Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Mar. 28, 2016 | Jun. 30, 2015 | |
Document And Entity Information | |||
Entity Registrant Name | Cardinal Energy Group, Inc. | ||
Entity Central Index Key | 1,408,351 | ||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2015 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity a Well-known Seasoned Issuer | No | ||
Entity a Voluntary Filer | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 3,165,558 | ||
Entity Common Stock, Shares Outstanding | 83,379,557 | ||
Trading Symbol | CEGX | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,015 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
CURRENT ASSETS | ||
Cash | $ 24,155 | $ 115,398 |
Accounts receivable | 10,453 | |
Accounts receivable - related party | $ 180,712 | 225,000 |
Marketable securities | 30,800 | 69,300 |
Prepaid expenses - debt issuance costs, net | 20,774 | 331,664 |
Total Current Assets | 256,441 | 751,815 |
PROPERTY AND EQUIPMENT, net | 244,078 | 339,753 |
OIL AND GAS PROPERTIES (full cost method) | ||
Unproved properties | 310,226 | $ 3,449,487 |
OTHER ASSETS | ||
Non-current - prepaid debt issuance costs, net | 5,501 | |
Deposits and deferred charges | 56,100 | $ 73,755 |
TOTAL ASSETS | 872,346 | 4,614,810 |
CURRENT LIABILITIES | ||
Accounts payable and accrued expenses | $ 908,066 | 448,133 |
Accrued legal settlement | 100,000 | |
Current portion of long term senior secured convertible promissory note, net of debt discount of $0 and $295,128, respectively | $ 4,500,000 | 4,204,872 |
Convertible notes, net of debt discount of $127,262 and $303,106, respectively | $ 1,061,725 | 329,894 |
Note payable | $ 340,000 | |
Loan payable, net of debt discount of $36,759 and $0, respectively | $ 119,584 | |
Derivative liability | 2,355,580 | $ 382,836 |
Equipment purchase contracts payable - current portion | 13,721 | 17,023 |
Total Current Liabilities | 8,958,676 | $ 5,822,758 |
LONG-TERM LIABILITIES | ||
Convertible notes, net of debt discount of $52,902 and $0, respectively | 87,818 | |
Equipment purchase contracts payable - long term portion | 42,505 | $ 77,608 |
Asset retirement obligation | 96,063 | 162,321 |
Total Long-Term Liabilities | 226,386 | 239,929 |
TOTAL LIABILITIES | $ 9,185,062 | $ 6,062,687 |
Commitments and contingencies | ||
STOCKHOLDERS’ DEFICIT | ||
Series A Preferred stock, 1,000,000 shares authorized at par value of $0.00001; 1,000,000 and none shares issued and outstanding, respectively | $ 10 | |
Common stock, 100,000,000 shares authorized at par value of $0.00001; 84,374,961 and 38,040,046 shares issued; and 81,274,961 and 34,940,046 shares outstanding, respectively | 813 | $ 350 |
Additional paid-in capital | $ 9,841,715 | 8,058,665 |
Stock subscription receivable | (3,500) | |
Treasury stock | $ (2,013,380) | (2,013,380) |
Accumulated other comprehensive loss | (2,186,800) | (2,148,300) |
Accumulated deficit | (13,955,074) | (5,341,712) |
TOTAL STOCKHOLDERS’ DEFICIT | (8,312,716) | (1,447,877) |
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | $ 872,346 | $ 4,614,810 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Current portion of long term convertible promissory note, debt discount | $ 0 | $ 295,128 |
Convertible notes, debt of discount | 127,262 | 303,106 |
Loan payable, debt discount | 36,759 | 0 |
Convertible notes, debt discount | $ 52,902 | $ 0 |
Preferred stock shares authorized | 1,000,000 | 1,000,000 |
Preferred stock shares par value | $ 0.00001 | $ 0.00001 |
Preferred stock shares issued | 1,000,000 | 0 |
Preferred stock shares outstanding | 1,000,000 | 0 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, par value | $ 0.00001 | $ 0.00001 |
Common stock, shares issued | 84,374,961 | 38,040,046 |
Common stock, shares outstanding | 81,274,961 | 34,940,046 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Other Comprehensive Loss - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
REVENUES | ||
Oil and gas revenues | $ 47,057 | $ 148,855 |
Operating income from escrowed property - related party | 250,000 | |
Related party income from contract development operations | 621,508 | $ 1,716,771 |
Total Revenues from Operations | 918,565 | 1,865,626 |
COSTS & OPERATING EXPENSES | ||
Operating and production costs | 74,281 | 402,863 |
Costs of contract development operations | 331,010 | 692,895 |
Depreciation and amortization | 63,294 | $ 40,092 |
Impairment expense | 2,654,824 | |
General and administrative | 1,568,506 | $ 2,113,983 |
Total Operating Expenses | 4,691,915 | 3,249,833 |
OPERATING LOSS | (3,773,350) | $ (1,384,207) |
OTHER INCOME (EXPENSES) | ||
Other income | 20,076 | |
Gain (loss) on extinguishment of debt | $ 27,373 | $ (76,581) |
Gain on sale of lease | 93,414 | |
(Loss) gain on sale of property and equipment | $ (6,774) | 1,265 |
Amortization of debt discount | (1,302,701) | (401,892) |
Interest expense, net | (4,287,205) | (1,044,646) |
Gain on change in the fair value of derivative liability | 709,219 | 321,254 |
Total Other Expenses | (4,840,012) | (1,107,186) |
NET LOSS | (8,613,362) | (2,491,393) |
OTHER COMPREHENSIVE LOSS | ||
Change in value of investments | (38,500) | 45,465 |
NET COMPREHENSIVE LOSS | $ (8,651,862) | $ (2,445,928) |
Loss per share of common stock (basic and diluted) | $ (0.18) | $ (0.07) |
Weighted average shares outstanding | 48,059,554 | 35,825,479 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Deficit - USD ($) | Preferred Stock - Series A [Member] | Common Stock [Member] | Additional Paid-In Capital [Member] | Stock Subscriptions Receivable [Member] | Treasury Stock [Member] | Accumulated Deficit [Member] | Accumulated Other Comprehensive Loss [Member] | Total |
Balance at Dec. 31, 2013 | $ 359 | $ 5,293,772 | $ (3,500) | $ (2,850,319) | $ (2,193,765) | $ 246,547 | ||
Balance, shares at Dec. 31, 2013 | 35,944,750 | |||||||
Common stock issued for cash | $ 7 | 195,968 | 195,975 | |||||
Common stock issued for cash, shares | 699,929 | |||||||
Common stock issued for services | $ 9 | 415,211 | 415,220 | |||||
Common stock issued for services, shares | 922,867 | |||||||
Common stock issued for settlement of accounts payable | $ 1 | 29,999 | 30,000 | |||||
Common stock issued for settlement of accounts payable, shares | 100,000 | |||||||
Common stock issued for purchase of oil and gas properties | $ 1 | 34,999 | 35,000 | |||||
Common stock issued for purchase of oil and gas properties, shares | 50,000 | |||||||
Common stock issued for conversion of debt | $ 4 | 174,803 | $ 174,807 | |||||
Common stock issued for conversion of debt, shares | 437,500 | |||||||
Common stock cancelled | $ (1) | 1 | ||||||
Common stock cancelled, shares | (150,000) | |||||||
Extinguishment of derivative liability on conversion of debt | 22,068 | $ 22,068 | ||||||
Beneficial conversion feature on warrants issued concurrent with convertible notes | 519,286 | 519,286 | ||||||
Treasury stock received for assets transferred to related party | $ (31) | 1,356,308 | $ (2,013,380) | (657,103) | ||||
Treasury stock received for assets transferred to related party, shares | (3,100,000) | |||||||
Common stock issued to pay interest on debt | $ 1 | 34,999 | 35,000 | |||||
Common stock issued to pay interest on debt, shares | 50,000 | |||||||
Common stock cancelled upon lease expiration | $ (18,750) | (18,750) | ||||||
Common stock cancelled upon lease expiration, shares | (15,000) | |||||||
Unrealized holding gain for available-for-sale-securities | $ 45,465 | 45,465 | ||||||
Net loss | $ (2,491,393) | (2,491,393) | ||||||
Balance at Dec. 31, 2014 | $ 350 | $ 8,058,664 | $ (3,500) | $ (2,013,380) | $ (5,341,712) | $ (2,148,300) | (1,447,877) | |
Balance, shares at Dec. 31, 2014 | 34,940,046 | |||||||
Common stock issued for cash | $ 195,975 | |||||||
Common stock issued for cash, shares | 699,929 | |||||||
Common stock issued for services | $ 2 | 92,181 | $ 92,183 | |||||
Common stock issued for services, shares | 248,874 | 248,874 | ||||||
Common stock issued employee bonus | $ 1 | 39,999 | $ 40,000 | |||||
Common stock issued employee bonus, shares | 100,000 | |||||||
Common stock issued for conversion of debt | $ 23,000 | |||||||
Common stock issued for conversion of debt, shares | 69,697 | |||||||
Common stock issued for payment of short-term note payable interest and notes payable extension | $ 5 | 119,495 | $ 119,500 | |||||
Common stock issued for payment of short-term note payable interest and notes payable extension, shares | 530,000 | |||||||
Common stock cancelled | (15,667) | $ (15,667) | ||||||
Common stock cancelled, shares | (33,333) | 150,000 | ||||||
Extinguishment of derivative liability on conversion of debt | 826,901 | $ 826,901 | ||||||
Common stock issued to convert convertible note payable | $ 455 | 620,152 | 620,607 | |||||
Common stock issued to convert convertible note payable, shares | 45,489,374 | |||||||
Issuance of preferred stock for services | $ 10 | 99,990 | 100,000 | |||||
Issuance of preferred stock for services,shares | 1,000,000 | |||||||
Unrealized holding gain for available-for-sale-securities | $ (38,500) | (38,500) | ||||||
Uncollectible stock subscription receivable charged to expense | $ 3,500 | 3,500 | ||||||
Net loss | $ (8,613,362) | (8,613,362) | ||||||
Balance at Dec. 31, 2015 | $ 10 | $ 813 | $ 9,841,715 | $ (2,013,380) | $ (13,955,074) | $ (2,186,800) | $ (8,312,716) | |
Balance, shares at Dec. 31, 2015 | 1,000,000 | 81,274,961 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | $ (8,613,362) | $ (2,491,393) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation | 63,294 | $ 40,093 |
Write off of subscription receivable | 3,500 | |
Accretion expense | 14,987 | $ 19,985 |
Amortization of debt discount | 1,302,701 | $ 401,892 |
Impairment expense | 2,654,824 | |
Stock based compensation | 216,516 | $ 453,945 |
Amortization of prepaid debt issuance costs | 429,826 | 280,726 |
(Gain) loss on extinguishment of debt | (27,373) | 76,581 |
Gain on change in fair value of derivative liability | (709,219) | (321,254) |
Non-cash interest expense related to derivative liability | 2,577,683 | $ 243,630 |
Non-cash interest expense, defaults fees and charges included in principal amount of notes | $ 578,141 | |
Gain on sale of lease | $ (93,414) | |
Loss (gain) on sale of property and equipment | $ 6,774 | $ (1,265) |
Stock issued for interest expense | 119,500 | |
Changes in operating assets and liabilities: | ||
Accounts receivable - related party | 44,288 | $ (720,367) |
Accounts receivable | 10,453 | (10,453) |
Prepaid expenses | (6,157) | 27,611 |
Other assets | 17,655 | (44,553) |
Accounts payable and accrued expenses | 493,602 | $ 262,939 |
Accrued legal settlement | (100,000) | |
Net Cash used in Operating Activities | $ (922,367) | $ (1,875,297) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Proceeds from sale of property and equipment | 22,000 | |
Purchase of property and equipment | $ (3,511) | (217,816) |
Purchase of oil and gas properties | (16,464) | $ (2,047,603) |
Credit refunds against purchases of oil and gas properties | 50,000 | |
Net Cash Provided by (Used in) Investing Activities | 30,025 | $ (2,243,419) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Repayment of notes payable -equipment | $ (13,302) | |
Stock issued for cash | $ 195,975 | |
Net proceeds from issuance of convertible notes and loans payable | $ 1,084,568 | 4,860,000 |
Repayment of convertible notes and loan payable | $ (270,167) | (621,555) |
Proceeds from issuance of notes payable | 296,000 | |
Payment of deferred financing costs | (515,000) | |
Net Cash Provided by Financing Activities | $ 801,099 | 4,215,420 |
NET (DECREASE) INCREASE IN CASH | (91,243) | 96,704 |
CASH AT BEGINNING OF YEAR | 115,398 | 18,694 |
CASH AT END OF YEAR | 24,155 | 115,398 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | ||
Interest | $ 22,295 | $ 289,708 |
Income Taxes | ||
NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
Unrealized (loss) gain on available-for-sale-securities | $ (38,500) | $ 45,465 |
Reduction in note payable for reduction in purchase price of oil properties | 340,000 | 60,000 |
Derivative liability on convertible notes payable and warrants at inception | 3,508,864 | 693,630 |
ARO estimate on assets purchased (reduction for sale of oil and gas properties) | $ (78,152) | 142,336 |
Common stock issued for prepaid services | 438,600 | |
Beneficial conversion feature on warrants issued concurrent with convertible note | 519,289 | |
Common stock issued for settlement of accounts payable | 30,000 | |
Common stock issued for oil and gas properties | 35,000 | |
Extinguishment of derivative liability | $ 826,901 | 22,068 |
Common stock cancelled for assets transferred to related party | 657,103 | |
Purchase of fixed assets through financing | 126,686 | |
Common stock issued for conversion of debt | $ 620,607 | 174,807 |
Common stock returned reflecting employment agreement changes | 207,302 | |
Purchase of investment in Bradford joint venture against accounts receivable, included in Oil and Gas Properties | 500,000 | |
Common stock issued for prepaid interest | 35,000 | |
Cancellation of shares upon lease expiration | 18,750 | |
Original issue discount on convertible note payable | $ 118,280 | $ 90,000 |
Settlement of equipment purchase payable upon sale of asset | $ 28,000 |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Operations and Organization Cardinal Energy Group, Inc. (the Company) was incorporated in the State of Nevada on June 19, 2007. On September 28, 2012, the Company changed the focus of its business when it acquired all of the ownership interests of Cardinal Energy Group, LLC, an Ohio limited liability company which was engaged in the business of exploring, purchasing, developing and operating oil and gas leases. The Company changed its name to Cardinal Energy Group, Inc. on October 10, 2012 in connection with this acquisition. On June 10, 2015 the Company moved its executive offices from Dublin, Ohio to Abilene, Texas. In February 2016, the Company closed its Abilene, Texas office and relocated their executive offices to Upper Arlington, Ohio. The Company has been engaged in the development, exploitation and production of oil and natural gas. The Company sells its oil and gas products to domestic purchasers of oil and gas production. Its operations were focused in the states of California, Ohio and Texas during 2012 and 2013. In 2014 and 2015, management decided to focus its oil and gas operations entirely within the state of Texas. The Company established a regional operations office in Albany, Texas and retained the services of operating personnel with ties to the exploration and development of oil and gas fields in Texas. In February 2016, the Company sold its operations facility in Albany, Texas (see Note 14). On April 30, 2015 the Company formed High Performance Energy Fund Corporation, a Delaware corporation (High Performance), for the purposes of identifying, developing and financing new prospective oil and gas properties. High Performance is a wholly-owned subsidiary of the Company. Basis of Presentation and Use of Estimates These financial statements have been prepared in accordance with accounting principles generally accepted in United States of America which require management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and the disclosures of revenues and expenses for the reported year. Actual results may differ from those estimates. Included in these estimates are assumptions about collection of accounts receivable, impairment of oil and gas properties, useful life of property and equipment, amounts and timing of closure obligations, assumptions used to calculate fair value of stocks and warrants granted, stock based compensation, beneficial conversion of convertible notes payable, deferred income tax asset valuation allowances, and valuation of derivative liabilities. Revenues and direct operating expenses of the California and Ohio properties represent members interest in the properties acquired for the periods prior to the closing date and are presented on the accrual basis of accounting and in accordance with generally accepted accounting principles. The financial statements presented herein include the revenues and operating expenses of the California and Ohio properties for the period of January 1, 2014 through the sale date of the properties on April 1, 2014. Principles of Consolidation Our consolidated financial statements include the accounts of subsidiaries in which a controlling interest is held. All intercompany transactions have been eliminated. Undivided interests in oil and gas exploration and production joint ventures are consolidated on a proportionate basis. Investments in entities without a controlling interest are accounted for by the equity method or cost basis. The equity method is used to account for investments in non-controlled entities when the Company has the ability to exercise significant influence over operating and financial policies. In applying the equity method of accounting, the investments are initially recognized at cost, and subsequently adjusted for the Companys proportionate share of earnings, losses and distributions. The cost method is used when the Company does not have the ability to exert significant influence. Cash and Cash Equivalents The Company considers all highly liquid debt instruments and other short-term investments with maturities of three months or less, when purchased, to be cash equivalents. The Company places its cash with a high credit quality financial institution. The Companys accounts at this institution are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. As of December 31, 2015, the Company had not reached bank balances exceeding the FDIC insurance limit. To reduce its risk associated with the failure of such financial institution, the Company evaluates at least annually the rating of the financial institution in which it holds deposits. Allowance for Doubtful Accounts Uncollectible accounts receivable are charged directly against earnings when they are determined to be uncollectible. Use of this method does not result in a material difference from the valuation method required by generally accepted accounting principles. At December 31, 2015 and 2014, no reserve for allowance for doubtful accounts was needed. Oil and Gas Properties The Company follows the full cost method of accounting for its oil and natural gas properties, whereby all costs incurred in connection with the acquisition, exploration for and development of petroleum and natural gas reserves are capitalized. Such costs include lease acquisition, geological and geophysical activities, rentals on non-producing leases, drilling, completing and equipping of oil and gas wells and administrative costs directly attributable to those activities and asset retirement costs. Disposition of oil and gas properties are accounted for as a reduction of capitalized costs, with no gain or loss recognized unless such adjustment would significantly alter the relationship between capital costs and proved reserves of oil and gas, in which case the gain or loss is recognized to income. Depletion and depreciation of proved oil and gas properties is calculated on the units-of-production method based upon estimates of proved reserves. Such calculations include the estimated future costs to develop proved reserves. Oil and gas reserves are converted to a common unit of measure based on the energy content of 6,000 cubic feet of gas to one barrel of oil. Costs of unevaluated properties are not included in the costs subject to depletion. These costs are assessed periodically for impairment. As of December 31, 2015 and 2014 there were no proved reserves. During year ended December 31, 2014, the Company completed the acquisition of 100% working interests in the Powers-Sanders and Stroebel-Broyles leases, a 93.75% working interest in the Bradford A and B leases, a 43.75% working interest in the Fortune lease and the remaining 15% working interest in the Dawson-Conway leases for a combined cash consideration of $1,010,000. These properties are located in Shackelford and Eastland counties in north-central Texas. The cash for these acquisitions was sourced from a portion of the proceeds of a private offering of Senior Secured Convertible Promissory Notes. The acquisition cost for these properties was capitalized. Also, during the same period, the Company sold its interests in oil and gas properties located in California and Ohio to California Hydrocarbons, Inc. in exchange for the return of 3,000,000 shares of the Companys common stock valued at $2,010,000. The Company has recorded the return of the shares as the acquisition of Treasury Stock at cost and relieved the balance sheet of the affected assets and liabilities. During the year ended December 31, 2015, the Company disposed of its working interests in the Stroebel-Broyles leases in Eastland County, Texas. The Company assigned its interests in the leases to two local companies in exchange for the assumption of the plugging and abandonment liability associated with the thirty-two wells located on the properties. The disposition is in keeping with the Companys decision to focus its drilling and development activities in and adjacent to its properties in Shackelford County, Texas. On September 2, 2014 the Company sold its interests in the Bradford A and B leases to the Bradford Joint Venture Partnership (Bradford JV) for $325,000. The Companys wholly-owned subsidiary CEGX of Texas, LLC provides drilling and production services to Bradford JV. The additional cost for developing the leases is $2,175,000 to include infrastructure development, drilling and completion of 14 new wells, remediation of 6 existing wells, and conversion of 1 existing producing well to an injector. The Company acquired a 20% equity interest in participating units of the Bradford JV during December 2014 on the same terms as the original investors, being valued at $25,000 per 1% unit of the JV. In connection with the acquisition, the Company received $16,608 cash representing cash distributions which had been reserved by the Joint Venture in connection with the units the Company acquired. In June 2015, the Company transferred its 20% interests in the Bradford A and Bradford B leases to Keystone Energy, LLC pursuant to a Participation Interest Purchase Agreement (see Note 13). Our oil and gas leases were classified as unproved properties at December 31, 2015 and 2014 due to the limited quantities of oil and gas produced during the 2013 through 2015 time frame. In light of the precipitous fall in crude oil prices during the last 20 months and the relatively small production volumes from the Companys leases we elected to reduce the carrying value of our oil and gas properties during the fourth quarter of 2015. This reduction to the estimated net recoverable values of our oil and gas properties is reflected in the financial statements as an impairment charge of $2,654,824 on the income statement. Property and Equipment Support equipment and other property and equipment are valued at cost and depreciated over their estimated useful lives, using the straight-line method over estimated useful lives of 3 to 5 years. Additions are capitalized and maintenance and repairs are charged to expense as incurred. When assets are retired or disposed of, the cost and accumulated depreciation are removed, and any resulting gains or losses are included in the consolidated statement of operations. Valuation of Long-Lived Assets The Company follows ASC 360 regarding the valuations and carrying values of its long-lived assets. Long-lived tangible assets and definite-lived intangible assets are reviewed for possible impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. The Company uses an estimate of undiscounted future net cash flows of the assets over the remaining useful lives in determining whether the carrying value of the assets is recoverable. If the carrying values of the assets exceed the expected future cash flows of the assets, the Company recognizes an impairment loss equal to the difference between the carrying values of the assets and their estimated fair values. The Company recorded impairment losses in the amounts of $2,654,824 and $0 during the years ended December 31, 2015 and 2014, respectively. Stock-based Compensation Stock-based compensation is accounted for based on the requirements of the Share-Based Payment Topic of ASC 718, Compensation Stock Compensation (ASC 718), which requires recognition in the consolidated financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). ASC 718 also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award. Pursuant to ASC Topic 505-50, Equity Based Payments to Non-employees, for share-based payments to consultants and other