Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2018 | Aug. 14, 2018 | |
Document And Entity Information | ||
Entity Registrant Name | VIKING ENERGY GROUP, INC. | |
Entity Central Index Key | 1,102,432 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Well-known Seasoned Issuer | No | |
Entity Voluntary Filer | No | |
Entity's Reporting Status Current | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 83,847,729 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,018 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Current assets: | ||
Cash | $ 5,806,479 | $ 536,156 |
Restricted cash | 5,199,103 | |
Accounts receivable - oil and gas | 559,682 | 573,296 |
Other receivable - related party | 548,714 | |
Prepaid expenses | 65,761 | |
Total current assets | 6,431,922 | 6,857,269 |
Oil and gas properties, full cost method | ||
Proved developed producing oil and gas properties, net | 11,577,814 | 12,301,141 |
Undeveloped and non-producing oil and gas properties, net | 28,001,852 | 26,859,634 |
Total Oil and gas properties, net | 39,579,666 | 39,160,775 |
Fixed assets, net | 267,576 | 166,741 |
Other assets | 32,083 | 9,396 |
TOTAL ASSETS | 46,311,247 | 46,194,181 |
Current liabilities: | ||
Accrued expenses and other current liabilities | 819,287 | 397,070 |
Accounts payable | 622,808 | 2,555,869 |
Undistributed revenues and royalties | 1,253,934 | 1,175,200 |
Derivative liability | 1,232,810 | 1,052,788 |
Amount due to directors | 509,007 | 1,192,970 |
Current portion of long term debt - net of debt discount | 4,732,565 | 3,562,051 |
Total current liabilities | 9,170,411 | 9,935,948 |
Long term debt - net of current portion and debt discount | 13,149,005 | 9,742,830 |
Deferred tax liability | 33,548 | 910,827 |
Asset retirement obligation | 3,367,052 | 3,096,263 |
TOTAL LIABILITIES | 25,720,016 | 23,685,868 |
Commitments and contingencies (Note 8) | ||
Capital Stock | ||
Preferred stock, $0.001 par value, 5,000,000 shares authorized, 28,092 shares issued and outstanding as of June 30, 2018 and December 31, 2017 | 28 | 28 |
Common stock, $0.001 par value, 100,000,000 shares authorized,with 83,464,906 and 72,347,991 shares issued and outstanding as of June 30, 2018 and December 31, 2017 respectively. | 83,465 | 72,348 |
Additional Paid-In Capital | 21,790,203 | 19,029,892 |
Prepaid equity-based compensation | (11,827) | |
Retained earnings (accumulated deficit) | (1,282,465) | 3,417,872 |
TOTAL STOCKHOLDERS' EQUITY | 20,591,231 | 22,508,313 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 46,311,247 | $ 46,194,181 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2018 | Dec. 31, 2017 |
STOCKHOLDERS' EQUITY | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, authorized | 5,000,000 | 5,000,000 |
Preferred stock, issued | 28,092 | 28,092 |
Preferred stock, outstanding | 28,092 | 28,092 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, authorized | 100,000,000 | 100,000,000 |
Common stock, issued | 83,464,906 | 72,347,991 |
Common stock, outstanding | 83,464,906 | 72,347,991 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Revenue | ||||
Oil and gas sales | $ 2,318,622 | $ 160,430 | $ 4,480,569 | $ 367,293 |
Operating expenses | ||||
Lease operating costs | 1,035,474 | 104,066 | 2,043,742 | 264,584 |
General and administrative | 1,125,936 | 215,582 | 2,026,461 | 485,923 |
Stock based compensation | 1,044,612 | 803,616 | 1,218,099 | 1,151,020 |
Accretion - ARO | 49,346 | 9,804 | 97,777 | 18,641 |
Depreciation, depletion and amortization | 459,951 | 35,609 | 949,637 | 86,891 |
Total operating expenses | 3,715,319 | 1,168,677 | 6,335,716 | 2,007,059 |
Loss from operations | (1,396,697) | (1,008,247) | (1,855,147) | (1,639,766) |
Other income (expenses) | ||||
Interest expense | (2,531,178) | (433,551) | (3,600,488) | (690,261) |
Change in fair value of derivatives | (632,831) | 119,085 | (987,784) | 455,098 |
Loss on sale of investments | (7,185) | |||
Gain on ARO settlement | 58,041 | |||
Total other income (expense) | (3,164,009) | (314,466) | (4,530,231) | (242,348) |
Net loss before income taxes | (4,560,706) | (1,322,713) | (6,385,378) | (1,882,114) |
Income tax benefit (expense) | 605,490 | 877,279 | ||
Net loss | (3,955,216) | (1,322,713) | (5,508,099) | (1,882,114) |
Other comprehensive income (loss) | ||||
Unrealized gain (loss) on securities available-for-sale | 1,446 | |||
Net Comprehensive income loss | $ (3,955,216) | $ (1,322,713) | $ (5,508,099) | $ (1,880,668) |
Earnings (loss) per common share | ||||
Basic | $ (0.05) | $ (0.02) | $ (0.07) | $ (0.03) |
Weighted average number of common shares outstanding | ||||
Basic | 80,957,111 | 61,272,870 | 77,650,012 | 59,032,220 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Cash flows from operating activities: | |||||
Net loss | $ (3,955,216) | $ (1,322,713) | $ (5,508,099) | $ (1,882,114) | |
Adjustments to reconcile net loss to cash used in operating activities: | |||||
Derivative gain (loss) | 632,831 | (119,085) | 987,784 | (455,098) | |
Amortization of prepaid expenses | 162,914 | ||||
Stock based compensation | 1,044,612 | 803,616 | 1,218,099 | 1,151,020 | |
Loss on sale of investments | 7,185 | ||||
Depreciation, depletion and amortization | 459,951 | 35,609 | 949,637 | 86,891 | |
Gain on ARO settlement | (58,041) | ||||
Accretion - Asset retirement obligation | 49,346 | 9,804 | 97,777 | 18,641 | |
Amortization of debt discount | 2,639,104 | 514,540 | |||
Changes in operating assets and liabilities | |||||
Accounts receivable | 13,614 | (4,328) | |||
Prepaid expenses and other assets | (88,448) | ||||
Other receivables | 548,714 | ||||
Accounts payable | (1,933,061) | (48,898) | |||
Accrued expenses and other current liabilities | 446,928 | 88,429 | |||
Deferred tax liability | (877,279) | ||||
Undistributed revenues and royalties | 78,734 | ||||
Amounts due to directors | 39,993 | 94,871 | |||
Net cash used in operating activities | (1,444,544) | (265,947) | |||
Cash flows from investing activities: | |||||
Investment in, and acquisition of oil and gas properties | (2,088,262) | ||||
Acquisition of fixed assets | (130,000) | ||||
Proceeds from sale of oil and gas interests | 1,144,953 | ||||
Proceeds from sale of investments | 101,191 | ||||
Net cash (used in) provided by investing activities | (1,073,309) | 101,191 | |||
Cash flows from financing activities: | |||||
Proceeds from amount due to directors | 583,000 | 5,350 | |||
Repayments of amount due to directors | (1,306,956) | (300,024) | |||
Proceeds from sale of common stock | 331,667 | ||||
Proceeds from long term debt | 10,078,018 | 331,667 | |||
Repayment of long term debt | (6,764,989) | (222,500) | |||
Net cash provided by financing activities | 2,589,073 | 146,160 | |||
Net increase (decrease) in cash | 71,220 | (18,596) | |||
Cash, beginning of period | 5,735,259 | 18,605 | 18,605 | ||
Cash, end of period | $ 5,806,479 | $ 9 | 5,806,479 | 9 | $ 5,735,259 |
Supplemental Cash Flow Information: | |||||
Cash paid for: Interest | 866,380 | 99,909 | |||
Cash paid for: Income taxes | |||||
Supplemental disclosure of Non-Cash Investing and Financing Activities: | |||||
Recognition of asset retirement obligation | 231,053 | ||||
Issuance of shares as discount on debt | 1,237,416 | ||||
Issuance of warrants as discount on debt | 327,740 | ||||
1st Global debt discount and loan fees | 324,000 | ||||
Payment in kind interest added to debt | 140,757 | ||||
Prepayment of contract through amounts due directors | 100,000 | ||||
Debt refinanced through new credit facility | 7,633,389 | ||||
Private placement debt exchanged for new private placement | 2,085,000 | ||||
Purchase of working interest through new debt | 165,000 | ||||
Long term debt paid through amounts due directors | 104,904 | ||||
Issuance of shares for contract services | 55,000 | 700,920 | |||
Cashless exercise of warrants | 60 | ||||
Sale of shares through satisfaction of unrelated notes payable | 127,215 | ||||
Accrued expenses exchanged for long term debt | $ 24,712 | $ 9,500 |
Consolidated Statement of Chang
Consolidated Statement of Changes in Stockholders Deficit - 6 months ended Jun. 30, 2018 - USD ($) | Common Stock | Preferred Stock | Additional Paid-in Capital | Prepaid Equity-Based Compensation | Retained Earnings (Accumulated Deficit) | Total |
Beginning Balance, Shares at Dec. 31, 2017 | 72,347,990 | 28,092 | ||||
Beginning Balance, Amount at Dec. 31, 2017 | $ 72,348 | $ 28 | $ 19,029,892 | $ (11,827) | $ 3,417,872 | $ 22,508,313 |
Accounting principal change relative to certain derivative liabilities - Note 2. | 807,762 | 807,762 | ||||
Shares issued as debt discount, Shares | 7,774,856 | |||||
Shares issued as debt discount, Amount | $ 7,775 | 1,229,641 | 1,237,416 | |||
Shares issued as prepaid equity-based compensation, Shares | 250,000 | |||||
Shares issued as prepaid equity-based compensation, Amount | $ 250 | 54,750 | (55,000) | |||
Amortization of prepaid equity-based compensation | 66,827 | 66,827 | ||||
Shares issued for services, Shares | 3,031,748 | |||||
Shares issued for services, Amount | $ 3,032 | 548,887 | 551,919 | |||
Warrants issued for services | 599,353 | 599,353 | ||||
Shares issued in cashless exercise of warrants, Shares | 60,312 | |||||
Shares issued in cashless exercise of warrants, Amount | $ 60 | (60) | ||||
Warrants issued as debt discount | 327,740 | 327,740 | ||||
Net Loss | (5,508,099) | (5,508,099) | ||||
Ending Balance, Shares at Jun. 30, 2018 | 83,464,906 | 28,092 | ||||
Ending Balance, Amount at Jun. 30, 2018 | $ 83,465 | $ 28 | $ 21,790,203 | $ (1,282,465) | $ 20,591,231 |
Nature of Business and Going Co
Nature of Business and Going Concern | 6 Months Ended |
Jun. 30, 2018 | |
Notes to Financial Statements | |
Note 1 - Nature of Business and Going Concern | Viking Energy Group, Inc. (“Viking” or the “Company”) was incorporated under the laws of the State of Florida on May 3, 1989, as Sparta Ventures Corp. and remained inactive until June 27, 1998. After several name changes, the Company merged with and into a wholly-owned subsidiary, SinoCubate, Inc., which remained the surviving entity of the merger. SinoCubate, Inc. was formed in the State of Nevada on September 11, 2008. The merger resulted in a change of name of the Company from Synthenol Inc. to SinoCubate, Inc., and a change in the state of incorporation of the Company from Florida to Nevada. On June 13, 2012, the Company changed its name to Viking Investments Group, Inc., and the Company’s ticker symbol was changed to “VKIN.” On March 17, 2017, the Company changed its name to Viking Energy Group, Inc. The Company's business plan is to engage in the acquisition, exploration, development and production of oil and natural gas properties, both individually and through collaborative partnerships with other companies in this field of endeavor. In November of 2014, the Company entered into its first contract relative to oil and gas activities involving jointly controlled assets and related liabilities by purchasing an undivided 50% interest in the Joffre project located in Alberta, Canada. On March 8, 2016, the Company incorporated a wholly owned subsidiary, Viking Oil & Gas (Canada) ULC, in Alberta, Canada, to hold its Canadian oil and gas interests. On February 23, 2016, the Company closed on the acquisition of working interests in four leases with access to the mineral rights (oil and gas) concerning approximately 281 acres of property in Miami and Franklin Counties in eastern Kansas. On August 30, 2016, the Company incorporated an additional wholly owned subsidiary, Mid-Con Petroleum, LLC, in the State of Kansas to hold certain of its acquisitions in the central United States. On October 4, 2016, the Company, through Mid-Con Petroleum, completed an acquisition whereby the Company (i) increased its working interest in three existing oil and gas leases in Miami and Franklin Counties in Eastern Kansas, and (ii) acquired a working interest in four new oil and gas leases in the same region, comprising approximately 660 acres of property. On August 25, 2017, the Company created an additional wholly owned subsidiary, Mid-Con Drilling, LLC. (“Mid-Con Drilling”), in the State of Kansas to hold additional acquisitions in the central United States. On September 11, 2017, the Company through Mid-Con Drilling, completed an acquisition of a 90% working interest in four new oil and gas leases in Anderson County in Eastern Kansas, comprising approximately 980 acres of property. On October 2, 2017, the Company, through Mid-Con Drilling, closed on an acquisition, effective October 1, 2017, of a 100% working interest in six new oil and gas leases in Miami and Franklin Counties in Eastern Kansas. Existing production from the acquired interests is approximately twenty-two barrels of oil per day. The purchase includes an undivided interest in all oil and gas wells, equipment, fixtures and other personal property located upon the leased properties and used in connection with oil and gas operations upon the leases attributable to the working interests purchased by Viking, through Mid-Con Drilling. On October 4, 2017, the Company, through Mid-Con Drilling, closed on an acquisition of an 80% working interest in six new oil and gas leases in Riley, Geary and Wabaunsee Counties in Kansas. Existing production from the acquired interests is approximately thirteen barrels of oil per day. The purchase includes an undivided interest in all oil and gas wells, equipment, fixtures and other personal property located upon the leased properties. On December 22, 2017, the Company completed an acquisition of 100% of the issued and outstanding membership interests of Petrodome Energy LLC, a privately-owned company, with working interests in multiple oil and gas fields across Texas, Louisiana and Mississippi, comprising approximately 11,700 acres. On December 27, 2017, the Company created an additional wholly owned subsidiary, Mid-Con Development, LLC (“Mid-Con Development”) in the State of Kansas to hold additional acquisition in the central United States. On December 29, 2017, the Company through Mid-Con Development completed an acquisition of working interests in approximately 41 oil leases in Ellis and Rooks Counties in Kansas, comprising several thousand acres. On January 12, 2018, the Company, through Mid-Con Drilling, completed an acquisition of a 100% working interest in seven new oil and gas leases in Woodson and Allen Counties in Eastern Kansas. Effective February 1, 2018, the Company, through Mid-Con Drilling, closed on the acquisition of a working interest in a lease with access to the mineral rights (oil and gas) concerning approximately 80 acres of property in Douglas County in eastern Kansas. The acquisition price was $50,000. These consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company had a net comprehensive loss of $5,508,099 and $1,880,668 for the six months ended June 30, 2018 and 2017, respectively. The Company has accumulated a stockholders’ equity of $20,591,231 as of June 30, 2018. The Company has generated losses from operations and has a significant working capital deficit. These conditions raise substantial doubt regarding the Company's ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management has no formal plan in place to address this concern but considers that the Company will be able to obtain additional funds by equity financing and/or related party advances; however, there is no assurance of additional funding being available. These consolidated financial statements do not include any adjustments to the recorded assets or liabilities that might be necessary should the Company have to curtail operations or be unable to continue in existence. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2018 | |
Notes to Financial Statements | |
