Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Jun. 19, 2014 | Jun. 30, 2013 | |
Document And Entity Information | ' | ' | ' |
Entity Registrant Name | 'STW RESOURCES HOLDING CORP. | ' | ' |
Entity Central Index Key | '0001357838 | ' | ' |
Document Type | '10-K | ' | ' |
Document Period End Date | 31-Dec-13 | ' | ' |
Amendment Flag | 'false | ' | ' |
Current Fiscal Year End Date | '--12-31 | ' | ' |
Is Entity a Well-known Seasoned Issuer? | 'No | ' | ' |
Is Entity a Voluntary Filer? | 'No | ' | ' |
Is Entity's Reporting Status Current? | 'No | ' | ' |
Entity Filer Category | 'Smaller Reporting Company | ' | ' |
Entity Public Float | ' | ' | $1,723,579 |
Entity Common Stock, Shares Outstanding | ' | 151,118,930 | ' |
Document Fiscal Period Focus | 'FY | ' | ' |
Document Fiscal Year Focus | '2013 | ' | ' |
Condensed_Consolidated_Balance
Condensed Consolidated Balance Sheets (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Assets | ' | ' |
Cash | $17,301 | $59,870 |
Accounts receivable | 532,910 | 5,040 |
Prepaid expenses and other current assets | 33,370 | 88,937 |
Total current assets | 583,581 | 153,847 |
Property and equipment, net | 746,638 | ' |
Other Assets | ' | ' |
Deferred loan costs, net of $102,435 and $45,675 accumulated amortization, respectively | 185,428 | 47,167 |
Total Assets | 1,515,647 | 201,014 |
Current liabilities | ' | ' |
Bank overdraft | 30,468 | ' |
Accounts payable | 1,256,043 | 794,191 |
Payable to related parties: | ' | ' |
Black Pearl Energy, LLC | 139,763 | ' |
Dufrane Nuclear, Inc. | 132,490 | ' |
Accrued consulting fees - officers | 584,666 | 287,934 |
Current portion of notes payable, net of discounts, $854,928 | 4,668,492 | 5,331,734 |
Sales and payroll taxes payable | 350,074 | ' |
Accrued expenses and interest | 1,839,439 | 899,728 |
Accrued compensation | 285,190 | 127,665 |
Accrued board compensation | 491,724 | 235,000 |
Deferred Revenue, net of deferred costs of $436,654 | ' | 97,346 |
Fees payable in common stock | 231,897 | ' |
Stock subscriptions payable | 310,000 | ' |
Derivative liability | 1,630,985 | 1,046,439 |
Total current liabilities | 11,951,231 | 8,820,037 |
Notes payable, net of discount and current portion | 2,623,009 | 513,141 |
Accrued interest on notes payable, net of current portion | ' | 26,307 |
Total liabilities | 14,574,240 | 9,359,485 |
Stockholders' deficit | ' | ' |
Preferred stock, par value $.001 per share, 10,000,000 shares authorized, no shares issued and outstanding as of December 31, 2013 and December 31, 2012 | ' | ' |
Common stock, par value $.001 per share, 250,000,000 and 100,000,000 shares authorized, 111,255,849 and 96,308,599 shares issued and outstanding as of December 31, 2013 and December 31, 2012, respectively | 111,256 | 96,309 |
Additional paid-in capital | 11,231,418 | 8,067,608 |
Accumulated deficit | -24,355,343 | -17,322,388 |
Total Stockholders' Deficit of STW Resources | -13,012,669 | -9,158,471 |
Non-controlling interest in subsidiary | -45,924 | ' |
Total Stockholders' Deficit | -13,058,893 | -9,158,471 |
Total Liabilities and Stockholders' Deficit | $1,515,647 | $201,014 |
Condensed_Consolidated_Balance1
Condensed Consolidated Balance Sheets (Parenthetical) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Other Assets | ' | ' |
Accumulated amortization | $102,435 | $45,675 |
Current liabilities | ' | ' |
Notes payable to related parties | 854,928 | 854,928 |
Deferred costs | $436,544 | $436,544 |
Shareholders' equity (deficit) | ' | ' |
Preferred stock, par value | $0.00 | $0.00 |
Preferred stock, authorized shares | 10,000,000 | 10,000,000 |
Preferred stock, issued shares | ' | ' |
Preferred stock, outstanding shares | ' | ' |
Common stock, par value | $0.00 | $0.00 |
Common stock, authorized shares | 250,000,000 | 100,000,000 |
Common stock, issued shares | 111,255,849 | 96,308,599 |
Common stock, outstanding shares | 111,255,849 | 96,308,599 |
Condensed_Consolidated_Stateme
Condensed Consolidated Statements of Operations (Unaudited) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Revenues | ' | ' |
Contract and service revenues | $1,598,081 | ' |
Service revenues from related party | 347,550 | ' |
Total revenues | 1,945,631 | ' |
Costs of Revenues | 1,675,314 | ' |
Gross Profit | 270,317 | ' |
Operating Expenses | ' | ' |
Research and Development | 80,556 | ' |
Sales and marketing | 37,066 | ' |
General and administrative | 3,291,481 | 1,935,027 |
Depreciation | 60,380 | ' |
Total operating expenses | 3,469,483 | 1,935,027 |
Loss from operations | -3,199,166 | -1,935,027 |
Other Income (Expense) | ' | ' |
Interest expense | -1,205,338 | -655,371 |
Change in fair value of shares issued to note holder | ' | -19,587 |
Other income | ' | 2,052 |
Penalties | -114,957 | ' |
Change in fair value of derivative liability | -2,561,918 | -990,751 |
Net Loss | -7,032,955 | -3,598,684 |
Less: Share of net loss of subsidiary attributable to non-controlling interest | -48,424 | ' |
Net Loss of STW Resources | ($7,081,379) | ($3,598,684) |
Loss per common share - basic and diluted | ($0.07) | ($0.05) |
Weighted average shares outstanding - basic and diluted | 99,992,398 | 76,376,677 |
Consolidated_Statements_of_Sto
Consolidated Statements of Stockholders’ Deficit (USD $) | Common Stock | Additional Paid In Capital | Accumulated Deficit | Non-Controlling Interest | Total |
Beginning balance, Amount at Dec. 31, 2011 | $46,637 | $5,773,505 | ($13,723,704) | ' | ($7,903,562) |
Beginning Balance, Shares at Dec. 31, 2011 | 46,636,849 | ' | ' | ' | ' |
Shares issued to board members as directors fees, Shares | 29,903,000 | ' | ' | ' | ' |
Shares issued to board members as directors fees, Amount | 29,903 | 1,452,497 | ' | ' | 1,482,400 |
Shares issued for consulting services, Shares | 15,768,750 | ' | ' | ' | ' |
Shares issued for consulting services, Amount | 15,769 | 770,606 | ' | ' | 786,375 |
Issuance of shares in connection with debt settlement agreement, shares | 3,000,000 | ' | ' | ' | ' |
Issuance of shares in connection with debt settlement agreement, shares, amount | 3,000 | 27,000 | ' | ' | 30,000 |
Subscription sale of shares, net of issuance cost, shares | 1,000,000 | ' | ' | ' | ' |
Subscription sale of shares, net of issuance cost, amount | 1,000 | 44,000 | ' | ' | 45,000 |
Reclassification of derivative liability due to increase share authorization | ' | ' | ' | ' | ' |
Net Loss for the period | ' | ' | -3,598,684 | ' | -3,598,684 |
Ending Balance, Amount at Dec. 31, 2012 | 96,309 | 8,067,608 | -17,322,388 | ' | -9,158,471 |
Ending Balance, Shares at Dec. 31, 2012 | 96,308,599 | ' | ' | ' | ' |
Conversion of accrued interest on 12% convertible notes to common shares, Shares | 353,120 | ' | ' | ' | ' |
Conversion of accrued interest on 12% convertible notes to common shares, Amount | 353 | 20,834 | ' | ' | 21,187 |
Conversion of 12% convertible notes to common shares, Shares | 750,380 | ' | ' | ' | ' |
Conversion of 12% convertible notes to common shares, Amount | 750 | 44,272 | ' | ' | 45,022 |
Value of warrants issued for loan fee | ' | ' | ' | ' | ' |
Value of warrants issued with notes payable | ' | 171,996 | ' | ' | 171,996 |
Shares issued to board members as directors fees, Shares | 4,575,000 | ' | ' | ' | ' |
Shares issued to board members as directors fees, Amount | 4,575 | 269,925 | ' | ' | 274,500 |
Shares issued to advisory board members as fees, Shares | 468,750 | ' | ' | ' | ' |
Shares issued to advisory board members as fees, Amount | 469 | 27,656 | ' | ' | 28,125 |
Shares issued for consulting services, Shares | 6,500,000 | ' | ' | ' | ' |
Shares issued for consulting services, Amount | 6,500 | 247,500 | ' | ' | 434,000 |
Reclassification of derivative liability due to increase share authorization | ' | 1,977,372 | ' | ' | 1,977,372 |
Shares issued as employment signing bonuses, shares | 2,300,000 | ' | ' | ' | ' |
Shares issued as employment signing bonus, amount | 2,300 | 158,700 | ' | ' | 161,000 |
Non-controlling interest investment in subsidiary | ' | ' | ' | 2,500 | 2,500 |
Net Loss for the period | ' | ' | -7,032,955 | -484,424 | -7,081,379 |
Ending Balance, Amount at Dec. 31, 2013 | $111,256 | $11,231,418 | ($24,355,343) | ($45,924) | ($13,058,893) |
Ending Balance, Shares at Dec. 31, 2013 | 111,255,849 | ' | ' | ' | ' |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Cash flows from operating activities | ' | ' |
Net Loss | ($7,032,955) | ($3,598,684) |
Adjustments to reconcile net loss of STW Resources to net cash used in operations operating activities: | ' | ' |
Depreciation | 60,380 | ' |
Net loss of subsidiary attributable to non-controlling interest | -48,424 | ' |
Change in fair value of derivative liability | 2,561,918 | 990,751 |
Amortization of discount and debt issuance costs | 164,549 | 44,675 |
Share-based compensation | 826,897 | 1,004,875 |
Change in fair value of common shares issued in connection with the debt settlement agreement | ' | 19,587 |
Changes in operating assets and liabilities: | ' | ' |
(Increase) Decrease in accounts receivable | -527,870 | ' |
(Increase) Decrease in prepaid expense | 55,567 | 1,343 |
Increase (Decrease) in accounts payable | 459,649 | -17,295 |
Increase (Decrease) in sales and payroll taxes payable | 350,074 | ' |
Increase (Decrease) in accrued compensation | 157,525 | ' |
Increase (Decrease) in accrued expenses and interest | 976,613 | 772,835 |
Increase (Decrease) in accrued board compensation | 559,349 | 232,750 |
Increase (Decrease) in deferred revenue | -97,346 | 97,346 |
Net cash used in operating activities | -1,534,074 | -451,817 |
Cash flows used in investing activities | ' | ' |
Purchases of vehicles and equipment, net of equipment loans | -608,372 | ' |
Net cash used in investing activities | -608,372 | ' |
Cash flows provided from financing activities | ' | ' |
Bank overdraft | 30,468 | ' |
Stock subscriptions payable | 310,000 | ' |
Related party payables | 568,985 | ' |
Proceeds from notes payable | 1,320,611 | 165,000 |
Principal payments on notes payable | -97,662 | -50,000 |
Non-controlling interest contributions | 2,500 | ' |
Issuance of convertible notes payable | ' | 401,000 |
Proceeds from equity issuances, net | ' | 45,000 |
Debt issuance costs | -35,025 | -56,500 |
Net cash from financing activities | 2,099,877 | 504,500 |
Net increase in cash | -42,569 | 52,683 |
Cash at beginning of period | 59,870 | 7,187 |
Cash at end of period | 17,301 | 59,870 |
Supplemental cash flow information: | ' | ' |
Cash paid for interest | 10,413 | 9,647 |
Non-cash investing and financing activities: | ' | ' |
Value of common shares issued in connection with debt settlement agreement | ' | 30,000 |
Fair value of shares sold by note holder to reduce the note payable principal balance in connection with the debt settlement | ' | 30,413 |
Value of warrants issued with revenue participation notes payable | 65,555 | ' |
Value of common shares issued to board and advisory board for fees | 302,625 | 1,173,900 |
Value of common shares issued to consultants | 434,000 | 90,000 |
Value of common shares issued to employees as signing bonuses | 161,000 | ' |
Value of property, plant & equipment acquired with long term debt | 247,004 | ' |
Estimated fair value of warrants issued in connection with the 14% convertible notes payable | ' | 54,197 |
Reclassification of derivative liability due to increased share authorization | 1,977,372 | ' |
Notes and interest settled in stock | $66,209 | ' |
Nature_of_the_Business_and_Sig
Nature of the Business and Significant Accounting Policies | 12 Months Ended | |||||||||||||
Dec. 31, 2013 | ||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' | |||||||||||||
Nature of the Business and Significant Accounting Policies | ' | |||||||||||||
History of the Company | ||||||||||||||
STW Resources Holding Corp. (“STW” or the “Company”, is a corporation formed to utilize state of the art water reclamation technologies to reclaim fresh water from highly contaminated oil and gas hydraulic fracture flow-back salt water that is produced in conjunction with the production of oil and gas. STW has been working to establish contracts with oil and gas operators for the deployment of multiple water reclamation systems throughout Texas, Arkansas, Louisiana and the Appalachian Basin of Pennsylvania and West Virginia. STW, in conjunction with energy producers, operators, various state agencies and legislators, is working to create an efficient and economical solution to this complex problem. The Company is also evaluating the deployment of similar technology in the municipal wastewater industry. | ||||||||||||||
The Company’s operations are located in the United States of America and the principal executive offices are located at 3424 South County Road 1192, Midland, Texas 79706. | ||||||||||||||
On January 17, 2010, the Company entered into an Agreement and Plan of Merger (“Merger Agreement”) with STW Acquisition, Inc. (“Acquisition Sub”), a wholly owned subsidiary of STW Resources, Inc. (“STW Sub”) and certain shareholders of STW controlling a majority of the issued and outstanding shares of STW. Pursuant to the Merger Agreement, STW merged into the Acquisition Sub resulting in an exchange of all of the issued and outstanding shares of STW for shares of the Company on a one for one basis. At such time, STW became a wholly owned subsidiary of the Company. | ||||||||||||||
On February 9, 2010, the Federal Bankruptcy Court handling a bankruptcy proceeding for our predecessor at the time entered an order confirming the Second Amended Plan of Reorganization (the “Plan”) pursuant to which the Merger Agreement was approved. The Plan was effective February 19, 2010 (the “Effective Date”). The principal provisions of the Plan were as follows: | ||||||||||||||
● | MKM, the DIP lender, received 400,000 shares of common stock and 2,140,000 shares of preferred stock, | |||||||||||||
● | The holders of the Convertible Notes received 1,760,000 shares of common stock, | |||||||||||||
● | General unsecured claims received 100,000 shares of common stock, and | |||||||||||||
● | The Company’s equity interest was extinguished and cancelled. | |||||||||||||
On February 12, 2010, pursuant to the terms of the Merger Agreement, STW Sub merged with Acquisition Sub, which became a wholly-owned subsidiary of the Company (the “Merger”). In consideration for the Merger and STW Sub becoming a wholly-owned subsidiary of the Company, the Company issued an aggregate of 31,780,004 ("the STW Acquisition Shares") shares of common stock to the shareholders of STW at the closing of the Merger and all derivative securities of STW Sub as of the Merger became derivative securities of the Company including options and warrants to acquire 12,613,002 shares of common stock at an exercise price ranging from $3.00 to $8.00 with an exercise period ranging from July 31, 2011 through November 12, 2014 and convertible debentures in the principal amount of $1,467,903 with a conversion price of $0.25 and maturity dates ranging from April 24, 2010 through November 12, 2010. | ||||||||||||||
Formation of New Subsidiaries | ||||||||||||||
On June 25, 2013, the Company formed a new subsidiary, a 75% limited liability company (“LLC”) interest in STW Energy Services, LLC (“STW Energy”). The remaining 25% non-controlling interest in STW Energy is held by Crown Financial, LLC, a Texas Limited Liability Company (“Crown” or “Crown Financial”). | ||||||||||||||
Effective June 30, 2013, STW Resources Holding Corp. (the “Company”) formed a new subsidiary, STW Oilfield Construction, LLC (“Oilfield Construction”), a Texas limited liability company. The Company is the sole member of Oilfield Construction, owning 100% of the membership interest in such entity, which is managed by the Company's CEO and COO, as well as one of the Company's directors and an employee of the Company. | ||||||||||||||
Effective September 20, 2013, the Company formed another new subsidiary, STW Pipeline Maintenance & Construction, LLC (“Pipeline Maintenance”), a Texas limited liability company. The Company is the sole member of Pipeline Maintenance, owning 100% of the membership interest in such entity, which is managed by its members. | ||||||||||||||
Consolidation policy | ||||||||||||||
The consolidated financial statements for the year ended December 31, 2013 include the accounts of the Company and its wholly owned subsidiaries, STW Resources, Inc., STW Oilfield Construction LLC, STW Pipeline Maintenance Construction, LLC, and 75% owned subsidiary of STW Energy Services, LLC. The consolidated financial statements for the year ended December 31, 2012, include the accounts of the Company and its wholly owned subsidiary, STW Resources, Inc. All significant intercompany transactions and balances have been eliminated in consolidation. | ||||||||||||||
The Company also consolidates any variable interest entities (VIEs), of which it is the primary beneficiary, as defined. The Company does not have any VIEs that need to be consolidated as of December 31, 2013. | ||||||||||||||
Reclassifications | ||||||||||||||
Certain reclassifications were made to the prior year consolidated financial statements to conform to the current year presentation. There was no change to reported net loss. | ||||||||||||||
Non-Controlling interest | ||||||||||||||
On June 25, 2013, the Company invested in a 75% limited liability company (“LLC”) interest in STW Energy Services, LLC (“STW Energy”). The non-controlling interest in STW Energy is held by Crown Financial, LLC, a Texas Limited Liability Company (“Crown” or “Crown Financial”). As of December 31, 2013, $2,500 was recorded as the equity of the non-controlling interest in our consolidated balance sheet representing the third-party investment in STW Energy, with a net loss attributable to non-controlling interests of $48,424 for the year ended December 31, 2013. | ||||||||||||||
Going Concern | ||||||||||||||
The Company’s consolidated financial statements have been presented on the basis that it is a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company had an accumulated deficit of $24,355,343 as of December 31, 2013, and as of that date was delinquent in payment of $350,074 of sales and payroll taxes. As of December 31, 2013, $3,695,346 of notes payable are in default. Since its inception in January 2008 through December 31, 2013, management has raised equity and debt financing of approximately $12,000,000 to fund operations and provide working capital. The cash resources of the Company are insufficient to meet its planned business objectives without additional financing. These and other factors raise substantial doubt about the Company’s ability to continue as a going concern. | ||||||||||||||
Management has undertaken steps as part of a plan to improve operations with the goal of sustaining our operations for the next twelve months and beyond. These steps include (a) raising additional capital and/or obtaining financing; (b) executing contracts with oil and gas operators and municipal utility districts; and (c) controlling overhead and expenses. There can be no assurance that the Company can successfully accomplish these steps and it is uncertain that the Company will achieve a profitable level of operations and obtain additional financing. There can be no assurance that any additional financing will be available to the Company on satisfactory terms and conditions, if at all. | ||||||||||||||
The accompanying consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern. | ||||||||||||||
The Company’s ability to continue as a going concern is dependent upon its ability to raise additional capital and to ultimately achieve sustainable revenues and profitable operations. At December 31, 2013, the Company had $17,301 of cash on hand; the Company raised $617,500 of equity financing and secured a $2.0 million credit line from Black Pearl Energy, LLC, a related party, on March 13, 2014, to sustain its operations. Management expects that the current funds on hand will be sufficient to continue operations for the next three months. Management is currently seeking additional funds, primarily through the issuance of debt or equity securities for cash to be used in operations. No assurance can be given that any future financing will be available or, if available, and that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing or cause substantial dilution for our stockholders, in case or equity financing. | ||||||||||||||
Development Stage Enterprise | ||||||||||||||
During the year ended December 31, 2012, the Company was a development stage company as defined by the Financial Accounting Standards Board (the “FASB”). During the year ended December 31, 2013, the Company realized $1,945,631, including $536,735 of revenues from its water treatment business and $1,408,996 from its oil services business. Revenues commenced January 1, 2013, accordingly, as of January 1, 2013, the Company is no longer a development stage company. | ||||||||||||||
Use of Estimates | ||||||||||||||
Consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States require management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Among other things, management has estimated the collectability of its accounts receivable, the valuation of long lived assets, the assumptions used to calculate its derivative liabilities, and equity instruments issued for financing and compensation. Actual results could differ from those estimates. | ||||||||||||||
Concentration of Credit Risk | ||||||||||||||
A financial instrument that potentially subjects the Company to concentration of credit risk is cash. The Company places its cash with financial institutions deemed by management to be of high credit quality. The Federal Deposit Insurance Corporation (“FDIC”) provides basic deposit coverage with limits to $250,000 per owner. At December 31, 2013, there were no uninsured deposits. | ||||||||||||||
The Company anticipates entering into long-term, fixed-price contracts for its services with select oil and gas producers and municipal utilities. The Company will control credit risk related to accounts receivable through credit approvals, credit limits and monitoring procedures. | ||||||||||||||
As of December 31, 2013, three vendors accounted for 64% of total accounts payable. During the year ended December 31, 2013, two vendors accounted for 28% of total purchases. As of December 31, 2012, three vendors accounted for 78% of total accounts payable. | ||||||||||||||
As of December 31, 2013, three customers accounted for 42%, 17% and 17% of accounts receivable. During the year ended December 31, 2013, three customers accounted for 27%, 22% and 17% of total revenues. As of December 31, 2012, one customer accounted for 100% of accounts receivable. During the year ended December 31, 2012, the Company had no revenues as it was a development stage enterprise. | ||||||||||||||
Fair Value of Financial Instruments | ||||||||||||||
Accounting Standards Codification (“ASC”) 820 defines “fair value” as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. | ||||||||||||||
The Company’s financial instruments consist of cash, accounts receivable, convertible notes payable, accounts payable, accrued expenses and derivative liabilities. The carrying value for all such instruments except convertible notes payable and derivative liabilities approximates fair value due to the short-term nature of the instruments. Our derivative liabilities are recorded at fair value (see Note 6). | ||||||||||||||
We determine the fair value of our financial instruments based on a three-level hierarchy for fair value measurements under which these assets and liabilities must be grouped, based on significant levels of observable or unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect management’s market assumptions. This hierarchy requires the use of observable market data when available. These two types of inputs have created the following fair-value hierarchy: | ||||||||||||||
Level 1 — Valuations based on unadjusted quoted market prices in active markets for identical securities. Currently, we do not have any items classified as Level 1. | ||||||||||||||
Level 2 — Valuations based on observable inputs (other than Level 1 prices), such as quoted prices for similar assets at the measurement date; quoted prices in markets that are not active; or other inputs that are observable, either directly or indirectly. Currently, we do not have any items classified as Level 2. | ||||||||||||||
Level 3 — Valuations based on inputs that are unobservable and significant to the overall fair value measurement, and involve management judgment. We use the Black-Scholes-Merton option pricing model (“Black-Scholes”) to determine the fair value of the financial instruments. | ||||||||||||||
