0001199835-19-000029.txt : 20191108 0001199835-19-000029.hdr.sgml : 20191108 20191108170441 ACCESSION NUMBER: 0001199835-19-000029 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 49 CONFORMED PERIOD OF REPORT: 20190930 FILED AS OF DATE: 20191108 DATE AS OF CHANGE: 20191108 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TORCHLIGHT ENERGY RESOURCES INC CENTRAL INDEX KEY: 0001431959 STANDARD INDUSTRIAL CLASSIFICATION: CRUDE PETROLEUM & NATURAL GAS [1311] IRS NUMBER: 743237581 STATE OF INCORPORATION: NV FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-36247 FILM NUMBER: 191204859 BUSINESS ADDRESS: STREET 1: 5700 W. PLANO PARKWAY, SUITE 3600 CITY: PLANO STATE: TX ZIP: 75093 BUSINESS PHONE: (214) 432-8002 MAIL ADDRESS: STREET 1: 5700 W. PLANO PARKWAY, SUITE 3600 CITY: PLANO STATE: TX ZIP: 75093 FORMER COMPANY: FORMER CONFORMED NAME: Pole Perfect Studios, Inc. DATE OF NAME CHANGE: 20080409 10-Q 1 form-10q.htm TORCHLIGHT ENERGY RESOURCES, INC. 10-Q
 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

x Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Quarter Ended September 30, 2019

 

o Transition report under Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from _______ to _______.

 

Commission file number: 001-36247

 

TORCHLIGHT ENERGY RESOURCES, INC.

 

(Name of registrant in its charter)

 

Nevada 74-3237581
(State or Other Jurisdiction of Incorporation or Organization) (I.R.S. Employer Identification No.)

 

5700 West Plano Pkwy, Suite 3600

Plano, Texas 75093

 

(Address of Principal Executive Offices)

 

(214) 432-8002

 

(Registrant’s Telephone Number, Including Area Code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)   Name of each exchange on which registered
Common Stock, $0.001 par value   TRCH   The Nasdaq Stock Market LLC

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. Large accelerated filer o Accelerated filer x Non-accelerated filer o Smaller reporting company x Emerging growth company o

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

 

As of November 8, 2019, there were 74,255,375 shares of the registrant’s common stock outstanding (the only class of voting common stock).

1

 

FORM 10-Q

 

TABLE OF CONTENTS

  

Note About Forward-Looking Statements 3
     
PART I FINANCIAL INFORMATION 4
     
Item 1. Consolidated Financial Statements 4
     
  Consolidated Balance Sheets (Unaudited) 4
     
  Consolidated Statements of Operations (Unaudited) 5
     
  Consolidated Statements of Cash Flows (Unaudited) 6
     
  Consolidated Statement of Stockholders’ Equity (Unaudited) 7
     
  Notes to Consolidated Financial Statements (Unaudited) 8
     
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 22
     
Item 3. Quantitative and Qualitative Disclosures About Market Risk 25
     
Item 4. Controls and Procedures 26
     
PART II OTHER INFORMATION 26
     
Item 1. Legal Proceedings 26
     
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 26
     
Item 6. Exhibits 27
     
  Signatures 29

2

 

NOTE ABOUT FORWARD-LOOKING STATEMENTS

 

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include, among other things, statements regarding plans, objectives, goals, strategies, future events or performance and underlying assumptions and other statements, which are other than statements of historical facts. Forward-looking statements may appear throughout this report, including without limitation, Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Forward-looking statements generally can be identified by words such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “projects,” “will be,” “will continue,” “will likely result,” and similar expressions. These forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties, which could cause our actual results to differ materially from those reflected in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in this report and in our Annual Report on Form 10-K for the year ended December 31, 2018 and in particular, the risks discussed in our Form 10-K under the caption “Risk Factors” in Item 1A therein, and those discussed in other documents we file with the Securities and Exchange Commission (“SEC”). Important factors that in our view could cause material adverse effects on our financial condition and results of operations include, but are not limited to, risks associated with our future operating or financial results, our financial condition and liquidity, including our ability to pay amounts that we owe, obtain additional financing in the future to fund capital expenditures, acquisitions and other general corporate activities, our ability to continue as a going concern, our development of successful operations, the speculative nature of oil and gas exploration, the volatile price of oil and natural gas, the risk of incurring liability or damages as we conduct business operations due to the inherent dangers involved in oil and gas operations, our ability to rely on strategic relationships which are subject to change, the competitive nature of the oil and gas market, changes in governmental rules and regulations, and other factors that may cause actual results to be materially different from those described herein as anticipated, believed, estimated or expected. We undertake no obligation to revise or publicly release the results of any revision to any forward-looking statements, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

 

As used herein, the “Company,” “Torchlight,” “we,” “our,” and similar terms include Torchlight Energy Resources, Inc. and its subsidiaries, unless the context indicates otherwise.

3

 

PART I FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

TORCHLIGHT ENERGY RESOURCES, INC.
CONSOLIDATED BALANCE SHEETS (Unaudited)

 

   September 30,   December 31, 
   2019   2018 
ASSETS          
Current assets:          
Cash  $760,455   $840,163 
Accounts receivable   236,158    179,702 
Production revenue receivable   47,592    294,715 
Prepayments - development costs   1,781    146,422 
Prepaid expenses   167,245    60,980 
Total current assets   1,213,231    1,521,982 
           
Oil and gas properties, net   42,316,936    36,565,461 
Office equipment, net   6,829    4,076 
Other assets   -    6,362 
           
TOTAL ASSETS  $43,536,996   $38,097,881 
           
LIABILITIES AND STOCKHOLDERS’ EQUITY          
Current liabilities:          
Accounts payable  $514,527   $729,806 
12% 2020 Unsecured promissory notes, net of discount and financing costs of $315,404 at September 30, 2019   12,248,893    - 
Notes payable   8,000,000    - 
Accrued payroll   951,176    816,176 
Related party payables   45,000    45,000 
Due to working interest owners   54,320    54,320 
Accrued interest payable   1,205,665    553,370 
Total current liabilities   23,019,581    2,198,672 
           
Unsecured promissory notes, net of discount   -    11,862,080 
8% 2021 Convertible promissory notes payable, net of discount of $1,283,658   676,342    - 
Notes payable   -    6,000,000 
Asset retirement obligations   23,176    14,353 
           
Total liabilities   23,719,099    20,075,105 
           
Commitments and contingencies          
           
Stockholders’ equity:          
 Preferred stock, par value $0.001, 10,000,000 shares authorized; -0- issued and outstanding at September 30, 2019 and December 31, 2018   -    - 
Common stock, par value $0.001 per share; 150,000,000 shares authorized;
74,255,375 issued and outstanding at September 30, 2019, 70,112,376 issued and outstanding at December 31, 2018		   74,258    70,116 
Additional paid-in capital   112,878,089    107,266,965 
Accumulated deficit   (93,134,450)   (89,314,305)
Total stockholders’ equity   19,817,897    18,022,776 
           
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY  $43,536,996   $38,097,881 

 

The accompanying notes are an integral part of these unaudited interim consolidated financial statements.

4

 

TORCHLIGHT ENERGY RESOURCES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

 

   Three Months   Three Months   Nine Months   Nine Months 
   Ended   Ended   Ended   Ended 
   September 30, 2019   September 30, 2018   September 30, 2019   September 30, 2018 
Revenues                    
Oil and gas sales  $71,142   $128,675   $619,054   $893,101 
                     
Cost of revenues   (117,104)   (182,294)   (358,424)   (595,622)
                     
Gross profit (loss)   (45,962)   (53,619)   260,630    297,479 
                     
Operating expenses:                    
General and administrative expense   (849,425)   (747,357)   (2,552,901)   (3,330,790)
Depreciation, depletion and amortization   (27,355)   (106,136)   (355,050)   (368,074)
Loss on settlement   -    -    -    (369,439)
Impairment loss   -    -    (474,357)   (139,891)
 Total operating expenses   (876,780)   (853,493)   (3,382,308)   (4,208,194)
                     
Other income (expense)                    
Interest expense and accretion of note discounts   (328,895)   (128,226)   (694,077)   (391,428)
Franchise tax   -    -    (4,442)   - 
Interest income   -    261    52    745 
 Total (expense), net   (328,895)   (127,965)   (698,467)   (390,683)
                     
Loss before income taxes   (1,251,637)   (1,035,077)   (3,820,145)   (4,301,398)
                     
Provision for income taxes   -    -    -    - 
                     
Net loss  $(1,251,637)  $(1,035,077)  $(3,820,145)  $(4,301,398)
                     
Loss per common share:                    
Basic and Diluted  $(0.02)  $(0.01)  $(0.05)  $(0.06)
Weighted average number of common shares outstanding:                    
Basic and Diluted   73,930,596    70,080,854    72,350,083    67,468,291 

 

The accompanying notes are an integral part of these unaudited interim consolidated financial statements.

5

 

TORCHLIGHT ENERGY RESOURCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

 

   Nine Months   Nine Months 
   Ended   Ended 
   September 30, 2019   September 30, 2018 
Cash Flows From Operating Activities          
Net loss  $(3,820,145)  $(4,301,398)
Adjustments to reconcile net loss to net cash from operations:          
Stock based compensation   854,720    1,215,825 
Stock issued for interest payments on notes payable   497,817    148,882 
Amortization of debt issuance costs   214,939    - 
Accretion of debt discounts   274,217    159,441 
Accrued interest payable in stock   163,168    - 
Depreciation, depletion and amortization   355,050    368,074 
Net settlement offset   -    (100,561)
Impairment loss   474,357    139,891 
Change in:          
Accounts receivable   (56,456)   (53,551)
Production revenue receivable   247,123    138,468 
Prepayments - development costs   144,641    1,158,588 
Prepaid expenses   (106,265)   (47,482)
Other assets   6,362    - 
Accounts payable and accrued expenses   82,757    1,718 
Accrued interest payable   489,127    14,434 
Net cash from operating activities   (178,588)   (1,157,671)
           
Cash Flows From Investing Activities          
Investment in oil and gas properties   (6,606,279)   (9,319,771)
Purchases of property, plant, and equipment   (6,564)   - 
Net cash from investing activities   (6,612,843)   (9,319,771)
           
Cash Flows From Financing Activities          
Issuance of common stock   2,516,880    6,049,734 
Proceeds from convertible promissory notes   4,010,000    4,304,421 
Repayment of promissory notes   -    (250,000)
Proceeds from warrant exercise   184,843    200,000 
Net cash from financing activities   6,711,723    10,304,155 
           
Net (decrease) in cash   (79,708)   (173,287)
           
Cash - beginning of period   840,163    1,051,720 
           
Cash - end of period  $760,455   $878,433 
           
Supplemental disclosure of cash flow information: (Non Cash Items)          
           
Common stock issued for lease interests  $125,000   $- 
Common stock issued for partial payment of unpaid compensation  $-   $59,000 
Common stock issued for payment in kind on notes payable  $314,107   $221,024 
Common stock issued in conversion of convertible note principal  $50,000   $- 
Decrease in accounts payable for property development costs  $225,536   $- 
Beneficial conversion feature on convertible notes  $1,145,546   $- 
Debt discount from fair value of warrants issued with convertible notes  $240,455   $- 
Cash paid for interest  $1,131,819   $1,124,174 
Cash paid for income tax  $-   $- 

 

The accompanying notes are an integral part of these unaudited interim consolidated financial statements.

6

 

TORCHLIGHT ENERGY RESOURCES, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (Unaudited)

 

   Common   Common   Additional         
   stock   stock   paid-in   Accumulated     
   shares   amount   capital   deficit   Total 
                     
Balance, December 31, 2018   70,112,376   $70,116   $107,266,965   $(89,314,305)  $18,022,776 
                          
Issuance of common stock for services   92,593    92    99,908         100,000 
Issuance of common stock for cash   1,592,600    1,593    1,272,487         1,274,080 
Issuance of common stock for interest   13,546    13    14,615         14,628 
Issuance of common stock for warrant exercise   100,000    100    76,900         77,000 
Warrants issued for services             186,000         186,000 
Stock options issued for services             111,250         111,250 
Net loss                  (1,677,874)   (1,677,874)
                          
Balance, March 31, 2019   71,911,115   $71,914   $109,028,125   $(90,992,179)  $18,107,860 
                          
Issuance of common stock for services   100,000    100    148,900         149,000 
Issuance of common stock for cash   695,000    695    555,305         556,000 
Issuance of common stock for oil and gas lease extension   100,000    100    124,900         125,000 
Issuance of common stock for interest   46,796    48    50,492         50,540 
Issuance of common stock for note payment in kind   202,316    202    313,906         314,108 
Issuance of common stock for option/warrant exercise   68,690    68    107,775         107,843 
Warrants issued for services             87,000         87,000 
Stock options issued for services             25,000         25,000 
Net loss                  (890,634)   (890,634)
                          
Balance, June 30, 2019   73,123,917   $73,127   $110,441,403   $(91,882,813)  $18,631,717 
                          
Issuance of common stock for services   120,000    120    116,280         116,400 
Issuance of common stock for cash   858,500    858    685,942         686,800 
Issuance of common stock for interest   107,503    108    118,438         118,546 
Warrants issued for services             67,570         67,570 
Beneficial conversion feature on convertible notes             1,145,546         1,145,546 
Debt discount from fair value of warrants issued with convertible notes             240,455         240,455 
Issuance of common stock for convertible note conversion   45,455    45    49,955         50,000 
Stock options issued for services             12,500         12,500 
Net loss                  (1,251,637)   (1,251,637)
                          
Balance, September 30, 2019   74,255,375   $74,258   $112,878,089   $(93,134,450)  $19,817,897 

 

The accompanying notes are an integral part of these unaudited interim consolidated financial statements.

7

 

TORCHLIGHT ENERGY RESOURCES, INC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

1. NATURE OF BUSINESS

 

Torchlight Energy Resources, Inc. (“Company”) was incorporated in October 2007 under the laws of the State of Nevada as Pole Perfect Studios, Inc. (“PPS”). From its incorporation to November 2010, the company was primarily engaged in business start-up activities.

 

On November 23, 2010, we entered into and closed a Share Exchange Agreement (the “Exchange Agreement”) between the major shareholders of PPS and the shareholders of Torchlight Energy, Inc. (“TEI”). As a result of the transactions effected by the Exchange Agreement, at closing TEI became our wholly-owned subsidiary, and the business of TEI became our sole business. TEI was incorporated under the laws of the State of Nevada in June 2010. We are engaged in the acquisition, exploitation and/or development of oil and natural gas properties in the United States. We operate our business through our subsidiaries Torchlight Energy Inc., Torchlight Energy Operating, LLC, Hudspeth Oil Corporation, Torchlight Hazel LLC, and Warwink Properties LLC.

 

2. GOING CONCERN

 

At September 30, 2019, the Company had not yet achieved profitable operations. We had a net loss of $3,820,145 for the nine months ended September 30, 2019 and had accumulated losses of $93,134,450 since our inception. We expect to incur further losses in the development of our business. The Company had a working capital deficit as of September 30, 2019 of $21,806,350. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

 

The Company’s ability to continue as a going concern is dependent on 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’s plan to address the Company’s ability to continue as a going concern includes: (1) obtaining debt or equity funding from private placement or institutional sources; (2) obtain loans from financial institutions, where possible, or (3) participating in joint venture transactions with third parties. Although management believes that it will be able to obtain the necessary funding to allow the Company to remain a going concern through the methods discussed above, there can be no assurances that such methods will prove successful.

 

These consolidated financial statements have been prepared assuming that the Company will continue as a going concern and therefore, the financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amount and classifications of liabilities that may result from the outcome of this uncertainty.

 

3. SIGNIFICANT ACCOUNTING POLICIES

 

The Company maintains its accounts on the accrual method of accounting in accordance with accounting principles generally accepted in the United States of America. Accounting principles followed and the methods of applying those principles, which materially affect the determination of financial position, results of operations and cash flows are summarized below:

 

Use of estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and certain assumptions that affect the amounts reported in these consolidated financial statements and accompanying notes. Actual results could differ from these estimates.

 

Basis of presentation—The financial statements are presented on a consolidated basis and include all of the accounts of Torchlight Energy Resources Inc. and its wholly owned subsidiaries, Torchlight Energy, Inc., Torchlight Energy Operating, LLC, Hudspeth Oil Corporation, Torchlight Hazel LLC, and Warwink Properties LLC. All significant intercompany balances and transactions have been eliminated.

 

These interim financial statements are unaudited and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain disclosures have been condensed or omitted from these financial statements. Accordingly, they do not include all the information and notes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete consolidated financial statements, and should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2018.

 

In the opinion of management, the accompanying unaudited financial condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, necessary to fairly present the financial position as of, and the results of operations for, all periods presented. In preparing the accompanying financial statements, management has made certain estimates and assumptions that affect reported amounts in the condensed financial statements and disclosures of contingencies. Actual results may differ from those estimates. The results for interim periods are not necessarily indicative of annual results. Certain reclassifications have been made to the prior period’s consolidated financial statements and related footnotes to conform them to the current period presentation.

8

 

TORCHLIGHT ENERGY RESOURCES, INC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

3. SIGNIFICANT ACCOUNTING POLICIES- continued

 

Risks and uncertainties – The Company’s operations are subject to significant risks and uncertainties, including financial, operational, technological, and other risks associated with operating an emerging business, including the potential risk of business failure.

 

Concentration of risks – At times the Company’s cash balances are in excess of amounts guaranteed by the Federal Deposit Insurance Corporation. The Company’s cash is placed with a highly rated financial institution, and the Company regularly monitors the credit worthiness of the financial institutions with which it does business.

 

Fair value of financial instruments – Financial instruments consist of cash, receivables, payables and promissory notes, if any. The estimated fair values of cash, receivables, and payables approximate the carrying amount due to the relatively short maturity of these instruments. The carrying amounts of any promissory notes approximate their fair value giving affect for the term of the note and the effective interest rates.

 

For assets and liabilities that require re-measurement to fair value the Company categorizes them in a three-level fair value hierarchy as follows:

 

●Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.

 

●Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration.

 

●Level 3 inputs are unobservable inputs based on management’s own assumptions used to measure assets and liabilities at fair value.

 

A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

 

Cash and cash equivalents - Cash and cash equivalents include certain investments in highly liquid instruments with original maturities of three months or less.

 

Accounts receivable – Accounts receivable consist of uncollateralized oil and natural gas revenues due under normal trade terms, as well as amounts due from working interest owners of oil and gas properties for their share of expenses paid on their behalf by the Company. Management reviews receivables periodically and reduces the carrying amount by a valuation allowance that reflects management’s best estimate of the amount that may not be collectible. As of September 30, 2019 and December 31, 2018, no valuation allowance was considered necessary.

 

Oil and gas properties – The Company uses the full cost method of accounting for exploration and development activities as defined by the Securities and Exchange Commission (“SEC”). Under this method of accounting, the costs of unsuccessful, as well as successful, exploration and development activities are capitalized as properties and equipment. This includes any internal costs that are directly related to property acquisition, exploration and development activities but does not include any costs related to production, general corporate overhead or similar activities. Gain or loss on the sale or other disposition of oil and gas properties is not recognized, unless the gain or loss would significantly alter the relationship between capitalized costs and proved reserves.

 

Oil and gas properties include costs that are excluded from costs being depleted or amortized. Oil and natural gas property costs excluded represent investments in unevaluated properties and include non-producing leasehold, geological, and geophysical costs associated with leasehold or drilling interests and exploration drilling costs. The Company allocates a portion of its acquisition costs to unevaluated properties based on relative value. Costs are transferred to the full cost pool as the properties are evaluated over the life of the reservoir. Unevaluated properties are reviewed for impairment at least quarterly and are determined through an evaluation considering, among other factors, seismic data, requirements to relinquish acreage, drilling results, remaining time in the commitment period, remaining capital plan, and political, economic, and market conditions.

 

Gains and losses on the sale of oil and gas properties are not generally reflected in income unless the gain or loss would significantly alter the relationship between capitalized costs and proved reserves. Sales of less than 100% of the Company’s interest in the oil and gas property are treated as a reduction of the capital cost of the field, with no gain or loss recognized, as long as doing so does not significantly affect the unit-of-production depletion rate. Costs of retired equipment, net of salvage value, are usually charged to accumulated depreciation.

9

 

TORCHLIGHT ENERGY RESOURCES, INC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

3. SIGNIFICANT ACCOUNTING POLICIES- continued

 

Capitalized interest – The Company capitalizes interest on unevaluated properties during the periods in which they are excluded from costs being depleted or amortized. During the nine months ended September 30, 2019 and 2018, the Company capitalized $2,084,026 and $1,382,820, respectively, of interest on unevaluated properties.

 

Depreciation, depletion, and amortization – The depreciable base for oil and natural gas properties includes the sum of all capitalized costs net of accumulated depreciation, depletion, and amortization (“DD&A”), estimated future development costs and asset retirement costs not included in oil and natural gas properties, less costs excluded from amortization. The depreciable base of oil and natural gas properties is amortized on a unit-of-production method.

 

Ceiling test – Future production volumes from oil and gas properties are a significant factor in determining the full cost ceiling limitation of capitalized costs. Under the full cost method of accounting, the Company is required to periodically perform a “ceiling test” that determines a limit on the book value of oil and gas properties. If the net capitalized cost of proved oil and gas properties, net of related deferred income taxes, plus the cost of unproved oil and gas properties, exceeds the present value of estimated future net cash flows discounted at 10 percent, net of related realizable tax affects, plus the cost of unproved oil and gas properties, the excess is charged to expense and reflected as additional accumulated DD&A. The Company recorded an impairment expense of $474,357 and $139,891 for the nine months ended September 30, 2019 and 2018, respectively, to recognize the adjustment required by the ceiling test.

 

The ceiling test calculation uses a commodity price assumption which is based on the unweighted arithmetic average of the price on the first day of each month for each month within the prior 12 month period and excludes future cash outflows related to estimated abandonment costs.

 

The determination of oil and gas reserves is a subjective process, and the accuracy of any reserve estimate depends on the quality of available data and the application of engineering and geological interpretation and judgment. Estimates of economically recoverable reserves and future net cash flows depend on a number of variable factors and assumptions that are difficult to predict and may vary considerably from actual results. In particular, reserve estimates for wells with limited or no production history are less reliable than those based on actual production. Subsequent re-evaluation of reserves and cost estimates related to future development of proved oil and gas reserves could result in significant revisions to proved reserves. Other issues, such as changes in regulatory requirements, technological advances, and other factors which are difficult to predict could also affect estimates of proved reserves in the future.

 

Asset retirement obligations –The fair value of a liability for an asset’s retirement obligation (“ARO”) is recognized in the period in which it is incurred if a reasonable estimate of fair value can be made, with the corresponding charge capitalized as part of the carrying amount of the related long-lived asset. The liability is accreted to its then-present value each subsequent period, and the capitalized cost is depleted over the useful life of the related asset. Abandonment costs incurred are recorded as a reduction of the ARO liability.

 

Inherent in the fair value calculation of an ARO are numerous assumptions and judgments including the ultimate settlement amounts, inflation factors, credit adjusted discount rates, timing of settlement, and changes in the legal, regulatory, environmental, and political environments. To the extent future revisions to these assumptions impact the fair value of the existing ARO liability, a corresponding adjustment is made to the oil and gas property balance. Settlements greater than or less than amounts accrued as ARO are recorded as a gain or loss upon settlement.

 

Income taxes - Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is established to reduce deferred tax assets if it is more likely than not that the related tax benefits will not be realized.

 

Authoritative guidance for uncertainty in income taxes requires that the Company recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an examination. Management has reviewed the Company’s tax positions and determined there were no uncertain tax positions requiring recognition in the consolidated financial statements. Company tax returns remain subject to Federal and State tax examinations. Generally, the applicable statutes of limitation are three to four years from their respective filings.

 

Estimated interest and penalties related to potential underpayment on any unrecognized tax benefits are classified as a component of tax expense in the statement of operation. The Company has not recorded any interest or penalties associated with unrecognized tax benefits for any periods covered by these financial statements.

 

Share-based compensation – Compensation cost for equity awards is based on the fair value of the equity instrument on the date of grant and is recognized over the period during which an employee is required to provide service in exchange for the award.

10

 

TORCHLIGHT ENERGY RESOURCES, INC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

3. SIGNIFICANT ACCOUNTING POLICIES- continued

 

The Company accounts for stock option awards using the calculated value method. The expected term was derived using the simplified method provided in Securities and Exchange Commission release Staff Accounting Bulletin No. 110, which averages an awards weighted average vesting period and contractual term for “plain vanilla” share options.

 

The Company accounts for any forfeitures of options when they occur. Previously recognized compensation cost for an award is reversed in the period that the award is forfeited.

 

The Company also issues equity awards to non-employees. The fair value of these option awards is estimated when the award recipient completes the contracted professional services. The Company recognizes expense for the estimated total value of the awards during the period from their issuance until performance completion.

 

In June 2018, the FASB issued ASU 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which simplifies the accounting for share-based payments granted to nonemployees for goods and services. Under this ASU, the guidance on such payments to nonemployees is aligned with the requirements for share-based payments granted to employees. ASU 2018-07 was effective for fiscal years beginning after December 15, 2018, however the Company opted for early adoption effective July 1, 2018. In evaluating early adoption the Company determined that the change did not have a material impact on its consolidated financial statements.

 

The Company values warrant and option awards using the Black-Scholes option pricing model.

 

Revenue recognition – On January 1, 2018, the Company adopted ASC 606, Revenue from Contracts with Customers, and the related guidance in ASC 340-40 (the new revenue standard), and related guidance on gains and losses on derecognition of nonfinancial assets ASC 610-20, using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Under the modified retrospective method, the Company recognizes the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of retained earnings; however, no significant adjustment was required as a result of adopting the new revenue standard. Results for reporting periods beginning after January 1, 2018 are presented under the new revenue standard. The impact of the adoption of the new revenue standard was immaterial to the Company’s net loss.

 

The Company’s revenue is typically generated from contracts to sell natural gas, crude oil or NGLs produced from interests in oil and gas properties owned by the Company. Contracts for the sale of natural gas and crude oil are evidenced by (1) base contracts for the sale and purchase of natural gas or crude oil, which document the general terms and conditions for the sale, and (2) transaction confirmations, which document the terms of each specific sale. The transaction confirmations specify a delivery point which represents the point at which control of the product is transferred to the customer. These contracts frequently meet the definition of a derivative under ASC 815, and are accounted for as derivatives unless the Company elects to treat them as normal sales as permitted under that guidance. The Company elects to treat contracts to sell oil and gas production as normal sales, which are then accounted for as contracts with customers. The Company has determined that these contracts represent multiple performance obligations which are satisfied when control of the commodity transfers to the customer, typically through the delivery of the specified commodity to a designated delivery point.

 

Revenues from oil and gas sales are detailed as follows:

 

   Three Months   Three Months   Nine Months   Nine Months 
   Ended   Ended   Ended   Ended 
   September 30, 2019   September 30, 2018   September 30, 2019   September 30, 2018 
Revenues                    
                     
Oil sales  $71,064   $124,830   $596,247   $881,364 
                     
Gas sales   78    3,845    22,807    11,737 
                     
Total  $71,142   $128,675   $619,054   $893,101 

 

Revenue is measured based on consideration specified in the contract with the customer, and excludes any amounts collected on behalf of third parties. The Company recognizes revenue in the amount that reflects the consideration it expects to be entitled to in exchange for transferring control of those goods to the customer. Amounts allocated in the Company’s price contracts are based on the standalone selling price of those products in the context of long-term contracts. Payment is generally received one or two months after the sale has occurred.

11

 

TORCHLIGHT ENERGY RESOURCES, INC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

3. SIGNIFICANT ACCOUNTING POLICIES- continued

 

Gain or loss on derivative instruments is outside the scope of ASC 606 and is not considered revenue from contracts with customers subject to ASC 606. The Company may in the future use financial or physical contracts accounted for as derivatives as economic hedges to manage price risk associated with normal sales, or in limited cases may use them for contracts the Company intends to physically settle but do not meet all of the criteria to be treated as normal sales.

 

Producer Gas Imbalances. The Company applies the sales method of accounting for natural gas revenue. Under this method, revenues are recognized based on the actual volume of natural gas sold to purchasers.

 

Basic and diluted earnings (loss) per share – Basic earnings (loss) per common share is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per common share is computed in the same way as basic earnings (loss) per common share except that the denominator is increased to include the number of additional common shares that would be outstanding if all potential common shares had been issued and if the additional common shares were dilutive. The calculation of diluted earnings per share excludes 10,705,072 shares issuable upon the exercise of outstanding warrants and options because their effect would be anti-dilutive.

 

Environmental laws and regulations – The Company is subject to extensive federal, state, and local environmental laws and regulations. Environmental expenditures are expensed or capitalized depending on their future economic benefit. The Company believes that it is in compliance with existing laws and regulations. The Company accrued no liability as of September 30, 2019 and December 31, 2018.

 

Recent adopted accounting pronouncements – In February 2016 the FASB, issued ASU, 2016-02, Leases. The ASU requires companies to recognize on the balance sheet the assets and liabilities for the rights and obligations created by leased assets. ASU 2016-02 was effective for the Company in the first quarter of 2019. The Company adopted the change which did not have a material impact on its consolidated financial statements.

 

Other recently issued or adopted accounting pronouncements are not expected to have, or did not have, a material impact on the Company’s financial position or results from operations.

 

Subsequent events – The Company evaluated subsequent events through November 8, 2019, the date of issuance of these financial statements. Subsequent events, if any, are disclosed in Note 11.

 

4. OIL & GAS PROPERTIES

 

The following table presents the capitalized costs for oil & gas properties of the Company as of September 30, 2019 and December 31, 2018:

 

Evaluated costs subject to amortization  $12,458,270   $11,664,586 
Unevaluated costs   37,529,864    31,746,477 
Total capitalized costs   49,988,134    43,411,063 
Less accumulated depreciation, depletion and amortization   (7,671,198)   (6,845,602)
Total oil and gas properties  $42,316,936   $36,565,461 

 

Unevaluated costs as of September 30, 2019 include cumulative costs on developing projects including the Orogrande, Hazel, and Winkler projects in West Texas.

 

The Company identified impairment of $2,300,626 in 2017 related to its unevaluated properties. The Company adjusted the separation of evaluated versus unevaluated costs within its full cost pool to recognize the value impairment related to the expiration of unevaluated leases in 2017 in the amount of $2,300,626. The impact of this change was to increase the basis for calculation of future period’s depletion, depreciation and amortization to include $2,300,626 of cost which will effectively recognize the impairment on the consolidated statement of operations over future periods. The $2,300,626 has also become an evaluated cost for purposes of ceiling tests and which may further recognize the impairment expense recognized in future periods. The impact of this cost reclassification at March 31, 2018 was a recognized impairment expense of $139,891. Impairment expense was recognized for the nine months ended September 30, 2019 of $474,357 as required by the ceiling test calculation.

 

Due to the volatility of commodity prices, should oil and natural gas prices decline in the future, it is possible that a further write-down could occur. Proved reserves are estimated quantities of crude oil, natural gas, and natural gas liquids, which geological and engineering data demonstrate with reasonable certainty to be recoverable from known reservoirs under existing economic and operating conditions. The independent engineering estimates include only those amounts considered to be proved reserves and do not include additional amounts which may result from new discoveries in the future, or from application of secondary and tertiary recovery processes where facilities are not in place or for which transportation and/or marketing contracts are not in place. Estimated reserves to be developed through secondary or tertiary recovery processes are classified as unevaluated properties.

12

 

TORCHLIGHT ENERGY RESOURCES, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 

4. OIL & GAS PROPERTIES- continued

 

Current Projects

 

As of September 30, 2019, we had interests in four oil and gas projects: the Orogrande Project in Hudspeth County, Texas, the Hazel Project in Sterling, Tom Green, and Irion Counties, Texas, the Winkler Project in Winkler County, Texas and the Hunton wells in partnership with Husky Ventures in central Oklahoma.

 

Orogrande Project, West Texas

 

On August 7, 2014, we entered into a Purchase Agreement with Hudspeth Oil Corporation (“Hudspeth”), McCabe Petroleum Corporation (“MPC”), and Gregory McCabe, our Chairman. Mr. McCabe was the sole owner of both Hudspeth and MPC. Under the terms and conditions of the Purchase Agreement, at closing, we purchased 100% of the capital stock of Hudspeth which holds certain oil and gas assets, including a 100% working interest in approximately 172,000 mostly contiguous acres in the Orogrande Basin in West Texas. As of December 31, 2017, leases covering approximately 134,000 acres remain in effect. As consideration, at closing we issued 868,750 restricted shares of our common stock to Mr. McCabe and paid a total of $100,000 in geologic origination fees to third parties. Additionally, Mr. McCabe has, at his option, a 10% working interest back-in after payout and a reversionary interest if drilling obligations are not met, all under the terms and conditions of a participation and development agreement among Hudspeth, MPC and Mr. McCabe. Mr. McCabe also holds a 4.5% overriding royalty interest in the Orogrande acreage, which he obtained prior to, and was not a part of, the August 2014 transaction. We believe all drilling obligations through September 30, 2019 have been met.

 

On September 23, 2015, Hudspeth entered into a Farmout Agreement with Pandora Energy, LP (“Pandora”), Founders Oil & Gas, LLC (“Founders”), and for the limited purposes set forth therein, MPC and Mr. McCabe, for the entire Orogrande Project in Hudspeth County, Texas. The Farmout Agreement provided that Hudspeth and Pandora (collectively referred to as “Farmor”) would assign to Founders an undivided 50% of the leasehold interest and a 37.5% net revenue interest in the oil and gas leases and mineral interests in the Orogrande Project, which interests, except for any interests retained by Founders, would be reassigned to Farmor by Founders if Founders did not spend a minimum of $45.0 million on actual drilling operations on the Orogrande Project by September 23, 2017. Under a joint operating agreement also entered into on September 23, 2015, Founders was designated as operator of the leases.

 

On March 22, 2017, Founders, Founders Oil & Gas Operating, LLC, Founders’ operating partner, Hudspeth and Pandora signed a Drilling and Development Unit Agreement (the “DDU Agreement”), with the Commissioner of the General Land Office, on behalf of the State of Texas, and as approved by the Board for Lease of University Lands, or University Lands, on the Orogrande Project. The DDU Agreement has an effective date of January 1, 2017 and required a payment from Founders, Hudspeth and Pandora, collectively, of $335,323 as the initial consideration fee. The initial consideration fee was paid by Founders in April 2017 and was to be deducted from the required spud fee payable to us at commencement of the next well drilled.

 

The DDU Agreement allows for all 192 existing leases covering approximately 134,000 net acres leased from University Lands to be combined into one drilling and development unit for development purposes. The term of the DDU Agreement expires on December 31, 2023, and the time to drill on the drilling and development unit continues through December 2023. The DDU Agreement also grants the right to extend the DDU Agreement through December 2028 if compliance with the DDU Agreement is met and the extension fee associated with the additional time is paid. Our drilling obligations began with one well to be spudded and drilled on or before September 1, 2017, and increased to two wells in year 2018, three wells in year 2019, four wells in year 2020 and five wells per year in years 2021, 2022 and 2023. The drilling obligations are minimum yearly requirements and may be exceeded if acceleration is desired. The DDU Agreement replaces all prior agreements, and will govern future drilling obligations on the drilling and development unit if the DDU Agreement is extended. The Company drilled three wells during fourth quarter, 2018.

 

There are two vertical tests wells in the Orogrande Project, the Orogrande Rich A-11 test well and the University Founders B-19 #1 test well. The Orogrande Rich A-11 test well was spudded on March 31, 2015, drilled in the second quarter of 2015 and was evaluated and numerous scientific tests were performed to provide key data for the field development thesis. We believe that future utility of this well may be conversion to a salt water disposal well in the course of further development of the Orogrande acreage. The University Founders B-19 #1 was spudded on April 24, 2016 and drilled in the second quarter of 2016. The well successfully pumped down completion fluid in the third quarter of 2016 and indications of hydrocarbons were seen at the surface on this second Orogrande Project test well. We believe that future utility of this well may be conversion to a salt water disposal well in the course of further development of the Orogrande acreage.

13

 

TORCHLIGHT ENERGY RESOURCES, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 

4. OIL & GAS PROPERTIES- continued

 

During the fourth quarter of 2017, we took back operational control from Founders on the Orogrande Project. We were joined by Wolfbone Investments, LLC, (“Wolfbone”), a company owned by Mr. McCabe. We, along with Hudspeth, Wolfbone and, for the limited purposes set forth therein, Pandora, entered into an Assignment of Farmout Agreement with Founders, (the “Assignment of Farmout Agreement”), pursuant to which we and Wolfbone will share the remaining commitments under the Farmout Agreement. All original provisions of our carried interest were to remain in place including reimbursement to us on each wellbore. Founders was to remain a 9.5% working interest owner in the Orogrande Project for the $9.5 million it had spent as of the date of the Assignment of Farmout Agreement, and such interests were to be carried until $40.5 million is spent by Wolfbone and us, with each contributing 50% of such capital spend, under the existing agreement. Our working interest in the Orogrande Project thereby increased by 20.25% to a total of 67.75% and Wolfbone then owned 20.25%.

 

Founders was to operate a newly drilled horizontal well called the University Founders #A25 (at 5,540’ depth in a 1,000’ lateral) with supervision from us and our partners. The University Founders #A25 was spudded on November 28, 2017. During the month of April, 2018, we, MPC and Mr. McCabe were to assume full operational control including managing drilling plans and timing for all future wells drilled in the project.

 

On July 25, 2018, we and Hudspeth entered into a Settlement & Purchase Agreement (the “Settlement Agreement”) with Founders (and Founders Oil & Gas Operating, LLC), Wolfbone and MPC, which agreement provides for Hudspeth and Wolfbone to each immediately pay $625,000 and for Hudspeth or the Company and Wolfbone or MPC to each pay another $625,000 on July 20, 2019, as consideration for Founders assigning all of its working interest in the oil and gas leases of the Orogrande Project to Hudspeth and Wolfbone equally. The final payments were made on July 18, 2019. The assignments to Hudspeth and Wolfbone were made in July when the first payments were made. Future well capital spending obligations will require the same 50% contribution from Hudspeth and 50% from Wolfbone until such time as the $40.5 million to be spent on the project (as per our Assignment of Farmout Agreement with Founders) is completed. The Company estimates that there is still approximately $16 million remaining to be spent on the project until such time as the capital expenditures revert back to the percentages of the working interest owners.

 

After the assignment by Founders (for which Hudspeth’s total consideration was $1,250,000), Hudspeth’s working interest increased to 72.5%.

 

The Orogrande Project ownership as of September 30, 2019 is detailed as follows:

 

   Revenue   Working 
   Interest   Interest 
         
University Lands - Mineral Owner   20.000%   n/a 
           
ORRI - Magdalena Royalties, LLC, an entity controlled by Gregory McCabe, Chairman   4.500%   n/a 
           
ORRI - Unrelated Party   0.500%   n/a 
           
           
Hudspeth Oil Corporation, a subsidiary of Torchlight Energy Resources Inc.   54.375%   72.500%
           
Wolfbone Investments LLC, an entity controlled by Gregory McCabe, Chairman   18.750%   25.000%
           
Unrelated Party   1.875%   2.500%
    100.000%   100.000%

 

Additionally, the Settlement Agreement provides that the Founders parties will assign to the Company, Hudspeth, Wolfbone and MPC their claims against certain vendors for damages, if any, against such vendors for negligent services or defective equipment. Further, the Settlement Agreement has a mutual release and waivers among the parties.

 

Rich Masterson, our consulting geologist, is credited with originating the Orogrande Project in Hudspeth County in the Orogrande Basin. With Mr. Masterson’s assistance and based on all the science we have gathered to date, we have identified multiple unconventional and conventional target pay zones with depths between 3,000’ and 8,000’ with primary pay, described as the Penn formation, located at depths of 5,300 to 5,900’. Based on our geologic analysis to date, this basin has stacked pay with zones including the Wolfcamp, Penn, Barnett, Woodford, Atoka and more. These potential zones are prospective for oil and gas with a GOR of 1100 expected based on our gathered scientific information and analysis from independent third parties.

