$ 418

 

 

$ (167 )

Operating Expenses

 

$ 20,433

 

 

$ 17,634

 

 

$ 2,799

 

Other Expenses

 

$ 21,734

 

 

$ 21,263

 

 

$ 471

 

Net Loss

 

$ (41,916 )

 

$ (38,479 )

 

$ (3,437 )

 

Revenue for the three months ended September 30, 2018 was $251 compared to $418 for the three months ended September 30, 2017. Revenue was comprised of royalty revenue.

 

 
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Our operating expenses for the three months ended September 30, 2018 increased to $20,433 from $17,634 for the three months ended September 30, 2017 due to increase in professional fees and general and administration expenses.

 

Other expenses for the three months ended September 30, 2018 increased to $21,734 from $21,263 for the three months ended September 30, 2017. The increase is driven by the amortization of debt discount and accrued interest from the convertible and promissory notes.

 

Six months ended September 30, 2018 compared to six months ended September 30, 2017.

 

 

 

Six Months

 

 

Six Months

 

 

 

 

 

Ended

 

 

Ended

 

 

 

 

 

September 30,

 

 

September 30,

 

 

 

 

 

2018

 

 

2017

 

 

Changes

 

 

 

 

 

 

 

 

 

 

 

Royalty Revenue

 

$ 916

 

 

$ 693

 

 

$ 223

 

Operating Expenses

 

$ 23,884

 

 

$ 29,887

 

 

$ (6,003 )

Other Expenses

 

$ 74,599

 

 

$ 22,466

 

 

$ 52,133

 

Net Loss

 

$ (97,567 )

 

$ (51,660 )

 

$ (45,907 )

 

Revenue for the six months ended September 30, 2018 was $916 compared to $693 for the six months ended September 30, 2017. Revenue was comprised of royalty revenue.

 

Our operating expenses for the six months ended September 30, 2018 decreased to $23,884 from $29,887 for the three months ended September 30, 2017 due to decrease in filing, transfer agent and professional fees.

 

Other expenses for the six months ended September 30, 2018 increased to $74,599 from $22,466 for the three months ended September 30, 2017. The increase is driven by impairment loss on oil and gas leases of $29,158 and the amortization of debt discount and accrued interest from the convertible and promissory notes of $45,441.

 

Liquidity and Capital Resources

 

The following table provides selected financial data about our company as of September 30, 2018 and March 31, 2018, respectively.

 

Working Capital

 

 

 

As of

 

 

As of

 

 

 

 

 

September 30,

 

 

March 31,

 

 

 

 

 

2018

 

 

2018

 

 

Changes

 

 

 

 

 

 

 

 

 

 

 

Current Assets

 

$ 1,397

 

 

$ 5,176

 

 

$ (3,779 )

Current Liabilities

 

$ 69,155

 

 

$ 57,329

 

 

$ 11,826

 

Working Capital (Deficiency)

 

$ (67,758 )

 

$ (52,153 )

 

$ (15,605 )

 

Cash Flows

 

 

 

Six Months

 

 

Six Months

 

 

 

 

 

Ended

 

 

Ended

 

 

 

 

 

September 30,

 

 

September 30,

 

 

 

 

 

2018

 

 

2017

 

 

Changes

 

 

 

 

 

 

 

 

 

 

 

Net cash used in Operating Activities

 

$ (21,613 )

 

$ (11,507 )

 

$ (10,106 )

Net cash used in Investing Activities

 

$ -

 

 

$ -

 

 

$ -

 

Net cash provided by Financing Activities

 

$ 17,834

 

 

$ 17,704

 

 

$ 130

 

Net increase in cash and cash equivalents

 

$ (3,779 )

 

$ 6,197

 

 

$ (9,976 )

 

As of September 30, 2018, we had cash and cash equivalents of $1,397 and a negative working capital of $67,758, as compared to cash and cash equivalents of $5,176 and a negative working capital of $52,153 as of March 31, 2018.

 

 
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Cash Flow from Operating Activities

 

For the six months ended September 30, 2018, we used $21,613 of cash for operations primarily as a result of the net loss of $97,567, decreased by impairment of oil and gas leases of $29,158, amortization of debt discount of $34,970, an increase in accounts payable and accrued liabilities of $1,354 and an increase in accrued interest of $10,472.