third-parties, compensation expense is determined at the measurement date. The expense is recognized over the vesting period of the award. Until the measurement date is reached, the total amount of compensation expense remains uncertain. The Company initially records compensation expense based on the fair value of the award at the reporting date. Earnings (Loss) per Share Basic earnings (loss) per share (EPS) is calculated by dividing the Companys net earnings (loss) applicable to common stockholders by the weighted average number of common shares during the period. Diluted EPS assumes the exercise of stock option and warrants and the conversion of convertible debt, provided the effect is not antidilutive. The effect of computing diluted loss per share is anti-dilutive and, as such, basic and diluted losses per share are the same for the years ended December 31, 2015 and 2014. Asset Retirement Obligation The Company follows FASB ASC 410, Asset Retirement and Environmental Obligations which requires entities to record the fair value of a liability for asset retirement obligations (ARO) and to record a corresponding increase in the carrying amount of the related long-lived asset. The asset retirement obligation primarily relates to the abandonment of oil and gas properties. The present value of the estimated asset retirement cost is capitalized as part of the carrying amount of oil and gas properties and is depleted over the useful life of the asset. The settlement date fair value is discounted at our credit adjusted risk-free rate in determining the abandonment liability. The liability is accreted with the passage of time to its expected settlement fair value. Revisions to such estimates are recorded as adjustments to ARO and are charged to operations in the period in which they become known. At the time the abandonment cost is incurred, the Company is required to recognize a gain or loss if the actual costs do not equal the estimated costs included in ARO. The ARO is based upon numerous estimates and assumptions, including future abandonment costs, future recoverable quantities of oil and gas, future inflation rates, and the credit adjusted risk free interest rate. Different, but equally valid, assumptions and judgments could lead to significantly different results. Future geopolitical, regulatory, technological, contractual, legal and environmental changes could also impact future ARO cost estimates. Because of the intrinsic uncertainties present when estimating asset retirement costs as well as asset retirement settlement dates, our ARO estimates are subject to ongoing volatility. The ARO is $96,063 and $162,321 as of December 31, 2015 and 2014, respectively. The reduction in the ARO at December 31, 2015 reflects the aforementioned sale of the Stroebel-Broyles leases in March of 2015. The Company accreted $14,987 and $19,985 to ARO during the years ended December, 2015 and 2014, respectively. Available-for-Sale Securities The Companys available-for-sale securities consist of investments in marketable securities. The Company carries its investment at fair value based upon quoted market prices which amounted to $30,800 and $69,300 at December 31, 2015 and 2014, respectively. Unrealized holding gains (losses) on available-for-sale securities are excluded from earnings and reported as accumulated other comprehensive gain (loss), a separate component of stockholders equity (deficit), until realized. The Company recorded unrealized loss of $38,500 and gain of $45,465 during the years ended December 31, 2015 and 2014, respectively. Accumulated Other Comprehensive Losses were $2,186,800 and $2,148,300 as of December 31, 2015 and 2014, respectively. Income Taxes The Company accounts for income taxes pursuant to the provisions of ASC 740-10, Income Taxes which requires, among other things, an asset and liability approach to calculating deferred income taxes. The asset and liability approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. A valuation allowance is provided to offset any net deferred tax assets for which management believes it is more likely than not that the net deferred asset will not be realized. The Company also follows the provisions of ASC 740-10 related to accounting for uncertain income tax positions. When tax returns are filed, some positions taken may be sustained upon examination by the taxing authorities, while others may be subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740-10, the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. As of December 31, 2015 and 2014, the Company has had no uncertain tax positions. The Company recognizes interest and penalties, if any, related to uncertain tax positions as general and administrative expenses. The Company currently has no federal or state tax examinations nor has it had any federal or state examinations since its inception. The Companys 2015, 2014, and 2013 tax years may still be subject to federal and state tax examination. Concentration During the year ended December 31, 2015 sales to two customers represented approximately 92% of the Companys net revenues. During the year ended December 31, 2014 sales to one customer represented approximately 95% of the Companys net revenues. As of December 31, 2015 and 2014, the Company had one customer representing 100% of accounts receivable and one customer representing approximately 77% of accounts receivable, respectively. Revenue and Cost Recognition The Company uses the sales method to account for the sales of crude oil and natural gas. Under this method, revenues are recognized based on the actual volumes of oil and gas sold to purchasers. The volumes sold may differ from the volumes to which the Company is entitled based on its interest in the properties. These differences create imbalances which are recognized as a liability or as an asset only when the imbalance exceeds the estimate of remaining reserves. For the years ending December 31, 2015 and 2014 there were no such differences. The Company has agreed with the Bradford JV and Keystone Energy, LLC to provide drilling, infrastructure and work-over services to support the development of certain oil leases. The revenue and costs arising from the drilling and other services are matched and recorded as income and expense as each project is completed in accordance with their agreements, effectively recognizing income on the percentage of completion basis. Costs associated with the production of oil and gas (sometimes referred to as lifting costs) are expensed in the period incurred. During the last week of December 2014, the Company obtained 20 units (out of 100 total units) in the Bradford Joint Venture exploration and drilling program located in Shackelford County, Texas. The operation is accounted for as an investment as of December 31, 2014. The Company purchased their interest for $25,000 per unit on December 31, 2014. On June 12, 2015 the Company transferred its 20% interest in the Bradford JV to Keystone Energy, LLC (Keystone) in a series of transactions which resulted in Keystone securing a line of credit to be used to further develop the Bradford A and Bradford B leases. Keystone acquired an option (exercisable within 365 days) to purchase all of the interests in the Bradford JV and the Company exchanged 10 units of its ownership interests in the Bradford JV for a 5% equity interest in Keystone. Derivative Liabilities The Company evaluates its convertible debt, options, warrants or other contracts, if any, to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with Accounting Standards Codification topic 815, Accounting for Derivative Instruments and Hedging Activities (ASC 815) as well as related interpretations of this standard. In accordance with this standard, derivative instruments are recognized as either assets or liabilities in the balance sheet and are measured at fair values with gains or losses recognized in earnings. Embedded derivatives that are not clearly and closely related to the host contract are bifurcated and are recognized at fair value with changes in fair value recognized as either a gain or loss in earnings. The Company determines the fair value of derivative instruments and hybrid instruments based on available market data using appropriate valuation models, considering all of the rights and obligations of each instrument. The result of this accounting treatment is that the fair value of the embedded derivative is marked-to-market each balance sheet date and recorded as either an asset or a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the consolidated statement of operations as other income or expense. Upon conversion, exercise or cancellation of a derivative instrument, the instrument is marked to fair value at the date of conversion, exercise or cancellation and then that the related fair value is reclassified to equity. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. Equity instruments that are initially classified as equity that become subject to reclassification are reclassified to liability at the fair value of the instrument on the reclassification date. ASC 815 generally provides three criteria that, if met, require companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument subject to the requirements of ASC 815. ASC 815 also provides an exception to this rule when the host instrument is deemed to be conventional. The Company marks to market the fair value of the embedded derivative convertible notes and derivative warrants at each balance sheet date and records the change in the fair value of the embedded derivative convertible notes and derivative warrants as other income or expense in the consolidated statements of operations. The Company estimates fair values of derivative financial instruments using the Black-Scholes model, adjusted for the effect of dilution, because it embodies all of the requisite assumptions (including trading volatility, estimated terms, dilution and risk free rates) necessary to fair value these instruments. Estimating fair values of derivative financial instruments requires the development of significant and subjective estimates that may, and are likely to, change over the duration of the instrument with related changes in internal and external market factors. In addition, option-based techniques (such as Black-Scholes model) are highly volatile and sensitive to changes in the trading market price of our common stock. Recent Accounting Pronouncements In August 2014, FASB issued Accounting Standards Update (ASU) No. 2014-15, Presentation of Financial StatementsGoing Concern (ASU No. 2014-15). The provisions of ASU No. 2014-15 require management to assess an entitys ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term substantial doubt, (2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of managements plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of managements plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). The amendments in this ASU are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. The Company is currently assessing the impact of this ASU on the Companys consolidated financial statements. In November 2014, FASB issued ASU No. 2014-17, Business Combinations: Pushdown Accounting (ASU No. 2014-17). This ASU amended the Business Combination Accounting Standards Codification to provide guidance on whether and at what threshold an acquired entity that is a business or nonprofit activity can apply pushdown accounting in its separate financial statements. The Companys adoption of ASU No. 2014-17 effective November 14, 2014 did not have an impact on the Companys consolidated results of operations, financial position and related disclosures. In April 2015, FASB issued ASU 2015-03, Interest Imputation of Interest (Subtopic 835-30) which focuses on simplifying the presentation of debt issuance costs. The amendments in this update require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this update. The ASU will be effective for periods beginning after December 15, 2015 for public companies. Early adoption is permitted, including adoption in an interim period. The Company is currently assessing the impact of this ASU on the Companys consolidated financial statements. In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes In February 2016, FASB issued ASU 2016-02, Leases (Topic 842). The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases. The new guidance will be effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period and is applied retrospectively. Early adoption is permitted. The Company is currently in the process of assessing the impact the adoption of this guidance will have on the Companys consolidated financial statements. Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption. The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its financial condition, results of operations, cash flows or disclosures. Reclassifications Certain items in prior year financial statements have been reclassified to conform to the 2015 presentation. These reclassifications had no effect on the reported results. |
Going Concern
Going Concern | 12 Months Ended |
Dec. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Going Concern | NOTE 2 - GOING CONCERN The Companys consolidated financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplate the realization of assets and the liquidation of liabilities in the normal course of business. The Company currently utilizes revenues from the sale of crude oil and natural gas and contract drilling and operating services plus the proceeds from the private sales of common stock and/or convertible debt instruments to fund its operating expenses. The Companys minimal cash flows from operations, working capital deficit and the projected cost of capital improvements of its oil and gas wells raise substantial doubt about its ability to continue as a going concern. The Company has not yet established an adequate ongoing source of operating revenues sufficient to cover its operating costs and to allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease development of operations. The Companys consolidated financial statements have been prepared assuming that it will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. As reflected in the consolidated financial statements, the Company had an accumulated deficit of $13,955,074 at December 31, 2015, a net loss of $8,613,362 and net cash used in operating activities of $922,367 for the year ended December 31, 2015. These factors raise substantial doubt about the Companys ability to continue as a going concern. Managements plans to continue as a going concern include raising additional capital through increased sales of oil and gas, providing additional contract drilling and operating services for the development of proven undeveloped shallow oil projects and by the sale of debt and equity securities in both public and private transactions. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described above, restructuring its current debt and eventually securing additional sources of financing and attaining consistent profitable operations. These consolidated financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 12 Months Ended |
Dec. 31, 2015 | |
Fair Value Disclosures [Abstract] | |
Fair Value of Financial Instruments | NOTE 3 - FAIR VALUE OF FINANCIAL INSTRUMENTS ASC 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated, or generally unobservable. The Company classifies fair value balances based on the observability of those inputs. The following tables set forth by level within the fair value hierarchy the Companys financial assets and liabilities that were accounted for at fair value as of December 31, 2015 and 2014. As required by ASC 820, a financial instruments level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Companys assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels. There were no transfers between fair value hierarchy levels as of December 31, 2015 and 2014. The following table presents assets and liabilities that are measured and recognized at fair value as of December 31, 2015 and 2014, on a recurring basis: Assets and liabilities at fair value on a recurring basis at December 31, 2015: Level 1 Level 2 Level 3 Total Assets Marketable securities $ 30,800 $ - $ - $ 30,800 Total $ 30,800 - - $ 30,800 Liabilities Derivative liability $ - $ - $ 2,355,580 $ 2,355,580 Total $ - $ - $ 2,355,580 $ 2,355,580 Assets and liabilities at fair value on a recurring basis at December 31, 2014: Level 1 Level 2 Level 3 Total Assets Marketable securities $ 69,300 $ - $ - $ 69,300 Total $ 69,300 $ - $ - $ 69,300 Liabilities Derivative liability - - $ 382,836 $ 382,836 Total $ - $ - $ 382,836 $ 382,836 The following table provides a summary of changes in fair value of the Companys Level 3 financial liabilities as of December 31: 2015 2014 Balance, beginning of year $ 382,836 $ 32,528 Excess of fair value over debt discount 2,577,683 - Debt discount in connection with conversion option of Debentures and detachable warrants 931,181 693,630 Extinguished derivative liability (826,901 ) (22,068 ) Change in fair value of derivative liabilities (709,219 ) (321,254 ) Balance, end of year $ 2,355,580 $ 382,836 Net gain for the period included in earnings relating to the liabilities held at December 31, 2015 $ 709,219 $ 321,254 The carrying value of short term financial instruments including cash, accounts receivable, prepaid expense, loans payable, accounts payable, accrued expenses and short-term borrowings approximate fair value due to the short period of maturity for these instruments. The long-term debentures payable approximates fair value since the related rates of interest approximate current market rates. |
Oil and Gas Properties
Oil and Gas Properties | 12 Months Ended |
Dec. 31, 2015 | |
Extractive Industries [Abstract] | |
Oil and Gas Properties | NOTE 4 - OIL AND GAS PROPERTIES The Company holds oil and gas leases in Texas. The oil and gas leases were classified as unproved properties at December 31, 2015 and 2014 due to the absence of sustained commercial levels oil and gas production from the properties. In July 2013, the Company purchased an 85% working interest and 75% net revenue interest in certain oil and gas leases (Dawson-Conway leases) for a purchase price of $400,000. The Company initially issued a promissory note in the amount of $400,000 to finance the purchase, that amount was initially reduced to $340,000 during March of 2014 and subsequently reduced to zero as the result of litigation filed by the Company in 2015 (see Note 7 for additional details). The Company has reflected these actions as adjustments to the cost basis of the leases. On March 11, 2014 the Company purchased the remaining 15% working interest in Dawson Conway Leases property for a cash payment of $30,000. On June 30, 2015 the Company announced that it had settled the dispute with Concho Oilfield Services (Concho) over services provided by Concho. As a part of the settlement Concho agreed to re-enter the #5B well on the Dawson-Conway 195B lease to repair damage to the wellbore and production string and to return the well to production. In July 2015 Concho did return to the #5B well and commenced jarring and fishing operations in an attempt to repair the well. These operations did not result in success and the well remains shut-in at this time. In June 2015 the Company filed suit in the District Court for Shackelford County against HLA Interests, LLC and Sedco (a former operator of the Dawson-Conway leases) alleging misrepresentation and fraud concerning title to the leases and compliance in regards to various regulations and permitting requirements of the Texas Railroad Commission. During December 2015, the Company accessed the potential development options for the Dawson-Conway leases and the Company decided that all operations at the Dawson-Conway leases should be suspended pending eventual sale of the property. On March 5, 2014, the Company acquired a 100% working interest (80% net revenue interest) in the Powers-Sanders lease located in Shackelford County, Texas from Sabor X Energy Services, Inc. for $600,000. The property consists of 385 acres and 5 producing oil wells. The property has been shut-in since August of 2015 due to mechanical downhole issues. In December 2015, the Company accessed the potential development options for the Powers-Sanders lease and the Company decided that all operations at the Powers-Sanders leases should be suspended pending the eventual sale of the property. On March 6, 2014, the Company acquired a 100% working interest in the Stroebel-Broyles leases located in Eastland County, Texas from Hunting Dog Capital, LLC for $75,000. We held a 76.0% net revenue interest in the Broyles lease and a 78.0% net revenue interest in the Stroebel lease. The property consisted of 235 acres and 32 wells. The Company disposed of its working interests in the Stroebel-Broyles leases in Eastland County, Texas during the first quarter of 2015. On June 16, 2014, we acquired a 93.75% working interest in the Bradford A and Bradford B leases located in Shackelford County, Texas for $225,000 pursuant to the terms of Purchase & Sale and Farmout agreements. At the time of the acquisition the property consisted of 320 acres with 7 producing wells. Under the terms of the Farmout Agreement our wholly-owned subsidiary, CEGX of Texas, LLC, was obligated to spud the initial Earning Well by September 15, 2014. The initial well was part of a continuous drilling program which afforded Cardinal the opportunity to earn additional 2-acre producing units on the Bradford leases by drilling and completing injection and production wells. The property, which heretofore had never been water flooded, had a two tank batteries. On September 2, 2014 the Company sold its interests in the Bradford A and Bradford B leases to the Bradford Joint Venture Partnership (Bradford JV). At the time of the sale neither the parent company nor CEGX held any ownership in Bradford JV. In late December 2014, Cardinal Energy (the parent company) purchased a 20% interest in Bradford JV on the same terms as offered to the general public. On June 12, 2015 the Company transferred its 20% interest in the Bradford JV to Keystone Energy, LLC (Keystone) in a series of transactions which resulted in Keystone securing a line of credit to be used to further develop the Bradford A and Bradford B leases, Keystone acquiring an option (exercisable within 365 days) to purchase all of the interests in the Bradford JV and Cardinal Energy exchanging 10 units of its ownership interests in the Bradford JV for a 5% equity interest in Keystone. On September 2, 2014, we acquired a 43.75% working interest (32.375% net revenue interest) in the Fortune prospect located in Shackelford County, Texas for a cash payment of $80,000. P.I.D. Drilling, Inc. serves as the operator for the property. The prospect consists of leasehold interests in five tracts of land aggregating just over 310 acres. During the fourth quarter of 2014 the plugged well on the Fortune Prospect was re-drilled and completed in the prolific Caddo limestone formation and two new wells were drilled and completed in the Cooke sandstone formation. The remote location of the lease caused some delays in getting electricity to the location, obtaining approval for hook-up to a natural gas pipeline and the delivery and installation of tank batteries and associated production equipment. The lease came on production in January 2015 and production peaked at just under 25 barrels of oil equivalent (BOE) per day. Production from the three wells has steadily declined from its peak to approximately 13 BOE per day for the first quarter of 2015 to just under 7 BOE per day during the second quarter of 2015 and approximately 3 BOE per day during the third quarter of 2015. Following the initial completion of the three producers, the Company asked for a full accounting of the drilling costs and requested a refund for excess charges billed by the operator. In March 2015 the Company received refunds totaling $40,000 from the operator voted to remove the operator. The refunds were treated as a reduction in our cost basis of the property. In June 2015 the Company filed suit in the District Court for Shackelford County seeking recovery of damages. Future development activities for the prospect have been placed on hold pending the outcome of the litigation. On December 31, 2014 the Company acquired a 100% working interest (77% net revenue interest) in the Bradford West lease for a cash payment of $20,000. The prospect comprising 200 acres is located adjacent to and just to the west of the existing Bradford A and B leases. During the second quarter of 2015, the Company drilled the initial well (Bradford West #1). We perforated and treated the well, ran the production tubing and set the pump jack. The results from this well were disappointing and the Company elected not to continue the drilling program called for under the Asset Sale & Purchase, and Farm-In agreements. The well was suspended and the lease and well were subsequently transferred to the previous owners during the fourth quarter of 2015. The aforementioned Powers-Sanders, Stroebel-Broyles, Bradford A and B and Fortune acquisitions and the additional 15% working interest in the Dawson-Conway leases were financed from the proceeds of a $4,500,000 offering of 12% Senior Secured Convertible Notes which matured in December 2015 (see Note 6 for additional details). As of December 31, 2015, based on managements review of the carrying value of oil and gas properties, management determined that there is evidence that the cost of these acquired oil and gas properties will not be fully recovered and accordingly, the Company has determined that an adjustment to the carrying value of these properties was required. |
