Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Apr. 02, 2015 | Jun. 30, 2014 | |
Document And Entity Information | |||
Entity Registrant Name | STW RESOURCES HOLDING CORP. | ||
Entity Central Index Key | 1357838 | ||
Document Type | 10-K | ||
Document Period End Date | 31-Dec-14 | ||
Amendment Flag | FALSE | ||
Current Fiscal Year End Date | -19 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $12,894,724 | ||
Entity Common Stock, Shares Outstanding | 31,683,150 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2014 |
Condensed_Consolidated_Balance
Condensed Consolidated Balance Sheets (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Current assets | ||
Cash | $123,629 | $17,301 |
Accounts receivable | 3,710,180 | 532,910 |
Accounts receivable from related parties | 519,789 | |
Deferred Project Costs | 480,000 | |
Prepaid expenses and other current assets | 344,525 | 33,370 |
Total current assets | 5,178,123 | 583,581 |
Property and equipment, net | 1,437,999 | 746,638 |
Other Assets | ||
Deferred loan costs, net | 97,121 | 185,428 |
TOTAL ASSETS | 6,713,243 | 1,515,647 |
Current liabilities | ||
Bank overdraft | 30,468 | |
Accounts payable | 4,523,265 | 1,256,043 |
Payable to related parties: | ||
Black Pearl Energy, LLC | 1,371,305 | 139,763 |
Crown Financial, LLC | 2,035,495 | |
Dufrane Nuclear, Inc. | 132,490 | |
Accrued compensation - officers | 873,380 | 584,666 |
Current portion of notes payable, net of discounts, $1,700,394 and $854,928 payable to related parties | 5,890,414 | 4,668,492 |
Sales and payroll taxes payable | 2,671,843 | 350,074 |
Insurance premium finance contract payable | 208,271 | |
Accrued expenses and interest | 1,769,117 | 1,839,439 |
Deferred Revenue | 680,000 | |
Accrued compensation | 643,777 | 285,190 |
Accrued board compensation | 496,067 | 491,724 |
Fees payable in common stock, including $1,173,500 payable to related parties | 2,783,711 | 231,897 |
Stock subscriptions payable | 27,000 | 310,000 |
Derivative liability | 802,340 | 1,630,985 |
Total current liabilities | 24,775,985 | 11,951,231 |
Notes payable, net of discount and current portion, related parties | 2,825,295 | 2,623,009 |
Total liabilities | 27,601,280 | 14,574,240 |
Stockholders' deficit | ||
Preferred stock, par value $0.001 per share, 10,000,000 shares authorized, no shares issued and outstanding as of December 31, 2014 and December 31, 2013 | ||
Common stock $0.001 par value 191,666,667 shares authorized, 28,194,953 and 18,542,642 shares issued and outstanding as of December 31, 2014 and 2013, respectively | 28,197 | 18,543 |
Additional paid-in capital | 18,383,411 | 11,324,131 |
Accumulated deficit | -39,112,171 | -24,355,343 |
Total Stockholders' Deficit of STW Resources | -20,700,563 | -13,012,669 |
Non-controlling interest in subsidiary | -187,474 | -45,924 |
Total Stockholders' Deficit | -20,888,037 | -13,058,593 |
Total Liabilities and Stockholders' Deficit | $6,713,243 | $1,515,647 |
Condensed_Consolidated_Balance1
Condensed Consolidated Balance Sheets (Parenthetical) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Current liabilities | ||
Notes payable to related parties | $1,700,394 | $854,928 |
Fees payable to related parties | $1,173,500 | |
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 | 0 | 0 |
Preferred stock, outstanding shares | 0 | 0 |
Common stock, par value | $0.00 | $0.00 |
Common stock, authorized shares | 191,666,667 | 41,666,667 |
Common stock, issued shares | 28,194,953 | 18,542,642 |
Common stock, outstanding shares | 28,194,953 | 18,542,642 |
Condensed_Consolidated_Stateme
Condensed Consolidated Statements of Operations (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Revenues | ||
Contract and service revenues | $16,528,759 | $1,598,081 |
Service revenues from related party | 2,079,269 | 347,550 |
Total revenues | 18,608,028 | 1,945,631 |
Costs of Revenues | 17,553,588 | 1,675,314 |
Gross Profit | 1,054,440 | 270,317 |
Operating Expenses | ||
Research and Development | 156,346 | 80,556 |
Sales and marketing | 1,014,997 | 37,066 |
General and administrative | 12,407,485 | 3,406,438 |
Depreciation | 237,915 | 60,380 |
Total operating expenses | 13,816,743 | 3,584,440 |
Loss from operations | -12,762,303 | -3,314,123 |
Other Income (Expense) | ||
Interest expense | -2,119,261 | -1,205,338 |
Loss on disposition of property and equipment | -44,820 | |
Gain on Debt Settlement - Brooks | 123,898 | |
Change in derivative liability | -95,892 | -2,561,918 |
Net Loss | -14,898,378 | -7,081,379 |
Less: Share of net loss of subsidiary attributable to non-controlling interest | -141,550 | -48,424 |
Net Loss of STW Resources | ($14,756,828) | ($7,032,955) |
Loss per common share - basic and diluted | ($0.60) | ($0.42) |
Weighted average shares outstanding - basic and diluted | 24,721,493 | 16,665,400 |
Consolidated_Statements_of_Sto
Consolidated Statements of Stockholders' Deficit (USD $) | CommonStockMember | Additional Paid In Capital | Accumulated Deficit [Member] | Non-Controlling Interest | Total |
Beginning balance, Amount at Dec. 31, 2012 | $16,053 | $8,147,864 | ($17,322,388) | ($9,158,471) | |
Beginning Balance, Shares at Dec. 31, 2012 | 16,051,435 | ||||
Conversion of accrued interest on 12% convertible notes to common shares, Shares | 58,853 | ||||
Conversion of accrued interest on 12% convertible notes to common shares, Amount | 59 | 21,128 | 21,187 | ||
Conversion of 12% convertible notes to common shares, Shares | 125,063 | ||||
Conversion of 12% convertible notes to common shares, Amount | 125 | 44,897 | 45,022 | ||
Value of warrants issued for loan fee | 171,996 | 171,996 | |||
Value of warrants issued with notes payable | 65,555 | 65,555 | |||
Shares issued to board members as directors fees, Shares | 762,500 | ||||
Shares issued to board members as directors fees, Amount | 762 | 273,738 | 274,500 | ||
Shares issued to advisory board members as fees, Shares | 78,125 | ||||
Shares issued to advisory board members as fees, Amount | 78 | 28,047 | 28,125 | ||
Shares issued for consulting services, Shares | 1,083,333 | ||||
Shares issued for consulting services, Amount | 1,083 | 432,917 | 434,000 | ||
Reclassification of derivative liability due to increase share authorization | 1,977,372 | 1,977,372 | |||
Shares issued as employment signing bonuses, shares | 383,333 | ||||
Shares issued as employment signing bonus, amount | 383 | 160,617 | 161,000 | ||
Non-controlling interest investment in subsidiary | 2,500 | 2,500 | |||
Value of derivative associated with converted notes payable | |||||
Net Loss for the period | -7,032,955 | -48,424 | -7,081,379 | ||
Ending Balance, Amount at Dec. 31, 2013 | 18,543 | 11,324,131 | -24,355,343 | -45,924 | -13,058,593 |
Ending Balance, Shares at Dec. 31, 2013 | 18,542,642 | ||||
Value of warrants issued with notes payable | 26,710 | 26,710 | |||
Shares issued to board members as directors fees, Shares | 930,261 | ||||
Shares issued to board members as directors fees, Amount | 930 | 557,227 | 558,157 | ||
Shares issued for consulting services, Amount | 788,625 | ||||
Reclassification of derivative liability due to increase share authorization | |||||
Shares issued upon conversion of notes payable and accrued interest, Shares | 3,068,004 | ||||
Shares issued upon conversion of notes payable and accrued interest, Amount | 3,069 | 1,849,007 | 1,852,076 | ||
Shares issued upon extension of notes payable, Shares | 124,818 | ||||
Shares issued upon extension of notes payable, Amount | 125 | 68,491 | 68,616 | ||
Shares issued for conversion of accrued paid in kind interest, Shares | 946,535 | ||||
Shares issued for conversion of accrued paid in kind interest, Amount | 947 | 539,830 | 540,777 | ||
Shares issued to consultants, Shares | 788,625 | ||||
Shares issued to consultants, Amount | 789 | 774,786 | 775,575 | ||
Shares issued to employees as compensation, Shares | 981,875 | ||||
Shares issued to employees as compensation, Amount | 982 | 1,010,393 | 1,011,375 | ||
Shares issued as charitable contribution, Shares | 166,667 | ||||
Shares issued as charitable contribution, Amount | 167 | 109,833 | 110,000 | ||
Shares issued from common stock payable, Shares | 333,333 | ||||
Shares issued from common stock payable, Amount | 333 | 159,667 | 160,000 | ||
Shares issued in connection with unit stock offering, Shares | 2,311,875 | ||||
Shares issued in connection with unit stock offering, Amount | 2,312 | 1,219,187 | 1,221,499 | ||
Shares issued in connection with reverse stock split rounding, Shares | 318 | ||||
Shares issued in connection with reverse stock split rounding, Amount | |||||
Value of derivative associated with converted notes payable | 694,149 | 694,149 | |||
Value of conversion feature of note | 50,000 | 50,000 | |||
Net Loss for the period | -14,756,828 | -141,550 | -14,898,378 | ||
Ending Balance, Amount at Dec. 31, 2014 | $28,197 | $18,383,411 | ($39,112,171) | ($187,474) | ($20,888,037) |
Ending Balance, Shares at Dec. 31, 2014 | 28,194,953 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Cash flows from operating activities | ||
Net Loss | ($14,898,378) | ($7,081,379) |
Adjustments to reconcile net loss of STW Resources to net cash used in operations operating activities: | ||
Depreciation | 237,915 | 60,380 |
Change in fair value of derivative liability | 95,892 | 2,561,918 |
Loss on disposition of property and equipment | 44,820 | |
Financing costs of notes payable | 69,299 | |
Change in fair value of debt instruments converted to equity | -272,980 | |
Amortization of discount and debt issuance costs | 230,723 | 164,549 |
Share-based compensation | 5,079,879 | 826,897 |
Changes in operating assets and liabilities: | ||
(Increase) Decrease in accounts receivable | -3,177,270 | -527,870 |
(Increase) Decrease in deferred project costs | -480,000 | |
(Increase) Decrease in prepaid expense | -311,155 | 55,567 |
Increase (Decrease) in accounts payable | 3,267,222 | 459,649 |
Increase (Decrease) in sales and payroll taxes payable | 2,321,769 | 350,074 |
Increase (Decrease) in insurance premium contract payable | 208,271 | |
Increase (Decrease) in deferred revenue | 680,000 | -97,346 |
Increase (Decrease) in accrued compensation | 358,587 | 157,525 |
Increase (Decrease) in accrued expenses and interest | 1,335,378 | 976,613 |
Increase (Decrease) in accrued board compensation | 559,349 | |
Net cash used in operating activities | -5,210,028 | -1,534,074 |
Cash flows used in investing activities | ||
Purchases of vehicles and equipment | -927,180 | -608,372 |
Net cash used in investing activities | -927,180 | -608,372 |
Cash flows provided from financing activities | ||
Bank overdraft (repayment) | -30,468 | 30,468 |
Stock subscriptions payable | 27,000 | 310,000 |
Related party accounts receivables | -435,759 | |
Related party accounts payables, credit facilities, notes, and advances | 3,998,260 | 568,985 |
Proceeds from notes payable | 1,812,137 | 1,320,611 |
Principal payments on notes payable | -349,134 | -97,662 |
Proceeds from issuance of common stock | 1,221,500 | |
Non-controlling interest contributions | 2,500 | |
Debt issuance costs | -35,025 | |
Net cash provided from financing activities | 6,243,536 | 2,099,877 |
Net increase (decrease) in cash | 106,328 | -42,569 |
Cash at beginning of year | 17,301 | 59,870 |
Cash at end of year | 123,629 | 17,301 |
Supplemental cash flow information: | ||
Cash paid for interest | 29,397 | 10,413 |
Non-cash investing and financing activities: | ||
Value of warrants issued as debt issuance costs | 26,710 | 171,996 |
Value of common shares issued from stock subscriptions payable | 160,000 | |
Value of common shares issued as a charitable contribution | 110,000 | |
Value of warrants issued with revenue participation notes payable | 65,555 | |
Value of common shares issued to board and advisory board for accrued fees | 558,157 | 302,625 |
Value of common shares issued to consultants | 775,575 | 434,000 |
Value of common shares issued to employees as compensation | 1,011,375 | 161,000 |
Value of property, plant & equipment acquired with long term debt | 247,004 | |
Value of common shares issued as consideration for extension of notes payable term | 68,616 | |
Reclassification of derivative liability due to increased share authorization | 1,977,372 | |
Notes and interest settled in stock | 66,209 | |
Value of shares issued upon conversion of notes payable and accrued interest | 1,852,076 | |
Value of beneficial conversion feature of note payable | 50,000 | |
Value of derivative associated with converted notes payable | 694,149 | |
Value of common shares issued in payment of accrued PIK interest | $540,777 |
Nature_of_the_Business_and_Sig
Nature of the Business and Significant Accounting Policies | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Notes to Financial Statements | |||||||||||||||||
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 water processing technologies in the municipal wastewater and potable water industry. The Company is also involved in the desalination of brackish water and seawater for industrial and municipal use. | |||||||||||||||||
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. | |||||||||||||||||
Formation of New Subsidiaries | |||||||||||||||||
Effective April 16, 2014, the Company formed another new subsidiary, STW Water Process & Technologies, LLC (“Water Process”), a Texas limited liability company. The Company is the sole member of Water Process, owning 100% of the membership interest in such entity, which is managed by its members. | |||||||||||||||||
Consolidation policy | |||||||||||||||||
The consolidated financial statements for the years ended December 31, 2014 and 2013 include the accounts of the Company and its wholly owned subsidiaries, STW Resources, Inc., STW Oilfield Construction LLC, STW Pipeline Maintenance Construction, LLC, STW Water Process & Technologies, LLC, and 75% owned subsidiary of STW Energy Services, LLC. All significant intercompany transactions and balances have been eliminated in consolidation. | |||||||||||||||||
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”). | |||||||||||||||||
Going Concern and Management's Plans | |||||||||||||||||
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 $39,112,171 as of December 31, 2014, and as of that date was delinquent in payment of $2,594,128 of sales and payroll taxes. As of December 31, 2014, $3,192,305 of notes payable are in default. Since its inception in January 2008 through December 31, 2014, management has raised equity and debt financing of approximately $18,000,000 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. | |||||||||||||||||
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, 2014, 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, 2014, three vendors accounted for 20% of total accounts payable. During the year ended December 31, 2014, two vendors accounted for 69% of total purchases. 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, 2014, three customers accounted for 43%, 11% and 3% of accounts receivable. During the year ended December 31, 2014, three customers accounted for 39%, 11% and 7% of total revenues. 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. | |||||||||||||||||
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. | |||||||||||||||||
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. | |||||||||||||||||
Level 3 — Valuations based on inputs that are unobservable and significant to the overall fair value measurement, and involve management judgment. | |||||||||||||||||
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. | |||||||||||||||||
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 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, 2014 and 2013. | |||||||||||||||||
Fair value of Derivative Liabilities: | Level 1 | Level 2 | Level 3 | Total | |||||||||||||
31-Dec-14 | $ | -- | $ | -- | $ | 802,340 | $ | 802,340 | |||||||||
31-Dec-13 | $ | -- | $ | -- | $ | 1,630,985 | $ | 1,630,985 | |||||||||
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, 2014 or 2013. 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 | |||||||||||||||||
Services Revenues from Master Services Agreements | |||||||||||||||||
During the years ended December 31, 2014 and 2013, the Company entered into Master Services Agreements (“MSA”) with several major oil & gas companies. 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 and signed off by the customer; revenues are recognized when collectability of the receivable is reasonably assured and amounts are fixed and determinable. | |||||||||||||||||
During the year ended December 31, 2014, the Company recognized $18,227,371 of revenues from its oil & gas and water reclamation services contracts, of which $2,079,269 were revenue from related parties. 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. | |||||||||||||||||
Services Revenues from 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. Revenues are recognized when the services are performed or the equipment is delivered to the customer. During the years ended December 31, 2014 and 2013, the Company realized $380,657 and $2,735, respectively, of revenues from services and product sales of its water reclamation business segment. | |||||||||||||||||
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. The Company recognizes revenue on a contract once the services 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 reasonable assured and amounts are fixed and determinable. During the year ended December 31, 2013, the Company realized $534,000 of contract revenues from this project. | |||||||||||||||||