 

For the six months ended September 30, 2017, we used $11,507 of cash for operations primarily as a result of the net loss of $51,660, increased by amortization of debt discount of $19,576, an increase in prepaid expenses of $129 and an increase in accounts payable and accrued liabilities of $20,448.

 

Cash Flow from Investing Activities

 

The company did not use any funds for investing activities in the six months ended September 30, 2018 or the six months ended September 30, 2017.

 

Cash Flow from Financing Activities

 

For the six ended September 30, 2018, we had $17,834 in net cash provided by financing activities for cash proceeds from issuance of convertible promissory notes.

 

For the six months ended September 30, 2017, we had $17,704 in net cash provided by financing activities for advancement from a related party.

 

Off-Balance Sheet Arrangements

 

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, and capital expenditures or capital resources that are material to stockholders.

 

Critical Accounting Policies

 

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 our company's assets. Any estimates during the period have had an immaterial effect on earnings.

 

Oil and Gas Properties – Full Cost Method

 

Our 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.

 

 
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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.

 

Revenue Recognition

 

Oil and gas sales result from undivided interests held by our company in oil and gas properties and royalty revenues. 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.

 

Revenue from royalties is recognized as they are earned, when collection is reasonably assured. Royalty revenue is recorded in the same period as the sales that generate the royalty payment.

 

Asset Retirement Obligations

 

Our company records a liability for asset retirement obligations ("ARO") associated with our 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.

 

 
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Fair Value of Financial Instruments

 

Our company measures our 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 September 30, 2018 and March 31, 2018, 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.

 

Recent Accounting Pronouncements

 

We have 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 our financial position or results of operations. Our company regularly reviews and analyses the recent accounting pronouncements.

 

 
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Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

As a “smaller reporting company”, we are not required to provide the information required by this Item.

 

Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

Our management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) that is designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

 

An evaluation was conducted under the supervision and with the participation of our management of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2018. Based on that evaluation, our management concluded that our disclosure controls and procedures were not effective as of such date to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms. Such officer also confirmed that there was no change in our internal control over financial reporting during the three-month period ended September 30, 2018, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

Changes in Internal Control Over Financial Reporting

 

There have been no changes in our internal control over financial reporting that occurred during the quarter ended September 30, 2018, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

 
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PART II - OTHER INFORMATION

 

Item 1. Legal Proceedings

 

We know of no material, existing or pending legal proceedings against our Company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

 

Item 1A. Risk Factors

 

As a “smaller reporting company”, we are not required to provide the information required by this Item.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

None.

 

Item 3. Defaults Upon Senior Securities

 

None.

 

Item 4. Mine Safety Disclosures

 

Not Applicable.

 

Item 5. Other Information

 

None.

 

 
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Item 6. Exhibits

 

Exhibit

Number

 

Description

(31)

 

Rule 13a-14 (d)/15d-14d) Certifications

31.1*

 

Section 302 Certification by the Principal Executive Officer

(32)

 

Section 1350 Certifications

32.1*

 

Section 906 Certification by the Principal Executive Officer

101*

 

Interactive Data File

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.
** XBRL Information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.
 

 
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SIGNATURES

 

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

 

 

PETROGAS COMPANY

 

 

(Registrant)

 

 

 

Dated: November 5, 2018

 

/s/ Huang Yu

 

 

Huang Yu

 

 

President and Chief Financial Officer

 

 

(Principal Executive Officer,

Principal Financial Officer an

Principal Accounting Officer)

 

 

 

21

 

EX-31.1 2 ptco_ex311.htm EX-31.1 ptco_ex311.htm

EXHIBIT 31.1

 

CERTIFICATION PURSUANT TO

18 U.S.C. ss 1350, AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

 

I, Huang Yu, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of PetroGas Company;

 

 

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

 

 

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

 

 

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

 

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

 

 

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

 

 

 

 

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

 

 

 

 

Date: November 5, 2018

 

/s/ Huang Yu

 

/s/ Huang Yu

 

President and Chief Financial Officer

(Principal Executive Officer,

Principal Financial Officer an

Principal Accounting Officer)

 

 

EX-32.1 3 ptco_ex321.htm EX-32.1 ptco_ex321.htm

EXHIBIT 32.1

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

I, Huang Yu, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

 

(1) the Quarterly Report on Form 10-Q of PetroGas Company for the period ended September 30, 2018 (the "Report") fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

