Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2015 | Oct. 06, 2015 | |
Document And Entity Information | ||
Entity Registrant Name | STW RESOURCES HOLDING CORP. | |
Entity Central Index Key | 1,357,838 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2015 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | No | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 35,844,548 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,015 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Current assets | ||
Cash | $ 28,030 | $ 137,524 |
Accounts receivable, trade, net | $ 2,592,932 | 3,493,918 |
Accounts receivable from related parties | 7,980 | |
Deferred project costs | $ 1,994,245 | 480,000 |
Prepaid expenses and other current assets | 447,639 | 329,475 |
Assets of discontinued operations | 113,015 | 1,078,142 |
Total current assets | 5,175,861 | 5,527,039 |
Long Term Assets | ||
Property and equipment, net | 997,628 | 1,203,082 |
Total Assets | 6,173,489 | $ 6,730,121 |
Current liabilities | ||
Book overdraft | 609,611 | |
Accounts Payable | 2,960,629 | $ 3,467,690 |
Payable to related parties: | ||
Black Pearl Energy, LLC | 69,680 | 1,276,588 |
Crown Financial, LLC | 1,592,252 | $ 2,034,810 |
Dufrane Nuclear, Inc. | 80,732 | |
Accrued compensation - officers | 948,380 | $ 873,380 |
Current portion of notes payable, net of discounts, including $1,685,211 and $1,077,235 payable to related parties, respectively | 8,053,635 | 5,869,484 |
Sales and payroll taxes payable | 2,013,354 | 2,197,768 |
Insurance premium finance contract payable | 330,198 | 208,271 |
Accrued expenses and interest | 2,246,567 | 1,727,734 |
Deferred revenue | 2,196,313 | 680,000 |
Accrued compensation | $ 436,875 | 495,934 |
Accrued board compensation | 496,067 | |
Fees payable in common stock | $ 191,724 | 2,783,711 |
Stock subscriptions payable | 117,000 | 27,000 |
Liabilities of discontinued operations | 1,898,802 | 2,584,164 |
Derivative liability | 283,161 | 802,340 |
Total current liabilities | 24,028,913 | 25,524,941 |
Notes payable, net of discount and current portion, $540,919 and $623,159 payable to related parties, respectively | 1,867,679 | 2,093,217 |
Total liabilities | $ 25,896,592 | $ 27,618,158 |
Stockholders' deficit | ||
Preferred stock, par value $0.001 per share, 10,000,000 shares authorized, no shares issued and outstanding as of June 30, 2015 and December 31, 2014, respectively | ||
Common stock; $0.001 par value; 191,666,667shares authorized, 35,239,048 and 28,194,953 shares issued and outstanding as of June 30, 2015 and December 31, 2014, respectively | $ 35,242 | $ 28,197 |
Additional paid-in capital | 24,099,362 | 18,383,411 |
Accumulated deficit | (43,508,853) | (39,112,171) |
Total Stockholders' Deficit of STW Resources Holding Corp. | (19,374,249) | (20,700,563) |
Non-controlling interest in subsidiary | (348,854) | (187,474) |
Total Stockholders' Deficit | (19,723,103) | (20,888,037) |
Total Liabilities and Stockholders' Deficit | $ 6,173,489 | $ 6,730,121 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Current liabilities | ||
Notes payable to related parties | $ 1,685,211 | $ 1,077,235 |
Shareholders' equity (deficit) | ||
Preferred stock, par value | $ 0.001 | |
Preferred stock, authorized shares | 10,000,000 | |
Preferred stock, issued shares | ||
Preferred stock, outstanding shares | ||
Common stock, par value | $ 0.001 | $ .001 |
Common stock, authorized shares | 191,666,667 | |
Common stock, issued shares | 35,239,048 | 28,194,953 |
Common stock, outstanding shares | 35,239,048 | 28,194,953 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Revenues | ||||
Water treatment services | $ 118,859 | $ 10,051 | $ 267,770 | $ 10,051 |
Energy and construction services | $ 2,468,601 | 3,045,588 | 4,517,743 | 5,157,913 |
Related parties services revenue | 17,104 | 354 | 35,138 | |
Net revenues | $ 2,587,460 | 3,072,743 | 4,785,867 | 5,203,102 |
Costs of Revenues | 1,717,706 | 3,346,112 | 3,004,985 | 5,108,280 |
Gross Profit | 869,754 | (273,369) | 1,780,882 | 94,822 |
Operating Expenses | ||||
Research and Development | 1,310 | 56,465 | 7,435 | 151,955 |
Sales and marketing | 39,547 | 144,335 | 265,860 | 215,816 |
General and administrative | 2,031,969 | 2,655,612 | 4,292,420 | 4,535,110 |
Depreciation and amortization | 41,420 | 9,951 | 71,308 | 21,543 |
Total operating expenses | 2,114,246 | 2,866,363 | 4,637,023 | 4,924,424 |
Loss from operations | (1,244,492) | (3,139,732) | (2,856,141) | (4,829,602) |
Interest expense, including related party interest of $38,318 and $54,164 for the three months ended June 30, 2015 and 2014, respectively, and $68,202 and $96,883 for the six months ended June 30, 2015 and 2014, respectively. | (1,418,157) | (462,188) | (2,595,741) | (861,616) |
Change in derivative liability | 1,353,429 | (456,809) | 1,627,209 | (443,536) |
Loss from continuing operations | (1,309,220) | (4,058,729) | (3,824,673) | (6,134,754) |
(Loss) income from operations of discontinued entities | (329,217) | 14,951 | (733,389) | (363,767) |
Net Loss | (1,638,437) | (4,043,778) | (4,558,062) | (6,498,521) |
Share of net income (loss) of subsidiary attributable to non-controlling interest | (80,347) | 10,641 | (161,380) | (30,928) |
Net Loss of STW Resources Holding Corp. | $ (1,558,090) | $ (4,054,419) | $ (4,396,682) | $ (6,467,593) |
Loss per common share - basic and diluted | $ (0.05) | $ (0.17) | $ (0.14) | $ (0.29) |
Weighted average shares outstanding - basic and diluted | 32,151,614 | 23,611,937 | 31,090,024 | 22,094,923 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Operations (Parenthetical) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Income Statement [Abstract] | ||||
Related party interest | $ 38,318 | $ 54,164 | $ 68,202 | $ 96,883 |
Condensed Consolidated Stateme6
Condensed Consolidated Statement of Stockholders' Deficit - 6 months ended Jun. 30, 2015 - USD ($) | Common Stock | Additional Paid In Capital | Accumulated Deficit | Non-Controlling Interest | Total |
Beginning Balance, Shares at Dec. 31, 2014 | 28,194,953 | ||||
Beginning balance, Amount at Dec. 31, 2014 | $ 28,197 | $ 18,383,411 | $ (39,112,171) | $ (187,474) | $ (20,888,037) |
Shares issued to Employees from Fees Payable in Common Stock, Shares | 2,192,834 | ||||
Shares issued to Employees from Fees Payable in Common Stock, Amount | $ 2,194 | 1,748,732 | |||
Shares issued to Consultants from Fees Payable in Common Stock, Shares | 2,102,456 | ||||
Shares issued to Consultants from Fees Payable in Common Stock, Amount | $ 2,103 | 1,649,743 | |||
Shares issued as board of director fees, shares | 908,658 | ||||
Shares issued as board of director fees, amount | $ 909 | 674,091 | 675,000 | ||
Shares issued for subscriptions stock payable, shares | 15,385 | ||||
Shares issued for subscriptions stock payable, amount | $ 15 | 9,985 | |||
Shares issued upon conversion of notes payable and accrued interest, Shares | 276,391 | ||||
Shares issued upon conversion of notes payable and accrued interest, Amount | $ 276 | 355,684 | |||
Shares issued in connection with the 2015 Transfer Agreements origination fees, Shares | 525,000 | ||||
Shares issued in connection with the 2015 Transfer Agreements origination fees, Amount | $ 525 | 420,475 | |||
Shares issued for financing fees, shares | 500,000 | ||||
Shares issued for financing fees, amount | $ 500 | 279,500 | 280,000 | ||
Shares issued per Saltech & Black Pearl Energy Agreements, shares | 523,371 | ||||
Shares issued per Saltech & Black Pearl Energy Agreements, amount | $ 523 | 305,182 | 305,705 | ||
Value of warrants issued as debt issuance costs, amount | 272,559 | 272,559 | |||
Net Loss | (4,396,682) | (161,380) | (3,824,673) | ||
Ending Balance, Shares at Jun. 30, 2015 | 35,239,048 | ||||
Ending Balance, Amount at Jun. 30, 2015 | $ 35,242 | $ 24,099,362 | $ (43,508,853) | $ (348,854) | $ (19,723,103) |
Condensed Consolidated Stateme7
Condensed Consolidated Statements of Cash Flows - USD ($) | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Cash flows from operating activities - continuing operations | ||
Net loss | $ (3,824,673) | $ (6,134,754) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation | 71,308 | 21,630 |
Change in fair value of derivative liability | (1,627,209) | 443,536 |
Financing costs of notes payable | $ 606,089 | 42,592 |
Change in fair value of debt instruments converted to equity | (272,980) | |
Amortization of discount and debt issuance costs | $ 1,354,148 | 90,833 |
Share based compensation | 1,472,448 | 1,655,444 |
Changes in working capital: | ||
(Increase) Decrease in accounts receivable | 788,007 | $ (652,609) |
(Increase) Decrease in deferred project costs | (1,514,245) | |
(Increase) Decrease in prepaid expenses and other current assets | (118,200) | $ (593,133) |
Increase (Decrease) in accounts payable | 232,599 | 1,192,132 |
Increase (Decrease) in sales and payroll taxes payable | 329,823 | $ 1,657,246 |
Increase (Decrease) in deferred revenue | 1,516,313 | |
Increase (Decrease) in accrued expenses and interest | 542,905 | $ 871,573 |
Increase (Decrease) in accrued compensation | (45,896) | $ 306,164 |
Increase (Decrease) in accrued board compensation | 178,933 | |
Net cash used in operating activities | (37,650) | $ (1,372,326) |
Cash flows used in investing activities - continuing operations | ||
Purchases of equipment, net of equipment loans | (170,035) | (107,431) |
Net cash used in investing activities | (170,035) | (107,431) |
Cash flows from financing activities - continuing operations | ||
Book overdraft | 609,611 | (8,211) |
Stock subscriptions payable | 100,000 | 540,000 |
Related party accounts receivables | 7,980 | 12,471 |
Related party accounts payables, credit facilities, notes, and advances | (631,537) | 1,156,036 |
Increase (Decrease) in insurance premium finance contract payable | 121,927 | 526,462 |
Proceeds from notes payable | 2,119,000 | 80,000 |
Principal payments of notes payable | $ (623,798) | (95,496) |
Proceeds from issuance of common stock | $ 122,500 | |
Debt issuance costs | $ (131,000) | |
Net cash provided by financing activities | 1,572,183 | $ 2,333,762 |
Net increase in cash - continuing operations | 1,364,498 | 854,005 |
Net loss | (733,389) | (363,767) |
Adjustments to reconcile net loss to net cash used in operating activities | ||
Depreciation of discontinued activities | 18,681 | $ 94,857 |
Loss on disposition of property and equipment of discontinued entities | 114,809 | |
Change in working capital: | ||
(Increase) Decrease in assets of discontinued operations | 1,184,582 | $ (1,585,872) |
Increase (Decrease) in liabilities of discontinued operations held for sale | (2,005,981) | 1,660,622 |
Net increase in cash - discontinued operations | (1,421,298) | $ (194,160) |
Principal payments of notes payable of discontinued operations | (52,694) | |
Net cash provided by financing activities - discontinued operations | (52,694) | |
Net increase in cash - discontinued operations | (1,473,992) | $ (194,160) |
Net increase (decrease) in cash | (109,494) | 659,845 |
Cash at beginning of period | 137,524 | 4,699 |
Cash at end of period | 28,030 | 664,544 |
Supplemental cash flow information: | ||
Cash paid for interest | $ 84,708 | $ 12,679 |
Cash paid for income taxes | ||
Non-cash investing and financing activities: | ||
Shares issued from common stock subscriptions payable | $ 10,000 | $ 150,000 |
Value of shares issued to employees as compensation | 1,750,926 | 301,625 |
Value of shares issued to consultants | 1,651,846 | 352,175 |
Value of shares issued as board fees | $ 675,000 | 558,157 |
Value of shares issued in connection with extension of notes payable | 67,354 | |
Value of shares issued in payment of accrued PIK interest | 510,769 | |
Value of shares issued upon conversion of notes payable and accrued interest | $ 355,960 | $ 1,588,074 |
Shares issued for 2015 Transfer Agreement origination fees | 421,000 | |
Shares issued for financing fees | $ 280,000 | |
Value of shares issued as charitable contributions | $ 110,000 | |
Shares issued per Saltech & Black Pearl Energy Agreements | $ 305,705 | |
Value of warrants issued as debt issuance costs | $ 272,559 | |
Value of conversion feature of JMJ convertible note payable | $ 50,000 | |
Value of derivative associated with convertible note payable | $ 715,981 |
1. Nature of the Business and S
1. Nature of the Business and Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of the Business and Significant Accounting Policies | NOTE 1 NATURE OF THE BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES Basis of presentation The accompanying condensed consolidated financial statements of STW Resources Holding Corp and its subsidiaries (STW, we, us, our and our Company) have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the rules and regulations of the Securities and Exchange Commission. Accordingly, the unaudited condensed financial statements do not include all information and footnotes required by accounting principles generally accepted in the United States of America for complete annual financial statements. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting of only normal recurring adjustments, considered necessary for a fair presentation. Interim operating results are not necessarily indicative of results that may be expected for the year ending December 31, 2015, or for any other interim period. These unaudited condensed consolidated financial statements should be read in conjunction with the Companys audited financial statements as of and for the year ended December 31, 2014, which are included in the Companys Annual Report on Form 10-K for such year as filed on April 3, 2015. During the six months ended June 30, 2015, the Company decided to shut down the operations of its Energy and Oilfield businesses. Accordingly, some information included in our form 10-K may not be comparable to the information included in this form 10-Q. The December 31, 2014 condensed consolidated balance sheet was derived from the audited consolidated balance sheet included in the Companys Annual Report on Form 10-K for such year as filed on April 3, 2015, see Reclassifications below. History of the Company STW Resources Holding Corp, 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 Companys 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. Consolidation policy The unaudited condensed consolidated financial statements for the three and six months ended June 30, 2015, include the accounts of the STW Resources Holding Corp and its wholly owned subsidiaries: STW Water Process & Technologies LLC and STW Pipeline Maintenance & Construction, LLC. The condensed consolidated financial statements for the three and six months ended June 30, 2014, include STW Resources Holding Corp and STW Pipeline Maintenance & Construction, LLC as STW Water Process & Technologies, LLC was not established prior to the quarterly period ended June 30, 2014. All significant intercompany transactions and balances have been eliminated in consolidation. STW Oilfield Construction LLC and the Companys 75% owned subsidiary STW Energy, LLC have been reported as discontinued operations. The Company also consolidates any variable interest entities (VIEs), of which it is the primary beneficiary, as defined. The Company does not have any VIEs that need to be consolidated at this time. When the Company does not have a controlling interest in an entity, but exerts a significant influence over the entity, the Company would apply the equity method of accounting. Reclassifications Certain reclassifications were made to the prior period condensed consolidated financial statements to conform to the current period presentation. There was no change to the previously reported net loss. Additionally, the financial statements for June 30, 2014, December 31, 2014, and March 31, 2015 have been revised for the discontinued operations (See Note 8). Non-Controlling interest On June 25, 2013, the Company invested in a limited liability company (LLC) by obtaining a 75% interest in STW Energy Services, LLC (STW Energy). The non-controlling interest in STW Energy is held by Crown Financial, LLC, a Texas Limited Liability Company (Crown or Crown Financial). As of December 31, 2014, $2,500 was recorded as the equity of the non-controlling interest in our consolidated balance sheet representing the third-party investment in STW Energy, with a cumulative net loss attributable to non-controlling interests of $187,474 for the year ended December 31, 2014. During the three and six month period ended June 30, 2015, a net loss attributable to the non-controlling interest of $80,347 and $161,380, respectively, was incurred. As of June 30, 2015, the net deficit interest in the subsidiary held by the non-controlling interest is $348,854. Going Concern The Companys condensed 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 $43,508,853 as of June 30, 2015, and as of that date was delinquent in payment of $2,013,354 of sales and payroll taxes. As of June 30, 2015, $5,546,655 of notes payable were in default. Since its inception in January 2008 through December 31, 2014, management had raised equity and debt financing of approximately $21,000,000 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 Companys 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 any at all. The accompanying condensed 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 Condensed 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 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. Accounts Receivable Trade accounts receivable, net of allowance for doubtful accounts consists primarily of receivables from oil & gas services fees. Management determines the allowance for doubtful accounts based on historical losses and current economic conditions. On a continuing basis, management analyzes delinquent receivables, and once these receivables are determined to be uncollectible, they are written off either against an existing allowance account or as a direct charge to the condensed consolidated statement of operations. As of June 30, 2015 and December 31, 2014, the allowances for doubtful accounts were zero and $6,773, respectively. Loan Discounts The Company amortizes loan discounts over the term of the loan using the effective interest method. 