| Summary of Significant Accounting Policies | Note 2 - Summary of Significant Accounting
Policies Basis of Presentation These interim condensed consolidated financial
statements have been prepared on the same basis as the annual financial statements and in the opinion of management, reflect all
adjustments, which include only normal recurring adjustments, necessary to present fairly the Company's financial position, results
of operations and cash flows for the periods shown. The results of operations for such periods are not necessarily indicative
of the results expected for a full year or for any future period. Emerging Growth Company We qualify as an emerging
growth company under the Jumpstart Our Business Startups Act of 2012 (the JOBS Act). Section 107 of the JOBS
Act provides that an emerging growth company can take advantage of the extended transition period provided in Section 7(a)(2)(B)
of the Securities Act of 1933 as amended (the Securities Act) for complying with new or revised accounting standards.
As an emerging growth company, we can delay the adoption of certain accounting standards until those standards would otherwise
apply to private companies. We have elected to take advantage of the benefits of this extended transition period. Cash and Cash Equivalents The Company considers all highly liquid investments
with an original term of three months or less to be cash equivalents. Accounts Receivable The Company and its
affiliates are engaged primarily in the purchase, transport and processing of oil and petroleum products. The Company
performs ongoing credit evaluations of its customers' financial condition and, generally, requires no collateral from its
customers. Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of
temporary cash investments and trade accounts receivables. The Company places its temporary cash investments with financial
institutions and limits the amount of credit exposure to any one financial institution. Concentrations of credit risk with
respect to trade receivables are limited due to the short payment terms dictated by the industry and operating environment.
See Note 4 for concentrations of credit risk as of September 30, 2016 and December 31, 2015. Inventory The Company's inventory, which
consists primarily of crude oil purchases on the vessel in transport, is valued at the lower of cost or market using the mark-to-market
method of valuation. Marketable Securities The Company classifies its marketable securities
as available-for-sale securities, which are carried at their fair value based on the quoted market prices of the securities with
unrealized gains and losses, net of deferred income taxes, reported as accumulated other comprehensive income (loss), a separate
component of stockholders equity. Realized gains and losses on available-for-sale securities are included in net earnings
in the period earned or incurred. Property and Equipment Fixed assets consisted of the following as of September
30, 2016 and December 31, 2015:
2016 2015
Vessels $ 9,999,380 $ 9,550,000
Furniture and equipment 88,117 85,000
10,087,497 9,635,000
Less: accumulated depreciation (3,999,073 ) (3,491,000 )
$ 6,088,424 $ 6,144,000 Property and equipment are stated at cost,
and depreciation is provided by use of straight-line methods over the estimated useful lives of the assets. The estimated useful
lives of property and equipment are as follows:
Vessels 15 years
Office equipment and furniture 10 years
Computer hardware 5 years Depreciation expense of $170,882 and $165,875
was recorded for the three months ended September 30, 2016 and 2015, respectively. Depreciation expense of $505,759 and $497,625
was recorded for the nine months ended September 30, 2016 and 2015, respectively. Revenue Recognition The Company recognizes revenues after product
is delivered to contracted customer. Product in transit at the end of an accounting period is recorded at an estimated value which
is adjusted upon load certification. The Company recognizes revenue in accordance with the Financial Accounting Standards Board
(FASB) Accounting Standards Codification (ASC) 605, Revenue Recognition. ASC 605 requires that the
following four basic criteria are met (1) persuasive evidence of an arrangement exists, (2) delivery of products and services has
occurred, (3) the fee is fixed or determinable and (4) collectability is reasonably assured. The Company recognizes revenue during
the month in which commissions are earned. Fair Value of Financial Instruments Fair value measurements are determined under
a three-level hierarchy for fair value measurements that prioritizes the inputs to valuation techniques used to measure fair value,
distinguishing between market participant assumptions developed based on market data obtained from sources independent of the reporting
entity (observable inputs) and the reporting entitys own assumptions about market participant assumptions
developed based on the best information available in the circumstances (unobservable inputs). Fair value is the price
that would be received to sell an asset or would be paid to transfer a liability (i.e., the exit price) in an orderly
transaction between market participants at the measurement date. In determining fair value, the Company primarily uses prices and
other relevant information generated by market transactions involving identical or comparable assets (market approach).