If the inputs used to measure fair value fall in different levels of the fair value hierarchy, a financial security’s hierarchy level is based upon the lowest level of input that is significant to the fair value measurement. | ||||||||||||||
The Company’s finance department is responsible for performing the valuation of financial instruments, including Level 3 fair values. The valuation processes and results are reviewed and approved by the CFO at least once every quarter, in line with the Company’s quarterly and annual reporting dates. Valuation results are discussed with the Audit Committee as part of its quarterly review and annual audit of the Company’s financial statements. | ||||||||||||||
The fair value the 12% convertible debentures was estimated using the Black Scholes Merton method, which approximates the Binomial Lattice valuation model. Significant observable and unobservable inputs include stock price, exercise price, annual risk free rate, term, and expected volatility, and were classified within Level 3 of the valuation hierarchy. An increase or decrease in these inputs could significantly increase or decrease the fair value of the warrant. For example, if the volatility factor was reduced from 623% to 500%, the derivative liability would be reduced from $1,630,985 to $1,585,686. | ||||||||||||||
Our derivative liabilities consist of embedded conversion features on debt and price protection features on warrants, which are classified as Level 3 liabilities. We use Black-Scholes to determine the fair value of these instruments (see Note 6). | ||||||||||||||
Management has used the simplified Black Scholes Merton model to estimate fair value of derivative instruments. Management believes that as a result of the relatively short term nature of the warrants and convertibility features, a lattice model would not result in a materially different valuation. | ||||||||||||||
The following table presents certain financial instruments measured and recorded at fair value in the Company’s consolidated balance sheets on a recurring basis and their level within the fair value hierarchy as of December 31, 2013 and 2012. | ||||||||||||||
Fair value of Derivative Liabilities: | Level 1 | Level 2 | Level 3 | Total | ||||||||||
31-Dec-13 | $ | -- | $ | -- | $ | 1,630,985 | $ | 1,630,985 | ||||||
31-Dec-12 | $ | -- | $ | -- | $ | 1,046,439 | $ | 1,046,439 | ||||||
Accounting for Derivative Liabilities | ||||||||||||||
The Company evaluates stock options, stock warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for under the relevant sections of ASC Topic 815-40, “Derivative Instruments and Hedging: Contracts in Entity’s Own Equity ” (“ASC Topic 815-40”). The result of this accounting treatment could be that the fair value of a financial instrument is classified as a derivative instrument and is marked-to-market at each balance sheet date and recorded as a liability. The change in fair value is recorded in the statement of operations as other income or other expense. Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. Financial instruments that are initially classified as equity that become subject to reclassification under ASC Topic 815-40 are reclassified to a liability account at the fair value of the instrument on the reclassification date. | ||||||||||||||
Certain of the Company’s embedded conversion features on debt, price protection features on outstanding warrants are treated as derivatives for accounting purposes. The common stock purchase warrants were not issued with the intent of effectively hedging any future cash flow, fair value of any asset or liability. The warrants do not qualify for hedge accounting, and as such, the changes in the fair value of these warrants are recognized currently in earnings until such time as the warrants are exercised, expired or waived. These common stock purchase warrants do not trade in an active securities market. The Company estimates the fair value of these warrants and embedded conversion features as derivative liabilities contracts using Black-Scholes (see Note 6). | ||||||||||||||
Equity Instruments Issued to Non-Employees for Acquiring Goods or Services | ||||||||||||||
Issuances of the Company’s common stock for acquiring goods or services are measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The measurement date for the fair value of the equity instruments issued to consultants or vendors is determined at the earlier of (i) the date at which a commitment for performance to earn the equity instruments is reached (a “performance commitment” which would include a penalty considered to be of a magnitude that is a sufficiently large disincentive for nonperformance) or (ii) the date at which performance is complete. When it is appropriate for the Company to recognize the cost of a transaction during financial reporting periods prior to the measurement date, for purposes of recognition of costs during those periods, the equity instrument is measured at the then-current fair values at each of those interim financial reporting dates. | ||||||||||||||
Long-lived Assets and Intangible Assets | ||||||||||||||
In accordance with ASC 350-30, the Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that their net book value may not be recoverable. When such factors and circumstances exist, the Company compares the projected undiscounted future cash flows associated with the related asset or group of assets over their estimated useful lives against their respective carrying amount. Impairment, if any, is based on the excess of the carrying amount over the fair value, based on market value when available, or discounted expected cash flows, of those assets and is recorded in the period in which the determination is made. | ||||||||||||||
The Company had no such asset impairments at December 31, 2013 or 2012. There can be no assurance, however, that market conditions will not change or demand for the Company’s products under development will continue. Either of these could result in future impairment of long-lived assets. | ||||||||||||||
Revenue Recognition | ||||||||||||||
Contract Revenue and Cost Recognition on Engineering and Design Services | ||||||||||||||
During the year ended December 31, 2013, the Company completed a contract to design, build and deliver a proprietary water desalinization facility to produce 700,000 gallons of water a day by converting brackish well water into the equivalent of rain water to maintain the greens and fairways of the Ranchland Hills Golf Club in Midland, Texas. As of December 31, 2012, the Company reported deferred revenue of $97,346, which is net of deferred costs of $436,654 related to this contract. These revenues and costs were recognized during the year ended December 31, 2013 upon completion of the contract and acceptance of the desalinization facility. | ||||||||||||||
The Company recognizes revenue on a contract once the service or products are delivered or completed and accepted by the customer. This is based on a thorough analysis of the written contract. Revenues from these contracts are recognized when the customer has passed credit tests and collection is reasonably assured and amounts are fixed and determinable. | ||||||||||||||
Services Revenues from Master Services Agreements | ||||||||||||||
During the year ended December 31, 2013, the Company entered into Master Services Agreements (“MSA”) with several major oil & gas companies including Anadarko Petroleum Company, Apache Corporation, Diamondback E&P, Pioneer Natural Resources USA, Reliance Energy, Atlas Pipeline Holdings, and Targa Resources LLC. These MSAs contract the Company to provide a range of oil & gas support services including oilfield site construction and maintenance, pipeline maintenance, oil rig cleaning, site preparation, energy support services, and other oil & gas support services. The Company bills these customers pursuant to purchase orders issued under the MSAs. The revenues billed include hourly labor fees and equipment usage fees. The Company realizes revenues from these contracts as the services are performed under the customer purchase orders. During the year ended December 31, 2013, the Company recognized $1,408,896 of revenues from these services contracts, of which $347,550 were revenue from related parties. | ||||||||||||||
The Company recognizes revenue in the service area based on the MSA agreements. As services are performed and signed off by the customer the Company generates an invoice and recognizes the revenue from its ongoing customers. Revenues are recognized when collectability of the receivable is reasonably assured and amounts are fixed and determinable. | ||||||||||||||
Business Segments | ||||||||||||||
The Company has two reportable segments, (1) water reclamation services, and (2) oil & gas services. Segment information is reported in Note 11. | ||||||||||||||
Income Taxes | ||||||||||||||
In accordance with ASC 740-10-25, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740-10-25, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. | ||||||||||||||
The Company maintains a valuation allowance with respect to deferred tax assets. The Company established a valuation allowance based upon the potential likelihood of realizing the deferred tax asset in the future tax consequences. Changes in circumstances, such as the Company generating taxable income, could cause a change in judgment about the realizability of the related deferred tax asset. Any change in the valuation allowance will be included in income in the year of the change in estimate. | ||||||||||||||
The Company has adopted the provisions set forth in FASB ASC Topic 740, to account for uncertainty in income taxes. In the preparation of income tax returns in federal and state jurisdictions, the Company asserts certain tax positions based on its understanding and interpretation of the income tax law. The taxing authorities may challenge such positions, and the resolution of such matters could result in recognition of income tax expense in the Company’s financial statements. Management believes it has used reasonable judgments and conclusions in the preparation of its income tax returns. | ||||||||||||||
The Company uses the “more likely than not” criterion for recognizing the tax benefit of uncertain tax positions and to establish measurement criteria for income tax benefits. The Company has determined that it has no material unrecognized tax assets or liabilities related to uncertain tax positions as of December 31, 2013 and 2012. The Company does not anticipate any significant changes in such uncertainties and judgments during the next 12 months. | ||||||||||||||
The Company’s policy is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company had no accrual for interest or penalties on its consolidated balance sheets at December 31, 2013 and December 31, 2012, respectively. | ||||||||||||||
Common Stock and Common Stock Warrants Issued to Employees | ||||||||||||||
The Company uses the fair value recognition provision of ASC 718, “Stock Compensation,” which requires the Company to expense the cost of employee services received in exchange for an award of equity instruments based on the grant date fair value of such instruments. The Company uses the Black-Scholes-Merton option pricing model to calculate the fair value of any equity instruments on the grant date. | ||||||||||||||
At December 31, 2013 and 2012, the Company had no grants of employee common stock options or warrants outstanding. | ||||||||||||||
Income (Loss) per Share | ||||||||||||||
The basic income (loss) per share is calculated by dividing the Company’s net income (loss) available to common shareholders by the weighted average number of common shares during the period. The diluted earnings (loss) per share is calculated by dividing the Company’s net income (loss) available to common shareholders by the diluted weighted average number of shares outstanding during the period. The diluted weighted average number of shares outstanding is the basic weighted average number of shares adjusted for any potentially dilutive debt or equity. Diluted income (loss) per share is the same as basic income (loss) per share due to the lack of dilutive items. As of December 31, 2013 and 2012, the Company had 102,350,791 and 101,270,609 dilutive shares outstanding, respectively, which have been excluded as their effect is anti-dilutive. | ||||||||||||||
Property and Equipment | ||||||||||||||
Property and equipment are stated at cost, net of accumulated depreciation and amortization. The cost of property and equipment is depreciated or amortized on the straight-line method over the following estimated useful lives: | ||||||||||||||
Computer equipment and software | 3 years | |||||||||||||
Furniture | 3 years | |||||||||||||
Machinery | 3-5 years | |||||||||||||
Stock Subscriptions Payable | ||||||||||||||
During the year ended December 31, 2013, the Company received stock subscriptions and $310,000 of proceeds from a unit offering of its common stock in consideration of 3,875,000 shares of its common stock. The stock was not issued as of December 31, 2013 and was reported as Stock Subscriptions Payable. | ||||||||||||||
Fees Payable in Common Stock | ||||||||||||||
During the year ended December 31, 2013, the Company agreed to issue an aggregate of 12,449,673 shares of its common stock in payment of consulting fees valued at an aggregate of $826,897. As of December 31, 2013, the Company has issued 8,800,000 of the shares associated with this obligation at a value of $595,000. As of December 31, 2013, the Company is obligated to issue the remaining 3,649,673 common shares at a value of $231,897. | ||||||||||||||
Loan Discounts | ||||||||||||||
The Company amortizes loan discounts under the effective interest method. | ||||||||||||||
Recently Issued Accounting Standards | ||||||||||||||
Recent accounting pronouncements did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements. The Company does not have any components of other comprehensive income (loss) as defined by ASC 220, “Reporting Comprehensive Income.” For the years ended December 31, 2013 and 2012, comprehensive income (loss) consists only of net loss and, therefore, a Statement of Other Comprehensive Loss has not been included in these consolidated financial statements. |
Property_and_Equipment
Property and Equipment | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Deferred Revenue Disclosure [Abstract] | ' | ||||||||
Property and Equipment | ' | ||||||||
Property, plant and equipment consisted of the following at December 31, 2013 and December 31, 2012: | |||||||||
31-Dec-13 | 31-Dec-12 | ||||||||
Office furniture and equipment | $ | 16,838 | $ | 10,396 | |||||
Tools and yard equipment | 2,302 | -- | |||||||
Vehicles and construction equipment | 798,273 | -- | |||||||
Total, cost | 817,413 | 10,396 | |||||||
Accumulated Depreciation and Amortization | (70,775 | ) | (10,396 | ) | |||||
Total Property and Equipment | $ | 746,638 | $ | - | |||||
Depreciation expense for the year ended December 31, 2013 and 2012 was $60,380 and zero, respectively. |
Investment_in_Black_Wolf_LLC
Investment in Black Wolf, LLC | 12 Months Ended |
Dec. 31, 2013 | |
Debt Disclosure [Abstract] | ' |
Investment in Black Wolf, LLC | ' |
On January 8, 2013, the Company and Black Pearl Energy, LLC ("BPE"), an entity controlled by Stan Weiner and Lee Maddox, the Company’s Chief Executive Officer and Chief Operating Officer, respectively, and one of our directors: Grant Seabolt, entered into an equity exchange agreement (the “Exchange Agreement”) pursuant to which BPE transferred 10% of the outstanding membership interests of Black Wolf Enterprises, LLC, (“Black Wolf”) to the Company in exchange for 7,000,000 shares of the Company’s common stock (the "Pearl Shares"). The Pearl Shares, although supposed to be issued after we amended our articles of incorporation to increase our authorized share capital, were never issued. Other than the Pearl Shares, the Exchange Agreement did not obligate STW to provide any other assets or commitments in consideration of the transaction contemplated thereby. The transaction contemplated by the Agreement - the transfer of ownership in Black Wolf - closed on January 28, 2013. At the time of the Exchange Agreement, Black Wolf commercialized the expertise and services of Lone Wolf Resources, LLC, an environmental and civil construction company operating in the oil and gas industry (“Lone Wolf”). Lone Wolf has worked with the Department of Transportation and the Texas Commission on environmental quality to shape the standards for processing hydrocarbon-impacted soils to a reusable road base. Lone Wolf has completed projects internationally and throughout the United States, including the world's largest in-situ thermal remediation project. BPE is an oilfield service company that has developed an evaporation cover that is conservation friendly, economical and can be floated on to existing ponds or installed during construction for the elimination of evaporation on frac ponds used throughout the oilfield. BPE also provides high quality liners with fusion-welded seams, quality control testing including air tests of seams and destruction testing in West Texas and Eastern New Mexico, and intends to expand into South Texas during the first quarter of next year. Black Wolf combines Lone Wolf’s and BPE’s services and constructs drill sites, reserve pits, frac ponds, roads, pit closings, liners, leak detection systems, evaporation covers, and provides associated maintenance. Black Wolf also offers turnkey services for H-11 permitted ponds, including surveys, engineering and design, and permitting for storage of produced and brine waters as well as utilizes proprietary technologies employed by Lone Wolf in the reclamation of hydrocarbon-impacted soils. Black Wolf is currently negotiating on a number of multi-well packages with many of the largest oil and gas producers in West Texas. After 4 months of operations, Lone Wolf initiated their termination clause with Black Pearl and Black Wolf. As a result, Black Wolf was dissolved and we sought to terminate the Exchange Agreement since our investment would no longer be of any value. On October 14, 2013, we entered into a Rescission Agreement with BPE, pursuant to which BPE has agreed to cancel the Exchange Agreement and unwind the transaction in its entirety; as part of the cancellation, we are not required to issue the Pearl Shares and BPE agreed to indemnify the Company from any and all potential liabilities associated with or arising out of the Black Pearl's business. | |
Receivable_from_Factor_Net_of_
Receivable from Factor, Net of Unapplied Customer Credits | 12 Months Ended |
Dec. 31, 2013 | |
Receivable From Factor Net Of Unapplied Customer Credits | ' |
Receivable from Factor, Net of Unapplied Customer Credits | ' |
Accounts Purchase Agreement – Crown Financial, LLC | |
On June 21, 2013, STW Energy entered into an accounts purchase facility with Crown Financial pursuant to an Account Purchase Agreement (the “Accounts Purchase Agreement”), pursuant to the Texas Finance Code. | |
The Accounts Purchase Agreement shall continue until terminated by either party upon 30 days written notice. The Accounts Purchase Agreement is secured by a security interest in substantially all of STW Energy’s assets pursuant to the terms of a Security Agreement. Under the terms of the Accounts Purchase Agreement, Crown Financial may, at its sole discretion, purchase certain of the STW Energy’s eligible accounts receivable. Upon any acquisition of an account receivable, Crown will advance to STW Energy up to 80% of the face amount of the account receivable; provided however, that based upon when each invoice gets paid, Crown shall pay STW Energy a rebate percentage of between 0-18.5% of the related invoice. Each account receivable purchased by Crown will be subject to a discount fee of 1.5% of the gross face amount of such purchased account for each 30 day period (or part thereof) the purchased account remains unpaid. Crown will generally have full recourse against STW Energy in the event of nonpayment of any such purchased account. | |
The Accounts Purchase Agreement contains covenants that are customary for agreements of this type and appoints Crown as attorney in fact for various activities associated with the purchased accounts receivable, including opening STW Energy’s mail, endorsing its name on related notes and payments, and filing liens against related third parties. The failure to satisfy covenants under the Accounts Purchase Agreement or the occurrence of other specified events that constitute an event of default could result in the acceleration of the repayment obligations of the Company or Crown enforcing its rights under the Security Agreement and take possession of the collateral. The Accounts Purchase Agreement contains provisions relating to events of default that are customary for agreements of this type. | |
Factoring Agreement with Joshua Brooks | |
On September 26, 2013, STW Oilfield Construction, LLC (Oilfield Construction) entered into an accounts receivable factoring facility (the “Factoring Facility”) with Mr. Joshua Brooks, the Company's Vice President of Operations, pursuant to a Loan Agreement (the “Factoring Agreement”), which shall not be deemed an account purchase agreement pursuant to the Texas Finance Code. The Factoring Facility includes a loan in the amount of $225,000, of which none is outstanding at December 31, 2013. | |
The Factoring Facility shall continue until terminated by either party upon 30 days written notice. The Factoring Facility is secured by a security interest in substantially all of Oilfield Construction's assets pursuant to the terms of a Security Agreement. Under the terms of the Factoring Agreement, Joshua Brooks may, at his sole discretion, purchase certain of the Company’s eligible accounts receivable. Upon any acquisition of an account receivable, Brooks will advance to the Company up to 80% of the face amount of the account receivable; provided however, that based upon when each invoice gets paid, Mr. | |
Brooks shall pay Oilfield Construction a rebate percentage of between 0-18.5% of the related invoice. Each account receivable purchased by Mr. Brooks will be subject to a factoring fee of 1.5% of the gross face amount of such purchased account for each 30 day period (or part thereof) the purchased account remains unpaid. Mr. Brooks will generally have full recourse against the Company in the event of nonpayment of any such purchased account. | |
The Factoring Agreement contains covenants that are customary for agreements of this type and appoints Joshua Brooks as attorney in fact for various activities associated with the purchased accounts receivable, including opening Oilfield Construction's mail, endorsing its name on related notes and payments, and filing liens against related third parties. The failure to satisfy covenants under the Factoring Agreement or the occurrence of other specified events that constitute an event of default could result in the acceleration of the repayment obligations of the Company or Mr. Brooks enforcing its rights under the Security Agreement and take possession of the collateral. The Factoring Agreement contains provisions relating to events of default that are customary for agreements of this type. | |
The Company has guaranteed performance of certain of Oilfield Construction's obligations under the Factoring Agreement, pursuant to a Guaranty Agreement with Mr. Brooks, pursuant to which the Company shall guaranty payment of the loan and the related indebtedness thereon. Pursuant to the Guaranty Agreement, Mr. Brooks may take all reasonable steps to take and hold security for the payment of the obligations under the Guaranty Agreement and the Company granted Mr. Brooks a security interest in any claims the Company may have against Mr. Brooks or Energy Services, as well as the proceeds of any of the foregoing, any of which Mr. Brooks may retain without notice at any time until the guaranteed obligations are paid in full. Pursuant to the Guaranty Agreement, the Company may not, without Mr. Brooks' prior written consent, transfer or otherwise dispose of a material portion of the Company's assets or any interest thereon. |
Notes_Payable
Notes Payable | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Notes Payable [Abstract] | ' | ||||||||
Notes Payable | ' | ||||||||
The Company’s notes payable at December 31, 2013 and December 31, 2012, consisted of the following: | |||||||||