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 per institution. At June 30, 2015, there were no account balances per institution that would have exceeded the $250,000 insurance limit. 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 June 30, 2015, three vendors accounted for 18%, 12% and 11% of total accounts payable. During the three months ended June 30, 2015, three vendors accounted for 58%, 15%, and 8% of total purchases. During the six months ended June 30, 2015, three vendors accounted for 63%, 18%, and 8% of total purchases. 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 June 30, 2015, three customers accounted for 34%, 33% and 13% of accounts receivable. During the three months ended June 30, 2015, three customers accounted for 75%, 12% and 7% of net revenues. During the six months ended June 30, 2015, three customers accounted for 74%, 8% and 8% of net revenues. 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. Fair Value of Financial Instruments Fair value is defined 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 Companys financial instruments consist of cash, accounts receivable, 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 5). 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 managements use of assumptions to external and internal information. This hierarchy requires the use of observable market data when available. These two types of inputs have created the following fair-value hierarchy: Level 1 Valuations based on unadjusted quoted market prices in active markets for identical securities. Currently, we do not have any items classified as Level 1. Level 2 Valuations based on observable inputs (other than Level 1 prices), such as quoted prices for similar assets at the measurement date; quoted prices in markets that are not active; or other inputs that are observable, either directly or indirectly. Currently, we do not have any items classified as Level 2. Level 3 Valuations based on inputs that are unobservable and significant to the overall fair value measurement, and involve management judgment. We use the Black-Scholes-Merton option pricing model (Black-Scholes) to determine the fair value of the financial instruments. If the inputs used to measure fair value fall in different levels of the fair value hierarchy, a financial securitys hierarchy level is based upon the lowest level of input that is significant to the fair value measurement. Our derivative liabilities consist of embedded conversion features on debt, price protection features on warrants, and are classified as Level 3 liabilities. We use Black-Scholes to determine the fair value of these instruments (see Note 5). Management has used the simplified Black Scholes 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 on the Companys condensed consolidated balance sheets on a recurring basis and their level within the fair value hierarchy as of June 30, 2015 and December 31, 2014. Level 1 Level 2 Level 3 Total Fair value of Derivative Liability at June 30, 2015 $ -- $ -- $ 283,161 $ 283,161 Fair value of Derivative Liability at December 31, 2014 $ -- $ -- $ 802,340 $ 802,340 Accounting for Derivatives Liabilities The Company evaluates stock warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for. Financial instruments classified as a derivative instrument is marked-to-market at each balance sheet date and recorded as an asset or a liability with the change in fair value adjusted through the statement of operations in other income (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 to a liability are recorded at the fair value of the instrument on the reclassification date. Certain of the Companys embedded conversion features on debt, with anti-dilution provisions, and price protection features on outstanding common stock 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, all future changes in the fair value of these warrants are recognized currently in earnings until such time as the warrants are exercised, expire or the related rights have been 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 the Black-Scholes model (see Note 5). Equity Instruments Issued to Non-Employees for Acquiring Goods or Services Issuances of the Companys 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 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 during the six months ending June 30, 2015 or 2014. There can be no assurance, however, that market conditions will not change or demand for the Companys products and services under development will continue. Either of these could result in future impairment of long-lived assets. Revenue Recognition During the year ended December 31, 2014, the Company entered into Master Services Agreements (MSA) with several major oil & gas companies. These MSAs authorize 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 recognized revenues from these contracts as the services are performed under the customer purchase orders and no further performance obligations exist, generally in the form of a customer approval. During the three and six months ended June 30, 2015, the Company recognized $2,468,601and $4,518,097, respectively of revenues from these services contracts, which included zero and $354, respectively of revenues from related parties. During the three and six months ending June 30, 2014, the Company realized revenue of $3,062,692 and $5,193,052, respectively from services contracts, which included $17,104 and $35,138, respectively of the service revenue was from related parties. 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 10. Income Taxes 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 basis. 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. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company maintains a valuation allowance with respect to deferred tax assets. The Company established a valuation allowance based upon the potential likelihood of realizing the deferred tax asset in the future. 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 reduction in the valuation allowance will be included in income in the year of the change in estimate. The Companys 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 condensed consolidated balance sheets at June 30, 2015 and December 31, 2014, respectively. Common Stock and Common Stock Warrants Issued to Employees The Company uses the fair value recognition provision of ASC 718, Stock Compensation, which requires the Company to recognize 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 option pricing model to calculate the fair value of any equity instruments on the grant date. At June 30, 2015 and December 31, 2014, the Company had no grants of employee common stock options or warrants outstanding. Loss per Share The basic net loss per share is calculated by dividing the Companys net loss available to common shareholders by the weighted average number of common shares during the period. The diluted net loss per share is calculated by dividing the Companys net income (loss) available to common shareholders by the diluted weighted average number of shares outstanding during the period. The diluted weighted average number of shares outstanding is the basic weighted average number of shares adjusted for any potentially dilutive shares arising from debt or equity instruments. Diluted net loss per share is the same as basic net loss per share due to the lack of dilutive items. As of June 30, 2015 and December 31, 2014, the Company had 14,036,978 and 14,442,977 shares issuable upon conversion or exercise, respectively, which have been excluded as their effect is anti-dilutive. Property and Equipment Property and equipment are stated at cost, net of accumulated depreciation and amortization. The cost of property and equipment is depreciated or amortized on the straight-line method over the following estimated useful lives: Computer equipment and software 3 years Furniture 3 years Tools, equipment, and vehicles 3-5 years Leasehold improvements remaining life of lease Stock Subscriptions Payable The initial balance of stock subscriptions payable as of December 31, 2014, was $27,000 representing 41,539 shares to be issued. During the three and six months ended June 30, 2015, zero and $10,000, respectively of these stock subscriptions payable were issued representing zero and 15,385, respectively shares of common stock. The remaining balance of stock subscriptions payable as of June 30, 2015, is $117,000 representing 126,154 shares to be issued. Fees Payable in Common Stock During the three and six months ended June 30, 2015, the Company agreed to issue a net of 1,663,334 and 2,676,596 shares, respectively, valued at $991,801 and $1,826,450 in payment of performance bonuses, employment signing bonuses, consulting fees, and interest. During the three and six months ended June 30, 2015, the Company issued an aggregate of 3,209,740 and 5,595,052 shares, respectively, of its common stock, valued at $2,196,150 and $4,335,434, respectively, in payment of performance bonuses, employment signing bonuses, consulting fees, and interest which left a remaining balance in fees payable in common stock of $191,724, or 391,306 shares. Recently Issued Accounting Standards Recent accounting pronouncements did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements. |
2. Property, Plant and Equipmen
2. Property, Plant and Equipment | 6 Months Ended |
Jun. 30, 2015 | |
Deferred Revenue Disclosure [Abstract] | |
Property, Plant and Equipment | NOTE 2 PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment consisted of the following at June 30, 2015 and December 31, 2014: June 30, 2015 December 31, 2014 Office furniture and equipment $ 29,467 $ 29,467 Tools and yard equipment 673,942 621,995 Vehicles and construction equipment 477,187 635,220 Facilities and leasehold improvements 15,933 15,933 Total, cost 1,196,529 1,302,615 Accumulated Depreciation and Amortization (198,901 ) (99,533 ) Property and equipment, net $ 997,628 $ 1,203,082 Depreciation and amortization expense for the three and six month periods ended June 30, 2015 were $41,420 and $71,308, respectively. Depreciation and amortization expense for both the three and six month periods ended June 30, 2014 were $9,951 and $21,543, respectively. |
3. Receivable from Factor, Net
3. Receivable from Factor, Net of Unapplied Customer Credits | 6 Months Ended |
Jun. 30, 2015 | |
Receivable From Factor Net Of Unapplied Customer Credits | |
Receivable from Factor, Net of Unapplied Customer Credits | NOTE 3 RECEIVABLE FROM FACTOR, NET OF UNAPPLIED CUSTOMER CREDITS Accounts Purchase Agreement Crown Financial, LLC On June 21, 2013, STW Energy entered into an Accounts Purchase Agreement (the Accounts Purchase Agreement) with Crown Financial, LLC (Crown Financial) under the Texas Finance Code, pursuant to which Crown Financial might, at its sole discretion, purchase certain of the STW Energys eligible accounts receivable. Upon any acquisition of an account receivable, Crown would 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 should pay STW Energy on the related invoice less fess and prior advances. Each account receivable purchased by Crown would 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 would 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 Energys 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. As of the date of this report there were no accounts in default. The Accounts Purchase Agreement shall remain valid 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 Energys assets pursuant to the terms of a Security Agreement. As of June 30, 2015 and December 31, 2014, respectively, there were no accounts receivables subject to recourse due to nonpayment of the purchased accounts. |
4. Notes Payable
4. Notes Payable | 6 Months Ended |
Jun. 30, 2015 | |
Notes Payable [Abstract] | |
Notes Payable | NOTE 4 NOTES PAYABLE The Companys notes payable at June 30, 2015 and December 31, 2014, consisted of the following: June 30, December 31, Name 2015 2014 14% convertible notes $ 2,296,342 $ 2,296,342 12% convertible notes 100,000 100,000 2015 transfer agreements 1,375,000 -- GE Ionics note 2,100,000 2,100,000 Deferred compensation notes 279,095 279,095 Revenue participation notes 2,371,500 2,337,500 Crown Financial note 620,459 702,698 Black Pearl note payable 777,096 -- Dufrane note payable 555,879 725,000 Other short-term debt 55,000 55,000 2015 Q2 short term financing 486,000 -- Discontinued operations L/T debt -- (752,441 ) Equipment finance contracts 48,168 110,000 Capital lease obligations 25,388 30,437 Total notes payable 11,089,927 7,983,631 Less: current portion (9,222,248 ) (5,890,414 ) Net long term portion notes payable $ 1,867,679 $ 2,093,217 Current portion notes payable $ 9,222,248 $ 5,890,414 Less items as follows: Unamortized loan discounts and loan fees 568,337 20,930 Discontinued operations 600,276 -- Total current portion of notes payable, net of discounts $ 8,053,635 $ 5,869,484 14% Convertible Notes As of June 30, 2015 and December 31, 2014, the aggregate principal balances of the 14% convertible notes are $2,296,342 and $2,296,342, respectively. During the six month period ended June 30, 2015, the Company had no activity on these notes. As of June 30, 2015, the total of outstanding 14% convertible notes was $2,296,342 of which $2,264,800 matured on or before June 30, 2015 and were in default, however, as of October 6, 2015, none of the note holders have declared the notes in default. During the six month period ended June 30, 2014, the Company converted principal and accrued interest of $973,869 in exchange for 1,628,335 shares of the Companys common stock. The value of the stock issued was $781,337 resulting in additional interest expense of $192,532 upon the conversion of convertible debt. During the three month period ended June 30, 2014, the Company converted principal and accrued interest of $741,912 in exchange for 1,545,650 shares of the Companys common stock. The value of the stock issued was $927,390 resulting in additional interest expense of $185,478 upon the conversion of convertible debt. At June 30, 2014, the total of outstanding 14% convertible notes was $2,326,517 of which $294,752 matured on November 30, 2013 and was in default; however, none of the note holders had declared the notes in default. During the six month period ended June 30, 2013, the Company converted principal of $25,000. The Company did not convert any principal or accrued interest of the 14% convertible notes during the three months ending June 30, 2013. As of June 30, 2015 and 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% convertible notes payable to accredited investors that matured on November 30, 2011 and are currently in default. At June 30, 2015, the remaining balance was $100,000. In connection with the issuance of the 12% convertible notes, the Company also issued 273,583 warrants to purchase common stock at an exercise price of $0.12 per share that expire at various dates through 2015. The 12% convertible notes are convertible into 1,454,053 shares of the Companys common stock. During the three and six months ended June 30, 2015, the Company has had no activity on the 12% convertible notes. The notes are currently in default, however, as of October 6, 2015, 2015, the note holders have not declared the notes in default. During the three and six months ended June 30, 2014, the Company had no activity and issued 1,137,417 shares of its common stock valued at $614,205 in payment of $225,000 of principal and $116,225 of accrued interest (total of $341,225), respectively. 