Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Nov. 02, 2017 | |
Document And Entity Information | ||
Entity Registrant Name | HOUSTON AMERICAN ENERGY CORP | |
Entity Central Index Key | 1,156,041 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 57,713,964 | |
Trading Symbol | HUSA | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,017 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
CURRENT ASSETS | ||
Cash | $ 409,606 | $ 481,172 |
Accounts receivable – oil and gas sales | 24,199 | |
Prepaid expenses and other current assets | 15,000 | 3,750 |
TOTAL CURRENT ASSETS | 448,805 | 484,922 |
Oil and gas properties, full cost method | ||
Costs subject to amortization | 59,935,893 | 55,639,333 |
Costs not being amortized | 2,303,127 | 2,291,181 |
Office equipment | 90,004 | 90,004 |
Total | 62,329,024 | 58,020,518 |
Accumulated depletion, depreciation, amortization, and impairment | (55,650,077) | (55,563,591) |
PROPERTY AND EQUIPMENT, NET | 6,678,947 | 2,456,927 |
Other assets | 3,167 | 3,167 |
TOTAL ASSETS | 7,130,919 | 2,945,016 |
CURRENT LIABILITIES | ||
Accounts payable | 430,633 | 50,122 |
Accrued expenses | 118,342 | 11,005 |
TOTAL CURRENT LIABILITIES | 548,975 | 61,127 |
LONG-TERM LIABILITIES | ||
Reserve for plugging and abandonment costs | 36,202 | 27,444 |
Deferred rent obligation | 40,100 | |
TOTAL LONG-TERM LIABILITIES | 76,302 | 27,444 |
TOTAL LIABILITIES | 625,277 | 88,571 |
SHAREHOLDERS' EQUITY | ||
Preferred stock, par value $0.001; 10,000,000 shares authorized, 2,109.6 and 0 shares issued and outstanding, respectively | 2 | |
Common stock, par value $0.001; 150,000,000 shares authorized 56,800,262 and 52,169,945 shares issued and outstanding, respectively | 56,800 | 52,170 |
Additional paid-in capital | 71,383,984 | 66,158,593 |
Treasury shares, at cost; 0 and 892,557 shares, respectively | (174,125) | |
Accumulated deficit | (64,935,144) | (63,180,193) |
TOTAL SHAREHOLDERS' EQUITY | 6,505,642 | 2,856,445 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 7,130,919 | $ 2,945,016 |
Consolidated Balance Sheets (U3
Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Sep. 30, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 2,109.6 | 0 |
Preferred stock, shares outstanding | 2,109.6 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 150,000,000 | 150,000,000 |
Common stock, shares issued | 56,800,262 | 52,169,945 |
Common stock, shares outstanding | 56,800,262 | 52,169,945 |
Treasury stock, at cost | 0 | 892,557 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Income Statement [Abstract] | ||||
OIL AND GAS REVENUE | $ 111,741 | $ 39,738 | $ 215,649 | $ 121,885 |
EXPENSES OF OPERATIONS | ||||
Lease operating expense and severance tax | 55,245 | 23,054 | 95,260 | 60,416 |
General and administrative expense | 622,994 | 362,807 | 1,627,433 | 1,194,223 |
Depreciation and depletion | 55,280 | 25,069 | 86,486 | 74,333 |
Total operating expenses | 733,519 | 410,930 | 1,809,179 | 1,328,972 |
Loss from operations | (621,778) | (371,192) | (1,593,530) | (1,207,087) |
OTHER INCOME (EXPENSE) | ||||
Interest income | 3 | 849 | 184 | 6,887 |
Other income | 10,000 | |||
Interest expense | (164,503) | (171,605) | ||
Total other income (expense), net | (164,500) | 849 | (161,421) | 6,887 |
Net loss before taxes | (786,278) | (370,343) | (1,754,951) | (1,200,200) |
Income tax expense (benefit) | ||||
Net loss | $ (786,278) | $ (370,343) | $ (1,754,951) | $ (1,200,200) |
Basic and diluted loss per common share | $ (0.01) | $ (0.01) | $ (0.03) | $ (0.02) |
Based and diluted weighted average number of common shares outstanding | 54,330,541 | 51,467,438 | 52,306,289 | 51,537,510 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | $ (1,754,951) | $ (1,200,200) |
Adjustments to reconcile net loss to net cash used in operations: | ||
Depreciation and depletion | 86,486 | 74,333 |
Stock-based compensation | 196,869 | 99,006 |
Accretion of asset retirement obligation | 2,758 | 414 |
Amortization of debt discount | 158,734 | |
Changes in operating assets and liabilities: | ||
(Increase)/decrease in accounts receivable | (24,199) | |
(Increase)/decrease in prepaid expenses and other current assets | (11,250) | 23,257 |
Increase/(decrease) in accounts payable and accrued expenses | 64,326 | (20,010) |
Increase/(decrease) in deferred rent obligation | 40,100 | |
Net cash used in operating activities | (1,241,127) | (1,023,200) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Payments for the acquisition and development of oil and gas properties | (3,878,984) | (92,217) |
Net cash used in investing activities | (3,878,984) | (92,217) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from the issuance of notes payable, net of debt discount | 570,000 | |
Payments on notes payable | (600,000) | |
Proceeds from the issuance of common stock | 3,049,515 | |
Payment of preferred stock dividends | (80,570) | |
Payments for the acquisition of treasury shares | (135,973) | |
Net cash provided by (used in) financing activities | 5,048,545 | (135,973) |
Decrease in cash | (71,566) | (1,251,390) |
Cash, beginning of period | 481,172 | 2,123,520 |
Cash, end of period | 409,606 | 872,130 |
SUPPLEMENTAL CASH FLOW INFORMATION | ||
Interest paid | 12,871 | |
Taxes paid | ||
SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES | ||
Accrued oil and gas development costs | 423,522 | |
Debt discount from issuance of warrants as debt inducement | 128,734 | |
Increase in reserve for plugging and abandonment costs | 6,000 | |
Retirement of treasury shares | 174,125 | |
Series A Preferred Stock [Member] | ||
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from the issuance of Preferred Stock | 1,200,000 | |
Series B Preferred Stock [Member] | ||
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Proceeds from the issuance of Preferred Stock | $ 909,600 |
Basis of Presentation and Signi
Basis of Presentation and Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Significant Accounting Policies | NOTE 1 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES The accompanying unaudited consolidated financial statements of Houston American Energy Corp., a Delaware corporation (the “Company”), have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q. They do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for a complete financial presentation. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, considered necessary for a fair presentation, have been included in the accompanying unaudited consolidated financial statements. Operating results for the periods presented are not necessarily indicative of the results that may be expected for the full year. These unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and footnotes, which are included as part of the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. Going Concern The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business for the twelve-month period following the date of these consolidated financial statements. The Company has incurred continuing losses, negative operating cash flow and declining cash balances since 2011, including negative operating cash flows of $1,241,127 for the nine months ended September 30, 2017. These conditions, together with continued low oil and natural gas prices and financial commitments the Company has made relative to its Reeves County, Texas and Colombian properties, raise substantial doubt as to the Company’s ability to continue as a going concern for the twelve months following the issuance of these financial statements. These financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. To address these concerns, during the nine months ended September 30, 2017, the Company raised $5,729,115 from the sale of common stock, Series A Preferred Stock, Series B Preferred Stock and Warrants, and Bridge Loan Notes and Warrants. Subsequent to September 30, 2017, the Company raised an additional $467,874, net, from the sale of common stock. Additionally, the Company’s first two wells in Reeves County, Texas were completed during the nine months ended September 30, 2017 and the Company anticipates receipt of meaningful revenues and cash flows from those wells commencing in the fourth quarter of 2017. The Company may seek additional financing or may consider divestiture of certain assets as necessary to support its operations and financial commitments. There can be no assurance that the Company will be successful in its efforts. See “ Note 4 – Bridge Loan Notes Note 5 – Capital Stock Note 8 – Subsequent Events Consolidation The accompanying consolidated financial statements include all accounts of the Company and its subsidiaries (HAEC Louisiana E&P, Inc., HAEC Oklahoma E&P, Inc., and HAEC Caddo Lake E&P, Inc.). All significant inter-company balances and transactions have been eliminated in consolidation. Accounting Principles and Use of Estimates The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America. In preparing financial statements, management makes informed judgments and estimates that affect the reported amounts of assets and liabilities as of the date of the financial statements and affect the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, management reviews its estimates, including those related to such potential matters as litigation, environmental liabilities, income taxes and the related valuation allowance, determination of proved reserves of oil and gas and asset retirement obligations. Changes in facts and circumstances may result in revised estimates and actual results may differ from these estimates. Concentration of Credit Risk Financial instruments that potentially subject the Company to a concentration of credit risk include cash, cash equivalents and any marketable securities. The Company had cash deposits of $20,068 in excess of the FDIC’s current insured limit on interest bearing accounts of $250,000 as of September 30, 2017. The Company has not experienced any losses on its deposits of cash and cash equivalents. Loss per Share Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average common shares outstanding for the period. In periods in which the Company reports a net loss, dilutive securities are excluded from the calculation of diluted net loss per share amounts as the effect would be anti-dilutive. For the nine months ended September 30, 2017 and 2016, the following convertible preferred stock and warrants and options to purchase shares of common stock were excluded from the computation of diluted net loss per share, as the inclusion of such shares would be anti-dilutive: Nine Months Ended September 30, 2017 2016 Series A Convertible Preferred Stock 6,000,000 — Series B Convertible Preferred Stock 2,527,778 — Stock warrants 3,651,680 — Stock options 6,012,165 — Total 18,191,623 — Subsequent Events The Company has evaluated all transactions from September 30, 2017 through the financial statement issuance date for subsequent event disclosure consideration. Recent Accounting Pronouncements In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which supersedes nearly all existing revenue recognition guidance under GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five- step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing GAAP. The guidance is effective for annual and interim periods beginning after December 15, 2017. The standard is required to be adopted using either the full retrospective approach, with all prior periods presented adjusted, or the modified retrospective approach, with a cumulative adjustment to retained earnings on the opening balance sheet. The Company will adopt the new standard utilizing the modified retrospective approach. The Company does not expect the adoption of this ASU to have a material impact on its financial statements. However, we anticipate the new standard will result in more robust footnote disclosures. We cannot currently determine the extent of the new footnote disclosures as further clarification is needed for certain practices common to the industry. We will continue to evaluate the impacts that future contracts may have. In February 2016, a pronouncement was issued by the FASB that creates new accounting and reporting guidelines for leasing arrangements. The new guidance requires organizations that lease assets to recognize assets and liabilities on the balance sheet related to the rights and obligations created by those leases, regardless of whether they are classified as finance or operating leases. Consistent with current guidance, the recognition, measurement and presentation of expenses and cash flows arising from a lease primarily will depend on its classification as a finance or operating lease. The guidance also requires new disclosures to help financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. The new standard is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, with early application permitted. The new standard is to be applied using a modified retrospective approach. The Company is still in the process of evaluating the impact of this new standard; however, the Company believes the initial impact of adopting the standard will result in increases to its assets and liabilities on its consolidated balance sheets, and changes to the timing and presentation of certain operating expenses on its consolidated statements of operations. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230). ASU 2016-15 seeks to reduce the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. This update is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the provisions of ASU 2016-15 and assessing the impact, if any, it may have on its statement of consolidated cash flows. In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718) Scope of Modification Accounting. The ASU clarifies which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The standard is effective for the Company on January 1, 2018, with early adoption permitted. The impact of this new standard will depend on the extent and nature of future changes to the terms of Company's share-based payment awards. |
