Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Apr. 30, 2015 | Jun. 15, 2015 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | HYDROCARB ENERGY CORP | |
Entity Central Index Key | 1,425,808 | |
Current Fiscal Year End Date | --07-31 | |
Entity Well-known Seasoned Issuer | No | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 21,289,089 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q3 | |
Document Type | 10-Q | |
Amendment Flag | true | |
Amendment Description | On June 22, 2015, Hydrocarb Energy Corp (the "Company") filed its Quarterly Report on Form 10-Q for the quarterly period ended April 30, 2015 (the "Original Form 10-Q"). The Original Form 10-Q was filed without the required XBRL files attached. This amendment corrects the Original Form 10-Q to include the required XBRL files. | |
Document Period End Date | Apr. 30, 2015 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) | Apr. 30, 2015 | Jul. 31, 2014 |
Current assets: | ||
Cash and cash equivalents | $ 90,261 | $ 144,258 |
Oil and gas revenues receivable | 323,839 | 372,120 |
Accounts receivable - related party | 2,722 | 58,014 |
Other current assets | 639,005 | 446,320 |
Other receivables, net | 139,542 | 38,455 |
Total current assets | 1,195,369 | 1,059,167 |
Oil and gas properties, accounted for using the full cost method of accounting | ||
Evaluated property, net of accumulated depletion of $4,221,631 and $3,491,420, respectively; and accumulated impairment of $373,335 and $373,335, respectively | 16,765,761 | 15,288,370 |
Unevaluated property | 2,260,912 | 2,119,769 |
Restricted cash | 6,857,002 | 6,877,944 |
Other assets | 404,264 | 219,942 |
Property and equipment, net of accumulated depreciation of $175,620 and $135,590, respectively | 126,060 | 166,963 |
TOTAL ASSETS | 27,609,368 | 25,732,155 |
Current liabilities: | ||
Accounts payable and accrued expenses | 3,631,169 | 2,795,675 |
Short term notes payable, net of discount $280,421 and $0 | 1,228,305 | 334,688 |
Derivative Liability | 1,940,460 | 0 |
Asset retirement obligations - short term | 60,000 | 1,133,690 |
Advances | 195,904 | 195,904 |
Due to related parties | 78,585 | 165,542 |
Total current liabilities | 7,134,423 | 4,625,499 |
Notes payable, net of discount of $491,374 and $0 | 4,054,080 | 0 |
Notes payable - related party | 600,000 | 600,000 |
Asset retirement obligation - long term | 12,394,349 | 10,582,540 |
Total liabilities | 24,182,852 | 15,808,039 |
Stockholders' Deficit: | ||
Common stock: $001 par value; 333,333,333 shares authorized; 21,272,785 and 21,081,602 shares issued and outstanding as of April 30, 2015 and July 31, 2014, respectively | 21,273 | 21,082 |
Receivable for common stock | (2,184,879) | (2,184,879) |
Additional paid-in capital | 82,920,196 | 82,228,799 |
Accumulated deficit | (77,294,234) | (70,106,351) |
Total stockholders' equity | 3,462,356 | 9,958,651 |
Noncontrolling interests | (35,840) | (34,535) |
Total equity | 3,426,516 | 9,924,116 |
TOTAL LIABILITIES AND EQUITY | $ 27,609,368 | $ 25,732,155 |
Consolidated Balance Sheets (U3
Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) | Apr. 30, 2015 | Jul. 31, 2014 |
Assets | ||
Accumulated depletion on evaluated oil and gas property accounted for using the full cost method of accounting | $ 4,221,631 | $ 3,491,420 |
Accumulated impairment on evaluated oil and gas property accounted for using the full cost method of accounting | 373,335 | 373,335 |
Accumulated depreciation recorded for property and equipment | 175,620 | 135,590 |
Short term notes payable, discount | 280,421 | 0 |
Notes Payable, discount | $ 491,374 | $ 0 |
Equity [Abstract] | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 333,333,333 | 333,333,333 |
Common stock, shares issued (in shares) | 21,272,785 | 21,272,785 |
Common stock, shares outstanding (in shares) | 21,081,602 | 21,081,602 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Apr. 30, 2015 | Apr. 30, 2014 | Apr. 30, 2015 | Apr. 30, 2014 | |
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited) | ||||
Revenues | $ 1,139,278 | $ 1,057,550 | $ 2,991,055 | $ 3,887,493 |
Operating expenses | ||||
Lease operating expense | 1,043,956 | 1,559,339 | 3,254,801 | 3,487,798 |
Depreciation, depletion, and amortization | 385,058 | 179,678 | 771,480 | 673,357 |
Accretion | 229,560 | 242,608 | 790,550 | 731,093 |
Consulting fees - related party | 0 | 0 | 0 | 6,754 |
General and administrative expense | 749,154 | 645,496 | 2,672,914 | 3,383,820 |
Total operating expenses | 2,407,728 | 2,627,121 | 7,489,745 | 8,282,822 |
Loss from operations | (1,268,450) | (1,569,571) | (4,498,690) | (4,395,329) |
Consulting and other income (expense) | 14,126 | 712 | 20,906 | 68,912 |
Gain or Loss on derivatives | (1,468,016) | 0 | (1,468,016) | 0 |
Interest income (expense), net | (697,291) | (20,905) | (1,204,795) | (98,033) |
Foreign currency transaction gain (loss) | (36,591) | (3,380) | (38,593) | (34,006) |
Net loss before income taxes | (3,456,582) | (1,593,144) | (7,189,188) | (4,458,456) |
Income tax provision | 0 | 0 | 0 | (4,599) |
Net loss | (3,456,582) | (1,593,144) | (7,189,188) | (4,463,055) |
Less: Net loss attributable to noncontrolling interests | 0 | (1,602) | (1,305) | (4,962) |
Net loss attributable to Hydrocarb Corporation | $ (3,456,582) | $ (1,591,542) | $ (7,187,883) | $ (4,458,093) |
Basic and diluted loss per common share (in dollars per share) | $ (0.16) | $ (0.08) | $ (0.34) | $ (0.34) |
Weighted average shares outstanding (basic and diluted) (in shares) | 21,270,879 | 20,963,759 | 21,184,600 | 13,111,626 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 9 Months Ended | |
Apr. 30, 2015 | Apr. 30, 2014 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net income (loss) | $ (7,189,188) | $ (4,463,055) |
Adjustments to reconcile net income loss to net cash used in operating activities: | ||
Depreciation, depletion, and amortization | 771,480 | 673,357 |
Accretion | 790,550 | 731,093 |
Amortization of debt discount | 820,448 | 0 |
Amortization of debt issuance cost | 205,131 | 0 |
Change in Derivative Liabilities | 1,468,016 | 0 |
Loss on settlement shares | 65,000 | 0 |
Warrants granted to related party | 0 | 6,754 |
Share based compensation | 396,475 | 1,251,212 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 48,281 | 366,220 |
Other receivables | (101,087) | 0 |
Accounts receivable - related party | 55,292 | 120,816 |
Payments on borrowings from related parties | (86,957) | 0 |
Other assets | 77,862 | 428,971 |
Accounts payable and accrued expenses | 790,702 | 128,352 |
Advances | 0 | 15,100 |
Settlement of asset retirement obligation | 0 | (84,618) |
NET CASH USED IN OPERATIONS | (1,887,995) | (825,798) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Purchases of oil and gas properties | (2,401,177) | (1,031,171) |
Purchases of property and equipment | 0 | (156,560) |
Proceeds from sale of property and equipment | 2,366 | 0 |
Proceeds from sale of oil and gas properties | 0 | 625,000 |
Change in restricted cash | 20,942 | 40,000 |
CASH USED IN INVESTING ACTIVITIES | (2,377,869) | (522,731) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Payments on notes payable | (596,672) | (311,995) |
Proceeds from note payable to related party | 0 | 300,000 |
Proceeds from collections on receivable for stock sale | 0 | 675,000 |
Dividend on HCN preferred stock | 0 | (34,254) |
Payments on borrowings from Related Parties | 0 | (610,514) |
Proceeds from borrowings | 4,808,539 | 1,736,437 |
Proceeds from subsidiary sale of its common stock | 0 | 31,071 |
CASH PROVIDED BY FINANCING ACTIVITIES | 4,211,867 | 1,785,745 |
NET CHANGE IN CASH AND CASH EQUIVALENTS | (53,997) | 437,216 |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 144,258 | 354,829 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | 90,261 | 792,045 |
Cash paid during the period for: | ||
Income taxes | 0 | 10,000 |
Interest | 8,331 | 15,271 |
NONCASH INVESTING AND FINANCING ACTIVITIES | ||
Asset retirement obligation sold | 0 | 33,195 |
Asset retirement obligations incurred | 0 | 100,932 |
Asset retirement obligations - change in estimate | (52,431) | 0 |
Discount from derivatives | 454,903 | 0 |
Note payable for prepaid insurance | 309,212 | 403,104 |
Settlement of HCN debt with HCN preferred stock | 0 | 1,585,200 |
Tainted warrant liability | 17,541 | 0 |
Common stock exchanged for HCN common stock for acquisition of HCN | 0 | 8,397 |
Receivable for common stock - related party | 0 | 1,000,000 |
Receivable for common stock - related party | 0 | 1,859,879 |
Common stock issued to satisfy contingently issuable shares from 2012 acquisition of Namibia Exploration , Inc. | 0 | 7,410 |
Value of shares issued to lenders as part of debt financing | 247,655 | 0 |
Debt issue costs | $ 308,729 | $ 0 |
Description of Business and Sum
Description of Business and Summary of Significant Accounting Policies | 9 Months Ended |
Apr. 30, 2015 | |
Description of Business and Summary of Significant Accounting Policies [Abstract] | |
Description of Business and Summary of Significant Accounting Policies | Note 1 – Description of Business and Summary of Significant Accounting Policies Description of business and basis of presentation The unaudited consolidated financial statements of Hydrocarb Energy Corp. (“Hydrocarb”, “HEC”, the “Company”, “we”, “us”, “our”) have been prepared in accordance with accounting principles generally accepted in the United States and the rules of the Securities and Exchange Commission (“SEC”), and should be read in conjunction with the audited financial statements and notes thereto contained in our Annual Report filed with the SEC on Form 10-K for the year ended July 31, 2014. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal year ended July 31, 2014, as reported in the Form 10-K, have been omitted. While working towards plans and expectations of being listed on a major stock exchange, we currently trade on the OTCQB under the stock symbol “HECC”. We are a natural resource exploration and production company engaged in the exploration, acquisition, development, and production of oil and gas properties in the United States and onshore in Namibia, Africa. We maintain developed acreage offshore in Texas. As part of our ongoing business strategy, we continue to review and evaluate acquisition opportunities in the continental United States and internationally. Reclassifications Certain prior year amounts have been reclassified to conform with the current presentation. Principles of consolidation We own 100% of the issued and outstanding share capital of (i) Penasco Petroleum Inc. (“Penasco”), a Nevada corporation, (ii) Galveston Bay Energy, LLC (“GBE”), a Texas limited liability company, (iii) SPE Navigation I, LLC, a Nevada limited liability company (“SPE”), (iv) Namibia Exploration, Inc. (“NEI”), a Nevada corporation, (v) Hydrocarb Corporation, a Nevada corporation (“HCN”), (vi) Hydrocarb Texas Corporation, a Texas corporation, and (vii) Hydrocarb Namibia Energy (Pty) Limited (“Namibia”), a company chartered in the Republic of Namibia. In addition, we own 95% of the issued and outstanding share capital of Otaiba Hydrocarb LLC (“Otaiba”), a UAE limited liability corporation. The accompanying consolidated financial statements include the accounts of the entities noted above. All significant intercompany accounts and transactions have been eliminated in consolidation. The acquisition of HCN, an entity under common control, on December 9, 2013 (See Note 2 – HCN Acquisition) has resulted in a change in the reporting entity. The consolidated financial statements presented for the periods subsequent to the acquisition include the accounts of HCN and its subsidiaries. As HEC and HCN are under the common control of same shareholder group, the acquired assets and liabilities were recorded at the historical carrying value and the consolidated financial statements were retroactively restated to reflect the Company as if HCN had been owned since the beginning of the earliest period presented. Noncontrolling interests Our consolidated financial statements include the accounts of all subsidiaries where we hold a controlling financial interest. We have a controlling financial interest if we own a majority of the outstanding voting common stock and minority shareholders do not have substantive participating rights, we have significant control over an entity through contractual or economic interests in which we are the primary beneficiary or we have the power to direct the activities that most significantly impact the entity’s economic performance. The ownership interest in subsidiaries held by third parties are presented in the consolidated balance sheet within equity, but separate from the parent’s equity, as noncontrolling interest. All significant intercompany balances and transactions have been eliminated in consolidation. Recent accounting pronouncements In August 2014, the FASB issued Accounting Standard Update No. 2014-15 (“ASU No. 2014-15”), Presentation of Financial Statements Going Concern (Subtopic 205-40) which requires management to assess an entity's ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, ASU 2014-15 provides a definition of the term substantial doubt and requires an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). It also requires certain disclosures when substantial doubt is alleviated as a result of consideration of management's plans and requires an express statement and other disclosures when substantial doubt is not alleviated. ASU No. 2014-15 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, early application is permitted. We are currently evaluating the accounting implication and do not believe the adoption of ASU 2014-15 to have material impact on our consolidated financial statements, although there may be additional disclosures upon adoption. Other recently issued or adopted accounting pronouncements are not expected to have, or did not have, a material impact on our financial position or results from operations. |
HCN Acquisition
HCN Acquisition | 9 Months Ended |
Apr. 30, 2015 | |
HCN Acquisition [Abstract] | |
HCN Acquisition | Note 2 – HCN Acquisition The acquisition Agreement provided that HEC would issue 7,470,000 shares of its common stock to the holders of certain rights to acquire HEC stock. These rights were previously issued by HEC as contingent consideration in connection with the acquisition of NEI. The rights had been convertible into HEC common stock based upon HEC market capitalization milestones. The rights were issued to entities deemed related parties to HEC. In anticipation of the HCN acquisition, HEC issued 619,960 shares of its common stock to HCN as full payment for HEC’s indebtedness to HCN in the amount of $3,589,567. A condition to the Agreement closing was that HCN will sell the 619,960 shares before closing of the acquisition, which it did (see Note 7 – Capital Stock – Receivables for Common Stock). With HCN, we acquired its 100% owned subsidiaries: Hydrocarb Namibia Energy (Pty) Limited, a Namibia Company and Hydrocarb Texas Corporation, a Texas Corporation; and its 95% owned subsidiary Otaiba Hydrocarb LLC, a UAE Limited Liability Company. Prior to the acquisition, HCN was directly and indirectly majority-owned and controlled by HEC’s Chairman of the Board and entities related to him and his family. Since HCN and HEC were under common control of a controlling party both before and after the completion of the share exchange, the transaction was accounted for as a business acquired from an entity under common control and the assets and liabilities acquired were recorded at HCN’s historical cost at Acquisition Date following ASC 805-50-30, Business Combinations. Under this accounting treatment, the results of operations for the three months and nine months ended April 30, 2015 and assets and liabilities of HCN as of April 30, 2015 are included in these financial statements as if the transaction had occurred at the beginning of the period. Prior reporting periods in these financial statements have been retroactively adjusted to include HCN and its subsidiaries. According to ASC 805-50-30, the net assets of HCN are to be recorded at historical cost, therefore, the value of the 8,396,667 common shares with excess of $3,874,609 recorded as additional paid in capital by HEC. Summary of the accounting entry to record this acquisition in December 2013 is as follows. Assets acquired $ 1,529,246 Liabilities assumed (161,599 ) Noncontrolling interest in 95% owned HCN subsidiary 30,480 $ 1,398,127 Common stock, at par 8,397 Receivable for common stock (2,484,879 ) Additional paid-in capital 3,874,609 $ 1,398,127 HCN had 51% working-interest rights in and operated an unevaluated Namibian concession described in Note 3 – Oil and Gas Properties, below, and provided international oilfield consulting services. Prior to this acquisition, HEC owned 39% working-interest right in this concession. With the HCN acquisition, we now own 90% working interest (100% cost responsibility) in the concession. This 5.3 million-acre concession is located in northern Namibia in Africa. The concession specifies the following minimum cost responsibilities on an 8/8ths basis: 1) Initial Exploration Period (expires September 2015): Perform a hydrocarbon potential study, gather and review existing technical data including reprocessing of available seismic lines, and acquire and process 750 kilometers of new 2D seismic data. The minimum expenditure is $4,505,000. 2) First Renewal Exploration Period (two years from end of the Initial Exploration Period): Acquire 200 square kilometers of 3D seismic data, interpret and map the data, design a drilling program, drill one well, conduct an environmental study, and relinquish 25% of the exploration license area. The minimum expenditure is $17,350,000. 3) Second Renewal (Production License) Exploration Period (25 years): Report on reserves and production and conduct an environmental study. The minimum expenditure is $300,000. In conjunction with the HCN acquisition, the HEC Board of Directors authorized the immediate issuance of 7,470,000 shares of our common stock to the former owners of NEI. We previously acquired NEI on August 7, 2012 and these 7,470,000 shares had been contingently-issuable consideration for the acquisition of NEI. We issued these shares on December 9, 2013. The original agreement contained market conditions for the issuance of this stock. In connection with certain recent due diligence undertaken by the Company, it has come to the attention of management, that although the Company previously believed, on advice of prior counsel, that the Board of Directors of the Company had the authority under the Company’s Articles of Incorporation, as amended, to unilaterally authorize preferred stock, including the designation of the Series A Preferred, under applicable Nevada law, unless such preferred stock is specifically authorized in a Nevada corporation’s articles no preferred stock can be designated or issued. As such, our Board of Directors did not have authority under the Articles of Incorporation, as amended and applicable Nevada law to designate the Series A Preferred or to file such certificate of designations with the Secretary of State of Nevada. Consequently, we now believe that the Series A Preferred is not validly issued or outstanding and the filing of the Series A Preferred designation with the consent of the Board of Directors and without shareholder approval, was invalid and had no legal effect. We are in the process of seeking shareholder approval, at our 2015 Annual Meeting of stockholders, to ratify and approve the designation of the Series A Preferred Stock. As a result, we removed Series A 7% Convertible Voting Preferred Stock (“Series A Preferred”) from the accompanying financial statements for current and prior periods. Hydrocarb Energy Corp. Consolidated Balance Sheets As of July 31, 2014 As Previously Reported Adjustment July 31, 2014 ASSETS Stockholders' Deficit: Series A 7% Convertible Preferred Stock, 10,000 shares authorized $400 par, 8,188 shares issued and outstanding as of July 31, 2014 3,275,200 (3,275,200 ) - Additional paid-in capital 78,953,599 3,275,200 82,228,799 Total stockholders' equity 9,958,651 9,958,651 Noncontrolling interests (34,535 ) (34,535 ) Total equity 9,924,116 9,924,116 TOTAL LIABILITIES AND EQUITY $ 25,732,155 $ 25,732,155 Hydrocarb Energy Corp. Consolidated Statements of Operations and Comprehensive Loss As of July 31, 2014 As Previously Reported Adjustment July 31, 2014 Net loss attributable to Hydrocarb Corporation (6,549,322 ) (6,549,322 ) Dividend on preferred stock Deemed dividend on preferred stock (34,254 ) 34,254 - Accretion dividend-Beneficial Cash Feature on preferred stock (150,548 ) 150,548 - Net loss attributable to Hydrocarb Energy Corp after dividends (949,808 ) 949,808 - $ (7,683,932 ) $ 1,134,610 $ (6,549,322 ) Hydrocarb Energy Corp. Consolidated Statements of Operations and Comprehensive Loss For the Three Months Ended April 30, 2014 As Previously Reported Adjustment April 30, 2014 Net loss attributable to Hydrocarb Corporation (1,591,542 ) (1,591,542 ) Dividend on preferred stock Deemed dividend on preferred stock (57,609 ) 57,609 - $ (1,649,151 ) $ 57,609 $ (1,591,542 ) |