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. Other Short-Term Debt 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 matured on January 1, 2015. The balance of the note payable as of June 30, 2015 and December 31, 2014, was $30,000. It is currently in default, however, as of October 6, 2015, MKM capital has not declared the note in default. In September 2014, the Company entered into short term loan agreements with seven accredited investors for short term notes of $145,000 to be used to sustain daily operating activities. The notes matured in October 2014 with 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 171,667 shares of common stock. These shares were included in the "Fees Payable in Common Stock" and were expensed as interest in the current period. As of June 30, 2015 and December 31, 2014, all but $25,000 of the delinquent loans had been repaid, but as of October 6, 2015, the remaining lender has not declared a default on the payment of his note. GE Ionics On August 31, 2010, the Company entered into a Settlement Agreement with GE Ionics (GE) relating to a $2,100,000 note payable that was amended on October 30, 2011 (GE Note). On May 7, 2012, GE informed the Company that the Company had failed to make any required installment payment that was due and payable under the GE Note and that the Companys 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 attorneys fees and expenses) incurred in connection with the collection and enforcement of any rights under the GE Note. Under the terms of the GE 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 Ionics, Inc. ("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 entered into on August 31, 2010, upon which STW owed GE $2.1 million plus interest. GE elected to forgo suit on the settlement amount and sued STW for the original debt of $11,239,437, plus interest and attorneys' fees (the "Original Debt"). STW filed its Answer asserting that it is entitled to and shall pursue all of its available legal and equitable defenses to the Original Debt, inasmuch as GE had, 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 currently in the discovery phase of litigation and the parties are exploring settlement. (See Note 9) Deferred Compensation Notes As of June 30, 2015, and December 31, 2014, the Company had a balance of $279,095 and $279,095 payable under deferred compensation, non-interest bearing, notes to its former Chief Executive Officer and its in house counsel. The notes matured on December 31, 2012, and the notes are in default, however, as of October 6, 2015, none of the note holders have declared the notes in default. Revenue Participation Notes As of June 30, 2015 and December 31, 2014, the Company had an outstanding balance of $2,371,500 and $2,337,500, respectively, of Revenue Participation Notes comprised as follows: June 30, December 31, Name 2015 2014 2012 Revenue Participation Notes $ 165,000 $ 165,000 2013 Revenue Participation Notes - STW Resources Salt Water Remediation 302,500 302,500 2013 Revenue Participation Notes - STW Energy 182,000 182,000 2013 Convertible Revenue Participation Notes - STW Pipeline 115,000 115,000 2014 Revenue Participation Notes, Upton Project STW Water 1,607,000 1,573,000 Total revenue participation notes $ 2,371,500 $ 2,337,500 These notes are more fully described in the notes to the consolidated financial statements for the year ended December 31, 2014, which were included in the Companys Annual Report on Form 10-K as filed with the SEC on April 3, 2015. 2014 Revenue Participation Notes STW Resources Upton Project On September 30, 2014, the Company issued its first note for the new Upton Project. The financing is a senior secured master note (Master Note) with a 15% coupon and a maturity of 18 months. According to the terms of the Master Note, the Company should pay interest only in the first three months of the issuance, and commencing on the fourth month of the issuance, the Company should pay equal monthly payment of principal and accrued interest through the maturity date of the Master Note with revenue participation interest. Additionally, the Master Note carries 5% royalty to be distributed based on pro rata ownership by investors in the Master Note. Payments for principal and interest will come solely from 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 Master Note. As of June 30, 2015, the total principal amount of this financing was $1,607,000. At June 30, 2015, $502,760 of the principal payments was in default. As of the date of this Report, the investors have not declared a default on the payment of the Master Note. 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 our subsidiary: 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 June 30, 2015 and December 31, 2014, the Company had drawn down $620,458 and $702,697, respectively, of this loan facility. This loan is part of the discontinued operations. Black Pearl Energy, LLC, a related party 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 the Companys CEO, Stan Weiner, former COO, Lee Maddox, and one of our directors and General Counsel, Grant Seabolt. Pursuant to the Credit Agreement, Black Pearl issued us a $2,000,000 line of credit, of which $1,054,944 had been advanced as of December 31, 2014. The credit was issued in the form of a promissory note (the "Note"). On February 26, 2015, the open balance of the credit line and accrued interest were converted into a note payable, described in more details in the Black Pearl note payable herein below, and the credit line was dissolved. On February 26, 2015, the Company negotiated an extension on the note payable to Black Pearl for the outstanding balance of $1,079,944 plus $105,363 of accrued interest under the Credit Agreement. The note is to be paid on a monthly basis of $12,000 per month for 48 months and the rest of the payment will become due in February 2019. On March 5, 2015, the note was revised to consolidate the receivables and the payable and reduced the principal and accrued interest to approximately $805,863 and $67,000, respectively. Additionally, we would issue 75,000 shares of common stock to Black Pearl to cure the default and 131,704 shares of common stock in consideration of the extension. These stock awards were accrued as fees payable in common stock when the awards were vested. As of June 30, 2015 and December 31, 2014, the Company had $777,096 of related party notes payables and zero, respectively, to Black Pearl. Dufrane Nuclear, Inc. , a related party As of June 30, 2015 and December 31, 2014, the Company has a related party note payable of $555,879 and $725,000, respectively, to Dufrane Nuclear, Inc. a company controlled by Mr. Joshua Brooks, the Companys Former Chief Operating Officer. During the six months ended June 30, 2015 and 2014, the Company made payments on the note of $169,121 and zero, respectively, in principal. 2015 Transfer Agreement Convertible Notes Payable During the six months ended June 30, 2015, the Company issued $1,375,000 of convertible transfer agreements to four (4) accredited investors. The transfer agreements bear interest at 5% and mature at various dates through October 17, 2015. The transfer agreements are convertible, including accrued interest, into 2,141,827 shares at a conversion price of $0.65 per share. In the event of default, the transfer agreements are convertible at a price equal to the lower of (a) $0.65 or (b) 60% multiplied by the lowest closing trade price of the common shares for the ten (10) trading days immediately prior to the applicable conversion date. The conversion feature of the 2015 transfer agreements meet the definition of a derivative due to the reset provision to occur upon the issuance of equity based instruments at below $0.65 per share or upon default of the notes and is accounted for as a derivative liability. The Company has determined the value of the conversion feature upon default of this note using the Black-Scholes pricing model to be $1,108,030 as of the date of issuance, of which $479,877 was recorded as a financing cost in the condensed consolidated statement of operations and $628,153 was recorded as a loan discount. In connection with these transfer agreements, the Company issued 525,000 shares of its common stock to the investors valued at $470,500. The Company also incurred third party loan fees of $151,347 on these notes. The value of the conversion feature of $628,153 and $746,847 will be amortized as interest expense over the term of the note under the straight line method, which we believe approximates the effective interest method due to their short term nature. The effective interest rate of these transfer agreements was determined to be 102.5%. 2015 Short Term Financing In the second quarter of 2015, the Company obtained short term loans from three qualified investors totaling $450,000. As part of the short term loans, one investor was given a discount on two notes totaling $73,500 and awarded 650,000 shares of common stock at various prices valued at $340,000 plus 4,000,000 shares, to be issued only in the event of a default, valued at $1,600,000. Another investor was awarded 100,000 shares of common stock at various prices valued at $80,000 plus 500,000 warrants at an exercise price of $0.59 per share. These costs in excess of the stated value were written off as current expenses due to the short term nature of the loans and others were deferred and will be expensed over the life of the short term loans as interest expense. For the six months ended June 30, 2015 and 2014, interest expense on all notes payable (including related parties in Note 6) described above was $2,595,741 and $861,616, respectively, which included $1,354,148 and $58,328, respectively, of amortization of debt discount and debt issuance costs. |
5. Derivative Liability
5. Derivative Liability | 6 Months Ended |
Jun. 30, 2015 | |
Notes to Financial Statements | |
Derivative Liability | NOTE 5 - 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 entitys 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 entitys 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. Management has used the simplified Black Scholes model to estimate fair value of derivative instruments. Management believes that as a result of the relatively short term nature of the warrants and convertibility features, a lattice model would not result in a materially different valuation. During the first quarter of 2015, the Company computed a historical volatility of 315% using daily pricing observations for recent periods. We applied a historical volatility rate of 315% during the period ended June 30, 2015, and future periods, since the Company exited its development stage and commenced commercial operations. We believe this method produces an estimate that is representative of our expectations of future volatility over the expected term of these 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 June 30, 2015 and December 31, 2014: For the six months ended June 30, 2015 For the year ended December 31, 2014 Annual dividend yield 0 % 0 % Expected life (years) 0.50 0.01 0.60 - 0.47 Risk-free interest rate 0.11% - 0.25 % 0.11% - 0.25 % Expected volatility 315 % 735 % June 30, 2015 December 31, 2014 Embedded conversion features $ 279,011 $ 751,439 Warrants 4,152 50,901 $ 283,161 $ 802,340 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 six months ended June 30, 2015 For the year ended December 31, 2014 Balance beginning $ 802,340 $ 1,630,985 Value of derivative liability associated with JMJ note payable -- 42,592 Value of derivative liability attributable to conversion feature of transfer agreements 1,108,030 -- 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 ) Change in fair value (1,627,209 ) 95,892 Balance ending $ 283,131 $ 802,340 The increase in fair value of the derivative liability is largely attributable to the derivative liability associated with the conversion feature of the transfer agreement convertible notes payable. The change in the fair value of the derivative liability is attributable to the expiration of some of the warrants that were outstanding. |
6. Related Party Transactions
6. Related Party Transactions | 6 Months Ended |
Jun. 30, 2015 | |
Notes to Financial Statements | |
Related Party Transactions | NOTE 6 RELATED PARTY TRANSACTIONS Officers Compensation During the six months ended June 30, 2015 and 2014, we incurred $87,500 and $75,000, respectively, in officers compensation due to our Director, Chairman, and CEO, Mr. Stanley Weiner. During the three month periods ended June 30, 2015 and 2014, we incurred $45,000 and $37,500, respectively, in officers compensation. During the six months ended June 30, 2015 and 2014, Mr. Weiner was paid $22,500 and zero, respectively. During the three months ended June 30, 2015 and 2014 Mr. Weiner was paid $22,500 and zero, respectively. As of June 30, 2015 and December 31, 2014, the balances of $478,083 and $413,083, respectively, were payable to Mr. Weiner for his compensation. During the six months ended June 30, 2015 and 2014, we incurred zero and $75,000, respectively, in officers compensation due to one of our former Directors and former Chief Operating Officer, Mr. Lee Maddox. During the three months ended June 30, 2015 and 2014, we incurred zero and $37,500, respectively, in officers compensation due to Mr. Maddox. During the six months ended June 30, 2015 and 2014, the Company paid Mr. Maddox $30,000 and zero, respectively. As of June 30, 2015 and December 31, 2014, the balances of $190,500 and $220,500, respectively, were payable to Mr. Maddox for his compensation. During the six months ended June 30, 2015 and 2014, we incurred $60,000 and zero, respectively, in officers compensation due to one of our Directors and Officer, Mr. Paul DiFrancesco. During the three months ended June 30, 2015 and 2014, we incurred $36,000 and zero, respectively, in officers compensation due to Mr. DiFrancesco. During the six months ended June 30, 2015 and 2014, the Company paid Mr. DiFrancesco $52,500 and zero, respectively. As of June 30, 2015 and December 31, 2014, the balances of $7,500 and zero, respectively, were payable to Mr. DiFrancesco for his salary. During the six months ended June 30, 2015 and 2014, we incurred $47,500 and $45,000, respectively, in general counsel services fees expense with Seabolt Law Group, a firm owned by our Director and General Counsel, Mr. Grant Seabolt. During the three months ended June 30, 2015 and 2014, we incurred $24,000 and $22,500, respectively, in general counsel services fees expense with Seabolt Law Group. During the six months ended June 30, 2015 and 2014, the Company paid Mr. Seabolt $15,000 and $15,000, respectively. As of June 30, 2015 and December 31, 2014, the balances of $212,297 and $179,797, respectively, were payable to Seabolt Law Group for their services. 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. There has been no additional activity during the six months ending June 30, 2015. The balance in the accrued officers compensations for our former COO, Mr. Brooks, was $60,000 at both June 30, 2015 and December 31, 2014. During six months ended June 30, 2015 and 2014, we incurred $96,436 and $317,118, respectively, in CFO, audit preparation, tax, and SEC compliance services fees expense with Miranda CFO Services, Inc. and Miranda & Associates, a Professional Accountancy Corporation, firms owned by our Chief Financial Officer, Mr. Robert J. Miranda. During three months ended June 30, 2015 and 2014, we incurred $45,688 and $168,520, respectively, in CFO, audit preparation, tax, and SEC compliance services fees expense with Miranda CFO Services, Inc. and Miranda & Associates. As of June 30, 2015 and December 31, 2014, the balances of $67,207 and $219,271, respectively, were payable to Miranda & Associates for these services. During six month periods ended June 30, 2015 and 2014, we incurred $100,000 and $100,000, respectively, in officers salary due to the President of our wholly-owned subsidiary, STW Pipeline Maintenance & Construction, LLC, Mr. Jennings. During three month periods ended June 30, 2015 and 2014, we incurred $50,000 and $50,000, respectively, in officers salary due to Mr. Jennings. During the six month period ended June 30, 2014, we incurred with Mr. Jennings a signing bonus comprised of 50,000 shares of the Companys common stock valued at $21,000. As of June 30, 2015 and December 31, 2014, the balance of zero and $121,000, was payable to Mr. Jennings for the value of signing bonuses due under his employment agreement. These stock awards were accrued as fees payable in common stock the awards are vested. During six month periods ended June 30, 2015 and 2014, we incurred $100,000 and none, respectively, in officers salary due to the President of our wholly-owned subsidiary, STW Water Process and Technologies, LLC, Mr. Murphy. During three month periods ended June 30, 2015 and 2014, we incurred $50,000 and none, respectively, in officers salary due to Mr. Murphy. In the second quarter of 2014, we incurred with Mr. Murphy a signing bonus comprised of 333,333 shares of the Companys common stock valued at $200,000. As of June 30, 2015 and December 31, 2014, the balance of zero and $200,000, was payable to Mr. Murphy for the value of signing bonuses due under his employment agreement. These stock awards were accrued as fees payable in common stock the awards are vested. 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. Pursuant to 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. For the six months ended June 30, 2015 and 2014, the Company incurred director fees of $225,000 and $337,500, respectively. During the six months ended June 30, 2015 and 2014, the Company issued 908,658 and 930,261 shares of its common stock in payment of director fees, valued at $675,000 and $558,167, respectively. For the three months ended June 30, 2015 and 2014, the Company incurred director fees of $112,500 and $168,750, respectively. During the three months ended June 30, 2015 and 2014, the Company issued 346,158 and 930,261 shares of its common stock in payment of these fees, valued at $225,000 and $558,167, respectively. As of June 30, 2015 and December 31, 2014, the Company has accrued compensation due to its directors (both current and former) of zero and $496,067, respectively. Related Party Notes Payable For a more complete discussion of the notes to Black Pearl Energy, LLC and Dufrane Nuclear see Note 4 Notes Payable. Related Party Sales During the six months ended June 30, 2015 and 2014, the Company had related party sales of $354 and $35,138, respectively. During three months ended June 30, 2015 and 2014, the Company had related party sales of zero and $17,104, respectively. Related party sales are a combination of sales to three companies, Black Pearl Energy, LLC, Dufrane Construction, and Dufrane Nuclear Shielding Inc. 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 Companys 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 June 30, 2015 and December 31, 2014, the Company had a related party payable of $1,592,252 and $2,034,810, respectively to Crown Financial. |
