Accounting Policies, by Policy (Policies) | 9 Months Ended |
Sep. 30, 2013 |
Accounting Policies [Abstract] | ' |
Basis of Accounting, Policy [Policy Text Block] | ' |
Basis of Presentation |
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ESP Resources, Inc. (“ESP Resources”, and collectively with its subsidiaries, “we, “our” or the “Company”) was incorporated in the State of Nevada on October 27, 2004. The accompanying consolidated financial statements include the accounts of ESP Resources, Inc. and its wholly owned subsidiaries, ESP Petrochemicals, Inc. of Louisiana (“ESP Petrochemicals”), ESP Ventures, Inc. of Delaware (“ESP Ventures”), ESP Corporation, S.A., a Panamanian corporation (“ESP Corporation”) and ESP Payroll Services, Inc. of Nevada (“ESP Payroll”). On July 11, 2012 the Company formed two partially owned subsidiaries in Delaware, ESP Advanced Technologies, Inc., and ESP Facility & Pipeline Services, Inc. On December 19, 2012 the Company formed a partially owned subsidiary in Nevada, IEM, Inc. |
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On September 7, 2011, the Company became a 49% partner in a new entity, ESP Marketing, LLC. The Company’s management will direct the operations of the business and the Company will receive 80% of the profits. On July 11, 2012, the Company became a 60% partner in a new entity, ESP Facility and Pipeline Services, Inc. The Company’s management will direct the operations of the business and the Company will receive 60% of the profits. All significant inter-company balances and transactions have been eliminated in the consolidated financial statements. |
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The consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America. Any reference herein to “ESP Resources”, the “Company”, “we”, “our” or “us” is intended to mean ESP Resources, Inc. including the subsidiaries indicated above, unless otherwise indicated. |
Nature of Operations [Text Block] | ' |
Nature of the Business |
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The Company’s current business through its subsidiary ESP Petrochemicals, Inc. sells and blends chemicals for use in the oil and gas industry to customers primarily located in the Gulf of Mexico and Gulf States region. ESP Resources was previously in the business of acquisition and exploration of oil and gas properties in North and South America. ESP Delaware, which was incorporated in Delaware in November 2006, was formed as a holding company for ESP Petrochemicals, Inc. On June 15, 2007, ESP Delaware acquired all the stock of ESP Petrochemicals, Inc. |
Use of Estimates, Policy [Policy Text Block] | ' |
Use of Estimates |
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The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Consolidation, Policy [Policy Text Block] | ' |
Principles of consolidation |
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The consolidated financial statements include the accounts of ESP Resources and its wholly-owned and partially owned subsidiaries for the nine month period ended September 30, 2013 and the twelve months ended December 31, 2012. All significant inter-company transactions and balances have been eliminated in consolidation. |
Cash and Cash Equivalents, Restricted Cash and Cash Equivalents, Policy [Policy Text Block] | ' |
Restricted Cash |
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Under the terms of the Factoring payable, the Company may obtain advances of up to 100% of eligible accounts receivable, subject to a factoring fee of 0.75% per 15 days, with 10% held in a restricted cash reserve account, which is released to the Company upon payment of the receivable. |
Receivables, Trade and Other Accounts Receivable, Allowance for Doubtful Accounts, Policy [Policy Text Block] | ' |
Accounts Receivable and Allowance for Doubtful Accounts |
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The Company generally does not require collateral, and the majority of its trade receivables are unsecured. The carrying amount for accounts receivable approximates fair value. |
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Accounts receivable consisted of the following as of September 30, 2013 and December 31, 2012: |
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| | September 30, | | | December 31, | |
2013 | 2012 |
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Trade receivables | | $ | 1,429,623 | | | $ | 1,868,090 | |
Less: Allowance for doubtful accounts | | | (84,000 | ) | | | (38,000 | ) |
Net accounts receivable | | $ | 1,345,623 | | | $ | 1,830,090 | |
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Accounts receivable are periodically evaluated for collectability based on past credit history with clients. Provisions for losses on accounts receivable are determined on the basis of loss experience, known and inherent risk in the account balance and current economic conditions. |
Inventory, Policy [Policy Text Block] | ' |
Inventory |
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Inventory represents raw and blended chemicals and other items valued at the lower of cost or market with cost determined using the first-in first-out method, and with market defined as the lower of replacement cost or realizable value. |
Fair Value Measurement, Policy [Policy Text Block] | ' |
Fair Value Measurements |
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The valuation of our embedded derivatives and warrant derivatives are determined primarily by the multinomial distribution (Lattice) model. An embedded derivative is a derivative instrument that is embedded within another contract, which under the convertible note (the host contract) includes the right to convert the note by the holder, certain default redemption right premiums and a change of control premium (payable in cash if a fundamental change occurs). In accordance with Accounting Standards Codification ("ASC") 815 “Accounting for Derivative Instruments and Hedging Activities”, as amended, these embedded derivatives are marked-to-market each reporting period, with a corresponding non-cash gain or loss charged to the current period. A warrant derivative liability is also determined in accordance with ASC 815. Based on ASC 815, warrants which are determined to be classified as derivative liabilities are marked-to-market each reporting period, with a corresponding non-cash gain or loss charged to the current period. The practical effect of this has been that when our stock price increases so does our derivative liability resulting in a non-cash loss charge that reduces our earnings and earnings per share. When our stock price declines, we record a non-cash gain, increasing our earnings and earnings per share. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, there exists a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows: |
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● Level 1 | unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access as of the measurement date. | | | | | | | |
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● Level 2 | inputs other than quoted prices included within Level 1 that are directly observable for the asset or liability or indirectly observable through corroboration with observable market data. | | | | | | | |
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● Level 3 | unobservable inputs for the asset or liability only used when there is little, if any, market activity for the asset or liability at the measurement date. | | | | | | | |
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This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. |
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To determine the fair value of our embedded derivatives, management evaluates assumptions regarding the probability of certain future events. Other factors used to determine fair value include our period end stock price, historical stock volatility, risk free interest rate and derivative term. The fair value recorded for the derivative liability varies from period to period. This variability may result in the actual derivative liability for a period either above or below the estimates recorded on our consolidated financial statements, resulting in significant fluctuations in other income (expense) because of the corresponding non-cash gain or loss recorded. |
Concentration Risk, Credit Risk, Policy [Policy Text Block] | ' |
Concentration |
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The Company has three major customers that together account for 47% of accounts receivable at September 30, 2013 and 36% of the total revenues earned for the period ended September 30, 2013. |
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| | Accounts | | | Revenue | |
Receivable |
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Customer A | | | 21 | % | | | 8 | % |
Customer B | | | 16 | % | | | 27 | % |
Customer C | | | 10 | % | | | 1 | % |
| | | 47 | % | | | 36 | % |
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The Company has three vendors that accounted for 16%, 16% and 10% of purchases for the nine months ended September 30, 2013. |
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The Company has three major customers that together account for 64% of accounts receivable at September 30, 2012 and 78% of the total revenues earned for the period ended September 30, 2012. |
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| | Accounts | | | Revenue | |
Receivable |
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Customer A | | | 37 | % | | | 38 | % |
Customer B | | | 17 | % | | | 22 | % |
Customer C | | | | | | | | |
Reclassification, Policy [Policy Text Block] | ' |
Reclassification |
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Certain accounts in the prior period were reclassified to conform to the current period’s financial statement presentation |