December 31, | December 31, | ||||||||
Name | 2013 | 2012 | |||||||
14% Convertible Notes | $ | 2,904,736 | $ | 2,882,235 | |||||
12% Convertible Notes | 375,000 | 415,000 | |||||||
Other Short-term Debt | 43,280 | 84,280 | |||||||
GE Note | 2,100,000 | 2,100,000 | |||||||
Deferred Compensation Notes | 279,095 | 279,095 | |||||||
Revenue Participation Notes | 852,702 | 165,000 | |||||||
Crown Financial note | 683,036 | -- | |||||||
Equipment finance contracts | 137,573 | -- | |||||||
Capital lease obligation | 23,300 | -- | |||||||
Unamortized debt discount | -107,221 | -80,735 | |||||||
Total Debt | 7,291,501 | 5,844,875 | |||||||
Less: Current Portion | (4,668,492 | ) | (5,331,734 | ) | |||||
Total Long Term Debt | $ | 2,623,009 | $ | 513,141 | |||||
14% Convertible Notes | |||||||||
Between November 2011 and December 2012, the Company issued a series of 14% convertible notes payable to accredited investors. The Company also issued 20,167,871 two year warrants to purchase common stock at an exercise price of $0.20 per share. These notes are convertible into 46,746,898 shares of the Company’s common stock as of December 31, 2013. | |||||||||
The Company valued the warrants and the embedded conversion feature at inception using the Black-Scholes option pricing model, using the following variables: annual dividend yield of 0%; expected life of 2 years; risk free rate of return of 0.17% - 0.33%; expected volatility of 100%. The estimated fair value of the warrants issued between November 2011 and December 2012 was $81,656 and the embedded conversion feature was $35,546 at issuance and was recorded as a derivative liability at such time in the accompanying consolidated balance sheets. The warrants and embedded conversion feature were included in the derivative liabilities account each reporting period as the Company had insufficient authorized shares to settle outstanding contracts (see Note 6). On July 12, 2013, the Company increased its share authorization to 250,000,000 shares and reclassified the $1,977,372 derivative liability to equity due to the availability of sufficient authorized shares to settle these outstanding contracts. | |||||||||
As of December 31, 2013, the aggregate principal balance of these notes is $2,904,736. An aggregate principal amount of $2,504,736 of these notes matured on November 30, 2013, with the remaining $400,000 balance maturing at various dates through November 2014. On September 22, 2013, the Company negotiated extensions of the maturity dates until June 1, 2015, with fourteen (14) of the note holders that hold an aggregate principal of $1,606,765 of these notes. In consideration of the extension agreements, the Company agreed to issue an aggregate 800,973 shares of its common stock with an accrued value of $64,078. As December 31, 2013, the total of outstanding 14% convertible notes is $2,904,736 of which $897,971 matured on November 30, 2013 and is in default. | |||||||||
As of December 31, 2013, $171,892 of the 14% convertible notes is payable to related parties. | |||||||||
12% Convertible Notes | |||||||||
Between April 2009 and November 2010, the Company issued a series of 12% notes payable to accredited investors that were scheduled to mature on November 30, 2011 and are currently in default. The Company also issued 1,641,496 warrants to purchase common stock at an exercise price of $0.02 per share that expire at various dates through 2015. The notes are convertible into 28,282,534 shares of the Company’s common stock as of December 31, 2013. | |||||||||
On June 6, 2013, the Company issued 353,120 shares of its common stock valued at $21,187 in payment of $6,965 accrued interest on convertible notes payable and 750,380 shares of its common stock valued at $45,022 in payment of $15,000 of principal on a 12% convertible note payable. The settlement of this $15,000 note payable and $6,966 of accrued interest, (combined total of $21,966) for common stock valued at $66,209 resulted in an additional interest expense of $44,243. | |||||||||
Other Short-Term Debt | |||||||||
Other short term debt is comprised of a settlement of a note payable to an accredited investor in the amount of $43,280. The Company did not make its required payments during 2013 and the balance is in default. | |||||||||
On August 1, 2013, the Company entered in to an unsecured loan agreement in the amount of $20,000 with a private investor. The loan matures on February 1, 2014 and bears interest at an effective rate of 20%. The Company made a $20,000 principal payment on this note bringing the unpaid principal balance as of December 31, 2013 to zero. | |||||||||
The Company also issued 200,000 warrants that bear an exercise price of $0.20 and expire on August 1, 2015.The Company valued the warrants at $12,000 using the Black-Scholes option pricing model, using the following variables: annual dividend yield of 0%; expected life of 2 years; risk free rate of return of 0.25%; expected volatility of 623%. The value of the warrants was recorded as a loan fee that was expensed during the year ended December 31, 2013. | |||||||||
GE Ionics | |||||||||
On August 31, 2010, the Company entered into a Settlement Agreement relating to a $2,100,000 note payable that was amended on October 30, 2011. On May 7, 2012, GE informed the Company that it had failed to make any required installment payment that was due and payable under the GE Note and that the Company’s failure to make any such installment payment(s) constituted an Event of Default under the GE Note. Pursuant to the terms of the GE Note, upon the occurrence of an Event of Default for any reason whatsoever, GE shall, among other things, have the right to (a) cure such defaults, with the result that all costs and expenses incurred or paid by GE in effecting such cure shall bear interest at the highest rate permitted by law, and shall be payable upon demand; and (b) accelerate the maturity of the GE Note and demand the immediate payment thereof, without presentment, demand, protest or other notice of any kind. Upon an event of default under the GE Note, GE shall be entitled to, among other things (i) the principal amount of the GE Note along with any interest accrued but unpaid thereon and (ii) any and all expenses (including attorney’s fees and expenses) incurred in connection with the collection and enforcement of any rights under the GE Note. | |||||||||
Under the terms of the August 31, 2010 note, interest at the rate of WSJ prime plus 2% is due on the note, upon default, interest is due at the maximum legal rate which is 10% in the state of Texas. The note matured on September 1, 2013, and is in default. Interest on the note through December 31, 2013, has been accrued pursuant to the terms of the note through May 6, 2012, interest upon default on May 7, 2012, has been accrued at the maximum default rate in the state of Texas which is 10%. | |||||||||
As of the date hereof, the Company has not repaid any principal or accrued but unpaid interest that has become due and payable under the GE Note. | |||||||||
On May 22, 2013, GE filed a lawsuit against STW in the Supreme Court of the State of New York, County of New York, Index No. 651832/2013 (the “GE Lawsuit”). Although the lawsuit arises out of STW’s obligations to GE under its Settlement Agreement with GE, upon which STW owed GE $2.1 million plus interest, GE has elected to forgo suit on the settlement amount and sue STW for the original debt of $11,239,437, plus interest and attorneys’ fees (the “Original Debt”). As such, STW filed its Answer and asserted that it is entitled to and shall pursue all of its available legal and equitable defenses to the Original Debt, inasmuch as GE has, among other things, failed to discount the Original Debt sued upon by the amounts that it recovered through re-use and re-sale of the equipment it fabricated for STW. Management has not accrued the original amount of the debt because the probability of recovery is remote. | |||||||||
Deferred Compensation Notes | |||||||||
As of December 31, 2013, the Company has a balance of $279,095 payable under deferred compensation, non-interest bearing, notes to its former Chief Executive Officer and its in-house counsel. The notes matured December 31, 2012, and the notes are in default. | |||||||||
Revenue Participation Notes | |||||||||
As of December 31, 2013, the Company has an outstanding balance of $852,702 of Revenue Participation Notes comprised as follows: | |||||||||
2012 Revenue Participation Notes | $ | 165,000 | |||||||
2013 Revenue Participation Notes - STW Resources Salt Water Remediation | 302,500 | ||||||||
2013 Revenue Participation Notes - STW Energy | 182,000 | ||||||||
2013 Convertible Revenue Participation Notes - STW Pipeline | 203,202 | ||||||||
Total revenue participation notes | $ | 852,702 | |||||||
These notes are described as follows: | |||||||||
2012 Revenue Participation Notes | |||||||||
During February 2012, the Company issued to certain accredited investors (the “Investors”) revenue participation interest notes with a principal amount of $165,000 (the “March 2012 Notes”). These March 2012 Notes mature on January 31, 2017 and carry an interest rate of 12%. Principal and interest payments shall come solely from the Investors share of the revenue participation fees from water processing contracts related to brackish and/or produced water. The Investors shall receive 50% of the net revenues from such contracts until such time as they have received two times their investment amount and 10% of the net revenues thereafter until such time as they have received an additional $295,000 at which time the March 2012 Notes are retired in full. The Investors received warrants to purchase 165,000 shares of the Company’s common stock. These warrants have an exercise price of $0.20, are immediately exercisable and a two year maturity. The Company incurred cash fees of $16,500 which is recorded as a loan origination fee and is included in prepaid expenses and other current assets in the accompanying consolidated balance sheet and is being amortized to interest expense, and issued 16,500 warrants under the same terms as those received by the Investors. As of December 31, 2013, the Company has not generated revenue related to these revenue participating notes. | |||||||||
The Company valued the warrants using the Black-Scholes option pricing model, using the following variables: annual dividend yield of 0%; expected life of 2 years; risk free rate of return of 0.33%; expected volatility of 100%. As the value of the warrants was not significant, the Company did not allocate any portion of the debt proceeds to the warrants and the value of the warrants were derivatives as of December 31, 2012. | |||||||||
2013 Revenue Participation Notes – STW Resources Salt Water Remediation Technology | |||||||||
During the nine month period ended September 30, 2013, the Company issued to ten (10) accredited investors revenue participation notes with an aggregate principal amount of $302,500. These notes mature five years from the date of issuance, and carry an interest rate of 12% and an effective interest rate of 13.5%. Principal and interest payments shall come solely from the Investors share of the revenue participation fees from water processing contracts related to brackish and/or produced water. The Company will pay one-half (50%) of the Net Operating Revenues, after deducting project operational and equipment lease expenses, from the Water Processing Master Services Agreements (“MSA’s”) to all Participants generally (with each Participant’s percentage of the $302,500 investment being paid on a pro-rata basis) until such time as each Participant’s share of the $302,500 Note has been paid in full, and until such further time as an additional $302,500 has been paid to the Participants in relation to each Participant’s share of the $302,500 investment. Thereafter, all further Revenue Fees shall cease and this Agreement shall be terminated in all respects. | |||||||||
The Company also issued 605,000 warrants in connection with this investment. These warrants have an exercise price of $0.20, are immediately exercisable and expire on various dates through June 30, 2015. | |||||||||
The Company valued the warrants using the Black-Scholes option pricing model, using the following variables: annual dividend yield of 0%; expected life of 2 years; risk free rate of return of 0.25%; expected volatility of 623%. The Company estimated the value of the warrants to be $33,398 and recorded this loan discount to be amortized to interest expense over the term of the loan. | |||||||||
2013 Original Issue Discount Notes with Revenue Participation Interest – STW Energy Services, LLC | |||||||||
During the year ended December 31, 2013, the Company issued to four (4) accredited investors revenue participation note with an aggregate principal amount of $182,000 and an original issue discount of $42,000, yielding net cash proceeds of $140,000 to the Company. These notes mature eighteen (18) months from the date of issuance and carry a stated interest rate of 6% and an effective interest rate of 9.4%. Principal and interest payments shall come solely from the Investors share of the revenue participation fees from STW Energy services contracts. The Investor shall receive the net revenues from such contracts until such time as they have received their investment amount at which time the note is retired in full. The Company also issued 91,000 warrants in connection with this investment. The warrants bear an exercise price of $0.30 per share and expire on various dates through June 30, 2015. | |||||||||
The 6% original issue discount notes with revenue participation interests (the "Notes") were issued pursuant to a private offering (the "Notes Offering"), with a maximum offering size of $325,000. The Notes maintain an original issue discount of $75,000 and are due on or before March 26, 2015; all payments on the Notes shall come solely from the Note holder's share of the revenue participation fees, as hereinafter explained. The Company shall pay each Note Holder out of the Company's share of the Net Operating Revenues; as such term is defined in the Note, of its STW Energy Services, LLC ("Energy Services") subsidiary, until each Note has been paid in full. All payments shall be made on a quarterly basis; provided however that only interest shall be paid in the first quarter and thereafter, payments shall follow the payment schedule set forth in the Notes. If payments are not made on the schedule payment date, interest on the Notes shall increase to 18% until the Notes are paid in full. In consideration for the Note, the Company shall issue 2 year warrants to purchase one share of common stock for each two dollars of such holder's investment, at an exercise price of $0.30 per share; provided however, that the Company shall only issue an aggregate of warrants to purchase up to 162,500 shares. The Notes are secured by a continuing security interest in the Company's net revenues and proceeds thereof. | |||||||||
The Company valued the 91,000 warrants associated with the $182,000 notes using the Black-Scholes option pricing model, using the following variables: annual dividend yield of 0%; expected life of 2 years; risk free rate of return of 0.25%; expected volatility of 623%. The Company estimated the value of the warrants to be $5,004 and recorded this loan discount to be amortized to interest expense over the term of the loan. | |||||||||
2013 Convertible Original Issue Discount Notes with Revenue Participation Interest – STW Oilfield Construction, LLC | |||||||||
On September 27, 2013, the Company issued to a related party accredited investor, Mr. Joshua Brooks, a convertible revenue participation notes with an aggregate principal amount of $65,804 and an original issue discount of $15,186, yielding net cash proceeds of $50,618 to the Company. This note matures eighteen (18) months from the date of issuance and carries a stated interest rate of 6% and an effective interest rate of 14%. Principal and interest payments shall come solely from the Investors share of the revenue participation fees from STW Oilfield Construction services contracts. The Investors shall receive the net revenues from such contracts until such time as they have received their investment amount at which time the note is retired in full. The Company also issued 131,608 warrants in connection with this investment. The warrants bear an exercise price of $0.30 per share and expire on September 27, 2015. The notes are convertible into 548,367 shares of the Company’s common stock. On December 6, 2013, the Company and Mr. Brooks agreed to a mutual rescission of this note and related warrants agreement. The net proceeds of $50,618 from this note were recorded as Related Party Payable – Dufrane Nuclear, a Company controlled by Mr. Joshua Brooks. | |||||||||
2013 Convertible Original Issue Discount Notes with Revenue Participation Interest – STW Pipeline Maintenance and Construction, LLC | |||||||||
During the year ended December 31, 2013, the Company issued to two (2) accredited investors convertible revenue participation notes with an aggregate principal amount of $207,115 and an original issue discount of $27,015, yielding net cash proceeds of $180,100 to the Company. These notes mature seven (7) months from the date of issuance and carry a stated interest rate of 6% and an effective interest rate of 8.1%. Principal and interest payments shall come solely from the Investors share of the revenue participation fees from STW Pipeline Maintenance &Construction services contracts. The Investors shall receive the net revenues from such contracts until such time as they have received their investment amount at which time the note is retired in full. The Company also issued 414,230 warrants in connection with this investment. These two year warrants bear an exercise price of $0.30 per share. The notes are convertible into 1,725,958 shares of the Company’s common stock. | |||||||||
The 6% convertible original issue discount notes with revenue participation interests (the "Notes") were issued pursuant to a private offering (the "Notes Offering"), with a maximum offering size of $207,000. The Notes maintain an original issue discount of $27,000 and are due on or before May 18, 2014; all payments on the Notes shall come solely from the Note holder's share of the revenue participation fees, as hereinafter explained. The Company shall pay each Note Holder out of the Company's share of the Net Operating Revenues; as such term is defined in the Note, of its STW Pipeline Maintenance & Construction, LLC ("Pipeline") subsidiary, until each Note has been paid in full. All payments shall be made on a quarterly basis; provided however that only interest shall be paid in the first quarter and thereafter, payments shall follow the payment schedule set forth in the Notes. If payments are not made on the schedule payment date, interest on the Notes shall increase to 18% until the Notes are paid in full. The Notes are convertible into shares of the Company's common stock at $0.12 per share, subject to adjustment for standard anti-dilution features. In consideration for the Notes, the Company issued 2-year warrants to purchase two shares of common stock for each one dollar of such holder's investment, at an exercise price of $0.20 per share; provided however, that the Company shall only issue an aggregate of warrants to purchase up to 414,000 shares. The Company is required to reserve a sufficient number of shares to be able to issue all of the shares underlying the Notes if same are fully converted. The Notes are secured by a continuing security interest in the Company's net revenues and proceeds thereof. | |||||||||
The Company valued the 414,230 warrants using the Black-Scholes option pricing model, using the following variables: annual dividend yield of 0%; expected life of 2 years; risk free rate of return of 0.25%; expected volatility of 623%. The Company estimated the value of the warrants to be $27,153 and recorded this debt discount to be amortized to interest expense over the term of the loan agreement. | |||||||||
Note payable to Crown Financial, LLC, a related party | |||||||||
On June 26, 2013, STW Energy Services, LLC entered into a loan agreement with Crown Financial, LLC for a $1.0 million loan facility to purchase machinery and equipment for STW Energy Services. Crown Financial, LLC is a related party in that it holds a 25% non-controlling interest in STW Energy Services, LLC. The note matures on June 25, 2016, and bears interest at 15%. Commencing November 1, 2013, monthly principal and interest payments are due on the note over a thirty-three month period. The note is secured by all assets of STW Energy Services. LLC. As of December 31, 2013, the Company had drawn down $683,036 of this loan facility. | |||||||||
The Company issued 4,000,000 warrants in connection with this loan agreement, in lieu of a cash loan fee. These warrants have an exercise price of $0.20, are immediately exercisable and a two year maturity. The Company valued the warrants using the Black-Scholes option pricing model, using the following variables: annual dividend yield of 0%; expected life of 2 years; risk free rate of return of 0.25%; expected volatility of 623%. The Company estimated the value of the warrants to be $159,996 and recorded this loan fee a prepaid loan fee to be amortized to interest expense over the term of the loan. | |||||||||
Equipment Finance Contracts | |||||||||
During the year ended December 31, 2013, the Company financed the purchase of vehicles and other equipment with equipment finance contracts from various banks and finance institutions. The contracts mature in three to five years and bear interest rates ranging from 4.7% to 8.0%. The contracts are secured by the associated equipment. As of December 31, 2013, the Company has an aggregate balance of $137,573 payable on these equipment finance contracts. | |||||||||
Capital lease obligation | |||||||||
During the year ended December 31, 2013, the Company entered into a capital lease of a modular office trailer. The lease contract calls for forty eight (48) monthly payments of $593 with a purchase option at the end of the lease. The Company determined the value of the capital lease to be $23,300 with an implicit interest rate in the lease of 10%. | |||||||||
For the years ended December 31, 2013 and 2012, interest expense on all notes payable described above was $1,205,338 and $655,371, respectively, which included $164,549 and $44,675, respectively, of amortization of debt discount and debt issuance costs. There was no interest capitalized in 2013 and 2012. As of December 31, 2013 and 2012, net deferred loan costs were $185,428 and $45,667, respectively. The balance of unamortized discount at December 31, 2013 and 2012, respectively, were $107,221 and $80,735. |
Derivative_Liability
Derivative Liability | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Notes to Financial Statements | ' | ||||||||
Derivative Liability | ' | ||||||||
We apply the accounting standard that provides guidance for determining whether an equity-linked financial instrument, or embedded feature, is indexed to an entity’s own stock. The standard applies to any freestanding financial instrument or embedded features that have the characteristics of a derivative, and to any freestanding financial instruments that are potentially settled in an entity’s own common stock. | |||||||||
From time to time, the Company has issued notes with embedded conversion features and warrants to purchase common stock. Certain of the embedded conversion features and warrants contain price protection or anti-dilution features that result in these instruments being treated as derivatives, or there were insufficient shares to satisfy the exercise of the instruments. On July 12, 2013, the Company increased its share authorization to 250,000,000 shares and removed this $1,977,372 derivative liability due to the availability of sufficient authorized shares to settle these outstanding contracts. | |||||||||
Management has used the simplified Black Scholes Merton model to estimate fair value of derivative instruments. Management believes that as a result of the relatively short term nature of the warrants and convertibility features, a lattice model would not result in a materially different valuation. | |||||||||