Business Segments | |||||||||||||||||
The Company has three reportable segments, (1) water reclamation services, (2) oil & gas services, and (3) corporate operations. 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 the period that includes the enactment date. | |||||||||||||||||
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 files income tax returns in the U.S. federal jurisdiction and Texas jurisdiction. All tax years remain open to examination for the U.S. federal jurisdiction as a result of net operating loss carryforwards. The Company’s periodic tax returns filed in 2010 and, thereafter, are subject to examination by state taxing authorities in accordance with normal statutes of limitations in the applicable jurisdictions. | |||||||||||||||||
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, 2014 and 2013. 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, 2014 and December 31, 2013, respectively. | |||||||||||||||||
Comprehensive Loss | |||||||||||||||||
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, 2014 and 2013, 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. | |||||||||||||||||
Common Stock, Common Stock Options, 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, 2014 and 2013, 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 per share is calculated by dividing the Company’s net income 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 anti-dilutive effect on losses. As of December 31, 2014, the Company had 14,442,977 dilutive shares outstanding, 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, 2014, the Company received $1,248,500 of proceeds from unit offerings of its common stock in consideration of 2,353,414 shares of its common stock. During the year ended December 31, 2014, the Company cancelled $150,000 of stock subscriptions payable for 312,500 shares of its common stock. As of December 31, 2014, the Company has 41,539 shares remaining to be issued from stock subscriptions at a value of $27,000. | |||||||||||||||||
During the year ended December 31, 2013, the Company received stock subscriptions and $310,000 of proceeds from unit offerings of its common stock in consideration of 645,833 shares of its common stock. The stock was not issued as of December 31, 2013 and $310,000 was reported as Stock Subscriptions Payable as of December 31, 2013. | |||||||||||||||||
Fees Payable in Common Stock | |||||||||||||||||
During the year ended December 31, 2014, the Company agreed to issue an aggregate of 4,813,465 shares of its common stock, net of 382,879 of cancelled shares, in payment of consulting fees and employee incentives valued at an aggregate of $4,517,379. During the year ended December 31, 2014, the Company issued 2,061,985 shares of its common stock as fees payable in common stock at an aggregate value of $1,965,566. As of December 31, 2014, the Company has 3,359,762 shares remaining to be issued associated with this obligation at an aggregate value of $2,783,711. | |||||||||||||||||
During the year ended December 31, 2013, the Company agreed to issue an aggregate of 2,074,946 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 1,466,667 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 608,279 common shares at a value of $231,897. | |||||||||||||||||
Loan Discounts | |||||||||||||||||
The Company amortizes loan discounts under the effective interest method. | |||||||||||||||||
Recently Issued Accounting Standards | |||||||||||||||||
In August 2014, the Financial Accounting Standards Board ("FASB") issued a new standard on disclosure of uncertainties about an entity's ability to continue as a going concern. The new standard provides guidance on determining when and how reporting entities must disclose going concern uncertainties in their financial statements. The new standard requires management to perform interim and annual assessments of an entity's ability to continue as a going concern within one year of the date of issuance of the entity's financial statements. Additionally, an entity must provide certain disclosures if there is substantial doubt about the entity's ability to continue as a going concern. The new standard will be effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2016. Early adoption is permitted. The Company is in the process of evaluating the impact of adoption on the Company's consolidated financial statements. | |||||||||||||||||
In June 2014, the FASB issued a new standard on accounting for share-based payments. The new standard clarifies that entities should treat performance targets that can be met after the requisite service period of a share-based payment award as performance conditions that affect vesting. As such, the performance target should not be reflected in estimating the grant date fair value of the award. The new standard also clarifies that compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period for which the requisite service has already been rendered. The new standard will be effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted. The Company is in the process of evaluating the impact of adoption on the Company's consolidated financial statements. | |||||||||||||||||
In May 2014, the FASB issued a new standard on recognizing revenue in contracts with customers. The new standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance. The new standard creates a five-step process to recognize revenue that requires entities to exercise judgment when considering contract terms and relevant facts and circumstances. The new standard also requires expanded disclosures surrounding revenue recognition. The new standard will be effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2016. The Company is in the process of evaluating the impact of adoption on the Company's consolidated financial statements. | |||||||||||||||||
Other recently issued accounting standards are not expected to have a material effect on the Company's consolidated financial statements. | |||||||||||||||||
Property_and_Equipment
Property and Equipment | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Notes to Financial Statements | |||||||||
Property and Equipment | Property, plant and equipment consisted of the following at December 31, 2014 and December 31, 2013: | ||||||||
31-Dec-14 | 31-Dec-13 | ||||||||
Office furniture and equipment | $ | 21,806 | $ | 16,838 | |||||
Tools and yard equipment | 7,661 | 2,302 | |||||||
Vehicles and construction equipment | 1,231,742 | 798,273 | |||||||
Leasehold improvements | 15,933 | -- | |||||||
Water wells under development | 341,359 | -- | |||||||
Total, cost | 1,618,501 | 817,413 | |||||||
Accumulated Depreciation and Amortization | (180,502 | ) | (70,775 | ) | |||||
Total Property and Equipment | $ | 1,437,999 | $ | 746,638 | |||||
Depreciation expense for the years ended December 31, 2014 and 2013 was $237,915 and $60,380, respectively. | |||||||||
Investment_in_Black_Wolf_LLC
Investment in Black Wolf, LLC | 12 Months Ended |
Dec. 31, 2014 | |
Notes to Financial Statements | |
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. | |
PAYABLE_TO_FACTOR
PAYABLE TO FACTOR | 12 Months Ended |
Dec. 31, 2014 | |
Notes to Financial Statements | |
PAYABLE TO FACTOR | Accounts Purchase Agreement – Crown Financial, LLC |
On June 21, 2013, STW Energy entered into an accounts purchase facility with Crown Financial, LLC (Crown) pursuant to an Account Purchase Agreement (the “Accounts Purchase Agreement”), pursuant to the Texas Finance Code. At December 31, 2014, and December 31, 2013, the amount payable to Crown, after grossing up the accounts receivable, was $1,746,479 and $0, respectively. These amounts are reflected in the amounts ‘Related party payable, Crown Financial, LLC’ on the Balance Sheet. | |
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 former 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, 2014 or 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. | |
On December 22, 2014, we entered into a settlement agreement (the “Settlement”) with Dufrane, to settle our outstanding debts with them. Pursuant to the Settlement, the Company shall issue Dufrane a $725,000 promissory note, which bears interest at the rate of 10% per annum (the “Note”). The Note is due and payable in equal monthly installments beginning on January 15, 2015 and continuing until December 15, 2016, when a balloon payment for all then outstanding amounts under the Note shall be paid. Dufrane maintains the right to charge a 5% late fee if the Company is late on any of its payments due under the Note and interest shall increase to 18% per annum on any matured, unpaid amounts. If the Company fails to comply with any terms or conditions of the Settlement, including the terms of the Note, the Company shall immediately pay Brooks $30,000, which amount shall accrue 18% interest per annum until paid in full. As part of the Settlement, Mr. Brooks shall be released from all personal guarantees previously entered into with the Company; failure to do so constitutes an event of default under the Note. Additionally, the Company will return all vehicles owned by Mr. Brooks to him and maintains the option to return all vehicles and equipment previously leased from Dufrane or enter into a new rental agreement with Dufrane. Brooks and Dufrane agreed to refrain from performing rig washing, pipeline construction or water reclamation services to or for any of the Company’s or Black Pearl Energy, LLC’s current customers with whom they have master service agreements, for a period of one year; Brooks and Dufrane shall also refrain from soliciting same, with limited exceptions, during such time period. Pursuant to the Settlement, the parties, along with specified others, released each other from any and all claims they may have against each other. After netting all of the payables and receivables between the various subsidiaries of the Company, STW Resources Holding booked a gain of $123,898. | |
Notes_Payable
Notes Payable | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Notes to Financial Statements | |||||||||
Notes Payable | The Company’s notes payable at December 31, 2014 and 2013, consisted of the following: | ||||||||
Name | 2014 | 2013 | |||||||
14% Convertible Notes | $ | 2,296,342 | $ | 2,904,736 | |||||
12% Convertible Notes | 100,000 | 375,000 | |||||||
Other Short-term Debt | 55,000 | 43,280 | |||||||
GE Note | 2,100,000 | 2,100,000 | |||||||
Deferred Compensation Notes | 279,095 | 279,095 | |||||||
Revenue Participation Notes | 2,337,500 | 852,702 | |||||||
Note payable to Crown Financial LLC, a related party | 702,697 | 683,036 | |||||||
Note payable to Dufrane Nuclear Shielding, LLC, a related party | 725,000 | -- | |||||||
Equipment finance contracts | 110,000 | 137,573 | |||||||
Capital lease obligations | 30,437 | 23,300 | |||||||
Unamortized debt discount | -20,362 | -107,221 | |||||||
Total Debt | 8,715,709 | 7,291,501 | |||||||
Less: Current Portion | (5,890,414 | ) | (4,668,492 | ) | |||||
Total Long Term Debt | $ | 2,825,295 | $ | 2,623,009 | |||||
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 3,361,312 two year warrants to purchase common stock at an exercise price of $1.20 per share. These notes are convertible into 5,854,260 shares of the Company’s common stock as of December 31, 2014. | |||||||||
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 41,666,667 shares (see Note 12 for January 22, 2015 increase to 191,666,667 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, 2014 and December 31, 2013, the aggregate principal balances of these notes are $2,296,342 and $2,904,736, respectively. During the year ended December 31, 2014, the Company converted principal and accrued interest of $977,151 in exchange for 1,696,856 shares of the Company’s common stock. The Company also issued 1,071,353 shares for the extension of notes valued at $609,257. Thirteen (13) notes were extended until June 1, 2015 and one (1) note was extended until December 15, 2019. | |||||||||
The value of the stock issued was $812,607 resulting in additional interest expense of $203,350 upon the conversion of interest. As of December 31, 2014, the total of outstanding 14% convertible notes is $2,296,342 of which $688,210 matured on or before December 31, 2014 and is in default, however, as of April 2, 2015, none of the note holders have declared the notes in default. | |||||||||
As of December 31, 2014, $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 warrants to purchase 273,583 shares of common stock at an exercise price of $0.12 per share that expire at various dates through 2015. | |||||||||
During the year ended December 31, 2014, the Company paid an aggregate of $50,000 of principal of two of these notes. During the year ended December 31, 2014, the Company issued 1,137,417 shares of its common stock valued at $614,205 in payment of $225,000 of principal and $116,225 accrued interest (total of $341,225). The conversion of these notes payable and accrued interest for common stock resulted in a non-cash charge of $272,980 to the derivative liability upon the conversion of convertible debt. As of December 31, 2014, there is one remaining note payable that has a principal balance of $100,000 and is convertible into 1,391,553 shares of the Company’s common stock. | |||||||||
Other Short-Term Debt | |||||||||
During the year ended December 31, 2014, the Company paid $43,280 of principal balance that was comprised of a settlement of a note payable to an accredited investor. | |||||||||
On January 1, 2014, the Company issued a $30,000 short term note to an investor, MKM Capital. The note bears interest at 8% and matures on January 1, 2015. The balance of this note payable as of December 31, 2014, is $30,000. | |||||||||
In September and October 2014, the Company entered into short term loan agreements, which matured in October 2014, with eight accredited investors totaling $170,000, to sustain some of its daily operating expenses; the loans had a 5% transaction fee at maturity and the lenders were entitled to receive 18% interest if the notes were not paid at maturity. As additional consideration for the loan, the Company agreed to issue the lenders an aggregate of 202,916 shares of common stock, which are only issuable if and when the Company increases its authorized capital. In October 2014 five of the investors extended their notes to October 24, 2015 for the additional consideration of 17,918 shares of common stock in lieu of interest. These shares were included in the "Fees Payable in Common Stock" and were expensed as interest in the current period. As of the date of this Report, all but $25,000 of the loans have been repaid, but the remaining lender has not declared a default on the payment of his note. On January 28, 2015, 158,335 of the shares were issued. The remaining shares are accrued as Fees Payable in Common Stock. (See Note 9 and Note 12). | |||||||||
GE Ionics Note | |||||||||
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, 2014, 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, 2014, 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, 2014, the Company has an outstanding balance of $2,337,500 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 | 115,000 | ||||||||
2014 Revenue Participation Notes, Upton Project – STW Water | 1,573,000 | ||||||||
Total revenue participation notes | $ | 2,337,500 | |||||||
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 27,500 shares of the Company’s common stock. These warrants have an exercise price of $1.20, 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 2,750 warrants under the same terms as those received by the Investors. As of December 31, 2014, 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. | |||||||||
As of December 31, 2014, the aggregate principal balance of these notes payable is $165,000. | |||||||||
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 100,833 warrants in connection with this investment. These warrants have an exercise price of $1.20, 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. | |||||||||
As of December 31, 2014, the aggregate principal balance of these notes payable is $302,500. | |||||||||
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 15,167 warrants in connection with this investment. The warrants bear an exercise price of $1.80 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 $1.80 per share; provided however, that the Company shall only issue an aggregate of warrants to purchase up to 27,083 shares. The Notes are secured by a continuing security interest in the Company's net revenues and proceeds thereof. | |||||||||
The Company valued the 15,167 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. | |||||||||
As of December 31, 2014, the aggregate principal balance of these notes payable is $182,000. | |||||||||
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 69,039 warrants in connection with this investment. These two year warrants bear an exercise price of $1.80 per share. The notes are convertible into 287,660 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 $1.20 per share; provided however, that the Company shall only issue an aggregate of warrants to purchase up to 69,000 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 69,039 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. | |||||||||