14

 

TORCHLIGHT ENERGY RESOURCES, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 

4. OIL & GAS PROPERTIES- continued

 

During the fourth quarter, 2018, the Company drilled three additional test wells in the Orogrande in order to stay in compliance with University Lands D&D Unit Agreement, as well as, to test for potential shallow pay zones and deeper pay zones that may be present on structural plays. Development of these wells continued into the nine months ended September 30, 2019 to further capture and document the scientific base in support of demonstrating the production potential of the property. The Company is currently marketing the project for an outright sale or farm in partner. This marketing process has been long and arduous as the overall market is quite soft. In addition, due to the size and scope of the project, we are dealing with very large companies that have multitudes of people reviewing our material, which in itself is extensive. During the marketing process, the Company and Wolfbone will endeavor to complete the University Maverick A24 #1 as a potential producer in the Atoka formation. In addition, should a farm out partner or sale not occur, the Company and Wolfbone will proceed to drill two additional wells in the play prior to year-end, in order to fulfill the obligations under the DDU Agreement. We are currently drilling and preparing to test the two obligation wells described above. The first well, the A35 1H, has been drilled and cased in the Penn Section. This first well is a short horizontal in the proven Penn Section where we will be looking to break through the dual porosity system in place with a larger frac designed to open up the oil bearing pores. We are also drilling ahead on the A25 #2 which is being drilled on an identified structure. This well is designed to test both conventional zones and potentially the unconventional Barnett and Woodford Zones ultimately drilling down to the cellar around 8000 feet.

 

Hazel Project in the Midland Basin in West Texas

 

Effective April 4, 2016, TEI acquired from MPC a 66.66% working interest in approximately 12,000 acres in the Midland Basin in exchange for 1,500,000 warrants to purchase shares of our common stock with an exercise price of $1.00 for five years and a back-in after payout of a 25% working interest to MPC.

 

Initial development of the first well on the property, the Flying B Ranch #1, began July 9, 2016 and development continued through September 30, 2016. This well is classified as a test well in the development pursuit of the Hazel Project. We believe that this wellbore will be utilized as a salt water disposal well in support of future development.

 

In October 2016, the holders of all of our then-outstanding shares of Series C Preferred Stock (which were issued in July 2016) elected to convert into a total 33.33% working interest in our Hazel Project, reducing our ownership from 66.66% to a 33.33% working interest. As of December 31, 2018, no shares of our Series C Preferred Stock were outstanding.

 

On December 27, 2016, drilling activities commenced on the second Hazel Project well, the Flying B Ranch #2. The well is a vertical test similar to our first Hazel Project well, the Flying B Ranch #1. Recompletion in an alternative geological formation for this well was performed during the three months ended September 30, 2017; however, we believe that the results were uneconomic for continuing production. We believe that this wellbore will be utilized as a salt water disposal well in support of future development.

 

We commenced planning to drill the Flying B Ranch #3 horizontal well in the Hazel Project in June 2017 in compliance with the continuous drilling obligation. The well was spudded on June 10, 2017. The well was completed and began production in late September 2017. As of September 30, 2019 the well is shut in due to high lease operating expenses as a result of lack of three phase electricity to the property which forced the use of diesel generation equipment to power the production facilities.

 

Acquisition of Additional Interests in Hazel Project

 

On January 30, 2017, we and our then wholly-owned subsidiary, Torchlight Acquisition Corporation, a Texas corporation (“TAC”), entered into and closed an Agreement and Plan of Reorganization and a Plan of Merger with Line Drive Energy, LLC, a Texas limited liability company (“Line Drive”), and Mr. McCabe, under which agreements TAC merged with and into Line Drive and the separate existence of TAC ceased, with Line Drive being the surviving entity and becoming our wholly-owned subsidiary. Line Drive, which was wholly-owned by Mr. McCabe, owned certain assets and securities, including approximately 40.66% of 12,000 gross acres, 9,600 net acres, in the Hazel Project and 521,739 warrants to purchase shares of our common stock (which warrants had been assigned by Mr. McCabe to Line Drive). Upon the closing of the merger, all of the issued and outstanding shares of common stock of TAC automatically converted into a membership interest in Line Drive, constituting all of the issued and outstanding membership interests in Line Drive immediately following the closing of the merger, the membership interest in Line Drive held by Mr. McCabe and outstanding immediately prior to the closing of the merger ceased to exist, and we issued Mr. McCabe 3,301,739 restricted shares of our common stock as consideration therefor. Immediately after closing, the 521,739 warrants held by Line Drive were cancelled, which warrants had an exercise price of $1.40 per share and an expiration date of June 9, 2020. A Certificate of Merger for the merger transaction was filed with the Secretary of State of Texas on January 31, 2017. Subsequent to the closing the name of Line Drive Energy, LLC was changed to Torchlight Hazel, LLC. We are required to drill one well every six months to hold the entire 12,000 acre block for eighteen months, and thereafter two wells every six months starting June 2018. During the nine months ended September 30, 2019 modifications were made to mineral owner leases as described below.

15

 

TORCHLIGHT ENERGY RESOURCES, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 

4. OIL & GAS PROPERTIES- continued

 

Also on January 30, 2017, TEI entered into and closed a Purchase and Sale Agreement with Wolfbone. Under the agreement, TEI acquired certain of Wolfbone’s Hazel Project assets, including its interest in the Flying B Ranch #1 well and the 40 acre unit surrounding the well, for consideration of $415,000, and additionally, Wolfbone caused to be cancelled a total of 2,780,000 warrants to purchase shares of our common stock, including 1,500,000 warrants held by MPC, and 1,280,000 warrants held by Green Hill Minerals, an entity owned by Mr. McCabe’s son, which warrant cancellations were effected through certain Warrant Cancellation Agreements. The 1,500,000 warrants held by MPC that were cancelled had an exercise price of $1.00 per share and an expiration date of April 4, 2021. The warrants held by Green Hill Minerals that were cancelled included 100,000 warrants with an exercise price of $1.73 and an expiration date of September 30, 2018 and 1,180,000 warrants with an exercise price of $0.70 and an expiration date of February 15, 2020.

 

Since Mr. McCabe held the controlling interest in both Line Drive and Wolfbone, the transactions were combined for accounting purposes. The working interest in the Hazel Project was the only asset held by Line Drive. The warrant cancellation was treated in the aggregate as an exercise of the warrants with the transfer of the working interests as the consideration. We recorded the transactions as an increase in its investment in the Hazel Project working interests of $3,644,431, which is equal to the exercise price of the warrants plus the cash paid to Wolfbone.

 

Upon the closing of the transactions, our working interest in the Hazel Project increased by 40.66% to a total ownership of 74%.

 

Effective June 1, 2017, we acquired an additional 6% working interest from unrelated working interest owners in exchange for 268,656 shares of common stock valued at $373,430, increasing our working interest in the Hazel project to 80%, and an overall net revenue interest of 74-75%.

 

Mr. Masterson is credited with originating the Hazel Project in the Midland Basin. With Mr. Masterson’s assistance, we are targeting prospects in the Midland Basin that have 150 to 130 feet of thickness, are likely to require six to eight laterals per bench, have the potential for 12 to 16 horizontal wells per section, and 200 long lateral locations, assuming only two benches.

 

In April 2018, we announced that we have commenced a process that could result in the monetization of the Hazel Project. We believe the development activity at the Hazel Project, coupled with nearby activities of other oil and gas operators, suggests that this project has achieved a level of value worth monetizing. We anticipate that the liquidity that would be provided from selling the Hazel Project could be redeployed into the Orogrande Project. While this process is underway, we will take all necessary steps to maintain the leasehold as required. As of this filing, we continue to maintain the leases in good standing and continue to market the acreage in an effort to focus on the Orogrande Project.

 

During the nine months ended September 30, 2019 the Company deepened the Flying B #4 and took whole cores through all of the Wolfcamp A and the upper portion of the Wolfcamp B. In addition, in May, 2019 we entered into agreements with two of the three mineral owners on the northern section of the leases to keep the entire acreage block as one lease with a one year extension. We issued each of them 50,000 shares of our common stock as consideration for this extension. At September 30, 2019 we were structuring the extension agreement with the third mineral owner for cash consideration. Due to this extension, our obligation in November reduces to one obligation well. We have finished that obligation well and are awaiting results. This well is targeting a shallow zone that is showing oil potential.

 

The marketing process is ongoing for the Hazel project. We continue to encounter, as does the entire industry, a soft market for acquisitions and divestitures transactions. We will continue to look to sell the property or joint venture the property via farm in or a drillco transaction.

 

Winkler Project, Winkler County, Texas

 

On December 1, 2017, the Agreement and Plan of Reorganization that we and our then wholly-owned subsidiary, Torchlight Wolfbone Properties, Inc., a Texas corporation (“TWP”), entered into with MPC and Warwink Properties, LLC (“Warwink Properties”) on November 14, 2017 closed. Under the agreement, TWP merged with and into Warwink Properties and the separate existence of TWP ceased, with Warwink Properties being the surviving entity and becoming our wholly-owned subsidiary. Warwink Properties was wholly owned by MPC. Warwink Properties owns certain assets, including a 10.71875% working interest in approximately 640 acres in Winkler County, Texas. Upon the closing of the merger, all of the issued and outstanding shares of common stock of TWP converted into a membership interest in Warwink Properties, constituting all of the issued and outstanding membership interests in Warwink Properties immediately following the closing of the merger, the membership interest in Warwink Properties held by MPC and outstanding immediately prior to the closing of the merger ceased to exist, and we issued MPC 2,500,000 restricted shares of our common stock as consideration. Also on December 1, 2017, MPC closed its transaction with MECO IV, LLC (” MECO”), for the purchase and sale of certain assets as contemplated by the Purchase and Sale Agreement dated November 9, 2017 among MPC, MECO and additional parties thereto (the “MECO PSA”), to which we are not a party. Under the MECO PSA, Warwink Properties received a carry from MECO (through the tanks) of up to $1,179,076 in the next well drilled on the Winkler County leases. A Certificate of Merger for the merger transaction was filed with the Secretary of State of Texas on December 5, 2017.

 

Also on December 1, 2017, the transactions contemplated by the Purchase Agreement that TEI entered into with MPC closed. Under the Purchase Agreement, which was entered into on November 14, 2017, TEI acquired beneficial ownership of certain of MPC’s assets, including acreage and wellbores located in Ward County, Texas (the “Ward County Assets”). As consideration under the Purchase Agreement, at closing TEI issued to MPC an unsecured promissory note in the principal amount of $3,250,000, payable in monthly installments of interest only beginning on January 1, 2018, at the rate of 5% per annum, with the entire principal amount together with all accrued interest due and payable on January 1, 2021. In connection with TEI’s acquisition of beneficial ownership in the Ward County Assets, MPC sold those same assets, on behalf of TEI, to MECO at closing of the MECO PSA, and accordingly, TEI received $3,250,000 in cash for its beneficial interest in the Ward County Assets. Additionally, at closing of the MECO PSA, MPC paid TEI a performance fee of $2,781,500 in cash as compensation for TEI’s marketing and selling the Winkler County assets of MPC and the Ward County Assets as a package to MECO.

16

 

TORCHLIGHT ENERGY RESOURCES, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 

4. OIL & GAS PROPERTIES- continued

 

Addition to the Winkler Project

 

As of May 7, 2018 our Winkler project in the Delaware Basin had begun the drilling phase of the first Winkler Project well, the UL 21 War-Wink 47 #2H. Our operating partner, MECO had begun the pilot hole on the project. The plan is to evaluate the various potential zones for a lateral leg to be drilled once logging is completed. We expect the most likely target to be the Wolfcamp A interval. The well is on 320 newly acquired acres offsetting the original leasehold we entered into in December, 2017. The additional acreage was leased by our operating partner under the Area of Mutual Interest Agreement (AMI) and we exercised its right to participate for its 12.5% in the additional 1,080 gross acres at a cash cost of $447,847 in July, 2018. Our carried interest in the first well, as outlined in the agreement, was originally planned to be on the first acreage acquired. That carried interest is being applied to this new well and will allow MECO to drill and produce potential revenues sooner than originally planned. The primary leasehold is a 320-acre block directly west of the current position and will allow for 5,000-foot lateral wells to be drilled. The well was completed and began production in October, 2018 and is producing currently. Recently the operator has informed us that there will be no planned additional wells in the acreage this year. All acreage is presently held by production.

 

In December 2018, the Company began to take measures on its own to market the Winkler Project in an effort to focus on the Orogrande. This process is ongoing.

 

Hunton Play, Central Oklahoma

 

Presently, we are producing from one well in the Viking Area of Mutual Interest and one well in Prairie Grove.

 

Assets Held for Sale

 

With respect to marketing oil and natural gas properties, the Company has evaluated the properties being marketed to determine whether any should be reclassified as held-for-sale at September 30, 2019. The held-for-sale criteria include: management commits to a plan to sell; the asset is available for immediate sale; an active program to locate a buyer exists; the sale of the asset is probable and expected to be completed within one year; the asset is being actively marketed for sale; and it is unlikely that significant changes to the plan will be made. If each of these criteria is met, the property would be reclassified as held-for-sale on the Company’s consolidated balance sheets and measured at the lower of their carrying amount or estimated fair value less costs to sell. Fair values are estimated using accepted valuation techniques, such as a discounted cash flow model, valuations performed by third parties, earnings multiples, or indicative bids, when available. Management considers historical experience and all available information at the time the estimates are made; however, the fair value that is ultimately realized upon the sale of the assets to be divested may differ from the estimated fair values reflected in the consolidated financial statements. If each of these criteria is met, DD&A expense would not be recorded on assets to be divested once they are classified as held for sale. Based on management’s assessment, these criteria have not been met and no assets are classified as held for sale as of September 30, 2019.

 

5. RELATED PARTY PAYABLES

 

As of September 30, 2019 and December 31, 2018, related party payables of $45,000, and accrued payroll was $951,176 and $816,176, respectively, consisting of accrued and unpaid compensation due to our executive officers.

 

6. COMMITMENTS AND CONTINGENCIES

 

Leases

 

The Company has a noncancelable lease for its office premises that expires on November 30, 2019 and which requires the payment of base lease amounts and executory costs such as taxes, maintenance and insurance. Effective June 1, 2019 the Company entered into an agreement with a company that had been subleasing a portion of its office space to become the primary obligor on the lease and to assume full responsibility for lease payments after lease expiration on November 30, 2019. The Company will continue after November 30, 2019 as a subtenant on a month to month basis.

 

Approximate future minimum rental commitments under the office premises lease total $12,288 through the expiration date of November 30, 2019.

 

Environmental matters

 

The Company is subject to contingencies as a result of environmental laws and regulations. Present and future environmental laws and regulations applicable to the Company’s operations could require substantial capital expenditures or could adversely affect its operations in other ways that cannot be predicted at this time. As of September 30, 2019 and December 31, 2018, no amounts had been recorded because no specific liability has been identified that is reasonably probable of requiring the Company to fund any future material amounts.

17

 

TORCHLIGHT ENERGY RESOURCES, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 

7. STOCKHOLDERS’ EQUITY

 

Common Stock

 

During the nine months ended September 30, 2019, the Company issued 3,146,100 shares of common stock for cash of $2,516,880.

 

During the nine months ended September 30, 2019, the Company issued 312,593 shares of common stock with a fair value of $365,400 as compensation for services.

 

During the nine months ended September 30, 2019, the Company issued 167,845 shares of common stock valued at $183,714 in payment of interest accrued on notes payable.

 

During the nine months ended September 30, 2019, the Company issued 168,690 shares of common stock resulting from warrant and option exercise for consideration totaling $184,843.

 

The Company issued 100,000 shares of common stock effective May 1, 2019, as compensation for an extension of oil and gas lease expiration valued at $125,000.

 

In April 2019, the Company issued 202,316 shares of common stock in satisfaction of the payment in kind valued at $314,108 due on April 10, 2019 to the holders of notes payable by the Company.

 

Warrants and Options

 

During the nine months ended September 30, 2019, the Company issued 200,000 warrants and options with total fair value of $154,000 as compensation for services and recorded expense of $335,320 related to warrants and options issued in prior periods.

 

During the nine months ended September 30, 2019, the Company issued 365,455 warrants valued at $240,455 in connection with the issuance of convertible notes payable.

 

In connection with the issuance of common stock for cash during the nine months ended September 30, 2019, 1,592,600 warrants were surrendered to the Company for cancellation.

 

A summary of warrants outstanding as of September 30, 2019 by exercise price and year of expiration is presented below:

 

Exercise     Expiration Date in     
Price   2019   2020   2021   2022   2023   2024   Total 
                              
$0.70    -    420,000    -    -    -    -    420,000 
$1.03    -    -    120,000    -    -    -    120,000 
$1.14    -    -    -    -    600,000    -    600,000 
$1.21    -    -    -    -    120,000    -    120,000 
$1.35    -    -    -    365,455              365,455 
$1.40    -    321,737    -    -    -    -    321,737 
$1.63    -    -    -    -    -    100,000    100,000 
$1.64    -    -    200,000    -    -    -    200,000 
$1.80    -    1,250,000    -    -    -    -    1,250,000 
$2.00    -    -    200,000    -    -    -    200,000 
$2.23    -    339,901    -    -    -    -    339,901 
$2.50    35,211    -    -    -    -    -    35,211 
$3.50    15,000    -    -    -    -    -    15,000 
      50,211    2,331,638    520,000    365,455    720,000    100,000    4,087,304 

18

 

TORCHLIGHT ENERGY RESOURCES, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 

7. STOCKHOLDERS’ EQUITY - continued

 

A summary of stock options outstanding as of September 30, 2019 by exercise price and year of expiration is presented below:

 

Exercise   Expiration Date in     
Price   2020   2021   2022   2023   Total 
                      
$0.97    -    259,742    -    -    259,742 
$1.10    -    -    800,000    -    800,000 
$1.19    -    -    -    700,000    700,000 
$1.57    4,500,000    -    -    -    4,500,000 
$1.63    -    -    58,026    -    58,026 
$1.79    300,000    -    -    -    300,000 
      4,800,000    259,742    858,026    700,000    6,617,768 

 

At September 30, 2019, the Company had reserved 10,705,072 common shares for future exercise of warrants and options.

 

Warrants and options granted were valued using the Black-Scholes Option Pricing Model. The assumptions used in calculating the fair value of the warrants and options issued were as follows:

 

2019   
    
Risk-free interest rate  1.77% - 2.46%
Expected volatility of common stock  80% - 107%
Dividend yield  0.00%
Discount due to lack of marketability  20%
Expected life of option/warrant  Three to Five Years
    
2018   
    
Risk-free interest rate  2.15% - 2.83%
Expected volatility of common stock  97% - 119%
Dividend yield  0.00%
Discount due to lack of marketability  20%
Expected life of option/warrant  2.75 to Five Years
    

8. INCOME TAXES

 

The Company recorded no income tax provision for 2019 and 2018 because of losses incurred.

 

The Company estimates its annual effective income tax rate in recording its quarterly provision for income taxes in the various jurisdictions in which it operates. Statutory tax rate changes and other significant or unusual items are recognized as discrete items in the quarter in which they occur. The Company recorded no income tax expense for the nine months ended September 30, 2019 because the Company expects to incur a tax loss in the current year. Similarly, no income tax expense was recognized for the nine months ended September 30, 2019.

 

The Company had a net deferred tax asset related to federal net operating loss carryforwards of $63,070,504 and $56,992,857 at September 30, 2019 and December 31, 2018, respectively. The federal net operating loss carryforward will begin to expire in 2033. Realization of the deferred tax asset is dependent, in part, on generating sufficient taxable income prior to expiration of the loss carryforwards. The Company has placed a 100% valuation allowance against the net deferred tax asset because future realization of these assets is not assured.

19

 

TORCHLIGHT ENERGY RESOURCES, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 

9. PROMISSORY NOTES

 

On April 10, 2017, the Company sold to investors in a private transaction two 12% unsecured promissory notes with a total of $8,000,000 in principal amount. Interest only is due and payable on the notes each month at the rate of 12% per annum, with a balloon payment of the outstanding principal due and payable at maturity on April 10, 2020. The holders of the notes will also receive annual payments of common stock at the rate of 2.5% of principal amount outstanding, based on a volume-weighted average price. Both notes were sold at an original issue discount of 94.25% and accordingly, we received total proceeds of $7,540,000 from the investors. We used the proceeds for working capital and general corporate purposes, which includes, without limitation, drilling capital, lease acquisition capital and repayment of prior debt.

 

These 12% promissory notes allow for early redemption. The notes also contain certain covenants under which we have agreed that, except for financing arrangements with established commercial banking or financial institutions and other debts and liabilities incurred in the normal course of business, we will not issue any other notes or debt offerings which have a maturity date prior to the payment in full of the 12% notes, unless consented to by the holders.

 

The effective interest rate is 16.15%.

 

On April 24, 2017, we used $2,509,500 of the proceeds from this financing to redeem and repay a portion of the outstanding 12% Series B Convertible Unsecured Promissory Notes. Separately, $1,000,000 of the principal amount of the Series B Notes plus accrued interest was converted into 1,007,890 shares of common stock and $64,297 was rolled into the new debt financing.

 

On February 6, 2018, we sold to an investor in a private transaction a 12% unsecured promissory note with a principal amount of $4,500,000. Interest only is due and payable on the note each month at the rate of 12% per annum, with a balloon payment of the outstanding principal due and payable at maturity on April 10, 2020. The holder of the note will also receive annual payments of common stock at the rate of 2.5% of principal amount outstanding, based on a volume-weighted average price. We sold the note at an original issue discount of 96.27% and accordingly, we received total proceeds of $4,332,150 from the investor. We used the proceeds for working capital and general corporate purposes, which includes, without limitation, drilling capital, lease acquisition capital and repayment of prior debt.

 

This 12% promissory note allows for early redemption, provided that if we redeem before February 6, 2019, we must pay the holder all unpaid interest and common stock payments on the portion of the note redeemed that would have been earned through February 6, 2019. The note also contains certain covenants under which we have agreed that, except for financing arrangements with established commercial banking or financial institutions and other debts and liabilities incurred in the normal course of business, we will not issue any other notes or debt offerings which have a maturity date prior to the payment in full of the 12% note, unless consented to by the holder.

 

The effective interest rate is 15.88%.

 

In April 2019 and 2018, respectively, the holders of the notes described above received 202,316 and 172,342 shares of common stock as a payment in kind representing the annual payments of common stock due at the rate of 2.5% of principal amount outstanding as of April 10 based on a volume-weighted average price calculation.

 

Unsecured promissory note transactions through September 30, 2019 are summarized as follows:

 

Unsecured promissory note balance - December 31, 2018  $11,862,080 
      
Accretion of discount and amortization of debt issuance costs   386,813 
      
Unsecured promissory note balance - September 30, 2019  $12,248,893 

20

 

TORCHLIGHT ENERGY RESOURCES, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
 

9. PROMISSORY NOTES- continued

 

On October 17, 2018, we sold to certain investors in a private transaction 16% Series C Unsecured Convertible Promissory Notes with a total principal amount of $6,000,000. Interest and principal are due and payable on the notes in one balloon payment at maturity on April 17, 2020. The notes are convertible, at the election of the holders, into an aggregate 6% working interest in certain oil and gas leases in Hudspeth County, Texas, known as our “Orogrande Project.” After an analysis of the transaction and a review of applicable accounting pronouncements, management concluded that the notes issued on October 17, 2018 which contain a conversion right for holders to convert into a working interest in the Orogrande Project of the Company, meet a specific scope exception to the provisions requiring derivative accounting.

 

The notes allow us to redeem them early only upon the event of a fundamental transaction, such as a merger or sale of substantially all our assets. The notes provide that the noteholders may accelerate and declare any and all of the obligations under the notes to be immediately due and payable in the event of default, such as nonpayment, failure to perform required conversions, failure to perform any covenant or agreement under the notes, an insolvency event, or certain defaults or judgments. As part of the sale of the of the notes, the noteholders required that McCabe Petroleum Corporation, a Texas corporation owned by our Chairman Gregory McCabe (“MPC”), provide them a put option whereby they have the right to have MPC purchase from them any unpaid principal amount due on the notes. Additionally, if there is a fundamental transaction, Mr. McCabe will be required to pay a fee to each noteholder that elects not to convert or require MPC to purchase the principal amount under the note, which fee will be equal to such noteholder’s pro-rata share of a total fee amount of $1,500,000.

 

We received total proceeds of $6,000,000 from the sale of the notes, of which $3,000,000 was used to pay back the promissory note issued to MPC on December 1, 2017, which note was due on December 31, 2020. We used the remaining proceeds for working capital and general corporate purposes, which includes, without limitation, drilling and lease acquisition capital.

 

Prior to entering into the above transactions, our Board of Directors formed a special committee composed of independent directors to analyze and authorize the transactions on behalf of Torchlight Energy Resources, Inc. and determine whether the transactions are fair to the company. In this role, the special committee engaged an independent financial consulting firm which rendered a fairness opinion deeming that the transactions were fair to the company, from a financial point of view, and contained terms no less favorable to the company than those that could be obtained in arm’s length transactions.

 

In February and March, 2019 the Company raised a total of $2,000,000 from investors through the sale of 14% Series D Unsecured Convertible Promissory Notes. Principal is payable in a lump sum at maturity on May 11, 2020 with payments of interest payable monthly at the rate of 14% per annum. Holders of the notes have the right to convert principal and interest at any time into common stock at a conversion price of $1.08 per share. The Company has the right to redeem the notes at any time, provided that the redemption amount must include all interest that would have been earned through maturity. The Company evaluated the notes for beneficial conversion features and derivative accounting criteria and concluded that derivative accounting treatment is not applicable.

 

In July, 2019, the Company issued 8% Unsecured Convertible Promissory notes in the amount of $2,010,000 together with warrants to purchase our common stock. The principal and accrued interest on the notes are convertible into shares of common stock at $1.10 per common share at any time after the original issue date. Along with the notes, the three year warrants equal to 20% of the number of shares of common stock issuable upon the conversion of the notes were issued to note holders. The warrants are exercisable at $1.35 per share.

 

Warrants issued along with the notes meet the requirements of the scope exemptions in ASC 815-10-15-74 and are thus classified as equity upon issuance. The Company determined the fair value of the warrants using the Black Scholes pricing formula and is recognized as a discount on the carrying amount of the notes and is credited to additional paid in capital. The fair value of the warrants at the issuance date was determined to be $240,455.

 

A beneficial conversion feature (“BCF”) of a convertible note is normally characterized as the convertible portion feature that provides a rate of conversion that is below market value or “in the money” when issued. The BCF related to the issuance of the notes was recorded at the issuance date. The BCF was measured using the intrinsic value method and is shown as a discount to the carrying amount of the convertible note and is credited to additional paid in capital. The intrinsic value of the BCF at the issuance date of the notes was determined to be $1,145,546.

 

The allocated fair values of the BCF and the warrants was recorded as a debt discount from the face amount of the notes and such discount is being accreted over the expected term of the notes and is charged to interest expense. The Company recognized interest expense of $102,343 from the amortization of debt discount from notes as of September 30, 2019.

 

The Company evaluated the July, 2019 notes for beneficial conversion features and derivative accounting criteria and concluded that derivative accounting treatment was not applicable.

 

10. ASSET RETIREMENT OBLIGATIONS

 

The following is a reconciliation of the asset retirement obligations liability through September 30, 2019:

 

Asset retirement obligations – December 31, 2018  $14,353 
      
Accretion expense   426 
Estimated liabilities recorded   8,397 
      
Asset retirement obligations – September 30, 2019  $23,176 

 

11. SUBSEQUENT EVENTS

 

The Company has evaluated the period after the balance sheet date up through the date that the financial statements were issued, and determined that there were no subsequent events or transactions that required recognition or disclosure in the financial statements.

21

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Overview

 

We are engaged in the acquisition, exploration, exploitation, and/or development of oil and natural gas properties in the United States.

 

During the year ended December 31, 2016, the Board of Directors initiated a review of Company operations in view of the divestiture of its Oklahoma properties, which included the previous sale of the Chisholm Trail and Cimarron properties. During 2016 development had continued on the Orogrande Project in West Texas, and in April 2016 the Company acquired the Hazel Project in the Midland Basin also in West Texas. These West Texas properties demonstrate significant potential and future production capabilities based upon the analysis of scientific data being gathered in the day by day development activity. Therefore, the Board determined to focus its efforts and capital on these projects to maximize shareholder value for the long run. The strategy in divesting of projects was to refocus on the greatest potential future value for the Company while systematically eliminating debt as noncore assets are sold and operations are streamlined.

 

During 2017 the Company increased its commitment to the Orogrande and Hazel Projects. Additional working interests were acquired and test wells were drilled on the properties which is detailed in the Properties section of this filing. Near the end of 2017 the Winkler Project, also in West Texas, was acquired.

 

During 2018 the Company continued development in the Orogrande and Hazel Projects. Additional test wells were drilled to capture additional science data to support lease value. Production from the Hazel Flying B #3 continued through 2018. The carried well provision of the Warwink Properties acquisition in 2017 was fulfilled with the drilling of the Warwink #47-H. That well began production in October, 2018, and is still producing today. All of the acreage is HBP and there are no current plans to develop further from the Operator.

 

Development continued in our Orogrande and Hazel Projects during the nine months ended September 30, 2019 resulting in additional gathering of scientific data to be available to potential acquirers.

 

During the quarter ended September 30, 2019, the Company continued its offering of the Hazel and Winkler Projects for sale and to offer its Orogrande Project for sale or farm in.

 

The following discussion of our financial condition and results of operations should be read in conjunction with our unaudited financial statements included herewith and our audited financial statements for the year ended December 31, 2018. This discussion should not be construed to imply that the results discussed herein will necessarily continue into the future, or that any conclusion reached herein will necessarily be indicative of actual operating results in the future. Such discussion represents only the best present assessment by our management.

22

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - continued

 

Historical Results for the three months ended September 30, 2019 and 2018:

 

Revenues and Cost of Revenues

 

For the three months ended September 30, 2019, we had production revenue of $71,142 compared to $128,675 for the three months ended September 30, 2018. Refer to the table of production and revenue included below for quarterly changes in revenue. Our cost of revenue, consisting of lease operating expenses and production taxes, was $117,104 and $182,294 for the three months ended September 30, 2019 and 2018, respectively.

 

Property Quarter Oil Production
{BBLS}		 Gas Production
{MCF}		  Oil Revenue   Gas Revenue   Total Revenue 
                   
Oklahoma Q1 - 2019 56 1,072  $2,567   $2,333   $4,900 
Hazel (TX) Q1 - 2019 2,864 0   131,901    -    131,901 
MECO (TX) Q1 - 2019 3,525 2,565   167,677    6,359    174,036 
Total Q1-2019 6,445 3,637  $302,145   $8,692   $310,837 
                      
Oklahoma Q2 - 2019 43 1,770  $2,477   $2,450   $4,927 
Hazel (TX) Q2 - 2019 1,123 0   64,302    -    64,302 
Meco (TX) Q2 - 2019 2,585 2,623   156,259    11,587    167,846 
Total Q2-2019 3,751 4,393  $223,038   $14,037   $237,075 
                      
Oklahoma Q3 - 2019 0 0  $-   $-   $- 
Hazel (TX) Q3 - 2019 0 0  $-   $-   $- 
Meco (TX) Q3 - 2019 1,320 4,522  $71,064   $78   $71,142 
Total Q3-2019 1,320 4,522  $71,064   $78   $71,142 
                      
2019 Year To Date 11,516 12,552  $596,247   $22,807   $619,054 
                      
Oklahoma Q1 - 2018 72 2,008  $4,463   $5,202   $9,665 
Hazel (TX) Q1 - 2018 7,786 0   471,498    -    471,498 
Total Q1-2018 7,858 2,008  $475,961   $5,202   $481,163 
                      
Oklahoma Q2 - 2018 446 1,857  $10,912   $2,690   $13,602 
Hazel (TX) Q2 - 2018 4,368 0   266,506    -    266,506 
Meco (TX) Q2 - 2018 51 0   3,155    -    3,155 
Total Q2-2018 4,865 1,857  $280,573   $2,690   $283,263 
                      
Oklahoma Q3 - 2018 41 2,324  $1,264   $3,845   $5,109 
Hazel (TX) Q3 - 2018 2,283 0   123,566    -    123,566 
Meco (TX) Q3 - 2018 0 0   -    -    - 
Total Q3-2018 2,324 2,324  $124,830   $3,845   $128,675 
                      
Oklahoma Q4 - 2018 94 986  $4,878   $1,104   $5,982 
Hazel (TX) Q4 - 2018 3,779 0   178,015    -    178,015 
Meco (TX) Q4 - 2018 3,967 10,646   192,916    12,348    205,264 
Total Q4-2018 7,840 11,632  $375,809   $13,452   $389,261 
                      
2018 Year To Date 22,887 17,821  $1,257,173   $25,189   $1,282,362 

 

During the three months ended September 30, 2019, oil production decreased due to downhole pump replacement on the MECO property and costs associated with delivery of gas to the pipeline exceeded the revenue during the time of low production.

23

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - continued

 

We recorded depreciation, depletion, and amortization expense of $27,355 for the three months ended September 30, 2019 compared to $106,136 for the three months ended September 30, 2018.

 

General and Administrative Expenses

 

Our general and administrative expenses for the three months ended September 30, 2019 and 2018 were $849,425 and $747,357, respectively, an increase of $102,068. Our general and administrative expenses consisted of consulting and compensation expense, substantially all of which was non-cash or deferred, accounting and administrative costs, professional consulting fees, and other general corporate expenses. The change in general and administrative expenses for the three months ended September 30, 2019 compared to 2018 is detailed as follows:

 

Increase(decrease) in non cash stock and warrant compensation  $(19,210)
Increase(decrease) in consulting expense   122,500 
Increase(decrease) in investor relations   20,364 
Increase(decrease) in travel expense   (316)
Increase(decrease) in salaries and compensation   (46,379)
Increase(decrease) in legal fees   19,258 
Increase(decrease) in filing and compliance fees   (866)
Increase(decrease) in insurance   3,818 
Increase(decrease) in audit fees   (22,067)
Increase(decrease) in general corporate expenses   24,966 
      
Total Decrease in General and Administrative Expenses  $102,068 

 

Historical Results for the nine months ended September 30, 2019 and 2018:

 

Revenues and Cost of Revenues

 

For the nine months ended September 30, 2019, we had production revenue of $619,054 compared to $893,101 for the nine months ended September 30, 2018. Refer to the table of production and revenue included above for quarterly changes in revenue. Our cost of revenue, consisting of lease operating expenses and production taxes, was $358,424 and $595,622 for the nine months ended September 30, 2019 and 2018, respectively.

 

We recorded depreciation, depletion, and amortization expense of $355,050 for the nine months ended September 30, 2019 compared to $368,074 for the nine months ended September 30, 2018.

 

General and Administrative Expenses

 

Our general and administrative expenses for the nine months ended September 30, 2019 and 2018 were $2,552,901 and $3,330,790, respectively, a decrease of $777,889. Our general and administrative expenses consisted of consulting and compensation expense, substantially all of which was non-cash or deferred, accounting and administrative costs, professional consulting fees, and other general corporate expenses. The change in general and administrative expenses for the nine months ended September 30, 2019 compared to 2018 is detailed as follows:

 

Increase(decrease) in audit fees  $(79,808)
Increase(decrease) in consulting expense   24,061 
Increase(decrease) in filing and compliance fees   (96,727)
Increase(decrease) in insurance   (9,281)
Increase(decrease) in investor relations   (82,799)
Increase(decrease) in legal fees   (13,391)
Increase(decrease) in non cash stock and warrant compensation   (346,475)
Increase(decrease) in salaries and compensation   (137,518)
Increase(decrease) in travel expense   7,188 
Increase(decrease) in rent expense   (25,661)
Increase(decrease) in dues and subscriptions   (19,050)
Increase(decrease) in general corporate expenses   1,572 
      
Total (Decrease) in General and Administrative Expenses  $(777,889)

24

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS - continued

 

Liquidity and Capital Resources

 

At September 30, 2019, we had working capital deficit of $21,806,350 and total assets of $43,536,996. Stockholders’ equity was $19,817,897. The negative working capital is principally due to the maturity of the Company’s promissory notes now due within one year (April 2020). The Company has begun efforts to either refinance and/or extend the maturities on the notes.

 

Cash flows from operating activities for the nine months ended September 30, 2019 was $(178,588) compared to $(1,157,671) for the nine months ended September 30, 2018, an increase of $979,083. Cash flows from operating activities for the nine months ended September 30, 2019 can be primarily attributed to net loss from operations of $3,820,145, stock based compensation of $854,720, an impairment expense of $474,357, and other noncash expense adjustments. Cash flows from operating activities for the nine months ended September 30, 2018 can be primarily attributed to net loss from operations of $4,301,398 and $1,215,825 in stock compensation expense and the increase in prepayment of development costs. Reference the Consolidated Statements of Cash Flows for additional detail of the components that comprise the net use of cash in operations. We expect to continue to use cash flow in operating activities until such time as we achieve sufficient commercial oil and gas production to cover all of our cash costs.

 

Cash flows from investing activities for the nine months ended September 30, 2019 was $(6,612,843) compared to $(9,319,771) for the nine months ended September 30, 2018. Cash flows from investing activities principally consists of investment in oil and gas properties in Texas.

 

Cash flows from financing activities for the nine months ended September 30, 2019 was $6,711,723 as compared to $10,304,155 for the nine months ended September 30, 2018. Cash flows from financing activities consists of proceeds from issuance of our common stock and additional borrowings under notes payable. We expect to continue to have cash flow provided by financing activities as we seek new rounds of financing and continue to develop our oil and gas investments.

 

We will require additional debt or equity financing to meet our plans and needs. We face obstacles in continuing to attract new financing due to industry conditions and our history and current record of net losses. Despite our efforts, we can provide no assurance that we will be able to obtain the financing required to meet our stated objectives or even to continue as a going concern.

 

We do not expect to pay cash dividends on our common stock in the foreseeable future.

 

Commitments and Contingencies-

 

Operating Leases

 

The Company has a noncancelable lease for its office premises that expires on November 30, 2019 and which requires the payment of base lease amounts and executory costs such as taxes, maintenance and insurance. Effective June 1, 2019 the Company entered into an agreement with a company that had been subleasing a portion of its office space to become the primary obligor on the lease and to assume full responsibility for lease payments after lease expiration on November 30, 2019. The Company will continue after November 30, 2019 as a subtenant on a month-to- month basis.

 

Approximate future minimum rental commitments under the office premises lease total $12,888 through the expiration date of November 30, 2019.

 

Environmental matters

 

We are subject to contingencies as a result of environmental laws and regulations. Present and future environmental laws and regulations applicable to our operations could require substantial capital expenditures or could adversely affect our operations in other ways that cannot be predicted at this time. As of September 30, 2019 and December 31, 2018, no amounts have been recorded because no specific liability has been identified that is reasonably probable of requiring us to fund any future material amounts.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Not Applicable

25

 

ITEM 4. CONTROLS AND PROCEDURES

 

Disclosure Controls and Procedures

 

Under the supervision and with the participation of our management, including our Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer), we evaluated the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of September 30, 2019. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective to ensure that the information required to be disclosed by us in the reports we submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the applicable rules and forms and that such information was accumulated and communicated to our Chief Executive Officer and Chief Financial Officer, in a manner that allowed for timely decisions regarding disclosure.

 

Changes in Internal Control over Financial Reporting

 

There were no changes during the quarter ended September 30, 2019 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

PART II OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

None

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

As previously disclosed in the registration statement on Form S-3 filed on September 6, 2019, in July 2019, the Company sold a total of 858,500 of shares of common stock through private placements for total consideration of $686,800.

 

As previously disclosed in the registration statement on Form S-3 filed on September 6, 2019, we sold 8% Unsecured Convertible Promissory Notes (the “Notes”) to two investors in July 2019 in a private offering. The Notes have a total principal amount of $2,010,000 and are convertible into shares of our common stock at a conversion price of $1.10 per share. In connection with the sale of the Notes, the investors also received a total of 365,455 warrants to purchase shares of common stock, as part of the same private offering. The warrants have an exercise price of $1.35 per share.

 

In September 2019, the Company issued 120,000 shares of common stock as compensation for consulting services valued at $116,400.

 

In August and September 2019, the Company issued 107,503 shares of common stock valued at $118,546 in payment of interest accrued on notes payable.

 

In September 2019, the Company issued 45,455 shares of common stock in conversion of note principal of $50,000.

 

All of the above sales of securities were sold under the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933 and the rules and regulations promulgated thereunder. The issuances of securities did not involve a “public offering” based upon the following factors: (i) the issuances of securities were isolated private transactions; (ii) a limited number of securities were issued to a limited number of purchasers; (iii) there were no public solicitations; (iv) the investment intent of the purchasers; and (v) the restriction on transferability of the securities issued.