During the year ended December 31, 2012, the Company used a volatility rate of 100% to value its derivative instruments. This 100% volatility rate was based on management’s estimate of volatility due to the limited trading history of the Company and the fact that it was a development stage company. During the year ended December 31, 2013, the Company computed a historical volatility of 623% using daily pricing observations for recent periods. We applied a historical volatility rate during the year ended December 31, 2013, and future periods, since the Company exited its development stage and commenced commercial operations. We believe this method produces an estimate that is representative of our expectations of future volatility over the expected term of these warrants and embedded conversion features. | |||||||||
We currently have no reason to believe that future volatility over the expected remaining life of these warrants and embedded conversion features is likely to differ materially from historical volatility. The expected life is based on the remaining term of the warrants and embedded conversion features. The risk-free interest rate is based on one-year to five-year U.S. Treasury securities consistent with the remaining term of the warrants and embedded conversion features. | |||||||||
The following table presents our warrants and embedded conversion options which have no observable market data and are derived using Black-Scholes measured at fair value on a recurring basis, using Level 3 inputs, as of December 31, 2013 and December 31, 2012: | |||||||||
For the year ended December 31, | For the year ended | ||||||||
2013 | December 31, | ||||||||
2012 | |||||||||
Annual dividend yield | 0 | % | 0 | % | |||||
Expected life (years) | 0.60– 0.47 | 0.50 – 3.40 | |||||||
Risk-free interest rate | 0.11% - 0.25 | % | 0.15% - 0.51 | % | |||||
Expected volatility | 623 | % | 100 | % | |||||
December 31, | December 31, | ||||||||
2013 | 2012 | ||||||||
Embedded Conversion features | $ | 1,467,579 | $ | 962,815 | |||||
Warrants | 163,406 | 83,624 | |||||||
$ | 1,630,985 | $ | 1,046,439 | ||||||
The following table presents the changes in fair value of our warrants and embedded conversion features measured at fair value on a recurring basis for each reporting period-end. | |||||||||
For the year ended December 31, | For the year ended | ||||||||
2013 | December 31, | ||||||||
2012 | |||||||||
Balance beginning | $ | 1,046,439 | $ | 1,491 | |||||
Issuance of warrants and embedded conversion features | 54,197 | ||||||||
Reclassification of derivative liability due to increased share authorization | (1,977,372 | ) | -- | ||||||
Change in fair value | 2,561,918 | 990,751 | |||||||
Balance ending | $ | 1,630,985 | $ | 1,046,439 | |||||
Related_Party_Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2013 | |
Notes to Financial Statements | ' |
Related Party Transactions | ' |
Officers’ Compensation | |
During years ended December 31, 2013 and 2012, we incurred $150,000 and $102,000, respectively, in officers’ consulting fees and $24,500 in commissions during the year ended December 31, 2012, due our Director, Chairman and CEO, Mr. Stanley Weiner. As of December 31, 2013 and December 31, 2012, the balances of $263,083, and $155,583, respectively, were payable to Mr. Weiner for his officers’ salary. | |
During the years ended December 31, 2013 and 2012, we incurred $150,000 and $130,000, respectively, in officers’ consulting fees due our Director and Chief Operating Officer, Mr. Lee Maddox. As of December 31, 2013 and December 31, 2012, the balances of $170,500, and $59,500, respectively, were payable to Mr. Maddox for his officers’ salary. | |
During the years ended December 31, 2013 and 2012, we incurred $90,000, and $60,000, respectively, in general counsel services fees expense with Seabolt Law Group, a firm owned by our Director and General Counsel, Mr. Grant Seabolt. As of December 31, 2013 and December 31, 2012, the balances of $121,083, and $108,866, respectively, were payable to Seabolt Law Group for these services. | |
During year ended December 31, 2013, we incurred $30,000 in officers’ consulting fees due our Vice President of Operations, Mr. Joshua Brooks. As of December 31, 2013, the balance of $30,000, was payable to Mr. Brooks for his officers’ salary. | |
Board and Advisory Board Compensation | |
Directors are expected to timely and fully participate in all regular and special board meetings, and all meetings of committees that they serve on. In December 2011, the Board voted to authorize the issuance of shares in lieu of cash compensation for past services. | |
Per the Director Agreements, the Company compensates each of the directors through the initial grant of 200,000 shares of common stock and the payment of a cash fee equal to $1,000 plus travel expenses for each board meeting attended, and $75,000 per year as compensation for serving on our board of directors. As of December 31, 2013, the Company recorded professional fees in the accompanying consolidated statement of operations of $602,849 and made payments of $43,500 in cash and issued 5,043,750 shares of its common stock having an accrued valued $302,625. As of December 31, 2013, the Company has accrued compensation due to its directors (both current and former) of $491,724 and as of December 31, 2012 the Company had accrued $235,000, which is calculated based upon time of service and the number of Board meetings attended and is included in accrued compensation in the accompanying consolidated balance sheet. | |
The Company’s advisory board was comprised of three members. Each advisory board member was granted 56,250 shares upon joining the board and 75,000 shares annually thereafter. The advisory board was dissolved on June 12, 2013. | |
Other related party transactions | |
During the year ended December 31, 2012, the Company incurred $73,500 in fees and expenses payable to Viewpoint, which was a related party based on one of their partners being a member of the Board of Directors, and granted a warrant to purchase 566,677 shares of the Company’s common stock with an exercise price of $0.20 per share for a period of two years from the date of issuance. At December 31, 2012, the Company had a balance due Viewpoint of $202,728 recorded in accounts payable. | |
During the year ended December 31, 2012, the Company incurred $63,199 in fees and expenses to Ascendiant Capital Markets, LLC, which was a related party based on one of their partners being a member of the Board of Directors, and granted a warrant to purchase 469,000 shares of the Company’s common stock with an exercise price of $0.20 per share for a period of two years from the date of issuance. | |
As of December 31, 2013, the Company has a $139,763 related party payable to Black Pearl Energy, LLC, a company controlled by the Company’s CEO, COO, and General Counsel. This related party payable is comprised of cash advances of $276,804, net of $137,041 of accounts receivable. During year ended December 31, 2013, the Company had sales of $347,550 to Black Pearl Energy, LLC, a related party. | |
As of December 31, 2013, the Company has a related party payable of $132,490 to Dufrane Nuclear, Inc. a company controlled by Mr. Josh Brooks, the Company’s vice president of operations. | |
Stockholders_Equity
Stockholders' Equity | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
Notes to Financial Statements | ' | ||||||||||||
Stockholders' Equity | ' | ||||||||||||
Preferred Stock | |||||||||||||
The Company has authorized 10,000,000 shares of preferred stock with a par value of $0.001 per share. No such shares are issued or outstanding and the Company does not currently have any plans to issue shares of such stock. | |||||||||||||
On March 7, 2013, the Company filed a certificate of designation to its articles of incorporation, as amended, with the Secretary of State of the State of Nevada whereby it designated 210,000 shares of preferred stock as series A-1 preferred stock (the “Series A-1 Preferred Stock”). Except as otherwise expressly required by law, each holder of Series A-1 Preferred Stock shall be entitled to vote on all matters submitted to shareholders of the Company and shall be entitled to one vote for each share of common stock deliverable upon conversion of the Series A-1 Preferred Stock owned at the record date for the determination of shareholders entitled to vote on such matter or, if no such record date is established, at the date such vote is taken or any written consent of shareholders is solicited. Except as otherwise required by law, the holders of shares of Series A-1 Preferred Stock shall vote together with the holders of common stock on all matters and shall not vote as a separate class. | |||||||||||||
The Series A-1 Preferred Stock pays dividends of 16% per annum (10% cash and 6% paid-in-kind), payable quarterly in arrears. Upon an Event of Default (as defined in the Certificate of Designation) the dividend rate shall increase to eighteen percent (18%) per annum, of which 12% is payable in cash and 6% paid-in-kind, until such time as the Event of Default is cured. Each share of Series A-1 Preferred Stock has a stated value equal to $2.40 per share and is initially convertible at any time into shares of common stock at a conversion price equal to $0.12 per share, subject to adjustment under certain circumstances. The conversion price of the Series A-1 Preferred Stock is subject to weighted average price adjustment for subsequent lower price issuances by the Company, subject to certain exceptions. Notwithstanding the foregoing, a holder of Series A-1 Preferred Stock shall not have the right to convert any portion of the Series A-1 Preferred Stock, to the extent that, after giving effect to the conversion, such Holder would beneficially own in excess of 9.9% of the number of shares of common stock outstanding immediately after giving effect to the issuance of shares of the common stock issuable upon conversion of Series A-1 Preferred Stock held by the applicable holder. In the event of any liquidation, dissolution or winding up of the Company, the holders of Series A-1 Preferred Stock will be entitled to receive an amount equal to two (2) times the original purchase price for the Series A-1 Preferred Stock, plus all declared and unpaid dividends. | |||||||||||||
Each share of Series A-1 Preferred Stock shall automatically convert into common stock, at the then applicable conversion price, upon the earlier to occur of (i) the closing share price of the Company’s common stock being at least $0.75 for 10 consecutive trading days, or (ii) the affirmative consent of the holders of at least a majority of the then outstanding shares of Series A-1 Preferred Stock. The Company may, at any time, and upon providing a 30 days written notice, require the holders of Series A-1 Preferred Stock to sell all of their shares of Series A-1 Preferred Stock at a redemption price payable in cash equal to the sum of the outstanding principal and accrued but unpaid dividends, if any, multiplied by a factor such that each Holder receives an annualized return of 20%. In addition, each holder of the Series A-1 Preferred Stock may, at their option upon certain events, require the Company to purchase all of the Series A-1 Preferred Stock held by such holder at a price payable in cash equal to the sum of the outstanding principal and accrued but unpaid dividends, if any, multiplied by a factor such that each holder receives an annualized return of 20%. | |||||||||||||
Common Stock | |||||||||||||
The Company has authorized 250,000,000 shares of common stock with a par value of $0.001. During the years ended December 31, 2013 and 2012, the Company issued common shares as follows: | |||||||||||||
Year ended December 31, 2012: | |||||||||||||
On March 20, 2012, pursuant to a debt settlement agreement, the Company issued 3,000,000 shares of its common stock to a note holder who sold these shares, and the net proceeds reduced the Company's liability to the note holder. The Company estimated the fair market value of the common stock to be $30,000 on the date of issuance (based on the closing share price on the issuance date) and recorded the amount in prepaid expenses and other current assets. The Company recorded the change in fair value of the shares still held by the note holder on each reporting date with the change in fair value being recorded as a change in fair value of shares issued to note holder within the consolidated statement of operations. The note holder sold all 3,000,000 shares for $18,626 which was used to reduce the amount of debt owed to the note holder. As of December 31, 2012, all shares held by the note holder were sold. | |||||||||||||
On March 23, 2012, the Board of Directors agreed to exchange their accrued and future compensation for fiscal 2012 for 29,478,000 shares of the Company’s common stock valued at $1,473,900. Total accrued compensation as of that date was $1,248,900, of which $1,173,900 was included in accrued compensation at December 31, 2011 and $300,000 of compensation expense being earned and recorded during the year ended December 31, 2012. The exchange price was agreed by both parties to be $0.05 per share. | |||||||||||||
On March 23, 2012, the Board of Directors authorized the Company to issue stock for consulting services to be performed on behalf of the Company. The Board authorized the issuance of 16,950,000 shares of common stock to various consultants, of which, 5,000,000 shares are to be issued to Mr. Stan Weiner, the Company’s Chief Executive Officer, and 10,750,000 to be issued to the other various consultants. The Company cancelled 1,200,000 of the shares that were part of the original 16,950,000 shares to be issued for consulting services to be performed. As of December 31, 2012, all shares related to these agreements have been issued related to the services to be performed pursuant to such consulting agreements. The Company estimated the fair value of the shares to be $786,000 based on the fair value of the share price on the commitment date. The Company will record the estimated fair value to expense for such services as they are performed ratably over the term of the consulting agreements. The consulting agreements mature on various dates through April 2013. During the year ended December 31, 2012, the Company expensed $696,000 in compensation for shares issued to consultants. | |||||||||||||
On March 23, 2012, the Board authorized the issuance of 425,000 shares of the Company’s common stock to its Advisory Board members. The Company estimated the fair market value to be $8,500 based on the closing share price on the date of issuance. | |||||||||||||
On March 23, 2012, the Company issued 18,750 shares to a consultant. The Company estimated the fair market value to be $375 based on the closing share price on the date of issuance. | |||||||||||||
In May 2012, the Company entered into a subscription agreement with accredited investors pursuant to which the Company sold 1,000,000 Units, each Unit consisting of one share of the Company’s common stock par value $0.001 and a warrant to purchase 0.375 shares of the Company’s common stock (the “Warrants”) for aggregate consideration of $50,000. The Warrants shall be exercisable for a period of two years from the date of issuance at an initial exercise price of $0.20. The Company incurred issuance costs of $5,000 and issued 150,000 warrants under the same terms. | |||||||||||||
The Company valued the warrants using the Black-Scholes option pricing model, using the following variables: annual dividend yield of 0%; expected life of 2 years; risk free rate of return of 0.33%; expected volatility of 100%. As the value of the warrants is not significant, the Company did not allocate any portion of the proceeds to the warrants, however, the warrants were included in the derivative liability account at December 31, 2012 as the Company had insufficient authorized shares to settle the contract. | |||||||||||||
As of December 31, 2012, the Company has an aggregate of common stock issued and outstanding plus common stock equivalents which, if fully converted, would be in excess of the 100,000,000 authorized shares permitted by the articles of incorporation of the Company. Total common shares outstanding plus common stock equivalents (warrants and conversion features) totaled approximately 198,000,000 as of December 31, 2012. As a result, the Company has recorded substantially all common stock equivalents as a derivative liability in the accompanying consolidated balance sheet at December 31, 2012. | |||||||||||||
Year ended December 31, 2013: | |||||||||||||
On June 6, 2013, the Company issued 353,120 shares of its common stock valued at $21,187 in payment of $6,965 accrued interest on convertible note payable and 750,380 shares of its common stock valued at $45,022 in payment of $15,000 of principal on a 14% convertible note payable. The settlement of this $15,000 note payable and $6,966 of accrued interest, (combined total of $21,966) for common stock valued at $66,209 resulted in an additional interest expense of $44,243. | |||||||||||||
Prior to the July 12, 2013, amendment to our Articles of Incorporation to increase our authorized capital from 100,000,000 shares of common stock to 250,000,000 shares of common stock (the "Amendment"), we did not have sufficient shares of authorized capital to meet all of our outstanding security obligations. Some of these obligations required us to issue shares of common stock to our officers and directors, pursuant to the agreements we maintain with them or board approved issuances to such persons; following the Amendment, on September 16, 2013 the company issued an aggregate of 5,043,750 shares of common stock, with a value of $297,581, as follows: | |||||||||||||
Name | Amount of Shares | Triggering Event | |||||||||||
Stanley T. Weiner | 625,000 | 2012 Director Compensation | |||||||||||
Manfred E. Birnbaum | 625,000 | 2012 Director Compensation | |||||||||||
D. Grant Seabolt, Jr. | 625,000 | 2012 Director Compensation | |||||||||||
Joseph I. O'Neill III | 625,000 | 2012 Director Compensation | |||||||||||
Audry Lee Maddox | 356,250 | 2012 Advisory Board Compensation (156,250 shares) & Director Appointment Shares (200,000) | |||||||||||
Dale F. Dorn | 625,000 | 2012 Director Compensation | |||||||||||
Paul DiFrancesco | 625,000 | 2012 Director Compensation | |||||||||||
Bill G. Carter | 625,000 | 2012 Director Compensation | |||||||||||
Steven Schachman | 156,250 | 2012 Advisory Board Compensation | |||||||||||
Hunter Hill | 156,250 | 2012 Advisory Board Compensation | |||||||||||
On September 16, 2013, the Company issued 2,100,000 shares of its Common stock in payment of accrued consulting fees. These shares were authorized by the board of directors at a value of $0.10 per share based on the value on March 5, 2013, the date that the board of directors approved the payment in shares. At the time of the March 5, 2013, board action to approve the payment of the accrued fees in stock, the Company did not have adequate shares authorized to settle the contracts so the issuance of shares was delayed until September 16, 2013. These shares were issued on September 16, 2013, at a value at the time of issuance of $126,000, resulting in a reduction of accrued consulting fees expense of $84,000. | |||||||||||||
During August and October, 2013, the Company issued to four (4) accredited investors revenue participation notes with an aggregate principal amount of $182,000 and an original issue discount of $42,000, yielding net cash proceeds of $140,000 to the Company. These note mature eighteen (18) months from the date of issuance and carry stated interest rates of 6%. Principal and interest payments shall come solely from the Investors’ share of the revenue participation fees from STW Energy services contracts. The Investors shall receive 50% of the net revenues from such contracts until such time as they have received their investment amount at which time the note is retired in full. The Company also issued 91,000 warrants in connection with this investment. The warrants bear an exercise price of $0.30 per share and expire on various dates through June 30, 2015. | |||||||||||||
During September, 2013, the Company issued to a related party accredited investor convertible a revenue participation note with an aggregate principal amount of $65,804 and an original issue discount of $15,186, yielding net cash proceeds of $50,618 to the Company. This note matures eighteen (18) months from the date of issuance and carries stated interest rates of 6%. Principal and interest payments shall come solely from the Investors’ share of the revenue participation fees from STW Oilfield Construction services contracts. The Investors shall receive 50% of the net revenues from such contracts until such time as they have received their investment amount at which time the note is retired in full. The Company also issued 131,608 warrants in connection with this investment. The warrants bear an exercise price of $0.30 per share and expire on September 27, 2015. The note is convertible into 548,347 shares of the Company’s common stock. On December 6, 2013, the Company and this investor agreed to a mutual rescission of this note and the related warrants. The net cash proceeds of $50,418 are included in the total balance of $134,013 as Payable to Related Party, Dufrane Nuclear Shielding Inc., a company controlled by our Vice President of Operations, Mr. Joshua Brooks. | |||||||||||||
In the months of October and December 2013 seven (7) of the companies consultants were issued 6,500,000 shares in exchange for their invoice amounts due from the company. | |||||||||||||
On December 9, 2013, the Company issued 2,000,000 shares to an employee as a signing bonus under an employment contract. The Company also issued 300,000 shares of its common stock to an employee of its subsidiary, STW Pipeline Maintenance & Construction, LLC, as an installment on a signing bonus under an employment contract with the subsidiary. | |||||||||||||
As of December 31, 2013, the Company had the following securities to acquire the Company’s common stock outstanding: | |||||||||||||
Security | |||||||||||||
Expire | |||||||||||||
Exercise | |||||||||||||
Price | |||||||||||||
Number of | |||||||||||||
Underlying | |||||||||||||
Common | |||||||||||||
Shares | |||||||||||||
Warrants issued for Professional Services | 1,500,000 | 4 | 2014 | ||||||||||
Warrants associated with the January 14, 2009 Bridge Note | 480,000 | 3 | 2014 | ||||||||||
1,500,000 | 8 | 2014 | |||||||||||
Warrants associated with the acquisition of the Company's Preferred Shares outstanding | |||||||||||||
Warrants associated with the 12% Convertible Notes | 1,641,496 | 0.02 | 2014-2015 | ||||||||||
Warrants associated with 2012 Revenue Participation Notes | 181,500 | 0.2 | 2014 | ||||||||||
Warrants associated with May 2012 Subscription Agreement | 525,000 | 0.2 | 2014 | ||||||||||
Warrants associated with June-September 14% Convertible Notes | 550,000 | 0.2 | 2014 | ||||||||||
Warrants associated with November 14% Convertible notes | 2,777,500 | 0.2 | 2014 | ||||||||||
Warrants associated with 2013 Revenue Participation Notes | 1,110,230 | 0.20 – 0.30 | 2015 | ||||||||||
Warrants issued to Crown Financial, LLC | 4,000,000 | 0.2 | 2016 | ||||||||||
Warrants issued on $20,000 short term loan | 200,000 | 0.2 | 2015 | ||||||||||
Warrants issued with November 2013 Unit Share Offering | 3,875,000 | 0.2 | 2015 | ||||||||||
Sub-total of Warrants outstanding | 18,340,726 | ||||||||||||
Common stock associated with the 12% Convertible Notes plus accrued interest | 27,765,417 | 0.02 | 2014 | ||||||||||
Common stock associated with Pipeline Convertible Revenue Participation notes | 1,725,958 | 0.12 | 2015 | ||||||||||
12/31/2013 Accrued Default interest | 517,118 | 0.02 | 2014-2015 | ||||||||||
Common stock associated with the 14% Convertible Notes plus accrued interest | 46,114,632 | 0.08 | 2015 | ||||||||||
12/31/2013 Accrued Default interest | 198,299 | 0.08 | 2014 | ||||||||||
12/31/2013 Calibre Note interest | 163,968 | 0.08 | 2014 | ||||||||||
Common stock associated with November 2013 Unit Share Offering | 3,875,000 | 0.08 | 2015 | ||||||||||
Common stock payable as fees | 3,649,673 | various | 2014 | ||||||||||
Total securities | 102,350,791 | ||||||||||||
Warrants | |||||||||||||
A summary of the Company’s warrant activity and related information during the years ended December 31, 2013 and 2012 follows: | |||||||||||||
Number of Shares | Weighted- Average Exercise | Remaining Contractual Life (Years) | Aggregate Intrinsic Value | ||||||||||
Price | |||||||||||||
Outstanding at January 1, 2012 | 29,803,434 | $ | 0.94 | ||||||||||
Issued | 4,034,000 | 0.2 | |||||||||||
Exercised | - | ||||||||||||
Forfeited | - | ||||||||||||
