Document_and_Entity_Informatio
Document and Entity Information | 6 Months Ended | |
Jun. 30, 2014 | Aug. 19, 2014 | |
Document And Entity Information | ' | ' |
Entity Registrant Name | 'New Western Energy Corp | ' |
Entity Central Index Key | '0001479488 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Jun-14 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Is Entity a Well-known Seasoned Issuer? | 'No | ' |
Is Entity a Voluntary Filer? | 'No | ' |
Is Entity's Reporting Status Current? | 'Yes | ' |
Entity Filer Category | 'Smaller Reporting Company | ' |
Entity Common Stock, Shares Outstanding | ' | 74,206,448 |
Document Fiscal Period Focus | 'Q2 | ' |
Document Fiscal Year Focus | '2014 | ' |
Balance_Sheets_Unaudited
Balance Sheets (Unaudited) (USD $) | Jun. 30, 2014 | Dec. 31, 2013 |
Current assets | ' | ' |
Cash and cash equivalents | $438,576 | $1,523,181 |
Accounts receivable | 71,260 | 43,365 |
Inventory | 73,953 | 24,713 |
Prepaid expenses and other assets | 94,358 | 75,417 |
Total current assets | 678,147 | 1,666,676 |
Property and equipment, net | 214,028 | 201,556 |
Oil and gas properties, net | 1,487,638 | 1,459,233 |
Mineral properties, net | 5,449 | 38,143 |
Deferred debt issuance cost, net | 142,154 | 241,911 |
Note receivable, net | 65,000 | ' |
Other assets | 1,930 | 1,930 |
Total Assets | 2,594,346 | 3,609,449 |
Current liabilities | ' | ' |
Accounts payable | 79,916 | 67,984 |
Accrued expenses | 124,505 | 70,491 |
Convertible notes payable, current portion, net of discount of $606,877 and $72,534 at June 30, 2014 and December 31, 2013 | 330,288 | 21,792 |
Embedded conversion option liability | 677,306 | 809,716 |
Warrant liability | 609,044 | 912,215 |
Payable to related party | ' | 1,922 |
Total current liabilities | 1,821,059 | 1,884,120 |
Notes payable, long term portion, net of discount of $647,839 at June 30, 2014 and $782,310 at December 31, 2013, respectively | 925,911 | 791,440 |
Convertible notes payable, net of discount of $0 at June 30, 2014 and $1,101,586 at December 31, 2013, respectively | ' | 130,414 |
Total long term liabilities | 925,911 | 921,854 |
Total Liabilities | 2,746,970 | 2,805,974 |
New Western Energy Corporation and Subsidiaries Stockholders' Equity | ' | ' |
Preferred stock, $0.0001 par value, 5,000,000 shares authorized, 127,000 and 0 shares issued and outstanding at June 30, 2014 and December 31, 2013, respectively | 13 | ' |
Common stock, $0.0001 par value, 250,000,000 shares authorized, 73,806,448 and 72,185,866 shares issued and outstanding at June 30, 2014 and December 31, 2013, respectively | 7,381 | 7,219 |
Additional paid in capital | 6,676,866 | 5,752,443 |
Accumulated deficit | -7,219,328 | -5,468,129 |
Total New Western Energy Corporation and Subsidiaries Stockholders' Equity | -535,068 | 291,533 |
Noncontrolling interest in consolidated subsidiary | 382,444 | 511,942 |
Total Stockholders' Equity | -152,624 | 803,475 |
Total Liabilities and Stockholders' Equity | $2,594,346 | $3,609,449 |
Balance_Sheets_Parenthetical
Balance Sheets (Parenthetical) (USD $) | Jun. 30, 2014 | Dec. 31, 2013 |
Statement of Financial Position [Abstract] | ' | ' |
Convertible Note, Current Portion, discount | $606,877 | $72,534 |
Convertible Note, Long Term Portion, Discount | 0 | 1,101,586 |
Note Payable, Long Term Portion, Discount | $647,839 | $782,310 |
Preferred Stock Par Value | $0.00 | $0.00 |
Preferred Stock Shares Authorized | 5,000,000 | 5,000,000 |
Preferred Stock Shares Issued | 127,000 | 0 |
Preferred Stock Shares Outstanding | 127,000 | 0 |
Common Stock Par Value | $0.00 | $0.00 |
Common Stock Shares Authorized | 250,000,000 | 250,000,000 |
Common Stock Shares Issued | 73,806,448 | 72,185,866 |
Common Stock Shares Outstanding | 73,806,448 | 72,185,866 |
Statements_of_Operations_Unaud
Statements of Operations (Unaudited) (USD $) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | |
Revenues | ' | ' | ' | ' |
Oil and gas sales | $110,734 | $11,797 | $182,122 | $30,994 |
Operating expenses | ' | ' | ' | ' |
Depreciation, depletion and amortization | 29,722 | 26,766 | 57,881 | 48,266 |
General and administrative | 401,915 | 287,891 | 1,081,811 | 453,882 |
(Gain) or loss on sale of oil leases | ' | 1,677 | ' | -77,594 |
Oil and gas production | 89,944 | 313,416 | 367,431 | 329,844 |
Total expenses | 521,581 | 629,750 | 1,507,123 | 754,398 |
Loss from operations | -410,847 | -617,953 | -1,325,001 | -723,404 |
Other income (expenses) | ' | ' | ' | ' |
Interest expense | -667,130 | -124,465 | -1,379,757 | -142,297 |
Change in fair value of embedded conversion option and warrant liability income (expense) | 594,835 | -66,510 | 826,439 | -124,325 |
Total other income (expenses) | -72,295 | -190,975 | -553,318 | -266,622 |
Loss from operations before income tax | -483,142 | -808,928 | -1,878,319 | -990,026 |
Provision for income tax | ' | ' | ' | -800 |
Net loss | -483,142 | -808,928 | -1,878,319 | -990,826 |
Preferred stock dividend | -2,378 | ' | -2,378 | ' |
Net loss applicable to common stock before allocation to noncontrolling interest | -485,520 | -808,928 | -1,880,697 | -990,826 |
Net loss applicable to noncontrolling interest in consolidated subsidiary | -40,725 | -95,102 | -129,498 | -96,347 |
Net loss applicable to New Western Energy Corporation common stock | ($444,795) | ($713,826) | ($1,751,199) | ($894,479) |
Basic and diluted net loss per share applicable to New Western Energy Corporation's common stock | ($0.01) | ($0.01) | ($0.03) | ($0.01) |
Weighted average number of shares outstanding - Basic and Diluted | 73,429,964 | 68,824,547 | 73,051,948 | 68,631,798 |
Statements_of_Cash_Flows_Unaud
Statements of Cash Flows (Unaudited) (USD $) | 6 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Reconciliation of net loss to net cash used in operating activities: | ' | ' |
Net loss applicable to New Western Energy Corporation common stock | ($1,751,199) | ($894,479) |
Adjustment to reconcile net loss to net cash used in operating activities: | ' | ' |
Depreciation and depletion | 25,188 | 15,573 |
Amortization of debt discount | 711,714 | 130,026 |
Amortization of mineral property | 32,694 | 32,694 |
Amortization of deferred debt issuance cost | 99,758 | ' |
Loss applicable to noncontrolling interest | -129,498 | -96,347 |
Gain on sale of oil and gas property and related equipment | ' | -77,594 |
Change in fair value of embedded conversion option liability | -76,973 | 124,325 |
Change in fair value of warrant liability | -303,171 | ' |
Changes in operating assets and liabilities: | ' | ' |
Accounts receivable | -27,895 | 287 |
Inventory | -49,240 | -29,938 |
Prepaid expenses and other current assets | 104,059 | 96,167 |
Other assets | ' | -480 |
Accounts payable | 11,932 | -22,994 |
Accrued expenses | 54,014 | 11,925 |
Net cash used in operating activities | -1,298,618 | -710,835 |
Cash Flows From Investing Activities: | ' | ' |
Cash paid for purchase of property and equipment | -31,065 | -152,868 |
Cash proceeds from sale of oil and gas property and related equipment | ' | 410,000 |
Cash advanced towards a note receivable | -75,000 | ' |
Cash received towards a note receivable | 10,000 | ' |
Cash paid for expenses relating to sale of oil and gas property and related equipment | ' | -99,680 |
Cash paid for purchase and capitalized cost of oil and gas properties, net | -35,000 | -155,958 |
Net cash (used in) provided by investing activities | -131,065 | 1,494 |
Cash Flows From Financing Activities: | ' | ' |
Cash received from sale of common stock and warrants | ' | 158,000 |
Cash received from sale of preferred stock | 635,000 | ' |
Cash paid for offering costs | ' | -17,700 |
Cash received from noncontrolling interest | ' | 650,000 |
Cash received from convertible promissory notes | 20,000 | 500,000 |
Cash repayments for notes payable | -308,000 | -331,389 |
Proceeds from related party advances | ' | 6,000 |
Repayments of related party advances | -1,922 | -48,500 |
Net cash provided by financing activities | 345,078 | 916,411 |
Net increase (decrease) in cash and cash equivalents | -1,084,605 | 207,070 |
Cash and cash equivalents, beginning of the period | 1,523,181 | 5,092 |
Cash and cash equivalents, end of the period | 438,576 | 212,162 |
Cash paid for income taxes | ' | ' |
Cash paid for interest | 45,174 | 21,389 |
Supplemental disclosures of non-cash investing and financing activities: | ' | ' |
Embedded conversion option liability | ' | -185,430 |
Debt discount | ' | 22,222 |
Reclassification of derivative Liability to equity | ' | 213,068 |
Promissory notes issued for lease purchases | ' | 120,000 |
Settlement of debt by issuance of common shares | 91,161 | ' |
Common shares issued to consultant as prepaid for services | 143,000 | 97,000 |
Common shares issued to director as prepaid for services | ' | $60,000 |
1_NATURE_OF_OPERATIONS_BASIS_O
1. NATURE OF OPERATIONS, BASIS OF PRESENTATION AND GOING CONCERN | 6 Months Ended |
Jun. 30, 2014 | |
Accounting Policies [Abstract] | ' |
1. NATURE OF OPERATIONS, BASIS OF PRESENTATION AND GOING CONCERN | ' |
NOTE 1: NATURE OF OPERATIONS, BASIS OF PRESENTATION AND GOING CONCERN | |
New Western Energy Corporation (the “Company”) was incorporated in the State of Nevada on September 25, 2008. The Company’s principal business is the acquisition, exploration and development of, and production from oil, gas and mineral properties located in the United States. | |
On December 1, 2010, the Company formed an entity named New Western Texas Oil and Gas Corporation incorporated in the State of Nevada, as its wholly-owned subsidiary. New Western Texas Oil and Gas Corporation started its operations on January 2011. On May 3, 2013, New Western Texas Oil and Gas Corporation amended its Articles of Incorporation and changed its name to New Western Gas Corporation. | |
On January 2, 2012, the Company completed the acquisition of 100% of the issued and outstanding capital stock of Royal Texan Energy Co. (“RTE”) and RTE became our wholly-owned subsidiary and conducts business as a separate operating company. | |
On March 18, 2013, the Company formed an entity named 2013 NWE Drilling Program 1 LP (the “Limited Partnership”). The Company became the General Partner and owns 51% of the Limited Partnership. The Limited Partnership was specifically formed to drill three oil wells on the Company’s B&W Ranch lease in the Chautauqua County, Kansas (See Note 3). | |
On May 28, 2014, the Company formed New Western Operating LLC, a wholly-owned subsidiary that will take over all operational duties for its leases and oil and gas exploration, drilling and production in the state of Kansas. | |
Basis of presentation | |
The accompanying interim condensed consolidated financial statements are unaudited, but in the opinion of management of the Company, contain all adjustments, which include normal recurring adjustments and business acquisition adjustments, necessary to present fairly the financial position at June 30, 2014, and the results of operations and cash flows for the six months ended June 30, 2014. The balance sheet as of December 31, 2013 is derived from the Company’s audited consolidated financial statements. | |