26

 

ITEM 6. EXHIBITS

 

Exhibit No.   Description
2.1   Share Exchange Agreement dated November 23, 2010. (Incorporated by reference from Form 8-K filed with the SEC on November 24, 2010.) *
     
3.1   Articles of Incorporation. (Incorporated by reference from Form 10-K filed with the SEC on March 18, 2019.) *
     
3.2   Certificate of Amendment to Articles of Incorporation dated December 10, 2014. (Incorporated by reference from Form 10-Q filed with the SEC on May 15, 2015.) *
     
3.3   Certificate of Amendment to Articles of Incorporation dated September 15, 2015. (Incorporated by reference from Form 10-Q filed with the SEC on November 12, 2015.) *
     
3.4   Certificate of Amendment to Articles of Incorporation dated August 18, 2017 (Incorporated by reference from Form 10-Q filed with the SEC on November 9, 2018.) *
     
3.5   Amended and Restated Bylaws (Incorporated by reference from Form 8-K filed with the SEC on October 26, 2016.) *
     
10.1   Employment Agreement (with John A. Brda) (Incorporated by reference from Form 8-K filed with the SEC on June 16, 2015.) *
     
10.2   Employment Agreement (with Roger Wurtele) (Incorporated by reference from Form 8-K filed with the SEC on June 16, 2015.) *
     
10.3   Farmout Agreement between Hudspeth Oil Corporation, Founders Oil & Gas, LLC and certain other parties (Incorporated by reference from Form 8-K filed with the SEC on September 29, 2015) *
     
10.4   Purchase and Sale Agreement with Husky Ventures, Inc. (Incorporated by reference from Form 8-K filed with the SEC on November 12, 2015) *
     
10.5   Purchase Agreement with McCabe Petroleum Corporation for acquisition of “Hazel Project” (Incorporated by reference from Form 10-Q filed with the SEC on August 15, 2016) *
     
10.6   Agreement and Plan of Reorganization and Plan of Merger with Line Drive Energy, LLC (Incorporated by reference from Form 10-K filed with the SEC on March 31, 2017) *
     
10.7   Purchase and Sale Agreement with Wolfbone Investments, LLC (Incorporated by reference from Form 10-K filed with the SEC on March 31, 2017) *
     
10.8   12% 2020 Senior Unsecured Promissory Note (form of) (Incorporated by reference from Form 10-Q filed with the SEC on May 12, 2017) *
     
10.9   Agreement and Plan of Reorganization and Plan of Merger with McCabe Petroleum Corporation and Warwink Properties, LLC(Incorporated by reference from Form 10-K filed with the SEC on March 16, 2018) *
     
10.10   Purchase Agreement with Torchlight Energy, Inc. and McCabe Petroleum Corporation (Incorporated by reference from Form 10-K filed with the SEC on March 16, 2018) *
     
10.11   Promissory Note for $3,250,000 by Torchlight Energy, Inc. to McCabe Petroleum Corporation (Incorporated by reference from Form 10-K filed with the SEC on March 16, 2018) *
     
10.12   Assignment of Farmout Agreement between Hudspeth Oil Corporation, Founders Oil & Gas, LLC and Wolfbone Investments, LLC (Incorporated by reference from Form 10-K filed with the SEC on March 16, 2018) *

27

 

ITEM 6. EXHIBITS - continued

 

10.13   12% 2020 Senior Unsecured Promissory Note for $4,500,000 with David A. Straz, Jr Revocable Trust of 1986 (Incorporated by reference from Form 10-K filed with the SEC on March 16, 2018) *
     
10.14   Underwriting Agreement, dated April 19, 2018, between Torchlight Energy Resources, Inc. and Roth Capital Partners, LLC (Incorporated by reference from Form 8-K filed with the SEC on April 19, 2018) *
     
10.15   Purchase & Settlement Agreement, dated July 24, 2018, between Torchlight Energy Resources, Inc., Hudspeth Oil Corporation, Founders Oil & Gas, LLC, Founders Oil & Gas Operating, LLC, Wolfbone Investments, LLC and McCabe Petroleum. Corporation (Incorporated by reference from Form 10-Q filed with the SEC on August 9, 2018) *
     
10.16   16% Series C Unsecured Convertible Promissory Note (form of) dated October 17, 2018 (Incorporated by reference from Form 8-K filed with the SEC on October 18, 2018)*
     
31.1   Certification of principal executive officer required by Rule 13a 14(1) or Rule 15d 14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
     
31.2   Certification of principal financial officer required by Rule 13a 14(1) or Rule 15d 14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
     
32.1   Certification of principal executive officer and principal financial officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and Section 1350 of 18 U.S.C. 63.
     
101.INS   XBRL Instance Document
     
101.SCH   XBRL Taxonomy Extension Schema
     
101.CAL   XBRL Taxonomy Extension Calculation Linkbase
     
101.DEF   XBRL Taxonomy Extension Definitions Linkbase
     
101.LAB   XBRL Taxonomy Extension Label Linkbase

 

*Incorporated by reference from our previous filings with the SEC

28

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

  Torchlight Energy Resources, Inc.
   
Date: November 8, 2019 /s/ John A. Brda
  By: John A. Brda
  Chief Executive Officer
   
Date: November 8, 2019 /s/ Roger Wurtele
  By: Roger Wurtele
  Chief Financial Officer and Principal Accounting Officer

29

 EX-31.1 2 ex31-1.htm CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER REQUIRED BY RULE 13A 14(1) OR RULE 15D 14(A) OF THE SECURITIES EXCHANGE ACT
 

 

EXHIBIT 31.1

 

CERTIFICATION PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

 

I, John A. Brda, certify that:

 

1.    I have reviewed this quarterly report on Form 10-Q of Torchlight Energy Resources, Inc. for the period ended September 30, 2019;

 

2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.    The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15 (e) and 15d- 15 (e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a)  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiary, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b)  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c)  Evaluated the effectiveness of the registrant’s disclosure controls and procedures, and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d)  Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over the financial reporting; and

 

5.    I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

a)  All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b)  Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

/s/ John A. Brda
John A. Brda
Chief Executive Officer
(Principal Executive Officer)
Date: November 8, 2019

 

 EX-31.2 3 ex31-2.htm CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER REQUIRED BY RULE 13A 14(1) OR RULE 15D 14(A) OF THE SECURITIES EXCHANGE ACT
 

 

EXHIBIT 31.2

 

CERTIFICATION PURSUANT TO SECTION 302 OF THE

SARBANES-OXLEY ACT OF 2002

 

I, Roger Wurtele, certify that:

 

1.    I have reviewed this quarterly report on Form 10-Q of Torchlight Energy Resources, Inc. for the period ended September 30, 2019;

 

2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.    The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15 (e) and 15d- 15 (e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a)  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material  information relating to the small  business issuer, including its consolidated subsidiary, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b)  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c)  Evaluated the effectiveness of the registrant’s disclosure controls and procedures, and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d)  Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over the financial reporting; and

 

5.    I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

 

a)  All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

 

b)  Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

/s/ Roger Wurtele
Roger Wurtele,
Chief Financial Officer
(Principal Financial Officer)
Date: November 8, 2019

 

 EX-32.1 4 ex32-1.htm CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 AND SECTION 1350 OF 18 U.S.C. 63.
 

 

  EXHIBIT 32.1

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

 

I, John A. Brda, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the quarterly report on Form 10-Q of Torchlight Energy Resources, Inc. for the period ended September 30, 2019, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such quarterly report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Torchlight Energy Resources, Inc.

 

/s/ John A. Brda
John A. Brda,
Chief Executive Officer (Principal Executive Officer)
 
Date: November 8, 2019

 

I, Roger Wurtele, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the quarterly report on Form 10-Q of Torchlight Energy Resources, Inc. for the period ended September 30, 2019, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such quarterly report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Torchlight Energy Resources, Inc.

 

/s/ Roger Wurtele
Roger Wurtele,
Chief Financial Officer (Principal Financial Officer)
 
Date: November 8, 2019

 

The foregoing certification is not deemed filed with the Securities and Exchange Commission for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (“Exchange Act”), and is not to be incorporated by reference into any filing of Torchlight Energy Resources, Inc. under the Securities Act of 1933, as amended, or the Exchange Act, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

 

