EQUITY | 12 Months Ended |
Dec. 31, 2013 |
Notes to Financial Statements | ' |
Note 9 - EQUITY | ' |
The Company has authorized the issuance of 500,000 shares of Series A preferred stock, 500,000 shares of Series C preferred stock, 4,000,000 shares of preferred stock and 4,000,000,000 shares of common stock. |
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COMMON STOCK |
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2013 Issuances |
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Stock Subscriptions |
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During the year ended December 31, 2013, the Company issued subscription units that consisted of common stock and warrants. The Company received subscriptions to acquire 530,176 shares of common stock and 418,389 warrants to purchase one share of common stock each for net cash proceeds $276,072. The warrants have an exercise price of $1.29 per share, and expires 48 months following an effective registration statement on the underlying shares or 24 months following the closing of any registered debt or equity offering contemplated by the Company subsequent to the merger with American Exploration. The issuances were as follows: |
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Date | | Number of Shares | | | Number of Warrants | | | Proceeds | |
17-Jan-13 | | | 161,000 | | | | 31,641 | | | $ | 26,450 | |
25-Mar-13 | | | 36,976 | | | | 38,697 | | | | 25,000 | |
7-Apr-13 | | | 60,400 | | | | 63,282 | | | | 40,838 | |
28-Apr-13 | | | 90,600 | | | | 94,923 | | | | 61,255 | |
15-Aug-13 | | | 30,200 | | | | 31,641 | | | | 20,418 | |
27-Sep-13 | | | 60,400 | | | | 63,282 | | | | 40,857 | |
6-Nov-13 | | | 30,200 | | | | 31,641 | | | | 20,418 | |
12-Nov-13 | | | 30,200 | | | | 31,641 | | | | 20,418 | |
20-Nov-13 | | | 30,200 | | | | 31,641 | | | | 20,418 | |
Total | | | 530,176 | | | | 418,389 | | | $ | 276,072 | |
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Other Stock Issuances |
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On August 7, 2013, the Company issued 15,100 shares of common stock for services related to consulting. The fair value of the shares was $10,268 based on the most recent sale of the Company’s common stock to a third party. |
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On October 4, 2013, the Company issued 262,000 shares of common stock and 800,000 warrants to purchase one share of common stock per warrant for a further extension of the Loan’s maturity date to December 31, 2013. The warrants have an exercise price of 60% of the 20 day average market price prior to the date of exercise. However, the exercise price cannot be less than $0.20 per share. The fair value of the shares on the date of grant was $178,160 and the fair value of the warrants on the date of grant was $529,643. |
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On December 16, 2013, the Company issued 245,458 shares of common stock in connection with the Merger with American Exploration. The shares had a fair value of $330,816 based on the market price on the date of grant. |
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On December 16, 2013, the Company granted the CEO and a consultant 3,200,000 and 296,373 shares of the Company’s common stock, respectively, as compensation for services rendered during the year ended December 31, 2013. These shares were valued at $4,720,104 based on the market price on the date of grant. As of the date of this filing, these shares have not been issued and have been recorded as a stock payable. |
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2012 Issuances |
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On March 23, 2012 (inception), the Company issued 6,692,724 shares of common stock to the Company’s founder for no consideration. |
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OPTIONS |
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Upon the acquisition of American Exploration, the Company adopted the 2009 Stock Option Plan (the “2009 Plan”). The 2009 Plan allows the Company to issue options to officers, directors and employees, as well as consultants, to purchase up to 7,000,000 shares of common stock. |
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The Company, as part of the Merger, issued and exchanged 5,200 stock options to individuals who previously held stock options in American Exploration. These stock options were valued at $6,934 using the Black-Scholes model which was included in the purchase price of American Exploration. |
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A summary of the stock option activity for the years ended December 31, 2013 and 2012 is presented below: |
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| | Options | | | Weighted-Average Exercise Price | | | Aggregate Intrinsic Value | |
March 23, 2012 (Inception) | | | - | | | $ | - | | | $ | - | |
