Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2019 | Aug. 06, 2019 | |
Document And Entity Information | ||
Entity Registrant Name | Vertex Energy Inc. | |
Entity Central Index Key | 0000890447 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2019 | |
Amendment Flag | false | |
Entity Emerging Growth Company | false | |
Entity Small Business | true | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 40,349,406 | |
Entity Current Reporting Status | Yes | |
Entity Shell Company | false | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2019 |
CONSOLIDATED BALANCE SHEETS (Un
CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Current assets | ||
Cash and cash equivalents | $ 498,219 | $ 1,249,831 |
Restricted cash | 100,007 | 1,600,000 |
Accounts receivable, net | 11,500,507 | 9,027,990 |
Federal income tax receivable | 205,818 | 137,212 |
Inventory | 5,752,583 | 8,091,397 |
Derivative commodity asset | 0 | 695,941 |
Prepaid expenses | 1,494,198 | 2,740,541 |
Total current assets | 19,551,332 | 23,542,912 |
Noncurrent assets | ||
Fixed assets, at cost | 68,950,111 | 66,762,388 |
Less accumulated depreciation | (22,243,716) | (19,874,896) |
Fixed assets, net | 46,706,395 | 46,887,492 |
Finance lease right-of-use assets | 957,812 | |
Finance lease right-of-use assets | 397,515 | |
Operating lease right-of use assets | 36,911,345 | |
Intangible assets, net | 11,666,613 | 12,578,519 |
Federal income tax receivable | 68,605 | 137,211 |
Other assets | 616,759 | 616,759 |
TOTAL ASSETS | 116,478,861 | 84,160,408 |
Current liabilities | ||
Accounts payable | 8,273,479 | 8,791,529 |
Accrued expenses | 2,347,998 | 2,535,347 |
Dividends payable | 412,875 | 403,002 |
Finance lease liability-current | 210,972 | |
Finance lease liability-current | 95,857 | |
Operating lease liability-current | 6,143,000 | |
Current portion of long-term debt, net of unamortized finance costs | 658,971 | 1,325,240 |
Derivative commodity liability | 108,557 | 0 |
Revolving note | 5,079,887 | 3,844,636 |
Total current liabilities | 23,235,739 | 16,995,611 |
Long-term liabilities | ||
Long-term debt, net of unamortized finance costs | 14,000,000 | 14,402,179 |
Finance lease liability-long-term | 720,602 | |
Finance lease liability-long-term | 276,355 | |
Operating lease liability-long-term | 30,768,345 | |
Contingent consideration | 0 | 15,564 |
Derivative warrant liability | 2,440,769 | 1,481,692 |
Total liabilities | 71,165,455 | 33,171,401 |
COMMITMENTS AND CONTINGENCIES (Note 3) | 0 | 0 |
TEMPORARY EQUITY | ||
Series B and B-1 preferred shares | 23,933,351 | 22,179,963 |
EQUITY | ||
Common stock, $0.001 par value per share; 750,000,000 shares authorized; 40,346,906 and 40,174,821 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively. | 40,347 | 40,175 |
Additional paid-in capital | 75,599,525 | 75,131,122 |
Accumulated deficit | (55,105,156) | (47,800,886) |
Total Vertex Energy, Inc. stockholders' equity | 20,535,136 | 27,370,831 |
Non-controlling interest | 844,919 | 1,438,213 |
Total Equity | 21,380,055 | 28,809,044 |
TOTAL LIABILITIES, TEMPORARY EQUITY, AND EQUITY | 116,478,861 | 84,160,408 |
Series A Preferred Stock | ||
EQUITY | ||
50,000,000 of total Preferred shares authorized: Series A Convertible Preferred Stock, $0.001 par value; 5,000,000 shares designated, 419,859 and 419,859 shares issued and outstanding at March 31, 2019 and December 31, 2018, respectively with a liquidation preference of $625,590 and $625,590 at March 31, 2019 and December 31, 2018, respectively. | 420 | 420 |
Series B Preferred Stock | ||
TEMPORARY EQUITY | ||
Series B and B-1 preferred shares | 9,904,054 | 8,900,208 |
Series B1 Preferred Stock | ||
TEMPORARY EQUITY | ||
Series B and B-1 preferred shares | $ 14,029,297 | $ 13,279,755 |
CONSOLIDATED BALANCE SHEETS (_2
CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Preferred stock, shares designated | 50,000,000 | 50,000,000 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 750,000,000 | 750,000,000 |
Common stock, shares issued | 40,346,906 | 40,174,821 |
Common stock, shares outstanding | 40,346,906 | 40,174,821 |
Preferred stock, par value (in dollars per share) | $ 0.001 | |
Series A Preferred Stock | ||
Preferred stock, shares designated | 5,000,000 | 5,000,000 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares issued | 419,859 | 419,859 |
Preferred stock, shares outstanding | 419,859 | 419,859 |
Preferred stock, liquidation preference | $ 625,590 | $ 625,590 |
Series B Preferred Stock | ||
Temporary equity, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Temporary equity, shares designated | 10,000,000 | 10,000,000 |
Temporary equity, shares issued | 3,713,794 | 3,604,827 |
Temporary equity, shares outstanding | 3,713,794 | 3,604,827 |
Temporary equity, liquidation preference | $ 11,512,761 | $ 11,174,964 |
Series B1 Preferred Stock | ||
Temporary equity, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Temporary equity, shares designated | 17,000,000 | 17,000,000 |
Temporary equity, shares issued | 10,264,001 | 10,057,597 |
Temporary equity, shares outstanding | 10,264,001 | 10,057,597 |
Temporary equity, liquidation preference | $ 16,011,842 | $ 15,689,851 |
Series C Preferred Stock | ||
Temporary equity, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Temporary equity, shares designated | 44,000 | 44,000 |
Temporary equity, shares issued | 0 | 0 |
Temporary equity, shares outstanding | 0 | 0 |
Temporary equity, liquidation preference | $ 0 | $ 0 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Income Statement [Abstract] | ||||
Revenues | $ 43,657,292 | $ 46,917,770 | $ 82,978,004 | $ 88,285,965 |
Cost of revenues (exclusive of depreciation and amortization shown separately below) | 36,515,421 | 36,796,258 | 71,359,770 | 71,841,409 |
Gross profit | 7,141,871 | 10,121,512 | 11,618,234 | 16,444,556 |
Operating expenses: | ||||
Selling, general and administrative expenses | 6,028,859 | 5,364,591 | 11,376,600 | 11,010,033 |
Depreciation and amortization | 1,780,890 | 1,733,076 | 3,517,903 | 3,427,175 |
Total operating expenses | 7,809,749 | 7,097,667 | 14,894,503 | 14,437,208 |
Income (loss) from operations | (667,878) | 3,023,845 | (3,276,269) | 2,007,348 |
Other income (expense): | ||||
Interest income | 1,918 | 659 | 1,918 | 659 |
Gain on sale of assets | 29,150 | 8,843 | 31,443 | 51,523 |
Gain (loss) on change in value of derivative warrant liability | 746,017 | 475,913 | (959,077) | 44,162 |
Interest expense | (738,972) | (847,456) | (1,496,775) | (1,649,971) |
Total other income (expense) | 38,113 | (362,041) | (2,422,491) | (1,553,627) |
Income (loss) before income tax | (629,765) | 2,661,804 | (5,698,760) | 453,721 |
Income tax benefit (expense) | 0 | 0 | 0 | 0 |
Net income (loss) | (629,765) | 2,661,804 | (5,698,760) | 453,721 |
Net income (loss) attributable to non-controlling interest | (202,329) | 131,736 | (307,760) | 182,275 |
Net income (loss) attributable to Vertex Energy, Inc. | (427,436) | 2,530,068 | (5,391,000) | 271,446 |
Accretion of discount on Series B and B1 Preferred Stock | (532,925) | (556,214) | (1,093,600) | (1,198,504) |
Dividends on Series B and B1 Preferred Stock | (412,875) | (534,680) | (819,670) | (1,089,597) |
Net income (loss) available to common shareholders | $ (1,373,236) | $ 1,439,174 | $ (7,304,270) | $ (2,016,655) |
Income (loss) per common share | ||||
Basic (in dollars per share) | $ (0.03) | $ 0.03 | $ (0.18) | $ (0.06) |
Diluted (in dollars per share) | $ (0.03) | $ 0.03 | $ (0.18) | $ (0.06) |
Shares used in computing earnings per share | ||||
Basic (in shares) | 40,294,870 | 33,300,456 | 40,245,671 | 33,182,748 |
Diluted (in shares) | 40,294,870 | 37,013,651 | 40,245,671 | 33,182,748 |
CONSOLIDATED STATEMENTS OF EQUI
CONSOLIDATED STATEMENTS OF EQUITY - USD ($) | Total | Common Stock | Additional Paid-In Capital | Retained Earnings | Non-controlling Interest | Series A PreferredPreferred Stock | Series C PreferredPreferred Stock |
Beginning balance (in shares) at Dec. 31, 2017 | 32,658,176 | 453,567 | 31,568 | ||||
Beginning balance at Dec. 31, 2017 | $ 28,384,358 | $ 32,658 | $ 67,768,509 | $ (39,816,300) | $ 399,005 | $ 454 | $ 32 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Share based compensation expense, total | 145,971 | 145,971 | |||||
Conversion of Series B1 Preferred stock to common (in shares) | 500,000 | ||||||
Conversion of Series B1 Preferred stock to common | 595,563 | $ 500 | 779,500 | (184,437) | |||
Dividends on Series B and B1 | (554,917) | (554,917) | |||||
Accretion of discount on Series B and B1 | (457,853) | (457,853) | |||||
Net income (loss) | (2,208,083) | (2,258,622) | 50,539 | ||||
Ending balance (in shares) at Mar. 31, 2018 | 33,158,176 | 453,567 | 31,568 | ||||
Ending balance at Mar. 31, 2018 | 25,905,039 | $ 33,158 | 68,693,980 | (43,272,129) | 449,544 | $ 454 | $ 32 |
Beginning balance (in shares) at Dec. 31, 2017 | 32,658,176 | 453,567 | 31,568 | ||||
Beginning balance at Dec. 31, 2017 | $ 28,384,358 | $ 32,658 | 67,768,509 | (39,816,300) | 399,005 | $ 454 | $ 32 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Exercise of options to common (in shares) | 241 | ||||||
Net income (loss) | $ 453,721 | ||||||
Ending balance (in shares) at Jun. 30, 2018 | 33,357,538 | 419,859 | 31,568 | ||||
Ending balance at Jun. 30, 2018 | 27,967,253 | $ 33,358 | 69,185,118 | (41,832,955) | 581,280 | $ 420 | $ 32 |
Beginning balance (in shares) at Mar. 31, 2018 | 33,158,176 | 453,567 | 31,568 | ||||
Beginning balance at Mar. 31, 2018 | 25,905,039 | $ 33,158 | 68,693,980 | (43,272,129) | 449,544 | $ 454 | $ 32 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Exercise of options to common (in shares) | 241 | ||||||
Exercise of options to common | 0 | ||||||
Share based compensation expense, total | 183,750 | 183,750 | |||||
Conversion of Series A Preferred stock to common (in shares) | 33,708 | (33,708) | |||||
Conversion of Series A Preferred stock to common | 0 | $ 34 | $ (34) | ||||
Conversion of Series B Preferred stock to common (in shares) | 32,149 | ||||||
Conversion of Series B Preferred stock to common | 62,962 | $ 33 | 99,629 | (36,700) | |||
Conversion of Series B1 Preferred stock to common (in shares) | 133,264 | ||||||
Conversion of Series B1 Preferred stock to common | 159,203 | $ 133 | 207,759 | (48,689) | |||
Dividends on Series B and B1 | (534,680) | (534,680) | |||||
Accretion of discount on Series B and B1 | (470,825) | (470,825) | |||||
Net income (loss) | 2,661,804 | 2,530,068 | 131,736 | ||||
Ending balance (in shares) at Jun. 30, 2018 | 33,357,538 | 419,859 | 31,568 | ||||
Ending balance at Jun. 30, 2018 | 27,967,253 | $ 33,358 | 69,185,118 | (41,832,955) | 581,280 | $ 420 | $ 32 |
Beginning balance (in shares) at Dec. 31, 2018 | 40,174,821 | 419,859 | |||||
Beginning balance at Dec. 31, 2018 | 28,809,044 | $ 40,175 | 75,131,122 | (47,800,886) | 1,438,213 | $ 420 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Share based compensation expense, total | 143,063 | 143,063 | |||||
Conversion of Series B1 Preferred stock to common (in shares) | 96,160 | ||||||
Conversion of Series B1 Preferred stock to common | 119,768 | $ 96 | 149,914 | (30,242) | |||
Dividends on Series B and B1 | (406,795) | (406,795) | |||||
Accretion of discount on Series B and B1 | (530,433) | (530,433) | |||||
Net income (loss) | (5,068,995) | (4,963,564) | (105,431) | ||||
Ending balance (in shares) at Mar. 31, 2019 | 40,270,981 | 419,859 | |||||
Ending balance at Mar. 31, 2019 | 23,065,652 | $ 40,271 | 75,424,099 | (53,731,920) | 1,332,782 | $ 420 | |
Beginning balance (in shares) at Dec. 31, 2018 | 40,174,821 | 419,859 | |||||
Beginning balance at Dec. 31, 2018 | $ 28,809,044 | $ 40,175 | 75,131,122 | (47,800,886) | 1,438,213 | $ 420 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Exercise of options to common (in shares) | 75,925 | ||||||
Net income (loss) | $ (5,698,760) | (5,400,000) | |||||
Ending balance (in shares) at Jun. 30, 2019 | 40,346,906 | 419,859 | |||||
Ending balance at Jun. 30, 2019 | 21,380,055 | $ 40,347 | 75,599,525 | (55,105,156) | 844,919 | $ 420 | |
Beginning balance (in shares) at Mar. 31, 2019 | 40,270,981 | 419,859 | |||||
Beginning balance at Mar. 31, 2019 | 23,065,652 | $ 40,271 | 75,424,099 | (53,731,920) | 1,332,782 | $ 420 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Exercise of options to common (in shares) | 75,925 | ||||||
Exercise of options to common | 4,500 | $ 76 | 4,424 | ||||
Share based compensation expense, total | 171,002 | 171,002 | |||||
Dividends on Series B and B1 | (412,875) | (412,875) | |||||
Accretion of discount on Series B and B1 | (532,925) | (532,925) | |||||
VRM LA distribution | (285,534) | (285,534) | |||||
Net income (loss) | (629,765) | (427,436) | (202,329) | ||||
Ending balance (in shares) at Jun. 30, 2019 | 40,346,906 | 419,859 | |||||
Ending balance at Jun. 30, 2019 | $ 21,380,055 | $ 40,347 | $ 75,599,525 | $ (55,105,156) | $ 844,919 | $ 420 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) | 6 Months Ended | |
Jun. 30, 2019USD ($) | Jun. 30, 2018USD ($) | |
Cash flows from operating activities | ||
Net income (loss) | $ (5,698,760) | $ 453,721 |
Adjustments to reconcile net income (loss) to cash provided by operating activities | ||
Stock based compensation expense | 314,065 | 329,721 |
Depreciation and amortization | 3,517,903 | 3,427,175 |
Gain on sale of assets | (31,443) | (51,523) |
Contingent consideration reduction | (15,564) | 0 |
Bad debt recovery | (360,926) | 0 |
Increase in fair value of derivative warrant liability | 959,077 | (44,162) |
Loss on commodity derivative contracts | 1,069,778 | 1,212,087 |
Net cash settlements on commodity derivatives | (967,708) | (1,393,970) |
Amortization of debt discount and deferred costs | 286,954 | 290,746 |
Changes in operating assets and liabilities | ||
Accounts receivable | (2,111,591) | (1,300,384) |
Inventory | 2,338,814 | (2,156,895) |
Prepaid expenses | 1,948,771 | 687,156 |
Accounts payable | (518,050) | 2,575,354 |
Accrued expenses | (187,349) | (628,120) |
Other assets | 0 | (205,942) |
Net cash provided by operating activities | 543,971 | 3,194,964 |
Cash flows from investing activities | ||
Purchase of fixed assets | (2,419,599) | (1,570,094) |
Proceeds from sale of fixed assets | 86,846 | 85,230 |
Net cash used in investing activities | (2,332,753) | (1,754,687) |
Cash flows from financing activities | ||
Payments on finance leases | (61,638) | |
Payments on finance leases | (10,797) | |
Proceeds from exercise of stock options | 4,500 | 0 |
Distribution VRM LA | (285,534) | 0 |
Line of credit (payments) proceeds, net | 1,235,251 | (816,797) |
Proceeds from note payable | 187,501 | 1,667,426 |
Payments on note payable | (1,542,903) | (1,667,066) |
Net cash used in financing activities | (462,823) | (827,234) |
Net change in cash, cash equivalents and restricted cash | (2,251,605) | 613,043 |
Cash, cash equivalents, and restricted cash at beginning of the period | 2,849,831 | 1,105,787 |
Cash, cash equivalents, and restricted cash at end of period | 598,226 | 1,718,830 |
SUPPLEMENTAL INFORMATION | ||
Cash paid for interest | 1,221,363 | 1,126,362 |
Cash paid for taxes | 0 | 0 |
NON-CASH INVESTING AND FINANCING TRANSACTIONS | ||
Accretion of discount on Series B and B1 Preferred Stock | 1,093,600 | 1,198,504 |
Dividends-in-kind accrued on Series B and B1 Preferred Stock | 819,670 | |
Equipment acquired under finance leases | 621,000 | 450,098 |
Series A Preferred Stock | ||
NON-CASH INVESTING AND FINANCING TRANSACTIONS | ||
Conversion of Preferred Stock into common stock | 0 | 34 |
Series B Preferred Stock | ||
NON-CASH INVESTING AND FINANCING TRANSACTIONS | ||
Conversion of Preferred Stock into common stock | 0 | 99,629 |
Dividends-in-kind accrued on Series B and B1 Preferred Stock | 172,704 | |
Series B1 Preferred Stock | ||
NON-CASH INVESTING AND FINANCING TRANSACTIONS | ||
Conversion of Preferred Stock into common stock | 149,914 | 987,259 |
Dividends-in-kind accrued on Series B and B1 Preferred Stock | 240,171 | |
SES | ||
Cash flows from investing activities | ||
Acquisition of SES | $ 0 | $ 269,823 |
BASIS OF PRESENTATION AND NATUR
BASIS OF PRESENTATION AND NATURE OF OPERATIONS | 6 Months Ended |
Jun. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION AND NATURE OF OPERATIONS | BASIS OF PRESENTATION AND NATURE OF OPERATIONS The accompanying unaudited consolidated interim financial statements of Vertex Energy, Inc. (the " Company " or " Vertex Energy ") have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission (" SEC ") and should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2018 , contained in the Company's annual report, as filed with the SEC on Form 10-K on March 6, 2019 (the " Form 10-K "). The December 31, 2018 balance sheet was derived from the audited financial statements of our 2018 Form 10-K. In the opinion of management all adjustments, consisting of normal recurring adjustments necessary for a fair presentation of financial position and the results of operations for the interim periods presented, have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the consolidated financial statements which would substantially duplicate the disclosures contained in the audited consolidated financial statements for the most recent fiscal year 2018 as reported in Form 10-K have been omitted. Uses and Sources of Liquidity The Company’s primary need for liquidity is to fund working capital requirements of the Company’s businesses, capital expenditures and for general corporate purposes, including debt repayment. The Company has incurred operating losses for the past several years, and accordingly, the Company has taken a number of actions to continue to support its operations and meet its obligations. During 2018, the Company continued to face a challenging competitive environment and while it continues to focus on its overall profitability, including managing expenses, it reported a loss in 2018 and was required to fund cash used in operating activities with cash from investing and financing activities. Moving forward, the Company expects to generate additional liquidity from strategic initiatives including monetization of assets and raising funds from debt and equity financing transactions. The Company expects that these actions will be executed in alignment with the anticipated timing of its liquidity needs. We had a working capital deficit of $ 3,684,407 as of June 30, 2019 , compared to working capital of $ 6,547,301 as of December 31, 2018 . The decline in working capital from December 31, 2018 to June 30, 2019 , is mainly due to the current portion of the operating lease liability in connection with the implementation of the new lease accounting requirements. To address the liquidity deficiency and operating losses, the Company is pursuing a number of actions, including: 1) seeking to obtain additional funds through public or private financing sources; 2) restructuring existing debts from creditors; 3) seeking to reduce operating costs; 4) minimizing projected capital costs for 2019; and 5) exploring opportunities to sell or lease non-income producing assets. The Company’s historical operating results indicate substantial doubt exists related to its ability to continue as a going concern. However, the Company believes it is probable that the actions discussed above will occur and mitigate the substantial doubt raised by its historical operating results and satisfy its estimated liquidity needs 12 months from the issuance of the financial statements. However, the Company cannot predict, with certainty, the outcome of its actions to generate liquidity, including the availability of additional debt or equity financing, or whether such actions would generate the expected liquidity as currently planned. In addition, the Company's Preferred Stock contains certain limitations on its ability to sell assets, which could impact the Company's ability to complete asset sale transactions or the Company's ability to use proceeds from those transactions to fund its operations. Therefore, any planned actions must take into account the ability to transact within any applicable restrictions under these agreements and securities. If the Company continues to experience operating losses and is not able to generate additional liquidity through the mechanisms described above or through some combination of other actions, while not expected, it may be forced to secure additional sources of funds, which may or may not be available to us. Additionally, a failure to generate additional liquidity could negatively impact the Company’s access to materials or services that are important to the operation of its business. On July 26, 2019, the Company obtained additional funds from a private source and extended credit terms with its lender. Please see “ Note 14. Subsequent Events ”, below, for details. |
