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Capital Stock
 12 Months Ended
Dec. 31, 2016
Notes to Financial Statements  
6. Capital Stock

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 could have been exercised at any time from the date of issuance until February 28, 2017, See Note 12.  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 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 fair value of the stock options issued were 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 fair value of the stock options issued were allocated $31,275 to Paid in Capital with an offsetting allocation of $31,275 to the Lease Options.

 

During December 2016, the Company issued $132,500 of senior unsecured convertible promissory notes ("Convertible Notes") due December 31, 2018 to several accredited investors, See Note 5.  The Convertible Notes are convertible at the option of the holder into Common Stock at $0.15 per share.  Each investor was also issued a warrant certificate, pursuant to which such investor could acquire one share of Common Stock at $0.25 per share for each $0.25 invested in the applicable Convertible Note until December 31, 2018.