Document_And_Entity_Informatio
Document And Entity Information | 3 Months Ended | |
Mar. 31, 2014 | 16-May-14 | |
Document And Entity Information | ' | ' |
Document Type | '10-Q | ' |
Amendment Flag | 'false | ' |
Document Period End Date | 31-Mar-14 | ' |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q1 | ' |
Entity Common Stock, Shares Outstanding | ' | 1,045,603,741 |
Entity Registrant Name | 'WORTHINGTON ENERGY, INC. | ' |
Entity Central Index Key | '0001342643 | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Well-known Seasoned Issuer | 'No | ' |
Entity Voluntary Filers | 'No | ' |
Entity Current Reporting Status | 'Yes | ' |
Entity Filer Category | 'Smaller Reporting Company | ' |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Current Assets: | ' | ' |
Cash and cash equivalents | $7,055 | $166 |
Total Current Assets | 7,055 | 166 |
Property and Equipment, net of accumulated depreciation | 8,777 | 10,123 |
Oil and gas properties, held for recession | 5,698,563 | 5,698,563 |
Other assets | 14,610 | 14,610 |
Total Assets | 5,729,005 | 5,723,462 |
Current Liabilities: | ' | ' |
Accounts payable | 989,286 | 863,702 |
Accrued interest | 1,479,730 | 1,340,122 |
Accrued liabilities | 496,188 | 442,863 |
Payable to Ironridge Global IV, Ltd. | 236,496 | 241,046 |
Payable to former officer | 115,000 | 115,000 |
Unsecured convertible promissory notes payable, net of discount, in default | 1,052,584 | 929,964 |
Secured notes payable, net of discount, in default | 639,012 | 620,512 |
Convertible debentures in default | 2,453,032 | 2,453,032 |
Derivative liabilities | 7,539,089 | 7,908,415 |
Total Current Liabilities | 15,000,417 | 14,914,656 |
Long-Term Liabilities | ' | ' |
Long-term asset retirement obligation | 37,288 | 37,288 |
Total Liabilities | 15,037,705 | 14,951,944 |
Stockholders' Deficiency: | ' | ' |
Common stock, $0.001 par value; 6,490,000,000 shares authorized, 186,908,173 and 47,476,265 shares issued and outstanding, respectively | 186,907 | 47,476 |
Additional paid-in capital | 26,394,378 | 26,435,670 |
Deficit accumulated during the exploration stage | -35,890,985 | -35,712,628 |
Total Stockholders' Deficiency | -9,308,700 | -9,228,482 |
Total Liabilities and Stockholders' Deficiency | 5,729,005 | 5,723,462 |
Undesignated preferred stock [Member] | ' | ' |
Stockholders' Deficiency: | ' | ' |
Preferred stock | 0 | 0 |
Series A Preferred Stock [Member] | ' | ' |
Stockholders' Deficiency: | ' | ' |
Preferred stock | $1,000 | $1,000 |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEETS [Parenthetical] (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Common stock, par value (in dollars per share) | $0.00 | $0.00 |
Common stock, shares authorized | 6,490,000,000 | 6,490,000,000 |
Common stock, shares issued | 186,908,173 | 47,476,265 |
Common stock, shares outstanding | 186,908,173 | 47,476,265 |
Undesignated preferred stock [Member] | ' | ' |
Preferred stock, par value (in dollars per share) | $0.00 | $0.00 |
Preferred stock, shares authorized | 9,000,000 | 9,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Series A Preferred Stock [Member] | ' | ' |
Preferred stock, par value (in dollars per share) | $0.00 | $0.00 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 1,000,000 | 1,000,000 |
Preferred stock, shares outstanding | 1,000,000 | 1,000,000 |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 3 Months Ended | 117 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | |
Income Statement [Abstract] | ' | ' | ' |
Oil and gas revenues, net | $0 | $0 | $370,437 |
Costs and Operating Expenses | ' | ' | ' |
Lease operating expenses | 0 | 0 | 164,381 |
Impairment loss on oil and gas properties | 0 | 11,623 | 5,196,701 |
Accretion of asset retirement obligations | 0 | 0 | 8,982 |
General and administrative expense (including shares based compensation of $0, $72,988, and $8,198,056, respectively) | 323,567 | 441,855 | 16,281,806 |
Total costs and operating expenses | 323,567 | 453,478 | 21,651,870 |
Loss from operations | -323,567 | -453,478 | -21,281,433 |
Other income (expense) | ' | ' | ' |
Interest income | 0 | 0 | 63,982 |
Change in fair value of derviative liabilities | 703,382 | 163,969 | -2,513,771 |
Gain on transfer of common stock from Bayshore Exploration, L. L. C. | 0 | 0 | 24,000 |
Interest expense | -145,907 | -164,987 | -2,391,440 |
Amortization of discount on convertible debentures and notes and other debt | -412,265 | -677,617 | -8,070,700 |
Interest expense - Ironridge Global IV, Ltd | 0 | 0 | -594,935 |
Amortization of deferred financing costs | 0 | 0 | -926,688 |
Total other income (expense) | 145,210 | -678,635 | -14,409,552 |
Net loss | ($178,357) | ($1,132,113) | ($35,690,985) |
Basic and Diluted Loss Per Common Share | $0 | ($0.47) | ' |
Basic and Diluted Weighted-Average Common Shares Outstanding | 81,770,613 | 2,392,656 | ' |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS [Parenthetical] (USD $) | 3 Months Ended | 117 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | |
Income Statement [Abstract] | ' | ' | ' |
Share-based Compensation | $0 | $72,988 | $8,198,056 |
CONDENSED_CONSOLIDATED_STATEME2
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY (DEFICIENCY) (USD $) | Series A Preferred Stock | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit during Development Stage [Member] | Total |
Beginning balance, amount at Dec. 31, 2013 | $1,000 | $47,476 | $26,435,670 | ($35,712,628) | ($9,228,482) |
Beginning balance, shares at Dec. 31, 2013 | 1,000,000 | 47,476,293 | ' | ' | ' |
Issuance of common stock upon conversion of notes payable and accrued interest, shares issued | ' | 130,761,577 | ' | ' | 130,751,577 |
Issuance of common stock upon conversion of notes payable and accrued interest, amount | ' | 130,761 | -42,672 | ' | ' |
Issuance of common stock to Ironridge Global IV, Ltd. in settlement of liabilities, stock issued | ' | 5,000,000 | ' | ' | 5,000,000 |
Issuance of common stock to Ironridge Global IV, Ltd. in settlement of liabilities, amount | ' | 5,000 | -450 | ' | ' |
Issuance of common stock to La Jolla Cove Investors, Inc. upon conversion of convertible debentures, shares issued | ' | 3,666,666 | ' | ' | 3,666,666 |
Issuance of common stock to La Jolla Cove Investors, Inc. upon conversion of convertible debentures, amount | ' | 3,667 | -3,167 | ' | ' |
Issuance of common stock to La Jolla Cove Investors, Inc. under an equity investment agreement, shares issued | ' | 3,637 | ' | ' | ' |
Issuance of common stock to La Jolla Cove Investors, Inc. under an equity investment agreement, amount | ' | 3 | 4,997 | ' | ' |
Net loss | ' | ' | ' | -178,357 | -178,357 |
Ending balance, amount at Mar. 31, 2014 | $1,000 | $186,907 | $26,394,378 | ($35,890,985) | ($9,308,700) |
Ending balance, shares at Mar. 31, 2014 | 1,000,000 | 186,908,173 | ' | ' | ' |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 3 Months Ended | 117 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | |
Cash Flows From Operating Activities | ' | ' | ' |
Net loss | ($178,357) | ($1,132,113) | ($35,690,985) |
Adjustments to reconcile net loss to net cash used in operating activities: | ' | ' | ' |
Impairment loss on oil and gas properties | 0 | 11,623 | 5,196,701 |
Share-based compensation for services | 0 | 72,988 | 8,198,056 |
Amortization of deferred financing costs and discount on convertible debentures and notes and other debt | 412,265 | 677,617 | 8,997,388 |
Interest expense - Ironridge Global IV, Ltd. | 0 | 0 | 594,935 |
Gain on transfer of common stock from Bayshore Exploration, L.L.C. | 0 | ' | -24,000 |
Accretion of asset retirement obligation | 0 | 0 | 8,982 |
Depreciation expense | 1,346 | 1,274 | 18,005 |
Change in fair value of derivative liabilities | -703,382 | -163,969 | 2,513,771 |
Change in assets and liabilities: | ' | ' | ' |
Prepaid expense and other current assets | 0 | 33,588 | 16,818 |
Other assets | 0 | 0 | 85,390 |
Accounts payable and accrued liabilities | 321,017 | 202,032 | 5,507,212 |
Payable to Ironridge Global IV, Ltd | 0 | 0 | 173,018 |
Net Cash Used In Operating Activities | -147,111 | -296,960 | -4,404,709 |
Cash Flows From Investing Activities | ' | ' | ' |
Proceeds from the sale of oil and gas properties | 0 | 0 | 500,000 |
Acquisition of oil and gas properties | 0 | 0 | -3,658,565 |
Earnest money deposit | 0 | 0 | -100,000 |
Purchase of property and equipment | 0 | 0 | -26,782 |
Net Cash Used in Investing Activities | 0 | 0 | -3,285,347 |
Cash Flows From Financing Activities | ' | ' | ' |
Proceeds from the issuance of common stock and warrants, net of registration and offering costs | 5,000 | 108,000 | 3,385,570 |
Proceeds from issuance of convertible notes and other debt, and related beneficial conversion features and common stock, less amount held in attorney's trust accounts | 149,000 | 188,000 | 3,212,391 |
Proceeds from issuance of convertible debentures | 0 | 0 | 2,550,000 |
Proceeds from related parties for issuance of secured convertible notes and other debt, and related beneficial conversion features and common stock | 0 | 0 | 180,000 |
Payment of deferred financing costs | 0 | 0 | -506,000 |
Payment of payable to Bayshore Exploration, L.L.C. | 0 | 0 | -489,600 |
Payment of principal on notes payable stockholder | 0 | 0 | -325,000 |
Payment on principal on notes payable | 0 | 0 | -410,250 |
Net Cash Provided By Financing Activities | 154,000 | 296,000 | 7,697,111 |
Net Increase (Decrease) In Cash and Cash Equivalents | 6,889 | -960 | 7,055 |
Cash and Cash Equivalents At Beginning Of Period | 166 | 8,065 | ' |
Cash and Cash Equivalents At End Of Period | 7,055 | 7,105 | 7,055 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ' | ' | ' |
Cash paid during the period for interest | 0 | 13,650 | ' |
Cash paid during the period for taxes | 0 | 0 | ' |
NON CASH INVESTING AND FINANCING ACTIVITIES | ' | ' | ' |
Derivative liabilities recorded as valuation discounts and interest | 334,056 | 0 | ' |
Common stock issued for conversion of notes and accrued interest | 88,589 | 1,380,277 | ' |
Common stock issued for Ironridge Global IV Ltd settement | 4,550 | 1,180,053 | ' |
Common and preferred stock issued for executive compensation | 0 | 25,000 | ' |
Cancelation of common stock in connection with Black Cat Exploration & Production, LLC settlement | 0 | 54,000 | ' |
Unsecured convertible promissory notes increase due to default | $101,615 | $0 | ' |
1_Organization_and_Significant
1. Organization and Significant Accounting Policies | 3 Months Ended | ||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||
Accounting Policies [Abstract] | ' | ||||||||||||||||
Basis of Presentation and Significant Accounting Policies | ' | ||||||||||||||||
Organization – Paxton Energy, Inc. was organized under the laws of the State of Nevada on June 30, 2004. On January 27, 2012, Paxton Energy, Inc. changed its name to Worthington Energy, Inc. (the “Company”). On October 12, 2012, the Company’s stockholders approved a 1-for-10 reverse common stock split. In addition, on October 2, 2013 the Company effected a 1-for-50 reverse common stock split. All references in these consolidated financial statements and related notes to numbers of shares of common stock, prices per share of common stock, and weighted average number of shares of common stock outstanding prior to the reverse stock splits have been adjusted to reflect the reverse stock splits on a retroactive basis for all periods presented, unless otherwise noted. | |||||||||||||||||
Nature of Operations – As further described in Note 2 to these consolidated financial statements, the Company commenced acquiring working interests in oil and gas properties in June 2005. We are in the business of acquiring, exploring and developing oil and gas-related assets. The Company is considered to be in the exploration stage due to the lack of significant revenues. | |||||||||||||||||
Condensed Interim Consolidated Financial Statements – The accompanying unaudited condensed consolidated financial statements of 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. Accordingly, these condensed consolidated financial statements do not include all of the information and disclosures required by generally accepted accounting principles for complete financial statements. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to fairly present the Company’s consolidated financial position as of March 31, 2014, and its consolidated results of operations and cash flows for the three months ended March 31, 2014 and 2013, and for the period from June 30, 2004 (date of inception), through March 31, 2014. The results of operations for the three months ended March 31, 2014, may not be indicative of the results that may be expected for the year ending December 31, 2014. The condensed consolidated financial statements included in this report on Form 10-Q should be read in conjunction with the audited financial statements of Worthington Energy, Inc., and the notes thereto for the year ended December 31, 2013, included in its annual report on Form 10-K filed with the SEC on April 17, 2013. | |||||||||||||||||