Oil and Gas Properties
Oil and Gas Properties | 9 Months Ended |
Apr. 30, 2015 | |
Oil and Gas Properties [Abstract] | |
Oil and Gas Properties | Note 3 – Oil and Gas Properties Oil and natural gas properties as of April 30, 2015 and July 31, 2014 consisted of the following: April 30, 2015 July 31, 2014 Evaluated Properties Costs subject to depletion $ 21,360,727 $ 19,153,125 Accumulated impairment (373,335 ) (373,335 ) Accumulated depletion (4,221,631 ) (3,491,420 ) Total evaluated properties 16,765,761 15,288,370 Unevaluated properties 2,260,912 2,119,769 Net oil and gas properties $ 19,026,673 $ 17,408,139 Evaluated properties Additions to evaluated oil and gas properties during the nine months ended April 30, 2015 totaled $2,207,602 which consisted mainly of recompletion expenses. Unevaluated Properties Namibia, Africa We own 90% (100% cost responsibility) of our Namibia concession, as described above in Note 2 –HCN Acquisition. Additions to unevaluated properties of approximately $182,000 during the nine months ended April 30, 2015 consisted primarily of: · Approximately $182,000 of leasehold costs, specifically payment of the annual concession fee to the Government of Namibia. As of April 30, 2015, approximately $2.2 million has been expended towards the initial exploration period. |
Impairment
Impairment | 9 Months Ended |
Apr. 30, 2015 | |
Impairment [Abstract] | |
Impairment | Note 4 - Impairment Oil and Gas Properties We account for our oil and natural gas producing activities using the full cost method of accounting as prescribed by the United States Securities and Exchange Commission (“SEC”). Under this method, subject to a limitation based on estimated value, all costs incurred in the acquisition, exploration, and development of proved oil and natural gas properties, including internal costs directly associated with acquisition, exploration, and development activities, the costs of abandoned properties, dry holes, geophysical costs, and annual lease rentals are capitalized within a cost center. We evaluated our capitalized costs using the full cost ceiling test as prescribed by the Securities and Exchange Commission at the end of each reporting period. As of April 30, 2015 and July 31, 2014, the net book value of oil and gas properties did not exceed the ceiling amount and thus, no impairment of the properties was required. Changes in production rates, levels of reserves, future development costs, and other factors will determine our actual ceiling test calculation and impairment analyses in future periods. |
Asset Retirement Obligations
Asset Retirement Obligations | 9 Months Ended |
Apr. 30, 2015 | |
Asset Retirement Obligations [Abstract] | |
Asset Retirement Obligations | Note 5 – Asset Retirement Obligations The following is a reconciliation of our asset retirement obligation liability as of April 30, 2015 and July 31, 2014 April 30, 2015 July 31, 2014 Liability for asset retirement obligation, beginning of period $ 11,716,230 $ 10,933,398 Asset retirement obligations sold - (33,195 ) Asset retirement obligations incurred on properties drilled - - Accretion 790,550 1,043,928 Revisions in estimated cash flows (52,431 ) (104,237 ) Costs incurred - (123,664 ) Liability for asset retirement obligation, end of period $ 12,454,349 $ 11,716,230 Current portion of asset retirement obligation $ 60,000 $ 1,133,690 Noncurrent portion of asset retirement obligation 12,394,349 10,582,540 Total liability for asset retirement obligation $ 12,454,349 $ 11,716,230 |
Notes Payable
Notes Payable | 9 Months Ended |
Apr. 30, 2015 | |
Notes Payable [Abstract] | |
Notes Payable | Note 6 – Notes Payable Installment Notes Payable In May 2012, we entered into a note payable of $18,375 to purchase a vehicle. The note is collateralized by the vehicle. The note carries an interest rate of 6.93% and is payable beginning in June 2012, in 36 installments of $567 per month. The principal balance owed on the note payable was approximately $602 and $7,100 as of April 30, 2015 and July 31, 2014, respectively. In February 2014, we financed our commercial insurance program using a note payable for $403,104. Under the note, we are obligated to make nine payments of $45,718 per month, which include principal and interest, beginning in March 2014. As of April 30, 2015, the note payable balance was approximately $256,625. In February 2015, we financed our commercial insurance program using a note payable for $420,690. Under the note, we are obligated to make eight payments of $52,586 per month, which include principal and interest, beginning in March 2014. As of April 30, 2015, the note payable balance was approximately $309,212. Related Party Installment Note Payable In November 2013, we issued a promissory note for funds received from Mr. Kent P. Watts, Our Chairman, of $100,000. Under the terms of the note, principal on the note was due after one year and incurred interest at 5% per annum payable on a monthly basis. Accrued interest is payable monthly beginning in May 2014, and beginning in August 2014 the principal is due in 36 monthly payments through July 2017. The note is secured by the Company’s assets owned by GBE, subject to any other lien holder's superior rights, if any. In April 2014, the Company entered into a new debt agreement whereby Mr. Watts agreed to loan the Company up to $600,000 at an interest rate of 6.25%. The previous debt of $100,000 was rolled into this new note. Additionally, we borrowed $200,000 from Mr. Watts during April 2014 and $300,000 from Mr. Watts in May 2014. The total balance on the note was $600,000 as of April 30, 2015. As part of the financing agreement with Shadow Tree Capital Management, LLC (as discussed below), this note has been subordinated, and no payments will be made until the Shadow Tree debt has been repaid. Convertible Notes Payable LG Capital Funding, LLC Convertible Note On February 17, 2015, we sold an 8% Convertible Redeemable Note to LG Capital Funding, LLC (“LG Capital” and the “LG Capital Convertible Note”) in the amount of $105,000 pursuant to a Securities Purchase Agreement. Amounts owed under the LG Capital Convertible Note accrue interest at the rate of 8% per annum (24% upon the occurrence of an event of default). The LG Capital Convertible Note is due and payable on February 17, 2016. The principal amount of the LG Capital Convertible Note and all accrued interest thereon is convertible at the option of the holder into our common stock at any time. The conversion price of the LG Capital Convertible Note is 65% of the average of the two lowest closing bid prices of our common stock for the 12 trading days prior to the date a notice of conversion is received by us from LG Capital. In the event we experience a “DTC chill” at any time, the conversion price percentage above decreases to 55%. At no time may the LG Capital Convertible Note be converted into shares of our common stock if such conversion would result in LG Capital and its affiliates owning an aggregate of in excess of 9.9% of the then outstanding shares of our common stock. The LG Capital Convertible Note provides for customary events of default such as failing to timely make payments under the note when due. Additionally, in the event we fail to timely deliver shares due in connection with a conversion, we are required to pay the holder $250 per day beginning on the 4th day after the conversion notice was delivered to us, increasing to $500 per day on the 10th day after the conversion notice was delivered. In the event we have no “bid” price for our common stock at any time while the note is outstanding, the outstanding principal due under the terms of the note increases by 20%. In the event our common stock is delisted from an exchange (including the OTCQB), the outstanding principal amount of the note increases by 50%. If not paid at maturity, the outstanding principal amount of the note increases by 10%. We may prepay in full the unpaid principal and interest on the LG Capital Convertible Note, upon notice, any time prior to the 180th day after the issuance date. Any prepayment is subject to payment of a prepayment amount ranging from 115% to 135% of the then outstanding balance on the LG Capital Convertible Note (inclusive of accrued and unpaid interest and any default amounts then owing), depending on when such prepayment is made. Additionally, upon the occurrence of certain fundamental events as described in the note, we are required to repay the note at the request of the holder in an amount equal to 150% of the then balance of the note. We agreed to pay $5,000 of LG Capital’s legal fees in connection with the sale of the LG Capital Convertible Note and as such, the net amount received in connection with the sale of the LG Capital Convertible Note, before our expenses, was $100,000. We hope to repay the LG Capital Convertible Note prior to any conversion. As of April 30, 2015, we have repaid this note and all accrued interest. Adar Bays, LLC Convertible Note On February 17, 2015, we sold an 8% Convertible Redeemable Note to Adar Bays, LLC (“Adar Bays” and the “Adar Bays Convertible Note”) in the amount of $105,000 pursuant to a Securities Purchase Agreement. Amounts owed under the Adar Bays Convertible Note accrue interest at the rate of 8% per annum (24% upon the occurrence of an event of default). The Adar Bays Convertible Note is due and payable on February 17, 2016. The principal amount of the Adar Bays Convertible Note and all accrued interest is convertible at the option of the holder thereof into the Company’s common stock at any time. The conversion price of the Adar Bays Convertible Note is 65% of the average of the two lowest closing bid prices of our common stock for the 12 trading days prior to the date a notice of conversion is received by us from Adar Bays. In the event we experience a “DTC chill” at any time, the conversion price percentage above decreases to 55%. At no time may the Adar Bays Convertible Note be converted into shares of our common stock if such conversion would result in Adar Bays and its affiliates owning an aggregate of in excess of 9.9% of the then outstanding shares of our common stock. The Adar Bays Convertible Note provides for customary events of default such as failing to timely make payments under the note when due. Additionally, in the event we fail to timely deliver shares due in connection with a conversion, we are required to pay the holder $250 per day beginning on the 4th day after the conversion notice was delivered to us, increasing to $500 per day on the 10th day after the conversion notice was delivered. In the event we have no “bid” price for our common stock at any time the note is outstanding, the outstanding principal due under the terms of the note increases by 20%. In the event our common stock is delisted from an exchange (including the OTCQB), the outstanding principal amount of the note increases by 50%. If not paid at maturity, the outstanding principal amount of the note increases by 10%. We may prepay in full the unpaid principal and interest on the Adar Bays Convertible Note, upon notice, any time prior to the 180th day after the issuance date. Any prepayment is subject to payment of a prepayment amount ranging from 115% to 135% of the then outstanding balance on the Adar Bays Convertible Note (inclusive of accrued and unpaid interest and any default amounts then owing), depending on when such prepayment is made, provided that upon the occurrence of certain fundamental events, we are required to repay the note at the request of the holder for 150% of the then balance of the note. We agreed to pay $5,000 of Adar Bays’ legal fees in connection with the sale of the Adar Bays Convertible Note and as such, the net amount received in connection with the sale of the Adar Bays Convertible Note, before our expenses, was $100,000. As of April 30, 2015, we have repaid this note and all accrued interest. KBM Worldwide, Inc. Convertible Note On February 19, 2015, we sold KBM Worldwide, Inc. (“KBM”) a Convertible Promissory Note in the principal amount of $350,000 (the “KBM Convertible Note”), pursuant to a Securities Purchase Agreement, dated and entered into on February 17, 2015. The KBM Convertible Note bears interest at the rate of 8% per annum (22% upon an event of default) and is due and payable on February 19, 2016. The KBM Convertible Note provides for customary events of default such as failing to timely make payments under the KBM Convertible Note when due. Additionally, upon the occurrence of certain fundamental defaults, as described in the KBM Convertible Note, we are required to repay KBM liquidated damages in addition to the amount owed under the KBM Convertible Note. The principal amount of the KBM Convertible Note and all accrued interest is convertible at the option of the holder thereof into our common stock at any time following the 180th day after the KBM Convertible Note was issued. The conversion price of the KBM Convertible Note is equal to 50% multiplied by the average of the lowest five closing bid prices of our common stock during the fifteen trading days immediately prior to the date of any conversion. The KBM Convertible Note included a $26,000 original issue discount and we paid $4,000 of KBM’s attorney’s fees in connection with the sale of the KBM Convertible Note and as such, the net amount, before our expenses, that we received upon sale of the KBM Convertible Note was $320,000. We are required to keep reserved from our authorized but unissued shares of common stock eight times the number of shares of common stock issuable upon conversion of the KBM Convertible Note at all times and if we fail to keep such amount reserved it is considered an event of default under the KBM Convertible Note. At no time may the KBM Convertible Note be converted into shares of our common stock if such conversion would result in KBM and its affiliates owning an aggregate of in excess of 9.99% of the then outstanding shares of our common stock. We may prepay in full the unpaid principal and interest on the KBM Convertible Note, upon notice, any time prior to the 180th day after the issuance date. Any prepayment is subject to payment of a prepayment amount ranging from 110% to 135% of the then outstanding balance on the KBM Convertible Note (inclusive of accrued and unpaid interest and any default amounts then owing), depending on when such prepayment is made. We also deposited 750,000 shares of our common stock into escrow with KBM’s counsel to secure the repayment of the KBM Convertible Note, which shares are to be held in escrow and released to KBM only upon the occurrence of an event of default under the KBM Convertible Note. As of April 30, 2015, the outstanding balance of this note is $350,000. JSJ Investments Inc. Convertible Note On February 23, 2015 we sold a 10% Convertible Note to JSJ Investments Inc. (“JSJ” and the “JSJ Convertible Note”) in the amount of $137,000. Amounts owed under the JSJ Convertible Note accrue interest at the rate of 10% per annum. The JSJ Convertible Note is payable by us on demand by JSJ at any time after August 23, 2015. We have the right to prepay the JSJ Convertible Note (a) for an amount equal to 135% of the then balance of such note until the 90th day following the date of the note, (b) for an amount equal to 140% of the balance of such note from the 91st day following the date of the note until the maturity date of the note, and (c) for an amount equal to 150% of the balance of such note subsequent to the maturity date (provided the holder consents to such payment after maturity). The JSJ Convertible Note and all accrued interest are convertible at the option of the holder thereof into the Company’s common stock at any time. The conversion price of the JSJ Convertible Note is the lower of (a) 58% of the lowest trading price of our common stock during the prior 20 trading days prior to any conversion; or (b) 58% of the lowest trading price of our common stock during the 20 trading days prior to the date of the note. In the event we do not issue the holder any shares due in connection with a conversion within three business days, we are required to issue the holder additional shares equal to 25% of the conversion amount, and an additional 25% of such shares for each additional five business days beyond such fourth business day that such failure continues. We agreed to pay $2,000 of JSJ’s legal fees and $10,000 of due diligence fees in connection with the sale of the JSJ Convertible Note and as such, the net amount received in connection with the sale of the JSJ Convertible Note, before our expenses, was $125,000. Pursuant to the terms of the JSJ Convertible Note, we are not allowed to borrow any additional money or incur any liability for borrowed money, except borrowings in place as of the date of the note or indebtedness to trade creditors or financial institutions in the ordinary course of business, or sell, lease or dispose of a significant portion of our assets outside the usual course of business, without the written consent of JSJ. The JSJ Convertible Note also includes anti-dilution rights in the event we sell or issue any securities with a price less than the then applicable conversion price, subject to certain exceptions. As of April 30, 2015, the outstanding balance of this note is $137,000. Typenex Co-Investment, LLC Convertible Note On March 5, 2015, we sold a Secured Convertible Promissory Note (the “Typenex Convertible Note”) to Typenex Co-Investment, LLC (“Typenex”) in the amount of $350,000. The Typenex Convertible Note was issued pursuant to the terms of a Securities Purchase Agreement dated as of the same date. The Typenex Convertible Note bears interest at the rate of 10% per annum (22% upon the occurrence of an event of default) and is due and payable in full on January 5, 2016. The Typenex Convertible Note provides for customary events of default such as failing to timely make payments under the Typenex Convertible Note when due. Additionally, upon the occurrence of certain fundamental defaults, as described in the Typenex Convertible Note, we are required to repay Typenex liquidated damages in addition to the amount owed under the Typenex Convertible Note. We have the right to prepay the Typenex Convertible Note, pursuant to the terms thereof, at any time, provided we pay a prepayment amount of 125% of the then outstanding balance. The principal amount of the