Property And Equipment
Property And Equipment | 12 Months Ended |
Dec. 31, 2015 | |
Property, Plant and Equipment [Abstract] | |
Property And Equipment | NOTE 5 - PROPERTY AND EQUIPMENT The following is a summary of property and equipment - at cost, less accumulated depreciation as of December 31, 2015 and 2014: December 31, 2015 December 31, 2014 Office equipment $ 63,235 $ 63,128 Computer hardware and software 26,652 23,527 Leasehold improvements 25,453 25,270 Transportation equipment 132,622 180,485 Building 110,699 110,595 358,661 403,005 Less: accumulated depreciation (114,583 ) (63,252 ) $ 244,078 $ 339,753 Depreciation expense for the years ended December 31, 2015 and 2014 amounted to $63,294 and $40,093, respectively. During 2015, the Company sold a truck with a net book value worth approximately $35,000 to third parties for a sales price of approximately $28,000 and settled the equipment purchase contract payable of $28,000, realizing a loss on sale of assets of approximately $7,000. The depreciation expense related to the sold truck amounted to approximately $7,000 which is included in the $63,294 above. During 2014, the Company sold a truck that had been purchased in 2014. No depreciation was recognized on the truck and a minor gain of approximately $1,000 was realized. |
Senior Secured Convertible Prom
Senior Secured Convertible Promissory Notes Payable | 12 Months Ended |
Dec. 31, 2015 | |
Debt Disclosure [Abstract] | |
Senior Secured Convertible Promissory Notes Payable | NOTE 6 - SENIOR SECURED CONVERTIBLE PROMISSORY NOTES PAYABLE Senior secured convertible notes payable consisted of the following: December 31, 2015 December 31, 2014 12% Senior secured convertible promissory notes $ 4,500,000 $ 4,500,000 Discount (519,286 ) (519,286 ) Accumulated amortization of discount 519,286 224,158 Remaining discount - (295,128 ) 12% Senior secured convertible notes payable, net $ 4,500,000 $ 4,204,872 In March 2014, the Company issued senior secured convertible promissory notes in an aggregate principal amount of $3,225,000 (the Senior Secured Convertible Notes) together with common stock purchase warrants (the Warrants) to purchase an aggregate of 1,290,000 shares of the Companys common stock at an exercise price of $1.00 per share as part of a private placement offering. The Senior Secured Convertible Notes bear interest at a rate of 12.0% per annum until they mature on December 15, 2015 or are converted. The note is secured by senior secured interest in the assets of the Companys working interest in the Dawson-Conway Lease, Powers-Sanders Lease, and Stroebel-Broyles Lease and a pledge of a number of shares of restricted Stock (the Stock Coverage) whose value based on the bid price of the Stock is twice (or 200%) the amount in outstanding and unpaid principal and interest of the Notes. During fiscal 2014, the Company issued additional Senior Secured Convertible Notes in an aggregate principal amount of $1,275,000 together with common stock purchase warrants (the Warrants) to purchase an aggregate of 510,000 shares of the Companys common stock at an exercise price of $1.00 per share as part of the same private placement offering. The remaining $500,000 of principal available under the facility was not secured during the fourth quarter of 2014 and the offering of units was closed during February 2015. In accordance with ASC 470-20, the Company recognized an embedded beneficial conversion feature in the notes. The Company allocated a portion of the proceeds equal to the intrinsic value of that feature to additional paid-in capital. The Company recognized and measured an aggregate of nil of the proceeds, which is equal to the intrinsic value of the embedded beneficial conversion feature. In connection with the issuance of the convertible promissory notes, the Company issued detachable warrants granting the holders the right to acquire an aggregate of 1,800,000 shares of the Companys common stock for $1.00 per share. The warrants expire on December 31, 2019. In accordance with ASC 470-20, the Company recognized the value attributable to the warrants in the amount of $519,286 to additional paid-in capital and as a discount against the notes. The Company valued the warrants in accordance with ASC 470-20 using the Black-Scholes pricing model and the following assumptions: contractual terms of 2 years, an average risk free interest rate of 0.69%, a dividend yield of 0% and volatility of 238.45%. The debt discount attributed to the value of the warrants issued was amortized over the notes maturity and recorded to amortization of debt discount. The Company amortized debt discount $224,158 to current operations as a component of interest expense for the year ended December 31, 2014. During the year ended December 31, 2015 the Company amortized an additional $295,128 to current operations as amortization of debt discount under other expenses. Through the end of December 2014, the Company had prepaid $515,000 in commissions and fees related to the financing. During the year ended December 31, 2015 and 2014, the Company amortized prepaid debt issuance cost of $294,163 and $220,837, respectively, of the commissions and fees to interest expense. As of December 31, 2015, accrued interest amounted to $540,000 and was included in accounts payable and accrued expenses as reflected in the consolidated balance sheet. The Company failed to make the $270,000 semi-annual interest payment that was due to the noteholders on July 31, 2015 and the final semi-annual interest and principal payments due on December 15, 2015 remain outstanding at December 31, 2015. The Company has held several telephone conference calls with the noteholders and has been in continuous contact with Syndicated Capital, the placement agent for the Notes, to discuss plans to either bring the interest payments to a current status or to restructure the unpaid interest and principal outstanding into common and or preferred equity securities of the Company. To date, the noteholders have elected not to exercise their rights to trigger certain default provisions under the senior secured promissory notes. The net proceeds from the borrowing were used primarily to acquire selected oil and gas properties in Texas, to fund the Companys well work-over and drilling programs, to purchase and equip a regional office, to purchase various well testing and production equipment, to fund lease operating expenses and to retire short-term debt. In July 2015 the Company identified embedded derivatives related to the theoretical default of the Senior Secured Convertible Promissory Notes. These embedded derivatives included certain conversion features. The accounting treatment of derivative financial instruments requires that the Company to record the fair value of the derivatives as of the inception date of the Senior Secured Convertible Promissory Note and to adjust the fair value as of each subsequent balance sheet date (see Note 8). |
Loan Payable Notes Payable and
Loan Payable Notes Payable and Convertible Notes Payable | 12 Months Ended |
Dec. 31, 2015 | |
Notes Payable [Abstract] | |
Loan payable Notes Payable and Convertible Notes Payable | NOTE 7 LOAN PAYABLE, NOTES PAYABLE AND CONVERTIBLE NOTES PAYABLE Loan Payable Loan payable outstanding at December 31, 2015 and 2014 consisted the following: December 31, 2015 December 31, 2014 Loan payable obtained in November 2015 of $172,800, net of debt discount of $36,759, payable over 273 days beginning on November 18, 2015 with daily payments of $633. $ 119,584 $ - Such loan was obtained in connection with a Revenue Based Factoring Agreement executed in November 2015 whereby the Company sells, assigns, and transfers all of the Companys future receipts, accounts and contract rights and other obligations arising from or relating to payment of monies from customers in the ordinary course of the Companys business, until such time the loan amount has been paid off by the Company. In March 2016, the Company received a default notice from the lender (see Note 14). Notes Payable Equipment purchase contracts payable Between June 2014 and September 2014, the Company issued notes payable in the aggregate amount of $100,285 in connection with the acquisition of three pieces of transportation equipment. The notes payable bear interest ranging approximately from 9% to 10% per annum and are secured by a lien on the transportation equipment. The notes are payable in 60 equal monthly payments. During fiscal 2015, the Company sold one piece of transportation equipment. The Company used the sales proceeds to pay off the remaining balance of the note of approximately $25,000. Notes payable short and long term portion consisted of the following: December 31, 2015 December 31, 2014 Total notes payable $ 56,226 $ 94,631 Less: current portion equipment purchase contract payable (13,721 ) (17,023 ) Long term portion equipment purchase contract payable $ 42,505 $ 77,608 Note payable outstanding at December 31, 2015 and 2014 consisted the following: December 31, 2015 December 31, 2014 Promissory note of $340,000 bearing 6% interest per annum $ - $ 340,000 Note issued in July 2013: In July 2013, the Company purchased an 85% working interest and 75% net revenue interest in certain oil and gas leases covering 618 acres of land located in Shackelford County, Texas (the Dawson-Conway Leases) for a purchase price of $400,000. The Company issued a promissory note in the amount of $400,000 to finance the purchase (the HLA Note). The promissory note accrues interest at 6% per annum, is due two years from issuance and is secured by the Dawson-Conway Leases. During March of 2014, pursuant to property title related issues, the note was reduced to $340,000. All of other terms of the note agreement remain unchanged. The Company has treated the reduction as an adjustment to the purchase price of the properties. At December 31, 2014, the $340,000 balance of the HLA Note remained outstanding. Pursuant to a partial default judgement awarded in favor of the Company on August 5, 2015, the Company was relieved of any responsibility for repayment of the HLA Note. Accordingly, the Company has removed the HLA Note from the liability section of the balance sheet and has treated the previously outstanding balance of $340,000 as a reduction to the carrying value of the properties as of December 31, 2015 (see Note 13). Note issued on September 11, 2014: On September 11, 2014, the Company issued a 90 day promissory note to an unrelated entity in the amount of $120,000. The Company received $120,000 in cash. Under the terms of the note, the Company issued 50,000 shares of restricted common stock as a prepayment of interest and agreed to pay an additional $15,000 of interest on maturity of the note. The stock that was issued was valued at $0.70 per share based upon the trading value of the stock when issued resulting in a credit to common stock of $35,000 which was amortized over the 90 days to maturity of the note. During December 2014 the Company repaid the note principal in cash and during January 2015 the Company paid the interest by issuing 30,000 shares of common stock valued at $12,000. Convertible notes payable Convertible notes payable outstanding at December 31, 2015 and 2014 are summarized in the following table: December 31, 2015 December 31, 2014 Amount of principal and interest under the various 8% convertible promissory notes net of debt discount of $0 and $14,353 at December 31, 2015 and 2014, respectively, issued during fiscal 2013 $ - $ 168,647 Amount of principal and interest including default interest and penalties under the 6% convertible promissory notes net of debt discount of $0 and $181,465 at December 31, 2015 and 2014, respectively, issued during fiscal 2014 431,092 158,535 Amount of principal and interest including default interest and penalties under the various 8% convertible promissory notes net of debt discount of $0 and $107,288 at December 31, 2015 and 2014, respectively, issued during fiscal 2014 4,521 2,712 Amount of principal and interest including default interest and penalties under the various 8% convertible promissory notes net of debt discount of $39,340 and $0 at December 31, 2015 and 2014, respectively, issued during fiscal 2015 20,295 - Amount of principal and interest including default interest and penalties under the various 10% convertible promissory notes net of debt discount of $2,610 and $0 at December 31, 2015 and 2014, respectively, issued during fiscal 2015 95,869 - Amount of principal and interest including default interest and penalties under the various 12% convertible promissory notes net of debt discount of $138,214 and $0 at December 31, 2015 and 2014, respectively, issued during fiscal 2015 597,766 - Total principal and interest including default interest and penalties 1,149,543 329,894 Less : Current portion of convertible notes (1,061,725 ) (329,894 ) Total long-term portion of convertible notes $ 87,818 $ - Convertible Note issued during fiscal 2013: As of December 31, 2015 and 2014, there was a total remaining balance of $0 and $183,000, respectively, pursuant to convertible debentures offering issued during fiscal 2013. The convertible notes bore interest at 8% per annum, with principal and interest due two years from issuance. The notes carried a default interest rate of 12% per annum. The notes were convertible for two years from the issue date into shares of the Companys common stock at a price of $1.00 per share. The Company analyzed the convertible debts for derivative accounting consideration under ASC 815 Derivatives and Hedging and determined that derivative accounting is not applicable. During the year ended December 31, 2015, the Company repaid by cash $15,000 of these convertible notes payable and issued 69,697 shares of common stock to convert $23,000 principal convertible notes issued in 2013. During the year ended December 31, 2015, noteholders of the remaining balance of these $145,000 principal convertible notes payable entered into an assignment agreement and assigned their debts to another note holder. The Company issued a 10 month 12% convertible note payable of $145,000 on May 8, 2015 - see below. Convertible Note issued on September 22, 2014: On September 22, 2014, the Company issued a 6% short term convertible promissory note payable of $340,000 to an unrelated entity. Under the terms of the note, the Company received $250,000. The Company paid $10,000 as a commission related to this credit facility. The repayment of the note is due 180 days after the funds were received. The repayment is subject to the convertible features of the note. The creditor has a conversion option allowing it to choose to receive repayment of the stated principal either in cash or, at the creditors option, in the Companys restricted common stock. If paid in cash, the Company is required to pay principal of $340,000. At the option of the note holder, the Company may repay the note by issuing restricted common stock based upon a valuation formula, which includes a calculation based upon 75% of an average of the lowest 3-day closing price during the immediate 20 days prior to the date of the conversion notice. The note was issued with an original issue discount of $90,000 and the Company recorded it as prepaid debt issuance cost which was amortized over the term of the note. In conjunction with the issuance of this convertible promissory note, the Company issued an aggregate of 250,000 Class C detachable warrants exercisable three years from the date of issuance with an initial exercise price of $1.00 per share. During the year ended December 31, 2015, the Company extended the repayment date on three occasions and issued common stock to the note holder as consideration for the extension concessions. The Company issued 250,000 shares on May 5, 2015 and an additional 250,000 shares on May 28, 2015. The shares were valued based upon an agreed formula consistent with the conversion terms applied to the embedded derivative. The 500,000 shares of common stock was valued at $107,500 which was charged to interest during the year ended December 31, 2015. The Company has completed a third extension, for which it paid $5,000 for legal fees incurred by the note holder. The note is currently in default and the Company and the note holder have agreed to arbitration in 2016. Convertible Note issued on December 23, 2014: On December 23, 2014, the Company issued an 8% short term convertible promissory note payable of $110,000 to an unrelated entity. Under the terms of the note, the Company received $95,000. The Company paid $5,000 as a legal fees related to this credit facility. The repayment of the note is due one year after the funds were received. The repayment is subject to the convertible features of the note. The creditor has a conversion option allowing it to choose to receive repayment of the stated principal either in cash or, at the creditors option, in the Companys restricted common stock. If paid in cash, the Company is required to pay principal of $120,000 on or before 180 days from the execution of the agreement. At the option of the note holder, the Company may repay the note by issuing restricted common stock based upon the conversion term, which includes a calculation based upon a 40% discount to the lowest closing price during the immediate 20 days prior to the date of the conversion notice. Convertible Note issued on January 12, 2015: On January 12, 2015, the Company issued a 10% one year promissory note payable of $100,000, due January 12, 2016, with an unrelated entity. Under the terms of the note, the Company received $90,000 and was charged an original issue discount of $5,000. The Company was also charged $5,000 as legal fees related to this credit facility. The repayment, if not completed within 180 days may, at the option of the note holder, be repaid in common stock of the Company. After 180 days, the creditor will have a conversion option allowing it to choose to receive repayment of the stated principal and interest either in cash or, at the creditors option, in the Companys restricted common stock. If paid in cash, during the 180 day prepayment period, the repayment will be $120% of the principal and any accrued interest. At the option of the note holder, the Company may repay the note by issuing restricted common stock based upon the conversion term, which includes a calculation based upon a 35% discount to the lowest closing price during the immediate 15 days prior to the date of the conversion notice. Convertible Note issued on January 16, 2015: On January 16, 2015, the Company issued an 8% short-term promissory note payable of $114,000, due October 13, 2015, with an unrelated entity. Under the terms of the note, the Company received $110,000 and was charged an original issue discount of $4,000. The repayment, if not completed within 180 days may, at the option of the note holder, be repaid in common stock of the Company. After 180 days, the creditor will have a conversion option allowing it to choose to receive repayment of the stated principal and interest either in cash or, at the creditors option, in the Companys restricted common stock. If paid in cash, during the 180 day prepayment period, the repayment will be 130% of the principal and any accrued interest. At the option of the note holder, the Company may repay the note by issuing restricted common stock based upon the conversion term, which includes a calculation based upon a 35% discount of the average of the lowest three trading price during the 10 days prior to the date of the conversion notice. Convertible Note issued on January 22, 2015: On January 22, 2015, the Company issued a two-year 12% convertible promissory note payable of $55,000 with an unrelated entity. Under the terms of the note, the Company received $50,000. The repayment of the note is due on or before January 28, 2017, 2 years after the funds were received. The repayment is subject to the convertible features of the note. The creditor has a conversion option allowing it to choose to receive repayment of the stated principal either in cash or, at the creditors option, in the Companys restricted common stock. At the option of the note holder, the Company may repay the note by issuing restricted common stock based upon a conversion term, which includes a calculation based upon 60% of the lowest closing price during the immediate 25 days prior to the calculation of the conversion notice. The note was issued with an original issue discount of $5,000 and the Company recorded it as prepaid debt issuance cost which is amortized over the term of the note. Conversion price of this convertible note shall equal to the lesser of (a) $0.50 or (b) 60% of the lowest trade occurring during the 25 consecutive trading days immediately preceding the applicable conversion date on which the holder elects to convert all or part of this note. Convertible Note issued on January 28, 2015: On January 28, 2015, the Company issued a two-year 12% convertible promissory note payable of $55,000, due January 28, 2017 with an unrelated entity. Under the terms of the note, the Company received $50,000 and was charged an original issue discount of $5,000. The repayment, if not completed within 180 days may, at the option of the note holder, be repaid in common stock of the Company. After 180 days, the creditor will have a conversion option allowing it to choose to receive repayment of the stated principal and interest either in cash or, at the creditors option, in the Companys restricted common stock. If paid in cash, during the initial 90 days, the repayment will be 120% of the principal and any accrued interest. During the succeeding 90 day prepayment period, the repayment will be 130% of the principal and any accrued interest. Conversion price of this convertible note shall equal the lesser of (a) $0.365 or (b) 60% of the lowest trade occurring during the 25 consecutive trading days immediately preceding the applicable conversion date on which the note holder elects to convert all or part of this note. Convertible Note issued on March 18, 2015: On March 18, 2015, the Company issued a two-year 8% convertible promissory note payable of $60,000, due March 18, 2017 with an unrelated entity. Under the terms of the note, the Company received $54,000 and was charged an original issue discount of $6,000. The repayment, if not completed within 180 days may, at the option of the note holder, be repaid in common stock of the Company. After 180 days, the creditor will have a conversion option allowing it to choose to receive repayment of the stated principal and interest either in cash or, at the creditors option, in the Companys common stock. If paid in cash, during the initial 90 days, the repayment will be 115% of the principal and accrued interest. During the succeeding 90 day prepayment period, the repayment will be $130% of the principal and any accrued interest. If the creditor elects to convert the note to common stock, the conversion feature allows for a valuation of the stock based upon a 35% discount to the average of the lowest three trading prices during the 10 days preceding the conversion date. Convertible Note issued on March 18, 2015 and August 27, 2015: Between March 18, 2015 and August 27, 2015, the Company issued two year 12% convertible promissory notes payable for a total of $85,000 with an unrelated entity. Under the terms of the note, the Company received $72,500. The repayment of the notes are both due on or before March 18, 2017, two years after the funds were received. The repayment is subject to the convertible features of the note. The creditor has a conversion option allowing it to choose to receive repayment of the stated principal