Oil and Gas Properties
Oil and Gas Properties | 9 Months Ended |
Sep. 30, 2017 | |
Oil and Gas Property [Abstract] | |
Oil and Gas Properties | NOTE 2 – OIL AND GAS PROPERTIES During the nine months ended September 30, 2017, the Company invested $4,302,506, net, for the acquisition and development of oil and gas properties, consisting of (1) cost of acquisition of U.S. properties $999,525, net, principally attributable to acreage acquired in Reeves County, Texas, (2) drilling and completion costs on U.S. properties of $3,284,040, principally attributable to operations on our Reeves County, Texas acreage, and (3) preparation and evaluation costs in Colombia of $18,941. Of the amount invested, the Company capitalized $18,941 to oil and gas properties not subject to amortization and capitalized $4,283,565 to oil and gas properties subject to amortization. Geographical Information The Company currently has operations in two geographical areas, the United States and Colombia. Revenues for the nine months ended September 30, 2017 and long lived assets (net of depletion, amortization, and impairments) as of September 30, 2017 attributable to each geographical area are presented below: Nine Months Ended September 30, 2017 As of September 30, 2017 Revenues Long Lived Assets, Net United States $ 215,649 $ 4,375,819 Colombia — 2,303,128 Total $ 215,649 $ 6,678,947 |
Notes Payable
Notes Payable | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Notes Payable | NOTE 3 – NOTES PAYABLE In June 2017, the Company issued promissory notes (the “Bridge Loan Notes”) in the principal amount of $600,000, with an original issue discount of 5%, and warrants (the “Bridge Loan Warrants”) to purchase 600,000 shares of the Company’s common stock. The aggregate consideration received by the Company for the Bridge Loan Notes and Warrants was $570,000. The Bridge Loan Notes were unsecured obligations bearing interest at 12.0% per annum and payable interest only on the last day of each calendar month with any unpaid principal and accrued interest being payable in full on October 21, 2017. The Bridge Loan Notes were subject to mandatory prepayment from and to the extent of (i) 100% of net proceeds received by the Company from any sales, for cash, of equity or debt securities (other than Bridge Loan Notes) of the Company, (ii) 100% of net proceeds received by the Company from the sale of assets (other than sales in the ordinary course of business); and (iii) 75% of net proceeds received from the sale of oil and gas produced from the Company’s Reeves County, Texas properties. Additionally, the Company had the option to prepay the Bridge Loan Notes, at its sole election, without penalty. The Bridge Loan Notes were recorded net of debt discount in the amount of $158,734. The debt discount consists of (i) $30,000 excess in the face amount of the Bridge Loan Notes over the consideration paid plus (ii) the value of the Bridge Loan Warrants, totaling $128,734. The debt discount is amortized over the life of the Bridge Loan Notes as additional interest expense. During the three and nine months ended September 30, 2017, interest expense paid in cash totaled $12,131 and $12,871, respectively, and interest expense attributable to amortization of debt discount totaled $152,372 and $158,734, respectively. See “Note 5 – Capital Stock – Warrants – Bridge Loan Warrants.” The holders of $300,000 in the face amount of the Bridge Loan Notes waived mandatory prepayment at both July 31, 2017 and August 31, 2017 and the holders of the remaining $300,000 in face amount of the Bridge Loan Notes were repaid in full pursuant to the mandatory prepayment provision. The balance of the Bridge Loan Notes, in the amount of $300,000, were repaid in full as of September 30, 2017. |
Stock-Based Compensation Expens
Stock-Based Compensation Expense | 9 Months Ended |
Sep. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation Expense | NOTE 4 – STOCK-BASED COMPENSATION EXPENSE In 2008, the Company’s Board of Directors adopted the Houston American Energy Corp. 2008 Equity Incentive Plan (the “2008 Plan”). The terms of the 2008 Plan, as amended in 2012 and 2013, allow for the issuance of up to 6,000,000 shares of the Company’s common stock pursuant to the grant of stock options and restricted stock. Persons eligible to participate in the Plans are key employees, consultants and directors of the Company. In 2017, the Company’s Board of Directors adopted the Houston American Energy Corp. 2017 Equity Incentive Plan (the “2017 Plan” and, together with the 2008 Plan, the “Plans”). The terms of the 2017 Plan, allow for the issuance of up to 5,000,000 shares of the Company’s common stock pursuant to the grant of stock options and restricted stock. Persons eligible to participate in the Plans are key employees, consultants and directors of the Company. The Company periodically grants options to employees, directors and consultants under the Plans and is required to make estimates of the fair value of the related instruments and recognize expense over the period benefited, usually the vesting period. Stock Option Activity In March 2017, options to purchase an aggregate of 1,200,000 shares were granted to an executive officer, a non-executive officer and an advisor to the Company. All of the options have a ten-year life and are exercisable at $0.30 per share, the fair market value on date of grant. The executive officer’s option grant vests 1/3 on each of the first three anniversaries of the grant date; subject to vesting in full on December 31, 2017 if the Company’s common stock continues to be listed on the NYSE MKT (or another national securities exchange) on that date. The non-executive officer’s option grant vested 25% on June 12, 2017 and 25% on each of the first three anniversaries of the grant date. The advisor option grant vested on the grant date. The non-executive officer options were forfeited unvested on termination of service to the Company during the six months ended June 30, 2017. The options were valued on the date of grant at $234,947 using the Black-Scholes option-pricing model with the following parameters: (1) risk-free interest rate of 2.19%; (2) expected life in years of 5.50; (3) expected stock volatility of 109.16%; and (4) expected dividend yield of 0%. The Company determined the options qualify as ‘plain vanilla’ under the provisions of SAB 107 and the simplified method was used to estimate the expected option life. In September 2017, options to purchase an aggregate of 200,000 shares were granted to the Company’s independent directors. All of the options have a ten-year life and are exercisable at $0.485 per share, the fair market value on date of grant. The options vest 20% on the date of grant and 80% nine months from the date of grant. The options were valued on the date of grant at $71,064 using the Black-Scholes option-pricing model with the following parameters: (1) risk-free interest rate of 1.76%; (2) expected life