Typenex Convertible Note and all accrued interest is convertible at the option of the holder thereof into our common stock at any time. The conversion price of the Typenex Convertible Note is initially $2.25 per share, provided that if our market capitalization falls below $20 million (provided further that our current market capitalization is below $20 million), the conversion price becomes the lower of $2.25 per share and the average of the five lowest closing bid prices of our common stock on the twenty trading days immediately prior to such conversion date (the “Market Price”) multiplied by 80% (provided such percentage is subject to automatic reduction upon the occurrence of certain events, including among other things described in the Convertible Secured Note, a reduction by 5% in the event the Market Price is less than $0.75). The Typenex Convertible Note included a $45,000 original issuance discount and we agreed to pay $5,000 of Typenex’s legal fees in connection with the transaction. As a result, the net amount received in connection with the sale of the Typenex Convertible Note, before our expenses, was $300,000. The Typenex Convertible Note also includes anti-dilution rights in the event we sell or issue any securities with a price less than the applicable conversion price, subject to certain exceptions. The Typenex Convertible Note also includes various restrictions on our ability to enter into subsequent variable rate security transactions following the date thereof. Beginning on the date that is six months after March 5, 2015, and continuing each month thereafter until maturity, we are required to prepay the Convertible Secured Note in cash or shares of our common stock (provided that upon the occurrence of certain defaults described in the Typenex Convertible Note we are only able to pay this amount in cash), an amount equal to the greater of (i) $70,000 and (ii) the outstanding balance of the Convertible Secured Note divided by the number of such required installment payments prior to the maturity date. Additionally, on the twentieth trading day following the date each tranche of installment shares becomes free trading we are required to issue Typenex additional shares of common stock if the applicable conversion price calculated on the true-up date is less than the original conversion price. We are subject to various fees and penalties under the Typenex Convertible Note for our failure to timely deliver shares due upon any conversion or installment payment. At no time may the Typenex Convertible Note be converted into shares of our common stock if such conversion would result in Typenex and its affiliates owning an aggregate of in excess of 4.99% of the then outstanding shares of our common stock, provided such percentage increases to 9.99% if our market capitalization is less than $10 million, and provided further that Typenex may change such percentage from time to time upon not less than 61 days prior written notice to us. As additional consideration for the loan evidenced by the Typenex Convertible Note, the Company granted Typenex a five year warrant to purchase 38,889 shares of our common stock at an exercise price of $2.25 per share (the “Warrant”) which number of shares at exercise price are subject to adjustment. The Warrant includes the same ownership limitation described above in connection with the Typenex Convertible Note. The Warrant includes cashless exercise rights. The Warrant contains anti-dilution rights such that if we issue or sell or are deemed to issue or sell securities for less than the then applicable exercise price of the Warrant, subject to certain exceptions, the exercise price of the Warrant is reduced to such lower price and the number of shares of common stock issuable upon exercise of the Warrant increases, such that the aggregate exercise price payable upon exercise of the Warrant remains the same upon such anti-dilutive adjustment, up to a maximum of three times the current number of shares issuable upon exercise of the Warrant, subject to certain exceptions upon which there is no cap on the number of shares issuable upon exercise of the Warrant. The amounts owed under the Typenex Convertible Note were secured by a Stock Pledge Agreement (the “Pledge Agreement”) whereby CW Navigation, Inc., a Texas corporation, a significant shareholder of the Company, which is beneficially owned by Christopher Watts, the nephew of Kent P. Watts, our Chief Executive Officer and Chairman (“CW Navigation”), pledged one million one hundred thousand (1,100,000) shares of our common stock held by CW Navigation as security for our obligations under the Typenex Convertible Note and related documents. Pursuant to the Stock Pledge Agreement, in the event the value (determined based on the average closing trade price for our common stock) of the pledged shares, for the immediately preceding three trading days as of any applicable date of determination, declines below $900,000 it constitutes a default of the Typenex Convertible Note and CW Navigation is required to pledge additional shares to bring the total value of such pledged shares (as calculated above) to $900,000. Typenex also entered into a subordination agreement in favor our senior lender, Shadow Tree Capital Management, LLC (“Shadow Tree”), to subordinate the repayment of the Typenex Convertible Note to amounts owed by us to Shadow Tree. As of April 30, 2015, the outstanding balance of ths note is $350,000. Vis Vires Group Convertible Promissory Note On March 31, 2015, we sold Vis Vires Group, Inc. (“ Vis Vires Vis Vires Convertible Note The principal amount of the Vis Vires Convertible Note and all accrued interest is convertible at the option of the holder thereof into our common stock at any time following the 180th day after the Vis Vires Convertible Note was issued. The conversion price of the Vis Vires Convertible Note is equal to the greater of (a) 50% multiplied by the average of the lowest five closing bid prices of our common stock during the fifteen trading days immediately prior to the date of any conversion; and (b) $0.00005. The Vis Vires Convertible Note included a $9,500 original issue discount and we paid $5,000 of Vis Vires’s attorney’s fees in connection with the sale of the Vis Vires Convertible Note and as such, the net amount, before our expenses, that we received upon sale of the Vis Vires Convertible Note was $400,000. We are required to keep reserved from our authorized but unissued shares of common stock 8 million shares of common stock issuable upon conversion of the Vis Vires Convertible Note at all times and if we fail to keep such amount reserved it is considered an event of default under the Vis Vires Convertible Note. At no time may the Vis Vires Convertible Note be converted into shares of our common stock if such conversion would result in Vis Vires and its affiliates owning an aggregate of in excess of 9.99% of the then outstanding shares of our common stock. We may prepay in full the unpaid principal and interest on the Vis Vires Convertible Note, upon notice, any time prior to the 180th day after the issuance date. Any prepayment is subject to payment of a prepayment amount ranging from 110% to 135% of the then outstanding balance on the Vis Vires Convertible Note (inclusive of accrued and unpaid interest and any default amounts then owing), depending on when such prepayment is made. We also deposited 750,000 shares of our common stock into escrow with Vis Vires’ counsel to secure the repayment of the Vis Vires Convertible Note, which shares are to be held in escrow and released to Vis Vires only upon the occurrence of an event of default under the Vis Vires Convertible Note. We hope to repay the Vis Vires Convertible Note prior to any conversion. As of April 30, 2015, the outstanding balance on this note is $414,500. Credit Agreement Effective August 15, 2014, we entered into a Credit Agreement (the “Credit Agreement”) as borrower, along with Shadow Tree Capital Management, LLC, as agent (the “Agent”), and certain lender parties thereto (the “Lenders”). Pursuant to the Credit Agreement, the Lenders loaned us $4.0 million, which was represented by Term Loan Notes in an aggregate amount of $4,545,454 (the “Notes”), representing an original issue discount of 12%. We also paid the Lenders a structuring fee of $90,909 equal to 2% of the principal amount of the Notes (the “Structuring Fee”) and agreed to reimburse the Lenders for all reasonable and documented fees, costs and expenses associated with the Credit Agreement, which totaled $172,824 in aggregate. Finally, we paid ROTH Capital Partners, LLC, a placement fee of 5% of the total value of the Loans ($227,273), as placement agent and Gary W. Vick, a consulting fee of 1% of the face value of the Loans ($45,455) for consulting services rendered. As a result of the payments above, the net amount of funding received from the Loans was $3,463,539. Pursuant to the Credit Agreement, we have the right, at any time prior to the one year anniversary of the Credit Agreement, to borrow up to an additional $1,000,000 under the Credit Agreement (the “Additional Loan”), subject to certain pre-requisites and requirements as set forth in the Credit Agreement, including, but not limited to us raising $750,000 through the sale of equity subsequent to the closing of the transactions contemplated by the Credit Agreement (which we agreed to obtain within 150 days of the date of the Credit Agreement). We also agreed to pay a 2% Structuring Fee on the Additional Loan. The proceeds of the Additional Loan may only be used for the Oil and Gas Activities. The amount owed pursuant to the Notes (and any amount borrowed pursuant to the Additional Loan) is guaranteed by our wholly-owned subsidiary, Hydrocarb Corporation (“HC”) and its subsidiaries, and our other wholly-owned subsidiaries and is secured by a first priority security interest in substantially all of our assets (including, but not limited to the securities of our subsidiaries and HC and its subsidiaries) evidenced by a Guarantee and Collateral Agreement, various pledge agreements and a deed of trust providing the Agent, as agent for the Lenders, a security interest over our oil and gas assets and rights. The Notes do not accrue any interest for the first nine months after their issuance date (August 15, 2014), provided thereafter they accrue interest at the rate of (a) 16% per annum where the average net monthly oil and gas production revenues of Galveston Bay Energy LLC, our wholly-owned subsidiary, for the trailing three month period (the “Trailing Three Month Revenues”) is less than $900,000; or (b) 14% per annum, where the Trailing Three Month Revenues are equal to or greater than $900,000, payable monthly in arrears through the maturity date of such Notes, August 15, 2016. The Additional Loan, if any, will bear interest at the rate of 14% per annum, payable monthly in arrears, and will have the same maturity date as the Notes. Upon the occurrence of an event of default, the Notes (and any amount outstanding under the Additional Loan) will bear interest at the rate of 24% per annum until paid in full. Pursuant to the Credit Agreement, we agreed to issue the Lenders their pro rata share of (a) 60,000 restricted shares of common stock on the effective date of the Credit Agreement, August 15, 2014 (the “Effective Date”); (b) 32,500 restricted shares in the event any amount of the Loans (or other obligations outstanding under agreements entered into in connection with the Loans, the “Loan Documents”) are outstanding on the 12 month anniversary of the Effective Date; (c) 32,500 restricted shares in the event any amount is outstanding under the Loan Documents on the 18 month anniversary of the Effective Date; and (d) 25,000 restricted shares in the event any amount is outstanding under the Loan Documents on the 21 month anniversary of the Effective Date. The shares are to be issued pursuant to the terms and conditions of a Stock Grant Agreement, pursuant to which each of the Lenders made certain representations to the Company regarding their financial condition and other items in order for the Company to confirm that an exemption from registration existed and will exist for such issuances. The Credit Agreement contains customary representations, warranties, covenants and requirements for the Company to indemnify the Lenders, Agent and their affiliates. The Credit Agreement also includes various covenants (positive and negative) binding upon the Company (and its subsidiaries), including but not limited to, requiring that the Company comply with certain reporting requirements, and provide notices of material corporate events and forecasts to Agent, and prohibiting us from (i) incurring any additional debt; (ii) creating any liens; (iii) making any investments; (iv) materially changing our business; (v) repaying outstanding debt; (vi) affecting a business combination, sale or transfer; (vii) undertaking transactions with affiliates; (viii) amending our organizational documents; (ix) forming subsidiaries; or (x) taking any action not in the usual course of business, in each case except as set forth in the Credit Agreement. The Credit Agreement includes customary events of default for facilities of a similar nature and size as the Credit Agreement, including, but not limited to, if any breach or default occurs under the Loan Documents, the failure of the Company to pay any amount when due under the Loan Documents, if the Company (or its subsidiaries) is subject to any judgment in excess of $250,000 which is not discharged or stayed within 30 days, or if a change in control of the Company, any subsidiary or any guarantor should occur, defined for purposes of the Credit Agreement as any transfer of 25% or more of the voting stock of such entity. For the nine months ended April 30, 2015, the Company has recognized $565,467 of amortization expense of the original issuance discount, with a net payable balance of $3,922,289 and unamortized original issuance discount of $491,374 as of April 30, 2015. In addition, we have recognized $283,455 of debt issuance cost related to professional fees and expenses, which we have classified within other non-current assets, related to the issuance of this debt. We are amortizing these costs over the term of the loan of two years. During the nine months ended April 30, 2015, we recognized $151,664 of amortization expense and have $131,791 in unamortized debt issuance cost as of April 30, 2015. |
Capital Stock
Capital Stock | 9 Months Ended |
Apr. 30, 2015 | |
Capital Stock [Abstract] | |
Capital Stock | Note 7 – Capital Stock Common Stock Issuances Pursuant our Credit Agreement, as noted in Note 6 - Notes Payable, during August 2014, we issued 60,000 shares of restricted common stock to the Lenders. The company recorded these shares as a debt discount with a fair value of $247,655. The shares were issued pursuant to the terms and conditions of a Stock Grant Agreement, pursuant to which each of the Lenders made certain representations to the Company regarding their financial condition and other items in order for the Company to confirm that an exemption from registration existed and will exist for such issuances. During the nine months ended April 30, 2015, 10,008 shares of restricted common stock valued at $20,012 were isued to directors of the Company as director compensation. Additionally, during the nine months ended April 30, 2015, 122,000 shares of restricted common stock to certain vendors for services rendered during the period for legal and professional services. The relative fair value of the 100,000 shares issued for services is $266,700. The remaining 22,000 shares were issued to settle the litigation with ERG. The value of this settlement is $65,000. Receivables for Common Stock On September 6, 2013, HCN sold 191,667 shares of HEC common stock to an employee of HCN (the nephew of our Chairman and Chief Executive Officer) in exchange for a note receivable in the amount of $1,000,000. HEC acquired this receivable upon its acquisition of HCN. The note is non-interest bearing and is payable only upon the sale of the common stock to a third party or HEC stock being listed on either the NASDAQ or NYSE stock exchanges. We will receive 95% of the proceeds up to $1,000,000 if the underlying stock is sold to a third party. Within 90 days of HEC stock being listed on a major stock exchange, we will receive up to $1,000,000, or the note can be paid earlier at the discretion of the other party. These shares of common stock are held in the name of the investors and are beneficially owned by the investors and the shares are not retrievable by the Company. On December 4, 2013 HCN sold 619,960 shares of unregistered and restricted HEC common stock in return for a $1,859,879 non-interest bearing note receivable from an entity in which Michael Watts, the father-in-law of our former CEO Jeremy Driver and the brother of our current CEO, has a minority interest. HEC acquired this receivable upon its acquisition of HCN. The 619,960 HEC common stock shares were previously issued by HEC to HCN to settle liabilities due by HEC related to the consulting services agreement described below in Note 6 – Notes Payable. The receivable from the individual was due to HEC upon the following conditions: 1) 100% of the proceeds payable from the sale of all or part of the shares by the owner of the shares to a third party; 2) within sixty days of the six month anniversary of the December 4, 2013 stock sale or within sixty days from the date that the shares become unrestricted (whichever is first); or 3) 100% of any remaining balance due within 90 days of HEC being listed on a major stock exchange and whereby the share price is above $6.00 per share. As with the above receivable for common stock, this receivable for the sale of HEC common stock is classified as a receivable for common stock within equity. These shares of common stock are held in the name of the investors and are beneficially owned by the investors and the shares are not retrievable by the Company. This note receivable was extended on August 4, 2014, for an extension fee of $50,000, payable in the future, with $750,000 due to be repaid by December 31, 2014, with the remaining balance to be repaid by March 31, 2015. These repayment terms may be changed if the Company is successful in being up-listed to either the NYSE or NASDAQ. If this occurs, the entire balance is due within 60 days after an up-listing occurs. The Company is currently negotiating an extension of this note. Stock Options and Warrants As of April 30, 2015, HEC could grant up to 737,706 shares of common stock under the 2013 Stock Incentive Plan (“2013 Plan”). The Plan is administered by the Compensation Committee of the Board of Directors, or in the absence of a Compensation Committee, the full Board of Directors, which has substantial discretion to determine persons, amounts, time, price, exercise terms, and restrictions of the grants, if any. Options granted to non-employees We account for options granted to non-employees under the provisions of ASC 505-50, Equity-Based Payments to Non-employees, and record the associated expense at fair value on the final measurement date. Because there is no disincentive for nonperformance for these awards, the final measurement date occurs when the services are complete, which is the vesting date. For the options granted to non-employees on a graded vesting schedule, we estimate the fair value of the award as of the end of each reporting period and recognize an appropriate portion of the cost based on the fair value on that date. When the award vests, we adjust the cost previously recognized so that the cost ultimately recognized is equivalent to the fair value on the date the performance is complete. There were options