Capital Stock

12 Months Ended

Dec. 31, 2015

Notes to Financial Statements

4. Capital Stock

On March 4, 2014, the Company, Albert E. Whitehead and Sierra Nevada Oil LLC ("Sierra") entered into a Call Option Agreement (the "Call Option Agreement").  The Call Option Agreement provided Sierra with a call option to purchase 4,000,000 shares of common stock of the Company at a price of (i) $0.25 per share or an aggregate of $1,000,000, less (ii) the $50,000 paid by Sierra to the Company as consideration for the Call Option Agreement.  The Call Option Agreement also provided that, if the Call Option is exercised by Sierra, Albert E. Whitehead, the Company's Chief Executive Officer and the Chairman of the Company's Board of Directors, would take commercially reasonable efforts to cause the current members of the Company's Board of Directors, Albert E. Whitehead, Montague H. Hackett, Jr. and Kevin R. Seth, to resign from the Company's Board of Directors and three of Sierra's designees to be appointed to the Company's Board of Directors.

On June 27, 2014, the parties to the Call Option Agreement agreed to extend the date by which Sierra may exercise the call option to September 1, 2014.  The call option was not exercised by September 1, 2014 therefore expired.

The company completed a private placement to seven accredited investors on dates from February 12, 2015 through February 24, 2015 of 1,080,000 shares of common stock, along with warrants to purchase up to 540,000 shares of the Company's common stock at an exercise price of $0.25, for an aggregate price of $135,000.  The warrants may be exercised at any time from the date of issuance until February 28, 2017.  Proceeds of the placements were allocated $1,080 to Common Stock, $6,858 to Additional Paid in Capital, and $127,062 to Common Stock Warrants, which is reflected in Additional Paid in Capital on the Statement of Changes in Stockholders' Equity (Deficit).  The value assigned to the warrants was determined using the Black-Scholes option valuation with the following assumptions:  no dividend yield, expected annual volatility of 214%, risk free interest rate of .49% and an expected useful life of two year period.

Effective April 8, 2015, the Company entered into an option to acquire oil & gas leases (the "Lease Option Agreement") with certain parties (BHPP Group).  Pursuant to the Lease Option Agreement, the Company acquired the sole and exclusive option for a period of two years to enter into one or more oil and gas leases with respect to any mineral interests owned by BHPP Group Members within an area of mutual interest located in the Counties of Haakon, Meade and Pennington in the State of South Dakota (the "Area of Mutual Interest").  The Lease Option Agreement covers approximately 150,000 gross leasable acres.  As the initial consideration under the Lease Option Agreement, the Company granted to the BHPP Group options to acquire an aggregate of 1,000,000 shares of the Company's Common Stock, at an exercise price of $0.25 per share for a period of two years from the effective date of the Lease Option Agreement.  In addition, under the Lease Option Agreement, the BHPP Group has the right to be issued additional options to acquire shares of Common Stock at an exercise price of $0.25 per share upon assisting the Company in securing additional oil and gas leases within the Area of Mutual Interest.  The value assigned to the stock options was determined using the Black-Scholes option valuation with the following assumptions:  no dividend yield, expected annual volatility of 147%, risk free interest rate of .54% and an expected useful life of two years, The value of the stock options was allocated $150,200 to Paid in Capital with an offsetting allocation of $150,200 to the Lease Options.

Effective April 30, 2015, the Company entered into an option to acquire oil & gas leases (the "Lease Option Agreement II") with certain parties (Anderson Brothers).  Pursuant to the Lease Option Agreement II, the Company acquired the sole and exclusive option for a period of two years to enter into one or more oil and gas leases with respect to any mineral interests owned by the Anderson Brothers within an area of mutual interest located in the Counties of Perkins and Harding in the State of South Dakota and the County of Adams, North Dakota (the "Area of Mutual Interest II").  The Lease Option Agreement II covers approximately 10,000 gross leasable acres.  As the initial consideration under the Lease Option Agreement II, the Company granted to the Anderson Brothers options to acquire an aggregate of 250,000 shares of the Company's Common Stock, at an exercise price of $0.25 per share for a period of two years from the effective date of the Lease Option Agreement II.  In addition, under the Lease Option Agreement II, the Anderson Brothers have the right to be issued additional options to acquire shares of Common Stock at an exercise price of $0.25 per share upon assisting the Company in securing additional oil and gas leases within the Area of Mutual Interest II.  The value assigned to the stock options was determined using the Black-Scholes option valuation with the following assumptions:  no dividend yield, expected annual volatility of 135%, risk free interest rate of .58% and an expected useful life of two years.  The value of the stock options was allocated $31,275 to Paid in Capital with an offsetting allocation of $31,275 to the Lease Options.