SUMMARY OF CRITICAL ACCOUNTING
SUMMARY OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
SUMMARY OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES | SUMMARY OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES Cash, Cash Equivalents and Restricted Cash The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the consolidated balance sheets to the same such amounts shown in the consolidated statements of cash flows. June 30, 2019 June 30, 2018 Cash and cash equivalents $ 498,219 $ 1,618,830 Restricted cash 100,007 100,000 Cash and cash equivalents and restricted cash as shown in the consolidated statements of cash flows $ 598,226 $ 1,718,830 The Company placed all the restricted cash in a money market account, to serve as collateral for payment of a credit card. Inventory Inventories of products consist of feedstocks, refined petroleum products and recovered ferrous and non-ferrous metals and are reported at the lower of cost or market. Cost is determined using the first-in, first-out (“ FIFO ”) method. The Company reviews its inventory commodities whenever events or circumstances indicate that the value may not be recoverable. Impairment of long-lived assets The Company evaluates the carrying value and recoverability of its long-lived assets when circumstances warrant such evaluation by applying the provisions of the Financial Accounting Standards Board Accounting Standards Codification (" FASB ASC ") regarding long-lived assets. It requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through the estimated undiscounted cash flows expected to result from the use and eventual disposition of the assets. Whenever any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair value. The Company determined that no long-lived asset impairment existed at June 30, 2019 . Fair value of financial instruments Under the FASB ASC, we are permitted to elect to measure financial instruments and certain other items at fair value, with the change in fair value recorded in earnings. We elected not to measure any eligible items using the fair value option. Consistent with the Fair Value Measurement Topic of the FASB ASC, we implemented guidelines relating to the disclosure of our methodology for periodic measurement of our assets and liabilities recorded at fair market value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-tier fair value hierarchy prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). These tiers include: • Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets; • Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and • Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. Our Level 1 assets primarily include our cash and cash equivalents. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities. The carrying amounts of accounts receivable, accounts payable and accrued liabilities approximate their fair values due to the immediate or short-term maturities of these financial instruments. Our Level 2 liabilities include our marked to market changes in the estimated value of our open derivative contracts held at the balance sheet date. Our Level 3 liabilities include our marked to market changes in the estimated value of our derivative warrants issued in connection with our Series B Preferred Stock and Series B1 Preferred Stock. The Company estimates the fair values of the crude oil swaps and collars based on published forward commodity price curves for the underlying commodity as of the date of the estimate for which published forward pricing is readily available. The determination of the fair values above incorporates various factors including the impact of the Company's non-performance risk and the credit standing of the counterparty involved in the Company's derivative contracts. In addition, the Company routinely monitors the creditworthiness of its counterparty. Nonfinancial assets and liabilities measured at fair value on a nonrecurring basis include certain nonfinancial assets and liabilities as may be acquired in a business combination and thereby measured at fair value. Income Taxes The Company accounts for income taxes in accordance with the FASB ASC Topic 740. The Company records a valuation allowance against net deferred tax assets if, based upon the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income and when temporary differences become deductible. The Company considers, among other available information, uncertainties surrounding the recoverability of deferred tax assets, scheduled reversals of deferred tax liabilities, projected future taxable income, and other matters in making this assessment. As part of the process of preparing its consolidated financial statements, the Company is required to estimate its income taxes in each of the jurisdictions in which it operates. This process requires the Company to estimate its actual current tax liability and to assess temporary differences resulting from differing book versus tax treatment of items, such as deferred revenue, compensation and benefits expense and depreciation. These temporary differences result in deferred tax assets and liabilities, which are included within the Company’s unaudited consolidated balance sheets, net of valuation allowance. Significant management judgment is required in determining the Company’s provision for income taxes, its deferred tax assets and liabilities and any valuation allowance recorded against its net deferred tax assets. If actual results differ from these estimates or the Company adjusts these estimates in future periods, the Company may need to adjust its valuation allowance, which could materially impact the Company’s consolidated financial position and results of operations. Tax contingencies can involve complex issues and may require an extended period of time to resolve. Changes in the level of annual pre-tax income can affect the Company’s overall effective tax rate. Furthermore, the Company’s interpretation of complex tax laws may impact its recognition and measurement of current and deferred income taxes. Derivative Transactions All derivative instruments are recorded on the accompanying balance sheets at fair value. These derivative transactions are not designated as cash flow hedges under FASB ASC 815, Derivatives and Hedges. Accordingly, these derivative contracts are marked-to-market and any changes in the estimated value of derivative contracts held at the balance sheet date are recognized in the accompanying statements of operations as net gain or loss on derivative contracts. The derivative assets or liabilities are classified as either current or noncurrent assets or liabilities based on their anticipated settlement date. The Company nets derivative assets and liabilities for counterparties where it has a legal right of offset. In accordance with ASC 815-40-25 and ASC 815-10-15, Derivatives and Hedging and ASC 480-10-25, Liabilities-Distinguishing from Equity, convertible preferred shares are accounted for net, outside of shareholders' equity and warrants are accounted for as liabilities at their fair value during periods where they can be net cash settled in case of a change in control transaction. The warrants are accounted for as a liability at their fair value at each reporting period. The value of the derivative warrant liability will be re-measured at each reporting period with changes in fair value recorded in earnings. To derive an estimate of the fair value of these warrants, a Dynamic Black Scholes model is utilized which computes the impact of a possible change in control transaction upon the exercise of the warrant shares. This process relies upon inputs such as shares outstanding, our quoted stock prices, strike price, risk-free interest rate and volatility assumptions to dynamically adjust the payoff of the warrants in the presence of the dilution effect. Debt Issuance Costs The Company follows the accounting guidance of ASC 835-30, Interest-Imputation of Interest, which requires that debt issuance costs related to a recognized debt liability be reported on the consolidated balance sheet as a direct reduction from the carrying amount of that debt liability. Revenue Recognition We account for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. Revenue is recognized when our performance obligations under the terms of a contract with our customers are satisfied. Recognition occurs when the Company transfers control by completing the specified services at the point in time the customer benefits from the services performed or once our products are delivered. Revenue is measured as the amount of consideration we expect to receive in exchange for completing our performance obligations. Sales tax and other taxes we collect with revenue-producing activities are excluded from revenue. In the case of contracts with multiple performance obligations, the Company allocates the transaction price to each performance obligation based on the relative stand-alone selling prices of the various goods and/or services encompassed by the contract. We do not have any material significant payment terms, as payment is generally due within 30 days after the performance obligation has been satisfactorily completed. The Company has elected the practical expedient to recognize the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that we otherwise would have recognized is one year or less. In applying the guidance in Topic 606, there were no judgments or estimates made that the Company deems significant. The nature of the Company's contracts give rise to certain types of variable consideration. The Company estimates the amount of variable consideration to include in the estimated transaction price based on historical experience, anticipated performance and its best judgment at the time and to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. From time to time, our fuel oil customers in our black oil segment may request that we store product which they purchase from us in our facilities. We recognize revenues for these “bill and hold” sales once the following criteria have been met: (1) there is a substantive reason for the arrangement, (2) the product is segregated and identified as the customer's asset, (3) the product is ready for delivery to the customer, and (4) we cannot use the product or direct it to another customer. Reclassification of Prior Year Presentation Certain prior period amounts have been reclassified to conform to current period presentation. These reclassifications had no effect on the reported results of operations. Contingent Consideration During the quarter ended June 30, 2019, the Company wrote off the remaining portion of the contingent consideration related to the July 2017 Ygriega Environmental Services, LLC ("Ygriega") acquisition earn-out due to the fact that collected oil gallons targets required for the payout of such earn-out, were not met. Recently Issued Accounting Pronouncements In February 2016, the FASB issued Accounting Standards Update No. 2016-02 (ASU 2016-02), Leases (Topic 842) . ASU 2016-02 requires companies to recognize lease assets and lease liabilities on the balance sheet and disclose key information about leasing arrangements. We adopted ASU 2016-02, Leases (Topic 842) effective January 1, 2019 and will not recast comparative periods in transition to the new standard. In addition, we elected certain practical expedients which permit us to not reassess whether existing contracts are or contain leases, to not reassess the lease classification of any existing leases, to not reassess initial direct costs for any existing leases, and to not separate lease and nonlease components for all classes of underlying assets. We also made an accounting policy election to keep leases with an initial term of 12 months or less off of the balance sheet for all classes of underlying assets. Adoption of the new standard resulted in an increase in the Company’s assets and liabilities of approximately $37.8 million . The ASU did not have an impact on our consolidated results of operations or cash flows. Additional information and disclosures required by this new standard are contained in " Note 13. Leases ". |
CONCENTRATIONS, SIGNIFICANT CUS
CONCENTRATIONS, SIGNIFICANT CUSTOMERS, COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2019 | |
Concentrations, Significant Customers, Commitments And Contingencies Disclosure [Abstract] | |
CONCENTRATIONS, SIGNIFICANT CUSTOMERS, COMMITMENTS AND CONTINGENCIES | CONCENTRATIONS, SIGNIFICANT CUSTOMERS, COMMITMENTS AND CONTINGENCIES At June 30, 2019 and 2018 and for each of the six months then ended, the Company’s revenues and receivables were comprised of the following customer concentrations: Six Months Ended June 30, 2019 Six Months Ended % of Revenues % of Receivables % of Revenues % of Receivables Customer 1 31% 20% 42% 13% Customer 2 17% —% 2% 3% Customer 3 11% 8% 9% 1% Customer 4 7% 14% —% —% Customer 5 4% 10% 5% 18% At June 30, 2019 and 2018 and for each of the six months then ended, the Company's segment revenues were comprised of the following customer concentrations: % of Revenue by Segment % Revenue by Segment Six Months Ended June 30, 2019 Six Months Ended June 30, 2018 Black Oil Refining Recovery Black Oil Refining Recovery Customer 1 36% —% —% 53% —% —% Customer 2 20% —% —% 3% —% —% Customer 3 12% —% —% 11% —% —% Customer 4 8% —% —% —% —% —% Customer 5 4% —% —% 6% —% —% The Company had no vendors that represented 10% of total purchases or payables for the three and six months ended June 30, 2019 and 2018 . The Company’s revenue, profitability and future rate of growth are substantially dependent on prevailing prices for petroleum-based products. Historically, the energy markets have been very volatile, and there can be no assurance that these prices will not be subject to wide fluctuations in the future. A substantial or extended decline in such prices could have a material adverse effect on the Company’s financial position, results of operations, cash flows, access to capital, and the quantities of petroleum-based products that the Company can economically produce. Litigation: The Company, in its normal course of business, is involved in various claims and legal action. In the opinion of management, the outcome of these claims and actions will not have a material adverse impact upon the financial position of the Company. We are currently party to the following material litigation proceedings: Vertex Refining LA, LLC (" Vertex Refining LA "), the wholly-owned subsidiary of Vertex Operating, LLC, our wholly-owned subsidiary (" Vertex Operating ") was named as a defendant, along with numerous other parties, in five lawsuits filed on or about February 12, 2016, in the Second Parish Court for the Parish of Jefferson, State of Louisiana, Case No. 121749, by Russell Doucet et. al., Case No. 121750, by Kendra Cannon et. al., Case No. 121751, by Lashawn Jones et. al., Case No. 121752, by Joan Strauss et. al. and Case No. 121753, by Donna Allen et. al. The suits relate to alleged noxious and harmful emissions from our facility located in Marrero, Louisiana. The suits seek damages for physical and emotional injuries, pain and suffering, medical expenses and deprivation of the use and enjoyment of plaintiffs’ homes. We intend to vigorously defend ourselves and oppose the relief sought in the complaints, provided that at this stage of the litigation, the Company has no basis for determining whether there is any likelihood of material loss associated with the claims and/or the potential and/or the outcome of the litigation. |
REVENUES
REVENUES | 6 Months Ended |
Jun. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | |
REVENUES | REVENUES Disaggregation of Revenue The following table presents our revenues disaggregated by revenue source: Three Months Ended June 30, 2019 Black Oil Refining & Marketing Recovery Total Primary Geographical Markets Northern United States $ 9,880,565 $ — $ — $ 9,880,565 Southern United States 28,027,246 3,277,402 2,472,079 33,776,727 $ 37,907,811 $ 3,277,402 $ 2,472,079 $ 43,657,292 Sources of Revenue Petroleum products $ 37,907,811 $ 3,277,402 $ 642,596 $ 41,827,809 Metals — — 1,829,483 1,829,483 Total revenues $ 37,907,811 $ 3,277,402 $ 2,472,079 $ 43,657,292 Six Months Ended June 30, 2019 Black Oil Refining & Marketing Recovery Total Primary Geographical Markets Northern United States $ 19,204,348 $ — $ — $ 19,204,348 Southern United States 51,518,650 6,136,023 6,118,983 63,773,656 $ 70,722,998 $ 6,136,023 $ 6,118,983 $ 82,978,004 Sources of Revenue Petroleum products $ 70,722,998 $ 6,136,023 $ 1,854,113 $ 78,713,134 Metals — — 4,264,870 4,264,870 Total revenues $ 70,722,998 $ 6,136,023 $ 6,118,983 $ 82,978,004 Three Months Ended June 30, 2018 Black Oil Refining & Marketing Recovery Total Primary Geographical Markets Northern United States $ 10,115,827 $ — $ — $ 10,115,827 Southern United States 28,353,304 4,392,870 4,055,769 36,801,943 $ 38,469,131 $ 4,392,870 $ 4,055,769 $ 46,917,770 Sources of Revenue Petroleum products $ 38,469,131 $ 4,392,870 $ 683,270 $ 43,545,271 Metals — — 3,372,499 3,372,499 Total revenues $ 38,469,131 $ 4,392,870 $ 4,055,769 $ 46,917,770 Six Months Ended June 30, 2018 Black Oil Refining & Marketing Recovery Total Primary Geographical Markets Northern United States $ 18,953,057 $ — $ — $ 18,953,057 Southern United States 51,753,320 10,068,111 7,511,477 69,332,908 $ 70,706,377 $ 10,068,111 $ 7,511,477 $ 88,285,965 Sources of Revenue Petroleum products $ 70,706,377 $ 10,068,111 $ 1,060,412 $ 81,834,900 Metals — — 6,451,065 6,451,065 Total revenues $ 70,706,377 $ 10,068,111 $ 7,511,477 $ 88,285,965 Petroleum products - We derive a majority of our revenues from the sale of recovered/re-refined petroleum products, which include Base Oil, VGO (Vacuum Gas Oil), Pygas, Gasoline, Cutterstock and Fuel Oils. Metals - Consist of recoverable ferrous and non-ferrous recyclable metals from manufacturing and consumption. Scrap metal can be recovered from pipes, barges, boats, building supplies, surplus equipment, tanks, and other items consisting of metal composition. These materials are segregated, processed, cut-up and sent back to a steel mill for re-purposing. |
ACCOUNTS RECEIVABLE
ACCOUNTS RECEIVABLE | 6 Months Ended |
Jun. 30, 2019 | |
Receivables [Abstract] | |
ACCOUNTS RECEIVABLE | ACCOUNTS RECEIVABLE Accounts receivable, net, consists of the following at June 30, 2019 and December 31, 2018 : June 30, 2019 December 31, 2018 Accounts receivable trade $ 11,966,601 $ 9,859,758 Allowance for doubtful accounts (466,094 ) (831,768 ) Accounts receivable trade, net $ 11,500,507 $ 9,027,990 Accounts receivable trade represents amounts due from customers. Accounts receivable trade are recorded at invoiced amounts, net of reserves and allowances and do not bear interest. The Company uses its best estimate to determine the required allowance for doubtful accounts based on a variety of factors, including the length of time receivables are past due, economic trends and conditions affecting its customer base, significant one-time events and historical write-off experience. Specific provisions are recorded for individual receivables when we become aware of a customer’s inability to meet its financial obligations. The Company reviews the adequacy of its reserves and allowances quarterly. Receivable balances greater than 90 days past due are individually reviewed for collectability and if deemed uncollectible, are charged off against the allowance accounts after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any significant off balance sheet credit exposure related to its customers. |
