Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Jun. 30, 2016 | Oct. 14, 2016 | Sep. 15, 2016 | |
Document And Entity Information | |||
Entity Registrant Name | AMERICAN ENERGY GROUP LTD | ||
Entity Central Index Key | 843,212 | ||
Document Type | 10-K | ||
Document Period End Date | Jun. 30, 2016 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --06-30 | ||
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 Public Float | $ 3,381,767 | ||
Entity Common Stock, Shares Outstanding | 66,547,148 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,016 |
Balance Sheets
Balance Sheets - USD ($) | Jun. 30, 2016 | Jun. 30, 2015 |
Current Assets | ||
Cash | $ 213 | $ 24,999 |
Prepaid expenses | 27,680 | 39,715 |
Total Current Assets | 27,893 | 64,714 |
Property and Equipment | ||
Office equipment | 25,670 | 25,670 |
Accumulated depreciation | (23,503) | (22,702) |
Net Property and Equipment | 2,167 | 2,968 |
Other Assets | ||
Investment in oil and gas working interest related party | 1,583,914 | |
Total Assets | 30,060 | 1,651,596 |
Current Liabilities | ||
Accounts payable | 58,377 | 59,553 |
Note payable | 28,654 | 32,935 |
Accrued liabilities | 379,329 | 438,649 |
Notes payable related parties, net of unamortized debt discount of $17,865 in 2016 | 1,457,135 | 825,000 |
Total Liabilities | 1,923,495 | 1,356,137 |
Stockholders' Equity | ||
Common stock, par value $0.001 per share; authorized 80,000,000 shares; 66,518,674 and 60,469,757 shares issued and outstanding, respectively | 66,519 | 60,470 |
Capital in excess of par value | 17,834,731 | 16,560,954 |
Accumulated deficit | (19,794,685) | (16,325,965) |
Total Stockholders' Deficit | (1,893,435) | 295,459 |
Total Liabilities and Stockholders' Deficit | $ 30,060 | $ 1,651,596 |
Balance Sheets (Parenthetical)
Balance Sheets (Parenthetical) - USD ($) | Jun. 30, 2016 | Jun. 30, 2015 |
Balance Sheets Parenthetical | ||
Unamortized debt discount | $ 17,865 | |
Stockholders' Equity: | ||
Common Stock Par Value | $ 0.001 | $ 0.001 |
Common Stock Shares Authorized | 80,000,000 | 80,000,000 |
Common Stock Shares Issued | 66,518,674 | 60,469,757 |
Common Stock Shares Outstanding | 66,518,674 | 60,469,757 |
Statements of Operations
Statements of Operations - USD ($) | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Statements Of Operations | ||
Revenue | ||
General and Administrative Expenses | ||
Legal and professional | 1,051,257 | 325,749 |
Bad debts | 3,095,351 | |
Depreciation and amortization expense | 801 | 776 |
General and administrative | 396,221 | 1,150,611 |
Total Expenses | (1,448,279) | (4,572,487) |
Net Operating Income (Loss) | (1,448,279) | (4,572,487) |
Other Income and (Expense) | ||
Warrant settlements | (78,133) | |
Impairment loss | (1,583,914) | |
Interest expense | (431,367) | (46,215) |
Other | (5,160) | (11,328) |
Total Other Income and (Expense) | (2,020,441) | (135,676) |
Net Loss before Federal Income Tax | (3,468,720) | (4,708,163) |
Federal Income Tax | ||
Net Loss | $ (3,468,720) | $ (4,708,163) |
Basic Loss per Common Share | $ (0.06) | $ (0.09) |
Weighted Average Number of Shares Outstanding | 62,002,533 | 52,675,425 |
Statements of Stockholders_ Equ
Statements of Stockholders? Equity - USD ($) | Common Stock | Capital in Excess of Par Value | Accumulated Deficit | Total |
Beginning Balance, Shares at Jun. 30, 2014 | 51,066,878 | |||
Beginning Balance, Amount at Jun. 30, 2014 | $ 51,067 | $ 15,258,164 | $ (11,617,802) | $ 3,691,429 |
July 2014, new shares issued for cash at $0.20 per share, Shares | 250,000 | |||
July 2014, new shares issued for cash at $0.20 per share, Amount | $ 250 | 49,750 | 50,000 | |
August 2014, new shares issued for cash at $0.20 per share, Shares | 650,000 | |||
August 2014, new shares issued for cash at $0.20 per share, Amount | $ 650 | 129,350 | 130,000 | |
August 2014, new shares issued for services rendered through July, 2014 at $0.20 per share, Shares | 150,000 | |||
August 2014, new shares issued for services rendered through July, 2014 at $0.20 per share, Amount | $ 150 | 29,850 | 30,000 | |
August 2014, new shares issued for payables incurred for directors fees rendered through July 2014 at average $0.33 per share, Shares | 37,878 | |||
August 2014, new shares issued for payables incurred for directors fees rendered through July 2014 at average $0.33 per share, Amount | $ 38 | 12,462 | 12,500 | |
October, 2014, new shares issued for cash at $0.15 per share, Shares | 200,000 | |||
October, 2014, new shares issued for cash at $0.15 per share, Amount | $ 200 | 29,800 | 30,000 | |
December, 2014, new shares issued for cash at $0.13 per share, Shares | 550,000 | |||
December, 2014, new shares issued for cash at $0.13 per share, Amount | $ 550 | 70,950 | 71,500 | |
December 2014, new shares issued for services rendered through November, 2014 at $0.13 per share, Shares | 20,000 | |||
December 2014, new shares issued for services rendered through November, 2014 at $0.13 per share, Amount | $ 20 | 2,580 | 2,600 | |
December 2014, 500,000 warrants in connection with debt issuance | 33,486 | 33,486 | ||
January 2015, new shares issued for cash at $0.11 per share, Shares | 813,637 | |||
January 2015, new shares issued for cash at $0.11 per share, Amount | $ 814 | 88,686 | 89,500 | |
March 2015, new shares issued for cash at $0.10 per share, Shares | 300,000 | |||
March 2015, new shares issued for cash at $0.10 per share, Amount | $ 300 | 29,700 | 30,000 | |
March 2015, 1,000,000 warrants in connection with debt issuance | 44,647 | 44,647 | ||
April 2015, new shares issued for payables incurred for directors fees rendered through March 2015 at average $0.11 per share, Shares | 328,124 | |||
April 2015, new shares issued for payables incurred for directors fees rendered through March 2015 at average $0.11 per share, Amount | $ 328 | 37,172 | 37,500 | |
April 2015, new shares issued for directors bonus rendered through March, 2015 at $0.10 per share, Shares | 5,000,000 | |||
April 2015, new shares issued for directors bonus rendered through March, 2015 at $0.10 per share, Amount | $ 5,000 | 495,000 | 500,000 | |
June 2015, new shares issued for payables incurred for service fees rendered through May 2015 at average $0.22 per share, Shares | 1,103,240 | |||
June 2015, new shares issued for payables incurred for service fees rendered through May 2015 at average $0.22 per share, Amount | $ 1,103 | 249,357 | 250,460 | |
Net Income (Loss) | (4,708,163) | (4,708,163) | ||
Ending Balance, Shares at Jun. 30, 2015 | 60,469,757 | |||
Ending Balance, Amount at Jun. 30, 2015 | $ 60,470 | 16,560,954 | (16,325,965) | 295,459 |
July 2015, new shares issued for cash at $0.16 per share, Shares | 316,250 | |||
July 2015, new shares issued for cash at $0.16 per share, Amount | $ 316 | 51,184 | 51,500 | |
July 2015, new shares issued for cash at $0.15 per share, Shares | 233,334 | |||
July 2015, new shares issued for cash at $0.15 per share, Amount | $ 234 | 34,766 | 35,000 | |
August 2015, 2,000,000 warrants in connection with debt issuance, Shares | ||||
August 2015, 2,000,000 warrants in connection with debt issuance, Amount | 254,808 | 254,808 | ||
August 2015, new shares issued for services rendered through July 2015 at $0.15 per share, Shares | 2,000,000 | |||
August 2015, new shares issued for services rendered through July 2015 at $0.15 per share, Amount | $ 2,000 | 298,000 | 300,000 | |
October 2015, 1,000,000 warrants in connection with debt issuance | 123,616 | 123,616 | ||
January 2016, new shares issued for services rendered through December, 2015 at average $0.145 per share, Shares | 999,333 | |||
January 2016, new shares issued for services rendered through December, 2015 at average $0.145 per share, Amount | $ 999 | 143,903 | 144,902 | |
February 2016, new shares issued for cash at $0.10 per share, Shares | 1,100,000 | |||
February 2016, new shares issued for cash at $0.10 per share, Amount | $ 1,100 | 108,900 | 110,000 | |
April, 2016, new shares issued for cash at $0.15 per share, Shares | 400,000 | |||
April, 2016, new shares issued for cash at $0.15 per share, Amount | $ 400 | 59,600 | 60,000 | |
May 2016, new shares issued for services rendered through April 2016 at $0.20 per share, Shares | 1,000,000 | |||
May 2016, new shares issued for services rendered through April 2016 at $0.20 per share, Amount | $ 1,000 | 199,000 | 200,000 | |
Net Income (Loss) | (3,468,720) | (3,468,720) | ||
Ending Balance, Shares at Jun. 30, 2016 | 66,518,674 | |||
Ending Balance, Amount at Jun. 30, 2016 | $ 66,519 | $ 17,834,731 | $ (19,794,685) | $ (1,893,435) |
Statements of Cash Flows
Statements of Cash Flows - USD ($) | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Cash Flows From Operating Activities | ||