On October 15, 2014 the Company, STW Resource Holding Corp, converted a revenue participation offering of STW Pipeline. Principal and accrued interest of $93,543 was exchanged for 129,921 shares of STW Resource Holding Corp common stock to an investor at a unit price of $0.72 per share. The value of the stock issued was $99,374 resulting in additional interest expense of $5,831 upon the conversion of convertible debt. | |||||||||
As of December 31, 2014, the aggregate principal balance of the remaining note payable is $115,000. | |||||||||
2014 Revenue Participation Notes – STW Resources Upton Project | |||||||||
From September 30, 2014 through December 31, 2014, the Company issued an aggregate of $1,573,000 of notes to eleven (11) accredited investors for the Upton Project. The financing is a Senior Secured Master Note, with a 15% coupon and a maturity of 18 months with interest only payments paid the first three months and equal monthly payments of principal and interest paid for months four though eighteen of the Master Note with Revenue Participation Interest. Additionally, a 5% royalty is assigned to the Master Note, which will be distributed based on pro rata ownership by investors in the Master Note. Principal and interest payments will come solely from the Investors share of the revenue participation fees from water processing contracts related to brackish water. This Agreement, including but not limited to the revenue sharing arrangement, is applicable to the brackish water processing facility being built with the proceeds of the Notes. As of December 31, 2014, the aggregate principal balance of these notes payable is $1,573,000. | |||||||||
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, 2014 and 2013, the Company had drawn down $702,697 and $683,036, respectively of this loan facility. | |||||||||
The Company issued 666,667 warrants in connection with this loan agreement, in lieu of a cash loan fee. These warrants have an exercise price of $1.20, 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. | |||||||||
Related party interest expense for this loan was $32,461 and $113,623, for the years ended December 31, 2014 and 2013, respectively. | |||||||||
Note payable to Dufrane Nuclear Shielding, LLC, a related party | |||||||||
On December 22, 2014, the Company entered into an unsecured loan agreement with Dufrane Nuclear Shielding, LLC, in the amount of $725,000 (See note 7). The note bear interest at 10.0% and is payable in monthly principal and interest installments of $43,541 commencing on January 15, 2015. The note matures on December 15, 2016. Dufrane Nuclear Shielding, LLC is a related party since the company is owed by Joshua Brooks, the Company’s former COO. The note provides for default interest rate of $18% and requires the payment of $60,000 of accrued officers’ compensation in the event of default. | |||||||||
Related party interest expense for this loan was $1,788 for the year ended December 31, 2014. | |||||||||
Convertible note payable with original issue discount | |||||||||
On March 19, 2014, the Company issued a $500,000 convertible note to JMJ Financial, an accredited private investor. The note bears interest at 6% and matures on March 19, 2016. The note is convertible under a variable conversion price formula that is based on the lesser of $0.66 per share or 60% of the lowest trade price in the 25 trading days previous to the conversion date. The note bears a $50,000 original issue discount which would yield $450,000 of net cash proceeds to the Company. During the year ended December 31, 2014, the Company drew $50,000 cash proceeds from this note. The $50,000 cash draw plus the applicable pro-rata original issue discount results in a gross note payable balance of $55,556. The value of the conversion feature of this note, accounted for as a liability, was determined under the Black-Scholes pricing model to be $92,592 as of the date of issuance, of which $42,592 was recorded as a financing cost in the consolidated statement of operations and $50,000 was recorded as a loan discount. The conversion feature and the original issue discount have been recorded as a loan discount of $55,556 that will be amortized as interest expense over the term of the note under the effective interest method. The effective interest rate of this note was determined to be 25.7%. In October and November 2014 the note and interest was paid off by the issuance of 103,810 shares of common stock valued at an average of $0.535 per share. | |||||||||
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, 2014 and2013, the Company has an aggregate balance of $110,000 and $137,573, respectively, payable on these equipment finance contracts. | |||||||||
Capital lease obligation | |||||||||
During 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%. In July of 2014, the Company entered into a lease for a commercial ice machine with Executive Leasing, Inc. The lease contract calls for Thirty six (36) monthly payments of $505 with a purchase option at the end of the lease. The Company determined the value of the capital lease to be $14,854 with an implicit interest rate in the lease of 12%. As of December 31, 2014 and December 31, 2013, the principal balances on these capital leases totaled $30,437 and $23,300, respectively. | |||||||||
For the years ended December 31, 2014 and 2013, interest expense on all notes payable described above was $2,089,356 and $1,205,338, respectively, which included $230,723 and $164,549, respectively, of amortization of debt discount and debt issuance costs. There was no interest capitalized in 2014 and 2013. As of December 31, 2014 and 2013, net deferred loan costs, net of $190,742 and $102,435 accumulated amortization, respectively were $97,121 and $185,428, respectively. The balance of unamortized discount at December 31, 2014 and 2013, were $20,362 and $107,221, respectively. |
Derivative_Liability
Derivative Liability | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
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 41,666,667 shares (see Note 12 for January 22, 2015 increase to 191,666,667 shares) and removed this $1,977,372 derivative liability due to the availability of sufficient authorized shares to settle these outstanding contracts. | |||||||||
During the year ended December 31, 2014, the Company recalculated its historical volatility factor to be 735% and applied this factor in estimating the value of the derivative instruments. 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, 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, 2014 and December 31, 2013: | |||||||||
For the year ended December 31, | For the year ended | ||||||||
2014 | December 31, | ||||||||
2013 | |||||||||
Annual dividend yield | 0 | % | 0 | % | |||||
Expected life (years) | 0.60 – 0.47 | 0.60 – 0.47 | |||||||
Risk-free interest rate | 0.11% - 0.25 | % | 0.11% - 0.25 | % | |||||
Expected volatility | 735 | % | 623 | % | |||||
December 31, | December 31, | ||||||||
2014 | 2013 | ||||||||
Embedded Conversion features | $ | 751,439 | $ | 1,467,579 | |||||
Warrants | 50,901 | 163,406 | |||||||
$ | 802,340 | $ | 1,630,985 | ||||||
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 | For the year ended | ||||||||
December 31, | December 31, | ||||||||
2014 | 2013 | ||||||||
Balance beginning | $ | 1,630,985 | $ | 1,046,439 | |||||
Value of derivative liability associated with JMJ note payable | 42,592 | -- | |||||||
Value of derivative liability attributable to conversion of notes payable and accrued interest | (694,149 | ) | -- | ||||||
Change in derivative liability associated with conversion of notes payable and accrued interest | (272,980 | ) | -- | ||||||
Reclassification of derivative liability due to increased share authorization | -- | (1,977,372 | ) | ||||||
Change in fair value | 95,892 | 2,561,918 | |||||||
Balance ending | $ | 802,340 | $ | 1,630,985 | |||||
Related_Party_Transactions
Related Party Transactions | 12 Months Ended | |||||||||
Dec. 31, 2014 | ||||||||||
Notes to Financial Statements | ||||||||||
Related Party Transactions | Officers’ Compensation | |||||||||
During years ended December 31, 2014 and 2013, we incurred $150,000 annually in officers’ compensation due to our Director, Chairman and CEO, Mr. Stanley Weiner. As of December 31, 2014 and 2013, the balances of $413,083 and $263,083, respectively, were payable to Mr. Weiner for his officers’ salary. | ||||||||||
During the years ended December 31, 2014 and 2013, we incurred $75,000 and $150,000, respectively, in officers’compensation due our former Director and Chief Operating Officer, Mr. Lee Maddox. As of December 31, 2014 and 2013, the balances of $220,500 and $170,500, respectively, were payable to Mr. Maddox for his officers’ salary. | ||||||||||
During the years ended December 31, 2014 and 2013, we incurred $90,000 annually 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, 2014 and 2013, the balances of $179,797 and $121,083, respectively, were payable to Seabolt Law Group for these services. | ||||||||||
During the years ended December 31, 2014 and 2013, we incurred $449,496 and $63,107, respectively, in CFO, audit preparation, tax, and SEC compliance services expense with Miranda & Associates, a Professional Accountancy Corporation, and Miranda CFO Services, Inc., (“Miranda”) firms owned by our Chief Financial Officer, Mr. Robert J. Miranda. During the year ended December 31, 2014, we paid Miranda cash of $182,110 and 120,292 shares of common stock valued at $72,175 toward these fees. As of December 31, 2014, we have agreed to pay 206,667 shares of common stock valued at $155,000 toward these obligations, which would leave an accounts payable balance of $64,271 as of December 31, 2014. The stock awards are accrued as fees payable in common stock as of December 31, 2014. As of December 31, 2014 and December 31, 2013, the balances of $219,271 and $24,060, respectively, were payable to these firms for these services. The December 31, 2014, balances are comprised of $64,271 of accounts payable and $155,000 of fees payable in common stock, for a combined balance payable of $219,271. | ||||||||||
As of December 31, 2013, the balance of $132,490 was payable to Dufrane Nuclear Shielding, LLC (“Dufrane”). Additionally, as of December 31, 2013, the balance of $150,000 was payable as Fees Payable in Common Stock and $30,000 was payable to Joshua Brooks as accrued officers compensation. During the years ended December 31, 2014 and 2013, we incurred $90,000 and $30,000, respectively, in officers’ compensation due to our former Chief Operating Officer, Mr. Joshua Brooks. During the year ended December 31, 2014, we also incurred with Mr. Joshua Brooks a performance bonus comprised of 333,333 shares of the Company’s common stock valued at $120,000. | ||||||||||
During the year ended December 31, 2013, the Company cancelled the $150,000 of stock subscriptions payable and incurred an additional $593,358 of net related party payables with Dufrane. On December 22, 2014, the Company entered into a settlement agreement and a $725,000 note payable to Dufrane. Under the terms of the settlement agreement, the 333,333 shares of common stock payable was cancelled and $180,000 of accrued officers’compensation payable were discharged leaving a balance of accrued officers’ compensation of $60,000 as of December 31, 2014. | ||||||||||
The settlement agreement with Joshua Brooks also provided for the transfer of various items of tools, vehicles, and other equipment to Dufrane. The agreement further requires that the Company remove Mr. Brooks from any personal guarantees or co-signatures that he made on vehicle loans or other liabilities of the Company. | ||||||||||
During the years ended December 31, 2014 and 2013, we incurred $180,000 and $18,461, respectively, in officers’ salary due to the President of our wholly-owned subsidiary, STW Pipeline Maintenance & Construction, LLC. Mr. Adam Jennings. During year ended December 31, 2014, we incurred with Mr. Adam Jennings signing bonuses comprised of 266,667 shares of the Company’s common stock valued at $142,000. As of December 31, 2014 and 2013, the balance of $121,000 and $27,000, respectively, were payable to Mr. Jennings for the value of signing bonuses due under his employment agreement. These stock awards are accrued as fees payable in common stock as the awards are vested. | ||||||||||
During the year ended December 31, 2014, we incurred $107,692, in officers’ salary due to the President of our wholly-owned subsidiary, STW Water Process and Technologies, LLC. Mr. Alan Murphy. During year ended December 31, 2014, we incurred with Mr. Alan Murphy a signing bonus comprised of 333,333 shares of the Company’s common stock valued at $200,000. | ||||||||||
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 33,333 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. | ||||||||||
The Company’s advisory board was comprised of three members. Each advisory board member was granted 9,375 shares upon joining the board and 12,500 shares annually thereafter. The advisory board was dissolved on June 12, 2013. | ||||||||||
During the year ended December 31, 2014, we incurred $635,000 in board and consulting fees with Paul DiFrancesco, a Director. Mr. DiFrancesco was paid cash of $282,500, awarded 538,870 shares of common stock in the Company, valued at $277,500 for services related to 2014 activities, and $75,000 per year as compensation for serving on our board of directors. | ||||||||||
During the year ended December 31, 2014, the Company recorded board fees in the accompanying consolidated statement of operations of $562,500 and issued 930,261 shares of its common stock valued at $558,157, leaving a balance of $496,067 of accrued board fees payable as of December 31, 2014. | ||||||||||
During the year ended December 31, 2013, the Company recorded board fees in the accompanying consolidated statement of operations of $602,849 and made payments of $43,500 in cash and issued 840,625 shares of its common stock having valued at $302,625, leaving a balance of $491,924 of accrued board fees as of December 31, 2013. | ||||||||||
Other related party transactions | ||||||||||
As of December 31, 2014 and 2013, the Company has $1,371,305 and $139,763, respectively, of related party payables to Black Pearl Energy, LLC, a company controlled by the Company’s CEO, former COO, and General Counsel. | ||||||||||
As of December 31, 2014, STW Energy, a subsidiary of the Company, has a related party receivable of $519,789 from Black Pearl Energy, LLC. | ||||||||||
During the years ended December 31, 2014 and 2013, the Company, had related party sales of $2,079,269 and $347,550, respectively. Related party sales are a combination of sales to three companies, (1) Black Pearl Energy, LLC, (2) Dufrane Construction, LLC and (3) Dufrane Nuclear Shielding LLC. | ||||||||||
Line of credit with Black Pearl Energy, LLC | ||||||||||
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, of which $1,054,944 has been advanced as of December 31, 2014. 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 250,000 restricted shares 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 with Crown Financial, LLC | ||||||||||
On January 13, 2014, STW Resource Holding Corp 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. Although our former Chief Operating Officer, Lee Maddox, 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, such guaranty was terminated when Mr. Maddox resigned as our COO in July 2014, pursuant to the terms of the related Termination Agreement. | ||||||||||
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 our 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. | ||||||||||
As of December 31, 2014, the Company has a related party payable of $2,035,495 to Crown Financial. | ||||||||||
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 $0.72 per share, as is equal to the amount of the guaranty (the "Guaranty Shares"). The value of the 63,667 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. | ||||||||||
Name and Title | Date of Agreement | Amount of Personal Guaranty | Guaranty Shares | |||||||
Joshua Brooks, former Chief Operating Officer | 24-Sep-13 | $ | 45,800 | (1 | ) | 63,667 | ||||
(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. | |||||||||
The service agreement was terminated by mutual agreement on December 24, 2014, when the Company executed a Settlement Agreement and Note Payable to Dufrane Nuclear Shielding, LLC, a company controlled by Mr. Joshua Brooks, the Company’s former executive officer. | ||||||||||
Stockholders_Deficit
Stockholders' Deficit | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Notes to Financial Statements | |||||||||||||
Stockholders' Deficit | 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 | |||||||||||||
As of the date of this Report, the Company has authorized 191,666,667 shares of common stock with a par value of $0.001. During the years ended December 31, 2014 and 2013, the Company issued common shares as follows: | |||||||||||||
Year ended December 31, 2013: | |||||||||||||
On June 6, 2013, the Company issued 58,853 shares of its common stock valued at $21,187 in payment of $6,965 accrued interest on convertible note payable and 125,063 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 16,666,667 shares of common stock to 41,666,667 shares (see Note 12 for January 22, 2015 increase to 191,666,667 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 840,628 shares of common stock, with a value of $297,581, as follows: | |||||||||||||