Going Concern – The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has not had significant revenue and is still considered to be in the exploration stage. The Company incurred losses of $178,357 for the three months ended March 31, 2014 and $3,322,257 for year ended December 31, 2013. The Company also used cash of $147,111 in its operating activities during the three months ended March 31, 2014 and $228,024 during the year ended December 31, 2013, and a significant portion of the Company’s debt is in default. At March 31, 2014, the Company has a working capital deficit of $14,993,362 and a stockholders’ deficiency of $9,308,700. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern. Also, the Company’s independent registered public accounting firm, in its report on the Company’s December 31, 2013 financial statements, has raised substantial doubt about the Company’s ability to continue as a going concern. | |||||||||||||||||
The Company is currently seeking debt and equity financing to fund potential acquisitions and other expenditures, although it does not have any contracts or commitments for either at this time. The Company will have to raise additional funds to continue operations and, while it has been successful in doing so in the past, there can be no assurance that it will be able to do so in the future. The Company’s continuation as a going concern is dependent upon its ability to obtain necessary additional funds to continue operations and the attainment of profitable operations. The Company hopes that working capital will become available via financing activities currently contemplated with regards to its intended operating activities. There can be no assurance that such funds, if available, can be obtained, or if obtained, on terms reasonable to the Company. The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern and do not include any adjustments that may result from the outcome of this uncertainty. | |||||||||||||||||
On May 6, 2011, the Company completed the acquisition of certain oil and gas properties located in the Vermillion 179 tract in the Gulf of Mexico, offshore from Louisiana. In December 2011, the seller of these oil and gas properties filed a lawsuit seeking to rescind the asset sale transaction. Pursuant to a Release and Settlement Agreement dated February 12, 2014 the Company agreed to convey its oil and gas properties for extinguishment of underlying obligations. The Company will account for the transaction in 2014 upon final settlement as an exchange of the oil and gas asset for the debt and an extinguishment of the related derivative liability (see Notes 2, 5, 6 and 11). | |||||||||||||||||
Principles of Consolidation – The accompanying consolidated financial statements present the financial position, results of operations, and cash flows of Worthington Energy, Inc. and of PaxAcq Inc., a wholly-owned subsidiary. Intercompany accounts and transactions have been eliminated in consolidation. | |||||||||||||||||
Use of Estimates – In preparing these consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated financial statements and the reported amount of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Significant estimates and assumptions included in the Company’s consolidated financial statements relate to the valuation of long-lived assets, accrued other liabilities, and valuation assumptions related to share-based payments and derivative liability. | |||||||||||||||||
Oil and Gas Properties – The Company follows the full cost method of accounting for oil and gas properties. Under this method, all costs associated with acquisition, exploration, and development of oil and gas reserves, including directly related overhead costs and related asset retirement costs, are capitalized. Costs capitalized include acquisition costs, geological and geophysical expenditures, lease rentals on undeveloped properties, and costs of drilling and equipping productive and nonproductive wells. Drilling costs include directly related overhead costs. Capitalized costs are categorized either as being subject to amortization or not subject to amortization. | |||||||||||||||||
All capitalized costs of oil and gas properties, including the estimated future costs to develop proved reserves, will be amortized, on the unit-of-production method using estimates of proved reserves. At March 31, 2014 and December 31, 2013, there were no capitalized costs subject to amortization. Investments in unproved properties and major development projects are not amortized until proved reserves associated with the projects can be determined. If the results of an assessment indicate that the properties are impaired, the amount of the impairment is charged to operations. The Company has not yet obtained a reserve report on its producing properties in Texas because the properties are considered to be in the exploration stage, management has not completed an evaluation of the properties, and the properties have had limited oil and gas exploration and production. | |||||||||||||||||
In addition, properties subject to amortization will be subject to a “ceiling test,” which basically limits such costs to the aggregate of the “estimated present value,” based on the projected future net revenues from proved reserves, discounted at 10% per annum to present value of future net revenues from proved reserves, based on current economic and operating conditions, plus the lower of cost or fair market value of unproved properties. | |||||||||||||||||
Sales of proved and unproved properties are accounted for as adjustments of capitalized costs with no gain or loss recognized, unless such adjustments would significantly alter the relationship between capitalized costs and proved reserves of oil and gas, in which case the gain or loss is recognized in the results of operations. Abandonments of properties are accounted for as adjustments of capitalized costs with no loss recognized. | |||||||||||||||||
Revenue Recognition – All revenues are derived from the sale of produced crude oil and natural gas. Revenue and related production taxes and lease operating expenses are recorded in the month the product is delivered to the purchaser. Normally, payment for the revenue, net of related taxes and lease operating expenses, is received from the operator of the well approximately 45 days after the month of delivery. | |||||||||||||||||
Stock-Based Compensation – The Company recognizes compensation expense for stock-based awards to employees expected to vest on a straight-line basis over the requisite service period of the award based on their grant date fair value. The Company estimates the fair value of stock options using a Black-Scholes option pricing model which requires management to make estimates for certain assumptions regarding risk-free interest rate, expected life of options, expected volatility of stock and expected dividend yield of stock. | |||||||||||||||||
The Company accounts for equity instruments issued in exchange for the receipt of goods or services from other than employees and non-employee directors in accordance with Accounting Standards Codification (ASC) 505-50, Equity-Based Payments to Non-Employees. Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration for other than employee services is determined on the earlier of a performance commitment or completion of performance by the provider of goods or services. The fair value of the equity instrument is charged directly to share-based compensation expense and credited to paid-in capital. | |||||||||||||||||
Basic and Diluted Loss per Common Share – Basic loss per common share amounts are computed by dividing net loss by the weighted-average number of shares of common stock outstanding during each period. Diluted loss per share amounts are computed assuming the issuance of common stock for potentially dilutive common stock equivalents. All outstanding stock options, warrants, stock awards, convertible promissory notes, and other obligations to be satisfied with the issuance of common stock are currently antidilutive due to our net loss and have been excluded from the diluted loss per share calculations. As such, options, warrants, and stock awards to acquire 2,493,270 and 279,794 shares of common stock outstanding as of March 31, 2014 and 2013, respectively, and promissory notes and debentures convertible into an aggregate of 5,653,502,228 and 28,096,258 shares of common stock at March 31, 2014 and 2013, respectively were excluded in the computation of diluted loss per share at March 31, 2014 and 2013 as their effect would have been anti-dilutive. | |||||||||||||||||
Fair Values of Financial Instruments – The carrying amounts reported in the consolidated balance sheets for cash, accounts payable, accrued liabilities, payable to Ironridge Global IV, Ltd., and payable to former officer approximate fair value because of the immediate or short-term maturity of these financial instruments. The carrying amounts reported for unsecured convertible promissory notes payable, secured notes payable, and convertible debentures approximate fair value because the underlying instruments are at interest rates which approximate current market rates. The fair value of derivative liabilities are estimated based on a probability weighted average Black Scholes-Merton pricing model. | |||||||||||||||||
For assets and liabilities measured at fair value, the Company uses the following hierarchy of inputs: | |||||||||||||||||
● | Level one – Quoted market prices in active markets for identical assets or liabilities; | ||||||||||||||||
● | Level two – Inputs other than level one inputs that are either directly or indirectly observable; and | ||||||||||||||||
● | Level three – Unobservable inputs developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions that a market participant would use. | ||||||||||||||||
Liabilities measured at fair value on a recurring basis at March 31, 2014 are summarized as follows: | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
Derivative liability - conversion feature of debentures and related warrants | $ | – | $ | 5,259,899 | $ | – | $ | 5,259,890 | |||||||||
Derivative liability - embedded conversion feature and reset provisions of notes | $ | – | $ | 2,279,190 | $ | – | $ | 2,279,190 | |||||||||
Liabilities measured at fair value on a recurring basis at December 31, 2013 are summarized as follows: | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
Derivative liability - conversion feature of debentures and related warrants | $ | – | $ | 5,467,223 | $ | – | $ | 5,467,223 | |||||||||
Derivative liability - embedded conversion feature and reset provisions of notes | $ | – | $ | 2,441,192 | $ | – | $ | 2,441,192 | |||||||||
Derivative Financial Instruments – The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. For stock-based derivative financial instruments, the Company uses a probability weighted average Black-Scholes-Merton pricing model to value the derivative instruments. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date. | |||||||||||||||||
Recently Issued Accounting Statements – In April 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-08, "Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360)." ASU 2014-08 amends the requirements for reporting discontinued operations and requires additional disclosures about discontinued operations. Under the new guidance, only disposals representing a strategic shift in operations or that have a major effect on the Company's operations and financial results should be presented as discontinued operations. This new accounting guidance is effective for annual periods beginning after December 15, 2014. The Company is currently evaluating the impact of adopting ASU 2014-08 on the Company's results of operations or financial condition. | |||||||||||||||||