LINE OF CREDIT AND LONG-TERM DE
LINE OF CREDIT AND LONG-TERM DEBT | 6 Months Ended |
Jun. 30, 2019 | |
Debt Disclosure [Abstract] | |
LINE OF CREDIT AND LONG-TERM DEBT | LINE OF CREDIT AND LONG-TERM DEBT Credit and Guaranty Agreement and Revolving Credit Facility with Encina Business Credit, LLC Effective February 1, 2017, we, Vertex Operating, and substantially all of our other operating subsidiaries, other than E-Source Holdings, LLC (" E-Source ", provided that E-Source is no longer in operations and we no longer undertake dismantling, demolition, decommission and marine salvage services), entered into a Credit Agreement (the “ EBC Credit Agreemen t”) with Encina Business Credit, LLC as agent (the “ Agent ” or “ EBC ”) and Encina Business Credit SPV, LLC and CrowdOut Capital LLC as lenders thereunder (the “ EBC Lenders ”). Pursuant to the EBC Credit Agreement, and the terms thereof, the EBC Lenders agreed to loan us up to $ 20 million , provided that the amount outstanding under the EBC Credit Agreement at any time cannot exceed 50% of the value of the operating plant facilities and related machinery and equipment owned by us. Amounts borrowed under the EBC Credit Agreement bear interest at 12% , 13% or 14% per annum, based on the ratio of (a) (i) consolidated EBITDA for such applicable period minus (ii) capital expenditures made during such period, minus (iii) the aggregate amount of income taxes paid in cash during such period (but not less than zero) to (b) the sum of (i) debt service charges plus (ii) the aggregate amount of all dividend or other distributions paid on capital stock in cash for the most recently completed 12 month period (which ratio falls into one of the three following tiers: less than 1 to 1; from 1 to 1 to less than 1.45 to 1; or equal to or greater than 1.45 to 1, which together with the value below, determines which interest rate is applicable) and average availability under the Revolving Credit Agreement (defined below) (which falls into two tiers: less than $ 2.5 million and greater than or equal to $ 2.5 million , which together with the calculation above, determines which interest rate is applicable), as described in greater detail in the EBC Credit Agreement (increasing by 2% per annum upon the occurrence of an event of default). Interest on amounts borrowed under the EBC Credit Agreement is payable by us in arrears, on the first business day of each month, beginning on the first business day of the first full month following the closing, together with required $ 75,000 monthly principal repayments. We also have the right to make voluntary repayments of the amount owed under the EBC Credit Agreement in amounts equal to or greater than $ 100,000 , from time to time. The interest rate is 12% at June 30, 2019 . The amounts borrowed under the EBC Credit Agreement are guaranteed by us and our subsidiaries, other than E-Source, pursuant to a Guaranty and Security Agreement (the “ Guaranty and Security Agreement ”), whereby we also pledged substantially all of our assets and all of the securities of our subsidiaries (other than E-Source) as collateral securing the amount due under the terms of the EBC Credit Agreement. We also provided EBC mortgages on our Marrero, Louisiana, and Columbus, Ohio facilities to secure the repayment of outstanding amounts and agreed to provide mortgages on certain other real property to be delivered post-closing. The post-closing mortgage properties provided were in Baytown, Pflugerville and Corpus Christi, Texas. The EBC Credit Agreement contains customary representations, warranties and requirements for the Company to indemnify the EBC Lenders and their affiliates. The EBC Credit Agreement also includes various covenants (positive and negative) binding upon the Company, including, prohibiting us from undertaking acquisitions or dispositions unless they meet the criteria set forth in the EBC Credit Agreement, not incurring any capital expenditures in an amount exceeding $3 million in any fiscal year that the EBC Credit Agreement is in place, and requiring us to maintain at least $2.5 million of borrowing availability under the Revolving Credit Agreement (defined below) in any 30 day period. The EBC Credit Agreement includes customary events of default for facilities of a similar nature and size as the EBC Credit Agreement, including if an event of default occurs under any agreement evidencing $500,000 or more of indebtedness of the Company; we fail to make any payment when due under any material agreement; subject to certain exceptions, any judgment is entered against the Company in an amount exceeding $500,000 ; and also provides that an event of default occurs if a change in control of the Company occurs, which includes if (a) Benjamin P. Cowart, the Company’s Chief Executive Officer, Chairman of the Board and largest shareholder and Chris Carlson, the Chief Financial Officer of the Company, cease to own and control legally and beneficially, collectively, either directly or indirectly, equity securities in Vertex Energy, Inc., representing more than 15% of the combined voting power of all securities entitled to vote for members of the board of directors or equivalent on a fully-diluted basis, (b) the acquisition of ownership, directly or indirectly, beneficially or of record, by any person or group of securities representing more than 30% of the aggregate ordinary voting power represented by the issued and outstanding securities of Vertex Energy, Inc., or (c) during any period of 12 consecutive months, a majority of the members of the board of directors of the Company cease to be composed of individuals (i) who were members of that board or equivalent governing body on the first day of such period, (ii) whose election or nomination to that board or equivalent governing body was approved by individuals referred to in clause (i) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body or (iii) whose election or nomination to that board or other equivalent governing body was approved by individuals referred to in clauses (i) and (ii) above constituting at the time of such election or nomination at least a majority of that board or equivalent governing body (collectively “ Events of Default ”). An event of default under the Revolving Credit Agreement (defined below), is also an event of default under the EBC Credit Agreement. Effective February 1, 2017, we, Vertex Operating and substantially all of our operating subsidiaries, other than E-Source, entered into a Revolving Credit Agreement (the “ Revolving Credit Agreement ” and together with the EBC Credit Agreement, the " Credit Agreements ") with Encina Business Credit SPV, LLC as lender (“ Encina ”) and EBC as the administrative agent. Pursuant to the Revolving Credit Agreement, and the terms thereof, Encina agreed to loan us, on a revolving basis, up to $10 million , subject to the terms of the Revolving Credit Agreement and certain lending ratios set forth therein, which provide that the amount outstanding thereunder cannot exceed an amount equal to the total of (a) the lesser of (A) the value (as calculated in the Revolving Credit Agreement) of our inventory which are raw materials or finished goods that are merchantable and readily saleable to the public in the ordinary course of our business (“ EBC Eligible Inventory ”), net of certain inventory reserves, multiplied by 85% of the appraised value of EBC Eligible Inventory, or (B) the value (as calculated in the Revolving Credit Agreement) of EBC Eligible Inventory, net of certain inventory reserves, multiplied by 65% , subject to a ceiling of $4 million , plus (b) the face amount of certain accounts receivables (net of certain reserves applicable thereto) multiplied by 85% (subject to adjustment as provided in the Revolving Credit Agreement); minus (c) the then-current amount of certain reserves that the agent may determine necessary for the Company to maintain. At June 30, 2019 , the maximum amount available to be borrowed was $2,902,448 , based on the above borrowing base calculation. Amounts borrowed under the Revolving Credit Agreement bear interest, subject to the terms of the Revolving Credit Agreement, at the one month LIBOR interest rate then in effect, subject to a floor of 0.25% (which interest rate is currently approximately 2.44% per annum), plus an additional 6.50% per annum (increasing by 2% per annum upon the occurrence of an event of default), provided that under certain circumstances amounts borrowed bear interest at the higher of (a) the “prime rate”; (b) the Federal Funds Rate, plus 0.50% ; and (c) the LIBOR Rate for a one month interest period, plus 1.00% . Interest on amounts borrowed under the Revolving Credit Agreement is payable by us in arrears, on the first business day of each month, beginning on the first business day of the first full month following the closing. The amounts borrowed under the Revolving Credit Agreement are guaranteed by us and our subsidiaries, other than E-Source, pursuant to a separate Guaranty and Security Agreement, similar to the EBC Credit Agreement, described in greater detail above. We also provided Encina mortgages on our Marrero, Louisiana, and Columbus, Ohio facilities to secure the repayment of outstanding amounts. The Revolving Credit Agreement contains customary representations, warranties and requirements for the Company to indemnify Encina and its affiliates. The Revolving Credit Agreement also includes various covenants (positive and negative) binding upon the Company, including, prohibiting us from undertaking acquisitions or dispositions unless they meet the criteria set forth in the Revolving Credit Agreement, not incurring any capital expenditures in amount exceeding $3 million in any fiscal year that the Revolving Credit Agreement is in place, and requiring us to maintain at least $ 2.5 million of borrowing availability under the Revolving Credit Agreement in any 30 day period. The Revolving Credit Agreement includes customary events of default for facilities of a similar nature and size as the Revolving Credit Agreement, including the same Events of Default as are described above under the description of the EBC Credit Agreement. The principal balances of the EBC Credit Agreement and the Revolving Credit Agreement as of June 30, 2019 are $14,900,000 and $5,079,887 , respectively. Credit Agreement Amendments On July 25, 2019, (a) EBC, the EBC Lenders, and Vertex Operating, entered into a Third Amendment and Limited Waiver to Credit Agreement, effective on July 26, 2019, pursuant to which the Lenders agreed to amend that certain Credit Agreement dated as of February 1, 2017, as amended to date; and (b) the EBC Lenders and Vertex Operating entered into a Third Amendment and Limited Waiver to ABL Credit Agreement pursuant to which the Lenders agreed to amend that certain ABL Credit Agreement dated as of February 1, 2017, as amended to date (collectively, the “ Waivers ”). The Waivers amended the credit agreements to: extend the due date of amounts owed thereunder from February 1, 2020 to February 1, 2021; to increase the amount of permitted indebtedness allowable thereunder from $500,000 to $750,000 ; to increase the amount of capital expenditures we are authorized to make in fiscal 2019 from $3 million to $3.5 million , and to set the amount of capital expenditures we are authorized to make in fiscal 2020 and thereafter at $3 million ; and to decrease the minimum amount of availability required under the credit agreements to $1.5 million at any time from July 26, 2019 to August 31, 2019, and $2 million at any time thereafter. The Waivers also provided for waivers by the lenders of certain restrictions in the credit agreements which would have prevented us from consummating the transactions contemplated by the MG Purchase Agreement and Heartland Purchase Agreement (each defined below under Note 14), subject to certain conditions, including us paying at least $1.1 million to the lenders from the amount received pursuant to the MG Purchase Agreement (which amount has been paid to date) and at least $9 million (unless otherwise agreed by the lenders) of the amount to be received by us pursuant to terms of the Heartland Purchase Agreement, in the event the transactions contemplated by such agreement closes, to the lenders. Insurance Premiums The Company financed insurance premiums through various financial institutions bearing interest rates from 4.00 % to 4.52% per annum. All such premium finance agreements have maturities of less than one year and have a balance of $ 93,751 at June 30, 2019 and $ 999,152 at December 31, 2018 . Finance Leases On March 1, 2018, the Company obtained one finance lease. Payments are $908 per month for three years and the amount of the finance lease obligation has been reduced to $ 17,425 at June 30, 2019 . On May 29, 2018, the Company obtained one finance lease. Payments are $26,305 per quarter for four years and the amount of the finance lease obligation has been reduced to $ 307,641 at June 30, 2019 . During April and May 2019, the Company obtained five finance leases. Payments are approximately $11,710 per month for five years and the amount of the finance lease obligation has been reduced to $ 606,508 at June 30, 2019 . The Company's outstanding debt facilities as of June 30, 2019 and December 31, 2018 are summarized as follows: Creditor Loan Type Origination Date Maturity Date Loan Amount Balance on June 30, 2019 Balance on December 31, 2018 Encina Business Credit, LLC Term Loan February 1, 2017 February 1, 2021 $ 20,000,000 $ 14,900,000 $ 15,350,000 Encina Business Credit SPV, LLC Revolving Note February 1, 2017 February 1, 2021 $ 10,000,000 5,079,887 3,844,636 Wells Fargo Equipment Lease-Ohio Finance Lease April-May, 2019 April-May, 2024 $ 621,000 606,508 — Tetra Capital Lease Finance Lease May, 2018 May, 2022 $ 419,690 307,641 349,822 Well Fargo Equipment Lease-VRM LA Finance Lease March, 2018 March, 2021 $ 30,408 17,425 22,390 Various institutions Insurance premiums financed Various < 1 year $ 2,902,428 93,751 999,152 Total 21,005,212 20,566,000 Deferred finance cost, net (334,780 ) (621,733 ) Total, net of deferred finance costs $ 20,670,432 $ 19,944,267 Future contractual maturities of notes payable as of June 30, 2019 are summarized as follows: Creditor Year 1 Year 2 Year 3 Year 4 Year 5 Thereafter Encina Business Credit, LLC $ 900,000 $ 14,000,000 $ — $ — $ — $ — Encina Business Credit SPV, LLC 5,079,887 — — — — — Well Fargo Equipment Lease- Ohio 111,939 117,834 124,041 130,575 122,119 Tetra Capital Lease 88,743 94,919 123,979 — — — Well Fargo Equipment Lease- VRM LA 10,290 7,135 — — — — Various institutions 93,751 — — — — — Totals 6,284,610 14,219,888 248,020 130,575 122,119 — Deferred finance costs, net (334,780 ) — — — — — Totals, net of deferred finance costs $ 5,949,830 $ 14,219,888 $ 248,020 $ 130,575 $ 122,119 $ — |
EARNINGS PER SHARE
EARNINGS PER SHARE | 6 Months Ended |
Jun. 30, 2019 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | EARNINGS PER SHARE Basic earnings per share includes no dilution and is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the periods presented. Diluted earnings per share reflects the potential dilution of securities that could share in the earnings of an entity, such as convertible preferred stock, stock options, warrants or convertible securities. Due to their anti-dilutive effect, the calculation of diluted earnings per share for the three months ended June 30, 2019 and 2018 excludes: 1) options to purchase 3,878,632 and 3,466,714 shares, respectively, of common stock, 2) warrants to purchase 7,353,056 and 7,356,056 shares, respectively, of common stock, 3) Series B Preferred Stock which is convertible into 3,713,794 and 3,499,059 shares, respectively, of common stock, 4) Series B1 Preferred Stock which is convertible into 10,264,001 and 13,105,989 shares, respectively, of common stock, and 5) Series A Preferred Stock which is convertible into 419,859 of common stock as of June 30, 2019. Due to their anti-dilutive effect, the calculation of diluted earnings per share for the six months ended June 30, 2019 and 2018 excludes: 1) options to purchase 3,978,795 and 3,603,250 shares, respectively, of common stock, 2) warrants to purchase 7,353,056 and 7,353,056 shares, respectively, of common stock, 3) Series B Preferred Stock which is convertible into 3,713,794 and 3,499,059 shares, respectively, of common stock, 4) Series B1 Preferred Stock which is convertible into 10,264,001 and 13,105,989 shares, respectively, of common stock, 5) Series A Preferred Stock which is convertible into 419,859 and 419,859 shares, respectively, of common stock, and 6) Series C Preferred Stock, which was convertible into 3,156,800 shares of common stock as of June 30, 2018. In accordance with ASC 260-10-45, Share-Based Payment Arrangements and Participating Securities and the Two-Class Method, our Series A Preferred Stock, Series C Preferred Stock, and Series B and B1 Preferred Stock are considered participating securities. Basic earnings per common share are calculated by dividing the net income, adjusted for preferred dividends and income allocated to participating securities, by the weighted average number of common shares outstanding during the period. Diluted net income per common share reflects the dilutions that would occur if any potential dilutive instruments were exercised or converted into common shares. The dilutive effect of participating securities is calculated using the more dilutive of the treasury stock method of two-class method. Other potentially dilutive securities include preferred stock, stock options and warrants, and restricted stock. These are included in diluted shares to the extent they are dilutive under the treasury stock method for the applicable periods. During the periods of net loss, no effect is given to the participating securities because they do not share in the losses of the Company. The following is a reconciliation of the numerator and denominator for basic and diluted earnings per share for the three and six months ended June 30, 2019 and 2018 : Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Basic Earnings per Share Numerator: Net income (loss) available to common shareholders $ (1,373,236 ) $ 1,439,174 $ (7,304,270 ) $ (2,016,655 ) Less allocation of dividends to participating securities — (543,698 ) — — Total (1,373,236 ) 895,476 (7,304,270 ) (2,016,655 ) Denominator: Weighted-average shares outstanding 40,294,870 33,300,456 40,245,671 33,182,748 Basic earnings (loss) per share $ (0.03 ) $ 0.03 $ (0.18 ) $ (0.06 ) Diluted Earnings per Share Numerator: Net income (loss) available to common shareholders $ (1,373,236 ) $ 1,439,174 $ (7,304,270 ) $ (2,016,655 ) Less diluted allocation of dividends to participating securities — (446,158 ) — — Total (1,373,236 ) 993,016 (7,304,270 ) (2,016,655 ) Denominator: Weighted-average shares outstanding 40,294,870 33,300,456 40,245,671 33,182,748 Effect of dilutive securities Stock options and warrants — 136,536 — — Preferred Stock A — 419,859 — — Preferred Stock C — 3,156,800 — — Diluted weighted-average shares outstanding 40,294,870 37,013,651 40,245,671 33,182,748 Diluted earnings (loss) per share $ (0.03 ) $ 0.03 $ (0.18 ) $ (0.06 ) |