in years of 5.67; (3) expected stock volatility of 102.38%; and (4) expected dividend yield of 0%. The Company determined the options qualify as ‘plain vanilla’ under the provisions of SAB 107 and the simplified method was used to estimate the expected option life. A summary of stock option activity and related information for the nine months ended September 30, 2017 is presented below: Options Weighted-Average Exercise Price Aggregate Intrinsic Value Outstanding at January 1, 2017 5,232,165 $ 2.11 Granted 1,400,000 0.33 Exercised — — Forfeited (620,000 ) $ 0.47 Outstanding at September 30, 2017 6,012,165 $ 1.86 $ 869,500 Exercisable at September 30, 2017 4,752,165 $ 2.28 $ 597,870 During the three and nine months ended September 30, 2017, the Company recognized $60,648 and $196,492, respectively, of stock-based compensation expense attributable to the amortization of unrecognized stock-based compensation from its outstanding stock options. As of September 30, 2017, total unrecognized stock-based compensation expense related to non-vested stock options was $143,540. The unrecognized expense is expected to be recognized over a weighted average period of 1.36 years and the weighted average remaining contractual term of the outstanding options and exercisable options at September 30, 2017 is 6.15 years and 5.42 years, respectively. Shares available for issuance under the 2008 Plan as of September 30, 2017 totaled 87,835. Shares available for issuance under the 2017 Plan, as of September 30, 2017, totaled 4,900,000. Share-Based Compensation Expense The following table reflects share-based compensation recorded by the Company for the three and nine months ended September 30, 2017 and 2016: Nine Months Ended September 30, Three Months Ended September 30, 2017 2016 2017 2016 Share-based compensation expense – options $ 196,492 $ 99,006 $ 60,648 $ 37,805 Share-based compensation expense – warrants 377 — 377 — Total share-based compensation expense included in general and administrative expense $ 196,869 $ 99,006 $ 61,025 $ 37,805 Earnings per share effect of share-based compensation expense – basic and diluted $ 0.00 $ (0.00 ) $ 0.00 $ (0.00 ) |
Capital Stock
Capital Stock | 9 Months Ended |
Sep. 30, 2017 | |
Equity [Abstract] | |
Capital Stock | NOTE 5 – CAPITAL STOCK Treasury Stock In March 2017, the Company’s board of directors approved the cancellation of all shares of common stock held in treasury. As a result, 892,557 shares of common stock were cancelled and $174,125 previously classified on the balance sheet as treasury stock was reclassified as a reduction in additional paid-in capital. Common Stock - At-the-Market Offering In July 2017, the Company entered into an At-the-Market Issuance Sales Agreement (the “Sales Agreement”) with WestPark Capital, Inc. (“WestPark Capital”) pursuant to which the Company may sell, at its option, up to an aggregate of $5 million in shares of its common stock through WestPark Capital, as sales agent. Sales of shares under the Sales Agreement (the “ATM Offering”) will be made, in accordance with one or more placement notices delivered by the Company to WestPark Capital, which notices shall set parameters under which shares may be sold. The ATM Offering was made pursuant to a shelf registration statement by methods deemed to be “at the market,” as defined in Rule 415 promulgated under the Securities Act of 1933. The Company will pay WestPark a commission in cash equal to 3% of the gross proceeds from the sale of shares in the ATM Offering. Additionally, the Company reimbursed WestPark Capital for $25,000 of expenses incurred in connection with the ATM Offering. As of September 30, 2017, the Company had sold an aggregate of 5,522,874 shares in the ATM Offering and had received proceeds, net of commissions and expenses, of $3,049,515. Series A Convertible Preferred Stock In January 2017, the Company issued 1,200 shares of 12% Series A Convertible Preferred Stock (the “Series A Preferred Stock”) for aggregate gross proceeds of $1.2 million. The Series A Preferred Stock (i) accrues a cumulative dividend, commencing July 1, 2017, at 12% payable, if and when declared, quarterly; (ii) is convertible at the option of the holder into shares of common stock at a conversion price of $0.20 per share, (iii) has a liquidation preference of $1,000 per share plus accrued and unpaid dividends; and (iv) is redeemable at our option, commencing on the second anniversary of the issue date, at a premium to issue price, which premium decreases from 12% to 0% following the fifth anniversary of the issue date, plus accrued and unpaid dividends. During the nine months ended September 30, 2017, the Company paid $36,000 of dividends on its Series A Preferred Stock. Series B Convertible Preferred Stock In May 2017, the Company received $909,600 from the sale of 909.6 Units (the “Units”), each Unit consisting of one share of 12.0% Series B Convertible Preferred Stock (the “Series B Preferred Stock”) and a Warrant (the “Series B Warrant”). The Series B Preferred Stock (i) accrues a cumulative dividend at 12% payable, if and when declared, quarterly; (ii) is convertible at the option of the holder into shares of common stock at a conversion price of $0.36 per share, (iii) has a liquidation preference of $1,000 per share plus accrued and unpaid dividends; and (iv) is redeemable at our option, commencing on the second anniversary of the issue date, at a premium to issue price, which premium decreases from 12% to 0% following the fifth anniversary of the issue date, plus accrued and unpaid dividends. During the nine months ended September 30, 2017, the Company paid $44,570 of dividends on its Series B Preferred Stock. Warrants Series B Warrants. Bridge Loan Warrants. Consultant Warrants A summary of warrant activity and related information for the nine months ended September 30, 2017 is presented below: Warrants Weighted-Average Exercise Price Aggregate Intrinsic Value Outstanding at January 1, 2017 — $ — Issued 3,651,680 0.44 Exercised — — Expired — — Outstanding at September 30, 2017 3,651,680 $ 0.44 $ 210,118 Exercisable at September 30, 2017 3,601,680 $ 0.44 $ 210,118 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 6 - COMMITMENTS AND CONTINGENCIES Lease Commitment The Company leases office facilities under an operating lease agreement that was extended in March 2017 until October 31, 2022. As of September 30, 2017, the lease agreement requires future payments as follows: Year Amount 2017 $ 20,931 2018 125,978 2019 128,348 2020 130,717 2021 133,087 2022 112,551 Total $ 651,612 For the three and nine months ended September 30, 2017, the total base rental expense was $40,100 and $89,544, respectively. The Company does not have any capital leases or other operating lease commitments. Employment Commitment In March 2017, the Company’s compensation committee approved revised compensation arrangements for John P. Boylan, Chairman, Chief Executive Officer and President of the Company. The principal terms of Mr. Boylan’s compensation, as so revised, include (i) an annual base salary of $250,000, effective January 1, 2017, with $10,000 per month being payable on a current basis, and full salary and accrued unpaid salary being payable at such time as the compensation committee determines that the Company has sufficient financial capability to pay such amounts; (ii) annual bonuses as determined by the compensation committee; (iii) grant, pursuant to the Company’s Production Incentive Compensation Plan, of a 1% interest in the Company revenues from all wells drilled on the Company’s Reeves County, Texas acreage; and (iv) grant of a stock option to purchase 500,000 shares of common stock. |