with accrued interest. At the option of the note holder, the Company may repay the note by issuing restricted common stock based upon the conversion term, which includes a calculation based upon the lesser of a) $0.30 or b) 60% of the lowest closing price during the immediate 25 days prior to the date of the conversion notice. The note was issued with an original issue discount of $8,500 and a charge for legal fees of $4,000. The Company recorded the costs as prepaid debt issuance cost which is amortized over the term of the note. Convertible Note issued on April 6, 2015: On April 6, 2015, the Company issued a nine-month 10% convertible promissory note payable of $60,000, due January 6, 2016 with an unrelated entity. Under the terms of the note, the Company received $54,750 and was charged an original issue discount of $5,250. The repayment, if not completed within 180 days may, at the option of the note holder, be repaid in common stock of the Company. After 180 days, the creditor will have a conversion option allowing it to choose to receive repayment of the stated principal and interest either in cash or, at the creditors option, in the Companys restricted common stock. If paid in cash, during the initial 180 days, the repayment will be calculated based upon the period paid, with prepayment terms requiring 125% to 150% of the principal and any accrued interest. At the option of the note holder, the Company may repay the note by issuing restricted common stock based upon the conversion term, which includes a calculation based upon 55% of the lowest two closing price during the immediate 25 days prior to the date of the conversion notice. Convertible Note issued on May 1, 2015: On May 1, 2015, the Company issued a nine-month 8% convertible promissory note payable of $59,000, due February 6, 2016 with an unrelated entity. Under the terms of the note, the Company received $55,000 and was charged prepaid loan costs of $4,000. The repayment, if not completed within 180 days may, at the option of the note holder, be repaid in common stock of the Company. After 180 days, the creditor will have a conversion option allowing it to choose to receive repayment of the stated principal and interest either in cash or, at the creditors option, in the Companys restricted common stock. If paid in cash, during the initial 180 days, the repayment will be calculated based upon the period paid, with prepayment terms requiring 115% to 130% of the principal and any accrued interest. If the creditor elects to convert the note to common stock, the conversion feature allows for a valuation of the stock based upon a 35% discount to the average of the lowest three trading prices during the 10 days preceding the conversion date. Convertible Note issued on May 8, 2015: On May 8, 2015, the Company issued a ten-month 12 % convertible promissory note payable of $145,000 to an unrelated entity upon the assignment of a total of $145,000 of 8% convertible notes issued in fiscal 2013 whereby the previous noteholders entered into an assignment agreement and assigned their debts to this unrelated entity. The repayment of the note is due on or before March 8, 2016, ten months after the issue date of the note. The repayment is subject to the convertible features of the note. The creditor has a conversion obligation allowing it to convert the notes during the pendency of the note, but repayment in cash is not expected. At the option of the note holder, the Company may repay the note by issuing restricted common stock based upon a valuation formula, which includes a calculation based upon lesser of a) $0.40 or b) 70% of the lowest volume weighted average price (VWAP) during the immediate 10 days prior to the date of the conversion notice. On November 25, 2015, the conversion price was changed to lesser of a) $0.40 or b) 60% of the lowest trading value during the 20 days immediately preceding the conversion. Convertible Note issued on May 21, 2015: On May 21, 2015, the Company issued a ten-month 12% convertible promissory note payable of $110,000 with an unrelated entity. Under the terms of the note, the Company received $100,000. The repayment of the note is due on or before March 8, 2016, ten months after the issue date of the note. The repayment is subject to the convertible features of the note. The creditor has a conversion option allowing it to choose to receive repayment of the stated principal with accrued interest. The note is to be repaid either in cash or, at the creditors option, in the Companys restricted common stock. If paid in cash the principal repayment is to be $110,000 (including an original issue discount of $10,000) and the interest after the initial 90 days is to be 12%. At the option of the note holder, the Company may repay the note by issuing restricted common stock based upon the conversion terms, which includes a calculation based upon lesser of a) $0.40 or b) 70% of the lowest volume weighted average price (VWAP) during the immediate 10 days prior to the date of the conversion notice. The original issue discount of $10,000 has been recorded as prepaid debt issuance cost along with legal and commission expenses of $11,350. On November 25, 2015, the conversion price was changed to lesser of a) $0.40 or b) 60% of the lowest trading value during the 20 days immediately preceding the conversion. The prepaid debt issuance costs will be amortized over the term of the note. Convertible Note issued on June 2, 2015: On June 2, 2015, the Company issued a twelve-month 12% convertible promissory note payable of $121,000 with an unrelated entity. Under the terms of the note, the Company received $100,000. The repayment of the note is due on or before June 2, 2016, one year after the issue date of the note. The repayment is subject to the convertible features of the note. The creditor has a conversion option allowing it to choose to receive repayment of the stated principal with accrued interest (12%). The note is to be repaid either in cash or, at the creditors option, in the Companys restricted common stock. If paid in cash the principal repayment is to be $121,000 (including an original issue discount of $10,000 and professional fees of $11,000) and the interest after the initial 90 days is to be 12%. At the option of the note holder, the Company may repay the note by issuing common stock based upon the conversion terms, which includes a calculation based upon 70% of the lowest trade price during the immediate 15 days prior to the date of the conversion notice. The original issue discount of $10,000 and the $11,000 legal fees have been recorded as prepaid debt issuance cost which is amortized over the term of the note. Convertible Note issued on July 17, 2015 On July 17, 2015, the Company issued a twelve-month an 8% convertible note to an unrelated party with a face amount of $57,500. The note contains an original issue discount of $5,000 and bears interest on the face amount at the rate of 8% per annum. The loan is due on July 17, 2016 and includes a convertible feature that allows the note holder to be paid in common stock of the Company. Any shares converted by the note holder will be valued at 60% of the lowest trading value during the 20 days immediately preceding the conversion. The note may be prepaid within 90 days of issuance at 110% of the principal amount plus accrued interest, and at 120% of principal plus accrued interest if prepaid after 90 days from the date of issuance but before 180 days of such date. The note may not be prepaid after 180 days. In the event of a default under the note, interest accrues at the rate of 24% per annum. In the event the Company fails to deliver shares of its common stock upon conversion within the time frames provided for in the note, the Company is subject to a $250 penalty per day increasing to $500 per day beginning on the 10th day after the prescribed delivery date. Further, in the event the Company is no longer current in its SEC filings for a period of six months or more, the conversion price shall be the lowest closing bid price during the delinquency period. Common stock issued to convert convertible notes payable During fiscal 2014, the Company issued an aggregate of 437,500 shares of common stock to various noteholders upon the conversion of a total of principal and interest of $174,807. During fiscal 2015, the Company issued an aggregate of 45,489,374 shares of common stock to various noteholders upon the conversion of a total of principal and interest of $620,607. Debt Discounts In connection with the convertible promissory notes issued in fiscal 2015, the convertible notes were considered to have an embedded beneficial conversion feature (BCF) because the effective conversion price was less than the fair value of the Companys common stock in accordance with ASC 470-20-25. Therefore the portion of proceeds allocated to the convertible notes of $931,181 was determined to be the value of the beneficial conversion feature and was recorded as a debt discount and is being amortized over the term of the notes. For the year ended December 31, 2015 and 2014 the Company recognized $1,007,573 and $177,734, respectively of amortization of debt discount. For the year ended December 31, 2015 and 2014, the Company recognized $135,663 and $59,889 of amortization of prepaid debt issuance cost, respectively, and were recorded in interest expense. |
Derivative Liabilities
Derivative Liabilities | 12 Months Ended |
Dec. 31, 2015 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivative Liabilities | NOTE 8 DERIVATIVE LIABILITIES The Company evaluated whether or not the convertible promissory notes contain embedded conversion features, which meet the definition of derivatives under ASC 815 and related interpretations. The Company determined that the terms of the notes issued in fiscal 2014 and 2015 (see Note 7) include a variable conversion price based on the closing bid prices of the Companys common stock which cause the embedded conversion options to be accounted for as derivative liabilities. Additionally, the Company determined that the terms of the warrants granted on September 22, 2014 in connection with the issuance of a convertible note and warrants granted on February 25, 2015 to the note holder of the Senior Secured convertible note (see Note 9) include a down-round provision under which the conversion price and exercise price could be affected by future equity offerings undertaken by the Company under the provisions of FASB ASC Topic No. 815-40, Derivatives and Hedging - Contracts in an Entitys Own Stock, the embedded conversion options and the warrants were accounted for as derivative liabilities at the date of issuance and adjusted to fair value through earnings at each reporting date In accordance with ASC 815, the Company has bifurcated the conversion feature of the convertible notes, along with the free-standing warrant derivative instruments and recorded derivative liabilities on their issuance date. The Company uses the Black-Scholes option pricing model to value the derivative liabilities. The notes issued in fiscal 2015 were discounted in an aggregate amount of $931,181 based on the valuations and the Company recognized an additional derivative expense included in interest expense of $2,577,683 upon initial recording of the derivative liabilities. The total debt discount of $931,181 from the valuation of the derivatives are being amortized over the terms of the note. These derivative liabilities are then revalued on each reporting date. The gain resulting from the decrease in fair value of these convertible instruments was $709,219 for the year ended December 31, 2015. During the year ended December 31, 2015 and 2014, the Company reclassified $826,901 and $22,068, respectively, to paid-in capital due to the conversion of convertible notes into common stock. At December 31, 2015, the Company had recorded warrant derivative liability of $1,722 and note derivative liability of $2,353,858. The following table summarizes the values of certain assumptions used by the Companys custom model to estimate the fair value of the derivative liabilities as of December 31: 2015 2014 Stock price $ 0.003 $ 0.42 Strike price ranging from 0.001 to 0.50 0.24 to 0.33 Remaining contractual term (years) 0.25 to 4.00 years 0.95 to 0.98 years Volatility 292 % 160 % Risk-free rate 0.05% to 1.76 % 0.04% to 1.10 % Dividend yield 0.0 % 0.0 % The following table provides a summary of changes in fair value of the Companys Level 3 financial liabilities as of December 31: 2015 2014 Balance, beginning of year $ 382,836 $ 32,528 Excess of fair value over debt discount 2,577,683 - Debt discount in connection with conversion option of Debentures and detachable warrants 931,181 693,630 Extinguished derivative liability (826,901 ) (22,068 ) Change in fair value of derivative liabilities (709,219 ) (321,254 ) Balance, end of year $ 2,355,580 $ 382,836 |
Stockholders' Deficit
Stockholders' Deficit | 12 Months Ended |
Dec. 31, 2015 | |
Equity [Abstract] | |
Stockholders' Deficit | NOTE 9 STOCKHOLDERS DEFICIT Common Stock As of December 31, 2015, the Company has 100,000,000 shares of common stock authorized. During the year ended December 31, 2014, the Company: Issued 699,929 shares for cash proceeds of $195,975; Issued 922,867 shares to contractors and employees as payment for services. The stock was valued at its fair market value of $415,220; Issued 100,000 shares valued at fair market as payment for accounts payable. The stock was valued at $30,000; Issued 50,000 shares in exchange for oil and gas properties, valued at fair market value of $35,000; Issued 437,500 shares to convert debt, valued at $196,875, the excess of $22,068 over the nominal amount of the note was credited to additional paid in capital as the extinguishment of derivative liability; Cancelled 150,000 shares at no value; Received 3,000,000 shares of treasury stock of the Company in exchange for transferring oil and gas producing properties in Ohio and California and 100,000 shares in settlement of litigation with Charles A. Koenig. The 3,000,000 shares associated with the asset sale were valued at a fair market value of $2,010,000 and the 100,000 shares associated with the legal settlement were valued at original cost of $3,380. The Company treated both of these transactions as the acquisition of Treasury Stock.; Issued 50,000 shares of common stock to pay interest on a note payable valued at $35,000; Cancelled 15,000 shares of common stock upon expiration of lease and was valued at $18,750. As of December 31, 2014, the Company reported 34,940,046 shares outstanding. During the year ended December 31, 2015, the Company: Issued an aggregate of 248,874 shares of common stock for services to various consultants valued at fair market value of $92,183. The fair value of the shares of the common stock were based on the quoted trading price on the date of grant. Issued 100,000 shares of common stock valued at $40,000 in connection with an employment agreement with an officer of the Company. The fair value of the shares of the common stock were based on the quoted trading price on the date of grant. Issued 30,000 shares of common stock valued at fair market value of $12,000 as payment for interest under a short-term note payable issued in 2014. The fair value of the shares of the common stock were based on the quoted trading price on the date of grant. Issued an aggregate of 500,000 shares of common stock, valued at fair market value of $107,500 as consideration for the extension of a convertible note and the interest payable thereon. The fair value of the shares of the common stock were based on the quoted trading price on the date of grant (see Note 7 for additional details). Cancelled 33,333 shares of common stock valued at $15,667. The fair value of the shares of the common stock were based on the quoted trading price on the date of cancellation. Issued an aggregate of 45,489,374 shares of common stock, valued at $620,607 for the conversion of various convertible notes payable and accrued interest pursuant to the conversion terms of the respective convertible notes. The Company reclassified $826,901 of derivative liabilities in connection with the extinguishment of derivative liabilities upon conversion of the convertible notes payable into common stock (see Note 8 for additional details). As of December 31, 2015 the Company had 81,274,961 shares of common stock outstanding. Preferred Stock Effective November 24, 2015, the Company filed with the Nevada Secretary of State a Certificate of Designation in which the Company authorized the creation of 1,000,000 shares of Series A preferred Stock. Each shares of Series A preferred stock entitles the holder thereof to 110 votes per share and otherwise has the same rights and privileges as the Companys common stock. The holders of shares of Series A preferred stock are not entitled to dividends or distributions. The holders of the Series A preferred stock do not have any conversion rights and the shares are non-transferrable. On November 24, 2015, the Company issued to the Companys CEO, Timothy Crawford, 1,000,000 shares of the Companys restricted Series A preferred stock, valued at approximately $100,000. In connection with the issuance of these Series A preferred shares, the Company recorded stock based compensation of $100,000 for the year ended December 31, 2015. The issuance to Mr. Crawford of the 1,000,000 shares of the Series A Preferred Stock resulted in Mr. Crawford acquiring approximately 65% of the voting securities of the Company on the date of grant. As of December 31, 2015 the Company had 1,000,000 shares of Series A preferred stock outstanding. Common stock Warrants On September 22, 2014, the Company issued 250,000 Class C warrants in connection with a short term credit facility. Each of the 250,000 warrants is exercisable into one share of the Companys common stock at $1.00 per share. The warrants were immediately exercisable. The warrants will expire if not converted into stock by September 29, 2017. After September 29, 2015, the shares are callable by the Company. During the year ended December 31, 2014, the Company issued common stock purchase warrants to purchase an aggregate of 1,800,000 shares of the Companys common stock at an exercise price of $1.00 per share in connection with the issuance of its Senior Secured Convertible Notes (see Note 7). The warrants expire on December 31, 2019. On February 25, 2015, the Company entered into an agreement with Syndicated Capital, Inc. (the Holder) granting Syndicated Capital, Inc. the right to subscribe for and purchase 450,000 shares of the Companys common stock at an initial purchase price of $1.00 per share. This right will expire, if not terminated earlier in accordance with the provisions of the agreement, on December 31, 2019. The Warrant was issued as compensation to the Holder for services rendered as placement agent in connection with the Companys private offering of units of the Companys securities which occurred in December 2014. The Company identified embedded derivatives related to the warrants issued February 25, 2015. These embedded derivatives included certain reset provisions (see Note 8 for additional details). The accounting treatment of derivative financial instruments requires that the Company record the fair value of the derivatives as of the inception date and to adjust the fair value as of each subsequent balance sheet date. Changes in stock purchase warrants during the periods ended December 31, 2015 and 2014 are as follows: Weighted Average Aggregate Weighted Average Number of Exercise Intrinsic Remaining Warrants Price Value Exercisable Life Outstanding, December 31, 2013 - $ - $ - - $ - Exercisable, December 31, 2013 - - - - - Issued 2,050,000 1.00 - - - Exercised - - - - - Cancelled - Outstanding, December 31, 2014 2,050,000 1.00 - 2,050,000 4.75 years Issued 450,000 1.00 - - - Exercised - - - - - Cancelled - - - - - Outstanding, December 31, 2015 2,500,000 $ 1.00 $ - 2,500,000 3.60 years Exercisable, December 31, 2015 2,500,000 $ 1.00 $ - 2,500,000 3.60 years |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2015 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | NOTE 10 - RELATED PARTY TRANSACTIONS Parties are considered to be related to the Company if the parties directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal stockholders of the Company, its management, members of the immediate families of principal stockholders of the Company and its management and other parties with which the Company may deal where one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. The Company discloses all related party transactions. All transactions shall be recorded at fair value of the goods or services exchanged. Property purchased from a related party is recorded at the cost to the related party and any payment to or on behalf of the related party in excess of the cost is reflected as compensation or distribution to related parties depending on the transaction. On June 1, 2014, the Company, through its wholly owned subsidiary, CEGX of Texas, LLC entered into a Contract Operating Agreement with Bradford JV. Under the terms of this agreement, the Company agreed to perform routine and major operations, marketing services, accounting services, reporting services and other administrative services on behalf of Bradford JV as necessary to operate Bradford JVs oil and gas lease operations on the Bradford oil and gas leases located in Shackelford County, Texas. Bradford JV agreed to pay the Company an administrative and pumping fee of $500 per well per month, 93.7% of the actual cost of electricity, taxes and ongoing maintenance and repairs to operate Bradford JVs assets. The agreement is for a term of three years and automatically renews for one year periods until one of the parties notifies the other party not later than 60 days prior to commencement of a renewal term of its desire to not renew the agreement. During the last week of December, the Company obtained 20 units (out of 100 total units) in the Bradford Joint Venture exploration and drilling program located in Shackelford County, Texas. The operation is accounted for as an investment included in Oil and Gas Properties as of December 31, 2014. The Company purchased their interest for $25,000 per unit on December 31, 2014. The Company has determined that the agreement and the Companys participation in the joint venture at December 31, 2014 created a related party relationship and as such has reported the billed revenue of $621,508 and $1,716,771 during the year ended December 31, 2015 and 2014, respectively and the unpaid accounts receivable of $180,712 and $225,000 at December 31, 2015 and 2014, respectively as related party transactions in the consolidated financial statements. During 2014, the Company transferred the oil and gas producing properties located in Ohio and California to a third party in exchange for 3,000,000 shares of common stock which have been designated Treasury Stock. Also, as part of the transaction, the Company returned the $20,000 bond they had received earlier. The third party involved in this transaction was previously a senior executive of the Company and was considered a related party when the properties in question were originally acquired by the Company. On June 12, 2015, the Company, and each of the other beneficial owners of seventy-three (73) participation interests in the Bradford JV entered into a Participation Interest Purchase Agreement with Keystone Energy, LLC (see Note 13). In June 2015, the Company received $250,000 for the Companys ten (10) Participation Interests for Keystones right to beneficial enjoyment which is not subject to forfeiture by the Company under any circumstances. For financial reporting purposes the Company has recognized this amount as a component of related party operating revenues during the year ended December 31, 2015. |
Asset Retirement Obligation
Asset Retirement Obligation | 12 Months Ended |
Dec. 31, 2015 | |
Asset Retirement Obligation Disclosure [Abstract] | |