COMMON STOCK
COMMON STOCK | 6 Months Ended |
Jun. 30, 2019 | |
Common Stock, Number of Shares, Par Value and Other Disclosures [Abstract] | |
COMMON STOCK | COMMON STOCK The total number of authorized shares of the Company’s common stock is 750,000,000 shares, $0.001 par value per share. As of June 30, 2019 , there were 40,346,906 common shares issued and outstanding. During the six months ended June 30, 2019 , the Company issued 96,160 shares of common stock in connection with the conversion of Series B1 Convertible Preferred Stock into common stock of the Company, pursuant to the terms of such securities. In addition, the Company issued 75,925 shares of common stock in connection with the exercise of options. During the six months ended June 30, 2018 , the Company issued 699,121 shares of common stock in connection with the conversion of Series B, Series B1, and Series A Convertible Preferred Stock into common stock of the Company, pursuant to the terms of such securities. In addition, the Company issued 241 shares of common stock in connection with the exercise of options. |
PREFERRED STOCK AND DETACHABLE
PREFERRED STOCK AND DETACHABLE WARRANTS | 6 Months Ended |
Jun. 30, 2019 | |
Equity [Abstract] | |
PREFERRED STOCK AND DETACHABLE WARRANTS | PREFERRED STOCK AND DETACHABLE WARRANTS The total number of authorized shares of the Company’s preferred stock is 50,000,000 shares, $0.001 par value per share. The total number of designated shares of the Company’s Series A Convertible Preferred Stock is 5,000,000 (“ Series A Preferred ”). The total number of designated shares of the Company’s Series B Convertible Preferred Stock is 10,000,000 . The total number of designated shares of the Company’s Series B1 Convertible Preferred Stock is 17,000,000 . As of June 30, 2019 and December 31, 2018 , there were 419,859 shares of Series A Preferred Stock issued and outstanding. As of June 30, 2019 and December 31, 2018 , there were 3,713,794 and 3,604,827 shares of Series B Preferred Stock issued and outstanding, respectively. As of June 30, 2019 and December 31, 2018 , there were 10,264,001 and 10,057,597 shares of Series B1 Preferred Stock issued and outstanding, respectively. Series B Preferred Stock and Temporary Equity Dividends on our Series B Preferred Stock accrue at an annual rate of 6% of the original issue price of the preferred stock ( $3.10 per share), subject to increase under certain circumstances, and are payable on a quarterly basis. The dividends are payable by the Company, at the Company’s election, in registered common stock of the Company (if available), cash or in-kind in Series B Preferred Stock at $3.10 per share. The Company has the option to redeem the outstanding shares of Series B Preferred Stock at $3.10 per share, plus any accrued and unpaid dividends on such Series B Preferred Stock redeemed, at any time beginning on June 24, 2017, and the Company is required to redeem the Series B Preferred Stock at $3.10 per share, plus any accrued and unpaid dividends, on June 24, 2020, subject to the terms of the Series B Preferred Stock designation and compliance with applicable law. The Warrants issued in connection with the Series B Preferred Stock (Series B Warrants) were initially valued using the Dynamic Black Scholes Merton formula pricing model that computes the impact of share dilution upon the exercise of the warrant shares at $7,028,067 . In accordance with ASC 815-40-25 and ASC 815-10-15 Derivatives and Hedging and ASC 480-10-25 Liabilities-Distinguishing Liabilities from Equity, the convertible preferred shares are accounted for net outside of stockholders’ equity with the Warrants accounted for as liabilities at their fair value. The initial value assigned to the derivative warrant liability was recognized through a corresponding discount to the Series B Preferred Stock. The value of the derivative warrant liability will be re-measured at each reporting period with changes in fair value recorded in earnings. The initial valuation of the warrants resulted in a beneficial conversion feature on the convertible preferred stock of $5,737,796 . The amounts related to the warrant discount and beneficial conversion feature will be accreted over the term as a deemed dividend. Fees in the amount of $1.4 million relating to the stock placement were netted against proceeds. The following table represents the activity related to the Series B Preferred Stock, classified as Temporary Equity on the accompanying unaudited consolidated balance sheet, during the six months ended June 30, 2019 and 2018 : 2019 2018 Balance at beginning of period $ 8,900,208 $ 7,190,467 Less: conversions of shares to common — (62,973 ) Plus: discount accretion 666,048 525,664 Plus: dividends in kind 337,798 278,372 Balance at end of period $ 9,904,054 $ 7,931,530 The Series B Warrants and Series B1 Warrants were revalued at June 30, 2019 and December 31, 2018 using the Dynamic Black Scholes model that computes the impact of a possible change in control transaction upon the exercise of the warrant shares at approximately $ 2,440,769 and $ 1,481,692 , respectively. At June 30, 2019 , the Series B Warrants and Series B1 Warrants were valued at approximately $ 556,339 and $ 1,884,430 , respectively. The Dynamic Black Scholes Merton inputs used were: expected dividend rate of 0% , expected volatility of 66%-100% , risk free interest rate of 1.84% (Series B Warrants) and 1.73% (Series B1 Warrants), and expected term of 1.50 years (Series B Warrants) and 2.50 years (Series B1 Warrants). At June 30, 2019 and December 31, 2018 , a total of $ 172,704 and $167,642 of dividends were accrued on our outstanding Series B Preferred Stock, respectively. During the three months ended June 30, 2019 and 2018 , we paid dividends in-kind in additional shares of Series B Preferred Stock of $170,156 and $139,186 , respectively. Series B1 Preferred Stock and Temporary Equity Dividends on our Series B1 Preferred Stock accrue at an annual rate of 6% of the original issue price of the preferred stock ( $1.56 per share), and are payable on a quarterly basis. The dividends are payable by the Company, at the Company’s election, in registered common stock of the Company (if available), cash, or in-kind in Series B1 Preferred Stock at $1.56 per share. The Company has the option to redeem the outstanding shares of Series B1 Preferred Stock at $1.72 per share, plus any accrued and unpaid dividends on such Series B1 Preferred Stock redeemed, at any time beginning on June 24, 2017, and the Company is required to redeem the Series B1 Preferred Stock at $1.56 per share, plus any accrued and unpaid dividends, on June 24, 2020, subject to the terms of the Series B Preferred Stock designation and compliance with applicable law. The Warrants issued in connection with the Series B1 Preferred Stock offering (Series B1 Warrants) were initially valued using the Dynamic Black Scholes Merton formula pricing model that computes the impact of share dilution upon the exercise of the May 2016 Warrant shares at $2,867,264 . In accordance with ASC 815-40-25 and ASC 815-10-15 Derivatives and Hedging and ASC 480-10-25 Liabilities-Distinguishing Liabilities from Equity, the convertible Series B1 Preferred Stock shares are accounted for net outside of stockholders’ equity with the May 2016 Warrants accounted for as liabilities at their fair value. The initial value assigned to the derivative warrant liability was recognized through a corresponding discount to the Series B1 Preferred Stock. The value of the derivative warrant liability will be re-measured at each reporting period with changes in fair value recorded in earnings. This initial valuation of the warrants resulted in a beneficial conversion feature on the convertible preferred stock of $2,371,106 . The amounts related to the warrant discount and beneficial conversion feature will be accreted over the term as a deemed dividend. Fees in the amount of $0.6 million relating to the stock placement were netted against proceeds. The following table represents the activity related to the Series B1 Preferred Stock, classified as Temporary Equity on the accompanying Consolidated Balance Sheet, for the three months ended June 30, 2019 , and 2018 : 2019 2018 Balance at beginning of period $ 13,279,755 $ 15,769,478 Less: conversions of shares to common (119,768 ) (754,766 ) Plus: dividends in kind 472,000 683,044 Plus: discount accretion 397,310 403,014 Balance at end of period $ 14,029,297 $ 16,100,770 As of June 30, 2019 and December 31, 2018 , respectively, a total of $240,171 and $ 235,360 of dividends were accrued on our outstanding Series B1 Preferred Stock. During the three months ended June 30, 2019 and 2018 , we paid dividends in-kind in additional shares of Series B1 Preferred Stock of $236,640 and $401,517 , respectively. The following is an analysis of changes in the derivative liability for the six months ended June 30: Level Three Roll-Forward 2019 2018 Balance at beginning of period $ 1,481,692 $ 2,245,408 Change in valuation of warrants 959,077 (44,162 ) Balance at end of period $ 2,440,769 $ 2,201,246 |
SEGMENT REPORTING
SEGMENT REPORTING | 6 Months Ended |
Jun. 30, 2019 | |
Segment Reporting [Abstract] | |
SEGMENT REPORTING | SEGMENT REPORTING The Company’s reportable segments include the Black Oil, Refining & Marketing and Recovery divisions. Segment information for the three and six months ended June 30, 2019 and 2018 is as follows: THREE MONTHS ENDED JUNE 30, 2019 Black Oil Refining & Recovery Total Revenues $ 37,907,811 $ 3,277,402 $ 2,472,079 $ 43,657,292 Income (loss) from operations $ 125,851 $ (132,408 ) $ (661,321 ) $ (667,878 ) THREE MONTHS ENDED JUNE 30, 2018 Black Oil Refining & Recovery Total Revenues $ 38,469,131 $ 4,392,870 $ 4,055,769 $ 46,917,770 Income (loss) from operations $ 2,969,532 $ (357,656 ) $ 411,969 $ 3,023,845 SIX MONTHS ENDED JUNE 30, 2019 Black Oil Refining & Recovery Total Revenues $ 70,722,998 $ 6,136,023 $ 6,118,983 $ 82,978,004 Loss from operations $ (2,166,354 ) $ (535,422 ) $ (574,493 ) $ (3,276,269 ) SIX MONTHS ENDED JUNE 30, 2018 Black Oil Refining & Recovery Total Revenues $ 70,706,377 $ 10,068,111 $ 7,511,477 $ 88,285,965 Income (loss) from operations $ 2,210,180 $ (701,040 ) $ 498,208 $ 2,007,348 |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES Our effective tax rate of 0% on pretax income differs from the U.S. federal income tax rate of 21% because of the change in our valuation allowance. The year to date loss at June 30, 2019 puts the Company in an accumulated loss position for the cumulative 12 quarters then ended. For tax reporting purposes, we have net operating losses ("NOLs") of approximately $65.9 million as of June 30, 2019 that are available to reduce future taxable income. In determining the carrying value of our net deferred tax asset, the Company considered all negative and positive evidence. The Company has generated a pre-tax loss of approximately $5.4 million from January 1, 2019 through June 30, 2019 . |
COMMODITY DERIVATIVE INSTRUMENT
COMMODITY DERIVATIVE INSTRUMENTS | 6 Months Ended |
Jun. 30, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
COMMODITY DERIVATIVE INSTRUMENTS | COMMODITY DERIVATIVE INSTRUMENTS The Company utilizes derivative instruments to manage its exposure to fluctuations in the underlying commodity prices of its inventory. The Company's management sets and implements hedging policies, including volumes, types of instruments and counterparties, to support oil prices at targeted levels and manage its exposure to fluctuating prices. The Company’s derivative instruments consist of swap and futures arrangements for oil. In a commodity swap agreement, if the agreed-upon published third-party index price (“index price”) is lower than the swap fixed price, the Company receives the difference between the index price and the swap fixed price. If the index price is higher than the swap fixed price, the Company pays the difference. For futures arrangements, the Company receives the difference positive or negative between an agreed-upon strike price and the market price. The mark-to-market effects of these contracts as of June 30, 2019 and December 31, 2018, are summarized in the following table. The notional amount is equal to the total net volumetric derivative position during the period indicated. The fair value of the crude oil swap agreements is based on the difference between the strike price and the New York Mercantile Exchange futures price for the applicable trading months. As of June 30, 2019 Contract Type Contract Period Weighted Average Strike Price (Barrels) Remaining Volume (Barrels) Fair Value Swap Jul. 2019- Nov. 2019 $ 54.40 150,000 $ (216,400 ) Swap Jul. 2019- Nov. 2019 $ 79.08 150,000 $ 265,020 Futures Jul. 2019- Aug. 2019 $ 81.45 45,000 $ (157,177 ) As of December 31, 2018 Contract Type Contract Period Weighted Average Strike Price (Barrels) Remaining Volume (Barrels) Fair Value Swap Dec. 2018-Feb. 2019 $ 48.78 60,000 $ (1,048,400 ) Swap Dec. 2018-Feb. 2019 $ 68.69 60,000 $ 1,097,124 Futures Feb. 2019-Mar. 2019 $ 70.42 69,000 $ 394,317 Futures Dec. 2018-Feb. 2019 $ 45.41 30,000 $ 252,900 The carrying values of the Company's derivatives positions and their locations on the consolidated balance sheets as of June 30, 2019 and December 31, 2018 are presented in the table below. Balance Sheet Classification Contract Type 2019 2018 Crude oil swaps $ 48,620 $ 48,724 Crude oil futures (157,177 ) 647,217 Derivative commodity asset (liability) $ (108,557 ) $ 695,941 For the three months ended June 30, 2019 and 2018 , we recognized a $310,011 and $755,685 loss on commodity derivative contracts on the consolidated statements of operations as part of our costs of revenues, respectively. For the six months ended June 30, 2019 and 2018 , we recognized a $1,069,778 and $1,212,087 loss on commodity derivative contracts on the consolidated statements of operations as part of our costs of revenues, respectively. |
LEASES (Notes)
LEASES (Notes) | 6 Months Ended |
Jun. 30, 2019 | |
Leases [Abstract] | |
LEASES | LEASES The Company has various lease agreements including leases of plant, facilities, railcar, and equipment. Some leases include options to purchase, terminate or extend for one or more years. These options are included in the lease term when it is reasonably certain that the option will be exercised. Leases with an initial term of 12 months or less are not recorded on our consolidated balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. Leases with initial terms in excess of 12 months are recorded as operating or financing leases in our consolidated balance sheet. Lease assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of our leases do not provide an implicit rate, we use secured incremental borrowing rates based on the information available at commencement date, including lease term, in determining the present value of future payments. The operating lease asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that the option will be exercised. At inception, the Company determines if an arrangement contains a lease and whether that lease meets the classification criteria of a finance or operating lease. Some of the Company’s lease arrangements contain lease components (e.g. minimum rent payments) and non-lease components (e.g. maintenance, labor charges, etc.). The Company generally accounts for each component separately based on the estimated standalone price of each component. For certain equipment leases, such as freight car, vehicles and work equipment, the Company accounts for the lease and non-lease components as a single lease component. Certain of the Company’s lease agreements include rental payments that are adjusted periodically for an index or rate. The leases are initially measured using the projected payments adjusted for the index or rate in effect at the commencement date. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. Finance Leases Finance leases are included in finance lease right-of-use lease assets and finance lease liability current and long-term liabilities on the unaudited consolidated balance sheets. The associated amortization expense and interest expense are included in depreciation and amortization and interest expense, respectively, on the unaudited consolidated statements of operations. Total finance lease costs for the three and six months ended June 30, 2019 were $47,075 and $74,793 , respectively. Please see “ Part I ” - “ Item 1. Financial Statements ” - “ Note 6. Line of Credit and Long-Term Debt ” for more details. Operating Leases Operating leases are included in operating lease right-of-use lease assets, and operating current and long-term lease liabilities on the consolidated balance sheets. Lease expense for operating leases is recognized on a straight-line basis over the lease term. Variable lease expense is recognized in the period in which the obligation for those payments is incurred. Lease expense for equipment is included in cost of revenues and other rents are included in selling, general and administrative expense on the consolidated statements of operations and are reported net of lease income. Lease income is not material to the results of operations for the three and six months ended June 30, 2019. Total operating lease costs for the three and six months ended June 30, 2019 were $1.6 million and $3.1 million , respectively. Cash Flows An initial right-of-use asset of $37.8 million was recognized as a non-cash asset addition with the adoption of the new lease accounting standard. Cash paid for amounts included in operating lease liabilities was $1.0 million during the six months ended June 30, 2019 and is included in operating cash flows. Cash paid for amounts included in finance lease was $61,638 during the six months ended June 30, 2019 and is included in financing cash flows. Maturities of our lease liabilities for all operating leases are as follows as of June 30, 2019: Facilities Equipment Plant Railcar Total Year 1 $ 767,133 $ 161,539 $ 4,060,417 $ 1,153,911 $ 6,143,000 Year 2 541,970 161,539 4,060,417 815,916 5,579,842 Year 3 413,512 107,723 4,060,417 204,606 4,786,258 Year 4 324,000 — 4,060,417 8,946 4,393,363 Year 5 300,000 — 4,060,417 — 4,360,417 Thereafter 2,525,000 — 35,555,115 — 38,080,115 Total lease payments $ 4,871,615 $ 430,801 $ 55,857,200 $ 2,183,379 $ 63,342,995 Less: interest (1,803,111 ) (33,654 ) (24,431,399 ) (163,486 ) (26,431,650 ) Present value of lease liabilities $ 3,068,504 $ 397,147 $ 31,425,801 $ 2,019,893 $ 36,911,345 The weighted average remaining lease terms and discount rates for all of our operating leases were as follows as of June 30, 2019: Remaining lease term and discount rate: June 30, 2019 Weighted average remaining lease terms (years) Lease facilities 5.76 Lease equipment 2.67 Lease plant 13.76 Lease railcar 1.87 Weighted average discount rate Lease facilities 9.10 % Lease equipment 8.00 % Lease plant 9.37 % Lease railcar 8.00 % Significant Judgments Significant judgments include the discount rates applied, the expected lease terms, lease renewal options and residual value guarantees. There are several leases with renewal options or purchase options. Using the practical expedient, the Company utilized existing lease classifications as of December 31, 2018. The purchase options are not expected to have a material impact on the lease obligation. There are several facility and plant leases which have lease renewal options from one to twenty years . The largest facility lease has an initial term through 2032. That lease does not have an extension option. For the two plant leases both have multiple 5 -year extension options for a total of 20 years . Two extension options have been included in the lease right to use asset and lease obligation at June 30, 2019. The Company will reassess the lease terms and purchase options when there is a significant change in circumstances or when the Company elects to exercise an option that had previously been determined that it was not reasonably certain to do so. |