Note 2 - Summary of Significant Accounting Policies | a) Basis of Presentation The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and the rules of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with the audited financial statements and notes thereto contained in Viking’s latest Annual Report filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments (unless otherwise indicated), necessary for a fair presentation of the 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. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. b) Basis of Consolidation The financial statements presented herein reflect the consolidated financial results of the Company and its wholly owned subsidiaries, Viking Oil & Gas (Canada) ULC, a Canadian corporation formed on March 8, 2016, to provide a base of operations for properties in Canada, Mid-Con Petroleum, LLC, formed on August 30, 2016, Mid-Con Drilling, LLC, formed on August 25, 2017, and Mid-Con Development, LLC, formed on December 27, 2017, all to provide a base of operations for properties in the Central United States, and Petrodome Energy, LLC, based in Houston, Texas to provide a base of operations to facilitate property acquisitions in Texas, Louisiana and Mississippi, as well as Petrodome Energy, LLC’s subsidiaries in Texas, Louisiana and Mississippi. All significant intercompany transactions and balances have been eliminated upon consolidation. c) Use of Estimates in the Preparation of Financial Statements The preparation of consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts and timing of revenues and expenses, the reported amounts and classification of assets and liabilities, and disclosure of contingent assets and liabilities. The Company's actual results could vary materially from management's estimates and assumptions. Significant areas requiring the use of management estimates relate to the determination of expected tax rates for future income tax recoveries, stock-based compensation, asset retirement obligations and impairment of long-lived assets. The estimates of proved, probable and possible oil and gas reserves are used as significant inputs in determining the depletion of oil and gas properties and the impairment of proved and unproved oil and gas properties. There are numerous uncertainties inherent in the estimation of quantities of proved, probable and possible reserves and in the projection of future rates of production and the timing of development expenditures. Similarly, evaluations for impairment of proved and unproved oil and gas properties are subject to numerous uncertainties including, among others, estimates of future recoverable reserves and commodity price outlooks. Actual results could differ from the estimates and assumptions utilized. d) Financial Instruments ASC Topic 820-10, “Fair Value Measurement” requires disclosure of the fair value of financial instruments held by the Company. ASC Topic 820-10 defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the consolidated balance sheets for other receivable – related party, accrued expenses and other current liabilities, accounts payable, derivative liabilities, amount due to directors, and convertible notes each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows: · Level 1: inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. · Level 2: inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. · Level 3: inputs to the valuation methodology are unobservable and significant to the fair value measurement. Liabilities measured at fair value as of June 30, 2018, are classified below based on the three-level fair value hierarchy described above: Description Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Gains (Losses) Financial Assets Long term investment $ - $ - $ - $ - Commodity Derivative - - - - $ - $ - $ - $ - Financial liabilities Derivative liabilities $ - $ - $ - $ - Commodity Derivative - 1,232,810 - (987,784 ) $ - $ 1,232,810 $ - $ (987,784 ) Assets and liabilities measured at fair value as of December 31, 2017, are classified below based on the three-level fair value hierarchy described above: Description Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Gains (Losses) Financial Assets Long term investment $ - $ - $ - $ 1,446 $ - $ - $ - $ 1,446 Financial liabilities Derivative liabilities $ - $ - $ 807,762 $ 232,840 Commodity Derivative - 245,026 - (183,965 ) $ - $ 245,026 $ 807,762 $ 48,875 The Company’s long-term investment consisted of 1,437,500 common shares of Tanager Energy Inc., as of December 31, 2016, which is traded on the TSX Venture Exchange (Toronto Stock Exchange). During the three months ended March 31, 2017, the Company sold these shares. The change in the fair value of this investment that has been recognized as an unrealized gain in other comprehensive income on the statement of operations and comprehensive loss was $1,446 for the three months ended March 31, 2017. The Company had commodity financial derivatives in place at June 30, 2018. The Company does not designate its commodities derivative instruments as hedges and therefore does not apply hedge accounting. Changes in fair value of derivative instruments subsequent to the initial measurement are recorded as change in fair value on derivative liability, in other income (expense). The estimated fair value amounts of the Company’s commodity derivative instruments have been determined at discrete points in time based on relevant market information which resulted in the Company classifying such derivatives as Level 2. Although the Company’s commodity derivative instruments are valued using public indices, the instruments themselves are traded with unrelated counterparties and are not openly traded on an exchange. The Company uses the Black-Scholes model to value its derivative liabilities. This model takes into account inputs such as contract terms, including maturity and market parameters, including assumptions associated with interest rates, volatility and credit worthiness. The derivative assets and liabilities of the Company were $0 and $1,232,810 respectively as of June 30, 2018, and $0 and $1,052,788 respectively as of December 31, 2017, respectively. The change in the fair value of the derivative liabilities for the six months ended June 30, 2018, consisted of an increase of $987,784 associated with commodity derivatives. The decrease in the derivative liabilities associated with warrants and the conversion features of convertible debt in the amount of $807,762 are the result of the Company adopting ASU 2017-11, Derivatives and Hedging (Topic 815) I. Accounting for Certain Instruments with Down Round Features. e) Cash and Cash Equivalents Cash and cash equivalents include cash in banks and highly liquid investment securities that have original maturities of three months or less. At June 30, 2018 and December 31, 2017, the Company has cash deposits in excess of FDIC insured limits in the amounts of $4,559,541 and $5,372,818, respectively. Restricted cash in the amount of $0 and $5,199,103 as of June 30, 2018 and December 31, 2017, respectively, represents cash provided through funding for the Petrodome acquisition, restricted for drilling and exploration. f) Accounts Receivable Accounts receivable consist of oil and gas receivables. The Company has classified these as short-term assets in the balance sheet because the Company expects repayment or recovery within the next 12 months. The Company evaluates these accounts receivable for collectability and, when necessary, records allowances for expected unrecoverable amounts. The Company has recorded an allowance for doubtful accounts of $87,957 at June 30, 2018. g) Prepaid Equity-Based Compensation Prepaid equity-based expenses represent amounts paid in advance through the issuance of restricted shares of stock, for future contractual benefits to be received. These expenses paid in advance are recorded as prepaid equity-based compensation as a component of “Stockholders’ Equity” and then amortized to the statements of operations and comprehensive loss over the life of the contract using the straight-line method. At June 30, 2018 and December 31, 2017, the balances of the prepaid equity-based compensation were comprised of the following: June 30, 2018 December 31, 2017 In February 2017, a one-year consulting agreement for services related to investor relations, market exposure and content development for a total amount of $44,160. $ - $ 6,412 In April 2017, a one-year consulting agreement comprised of four quarterly incremental installments for services related to analysis of potential oil and gas acquisitions, for an initial quarterly amount of $40,250, a second installment of $28,000 in July 2017, and a third installment of $55,000 in January 2018. - 5,415 $ - $ 11,827 h) Oil and Gas Properties The Company uses the full cost method of accounting for its investment in oil and natural gas properties. Under this method of accounting, all costs associated with acquisition, exploration and development of oil and gas reserves, including directly related overhead costs, are capitalized. General and administrative costs related to production and general overhead are expensed as incurred. All capitalized costs of oil and gas properties, including the estimated future costs to develop proved reserves, are amortized on the unit of production method using estimates of proved reserves. Disposition of oil and gas properties are accounted for as a reduction of capitalized costs, with no gain or loss recognized unless such adjustment would significantly alter the relationship between capitalized costs and proved reserves of oil and gas, in which case the gain or loss is recognized in operations. Unproved properties and major development projects are not amortized until proved reserves associated with the projects can be determined or until impairment occurs. If the results of an assessment indicate that the properties are impaired, the amount of the impairment is included in loss from continuing operations before income taxes and the adjusted carrying amount of the unproved properties is amortized on the unit-of-production method. Depreciation, depletion and amortization expense utilizing the unit-of-production method for the Company’s oil and gas properties for the three and six months ended June 30, 2018 and 2017, were as follows: Oil and Gas Properties by Geographical Cost Center Three months ended June 30, Six months ended, June 30, Cost Center 2018 2017 2018 2017 Canada $ 10,649 $ 221 $ 21,387 $ 17,228 United States 449,302 35,388 928,250 69,663 $ 459,951 $ 35,609 $ 949,637 $ 86,891 i) Limitation on Capitalized Costs Under the full-cost method of accounting, the Company is required, at the end of each reporting date, to perform a test to determine the limit on the book value of our oil and natural gas properties (the “Ceiling” test). If the capitalized costs of its oil and natural gas properties, net of accumulated amortization and related deferred income taxes, exceed the Ceiling, this excess or impairment is charged to expense. The expense may not be reversed in future periods, even though higher oil and natural gas prices may subsequently increase the Ceiling. The Ceiling is defined as the sum of: (a) the present value, discounted at 10 percent, and assuming continuation of existing economic conditions, of 1) estimated future gross revenues from proved reserves, which is computed using oil and natural gas prices determined as the unweighted arithmetic average of the first-day-of-the-month price for each month within the 12-month hedging arrangements pursuant to SAB 103, less 2) estimated future expenditures (based on current costs) to be incurred in developing and producing the proved reserves; plus (b) the cost of properties not being amortized; plus (c) the lower of cost or estimated fair value of unproven properties included in the costs being amortized; net of (d) the related tax effects related to the difference between the book and tax basis of our oil and natural gas properties. j) Oil and Gas Reserves Reserve engineering is a subjective process that is dependent upon the quality of available data and the interpretation thereof, including evaluations and extrapolations of well flow rates and reservoir pressure. Estimates by different engineers often vary sometimes significantly. In addition, physical factors such as the results of drilling, testing and production subsequent to the date of an estimate, as well as economic factors such as changes in product prices, may justify revision of such estimates. Because proved reserves are required to be estimated using recent prices of the evaluation, estimated reserve quantities can be significantly impacted by changes in product prices. k) Loss Per Share Basic net loss per share is computed by dividing the net loss by the weighted-average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing the net loss by the weighted-average number of common shares and, adjusted by any effects of warrants and options outstanding, if dilutive, that may add to the number of common shares during the period. At June 30, 2018 and 2017, there were approximately 34,912,910 and 6,582,259 common stock equivalents respectively, that were anti-dilutive. l) Revenue Recognition On January 1, 2018, the Company adopted ASU 2014-09, “Revenue from Contracts with Customers (ASC 606),” using the modified retrospective method. Adoption of the new revenue standard had no impact on the Company’s consolidated balance sheet, results of operations, equity or cash flows as of the adoption date, and the Company does not expect any further material impact to its consolidated financial statements on an ongoing basis as a result of adopting the new revenue standard. Sales of crude oil, natural gas, and natural gas liquids (NGLs) are included in revenue when production is sold to a customer in fulfillment of performance obligations under the terms of agreed contracts. Performance obligations primarily comprise delivery of oil, gas, or NGLs at a delivery point, as negotiated within each contract. Each barrel of oil, million BTU (MMBtu) of natural gas, or other unit of measure is separately identifiable and represents a distinct performance obligation to which the transaction price is allocated. Performance obligations are satisfied at a point in time once control of the product has been transferred to the customer. The Company considers a variety of facts and circumstances in assessing the point of control transfer, including but not limited to: whether the purchaser can direct the use of the hydrocarbons, the transfer of significant risks and rewards, the Company’s right to payment, and transfer of legal title. In each case, the term between delivery and when payments are due is not significant. The following table disaggregates the Company’s revenue by source for the three and six-month periods ended June 30, 2018 and 2017: Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Oil $ 2,248,725 151,386 $ 4,272,909 $ 358,249 Natural gas and Natural gas liquids 69,897 9,044 207,660 9,044 $ 2,318,622 $ 160,430 $ 4,480,569 $ 367,293 m) Comprehensive Loss ASC Topic 220, “Comprehensive Income,” establishes standards for the reporting and presentation of comprehensive income and its components in the consolidated financial statements. For the six months ended June 30, 2018 and 2017, comprehensive income (loss) was $0 and $1,446 respectively and consisted primarily of unrealized gains and (losses) on available for sale securities. n) Income Taxes The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements. Under this method, the Company determines deferred tax assets and liabilities on the basis of the differences between the consolidated financial statements and the tax basis of assets and liabilities by using estimated tax rates for the year in which the differences are expected to reverse. The Company recognizes deferred tax assets and liabilities to the extent that we believe that these assets and/or liabilities are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies, and results of recent operations. If we determine that the Company would be able to realize our deferred tax assets in the future in excess of their net recorded amount, we would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. In assessing the realizability of its deferred tax assets and liabilities, management evaluated whether it is more likely than not that some portion, or all of its deferred tax assets and liabilities, will be realized. As of December 31, 2017, based on all the available evidence, management determined that it is more likely than not its deferred tax assets will be fully realized. Accordingly, the Company recorded a deferred tax liability of $910,827. During the six months ended June 30, 2018, the Company incurred a net loss, which created a decrease