On February 26, 2014, the FASB affirmed changes in a November 2013 Exposure Draft, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, and directed the staff to draft a final Accounting Standards Update for vote by the FASB. This is intended to reduce the cost and complexity in financial reporting by eliminating inception-to-date information from the financial statements of development stage entities. | |||||||||||||||||
Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements. |
2_Oil_and_Gas_Properties
2. Oil and Gas Properties | 3 Months Ended |
Mar. 31, 2014 | |
Oil and Gas Property [Abstract] | ' |
Oil and Gas Properties [Text Block] | ' |
On May 6, 2011, the Company completed its acquisition of certain assets pursuant to an Asset Sale Agreement (the Montecito Agreement) with Montecito Offshore, L.L.C. (Montecito). The assets consist of certain oil and gas leases located in the Vermillion 179 tract, which is in the shallow waters of the Gulf of Mexico offshore from Louisiana. Pursuant to the terms of the Montecito Agreement, as amended, Montecito agreed to sell the Company a 70% leasehold working interest, with a net revenue interest of 51.975%, of certain oil and gas leases owned by Montecito, for $1,500,000 in cash, a subordinated promissory note in the amount of $500,000, and 30,000 shares of common stock. The leasehold interest has been capitalized in the amount of $5,698,563, representing $2,000,000 in cash and promissory note, $3,675,000 for the common stock based on a closing price of $2.45 per share on the closing date, and $23,563 in acquisition costs. No drilling or production has commenced as of March 31, 2014. Consequently, the oil and gas properties have not been subjected to amortization of the full cost pool. | |
In December 2011, Montecito filed a lawsuit in the Civil District Court for the Parish of Orleans of the State of Louisiana against the Company by filing a Petition to Rescind Sale. In this action, Montecito is seeking to rescind the asset sale transaction, as described in the previous paragraph. Pursuant to a Release and Settlement Agreement dated February 12, 2014 that has been signed and notarized by all parties involved, the matter has been settled. The operative terms of the settlement were recited into the record in open court on the day of trial. The result is that a judicially recognized compromise has been perfected under Louisiana law, which has the effect of extinguishing the underlying obligations the compromise is premised on. The Company’s obligations expected to be extinguished include a secured note payable in the amount of $500,000 to Montecito Offshore, LLC (see Note 5) and convertible debentures of $2,453,032 (see Note 6). However, recording the conveyance of the lease interest and cancelling mortgages and UCC-1’s by the debt holders has not occurred. The debt holders have delayed in performing these obligations because they want to first undertake a degree of internal restructuring before accepting the royalty interest they negotiated to receive as a part of the settlement. The debt holders have indicated that, after they have formed an entity to receive the royalty interest, they will cancel the outstanding mortgages and UCC-1’s along with recording the documents conveying the various interests in the public records. The Company will account for the transaction in 2014 upon final settlement as an exchange of the oil and gas asset for the debt and an extinguishment of the related derivative liability (see Note 11). |
3_Payable_to_Ironridge_Global_
3. Payable to Ironridge Global IV, Ltd. | 3 Months Ended |
Mar. 31, 2014 | |
Related Party Transactions [Abstract] | ' |
Payable To Ironridge Global Ltd [Text Block] | ' |
In March 2012, Ironridge Global IV, Ltd. (“Ironridge”) filed a complaint against the Company for the payment of $1,388,407 in outstanding accounts payable, accrued compensation, accrued interest, and notes payable of the Company (the “Claim Amount”) that Ironridge had purchased from various creditors of the Company. The lawsuit was filed in the Superior Court of the State of California for the County of Los Angeles Central District, and the case was Ironridge Global IV, Ltd. v. Worthington Energy, Inc., Case No. BC 480184. On March 22, 2012, the court approved an Order for Approval of Stipulation for Settlement of Claims (the "Order"). | |
The Order provided for the immediate issuance by the Company of 20,300 shares of common stock (the “Initial Shares”) to Ironridge towards settlement of the Claim Amount. The Order also provided for an adjustment in the total number of shares which may be issuable to Ironridge based on a calculation period for the transaction, defined as that number of consecutive trading days following the date on which the Initial Shares were issued (the "Issuance Date") required for the aggregate trading volume of the common stock, as reported by Bloomberg LP, to exceed $4.2 million (the "Calculation Period"). Pursuant to the Order, Ironridge would retain 200 shares of the Company's common stock as a fee, plus that number of shares (the "Final Amount") with an aggregate value equal to (a) the $1,358,135 plus reasonable attorney fees through the end of the Calculation Period, (b) divided by 70% of the following: the volume weighted average price ("VWAP") of the Common Stock over the length of the Calculation Period, as reported by Bloomberg, not to exceed the arithmetic average of the individual daily VWAPs of any five trading days during the Calculation Period. The Company has calculated that the Calculation Period ended during the year ended December 31, 2012 and calculated that the Final Amount to be issued under the Order is 856,291 shares of common stock. Additionally, during the year ended December 31, 2012 when the Final Amount was determined, the Company calculated the fair value of the original liability to Ironridge Global IV, Ltd to be $1,981,312, that amount which when discounted to 70% of the VWAP and multiplied by the Final Amount, would equal $1,358,135 plus reasonable attorney fees. In so doing, the Company recognized an expense for the excess of the fair value of the resultant liability to Ironridge Global IV, Ltd. in excess of the original carrying amount of the liabilities acquired by Ironridge and adjusted the liability to Ironridge Global IV, Ltd. for the fair value adjustment. | |
Since the issuance of the Initial Shares, the Company issued an additional 194,200 shares of common stock during the year ended December 31, 2012 (for an aggregate value of $531,689) which has been accounted for as the reduction of a proportionate amount of the calculated fair value of the original liability to Ironridge. During the year ended December 31, 2013 the Company issued an additional 6,550,000 shares of common stock to Ironridge with an aggregate value of $1,421,595. At that time, the Company believed it had a remaining obligation to Ironridge of $68,028. However, on February 24, 2014, Ironridge claimed that the Company’s failure to comply with prior order and stipulation has caused them harm and claimed that it was still owed $241,046. A judge awarded Ironridge a third order enforcing a prior order for approval of stipulation for settlement claim by requiring the Company to reserve 1,095,950,732 shares of the Company’s common stock until the balance of the claim is paid. On February 26, 2014, the Company issued to Ironridge 5,000,000 shares of common stock valued at $4,550 and at March 31, 2014, the balance due to Ironridge was $236,496. |
4_Unsecured_Convertible_Promis
4. Unsecured Convertible Promissory Notes Payable | 3 Months Ended | ||||||||||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||||||||||
Convertible Notes Payable [Abstract] | ' | ||||||||||||||||||||||||
Unsecured Convertible Promissory Notes Payable | ' | ||||||||||||||||||||||||
A summary of unsecured convertible promissory notes at March 31, 2014 and December 31, 2013 is as follows: | |||||||||||||||||||||||||
31-Mar-14 | 31-Dec-13 | ||||||||||||||||||||||||
Unpaid | Unamortized | Carrying | Unpaid | Unamortized | Carrying | ||||||||||||||||||||
Principal | Discount | Value | Principal | Discount | Value | ||||||||||||||||||||
Asher Enterprises, Inc. | $ | 183,170 | $ | 56,511 | $ | 126,659 | $ | 111,900 | $ | 7,473 | $ | 104,427 | |||||||||||||
GEL Properties, LLC | 149,000 | 2,534 | 146,466 | 149,000 | 13,486 | 135,514 | |||||||||||||||||||
Prolific Group, LLC | 79,900 | – | 79,900 | 79,900 | 11,849 | 68,051 | |||||||||||||||||||
Haverstock Master Fund, LTD and Common Stock, LLC | 328,976 | – | 328,976 | 289,906 | – | 289,906 | |||||||||||||||||||
Redwood Management LLC | 205,229 | 45,833 | 159,396 | – | – | – | |||||||||||||||||||
AGS Capital Group | 25,000 | 19,792 | 5,208 | – | – | – | |||||||||||||||||||
Charles Volk (related party) | 125,000 | 22,346 | 102,654 | 125,000 | 53,596 | 71,404 | |||||||||||||||||||
Various Other Individuals and Entities | 108,257 | 4,932 | 103,325 | 285,000 | 24,338 | 260,662 | |||||||||||||||||||
$ | 1,204,531 | $ | 151,947 | $ | 1,052,584 | $ | 1,040,705 | $ | 110,742 | $ | 929,964 | ||||||||||||||
The unsecured convertible promissory notes payable are generally due within one year from the date of issuance bear interest at rates ranging from 8% to 12% and are convertible into shares of our common stock at discounts ranging from 30% to 70%. Most of our unsecured convertible promissory notes payable are in default at March 31, 2014. Additionally, the notes have generally contained a reset provision that provides that if the Company issues or sells any shares of common stock for consideration per share less than the conversion price of the notes, that the conversion price will be reduced to the amount of consideration per share of the stock issuance. | |||||||||||||||||||||||||
During the three months ended March 31, 2014, the Company received proceeds of $149,000 pursuant to unsecured convertible promissory notes to various entities. The convertible promissory notes bear interest from 8% to 12% per annum, are convertible into shares of our common stock at discounts ranging from 49% to 70%, contain reset provisions, and are due from three months to 9 months after the issuance date. Under authoritative guidance of the FASB, due to the variable conversion prices and reset provisions, the Company accounted for the conversion features of these notes as instruments which do not have fixed settlement provisions and are deemed to be derivative instruments (see Note 7). The Company determined the aggregate fair value of the derivative liabilities related to these notes was $334,056, of which $149,000 was recorded as note discount (up to the face amount of the notes) to be amortized over the term of the related notes, and the balance of $185,056 is recorded as current period interest expense. | |||||||||||||||||||||||||
During the three months ended March 31, 2014, the Company increased existing notes by $100,415 to reflect an increase in the principal amount of certain notes due to an event of default occurring. This was recorded in amortization of discount on convertible notes. | |||||||||||||||||||||||||
During the three months ended March 31, 2014 and 2013, the Company recognized interest expense from the amortization of discounts in the amount of $107,794 and $329,635, respectively. | |||||||||||||||||||||||||
The change in unsecured convertible promissory notes payable from December 31, 2013 to March 31, 2014 is as follows: | |||||||||||||||||||||||||
Balance at December 31, 2013 | $ | 929,964 | |||||||||||||||||||||||
Issuance of new notes | 149,000 | ||||||||||||||||||||||||
Penalties on existing notes | 100,415 | ||||||||||||||||||||||||
Converted into common stock | (85,589 | ) | |||||||||||||||||||||||
Discount on new notes | (149,000 | ) | |||||||||||||||||||||||
Amortization of discounts | 107,794 | ||||||||||||||||||||||||
Balance at March 31, 2014 | $ | 1,052,584 | |||||||||||||||||||||||
5_Secured_Notes_Payable
5. Secured Notes Payable | 3 Months Ended | ||||||||||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||||||||||
Debt Disclosure [Abstract] | ' | ||||||||||||||||||||||||
Secured Notes Payable | ' | ||||||||||||||||||||||||
A summary of secured notes payable at March 31, 2014 and December 31, 2013: | |||||||||||||||||||||||||
31-Mar-14 | 31-Dec-13 | ||||||||||||||||||||||||
Unpaid | Unamortized | Carrying | Unpaid | Unamortized | Carrying | ||||||||||||||||||||
Principal | Discount | Value | Principal | Discount | Value | ||||||||||||||||||||
Montecito Offshore, LLC | $ | 500,000 | $ | – | $ | 500,000 | $ | 500,000 | $ | – | $ | 500,000 | |||||||||||||
Bridge Loan Settlement Note | 40,000 | – | 40,000 | 40,000 | – | 40,000 | |||||||||||||||||||