Asset Retirement Obligation | NOTE 11 - ASSET RETIREMENT OBLIGATION The following table sets forth the principal sources of change of the asset retirement obligation for the years ended December 31, 2015 and 2014: 2015 2014 Asset retirement obligations, beginning of period $ 162,321 $ 8,639 Additions and changes in estimated liabilities (81,245 ) (8,639 ) Asset retirement obligations assumed - 142,336 Accretion expense 14,987 19,985 Asset retirement obligations, end of period $ 96,063 $ 162,321 As of December 31, 2015 the Company does not maintain an escrow agreement or performance bond to assure the administration of the plugging and abandonment obligations assumed. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE 12 - INCOME TAXES The Companys provision for income taxes was $-0- for the years ended December 31, 2015 and 2014, respectively, since the Company has accumulated taxable losses from operations. ASC 740 requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. In the Companys opinion, it is uncertain whether they will generate sufficient taxable income in the future to fully utilize the net deferred tax asset. Accordingly, a full valuation allowance equal to the deferred tax asset has been recorded. The total deferred tax asset is calculated by multiplying a 39 percent marginal tax rate by the cumulative Net Operating Loss (NOL). At December 31, 2015, the Company has available $5,737,631 of NOLs which expire in various years beginning in 2031 and carrying forward through 2035. The tax effects of significant items comprising the Companys net deferred taxes as of December 31, 2015 and 2014 were as follows: The provision for income taxes differs from the amounts which would be provided by applying the statutory federal income tax rate of 39 percent to net loss before provision for income taxes for the following reasons: December 31, 2015 2014 Cumulative NOL $ 5,737,631 $ 4,294,241 Deferred Tax Assets: Net operating loss carry forwards 2,237,676 1,674,754 Valuation allowance (2, 237,676) (1,674,754 ) $ - $ - The Company files federal and Ohio income tax returns subject to statutes of limitations. The years ended December 31, 2015, 2014, 2013, 2012, 2011, and 2010 are subject to examination by federal and state tax authorities. After consideration of all the evidence, both positive and negative, management has recorded a full valuation allowance at December 31, 2015, due to the uncertainty of realizing the deferred income tax assets. The valuation allowance was increased by $562,922. The provisions of ASC 740 require companies to recognize in their financial statements the impact of a tax position if that position is more likely than not to be sustained upon audit, based upon the technical merits of the position. ASC 740 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken on a tax return. ASC 740 also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods and disclosure. Management does not believe that the Company has any material uncertain tax positions requiring recognition or measurement in accordance with the provisions of ASC 740. Accordingly, the adoption of these provisions of ASC 740 did not have a material effect on the Companys financial statements. The Companys policy is to record interest and penalties on uncertain tax positions, if any, as income tax expense. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 13 - COMMITMENTS AND CONTINGENCIES Contract Operating Agreement On June 1, 2014, the Company, through its wholly owned subsidiary, CEGX of Texas, LLC entered into a Contract Operating Agreement with Bradford JV. Under the terms of this agreement, the Company agreed to perform routine and major operations, marketing services, accounting services, reporting services and other administrative services on behalf of Bradford JV as necessary to operate Bradford JVs oil and gas lease operations on the Bradford oil and gas leases located in Shackelford County, Texas. Bradford JV agreed to pay the Company an administrative and pumping fee of $500 per well per month, 93.7% of the actual cost of electricity, taxes and ongoing maintenance and repairs to operate Bradford JVs assets. The agreement is for a term of three years and automatically renews for one year periods until one of the parties notifies the other party not later than 60 days prior to commencement of a renewal term of its desire to not renew the agreement. Participation Interest Purchase Agreement On June 12, 2015, the Company, and each of the other beneficial owners of seventy-three (73) participation interests (Participation Interests) in the Bradford JV (collectively, the Sellers) entered into a Participation Interest Purchase Agreement (Purchase Agreement) with Keystone Energy, LLC. Pursuant to the terms of the Purchase Agreement, Keystone Energy agreed to purchase, and the Sellers agreed to sell, all of the Participation Interests representing 100% of the beneficial ownership of (i) those certain oil and gas leases, along with the associated contracts and real property interests necessary and useful in the ownership and operation thereof, all situated in Shackelford County, Texas (the Oil and Gas Leasehold), (ii) the oil and gas wells located on the Oil and Gas Leasehold, along with the associated fixtures and personal property, including hydrocarbons produced therefrom (the Wells), and (iii) the rights in and to that certain Farmout Agreement between CEGX and Bluff Creed Petroleum, LLC for a total consideration of $1,825,000. As payment in full for the Participation Interests and the Oil and Gas Properties, Keystone Energy agreed to, within 365 days following execution of the Purchase Agreement, pay to the Sellers the aggregate cash amount of $1,575,000 (the Cash Purchase Price). As to the Companys twenty (20) Participation Interests, the Purchase Agreement additionally provided that Cardinal would (i) be presently paid the amount of $250,000 included in the cash purchase amount in consideration of the Companys assignment thereunder to Keystone Energy of the beneficial interest in ten (10) of its twenty (20) Participation Interests and (ii) as to the other ten (10) of the Companys Participation Interests, exchange the Companys rights therein to Keystone for a five (5%) percent equity ownership interest in Keystone Energy. The Participation Interests of all Sellers acquired under the Purchase Agreement were designated to be and are being held in escrow pending the acquisition of all of the Sellers Participation Interests or the expiration of the 365 day period, whichever occurs first. As of December 31, 2015, the balance of the cash purchase amount was $1,075,000 reflecting the balance of the 43 remaining Participation Interests which Keystone Energy remains obligated to purchase under the terms of the Purchase Agreement. The $250,000 received by the Company for the Companys ten (10) Participation Interests for Keystones right to beneficial enjoyment thereof is not subject to forfeiture by the Company under any circumstances. For financial reporting purposes the Company has recognized this amount as a component of related party operating revenues during the year ended December 31, 2015. The exchange of the other ten (10) Cardinal Participation Interests for a 5% equity interest in Keystone Energy has been reported as an income tax neutral, tax-deferred, property for property exchange in accordance with applicable provisions of federal income tax law and was initially recorded as an investment in oil and gas properties valued at its fair market value of $250,000. The Purchase Agreement further provided that Keystone would deliver to CEGX of Texas, as irrevocable consideration, an initial advance in an amount of $250,000 for improvements to be made to the Oil and Gas Properties. The amount is not subject to refund or forfeiture and has been included in related party operating revenues from contract operations during the year ended December 31, 2015. Finally, in accordance with the terms of the Purchase Agreement and as of the date thereof, Keystone Energy entered into a Master Loan Agreement with Maximilian Bradford, LLC (Maximilian), a Keystone Energy related party, providing for the loan by Maximilian to Keystone Energy of the amount of $2,600,000. The proceeds under this loan are to be used for the purchase of the Participation Interests and the development of the underlying interests in the Bradford A and B leases. Upon full repayment by Keystone Energy of the loan, the Company is granted an option to convert its 5% interest in Keystone Energy into either (i) an undivided 50% of the working interest owned by Keystone Energy in the Oil and Gas Properties, or (ii) a 50% equity interest in Keystone Energy. Concurrent with the Participation Interest Purchase Agreement, Keystone Energy entered into an Operating Agreement with the Companys wholly-owned subsidiary, CEGX of Texas, LLC authorizing CEGX of Texas to conduct the drilling operations and related activities necessary to develop the properties. Borets USA, Inc. f/k/a Borets-Weatherford US, Inc. v. Cardinal Energy Group, Inc.(Case No. 2015-028, 259 th On March 2, 2015 Borets filed a lawsuit against the Company claiming damages totaling $90,615 in damages for unpaid invoices for services rendered to the Company. On March 18th 2015, the Company filed an Original Answer and Counterclaim against Borets. The original answer set forth a general denial, certain specific denials, a verified denial denying the account amount and affirmative defenses of failure of consideration and offset. The counterclaim contains a cause of action for breach of contract and seeks $150,000 in damages. Borets has filed a Motion for Summary Judgment seeking to dispose of the counterclaim on behalf of the Company. No hearing has been set on the motion and the Company will prepare a response if in fact a hearing date is obtained. As of the date of this report, discovery is ongoing. CEGX of Texas, LLC v. Scott Miller, Miller Energy Services, Inc. and US Fuels, Inc. (Case No. CV1543707 91 st The lawsuit was filed on May 22, 2015. The lawsuit alleges a cause of action against the above named defendants for breach of contract, breach of fiduciary duty and fraud. This lawsuit concerns the sale of the Companys property (the Stroebel-Broyles leases in Eastland County, Texas) by Mr. Miller. Mr. Miller indicated that no one would pay anything for the property, and we agreed to assign the property for no cash consideration. We subsequently determined that Mr. Miller sold the property for $30,000 and pocketed all of the funds from the sale. Answers have been filed by each of the defendants. The Company is now in the process of filing a Motion for Summary Judgment in favor of the Company. CEGX of Texas, LLC v. P.I.D. Drilling, Inc.(Case No. 2015-062 259 th This lawsuit was filed by the Company on June 10, 2015 and contains causes of action for breach of contract and also requests an accounting. The lawsuit is claiming damages for overcharges by PID and also asking that PID be removed as operator after a vote by the non-operating working interest owners. As of the date of this report an answer has been filed on behalf of PID and the parties have entered into settlement discussions. If the settlement discussions fail the Company is prepared to request a trial date. Cardinal Energy Group, Inc. v. HLA Interests, LLC, Phillip Allen, SEDCO Operating, LLC (SEDCO) , ERCO Holdings, Ltd (ERCO), Caleb David Elks, and Michael Cies D/B/A Terlingua Oil Associates, Case No. 2015-059 (District Court of Shackelford County, Texas, 259th Judicial District) The Company filed this lawsuit against the corporate defendants and the individual members in their personal capacity on June 3, 2015. The lawsuit stems from a Working Interest Purchase Agreement that the Company entered into on July 3, 2013 with Defendant HLA Interests (an oil and gas management company that owns and controls existing oil fields in Texas), pursuant to which the Company agreed to purchase from HLA Interests its 85% working interest in 5 oil and gas leases known as the Dawson-Conway Leases (the Leases) in Shackelford County, Texas (the Agreement). The Company was fraudulently induced to enter into the Agreement by the defendants, who knew that 3 of the 5 leases had expired prior to executing the Agreement. The Company agreed to pay $400,000 to HLA Interests for its complete working interest in the 5 Leases, which HLA Interests represented to be 85%. The Company executed a Note for payment of the $400,000 purchase price, pursuant to which the entire principal balance is to be paid within 24 months of the date that the Agreement was executed. HLA Interests acquired title to the 5 Leases by Assignment of Oil and Gas Leases dated December 1, 2011 from Defendant ERCO, as Assignor, to HLA Interests recorded in Volume 552, Page 343 of the Official Records of Shackelford County, Texas (the ERCO Assignment). The ERCO Assignment purported to convey to HLA Interests 85% of 75% net revenue interest on the 5 Leases. Defendant SEDCO was the operator of the 5 Leases. Defendants HLA, its Managing Member, Allen, SEDCO, ERCO and Elks all made false representations with the intent to fraudulently induce the Company into entering into the Agreement. Specifically, prior to entering into the Agreement with the Company, Defendants HLA Interests and Allen knew that at least 3 of the 5 Leases had expired and that the Company would only be purchasing 2 active Leases. Defendants SEDCO, as the Operator of the 5 Leases, ERCO, as an assignor of the remaining 15% working interest in the 5 Leases, and Elks (SEDCOs Chief Operating Officer and the Managing Member of ERCO) also all knew that 3 of the Leases had expired and that Defendant HLA did not own a working interest in them free and clear as represented to the Company. All of the Defendants intentionally failed to disclose this material information to the Company so as to fraudulently induce the Company into entering into the Agreement. As a direct result of relying upon Defendants HLA, Allen, SEDCO, ERCO and Elks intentional and material misrepresentations and intentional failures to disclose the material facts, the Company suffered damages for which it seeks recovery in this lawsuit. Further, the false, misleading, and deceptive acts of these Defendants in misrepresenting the true legal status of title to the 5 Leases and the actual working interests prior to the execution of the Agreement, the Operating Agreement, and the March 11, 2014 Assignment are violations of Texas Deceptive Trade Practices Act. Finally, Defendant Terlingua entered into a Master Land Services Contract with the Company in or about June 2013, whereby Terlingua agree to provide due diligence services to the Company in furtherance of the Company entering into the Agreement with Defendants HLA Interests, SEDCO, and ERCO. Pursuant to the Master Land Services Contract, Terlingua agreed to investigate titles and the oil and gas records to determine the actual legal status of the ownership interests in the 5 Leases, and advise the Company of same. Terlingua breached its obligations under the Master Land Services Agreement by failing to perform its due diligence investigation of the titles and working interests in the 5 Leases in a good and workmanlike manner, and failing to discover that at least 3 of the 5 Leases had expired and that the Company would only be purchasing 2 active Leases. As a result of all of this, the Company filed a lawsuit asserting claims for breach of contract against Defendants HLA, SEDCO, ERCO, and Cies/Terlingua; Money had and Received against Defendants HLA, SEDCO, and Cies/Terlingua; Fraud and Fraud by Non-Disclosure against Defendants HLA, Allen, SEDCO, ERCO, and Elks; and Deceptive Trade Practices against Defendants HLA, SEDCO, and ERCO. On August 5, 2015, the Company was granted a Partial Default Judgment for the following: HLA Interests, LLC: Judgment on our causes of action for breach of contract, money had and received, fraud, fraud by non-disclosure and deceptive trade practices; Phillip Allen: Judgment on our causes of action for fraud, and fraud by non-disclosure; Sedco Operating, LLC: Judgment on our causes of action for breach of contract, money had and received, fraud, fraud by non-disclosure and deceptive trade practices; and Judgment against Erco Holdings, Ltd. for causes of action for breach of contract, fraud, fraud by non-disclosure and deceptive trade practices. The Companys out-of-pocket damages as a result of the claims asserted in this lawsuit have been calculated at $1,735,765. Adding the claims for attorneys fees, and other damages, including punitive damages as a result of the intentional fraudulent conduct, the Companys damages exceed $2,000,000. The Company was finally able to obtain service on Elks. As of now, Elks, Cies, Erco and Sedco have now filed answers. A hearing and/or trial will be required to obtain damages against Sedco and Erco. At present, we are in the process of attempting to obtain a damages judgment as against Phillip Allen individually and as HLA Interests, LLC. The Company has reached out to all of the parties involved requesting they contact us to enter into settlement discussions on this matter. In addition, we have forwarded discovery to the various defendants and are awaiting responses to same. As of the date of this report we have received no responses from any of the defendants in regards to settlement and the Companys attorneys are now working with the trial courts coordinator to set a date for trial. Edward A. Mitchell v. Cardinal Energy Group, Inc. and Timothy W. Crawford (Case No. 15CV-04-3538, Franklin County Common Pleas Court) Mr. Mitchell filed suit on April 27, 2015, claiming to be owed 200,000 shares of stock that he earned during his brief tenure as Controller of the Company, as well as additional compensation to which he claims hes entitled. The Company denies the claims, and filed a counterclaim to recover damages caused by Mitchell during his tenure for failure to perform his duties and to recover unauthorized reimbursements he improperly issued. Trial is currently scheduled for April 24, 2016. The parties have held settlement discussions in this matter but thus far have failed to reach a satisfactory agreement. As of the date of this report discovery is continuing. The Company has recorded $5,500 in accrued expenses which represents the amount most likely the Company would pay to settle this lawsuit. Terrance J. Dunne v. Cardinal Energy Group, Inc. (Case No. 14-02-04417-2, Spokane County Superior Court of Washington) On November 10, 2014, Mr. Dunne filed a suit in Spokane County Superior Court of Washington and alleged the Company owes him $6,000 for services rendered plus an additional $27,480 for the difference in value of stock that was given to him as compensation. The Company filed an Answer and a Motion to dismiss based on lack of jurisdiction and subsequently the hearing was cancelled. Management still intends to defend this matter vigorously. There was no ongoing activity in connection with this case for almost a year. The Company believes that there is a remote likelihood that this lawsuit will prevail. Other On September 11, 2015 Tonaquint, Inc. (Tonaquint) filed for arbitration under a Securities Purchase Agreement and Convertible Promissory Note, claiming that the Company is in default for failing to deliver all earned shares, failing to satisfy the remaining balance of the note and failing to maintain adequate stock reserves. The Company has answered, denying the claims and asserting that Company has satisfied its obligations with respect to the Tonaquint Note. Arbitration was scheduled for February 2016 in Salt Lake City, Utah. General The Company believes that its claims and defenses in the above cases where it is a defendant are substantial for the reasons discussed above. Litigation is, however, inherently unpredictable. The outcome of lawsuits is subject to significant uncertainties and, therefore, determining the likelihood of a loss and/or the measurement of any loss is complex. Consequently, we are unable to estimate the range of reasonably possible loss. Our assessments are based on estimates and assumptions that have been deemed reasonable by management, but the assessment process relies heavily on estimates and assumptions that may prove to be incomplete or inaccurate, and unanticipated events and circumstances may occur that might cause us to change those estimates and assumptions. The Company has potential contingent liabilities arising in the ordinary course of business. Matters that are probable of unfavorable outcomes to the Company and which can be reasonably estimated are accrued. Such accruals are based the Companys estimates of the outcomes of such matters and its experience in contesting, litigating and settling similar matters. To date no litigation has been filed in connection with any of these matters. The Companys counsel believes that the claims against the Company are groundless and any damages which may arise from these matters will not be material. Thus there are no contingencies or additional litigation that require accrual or disclosure as of December 31, 2015. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 14 - SUBSEQUENT EVENTS Tonaquint Arbitration After conducting discovery, the parties agreed to settle the issues outstanding prior to the scheduled arbitration hearing. On February 4, 2016 the Company agreed to judgment in the amount of $432,674.41 plus interest at 22% per year (included in convertible notes payable as of December 31, 2015) and agreed to the entry of summary judgment in Tonaquints favor as requested in Tonaquints motion. Tonaquint agreed to accept payment from the Company in the amount of $250,000 as full and complete satisfaction of the arbitration award but only so long as the Company paid the settlement amount on or before the settlement payment due date of March 12, 2016. The Company failed to make the required scheduled payment and as of the date of the filing of this report the parties are still holding discussions on the matter. Asset Sale On February 12, 2016, the Company sold its facility in Albany, Texas to an unrelated party for a sales price of $130,000. In connection to this sale, the Company received net proceeds of approximately $98,000, net of closing costs, and additionally the buyer issued a 5% secured promissory note of $30,000 to the Company. The principal amount is due on March 12, 2019 and accrued unpaid interest is due monthly. Litigation On March 1, 2016 Iconic Holdings filed suit in San Diego County Superior Court alleging that the Company was in default on a convertible promissory note and claiming that the Company owes $167,478 in unpaid principal and interest. The Company believes that remaining outstanding principal under the note is $35,000. As of the filing date of this report the Company has yet to retain counsel or answer the claims. Loan Default On March 18, 2016 the Company received notice from counsel representing Power Up Lending Group, Ltd. that it was in default under the terms of the November 12, 2015 Revenue Based Factoring Agreement. (Please refer to Loan Payable in Note 7 for additional details.) Equity Issued Subsequent to the year ended December 31, 2015 the Company issued 2,104,596 shares of common stock, valued at $6,924 for the conversion of a convertible note payable and accrued interest pursuant to the conversion terms of the note payable. |
Summary of Significant Accoun21
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Nature of Operations and Organization | Nature of Operations and Organization Cardinal Energy Group, Inc. (the Company) was incorporated in the State of Nevada on June 19, 2007. On September 28, 2012, the Company changed the focus of its business when it acquired all of the ownership interests of Cardinal Energy Group, LLC, an Ohio limited liability company which was engaged in the business of exploring, purchasing, developing and operating oil and gas leases. The Company changed its name to Cardinal Energy Group, Inc. on October 10, 2012 in connection with this acquisition. On June 10, 2015 the Company moved its executive offices from Dublin, Ohio to Abilene, Texas. In February 2016, the Company closed its Abilene, Texas office and relocated their executive offices to Upper Arlington, Ohio. The Company has been engaged in the development, exploitation and production of oil and natural gas. The Company sells its oil and gas products to domestic purchasers of oil and gas production. Its operations were focused in the states of California, Ohio and Texas during 2012 and 2013. In 2014 and 2015, management decided to focus its oil and gas operations entirely within the state of Texas. The Company established a regional operations office in Albany, Texas and retained the services of operating personnel with ties to the exploration and development of oil and gas fields in Texas. In February 2016, the Company sold its operations facility in Albany, Texas (see Note 14). On April 30, 2015 the Company formed High Performance Energy Fund Corporation, a Delaware corporation (High Performance), for the purposes of identifying, developing and financing new prospective oil and gas properties. High Performance is a wholly-owned subsidiary of the Company. |