in its deferred tax liability with a corresponding income tax benefit in the amount of $877,279. o) Stock-Based Compensation The Company may issue stock options to employees and stock options or warrants to non-employees in non-capital raising transactions for services and for financing costs. In accordance with guidance in ASC Topic 718, the cost of stock options and warrants issued to employees and non-employees is measured on the grant date based on the fair value. The fair value is determined using the Black-Scholes option pricing model. The resulting amount is charged to expense on the straight-line basis over the period in which the Company expects to receive the benefit, which is generally the vesting period. The fair value of stock warrants was determined at the date of grant using the Black-Scholes option pricing model. The Black-Scholes option model requires management to make various estimates and assumptions, including expected term, expected volatility, risk-free rate, and dividend yield. The expected term represents the period of time that stock-based compensation awards granted are expected to be outstanding and is estimated based on considerations including the vesting period, contractual term and anticipated employee exercise patterns. Expected volatility is based on the historical volatility of the Company’s stock. The risk-free rate is based on the U.S. Treasury yield curve in relation to the contractual life of stock-based compensation instrument. The dividend yield assumption is based on historical patterns and future expectations for the Company dividends. During the quarter ended June 30, 2018, the Company granted 7,472,284 warrants with the option to purchase common stock, of which 4,972,284,000 options vested immediately. The Company used the following Black-Scholes assumptions in arriving at the fair value of 3,000,000 warrants recorded as stock-based compensation expense of $599,353 and 1,972,284 warrants recorded as debt discount of $327,740 for the three months ended June 30, 2018. Expected Life in Years 5.0 Risk-free Interest Rates 2.55% to 2.73% Volatility 295.90% Dividend Yield 0% At June 30, 2018, there was approximately $499,500 of unrecognized compensation cost related to share-based payments which is expected to be recognized in the future. The following table represents stock warrant activity as of and for the six months ended June 30, 2018: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life Aggregate Intrinsic Value Warrants Outstanding – December 31, 2017 27,440,626 0.27 8.2 years - Granted 7,472,284 0.20 5.2 years - Exercised (402,084 ) - - - Forfeited/expired/cancelled - - - Warrants Outstanding – June 30, 2018 34,510,826 $ 0.27 7.1 years $ - Outstanding Exercisable – December 31, 2017 27,440,626 $ 0.27 8.2 years $ - Outstanding Exercisable – June 30, 2018 32,010,826 $ 0.27 7.1 years $ - p) Impairment of Long-Lived Assets In accordance with ASC 360, "Accounting for the Impairment or Disposal of Long-Lived Assets," the Company is required to review its long-lived assets 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. Assets are grouped and evaluated at the lowest level for their identifiable cash flows that are largely independent of the cash flows of other groups of assets. The Company considers historical performance and future estimated results in its evaluation of potential impairment and then compares the carrying amount of the asset to the future estimated cash flows expected to result from the use of the asset. If the carrying amount of the asset exceeds estimated expected undiscounted future cash flows, the Company measures the amount of impairment by comparing the carrying amount of the asset to its fair value. The estimation of fair value is generally determined by using the asset's expected future discounted cash flows or market value. The Company estimates fair value of the assets based on certain assumptions such as budgets, internal projections, and other available information as considered necessary. There is no impairment of long-lived assets during the six months ended June 30, 2018 and 2017. q) Foreign Currency Exchange An entity's functional currency is the currency of the primary economic environment in which it operates, normally that is the currency of the environment in which the entity primarily generates and expends cash. Management's judgment is essential to determine the functional currency by assessing various indicators, such as cash flows, sales price and market, expenses, financing and inter-company transactions and arrangements. The functional currency of the parent company is the U.S. Dollar. The reporting currency of the Company is the U.S. Dollar. The Company has oil and gas operations in Alberta, Canada in which the Canadian Dollar (“CAD” or “CS” herein) is the primary economic environment. The reporting currency of these consolidated financial statements is the U.S. Dollar. For financial reporting purposes, the operational results of the Company's oil and gas operations in Canada are prepared using the CAD, and are translated into the Company's reporting currency, the U.S. Dollar. Revenue and expenses applicable to the oil and gas operations in Alberta, Canada are translated using average rates prevailing during each reporting period. Gains or losses resulting from the settlement of foreign currency transactions are recorded as a separate component of accumulated other comprehensive loss in stockholders' deficit when realized. There have been no settlement transactions that resulted in the recognition of a foreign currency exchange gain or loss during the six months ended June 30, 2018 and 2017. r) Convertible Notes Payable The Company accounts for conversion options embedded in convertible notes in accordance with ASC 815. ASC 815 generally requires companies to bifurcate conversion options embedded in convertible notes from their host instruments and to account for them as free standing derivative financial instruments. The Company has evaluated the terms and conditions of its convertible notes under the guidance of ASC 815. The conversion feature did not meet the definition of “indexed to a company’s own stock” provided for in ASC 815 due to the down round protection feature. Therefore, the conversion feature requires bifurcation and liability classification. Additionally, the default put requires bifurcation because it is indexed to risks that are not associated with credit or interest risk. As a result, the compound embedded derivative comprises of (i) the embedded conversion feature and (i) the default put. Rather than bifurcating and recording the compound embedded derivative as a derivative liability, the Company elected to initially and subsequently measure the convertible note in its entirety at fair value, with changes in fair value recognized in earnings in accordance with ASC 815-15-25-4. On January 1, 2018, the Company adopted ASU 2017-11, Derivatives and Hedging (Topic 815), and increased beginning retained earnings in the amount of $807,762. s) Derivative Liability We review the terms of convertible debt issues to determine whether there are embedded derivative instruments, including embedded conversion options, which are required to be bifurcated and accounted for separately as derivative financial instruments. In circumstances where the host instrument contains more than one embedded derivative instrument, including the conversion option, that is required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument Bifurcated embedded derivatives are initially recorded at fair value and are then revalued at each reporting date with changes in the fair value reported as non-operating income or expense. When the equity or convertible debt instruments contain embedded derivative instruments that are to be bifurcated and accounted for as liabilities, the total proceeds received are first allocated to the fair value of all the bifurcated derivative instruments. The remaining proceeds, if any, are then allocated to the host instruments themselves, usually resulting in those instruments being recorded at a discount from their face value. The discount from the face value of the convertible debt, together with the stated interest on the instrument, is amortized over the life of the instrument through periodic charges to interest expense. t) Accounting for Asset Retirement Obligations Asset retirement obligations (“ARO”) primarily represent the estimated present value of the amount the Company will incur to plug, abandon and remediate its producing properties at the projected end of their productive lives, in accordance with applicable federal, state and local laws. The Company determined its ARO by calculating the present value of estimated cash flows related to the obligation. The retirement obligation is recorded as a liability at its estimated present value as of the obligation’s inception, with an offsetting increase to proved properties. The following table describes the changes in the Company’s asset retirement obligations for the six months ended June 30, 2018, and the year ended December 31, 2017: Six months ended June 30, 2018 Year ended December 31, 2017 Asset retirement obligation – beginning $ 3,096,263 $ 833,017 Oil and gas purchases 231,053 2,205,171 Gain on ARO Settlement (58,041 ) - Accretion expense 97,777 58,075 Asset retirement obligation – ending $ 3,367,052 $ 3,096,263 u) Undistributed Revenues and Royalties The Company records a liability for cash collected from oil and gas sales that have not been distributed. The amounts get distributed in accordance with the working interests of the respective owners. v) Recent Accounting Pronouncements As of June 30, 2018, and through the date of this filing, there were several new accounting pronouncements issued by the Financial Accounting Standards Board. Each of these pronouncements, as applicable, has been or will be adopted by the Company. Management does not believe the adoption of any of these accounting pronouncements has had or will have a material impact on the Company’s consolidated financial statements. The Company will monitor these emerging issues to assess any potential future impact on its financial statements. ASU Update 2014-09, “Revenue from Contracts with Customers (Topic 606),” issued May 28, 2014, by FASB and IASB converged guidance on recognizing revenue in contracts with customers on an effective date after December 31, 2017. The ASU outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers which supersedes current revenue recognition guidance, including most industry-specific guidance. The guidance provides that an entity recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This guidance also requires additional disclosure about the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments, and assets recognized from costs incurred to obtain or fulfill a contract. We adopted Topic 606 as of January 1, 2018, using the modified retrospective transition method. Under the modified retrospective method, the Company would recognize the cumulative effect of initially applying the standard as an adjustment to opening retained earnings at the date of initial application; however, we did not have any material adjustments as of the date of the adoption. The comparative periods have not been restated. In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842).” This standard requires all leases that have a term of over 12 months to be recognized on the balance sheet with the liability for lease payments and the corresponding right-of-use asset initially measured at the present value of amounts expected to be paid over the term. Recognition of the costs of these leases on the income statement will be dependent upon their classification as either an operating or a financing lease. Costs of an operating lease will continue to be recognized as a single operating expense on a straight-line basis over the lease term. Costs for a financing lease will be disaggregated and recognized as both an operating expense (for the amortization of the right-of-use asset) and interest expense (for interest on the lease liability). This standard will be effective for our interim and annual periods beginning January 1, 2019, and must be applied on a modified retrospective basis to leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. Early adoption is permitted. We are currently evaluating the timing of adoption and the potential impact of this standard on our financial position, but we do not expect it to have a material impact on our results of operations. In July 2017, the Financial Accounting Standards Board (“FASB”) issued ASU 2017-11, “Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part 1) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Non-public |
Business Acquisition
Business Acquisition | 6 Months Ended |
Jun. 30, 2018 | |
Notes to Financial Statements | |
Note 3 - Business Acquisition | Petrodome Energy LLC As discussed in Note 1, on December 22, 2017, the Company closed on the acquisition of all of the issued and outstanding membership interests of Petrodome Energy, LLC, a Texas limited liability company, with an effective date of November 1, 2017, in a transaction accounted for under the acquisition method of accounting, whereby the assets acquired and the liabilities, if any assumed are to be valued at fair value, and compared to the fair value of the consideration given to identify if there are any identifiable intangible assets to be recognized as a result of the transaction. The recorded cost of this acquisition was based upon the fair market value of the assets acquired based on an independent valuation. The fair value of the Business Enterprise and its assets exceed the value of the consideration given, creating a bargain purchase gain, which is to be recognized immediately by the purchaser. The fair value of the bargain purchase gain has been recorded in the amount of $27,021,418 during the year ended December 31, 2017. Proforma unaudited condensed selected financial data for the three and six months ended June 30, 2017, as though this acquisition had taken place at January 1, 2017, are as follows: Three Months Ended June 30, 2017 Six Months Ended June 30, 2017 Revenues $ 2,717,496 $ 5,694,444 Net Loss (excludes unrealized gains / losses) $ (1,425,275 ) $ (3,012,499 ) Loss per share $ (0.02 ) $ (0.05 ) |
Related Party Transactions
Related Party Transactions | 6 Months Ended |
Jun. 30, 2018 | |
Notes to Financial Statements | |
Note 4 - Related Party Transactions | During April 2015, the Company made an advance to Tanager Energy Inc., in conjunction with a joint investment in the second oil well of the Joffre Project. As of June 30, 2018, the balance owed by Tanager to the Company is $153,877. The Company has determined to reserve 100% of the balance and has reduced the amount shown as Other receivable – related party to $0 on the consolidated balance sheet. During the six months ended June 30, 2018, the Company’s CEO and Director, James Doris, incurred expenses on behalf of, and made advances to the Company in the amount of $608,191 in order to provide the Company with funds to carry on its operations, and the Company made repayments of $938,771. These advances do not bear interest, are unsecured and have no specific terms of repayment. As of June 30, 2018, the amount due to Mr. Doris for advances and expenses paid on behalf of the Company is $0. The Company has not imputed interest as the amount is deemed immaterial. Additionally, Mr. Doris made several loans to the Company totaling $862,390, of which $353,383 was paid back during the quarter ended June 30, 2018. These loans all accrue interest at 12%, and are payable on demand. As of June 30, 2018, the total amount due to Mr. Doris for these loans is $509,007. Accrued interest of $74,056 is included in accrued expenses and other current liabilities at June 30, 2018. |
Oil and Gas Properties
Oil and Gas Properties | 6 Months Ended |
Jun. 30, 2018 | |
Notes to Financial Statements | |