Cancelled | - | ||||||||||||
Expired | -1,430,000 | 0.5 | |||||||||||
Outstanding at December 31, 2012 | 32,407,434 | $ | 0.86 | 1.06 | $ | 32,830 | |||||||
Exercisable | 32,407,434 | $ | 0.86 | 1.06 | $ | 328,300 | |||||||
Outstanding at January 1, 2013 | 32,407,434 | $ | 0.86 | 1.06 | |||||||||
Issued | 9,316,838 | 0.21 | 2 | ||||||||||
Exercised | - | ||||||||||||
Forfeited | - | ||||||||||||
Cancelled | - | ||||||||||||
Expired | -23,383,546 | 0.32 | |||||||||||
Outstanding at December 31, 2013 | 18,340,726 | $ | 1.21 | 1.07 | $ | 131,320 | |||||||
Exercisable | 18,340,726 | $ | 0.21 | 1.07 | $ | 131,320 | |||||||
Income_Taxes
Income Taxes | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Income Taxes | ' | ||||||||
Income Taxes | ' | ||||||||
The Company's net loss before income taxes totaled $7,032,955 and $3,598,684 for the years ended December 31, 2013 and 2012, respectively. | |||||||||
The total provision for income taxes, which consists solely of U.S. federal taxes, consists of the following: | |||||||||
December 31, | December 31, | ||||||||
2013 | 2012 | ||||||||
Current taxes | $ | — | $ | — | |||||
Deferred taxes | — | — | |||||||
Total | $ | — | $ | — | |||||
A reconciliation of the tax on the Company's loss for the year before income taxes and total tax expense are shown below: | |||||||||
Year Ended December 31, | |||||||||
2013 | 2012 | ||||||||
Income tax benefit at the U.S. statutory income tax | $ | (2,391,205 | ) | $ | (1,223,553 | ) | |||
Change in fair value of derivative liability | 871,052 | 336,855 | |||||||
Other differences | 42,873 | 653 | |||||||
Changes in Valuation allowance | 1,477,280 | 886,045 | |||||||
Total | $ | — | $ | — | |||||
Based on the weight of available evidence, the Company’s management has determined that it is more likely than not that the net deferred tax assets will not be realized. Therefore, the company has recorded a full valuation allowance against the net deferred tax assets. | |||||||||
The components of net deferred tax assets recognized are as follows: | |||||||||
December 31, | December 31, | ||||||||
2013 | 2012 | ||||||||
Deferred noncurrent tax asset: | |||||||||
Net operating loss carry-forward | $ | 2,380,000 | $ | 1,037,000 | |||||
Accrued expenses | 210,780 | 76,500 | |||||||
Valuation allowance | (2,590,780 | ) | (1,113,500 | ) | |||||
Total | $ | — | $ | — | |||||
Due to uncertainties surrounding the Company's ability to generate future U.S. taxable income to realize these assets, a full valuation allowance has been established to offset the net U.S. deferred tax asset. | |||||||||
The valuation allowance increased by $1,477,280 and $221,000 as of December 31, 2013 and 2012, respectively. The future utilization of the Company's federal net operating loss and tax credit carry forwards to offset future taxable income may be subject to an annual limitation, pursuant to Internal Revenue Code sections 382 and 383, as a result of ownership changes that may have occurred previously or that could occur in the future. While the Company has not formally analyzed any NOLs to determine the maximum potential future tax benefit that might be available, the Company believes that the latest change date as defined under Section 382 occurred approximately in September 2012, and the annual limitation under Section 382 has been estimated to be approximately $120,000.The Company’s deferred tax assets have been adjusted to reflect the maximum benefit that might be available subject to this limitation. | |||||||||
At December 31, 2013, the Company had federal income tax net operating losses of approximately $18.4 million. The federal net operating losses expire at various dates beginning in 2028.The Company files income tax returns in the U.S. federal jurisdiction and Texas. Tax years 2008 forward remain open to examination for the U.S. federal jurisdiction as a result of net operating loss carryforwards. Tax years 2009 forward remain open to examination by the state taxing authority. | |||||||||
Commitments_and_Contingencies
Commitments and Contingencies | 12 Months Ended | ||||||||||||||
Dec. 31, 2013 | |||||||||||||||
Notes to Financial Statements | ' | ||||||||||||||
Commitments and Contingencies | ' | ||||||||||||||
Lease Commitments | |||||||||||||||
The Company leased its office facilities under an operating lease that commenced on October 1, 2013 and expires on September 30, 2020. The lease calls for monthly payments of $9,750, plus payment by the Company of all operating expenses, insurance and taxes on the property. The Company has an option until September 30, 2016, to purchase the land and building for $825,500 | |||||||||||||||
The Company entered into a capital lease for a mobile trailer office unit that commenced on October 16, 2013 and expires on September 16, 2017. The lease calls for forty-eight (48) monthly payments of $593, plus payment by the Company of all operating expenses, insurance and taxes on the property. The Company has the option to purchase the property at the end of the term for zero. | |||||||||||||||
Future minimum lease payments under the capital lease and operating lease as of December 31, 2013, are as follows: | |||||||||||||||
Capital Lease | Operating Lease | Totals | |||||||||||||
Years ending December 31: | |||||||||||||||
2014 | $ | 7,116 | $ | 117,000 | $ | 124,116 | |||||||||
2015 | 7,116 | 117,000 | 124,116 | ||||||||||||
2016 | 7,116 | 117,000 | 124,116 | ||||||||||||
2017 | 5,930 | 117,000 | 122,930 | ||||||||||||
Thereafter | -- | 321,750 | 321,750 | ||||||||||||
Total minimum lease payments | 27,278 | 789,750 | 817,028 | ||||||||||||
Less interest | (3,978 | ) | |||||||||||||
Capital lease obligation | 23,300 | ||||||||||||||
Less current portion | (5,012 | ) | |||||||||||||
Long-term capital lease obligation | $ | 18,288 | |||||||||||||
Rental expense for all property and equipment operating leases during the year ended December 31, 2013, was $78,558, including $49,308 of rental expense incurred with a related party. Rental expense for all property and equipment operating leases during the year ended December 31, 2012, was $14,292. | |||||||||||||||
Indemnities and Guarantees | |||||||||||||||
In addition to the indemnification provisions contained in the Company’s charter documents, the Company will generally enter into separate indemnification agreements with the Company’s directors and officers. These agreements require the Company, among other things, to indemnify the director or officer against specified expenses and liabilities, such as attorneys’ fees, judgments, fines and settlements, paid by the individual in connection with any action, suit or proceeding arising out of the individual’s status or service as the Company’s director or officer, other than liabilities arising from willful misconduct or conduct that is knowingly fraudulent or deliberately dishonest, and to advance expenses incurred by the individual in connection with any proceeding against the individual with respect to which the individual may be entitled to indemnification by the Company. These guarantees and indemnities do not provide for any limitation of the maximum potential future payments the Company could be obligated to make. Historically, the Company has not been obligated nor incurred any payments for these obligations and, therefore, no liabilities have been recorded for these indemnities and guarantees in the accompanying consolidated balance sheets. | |||||||||||||||
Employment Agreements | |||||||||||||||
On September 23, 2013, one of our wholly owned subsidiaries, STW Pipeline Maintenance & Construction, LLC (“Pipeline Maintenance”), entered into an Executive Employment Agreement with Adam Jennings to serve as Pipeline Maintenance's President (the "Jennings Agreement") for a term of one year, unless otherwise terminated or mutually extended. The Company is a party to the Jennings Agreement only to the extent of the obligations it is required to perform under the Jennings Agreement. Pursuant to the Jennings Agreement, Mr. Jennings may not accept other employment or engage in activity that may interfere with his duties under the agreement without obtaining the Company's prior written consent. The Company also agreed to issue an aggregate of 1,200,000 shares of its common stock to Mr. Jennings as a signing bonus, to be issued in four (4) equal installments on each consecutive 90th day following Mr. Jennings employment; provided however that the first installment shall be paid within 30 days of signing the agreement and if Mr. Jennings voluntarily terminates employment before September 20, 2014, he shall return the most recently received installment of such signing bonus back to the Company. The Company also has sole discretion to grant Mr. Jennings stock options in the Company. Mr. Jennings is also entitled to receive 10% of Pipeline Maintenance's distributable limited liability company net profits during his employ. The Company has sole rights to terminate Mr. Jennings' employment for cause. The value of the first installment of the signing bonus of 300,000 shares of common stock was recorded on September 23, 2013 as fees payable in common stock. | |||||||||||||||
On September 20, 2013, the Company entered into an Executive Employment Agreement with Joshua Brooks (the "Brooks Agreement"), to serve as the Company's Vice President of Operations, primarily focusing on the Company's oilfield construction, services and maintenance operations and to observe and learn the other activities that the Company is involved in including water processing. The term of the Brooks Agreement is for a term of one year, unless otherwise terminated or mutually extended. Pursuant to the Brooks Agreement, Mr. Brooks is entitled to an annual salary of $120,000, which shall be paid on a quarterly basis, in shares of the Company's common stock at a price per share equal to the weighted average trading value of such stock during the same quarter. As incentive to help develop the operation and profitability of Pipeline Maintenance, Mr. Brooks is entitled to an aggregate of an additional 4,000,000 shares of the Company's common stock upon the occurrence of certain Company milestones in gross sales and/or profit. As a signing bonus, the Company shall issue Mr. Brooks 2,000,000 shares of its common stock, which Mr. Brooks must return on a pro-rata basis, if he voluntarily resigns before March 20, 2014. Mr. Brooks shall be entitled to bonuses and stock options, which the Company may award and grant in its sole discretion, and to the benefits offered to similarly situated executives. The Company shall reimburse Mr. Brooks for reasonable business expenses he incurs while carrying out his duties under the Brooks Agreement, and they shall also reimburse him for use of his personal vehicle at standard mileage rates and provide him with a laptop computer and cellular phone, if needed to carry out such duties. The Company shall indemnify Mr. Brooks to the fullest extent permitted under Nevada law. Unless Mr. Brooks is terminated for cause by the Company, which they maintain the right to do, or as a result of disability, Mr. Brooks is entitled to certain severance as set forth in the Brooks Agreement. Mr. Brooks maintains the right to terminate his employment at any time upon 30 days advance written notice and shall be entitled to all compensation payable up through such thirtieth day, after which all of the Company's obligations (other than indemnification and specific benefits) shall cease. Pursuant to the Brooks Agreement, Mr. Brooks is under a 1 year non-compete/solicitation agreement. The value of the signing bonus of $140,000 was recorded as fees payable in common stock on September 20, 2013.The Company has issued 2,000,000 shares of common stock to satisfy the obligation. As of December 31, 2013 there was no remaining obligation. | |||||||||||||||
Service Agreement | |||||||||||||||
On September 24, 2013, the Company entered into a service agreement with one of its executive officers pursuant to which the officer agreed to provide a personal guaranty to lenders and/or suppliers from which the Company's subsidiary, STW Oilfield Construction, LLC ("Oilfield Construction"), seeks to rent or purchase equipment, as specified in each agreement. In consideration for the personal guaranty, the Company agreed to issue to the officer that number of shares of its common stock, valued at $0.12 per share, as is equal to the amount of the guaranty (the "Guaranty Shares"). The value of the 382,000 shares of common stock was recorded on September 24, 2013, as fees payable in common stock. The Company maintains the right to terminate these service agreements at any time with written notice. The term of the agreement/guaranty is for 6 months. The following table provides salient information about this service agreement, which is attached as an exhibit to this Report. | |||||||||||||||
Name and Title | Date of Agreement | Amount of Personal Guaranty | Guaranty Shares | No. of Shares Owned Following Receipt of Guaranty Shares | |||||||||||
Joshua Brooks, Vice President of Operations | 24-Sep-13 | $ | 45,800 | -1 | 382,000 | 382,000 | |||||||||
(1) Pursuant to the service agreement with Mr. Brooks, any amounts due on a related defaulted lease in excess of 20% of the amount of the personal guaranty, shall be the Company's obligation. If Brooks' employment with the Company is terminated, the Company shall use its best commercial efforts to have it or a third party assume Brooks' guarantee obligations. This obligation is still outstanding as of December 31, 2013. | |||||||||||||||
Contingencies | |||||||||||||||
Viewpoint Securities, LLC Arbitration. On or about July 9, 2012, the Company and Stan Weiner, the Company's chief executive officer, received a demand for arbitration with the American Arbitration Association. The demand was filed by Viewpoint Securities LLC ("VP"), who entered into that certain engagement agreement, dated March 9, 2008, as amended on March 9, 2008, November 10, 2008, January 1, 2009, February 5, 2010, and December 1, 2010, pursuant to which the Company retained VP to act as its financial and capital markets advisor regarding equity and debt introduced by VP to the Company. The demand alleges breach of contract, breach of the covenant of good faith and fair dealings, negligence prayer for commissions and expenses incurred by VP in its efforts to provide introductions and attempt to provide financing to the Company from March 9, 2008 through February 2, 2012, the date of termination of the Agreement. VP seeks, among other things, $216,217 and a warrant to purchase 566,667 shares of the Company's common stock. The Company believes that it has valid defenses and intends to contest these claims vigorously. On August 18, 2012, VP dismissed Stan Weiner from the claim with prejudice. On February 5, 2013, the Company caused an answer to the complaint to be filed on behalf of the Company, denying the allegations and asserting, among other things, the course of business conduct, lack of FINRA status post termination and recognition of third party entitlement to amounts owed. The arbitration has gone through the discovery phase and is set for a final hearing on February 3, 2014. A final arbitration hearing was held on February 3, 2014. On April 1, 2014, the Arbitrator issued an Award in favor of Viewpoint for $196,727 on Viewpoint’s claim for $216,217 in fees and expenses, plus $5,541 in arbitration hearing fees and expenses; interest shall accrue at the rate of 10% per annum on any unpaid portion of the award commencing April 1, 2014. | |||||||||||||||
GE Ionics, Inc. Lawsuit. On May 22, 2013, GE filed a lawsuit against STW in the Supreme Court of the State of New York, County of New York, Index No. 651832/2013 (the “GE Lawsuit”). Although the lawsuit arises out of STW’s obligations to GE under its Settlement Agreement with GE (described more fully in Item 3 Legal Proceedings, GE Ionics Lawsuit, upon which STW owed GE $2.1 million plus interest, GE has elected to forgo suit on the settlement amount and sue STW for the original debt of $11,239,437, plus interest and attorneys’ fees (the “Original Debt”). As such, STW filed its Answer and asserted that it is entitled to and shall pursue all of its available legal and equitable defenses to the Original Debt, inasmuch as GE has, among other things, failed to discount the Original Debt sued upon by the amounts that it recovered through re-use and re-sale of the equipment it fabricated for STW. Management has not accrued the original amount of the debt because the probability of recovery is remote. | |||||||||||||||
Marcus Muller and Roy Beach Promissory Notes. On March 2, 2012, counsel for Marcus Muller and Roy Beach sent a demand letter to the Company demanding payment on two 12% Convertible Notes by the Company to Messrs. Muller and Beach. The notes in an original principal amount of $25,000 each, were issued on August 13 and 18, 2010 and were in a default status. Muller and Beach’s counsel threatened to initiate Chapter 7 Involuntary Bankruptcy proceedings against the Company, but did not disclose who the necessary third debtor was who had an alleged liquidated and uncontested claim. Since that date, the Company has settled its obligation to Muller and Beach and the related matter has been resolved; however, an issue regarding attorneys’ fees in relation to this matter is now pending. There has been no accrual for those fees. | |||||||||||||||
Segment_Information
Segment Information | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Segment Information | ' | ||||||||||||||||
Note 11. Segment Information | ' | ||||||||||||||||
We have two reportable segments, (1) water reclamation services, and (2) oil & gas services, as described herein. | |||||||||||||||||
Water reclamation services | |||||||||||||||||
The Company provides customized water reclamation services. STW’s core expertise is an understanding of water chemistry and its application to the analysis and remediation of complex water reclamation issues. STW provides a complete solution throughout all phases of a water reclamation project including analysis, design, evaluation, implementation and operations. | |||||||||||||||||
Oil and Gas Services | |||||||||||||||||
Our subsidiaries, STW Energy, STW Pipeline Maintenance & Construction, and STW Oilfield Construction Services offer a wide range of oilfield and pipeline construction, and support services. We employ qualified laborers with years of experience in the oil patch and Supervisor/Sales people with particular oil patch knowledge in the Permian and Delaware Basins of West Texas, Eastern New Mexico, and in the Eagle Ford of South Texas. | |||||||||||||||||
The accounting policies for the segments are the same as those described in the Summary of Significant Accounting Policies (see Note 1). The following is a list of methodologies that we use for segment reporting that differ from our external reporting: | |||||||||||||||||
· | Corporate overhead is allocated among the segments based on the ratio of segment revenues to total revenues. | ||||||||||||||||
· | Liabilities including accounts payable, notes payable, and other liabilities are managed at the corporate level and not included in segment operations. | ||||||||||||||||
· | Interest expense and change in derivative liabilities are managed at the corporate level and not included in segment operations. | ||||||||||||||||
Segment Operations | |||||||||||||||||
Year Ended December 31, 2013 | Year Ended December 31, 2012 | ||||||||||||||||
Water Reclamation | Oil & Gas Services | Water Reclamation | Oil & Gas Services | ||||||||||||||
Revenues | $ | 536,735 | $ | 1,408,896 | $ | -- | $ | -- | |||||||||
Costs of revenues | 472,978 | 1,202,336 | -- | -- | |||||||||||||
Operating expenses | 102,210 | 763,900 | 1,935,027 | -- | |||||||||||||
Non-allocable corporate overhead | (3,160,713 | ) | |||||||||||||||
Segment loss | $ | (38,453 | ) | $ | 2,603,374 | $ | (1,935,027 | ) | $ | -- | |||||||
Segment Assets | |||||||||||||||||
31-Dec-13 | 31-Dec-12 | ||||||||||||||||
Water Reclamation | Oil & Gas Services | Water Reclamation | Oil & Gas Services | ||||||||||||||
Current Assets | $ | -- | $ | 579,541 | $ | -- | $ | -- | |||||||||
Fixed assets | 694,219 | -- | -- | ||||||||||||||
Segment Assets | $ | -- | $ | 1,273,760 | $ | -- | |||||||||||
Subsequent_Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2013 | |
Subsequent Events [Abstract] | ' |
Note 12. Subsequent Events | ' |
Management evaluated all activity of the Company through June 19, 2014, the date the consolidated financial statements were available to be issued and has concluded that no material subsequent events have occurred that would require recognition in the financial statements of disclosures in the notes to the financial statements, except as discussed below. | |
Line of Credit | |
On March 19, 2014, we entered into a Line of Credit Agreement (the "Credit Agreement") with Black Pearl Energy, LLC ("Black Pearl"), an entity controlled by Stan Weiner and Lee Maddox, the Company’s Chief Executive Officer and Chief Operating Officer, respectively, and one of our directors: Grant Seabolt. Pursuant to the Credit Agreement, Black Pearl issued us a $2,000,000 line of credit, approximately $1,010,000 has been advanced subsequent to December 31, 2013; the credit was issued in the form of a promissory note (the "Note"). We must pay back all advanced funds on or before August 1, 2014, although such date will be extended to September 30, 2014 if we do not receive gross proceeds of no less than $6,000,000 resulting from either or both of: (a) the consummation of one or more private placements of debt or equity securities, not including the funds received pursuant to the Credit Agreement; or (b) the filing of a registration statement on Form S-1 with the Securities and Exchange Commission (“SEC”) for an initial public offering of our securities. Interest accrues at 11% per annum. To further induce Black Pearl to issue us the line of credit, we agreed to issue them 1,000,000 restricted shares of our common stock (after which, Black Pearl will own 1,500,000 (1%) of our common stock) and a $25,000 transaction fee to be paid on the final closing date of the credit line. | |
Upon an event of default, which includes nonpayment of any funds owed or bankruptcy, Black Pearl may cease making further advances to us until such default is cured; if the default is not cured, all of Black Pearl's obligations under the Agreement and the Note shall cease and terminate, and Black Pearl may: (i) declare the outstanding principal evidenced by the Note immediately due and payable; (ii) exercise any remedy provided for in the Credit Agreement; or (iii) (iv) exercise any other right or remedy available to it pursuant to the Credit Agreement or Note, or as provided at law or in equity. Interest on the advanced funds shall increase to 18% until the default is cured. | |
Factoring Agreement | |
On January 13, 2014, we entered into an accounts receivable factoring facility (the “Factoring Facility”) with Crown Financial, LLC ("Crown"), pursuant to an Account Purchase Agreement (the “Factoring Agreement”). The Factoring Agreement is secured through a Security Agreement between the Company, two of our subsidiaries: STW Pipeline Maintenance & Construction, LLC and STW Oilfield Construction, LLC (collectively, the "Subsidiaries") and Crown, by all of the instruments, accounts, contracts and rights to the payment of money, all general intangibles and all equipment of the Company and the Subsidiaries. The Factoring Facility includes a loan in the amount of $4,000,000. Our Chief Operating Officer, Lee Maddox also personally guaranteed our full and prompt performance of all of our obligations, representations, warranties and covenants under the Factoring Agreement, pursuant to a Guaranty Agreement for and in consideration of Crown issuing us the Factoring Facility. | |
The Factoring Facility shall continue until terminated by either party upon 30 days written notice. Under the terms of the Factoring Agreement, Crown may, at its sole discretion, purchase certain of the Company’s eligible accounts receivable. Upon any acquisition of an account receivable, Crown will advance to the Company up to 80% of the face amount of the account receivable (the "Purchase Price"); although Crown maintains the right to propose a change in that rate, which we can accept in writing, orally or by accepting funding based on such changed rate. Additionally, based upon when each invoice gets paid, Crown shall pay us a rebate percentage of between 0-18% of the related invoice. Crown will generally have full recourse against us in the event of nonpayment of any such purchased account. Crown has the discretion to also accept a substitute invoice from us for uncollected invoices; if such substitute invoice is not accepted, we will be obligated to pay Crown the Purchase Price of such uncollected invoice plus interest at the maximum lawful interest rate per annum, minus any payments made on the invoice. | |