Taxes
Taxes | 9 Months Ended |
Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Taxes | NOTE 7 – TAXES The Company has estimated that its effective tax rate for U.S. purposes will be zero for 2017, and consequently, recorded no U.S. income tax liability or tax expense for the three and nine months ended September 30, 2017. During the three and nine months ended September 30, 2017, significant temporary differences between financial statement net loss and estimated taxable income related primarily to the stock compensation expense recognized for book purposes during the period. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 8 – SUBSEQUENT EVENTS At-the-Market Offering Subsequent to September 30, 2017, through the date hereof, the Company sold an aggregate of 913,702 shares in the ATM Offering and received proceeds, net of commissions and expenses, of $467,874. |
Basis of Presentation and Sig14
Basis of Presentation and Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Going Concern | Going Concern The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business for the twelve-month period following the date of these consolidated financial statements. The Company has incurred continuing losses, negative operating cash flow and declining cash balances since 2011, including negative operating cash flows of $1,241,127 for the nine months ended September 30, 2017. These conditions, together with continued low oil and natural gas prices and financial commitments the Company has made relative to its Reeves County, Texas and Colombian properties, raise substantial doubt as to the Company’s ability to continue as a going concern for the twelve months following the issuance of these financial statements. These financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. To address these concerns, during the nine months ended September 30, 2017, the Company raised $5,729,115 from the sale of common stock, Series A Preferred Stock, Series B Preferred Stock and Warrants, and Bridge Loan Notes and Warrants. Subsequent to September 30, 2017, the Company raised an additional $467,874, net, from the sale of common stock. Additionally, the Company’s first two wells in Reeves County, Texas were completed during the nine months ended September 30, 2017 and the Company anticipates receipt of meaningful revenues and cash flows from those wells commencing in the fourth quarter of 2017. The Company may seek additional financing or may consider divestiture of certain assets as necessary to support its operations and financial commitments. There can be no assurance that the Company will be successful in its efforts. See “ Note 4 – Bridge Loan Notes Note 5 – Capital Stock Note 8 – Subsequent Events |
Consolidation | Consolidation The accompanying consolidated financial statements include all accounts of the Company and its subsidiaries (HAEC Louisiana E&P, Inc., HAEC Oklahoma E&P, Inc., and HAEC Caddo Lake E&P, Inc.). All significant inter-company balances and transactions have been eliminated in consolidation. |
Accounting Principles and Use of Estimates | Accounting Principles and Use of Estimates The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America. In preparing financial statements, management makes informed judgments and estimates that affect the reported amounts of assets and liabilities as of the date of the financial statements and affect the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, management reviews its estimates, including those related to such potential matters as litigation, environmental liabilities, income taxes and the related valuation allowance, determination of proved reserves of oil and gas and asset retirement obligations. Changes in facts and circumstances may result in revised estimates and actual results may differ from these estimates. |
Concentration of Credit Risk | Concentration of Credit Risk Financial instruments that potentially subject the Company to a concentration of credit risk include cash, cash equivalents and any marketable securities. The Company had cash deposits of $20,068 in excess of the FDIC’s current insured limit on interest bearing accounts of $250,000 as of September 30, 2017. The Company has not experienced any losses on its deposits of cash and cash equivalents. |
Loss Per Share | Loss per Share Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average common shares outstanding for the period. In periods in which the Company reports a net loss, dilutive securities are excluded from the calculation of diluted net loss per share amounts as the effect would be anti-dilutive. For the nine months ended September 30, 2017 and 2016, the following convertible preferred stock and warrants and options to purchase shares of common stock were excluded from the computation of diluted net loss per share, as the inclusion of such shares would be anti-dilutive: Nine Months Ended September 30, 2017 2016 Series A Convertible Preferred Stock 6,000,000 — Series B Convertible Preferred Stock 2,527,778 — Stock warrants 3,651,680 — Stock options 6,012,165 — Total 18,191,623 — |
Subsequent Events | Subsequent Events The Company has evaluated all transactions from September 30, 2017 through the financial statement issuance date for subsequent event disclosure consideration. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which supersedes nearly all existing revenue recognition guidance under GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration to which an entity expects to be entitled for those goods or services. ASU 2014-09 defines a five- step process to achieve this core principle and, in doing so, more judgment and estimates may be required within the revenue recognition process than are required under existing GAAP. The guidance is effective for annual and interim periods beginning after December 15, 2017. The standard is required to be adopted using either the full retrospective approach, with all prior periods presented adjusted, or the modified retrospective approach, with a cumulative adjustment to retained earnings on the opening balance sheet. The Company will adopt the new standard utilizing the modified retrospective approach. The Company does not expect the adoption of this ASU to have a material impact on its financial statements. However, we anticipate the new standard will result in