granted to purchase 25,000 shares to non-employees during the nine months ended April 30, 2015. Compensation expense of $112,500 was recognized during the nine months ended April 30, 2015. No options have been exercised, and options to purchase 92,000 shares expired during the nine months ended April 30, 2015. Options granted to employees The following table provides information about options granted to employees under our stock incentive plans during the nine months ended April 30, 2015 and 2014: 2015 2014 Number of options granted 25,000 - Compensation expense recognized $ 112,500 $ 56,208 Weighted average exercise price of options granted $ 4.50 $ N/A Summary information regarding stock options issued and outstanding as of April 30, 2015 is as follows: Options Weighted Average Share Price Aggregate intrinsic value Weighted average remaining contractual life (years) Outstanding at July 31, 2014 265,333 $ 6.81 $ 7.95 Granted 25,000 4.50 5.00 Exercised - - Expired (92,000 ) 6.85 Outstanding at April 30, 2015 198,333 $ 6.52 $ 7.51 No non-vested stock options existed as of April 30, 2015. Warrants Summary information regarding common stock warrants issued and outstanding as of April 30, 2015, is as follows: Warrants Weighted Average Exercise Price Aggregate intrinsic value Weighted average remaining contractual life (years) Outstanding at year ended July 31,2014 1,084,584 $ 7.50 $ - 1.04 Granted 311,632 0.28 0.92 4.85 Exercised - - Expired (417,917 ) - Outstanding at quarter ended April 30, 2015 978,299 $ 5.20 $ 0.92 2.08 Warrants granted to related party During the year ended July 31, 2011, we entered into a consulting agreement with Geoserve Marketing, LLC (“Geoserve”), a company controlled by Michael Watts, who is the father-in-law of our former CEO Jeremy Driver and the brother of our current CEO. Under the terms of the agreement, we granted warrants to purchase 400,000 shares of common stock that have a market condition. If our common stock attains a five day average closing price of $22.50 per share, 200,000 warrants with an exercise price of $7.50 and an expiration date of February 15, 2016 shall be exercisable (“Warrant B”). If our common stock attains a five day average closing price of $45.00 per share, 200,000 warrants with an exercise price of $7.50 and an expiration date of February 15, 2016 shall be exercisable (“Warrant C”). The fair value of warrants that vest upon the attainment of a market condition must be estimated and amortized over the lower of the implicit or derived service period of the warrants. Previously recognized expense is not reversed in the event of a subsequent decline in the fair value of market condition equity based compensation. The fair value of the warrants and the derived service period were valued using a lattice model that values the liability of the warrants based on a probability weighted discounted cash flow model. This model is based on future projections of the various potential outcomes. Warrant B and Warrant C were amortized over the derived service periods of 2.08 years and 2.49 years, respectively. No expense related to these warrants was recognized during the nine months ended April 30, 2015, as the expense for the warrants was fully amortized in previously reported periods. The following reflects the fair value at the end of the derived service for each of the warrants: Warrant B Warrant C Fair value $ 266,017 $ 206,245 The following table reflects information regarding Warrant B and Warrant C during the nine months ended April 30, 2015 and 2014: 2015 2014 Compensation expense recognized $ - $ 6,754 |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Apr. 30, 2015 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 8 – Related Party Transactions During the reporting period we have had transactions as described below with entities controlled by Michael Watts. Michael Watts is the father-in-law of Jeremy Driver, who served as a director and Chief Executive Officer through November, 2013. Additionally, Michael Watts is the brother of Kent Watts, who became the Company’s Chairman of Board of Directors in October 2013. Michael Watts is a related party to the Company by virtue of his relationships with Mr. Driver and with Mr. Watts. Further, one of Michael Watts’ adult children is a significant shareholder of HEC’s common stock. Between them, they are beneficial owners of approximately 68% of the outstanding common stock. A company controlled by Michael Watts purchased a 5% working interest in one of our wells in Galveston Bay. As of April 30, 2015 and July 31, 2014, this company owed us $100 and $80,468, respectively, in joint interest billings. During 2011, we entered into a consulting contract with a company controlled by Michael Watts, as detailed in Note 7 – Capital Stock - Warrants. The contract permits us to terminate the agreement after the first year with thirty days’ notice. We recognized expense of $0 and $6,754 from this contract during the nine months ended April 30, 2015 and 2014, respectively. During the three months ended October 31, 2013, a company controlled by one of our former officers, Carter E & P, LLC (“Carter”) operated several properties onshore in South Texas, including our producing properties located near the Victoria Barge Canal in Calhoun County, Texas. Although he was not a related party after September 1, 2013, he was a related party during the periods covered by this report. As of April 30, 2015 and July 31, 2014, there were no outstanding related party receivables from Carter. Revenues generated, lease operating costs, and contractual overhead charges incurred during the time Carter was a related party were as follows: Three months ended Nine months ended 2015 2014 2015 2014 Revenues $ - $ - $ $ 39,274 Lease operating costs $ - $ - $ $ 23,259 Overhead costs incurred $ - $ - $ $ 4,687 In November 2013, we issued a promissory note for funds received from Mr. Kent Watts, our Chairman, of $100,000. Under the terms of the note, principal on the note was due after one year and incurred interest at 5% per annum payable on a monthly basis. In April 2014, the Company entered into a new debt agreement whereby Mr. Watts agreed to loan the Company up to $600,000 at an interest rate of 6.25%. The previous debt of $100,000 was rolled into this new note. Additionally, we borrowed $200,000 from Mr. Watts during April 2014 and $300,000 from Mr. Watts in May 2014. The total balance on the note was $600,000 as of April 30, 2015. Accrued interest is payable monthly beginning in May 2014, and beginning in August 2014 the principal is due in 36 monthly payments through July 2017. The note is secured by the Company’s assets owned by GBE, subject to any other lien holder's superior rights, if any. As part of the financing agreement with Shadow Tree, this note has been subordinated, and no payments will be made until the Shadow Tree debt has been repaid. During December 2013, the Company has sold 191,667 shares of common stock to the nephew of the Chairman and Chief Executive Officer of the company and 619,960 shares of common stock to an entity in which Michael Watts has a minority interest (See Note 7). The value of these transactions as of April 30, 2015 is $2,184,879 and is classified as a receivable for common stock within equity. During the three months ended April 30, 2014, Kent P. Watts advanced HCN (prior to its acquisition by HEC) funds for working capital purposes to the Company. On December 3, 2013, HCN issued 3,963 shares of its Series A Preferred Stock to Kent P. Watts in order to cancel the majority of the outstanding balance HCN owed to Kent P. Watts at that time. (See Note 7 – Capital Stock – HCN Series A Preferred Stock). During the nine months ended as of April 30, 2015, the Company had current liabilities owed to Mr. Watts of approximately $78,600. During the nine months ended April 30, 2015, the Company received approximately $2,722 from Mr. Michael Watts for a related party receivable previously outstanding for approximately the same amount as of July 31, 2014. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Apr. 30, 2015 | |
Fair Value Measurements [Abstract] | |
Fair Value Measurements | Note 9 – Fair Value Measurements As defined in FASB ASC Topic 820, fair value is the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. This Topic requires disclosure that establishes a framework for measuring fair value and expands disclosure about fair value measurements. The statement requires fair value measurements be classified and disclosed in one of the following categories: Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. The Company considers active markets as those in which transactions for the assets or liabilities occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2: Pricing inputs other than quoted market prices included in Level 1 that are based on observable market data and are directly or indirectly observable for substantially the full term of the asset or liability. These include quoted market prices for similar assets or liabilities, quoted market prices for identical or similar assets in markets that are not active, adjusted quoted market prices, inputs from observable data such as interest rate and yield curves, volatilities or default rates observable at commonly quoted intervals, or inputs derived from observable market data by correlation or other means. Level 3: Pricing inputs that are unobservable or less observable from objective sources. Unobservable inputs should only be used to the extent observable inputs are not available. These inputs maintain the concept of an exit price from the perspective of a market participant and should reflect assumptions of other market participants. An entity should consider all market participant assumptions that are available without unreasonable cost and effort. These are given the lowest priority and are generally used in internally developed methodologies to generate management's best estimate of the fair value when no observable market data is available. Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The Company's assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels. Certain assets and liabilities are reported at fair value on a recurring or nonrecurring basis in the Company's consolidated balance sheets. The following methods and assumptions were used to estimate the fair values: Derivative Liabilities The following table sets forth, by level within the fair value hierarchy, the Company's financial assets and liabilities that were accounted for at fair value on a recurring basis as of April 30, 2015: April 30, 2015 Description (Level 1) (Level 2) (Level 3) Total Carrying Value Convertible Notes $ $ - $ 1,648,407 $ 1,648,407 Typenex Co-Warrants $ - $ - $ 243,478 $ 243,478 Tainted Warrants – Georserve (Note 7) $ $ - $ 48,575 $ 48,575 Total $ - $ - $ 1,940,460 $ 1,940,460 |
Derivative Liabilities
Derivative Liabilities | 9 Months Ended |
Apr. 30, 2015 | |
Derivative Liabilities [Abstract] | |
Derivative Liabilities | Note 10-Derivative Liabilities Embedded Derivative Instruments The Company determined that the following convertible notes (collectively “Convertible Notes”) issued during the three months ended April 30, 2015 contained an embedded derivative instrument as the conversion price was based on a variable that was not an input to the fair value of a “fixed-for-fixed” option as defined under FASB ASC Topic No. 815 - 40 (refer Note 7 for further information regarding the convertible notes): · LG Capital Convertible Note · Adar Bays, LLC Convertible Note · JSJ Investments Inc. Convertible Note · Typenex Co-Investment, LLC Convertible Note The Company determined the fair values of the embedded derivatives using the lattice valuation model with the following assumptions: Initial April 30, 2015 Common stock issuable 744,835 1,771,432 Market value of common stock on measurement date (1) $ 0.91 – 1.07 $ 1.20 Adjusted exercise price $ 0.52 – 2.25 $ 0.26-$0.28 Risk free interest rate (2) 0.08% - 0.25 % 0.01%-0.06 % Instrument lives in years 0.50 – 1.00 0.32 – 0.68 Expected volatility (3) 103%-114 % 126%-137 % Expected dividend yields (4) None None (1) The market value of common stock is the stock price at the close of trading on the date of issuance or at period-end, as applicable. (2) The risk-free interest rate was determined by management using between the 0.5 and 5 - year Treasury Bill as of the respective offering or measurement date. (3) The historical trading volatility was determined by the Company’s trading history. (4) Management determined the dividend yield to be -0-% based upon its expectation that it will not pay dividends for the foreseeable future. Activity for embedded derivative instruments during the three and nine months ended April 30, 2015 was as follows: Balance at July 31, 2014 Initial Valuation of Embedded Derivative Instruments Issued During the Period Increase (Decrease) in Fair Value of Derivative Liabilities Fair Value of Derivative Liabilities on Repayment of Debt Balance at April 30, 2015 LG Capital $ - $ 80,433 $ 192,313 $ (272,745 ) $ - Adar Bays, LLC - 109,170 163,576 (272,745 ) - JSJ Investments, Inc. - 110,825 382,064 - 492,889 Typenex Co-Investment 66,720 1,088,798 - 1,155,518 $ - $ 367,147 $ 1,826,751. $ (545,490 ) $ 1,648,407 Warrants As additional consideration for the loan evidenced by the Typenex Convertible Note, we granted Typenex a five year warrant (Typenex Warrants) to purchase shares of our common stock equal to $87,500 divided by the Market Price. The Market Price is defined as a Conversion Factor (70%-80%) multiplied by the average of the five (5) lowest Closing Bid Prices in the twenty (20) Trading Days immediately preceding the applicable Conversion. The warrants have an initial exercise price of $2.25 per share, and are exercisable for 38,889 shares of commono stock. In addition, the Typenex Warrants contain anti-dilution provisions that provide for a reduction in the exercise price of such warrants in the event that future common stock (or securities convertible into or exercisable for common stock) is issued (or becomes contractually issuable) at a price per share (a “Lower Price”) that is less than the exercise price of such warrant at the relevant time. The amount of any such adjustment is determined in accordance with the provisions of the relevant warrant agreement and depends upon the number of shares of common stock issued (or deemed issued) at the Lower Price and the extent to which the Lower Price is less than the exercise price of the warrant at the relevant time. In addition, the number of shares issuable upon exercise of some of these warrants will be increased inversely proportional to any decrease in the exercise price, thus preserving the aggregate exercise price of the warrants both before and after any such adjustment. We have determined that these provisions could result in modification of the warrants exercise price based on a variable that is not an input to the fair value of a “fixed-for-fixed” option as defined under FASB ASC Topic No. 815 - 40. Tainted Warrants On February 17, 2015, the Warrant B and Warrant C that were previously issued to Georserve (see Note 7) were considered tainted derivative instruments due to the issuances of various convertibles notes during the three month ended April 30, 2014. Those convertible notes contain variable conversion price and therefore, we cannot conclude that we will have sufficient authorized unissued shares to share settle all the warrants and convertible notes. Accordingly, the Company recorded a derivative liability for the aggregate fair value of the Warrant B and Warrant C. The fair values of these warrants were recognized as derivative warrant instruments at issuance or when they become issuable and are measured at fair value at each reporting period. The Company determined the fair values of these warrants using a lattice valuation model. Activity for derivative warrant instruments during the three and nine months ended April 30, 2015 was as follows: Balance at July 31 2014 Initial Valuation Increase (Decrease) in Fair Value of Derivative Liabilities Balance at April 30, 2015 Tainted Warrant-Georserve (Note 7) - 17,541 31,034 48,575 Typenex Co-Warrants $ - $ 91,925 $ 151,553 $ 243,478 $ - $ 109,466 $ 182,587 $ 292,053 The Company determined the fair values of the warrant derivatives using the lattice valuation model with the following assumptions: Initial April 30, 2015 Common stock issuable 705,556 978,299 Market value of common stock on measurement date (1) $ 0.92 $ 1.20 Adjusted exercise price (2) $ 2.25 $ 0.28 Risk free interest rate (3) 1.57 % 1.43 % Instrument lives in years 5 4.85 Expected volatility (4) 112 % 114 % Expected dividend yields (5) None None (1) The market value of common stock is the stock price at the close of trading on the date of issuance or at period-end, as applicable. (2) Upon the issuance of Vis Vires convertible note on March 31, 2015, it was assumed that the anti-provision was triggered as the note conversion price of $0.28 was below the then-current warrant exercise price of $2.25. The adjusted exercise price was lowered to the note conversion price. (3) The risk-free interest rate was determined by management using the 5 - year Treasury Bill as of the respective offering or measurement date. (4) The historical trading volatility was determined by the Company’s trading history. (5) Management determined the dividend yield to be -0-% based upon its expectation that it will not pay dividends for the foreseeable future. On issuance dates, the derivative liability with an aggregate fair value of $454,903 which we recorded as a debt discount and amortized over the terms of the instruments. The initial fair value of the tainted warrants was offset to equity. On April 24, 2015, the Company repaid the principle amount of the LG Capital and Adar Bays convertible notes, resulting in a change of $513,157. The change was recorded as a loss from derivatives and the related unamortized discount was expensed immediately. As of April 30, 2015, the aggregated balance of derivative liability was $1,940,460 and the unamortized discount was $214,031. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Apr. 30, 2015 | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies | Note 11 - Commitments and Contingencies Legal We are subject to legal proceedings, claims and liabilities which arise in the ordinary course of business. We accrue for losses associated with legal claims when such losses are probable and can be reasonably estimated. These accruals are adjusted as additional information becomes available or circumstances change. Legal fees are charged to expense as they are incurred. As of April 30, 2015, we were party to the following legal proceedings: Civ. Action No. 4:15-cv-00727, Hydrocarb Energy Corporation, et al. v. Vincent Pasquale Scaturro Environmental We accrue for losses associated with environmental remediation obligations when such losses are probable and can be reasonably estimated. These accruals are adjusted as additional information becomes available or circumstances change. Costs of future expenditures for environmental remediation obligations are not discounted to their present value. Recoveries of environmental remediation costs from other parties are recorded at their undiscounted value as assets when their receipt is deemed probable. There is soil contamination at a tank facility owned by GBE. Depending on the technique used to perform the remediation, we estimate the cost range to be between $150,000 and $900,000. We cannot determine a most likely scenario, thus we have recognized the lower end of the range. We have submitted a remediation plan to the appropriate authorities and have not yet received a response. As of April 30, 2015, $150,000 has been recognized and is included in the balance sheet caption “Accounts payable and accrued expenses.” Letters of Credit Oil and gas operators in the State of Texas are required to obtain a letter of credit in favor of the Railroad Commission of Texas as security that they will meet their obligations to plug and abandon the wells they operate. We have two letters of credit in the amount of $6,610,000 and $120,000 issued by Green Bank. These letters of credit are collateralized by a certificate of deposit held with the bank for the same amount. We pay a 1.5% per annum fee in conjunction with these letters of credit. In June 2014, when we renewed the letters of credit, we prepaid the entire years’ interest upfront. We amortize these fees on a straight-line basis. The following table reflects the prepaid balances as of: April 30, 2015 Prepaid letter of credit fees $ 101,250 Amortization (84,875 ) Net prepaid letter of credit fees $ 16,375 |