Note 5 - Oil and Gas Properties | The following table summarizes the Company’s oil and gas activities by classification and geographical cost center for the six months ended June 30, 2018: December 31, 2017 Adjustments Impairments June 30, 2018 Proved developed producing oil and gas properties Canada cost center $ 23,279 $ - $ - $ 23,279 United States cost center 12,513,088 (413,332 ) - 12,099,756 Accumulated depreciation, depletion and amortization (235,226 ) (309,995 ) - (545,221 ) Proved developed producing oil and gas properties, net $ 12,301,141 $ (723,327 ) $ - $ 11577,814 Undeveloped and non-producing oil and gas properties Canada cost center $ 382,935 $ - $ - $ 382,935 United States cost center 26,851,244 1,752,694 - 28,603,938 Accumulated depreciation, depletion and amortization (374,545 ) (610,476 ) - (985,021 ) Undeveloped and non-producing oil and gas properties, net $ 26,859,634 $ 1,142,218 $ - $ 28,001,852 Total Oil and Gas Properties, Net $ 39,160,775 $ 418,891 $ - $ 39,579,666 The following table summarizes the Company’s oil and gas activities by classification for the year ended December 31, 2017: December 31, December 31, 2016 Adjustments Impairments 2017 Proved developed producing oil and gas properties Canada cost center $ 34,733 $ (11,454 ) $ - $ 23,279 United States cost center 1,787,840 10,725,248 - 12,513,088 Accumulated depreciation, depletion and amortization (57,200 ) (178,026 ) - (235,226 ) Proved developed producing oil and gas properties, net $ 1,765,373 $ 10,535,768 $ - $ 12,301,141 Undeveloped and non-producing oil and gas properties Canada cost center $ 371,481 $ 11,454 $ - $ 382,935 United States cost center 917,184 25,934,060 - 26,851,244 Accumulated depreciation, depletion and amortization (51,176 ) (323,369 ) - (374,545 ) Undeveloped and non-producing oil and gas properties, net $ 1,237,489 $ 25,622,145 $ - $ 26,859,634 Total Oil and Gas Properties, Net $ 3,002,862 $ 36,157,913 $ - $ 39,160,775 On December 27, 2017, the Company created an additional wholly owned subsidiary, Mid-Con Development, LLC (“Mid-Con Development”) in the State of Kansas to hold additional acquisition in the central United States. On December 29, 2017, the Company through Mid-Con Development completed an acquisition of working interests in approximately 41 oil leases in Ellis and Rooks Counties in Kansas, comprising several thousand acres. The working interests in the leases range from 84% to 100%, with an average of approximately 96%, and the net revenue interests range from 72% to 85%, with an average of approximately 81%. The acquisition purchase price was $2,200,000. The Company paid $200,000 at closing on December 29, 2017. Between the closing date and January 18, 2018, Mid-Con Development assigned 7.5% of the purchased assets to Global Equity Funding, LLC (“Global Equity”), and 5% of the purchased assets to Coal Creek Energy, LLC (“Coal Creak”), leaving Mid-Con Development with an 87.5% interest in the purchased oil and gas leases. The portion of the Acquisition price attributable to Mid-Con Development, Global Equity and Coal Creek was $1,925,000, $165,000 and $110,000, respectively, which was paid in full by the close of business on January 18, 2018. On January 12, 2018, the Company, through Mid-Con Drilling, closed on an acquisition of a 100% working interest in seven new oil and gas leases in Woodson and Allen Counties in Kansas. The purchase includes an undivided interest in all oil and gas wells, equipment, fixtures and other personal property located upon the leased properties. To facilitate this transaction, the Company, through Mid-Con Drilling, executed a Promissory Note, dated January 12, 2018, in favor of Cornerstone Bank in the amount of $366,000. The acquisition price for this acquisition was $480,000. Effective February 1, 2018, the Company, through Mid-Con Drilling, closed on the acquisition of a working interest in a lease with access to the mineral rights (oil and gas) concerning approximately 80 acres of property in Douglas County in eastern Kansas. The acquisition price was $50,000. |
Capital Stock and Additional Pa
Capital Stock and Additional Paid-in Capital | 6 Months Ended |
Jun. 30, 2018 | |
Notes to Financial Statements | |
Note 6 - Capital Stock and Additional Paid-in Capital | (a) Preferred Stock The Company is authorized to issue 5,000,000 shares of Preferred Stock, par value $0.001 per share (the “Preferred Stock”), of which 50,000 have been designated as Series C Preferred Stock (the “Series C Preferred Stock”). On December 4, 2017, Viking Energy Group, Inc. (the “Company” or “Viking”) filed with the State of Nevada an amendment to the Certificate of Designation for the Company’s Series C Preferred Stock, pursuant to which each share of Series C Preferred Stock would entitle the holder thereof to 10,000 votes on all matters submitted to the vote of the stockholders of the Company. Each share of Series C Preferred Stock shall be convertible, at the option of the holder, at any time after the date of issuance into one share, at the office of the Corporation or any transfer agent for such stock, into one share of fully paid and non-assessable common stock. (the “Conversion Rate”). (b) Common Stock On June 11, 2018, the Company filed a Schedule 14C Information Statement with the SEC regarding a prospective amendment to our Articles of Incorporation to increase the number of authorized shares of our common stock from one hundred million (100,000,000) shares to five hundred million (500,000,000) shares of common stock, par value $0.001 per share. Such amendment has not yet been filed but will be filed during the three months ended September 30, 2018. During January 2018, the Company issued 250,000 common shares for services pursuant to a one-year consulting agreement. During February and March 2018, the Company issued 668,500 common shares for services. During the quarter ended March 31, 2018, pursuant to a private placement for debt and equity, the Company issued 4,110,000 common shares. During April 2018, the Company issued 60,312 common shares in a cashless exercise of 402,084 warrants to purchase the common stock of the Company. During the quarter ended June 30, 2018, the Company issued 2,363,248 common shares for services. During the quarter ended June 30, 2018, pursuant to a private placement for debt and equity, the Company issued 3,664,856 common shares. |
Long Term Debt
Long Term Debt | 6 Months Ended |
Jun. 30, 2018 | |
Notes to Financial Statements | |
Note 7 - Long Term Debt | Long term debt consisted of the following at June 30, 2018 and December 31, 2017: June 30, 2018 December 31, 2017 As of December 31, 2016, the Company issued a total of $630,000 of 10% Secured promissory notes with a term expiring April 3, 2017 (the “Maturity Date”), and an original issue discount of thirty-seven and one-half percent (37.5%). The discount was modified to fifty percent (50%) retroactively with an extension of the maturity to June 2017. During the quarter ended March 31, 2017, the Company issued an additional $917,833 of 10% Secured promissory notes with terms expiring in June, August and September of 2017, and an original issue discount of fifty percent (50%). Interest is payable on the outstanding principal of these notes at 10% per annum on the various maturity dates. The balance shown is net of unamortized discount of $0 and $0 at June 30, 2018 and December 31, 2017 respectively. - 75,000 On October 4, 2016, the Company closed on a revolver loan with Crossfirst Bank in the amount of $1,800,000, payable at $15,000 per month, interest at 10%, with all unpaid principal and accrued interest payable on September 30, 2018. The balance shown is net of unamortized discount of $6,932 and $10,341 at December 31, 2017 and 2016 respectively. - 1,594,659 During July and August of 2017, the Company borrowed $1,475,000 from private lenders pursuant to a 10% Secured Convertible Promissory Note with a twelve-month maturity. The balance shown is net of unamortized discount of $17,009 and $271,403 at June 30, 2018 and December 31, 2017 respectively. 1,457,991 1,203,597 During August through December of 2017, the Company borrowed $2,989,000, and from January through June 2018, the Company borrowed $3,230,000, all from private lenders pursuant to a 10% Secured Promissory Note with all principal and accrued interest payable on the maturity date of October 31, 2018. During the quarter ended June 30, 2018, $1,050,000 of these notes were paid in full and $2,085,000 of these notes have been exchanged for new partially convertible promissory notes. The promissory notes are secured by the membership interests of Mid-Con Drilling, LLC. The balance shown is net of unamortized discount of $838,714 and $867,399 at June 30, 2018 and December 31, 2017 respectively. 2,245,286 2,121,601 On September 8, 2017, the Company closed on a Promissory Note with Cornerstone Bank in the amount of $256,983, payable interest only for the first twelve months commencing October 8, 2017, variable interest rate, currently at 5.5%, followed by 83 monthly payments of $3,765, interest at 6%, final payment due on September 8, 2025. The balance shown is net of unamortized discount of $3,113 and $0 at June 30, 2018 and December 31, 2017 respectively. - 253,870 On September 29, 2017, the Company closed on a Promissory Note with Cornerstone Bank in the amount of $290,000, payable interest only for the first twelve months commencing October 29, 2017, variable interest rate, currently at 5.5%, followed by 83 monthly payments of $3,765, interest at 6%, final payment due on September 29, 2025. The balance shown is net of unamortized discount of $3,800 and $3,925 at June 30, 2018 and December 31, 2017 respectively. - 286,075 On October 3, 2017, the Company closed on a Promissory Note with Cornerstone Bank in the amount of $204,000, payable interest only for the first twelve months commencing November 3, 2017, variable interest rate, currently at 5.5%, followed by 83 monthly payments of $3,765, interest at 6%, final payment due on October 3, 2025. The balance shown is net of unamortized discount of $3,341 and $3,451 at June 30, 2018 and December 31, 2017 respectively. - 200,549 On December 22, 2017, the Company borrowed $8,510,638, through 405 Petrodome, LLC, as agent for Lenders, with an OID of 6%., bearing interest initially at 9.875% through June 2018, then 11.375% through December 2018, then 12.875% through June 2019, then 14.375% through December 2019. Interest only through June 2018, at which time Principal will be payable at $75,000 monthly for six months and then $125,000 monthly to the maturity date of December 22, 2019. The balance shown is net of unamortized discounts of $823,633 and $941,108 at June 30, 2018 and December 31, 2017 respectively. - 7,569,530 During June of 2018, the Company borrowed $379,712 from private lenders, and issued an additional $2,250,000 in exchange for amounts owed to the Company, pursuant to a 10% Secured Promissory Note with 50% of the principal convertible into the Company’s common stock at $0.20 per share, all principal and accrued interest payable on the maturity date of August 31, 2019. The balance shown is net of unamortized discount of $713,208 and $0 respectively. 1.916.504 - On June 13, 2018, the Company borrowed $12,400,000 pursuant to a revolving line of credit facility with a maximum principal amount of $30,000,000 from Crossfirst Bank, bearing interest 1.5% above a base rate equal to the prime rate of interest published by the Wall Street Journal, interest only for June and July of 2018, at which time Principal will be payable at $100,000 monthly through the maturity date of June 30, 2020, at which time all remaining unpaid principal and accrued interest shall be due. The balance shown is net of unamortized discount of $138,211 and $0 at June 30, 2018 and December 31, 2017 respectively. 12,261,789 - 17,881,570 13,304,881 Less current portion (4,732,565 ) (3,562,051 ) $ 13,149,005 $ 9,742,830 |
Commitments and contingencies
Commitments and contingencies | 6 Months Ended |
Jun. 30, 2018 | |
Notes to Financial Statements | |
Note 8 - Commitments and contingencies | From time to time the Company may be a party to litigation matters involving claims against the Company. Management believes that there are no current matters that would have a material effect on the Company’s consolidated financial position or results of operations. On April 16, 2018, the Company entered into an employment agreement, restricted stock agreement, and warrant with Timothy Swift, appointing Mr. Swift as Executive Vice President and Chief Operating Officer of the Company. Pursuant to Mr. Swift’s employment agreement with the Company, Mr. Swift is to receive an annual base salary of $275,000 and is eligible to receive, at the discretion of the Company’s Board of Directors, an annual bonus of up to 110% of his base salary and incentive equity compensation equal to approximately 130% of his base salary. Pursuant to the restricted stock agreement, Mr. Swift is to receive 1,000,000 shares of the Company’s common stock, with 50% of the shares vesting immediately and the remaining shares vesting on October 1, 2018, unless Mr. Swift has resigned from employment or has been terminated for cause on or prior to that time. Pursuant to the warrant, Mr. Swift received the right to purchase 3,500,000 shares of the Company’s common stock at $0.30 per share exercisable through April 1, 2023, with (i) 1,000,000 of the warrant shares vesting immediately; (ii) 2,000,000 of the warrant shares vesting on July 1, 2018, or another date as agreed in writing by both parties so long as the Company has closed a financing transaction consolidating the Company’s debt, has raised an additional $5,000,000 in financing at such time, and Mr. Swift has not resigned from employment or been terminated for cause at that time; and (iii) 500,000 of the warrant shares vesting on December 31, 2018, so long as Mr. Swift has not resigned from employment or been terminated for cause at that time. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2018 | |
Notes to Financial Statements | |
Note 9 - Subsequent Events | The Company has evaluated subsequent events from June 30, 2018, through the date of filing this Form 10-Q, and determined there are no additional items to disclose other than the following: During July 2018, the Company issued 382,823 common shares for services. During July 2018, and through the date of this filing, the Company, through a private placement raised new funds in the amount of $1,297,000, and issued new notes pursuant to the terms of the private placement relative to the exchange of previous promissory notes in the amount of $3,852,000, requiring the issuance of 3,861,750 warrants to purchase common stock of the Company. |
Summary of Significant Accoun16
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2018 | |
Summary Of Significant Accounting Policies | |
Basis of Presentation | The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and the rules of the Securities and Exchange Commission (“SEC”) and should be read in conjunction with the audited financial statements and notes thereto contained in Viking’s latest Annual Report filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments (unless otherwise indicated), necessary for a fair presentation of the 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. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. |
Basis of Consolidation | The financial statements presented herein reflect the consolidated financial results of the Company and its wholly owned subsidiaries, Viking Oil & Gas (Canada) ULC, a Canadian corporation formed on March 8, 2016, to provide a base of operations for properties in Canada, Mid-Con Petroleum, LLC, formed on August 30, 2016, Mid-Con Drilling, LLC, formed on August 25, 2017, and Mid-Con Development, LLC, formed on December 27, 2017, all to provide a base of operations for properties in the Central United States, and Petrodome Energy, LLC, based in Houston, Texas to provide a base of operations to facilitate property acquisitions in Texas, Louisiana and Mississippi, as well as Petrodome Energy, LLC’s subsidiaries in Texas, Louisiana and Mississippi. All significant intercompany transactions and balances have been eliminated upon consolidation. |