LEASES | LEASES The Company has various lease agreements including leases of plant, facilities, railcar, and equipment. Some leases include options to purchase, terminate or extend for one or more years. These options are included in the lease term when it is reasonably certain that the option will be exercised. Leases with an initial term of 12 months or less are not recorded on our consolidated balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. Leases with initial terms in excess of 12 months are recorded as operating or financing leases in our consolidated balance sheet. Lease assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As most of our leases do not provide an implicit rate, we use secured incremental borrowing rates based on the information available at commencement date, including lease term, in determining the present value of future payments. The operating lease asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that the option will be exercised. At inception, the Company determines if an arrangement contains a lease and whether that lease meets the classification criteria of a finance or operating lease. Some of the Company’s lease arrangements contain lease components (e.g. minimum rent payments) and non-lease components (e.g. maintenance, labor charges, etc.). The Company generally accounts for each component separately based on the estimated standalone price of each component. For certain equipment leases, such as freight car, vehicles and work equipment, the Company accounts for the lease and non-lease components as a single lease component. Certain of the Company’s lease agreements include rental payments that are adjusted periodically for an index or rate. The leases are initially measured using the projected payments adjusted for the index or rate in effect at the commencement date. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. Finance Leases Finance leases are included in finance lease right-of-use lease assets and finance lease liability current and long-term liabilities on the unaudited consolidated balance sheets. The associated amortization expense and interest expense are included in depreciation and amortization and interest expense, respectively, on the unaudited consolidated statements of operations. Total finance lease costs for the three and six months ended June 30, 2019 were $47,075 and $74,793 , respectively. Please see “ Part I ” - “ Item 1. Financial Statements ” - “ Note 6. Line of Credit and Long-Term Debt ” for more details. Operating Leases Operating leases are included in operating lease right-of-use lease assets, and operating current and long-term lease liabilities on the consolidated balance sheets. Lease expense for operating leases is recognized on a straight-line basis over the lease term. Variable lease expense is recognized in the period in which the obligation for those payments is incurred. Lease expense for equipment is included in cost of revenues and other rents are included in selling, general and administrative expense on the consolidated statements of operations and are reported net of lease income. Lease income is not material to the results of operations for the three and six months ended June 30, 2019. Total operating lease costs for the three and six months ended June 30, 2019 were $1.6 million and $3.1 million , respectively. Cash Flows An initial right-of-use asset of $37.8 million was recognized as a non-cash asset addition with the adoption of the new lease accounting standard. Cash paid for amounts included in operating lease liabilities was $1.0 million during the six months ended June 30, 2019 and is included in operating cash flows. Cash paid for amounts included in finance lease was $61,638 during the six months ended June 30, 2019 and is included in financing cash flows. Maturities of our lease liabilities for all operating leases are as follows as of June 30, 2019: Facilities Equipment Plant Railcar Total Year 1 $ 767,133 $ 161,539 $ 4,060,417 $ 1,153,911 $ 6,143,000 Year 2 541,970 161,539 4,060,417 815,916 5,579,842 Year 3 413,512 107,723 4,060,417 204,606 4,786,258 Year 4 324,000 — 4,060,417 8,946 4,393,363 Year 5 300,000 — 4,060,417 — 4,360,417 Thereafter 2,525,000 — 35,555,115 — 38,080,115 Total lease payments $ 4,871,615 $ 430,801 $ 55,857,200 $ 2,183,379 $ 63,342,995 Less: interest (1,803,111 ) (33,654 ) (24,431,399 ) (163,486 ) (26,431,650 ) Present value of lease liabilities $ 3,068,504 $ 397,147 $ 31,425,801 $ 2,019,893 $ 36,911,345 The weighted average remaining lease terms and discount rates for all of our operating leases were as follows as of June 30, 2019: Remaining lease term and discount rate: June 30, 2019 Weighted average remaining lease terms (years) Lease facilities 5.76 Lease equipment 2.67 Lease plant 13.76 Lease railcar 1.87 Weighted average discount rate Lease facilities 9.10 % Lease equipment 8.00 % Lease plant 9.37 % Lease railcar 8.00 % Significant Judgments Significant judgments include the discount rates applied, the expected lease terms, lease renewal options and residual value guarantees. There are several leases with renewal options or purchase options. Using the practical expedient, the Company utilized existing lease classifications as of December 31, 2018. The purchase options are not expected to have a material impact on the lease obligation. There are several facility and plant leases which have lease renewal options from one to twenty years . The largest facility lease has an initial term through 2032. That lease does not have an extension option. For the two plant leases both have multiple 5 -year extension options for a total of 20 years . Two extension options have been included in the lease right to use asset and lease obligation at June 30, 2019. The Company will reassess the lease terms and purchase options when there is a significant change in circumstances or when the Company elects to exercise an option that had previously been determined that it was not reasonably certain to do so. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2019 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS Issuance of Series B and B1 Preferred Stock Shares In-Kind and Common Stock We paid the accrued dividends on our Series B Preferred Stock and Series B1 Preferred Stock, which were accrued as of June 30, 2019 , in-kind by way of the issuance of 55,711 restricted shares of Series B Preferred Stock pro rata to each of the then holders of our Series B Preferred Stock in July 2019 and the issuance of 153,956 restricted shares of Series B1 Preferred Stock pro rata to each of the then holders of our Series B1 Preferred Stock in July 2019. If converted in full, the 55,711 shares of Series B Preferred Stock would convert into 55,711 shares of common stock and the 153,956 shares of Series B1 Preferred Stock would convert into 153,956 shares of common stock. Common Stock Option Exercise On July 20, 2019, the Company issued 2,500 shares of common stock in connection with a cash exercise of options. Myrtle Grove Share Purchase and Subscription Agreement On July 26, 2019 (the “ Closing Date ”), Vertex Refining Myrtle Grove LLC, a Delaware limited liability company, which entity was formed as a special purpose vehicle in connection with the transactions, described in greater detail below (“ MG SPV ”), Vertex Energy Operating LLC (“ Vertex Operating ”, our wholly-owned subsidiary), Tensile-Myrtle Grove Acquisition Corporation (“ Tensile-MG ”), an affiliate of Tensile Capital Partners Master Fund LP, an investment fund based in San Francisco, California (“ Tensile ”), and solely for the purposes of the MG Guaranty (defined below), we entered into and closed the transactions contemplated by a Share Purchase and Subscription Agreement (the “ MG Share Purchase ”). Prior to entering into the MG Share Purchase, Vertex Operating’s wholly-owned subsidiary, Vertex Refining LA, LLC, (“ Vertex LA ”), transferred all of the operating assets owned by it and related to the planned development of the MG Refinery (as defined below), which the parties agreed had a fair market value of $22,666,667 , to MG SPV in consideration for 21,667 Class A Units and 1,000 Class B Units of MG SPV, which units were distributed to Vertex Operating. At the closing of the MG Share Purchase (on the Closing Date), Vertex Operating sold 1,000 of the Class B Units to Tensile-MG for consideration of $1 million and Tensile-MG, purchased an additional 3,000 Class B Units directly from MG SPV for $3 million (less Tensile’s fees and expenses incurred in connection with the transaction, not to exceed $850,000 ). As a result of the transaction, Tensile, through Tensile-MG, acquired an approximate 15.58% ownership interest in MG SPV, which in turn now owns the Company’s Belle Chasse, Louisiana, re-refining complex (the “ MG Refinery ”). We are required to use all proceeds we received from the sale of the Class B Units to pay down the EBC Credit Agreement, which amount we have paid to date. The MG Share Purchase includes customary representations and warranties and requires Myrtle-Grove SPV to indemnify Tensile-MG (and its related parties), Vertex Operating to indemnify Tensile-MG (and its related parties), and Tensile-MG to indemnify the Company (and its related parties), against various matters (subject to minimum losses being incurred by Myrtle-Grove SPV (and its related parties, as applicable) of $226,000 and a maximum liability by Myrtle-Grove SPV for all losses of Myrtle-Grove SPV of $3,400,000 , subject to certain exceptions). Additionally, Myrtle-Grove SPV’s maximum indemnification liability under the agreement is not to exceed $4 million , except in the case of fraud, intentional misrepresentation or criminal activity. The MG Share Purchase also provided for a guarantee by the Company to Tensile-MG of the payment obligations of Myrtle-Grove SPV and Vertex Operating as set forth in the MG Share Purchase, including the indemnification rights summarized above (the “ MG Guaranty ”). In connection with the closing of the MG Share Purchase, MG SPV, Vertex Operating and the Company entered into an environmental remediation and indemnity agreement, whereby we agreed to indemnify and hold Tensile-MG harmless against certain environmental liabilities. On the Closing Date, and as a required term of the closing of the MG Share Purchase, Tensile entered into a Subscription Agreement dated July 25, 2019, and effective on July 26, 2019, in favor of the Company (the “ Subscription Agreement ”), pursuant to which it subscribed to purchase (a) 1,500,000 shares of our common stock (the “ Tensile Shares ”), and (b) warrants to purchase 1,500,000 shares of our common stock, which were documented by a Common Stock Purchase Warrant (the “ Warrants ” and the shares of common stock issuable upon exercise thereof, the “ Warrant Shares ”) in consideration for $2.22 million or $1.48 per share and warrant. The Warrants have an exercise price of $2.25 per share and a term of ten years . The Warrants also include a beneficial ownership limitation which prohibits Tensile from exercising any Warrants, if upon such exercise, Tensile, together with its affiliates, would, subject to limited exceptions, beneficially own in excess of 4.999% of the number of shares of our common stock outstanding immediately after the exercise. Tensile may elect to change this beneficial ownership limitation from 4.999% to up to 9.999% of the number of shares of our common stock outstanding immediately after the exercise upon 61 days ’ prior written notice to us. In connection with the subscription, we and Tensile entered into a Registration Rights and Lock-Up Agreement dated July 25, 2019 (the “ Lock-Up Agreement ”), pursuant to which we agreed to use commercially reasonable efforts to register the Tensile Shares and Warrant Shares prior to end of the Initial Lock-Up (defined below) and Tensile agreed to not sell any of the Tensile Shares or Warrant Shares for a period of one year following the Closing Date (the “ Initial Lock-Up ”) and to sell no more than 300,000 of such Tensile Shares and Warrant Shares in any 90 day period during the four years thereafter (the “ Volume Limitations ”), each, subject to certain exemptions set forth therein. The Initial Lock-Up, but not the Volume Limitation, terminates if (i) the Heartland Closing does not occur by June 30, 2020 and/or (ii) if our common stock is not traded on Nasdaq or a similar market for a period of more than five consecutive trading days. Upon any termination of the Initial Lock-Up pursuant to the preceding sentence, in the event Tensile holds any Tensile Shares, Warrant Shares or any Warrants, we are required to disclose publicly all material nonpublic information disclosed to Tensile prior to the date of such termination. The Heartland Closing requires the placement of our Heartland refinery into a standalone SPV, similar to what we have done with Myrtle Grove. Under the terms of that transaction, if closed, Tensile will acquire a 65% interest in the Heartland SPV, while the Company will retain a 35% stake and the Company will receive $13.5 million of non-recourse cash to our balance sheet. Encina Credit Agreement Amendments In connection with the transactions contemplated by the MG Share Purchase, the Company amended its EBC Credit Agreement and Revolving Credit Agreement, as further described in Note 6. |
SUMMARY OF CRITICAL ACCOUNTIN_2
SUMMARY OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES (Policies) | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Cash, Cash Equivalents and Restricted Cash | Cash, Cash Equivalents and Restricted Cash The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. |
Inventory | Inventory Inventories of products consist of feedstocks, refined petroleum products and recovered ferrous and non-ferrous metals and are reported at the lower of cost or market. Cost is determined using the first-in, first-out (“ FIFO ”) method. The Company reviews its inventory commodities whenever events or circumstances indicate that the value may not be recoverable. |
Impairment of long-lived assets | Impairment of long-lived assets The Company evaluates the carrying value and recoverability of its long-lived assets when circumstances warrant such evaluation by applying the provisions of the Financial Accounting Standards Board Accounting Standards Codification (" FASB ASC ") regarding long-lived assets. It requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through the estimated undiscounted cash flows expected to result from the use and eventual disposition of the assets. Whenever any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair value. |
Fair value of financial instruments | Fair value of financial instruments Under the FASB ASC, we are permitted to elect to measure financial instruments and certain other items at fair value, with the change in fair value recorded in earnings. We elected not to measure any eligible items using the fair value option. Consistent with the Fair Value Measurement Topic of the FASB ASC, we implemented guidelines relating to the disclosure of our methodology for periodic measurement of our assets and liabilities recorded at fair market value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-tier fair value hierarchy prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). These tiers include: • Level 1, defined as observable inputs such as quoted prices for identical instruments in active markets; • Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and • Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. Our Level 1 assets primarily include our cash and cash equivalents. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities. The carrying amounts of accounts receivable, accounts payable and accrued liabilities approximate their fair values due to the immediate or short-term maturities of these financial instruments. Our Level 2 liabilities include our marked to market changes in the estimated value of our open derivative contracts held at the balance sheet date. Our Level 3 liabilities include our marked to market changes in the estimated value of our derivative warrants issued in connection with our Series B Preferred Stock and Series B1 Preferred Stock. The Company estimates the fair values of the crude oil swaps and collars based on published forward commodity price curves for the underlying commodity as of the date of the estimate for which published forward pricing is readily available. The determination of the fair values above incorporates various factors including the impact of the Company's non-performance risk and the credit standing of the counterparty involved in the Company's derivative contracts. In addition, the Company routinely monitors the creditworthiness of its counterparty. Nonfinancial assets and liabilities measured at fair value on a nonrecurring basis include certain nonfinancial assets and liabilities as may be acquired in a business combination and thereby measured at fair value. |
Income Taxes | Income Taxes The Company accounts for income taxes in accordance with the FASB ASC Topic 740. The Company records a valuation allowance against net deferred tax assets if, based upon the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income and when temporary differences become deductible. The Company considers, among other available information, uncertainties surrounding the recoverability of deferred tax assets, scheduled reversals of deferred tax liabilities, projected future taxable income, and other matters in making this assessment. As part of the process of preparing its consolidated financial statements, the Company is required to estimate its income taxes in each of the jurisdictions in which it operates. This process requires the Company to estimate its actual current tax liability and to assess temporary differences resulting from differing book versus tax treatment of items, such as deferred revenue, compensation and benefits expense and depreciation. These temporary differences result in deferred tax assets and liabilities, which are included within the Company’s unaudited consolidated balance sheets, net of valuation allowance. Significant management judgment is required in determining the Company’s provision for income taxes, its deferred tax assets and liabilities and any valuation allowance recorded against its net deferred tax assets. If actual results differ from these estimates or the Company adjusts these estimates in future periods, the Company may need to adjust its valuation allowance, which could materially impact the Company’s consolidated financial position and results of operations. Tax contingencies can involve complex issues and may require an extended period of time to resolve. Changes in the level of annual pre-tax income can affect the Company’s overall effective tax rate. Furthermore, the Company’s interpretation of complex tax laws may impact its recognition and measurement of current and deferred income taxes. |