Going Concern
Going Concern | 9 Months Ended |
Apr. 30, 2015 | |
Going Concern [Abstract] | |
Going Concern | Note 12 – Going Concern The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has not generated any significant revenues from ongoing operations and incurred net losses since inception. These matters raise substantial doubt about the Company’s ability to continue as a going concern. The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset amounts or the classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Management’s principal objective is to maximize shareholder value by, among other things, increasing production by developing its acreage, increasing profit margins by evaluating and optimizing its production, and executing its business plan to increase property values, prove its reserves, and expand its asset base. While management currently has no plans to discontinue or revise its business plan, recent volatility and decrease in crude oil prices may cause management to cut back on its development or acquisition plans, or otherwise revisit its business and/or its capital expenditure plan. Continued volatility and decreases in crude oil prices may accelerate such cut back or revisions. To combat price volatility in crude oil process and further diversify the business, management has increased its focus on the development of HEC. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Apr. 30, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 13 - Subsequent Events Effective June 10, 2015, the Credit Agreement )the “Credit Agreement”) entered into as borrower, along with Shadow Tree Capital Management LLC, as agent (the “Agent”), and certain lenders party thereto )the “Lenders”) was amended. Pursuant to the original 2014 Credit Agreement, the Lenders loan us $4 million, which was represented by Term Loan Notes in an aggregate amount of $4,545,454 (the “Notes”), representing as original issue discount of 12%. As part of the amended agreement, the lenders agreed to loan to us an additional $475,632. The proceeds may be used for the following: pay for costs of operating Borrower’s business that do not violate the terms of the Agreement, pay transaction costs, including Lender fees, broker fees, legal costs, and other professional fees with respect to the closing of the transaction contemplated by this Agreement, fund the costs of resuming, increasing and sustaining oil and gas production, including well work and infrastructure improvements, at the Galveston Bay Fields. O Note 2 – HCN Acquisition (“Units”), each consisting of (a) 25,000 shares of the restricted common stock of the Company (the “Shares”); and (b) $100,000 in face amount of Convertible Subordinated Promissory Notes (each a “Note”) Watts Note The Watts Note accrues interest quarterly in arrears, at an annualized percentage interest rate equal to the average quarterly closing spot price of West Texas Intermediate Crude oil divided by ten, plus two (the “ WTI Interest Rate , which resets on a quarterly basis, provided that if the average quarterly closing spot price is less than $50 in any quarter, the applicable interest rate for the following quarter is 0% per annum. For example, if the average quarterly closing spot price was $60 for the prior quarter, the applicable interest rate for the next quarter would be 8% per annum ($60 / 10 = 6 + 2 = 8%). The Watts Note accrues interest, quarterly in arrears, which accrued interest is added to the principal balance of the Watts Note until the earlier of (a) the date the Watts Note is converted into Series B Convertible Preferred Stock (as discussed below); and (b) January 31, 2016 (provided that after January 31, 2016, interest is payable quarterly in arrears in cash). The Watts Note may be prepaid at any time prior to maturity, subject to a 15% prepayment penalty. At any time prior to the earlier of (a) the payment in full of the Watts Note and (b) the Conversion Date (defined below), the Watts Note and all accrued interest thereon is convertible into common stock of the Company at the option of the holder at a conversion price of $4 per share. Notwithstanding the above, on the date, if ever, as the Company has filed a designation of Series B Convertible Preferred Stock (described below) with the Secretary of State of Nevada (the “ Conversion Date ”), the Watts Note, and any and all accrued and unpaid interest thereon, automatically converts into shares of Series B Convertible Preferred Stock at a conversion price of $1,000 per Series B Convertible Preferred Stock share (with any remaining amount payable in cash at the time of conversion). The Watts Note contains standard and customary events of default, subject where applicable to a ten day cure right, and accrues interest at the rate of 12% per annum in the event of an occurrence of an event of default, provided that the holder may with written notice, upon the occurrence of an event of default, demand the entire outstanding balance of the Watts Note be immediately paid in full. The payment of the Watts Note is subordinate in all cases to the amounts owed by the Company to its senior lenders under that certain Amended and Restated Credit Agreement, originally dated as of August 15, 2014 and amended and restated as of June 10, 2015 (the “ Credit Agreement ”). Series B Convertible Preferred Stock The proposed Series B Convertible Preferred Stock, which is subject to the approval at our 2015 annual meeting of stockholders of (a) an amendment to our Articles of Incorporation, to authorize our Board of Directors to designate series of preferred stock with such rights and privileges as it may determine in its sole authority; or (b) an amendment to our Articles of Incorporation to amend our Articles of Incorporation to provide for the designation of a series of Series B Convertible Preferred Stock, has the rights and privileges described below. No Series B Convertible Preferred Stock will be issued by us, until such time, if ever, as such Series B Convertible Preferred Stock is approved by the Board of Directors (in the event the stockholders approve the amendment described in (a) above, but not the amendment described in (b) above) or the stockholders (in the event the stockholders approve the amendment described in (b) above). Shortly after this filing, we plan to file an updated Schedule 14A proxy statement setting forth, among other things, the terms and conditions of the amendments described in (a) and (b) above, and requesting stockholder approval at our annual meeting for the approval of such amendments, each of which will require the affirmative vote of stockholders holding at least a majority of our outstanding voting shares. We plan to designate a total of 35,000 shares of Series B Convertible Preferred Stock, subject to stockholder approval. Convertible Accrual Period The Series B Convertible Preferred Stock has the right to participate in dividends and other non-stock distributions of the Company as if such Series B Convertible Preferred Stock had previously been converted into common stock. The Series B Convertible Preferred Stock contains a liquidation preference equal to its face value, which takes priority over the securities of the Company other than, the Series A Preferred Stock, amounts owed by the Company under the Credit Agreement, as well as any future debt used to refinance, repay or supplement the Credit Agreement, capital leases, senior debt in place as of the original issuance date of the Series B Convertible Preferred Stock and any other securities which the Company may determine to provide first priority interests to in the event of a liquidation of the Company, provided that the Series B Convertible Preferred Stock shall always have a liquidation preference over the common stock. Each Series B Convertible Preferred Stock share is convertible, at any time, at the option of the holder, into 250 shares of common stock, and all accrued and unpaid dividends are convertible into common stock of the Company at the option of the holder at any time, at the rate of $4 per share. Each Series B Convertible Preferred Stock share votes together with the common stock on all shareholder matters, and not as a separate class, and has the right to vote 250 voting shares on all shareholder matters. The Series B Convertible Preferred Stock and any and all accrued and unpaid dividends thereon also automatically convert, upon the Company’s common stock (as adjusted for stock splits and similar events) closing at or above $7 per share for a period of at least thirty consecutive trading days, into shares of common stock in an amount equal to (i) the number of shares of Series B Convertible Preferred Stock held by each holder multiplied by the face value of the Series B Convertible Preferred Stock ($1,000 per share), plus (ii) any and all accrued dividends, divided by the conversion price ($4 per share). The Series B Convertible Preferred Stock contains no preemptive rights. The Series B Convertible Preferred Stock has no redemption rights, provided the Company is able, pursuant to the terms of the Series B Convertible Preferred Stock to negotiate, from time to time, mutually agreeable redemption terms with any or all of the Series B Convertible Preferred Stock holders (which terms and conditions need not be consistent from holder to holder). So long as any shares of Series B Convertible Preferred Stock are outstanding, the Company cannot, without first obtaining the approval of the holders of a majority in interest of the Series B Convertible Preferred Stock, voting together as a single class (a) effect an exchange, reclassification, or cancellation of all or a part of the Series B Convertible Preferred Stock (except in connection with a recapitalization which effects the conversion price of the Series B Convertible Preferred Stock and/or a combination in which the holders of the Series B Convertible Preferred Stock have the right to participate on an as-converted basis); (b) effect an exchange, or create a right of exchange, of all or part of the shares of another class of shares into shares of Series B Convertible Preferred Stock (except in connection with a recapitalization which effects the conversion price of the Series B Convertible Preferred Stock and/or a combination in which the holders of the Series B Convertible Preferred Stock have the right to participate on an as-converted basis); (c) alter or change the rights, preferences or privileges of the shares of Series B Convertible Preferred Stock so as to affect adversely the shares of such series; or (d) amend or waive any provision of the Company’s Articles of Incorporation or Bylaws relative to the Series B Convertible Preferred Stock so as to affect adversely the shares of Series B Convertible Preferred Stock. Finally, Mr. Watts has agreed that in the event the Company should raise at least $10.5 million through a planned offering of the Units (not including his exchange of the rights to the Series A Preferred for Units), he will convert the $600,000 promissory note he is owed into Units or Series B Convertible Preferred Stock, in his discretion and as applicable, and the Company will be responsible for repaying any remaining amount (accrued interest for example) in cash. |
Description of Business and S19
Description of Business and Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Apr. 30, 2015 | |
Description of Business and Summary of Significant Accounting Policies [Abstract] | |
Description of business and basis of presentation | Description of business and basis of presentation The unaudited consolidated financial statements of Hydrocarb Energy Corp. (“Hydrocarb”, “HEC”, the “Company”, “we”, “us”, “our”) have been prepared in accordance with accounting principles generally accepted in the United States and the rules of the Securities and Exchange Commission (“SEC”), and should be read in conjunction with the audited financial statements and notes thereto contained in our Annual Report filed with the SEC on Form 10-K for the year ended July 31, 2014. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal year ended July 31, 2014, as reported in the Form 10-K, have been omitted. While working towards plans and expectations of being listed on a major stock exchange, we currently trade on the OTCQB under the stock symbol “HECC”. We are a natural resource exploration and production company engaged in the exploration, acquisition, development, and production of oil and gas properties in the United States and onshore in Namibia, Africa. We maintain developed acreage offshore in Texas. As part of our ongoing business strategy, we continue to review and evaluate acquisition opportunities in the continental United States and internationally. |
Reclassifications | Reclassifications Certain prior year amounts have been reclassified to conform with the current presentation. |
Principles of consolidation | Principles of consolidation We own 100% of the issued and outstanding share capital of (i) Penasco Petroleum Inc. (“Penasco”), a Nevada corporation, (ii) Galveston Bay Energy, LLC (“GBE”), a Texas limited liability company, (iii) SPE Navigation I, LLC, a Nevada limited liability company (“SPE”), (iv) Namibia Exploration, Inc. (“NEI”), a Nevada corporation, (v) Hydrocarb Corporation, a Nevada corporation (“HCN”), (vi) Hydrocarb Texas Corporation, a Texas corporation, and (vii) Hydrocarb Namibia Energy (Pty) Limited (“Namibia”), a company chartered in the Republic of Namibia. In addition, we own 95% of the issued and outstanding share capital of Otaiba Hydrocarb LLC (“Otaiba”), a UAE limited liability corporation. The accompanying consolidated financial statements include the accounts of the entities noted above. All significant intercompany accounts and transactions have been eliminated in consolidation. The acquisition of HCN, an entity under common control, on December 9, 2013 (See Note 2 – HCN Acquisition) has resulted in a change in the reporting entity. The consolidated financial statements presented for the periods subsequent to the acquisition include the accounts of HCN and its subsidiaries. As HEC and HCN are under the common control of same shareholder group, the acquired assets and liabilities were recorded at the historical carrying value and the consolidated financial statements were retroactively restated to reflect the Company as if HCN had been owned since the beginning of the earliest period presented. |
Noncontrolling interests | Noncontrolling interests Our consolidated financial statements include the accounts of all subsidiaries where we hold a controlling financial interest. We have a controlling financial interest if we own a majority of the outstanding voting common stock and minority shareholders do not have substantive participating rights, we have significant control over an entity through contractual or economic interests in which we are the primary beneficiary or we have the power to direct the activities that most significantly impact the entity’s economic performance. The ownership interest in subsidiaries held by third parties are presented in the consolidated balance sheet within equity, but separate from the parent’s equity, as noncontrolling interest. All significant intercompany balances and transactions have been eliminated in consolidation. |
Recent accounting pronouncements | Recent accounting pronouncements In August 2014, the FASB issued Accounting Standard Update No. 2014-15 (“ASU No. 2014-15”), Presentation of Financial Statements Going Concern (Subtopic 205-40) which requires management to assess an entity's ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, ASU 2014-15 provides a definition of the term substantial doubt and requires an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). It also requires certain disclosures when substantial doubt is alleviated as a result of consideration of management's plans and requires an express statement and other disclosures when substantial doubt is not alleviated. ASU No. 2014-15 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, early application is permitted. We are currently evaluating the accounting implication and do not believe the adoption of ASU 2014-15 to have material impact on our consolidated financial statements, although there may be additional disclosures upon adoption. Other recently issued or adopted accounting pronouncements are not expected to have, or did not have, a material impact on our financial position or results from operations. |
HCN Acquisition (Tables)
HCN Acquisition (Tables) | 9 Months Ended |
Apr. 30, 2015 | |
HCN Acquisition [Abstract] | |
Summary of Pro Forma Information | Summary of the accounting entry to record this acquisition in December 2013 is as follows. Assets acquired $ 1,529,246 Liabilities assumed (161,599 ) Noncontrolling interest in 95% owned HCN subsidiary 30,480 $ 1,398,127 Common stock, at par 8,397 Receivable for common stock (2,484,879 ) Additional paid-in capital 3,874,609 $ 1,398,127 |
Condensed Balance Sheet | Hydrocarb Energy Corp. Consolidated Balance Sheets As of July 31, 2014 As Previously Reported Adjustment July 31, 2014 ASSETS Stockholders' Deficit: Series A 7% Convertible Preferred Stock, 10,000 shares authorized $400 par, 8,188 shares issued and outstanding as of July 31, 2014 3,275,200 (3,275,200 ) - Additional paid-in capital 78,953,599 3,275,200 82,228,799 Total stockholders' equity 9,958,651 9,958,651 Noncontrolling interests (34,535 ) (34,535 ) Total equity 9,924,116 9,924,116 TOTAL LIABILITIES AND EQUITY $ 25,732,155 $ 25,732,155 |
Condensed Statements of Operations and Comprehensive Loss | Hydrocarb Energy Corp. Consolidated Statements of Operations and Comprehensive Loss As of July 31, 2014 As Previously Reported Adjustment July 31, 2014 Net loss attributable to Hydrocarb Corporation (6,549,322 ) (6,549,322 ) Dividend on preferred stock Deemed dividend on preferred stock (34,254 ) 34,254 - Accretion dividend-Beneficial Cash Feature on preferred stock (150,548 ) 150,548 - Net loss attributable to Hydrocarb Energy Corp after dividends (949,808 ) 949,808 - $ (7,683,932 ) $ 1,134,610 $ (6,549,322 ) Hydrocarb Energy Corp. Consolidated Statements of Operations and Comprehensive Loss For the Three Months Ended April 30, 2014 As Previously Reported Adjustment April 30, 2014 Net loss attributable to Hydrocarb Corporation (1,591,542 ) (1,591,542 ) Dividend on preferred stock Deemed dividend on preferred stock (57,609 ) 57,609 - $ (1,649,151 ) $ 57,609 $ (1,591,542 ) |
Oil and Gas Properties (Tables)
Oil and Gas Properties (Tables) | 9 Months Ended |
Apr. 30, 2015 | |
Oil and Gas Properties [Abstract] | |
Schedule of Oil and Natural Gas Properties | Oil and natural gas properties as of April 30, 2015 and July 31, 2014 consisted of the following: April 30, 2015 July 31, 2014 Evaluated Properties Costs subject to depletion $ 21,360,727 $ 19,153,125 Accumulated impairment (373,335 ) (373,335 ) Accumulated depletion (4,221,631 ) (3,491,420 ) Total evaluated properties 16,765,761 15,288,370 Unevaluated properties 2,260,912 2,119,769 Net oil and gas properties $ 19,026,673 $ 17,408,139 |