What Happened LLC | 21,575 | – | 21,575 | 21,575 | – | 21,575 | |||||||||||||||||||
La Jolla Cove Investors, Inc. | 83,440 | 6,003 | 77,437 | 83,940 | 25,003 | 58,937 | |||||||||||||||||||
$ | 645,015 | $ | 6,003 | $ | 639,012 | $ | 645,515 | $ | 25,003 | $ | 620,512 | ||||||||||||||
The secured notes payable are generally secured with oil and gas properties, bear interest at rates ranging from 4.75% to 9% and some are convertible into shares of our common stock at discount of 93%. Our secured notes payable are in default at March 31, 2014. The Montecito Offshore LLC note is secured by a second lien mortgage, subordinated to the convertible debentures discussed below. See discussion below about the Release and Settlement Agreement dated February 12, 2014. Certain notes contained a reset provision that provides that if the Company issues or sells any shares of common stock for consideration per share less than the conversion price of the notes, that the conversion price will be reduced to the amount of consideration per share of the stock issuance. | |||||||||||||||||||||||||
A roll forward of the secured notes payable from December 31, 2013 to March 31, 2014 is as follows: | |||||||||||||||||||||||||
Balance at December 31, 2013 | $ | 620,512 | |||||||||||||||||||||||
Converted into common stock | (500 | ) | |||||||||||||||||||||||
Amortization of discounts | 19,000 | ||||||||||||||||||||||||
Balance at March 31, 2014 | $ | 639,012 | |||||||||||||||||||||||
Montecito Offshore, L.L.C. (Vermillion 179) | |||||||||||||||||||||||||
As further described in Note 2, on May 6, 2011, the Company acquired a leasehold interest in oil and gas properties from Montecito Offshore, L.L.C. (Montecito). Pursuant to the terms of the agreement, as amended, the Company issued a subordinated promissory note in the amount of $500,000 as partial consideration for the purchase. The note is secured by a second lien mortgage, subordinated to the convertible debentures issued in May 2011, as further described in Note 7 to these consolidated financial statements. The note bears interest at 9% per annum. The note and unpaid interest were originally due ninety days after the date of the promissory note, but the due date was extended to August 15, 2011. The note came due on August 15, 2011 and has not been paid. The Company’s failure to repay the note when due constitutes an event of default under the note. Upon the occurrence of an event of default, the note holder has the right to exercise its rights under the security agreement associated with the note. These rights include, among other things, the right to foreclose on the collateral if necessary. The Company is exploring alternatives for a partial sale, a farm-in, or the refinancing of the Vermillion 179 tract in order to pay off this note, with accrued interest. | |||||||||||||||||||||||||
In December 2011, Montecito filed a lawsuit in the Civil District Court for the Parish of Orleans of the State of Louisiana against the Company by filing a Petition to Rescind Sale. In this action, Montecito is seeking to rescind the asset sale transaction, as described in the previous paragraph. The Company has entered into settlement discussions and has reached a preliminary settlement, but final documents remain to be signed as of the date of this Report. |
6_Convertible_Debentures_and_R
6. Convertible Debentures and Related Warrants (In Default) | 3 Months Ended |
Mar. 31, 2014 | |
Debt Disclosure [Abstract] | ' |
Convertible Debentures and Related Warrants | ' |
In May 2011 the Company sold units to certain investors for aggregate cash proceeds of $2,550,000 at a price of $30,000 per unit. Each unit consisted of a secured convertible debenture in the principal amount of $30,000 and a warrant to purchase 400 shares of the Company’s common stock. The convertible debentures were issued in three tranches, matured one year after issuance on May 5, 2012, May 13, 2012, and May 19, 2012, and originally accrued interest at 9% per annum. The debentures were convertible at the holder’s option at any time into common stock at a conversion price originally set at $150.00 per share. The debentures will automatically be redeemed with a 30% premium upon a Change of Control or Listing Event (each as defined in the convertible debenture). Interest on the debentures is payable quarterly in arrears in cash. The Company is in default under the convertible debentures because it has not made the interest payments that were due beginning July 1, 2011 and has not repaid the principal which matured on May 19, 2012. As such, the Company is in default on all unpaid principal and total accrued interest of $1,233,496 as of March 31, 2014. The default interest rate is 18% per annum. Interest on the convertible debentures has been accrued at 18% in the accompanying consolidated financial statements commencing on July 1, 2011, the date when the Company first defaulted on an interest payment. To date, such default has not been either cured by the Company or waived by the holders of the convertible debentures. Upon the occurrence of an event of default, the debenture holders have the right to exercise their rights under the Mineral Mortgage associated with the debentures. These rights include, among other things, the right to foreclose on the collateral if necessary. The Company is currently working to resolve the default on these debentures. Pursuant to a Release and Settlement Agreement dated February 12, 2014 that has been signed and notarized by all parties involved, the matter has been settled. The operative terms of the settlement were recited into the record in open court on the day of trial. The result is that a judicially recognized compromise has been perfected under Louisiana law, which has the effect of extinguishing the underlying obligations the compromise is premised on. The Company’s obligations expected to be extinguished include a secured note payable in the amount of $500,000 to Montecito Offshore, LLC (see Note 5) and the convertible debentures. However, recording the conveyance of the lease interest and cancelling mortgages and UCC-1’s by the debt holders has not occurred. The debt holders have delayed in performing these obligations because they want to first undertake a degree of internal restructuring before accepting the royalty interest they negotiated to receive as a part of the settlement. The debt holders have indicated that, after they have formed an entity to receive the royalty interest, they will cancel the outstanding mortgages and UCC-1’s along with recording the documents conveying the various interests in the public records (See Notes 2 and 11). | |
The debentures contain price ratchet anti-dilution protection. In addition, the conversion price shall be adjusted if the conversion price of securities in a subsequent offering by the Company is adjusted pursuant to a make good provision. The shares of common stock issuable upon conversion of the debentures are entitled to piggyback registration rights. The Company has determined that this anti-dilution reset provision caused the conversion feature to be bifurcated from the debentures, treated as a derivative liability, and accounted for as a valuation discount at its fair value. Upon issuance, the Company recorded a corresponding discount to the convertible debentures. | |
The carrying amount of the convertible debentures is $2,453,032 at March 31, 2014 and December 31, 2013. | |
Pursuant to the debentures and warrants, no holder may convert or exercise such holder’s debenture or warrant if such conversion or exercise would result in the holder beneficially owning in excess of 4.99% of our then issued and outstanding common stock. A holder may, however, increase or decrease this limitation (but in no event exceed 9.99% of the number of shares of common stock issued and outstanding) by providing the Company with 61 days’ notice that such holder wishes to increase or decrease this limitation. | |
7_Derivative_Liabilities
7. Derivative Liabilities | 3 Months Ended | |||||||||||
Mar. 31, 2014 | ||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ' | |||||||||||
Derivative Liabilities | ' | |||||||||||
Under the authoritative guidance of the FASB on determining whether an instrument (or embedded feature) is indexed to an entity’s own stock, instruments which do not have fixed settlement provisions are deemed to be derivative instruments. All of the notes described in Notes 4, 5 and 6 that contain a reset provision or have a conversion price that is a percentage of the market price contain embedded conversion features which are considered derivative liabilities to be re-measured at the end of every reporting period with the change in value reported in the statement of operations. The conversion feature of the Company’s Debentures (described in Note 6), and the related warrants, do not have fixed settlement provisions because their conversion and exercise prices, respectively, may be lowered if the Company issues securities at lower prices in the future. The Company was required to include the reset provisions in order to protect the holders of the Debentures from the potential dilution associated with future financings. In accordance with the FASB authoritative guidance, the conversion feature of the Debentures was separated from the host contract (i.e., the Debentures) and recognized as a derivative instrument. | ||||||||||||
As of March 31, 2014 and December 31, 2013, the derivative liabilities were valued using a probability weighted average Black Scholes-Merton pricing model with the following assumptions: | ||||||||||||
March 31, | At Date of | December 31, | ||||||||||
2014 | Issuance | 2013 | ||||||||||
Conversion feature: | ||||||||||||
Risk-free interest rate | 0.13% | 0.11% - 0.13% | 0.13% | |||||||||
Expected Volatility | 431% | 421% - 441% | 425% | |||||||||
Expected life (in years) | .06 to .7 | .5 to .8 | .04 to .62 | |||||||||
Expected dividend yield | 0% | 0% | 0% | |||||||||
Warrants: | ||||||||||||
Risk-free interest rate | 0.15% | N/A | 0.13% | |||||||||
Expected Volatility | 431% | N/A | 425% | |||||||||
Expected life (in years) | 1.3 to 2.93 | N/A | 1.6 to 3.6 | |||||||||
Expected dividend yield | 0% | N/A | 0% | |||||||||
Fair Value | ||||||||||||
Conversion feature | $ | 7,535,507 | $ | 334,056 | $ | 7,896,892 | ||||||
Warrants | 3,582 | – | 11,523 | |||||||||
$ | 7,539,089 | $ | 334,056 | $ | 7,908,415 | |||||||
The risk-free interest rate was based on rates established by the Federal Reserve Bank. The Company uses the historical volatility of its common stock to estimate the future volatility for its common stock. The expected life of the convertible debentures and notes was determined by the maturity date of the notes. The expected life of the warrants was determined by their expiration dates. The expected dividend yield was based on the fact that the Company has not paid dividends to its common stockholders in the past and does not expect to pay dividends to its common stockholders in the future. | ||||||||||||
At March 31, 2014 and December 31, 2013, the fair value of the aggregate derivative liability of the conversion features and warrants was $7,539,089 and $7,908,415, respectively. For the three months ended March 31, 2014 and 2013 the Company recorded a change in fair value of the derivative liability of $703,382 and $163,969, respectively. During the three months ended March 31, 2014, we recognized additional derivative liabilities of $334,056, related to the issuances of convertible promissory notes payable as described under Note 4. |
8_Preferred_and_Common_Stock
8. Preferred and Common Stock | 3 Months Ended | ||
Mar. 31, 2014 | |||
Stockholders' Equity Note [Abstract] | ' | ||
Preferred and Common Stock | ' | ||
Issuance of Common Stock for Cash | |||
During the three months ended March 31, 2014, the Company sold 3,637 shares of common stock at the price of $1.37 per share for total proceeds of $5,000. | |||
Issuance of Common Stock for Debt | |||
During the three months ended March 31, 2014, the Company issued: | |||
· | 130,761,577 shares of its common stock to the holders of certain unsecured convertible promissory notes payable in exchange for $85,589 of notes payable and $2,500 in accrued interest and fees, | ||
· | 3,666,666 shares of its common stock to La Jolla Cover Investors, Inc. in exchange for $500 of notes payable (see below), and | ||
· | 5,000,000 shares of its common stock to Ironridge Global IV, Ltd. in exchange for $4,550 of debt. | ||