more robust footnote disclosures. We cannot currently determine the extent of the new footnote disclosures as further clarification is needed for certain practices common to the industry. We will continue to evaluate the impacts that future contracts may have. In February 2016, a pronouncement was issued by the FASB that creates new accounting and reporting guidelines for leasing arrangements. The new guidance requires organizations that lease assets to recognize assets and liabilities on the balance sheet related to the rights and obligations created by those leases, regardless of whether they are classified as finance or operating leases. Consistent with current guidance, the recognition, measurement and presentation of expenses and cash flows arising from a lease primarily will depend on its classification as a finance or operating lease. The guidance also requires new disclosures to help financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. The new standard is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period, with early application permitted. The new standard is to be applied using a modified retrospective approach. The Company is still in the process of evaluating the impact of this new standard; however, the Company believes the initial impact of adopting the standard will result in increases to its assets and liabilities on its consolidated balance sheets, and changes to the timing and presentation of certain operating expenses on its consolidated statements of operations. In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230). ASU 2016-15 seeks to reduce the existing diversity in practice in how certain cash receipts and cash payments are presented and classified in the statement of cash flows. This update is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the provisions of ASU 2016-15 and assessing the impact, if any, it may have on its statement of consolidated cash flows. In May 2017, the FASB issued ASU 2017-09, Compensation-Stock Compensation (Topic 718) Scope of Modification Accounting. The ASU clarifies which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. The standard is effective for the Company on January 1, 2018, with early adoption permitted. The impact of this new standard will depend on the extent and nature of future changes to the terms of Company's share-based payment awards. |
Basis of Presentation and Sig15
Basis of Presentation and Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Schedule of Computation of Diluted Net Loss Per Share | For the six months ended July 30, 2017 and 2016, the following convertible preferred stock and warrants and options to purchase shares of common stock were excluded from the computation of diluted net loss per share, as the inclusion of such shares would be anti-dilutive: Six Months Ended July 30, 2017 2016 Series A Convertible Preferred Stock 6,000,000 — Series B Convertible Preferred Stock 2,527,778 — Stock warrants 3,601,680 — Stock options 5,812,165 5,232,165 Total 17,941,623 5,232,165 |
Oil and Gas Properties (Tables)
Oil and Gas Properties (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Oil and Gas Property [Abstract] | |
Schedule of Revenues and Long Lived Assets Attributable to Geographical Area | The Company currently has operations in two geographical areas, the United States and Colombia. Revenues for the nine months ended September 30, 2017 and long lived assets (net of depletion, amortization, and impairments) as of September 30, 2017 attributable to each geographical area are presented below: Nine Months Ended September 30, 2017 As of September 30, 2017 Revenues Long Lived Assets, Net United States $ 215,649 $ 4,375,819 Colombia — 2,303,128 Total $ 215,649 $ 6,678,947 |
Stock-Based Compensation Expe17
Stock-Based Compensation Expense (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Summary of Stock Option Activity | A summary of stock option activity and related information for the nine months ended September 30, 2017 is presented below: Options Weighted-Average Exercise Price Aggregate Intrinsic Value Outstanding at January 1, 2017 5,232,165 $ 2.11 Granted 1,400,000 0.33 Exercised — — Forfeited (620,000 ) $ 0.47 Outstanding at September 30, 2017 6,012,165 $ 1.86 $ 869,500 Exercisable at September 30, 2017 4,752,165 $ 2.28 $ 597,870 |
Schedule of Share-based Compensation Expense | The following table reflects share-based compensation recorded by the Company for the three and nine months ended September 30, 2017 and 2016: Nine Months Ended September 30, Three Months Ended September 30, 2017 2016 2017 2016 Share-based compensation expense – options $ 196,492 $ 99,006 $ 60,648 $ 37,805 Share-based compensation expense – warrants 377 — 377 — Total share-based compensation expense included in general and administrative expense $ 196,869 $ 99,006 $ 61,025 $ 37,805 Earnings per share effect of share-based compensation expense – basic and diluted $ 0.00 $ (0.00 ) $ 0.00 $ (0.00 ) |
Capital Stock (Tables)
Capital Stock (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Equity [Abstract] | |
Summary of Warrant Activity | A summary of warrant activity and related information for the nine months ended September 30, 2017 is presented below: Warrants Weighted-Average Exercise Price Aggregate Intrinsic Value Outstanding at January 1, 2017 — $ — Issued 3,651,680 0.44 Exercised — — Expired — — Outstanding at September 30, 2017 3,651,680 $ 0.44 $ 210,118 Exercisable at September 30, 2017 3,601,680 $ 0.44 $ 210,118 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Payments Under Lease Agreement | As of September 30, 2017, the lease agreement requires future payments as follows: Year Amount 2017 $ 20,931 2018 125,978 2019 128,348 2020 130,717 2021 133,087 2022 112,551 Total $ 651,612 |
Basis of Presentation and Sig20
Basis of Presentation and Significant Accounting Policies (Details Narrative) - USD ($) | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Net cash used in operations | $ 1,241,127 | $ 1,023,200 |
Proceeds from sale of equity | 5,729,115 | |
Proceeds from issuance of common stock | 3,049,515 | |
Cash deposits in excess of FDIC's | 20,068 | |
Current insured limit on interest bearing accounts | 250,000 | |
Common Stock [Member] | ||
Proceeds from issuance of common stock | $ 467,874 |
Basis of Presentation and Sig21
Basis of Presentation and Significant Accounting Policies - Schedule of Computation of Diluted Net Loss Per Share (Details) - shares | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | 18,191,623 | |
Series A Convertible Preferred Stock [Member] | ||
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | 6,000,000 | |
Series B Convertible Preferred Stock [Member] | ||
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | 2,527,778 | |
Stock Warrants [Member] | ||
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | 3,651,680 | |
Stock Options [Member] | ||
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | 6,012,165 |
Oil and Gas Properties (Details