 EX-101.INS 5 trch-20190930.xml XBRL INSTANCE DOCUMENT 0001431959 2019-09-30 0001431959 2018-12-31 0001431959 2019-01-01 2019-09-30 0001431959 srt:MinimumMember 2019-01-01 2019-09-30 0001431959 srt:MaximumMember 2019-01-01 2019-09-30 0001431959 TRCH:PriceRangeOneMember 2019-09-30 0001431959 TRCH:PriceRangeTwoMember 2019-09-30 0001431959 TRCH:PriceRangeThreeMember 2019-09-30 0001431959 TRCH:PriceRangeFourMember 2019-09-30 0001431959 TRCH:PriceRangeFiveMember 2019-09-30 0001431959 TRCH:PriceRangeSixMember 2019-09-30 0001431959 TRCH:PriceRangeSevenMember 2019-09-30 0001431959 TRCH:PriceRangeEightMember 2019-09-30 0001431959 TRCH:PriceRangeNineMember 2019-09-30 0001431959 TRCH:PriceRangeTotalMember 2019-09-30 0001431959 TRCH:PriceRangeTenMember 2019-09-30 0001431959 TRCH:PriceRangeElevenMember 2019-09-30 0001431959 TRCH:PriceRangeTwelveMember 2019-09-30 0001431959 TRCH:PriceRangeThirteenMember 2019-09-30 0001431959 TRCH:PriceRangeTotalMember TRCH:ExpiringInTheYear2019Member 2019-09-30 0001431959 TRCH:PriceRangeTotalMember TRCH:ExpiringInTheYear2020Member 2019-09-30 0001431959 2017-12-31 0001431959 2018-01-01 2018-09-30 0001431959 2018-09-30 0001431959 srt:MinimumMember 2018-01-01 2018-09-30 0001431959 srt:MaximumMember 2018-01-01 2018-09-30 0001431959 TRCH:PriceRangeTotalMember TRCH:ExpiringInTheYear2021Member 2019-09-30 0001431959 TRCH:PriceRangeTotalMember TRCH:ExpiringInTheYear2022Member 2019-09-30 0001431959 us-gaap:CommonStockMember 2018-12-31 0001431959 us-gaap:AdditionalPaidInCapitalMember 2018-12-31 0001431959 us-gaap:RetainedEarningsMember 2018-12-31 0001431959 us-gaap:CommonStockMember 2019-09-30 0001431959 us-gaap:AdditionalPaidInCapitalMember 2019-09-30 0001431959 us-gaap:RetainedEarningsMember 2019-09-30 0001431959 TRCH:PriceRangeTotalMember TRCH:ExpiringInTheYear2023Member 2019-09-30 0001431959 TRCH:PriceRangeTotalMember TRCH:ExpiringInTheYear2024Member 2019-09-30 0001431959 2019-07-01 2019-09-30 0001431959 2018-07-01 2018-09-30 0001431959 TRCH:UniversityLandsMineralOwnerMember 2019-01-01 2019-09-30 0001431959 TRCH:ORRIMagdalenaRoyaltiesLLCMember 2019-01-01 2019-09-30 0001431959 TRCH:ORRIUnrelatedPartyMember 2019-01-01 2019-09-30 0001431959 TRCH:HudspethOilCorporationMember 2019-01-01 2019-09-30 0001431959 TRCH:WolfboneInvestmentsLLCMember 2019-01-01 2019-09-30 0001431959 TRCH:UnrelatedPartyMember 2019-01-01 2019-09-30 0001431959 TRCH:OilSalesMember 2019-07-01 2019-09-30 0001431959 TRCH:OilSalesMember 2018-07-01 2018-09-30 0001431959 TRCH:OilSalesMember 2019-01-01 2019-09-30 0001431959 TRCH:OilSalesMember 2018-01-01 2018-09-30 0001431959 TRCH:GasSalesMember 2019-07-01 2019-09-30 0001431959 TRCH:GasSalesMember 2018-07-01 2018-09-30 0001431959 TRCH:GasSalesMember 2019-01-01 2019-09-30 0001431959 TRCH:GasSalesMember 2018-01-01 2018-09-30 0001431959 2019-11-08 0001431959 us-gaap:CommonStockMember 2019-01-01 2019-03-31 0001431959 us-gaap:CommonStockMember 2019-04-01 2019-06-30 0001431959 us-gaap:CommonStockMember 2019-07-01 2019-09-30 0001431959 us-gaap:CommonStockMember 2019-03-31 0001431959 us-gaap:CommonStockMember 2019-06-30 0001431959 us-gaap:AdditionalPaidInCapitalMember 2019-01-01 2019-03-31 0001431959 us-gaap:AdditionalPaidInCapitalMember 2019-04-01 2019-06-30 0001431959 us-gaap:AdditionalPaidInCapitalMember 2019-07-01 2019-09-30 0001431959 us-gaap:AdditionalPaidInCapitalMember 2019-03-31 0001431959 us-gaap:AdditionalPaidInCapitalMember 2019-06-30 0001431959 us-gaap:RetainedEarningsMember 2019-01-01 2019-03-31 0001431959 us-gaap:RetainedEarningsMember 2019-04-01 2019-06-30 0001431959 us-gaap:RetainedEarningsMember 2019-07-01 2019-09-30 0001431959 us-gaap:RetainedEarningsMember 2019-03-31 0001431959 us-gaap:RetainedEarningsMember 2019-06-30 0001431959 2019-01-01 2019-03-31 0001431959 2019-04-01 2019-06-30 0001431959 2019-03-31 0001431959 2019-06-30 0001431959 TRCH:ExercisePriceOneMember 2019-09-30 0001431959 TRCH:ExercisePriceTwoMember 2019-09-30 0001431959 TRCH:ExercisePriceThreeMember 2019-09-30 0001431959 TRCH:ExercisePriceFourMember 2019-09-30 0001431959 TRCH:ExercisePriceFiveMember 2019-09-30 0001431959 TRCH:ExercisePriceSixMember 2019-09-30 xbrli:shares iso4217:USD iso4217:USD xbrli:shares xbrli:pure TORCHLIGHT ENERGY RESOURCES INC 10-Q 2019-09-30 false 0001431959 --12-31 Accelerated Filer Yes 2019 Q3 0.001 0.001 10000000 10000000 0.001 0.001 150000000 150000000 false true 43536996 38097881 0 6362 6829 4076 42316936 36565461 1213231 1521982 167245 60980 1781 146422 47592 294715 236158 179702 760455 840163 23019581 2198672 1205665 553370 54320 54320 45000 45000 951176 816176 514527 729806 23719099 20075105 23176 14353 74258 70116 0 0 19817897 18022776 70116 107266965 -89314305 74258 112878089 -93134450 71914 73127 109028125 110441403 -90992179 -91882813 18107860 18631717 -93134450 -89314305 112878089 107266965 43536996 38097881 0 0 0 0 74255375 70112376 74255375 70112376 42316936 36565461 -7671198 -6845602 49988134 43411063 37529864 31746477 12458270 11664586 63070504 56992857 false 8000000 0 12248893 0 0 11862080 0 6000000 74255375 676342 0 315404 1283658 260630 297479 -45962 -53619 358424 595622 117104 182294 619054 893101 71142 128675 71064 124830 596247 881364 78 3845 22807 11737 -3382308 -4208194 -876780 -853493 -474357 -139891 0 0 0 369439 0 0 -355050 -368074 -27355 -106136 -2552901 -3330790 -849425 -747357 -698467 -390683 -328895 -127965 52 745 0 261 4442 0 0 0 694077 391428 328895 128226 -3820145 -4301398 -1251637 -1035077 -3820145 -4301398 -1251637 -1035077 -1677874 -890634 -1251637 -1677874 -890634 0 0 0 0 -0.05 -0.06 -0.02 -0.01 72350083 67468291 73930596 70080854 -3820145 -4301398 0 -100561 355050 368074 163168 0 274217 159441 214939 0 497817 148882 854720 1215825 -178588 -1157671 489127 14434 82757 1718 -6362 0 106265 47482 -144641 -1158588 -247123 -138468 56456 53551 -6612843 -9319771 6564 0 6606279 9319771 0 250000 4010000 4304421 2516880 6049734 184843 200000 6711723 10304155 -79708 -173287 760455 840163 1051720 878433 0 0 1131819 1124174 1145546 0 1145546 1145546 225536 0 50000 0 314107 221024 0 59000 125000 0 70112376 74255375 71911115 73123917 92593 100000 120000 116400 92 100 120 99908 148900 116280 100000 149000 1592600 695000 858500 686800 1593 695 858 1272487 555305 685942 1274080 556000 13546 46796 107503 118546 13 48 108 14615 50492 118438 14628 50540 67570 186000 87000 67570 186000 87000 12500 111250 25000 12500 111250 25000 100000 100 124900 125000 202316 202 313906 314108 100000 68690 100 68 76900 107775 77000 107843 240455 0 240455 240455 45455 50000 45 49955 <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Torchlight Energy Resources, Inc. (&#8220;Company&#8221;) was incorporated in October 2007 under the laws of the State of Nevada as Pole Perfect Studios, Inc. (&#8220;PPS&#8221;). From its incorporation to November 2010, the company was primarily engaged in business start-up activities.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On November 23, 2010, we entered into and closed a Share Exchange Agreement (the &#8220;Exchange Agreement&#8221;) between the major shareholders of PPS and the shareholders of Torchlight Energy, Inc. (&#8220;TEI&#8221;). As a result of the transactions effected by the Exchange Agreement, at closing TEI became our wholly-owned subsidiary, and the business of TEI became our sole business. TEI was incorporated under the laws of the State of Nevada in June 2010. We are engaged in the acquisition, exploitation and/or development of oil and natural gas properties in the United States. We operate our business through our subsidiaries Torchlight Energy Inc., Torchlight Energy Operating, LLC, Hudspeth Oil Corporation, Torchlight Hazel LLC, and Warwink Properties LLC.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">At September 30, 2019, the Company had not yet achieved profitable operations. We had a net loss of $3,820,145 for the nine months ended September 30, 2019 and had accumulated losses of $93,134,450 since our inception. We expect to incur further losses in the development of our business. The Company had a working capital deficit as of September 30, 2019 of $21,806,350. These conditions raise substantial doubt about the Company&#8217;s ability to continue as a going concern.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company&#8217;s ability to continue as a going concern is dependent on 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&#8217;s plan to address the Company&#8217;s ability to continue as a going concern includes: (1) obtaining debt or equity funding from private placement or institutional sources; (2) obtain loans from financial institutions, where possible, or (3) participating in joint venture transactions with third parties. Although management believes that it will be able to obtain the necessary funding to allow the Company to remain a going concern through the methods discussed above, there can be no assurances that such methods will prove successful.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">These consolidated financial statements have been prepared assuming that the Company will continue as a going concern and therefore, the financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amount and classifications of liabilities that may result from the outcome of this uncertainty.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company maintains its accounts on the accrual method of accounting in accordance with accounting principles generally accepted in the United States of America. Accounting principles followed and the methods of applying those principles, which materially affect the determination of financial position, results of operations and cash flows are summarized below:</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Use of estimates</i></b> &#8211; The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and certain assumptions that affect the amounts reported in these consolidated financial statements and accompanying notes. Actual results could differ from these estimates.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Basis of presentation</i></b>&#8212;The financial statements are presented on a consolidated basis and include all of the accounts of Torchlight Energy Resources Inc. and its wholly owned subsidiaries, Torchlight Energy, Inc., Torchlight Energy Operating, LLC, Hudspeth Oil Corporation, Torchlight Hazel LLC, and Warwink Properties LLC. All significant intercompany balances and transactions have been eliminated.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">These interim financial statements are unaudited and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (&#8220;SEC&#8221;) regarding interim financial reporting. Certain disclosures have been condensed or omitted from these financial statements. Accordingly, they do not include all the information and notes required by accounting principles generally accepted in the United States of America (&#8220;GAAP&#8221;) for complete consolidated financial statements, and should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2018.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In the opinion of management, the accompanying unaudited financial condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, necessary to fairly present the financial position as of, and the results of operations for, all periods presented. In preparing the accompanying financial statements, management has made certain estimates and assumptions that affect reported amounts in the condensed financial statements and disclosures of contingencies. Actual results may differ from those estimates. The results for interim periods are not necessarily indicative of annual results. Certain reclassifications have been made to the prior period&#8217;s consolidated financial statements and related footnotes to conform them to the current period presentation.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>&#160;</i></b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Risks and uncertainties</i></b> &#8211; The Company&#8217;s operations are subject to significant risks and uncertainties, including financial, operational, technological, and other risks associated with operating an emerging business, including the potential risk of business failure.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Concentration of risks</i></b> &#8211; At times the Company&#8217;s cash balances are in excess of amounts guaranteed by the Federal Deposit Insurance Corporation. The Company&#8217;s cash is placed with a highly rated financial institution, and the Company regularly monitors the credit worthiness of the financial institutions with which it does business.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Fair value of financial instruments</i></b> &#8211; Financial instruments consist of cash, receivables, payables and promissory notes, if any. The estimated fair values of cash, receivables, and payables approximate the carrying amount due to the relatively short maturity of these instruments. The carrying amounts of any promissory notes approximate their fair value giving affect for the term of the note and the effective interest rates.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">For assets and liabilities that require re-measurement to fair value the Company categorizes them in a three-level fair value hierarchy as follows:</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <table cellspacing="0" cellpadding="0" style="width: 100%"> <tr style="vertical-align: top"> <td style="width: 0px">&#160;</td> <td style="width: 29px; font: 12pt Times New Roman, Times, Serif"><font style="font-size: 8pt">&#9679;</font></td> <td style="font: 12pt Times New Roman, Times, Serif; text-align: justify"><font style="font-size: 8pt">Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.</font></td></tr> </table> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <table cellspacing="0" cellpadding="0" style="width: 100%"> <tr style="vertical-align: top"> <td style="width: 0px">&#160;</td> <td style="width: 29px; font: 12pt Times New Roman, Times, Serif"><font style="font-size: 8pt">&#9679;</font></td> <td style="font: 12pt Times New Roman, Times, Serif; text-align: justify"><font style="font-size: 8pt">Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration.</font></td></tr> </table> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <table cellspacing="0" cellpadding="0" style="width: 100%"> <tr style="vertical-align: top"> <td style="width: 0px">&#160;</td> <td style="width: 29px; font: 12pt Times New Roman, Times, Serif"><font style="font-size: 8pt">&#9679;</font></td> <td style="font: 12pt Times New Roman, Times, Serif; text-align: justify"><font style="font-size: 8pt">Level 3 inputs are unobservable inputs based on management&#8217;s own assumptions used to measure assets and liabilities at fair value.</font></td></tr> </table> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">A financial asset or liability&#8217;s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Cash and cash equivalents -</i></b> Cash and cash equivalents include certain investments in highly liquid instruments with original maturities of three months or less.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Accounts receivable</i></b> &#8211; Accounts receivable consist of uncollateralized oil and natural gas revenues due under normal trade terms, as well as amounts due from working interest owners of oil and gas properties for their share of expenses paid on their behalf by the Company. Management reviews receivables periodically and reduces the carrying amount by a valuation allowance that reflects management&#8217;s best estimate of the amount that may not be collectible. As of September 30, 2019 and December 31, 2018, no valuation allowance was considered necessary.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Oil and gas properties</i></b> &#8211; The Company uses the full cost method of accounting for exploration and development activities as defined by the Securities and Exchange Commission (&#8220;SEC&#8221;). Under this method of accounting, the costs of unsuccessful, as well as successful, exploration and development activities are capitalized as properties and equipment. This includes any internal costs that are directly related to property acquisition, exploration and development activities but does not include any costs related to production, general corporate overhead or similar activities. Gain or loss on the sale or other disposition of oil and gas properties is not recognized, unless the gain or loss would significantly alter the relationship between capitalized costs and proved reserves.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Oil and gas properties include costs that are excluded from costs being depleted or amortized. Oil and natural gas property costs excluded represent investments in unevaluated properties and include non-producing leasehold, geological, and geophysical costs associated with leasehold or drilling interests and exploration drilling costs. The Company allocates a portion of its acquisition costs to unevaluated properties based on relative value. Costs are transferred to the full cost pool as the properties are evaluated over the life of the reservoir. Unevaluated properties are reviewed for impairment at least quarterly and are determined through an evaluation considering, among other factors, seismic data, requirements to relinquish acreage, drilling results, remaining time in the commitment period, remaining capital plan, and political, economic, and market conditions.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Gains and losses on the sale of oil and gas properties are not generally reflected in income unless the gain or loss would significantly alter the relationship between capitalized costs and proved reserves. Sales of less than 100% of the Company&#8217;s interest in the oil and gas property are treated as a reduction of the capital cost of the field, with no gain or loss recognized, as long as doing so does not significantly affect the unit-of-production depletion rate. Costs of retired equipment, net of salvage value, are usually charged to accumulated depreciation.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>&#160;</i></b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Capitalized interest &#8211;</i></b> The Company capitalizes interest on unevaluated properties during the periods in which they are excluded from costs being depleted or amortized. During the nine months ended September 30, 2019 and 2018, the Company capitalized $2,084,026 and $1,382,820, respectively, of interest on unevaluated properties.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Depreciation, depletion, and amortization</i></b> &#8211; The depreciable base for oil and natural gas properties includes the sum of all capitalized costs net of accumulated depreciation, depletion, and amortization (&#8220;DD&#38;A&#8221;), estimated future development costs and asset retirement costs not included in oil and natural gas properties, less costs excluded from amortization. The depreciable base of oil and natural gas properties is amortized on a unit-of-production method.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Ceiling test</i></b> &#8211; Future production volumes from oil and gas properties are a significant factor in determining the full cost ceiling limitation of capitalized costs. Under the full cost method of accounting, the Company is required to periodically perform a &#8220;ceiling test&#8221; that determines a limit on the book value of oil and gas properties. If the net capitalized cost of proved oil and gas properties, net of related deferred income taxes, plus the cost of unproved oil and gas properties, exceeds the present value of estimated future net cash flows discounted at 10 percent, net of related realizable tax affects, plus the cost of unproved oil and gas properties, the excess is charged to expense and reflected as additional accumulated DD&#38;A. The Company recorded an impairment expense of $474,357 and $139,891 for the nine months ended September 30, 2019 and 2018, respectively, to recognize the adjustment required by the ceiling test.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The ceiling test calculation uses a commodity price assumption which is based on the unweighted arithmetic average of the price on the first day of each month for each month within the prior 12 month period and excludes future cash outflows related to estimated abandonment costs.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The determination of oil and gas reserves is a subjective process, and the accuracy of any reserve estimate depends on the quality of available data and the application of engineering and geological interpretation and judgment. Estimates of economically recoverable reserves and future net cash flows depend on a number of variable factors and assumptions that are difficult to predict and may vary considerably from actual results. In particular, reserve estimates for wells with limited or no production history are less reliable than those based on actual production. Subsequent re-evaluation of reserves and cost estimates related to future development of proved oil and gas reserves could result in significant revisions to proved reserves. Other issues, such as changes in regulatory requirements, technological advances, and other factors which are difficult to predict could also affect estimates of proved reserves in the future.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Asset retirement obligations</i></b> &#8211;The fair value of a liability for an asset&#8217;s retirement obligation (&#8220;ARO&#8221;) is recognized in the period in which it is incurred if a reasonable estimate of fair value can be made, with the corresponding charge capitalized as part of the carrying amount of the related long-lived asset. The liability is accreted to its then-present value each subsequent period, and the capitalized cost is depleted over the useful life of the related asset. Abandonment costs incurred are recorded as a reduction of the ARO liability.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Inherent in the fair value calculation of an ARO are numerous assumptions and judgments including the ultimate settlement amounts, inflation factors, credit adjusted discount rates, timing of settlement, and changes in the legal, regulatory, environmental, and political environments. To the extent future revisions to these assumptions impact the fair value of the existing ARO liability, a corresponding adjustment is made to the oil and gas property balance. Settlements greater than or less than amounts accrued as ARO are recorded as a gain or loss upon settlement.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Income taxes</i> -</b> Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is established to reduce deferred tax assets if it is more likely than not that the related tax benefits will not be realized.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Authoritative guidance for uncertainty in income taxes requires that the Company recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an examination. Management has reviewed the Company&#8217;s tax positions and determined there were no uncertain tax positions requiring recognition in the consolidated financial statements. Company tax returns remain subject to Federal and State tax examinations. Generally, the applicable statutes of limitation are three to four years from their respective filings.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Estimated interest and penalties related to potential underpayment on any unrecognized tax benefits are classified as a component of tax expense in the statement of operation. The Company has not recorded any interest or penalties associated with unrecognized tax benefits for any periods covered by these financial statements.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Share-based compensation</i></b> &#8211; Compensation cost for equity awards is based on the fair value of the equity instrument on the date of grant and is recognized over the period during which an employee is required to provide service in exchange for the award.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company accounts for stock option awards using the calculated value method. The expected term was derived using the simplified method provided in Securities and Exchange Commission release Staff Accounting Bulletin No. 110, which averages an awards weighted average vesting period and contractual term for &#8220;plain vanilla&#8221; share options.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company accounts for any forfeitures of options when they occur. Previously recognized compensation cost for an award is reversed in the period that the award is forfeited.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company also issues equity awards to non-employees. The fair value of these option awards is estimated when the award recipient completes the contracted professional services. The Company recognizes expense for the estimated total value of the awards during the period from their issuance until performance completion.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In June 2018, the FASB issued ASU 2018-07, <i>Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting</i>, which simplifies the accounting for share-based payments granted to nonemployees for goods and services. Under this ASU, the guidance on such payments to nonemployees is aligned with the requirements for share-based payments granted to employees. ASU 2018-07 was effective for fiscal years beginning after December 15, 2018, however the Company opted for early adoption effective July 1, 2018. In evaluating early adoption the Company determined that the change did not have a material impact on its consolidated financial statements.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company values warrant and option awards using the Black-Scholes option pricing model.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Revenue recognition</i></b> &#8211; On January 1, 2018, the Company adopted ASC 606, Revenue from Contracts with Customers, and the related guidance in ASC 340-40 (the new revenue standard), and related guidance on gains and losses on derecognition of nonfinancial assets ASC 610-20, using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Under the modified retrospective method, the Company recognizes the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of retained earnings; however, no significant adjustment was required as a result of adopting the new revenue standard. Results for reporting periods beginning after January 1, 2018 are presented under the new revenue standard. The impact of the adoption of the new revenue standard was immaterial to the Company&#8217;s net loss.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company&#8217;s revenue is typically generated from contracts to sell natural gas, crude oil or NGLs produced from interests in oil and gas properties owned by the Company. Contracts for the sale of natural gas and crude oil are evidenced by (1) base contracts for the sale and purchase of natural gas or crude oil, which document the general terms and conditions for the sale, and (2) transaction confirmations, which document the terms of each specific sale. The transaction confirmations specify a delivery point which represents the point at which control of the product is transferred to the customer. These contracts frequently meet the definition of a derivative under ASC 815, and are accounted for as derivatives unless the Company elects to treat them as normal sales as permitted under that guidance. The Company elects to treat contracts to sell oil and gas production as normal sales, which are then accounted for as contracts with customers. The Company has determined that these contracts represent multiple performance obligations which are satisfied when control of the commodity transfers to the customer, typically through the delivery of the specified commodity to a designated delivery point.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Revenues from oil and gas sales are detailed as follows:</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="white-space: nowrap; padding-left: 8.65pt; text-align: center; text-indent: -8.65pt">&#160;</td> <td>&#160;</td> <td colspan="2" style="white-space: nowrap; text-align: center"><font style="font-size: 8pt">Three Months</font></td> <td>&#160;</td> <td>&#160;</td> <td colspan="2" style="white-space: nowrap; text-align: center"><font style="font-size: 8pt">Three Months</font></td> <td>&#160;</td> <td>&#160;</td> <td colspan="2" style="white-space: nowrap; text-align: center"><font style="font-size: 8pt">Nine Months</font></td> <td>&#160;</td> <td>&#160;</td> <td colspan="2" style="white-space: nowrap; text-align: center"><font style="font-size: 8pt">Nine Months</font></td> <td>&#160;</td></tr> <tr style="vertical-align: bottom"> <td style="white-space: nowrap; padding-left: 8.65pt; text-align: center; text-indent: -8.65pt">&#160;</td> <td>&#160;</td> <td colspan="2" style="white-space: nowrap; text-align: center"><font style="font-size: 8pt">Ended</font></td> <td>&#160;</td> <td>&#160;</td> <td colspan="2" style="white-space: nowrap; text-align: center"><font style="font-size: 8pt">Ended</font></td> <td>&#160;</td> <td>&#160;</td> <td colspan="2" style="white-space: nowrap; text-align: center"><font style="font-size: 8pt">Ended</font></td> <td>&#160;</td> <td>&#160;</td> <td colspan="2" style="white-space: nowrap; text-align: center"><font style="font-size: 8pt">Ended</font></td> <td>&#160;</td></tr> <tr style="vertical-align: bottom"> <td style="white-space: nowrap; padding-left: 8.65pt; text-align: center; text-indent: -8.65pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt">September 30, 2019</font></td> <td style="padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt">September 30, 2018</font></td> <td style="padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt">September 30, 2019</font></td> <td style="padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt">September 30, 2018</font></td> <td style="padding-bottom: 1pt">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 8.65pt; text-indent: -8.65pt"><font style="font-size: 8pt">Revenues</font></td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 8.65pt; text-indent: -8.65pt">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 32%; padding-left: 17.3pt; text-indent: -8.65pt"><font style="font-size: 8pt">Oil sales</font></td> <td style="width: 4%">&#160;</td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 11%; text-align: right"><font style="font-size: 8pt">71,064</font></td> <td style="white-space: nowrap; width: 1%">&#160;</td> <td style="width: 4%">&#160;</td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 11%; text-align: right"><font style="font-size: 8pt">124,830</font></td> <td style="white-space: nowrap; width: 1%">&#160;</td> <td style="width: 4%">&#160;</td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 11%; text-align: right"><font style="font-size: 8pt">596,247</font></td> <td style="white-space: nowrap; width: 1%">&#160;</td> <td style="width: 4%">&#160;</td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 11%; text-align: right"><font style="font-size: 8pt">881,364</font></td> <td style="white-space: nowrap; width: 1%">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 8.65pt; text-indent: -8.65pt">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 17.3pt; text-indent: -8.65pt"><font style="font-size: 8pt">Gas sales</font></td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">78</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">3,845</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">22,807</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">11,737</font></td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 1pt; padding-left: 8.65pt; text-indent: -8.65pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: black 1pt solid">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right">&#160;</td> <td style="white-space: nowrap; padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: black 1pt solid">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right">&#160;</td> <td style="white-space: nowrap; padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: black 1pt solid">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right">&#160;</td> <td style="white-space: nowrap; padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: black 1pt solid">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right">&#160;</td> <td style="white-space: nowrap; padding-bottom: 1pt">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-bottom: 2.5pt; padding-left: 8.65pt; text-indent: -8.65pt"><font style="font-size: 8pt">Total</font></td> <td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: black 2.25pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 8pt">71,142</font></td> <td style="white-space: nowrap; padding-bottom: 2.5pt">&#160;</td> <td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: black 2.25pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 8pt">128,675</font></td> <td style="white-space: nowrap; padding-bottom: 2.5pt">&#160;</td> <td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: black 2.25pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 8pt">619,054</font></td> <td style="white-space: nowrap; padding-bottom: 2.5pt">&#160;</td> <td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: black 2.25pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 8pt">893,101</font></td> <td style="white-space: nowrap; padding-bottom: 2.5pt">&#160;</td></tr> </table> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Revenue is measured based on consideration specified in the contract with the customer, and excludes any amounts collected on behalf of third parties. The Company recognizes revenue in the amount that reflects the consideration it expects to be entitled to in exchange for transferring control of those goods to the customer. Amounts allocated in the Company&#8217;s price contracts are based on the standalone selling price of those products in the context of long-term contracts. Payment is generally received one or two months after the sale has occurred.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Gain or loss on derivative instruments is outside the scope of ASC 606 and is not considered revenue from contracts with customers subject to ASC 606. The Company may in the future use financial or physical contracts accounted for as derivatives as economic hedges to manage price risk associated with normal sales, or in limited cases may use them for contracts the Company intends to physically settle but do not meet all of the criteria to be treated as normal sales.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>Producer Gas Imbalances.</i> The Company applies the sales method of accounting for natural gas revenue. Under this method, revenues are recognized based on the actual volume of natural gas sold to purchasers.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Basic and diluted earnings (loss) per share</i></b><i> &#8211;</i> Basic earnings (loss) per common share is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per common share is computed in the same way as basic earnings (loss) per common share except that the denominator is increased to include the number of additional common shares that would be outstanding if all potential common shares had been issued and if the additional common shares were dilutive. The calculation of diluted earnings per share excludes 10,705,072 shares issuable upon the exercise of outstanding warrants and options because their effect would be anti-dilutive.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Environmental laws and regulations</i></b> &#8211; The Company is subject to extensive federal, state, and local environmental laws and regulations. Environmental expenditures are expensed or capitalized depending on their future economic benefit. The Company believes that it is in compliance with existing laws and regulations. The Company accrued no liability as of September 30, 2019 and December 31, 2018.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Recent adopted accounting pronouncements</i></b> &#8211; In February 2016 the FASB, issued ASU, 2016-02, Leases. The ASU requires companies to recognize on the balance sheet the assets and liabilities for the rights and obligations created by leased assets. ASU 2016-02 was effective for the Company in the first quarter of 2019. The Company adopted the change which did not have a material impact on its consolidated financial statements.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Other recently issued or adopted accounting pronouncements are not expected to have, or did not have, a material impact on the Company&#8217;s financial position or results from operations.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Subsequent events &#8211;</i></b> The Company evaluated subsequent events through November 8, 2019, the date of issuance of these financial statements. Subsequent events, if any, are disclosed in Note 11.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The following table presents the capitalized costs for oil &#38; gas properties of the Company as of September 30, 2019 and December 31, 2018:</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 60%; padding-left: 8.65pt; text-indent: -8.65pt"><font style="font-size: 8pt">Evaluated costs subject to amortization</font></td> <td style="width: 4%">&#160;</td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 14%; text-align: right"><font style="font-size: 8pt">12,458,270</font></td> <td style="white-space: nowrap; width: 1%">&#160;</td> <td style="width: 4%">&#160;</td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 14%; text-align: right"><font style="font-size: 8pt">11,664,586</font></td> <td style="white-space: nowrap; width: 1%">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 1pt; padding-left: 8.65pt; text-indent: -8.65pt"><font style="font-size: 8pt">Unevaluated costs</font></td> <td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: black 1pt solid">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">37,529,864</font></td> <td style="white-space: nowrap; padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: black 1pt solid">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">31,746,477</font></td> <td style="white-space: nowrap; padding-bottom: 1pt">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 25.95pt; text-indent: -8.65pt"><font style="font-size: 8pt">Total capitalized costs</font></td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">49,988,134</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">43,411,063</font></td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 1pt; padding-left: 8.65pt; text-indent: -8.65pt"><font style="font-size: 8pt">Less accumulated depreciation, depletion and amortization</font></td> <td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: black 1pt solid">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(7,671,198</font></td> <td style="white-space: nowrap; padding-bottom: 1pt"><font style="font-size: 8pt">)</font></td> <td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: black 1pt solid">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(6,845,602</font></td> <td style="white-space: nowrap; padding-bottom: 1pt"><font style="font-size: 8pt">)</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-bottom: 2.5pt; padding-left: 25.95pt; text-indent: -8.65pt"><font style="font-size: 8pt">Total oil and gas properties</font></td> <td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: black 2.25pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 8pt">42,316,936</font></td> <td style="white-space: nowrap; padding-bottom: 2.5pt">&#160;</td> <td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: black 2.25pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 8pt">36,565,461</font></td> <td style="white-space: nowrap; padding-bottom: 2.5pt">&#160;</td></tr> </table> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Unevaluated costs as of September 30, 2019 include cumulative costs on developing projects including the Orogrande, Hazel, and Winkler projects in West Texas.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company identified impairment of $2,300,626 in 2017 related to its unevaluated properties. The Company adjusted the separation of evaluated versus unevaluated costs within its full cost pool to recognize the value impairment related to the expiration of unevaluated leases in 2017 in the amount of $2,300,626. The impact of this change was to increase the basis for calculation of future period&#8217;s depletion, depreciation and amortization to include $2,300,626 of cost which will effectively recognize the impairment on the consolidated statement of operations over future periods. The $2,300,626 has also become an evaluated cost for purposes of ceiling tests and which may further recognize the impairment expense recognized in future periods. The impact of this cost reclassification at March 31, 2018 was a recognized impairment expense of $139,891. Impairment expense was recognized for the nine months ended September 30, 2019 of $474,357 as required by the ceiling test calculation.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Due to the volatility of commodity prices, should oil and natural gas prices decline in the future, it is possible that a further write-down could occur. Proved reserves are estimated quantities of crude oil, natural gas, and natural gas liquids, which geological and engineering data demonstrate with reasonable certainty to be recoverable from known reservoirs under existing economic and operating conditions. The independent engineering estimates include only those amounts considered to be proved reserves and do not include additional amounts which may result from new discoveries in the future, or from application of secondary and tertiary recovery processes where facilities are not in place or for which transportation and/or marketing contracts are not in place. Estimated reserves to be developed through secondary or tertiary recovery processes are classified as unevaluated properties.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b>Current Projects</b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">As of September 30, 2019, we had interests in four oil and gas projects: the Orogrande Project in Hudspeth County, Texas, the Hazel Project in Sterling, Tom Green, and Irion Counties, Texas, the Winkler Project in Winkler County, Texas and the Hunton wells in partnership with Husky Ventures in central Oklahoma.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><u>Orogrande Project, West Texas</u></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On August 7, 2014, we entered into a Purchase Agreement with Hudspeth Oil Corporation (&#8220;Hudspeth&#8221;), McCabe Petroleum Corporation (&#8220;MPC&#8221;), and Gregory McCabe, our Chairman. Mr. McCabe was the sole owner of both Hudspeth and MPC. Under the terms and conditions of the Purchase Agreement, at closing, we purchased 100% of the capital stock of Hudspeth which holds certain oil and gas assets, including a 100% working interest in approximately 172,000 mostly contiguous acres in the Orogrande Basin in West Texas. As of December 31, 2017, leases covering approximately 134,000 acres remain in effect. As consideration, at closing we issued 868,750 restricted shares of our common stock to Mr. McCabe and paid a total of $100,000 in geologic origination fees to third parties. Additionally, Mr. McCabe has, at his option, a 10% working interest back-in after payout and a reversionary interest if drilling obligations are not met, all under the terms and conditions of a participation and development agreement among Hudspeth, MPC and Mr. McCabe. Mr. McCabe also holds a 4.5% overriding royalty interest in the Orogrande acreage, which he obtained prior to, and was not a part of, the August 2014 transaction. We believe all drilling obligations through September 30, 2019 have been met.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On September 23, 2015, Hudspeth entered into a Farmout Agreement with Pandora Energy, LP (&#8220;Pandora&#8221;), Founders Oil &#38; Gas, LLC (&#8220;Founders&#8221;), and for the limited purposes set forth therein, MPC and Mr. McCabe, for the entire Orogrande Project in Hudspeth County, Texas. The Farmout Agreement provided that Hudspeth and Pandora (collectively referred to as &#8220;Farmor&#8221;) would assign to Founders an undivided 50% of the leasehold interest and a 37.5% net revenue interest in the oil and gas leases and mineral interests in the Orogrande Project, which interests, except for any interests retained by Founders, would be reassigned to Farmor by Founders if Founders did not spend a minimum of $45.0 million on actual drilling operations on the Orogrande Project by September 23, 2017. Under a joint operating agreement also entered into on September 23, 2015, Founders was designated as operator of the leases.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On March 22, 2017, Founders, Founders Oil &#38; Gas Operating, LLC, Founders&#8217; operating partner, Hudspeth and Pandora signed a Drilling and Development Unit Agreement (the &#8220;DDU Agreement&#8221;), with the Commissioner of the General Land Office, on behalf of the State of Texas, and as approved by the Board for Lease of University Lands, or University Lands, on the Orogrande Project. The DDU Agreement has an effective date of January 1, 2017 and required a payment from Founders, Hudspeth and Pandora, collectively, of $335,323 as the initial consideration fee. The initial consideration fee was paid by Founders in April 2017 and was to be deducted from the required spud fee payable to us at commencement of the next well drilled.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The DDU Agreement allows for all 192 existing leases covering approximately 134,000 net acres leased from University Lands to be combined into one drilling and development unit for development purposes. The term of the DDU Agreement expires on December 31, 2023, and the time to drill on the drilling and development unit continues through December 2023. The DDU Agreement also grants the right to extend the DDU Agreement through December 2028 if compliance with the DDU Agreement is met and the extension fee associated with the additional time is paid. Our drilling obligations began with one well to be spudded and drilled on or before September 1, 2017, and increased to two wells in year 2018, three wells in year 2019, four wells in year 2020 and five wells per year in years 2021, 2022 and 2023. The drilling obligations are minimum yearly requirements and may be exceeded if acceleration is desired. The DDU Agreement replaces all prior agreements, and will govern future drilling obligations on the drilling and development unit if the DDU Agreement is extended. The Company drilled three wells during fourth quarter, 2018.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">There are two vertical tests wells in the Orogrande Project, the Orogrande Rich A-11 test well and the University Founders B-19 #1 test well. The Orogrande Rich A-11 test well was spudded on March 31, 2015, drilled in the second quarter of 2015 and was evaluated and numerous scientific tests were performed to provide key data for the field development thesis. We believe that future utility of this well may be conversion to a salt water disposal well in the course of further development of the Orogrande acreage. The University Founders B-19 #1 was spudded on April 24, 2016 and drilled in the second quarter of 2016. The well successfully pumped down completion fluid in the third quarter of 2016 and indications of hydrocarbons were seen at the surface on this second Orogrande Project test well. We believe that future utility of this well may be conversion to a salt water disposal well in the course of further development of the Orogrande acreage.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">During the fourth quarter of 2017, we took back operational control from Founders on the Orogrande Project. We were joined by Wolfbone Investments, LLC, (&#8220;Wolfbone&#8221;), a company owned by Mr. McCabe. We, along with Hudspeth, Wolfbone and, for the limited purposes set forth therein, Pandora, entered into an Assignment of Farmout Agreement with Founders, (the &#8220;Assignment of Farmout Agreement&#8221;), pursuant to which we and Wolfbone will share the remaining commitments under the Farmout Agreement. All original provisions of our carried interest were to remain in place including reimbursement to us on each wellbore. Founders was to remain a 9.5% working interest owner in the Orogrande Project for the $9.5 million it had spent as of the date of the Assignment of Farmout Agreement, and such interests were to be carried until $40.5 million is spent by Wolfbone and us, with each contributing 50% of such capital spend, under the existing agreement. Our working interest in the Orogrande Project thereby increased by 20.25% to a total of 67.75% and Wolfbone then owned 20.25%.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Founders was to operate a newly drilled horizontal well called the University Founders #A25 (at 5,540&#8217; depth in a 1,000&#8217; lateral) with supervision from us and our partners. The University Founders #A25 was spudded on November 28, 2017. During the month of April, 2018, we, MPC and Mr. McCabe were to assume full operational control including managing drilling plans and timing for all future wells drilled in the project.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On July 25, 2018, we and Hudspeth entered into a Settlement &#38; Purchase Agreement (the &#8220;Settlement Agreement&#8221;) with Founders (and Founders Oil &#38; Gas Operating, LLC), Wolfbone and MPC, which agreement provides for Hudspeth and Wolfbone to each immediately pay $625,000 and for Hudspeth or the Company and Wolfbone or MPC to each pay another $625,000 on July 20, 2019, as consideration for Founders assigning all of its working interest in the oil and gas leases of the Orogrande Project to Hudspeth and Wolfbone equally. The final payments were made on July 18, 2019. The assignments to Hudspeth and Wolfbone were made in July when the first payments were made. Future well capital spending obligations will require the same 50% contribution from Hudspeth and 50% from Wolfbone until such time as the $40.5 million to be spent on the project (as per our Assignment of Farmout Agreement with Founders) is completed. The Company estimates that there is still approximately $16 million remaining to be spent on the project until such time as the capital expenditures revert back to the percentages of the working interest owners.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">After the assignment by Founders (for which Hudspeth&#8217;s total consideration was $1,250,000), Hudspeth&#8217;s working interest increased to 72.5%.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Orogrande Project ownership as of September 30, 2019 is detailed as follows:</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="white-space: nowrap; padding-left: 8.65pt; text-align: center; text-indent: -8.65pt">&#160;</td> <td>&#160;</td> <td colspan="2" style="white-space: nowrap; text-align: center"><font style="font-size: 8pt">Revenue</font></td> <td>&#160;</td> <td>&#160;</td> <td colspan="2" style="white-space: nowrap; text-align: center"><font style="font-size: 8pt">Working</font></td> <td>&#160;</td></tr> <tr style="vertical-align: bottom"> <td style="white-space: nowrap; padding-left: 8.65pt; text-align: center; text-indent: -8.65pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt">Interest</font></td> <td style="padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt">Interest</font></td> <td style="padding-bottom: 1pt">&#160;</td></tr> <tr style="vertical-align: bottom"> <td style="white-space: nowrap; padding-left: 8.65pt; text-align: center; text-indent: -8.65pt">&#160;</td> <td>&#160;</td> <td colspan="2" style="white-space: nowrap; text-align: center">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td colspan="2" style="white-space: nowrap; text-align: center">&#160;</td> <td>&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 60%; padding-left: 8.65pt; text-indent: -8.65pt"><font style="font-size: 8pt">University Lands - Mineral Owner</font></td> <td style="width: 4%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 14%; text-align: right"><font style="font-size: 8pt">20.000</font></td> <td style="white-space: nowrap; width: 1%"><font style="font-size: 8pt">%</font></td> <td style="width: 4%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 14%; text-align: center"><font style="font-size: 8pt">n/a</font></td> <td style="white-space: nowrap; width: 1%">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 8.65pt; text-indent: -8.65pt">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 8.65pt; text-indent: -8.65pt"><font style="font-size: 8pt">ORRI - Magdalena Royalties, LLC, an entity controlled by Gregory McCabe, Chairman</font></td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">4.500</font></td> <td style="white-space: nowrap"><font style="font-size: 8pt">%</font></td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: center"><font style="font-size: 8pt">n/a</font></td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 8.65pt; text-indent: -8.65pt">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 8.65pt; text-indent: -8.65pt"><font style="font-size: 8pt">ORRI - Unrelated Party</font></td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">0.500</font></td> <td style="white-space: nowrap"><font style="font-size: 8pt">%</font></td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: center"><font style="font-size: 8pt">n/a</font></td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 8.65pt; text-indent: -8.65pt">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 8.65pt; text-indent: -8.65pt">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 8.65pt; text-indent: -8.65pt"><font style="font-size: 8pt">Hudspeth Oil Corporation, a subsidiary of Torchlight Energy Resources Inc.</font></td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">54.375</font></td> <td style="white-space: nowrap"><font style="font-size: 8pt">%</font></td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">72.500</font></td> <td style="white-space: nowrap"><font style="font-size: 8pt">%</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 8.65pt; text-indent: -8.65pt">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 8.65pt; text-indent: -8.65pt"><font style="font-size: 8pt">Wolfbone Investments LLC, an entity controlled by Gregory McCabe, Chairman</font></td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">18.750</font></td> <td style="white-space: nowrap"><font style="font-size: 8pt">%</font></td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">25.000</font></td> <td style="white-space: nowrap"><font style="font-size: 8pt">%</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 8.65pt; text-indent: -8.65pt">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 1pt; padding-left: 8.65pt; text-indent: -8.65pt"><font style="font-size: 8pt">Unrelated Party</font></td> <td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: black 1pt solid">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">1.875</font></td> <td style="white-space: nowrap; padding-bottom: 1pt"><font style="font-size: 8pt">%</font></td> <td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: black 1pt solid">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">2.500</font></td> <td style="white-space: nowrap; padding-bottom: 1pt"><font style="font-size: 8pt">%</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-bottom: 2.5pt; padding-left: 8.65pt; text-indent: -8.65pt">&#160;</td> <td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: black 2.25pt double">&#160;</td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 8pt">100.000</font></td> <td style="white-space: nowrap; padding-bottom: 2.5pt"><font style="font-size: 8pt">%</font></td> <td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: black 2.25pt double">&#160;</td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 8pt">100.000</font></td> <td style="white-space: nowrap; padding-bottom: 2.5pt"><font style="font-size: 8pt">%</font></td></tr> </table> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Additionally, the Settlement Agreement provides that the Founders parties will assign to the Company, Hudspeth, Wolfbone and MPC their claims against certain vendors for damages, if any, against such vendors for negligent services or defective equipment. Further, the Settlement Agreement has a mutual release and waivers among the parties.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Rich Masterson, our consulting geologist, is credited with originating the Orogrande Project in Hudspeth County in the Orogrande Basin. With Mr. Masterson&#8217;s assistance and based on all the science we have gathered to date, we have identified multiple unconventional and conventional target pay zones with depths between 3,000&#8217; and 8,000&#8217; with primary pay, described as the Penn formation, located at depths of 5,300 to 5,900&#8217;. Based on our geologic analysis to date, this basin has stacked pay with zones including the Wolfcamp, Penn, Barnett, Woodford, Atoka and more. These potential zones are prospective for oil and gas with a GOR of 1100 expected based on our gathered scientific information and analysis from independent third parties.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">During the fourth quarter, 2018, the Company drilled three additional test wells in the Orogrande in order to stay in compliance with University Lands D&#38;D Unit Agreement, as well as, to test for potential shallow pay zones and deeper pay zones that may be present on structural plays. Development of these wells continued into the nine months ended September 30, 2019 to further capture and document the scientific base in support of demonstrating the production potential of the property. The Company is currently marketing the project for an outright sale or farm in partner. This marketing process has been long and arduous as the overall market is quite soft. In addition, due to the size and scope of the project, we are dealing with very large companies that have multitudes of people reviewing our material, which in itself is extensive. During the marketing process, the Company and Wolfbone will endeavor to complete the University Maverick A24 #1 as a potential producer in the Atoka formation. In addition, should a farm out partner or sale not occur, the Company and Wolfbone will proceed to drill two additional wells in the play prior to year-end, in order to fulfill the obligations under the DDU Agreement. We are currently drilling and preparing to test the two obligation wells described above. The first well, the A35 1H, has been drilled and cased in the Penn Section. This first well is a short horizontal in the proven Penn Section where we will be looking to break through the dual porosity system in place with a larger frac designed to open up the oil bearing pores. We are also drilling ahead on the A25 #2 which is being drilled on an identified structure. This well is designed to test both conventional zones and potentially the unconventional Barnett and Woodford Zones ultimately drilling down to the cellar around 8000 feet.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><u>Hazel Project in the Midland Basin in West Texas</u></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Effective April 4, 2016, TEI acquired from MPC a 66.66% working interest in approximately 12,000 acres in the Midland Basin in exchange for 1,500,000 warrants to purchase shares of our common stock with an exercise price of $1.00 for five years and a back-in after payout of a 25% working interest to MPC.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Initial development of the first well on the property, the Flying B Ranch #1, began July 9, 2016 and development continued through September 30, 2016. This well is classified as a test well in the development pursuit of the Hazel Project. We believe that this wellbore will be utilized as a salt water disposal well in support of future development.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In October 2016, the holders of all of our then-outstanding shares of Series C Preferred Stock (which were issued in July 2016) elected to convert into a total 33.33% working interest in our Hazel Project, reducing our ownership from 66.66% to a 33.33% working interest. As of December 31, 2018, no shares of our Series C Preferred Stock were outstanding.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On December 27, 2016, drilling activities commenced on the second Hazel Project well, the Flying B Ranch #2. The well is a vertical test similar to our first Hazel Project well, the Flying B Ranch #1. Recompletion in an alternative geological formation for this well was performed during the three months ended September 30, 2017; however, we believe that the results were uneconomic for continuing production. We believe that this wellbore will be utilized as a salt water disposal well in support of future development.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">We commenced planning to drill the Flying B Ranch #3 horizontal well in the Hazel Project in June 2017 in compliance with the continuous drilling obligation. The well was spudded on June 10, 2017. The well was completed and began production in late September 2017. As of September 30, 2019 the well is shut in due to high lease operating expenses as a result of lack of three phase electricity to the property which forced the use of diesel generation equipment to power the production facilities.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><i>Acquisition of Additional Interests in Hazel Project</i></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On January 30, 2017, we and our then wholly-owned subsidiary, Torchlight Acquisition Corporation, a Texas corporation (&#8220;TAC&#8221;), entered into and closed an Agreement and Plan of Reorganization and a Plan of Merger with Line Drive Energy, LLC, a Texas limited liability company (&#8220;Line Drive&#8221;), and Mr. McCabe, under which agreements TAC merged with and into Line Drive and the separate existence of TAC ceased, with Line Drive being the surviving entity and becoming our wholly-owned subsidiary. Line Drive, which was wholly-owned by Mr. McCabe, owned certain assets and securities, including approximately 40.66% of 12,000 gross acres, 9,600 net acres, in the Hazel Project and 521,739 warrants to purchase shares of our common stock (which warrants had been assigned by Mr. McCabe to Line Drive). Upon the closing of the merger, all of the issued and outstanding shares of common stock of TAC automatically converted into a membership interest in Line Drive, constituting all of the issued and outstanding membership interests in Line Drive immediately following the closing of the merger, the membership interest in Line Drive held by Mr. McCabe and outstanding immediately prior to the closing of the merger ceased to exist, and we issued Mr. McCabe 3,301,739 restricted shares of our common stock as consideration therefor. Immediately after closing, the 521,739 warrants held by Line Drive were cancelled, which warrants had an exercise price of $1.40 per share and an expiration date of June 9, 2020. A Certificate of Merger for the merger transaction was filed with the Secretary of State of Texas on January 31, 2017. Subsequent to the closing the name of Line Drive Energy, LLC was changed to Torchlight Hazel, LLC. We are required to drill one well every six months to hold the entire 12,000 acre block for eighteen months, and thereafter two wells every six months starting June 2018. During the nine months ended September 30, 2019 modifications were made to mineral owner leases as described below.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Also on January 30, 2017, TEI entered into and closed a Purchase and Sale Agreement with Wolfbone. Under the agreement, TEI acquired certain of Wolfbone&#8217;s Hazel Project assets, including its interest in the Flying B Ranch #1 well and the 40 acre unit surrounding the well, for consideration of $415,000, and additionally, Wolfbone caused to be cancelled a total of 2,780,000 warrants to purchase shares of our common stock, including 1,500,000 warrants held by MPC, and 1,280,000 warrants held by Green Hill Minerals, an entity owned by Mr. McCabe&#8217;s son, which warrant cancellations were effected through certain Warrant Cancellation Agreements. The 1,500,000 warrants held by MPC that were cancelled had an exercise price of $1.00 per share and an expiration date of April 4, 2021. The warrants held by Green Hill Minerals that were cancelled included 100,000 warrants with an exercise price of $1.73 and an expiration date of September 30, 2018 and 1,180,000 warrants with an exercise price of $0.70 and an expiration date of February 15, 2020.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Since Mr. McCabe held the controlling interest in both Line Drive and Wolfbone, the transactions were combined for accounting purposes. The working interest in the Hazel Project was the only asset held by Line Drive. The warrant cancellation was treated in the aggregate as an exercise of the warrants with the transfer of the working interests as the consideration. We recorded the transactions as an increase in its investment in the Hazel Project working interests of $3,644,431, which is equal to the exercise price of the warrants plus the cash paid to Wolfbone.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Upon the closing of the transactions, our working interest in the Hazel Project increased by 40.66% to a total ownership of 74%.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Effective June 1, 2017, we acquired an additional 6% working interest from unrelated working interest owners in exchange for 268,656 shares of common stock valued at $373,430, increasing our working interest in the Hazel project to 80%, and an overall net revenue interest of 74-75%.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Mr. Masterson is credited with originating the Hazel Project in the Midland Basin. With Mr. Masterson&#8217;s assistance, we are targeting prospects in the Midland Basin that have 150 to 130 feet of thickness, are likely to require six to eight laterals per bench, have the potential for 12 to 16 horizontal wells per section, and 200 long lateral locations, assuming only two benches.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In April 2018, we announced that we have commenced a process that could result in the monetization of the Hazel Project. We believe the development activity at the Hazel Project, coupled with nearby activities of other oil and gas operators, suggests that this project has achieved a level of value worth monetizing. We anticipate that the liquidity that would be provided from selling the Hazel Project could be redeployed into the Orogrande Project. While this process is underway, we will take all necessary steps to maintain the leasehold as required. As of this filing, we continue to maintain the leases in good standing and continue to market the acreage in an effort to focus on the Orogrande Project.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">During the nine months ended September 30, 2019 the Company deepened the Flying B #4 and took whole cores through all of the Wolfcamp A and the upper portion of the Wolfcamp B. In addition, in May, 2019 we entered into agreements with two of the three mineral owners on the northern section of the leases to keep the entire acreage block as one lease with a one year extension. We issued each of them 50,000 shares of our common stock as consideration for this extension. At September 30, 2019 we were structuring the extension agreement with the third mineral owner for cash consideration. Due to this extension, our obligation in November reduces to one obligation well. We have finished that obligation well and are awaiting results. This well is targeting a shallow zone that is showing oil potential.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The marketing process is ongoing for the Hazel project. We continue to encounter, as does the entire industry, a soft market for acquisitions and divestitures transactions. We will continue to look to sell the property or joint venture the property via farm in or a drillco transaction.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><u>Winkler Project, Winkler County, Texas</u></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On December 1, 2017, the Agreement and Plan of Reorganization that we and our then wholly-owned subsidiary, Torchlight Wolfbone Properties, Inc., a Texas corporation (&#8220;TWP&#8221;), entered into with MPC and Warwink Properties, LLC (&#8220;Warwink Properties&#8221;) on November 14, 2017 closed. Under the agreement, TWP merged with and into Warwink Properties and the separate existence of TWP ceased, with Warwink Properties being the surviving entity and becoming our wholly-owned subsidiary. Warwink Properties was wholly owned by MPC. Warwink Properties owns certain assets, including a 10.71875% working interest in approximately 640 acres in Winkler County, Texas. Upon the closing of the merger, all of the issued and outstanding shares of common stock of TWP converted into a membership interest in Warwink Properties, constituting all of the issued and outstanding membership interests in Warwink Properties immediately following the closing of the merger, the membership interest in Warwink Properties held by MPC and outstanding immediately prior to the closing of the merger ceased to exist, and we issued MPC 2,500,000 restricted shares of our common stock as consideration. Also on December 1, 2017, MPC closed its transaction with MECO IV, LLC (&#8221; MECO&#8221;), for the purchase and sale of certain assets as contemplated by the Purchase and Sale Agreement dated November 9, 2017 among MPC, MECO and additional parties thereto (the &#8220;MECO PSA&#8221;), to which we are not a party. Under the MECO PSA, Warwink Properties received a carry from MECO (through the tanks) of up to $1,179,076 in the next well drilled on the Winkler County leases. A Certificate of Merger for the merger transaction was filed with the Secretary of State of Texas on December 5, 2017.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Also on December 1, 2017, the transactions contemplated by the Purchase Agreement that TEI entered into with MPC closed. Under the Purchase Agreement, which was entered into on November 14, 2017, TEI acquired beneficial ownership of certain of MPC&#8217;s assets, including acreage and wellbores located in Ward County, Texas (the &#8220;Ward County Assets&#8221;). As consideration under the Purchase Agreement, at closing TEI issued to MPC an unsecured promissory note in the principal amount of $3,250,000, payable in monthly installments of interest only beginning on January 1, 2018, at the rate of 5% per annum, with the entire principal amount together with all accrued interest due and payable on January 1, 2021. In connection with TEI&#8217;s acquisition of beneficial ownership in the Ward County Assets, MPC sold those same assets, on behalf of TEI, to MECO at closing of the MECO PSA, and accordingly, TEI received $3,250,000 in cash for its beneficial interest in the Ward County Assets. Additionally, at closing of the MECO PSA, MPC paid TEI a performance fee of $2,781,500 in cash as compensation for TEI&#8217;s marketing and selling the Winkler County assets of MPC and the Ward County Assets as a package to MECO.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>Addition to the Winkler Project</i></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">As of May 7, 2018 our Winkler project in the Delaware Basin had begun the drilling phase of the first Winkler Project well, the UL 21 War-Wink 47 #2H. Our operating partner, MECO had begun the pilot hole on the project. The plan is to evaluate the various potential zones for a lateral leg to be drilled once logging is completed. We expect the most likely target to be the Wolfcamp A interval. The well is on 320 newly acquired acres offsetting the original leasehold we entered into in December, 2017. The additional acreage was leased by our operating partner under the Area of Mutual Interest Agreement (AMI) and we exercised its right to participate for its 12.5% in the additional 1,080 gross acres at a cash cost of $447,847 in July, 2018. Our carried interest in the first well, as outlined in the agreement, was originally planned to be on the first acreage acquired. That carried interest is being applied to this new well and will allow MECO to drill and produce potential revenues sooner than originally planned. The primary leasehold is a 320-acre block directly west of the current position and will allow for 5,000-foot lateral wells to be drilled. The well was completed and began production in October, 2018 and is producing currently. Recently the operator has informed us that there will be no planned additional wells in the acreage this year. All acreage is presently held by production.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In December 2018, the Company began to take measures on its own to market the Winkler Project in an effort to focus on the Orogrande. This process is ongoing.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><u>Hunton Play, Central Oklahoma</u></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Presently, we are producing from one well in the Viking Area of Mutual Interest and one well in Prairie Grove.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0"><u>Assets Held for Sale</u></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">With respect to marketing oil and natural gas properties, the Company has evaluated the properties being marketed to determine whether any should be reclassified as held-for-sale at September 30, 2019. The held-for-sale criteria include: management commits to a plan to sell; the asset is available for immediate sale; an active program to locate a buyer exists; the sale of the asset is probable and expected to be completed within one year; the asset is being actively marketed for sale; and it is unlikely that significant changes to the plan will be made. If each of these criteria is met, the property would be reclassified as held-for-sale on the Company&#8217;s consolidated balance sheets and measured at the lower of their carrying amount or estimated fair value less costs to sell. Fair values are estimated using accepted valuation techniques, such as a discounted cash flow model, valuations performed by third parties, earnings multiples, or indicative bids, when available. Management considers historical experience and all available information at the time the estimates are made; however, the fair value that is ultimately realized upon the sale of the assets to be divested may differ from the estimated fair values reflected in the consolidated financial statements. If each of these criteria is met, DD&#38;A expense would not be recorded on assets to be divested once they are classified as held for sale. Based on management&#8217;s assessment, these criteria have not been met and no assets are classified as held for sale as of September 30, 2019.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">As of September 30, 2019 and December 31, 2018, related party payables of $45,000, and accrued payroll was $951,176 and $816,176, respectively, consisting of accrued and unpaid compensation due to our executive officers.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>Leases</i></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company has a noncancelable lease for its office premises that expires on November 30, 2019 and which requires the payment of base lease amounts and executory costs such as taxes, maintenance and insurance. Effective June 1, 2019 the Company entered into an agreement with a company that had been subleasing a portion of its office space to become the primary obligor on the lease and to assume full responsibility for lease payments after lease expiration on November 30, 2019. The Company will continue after November 30, 2019 as a subtenant on a month to month basis.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Approximate future minimum rental commitments under the office premises lease total $12,288 through the expiration date of November 30, 2019.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>Environmental matters</i></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company is subject to contingencies as a result of environmental laws and regulations. Present and future environmental laws and regulations applicable to the Company&#8217;s operations could require substantial capital expenditures or could adversely affect its operations in other ways that cannot be predicted at this time. As of September 30, 2019 and December 31, 2018, no amounts had been recorded because no specific liability has been identified that is reasonably probable of requiring the Company to fund any future material amounts.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>Common Stock</i></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">During the nine months ended September 30, 2019, the Company issued 3,146,100 shares of common stock for cash of $2,516,880.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">During the nine months ended September 30, 2019, the Company issued 312,593 shares of common stock with a fair value of $365,400 as compensation for services.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">During the nine months ended September 30, 2019, the Company issued 167,845 shares of common stock valued at $183,714 in payment of interest accrued on notes payable.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">During the nine months ended September 30, 2019, the Company issued 168,690 shares of common stock resulting from warrant and option exercise for consideration totaling $184,843.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0">The Company issued 100,000 shares of common stock effective May 1, 2019, as compensation for an extension of oil and gas lease expiration valued at $125,000.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In April 2019, the Company issued 202,316 shares of common stock in satisfaction of the payment in kind valued at $314,108 due on April 10, 2019 to the holders of notes payable by the Company.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>Warrants and Options</i></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">During the nine months ended September 30, 2019, the Company issued 200,000 warrants and options with total fair value of $154,000 as compensation for services and recorded expense of $335,320 related to warrants and options issued in prior periods.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">During the nine months ended September 30, 2019, the Company issued 365,455 warrants valued at $240,455 in connection with the issuance of convertible notes payable.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In connection with the issuance of common stock for cash during the nine months ended September 30, 2019, 1,592,600 warrants were surrendered to the Company for cancellation.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0">A summary of warrants outstanding as of September 30, 2019 by exercise price and year of expiration is presented below:</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td colspan="2" style="white-space: nowrap; padding-bottom: 1pt; text-align: center"><font style="font-size: 8pt">Exercise</font></td> <td style="white-space: nowrap; padding-bottom: 1pt; text-align: center">&#160;</td> <td style="white-space: nowrap; padding-bottom: 1pt; text-align: center">&#160;</td> <td colspan="22" style="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt">Expiration Date in</font></td> <td style="padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="white-space: nowrap; padding-bottom: 1pt; text-align: center">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td></tr> <tr style="vertical-align: bottom"> <td colspan="2" style="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt">Price</font></td> <td style="padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt">2019</font></td> <td style="padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt">2020</font></td> <td style="padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt">2021</font></td> <td style="padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt">2022</font></td> <td style="padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt">2023</font></td> <td style="padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt">2024</font></td> <td style="padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt">Total</font></td> <td style="padding-bottom: 1pt">&#160;</td></tr> <tr style="vertical-align: bottom"> <td colspan="2" style="white-space: nowrap; text-align: center">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td colspan="2" style="white-space: nowrap; text-align: center">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td colspan="2" style="white-space: nowrap; text-align: center">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td colspan="2" style="white-space: nowrap; text-align: center">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td colspan="2" style="white-space: nowrap; text-align: center">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td colspan="2" style="white-space: nowrap; text-align: center">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td colspan="2" style="white-space: nowrap; text-align: center">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td colspan="2" style="white-space: nowrap; text-align: center">&#160;</td> <td>&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 16%; text-align: right"><font style="font-size: 8pt">0.70</font></td> <td style="white-space: nowrap; width: 1%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap; width: 1%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">420,000</font></td> <td style="white-space: nowrap; width: 1%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap; width: 1%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap; width: 1%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap; width: 1%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 8%; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap; width: 1%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 8%; text-align: right"><font style="font-size: 8pt">420,000</font></td> <td style="white-space: nowrap; width: 1%">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td><font style="font-size: 8pt">$</font></td> <td style="text-align: right"><font style="font-size: 8pt">1.03</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">120,000</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">120,000</font></td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td><font style="font-size: 8pt">$</font></td> <td style="text-align: right"><font style="font-size: 8pt">1.14</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">600,000</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">600,000</font></td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td><font style="font-size: 8pt">$</font></td> <td style="text-align: right"><font style="font-size: 8pt">1.21</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">120,000</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">120,000</font></td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td><font style="font-size: 8pt">$</font></td> <td style="text-align: right"><font style="font-size: 8pt">1.35</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">365,455</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">365,455</font></td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td><font style="font-size: 8pt">$</font></td> <td style="text-align: right"><font style="font-size: 8pt">1.40</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">321,737</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">321,737</font></td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td><font style="font-size: 8pt">$</font></td> <td style="text-align: right"><font style="font-size: 8pt">1.63</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">100,000</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">100,000</font></td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td><font style="font-size: 8pt">$</font></td> <td style="text-align: right"><font style="font-size: 8pt">1.64</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">200,000</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">200,000</font></td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td><font style="font-size: 8pt">$</font></td> <td style="text-align: right"><font style="font-size: 8pt">1.80</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">1,250,000</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">1,250,000</font></td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td><font style="font-size: 8pt">$</font></td> <td style="text-align: right"><font style="font-size: 8pt">2.00</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">200,000</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">200,000</font></td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td><font style="font-size: 8pt">$</font></td> <td style="text-align: right"><font style="font-size: 8pt">2.23</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">339,901</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">339,901</font></td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td><font style="font-size: 8pt">$</font></td> <td style="text-align: right"><font style="font-size: 8pt">2.50</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">35,211</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">35,211</font></td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-bottom: 1pt"><font style="font-size: 8pt">$</font></td> <td style="padding-bottom: 1pt; text-align: right"><font style="font-size: 8pt">3.50</font></td> <td style="white-space: nowrap; padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: black 1pt solid">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">15,000</font></td> <td style="white-space: nowrap; padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: black 1pt solid">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap; padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: black 1pt solid">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap; padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: black 1pt solid">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap; padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: black 1pt solid">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap; padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: black 1pt solid">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap; padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: black 1pt solid">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">15,000</font></td> <td style="white-space: nowrap; padding-bottom: 1pt">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 2.5pt">&#160;</td> <td style="padding-bottom: 2.5pt; text-align: right">&#160;</td> <td style="white-space: nowrap; padding-bottom: 2.5pt">&#160;</td> <td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: black 2.25pt double">&#160;</td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 8pt">50,211</font></td> <td style="white-space: nowrap; padding-bottom: 2.5pt">&#160;</td> <td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: black 2.25pt double">&#160;</td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 8pt">2,331,638</font></td> <td style="white-space: nowrap; padding-bottom: 2.5pt">&#160;</td> <td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: black 2.25pt double">&#160;</td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 8pt">520,000</font></td> <td style="white-space: nowrap; padding-bottom: 2.5pt">&#160;</td> <td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: black 2.25pt double">&#160;</td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 8pt">365,455</font></td> <td style="white-space: nowrap; padding-bottom: 2.5pt">&#160;</td> <td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: black 2.25pt double">&#160;</td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 8pt">720,000</font></td> <td style="white-space: nowrap; padding-bottom: 2.5pt">&#160;</td> <td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: black 2.25pt double">&#160;</td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 8pt">100,000</font></td> <td style="white-space: nowrap; padding-bottom: 2.5pt">&#160;</td> <td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: black 2.25pt double">&#160;</td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 8pt">4,087,304</font></td> <td style="white-space: nowrap; padding-bottom: 2.5pt">&#160;</td></tr> </table> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; color: white">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0">A summary of stock options outstanding as of September 30, 2019 by exercise price and year of expiration is presented below:</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td colspan="2" style="white-space: nowrap; padding-bottom: 1pt; text-align: center"><font style="font-size: 8pt">Exercise</font></td> <td style="padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="14" style="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt">Expiration Date in</font></td> <td style="padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="white-space: nowrap; text-align: center">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td></tr> <tr style="vertical-align: bottom"> <td colspan="2" style="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt">Price</font></td> <td style="padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt">2020</font></td> <td style="padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt">2021</font></td> <td style="padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt">2022</font></td> <td style="padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt">2023</font></td> <td style="padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt">Total</font></td> <td style="padding-bottom: 1pt">&#160;</td></tr> <tr style="vertical-align: bottom"> <td colspan="2" style="white-space: nowrap; text-align: center">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td colspan="2" style="white-space: nowrap; text-align: center">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td colspan="2" style="white-space: nowrap; text-align: center">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td colspan="2" style="white-space: nowrap; text-align: center">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td colspan="2" style="white-space: nowrap; text-align: center">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td colspan="2" style="white-space: nowrap; text-align: center">&#160;</td> <td>&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 18%; text-align: right"><font style="font-size: 8pt">0.97</font></td> <td style="white-space: nowrap; width: 1%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 13%; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap; width: 1%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 13%; text-align: right"><font style="font-size: 8pt">259,742</font></td> <td style="white-space: nowrap; width: 1%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 13%; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap; width: 1%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 13%; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap; width: 1%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 13%; text-align: right"><font style="font-size: 8pt">259,742</font></td> <td style="white-space: nowrap; width: 1%">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td><font style="font-size: 8pt">$</font></td> <td style="text-align: right"><font style="font-size: 8pt">1.10</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">800,000</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">800,000</font></td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td><font style="font-size: 8pt">$</font></td> <td style="text-align: right"><font style="font-size: 8pt">1.19</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">700,000</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">700,000</font></td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td><font style="font-size: 8pt">$</font></td> <td style="text-align: right"><font style="font-size: 8pt">1.57</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">4,500,000</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">4,500,000</font></td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td><font style="font-size: 8pt">$</font></td> <td style="text-align: right"><font style="font-size: 8pt">1.63</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">58,026</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">58,026</font></td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 1pt"><font style="font-size: 8pt">$</font></td> <td style="padding-bottom: 1pt; text-align: right"><font style="font-size: 8pt">1.79</font></td> <td style="white-space: nowrap; padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: black 1pt solid">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">300,000</font></td> <td style="white-space: nowrap; padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: black 1pt solid">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap; padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: black 1pt solid">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap; padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: black 1pt solid">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap; padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: black 1pt solid">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">300,000</font></td> <td style="white-space: nowrap; padding-bottom: 1pt">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-bottom: 2.5pt">&#160;</td> <td style="padding-bottom: 2.5pt; text-align: right">&#160;</td> <td style="white-space: nowrap; padding-bottom: 2.5pt">&#160;</td> <td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: black 2.25pt double">&#160;</td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 8pt">4,800,000</font></td> <td style="white-space: nowrap; padding-bottom: 2.5pt">&#160;</td> <td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: black 2.25pt double">&#160;</td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 8pt">259,742</font></td> <td style="white-space: nowrap; padding-bottom: 2.5pt">&#160;</td> <td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: black 2.25pt double">&#160;</td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 8pt">858,026</font></td> <td style="white-space: nowrap; padding-bottom: 2.5pt">&#160;</td> <td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: black 2.25pt double">&#160;</td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 8pt">700,000</font></td> <td style="white-space: nowrap; padding-bottom: 2.5pt">&#160;</td> <td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: black 2.25pt double">&#160;</td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 8pt">6,617,768</font></td> <td style="white-space: nowrap; padding-bottom: 2.5pt">&#160;</td></tr> </table> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">At September 30, 2019, the Company had reserved 10,705,072 common shares for future exercise of warrants and options.