The Company also considers the impact of a significant decrease in volume and level of activity for an asset or liability when
compared with normal activity to identify transactions that are not orderly. The highest priority is given to unadjusted
quoted prices in active markets for identical assets (Level 1 measurements) and the lowest priority to unobservable inputs (Level
3 measurements). Securities are classified in their entirety based on the lowest level of input that is significant to the fair
value measurement. The three hierarchy levels are defined
as follows: Level 1 - Quoted prices
in active markets that is unadjusted and accessible at the measurement date for identical, unrestricted assets or liabilities; Level 2 - Quoted prices
for identical assets and liabilities in markets that are not active, quoted prices for similar assets and liabilities in active
markets or financial instruments for which significant inputs are observable, either directly or indirectly; Level 3 - Prices or
valuations that require inputs that are both significant to the fair value measurement and unobservable. Credit risk adjustments are applied to reflect
the Companys own credit risk when valuing all liabilities measured at fair value. The methodology is consistent with that
applied in developing counterparty credit risk adjustments, but incorporates the Companys own credit risk as observed in
the credit default swap market. The Company's financial instruments consist
primarily of cash, accounts receivable, inventory, marketable securities, accounts payable and accrued expenses and convertible
debt. The carrying amount of the Companys accounts payable approximate fair value to their short term. Marketable securities
are adjusted to fair value each balance sheet date, based on quoted prices; which are considered level 1 inputs (see Note 6). The
Companys derivative liability is valued using the level 3 inputs (see Note 7). The estimated fair value is not necessarily
indicative of the amounts the Company would realize in a current market exchange or from future earnings or cash flows. The following table represents the Companys
financial instruments that are measured at fair value on a recurring basis as of September 30, 2016 for each fair value hierarchy
level:
September 30, 2016 Derivative Marketable Total
Level I $ $ 4,140 $ 4,140
Level II $ $ $
Level III $ 68,154 $ $ 68,154 The carrying amount of the Companys
accounts payable approximate fair value to their short term. Earnings (Loss) Per Share The Company reports earnings (loss) per share
in accordance with ASC 260, "Earnings per Share." Basic earnings (loss) per share is computed by dividing net income
(loss), after deducting preferred stock dividends accumulated during the period, by the weighted-average number of shares of common
stock outstanding during each period. Diluted earnings per share is computed by dividing income by the weighted-average number
of shares of common stock, common stock equivalents and other potentially dilutive securities outstanding during the period. Potentially
dilutive securities for the periods ended September 30, 2016 includes the Companys outstanding convertible debt that is
convertible into approximately 3,457,551 shares of common stock. Accounting for Stock-based Compensation The Company accounts for stock awards issued
to non-employees in accordance with ASC 505-50, Equity-Based Payments to Non-Employees. The measurement date is the earlier of
(1) the date at which a commitment for performance by the counterparty to earn the equity instruments is reached, or (2) the date
at which the counterparty's performance is complete. Stock awards granted to non-employees are valued at their respective measurement
dates based on the trading price of the Companys common stock and recognized as expense during the period in which services
are provided. Use of Estimates The preparation of financial statements in
conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues
and expenses during the reported period. Actual results could differ from those estimates. Income Taxes The Company accounts for income taxes in accordance
with ASC 740-10, Income Taxes. The Company recognizes deferred tax assets and liabilities to reflect the estimated future tax effects,
calculated at the tax rate expected to be in effect at the time of realization. The Company records a valuation allowance related
to a deferred tax asset when it is more likely than not that some portion of the deferred tax asset will not be realized. Deferred
tax assets and liabilities are adjusted for the effects of the changes in tax laws and rates of the date of enactment. ASC 740-10 prescribes a recognition threshold
that a tax position is required to meet before being recognized in the financial statements and provides guidance on recognition,
measurement, classification, interest and penalties, accounting in interim periods, disclosure and transition issues. The Company
classifies interest and penalties as a component of interest and other expenses. To date, the Company has not been assessed, nor
has the Company paid, any interest or penalties. The Company measures and records uncertain
tax positions by establishing a threshold for the financial statement recognition and measurement of a tax position taken or expected
to be taken in a tax return. Only tax positions meeting the more-likely-than-not recognition threshold at the effective date may
be recognized or continue to be recognized. The Companys tax years subsequent to 2010 remain subject to examination by federal
and state tax jurisdictions. Comprehensive Income The Company has adopted ASC Topic 220, "Comprehensive
Income." This statement establishes standards for reporting comprehensive income and its components in a financial statement.
Comprehensive income as defined includes all changes in equity (net assets) during a period from non-owner sources. Items included
in the Companys comprehensive loss consist of unrealized losses on available-for-sale securities. |