7. Stockholders' Deficit
7. Stockholders' Deficit | 6 Months Ended |
Jun. 30, 2015 | |
Notes to Financial Statements | |
Stockholders' Deficit | NOTE 7 STOCKHOLDERS DEFICIT Preferred Stock The Company is authorized to issue up to 10,000,000 shares of preferred stock with a par value of $0.001 per share. As of June 30, 2015, no preferred shares were issued or outstanding and the Company does not currently have any plans to issue any preferred shares Common Stock The Company is authorized to issue up to 191,666,667 shares of common stock with a par value of $0.001 per share. During the six months ended June 30, 2015, the Company issued common shares as follows: On January 15, 2015, the Company issued 62,500 shares of common stock to an investor, at a per share price of $1.56, in payment of interest on a short term loan for a value of $97,500 and an additional 170,000 shares of common stock, at a per share 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 per share prices, valued at $209,825 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 per share prices, to 7 investors valued at $225,128 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 per share prices, valued at $344,100 to 4 employees pursuant to their employment contracts. On February 3, 2015, the Company issued 15,385 shares of common stock, at a per share price of $0.65, to an accredited investor based on a unit offering at $0.65 per unit, increasing capital of the Company by $10,000. On February 3, 2015, the Company issued 100,000 shares of common stock, at a per share price of $0.68, to an accredited investor for $68,000 in loan origination fees. On February 6, 2015, the Company issued 150,001 shares of fully vested common stock, at various per share prices, to 3 consultants valued at $119,500 in payment of services rendered in 2014, previously accrued, and the renewal of a 2015 contract. On February 6, 2015, the Company issued 225,000 shares of common stock, at various per share prices, to 3 accredited investors for $187,000 in loan origination fees. On February 17, 2015, the Company issued 100,000 shares of common stock, at a per share price of $0.81, to an accredited investor for $81,000 in loan origination fees. On February 18, 2015, the Company issued 184,975 shares of common stock to an investment group, at a per share price of $0.65, valued at $120,233 for services rendered in procuring investors for the company. On February 19, 2015, the Company issued 100,000 shares of common stock, at a per share price of $0.85, to an accredited investor for $85,000 in loan origination fees. On February 23, 2015, the Company issued 562,500 shares of common stock to 6 directors, at a per share 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 per share 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 Directors Minutes, a total of 900,000 shares were issued by the Company to 1 employee and 2 consultants for services performed in 2014. They were issued at a per share price of $0.80 per common share at a total value of $720,000. On May 14, 2015, the Company issued 341,667 shares of common stock to two consultants valued at $230,501. On May 15, 2015, the Company issued 26,000 shares of common stock to two consultants valued at $18,610. On May 18, 2015, the Company issued 206,667 shares of common stock to two consultants valued at $155,000. On June 12, 2015,the Company issued 500,000 shares of its common stock and warrants to purchase up to 500,000 shares of the Companys common stock at $0.59 per share to an accreditor investor who provided the Company with a $385,000 original issue discount bridge note, which yielded net proceeds of $350,000 to the Company. The shares were valued at $280,000. On June 26, 2015 the Company issued 800, 000 shares of common stock to six employees for accrued signing bonuses valued at $677,000. The Company also issued 183,334 shares of common stock to two consultants valued at $137,501. On June 30, 2015 the Company issued 333, 333 shares of common stock to one employee for an accrued signing bonus valued at $200,000. The Company issued 578,927 shares of common stock valued at $339,039 to satisfy an obligation to Salttech, its contracts with Black Pearl Energy, and a financial obligation to an investor. The Company also issued 346,158 shares of common stock to members of the Board of Directors valued at $225,000. Additionally, the Company issued 239,812 shares of common stock to two consultants valued at $167,500. As of June 30, 2015, the Company had the following securities outstanding which gives the holder the right to acquire the Companys common stock outstanding: Number of Underlying Common Exercise Security Shares Price Expire Warrants associated with the 12% Convertible Notes 25,000 0.12 2015 Warrants issued to Crown Financial, LLC 666,667 1.20 2016 Warrants issued on $20,000 short term loan 33,333 1.20 2015 Warrants associated with 2013 Revenue Participation Notes 84,205 1.80 2015 Warrants issued with 2013 Unit Share Offerings 333,333 1.20 2015 Warrants issued with 2014 Unit Share Offerings 2,328,542 1.20 1.50 2016 Warrants issued with 2013 and 2014 Unit Share Offerings 20,770 1.50 2017 Warrants issued with 2015 Q2 Financing 500,000 0.59 2017 Sub-total of Warrants outstanding 3,991,850 Common stock associated with the 12% Convertible Notes plus accrued interest 1,454,053 0.12 N/A Common stock associated with Pipeline Convertible Revenue Participation notes 166,910 0.72 N/A Common stock associated with 14% convertible notes plus accrued interest 6,231,244 0.48 N/A Common stock associated with 2015 Transfer Agreements 1,734,615 0. 65 N/A Common stock associated with 2014 Unit Share Offerings 117,000 various N/A Common stock payable as fees 341,306 various N/A Total 14,036,978 Warrants A summary of the Companys warrant activity and related information during the six months ended June 30, 2015 follows: Number of Shares Weighted- Average Exercise Price Remaining Contractual Life (Years) Aggregate Intrinsic Value Outstanding at January 1, 2015 3,634,350 $ 1.27 1.18 $ 851,313 Issued 500,000 0.59 2.00 Exercised -- Forfeited -- Cancelled -- Expired (142,500 ) 0.75 Outstanding at June 30, 2015 3,991,850 $ 1.20 0.86 $ 792,563 Exercisable 3,991,850 $ 1.20 0.86 $ 792,563 |
8. Discontinued Operations
8. Discontinued Operations | 6 Months Ended |
Jun. 30, 2015 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued operations | NOTE 8 DISCONTINUED OPERATIONS During the three months ended June 30, 2015, the Company discontinued the operations of STW Energy, LLC and STW Oilfield Construction, LLC. These business units have ceased operations and the Company is in process of disposing of assets and settling liabilities. Because of continued losses, the Company made the decision to close STW Energy, LLC and STW Oilfield Construction, LLC. In the three month period ending June 30, 2015, the company sold or transferred all remaining fixed assets to STW Pipeline Maintenance & Construction, LLC and incurred a loss on the sale of assets of $114,000. No further significant losses are expected. A summary of assets and liabilities of discontinued operations is as follows: June 30, 2015 December 31, 2014 (Unaudited) Carrying amounts of major classes of assets included as part of discontinued operations: Cash $ -- $ 3,550 Accounts receivable, trade, net 112,979 216,262 Accounts receivable from related parties 511,809 Prepaid expenses and other current assets 36 111,604 Total Current Assets 113,015 843,225 Long Term Assets Property and equipment, net -- 234,917 Total major classes of assets of the discontinued operations. $ 113,015 $ 1,078,142 Carrying amounts of major classes of liabilities included as part of discontinued operations: Book overdraft $ 56,466 $ 17,445 Accounts Payable 683,193 1,055,575 Payable to related parties: Black Pearl Energy, LLC 6,709 94,717 Crown Financial, LLC 685 685 Current portion of notes payable, net of discounts 600,276 752,441 Sales and payroll taxes payable 514,237 474,075 Accrued expenses and interest 24,072 41,383 Accrued compensation 13,163 147,843 Total major classes of liabilities of the discontinued operations. $ 1,898,801 $ 2,584,164 Loss from Discontinued Operations is as follows: Six Month Periods Ended June 30: 2015 2014 Major classes of line items constituting pre-tax loss from operation of discontinued operations: $ 504,699 $ 4,011,025 Revenues Cost of revenues (719,103 ) (3,349,019 ) Operating expenses (321,815 ) (941,884 ) Interest expense (82,361 ) (83,889 ) Loss on the sale of fixed assets (114,809 ) -- Total loss from operation of discontinued operations $ (733,389 ) $ (363,767 ) Three Month Periods Ended June 30: 2015 2014 Major classes of line items constituting pre-tax loss from operation of discontinued operations: Revenues $ 23,705 $ 2,540,605 Cost of revenues (126,117 ) (1,929,945 ) Operating expenses (71,639 ) (549,994 ) Interest expense (40,357 ) (45,715 ) Loss on the sale of fixed assets (114,809 ) -- Total loss from operation of discontinued operations $ (329,217 ) $ 14,951 |
9. Commitments and Contingencie
9. Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2015 | |
Notes to Financial Statements | |
Commitments and Contingencies | NOTE 9 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 2014, 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 June 30, 2015 and December 31, 2014, the principal balances on these capital leases totaled $25,388 and $30,438, respectively. Future minimum lease payments under the capital lease and operating lease as of June 30, 2015, are as follows: Years ending December 31: Capital Lease Operating Lease Totals 2015 $ 6,588 $ 58,500 $ 65,088 2016 13,176 117,000 130,176 2017 8,960 117,000 125,960 2018 -- 117,000 117,000 Thereafter -- 204,750 204,750 Total minimum lease payments 28,724 614,250 642,974 Less interest 3,336 Capital lease obligation 25,388 Less current portion 5,332 Long-term capital lease obligation $ 20,056 During the six months ended June 30, 2015 and 2014, rental expense for all property, including equipment rentals cost of sales, and equipment operating leases was $736,527 and $1,076,926, respectively, which includes over $645,071 and $1,015,516, respectively, of equipment rental used on projects and reflected in cost of revenues. Related party rental expense during the six months ended June 30, 2015 and 2014, was $604 and zero, respectively. During the three months ended June 30, 2015 and 2014, rental expense for all property, including equipment rentals cost of sales, and equipment operating leases was $408,637 and $688,751, respectively, which includes over $361,923 and $670,458, respectively, of equipment rental used on projects and reflected in cost of revenues. Related party rental expense during the three months ended June 30, 2015 and 2014, was zero for both. Product Purchase and Manufacturing License Agreement On June 20, 2014, the Company entered into an exclusive product purchase and manufacturing license agreement with Saltech B.V (Saltech), a company based in the Netherlands. The agreement provides exclusive rights to purchase Saltechs DyVaR devices which are used to remove salinity from brackish/brine water streams. The agreement grants 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 was $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. These stock awards were accrued as fees payable in common stock as the awards are vested and was settled upon the issuance of the shares in June 2015. During the three and six months ended June 30, 2015, the company paid $100,000 and $100,000, respectively in royalties to Salttech. As of June 30, 2015, the minimum royalty obligation payable under this agreement is as follows: Years ending December 31: Minimum Royalty Obligation 2015 $ 140,000 2016 240,000 2017 240,000 2018 240,000 Thereafter 120,000 Total minimum lease payments $ 980,000 Indemnities and Guarantees In addition to the indemnification provisions contained in the Companys charter documents, the Company will generally enter into separate indemnification agreements with the Companys 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 individuals status or service as the Companys 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 STW Pipeline Maintenance & Construction, LLC, has an employment agreement with Adam Jennings that expired on September 22, 2014, but is renewable by mutual consent of the Company and Mr. Jennings. The employment agreement for Mr. Jennings has been renewed. Stanley T. Weiner is employed as Chairman and CEO for a three year term effective February 1, 2015. His base salary is $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 could be rewarded an annual discretionary bonus up to 100% of his previous six month salary, and a signing bonus of 400,000 fully vested shares of the Companys common stock. He will also be awarded quarterly bonuses equal to 50,000 shares of the Companys common stock. He would also receive a twelve month severance award in the event of termination. Paul DiFrancesco is employed as Head of Finance for a three year term effective February 1, 2015. His base salary is $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 could be rewarded an annual discretionary bonus up to 100% of his previous six month salary, and a signing bonus of 300,000 fully vested shares of the Companys common stock. He will also be awarded quarterly bonuses equal to 50,000 shares of the Companys common stock. He would also receive a twelve month severance award in the event of termination. Grant Seabolt is employed as General Counsel and Corporate Secretary for a three year term effective February 1, 2015. His base salary is $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 could be awarded an annual discretionary bonus up to 100% of his previous six month salary, and a signing bonus of 200,000 fully vested shares of the Companys common stock. He will be awarded quarterly bonuses equal to 25,000 shares of the Companys common stock. He would also receive a twelve month severance award in the event of termination. Contingencies The Company is subject to various claims and contingencies in the normal course of business that arise from litigation, business transactions, or employee-related matters. The Company establishes reserves when it believes a loss is probable and is able to estimate its potential exposure. For reasonably possible loss contingencies, the Company discloses the nature of the loss contingency and an estimate of the possible loss, range of loss, or a statement that such an estimate cannot be made. While actual losses may differ from the amounts recorded and the ultimate outcome of our pending actions is generally not yet determinable, the Company does not believe the ultimate resolution of currently pending legal proceedings, either individually or in the aggregate, will have a material adverse effect on its business, financial position, results of operations, or cash flows. In all cases, the Company vigorously defends itself unless a reasonable settlement appears appropriate. All items, whereby the Company agrees with the amount of the claim, have been recorded in the current period and are reflected in accounts payable. GE Ionics, Inc. Lawsuit Sichenzia and Ross Lawsuit Bob J. Johnson & Associates Lawsuit Bob J. Johnson & Associates, Inc. v. Alan Murphy and STW Water & Process Technologies, LLC th Arbitration Judgment Viewpoint Securities, LLC Arbitration United Drilling, Inc. Lawsuit Dufrane Nuclear Shielding, Inc. Counterclaims th District Court of Midland County, Texas, styled STW Resources Holding Corp., et al. v. Felipe Sanchez, et al. Seaboard International, Inc. Lawsuit th Judicial District in Pecos County, Texas, styled Seaboard International, Inc. v. Case Drilling & Pump, LLC, et al., Cause No. P-11813-112-CV (the Seaboard Lawsuit). Seaboard provided water well drilling services as a subcontractor to Case Drilling in the amount alleged to be $80,685.01related to Case Drilling providing drilling services to STW Water Process & Technologies, LLC (a wholly owned subsidiary of STW) for Capitan Reef Test Well No. 1, located in Pecos County, Texas (the Test Well). Case Drilling did not pay Seaboard; therefore, Seaboard filed the Seaboard Lawsuit to attempt to foreclose on an alleged statutory lien on STWs water lease with the City of Fort Stockton, Texas, on which the Test Well was located. Seaboard seeks any monies owed by STW to Case Drilling for the Test Well to be paid to United Drilling. STW has asserted that it had a turn-key contract with Case Drilling, which required Case Drilling to deliver a producing water well, which it did not. Accordingly, STW alleges that since it owed nothing to Case Drilling, correspondingly, it owes nothing to Seaboard. In addition to STW filing its Answer and Affirmative Defenses to United Drillings claims, it has also filed a counterclaim against Seaboard for wrongfully placing alien on STWs Fort Stockton water lease, and STW has cross-claimed Case Drilling for breach of contract and indemnity related to Case Drillings alleged failure to pay its subcontractor, Seaboard. The Company will vigorously defend this lawsuit and does not expect significant liability from this matter. Based on the Company counsel's legal opinions regarding the invalidity of United Drillings lien, the Company does not expect to incur any substantial liability from this matter. |