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Warrants and options granted were valued using the Black-Scholes Option Pricing Model. The assumptions used in calculating the fair value of the warrants and options issued were as follows:</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="white-space: nowrap; padding-bottom: 1pt; text-align: center"><font style="font-size: 8pt"><u>2019</u></font></td> <td style="padding-bottom: 1pt">&#160;</td> <td style="white-space: nowrap; text-align: center">&#160;</td></tr> <tr style="vertical-align: bottom"> <td style="white-space: nowrap; text-align: center">&#160;</td> <td>&#160;</td> <td style="white-space: nowrap; text-align: center">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 1.5pt"><font style="font-size: 8pt">Risk-free interest rate</font></td> <td>&#160;</td> <td style="white-space: nowrap; padding-left: 1.5pt; text-align: center"><font style="font-size: 8pt">1.77% - 2.46%</font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 1.5pt"><font style="font-size: 8pt">Expected volatility of common stock</font></td> <td>&#160;</td> <td style="white-space: nowrap; padding-left: 1.5pt; text-align: center"><font style="font-size: 8pt">80% - 107%</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 68%; padding-left: 1.5pt"><font style="font-size: 8pt">Dividend yield</font></td> <td style="width: 4%">&#160;</td> <td style="white-space: nowrap; width: 28%; padding-left: 1.5pt; text-align: center"><font style="font-size: 8pt">0.00%</font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 1.5pt"><font style="font-size: 8pt">Discount due to lack of marketability</font></td> <td>&#160;</td> <td style="white-space: nowrap; padding-left: 1.5pt; text-align: center"><font style="font-size: 8pt">20%</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 1.5pt"><font style="font-size: 8pt">Expected life of option/warrant</font></td> <td>&#160;</td> <td style="white-space: nowrap; padding-left: 1.5pt; text-align: center"><font style="font-size: 8pt">Three to Five Years</font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 1.5pt; text-align: right">&#160;</td> <td>&#160;</td> <td style="white-space: nowrap; padding-left: 1.5pt; text-align: right">&#160;</td></tr> <tr style="vertical-align: bottom"> <td style="white-space: nowrap; padding-bottom: 1pt; text-align: center"><font style="font-size: 8pt"><u>2018</u></font></td> <td style="padding-bottom: 1pt">&#160;</td> <td style="white-space: nowrap; text-align: center">&#160;</td></tr> <tr style="vertical-align: bottom"> <td style="white-space: nowrap; text-align: center">&#160;</td> <td>&#160;</td> <td style="white-space: nowrap; text-align: center">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 1.5pt"><font style="font-size: 8pt">Risk-free interest rate</font></td> <td>&#160;</td> <td style="white-space: nowrap; padding-left: 1.5pt; text-align: center"><font style="font-size: 8pt">2.15% - 2.83%</font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 1.5pt"><font style="font-size: 8pt">Expected volatility of common stock</font></td> <td>&#160;</td> <td style="white-space: nowrap; padding-left: 1.5pt; text-align: center"><font style="font-size: 8pt">97% - 119%</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 1.5pt"><font style="font-size: 8pt">Dividend yield</font></td> <td>&#160;</td> <td style="white-space: nowrap; padding-left: 1.5pt; text-align: center"><font style="font-size: 8pt">0.00%</font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 1.5pt"><font style="font-size: 8pt">Discount due to lack of marketability</font></td> <td>&#160;</td> <td style="white-space: nowrap; padding-left: 1.5pt; text-align: center"><font style="font-size: 8pt">20%</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 1.5pt"><font style="font-size: 8pt">Expected life of option/warrant</font></td> <td>&#160;</td> <td style="white-space: nowrap; padding-left: 1.5pt; text-align: center"><font style="font-size: 8pt">2.75 to Five Years</font></td></tr> </table> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company recorded no income tax provision for 2019 and 2018 because of losses incurred.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company estimates its annual effective income tax rate in recording its quarterly provision for income taxes in the various jurisdictions in which it operates. Statutory tax rate changes and other significant or unusual items are recognized as discrete items in the quarter in which they occur. The Company recorded no income tax expense for the nine months ended September 30, 2019 because the Company expects to incur a tax loss in the current year. Similarly, no income tax expense was recognized for the nine months ended September 30, 2019.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company had a net deferred tax asset related to federal net operating loss carryforwards of $63,070,504 and $56,992,857 at September 30, 2019 and December 31, 2018, respectively. The federal net operating loss carryforward will begin to expire in 2033. Realization of the deferred tax asset is dependent, in part, on generating sufficient taxable income prior to expiration of the loss carryforwards. The Company has placed a 100% valuation allowance against the net deferred tax asset because future realization of these assets is not assured.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On April 10, 2017, the Company sold to investors in a private transaction two 12% unsecured promissory notes with a total of $8,000,000 in principal amount. Interest only is due and payable on the notes each month at the rate of 12% per annum, with a balloon payment of the outstanding principal due and payable at maturity on April 10, 2020. The holders of the notes will also receive annual payments of common stock at the rate of 2.5% of principal amount outstanding, based on a volume-weighted average price. Both notes were sold at an original issue discount of 94.25% and accordingly, we received total proceeds of $7,540,000 from the investors. We used the proceeds for working capital and general corporate purposes, which includes, without limitation, drilling capital, lease acquisition capital and repayment of prior debt.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">These 12% promissory notes allow for early redemption. The notes also contain certain covenants under which we have agreed that, except for financing arrangements with established commercial banking or financial institutions and other debts and liabilities incurred in the normal course of business, we will not issue any other notes or debt offerings which have a maturity date prior to the payment in full of the 12% notes, unless consented to by the holders.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The effective interest rate is 16.15%.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On April 24, 2017, we used $2,509,500 of the proceeds from this financing to redeem and repay a portion of the outstanding 12% Series B Convertible Unsecured Promissory Notes. Separately, $1,000,000 of the principal amount of the Series B Notes plus accrued interest was converted into 1,007,890 shares of common stock and $64,297 was rolled into the new debt financing.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On February 6, 2018, we sold to an investor in a private transaction a 12% unsecured promissory note with a principal amount of $4,500,000. Interest only is due and payable on the note each month at the rate of 12% per annum, with a balloon payment of the outstanding principal due and payable at maturity on April 10, 2020. The holder of the note will also receive annual payments of common stock at the rate of 2.5% of principal amount outstanding, based on a volume-weighted average price. We sold the note at an original issue discount of 96.27% and accordingly, we received total proceeds of $4,332,150 from the investor. We used the proceeds for working capital and general corporate purposes, which includes, without limitation, drilling capital, lease acquisition capital and repayment of prior debt.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">This 12% promissory note allows for early redemption, provided that if we redeem before February 6, 2019, we must pay the holder all unpaid interest and common stock payments on the portion of the note redeemed that would have been earned through February 6, 2019. The note also contains certain covenants under which we have agreed that, except for financing arrangements with established commercial banking or financial institutions and other debts and liabilities incurred in the normal course of business, we will not issue any other notes or debt offerings which have a maturity date prior to the payment in full of the 12% note, unless consented to by the holder.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0">The effective interest rate is 15.88%.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In April 2019 and 2018, respectively, the holders of the notes described above received 202,316 and 172,342 shares of common stock as a payment in kind representing the annual payments of common stock due at the rate of 2.5% of principal amount outstanding as of April 10 based on a volume-weighted average price calculation.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0">Unsecured promissory note transactions through September 30, 2019 are summarized as follows:</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 86%; padding-left: 1.5pt"><font style="font-size: 8pt">Unsecured promissory note balance - December 31, 2018</font></td> <td style="width: 2%">&#160;</td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 10%; text-align: right"><font style="font-size: 8pt">11,862,080</font></td> <td style="white-space: nowrap; width: 1%">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 1.5pt; text-align: right">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 1.5pt"><font style="font-size: 8pt">Accretion of discount and amortization of debt issuance costs</font></td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">386,813</font></td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 1pt; padding-left: 1.5pt; text-align: right">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: black 1pt solid">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right">&#160;</td> <td style="white-space: nowrap; padding-bottom: 1pt">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-bottom: 2.5pt; padding-left: 1.5pt"><font style="font-size: 8pt">Unsecured promissory note balance - September 30, 2019</font></td> <td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: black 2.25pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 8pt">12,248,893</font></td> <td style="white-space: nowrap; padding-bottom: 2.5pt">&#160;</td></tr> </table> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">On October 17, 2018, we sold to certain investors in a private transaction 16% Series C Unsecured Convertible Promissory Notes with a total principal amount of $6,000,000. Interest and principal are due and payable on the notes in one balloon payment at maturity on April 17, 2020. The notes are convertible, at the election of the holders, into an aggregate 6% working interest in certain oil and gas leases in Hudspeth County, Texas, known as our &#8220;Orogrande Project.&#8221; After an analysis of the transaction and a review of applicable accounting pronouncements, management concluded that the notes issued on October 17, 2018 which contain a conversion right for holders to convert into a working interest in the Orogrande Project of the Company, meet a specific scope exception to the provisions requiring derivative accounting.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The notes allow us to redeem them early only upon the event of a fundamental transaction, such as a merger or sale of substantially all our assets. The notes provide that the noteholders may accelerate and declare any and all of the obligations under the notes to be immediately due and payable in the event of default, such as nonpayment, failure to perform required conversions, failure to perform any covenant or agreement under the notes, an insolvency event, or certain defaults or judgments. As part of the sale of the of the notes, the noteholders required that McCabe Petroleum Corporation, a Texas corporation owned by our Chairman Gregory McCabe (&#8220;MPC&#8221;), provide them a put option whereby they have the right to have MPC purchase from them any unpaid principal amount due on the notes. Additionally, if there is a fundamental transaction, Mr. McCabe will be required to pay a fee to each noteholder that elects not to convert or require MPC to purchase the principal amount under the note, which fee will be equal to such noteholder&#8217;s pro-rata share of a total fee amount of $1,500,000.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">We received total proceeds of $6,000,000 from the sale of the notes, of which $3,000,000 was used to pay back the promissory note issued to MPC on December 1, 2017, which note was due on December 31, 2020. We used the remaining proceeds for working capital and general corporate purposes, which includes, without limitation, drilling and lease acquisition capital.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Prior to entering into the above transactions, our Board of Directors formed a special committee composed of independent directors to analyze and authorize the transactions on behalf of Torchlight Energy Resources, Inc. and determine whether the transactions are fair to the company. In this role, the special committee engaged an independent financial consulting firm which rendered a fairness opinion deeming that the transactions were fair to the company, from a financial point of view, and contained terms no less favorable to the company than those that could be obtained in arm&#8217;s length transactions.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In February and March, 2019 the Company raised a total of $2,000,000 from investors through the sale of 14% Series D Unsecured Convertible Promissory Notes. Principal is payable in a lump sum at maturity on May 11, 2020 with payments of interest payable monthly at the rate of 14% per annum. Holders of the notes have the right to convert principal and interest at any time into common stock at a conversion price of $1.08 per share. The Company has the right to redeem the notes at any time, provided that the redemption amount must include all interest that would have been earned through maturity. The Company evaluated the notes for beneficial conversion features and derivative accounting criteria and concluded that derivative accounting treatment is not applicable.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In July, 2019, the Company issued 8% Unsecured Convertible Promissory notes in the amount of $2,010,000 together with warrants to purchase our common stock. The principal and accrued interest on the notes are convertible into shares of common stock at $1.10 per common share at any time after the original issue date. Along with the notes, the three year warrants equal to 20% of the number of shares of common stock issuable upon the conversion of the notes were issued to note holders. The warrants are exercisable at $1.35 per share.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Warrants issued along with the notes meet the requirements of the scope exemptions in ASC 815-10-15-74 and are thus classified as equity upon issuance. The Company determined the fair value of the warrants using the Black Scholes pricing formula and is recognized as a discount on the carrying amount of the notes and is credited to additional paid in capital. The fair value of the warrants at the issuance date was determined to be $240,455.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">A beneficial conversion feature (&#8220;BCF&#8221;) of a convertible note is normally characterized as the convertible portion feature that provides a rate of conversion that is below market value or &#8220;in the money&#8221; when issued. The BCF related to the issuance of the notes was recorded at the issuance date. The BCF was measured using the intrinsic value method and is shown as a discount to the carrying amount of the convertible note and is credited to additional paid in capital. The intrinsic value of the BCF at the issuance date of the notes was determined to be $1,145,546.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The allocated fair values of the BCF and the warrants was recorded as a debt discount from the face amount of the notes and such discount is being accreted over the expected term of the notes and is charged to interest expense. The Company recognized interest expense of $102,343 from the amortization of debt discount from notes as of September 30, 2019.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company evaluated the July, 2019 notes for beneficial conversion features and derivative accounting criteria and concluded that derivative accounting treatment was not applicable.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The following is a reconciliation of the asset retirement obligations liability through September 30, 2019:</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 83%; padding-left: 1.5pt"><font style="font-size: 8pt">Asset retirement obligations &#8211; December 31, 2018</font></td> <td style="width: 3%">&#160;</td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 12%; text-align: right"><font style="font-size: 8pt">14,353</font></td> <td style="white-space: nowrap; width: 1%">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 1.5pt; text-align: right">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 1.5pt"><font style="font-size: 8pt">Accretion expense</font></td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">426</font></td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 1.5pt"><font style="font-size: 8pt">Estimated liabilities recorded</font></td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">8,397</font></td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-bottom: 1pt; padding-left: 1.5pt; text-align: right">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: black 1pt solid">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right">&#160;</td> <td style="white-space: nowrap; padding-bottom: 1pt">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 2.5pt; padding-left: 1.5pt"><font style="font-size: 8pt">Asset retirement obligations &#8211; September 30, 2019</font></td> <td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: black 2.25pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 8pt">23,176</font></td> <td style="white-space: nowrap; padding-bottom: 2.5pt">&#160;</td></tr> </table> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Use of estimates</i></b> &#8211; The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and certain assumptions that affect the amounts reported in these consolidated financial statements and accompanying notes. Actual results could differ from these estimates.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Basis of presentation</i></b>&#8212;The financial statements are presented on a consolidated basis and include all of the accounts of Torchlight Energy Resources Inc. and its wholly owned subsidiaries, Torchlight Energy, Inc., Torchlight Energy Operating, LLC, Hudspeth Oil Corporation, Torchlight Hazel LLC, and Warwink Properties LLC. All significant intercompany balances and transactions have been eliminated.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">These interim financial statements are unaudited and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (&#8220;SEC&#8221;) regarding interim financial reporting. Certain disclosures have been condensed or omitted from these financial statements. Accordingly, they do not include all the information and notes required by accounting principles generally accepted in the United States of America (&#8220;GAAP&#8221;) for complete consolidated financial statements, and should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2018.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In the opinion of management, the accompanying unaudited financial condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, necessary to fairly present the financial position as of, and the results of operations for, all periods presented. In preparing the accompanying financial statements, management has made certain estimates and assumptions that affect reported amounts in the condensed financial statements and disclosures of contingencies. Actual results may differ from those estimates. The results for interim periods are not necessarily indicative of annual results. Certain reclassifications have been made to the prior period&#8217;s consolidated financial statements and related footnotes to conform them to the current period presentation.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>&#160;</i></b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Risks and uncertainties</i></b> &#8211; The Company&#8217;s operations are subject to significant risks and uncertainties, including financial, operational, technological, and other risks associated with operating an emerging business, including the potential risk of business failure.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Concentration of risks</i></b> &#8211; At times the Company&#8217;s cash balances are in excess of amounts guaranteed by the Federal Deposit Insurance Corporation. The Company&#8217;s cash is placed with a highly rated financial institution, and the Company regularly monitors the credit worthiness of the financial institutions with which it does business.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Fair value of financial instruments</i></b> &#8211; Financial instruments consist of cash, receivables, payables and promissory notes, if any. The estimated fair values of cash, receivables, and payables approximate the carrying amount due to the relatively short maturity of these instruments. The carrying amounts of any promissory notes approximate their fair value giving affect for the term of the note and the effective interest rates.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">For assets and liabilities that require re-measurement to fair value the Company categorizes them in a three-level fair value hierarchy as follows:</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <table cellspacing="0" cellpadding="0" style="width: 100%"> <tr style="vertical-align: top"> <td style="width: 0px">&#160;</td> <td style="width: 29px; font: 12pt Times New Roman, Times, Serif"><font style="font-size: 8pt">&#9679;</font></td> <td style="font: 12pt Times New Roman, Times, Serif; text-align: justify"><font style="font-size: 8pt">Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.</font></td></tr> </table> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <table cellspacing="0" cellpadding="0" style="width: 100%"> <tr style="vertical-align: top"> <td style="width: 0px">&#160;</td> <td style="width: 29px; font: 12pt Times New Roman, Times, Serif"><font style="font-size: 8pt">&#9679;</font></td> <td style="font: 12pt Times New Roman, Times, Serif; text-align: justify"><font style="font-size: 8pt">Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration.</font></td></tr> </table> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <table cellspacing="0" cellpadding="0" style="width: 100%"> <tr style="vertical-align: top"> <td style="width: 0px">&#160;</td> <td style="width: 29px; font: 12pt Times New Roman, Times, Serif"><font style="font-size: 8pt">&#9679;</font></td> <td style="font: 12pt Times New Roman, Times, Serif; text-align: justify"><font style="font-size: 8pt">Level 3 inputs are unobservable inputs based on management&#8217;s own assumptions used to measure assets and liabilities at fair value.</font></td></tr> </table> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">A financial asset or liability&#8217;s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Cash and cash equivalents -</i></b> Cash and cash equivalents include certain investments in highly liquid instruments with original maturities of three months or less.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Accounts receivable</i></b> &#8211; Accounts receivable consist of uncollateralized oil and natural gas revenues due under normal trade terms, as well as amounts due from working interest owners of oil and gas properties for their share of expenses paid on their behalf by the Company. Management reviews receivables periodically and reduces the carrying amount by a valuation allowance that reflects management&#8217;s best estimate of the amount that may not be collectible. As of September 30, 2019 and December 31, 2018, no valuation allowance was considered necessary.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Oil and gas properties</i></b> &#8211; The Company uses the full cost method of accounting for exploration and development activities as defined by the Securities and Exchange Commission (&#8220;SEC&#8221;). Under this method of accounting, the costs of unsuccessful, as well as successful, exploration and development activities are capitalized as properties and equipment. This includes any internal costs that are directly related to property acquisition, exploration and development activities but does not include any costs related to production, general corporate overhead or similar activities. Gain or loss on the sale or other disposition of oil and gas properties is not recognized, unless the gain or loss would significantly alter the relationship between capitalized costs and proved reserves.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Oil and gas properties include costs that are excluded from costs being depleted or amortized. Oil and natural gas property costs excluded represent investments in unevaluated properties and include non-producing leasehold, geological, and geophysical costs associated with leasehold or drilling interests and exploration drilling costs. The Company allocates a portion of its acquisition costs to unevaluated properties based on relative value. Costs are transferred to the full cost pool as the properties are evaluated over the life of the reservoir. Unevaluated properties are reviewed for impairment at least quarterly and are determined through an evaluation considering, among other factors, seismic data, requirements to relinquish acreage, drilling results, remaining time in the commitment period, remaining capital plan, and political, economic, and market conditions.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Gains and losses on the sale of oil and gas properties are not generally reflected in income unless the gain or loss would significantly alter the relationship between capitalized costs and proved reserves. Sales of less than 100% of the Company&#8217;s interest in the oil and gas property are treated as a reduction of the capital cost of the field, with no gain or loss recognized, as long as doing so does not significantly affect the unit-of-production depletion rate. Costs of retired equipment, net of salvage value, are usually charged to accumulated depreciation.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>&#160;</i></b></p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Capitalized interest &#8211;</i></b> The Company capitalizes interest on unevaluated properties during the periods in which they are excluded from costs being depleted or amortized. During the nine months ended September 30, 2019 and 2018, the Company capitalized $2,084,026 and $1,382,820, respectively, of interest on unevaluated properties.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Depreciation, depletion, and amortization</i></b> &#8211; The depreciable base for oil and natural gas properties includes the sum of all capitalized costs net of accumulated depreciation, depletion, and amortization (&#8220;DD&#38;A&#8221;), estimated future development costs and asset retirement costs not included in oil and natural gas properties, less costs excluded from amortization. The depreciable base of oil and natural gas properties is amortized on a unit-of-production method.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Ceiling test</i></b> &#8211; Future production volumes from oil and gas properties are a significant factor in determining the full cost ceiling limitation of capitalized costs. Under the full cost method of accounting, the Company is required to periodically perform a &#8220;ceiling test&#8221; that determines a limit on the book value of oil and gas properties. If the net capitalized cost of proved oil and gas properties, net of related deferred income taxes, plus the cost of unproved oil and gas properties, exceeds the present value of estimated future net cash flows discounted at 10 percent, net of related realizable tax affects, plus the cost of unproved oil and gas properties, the excess is charged to expense and reflected as additional accumulated DD&#38;A. The Company recorded an impairment expense of $474,357 and $139,891 for the nine months ended September 30, 2019 and 2018, respectively, to recognize the adjustment required by the ceiling test.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The ceiling test calculation uses a commodity price assumption which is based on the unweighted arithmetic average of the price on the first day of each month for each month within the prior 12 month period and excludes future cash outflows related to estimated abandonment costs.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The determination of oil and gas reserves is a subjective process, and the accuracy of any reserve estimate depends on the quality of available data and the application of engineering and geological interpretation and judgment. Estimates of economically recoverable reserves and future net cash flows depend on a number of variable factors and assumptions that are difficult to predict and may vary considerably from actual results. In particular, reserve estimates for wells with limited or no production history are less reliable than those based on actual production. Subsequent re-evaluation of reserves and cost estimates related to future development of proved oil and gas reserves could result in significant revisions to proved reserves. Other issues, such as changes in regulatory requirements, technological advances, and other factors which are difficult to predict could also affect estimates of proved reserves in the future.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Asset retirement obligations</i></b> &#8211;The fair value of a liability for an asset&#8217;s retirement obligation (&#8220;ARO&#8221;) is recognized in the period in which it is incurred if a reasonable estimate of fair value can be made, with the corresponding charge capitalized as part of the carrying amount of the related long-lived asset. The liability is accreted to its then-present value each subsequent period, and the capitalized cost is depleted over the useful life of the related asset. Abandonment costs incurred are recorded as a reduction of the ARO liability.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Inherent in the fair value calculation of an ARO are numerous assumptions and judgments including the ultimate settlement amounts, inflation factors, credit adjusted discount rates, timing of settlement, and changes in the legal, regulatory, environmental, and political environments. To the extent future revisions to these assumptions impact the fair value of the existing ARO liability, a corresponding adjustment is made to the oil and gas property balance. Settlements greater than or less than amounts accrued as ARO are recorded as a gain or loss upon settlement.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Income taxes</i> -</b> Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is established to reduce deferred tax assets if it is more likely than not that the related tax benefits will not be realized.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Authoritative guidance for uncertainty in income taxes requires that the Company recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an examination. Management has reviewed the Company&#8217;s tax positions and determined there were no uncertain tax positions requiring recognition in the consolidated financial statements. Company tax returns remain subject to Federal and State tax examinations. Generally, the applicable statutes of limitation are three to four years from their respective filings.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Estimated interest and penalties related to potential underpayment on any unrecognized tax benefits are classified as a component of tax expense in the statement of operation. The Company has not recorded any interest or penalties associated with unrecognized tax benefits for any periods covered by these financial statements.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Share-based compensation</i></b> &#8211; Compensation cost for equity awards is based on the fair value of the equity instrument on the date of grant and is recognized over the period during which an employee is required to provide service in exchange for the award.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company accounts for stock option awards using the calculated value method. The expected term was derived using the simplified method provided in Securities and Exchange Commission release Staff Accounting Bulletin No. 110, which averages an awards weighted average vesting period and contractual term for &#8220;plain vanilla&#8221; share options.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company accounts for any forfeitures of options when they occur. Previously recognized compensation cost for an award is reversed in the period that the award is forfeited.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company also issues equity awards to non-employees. The fair value of these option awards is estimated when the award recipient completes the contracted professional services. The Company recognizes expense for the estimated total value of the awards during the period from their issuance until performance completion.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">In June 2018, the FASB issued ASU 2018-07, <i>Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting</i>, which simplifies the accounting for share-based payments granted to nonemployees for goods and services. Under this ASU, the guidance on such payments to nonemployees is aligned with the requirements for share-based payments granted to employees. ASU 2018-07 was effective for fiscal years beginning after December 15, 2018, however the Company opted for early adoption effective July 1, 2018. In evaluating early adoption the Company determined that the change did not have a material impact on its consolidated financial statements.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company values warrant and option awards using the Black-Scholes option pricing model.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Revenue recognition</i></b> &#8211; On January 1, 2018, the Company adopted ASC 606, Revenue from Contracts with Customers, and the related guidance in ASC 340-40 (the new revenue standard), and related guidance on gains and losses on derecognition of nonfinancial assets ASC 610-20, using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Under the modified retrospective method, the Company recognizes the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of retained earnings; however, no significant adjustment was required as a result of adopting the new revenue standard. Results for reporting periods beginning after January 1, 2018 are presented under the new revenue standard. The impact of the adoption of the new revenue standard was immaterial to the Company&#8217;s net loss.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company&#8217;s revenue is typically generated from contracts to sell natural gas, crude oil or NGLs produced from interests in oil and gas properties owned by the Company. Contracts for the sale of natural gas and crude oil are evidenced by (1) base contracts for the sale and purchase of natural gas or crude oil, which document the general terms and conditions for the sale, and (2) transaction confirmations, which document the terms of each specific sale. The transaction confirmations specify a delivery point which represents the point at which control of the product is transferred to the customer. These contracts frequently meet the definition of a derivative under ASC 815, and are accounted for as derivatives unless the Company elects to treat them as normal sales as permitted under that guidance. The Company elects to treat contracts to sell oil and gas production as normal sales, which are then accounted for as contracts with customers. The Company has determined that these contracts represent multiple performance obligations which are satisfied when control of the commodity transfers to the customer, typically through the delivery of the specified commodity to a designated delivery point.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Revenues from oil and gas sales are detailed as follows:</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="white-space: nowrap; padding-left: 8.65pt; text-align: center; text-indent: -8.65pt">&#160;</td> <td>&#160;</td> <td colspan="2" style="white-space: nowrap; text-align: center"><font style="font-size: 8pt">Three Months</font></td> <td>&#160;</td> <td>&#160;</td> <td colspan="2" style="white-space: nowrap; text-align: center"><font style="font-size: 8pt">Three Months</font></td> <td>&#160;</td> <td>&#160;</td> <td colspan="2" style="white-space: nowrap; text-align: center"><font style="font-size: 8pt">Nine Months</font></td> <td>&#160;</td> <td>&#160;</td> <td colspan="2" style="white-space: nowrap; text-align: center"><font style="font-size: 8pt">Nine Months</font></td> <td>&#160;</td></tr> <tr style="vertical-align: bottom"> <td style="white-space: nowrap; padding-left: 8.65pt; text-align: center; text-indent: -8.65pt">&#160;</td> <td>&#160;</td> <td colspan="2" style="white-space: nowrap; text-align: center"><font style="font-size: 8pt">Ended</font></td> <td>&#160;</td> <td>&#160;</td> <td colspan="2" style="white-space: nowrap; text-align: center"><font style="font-size: 8pt">Ended</font></td> <td>&#160;</td> <td>&#160;</td> <td colspan="2" style="white-space: nowrap; text-align: center"><font style="font-size: 8pt">Ended</font></td> <td>&#160;</td> <td>&#160;</td> <td colspan="2" style="white-space: nowrap; text-align: center"><font style="font-size: 8pt">Ended</font></td> <td>&#160;</td></tr> <tr style="vertical-align: bottom"> <td style="white-space: nowrap; padding-left: 8.65pt; text-align: center; text-indent: -8.65pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt">September 30, 2019</font></td> <td style="padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt">September 30, 2018</font></td> <td style="padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt">September 30, 2019</font></td> <td style="padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt">September 30, 2018</font></td> <td style="padding-bottom: 1pt">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 8.65pt; text-indent: -8.65pt"><font style="font-size: 8pt">Revenues</font></td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 8.65pt; text-indent: -8.65pt">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 32%; padding-left: 17.3pt; text-indent: -8.65pt"><font style="font-size: 8pt">Oil sales</font></td> <td style="width: 4%">&#160;</td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 11%; text-align: right"><font style="font-size: 8pt">71,064</font></td> <td style="white-space: nowrap; width: 1%">&#160;</td> <td style="width: 4%">&#160;</td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 11%; text-align: right"><font style="font-size: 8pt">124,830</font></td> <td style="white-space: nowrap; width: 1%">&#160;</td> <td style="width: 4%">&#160;</td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 11%; text-align: right"><font style="font-size: 8pt">596,247</font></td> <td style="white-space: nowrap; width: 1%">&#160;</td> <td style="width: 4%">&#160;</td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 11%; text-align: right"><font style="font-size: 8pt">881,364</font></td> <td style="white-space: nowrap; width: 1%">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 8.65pt; text-indent: -8.65pt">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 17.3pt; text-indent: -8.65pt"><font style="font-size: 8pt">Gas sales</font></td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">78</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">3,845</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">22,807</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">11,737</font></td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 1pt; padding-left: 8.65pt; text-indent: -8.65pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: black 1pt solid">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right">&#160;</td> <td style="white-space: nowrap; padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: black 1pt solid">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right">&#160;</td> <td style="white-space: nowrap; padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: black 1pt solid">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right">&#160;</td> <td style="white-space: nowrap; padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: black 1pt solid">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right">&#160;</td> <td style="white-space: nowrap; padding-bottom: 1pt">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-bottom: 2.5pt; padding-left: 8.65pt; text-indent: -8.65pt"><font style="font-size: 8pt">Total</font></td> <td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: black 2.25pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 8pt">71,142</font></td> <td style="white-space: nowrap; padding-bottom: 2.5pt">&#160;</td> <td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: black 2.25pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 8pt">128,675</font></td> <td style="white-space: nowrap; padding-bottom: 2.5pt">&#160;</td> <td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: black 2.25pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 8pt">619,054</font></td> <td style="white-space: nowrap; padding-bottom: 2.5pt">&#160;</td> <td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: black 2.25pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 8pt">893,101</font></td> <td style="white-space: nowrap; padding-bottom: 2.5pt">&#160;</td></tr> </table> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Revenue is measured based on consideration specified in the contract with the customer, and excludes any amounts collected on behalf of third parties. The Company recognizes revenue in the amount that reflects the consideration it expects to be entitled to in exchange for transferring control of those goods to the customer. Amounts allocated in the Company&#8217;s price contracts are based on the standalone selling price of those products in the context of long-term contracts. Payment is generally received one or two months after the sale has occurred.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Gain or loss on derivative instruments is outside the scope of ASC 606 and is not considered revenue from contracts with customers subject to ASC 606. The Company may in the future use financial or physical contracts accounted for as derivatives as economic hedges to manage price risk associated with normal sales, or in limited cases may use them for contracts the Company intends to physically settle but do not meet all of the criteria to be treated as normal sales.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><i>Producer Gas Imbalances.</i> The Company applies the sales method of accounting for natural gas revenue. Under this method, revenues are recognized based on the actual volume of natural gas sold to purchasers.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Basic and diluted earnings (loss) per share</i></b><i> &#8211;</i> Basic earnings (loss) per common share is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per common share is computed in the same way as basic earnings (loss) per common share except that the denominator is increased to include the number of additional common shares that would be outstanding if all potential common shares had been issued and if the additional common shares were dilutive. The calculation of diluted earnings per share excludes 10,705,072 shares issuable upon the exercise of outstanding warrants and options because their effect would be anti-dilutive.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Environmental laws and regulations</i></b> &#8211; The Company is subject to extensive federal, state, and local environmental laws and regulations. Environmental expenditures are expensed or capitalized depending on their future economic benefit. The Company believes that it is in compliance with existing laws and regulations. The Company accrued no liability as of September 30, 2019 and December 31, 2018.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Recent adopted accounting pronouncements</i></b> &#8211; In February 2016 the FASB, issued ASU, 2016-02, Leases. The ASU requires companies to recognize on the balance sheet the assets and liabilities for the rights and obligations created by leased assets. ASU 2016-02 was effective for the Company in the first quarter of 2019. The Company adopted the change which did not have a material impact on its consolidated financial statements.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">Other recently issued or adopted accounting pronouncements are not expected to have, or did not have, a material impact on the Company&#8217;s financial position or results from operations.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify"><b><i>Subsequent events &#8211;</i></b> The Company evaluated subsequent events through November 8, 2019, the date of issuance of these financial statements. Subsequent events, if any, are disclosed in Note 11.</p> <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">&#160;</p> <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="white-space: nowrap; padding-left: 8.65pt; text-align: center; text-indent: -8.65pt">&#160;</td> <td>&#160;</td> <td colspan="2" style="white-space: nowrap; text-align: center"><font style="font-size: 8pt">Three Months</font></td> <td>&#160;</td> <td>&#160;</td> <td colspan="2" style="white-space: nowrap; text-align: center"><font style="font-size: 8pt">Three Months</font></td> <td>&#160;</td> <td>&#160;</td> <td colspan="2" style="white-space: nowrap; text-align: center"><font style="font-size: 8pt">Nine Months</font></td> <td>&#160;</td> <td>&#160;</td> <td colspan="2" style="white-space: nowrap; text-align: center"><font style="font-size: 8pt">Nine Months</font></td> <td>&#160;</td></tr> <tr style="vertical-align: bottom"> <td style="white-space: nowrap; padding-left: 8.65pt; text-align: center; text-indent: -8.65pt">&#160;</td> <td>&#160;</td> <td colspan="2" style="white-space: nowrap; text-align: center"><font style="font-size: 8pt">Ended</font></td> <td>&#160;</td> <td>&#160;</td> <td colspan="2" style="white-space: nowrap; text-align: center"><font style="font-size: 8pt">Ended</font></td> <td>&#160;</td> <td>&#160;</td> <td colspan="2" style="white-space: nowrap; text-align: center"><font style="font-size: 8pt">Ended</font></td> <td>&#160;</td> <td>&#160;</td> <td colspan="2" style="white-space: nowrap; text-align: center"><font style="font-size: 8pt">Ended</font></td> <td>&#160;</td></tr> <tr style="vertical-align: bottom"> <td style="white-space: nowrap; padding-left: 8.65pt; text-align: center; text-indent: -8.65pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt">September 30, 2019</font></td> <td style="padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt">September 30, 2018</font></td> <td style="padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt">September 30, 2019</font></td> <td style="padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt">September 30, 2018</font></td> <td style="padding-bottom: 1pt">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 8.65pt; text-indent: -8.65pt"><font style="font-size: 8pt">Revenues</font></td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 8.65pt; text-indent: -8.65pt">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 32%; padding-left: 17.3pt; text-indent: -8.65pt"><font style="font-size: 8pt">Oil sales</font></td> <td style="width: 4%">&#160;</td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 11%; text-align: right"><font style="font-size: 8pt">71,064</font></td> <td style="white-space: nowrap; width: 1%">&#160;</td> <td style="width: 4%">&#160;</td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 11%; text-align: right"><font style="font-size: 8pt">124,830</font></td> <td style="white-space: nowrap; width: 1%">&#160;</td> <td style="width: 4%">&#160;</td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 11%; text-align: right"><font style="font-size: 8pt">596,247</font></td> <td style="white-space: nowrap; width: 1%">&#160;</td> <td style="width: 4%">&#160;</td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 11%; text-align: right"><font style="font-size: 8pt">881,364</font></td> <td style="white-space: nowrap; width: 1%">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 8.65pt; text-indent: -8.65pt">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 17.3pt; text-indent: -8.65pt"><font style="font-size: 8pt">Gas sales</font></td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">78</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">3,845</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">22,807</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">11,737</font></td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 1pt; padding-left: 8.65pt; text-indent: -8.65pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: black 1pt solid">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right">&#160;</td> <td style="white-space: nowrap; padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: black 1pt solid">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right">&#160;</td> <td style="white-space: nowrap; padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: black 1pt solid">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right">&#160;</td> <td style="white-space: nowrap; padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: black 1pt solid">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right">&#160;</td> <td style="white-space: nowrap; padding-bottom: 1pt">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-bottom: 2.5pt; padding-left: 8.65pt; text-indent: -8.65pt"><font style="font-size: 8pt">Total</font></td> <td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: black 2.25pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 8pt">71,142</font></td> <td style="white-space: nowrap; padding-bottom: 2.5pt">&#160;</td> <td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: black 2.25pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 8pt">128,675</font></td> <td style="white-space: nowrap; padding-bottom: 2.5pt">&#160;</td> <td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: black 2.25pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 8pt">619,054</font></td> <td style="white-space: nowrap; padding-bottom: 2.5pt">&#160;</td> <td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: black 2.25pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 8pt">893,101</font></td> <td style="white-space: nowrap; padding-bottom: 2.5pt">&#160;</td></tr> </table> <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 60%; padding-left: 8.65pt; text-indent: -8.65pt"><font style="font-size: 8pt">Evaluated costs subject to amortization</font></td> <td style="width: 4%">&#160;</td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 14%; text-align: right"><font style="font-size: 8pt">12,458,270</font></td> <td style="white-space: nowrap; width: 1%">&#160;</td> <td style="width: 4%">&#160;</td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 14%; text-align: right"><font style="font-size: 8pt">11,664,586</font></td> <td style="white-space: nowrap; width: 1%">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 1pt; padding-left: 8.65pt; text-indent: -8.65pt"><font style="font-size: 8pt">Unevaluated costs</font></td> <td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: black 1pt solid">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">37,529,864</font></td> <td style="white-space: nowrap; padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: black 1pt solid">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">31,746,477</font></td> <td style="white-space: nowrap; padding-bottom: 1pt">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 25.95pt; text-indent: -8.65pt"><font style="font-size: 8pt">Total capitalized costs</font></td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">49,988,134</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">43,411,063</font></td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 1pt; padding-left: 8.65pt; text-indent: -8.65pt"><font style="font-size: 8pt">Less accumulated depreciation, depletion and amortization</font></td> <td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: black 1pt solid">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(7,671,198</font></td> <td style="white-space: nowrap; padding-bottom: 1pt"><font style="font-size: 8pt">)</font></td> <td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: black 1pt solid">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">(6,845,602</font></td> <td style="white-space: nowrap; padding-bottom: 1pt"><font style="font-size: 8pt">)</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-bottom: 2.5pt; padding-left: 25.95pt; text-indent: -8.65pt"><font style="font-size: 8pt">Total oil and gas properties</font></td> <td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: black 2.25pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 8pt">42,316,936</font></td> <td style="white-space: nowrap; padding-bottom: 2.5pt">&#160;</td> <td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: black 2.25pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 8pt">36,565,461</font></td> <td style="white-space: nowrap; padding-bottom: 2.5pt">&#160;</td></tr> </table> <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="white-space: nowrap; padding-left: 8.65pt; text-align: center; text-indent: -8.65pt">&#160;</td> <td>&#160;</td> <td colspan="2" style="white-space: nowrap; text-align: center"><font style="font-size: 8pt">Revenue</font></td> <td>&#160;</td> <td>&#160;</td> <td colspan="2" style="white-space: nowrap; text-align: center"><font style="font-size: 8pt">Working</font></td> <td>&#160;</td></tr> <tr style="vertical-align: bottom"> <td style="white-space: nowrap; padding-left: 8.65pt; text-align: center; text-indent: -8.65pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt">Interest</font></td> <td style="padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt">Interest</font></td> <td style="padding-bottom: 1pt">&#160;</td></tr> <tr style="vertical-align: bottom"> <td style="white-space: nowrap; padding-left: 8.65pt; text-align: center; text-indent: -8.65pt">&#160;</td> <td>&#160;</td> <td colspan="2" style="white-space: nowrap; text-align: center">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td colspan="2" style="white-space: nowrap; text-align: center">&#160;</td> <td>&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 60%; padding-left: 8.65pt; text-indent: -8.65pt"><font style="font-size: 8pt">University Lands - Mineral Owner</font></td> <td style="width: 4%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 14%; text-align: right"><font style="font-size: 8pt">20.000</font></td> <td style="white-space: nowrap; width: 1%"><font style="font-size: 8pt">%</font></td> <td style="width: 4%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 14%; text-align: center"><font style="font-size: 8pt">n/a</font></td> <td style="white-space: nowrap; width: 1%">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 8.65pt; text-indent: -8.65pt">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 8.65pt; text-indent: -8.65pt"><font style="font-size: 8pt">ORRI - Magdalena Royalties, LLC, an entity controlled by Gregory McCabe, Chairman</font></td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">4.500</font></td> <td style="white-space: nowrap"><font style="font-size: 8pt">%</font></td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: center"><font style="font-size: 8pt">n/a</font></td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 8.65pt; text-indent: -8.65pt">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 8.65pt; text-indent: -8.65pt"><font style="font-size: 8pt">ORRI - Unrelated Party</font></td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">0.500</font></td> <td style="white-space: nowrap"><font style="font-size: 8pt">%</font></td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: center"><font style="font-size: 8pt">n/a</font></td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 8.65pt; text-indent: -8.65pt">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 8.65pt; text-indent: -8.65pt">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 8.65pt; text-indent: -8.65pt"><font style="font-size: 8pt">Hudspeth Oil Corporation, a subsidiary of Torchlight Energy Resources Inc.</font></td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">54.375</font></td> <td style="white-space: nowrap"><font style="font-size: 8pt">%</font></td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">72.500</font></td> <td style="white-space: nowrap"><font style="font-size: 8pt">%</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 8.65pt; text-indent: -8.65pt">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 8.65pt; text-indent: -8.65pt"><font style="font-size: 8pt">Wolfbone Investments LLC, an entity controlled by Gregory McCabe, Chairman</font></td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">18.750</font></td> <td style="white-space: nowrap"><font style="font-size: 8pt">%</font></td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">25.000</font></td> <td style="white-space: nowrap"><font style="font-size: 8pt">%</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 8.65pt; text-indent: -8.65pt">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 1pt; padding-left: 8.65pt; text-indent: -8.65pt"><font style="font-size: 8pt">Unrelated Party</font></td> <td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: black 1pt solid">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">1.875</font></td> <td style="white-space: nowrap; padding-bottom: 1pt"><font style="font-size: 8pt">%</font></td> <td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: black 1pt solid">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">2.500</font></td> <td style="white-space: nowrap; padding-bottom: 1pt"><font style="font-size: 8pt">%</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-bottom: 2.5pt; padding-left: 8.65pt; text-indent: -8.65pt">&#160;</td> <td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: black 2.25pt double">&#160;</td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 8pt">100.000</font></td> <td style="white-space: nowrap; padding-bottom: 2.5pt"><font style="font-size: 8pt">%</font></td> <td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: black 2.25pt double">&#160;</td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 8pt">100.000</font></td> <td style="white-space: nowrap; padding-bottom: 2.5pt"><font style="font-size: 8pt">%</font></td></tr> </table> <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td colspan="2" style="white-space: nowrap; padding-bottom: 1pt; text-align: center"><font style="font-size: 8pt">Exercise</font></td> <td style="white-space: nowrap; padding-bottom: 1pt; text-align: center">&#160;</td> <td style="white-space: nowrap; padding-bottom: 1pt; text-align: center">&#160;</td> <td colspan="22" style="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt">Expiration Date in</font></td> <td style="padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="white-space: nowrap; padding-bottom: 1pt; text-align: center">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td></tr> <tr style="vertical-align: bottom"> <td colspan="2" style="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt">Price</font></td> <td style="padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt">2019</font></td> <td style="padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt">2020</font></td> <td style="padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt">2021</font></td> <td style="padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt">2022</font></td> <td style="padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt">2023</font></td> <td style="padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt">2024</font></td> <td style="padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt">Total</font></td> <td style="padding-bottom: 1pt">&#160;</td></tr> <tr style="vertical-align: bottom"> <td colspan="2" style="white-space: nowrap; text-align: center">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td colspan="2" style="white-space: nowrap; text-align: center">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td colspan="2" style="white-space: nowrap; text-align: center">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td colspan="2" style="white-space: nowrap; text-align: center">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td colspan="2" style="white-space: nowrap; text-align: center">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td colspan="2" style="white-space: nowrap; text-align: center">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td colspan="2" style="white-space: nowrap; text-align: center">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td colspan="2" style="white-space: nowrap; text-align: center">&#160;</td> <td>&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 16%; text-align: right"><font style="font-size: 8pt">0.70</font></td> <td style="white-space: nowrap; width: 1%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap; width: 1%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">420,000</font></td> <td style="white-space: nowrap; width: 1%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap; width: 1%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap; width: 1%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 9%; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap; width: 1%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 8%; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap; width: 1%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 8%; text-align: right"><font style="font-size: 8pt">420,000</font></td> <td style="white-space: nowrap; width: 1%">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td><font style="font-size: 8pt">$</font></td> <td style="text-align: right"><font style="font-size: 8pt">1.03</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">120,000</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">120,000</font></td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td><font style="font-size: 8pt">$</font></td> <td style="text-align: right"><font style="font-size: 8pt">1.14</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">600,000</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">600,000</font></td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td><font style="font-size: 8pt">$</font></td> <td style="text-align: right"><font style="font-size: 8pt">1.21</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">120,000</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">120,000</font></td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td><font style="font-size: 8pt">$</font></td> <td style="text-align: right"><font style="font-size: 8pt">1.35</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">365,455</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">365,455</font></td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td><font style="font-size: 8pt">$</font></td> <td style="text-align: right"><font style="font-size: 8pt">1.40</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">321,737</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">321,737</font></td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td><font style="font-size: 8pt">$</font></td> <td style="text-align: right"><font style="font-size: 8pt">1.63</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">100,000</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">100,000</font></td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td><font style="font-size: 8pt">$</font></td> <td style="text-align: right"><font style="font-size: 8pt">1.64</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">200,000</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">200,000</font></td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td><font style="font-size: 8pt">$</font></td> <td style="text-align: right"><font style="font-size: 8pt">1.80</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">1,250,000</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">1,250,000</font></td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td><font style="font-size: 8pt">$</font></td> <td style="text-align: right"><font style="font-size: 8pt">2.00</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">200,000</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">200,000</font></td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td><font style="font-size: 8pt">$</font></td> <td style="text-align: right"><font style="font-size: 8pt">2.23</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">339,901</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">339,901</font></td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td><font style="font-size: 8pt">$</font></td> <td style="text-align: right"><font style="font-size: 8pt">2.50</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">35,211</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">35,211</font></td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-bottom: 1pt"><font style="font-size: 8pt">$</font></td> <td style="padding-bottom: 1pt; text-align: right"><font style="font-size: 8pt">3.50</font></td> <td style="white-space: nowrap; padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: black 1pt solid">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">15,000</font></td> <td style="white-space: nowrap; padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: black 1pt solid">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap; padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: black 1pt solid">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap; padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: black 1pt solid">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap; padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: black 1pt solid">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap; padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: black 1pt solid">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap; padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: black 1pt solid">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">15,000</font></td> <td style="white-space: nowrap; padding-bottom: 1pt">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 2.5pt">&#160;</td> <td style="padding-bottom: 2.5pt; text-align: right">&#160;</td> <td style="white-space: nowrap; padding-bottom: 2.5pt">&#160;</td> <td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: black 2.25pt double">&#160;</td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 8pt">50,211</font></td> <td style="white-space: nowrap; padding-bottom: 2.5pt">&#160;</td> <td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: black 2.25pt double">&#160;</td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 8pt">2,331,638</font></td> <td style="white-space: nowrap; padding-bottom: 2.5pt">&#160;</td> <td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: black 2.25pt double">&#160;</td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 8pt">520,000</font></td> <td style="white-space: nowrap; padding-bottom: 2.5pt">&#160;</td> <td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: black 2.25pt double">&#160;</td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 8pt">365,455</font></td> <td style="white-space: nowrap; padding-bottom: 2.5pt">&#160;</td> <td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: black 2.25pt double">&#160;</td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 8pt">720,000</font></td> <td style="white-space: nowrap; padding-bottom: 2.5pt">&#160;</td> <td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: black 2.25pt double">&#160;</td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 8pt">100,000</font></td> <td style="white-space: nowrap; padding-bottom: 2.5pt">&#160;</td> <td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: black 2.25pt double">&#160;</td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 8pt">4,087,304</font></td> <td style="white-space: nowrap; padding-bottom: 2.5pt">&#160;</td></tr> </table> <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td colspan="2" style="white-space: nowrap; padding-bottom: 1pt; text-align: center"><font style="font-size: 8pt">Exercise</font></td> <td style="padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="14" style="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt">Expiration Date in</font></td> <td style="padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="white-space: nowrap; text-align: center">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td></tr> <tr style="vertical-align: bottom"> <td colspan="2" style="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt">Price</font></td> <td style="padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt">2020</font></td> <td style="padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt">2021</font></td> <td style="padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt">2022</font></td> <td style="padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt">2023</font></td> <td style="padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td colspan="2" style="white-space: nowrap; border-bottom: black 1pt solid; text-align: center"><font style="font-size: 8pt">Total</font></td> <td style="padding-bottom: 1pt">&#160;</td></tr> <tr style="vertical-align: bottom"> <td colspan="2" style="white-space: nowrap; text-align: center">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td colspan="2" style="white-space: nowrap; text-align: center">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td colspan="2" style="white-space: nowrap; text-align: center">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td colspan="2" style="white-space: nowrap; text-align: center">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td colspan="2" style="white-space: nowrap; text-align: center">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td colspan="2" style="white-space: nowrap; text-align: center">&#160;</td> <td>&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 18%; text-align: right"><font style="font-size: 8pt">0.97</font></td> <td style="white-space: nowrap; width: 1%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 13%; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap; width: 1%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 13%; text-align: right"><font style="font-size: 8pt">259,742</font></td> <td style="white-space: nowrap; width: 1%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 13%; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap; width: 1%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 13%; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap; width: 1%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 1%">&#160;</td> <td style="width: 13%; text-align: right"><font style="font-size: 8pt">259,742</font></td> <td style="white-space: nowrap; width: 1%">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td><font style="font-size: 8pt">$</font></td> <td style="text-align: right"><font style="font-size: 8pt">1.10</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">800,000</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">800,000</font></td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td><font style="font-size: 8pt">$</font></td> <td style="text-align: right"><font style="font-size: 8pt">1.19</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">700,000</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">700,000</font></td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td><font style="font-size: 8pt">$</font></td> <td style="text-align: right"><font style="font-size: 8pt">1.57</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">4,500,000</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">4,500,000</font></td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td><font style="font-size: 8pt">$</font></td> <td style="text-align: right"><font style="font-size: 8pt">1.63</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">58,026</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">58,026</font></td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 1pt"><font style="font-size: 8pt">$</font></td> <td style="padding-bottom: 1pt; text-align: right"><font style="font-size: 8pt">1.79</font></td> <td style="white-space: nowrap; padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: black 1pt solid">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">300,000</font></td> <td style="white-space: nowrap; padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: black 1pt solid">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap; padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: black 1pt solid">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap; padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: black 1pt solid">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">-</font></td> <td style="white-space: nowrap; padding-bottom: 1pt">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: black 1pt solid">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right"><font style="font-size: 8pt">300,000</font></td> <td style="white-space: nowrap; padding-bottom: 1pt">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-bottom: 2.5pt">&#160;</td> <td style="padding-bottom: 2.5pt; text-align: right">&#160;</td> <td style="white-space: nowrap; padding-bottom: 2.5pt">&#160;</td> <td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: black 2.25pt double">&#160;</td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 8pt">4,800,000</font></td> <td style="white-space: nowrap; padding-bottom: 2.5pt">&#160;</td> <td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: black 2.25pt double">&#160;</td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 8pt">259,742</font></td> <td style="white-space: nowrap; padding-bottom: 2.5pt">&#160;</td> <td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: black 2.25pt double">&#160;</td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 8pt">858,026</font></td> <td style="white-space: nowrap; padding-bottom: 2.5pt">&#160;</td> <td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: black 2.25pt double">&#160;</td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 8pt">700,000</font></td> <td style="white-space: nowrap; padding-bottom: 2.5pt">&#160;</td> <td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: black 2.25pt double">&#160;</td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 8pt">6,617,768</font></td> <td style="white-space: nowrap; padding-bottom: 2.5pt">&#160;</td></tr> </table> <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="white-space: nowrap; padding-bottom: 1pt; text-align: center"><font style="font-size: 8pt"><u>2019</u></font></td> <td style="padding-bottom: 1pt">&#160;</td> <td style="white-space: nowrap; text-align: center">&#160;</td></tr> <tr style="vertical-align: bottom"> <td style="white-space: nowrap; text-align: center">&#160;</td> <td>&#160;</td> <td style="white-space: nowrap; text-align: center">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 1.5pt"><font style="font-size: 8pt">Risk-free interest rate</font></td> <td>&#160;</td> <td style="white-space: nowrap; padding-left: 1.5pt; text-align: center"><font style="font-size: 8pt">1.77% - 2.46%</font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 1.5pt"><font style="font-size: 8pt">Expected volatility of common stock</font></td> <td>&#160;</td> <td style="white-space: nowrap; padding-left: 1.5pt; text-align: center"><font style="font-size: 8pt">80% - 107%</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 68%; padding-left: 1.5pt"><font style="font-size: 8pt">Dividend yield</font></td> <td style="width: 4%">&#160;</td> <td style="white-space: nowrap; width: 28%; padding-left: 1.5pt; text-align: center"><font style="font-size: 8pt">0.00%</font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 1.5pt"><font style="font-size: 8pt">Discount due to lack of marketability</font></td> <td>&#160;</td> <td style="white-space: nowrap; padding-left: 1.5pt; text-align: center"><font style="font-size: 8pt">20%</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 1.5pt"><font style="font-size: 8pt">Expected life of option/warrant</font></td> <td>&#160;</td> <td style="white-space: nowrap; padding-left: 1.5pt; text-align: center"><font style="font-size: 8pt">Three to Five Years</font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 1.5pt; text-align: right">&#160;</td> <td>&#160;</td> <td style="white-space: nowrap; padding-left: 1.5pt; text-align: right">&#160;</td></tr> <tr style="vertical-align: bottom"> <td style="white-space: nowrap; padding-bottom: 1pt; text-align: center"><font style="font-size: 8pt"><u>2018</u></font></td> <td style="padding-bottom: 1pt">&#160;</td> <td style="white-space: nowrap; text-align: center">&#160;</td></tr> <tr style="vertical-align: bottom"> <td style="white-space: nowrap; text-align: center">&#160;</td> <td>&#160;</td> <td style="white-space: nowrap; text-align: center">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 1.5pt"><font style="font-size: 8pt">Risk-free interest rate</font></td> <td>&#160;</td> <td style="white-space: nowrap; padding-left: 1.5pt; text-align: center"><font style="font-size: 8pt">2.15% - 2.83%</font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 1.5pt"><font style="font-size: 8pt">Expected volatility of common stock</font></td> <td>&#160;</td> <td style="white-space: nowrap; padding-left: 1.5pt; text-align: center"><font style="font-size: 8pt">97% - 119%</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 1.5pt"><font style="font-size: 8pt">Dividend yield</font></td> <td>&#160;</td> <td style="white-space: nowrap; padding-left: 1.5pt; text-align: center"><font style="font-size: 8pt">0.00%</font></td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 1.5pt"><font style="font-size: 8pt">Discount due to lack of marketability</font></td> <td>&#160;</td> <td style="white-space: nowrap; padding-left: 1.5pt; text-align: center"><font style="font-size: 8pt">20%</font></td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 1.5pt"><font style="font-size: 8pt">Expected life of option/warrant</font></td> <td>&#160;</td> <td style="white-space: nowrap; padding-left: 1.5pt; text-align: center"><font style="font-size: 8pt">2.75 to Five Years</font></td></tr> </table> <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 86%; padding-left: 1.5pt"><font style="font-size: 8pt">Unsecured promissory note balance - December 31, 2018</font></td> <td style="width: 2%">&#160;</td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 10%; text-align: right"><font style="font-size: 8pt">11,862,080</font></td> <td style="white-space: nowrap; width: 1%">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 1.5pt; text-align: right">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 1.5pt"><font style="font-size: 8pt">Accretion of discount and amortization of debt issuance costs</font></td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">386,813</font></td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 1pt; padding-left: 1.5pt; text-align: right">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: black 1pt solid">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right">&#160;</td> <td style="white-space: nowrap; padding-bottom: 1pt">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-bottom: 2.5pt; padding-left: 1.5pt"><font style="font-size: 8pt">Unsecured promissory note balance - September 30, 2019</font></td> <td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: black 2.25pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 8pt">12,248,893</font></td> <td style="white-space: nowrap; padding-bottom: 2.5pt">&#160;</td></tr> </table> <table cellspacing="0" cellpadding="0" style="font: 12pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 83%; padding-left: 1.5pt"><font style="font-size: 8pt">Asset retirement obligations &#8211; December 31, 2018</font></td> <td style="width: 3%">&#160;</td> <td style="width: 1%"><font style="font-size: 8pt">$</font></td> <td style="width: 12%; text-align: right"><font style="font-size: 8pt">14,353</font></td> <td style="white-space: nowrap; width: 1%">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 1.5pt; text-align: right">&#160;</td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right">&#160;</td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-left: 1.5pt"><font style="font-size: 8pt">Accretion expense</font></td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">426</font></td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-left: 1.5pt"><font style="font-size: 8pt">Estimated liabilities recorded</font></td> <td>&#160;</td> <td>&#160;</td> <td style="text-align: right"><font style="font-size: 8pt">8,397</font></td> <td style="white-space: nowrap">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="padding-bottom: 1pt; padding-left: 1.5pt; text-align: right">&#160;</td> <td style="padding-bottom: 1pt">&#160;</td> <td style="border-bottom: black 1pt solid">&#160;</td> <td style="border-bottom: black 1pt solid; text-align: right">&#160;</td> <td style="white-space: nowrap; padding-bottom: 1pt">&#160;</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="padding-bottom: 2.5pt; padding-left: 1.5pt"><font style="font-size: 8pt">Asset retirement obligations &#8211; September 30, 2019</font></td> <td style="padding-bottom: 2.5pt">&#160;</td> <td style="border-bottom: black 2.25pt double"><font style="font-size: 8pt">$</font></td> <td style="border-bottom: black 2.25pt double; text-align: right"><font style="font-size: 8pt">23,176</font></td> <td style="white-space: nowrap; padding-bottom: 2.5pt">&#160;</td></tr> </table> -21806350 2084026 1382820 1.00000 0.20000 0.04500 0.00500 .57375 .18750 .01875 1.00000 .72500 .25000 .02500 420000 120000 600000 120000 365455 321737 100000 200000 1250000 4087304 200000 339901 35211 15000 50211 2331638 520000 365455 720000 100000 6617768 4800000 259742 858026 700000 259742 800000 700000 4500000 58026 300000 .0177 .0246 .0215 .0283 .8000 1.0700 .9700 1.1900 .0000 .0000 .2000 .2000 P3Y P5Y P2Y9M P5Y 12248893 11862080 386813 23176 14353 426 8397 <p style="font: 8pt Times New Roman, Times, Serif; margin: 0; text-align: justify">The Company has evaluated the period after the balance sheet date up through the date that the financial statements were issued, and determined that there were no subsequent events or transactions that required recognition or disclosure in the financial statements.</p> EX-101.SCH 6 trch-20190930.xsd XBRL TAXONOMY EXTENSION SCHEMA 00000001 - Document - Document and Entity Information link:presentationLink link:calculationLink link:definitionLink 00000002 - Statement - CONSOLIDATED CONDENSED BALANCE SHEETS link:presentationLink link:calculationLink link:definitionLink 00000003 - Statement - CONSOLIDATED CONDENSED BALANCE SHEETS (Parenthetical) link:presentationLink link:calculationLink link:definitionLink 00000004 - Statement - CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS link:presentationLink link:calculationLink link:definitionLink 00000005 - Statement - CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS link:presentationLink link:calculationLink link:definitionLink 00000006 - Statement - CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY link:presentationLink link:calculationLink link:definitionLink 00000007 - Disclosure - 1. NATURE OF BUSINESS link:presentationLink link:calculationLink link:definitionLink 00000008 - Disclosure - 2. GOING CONCERN link:presentationLink link:calculationLink link:definitionLink 00000009 - Disclosure - 3. SIGNIFICANT ACCOUNTING POLICIES link:presentationLink link:calculationLink link:definitionLink 00000010 - Disclosure - 4. OIL & GAS PROPERTIES link:presentationLink link:calculationLink link:definitionLink 00000011 - Disclosure - 5. RELATED PARTY PAYABLES link:presentationLink link:calculationLink link:definitionLink 00000012 - Disclosure - 6. COMMITMENTS AND CONTINGENCIES link:presentationLink link:calculationLink link:definitionLink 00000013 - Disclosure - 7. STOCKHOLDERS' EQUITY link:presentationLink link:calculationLink link:definitionLink 00000014 - Disclosure - 8. INCOME TAXES link:presentationLink link:calculationLink link:definitionLink 00000015 - Disclosure - 9. PROMISSORY NOTES link:presentationLink link:calculationLink link:definitionLink 00000016 - Disclosure - 10. ASSET RETIREMENT OBLIGATIONS link:presentationLink link:calculationLink link:definitionLink 00000017 - Disclosure - 11. SUBSEQUENT EVENTS link:presentationLink link:calculationLink link:definitionLink 00000018 - Disclosure - 3. SIGNIFICANT ACCOUNTING POLICIES (Policies) link:presentationLink link:calculationLink link:definitionLink 00000019 - Disclosure - 3. SIGNIFICANT ACCOUNTING POLICIES (Tables) link:presentationLink link:calculationLink link:definitionLink 00000020 - Disclosure - 4. OIL & GAS PROPERTIES (Tables) link:presentationLink link:calculationLink link:definitionLink 00000021 - Disclosure - 7. STOCKHOLDERS' EQUITY (Tables) link:presentationLink link:calculationLink link:definitionLink 00000022 - Disclosure - 9. PROMISSORY NOTES (Tables) link:presentationLink link:calculationLink link:definitionLink 00000023 - Disclosure - 10. ASSET RETIREMENT OBLIGATIONS (Tables) link:presentationLink link:calculationLink link:definitionLink 00000024 - Disclosure - 2. GOING CONCERN (Details Narrative) link:presentationLink link:calculationLink link:definitionLink 00000025 - Disclosure - 3. SIGNIFICANT ACCOUNTING POLICIES (Details) link:presentationLink link:calculationLink link:definitionLink 00000026 - Disclosure - 3. SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) link:presentationLink link:calculationLink link:definitionLink 00000027 - Disclosure - 4. OIL & GAS PROPERTIES (Details) link:presentationLink link:calculationLink link:definitionLink 00000028 - Disclosure - 4. OIL & GAS PROPERTIES (Details 1) link:presentationLink link:calculationLink link:definitionLink 00000029 - Disclosure - 7. STOCKHOLDERS' EQUITY (Details) link:presentationLink link:calculationLink link:definitionLink 00000030 - Disclosure - 7. STOCKHOLDERS' EQUITY (Details 1) link:presentationLink link:calculationLink link:definitionLink 00000031 - Disclosure - 7. STOCKHOLDERS' EQUITY (Details 2) link:presentationLink link:calculationLink link:definitionLink 00000032 - Disclosure - 8. INCOME TAXES (Details Narrative) link:presentationLink link:calculationLink link:definitionLink 00000033 - Disclosure - 9. PROMISSORY NOTES (Details) link:presentationLink link:calculationLink link:definitionLink 00000034 - Disclosure - 10. ASSET RETIREMENET OBLIGATION (Details) link:presentationLink link:calculationLink link:definitionLink EX-101.CAL 7 trch-20190930_cal.xml XBRL TAXONOMY EXTENSION CALCULATION LINKBASE EX-101.DEF 8 trch-20190930_def.xml XBRL TAXONOMY EXTENSION DEFINITIONS LINKBASE EX-101.LAB 9 trch-20190930_lab.xml XBRL TAXONOMY EXTENSION LABEL LINKBASE Range [Axis] Minimum Maximum Exercise Price Range [Axis] 0.70 1.03 1.14 1.21 1.35 1.40 1.63 1.64 1.80 Total 2.00 2.23 2.50 3.50 Expiring in the year 2019 Expiring in the year 2020 Expiring in the year 2021 Expiring in the year 2022 Statement, Equity Components [Axis] Common Stock Additional Paid-in Capital Accumulated Deficit Expiring in the year 2023 Expiring in the year 2024 Oil and Gas Delivery Commitments and Contracts [Axis] University Lands - Mineral Owner ORRI - Magdalena Royalties, LLC ORRI - Unrelated Party Hudspeth Oil Corporation Wolfbone Investments LLC Unrelated Party Product and Service [Axis] Oil Sales Gas Sales 0.97 1.10 1.19 1.57 1.63 1.79 Document and Entity Information Entity Registrant Name Document Type Document Period End Date Amendment Flag Entity Central Index Key Current Fiscal Year End Date Entity Common Stock, Shares Outstanding Entity Filer Category Entity Emerging Growth Company Entity Small Business Entity Current Reporting Status Entity Shell Company Document Fiscal Year Focus Document Fiscal Period Focus Statement of Financial Position [Abstract] ASSETS Current assets: Cash Accounts receivable Production revenue receivable Prepayments - development costs Prepaid expenses Total current assets Oil and gas properties, net Office equipment, net Other assets TOTAL ASSETS LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable Unsecured promissory notes, net of discount and financing costs of $315,404 at September 30, 2019 Notes payable Accrued payroll Related party payables Due to working interest owners Accrued interest payable Total current liabilities Unsecured promissory notes, net of discount Convertible promissory notes payable, net of discount of $1,283,658 Notes payable Asset retirement obligations Total liabilities Commitments and contingencies Stockholders' equity: Preferred stock, par value $0.001, 10,000,000 shares authorized; -0- issued and outstanding at September 30, 2019 and December 31, 2018 Common stock, par value $0.001 per share; 150,000,000 shares authorized; 74,255,375 issued and outstanding at September 30, 2019, 70,112,376 issued and outstanding at December 31, 2018 Additional paid-in capital Accumulated deficit Total stockholders' equity TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY Unsecured promissory notes discount, current Convertible promissory notes payable discount, noncurrent Preferred Stock, par value Preferred Stock, shares authorized Preferred Stock, shares issued Preferred Stock, shares outstanding Common Stock, par or stated value Common Stock, shares authorized Common Stock, shares issued Common Stock, shares outstanding Income Statement [Abstract] Revenues: Oil and gas sales Cost of revenues Gross profit Operating expenses: General and administrative expenses Depreciation, depletion and amortization Loss on settlement Impairment loss Total operating expenses Other income (expense) Interest expense and accretion of note discounts Franchise tax Interest income Total (expense), net Loss before income taxes Provision for income taxes Net loss Loss per share: basic and diluted Weighted average shares outstanding: basic and diluted Statement of Cash Flows [Abstract] Cash Flows From Operating Activities Net loss Adjustments to reconcile net loss to net cash from operations: Stock based compensation Stock issued for interest payments on notes payable Amortization of debt issuance costs Accretion of note discounts Accrued interest payable in stock Depreciation, depletion and amortization Net settlement offset Impairment loss Change in: Accounts receivable Production revenue receivable Prepayments - development costs Prepaid expenses Other assets Accounts payable and accrued expenses Accrued interest payable Net cash from operating activities Cash Flows From Investing Activities Investment in oil and gas properties Purchases of property, plant, and equipment Net cash from investing activities Cash Flows From Financing Activities Issuance of common stock Proceeds from convertible promissory notes Repayment of promissory notes Proceeds from warrant exercise Net cash from financing activities Net (decrease) in cash Cash - beginning of period Cash - end of period Supplemental disclosure of cash flow information: (Non Cash Items) Common stock issued for lease interests Common stock issued for partial payment of unpaid compensation Common stock issued for payment in kind on notes payable Common stock issued in conversion of convertible note principal Decrease in accounts payable for property development costs Beneficial conversion feature on convertible notes Debt discount from fair value of warrants issued with convertible notes Cash paid for interest Cash paid for income tax Statement [Table] Statement [Line Items] Equity Components [Axis] Begining balance, shares Begining balance, amount Issuance of common stock for services, shares Issuance of common stock for services, amount Issuance of common stock for cash, shares Issuance of common stock for cash, amount Issuance of common stock for oil and gas lease extension, shares Issuance of common stock for oil and gas lease extension, amount Issuance of common stock for interest, shares Issuance of common stock for interest, amount Issuance of common stock for note payment in kind, shares Issuance of common stock for note payment in kind, amount Issuance of common stock for option/warrant exercise, shares Issuance of common stock for option/warrant exercise, amount Warrants issued for services Issuance of common stock for convertible note conversion, shares Issuance of common stock for convertible note conversion, amount Stock options issued for services Net loss Ending balance, shares Ending balance, amount Organization, Consolidation and Presentation of Financial Statements [Abstract] NATURE OF BUSINESS Going Concern GOING CONCERN Accounting Policies [Abstract] SIGNIFICANT ACCOUNTING POLICIES Oil and Gas Property [Abstract] OIL & GAS PROPERTIES Due to Related Parties [Abstract] RELATED PARTY PAYABLES Commitments and Contingencies Disclosure [Abstract] COMMITMENTS AND CONTINGENCIES Stockholders' Equity Attributable to Parent [Abstract] STOCKHOLDERS' EQUITY Income Tax Disclosure [Abstract] INCOME TAXES Debt Disclosure [Abstract] PROMISSORY NOTES Asset Retirement Obligation [Abstract] ASSET RETIREMENT OBLIGATIONS Subsequent Events [Abstract] SUBSEQUENT EVENTS Use of estimates Basis of presentation Risks and uncertainties Concentration of risks Fair value of financial instruments Cash and cash equivalents Accounts receivable Oil and gas properties Capitalized interest Depreciation, depletion and amortization Ceiling test Asset retirement obligations Income taxes Share-based compensation Revenue recognition Basic and diluted earnings (loss) per share Environmental laws and regulations Recent adopted accounting pronouncements Subsequent events Revenues from oil and gas sales Schedule of oil and gas properties Schedule of revenue and working interest Summary of warrants outstanding Summary of stock options outstanding Assumptions used in calculating the fair value of the warrants Summary of unsecured promissory note transactions Asset retirement obligation Working capital deficit Revenues Capitalized interest Impairment expense Evaluated costs subject to amortization Unevaluated costs Total capitalized costs Less accumulated depreciation, depletion and amortization Total oil and gas properties Revenue interest Working interest Statistical Measurement [Axis] Outstanding warrants and stock options Stock options outstanding Risk-free interest rate Expected volatility of common stock Dividend yield Discount due to lack of marketability Expected life of warrant in years Net operating loss carryforwards Unsecured promissory note, beginning Accretion of discount and amortization of debt issuance costs Unsecured promissory note, ending Asset retirement obligations, beginning Accretion expense Estimated liabilities recorded Asset retirement obligations, ending The entire policy text block is about Ceiling test. The entire policy text block is about Environmental laws and regulations Evaluated costs subject to amortization Expiring in the year 2018 Custom Element. Custom Element. Custom Element. ExercisePriceFiveMember Assets, Current Assets Liabilities, Current Notes Payable, Noncurrent Liabilities Stockholders' Equity Attributable to Parent Liabilities and Equity Cost of Revenue Gross Profit Gain (Loss) Related to Litigation Settlement Operating Expenses Interest Expense Franchisor Costs Other Nonoperating Income (Expense) Net Income (Loss) Attributable to Parent Depreciation, Amortization and Accretion, Net Increase (Decrease) in Accounts and Notes Receivable Increase (Decrease) in Other Receivables Unevaluated costs [Default Label] Increase (Decrease) in Prepaid Expense Increase (Decrease) in Other Operating Assets Increase (Decrease) in Interest Payable, Net Net Cash Provided by (Used in) Operating Activities, Continuing Operations Payments to Explore and Develop Oil and Gas Properties Payments to Acquire Property, Plant, and Equipment Net Cash Provided by (Used in) Investing Activities Repayments of Notes Payable Net Cash Provided by (Used in) Financing Activities Cash and Cash Equivalents, Period Increase (Decrease) Cash and Cash Equivalents, at Carrying Value Shares, Outstanding Receivable [Policy Text Block] Depreciation, Depletion, and Amortization [Policy Text Block] Asset Retirement Obligation [Policy Text Block] Capitalized Costs, Mineral Interests in Unproved Properties Unsecured Debt Asset Retirement Obligation EX-101.PRE 10 trch-20190930_pre.xml XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE XML 11 R4.htm IDEA: XBRL DOCUMENT v3.19.3
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS - USD ($)
 3 Months Ended 9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
Revenues:        
Oil and gas sales $ 71,142 $ 128,675 $ 619,054 $ 893,101
Cost of revenues (117,104) (182,294) (358,424) (595,622)
Gross profit (45,962) (53,619) 260,630 297,479
Operating expenses:        
General and administrative expenses (849,425) (747,357) (2,552,901) (3,330,790)
Depreciation, depletion and amortization (27,355) (106,136) (355,050) (368,074)
Loss on settlement 0 0 0 (369,439)
Impairment loss 0 0 (474,357) (139,891)
Total operating expenses (876,780) (853,493) (3,382,308) (4,208,194)
Other income (expense)        
Interest expense and accretion of note discounts (328,895) (128,226) (694,077) (391,428)
Franchise tax 0 0 (4,442) 0
Interest income 0 261 52 745
Total (expense), net (328,895) (127,965) (698,467) (390,683)
Loss before income taxes (1,251,637) (1,035,077) (3,820,145) (4,301,398)
Provision for income taxes 0 0 0 0
Net loss $ (1,251,637) $ (1,035,077) $ (3,820,145) $ (4,301,398)
Loss per share: basic and diluted $ (0.02) $ (0.01) $ (0.05) $ (0.06)
Weighted average shares outstanding: basic and diluted 73,930,596 70,080,854 72,350,083 67,468,291
XML 12 R16.htm IDEA: XBRL DOCUMENT v3.19.3
10. ASSET RETIREMENT OBLIGATIONS
 9 Months Ended
Sep. 30, 2019
Asset Retirement Obligation [Abstract]  
ASSET RETIREMENT OBLIGATIONS