Certain information and footnote disclosures normally included in consolidated financial statements that have been prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission, although management of the Company believes that the disclosures contained in these consolidated financial statements are adequate to make the information presented therein not misleading. For further information, refer to the financial statements and the notes thereto contained in the Company’s 2013 Annual Report filed with the Securities and Exchange Commission on Form 10-K on April 14, 2014. | |
Going Concern | |
These consolidated financial statements have been prepared on a going concern basis, which implies the Company will continue to realize its assets and discharge its liabilities in the normal course of business. The Company has not generated significant revenues since inception and has never paid any dividends and is unlikely to pay dividends or generate significant earnings in the immediate or foreseeable future. The continuation of the Company as a going concern is dependent upon the continued financial support from its shareholders, the ability of the Company to obtain necessary equity financing to continue operations, and the attainment of profitable operations. | |
At June 30, 2014, the Company had working capital deficit of $1,142,911, incurred a net loss applicable to New Western Energy Corporation common stockholders of $1,751,199 during the six months ended June 30, 2014 and used cash in operating activities of $1,298,618. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern. These consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. |
2_SUMMARY_OF_SIGNIFICANT_ACCOU
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended | ||||||||||||||||
Jun. 30, 2014 | |||||||||||||||||
Accounting Policies [Abstract] | ' | ||||||||||||||||
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' | ||||||||||||||||
NOTE 2: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||||||||||||||||
Principles of Consolidation | |||||||||||||||||
The accompanying consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries New Western Gas Corporation, Royal Texan Energy Co. and New Western Operating LLC, and the Company’s 51% majority owned subsidiary 2013 NWE Drilling Program 1 LP. All intercompany balances and transactions are eliminated in consolidation. | |||||||||||||||||
Noncontrolling Interest | |||||||||||||||||
The Company accounts for its less than 100% interest in consolidated subsidiaries in accordance with Financial Accounting Standards Board - Accounting Standards Codification (“ASC”) Topic 810, Consolidation , and accordingly, the Company presents noncontrolling interests as a component of equity on its unaudited condensed consolidated balance sheets and reports noncontrolling interest net income or loss under the heading “Net income (loss) applicable to noncontrolling interest in consolidated subsidiary” in the unaudited condensed consolidated statements of operations. | |||||||||||||||||
Use of Estimates | |||||||||||||||||
The preparation of financial statements in conformity with U.S. generally accepted accounting principles (U.S. GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the valuation of accounts, notes and other receivables, valuation of beneficial conversion features in convertible debt, valuation of derivatives, valuation of long-lived assets, goodwill and oil, gas and mineral properties, stock-based compensation and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. | |||||||||||||||||
Derivative Instruments | |||||||||||||||||
ASC Topic 815, Derivatives and Hedging (“ASC Topic 815”), establishes accounting and reporting standards for derivative instruments and for hedging activities by requiring that all derivatives be recognized in the balance sheet and measured at fair value. Gains or losses resulting from changes in the fair value of derivatives are recognized in earnings or recorded in other comprehensive income (loss) depending upon the purpose of the derivatives and whether they qualify and have been designated for hedge accounting treatment. The Company does not have any derivative instruments for which it has applied hedge accounting treatment. | |||||||||||||||||
Fair value of Financial Instruments and Fair Value Measurements | |||||||||||||||||
ASC 820, Fair Value Measurements and Disclosures, requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value: | |||||||||||||||||
Level 1 | |||||||||||||||||
Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. | |||||||||||||||||
Level 2 | |||||||||||||||||
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. | |||||||||||||||||
Level 3 | |||||||||||||||||
Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. | |||||||||||||||||
The Company’s financial instruments consist principally of cash, amounts receivable, accounts payable, notes payable, embedded conversion option liabilities, and amounts due to related parties. Pursuant to ASC 820, Fair Value Measurements and Disclosures and ASC 825, Financial Instruments, the fair value of our cash equivalents is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The Company believes that the recorded values of all of the other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations. | |||||||||||||||||
Assets and liabilities measured at fair value on a recurring and non-recurring basis consist of the following at June 30, 2014: | |||||||||||||||||
Fair Value Measurements at June 30, 2014 | |||||||||||||||||
Carrying Value at June 30, 2014 (Unaudited) | (Level 1) (Unaudited) | (Level 2) (Unaudited) | (Level 3) (Unaudited) | ||||||||||||||
Mineral Properties | $ | 5,449 | $ | — | $ | — | $ | 5,449 | |||||||||
Warrant Liabilities | $ | 609,044 | $ | — | $ | — | $ | 609,044 | |||||||||
Embedded Conversion Option Liability | $ | 677,306 | $ | — | $ | — | $ | 677,306 | |||||||||
The following is a summary of activity of Level 3 assets and liabilities for the period ended June 30, 2014: | |||||||||||||||||
Mineral Properties | |||||||||||||||||
Balance - December 31, 2013 | $ | 38,143 | |||||||||||||||
Additions | — | ||||||||||||||||
Change in fair value | (32,694 | ) | |||||||||||||||
Balance – June 30, 2014 | $ | 5,449 | |||||||||||||||
Warrant Liabilities | |||||||||||||||||
Balance - December 31, 2013 | $ | 912,215 | |||||||||||||||
Additions | — | ||||||||||||||||
Change in fair value | (303,171 | ) | |||||||||||||||
Balance – June 30, 2014 | $ | 609,044 | |||||||||||||||
Embedded Conversion Option Liability | |||||||||||||||||
Balance - December 31, 2013 | $ | 809,716 | |||||||||||||||
Additions | — | ||||||||||||||||
Change in fair value | (187,847 | ) | |||||||||||||||
Reclassification to equity | 55,437 | ||||||||||||||||
Balance – June 30, 2014 | $ | 677,306 | |||||||||||||||
Changes in fair value of the embedded conversion liability are included in other income (expense) in the accompanying unaudited consolidated statements of operations. | |||||||||||||||||
Revenue Recognition | |||||||||||||||||
The Company sells crude oil and minerals under short-term agreements at prevailing market prices. Revenue, which is the Company's net revenue interest in the leased property, is recognized at the point of sale, when the crude oil and minerals are extracted from our storage units by the customer. This is at the point where the customer has taken title and has assumed the risks and rewards of ownership, the sales price is fixed or determinable and collectability is reasonably assured. | |||||||||||||||||
For sale of gas, the Company records revenue based on an estimate of the volumes delivered at the agreed-upon price and then adjusts revenue in subsequent periods based upon the data received from the purchaser that reflects actual volumes received. Generally, proceeds from gas production are received from one to three months after the actual delivery has occurred. Thus, it is usually necessary to estimate gas revenue based on prior months’ production volumes and current lease operating data, such as meter readings, in order to prepare financial statements on a timely basis. | |||||||||||||||||
Net Earnings (Loss) Per Share | |||||||||||||||||
The Company computes net earnings (loss) per share in accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of both basic and diluted net earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing earnings (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. At June 30, 2014, there were Class D, E and F Warrants outstanding for 15,548,420 common shares that if exercised, may dilute future earnings per share, 3,000,000 stock options outstanding awarded to employees and consultants, and there were convertible debt convertible into 4,926,888 common shares that may dilute future earnings per share. | |||||||||||||||||
Recent Accounting Pronouncements | |||||||||||||||||
The Company has implemented all new accounting pronouncements that are in effect and that may impact its consolidated financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations. |
3_NONCONTROLLING_INTEREST_IN_C
3. NONCONTROLLING INTEREST IN CONSOLIDATED SUBSIDIARY | 6 Months Ended | ||||
Jun. 30, 2014 | |||||
Equity [Abstract] | ' | ||||
3. NONCONTROLLING INTEREST IN CONSOLIDATED SUBSIDIARY | ' | ||||
NOTE 3: NONCONTROLLING INTEREST IN CONSOLIDATED SUBSIDIARY | |||||
On March 18, 2013, the Company formed a new entity 2013 NWE Drilling Program 1 LP (the “Limited Partnership”). The Limited Partnership was specifically formed to drill three oil wells on the Company’s B&W Ranch lease in the Chautauqua County, Kansas. The Company became the General Partner and owns 51% of the Limited Partnership. The Limited Partnership closed upon receiving a cash contribution of $650,000 from one non-affiliate shareholder of the Company as the Limited Partner, and the Company’s contribution as the General Partner was $6,500 in cash and giving the rights and commitment to the Limited Partnership to drill three oil wells on the Company’s B&W Ranch lease. Pursuant to the terms of the partnership agreement, the Limited Partner will be entitled to receive 70% of the net income and cash available for distributions until such time an amount equal to the Limited Partner’s initial investment plus a 50% return on such initial investment is received by the Limited Partner. Thereafter, net income and cash available for distributions shall be allocated 20% to the Limited Partner and 80% to the General Partner. The Limited Partnership will enter into turnkey drilling agreement with the managing General Partner, to drill and complete the partnership wells. The turnkey price includes all ordinary costs of drilling, testing and completing the wells. When the wells begin producing, the General Partner, as operator of the wells will be reimbursed at actual cost for all direct expenses incurred on behalf of the Limited Partnership, and will receive a fixed fee of $250 per well per month for supervising, operating and maintaining the wells during production operations. The Limited Partnership recorded a loss of $40,725 and $129,498 for the three months and six months ended June 30, 2014 as compared to $$95,102 and $96,347 for the same comparable periods in 2013. The Company allocated the Limited Partnership’s loss to its noncontrolling members in its consolidated financial statements as of June 30, 2014 and 2013, respectively | |||||
The following provides a summary of activity in the noncontrolling interest in consolidated subsidiary account for the six months ended June 30, 2014: | |||||
Balance at December 31, 2013 | $ | 511,942 | |||