 

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

 

Dated: November 5, 2018

 

/s/ Huang Yu

 

Huang Yu

 

President and Chief Financial Officer

(Principal Executive Officer,

Principal Financial Officer an

Principal Accounting Officer)

 

PetroGas Company

 

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to PetroGas Company and will be retained by PetroGas Company and furnished to the Securities and Exchange Commission or its staff upon request

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Entity Filer Category Entity Common Stock, Shares Outstanding Document Fiscal Period Focus Document Fiscal Year Focus Entity Emerging Growth Company Entity Small Business Entity Ex Transition Period Statement of Financial Position [Abstract] ASSETS Current Assets Cash and cash equivalents Total Current Assets Oil and gas, on the basis of full cost accounting Unproved Property TOTAL ASSETS LIABILITIES & SHAREHOLDERS' EQUITY Current Liabilities Accounts payable and accrued liabilities Accrued interest Advances from related party Total Current Liabilities Long-term liabilities Asset retirement obligations Convertible promissory notes, net of discount of $60,832 and $77,968, respectively Promissory note Total long-term liabilities TOTAL LIABILITIES SHAREHOLDERS' DEFICIT Common stock: 300,000,000 authorized; $0.001 par value 30,099,230 and 30,099,230 shares issued and outstanding, respectively Additional paid in capital Accumulated deficit TOTAL SHAREHOLDERS' DEFICIT TOTAL LIABILITIES & SHAREHOLDERS' DEFICIT Promissory Note [Member] Discount of convertible promissory notes (in dollars) Common stock, shares authorized Common stock, par value (in dollars per share) Common stock, shares issued Common stock, shares outstanding Statements Of Operations Royalty Revenue OPERATING EXPENSES General and administrative expense TOTAL OPERATING EXPENSES Loss from Operations OTHER EXPENSES Impairment of oil and gas leases Interest expense Total other expenses NET LOSS NET LOSS PER SHARE, BASIC AND DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING, BASIC AND DILUTED Statement of Cash Flows [Abstract] CASH FLOWS FROM OPERATING ACTIVITIES Net Loss Adjustments to reconcile net loss to net cash used in operating activities: Amortization of debt discount Changes in operating assets and liabilities: Prepaid expenses Accounts payable and accrued liabilities Accrued interest Net cash used in Operating Activities CASH FLOWS FROM INVESTING ACTIVITIES CASH FLOWS FROM FINANCING ACTIVITIES Advances from related party Promissory note Issuance of convertible promissory notes Net cash provided by Financing Activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents, beginning of period Cash and cash equivalents, end of period Supplemental cash flow information Cash paid for interest Cash paid for taxes Notes to Financial Statements NOTE 1 - DESCRIPTION OF BUSINESS AND BASIS OF PERSENTATION NOTE 2 - GOING CONCERN NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES NOTE 4 - OIL AND GAS PROPERTIES NOTE 5 - ASSET RETIREMENT OBLIGATIONS NOTE 6 - PROMISSORY NOTE NOTE 7 - CONVERTIBLE PROMISSORY NOTES NOTE 8 - COMMON STOCK NOTE 9 - RELATED PARTY TRANSACTIONS NOTE 10 - SUBSEQUENT EVENTS Summary Of Significant Accounting Policies Basis of Presentation of Interim Financial Statements Use of Estimates Cash and Cash Equivalents Oil and Gas Properties - Full Cost Method Revenue Recognition Asset Retirement Obligations Fair Value of Financial Instruments Stock-Based Compensation Recent Accounting Pronouncements Four Individuals [Member] Schedule of assumptions of determining the fair value of ARO Description Of Business And Basis Of Persentation State or Country of Incorporation Date of incorporation Going Concern Summary Of Significant Accounting Policies Description of oil and gas properties under full cost method Oil And Gas Properties Impairment loss on oil and gas lease Convertible Promissory Notes [Text Block] Inflation Rate Estimated asset life Credit adjusted risk free interest rate Document and Entity Information [Abstract] Schedule of Long-term Debt Instruments [Table] Debt Instrument [Line Items] Debt amount Interest rate Debt maturity date Number of individuals Number of common stock shares issued to promissory note holder Common stock shares issued for assignment of notes, amount Conversion price Debt discount Debt discount amortized Amount of convertible promissory notes, converted Debt conversion converted instrument, shares issued Common Stock Stock issued during period, shares Value of reverse stock split Schedule of Related Party Transactions, by Related Party [Table] Related Party Transaction [Line Items] Advances received Information of convertible promissory note. The entire disclosure for information about convertible promissory notes. Represents number of individuals, whom promissory note has been issued. Information about promissory note. Assets, Current Assets Liabilities, Current Liabilities, Noncurrent Liabilities Stockholders' Equity Attributable to Parent Liabilities and Equity Operating Expenses Operating Income (Loss) Interest and Debt Expense Increase (Decrease) in Prepaid Expense Increase (Decrease) in Accounts Payable and Accrued Liabilities Increase (Decrease) in Income Taxes Payable Net Cash Provided by (Used in) Operating Activities Proceeds from (Repayments of) Notes Payable Net Cash Provided by (Used in) Financing Activities Cash and Cash Equivalents, Period Increase (Decrease) EX-101.PRE 9 ptco-20180930_pre.xml XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE XML 10 R1.htm IDEA: XBRL DOCUMENT v3.10.0.1