Use of Estimates in the Preparation of Financial Statements | The preparation of consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts and timing of revenues and expenses, the reported amounts and classification of assets and liabilities, and disclosure of contingent assets and liabilities. The Company's actual results could vary materially from management's estimates and assumptions. Significant areas requiring the use of management estimates relate to the determination of expected tax rates for future income tax recoveries, stock-based compensation, asset retirement obligations and impairment of long-lived assets. The estimates of proved, probable and possible oil and gas reserves are used as significant inputs in determining the depletion of oil and gas properties and the impairment of proved and unproved oil and gas properties. There are numerous uncertainties inherent in the estimation of quantities of proved, probable and possible reserves and in the projection of future rates of production and the timing of development expenditures. Similarly, evaluations for impairment of proved and unproved oil and gas properties are subject to numerous uncertainties including, among others, estimates of future recoverable reserves and commodity price outlooks. Actual results could differ from the estimates and assumptions utilized. |
Financial Instruments | ASC Topic 820-10, “Fair Value Measurement” requires disclosure of the fair value of financial instruments held by the Company. ASC Topic 820-10 defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the consolidated balance sheets for other receivable – related party, accrued expenses and other current liabilities, accounts payable, derivative liabilities, amount due to directors, and convertible notes each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows: · Level 1: inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. · Level 2: inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. · Level 3: inputs to the valuation methodology are unobservable and significant to the fair value measurement. Liabilities measured at fair value as of June 30, 2018, are classified below based on the three-level fair value hierarchy described above: Description Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Gains (Losses) Financial Assets Long term investment $ - $ - $ - $ - Commodity Derivative - - - - $ - $ - $ - $ - Financial liabilities Derivative liabilities $ - $ - $ - $ - Commodity Derivative - 1,232,810 - (987,784 ) $ - $ 1,232,810 $ - $ (987,784 ) Assets and liabilities measured at fair value as of December 31, 2017, are classified below based on the three-level fair value hierarchy described above: Description Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Gains (Losses) Financial Assets Long term investment $ - $ - $ - $ 1,446 $ - $ - $ - $ 1,446 Financial liabilities Derivative liabilities $ - $ - $ 807,762 $ 232,840 Commodity Derivative - 245,026 - (183,965 ) $ - $ 245,026 $ 807,762 $ 48,875 The Company’s long-term investment consisted of 1,437,500 common shares of Tanager Energy Inc., as of December 31, 2016, which is traded on the TSX Venture Exchange (Toronto Stock Exchange). During the three months ended March 31, 2017, the Company sold these shares. The change in the fair value of this investment that has been recognized as an unrealized gain in other comprehensive income on the statement of operations and comprehensive loss was $1,446 for the three months ended March 31, 2017. The Company had commodity financial derivatives in place at June 30, 2018. The Company does not designate its commodities derivative instruments as hedges and therefore does not apply hedge accounting. Changes in fair value of derivative instruments subsequent to the initial measurement are recorded as change in fair value on derivative liability, in other income (expense). The estimated fair value amounts of the Company’s commodity derivative instruments have been determined at discrete points in time based on relevant market information which resulted in the Company classifying such derivatives as Level 2. Although the Company’s commodity derivative instruments are valued using public indices, the instruments themselves are traded with unrelated counterparties and are not openly traded on an exchange. The Company uses the Black-Scholes model to value its derivative liabilities. This model takes into account inputs such as contract terms, including maturity and market parameters, including assumptions associated with interest rates, volatility and credit worthiness. The derivative assets and liabilities of the Company were $0 and $1,232,810 respectively as of June 30, 2018, and $0 and $1,052,788 respectively as of December 31, 2017, respectively. The change in the fair value of the derivative liabilities for the six months ended June 30, 2018, consisted of an increase of $987,784 associated with commodity derivatives. The decrease in the derivative liabilities associated with warrants and the conversion features of convertible debt in the amount of $807,762 are the result of the Company adopting ASU 2017-11, Derivatives and Hedging (Topic 815) I. Accounting for Certain Instruments with Down Round Features. |
Cash and Cash Equivalents | Cash and cash equivalents include cash in banks and highly liquid investment securities that have original maturities of three months or less. At June 30, 2018 and December 31, 2017, the Company has cash deposits in excess of FDIC insured limits in the amounts of $4,559,541 and $5,372,818, respectively. Restricted cash in the amount of $0 and $5,199,103 as of June 30, 2018 and December 31, 2017, respectively, represents cash provided through funding for the Petrodome acquisition, restricted for drilling and exploration. |
Accounts receivable | Accounts receivable consist of oil and gas receivables. The Company has classified these as short-term assets in the balance sheet because the Company expects repayment or recovery within the next 12 months. The Company evaluates these accounts receivable for collectability and, when necessary, records allowances for expected unrecoverable amounts. The Company has recorded an allowance for doubtful accounts of $87,957 at June 30, 2018. |
Prepaid equity-based compensation | Prepaid equity-based expenses represent amounts paid in advance through the issuance of restricted shares of stock, for future contractual benefits to be received. These expenses paid in advance are recorded as prepaid equity-based compensation as a component of “Stockholders’ Equity” and then amortized to the statements of operations and comprehensive loss over the life of the contract using the straight-line method. At June 30, 2018 and December 31, 2017, the balances of the prepaid equity-based compensation were comprised of the following: June 30, 2018 December 31, 2017 In February 2017, a one-year consulting agreement for services related to investor relations, market exposure and content development for a total amount of $44,160. $ - $ 6,412 In April 2017, a one-year consulting agreement comprised of four quarterly incremental installments for services related to analysis of potential oil and gas acquisitions, for an initial quarterly amount of $40,250, a second installment of $28,000 in July 2017, and a third installment of $55,000 in January 2018. - 5,415 $ - $ 11,827 |
Oil and Gas Properties | The Company uses the full cost method of accounting for its investment in oil and natural gas properties. Under this method of accounting, all costs associated with acquisition, exploration and development of oil and gas reserves, including directly related overhead costs, are capitalized. General and administrative costs related to production and general overhead are expensed as incurred. All capitalized costs of oil and gas properties, including the estimated future costs to develop proved reserves, are amortized on the unit of production method using estimates of proved reserves. Disposition of oil and gas properties are accounted for as a reduction of capitalized costs, with no gain or loss recognized unless such adjustment would significantly alter the relationship between capitalized costs and proved reserves of oil and gas, in which case the gain or loss is recognized in operations. Unproved properties and major development projects are not amortized until proved reserves associated with the projects can be determined or until impairment occurs. If the results of an assessment indicate that the properties are impaired, the amount of the impairment is included in loss from continuing operations before income taxes and the adjusted carrying amount of the unproved properties is amortized on the unit-of-production method. Depreciation, depletion and amortization expense utilizing the unit-of-production method for the Company’s oil and gas properties for the three and six months ended June 30, 2018 and 2017, were as follows: Oil and Gas Properties by Geographical Cost Center Three months ended June 30, Six months ended, June 30, Cost Center 2018 2017 2018 2017 Canada $ 10,649 $ 221 $ 21,387 $ 17,228 United States 449,302 35,388 928,250 69,663 $ 459,951 $ 35,609 $ 949,637 $ 86,891 |
Limitation on Capitalized Costs | Under the full-cost method of accounting, the Company is required, at the end of each reporting date, to perform a test to determine the limit on the book value of our oil and natural gas properties (the “Ceiling” test). If the capitalized costs of its oil and natural gas properties, net of accumulated amortization and related deferred income taxes, exceed the Ceiling, this excess or impairment is charged to expense. The expense may not be reversed in future periods, even though higher oil and natural gas prices may subsequently increase the Ceiling. The Ceiling is defined as the sum of: (a) the present value, discounted at 10 percent, and assuming continuation of existing economic conditions, of 1) estimated future gross revenues from proved reserves, which is computed using oil and natural gas prices determined as the unweighted arithmetic average of the first-day-of-the-month price for each month within the 12-month hedging arrangements pursuant to SAB 103, less 2) estimated future expenditures (based on current costs) to be incurred in developing and producing the proved reserves; plus (b) the cost of properties not being amortized; plus (c) the lower of cost or estimated fair value of unproven properties included in the costs being amortized; net of (d) the related tax effects related to the difference between the book and tax basis of our oil and natural gas properties. |
Oil and Gas Reserves | Reserve engineering is a subjective process that is dependent upon the quality of available data and the interpretation thereof, including evaluations and extrapolations of well flow rates and reservoir pressure. Estimates by different engineers often vary sometimes significantly. In addition, physical factors such as the results of drilling, testing and production subsequent to the date of an estimate, as well as economic factors such as changes in product prices, may justify revision of such estimates. Because proved reserves are required to be estimated using recent prices of the evaluation, estimated reserve quantities can be significantly impacted by changes in product prices. |
Loss per Share | Basic net loss per share is computed by dividing the net loss by the weighted-average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing the net loss by the weighted-average number of common shares and, adjusted by any effects of warrants and options outstanding, if dilutive, that may add to the number of common shares during the period. At June 30, 2018 and 2017, there were approximately 34,912,910 and 6,582,259 common stock equivalents respectively, that were anti-dilutive. |
Revenue Recognition | On January 1, 2018, the Company adopted ASU 2014-09, “Revenue from Contracts with Customers (ASC 606),” using the modified retrospective method. Adoption of the new revenue standard had no impact on the Company’s consolidated balance sheet, results of operations, equity or cash flows as of the adoption date, and the Company does not expect any further material impact to its consolidated financial statements on an ongoing basis as a result of adopting the new revenue standard. Sales of crude oil, natural gas, and natural gas liquids (NGLs) are included in revenue when production is sold to a customer in fulfillment of performance obligations under the terms of agreed contracts. Performance obligations primarily comprise delivery of oil, gas, or NGLs at a delivery point, as negotiated within each contract. Each barrel of oil, million BTU (MMBtu) of natural gas, or other unit of measure is separately identifiable and represents a distinct performance obligation to which the transaction price is allocated. Performance obligations are satisfied at a point in time once control of the product has been transferred to the customer. The Company considers a variety of facts and circumstances in assessing the point of control transfer, including but not limited to: whether the purchaser can direct the use of the hydrocarbons, the transfer of significant risks and rewards, the Company’s right to payment, and transfer of legal title. In each case, the term between delivery and when payments are due is not significant. The following table disaggregates the Company’s revenue by source for the three and six-month periods ended June 30, 2018 and 2017: Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Oil $ 2,248,725 151,386 $ 4,272,909 $ 358,249 Natural gas and Natural gas liquids 69,897 9,044 207,660 9,044 $ 2,318,622 $ 160,430 $ 4,480,569 $ 367,293 |
Comprehensive Loss | ASC Topic 220, “Comprehensive Income,” establishes standards for the reporting and presentation of comprehensive income and its components in the consolidated financial statements. For the six months ended June 30, 2018 and 2017, comprehensive income (loss) was $0 and $1,446 respectively and consisted primarily of unrealized gains and (losses) on available for sale securities. |
Income Taxes | The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements. Under this method, the Company determines deferred tax assets and liabilities on the basis of the differences between the consolidated financial statements and the tax basis of assets and liabilities by using estimated tax rates for the year in which the differences are expected to reverse. The Company recognizes deferred tax assets and liabilities to the extent that we believe that these assets and/or liabilities are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies, and results of recent operations. If we determine that the Company would be able to realize our deferred tax assets in the future in excess of their net recorded amount, we would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. In assessing the realizability of its deferred tax assets and liabilities, management evaluated whether it is more likely than not that some portion, or all of its deferred tax assets and liabilities, will be realized. As of December 31, 2017, based on all the available evidence, management determined that it is more likely than not its deferred tax assets will be fully realized. Accordingly, the Company recorded a deferred tax liability of $910,827. During the six months ended June 30, 2018, the Company incurred a net loss, which created a decrease in its deferred tax liability with a corresponding income tax benefit in the amount of $877,279. |