Contribution by noncontrolling interest member | — | ||||
Net loss applicable to noncontrolling interest | (129,498 | ) | |||
Balance at June 30, 2014 | $ | 382,444 | |||
4_OIL_AND_GAS_PROPERTIES
4. OIL AND GAS PROPERTIES | 6 Months Ended | ||||||||||||
Jun. 30, 2014 | |||||||||||||
Extractive Industries [Abstract] | ' | ||||||||||||
4. OIL AND GAS PROPERTIES | ' | ||||||||||||
NOTE 4: OIL AND GAS PROPERTIES | |||||||||||||
The Company's aggregate capitalized costs related to oil properties consist of the following: | |||||||||||||
Name of the Property | Type | June 30, | December 31, | ||||||||||
2014 | 2013 | ||||||||||||
(Unaudited) | |||||||||||||
Rogers County, OK - Glass Lease | Oil | $ | 221,000 | $ | 221,000 | ||||||||
Rogers County, OK - Phillips Lease | Oil | 130,000 | 130,000 | ||||||||||
Rogers County, OK (9) Leases | Oil | 378,600 | 378,600 | ||||||||||
Chautauqua County, KS - B&W Ranch Lease | Oil | 75,000 | 75,000 | ||||||||||
Chautauqua County, KS - Charles & Nancy Smith Lease | Oil | 24,750 | 24,750 | ||||||||||
Chautauqua County, KS - Lloyd & Patricia Fields Lease | Oil | 14,400 | 14,400 | ||||||||||
Chautauqua County, KS - Rinck Lease | Oil | 24,750 | 24,750 | ||||||||||
Wilson County, KS – Farwell, Puckett & Farwell/Eagle Lease | Oil | 251,208 | 251,208 | ||||||||||
Wilson County, KS – Volunteer & Landers Lease | Oil | 470,000 | 470,000 | ||||||||||
Nowata County, OK (4) Leases | Oil | 35,000 | — | ||||||||||
Shackelford County, TX - Terry Heirs | Oil | 9,722 | 9,722 | ||||||||||
— | — | ||||||||||||
1,634,430 | 1,599,430 | ||||||||||||
Accumulated depletion | (13,292 | ) | (6,697 | ) | |||||||||
Impairment allowance | (133,500 | ) | (133,500 | ) | |||||||||
$ | 1,487,638 | $ | 1,459,233 | ||||||||||
Impairment allowance is allocated as follows: | |||||||||||||
Glass Lease | $ | 123,778 | $ | 123,778 | |||||||||
Terry Heirs Lease | $ | 9,722 | $ | 9,722 | |||||||||
There were no exploration well costs capitalized for more than one year following the completion of drilling. | |||||||||||||
The following oil and gas leases were acquired and sold during the six months ended June 30, 2014. | |||||||||||||
Acquisition of Moab Oil and Gas Project, Nowata County, Oklahoma | |||||||||||||
On February 28, 2014, the Company entered into a Lease Purchase Agreement (“Agreement”) with Moab Oil and Gas, LLC and a third party, to purchase leasehold interest in four oil and gas leases named as Taylor Lease, Roberts Lease, Roebuck Lease and Walker Lease, consisting of 217 acres located in Nowata County, Oklahoma. The Company has paid the total purchase consideration of $35,000 as of March 31, 2014. The Company has started gas exploration on this lease and sold 1,484 mcf of gas for $4,323 as of June 30, 2014. |
5_MINERAL_PROPERTIES
5. MINERAL PROPERTIES | 6 Months Ended | ||||||||||||
Jun. 30, 2014 | |||||||||||||
Extractive Industries [Abstract] | ' | ||||||||||||
5. MINERAL PROPERTIES | ' | ||||||||||||
NOTE 5: MINERAL PROPERTIES | |||||||||||||
The Company’s aggregate capitalized costs related to mineral properties consist of the following: | |||||||||||||
Unproved Mineral Property | |||||||||||||
Name of Property | Type | 30-Jun-14 | December 31, | ||||||||||
(Unaudited) | 2013 | ||||||||||||
Wellsboro Lease | Gravel | $ | 103,530 | $ | 103,530 | ||||||||
103,530 | 103,530 | ||||||||||||
Less: Accumulated depletion | — | — | |||||||||||
103,530 | 103,530 | ||||||||||||
Less: Amortization | (98,081 | ) | (65,387 | ) | |||||||||
$ | 5,449 | $ | 38,143 | ||||||||||
The lease term of Wellsboro Lease expired on July 31, 2014. Since there was no production of minerals during the six months ended June 30, 2014 and 2013, no depletion expense relating to mineral properties has been recorded for the three months and six months ended as of June 30, 2014 and 2013. The Company has taken a conservative position to amortize the lease acquisition cost over the remaining term of the lease. The Company recorded amortization expense of $16,347 and $32,694 for the three months and six months ended June 30, 2014 and 2013, which is included in depreciation, depletion and amortization expenses in the consolidated financial statements. The Company has not started any gravel exploration on the Wellsboro Lease as of June 30, 2014. |
6_NOTE_RECEIVABLE
6. NOTE RECEIVABLE | 6 Months Ended |
Jun. 30, 2014 | |
Receivables [Abstract] | ' |
6. NOTE RECEIVABLE | ' |
NOTE 6: NOTE RECEIVABLE | |
On April 1, 2014, the Company made a short-term advance of $75,000 to Legend Oil & Gas Ltd. (“Legend”), an entity with whom the Company had entered into a merger agreement on January 23, 2014. The advance is non-interest bearing, unsecured and is to be returned to the Company by Legend by February 28, 2015 or within 60 days, if the merger between the Company and Legend is terminated, whichever first occurs. On April 30, 2014, the Company terminated the merger agreement with Legend. The Company has received $10,000 in cash from Legend as of June 30, 2014. The Company expects to receive the remaining balance from Legend by September 15, 2014. |
7_NOTES_PAYABLE
7. NOTES PAYABLE | 6 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Payables and Accruals [Abstract] | ' | ||||||||
7. NOTES PAYABLE | ' | ||||||||
NOTE 7: NOTES PAYABLE | |||||||||
Notes payable consist of: | |||||||||
June 30, | December 31, | ||||||||
2014 | 2013 | ||||||||
(Unaudited) | |||||||||
Note payable to a third party, unsecured, bearing interest at 5% per annum, due on September 30, 2015, is subordinated in right of payment to the prior payment in full of all bank rediscount line of credit or loan | 73,750 | 73,750 | |||||||
Stockholder note payable, secured, bearing interest at 10% per annum, due on October 31, 2015, is subordinated in right of payment to the prior payment in full of all future bank rediscount lines of credit or loans | 1,500,000 | 1,500,000 | |||||||
1,573,750 | 1,573,750 | ||||||||
Notes payable - Current Portion | — | — | |||||||
Notes payable – Long-term Portion | 1,573,750 | 1,573,750 | |||||||
Less: Unamortized discount | (647,839 | ) | (782,310 | ) | |||||
$ | 925,911 | $ | 791,440 | ||||||
The Company recorded interest expense on these notes of $38,419 and $76,828 for the three months and six months ended June 30, 2014, and $13,922 and $18,471 for the three months and six months ended June 30, 2013, respectively. |
8_CONVERTIBLE_NOTES_PAYABLE
8. CONVERTIBLE NOTES PAYABLE | 6 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Debt Disclosure [Abstract] | ' | ||||||||
8. CONVERTIBLE NOTES PAYABLE | ' | ||||||||
NOTE 8: CONVERTIBLE NOTES PAYABLE | |||||||||
Convertible notes payable consist of: | |||||||||
June 30, | December 31, | ||||||||
2014 | 2013 | ||||||||
(Unaudited) | |||||||||
Note payable to a third party, bearing one-time interest of 12%, one year term, due on June 5, 2014 (Convertible Note 2) | $ | — | $ | 38,771 | |||||
Note payable to a third party, bearing one-time interest of 12%, one year term, due on September 26, 2014 (Convertible Note 3) | 13,165 | 55,555 | |||||||
Note payable to a third party, bearing interest of 8% per annum, due February 1, 2015 (Convertible Note 4) | 924,000 | 1,232,000 | |||||||
Convertible notes payable | 937,165 | 1,326,326 | |||||||
Less: unamortized debt discount | (606,877 | ) | (1,174,120 | ) | |||||
Convertible notes payable, net | 330,288 | 152,206 | |||||||
Less: current portion | (330,288 | ) | (21,792 | ) | |||||
Convertible notes payable, non-current | $ | — | $ | 130,414 | |||||
Convertible Note 2 | |||||||||
On June 5, 2013, the Company received $75,000 (the “Draw”) from a third party against a $500,000 Convertible Promissory Note (the “Note 2”) executed on June 4, 2013. The total consideration receivable against the Note 2 was $450,000, with the Note 2 bearing $50,000 original issue discount (OID) resulting in a principal amount due on this draw of $83,333. A one-time interest charge of 12% shall be applied to the principal sum. Any interest payable is in addition to the OID, and that OID (or prorated OID, if applicable) remains payable regardless of time and manner of payment by the Company. The maturity date is one year from the effective date of each payment and is the date upon which the principal sum of this promissory note, as well as any unpaid interest and other fees, shall be due and payable. The lender has the right at any time after the effective date, at its election, to convert all or part of the outstanding and unpaid principal sum and accrued interest into shares of fully paid and non-assessable shares of common stock of the Company as per the conversion formula: Number of shares receivable upon conversion equals the dollar conversion amount divided by the Conversion Price. The Conversion Price is the lessor of $0.22 or 67.5% of the lowest trade price in the 25 trading days previous to the conversion. | |||||||||
In connection with the issuance of the Note 2, the Company recorded a loan discount related to the OID in the amount of $8,333 which will be amortized to interest expense over the term of the Draw. In accordance with ASC 815, the Company recognized a debt discount related to the bifurcated embedded conversion option derivative liability in the amount of $75,000 which will be amortized to interest expense over the term of the Draw and an initial change in fair value of $42,591 for a total initial embedded conversion option liability of $117,591. For the year ended December 31, 2013, the Company has recognized interest expense of $4,691 related to the amortization of the OID and $43,773 related to the amortization of the embedded conversion option liability discount as it related to this Note 2. Furthermore, on December 5, 2013 and December 19, 2013, the Company converted $22,425 and $22,137 of the debt by issuance of 200,000 shares and 250,000 shares, respectively, of its common stock valued at $0.112125 per share and $0.08855 per share (See Note 11). On January 16, 2014 and February 11, 2014, the Company converted $24,948 and $23,823 of the debt by issuance of 240,000 shares and 220,582 shares, respectively, of its common stock valued at $0.10395 per share and $0.10800 per share (See Note 11). The Note 2 was converted in full $83,333 of the principal sum due and $19,802 of embedded conversion option liability was reclassified to equity. For the three months ended March 31, 2014, the Company has recognized interest expense of $13,643 related to the amortization of the OID and $31,168 related to the amortization of the embedded conversion option liability discount as it related to this Note 2. | |||||||||
Convertible Note 3 | |||||||||
On September 26, 2013, the Company received $50,000 (the “Draw”) from a third party against a $500,000 Convertible Promissory Note (the “Note 3”) executed on September 25, 2013. The total consideration receivable against the Note 3 was $450,000, with the Note 3 bearing $50,000 original issue discount (OID) resulting in a principal amount due from this draw of $55,556. A one-time interest charge of 12% shall be applied to the principal sum. Any interest payable is in addition to the OID, and that OID (or prorated OID, if applicable) remains payable regardless of time and manner of payment by the Company. The maturity date is one year from the effective date of each payment and is the date upon which the principal sum of this promissory note, as well as any unpaid interest and other fees, shall be due and payable. The lender has the right at any time after the effective date, at its election, to convert all or part of the outstanding and unpaid principal sum and accrued interest into shares of fully paid and non-assessable shares of common stock of the Company as per the conversion formula: Number of shares receivable upon conversion equals the dollar conversion amount divided by the Conversion Price. The Conversion Price is the lessor of $0.22 or 67.5% of the lowest trade price in the 25 trading days previous to the conversion. | |||||||||