Oil and Gas Properties (Details Narrative) | 9 Months Ended |
Sep. 30, 2017USD ($)segments | |
Investment in development of oil and gas properties | $ 4,302,506 |
Development costs not subject to amortization | 18,941 |
Capitalized oil and gas properties subject to amortization | $ 4,283,565 |
Number of geographical areas in which entity operates | segments | 2 |
United States [Member] | |
Acquisition and development cost of oil and gas properties | $ 999,525 |
Texas [Member] | |
Acquisition and development cost of oil and gas properties | 3,284,040 |
Colombia [Member] | |
Preparation and evaluation costs | $ 18,941 |
Oil and Gas Properties - Schedu
Oil and Gas Properties - Schedule of Revenues and Long Lived Assets Attributable to Geographical Area (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Revenues | $ 111,741 | $ 39,738 | $ 215,649 | $ 121,885 |
Long Lived Assets, Net | 6,678,947 | 6,678,947 | ||
United States [Member] | ||||
Revenues | 215,649 | |||
Long Lived Assets, Net | 4,375,819 | 4,375,819 | ||
Colombia [Member] | ||||
Revenues | ||||
Colombia [Member] | ||||
Long Lived Assets, Net | $ 2,303,128 | $ 2,303,128 |
Notes Payable (Details Narrativ
Notes Payable (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | |
Amortization of debt discount | $ 158,734 | ||
Bridge Loan Warrants [Member] | |||
Bridge loan, debt discount | $ 128,734 | 128,734 | |
Maximum [Member] | |||
Bridge loan, debt discount | 30,000 | 30,000 | |
Bridge Loan Notes [Member] | |||
Note, face amount | $ 600,000 | $ 600,000 | |
Original issue discount, percent | 5.00% | 5.00% | |
Number of warrant issued to purchase common stock | 600,000 | 600,000 | |
Debt instrument interest rate | 12.00% | 12.00% | |
Prepayment, description | The Bridge Loan Notes are subject to mandatory prepayment from and to the extent of (i) 100% of net proceeds received by the Company from any sales, for cash, of equity or debt securities (other than Bridge Loan Notes) of the Company, (ii) 100% of net proceeds received by the Company from the sale of assets (other than sales in the ordinary course of business); and (iii) 75% of net proceeds received from the sale of oil and gas produced from the Companys Reeves County, Texas properties. | ||
Proceeds received from sale of equity and debt securities, percentage | 100.00% | ||
Bridge loan, debt discount | $ 158,734 | $ 158,734 | |
Interest expense | 12,131 | 12,871 | |
Amortization of debt discount | $ 152,372 | 158,734 | |
Repayments of debt | 300,000 | ||
Bridge Loan Notes [Member] | Remaining Note Holders [Member] | |||
Prepayment of debt | 300,000 | ||
Bridge Loan Notes [Member] | July 31, 2017 [Member] | |||
Prepayment of debt | 300,000 | ||
Bridge Loan Notes [Member] | August 31, 2017 [Member] | |||
Prepayment of debt | 300,000 | ||
Bridge Loan Notes and Warrants [Member] | |||
Consideration received from warrants | $ 570,000 |
Stock-Based Compensation Expe25
Stock-Based Compensation Expense (Details Narrative) - USD ($) | Jun. 12, 2017 | Sep. 30, 2017 | Mar. 31, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Jun. 30, 2017 | Dec. 31, 2008 |
Number of options authorized to purchase shares of common stock | 500,000 | 500,000 | 500,000 | ||||||
Number of stock option shares granted | 1,400,000 | ||||||||
Stock option exercise per share | |||||||||
Stock compensation amortized expense | $ 61,025 | $ 37,805 | $ 196,869 | $ 99,006 | |||||
Unrecognized share-based compensation expense related to non-vested stock options | $ 143,540 | $ 143,540 | $ 143,540 | ||||||
Weighted average period for recognition of compensation expense | 1 year 4 months 9 days | ||||||||
Weighted average remaining contractual term of the outstanding options | 6 years 1 month 24 days | ||||||||
Weighted average remaining contractual term of the exercisable options | 5 years 5 months 1 day | ||||||||
Executive Officer [Member] | |||||||||
Number of stock option shares granted | 1,200,000 | ||||||||
Stock option grand period | 10 years | ||||||||
Stock option exercise per share | $ 0.30 | ||||||||
Non Executive Officer [Member] | |||||||||
Stock option vesting percentage | 25.00% | ||||||||
Value of option granted | $ 234,947 | ||||||||
Risk free interest rate | 2.19% | ||||||||
Stock option expected life | 5 years 6 months | ||||||||
Expected stock volatility | 109.16% | ||||||||
Expected dividend yield | 0.00% | ||||||||
Non Executive Officer [Member] | Tranche One [Member] [Member] | |||||||||
Stock option vesting percentage | 25.00% | ||||||||
Non Executive Officer [Member] | Tranche Two [Member] | |||||||||
Stock option vesting percentage | 25.00% | ||||||||
Non Executive Officer [Member] | Tranche Three [Member] | |||||||||
Stock option vesting percentage | 25.00% | ||||||||
Independent Directors [Member] | |||||||||
Number of stock option shares granted | 200,000 | ||||||||
Stock option grand period | 10 years | ||||||||
Stock option exercise per share | $ 0.485 | ||||||||
Stock option vesting percentage | 20.00% | 80.00% | |||||||
Value of option granted | $ 71,064 | ||||||||
Risk free interest rate | 1.76% | ||||||||
Stock option expected life | 5 years 8 months 2 days | ||||||||
Expected stock volatility | 102.38% | ||||||||
Expected dividend yield | 0.00% | ||||||||
2008 Equity Incentive Plan [Member] | |||||||||
Number of options authorized to purchase shares of common stock | 6,000,000 | ||||||||
2017 Equity Incentive Plan [Member] | |||||||||
Number of options authorized to purchase shares of common stock | 5,000,000 | ||||||||
Shares available for issuance | 4,900,000 | ||||||||
2008 Plan [Member] | |||||||||
Shares available for issuance | 87,835 | 87,835 | 87,835 |
Stock-Based Compensation Expe26
Stock-Based Compensation Expense - Summary of Stock Option Activity (Details) | 9 Months Ended |
Sep. 30, 2017USD ($)$ / sharesshares | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Options Outstanding at beginning of the period | shares | 5,232,165 |
Options Granted | shares | 1,400,000 |
Options Exercised | shares | |
Options Forfeited | shares | (620,000) |
Options Outstanding at end of the period | shares | 6,012,165 |
Options Outstanding Exercisable | shares | 4,752,165 |
Weighted-Average Exercise Price Outstanding at beginning of the period | $ / shares | $ 2.11 |
Weighted-Average Exercise Price Granted | $ / shares | 0.33 |
Weighted-Average Exercise Price Exercised | $ / shares | |
Weighted-Average Exercise Price Forfeited | $ / shares | 0.47 |
Weighted-Average Exercise Price Outstanding at end of the period | $ / shares | 1.86 |
Weighted-Average Exercise Price Outstanding Exercisable | $ / shares | $ 2.28 |
Aggregate Intrinsic Value Outstanding at end of the period | $ | $ 869,500 |
Aggregate Intrinsic Value Outstanding Exercisable | $ | $ 597,870 |
Stock-Based Compensation Expe27
Stock-Based Compensation Expense - Schedule of Share-based Compensation Expense (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Share-based compensation expense included in general and administrative expense | $ 61,025 | $ 37,805 | $ 196,869 | $ 99,006 |