Basis of Presentation and Use of Estimates | Basis of Presentation and Use of Estimates These financial statements have been prepared in accordance with accounting principles generally accepted in United States of America which require management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and the disclosures of revenues and expenses for the reported year. Actual results may differ from those estimates. Included in these estimates are assumptions about collection of accounts receivable, impairment of oil and gas properties, useful life of property and equipment, amounts and timing of closure obligations, assumptions used to calculate fair value of stocks and warrants granted, stock based compensation, beneficial conversion of convertible notes payable, deferred income tax asset valuation allowances, and valuation of derivative liabilities. Revenues and direct operating expenses of the California and Ohio properties represent members interest in the properties acquired for the periods prior to the closing date and are presented on the accrual basis of accounting and in accordance with generally accepted accounting principles. The financial statements presented herein include the revenues and operating expenses of the California and Ohio properties for the period of January 1, 2014 through the sale date of the properties on April 1, 2014. |
Principles of Consolidation | Principles of Consolidation Our consolidated financial statements include the accounts of subsidiaries in which a controlling interest is held. All intercompany transactions have been eliminated. Undivided interests in oil and gas exploration and production joint ventures are consolidated on a proportionate basis. Investments in entities without a controlling interest are accounted for by the equity method or cost basis. The equity method is used to account for investments in non-controlled entities when the Company has the ability to exercise significant influence over operating and financial policies. In applying the equity method of accounting, the investments are initially recognized at cost, and subsequently adjusted for the Companys proportionate share of earnings, losses and distributions. The cost method is used when the Company does not have the ability to exert significant influence. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid debt instruments and other short-term investments with maturities of three months or less, when purchased, to be cash equivalents. The Company places its cash with a high credit quality financial institution. The Companys accounts at this institution are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. As of December 31, 2015, the Company had not reached bank balances exceeding the FDIC insurance limit. To reduce its risk associated with the failure of such financial institution, the Company evaluates at least annually the rating of the financial institution in which it holds deposits. |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts Uncollectible accounts receivable are charged directly against earnings when they are determined to be uncollectible. Use of this method does not result in a material difference from the valuation method required by generally accepted accounting principles. At December 31, 2015 and 2014, no reserve for allowance for doubtful accounts was needed. |
Oil and Gas Properties | Oil and Gas Properties The Company follows the full cost method of accounting for its oil and natural gas properties, whereby all costs incurred in connection with the acquisition, exploration for and development of petroleum and natural gas reserves are capitalized. Such costs include lease acquisition, geological and geophysical activities, rentals on non-producing leases, drilling, completing and equipping of oil and gas wells and administrative costs directly attributable to those activities and asset retirement costs. Disposition of oil and gas properties are accounted for as a reduction of capitalized costs, with no gain or loss recognized unless such adjustment would significantly alter the relationship between capital costs and proved reserves of oil and gas, in which case the gain or loss is recognized to income. Depletion and depreciation of proved oil and gas properties is calculated on the units-of-production method based upon estimates of proved reserves. Such calculations include the estimated future costs to develop proved reserves. Oil and gas reserves are converted to a common unit of measure based on the energy content of 6,000 cubic feet of gas to one barrel of oil. Costs of unevaluated properties are not included in the costs subject to depletion. These costs are assessed periodically for impairment. As of December 31, 2015 and 2014 there were no proved reserves. During year ended December 31, 2014, the Company completed the acquisition of 100% working interests in the Powers-Sanders and Stroebel-Broyles leases, a 93.75% working interest in the Bradford A and B leases, a 43.75% working interest in the Fortune lease and the remaining 15% working interest in the Dawson-Conway leases for a combined cash consideration of $1,010,000. These properties are located in Shackelford and Eastland counties in north-central Texas. The cash for these acquisitions was sourced from a portion of the proceeds of a private offering of Senior Secured Convertible Promissory Notes. The acquisition cost for these properties was capitalized. Also, during the same period, the Company sold its interests in oil and gas properties located in California and Ohio to California Hydrocarbons, Inc. in exchange for the return of 3,000,000 shares of the Companys common stock valued at $2,010,000. The Company has recorded the return of the shares as the acquisition of Treasury Stock at cost and relieved the balance sheet of the affected assets and liabilities. During the year ended December 31, 2015, the Company disposed of its working interests in the Stroebel-Broyles leases in Eastland County, Texas. The Company assigned its interests in the leases to two local companies in exchange for the assumption of the plugging and abandonment liability associated with the thirty-two wells located on the properties. The disposition is in keeping with the Companys decision to focus its drilling and development activities in and adjacent to its properties in Shackelford County, Texas. On September 2, 2014 the Company sold its interests in the Bradford A and B leases to the Bradford Joint Venture Partnership (Bradford JV) for $325,000. The Companys wholly-owned subsidiary CEGX of Texas, LLC provides drilling and production services to Bradford JV. The additional cost for developing the leases is $2,175,000 to include infrastructure development, drilling and completion of 14 new wells, remediation of 6 existing wells, and conversion of 1 existing producing well to an injector. The Company acquired a 20% equity interest in participating units of the Bradford JV during December 2014 on the same terms as the original investors, being valued at $25,000 per 1% unit of the JV. In connection with the acquisition, the Company received $16,608 cash representing cash distributions which had been reserved by the Joint Venture in connection with the units the Company acquired. In June 2015, the Company transferred its 20% interests in the Bradford A and Bradford B leases to Keystone Energy, LLC pursuant to a Participation Interest Purchase Agreement (see Note 13). Our oil and gas leases were classified as unproved properties at December 31, 2015 and 2014 due to the limited quantities of oil and gas produced during the 2013 through 2015 time frame. In light of the precipitous fall in crude oil prices during the last 20 months and the relatively small production volumes from the Companys leases we elected to reduce the carrying value of our oil and gas properties during the fourth quarter of 2015. This reduction to the estimated net recoverable values of our oil and gas properties is reflected in the financial statements as an impairment charge of $2,654,824 on the income statement. |
Property and Equipment | Property and Equipment Support equipment and other property and equipment are valued at cost and depreciated over their estimated useful lives, using the straight-line method over estimated useful lives of 3 to 5 years. Additions are capitalized and maintenance and repairs are charged to expense as incurred. When assets are retired or disposed of, the cost and accumulated depreciation are removed, and any resulting gains or losses are included in the consolidated statement of operations. |
Valuation of Long-Lived Assets | Valuation of Long-Lived Assets The Company follows ASC 360 regarding the valuations and carrying values of its long-lived assets. Long-lived tangible assets and definite-lived intangible assets are reviewed for possible impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. The Company uses an estimate of undiscounted future net cash flows of the assets over the remaining useful lives in determining whether the carrying value of the assets is recoverable. If the carrying values of the assets exceed the expected future cash flows of the assets, the Company recognizes an impairment loss equal to the difference between the carrying values of the assets and their estimated fair values. The Company recorded impairment losses in the amounts of $2,654,824 and $0 during the years ended December 31, 2015 and 2014, respectively. |
Stock-based Compensation | Stock-based Compensation Stock-based compensation is accounted for based on the requirements of the Share-Based Payment Topic of ASC 718, Compensation Stock Compensation (ASC 718), which requires recognition in the consolidated financial statements of the cost of employee and director services received in exchange for an award of equity instruments over the period the employee or director is required to perform the services in exchange for the award (presumptively, the vesting period). ASC 718 also requires measurement of the cost of employee and director services received in exchange for an award based on the grant-date fair value of the award. Pursuant to ASC Topic 505-50, Equity Based Payments to Non-employees, for share-based payments to consultants and other third-parties, compensation expense is determined at the measurement date. The expense is recognized over the vesting period of the award. Until the measurement date is reached, the total amount of compensation expense remains uncertain. The Company initially records compensation expense based on the fair value of the award at the reporting date. |
Earnings (Loss) per Share | Earnings (Loss) per Share Basic earnings (loss) per share (EPS) is calculated by dividing the Companys net earnings (loss) applicable to common stockholders by the weighted average number of common shares during the period. Diluted EPS assumes the exercise of stock option and warrants and the conversion of convertible debt, provided the effect is not antidilutive. The effect of computing diluted loss per share is anti-dilutive and, as such, basic and diluted losses per share are the same for the years ended December 31, 2015 and 2014. |
Asset Retirement Obligation | Asset Retirement Obligation The Company follows FASB ASC 410, Asset Retirement and Environmental Obligations which requires entities to record the fair value of a liability for asset retirement obligations (ARO) and to record a corresponding increase in the carrying amount of the related long-lived asset. The asset retirement obligation primarily relates to the abandonment of oil and gas properties. The present value of the estimated asset retirement cost is capitalized as part of the carrying amount of oil and gas properties and is depleted over the useful life of the asset. The settlement date fair value is discounted at our credit adjusted risk-free rate in determining the abandonment liability. The liability is accreted with the passage of time to its expected settlement fair value. Revisions to such estimates are recorded as adjustments to ARO and are charged to operations in the period in which they become known. At the time the abandonment cost is incurred, the Company is required to recognize a gain or loss if the actual costs do not equal the estimated costs included in ARO. The ARO is based upon numerous estimates and assumptions, including future abandonment costs, future recoverable quantities of oil and gas, future inflation rates, and the credit adjusted risk free interest rate. Different, but equally valid, assumptions and judgments could lead to significantly different results. Future geopolitical, regulatory, technological, contractual, legal and environmental changes could also impact future ARO cost estimates. Because of the intrinsic uncertainties present when estimating asset retirement costs as well as asset retirement settlement dates, our ARO estimates are subject to ongoing volatility. The ARO is $96,063 and $162,321 as of December 31, 2015 and 2014, respectively. The reduction in the ARO at December 31, 2015 reflects the aforementioned sale of the Stroebel-Broyles leases in March of 2015. The Company accreted $14,987 and $19,985 to ARO during the years ended December, 2015 and 2014, respectively. |
Available-for-Sale Securities | Available-for-Sale Securities The Companys available-for-sale securities consist of investments in marketable securities. The Company carries its investment at fair value based upon quoted market prices which amounted to $30,800 and $69,300 at December 31, 2015 and 2014, respectively. Unrealized holding gains (losses) on available-for-sale securities are excluded from earnings and reported as accumulated other comprehensive gain (loss), a separate component of stockholders equity (deficit), until realized. The Company recorded unrealized loss of $38,500 and gain of $45,465 during the years ended December 31, 2015 and 2014, respectively. Accumulated Other Comprehensive Losses were $2,186,800 and $2,148,300 as of December 31, 2015 and 2014, respectively. |
Income Taxes | Income Taxes The Company accounts for income taxes pursuant to the provisions of ASC 740-10, Income Taxes which requires, among other things, an asset and liability approach to calculating deferred income taxes. The asset and liability approach requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. A valuation allowance is provided to offset any net deferred tax assets for which management believes it is more likely than not that the net deferred asset will not be realized. The Company also follows the provisions of ASC 740-10 related to accounting for uncertain income tax positions. When tax returns are filed, some positions taken may be sustained upon examination by the taxing authorities, while others may be subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740-10, the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. As of December 31, 2015 and 2014, the Company has had no uncertain tax positions. The Company recognizes interest and penalties, if any, related to uncertain tax positions as general and administrative expenses. The Company currently has no federal or state tax examinations nor has it had any federal or state examinations since its inception. The Companys 2015, 2014, and 2013 tax years may still be subject to federal and state tax examination. |
Concentration | Concentration During the year ended December 31, 2015 sales to two customers represented approximately 92% of the Companys net revenues. During the year ended December 31, 2014 sales to one customer represented approximately 95% of the Companys net revenues. As of December 31, 2015 and 2014, the Company had one customer representing 100% of accounts receivable and one customer representing approximately 77% of accounts receivable, respectively. |
Revenue and Cost Recognition | Revenue and Cost Recognition The Company uses the sales method to account for the sales of crude oil and natural gas. Under this method, revenues are recognized based on the actual volumes of oil and gas sold to purchasers. The volumes sold may differ from the volumes to which the Company is entitled based on its interest in the properties. These differences create imbalances which are recognized as a liability or as an asset only when the imbalance exceeds the estimate of remaining reserves. For the years ending December 31, 2015 and 2014 there were no such differences. The Company has agreed with the Bradford JV and Keystone Energy, LLC to provide drilling, infrastructure and work-over services to support the development of certain oil leases. The revenue and costs arising from the drilling and other services are matched and recorded as income and expense as each project is completed in accordance with their agreements, effectively recognizing income on the percentage of completion basis. Costs associated with the production of oil and gas (sometimes referred to as lifting costs) are expensed in the period incurred. During the last week of December 2014, the Company obtained 20 units (out of 100 total units) in the Bradford Joint Venture exploration and drilling program located in Shackelford County, Texas. The operation is accounted for as an investment as of December 31, 2014. The Company purchased their interest for $25,000 per unit on December 31, 2014. On June 12, 2015 the Company transferred its 20% interest in the Bradford JV to Keystone Energy, LLC (Keystone) in a series of transactions which resulted in Keystone securing a line of credit to be used to further develop the Bradford A and Bradford B leases. Keystone acquired an option (exercisable within 365 days) to purchase all of the interests in the Bradford JV and the Company exchanged 10 units of its ownership interests in the Bradford JV for a 5% equity interest in Keystone. |
Derivative Liabilities | Derivative Liabilities The Company evaluates its convertible debt, options, warrants or other contracts, if any, to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for in accordance with Accounting Standards Codification topic 815, Accounting for Derivative Instruments and Hedging Activities (ASC 815) as well as related interpretations of this standard. In accordance with this standard, derivative instruments are recognized as either assets or liabilities in the balance sheet and are measured at fair values with gains or losses recognized in earnings. Embedded derivatives that are not clearly and closely related to the host contract are bifurcated and are recognized at fair value with changes in fair value recognized as either a gain or loss in earnings. The Company determines the fair value of derivative instruments and hybrid instruments based on available market data using appropriate valuation models, considering all of the rights and obligations of each instrument. The result of this accounting treatment is that the fair value of the embedded derivative is marked-to-market each balance sheet date and recorded as either an asset or a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the consolidated statement of operations as other income or expense. Upon conversion, exercise or cancellation of a derivative instrument, the instrument is marked to fair value at the date of conversion, exercise or cancellation and then that the related fair value is reclassified to equity. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is re-assessed at the end of each reporting period. Equity instruments that are initially classified as equity that become subject to reclassification are reclassified to liability at the fair value of the instrument on the reclassification date. ASC 815 generally provides three criteria that, if met, require companies to bifurcate conversion options from their host instruments and account for them as free standing derivative financial instruments. These three criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under otherwise applicable generally accepted accounting principles with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument subject to the requirements of ASC 815. ASC 815 also provides an exception to this rule when the host instrument is deemed to be conventional. The Company marks to market the fair value of the embedded derivative convertible notes and derivative warrants at each balance sheet date and records the change in the fair value of the embedded derivative convertible notes and derivative warrants as other income or expense in the consolidated statements of operations. The Company estimates fair values of derivative financial instruments using the Black-Scholes model, adjusted for the effect of dilution, because it embodies all of the requisite assumptions (including trading volatility, estimated terms, dilution and risk free rates) necessary to fair value these instruments. Estimating fair values of derivative financial instruments requires the development of significant and subjective estimates that may, and are likely to, change over the duration of the instrument with related changes in internal and external market factors. In addition, option-based techniques (such as Black-Scholes model) are highly volatile and sensitive to changes in the trading market price of our common stock. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In August 2014, FASB issued Accounting Standards Update (ASU) No. 2014-15, Presentation of Financial StatementsGoing Concern (ASU No. 2014-15). The provisions of ASU No. 2014-15 require management to assess an entitys ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term substantial doubt, (2) require an evaluation every reporting period including interim periods, (3) provide principles for considering the mitigating effect of managements plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of managements plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). The amendments in this ASU are effective for the annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. The Company is currently assessing the impact of this ASU on the Companys consolidated financial statements. In November 2014, FASB issued ASU No. 2014-17, Business Combinations: Pushdown Accounting (ASU No. 2014-17). This ASU amended the Business Combination Accounting Standards Codification to provide guidance on whether and at what threshold an acquired entity that is a business or nonprofit activity can apply pushdown accounting in its separate financial statements. The Companys adoption of ASU No. 2014-17 effective November 14, 2014 did not have an impact on the Companys consolidated results of operations, financial position and related disclosures. In April 2015, FASB issued ASU 2015-03, Interest Imputation of Interest (Subtopic 835-30) which focuses on simplifying the presentation of debt issuance costs. The amendments in this update require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this update. The ASU will be effective for periods beginning after December 15, 2015 for public companies. Early adoption is permitted, including adoption in an interim period. The Company is currently assessing the impact of this ASU on the Companys consolidated financial statements. In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes In February 2016, FASB issued ASU 2016-02, Leases (Topic 842). The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases. The new guidance will be effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period and is applied retrospectively. Early adoption is permitted. The Company is currently in the process of assessing the impact the adoption of this guidance will have on the Companys consolidated financial statements. Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption. The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its financial condition, results of operations, cash flows or disclosures. |
Reclassifications | Reclassifications Certain items in prior year financial statements have been reclassified to conform to the 2015 presentation. These reclassifications had no effect on the reported results. |
Fair Value of Financial Instr22
Fair Value of Financial Instruments (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value of Assets and Liabilities Measured on Recurring Basis | Assets and liabilities at fair value on a recurring basis at December 31, 2015: Level 1 Level 2 Level 3 Total Assets Marketable securities $ 30,800 $ - $ - $ 30,800 Total $ 30,800 - - $ 30,800 Liabilities Derivative liability $ - $ - $ 2,355,580 $ 2,355,580 Total $ - $ - $ 2,355,580 $ 2,355,580 Assets and liabilities at fair value on a recurring basis at December 31, 2014: Level 1 Level 2 Level 3 Total Assets Marketable securities $ 69,300 $ - $ - $ 69,300 Total $ 69,300 $ - $ - $ 69,300 Liabilities Derivative liability - - $ 382,836 $ 382,836 Total $ - $ - $ 382,836 $ 382,836 |