Name | Amount of Shares | Triggering Event | |||||||||||
Stanley T. Weiner | 104,167 | 2012 Director Compensation | |||||||||||
Manfred E. Birnbaum | 104,167 | 2012 Director Compensation | |||||||||||
D. Grant Seabolt, Jr. | 104,167 | 2012 Director Compensation | |||||||||||
Joseph I. O'Neill III | 104,167 | 2012 Director Compensation | |||||||||||
Audry Lee Maddox | 59,375 | 2012 Advisory Board Compensation (156,250 shares) & Director Appointment Shares (200,000) | |||||||||||
Dale F. Dorn | 104,167 | 2012 Director Compensation | |||||||||||
Paul DiFrancesco | 104,167 | 2012 Director Compensation | |||||||||||
Bill G. Carter | 104,167 | 2012 Director Compensation | |||||||||||
Steven Schachman | 26,042 | 2012 Advisory Board Compensation | |||||||||||
Hunter Hill | 26,042 | 2012 Advisory Board Compensation | |||||||||||
On September 16, 2013, the Company issued 350,000 shares of its Common stock in payment of accrued compensation. 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 compensation 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 15,167 warrants in connection with this investment. The warrants bear an exercise price of $1.80 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 21,935 warrants in connection with this investment. The warrants bear an exercise price of $1.80 per share and expire on September 27, 2015. The note is convertible into 91,391 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 former COO, Mr. Joshua Brooks. | |||||||||||||
In the months of October and December 2013 seven (7) of the Company’s consultants were issued 1,083,333 shares in exchange for their invoice amounts due from the company. | |||||||||||||
On December 9, 2013, the Company issued 333,333 shares to an employee as a signing bonus under an employment contract. The Company also issued 50,000 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. | |||||||||||||
Year ended December 31, 2014: | |||||||||||||
During January 2014, the Company issued an aggregate of 926,603 shares of its common stock valued at $510,769 in payment of accrued paid-in-kind (“PIK”) interest to twelve (12) investors. | |||||||||||||
During January, 2014, the Company issued an aggregate of 122,190 shares of its common stock to twelve (12) investors valued at $67,354 as consideration for the extension of the maturity date to June 1, 2015, on the 14% convertible notes that matured on November 30, 2013 and in default. | |||||||||||||
During January, 2014, the Company issued an aggregate of 1,220,101 shares of its common stock valued at $660,684 upon the conversion of a 14% convertible note and two 12% convertible notes (see Note 5). | |||||||||||||
During January and February, 2014, the Company issued 250,000 shares of its common stock valued at $145,000 to consultants for services rendered. | |||||||||||||
During March 2014, the Company issued 312,500 shares of its common stock to an investor that had subscribed and paid $150,000 for the shares on November 15, 2013. This subscription of shares was previously reported as Stock Subscriptions Payable as of December 31, 2013. | |||||||||||||
During March 2014, the Company issued 130,208 shares of its common stock in consideration of $62,500 cash proceeds realized from the sale of stock to accredited investors at $0.48 per share. | |||||||||||||
In April 2014 the Company issued 104,166 shares of common stock on a unit share offering at $0.48 for proceeds of $70,000. The Company issued 930,261 shares of common stock to the Board of Directors for services rendered; this was valued at $558,157. Additional shares of 100,000 were issued to an employee as a signing bonus valued at $60,000. Officer’s compensation was paid by issuing 402,708 shares of common stock in lieu of paying $241,625. Consultants were issued 186,958 shares of common stock in lieu of paying $112,175 in accrued fees. | |||||||||||||
On May 22, 2014, the Company converted a 14% convertible note that was in default in the amount of $544,426 of principal and $197,486 of accrued interest into 1,545,650 shares of its common stock. | |||||||||||||
In May 2014 a consultant was issued 83,333 shares of common stock in lieu of fees of $60,000. | |||||||||||||
On June 4, 2014 the company issued 58,333 shares to a consultant at $0.10 per share in payment of $35,000 of consulting fees. | |||||||||||||
In June 2014 the Company issued 20,833 shares of common stock on a unit share offering at $0.48 for proceeds of $30,000. A charitable contribution was made of 166,667 shares of common stock valued at $110,000. | |||||||||||||
In July 2014 the Company issued 1,104,167 shares of common stock on a unit share offering at $0.48 for proceeds of $530,000. The Company also issued 41,667 shares for 8,333 warrants at $0.12 for $50,000, 22,561 shares in payment of PIK interest for $10,829, and 83,333 shares for a loan, valued at $40,000. | |||||||||||||
Two employees also received 283,333 shares of stock for signing bonus and services to the company; these shares were valued at $136,000. | |||||||||||||
In August 2014 the Company issued 724,167 shares of common stock on a unit share offering at $0.60 for proceeds of $437,500. The Company also issued 108,333 shares to consultants in lieu of paying Consultant fees of $49,000. | |||||||||||||
In September 2014 the Company issued 10,000 shares of common stock to a consultant in lieu of paying Consultant fees of $4,800 and issued an additional 95,833 shares to employees as signing bonuses. | |||||||||||||
On September 23, 2014, 100,000 shares of common stock were issued to three employees at $1.32 per share as part of their employment/signing bonuses. | |||||||||||||
On October 15, 2014 the Company, STW Resource Holding Corp, converted a revenue participation offering of STW Pipeline. Principal and accrued interest of $93,543 was exchanged for 129,921 shares of STW Resource Holding Corp common stock to an investor at a unit price of $0.72 per share. The value of the stock issued was $99,374 resulting in additional interest expense of $5,831 upon the conversion of convertible debt. | |||||||||||||
On October 23, 2014, the Company issued 33,333 shares of common stock to an investor at a unit value of $1.44 per share on the conversion of $21,120 of a short term convertible note. The value of the stock issued was $48,000 resulting in additional interest expense of $26,880 upon the conversion of convertible debt. | |||||||||||||
On November 5, 2014 the company issued 70,477 shares of common stock to an investor at a unit value of $1.17 per share on the conversion of $41,102 of a short term convertible note. The value of the stock issued was $82,458 resulting in additional interest expense of $41,356 upon the conversion of convertible debt. | |||||||||||||
On November 20, 2014, the Company issued 8,333 shares of common stock for a value of $5,000 to one of the investors in the July offering at a unit value of $0.60 per share. | |||||||||||||
In November and December 2014 it was necessary to issue an additional net of 319 shares to cover the rounding effect of the 1 for 6 reverse stock split. | |||||||||||||
On December 23, 2014 the Company issued 68,522 shares to an investor for the conversion of a 14% note for $30,175 and the accrued interest of $2,715. The value of the stock was $34,169, resulting in additional interest expense of $1,278 upon the conversion of convertible debt. | |||||||||||||
On December 31, 2014 the Company issued 207,500 shares for a value of $124,500 to 11 investors pursuant to their purchase of the July 2014 offering at $0.60 per unit. | |||||||||||||
As of December 31, 2013, the Company had the following securities to acquire the Company’s common stock outstanding: | |||||||||||||
Security | Number of Underlying Common Shares | ExerciseP rice | Expire | ||||||||||
Warrants issued for Professional Services | 250,000 | 24 | 2014 | ||||||||||
Warrants associated with the January 14, 2009 Bridge Note | 80,000 | 18 | 2014 | ||||||||||
Warrants associated with the acquisition of the Company's Preferred Shares outstanding | 250,000 | 48 | 2014 | ||||||||||
Warrants associated with the 12% Convertible Notes | 273,583 | 0.12 | 2014-2015 | ||||||||||
Warrants associated with 2012 Revenue Participation Notes | 30,250 | 1.2 | 2014 | ||||||||||
Warrants associated with May 2012 Subscription Agreement | 87,500 | 1.2 | 2014 | ||||||||||
Warrants associated with June-September 14% Convertible Notes | 91,667 | 1.2 | 2014 | ||||||||||
Warrants associated with November 14% Convertible notes | 462,917 | 1.2 | 2014 | ||||||||||
Warrants associated with 2013 Revenue Participation Notes | 185,038 | 1.20 – 1.80 | 2015 | ||||||||||
Warrants issued to Crown Financial, LLC | 666,667 | 1.2 | 2016 | ||||||||||
Warrants issued on $20,000 short term loan | 33,333 | 1.2 | 2015 | ||||||||||
Warrants issued with November 2013 Unit Share Offering | 645,833 | 1.2 | 2015 | ||||||||||
Sub-total of Warrants outstanding | 3,056,788 | ||||||||||||
Common stock associated with the 12% Convertible Notes plus accrued interest | 4,627,570 | 0.02 | 2014 | ||||||||||
Common stock associated with Pipeline Convertible Revenue Participation notes | 287,660 | 0.12 | 2015 | ||||||||||
12/31/2013 Accrued Default interest | 86,186 | 0.02 | 2014-2015 | ||||||||||
Common stock associated with the 14% Convertible Notes plus accrued interest | 7,685,772 | 0.08 | 2015 | ||||||||||
12/31/2013 Accrued Default interest | 33,050 | 0.08 | 2014 | ||||||||||
12/31/2013 Calibre Note interest | 27,328 | 0.08 | 2014 | ||||||||||
Common stock associated with November 2013 Unit Share Offering | 645,833 | 0.08 | 2015 | ||||||||||
Common stock payable as fees | 608,279 | various | 2014 | ||||||||||
Total securities | 17,058,466 | ||||||||||||
As of December 31, 2014, the Company had the following securities outstanding which gives the holder the right to acquire the Company’s common stock outstanding: | |||||||||||||
Security | Number of Underlying Common Shares | Exercise Price | Expire | ||||||||||
Warrants associated with the 12% Convertible Notes | 66,667 | 0.012 | 2015 | ||||||||||
Warrants associated with 2013 Revenue Participation Notes | 185,038 | 1.20– 1.80 | 2015 | ||||||||||
Warrants issued to Crown Financial, LLC | 666,667 | 1.2 | 2016 | ||||||||||
Warrants issued on $20,000 short term loan | 33,333 | 1.2 | 2015 | ||||||||||
Warrants issued with 2013 and 2014 Unit Share Offerings | 2,682,645 | 1.20– 1.50 | 2015 - 2016 | ||||||||||
Sub-total of Warrants outstanding | 3,634,350 | ||||||||||||
Common stock associated with the 12% Convertible Notes plus accrued interest | 1,391,553 | 0.12 | N/A | ||||||||||
Common stock associated with Pipeline Convertible Revenue Participation notes | 164,513 | 0.72 | N/A | ||||||||||
Common stock associated with 14% convertible notes plus accrued interest | 5,854,260 | 0.48 | N/A | ||||||||||
Common stock associated with 2013 and 2014 Unit Share Offerings | 41,539 | 0.48 | N/A | ||||||||||
Common stock payable as fees | 3,356,762 | various | |||||||||||
Total | 14,442,977 | ||||||||||||
Warrants | |||||||||||||
A summary of the Company’s warrant activity and related information during the year ended December 31, 2014 follows: | |||||||||||||
Number of Shares | Weighted- Average Exercise | Remaining Contractual Life (Years) | Aggregate Intrinsic Value | ||||||||||
Price | |||||||||||||
Outstanding at January 1, 2013 | 5,401,239 | $ | 5.16 | 1.06 | $ | 32,830 | |||||||
Issued | 1,552,807 | 1.26 | 2 | ||||||||||
Exercised | -- | ||||||||||||
Forfeited | -- | ||||||||||||
Cancelled | -- | ||||||||||||
Expired | (3,897,258 | ) | 1.92 | ||||||||||
Outstanding at December 31, 2013 | 3,056,788 | $ | 1.26 | 1.07 | $ | 131,320 | |||||||
Exercisable | 3,056,788 | $ | 1.26 | 1.07 | $ | 131,320 | |||||||
Outstanding at January 1, 2014 | 3,056,788 | $ | 4.29 | 1.07 | $ | 131,320 | |||||||
Issued | 2,349,312 | 1.27 | 1.46 | ||||||||||
Exercised | -- | ||||||||||||
Forfeited | -- | ||||||||||||
Cancelled | (312,500 | ) | |||||||||||
Expired | (1,459,250 | ) | 13.89 | ||||||||||
Outstanding at December 31, 2014 | 3,634,350 | $ | 1.27 | 1.18 | $ | 851,313 | |||||||
Exercisable | 3,634,350 | $ | 1.27 | 1.18 | $ | 851,313 | |||||||
Income_Taxes
Income Taxes | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Notes to Financial Statements | |||||||||
Income Taxes | The Company's net loss before income taxes totaled $14,756,828 and $7,032,955 for the years ended December 31, 2014 and 2013, respectively, accordingly, no provision for income taxes were provided in the accompanying financial statements. | ||||||||
A reconciliation of the tax on the Company's loss for the year before income taxes and total tax expense are shown below: | |||||||||
Years Ended December 31, | |||||||||
2014 | 2013 | ||||||||
Income tax benefit at the U.S. statutory income tax | $ | (5,017,321 | ) | $ | (2,391,205 | ) | |||
Change in fair value of derivative liability | 32,603 | 871,052 | |||||||
Non-controlling interest in loss of subsidiary | 48,127 | 16,464 | |||||||
Non-deductible penalties and other expenses | 472,619 | 290,420 | |||||||
Changes in Valuation allowance | 4,463,972 | 1,213,269 | |||||||
Total | $ | — | $ | — | |||||
Based on the weight of available evidence and uncertainties regarding the Company's ability to generate profits in the near future, 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, | ||||||||
2014 | 2013 | ||||||||
Deferred noncurrent tax asset: | |||||||||
Net operating loss carry-forward | $ | 2,036,123 | $ | 1,481,871 | |||||
Accrual to Cash conversion | 3,991,660 | 1,480,682 | |||||||
Stock based compensation | 1,361,342 | -- | |||||||
Depreciation | (38,995 | ) | (38,995 | ) | |||||
Charitable Contributions | 37,400 | 18,768 | |||||||
Valuation allowance | (7,387,530 | ) | (2,942,326 | ) | |||||
Total | $ | — | $ | — | |||||
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. | |||||||||
At December 31, 2014, the Company had federal income tax net operating losses of approximately $6.7 million. The federal net operating losses expire at various dates beginning in 2029.The Company files income tax returns in the U.S. federal jurisdiction and Texas jurisdiction. All tax years remain open to examination for the U.S. federal jurisdiction as a result of net operating loss carryforwards. The Company’s periodic tax returns filed in 2010 and, thereafter, are subject to examination by state taxing authorities in accordance with normal statutes of limitations in the applicable jurisdictions. | |||||||||
Commitments_and_Contingencies
Commitments and Contingencies | 12 Months Ended | |||||||||||||
Dec. 31, 2014 | ||||||||||||||
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. | ||||||||||||||
During 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%. In July of 2014, the Company entered into a lease for a commercial ice machine with Executive Leasing, Inc. The lease contract calls for Thirty six (36) monthly payments of $505 with a purchase option at the end of the lease. The Company determined the value of the capital lease to be $14,854 with an implicit interest rate in the lease of 12%. As of December 31, 2014 and 2013, the principal balances on these capital leases totaled $30,438 and $23,300, respectively. | ||||||||||||||
Future minimum lease payments under the capital lease and operating lease as of December 31, 2014, are as follows: | ||||||||||||||
Capital Leases | Operating Lease | Totals | ||||||||||||
Years ending December 31: | ||||||||||||||
2015 | $ | 13,176 | $ | 117,000 | $ | 130,176 | ||||||||
2016 | 13,176 | 117,000 | 130,176 | |||||||||||
2017 | 8,960 | 117,000 | 125,960 | |||||||||||
2018 | -- | 117,000 | 117,000 | |||||||||||
2019 | -- | 117,000 | 117,000 | |||||||||||
Thereafter | -- | 87,750 | 87,750 | |||||||||||
Total minimum lease payments | 35,312 | 672,750 | 708,062 | |||||||||||
Less interest | (4,874 | ) | ||||||||||||
Capital lease obligation | 30,438 | |||||||||||||
Less current portion | (10,382 | ) | ||||||||||||
Long-term capital lease obligation | $ | 20,056 | ||||||||||||
Rental expense for all property, including equipment rentals in the cost of sales, and equipment operating leases during the years ended December 31, 2014 and 2013, respectively, was $4,041,793 (which includes approximately$3.6million of equipment rental used on projects and reflected in cost of revenues) and $78,558, respectively. Related party rental expense during the years ended December 31, 2014 and 2013, was $472,450 and $14,292, respectively. | ||||||||||||||
Product Purchase and Manufacturing license agreement | ||||||||||||||
On June 20, 2014, the Company entered into an exclusive product purchase and manufacturing license agreement with Salttech B.V, (“Salttech”) a company based in the Netherlands. The agreement provides exclusive rights to purchase Salttech’s DyVaR devices which are used to remove salinity from brackish/brine water streams. The agreement grant’s to the Company exclusive United States rights to purchase these products for use in the municipal and oil & gas industries. The agreement also grants to the Company the right of first refusal for this technology in North America. | ||||||||||||||
The initial term of the agreement is for five years and is renewable automatically for five years and every five year period unless terminated by written notice of the parties at least three months before the termination date. | ||||||||||||||