The following is a reconciliation of the asset retirement obligations liability through September 30, 2019:

 

Asset retirement obligations – December 31, 2018   $ 14,353  
         
Accretion expense     426  
Estimated liabilities recorded     8,397  
         
Asset retirement obligations – September 30, 2019   $ 23,176  

 
ZIP 13 0001199835-19-000029-xbrl.zip IDEA: XBRL DOCUMENT begin 644 0001199835-19-000029-xbrl.zip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htm IDEA: XBRL DOCUMENT v3.19.3
6. COMMITMENTS AND CONTINGENCIES
 9 Months Ended
Sep. 30, 2019
Commitments and Contingencies Disclosure [Abstract]  
COMMITMENTS AND CONTINGENCIES

Leases

 

The Company has a noncancelable lease for its office premises that expires on November 30, 2019 and which requires the payment of base lease amounts and executory costs such as taxes, maintenance and insurance. Effective June 1, 2019 the Company entered into an agreement with a company that had been subleasing a portion of its office space to become the primary obligor on the lease and to assume full responsibility for lease payments after lease expiration on November 30, 2019. The Company will continue after November 30, 2019 as a subtenant on a month to month basis.

 

Approximate future minimum rental commitments under the office premises lease total $12,288 through the expiration date of November 30, 2019.

 

Environmental matters

 

The Company is subject to contingencies as a result of environmental laws and regulations. Present and future environmental laws and regulations applicable to the Company’s operations could require substantial capital expenditures or could adversely affect its operations in other ways that cannot be predicted at this time. As of September 30, 2019 and December 31, 2018, no amounts had been recorded because no specific liability has been identified that is reasonably probable of requiring the Company to fund any future material amounts.

XML 15 R8.htm IDEA: XBRL DOCUMENT v3.19.3
2. GOING CONCERN
 9 Months Ended
Sep. 30, 2019
Going Concern  
GOING CONCERN

At September 30, 2019, the Company had not yet achieved profitable operations. We had a net loss of $3,820,145 for the nine months ended September 30, 2019 and had accumulated losses of $93,134,450 since our inception. We expect to incur further losses in the development of our business. The Company had a working capital deficit as of September 30, 2019 of $21,806,350. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

 

The Company’s ability to continue as a going concern is dependent on 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’s plan to address the Company’s ability to continue as a going concern includes: (1) obtaining debt or equity funding from private placement or institutional sources; (2) obtain loans from financial institutions, where possible, or (3) participating in joint venture transactions with third parties. Although management believes that it will be able to obtain the necessary funding to allow the Company to remain a going concern through the methods discussed above, there can be no assurances that such methods will prove successful.

 

These consolidated financial statements have been prepared assuming that the Company will continue as a going concern and therefore, the financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amount and classifications of liabilities that may result from the outcome of this uncertainty.

 
XML 16 R31.htm IDEA: XBRL DOCUMENT v3.19.3
7. STOCKHOLDERS' EQUITY (Details 2)
 9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Dividend yield 0.00% 0.00%
Discount due to lack of marketability 20.00% 20.00%
Minimum    
Risk-free interest rate 1.77% 2.15%
Expected volatility of common stock 80.00% 97.00%
Expected life of warrant in years 3 years 2 years 9 months
Maximum    
Risk-free interest rate 2.46% 2.83%
Expected volatility of common stock 107.00% 119.00%
Expected life of warrant in years 5 years 5 years
XML 18 report.css IDEA: XBRL DOCUMENT /* Updated 2009-11-04 */ /* v2.2.0.24 */ /* DefRef Styles */ ..report table.authRefData{ background-color: #def; border: 2px solid #2F4497; font-size: 1em; position: absolute; } ..report table.authRefData a { display: block; font-weight: bold; } ..report table.authRefData p { margin-top: 0px; } ..report table.authRefData .hide { background-color: #2F4497; padding: 1px 3px 0px 0px; text-align: right; } ..report table.authRefData .hide a:hover { background-color: #2F4497; } ..report table.authRefData .body { height: 150px; overflow: auto; width: 400px; } ..report table.authRefData table{ font-size: 1em; } /* Report Styles */ ..pl a, .pl a:visited { color: black; text-decoration: none; } /* table */ ..report { background-color: white; border: 2px solid #acf; clear: both; color: black; font: normal 8pt Helvetica, Arial, san-serif; margin-bottom: 2em; } ..report hr { border: 1px solid #acf; } /* Top labels */ ..report th { background-color: #acf; color: black; font-weight: bold; text-align: center; } ..report th.void { background-color: transparent; color: #000000; font: bold 10pt Helvetica, Arial, san-serif; text-align: left; } ..report .pl { text-align: left; vertical-align: top; white-space: normal; width: 200px; white-space: normal; /* word-wrap: break-word; */ } ..report td.pl a.a { cursor: pointer; display: block; width: 200px; overflow: hidden; } ..report td.pl div.a { width: 200px; } ..report td.pl a:hover { background-color: #ffc; } /* Header rows... */ ..report tr.rh { background-color: #acf; color: black; font-weight: bold; } /* Calendars... */ ..report .rc { background-color: #f0f0f0; } /* Even rows... */ ..report .re, .report .reu { background-color: #def; } ..report .reu td { border-bottom: 1px solid black; } /* Odd rows... */ ..report .ro, .report .rou { background-color: white; } ..report .rou td { border-bottom: 1px solid black; } ..report .rou table td, .report .reu table td { border-bottom: 0px solid black; } /* styles for footnote marker */ ..report .fn { white-space: nowrap; } /* styles for numeric types */ ..report .num, .report .nump { text-align: right; white-space: nowrap; } ..report .nump { padding-left: 2em; } ..report .nump { padding: 0px 0.4em 0px 2em; } /* styles for text types */ ..report .text { text-align: left; white-space: normal; } ..report .text .big { margin-bottom: 1em; width: 17em; } ..report .text .more { display: none; } ..report .text .note { font-style: italic; font-weight: bold; } ..report .text .small { width: 10em; } ..report sup { font-style: italic; } ..report .outerFootnotes { font-size: 1em; } EXCEL 19 Financial_Report.xlsx IDEA: XBRL DOCUMENT begin 644 Financial_Report.xlsx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htm IDEA: XBRL DOCUMENT v3.19.3
2. GOING CONCERN (Details Narrative) - USD ($)
 3 Months Ended 9 Months Ended
Sep. 30, 2019
Jun. 30, 2019
Mar. 31, 2019
Sep. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
Dec. 31, 2018
Going Concern              
Net loss $ (1,251,637) $ (890,634) $ (1,677,874) $ (1,035,077) $ (3,820,145) $ (4,301,398)  
Accumulated deficit (93,134,450)       (93,134,450)   $ (89,314,305)
Working capital deficit $ (21,806,350)       $ (21,806,350)    
XML 21 R20.htm IDEA: XBRL DOCUMENT v3.19.3
4. OIL & GAS PROPERTIES (Tables)
 9 Months Ended
Sep. 30, 2019
Oil and Gas Property [Abstract]  
Schedule of oil and gas properties
Evaluated costs subject to amortization   $ 12,458,270     $ 11,664,586  
Unevaluated costs     37,529,864       31,746,477  
Total capitalized costs     49,988,134       43,411,063  
Less accumulated depreciation, depletion and amortization     (7,671,198 )     (6,845,602 )
Total oil and gas properties   $ 42,316,936     $ 36,565,461  
Schedule of revenue and working interest
    Revenue     Working  
    Interest     Interest  
             
University Lands - Mineral Owner     20.000 %     n/a  
                 
ORRI - Magdalena Royalties, LLC, an entity controlled by Gregory McCabe, Chairman     4.500 %     n/a  
                 
ORRI - Unrelated Party     0.500 %     n/a  
                 
                 
Hudspeth Oil Corporation, a subsidiary of Torchlight Energy Resources Inc.     54.375 %     72.500 %
                 
Wolfbone Investments LLC, an entity controlled by Gregory McCabe, Chairman     18.750 %     25.000 %
                 
Unrelated Party     1.875 %     2.500 %
      100.000 %     100.000 %
XML 22 R28.htm IDEA: XBRL DOCUMENT v3.19.3
4. OIL & GAS PROPERTIES (Details 1)
 9 Months Ended
Sep. 30, 2019
Revenue interest 100.00%
Working interest 100.00%
University Lands - Mineral Owner  
Revenue interest 20.00%
Working interest
ORRI - Magdalena Royalties, LLC  
Revenue interest 4.50%
Working interest
ORRI - Unrelated Party  
Revenue interest 0.50%
Working interest
Hudspeth Oil Corporation  
Revenue interest 57.375%
Working interest 72.50%
Wolfbone Investments LLC  
Revenue interest 18.75%
Working interest 25.00%
Unrelated Party  
Revenue interest 1.875%
Working interest 2.50%
XML 23 R29.htm IDEA: XBRL DOCUMENT v3.19.3
7. STOCKHOLDERS' EQUITY (Details)
Sep. 30, 2019
shares
0.70  
Outstanding warrants and stock options 420,000
1.03  
Outstanding warrants and stock options 120,000
1.14  
Outstanding warrants and stock options 600,000
1.21  
Outstanding warrants and stock options 120,000
1.35  
Outstanding warrants and stock options 365,455
1.40  
Outstanding warrants and stock options 321,737
1.63  
Outstanding warrants and stock options 100,000
1.64  
Outstanding warrants and stock options 200,000
1.80  
Outstanding warrants and stock options 1,250,000
2.00  
Outstanding warrants and stock options 200,000
2.23  
Outstanding warrants and stock options 339,901
2.50  
Outstanding warrants and stock options 35,211
3.50  
Outstanding warrants and stock options 15,000
Total  
Outstanding warrants and stock options 4,087,304
Total | Expiring in the year 2019  
Outstanding warrants and stock options 50,211
Total | Expiring in the year 2020  
Outstanding warrants and stock options 2,331,638
Total | Expiring in the year 2021  
Outstanding warrants and stock options 520,000
Total | Expiring in the year 2022  
Outstanding warrants and stock options 365,455
Total | Expiring in the year 2023  
Outstanding warrants and stock options 720,000
Total | Expiring in the year 2024  
Outstanding warrants and stock options 100,000
XML 24 R25.htm IDEA: XBRL DOCUMENT v3.19.3
3. SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($)
 3 Months Ended 9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
Revenues $ 71,142 $ 128,675 $ 619,054 $ 893,101
Oil Sales        
Revenues 71,064 124,830 596,247 881,364
Gas Sales        
Revenues $ 78 $ 3,845 $ 22,807 $ 11,737
XML 25 R21.htm IDEA: XBRL DOCUMENT v3.19.3
7. STOCKHOLDERS' EQUITY (Tables)
 9 Months Ended
Sep. 30, 2019
Stockholders' equity:  
Summary of warrants outstanding
Exercise     Expiration Date in        
Price     2019     2020     2021     2022     2023     2024     Total  
                                             
$ 0.70       -       420,000       -       -       -       -       420,000  
$ 1.03       -       -       120,000       -       -       -       120,000  
$ 1.14       -       -       -       -       600,000       -       600,000  
$ 1.21       -       -       -       -       120,000       -       120,000  
$ 1.35       -       -       -       365,455                       365,455  
$ 1.40       -       321,737       -       -       -       -       321,737  
$ 1.63       -       -       -       -       -       100,000       100,000  
$ 1.64       -       -       200,000       -       -       -       200,000  
$ 1.80       -       1,250,000       -       -       -       -       1,250,000  
$ 2.00       -       -       200,000       -       -       -       200,000  
$ 2.23       -       339,901       -       -       -       -       339,901  
$ 2.50       35,211       -       -       -       -       -       35,211  
$ 3.50       15,000       -       -       -       -       -       15,000  
          50,211       2,331,638       520,000       365,455       720,000       100,000       4,087,304  
Summary of stock options outstanding
Exercise     Expiration Date in        
Price     2020     2021     2022     2023     Total  
                                 
$ 0.97       -       259,742       -       -       259,742  
$ 1.10       -       -       800,000       -       800,000  
$ 1.19       -       -       -       700,000       700,000  
$ 1.57       4,500,000       -       -       -       4,500,000  
$ 1.63       -       -       58,026       -       58,026  
$ 1.79       300,000       -       -       -       300,000  
          4,800,000       259,742       858,026       700,000       6,617,768  
Assumptions used in calculating the fair value of the warrants
2019    
     
Risk-free interest rate   1.77% - 2.46%
Expected volatility of common stock   80% - 107%
Dividend yield   0.00%
Discount due to lack of marketability   20%
Expected life of option/warrant   Three to Five Years
     
2018    
     
Risk-free interest rate   2.15% - 2.83%
Expected volatility of common stock   97% - 119%
Dividend yield   0.00%
Discount due to lack of marketability   20%
Expected life of option/warrant   2.75 to Five Years
XML 26 R17.htm IDEA: XBRL DOCUMENT v3.19.3
11. SUBSEQUENT EVENTS
 9 Months Ended
Sep. 30, 2019
Subsequent Events [Abstract]  
SUBSEQUENT EVENTS

The Company has evaluated the period after the balance sheet date up through the date that the financial statements were issued, and determined that there were no subsequent events or transactions that required recognition or disclosure in the financial statements.
XML 27 R13.htm IDEA: XBRL DOCUMENT v3.19.3
7. STOCKHOLDERS' EQUITY
 9 Months Ended
Sep. 30, 2019
Stockholders' equity:  
STOCKHOLDERS' EQUITY

Common Stock

 

During the nine months ended September 30, 2019, the Company issued 3,146,100 shares of common stock for cash of $2,516,880.