Schedule of Changes in Fair Value of the Financial Liabilities | The following table provides a summary of changes in fair value of the Companys Level 3 financial liabilities as of December 31: 2015 2014 Balance, beginning of year $ 382,836 $ 32,528 Excess of fair value over debt discount 2,577,683 - Debt discount in connection with conversion option of Debentures and detachable warrants 931,181 693,630 Extinguished derivative liability (826,901 ) (22,068 ) Change in fair value of derivative liabilities (709,219 ) (321,254 ) Balance, end of year $ 2,355,580 $ 382,836 Net gain for the period included in earnings relating to the liabilities held at December 31, 2015 $ 709,219 $ 321,254 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Property, Plant and Equipment [Abstract] | |
Summary of Property and Equipment | The following is a summary of property and equipment - at cost, less accumulated depreciation as of December 31, 2015 and 2014: December 31, 2015 December 31, 2014 Office equipment $ 63,235 $ 63,128 Computer hardware and software 26,652 23,527 Leasehold improvements 25,453 25,270 Transportation equipment 132,622 180,485 Building 110,699 110,595 358,661 403,005 Less: accumulated depreciation (114,583 ) (63,252 ) $ 244,078 $ 339,753 |
Senior Secured Convertible Pr24
Senior Secured Convertible Promissory Notes Payable (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Debt Disclosure [Abstract] | |
Schedule of Convertible Notes Payable | Senior secured convertible notes payable consisted of the following: December 31, 2015 December 31, 2014 12% Senior secured convertible promissory notes $ 4,500,000 $ 4,500,000 Discount (519,286 ) (519,286 ) Accumulated amortization of discount 519,286 224,158 Remaining discount - (295,128 ) 12% Senior secured convertible notes payable, net $ 4,500,000 $ 4,204,872 |
Loan Payable Notes Payable an25
Loan Payable Notes Payable and Convertible Notes Payable (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Notes Payable [Abstract] | |
Schedule of Loan Payable Outstanding | Loan payable outstanding at December 31, 2015 and 2014 consisted the following: December 31, 2015 December 31, 2014 Loan payable obtained in November 2015 of $172,800, net of debt discount of $36,759, payable over 273 days beginning on November 18, 2015 with daily payments of $633. $ 119,584 $ - |
Schedule of Notes Payable Short and Long Term Portion | Notes payable short and long term portion consisted of the following: December 31, 2015 December 31, 2014 Total notes payable $ 56,226 $ 94,631 Less: current portion equipment purchase contract payable (13,721 ) (17,023 ) Long term portion equipment purchase contract payable $ 42,505 $ 77,608 |
Schedule of Notes Payable | Note payable outstanding at December 31, 2015 and 2014 consisted the following: December 31, 2015 December 31, 2014 Promissory note of $340,000 bearing 6% interest per annum $ - $ 340,000 |
Schedule of Convertible Notes Payable Outstanding | Convertible notes payable outstanding at December 31, 2015 and 2014 are summarized in the following table: December 31, 2015 December 31, 2014 Amount of principal and interest under the various 8% convertible promissory notes net of debt discount of $0 and $14,353 at December 31, 2015 and 2014, respectively, issued during fiscal 2013 $ - $ 168,647 Amount of principal and interest including default interest and penalties under the 6% convertible promissory notes net of debt discount of $0 and $181,465 at December 31, 2015 and 2014, respectively, issued during fiscal 2014 431,092 158,535 Amount of principal and interest including default interest and penalties under the various 8% convertible promissory notes net of debt discount of $0 and $107,288 at December 31, 2015 and 2014, respectively, issued during fiscal 2014 4,521 2,712 Amount of principal and interest including default interest and penalties under the various 8% convertible promissory notes net of debt discount of $39,340 and $0 at December 31, 2015 and 2014, respectively, issued during fiscal 2015 20,295 - Amount of principal and interest including default interest and penalties under the various 10% convertible promissory notes net of debt discount of $2,610 and $0 at December 31, 2015 and 2014, respectively, issued during fiscal 2015 95,869 - Amount of principal and interest including default interest and penalties under the various 12% convertible promissory notes net of debt discount of $138,214 and $0 at December 31, 2015 and 2014, respectively, issued during fiscal 2015 597,766 - Total principal and interest including default interest and penalties 1,149,543 329,894 Less : Current portion of convertible notes (1,061,725 ) (329,894 ) Total long-term portion of convertible notes $ 87,818 $ - |
Derivative Liabilities (Tables)
Derivative Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Fair value of the Derivative Liabilities | The following table summarizes the values of certain assumptions used by the Companys custom model to estimate the fair value of the derivative liabilities as of December 31: 2015 2014 Stock price $ 0.003 $ 0.42 Strike price ranging from 0.001 to 0.50 0.24 to 0.33 Remaining contractual term (years) 0.25 to 4.00 years 0.95 to 0.98 years Volatility 292 % 160 % Risk-free rate 0.05% to 1.76 % 0.04% to 1.10 % Dividend yield 0.0 % 0.0 % |
Summary of Changes in Fair Value of Financial Liabilities | The following table provides a summary of changes in fair value of the Companys Level 3 financial liabilities as of December 31: 2015 2014 Balance, beginning of year $ 382,836 $ 32,528 Excess of fair value over debt discount 2,577,683 - Debt discount in connection with conversion option of Debentures and detachable warrants 931,181 693,630 Extinguished derivative liability (826,901 ) (22,068 ) Change in fair value of derivative liabilities (709,219 ) (321,254 ) Balance, end of year $ 2,355,580 $ 382,836 |
Stockholders' Deficit (Tables)
Stockholders' Deficit (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Other Liabilities Disclosure [Abstract] | |
Schedule of Changes in stock purchase warrants | Changes in stock purchase warrants during the periods ended December 31, 2015 and 2014 are as follows: Weighted Average Aggregate Weighted Average Number of Exercise Intrinsic Remaining Warrants Price Value Exercisable Life Outstanding, December 31, 2013 - $ - $ - - $ - Exercisable, December 31, 2013 - - - - - Issued 2,050,000 1.00 - - - Exercised - - - - - Cancelled - Outstanding, December 31, 2014 2,050,000 1.00 - 2,050,000 4.75 years Issued 450,000 1.00 - - - Exercised - - - - - Cancelled - - - - - Outstanding, December 31, 2015 2,500,000 $ 1.00 $ - 2,500,000 3.60 years Exercisable, December 31, 2015 2,500,000 $ 1.00 $ - 2,500,000 3.60 years |
Asset Retirement Obligation (Ta
Asset Retirement Obligation (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Asset Retirement Obligation Disclosure [Abstract] | |
Schedule of Asset Retirement Obligation | The following table sets forth the principal sources of change of the asset retirement obligation for the years ended December 31, 2015 and 2014: 2015 2014 Asset retirement obligations, beginning of period $ 162,321 $ 8,639 Additions and changes in estimated liabilities (81,245 ) (8,639 ) Asset retirement obligations assumed - 142,336 Accretion expense 14,987 19,985 Asset retirement obligations, end of period $ 96,063 $ 162,321 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of Net Deferred Taxes | The provision for income taxes differs from the amounts which would be provided by applying the statutory federal income tax rate of 39 percent to net loss before provision for income taxes for the following reasons: December 31, 2015 2014 Cumulative NOL $ 5,737,631 $ 4,294,241 Deferred Tax Assets: Net operating loss carry forwards 2,237,676 1,674,754 Valuation allowance (2, 237,676) (1,674,754 ) $ - $ - |
Significant Accounting Policies
Significant Accounting Policies (Details Narrative) | Sep. 02, 2014USD ($) | Dec. 31, 2015USD ($)Boe | Dec. 31, 2014USD ($)Boeshares | Dec. 31, 2013USD ($) |
Cash FDIC insured amount | $ 250,000 | |||
Oil and gas reserves conversion to common unit's basis of barrel of oil. | Boe | 6,000 | 6,000 | ||
Disclosure of oil and gas reserves conversion to common units | Oil and gas reserves are converted to a common unit of measure based on the energy content of 6,000 cubic feet of gas to one barrel of oil. | |||
Sale of interests in oil and gas properties in exchange of shares | shares | 3,000,000 | |||
Sale of interests in oil and gas properties in exchange of shares value | $ 2,010,000 | |||
Additional cost for leases development | 2,175,000 | |||
Impairment charge | $ 2,654,824 | |||
Impirement losses | 2,654,824 | 0 | ||
Asset retirement obligation | 96,063 | 162,321 | $ 96,063 | |
Accretion on asset retirement obligation | 14,987 | 19,985 | ||
Available-for-sale securities | 30,800 | 69,300 | ||
Unrealized gains (losses) on available-for-sale securities | 38,500 | 45,465 | ||
Accumulated other comprehensive losses | 2,186,800 | $ 2,148,300 | ||
Concentration risk oil production | 95.00% | |||
Purchase interest | $ 25,000 | |||
Sales Revenue Net [Member] | Two Customer [Member] | ||||
Concentration risk oil production | 92.00% | 95.00% | ||
Accounts Receivable [Member] | One Customer [Member] | ||||
Concentration risk oil production | 100.00% | 77.00% | ||
Minimum [Member] | ||||
Property and equipment useful live | 3 years | |||
Maximum [Member] | ||||
Property and equipment useful live | 5 years | |||
Powers-Sanders And Stroebel Broyles Leases [Member] | ||||
Percentage of acquisition of working interest | 100.00% | |||
Bradford A and B Leases [Member] | ||||
Percentage of acquisition of working interest | 93.75% | |||
Fortune Leases [Member] | ||||
Percentage of acquisition of working interest | 43.75% | |||
Dawson Conway [Member] | ||||
Percentage of acquisition of working interest | 15.00% | |||
Business combined cash consideration | $ 1,010,000 | |||
Bradford JV [Member] | ||||
Business combined cash consideration | 16,608 | |||
Acquire interest in joint venture | $ 325,000 | |||
Value of equity interest acquired per unit | $ 25,000 | |||
Percentage of units acquired company | 1.00% |
Going Concern (Details Narrativ
Going Concern (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accumulated deficit | $ 13,955,074 | $ 5,341,712 |
Net cash used in operating activities | $ 922,367 | $ 1,875,297 |
Fair Value of Financial Instr32
Fair Value of Financial Instruments - Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Assets, Marketable securities | $ 30,800 | $ 69,300 |
Assets, Total | 30,800 | 69,300 |
Liabilities, Derivative liability | 2,355,580 | 382,836 |
Liabilities, Total | 2,355,580 | 382,836 |
Level 1 [Member] | ||
Assets, Marketable securities | 30,800 | 69,300 |
Assets, Total | $ 30,800 | $ 69,300 |
Liabilities, Derivative liability | ||
Liabilities, Total | ||
Level 2 [Member] | ||
Assets, Marketable securities | ||
Assets, Total | ||
Liabilities, Derivative liability | ||
Liabilities, Total | ||
Level 3 [Member] | ||
Assets, Marketable securities | ||
Assets, Total | ||
Liabilities, Derivative liability | $ 2,355,580 | $ 382,836 |
Liabilities, Total | $ 2,355,580 | $ 382,836 |
Fair Value of Financial Instr33
Fair Value of Financial Instruments - Schedule of Changes in Fair Value of the Financial Liabilities (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Fair Value Disclosures [Abstract] | ||
Beginning balance | $ 382,836 | $ 32,528 |
Excess of fair value over debt discount | 2,577,683 | |
Debt discount in connection with conversion option of Debentures and detachable warrants | 931,181 | $ 693,630 |
Extinguished derivative liability | (826,901) | (22,068) |
Change in fair value of derivative liabilities | 826,901 | (321,254) |
Ending balance | 2,355,580 | 382,836 |
Net gain for the period included in earnings relating to the liabilities held at December 31, 2015 | $ 709,219 | $ 321,254 |
Oil And Gas Properties (Details
Oil And Gas Properties (Details Narrative) | Sep. 02, 2014USD ($) | Sep. 02, 2014shares | Jun. 16, 2014USD ($)aWell | Mar. 11, 2014USD ($) | Mar. 06, 2014USD ($)aWell | Mar. 05, 2014USD ($)aWell | Nov. 30, 2015 | Mar. 31, 2015USD ($) | Mar. 31, 2014USD ($) | Jul. 31, 2013USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($)aBoe |
Equity ownerhip interest rate | 100.00% | |||||||||||
Debt maturity period | Nov. 18, 2015 | |||||||||||
Impairment expense | $ 2,654,824 | |||||||||||
Values of oil and gas properties | $ 310,226 | $ 3,449,487 | ||||||||||
Dawson Conway Leases Property [Member] | ||||||||||||
Purchase of working interest | 15.00% | 85.00% | ||||||||||
Net revenue interest | 75.00% | |||||||||||
Oil and gas property, purchase price | $ 30,000 | $ 400,000 | ||||||||||
Issued promissory note for oil and gas leases | $ 340,000 | $ 400,000 | ||||||||||
Oil and Gas Properties [Member] | September and October [Member] | ||||||||||||
Number of production oil wells | Boe | 3 | |||||||||||
Cost of drilling charged for oil and gas properties | $ 407,767 | |||||||||||
Oil and Gas Properties [Member] | Broyles Lease [Member] | ||||||||||||
Net revenue interest | 76.00% | |||||||||||
Oil and Gas Properties [Member] | Stroebel Lease [Member] | ||||||||||||
Net revenue interest | 78.00% | |||||||||||
Oil and Gas Properties [Member] | Dawson Conway [Member] | ||||||||||||
Oil and gas property, purchase price | $ 4,500,000 | |||||||||||
Percentage of additional working interest | 15.00% | |||||||||||
Percentage of senior secured convertible notes | 12.00% | |||||||||||
Debt maturity period | Dec. 31, 2015 | |||||||||||
Oil and Gas Properties [Member] | Sabor X Energy Services [Member] | ||||||||||||
Purchase of working interest | 100.00% | |||||||||||
Net revenue interest | 80.00% | |||||||||||
Oil and gas property, purchase price | $ 600,000 | |||||||||||
Area of land | a | 385 | |||||||||||
Number of production oil wells | Well | 5 | |||||||||||
Oil and Gas Properties [Member] | Hunting Dog Capital LLC [Member] | ||||||||||||
Purchase of working interest | 100.00% | |||||||||||
Oil and gas property, purchase price | $ 75,000 | |||||||||||
Area of land | a | 235 | |||||||||||
Number of production oil wells | Well | 32 | |||||||||||
Oil and Gas Properties [Member] | Bradford JV [Member] | ||||||||||||
Purchase of working interest | 20.00% | 93.75% | ||||||||||
Net revenue interest | 20.00% | |||||||||||
Oil and gas property, purchase price | $ 225,000 | |||||||||||
Equity ownerhip interest rate | 5.00% | 5.00% | ||||||||||
Number of units exchanged for ownership interest | shares | 10 | |||||||||||
Area of land | a | 320 | |||||||||||
Number of production oil wells | Well | 7 | |||||||||||
Oil and Gas Properties [Member] | P.I.D. Drilling, Inc [Member] | ||||||||||||
Purchase of working interest | 43.75% | |||||||||||
Net revenue interest | 32.375% | |||||||||||
Oil and gas property, purchase price | $ 80,000 | |||||||||||
Received refunds | $ 40,000 | |||||||||||
Oil and Gas Properties [Member] | Bradford [Member] | ||||||||||||
Purchase of working interest | 100.00% | |||||||||||
Net revenue interest | 77.00% | |||||||||||
Oil and gas property, purchase price | $ 20,000 | |||||||||||
Area of land | a | 200 |
Property and Equipment (Details
Property and Equipment (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Depreciation expense | $ 63,294 | $ 40,093 |
Truck [Member] | ||
Depreciation expense | 7,000 | |
Sale of truck book vaue | 35,000 | |
Proceeds from sale of assets | 28,000 | |
Settled equipment purchase contract payable | 28,000 | |
Gain on sale of property and equipment | 63,294 | |
Realized gain on asset | $ 1,000 |
Property and Equipment - Schedu
Property and Equipment - Schedule of Property and Equipment (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Property, Plant and Equipment [Abstract] | ||
Office equipment | $ 63,235 | $ 63,128 |
Computer hardware and software | 26,652 | 23,527 |
Leasehold improvements | 25,453 | 25,270 |
Transportation equipment | 132,622 | 180,485 |
Building | 110,699 | 110,595 |
Property and equipment, gross | 358,661 | 403,005 |
Less: accumulated depreciation | (114,583) | (63,252) |
Property and equipment,net | $ 244,078 | $ 339,753 |
Senior Secured Convertible Pr37
Senior Secured Convertible Promissory Notes Payable (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||
Nov. 30, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | |
Convertible note, maturity date | Nov. 18, 2015 | ||||
Remaining Principle amount to issue | $ 500,000 | ||||
Warrants expiration date | Dec. 31, 2019 | ||||
Warrants average risk free interest rate | 0.11% | ||||
Warrants expected dividends | 0.00% | 0.00% | |||
Warrants volatility rate | 292.00% | 160.00% | |||
Amortization of debt discount | $ 36,759 | $ 1,302,701 | $ 401,892 | ||
Accrued interest | $ 540,000 | ||||
Senior Secured Convertible Notes [Member] | |||||
Proceeds from convertible debt | $ 1,275,000 | $ 1,275,000 | |||
Warrants to purchase shares of common stock | 1,800,000 | 510,000 | |||
Common stock exercise per share | $ 1 | $ 1 | |||
Warrants expiration date | Dec. 31, 2019 | ||||
Warrants attribute to additional paid in capital | $ 519,286 | ||||
Warrants term | 2 years | ||||
Warrants average risk free interest rate | 0.69% | ||||
Warrants expected dividends | 0.00% | ||||
Warrants volatility rate | 238.45% | ||||
Amortization of debt discount | $ 295,128 | $ 224,158 | |||
Interest expense | 270,000 | ||||
Commission and fees | 515,000 | 515,000 | |||
Prepaid expense debt issuance costs, net | $ 294,163 | $ 220,837 | |||
Senior Secured Convertible Notes [Member] | |||||
Proceeds from convertible debt | $ 3,225,000 | ||||
Warrants to purchase shares of common stock | 1,290,000 | ||||
Common stock exercise per share | $ 1 | ||||
Convertible notes, bearing interest rate | 12.00% | ||||
Convertible note, maturity date | Dec. 15, 2015 | ||||
Percentage of stock coverage value based on bid price of stock | 200.00% |
Senior Secured Convertible Pr38
Senior Secured Convertible Promissory Notes Payable - Schedule of Convertible Notes Payable (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Debt Disclosure [Abstract] | ||
12% Senior secured convertible promissory notes | $ 4,500,000 | $ 4,500,000 |
Discount | (519,286) | (519,286) |
Accumulated amortization of discount | $ 519,286 | 224,158 |
Remaining discount | (295,128) | |
12% Senior secured convertible notes payable, net | $ 4,500,000 | $ 4,204,872 |
Loan Payable, Notes Payable and
Loan Payable, Notes Payable and Convertible Notes Payable (Details Narrative) | Jul. 17, 2015USD ($) | Jun. 02, 2015USD ($) | May. 28, 2015shares | May. 21, 2015USD ($)$ / shares | May. 08, 2015USD ($)$ / shares | May. 08, 2015USD ($)$ / shares | May. 05, 2015shares | May. 01, 2015USD ($) | May. 01, 2015USD ($) | Apr. 06, 2015USD ($) | Mar. 18, 2015USD ($) | Dec. 23, 2014USD ($) | Sep. 22, 2014USD ($)$ / shares | Sep. 11, 2014USD ($)$ / sharesshares | Nov. 30, 2015 | Jul. 31, 2013USD ($)a | Sep. 30, 2014USD ($) | Aug. 27, 2015USD ($)$ / shares | Dec. 31, 2015USD ($)$ / sharesshares | Dec. 31, 2014USD ($)shares | Dec. 31, 2013USD ($) | Nov. 25, 2015$ / shares |
Proceeds of notes payable | $ 1,084,568 | $ 4,860,000 | ||||||||||||||||||||
Debt instruments maturity date | Nov. 18, 2015 | |||||||||||||||||||||
Notes payable | 87,818 | |||||||||||||||||||||
Additional interest paid | 22,295 | $ 289,708 | ||||||||||||||||||||
Common stock issued for conversion of debt | $ 23,000 | 174,807 | ||||||||||||||||||||
Debt instrument conversion amount, shares | shares | 69,697 | |||||||||||||||||||||
Amortization of prepaid debt issuance cost | $ 429,826 | 280,726 | ||||||||||||||||||||
Notes Payable [Member] | ||||||||||||||||||||||
Proceeds of notes payable | $ 100,285 | |||||||||||||||||||||
Principal balance of note | $ 25,000 | |||||||||||||||||||||
Notes Payable [Member] | Minimum [Member] | ||||||||||||||||||||||
Debt instrumenst interest rate | 9.00% | |||||||||||||||||||||
Notes Payable [Member] | Maximum [Member] | ||||||||||||||||||||||
Debt instrumenst interest rate | 10.00% | |||||||||||||||||||||
July 2013 Note Payable [Member] | ||||||||||||||||||||||
Debt instruments default interest rate | 6.00% | |||||||||||||||||||||
Purchase of working interest | 85.00% | |||||||||||||||||||||
Percentage of revenue interest | 75.00% | |||||||||||||||||||||
Area of land covering oil and gas lease | a | 618 | |||||||||||||||||||||
Oil and gas property, purchase price | $ 400,000 | |||||||||||||||||||||
Proceeds from promissory note | $ 400,000 | |||||||||||||||||||||
Debt due term | 2 years | |||||||||||||||||||||
Notes payable | 340,000 | $ 340,000 | ||||||||||||||||||||
September 11, 2014 Note Payable [Member] | ||||||||||||||||||||||
Debt due term | 90 days | |||||||||||||||||||||
Promissory note issued | $ 120,000 | |||||||||||||||||||||
Cash received | $ 120,000 | |||||||||||||||||||||
Restricted common stock issued | shares | 50,000 | |||||||||||||||||||||
Additional interest paid | $ 15,000 | |||||||||||||||||||||
Stock issued per share | $ / shares | $ 0.70 | |||||||||||||||||||||
Share based payments credit to common stock | $ 35,000 | |||||||||||||||||||||
Shares issued to pay interest | shares | 30,000 | |||||||||||||||||||||
Value of shares issued to pay interest | $ 12,000 | |||||||||||||||||||||
2013 Convertible Note Issued [Member] | ||||||||||||||||||||||
Proceeds of notes payable | $ 183,000 | 0 | ||||||||||||||||||||
Debt instruments default interest rate | 12.00% | |||||||||||||||||||||
Debt instruments conversion price | $ / shares | $ 1 | |||||||||||||||||||||
Debt instrument, accrued interest | 12.00% | 8.00% | ||||||||||||||||||||
Notes payable | $ 145,000 | $ 145,000 | ||||||||||||||||||||
Repayment of principle amount | 15,000 | |||||||||||||||||||||
Common stock issued for conversion of debt | $ 23,000 | |||||||||||||||||||||
Debt instrument conversion amount, shares | shares | 69,697 | |||||||||||||||||||||
Convertible Note Issued On September 22, 2014 [Member] | ||||||||||||||||||||||
Debt instruments default interest rate | 6.00% | |||||||||||||||||||||
Debt due term | 180 days | |||||||||||||||||||||
Promissory note issued | $ 250,000 | |||||||||||||||||||||
Commission paid | $ 10,000 | |||||||||||||||||||||
Stock issued per share | $ / shares | $ 1 | |||||||||||||||||||||
Interest expense on debt | $ 32,500 | |||||||||||||||||||||
Repayment of principle amount | $ 340,000 | |||||||||||||||||||||
Percentage of average closing price | 75.00% | |||||||||||||||||||||
Debt discount | $ 90,000 | |||||||||||||||||||||
Amortization of interest expense | 52,500 | |||||||||||||||||||||
September 22, 2014 Note Payable One [Member] | ||||||||||||||||||||||
Proceeds from promissory note | $ 340,000 | |||||||||||||||||||||
September 22, 2014 Note Payable Two [Member] | ||||||||||||||||||||||
Restricted common stock issued | shares | 250,000 | 250,000 | ||||||||||||||||||||
Shares issued to pay interest | shares | 500,000 | |||||||||||||||||||||
Value of shares issued to pay interest | $ 107,500 | |||||||||||||||||||||
Legal fees related to credit facility | $ 5,000 | |||||||||||||||||||||
Convertible Note Issued On December 23, 2014 [Member] | ||||||||||||||||||||||
Debt instruments default interest rate | 8.00% | |||||||||||||||||||||
Notes payable | $ 110,000 | |||||||||||||||||||||
Cash received | $ 95,000 | |||||||||||||||||||||
Percentage of average closing price | 40.00% | |||||||||||||||||||||
Legal fees related to credit facility | $ 5,000 | |||||||||||||||||||||
Convertible Note Issued On January 12, 2015 [Member] | ||||||||||||||||||||||
Debt instruments default interest rate | 120.00% | |||||||||||||||||||||
Proceeds from promissory note | $ 90,000 | |||||||||||||||||||||
Debt instrument, accrued interest | 10.00% | |||||||||||||||||||||
Debt due term | 180 days | |||||||||||||||||||||
Debt discount | $ 5,000 | |||||||||||||||||||||
Legal fees related to credit facility | $ 5,000 | |||||||||||||||||||||
Convertible Note issued On January 16, 2015 [Member] | ||||||||||||||||||||||
Debt instruments default interest rate | 130.00% | |||||||||||||||||||||
Proceeds from promissory note | $ 110,000 | |||||||||||||||||||||
Debt due term | 180 days | |||||||||||||||||||||
Notes payable | $ 114,000 | |||||||||||||||||||||
Percentage of discount of average lowest three trading price | 35.00% | |||||||||||||||||||||
Debt discount | $ 4,000 | |||||||||||||||||||||
Convertible Note Issued On January 22, 2015 [Member] | ||||||||||||||||||||||
Debt instrumenst interest rate | 12.00% | |||||||||||||||||||||
Debt instruments conversion price | $ / shares | $ 0.50 | |||||||||||||||||||||
Proceeds from promissory note | $ 50,000 | |||||||||||||||||||||
Debt due term | 2 years | |||||||||||||||||||||
Debt instruments maturity date | Jan. 28, 2017 | |||||||||||||||||||||
Notes payable | $ 55,000 | |||||||||||||||||||||
Percentage of discount of average lowest three trading price | 60.00% | |||||||||||||||||||||