The initial royalty for the first year of the agreement is for $324,000, payable quarterly beginning with the calendar quarter starting July 1, 2014 as follows: Q3 2014 $60,000, Q4 2014 $60,000, Q1 2015 $100,000 and Q2 2015 $104,000. The Company also agreed to pay a continuing royalty of $240,000 per year for years 2-5, plus 3% of the invoice price of any products sold by the Company under the agreement. The Company also agreed to issue 66,667 shares of its common stock in consideration of this agreement. | ||||||||||||||
As of December 31, 2014, the minimum royalty obligation payable under this agreement is as follows: | ||||||||||||||
Years ending December 31: | Minimum Royalty Obligation | |||||||||||||
2015 | $ | 324,000 | ||||||||||||
2016 | 240,000 | |||||||||||||
2017 | 240,000 | |||||||||||||
2018 | 240,000 | |||||||||||||
2019 | 120,000 | |||||||||||||
Total minimum royalty payments | $ | 1,164,000 | ||||||||||||
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 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 50,000 shares of common stock was recorded on September 23, 2013 as fees payable in common stock. | ||||||||||||||
The Company amended the employment agreement with Mr. Jennings on April 1, 2014 for an additional year. The terms of the amendment, Mr. Jennings base salary was increased to $200,000 per year. He was also awarded an additional 166,667 shares of its common stock to Mr. Jennings valued at $100,000 as an additional signing bonus. | ||||||||||||||
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 333,333 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 333,333 shares of common stock to satisfy the obligation. As of December 31, 2013 there was no remaining obligation. | ||||||||||||||
On May 27, 2014, one of our wholly owned subsidiaries, STW Water Process and Technologies, LLC (“STW Water”), entered into an Executive Employment Agreement with Alan Murphy to serve as STW Water’s President (the "Murphy Agreement") for a term of three years, unless otherwise terminated or mutually extended. The initial base salary pursuant to the Murphy agreement is $200,000 annually. The base salary is subject to an annual review and Mr. Murphy is entitled to receive performance bonuses up to 100% of his base salary, subject to the sole discretion of the Company’s CEO. The Company is a party to the Murphy Agreement only to the extent of the obligations it is required to perform under the Murphy Agreement. Pursuant to the Murphy Agreement, Mr. Murphy 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 333,333 shares of its common stock valued at $200,000 to Mr. Murphy as a signing bonus. The Company also agreed to grant Mr. Murphy 500,000 stock options in the Company upon the formation and funding of the Company’s employee stock option plan. The Company has sole rights to terminate Mr. Jennings' employment for cause. | ||||||||||||||
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 $0.72 per share, as is equal to the amount of the guaranty (the "Guaranty Shares"). The value of the 63,667 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, former Chief Operating Officer | 24-Sep-13 | $ | 45,800 | -1 | 63,667 | 63,667 | ||||||||
(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. The service agreement was terminated by mutual agreement on December 24, 2014, when the Company executed a Settlement Agreement and Note Payable to Dufrane Nuclear Shielding, LLC, a company controlled by Mr. Joshua Brooks, the Company’s former executive officer. | ||||||||||||||
Contingencies | ||||||||||||||
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 Note 5, Notes Payable - GE Ionics Settlement Agreement), 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. The lawsuit is in the discovery phase of litigation. | ||||||||||||||
Sichenzia and Ross Lawsuit. On June 13, 2014, Sichenzia Ross Friedman Ference LLP filed a lawsuit against the Company in the Supreme Court of New York, County of New York, Index No. 155843/2013, seeking $180,036 in legal fees and expenses from the Company. The legal fees and expenses related to Sichenzia Ross’ representation of the Company on SEC matters. The parties filed a stipulation with the Court on August 25, 2014, which extended the Company’s date to file an Answer to the lawsuit to September 22, 2014. On October 8, 2014, the Parties entered into a Settlement Agreement whereby the Company agreed to pay Sichenzia Ross $80,036.22 on or before November 28, 2014 or within three business days of the Company closing its current round of financing. The agreement to pay was secured by the Company providing Sichenzia Ross an “Affidavit of Judgment by Confession” in the amount of $80,036.22 to be filed only if the Company failed to pay the $80,036.22 by the due date, plus a five day cure period ending on December 03, 2014. On December 10, 2014, Sichenzia Ross filed the Judgement by Confession with the Court and the Judgment remains unsatisfied. | ||||||||||||||
J. Johnson & Associates Lawsuit. There has been one lawsuit filed on July 14, 2014 against the Company’s subsidiary, STW Water Process & Technologies, LLC (“STW Water”), Bob J. Johnson & Associates, Inc. (BJJA) v. Alan Murphy and STW Water & Process Technologies, LLC, Case No. CV50473 in the 238th District Court of Midland County, Texas (the “BJJA Lawsuit”). BJJA sought to enforce an allegedly enforceable covenant not to compete and a confidentiality agreement signed by Alan Murphy, STW Water’s recently hired President, who was a former vice president and employee of BJJA. On July 14, 2014, BJJA obtained a TRO against Alan Murphy, STW Water and those associated with the Defendants, which, by the Company’s ownership of STW Water, included the Company. The TRO temporarily prohibited the Company, STW Water and Alan Murphy from contacting two key customers of STW and STW Water, Pioneer Energy Resources and the City of Ft. Stockton, Texas. On July 28, 2014, the Court held a temporary injunction hearing, which resulted in the TRO being dissolved and the Court refusing to further enjoin STW, STW Water or Alan Murphy from competing with BJJA. The case is still on the docket and BJJA has sought initial discovery from the Company; however, the Company is confident that it will not go forward to a trial on the merits, thereby precluding any appreciable risk of a permanent injunction. | ||||||||||||||
Arbitration Judgment | ||||||||||||||
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 an 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), with STW whereby 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 alleged 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 94,444 shares of the Company's common stock, payment of a $15,000 promissory note plus 3+ years of interest at 12%, attorneys' fees of $18,000 and costs of arbitration for filing fees and hearing fees. The Company believed it had valid defenses and contested these claims vigorously. On August 18, 2012, VP dismissed Stan Weiner from the claim with prejudice. 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. The Arbitrator denied Viewpoint's claims related to the Company's warrants, a $15,000 promissory note plus 12% interest and for $18,000 in attorneys' fees. The Award was final on April 1, 2014, and on October 28, 2014, Viewpoint filed a lawsuit in San Diego County, California Superior Court seeking to enforce its Arbitration Award, in Case No. 37-2014-00036027-CU-PA-CTL. On December 08, 2014, the Company filed a motion to dismiss the enforcement action due to Viewpoint having forfeited its corporate rights in California due to non-payment of California corporate taxes, and that motion is still pending before the Court. The full amount of this award has been accrued for in Accounts Payable. | ||||||||||||||
Segment_Information
Segment Information | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Notes to Financial Statements | |||||||||||||||||
Segment Information | |||||||||||||||||
We have three reportable segments, (1) water reclamation services, (2) oil & gas services, and (3) corporate overhead, as described herein. | |||||||||||||||||
Water reclamation services | |||||||||||||||||
The Company plans to provide 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 a range of oilfield and pipeline construction, maintenance 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. | |||||||||||||||||
Corporate Operations | |||||||||||||||||
Corporate operations include senior management salaries and benefits, accounting and finance, legal, business development, and other general corporate operating expenses. | |||||||||||||||||
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: | |||||||||||||||||
● | 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, 2014 | |||||||||||||||||
Water Reclamation | Oil & Gas Services | Corporate Operations | Consolidated Totals | ||||||||||||||
Revenues | $ | 380,657 | $ | 18,227,371 | $ | -- | $ | 18,608,028 | |||||||||
Costs of revenues | 312,277 | 17,241,311 | -- | 17,553,588 | |||||||||||||
Operating expenses | 1,283,862 | 3,468,949 | 9,063,932 | 13,816,743 | |||||||||||||
Other income (expense) | -- | -- | (2,136,075 | ) | (2,136,075 | ) | |||||||||||
Segment income (loss) | $ | (1,215,482 | ) | $ | (2,482,889 | ) | $ | (11,200,007 | ) | $ | (14,898,378 | ) | |||||
Year Ended December 31, 2013 | |||||||||||||||||
Water Reclamation | Oil & Gas Services | Corporate Operations | Consolidated Totals | ||||||||||||||
Revenues | $ | 536,735 | $ | 1,408,896 | $ | -- | $ | 1,945,631 | |||||||||
Costs of revenues | 472,978 | 1,202,336 | -- | 1,675,314 | |||||||||||||
Operating expenses | 102,210 | 763,900 | 2,718,330 | 3,584,440 | |||||||||||||
Other income (expense) | -- | -- | (3,767,256 | ) | (3,767,256 | ) | |||||||||||
Segment income (loss) | $ | (38,453 | ) | $ | (557,340 | ) | $ | (6,485,586 | ) | $ | (7,081,379 | ) | |||||
Segment Assets | |||||||||||||||||
31-Dec-14 | |||||||||||||||||
Water Reclamation | Oil & Gas Services | Corporate Operations | Consolidated Totals | ||||||||||||||
Current Assets | $ | 1,369,434 | $ | 3,561,024 | $ | 247,665 | $ | 5,178,123 | |||||||||
Fixed assets | 837,602 | 524,219 | 76,178 | 1,437,999 | |||||||||||||
Other assets | -- | -- | 97,121 | 97,121 | |||||||||||||
Segment Assets | $ | 2,207,036 | $ | 4,085,243 | $ | 420,964 | $ | 6,713,243 | |||||||||
31-Dec-13 | |||||||||||||||||
Water Reclamation | Oil & Gas Services | Corporate Operations | Consolidated Totals | ||||||||||||||
Current Assets | $ | -- | $ | 579,541 | $ | 4,040 | $ | 583,581 | |||||||||
Fixed assets | -- | 694,219 | 52,419 | 746,638 | |||||||||||||
Other assets | -- | -- | 185,428 | 185,428 | |||||||||||||
Segment Assets | $ | -- | $ | 1,273,760 | $ | 241,887 | $ | 1,515,647 | |||||||||
Subsequent_Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2014 | |
Notes to Financial Statements | |
Subsequent Events | Management evaluated all activity of the Company through April 2, 2015, the consolidated financial statements issuance date, and has concluded that no material subsequent events have occurred that would require recognition in the financial statements or disclosures in the notes to the financial statements, except as discussed below. |
On January 22, 2015, the Company filed a Certificate of Amendment to increase the number of common stock shares from 41,666,667 to 191,666,667. | |
Issuance of convertible notes and common stock: | |
In January of 2015 the Company started to raise capital for the purpose of retiring some of the older loans with higher interest rates. To the date of this Report, the Company has issued $1,375,000 of new debt to 4 investors; after reductions for discounts and fees, the Company raised approximately $1,144,000 for that purpose. The new convertible notes bear interest of 5% through July 15, 2015, and 15% if in default and are convertible, subject to limitations, at $0.65. In connection with this funding, in February 2015, the Company issued 525,000 shares of common stock valued at $481,500 to the four investors as further inducement. | |
On January 15, 2015 the Company issued 62,500 shares of common stock to an investor, at a unit price of $1.59, in payment of interest on a short term loan for a value of $99,375 and an additional 170,000 shares of common stock, at a unit price of $1.40, to a consultant for services valued at $238,000. | |
On January 27, 2015 the Company issued 281,167 shares of common stock, at various unit prices, valued at $210,642 to 19 employees for signing bonuses and continued service to the company. | |
On January 28, 2015 the Company issued 158,335 shares of common stock, at various unit prices, to 7 investors valued at $223,501 in payment of interest on 7 short term loans. | |
In the first week of February 2015 the Company issued 378,334 shares of common stock, at various unit prices, valued at $429,834 to 4 employees pursuant to their employment contracts. | |
On February 3, 2015 the Company issued 15,385 shares of common stock, at a unit price of $0.65, to an accredited investor based on a unit offering at $0.65 per unit raising $10,000 of additional capital for the Company. | |
On February 6, 2015 the Company 150,001 shares of common stock, at various unit prices, to 2 consultants valued at $144,333 in payment of services rendered in 2014 and the renewal of a 2015 contract. | |
On February 18, 2015 the Company issued 184,975 shares of common stock to an investment group, at a unit price of $0.65, valued at $140,581 for services rendered in procuring investors for the company. | |
On February 23, 2015 the Company issued 562,500 shares of common stock to 6 directors, at a unit price of $0.80, valued at $450,000 for services rendered in prior year(s). | |
On February 24, 2015 the Company issued 100,000 shares of common stock, at a unit price of $0.65, to a consultant for services valued at $65,000. | |
On February 27, 2015, pursuant to the January 8, 2015 Board of Director’s Minutes, a total of 900,000 shares were issued by the Company to 2 employees and 1 consultant for services performed in 2014. They were issued at a unit price of $0.80 per common share at a value of $720,000. | |
On January 21, 2015 the Company interred into a securities purchase agreement with 3 accredited investors and received aggregate gross proceeds of $750,000 for 5% Convertible Promissory Notes of the Company. | |
On February 24, 2015, the Board voted to increase the short term financing round previously approved by the Board on January 08, 2015 shall be increased in authorization by $250,000 to $1,250,000, together with authorizing an additional 100,000 shares of the Company’s stock in order to close on an offer from an additional $250,000 investor. | |
The Board also agreed that in exchange for MKM Master Opportunity Fund, Ltd. extending the Company’s note obligation that the shares of the Company’s restricted common stock shall be increased from the original extension amount of 41,667 (250,000 pre-reverse merger) to 55,556 shares (333,334 pre-reverse merger). | |
Black Pearl note payable: | |
On February 26, 2015, the Company negotiated an extension on the note payable to Black Pearl Energy, a Related Party, and established the balance at $1,079,944 plus $105,363 in interest due. The note is to be paid on a monthly basis of $12,000 per month for 48 months and a balloon payment in February of 2019. On March 5, 2015, the note was revised to consolidate the receivables and the payable and net the note down to $805,863 and reduce the interest due to approximately $67,000. Additionally Black Pearl is to be granted 75,000 shares to cure the default and 131,704 shares of common stock to make the extension. | |
On March 26, 2015, the Company approved three Executive Long Term Agreements for Stanley T. Weiner (as President and CEO), Paul DiFrancesco (as Head of Finance) and D. Grant Seabolt, Jr. (as General Counsel and Corporate Secretary). | |
On March 26, 2015, the Board approved amending certain outstanding employment agreements to clarify that any options issuable thereunder, shall only be issued at such time when the Company’s option plan is fully funded and implemented; the Company circulated these amendments to the respective employees and has no reason to believe they will not be countersigned by each such employee. | |
The terms of the employment agreements are as follows: | |
Stanley T. Weiner shall be employed as Chairman and CEO for a three year term effective February 1, 2015. His base salary shall be $15,000 monthly ($180,000 annually) during the first year of employment, $22,000 monthly ($264,000 annually) during the second year of employment, and $29,000 monthly ($348,000 annually) during the third year of employment. He will be subject to an annual discretionary bonus up to 100% of his previous six month salary, and a signing bonus of 300,000 shares of the Company’s common stock. He will also be subject to quarterly bonuses equal to 50,000 shares of the Company’s common stock. He will also be subject to a twelve month severance award in the event of termination. | |
Paul DiFrancesco shall be employed as Head of Finance for a three year term effective February 1, 2015. His base salary shall be $12,000 monthly ($144,000 annually) during the first year of employment, $16,000 monthly ($192,000 annually) during the second year of employment, and $16,000 monthly ($192,000 annually) during the third year of employment. He will be subject to an annual discretionary bonus up to 100% of his previous six month salary, and a signing bonus of 300,000 shares of the Company’s common stock. He will also be subject to quarterly bonuses equal to 50,000 shares of the Company’s common stock. He will also be subject to a twelve month severance award in the event of termination. | |