Stock-Based Compensation | The Company may issue stock options to employees and stock options or warrants to non-employees in non-capital raising transactions for services and for financing costs. In accordance with guidance in ASC Topic 718, the cost of stock options and warrants issued to employees and non-employees is measured on the grant date based on the fair value. The fair value is determined using the Black-Scholes option pricing model. The resulting amount is charged to expense on the straight-line basis over the period in which the Company expects to receive the benefit, which is generally the vesting period. The fair value of stock warrants was determined at the date of grant using the Black-Scholes option pricing model. The Black-Scholes option model requires management to make various estimates and assumptions, including expected term, expected volatility, risk-free rate, and dividend yield. The expected term represents the period of time that stock-based compensation awards granted are expected to be outstanding and is estimated based on considerations including the vesting period, contractual term and anticipated employee exercise patterns. Expected volatility is based on the historical volatility of the Company’s stock. The risk-free rate is based on the U.S. Treasury yield curve in relation to the contractual life of stock-based compensation instrument. The dividend yield assumption is based on historical patterns and future expectations for the Company dividends. During the quarter ended June 30, 2018, the Company granted 7,472,284 warrants with the option to purchase common stock, of which 4,972,284,000 options vested immediately. The Company used the following Black-Scholes assumptions in arriving at the fair value of 3,000,000 warrants recorded as stock-based compensation expense of $599,353 and 1,972,284 warrants recorded as debt discount of $327,740 for the three months ended June 30, 2018. Expected Life in Years 5.0 Risk-free Interest Rates 2.55% to 2.73% Volatility 295.90% Dividend Yield 0% At June 30, 2018, there was approximately $499,500 of unrecognized compensation cost related to share-based payments which is expected to be recognized in the future. The following table represents stock warrant activity as of and for the six months ended June 30, 2018: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life Aggregate Intrinsic Value Warrants Outstanding – December 31, 2017 27,440,626 0.27 8.2 years - Granted 7,472,284 0.20 5.2 years - Exercised (402,084 ) - - - Forfeited/expired/cancelled - - - Warrants Outstanding – June 30, 2018 34,510,826 $ 0.27 7.1 years $ - Outstanding Exercisable – December 31, 2017 27,440,626 $ 0.27 8.2 years $ - Outstanding Exercisable – June 30, 2018 32,010,826 $ 0.27 7.1 years $ - |
Impairment of long-lived assets | In accordance with ASC 360, "Accounting for the Impairment or Disposal of Long-Lived Assets," the Company is required to review its long-lived assets 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. Assets are grouped and evaluated at the lowest level for their identifiable cash flows that are largely independent of the cash flows of other groups of assets. The Company considers historical performance and future estimated results in its evaluation of potential impairment and then compares the carrying amount of the asset to the future estimated cash flows expected to result from the use of the asset. If the carrying amount of the asset exceeds estimated expected undiscounted future cash flows, the Company measures the amount of impairment by comparing the carrying amount of the asset to its fair value. The estimation of fair value is generally determined by using the asset's expected future discounted cash flows or market value. The Company estimates fair value of the assets based on certain assumptions such as budgets, internal projections, and other available information as considered necessary. There is no impairment of long-lived assets during the six months ended June 30, 2018 and 2017. |
Foreign Currency Exchange | An entity's functional currency is the currency of the primary economic environment in which it operates, normally that is the currency of the environment in which the entity primarily generates and expends cash. Management's judgment is essential to determine the functional currency by assessing various indicators, such as cash flows, sales price and market, expenses, financing and inter-company transactions and arrangements. The functional currency of the parent company is the U.S. Dollar. The reporting currency of the Company is the U.S. Dollar. The Company has oil and gas operations in Alberta, Canada in which the Canadian Dollar (“CAD” or “CS” herein) is the primary economic environment. The reporting currency of these consolidated financial statements is the U.S. Dollar. For financial reporting purposes, the operational results of the Company's oil and gas operations in Canada are prepared using the CAD, and are translated into the Company's reporting currency, the U.S. Dollar. Revenue and expenses applicable to the oil and gas operations in Alberta, Canada are translated using average rates prevailing during each reporting period. Gains or losses resulting from the settlement of foreign currency transactions are recorded as a separate component of accumulated other comprehensive loss in stockholders' deficit when realized. There have been no settlement transactions that resulted in the recognition of a foreign currency exchange gain or loss during the six months ended June 30, 2018 and 2017. |
Convertible Notes Payable | The Company accounts for conversion options embedded in convertible notes in accordance with ASC 815. ASC 815 generally requires companies to bifurcate conversion options embedded in convertible notes from their host instruments and to account for them as free standing derivative financial instruments. The Company has evaluated the terms and conditions of its convertible notes under the guidance of ASC 815. The conversion feature did not meet the definition of “indexed to a company’s own stock” provided for in ASC 815 due to the down round protection feature. Therefore, the conversion feature requires bifurcation and liability classification. Additionally, the default put requires bifurcation because it is indexed to risks that are not associated with credit or interest risk. As a result, the compound embedded derivative comprises of (i) the embedded conversion feature and (i) the default put. Rather than bifurcating and recording the compound embedded derivative as a derivative liability, the Company elected to initially and subsequently measure the convertible note in its entirety at fair value, with changes in fair value recognized in earnings in accordance with ASC 815-15-25-4. On January 1, 2018, the Company adopted ASU 2017-11, Derivatives and Hedging (Topic 815), and increased beginning retained earnings in the amount of $807,762. |
Derivative Liability | We review the terms of convertible debt issues to determine whether there are embedded derivative instruments, including embedded conversion options, which are required to be bifurcated and accounted for separately as derivative financial instruments. In circumstances where the host instrument contains more than one embedded derivative instrument, including the conversion option, that is required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument Bifurcated embedded derivatives are initially recorded at fair value and are then revalued at each reporting date with changes in the fair value reported as non-operating income or expense. When the equity or convertible debt instruments contain embedded derivative instruments that are to be bifurcated and accounted for as liabilities, the total proceeds received are first allocated to the fair value of all the bifurcated derivative instruments. The remaining proceeds, if any, are then allocated to the host instruments themselves, usually resulting in those instruments being recorded at a discount from their face value. The discount from the face value of the convertible debt, together with the stated interest on the instrument, is amortized over the life of the instrument through periodic charges to interest expense. |
Accounting for Asset Retirement Obligations | Asset retirement obligations (“ARO”) primarily represent the estimated present value of the amount the Company will incur to plug, abandon and remediate its producing properties at the projected end of their productive lives, in accordance with applicable federal, state and local laws. The Company determined its ARO by calculating the present value of estimated cash flows related to the obligation. The retirement obligation is recorded as a liability at its estimated present value as of the obligation’s inception, with an offsetting increase to proved properties. The following table describes the changes in the Company’s asset retirement obligations for the six months ended June 30, 2018, and the year ended December 31, 2017: Six months ended June 30, 2018 Year ended December 31, 2017 Asset retirement obligation – beginning $ 3,096,263 $ 833,017 Oil and gas purchases 231,053 2,205,171 Gain on ARO Settlement (58,041 ) - Accretion expense 97,777 58,075 Asset retirement obligation – ending $ 3,367,052 $ 3,096,263 |
Undistributed Revenues and Royalties | The Company records a liability for cash collected from oil and gas sales that have not been distributed. The amounts get distributed in accordance with the working interests of the respective owners. |
Recently Accounting Pronouncements | As of June 30, 2018, and through the date of this filing, there were several new accounting pronouncements issued by the Financial Accounting Standards Board. Each of these pronouncements, as applicable, has been or will be adopted by the Company. Management does not believe the adoption of any of these accounting pronouncements has had or will have a material impact on the Company’s consolidated financial statements. The Company will monitor these emerging issues to assess any potential future impact on its financial statements. ASU Update 2014-09, “Revenue from Contracts with Customers (Topic 606),” issued May 28, 2014, by FASB and IASB converged guidance on recognizing revenue in contracts with customers on an effective date after December 31, 2017. The ASU outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers which supersedes current revenue recognition guidance, including most industry-specific guidance. The guidance provides that an entity recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This guidance also requires additional disclosure about the nature, amount, timing, and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments, and assets recognized from costs incurred to obtain or fulfill a contract. We adopted Topic 606 as of January 1, 2018, using the modified retrospective transition method. Under the modified retrospective method, the Company would recognize the cumulative effect of initially applying the standard as an adjustment to opening retained earnings at the date of initial application; however, we did not have any material adjustments as of the date of the adoption. The comparative periods have not been restated. In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842).” This standard requires all leases that have a term of over 12 months to be recognized on the balance sheet with the liability for lease payments and the corresponding right-of-use asset initially measured at the present value of amounts expected to be paid over the term. Recognition of the costs of these leases on the income statement will be dependent upon their classification as either an operating or a financing lease. Costs of an operating lease will continue to be recognized as a single operating expense on a straight-line basis over the lease term. Costs for a financing lease will be disaggregated and recognized as both an operating expense (for the amortization of the right-of-use asset) and interest expense (for interest on the lease liability). This standard will be effective for our interim and annual periods beginning January 1, 2019, and must be applied on a modified retrospective basis to leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. Early adoption is permitted. We are currently evaluating the timing of adoption and the potential impact of this standard on our financial position, but we do not expect it to have a material impact on our results of operations. In July 2017, the Financial Accounting Standards Board (“FASB”) issued ASU 2017-11, “Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part 1) Accounting for Certain Financial Instruments with Down Round Features, (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Non-public Entities and Certain Mandatorily Redeemable Non-controlling Interests with a Scope Exception” (“ASU 2017-11”). Part I relates to the accounting for certain financial instruments with down round features in Subtopic 815-40, which is considered in determining whether an equity-linked financial instrument qualifies for a scope exception from derivative accounting. Down round features are features of certain equity-linked instruments (or embedded features) that result in the strike price being reduced based on the pricing of future equity offerings. An entity still is required to determine whether instruments would be classified as equity under the guidance in Subtopic 815-40 in determining whether they qualify for that scope exception. If they do qualify, freestanding instruments with down round features are no longer classified as liabilities. ASU 2017-11 is effective for annual reporting periods beginning after December 15, 2018, including interim periods within that reporting period. Early adoption is permitted, including in an interim period. We adopted Topic 815 as of January 1, 2018. The effect was to no longer recognize certain freestanding instruments with down round features as a liability, through an increase in beginning retained earnings of $807,762. |
Subsequent events | The Company has evaluated all subsequent events from June 30, 2018, through the date of filing this report, and determined there are no additional items to disclose other than those listed in Note 9. |
Summary of Significant Accoun17
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Summary Of Significant Accounting Policies Tables Abstract | |
Financial assets and liabilities measured at fair value | Liabilities measured at fair value as of June 30, 2018, are classified below based on the three-level fair value hierarchy described above: Description Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Gains (Losses) Financial Assets Long term investment $ - $ - $ - $ - Commodity Derivative - - - - $ - $ - $ - $ - Financial liabilities Derivative liabilities $ - $ - $ - $ - Commodity Derivative - 1,232,810 - (987,784 ) $ - $ 1,232,810 $ - $ (987,784 ) Assets and liabilities measured at fair value as of December 31, 2017, are classified below based on the three-level fair value hierarchy described above: Description Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Gains (Losses) Financial Assets Long term investment $ - $ - $ - $ 1,446 $ - $ - $ - $ 1,446 Financial liabilities Derivative liabilities $ - $ - $ 807,762 $ 232,840 Commodity Derivative - 245,026 - (183,965 ) $ - $ 245,026 $ 807,762 $ 48,875 |
Schedule of Prepaid equity based compensation expenses | At June 30, 2018 and December 31, 2017, the balances of the prepaid equity-based compensation were comprised of the following: June 30, 2018 December 31, 2017 In February 2017, a one-year consulting agreement for services related to investor relations, market exposure and content development for a total amount of $44,160. $ - $ 6,412 In April 2017, a one-year consulting agreement comprised of four quarterly incremental installments for services related to analysis of potential oil and gas acquisitions, for an initial quarterly amount of $40,250, a second installment of $28,000 in July 2017, and a third installment of $55,000 in January 2018. - 5,415 $ - $ 11,827 |
Depreciation, depletion and amortization expense | Oil and Gas Properties by Geographical Cost Center Three months ended June 30, Six months ended, June 30, Cost Center 2018 2017 2018 2017 Canada $ 10,649 $ 221 $ 21,387 $ 17,228 United States 449,302 35,388 928,250 69,663 $ 459,951 $ 35,609 $ 949,637 $ 86,891 |
Schedule of revenue by source | The following table disaggregates the Company’s revenue by source for the three and six-month periods ended June 30, 2018 and 2017: Three Months Ended June 30, Six Months Ended June 30, 2018 2017 2018 2017 Oil $ 2,248,725 151,386 $ 4,272,909 $ 358,249 Natural gas and Natural gas liquids 69,897 9,044 207,660 9,044 $ 2,318,622 $ 160,430 $ 4,480,569 $ 367,293 |
Schedule of share-based payment award, valuation assumptions | Expected Life in Years 5.0 Risk-free Interest Rates 2.55% to 2.73% Volatility 295.90% Dividend Yield 0% |
Stock-Based Compensation | The following table represents stock warrant activity as of and for the six months ended June 30, 2018: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life Aggregate Intrinsic Value Warrants Outstanding – December 31, 2017 27,440,626 0.27 8.2 years - Granted 7,472,284 0.20 5.2 years - Exercised (402,084 ) - - - Forfeited/expired/cancelled - - - Warrants Outstanding – June 30, 2018 34,510,826 $ 0.27 7.1 years $ - Outstanding Exercisable – December 31, 2017 27,440,626 $ 0.27 8.2 years $ - Outstanding Exercisable – June 30, 2018 32,010,826 $ 0.27 7.1 years $ - |