Net loss | $ (3,468,720) | $ (4,708,163) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Depreciation | 801 | 776 |
Impairment loss | 1,583,914 | |
Warrant settlements | 78,133 | |
Amortization of debt discount | 360,559 | |
Common stock issued for services | 644,902 | 833,060 |
Changes in operating assets and liabilities: | ||
(Increase) decrease in oil and gas sales receivable | 3,145,306 | |
(Increase) decrease in prepaid expenses | 12,035 | (5,889) |
(Increase) decrease in security deposits | 11,858 | |
Increase (decrease) in accounts payable | (1,176) | (2,543) |
Increase (decrease) in accrued expenses and other current liabilities | (63,601) | 86,900 |
Net Cash (Used In) Operating Activities | (931,286) | (560,562) |
Cash Flows From Investing Activities | ||
Cash paid for equipment acquisitions | (2,253) | |
Net Cash (Used In) Investing Activities | (2,253) | |
Cash Flows From Financing Activities | ||
Proceeds from the issuance of debt - related party | 650,000 | 175,000 |
Proceeds from the issuance of common stock | 256,500 | 401,000 |
Net Cash Provided By Financing Activities | 906,500 | 576,000 |
Net Increase (Decrease) in Cash | (24,786) | 13,185 |
Cash and Cash Equivalents, Beginning of Year | 24,999 | 11,814 |
Cash and Cash Equivalents, End of Year | 213 | 24,999 |
Cash Paid For: | ||
Interest | 7,610 | 8,607 |
Non-Cash Financing Activities: | ||
Common stock issued in satisfaction of accounts payable and accrued expenses | 302,960 | |
Common stock issued for services rendered | $ 644,902 | $ 530,100 |
Organization and Summary of Sig
Organization and Summary of Significant Accounting Policies | 12 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
Note 1 - Organization and Summary of Significant Accounting Policies | a. Organization The American Energy Group, Ltd. (the Company) was incorporated in the State of Nevada on July 21, 1987 as Dimension Industries, Inc. Since incorporation, the Company has had several name changes including DIM, Inc. and Belize-American Corp. Internationale with the name change to The American Energy Group, Ltd. effective November 18, 1994. The Companys authorized common stock, par value $0.001 is 80,000,000 shares. The Companys authorized preferred stock, par value $0.001, is 20,000,000 shares. There is no preferred stock issued and outstanding. During the year ended June 30, 1995, the Company incorporated additional subsidiaries including American Energy-Deckers Prairie, Inc., The American Energy Operating Corp., Tomball American Energy, Inc., Cypress-American Energy, Inc., Dayton North Field-American Energy, Inc. and Nash Dome Field-American Energy, Inc. In addition, in May 1995, the Company acquired all of the issued and outstanding common stock of Hycarbex, Inc. (Hycarbex), a Texas corporation, in exchange for 120,000 shares of common stock of the Company, a 1% overriding royalty on the Pakistan Project (see Note 2) and a future $200,000 production payment if certain conditions are met. The acquisition was accounted for as a pooling-of-interests on the date of the acquisition. The fair value of the assets and liabilities assumed approximated the fair value of the 120,000 shares issued of $60,000 as of the date of the acquisition. Accordingly, book value of the assets and liabilities assumed was $60,000. In April 1995, the name of that company was changed to Hycarbex-American Energy, Inc. The Company and its subsidiaries were principally in the business of acquisition, exploration, development and production of oil and gas properties. On June 28, 2002, the Company was placed into involuntary Chapter 7 bankruptcy by three creditors, including Georg von Canal, an officer and director who was then involved in litigation with the Company to invalidate an attempt to remove him from his management positions. The bankruptcy filing followed an unsuccessful effort by management to resolve both the litigation and the need for a substantial cash infusion through a stock sale to a German-based investor which would have simultaneously resulted in a restructure of management. Shortly after this bankruptcy filing, the secured creditor holding a first lien on the Companys only producing oil and gas leases in Fort Bend County, Texas, sought permission from the bankruptcy court to foreclose on those assets. The Company responded by converting the Chapter 7 bankruptcy proceedings to a Chapter 11 reorganization proceeding. The Company obtained approval of a plan of reorganization in September 2002, but the secured creditor was nevertheless permitted to foreclose upon the Fort Bend County oil and gas leases. Subsequent to the approval of the foreclosure of the oil and gas producing properties, the Company abandoned the remaining oil and gas properties except for one lease in southeast Texas. For the year ended June 30, 2003, the Company recognized a loss of $13,040,120 on the foreclosure and abandonment of the oil and gas properties and the sale of the fixed assets. On October 26, 2003, the Company sold its wholly-owned subsidiary, Hycarbex-American Energy, Inc., for an 18% overriding royalty interest in the Exploration License No. 2768-7 dated August 11, 2001, of the Yasin Exploration Block. During the year ended June 30, 2015, the Company was awarded 100% of the stock of Hycarbex in the final decision of the ICC Tribunal on April 15, 2015, voiding the previous sale of the Hycarbex subsidiary, more fully discussed in Note 9 to these financial statements. On January 29, 2004, the Company was released from bankruptcy. Pursuant to the plan, all of the existing 66,318,037 shares of common stock and 41,499 shares of preferred stock were cancelled. The Company issued 18,898,518 new shares of common stock to creditors. Also, the Company adopted the provisions for fresh-start reporting. Accordingly, the accumulated deficit accumulated through January 29, 2004 has been eliminated. The Company is considered to have a fresh-start due to the cancellation of the prior shareholders common stock and the subsequent issuance of common stock to creditors, the new shareholders. On April 14, 2005, the Companys wholly owned inactive subsidiary, The American Energy Operating Corp. (AEOC) filed for voluntary bankruptcy liquidation. On July 24, 2006, The American Energy Operating Corp. received a final decree from the United States Bankruptcy Court Southern District of Texas that the Companys estate had been fully administered and that the Chapter 7 was closed. The Company no longer has any subsidiaries. These financial statements do not include the consolidation of its recently re-acquired wholly owned subsidiary, Hycarbex American Energy, Inc as the Company had not yet received full access to the historical financial records, nor full control of its operations, as of June 30, 2015. b. Accounting Methods The Companys financial statements are prepared using the accrual method of accounting. The Company has elected a June 30 year-end. c. Cash Equivalents The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. d. Property and Equipment and Depreciation Property and equipment are stated at cost. Depreciation on drilling and related equipment, vehicles and office equipment is provided using the straight-line method over expected useful lives of five to ten years. For the years ended June 30, 2016 and 2015, the Company incurred total depreciation of $801 and $776, respectively. e. Basic Loss Per Share of Common Stock For the Year For the Year Ended June 30, Ended June 30, 2016 2015 Loss (numerator) $ (3,468,720 ) $ (4,708,163 ) Shares (denominator) 62,002,533 52,675,425 Per Share Amount $ (0.06 ) $ (0.09 ) The basic loss per share of common stock is based on the weighted average number of shares issued and outstanding during the period of the financial statements. Stock warrants convertible into 11,193,334 and 10,193,334 shares of common stock for the years ended June 30, 2016 and 2015, respectively, are not included in the basic calculation because their inclusion would be antidilutive, thereby reducing the net loss per common share. f. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. g. Long Lived Assets All long lived assets are evaluated for impairment per FASB ASC 360 whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. During the third quarter the Company was made aware that Heritage Oil and Gas Limited (Heritage), the operator of both the Zamzama North Exploration and the Sanjawi Exploration Licenses, was given a Notice of Termination (Sanjawi Petroleum Concession Agreement notice dated February 12, 2016) and a Notice of Breach (Zamzama North Petroleum Concession Agreement notice dated February 22, 2016) by the Director General of Petroleum Concessions of the Government of Pakistan. Heritage has acknowledged and accepted the notice of termination in regards to the Sanjawi Petroleum Concession Agreement. Although Heritage has refuted the basis of the claim of breach in regards to the Zamzama North Petroleum Concession Agreement asserting that all reasonable efforts have been made to fulfill its work commitments and financial obligations under this agreement but was prevented from doing so for reasons outside its control, the Company has determined that it is reasonably possible that the working interest investment in the Zamzama North Block will also not be recovered. As a result the Company recorded an impairment loss in the amount of $1,583,914 in relation to these oil and gas interests. h. Oil and Gas Sales Receivable and Revenue Recognition Prior to the year ended June 30, 2015, the Company recognized revenue in accordance with SEC SAB 104 which stipulates that pervasive evidence of an arrangement exists, delivery has occurred, the price is fixed or determinable, and collection is reasonably assured. Prior to the year ended June 30, 2015, our revenue was derived exclusively from an overriding royalty interest. The Company recognized royalty revenues when production had occurred and royalties were due and payable under its contract with Hycarbex (Note 9 Other Contingencies). During the year ended June 30, 2015, the Company was awarded 100% of the stock of our previously wholly owned Hycarbex subsidiary. Our prior oil and gas receivable earned through our ownership of the 18% overriding royalty interest in the Yasin Concession was due from Hycarbex and was not collected prior to our successful litigation results and being awarded 100% of the actual stock of the Hycarbex entity. Upon re-acquisition of the Hycarbex subsidiary, the previously recognized oil and gas receivable was written off. Future oil and gas revenues will continue to be recorded in accordance with SEC SAB 104, upon obtaining full control of the entity. i. Concentrations The Companys revenue and receivable is derived solely from its overriding royalty interest in the Yasin Concession which is located in the country of Pakistan. j. Equity Securities Equity securities issued for services rendered have been accounted for at the fair market value of the securities on the date of issuance. k. Income Taxes The Company accounts for corporate income taxes in accordance with FASB ASC 740-10 Income Taxes. FASB ASC 740-10 requires an asset and liability approach for financial accounting and reporting for income tax purposes. The tax provision (benefit) for the year-ended June 30, 2016 and the year ended June 30, 2015 consisted of the following: 2016 2015 Current: Federal $ - $ - State - - Deferred Federal - - State - - Total tax provision (benefit) $ - $ - Deferred income taxes reflect the net tax effects of net operating losses and temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Net operating loss carryovers of the Company will begin expiring in the year ended June 30, 2019. The Companys total deferred tax liabilities, deferred tax assets, and deferred tax asset valuation allowances at June 30, 2016 and June 30, 2015 are as follows: 2016 2015 Net Operating Losses: Federal $ (55,964,106 ) $ (52,495,386 ) State - - Total net operating losses $ (55,964,106 ) $ (52,495,386 ) Deferred Tax Provision: Total tax provision (benefit) (19,027,796 ) (17,848,431 ) Less valuation allowance 19,027,796 17,848,431 Deferred tax asset $ - $ - The reconciliation of income tax computed at statutory rates of income tax benefits is as follows: 2016 2015 Expense (benefit) at federal statutory rate $ (1,179,365 ) $ (1,574,210 ) State tax effects - - Non deductible expenses - - Deferred tax asset valuation allowance 1,179,365 1,574,210 Income tax provision (benefit) $ - $ - The Financial Accounting Standards Board (FASB) has issued FASB ASC 740-10 (Prior authoritative literature: Financial Interpretation No. 48, "Accounting for Uncertainty in Income Taxes - An Interpretation of FASB Statement No. 109 (FIN 48)). FASB ASC 740-10 clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements in accordance with prior literature FASB Statement No. 109, Accounting for Income Taxes. This standard requires a company to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more-likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements. As a result of the implementation of this standard, the Company performed a review of its material tax positions in accordance with recognition and measurement standards established by FASB ASC 740-10. At the adoption date of July 1, 2007, the Company had no unrecognized tax benefit which would affect the effective tax rate if recognized. The Company includes interest and penalties arising from the underpayment of income taxes in the statements of operations in the provision for income taxes. As of June 30, 2016, the Company had no accrued interest or penalties. The tax years that remain subject to examination by major taxing jurisdictions are those for the years ended June 30, 2016, 2015 and 2014. l. Fair Value of Financial Instruments On January 1, 2008, the Company adopted FASB ASC 820-10-50, Fair Value Measurements. · Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. · Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. · Level 3 inputs to valuation methodology are unobservable and significant to the fair measurement. The carrying amounts reported in the balance sheets for the cash and cash equivalents, receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The carrying value of the promissory notes approximates fair value because negotiated terms and conditions are consistent with current market rates as of June 30, 2016. m. Concentration of Credit Risk Financial instruments which subject the Company to concentrations of credit risk include cash and cash equivalents. The Company maintains its cash and cash equivalents with major financial institutions selected based on managements assessment of the banks financial stability. Balances occasionally exceed the $250,000 federal deposit insurance limit. The Company has not experienced any losses on deposits. n. Restoration, Removal and Environmental Liabilities The Company is subject to extensive federal, state and local environmental laws and regulations. These laws regulate the discharge of materials into the environment and may require the Company to remove or mitigate the environmental effects of the disposal or release of petroleum substances at various sites. Environmental expenditures are expensed or capitalized depending on their future economic benefit. Expenditures that relate to an existing condition caused by past operations and that have no future economic benefit are expensed. Liabilities for expenditures of a noncapital nature are recorded when environmental assessments and/or remediation is probable, and the costs can be reasonably estimated. Such liabilities are generally undiscounted unless the timing of cash payments for the liability or component are fixed or reliably determinable. As of June 30, 2016, the Company believes it has no such liabilities. o. New Accounting Pronouncements Except for rules and interpretive releases of the SEC under authority of federal securities laws and a limited number of grandfathered standards, the FASB Accounting Standards Codification ("ASC") is the sole source of authoritative GAAP literature recognized by the FASB and applicable to the Company. We have reviewed the FASB issued Accounting Standards Update ("ASU") accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods. The Company has carefully considered the new pronouncements that alter previous generally accepted accounting principles and does not believe that any new or modified principles will have a material impact on the corporation's reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of our financial management and certain standards are under consideration. |
Oil and Gas Properties
Oil and Gas Properties | 12 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