Grant Seabolt shall be employed as General Counsel and Corporate Secretary for a three year term effective February 1, 2015. His base salary shall be $8,000 monthly ($96,000 annually) during the first year of employment, $9,500 monthly ($114,000 annually) during the second year of employment, and $9,500 monthly ($114,000 annually) during the third year of employment. He will be subject to an annual discretionary bonus up to 100% of his previous six month salary, and a signing bonus of 100,000 shares of the Company’s common stock. He will also be subject to quarterly bonuses equal to 25,000 shares of the Company’s common stock. He will also be subject to a twelve month severance award in the event of termination. | |
Nature_of_the_Business_and_Sig1
Nature of the Business and Significant Accounting Policies (Policies) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
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 water processing technologies in the municipal wastewater and potable water industry. The Company is also involved in the desalination of brackish water and seawater for industrial and municipal use. | ||||||||||||||||
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. | |||||||||||||||||
Formation of New Subsidiaries | Effective April 16, 2014, the Company formed another new subsidiary, STW Water Process & Technologies, LLC (“Water Process”), a Texas limited liability company. The Company is the sole member of Water Process, owning 100% of the membership interest in such entity, which is managed by its members. | ||||||||||||||||
Consolidation Policy | The consolidated financial statements for the years ended December 31, 2014 and 2013 include the accounts of the Company and its wholly owned subsidiaries, STW Resources, Inc., STW Oilfield Construction LLC, STW Pipeline Maintenance Construction, LLC, STW Water Process & Technologies, LLC, and 75% owned subsidiary of STW Energy Services, LLC. All significant intercompany transactions and balances have been eliminated in consolidation. | ||||||||||||||||
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”). | ||||||||||||||||
Going Concern and Management's Plan | 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 $39,112,171 as of December 31, 2014, and as of that date was delinquent in payment of $2,594,128 of sales and payroll taxes. As of December 31, 2014, $3,192,305 of notes payable are in default. Since its inception in January 2008 through December 31, 2014, management has raised equity and debt financing of approximately $18,000,000 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. | |||||||||||||||||
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, 2014, 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, 2014, three vendors accounted for 20% of total accounts payable. During the year ended December 31, 2014, two vendors accounted for 69% of total purchases. 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, 2014, three customers accounted for 43%, 11% and 3% of accounts receivable. During the year ended December 31, 2014, three customers accounted for 39%, 11% and 7% of total revenues. 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. | |||||||||||||||||
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. | |||||||||||||||||
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. | |||||||||||||||||
Level 3 — Valuations based on inputs that are unobservable and significant to the overall fair value measurement, and involve management judgment. | |||||||||||||||||
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. | |||||||||||||||||
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 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, 2014 and 2013. | |||||||||||||||||
Fair value of Derivative Liabilities: | Level 1 | Level 2 | Level 3 | Total | |||||||||||||
31-Dec-14 | $ | -- | $ | -- | $ | 802,340 | $ | 802,340 | |||||||||
31-Dec-13 | $ | -- | $ | -- | $ | 1,630,985 | $ | 1,630,985 | |||||||||
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, 2014 or 2013. 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 | Services Revenues from Master Services Agreements | ||||||||||||||||
During the years ended December 31, 2014 and 2013, the Company entered into Master Services Agreements (“MSA”) with several major oil & gas companies. 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. As services are performed and signed off by the customer, the Company generates an invoice and recognizes the revenue from its customers. Revenues are recognized when collectability of the receivable is reasonably assured and amounts are fixed and determinable. | |||||||||||||||||
During the year ended December 31, 2014, the Company recognized $18,227,371 of revenues from its oil & gas and water reclamation services contracts, of which $2,079,269 were revenue from related parties. 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. | |||||||||||||||||
Services Revenues from 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. Revenues are recognized when the services are performed or the equipment is delivered to the customer. During the years ended December 31, 2014 and 2013, the Company realized $380,657 and $2,735, respectively, of revenues from services and product sales of its water reclamation business segment. | |||||||||||||||||
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. The Company recognizes revenue on a contract once the services 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 reasonable assured and amounts are fixed and determinable. During the year ended December 31, 2013, the Company realized $534,000 of contract revenues from this project. | |||||||||||||||||
Business Segments | The Company has three reportable segments, (1) water reclamation services, (2) oil & gas services, and (3) corporate operations. 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 the period that includes the enactment date. | ||||||||||||||||
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 files income tax returns in the U.S. federal jurisdiction and one state jurisdiction. The Company’s periodic tax returns filed in 2011 and, thereafter, are subject to examination by taxing authorities in accordance with normal statutes of limitations in the applicable jurisdictions. | |||||||||||||||||
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, 2014 and 2013. 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, 2014 and December 31, 2013, respectively. | |||||||||||||||||
Comprehensive Loss | 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, 2014 and 2013, 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. | ||||||||||||||||
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, 2014 and 2013, 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 per share is calculated by dividing the Company’s net income 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 anti-dilutive effect on losses. As of December 31, 2014, the Company had 14,442,977 dilutive shares outstanding, 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, 2014, the Company received $1,248,500 of proceeds from unit offerings of its common stock in consideration of 2,353,414 shares of its common stock. During the year ended December 31, 2014, the Company cancelled $150,000 of stock subscriptions payable for 312,500 shares of its common stock. As of December 31, 2014, the Company has 41,539 shares remaining to be issued from stock subscriptions payable at a value of $27,000. | ||||||||||||||||
During the year ended December 31, 2013, the Company received stock subscriptions and $310,000 of proceeds from unit offerings of its common stock in consideration of 645,833 shares of its common stock. The stock was not issued as of December 31, 2013 and $310,000 was reported as Stock Subscriptions Payable as of December 31, 2013. | |||||||||||||||||
Fees Payable in Common Stock | During the year ended December 31, 2014, the Company agreed to issue an aggregate of 4,813,465 shares of its common stock, net of 382,879 of cancelled shares, in payment of consulting fees and employee incentives valued at an aggregate of $4,517,379. During the year ended December 31, 2014, the Company issued 2,061,985 shares of its common stock as fees payable in common stock at an aggregate value of $1,965,566. As of December 31, 2014, the Company has 3,359,762 shares remaining to be issued associated with this obligation at an aggregate value of $2,783,711. | ||||||||||||||||
During the year ended December 31, 2013, the Company agreed to issue an aggregate of 2,074,946 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 1,466,667 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 608,279 common shares at a value of $231,897. | |||||||||||||||||
Loan Discounts | The Company amortizes loan discounts under the effective interest method. | ||||||||||||||||
Recently Issued Accounting Standards | In August 2014, the Financial Accounting Standards Board ("FASB") issued a new standard on disclosure of uncertainties about an entity's ability to continue as a going concern. The new standard provides guidance on determining when and how reporting entities must disclose going concern uncertainties in their financial statements. The new standard requires management to perform interim and annual assessments of an entity's ability to continue as a going concern within one year of the date of issuance of the entity's financial statements. Additionally, an entity must provide certain disclosures if there is substantial doubt about the entity's ability to continue as a going concern. The new standard will be effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2016. Early adoption is permitted. The Company is in the process of evaluating the impact of adoption on the Company's consolidated financial statements. | ||||||||||||||||
In June 2014, the FASB issued a new standard on accounting for share-based payments. The new standard clarifies that entities should treat performance targets that can be met after the requisite service period of a share-based payment award as performance conditions that affect vesting. As such, the performance target should not be reflected in estimating the grant date fair value of the award. The new standard also clarifies that compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period for which the requisite service has already been rendered. The new standard will be effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted. The Company is in the process of evaluating the impact of adoption on the Company's consolidated financial statements. | |||||||||||||||||
In May 2014, the FASB issued a new standard on recognizing revenue in contracts with customers. The new standard outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance. The new standard creates a five-step process to recognize revenue that requires entities to exercise judgment when considering contract terms and relevant facts and circumstances. The new standard also requires expanded disclosures surrounding revenue recognition. The new standard will be effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2016. The Company is in the process of evaluating the impact of adoption on the Company's consolidated financial statements. | |||||||||||||||||
Other recently issued accounting standards are not expected to have a material effect on the Company's consolidated financial statements. |
Nature_of_the_Business_and_Sig2
Nature of the Business and Significant Accounting Policies (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
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-14 | $ | -- | $ | -- | $ | 802,340 | $ | 802,340 | |||||||||
31-Dec-13 | $ | -- | $ | -- | $ | 1,630,985 | $ | 1,630,985 | |||||||||
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, 2014 | |||||||||
Property And Equipment Tables | |||||||||
Property, Plant and Equipment | 31-Dec-14 | 31-Dec-13 | |||||||
Office furniture and equipment | $ | 21,806 | $ | 16,838 | |||||
Tools and yard equipment | 7,661 | 2,302 | |||||||
Vehicles and construction equipment | 1,231,742 | 798,273 | |||||||
Leasehold improvements | 15,933 | -- | |||||||
Water wells under development | 341,359 | -- | |||||||
Total, cost | 1,618,501 | 817,413 | |||||||
Accumulated Depreciation and Amortization | (180,502 | ) | (70,775 | ) | |||||
Total Property and Equipment | $ | 1,437,999 | $ | 746,638 |
Notes_Payable_Tables
Notes Payable (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Notes Payable Tables | |||||||||
Notes Payable | Name | 2014 | 2013 | ||||||
14% Convertible Notes | $ | 2,296,342 | $ | 2,904,736 | |||||
12% Convertible Notes | 100,000 | 375,000 | |||||||
Other Short-term Debt | 55,000 | 43,280 | |||||||
GE Note | 2,100,000 | 2,100,000 | |||||||
Deferred Compensation Notes | 279,095 | 279,095 | |||||||
Revenue Participation Notes | 2,337,500 | 852,702 | |||||||
Note payable to Crown Financial LLC, a related party | 702,697 | 683,036 | |||||||
Note payable to Dufrane Nuclear Shielding, LLC, a related party | 725,000 | -- | |||||||
Equipment finance contracts | 110,000 | 137,573 | |||||||
Capital lease obligations | 30,437 | 23,300 | |||||||
Unamortized debt discount | -20,362 | -107,221 | |||||||
Total Debt | 8,715,709 | 7,291,501 | |||||||
Less: Current Portion | (5,890,414 | ) | (4,668,492 | ) | |||||
Total Long Term Debt | $ | 2,825,295 | $ | 2,623,009 | |||||
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 | 115,000 | ||||||||
2014 Revenue Participation Notes, Upton Project – STW Water | 1,573,000 | ||||||||
Total revenue participation notes | $ | 2,337,500 |
Derivative_Liability_Tables
Derivative Liability (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
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 | |||||||
2014 | December 31, | ||||||||
2013 | |||||||||
Annual dividend yield | 0 | % | 0 | % | |||||
Expected life (years) | 0.60 – 0.47 | 0.60 – 0.47 | |||||||
Risk-free interest rate | 0.11% - 0.25 | % | 0.11% - 0.25 | % | |||||
Expected volatility | 735 | % | 623 | % | |||||
Warrants and embedded conversion options measured at fair value on a recurring basis | For the year ended | For the year ended | |||||||
December 31, | December 31, | ||||||||
2014 | 2013 | ||||||||
Balance beginning | $ | 1,630,985 | $ | 1,046,439 | |||||
Value of derivative liability associated with JMJ note payable | 42,592 | -- | |||||||
Value of derivative liability attributable to conversion of notes payable and accrued interest | (694,149 | ) | -- | ||||||
Change in derivative liability associated with conversion of notes payable and accrued interest | (272,980 | ) | -- | ||||||
Reclassification of derivative liability due to increased share authorization | -- | (1,977,372 | ) | ||||||
Change in fair value | 95,892 | 2,561,918 | |||||||
Balance ending | $ | 802,340 | $ | 1,630,985 |
Stockholders_Deficit_Tables
Stockholders' Deficit (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Notes to Financial Statements | |||||||||||||
Amendment shares issued | Security | Number of Underlying Common Shares | ExerciseP rice | Expire | |||||||||
Warrants issued for Professional Services | 250,000 | 24 | 2014 | ||||||||||
Warrants associated with the January 14, 2009 Bridge Note | 80,000 | 18 | 2014 | ||||||||||
Warrants associated with the acquisition of the Company's Preferred Shares outstanding | 250,000 | 48 | 2014 | ||||||||||
Warrants associated with the 12% Convertible Notes | 273,583 | 0.12 | 2014-2015 | ||||||||||
Warrants associated with 2012 Revenue Participation Notes | 30,250 | 1.2 | 2014 | ||||||||||
Warrants associated with May 2012 Subscription Agreement | 87,500 | 1.2 | 2014 | ||||||||||
Warrants associated with June-September 14% Convertible Notes | 91,667 | 1.2 | 2014 | ||||||||||
Warrants associated with November 14% Convertible notes | 462,917 | 1.2 | 2014 | ||||||||||
Warrants associated with 2013 Revenue Participation Notes | 185,038 | 1.20 – 1.80 | 2015 | ||||||||||
Warrants issued to Crown Financial, LLC | 666,667 | 1.2 | 2016 | ||||||||||
Warrants issued on $20,000 short term loan | 33,333 | 1.2 | 2015 | ||||||||||
Warrants issued with November 2013 Unit Share Offering | 645,833 | 1.2 | 2015 | ||||||||||
Sub-total of Warrants outstanding | 3,056,788 | ||||||||||||
Common stock associated with the 12% Convertible Notes plus accrued interest | 4,627,570 | 0.02 | 2014 | ||||||||||
Common stock associated with Pipeline Convertible Revenue Participation notes | 287,660 | 0.12 | 2015 | ||||||||||
12/31/2013 Accrued Default interest | 86,186 | 0.02 | 2014-2015 | ||||||||||
Common stock associated with the 14% Convertible Notes plus accrued interest | 7,685,772 | 0.08 | 2015 | ||||||||||
12/31/2013 Accrued Default interest | 33,050 | 0.08 | 2014 | ||||||||||
12/31/2013 Calibre Note interest | 27,328 | 0.08 | 2014 | ||||||||||
Common stock associated with November 2013 Unit Share Offering | 645,833 | 0.08 | 2015 | ||||||||||
Common stock payable as fees | 608,279 | various | 2014 | ||||||||||
Total securities | 17,058,466 | ||||||||||||
Securities to acquire common stock outstanding | Security | Number of Underlying Common Shares | Exercise Price | Expire | |||||||||
Warrants associated with the 12% Convertible Notes | 66,667 | 0.012 | 2015 | ||||||||||
Warrants associated with 2013 Revenue Participation Notes | 185,038 | 1.20– 1.80 | 2015 | ||||||||||