10. Segment Information
10. Segment Information | 6 Months Ended |
Jun. 30, 2015 | |
Segment Information | |
Segment Information | NOTE 10 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. STWs 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 supplies, analysis, design, evaluation, implementation and operations. Oil and Gas Services Our subsidiary, STW Pipeline Maintenance & Construction, LLC, offers a wide a range of oilfield, 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 expenses 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 Six months ended June 30, 2015 Water Reclamation Oil & Gas Services Corporate Operations Consolidated Totals Revenues $ 267,770 $ 4,518,097 $ -- $ 4,785,867 Costs of revenues 271,963 2,733,022 -- 3,004,985 Operating expenses 931,725 1,039,647 2,665,651 4,637,023 Other income (expense) -- -- (968,532 ) (968,532 ) Segment income (loss) $ (935,918 ) $ 745,428 $ (3,634,183 ) $ (3,824,673 ) Three months ended June 30, 2015 Water Reclamation Oil & Gas Services Corporate Operations Consolidated Totals Revenues $ 118,859 $ 2,468,601 $ -- $ 2,587,460 Costs of revenues 126,437 1,591,269 -- 1,717,706 Operating expenses 397,208 493,754 1,223,284 2,114,246 Other income (expense) -- -- (64,728 ) (64,728 ) Segment income (loss) $ (404,786 ) $ 383,578 $ (1,288,012 ) $ (1,309,220 ) Six months ended June 30, 2014 Water Reclamation Oil & Gas Services Corporate Operations Consolidated Totals Revenues $ 10,051 $ 5,193,051 $ -- $ 5,203,102 Costs of revenues -- 5,108,280 -- 5,108,280 Operating expenses 219,584 1,006,691 3,698,149 4,924,424 Other income (expense) -- -- (1,305,152 ) (1,305,152 ) Segment income (loss) $ (209,533 ) $ (921,920 ) $ (5,003,301 ) $ (6,134,754 ) Three months ended June 30, 2014 Water Reclamation Oil & Gas Services Corporate Operations Consolidated Totals Revenues $ 10,051 $ 3,062,692 $ -- $ 3,072,743 Costs of revenues -- 3,346,112 -- 3,346,112 Operating expenses 88,036 662,802 2,115,525 2,866,363 Other income (expense) -- -- (918,997 ) (918,997 ) Segment income (loss) $ (77,985 ) $ (946,222 ) $ (3,034,522 ) $ (4,058,729 ) Segment Assets June 30, 2015 Water Reclamation Oil & Gas Services Corporate Operations Consolidated Totals Current Assets $ 3,529,556 $ 1,203,281 $ 443,024 $ 5,175,861 Fixed assets 484,217 450,042 63,369 997,628 Other assets -- -- -- -- Segment Assets $ 4,013,773 $ 1,653,323 $ 506,393 $ 6,173,489 December 31, 2014 Water Reclamation Oil & Gas Services Corporate Operations Consolidated Totals Current Assets $ 1,369,434 $ 2,831,798 $ 1,325,807 $ 5,527,039 Fixed assets 837,602 289,302 76,178 1,203,082 Other assets -- -- -- -- Segment Assets $ 2,207,036 $ 3,121,100 $ 1,401,985 $ 6,730,121 |
11. Subsequent Events
11. Subsequent Events | 6 Months Ended |
Jun. 30, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 11 SUBSEQUENT EVENTS Shares Issued On July 9, 2015, the Company issued 355,500 shares of common stock to forty-three employees for performance bonuses, valued at $71,100. On July 22, 2015, the Company issued 200,000 shares of common stock to a qualified investor pursuant to the terms of the loan payoff, valued at $40,000. On July 28, 2015, the Company issued 50,000 shares of common stock to a consultant for services rendered, valued at $32,500. Other Events In August 2015, STW Water Process & Technologies, LLC (STW Water) entered into a lease agreement with MRK Development, LLC (MRK) for the rights to collect, process, and sell the water located on and below the surface of properties owned by MRK. The lease calls for the initial payment of $10,000 in cash and the issuance of 100,000 shares of common stock of STW Resources Holding Corp. The lease is for a period of 30 years with automatic renewals on a year by year basis unless terminated by either party with a 60 day notice. There are additional bonus payments of cash and stock when certain levels of Gallon per Day (GPD) are met. Additionally, there is a Royalty based on a received price of the water sold on a per 1,000 gallons basis. The percentage of the royalty escalates from 10% to 15% dependent on the GPD. On August 20, 2015, Alan Murphy was appointed to the Companys Board of Directors. Pursuant to the agreement with Mr. Murphy, the Company agreed to pay him the following compensation: (a) 33,334 shares of the Companys common stock upon the execution of the agreement; (b) a fee at the rate of $75,000 per year ($27,329 for the partial year 2015), which shall be paid solely at the Companys discretion in cash or in shares of the Companys stock; (c) a cash payment of $1,000.00 for each day of attendance at meetings of the Companys Board of Directors or any other meeting called by the Company and attended by Mr. Murphy; and (d) reimbursement of all reasonable costs of travel, lodging, and entertainment reasonably necessary for Mr. Murphy to carry out his duties, so long as any such expense in excess of $100 is approved in advance by the Company. In the month of August 2015 the Company agreed to act as the intermediary agent to an agreement in which two of the current officers of the Company are selling their share of a related party company Black Pearl Energy, LLC, (BPE), to the third owner and withdrawing from BPE. In addition to the Company acting as an intermediary, it entered into an agreement reconciling payments between the Company and the related party company, for which the Companys Management does not anticipate it having any financial risk or benefit. On August 17, 2015, management entered into a short term financing with a lender for $375,000. The note contained a $75,000 (or 20%) original issue discount and a legal fee for $5,000. The note will bear interest at 8%. The lender will be granted 250,000 shares of common stock. The Company received $295,000 from the investor. On August 21, 2015, the Board of Directors approved an agreement with MDM Worldwide Solutions, Inc. (MDM) to handle investor relations for the Company commencing July 15, 2015 and running for six months. Upon acceptance of the agreement the Company will issue 100,000 shares of common stock to MDM. Fees for the service include a monthly retainer of $20,000. On September 14, 2015, the Board of Directors authorized management to inter into short term financing with three separate lenders for a total of $598,000, $198,000 from each lender. The notes will bear interest at 5% and contains a 10% original issue discount. The notes will be convertible at $0.65 per common share, or 60% of the lowest daily closing bid price for the 10 day period preceding the conversion. In addition each lender will be granted 225,000 shares of common stock. The Company will reserve 2,566,000 shares of common stock with the transfer agent to facilitate the conversion. To-date we have received $100,000 each from two of the investors. Since June 30, 2015, there has been two new litigations instituted against the Company. Dufrane Nuclear Shielding, Inc. Counterclaims th District Court of Midland County, Texas, styled STW Resources Holding Corp., et al. v. Felipe Sanchez, et al. Seaboard International, Inc. Lawsuit th Judicial District in Pecos County, Texas, styled Seaboard International, Inc. v. Case Drilling & Pump, LLC, et al., Cause No. P-11813-112-CV (the Seaboard Lawsuit). Seaboard provided water well drilling services as a subcontractor to Case Drilling in the amount alleged to be $80,685.01related to Case Drilling providing drilling services to STW Water Process & Technologies, LLC (a wholly owned subsidiary of STW) for Capitan Reef Test Well No. 1, located in Pecos County, Texas (the Test Well). Case Drilling did not pay Seaboard; therefore, Seaboard filed the Seaboard Lawsuit to attempt to foreclose on an alleged statutory lien on STWs water lease with the City of Fort Stockton, Texas, on which the Test Well was located. Seaboard seeks any monies owed by STW to Case Drilling for the Test Well to be paid to United Drilling. STW has asserted that it had a turn-key contract with Case Drilling, which required Case Drilling to deliver a producing water well, which it did not. Accordingly, STW alleges that since it owed nothing to Case Drilling, correspondingly, it owes nothing to Seaboard. In addition to STW filing its Answer and Affirmative Defenses to United Drillings claims, it has also filed a counterclaim against Seaboard for wrongfully placing a lien on STWs Fort Stockton water lease, and STW has cross-claimed Case Drilling for breach of contract and indemnity related to Case Drillings alleged failure to pay its subcontractor, Seaboard. The Company will vigorously defend this lawsuit and does not expect significant liability from this matter. Based on the Company counsels legal opinions regarding the invalidity of United Drillings lien, the Company does not expect to incur any substantial liability from this matter. Default on Note Payable On July 24, 2015, the Company defaulted on a note payable in the principal amount of $423,500. The Company had 15 days to cure the default but failed to cure the default within this time frame. The note payable provided for a reserve of 4,000,000 shares of the Companys common stock as security on the note. Upon the Companys failure to cure the default the 4,000,000 shares of the Companys restricted common stock was to be released to the note holder. |
1. Nature of the Business and19
1. Nature of the Business and Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of presentation | Basis of presentation The accompanying condensed consolidated financial statements of STW Resources Holding Corp and its subsidiaries (STW, we, us, our and our Company) have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the rules and regulations of the Securities and Exchange Commission. Accordingly, the unaudited condensed financial statements do not include all information and footnotes required by accounting principles generally accepted in the United States of America for complete annual financial statements. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments, consisting of only normal recurring adjustments, considered necessary for a fair presentation. Interim operating results are not necessarily indicative of results that may be expected for the year ending December 31, 2015, or for any other interim period. These unaudited condensed consolidated financial statements should be read in conjunction with the Companys audited financial statements as of and for the year ended December 31, 2014, which are included in the Companys Annual Report on Form 10-K for such year as filed on April 3, 2015. During the six months ended June 30, 2015, the Company decided to shut down the operations of its Energy and Oilfield businesses. Accordingly, some information included in our form 10-K may not be comparable to the information included in this form 10-Q. The December 31, 2014 condensed consolidated balance sheet was derived from the audited consolidated balance sheet included in the Companys Annual Report on Form 10-K for such year as filed on April 3, 2015, see Reclassifications below. |
History of the Company | History of the Company STW Resources Holding Corp, 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 Companys 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. |
Consolidation Policy | Consolidation policy The unaudited condensed consolidated financial statements for the three and six months ended June 30, 2015, include the accounts of the STW Resources Holding Corp and its wholly owned subsidiaries: STW Water Process & Technologies LLC and STW Pipeline Maintenance & Construction, LLC. The condensed consolidated financial statements for the three and six months ended June 30, 2014, include STW Resources Holding Corp and STW Pipeline Maintenance & Construction, LLC as STW Water Process & Technologies, LLC was not established prior to the quarterly period ended June 30, 2014. All significant intercompany transactions and balances have been eliminated in consolidation. STW Oilfield Construction LLC and the Companys 75% owned subsidiary STW Energy, LLC have been reported as discontinued operations. The Company also consolidates any variable interest entities (VIEs), of which it is the primary beneficiary, as defined. The Company does not have any VIEs that need to be consolidated at this time. When the Company does not have a controlling interest in an entity, but exerts a significant influence over the entity, the Company would apply the equity method of accounting. |
Reclassifications | Reclassifications Certain reclassifications were made to the prior period condensed consolidated financial statements to conform to the current period presentation. There was no change to the previously reported net loss. Additionally, the financial statements for June 30, 2014, December 31, 2014, and March 31, 2015 have been revised for the discontinued operations (See Note 8). |
Non-Controlling Interest | Non-Controlling interest On June 25, 2013, the Company invested in a limited liability company (LLC) by obtaining a 75% interest in STW Energy Services, LLC (STW Energy). The non-controlling interest in STW Energy is held by Crown Financial, LLC, a Texas Limited Liability Company (Crown or Crown Financial). As of December 31, 2014, $2,500 was recorded as the equity of the non-controlling interest in our consolidated balance sheet representing the third-party investment in STW Energy, with a cumulative net loss attributable to non-controlling interests of $187,474 for the year ended December 31, 2014. During the three and six month period ended June 30, 2015, a net loss attributable to the non-controlling interest of $80,347 and $161,380, respectively, was incurred. As of June 30, 2015, the net deficit interest in the subsidiary held by the non-controlling interest is $348,854. |
Going Concern | Going Concern The Companys condensed 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 $43,508,853 as of June 30, 2015, and as of that date was delinquent in payment of $2,013,354 of sales and payroll taxes. As of June 30, 2015, $5,546,655 of notes payable were in default. Since its inception in January 2008 through December 31, 2014, management had raised equity and debt financing of approximately $21,000,000 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 Companys 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 any at all. The accompanying condensed 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 | Use of Estimates Condensed 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 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. |
Accounts Receivable | Accounts Receivable Trade accounts receivable, net of allowance for doubtful accounts consists primarily of receivables from oil & gas services fees. Management determines the allowance for doubtful accounts based on historical losses and current economic conditions. On a continuing basis, management analyzes delinquent receivables, and once these receivables are determined to be uncollectible, they are written off either against an existing allowance account or as a direct charge to the condensed consolidated statement of operations. As of June 30, 2015 and December 31, 2014, the allowances for doubtful accounts were zero and $6,773, respectively. |
Loan Discounts | Loan Discounts The Company amortizes loan discounts over the term of the loan using the effective interest method. |