Note 2 - Oil and Gas Properties | The Company owns an interest in two oil and gas leases located in Southeast Texas. The Company is exploring various opportunities to realize value from these interests, including potential farmout or sale. The Company intends to adopt the full cost method of accounting for oil and gas properties in the event that the Company develops their interests in these leases. As of June 30, 2015, the Company does not have any proved reserves as defined under FASB ASC 932-235-50 (formerly SFAS No. 69) and has not incurred any costs associated with the development of these oil and gas properties and had not received any oil and gas revenue from these leases. The carrying value of these leases is $0. Subsequent to the year ended June 30, 2015, the Company was awarded 100% of the stock of its previously wholly owned subsidiary, Hycarebex American Energy, Inc. Prior to the year ended June 30, 2015, the Company held an 18% gross royalty interest in the Yasin Concession in Pakistan, which was received in exchange for the original sale of Hycarbex. As of June 30, 2015 and 2014, the Company had earned approximately $3,749,355 and $3,145,271, respectively, but not yet received payment for all royalties earned from their interest in this concession. Revenues to have been derived from this interest were overriding in nature and there were no future financial obligations or commitments required of the Company to secure this royalty interest. The Company has not yet received full access to the historical financial and property records of Hycarbex since receiving the judgment award of the ICC subsequent to the year ended June 30, 2015. Oil and Gas properties currently determined to be owned by Hycarbex include working interests in five (5) large exploration blocks within Pakistan. These interests include: Block No. 2768-7 (Yasin), 673 square miles; Block No. 2667-8 (Zamzama North), 474 square miles; Block No. 3068-2 (Sanjawi), 871 square miles; Block No. 2466-8 (Karachi), 851 square miles; and Block No. 3371-13 (Peshawar), 960 square miles. Hycarbex is the registered owner of a 75% working interest in the Yasin Exploration Block, 95% working interest in the Karachi and Peshawar Exploration Blocks, 20% working interest in Zamzama North and Sanjawi Exploration Blocks, of which 10% is carried as to exploration costs with back-in rights to acquire an additional 10% working interest upon commercial discovery. |
Notes Payable - Related Party
Notes Payable - Related Party | 12 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
Note 3 - Notes Payable - Related Party | During the years ended June 30, 2016 and 2015, the Company borrowed $650,000 and $175,000, respectively, from a current shareholder. Interest on these notes accrues at 5% and is payable in full at maturity. The notes mature in February of 2020. The Company has accrued interest expense of $62,366 and $35,708 during the years ended June 30, 2016 and June 30, 2015, respectively, on these notes. The oil and gas properties in Southeast Texas serve as collateral on these notes. |
Lease Commitments
Lease Commitments | 12 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
Note 4 - Lease Commitments | During the year ended June 30, 2015, the Company entered into a lease for office space with an original lease term of 5 years. During the year ended June 30, 2016, the Company terminated the lease and vacated the lease space. During the years ended June 30, 2016 and 2015, the Company incurred net rental expense of $6,753 and $55,205, respectively. |
Common Stock
Common Stock | 12 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
Note 5 - Common Stock | During July 2014, the Company issued 250,000 shares of common stock for cash in the amount of $50,000. During August 2014, the Company issued 150,000 shares of common stock for services in the amount of $27,500. During August 2014, the Company issued 650,000 shares of common stock for cash in the amount of $160,000. During August 2014, the Company issued 37,878 shares of common stock for payment of directors fees payable of $12,500. During October 2014, the Company issued 200,000 shares of common stock for cash in the amount of $30,000. During December 2014, the Company issued 550,000 shares of common stock for cash in the amount of $71,500. During December 2014, the Company issued 20,000 shares of common stock for services in the amount of $2,600. During January 2015, the Company issued 813,637 shares of common stock for cash in the amount of $89,500. During March 2015, the Company issued 300,000 shares of common stock for cash in the amount of $30,000. During April 2015, the Company issued 328,124 shares of common stock for payment of directors fees payable of $37,500. During April 2015, the Company issued 5,000,000 shares of common stock for a directors bonus payment of $500,000. During June 2015, the Company issued 1,103,240 shares of common stock for payment of legal fees payable of $250,460. During July 2015, the Company issued 549,584 shares of common stock for cash in the amount of $86,500. During August 2015, the Company issued 2,000,000 shares of common stock for services in the amount of $300,000. During January 2016, the Company issued 999,333 shares of common stock for services in the amount of $144,903. During February 2016, the Company issued 1,100,000 shares of common stock for cash in the amount of $110,000. During April 2016, the Company issued 400,000 shares of common stock for cash in the amount of $60,000. During May 2016, the Company issued 1,000,000 shares of common stock for legal services in the amount of $200,000. |
Common Stock Warrants
Common Stock Warrants | 12 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
Note 6 - Common Stock Warrants | Effective January 1, 2006, the Company adopted the fair value recognition provisions of FASB ASC 480-10 Share Based Payment using the modified-prospective-transition method. Under this transition method, total compensation cost recognized in the statement of operations for the years ended June 30, 2007 and 2006 includes compensation costs for all share-based payments granted prior to, but not yet vested as of January 1, 2006, based on the grant date fair value estimated in accordance with the originalprovisions of FASB ASC During the year ended June 30, 2016, the Company issued 3,000,000 warrants in connection with the financing addressed in Note 3, of which 3,000,000 can be purchased at $0.15 per share. The Company reported $378,424 of debt discount related to these warrant issuances. As of June 30, 2016, $17,865 of debt discount remains unamortized. The expense of these warrants was calculated using the Black-Scholes option pricing model using the following assumptions: Dividend yield 0 Expected volatility 1.42% Risk free interest 0.50% Expected life 4.5 years A summary of the status of the Companys stock warrants as of June 30, 2016 and 2015 is presented below: Stock Exercise Weighted Ave. Exercise Warrants Price Price Outstanding and Exercisable, June 30, 2014 8,693,334 $ 0.15-1.50 $ 0.28 Granted 1,500,000 $ 0.10-0.15 $ 0.12 Expired/Canceled - - - Exercised - - - Outstanding and Exercisable, June 30, 2015 10,193,334 $ 0.10-1.50 $ 0.24 Granted 3,000,000 $ 0.20-0.20 $ 0.20 Expired/Canceled (2,000,000 ) - - Exercised - - - Outstanding and Exercisable, June 30, 2016 11,193,334 $ 0.10-1.50 $ 0.27 A summary of outstanding stock warrants at June 30, 2016 follows: Number of Remaining Weighted Common Stock Contracted Exercise Ave Exer. Equivalents Expir. Date Life (Years) Price Price 50,000 August, 2016 .250 $ 0.15 $ 0.15 210,000 August, 2016 .250 $ 0.15 $ 0.15 2,333,334 February, 2020 .250 $ 0.15 $ 0.15 1,500,000 February, 2020 .250 $ 0.20 $ 0.20 2,600,000 May, 2018 2.000 $ 0.15 $ 0.15 2,000,000 February, 2020 3.750 $ 0.20 $ 0.20 1,000,000 February, 2020 3.750 $ 0.20 $ 0.20 500,000 February, 2020 .250 $ 0.15 $ 0.15 1,000,000 February, 2020 .250 $ 0.10 $ 0.10 |
Investment in Oil and Gas Worki
Investment in Oil and Gas Working Interest – Related Party | 12 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
Note 7 - Investment in Oil and Gas Working Interest – Related Party | On October 29, 2009, the Company executed an agreement to acquire from Hycarbex American Energy, Inc. (Hycarbex), a related party, a two and one half percent (2-1/2%) working interest in each of the 2,258 square kilometer Sanjawi Block No. 3068-2, Zone II, Baluchistan Province, Pakistan, and 1,229 square kilometer Zamzama North Block No. 2667-8, Zone III, Sindh Province, Pakistan. In exchange for the working interest, the Company issued (1) 2,000,000 shares of common stock to Hycarbex, (2) 100,000 warrants with a three year duration to purchase an additional 100,000 shares at $1.75 per share and (3) $100,000 in cash. The Company has the option to convert the two and one half percent working interests described above to a one and one half percent gross royalty working interest at any time. During the third quarter the Company was made aware that Heritage Oil and Gas Limited (Heritage), the operator of both the Zamzama North Exploration and the Sanjawi Exploration Licenses, was given a Notice of Termination (Sanjawi Petroleum Concession Agreement notice dated February 12, 2016) and a Notice of Breach (Zamzama North Petroleum Concession Agreement notice dated February 22, 2016) by the Director General of Petroleum Concessions of the Government of Pakistan. Heritage has acknowledged and accepted the notice of termination in regards to the Sanjawi Petroleum Concession Agreement. Although Heritage has refuted the basis of the claim of breach in regards to the Zamzama North Petroleum Concession Agreement asserting that all reasonable efforts have been made to fulfill its work commitments and financial obligations under this agreement but was prevented from doing so for reasons outside its control, the Company has determined that it is reasonably possible that the working interest investment in the Zamzama North Block will also not be recovered. As a result the Company recorded an impairment loss in the amount of $1,583,914 in relation to these oil and gas interests. As of June 30, 2016 and 2015, the Company has capitalized $0 and $1,583,914, respectively, related to these working interests. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