The Factoring Agreement contains covenants that are customary for agreements of this type and appoints Crown as attorney in fact for various activities associated with the purchased accounts receivable, including opening our mail, endorsing its name on related notes and payments, and filing liens against related third parties. The failure to satisfy covenants under the Factoring Agreement or the occurrence of other specified events that constitute an event of default could result in the acceleration of our repayment obligations or Crown enforcing its rights under the Security Agreement and taking possession of the collateral. The Factoring Agreement contains provisions relating to events of default that are customary for agreements of this type. | |
Debt Extension | |
During 2012, the Company issued to certain accredited investors, new 14% Convertible Notes with an aggregate principal amount of $2,380,975. The Company also issued 566,667 warrants to the placement agent under the same terms. These notes were due on November 30, 2013 and otherwise have the same terms as the 14% Notes the Company issued in 2011. In light of the Company's current cash position, we recently received consent to extend the maturity date of such notes (the "Extension") from the holders of approximately 56% of the outstanding principal amount of such notes. Pursuant to the Extension, the maturity date shall be extended to June 1, 2015. In consideration for their consent to the Extension, the Company agreed to issue each of the consenting note holders additional shares of the Company's common stock in an amount equal to one half of the original principal amount of such holder's note. The Company negotiated extensions of the maturity dates until June 1, 2015, with fourteen (14) of the note holders that hold an aggregate principal of $1,606,765 of these notes. In consideration of the extension agreements, during January 2014, the Company issued an aggregate of 733,137 shares of its common stock valued at $67,354 and is obligated to issue an additional 67,836 shares of its common stock, for a total of 800,973 shares. | |
14% convertible notes Paid In Kind “PIK” interest offering | |
As part of our effort to free up critical capital necessary to carry out our business plans and increase shareholder value, the Company has recently received consent from certain of its outstanding note holders to receive accrued interest in shares of our common stock (the "PIK Shares"), rather than in cash as required by the related note agreement. Upon consent, the PIK Shares are being issued at the rate of $0.08 per share. As of June 19, 2014, we have agreed to issue a total of 6,004,619 PIK Shares to those note holders who have consented to receiving same. As of the date of this Report, we have outstanding accrued interest in the amount of $751,428 for which we are seeking consent to pay in PIK Shares, to which if we receive consent, would require us to issue an additional 3,388,229 PIK Shares. As of the end of January 2014 we had issued 5,559,617 shares of common stock to satisfy the outstanding balance of $444,769 in interest. | |
Unit offering of Common Shares | |
Between January 1, and February 10, 2014, we sold an aggregate of 1,656,250 units pursuant to a Share Purchase Agreement (the "Purchase Agreement") to ten (10) accredited investors (the "Investors"), each consisting of (a) one share of common stock and (b) one, 2 year, common stock purchase warrant to purchase one share of common stock at an exercise price of $0.20 per share, subject to adjustment (the "Warrants," collectively with the shares of common stock, the "Units"). Each Unit had a purchase price of $0.08, and the Company received an aggregate of $132,500 in gross funding in the transaction (the "Offering"). | |
On May 28, 2014, we sold an aggregate of 2,312,500 units pursuant to a Share Purchase Agreement (the "Purchase Agreement") to four (4) accredited investors (the "Investors"), each consisting of (a) one share of common stock and (b) one, 2 year, common stock purchase warrant to purchase one share of common stock at an exercise price of $0.20 per share, subject to adjustment (the "Warrants," collectively with the shares of common stock, the "Units"). Each Unit had a purchase price of $0.08, and the Company received an aggregate of $185,000 in gross funding in the transaction (the "Offering"). One of the investors, because of additional circumstances, received an additional 100,000 warrants. Warrants in total came to 2,412,500. | |
The Purchase Agreements contain representations and warranties by the Company and the investors which are customary for transactions of this type such as, with respect to the Company: organization, good standing and qualification to do business; capitalization; subsidiaries, authorization and enforceability of the transaction and transaction documents; valid issuance of stock, consents being obtained or not required to consummate the transaction; litigation; compliance with securities laws; and no brokers used, and with respect to the investors: authorization, accredited investor status and investment intent. | |
Issuance of Common Shares to Consultants and Employees | |
On February 26, 2014, we issued 500,000 common shares valued at $55,000 to an investor relations consultant for services. | |
Conversion of 12% convertible notes payable | |
During January, 2014, we issued 6,824,500 shares of our common stock to two (2) accredited investors upon their conversion of $225,000 of principal and $116,225 accrued interest of the investors’ 12% convertible notes. | |
Conversion of 14% convertible notes payable | |
During January 2014 and March, 2014, a holder of $25,000 of our 14% convertible notes payable converted the note and related accrued interest into 498,106 shares of the Company’s common stock. | |
On May 22, 2014 the current holder of a 14% convertible note that was in default in the amount of $544,426 of principal and $197,486 of accrued interest converted into 9,273,902 shares of the Company’s common stock. |
Nature_of_the_Business_and_Sig1
Nature of the Business and Significant Accounting Policies (Policies) | 12 Months Ended | |||||||||||||
Dec. 31, 2013 | ||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' | |||||||||||||
History of the Company | ' | |||||||||||||
STW Resources Holding Corp. (“STW” or the “Company”, is a corporation formed to utilize state of the art water reclamation technologies to reclaim fresh water from highly contaminated oil and gas hydraulic fracture flow-back salt water that is produced in conjunction with the production of oil and gas. STW has been working to establish contracts with oil and gas operators for the deployment of multiple water reclamation systems throughout Texas, Arkansas, Louisiana and the Appalachian Basin of Pennsylvania and West Virginia. STW, in conjunction with energy producers, operators, various state agencies and legislators, is working to create an efficient and economical solution to this complex problem. The Company is also evaluating the deployment of similar technology in the municipal wastewater industry. | ||||||||||||||
The Company’s operations are located in the United States of America and the principal executive offices are located at 3424 South County Road 1192, Midland, Texas 79706. | ||||||||||||||
On January 17, 2010, the Company entered into an Agreement and Plan of Merger (“Merger Agreement”) with STW Acquisition, Inc. (“Acquisition Sub”), a wholly owned subsidiary of STW Resources, Inc. (“STW Sub”) and certain shareholders of STW controlling a majority of the issued and outstanding shares of STW. Pursuant to the Merger Agreement, STW merged into the Acquisition Sub resulting in an exchange of all of the issued and outstanding shares of STW for shares of the Company on a one for one basis. At such time, STW became a wholly owned subsidiary of the Company. | ||||||||||||||
On February 9, 2010, the Federal Bankruptcy Court handling a bankruptcy proceeding for our predecessor at the time entered an order confirming the Second Amended Plan of Reorganization (the “Plan”) pursuant to which the Merger Agreement was approved. The Plan was effective February 19, 2010 (the “Effective Date”). The principal provisions of the Plan were as follows: | ||||||||||||||
● | MKM, the DIP lender, received 400,000 shares of common stock and 2,140,000 shares of preferred stock, | |||||||||||||
● | The holders of the Convertible Notes received 1,760,000 shares of common stock, | |||||||||||||
● | General unsecured claims received 100,000 shares of common stock, and | |||||||||||||
● | The Company’s equity interest was extinguished and cancelled. | |||||||||||||
On February 12, 2010, pursuant to the terms of the Merger Agreement, STW Sub merged with Acquisition Sub, which became a wholly-owned subsidiary of the Company (the “Merger”). In consideration for the Merger and STW Sub becoming a wholly-owned subsidiary of the Company, the Company issued an aggregate of 31,780,004 ("the STW Acquisition Shares") shares of common stock to the shareholders of STW at the closing of the Merger and all derivative securities of STW Sub as of the Merger became derivative securities of the Company including options and warrants to acquire 12,613,002 shares of common stock at an exercise price ranging from $3.00 to $8.00 with an exercise period ranging from July 31, 2011 through November 12, 2014 and convertible debentures in the principal amount of $1,467,903 with a conversion price of $0.25 and maturity dates ranging from April 24, 2010 through November 12, 2010. | ||||||||||||||
Formation of New Subsidiaries | ' | |||||||||||||
On June 25, 2013, the Company formed a new subsidiary, a 75% limited liability company (“LLC”) interest in STW Energy Services, LLC (“STW Energy”). The remaining 25% non-controlling interest in STW Energy is held by Crown Financial, LLC, a Texas Limited Liability Company (“Crown” or “Crown Financial”). | ||||||||||||||
Effective June 30, 2013, STW Resources Holding Corp. (the “Company”) formed a new subsidiary, STW Oilfield Construction, LLC (“Oilfield Construction”), a Texas limited liability company. The Company is the sole member of Oilfield Construction, owning 100% of the membership interest in such entity, which is managed by the Company's CEO and COO, as well as one of the Company's directors and an employee of the Company. | ||||||||||||||
Effective September 20, 2013, the Company formed another new subsidiary, STW Pipeline Maintenance & Construction, LLC (“Pipeline Maintenance”), a Texas limited liability company. The Company is the sole member of Pipeline Maintenance, owning 100% of the membership interest in such entity, which is managed by its members. | ||||||||||||||
Consolidation Policy | ' | |||||||||||||
The consolidated financial statements for the year ended December 31, 2013 include the accounts of the Company and its wholly owned subsidiaries, STW Resources, Inc., STW Oilfield Construction LLC, STW Pipeline Maintenance Construction, LLC, and 75% owned subsidiary of STW Energy Services, LLC. The consolidated financial statements for the year ended December 31, 2012, include the accounts of the Company and its wholly owned subsidiary, STW Resources, Inc. All significant intercompany transactions and balances have been eliminated in consolidation. | ||||||||||||||
The Company also consolidates any variable interest entities (VIEs), of which it is the primary beneficiary, as defined. The Company does not have any VIEs that need to be consolidated as of December 31, 2013. | ||||||||||||||
Reclassifications | ' | |||||||||||||
Certain reclassifications were made to the prior year consolidated financial statements to conform to the current year presentation. There was no change to reported net loss. | ||||||||||||||
Non-Controlling Interest | ' | |||||||||||||
On June 25, 2013, the Company invested in a 75% limited liability company (“LLC”) interest in STW Energy Services, LLC (“STW Energy”). The non-controlling interest in STW Energy is held by Crown Financial, LLC, a Texas Limited Liability Company (“Crown” or “Crown Financial”). As of December 31, 2013, $2,500 was recorded as the equity of the non-controlling interest in our consolidated balance sheet representing the third-party investment in STW Energy, with a net loss attributable to non-controlling interests of $48,424 for the year ended December 31, 2013. | ||||||||||||||
Going Concern | ' | |||||||||||||
The Company’s consolidated financial statements have been presented on the basis that it is a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. The Company had an accumulated deficit of $24,355,343 as of December 31, 2013, and as of that date was delinquent in payment of $350,074 of sales and payroll taxes. As of December 31, 2013, $3,695,346 of notes payable are in default. Since its inception in January 2008 through December 31, 2013, management has raised equity and debt financing of approximately $12,000,000 to fund operations and provide working capital. The cash resources of the Company are insufficient to meet its planned business objectives without additional financing. These and other factors raise substantial doubt about the Company’s ability to continue as a going concern. | ||||||||||||||
Management has undertaken steps as part of a plan to improve operations with the goal of sustaining our operations for the next twelve months and beyond. These steps include (a) raising additional capital and/or obtaining financing; (b) executing contracts with oil and gas operators and municipal utility districts; and (c) controlling overhead and expenses. There can be no assurance that the Company can successfully accomplish these steps and it is uncertain that the Company will achieve a profitable level of operations and obtain additional financing. There can be no assurance that any additional financing will be available to the Company on satisfactory terms and conditions, if at all. | ||||||||||||||
The accompanying consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern. | ||||||||||||||
The Company’s ability to continue as a going concern is dependent upon its ability to raise additional capital and to ultimately achieve sustainable revenues and profitable operations. At December 31, 2013, the Company had $17,301 of cash on hand; the Company raised $617,500 of equity financing and secured a $2.0 million credit line from Black Pearl Energy, LLC, a related party, on March 13, 2014, to sustain its operations. Management expects that the current funds on hand will be sufficient to continue operations for the next three months. Management is currently seeking additional funds, primarily through the issuance of debt or equity securities for cash to be used in operations. No assurance can be given that any future financing will be available or, if available, and that it will be on terms that are satisfactory to the Company. Even if the Company is able to obtain additional financing, it may contain undue restrictions on our operations, in the case of debt financing or cause substantial dilution for our stockholders, in case or equity financing. | ||||||||||||||
Development Stage Enterprise | ' | |||||||||||||
During the year ended December 31, 2012, the Company was a development stage company as defined by the Financial Accounting Standards Board (the “FASB”). During the year ended December 31, 2013, the Company realized $1,945,631, including $536,735 of revenues from its water treatment business and $1,408,996 from its oil services business. Revenues commenced January 1, 2013, accordingly, as of January 1, 2013, the Company is no longer a development stage company. | ||||||||||||||
Use of Estimates | ' | |||||||||||||
Consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States require management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Among other things, management has estimated the collectability of its accounts receivable, the valuation of long lived assets, the assumptions used to calculate its derivative liabilities, and equity instruments issued for financing and compensation. Actual results could differ from those estimates. | ||||||||||||||
Concentration of Credit Risk | ' | |||||||||||||
A financial instrument that potentially subjects the Company to concentration of credit risk is cash. The Company places its cash with financial institutions deemed by management to be of high credit quality. The Federal Deposit Insurance Corporation (“FDIC”) provides basic deposit coverage with limits to $250,000 per owner. At December 31, 2013, there were no uninsured deposits. | ||||||||||||||
The Company anticipates entering into long-term, fixed-price contracts for its services with select oil and gas producers and municipal utilities. The Company will control credit risk related to accounts receivable through credit approvals, credit limits and monitoring procedures. | ||||||||||||||
As of December 31, 2013, three vendors accounted for 64% of total accounts payable. During the year ended December 31, 2013, two vendors accounted for 28% of total purchases. As of December 31, 2012, three vendors accounted for 78% of total accounts payable. | ||||||||||||||
As of December 31, 2013, three customers accounted for 42%, 17% and 17% of accounts receivable. During the year ended December 31, 2013, three customers accounted for 27%, 22% and 17% of total revenues. As of December 31, 2012, one customer accounted for 100% of accounts receivable. During the year ended December 31, 2012, the Company had no revenues as it was a development stage enterprise. | ||||||||||||||
Fair Value of Financial Instruments | ' | |||||||||||||
Accounting Standards Codification (“ASC”) 820 defines “fair value” as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. | ||||||||||||||
The Company’s financial instruments consist of cash, accounts receivable, convertible notes payable, accounts payable, accrued expenses and derivative liabilities. The carrying value for all such instruments except convertible notes payable and derivative liabilities approximates fair value due to the short-term nature of the instruments. Our derivative liabilities are recorded at fair value (see Note 6). | ||||||||||||||
We determine the fair value of our financial instruments based on a three-level hierarchy for fair value measurements under which these assets and liabilities must be grouped, based on significant levels of observable or unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect management’s market assumptions. This hierarchy requires the use of observable market data when available. These two types of inputs have created the following fair-value hierarchy: | ||||||||||||||
Level 1 — Valuations based on unadjusted quoted market prices in active markets for identical securities. Currently, we do not have any items classified as Level 1. | ||||||||||||||
Level 2 — Valuations based on observable inputs (other than Level 1 prices), such as quoted prices for similar assets at the measurement date; quoted prices in markets that are not active; or other inputs that are observable, either directly or indirectly. Currently, we do not have any items classified as Level 2. | ||||||||||||||
Level 3 — Valuations based on inputs that are unobservable and significant to the overall fair value measurement, and involve management judgment. We use the Black-Scholes-Merton option pricing model (“Black-Scholes”) to determine the fair value of the financial instruments. | ||||||||||||||
If the inputs used to measure fair value fall in different levels of the fair value hierarchy, a financial security’s hierarchy level is based upon the lowest level of input that is significant to the fair value measurement. | ||||||||||||||
The Company’s finance department is responsible for performing the valuation of financial instruments, including Level 3 fair values. The valuation processes and results are reviewed and approved by the CFO at least once every quarter, in line with the Company’s quarterly and annual reporting dates. Valuation results are discussed with the Audit Committee as part of its quarterly review and annual audit of the Company’s financial statements. | ||||||||||||||
The fair value the 12% convertible debentures was estimated using the Black Scholes Merton method, which approximates the Binomial Lattice valuation model. Significant observable and unobservable inputs include stock price, exercise price, annual risk free rate, term, and expected volatility, and were classified within Level 3 of the valuation hierarchy. An increase or decrease in these inputs could significantly increase or decrease the fair value of the warrant. For example, if the volatility factor was reduced from 623% to 500%, the derivative liability would be reduced from $1,630,985 to $1,585,686. | ||||||||||||||
Our derivative liabilities consist of embedded conversion features on debt and price protection features on warrants, which are classified as Level 3 liabilities. We use Black-Scholes to determine the fair value of these instruments (see Note 6). | ||||||||||||||
Management has used the simplified Black Scholes Merton model to estimate fair value of derivative instruments. Management believes that as a result of the relatively short term nature of the warrants and convertibility features, a lattice model would not result in a materially different valuation. | ||||||||||||||
The following table presents certain financial instruments measured and recorded at fair value in the Company’s consolidated balance sheets on a recurring basis and their level within the fair value hierarchy as of December 31, 2013 and 2012. | ||||||||||||||
Fair value of Derivative Liabilities: | Level 1 | Level 2 | Level 3 | Total | ||||||||||
31-Dec-13 | $ | -- | $ | -- | $ | 1,630,985 | $ | 1,630,985 | ||||||
31-Dec-12 | $ | -- | $ | -- | $ | 1,046,439 | $ | 1,046,439 | ||||||
Accounting for Derivative Liabilities | ' | |||||||||||||
The Company evaluates stock options, stock warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for under the relevant sections of ASC Topic 815-40, “Derivative Instruments and Hedging: Contracts in Entity’s Own Equity ” (“ASC Topic 815-40”). The result of this accounting treatment could be that the fair value of a financial instrument is classified as a derivative instrument and is marked-to-market at each balance sheet date and recorded as a liability. The change in fair value is recorded in the statement of operations as other income or other expense. Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. Financial instruments that are initially classified as equity that become subject to reclassification under ASC Topic 815-40 are reclassified to a liability account at the fair value of the instrument on the reclassification date. | ||||||||||||||
Certain of the Company’s embedded conversion features on debt, price protection features on outstanding warrants are treated as derivatives for accounting purposes. The common stock purchase warrants were not issued with the intent of effectively hedging any future cash flow, fair value of any asset or liability. The warrants do not qualify for hedge accounting, and as such, the changes in the fair value of these warrants are recognized currently in earnings until such time as the warrants are exercised, expired or waived. These common stock purchase warrants do not trade in an active securities market. The Company estimates the fair value of these warrants and embedded conversion features as derivative liabilities contracts using Black-Scholes (see Note 6). | ||||||||||||||
Equity Instruments Issued to Non-Employees for Acquiring Goods or Services | ' | |||||||||||||
Issuances of the Company’s common stock for acquiring goods or services are measured at the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The measurement date for the fair value of the equity instruments issued to consultants or vendors is determined at the earlier of (i) the date at which a commitment for performance to earn the equity instruments is reached (a “performance commitment” which would include a penalty considered to be of a magnitude that is a sufficiently large disincentive for nonperformance) or (ii) the date at which performance is complete. When it is appropriate for the Company to recognize the cost of a transaction during financial reporting periods prior to the measurement date, for purposes of recognition of costs during those periods, the equity instrument is measured at the then-current fair values at each of those interim financial reporting dates. | ||||||||||||||