Concentration of Credit Risk | 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 per institution. At June 30, 2015, there were no account balances per institution that would have exceeded the $250,000 insurance limit. 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 June 30, 2015, three vendors accounted for 18%, 12% and 11% of total accounts payable. During the three months ended June 30, 2015, three vendors accounted for 58%, 15%, and 8% of total purchases. During the six months ended June 30, 2015, three vendors accounted for 63%, 18%, and 8% of total purchases. 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 June 30, 2015, three customers accounted for 34%, 33% and 13% of accounts receivable. During the three months ended June 30, 2015, three customers accounted for 75%, 12% and 7% of net revenues. During the six months ended June 30, 2015, three customers accounted for 74%, 8% and 8% of net revenues. 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. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Fair value is defined 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 Companys financial instruments consist of cash, accounts receivable, 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 5). 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 managements use of assumptions to external and internal information. This hierarchy requires the use of observable market data when available. These two types of inputs have created the following fair-value hierarchy: Level 1 Valuations based on unadjusted quoted market prices in active markets for identical securities. Currently, we do not have any items classified as Level 1. Level 2 Valuations based on observable inputs (other than Level 1 prices), such as quoted prices for similar assets at the measurement date; quoted prices in markets that are not active; or other inputs that are observable, either directly or indirectly. Currently, we do not have any items classified as Level 2. Level 3 Valuations based on inputs that are unobservable and significant to the overall fair value measurement, and involve management judgment. We use the Black-Scholes-Merton option pricing model (Black-Scholes) to determine the fair value of the financial instruments. If the inputs used to measure fair value fall in different levels of the fair value hierarchy, a financial securitys hierarchy level is based upon the lowest level of input that is significant to the fair value measurement. Our derivative liabilities consist of embedded conversion features on debt, price protection features on warrants, and are classified as Level 3 liabilities. We use Black-Scholes to determine the fair value of these instruments (see Note 5). Management has used the simplified Black Scholes 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 on the Companys condensed consolidated balance sheets on a recurring basis and their level within the fair value hierarchy as of June 30, 2015 and December 31, 2014. Level 1 Level 2 Level 3 Total Fair value of Derivative Liability at June 30, 2015 $ -- $ -- $ 283,161 $ 283,161 Fair value of Derivative Liability at December 31, 2014 $ -- $ -- $ 802,340 $ 802,340 |
Accounting for Derivatives Liabilities | Accounting for Derivatives Liabilities The Company evaluates stock warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for. Financial instruments classified as a derivative instrument is marked-to-market at each balance sheet date and recorded as an asset or a liability with the change in fair value adjusted through the statement of operations in other income (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 to a liability are recorded at the fair value of the instrument on the reclassification date. Certain of the Companys embedded conversion features on debt, with anti-dilution provisions, and price protection features on outstanding common stock 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, all future changes in the fair value of these warrants are recognized currently in earnings until such time as the warrants are exercised, expire or the related rights have been 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 the Black-Scholes model (see Note 5). |
Equity Instruments Issued to Non-Employees for Acquiring Goods or Services | Equity Instruments Issued to Non-Employees for Acquiring Goods or Services Issuances of the Companys 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 | Long-lived Assets and Intangible Assets 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 during the six months ending June 30, 2015 or 2014. There can be no assurance, however, that market conditions will not change or demand for the Companys products and services under development will continue. Either of these could result in future impairment of long-lived assets. |
Revenue Recognition | Revenue Recognition During the year ended December 31, 2014, the Company entered into Master Services Agreements (MSA) with several major oil & gas companies. These MSAs authorize 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 recognized revenues from these contracts as the services are performed under the customer purchase orders and no further performance obligations exist, generally in the form of a customer approval. During the three and six months ended June 30, 2015, the Company recognized $2,468,601and $4,518,097, respectively of revenues from these services contracts, which included zero and $354, respectively of revenues from related parties. During the three and six months ending June 30, 2014, the Company realized revenue of $3,062,692 and $5,193,052, respectively from services contracts, which included $17,104 and $35,138, respectively of the service revenue was from related parties. |
Business Segments | 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 10. |
Income Taxes | Income Taxes 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 basis. 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. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company maintains a valuation allowance with respect to deferred tax assets. The Company established a valuation allowance based upon the potential likelihood of realizing the deferred tax asset in the future. 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 reduction in the valuation allowance will be included in income in the year of the change in estimate. The Companys 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 condensed consolidated balance sheets at June 30, 2015 and December 31, 2014, respectively. |
Common Stock and Common Stock Warrants Issued to Employees | 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 recognize 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 option pricing model to calculate the fair value of any equity instruments on the grant date. At June 30, 2015 and December 31, 2014, the Company had no grants of employee common stock options or warrants outstanding. |
Loss per Share | Loss per Share The basic net loss per share is calculated by dividing the Companys net loss available to common shareholders by the weighted average number of common shares during the period. The diluted net loss per share is calculated by dividing the Companys net income (loss) available to common shareholders by the diluted weighted average number of shares outstanding during the period. The diluted weighted average number of shares outstanding is the basic weighted average number of shares adjusted for any potentially dilutive shares arising from debt or equity instruments. Diluted net loss per share is the same as basic net loss per share due to the lack of dilutive items. As of June 30, 2015 and December 31, 2014, the Company had 14,036,978 and 14,442,977 shares issuable upon conversion or exercise, respectively, which have been excluded as their effect is anti-dilutive. |
Property and Equipment | 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 Tools, equipment, and vehicles 3-5 years Leasehold improvements remaining life of lease |
Stock Subscriptions Payable | Stock Subscriptions Payable The initial balance of stock subscriptions payable as of December 31, 2014, was $27,000 representing 41,539 shares to be issued. During the three and six months ended June 30, 2015, zero and $10,000, respectively of these stock subscriptions payable were issued representing zero and 15,385, respectively shares of common stock. The remaining balance of stock subscriptions payable as of June 30, 2015, is $117,000 representing 126,154 shares to be issued. |
Fees Payable in Common Stock | Fees Payable in Common Stock During the three and six months ended June 30, 2015, the Company agreed to issue a net of 1,663,334 and 2,676,596 shares, respectively, valued at $991,801 and $1,826,450 in payment of performance bonuses, employment signing bonuses, consulting fees, and interest. During the three and six months ended June 30, 2015, the Company issued an aggregate of 3,209,740 and 5,595,052 shares, respectively, of its common stock, valued at $2,196,150 and $4,335,434, respectively, in payment of performance bonuses, employment signing bonuses, consulting fees, and interest which left a remaining balance in fees payable in common stock of $191,724, or 391,306 shares. |
Recently Issued Accounting Standards | Recently Issued Accounting Standards Recent accounting pronouncements did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements. |
1. Nature of the Business and20
1. Nature of the Business and Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Fair Value of Derivative Liability | Level 1 Level 2 Level 3 Total Fair value of Derivative Liability at June 30, 2015 $ -- $ -- $ 283,161 $ 283,161 Fair value of Derivative Liability at December 31, 2014 $ -- $ -- $ 802,340 $ 802,340 |
Estimated useful life of property and equipment | June 30, 2015 December 31, 2014 Office furniture and equipment $ 29,467 $ 29,467 Tools and yard equipment 673,942 621,995 Vehicles and construction equipment 477,187 635,220 Facilities and leasehold improvements 15,933 15,933 Total, cost 1,196,529 1,302,615 Accumulated Depreciation and Amortization (198,901 ) (99,533 ) Property and equipment, net $ 997,628 $ 1,203,082 |
2. Property, Plant and Equipm21
2. Property, Plant and Equipment (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Property Plant And Equipment Tables | |
Property, Plant and Equipment | June 30, 2015 December 31, 2014 Office furniture and equipment $ 29,467 $ 29,467 Tools and yard equipment 673,942 621,995 Vehicles and construction equipment 477,187 635,220 Facilities and leasehold improvements 15,933 15,933 Total, cost 1,196,529 1,302,615 Accumulated Depreciation and Amortization (198,901 ) (99,533 ) Property and equipment, net $ 997,628 $ 1,203,082 |
4. Notes Payable (Tables)
4. Notes Payable (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Notes Payable Tables | |
Notes Payable | June 30, December 31, Name 2015 2014 14% convertible notes $ 2,296,342 $ 2,296,342 12% convertible notes 100,000 100,000 2015 transfer agreements 1,375,000 -- GE Ionics note 2,100,000 2,100,000 Deferred compensation notes 279,095 279,095 Revenue participation notes 2,371,500 2,337,500 Crown Financial note 620,459 702,698 Black Pearl note payable 777,096 -- Dufrane note payable 555,879 725,000 Other short-term debt 55,000 55,000 2015 Q2 short term financing 486,000 -- Discontinued operations L/T debt -- (752,441 ) Equipment finance contracts 48,168 110,000 Capital lease obligations 25,388 30,437 Total notes payable 11,089,927 7,983,631 Less: current portion (9,222,248 ) (5,890,414 ) Net long term portion notes payable $ 1,867,679 $ 2,093,217 Current portion notes payable $ 9,222,248 $ 5,890,414 Less items as follows: Unamortized loan discounts and loan fees 568,337 20,930 Discontinued operations 600,276 -- Total current portion of notes payable, net of discounts $ 8,053,635 $ 5,869,484 |
Revenue Participation Notes | June 30, December 31, Name 2015 2014 2012 Revenue Participation Notes $ 165,000 $ 165,000 2013 Revenue Participation Notes - STW Resources Salt Water Remediation 302,500 302,500 2013 Revenue Participation Notes - STW Energy 182,000 182,000 2013 Convertible Revenue Participation Notes - STW Pipeline 115,000 115,000 2014 Revenue Participation Notes, Upton Project STW Water 1,607,000 1,573,000 Total revenue participation notes $ 2,371,500 $ 2,337,500 |
5. Derivative Liability (Tables
5. Derivative Liability (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Notes to Financial Statements | |
Warrants and embedded conversion options which have no observable market data | For the six months ended June 30, 2015 For the year ended December 31, 2014 Annual dividend yield 0 % 0 % Expected life (years) 0.50 0.01 0.60 - 0.47 Risk-free interest rate 0.11% - 0.25 % 0.11% - 0.25 % Expected volatility 315 % 735 % June 30, 2015 December 31, 2014 Embedded conversion features $ 279,011 $ 751,439 Warrants 4,152 50,901 $ 283,161 $ 802,340 |
Warrants and embedded conversion options measured at fair value on a recurring basis | For the six months ended June 30, 2015 For the year ended December 31, 2014 Balance beginning $ 802,340 $ 1,630,985 Value of derivative liability associated with JMJ note payable -- 42,592 Value of derivative liability attributable to conversion feature of transfer agreements 1,108,030 -- 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 ) Change in fair value (1,627,209 ) 95,892 Balance ending $ 283,131 $ 802,340 |
7. Stockholders' Deficit (Table
7. Stockholders' Deficit (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Notes to Financial Statements | |
Securities to acquire common stock outstanding | Number of Underlying Common Exercise Security Shares Price Expire Warrants associated with the 12% Convertible Notes 25,000 0.12 2015 Warrants issued to Crown Financial, LLC 666,667 1.20 2016 Warrants issued on $20,000 short term loan 33,333 1.20 2015 Warrants associated with 2013 Revenue Participation Notes 84,205 1.80 2015 Warrants issued with 2013 Unit Share Offerings 333,333 1.20 2015 Warrants issued with 2014 Unit Share Offerings 2,328,542 1.20 1.50 2016 Warrants issued with 2013 and 2014 Unit Share Offerings 20,770 1.50 2017 Warrants issued with 2015 Q2 Financing 500,000 0.59 2017 Sub-total of Warrants outstanding 3,991,850 Common stock associated with the 12% Convertible Notes plus accrued interest 1,454,053 0.12 N/A Common stock associated with Pipeline Convertible Revenue Participation notes 166,910 0.72 N/A Common stock associated with 14% convertible notes plus accrued interest 6,231,244 0.48 N/A Common stock associated with 2015 Transfer Agreements 1,734,615 0. 65 N/A Common stock associated with 2014 Unit Share Offerings 117,000 various N/A Common stock payable as fees 341,306 various N/A Total 14,036,978 |
Warrant activity | Number of Shares Weighted- Average Exercise Price Remaining Contractual Life (Years) Aggregate Intrinsic Value Outstanding at January 1, 2015 3,634,350 $ 1.27 1.18 $ 851,313 Issued 500,000 0.59 2.00 Exercised -- Forfeited -- Cancelled -- Expired (142,500 ) 0.75 Outstanding at June 30, 2015 3,991,850 $ 1.20 0.86 $ 792,563 Exercisable 3,991,850 $ 1.20 0.86 $ 792,563 |
8. Discontinued Operations (Tab
8. Discontinued Operations (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Reconciliation of the carrying amounts of the major assets and liabilities | A summary of assets and liabilities of discontinued operations is as follows: June 30, 2015 December 31, 2014 (Unaudited) Carrying amounts of major classes of assets included as part of discontinued operations: Cash $ -- $ 3,550 Accounts receivable, trade, net 112,979 216,262 Accounts receivable from related parties 511,809 Prepaid expenses and other current assets 36 111,604 Total Current Assets 113,015 843,225 Long Term Assets Property and equipment, net -- 234,917 Total major classes of assets of the discontinued operations. $ 113,015 $ 1,078,142 Carrying amounts of major classes of liabilities included as part of discontinued operations: Book overdraft $ 56,466 $ 17,445 Accounts Payable 683,193 1,055,575 Payable to related parties: Black Pearl Energy, LLC 6,709 94,717 Crown Financial, LLC 685 685 Current portion of notes payable, net of discounts 600,276 752,441 Sales and payroll taxes payable 514,237 474,075 Accrued expenses and interest 24,072 41,383 Accrued compensation 13,163 147,843 Total major classes of liabilities of the discontinued operations. $ 1,898,801 $ 2,584,164 |
Reconciliation of the major classes of items constituting pre-tax loss | Loss from Discontinued Operations is as follows: Six Month Periods Ended June 30: 2015 2014 Major classes of line items constituting pre-tax loss from operation of discontinued operations: $ 504,699 $ 4,011,025 Revenues Cost of revenues (719,103 ) (3,349,019 ) Operating expenses (321,815 ) (941,884 ) Interest expense (82,361 ) (83,889 ) Loss on the sale of fixed assets (114,809 ) -- Total loss from operation of discontinued operations $ (733,389 ) $ (363,767 ) Three Month Periods Ended June 30: 2015 2014 Major classes of line items constituting pre-tax loss from operation of discontinued operations: Revenues $ 23,705 $ 2,540,605 Cost of revenues (126,117 ) (1,929,945 ) Operating expenses (71,639 ) (549,994 ) Interest expense (40,357 ) (45,715 ) Loss on the sale of fixed assets (114,809 ) -- Total loss from operation of discontinued operations $ (329,217 ) $ 14,951 |