 

During the nine months ended September 30, 2019, the Company issued 312,593 shares of common stock with a fair value of $365,400 as compensation for services.

 

During the nine months ended September 30, 2019, the Company issued 167,845 shares of common stock valued at $183,714 in payment of interest accrued on notes payable.

 

During the nine months ended September 30, 2019, the Company issued 168,690 shares of common stock resulting from warrant and option exercise for consideration totaling $184,843.

 

The Company issued 100,000 shares of common stock effective May 1, 2019, as compensation for an extension of oil and gas lease expiration valued at $125,000.

 

In April 2019, the Company issued 202,316 shares of common stock in satisfaction of the payment in kind valued at $314,108 due on April 10, 2019 to the holders of notes payable by the Company.

 

Warrants and Options

 

During the nine months ended September 30, 2019, the Company issued 200,000 warrants and options with total fair value of $154,000 as compensation for services and recorded expense of $335,320 related to warrants and options issued in prior periods.

 

During the nine months ended September 30, 2019, the Company issued 365,455 warrants valued at $240,455 in connection with the issuance of convertible notes payable.

 

In connection with the issuance of common stock for cash during the nine months ended September 30, 2019, 1,592,600 warrants were surrendered to the Company for cancellation.

 

A summary of warrants outstanding as of September 30, 2019 by exercise price and year of expiration is presented below:

 

Exercise     Expiration Date in        
Price     2019     2020     2021     2022     2023     2024     Total  
                                             
$ 0.70       -       420,000       -       -       -       -       420,000  
$ 1.03       -       -       120,000       -       -       -       120,000  
$ 1.14       -       -       -       -       600,000       -       600,000  
$ 1.21       -       -       -       -       120,000       -       120,000  
$ 1.35       -       -       -       365,455                       365,455  
$ 1.40       -       321,737       -       -       -       -       321,737  
$ 1.63       -       -       -       -       -       100,000       100,000  
$ 1.64       -       -       200,000       -       -       -       200,000  
$ 1.80       -       1,250,000       -       -       -       -       1,250,000  
$ 2.00       -       -       200,000       -       -       -       200,000  
$ 2.23       -       339,901       -       -       -       -       339,901  
$ 2.50       35,211       -       -       -       -       -       35,211  
$ 3.50       15,000       -       -       -       -       -       15,000  
          50,211       2,331,638       520,000       365,455       720,000       100,000       4,087,304  

 

A summary of stock options outstanding as of September 30, 2019 by exercise price and year of expiration is presented below:

 

Exercise     Expiration Date in        
Price     2020     2021     2022     2023     Total  
                                 
$ 0.97       -       259,742       -       -       259,742  
$ 1.10       -       -       800,000       -       800,000  
$ 1.19       -       -       -       700,000       700,000  
$ 1.57       4,500,000       -       -       -       4,500,000  
$ 1.63       -       -       58,026       -       58,026  
$ 1.79       300,000       -       -       -       300,000  
          4,800,000       259,742       858,026       700,000       6,617,768  

 

At September 30, 2019, the Company had reserved 10,705,072 common shares for future exercise of warrants and options.

 

Warrants and options granted were valued using the Black-Scholes Option Pricing Model. The assumptions used in calculating the fair value of the warrants and options issued were as follows:

 

2019    
     
Risk-free interest rate   1.77% - 2.46%
Expected volatility of common stock   80% - 107%
Dividend yield   0.00%
Discount due to lack of marketability   20%
Expected life of option/warrant   Three to Five Years
     
2018    
     
Risk-free interest rate   2.15% - 2.83%
Expected volatility of common stock   97% - 119%
Dividend yield   0.00%
Discount due to lack of marketability   20%
Expected life of option/warrant   2.75 to Five Years
XML 28 R9.htm IDEA: XBRL DOCUMENT v3.19.3
3. SIGNIFICANT ACCOUNTING POLICIES
 9 Months Ended
Sep. 30, 2019
Accounting Policies [Abstract]  
SIGNIFICANT ACCOUNTING POLICIES

The Company maintains its accounts on the accrual method of accounting in accordance with accounting principles generally accepted in the United States of America. Accounting principles followed and the methods of applying those principles, which materially affect the determination of financial position, results of operations and cash flows are summarized below:

 

Use of estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and certain assumptions that affect the amounts reported in these consolidated financial statements and accompanying notes. Actual results could differ from these estimates.

 

Basis of presentation—The financial statements are presented on a consolidated basis and include all of the accounts of Torchlight Energy Resources Inc. and its wholly owned subsidiaries, Torchlight Energy, Inc., Torchlight Energy Operating, LLC, Hudspeth Oil Corporation, Torchlight Hazel LLC, and Warwink Properties LLC. All significant intercompany balances and transactions have been eliminated.

 

These interim financial statements are unaudited and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain disclosures have been condensed or omitted from these financial statements. Accordingly, they do not include all the information and notes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete consolidated financial statements, and should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2018.

 

In the opinion of management, the accompanying unaudited financial condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, necessary to fairly present the financial position as of, and the results of operations for, all periods presented. In preparing the accompanying financial statements, management has made certain estimates and assumptions that affect reported amounts in the condensed financial statements and disclosures of contingencies. Actual results may differ from those estimates. The results for interim periods are not necessarily indicative of annual results. Certain reclassifications have been made to the prior period’s consolidated financial statements and related footnotes to conform them to the current period presentation.

 

Risks and uncertainties – The Company’s operations are subject to significant risks and uncertainties, including financial, operational, technological, and other risks associated with operating an emerging business, including the potential risk of business failure.

 

Concentration of risks – At times the Company’s cash balances are in excess of amounts guaranteed by the Federal Deposit Insurance Corporation. The Company’s cash is placed with a highly rated financial institution, and the Company regularly monitors the credit worthiness of the financial institutions with which it does business.

 

Fair value of financial instruments – Financial instruments consist of cash, receivables, payables and promissory notes, if any. The estimated fair values of cash, receivables, and payables approximate the carrying amount due to the relatively short maturity of these instruments. The carrying amounts of any promissory notes approximate their fair value giving affect for the term of the note and the effective interest rates.

 

For assets and liabilities that require re-measurement to fair value the Company categorizes them in a three-level fair value hierarchy as follows:

 

  ● Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.

 

  ● Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration.

 

  ● Level 3 inputs are unobservable inputs based on management’s own assumptions used to measure assets and liabilities at fair value.

 

A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

 

Cash and cash equivalents - Cash and cash equivalents include certain investments in highly liquid instruments with original maturities of three months or less.

 

Accounts receivable – Accounts receivable consist of uncollateralized oil and natural gas revenues due under normal trade terms, as well as amounts due from working interest owners of oil and gas properties for their share of expenses paid on their behalf by the Company. Management reviews receivables periodically and reduces the carrying amount by a valuation allowance that reflects management’s best estimate of the amount that may not be collectible. As of September 30, 2019 and December 31, 2018, no valuation allowance was considered necessary.

 

Oil and gas properties – The Company uses the full cost method of accounting for exploration and development activities as defined by the Securities and Exchange Commission (“SEC”). Under this method of accounting, the costs of unsuccessful, as well as successful, exploration and development activities are capitalized as properties and equipment. This includes any internal costs that are directly related to property acquisition, exploration and development activities but does not include any costs related to production, general corporate overhead or similar activities. Gain or loss on the sale or other disposition of oil and gas properties is not recognized, unless the gain or loss would significantly alter the relationship between capitalized costs and proved reserves.

 

Oil and gas properties include costs that are excluded from costs being depleted or amortized. Oil and natural gas property costs excluded represent investments in unevaluated properties and include non-producing leasehold, geological, and geophysical costs associated with leasehold or drilling interests and exploration drilling costs. The Company allocates a portion of its acquisition costs to unevaluated properties based on relative value. Costs are transferred to the full cost pool as the properties are evaluated over the life of the reservoir. Unevaluated properties are reviewed for impairment at least quarterly and are determined through an evaluation considering, among other factors, seismic data, requirements to relinquish acreage, drilling results, remaining time in the commitment period, remaining capital plan, and political, economic, and market conditions.

 

Gains and losses on the sale of oil and gas properties are not generally reflected in income unless the gain or loss would significantly alter the relationship between capitalized costs and proved reserves. Sales of less than 100% of the Company’s interest in the oil and gas property are treated as a reduction of the capital cost of the field, with no gain or loss recognized, as long as doing so does not significantly affect the unit-of-production depletion rate. Costs of retired equipment, net of salvage value, are usually charged to accumulated depreciation.

 

Capitalized interest – The Company capitalizes interest on unevaluated properties during the periods in which they are excluded from costs being depleted or amortized. During the nine months ended September 30, 2019 and 2018, the Company capitalized $2,084,026 and $1,382,820, respectively, of interest on unevaluated properties.

 

Depreciation, depletion, and amortization – The depreciable base for oil and natural gas properties includes the sum of all capitalized costs net of accumulated depreciation, depletion, and amortization (“DD&A”), estimated future development costs and asset retirement costs not included in oil and natural gas properties, less costs excluded from amortization. The depreciable base of oil and natural gas properties is amortized on a unit-of-production method.

 

Ceiling test – Future production volumes from oil and gas properties are a significant factor in determining the full cost ceiling limitation of capitalized costs. Under the full cost method of accounting, the Company is required to periodically perform a “ceiling test” that determines a limit on the book value of oil and gas properties. If the net capitalized cost of proved oil and gas properties, net of related deferred income taxes, plus the cost of unproved oil and gas properties, exceeds the present value of estimated future net cash flows discounted at 10 percent, net of related realizable tax affects, plus the cost of unproved oil and gas properties, the excess is charged to expense and reflected as additional accumulated DD&A. The Company recorded an impairment expense of $474,357 and $139,891 for the nine months ended September 30, 2019 and 2018, respectively, to recognize the adjustment required by the ceiling test.

 

The ceiling test calculation uses a commodity price assumption which is based on the unweighted arithmetic average of the price on the first day of each month for each month within the prior 12 month period and excludes future cash outflows related to estimated abandonment costs.

 

The determination of oil and gas reserves is a subjective process, and the accuracy of any reserve estimate depends on the quality of available data and the application of engineering and geological interpretation and judgment. Estimates of economically recoverable reserves and future net cash flows depend on a number of variable factors and assumptions that are difficult to predict and may vary considerably from actual results. In particular, reserve estimates for wells with limited or no production history are less reliable than those based on actual production. Subsequent re-evaluation of reserves and cost estimates related to future development of proved oil and gas reserves could result in significant revisions to proved reserves. Other issues, such as changes in regulatory requirements, technological advances, and other factors which are difficult to predict could also affect estimates of proved reserves in the future.

 

Asset retirement obligations –The fair value of a liability for an asset’s retirement obligation (“ARO”) is recognized in the period in which it is incurred if a reasonable estimate of fair value can be made, with the corresponding charge capitalized as part of the carrying amount of the related long-lived asset. The liability is accreted to its then-present value each subsequent period, and the capitalized cost is depleted over the useful life of the related asset. Abandonment costs incurred are recorded as a reduction of the ARO liability.

 

Inherent in the fair value calculation of an ARO are numerous assumptions and judgments including the ultimate settlement amounts, inflation factors, credit adjusted discount rates, timing of settlement, and changes in the legal, regulatory, environmental, and political environments. To the extent future revisions to these assumptions impact the fair value of the existing ARO liability, a corresponding adjustment is made to the oil and gas property balance. Settlements greater than or less than amounts accrued as ARO are recorded as a gain or loss upon settlement.

 

Income taxes - Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is established to reduce deferred tax assets if it is more likely than not that the related tax benefits will not be realized.

 

Authoritative guidance for uncertainty in income taxes requires that the Company recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an examination. Management has reviewed the Company’s tax positions and determined there were no uncertain tax positions requiring recognition in the consolidated financial statements. Company tax returns remain subject to Federal and State tax examinations. Generally, the applicable statutes of limitation are three to four years from their respective filings.

 

Estimated interest and penalties related to potential underpayment on any unrecognized tax benefits are classified as a component of tax expense in the statement of operation. The Company has not recorded any interest or penalties associated with unrecognized tax benefits for any periods covered by these financial statements.

 

Share-based compensation – Compensation cost for equity awards is based on the fair value of the equity instrument on the date of grant and is recognized over the period during which an employee is required to provide service in exchange for the award.

 

The Company accounts for stock option awards using the calculated value method. The expected term was derived using the simplified method provided in Securities and Exchange Commission release Staff Accounting Bulletin No. 110, which averages an awards weighted average vesting period and contractual term for “plain vanilla” share options.

 

The Company accounts for any forfeitures of options when they occur. Previously recognized compensation cost for an award is reversed in the period that the award is forfeited.

 

The Company also issues equity awards to non-employees. The fair value of these option awards is estimated when the award recipient completes the contracted professional services. The Company recognizes expense for the estimated total value of the awards during the period from their issuance until performance completion.

 

In June 2018, the FASB issued ASU 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which simplifies the accounting for share-based payments granted to nonemployees for goods and services. Under this ASU, the guidance on such payments to nonemployees is aligned with the requirements for share-based payments granted to employees. ASU 2018-07 was effective for fiscal years beginning after December 15, 2018, however the Company opted for early adoption effective July 1, 2018. In evaluating early adoption the Company determined that the change did not have a material impact on its consolidated financial statements.

 

The Company values warrant and option awards using the Black-Scholes option pricing model.

 

Revenue recognition – On January 1, 2018, the Company adopted ASC 606, Revenue from Contracts with Customers, and the related guidance in ASC 340-40 (the new revenue standard), and related guidance on gains and losses on derecognition of nonfinancial assets ASC 610-20, using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Under the modified retrospective method, the Company recognizes the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of retained earnings; however, no significant adjustment was required as a result of adopting the new revenue standard. Results for reporting periods beginning after January 1, 2018 are presented under the new revenue standard. The impact of the adoption of the new revenue standard was immaterial to the Company’s net loss.

 

The Company’s revenue is typically generated from contracts to sell natural gas, crude oil or NGLs produced from interests in oil and gas properties owned by the Company. Contracts for the sale of natural gas and crude oil are evidenced by (1) base contracts for the sale and purchase of natural gas or crude oil, which document the general terms and conditions for the sale, and (2) transaction confirmations, which document the terms of each specific sale. The transaction confirmations specify a delivery point which represents the point at which control of the product is transferred to the customer. These contracts frequently meet the definition of a derivative under ASC 815, and are accounted for as derivatives unless the Company elects to treat them as normal sales as permitted under that guidance. The Company elects to treat contracts to sell oil and gas production as normal sales, which are then accounted for as contracts with customers. The Company has determined that these contracts represent multiple performance obligations which are satisfied when control of the commodity transfers to the customer, typically through the delivery of the specified commodity to a designated delivery point.

 

Revenues from oil and gas sales are detailed as follows:

 

    Three Months     Three Months     Nine Months     Nine Months  
    Ended     Ended     Ended     Ended  
    September 30, 2019     September 30, 2018     September 30, 2019     September 30, 2018  
Revenues                                
                                 
Oil sales   $ 71,064     $ 124,830     $ 596,247     $ 881,364  
                                 
Gas sales     78       3,845       22,807       11,737  
                                 
Total   $ 71,142     $ 128,675     $ 619,054     $ 893,101  

 

Revenue is measured based on consideration specified in the contract with the customer, and excludes any amounts collected on behalf of third parties. The Company recognizes revenue in the amount that reflects the consideration it expects to be entitled to in exchange for transferring control of those goods to the customer. Amounts allocated in the Company’s price contracts are based on the standalone selling price of those products in the context of long-term contracts. Payment is generally received one or two months after the sale has occurred.

 

Gain or loss on derivative instruments is outside the scope of ASC 606 and is not considered revenue from contracts with customers subject to ASC 606. The Company may in the future use financial or physical contracts accounted for as derivatives as economic hedges to manage price risk associated with normal sales, or in limited cases may use them for contracts the Company intends to physically settle but do not meet all of the criteria to be treated as normal sales.

 

Producer Gas Imbalances. The Company applies the sales method of accounting for natural gas revenue. Under this method, revenues are recognized based on the actual volume of natural gas sold to purchasers.

 

Basic and diluted earnings (loss) per share – Basic earnings (loss) per common share is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per common share is computed in the same way as basic earnings (loss) per common share except that the denominator is increased to include the number of additional common shares that would be outstanding if all potential common shares had been issued and if the additional common shares were dilutive. The calculation of diluted earnings per share excludes 10,705,072 shares issuable upon the exercise of outstanding warrants and options because their effect would be anti-dilutive.

 

Environmental laws and regulations – The Company is subject to extensive federal, state, and local environmental laws and regulations. Environmental expenditures are expensed or capitalized depending on their future economic benefit. The Company believes that it is in compliance with existing laws and regulations. The Company accrued no liability as of September 30, 2019 and December 31, 2018.

 

Recent adopted accounting pronouncements – In February 2016 the FASB, issued ASU, 2016-02, Leases. The ASU requires companies to recognize on the balance sheet the assets and liabilities for the rights and obligations created by leased assets. ASU 2016-02 was effective for the Company in the first quarter of 2019. The Company adopted the change which did not have a material impact on its consolidated financial statements.

 

Other recently issued or adopted accounting pronouncements are not expected to have, or did not have, a material impact on the Company’s financial position or results from operations.

 

Subsequent events – The Company evaluated subsequent events through November 8, 2019, the date of issuance of these financial statements. Subsequent events, if any, are disclosed in Note 11.

 
XML 29 R1.htm IDEA: XBRL DOCUMENT v3.19.3
Document and Entity Information - shares
 9 Months Ended
Sep. 30, 2019
Nov. 08, 2019
Document and Entity Information    
Entity Registrant Name TORCHLIGHT ENERGY RESOURCES INC  
Document Type 10-Q  
Document Period End Date Sep. 30, 2019  
Amendment Flag false  
Entity Central Index Key 0001431959  
Current Fiscal Year End Date --12-31  
Entity Common Stock, Shares Outstanding   74,255,375
Entity Filer Category Accelerated Filer  
Entity Emerging Growth Company false  
Entity Small Business true  
Entity Current Reporting Status Yes  
Entity Shell Company false  
Document Fiscal Year Focus 2019  
Document Fiscal Period Focus Q3  
XML 30 R5.htm IDEA: XBRL DOCUMENT v3.19.3
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS - USD ($)
 9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Cash Flows From Operating Activities    
Net loss $ (3,820,145) $ (4,301,398)
Adjustments to reconcile net loss to net cash from operations:    
Stock based compensation 854,720 1,215,825
Stock issued for interest payments on notes payable 497,817 148,882
Amortization of debt issuance costs 214,939 0
Accretion of note discounts 274,217 159,441
Accrued interest payable in stock 163,168 0
Depreciation, depletion and amortization 355,050 368,074
Net settlement offset 0 (100,561)
Impairment loss 474,357 139,891
Change in:    
Accounts receivable (56,456) (53,551)
Production revenue receivable 247,123 138,468
Prepayments - development costs 144,641 1,158,588
Prepaid expenses (106,265) (47,482)
Other assets 6,362 0
Accounts payable and accrued expenses 82,757 1,718
Accrued interest payable 489,127 14,434
Net cash from operating activities (178,588) (1,157,671)
Cash Flows From Investing Activities    
Investment in oil and gas properties (6,606,279) (9,319,771)
Purchases of property, plant, and equipment (6,564) 0
Net cash from investing activities (6,612,843) (9,319,771)
Cash Flows From Financing Activities    
Issuance of common stock 2,516,880 6,049,734
Proceeds from convertible promissory notes 4,010,000 4,304,421
Repayment of promissory notes 0 (250,000)
Proceeds from warrant exercise 184,843 200,000
Net cash from financing activities 6,711,723 10,304,155
Net (decrease) in cash (79,708) (173,287)
Cash - beginning of period 840,163 1,051,720
Cash - end of period 760,455 878,433
Supplemental disclosure of cash flow information: (Non Cash Items)    
Common stock issued for lease interests 125,000 0
Common stock issued for partial payment of unpaid compensation 0 59,000
Common stock issued for payment in kind on notes payable 314,107 221,024
Common stock issued in conversion of convertible note principal 50,000 0
Decrease in accounts payable for property development costs 225,536 0
Beneficial conversion feature on convertible notes 1,145,546 0
Debt discount from fair value of warrants issued with convertible notes 240,455 0
Cash paid for interest 1,131,819 1,124,174
Cash paid for income tax $ 0 $ 0
XML 31 R30.htm IDEA: XBRL DOCUMENT v3.19.3
7. STOCKHOLDERS' EQUITY (Details 1)
Sep. 30, 2019
shares
0.97  
Stock options outstanding 259,742
1.10  
Stock options outstanding 800,000
1.19  
Stock options outstanding 700,000
1.57  
Stock options outstanding 4,500,000
1.63  
Stock options outstanding 58,026
1.79  
Stock options outstanding 300,000
Total  
Stock options outstanding 6,617,768
Total | Expiring in the year 2020  
Stock options outstanding 4,800,000
Total | Expiring in the year 2021  
Stock options outstanding 259,742
Total | Expiring in the year 2022  
Stock options outstanding 858,026
Total | Expiring in the year 2023  
Stock options outstanding 700,000
XML 32 R34.htm IDEA: XBRL DOCUMENT v3.19.3
10. ASSET RETIREMENET OBLIGATION (Details)
 9 Months Ended
Sep. 30, 2019
USD ($)
Asset Retirement Obligation [Abstract]  
Asset retirement obligations, beginning $ 14,353
Accretion expense 426
Estimated liabilities recorded 8,397
Asset retirement obligations, ending $ 23,176
XML 33 Show.js IDEA: XBRL DOCUMENT // Edgar(tm) Renderer was created by staff of the U.S. Securities and Exchange Commission. Data and content created by government employees within the scope of their employment are not subject to domestic copyright protection. 17 U.S.C. 105. var Show={};Show.LastAR=null,Show.showAR=function(a,r,w){if(Show.LastAR)Show.hideAR();var e=a;while(e&&e.nodeName!='TABLE')e=e.nextSibling;if(!e||e.nodeName!='TABLE'){var ref=((window)?w.document:document).getElementById(r);if(ref){e=ref.cloneNode(!0); e.removeAttribute('id');a.parentNode.appendChild(e)}} if(e)e.style.display='block';Show.LastAR=e};Show.hideAR=function(){Show.LastAR.style.display='none'};Show.toggleNext=function(a){var e=a;while(e.nodeName!='DIV')e=e.nextSibling;if(!e.style){}else if(!e.style.display){}else{var d,p_;if(e.style.display=='none'){d='block';p='-'}else{d='none';p='+'} e.style.display=d;if(a.textContent){a.textContent=p+a.textContent.substring(1)}else{a.innerText=p+a.innerText.substring(1)}}} XML 34 R27.htm IDEA: XBRL DOCUMENT v3.19.3
4. OIL & GAS PROPERTIES (Details) - USD ($)
Sep. 30, 2019
Dec. 31, 2018
Oil and Gas Property [Abstract]    
Evaluated costs subject to amortization $ 12,458,270 $ 11,664,586
Unevaluated costs 37,529,864 31,746,477
Total capitalized costs 49,988,134 43,411,063
Less accumulated depreciation, depletion and amortization (7,671,198) (6,845,602)
Total oil and gas properties $ 42,316,936 $ 36,565,461
XML 35 R23.htm IDEA: XBRL DOCUMENT v3.19.3
10. ASSET RETIREMENT OBLIGATIONS (Tables)
 9 Months Ended
Sep. 30, 2019
Asset Retirement Obligation [Abstract]  
Asset retirement obligation
Asset retirement obligations – December 31, 2018   $ 14,353  
         
Accretion expense     426  
Estimated liabilities recorded     8,397  
         
Asset retirement obligations – September 30, 2019   $ 23,176  
XML 36 R32.htm IDEA: XBRL DOCUMENT v3.19.3
8. INCOME TAXES (Details Narrative) - USD ($)
Sep. 30, 2019
Dec. 31, 2018
Income Tax Disclosure [Abstract]    
Net operating loss carryforwards $ 63,070,504 $ 56,992,857
XML 37 R15.htm IDEA: XBRL DOCUMENT v3.19.3
9. PROMISSORY NOTES
 9 Months Ended
Sep. 30, 2019
Debt Disclosure [Abstract]  
PROMISSORY NOTES

On April 10, 2017, the Company sold to investors in a private transaction two 12% unsecured promissory notes with a total of $8,000,000 in principal amount. Interest only is due and payable on the notes each month at the rate of 12% per annum, with a balloon payment of the outstanding principal due and payable at maturity on April 10, 2020. The holders of the notes will also receive annual payments of common stock at the rate of 2.5% of principal amount outstanding, based on a volume-weighted average price. Both notes were sold at an original issue discount of 94.25% and accordingly, we received total proceeds of $7,540,000 from the investors. We used the proceeds for working capital and general corporate purposes, which includes, without limitation, drilling capital, lease acquisition capital and repayment of prior debt.

 

These 12% promissory notes allow for early redemption. The notes also contain certain covenants under which we have agreed that, except for financing arrangements with established commercial banking or financial institutions and other debts and liabilities incurred in the normal course of business, we will not issue any other notes or debt offerings which have a maturity date prior to the payment in full of the 12% notes, unless consented to by the holders.

 

The effective interest rate is 16.15%.

 

On April 24, 2017, we used $2,509,500 of the proceeds from this financing to redeem and repay a portion of the outstanding 12% Series B Convertible Unsecured Promissory Notes. Separately, $1,000,000 of the principal amount of the Series B Notes plus accrued interest was converted into 1,007,890 shares of common stock and $64,297 was rolled into the new debt financing.

 

On February 6, 2018, we sold to an investor in a private transaction a 12% unsecured promissory note with a principal amount of $4,500,000. Interest only is due and payable on the note each month at the rate of 12% per annum, with a balloon payment of the outstanding principal due and payable at maturity on April 10, 2020. The holder of the note will also receive annual payments of common stock at the rate of 2.5% of principal amount outstanding, based on a volume-weighted average price. We sold the note at an original issue discount of 96.27% and accordingly, we received total proceeds of $4,332,150 from the investor. We used the proceeds for working capital and general corporate purposes, which includes, without limitation, drilling capital, lease acquisition capital and repayment of prior debt.

 

This 12% promissory note allows for early redemption, provided that if we redeem before February 6, 2019, we must pay the holder all unpaid interest and common stock payments on the portion of the note redeemed that would have been earned through February 6, 2019. The note also contains certain covenants under which we have agreed that, except for financing arrangements with established commercial banking or financial institutions and other debts and liabilities incurred in the normal course of business, we will not issue any other notes or debt offerings which have a maturity date prior to the payment in full of the 12% note, unless consented to by the holder.

 

The effective interest rate is 15.88%.

 

In April 2019 and 2018, respectively, the holders of the notes described above received 202,316 and 172,342 shares of common stock as a payment in kind representing the annual payments of common stock due at the rate of 2.5% of principal amount outstanding as of April 10 based on a volume-weighted average price calculation.

 

Unsecured promissory note transactions through September 30, 2019 are summarized as follows:

 

Unsecured promissory note balance - December 31, 2018   $ 11,862,080  
         
Accretion of discount and amortization of debt issuance costs     386,813  
         
Unsecured promissory note balance - September 30, 2019   $ 12,248,893  

 

On October 17, 2018, we sold to certain investors in a private transaction 16% Series C Unsecured Convertible Promissory Notes with a total principal amount of $6,000,000. Interest and principal are due and payable on the notes in one balloon payment at maturity on April 17, 2020. The notes are convertible, at the election of the holders, into an aggregate 6% working interest in certain oil and gas leases in Hudspeth County, Texas, known as our “Orogrande Project.” After an analysis of the transaction and a review of applicable accounting pronouncements, management concluded that the notes issued on October 17, 2018 which contain a conversion right for holders to convert into a working interest in the Orogrande Project of the Company, meet a specific scope exception to the provisions requiring derivative accounting.

 

The notes allow us to redeem them early only upon the event of a fundamental transaction, such as a merger or sale of substantially all our assets. The notes provide that the noteholders may accelerate and declare any and all of the obligations under the notes to be immediately due and payable in the event of default, such as nonpayment, failure to perform required conversions, failure to perform any covenant or agreement under the notes, an insolvency event, or certain defaults or judgments. As part of the sale of the of the notes, the noteholders required that McCabe Petroleum Corporation, a Texas corporation owned by our Chairman Gregory McCabe (“MPC”), provide them a put option whereby they have the right to have MPC purchase from them any unpaid principal amount due on the notes. Additionally, if there is a fundamental transaction, Mr. McCabe will be required to pay a fee to each noteholder that elects not to convert or require MPC to purchase the principal amount under the note, which fee will be equal to such noteholder’s pro-rata share of a total fee amount of $1,500,000.

 

We received total proceeds of $6,000,000 from the sale of the notes, of which $3,000,000 was used to pay back the promissory note issued to MPC on December 1, 2017, which note was due on December 31, 2020. We used the remaining proceeds for working capital and general corporate purposes, which includes, without limitation, drilling and lease acquisition capital.

 

Prior to entering into the above transactions, our Board of Directors formed a special committee composed of independent directors to analyze and authorize the transactions on behalf of Torchlight Energy Resources, Inc. and determine whether the transactions are fair to the company. In this role, the special committee engaged an independent financial consulting firm which rendered a fairness opinion deeming that the transactions were fair to the company, from a financial point of view, and contained terms no less favorable to the company than those that could be obtained in arm’s length transactions.

 

In February and March, 2019 the Company raised a total of $2,000,000 from investors through the sale of 14% Series D Unsecured Convertible Promissory Notes. Principal is payable in a lump sum at maturity on May 11, 2020 with payments of interest payable monthly at the rate of 14% per annum. Holders of the notes have the right to convert principal and interest at any time into common stock at a conversion price of $1.08 per share. The Company has the right to redeem the notes at any time, provided that the redemption amount must include all interest that would have been earned through maturity. The Company evaluated the notes for beneficial conversion features and derivative accounting criteria and concluded that derivative accounting treatment is not applicable.

 

In July, 2019, the Company issued 8% Unsecured Convertible Promissory notes in the amount of $2,010,000 together with warrants to purchase our common stock. The principal and accrued interest on the notes are convertible into shares of common stock at $1.10 per common share at any time after the original issue date. Along with the notes, the three year warrants equal to 20% of the number of shares of common stock issuable upon the conversion of the notes were issued to note holders. The warrants are exercisable at $1.35 per share.

 

Warrants issued along with the notes meet the requirements of the scope exemptions in ASC 815-10-15-74 and are thus classified as equity upon issuance. The Company determined the fair value of the warrants using the Black Scholes pricing formula and is recognized as a discount on the carrying amount of the notes and is credited to additional paid in capital. The fair value of the warrants at the issuance date was determined to be $240,455.

 

A beneficial conversion feature (“BCF”) of a convertible note is normally characterized as the convertible portion feature that provides a rate of conversion that is below market value or “in the money” when issued. The BCF related to the issuance of the notes was recorded at the issuance date. The BCF was measured using the intrinsic value method and is shown as a discount to the carrying amount of the convertible note and is credited to additional paid in capital. The intrinsic value of the BCF at the issuance date of the notes was determined to be $1,145,546.

 

The allocated fair values of the BCF and the warrants was recorded as a debt discount from the face amount of the notes and such discount is being accreted over the expected term of the notes and is charged to interest expense. The Company recognized interest expense of $102,343 from the amortization of debt discount from notes as of September 30, 2019.

 

The Company evaluated the July, 2019 notes for beneficial conversion features and derivative accounting criteria and concluded that derivative accounting treatment was not applicable.

 
XML 38 R11.htm IDEA: XBRL DOCUMENT v3.19.3
5. RELATED PARTY PAYABLES
 9 Months Ended
Sep. 30, 2019
Due to Related Parties [Abstract]  
RELATED PARTY PAYABLES

As of September 30, 2019 and December 31, 2018, related party payables of $45,000, and accrued payroll was $951,176 and $816,176, respectively, consisting of accrued and unpaid compensation due to our executive officers.

 
XML 39 R19.htm IDEA: XBRL DOCUMENT v3.19.3
3. SIGNIFICANT ACCOUNTING POLICIES (Tables)
 9 Months Ended
Sep. 30, 2019
Accounting Policies [Abstract]  
Revenues from oil and gas sales
    Three Months     Three Months     Nine Months     Nine Months  
    Ended     Ended     Ended     Ended  
    September 30, 2019     September 30, 2018     September 30, 2019     September 30, 2018  
Revenues                                
                                 
Oil sales   $ 71,064     $ 124,830     $ 596,247     $ 881,364  
                                 
Gas sales     78       3,845       22,807       11,737  
                                 
Total   $ 71,142     $ 128,675     $ 619,054     $ 893,101  
XML 40 R3.htm IDEA: XBRL DOCUMENT v3.19.3
CONSOLIDATED CONDENSED BALANCE SHEETS (Parenthetical) - USD ($)
Sep. 30, 2019
Dec. 31, 2018
Statement of Financial Position [Abstract]    
Unsecured promissory notes discount, current $ 315,404  
Convertible promissory notes payable discount, noncurrent $ 1,283,658  
Preferred Stock, par value $ 0.001 $ 0.001
Preferred Stock, shares authorized 10,000,000 10,000,000
Preferred Stock, shares issued 0 0
Preferred Stock, shares outstanding 0 0
Common Stock, par or stated value $ 0.001 $ 0.001
Common Stock, shares authorized 150,000,000 150,000,000
Common Stock, shares issued 74,255,375 70,112,376
Common Stock, shares outstanding 74,255,375 70,112,376
XML 41 R7.htm IDEA: XBRL DOCUMENT v3.19.3
1. NATURE OF BUSINESS
 9 Months Ended
Sep. 30, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
NATURE OF BUSINESS

Torchlight Energy Resources, Inc. (“Company”) was incorporated in October 2007 under the laws of the State of Nevada as Pole Perfect Studios, Inc. (“PPS”). From its incorporation to November 2010, the company was primarily engaged in business start-up activities.

 

On November 23, 2010, we entered into and closed a Share Exchange Agreement (the “Exchange Agreement”) between the major shareholders of PPS and the shareholders of Torchlight Energy, Inc. (“TEI”). As a result of the transactions effected by the Exchange Agreement, at closing TEI became our wholly-owned subsidiary, and the business of TEI became our sole business. TEI was incorporated under the laws of the State of Nevada in June 2010. We are engaged in the acquisition, exploitation and/or development of oil and natural gas properties in the United States. We operate our business through our subsidiaries Torchlight Energy Inc., Torchlight Energy Operating, LLC, Hudspeth Oil Corporation, Torchlight Hazel LLC, and Warwink Properties LLC.

