Annual report pursuant to Section 13 and 15(d)

Equity

v3.19.3
Equity
12 Months Ended
Aug. 31, 2019
Equity  
Note 5 - Equity

Reverse Stock Split

 

Effective June 17, 2019, the Company issued a one for one thousand reverse stock split. One share of common stock, par value $0.001 per share, was issued in exchange for one thousand issued shares of common stock, par value $0.001 per share. The amount reallocated to additional paid-in capital from common stock was $20,549. The financial statements were retroactively restated to reflect the reverse stock split.

 

Shares Authorized

 

Upon formation the total number of shares of all classes of stock which the Company is authorized to issue is Seventy-Five Million (75,000,000) shares of which Twenty Five Million (25,000,000) shares shall be Preferred Stock, par value $0.001 per share, and Fifty Million (50,000,000) shares shall be Common Stock, par value $0.001 per share.

 

Stock Options Plan

 

In February 2016, the Board of Directors approved the 2016 Stock Options Plan ("Plan") that provides for the granting of stock options to certain key employees. The Plan reserves 2,000,000 shares of common stock for this purpose. There is no provision for shares to be specifically granted to the CEO under his employment arrangement, either in the stock option plan or the employment agreement.

 

Options under the Plan are to be granted at no less than fair market value of the shares at the date of grant. As of August 31, 2019 and 2018 no options under this plan have been granted.

 

Consulting Agreement

 

On March 14, 2016, the Company entered into a consulting agreement with Steve Moore for consulting services related to develop business and advise management of technology, products and services used in the oil and gas exploration and production. This agreement combines commissions payable on gross profit, as well as a warrant of company stock. The cost of these benefits is estimated at $250,000 over 2 years. As of August 31, 2018, there were no warrants of company stock outstanding under this agreement. Costs associated with the warrant issuances are included in “Professional fees” in the accompanying statements of operations in the amount of $0 for the years ended August 31, 2019 and 2018.

 

Effective February 15, 2018, the Company and consultant mutually agreed to cancel all warrants related to this consulting agreement as a result of unsatisfactory performance. There was no cost to the Company associated with the warrant cancellation due to the nonperformance. The weighted average exercise price of the warrants at cancellation was $0.001.

 

Following is a summary of warrant activity during 2018:

 

Options Outstanding

 

Options

 

Weighted average exercise price

 

Weighted average remaining contractual life (in years)

 

Balance, August 31, 2017

 

125

 

$

1.00

 

2.30

 

Granted

 

-

 

-

 

-

 

Exercised

 

-

 

-

 

-

 

Cancelled

 

(125

)

 

1.00

 

-

 

Balance, August 31, 2018

 

-

 

$

-

 

-

 

The fair market value of stock warrants is determined using the Black-Scholes valuation model, and the company uses the following methods to determine its underlying assumptions: expected volatilities are based on the historical volatility of the Company’s common stock; the expected term of warrants granted are based on the simplified method; and the risk-free interest rate is based on the U.S. Treasury implied yield on zero-coupon issues (with a remaining term equal to the expected term of the warrant).

 

As of August 31, 2019, there was no unrecognized stock warrant cost related to unvested stock warrant awards as all awards have fully vested.

 

There were no warrants outstanding as of August 31, 2019.

 

Waived Compensation

The Company and Michael Winterhalter collectively waived payment in the amount of $45,000 and $60,000 for the years ended August 31, 2019 and 2018, respectively. Waived compensation expense is included in payroll expense in the accompanying Statements of Operations.

 

The Company and Eric Krogius collectively waived payment in the amount of $15,000 and $20,000 for the years ended August 31, 2019 and 2018, respectively. Waived compensation expense is included in payroll expense in the accompanying Statements of Operations. These amounts are treated as capital contributions in the accompanying consolidated Statements of Cash Flow.