In connection with the issuance of the Note 3, the Company recorded a loan discount related to the OID in the amount of $5,555 which will be amortized to interest expense over the term of the Draw. In accordance with ASC 815, the Company recognized a debt discount related to the bifurcated embedded conversion option derivative liability in the amount of $50,000 which will be amortized to interest expense over the term of the Draw and an initial change in fair value of $17,511 for a total initial embedded conversion option liability of $67,511. For the year ended December 31, 2013, the Company has recognized interest expense of $1,461 related to the amortization of the OID and $13,151 related to the amortization of the embedded conversion option liability discount as it related to this Note 3. On March 27, 2014, the Company converted $22,950 of the debt by issuance of 200,000 shares of its common stock valued at $0.1215 per share. On April 14, 2014, the Company converted $19,440 of the debt by issuance of 160,000 shares of its common stock valued at $0.1215 per share (See Note 12). | |||||||||
Based on the conversion amounts an aggregate $37,763 was reclassified from the embedded conversion option liability to additional paid in capital. For the three months and six months ended June 30, 2014, the Company has recognized interest expense of $1,218 and $2,577 related to the amortization of the OID and $10,959 and $23,365 related to the amortization of the embedded conversion option liability discount as it related to this Note 3. The note balance at June 30, 2014 was $13,165. | |||||||||
Convertible Note 4 | |||||||||
On November 6, 2013, the Company entered into a Definitive Agreement (the "Securities Agreement") for a private offering with an Investor for the sale of the Company’s securities (debt and warrants) for $1,232,000. The offering closed on November 15, 2013 (“funding date”). | |||||||||
Debt issue costs paid to or on behalf of the lender were $84,386. This amount plus an original issue discount (OID) of $132,000 and warrant discount discussed below of $1,219,332 were allocated by charging $1,232,000 to debt discount and $203,718 to change in fair value of warrant liability, and recorded in other expense in the accompanying statements of operations. | |||||||||
The Company engaged a placement agent with respect to the Offering. The Company paid the placement agent upon receipt of the gross proceeds at the Closing, a commission of $95,000 plus 250,000 shares of the Company’s restricted common stock valued at $77,500 based on the fair value of common stock on the date of Agreement. The Company also paid $35,000 in other issue costs to third parties. The total $207,500 is recorded as a deferred debt issue costs as an asset. All discounts and debt issue costs are being amortized to interest expense over the debt term of 1.22 years. | |||||||||
The Company closed the offering on November 15, 2013 and received net cash proceeds of $936,233. | |||||||||
The securities were sold pursuant to the Securities Purchase Agreement entered into by and among the Company and the Investor (the “Agreement”) and consists of (i) 8% original issue discount senior secured convertible promissory debentures in the issuance amount of $1,232,000 (the “Debentures”) and (ii) three year warrants to purchase 6,383,420 shares of the Company’s common stock, which are exercisable at $0.2316 per share. The net proceeds from the offering will be used by the Company for drilling and rework of oil and gas wells and general working capital. The Agreement contained certain customary representations, warranties and covenants. | |||||||||
The Debentures are convertible into shares of Common Stock at any time prior to maturity at $0.193 per share (the “Conversion Price”), subject to certain conversion limitations set forth in the Debentures and certain price protection described below. The Company shall pay interest on the aggregate unconverted and then outstanding principal amount of the Debenture at the rate of 8% per annum, payable quarterly on February 1, May 1, August 1 and November 1, beginning on May 1, 2014. Interest is payable in cash or at the Company’s option in shares of Common Stock, provided certain conditions are met, based on a share value equal to the lesser of (a) 90% of the average of the volume weighted average price (the “VWAP”) for the 20 consecutive trading days prior to the applicable interest payment date and (b) 100% of the average of the VWAP for the 20 consecutive trading days prior to the applicable interest payment date less $0.01. On each of May 1, 2014, August 1, 2014, November 1, 2014, and February 1, 2015, the Company is obligated to redeem an amount equal to $308,000 (plus accrued but unpaid interest, liquidated damages and any other amounts then owing in respect of the Debentures) (collectively, the “Periodic Redemption Amount”). The company made the Periodic Redemption Amount of $308,000 on May 1, 2014 in the accordance with the redemption of debenture but failed to make a payment of $308,000 due on August 1, 2014. On August 11, 2014, the company received a default notice from the debt holder requesting for the default amount of $921,839 due plus all accrued but unpaid interest. The company is currently in negotiations with the debt holders to extend payment terms of the note. | |||||||||
In lieu of a cash redemption and subject to the Company meeting certain equity conditions described in the Debentures, the Company may elect to pay the Periodic Redemption Amount in shares based on a conversion price equal to the lesser of (a) $0.193 per share, subject to adjustments upon certain events, and (b) 90% of the average of the VWAP for the 20 consecutive trading days prior to the applicable redemption date. Upon any Event of Default (as defined in the Debenture), the outstanding principal amount of the Debenture, plus liquidated damages and interest, shall become, at the Investors’ election, immediately due and payable in cash. Commencing five days after the occurrence of any Event of Default, the interest rate on the Debentures shall accrue at an interest rate equal to the lesser of 18% per annum or the maximum rate permitted under applicable law. At any time after the 6 month anniversary of the Closing Date, the Company may prepay any portion of the outstanding principal amount of any Debentures, plus liquidated damages, interest, a premium of 20% and other amounts owing in respect thereof through the applicable date of optional redemption, subject to notice to the Investor. The Debentures contain customary affirmative and negative covenants of the Company. The Conversion Price is subject to “full ratchet” and other customary anti-dilution protections. | |||||||||
The Warrants are exercisable for a period of three years and are subject to “weighted average” and other customary anti-dilution protections including full ratchet protection. | |||||||||
As collateral security for all of the Company’s obligations under the Securities Agreement and related documents executed in connection with the Offering, the Company and its subsidiaries (the “Subsidiaries”), granted the Investor a first priority security interest in all of the Company’s and Subsidiaries assets pursuant to the terms of the Security Agreement. To further secure the Company's obligations, the Subsidiaries also executed a Guarantee, dated as of November 6, 2013 (the “Guaranty”), pursuant to which the Subsidiaries have agreed to guaranty the Company’s obligations owed to the Investor. | |||||||||
Due to the “full ratchet” price protection in warrant, the warrant is accounted for as a derivative liability in the balance sheet at fair value. The warrant liability was valued at the funding date at its fair value of $1,219,332 using the Black-Scholes option pricing model with the following assumptions; stock price $0.22, expected term of 3 years, expected volatility of 175% and discount rate of 0.58%. The warrant value was allocated $1,015,614 to debt discount and $203,718 to change in fair value of warrant liability, an other expense in the accompanying statements of operations. | |||||||||
Due to the “full ratchet” price protection in the convertible Debenture, the embedded conversion feature was bifurcated and accounted for as a derivative liability in the balance sheet at fair value. The initial valuation and recording of this derivative liability was $972,532 using the Black-Scholes option pricing model with the following assumptions; stock price $0.22, expected term of 1.22 years, expected volatility of 176% and discount rate of 0.75%, and charged to change in fair value of embedded conversion option liability, an other expense. The note balance was $924,000 at June 30, 2014. | |||||||||
For the three months and six months ended June 30, 2014, the Company has recognized and recorded interest expense of $22,077 and $47,739 related to Note 2, Note 3 and Note 4, respectively, and $531,442 and $1,105,550 related to the amortization of other discounts of Note 2, Note 3 and Note 4, respectively. |
9_RELATED_PARTY_TRANSACTIONS_A
9. RELATED PARTY TRANSACTIONS AND BALANCES | 6 Months Ended |
Jun. 30, 2014 | |
Related Party Transactions [Abstract] | ' |
9. RELATED PARTY TRANSACTIONS AND BALANCES | ' |
NOTE 9: RELATED PARTY TRANSACTIONS AND BALANCES | |
Payable to Related party | |
At June 30, 2014 and December 31, 2013, advances, net of repayments, made to the Company by the Chief Executive | |
Officer (“Officer”) for its working capital requirements amounted to $0 and $1,922, respectively. Amounts due to the Officer are unsecured, non-interest bearing and due on demand without specific repayment terms. | |
On June 1, 2013, the Company entered into a business consulting and marketing agreement with its non-executive director for a twelve month period at the rate of $2,500 per month. On May 1, 2014, the agreement was extended for a twelve month period at the rate of $5,000 per month. The Company recorded an expense of $12,500 and $20,000 as consulting fees for the three months and six months ended June 30, 2014. | |
The Company engages an entity owned by a director of the Company to be the operator on its oil and gas lease properties in Wilson County, Kansas. The Company has paid the operator $24,786 and $243,573 for lease operating expenses and administration for these oil and gas leases for the three months and six months ended June 30, 2014. | |
The Company paid $25,000 and $40,000 to a director for consulting and business advisory services for the three months and six months ended June 30, 2014. No payments were made during the three months and six months ended June 30, 2013. |
10_COMMITMENTS_AND_CONTINGENCI
10. COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2014 | |