Asset Retirement Obligations (T
Asset Retirement Obligations (Tables) | 9 Months Ended |
Apr. 30, 2015 | |
Asset Retirement Obligations [Abstract] | |
Reconciliation of Asset Retirement Obligation Liability | The following is a reconciliation of our asset retirement obligation liability as of April 30, 2015 and July 31, 2014 April 30, 2015 July 31, 2014 Liability for asset retirement obligation, beginning of period $ 11,716,230 $ 10,933,398 Asset retirement obligations sold - (33,195 ) Asset retirement obligations incurred on properties drilled - - Accretion 790,550 1,043,928 Revisions in estimated cash flows (52,431 ) (104,237 ) Costs incurred - (123,664 ) Liability for asset retirement obligation, end of period $ 12,454,349 $ 11,716,230 Current portion of asset retirement obligation $ 60,000 $ 1,133,690 Noncurrent portion of asset retirement obligation 12,394,349 10,582,540 Total liability for asset retirement obligation $ 12,454,349 $ 11,716,230 |
Capital Stock (Tables)
Capital Stock (Tables) | 9 Months Ended |
Apr. 30, 2015 | |
Capital Stock [Abstract] | |
Stock Options Granted to Employees Under Stock Incentive Plans | The following table provides information about options granted to employees under our stock incentive plans during the nine months ended April 30, 2015 and 2014: 2015 2014 Number of options granted 25,000 - Compensation expense recognized $ 112,500 $ 56,208 Weighted average exercise price of options granted $ 4.50 $ N/A |
Summary Information Regarding Stock Options Issued and Outstanding | Summary information regarding stock options issued and outstanding as of April 30, 2015 is as follows: Options Weighted Average Share Price Aggregate intrinsic value Weighted average remaining contractual life (years) Outstanding at July 31, 2014 265,333 $ 6.81 $ 7.95 Granted 25,000 4.50 5.00 Exercised - - Expired (92,000 ) 6.85 Outstanding at April 30, 2015 198,333 $ 6.52 $ 7.51 |
Summary Information Regarding Common Stock Warrants Issued and Outstanding | Summary information regarding common stock warrants issued and outstanding as of April 30, 2015, is as follows: Warrants Weighted Average Exercise Price Aggregate intrinsic value Weighted average remaining contractual life (years) Outstanding at year ended July 31,2014 1,084,584 $ 7.50 $ - 1.04 Granted 311,632 0.28 0.92 4.85 Exercised - - Expired (417,917 ) - Outstanding at quarter ended April 30, 2015 978,299 $ 5.20 $ 0.92 2.08 |
Warrants Granted to Related Parties | The following reflects the fair value at the end of the derived service for each of the warrants: Warrant B Warrant C Fair value $ 266,017 $ 206,245 The following table reflects information regarding Warrant B and Warrant C during the nine months ended April 30, 2015 and 2014: 2015 2014 Compensation expense recognized $ - $ 6,754 |
Related Party Transactions (Tab
Related Party Transactions (Tables) | 9 Months Ended |
Apr. 30, 2015 | |
Related Party Transactions [Abstract] | |
Revenues and Costs from Facility Controlled by Related Party | Revenues generated, lease operating costs, and contractual overhead charges incurred during the time Carter was a related party were as follows: Three months ended Nine months ended 2015 2014 2015 2014 Revenues $ - $ - $ $ 39,274 Lease operating costs $ - $ - $ $ 23,259 Overhead costs incurred $ - $ - $ $ 4,687 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Apr. 30, 2015 | |
Fair Value Measurements [Abstract] | |
Schedule of Assets and Liabilities Measured at Fair Value on a Recurring Basis | The following table sets forth, by level within the fair value hierarchy, the Company's financial assets and liabilities that were accounted for at fair value on a recurring basis as of April 30, 2015: April 30, 2015 Description (Level 1) (Level 2) (Level 3) Total Carrying Value Convertible Notes $ $ - $ 1,648,407 $ 1,648,407 Typenex Co-Warrants $ - $ - $ 243,478 $ 243,478 Tainted Warrants – Georserve (Note 7) $ $ - $ 48,575 $ 48,575 Total $ - $ - $ 1,940,460 $ 1,940,460 |
Derivative Liabilities (Tables)
Derivative Liabilities (Tables) | 9 Months Ended |
Apr. 30, 2015 | |
Embedded Derivative Instruments [Member] | |
Derivative [Line Items] | |
Summary of Fair Values for Embedded Derivative Instruments and Warrant Derivatives Using Lattice Valuation Model | The Company determined the fair values of the embedded derivatives using the lattice valuation model with the following assumptions: Initial April 30, 2015 Common stock issuable 744,835 1,771,432 Market value of common stock on measurement date (1) $ 0.91 – 1.07 $ 1.20 Adjusted exercise price $ 0.52 – 2.25 $ 0.26-$0.28 Risk free interest rate (2) 0.08% - 0.25 % 0.01%-0.06 % Instrument lives in years 0.50 – 1.00 0.32 – 0.68 Expected volatility (3) 103%-114 % 126%-137 % Expected dividend yields (4) None None (1) The market value of common stock is the stock price at the close of trading on the date of issuance or at period-end, as applicable. (2) The risk-free interest rate was determined by management using between the 0.5 and 5 - year Treasury Bill as of the respective offering or measurement date. (3) The historical trading volatility was determined by the Company’s trading history. (4) Management determined the dividend yield to be -0-% based upon its expectation that it will not pay dividends for the foreseeable future. |
Summary of Activity of Derivative Instruments | Activity for embedded derivative instruments during the three and nine months ended April 30, 2015 was as follows: Balance at July 31, 2014 Initial Valuation of Embedded Derivative Instruments Issued During the Period Increase (Decrease) in Fair Value of Derivative Liabilities Fair Value of Derivative Liabilities on Repayment of Debt Balance at April 30, 2015 LG Capital $ - $ 80,433 $ 192,313 $ (272,745 ) $ - Adar Bays, LLC - 109,170 163,576 (272,745 ) - JSJ Investments, Inc. - 110,825 382,064 - 492,889 Typenex Co-Investment 66,720 1,088,798 - 1,155,518 $ - $ 367,147 $ 1,826,751. $ (545,490 ) $ 1,648,407 |
Warrants [Member] | |
Derivative [Line Items] | |
Summary of Fair Values for Embedded Derivative Instruments and Warrant Derivatives Using Lattice Valuation Model | The Company determined the fair values of the warrant derivatives using the lattice valuation model with the following assumptions: Initial April 30, 2015 Common stock issuable 705,556 978,299 Market value of common stock on measurement date (1) $ 0.92 $ 1.20 Adjusted exercise price (2) $ 2.25 $ 0.28 Risk free interest rate (3) 1.57 % 1.43 % Instrument lives in years 5 4.85 Expected volatility (4) 112 % 114 % Expected dividend yields (5) None None (1) The market value of common stock is the stock price at the close of trading on the date of issuance or at period-end, as applicable. (2) Upon the issuance of Vis Vires convertible note on March 31, 2015, it was assumed that the anti-provision was triggered as the note conversion price of $0.28 was below the then-current warrant exercise price of $2.25. The adjusted exercise price was lowered to the note conversion price. (3) The risk-free interest rate was determined by management using the 5 - year Treasury Bill as of the respective offering or measurement date. (4) The historical trading volatility was determined by the Company’s trading history. (5) Management determined the dividend yield to be -0-% based upon its expectation that it will not pay dividends for the foreseeable future. |
Summary of Activity of Derivative Instruments | Activity for derivative warrant instruments during the three and nine months ended April 30, 2015 was as follows: Balance at July 31 2014 Initial Valuation Increase (Decrease) in Fair Value of Derivative Liabilities Balance at April 30, 2015 Tainted Warrant-Georserve (Note 7) - 17,541 31,034 48,575 Typenex Co-Warrants $ - $ 91,925 $ 151,553 $ 243,478 $ - $ 109,466 $ 182,587 $ 292,053 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Apr. 30, 2015 | |
Commitments and Contingencies [Abstract] | |
Schedule Of Prepaid Balances | The following table reflects the prepaid balances as of: April 30, 2015 Prepaid letter of credit fees $ 101,250 Amortization (84,875 ) Net prepaid letter of credit fees $ 16,375 |
Description of Business and S28
Description of Business and Summary of Significant Accounting Policies (Details) | 9 Months Ended |
Apr. 30, 2015 | |
Penasco Petroleum Inc [Member] | |
Subsidiary or Equity Method Investee [Line Items] | |
Ownership interest (in hundredths) | 100.00% |
Galveston Bay, LLC [Member] | |
Subsidiary or Equity Method Investee [Line Items] | |
Ownership interest (in hundredths) | 100.00% |
SPE Navigation I, LLC [Member] | |
Subsidiary or Equity Method Investee [Line Items] | |
Ownership interest (in hundredths) | 100.00% |
Namibia Exploration, Inc [Member] | |
Subsidiary or Equity Method Investee [Line Items] | |
Ownership interest (in hundredths) | 100.00% |
Hydrocarb Corporation, HCN [Member] | |
Subsidiary or Equity Method Investee [Line Items] | |
Ownership interest (in hundredths) | 100.00% |
Hydrocarb Texas Corporation [Member] | |
Subsidiary or Equity Method Investee [Line Items] | |
Ownership interest (in hundredths) | 100.00% |
Hydrocarb Namibia Energy [Member] | |
Subsidiary or Equity Method Investee [Line Items] | |
Ownership interest (in hundredths) | 100.00% |
Otaiba Hydrocarb LLC [Member] | |
Subsidiary or Equity Method Investee [Line Items] | |
Ownership interest (in hundredths) | 95.00% |
HCN Acquisition (Details)
HCN Acquisition (Details) a in Millions | Dec. 09, 2013USD ($)akm²Wellshares | Apr. 30, 2015USD ($) | Jul. 31, 2014USD ($) |
Summary of the accounting entry to record the acquisition [Abstract] | |||
Common stock, at par | $ 21,273 | $ 21,082 | |
Receivable for common stock | (2,184,879) | (2,184,879) | |
Additional paid-in capital | $ 82,920,196 | $ 82,228,799 | |
Recorded Unconditional Purchase Obligation [Line Items] | |||
Working interest rights (in hundredths) | 39.00% | 90.00% | |
Cost responsibility rate (in hundredths) | 100.00% | ||
Concession area | a | 5.3 | ||
Number of wells required to be drilled under the purchase obligation | Well | 1 | ||
Series A Preferred Stock [Member] | |||
Recorded Unconditional Purchase Obligation [Line Items] | |||
Dividend rate of preferred stock (in hundredths) | 7.00% | ||
Initial Exploration Period [Member] | |||
Recorded Unconditional Purchase Obligation [Line Items] | |||
Area of seismic data required by purchase obligation | km² | 750 | ||
Minimum required expenditure | $ 4,505,000 | ||
First Renewal Exploration Period [Member] | |||
Recorded Unconditional Purchase Obligation [Line Items] | |||
Duration of commitment period | 2 years | ||
Area of seismic data required by purchase obligation | km² | 200 | ||
Minimum required expenditure | $ 17,350,000 | ||
Percentage of exploration license area relinquish requirement (in hundredths) | 25.00% | ||
Second Renewal Exploration Period [Member] | |||
Recorded Unconditional Purchase Obligation [Line Items] | |||
Duration of commitment period | 25 years | ||
Minimum required expenditure | $ 300,000 | ||
HCN [Member] | |||
Business Acquisition, Equity Interests Issued or Issuable [Line Items] | |||
Shares reserved for issuance to certain stock holders with certain rights (in shares) | shares | 7,470,000 | ||
Shares issued and sold to extinguish debt (in shares) | shares | 619,960 | ||
Value of shares issued to extinguish debt | $ 3,589,567 | ||
Additional paid in capital by HEC | 3,874,609 | ||
Summary of the accounting entry to record the acquisition [Abstract] | |||
Assets acquired | 1,529,246 | ||
Liabilities assumed | (161,599) | ||
Noncontrolling interest in 95% owned HCN subsidiary | 30,480 | ||
Total | 1,398,127 | ||
Common stock, at par | 8,397 | ||
Receivable for common stock | (2,484,879) | ||
Additional paid-in capital | $ 3,874,609 | ||
Recorded Unconditional Purchase Obligation [Line Items] | |||
Working interest rights (in hundredths) | 51.00% | ||
HCN [Member] | Common Stock [Member] | |||
Business Acquisition, Equity Interests Issued or Issuable [Line Items] | |||
Number of shares exchanged (in shares) | shares | 8,396,667 | ||
Hydrocarb Namibia Energy (Pty) Limited [Member] | |||
Business Acquisition, Equity Interests Issued or Issuable [Line Items] | |||
Percentage ownership in subsidiaries (in hundredths) | 100.00% | ||
Otaiba Hydrocarb LLC [Member] | |||
Business Acquisition, Equity Interests Issued or Issuable [Line Items] | |||
Percentage ownership in subsidiaries (in hundredths) | 95.00% |
HCN Acquisition, Adjusted Finan
HCN Acquisition, Adjusted Financial Statements (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Apr. 30, 2015 | Apr. 30, 2014 | Apr. 30, 2015 | Apr. 30, 2014 | Jul. 31, 2014 | |
Stockholders' Deficit [Abstract] | |||||
Additional Paid in Capital | $ 82,920,196 | $ 82,920,196 | $ 82,228,799 | ||
Total stockholders' equity | 3,462,356 | 3,462,356 | 9,958,651 | ||
Noncontrolling interests | (35,840) | (35,840) | (34,535) | ||
Total equity | 3,426,516 | 3,426,516 | 9,924,116 | ||
TOTAL LIABILITIES AND EQUITY | 27,609,368 | 27,609,368 | 25,732,155 | ||
Condensed Statement of Income Captions [Line Items] | |||||
Net loss attributable to Hydrocarb Corporation | $ (3,456,582) | $ (1,591,542) | $ (7,187,883) | $ (4,458,093) | (6,549,322) |
Dividend on preferred stock | 0 | 0 | |||
Deemed dividend on preferred stock | (1,591,542) | 0 | |||
Accretion dividend - Beneficial Cash Feature on preferred stock | 0 | ||||
Net loss attributable to Hydrocarb Energy Corp after dividends | (6,549,322) | ||||
Series A 7% Convertible Preferred Stock [Member] | |||||
Stockholders' Deficit [Abstract] | |||||
Series A 7% Convertible Preferred Stock, 10,000 shares authorized $400 par, 8,188 shares issued and outstanding as of July 31, 2014 | $ 0 | ||||
Preferred Stock, par value (in dollars per share) | $ 400 | ||||
Preferred Stock, shares authorized (in shares) | 10,000 | ||||
Preferred Stock, shares issued (in shares) | 8,188 | ||||
Preferred Stock, shares outstanding (in shares) | 8,188 | ||||
As Previously Reported [Member] | |||||
Stockholders' Deficit [Abstract] | |||||
Additional Paid in Capital | $ 78,953,599 | ||||
Total stockholders' equity | 9,958,651 | ||||
Noncontrolling interests | (34,535) | ||||
Total equity | 9,924,116 | ||||
TOTAL LIABILITIES AND EQUITY | 25,732,155 | ||||
Condensed Statement of Income Captions [Line Items] | |||||
Net loss attributable to Hydrocarb Corporation | (1,591,542) | (6,549,322) | |||
Dividend on preferred stock | (57,609) | (34,254) | |||
Deemed dividend on preferred stock | (1,649,151) | (150,548) | |||
Accretion dividend - Beneficial Cash Feature on preferred stock | (949,808) | ||||
Net loss attributable to Hydrocarb Energy Corp after dividends | (7,683,932) | ||||
As Previously Reported [Member] | Series A 7% Convertible Preferred Stock [Member] | |||||
Stockholders' Deficit [Abstract] | |||||
Series A 7% Convertible Preferred Stock, 10,000 shares authorized $400 par, 8,188 shares issued and outstanding as of July 31, 2014 | 3,275,200 | ||||
Adjustment [Member] | |||||
Stockholders' Deficit [Abstract] | |||||
Additional Paid in Capital | 3,275,200 | ||||
Condensed Statement of Income Captions [Line Items] | |||||
Dividend on preferred stock | 57,609 | 34,254 | |||
Deemed dividend on preferred stock | $ 57,609 | 150,548 | |||
Accretion dividend - Beneficial Cash Feature on preferred stock | 949,808 | ||||
Net loss attributable to Hydrocarb Energy Corp after dividends | 1,134,610 | ||||
Adjustment [Member] | Series A 7% Convertible Preferred Stock [Member] | |||||
Stockholders' Deficit [Abstract] | |||||
Series A 7% Convertible Preferred Stock, 10,000 shares authorized $400 par, 8,188 shares issued and outstanding as of July 31, 2014 | $ (3,275,200) |
Oil and Gas Properties (Schedul
Oil and Gas Properties (Schedule of Oil and Gas Properties) (Details) - USD ($) | Apr. 30, 2015 | Jul. 31, 2014 |
Evaluated Properties [Abstract] | ||
Costs subject to depletion | $ 21,360,727 | $ 19,153,125 |
Accumulated impairment | (373,335) | (373,335) |
Accumulated depletion | (4,221,631) | (3,491,420) |
Total evaluated properties | 16,765,761 | 15,288,370 |
Unevaluated properties | 2,260,912 | 2,119,769 |
Net oil and gas properties | $ 19,026,673 | $ 17,408,139 |
Oil and Gas Properties (Details
Oil and Gas Properties (Details) - Apr. 30, 2015 - USD ($) | Total |
Oil And Gas Properties [Line Items] | |
Additions to evaluated oil and gas properties | $ 2,207,602 |
Namibia Exploration, Inc. [Member] | |
Oil And Gas Properties [Line Items] | |
Ownership percentage (in hundredths) | 90.00% |
Cost responsibility percentage (in hundredths) | 100.00% |
Additions to unevaluated properties | $ 182,000 |
Leasehold costs | 182,000 |
Exploration costs | $ 2,200,000 |
Asset Retirement Obligations (D
Asset Retirement Obligations (Details) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Apr. 30, 2015 | Apr. 30, 2014 | Apr. 30, 2015 | Apr. 30, 2014 | Jul. 31, 2014 | Jul. 31, 2014 | |
Reconciliation of asset retirement obligation liability [Roll Forward] | ||||||
Liability for asset retirement obligation, beginning of period | $ 11,716,230 | $ 10,933,398 | $ 10,933,398 | |||
Asset retirement obligations sold | 0 | (33,195) | (33,195) | |||
Asset retirement obligations incurred on properties drilled | 0 | 100,932 | 0 | |||
Accretion | $ 229,560 | $ 242,608 | 790,550 | 731,093 | 1,043,928 | |
Revisions in estimated cash flows | (52,431) | 0 | (104,237) | |||
Costs incurred | 0 | (123,664) | ||||
Liability for asset retirement obligation, end of period | 12,454,349 | 12,454,349 | 11,716,230 | |||
Current portion of asset retirement obligation | 60,000 | $ 1,133,690 | ||||
Noncurrent portion of asset retirement obligation | 12,394,349 | 10,582,540 | ||||
Total liability for asset retirement obligation | $ 12,454,349 | $ 11,716,230 | $ 10,933,398 | $ 10,933,398 | $ 11,716,230 |
Notes Payable (Details)
Notes Payable (Details) | Feb. 28, 2015USD ($)Payment | Aug. 15, 2014USD ($)shares | May. 31, 2014USD ($) | Feb. 28, 2014USD ($)Payment | Nov. 30, 2013USD ($) | May. 31, 2012USD ($)Payment | Apr. 30, 2014USD ($) | Apr. 30, 2015USD ($)Payment$ / sharesshares | Apr. 30, 2014USD ($) | Aug. 04, 2014USD ($) | Jul. 31, 2014USD ($) |
Debt Instrument [Line Items] | |||||||||||
Additional funds borrowed | $ 4,808,539 | $ 1,736,437 | |||||||||
Original issue discount | $ 247,655 | ||||||||||
Amortization of debt discount | 820,448 | $ 0 | |||||||||
Note payable | 4,054,080 | $ 0 | |||||||||
LG Capital Funding, LLC Convertible Note [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Convertible note, face amount | $ 105,000 | ||||||||||
Due and payable date | Feb. 17, 2016 | ||||||||||
Interest rate (in hundredths) | 8.00% | ||||||||||
Interest rate in case of default (in hundredths) | 24.00% | ||||||||||
Conversion price percentage average of the two lowest closing bid prices of common stock (in hundredths) | 65.00% | ||||||||||
Conversion price percentage decrease in the event of "DTC chill" (in hundredths) | 55.00% | ||||||||||
Excess percentage of outstanding shares that convertible note cannot be converted to Company's common stock (in hundredths) | 9.90% | ||||||||||
Daily payment in the event of failure to deliver shares | $ 250 | ||||||||||
Daily payment in the event of failure to deliver shares after 10 days | $ 500 | ||||||||||
Note increase in the event of no "bid" price (in hundredths) | 20.00% | ||||||||||
Increase in outstanding principal amount in the event of common stock being delisted (in hundredths) | 50.00% | ||||||||||
Increase in outstanding principal amount if not paid at maturity (in hundredths) | 10.00% | ||||||||||
Percentage of repayment upon the occurrence of certain fundamental events (in hundredths) | 150.00% | ||||||||||