Document and Entity Information - shares
6 Months Ended
Sep. 30, 2018
Nov. 01, 2018
Document and Entity Information [Abstract]    
Entity Registrant Name PetroGas Co  
Entity Central Index Key 0001609258  
Document Type 10-Q  
Document Period End Date Sep. 30, 2018  
Amendment Flag false  
Current Fiscal Year End Date --03-31  
Trading Symbol ptco  
Is Entity a Well-known Seasoned Issuer? No  
Is Entity a Voluntary Filer? No  
Is Entity's Reporting Status Current? Yes  
Entity Filer Category Smaller Reporting Company  
Entity Common Stock, Shares Outstanding   30,099,230
Document Fiscal Period Focus Q2  
Document Fiscal Year Focus 2019  
Entity Emerging Growth Company false  
Entity Small Business true  
Entity Ex Transition Period false  
XML 11 R2.htm IDEA: XBRL DOCUMENT v3.10.0.1
BALANCE SHEETS - USD ($)
Sep. 30, 2018
Mar. 31, 2018
Current Assets    
Cash and cash equivalents $ 1,397 $ 5,176
Total Current Assets 1,397 5,176
Oil and gas, on the basis of full cost accounting    
Unproved Property 29,158
TOTAL ASSETS 1,397 34,334
Current Liabilities    
Accounts payable and accrued liabilities 21,904 20,550
Accrued interest 18,710 8,238
Advances from related party 28,541 28,541
Total Current Liabilities 69,155 57,329
Long-term liabilities    
Asset retirement obligations 83,580 83,580
Convertible promissory notes, net of discount of $60,832 and $77,968, respectively 103,005 68,035
Promissory note 42,683 42,683
Total long-term liabilities 229,268 194,298
TOTAL LIABILITIES 298,423 251,627
SHAREHOLDERS' DEFICIT    
Common stock: 300,000,000 authorized; $0.001 par value 30,099,230 and 30,099,230 shares issued and outstanding, respectively 30,099 30,099
Additional paid in capital 1,284,032 1,266,198
Accumulated deficit (1,611,157) (1,513,590)
TOTAL SHAREHOLDERS' DEFICIT (297,026) (217,293)
TOTAL LIABILITIES & SHAREHOLDERS' DEFICIT $ 1,397 $ 34,334
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BALANCE SHEETS (Parenthetical) - USD ($)
Sep. 30, 2018
Mar. 31, 2018
Long-term liabilities    
Discount of convertible promissory notes (in dollars) $ 60,832 $ 77,968
SHAREHOLDERS' DEFICIT    
Common stock, shares authorized 300,000,000 300,000,000
Common stock, par value (in dollars per share) $ 0.001 $ 0.001
Common stock, shares issued 30,099,230 30,099,230
Common stock, shares outstanding 30,099,230 30,099,230
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STATEMENTS OF OPERATIONS (Unaudited) - USD ($)
3 Months Ended 6 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Statements Of Operations        
Royalty Revenue $ 251 $ 418 $ 916 $ 693
OPERATING EXPENSES        
General and administrative expense 20,433 17,634 23,884 29,887
TOTAL OPERATING EXPENSES 20,433 17,634 23,884 29,887
Loss from Operations (20,182) (17,216) (22,968) (29,194)
OTHER EXPENSES        
Impairment of oil and gas leases 29,158
Interest expense 21,734 21,263 45,441 22,466
Total other expenses 21,734 21,263 74,599 22,466
NET LOSS $ (41,916) $ (38,479) $ (97,567) $ (51,660)
NET LOSS PER SHARE, BASIC AND DILUTED $ 0.00 $ (0.13) $ 0.00 $ (0.17)
WEIGHTED AVERAGE SHARES OUTSTANDING, BASIC AND DILUTED 30,099,229 296,839 30,099,230 296,839
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STATEMENT OF CASH FLOWS (Unaudited) - USD ($)
6 Months Ended
Sep. 30, 2018
Sep. 30, 2017
CASH FLOWS FROM OPERATING ACTIVITIES    
Net Loss $ (97,567) $ (51,660)
Adjustments to reconcile net loss to net cash used in operating activities:    
Impairment of oil and gas leases 29,158
Amortization of debt discount 34,970 19,576
Changes in operating assets and liabilities:    
Prepaid expenses 129
Accounts payable and accrued liabilities 1,354 20,448
Accrued interest 10,472
Net cash used in Operating Activities (21,613) (11,507)
CASH FLOWS FROM INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES    
Advances from related party 17,704
Promissory note (174,000)
Issuance of convertible promissory notes 17,834 174,000
Net cash provided by Financing Activities 17,834 17,704
Net increase (decrease) in cash and cash equivalents (3,779) 6,197
Cash and cash equivalents, beginning of period 5,176 1,016
Cash and cash equivalents, end of period 1,397 7,213
Supplemental cash flow information    
Cash paid for interest
Cash paid for taxes
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DESCRIPTION OF BUSINESS AND BASIS OF PERSENTATION
6 Months Ended
Sep. 30, 2018
Notes to Financial Statements  
NOTE 1 - DESCRIPTION OF BUSINESS AND BASIS OF PERSENTATION