Long-lived Assets and Intangible Assets | ' | |||||||||||||
In accordance with ASC 350-30, the Company evaluates long-lived assets for impairment whenever events or changes in circumstances indicate that their net book value may not be recoverable. When such factors and circumstances exist, the Company compares the projected undiscounted future cash flows associated with the related asset or group of assets over their estimated useful lives against their respective carrying amount. Impairment, if any, is based on the excess of the carrying amount over the fair value, based on market value when available, or discounted expected cash flows, of those assets and is recorded in the period in which the determination is made. | ||||||||||||||
The Company had no such asset impairments at December 31, 2013 or 2012. There can be no assurance, however, that market conditions will not change or demand for the Company’s products under development will continue. Either of these could result in future impairment of long-lived assets. | ||||||||||||||
Revenue Recognition | ' | |||||||||||||
Contract Revenue and Cost Recognition on Engineering and Design Services | ||||||||||||||
During the year ended December 31, 2013, the Company completed a contract to design, build and deliver a proprietary water desalinization facility to produce 700,000 gallons of water a day by converting brackish well water into the equivalent of rain water to maintain the greens and fairways of the Ranchland Hills Golf Club in Midland, Texas. As of December 31, 2012, the Company reported deferred revenue of $97,346, which is net of deferred costs of $436,654 related to this contract. These revenues and costs were recognized during the year ended December 31, 2013 upon completion of the contract and acceptance of the desalinization facility. | ||||||||||||||
The Company recognizes revenue on a contract once the service or products are delivered or completed and accepted by the customer. This is based on a thorough analysis of the written contract. Revenues from these contracts are recognized when the customer has passed credit tests and collection is reasonably assured and amounts are fixed and determinable. | ||||||||||||||
Services Revenues from Master Services Agreements | ||||||||||||||
During the year ended December 31, 2013, the Company entered into Master Services Agreements (“MSA”) with several major oil & gas companies including Anadarko Petroleum Company, Apache Corporation, Diamondback E&P, Pioneer Natural Resources USA, Reliance Energy, Atlas Pipeline Holdings, and Targa Resources LLC. These MSAs contract the Company to provide a range of oil & gas support services including oilfield site construction and maintenance, pipeline maintenance, oil rig cleaning, site preparation, energy support services, and other oil & gas support services. The Company bills these customers pursuant to purchase orders issued under the MSAs. The revenues billed include hourly labor fees and equipment usage fees. The Company realizes revenues from these contracts as the services are performed under the customer purchase orders. During the year ended December 31, 2013, the Company recognized $1,408,896 of revenues from these services contracts, of which $347,550 were revenue from related parties. | ||||||||||||||
The Company recognizes revenue in the service area based on the MSA agreements. As services are performed and signed off by the customer the Company generates an invoice and recognizes the revenue from its ongoing customers. Revenues are recognized when collectability of the receivable is reasonably assured and amounts are fixed and determinable. | ||||||||||||||
Business Segments | ' | |||||||||||||
The Company has two reportable segments, (1) water reclamation services, and (2) oil & gas services. Segment information is reported in Note 11. | ||||||||||||||
Income Taxes | ' | |||||||||||||
In accordance with ASC 740-10-25, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740-10-25, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. | ||||||||||||||
The Company maintains a valuation allowance with respect to deferred tax assets. The Company established a valuation allowance based upon the potential likelihood of realizing the deferred tax asset in the future tax consequences. Changes in circumstances, such as the Company generating taxable income, could cause a change in judgment about the realizability of the related deferred tax asset. Any change in the valuation allowance will be included in income in the year of the change in estimate. | ||||||||||||||
The Company has adopted the provisions set forth in FASB ASC Topic 740, to account for uncertainty in income taxes. In the preparation of income tax returns in federal and state jurisdictions, the Company asserts certain tax positions based on its understanding and interpretation of the income tax law. The taxing authorities may challenge such positions, and the resolution of such matters could result in recognition of income tax expense in the Company’s financial statements. Management believes it has used reasonable judgments and conclusions in the preparation of its income tax returns. | ||||||||||||||
The Company uses the “more likely than not” criterion for recognizing the tax benefit of uncertain tax positions and to establish measurement criteria for income tax benefits. The Company has determined that it has no material unrecognized tax assets or liabilities related to uncertain tax positions as of December 31, 2013 and 2012. The Company does not anticipate any significant changes in such uncertainties and judgments during the next 12 months. | ||||||||||||||
The Company’s policy is to recognize interest and/or penalties related to income tax matters in income tax expense. The Company had no accrual for interest or penalties on its consolidated balance sheets at December 31, 2013 and December 31, 2012, respectively. | ||||||||||||||
Common Stock and Common Stock Warrants Issued to Employees | ' | |||||||||||||
The Company uses the fair value recognition provision of ASC 718, “Stock Compensation,” which requires the Company to expense the cost of employee services received in exchange for an award of equity instruments based on the grant date fair value of such instruments. The Company uses the Black-Scholes-Merton option pricing model to calculate the fair value of any equity instruments on the grant date. | ||||||||||||||
At December 31, 2013 and 2012, the Company had no grants of employee common stock options or warrants outstanding. | ||||||||||||||
Income (Loss) per Share | ' | |||||||||||||
The basic income (loss) per share is calculated by dividing the Company’s net income (loss) available to common shareholders by the weighted average number of common shares during the period. The diluted earnings (loss) per share is calculated by dividing the Company’s net income (loss) available to common shareholders by the diluted weighted average number of shares outstanding during the period. The diluted weighted average number of shares outstanding is the basic weighted average number of shares adjusted for any potentially dilutive debt or equity. Diluted income (loss) per share is the same as basic income (loss) per share due to the lack of dilutive items. As of December 31, 2013 and 2012, the Company had 102,350,791 and 101,270,609 dilutive shares outstanding, respectively, which have been excluded as their effect is anti-dilutive. | ||||||||||||||
Property and Equipment | ' | |||||||||||||
Property and equipment are stated at cost, net of accumulated depreciation and amortization. The cost of property and equipment is depreciated or amortized on the straight-line method over the following estimated useful lives: | ||||||||||||||
Computer equipment and software | 3 years | |||||||||||||
Furniture | 3 years | |||||||||||||
Machinery | 3-5 years | |||||||||||||
Stock Subscriptions Payable | ' | |||||||||||||
During the year ended December 31, 2013, the Company received stock subscriptions and $310,000 of proceeds from a unit offering of its common stock in consideration of 3,875,000 shares of its common stock. The stock was not issued as of December 31, 2013 and was reported as Stock Subscriptions Payable. | ||||||||||||||
Fees Payable in Common Stock | ' | |||||||||||||
During the year ended December 31, 2013, the Company agreed to issue an aggregate of 12,449,673 shares of its common stock in payment of consulting fees valued at an aggregate of $826,897. As of December 31, 2013, the Company has issued 8,800,000 of the shares associated with this obligation at a value of $595,000. As of December 31, 2013, the Company is obligated to issue the remaining 3,649,673 common shares at a value of $231,897. | ||||||||||||||
Loan Discounts | ' | |||||||||||||
The Company amortizes loan discounts under the effective interest method. | ||||||||||||||
Recently Issued Accounting Standards | ' | |||||||||||||
Recent accounting pronouncements did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements. The Company does not have any components of other comprehensive income (loss) as defined by ASC 220, “Reporting Comprehensive Income.” For the years ended December 31, 2013 and 2012, comprehensive income (loss) consists only of net loss and, therefore, a Statement of Other Comprehensive Loss has not been included in these consolidated financial statements. |
Nature_of_the_Business_and_Sig2
Nature of the Business and Significant Accounting Policies (Tables) | 12 Months Ended | |||||||||||||
Dec. 31, 2013 | ||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' | |||||||||||||
Fair Value of Derivative Liability | ' | |||||||||||||
Fair value of Derivative Liabilities: | Level 1 | Level 2 | Level 3 | Total | ||||||||||
31-Dec-13 | $ | -- | $ | -- | $ | 1,630,985 | $ | 1,630,985 | ||||||
31-Dec-12 | $ | -- | $ | -- | $ | 1,046,439 | $ | 1,046,439 | ||||||
Estimated useful life of property and equipment | ' | |||||||||||||
Computer equipment and software | 3 years | |||||||||||||
Furniture | 3 years | |||||||||||||
Machinery | 3-5 years |
Property_and_Equipment_Tables
Property and Equipment (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Property And Equipment Tables | ' | ||||||||
Property, Plant and Equipment | ' | ||||||||
31-Dec-13 | 31-Dec-12 | ||||||||
Office furniture and equipment | $ | 16,838 | $ | 10,396 | |||||
Tools and yard equipment | 2,302 | -- | |||||||
Vehicles and construction equipment | 798,273 | -- | |||||||
Total, cost | 817,413 | 10,396 | |||||||
Accumulated Depreciation and Amortization | (70,775 | ) | (10,396 | ) | |||||
Total Property and Equipment | $ | 746,638 | $ | - |
Notes_Payable_Tables
Notes Payable (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Notes Payable Tables | ' | ||||||||
Notes Payable | ' | ||||||||
December 31, | December 31, | ||||||||
Name | 2013 | 2012 | |||||||
14% Convertible Notes | $ | 2,904,736 | $ | 2,882,235 | |||||
12% Convertible Notes | 375,000 | 415,000 | |||||||
Other Short-term Debt | 43,280 | 84,280 | |||||||
GE Note | 2,100,000 | 2,100,000 | |||||||
Deferred Compensation Notes | 279,095 | 279,095 | |||||||
Revenue Participation Notes | 852,702 | 165,000 | |||||||
Crown Financial note | 683,036 | -- | |||||||
Equipment finance contracts | 137,573 | -- | |||||||
Capital lease obligation | 23,300 | -- | |||||||
Unamortized debt discount | -107,221 | -80,735 | |||||||
Total Debt | 7,291,501 | 5,844,875 | |||||||
Less: Current Portion | (4,668,492 | ) | (5,331,734 | ) | |||||
Total Long Term Debt | $ | 2,623,009 | $ | 513,141 | |||||
Revenue Participation Notes | ' | ||||||||
2012 Revenue Participation Notes | $ | 165,000 | |||||||
2013 Revenue Participation Notes - STW Resources Salt Water Remediation | 302,500 | ||||||||
2013 Revenue Participation Notes - STW Energy | 182,000 | ||||||||
2013 Convertible Revenue Participation Notes - STW Pipeline | 203,202 | ||||||||
Total revenue participation notes | $ | 852,702 |
Derivative_Liability_Tables
Derivative Liability (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Notes to Financial Statements | ' | ||||||||
Warrants and embedded conversion options which have no observable market data | ' | ||||||||
For the year ended December 31, | For the year ended | ||||||||
2013 | December 31, | ||||||||
2012 | |||||||||
Annual dividend yield | 0 | % | 0 | % | |||||
Expected life (years) | 0.60– 0.47 | 0.50 – 3.40 | |||||||
Risk-free interest rate | 0.11% - 0.25 | % | 0.15% - 0.51 | % | |||||
Expected volatility | 623 | % | 100 | % | |||||
December 31, | December 31, | ||||||||
2013 | 2012 | ||||||||
Embedded Conversion features | $ | 1,467,579 | $ | 962,815 | |||||
Warrants | 163,406 | 83,624 | |||||||
$ | 1,630,985 | $ | 1,046,439 | ||||||
Warrants and embedded conversion options measured at fair value on a recurring basis | ' | ||||||||
For the year ended December 31, | For the year ended | ||||||||
2013 | December 31, | ||||||||
2012 | |||||||||
Balance beginning | $ | 1,046,439 | $ | 1,491 | |||||
Issuance of warrants and embedded conversion features | 54,197 | ||||||||
Reclassification of derivative liability due to increased share authorization | (1,977,372 | ) | -- | ||||||
Change in fair value | 2,561,918 | 990,751 | |||||||
Balance ending | $ | 1,630,985 | $ | 1,046,439 |
Stockholders_Equity_Tables
Stockholders' Equity (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2013 | |||||||||||||
Notes to Financial Statements | ' | ||||||||||||
Amendment shares issued | ' | ||||||||||||
Name | Amount of Shares | Triggering Event | |||||||||||
Stanley T. Weiner | 625,000 | 2012 Director Compensation | |||||||||||
Manfred E. Birnbaum | 625,000 | 2012 Director Compensation | |||||||||||
D. Grant Seabolt, Jr. | 625,000 | 2012 Director Compensation | |||||||||||
Joseph I. O'Neill III | 625,000 | 2012 Director Compensation | |||||||||||
Audry Lee Maddox | 356,250 | 2012 Advisory Board Compensation (156,250 shares) & Director Appointment Shares (200,000) | |||||||||||
Dale F. Dorn | 625,000 | 2012 Director Compensation | |||||||||||
Paul DiFrancesco | 625,000 | 2012 Director Compensation | |||||||||||
Bill G. Carter | 625,000 | 2012 Director Compensation | |||||||||||
Steven Schachman | 156,250 | 2012 Advisory Board Compensation | |||||||||||
Hunter Hill | 156,250 | 2012 Advisory Board Compensation | |||||||||||
Securities to acquire common stock outstanding | ' | ||||||||||||
Security | |||||||||||||
Expire | |||||||||||||
Exercise | |||||||||||||
Price | |||||||||||||
Number of | |||||||||||||
Underlying | |||||||||||||
Common | |||||||||||||
Shares | |||||||||||||
Warrants issued for Professional Services | 1,500,000 | 4 | 2014 | ||||||||||
Warrants associated with the January 14, 2009 Bridge Note | 480,000 | 3 | 2014 | ||||||||||
1,500,000 | 8 | 2014 | |||||||||||
Warrants associated with the acquisition of the Company's Preferred Shares outstanding | |||||||||||||
Warrants associated with the 12% Convertible Notes | 1,641,496 | 0.02 | 2014-2015 | ||||||||||
Warrants associated with 2012 Revenue Participation Notes | 181,500 | 0.2 | 2014 | ||||||||||
Warrants associated with May 2012 Subscription Agreement | 525,000 | 0.2 | 2014 | ||||||||||
Warrants associated with June-September 14% Convertible Notes | 550,000 | 0.2 | 2014 | ||||||||||
Warrants associated with November 14% Convertible notes | 2,777,500 | 0.2 | 2014 | ||||||||||
Warrants associated with 2013 Revenue Participation Notes | 1,110,230 | 0.20 – 0.30 | 2015 | ||||||||||
Warrants issued to Crown Financial, LLC | 4,000,000 | 0.2 | 2016 | ||||||||||
Warrants issued on $20,000 short term loan | 200,000 | 0.2 | 2015 | ||||||||||
Warrants issued with November 2013 Unit Share Offering | 3,875,000 | 0.2 | 2015 | ||||||||||
Sub-total of Warrants outstanding | 18,340,726 | ||||||||||||
Common stock associated with the 12% Convertible Notes plus accrued interest | 27,765,417 | 0.02 | 2014 | ||||||||||
Common stock associated with Pipeline Convertible Revenue Participation notes | 1,725,958 | 0.12 | 2015 | ||||||||||
12/31/2013 Accrued Default interest | 517,118 | 0.02 | 2014-2015 | ||||||||||
Common stock associated with the 14% Convertible Notes plus accrued interest | 46,114,632 | 0.08 | 2015 | ||||||||||
12/31/2013 Accrued Default interest | 198,299 | 0.08 | 2014 | ||||||||||
12/31/2013 Calibre Note interest | 163,968 | 0.08 | 2014 | ||||||||||
Common stock associated with November 2013 Unit Share Offering | 3,875,000 | 0.08 | 2015 | ||||||||||
Common stock payable as fees | 3,649,673 | various | 2014 | ||||||||||
Total securities | 102,350,791 | ||||||||||||
Warrant activity | ' | ||||||||||||
Number of Shares | Weighted- Average Exercise | Remaining Contractual Life (Years) | Aggregate Intrinsic Value | ||||||||||
Price | |||||||||||||
Outstanding at January 1, 2012 | 29,803,434 | $ | 0.94 | ||||||||||
Issued | 4,034,000 | 0.2 | |||||||||||
Exercised | - | ||||||||||||
Forfeited | - | ||||||||||||
Cancelled | - | ||||||||||||
Expired | -1,430,000 | 0.5 | |||||||||||
Outstanding at December 31, 2012 | 32,407,434 | $ | 0.86 | 1.06 | $ | 32,830 | |||||||
Exercisable | 32,407,434 | $ | 0.86 | 1.06 | $ | 328,300 | |||||||
Outstanding at January 1, 2013 | 32,407,434 | $ | 0.86 | 1.06 | |||||||||
Issued | 9,316,838 | 0.21 | 2 | ||||||||||
Exercised | - | ||||||||||||
Forfeited | - | ||||||||||||
Cancelled | - | ||||||||||||
Expired | -23,383,546 | 0.32 | |||||||||||
Outstanding at December 31, 2013 | 18,340,726 | $ | 1.21 | 1.07 | $ | 131,320 | |||||||
Exercisable | 18,340,726 | $ | 0.21 | 1.07 | $ | 131,320 |
Income_Taxes_Tables
Income Taxes (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Income Taxes Tables | ' | ||||||||
Provision for income taxes | ' | ||||||||
December 31, | December 31, | ||||||||
2013 | 2012 | ||||||||
Current taxes | $ | — | $ | — | |||||
Deferred taxes | — | — | |||||||
Total | $ | — | $ | — | |||||
Reconciliation of tax on the Company's loss | ' | ||||||||
Year Ended December 31, | |||||||||
2013 | 2012 | ||||||||
Income tax benefit at the U.S. statutory income tax | $ | (2,391,205 | ) | $ | (1,223,553 | ) | |||
Change in fair value of derivative liability | 871,052 | 336,855 | |||||||
Other differences | 42,873 | 653 | |||||||
Changes in Valuation allowance | 1,477,280 | 886,045 | |||||||
Total | $ | — | $ | — | |||||
Net deferred tax assets recognized | ' | ||||||||
December 31, | December 31, | ||||||||
2013 | 2012 | ||||||||
Deferred noncurrent tax asset: | |||||||||
Net operating loss carry-forward | $ | 2,380,000 | $ | 1,037,000 | |||||
Accrued expenses | 210,780 | 76,500 | |||||||
Valuation allowance | (2,590,780 | ) | (1,113,500 | ) | |||||
Total | $ | — | $ | — |
Commitments_and_Contingencies_
Commitments and Contingencies (Tables) | 12 Months Ended | ||||||||||||||
Dec. 31, 2013 | |||||||||||||||
Restatements Tables | ' | ||||||||||||||
Future minimum lease payments | ' | ||||||||||||||
Capital Lease | Operating Lease | Totals | |||||||||||||
Years ending December 31: | |||||||||||||||
2014 | $ | 7,116 | $ | 117,000 | $ | 124,116 | |||||||||
2015 | 7,116 | 117,000 | 124,116 | ||||||||||||
2016 | 7,116 | 117,000 | 124,116 | ||||||||||||
2017 | 5,930 | 117,000 | 122,930 | ||||||||||||
Thereafter | -- | 321,750 | 321,750 | ||||||||||||
Total minimum lease payments | 27,278 | 789,750 | 817,028 | ||||||||||||
Less interest | (3,978 | ) | |||||||||||||
Capital lease obligation | 23,300 | ||||||||||||||
Less current portion | (5,012 | ) | |||||||||||||
Long-term capital lease obligation | $ | 18,288 | |||||||||||||
Service Agreement | ' | ||||||||||||||
Name and Title | Date of Agreement | Amount of Personal Guaranty | Guaranty Shares | No. of Shares Owned Following Receipt of Guaranty Shares | |||||||||||
Joshua Brooks, Vice President of Operations | 24-Sep-13 | $ | 45,800 | -1 | 382,000 | 382,000 |
Segment_Information_Tables
Segment Information (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
Segment Information Tables | ' | ||||||||||||||||
Segment Operations and Assets | ' | ||||||||||||||||
Segment Operations | |||||||||||||||||
Year Ended December 31, 2013 | Year Ended December 31, 2012 | ||||||||||||||||
Water Reclamation | Oil & Gas Services | Water Reclamation | Oil & Gas Services | ||||||||||||||
Revenues | $ | 536,735 | $ | 1,408,896 | $ | -- | $ | -- | |||||||||
Costs of revenues | 472,978 | 1,202,336 | -- | -- | |||||||||||||
Operating expenses | 102,210 | 763,900 | 1,935,027 | -- | |||||||||||||
Non-allocable corporate overhead | (3,160,713 | ) | |||||||||||||||
Segment loss | $ | (38,453 | ) | $ | 2,603,374 | $ | (1,935,027 | ) | $ | -- | |||||||
Segment Assets | |||||||||||||||||
31-Dec-13 | 31-Dec-12 | ||||||||||||||||
Water Reclamation | Oil & Gas Services | Water Reclamation | Oil & Gas Services | ||||||||||||||
Current Assets | $ | -- | $ | 579,541 | $ | -- | $ | -- | |||||||||
Fixed assets | 694,219 | -- | -- | ||||||||||||||
Segment Assets | $ | -- | $ | 1,273,760 | $ | -- | |||||||||||
Nature_of_Business_and_Signifi
Nature of Business and Significant Accounting Policies (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Fair Value of Derivative Liability | $1,630,985 | $1,046,439 |
Level 1 [Member] | ' | ' |
Fair Value of Derivative Liability | ' | ' |
Level 2 [Member] | ' | ' |
Fair Value of Derivative Liability | ' | ' |
Level 3 [Member] | ' | ' |
Fair Value of Derivative Liability | $1,630,985 | $1,046,439 |
Nature_of_Business_and_Signifi1
Nature of Business and Significant Accounting Policies (Details 1) | 12 Months Ended |
Dec. 31, 2013 | |
Computer Equipment [Member] | ' |
Useful lives of Property, Plant and Equipment | '3 years |
Furniture [Member] | ' |
Useful lives of Property, Plant and Equipment | '3 years |
Machinery and Equipment [Member] | Minimum [Member] | ' |
Useful lives of Property, Plant and Equipment | '3 years |
Machinery and Equipment [Member] | Maximum [Member] | ' |
Useful lives of Property, Plant and Equipment | '5 years |
Nature_of_Business_and_Signifi2
Nature of Business and Significant Accounting Policies (Details Narrative) (USD $) | 6 Months Ended | 12 Months Ended | 71 Months Ended | 12 Months Ended | 12 Months Ended | 12 Months Ended | |||||||||||||||||||
Jun. 13, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Feb. 19, 2010 | Feb. 19, 2010 | Feb. 19, 2010 | Feb. 10, 2010 | Feb. 10, 2010 | Feb. 10, 2010 | |
Consulting [Member] | STW Energy [Member] | Oilfield [Member] | Pipeline [Member] | Water Reclamation [Member] | Water Reclamation [Member] | Oil & Gas Services [Member] | Oil & Gas Services [Member] | Three Vendors [Member] | Three Vendors [Member] | Two Vendors [Member] | Customer One [Member] | Customer Two [Member] | Customer Three [Member] | One Customer [Member] | LenderMember | ConvertibleNoteHoldersMember | UnsecuredClaimsMember | MergerShareholdersMember | ExercisePriceMinimumMember | ExercisePriceMaximumMember | |||||
Company ownership interest | ' | ' | ' | ' | ' | 75.00% | 100.00% | 100.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Noncontrolling member interest | ' | ' | ' | ' | ' | 25.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Common stock issued | ' | 111,255,849 | 96,308,599 | 111,255,849 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 400,000 | 1,760,000 | 100,000 | 31,780,004 | ' | ' |
Preferred stock issued | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 2,140,000 | ' | ' | ' | ' | ' |
Options and warrants issued | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 12,613,002 | ' | ' |
Convertible debentures | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $1,467,903 | ' | ' |
Convertible debentures conversion price | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $0.25 | ' | ' |
Exercise price | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $3 | $8 |
Par value | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $0.00 | $0.00 |