Convertible Note issued On January 28, 2015 [Member] | ||||||||||||||||||||||
Debt instruments conversion price | $ / shares | $ 0.365 | |||||||||||||||||||||
Proceeds from promissory note | $ 50,000 | |||||||||||||||||||||
Debt due term | 180 days | |||||||||||||||||||||
Debt instruments maturity date | Jan. 28, 2017 | |||||||||||||||||||||
Notes payable | $ 55,000 | |||||||||||||||||||||
Percentage of discount of average lowest three trading price | 60.00% | |||||||||||||||||||||
Debt discount | $ 5,000 | |||||||||||||||||||||
Convertible Note Issued On March 18, 2015 [Member] | ||||||||||||||||||||||
Debt instruments default interest rate | 115.00% | |||||||||||||||||||||
Debt due term | 180 days | |||||||||||||||||||||
Debt instruments maturity date | Mar. 18, 2017 | |||||||||||||||||||||
Promissory note issued | $ 60,000 | |||||||||||||||||||||
Cash received | 54,000 | |||||||||||||||||||||
Debt discount | $ 6,000 | |||||||||||||||||||||
Percentage of discount | 35.00% | |||||||||||||||||||||
Convertible Note Issued On March 18, 2015 And August 27, 2015 [Member] | ||||||||||||||||||||||
Debt instrumenst interest rate | 12.00% | |||||||||||||||||||||
Debt instruments default interest rate | 60.00% | |||||||||||||||||||||
Debt instruments conversion price | $ / shares | $ 0.30 | |||||||||||||||||||||
Debt instruments maturity date | Mar. 18, 2017 | |||||||||||||||||||||
Notes payable | $ 85,000 | |||||||||||||||||||||
Percentage of discount of average lowest three trading price | 60.00% | |||||||||||||||||||||
Debt discount | $ 8,500 | |||||||||||||||||||||
Legal fees related to credit facility | $ 4,000 | |||||||||||||||||||||
Convertible Note Issued On April 6, 2015 [Member] | ||||||||||||||||||||||
Debt instruments default interest rate | 10.00% | |||||||||||||||||||||
Debt due term | 180 days | |||||||||||||||||||||
Notes payable | $ 60,000 | |||||||||||||||||||||
Percentage of discount of average lowest three trading price | 55.00% | |||||||||||||||||||||
Cash received | $ 54,750 | |||||||||||||||||||||
Debt discount | $ 5,250 | |||||||||||||||||||||
Convertible Note Issued On April 6, 2015 [Member] | Minimum [Member] | ||||||||||||||||||||||
Debt instruments default interest rate | 125.00% | |||||||||||||||||||||
Convertible Note Issued On April 6, 2015 [Member] | Maximum [Member] | ||||||||||||||||||||||
Debt instruments default interest rate | 150.00% | |||||||||||||||||||||
Convertible Note Issued On May 1, 2015 [Member] | ||||||||||||||||||||||
Principal balance of note | $ 72,428 | $ 72,428 | ||||||||||||||||||||
Prepaid loan cost | 4,000 | 4,000 | ||||||||||||||||||||
Notes payable | 59,000 | $ 59,000 | ||||||||||||||||||||
Percentage of discount of average lowest three trading price | 35.00% | |||||||||||||||||||||
Cash received | $ 55,000 | $ 55,000 | ||||||||||||||||||||
Convertible Note Issued On May 1, 2015 [Member] | Minimum [Member] | ||||||||||||||||||||||
Debt instruments default interest rate | 130.00% | |||||||||||||||||||||
Convertible Note Issued On May 1, 2015 [Member] | Maximum [Member] | ||||||||||||||||||||||
Debt instruments default interest rate | 115.00% | |||||||||||||||||||||
Convertible Note Issued On May 8, 2015 [Member] | ||||||||||||||||||||||
Proceeds of notes payable | $ 145,000 | |||||||||||||||||||||
Debt instruments default interest rate | 12.00% | 8.00% | ||||||||||||||||||||
Debt instruments conversion price | $ / shares | $ 0.40 | $ 0.40 | $ 0.40 | |||||||||||||||||||
Notes payable | $ 145,000 | $ 145,000 | ||||||||||||||||||||
Weighted average exercise price percentage | 70.00% | 70.00% | 60.00% | |||||||||||||||||||
Convertible Note Issued On May 21, 2015 [Member] | ||||||||||||||||||||||
Proceeds of notes payable | $ 110,000 | |||||||||||||||||||||
Debt instruments default interest rate | 12.00% | |||||||||||||||||||||
Debt instruments conversion price | $ / shares | $ 0.40 | $ 0.40 | ||||||||||||||||||||
Debt due term | 90 days | |||||||||||||||||||||
Debt instruments maturity date | Mar. 8, 2016 | |||||||||||||||||||||
Notes payable | $ 110,000 | |||||||||||||||||||||
Cash received | 100,000 | |||||||||||||||||||||
Debt discount | 10,000 | |||||||||||||||||||||
Legal fees related to credit facility | $ 11,350 | |||||||||||||||||||||
Weighted average exercise price percentage | 70.00% | 60.00% | ||||||||||||||||||||
Convertible Note Issued On June 2, 2015 [Member] | ||||||||||||||||||||||
Proceeds of notes payable | $ 121,000 | |||||||||||||||||||||
Debt instruments default interest rate | 12.00% | |||||||||||||||||||||
Debt due term | 90 days | |||||||||||||||||||||
Debt instruments maturity date | Jun. 2, 2016 | |||||||||||||||||||||
Notes payable | $ 121,000 | |||||||||||||||||||||
Cash received | 100,000 | |||||||||||||||||||||
Debt discount | 10,000 | |||||||||||||||||||||
Legal fees related to credit facility | $ 11,000 | |||||||||||||||||||||
Weighted average exercise price percentage | 70.00% | |||||||||||||||||||||
Convertible Note Issued On July 17, 2015 [Member] | ||||||||||||||||||||||
Debt instruments default interest rate | 8.00% | |||||||||||||||||||||
Notes payable | $ 57,500 | |||||||||||||||||||||
Penalty amount payable on debt per day | $ 250 | |||||||||||||||||||||
Convertible Note Issued On July 17, 2015 [Member] | Within 90 days [Member] | ||||||||||||||||||||||
Debt instruments default interest rate | 90.00% | |||||||||||||||||||||
Convertible Note Issued On July 17, 2015 [Member] | After 90 Days [Member] | ||||||||||||||||||||||
Debt instruments default interest rate | 120.00% | |||||||||||||||||||||
Convertible Note Issued On July 17, 2015 [Member] | Event of Default [Member] | ||||||||||||||||||||||
Debt instruments default interest rate | 24.00% | |||||||||||||||||||||
Convertible Note Issued On July 17, 2015 [Member] | After Delivery Date [Member] | ||||||||||||||||||||||
Penalty amount payable on debt per day | $ 500 | |||||||||||||||||||||
Extension Of Convertible Notes Payable [Member] | ||||||||||||||||||||||
Common stock issued for conversion of debt | $ 107,500 | |||||||||||||||||||||
Debt instrument conversion amount, shares | shares | 500,000 | |||||||||||||||||||||
Beneficial conversion feature | $ 931,181 | |||||||||||||||||||||
Amortization of prepaid debt issuance cost | 135,663 | |||||||||||||||||||||
Convertible Notes Payable [Member] | ||||||||||||||||||||||
Common stock issued for conversion of debt | $ 620,607 | |||||||||||||||||||||
Debt instrument conversion amount, shares | shares | 45,489,374 | |||||||||||||||||||||
Beneficial conversion feature net of amortization | $ 1,007,573 | $ 177,734 | ||||||||||||||||||||
Amortization of prepaid debt issuance cost | $ 59,889 |
Loan Payable Notes Payable an40
Loan Payable Notes Payable and Convertible Notes Payable - Schedule of Loan Payable Outstanding (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Loan Payable Notes Payable And Convertible Notes Payable - Schedule Of Loan Payable Outstanding Details | ||
Loan payable obtained in November 2015 of $172,800, net of debt discount of $36,759, payable over 273 days beginning on November 18, 2015 with daily payments of $633. | $ 119,584 |
Loan Payable Notes Payable an41
Loan Payable Notes Payable and Convertible Notes Payable - Schedule of Loan Payable Outstanding (Details) (Parenthetical) - USD ($) | 1 Months Ended | 12 Months Ended | |
Nov. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | |
Loan Payable Notes Payable And Convertible Notes Payable - Schedule Of Loan Payable Outstanding Details | |||
Proceeds from loan | $ 172,800 | ||
Amortization of debt discount | $ 36,759 | $ 1,302,701 | $ 401,892 |
Debt instruments maturity date | Nov. 18, 2015 | ||
Debt instruments periodic payments | $ 633 |
Loan Payable Notes Payable an42
Loan Payable Notes Payable and Convertible Notes Payable - Schedule of Notes Payable Short and Long Term Portion (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Less: Current portion | $ 340,000 | |
Notes Payable of Short And Long Term [Member] | ||
Total notes payable | $ 56,226 | 94,631 |
Less: Current portion | (13,721) | (17,023) |
Long-term portion | $ 42,505 | $ 77,608 |
Loan Payable Notes Payable an43
Loan Payable Notes Payable and Convertible Notes Payable - Schedule of Notes Payable (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Loan Payable Notes Payable And Convertible Notes Payable - Schedule Of Notes Payable Details | ||
Promissory note of $340,000 bearing 6% interest per annum | $ 340,000 |
Loan Payable Notes Payable an44
Loan Payable Notes Payable and Convertible Notes Payable - Schedule of Notes Payable (Details) (Parenthetical) | 12 Months Ended |
Dec. 31, 2015USD ($) | |
Loan Payable Notes Payable And Convertible Notes Payable - Schedule Of Notes Payable Details | |
Proceeds from debt | $ 340,000 |
Debt instruments interest rate per annum | 6.00% |
Loan Payable Notes Payable an45
Loan Payable Notes Payable and Convertible Notes Payable - Schedule of Convertible Notes Payable Outstanding (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Total principal and interest including default interest and penalties | $ 1,149,543 | $ 329,894 |
Less : Current portion of convertible notes | 1,061,725 | $ 329,894 |
Total long-term portion of convertible notes | $ 87,818 | |
Convertible Notes Payable One [Member] | ||
Total principal and interest including default interest and penalties | $ 168,647 | |
Convertible Notes Payable Two [Member] | ||
Total principal and interest including default interest and penalties | $ 431,092 | 158,535 |
Convertible Notes Payable Three [Member] | ||
Total principal and interest including default interest and penalties | 4,521 | $ 2,712 |
Convertible Notes Payable Four [Member] | ||
Total principal and interest including default interest and penalties | 20,295 | |
Convertible Notes Payable Five [Member] | ||
Total principal and interest including default interest and penalties | 95,869 | |
Convertible Notes Payable Six [Member] | ||
Total principal and interest including default interest and penalties | $ 597,766 |
Loan Payable Notes Payable an46
Loan Payable Notes Payable and Convertible Notes Payable - Schedule of Convertible Notes Payable Outstanding (Details) (Parenthetical) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Convertible Notes Payable One [Member] | ||
Debt instrumenst interest rate | 8.00% | 8.00% |
Convertible promissory notes net of debt discount | $ 0 | $ 14,353 |
Convertible Notes Payable Two [Member] | ||
Debt instrumenst interest rate | 6.00% | 6.00% |
Convertible promissory notes net of debt discount | $ 0 | $ 181,465 |
Convertible Notes Payable Three [Member] | ||
Debt instrumenst interest rate | 8.00% | 8.00% |
Convertible promissory notes net of debt discount | $ 0 | $ 107,288 |
Convertible Notes Payable Four [Member] | ||
Debt instrumenst interest rate | 8.00% | 8.00% |
Convertible promissory notes net of debt discount | $ 39,340 | $ 0 |
Convertible Notes Payable Five [Member] | ||
Debt instrumenst interest rate | 10.00% | 10.00% |
Convertible promissory notes net of debt discount | $ 2,610 | $ 0 |
Convertible Notes Payable Six [Member] | ||
Debt instrumenst interest rate | 12.00% | 12.00% |
Convertible promissory notes net of debt discount | $ 138,214 | $ 0 |
Derivative Liabilities (Details
Derivative Liabilities (Details Narrative) - USD ($) | 1 Months Ended | 12 Months Ended | |
Nov. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | |
Derivative liabilities | $ 2,355,580 | $ 382,836 | |
Amortization of debt discount | $ 36,759 | 1,302,701 | 401,892 |
Common stock issued for conversion of debt | 23,000 | 174,807 | |
Derivative liability | 2,355,580 | 382,836 | |
Derivative Liabilities [Member] | |||
Derivative expense | 931,181 | ||
Derivative liabilities | 2,577,683 | ||
Amortization of debt discount | 931,181 | ||
Fair value of convertible instruments | 709,219 | ||
Common stock issued for conversion of debt | 826,901 | $ 22,068 | |
Warrant derivative liability | 1,722 | ||
Derivative liability | $ 2,353,858 |
Derivative Liabilities - Fair V
Derivative Liabilities - Fair Value of the Derivative Liabilities (Details) - $ / shares | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Stock price | $ 0.003 | $ 0.42 |
Volatility | 292.00% | 160.00% |
Risk-free rate | 0.11% | |
Dividend yield | 0.00% | 0.00% |
Minimum [Member] | ||
Strike price ranging from | $ 0.001 | $ 0.24 |
Remaining contractual term (years) | 3 months | 11 months 12 days |
Risk-free rate | 0.05% | 0.04% |
Maximum [Member] | ||
Strike price ranging from | $ 0.50 | $ 0.33 |
Remaining contractual term (years) | 4 years | 11 months 23 days |
Risk-free rate | 1.76% | 1.10% |
Derivative Liabilities - Summar
Derivative Liabilities - Summary of Changes in Fair Value of Financial Liabilities (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Fair Value Disclosures [Abstract] | ||
Beginning balance | $ 382,836 | $ 32,528 |
Excess of fair value over debt discount | 2,577,683 | |
Debt discount in connection with conversion option of Debentures and detachable warrants | 931,181 | $ 693,630 |
Extinguished derivative liability | (826,901) | (22,068) |
Change in fair value of derivative liabilities | 826,901 | (321,254) |
Ending balance | $ 2,355,580 | $ 382,836 |
Stockholders' Deficit (Details
Stockholders' Deficit (Details Narrative) - USD ($) | Nov. 24, 2015 | Feb. 25, 2015 | Sep. 22, 2014 | Dec. 31, 2015 | Dec. 31, 2014 |
Common stock authorized | 100,000,000 | 100,000,000 | |||
Number of shares issued for cash | 699,929 | ||||
Number of shares issued for cash, value | $ 195,975 | $ 195,975 | |||
Common stock issued for services, shares | 248,874 | ||||
Common stock issued period for services | $ 92,183 | 415,220 | |||
Number of shares issued for debt conversion | 69,697 | ||||
Common stock issued for conversion of debt | $ 23,000 | $ 174,807 | |||
Conversion stock issued | 437,500 | ||||
Conversion stock issued, value | $ 196,875 | ||||
Additional paid in capital | $ 22,068 | ||||
Number of stock cancelled | 150,000 | ||||
Common stock cancelled during period, shares | 33,333 | ||||
Common stock cancelled during period | $ 15,667 | ||||
Common stock outstanding | 81,274,961 | 34,940,046 | |||
Extinguishment of derivative liabilities | $ 826,901 | $ (321,254) | |||
Preferred Stock | 1,000,000 | 0 | |||
Preferred stock voting | 110 votes | ||||
Preferred stock outstanding | 1,000,000 | 0 | |||
Number of class C warrants issued during period | 250,000 | ||||
Number of warrants exercisable during period | 250,000 | ||||
Sale of stock price per share | $ 1 | $ 1 | |||
Issuance of warrants to purchase of stock | 1,800,000 | ||||
Warrants expiration date | Dec. 31, 2019 | ||||
Timothy Crawford [Member] | |||||
Number of restricted shares issued | 1,000,000 | ||||
Preferred Stock - Series A [Member] | |||||
Number of restricted shares issued | 100,000 | ||||
Number of restricted shares issued, value | $ 100,000 | ||||
Preferred Stock - Series A [Member] | |||||
Preferred Stock | 1,000,000 | ||||
Preferred stock outstanding | 1,000,000 | ||||
Extension Of Convertible Notes Payable [Member] | |||||
Number of shares issued for debt conversion | 500,000 | ||||
Common stock issued for conversion of debt | $ 107,500 | ||||
Oil And Gas Properties [Member] | |||||
Number of shares issued for exchange | 50,000 | ||||
Number of shares issued for exchange , value | $ 35,000 | ||||
Received treasury stock for exchange | 3,000,000 | ||||
Contractors [Member] | |||||
Common stock issued for services, shares | 922,867 | ||||
Common stock issued period for services | $ 922,867 | ||||
Accounts Payable [Member] | |||||
Number of shares issued for debt conversion | 100,000 | ||||
Common stock issued for conversion of debt | $ 30,000 | ||||
Charles A Koenig [Member] | |||||
Received treasury stock for exchange | 3,000,000 | ||||
Legal Settlement [Member] | |||||
Number of shares issued for debt conversion | 3,380 | ||||
Common stock issued for conversion of debt | $ 100,000 | ||||
Note Payable [Member] | |||||
Number of shares issued for debt conversion | 35,000 | ||||
Common stock issued for conversion of debt | $ 50,000 | ||||
Lease [Member] | |||||
Common stock cancelled during period, shares | 15,000 | ||||
Common stock cancelled during period | $ 18,750 | ||||
Various Consultants [Member] | |||||
Common stock issued for services, shares | 248,874 | ||||
Common stock issued period for services | $ 92,183 | ||||
Employment Agreement [Member] | |||||
Common stock issued for services, shares | 100,000 | ||||
Common stock issued period for services | $ 40,000 | ||||
Short Term Note Payable [Member] | |||||
Number of shares issued for debt conversion | 30,000 | ||||
Common stock issued for conversion of debt | $ 12,000 | ||||
Various Convertible Notes Payable [Member] | |||||
Number of shares issued for debt conversion | 45,489,374 | ||||
Common stock issued for conversion of debt | $ 620,607 | ||||
Syndicated Capital, Inc [Member] | |||||
Sale of stock price per share | $ 1 | ||||
Issuance of warrants to purchase of stock | 450,000 |
Warrants and Warrant Derivative
Warrants and Warrant Derivative Liability - Schedule of Changes in Stock Purchase Warrants (Details) - Warrants [Member] - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Number of warrants outstanding, beginning | 2,050,000 | |
Number of warrants exercisable, beginning | ||
Number of warrants, issued | 450,000 | 2,050,000 |
Number of warrants, exercised | ||
Number of warrants, cancelled | ||
Number of warrants outstanding, ending | 2,500,000 | 2,050,000 |
Number of warrants exercisable, ending | 2,500,000 | |
Weighted average exercise price outstanding, beginning | $ 1 | |
Weighted average exercise price exercisable, beginning | ||
Weighted average exercise price, issued | $ 1 | |
Weighted average exercise price, exercised | ||
Weighted average exercise price, cancelled | ||
Weighted average exercise price outstanding, ending | $ 1 | $ 1 |
Weighted average exercise price exercisable, ending | $ 1 | |
Aggregate intrinsic value outstanding, beginning | ||
Aggregate intrinsic value exercisable, beginning | ||
Aggregate intrinsic value outstanding, ending | ||
Aggregate intrinsic value exercisable, ending | ||
Exercisable warrants outstanding | 2,050,000 | |
Exercisable, Outstanding | ||
Exercisable, issued | ||
Exercisable, cancelled | ||
Exercsable warrants ending | 2,500,000 | 2,050,000 |
Exercisable, ending | 2,500,000 | |
Weighted average remaining life, outstanding | 3 years 7 months 6 days | 4 years 9 months |
Weighted average remaining life, exercisable | 3 years 7 months 6 days | 4 years 9 months |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | Jun. 02, 2014 | Dec. 31, 2014 | Dec. 31, 2015 |
Number of units obtained | 20 | ||
Total number of units | 100 | ||
Purchase Interest price per unit total | $ 25,000 | ||
Billed revenue | 1,716,771 | $ 621,508 | |
Unpaid accounts receivable | 225,000 | 180,712 | |
Bonds payable to related parties | 20,000 | ||
Related party receivables | $ 225,000 | $ 306,403 | |
Former Officer [Member] | |||
Treasury shares issued | 3,000,000 | ||
Bradford JV [Member] | |||
Administrative and pumping fee | $ 500 | ||
Percentage of actual cost of electricity, taxes and ongoing maintenance and repairs to operating asset | 93.70% |
Asset Retirement Obligation - S
Asset Retirement Obligation - Schedule of Change of the Asset Retirement Obligation (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Asset Retirement Obligation Disclosure [Abstract] | ||
Asset retirement obligations, beginning of period | $ 162,321 | $ 96,063 |
Revisions in estimated liabilities | $ (81,245) | (8,639) |
Asset retirement obligations assumed | 142,336 | |
Accretion expense | $ 14,987 | 19,985 |
Asset retirement obligations, end of period | $ 96,063 | $ 162,321 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Income Tax Disclosure [Abstract] | ||
Provision for income taxes | $ 0 | |
Income tax benefit at U. S. federal statutory rates | 39.00% | |
Cumulative net operating carryforward loss | $ 5,737,631 | $ 4,294,241 |
Operating loss carryforward loss, expiration dates | various years beginning in 2031 and carrying forward through 2035 | |
Valuation allowance | $ 2,237,676 | $ 1,674,754 |
Income Taxes - Schedule of Comp
Income Taxes - Schedule of Components of Net Deferred Taxes (Details) - USD ($) | Dec. 31, 2015 | Dec. 31, 2014 |
Income Tax Disclosure [Abstract] | ||
Cumulative NOL | $ 5,737,631 | $ 4,294,241 |
Net operating loss carry forwards | 2,237,676 | 1,674,754 |
Valuation allowance | $ (2,237,676) | $ (1,674,754) |
Deferred tax assets, net |
Commitments and Contingencies (
Commitments and Contingencies (Details Narrative) | May. 22, 2015USD ($) | Mar. 18, 2015USD ($) | Mar. 02, 2015USD ($) | Nov. 10, 2014USD ($) | Jul. 12, 2014USD ($) | Jul. 01, 2014USD ($) | Nov. 30, 2015USD ($) | Dec. 31, 2015USD ($)Lease | Jun. 12, 2015USD ($) | Apr. 27, 2015USD ($)shares |
Equity ownerhip interest | 100.00% | |||||||||
Purchase consideration | $ 25,000 | |||||||||
Cash purchase amount consideration | 1,075,000 | |||||||||
Proceeds from loan | $ 172,800 | |||||||||
Damages sought, value | $ 150,000 | $ 90,615 | ||||||||
Property sold | $ 1,735,765 | |||||||||
Percentage of remaining working interest | 15.00% | |||||||||
Damages value exceed | $ 2,000,000 | |||||||||
Contingencies or additional litigation | ||||||||||
Mr. Miller [Member] | ||||||||||
Property sold | $ 30,000 | |||||||||
HLA Interests [Member] | ||||||||||
Percentage of related party working interest | 85.00% | |||||||||
Payment of working interest | $ 400,000 | |||||||||
Number of leases | Lease | 5 | |||||||||
Purchase price settlement period | 24 months | |||||||||
Percentage of litigation settlement interest rate changes | 75.00% | |||||||||
Mr. Mitchell [Member] | ||||||||||
Number of shares under claim | shares | 200,000 | |||||||||
Accrued expenses | $ 5,500 | |||||||||
Mr. Dunne [Member] | ||||||||||
Amount owed to services rendered | $ 6,000 | |||||||||
Difference in value of stock give as compensation | $ 27,480 | |||||||||
Keystones [Member] | ||||||||||
Payment to acquire property | $ 250,000 | |||||||||
Proceeds from loan | $ 2,600,000 | |||||||||
Percentage of related party working interest | 5.00% | |||||||||
Payment of working interest | $ 250,000 | |||||||||
Undivided working interest | 50.00% | |||||||||
Contract Operating Agreement [Member] | Bradford JV [Member] | ||||||||||
Administrative and pumping fee per month | $ 500 | |||||||||
Percentage of actual cost of electricity | 93.70% | |||||||||
Participation Interest Purchase Agreement [Member] | ||||||||||
Equity ownerhip interest | 100.00% | |||||||||
Purchase consideration | $ 1,825,000 | |||||||||
Payment to acquire property | $ 1,575,000 | |||||||||
Cash purchase amount consideration | $ 250,000 | |||||||||
Purchase price consideration description | As to the Company’s twenty (20) Participation Interests, the Purchase Agreement additionally provided that Cardinal would (i) be presently paid the amount of $250,000 included in the cash purchase amount in consideration of the Company’s assignment thereunder to Keystone Energy of the beneficial interest in ten (10) of its twenty (20) Participation Interests and (ii) as to the other ten (10) of the Company’s Participation Interests, exchange the Company’s rights therein to Keystone for a five (5%) percent equity ownership interest in Keystone Energy. The Participation Interests of all Sellers acquired under the Purchase Agreement were designated to be and are being held in escrow pending the acquisition of all of the Sellers Participation Interests or the expiration of the 365 day period, whichever occurs first |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | Mar. 01, 2016 | Feb. 12, 2016 | Feb. 04, 2016 | Nov. 30, 2015 | Dec. 31, 2015 | Dec. 31, 2014 |
Debt instruments maturity date | Nov. 18, 2015 | |||||
Debt instruments remaining outstanding principal | $ 87,818 | |||||
Common stock issued for conversion of debt | $ 23,000 | $ 174,807 | ||||
Common stock issued for conversion of debt, shares | 69,697 | |||||
Subsequent Event [Member] | ||||||
Litigation amount | $ 432,674 | |||||
Percentage of settlement amount interest | 22.00% | |||||
Payment of settelment | $ 250,000 | |||||
Common stock issued for conversion of debt | $ 2,104,596 | |||||
Common stock issued for conversion of debt, shares | 0 | |||||
Subsequent Event [Member] | Iconic Holdings [Member] | ||||||
Unpaid principal and interest | $ 167,478 | |||||
Debt instruments remaining outstanding principal | $ 35,000 | |||||
Subsequent Event [Member] | Unrelated Party [Member] | ||||||
Sale of fixed asset | $ 130,000 | |||||
Proceeds from sale of asset | $ 98,000 | |||||
Percentage of secured promissory note issued | 5.00% | |||||
Proceeds from secured note | $ 30,000 | |||||
Debt instruments maturity date | Mar. 12, 2019 |