Warrants issued to Crown Financial, LLC | 666,667 | 1.2 | 2016 | ||||||||||
Warrants issued on $20,000 short term loan | 33,333 | 1.2 | 2015 | ||||||||||
Warrants issued with 2013 and 2014 Unit Share Offerings | 2,682,645 | 1.20– 1.50 | 2015 - 2016 | ||||||||||
Sub-total of Warrants outstanding | 3,634,350 | ||||||||||||
Common stock associated with the 12% Convertible Notes plus accrued interest | 1,391,553 | 0.12 | N/A | ||||||||||
Common stock associated with Pipeline Convertible Revenue Participation notes | 164,513 | 0.72 | N/A | ||||||||||
Common stock associated with 14% convertible notes plus accrued interest | 5,854,260 | 0.48 | N/A | ||||||||||
Common stock associated with 2013 and 2014 Unit Share Offerings | 41,539 | 0.48 | N/A | ||||||||||
Common stock payable as fees | 3,356,762 | various | |||||||||||
Total | 14,442,977 | ||||||||||||
Warrant activity | |||||||||||||
A summary of the Company’s warrant activity and related information during the year ended December 31, 2014 follows: | |||||||||||||
Number of Shares | Weighted- Average Exercise | Remaining Contractual Life (Years) | Aggregate Intrinsic Value | ||||||||||
Price | |||||||||||||
Outstanding at January 1, 2013 | 5,401,239 | $ | 5.16 | 1.06 | $ | 32,830 | |||||||
Issued | 1,552,807 | 1.26 | 2 | ||||||||||
Exercised | -- | ||||||||||||
Forfeited | -- | ||||||||||||
Cancelled | -- | ||||||||||||
Expired | (3,897,258 | ) | 1.92 | ||||||||||
Outstanding at December 31, 2013 | 3,056,788 | $ | 1.26 | 1.07 | $ | 131,320 | |||||||
Exercisable | 3,056,788 | $ | 1.26 | 1.07 | $ | 131,320 | |||||||
Outstanding at January 1, 2014 | 3,056,788 | $ | 4.29 | 1.07 | $ | 131,320 | |||||||
Issued | 2,349,312 | 1.27 | 1.46 | ||||||||||
Exercised | -- | ||||||||||||
Forfeited | -- | ||||||||||||
Cancelled | (312,500 | ) | |||||||||||
Expired | (1,459,250 | ) | 13.89 | ||||||||||
Outstanding at December 31, 2014 | 3,634,350 | $ | 1.27 | 1.18 | $ | 851,313 | |||||||
Exercisable | 3,634,350 | $ | 1.27 | 1.18 | $ | 851,313 | |||||||
Income_Taxes_Tables
Income Taxes (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2014 | |||||||||
Income Taxes Tables | |||||||||
Reconciliation of tax on the Company's loss | Years Ended December 31, | ||||||||
2014 | 2013 | ||||||||
Income tax benefit at the U.S. statutory income tax | $ | (5,017,321 | ) | $ | (2,391,205 | ) | |||
Change in fair value of derivative liability | 32,603 | 871,052 | |||||||
Non-controlling interest in loss of subsidiary | 48,127 | 16,464 | |||||||
Non-deductible penalties and other expenses | 472,619 | 290,420 | |||||||
Changes in Valuation allowance | 4,463,972 | 1,213,269 | |||||||
Total | $ | — | $ | — | |||||
Net deferred tax assets recognized | December 31, | December 31, | |||||||
2014 | 2013 | ||||||||
Deferred noncurrent tax asset: | |||||||||
Net operating loss carry-forward | $ | 2,036,123 | $ | 1,481,871 | |||||
Accrual to Cash conversion | 3,991,660 | 1,480,682 | |||||||
Stock based compensation | 1,361,342 | -- | |||||||
Depreciation | (38,995 | ) | (38,995 | ) | |||||
Charitable Contributions | 37,400 | 18,768 | |||||||
Valuation allowance | (7,387,530 | ) | (2,942,326 | ) | |||||
Total | $ | — | $ | — |
Commitments_and_Contingencies_
Commitments and Contingencies (Tables) | 12 Months Ended | |||||||||||||
Dec. 31, 2014 | ||||||||||||||
Commitments And Contingencies Tables | ||||||||||||||
Future minimum lease payments | Future minimum lease payments under the capital lease and operating lease as of December 31, 2014, are as follows: | |||||||||||||
Capital Leases | Operating Lease | Totals | ||||||||||||
Years ending December 31: | ||||||||||||||
2015 | $ | 13,176 | $ | 117,000 | $ | 130,176 | ||||||||
2016 | 13,176 | 117,000 | 130,176 | |||||||||||
2017 | 8,960 | 117,000 | 125,960 | |||||||||||
2018 | -- | 117,000 | 117,000 | |||||||||||
2019 | -- | 117,000 | 117,000 | |||||||||||
Thereafter | -- | 87,750 | 87,750 | |||||||||||
Total minimum lease payments | 35,312 | 672,750 | 708,062 | |||||||||||
Less interest | (4,874 | ) | ||||||||||||
Capital lease obligation | 30,438 | |||||||||||||
Less current portion | (10,382 | ) | ||||||||||||
Long-term capital lease obligation | $ | 20,056 | ||||||||||||
Product Purchase and Manufacturing license agreement | As of December 31, 2014, the minimum royalty obligation payable under this agreement is as follows: | |||||||||||||
Years ending December 31: | Minimum Royalty Obligation | |||||||||||||
2015 | $ | 324,000 | ||||||||||||
2016 | 240,000 | |||||||||||||
2017 | 240,000 | |||||||||||||
2018 | 240,000 | |||||||||||||
2019 | 120,000 | |||||||||||||
Total minimum royalty payments | $ | 1,164,000 | ||||||||||||
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, former Chief Operating Officer | 24-Sep-13 | $ | 45,800 | -1 | 63,667 | 63,667 |
Segment_Information_Tables
Segment Information (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Segment Information Tables | |||||||||||||||||
Segment Operations and Assets | Segment Operations | ||||||||||||||||
Year Ended December 31, 2014 | |||||||||||||||||
Water Reclamation | Oil & Gas Services | Corporate Operations | Consolidated Totals | ||||||||||||||
Revenues | $ | 380,657 | $ | 18,227,371 | $ | -- | $ | 18,608,028 | |||||||||
Costs of revenues | 312,277 | 17,241,311 | -- | 17,553,588 | |||||||||||||
Operating expenses | 1,283,862 | 3,468,949 | 9,063,932 | 13,816,743 | |||||||||||||
Other income (expense) | -- | -- | (2,136,075 | ) | (2,136,075 | ) | |||||||||||
Segment income (loss) | $ | (1,215,482 | ) | $ | (2,482,889 | ) | $ | (11,200,007 | ) | $ | (14,898,378 | ) | |||||
Year Ended December 31, 2013 | |||||||||||||||||
Water Reclamation | Oil & Gas Services | Corporate Operations | Consolidated Totals | ||||||||||||||
Revenues | $ | 536,735 | $ | 1,408,896 | $ | -- | $ | 1,945,631 | |||||||||
Costs of revenues | 472,978 | 1,202,336 | -- | 1,675,314 | |||||||||||||
Operating expenses | 102,210 | 763,900 | 2,718,330 | 3,584,440 | |||||||||||||
Other income (expense) | -- | -- | (3,767,256 | ) | (3,767,256 | ) | |||||||||||
Segment income (loss) | $ | (38,453 | ) | $ | (557,340 | ) | $ | (6,485,586 | ) | $ | (7,081,379 | ) | |||||
Segment Assets | |||||||||||||||||
31-Dec-14 | |||||||||||||||||
Water Reclamation | Oil & Gas Services | Corporate Operations | Consolidated Totals | ||||||||||||||
Current Assets | $ | 1,369,434 | $ | 3,561,024 | $ | 247,665 | $ | 5,178,123 | |||||||||
Fixed assets | 837,602 | 524,219 | 76,178 | 1,437,999 | |||||||||||||
Other assets | -- | -- | 97,121 | 97,121 | |||||||||||||
Segment Assets | $ | 2,207,036 | $ | 4,085,243 | $ | 420,964 | $ | 6,713,243 | |||||||||
31-Dec-13 | |||||||||||||||||
Water Reclamation | Oil & Gas Services | Corporate Operations | Consolidated Totals | ||||||||||||||
Current Assets | $ | -- | $ | 579,541 | $ | 4,040 | $ | 583,581 | |||||||||
Fixed assets | -- | 694,219 | 52,419 | 746,638 | |||||||||||||
Other assets | -- | -- | 185,428 | 185,428 | |||||||||||||
Segment Assets | $ | -- | $ | 1,273,760 | $ | 241,887 | $ | 1,515,647 | |||||||||
Nature_of_Business_and_Signifi
Nature of Business and Significant Accounting Policies (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Fair Value of Derivative Liability | $802,340 | $1,630,985 |
Level 1 [Member] | ||
Fair Value of Derivative Liability | ||
Level 2 [Member] | ||
Fair Value of Derivative Liability | ||
Level 3 [Member] | ||
Fair Value of Derivative Liability | $802,340 | $1,630,985 |
Nature_of_Business_and_Signifi1
Nature of Business and Significant Accounting Policies (Details 1) | 12 Months Ended |
Dec. 31, 2014 | |
Computer Equipment [Member] | |
Useful lives of Property, Plant and Equipment | 3 years |
Furniture and Fixtures [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 $) | 12 Months Ended | 83 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2014 | |
Accumulated Deficit | ($39,112,171) | ($24,355,343) | ($39,112,171) |
Accrued sales and payroll taxes | 2,594,128 | 2,594,128 | |
Notes payable in default | 3,192,305 | 3,192,305 | |
Raised net equity and debt financing | 18,000,000 | ||
Cash on hand | 123,629 | 17,301 | 123,629 |
Total revenues including service contracts | 18,608,028 | 1,945,631 | |
Common Stock equivalents outstanding | 14,442,977 | 14,442,977 | 14,442,977 |
Proceeds from stock subscriptions and unit offering | 27,000 | 310,000 | 27,000 |
Stock subscription and unit offering, shares | 2,353,414 | 645,833 | 2,353,414 |
Stock subscriptions payable cancelled | 150,000 | ||
stock subscriptions payable cancelled, shares | 312,500 | ||
stock subscriptions payable remained | 27,000 | 27,000 | |
stock subscriptions payable remained, shares | 41,539 | 41,539 | |
Shares issued for consulting fees, value | 788,625 | 434,000 | |
Consulting [Member] | |||
Total revenues including service contracts | 534,000 | ||
Shares issued for consulting fees, commitment | 4,813,465 | 12,449,673 | |
Shares issued for consulting fees, value, commitment | 4,517,379 | 826,897 | |
Shares issued for consulting fees | 2,061,985 | 1,466,667 | |
Shares issued for consulting fees, value | 1,965,566 | 595,000 | |
Shares issuable under commitment | 3,359,762 | 608,279 | 3,359,762 |
Shares issuable under commitment, value | 2,783,711 | 231,897 | 2,783,711 |
Oil & Gas Services [Member] | |||
Total revenues including service contracts | 18,227,371 | 1,408,996 | |
Revenue from related parties | 2,079,269 | 347,550 | |
Water Reclamation [Member] | |||
Total revenues including service contracts | $380,657 | $2,735 | |
Three Vendors [Member] | |||
Percent of accounts payable | 20.00% | 69.00% | 20.00% |
Two Vendors [Member] | |||
Concentration risk | 64.00% | 28.00% | |
Customer One [Member] | |||
Percent of accounts receivable | 43.00% | 42.00% | 43.00% |
Percent of revenues | 39.00% | 27.00% | |
Customer Two [Member] | |||
Percent of accounts receivable | 11.00% | 17.00% | 11.00% |
Percent of revenues | 11.00% | 22.00% | |
Customer Three [Member] | |||
Percent of accounts receivable | 3.00% | 17.00% | 3.00% |
Percent of revenues | 7.00% | 17.00% |
Property_and_Equipment_Details
Property and Equipment (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Property And Equipment Details | ||
Office furniture and equipment | $21,806 | $16,838 |
Tools and yard equipment | 7,661 | 2,302 |
Vehicles and construction equipment | 1,231,742 | 798,273 |
Leasehold improvements | 15,933 | |
Water wells under development | 341,359 | |
Total, cost | 1,618,501 | 817,413 |
Accumulated Depreciation and Amortization | -180,502 | -70,775 |
Total Property and Equipment | $1,437,999 | $746,638 |
Property_and_Equipment_Details1
Property and Equipment (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Notes to Financial Statements | ||
Depreciation Expense | $237,915 | $60,380 |
Notes_Payable_Details
Notes Payable (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Unamortized debt discount | ($20,362) | ($107,221) |
Total Debt | 8,715,709 | 7,291,501 |
Less: Current Portion | -5,890,414 | -4,668,492 |
Total Long Term Debt | 2,825,295 | 2,623,009 |
CNotes 14% [Member] | ||
Total Debt | 2,296,342 | 2,904,736 |
CNotes 12% [Member] | ||
Total Debt | 100,000 | |
Other Debt [Member] | ||
Total Debt | 43,280 | |
GE Ionics [Member] | ||
Total Debt | 2,100,000 | 2,100,000 |
Deferred Compensation Notes [Member] | ||
Total Debt | 279,095 | 279,095 |
Revenue Participation Notes [Member] | ||
Total Debt | 2,337,500 | 852,702 |
Crown Financial Notes | ||
Total Debt | 702,697 | 683,036 |
DufraneNuclearShielding [Member] | ||
Total Debt | 725,000 | |
Equipment contract [Member] | ||
Total Debt | 110,000 | 137,573 |
Capital Lease Obligations [Member] | ||
Total Debt | $30,437 | $23,300 |
Notes_Payable_Details_1
Notes Payable (Details 1) (USD $) | Dec. 31, 2014 |
Revenue Participation Notes balance | $2,337,500 |
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 5 [Member] | |
Revenue Participation Notes balance | $1,573,000 |
Notes_Payable_Details_Narrativ
Notes Payable (Details Narrative) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2011 | |
Warrants issued | 32,407,434 | 3,056,788 | 29,803,434 |
Annual dividend yield | 0.00% | 0.00% | |
Expected volatility | 735.00% | 623.00% | |
Common stock, authorized shares | 191,666,667 | 41,666,667 | |
Total Debt | $8,715,709 | $7,291,501 | |
note payable to an accredited investor, amount | 349,134 | 97,662 | |
STW original debt with GE, amount | 1,573,000 | ||
Revenue Participation Notes balance | 2,337,500 | ||
Interest expense, notes payable | 655,371 | 1,205,338 | |
Amortization of debt discount and debt issuance costs | 44,675 | 164,549 | |
Net deferred loan costs | -47,167 | -185,428 | |
Unamortized debt discount | 80,735 | 107,221 | |
Monthly lease payment | 593 | ||
Capital lease obligation | |||
Lease interest rate | 10.00% | ||
Minimum [Member] | |||
Expected life (years) | 5 months 19 days | 5 months 19 days | |
Risk-free interest rate | 0.11% | 0.11% | |
Minimum [Member] | Machinery and Equipment [Member] | |||
interest rate of debt | 4.70% | ||
Maximum [Member] | |||
Expected life (years) | 7 months 6 days | 7 months 6 days | |
Risk-free interest rate | 0.25% | 0.25% | |
Maximum [Member] | Machinery and Equipment [Member] | |||
interest rate of debt | 8.00% | ||
Capital Lease Obligations [Member] | |||
Total Debt | 30,437 | 23,300 | |
Effective interest rate | 12.00% | ||
Interest expense, notes payable | 2,089,356 | 1,205,338 | |
Amortization of debt discount and debt issuance costs | 230,723 | 164,549 | |
Net deferred loan costs | 190,742 | 102,435 | |
Unamortized debt discount | 20,362 | 107,221 | |
Capital lease obligation | 14,854 | ||
Lease interest rate | 10.00% | ||
Accumulated amortization | 97,121 | 185,428 | |
DufraneNuclearShielding [Member] | |||
warrants exercise price | $0.20 | ||
Estimated fair value of warrants | 159,996 | ||
Total Debt | 725,000 | ||
Loan facility amount outstanding | 683,036 | ||
interest rate of debt | 18.00% | ||
Interest expense, notes payable | 1,788 | ||
Capital lease obligation | 43,541 | ||
Crown Financial Notes | |||
Warrants issued | 666,667 | ||
warrants exercise price | $1.20 | ||
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 | 702,697 | 683,036 | |
interest rate of debt | 15.00% | ||
Interest expense, notes payable | 32,461 | 113,623 | |
ParticipationNote 4 [Member] | |||
Warrants issued | 69,039 | ||
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 | 287,660 | ||
Aggregate principal balance of notes | 115,000 | ||
Total Debt | 207,115 | ||
interest rate of debt | 6.00% | ||
Effective interest rate | 8.10% | ||
Revenue receivable initial rate | 50.00% | ||
note discount | 27,015 | ||
proceeds to company | 180,100 | ||
ParticipationNote 3 [Member] | |||
Warrants issued | 100,833 | ||
warrants exercise price | $1.20 | ||
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 | 1,624 | ||
Aggregate principal balance of notes | 302,500 | ||
interest rate of debt | 12.00% | ||
Revenue Participation Notes balance | 182,000 | ||
Revenue receivable initial rate | 50.00% | ||
CNotes 14% [Member] | |||
Warrants issued | 3,361,312 | ||
warrants exercise price | $1.20 | ||
Annual dividend yield | 0.00% | ||
Expected life (years) | 2 years | ||
Expected volatility | 100.00% | ||
Estimated fair value of warrants | 81,656 | ||
Embedded conversion feature at issuance | 35,546 | ||
notes convertible into common stock share | 5,854,260 | ||
Common stock, authorized shares | 41,666,667 | ||
Derivative liability to equity | 1,977,372 | ||
Aggregate principal balance of notes | 2,296,342 | 2,904,736 | |
shares issued in consideration, value amount | 64,078 | ||
Total Debt | 2,296,342 | 2,904,736 | |
Total debt matured and in default | 688,210 | ||
Notes payable to related parties | 171,892 | ||
CNotes 14% [Member] | Minimum [Member] | |||
Risk-free interest rate | 0.17% | ||
CNotes 14% [Member] | Maximum [Member] | |||
Risk-free interest rate | 0.33% | ||
CNotes 12% [Member] | |||
Warrants issued | 273,583 | ||
warrants exercise price | $0.12 | ||
notes convertible into common stock share | 1,391,553 | ||
Common stock, authorized shares | 1,137,417 | ||
Derivative liability to equity | 272,980 | ||
Aggregate principal balance of notes | 225,000 | ||
shares issued in consideration, value amount | 614,205 | ||
Total Debt | 100,000 | ||
Accrued interest | 116,225 | ||
Other Debt [Member] | |||
Warrants issued | 200,000 | ||
warrants exercise price | $0.20 | ||
Estimated fair value of warrants | 12,000 | ||
Total Debt | 43,280 | ||
unsecured loan agreement, amount | 30,000 | ||
interest rate of debt | 8.00% | ||
unpaid principal balance of unsecured loan | 30,000 | ||
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 | ||
Deferred Compensation Notes [Member] | |||
Total Debt | 279,095 | 279,095 | |
Revenue Participation Notes [Member] | |||
Total Debt | 2,337,500 | 852,702 | |
ParticipationNote 1 [Member] | |||
Warrants issued | 27,500 | ||
warrants exercise price | $1.20 | ||
Annual dividend yield | 0.00% | ||
Expected life (years) | 2 years | ||
Risk-free interest rate | 0.33% | ||
Expected volatility | 100.00% | ||
Aggregate principal balance of notes | 165,000 | ||
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 | 2,750 | ||
ParticipationNote 2 [Member] | |||
Warrants issued | 100,833 | ||
warrants exercise price | $1.20 | ||
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 | ||
Aggregate principal balance of notes | 302,500 | ||
interest rate of debt | 12.00% | ||
Revenue Participation Notes balance | 302,500 | ||
Revenue receivable initial rate | 50.00% | ||