Organization and nature of business

 

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. All share amounts in these financial statements have been adjusted to reflect this stock split.

XML 16 R7.htm IDEA: XBRL DOCUMENT v3.10.0.1
GOING CONCERN
6 Months Ended
Sep. 30, 2018
Notes to Financial Statements  
NOTE 2 - GOING CONCERN

The Company had no significant revenues from the inception through September 30, 2018. As of September 30, 2018, the Company has an accumulated deficit of $1,611,157. 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 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.

XML 17 R8.htm IDEA: XBRL DOCUMENT v3.10.0.1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
6 Months Ended
Sep. 30, 2018
Notes to Financial Statements  
NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation of Interim Financial Statements

 

The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions for Form 10-Q and Article 210 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All such adjustments are of a normal recurring nature. Operating results for the six months ended September 30, 2018, are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2019. For further information, refer to the financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2018 as filed with the Securities and Exchange Commission on July 23, 2018.

 

Use of Estimates

 

The preparation of 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 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.

  

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.

 

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.

 

Revenue Recognition

 

Oil and gas sales result from undivided interests held by the Company in oil and gas properties and royalty revenues. 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.

 

Revenue from royalties is recognized as they are earned, when collection is reasonably assured. Royalty revenue is recorded in the same period as the sales that generate the royalty payment.

  

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 September 30, 2018 and March 31, 2018, 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.

 

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. The Company regularly reviews and analyses the recent accounting pronouncements.

XML 18 R9.htm IDEA: XBRL DOCUMENT v3.10.0.1
OIL AND GAS PROPERTIES
6 Months Ended
Sep. 30, 2018
Notes to Financial Statements  
NOTE 4 - OIL AND GAS PROPERTIES

As at September 30, 2018, the Company evaluated the capitalized value of the unproven oil and gas leases and determined to impair the amount in full due to the fact that the Company had no historical cost basis for the leases to perform full-coast ceiling test, and no immediate development plans for the lease land. A total of $29,158 has been expensed as Impairment loss on oil and gas lease during the six months ended September 30, 2018.

 

As of September 30, 2018, and March 31, 2018, a total of $0, and $29,158 is recorded as Unproved Property, respectively.

XML 19 R10.htm IDEA: XBRL DOCUMENT v3.10.0.1
ASSET RETIREMENT OBLIGATIONS
6 Months Ended
Sep. 30, 2018
Notes to Financial Statements  
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.