Note 8 - Subsequent Events | Subsequent to June 30, 2016, the Company issued an additional 516,667 common shares at $0.12 for a total of $62,000. In addition, the Company issued an additional 600,000 common shares at $0.10 for a total of $60,000. Warrant certificates totaling 5,333,334 warrants that were set to expire on August 31, 2016, were extended to February 5, 2020. In addition, loans in the amount of $1,275,000 coming due on August 31, 2016, were to extended to February 5, 2020. |
Other Contingencies
Other Contingencies | 12 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
Note 9 - Other Contingencies | Litigation In December 2011, we initiated civil legal proceedings against Hycarbex and others in the High Court of Islamabad, Pakistan. Our pleadings with respect to the 2.5% carried working interest positions in the Sanjawi and Zamzama North concessions sought a registration of those interests with the Government of Pakistan and simultaneously sought the imposition of an injunction preventing the transfer of the working interest in those concessions until the registration can be effected, thereby protecting our interests. In our pleadings with respect to the Yasin concession and the right to receive 18% of the gross production revenues, our pleadings sought a referral to arbitration based upon ownership of, in effect, a 25% carried working interest to which is attributed 18% of gross production revenues and the right to receive pertinent records and data, the appointment of a receiver to both protect and cause disbursement of the 18% of gross revenues since the inception of production in April 2011, and the imposition of an injunction against the transfer of the working interest in the Yasin On March 27, 2012, the Islamabad High Court issued its final order (later clarified as to certain arbitration procedures by a clarification Order dated April 4, 2012). The Court directed the parties to proceed to arbitration in London, UK under the ICC Rules of Arbitration and further reaffirmed the continuation of the pending temporary injunctions against Hycarbexs potential transfer of interests in the concessions prior to final resolution in the arbitration forum. Our application for the appointment of a receiver was neither granted nor denied, but was instead deferred by the Court to the arbitration forum. Hycarbex appealed the March 27, 2012 Order asserting that litigation should not have been initiated by American Energy without first going to arbitration, asserting that our claims to 18% of gross production revenues were premature (despite already having made some payments toward that production interest) because a commercial discovery had not yet been declared, and asserting that the injunctions had the effect of enjoining all of the working interest, not just a portion. American Energy countered with an appeal that the Court should reconsider the application for a receiver due to an existing arbitration rule which would prevent the arbitration forum from granting interim relief of that type, irrespective of the merits of such an application. The appeals have become moot by virtue of the ICC Partial Final Award described below. On April 10, 2012, pursuant to the terms of the March 27, 2012, Islamabad High Court Order, we filed our claim with the International Chamber of Commerce (ICC) International Court of Arbitration. In this claim, we are seeking an order which voids, ab initio In February, 2013, we filed an Application For Interim Relief with the ICC which was heard by the tribunal on On February 17, 2014, the arbitration proceedings commenced before the 3-arbitrator tribunal with the first order of business being consideration of another request to the arbitration tribunal by the Liquidators of Hycarbex Asia for suspension of the proceeding or, in the alternative, a postponement to permit newly appointed legal counsel to prepare a proper defense to the Companys claims in arbitration. A complete suspension was rejected by the Tribunal. The Liquidators voluntarily offered to pay interim costs of $50,000 toward the actual costs determined by the Tribunal as caused by the request. We opposed the postponement and indicated that any consideration of same must be conditioned upon protection of the disputed assets and adequate measures to assure payment to us of the monies due to us under the September 25, 2013 Order granting interim relief. The tribunal adjourned the final hearing on the merits until June 16, 2014, based upon Hycarbex Asias assertion that the change of counsel was necessitated by a conflict arising out of a divergence of the respective interests of Hycarbex Asia and the other Defendants. We were awarded the $50,000 in inconvenience costs offered by Hycarbex Asia, which have been paid, and given the opportunity to request an increase in that sum based upon actual costs incurred. The Tribunal further issued an interim Order dated February 25, 2014, requiring Hycarbex to produce to us all records of production from August 2011 forward, including any production which occurs after the date of the Order. The Order further required Hycarbex to produce any future notices of regulatory action or default received from the Government of Pakistan. The Order further ordered that the parties prepare a joint letter to Sui Southern Gas Company Limited (the purchaser of the gas from the Haseeb #1 Well) withdrawing Hycarbexs October 8, 2013 instruction letter to Sui Southern Gas Company and further ordered that the joint letter direct Sui Southern Gas Company Limited to pay 18% of the gross production proceeds directly to the Company going forward. The Order further directed that the joint letter be submitted to Sui Southern Gas Company Limited within 7 days after agreement is reached on the form of the letter. The Company and Hycarbex Asia reached agreement as to the form of the letter during the second week of May, 2014, and the joint letter was submitted to Sui Southern Gas Company Limited. The Order further authorized our use of any documents and transcripts from the arbitration proceedings in any ancillary proceeding initiated by the Company in Pakistan. In August, 2014, we initiated separate legal actions in Pakistan for an injunction against Sui Southern Gas Company Limited (Sui Southern) and Hycarbex-American Energy, Inc. (Hycarbex), respectively, in furtherance of the prior interim orders of the Arbitration Tribunal. The new action filed in the Sindh, Karachi High Court named as defendants Sui Southern, Hycarbex, its parent company, Hycarbex Asia Pte. Ltd. (Hycarbex Asia) and two additional pro forma defendants and requests an injunction against Sui Southern against payment to Hycarbex of 18% of the total proceeds of gas sales. The requested injunction was granted to us by the Karachi Court, but later vacated as premature as it pertains to the third party gas gatherer. However, we also filed in the Islamabad Court an action against Hycarbex, Hycarbex Asia and Hydro Tur as defendants and obtained injunctive relief against Hycarbex from interference with the Arbitration Tribunal-ordered notifications to Sui Southern to pay us directly our 18% of production, and injunctive relief requiring Hycarbex to escrow the 18% of production which would have been payable to the Company. On April 15, 2015, the ICC Arbitration Tribunal rendered its Partial Final Award in the pending arbitration proceedings which declares that the November 9, 2003 Stock Purchase Agreement between the Company, Hycarbex and Hydro-Tur, which was amended on February 16, 2004, and December 15, 2009, is void ab initio and of no legal effect on account of the fraud and misrepresentations of Hycarbex, Hydro-Tur and Hycarbex-Asia and that the Company is thus the 100% owner of the common stock of Hycarbex relating back to the original Stock Purchase Agreement date of November 9, 2003. In connection with its findings, the ICC Arbitration Tribunal ordered that the register of shareholders for Hycarbex be corrected to reflect the Company as the owner of 100% of the common stock, that Hycarbex and Hycarbex-Asia take any and all steps necessary to effect the rectification of the register of shareholders of Hycarbex to reflect the Company as the owner of 100% of the common stock, and that Hycarbex and Hycarbex-Asia bear all costs of the arbitration proceedings, including the Companys legal costs, which costs and fees are to be fixed by the ICC Arbitration Tribunal in a subsequent award after submission of the total costs and fees by AEGG. The ICC Arbitration Tribunal dismissed Hydro-Turs application for costs. The April 15 Award makes moot certain of the pending actions in Pakistan due to the recovery of ownership of 100% of the stock of Hycarbex. |