Equity Investment Agreement | |||
Pursuant to the Equity Investment Agreement, La Jolla Cove Investors, Inc., has the right from time to time during the term of the agreement to purchase up to $2,000,000 of the Company’s Common Stock in accordance with the terms of the agreement. Beginning October 27, 2012 and for each month thereafter, La Jolla shall purchase from the Company at least $100,000 of common stock, at a price per share equal to 125% of the VWAP on the Closing Date, provided, however, that La Jolla shall not be required to purchase common stock if (i) the VWAP for the five consecutive trading days prior to the payment date is equal to or less than $10.00 per share or (ii) an event of default has occurred under the SPA, the Convertible Debenture or the Equity Investment Agreement. Pursuant to the Equity Investment Agreement, La Jolla has the right to purchase, at any time and in any amount, at La Jolla’s option, common stock from the Company at a price per share equal to 125% of the VWAP on the Closing Date. | |||
During the three months ended March 31, 2014, the Company received notices of purchase from La Jolla under the Equity Investment Agreement totaling $500, pursuant to which the Company issued 3,666,666 shares of common stock at a weighted average price of $0.0001per share. |
9_Stock_Options_and_Warrants
9. Stock Options and Warrants | 3 Months Ended | ||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | ||||||||||||||||
Stock Options and Warrants | ' | ||||||||||||||||
Stock Options and Compensation-Based Warrants | |||||||||||||||||
On September 29, 2010, the stockholders of the Company approved the adoption of the 2010 Stock Option Plan. The Plan provides for the granting of incentive and nonqualified stock options to employees and consultants of the Company. Generally, options granted under the plan may not have a term in excess of ten years. Upon adoption, the Plan reserved 40,000 shares of the Company’s common stock for issuance there under. | |||||||||||||||||
Generally accepted accounting principles for stock options and compensation-based warrants require the recognition of the cost of services received in exchange for an award of equity instruments in the financial statements, is measured based on the grant date fair value of the award, and requires the compensation expense to be recognized over the period during which an employee or other service provider is required to provide service in exchange for the award (the vesting period). No income tax benefit has been recognized for share-based compensation arrangements and no compensation cost has been capitalized in the accompanying consolidated balance sheet. | |||||||||||||||||
A summary of stock option and compensation-based warrant activity for the three months ended March 31, 2014 is presented below: | |||||||||||||||||
Weighted | |||||||||||||||||
Shares | Weighted | Average | |||||||||||||||
Under | Average | Remaining | Aggregate | ||||||||||||||
Option or | Exercise | Contractual | Intrinsic | ||||||||||||||
Warrant | Price | Life (in years) | Value | ||||||||||||||
Outstanding at December 31, 2013 | 92,300 | $ | 33.52 | 2.9 | $ | – | |||||||||||
Granted or issued | – | ||||||||||||||||
Expired or forfeited | (8,400 | ) | 121.43 | ||||||||||||||
Outstanding and Exercisable at March 31, 2014 | 83,900 | $ | 24.72 | 2.9 | $ | – | |||||||||||
Other Stock Warrants | |||||||||||||||||
A summary of other stock warrant activity for the three-month period ended March 31, 2014 is presented below: | |||||||||||||||||
Weighted | |||||||||||||||||
Weighted | Average | ||||||||||||||||
Shares | Average | Remaining | Aggregate | ||||||||||||||
Under | Exercise | Contractual | Intrinsic | ||||||||||||||
Warrant | Price | Life (in years) | Value | ||||||||||||||
Outstanding at December 31, 2013 | 2,409,370 | $ | 0.38 | 2.4 | $ | – | |||||||||||
Granted or issued | – | ||||||||||||||||
Expired or forfeited | – | ||||||||||||||||
Outstanding at March 31, 2014 | 2,409,370 | $ | 0.38 | 2.2 | $ | – | |||||||||||
10_Related_Party_Transactions
10. Related Party Transactions | 3 Months Ended |
Mar. 31, 2014 | |
Related Party Transactions [Abstract] | ' |
Related Party Transactions | ' |
Payable to Related Parties | |
Warren Rothouse was appointed to be a director of the Company in October 2012. Mr. Rothouse is Senior Partner of Surety Financial Group, LLC (Surety). Surety has provided investor relations services to the Company in recent years. On November 7, 2012, the Company entered into a new agreement with Surety to provide investor relations services for the fifteen month period commencing December 1, 2012 and continuing through February 28, 2014. The agreement provided for monthly payments of $6,500 for Surety’s services. In addition, Surety was issued 10,000 shares of restricted common stock of the Company’s common stock and warrants to purchase 15,000 shares of the Company’s common stock. The exercise price of the warrants is $5.00 per share and the warrants are exercisable on a cashless basis. The term of the warrants is three years. On February 27, 2013, the Company amended the November 7, 2012 agreement. Under the amended agreement, Surety will provide investor relations services for the fifteen month period commencing March 1, 2013 and continuing through May 31, 2014 and Surety will receive monthly payments of $10,000 for its services. Compensation to Surety under the agreements was $30,000 for the three months ended March 31, 2014. The balance due to Surety at March 31, 2014 and December 31, 2013 was $110,300 and $113,300, respectively, included on the Company’s accounts payable balance. | |
Effective January 31, 2013, David Pinkman was appointed to the Board of Directors of the Company. On February 1, 2013, the Company entered into a consulting agreement with Mr. Pinkman. The term of the agreement is for twelve months and provides for monthly compensation of $8,330. As additional compensation, the Company issued 20,000 shares of restricted common stock to Mr. Pinkman and issued him a warrant to acquire 20,000 shares of the Company’s common stock at $2.50 per share. Compensation earned by Mr. Pinkman under the consulting agreement was $17,121 for the year ended December 31, 2013 and March 31, 2014, of which approximately $7,000 remained outstanding and included on the Company’s Accounts payable balance at December 31, 2013 and March 31, 2014. |
11_Subsequent_Events
11. Subsequent Events | 3 Months Ended | ||||||||||||
Mar. 31, 2014 | |||||||||||||
Subsequent Events [Abstract] | ' | ||||||||||||
Subsequent Events | ' | ||||||||||||
On April 24, 2014, the Company entered into a Settlement Agreement and Stipulation, whereby an investor acquired $74,514 of past due liabilities of the Company and the Company allowed this investor to convert the acquired liabilities into shares of the Company’s common stock at a conversion price equal to 50% of the market price. | |||||||||||||
Subsequent to March 31, 2014 the Company issued shares of common stock as follows: | |||||||||||||
· | 742,692,659 to investors upon the conversion of notes payable and accrued interest; | ||||||||||||
· | 2,909 to an investor for cash; | ||||||||||||
· | 46,000,000 to Ironridge Global IV, Ltd for settlement of accrued liabilities; and | ||||||||||||
· | 70,000,000 for payment of acquisitions (see below). | ||||||||||||
On April 17, 2014, the Company completed the acquisition of the oil and gas assets of American Dynamic Resources, Inc. (ADR) and the Heavy Oil Technology and Intellectual Property. The assets of ADR consist of multiple leases in Montgomery, Labette and Wilson Counties in Kansas. The combined leases contain 140 oil wells and 17 gas wells within 3,527 acres. The purchase price for these oil and gas leases was $50,000 plus 35,000,000 shares of the Company’s common stock valued at $63,000. We also acquired ADR's patents on Intellectual Properties covering 3 areas of Enhanced Oil Recovery: Air Lift, Thermal Enhancement and Reservoir Management. The purchase price for the patents was $75,000 plus 35,000,000 shares of the Company’s common stock valued at $63,000. | |||||||||||||
On April 18, 2014, the Company purchased certain assets from Sunwest Group, LLC. The assets consisting of 18 leases in Montgomery, Labette and Wilson Counties in Kansas. The purchase price was $325,000. As additional consideration for its purchase of the assets the Company assumed the obligations and responsibilities with respect to the abandonment obligations up to the amount of $250,000. | |||||||||||||
On May 6, 2011, the Company acquired certain assets from Montecito (see Notes 2, 6, and 7). The assets consist of certain oil and gas leases located in the Vermillion 179 tract, which is in the shallow waters of the Gulf of Mexico offshore from Louisiana. Pursuant to the terms of the Montecito Agreement, as amended, Montecito agreed to sell the Company a 70% leasehold working interest, with a net revenue interest of 51.975%, of certain oil and gas leases owned by Montecito, for $1,500,000 in cash, a subordinated promissory note in the amount of $500,000, and 30,000 shares of common stock. The leasehold interest has been capitalized in the amount of $5,698,563, representing $2,000,000 in cash and promissory note, $3,675,000 for the common stock based on a closing price of $2.45 per share on the closing date, and $23,563 in acquisition costs. No drilling or production has commenced as of December 31, 2013. Consequently, the oil and gas properties have not been subjected to amortization of the full cost pool. In December 2011, Montecito filed a lawsuit in the Civil District Court for the Parish of Orleans of the State of Louisiana against the Company by filing a Petition to Rescind Sale. In this action, Montecito is seeking to rescind the asset sale transaction, as described above. Pursuant to a Release and Settlement Agreement dated February 12, 2014 that has been signed and notarized by all parties involved, the matter has been settled and the operative terms of the settlement were recited into the record in open court on the day of trial. The result is that a judicially recognized compromise has been perfected under Louisiana law, which has the effect of extinguishing the underlying obligations the compromise is premised on. The Company’s obligations extinguished include a secured notes payable in the amount of $500,000 (see Note 5) and convertible debentures of approximately $2,450,000 (see Note 6). However, recording the conveyance of the lease interest and cancelling mortgages and UCC-1’s by the debt holders has not occurred. The debt holders have delayed in performing these obligations because they want to first undertake a degree of internal restructuring before accepting the royalty interest they negotiated to receive as a part of the settlement. The debt holders have indicated that, after they have formed an entity to receive the royalty interest, they will cancel the outstanding mortgages and UCC-1’s along with recording the documents conveying the various interests into the public records. The Company believes the conveyances will occur and that the matter has been settled. Below is an unaudited pro forma balance sheet that shows the pro forma impact of this settlement on the Company’s March 31, 2014 balance sheet: | |||||||||||||
As filed | Adjustments | Proforma | |||||||||||
(unaudited) | (unaudited) | (unaudited) | |||||||||||
ASSETS | |||||||||||||
Current Assets: | |||||||||||||
Cash and cash equivalents | $ | 7,055 | $ | $ | 7,055 | ||||||||
Total Current Assets | 7,055 | 0 | 7,055 | ||||||||||
Property and Equipment, net of accumulated depreciation | 8,777 | 8,777 | |||||||||||
Oil and gas properties | 5,698,563 | (5,698,563 | ) | 0 | |||||||||
Other assets | 14,610 | 14,610 | |||||||||||
Total Assets | $ | 5,729,005 | $ | (5,698,563 | ) | $ | 30,442 | ||||||
LIABILITIES AND STOCKHOLDERS' DEFICIENCY | |||||||||||||
Current Liabilities: | |||||||||||||
Accounts payable | $ | 989,286 | $ | $ | 989,286 | ||||||||
Accrued interest | 1,479,730 | (1,233,496 | ) | 246,234 | |||||||||
Accrued liabilities | 496,188 | 496,188 | |||||||||||
Payable to Ironridge Global IV, Ltd. | 236,496 | 236,496 | |||||||||||
Payable to former officer | 115,000 | 115,000 | |||||||||||
Unsecured convertible promissory notes payable, net of discount, in default | 1,052,584 | 1,052,584 | |||||||||||
Secured notes payable, net of discount, in default | 639,012 | (500,000 | ) | 139,012 | |||||||||