Commitments and contingencies (Note 10) | ' |
10. COMMITMENTS AND CONTINGENCIES | ' |
NOTE 10: COMMITMENTS AND CONTINGENCIES | |
Legal Costs and Contingencies | |
On November 12, 2013, a complaint was filed in the District Court of Taylor County, Texas, captioned Brent and Brook Hatchett v. New Western Energy Corporation, Case No. 25,863-B. The complaint asserts breach of contract on the part of the Company relating to a Plan and Agreement of Reorganization (the “Contract”) wherein the Company acquired all of the issued and outstanding capital stock of Royal Texan Energy Co. from the Hatchetts. The Hatchetts are seeking the remaining consideration of 600,000 common shares of New Western Energy Corporation payable to them for the acquisition by New Western Energy Corporation of Royal Texan Energy Co. in addition to general damages. | |
On January 22, 2014, the Company filed an answer denying any wrongdoing and a counterclaim against the Hatchetts, alleging fraudulent inducement and misrepresentations by the Hatchetts in addition to breach of contract and fiduciary duty. The Company is seeking among other things, damages from the Hatchetts, including exemplary damages and court costs and reasonable and necessary attorney’s fees. | |
The Company and the Hatchetts’ are currently in settlement negotiations. | |
In the normal course of business, the Company incurs costs to hire and retain external legal counsel to advise it on regulatory, litigation and other matters. The Company expenses these costs as the related services are received. |
11_STOCKHOLDERS_EQUITY
11. STOCKHOLDERS EQUITY | 6 Months Ended |
Jun. 30, 2014 | |
Equity [Abstract] | ' |
11. STOCKHOLDERS EQUITY | ' |
NOTE 11: STOCKHOLDERS' EQUITY | |
The Company’s authorized common shares and preferred shares at June 30, 2014 were 250,000,000 and 5,000,000 shares respectively, both with a par value of $0.0001 per share. | |
Common Stock | |
On February 1, 2014, the Company entered into a non-exclusive agreement with a third party consultant to develop, coordinate, manage and execute a comprehensive corporate finance and investor relations campaign for the Company for a six month period. The Company issued 300,000 shares of its common stock valued at $57,000 for such services. The common shares issued are valued at the closing price of stock on the effective date of the consulting agreement and the value is recorded as a prepaid expense to be amortized over the service period. | |
On January 13, 2014 and February 10, 2014, the Company converted $24,948 and $23,823 of its convertible debt (Convertible Note 2 - See Note 8) by issuance of 240,000 shares and 220,582 shares of its common stock valued at $0.10395 per share and $0.10800 per share, respectively (See Note 8). On March 26, 2014 and April 14, 2014, the Company converted $22,950 and $19,440 of its convertible debt (Convertible Note 3 – See Note 8) by issuance of 200,000 shares and 160,000 shares of its common stock valued at $0.11475 per share and $0.1215 per share (See Note 8). | |
On May 1, 2014, the Company entered into a business consulting agreement for a six month period with a third party to consult with the officers and employees concerning matters relating to the management and marketing of the Company. The Company issued 300,000 shares of its common stock valued at $54,000 for such services. The common shares issued are valued at the closing price of stock on the effective date of the consulting agreement and the value is recorded as a prepaid expense to be amortized over the service period. | |
On June 1, 2014, the Company entered into a business consulting agreement for a three month period with a third party to consult with the officers and employees concerning matters relating to the management and marketing of the Company. The Company issued 200,000 shares of its common stock valued at $32,000 for such services. The common shares issued are valued at the closing price of stock on the effective date of the consulting agreement and the value is recorded as a prepaid expense to be amortized over the service period. | |
Preferred stock | |
On April 1, 2014, the Company offered to sell pursuant to a private placement, under a Regulation S offering to non-US investors only, 1,500,000 Units to raise $7,500,000. The minimum investment in this offering is for 5,000 Units for $25,000. Each Unit consists of two (2) shares of Series A 7% Convertible Preferred Stock, par value $0.0001 per share and one (1) redeemable Class F Warrant of the Company to purchase ten (10) shares of common stock. Each share of Series A Preferred Stock pays a 7% annual dividend for the first year ending March 31, 2015 and thereafter, a 10% dividend payable, at the option the Company, in cash or in the Company’s common stock. Each Class F Warrant entitles the holder thereof to purchase, at any time until the expiration date of March 31, 2017, ten (10) shares of Common Stock at an exercise price of $0.30 per share, subject to adjustment. The Class F Warrants are redeemable by the Company, at a redemption price of $0.05 per Warrant, upon at least 30 days’ prior written notice, commencing six months after the date of this private placement, if the average of the closing bid price of the Common Stock, as reported on the Over-The-Counter or other exchange, shall equal or exceed $1.00 per share (subject to adjustment) for ten 910) consecutive business days prior to the notice of redemption. The Units are being offered on a “best effort basis” by the Company through its officers and directors and selected finders and broker/dealers. | |
As a result of all stocks, options and warrant issuances as of June 30, 2014, the Company had 73,806,448 shares of common stock issued and outstanding, 127,000 of preferred stock issued and outstanding, 3,000,000 stock options for conversion into common stock, 395,000 Class D Warrants, 7,500,000 Class E Warrants, and 7,653,420 Class F Warrants for conversion into common stock. |
12_DERIVATIVE_FINANCIAL_INSTRU
12. DERIVATIVE FINANCIAL INSTRUMENTS | 6 Months Ended | ||||
Jun. 30, 2014 | |||||
Investments, All Other Investments [Abstract] | ' | ||||
12. DERIVATIVE FINANCIAL INSTRUMENTS | ' | ||||
NOTE 12: DERIVATIVE FINANCIAL INSTRUMENTS | |||||
Under the provisions of ASC 815-40, convertible instruments issued by the Company qualify for derivative treatment due to the variable conversion formula (Note 8). The embedded conversion features of the convertible note is bifurcated and recorded as a liability which is revalued at fair value each reporting date. If the fair value of the embedded conversion feature exceeds the face value of the related debt, net of other discounts, the excess is recorded as a change in fair value on the issuance date. Embedded conversion features are valued at their fair value, rather than by the intrinsic value method. | |||||
The Company calculated the estimated fair values of the liabilities for embedded conversion feature at June 30, 2014 with the Black-Scholes option pricing model using the closing price of the Company’s common stock at each respective date and the ranges for volatility, expected term and risk free interest indicated in the table below. As a result, the Company recorded a change in the fair value of the liabilities for embedded conversion option derivative instruments for the three months and six months ended June 30, 2014 of $350,537 and $523,268 which was included in other expense (See Note 2 Fair Value Measurements). | |||||
Embedded Conversion Options | |||||
Black-Scholes Model Assumptions | |||||
During Three Months Ended June 30, 2014 | |||||
Volatility | 117.66-159.82 | ||||
Expected term | 0.24 - 0.84 years | ||||
Risk free interest rate | 0.13% | ||||
13_CONCENTRATIONS
13. CONCENTRATIONS | 6 Months Ended |
Jun. 30, 2014 | |
Risks and Uncertainties [Abstract] | ' |
13. CONCENTRATIONS | ' |
NOTE 13: CONCENTRATIONS | |
Concentration of Operators | |
As of June 30, 2014, the Company uses two operators for the leased properties for which the Company has current activities. The Company also has one mineral lease with another lessor. There has been no activity on the mineral lease other than initial lease acquisition costs relating to the mineral lease as of June 30, 2014. | |
Concentration of Customer | |
The Company sells its oil product to one customer and gas product to a separate customer. | |
Concentration of Credit Risk | |
The Company maintains its cash in bank and financial institution deposits that at times may exceed federally insured limits. The Company has not experienced any losses in such accounts through June 30, 2014. The Company’s bank balances exceeded FDIC insured amounts as of June 30, 2014. |
14_SUBSEQUENT_EVENTS
14. SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2014 | |
Subsequent Events [Abstract] | ' |
14. SUBSEQUENT EVENTS | ' |
NOTE 14: SUBSEQUENT EVENTS | |
On July 1, 2014, the Company entered into a consulting agreement with a third party for the twelve month period to provide business advisory services to the management of the Company. The Company issued 400,000 shares of its common stock valued at $56,000 for such services. The common shares are valued at the closing price of stock on the effective date of the consulting agreement. | |
On August 11, 2014, the Company received a notice of default on Convertible Note 4 (see Note 8). The Company is currently in negotiations to extend the payment terms of this note. |
2_SUMMARY_OF_SIGNIFICANT_ACCOU1
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended | ||||||||||||||||
Jun. 30, 2014 | |||||||||||||||||
Accounting Policies [Abstract] | ' | ||||||||||||||||
Principles of Consolidation | ' | ||||||||||||||||
Principles of Consolidation | |||||||||||||||||
The accompanying consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries New Western Gas Corporation, Royal Texan Energy Co. and New Western Operating LLC, and the Company’s 51% majority owned subsidiary 2013 NWE Drilling Program 1 LP. All intercompany balances and transactions are eliminated in consolidation. | |||||||||||||||||
Noncontrolling Interest | ' | ||||||||||||||||
Noncontrolling Interest | |||||||||||||||||
The Company accounts for its less than 100% interest in consolidated subsidiaries in accordance with Financial Accounting Standards Board - Accounting Standards Codification (“ASC”) Topic 810, Consolidation , and accordingly, the Company presents noncontrolling interests as a component of equity on its unaudited condensed consolidated balance sheets and reports noncontrolling interest net income or loss under the heading “Net (income) loss applicable to noncontrolling interest in consolidated subsidiary” in the unaudited condensed consolidated statements of operations. | |||||||||||||||||
Use of Estimates | ' | ||||||||||||||||
Use of Estimates | |||||||||||||||||
The preparation of financial statements in conformity with U.S. generally accepted accounting principles (U.S. GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company regularly evaluates estimates and assumptions related to the valuation of marketable securities, valuation of accounts, notes and other receivables, valuation and purchase price allocation of assets acquired and liabilities assumed in business combinations, valuation of beneficial conversion features in convertible debt, valuation of derivatives, valuation of long-lived assets, goodwill and oil, gas and mineral properties, stock-based compensation and deferred income tax asset valuation allowances. The Company bases its estimates and assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ materially and adversely from the Company’s estimates. To the extent there are material differences between the estimates and the actual results, future results of operations will be affected. | |||||||||||||||||