Going Concern
Going Concern | 12 Months Ended |
Jun. 30, 2016 | |
Notes to Financial Statements | |
Note 10 - Going Concern | The Companys financial statements have been prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. Accordingly, the financial statements do not include any adjustments related to the recoverability of assets or classification of liabilities that might be necessary should the Company be unable to continue as a going concern. At June 30, 2016, the Companys current liabilities exceeded its current assets, it has recorded negative cash flows from operations. The preceding circumstances combine to raise substantial doubt about the Companys ability to continue as a going concern. Management expects to continue to be successful in future capital raises, if necessary, to continue operations. The Company has evaluated subsequent events from the balance sheet date through the date the financial statements were issued and determined there were no additional items to report. |
Organization and Summary of S17
Organization and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Jun. 30, 2016 | |
Organization And Summary Of Significant Accounting Policies Policies | |
Organization | The American Energy Group, Ltd. (the Company) was incorporated in the State of Nevada on July 21, 1987 as Dimension Industries, Inc. Since incorporation, the Company has had several name changes including DIM, Inc. and Belize-American Corp. Internationale with the name change to The American Energy Group, Ltd. effective November 18, 1994. The Companys authorized common stock, par value $0.001 is 80,000,000 shares. The Companys authorized preferred stock, par value $0.001, is 20,000,000 shares. There is no preferred stock issued and outstanding. During the year ended June 30, 1995, the Company incorporated additional subsidiaries including American Energy-Deckers Prairie, Inc., The American Energy Operating Corp., Tomball American Energy, Inc., Cypress-American Energy, Inc., Dayton North Field-American Energy, Inc. and Nash Dome Field-American Energy, Inc. In addition, in May 1995, the Company acquired all of the issued and outstanding common stock of Hycarbex, Inc. (Hycarbex), a Texas corporation, in exchange for 120,000 shares of common stock of the Company, a 1% overriding royalty on the Pakistan Project (see Note 2) and a future $200,000 production payment if certain conditions are met. The acquisition was accounted for as a pooling-of-interests on the date of the acquisition. The fair value of the assets and liabilities assumed approximated the fair value of the 120,000 shares issued of $60,000 as of the date of the acquisition. Accordingly, book value of the assets and liabilities assumed was $60,000. In April 1995, the name of that company was changed to Hycarbex-American Energy, Inc. The Company and its subsidiaries were principally in the business of acquisition, exploration, development and production of oil and gas properties. On June 28, 2002, the Company was placed into involuntary Chapter 7 bankruptcy by three creditors, including Georg von Canal, an officer and director who was then involved in litigation with the Company to invalidate an attempt to remove him from his management positions. The bankruptcy filing followed an unsuccessful effort by management to resolve both the litigation and the need for a substantial cash infusion through a stock sale to a German-based investor which would have simultaneously resulted in a restructure of management. Shortly after this bankruptcy filing, the secured creditor holding a first lien on the Companys only producing oil and gas leases in Fort Bend County, Texas, sought permission from the bankruptcy court to foreclose on those assets. The Company responded by converting the Chapter 7 bankruptcy proceedings to a Chapter 11 reorganization proceeding. The Company obtained approval of a plan of reorganization in September 2002, but the secured creditor was nevertheless permitted to foreclose upon the Fort Bend County oil and gas leases. Subsequent to the approval of the foreclosure of the oil and gas producing properties, the Company abandoned the remaining oil and gas properties except for one lease in southeast Texas. For the year ended June 30, 2003, the Company recognized a loss of $13,040,120 on the foreclosure and abandonment of the oil and gas properties and the sale of the fixed assets. On October 26, 2003, the Company sold its wholly-owned subsidiary, Hycarbex-American Energy, Inc., for an 18% overriding royalty interest in the Exploration License No. 2768-7 dated August 11, 2001, of the Yasin Exploration Block. During the year ended June 30, 2015, the Company was awarded 100% of the stock of Hycarbex in the final decision of the ICC Tribunal on April 15, 2015, voiding the previous sale of the Hycarbex subsidiary, more fully discussed in Note 9 to these financial statements. On January 29, 2004, the Company was released from bankruptcy. Pursuant to the plan, all of the existing 66,318,037 shares of common stock and 41,499 shares of preferred stock were cancelled. The Company issued 18,898,518 new shares of common stock to creditors. Also, the Company adopted the provisions for fresh-start reporting. Accordingly, the accumulated deficit accumulated through January 29, 2004 has been eliminated. The Company is considered to have a fresh-start due to the cancellation of the prior shareholders common stock and the subsequent issuance of common stock to creditors, the new shareholders. On April 14, 2005, the Companys wholly owned inactive subsidiary, The American Energy Operating Corp. (AEOC) filed for voluntary bankruptcy liquidation. On July 24, 2006, The American Energy Operating Corp. received a final decree from the United States Bankruptcy Court Southern District of Texas that the Companys estate had been fully administered and that the Chapter 7 was closed. The Company no longer has any subsidiaries. These financial statements do not include the consolidation of its recently re-acquired wholly owned subsidiary, Hycarbex American Energy, Inc as the Company had not yet received full access to the historical financial records, nor full control of its operations, as of June 30, 2015. |
Accounting Methods | The Companys financial statements are prepared using the accrual method of accounting. The Company has elected a June 30 year-end. |
Cash Equivalents | The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. |
Property and Equipment and Depreciation | Property and equipment are stated at cost. Depreciation on drilling and related equipment, vehicles and office equipment is provided using the straight-line method over expected useful lives of five to ten years. For the years ended June 30, 2016 and 2015, the Company incurred total depreciation of $801 and $776, respectively. |
Basic Loss Per Share of Common Stock | For the Year For the Year Ended June 30, Ended June 30, 2016 2015 Loss (numerator) $ (3,468,720 ) $ (4,708,163 ) Shares (denominator) 62,002,533 52,675,425 Per Share Amount $ (0.06 ) $ (0.09 ) The basic loss per share of common stock is based on the weighted average number of shares issued and outstanding during the period of the financial statements. Stock warrants convertible into 11,193,334 and 10,193,334 shares of common stock for the years ended June 30, 2016 and 2015, respectively, are not included in the basic calculation because their inclusion would be antidilutive, thereby reducing the net loss per common share. |