Convertible debentures in default | 2,453,032 | (2,453,032 | ) | 0 | |||||||||
Derivative liabilities | 7,539,089 | (5,259,769 | ) | 2,279,320 | |||||||||
Total Current Liabilities | 15,000,417 | (9,446,297 | ) | 5,554,120 | |||||||||
Long-Term Liabilities | |||||||||||||
Long-term asset retirement obligation | 37,288 | (37,288 | ) | 0 | |||||||||
Total Liabilities | 15,037,705 | (9,483,585 | ) | 5,554,120 | |||||||||
Stockholders' Deficiency: | |||||||||||||
Series A convertible preferred stock | 1,000 | 1,000 | |||||||||||
Common stock | 186,907 | 186,907 | |||||||||||
Additional paid-in capital | 26,394,378 | 26,394,378 | |||||||||||
Deficit accumulated during the exploration stage | (35,890,985 | ) | 3,785,022 | (32,105,963 | ) | ||||||||
Total Stockholders' Deficiency | (9,308,700 | ) | 3,785,022 | (5,523,678 | ) | ||||||||
Total Liabilities and Stockholders' Deficiency | $ | 5,729,005 | $ | (5,698,563 | ) | $ | 30,442 |
1_Organization_and_Significant1
1. Organization and Significant Accounting Policies (Policies) | 3 Months Ended | ||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||
Accounting Policies [Abstract] | ' | ||||||||||||||||
Organization Disclosure, Policy [Policy Text Block] | ' | ||||||||||||||||
Organization – Paxton Energy, Inc. was organized under the laws of the State of Nevada on June 30, 2004. On January 27, 2012, Paxton Energy, Inc. changed its name to Worthington Energy, Inc. (the “Company”). On October 12, 2012, the Company’s stockholders approved a 1-for-10 reverse common stock split. In addition, on October 2, 2013 the Company effected a 1-for-50 reverse common stock split. All references in these consolidated financial statements and related notes to numbers of shares of common stock, prices per share of common stock, and weighted average number of shares of common stock outstanding prior to the reverse stock splits have been adjusted to reflect the reverse stock splits on a retroactive basis for all periods presented, unless otherwise noted. | |||||||||||||||||
Nature of Operations | ' | ||||||||||||||||
Nature of Operations – As further described in Note 2 to these consolidated financial statements, the Company commenced acquiring working interests in oil and gas properties in June 2005. We are in the business of acquiring, exploring and developing oil and gas-related assets. The Company is considered to be in the exploration stage due to the lack of significant revenues. | |||||||||||||||||
Condensed Interim Consolidated Financial Statements | ' | ||||||||||||||||
Condensed Interim Consolidated Financial Statements – The accompanying unaudited condensed consolidated financial statements of 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. Accordingly, these condensed consolidated financial statements do not include all of the information and disclosures required by generally accepted accounting principles for complete financial statements. In the opinion of the Company’s management, the accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to fairly present the Company’s consolidated financial position as of March 31, 2014, and its consolidated results of operations and cash flows for the three months ended March 31, 2014 and 2013, and for the period from June 30, 2004 (date of inception), through March 31, 2014. The results of operations for the three months ended March 31, 2014, may not be indicative of the results that may be expected for the year ending December 31, 2014. The condensed consolidated financial statements included in this report on Form 10-Q should be read in conjunction with the audited financial statements of Worthington Energy, Inc., and the notes thereto for the year ended December 31, 2013, included in its annual report on Form 10-K filed with the SEC on April 17, 2013. | |||||||||||||||||
Going Concern | ' | ||||||||||||||||
Going Concern – The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has not had significant revenue and is still considered to be in the exploration stage. The Company incurred losses of $178,357 for the three months ended March 31, 2014 and $3,322,257 for year ended December 31, 2013. The Company also used cash of $147,111 in its operating activities during the three months ended March 31, 2014 and $228,024 during the year ended December 31, 2013, and a significant portion of the Company’s debt is in default. At March 31, 2014, the Company has a working capital deficit of $14,993,362 and a stockholders’ deficiency of $9,308,700. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern. Also, the Company’s independent registered public accounting firm, in its report on the Company’s December 31, 2013 financial statements, has raised substantial doubt about the Company’s ability to continue as a going concern. | |||||||||||||||||
The Company is currently seeking debt and equity financing to fund potential acquisitions and other expenditures, although it does not have any contracts or commitments for either at this time. The Company will have to raise additional funds to continue operations and, while it has been successful in doing so in the past, there can be no assurance that it will be able to do so in the future. The Company’s continuation as a going concern is dependent upon its ability to obtain necessary additional funds to continue operations and the attainment of profitable operations. The Company hopes that working capital will become available via financing activities currently contemplated with regards to its intended operating activities. There can be no assurance that such funds, if available, can be obtained, or if obtained, on terms reasonable to the Company. The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern and do not include any adjustments that may result from the outcome of this uncertainty. | |||||||||||||||||
On May 6, 2011, the Company completed the acquisition of certain oil and gas properties located in the Vermillion 179 tract in the Gulf of Mexico, offshore from Louisiana. In December 2011, the seller of these oil and gas properties filed a lawsuit seeking to rescind the asset sale transaction. Pursuant to a Release and Settlement Agreement dated February 12, 2014 the Company agreed to convey its oil and gas properties for extinguishment of underlying obligations. The Company will account for the transaction in 2014 upon final settlement as an exchange of the oil and gas asset for the debt and an extinguishment of the related derivative liability (see Notes 2, 5, 6 and 11). | |||||||||||||||||
Principles of Consolidation | ' | ||||||||||||||||
Principles of Consolidation – The accompanying consolidated financial statements present the financial position, results of operations, and cash flows of Worthington Energy, Inc. and of PaxAcq Inc., a wholly-owned subsidiary. Intercompany accounts and transactions have been eliminated in consolidation. | |||||||||||||||||
Use of Estimates | ' | ||||||||||||||||
Use of Estimates – In preparing these consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated financial statements and the reported amount of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Significant estimates and assumptions included in the Company’s consolidated financial statements relate to the valuation of long-lived assets, accrued other liabilities, and valuation assumptions related to share-based payments and derivative liability. | |||||||||||||||||
Oil and Gas Properties | ' | ||||||||||||||||
Oil and Gas Properties – The Company follows the full cost method of accounting for oil and gas properties. Under this method, all costs associated with acquisition, exploration, and development of oil and gas reserves, including directly related overhead costs and related asset retirement costs, are capitalized. Costs capitalized include acquisition costs, geological and geophysical expenditures, lease rentals on undeveloped properties, and costs of drilling and equipping productive and nonproductive wells. Drilling costs include directly related overhead costs. Capitalized costs are categorized either as being subject to amortization or not subject to amortization. | |||||||||||||||||
All capitalized costs of oil and gas properties, including the estimated future costs to develop proved reserves, will be amortized, on the unit-of-production method using estimates of proved reserves. At March 31, 2014 and December 31, 2013, there were no capitalized costs subject to amortization. Investments in unproved properties and major development projects are not amortized until proved reserves associated with the projects can be determined. If the results of an assessment indicate that the properties are impaired, the amount of the impairment is charged to operations. The Company has not yet obtained a reserve report on its producing properties in Texas because the properties are considered to be in the exploration stage, management has not completed an evaluation of the properties, and the properties have had limited oil and gas exploration and production. | |||||||||||||||||
In addition, properties subject to amortization will be subject to a “ceiling test,” which basically limits such costs to the aggregate of the “estimated present value,” based on the projected future net revenues from proved reserves, discounted at 10% per annum to present value of future net revenues from proved reserves, based on current economic and operating conditions, plus the lower of cost or fair market value of unproved properties. | |||||||||||||||||
Sales of proved and unproved properties are accounted for as adjustments of capitalized costs with no gain or loss recognized, unless such adjustments would significantly alter the relationship between capitalized costs and proved reserves of oil and gas, in which case the gain or loss is recognized in the results of operations. Abandonments of properties are accounted for as adjustments of capitalized costs with no loss recognized. | |||||||||||||||||
Revenue Recognition | ' | ||||||||||||||||
Revenue Recognition – All revenues are derived from the sale of produced crude oil and natural gas. Revenue and related production taxes and lease operating expenses are recorded in the month the product is delivered to the purchaser. Normally, payment for the revenue, net of related taxes and lease operating expenses, is received from the operator of the well approximately 45 days after the month of delivery. | |||||||||||||||||
Stock-Based Compensation | ' | ||||||||||||||||
Stock-Based Compensation – The Company recognizes compensation expense for stock-based awards to employees expected to vest on a straight-line basis over the requisite service period of the award based on their grant date fair value. The Company estimates the fair value of stock options using a Black-Scholes option pricing model which requires management to make estimates for certain assumptions regarding risk-free interest rate, expected life of options, expected volatility of stock and expected dividend yield of stock. | |||||||||||||||||
The Company accounts for equity instruments issued in exchange for the receipt of goods or services from other than employees and non-employee directors in accordance with Accounting Standards Codification (ASC) 505-50, Equity-Based Payments to Non-Employees. Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration for other than employee services is determined on the earlier of a performance commitment or completion of performance by the provider of goods or services. The fair value of the equity instrument is charged directly to share-based compensation expense and credited to paid-in capital. | |||||||||||||||||
Basic and Diluted Loss per Common Share | ' | ||||||||||||||||
Basic and Diluted Loss per Common Share – Basic loss per common share amounts are computed by dividing net loss by the weighted-average number of shares of common stock outstanding during each period. Diluted loss per share amounts are computed assuming the issuance of common stock for potentially dilutive common stock equivalents. All outstanding stock options, warrants, stock awards, convertible promissory notes, and other obligations to be satisfied with the issuance of common stock are currently antidilutive due to our net loss and have been excluded from the diluted loss per share calculations. As such, options, warrants, and stock awards to acquire 2,493,270 and 279,794 shares of common stock outstanding as of March 31, 2014 and 2013, respectively, and promissory notes and debentures convertible into an aggregate of 5,653,502,228 and 28,096,258 shares of common stock at March 31, 2014 and 2013, respectively were excluded in the computation of diluted loss per share at March 31, 2014 and 2013 as their effect would have been anti-dilutive. | |||||||||||||||||