9. Commitments and Contingenc26
9. Commitments and Contingencies (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Restatements Tables | |
Future minimum lease payments | Years ending December 31: Capital Lease Operating Lease Totals 2015 $ 6,588 $ 58,500 $ 65,088 2016 13,176 117,000 130,176 2017 8,960 117,000 125,960 2018 -- 117,000 117,000 Thereafter -- 204,750 204,750 Total minimum lease payments 28,724 614,250 642,974 Less interest 3,336 Capital lease obligation 25,388 Less current portion 5,332 Long-term capital lease obligation $ 20,056 |
Minimum royalty obligation payable | Years ending December 31: Minimum Royalty Obligation 2015 $ 140,000 2016 240,000 2017 240,000 2018 240,000 Thereafter 120,000 Total minimum lease payments $ 980,000 |
10. Segment Information (Tables
10. Segment Information (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Segment Information Tables | |
Segment Operations and Assets | Segment Operations Six months ended June 30, 2015 Water Reclamation Oil & Gas Services Corporate Operations Consolidated Totals Revenues $ 267,770 $ 4,518,097 $ -- $ 4,785,867 Costs of revenues 271,963 2,733,022 -- 3,004,985 Operating expenses 931,725 1,039,647 2,665,651 4,637,023 Other income (expense) -- -- (968,532 ) (968,532 ) Segment income (loss) $ (935,918 ) $ 745,428 $ (3,634,183 ) $ (3,824,673 ) Three months ended June 30, 2015 Water Reclamation Oil & Gas Services Corporate Operations Consolidated Totals Revenues $ 118,859 $ 2,468,601 $ -- $ 2,587,460 Costs of revenues 126,437 1,591,269 -- 1,717,706 Operating expenses 397,208 493,754 1,223,284 2,114,246 Other income (expense) -- -- (64,728 ) (64,728 ) Segment income (loss) $ (404,786 ) $ 383,578 $ (1,288,012 ) $ (1,309,220 ) Six months ended June 30, 2014 Water Reclamation Oil & Gas Services Corporate Operations Consolidated Totals Revenues $ 10,051 $ 5,193,051 $ -- $ 5,203,102 Costs of revenues -- 5,108,280 -- 5,108,280 Operating expenses 219,584 1,006,691 3,698,149 4,924,424 Other income (expense) -- -- (1,305,152 ) (1,305,152 ) Segment income (loss) $ (209,533 ) $ (921,920 ) $ (5,003,301 ) $ (6,134,754 ) Three months ended June 30, 2014 Water Reclamation Oil & Gas Services Corporate Operations Consolidated Totals Revenues $ 10,051 $ 3,062,692 $ -- $ 3,072,743 Costs of revenues -- 3,346,112 -- 3,346,112 Operating expenses 88,036 662,802 2,115,525 2,866,363 Other income (expense) -- -- (918,997 ) (918,997 ) Segment income (loss) $ (77,985 ) $ (946,222 ) $ (3,034,522 ) $ (4,058,729 ) Segment Assets June 30, 2015 Water Reclamation Oil & Gas Services Corporate Operations Consolidated Totals Current Assets $ 3,529,556 $ 1,203,281 $ 443,024 $ 5,175,861 Fixed assets 484,217 450,042 63,369 997,628 Other assets -- -- -- -- Segment Assets $ 4,013,773 $ 1,653,323 $ 506,393 $ 6,173,489 December 31, 2014 Water Reclamation Oil & Gas Services Corporate Operations Consolidated Totals Current Assets $ 1,369,434 $ 2,831,798 $ 1,325,807 $ 5,527,039 Fixed assets 837,602 289,302 76,178 1,203,082 Other assets -- -- -- -- Segment Assets $ 2,207,036 $ 3,121,100 $ 1,401,985 $ 6,730,121 |
1. Nature of Business and Signi
1. Nature of Business and Significant Accounting Policies (Details) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Fair Value of Derivative Liability | $ 283,161 | $ 802,340 |
Level 1 [Member] | ||
Fair Value of Derivative Liability | ||
Level 2 [Member] | ||
Fair Value of Derivative Liability | ||
FairValueInputsLevel3Member | ||
Fair Value of Derivative Liability | $ 283,161 | $ 802,340 |
1. Nature of Business and Sig29
1. Nature of Business and Significant Accounting Policies (Details 1) | 6 Months Ended |
Jun. 30, 2015 | |
Computer Equipment [Member] | |
Useful lives of Property, Plant and Equipment | 3 years |
Furniture [Member] | |
Useful lives of Property, Plant and Equipment | 3 years |
Machinery and Equipment [Member] | Minimum [Member] | |
Useful lives of Property, Plant and Equipment | 3 years |
Machinery and Equipment [Member] | Maximum [Member] | |
Useful lives of Property, Plant and Equipment | 5 years |
1. Nature of Business and Sig30
1. Nature of Business and Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | 83 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | Dec. 31, 2014 | Jun. 25, 2013 | |
Noncontrolling member interest | 250000.00% | 250000.00% | 75.00% | ||||
Common stock issued | 35,239,048 | 35,239,048 | 28,194,953 | 28,194,953 | |||
Preferred stock issued | |||||||
Net loss attributable to non-controlling interest | $ 80,347 | $ 161,380 | $ 187,474 | ||||
Net deficit interest in subsidiary held by non-controlling interest | (348,854) | (348,854) | |||||
Accumulated (Deficit) | (43,508,853) | (43,508,853) | $ (39,112,171) | $ (39,112,171) | |||
Accrued sales and payroll taxes | (2,013,354) | (2,013,354) | |||||
Notes payable in default | $ 5,546,655 | 5,546,655 | |||||
Raised net equity and debt financing | $ 21,000,000 | ||||||
Proceeds from issuance of notes | $ 2,119,000 | $ 80,000 | |||||
Common Stock equivalents outstanding | 14,036,978 | 14,036,978 | 14,442,977 | 14,442,977 | |||
Revenues from service contracts | $ 468,601 | $ 3,062,692 | $ 4,518,097 | 5,193,052 | |||
Revenues from related parties | 0 | $ 17,104 | 354 | $ 35,138 | |||
Stock subscriptions | $ 0 | $ 10,000 | $ 27,000 | ||||
Shares to be issued | 41,539 | 41,539 | |||||
Subscription payable issued - shares | 0 | 15,385 | |||||
Remaining balance of subscription payable | $ 117,000 | ||||||
Remaining balance of subscription payable - shares | 126,154 | ||||||
Shares issued in payment performance bonus | 1,663,334 | 2,676,596 | |||||
Fees payable in common stock, value | $ 191,724 | $ 191,724 | |||||
Fees payable in common stock, shares | 391,306 | 391,306 | |||||
Share based compensation, value | $ 991,801 | $ 1,826,450 | |||||
Shares issued for services rendered | 3,209,740 | 5,595,052 | |||||
Value of shares issued for services rendered | $ 2,196,150 | $ 4,335,434 | |||||
Property and equipment | 997,628 | 997,628 | $ 1,203,082 | $ 1,203,082 | |||
Allowance for doubtful accounts | $ 0 | $ 0 | $ 6,773 | $ 6,773 | |||
Accounts Payable [Member] | Customer One [Member] | |||||||
Concentration risk | 18.00% | ||||||
Accounts Payable [Member] | Customer Two [Member] | |||||||
Concentration risk | 12.00% | ||||||
Accounts Payable [Member] | Customer Three [Member] | |||||||
Concentration risk | 11.00% | ||||||
Accounts Payable [Member] | Three Vendors [Member] | |||||||
Concentration risk | 20.00% | ||||||
Purchases [Member] | Vendor 1 [Member] | |||||||
Concentration risk | 58.00% | 63.00% | |||||
Purchases [Member] | Vendor 2 [Member] | |||||||
Concentration risk | 15.00% | 18.00% | |||||
Purchases [Member] | Vendor 3 [Member] | |||||||
Concentration risk | 8.00% | 8.00% | |||||
Purchases [Member] | Two Vendors [Member] | |||||||
Concentration risk | 69.00% | ||||||
Accounts Receivable [Member] | Customer One [Member] | |||||||
Concentration risk | 34.00% | 43.00% | |||||
Accounts Receivable [Member] | Customer Two [Member] | |||||||
Concentration risk | 33.00% | 11.00% | |||||
Accounts Receivable [Member] | Customer Three [Member] | |||||||
Concentration risk | 13.00% | 3.00% | |||||
Net Revenue [Member] | Customer One [Member] | |||||||
Concentration risk | 75.00% | 74.00% | 39.00% | ||||
Net Revenue [Member] | Customer Two [Member] | |||||||
Concentration risk | 12.00% | 8.00% | 11.00% | ||||
Net Revenue [Member] | Customer Three [Member] | |||||||
Concentration risk | 7.00% | 8.00% | 7.00% |
2. Property, Plant and Equipm31
2. Property, Plant and Equipment (Details) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Property Plant And Equipment Details | ||
Office furniture and equipment | $ 29,467 | $ 29,467 |
Tools and yard equipment | 673,942 | 621,995 |
Vehicles and construction equipment | 477,187 | 635,220 |
Leasehold improvements | 15,933 | 15,933 |
Total, cost | 1,196,529 | 1,302,615 |
Accumulated Depreciation and Amortization | (198,901) | (99,533) |
Property and equipment, net | $ 997,628 | $ 1,203,082 |
2. Property, Plant and Equipm32
2. Property, Plant and Equipment (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended |
Jun. 30, 2015 | Jun. 30, 2015 | |
Notes to Financial Statements | ||
Depreciation and Ammortization Expense | $ 9,951 | $ 21,543 |
4. Notes Payable (Details)
4. Notes Payable (Details) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 | Jun. 30, 2014 |
Total Debt | $ 11,089,927 | $ 7,983,631 | |
Less: Current Portion | (9,222,248) | (5,890,414) | |
Net long term portion notes payable | 1,867,679 | 2,093,217 | |
Current portion notes payable | 9,222,248 | 5,890,414 | |
Less: Unamortized loan discounts and loan fees | 568,337 | $ 20,930 | |
Less: Discontinued operations | 600,276 | ||
Total current portion of notes payable, net of discounts | 8,053,635 | $ 5,869,484 | |
Equipment Contract [Member] | |||
Total Debt | 48,168 | ||
Equipment Contracts [Member] | |||
Total Debt | 110,000 | ||
CNotes 14% [Member] | |||
Total Debt | $ 2,296,342 | ||
CNotes 12% [Member] | |||
Total Debt | 100,000 | $ 100,000 | |
Transfer 2015 Agmts [Member] | |||
Total Debt | 1,375,000 | ||
GE Ionics [Member] | |||
Total Debt | 2,100,000 | $ 2,100,000 | |
Deferred Comp Notes [Member] | |||
Total Debt | 279,095 | 279,095 | |
Rev Part Notes [Member] | |||
Total Debt | 2,371,500 | $ 2,337,500 | |
Crown Financial Notes | |||
Total Debt | 620,459 | ||
Black Pearl Note [Member] | |||
Total Debt | 777,096 | ||
Dufrane Note [Member] | |||
Total Debt | 555,879 | $ 725,000 | |
Other Debt [Member] | |||
Total Debt | 55,000 | $ 55,000 | |
2015 Q2 Financing [Member] | |||
Total Debt | $ 486,000 | ||
Discontinued Operations [Member] | |||
Total Debt | $ (752,441) | ||
Capital Lease Obligations [Member] | |||
Total Debt | $ 25,388 | ||
Crown Financial [Member] | |||
Total Debt | 702,698 | ||
Capital Lease Obligation [Member] | |||
Total Debt | $ 30,437 |
4. Notes Payable (Details 1)
4. Notes Payable (Details 1) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Revenue Participation notes | $ 11,089,927 | $ 7,983,631 |
ParticipationNote 1 [Member] | ||
Revenue Participation notes | 165,000 | 165,000 |
ParticipationNote 2 [Member] | ||
Revenue Participation notes | 302,500 | 302,500 |
ParticipationNote 3 [Member] | ||
Revenue Participation notes | 182,000 | 182,000 |
ParticipationNote 4 [Member] | ||
Revenue Participation notes | 115,000 | 115,000 |
ParticipationNote 5 [Member] | ||
Revenue Participation notes | 1,607,000 | 1,573,000 |
Rev Part Notes [Member] | ||
Revenue Participation notes | $ 2,371,500 | $ 2,337,500 |
4. Notes Payable (Details Narra
4. Notes Payable (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | |
Warrants | 3,991,850 | 3,991,850 | 3,634,350 | ||
Proceeds from notes payable | $ 2,119,000 | $ 80,000 | |||
Increase in derivative liability | $ (1,353,429) | $ 456,809 | (1,627,209) | 443,536 | $ 95,892 |
Total Debt amount | 11,089,927 | 11,089,927 | 7,983,631 | ||
note payable to an accredited investor, amount | 623,798 | 95,496 | |||
Interest expense, notes payable | 2,595,741 | 8,616,616 | |||
Amortization of debt discount and debt issuance costs | 1,354,148 | 58,328 | |||
CNotes 14% [Member] | |||||
Note payable | $ 2,296,342 | $ 2,296,342 | 2,296,342 | ||
Common Stock issued during period | 1,545,650 | 1,628,335 | |||
Common Stock issued during period, value | $ 927,390 | $ 781,337 | |||
Principal converted | 741,912 | 973,869 | |||
Repayment of accrued interest | $ 185,478 | $ 192,532 | |||
Note interest rate | 14.00% | 14.00% | |||
Total Debt amount | $ 2,296,342 | $ 2,296,342 | |||
Total debt matured and in default | 2,264,800 | 2,264,800 | |||
Notes payable to related parties | $ 171,892 | $ 171,892 | 171,892 | ||
Short-term Financing [Member] | |||||
Proceeds from notes payable | 450,000 | ||||
Note discount | $ 73,500 | $ 73,500 | |||
Common Stock issued during period | 650,000 | ||||
Common Stock issued during period, value | $ 340,000 | ||||
Default shares | 4,000,000 | ||||
Default shares value | $ 1,600,000 | ||||
Total Debt amount | 0 | ||||
Short-term Financing 2[Member] | |||||
Warrants | 500,000 | 500,000 | |||
warrants exercise price | $ .59 | $ .59 | |||
Common Stock issued during period | 100,000 | ||||
Common Stock issued during period, value | $ 80,000 | ||||
CNotes 12% [Member] | |||||
Warrants | 273,583 | 273,583 | |||
warrants exercise price | $ .12 | $ .12 | |||
notes convertible into common stock share amount | 1,454,053 | 1,454,053 | |||
Common Stock issued during period | 1,137,417 | ||||
Common Stock issued during period, value | $ 614,205 | ||||
Principal converted | 225,000 | ||||
Repayment of accrued interest | 116,225 | ||||
Total note amount converted | 341,225 | ||||
Increase in derivative liability | $ 272,980 | ||||
Note interest rate | 12.00% | 12.00% | |||
Total Debt amount | $ 100,000 | $ 100,000 | 100,000 | ||
Other Debt [Member] | |||||
Common Stock issued during period | 171,667 | ||||
Total Debt amount | 55,000 | $ 55,000 | 55,000 | ||
Loan facility amount outstanding | 25,000 | 25,000 | |||
Notes payable to related parties | 30,000 | 30,000 | 30,000 | ||
note payable to an accredited investor, amount | 30,000 | ||||
unsecured loan agreement, amount | $ 145,000 | ||||
interest rate of debt | 8.00% | ||||
GE Ionics [Member] | |||||
Total Debt amount | 2,100,000 | $ 2,100,000 | 2,100,000 | ||
Default note rate | 10.00% | ||||
STW original debt with GE, amount | 11,239,437 | $ 11,239,437 | |||
Deferred Comp Notes [Member] | |||||
Total Debt amount | 279,095 | 279,095 | 279,095 | ||
Rev Part Notes [Member] | |||||
Total Debt amount | $ 2,371,500 | $ 2,371,500 | 2,337,500 | ||
ParticipationNote 5 [Member] | |||||
Note interest rate | 15.00% | 15.00% | |||
Total Debt amount | $ 1,607,000 | $ 1,607,000 | 1,573,000 | ||
Total debt matured and in default | 502,760 | 502,760 | |||
Crown [Member] | |||||
Total Debt amount | 1,000,000 | 1,000,000 | |||
Loan facility amount outstanding | $ 620,458 | $ 620,458 | $ 702,697 | ||
interest rate of debt | 15.00% |
5. Derivative Liability (Detail
5. Derivative Liability (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Jun. 30, 2015 | Dec. 31, 2014 | |
Annual dividend yield | 0.00% | 0.00% | |
Expected volatility | 315.00% | 315.00% | 735.00% |
FairValueInputsLevel3Member | |||
Embedded conversion Options | $ 1,620,142 | $ 1,620,142 | $ 751,439 |
Warrants | 16,448 | 16,448 | 50,901 |
Increase (Decrease) in fair value | $ 1,636,590 | $ 1,636,590 | $ 802,340 |
Minimum [Member] | |||
Annual dividend yield | 7600.00% | ||
Expected life (years) | 6 months | 5 months 19 days | |
Risk-free interest rate | 0.11% | 0.11% | |
Maximum [Member] | |||
Expected life (years) | 4 days | 7 months 6 days | |
Risk-free interest rate | 0.25% | 0.25% |
5. Derivative Liability (Deta37
5. Derivative Liability (Details 1) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | |
Derivative Liabilities Details 1 | |||||
Beginning Balance | $ 802,340 | $ 1,630,985 | $ 1,630,985 | ||
Value of derivative liability associated with JMJ note payable | $ 42,592 | ||||
Value of derivative liability attributable to conversion feature of Transfer Agreements | $ 1,108,030 | ||||
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) | ||||
Change in fair value | $ (1,353,429) | $ 456,809 | $ (1,627,209) | $ 443,536 | 95,892 |
Ending Balance | $ 283,131 | $ 283,131 | $ 802,340 |
5. Derivative Liability (Deta38
5. Derivative Liability (Details Narrative) - shares | 3 Months Ended | 6 Months Ended | 12 Months Ended |
Jun. 30, 2015 | Jun. 30, 2015 | Dec. 31, 2014 | |
Derivative Liability Details Narrative | |||
Common stock, authorized shares | 191,666,667 | 191,666,667 | |
Convertible debt interest rate | 14.00% | 14.00% | |
Volatility rate to value derivative instruments | 315.00% | 315.00% | 735.00% |
6. Related Party Transactions (
6. Related Party Transactions (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | |
Share compensation, value | $ 1,472,448 | $ 1,655,444 | |||
Repayment of note | 623,798 | 95,496 | |||
Crown Financial Notes | |||||
Due to related parties | $ 1,592,252 | 1,592,252 | |||
Crown Financial [Member] | |||||
Due to related parties | $ 2,034,810 | ||||
Weiner [Member] | |||||
Consulting fees incurred | 45,000 | $ 37,500 | 87,500 | 75,000 | |
Payment of salary | 22,500 | 0 | 22,500 | 0 | |
Salary and consulting fees payable | 478,083 | 478,083 | 413,083 | ||
Maddox [Member] | |||||
Consulting fees incurred | 0 | 37,500 | 0 | 75,000 | |
Payment of salary | 30,000 | 0 | |||
Salary and consulting fees payable | 190,500 | 190,500 | 220,500 | ||
DiFrancesco [Member] | |||||
Consulting fees incurred | 36,000 | 0 | 60,000 | 0 | |
Payment of salary | 52,500 | 0 | |||
Salary and consulting fees payable | 7,500 | 0 | 7,500 | 0 | |
Seabolt [Member] | |||||
Consulting fees incurred | 24,000 | 22,500 | 47,500 | 45,000 | |
Payment of salary | 15,000 | 15,000 | |||
Salary and consulting fees payable | 212,297 | 212,297 | 179,797 | ||