 

Inflation Rate     3 %
Estimated asset life   20 years  
Credit adjusted risk free interest rate     18 %

 

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.

 

As at September 30, 2018 and March 31, 2018, a total of $83,580 is recorded as asset retirement obligations, respectively

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PROMISSORY NOTE
6 Months Ended
Sep. 30, 2018
Notes to Financial Statements  
NOTE 6 - PROMISSORY NOTE

On December 31, 2016, the Company entered into a promissory note with a majority shareholder, Rise Fast Limited, for an amount of $240,683. The promissory note bears interest at a rate of 2% per annum, and is payable on December 31, 2019.

 

On July 10, 2017, the Company, along with the holder of the promissory note to assigned $174,000 of the promissory note to four individuals not related to the Company. Refer to Note 7 for further details. On October 6, 2017, the Company issued 24,000,000 common shares to the holder of the promissory note for the assignment of the notes of $24,000.

 

As of September 30, 2018, the promissory note payable was $42,683 and accrued interest payable was $3,680.

XML 21 R12.htm IDEA: XBRL DOCUMENT v3.10.0.1
CONVERTIBLE PROMISSORY NOTES
6 Months Ended
Sep. 30, 2018
Notes to Financial Statements  
NOTE 7 - CONVERTIBLE PROMISSORY NOTES

On July 10, 2017, a total of $174,000 was assigned from a promissory note to four individuals not related to the Company. Each of the convertible promissory notes has a principal value of $43,500, maturity date of July 10, 2019, bears interest at 4% per annum, and are convertible at a rate of $0.03 per share. On October 6, 2017, the four convertible promissory notes were amended to an interest rate of 0.5% per annum, the maturity date was amended to July 10, 2020, and the conversion price was amended to $0.01 per share.

 

On October 11, 2017, four individual holders that have $174,000 of convertible promissory notes, converted a total of $58,000, or $14,500 each, for a total of 5,800,000, or 1,450,000 common shares each.

 

A debt discount on the notes was recognized of $174,000. During the six months ended September 30, 2018, a total of $17,136 of the debt discount has been amortized and recorded in interest expense. As of September 30, 2018, the unamortized amount of the debt discounts is $60,832.

 

On December 31, 2017, the Company entered into a convertible promissory note for $9,230 with an individual not related to the Company. The convertible promissory note is due on demand, bears interest at 55% per annum, and is convertible at $0.01 per share. The debt discount of $9,230 was expensed upon issuance of the note.

 

On March 31, 2018, the Company entered into a convertible promissory note for $20,773 with an individual not related to the Company. The convertible promissory note is due on demand, bears interest at 55% per annum, and is convertible at $0.01 per share. The debt discount of $20,773 was expensed upon issuance of the note.

  

On June 30, 2018, the Company entered into a convertible promissory note for $10,667 with an individual not related to the Company. The convertible promissory note is due on demand, bears interest at 55% per annum, and is convertible at $0.01 per share. The debt discount of $10,667 was expensed upon issuance of the note.

 

On September 30, 2018, the Company entered into a convertible promissory note for $7,167 with an individual not related to the Company. The convertible promissory note is due on demand, bears interest at 55% per annum, and is convertible at $0.01 per share. The debt discount of $7,167 was expensed upon issuance of the note.

 

As of September 30, 2018, the convertible note payable was $103,005 and accrued interest payable was $13,888.

XML 22 R13.htm IDEA: XBRL DOCUMENT v3.10.0.1
COMMON STOCK
6 Months Ended
Sep. 30, 2018
Notes to Financial Statements  
NOTE 8 - COMMON STOCK

The Company has 300,000,000 authorized common shares at $0.001 par value.

 

Year Ended March 31, 2018

 

During the year ended March 31, 2018, the Company issued 29,800,000 common shares.

 

On July 26, 2017, the Company performed a 100:1 reverse stock split. All outstanding shares have been adjusted retrospectively.

 

As at September 30, 2018 and March 31, 2017, the Company had a total of 30,099,230 shares issued and outstanding, respectively.

XML 23 R14.htm IDEA: XBRL DOCUMENT v3.10.0.1
RELATED PARTY TRANSACTIONS
6 Months Ended
Sep. 30, 2018
Notes to Financial Statements  
NOTE 9 - RELATED PARTY TRANSACTIONS

During the year ended March 31, 2018, the Company received advances totaling $24,156 from its majority shareholder, Rise Fast Limited, in order to fund ongoing operations in the normal course.