Derivative Instruments | ' | ||||||||||||||||
Derivative Instruments | |||||||||||||||||
ASC Topic 815, Derivatives and Hedging (“ASC Topic 815”), establishes accounting and reporting standards for derivative instruments and for hedging activities by requiring that all derivatives be recognized in the balance sheet and measured at fair value. Gains or losses resulting from changes in the fair value of derivatives are recognized in earnings or recorded in other comprehensive income (loss) depending upon the purpose of the derivatives and whether they qualify and have been designated for hedge accounting treatment. The Company does not have any derivative instruments for which it has applied hedge accounting treatment. | |||||||||||||||||
Fair Value of Financial Instruments and Fair Value Measurements | ' | ||||||||||||||||
Fair value of Financial Instruments and Fair Value Measurements | |||||||||||||||||
ASC 820, Fair Value Measurements and Disclosures, requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 establishes a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC 820 prioritizes the inputs into three levels that may be used to measure fair value: | |||||||||||||||||
Level 1 | |||||||||||||||||
Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities. | |||||||||||||||||
Level 2 | |||||||||||||||||
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets; quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data. | |||||||||||||||||
Level 3 | |||||||||||||||||
Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities. | |||||||||||||||||
The Company’s financial instruments consist principally of cash, amounts receivable, accounts payable, notes payable, embedded conversion option liabilities, and amounts due to related parties. Pursuant to ASC 820, Fair Value Measurements and Disclosures and ASC 825, Financial Instruments, the fair value of our cash equivalents is determined based on “Level 1” inputs, which consist of quoted prices in active markets for identical assets. The Company believes that the recorded values of all of the other financial instruments approximate their current fair values because of their nature and respective maturity dates or durations. | |||||||||||||||||
Assets and liabilities measured at fair value on a recurring and non-recurring basis consist of the following at June 30, 2014: | |||||||||||||||||
Fair Value Measurements at June 30, 2014 | |||||||||||||||||
Carrying Value at June 30, 2014 (Unaudited) | (Level 1) (Unaudited) | (Level 2) (Unaudited) | (Level 3) (Unaudited) | ||||||||||||||
Mineral Properties | $ | 5,449 | $ | — | $ | — | $ | 5,449 | |||||||||
Warrant Liabilities | $ | 609,044 | $ | — | $ | — | $ | 609,044 | |||||||||
Embedded Conversion Option Liability | $ | 677,306 | $ | — | $ | — | $ | 677,306 | |||||||||
The following is a summary of activity of Level 3 assets and liabilities for the period ended June 30, 2014: | |||||||||||||||||
Mineral Properties | |||||||||||||||||
Balance - December 31, 2013 | $ | 38,143 | |||||||||||||||
Additions | — | ||||||||||||||||
Change in fair value | (32,694 | ) | |||||||||||||||
Balance – June 30, 2014 | $ | 5,449 | |||||||||||||||
Warrant Liabilities | |||||||||||||||||
Balance - December 31, 2013 | $ | 912,215 | |||||||||||||||
Additions | — | ||||||||||||||||
Change in fair value | (303,171 | ) | |||||||||||||||
Balance – June 30, 2014 | $ | 609,044 | |||||||||||||||
Embedded Conversion Option Liability | |||||||||||||||||
Balance - December 31, 2013 | $ | 809,716 | |||||||||||||||
Additions | — | ||||||||||||||||
Change in fair value | (187,847 | ) | |||||||||||||||
Reclassification to equity | 55,437 | ||||||||||||||||
Balance – June 30, 2014 | $ | 677,306 | |||||||||||||||
Changes in fair value of the embedded conversion liability are included in other income (expense) in the accompanying unaudited consolidated statements of operations. | |||||||||||||||||
Revenue Recognition | ' | ||||||||||||||||
Revenue Recognition | |||||||||||||||||
The Company sells crude oil and minerals under short-term agreements at prevailing market prices. Revenue, which is the Company's net revenue interest in the leased property, is recognized at the point of sale, when the crude oil and minerals are extracted from our storage units by the customer. This is at the point where the customer has taken title and has assumed the risks and rewards of ownership, the sales price is fixed or determinable and collectability is reasonably assured. | |||||||||||||||||
For sale of gas, the Company records revenue based on an estimate of the volumes delivered at the agreed-upon price and then adjusts revenue in subsequent periods based upon the data received from the purchaser that reflects actual volumes received. Generally, proceeds from gas production are received from one to three months after the actual delivery has occurred. Thus, it is usually necessary to estimate gas revenue based on prior months’ production volumes and current lease operating data, such as meter readings, in order to prepare financial statements on a timely basis. | |||||||||||||||||
Net Earnings (Loss) Per Share | ' | ||||||||||||||||
Net Earnings (Loss) Per Share | |||||||||||||||||
The Company computes net earnings (loss) per share in accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of both basic and diluted net earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing earnings (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive. At June 30, 2014, there were Class D, E and F Warrants outstanding for 15,548,420 common shares that if exercised, may dilute future earnings per share, 3,000,000 stock options outstanding awarded to employees and consultants, and there were convertible debt convertible into 4,926,888 common shares that may dilute future earnings per share. | |||||||||||||||||
Recent Accounting Pronouncements | ' | ||||||||||||||||
Recent Accounting Pronouncements | |||||||||||||||||
The Company has implemented all new accounting pronouncements that are in effect and that may impact its consolidated financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations. |
2_SUMMARY_OF_SIGNIFICANT_ACCOU2
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 6 Months Ended | ||||||||||||||||
Jun. 30, 2014 | |||||||||||||||||
Accounting Policies [Abstract] | ' | ||||||||||||||||
Fair Value of Financial Instruments and Fair Value Measurements | ' | ||||||||||||||||
Fair Value Measurements at June 30, 2014 | |||||||||||||||||
Carrying Value at June 30, 2014 (Unaudited) | (Level 1) (Unaudited) | (Level 2) (Unaudited) | (Level 3) (Unaudited) | ||||||||||||||
Mineral Properties | $ | 5,449 | $ | — | $ | — | $ | 5,449 | |||||||||
Warrant Liabilities | $ | 609,044 | $ | — | $ | — | $ | 609,044 | |||||||||
Embedded Conversion Option Liability | $ | 677,306 | $ | — | $ | — | $ | 677,306 | |||||||||
Fair Value of Financial Instruments and Fair Value Measurements - Level 3 | ' | ||||||||||||||||
Mineral Properties | |||||||||||||||||
Balance - December 31, 2013 | $ | 38,143 | |||||||||||||||
Additions | — | ||||||||||||||||
Change in fair value | (32,694 | ) | |||||||||||||||
Balance – June 30, 2014 | $ | 5,449 | |||||||||||||||
Warrant Liabilities | |||||||||||||||||
Balance - December 31, 2013 | $ | 912,215 | |||||||||||||||
Additions | — | ||||||||||||||||
Change in fair value | (303,171 | ) | |||||||||||||||
Balance – June 30, 2014 | $ | 609,044 | |||||||||||||||
Embedded Conversion Option Liability | |||||||||||||||||
Balance - December 31, 2013 | $ | 809,716 | |||||||||||||||
Additions | — | ||||||||||||||||
Change in fair value | (187,847 | ) | |||||||||||||||
Reclassification to equity | 55,437 | ||||||||||||||||
Balance – June 30, 2014 | $ | 677,306 |
3_NONCONTROLLING_INTEREST_IN_C1
3. NONCONTROLLING INTEREST IN CONSOLIDATED SUBSIDIARY (Tables) | 6 Months Ended | ||||
Jun. 30, 2014 | |||||
Equity [Abstract] | ' | ||||
Noncontrolling Interest in Consolidated Subsidiary | ' | ||||
Balance at December 31, 2013 | $ | 511,942 | |||
Contribution by noncontrolling interest member | — | ||||
Net loss applicable to noncontrolling interest | (129,498 | ) | |||
Balance at June 30, 2014 | $ | 382,444 |
4_OIL_AND_GAS_PROPERTIES_Table
4. OIL AND GAS PROPERTIES (Tables) | 6 Months Ended | ||||||||||||
Jun. 30, 2014 | |||||||||||||
Extractive Industries [Abstract] | ' | ||||||||||||
Oil and Gas Properties | ' | ||||||||||||
Name of the Property | Type | June 30, | December 31, | ||||||||||
2014 | 2013 | ||||||||||||
(Unaudited) | |||||||||||||
Rogers County, OK - Glass Lease | Oil | $ | 221,000 | $ | 221,000 | ||||||||
Rogers County, OK - Phillips Lease | Oil | 130,000 | 130,000 | ||||||||||
Rogers County, OK (9) Leases | Oil | 378,600 | 378,600 | ||||||||||
Chautauqua County, KS - B&W Ranch Lease | Oil | 75,000 | 75,000 | ||||||||||
Chautauqua County, KS - Charles & Nancy Smith Lease | Oil | 24,750 | 24,750 | ||||||||||
Chautauqua County, KS - Lloyd & Patricia Fields Lease | Oil | 14,400 | 14,400 | ||||||||||
Chautauqua County, KS - Rinck Lease | Oil | 24,750 | 24,750 | ||||||||||
Wilson County, KS – Farwell, Puckett & Farwell/Eagle Lease | Oil | 251,208 | 251,208 | ||||||||||
Wilson County, KS – Volunteer & Landers Lease | Oil | 470,000 | 470,000 | ||||||||||
Nowata County, OK (4) Leases | Oil | 35,000 | — | ||||||||||
Shackelford County, TX - Terry Heirs | Oil | 9,722 | 9,722 | ||||||||||
— | — | ||||||||||||
1,634,430 | 1,599,430 | ||||||||||||
Accumulated depletion | (13,292 | ) | (6,697 | ) | |||||||||
Impairment allowance | (133,500 | ) | (133,500 | ) | |||||||||
$ | 1,487,638 | $ | 1,459,233 | ||||||||||
Impairment allowance is allocated as follows: | |||||||||||||
Glass Lease | $ | 123,778 | $ | 123,778 | |||||||||
Terry Heirs Lease | $ | 9,722 | $ | 9,722 |
5_MINERAL_PROPERTIES_Tables
5. MINERAL PROPERTIES (Tables) | 6 Months Ended | ||||||||||||
Jun. 30, 2014 | |||||||||||||
Extractive Industries [Abstract] | ' | ||||||||||||
Mineral Properties | ' | ||||||||||||
Unproved Mineral Property | |||||||||||||
Name of Property | Type | 30-Jun-14 | December 31, | ||||||||||
(Unaudited) | 2013 | ||||||||||||
Wellsboro Lease | Gravel | $ | 103,530 | $ | 103,530 | ||||||||
103,530 | 103,530 | ||||||||||||
Less: Accumulated depletion | — | — | |||||||||||
103,530 | 103,530 | ||||||||||||
Less: Amortization | (98,081 | ) | (65,387 | ) | |||||||||
$ | 5,449 | $ | 38,143 |
7_NOTES_PAYABLE_Tables
7. NOTES PAYABLE (Tables) | 6 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Payables and Accruals [Abstract] | ' | ||||||||
Notes Payable | ' | ||||||||
June 30, | December 31, | ||||||||
2014 | 2013 | ||||||||
(Unaudited) | |||||||||
Note payable to a third party, unsecured, bearing interest at 5% per annum, due on September 30, 2015, is subordinated in right of payment to the prior payment in full of all bank rediscount line of credit or loan | 73,750 | 73,750 | |||||||