Earnings per share effect of share-based compensation expense – basic and diluted | $ 0 | $ 0 | $ 0 | $ 0 |
Options [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Share-based compensation expense included in general and administrative expense | $ 60,648 | $ 37,805 | $ 196,492 | $ 99,006 |
Warrants [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Share-based compensation expense included in general and administrative expense | $ 377 | $ 377 |
Capital Stock (Details Narrativ
Capital Stock (Details Narrative) - USD ($) | 1 Months Ended | 9 Months Ended | |||||
Sep. 30, 2017 | Jul. 31, 2017 | May 31, 2017 | Jan. 31, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Number of treasury stock shares | 0 | 0 | 892,557 | ||||
Treasury stock value | $ 174,125 | ||||||
Sale of stock shares of common stock value | $ 3,049,515 | ||||||
Number shares sold | 5,522,874 | ||||||
Payments for dividend | $ 36,000 | ||||||
Warrant [Member] | |||||||
Number of warrants issued to purchase common stock | 3,001,680 | 3,001,680 | |||||
Warrants expiration date | Feb. 3, 2018 | ||||||
Warrants exercise price | $ 0.43 | $ 0.43 | |||||
Warrants fair value | $ 194,934 | ||||||
Risk free interest rate | 1.10% | ||||||
Expected life in years | 9 months | ||||||
Expected stock volatility | 92.36% | ||||||
Expected dividend yield | 0.00% | ||||||
Bridge Loan Warrant [Member] | |||||||
Number of warrants issued to purchase common stock | 600,000 | 600,000 | |||||
Warrants expiration date | Jun. 23, 2018 | ||||||
Warrants exercise price | $ 0.50 | $ 0.50 | |||||
Warrants fair value | $ 128,734 | ||||||
Risk free interest rate | 1.20% | ||||||
Expected life in years | 1 year | ||||||
Expected stock volatility | 93.67% | ||||||
Expected dividend yield | 0.00% | ||||||
Consultant Warrants [Member] | |||||||
Number of warrants issued to purchase common stock | 50,000 | 50,000 | |||||
Warrants expiration date | Dec. 31, 2021 | ||||||
Warrants exercise price | $ 0.55 | $ 0.55 | |||||
Warrants fair value | $ 16,132 | ||||||
Risk free interest rate | 1.63% | ||||||
Expected life in years | 4 years 3 months 26 days | ||||||
Expected stock volatility | 99.75% | ||||||
Expected dividend yield | 0.00% | ||||||
Share based compensation | $ 377 | ||||||
Consultant Warrants [Member] | December 6, 2017 [Member] | |||||||
Number of warrants issued to purchase common stock | 12,500 | 12,500 | |||||
Consultant Warrants [Member] | September 6, 2018 [Member] | |||||||
Number of warrants issued to purchase common stock | 12,500 | 12,500 | |||||
Consultant Warrants [Member] | September 6, 2019 [Member] | |||||||
Number of warrants issued to purchase common stock | 12,500 | 12,500 | |||||
Consultant Warrants [Member] | September 6, 2020 [Member] | |||||||
Number of warrants issued to purchase common stock | 12,500 | 12,500 | |||||
12% Series A Convertible Preferred Stock [Member] | |||||||
Number of preferred stock issued | 1,200 | ||||||
Proceeds from issuance of preferred stock | $ 1,200,000 | ||||||
Dividend payable or declared date | Jul. 1, 2017 | ||||||
Preferred stock dividend percentage | 12.00% | ||||||
Debt conversion price per share | $ 0.20 | ||||||
Preferred stock liquidation preference price per share | $ 1,000 | ||||||
12% Series A Convertible Preferred Stock [Member] | Maximum [Member] | |||||||
Premium issuance price decreased percentage | 12.00% | ||||||
12% Series A Convertible Preferred Stock [Member] | Minimum [Member] | |||||||
Premium issuance price decreased percentage | 0.00% | ||||||
Series B Convertible Preferred Stock [Member] | |||||||
Number shares sold | 909.6 | ||||||
Proceeds from issuance of preferred stock | $ 909,600 | ||||||
Preferred stock dividend percentage | 12.00% | ||||||
Series B Preferred Stock [Member] | |||||||
Proceeds from issuance of preferred stock | $ 909,600 | ||||||
Preferred stock dividend percentage | 12.00% | ||||||
Payments for dividend | $ 44,750 | ||||||
Common stock conversion basis | Holder into shares of common stock at a conversion price of $0.36 per share | ||||||
Common stock conversion price per share | $ 0.36 | ||||||
Preferred stock. liquidation preference | $ 1,000 | ||||||
Series B Preferred Stock [Member] | Maximum [Member] | |||||||
Preferred stock premium percentage | 12.00% | ||||||
Series B Preferred Stock [Member] | Minimum [Member] | |||||||
Preferred stock premium percentage | 0.00% | ||||||
Sales Agreement [Member] | WestPark Capital, Inc [Member] | |||||||
Sale of stock shares of common stock value | $ 5,000,000 | ||||||
Commission percentage | 3.00% | ||||||
Reimbursement of expenses connection with offering | $ 25,000 | ||||||
Board of Directors [Member] | |||||||
Number of treasury stock shares | 892,557 | 892,557 | |||||
Treasury stock value | $ 174,125 | $ 174,125 |
Capital Stock - Summary of Warr
Capital Stock - Summary of Warrant Activity (Details) | 9 Months Ended |
Sep. 30, 2017USD ($)$ / sharesshares | |
Equity [Abstract] | |
Warrants Outstanding, beginning | |
Warrants Outstanding, Issued | 3,651,680 |
Warrants Outstanding, Exercised | |
Warrants Outstanding, Expired | |
Warrants Outstanding, ending | 3,651,680 |
Warrants Outstanding, Exercisable | 3,651,680 |
Weighted-Average Exercise Price Outstanding, beginning | $ / shares | |
Weighted-Average Exercise Price, Issued | $ / shares | 0.44 |
Weighted-Average Exercise Price, Exercised | $ / shares | |
Weighted-Average Exercise Price, Expired | $ / shares | |
Weighted-Average Exercise Price Outstanding, ending | $ / shares | $ 0.44 |
Weighted-Average Exercise Price Outstanding, Exercisable | 0.44 |
Aggregate Intrinsic Value Ending | $ | $ 210,118 |
Aggregate Intrinsic Value, Exercisable | $ | $ 210,118 |
Commitments and Contingencies30
Commitments and Contingencies (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 9 Months Ended |
Jan. 31, 2017 | Sep. 30, 2017 | Sep. 30, 2017 | |
Total rental expense | $ 40,100 | $ 89,544 | |
Revenues percentage | 1.00% | ||
Number of option to purchase shares of common stock | 500,000 | 500,000 | |
Employee [Member] | |||
Annual base salary | $ 250,000 | ||
Periodic payment | $ 10,000 |
Commitments and Contingencies -
Commitments and Contingencies - Schedule of Future Payments Under Lease Agreement (Details) | Sep. 30, 2017USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2,017 | $ 20,931 |
2,018 | 125,978 |
2,019 | 128,348 |
2,020 | 130,717 |
2,021 | 133,087 |
2,022 | 112,551 |
Total | $ 651,612 |
Taxes (Details Narrative)
Taxes (Details Narrative) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2017 | Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | ||
Effective tax rate |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | Aug. 14, 2017 | Sep. 30, 2017 |
Number of common stock shares sold in transaction | 5,522,874 | |
Number of sale of stock shares received value | $ 3,049,515 | |
Subsequent Event [Member] | ATM Offering [Member] | ||
Number of common stock shares sold in transaction | 913,702 | |
Number of sale of stock shares received value | $ 467,874 |