 

As at September 30, 2018 and March 31, 2018, the Company had advances from related party of $28,541 and $28,541, respectively.

XML 24 R15.htm IDEA: XBRL DOCUMENT v3.10.0.1
SUBSEQUENT EVENTS
6 Months Ended
Sep. 30, 2018
Notes to Financial Statements  
NOTE 10 - SUBSEQUENT EVENTS

Management has evaluated subsequent events through the date these financial statements were available to be issued. Based on our evaluation no material events have occurred that require disclosure.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)
6 Months Ended
Sep. 30, 2018
Summary Of Significant Accounting Policies  
Basis of Presentation of Interim Financial Statements

The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions for Form 10-Q and Article 210 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All such adjustments are of a normal recurring nature. Operating results for the six months ended September 30, 2018, are not necessarily indicative of the results that may be expected for the fiscal year ending March 31, 2019. For further information, refer to the financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2018 as filed with the Securities and Exchange Commission on July 23, 2018.

Use of Estimates

The preparation of 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 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.

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.

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.

Revenue Recognition

Oil and gas sales result from undivided interests held by the Company in oil and gas properties and royalty revenues. 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.

 

Revenue from royalties is recognized as they are earned, when collection is reasonably assured. Royalty revenue is recorded in the same period as the sales that generate the royalty payment.

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 September 30, 2018 and March 31, 2018, 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.

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. The Company regularly reviews and analyses the recent accounting pronouncements.

XML 26 R17.htm IDEA: XBRL DOCUMENT v3.10.0.1
ASSET RETIREMENT OBLIGATIONS (Tables)
6 Months Ended
Sep. 30, 2018
Asset Retirement Obligations Tables Abstract  
Schedule of assumptions of determining the fair value of ARO

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.

 

Inflation Rate     3 %
Estimated asset life   20 years  
Credit adjusted risk free interest rate     18 %