Derivative Transactions | Derivative Transactions All derivative instruments are recorded on the accompanying balance sheets at fair value. These derivative transactions are not designated as cash flow hedges under FASB ASC 815, Derivatives and Hedges. Accordingly, these derivative contracts are marked-to-market and any changes in the estimated value of derivative contracts held at the balance sheet date are recognized in the accompanying statements of operations as net gain or loss on derivative contracts. The derivative assets or liabilities are classified as either current or noncurrent assets or liabilities based on their anticipated settlement date. The Company nets derivative assets and liabilities for counterparties where it has a legal right of offset. In accordance with ASC 815-40-25 and ASC 815-10-15, Derivatives and Hedging and ASC 480-10-25, Liabilities-Distinguishing from Equity, convertible preferred shares are accounted for net, outside of shareholders' equity and warrants are accounted for as liabilities at their fair value during periods where they can be net cash settled in case of a change in control transaction. The warrants are accounted for as a liability at their fair value at each reporting period. The value of the derivative warrant liability will be re-measured at each reporting period with changes in fair value recorded in earnings. To derive an estimate of the fair value of these warrants, a Dynamic Black Scholes model is utilized which computes the impact of a possible change in control transaction upon the exercise of the warrant shares. This process relies upon inputs such as shares outstanding, our quoted stock prices, strike price, risk-free interest rate and volatility assumptions to dynamically adjust the payoff of the warrants in the presence of the dilution effect. |
Debt Issuance Costs | Debt Issuance Costs The Company follows the accounting guidance of ASC 835-30, Interest-Imputation of Interest, which requires that debt issuance costs related to a recognized debt liability be reported on the consolidated balance sheet as a direct reduction from the carrying amount of that debt liability. |
Revenue Recognition | Revenue Recognition We account for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. Revenue is recognized when our performance obligations under the terms of a contract with our customers are satisfied. Recognition occurs when the Company transfers control by completing the specified services at the point in time the customer benefits from the services performed or once our products are delivered. Revenue is measured as the amount of consideration we expect to receive in exchange for completing our performance obligations. Sales tax and other taxes we collect with revenue-producing activities are excluded from revenue. In the case of contracts with multiple performance obligations, the Company allocates the transaction price to each performance obligation based on the relative stand-alone selling prices of the various goods and/or services encompassed by the contract. We do not have any material significant payment terms, as payment is generally due within 30 days after the performance obligation has been satisfactorily completed. The Company has elected the practical expedient to recognize the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that we otherwise would have recognized is one year or less. In applying the guidance in Topic 606, there were no judgments or estimates made that the Company deems significant. The nature of the Company's contracts give rise to certain types of variable consideration. The Company estimates the amount of variable consideration to include in the estimated transaction price based on historical experience, anticipated performance and its best judgment at the time and to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. From time to time, our fuel oil customers in our black oil segment may request that we store product which they purchase from us in our facilities. We recognize revenues for these “bill and hold” sales once the following criteria have been met: (1) there is a substantive reason for the arrangement, (2) the product is segregated and identified as the customer's asset, (3) the product is ready for delivery to the customer, and (4) we cannot use the product or direct it to another customer. |
Reclassification of Prior Year Presentation | Reclassification of Prior Year Presentation Certain prior period amounts have been reclassified to conform to current period presentation. These reclassifications had no effect on the reported results of operations. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In February 2016, the FASB issued Accounting Standards Update No. 2016-02 (ASU 2016-02), Leases (Topic 842) . ASU 2016-02 requires companies to recognize lease assets and lease liabilities on the balance sheet and disclose key information about leasing arrangements. We adopted ASU 2016-02, Leases (Topic 842) effective January 1, 2019 and will not recast comparative periods in transition to the new standard. In addition, we elected certain practical expedients which permit us to not reassess whether existing contracts are or contain leases, to not reassess the lease classification of any existing leases, to not reassess initial direct costs for any existing leases, and to not separate lease and nonlease components for all classes of underlying assets. We also made an accounting policy election to keep leases with an initial term of 12 months or less off of the balance sheet for all classes of underlying assets. Adoption of the new standard resulted in an increase in the Company’s assets and liabilities of approximately $37.8 million . The ASU did not have an impact on our consolidated results of operations or cash flows. |
SUMMARY OF CRITICAL ACCOUNTIN_3
SUMMARY OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Accounting Policies [Abstract] | |
Summary of Restrictions on Cash and Cash Equivalents | The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the consolidated balance sheets to the same such amounts shown in the consolidated statements of cash flows. June 30, 2019 June 30, 2018 Cash and cash equivalents $ 498,219 $ 1,618,830 Restricted cash 100,007 100,000 Cash and cash equivalents and restricted cash as shown in the consolidated statements of cash flows $ 598,226 $ 1,718,830 |
Schedule of Cash and Cash Equivalents | The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the consolidated balance sheets to the same such amounts shown in the consolidated statements of cash flows. June 30, 2019 June 30, 2018 Cash and cash equivalents $ 498,219 $ 1,618,830 Restricted cash 100,007 100,000 Cash and cash equivalents and restricted cash as shown in the consolidated statements of cash flows $ 598,226 $ 1,718,830 |
CONCENTRATIONS, SIGNIFICANT C_2
CONCENTRATIONS, SIGNIFICANT CUSTOMERS, COMMITMENTS AND CONTINGENCIES (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Concentrations, Significant Customers, Commitments And Contingencies Disclosure [Abstract] | |
Schedule of Concentrations | At June 30, 2019 and 2018 and for each of the six months then ended, the Company’s revenues and receivables were comprised of the following customer concentrations: Six Months Ended June 30, 2019 Six Months Ended % of Revenues % of Receivables % of Revenues % of Receivables Customer 1 31% 20% 42% 13% Customer 2 17% —% 2% 3% Customer 3 11% 8% 9% 1% Customer 4 7% 14% —% —% Customer 5 4% 10% 5% 18% At June 30, 2019 and 2018 and for each of the six months then ended, the Company's segment revenues were comprised of the following customer concentrations: % of Revenue by Segment % Revenue by Segment Six Months Ended June 30, 2019 Six Months Ended June 30, 2018 Black Oil Refining Recovery Black Oil Refining Recovery Customer 1 36% —% —% 53% —% —% Customer 2 20% —% —% 3% —% —% Customer 3 12% —% —% 11% —% —% Customer 4 8% —% —% —% —% —% Customer 5 4% —% —% 6% —% —% |
REVENUES (Tables)
REVENUES (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | The following table presents our revenues disaggregated by revenue source: Three Months Ended June 30, 2019 Black Oil Refining & Marketing Recovery Total Primary Geographical Markets Northern United States $ 9,880,565 $ — $ — $ 9,880,565 Southern United States 28,027,246 3,277,402 2,472,079 33,776,727 $ 37,907,811 $ 3,277,402 $ 2,472,079 $ 43,657,292 Sources of Revenue Petroleum products $ 37,907,811 $ 3,277,402 $ 642,596 $ 41,827,809 Metals — — 1,829,483 1,829,483 Total revenues $ 37,907,811 $ 3,277,402 $ 2,472,079 $ 43,657,292 Six Months Ended June 30, 2019 Black Oil Refining & Marketing Recovery Total Primary Geographical Markets Northern United States $ 19,204,348 $ — $ — $ 19,204,348 Southern United States 51,518,650 6,136,023 6,118,983 63,773,656 $ 70,722,998 $ 6,136,023 $ 6,118,983 $ 82,978,004 Sources of Revenue Petroleum products $ 70,722,998 $ 6,136,023 $ 1,854,113 $ 78,713,134 Metals — — 4,264,870 4,264,870 Total revenues $ 70,722,998 $ 6,136,023 $ 6,118,983 $ 82,978,004 Three Months Ended June 30, 2018 Black Oil Refining & Marketing Recovery Total Primary Geographical Markets Northern United States $ 10,115,827 $ — $ — $ 10,115,827 Southern United States 28,353,304 4,392,870 4,055,769 36,801,943 $ 38,469,131 $ 4,392,870 $ 4,055,769 $ 46,917,770 Sources of Revenue Petroleum products $ 38,469,131 $ 4,392,870 $ 683,270 $ 43,545,271 Metals — — 3,372,499 3,372,499 Total revenues $ 38,469,131 $ 4,392,870 $ 4,055,769 $ 46,917,770 Six Months Ended June 30, 2018 Black Oil Refining & Marketing Recovery Total Primary Geographical Markets Northern United States $ 18,953,057 $ — $ — $ 18,953,057 Southern United States 51,753,320 10,068,111 7,511,477 69,332,908 $ 70,706,377 $ 10,068,111 $ 7,511,477 $ 88,285,965 Sources of Revenue Petroleum products $ 70,706,377 $ 10,068,111 $ 1,060,412 $ 81,834,900 Metals — — 6,451,065 6,451,065 Total revenues $ 70,706,377 $ 10,068,111 $ 7,511,477 $ 88,285,965 |
ACCOUNTS RECEIVABLE (Tables)
ACCOUNTS RECEIVABLE (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Receivables [Abstract] | |
Schedule of Accounts Receivable | Accounts receivable, net, consists of the following at June 30, 2019 and December 31, 2018 : June 30, 2019 December 31, 2018 Accounts receivable trade $ 11,966,601 $ 9,859,758 Allowance for doubtful accounts (466,094 ) (831,768 ) Accounts receivable trade, net $ 11,500,507 $ 9,027,990 |
LINE OF CREDIT AND LONG-TERM _2
LINE OF CREDIT AND LONG-TERM DEBT (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Debt Disclosure [Abstract] | |
Schedule of Outstanding Debt Facilities | The Company's outstanding debt facilities as of June 30, 2019 and December 31, 2018 are summarized as follows: Creditor Loan Type Origination Date Maturity Date Loan Amount Balance on June 30, 2019 Balance on December 31, 2018 Encina Business Credit, LLC Term Loan February 1, 2017 February 1, 2021 $ 20,000,000 $ 14,900,000 $ 15,350,000 Encina Business Credit SPV, LLC Revolving Note February 1, 2017 February 1, 2021 $ 10,000,000 5,079,887 3,844,636 Wells Fargo Equipment Lease-Ohio Finance Lease April-May, 2019 April-May, 2024 $ 621,000 606,508 — Tetra Capital Lease Finance Lease May, 2018 May, 2022 $ 419,690 307,641 349,822 Well Fargo Equipment Lease-VRM LA Finance Lease March, 2018 March, 2021 $ 30,408 17,425 22,390 Various institutions Insurance premiums financed Various < 1 year $ 2,902,428 93,751 999,152 Total 21,005,212 20,566,000 Deferred finance cost, net (334,780 ) (621,733 ) Total, net of deferred finance costs $ 20,670,432 $ 19,944,267 |
Schedule of Future Maturities of Notes Payable | Future contractual maturities of notes payable as of June 30, 2019 are summarized as follows: Creditor Year 1 Year 2 Year 3 Year 4 Year 5 Thereafter Encina Business Credit, LLC $ 900,000 $ 14,000,000 $ — $ — $ — $ — Encina Business Credit SPV, LLC 5,079,887 — — — — — Well Fargo Equipment Lease- Ohio 111,939 117,834 124,041 130,575 122,119 Tetra Capital Lease 88,743 94,919 123,979 — — — Well Fargo Equipment Lease- VRM LA 10,290 7,135 — — — — Various institutions 93,751 — — — — — Totals 6,284,610 14,219,888 248,020 130,575 122,119 — Deferred finance costs, net (334,780 ) — — — — — Totals, net of deferred finance costs $ 5,949,830 $ 14,219,888 $ 248,020 $ 130,575 $ 122,119 $ — |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Earnings Per Share [Abstract] | |
Schedule of Reconciliation of Basic and Diluted Earnings Per Share | The following is a reconciliation of the numerator and denominator for basic and diluted earnings per share for the three and six months ended June 30, 2019 and 2018 : Three Months Ended June 30, Six Months Ended June 30, 2019 2018 2019 2018 Basic Earnings per Share Numerator: Net income (loss) available to common shareholders $ (1,373,236 ) $ 1,439,174 $ (7,304,270 ) $ (2,016,655 ) Less allocation of dividends to participating securities — (543,698 ) — — Total (1,373,236 ) 895,476 (7,304,270 ) (2,016,655 ) Denominator: Weighted-average shares outstanding 40,294,870 33,300,456 40,245,671 33,182,748 Basic earnings (loss) per share $ (0.03 ) $ 0.03 $ (0.18 ) $ (0.06 ) Diluted Earnings per Share Numerator: Net income (loss) available to common shareholders $ (1,373,236 ) $ 1,439,174 $ (7,304,270 ) $ (2,016,655 ) Less diluted allocation of dividends to participating securities — (446,158 ) — — Total (1,373,236 ) 993,016 (7,304,270 ) (2,016,655 ) Denominator: Weighted-average shares outstanding 40,294,870 33,300,456 40,245,671 33,182,748 Effect of dilutive securities Stock options and warrants — 136,536 — — Preferred Stock A — 419,859 — — Preferred Stock C — 3,156,800 — — Diluted weighted-average shares outstanding 40,294,870 37,013,651 40,245,671 33,182,748 Diluted earnings (loss) per share $ (0.03 ) $ 0.03 $ (0.18 ) $ (0.06 ) |
PREFERRED STOCK AND DETACHABL_2
PREFERRED STOCK AND DETACHABLE WARRANTS (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Equity [Abstract] | |
Summary of Temporary Equity | The following table represents the activity related to the Series B1 Preferred Stock, classified as Temporary Equity on the accompanying Consolidated Balance Sheet, for the three months ended June 30, 2019 , and 2018 : 2019 2018 Balance at beginning of period $ 13,279,755 $ 15,769,478 Less: conversions of shares to common (119,768 ) (754,766 ) Plus: dividends in kind 472,000 683,044 Plus: discount accretion 397,310 403,014 Balance at end of period $ 14,029,297 $ 16,100,770 The following table represents the activity related to the Series B Preferred Stock, classified as Temporary Equity on the accompanying unaudited consolidated balance sheet, during the six months ended June 30, 2019 and 2018 : 2019 2018 Balance at beginning of period $ 8,900,208 $ 7,190,467 Less: conversions of shares to common — (62,973 ) Plus: discount accretion 666,048 525,664 Plus: dividends in kind 337,798 278,372 Balance at end of period $ 9,904,054 $ 7,931,530 |
Schedule of Liabilities with Unobservable Inputs | The following is an analysis of changes in the derivative liability for the six months ended June 30: Level Three Roll-Forward 2019 2018 Balance at beginning of period $ 1,481,692 $ 2,245,408 Change in valuation of warrants 959,077 (44,162 ) Balance at end of period $ 2,440,769 $ 2,201,246 |
SEGMENT REPORTING (Tables)
SEGMENT REPORTING (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Segment Reporting [Abstract] | |
Schedule of the Company's reportable segment information | The Company’s reportable segments include the Black Oil, Refining & Marketing and Recovery divisions. Segment information for the three and six months ended June 30, 2019 and 2018 is as follows: THREE MONTHS ENDED JUNE 30, 2019 Black Oil Refining & Recovery Total Revenues $ 37,907,811 $ 3,277,402 $ 2,472,079 $ 43,657,292 Income (loss) from operations $ 125,851 $ (132,408 ) $ (661,321 ) $ (667,878 ) THREE MONTHS ENDED JUNE 30, 2018 Black Oil Refining & Recovery Total Revenues $ 38,469,131 $ 4,392,870 $ 4,055,769 $ 46,917,770 Income (loss) from operations $ 2,969,532 $ (357,656 ) $ 411,969 $ 3,023,845 SIX MONTHS ENDED JUNE 30, 2019 Black Oil Refining & Recovery Total Revenues $ 70,722,998 $ 6,136,023 $ 6,118,983 $ 82,978,004 Loss from operations $ (2,166,354 ) $ (535,422 ) $ (574,493 ) $ (3,276,269 ) SIX MONTHS ENDED JUNE 30, 2018 Black Oil Refining & Recovery Total Revenues $ 70,706,377 $ 10,068,111 $ 7,511,477 $ 88,285,965 Income (loss) from operations $ 2,210,180 $ (701,040 ) $ 498,208 $ 2,007,348 |
COMMODITY DERIVATIVE INSTRUME_2
COMMODITY DERIVATIVE INSTRUMENTS (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Instruments | he fair value of the crude oil swap agreements is based on the difference between the strike price and the New York Mercantile Exchange futures price for the applicable trading months. As of June 30, 2019 Contract Type Contract Period Weighted Average Strike Price (Barrels) Remaining Volume (Barrels) Fair Value Swap Jul. 2019- Nov. 2019 $ 54.40 150,000 $ (216,400 ) Swap Jul. 2019- Nov. 2019 $ 79.08 150,000 $ 265,020 Futures Jul. 2019- Aug. 2019 $ 81.45 45,000 $ (157,177 ) As of December 31, 2018 Contract Type Contract Period Weighted Average Strike Price (Barrels) Remaining Volume (Barrels) Fair Value Swap Dec. 2018-Feb. 2019 $ 48.78 60,000 $ (1,048,400 ) Swap Dec. 2018-Feb. 2019 $ 68.69 60,000 $ 1,097,124 Futures Feb. 2019-Mar. 2019 $ 70.42 69,000 $ 394,317 Futures Dec. 2018-Feb. 2019 $ 45.41 30,000 $ 252,900 |
Fair Value of Derivative Instruments within Balance Sheet | The carrying values of the Company's derivatives positions and their locations on the consolidated balance sheets as of June 30, 2019 and December 31, 2018 are presented in the table below. Balance Sheet Classification Contract Type 2019 2018 Crude oil swaps $ 48,620 $ 48,724 Crude oil futures (157,177 ) 647,217 Derivative commodity asset (liability) $ (108,557 ) $ 695,941 |
LEASES (Tables)
LEASES (Tables) | 6 Months Ended |
Jun. 30, 2019 | |
Leases [Abstract] | |
Schedule of maturities of operating lease liabilities | Maturities of our lease liabilities for all operating leases are as follows as of June 30, 2019: Facilities Equipment Plant Railcar Total Year 1 $ 767,133 $ 161,539 $ 4,060,417 $ 1,153,911 $ 6,143,000 Year 2 541,970 161,539 4,060,417 815,916 5,579,842 Year 3 413,512 107,723 4,060,417 204,606 4,786,258 Year 4 324,000 — 4,060,417 8,946 4,393,363 Year 5 300,000 — 4,060,417 — 4,360,417 Thereafter 2,525,000 — 35,555,115 — 38,080,115 Total lease payments $ 4,871,615 $ 430,801 $ 55,857,200 $ 2,183,379 $ 63,342,995 Less: interest (1,803,111 ) (33,654 ) (24,431,399 ) (163,486 ) (26,431,650 ) Present value of lease liabilities $ 3,068,504 $ 397,147 $ 31,425,801 $ 2,019,893 $ 36,911,345 |
Schedule of operating lease weighted average remaining lease terms and discount rates | The weighted average remaining lease terms and discount rates for all of our operating leases were as follows as of June 30, 2019: Remaining lease term and discount rate: June 30, 2019 Weighted average remaining lease terms (years) Lease facilities 5.76 Lease equipment 2.67 Lease plant 13.76 Lease railcar 1.87 Weighted average discount rate Lease facilities 9.10 % Lease equipment 8.00 % Lease plant 9.37 % Lease railcar 8.00 % |
BASIS OF PRESENTATION AND NAT_2
BASIS OF PRESENTATION AND NATURE OF OPERATIONS (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Working capital (deficit) | $ (3,684,407) | $ 6,547,301 |
SUMMARY OF CRITICAL ACCOUNTIN_4
SUMMARY OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES- Summary of Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 | Jun. 30, 2018 | Dec. 31, 2017 |
Accounting Policies [Abstract] | ||||
Cash and cash equivalents | $ 498,219 | $ 1,249,831 | $ 1,618,830 | |
Restricted cash | 100,007 | 1,600,000 | 100,000 | |
Cash and cash equivalents and restricted cash as shown in the consolidated statements of cash flows | $ 598,226 | $ 2,849,831 | $ 1,718,830 | $ 1,105,787 |
SUMMARY OF CRITICAL ACCOUNTIN_5
SUMMARY OF CRITICAL ACCOUNTING POLICIES AND ESTIMATES- Narrative (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2019 | Jan. 01, 2019 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Asset impairment | $ 0 | |
Accounting Standards Update 2018-11 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Lease, asset | $ 37,800,000 | |
Lease liability | $ 37,800,000 |
CONCENTRATIONS, SIGNIFICANT C_3
CONCENTRATIONS, SIGNIFICANT CUSTOMERS, COMMITMENTS AND CONTINGENCIES (Details) - Customer concentration risk | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Revenues | Customer 1 | ||
Revenue, Major Customer [Line Items] | ||
Concentration percentage | 31.00% | 42.00% |
Revenues | Customer 1 | Black Oil | ||
Revenue, Major Customer [Line Items] | ||