Fair Values of Financial Instruments | ' | ||||||||||||||||
Fair Values of Financial Instruments – The carrying amounts reported in the consolidated balance sheets for cash, accounts payable, accrued liabilities, payable to Ironridge Global IV, Ltd., and payable to former officer approximate fair value because of the immediate or short-term maturity of these financial instruments. The carrying amounts reported for unsecured convertible promissory notes payable, secured notes payable, and convertible debentures approximate fair value because the underlying instruments are at interest rates which approximate current market rates. The fair value of derivative liabilities are estimated based on a probability weighted average Black Scholes-Merton pricing model. | |||||||||||||||||
For assets and liabilities measured at fair value, the Company uses the following hierarchy of inputs: | |||||||||||||||||
● | Level one – Quoted market prices in active markets for identical assets or liabilities; | ||||||||||||||||
● | Level two – Inputs other than level one inputs that are either directly or indirectly observable; and | ||||||||||||||||
● | Level three – Unobservable inputs developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions that a market participant would use. | ||||||||||||||||
Liabilities measured at fair value on a recurring basis at March 31, 2014 are summarized as follows: | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
Derivative liability - conversion feature of debentures and related warrants | $ | – | $ | 5,259,899 | $ | – | $ | 5,259,890 | |||||||||
Derivative liability - embedded conversion feature and reset provisions of notes | $ | – | $ | 2,279,190 | $ | – | $ | 2,279,190 | |||||||||
Liabilities measured at fair value on a recurring basis at December 31, 2013 are summarized as follows: | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
Derivative liability - conversion feature of debentures and related warrants | $ | – | $ | 5,467,223 | $ | – | $ | 5,467,223 | |||||||||
Derivative liability - embedded conversion feature and reset provisions of notes | $ | – | $ | 2,441,192 | $ | – | $ | 2,441,192 | |||||||||
Derivative Financial Instruments | ' | ||||||||||||||||
Derivative Financial Instruments – The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. For stock-based derivative financial instruments, the Company uses a probability weighted average Black-Scholes-Merton pricing model to value the derivative instruments. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative instrument liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement of the derivative instrument could be required within 12 months of the balance sheet date. | |||||||||||||||||
Recently Issued Accounting Statements | ' | ||||||||||||||||
Recently Issued Accounting Statements – In April 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2014-08, "Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360)." ASU 2014-08 amends the requirements for reporting discontinued operations and requires additional disclosures about discontinued operations. Under the new guidance, only disposals representing a strategic shift in operations or that have a major effect on the Company's operations and financial results should be presented as discontinued operations. This new accounting guidance is effective for annual periods beginning after December 15, 2014. The Company is currently evaluating the impact of adopting ASU 2014-08 on the Company's results of operations or financial condition. | |||||||||||||||||
On February 26, 2014, the FASB affirmed changes in a November 2013 Exposure Draft, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, and directed the staff to draft a final Accounting Standards Update for vote by the FASB. This is intended to reduce the cost and complexity in financial reporting by eliminating inception-to-date information from the financial statements of development stage entities. | |||||||||||||||||
Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements. |
1_Organization_and_Significant2
1. Organization and Significant Accounting Policies (Tables) | 3 Months Ended | ||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||
Accounting Policies [Abstract] | ' | ||||||||||||||||
Fair Value Measurements, Recurring and Nonrecurring [Table Text Block] | ' | ||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
Derivative liability - conversion feature of debentures and related warrants | $ | – | $ | 5,259,899 | $ | – | $ | 5,259,890 | |||||||||
Derivative liability - embedded conversion feature and reset provisions of notes | $ | – | $ | 2,279,190 | $ | – | $ | 2,279,190 | |||||||||
Liabilities measured at fair value on a recurring basis at December 31, 2013 are summarized as follows: | |||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
Derivative liability - conversion feature of debentures and related warrants | $ | – | $ | 5,467,223 | $ | – | $ | 5,467,223 | |||||||||
Derivative liability - embedded conversion feature and reset provisions of notes | $ | – | $ | 2,441,192 | $ | – | $ | 2,441,192 |
4_Unsecured_Convertible_Promis1
4. Unsecured Convertible Promissory Notes Payable (Tables) | 3 Months Ended | ||||||||||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||||||||||
Convertible Notes Payable [Abstract] | ' | ||||||||||||||||||||||||
Schedule of convertible debt | ' | ||||||||||||||||||||||||
31-Mar-14 | 31-Dec-13 | ||||||||||||||||||||||||
Unpaid | Unamortized | Carrying | Unpaid | Unamortized | Carrying | ||||||||||||||||||||
Principal | Discount | Value | Principal | Discount | Value | ||||||||||||||||||||
Asher Enterprises, Inc. | $ | 183,170 | $ | 56,511 | $ | 126,659 | $ | 111,900 | $ | 7,473 | $ | 104,427 | |||||||||||||
GEL Properties, LLC | 149,000 | 2,534 | 146,466 | 149,000 | 13,486 | 135,514 | |||||||||||||||||||
Prolific Group, LLC | 79,900 | – | 79,900 | 79,900 | 11,849 | 68,051 | |||||||||||||||||||
Haverstock Master Fund, LTD and Common Stock, LLC | 328,976 | – | 328,976 | 289,906 | – | 289,906 | |||||||||||||||||||
Redwood Management LLC | 205,229 | 45,833 | 159,396 | – | – | – | |||||||||||||||||||
AGS Capital Group | 25,000 | 19,792 | 5,208 | – | – | – | |||||||||||||||||||
Charles Volk (related party) | 125,000 | 22,346 | 102,654 | 125,000 | 53,596 | 71,404 | |||||||||||||||||||
Various Other Individuals and Entities | 108,257 | 4,932 | 103,325 | 285,000 | 24,338 | 260,662 | |||||||||||||||||||
$ | 1,204,531 | $ | 151,947 | $ | 1,052,584 | $ | 1,040,705 | $ | 110,742 | $ | 929,964 | ||||||||||||||
Roll forward of unsecured convertible promissory notes | ' | ||||||||||||||||||||||||
Balance at December 31, 2013 | $ | 929,964 | |||||||||||||||||||||||
Issuance of new notes | 149,000 | ||||||||||||||||||||||||
Penalties on existing notes | 100,415 | ||||||||||||||||||||||||
Converted into common stock | (85,589 | ) | |||||||||||||||||||||||
Discount on new notes | (149,000 | ) | |||||||||||||||||||||||
Amortization of discounts | 107,794 | ||||||||||||||||||||||||
Balance at March 31, 2014 | $ | 1,052,584 |
5_Secured_Notes_Payable_Tables
5. Secured Notes Payable (Tables) | 3 Months Ended | ||||||||||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||||||||||
Debt Disclosure [Abstract] | ' | ||||||||||||||||||||||||
Schedule of secured notes payable | ' | ||||||||||||||||||||||||
31-Mar-14 | 31-Dec-13 | ||||||||||||||||||||||||
Unpaid | Unamortized | Carrying | Unpaid | Unamortized | Carrying | ||||||||||||||||||||
Principal | Discount | Value | Principal | Discount | Value | ||||||||||||||||||||
Montecito Offshore, LLC | $ | 500,000 | $ | – | $ | 500,000 | $ | 500,000 | $ | – | $ | 500,000 | |||||||||||||
Bridge Loan Settlement Note | 40,000 | – | 40,000 | 40,000 | – | 40,000 | |||||||||||||||||||
What Happened LLC | 21,575 | – | 21,575 | 21,575 | – | 21,575 | |||||||||||||||||||
La Jolla Cove Investors, Inc. | 83,440 | 6,003 | 77,437 | 83,940 | 25,003 | 58,937 | |||||||||||||||||||
$ | 645,015 | $ | 6,003 | $ | 639,012 | $ | 645,515 | $ | 25,003 | $ | 620,512 | ||||||||||||||
Roll forward of secured notes payable | ' | ||||||||||||||||||||||||
Balance at December 31, 2013 | $ | 620,512 | |||||||||||||||||||||||
Converted into common stock | (500 | ) | |||||||||||||||||||||||
Amortization of discounts | 19,000 | ||||||||||||||||||||||||
Balance at March 31, 2014 | $ | 639,012 |
7_Derivative_Liabilities_Table
7. Derivative Liabilities (Tables) | 3 Months Ended | |||||||||||
Mar. 31, 2014 | ||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ' | |||||||||||
Schedule of Derivative Liabilities at Fair Value | ' | |||||||||||
March 31, | At Date of | December 31, | ||||||||||
2014 | Issuance | 2013 | ||||||||||
Conversion feature: | ||||||||||||
Risk-free interest rate | 0.13% | 0.11% - 0.13% | 0.13% | |||||||||
Expected Volatility | 431% | 421% - 441% | 425% | |||||||||
Expected life (in years) | .06 to .7 | .5 to .8 | .04 to .62 | |||||||||
Expected dividend yield | 0% | 0% | 0% | |||||||||
Warrants: | ||||||||||||
Risk-free interest rate | 0.15% | N/A | 0.13% | |||||||||
Expected Volatility | 431% | N/A | 425% | |||||||||
Expected life (in years) | 1.3 to 2.93 | N/A | 1.6 to 3.6 | |||||||||
Expected dividend yield | 0% | N/A | 0% | |||||||||
Fair Value | ||||||||||||
Conversion feature | $ | 7,535,507 | $ | 334,056 | $ | 7,896,892 | ||||||
Warrants | 3,582 | – | 11,523 | |||||||||
$ | 7,539,089 | $ | 334,056 | $ | 7,908,415 |
9_Stock_Options_and_Warrants_T
9. Stock Options and Warrants (Tables) | 3 Months Ended | ||||||||||||||||
Mar. 31, 2014 | |||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ' | ||||||||||||||||
Schedule of Share-based Compensation, Stock Options, Activity | ' | ||||||||||||||||
Weighted | |||||||||||||||||
Shares | Weighted | Average | |||||||||||||||
Under | Average | Remaining | Aggregate | ||||||||||||||
Option or | Exercise | Contractual | Intrinsic | ||||||||||||||
Warrant | Price | Life (in years) | Value | ||||||||||||||
Outstanding at December 31, 2013 | 92,300 | $ | 33.52 | 2.9 | $ | – | |||||||||||
Granted or issued | – | ||||||||||||||||
Expired or forfeited | (8,400 | ) | 121.43 | ||||||||||||||
Outstanding and Exercisable at March 31, 2014 | 83,900 | $ | 24.72 | 2.9 | $ | – | |||||||||||
Schedule of stock warrant activity | ' | ||||||||||||||||
Weighted | |||||||||||||||||
Weighted | Average | ||||||||||||||||
Shares | Average | Remaining | Aggregate | ||||||||||||||
Under | Exercise | Contractual | Intrinsic | ||||||||||||||
Warrant | Price | Life (in years) | Value | ||||||||||||||
Outstanding at December 31, 2013 | 2,409,370 | $ | 0.38 | 2.4 | $ | – | |||||||||||
Granted or issued | – | ||||||||||||||||
Expired or forfeited | – | ||||||||||||||||
Outstanding at March 31, 2014 | 2,409,370 | $ | 0.38 | 2.2 | $ | – |
11_Subsequent_Events_Tables
11. Subsequent Events (Tables) | 3 Months Ended | ||||||||||||
Mar. 31, 2014 | |||||||||||||
Subsequent Events [Abstract] | ' | ||||||||||||
Business Acquisition, Pro Forma Information | ' | ||||||||||||
As filed | Adjustments | Proforma | |||||||||||
(unaudited) | (unaudited) | (unaudited) | |||||||||||
ASSETS | |||||||||||||
Current Assets: | |||||||||||||
Cash and cash equivalents | $ | 7,055 | $ | $ | 7,055 | ||||||||
Total Current Assets | 7,055 | 0 | 7,055 | ||||||||||
Property and Equipment, net of accumulated depreciation | 8,777 | 8,777 | |||||||||||
Oil and gas properties | 5,698,563 | (5,698,563 | ) | 0 | |||||||||
Other assets | 14,610 | 14,610 | |||||||||||
Total Assets | $ | 5,729,005 | $ | (5,698,563 | ) | $ | 30,442 | ||||||
LIABILITIES AND STOCKHOLDERS' DEFICIENCY | |||||||||||||
Current Liabilities: | |||||||||||||
Accounts payable | $ | 989,286 | $ | $ | 989,286 | ||||||||
Accrued interest | 1,479,730 | (1,233,496 | ) | 246,234 | |||||||||
Accrued liabilities | 496,188 | 496,188 | |||||||||||
Payable to Ironridge Global IV, Ltd. | 236,496 | 236,496 | |||||||||||
Payable to former officer | 115,000 | 115,000 | |||||||||||
Unsecured convertible promissory notes payable, net of discount, in default | 1,052,584 | 1,052,584 | |||||||||||
Secured notes payable, net of discount, in default | 639,012 | (500,000 | ) | 139,012 | |||||||||
Convertible debentures in default | 2,453,032 | (2,453,032 | ) | 0 | |||||||||
Derivative liabilities | 7,539,089 | (5,259,769 | ) | 2,279,320 | |||||||||