XML 27 R18.htm IDEA: XBRL DOCUMENT v3.10.0.1
DESCRIPTION OF BUSINESS AND BASIS OF PERSENTATION (Details Narrative)
6 Months Ended
Sep. 30, 2018
Description Of Business And Basis Of Persentation  
State or Country of Incorporation Nevada
Date of incorporation Jan. 24, 2014
XML 28 R19.htm IDEA: XBRL DOCUMENT v3.10.0.1
GOING CONCERN (Details Narrative) - USD ($)
Sep. 30, 2018
Mar. 31, 2018
Going Concern    
Accumulated deficit $ (1,611,157) $ (1,513,590)
XML 29 R20.htm IDEA: XBRL DOCUMENT v3.10.0.1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative)
6 Months Ended
Sep. 30, 2018
Summary Of Significant Accounting Policies Details Narrative Abstract  
Description of oil and gas properties under full cost method 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.
XML 30 R21.htm IDEA: XBRL DOCUMENT v3.10.0.1
OIL AND GAS PROPERTIES (Details Narrative) - USD ($)
3 Months Ended 6 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2018
Sep. 30, 2017
Mar. 31, 2018
Oil And Gas Properties          
Impairment loss on oil and gas lease $ 29,158  
Unproved Property     $ 29,158
XML 31 R22.htm IDEA: XBRL DOCUMENT v3.10.0.1
ASSET RETIREMENT OBLIGATIONS (Details)
6 Months Ended
Sep. 30, 2018
Convertible Promissory Notes [Text Block]  
Inflation Rate 3.00%
Estimated asset life 20 years
Credit adjusted risk free interest rate 18.00%
XML 32 R23.htm IDEA: XBRL DOCUMENT v3.10.0.1
ASSET RETIREMENT OBLIGATIONS (Details Narrative) - USD ($)
Sep. 30, 2018
Mar. 31, 2018
Asset Retirement Obligations Details Narrative Abstract    
Asset retirement obligations $ 83,580 $ 83,580
XML 33 R24.htm IDEA: XBRL DOCUMENT v3.10.0.1
PROMISSORY NOTE (Details Narrative)
1 Months Ended 12 Months Ended
Oct. 06, 2017
USD ($)
shares
Jul. 10, 2017
USD ($)
Individual
Dec. 31, 2016
USD ($)
Mar. 31, 2018
USD ($)
shares
Sep. 30, 2018
USD ($)
Debt Instrument [Line Items]          
Number of common stock shares issued to promissory note holder | shares       29,800,000  
Accrued interest       $ 8,238 $ 18,710
Majority shareholder [Member]          
Debt Instrument [Line Items]          
Debt amount     $ 240,683    
Interest rate     2.00%    
Debt maturity date     Dec. 31, 2019    
Promissory Note [Member]          
Debt Instrument [Line Items]          
Debt amount   $ 174,000     42,683
Number of individuals | Individual   4      
Number of common stock shares issued to promissory note holder | shares 24,000,000        
Accrued interest         $ 3,680
Common stock shares issued for assignment of notes, amount $ 24,000        
XML 34 R25.htm IDEA: XBRL DOCUMENT v3.10.0.1
CONVERTIBLE PROMISSORY NOTES (Details Narrative)
6 Months Ended
Oct. 11, 2017
USD ($)
Individual
shares
Oct. 06, 2017
Individual
$ / shares
Jul. 10, 2017
USD ($)
Individual
$ / shares
Sep. 30, 2018
USD ($)
$ / shares
Sep. 30, 2017
USD ($)
Jun. 30, 2018
USD ($)
$ / shares
Mar. 31, 2018
USD ($)
$ / shares
Dec. 31, 2017
USD ($)
$ / shares
Debt Instrument [Line Items]                
Debt discount       $ 60,832     $ 77,968  
Debt discount amortized       34,970 $ 19,576      
Accrued interest       18,710     8,238  
Convertible Notes Payable [Member]                
Debt Instrument [Line Items]                
Debt amount       103,005        
Accrued interest       13,888        
Convertible Promissory Notes [Member]                
Debt Instrument [Line Items]                
Debt amount             $ 20,773 $ 9,230
Number of individuals | Individual     4          
Interest rate             55.00% 55.00%
Conversion price | $ / shares             $ 0.01 $ 0.01
Debt discount             $ 20,773 $ 9,230
Convertible Promissory Notes [Member] | An Individuals [Member]                
Debt Instrument [Line Items]                
Debt amount       $ 7,167   $ 10,667    
Interest rate       55.00%   55.00%    
Conversion price | $ / shares       $ 0.01   $ 0.01    
Debt discount       $ 7,167   $ 10,667    
Convertible Promissory Notes [Member] | Four Individuals [Member]                
Debt Instrument [Line Items]                
Debt amount $ 174,000   $ 174,000          
Number of individuals | Individual 4 4            
Interest rate   0.50% 4.00%          
Debt maturity date   Jul. 10, 2020 Jul. 10, 2019          
Conversion price | $ / shares   $ 0.01 $ 0.03          
Debt discount $ 174,000     60,832        
Debt discount amortized       $ 17,136        
Amount of convertible promissory notes, converted $ 58,000              
Debt conversion converted instrument, shares issued | shares 5,800,000              
Convertible Promissory Notes [Member] | Each Individual [Member]                
Debt Instrument [Line Items]                
Debt amount     $ 43,500          
Amount of convertible promissory notes, converted $ 14,500              
Debt conversion converted instrument, shares issued | shares 1,450,000              
XML 35 R26.htm IDEA: XBRL DOCUMENT v3.10.0.1
COMMON STOCK (Details Narrative) - $ / shares
1 Months Ended 12 Months Ended
Jul. 26, 2017
Mar. 31, 2018
Sep. 30, 2018
Common Stock      
Stock issued during period, shares   29,800,000  
Value of reverse stock split 100:1    
Common stock, shares issued   30,099,230 30,099,230
Common stock, shares outstanding   30,099,230 30,099,230
Common stock, shares authorized   300,000,000 300,000,000
Common stock, par value (in dollars per share)   $ 0.001 $ 0.001
XML 36 R27.htm IDEA: XBRL DOCUMENT v3.10.0.1
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)
6 Months Ended 12 Months Ended
Sep. 30, 2018
Sep. 30, 2017
Mar. 31, 2018
Related Party Transaction [Line Items]      
Advances received $ 17,704  
Advances from related party $ 28,541   $ 28,541
Majority shareholder [Member]      
Related Party Transaction [Line Items]      
Advances received     $ 24,156
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