Concentration percentage | 36.00% | 53.00% |
Revenues | Customer 1 | Refining | ||
Revenue, Major Customer [Line Items] | ||
Concentration percentage | 0.00% | 0.00% |
Revenues | Customer 1 | Recovery | ||
Revenue, Major Customer [Line Items] | ||
Concentration percentage | 0.00% | 0.00% |
Revenues | Customer 2 | ||
Revenue, Major Customer [Line Items] | ||
Concentration percentage | 17.00% | 2.00% |
Revenues | Customer 2 | Black Oil | ||
Revenue, Major Customer [Line Items] | ||
Concentration percentage | 20.00% | 3.00% |
Revenues | Customer 2 | Refining | ||
Revenue, Major Customer [Line Items] | ||
Concentration percentage | 0.00% | 0.00% |
Revenues | Customer 2 | Recovery | ||
Revenue, Major Customer [Line Items] | ||
Concentration percentage | 0.00% | 0.00% |
Revenues | Customer 3 | ||
Revenue, Major Customer [Line Items] | ||
Concentration percentage | 11.00% | 9.00% |
Revenues | Customer 3 | Black Oil | ||
Revenue, Major Customer [Line Items] | ||
Concentration percentage | 12.00% | 11.00% |
Revenues | Customer 3 | Refining | ||
Revenue, Major Customer [Line Items] | ||
Concentration percentage | 0.00% | 0.00% |
Revenues | Customer 3 | Recovery | ||
Revenue, Major Customer [Line Items] | ||
Concentration percentage | 0.00% | 0.00% |
Revenues | Customer 4 | ||
Revenue, Major Customer [Line Items] | ||
Concentration percentage | 7.00% | 0.00% |
Revenues | Customer 4 | Black Oil | ||
Revenue, Major Customer [Line Items] | ||
Concentration percentage | 8.00% | 0.00% |
Revenues | Customer 4 | Refining | ||
Revenue, Major Customer [Line Items] | ||
Concentration percentage | 0.00% | 0.00% |
Revenues | Customer 4 | Recovery | ||
Revenue, Major Customer [Line Items] | ||
Concentration percentage | 0.00% | 0.00% |
Revenues | Customer 5 | ||
Revenue, Major Customer [Line Items] | ||
Concentration percentage | 4.00% | 5.00% |
Revenues | Customer 5 | Black Oil | ||
Revenue, Major Customer [Line Items] | ||
Concentration percentage | 4.00% | 6.00% |
Revenues | Customer 5 | Refining | ||
Revenue, Major Customer [Line Items] | ||
Concentration percentage | 0.00% | 0.00% |
Revenues | Customer 5 | Recovery | ||
Revenue, Major Customer [Line Items] | ||
Concentration percentage | 0.00% | 0.00% |
Receivables | Customer 1 | ||
Revenue, Major Customer [Line Items] | ||
Concentration percentage | 20.00% | 13.00% |
Receivables | Customer 2 | ||
Revenue, Major Customer [Line Items] | ||
Concentration percentage | 0.00% | 3.00% |
Receivables | Customer 3 | ||
Revenue, Major Customer [Line Items] | ||
Concentration percentage | 8.00% | 1.00% |
Receivables | Customer 4 | ||
Revenue, Major Customer [Line Items] | ||
Concentration percentage | 14.00% | 0.00% |
Receivables | Customer 5 | ||
Revenue, Major Customer [Line Items] | ||
Concentration percentage | 10.00% | 18.00% |
CONCENTRATIONS, SIGNIFICANT C_4
CONCENTRATIONS, SIGNIFICANT CUSTOMERS, COMMITMENTS AND CONTINGENCIES (Details Narrative) | Feb. 12, 2016lawsuit |
Vertex Refining LA, LLC | |
Revenue, Major Customer [Line Items] | |
Number of lawsuits named as defendant | 5 |
REVENUES (Details)
REVENUES (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Disaggregation of Revenue [Line Items] | ||||
Revenues | $ 43,657,292 | $ 46,917,770 | $ 82,978,004 | $ 88,285,965 |
Petroleum products | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 41,827,809 | 43,545,271 | 78,713,134 | 81,834,900 |
Metals | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 1,829,483 | 3,372,499 | 4,264,870 | 6,451,065 |
Northern United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 9,880,565 | 10,115,827 | 19,204,348 | 18,953,057 |
Southern United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 33,776,727 | 36,801,943 | 63,773,656 | 69,332,908 |
Black Oil | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 37,907,811 | 38,469,131 | 70,722,998 | 70,706,377 |
Black Oil | Petroleum products | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 37,907,811 | 38,469,131 | 70,722,998 | 70,706,377 |
Black Oil | Metals | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 0 | 0 | 0 | 0 |
Black Oil | Northern United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 9,880,565 | 10,115,827 | 19,204,348 | 18,953,057 |
Black Oil | Southern United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 28,027,246 | 28,353,304 | 51,518,650 | 51,753,320 |
Refining & Marketing | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 3,277,402 | 4,392,870 | 6,136,023 | 10,068,111 |
Refining & Marketing | Petroleum products | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 3,277,402 | 4,392,870 | 6,136,023 | 10,068,111 |
Refining & Marketing | Metals | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 0 | 0 | 0 | 0 |
Refining & Marketing | Northern United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 0 | 0 | 0 | 0 |
Refining & Marketing | Southern United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 3,277,402 | 4,392,870 | 6,136,023 | 10,068,111 |
Recovery | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 2,472,079 | 4,055,769 | 6,118,983 | 7,511,477 |
Recovery | Petroleum products | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 642,596 | 683,270 | 1,854,113 | 1,060,412 |
Recovery | Metals | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 1,829,483 | 3,372,499 | 4,264,870 | 6,451,065 |
Recovery | Northern United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | 0 | 0 | 0 | 0 |
Recovery | Southern United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenues | $ 2,472,079 | $ 4,055,769 | $ 6,118,983 | $ 7,511,477 |
ACCOUNTS RECEIVABLE (Details)
ACCOUNTS RECEIVABLE (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Accounts Receivable, after Allowance for Credit Loss, Current [Abstract] | ||
Accounts receivable trade | $ 11,966,601 | $ 9,859,758 |
Allowance for doubtful accounts | (466,094) | (831,768) |
Accounts receivable trade, net | $ 11,500,507 | $ 9,027,990 |
LINE OF CREDIT AND LONG-TERM _3
LINE OF CREDIT AND LONG-TERM DEBT (Details Narrative) | Jul. 26, 2019USD ($) | May 29, 2018USD ($)lease | Mar. 01, 2018USD ($)lease | May 31, 2019USD ($)lease | Jun. 30, 2019USD ($) | Dec. 31, 2018USD ($) | Feb. 01, 2017USD ($) |
Line of Credit Facility [Line Items] | |||||||
Long-term debt | $ 21,005,212 | $ 20,566,000 | |||||
Finance lease payment | 61,638 | ||||||
Encina Business Credit SPV, LLC | Revolving line of credit | |||||||
Line of Credit Facility [Line Items] | |||||||
Long-term debt | 5,079,887 | 3,844,636 | |||||
Encina Business Credit, LLC | Term loan | |||||||
Line of Credit Facility [Line Items] | |||||||
Long-term debt | 14,900,000 | 15,350,000 | |||||
Various institutions | Insurance premiums financed | |||||||
Line of Credit Facility [Line Items] | |||||||
Long-term debt | 93,751 | 999,152 | |||||
Tetra Capital Lease | |||||||
Line of Credit Facility [Line Items] | |||||||
Number of finance leases assumed | lease | 1 | ||||||
Finance lease payment | $ 26,305 | ||||||
Finance lease term | 4 years | ||||||
Tetra Capital Lease | Finance Lease | |||||||
Line of Credit Facility [Line Items] | |||||||
Finance lease obligation | 307,641 | ||||||
Tetra Capital Lease | Capital Lease | |||||||
Line of Credit Facility [Line Items] | |||||||
Long-term debt | 349,822 | ||||||
Well Fargo Equipment Lease-VRM LA | |||||||
Line of Credit Facility [Line Items] | |||||||
Number of finance leases assumed | lease | 1 | ||||||
Finance lease payment | $ 908 | ||||||
Finance lease term | 3 years | ||||||
Well Fargo Equipment Lease-VRM LA | Finance Lease | |||||||
Line of Credit Facility [Line Items] | |||||||
Finance lease obligation | 17,425 | ||||||
Well Fargo Equipment Lease-VRM LA | Capital Lease | |||||||
Line of Credit Facility [Line Items] | |||||||
Long-term debt | 22,390 | ||||||
Wells Fargo Equipment Lease-Ohio | |||||||
Line of Credit Facility [Line Items] | |||||||
Number of finance leases assumed | lease | 5 | ||||||
Finance lease payment | $ 11,710 | ||||||
Finance lease term | 5 years | ||||||
Wells Fargo Equipment Lease-Ohio | Finance Lease | |||||||
Line of Credit Facility [Line Items] | |||||||
Finance lease obligation | $ 606,508 | ||||||
Wells Fargo Equipment Lease-Ohio | Capital Lease | |||||||
Line of Credit Facility [Line Items] | |||||||
Long-term debt | $ 0 | ||||||
Minimum | Various institutions | Insurance premiums financed | |||||||
Line of Credit Facility [Line Items] | |||||||
Debt instrument, stated rate (percent) | 4.00% | ||||||
Maximum | Various institutions | Insurance premiums financed | |||||||
Line of Credit Facility [Line Items] | |||||||
Debt instrument, stated rate (percent) | 4.52% | ||||||
Line of Credit | EBC Credit Agreement | |||||||
Line of Credit Facility [Line Items] | |||||||
Line of credit, maximum borrowing capacity | $ 20,000,000 | ||||||
Line of credit outstanding as percent of operating plant facilities and related machinery and equipment (percent) | 50.00% | ||||||
Line of credit, period for dividends included in calculation of interest rate tier | 12 months | ||||||
Debt instrument, interest rate, incremental increase per event of default (percent) | 2.00% | ||||||
Debit instrument, quarterly principal payment | $ 75,000 | ||||||
Effective interest rate | 12.00% | ||||||
Line of credit, debt covenant, maximum annual capital expenditures allowed | $ 3,000,000 | ||||||
Line of credit, debt covenant, minimum average borrowing availability in any 30 day period | 2,500,000 | ||||||
Line of credit, debt covenant, event of default under any agreement, debt amount minimum | 500,000 | ||||||
Line of credit, debt covenant, event of default, minimum legal judgment amount, Minimum | $ 500,000 | ||||||
Line of credit, debt covenant, event of default, change in stock ownership by executive officers, minimum (percent) | 15.00% | ||||||
Line of credit, debt covenant, event of default, change in ownership, minimum (percent) | 30.00% | ||||||
Line of credit, debt covenant, event of default, period during which a majority of duly elected board members cease to serve | 12 months | ||||||
Line of Credit | EBC Credit Agreement | Minimum | |||||||
Line of Credit Facility [Line Items] | |||||||
Line of credit, average availability included in calculation of interest rate tier | $ 2,500,000 | ||||||
Line of credit, voluntary repayment amount | 100,000 | ||||||
Line of Credit | EBC Credit Agreement | Maximum | |||||||
Line of Credit Facility [Line Items] | |||||||
Line of credit, average availability included in calculation of interest rate tier | $ 2,500,000 | ||||||
Line of Credit | EBC Credit Agreement | Tier One | |||||||
Line of Credit Facility [Line Items] | |||||||
Debt instrument, stated rate (percent) | 12.00% | ||||||
Line of Credit | EBC Credit Agreement | Tier One | Minimum | |||||||
Line of Credit Facility [Line Items] | |||||||
Debt covenant ratio | 1 | ||||||
Line of Credit | EBC Credit Agreement | Tier Two | |||||||
Line of Credit Facility [Line Items] | |||||||
Debt instrument, stated rate (percent) | 13.00% | ||||||
Line of Credit | EBC Credit Agreement | Tier Two | Minimum | |||||||
Line of Credit Facility [Line Items] | |||||||
Debt covenant ratio | 1 | ||||||
Line of Credit | EBC Credit Agreement | Tier Two | Maximum | |||||||
Line of Credit Facility [Line Items] | |||||||
Debt covenant ratio | 1.45 | ||||||
Line of Credit | EBC Credit Agreement | Tier Three | |||||||
Line of Credit Facility [Line Items] | |||||||
Debt instrument, stated rate (percent) | 14.00% | ||||||
Line of Credit | EBC Credit Agreement | Tier Three | Minimum | |||||||
Line of Credit Facility [Line Items] | |||||||
Debt covenant ratio | 1.45 | ||||||
Revolving line of credit | Encina Business Credit SPV, LLC | |||||||
Line of Credit Facility [Line Items] | |||||||
Line of credit, maximum borrowing capacity | $ 2,902,448 | $ 10,000,000 | |||||
Line of credit, debt covenant, maximum annual capital expenditures allowed | 3,000,000 | ||||||
Line of credit, debt covenant, minimum average borrowing availability in any 30 day period | $ 2,500,000 | ||||||
Revolving line of credit | Encina Business Credit SPV, LLC | One Month LIBOR | |||||||
Line of Credit Facility [Line Items] | |||||||
Debt instrument, stated rate (percent) | 2.44% | ||||||
Debt instrument, interest rate, incremental increase per event of default (percent) | 2.00% | ||||||
Variable rate, basis spread | 6.50% | ||||||
Revolving line of credit | Encina Business Credit SPV, LLC | Federal Funds Rate | |||||||
Line of Credit Facility [Line Items] | |||||||
Debt instrument, stated rate (percent) | 0.50% | ||||||
Revolving line of credit | Encina Business Credit SPV, LLC | London Interbank Offered Rate (LIBOR) | |||||||
Line of Credit Facility [Line Items] | |||||||
Variable rate, basis spread | 1.00% | ||||||
Revolving line of credit | Minimum | Encina Business Credit SPV, LLC | One Month LIBOR | |||||||
Line of Credit Facility [Line Items] | |||||||
Debt instrument, stated rate (percent) | 0.25% | ||||||
Revolving line of credit | Tier One | Encina Business Credit SPV, LLC | |||||||
Line of Credit Facility [Line Items] | |||||||
Line of credit, eligible inventory included in calculation of maximum allowable outstanding balance (percent) | 85.00% | ||||||
Revolving line of credit | Tier Two | Encina Business Credit SPV, LLC | |||||||
Line of Credit Facility [Line Items] | |||||||
Line of credit, eligible inventory included in calculation of maximum allowable outstanding balance (percent) | 65.00% | ||||||
Line of credit, eligible inventory included in calculation of maximum allowable outstanding balance, ceiling | $ 4,000,000 | ||||||
Line of credit, eligible receivables included in calculation of maximum allowable outstanding balance, percent | 85.00% | ||||||
Subsequent event | Line of Credit | EBC Credit Agreement | |||||||
Line of Credit Facility [Line Items] | |||||||
Line of credit, debt covenant, event of default under any agreement, debt amount minimum | $ 750,000 | ||||||
Subsequent event | Line of Credit | EBC Credit Agreement | Tier One | |||||||
Line of Credit Facility [Line Items] | |||||||
Line of credit, debt covenant, maximum annual capital expenditures allowed | 3,500,000 | ||||||
Line of credit, debt covenant, minimum average borrowing availability in any 30 day period | 1,500,000 | ||||||
Subsequent event | Line of Credit | EBC Credit Agreement | Tier Two | |||||||
Line of Credit Facility [Line Items] | |||||||
Line of credit, debt covenant, maximum annual capital expenditures allowed | 3,000,000 | ||||||
Line of credit, debt covenant, minimum average borrowing availability in any 30 day period | 2,000,000 | ||||||
Subsequent event | Line of Credit | MG Purchase Agreement | |||||||
Line of Credit Facility [Line Items] | |||||||
Maximum payment to lenders | 1,100,000 | ||||||
Subsequent event | Line of Credit | Heartland Purchase Agreement | |||||||
Line of Credit Facility [Line Items] | |||||||
Maximum payment to lenders | $ 9,000,000 |
LINE OF CREDIT AND LONG-TERM _4
LINE OF CREDIT AND LONG-TERM DEBT (Details) - USD ($) | Jun. 30, 2019 | Dec. 31, 2018 |
Long-term Debt | ||
Long-term debt | $ 21,005,212 | $ 20,566,000 |
Deferred finance cost, net | (334,780) | (621,733) |
Total, net of deferred finance costs | 20,670,432 | 19,944,267 |
Secured debt | Encina Business Credit, LLC | ||
Line of Credit Facility [Line Items] | ||
Loan Amount | 20,000,000 | |
Long-term Debt | ||
Long-term debt | 14,900,000 | 15,350,000 |
Revolving line of credit | Encina Business Credit SPV, LLC | ||
Line of Credit Facility [Line Items] | ||
Loan Amount | 10,000,000 | |
Long-term Debt | ||
Long-term debt | 5,079,887 | 3,844,636 |
Finance Lease | Wells Fargo Equipment Lease-Ohio | ||
Line of Credit Facility [Line Items] | ||
Loan Amount | 621,000 | |
Long-term Debt | ||
Finance lease obligation | 606,508 | |
Finance Lease | Tetra Capital Lease | ||
Line of Credit Facility [Line Items] | ||
Loan Amount | 419,690 | |
Long-term Debt | ||
Finance lease obligation | 307,641 | |
Finance Lease | Well Fargo Equipment Lease-VRM LA | ||
Line of Credit Facility [Line Items] | ||
Loan Amount | 30,408 | |
Long-term Debt | ||
Finance lease obligation | 17,425 | |
Capital Lease | Wells Fargo Equipment Lease-Ohio | ||
Long-term Debt | ||
Long-term debt | 0 | |
Capital Lease | Tetra Capital Lease | ||
Long-term Debt | ||
Long-term debt | 349,822 | |
Capital Lease | Well Fargo Equipment Lease-VRM LA | ||
Long-term Debt | ||
Long-term debt | 22,390 | |
Insurance premiums financed | Various institutions | ||
Line of Credit Facility [Line Items] | ||
Loan Amount | 2,902,428 | |
Long-term Debt | ||
Long-term debt | $ 93,751 | $ 999,152 |
LINE OF CREDIT AND LONG-TERM _5
LINE OF CREDIT AND LONG-TERM DEBT (Details 1) | Jun. 30, 2019USD ($) |
Maturities of Long-term Debt and Capital Lease Obligations [Abstract] | |
Year 1 | $ 6,284,610 |
Year 2 | 14,219,888 |
Year 3 | 248,020 |
Year 4 | 130,575 |
Year 5 | 122,119 |
Thereafter | 0 |
Amortization of Deferred Finance Costs, Net [Abstract] | |
Year 1 | (334,780) |
Year 2 | 0 |
Year 3 | 0 |
Year 4 | 0 |
Year 5 | 0 |
Thereafter | 0 |
Maturities of Long-term Debt and Capital Lease Obligation, Net of Deferred Finance Costs [Abstract] | |
Year 1 | 5,949,830 |
Year 2 | 14,219,888 |
Year 3 | 248,020 |
Year 4 | 130,575 |
Year 5 | 122,119 |
Thereafter | 0 |
Encina Business Credit, LLC | |
Maturities of Long-term Debt and Capital Lease Obligations [Abstract] | |
Year 1 | 900,000 |
Year 2 | 14,000,000 |
Year 3 | 0 |
Year 4 | 0 |
Year 5 | 0 |
Thereafter | 0 |
Encina Business Credit SPV, LLC | |
Maturities of Long-term Debt and Capital Lease Obligations [Abstract] | |
Year 1 | 5,079,887 |
Year 2 | 0 |
Year 3 | 0 |
Year 4 | 0 |
Year 5 | 0 |
Thereafter | 0 |
Wells Fargo Equipment Lease-Ohio | |
Maturities of Long-term Debt and Capital Lease Obligations [Abstract] | |
Year 1 | 111,939 |
Year 2 | 117,834 |
Year 3 | 124,041 |
Year 4 | 130,575 |
Year 5 | 122,119 |
Tetra Capital Lease | |
Maturities of Long-term Debt and Capital Lease Obligations [Abstract] | |
Year 1 | 88,743 |
Year 2 | 94,919 |
Year 3 | 123,979 |
Year 4 | 0 |
Year 5 | 0 |
Thereafter | 0 |
Well Fargo Equipment Lease-VRM LA | |
Maturities of Long-term Debt and Capital Lease Obligations [Abstract] | |
Year 1 | 10,290 |
Year 2 | 7,135 |
Year 3 | 0 |
Year 4 | 0 |
Year 5 | 0 |
Thereafter | 0 |
Various institutions | |
Maturities of Long-term Debt and Capital Lease Obligations [Abstract] | |
Year 1 | 93,751 |
Year 2 | 0 |
Year 3 | 0 |
Year 4 | 0 |
Year 5 | 0 |
Thereafter | $ 0 |
EARNINGS PER SHARE (Details Nar
EARNINGS PER SHARE (Details Narrative) - shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Options to purchase (in shares) | 3,878,632 | 3,466,714 | 3,978,795 | 3,603,250 |
Warrants to purchase (in shares) | 7,353,056 | 7,356,056 | 7,353,056 | 7,353,056 |
Series B Preferred Stock | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Convertible preferred stock, common stock issuable upon conversion (in shares) | 3,713,794 | 3,499,059 | 3,713,794 | 3,499,059 |
Series B1 Preferred Stock | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Convertible preferred stock, common stock issuable upon conversion (in shares) | 10,264,001 | 13,105,989 | 10,264,001 | 13,105,989 |
Series A Preferred Stock | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Conversion Of Stock, Shares Issued If Converted | 419,859 | 419,859 | 419,859 | |
Series C Preferred Stock | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Conversion Of Stock, Shares Issued If Converted | 3,156,800 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Numerator: | ||||
Net income (loss) available to common shareholders | $ (1,373,236) | $ 1,439,174 | $ (7,304,270) | $ (2,016,655) |
Less allocation of dividends to participating securities | 0 | (543,698) | 0 | 0 |
Undistributed Earnings (Loss) Available to Common Shareholders, Basic | $ (1,373,236) | $ 895,476 | $ (7,304,270) | $ (2,016,655) |
Denominator: | ||||
Total weighted-average shares (in shares) | 40,294,870 | 33,300,456 | 40,245,671 | 33,182,748 |