Net loss attributable to non-controlling interest | ' | 48,424 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Accumulated Deficit | ' | 24,355,343 | ' | 24,355,343 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Accrued sales and payroll taxes | ' | 350,074 | ' | 350,074 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Notes payable in default | ' | 3,695,346 | ' | 3,695,346 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Raised net equity and debt financing | ' | ' | ' | 12,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Cash on hand | ' | 17,301 | 59,870 | 17,301 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt | 617,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Equity | 2,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Deferred revenue | ' | ' | 97,346 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Deferred costs related to contract | ' | ' | 436,654 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total revenues including service contracts | ' | 1,945,631 | ' | ' | ' | ' | ' | ' | 536,735 | ' | 1,408,996 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Revenue from related parties | ' | 347,550 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Common Stock equivalents outstanding | ' | 102,350,791 | 101,270,609 | 102,350,791 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Percent of accounts payable | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 64.00% | 78.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Concentration risk | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 28.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Percent of accounts receivable | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 42.00% | 17.00% | 17.00% | 100.00% | ' | ' | ' | ' | ' | ' |
Percent of revenues | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 27.00% | 22.00% | 17.00% | ' | ' | ' | ' | ' | ' | ' |
Proceeds from stock subscriptions and unit offering | ' | 310,000 | ' | 310,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Stock subscription and unit offering, shares | ' | 3,875,000 | ' | 3,875,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Shares issued for consulting fees, commitment | ' | ' | ' | ' | 12,449,673 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Shares issued for consulting fees, value, commitment | ' | ' | ' | ' | 826,897 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Shares issued for consulting fees | ' | ' | ' | ' | 8,800,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Shares issued for consulting fees, value | ' | $434,000 | $786,375 | ' | $595,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Shares issuable under commitment | ' | ' | ' | ' | 3,649,673 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Property_and_Equipment_Details
Property and Equipment (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Property And Equipment Details | ' | ' |
Office furniture and equipment | $16,838 | $10,396 |
Tools and yard equipment | 2,302 | ' |
Vehicles and construction equipment | 798,273 | ' |
Total, cost | 817,413 | 10,396 |
Accumulated Depreciation and Amortization | -70,775 | -10,396 |
Total Property and Equipment | $746,638 | ' |
Propertyt_and_Equipment_Detail
Propertyt and Equipment (Details Narrative) (USD $) | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | |
Notes to Financial Statements | ' | ' | ' |
Depreciation Expense | ' | $60,380 | ' |
Notes_Payable_Details
Notes Payable (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Total Debt | $7,291,501 | $5,844,875 |
Unamortized debt discount | -107,221 | -80,735 |
Less: Current Portion | -4,668,492 | -5,331,734 |
Total Long Term Debt | 2,623,009 | 513,141 |
CNotes 14% [Member] | ' | ' |
Total Debt | 2,904,736 | 2,882,235 |
CNotes 12% [Member] | ' | ' |
Total Debt | 375,000 | 415,000 |
Other Debt [Member] | ' | ' |
Total Debt | 43,280 | 84,280 |
GE Ionics [Member] | ' | ' |
Total Debt | 2,100,000 | 2,100,000 |
Deferrable Compensation [Member] | ' | ' |
Total Debt | 279,095 | 279,095 |
Rev Part Notes [Member] | ' | ' |
Total Debt | 852,702 | 165,000 |
Crown Financial Notes | ' | ' |
Total Debt | 683,036 | ' |
Equipment contract [Member] | ' | ' |
Total Debt | 137,573 | ' |
Capital Lease Obligations [Member] | ' | ' |
Total Debt | $23,300 | ' |
Notes_Payable_Details_1
Notes Payable (Details 1) (USD $) | Dec. 31, 2013 |
Revenue Participation Notes balance | $852,702 |
ParticipationNote 1 [Member] | ' |
Revenue Participation Notes balance | 165,000 |
ParticipationNote 2 [Member] | ' |
Revenue Participation Notes balance | 302,500 |
ParticipationNote 3 [Member] | ' |
Revenue Participation Notes balance | 182,000 |
ParticipationNote 4 [Member] | ' |
Revenue Participation Notes balance | $203,202 |
Notes_Payable_Details_Narrativ
Notes Payable (Details Narrative) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Warrants issued | 18,340,726 | 32,407,434 | 29,803,434 |
Annual dividend yield | 0.00% | 0.00% | ' |
Expected volatility | 623.00% | 100.00% | ' |
Common stock, authorized shares | 250,000,000 | 100,000,000 | ' |
Total Debt | $7,291,501 | $5,844,875 | ' |
note payable to an accredited investor, amount | 97,662 | 50,000 | ' |
Revenue Participation Notes balance | 852,702 | ' | ' |
Interest expense, notes payable | 1,205,338 | 655,371 | ' |
Amortization of debt discount and debt issuance costs | 164,549 | 44,675 | ' |
Net deferred loan costs | -185,428 | -47,167 | ' |
Unamortized debt discount | 107,221 | 80,735 | ' |
Monthly lease payment | 593 | ' | ' |
Capital lease obligation | 23,300 | ' | ' |
Lease interest rate | 10.00% | ' | ' |
Brooks [Member] | ' | ' | ' |
Factoring agreement loan | 225,000 | ' | ' |
Precent of accounts receivable | 80.00% | ' | ' |
Factoring fee | 1.50% | ' | ' |
Minimum [Member] | ' | ' | ' |
Expected life (years) | '5 months 14 days | '3 years 4 months 24 days | ' |
Risk-free interest rate | 0.11% | 0.51% | ' |
Minimum [Member] | Machinery and Equipment [Member] | ' | ' | ' |
interest rate of debt | 4.70% | ' | ' |
Maximum [Member] | ' | ' | ' |
Expected life (years) | '7 months 6 days | '6 months | ' |
Risk-free interest rate | 0.25% | 0.15% | ' |
Maximum [Member] | Machinery and Equipment [Member] | ' | ' | ' |
interest rate of debt | 8.00% | ' | ' |
CNotes 14% [Member] | ' | ' | ' |
Warrants issued | 20,167,871 | ' | ' |
warrants exercise price | $0.20 | ' | ' |
Annual dividend yield | 0.00% | ' | ' |
Expected life (years) | '2 years | ' | ' |
Risk-free interest rate | 0.17% | ' | ' |
Expected volatility | 100.00% | ' | ' |
Estimated fair value of warrants | 81,656 | ' | ' |
Embedded conversion feature at issuance | 35,546 | ' | ' |
notes convertible into common stock share amount | 46,746,898 | ' | ' |
Aggregate principal balance of notes | 2,904,736 | ' | ' |
Aggregate principal amount due to mature current period | 2,504,736 | ' | ' |
Remaining balance to mature future periods | 400,000 | ' | ' |
aggregate principal of notes with negotiated extensions | 1,606,765 | ' | ' |
shares issued in consideration | 800,973 | ' | ' |
shares issued in consideration, value amount | 64,078 | ' | ' |
Total Debt | 2,904,736 | 2,882,235 | ' |
Total debt matured and in default | 897,971 | ' | ' |
Notes payable to related parties | 171,892 | ' | ' |
CNotes 12% [Member] | ' | ' | ' |
Warrants issued | 1,641,496 | ' | ' |
warrants exercise price | $0.02 | ' | ' |
notes convertible into common stock share amount | 28,282,534 | ' | ' |
Total Debt | 375,000 | 415,000 | ' |
Other Debt [Member] | ' | ' | ' |
Warrants issued | 200,000 | ' | ' |
warrants exercise price | $0.20 | ' | ' |
Annual dividend yield | 0.00% | ' | ' |
Expected life (years) | '2 years | ' | ' |
Risk-free interest rate | 0.25% | ' | ' |
Expected volatility | 623.00% | ' | ' |
Estimated fair value of warrants | 12,000 | ' | ' |
Total Debt | 43,280 | 84,280 | ' |
note payable to an accredited investor, amount | 43,280 | ' | ' |
unsecured loan agreement, amount | 20,000 | ' | ' |
interest rate of debt | 20.00% | ' | ' |
principal payment on unsecured loan | 20,000 | ' | ' |
unpaid principal balance of unsecured loan | 0 | ' | ' |
GE Ionics [Member] | ' | ' | ' |
Total Debt | 2,100,000 | 2,100,000 | ' |
Default note rate | 10.00% | ' | ' |
STW original debt with GE, amount | 11,239,437 | ' | ' |
Deferrable Compensation [Member] | ' | ' | ' |
Total Debt | 279,095 | 279,095 | ' |
ParticipationNote 1 [Member] | ' | ' | ' |
Warrants issued | 165,000 | ' | ' |
warrants exercise price | $0.20 | ' | ' |
Annual dividend yield | 0.00% | ' | ' |
Expected life (years) | '2 years | ' | ' |
Risk-free interest rate | 0.33% | ' | ' |
Expected volatility | 100.00% | ' | ' |
interest rate of debt | 12.00% | ' | ' |
Revenue Participation Notes balance | 165,000 | ' | ' |
Revenue receivable initial rate | 50.00% | ' | ' |
Revenue receivable subsequent rate | 10.00% | ' | ' |
Revenue payable maximum amount | 295,000 | ' | ' |
Cash fees related to issuance of notes | 16,500 | ' | ' |
Warrants issued related to cash fees due for issuance of notes | 16,500 | ' | ' |
ParticipationNote 2 [Member] | ' | ' | ' |
Warrants issued | 182,000 | ' | ' |
warrants exercise price | $0.20 | ' | ' |
Annual dividend yield | 0.00% | ' | ' |
Expected life (years) | '2 years | ' | ' |
Risk-free interest rate | 0.25% | ' | ' |
Expected volatility | 623.00% | ' | ' |
Estimated fair value of warrants | 33,398 | ' | ' |
interest rate of debt | 12.00% | ' | ' |
Revenue Participation Notes balance | 302,500 | ' | ' |
Warrants issued related to cash fees due for issuance of notes | 91,000 | ' | ' |
note discount | 42,000 | ' | ' |
ParticipationNote 3 [Member] | ' | ' | ' |
Warrants issued | 32,500 | ' | ' |
Annual dividend yield | 0.00% | ' | ' |
Expected life (years) | '2 years | ' | ' |
Risk-free interest rate | 0.25% | ' | ' |
Expected volatility | 623.00% | ' | ' |
Estimated fair value of warrants | 1,624 | ' | ' |
interest rate of debt | 6.00% | ' | ' |
Revenue Participation Notes balance | 182,000 | ' | ' |
note discount | 15,000 | ' | ' |
proceeds to company | 50,000 | ' | ' |
maximum offering size | 325,000 | ' | ' |
ParticipationNote 4 [Member] | ' | ' | ' |
Warrants issued | 414,230 | ' | ' |
warrants exercise price | $0.20 | ' | ' |
Annual dividend yield | 0.00% | ' | ' |
Expected life (years) | '2 years | ' | ' |
Risk-free interest rate | 0.25% | ' | ' |
Expected volatility | 623.00% | ' | ' |
Estimated fair value of warrants | 27,153 | ' | ' |
notes convertible into common stock share amount | 1,752,958 | ' | ' |
Total Debt | 207,115 | ' | ' |
Revenue Participation Notes balance | 203,202 | ' | ' |
Revenue receivable initial rate | 50.00% | ' | ' |
note discount | 27,015 | ' | ' |
proceeds to company | 180,100 | ' | ' |
Crown [Member] | ' | ' | ' |
Warrants issued | 4,000,000 | ' | ' |
warrants exercise price | $0.20 | ' | ' |
Annual dividend yield | 0.00% | ' | ' |
Expected life (years) | '2 years | ' | ' |
Risk-free interest rate | 0.25% | ' | ' |
Expected volatility | 623.00% | ' | ' |
Estimated fair value of warrants | 159,996 | ' | ' |
Total Debt | 1,000,000 | ' | ' |
Loan facility amount outstanding | 683,036 | ' | ' |
interest rate of debt | 15.00% | ' | ' |
Equipment contract [Member] | ' | ' | ' |
Total Debt | $137,573 | ' | ' |
Derivative_Liability_Details
Derivative Liability (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Annual dividend yield | 0.00% | 0.00% |
Expected volatility | 623.00% | 100.00% |
FairValueInputsLevel3Member | ' | ' |
Embedded conversion Options | 1,467,579 | 962,815 |
Warrants | 163,406 | 83,624 |
Increase (Decrease) in fair value | 1,630,985 | 1,046,439 |
Minimum [Member] | ' | ' |
Expected life (years) | '5 months 14 days | '3 years 4 months 24 days |
Risk-free interest rate | 0.11% | 0.51% |
Maximum [Member] | ' | ' |
Expected life (years) | '7 months 6 days | '6 months |
Risk-free interest rate | 0.25% | 0.15% |
Derivative_Liability_Details_1
Derivative Liability (Details 1) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Derivative Liabilities Details 1 | ' | ' |
Beginning Balance | $1,046,439 | $1,491 |
Issuance of warrants and embedded conversion features | ' | 54,197 |
Reclassification of derivative liability due to increased share authorization | -1,977,372 | ' |
Change in fair value | -2,561,918 | -990,751 |
Ending Balance | $1,630,985 | $1,046,439 |
Derivative_Liability_Details_N
Derivative Liability (Details Narrative) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Derivative Liability Details Narrative | ' | ' |
Common stock, authorized shares | 250,000,000 | 100,000,000 |
Volatility rate to value derivative instruments | 623.00% | 100.00% |
Related_Party_Transactions_Det
Related Party Transactions (Details Narrative) (USD $) | 12 Months Ended | 3 Months Ended | 3 Months Ended | 12 Months Ended | ||||||||||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | |
Weiner [Member] | Weiner [Member] | Maddox [Member] | Maddox [Member] | Seabolt [Member] | Seabolt [Member] | Brooks [Member] | Board of Directors [Member] | Board of Directors [Member] | Other Related Party [Member] | Other Related Party [Member] | Dufrane [Member] | |||
Consulting fees incurred | ' | ' | $150,000 | $102,000 | $150,000 | $130,000 | $90,000 | $60,000 | $30,000 | ' | ' | $73,500 | ' | ' |
Accrued commissions payable | 976,613 | 772,835 | ' | 24,500 | ' | ' | ' | ' | ' | ' | ' | 202,728 | ' | ' |
Salary and consulting fees payable | ' | ' | 263,083 | 155,583 | 170,500 | 59,500 | 121,083 | 108,866 | 30,000 | 491,724 | 235,000 | ' | ' | ' |
Initial grant | ' | ' | ' | ' | ' | ' | ' | ' | ' | 200,000 | ' | 469,000 | 469,000 | ' |
Initial cash fee compensation | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,000 | ' | ' | ' | ' |
Annual compensation | ' | ' | ' | ' | ' | ' | ' | ' | ' | 75,000 | ' | ' | ' | ' |
Professional fees | ' | ' | ' | ' | ' | ' | ' | ' | ' | 43,500 | ' | ' | ' | ' |
Accrued professional fees | ' | ' | ' | ' | ' | ' | ' | ' | ' | 602,849 | ' | 63,199 | 63,199 | ' |
Due to related parties | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 139,763 | 139,763 | 132,490 |
Related party payable, cash advance | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 276,804 | 276,804 | ' |
Related party payable, common stock | ' | ' | ' | ' | ' | ' | ' | ' | ' | 5,043,750 | ' | 137,041 | 137,041 | ' |
Related party sales | 347,550 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 48,328 | 48,328 | ' |
Due from related party | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $10,752 | $10,752 | ' |
Stockholders_Equity_Details
Stockholders' Equity (Details) | 12 Months Ended |
Dec. 31, 2013 | |
Office & Director Issuance 1 [Member] | ' |
Shares | 625,000 |
Triggering Event | '2012 Director Compensation |
Office & Director Issuance 2 [Member] | ' |
Shares | 625,000 |
Triggering Event | '2012 Director Compensation |
Office & Director Issuance 3 [Member] | ' |
Shares | 625,000 |
Triggering Event | '2012 Director Compensation |
Office & Director Issuance 4 [Member] | ' |
Shares | 625,000 |
Triggering Event | '2012 Director Compensation |
Office & Director Issuance 5 [Member] | ' |
Shares | 356,250 |
Triggering Event | '2012 Advisory Board Compensation (156,250 shares) & Director Appointment Shares (200,000) |
Office & Director Issuance 6 [Member] | ' |
Shares | 625,000 |
Triggering Event | '2012 Director Compensation |
Office & Director Issuance 7 [Member] | ' |
Shares | 625,000 |
Triggering Event | '2012 Director Compensation |
Office & Director Issuance 8 [Member] | ' |
Shares | 625,000 |
Triggering Event | '2012 Director Compensation |
Office & Director Issuance 9 [Member] | ' |
Shares | 156,250 |
Triggering Event | '2012 Advisory Board Compensation |
Office & Director Issuance 10 [Member] | ' |
Shares | 156,250 |
Triggering Event | '2012 Advisory Board Compensation |
Stockholders_Equity_Details_1
Stockholders' Equity (Details 1) (USD $) | Dec. 31, 2013 |
Securities to acquire common stock outstanding | 102,350,791 |
Warrant 1 [Member] | ' |
Securities to acquire common stock outstanding | 1,500,000 |
Exercise price | 4 |
Warrant 2 [Member] | ' |
Securities to acquire common stock outstanding | 480,000 |
Exercise price | 3 |
Warrant 3 [Member] | ' |
Securities to acquire common stock outstanding | 1,500,000 |
Exercise price | 8 |
Warrant 4 [Member] | ' |
Securities to acquire common stock outstanding | 1,641,496 |
Exercise price | 0.02 |
Warrant 5 [Member] | ' |
Securities to acquire common stock outstanding | 181,500 |
Exercise price | 0.2 |
Warrant 6 [Member] | ' |
Securities to acquire common stock outstanding | 525,000 |
Exercise price | 0.2 |
Warrant 7 [Member] | ' |
Securities to acquire common stock outstanding | 550,000 |
Exercise price | 0.2 |
Warrant 8 [Member] | ' |
Securities to acquire common stock outstanding | 2,777,500 |
Exercise price | 0.2 |
Warrant 9 [Member] | ' |
Securities to acquire common stock outstanding | 1,110,230 |
Exercise price | 0.2 |
Warrant 10 [Member] | ' |
Securities to acquire common stock outstanding | 4,000,000 |
Exercise price | 0.2 |
Warrant 11 [Member] | ' |
Securities to acquire common stock outstanding | 200,000 |
Exercise price | 0.2 |
Warrant 12 [Member] | ' |
Securities to acquire common stock outstanding | 3,875,000 |
Exercise price | 0.2 |
Warrant Total [Member] | ' |
Securities to acquire common stock outstanding | 18,340,726 |
Notes 1 [Member] | ' |
Securities to acquire common stock outstanding | 27,765,417 |
Exercise price | 0.02 |
Notes 2 [Member] | ' |
Securities to acquire common stock outstanding | 1,725,958 |
Exercise price | 0.12 |
Notes 3 [Member] | ' |
Securities to acquire common stock outstanding | 517,118 |
Exercise price | 0.02 |
Notes 4 [Member] | ' |
Securities to acquire common stock outstanding | 46,114,632 |
Exercise price | 0.08 |
Notes 5 [Member] | ' |
Securities to acquire common stock outstanding | 198,299 |
Exercise price | 0.08 |
Notes 6 [Member] | ' |
Securities to acquire common stock outstanding | 163,968 |
Exercise price | 0.08 |
Notes 7 [Member] | ' |
Securities to acquire common stock outstanding | 3,875,000 |
Exercise price | 0.08 |
Stock Fees [Member] | ' |
Securities to acquire common stock outstanding | 3,649,673 |
Stockholders_Equity_Details_2
Stockholders' Equity (Details 2) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Number of Shares Under Warrants | ' | ' |
Warrants outstanding at beginning of period | 32,407,434 | 29,803,434 |
Warrants Issued | 9,316,838 | 4,034,000 |
Warrants Exercised | ' | ' |
Warrants Forfeited | ' | ' |
Warrants Cancelled | ' | ' |
Warrants Expired | -23,383,546 | -1,430,000 |
Warrants outstanding at end of period | 18,340,726 | 32,407,434 |
Warrants exercisable at end of period | 18,340,726 | 32,407,434 |
Weighted Average Exercise Price | ' | ' |
Warrants outstanding at beginning of period | $0.86 | $0.94 |
Warrants Issued | $0.21 | $0.20 |
Warrants Exercised | ' | ' |
Warrants Forfeited | ' | ' |
Warrants Cancelled | ' | ' |
Warrants Expired | $0.32 | $0.50 |
Warrants outstanding at end of period | $1.21 | $0.86 |
Warrants exercisable at end of period | $0.21 | $0.86 |
Remaining Contractual Life (Years) | ' | ' |
Warrants outstanding at beginning of period | '1 year 22 days | ' |
Warrants Issued | '2 years | ' |
Warrants outstanding at end of period | '1 year 24 days | '1 year 22 days |
Warrants exercisable at end of period | '1 year 24 days | '1 year 22 days |
Aggregate Intrinsic Value | ' | ' |
Warrants outstanding at beginning of period | $32,830 | ' |
Warrants outstanding at end of period | 131,320 | 32,830 |
Warrants exercisable at end of period | $131,320 | $32,830 |
Stockholders_Equity_Details_Na
Stockholders' Equity (Details Narrative) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Stockholders Equity Details Narrative | ' | ' |
Preferred stock, par value | $0.00 | $0.00 |
Preferred stock, authorized shares | 10,000,000 | 10,000,000 |
Common stock, par value | $0.00 | $0.00 |
Common stock, authorized shares | 250,000,000 | 100,000,000 |
Income_Taxes_Details
Income Taxes (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Income Taxes Details | ' | ' |
Income taxes benefit at US statutory rate | -239120500.00% | -122355300.00% |
Change in fair value of derivative liability | $871,052 | $336,855 |
Other differences | 42,873 | 653 |
Valuation allowance | 1,477,280 | 886,045 |
Total | ' | ' |
Income_Taxes_Details_1
Income Taxes (Details 1) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Income Taxes Details 1 | ' | ' |
Net operating loss carry-forward | $2,380,000 | $1,037,000 |
Accrued expenses | 210,780 | 76,500 |
Deferred noncurrent tax asset, gross | 9,181,627 | 1,113,500 |
Valuation allowance | -9,181,627 | -1,113,500 |
Deferred noncurrent tax asset, Total | ' | ' |
Income_Taxes_Details_Narrative
Income Taxes (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Income Taxes Details Narrative | ' | ' |
Net Loss | ($7,032,955) | ($3,598,684) |
Deferred noncurrent tax asset, gross | 9,181,627 | 1,113,500 |
Increase in valuation allowance | 1,477,280 | 221,000 |
Annual limitation NOL | '$120,000 | ' |
Federal income tax net operating loss | ($18,400,000) | ' |
Commitments_and_Contingencies_1
Commitments and Contingencies (Details) (USD $) | Dec. 31, 2013 |
Future minimum lease payments | ' |
Future minimum lease payments, 2014 | $124,116 |
Future minimum lease payments, 2015 | 124,116 |
Future minimum lease payments, 2016 | 124,116 |
Future minimum lease payments, 2017 | 122,930 |
Future minimum lease payments, Thereafter | 321,750 |
Total future minimum lease payments, Capital Lease | 817,028 |
Capital lease obligation | 23,300 |
Capital Lease Obligations [Member] | ' |
Future minimum lease payments | ' |
Future minimum lease payments, 2014 | 7,116 |
Future minimum lease payments, 2015 | 7,116 |
Future minimum lease payments, 2016 | 7,116 |
Future minimum lease payments, 2017 | 5,930 |
Future minimum lease payments, Thereafter | ' |
Total future minimum lease payments, Capital Lease | 27,278 |
Less interest | -3,978 |
Capital lease obligation | 23,300 |
Less current portion | -5,012 |
Long-term capital lease obligation | 18,288 |
Operating Lease Expense [Member] | ' |
Future minimum lease payments | ' |
Future minimum lease payments, 2014 | 117,000 |
Future minimum lease payments, 2015 | 117,000 |
Future minimum lease payments, 2016 | 117,000 |
Future minimum lease payments, 2017 | 117,000 |
Future minimum lease payments, Thereafter | 321,750 |
Total future minimum lease payments, Capital Lease | $789,750 |
Commitments_and_Contingencies_2
Commitments and Contingencies (Details 1) (Brooks [Member], USD $) | Dec. 31, 2013 | |
Brooks [Member] | ' | |
Amount of Personal Guaranty | $45,800 | [1] |
Guaranty Shares | 382,000 | |
No. of Shares owned following receipt of guaranty shares | 382,000 | |
[1] | Pursuant to the service agreement with Mr. Brooks, any amounts due on a related defaulted lease in excess of 20% of the amount of the personal guaranty, shall be the Company's obligation. If Brooks' employment with the Company is terminated, the Company shall use its best commercial efforts to have it or a third party assume Brooks' guarantee obligations. |
Commitments_and_Contingencies_3
Commitments and Contingencies (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Monthly rental expense | $9,750 | ' |
Rental expense | 78,558 | ' |
Rental expense to related party | 49,308 | ' |
Operating lease rental expense | 14,292 | ' |
Option to purchase land and building | 825,500 | ' |
Original settlement agreement amount | 1,977,372 | ' |
Viewpoint [Member] | ' | ' |
Loss contingency | 216,217 | ' |
Loss contingency, additional shares | 566,667 | ' |
Loss contingency reflected on financial statements | 202,727 | ' |
Muller and Beach [Member] | ' | ' |
Loss contingency | 25,000 | ' |
Jennings [Member] | ' | ' |
Shares issued as signing bonus | 1,200,000 | ' |
Fees payable in common stock | 300,000 | ' |
Brooks [Member] | ' | ' |
Shares issued as signing bonus | 2,000,000 | ' |
Fees payable in common stock | 140,000 | ' |
Annual salary | 120,000 | ' |
Milestone shares | 4,000,000 | ' |
Guaranty shares, per share price | $0.12 | ' |
Guaranty Shares | 382,000 | ' |
GE Ionics [Member] | ' | ' |
Loss contingency | $11,239,437 | ' |
Segment_Information_Details
Segment Information (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Segment Operations | ' | ' |
Revenues | $1,945,631 | ' |
Cost of revenues | 1,675,314 | ' |
Operating expenses | 3,469,483 | 1,935,027 |
Segment loss | -7,081,379 | -3,598,684 |
Segment Assets | ' | ' |
Current Assets | 583,581 | 153,847 |
Segment Assets | 1,515,647 | 201,014 |
Water Reclamation [Member] | ' | ' |
Segment Operations | ' | ' |
Revenues | 536,735 | ' |
Cost of revenues | 472,978 | ' |
Operating expenses | 102,210 | 1,935,027 |
Segment loss | -38,453 | -1,935,027 |
Segment Assets | ' | ' |
Current Assets | ' | ' |
Fixed assets | ' | ' |
Segment Assets | ' | ' |
Oil & Gas Services [Member] | ' | ' |
Segment Operations | ' | ' |
Revenues | 1,408,996 | ' |
Cost of revenues | 1,202,336 | ' |
Operating expenses | 763,900 | ' |
Non-allocable corporate overhead | -3,160,713 | ' |
Segment loss | 2,603,374 | ' |
Segment Assets | ' | ' |
Current Assets | 579,541 | ' |
Fixed assets | 694,219 | ' |
Segment Assets | $1,273,760 | ' |