Stockholder note payable, secured, bearing interest at 10% per annum, due on October 31, 2015, is subordinated in right of payment to the prior payment in full of all future bank rediscount lines of credit or loans | 1,500,000 | 1,500,000 | |||||||
1,573,750 | 1,573,750 | ||||||||
Notes payable - Current Portion | — | — | |||||||
Notes payable – Long-term Portion | 1,573,750 | 1,573,750 | |||||||
Less: Unamortized discount | (647,839 | ) | (782,310 | ) | |||||
$ | 925,911 | $ | 791,440 |
8_CONVERTIBLE_NOTES_PAYABLE_Ta
8. CONVERTIBLE NOTES PAYABLE (Tables) | 6 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Debt Disclosure [Abstract] | ' | ||||||||
Convertible Notes Payable | ' | ||||||||
June 30, | December 31, | ||||||||
2014 | 2013 | ||||||||
(Unaudited) | |||||||||
Note payable to a third party, bearing one-time interest of 12%, one year term, due on June 5, 2014 (Convertible Note 2) | $ | — | $ | 38,771 | |||||
Note payable to a third party, bearing one-time interest of 12%, one year term, due on September 26, 2014 (Convertible Note 3) | 13,165 | 55,555 | |||||||
Note payable to a third party, bearing interest of 8% per annum, due February 1, 2015 (Convertible Note 4) | 924,000 | 1,232,000 | |||||||
Convertible notes payable | 937,165 | 1,326,326 | |||||||
Less: unamortized debt discount | (606,877 | ) | (1,174,120 | ) | |||||
Convertible notes payable, net | 330,288 | 152,206 | |||||||
Less: current portion | (330,288 | ) | (21,792 | ) | |||||
Convertible notes payable, non-current | $ | — | $ | 130,414 | |||||
12_DERIVATIVE_FINANCIAL_INSTRU1
12. DERIVATIVE FINANCIAL INSTRUMENTS (Tables) | 6 Months Ended | ||||||||
Jun. 30, 2014 | |||||||||
Investments, All Other Investments [Abstract] | ' | ||||||||
Derivative Financial Instruments | ' | ||||||||
Embedded Conversion Options | |||||||||
Black-Scholes Model Assumptions | |||||||||
For the Six Months Ended June 30, 2014 | |||||||||
Volatility | 117.66 - 159.82 | ||||||||
Expected term | 0.24 – 0.84 years | ||||||||
Risk free interest rate | 0.13% | ||||||||
1_NATURE_OF_OPERATIONS_BASIS_O1
1. NATURE OF OPERATIONS, BASIS OF PRESENTATION AND GOING CONCERN (Details Narrative) (USD $) | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Jan. 02, 2012 | Mar. 18, 2013 | |
RTE [Member] | Limited Partnership [Member] | |||||
Ownership | ' | ' | ' | ' | 100.00% | 51.00% |
Working Capital Deficit | ' | ' | $1,142,911 | ' | ' | ' |
Net Loss Applicable to New Western Energy Corporation common stockholders | 444,795 | 713,826 | 1,751,199 | 894,479 | ' | ' |
Cash Used in Operating Activities | ' | ' | $1,298,618 | ' | ' | ' |
2_SUMMARY_OF_SIGNIFICANT_ACCOU3
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Fair Value of Financial Instruments and Fair Value Measurements (Details) (USD $) | Jun. 30, 2014 | Dec. 31, 2013 |
Mineral Properties | $5,449 | ' |
Warrant Liabilities | 609,044 | ' |
Embedded Conversion Option Liability | 677,306 | 809,716 |
Level 1 | ' | ' |
Mineral Properties | ' | ' |
Warrant Liabilities | ' | ' |
Embedded Conversion Option Liability | ' | ' |
Level 2 | ' | ' |
Mineral Properties | ' | ' |
Warrant Liabilities | ' | ' |
Embedded Conversion Option Liability | ' | ' |
Level 3 | ' | ' |
Mineral Properties | 5,449 | ' |
Warrant Liabilities | 609,044 | ' |
Embedded Conversion Option Liability | $677,306 | ' |
2_SUMMARY_OF_SIGNIFICANT_ACCOU4
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Fair Value of Financial Instruments and Fair Value Measurements - Level 3 (Details) (USD $) | 6 Months Ended |
Jun. 30, 2014 | |
Mineral Properties [Member] | ' |
Beginning Balance | $38,143 |
Additions | ' |
Change in fair value | -32,694 |
Ending Balance | 5,449 |
Warrant Liabilities [Member] | ' |
Beginning Balance | 912,215 |
Additions | ' |
Change in fair value | -303,171 |
Ending Balance | 609,044 |
Embedded Conversion Option Liability [Member] | ' |
Beginning Balance | 809,716 |
Additions | ' |
Change in fair value | -187,847 |
Reclassification to equity | 55,437 |
Ending Balance | $677,306 |
2_SUMMARY_OF_SIGNIFICANT_ACCOU5
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) | 6 Months Ended |
Jun. 30, 2014 | |
Accounting Policies [Abstract] | ' |
Warrants Outstanding | 15,548,420 |
Convertible Debt, Shares Outstanding | 4,926,888 |
Options Outstanding | 3,000,000 |
3_NONCONTROLLING_INTEREST_IN_C2
3. NONCONTROLLING INTEREST IN CONSOLIDATED SUBSIDIARY - Noncontrolling Interest in Consolidated Subsidiary (Details) (USD $) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Dec. 31, 2013 | |
Equity [Abstract] | ' | ' | ' | ' | ' |
Balance at December 31, 2013 | ' | ' | $511,942 | ' | ' |
Contribution by noncontrolling interest member | ' | ' | ' | ' | 650,000 |
Net loss applicable to noncontrolling interest | -40,725 | -95,102 | -129,498 | -96,347 | ' |
Balance at June 30, 2014 | $382,444 | ' | $382,444 | ' | $511,942 |
3_NONCONTROLLING_INTEREST_IN_C3
3. NONCONTROLLING INTEREST IN CONSOLIDATED SUBSIDIARY (Details Narrative) (USD $) | 3 Months Ended | 6 Months Ended | 12 Months Ended | |||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Dec. 31, 2013 | Mar. 18, 2013 | |
Limited Partnership [Member] | ||||||
Ownership | ' | ' | ' | ' | ' | 51.00% |
Cash Funding received | ' | ' | ' | ' | $650,000 | ' |
Contribution to partnership | ' | ' | ' | ' | 6,500 | ' |
Loss on partnership | 40,725 | 95,102 | 129,498 | 96,347 | ' | ' |
Fixed fee revenue per month | ' | ' | ' | ' | $250 | ' |
4_OIL_AND_GAS_PROPERTIES_Oil_a
4. OIL AND GAS PROPERTIES - Oil and Gas Properties (Details) (USD $) | 6 Months Ended | |
Jun. 30, 2014 | Dec. 31, 2013 | |
Unproved Properties | $1,634,430 | $1,599,430 |
Accumulated depletion | -13,292 | -6,697 |
Impairment allowance | -133,500 | -133,500 |
Unproved Properties, Net | 1,487,638 | 1,459,233 |
Rogers County, Glass Lease [Member] | ' | ' |
Type | 'Oil | ' |
Unproved Properties | 221,000 | 221,000 |
Impairment allowance | 123,778 | 123,778 |
Rogers County, Phillips Lease [Member] | ' | ' |
Type | 'Oil | ' |
Unproved Properties | 130,000 | 130,000 |
Rogers County, Nine Leases [Member] | ' | ' |
Type | 'Oil | ' |
Unproved Properties | 378,600 | 378,600 |
Chautauqua County, B&W Ranch Lease [Member] | ' | ' |
Type | 'Oil | ' |
Unproved Properties | 75,000 | 75,000 |
Chautauqua County, Charles & Nancy Smith Lease [Member] | ' | ' |
Type | 'Oil | ' |
Unproved Properties | 24,750 | 24,750 |
Chautauqua County, Lloyd & Patricia Fields Lease [Member] | ' | ' |
Type | 'Oil | ' |
Unproved Properties | 14,400 | 14,400 |
Chautauqua County, Rinck Lease [Member] | ' | ' |
Type | 'Oil | ' |
Unproved Properties | 24,750 | 24,750 |
Wilson County, Farwell, Puckett & Farwell-Eagle Lease [Member] | ' | ' |
Type | 'Oil | ' |
Unproved Properties | 251,208 | 251,208 |
Wilson County, Volunteer & Landers Lease | ' | ' |
Type | 'Oil | ' |
Unproved Properties | 470,000 | 470,000 |
Nowata County, Four Leases [Member] | ' | ' |
Type | 'Oil | ' |
Unproved Properties | 35,000 | ' |
Shackelford County, Terry Heirs [Member] | ' | ' |
Type | 'Oil | ' |
Unproved Properties | 9,722 | 9,722 |
Impairment allowance | $9,722 | $9,722 |
4_OIL_AND_GAS_PROPERTIES_Detai
4. OIL AND GAS PROPERTIES (Details Narrative) (Moab Oil & Gas Project [Member], USD $) | 6 Months Ended |
Jun. 30, 2014 | |
Mcfe | |
Moab Oil & Gas Project [Member] | ' |
Consideration Paid | $35,000 |
Gas Sold | 1,484 |
Consideration Received on Sale of Gas | $3,423 |
5_MINERAL_PROPERTIES_Mineral_P
5. MINERAL PROPERTIES - Mineral Properties (Details) (USD $) | 6 Months Ended | |
Jun. 30, 2014 | Dec. 31, 2013 | |
Mineral Properties, Gross | $5,449 | ' |
Less: Accumulated depletion | -13,292 | -6,697 |
Wellsboro Lease [Member] | ' | ' |
Mineral Properties, Gross | 103,530 | 103,530 |
Mineral Property, Type | 'Gravel | ' |
Mineral Properties [Member] | ' | ' |
Mineral Properties, Gross | 103,530 | 103,530 |
Less: Accumulated depletion | ' | ' |
Less: Amortization | -98,081 | -65,387 |
Mineral Properties, Net | $5,449 | $38,143 |
5_MINERAL_PROPERTIES_Details_N
5. MINERAL PROPERTIES (Details Narrative) (USD $) | 3 Months Ended | 6 Months Ended |
Jun. 30, 2014 | Jun. 30, 2014 | |
Extractive Industries [Abstract] | ' | ' |
Amortization Expense | $16,347 | $32,694 |
6_NOTE_RECEIVABLE_Details_Narr
6. NOTE RECEIVABLE (Details Narrative) (USD $) | 6 Months Ended | |
Jun. 30, 2014 | Jun. 30, 2013 | |
Receivables [Abstract] | ' | ' |
Cash advanced towards a note receivable | ($75,000) | ' |
Cash received towards a note receivable | $10,000 | ' |
7_NOTES_PAYABLE_Notes_Payable_
7. NOTES PAYABLE - Notes Payable (Details) (USD $) | Jun. 30, 2014 | Dec. 31, 2013 |
Notes Payable, Gross | $1,573,750 | $1,573,750 |
Notes payable - Current Portion | ' | ' |
Notes payable - Long term Portion | 1,573,750 | 1,573,750 |
Less: Unamortized discount | -647,839 | -782,310 |
Notes Payable, Net | 925,911 | 791,440 |
Note Payable, Unsecured, 5% Interest [Member] | ' | ' |
Notes Payable, Gross | 73,750 | 73,750 |
Note Payable, Stockholder [Member] | ' | ' |
Notes Payable, Gross | $1,500,000 | $1,500,000 |
7_NOTES_PAYABLE_Details_Narrat
7. NOTES PAYABLE (Details Narrative) (USD $) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | |
Payables and Accruals [Abstract] | ' | ' | ' | ' |
Notes Payable, Interest Expense | $38,419 | $13,922 | $76,828 | $18,471 |
8_CONVERTIBLE_NOTES_PAYABLE_Co
8. CONVERTIBLE NOTES PAYABLE - Convertible Notes Payable (Details) (USD $) | Jun. 30, 2014 | Dec. 31, 2013 |
Convertible notes payable | $937,165 | $1,326,326 |
Less: debt discount | -606,877 | -1,174,120 |
Convertible notes payable, net | 330,288 | 152,206 |
Less: current portion | -330,288 | -21,792 |
Convertible notes payable, non-current | ' | 130,414 |
Convertible Note 2 [Member] | ' | ' |
Convertible notes payable | ' | 38,771 |
Convertible Note 3 [Member] | ' | ' |
Convertible notes payable | 13,165 | 55,555 |
Convertible Note 4 [Member] | ' | ' |
Convertible notes payable | $924,000 | $1,232,000 |
8_CONVERTIBLE_NOTES_PAYABLE_De
8. CONVERTIBLE NOTES PAYABLE (Details Narrative) (USD $) | 1 Months Ended | 3 Months Ended | 6 Months Ended | 1 Months Ended | 0 Months Ended | 1 Months Ended | 3 Months Ended | 11 Months Ended | 12 Months Ended | 1 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||||||||||||||||
Jun. 30, 2014 | 31-May-14 | Jun. 30, 2014 | Mar. 31, 2014 | Jun. 30, 2013 | Jun. 30, 2014 | Jun. 30, 2013 | Aug. 12, 2014 | Aug. 02, 2014 | Dec. 31, 2013 | Feb. 28, 2014 | Feb. 11, 2014 | Jan. 16, 2014 | Dec. 19, 2013 | Jan. 31, 2014 | Mar. 31, 2014 | Dec. 05, 2013 | Dec. 31, 2013 | Feb. 10, 2014 | Jan. 13, 2014 | Apr. 30, 2014 | Mar. 31, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Jun. 30, 2014 | Dec. 31, 2013 | Apr. 14, 2014 | Mar. 26, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Dec. 31, 2013 | 2-May-14 | |
Convertible Note 2 [Member] | Convertible Note 2 [Member] | Convertible Note 2 [Member] | Convertible Note 2 [Member] | Convertible Note 2 [Member] | Convertible Note 2 [Member] | Convertible Note 2 [Member] | Convertible Note 2 [Member] | Convertible Note 2 [Member] | Convertible Note 2 [Member] | Convertible Note 3 [Member] | Convertible Note 3 [Member] | Convertible Note 3 [Member] | Convertible Note 3 [Member] | Convertible Note 3 [Member] | Convertible Note 3 [Member] | Convertible Note 3 [Member] | Convertible Note 3 [Member] | Convertible Note 4 [Member] | Convertible Note 4 [Member] | Convertible Note 4 [Member] | Convertible Note 4 [Member] | |||||||||||