Legal fees | $ 5,000 | ||||||||||
Net amount received in connection with the sale | $ 100,000 | ||||||||||
LG Capital Funding, LLC Convertible Note [Member] | Minimum [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Percentage of prepayment amount of the outstanding balance of the Convertible Note (in hundredths) | 115.00% | ||||||||||
LG Capital Funding, LLC Convertible Note [Member] | Maximum [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Percentage of prepayment amount of the outstanding balance of the Convertible Note (in hundredths) | 135.00% | ||||||||||
Adar Bays, LLC Convertible Note [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Convertible note, face amount | $ 105,000 | ||||||||||
Due and payable date | Feb. 17, 2016 | ||||||||||
Interest rate (in hundredths) | 8.00% | ||||||||||
Interest rate in case of default (in hundredths) | 24.00% | ||||||||||
Conversion price percentage average of the two lowest closing bid prices of common stock (in hundredths) | 65.00% | ||||||||||
Conversion price percentage decrease in the event of "DTC chill" (in hundredths) | 55.00% | ||||||||||
Excess percentage of outstanding shares that convertible note cannot be converted to Company's common stock (in hundredths) | 9.90% | ||||||||||
Daily payment in the event of failure to deliver shares | $ 250 | ||||||||||
Daily payment in the event of failure to deliver shares after 10 days | $ 500 | ||||||||||
Note increase in the event of no "bid" price (in hundredths) | 20.00% | ||||||||||
Increase in outstanding principal amount in the event of common stock being delisted (in hundredths) | 50.00% | ||||||||||
Increase in outstanding principal amount if not paid at maturity (in hundredths) | 10.00% | ||||||||||
Percentage of repayment upon the occurrence of certain fundamental events (in hundredths) | 150.00% | ||||||||||
Legal fees | $ 5,000 | ||||||||||
Net amount received in connection with the sale | $ 100,000 | ||||||||||
Adar Bays, LLC Convertible Note [Member] | Minimum [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Percentage of prepayment amount of the outstanding balance of the Convertible Note (in hundredths) | 115.00% | ||||||||||
Adar Bays, LLC Convertible Note [Member] | Maximum [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Percentage of prepayment amount of the outstanding balance of the Convertible Note (in hundredths) | 135.00% | ||||||||||
KBM Worldwide, Inc. Convertible Note [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Convertible note, face amount | $ 350,000 | ||||||||||
Due and payable date | Feb. 19, 2016 | ||||||||||
Interest rate (in hundredths) | 8.00% | ||||||||||
Interest rate in case of default (in hundredths) | 22.00% | ||||||||||
Excess percentage of outstanding shares that convertible note cannot be converted to Company's common stock (in hundredths) | 9.99% | ||||||||||
Legal fees | $ 4,000 | ||||||||||
Net amount received in connection with the sale | $ 320,000 | ||||||||||
Entered date | Feb. 17, 2015 | ||||||||||
Conversion price (in hundredths) | 50.00% | ||||||||||
Original issue discount | $ 26,000 | ||||||||||
Common stock deposited into escrow | 750,000 | ||||||||||
Debt instrument, outstanding balance | $ 350,000 | ||||||||||
KBM Worldwide, Inc. Convertible Note [Member] | Minimum [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Percentage of prepayment amount of the outstanding balance of the Convertible Note (in hundredths) | 110.00% | ||||||||||
KBM Worldwide, Inc. Convertible Note [Member] | Maximum [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Percentage of prepayment amount of the outstanding balance of the Convertible Note (in hundredths) | 135.00% | ||||||||||
JSJ Investments Inc. Convertible Note [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Convertible note, face amount | $ 137,000 | ||||||||||
Interest rate (in hundredths) | 10.00% | ||||||||||
Legal fees | $ 2,000 | ||||||||||
Net amount received in connection with the sale | $ 125,000 | ||||||||||
Payable after date | Aug. 23, 2015 | ||||||||||
Prepayment percentage until 90th day (in hundredths) | 135.00% | ||||||||||
Prepayment percentage after 91st day (in hundredths) | 140.00% | ||||||||||
Prepayment percentage maturity date (in hundredths) | 150.00% | ||||||||||
Percentage of conversion price during 20 days prior to any conversion (in hundredths) | 58.00% | ||||||||||
Percentage of conversion price during 20 days prior to the date of the note (in hundredths) | 58.00% | ||||||||||
Percentage of conversion amount within three business days (in hundredths) | 25.00% | ||||||||||
Percentage of conversion amount within for each additional five business days (in hundredths) | 25.00% | ||||||||||
Diligence fees | $ 10,000 | ||||||||||
Typenex Co-Investment, LLC Convertible Note [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Convertible note, face amount | $ 350,000 | ||||||||||
Due and payable date | Jan. 5, 2016 | ||||||||||
Interest rate (in hundredths) | 10.00% | ||||||||||
Interest rate in case of default (in hundredths) | 22.00% | ||||||||||
Excess percentage of outstanding shares that convertible note cannot be converted to Company's common stock (in hundredths) | 4.99% | ||||||||||
Percentage of prepayment amount of the outstanding balance of the Convertible Note (in hundredths) | 125.00% | ||||||||||
Legal fees | $ 5,000 | ||||||||||
Net amount received in connection with the sale | 300,000 | ||||||||||
Original issue discount | 45,000 | ||||||||||
Debt instrument, outstanding balance | $ 350,000 | ||||||||||
Conversion price (in dollars per share) | $ / shares | $ 2.25 | ||||||||||
Current market capitalization limit | $ 20,000,000 | ||||||||||
Multiplier (in hundredths) | 80.00% | ||||||||||
Reduction in convertible note (in hundredths) | 5.00% | ||||||||||
Market price limit (in dollars per share) | $ / shares | $ 0.75 | ||||||||||
Prepayment minimum amount | $ 70,000 | ||||||||||
Percentage increase of market capitalization (in hundredths) | 9.99% | ||||||||||
Market capitalization limit | $ 10,000,000 | ||||||||||
Warrants, granted (in shares) | shares | 38,889 | ||||||||||
Warrants, exercise price (in dollars per share) | $ / shares | $ 2.25 | ||||||||||
Shares pledged by Christopher Watts (in shares) | shares | 1,100,000 | ||||||||||
Pledged, amount minimum | $ 900,000 | ||||||||||
Vis Vires Group Convertible Note [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Convertible note, face amount | $ 414,500 | ||||||||||
Due and payable date | Apr. 2, 2016 | ||||||||||
Interest rate (in hundredths) | 8.00% | ||||||||||
Interest rate in case of default (in hundredths) | 22.00% | ||||||||||
Excess percentage of outstanding shares that convertible note cannot be converted to Company's common stock (in hundredths) | 9.99% | ||||||||||
Legal fees | $ 5,000 | ||||||||||
Net amount received in connection with the sale | $ 400,000 | ||||||||||
Conversion price (in hundredths) | 50.00% | ||||||||||
Original issue discount | $ 9,500 | ||||||||||
Common stock deposited into escrow | 750,000 | ||||||||||
Debt instrument, outstanding balance | $ 414,500 | ||||||||||
Common stock shares authorized but unissued | shares | 8,000,000 | ||||||||||
Conversion price (in dollars per share) | $ / shares | $ 0.00005 | ||||||||||
Vis Vires Group Convertible Note [Member] | Minimum [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Percentage of prepayment amount of the outstanding balance of the Convertible Note (in hundredths) | 110.00% | ||||||||||
Vis Vires Group Convertible Note [Member] | Maximum [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Percentage of prepayment amount of the outstanding balance of the Convertible Note (in hundredths) | 135.00% | ||||||||||
Shadow Tree Capital Management, LLC [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Original issue discount | $ 491,374 | ||||||||||
Debt issuance cost | 283,455 | ||||||||||
Amortization of debt discount | 565,467 | ||||||||||
Note payable | $ 3,922,289 | ||||||||||
Term of amortization | 2 years | ||||||||||
Amortization expenses classified as interest expenses | $ 151,664 | ||||||||||
Unamortized debt issuance cost | 131,791 | ||||||||||
Notes Payable For Vehicle Purchase [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Convertible note, face amount | $ 18,375 | ||||||||||
Debt instrument, interest rate (in hundredths) | 6.93% | ||||||||||
Number of required periodic payments | Payment | 36 | ||||||||||
Periodic installments amount | $ 567 | ||||||||||
Principal balance | 602 | $ 7,100 | |||||||||
Note Payable For Commercial Insurance Program [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Convertible note, face amount | $ 403,104 | ||||||||||
Number of required periodic payments | Payment | 9 | ||||||||||
Periodic installments amount | $ 45,718 | ||||||||||
Principal balance | 256,625 | ||||||||||
Note Payable For Commercial Insurance Program 2 [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Convertible note, face amount | $ 420,690 | ||||||||||
Number of required periodic payments | Payment | 8 | ||||||||||
Periodic installments amount | $ 52,586 | ||||||||||
Principal balance | 309,212 | ||||||||||
Note Payable-Chairman [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Convertible note, face amount | $ 100,000 | $ 600,000 | |||||||||
Debt instrument, interest rate (in hundredths) | 5.00% | 6.25% | |||||||||
Number of required periodic payments | Payment | 36 | ||||||||||
Principal balance | $ 600,000 | ||||||||||
Additional funds borrowed | $ 300,000 | $ 200,000 | |||||||||
Term of debt instrument | 1 year | ||||||||||
Term Loan [Member] | Shadow Tree Capital Management, LLC [Member] | |||||||||||
Debt Instrument [Line Items] | |||||||||||
Convertible note, face amount | $ 4,000,000 | ||||||||||
Principal balance | $ 4,545,454 | ||||||||||
Interest rate (in hundredths) | 12.00% | ||||||||||
Interest rate in case of default (in hundredths) | 24.00% | ||||||||||
Net amount received in connection with the sale | $ 3,463,539 | ||||||||||
Entered date | Aug. 15, 2014 | ||||||||||
Structuring fee | $ 90,909 | ||||||||||
Structuring fee (in hundredths) | 2.00% | ||||||||||
Debt issuance cost | $ 172,824 | ||||||||||
Placement fee (in hundredths) | 5.00% | ||||||||||
Placement fee | $ 227,273 | ||||||||||
Consulting fee (in hundredths) | 1.00% | ||||||||||
Consulting fee | $ 45,455 | ||||||||||
Additional borrowing capacity | 1,000,000 | ||||||||||
Sale of equity | $ 750,000 | ||||||||||
Credit agreement period sale of equity | 150 days | ||||||||||
Structuring Fee on additional borrowings (in hundredths) | 2.00% | ||||||||||
Threshold Revenues | $ 900,000 | ||||||||||
Interest rate under condition one (in hundredths) | 16.00% | ||||||||||
Interest rate under condition two (in hundredths) | 14.00% | ||||||||||
Restricted shares issued (in shares) | shares | 60,000 | ||||||||||
Restricted shares issued after 12 months from effective date (in shares) | shares | 32,500 | ||||||||||
Restricted shares issued after 18 months from effective date (in shares) | shares | 32,500 | ||||||||||
Restricted shares issued after 21 months from effective date (in shares) | shares | 25,000 | ||||||||||
Voting stock percentage (in hundredths) | 25.00% | ||||||||||
Payables in case of default | $ 250,000 | ||||||||||
Period of default | 30 days |
Capital Stock (Details)
Capital Stock (Details) - USD ($) | Aug. 04, 2014 | Dec. 04, 2013 | Dec. 03, 2013 | Sep. 06, 2013 | Aug. 31, 2014 | Dec. 31, 2013 | Apr. 30, 2015 |
Class of Stock [Line Items] | |||||||
Debt discount | $ 247,655 | ||||||
Restricted common stock (in shares) | 10,008 | ||||||
Value of common stock issued in exchange for note receivable | $ 2,184,879 | ||||||
Maximum percentage of proceeds to be received upon sale of stock to third party (in hundredths) | 100.00% | 95.00% | |||||
Maximum proceeds to be received upon sale of stock to third party | $ 1,000,000 | ||||||
Period of stock listing on major stock exchange within which the Company will receive proceeds from sale of stock | 60 days | 90 days | 90 days | ||||
Period of six month anniversary of stock sale within which the Company will receive proceeds from sale of stock | 60 days | ||||||
Period from date that shares become unrestricted within which the Company will receive proceeds from sale of stock | 60 days | ||||||
Percentage of remaining receivable balance is due within stock listing period (in hundredths) | 100.00% | ||||||
Minimum share price for note receivable to be due to company (in dollars per share) | $ 6 | ||||||
Note receivable extension fee | $ 50,000 | ||||||
Note payable remaining balance repaid in future | $ 750,000 | ||||||
HCN [Member] | |||||||
Class of Stock [Line Items] | |||||||
Restricted common stock (in shares) | 3,963 | ||||||
Number of shares of common stock issued in exchange for note receivable (in shares) | 619,960 | 191,667 | 619,960 | ||||
Value of common stock issued in exchange for note receivable | $ 1,859,879 | $ 1,000,000 | |||||
Restricted Common Stock [Member] | |||||||
Class of Stock [Line Items] | |||||||
Stock issued for notes payable and joint interest billings (in shares) | 60,000 | ||||||
Shares issued for services rendered (in shares) | 122,000 | ||||||
Shares used to settle litigation (in shares) | 22,000 | ||||||
Value of settlement | $ 65,000 | ||||||
Common Stock [Member] | |||||||
Class of Stock [Line Items] | |||||||
Restricted common stock (in shares) | 100,000 | ||||||
Compensation expense for shares issued for services | $ 266,700 |
Capital Stock, Options Granted
Capital Stock, Options Granted (Details) - USD ($) | 9 Months Ended | 12 Months Ended | |
Apr. 30, 2015 | Apr. 30, 2014 | Jul. 31, 2014 | |
Information about options granted to non-employees and employee under stock incentive plans [Abstract] | |||
Compensation expense recognized | $ 396,475 | $ 1,251,212 | |
Stock Option [Member] | |||
Information about options granted to non-employees and employee under stock incentive plans [Abstract] | |||
Number of options granted (in shares) | 25,000 | ||
Weighted average exercise price of options granted (in dollars per share) | $ 4.50 | ||
Number of options Exercised (in shares) | 0 | ||
Number of options expired (in shares) | 92,000 | ||
Options [Roll Forward] | |||
Outstanding, beginning balance (in shares) | 265,333 | ||
Granted (in shares) | 25,000 | ||
Exercised (in shares) | 0 | ||
Expired (in shares) | (92,000) | ||
Outstanding, ending balance (in shares) | 198,333 | 265,333 | |
Weighted Average Exercise Price [Roll Forward] | |||
Outstanding, beginning balance (in dollars per share) | $ 6.81 | ||
Granted (in dollars per share) | 4.50 | ||
Exercised (in dollars per share) | 0 | ||
Expired (in dollars per share) | 6.85 | ||
Outstanding, ending balance (in dollars per share) | $ 6.52 | $ 6.81 | |
Aggregate intrinsic value, beginning balance | $ 0 | ||
Aggregate intrinsic value, ending balance | $ 0 | $ 0 | |
SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsOutstandingWeightedAverageRemainingContractualTerm2 | 7 years 6 months 4 days | 7 years 11 months 12 days | |
Weighted average remaining contractual life, Granted | 5 years | ||
SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsOutstandingWeightedAverageRemainingContractualTerm2 | 7 years 6 months 4 days | 7 years 11 months 12 days | |
Stock Option [Member] | Non Employees [Member] | |||
Information about options granted to non-employees and employee under stock incentive plans [Abstract] | |||
Number of options granted (in shares) | 25,000 | ||
Compensation expense recognized | $ 112,500 | ||
Number of options Exercised (in shares) | 0 | ||
Number of options expired (in shares) | 92,000 | ||
Options [Roll Forward] | |||
Granted (in shares) | 25,000 | ||
Exercised (in shares) | 0 | ||
Expired (in shares) | (92,000) | ||
Stock Option [Member] | Employees [Member] | |||
Information about options granted to non-employees and employee under stock incentive plans [Abstract] | |||
Number of options granted (in shares) | 25,000 | 0 | |
Compensation expense recognized | $ 112,500 | $ 56,208 | |
Weighted average exercise price of options granted (in dollars per share) | $ 4.50 | ||
Options [Roll Forward] | |||
Granted (in shares) | 25,000 | 0 | |
Weighted Average Exercise Price [Roll Forward] | |||
Granted (in dollars per share) | $ 4.50 | ||
2013 Stock Incentive Plan [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Maximum number of shares authorized (in shares) | 737,706 | ||
[1] | N/A |
Capital Stock, Warrants Granted
Capital Stock, Warrants Granted (Details) - USD ($) | 9 Months Ended | 12 Months Ended | |||
Apr. 30, 2015 | Apr. 30, 2014 | Jul. 31, 2014 | Apr. 30, 2015 | Jul. 31, 2011 | |
Warrants Granted To Related Party [Line Items] | |||||
Exercise price (in dollars per share) | $ 7.50 | $ 7.50 | $ 5.20 | ||
Warrants [Roll Forward] | |||||
Outstanding, beginning balance (in shares) | 1,084,584 | ||||
Granted (in shares) | 311,632 | ||||
Exercised (in shares) | 0 | ||||
Expired (in shares) | (417,917) | ||||
Outstanding, beginning balance (in shares) | 978,299 | 1,084,584 | |||
Weighted Average Exercise Price [Roll Forward] | |||||
Outstanding, beginning balance (in dollars per share) | $ 7.50 | ||||
Granted (in dollars per share) | 0.28 | ||||
Exercised (in dollars per share) | 0 | ||||
Expired (in dollars per share) | 0 | ||||
Outstanding, beginning balance (in dollars per share) | $ 5.20 | $ 7.50 | |||
Aggregate intrinsic value, beginning balance | $ 0 | ||||
Aggregate intrinsic value, Granted | 0.92 | ||||
Aggregate intrinsic value, ending balance | $ 0.92 | $ 0 | |||
SharebasedCompensationArrangementBySharebasedPaymentAwardWarrantsOutstandingWeightedAverageRemainingContractualTerm | 2 years 29 days | 1 year 14 days | |||
Weighted average remaining contractual life, Granted | 4 years 10 months 6 days | ||||
SharebasedCompensationArrangementBySharebasedPaymentAwardWarrantsOutstandingWeightedAverageRemainingContractualTerm | 2 years 29 days | 1 year 14 days | |||
Compensation expense recognized | $ 396,475 | $ 1,251,212 | |||
Warrant B [Member] | |||||
Weighted Average Exercise Price [Roll Forward] | |||||
Fair value | 266,017 | ||||
Warrant C [Member] | |||||
Weighted Average Exercise Price [Roll Forward] | |||||
Fair value | 206,245 | ||||
Warrants [Member] | |||||
Weighted Average Exercise Price [Roll Forward] | |||||
Compensation expense recognized | $ 0 | $ 6,754 | |||
Geoserve Marketing, LLC [Member] | |||||
Warrants Granted To Related Party [Line Items] | |||||
Total shares of common stock issuable under warrants (in shares) | 400,000 | ||||
Geoserve Marketing, LLC [Member] | Warrant B [Member] | |||||
Warrants Granted To Related Party [Line Items] | |||||
Period for calculating average closing price | 5 days | ||||
Average closing stock price that will trigger issuance of additional warrants (in dollars per share) | $ 22.50 | ||||
Number of warrants exercisable upon attaining target average closing price (in shares) | 200,000 | ||||
Exercise price (in dollars per share) | $ 7.50 | $ 7.50 | |||
Expiration date | Feb. 15, 2016 | ||||
Term of warrants | 2 years 29 days | ||||
Weighted Average Exercise Price [Roll Forward] | |||||
Outstanding, beginning balance (in dollars per share) | $ 7.50 | ||||
Geoserve Marketing, LLC [Member] | Warrant C [Member] | |||||
Warrants Granted To Related Party [Line Items] | |||||
Period for calculating average closing price | 5 days | ||||
Average closing stock price that will trigger issuance of additional warrants (in dollars per share) | $ 45 | ||||
Number of warrants exercisable upon attaining target average closing price (in shares) | 200,000 | ||||
Exercise price (in dollars per share) | $ 7.50 | $ 7.50 | |||
Expiration date | Feb. 15, 2016 | ||||
Term of warrants | 2 years 5 months 26 days | ||||
Weighted Average Exercise Price [Roll Forward] | |||||