Use of Estimates | The preparation of financial statements in conformity with generally accepted accounting principles 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 financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Long Lived Assets | All long lived assets are evaluated for impairment per FASB ASC 360 whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. During the third quarter the Company was made aware that Heritage Oil and Gas Limited (Heritage), the operator of both the Zamzama North Exploration and the Sanjawi Exploration Licenses, was given a Notice of Termination (Sanjawi Petroleum Concession Agreement notice dated February 12, 2016) and a Notice of Breach (Zamzama North Petroleum Concession Agreement notice dated February 22, 2016) by the Director General of Petroleum Concessions of the Government of Pakistan. Heritage has acknowledged and accepted the notice of termination in regards to the Sanjawi Petroleum Concession Agreement. Although Heritage has refuted the basis of the claim of breach in regards to the Zamzama North Petroleum Concession Agreement asserting that all reasonable efforts have been made to fulfill its work commitments and financial obligations under this agreement but was prevented from doing so for reasons outside its control, the Company has determined that it is reasonably possible that the working interest investment in the Zamzama North Block will also not be recovered. As a result the Company recorded an impairment loss in the amount of $1,583,914 in relation to these oil and gas interests. |
Oil and Gas Sales Receivable and Revenue Recognition | Prior to the year ended June 30, 2015, the Company recognized revenue in accordance with SEC SAB 104 which stipulates that pervasive evidence of an arrangement exists, delivery has occurred, the price is fixed or determinable, and collection is reasonably assured. Prior to the year ended June 30, 2015, our revenue was derived exclusively from an overriding royalty interest. The Company recognized royalty revenues when production had occurred and royalties were due and payable under its contract with Hycarbex (Note 9 Other Contingencies). During the year ended June 30, 2015, the Company was awarded 100% of the stock of our previously wholly owned Hycarbex subsidiary. Our prior oil and gas receivable earned through our ownership of the 18% overriding royalty interest in the Yasin Concession was due from Hycarbex and was not collected prior to our successful litigation results and being awarded 100% of the actual stock of the Hycarbex entity. Upon re-acquisition of the Hycarbex subsidiary, the previously recognized oil and gas receivable was written off. Future oil and gas revenues will continue to be recorded in accordance with SEC SAB 104, upon obtaining full control of the entity. |
Concentrations | The Companys revenue and receivable is derived solely from its overriding royalty interest in the Yasin Concession which is located in the country of Pakistan. |
Equity Securities | Equity securities issued for services rendered have been accounted for at the fair market value of the securities on the date of issuance. |
Income Taxes | The Company accounts for corporate income taxes in accordance with FASB ASC 740-10 Income Taxes. FASB ASC 740-10 requires an asset and liability approach for financial accounting and reporting for income tax purposes. The tax provision (benefit) for the year-ended June 30, 2016 and the year ended June 30, 2015 consisted of the following: 2016 2015 Current: Federal $ - $ - State - - Deferred Federal - - State - - Total tax provision (benefit) $ - $ - Deferred income taxes reflect the net tax effects of net operating losses and temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Net operating loss carryovers of the Company will begin expiring in the year ended June 30, 2019. The Companys total deferred tax liabilities, deferred tax assets, and deferred tax asset valuation allowances at June 30, 2016 and June 30, 2015 are as follows: 2016 2015 Net Operating Losses: Federal $ (55,964,106 ) $ (52,495,386 ) State - - Total net operating losses $ (55,964,106 ) $ (52,495,386 ) Deferred Tax Provision: Total tax provision (benefit) (19,027,796 ) (17,848,431 ) Less valuation allowance 19,027,796 17,848,431 Deferred tax asset $ - $ - The reconciliation of income tax computed at statutory rates of income tax benefits is as follows: 2016 2015 Expense (benefit) at federal statutory rate $ (1,179,365 ) $ (1,574,210 ) State tax effects - - Non deductible expenses - - Deferred tax asset valuation allowance 1,179,365 1,574,210 Income tax provision (benefit) $ - $ - The Financial Accounting Standards Board (FASB) has issued FASB ASC 740-10 (Prior authoritative literature: Financial Interpretation No. 48, "Accounting for Uncertainty in Income Taxes - An Interpretation of FASB Statement No. 109 (FIN 48)). FASB ASC 740-10 clarifies the accounting for uncertainty in income taxes recognized in an enterprise's financial statements in accordance with prior literature FASB Statement No. 109, Accounting for Income Taxes. This standard requires a company to determine whether it is more likely than not that a tax position will be sustained upon examination based upon the technical merits of the position. If the more-likely-than-not threshold is met, a company must measure the tax position to determine the amount to recognize in the financial statements. As a result of the implementation of this standard, the Company performed a review of its material tax positions in accordance with recognition and measurement standards established by FASB ASC 740-10. At the adoption date of July 1, 2007, the Company had no unrecognized tax benefit which would affect the effective tax rate if recognized. The Company includes interest and penalties arising from the underpayment of income taxes in the statements of operations in the provision for income taxes. As of June 30, 2016, the Company had no accrued interest or penalties. The tax years that remain subject to examination by major taxing jurisdictions are those for the years ended June 30, 2016, 2015 and 2014. |
Fair Value of Financial Instruments | On January 1, 2008, the Company adopted FASB ASC 820-10-50, Fair Value Measurements. · Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. · Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. · Level 3 inputs to valuation methodology are unobservable and significant to the fair measurement. The carrying amounts reported in the balance sheets for the cash and cash equivalents, receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The carrying value of the promissory notes approximates fair value because negotiated terms and conditions are consistent with current market rates as of June 30, 2016. |
Concentration of Credit Risk | Financial instruments which subject the Company to concentrations of credit risk include cash and cash equivalents. The Company maintains its cash and cash equivalents with major financial institutions selected based on managements assessment of the banks financial stability. Balances occasionally exceed the $250,000 federal deposit insurance limit. The Company has not experienced any losses on deposits. |
Restoration, Removal and Environmental Liabilities | The Company is subject to extensive federal, state and local environmental laws and regulations. These laws regulate the discharge of materials into the environment and may require the Company to remove or mitigate the environmental effects of the disposal or release of petroleum substances at various sites. Environmental expenditures are expensed or capitalized depending on their future economic benefit. Expenditures that relate to an existing condition caused by past operations and that have no future economic benefit are expensed. Liabilities for expenditures of a noncapital nature are recorded when environmental assessments and/or remediation is probable, and the costs can be reasonably estimated. Such liabilities are generally undiscounted unless the timing of cash payments for the liability or component are fixed or reliably determinable. As of June 30, 2016, the Company believes it has no such liabilities. |
New Accounting Pronouncements | Except for rules and interpretive releases of the SEC under authority of federal securities laws and a limited number of grandfathered standards, the FASB Accounting Standards Codification ("ASC") is the sole source of authoritative GAAP literature recognized by the FASB and applicable to the Company. We have reviewed the FASB issued Accounting Standards Update ("ASU") accounting pronouncements and interpretations thereof that have effectiveness dates during the periods reported and in future periods. The Company has carefully considered the new pronouncements that alter previous generally accepted accounting principles and does not believe that any new or modified principles will have a material impact on the corporation's reported financial position or operations in the near term. The applicability of any standard is subject to the formal review of our financial management and certain standards are under consideration. |
Organization and Summary of S18
Organization and Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
Organization And Summary Of Significant Accounting Policies Tables | |