Amount Received Against Convertible Promissory Note | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $75,000 | ' | ' | ' | ' | ' | ' | ' | $50,000 | ' | ' | ' | ' | ' | ' |
Convertible Promissory Note | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 500,000 | ' | ' | ' | ' | 13,165 | ' | 13,165 | 500,000 | ' | ' | 924,000 | 924,000 | 1,232,000 | ' |
Consideration Receivable Against Note | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 450,000 | ' | ' | ' | ' | ' | ' | ' | 450,000 | ' | ' | ' | ' | ' | ' |
Original Issue Discount | 647,839 | ' | 647,839 | ' | ' | 647,839 | ' | ' | ' | 782,310 | ' | ' | ' | ' | ' | ' | ' | 50,000 | ' | ' | ' | ' | ' | ' | ' | 50,000 | ' | ' | ' | ' | 132,000 | ' |
Principal Amount Due From Draw | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 83,333 | ' | ' | ' | ' | ' | ' | ' | 55,556 | ' | ' | ' | ' | ' | ' |
Interest Rate | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 12.00% | ' | ' | ' | ' | ' | ' | ' | 12.00% | ' | ' | ' | ' | ' | ' |
Loan Discount | -647,839 | ' | -647,839 | ' | ' | -647,839 | ' | ' | ' | -782,310 | ' | ' | ' | ' | ' | ' | ' | 8,333 | ' | ' | ' | ' | ' | ' | ' | 5,555 | ' | ' | ' | ' | 1,232,000 | ' |
Debt Discount Related to the Bifurcated Embedded Conersion Option Derivative Liability | ' | ' | -594,835 | -231,604 | 66,510 | -826,439 | 124,325 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 75,000 | ' | ' | ' | ' | ' | ' | ' | 50,000 | ' | ' | ' | ' | 1,015,614 | ' |
Embedded Conversion Feature Liability | ' | ' | ' | ' | ' | ' | -185,430 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 117,591 | ' | ' | ' | ' | ' | ' | ' | 67,511 | ' | ' | ' | ' | ' | ' |
Interest Expense | ' | ' | -667,130 | ' | -124,465 | -1,379,757 | -142,297 | ' | ' | ' | ' | ' | ' | ' | ' | 13,643 | ' | 4,691 | ' | ' | ' | ' | 1,218 | ' | 2,577 | 1,461 | ' | ' | 22,077 | 47,739 | ' | ' |
Amortization of Embedded Conversion Option Liability | ' | ' | ' | ' | ' | 711,714 | 130,026 | ' | ' | ' | ' | ' | ' | ' | ' | 31,168 | ' | 43,773 | ' | ' | ' | ' | 10,959 | ' | 23,365 | 13,151 | ' | ' | 531,442 | 1,105,550 | ' | ' |
Initial Change in Fair Value | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 42,591 | ' | ' | ' | ' | ' | ' | ' | 17,511 | ' | ' | ' | ' | 203,718 | ' |
Converted Debt | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 23,823 | 23,823 | 24,948 | 22,137 | 24,948 | 83,333 | 22,425 | 45,841 | ' | ' | 19,440 | 22,950 | 19,440 | 22,950 | ' | 22,950 | ' | ' | ' | ' | ' | ' |
Converted Debt, Shares Issued | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 220,582 | 220,582 | 240,000 | 250,000 | 240,000 | 19,802 | 200,000 | ' | ' | ' | 160,000 | 200,000 | 160,000 | 200,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Price Per Share Converted | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $0.11 | $0.10 | $0.09 | ' | ' | $0.11 | ' | $0.01 | $0.10 | ' | ' | $0.11 | ' | $0.11 | ' | $0.12 | $0.11 | ' | ' | $0.23 | ' |
Convertible Debt | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 38,771 | ' | ' | ' | ' | 55,555 | ' | 55,555 | ' | ' | ' | ' | ' | ' | ' |
Debt Issuance Costs | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 84,386 | ' |
Warrant Discount | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,219,332 | ' |
Private Placement Commission | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 95,000 | ' |
Private Placement Commission, Shares | 200,000 | 300,000 | ' | 300,000 | ' | 300,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 250,000 | ' |
Common stock issued to vendors for services, amount | 32,000 | 54,000 | ' | 57,000 | ' | 57,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 77,500 | ' |
Other Issue Costs | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 35,000 | ' |
Deferred Debt Issue Costs | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 207,500 | ' |
Debt Term | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '1 year 2 months | ' |
Net Cash Proceeds | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 936,233 | ' |
Redemption Obligation | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 308,000 | ' |
Risk-free interest rate: | ' | ' | ' | 0.13% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0.58% | ' |
Expected term: | ' | ' | ' | '6 months | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '3 years | ' |
Expected volatility: | ' | ' | ' | 15982.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 175.00% | ' |
Warrant Liability | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,219,332 | ' |
Warrant, Price Per Share | $0.05 | ' | $0.05 | ' | ' | $0.05 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $0.22 | ' |
Reclassification, Embedded Conversion Feature to Additional Paid in Capital | ' | ' | ' | 181,211 | ' | ' | 213,068 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 37,763 | ' | ' | ' | ' | ' | ' | ' | ' |
Discount Rate | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0.58% | ' |
Periodic Redemption Amount | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 308,000 |
Default amount requested to be paid | ' | ' | ' | ' | ' | ' | ' | $921,839 | $308,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
9_RELATED_PARTY_TRANSACTIONS_A1
9. RELATED PARTY TRANSACTIONS AND BALANCES (Details Narrative) (USD $) | 3 Months Ended | 6 Months Ended | 12 Months Ended |
Jun. 30, 2014 | Jun. 30, 2014 | Dec. 31, 2013 | |
Related Party Transactions [Abstract] | ' | ' | ' |
Advances to the Company, Working Capital | ' | $0 | $1,922 |
Professional Fees | 12,500 | 20,000 | ' |
Compensation Rate | ' | 5,000 | 2,500 |
Lease Operating Expenses | 24,786 | 243,573 | ' |
Consulting & Business Services | $25,000 | $40,000 | ' |
Recovered_Sheet1
10 - Commitments and contingencies (Details Narrative) (USD $) | Nov. 12, 2013 |
Commitments And Contingencies Details Narrative | ' |
Consideration of shares payable | $600,000 |
11_STOCKHOLDERS_EQUITY_Details
11. STOCKHOLDERS EQUITY (Details Narrative) (USD $) | 1 Months Ended | 3 Months Ended | 6 Months Ended | 1 Months Ended | 0 Months Ended | 1 Months Ended | 3 Months Ended | 11 Months Ended | 12 Months Ended | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||||||||||
Jun. 30, 2014 | 31-May-14 | Mar. 31, 2014 | Jun. 30, 2014 | Dec. 31, 2013 | Jun. 30, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | Feb. 28, 2014 | Feb. 11, 2014 | Jan. 16, 2014 | Dec. 19, 2013 | Jan. 31, 2014 | Mar. 31, 2014 | Dec. 05, 2013 | Dec. 31, 2013 | Feb. 10, 2014 | Jan. 13, 2014 | Apr. 30, 2014 | Mar. 31, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Apr. 14, 2014 | Mar. 26, 2014 | |
Class D Warrants [Member] | Class E Warrants [Member] | Class F Warrants [Member] | Convertible Note 2 [Member] | Convertible Note 2 [Member] | Convertible Note 2 [Member] | Convertible Note 2 [Member] | Convertible Note 2 [Member] | Convertible Note 2 [Member] | Convertible Note 2 [Member] | Convertible Note 2 [Member] | Convertible Note 2 [Member] | Convertible Note 2 [Member] | Convertible Note 3 [Member] | Convertible Note 3 [Member] | Convertible Note 3 [Member] | Convertible Note 3 [Member] | Convertible Note 3 [Member] | Convertible Note 3 [Member] | Convertible Note 3 [Member] | ||||||
Preferred Stock Par Value | $0.00 | ' | ' | $0.00 | $0.00 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Preferred Stock Shares Authorized | 5,000,000 | ' | ' | 5,000,000 | 5,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Preferred Stock Shares Issued | 127,000 | ' | ' | 127,000 | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Preferred Stock Shares Outstanding | 127,000 | ' | ' | 127,000 | 0 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Common Stock Par Value | $0.00 | ' | ' | $0.00 | $0.00 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Common Stock Shares Authorized | 250,000,000 | ' | ' | 250,000,000 | 250,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Common Stock Shares Issued | 73,806,448 | ' | ' | 73,806,448 | 72,185,866 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Common Stock Shares Outstanding | 73,806,448 | ' | ' | 73,806,448 | 72,185,866 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Stock Issued for Services, Shares | 200,000 | 300,000 | 300,000 | 300,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Stock Issued for Services, Value | $32,000 | $54,000 | $57,000 | $57,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Converted Debt | ' | ' | ' | ' | ' | ' | ' | ' | 23,823 | 23,823 | 24,948 | 22,137 | 24,948 | 83,333 | 22,425 | 45,841 | ' | ' | 19,440 | 22,950 | 19,440 | 22,950 | 22,950 | ' | ' |
Converted Debt, Shares Issued | ' | ' | ' | ' | ' | ' | ' | ' | 220,582 | 220,582 | 240,000 | 250,000 | 240,000 | 19,802 | 200,000 | ' | ' | ' | 160,000 | 200,000 | 160,000 | 200,000 | ' | ' | ' |
Price Per Share Converted | ' | ' | ' | ' | ' | ' | ' | ' | ' | $0.11 | $0.10 | $0.09 | ' | ' | $0.11 | ' | $0.01 | $0.10 | ' | ' | $0.11 | ' | ' | $0.12 | $0.11 |
Units Offered in Private Placement | 1,500,000 | ' | ' | 1,500,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Goal of Private placement | 7,500,000 | ' | ' | 7,500,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Minimum Investment, Units | 5,000 | ' | ' | 5,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Minimum Investment, Value | $25,000 | ' | ' | $25,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Private Placement, Unit Description | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Each Unit consists of two (2) shares of Series A 7% Convertible Preferred Stock, par value $0.0001 per share and one (1) redeemable Class F Warrant of the Company to purchase ten (10) shares of common stock. Each share of Series A Preferred Stock pays a 7% annual dividend for the first year ending March 31, 2015 and thereafter, a 10% dividend payable, at the option the Company, in cash or in the Company’s common stock. | |||||||||||||||||||||||||
Exercise Price | ' | ' | ' | $0.30 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Redemption Price | $0.05 | ' | ' | $0.05 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Stock Options Outstanding, Shares | 3,000,000 | ' | ' | 3,000,000 | ' | 395,000 | 7,500,000 | 7,653,420 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
12_DERIVATIVE_FINANCIAL_INSTRU2
12. DERIVATIVE FINANCIAL INSTRUMENTS - Derivative Financial Instruments (Details) | 3 Months Ended | 6 Months Ended | |
Mar. 31, 2014 | Jun. 30, 2014 | Jun. 30, 2014 | |
Minimum [Member] | Maximum [Member] | ||
Volatility | 15982.00% | 11766.00% | 15982.00% |
Expected term | '6 months | '3 months | '10 months |
Risk free interest rate | 0.13% | 13.00% | ' |
12_DERIVATIVE_FINANCIAL_INSTRU3
12. DERIVATIVE FINANCIAL INSTRUMENTS (Details Narrative) (USD $) | 3 Months Ended | 6 Months Ended |
Jun. 30, 2014 | Jun. 30, 2014 | |
Investments, All Other Investments [Abstract] | ' | ' |
Change in the Fair Value of Liabilities for Embedded Conversion Option Derivative Instruments | $350,537 | $523,268 |
14_Subsequent_Events_Details_N
14 - Subsequent Events (Details Narrative) (USD $) | 1 Months Ended | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2014 | 31-May-14 | Mar. 31, 2014 | Jun. 30, 2014 | |
Shares Issued, Services | 200,000 | 300,000 | 300,000 | 300,000 |
Shares Issued, Services, Value | $32,000 | $54,000 | $57,000 | $57,000 |
Subsequent Event [Member] | ' | ' | ' | ' |
Shares Issued, Services | ' | ' | ' | 400,000 |
Shares Issued, Services, Value | ' | ' | ' | $56,000 |