Summary of changes in the Company's asset retirement obligations | The following table describes the changes in the Company’s asset retirement obligations for the six months ended June 30, 2018, and the year ended December 31, 2017: Six months ended June 30, 2018 Year ended December 31, 2017 Asset retirement obligation – beginning $ 3,096,263 $ 833,017 Oil and gas purchases 231,053 2,205,171 Gain on ARO Settlement (58,041 ) - Accretion expense 97,777 58,075 Asset retirement obligation – ending $ 3,367,052 $ 3,096,263 |
Business Acquisition (Tables)
Business Acquisition (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Business Acquisition | |
Summary of loss per share | Proforma unaudited condensed selected financial data for the three and six months ended June 30, 2017, as though this acquisition had taken place at January 1, 2017, are as follows: Three Months Ended June 30, 2017 Six Months Ended June 30, 2017 Revenues $ 2,717,496 $ 5,694,444 Net Loss (excludes unrealized gains / losses) $ (1,425,275 ) $ (3,012,499 ) Loss per share $ (0.02 ) $ (0.05 ) |
Oil and Gas Properties (Tables)
Oil and Gas Properties (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Oil And Gas Properties | |
Schedule of oil and gas activities | The following table summarizes the Company’s oil and gas activities by classification and geographical cost center for the six months ended June 30, 2018: December 31, 2017 Adjustments Impairments June 30, 2018 Proved developed producing oil and gas properties Canada cost center $ 23,279 $ - $ - $ 23,279 United States cost center 12,513,088 (413,332 ) - 12,099,756 Accumulated depreciation, depletion and amortization (235,226 ) (309,995 ) - (545,221 ) Proved developed producing oil and gas properties, net $ 12,301,141 $ (723,327 ) $ - $ 11577,814 Undeveloped and non-producing oil and gas properties Canada cost center $ 382,935 $ - $ - $ 382,935 United States cost center 26,851,244 1,752,694 - 28,603,938 Accumulated depreciation, depletion and amortization (374,545 ) (610,476 ) - (985,021 ) Undeveloped and non-producing oil and gas properties, net $ 26,859,634 $ 1,142,218 $ - $ 28,001,852 Total Oil and Gas Properties, Net $ 39,160,775 $ 418,891 $ - $ 39,579,666 The following table summarizes the Company’s oil and gas activities by classification for the year ended December 31, 2017: December 31, December 31, 2016 Adjustments Impairments 2017 Proved developed producing oil and gas properties Canada cost center $ 34,733 $ (11,454 ) $ - $ 23,279 United States cost center 1,787,840 10,725,248 - 12,513,088 Accumulated depreciation, depletion and amortization (57,200 ) (178,026 ) - (235,226 ) Proved developed producing oil and gas properties, net $ 1,765,373 $ 10,535,768 $ - $ 12,301,141 Undeveloped and non-producing oil and gas properties Canada cost center $ 371,481 $ 11,454 $ - $ 382,935 United States cost center 917,184 25,934,060 - 26,851,244 Accumulated depreciation, depletion and amortization (51,176 ) (323,369 ) - (374,545 ) Undeveloped and non-producing oil and gas properties, net $ 1,237,489 $ 25,622,145 $ - $ 26,859,634 Total Oil and Gas Properties, Net $ 3,002,862 $ 36,157,913 $ - $ 39,160,775 |
Long Term Debt (Tables)
Long Term Debt (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Long Term Debt | |
Schedule of Long-term Debt | Long term debt consisted of the following at June 30, 2018 and December 31, 2017: June 30, 2018 December 31, 2017 As of December 31, 2016, the Company issued a total of $630,000 of 10% Secured promissory notes with a term expiring April 3, 2017 (the “Maturity Date”), and an original issue discount of thirty-seven and one-half percent (37.5%). The discount was modified to fifty percent (50%) retroactively with an extension of the maturity to June 2017. During the quarter ended March 31, 2017, the Company issued an additional $917,833 of 10% Secured promissory notes with terms expiring in June, August and September of 2017, and an original issue discount of fifty percent (50%). Interest is payable on the outstanding principal of these notes at 10% per annum on the various maturity dates. The balance shown is net of unamortized discount of $0 and $0 at June 30, 2018 and December 31, 2017 respectively. - 75,000 On October 4, 2016, the Company closed on a revolver loan with Crossfirst Bank in the amount of $1,800,000, payable at $15,000 per month, interest at 10%, with all unpaid principal and accrued interest payable on September 30, 2018. The balance shown is net of unamortized discount of $6,932 and $10,341 at December 31, 2017 and 2016 respectively. - 1,594,659 During July and August of 2017, the Company borrowed $1,475,000 from private lenders pursuant to a 10% Secured Convertible Promissory Note with a twelve-month maturity. The balance shown is net of unamortized discount of $17,009 and $271,403 at June 30, 2018 and December 31, 2017 respectively. 1,457,991 1,203,597 During August through December of 2017, the Company borrowed $2,989,000, and from January through June 2018, the Company borrowed $3,230,000, all from private lenders pursuant to a 10% Secured Promissory Note with all principal and accrued interest payable on the maturity date of October 31, 2018. During the quarter ended June 30, 2018, $1,050,000 of these notes were paid in full and $2,085,000 of these notes have been exchanged for new partially convertible promissory notes. The promissory notes are secured by the membership interests of Mid-Con Drilling, LLC. The balance shown is net of unamortized discount of $838,714 and $867,399 at June 30, 2018 and December 31, 2017 respectively. 2,245,286 2,121,601 On September 8, 2017, the Company closed on a Promissory Note with Cornerstone Bank in the amount of $256,983, payable interest only for the first twelve months commencing October 8, 2017, variable interest rate, currently at 5.5%, followed by 83 monthly payments of $3,765, interest at 6%, final payment due on September 8, 2025. The balance shown is net of unamortized discount of $3,113 and $0 at June 30, 2018 and December 31, 2017 respectively. - 253,870 On September 29, 2017, the Company closed on a Promissory Note with Cornerstone Bank in the amount of $290,000, payable interest only for the first twelve months commencing October 29, 2017, variable interest rate, currently at 5.5%, followed by 83 monthly payments of $3,765, interest at 6%, final payment due on September 29, 2025. The balance shown is net of unamortized discount of $3,800 and $3,925 at June 30, 2018 and December 31, 2017 respectively. - 286,075 On October 3, 2017, the Company closed on a Promissory Note with Cornerstone Bank in the amount of $204,000, payable interest only for the first twelve months commencing November 3, 2017, variable interest rate, currently at 5.5%, followed by 83 monthly payments of $3,765, interest at 6%, final payment due on October 3, 2025. The balance shown is net of unamortized discount of $3,341 and $3,451 at June 30, 2018 and December 31, 2017 respectively. - 200,549 On December 22, 2017, the Company borrowed $8,510,638, through 405 Petrodome, LLC, as agent for Lenders, with an OID of 6%., bearing interest initially at 9.875% through June 2018, then 11.375% through December 2018, then 12.875% through June 2019, then 14.375% through December 2019. Interest only through June 2018, at which time Principal will be payable at $75,000 monthly for six months and then $125,000 monthly to the maturity date of December 22, 2019. The balance shown is net of unamortized discounts of $823,633 and $941,108 at June 30, 2018 and December 31, 2017 respectively. - 7,569,530 During June of 2018, the Company borrowed $379,712 from private lenders, and issued an additional $2,250,000 in exchange for amounts owed to the Company, pursuant to a 10% Secured Promissory Note with 50% of the principal convertible into the Company’s common stock at $0.20 per share, all principal and accrued interest payable on the maturity date of August 31, 2019. The balance shown is net of unamortized discount of $713,208 and $0 respectively. 1.916.504 - On June 13, 2018, the Company borrowed $12,400,000 pursuant to a revolving line of credit facility with a maximum principal amount of $30,000,000 from Crossfirst Bank, bearing interest 1.5% above a base rate equal to the prime rate of interest published by the Wall Street Journal, interest only for June and July of 2018, at which time Principal will be payable at $100,000 monthly through the maturity date of June 30, 2020, at which time all remaining unpaid principal and accrued interest shall be due. The balance shown is net of unamortized discount of $138,211 and $0 at June 30, 2018 and December 31, 2017 respectively. 12,261,789 - 17,881,570 13,304,881 Less current portion (4,732,565 ) (3,562,051 ) $ 13,149,005 $ 9,742,830 |
Nature of Business and Going 21
Nature of Business and Going Concern (Details Narrative) | Jan. 12, 2018USD ($)aInteger | Oct. 04, 2017Integer | Oct. 02, 2017Integer | Sep. 11, 2017aInteger | Oct. 04, 2016aInteger | Dec. 29, 2017Integer | Nov. 30, 2014 | Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) | Jun. 30, 2018USD ($) | Jun. 30, 2017USD ($) | Dec. 31, 2017USD ($) | Dec. 22, 2017a | Feb. 23, 2016a |
Controlling purchasing percentage of ownerships | 50.00% | |||||||||||||
Net comprehensive loss | $ | $ (3,955,216) | $ (1,322,713) | $ (5,508,099) | $ (1,880,668) | ||||||||||
Total stockholders' equity | $ | $ 20,591,231 | $ 20,591,231 | $ 22,508,313 | |||||||||||
Miami and Franklin [Member] | ||||||||||||||
Area of oil and gas acquisition | 281 | |||||||||||||
Mid-Con Petroleum [Member] | ||||||||||||||
Area of oil and gas acquisition | 660 | |||||||||||||
Number of oil and gas lease | Integer | 4 | |||||||||||||
Sparta Ventures Corp. [Member] | ||||||||||||||
State of incorporation | Florida | |||||||||||||
Date of Incorporation | May 3, 1989 | |||||||||||||
SinoCubate, Inc. [Member] | ||||||||||||||
State of incorporation | Nevada | |||||||||||||
Date of Incorporation | Sep. 11, 2008 | |||||||||||||
Mid-Con Drilling, LLC [Member] | ||||||||||||||
Acquisition price | $ | $ 50,000 | |||||||||||||
Effective date of acquisition | Feb. 1, 2018 | Oct. 1, 2017 | ||||||||||||
Area of oil and gas acquisition | 80 | 980 | ||||||||||||
Ownership interest, percentage | 100.00% | 80.00% | 100.00% | 90.00% | ||||||||||
Oil and gas Production, description | thirteen barrels of oil per day | twenty-two barrels of oil per day. | ||||||||||||
Number of oil and gas lease | Integer | 7 | 6 | 6 | 4 | 41 | |||||||||
Petrodome Energy LLC [Member] | ||||||||||||||
Area of oil and gas acquisition | 11,700 | |||||||||||||
Ownership interest, percentage | 100.00% |
Summary of Significant Accoun22
Summary of Significant Accounting Policies (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Financial Liabilities | ||
Derivative Liabilities | $ 1,232,810 | $ 1,052,788 |
Quoted Prices in Active Markets for Identical Assets/Level 1 [Member] | ||
Financial Assets | ||
Long term investment | ||
Commodity Derivative | ||
Financial Asset | ||
Financial Liabilities | ||
Derivative Liabilities | ||
Commodity Derivative | ||
Financial Liabilities | ||
Significant Other Observable Inputs/Level 2 [Member] | ||
Financial Assets | ||
Long term investment | ||
Commodity Derivative | ||
Financial Asset | ||
Financial Liabilities | ||
Derivative Liabilities | ||
Commodity Derivative | 1,232,810 | 245,026 |
Financial Liabilities | 1,232,810 | 245,026 |
Significant Unobservable Inputs/Level 3 [Member] | ||
Financial Assets | ||
Long term investment | ||
Commodity Derivative | ||
Financial Asset | ||
Financial Liabilities | ||
Derivative Liabilities | 807,762 | |
Commodity Derivative | ||
Financial Liabilities | 807,762 | |
Total Gain Loss [Member] | ||
Financial Assets | ||
Long term investment | 1,446 | |
Commodity Derivative | ||
Financial Asset | 1,446 | |
Financial Liabilities | ||
Derivative Liabilities | 232,840 | |
Commodity Derivative | (987,784) | (183,965) |
Financial Liabilities | $ (987,784) | $ 48,875 |
Summary of Significant Accoun23
Summary of Significant Accounting Policies (Details 1) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Prepaid equity-based compensation | $ 11,827 | |
Consulting agreement for services related to investor relations [Member] | In February 2017 [Member] | ||
Prepaid equity-based compensation | 6,412 | |
Consulting agreement comprised of four quarterly incremental installments for services [Member] | In April 2017 [Member] | ||
Prepaid equity-based compensation | $ 5,415 |
Summary of Significant Accoun24
Summary of Significant Accounting Policies (Details 2) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Amortization expense for the oil and gas properties | $ 459,951 | $ 35,609 | $ 949,637 | $ 86,891 |
Canada [Member] | ||||
Amortization expense for the oil and gas properties | 10,649 | 221 | 21,387 | 17,228 |
United States [Member] | ||||
Amortization expense for the oil and gas properties | $ 449,302 | $ 35,388 | $ 928,250 | $ 69,663 |
Summary of Significant Accoun25
Summary of Significant Accounting Policies (Details 3) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Summary Of Significant Accounting Policies Details 3Abstract | ||||
Oil | $ 2,248,725 | $ 151,386 | $ 4,272,909 | $ 358,249 |
Natural gas and Natural gas liquids | 69,897 | 9,044 | 207,660 | 9,044 |
Total revenue | $ 2,318,622 | $ 160,430 | $ 4,480,569 | $ 367,293 |
Summary of Significant Accoun26
Summary of Significant Accounting Policies (Details 4) - Warrants [Member] | 6 Months Ended |
Jun. 30, 2018 | |
Expected Life in Years | 5 years |
Volatility | 295.90% |
Dividend Yield | 0.00% |
Maximum [Member] | |
Risk-free Interest Rates | 2.55% |
Minimum [Member] | |
Risk-free Interest Rates | 2.73% |
Summary of Significant Accoun27
Summary of Significant Accounting Policies (Details 5) - Warrants [Member] - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Number of Shares | ||
Outstanding, Beginning | 27,440,626 | |
Granted | 7,472,284 | |
Exercised | (402,084) | |
Forfeited/expired/cancelled | ||
Outstanding, Ending | 34,510,826 | 27,440,626 |
Outstanding Exercisable December 31, 2017 | 27,440,626 | |
Outstanding Exercisable – June 30, 2018 | 32,010,826 | |
Weighted Average Exercise Price | ||
Outstanding, Beginning | $ 0.27 | |
Granted | 0.20 | |
Exercised | ||
Outstanding, Ending | 0.27 | $ 0.27 |
Outstanding Exercisable December 31, 2017 | $ 0.27 | |
Outstanding Exercisable – June 30, 2018 | $ 0.27 | |
Weighted Average Remaining Contractual Life | ||
Outstanding, Beginning | 8 years 2 months 12 days | |
Granted | 5 years 2 months 12 days | |
Outstanding, Ending | 7 years 1 month 6 days | |
Outstanding Exercisable December 31, 2017 | 8 years 2 months 12 days | |
Outstanding Exercisable – June 30, 2018 | 7 years 1 month 6 days | |
Aggregate Intrinsic Value | ||
Outstanding, Beginning | ||
Granted | ||
Forfeited/expired/cancelled | ||
Outstanding, Ending | ||
Outstanding Exercisable December 31, 2017 | ||
Outstanding Exercisable – June 30, 2018 |
Summary of Significant Accoun28
Summary of Significant Accounting Policies (Details 6) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Summary Of Significant Accounting Policies Details 1Abstract | |||||
Asset retirement obligation - beginning | $ 3,096,263 | $ 833,017 | $ 833,017 | ||
Oil and gas purchases | 231,053 | 2,205,171 | |||
Gain on ARO Settlement | (58,041) | ||||
Accretion expense | 97,777 | 58,075 | |||
Asset retirement obligation - ending | $ 3,367,052 | $ 3,367,052 | $ 3,096,263 |
Summary of Significant Accoun29
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |||||
Jun. 30, 2018 | Jun. 30, 2017 | Mar. 31, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | |
Unrealized gain (loss) on securities available-for-sale | $ 1,446 | $ 1,446 | |||||
Derivative Liabilities | 1,232,810 | 1,232,810 | $ 1,052,788 | ||||
Derivative assets | 0 | 0 | 0 | ||||
Change in fair value on derivative liability | 632,831 | (119,085) | 987,784 | $ (455,098) | |||
Accounting principal change relative to certain derivative liabilities - Note 2. | $ 807,762 | ||||||