Basic Loss Per Share of Common Stock | For the Year For the Year Ended June 30, Ended June 30, 2016 2015 Loss (numerator) $ (3,468,720 ) $ (4,708,163 ) Shares (denominator) 62,002,533 52,675,425 Per Share Amount $ (0.06 ) $ (0.09 ) |
The tax provision (benefit) for the year-ended | 2016 2015 Current: Federal $ - $ - State - - Deferred Federal - - State - - Total tax provision (benefit) $ - $ - |
The Company's total deferred tax liabilities, deferred tax assets, and deferred tax asset valuation allowances | 2016 2015 Net Operating Losses: Federal $ (55,964,106 ) $ (52,495,386 ) State - - Total net operating losses $ (55,964,106 ) $ (52,495,386 ) Deferred Tax Provision: Total tax provision (benefit) (19,027,796 ) (17,848,431 ) Less valuation allowance 19,027,796 17,848,431 Deferred tax asset $ - $ - |
The reconciliation of income tax computed at statutory rates of income tax benefits | 2016 2015 Expense (benefit) at federal statutory rate $ (1,179,365 ) $ (1,574,210 ) State tax effects - - Non deductible expenses - - Deferred tax asset valuation allowance 1,179,365 1,574,210 Income tax provision (benefit) $ - $ - |
Common Stock Warrants (Tables)
Common Stock Warrants (Tables) | 12 Months Ended |
Jun. 30, 2016 | |
Common Stock Warrants Tables | |
Summary of expense warrants using assumptions | Dividend yield 0 Expected volatility 1.42% Risk free interest 0.50% Expected life 4.5 years |
Company Stock warrants | Stock Exercise Weighted Ave. Exercise Warrants Price Price Outstanding and Exercisable, June 30, 2014 8,693,334 $ 0.15-1.50 $ 0.28 Granted 1,500,000 $ 0.10-0.15 $ 0.12 Expired/Canceled - - - Exercised - - - Outstanding and Exercisable, June 30, 2015 10,193,334 $ 0.10-1.50 $ 0.24 Granted 3,000,000 $ 0.20-0.20 $ 0.20 Expired/Canceled (2,000,000 ) - - Exercised - - - Outstanding and Exercisable, June 30, 2016 11,193,334 $ 0.10-1.50 $ 0.27 |
Outstanding stock warrants | Number of Remaining Weighted Common Stock Contracted Exercise Ave Exer. Equivalents Expir. Date Life (Years) Price Price 50,000 August, 2016 .250 $ 0.15 $ 0.15 210,000 August, 2016 .250 $ 0.15 $ 0.15 2,333,334 February, 2020 .250 $ 0.15 $ 0.15 1,500,000 February, 2020 .250 $ 0.20 $ 0.20 2,600,000 May, 2018 2.000 $ 0.15 $ 0.15 2,000,000 February, 2020 3.750 $ 0.20 $ 0.20 1,000,000 February, 2020 3.750 $ 0.20 $ 0.20 500,000 February, 2020 .250 $ 0.15 $ 0.15 1,000,000 February, 2020 .250 $ 0.10 $ 0.10 |
Organization and Summary of S20
Organization and Summary of Significant Accounting Policies (Details) - USD ($) | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Organization And Summary Of Significant Accounting Policies Details | ||
Loss (numerator) | $ (3,468,720) | $ (4,708,163) |
Shares (denominator) | 62,002,533 | 52,675,425 |
Per Share Amount | $ (0.06) | $ (0.09) |
Organization and Summary of S21
Organization and Summary of Significant Accounting Policies (Details 1) - USD ($) | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Current: | ||
Federal | ||
State | ||
Deferred | ||
Federal | ||
State | ||
Total tax provision (benefit) |
Organization and Summary of S22
Organization and Summary of Significant Accounting Policies (Details 2) - USD ($) | Jun. 30, 2016 | Jun. 30, 2015 |
Net Operating Losses: | ||
Federal | $ (55,964,106) | $ (52,495,386) |
State | ||
Total net operating losses | (55,964,106) | (52,495,386) |
Deferred Tax Provision: | ||
Total tax provision (benefit) | (19,027,796) | (17,848,431) |
Less valuation allowance | 19,027,796 | 17,848,431 |
Deferred tax asset |
Organization and Summary of S23
Organization and Summary of Significant Accounting Policies (Details 3) - USD ($) | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Organization And Summary Of Significant Accounting Policies Details 3 | ||
Expense (benefit) at federal statutory rate | $ (1,179,365) | $ (1,574,210) |
State tax effects | ||
Non deductible expenses | ||
Deferred tax asset valuation allowance | 1,179,365 | (1,574,210) |
Income tax provision (benefit) |
Organization and Summary of S24
Organization and Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Organization And Summary Of Significant Accounting Policies Details Narrative | ||
Depreciation | $ 801 | $ 776 |
Stock warrants convertible into shares of common stock | $ 11,193,334 | $ 10,193,334 |
Notes Payable Related Party (De
Notes Payable Related Party (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Notes Payable Related Party Details Narrative | ||
Proceeds from the issuance of debt | $ 650,000 | $ 175,000 |
Interest rate | 5.00% | |
Interest expense | $ 62,366 | $ 35,708 |
Lease Commitments (Details Narr
Lease Commitments (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Lease Commitments Details Narrative | ||
Rental expense | $ 6,753 | $ 55,205 |
Common Stock Warrants (Details)
Common Stock Warrants (Details) | 12 Months Ended |
Jun. 30, 2016 | |
Common Stock Warrants Details | |
Dividend yield | 0.00% |
Expected volatility | 1.42% |
Risk free interest | 0.50% |
Expected life | 4 years 6 months |
Common Stock Warrants (Details
Common Stock Warrants (Details 1) - Warrant [Member] - $ / shares | 12 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Outstanding and Exercisable, Beginning Balance | 10,193,334 | 8,693,334 |
Granted | 3,000,000 | 1,500,000 |
Expired/Canceled | (2,000,000) | |
Exercised | ||
Outstanding and Exercisable, Ending Balance | 11,193,334 | 10,193,334 |
Expired/Canceled, Exercise Price | ||
Exercised, Exercise Price | ||
Outstanding and Exercisable, Beginning Balance, Weighted Average Exercise Price | 0.24 | 0.28 |
Granted, Weighted Average Exercise Price | 0.20 | 0.12 |
Expired/Canceled, Weighted Average Exercise Price | ||
Exercised, Weighted Average Exercise Price | ||
Outstanding and Exercisable, Beginning Balance, Weighted Average Exercise Price | 0.27 | 0.24 |
Minimum [Member] | ||
Outstanding and Exercisable, Beginning Balance, Exercise Price | 0.10 | 0.15 |
Granted, Exercise Price | 0.20 | 0.10 |
Outstanding and Exercisable, Ending Balance, Exercise Price | 0.10 | 0.10 |
Maximum [Member] | ||
Outstanding and Exercisable, Beginning Balance, Exercise Price | 1.50 | 1.50 |
Granted, Exercise Price | 0.20 | 0.15 |
Outstanding and Exercisable, Ending Balance, Exercise Price | $ 1.50 | $ 1.50 |
Common Stock Warrants (Detail29
Common Stock Warrants (Details 2) | 12 Months Ended |
Jun. 30, 2016$ / sharesshares | |
Warrant [Member] | |
Number of Common Stock Equivalents | shares | 50,000 |
Expir. Date | August, 2016 |
Remaining Contracted Life (Years) | 3 months |
Exercise Price | $ 0.15 |
Weighted Ave Exer. Price | $ 0.15 |
Warrant 1 [Member] | |
Number of Common Stock Equivalents | shares | 210,000 |
Expir. Date | August 2,016 |
Remaining Contracted Life (Years) | 3 months |
Exercise Price | $ 0.15 |
Weighted Ave Exer. Price | $ 0.15 |
Warrant 2 [Member] | |
Number of Common Stock Equivalents | shares | 2,333,334 |
Expir. Date | February 2,020 |
Remaining Contracted Life (Years) | 3 months |
Exercise Price | $ 0.15 |
Weighted Ave Exer. Price | $ 0.15 |
Warrant 3 [Member] | |
Number of Common Stock Equivalents | shares | 1,500,000 |
Expir. Date | February 2,020 |
Remaining Contracted Life (Years) | 3 months |
Exercise Price | $ 0.20 |
Weighted Ave Exer. Price | $ 0.20 |
Warrant 4 [Member] | |
Number of Common Stock Equivalents | shares | 2,600,000 |
Expir. Date | May 2,018 |
Remaining Contracted Life (Years) | 2 years |
Exercise Price | $ 0.15 |
Weighted Ave Exer. Price | $ 0.15 |
Warrant 5 [Member] | |
Number of Common Stock Equivalents | shares | 2,000,000 |
Expir. Date | February 2,020 |
Remaining Contracted Life (Years) | 3 years 9 months |
Exercise Price | $ 0.20 |
Weighted Ave Exer. Price | $ 0.20 |
Warrant 6 [Member] | |
Number of Common Stock Equivalents | shares | 1,000,000 |
Expir. Date | February 2,020 |
Remaining Contracted Life (Years) | 3 years 9 months |
Exercise Price | $ 0.20 |
Weighted Ave Exer. Price | $ 0.20 |
Warrant 7 [Member] | |
Number of Common Stock Equivalents | shares | 500,000 |
Expir. Date | February 2,020 |
Remaining Contracted Life (Years) | 3 months |
Exercise Price | $ 0.15 |
Weighted Ave Exer. Price | $ 0.15 |
Warrant 8 [Member] | |
Number of Common Stock Equivalents | shares | 1,000,000 |
Expir. Date | February 2,020 |
Remaining Contracted Life (Years) | 3 months |
Exercise Price | $ 0.10 |
Weighted Ave Exer. Price | $ 0.10 |
Common Stock Warrants (Detail30
Common Stock Warrants (Details Narrative) | 12 Months Ended |
Jun. 30, 2016USD ($)shares | |
Common Stock Warrants Details Narrative | |
Issued warrants | shares | 3,000,000 |
Debt discount remains unamortized | $ | $ 17,865 |
Investment in Oil and Gas Wor31
Investment in Oil and Gas Working Interest (Details Narrative) - USD ($) | Jun. 30, 2016 | Jun. 30, 2015 |
Investment In Oil And Gas Working Interest Details Narrative | ||
Working interests capitalized | $ 1,583,914 |