Outstanding, beginning balance (in dollars per share) | $ 7.50 |
Related Party Transactions (Det
Related Party Transactions (Details) | Dec. 04, 2013USD ($)shares | Dec. 03, 2013shares | Sep. 06, 2013USD ($)shares | Dec. 31, 2013shares | Apr. 30, 2015USD ($)Child | Apr. 30, 2014USD ($) | Apr. 30, 2015USD ($)Childshares | Apr. 30, 2014USD ($) | Jul. 31, 2014USD ($) |
Related Party Transaction [Line Items] | |||||||||
Value of common stock issued in exchange for note receivable | $ 2,184,879 | ||||||||
Shares issued in order to cancel the value of outstanding balance of related party (in shares) | shares | 10,008 | ||||||||
Due to related parties | $ 78,585 | $ 78,585 | $ 165,542 | ||||||
HCN [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Number of shares of common stock issued in exchange for note receivable (in shares) | shares | 619,960 | 191,667 | 619,960 | ||||||
Value of common stock issued in exchange for note receivable | $ 1,859,879 | $ 1,000,000 | |||||||
Shares issued in order to cancel the value of outstanding balance of related party (in shares) | shares | 3,963 | ||||||||
Due to related parties | $ 78,600 | 78,600 | |||||||
Company received payment from related party | $ 2,722 | ||||||||
Father-In-Law of Chief Executive Officer [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Number of adult children of related party who are significant shareholders | Child | 1 | 1 | |||||||
Percentage of outstanding common stock owned by beneficial owners (in hundredths) | 68.00% | 68.00% | |||||||
Percentage of working interest sold (in hundredths) | 5.00% | ||||||||
Outstanding joint interest billings owed by related party | $ 100 | $ 100 | 80,468 | ||||||
Period of termination notice | 30 days | ||||||||
Expense recognized from consulting contract with related party | $ 0 | $ 6,754 | |||||||
Promissory note for funds received from related party | $ 100,000 | $ 100,000 | |||||||
Term of promissory note | 1 year | ||||||||
Interest rate on debt (in hundredths) | 5.00% | 5.00% | |||||||
Maximum borrowing capacity | $ 600,000 | $ 600,000 | |||||||
Interest rate (in hundredths) | 6.25% | 6.25% | |||||||
Additional borrowing capacity | $ 200,000 | $ 200,000 | |||||||
Remaining balance borrowing amount | 300,000 | $ 300,000 | |||||||
Number of monthly payment | 36 months | ||||||||
Carter E&P [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Related party receivable from Carter | 0 | $ 0 | $ 0 | ||||||
Revenues | 0 | $ 0 | 0 | 39,274 | |||||
Lease operating costs | 0 | 0 | 0 | 23,259 | |||||
Overhead costs incurred | $ 0 | $ 0 | $ 0 | $ 4,687 | |||||
Nephew of Chairman and Chief Executive Officer [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Number of shares of common stock issued in exchange for note receivable (in shares) | shares | 191,667 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - Recurring [Member] | Apr. 30, 2015USD ($) |
Level 1 [Member] | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Total Carrying Value | $ 0 |
Level 2 [Member] | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Total Carrying Value | 0 |
Level 3 [Member] | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Total Carrying Value | 1,940,460 |
Carrying Value [Member] | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Total Carrying Value | 1,940,460 |
Convertible Notes [Member] | Level 1 [Member] | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Total Carrying Value | 0 |
Convertible Notes [Member] | Level 2 [Member] | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Total Carrying Value | 0 |
Convertible Notes [Member] | Level 3 [Member] | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Total Carrying Value | 1,648,407 |
Convertible Notes [Member] | Carrying Value [Member] | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Total Carrying Value | 1,648,407 |
Tyenex Co-Warrants [Member] | Level 1 [Member] | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Total Carrying Value | 0 |
Tyenex Co-Warrants [Member] | Level 2 [Member] | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Total Carrying Value | 0 |
Tyenex Co-Warrants [Member] | Level 3 [Member] | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Total Carrying Value | 243,478 |
Tyenex Co-Warrants [Member] | Carrying Value [Member] | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Total Carrying Value | 243,478 |
Tainted Warrants - Georserve [Member] | Level 1 [Member] | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Total Carrying Value | 0 |
Tainted Warrants - Georserve [Member] | Level 2 [Member] | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Total Carrying Value | 0 |
Tainted Warrants - Georserve [Member] | Level 3 [Member] | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Total Carrying Value | 48,575 |
Tainted Warrants - Georserve [Member] | Carrying Value [Member] | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Total Carrying Value | $ 48,575 |
Derivative Liabilities (Details
Derivative Liabilities (Details) | Apr. 24, 2015USD ($) | Apr. 30, 2015USD ($)$ / sharesshares | Apr. 30, 2015USD ($)Bidshares | Aug. 04, 2014USD ($) | Jul. 31, 2014USD ($)shares | |
Fair Value of Embedded Derivatives and Warrants [Abstract] | ||||||
Common stock issuable (in shares) | shares | 21,272,785 | 21,272,785 | ||||
Activity for Embedded Derivatives and Warrants [Abstract] | ||||||
Balance | $ 0 | |||||
Balance | $ 1,940,460 | 1,940,460 | ||||
Derivative liability | 1,940,460 | $ 1,940,460 | $ 0 | |||
Unamortized discount | $ 247,655 | |||||
KBM Worldwide, Inc. Convertible Note [Member] | ||||||
Activity for Embedded Derivatives and Warrants [Abstract] | ||||||
Unamortized discount | 26,000 | |||||
Typenex Co [Member] | ||||||
Activity for Embedded Derivatives and Warrants [Abstract] | ||||||
Warrants exercisable (in shares) | shares | 38,889 | |||||
Unamortized discount | $ 45,000 | |||||
Warrants [Member] | ||||||
Fair Value of Embedded Derivatives and Warrants [Abstract] | ||||||
Common stock issuable (in shares) | shares | 978,299 | |||||
Market value of common stock on measurement date (in dollars per share) | $ / shares | [1] | $ 1.20 | ||||
Adjusted exercise price (in dollars per share) | $ / shares | [2] | $ 0.28 | ||||
Risk free interest rate (in hundredths) | [3] | 1.43% | ||||
Instrument lives in years | 4 years 10 months 6 days | |||||
Expected volatility (in hundredths) | [4] | 114.00% | ||||
Expected dividend yields (in hundredths) | [5] | 0.00% | ||||
Risk-free interest rate determination term on treasury bill | 5 years | |||||
Activity for Embedded Derivatives and Warrants [Abstract] | ||||||
Balance | $ 0 | |||||
Initial Valuation of Derivative Instruments Issued During the Period | 109,466 | |||||
Increase (Decrease) in Fair Value of Derivative Liabilities | 182,587 | |||||
Balance | $ 292,053 | $ 292,053 | ||||
Warrants exercise period | 5 years | |||||
Warrants issued to purchase shares of common stock | $ 87,500 | |||||
Number of lowest closing bid price | Bid | 5 | |||||
Number of trading days determining market price | 20 days | |||||
Warrants exercisable (in shares) | shares | 38,889 | |||||
Aggregate fair value of derivative liabilities | 454,903 | |||||
Repayment of principal amount of convertible notes | $ 513,157 | |||||
Derivative liability | 292,053 | $ 0 | 0 | |||
Unamortized discount | $ 214,031 | |||||
Warrants [Member] | Initial [Member] | ||||||
Fair Value of Embedded Derivatives and Warrants [Abstract] | ||||||
Common stock issuable (in shares) | shares | 705,556 | |||||
Market value of common stock on measurement date (in dollars per share) | $ / shares | [1] | $ 0.92 | ||||
Adjusted exercise price (in dollars per share) | $ / shares | [2] | $ 2.25 | ||||
Risk free interest rate (in hundredths) | [3] | 1.57% | ||||
Instrument lives in years | 5 years | |||||
Expected volatility (in hundredths) | [4] | 112.00% | ||||
Expected dividend yields (in hundredths) | [5] | 0.00% | ||||
Warrants [Member] | Typenex Co [Member] | ||||||
Activity for Embedded Derivatives and Warrants [Abstract] | ||||||
Balance | $ 0 | |||||
Initial Valuation of Derivative Instruments Issued During the Period | 91,925 | |||||
Increase (Decrease) in Fair Value of Derivative Liabilities | 151,553 | |||||
Balance | $ 243,478 | 243,478 | ||||
Derivative liability | $ 243,478 | 0 | 0 | |||
Embedded Derivative Instruments [Member] | ||||||
Fair Value of Embedded Derivatives and Warrants [Abstract] | ||||||
Common stock issuable (in shares) | shares | 1,771,432 | |||||
Market value of common stock on measurement date (in dollars per share) | $ / shares | [1] | $ 1.20 | ||||
Expected dividend yields (in hundredths) | [5] | 0.00% | ||||
Activity for Embedded Derivatives and Warrants [Abstract] | ||||||
Balance | 0 | |||||
Initial Valuation of Derivative Instruments Issued During the Period | 367,147 | |||||
Increase (Decrease) in Fair Value of Derivative Liabilities | 1,826,751 | |||||
Fair Value of Derivative Liabilities on Repayment of Debt | (545,490) | |||||
Balance | $ 1,648,407 | 1,648,407 | ||||
Derivative liability | $ 1,648,407 | 0 | 0 | |||
Embedded Derivative Instruments [Member] | Initial [Member] | ||||||
Fair Value of Embedded Derivatives and Warrants [Abstract] | ||||||
Common stock issuable (in shares) | shares | 744,835 | |||||
Expected dividend yields (in hundredths) | [5] | 0.00% | ||||
Embedded Derivative Instruments [Member] | LG Capital [Member] | ||||||
Activity for Embedded Derivatives and Warrants [Abstract] | ||||||
Balance | 0 | |||||
Initial Valuation of Derivative Instruments Issued During the Period | 80,433 | |||||
Increase (Decrease) in Fair Value of Derivative Liabilities | 192,313 | |||||
Fair Value of Derivative Liabilities on Repayment of Debt | (272,745) | |||||
Balance | $ 0 | 0 | ||||
Derivative liability | 0 | 0 | 0 | |||
Embedded Derivative Instruments [Member] | Adar Bays, LLC [Member] | ||||||
Activity for Embedded Derivatives and Warrants [Abstract] | ||||||
Balance | 0 | |||||
Initial Valuation of Derivative Instruments Issued During the Period | 109,170 | |||||
Increase (Decrease) in Fair Value of Derivative Liabilities | 163,576 | |||||
Fair Value of Derivative Liabilities on Repayment of Debt | (272,745) | |||||
Balance | 0 | 0 | ||||
Derivative liability | 0 | 0 | 0 | |||
Embedded Derivative Instruments [Member] | JSJ Investments, Inc. [Member] | ||||||
Activity for Embedded Derivatives and Warrants [Abstract] | ||||||
Balance | 0 | |||||
Initial Valuation of Derivative Instruments Issued During the Period | 110,825 | |||||
Increase (Decrease) in Fair Value of Derivative Liabilities | 382,064 | |||||
Fair Value of Derivative Liabilities on Repayment of Debt | 0 | |||||
Balance | 492,889 | 492,889 | ||||
Derivative liability | 492,889 | 0 | 0 | |||
Embedded Derivative Instruments [Member] | Typenex Co [Member] | ||||||
Activity for Embedded Derivatives and Warrants [Abstract] | ||||||
Initial Valuation of Derivative Instruments Issued During the Period | 66,720 | |||||
Increase (Decrease) in Fair Value of Derivative Liabilities | 1,088,798 | |||||
Fair Value of Derivative Liabilities on Repayment of Debt | 0 | |||||
Balance | 1,155,518 | 1,155,518 | ||||
Derivative liability | 1,155,518 | 1,155,518 | ||||
Tainted Warrants Georserve [Member] | ||||||
Activity for Embedded Derivatives and Warrants [Abstract] | ||||||
Balance | 0 | |||||
Initial Valuation of Derivative Instruments Issued During the Period | 17,541 | |||||
Increase (Decrease) in Fair Value of Derivative Liabilities | 31,034 | |||||
Balance | 48,575 | 48,575 | ||||
Derivative liability | $ 48,575 | $ 0 | $ 0 | |||
Minimum [Member] | ||||||
Fair Value of Embedded Derivatives and Warrants [Abstract] | ||||||
Risk-free interest rate determination term on treasury bill | 6 months | |||||
Minimum [Member] | Warrants [Member] | ||||||
Activity for Embedded Derivatives and Warrants [Abstract] | ||||||
Conversion factor (in hundredths) | 70.00% | |||||
Minimum [Member] | Embedded Derivative Instruments [Member] | ||||||
Fair Value of Embedded Derivatives and Warrants [Abstract] | ||||||
Adjusted exercise price (in dollars per share) | $ / shares | $ 0.26 | |||||
Risk free interest rate (in hundredths) | [6] | 0.01% | ||||
Instrument lives in years | 3 months 25 days | |||||
Expected volatility (in hundredths) | [4] | 126.00% | ||||
Minimum [Member] | Embedded Derivative Instruments [Member] | Initial [Member] | ||||||
Fair Value of Embedded Derivatives and Warrants [Abstract] | ||||||
Market value of common stock on measurement date (in dollars per share) | $ / shares | [1] | 0.91 | ||||
Adjusted exercise price (in dollars per share) | $ / shares | $ 0.52 | |||||
Risk free interest rate (in hundredths) | [6] | 0.08% | ||||
Instrument lives in years | 6 months | |||||
Expected volatility (in hundredths) | [4] | 103.00% | ||||
Maximum [Member] | ||||||
Fair Value of Embedded Derivatives and Warrants [Abstract] | ||||||
Risk-free interest rate determination term on treasury bill | 5 years | |||||
Maximum [Member] | Warrants [Member] | ||||||
Activity for Embedded Derivatives and Warrants [Abstract] | ||||||
Conversion factor (in hundredths) | 80.00% | |||||
Maximum [Member] | Embedded Derivative Instruments [Member] | ||||||
Fair Value of Embedded Derivatives and Warrants [Abstract] | ||||||
Adjusted exercise price (in dollars per share) | $ / shares | $ 0.28 | |||||
Risk free interest rate (in hundredths) | [6] | 0.06% | ||||
Instrument lives in years | 8 months 5 days | |||||
Expected volatility (in hundredths) | [4] | 137.00% | ||||
Maximum [Member] | Embedded Derivative Instruments [Member] | Initial [Member] | ||||||
Fair Value of Embedded Derivatives and Warrants [Abstract] | ||||||
Market value of common stock on measurement date (in dollars per share) | $ / shares | [1] | 1.07 | ||||
Adjusted exercise price (in dollars per share) | $ / shares | $ 2.25 | |||||
Risk free interest rate (in hundredths) | [6] | 0.25% | ||||
Instrument lives in years | 1 year | |||||
Expected volatility (in hundredths) | [4] | 114.00% | ||||
[1] | The market value of common stock is the stock price at the close of trading on the date of issuance or at period-end, as applicable. | |||||
[2] | Upon the issuance of Vis Vires convertible note on March 31, 2015, it was assumed that the anti-provision was triggered as the note conversion price of $0.28 was below the then-current warrant exercise price of $2.25. The adjusted exercise price was lowered to the note conversion price. | |||||
[3] | The risk-free interest rate was determined by management using the 5 - year Treasury Bill as of the respective offering or measurement date. | |||||
[4] | The historical trading volatility was determined by the Company's trading history. | |||||
[5] | Management determined the dividend yield to be -0-% based upon its expectation that it will not pay dividends for the foreseeable future. | |||||
[6] | The risk-free interest rate was determined by management using between the 0.5 and 5 - year Treasury Bill as of the respective offering or measurement date. |
Commitments and Contingencies41
Commitments and Contingencies (Details) - Apr. 30, 2015 | USD ($)LetterofCreditshares |
Commitments And Contingencies [Line Items] | |
Number of letters of credit in favor of the Railroad Commission of Texas | LetterofCredit | 2 |
Schedule of prepaid balances [Abstract] | |
Prepaid letter of credit fees | $ 101,250 |
Amortization | (84,875) |
Net prepaid letter of credit fees | 16,375 |
Minimum [Member] | |
Commitments And Contingencies [Line Items] | |
Loss contingency, estimate | $ 150,000 |
Maximum [Member] | |
Commitments And Contingencies [Line Items] | |
Per day trading limit of HEC shares due to temporary restraining order on Mr. Scaturro (in shares) | shares | 500 |
Loss contingency, estimate | $ 900,000 |
Letter of Credit One [Member] | |
Commitments And Contingencies [Line Items] | |
Debt instrument, face amount | $ 6,610,000 |
Debt instrument, fee percentage (in hundredths) | 1.50% |
Letter of Credit Two [Member] | |
Commitments And Contingencies [Line Items] | |
Debt instrument, face amount | $ 120,000 |
Debt instrument, fee percentage (in hundredths) | 1.50% |
Accounts payable and accrued expenses [Member] | |
Commitments And Contingencies [Line Items] | |
Environmental remediation expense | $ 150,000 |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | Jun. 10, 2015 | Apr. 30, 2015 | Jul. 31, 2014 |
Subsequent Event [Line Items] | |||
Shares issued (in shares) | 10,008 | ||
Series A 7% Convertible Preferred Stock [Member] | |||
Subsequent Event [Line Items] | |||
Face value of rights exchanged | $ 0 | ||
Preferred stock issued (in shares) | 8,188 | ||
Preferred stock face value (in dollars per share) | $ 400 | ||
Subsequent Event [Member] | Restricted Common Stock [Member] | |||
Subsequent Event [Line Items] | |||
Shares issued (in shares) | 25,000 | ||
Subsequent Event [Member] | Common Stock [Member] | |||
Subsequent Event [Line Items] | |||
Shares issued (in shares) | 800,000 | ||
Preferred stock conversion price (in dollars per shares) | $ 4 | ||
Subsequent Event [Member] | Series B Convertible Preferred Stock [Member] | |||
Subsequent Event [Line Items] | |||
Preferred stock issued (in shares) | 35,000 | ||
Preferred stock face value (in dollars per share) | $ 1,000 | ||
Interest rate on unpaid dividend (in hundredths) | 12.00% | ||
Convertible preferred stock (in shares) | 250 | ||
Conversion price of preferred stock for consecutive 30 days (in dollars per share) | $ 7 | ||
Consecutive trading days | 30 days | ||
Subsequent Event [Member] | Series B Convertible Preferred Stock [Member] | Minimum [Member] | |||
Subsequent Event [Line Items] | |||
Proceeds from planned offerings | $ 10,500,000 | ||
Subsequent Event [Member] | Series A 7% Convertible Preferred Stock [Member] | |||
Subsequent Event [Line Items] | |||
Face value of rights exchanged | $ 3,275,200 | ||
Dividend rate of preferred stock (in hundredths) | 7.00% | ||
Accrued and unpaid dividends | $ 327,879 | ||
Number of units exchanged for accrued and unpaid dividends (in shares) | 32 | ||
Preferred stock issued (in shares) | 8,188 | ||
Subsequent Event [Member] | Term Loan [Member] | |||
Subsequent Event [Line Items] | |||
Convertible note, face amount | $ 4,000,000 | ||
Term Loan amount outstanding | $ 4,545,454 | ||
Discount rate (in hundredths ) | 12.00% | ||
Additional loan, face amount | $ 475,632 | ||
Subsequent Event [Member] | Convertible Subordinated Promissory Notes [Member] | |||
Subsequent Event [Line Items] | |||
Convertible note, face amount | 100,000 | ||
Subsequent Event [Member] | Convertible Promissory Note [Member] | |||
Subsequent Event [Line Items] | |||
Convertible note, face amount | $ 3,200,000 | ||
Prepeyment penalty percentage (in hundredths) | 15.00% | ||
Conversion price (in dollars per share) | $ 4 | ||
Number of cure right days | 10 days | ||
Interest rate in the event default (in hundredths) | 12.00% | ||
Conversion value of promissory note | $ 600,000 | ||
Subsequent Event [Member] | Convertible Promissory Note [Member] | Series B Convertible Preferred Stock [Member] | |||
Subsequent Event [Line Items] | |||
Conversion price (in dollars per share) | $ 1,000 | ||
Subsequent Event [Member] | Convertible Promissory Note [Member] | WTI Interest Rate [Member] | |||
Subsequent Event [Line Items] | |||
Debt instrument, interest rate description | annualized percentage interest rate equal to the average quarterly closing spot price of West Texas Intermediate Crude oil divided by ten, plus two | ||
Average quarterly closing spot price (in dollars per share) | $ 50 | ||
Average quarterly closing spot price interest rate (in hundredths) | 0.00% | ||
Average quarterly closing spot price for the prior quarter (in dollars per share) | $ 60 | ||
Average quarterly closing spot price subsequent quarter interest rate (in hundredths) | 8.00% |