Equipment contract [Member] | |||
Total Debt | $110,000 | $137,573 |
Derivative_Liability_Details
Derivative Liability (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Annual dividend yield | 0.00% | 0.00% |
Expected volatility | 735.00% | 623.00% |
Minimum [Member] | ||
Expected life (years) | 5 months 19 days | 5 months 19 days |
Risk-free interest rate | 0.11% | 0.11% |
Maximum [Member] | ||
Expected life (years) | 7 months 6 days | 7 months 6 days |
Risk-free interest rate | 0.25% | 0.25% |
FairValueInputsLevel3Member | ||
Embedded conversion Options | 751,439 | 1,467,579 |
Warrants | 50,901 | 163,406 |
Increase (Decrease) in fair value | 802,340 | 1,630,985 |
Derivative_Liability_Details_1
Derivative Liability (Details 1) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Derivative Liabilities Details 1 | ||
Beginning Balance | $1,630,985 | $1,046,439 |
Value of derivative liability associated with JMJ note payable | 42,592 | |
Value of derivative liability attributable to conversion of notes payable and accrued interest | -694,149 | |
Change in derivative liability associated with conversion of notes payable and accrued interest | -272,980 | |
Reclassification of derivative liability due to increased share authorization | -1,977,372 | |
Change in fair value | -95,892 | -2,561,918 |
Ending Balance | $802,340 | $1,630,985 |
Derivative_Liability_Details_N
Derivative Liability (Details Narrative) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Derivative Liability Details Narrative | ||
Volatility rate to value derivative instruments | 735.00% | 623.00% |
Related_Party_Transactions_Det
Related Party Transactions (Details) (Joshua Brooks, former Chief Operating Officer [Member], USD $) | 12 Months Ended |
Dec. 31, 2014 | |
Joshua Brooks, former Chief Operating Officer [Member] | |
Date of Agreement | 24-Sep-13 |
Amount of Personal Guaranty | $45,800 |
Guaranty Shares | 63,667 |
Related_Party_Transactions_Det1
Related Party Transactions (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Accrued commissions payable | $1,335,378 | $976,613 |
Common stock value, related party | 28,197 | 18,543 |
Notes Payable | 3,192,305 | |
Weiner [Member] | ||
Consulting fees incurred | 150,000 | 150,000 |
Salary and consulting fees payable | 413,083 | 263,083 |
Maddox [Member] | ||
Consulting fees incurred | 75,000 | 150,000 |
Salary and consulting fees payable | 220,500 | 170,500 |
Seabolt [Member] | ||
Consulting fees incurred | 90,000 | 90,000 |
Salary and consulting fees payable | 179,797 | 121,083 |
Miranda & Associates [Member] | ||
Services expense | 449,496 | 63,107 |
Advance paid to related parties | 182,110 | |
Common stock paid to related parties | 120,292 | |
Common stock value | 72,175 | |
Accrued professional fees | 219,271 | 24,060 |
Due to related parties | 64,271 | |
Related party payable, cash | 155,000 | |
Related party payable, common stock | 206,667 | |
Dufrane [Member] | ||
Consulting fees incurred | 180,000 | |
Initial grant | 60,000 | |
Accrued professional fees | 150,000 | |
Due to related parties | 132,490 | |
Related party payable, cash | 593,358 | |
Stock Subscription payable | 150,000 | |
Notes Payable | 725,000 | |
Joshua Brooks [Member] | ||
Consulting fees incurred | 90,000 | 30,000 |
Common stock value | 120,000 | |
Due to related parties | 30,000 | |
Related party payable, cash | 333,333 | |
President [Member] | ||
Consulting fees incurred | 180,000 | 18,461 |
Services expense | 107,692 | |
STW Pipeline Maintenance & Construction/Adam Jennings [Member] | ||
Due to related parties | 121,000 | 27,000 |
Related party payable, common stock | 142,000 | |
Related party sales | 48,328 | |
Signing bonuses | 266,667 | |
Alan Murphy [Member] | ||
Due to related parties | 333,333 | |
Related party payable, cash | 200,000 | |
DiFrancesco [Member] | ||
Salary and consulting fees payable | 75,000 | |
Related party payable, cash | 282,500 | |
Related party payable, common stock | 538,870 | |
Common stock value, related party | 277,500 | |
Board of Directors [Member] | ||
Salary and consulting fees payable | 562,500 | 602,849 |
Due to related parties | 496,067 | 491,924 |
Related party payable, cash | 43,500 | |
Related party payable, common stock | 930,261 | 840,625 |
Common stock value, related party | 558,157 | 302,625 |
Black Pearl Energy, LLC [Member] | ||
Due to related parties | 1,371,305 | 139,763 |
Related party sales | 2,079,269 | 347,550 |
Due from related party | 519,789 | |
Crown Financial [Member] | ||
Due to related parties | $2,035,495 |
Stockholders_Deficit_Details
Stockholdersb Deficit (Details) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Stanley T. Weiner [Member] | ||
Shares | 104,167 | |
Triggering Event | 2012 Director Compensation | |
Manfred E. Birnbaum [Member] | ||
Shares | 104,167 | |
Triggering Event | 2012 Director Compensation | |
D. Grant Seabolt, Jr. [Member] | ||
Shares | 104,167 | |
Triggering Event | 2012 Director Compensation | |
Joseph I. O'Neill III [Member] | ||
Shares | 104,167 | |
Triggering Event | 2012 Director Compensation | |
Audry Lee Maddox [Member] | ||
Shares | 59,375 | |
Triggering Event | 2012 Advisory Board Compensation (156,250 shares) & Director Appointment Shares (200,000) | |
Dale F. Dorn [Member] | ||
Shares | 104,167 | |
Triggering Event | 2012 Director Compensation | |
Paul DiFrancesco [Member] | ||
Shares | 104,167 | |
Triggering Event | 2012 Director Compensation | |
Bill G. Carter [Member] | ||
Shares | 104,167 | |
Triggering Event | 2012 Director Compensation | |
Steven Schachman [Member] | ||
Shares | 26,042 | |
Triggering Event | 2012 Advisory Board Compensation | |
Hunter Hill [Member] | ||
Shares | 26,042 | |
Triggering Event | 2012 Advisory Board Compensation |
Stockholders_Deficit_Details_1
Stockholdersb Deficit (Details 1) (USD $) | 12 Months Ended |
Dec. 31, 2014 | |
Number of Underlying Common Shares | 17,058,466 |
Warrant 9 [Member] | |
Expire year | 2015 |
Warrant 1 [Member] | |
Expire year | 2014 |
Warrant 2 [Member] | |
Expire year | 2014 |
Warrant 3 [Member] | |
Expire year | 2014 |
Warrant 4 [Member] | |
Expire year | 2014-2015 |
Warrant 5 [Member] | |
Expire year | 2014 |
Warrant 6 [Member] | |
Expire year | 2014 |
Warrant 7 [Member] | |
Expire year | 2014 |
Warrant 8 [Member] | |
Expire year | 2014 |
Warrant 10 [Member] | |
Expire year | 2016 |
Warrant 11 [Member] | |
Expire year | 2015 |
Warrant 12 [Member] | |
Expire year | 2015 |
Notes 1 [Member] | |
Expire year | 2014 |
Notes 2 [Member] | |
Expire year | 2015 |
Notes 3 [Member] | |
Expire year | 2014-2015 |
Notes 4 [Member] | |
Expire year | 2015 |
Notes 5 [Member] | |
Expire year | 2014 |
Notes 6 [Member] | |
Expire year | 2014 |
Notes 7 [Member] | |
Expire year | 2015 |
Maximum [Member] | Warrant 9 [Member] | |
Number of Underlying Common Shares | 185,038 |
Exercise price | 1.8 |
Warrant 1 [Member] | |
Number of Underlying Common Shares | 250,000 |
Exercise price | 24 |
Warrant 2 [Member] | |
Number of Underlying Common Shares | 80,000 |
Exercise price | 18 |
Warrant 3 [Member] | |
Number of Underlying Common Shares | 250,000 |
Exercise price | 48 |
Warrant 4 [Member] | |
Number of Underlying Common Shares | 273,583 |
Exercise price | 0.12 |
Warrant 5 [Member] | |
Number of Underlying Common Shares | 30,250 |
Exercise price | 1.2 |
Warrant 6 [Member] | |
Number of Underlying Common Shares | 87,500 |
Exercise price | 1.2 |
Warrant 7 [Member] | |
Number of Underlying Common Shares | 91,667 |
Exercise price | 1.2 |
Warrant 8 [Member] | |
Number of Underlying Common Shares | 462,917 |
Exercise price | 1.2 |
Warrant 9 [Member] | Minimum [Member] | |
Exercise price | 1.2 |
Warrant 10 [Member] | |
Number of Underlying Common Shares | 666,667 |
Exercise price | 1.2 |
Warrant 11 [Member] | |
Number of Underlying Common Shares | 33,333 |
Exercise price | 1.2 |
Warrant 12 [Member] | |
Number of Underlying Common Shares | 645,833 |
Exercise price | 1.2 |
Warrant Total [Member] | |
Number of Underlying Common Shares | 3,056,788 |
Notes 1 [Member] | |
Number of Underlying Common Shares | 4,627,570 |
Exercise price | 0.02 |
Notes 2 [Member] | |
Number of Underlying Common Shares | 287,660 |
Exercise price | 0.12 |
Notes 3 [Member] | |
Number of Underlying Common Shares | 86,186 |
Exercise price | 0.02 |
Notes 4 [Member] | |
Number of Underlying Common Shares | 7,685,772 |
Exercise price | 0.08 |
Notes 5 [Member] | |
Number of Underlying Common Shares | 33,050 |
Exercise price | 0.08 |
Notes 6 [Member] | |
Number of Underlying Common Shares | 27,328 |
Exercise price | 0.08 |
Notes 7 [Member] | |
Number of Underlying Common Shares | 645,833 |
Exercise price | 0.08 |
Common Stock Payable [Member] | |
Number of Underlying Common Shares | 608,279 |
Stockholders_Deficit_Details_2
Stockholdersb Deficit (Details 2) (USD $) | 12 Months Ended |
Dec. 31, 2014 | |
Number of Underlying Common Shares | 17,058,466 |
Holder [Member] | |
Number of Underlying Common Shares | 14,442,977 |
Warrant 1 [Member] | |
Expire year | 2014 |
Warrant 1 [Member] | Holder [Member] | |
Number of Underlying Common Shares | 66,667 |
Exercise price | 0.012 |
Expire year | 2015 |
Warrant 2 [Member] | |
Expire year | 2014 |
Warrant 2 [Member] | Holder [Member] | |
Number of Underlying Common Shares | 185,038 |
Expire year | 2015 |
Warrant 2 [Member] | Holder [Member] | Minimum [Member] | |
Exercise price | 1.2 |
Warrant 2 [Member] | Holder [Member] | Maximum [Member] | |
Exercise price | 1.8 |
Warrant 3 [Member] | |
Expire year | 2014 |
Warrant 3 [Member] | Holder [Member] | |
Number of Underlying Common Shares | 666,667 |
Exercise price | 1.2 |
Expire year | 2016 |
Warrant 4 [Member] | |
Expire year | 2014-2015 |
Warrant 4 [Member] | Holder [Member] | |
Number of Underlying Common Shares | 33,333 |
Exercise price | 1.2 |
Expire year | 2015 |
Warrant 5 [Member] | |
Expire year | 2014 |
Warrant 5 [Member] | Holder [Member] | Minimum [Member] | |
Exercise price | 1.2 |
Expire year | 2015 |
Warrant 5 [Member] | Holder [Member] | Maximum [Member] | |
Number of Underlying Common Shares | 2,682,645 |
Exercise price | 1.5 |
Expire year | 2016 |
Warrant Total [Member] | Holder [Member] | |
Number of Underlying Common Shares | 3,634,350 |
Notes 1 [Member] | |
Expire year | 2014 |
Notes 1 [Member] | Holder [Member] | |
Number of Underlying Common Shares | 1,391,553 |
Exercise price | 0.12 |
Notes 2 [Member] | |
Expire year | 2015 |
Notes 2 [Member] | Holder [Member] | |
Number of Underlying Common Shares | 164,513 |
Exercise price | 0.72 |
Notes 3 [Member] | |
Expire year | 2014-2015 |
Notes 3 [Member] | Holder [Member] | |
Number of Underlying Common Shares | 5,854,260 |
Exercise price | 0.48 |
Notes 4 [Member] | |
Expire year | 2015 |
Notes 4 [Member] | Holder [Member] | |
Number of Underlying Common Shares | 41,539 |
Exercise price | 0.48 |
Common Stock Payable [Member] | Holder [Member] | |
Number of Underlying Common Shares | 3,356,762 |
Stockholders_Deficit_Details_3
Stockholdersb Deficit (Details 3) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Number of Shares Under Warrants | ||
Warrants outstanding at beginning of period | 3,056,788 | 5,401,239 |
Warrants Issued | 2,349,312 | 1,552,807 |
Warrants Exercised | ||
Warrants Forfeited | ||
Warrants Cancelled | -312,500 | |
Warrants Expired | -1,459,250 | -3,897,258 |
Warrants outstanding at end of period | 3,634,350 | 3,056,788 |
Warrants exercisable at end of period | 3,634,350 | 3,056,788 |
Weighted Average Exercise Price | ||
Warrants outstanding at beginning of period | $1.26 | $5.16 |
Warrants Issued | $1.27 | $1.26 |
Warrants Expired | $13.89 | $1.92 |
Warrants outstanding at end of period | $1.27 | $1.26 |
Warrants exercisable at end of period | $1.27 | $1.26 |
Remaining Contractual Life (Years) | ||
Warrants outstanding at beginning of period | 1 year 26 days | 1 year 22 days |
Warrants Issued | 1 year 5 months 16 days | 2 years |
Warrants outstanding at end of period | 1 year 2 months 5 days | 1 year 26 days |
Warrants exercisable at end of period | 1 year 2 months 5 days | 1 year 26 days |
Aggregate Intrinsic Value | ||
Warrants outstanding at beginning of period | $131,320 | $32,830 |
Warrants outstanding at end of period | 851,313 | 131,320 |
Warrants exercisable at end of period | $851,313 | $131,320 |
Stockholders_Deficit_Details_N
Stockholdersb Deficit (Details Narrative) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
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 | 191,666,667 | 41,666,667 |
Income_Taxes_Details
Income Taxes (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Income Taxes Details | ||
Income tax benefit at the U.S. statutory income tax | ($5,017,321) | ($2,391,205) |
Change in fair value of derivative liability | 32,603 | 871,052 |
Non-controlling interest in loss of subsidiary | 30,677 | 16,464 |
Non-deductible penalties and other expenses | 472,619 | 290,420 |
Valuation allowance | 4,463,972 | 1,213,269 |
Total |
Income_Taxes_Details_1
Income Taxes (Details 1) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Deferred noncurrent tax asset: | ||
Net operating loss carry-forward | $2,036,123 | $1,481,871 |
Accrual to Cash conversion | 3,991,660 | 1,480,682 |
Stock based compensation | 1,361,342 | |
Depreciation | -38,995 | -38,995 |
Charitable contributions | 3,740 | 18,768 |
Valuation allowance | -7,387,530 | -2,942,326 |
Total |
Income_Taxes_Details_Narrative
Income Taxes (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Income Taxes Details Narrative | ||
Net Loss | $14,756,828 | $7,032,955 |
Federal income tax net operating loss | $6,000,000 |
Commitments_and_Contingencies_1
Commitments and Contingencies (Details) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Future minimum lease payments | ||
2015 | $130,176 | |
2016 | 130,176 | |
2017 | 125,960 | |
2018 | 117,000 | |
2019 | 117,000 | |
Thereafter | 87,750 | |
Total future minimum lease payments | 708,062 | |
Less interest | ||
Capital lease obligation | ||
Less current portion | ||
Long-term capital lease obligation | ||
Capital Lease Obligations [Member] | ||
Future minimum lease payments | ||
2015 | 13,176 | |
2016 | 13,176 | |
2017 | 8,960 | |
2018 | ||
2019 | ||
Thereafter | ||
Total future minimum lease payments | 35,312 | |
Less interest | -4,874 | |
Capital lease obligation | 30,438 | |
Less current portion | -10,382 | |
Long-term capital lease obligation | 20,056 | |
Operating Lease Expense [Member] | ||
Future minimum lease payments | ||
2015 | 117,000 | |
2016 | 117,000 | |
2017 | 117,000 | |
2018 | 117,000 | |
2019 | 117,000 | |
Thereafter | 87,750 | |
Total future minimum lease payments | 672,750 | |
Less interest | ||
Capital lease obligation | ||
Less current portion | ||
Long-term capital lease obligation |
Commitments_and_Contingencies_2
Commitments and Contingencies (Details 1) (Joshua Brooks [Member], USD $) | Dec. 31, 2013 |
Joshua Brooks [Member] | |
2015 | $324,000 |
2016 | 240,000 |
2017 | 240,000 |
2018 | 240,000 |
2019 | 120,000 |
Total minimum royalty payments | $1,164,000 |
Commitments_and_Contingencies_3
Commitments and Contingencies (Details 2) (Joshua Brooks, former Chief Operating Officer [Member], USD $) | 12 Months Ended |
Dec. 31, 2014 | |
Joshua Brooks, former Chief Operating Officer [Member] | |
Date of Agreement | 24-Sep-13 |
Amount of Personal Guaranty | $45,800 |
Guaranty Shares | 63,667 |
No. of Shares Owned Following Receipt of Guaranty Shares | 63,667 |
Commitments_and_Contingencies_4
Commitments and Contingencies (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Commitments And Contingencies Details Narrative | ||
Operating leases | $4,041,793 | $78,558 |
Principal balance on capital lease | 30,438 | 14,292 |
Equipment rental used on projects | 3,600,000 | |
Related party rental expense | $472,450 | $14,292 |
Segment_Information_Details
Segment Information (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Segment Operations | ||
Revenues | $18,608,028 | $1,945,631 |
Cost of revenues | 17,553,588 | 1,675,314 |
Operating expenses | 13,816,743 | 3,584,440 |
Other income (expense) | -2,136,075 | -3,767,256 |
Segment income (loss) | -14,898,378 | -7,081,379 |
Segment Assets | ||
Current Assets | 5,178,123 | 583,581 |
Fixed assets | 1,437,999 | 746,638 |
Other assets | 97,121 | 185,428 |
Segment Assets | 6,713,243 | 1,515,647 |
Water Reclamation [Member] | ||
Segment Operations | ||
Revenues | 380,657 | 2,735 |
Cost of revenues | 312,277 | 472,978 |
Operating expenses | 1,283,862 | 102,210 |
Other income (expense) | ||
Segment income (loss) | -1,215,482 | -38,453 |
Segment Assets | ||
Current Assets | 1,369,434 | 1,369,434 |
Fixed assets | 837,602 | 837,602 |
Other assets | ||
Segment Assets | 2,207,036 | 2,207,036 |
Oil & Gas Services [Member] | ||
Segment Operations | ||
Revenues | 18,227,371 | 1,408,996 |
Cost of revenues | 17,241,311 | 1,202,336 |
Operating expenses | 3,468,949 | 763,900 |
Other income (expense) | -3,160,713 | |
Segment income (loss) | -2,482,889 | 2,603,374 |
Segment Assets | ||
Current Assets | 3,561,024 | 579,541 |
Fixed assets | 524,219 | 694,219 |
Other assets | ||
Segment Assets | 4,085,243 | 1,273,760 |
Corporate Operations [Member] | ||
Segment Operations | ||
Revenues | ||
Cost of revenues | ||
Operating expenses | 9,063,932 | 2,718,330 |
Other income (expense) | -2,136,075 | -3,767,256 |
Segment income (loss) | -11,200,007 | -6,485,586 |
Segment Assets | ||
Current Assets | 247,665 | 4,040 |
Fixed assets | 76,178 | 52,419 |
Other assets | 97,121 | 185,428 |
Segment Assets | $420,964 | $241,887 |