NOTE 9. SUBSEQUENT EVENTS

During July and August 2016, two directors and the CFO provided loans of $130,000 (Leo Womack $20,000, Joel Oppenheim $10,000 and Paul Deputy $100,000) in order to temporarily fund the Company’s working capital needs. The loans pay a 10% annual interest and mature in 90 days.  To compensate the directors and CFO, the Company granted one warrant to purchase one share of common stock to the shareholder for each dollar advanced, and agreed to pay interest of 10% on all balances outstanding. The exercise price of each warrant is $0.077 per share and they expire three (3) years from their grant date. A total of 130,000 warrants were granted.

On July 8, 2016, the Company purchased a workover/service rig for $80,000.  A portion of the purchase was funded through $60,000 of loans (Lee Lytton $10,000, Leo Womack $10,000, Joel Oppenheim $10,000, Quinten Beasley $10,000, Paul Deputy $10,000 and one shareholder for $10,000) that accrue a 10% annual interest and mature in 90 days.  In addition, each of the six (6) noteholders were granted warrants to purchase 10,000 shares of our common stock with an exercise price of $0.09 and an expiration term of 3 years.  The remaining $20,000 was funded through the Company’s operating account.

On August 13, Joel Oppenheim was granted 37,500 warrants in exchange for providing a bank access to various personal assets in order to collateralize the Company’s letters of credit.  The exercise price of each warrant is $0.06 per share and they expire three (3) years from their grant date.

On August 17, 2016 Paul M. Deputy was appointed Chief Financial Officer (“CFO”) of the Company and entered into an employment agreement with the Company effective July 1, 2016 to serve as Chief Financial Officer for an initial term of twelve (12) months (automatically renewable thereafter for additional one year terms).  The agreement provides that the Company will pay Mr. Deputy $140,000 per year.  The Company granted Mr. Deputy options to purchase 550,000 shares of the Company’s restricted common stock at an exercise price of $0.077 per share and have a term of three (3) years beginning July 1, 2016.

Mr. Deputy’s compensation for the first 90 days of the contract period will be deferred with the Board having the option to, (a) authorize payment at that time or (b) elect to defer payment until the closing of the financing in exchange for granting Mr. Deputy a warrant to purchase Rockdale  shares equal to the amount of salary deferred at a price equal to the closing price of the stock on the day of the Board meeting or (c) issue shares of common stock based on a strike price equal to the closing price of the company’s shares on the previous day.

On August 17, 2016 the Board of Directors granted two employees 200,000 shares of the Company’s restricted common stock from the 2015 Stock Incentive Plan.  The shares were issued at current market price of $0.077 per share on August 17, 2016 at a value of $15,400.

On August 17, 2016 the Board of Directors granted the CFO  500,000 shares of the Company’s restricted common stock for settlement of outstanding payables.  The shares were issued at current market price of $0.077 per share on August 17, 2016 at a value of $38,500.  The remaining payable after the granting of shares was $26,500.

On August 17, 2016 the Board of Directors granted Joel Oppenheim options to purchase 300,000 shares of the Company’s restricted common stock at an exercise price of $0.077 per share and have a term of three (3) years beginning August 17, 2016 at a value of $23,100.