Total Current Liabilities | 15,000,417 | (9,446,297 | ) | 5,554,120 | |||||||||
Long-Term Liabilities | |||||||||||||
Long-term asset retirement obligation | 37,288 | (37,288 | ) | 0 | |||||||||
Total Liabilities | 15,037,705 | (9,483,585 | ) | 5,554,120 | |||||||||
Stockholders' Deficiency: | |||||||||||||
Series A convertible preferred stock | 1,000 | 1,000 | |||||||||||
Common stock | 186,907 | 186,907 | |||||||||||
Additional paid-in capital | 26,394,378 | 26,394,378 | |||||||||||
Deficit accumulated during the exploration stage | (35,890,985 | ) | 3,785,022 | (32,105,963 | ) | ||||||||
Total Stockholders' Deficiency | (9,308,700 | ) | 3,785,022 | (5,523,678 | ) | ||||||||
Total Liabilities and Stockholders' Deficiency | $ | 5,729,005 | $ | (5,698,563 | ) | $ | 30,442 |
1_Organization_and_Significant3
1. Organization and Significant Accounting Policies (Details-Fair value) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
FairValueMeasurementsLineItems [Line Items] | ' | ' |
Derivative liability | $7,539,089 | $7,908,415 |
Conversion Feature Of Debentures And Related Warrants [Member] | ' | ' |
FairValueMeasurementsLineItems [Line Items] | ' | ' |
Derivative liability | 5,259,980 | 5,467,223 |
Conversion Feature Of Debentures And Related Warrants [Member] | Fair Value, Inputs, Level 1 [Member] | ' | ' |
FairValueMeasurementsLineItems [Line Items] | ' | ' |
Derivative liability | 0 | 0 |
Conversion Feature Of Debentures And Related Warrants [Member] | Fair Value, Inputs, Level 2 [Member] | ' | ' |
FairValueMeasurementsLineItems [Line Items] | ' | ' |
Derivative liability | 5,259,890 | 5,467,223 |
Conversion Feature Of Debentures And Related Warrants [Member] | Fair Value, Inputs, Level 3 [Member] | ' | ' |
FairValueMeasurementsLineItems [Line Items] | ' | ' |
Derivative liability | 0 | 0 |
Embedded Conversion Feature And Reset Provisions Of Notes [Member] | ' | ' |
FairValueMeasurementsLineItems [Line Items] | ' | ' |
Derivative liability | 2,334,421 | 2,441,192 |
Embedded Conversion Feature And Reset Provisions Of Notes [Member] | Fair Value, Inputs, Level 1 [Member] | ' | ' |
FairValueMeasurementsLineItems [Line Items] | ' | ' |
Derivative liability | 0 | 0 |
Embedded Conversion Feature And Reset Provisions Of Notes [Member] | Fair Value, Inputs, Level 2 [Member] | ' | ' |
FairValueMeasurementsLineItems [Line Items] | ' | ' |
Derivative liability | 2,279,190 | 2,441,192 |
Embedded Conversion Feature And Reset Provisions Of Notes [Member] | Fair Value, Inputs, Level 3 [Member] | ' | ' |
FairValueMeasurementsLineItems [Line Items] | ' | ' |
Derivative liability | $0 | $0 |
1_Organization_and_Significant4
1. Organization and Significant Accounting Policies (Details Narrative) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Mar. 31, 2013 |
Options, warrants and stock awards | Options, warrants and stock awards | Promissory notes and debentures | Promissory notes and debentures | |||
Working capital | ($14,993,362) | ' | ' | ' | ' | ' |
Accounts receivable | 0 | 0 | ' | ' | ' | ' |
Allowance for doubtful accounts | $0 | $0 | ' | ' | ' | ' |
Antidilutive shares excluded from EPS | ' | ' | 2,493,270 | 279,794 | 5,653,502,228 | 28,096,258 |
3_Payable_to_Ironridge_Global_1
3. Payable to Ironridge Global IV, Ltd (Details Narrative) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Related Party Transactions [Abstract] | ' | ' |
Due to Ironridge | $236,496 | $241,046 |
4_Unsecured_Convertible_Promis2
4. Unsecured Convertible Promissory Notes Payable (Details-Unsecured debt schedule) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Debt Instrument [Line Items] | ' | ' |
Carrying Value | $1,052,584 | $929,964 |
Unsecured Convertible Promisorry Notes Payable [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Unpaid Principal | 1,204,531 | 1,040,706 |
Unamortized Discount | 151,947 | 110,742 |
Carrying Value | 1,052,584 | 929,964 |
Asher Enterprises, Inc [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Unpaid Principal | 183,170 | 111,900 |
Unamortized Discount | 56,511 | 7,473 |
Carrying Value | 126,659 | 104,427 |
GEL Properties, LLC [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Unpaid Principal | 149,000 | 149,000 |
Unamortized Discount | 2,534 | 13,486 |
Carrying Value | 146,466 | 135,514 |
Prolific Group, LLC [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Unpaid Principal | 79,900 | 79,900 |
Unamortized Discount | 0 | 11,849 |
Carrying Value | 79,900 | 68,051 |
Haverstock Master Fund, LTD And Common Stock, LLC [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Unpaid Principal | 328,976 | 289,906 |
Unamortized Discount | 0 | 0 |
Carrying Value | 328,976 | 289,906 |
Charles Volk [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Unpaid Principal | 125,000 | 125,000 |
Unamortized Discount | 22,346 | 53,596 |
Carrying Value | 102,654 | 71,404 |
Various Other Individuals and Entities [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Unpaid Principal | 108,257 | 285,000 |
Unamortized Discount | 4,932 | 24,338 |
Carrying Value | 103,325 | 260,662 |
Redwood Management [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Unpaid Principal | 205,229 | ' |
Unamortized Discount | 45,833 | ' |
Carrying Value | 159,396 | ' |
AGS Capital Group [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Unpaid Principal | 25,000 | ' |
Unamortized Discount | 19,792 | ' |
Carrying Value | $5,208 | ' |
4_Unsecured_Convertible_Promis3
4. Unsecured Convertible Promissory Notes Payable (Details-Rollforward) (USD $) | 3 Months Ended | 117 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | |
Unsecured convertible promissory note, beginning balance | $929,964 | ' | ' |
Issuance of new notes | 1,490,000 | ' | ' |
Amortization of discounts | 412,265 | 677,617 | 8,070,700 |
Unsecured convertible promissory note, ending balance | 1,052,584 | ' | 1,052,584 |
Unsecured Convertible Promisorry Notes Payable [Member] | ' | ' | ' |
Unsecured convertible promissory note, beginning balance | 929,964 | ' | ' |
Issuance of new notes | 149,000 | ' | ' |
Penalties on existing notes | 100,415 | ' | ' |
Converted into common stock | -85,589 | ' | ' |
Discount on new notes | -149,000 | ' | ' |
Amortization of discounts | 107,794 | ' | ' |
Unsecured convertible promissory note, ending balance | $1,052,584 | ' | $1,052,584 |
4_Unsecured_Convertible_Promis4
4. Unsecured Convertible Promissory Notes Payable (Details Narrative) (USD $) | 3 Months Ended |
Mar. 31, 2014 | |
Convertible Notes Payable [Abstract] | ' |
Proceeds from unsecured convertible promissory notes | $1,490,000 |
5_Secured_Notes_Payable_Detail
5. Secured Notes Payable (Details-Schedule of notes) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Carrying Value | $639,012 | $620,512 |
Secured Notes Payable [Member] | ' | ' |
Unpaid Principal | 645,015 | 645,015 |
Unamortized Discount | 6,003 | 25,003 |
Carrying Value | 639,012 | 620,512 |
Montecito Offshore LLC [Member] | ' | ' |
Unpaid Principal | 500,000 | 500,000 |
Unamortized Discount | 0 | 0 |
Carrying Value | 500,000 | 500,000 |
Bridge Loan [Member] | ' | ' |
Unpaid Principal | 40,000 | 40,000 |
Unamortized Discount | 0 | 0 |
Carrying Value | 40,000 | 40,000 |
What Happened LLC [Member] | ' | ' |
Unpaid Principal | 21,575 | 21,575 |
Unamortized Discount | 0 | 0 |
Carrying Value | 21,575 | 21,575 |
La Jolla Cove Investors Inc [Member] | ' | ' |
Unpaid Principal | 83,440 | 83,940 |
Unamortized Discount | 6,003 | 25,003 |
Carrying Value | $77,437 | $58,937 |
5_Secured_Notes_Payable_Detail1
5. Secured Notes Payable (Details-Roll forward) (USD $) | 3 Months Ended | 117 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | |
Secured notes payable, beginning balance | $620,512 | ' | ' |
Amortization of discounts | 412,265 | 677,617 | 8,070,700 |
Secured notes payable, ending balance | 639,012 | ' | 639,012 |
Secured Notes Payable [Member] | ' | ' | ' |
Secured notes payable, beginning balance | 620,512 | ' | ' |
Converted into common stock | -500 | ' | ' |
Amortization of discounts | 19,000 | ' | ' |
Secured notes payable, ending balance | $639,012 | ' | $639,012 |
6_Convertible_Debentures_and_R1
6. Convertible Debentures and Related Warrants (In Default) (Details Narrative) (USD $) | 3 Months Ended | 117 Months Ended | ||
Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | Dec. 31, 2013 | |
Debt Disclosure [Abstract] | ' | ' | ' | ' |
Convertible debentures | $2,453,032 | ' | $2,453,032 | $2,453,032 |
Amortization of deferred financing costs | $0 | $0 | $926,688 | ' |
7_Derivative_Liabilities_Detai
7. Derivative Liabilities (Details) (USD $) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2014 | Dec. 31, 2013 | |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ' | ' |
Derivative Liability, Fair Value | $7,539,089 | $7,908,415 |
Conversion Feature [Member] | ' | ' |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ' | ' |
Risk-free interest rate | 0.13% | 0.13% |
Expected Volatility | 431.00% | 425.00% |
Expected life (in years) | '.06 to .7 | '.04 to .62 |
Expected dividend yield | 0.00% | 0.00% |
Derivative Liability, Fair Value | 7,535,507 | 7,896,892 |
Warrant [Member] | ' | ' |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ' | ' |
Risk-free interest rate | 0.15% | 0.13% |
Expected Volatility | 431.00% | 425.00% |
Expected life (in years) | '1.3 to 2.93 | '1.6 to 3.6 |
Expected dividend yield | 0.00% | 0.00% |
Derivative Liability, Fair Value | $3,582 | $11,523 |
7_Derivative_Liabilities_Detai1
7. Derivative Liabilities (Details Narrative) (USD $) | 3 Months Ended | ||
Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ' | ' | ' |
Derivative Liability, Current | $7,539,089 | ' | $7,908,415 |
Change in fair value of derivative liability | 703,382 | 163,969 | ' |
Additional derivative liabilities recognized during the period | $334,056 | ' | ' |
8_Preferred_and_Common_Stock_D
8. Preferred and Common Stock (Details Narrative) (USD $) | 3 Months Ended | 117 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | Mar. 31, 2014 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ' | ' | ' |
Common stock issued for cash, shares issued | 3,637 | ' | ' |
Proceeds from common stock sold | $5,000 | $108,000 | $3,385,570 |
Common stock issued in exchange for convertible promissory notes payable, shares issued | 130,751,577 | ' | ' |
Common stock issued in exchange for convertible debt, shares issued | 3,666,666 | ' | ' |
Common stock issued in exchange of debt, shares issued | 5,000,000 | ' | ' |
9_Stock_Options_and_Warrants_D
9. Stock Options and Warrants (Details-Options outstanding) (Options [Member], USD $) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2014 | Dec. 31, 2013 | |
Options [Member] | ' | ' |
Number of shares | ' | ' |
Options outstanding, beginning balance | 92,300 | ' |
Granted or issued | ' | ' |
Expired or forfeited | -8,400 | ' |
Options outstanding, ending balance | 83,900 | 92,300 |
Options exercisable | 83,900 | ' |
Weighted Average Exercise Price | ' | ' |
Options outstanding, beginning balance | $33.52 | ' |
Expired or forfeited | $121.43 | ' |
Options outstanding, ending balance | $24.72 | $33.52 |
Options exercisable | $24.72 | ' |
Weighted Average Remaining Contractual Life | ' | ' |
Options outstanding, ending balance | '2 years 10 months 24 days | '2 years 10 months 24 days |
Aggregate Intrinsic Value | ' | ' |
Intrinsic value, ending balance | $0 | $0 |
9_Stock_Options_and_Warrants_D1
9. Stock Options and Warrants (Details-Warrants outstanding) (Warrants [Member], USD $) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2014 | Dec. 31, 2013 | |
Warrants [Member] | ' | ' |
Number of Shares | ' | ' |
Warrants outstanding, beginning balance | 2,409,370 | ' |
Warrants granted or issued | ' | ' |
Warrants expired or forfeited | ' | ' |
Warrants outstanding, ending balance | 2,409,370 | 2,409,370 |
Weighted Average Exercise Price | ' | ' |
Warrants outstanding, beginning balance | 0.38 | ' |
Warrants granted or issued | ' | ' |
Warrants expired or forfeited | ' | ' |
Warrants outstanding, ending balance | 0.38 | 0.38 |
Weighted Average Remaining Contractual Life | ' | ' |
Warrants outstanding, ending balance | '2 years 4 months 24 days | '2 years 4 months 24 days |
Aggregate Intrinsic Value | ' | ' |
Warrants outstanding, ending balance | $0 | $0 |
10_Related_Party_Transactions_
10. Related Party Transactions (Details Narrative) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Surety Financial Group, LLC | ' | ' |
Accounts payable, related parties | $110,300 | $113,300 |
Pinkman | ' | ' |
Accounts payable, related parties | $7,000 | $7,000 |