Common stock equivalents as anti-dilutive | 34,912,910 | 6,582,259 | |||||
Deferred tax liability | 33,548 | $ 33,548 | 910,827 | ||||
Income tax benefit | (605,490) | (877,279) | |||||
Restricted cash | 5,199,103 | ||||||
Allowance for doubtful accounts | 87,957 | 87,957 | |||||
Cash in excess of FDIC Insured Amount | 4,559,541 | 4,559,541 | $ 5,372,818 | ||||
Stock-based compensation expense | 1,044,612 | $ 803,616 | 1,218,099 | 1,151,020 | |||
Unrecognized compensation cost | $ 499,500 | 499,500 | |||||
February 2017, one-year consulting agreements [Member] | |||||||
Principal amount | 44,160 | ||||||
April 2017, three one-year consulting agreements [Member] | Initial Quarterly Installment [Memeber] | |||||||
Principal quarterly amount | 40,250 | ||||||
July 2017, three one-year consulting agreements [Member] | Second Quarterly Installment [Memeber] | |||||||
Principal quarterly amount | 28,000 | ||||||
January 2018, three one-year consulting agreements [Member] | Third Quarterly Installment [Memeber] | |||||||
Principal quarterly amount | $ 55,000 | ||||||
Tanager Energy, Inc. [Member] | |||||||
Long-term investment related to common stock | 1,437,500 | ||||||
Warrants [Member] | |||||||
Warrants granted | 7,472,284 | ||||||
Stock option vested shares | 4,972,284,000 | ||||||
Class of warrants or rights outstanding | 3,000,000 | 3,000,000 | |||||
Stock-based compensation expense | $ 599,353 | $ 1,972,284 | |||||
Debt discount | $ 327,740 | $ 327,740 |
Business Acquisition (Details)
Business Acquisition (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Net Loss (excludes unrealized gains / losses) | $ (3,955,216) | $ (1,322,713) | $ (5,508,099) | $ (1,882,114) |
Loss per share | $ (0.05) | $ (0.02) | $ (0.07) | $ (0.03) |
Proforma [Member] | ||||
Revenues | $ 2,717,496 | $ 5,694,444 | ||
Net Loss (excludes unrealized gains / losses) | $ (1,425,275) | $ (3,012,499) | ||
Loss per share | $ (0.02) | $ (0.05) |
Business Acquisition (Details N
Business Acquisition (Details Narrative) | 12 Months Ended |
Dec. 31, 2017USD ($) | |
Business Acquisition Details Narrative Abstract | |
Fair value of bargain purchase gain | $ 27,021,418 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | 6 Months Ended | |
Nov. 30, 2014 | Jun. 30, 2018 | Jun. 30, 2018 | Dec. 31, 2017 | |
Other receivable - related party | $ 548,714 | |||
Controlling purchasing percentage of ownerships | 50.00% | |||
Amount due to directors | 509,007 | 509,007 | $ 1,192,970 | |
Tanager Energy, Inc. [Member] | ||||
Other receivable - related party | 0 | $ 0 | ||
Controlling purchasing percentage of ownerships | 100.00% | |||
Advances due to Company | 153,877 | $ 153,877 | ||
Mr. James A. Doris [Member] | ||||
Advances to related party | 608,191 | |||
Repayments to related party | 353,383 | 938,771 | ||
Amount due to directors | $ 862,390 | 862,390 | ||
Accrued interest | $ 74,056 | |||
Interest rate | 12.00% | 12.00% | ||
Payment of advance by related party | $ 0 |
Oil and Gas Properties (Details
Oil and Gas Properties (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Oil and gas properties, net | $ 11,577,814 | $ 12,301,141 | |
Total Oil and Gas Properties, Net | 39,579,666 | 39,160,775 | |
Proved Developed Producing [Member] | |||
Canada cost center | 23,279 | 23,279 | $ 34,733 |
United States cost center | 12,099,756 | 12,513,088 | 1,787,840 |
Accumulated depreciation, depletion and amortization | (545,221) | (235,226) | (57,200) |
Oil and gas properties, net | 11,577,814 | 12,301,141 | 1,765,373 |
Undeveloped and Non-producing [Member] | |||
Canada cost center | 382,935 | 382,935 | 371,481 |
United States cost center | 28,603,938 | 26,851,244 | 917,184 |
Accumulated depreciation, depletion and amortization | (985,021) | (374,545) | (51,176) |
Oil and gas properties, net | 28,001,852 | 26,859,634 | 1,237,489 |
Total Oil and Gas Properties, Net | $ 39,579,666 | 39,160,775 | 3,002,862 |
Adjustments Proved Developed Producing [Member] | |||
Canada cost center | (11,454) | ||
United States cost center | (413,332) | 10,725,248 | |
Accumulated depreciation, depletion and amortization | (309,995) | (178,026) | |
Oil and gas properties, net | (723,327) | 10,535,768 | |
Impairments Proved Developed Producing [Member] | |||
Canada cost center | |||
United States cost center | |||
Accumulated depreciation, depletion and amortization | |||
Oil and gas properties, net | |||
Adjustments Undeveloped and non-producing [Member] | |||
Canada cost center | 11,454 | ||
United States cost center | 1,752,694 | 25,934,060 | |
Accumulated depreciation, depletion and amortization | (610,476) | (323,369) | |
Oil and gas properties, net | 1,142,218 | 25,622,145 | |
Total Oil and Gas Properties, Net | 418,891 | 36,157,913 | |
Impairments Undeveloped and non-producing [Member] | |||
Canada cost center | |||
United States cost center | |||
Accumulated depreciation, depletion and amortization | |||
Oil and gas properties, net | |||
Total Oil and Gas Properties, Net |
Oil and Gas Properties (Detai34
Oil and Gas Properties (Details Narrative) | Jan. 12, 2018USD ($)Integer | Oct. 04, 2017Integer | Oct. 02, 2017Integer | Sep. 11, 2017Integer | Dec. 29, 2017USD ($)Integer | Jun. 30, 2018USD ($) | Jan. 18, 2018USD ($) |
Mid-Con Drilling, LLC [Member] | |||||||
Business acquisition total purchase price | $ 50,000 | ||||||
Number of oil and gas lease | Integer | 7 | 6 | 6 | 4 | 41 | ||
Oil and Gas Properties [Member] | Mid-Con Drilling [Member] | |||||||
Business acquisition working interest acquired | 100.00% | ||||||
Promissory note issued upon acquisition | $ 366,000 | ||||||
Business acquisition total purchase price | $ 480,000 | ||||||
Number of oil and gas lease | Integer | 7 | ||||||
Oil and Gas Properties [Member] | Mid-Con Drilling [Member] | February 1, 2018 | |||||||
Description of property acquisition | The mineral rights (oil and gas) concerning approximately 80 acres of property in Douglas County in eastern Kansas. | ||||||
Business acquisition price | $ 50,000 | ||||||
Oil and Gas Properties [Member] | Mid-Con Drilling, LLC [Member] | |||||||
Business acquisition consideration transferred | $ 200,000 | ||||||
Business acquisition ownership interest held by related parties | 87.50% | ||||||
Description of property acquisition | The working interests in the leases range from 84% to 100%, with an average of approximately 96%, and the net revenue interests range from 72% to 85%, with an average of approximately 81%. | ||||||
Business acquisition total purchase price | $ 2,200,000 | $ 1,925,000 | |||||
Number of oil and gas lease | Integer | 41 | ||||||
Oil and Gas Properties [Member] | Coal Creek [Member] | |||||||
Business acquisition ownership interest held by related parties | 5.00% | ||||||
Business acquisition total purchase price | $ 110,000 | ||||||
Oil and Gas Properties [Member] | Global Equity [Member] | |||||||
Business acquisition ownership interest held by related parties | 7.50% | ||||||
Business acquisition total purchase price | $ 165,000 |
Capital Stock and Additional 35
Capital Stock and Additional Paid-in Capital (Details Narrative) - $ / shares | Jun. 11, 2018 | Apr. 30, 2018 | Jan. 31, 2018 | Mar. 31, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2018 | Dec. 31, 2017 |
Preferred stock Series, par value | $ 0.001 | $ 0.001 | $ 0.001 | |||||
Preferred stock Series, authorized | 5,000,000 | 5,000,000 | 5,000,000 | |||||
Series C preferred stock designated shares | 50,000 | 50,000 | ||||||
Voting rights | 10,000 votes | |||||||
Common stock, par value | $ 0.001 | $ 0.001 | $ 0.001 | |||||
Common stock, authorized | 100,000,000 | 100,000,000 | 100,000,000 | |||||
Amendment to articles incorporation description | To increase the number of authorized shares of our common stock from one hundred million (100,000,000) shares to five hundred million (500,000,000) shares of common stock, par value $0.001 per share. | |||||||
Common shares issued for services, shares | 668,500 | 2,363,248 | ||||||
Warrants exercised | 402,084 | |||||||
Shares issued upon exercise of warrants | 60,312 | |||||||
Consulting Agreement [Member] | ||||||||
Common shares issued for services, shares | 250,000 | |||||||
Term of agreement | 1 year | |||||||
Private Placement [Member] | ||||||||
Shares issued during period | 4,110,000 | |||||||
Common stock shares issued | 3,664,856 | 3,664,856 |
Long Term Debt (Details)
Long Term Debt (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Long term debt including current and non-current portion | $ 17,881,570 | $ 13,304,881 |
Less current portion | (4,732,565) | (3,562,051) |
Long term debt | 13,149,005 | 9,742,830 |
December 31, 2016 Promissory Note [Member] | ||
Long term debt including current and non-current portion | 75,000 | |
October 4, 2016 Promissory Note [Member] | ||
Long term debt including current and non-current portion | 1,594,659 | |
July and August of 2017 Convertible Promissory Note [Member] | ||
Long term debt including current and non-current portion | 1,457,991 | 1,203,597 |
August Through December of 2017 Promissory Note [Member] | ||
Long term debt including current and non-current portion | 2,245,286 | 2,121,601 |
September 8, 2017 Promissory Note [Member] | ||
Long term debt including current and non-current portion | 253,870 | |
September 29, 2017 Promissory Note [Member] | ||
Long term debt including current and non-current portion | 286,075 | |
October 3, 2017 Promissory Note [Member] | ||
Long term debt including current and non-current portion | 200,549 | |
December 22, 2017 Promissory Note [Member] | ||
Long term debt including current and non-current portion | 7,569,530 | |
June of 2018, [Member] | ||
Long term debt including current and non-current portion | 1,916,504 | |
June 13, 2018 [Member] | ||
Long term debt including current and non-current portion | $ 12,261,789 |
Long Term Debt (Details Narrat
Long Term Debt (Details Narrative) - USD ($) | Oct. 04, 2016 | Jun. 30, 2018 | Mar. 31, 2017 | Jun. 30, 2018 | Dec. 31, 2016 | Dec. 31, 2017 |
Secured Promissory Notes [Member] | ||||||
Promissory note | $ 630,000 | |||||
Interest rate | 10.00% | 10.00% | ||||
Original issue discount, Percentage | 50.00% | 37.50% | ||||
Original issue discount, Description | The discount was modified to fifty percent (50%) retroactively | |||||
Maturity date | Apr. 3, 2017 | |||||
Unamortized discount | $ 0 | $ 0 | $ 0 | |||
Interest payable, Description | Interest is payable on the outstanding principal of these notes at 10% per annum on the Maturity Date | |||||
Amendment to maturity date description | terms expiring in June, August and September of 2017 | Extension of the maturity to June 2017 | ||||
Additional amount | $ 917,833 | |||||
Crossfirst Bank [Member] | ||||||
Unamortized discount | $ 10,341 | 6,932 | ||||
June 13, 2018 [Member] | ||||||
Promissory note | 12,400,000 | $ 12,400,000 | ||||
Interest rate description | Interest 1.5% above a base rate equal to the prime rate of interest published by the Wall Street Journal, interest only for June and July of 2018, at which time Principal will be payable at $100,000 monthly through the maturity date of June 30, 2020, at which time all remaining unpaid principal and accrued interest shall be due. | |||||
Maturity date | Jun. 30, 2020 | |||||
Unamortized discount | 138,211 | $ 138,211 | 0 | |||
June 13, 2018 [Member] | Crossfirst Bank [Member] | ||||||
Maximum principal amount | 30,000,000 | 30,000,000 | ||||
June of 2018, [Member] | ||||||
Promissory note | 379,712 | $ 379,712 | ||||
Interest rate | 10.00% | |||||
Maturity date | Aug. 31, 2019 | |||||
Unamortized discount | 713,208 | $ 713,208 | 0 | |||
Additional amount | $ 2,250,000 | $ 2,250,000 | ||||
Common stock price per share | $ 0.20 | $ 0.20 | ||||
December 22, 2017 Promissory Note [Member] | ||||||
Promissory note | $ 8,510,638 | $ 8,510,638 | ||||
Interest rate description | An OID of 6%., bearing interest initially at 9.875% through June 2018, then 11.375% through December 2018, then 12.875% through June 2019, then 14.375% through December 2019. Interest only through June 2018, at which time Principal will be payable at $75,000 monthly for six months and then $125,000 monthly to the maturity date of December 22, 2019. | |||||
Maturity date | Dec. 22, 2019 | |||||
Unamortized discount | 823,633 | $ 823,633 | 941,108 | |||
October 3, 2017 Promissory Note [Member] | Cornerstone Bank [Member] | ||||||
Promissory note | 204,000 | $ 204,000 | ||||
Interest rate description | Payable interest only for the first twelve months commencing November 3, 2017, variable interest rate, currently at 5.5%, followed by 83 monthly payments of $3,765, interest at 6%, final payment due on October 3, 2025. | |||||
Unamortized discount | 3,451 | $ 3,451 | 3,451 | |||
September 29, 2017 Promissory Note [Member] | Cornerstone Bank [Member] | ||||||
Promissory note | 290,000 | $ 290,000 | ||||
Interest rate description | Pable interest only for the first twelve months commencing October 29, 2017, variable interest rate, currently at 5.5%, followed by 83 monthly payments of $3,765, interest at 6%, final payment due on September 29, 2025. | |||||
Unamortized discount | 3,800 | $ 3,800 | 3,925 | |||
September 8, 2017 Promissory Note [Member] | Cornerstone Bank [Member] | ||||||
Promissory note | 256,983 | $ 256,983 | ||||
Interest rate description | Interest only for the first twelve months commencing October 8, 2017, variable interest rate, currently at 5.5%, followed by 83 monthly payments of $3,765, interest at 6%, final payment due on September 8, 2025. | |||||
Unamortized discount | 3,113 | $ 3,113 | 0 | |||
August Through December of 2017 Promissory Note [Member] | ||||||
Promissory note | 3,230,000 | $ 3,230,000 | 2,989,000 | |||
Interest rate | 10.00% | |||||
Maturity date | Oct. 31, 2018 | |||||
Unamortized discount | 838,714 | $ 838,714 | 867,399 | |||
Convertible promissory notes | 2,085,000 | 2,085,000 | ||||
Payment to promissory note | 1,050,000 | |||||
July and August of 2017 Convertible Promissory Note [Member] | ||||||
Promissory note | 1,475,000 | $ 1,475,000 | ||||
Interest rate | 10.00% | |||||
Unamortized discount | $ 17,009 | $ 17,009 | $ 271,403 | |||
Crossfirst Bank [Member] | ||||||
Promissory note | $ 1,800,000 | |||||
Interest rate | 10.00% | |||||
Debt instrument periodic payments | $ 15,000 | |||||
Frequency of periodic payments | Monthly |
Commitments and contingencies (
Commitments and contingencies (Details Narrative) - Subsequent Event [Member] - Timothy Swift [Member] | 1 Months Ended |
Apr. 16, 2018USD ($)shares | |
Base salary | $ | $ 275,000 |
Bonus description | Bonus of up to 110% of his base salary and incentive equity compensation equal to approximately 130% of his base salary. |
Restricted shares issued | shares | 1,000,000 |
Restricted shares vesting description | 50% of the shares vesting immediately and the remaining shares vesting on October 1, 2018, unless Mr. Swift has resigned from employment or has been terminated for cause on or prior to that time. |
Warrant, description | Pursuant to the warrant, Mr. Swift received the right to purchase 3,500,000 shares of the Companys common stock at $0.30 per share exercisable through April 1, 2023, with (i) 1,000,000 of the warrant shares vesting immediately; (ii) 2,000,000 of the warrant shares vesting on July 1, 2018, or another date as agreed in writing by both parties so long as the Company has closed a financing transaction consolidating the Companys debt, has raised an additional $5,000,000 in financing at such time, and Mr. Swift has not resigned from employment or been terminated for cause at that time; and (iii) 500,000 of the warrant shares vesting on December 31, 2018, so long as Mr. Swift has not resigned from employment or been terminated for cause at that time. |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | 1 Months Ended | 2 Months Ended | 3 Months Ended |
Jul. 31, 2018 | Mar. 31, 2018 | Jun. 30, 2018 | |
Common stock, shares issued for services | 668,500 | 2,363,248 | |
Subsequent Event [Member] | |||
Common stock, shares issued for services | 382,823 | ||
Subsequent Event [Member] | Private Placement [Member] | |||
Private placement fund amount | $ 1,297,000 | ||
Exchange amount of promissory note | $ 3,852,000 | ||
Issuance of warrant | 3,861,750 |