Dufrane [Member] | |||||
Accrued professional fees | 60,000 | 60,000 | 180,000 | ||
Due to related parties | 611,561 | 611,561 | 725,000 | ||
Related party payable, common stock | 333,333 | ||||
Miranda Associates [Member] | |||||
Payment of salary | 168,520 | 45,688 | 96,436 | 317,118 | |
Accrued professional fees | 67,207 | 67,207 | 219,271 | ||
President/Murphy [Member] | |||||
Payment of salary | 50,000 | 0 | 100,000 | 0 | |
Salary and consulting fees payable | 0 | 0 | 200,000 | ||
Signing bonus, amount | $ 200,000 | ||||
Signing bonus, shares | 333,333 | ||||
Officers Salary [Member] | |||||
Payment of salary | 50,000 | 50,000 | $ 100,000 | 100,000 | |
Salary and consulting fees payable | 0 | 0 | 121,000 | ||
Signing bonus, amount | $ 21,000 | ||||
Signing bonus, shares | 50,000 | ||||
Board of Directors [Member] | |||||
Payment of salary | 112,500 | $ 168,750 | $ 25,000 | $ 337,500 | |
Salary and consulting fees payable | $ 0 | $ 0 | $ 496,067 | ||
Shares issued compensation | 346,158 | 930,261 | 908,658 | 930,261 | |
Share compensation, value | $ 225,000 | $ 558,167 | $ 675,000 | $ 558,167 | |
Other Related Party [Member] | |||||
Related party sales | $ 0 | $ 17,104 | $ 354 | $ 235,138 |
7. Stockholders' Deficit (Detai
7. Stockholders' Deficit (Details) | Jun. 30, 2015$ / sharesshares |
Securities to acquire common stock outstanding | 14,036,978 |
Warrant 1 [Member] | |
Securities to acquire common stock outstanding | 250,000 |
Exercise price | $ / shares | $ .12 |
Warrant 3 [Member] | |
Securities to acquire common stock outstanding | 666,666 |
Exercise price | $ / shares | $ 1.20 |
Warrant 4 [Member] | |
Securities to acquire common stock outstanding | 33,333 |
Exercise price | $ / shares | $ 1.20 |
Warrant 5 [Member] | |
Securities to acquire common stock outstanding | 84,205 |
Exercise price | $ / shares | $ 1.80 |
Warrant 6 [Member] | |
Securities to acquire common stock outstanding | 333,333 |
Exercise price | $ / shares | $ 1.20 |
Warrant 8 [Member] | |
Securities to acquire common stock outstanding | 2,328,542 |
Warrant 8 [Member] | Minimum [Member] | |
Exercise price | $ / shares | $ 1.20 |
Warrant 8 [Member] | Maximum [Member] | |
Exercise price | $ / shares | $ 1.50 |
Warrant 7 [Member] | |
Securities to acquire common stock outstanding | 20,770 |
Exercise price | $ / shares | $ 1.50 |
Warrant 9 [Member] | |
Securities to acquire common stock outstanding | 500,000 |
Exercise price | $ / shares | $ .59 |
Warrant Total [Member] | |
Securities to acquire common stock outstanding | 3,991,850 |
Notes 1 [Member] | |
Securities to acquire common stock outstanding | 1,454,053 |
Exercise price | $ / shares | $ .12 |
Notes 2 [Member] | |
Securities to acquire common stock outstanding | 166,910 |
Exercise price | $ / shares | $ .72 |
Notes 3 [Member] | |
Securities to acquire common stock outstanding | 6,231,244 |
Exercise price | $ / shares | $ .48 |
Notes 4 [Member] | |
Securities to acquire common stock outstanding | 1,734,615 |
Exercise price | $ / shares | $ .65 |
Notes 5 [Member] | |
Securities to acquire common stock outstanding | 117,000 |
Stock Fees [Member] | |
Securities to acquire common stock outstanding | 341,306 |
7. Stockholders' Deficit (Det41
7. Stockholders' Deficit (Details 1) | 6 Months Ended |
Jun. 30, 2015USD ($)$ / sharesshares | |
Number of Shares Under Warrants | |
Warrants outstanding at beginning of period | 3,634,350 |
Warrants Issued | 500,000 |
Warrants Exercised | |
Warrants Forfeited | |
Warrants Cancelled | |
Warrants Expired | (142,500) |
Warrants outstanding at end of period | 3,991,850 |
Warrants exercisable at end of period | 3,991,850 |
Weighted Average Exercise Price | |
Warrants outstanding at beginning of period | $ / shares | $ 1.27 |
Warrants Issued | $ / shares | $ .59 |
Warrants Exercised | $ / shares | |
Warrants Forfeited | $ / shares | |
Warrants Cancelled | $ / shares | |
Warrants Expired | $ / shares | $ .75 |
Warrants outstanding at end of period | $ / shares | 1.20 |
Warrants exercisable at end of period | $ / shares | $ 1.20 |
Remaining Contractual Life (Years) | |
Warrants outstanding at beginning of period | 1 year 2 months 3 days |
Warrants Issued | 2 years |
Warrants outstanding at end of period | 10 months 9 days |
Warrants exercisable at end of period | 10 months 9 days |
Aggregate Intrinsic Value | |
Warrants outstanding at beginning of period | $ | $ 851,313 |
Warrants outstanding at end of period | $ | 792,563 |
Warrants exercisable at end of period | $ | $ 792,563 |
7. Stockholders' Deficit (Det42
7. Stockholders' Deficit (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||
Mar. 31, 2014 | Jun. 30, 2015 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | |
Shares authorized | 10,000,000 | 10,000,000 | |||
Common stock shares authorized | 191,666,667 | 191,666,667 | |||
Shares outstanding | 14,036,978 | 14,036,978 | 14,442,977 | ||
Charitable contribution | $ 675,000 | $ 558,157 | |||
Shares issued for services rendered | 3,209,740 | 5,595,052 | |||
Value of shares issued for services rendered | $ 2,196,150 | $ 4,335,434 | |||
Officers compensation, value of shares | $ 1,472,448 | $ 1,655,444 | |||
Preferred Stock [Member] | |||||
Par value per share | $ 0.001 | ||||
Common Stock Issuance 1 [Member] | |||||
Shares issued | 62,500 | ||||
Shares issued, unit price | $ 1.56 | ||||
Stock issued, value | $ 97,500 | ||||
Decrease debt | $ 43,750 | ||||
Consultant [Member] | |||||
Shares issued | 170,000 | ||||
Shares issued, unit price | $ 1.40 | ||||
Decrease debt | $ 91,800 | ||||
Value of shares issued for services rendered | $ 238,000 | ||||
Common Stock Issuance 2 [Member] | |||||
Shares issued | 281,167 | ||||
Stock issued, value | $ 209,825 | ||||
Investor [Member] | |||||
Shares issued | 15,385 | 158,335 | |||
Shares issued, unit price | $ 0.65 | ||||
Stock issued, value | $ 225,128 | ||||
Common Stock Issuance 3 [Member] | |||||
Shares issued | 378,334 | ||||
Stock issued, value | $ 344,101 | ||||
Common Stock Issuance 4 [Member] | |||||
Shares issued | 100,000 | ||||
Shares issued, unit price | $ 0.68 | ||||
Decrease debt | $ 68,000 | ||||
Common Stock Issuance 5 [Member] | |||||
Shares issued | 150,001 | ||||
Value of shares issued for services rendered | $ 119,500 | ||||
Common Stock Issuance 7 [Member] | |||||
Shares issued | 225,000 | ||||
Decrease debt | $ 187,000 | ||||
Common Stock Issuance 8 [Member] | |||||
Shares issued | 100,000 | ||||
Shares issued, unit price | $ 0.81 | ||||
Decrease debt | $ 81,000 | ||||
Common Stock Issuance 9 [Member] | |||||
Shares issued | 184,975 | ||||
Shares issued, unit price | $ 0.65 | ||||
Decrease debt | $ 120,233 | ||||
Common Stock Issuance 10 [Member] | |||||
Shares issued | 100,000 | ||||
Shares issued, unit price | $ 0.85 | ||||
Decrease debt | $ 85,000 | ||||
Common Stock Issuance 11 [Member] | |||||
Shares issued | 562,500 | ||||
Shares issued, unit price | $ 0.80 | ||||
Value of shares issued for services rendered | $ 450,000 | ||||
Common Stock Issuance 12 [Member] | |||||
Shares issued | 100,000 | ||||
Shares issued, unit price | $ 0.65 | ||||
Value of shares issued for services rendered | $ 65,000 | ||||
Common Stock Issuance 13 [Member] | |||||
Shares issued | 900,000 | ||||
Shares issued, unit price | $ 0.80 | ||||
Value of shares issued for services rendered | $ 720,000 | ||||
Common Stock Issuance 14 [Member] | |||||
Shares issued | 341,667 | ||||
Value of shares issued for services rendered | $ 230,501 | ||||
Common Stock Issuance 15 [Member] | |||||
Shares issued | 26,000 | ||||
Value of shares issued for services rendered | $ 18,610 | ||||
Common Stock Issuance 16 [Member] | |||||
Shares issued | 206,667 | ||||
Value of shares issued for services rendered | $ 155,000 | ||||
Common Stock Issuance 17 [Member] | |||||
Shares issued | 500,000 | ||||
Shares issued, unit price | $ 0.09 | ||||
Decrease debt | $ 385,000 | ||||
Value of additional issued | $ 280,000 | ||||
Common Stock Issuance 18 [Member] | |||||
Shares issued | 800,000 | ||||
Value of shares issued for services rendered | $ 677,000 | ||||
Common Stock Issuance 19 [Member] | |||||
Shares issued | 183,334 | ||||
Value of shares issued for services rendered | $ 137,501 | ||||
Common Stock Issuance 20 [Member] | |||||
Shares issued | 333,333 | ||||
Value of shares issued for services rendered | $ 200,000 | ||||
Common Stock Issuance 21 [Member] | |||||
Shares issued | 578,927 | ||||
Value of additional issued | $ 339,039 | ||||
Common Stock Issuance 22 [Member] | |||||
Shares issued | 346,158 | ||||
Value of shares issued for services rendered | $ 225,000 | ||||
Common Stock Issuance 23 [Member] | |||||
Shares issued | 239,812 | ||||
Value of shares issued for services rendered | $ 167,500 |
8. Discontinued Operations (Det
8. Discontinued Operations (Details) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Carrying amounts of major classes of assets included as part of discontinued operations: | ||
Cash | $ 3,550 | |
Accounts receivable, trade, net | $ 112,979 | 216,262 |
Accounts receivable from related parties | 511,809 | |
Prepaid expenses and other current assets | $ 36 | 111,604 |
Total current assets | $ 113,015 | 843,225 |
Long term assets: Porperty and equipment, net | 234,917 | |
Total major classes of assets of the discontinued operations | $ 113,015 | 1,078,142 |
Carrying amounts of major classes of liabilities included as part of discontinued operations: | ||
Book overdraft | 56,466 | 17,445 |
Accounts payable | 683,193 | 1,055,575 |
Payable to Black Pearl Energy, LLC | 6,709 | 94,717 |
Payable to Crown Financial, LLC | 685 | 685 |
Current portion of notes payable, net of discounts | 600,276 | 752,441 |
Sales and payroll taxes payable | 514,237 | 474,075 |
Accrued expenses and interest | 24,072 | 41,383 |
Accrued compensation | 13,163 | 147,843 |
Total major classes of liabilities of the discontinued operations | $ 1,898,802 | $ 2,584,164 |
8. Discontinued Operations (D44
8. Discontinued Operations (Details 1) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Major classes of line items constituting pre-tax loss from operation of discontinued operations: | ||||
Revenues | $ 23,705 | $ 2,540,605 | $ 504,699 | $ 4,011,025 |
Cost of revenues | (126,117) | (1,929,945) | (719,103) | (3,349,019) |
Operating expenses | (71,639) | (549,994) | (321,815) | (941,884) |
Interest expense | (40,357) | $ (45,715) | (82,361) | $ (83,889) |
Loss on the sale of fixed assets | (114,809) | (114,809) | ||
Total loss from operation of discontinued operations | $ (329,217) | $ 14,951 | $ (733,389) | $ (363,767) |
8. Discontinued Operations (D45
8. Discontinued Operations (Details Narrative) | 3 Months Ended |
Jun. 30, 2015USD ($) | |
Discontinued Operations and Disposal Groups [Abstract] | |
(Loss) on sale of assets | $ (114,000) |
9. Commitments and Contingenc46
9. Commitments and Contingencies (Details) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Future minimum lease payments | ||
Future minimum lease payments, 2015 | $ 65,088 | |
Future minimum lease payments, 2016 | 130,176 | |
Future minimum lease payments, 2017 | 125,960 | |
Future minimum lease payments, 2018 | 117,000 | |
Future minimum lease payments, Thereafter | 204,750 | |
Total future minimum lease payments, Capital Lease | 642,974 | |
Capital lease obligation | 25,388 | $ 20,362 |
Capital Lease Obligations [Member] | ||
Future minimum lease payments | ||
Future minimum lease payments, 2015 | 6,588 | |
Future minimum lease payments, 2016 | 13,176 | |
Future minimum lease payments, 2017 | $ 8,960 | |
Future minimum lease payments, Thereafter | ||
Total future minimum lease payments, Capital Lease | $ 28,724 | |
Less interest | 3,336 | |
Capital lease obligation | 25,388 | |
Less current portion | 5,332 | |
Long-term capital lease obligation | 20,056 | |
Operating Lease Expense [Member] | ||
Future minimum lease payments | ||
Future minimum lease payments, 2015 | 58,500 | |
Future minimum lease payments, 2016 | 117,000 | |
Future minimum lease payments, 2017 | 117,000 | |
Future minimum lease payments, 2018 | 117,000 | |
Future minimum lease payments, Thereafter | 204,750 | |
Total future minimum lease payments, Capital Lease | $ 614,250 |
9. Commitments and Contingenc47
9. Commitments and Contingencies (Details 1) - Royalty Arrangement [Member] | Jun. 30, 2015USD ($) |
2,015 | $ 140,000 |
2,016 | 240,000 |
2,017 | 240,000 |
2,018 | 240,000 |
Thereafter | 120,000 |
Total minimum royalty payments | $ 280,000 |
9. Commitments and Contingenc48
9. Commitments and Contingencies (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | |
Capital lease obligation | $ 25,388 | $ 25,388 | $ 20,362 | ||
Capital lease interest rate | 10.00% | ||||
Option to purchase land and building | $ 825,500 | 825,500 | |||
Rental expense | 408,637 | $ 688,751 | 736,527 | $ 1,076,926 | |
Rental expense to related party | 0 | 0 | 604 | 0 | |
Rental expense to projects | $ 361,923 | $ 670,458 | 645,071 | $ 1,015,516 | |
Product purchase agreement term | 5 years | ||||
Royalty expense | $ 100,000 | 100,000 | |||
Royalty expense, initial | 324,000 | ||||
Royalty expense, quarter 1 | 60,000 | ||||
Royalty expense, quarter 2 | 60,000 | ||||
Royalty expense, quarter 3 | 100,000 | ||||
Royalty expense, quarter 4 | 104,000 | ||||
Royalty expense, thereafter | $ 240,000 | ||||
Royalty payment rate | 3.00% | ||||
Shares issued upon product purchase agreement | 66,667 | ||||
Total Debt | $ 11,089,927 | 11,089,927 | 7,983,631 | ||
SRFF [Member] | |||||
Loss contingency | 180,036 | 180,036 | |||
Judgement amount | 80,036 | 80,036 | |||
Johnson Associates [Member] | |||||
Loss contingency | $ 216,217 | $ 216,217 | |||
Note interest rate | 12.00% | 12.00% | |||
Judgement amount | $ 196,727 | $ 196,727 | |||
GE Ionics [Member] | |||||
Loss contingency | 11,239,437 | 11,239,437 | |||
Total Debt | 2,100,000 | 2,100,000 | $ 2,100,000 | ||
Weiner [Member] | |||||
Annual salary | 180,000 | 180,000 | |||
Salary rate, monthly | 15,000 | 15,000 | |||
DiFrancesco [Member] | |||||
Annual salary | 144,000 | 144,000 | |||
Salary rate, monthly | 12,000 | 12,000 | |||
Seabolt [Member] | |||||
Annual salary | 96,000 | 96,000 | |||
Salary rate, monthly | 8,000 | 8,000 | |||
Land and Building [Member] | |||||
Monthly rent payments | 9,750 | ||||
Option to purchase land and building | 825,500 | 825,500 | |||
Trailer [Member] | |||||
Monthly rent payments | 593 | ||||
Capital lease obligation | 25,388 | $ 25,388 | |||
Capital lease interest rate | 10.00% | ||||
Option to purchase land and building | 0 | $ 0 | |||
Machinery and Equipment [Member] | |||||
Monthly rent payments | 505 | ||||
Capital lease obligation | $ 30,438 | $ 30,438 | |||
Capital lease interest rate | 12.00% |
10. Segment Information (Detail
10. Segment Information (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Segment Operations | ||||
Revenues | $ 2,587,460 | $ 3,072,743 | $ 4,785,867 | $ 5,203,102 |
Cost of revenues | 1,717,706 | 3,346,112 | 3,004,985 | 5,108,280 |
Operating expenses | 2,114,246 | 2,866,363 | 4,637,023 | 4,924,424 |
Other income (expense) | (64,728) | (918,997) | (968,532) | (1,305,152) |
Net income (loss) | (1,309,220) | (4,058,729) | (3,824,673) | (6,134,754) |
Water Reclamation [Member] | ||||
Segment Operations | ||||
Revenues | 118,859 | $ 10,051 | 267,770 | $ 10,051 |
Cost of revenues | 126,437 | 271,963 | ||
Operating expenses | $ 397,208 | $ 88,036 | $ 931,725 | $ 219,584 |
Other income (expense) | ||||
Net income (loss) | $ (404,786) | $ (77,985) | $ (935,918) | $ (209,533) |
Oil and Gas Services [Member] | ||||
Segment Operations | ||||
Revenues | 2,468,601 | 3,062,692 | 4,518,097 | 5,193,051 |
Cost of revenues | 1,591,269 | 3,346,112 | 2,733,022 | 5,108,280 |
Operating expenses | $ 493,754 | $ 662,802 | $ 1,039,647 | $ 1,006,691 |
Other income (expense) | ||||
Net income (loss) | $ 383,578 | $ (946,222) | $ 745,428 | $ (921,920) |
Corporate Segment [Member] | ||||
Segment Operations | ||||
Revenues | ||||
Cost of revenues | ||||
Operating expenses | $ 1,223,284 | $ 2,115,525 | $ 2,665,651 | $ 3,698,149 |
Other income (expense) | (64,728) | (918,997) | (968,532) | (1,305,152) |
Net income (loss) | $ (1,288,012) | $ (3,034,522) | $ (3,634,183) | $ (5,003,301) |
10. Segment Information (Deta50
10. Segment Information (Details 1) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Segment Assets | ||
Current Assets | $ 5,175,861 | $ 5,527,039 |
Fixed assets | 997,628 | 1,203,082 |
Segment Assets | 6,173,489 | 6,730,121 |
Water Reclamation [Member] | ||
Segment Assets | ||
Current Assets | 3,529,556 | 1,369,434 |
Fixed assets | 484,217 | 837,602 |
Segment Assets | 4,013,773 | 2,207,036 |
Oil and Gas Services [Member] | ||
Segment Assets | ||
Current Assets | 1,203,281 | 2,831,798 |
Fixed assets | 450,042 | 289,302 |
Segment Assets | 1,653,323 | 3,121,100 |
Corporate Segment [Member] | ||
Segment Assets | ||
Current Assets | 443,024 | 1,325,807 |
Fixed assets | 63,369 | 76,178 |
Segment Assets | $ 506,393 | $ 1,401,985 |
10. Segment Information (Deta51
10. Segment Information (Details Narrative) | 3 Months Ended |
Jun. 30, 2015 | |
Segment Information Details Narrative | |
Reportable segments | 3 |