Granted | | | - | | | | - | | | | - | |
Exercised | | | - | | | | | | | | - | |
Forfeited | | | - | | | | | | | | - | |
Outstanding at December 31, 2012 | | | - | | | | - | | | | - | |
Granted | | | 5,200 | | | | 359.04 | | | | - | |
Exercised | | | - | | | | - | | | | - | |
Expired | | | - | | | | - | | | | - | |
Outstanding December 31, 2013 | | | 5,200 | | | $ | 359.04 | | | $ | - | |
Exercisable December 31, 2012 | | | 5,200 | | | $ | 359.04 | | | $ | - | |
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The weighted average remaining contractual term of the outstanding options and exercisable options at December 31, 2013 and 2012 is 6.21 and 0 years, respectively |
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WARRANTS |
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During the year ended December 31, 2013, the Company issued subscription units that consisted of common stock and warrants. The Company received subscriptions to acquire 530,176 shares of common stock and 418,389 warrants to purchase one share of common stock each for net cash proceeds $276,072. The warrants have an exercise price of $1.29 per share, and expires 48 months following an effective registration statement on the underlying shares or 24 months following the closing of any registered debt or equity offering contemplated by the Company subsequent to the merger with American Exploration. The relative fair value of the warrants based on the Black-Scholes model was $135,727. |
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On September 27, 2013, the Company issued 100,000 warrants to purchase one share of common stock per warrant, in connection with the Note. The exercise price of the warrants is the greater of i) a discount of 40% to the 20 day average closing market price prior to the day that the warrant is executed or ii) $0.20 per share. The warrants will have a term of thirty-six (36) months from the date of repayment or conversion of the Note. The relative fair value of the warrants based on the Black-Scholes model was $25,136 and was recorded as a debt discount on the Note. |
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On October 4, 2013, the Company issued 262,000 shares of common stock and 800,000 warrants to purchase one share of common stock per warrant for a further extension of the Loan’s maturity date to December 31, 2013. The warrants have an exercise price of 60% of the 20 day average market price prior to the date of exercise. However, the exercise price cannot be less than $0.20 per share. The fair value of the warrants on the date of grant was $529,643 based on the Black-Scholes model. |
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On August 2, 2013 and November 20, 2013, the Company issued 31,641 warrants to purchases one share of common stock per warrant, to a consultant of the Company for services. The warrants have an exercise price of $1.29 per share, and expires 48 months following an effective registration statement on the underlying shares or 24 months following the closing of any registered debt or equity offering contemplated by the Company subsequent to the merger with American Exploration. The fair value of the warrants was $42,754 based on the Black-Scholes model and was recorded as stock compensation. |
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The fair value of the above warrants was determined by using the Black-Scholes option-pricing model. Variables used in the model for the warrants issued include :i) discount rates ranging from 0.38% to 0.79%; ii) expected terms ranging from 4.25 to 5.70 years; iii) expected volatility ranging from 250.09% to 285.88%; iv) zero expected dividends and v) stock price of $0.68. |
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A summary of the warrant activity for the period from March 23, 2012 (inception) to December 31, 2012 and the year ended December 31, 2013 is presented below: |
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| | Warrants | | | Weighted-Average Exercise Price | | | Aggregate Intrinsic Value | |
March 23, 2012 (Inception) | | | - | | | $ | - | | | $ | - | |
Granted | | | - | | | | - | | | | - | |
Exercised | | | - | | | | | | | | - | |
Forfeited | | | - | | | | | | | | - | |
Outstanding at December 31, 2012 | | | - | | | | - | | | | - | |
Granted | | | 1,381,671 | | | | 1.41 | | | | 28,900 | |
Exercised | | | - | | | | - | | | | - | |
Expired | | | - | | | | - | | | | - | |
Outstanding December 31, 2013 | | | 1,381,671 | | | $ | 1.41 | | | | 28,900 | |
Exercisable December 31, 2013 | | | 1,381,671 | | | | 1.41 | | | | 28,900 | |
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The weighted average remaining contractual term of the outstanding warrants and exercisable warrants at December 31, 2013 and 2012 is 3.01 and 0 years, respectively |
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