Basic earnings per share (in dollars per share) | $ (0.03) | $ 0.03 | $ (0.18) | $ (0.06) |
Numerator: | ||||
Net income (loss) available to common shareholders | $ (1,373,236) | $ 1,439,174 | $ (7,304,270) | $ (2,016,655) |
Less diluted allocation of dividends to participating securities | 0 | (446,158) | 0 | 0 |
Net Income (Loss) Available to Common Stockholders, Diluted | $ (1,373,236) | $ 993,016 | $ (7,304,270) | $ (2,016,655) |
Denominator: | ||||
Total weighted-average shares (in shares) | 40,294,870 | 33,300,456 | 40,245,671 | 33,182,748 |
Effect of dilutive securities | ||||
Stock options and warrants (in shares) | 0 | 136,536 | 0 | 0 |
Diluted weighted-average shares outstanding (in shares) | 40,294,870 | 37,013,651 | 40,245,671 | 33,182,748 |
Diluted earnings (loss) per share (in dollars per share) | $ (0.03) | $ 0.03 | $ (0.18) | $ (0.06) |
Preferred Stock A | ||||
Effect of dilutive securities | ||||
Preferred Stock (in shares) | 0 | 419,859 | 0 | 0 |
Preferred Stock C | ||||
Effect of dilutive securities | ||||
Preferred Stock (in shares) | 0 | 3,156,800 | 0 | 0 |
COMMON STOCK (Details Narrative
COMMON STOCK (Details Narrative) - $ / shares | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Dec. 31, 2018 | |
Conversion of Stock [Line Items] | |||
Common stock, shares authorized | 750,000,000 | 750,000,000 | |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 | |
Common stock, shares outstanding | 40,346,906 | 40,174,821 | |
Shares issued as result of options exercised (in shares) | 75,925 | 241 | |
Preferred Stock | |||
Conversion of Stock [Line Items] | |||
Shares issued as result of share conversion | 96,160 | 699,121 |
PREFERRED STOCK AND DETACHABL_3
PREFERRED STOCK AND DETACHABLE WARRANTS (Details Narrative) | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||||||
May 31, 2016USD ($) | Jun. 30, 2019USD ($)$ / sharesshares | Jun. 30, 2018USD ($) | Jun. 30, 2019USD ($)$ / sharesshares | Jun. 30, 2018USD ($) | Jun. 24, 2020$ / shares | Dec. 31, 2018USD ($)$ / sharesshares | Dec. 31, 2017USD ($) | Jun. 24, 2017$ / shares | |
Class of Stock [Line Items] | |||||||||
Preferred stock, shares authorized | shares | 50,000,000 | 50,000,000 | 50,000,000 | ||||||
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | |||||||
Liabilities at fair value | $ 2,440,769 | $ 2,440,769 | $ 1,481,692 | ||||||
Convertible preferred stock, beneficial conversion feature | 5,737,796 | 5,737,796 | |||||||
Private placement fees | 1,400,000 | ||||||||
Dividends payable | 819,670 | 819,670 | 1,089,597 | ||||||
Carrying amount of preferred shares | $ 23,933,351 | $ 23,933,351 | $ 22,179,963 | ||||||
Series A Preferred Stock | |||||||||
Class of Stock [Line Items] | |||||||||
Preferred stock, shares authorized | shares | 5,000,000 | 5,000,000 | 5,000,000 | ||||||
Preferred stock, par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | ||||||
Preferred stock, shares issued | shares | 419,859 | 419,859 | 419,859 | ||||||
Preferred stock, shares outstanding | shares | 419,859 | 419,859 | 419,859 | ||||||
Series B Preferred Stock | |||||||||
Class of Stock [Line Items] | |||||||||
Temporary equity, shares authorized | shares | 10,000,000 | 10,000,000 | 10,000,000 | ||||||
Temporary equity, shares issued | shares | 3,713,794 | 3,713,794 | 3,604,827 | ||||||
Temporary equity, shares outstanding | shares | 3,713,794 | 3,713,794 | 3,604,827 | ||||||
Preferred stock, dividend percentage | 6.00% | ||||||||
Dividends per share (in dollars per share) | $ / shares | $ 3.10 | ||||||||
Redemption price per share (in dollars per share) | $ / shares | $ 3.10 | ||||||||
Temporary equity, warrants issued | $ 556,339 | $ 556,339 | |||||||
Dividends payable | 172,704 | 172,704 | $ 167,642 | ||||||
Dividends paid in kind | 170,156 | $ 139,186 | 337,798 | $ 278,372 | |||||
Carrying amount of preferred shares | $ 9,904,054 | 7,931,530 | $ 9,904,054 | 7,931,530 | $ 8,900,208 | $ 7,190,467 | |||
Series B Preferred Stock | Liability | |||||||||
Class of Stock [Line Items] | |||||||||
Expected term (years) | 1 year 6 months | 1 year 6 months | |||||||
Series B Preferred Stock | Liability | Expected Dividend Rate | |||||||||
Class of Stock [Line Items] | |||||||||
Warrant measurement input (as a percent) | 0 | 0 | |||||||
Series B Preferred Stock | Liability | Risk Free Interest Rate | |||||||||
Class of Stock [Line Items] | |||||||||
Warrant measurement input (as a percent) | 0.0184 | 0.0184 | |||||||
Series B Preferred Stock | Liability | Minimum | Expected Volatility Rate | |||||||||
Class of Stock [Line Items] | |||||||||
Warrant measurement input (as a percent) | 0.66 | 0.66 | |||||||
Series B Preferred Stock | Liability | Maximum | Expected Volatility Rate | |||||||||
Class of Stock [Line Items] | |||||||||
Warrant measurement input (as a percent) | 1 | 1 | |||||||
Series B Preferred Stock | Warrant | |||||||||
Class of Stock [Line Items] | |||||||||
Liabilities at fair value | $ 7,028,067 | $ 7,028,067 | |||||||
Series B Preferred Stock | Forecast | |||||||||
Class of Stock [Line Items] | |||||||||
Redemption price per share (in dollars per share) | $ / shares | $ 3.10 | ||||||||
Series B1 Preferred Stock | |||||||||
Class of Stock [Line Items] | |||||||||
Temporary equity, shares authorized | shares | 17,000,000 | 17,000,000 | 17,000,000 | ||||||
Temporary equity, shares issued | shares | 10,264,001 | 10,264,001 | 10,057,597 | ||||||
Temporary equity, shares outstanding | shares | 10,264,001 | 10,264,001 | 10,057,597 | ||||||
Preferred stock, dividend percentage | 6.00% | ||||||||
Dividends per share (in dollars per share) | $ / shares | $ 1.56 | ||||||||
Redemption price per share (in dollars per share) | $ / shares | $ 1.72 | ||||||||
Convertible preferred stock, beneficial conversion feature | $ 2,371,106 | ||||||||
Private placement fees | 600,000 | ||||||||
Temporary equity, warrants issued | $ 1,884,430 | $ 1,884,430 | |||||||
Dividends payable | 240,171 | 240,171 | $ 235,360 | ||||||
Dividends paid in kind | 236,640 | 401,517 | 472,000 | 683,044 | |||||
Carrying amount of preferred shares | $ 14,029,297 | $ 16,100,770 | $ 14,029,297 | $ 16,100,770 | $ 13,279,755 | $ 15,769,478 | |||
Series B1 Preferred Stock | Liability | |||||||||
Class of Stock [Line Items] | |||||||||
Expected term (years) | 2 years 6 months | 2 years 6 months | |||||||
Series B1 Preferred Stock | Liability | Expected Dividend Rate | |||||||||
Class of Stock [Line Items] | |||||||||
Warrant measurement input (as a percent) | 0 | 0 | |||||||
Series B1 Preferred Stock | Liability | Risk Free Interest Rate | |||||||||
Class of Stock [Line Items] | |||||||||
Warrant measurement input (as a percent) | 0.0173 | 0.0173 | |||||||
Series B1 Preferred Stock | Liability | Minimum | Expected Volatility Rate | |||||||||
Class of Stock [Line Items] | |||||||||
Warrant measurement input (as a percent) | 0.66 | 0.66 | |||||||
Series B1 Preferred Stock | Liability | Maximum | Expected Volatility Rate | |||||||||
Class of Stock [Line Items] | |||||||||
Warrant measurement input (as a percent) | 1 | 1 | |||||||
Series B1 Preferred Stock | Warrant | |||||||||
Class of Stock [Line Items] | |||||||||
Liabilities at fair value | $ 2,867,264 | ||||||||
Series B1 Preferred Stock | Forecast | |||||||||
Class of Stock [Line Items] | |||||||||
Redemption price per share (in dollars per share) | $ / shares | $ 1.56 |
PREFERRED STOCK AND DETACHABL_4
PREFERRED STOCK AND DETACHABLE WARRANTS (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2019 | Mar. 31, 2019 | Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Temporary Equity [Line Items] | ||||||
Balance at beginning of period | $ 22,179,963 | $ 22,179,963 | ||||
Plus: discount accretion | $ 532,925 | 530,433 | $ 470,825 | $ 457,853 | ||
Balance at end of period | 23,933,351 | 23,933,351 | ||||
Series B Preferred Stock | ||||||
Temporary Equity [Line Items] | ||||||
Balance at beginning of period | 8,900,208 | 7,190,467 | 8,900,208 | $ 7,190,467 | ||
Less: conversions of shares to common | 0 | (62,973) | ||||
Plus: discount accretion | 666,048 | 525,664 | ||||
Plus: dividends in kind | 170,156 | 139,186 | 337,798 | 278,372 | ||
Balance at end of period | 9,904,054 | 7,931,530 | 9,904,054 | 7,931,530 | ||
Series B1 Preferred Stock | ||||||
Temporary Equity [Line Items] | ||||||
Balance at beginning of period | $ 13,279,755 | $ 15,769,478 | 13,279,755 | 15,769,478 | ||
Less: conversions of shares to common | (119,768) | (754,766) | ||||
Plus: discount accretion | 397,310 | 403,014 | ||||
Plus: dividends in kind | 236,640 | 401,517 | 472,000 | 683,044 | ||
Balance at end of period | $ 14,029,297 | $ 16,100,770 | $ 14,029,297 | $ 16,100,770 |
PREFERRED STOCK AND DETACHABL_5
PREFERRED STOCK AND DETACHABLE WARRANTS (Details 2) - USD ($) | 6 Months Ended | |
Jun. 30, 2019 | Jun. 30, 2018 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Balance at beginning of period | $ 1,481,692 | $ 2,245,408 |
Change in valuation of warrants | 959,077 | (44,162) |
Balance at end of period | $ 2,440,769 | $ 2,201,246 |
SEGMENT REPORTING (Details)
SEGMENT REPORTING (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Segment Reporting Information [Line Items] | ||||
Revenues | $ 43,657,292 | $ 46,917,770 | $ 82,978,004 | $ 88,285,965 |
Income (loss) from operations | (667,878) | 3,023,845 | (3,276,269) | 2,007,348 |
Black Oil | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 37,907,811 | 38,469,131 | 70,722,998 | 70,706,377 |
Refining & Marketing | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 3,277,402 | 4,392,870 | 6,136,023 | 10,068,111 |
Recovery | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 2,472,079 | 4,055,769 | 6,118,983 | 7,511,477 |
Operating segments | Black Oil | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 37,907,811 | 38,469,131 | 70,722,998 | 70,706,377 |
Income (loss) from operations | 125,851 | 2,969,532 | (2,166,354) | 2,210,180 |
Operating segments | Refining & Marketing | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 3,277,402 | 4,392,870 | 6,136,023 | 10,068,111 |
Income (loss) from operations | (132,408) | (357,656) | (535,422) | (701,040) |
Operating segments | Recovery | ||||
Segment Reporting Information [Line Items] | ||||
Revenues | 2,472,079 | 4,055,769 | 6,118,983 | 7,511,477 |
Income (loss) from operations | $ (661,321) | $ 411,969 | $ (574,493) | $ 498,208 |
INCOME TAXES - Narrative (Detai
INCOME TAXES - Narrative (Details) | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2019USD ($) | Mar. 31, 2019USD ($) | Jun. 30, 2018USD ($) | Mar. 31, 2018USD ($) | Jun. 30, 2019USD ($)quarter | Jun. 30, 2018USD ($) | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||
Effective income tax rate | 0.00% | |||||
U.S. federal income tax rate | 21.00% | |||||
Number of quarters of cumulative loss | quarter | 12 | |||||
Operating loss carryforwards | $ 65,900,000 | $ 65,900,000 | ||||
Pre-tax loss | 629,765 | $ 5,068,995 | $ (2,661,804) | $ 2,208,083 | 5,698,760 | $ (453,721) |
Retained Earnings | ||||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||||
Pre-tax loss | $ 427,436 | $ 4,963,564 | $ (2,530,068) | $ 2,258,622 | $ 5,400,000 |
COMMODITY DERIVATIVE INSTRUME_3
COMMODITY DERIVATIVE INSTRUMENTS - Schedule of Derivative Instruments (Details) bbl in Thousands | 3 Months Ended | |
Jun. 30, 2019USD ($)$ / bblbbl | Jun. 30, 2018USD ($)$ / bblbbl | |
Derivative [Line Items] | ||
Derivative commodity asset (liability) | $ (108,557) | $ 695,941 |
Swap | ||
Derivative [Line Items] | ||
Weighted Average Strike Price (in usd per barrel) | $ / bbl | 54.40 | 48.78 |
Remaining Volume (Barrels) | bbl | 150 | 60 |
Derivative commodity asset (liability) | $ (216,400) | $ (1,048,400) |
Swap | ||
Derivative [Line Items] | ||
Weighted Average Strike Price (in usd per barrel) | $ / bbl | 79.08 | 68.69 |
Remaining Volume (Barrels) | bbl | 150 | 60 |
Derivative commodity asset (liability) | $ 265,020 | $ 1,097,124 |
Futures | ||
Derivative [Line Items] | ||
Weighted Average Strike Price (in usd per barrel) | $ / bbl | 81.45 | 70.42 |
Remaining Volume (Barrels) | bbl | 45 | 69 |
Derivative commodity asset (liability) | $ (157,177) | $ 394,317 |
Futures | ||
Derivative [Line Items] | ||
Weighted Average Strike Price (in usd per barrel) | $ / bbl | 45.41 | |
Remaining Volume (Barrels) | bbl | 30 | |
Derivative commodity asset (liability) | $ 252,900 |
COMMODITY DERIVATIVE INSTRUME_4
COMMODITY DERIVATIVE INSTRUMENTS - Fair Value of Derivative Instruments within Balance Sheet (Details) - USD ($) | Jun. 30, 2019 | Jun. 30, 2018 |
Derivative [Line Items] | ||
Derivative commodity asset (liability) | $ (108,557) | $ 695,941 |
Crude oil swaps | ||
Derivative [Line Items] | ||
Derivative commodity asset (liability) | 48,620 | 48,724 |
Crude oil futures | ||
Derivative [Line Items] | ||
Derivative commodity asset (liability) | $ (157,177) | $ 647,217 |
COMMODITY DERIVATIVE INSTRUME_5
COMMODITY DERIVATIVE INSTRUMENTS - Narrative (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||
Loss on commodity derivative contracts | $ 310,011 | $ 755,685 | $ 1,069,778 | $ 1,212,087 |
LEASES - Narrative (Details)
LEASES - Narrative (Details) | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2019USD ($) | Jun. 30, 2019USD ($)leaserenewal_option | Jan. 01, 2019USD ($) | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Finance lase cost | $ 47,075 | $ 74,793 | |
Operating lease cost | $ 1,600,000 | 3,100,000 | |
Finance lease payment | $ 61,638 | ||
Number of extension options | renewal_option | 2 | ||
Accounting Standards Update 2018-11 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Right-of-use asset | $ 37,800,000 | ||
Operating lease payments | $ 1,000,000 | ||
Minimum | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Lease renewal term | 1 year | 1 year | |
Maximum | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Lease renewal term | 20 years | 20 years | |
Plant | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Lease renewal term | 5 years | 5 years | |
Number of operating leases | lease | 2 | ||
Lease renewal term, total | 20 years |
LEASES - Schedule of maturities
LEASES - Schedule of maturities of operating lease liabilities (Details) | Jun. 30, 2019USD ($) |
Lessee, Lease, Description [Line Items] | |
Year 1 | $ 6,143,000 |
Year 2 | 5,579,842 |
Year 3 | 4,786,258 |
Year 4 | 4,393,363 |
Year 5 | 4,360,417 |
Thereafter | 38,080,115 |
Total lease payments | 63,342,995 |
Less: interest | (26,431,650) |
Present value of lease liabilities | 36,911,345 |
Facilities | |
Lessee, Lease, Description [Line Items] | |
Year 1 | 767,133 |
Year 2 | 541,970 |
Year 3 | 413,512 |
Year 4 | 324,000 |
Year 5 | 300,000 |
Thereafter | 2,525,000 |
Total lease payments | 4,871,615 |
Less: interest | (1,803,111) |
Present value of lease liabilities | 3,068,504 |
Equipment | |
Lessee, Lease, Description [Line Items] | |
Year 1 | 161,539 |
Year 2 | 161,539 |
Year 3 | 107,723 |
Year 4 | 0 |
Year 5 | 0 |
Thereafter | 0 |
Total lease payments | 430,801 |
Less: interest | (33,654) |
Present value of lease liabilities | 397,147 |
Plant | |
Lessee, Lease, Description [Line Items] | |
Year 1 | 4,060,417 |
Year 2 | 4,060,417 |
Year 3 | 4,060,417 |
Year 4 | 4,060,417 |
Year 5 | 4,060,417 |
Thereafter | 35,555,115 |
Total lease payments | 55,857,200 |
Less: interest | (24,431,399) |
Present value of lease liabilities | 31,425,801 |
Railcar | |
Lessee, Lease, Description [Line Items] | |
Year 1 | 1,153,911 |
Year 2 | 815,916 |
Year 3 | 204,606 |
Year 4 | 8,946 |
Year 5 | 0 |
Thereafter | 0 |
Total lease payments | 2,183,379 |
Less: interest | (163,486) |
Present value of lease liabilities | $ 2,019,893 |
LEASES - Schedule of operating
LEASES - Schedule of operating lease weighted average remaining lease terms and discount rates (Details) | Jun. 30, 2019 |
Lease facilities | |
Lessee, Lease, Description [Line Items] | |
Weighted average remaining lease terms (years) | 5 years 9 months 4 days |
Weighted average discount rate | 9.10% |
Lease equipment | |
Lessee, Lease, Description [Line Items] | |
Weighted average remaining lease terms (years) | 2 years 8 months 1 day |
Weighted average discount rate | 8.00% |
Lease plant | |
Lessee, Lease, Description [Line Items] | |
Weighted average remaining lease terms (years) | 13 years 9 months 4 days |
Weighted average discount rate | 9.37% |
Lease railcar | |
Lessee, Lease, Description [Line Items] | |
Weighted average remaining lease terms (years) | 1 year 10 months 13 days |
Weighted average discount rate | 8.00% |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - shares | Jul. 20, 2019 | Jul. 31, 2019 | Jun. 30, 2019 | Jun. 30, 2018 | Jun. 30, 2019 | Jun. 30, 2018 |
Subsequent Event [Line Items] | ||||||
Exercise of options to common (in shares) | 75,925 | 241 | ||||
Subsequent event | Series B Preferred Stock | ||||||
Subsequent Event [Line Items] | ||||||
Paid-in-kind dividends, preferred stock (in shares) | 55,711 | |||||
Number of common shares issued for each convertible share (in shares) | 55,711 | |||||
Subsequent event | Common Stock | ||||||
Subsequent Event [Line Items] | ||||||
Paid-in-kind dividends, common stock (in shares) | 153,956 | |||||
Subsequent event | Series B1 Preferred Stock | Affiliated Entity | ||||||
Subsequent Event [Line Items] | ||||||
Paid-in-kind dividends, preferred stock (in shares) | 153,956 | |||||
Number of common shares issued for each convertible share (in shares) | 153,956 | |||||
Common Stock | ||||||
Subsequent Event [Line Items] | ||||||
Exercise of options to common (in shares) | 75,925 | 241 | ||||
Common Stock | Subsequent event | ||||||
Subsequent Event [Line Items] | ||||||
Exercise of options to common (in shares) | 2,500 |
SUBSEQUENT EVENTS - Myrtle Grov
SUBSEQUENT EVENTS - Myrtle Grove Share Purchase and Subscription Agreement (Details) - Subsequent event - USD ($) | Jul. 26, 2019 | Jul. 25, 2019 |
Heartland SPV | ||
Subsequent Event [Line Items] | ||
Percentage acquired | 35.00% | |
Cash and cash equivalents | $ 13,500,000 | |
Vertex Refining LA, LLC | MG SPV | ||
Subsequent Event [Line Items] | ||
Assets acquired | $ 22,666,667 | |
Vertex Refining LA, LLC | MG SPV | Class A | ||
Subsequent Event [Line Items] | ||
Units purchased (in shares) | 21,667 | |
Vertex Refining LA, LLC | MG SPV | Class B | ||
Subsequent Event [Line Items] | ||
Units purchased (in shares) | 1,000 | |
Vertex Operating | Tensile-MG | Class B | ||
Subsequent Event [Line Items] | ||
Units sold (in shares) | 1,000 | |
Units sold, value | $ 1,000,000 | |
MG SPV | Tensile-MG | Class B | ||
Subsequent Event [Line Items] | ||
Units sold (in shares) | 3,000 | |
Units sold, value | $ 3,000,000 | |
Maximum transaction costs | $ 850,000 | |
Tensile-MG | MG SPV | ||
Subsequent Event [Line Items] | ||
Percentage acquired | 15.58% | |
Tensile-MG | Heartland SPV | ||
Subsequent Event [Line Items] | ||
Percentage acquired | 65.00% | |
Minimum | MG SPV | ||
Subsequent Event [Line Items] | ||
Indemnification liability | $ 226,000 | |
Maximum | MG SPV | ||
Subsequent Event [Line Items] | ||
Indemnification liability | 3,400,000 | |
Maximum | MG SPV | MG SPV | ||
Subsequent Event [Line Items] | ||
Indemnification liability | $ 4,000,000 | |
Subscription Agreement | Tensile-MG | ||
Subsequent Event [Line Items] | ||
Number of shares issued | 1,500,000 | |
Number of warrants (in shares) | 1,500,000 | |
Warrants value | $ 2,220,000 | |
Warrants, price per share (in dollars per share) | $ 1.48 | |
Exercise price (in dollars per share) | $ 2.25 | |
Warrant term | 10 years | |
Beneficial ownership limitation (as a percent) | 4.999% | |
Beneficial ownership limitation, upon 61 days notice (as a percent) | 9.999% | |
Lock-Up Agreement | Tensile-MG | ||
Subsequent Event [Line Items] | ||
Period of maximum units sold | 90 days | |
Lock-Up Agreement | Maximum | Tensile-MG | ||
Subsequent Event [Line Items] | ||
Number of shares issued | 300,000 | |
Warrant term | 4 years |