 
XML 42 R33.htm IDEA: XBRL DOCUMENT v3.19.3
9. PROMISSORY NOTES (Details)
 9 Months Ended
Sep. 30, 2019
USD ($)
Debt Disclosure [Abstract]  
Unsecured promissory note, beginning $ 11,862,080
Accretion of discount and amortization of debt issuance costs 386,813
Unsecured promissory note, ending $ 12,248,893
XML 43 FilingSummary.xml IDEA: XBRL DOCUMENT 3.19.3 html 78 252 1 false 39 0 false 4 false false R1.htm 00000001 - Document - Document and Entity Information Sheet http://torchlight.com/role/DocumentAndEntityInformation Document and Entity Information Cover 1 false false R2.htm 00000002 - Statement - CONSOLIDATED CONDENSED BALANCE SHEETS Sheet http://torchlight.com/role/ConsolidatedCondensedBalanceSheets CONSOLIDATED CONDENSED BALANCE SHEETS Statements 2 false false R3.htm 00000003 - Statement - CONSOLIDATED CONDENSED BALANCE SHEETS (Parenthetical) Sheet http://torchlight.com/role/ConsolidatedCondensedBalanceSheetsParenthetical CONSOLIDATED CONDENSED BALANCE SHEETS (Parenthetical) Statements 3 false false R4.htm 00000004 - Statement - CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS Sheet http://torchlight.com/role/ConsolidatedCondensedStatementsOfOperations CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS Statements 4 false false R5.htm 00000005 - Statement - CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS Sheet http://torchlight.com/role/ConsolidatedCondensedStatementsOfCashFlows CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS Statements 5 false false R6.htm 00000006 - Statement - CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY Sheet http://torchlight.com/role/ConsolidatedStatementOfStockholdersEquity CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY Statements 6 false false R7.htm 00000007 - Disclosure - 1. NATURE OF BUSINESS Sheet http://torchlight.com/role/NatureOfBusiness 1. NATURE OF BUSINESS Notes 7 false false R8.htm 00000008 - Disclosure - 2. GOING CONCERN Sheet http://torchlight.com/role/GoingConcern 2. GOING CONCERN Notes 8 false false R9.htm 00000009 - Disclosure - 3. SIGNIFICANT ACCOUNTING POLICIES Sheet http://torchlight.com/role/SignificantAccountingPolicies 3. SIGNIFICANT ACCOUNTING POLICIES Notes 9 false false R10.htm 00000010 - Disclosure - 4. OIL & GAS PROPERTIES Sheet http://torchlight.com/role/OilGasProperties 4. OIL & GAS PROPERTIES Notes 10 false false R11.htm 00000011 - Disclosure - 5. RELATED PARTY PAYABLES Sheet http://torchlight.com/role/RelatedPartyPayables 5. RELATED PARTY PAYABLES Notes 11 false false R12.htm 00000012 - Disclosure - 6. COMMITMENTS AND CONTINGENCIES Sheet http://torchlight.com/role/CommitmentsAndContingencies 6. COMMITMENTS AND CONTINGENCIES Notes 12 false false R13.htm 00000013 - Disclosure - 7. STOCKHOLDERS' EQUITY Sheet http://torchlight.com/role/StockholdersEquity 7. STOCKHOLDERS' EQUITY Notes 13 false false R14.htm 00000014 - Disclosure - 8. INCOME TAXES Sheet http://torchlight.com/role/IncomeTaxes 8. INCOME TAXES Notes 14 false false R15.htm 00000015 - Disclosure - 9. PROMISSORY NOTES Notes http://torchlight.com/role/PromissoryNotes 9. PROMISSORY NOTES Notes 15 false false R16.htm 00000016 - Disclosure - 10. ASSET RETIREMENT OBLIGATIONS Sheet http://torchlight.com/role/AssetRetirementObligations 10. ASSET RETIREMENT OBLIGATIONS Notes 16 false false R17.htm 00000017 - Disclosure - 11. SUBSEQUENT EVENTS Sheet http://torchlight.com/role/SubsequentEvents 11. SUBSEQUENT EVENTS Notes 17 false false R18.htm 00000018 - Disclosure - 3. SIGNIFICANT ACCOUNTING POLICIES (Policies) Sheet http://torchlight.com/role/SignificantAccountingPoliciesPolicies 3. SIGNIFICANT ACCOUNTING POLICIES (Policies) Policies 18 false false R19.htm 00000019 - Disclosure - 3. SIGNIFICANT ACCOUNTING POLICIES (Tables) Sheet http://torchlight.com/role/SignificantAccountingPoliciesTables 3. SIGNIFICANT ACCOUNTING POLICIES (Tables) Tables http://torchlight.com/role/SignificantAccountingPolicies 19 false false R20.htm 00000020 - Disclosure - 4. OIL & GAS PROPERTIES (Tables) Sheet http://torchlight.com/role/OilGasPropertiesTables 4. OIL & GAS PROPERTIES (Tables) Tables http://torchlight.com/role/OilGasProperties 20 false false R21.htm 00000021 - Disclosure - 7. STOCKHOLDERS' EQUITY (Tables) Sheet http://torchlight.com/role/StockholdersEquityTables 7. STOCKHOLDERS' EQUITY (Tables) Tables http://torchlight.com/role/StockholdersEquity 21 false false R22.htm 00000022 - Disclosure - 9. PROMISSORY NOTES (Tables) Notes http://torchlight.com/role/PromissoryNotesTables 9. PROMISSORY NOTES (Tables) Tables http://torchlight.com/role/PromissoryNotes 22 false false R23.htm 00000023 - Disclosure - 10. ASSET RETIREMENT OBLIGATIONS (Tables) Sheet http://torchlight.com/role/AssetRetirementObligationsTables 10. ASSET RETIREMENT OBLIGATIONS (Tables) Tables http://torchlight.com/role/AssetRetirementObligations 23 false false R24.htm 00000024 - Disclosure - 2. GOING CONCERN (Details Narrative) Sheet http://torchlight.com/role/GoingConcernDetailsNarrative 2. GOING CONCERN (Details Narrative) Details http://torchlight.com/role/GoingConcern 24 false false R25.htm 00000025 - Disclosure - 3. SIGNIFICANT ACCOUNTING POLICIES (Details) Sheet http://torchlight.com/role/SignificantAccountingPoliciesDetails 3. SIGNIFICANT ACCOUNTING POLICIES (Details) Details http://torchlight.com/role/SignificantAccountingPoliciesTables 25 false false R26.htm 00000026 - Disclosure - 3. SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) Sheet http://torchlight.com/role/SignificantAccountingPoliciesDetailsNarrative 3. SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) Details http://torchlight.com/role/SignificantAccountingPoliciesTables 26 false false R27.htm 00000027 - Disclosure - 4. OIL & GAS PROPERTIES (Details) Sheet http://torchlight.com/role/OilGasPropertiesDetails 4. OIL & GAS PROPERTIES (Details) Details http://torchlight.com/role/OilGasPropertiesTables 27 false false R28.htm 00000028 - Disclosure - 4. OIL & GAS PROPERTIES (Details 1) Sheet http://torchlight.com/role/OilGasPropertiesDetails1 4. OIL & GAS PROPERTIES (Details 1) Details http://torchlight.com/role/OilGasPropertiesTables 28 false false R29.htm 00000029 - Disclosure - 7. STOCKHOLDERS' EQUITY (Details) Sheet http://torchlight.com/role/StockholdersEquityDetails 7. STOCKHOLDERS' EQUITY (Details) Details http://torchlight.com/role/StockholdersEquityTables 29 false false R30.htm 00000030 - Disclosure - 7. STOCKHOLDERS' EQUITY (Details 1) Sheet http://torchlight.com/role/StockholdersEquityDetails1 7. STOCKHOLDERS' EQUITY (Details 1) Details http://torchlight.com/role/StockholdersEquityTables 30 false false R31.htm 00000031 - Disclosure - 7. STOCKHOLDERS' EQUITY (Details 2) Sheet http://torchlight.com/role/StockholdersEquityDetails2 7. STOCKHOLDERS' EQUITY (Details 2) Details http://torchlight.com/role/StockholdersEquityTables 31 false false R32.htm 00000032 - Disclosure - 8. INCOME TAXES (Details Narrative) Sheet http://torchlight.com/role/IncomeTaxesDetailsNarrative 8. INCOME TAXES (Details Narrative) Details http://torchlight.com/role/IncomeTaxes 32 false false R33.htm 00000033 - Disclosure - 9. PROMISSORY NOTES (Details) Notes http://torchlight.com/role/PromissoryNotesDetails 9. PROMISSORY NOTES (Details) Details http://torchlight.com/role/PromissoryNotesTables 33 false false R34.htm 00000034 - Disclosure - 10. ASSET RETIREMENET OBLIGATION (Details) Sheet http://torchlight.com/role/AssetRetiremenetObligationDetails 10. ASSET RETIREMENET OBLIGATION (Details) Details 34 false false All Reports Book All Reports trch-20190930.xml trch-20190930.xsd trch-20190930_cal.xml trch-20190930_def.xml trch-20190930_lab.xml trch-20190930_pre.xml http://xbrl.sec.gov/dei/2018-01-31 http://fasb.org/srt/2019-01-31 http://fasb.org/us-gaap/2019-01-31 true true XML 44 R18.htm IDEA: XBRL DOCUMENT v3.19.3
3. SIGNIFICANT ACCOUNTING POLICIES (Policies)
 9 Months Ended
Sep. 30, 2019
Accounting Policies [Abstract]  
Use of estimates

Use of estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and certain assumptions that affect the amounts reported in these consolidated financial statements and accompanying notes. Actual results could differ from these estimates.

 
Basis of presentation

Basis of presentation—The financial statements are presented on a consolidated basis and include all of the accounts of Torchlight Energy Resources Inc. and its wholly owned subsidiaries, Torchlight Energy, Inc., Torchlight Energy Operating, LLC, Hudspeth Oil Corporation, Torchlight Hazel LLC, and Warwink Properties LLC. All significant intercompany balances and transactions have been eliminated.

 

These interim financial statements are unaudited and have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Certain disclosures have been condensed or omitted from these financial statements. Accordingly, they do not include all the information and notes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete consolidated financial statements, and should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2018.

 

In the opinion of management, the accompanying unaudited financial condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, necessary to fairly present the financial position as of, and the results of operations for, all periods presented. In preparing the accompanying financial statements, management has made certain estimates and assumptions that affect reported amounts in the condensed financial statements and disclosures of contingencies. Actual results may differ from those estimates. The results for interim periods are not necessarily indicative of annual results. Certain reclassifications have been made to the prior period’s consolidated financial statements and related footnotes to conform them to the current period presentation.

 
Risks and uncertainties

Risks and uncertainties – The Company’s operations are subject to significant risks and uncertainties, including financial, operational, technological, and other risks associated with operating an emerging business, including the potential risk of business failure.

 
Concentration of risks

Concentration of risks – At times the Company’s cash balances are in excess of amounts guaranteed by the Federal Deposit Insurance Corporation. The Company’s cash is placed with a highly rated financial institution, and the Company regularly monitors the credit worthiness of the financial institutions with which it does business.

 
Fair value of financial instruments

Fair value of financial instruments – Financial instruments consist of cash, receivables, payables and promissory notes, if any. The estimated fair values of cash, receivables, and payables approximate the carrying amount due to the relatively short maturity of these instruments. The carrying amounts of any promissory notes approximate their fair value giving affect for the term of the note and the effective interest rates.

 

For assets and liabilities that require re-measurement to fair value the Company categorizes them in a three-level fair value hierarchy as follows:

 

  ● Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities.

 

  ● Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration.

 

  ● Level 3 inputs are unobservable inputs based on management’s own assumptions used to measure assets and liabilities at fair value.

 

A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.
Cash and cash equivalents

Cash and cash equivalents - Cash and cash equivalents include certain investments in highly liquid instruments with original maturities of three months or less.

 
Accounts receivable

Accounts receivable – Accounts receivable consist of uncollateralized oil and natural gas revenues due under normal trade terms, as well as amounts due from working interest owners of oil and gas properties for their share of expenses paid on their behalf by the Company. Management reviews receivables periodically and reduces the carrying amount by a valuation allowance that reflects management’s best estimate of the amount that may not be collectible. As of September 30, 2019 and December 31, 2018, no valuation allowance was considered necessary.

 
Oil and gas properties

Oil and gas properties – The Company uses the full cost method of accounting for exploration and development activities as defined by the Securities and Exchange Commission (“SEC”). Under this method of accounting, the costs of unsuccessful, as well as successful, exploration and development activities are capitalized as properties and equipment. This includes any internal costs that are directly related to property acquisition, exploration and development activities but does not include any costs related to production, general corporate overhead or similar activities. Gain or loss on the sale or other disposition of oil and gas properties is not recognized, unless the gain or loss would significantly alter the relationship between capitalized costs and proved reserves.

 

Oil and gas properties include costs that are excluded from costs being depleted or amortized. Oil and natural gas property costs excluded represent investments in unevaluated properties and include non-producing leasehold, geological, and geophysical costs associated with leasehold or drilling interests and exploration drilling costs. The Company allocates a portion of its acquisition costs to unevaluated properties based on relative value. Costs are transferred to the full cost pool as the properties are evaluated over the life of the reservoir. Unevaluated properties are reviewed for impairment at least quarterly and are determined through an evaluation considering, among other factors, seismic data, requirements to relinquish acreage, drilling results, remaining time in the commitment period, remaining capital plan, and political, economic, and market conditions.

 

Gains and losses on the sale of oil and gas properties are not generally reflected in income unless the gain or loss would significantly alter the relationship between capitalized costs and proved reserves. Sales of less than 100% of the Company’s interest in the oil and gas property are treated as a reduction of the capital cost of the field, with no gain or loss recognized, as long as doing so does not significantly affect the unit-of-production depletion rate. Costs of retired equipment, net of salvage value, are usually charged to accumulated depreciation.

 
Capitalized interest

Capitalized interest – The Company capitalizes interest on unevaluated properties during the periods in which they are excluded from costs being depleted or amortized. During the nine months ended September 30, 2019 and 2018, the Company capitalized $2,084,026 and $1,382,820, respectively, of interest on unevaluated properties.

 
Depreciation, depletion and amortization

Depreciation, depletion, and amortization – The depreciable base for oil and natural gas properties includes the sum of all capitalized costs net of accumulated depreciation, depletion, and amortization (“DD&A”), estimated future development costs and asset retirement costs not included in oil and natural gas properties, less costs excluded from amortization. The depreciable base of oil and natural gas properties is amortized on a unit-of-production method.
Ceiling test

Ceiling test – Future production volumes from oil and gas properties are a significant factor in determining the full cost ceiling limitation of capitalized costs. Under the full cost method of accounting, the Company is required to periodically perform a “ceiling test” that determines a limit on the book value of oil and gas properties. If the net capitalized cost of proved oil and gas properties, net of related deferred income taxes, plus the cost of unproved oil and gas properties, exceeds the present value of estimated future net cash flows discounted at 10 percent, net of related realizable tax affects, plus the cost of unproved oil and gas properties, the excess is charged to expense and reflected as additional accumulated DD&A. The Company recorded an impairment expense of $474,357 and $139,891 for the nine months ended September 30, 2019 and 2018, respectively, to recognize the adjustment required by the ceiling test.

 

The ceiling test calculation uses a commodity price assumption which is based on the unweighted arithmetic average of the price on the first day of each month for each month within the prior 12 month period and excludes future cash outflows related to estimated abandonment costs.

 

The determination of oil and gas reserves is a subjective process, and the accuracy of any reserve estimate depends on the quality of available data and the application of engineering and geological interpretation and judgment. Estimates of economically recoverable reserves and future net cash flows depend on a number of variable factors and assumptions that are difficult to predict and may vary considerably from actual results. In particular, reserve estimates for wells with limited or no production history are less reliable than those based on actual production. Subsequent re-evaluation of reserves and cost estimates related to future development of proved oil and gas reserves could result in significant revisions to proved reserves. Other issues, such as changes in regulatory requirements, technological advances, and other factors which are difficult to predict could also affect estimates of proved reserves in the future.

 
Asset retirement obligations

Asset retirement obligations –The fair value of a liability for an asset’s retirement obligation (“ARO”) is recognized in the period in which it is incurred if a reasonable estimate of fair value can be made, with the corresponding charge capitalized as part of the carrying amount of the related long-lived asset. The liability is accreted to its then-present value each subsequent period, and the capitalized cost is depleted over the useful life of the related asset. Abandonment costs incurred are recorded as a reduction of the ARO liability.

 

Inherent in the fair value calculation of an ARO are numerous assumptions and judgments including the ultimate settlement amounts, inflation factors, credit adjusted discount rates, timing of settlement, and changes in the legal, regulatory, environmental, and political environments. To the extent future revisions to these assumptions impact the fair value of the existing ARO liability, a corresponding adjustment is made to the oil and gas property balance. Settlements greater than or less than amounts accrued as ARO are recorded as a gain or loss upon settlement.

 
Income taxes

Income taxes - Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is established to reduce deferred tax assets if it is more likely than not that the related tax benefits will not be realized.

 

Authoritative guidance for uncertainty in income taxes requires that the Company recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an examination. Management has reviewed the Company’s tax positions and determined there were no uncertain tax positions requiring recognition in the consolidated financial statements. Company tax returns remain subject to Federal and State tax examinations. Generally, the applicable statutes of limitation are three to four years from their respective filings.

 

Estimated interest and penalties related to potential underpayment on any unrecognized tax benefits are classified as a component of tax expense in the statement of operation. The Company has not recorded any interest or penalties associated with unrecognized tax benefits for any periods covered by these financial statements.

 
Share-based compensation

Share-based compensation – Compensation cost for equity awards is based on the fair value of the equity instrument on the date of grant and is recognized over the period during which an employee is required to provide service in exchange for the award.

 

The Company accounts for stock option awards using the calculated value method. The expected term was derived using the simplified method provided in Securities and Exchange Commission release Staff Accounting Bulletin No. 110, which averages an awards weighted average vesting period and contractual term for “plain vanilla” share options.

 

The Company accounts for any forfeitures of options when they occur. Previously recognized compensation cost for an award is reversed in the period that the award is forfeited.

 

The Company also issues equity awards to non-employees. The fair value of these option awards is estimated when the award recipient completes the contracted professional services. The Company recognizes expense for the estimated total value of the awards during the period from their issuance until performance completion.

 

In June 2018, the FASB issued ASU 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting, which simplifies the accounting for share-based payments granted to nonemployees for goods and services. Under this ASU, the guidance on such payments to nonemployees is aligned with the requirements for share-based payments granted to employees. ASU 2018-07 was effective for fiscal years beginning after December 15, 2018, however the Company opted for early adoption effective July 1, 2018. In evaluating early adoption the Company determined that the change did not have a material impact on its consolidated financial statements.

 

The Company values warrant and option awards using the Black-Scholes option pricing model.

 
Revenue recognition

Revenue recognition – On January 1, 2018, the Company adopted ASC 606, Revenue from Contracts with Customers, and the related guidance in ASC 340-40 (the new revenue standard), and related guidance on gains and losses on derecognition of nonfinancial assets ASC 610-20, using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Under the modified retrospective method, the Company recognizes the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of retained earnings; however, no significant adjustment was required as a result of adopting the new revenue standard. Results for reporting periods beginning after January 1, 2018 are presented under the new revenue standard. The impact of the adoption of the new revenue standard was immaterial to the Company’s net loss.

 

The Company’s revenue is typically generated from contracts to sell natural gas, crude oil or NGLs produced from interests in oil and gas properties owned by the Company. Contracts for the sale of natural gas and crude oil are evidenced by (1) base contracts for the sale and purchase of natural gas or crude oil, which document the general terms and conditions for the sale, and (2) transaction confirmations, which document the terms of each specific sale. The transaction confirmations specify a delivery point which represents the point at which control of the product is transferred to the customer. These contracts frequently meet the definition of a derivative under ASC 815, and are accounted for as derivatives unless the Company elects to treat them as normal sales as permitted under that guidance. The Company elects to treat contracts to sell oil and gas production as normal sales, which are then accounted for as contracts with customers. The Company has determined that these contracts represent multiple performance obligations which are satisfied when control of the commodity transfers to the customer, typically through the delivery of the specified commodity to a designated delivery point.

 

Revenues from oil and gas sales are detailed as follows:

 

    Three Months     Three Months     Nine Months     Nine Months  
    Ended     Ended     Ended     Ended  
    September 30, 2019     September 30, 2018     September 30, 2019     September 30, 2018  
Revenues                                
                                 
Oil sales   $ 71,064     $ 124,830     $ 596,247     $ 881,364  
                                 
Gas sales     78       3,845       22,807       11,737  
                                 
Total   $ 71,142     $ 128,675     $ 619,054     $ 893,101  

 

Revenue is measured based on consideration specified in the contract with the customer, and excludes any amounts collected on behalf of third parties. The Company recognizes revenue in the amount that reflects the consideration it expects to be entitled to in exchange for transferring control of those goods to the customer. Amounts allocated in the Company’s price contracts are based on the standalone selling price of those products in the context of long-term contracts. Payment is generally received one or two months after the sale has occurred.

 

Gain or loss on derivative instruments is outside the scope of ASC 606 and is not considered revenue from contracts with customers subject to ASC 606. The Company may in the future use financial or physical contracts accounted for as derivatives as economic hedges to manage price risk associated with normal sales, or in limited cases may use them for contracts the Company intends to physically settle but do not meet all of the criteria to be treated as normal sales.

 

Producer Gas Imbalances. The Company applies the sales method of accounting for natural gas revenue. Under this method, revenues are recognized based on the actual volume of natural gas sold to purchasers.

 
Basic and diluted earnings (loss) per share

Basic and diluted earnings (loss) per share – Basic earnings (loss) per common share is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per common share is computed in the same way as basic earnings (loss) per common share except that the denominator is increased to include the number of additional common shares that would be outstanding if all potential common shares had been issued and if the additional common shares were dilutive. The calculation of diluted earnings per share excludes 10,705,072 shares issuable upon the exercise of outstanding warrants and options because their effect would be anti-dilutive.

 
Environmental laws and regulations

Environmental laws and regulations – The Company is subject to extensive federal, state, and local environmental laws and regulations. Environmental expenditures are expensed or capitalized depending on their future economic benefit. The Company believes that it is in compliance with existing laws and regulations. The Company accrued no liability as of September 30, 2019 and December 31, 2018.

 
Recent adopted accounting pronouncements

Recent adopted accounting pronouncements – In February 2016 the FASB, issued ASU, 2016-02, Leases. The ASU requires companies to recognize on the balance sheet the assets and liabilities for the rights and obligations created by leased assets. ASU 2016-02 was effective for the Company in the first quarter of 2019. The Company adopted the change which did not have a material impact on its consolidated financial statements.

 

Other recently issued or adopted accounting pronouncements are not expected to have, or did not have, a material impact on the Company’s financial position or results from operations.

 
Subsequent events

Subsequent events – The Company evaluated subsequent events through November 8, 2019, the date of issuance of these financial statements. Subsequent events, if any, are disclosed in Note 11.

 
XML 45 R2.htm IDEA: XBRL DOCUMENT v3.19.3
CONSOLIDATED CONDENSED BALANCE SHEETS - USD ($)
Sep. 30, 2019
Dec. 31, 2018
Current assets:    
Cash $ 760,455 $ 840,163
Accounts receivable 236,158 179,702
Production revenue receivable 47,592 294,715
Prepayments - development costs 1,781 146,422
Prepaid expenses 167,245 60,980
Total current assets 1,213,231 1,521,982
Oil and gas properties, net 42,316,936 36,565,461
Office equipment, net 6,829 4,076
Other assets 0 6,362
TOTAL ASSETS 43,536,996 38,097,881
Current liabilities:    
Accounts payable 514,527 729,806
Unsecured promissory notes, net of discount and financing costs of $315,404 at September 30, 2019 12,248,893 0
Notes payable 8,000,000 0
Accrued payroll 951,176 816,176
Related party payables 45,000 45,000
Due to working interest owners 54,320 54,320
Accrued interest payable 1,205,665 553,370
Total current liabilities 23,019,581 2,198,672
Unsecured promissory notes, net of discount 0 11,862,080
Convertible promissory notes payable, net of discount of $1,283,658 676,342 0
Notes payable 0 6,000,000
Asset retirement obligations 23,176 14,353
Total liabilities 23,719,099 20,075,105
Commitments and contingencies
Stockholders' equity:    
Preferred stock, par value $0.001, 10,000,000 shares authorized; -0- issued and outstanding at September 30, 2019 and December 31, 2018 0 0
Common stock, par value $0.001 per share; 150,000,000 shares authorized; 74,255,375 issued and outstanding at September 30, 2019, 70,112,376 issued and outstanding at December 31, 2018 74,258 70,116
Additional paid-in capital 112,878,089 107,266,965
Accumulated deficit (93,134,450) (89,314,305)
Total stockholders' equity 19,817,897 18,022,776
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 43,536,996 $ 38,097,881
XML 46 R6.htm IDEA: XBRL DOCUMENT v3.19.3
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY - USD ($)
Common Stock
Additional Paid-in Capital
Accumulated Deficit
Total
Begining balance, shares at Dec. 31, 2018 70,112,376      
Begining balance, amount at Dec. 31, 2018 $ 70,116 $ 107,266,965 $ (89,314,305) $ 18,022,776
Issuance of common stock for services, shares 92,593      
Issuance of common stock for services, amount $ 92 99,908   100,000
Issuance of common stock for cash, shares 1,592,600      
Issuance of common stock for cash, amount $ 1,593 1,272,487   1,274,080
Issuance of common stock for interest, shares 13,546      
Issuance of common stock for interest, amount $ 13 14,615   14,628
Issuance of common stock for option/warrant exercise, shares 100,000      
Issuance of common stock for option/warrant exercise, amount $ 100 76,900   77,000
Warrants issued for services   186,000   186,000
Stock options issued for services   111,250   111,250
Net loss     (1,677,874) (1,677,874)
Ending balance, shares at Mar. 31, 2019 71,911,115      
Ending balance, amount at Mar. 31, 2019 $ 71,914 109,028,125 (90,992,179) 18,107,860
Begining balance, shares at Dec. 31, 2018 70,112,376      
Begining balance, amount at Dec. 31, 2018 $ 70,116 107,266,965 (89,314,305) 18,022,776
Beneficial conversion feature on convertible notes       1,145,546
Debt discount from fair value of warrants issued with convertible notes       240,455
Net loss       (3,820,145)
Ending balance, shares at Sep. 30, 2019 74,255,375      
Ending balance, amount at Sep. 30, 2019 $ 74,258 112,878,089 (93,134,450) 19,817,897
Begining balance, shares at Mar. 31, 2019 71,911,115      
Begining balance, amount at Mar. 31, 2019 $ 71,914 109,028,125 (90,992,179) 18,107,860
Issuance of common stock for services, shares 100,000      
Issuance of common stock for services, amount $ 100 148,900   149,000
Issuance of common stock for cash, shares 695,000      
Issuance of common stock for cash, amount $ 695 555,305   556,000
Issuance of common stock for oil and gas lease extension, shares 100,000      
Issuance of common stock for oil and gas lease extension, amount $ 100 124,900   125,000
Issuance of common stock for interest, shares 46,796      
Issuance of common stock for interest, amount $ 48 50,492   50,540
Issuance of common stock for note payment in kind, shares 202,316      
Issuance of common stock for note payment in kind, amount $ 202 313,906   314,108
Issuance of common stock for option/warrant exercise, shares 68,690      
Issuance of common stock for option/warrant exercise, amount $ 68 107,775   107,843
Warrants issued for services   87,000   87,000
Stock options issued for services   25,000   25,000
Net loss     (890,634) (890,634)
Ending balance, shares at Jun. 30, 2019 73,123,917      
Ending balance, amount at Jun. 30, 2019 $ 73,127 110,441,403 (91,882,813) 18,631,717
Issuance of common stock for services, shares 120,000      
Issuance of common stock for services, amount $ 120 116,280   116,400
Issuance of common stock for cash, shares 858,500      
Issuance of common stock for cash, amount $ 858 685,942   686,800
Issuance of common stock for interest, shares 107,503      
Issuance of common stock for interest, amount $ 108 118,438   118,546
Warrants issued for services   67,570   67,570
Beneficial conversion feature on convertible notes   1,145,546   1,145,546
Debt discount from fair value of warrants issued with convertible notes   240,455   240,455
Issuance of common stock for convertible note conversion, shares 45,455      
Issuance of common stock for convertible note conversion, amount $ 45 49,955   50,000
Stock options issued for services   12,500   12,500
Net loss     (1,251,637) (1,251,637)
Ending balance, shares at Sep. 30, 2019 74,255,375      
Ending balance, amount at Sep. 30, 2019 $ 74,258 $ 112,878,089 $ (93,134,450) $ 19,817,897
XML 47 R14.htm IDEA: XBRL DOCUMENT v3.19.3
8. INCOME TAXES
 9 Months Ended
Sep. 30, 2019
Income Tax Disclosure [Abstract]  
INCOME TAXES

The Company recorded no income tax provision for 2019 and 2018 because of losses incurred.

 

The Company estimates its annual effective income tax rate in recording its quarterly provision for income taxes in the various jurisdictions in which it operates. Statutory tax rate changes and other significant or unusual items are recognized as discrete items in the quarter in which they occur. The Company recorded no income tax expense for the nine months ended September 30, 2019 because the Company expects to incur a tax loss in the current year. Similarly, no income tax expense was recognized for the nine months ended September 30, 2019.

 

The Company had a net deferred tax asset related to federal net operating loss carryforwards of $63,070,504 and $56,992,857 at September 30, 2019 and December 31, 2018, respectively. The federal net operating loss carryforward will begin to expire in 2033. Realization of the deferred tax asset is dependent, in part, on generating sufficient taxable income prior to expiration of the loss carryforwards. The Company has placed a 100% valuation allowance against the net deferred tax asset because future realization of these assets is not assured.
XML 48 R10.htm IDEA: XBRL DOCUMENT v3.19.3
4. OIL & GAS PROPERTIES
 9 Months Ended
Sep. 30, 2019
Oil and Gas Property [Abstract]  
OIL & GAS PROPERTIES

The following table presents the capitalized costs for oil & gas properties of the Company as of September 30, 2019 and December 31, 2018:

 

Evaluated costs subject to amortization   $ 12,458,270     $ 11,664,586  
Unevaluated costs     37,529,864       31,746,477  
Total capitalized costs     49,988,134       43,411,063  
Less accumulated depreciation, depletion and amortization     (7,671,198 )     (6,845,602 )
Total oil and gas properties   $ 42,316,936     $ 36,565,461  

 

Unevaluated costs as of September 30, 2019 include cumulative costs on developing projects including the Orogrande, Hazel, and Winkler projects in West Texas.

 

The Company identified impairment of $2,300,626 in 2017 related to its unevaluated properties. The Company adjusted the separation of evaluated versus unevaluated costs within its full cost pool to recognize the value impairment related to the expiration of unevaluated leases in 2017 in the amount of $2,300,626. The impact of this change was to increase the basis for calculation of future period’s depletion, depreciation and amortization to include $2,300,626 of cost which will effectively recognize the impairment on the consolidated statement of operations over future periods. The $2,300,626 has also become an evaluated cost for purposes of ceiling tests and which may further recognize the impairment expense recognized in future periods. The impact of this cost reclassification at March 31, 2018 was a recognized impairment expense of $139,891. Impairment expense was recognized for the nine months ended September 30, 2019 of $474,357 as required by the ceiling test calculation.

 

Due to the volatility of commodity prices, should oil and natural gas prices decline in the future, it is possible that a further write-down could occur. Proved reserves are estimated quantities of crude oil, natural gas, and natural gas liquids, which geological and engineering data demonstrate with reasonable certainty to be recoverable from known reservoirs under existing economic and operating conditions. The independent engineering estimates include only those amounts considered to be proved reserves and do not include additional amounts which may result from new discoveries in the future, or from application of secondary and tertiary recovery processes where facilities are not in place or for which transportation and/or marketing contracts are not in place. Estimated reserves to be developed through secondary or tertiary recovery processes are classified as unevaluated properties.

 

Current Projects

 

As of September 30, 2019, we had interests in four oil and gas projects: the Orogrande Project in Hudspeth County, Texas, the Hazel Project in Sterling, Tom Green, and Irion Counties, Texas, the Winkler Project in Winkler County, Texas and the Hunton wells in partnership with Husky Ventures in central Oklahoma.

 

Orogrande Project, West Texas

 

On August 7, 2014, we entered into a Purchase Agreement with Hudspeth Oil Corporation (“Hudspeth”), McCabe Petroleum Corporation (“MPC”), and Gregory McCabe, our Chairman. Mr. McCabe was the sole owner of both Hudspeth and MPC. Under the terms and conditions of the Purchase Agreement, at closing, we purchased 100% of the capital stock of Hudspeth which holds certain oil and gas assets, including a 100% working interest in approximately 172,000 mostly contiguous acres in the Orogrande Basin in West Texas. As of December 31, 2017, leases covering approximately 134,000 acres remain in effect. As consideration, at closing we issued 868,750 restricted shares of our common stock to Mr. McCabe and paid a total of $100,000 in geologic origination fees to third parties. Additionally, Mr. McCabe has, at his option, a 10% working interest back-in after payout and a reversionary interest if drilling obligations are not met, all under the terms and conditions of a participation and development agreement among Hudspeth, MPC and Mr. McCabe. Mr. McCabe also holds a 4.5% overriding royalty interest in the Orogrande acreage, which he obtained prior to, and was not a part of, the August 2014 transaction. We believe all drilling obligations through September 30, 2019 have been met.

 

On September 23, 2015, Hudspeth entered into a Farmout Agreement with Pandora Energy, LP (“Pandora”), Founders Oil & Gas, LLC (“Founders”), and for the limited purposes set forth therein, MPC and Mr. McCabe, for the entire Orogrande Project in Hudspeth County, Texas. The Farmout Agreement provided that Hudspeth and Pandora (collectively referred to as “Farmor”) would assign to Founders an undivided 50% of the leasehold interest and a 37.5% net revenue interest in the oil and gas leases and mineral interests in the Orogrande Project, which interests, except for any interests retained by Founders, would be reassigned to Farmor by Founders if Founders did not spend a minimum of $45.0 million on actual drilling operations on the Orogrande Project by September 23, 2017. Under a joint operating agreement also entered into on September 23, 2015, Founders was designated as operator of the leases.

 

On March 22, 2017, Founders, Founders Oil & Gas Operating, LLC, Founders’ operating partner, Hudspeth and Pandora signed a Drilling and Development Unit Agreement (the “DDU Agreement”), with the Commissioner of the General Land Office, on behalf of the State of Texas, and as approved by the Board for Lease of University Lands, or University Lands, on the Orogrande Project. The DDU Agreement has an effective date of January 1, 2017 and required a payment from Founders, Hudspeth and Pandora, collectively, of $335,323 as the initial consideration fee. The initial consideration fee was paid by Founders in April 2017 and was to be deducted from the required spud fee payable to us at commencement of the next well drilled.

 

The DDU Agreement allows for all 192 existing leases covering approximately 134,000 net acres leased from University Lands to be combined into one drilling and development unit for development purposes. The term of the DDU Agreement expires on December 31, 2023, and the time to drill on the drilling and development unit continues through December 2023. The DDU Agreement also grants the right to extend the DDU Agreement through December 2028 if compliance with the DDU Agreement is met and the extension fee associated with the additional time is paid. Our drilling obligations began with one well to be spudded and drilled on or before September 1, 2017, and increased to two wells in year 2018, three wells in year 2019, four wells in year 2020 and five wells per year in years 2021, 2022 and 2023. The drilling obligations are minimum yearly requirements and may be exceeded if acceleration is desired. The DDU Agreement replaces all prior agreements, and will govern future drilling obligations on the drilling and development unit if the DDU Agreement is extended. The Company drilled three wells during fourth quarter, 2018.

 

There are two vertical tests wells in the Orogrande Project, the Orogrande Rich A-11 test well and the University Founders B-19 #1 test well. The Orogrande Rich A-11 test well was spudded on March 31, 2015, drilled in the second quarter of 2015 and was evaluated and numerous scientific tests were performed to provide key data for the field development thesis. We believe that future utility of this well may be conversion to a salt water disposal well in the course of further development of the Orogrande acreage. The University Founders B-19 #1 was spudded on April 24, 2016 and drilled in the second quarter of 2016. The well successfully pumped down completion fluid in the third quarter of 2016 and indications of hydrocarbons were seen at the surface on this second Orogrande Project test well. We believe that future utility of this well may be conversion to a salt water disposal well in the course of further development of the Orogrande acreage.

 

During the fourth quarter of 2017, we took back operational control from Founders on the Orogrande Project. We were joined by Wolfbone Investments, LLC, (“Wolfbone”), a company owned by Mr. McCabe. We, along with Hudspeth, Wolfbone and, for the limited purposes set forth therein, Pandora, entered into an Assignment of Farmout Agreement with Founders, (the “Assignment of Farmout Agreement”), pursuant to which we and Wolfbone will share the remaining commitments under the Farmout Agreement. All original provisions of our carried interest were to remain in place including reimbursement to us on each wellbore. Founders was to remain a 9.5% working interest owner in the Orogrande Project for the $9.5 million it had spent as of the date of the Assignment of Farmout Agreement, and such interests were to be carried until $40.5 million is spent by Wolfbone and us, with each contributing 50% of such capital spend, under the existing agreement. Our working interest in the Orogrande Project thereby increased by 20.25% to a total of 67.75% and Wolfbone then owned 20.25%.

 

Founders was to operate a newly drilled horizontal well called the University Founders #A25 (at 5,540’ depth in a 1,000’ lateral) with supervision from us and our partners. The University Founders #A25 was spudded on November 28, 2017. During the month of April, 2018, we, MPC and Mr. McCabe were to assume full operational control including managing drilling plans and timing for all future wells drilled in the project.

 

On July 25, 2018, we and Hudspeth entered into a Settlement & Purchase Agreement (the “Settlement Agreement”) with Founders (and Founders Oil & Gas Operating, LLC), Wolfbone and MPC, which agreement provides for Hudspeth and Wolfbone to each immediately pay $625,000 and for Hudspeth or the Company and Wolfbone or MPC to each pay another $625,000 on July 20, 2019, as consideration for Founders assigning all of its working interest in the oil and gas leases of the Orogrande Project to Hudspeth and Wolfbone equally. The final payments were made on July 18, 2019. The assignments to Hudspeth and Wolfbone were made in July when the first payments were made. Future well capital spending obligations will require the same 50% contribution from Hudspeth and 50% from Wolfbone until such time as the $40.5 million to be spent on the project (as per our Assignment of Farmout Agreement with Founders) is completed. The Company estimates that there is still approximately $16 million remaining to be spent on the project until such time as the capital expenditures revert back to the percentages of the working interest owners.

 

After the assignment by Founders (for which Hudspeth’s total consideration was $1,250,000), Hudspeth’s working interest increased to 72.5%.

 

The Orogrande Project ownership as of September 30, 2019 is detailed as follows:

 

    Revenue     Working  
    Interest     Interest  
             
University Lands - Mineral Owner     20.000 %     n/a  
                 
ORRI - Magdalena Royalties, LLC, an entity controlled by Gregory McCabe, Chairman     4.500 %     n/a  
                 
ORRI - Unrelated Party     0.500 %     n/a  
                 
                 
Hudspeth Oil Corporation, a subsidiary of Torchlight Energy Resources Inc.     54.375 %     72.500 %
                 
Wolfbone Investments LLC, an entity controlled by Gregory McCabe, Chairman     18.750 %     25.000 %
                 
Unrelated Party     1.875 %     2.500 %
      100.000 %     100.000 %

 

Additionally, the Settlement Agreement provides that the Founders parties will assign to the Company, Hudspeth, Wolfbone and MPC their claims against certain vendors for damages, if any, against such vendors for negligent services or defective equipment. Further, the Settlement Agreement has a mutual release and waivers among the parties.

 

Rich Masterson, our consulting geologist, is credited with originating the Orogrande Project in Hudspeth County in the Orogrande Basin. With Mr. Masterson’s assistance and based on all the science we have gathered to date, we have identified multiple unconventional and conventional target pay zones with depths between 3,000’ and 8,000’ with primary pay, described as the Penn formation, located at depths of 5,300 to 5,900’. Based on our geologic analysis to date, this basin has stacked pay with zones including the Wolfcamp, Penn, Barnett, Woodford, Atoka and more. These potential zones are prospective for oil and gas with a GOR of 1100 expected based on our gathered scientific information and analysis from independent third parties.

 

During the fourth quarter, 2018, the Company drilled three additional test wells in the Orogrande in order to stay in compliance with University Lands D&D Unit Agreement, as well as, to test for potential shallow pay zones and deeper pay zones that may be present on structural plays. Development of these wells continued into the nine months ended September 30, 2019 to further capture and document the scientific base in support of demonstrating the production potential of the property. The Company is currently marketing the project for an outright sale or farm in partner. This marketing process has been long and arduous as the overall market is quite soft. In addition, due to the size and scope of the project, we are dealing with very large companies that have multitudes of people reviewing our material, which in itself is extensive. During the marketing process, the Company and Wolfbone will endeavor to complete the University Maverick A24 #1 as a potential producer in the Atoka formation. In addition, should a farm out partner or sale not occur, the Company and Wolfbone will proceed to drill two additional wells in the play prior to year-end, in order to fulfill the obligations under the DDU Agreement. We are currently drilling and preparing to test the two obligation wells described above. The first well, the A35 1H, has been drilled and cased in the Penn Section. This first well is a short horizontal in the proven Penn Section where we will be looking to break through the dual porosity system in place with a larger frac designed to open up the oil bearing pores. We are also drilling ahead on the A25 #2 which is being drilled on an identified structure. This well is designed to test both conventional zones and potentially the unconventional Barnett and Woodford Zones ultimately drilling down to the cellar around 8000 feet.

 

Hazel Project in the Midland Basin in West Texas

 

Effective April 4, 2016, TEI acquired from MPC a 66.66% working interest in approximately 12,000 acres in the Midland Basin in exchange for 1,500,000 warrants to purchase shares of our common stock with an exercise price of $1.00 for five years and a back-in after payout of a 25% working interest to MPC.

 

Initial development of the first well on the property, the Flying B Ranch #1, began July 9, 2016 and development continued through September 30, 2016. This well is classified as a test well in the development pursuit of the Hazel Project. We believe that this wellbore will be utilized as a salt water disposal well in support of future development.

 

In October 2016, the holders of all of our then-outstanding shares of Series C Preferred Stock (which were issued in July 2016) elected to convert into a total 33.33% working interest in our Hazel Project, reducing our ownership from 66.66% to a 33.33% working interest. As of December 31, 2018, no shares of our Series C Preferred Stock were outstanding.

 

On December 27, 2016, drilling activities commenced on the second Hazel Project well, the Flying B Ranch #2. The well is a vertical test similar to our first Hazel Project well, the Flying B Ranch #1. Recompletion in an alternative geological formation for this well was performed during the three months ended September 30, 2017; however, we believe that the results were uneconomic for continuing production. We believe that this wellbore will be utilized as a salt water disposal well in support of future development.

 

We commenced planning to drill the Flying B Ranch #3 horizontal well in the Hazel Project in June 2017 in compliance with the continuous drilling obligation. The well was spudded on June 10, 2017. The well was completed and began production in late September 2017. As of September 30, 2019 the well is shut in due to high lease operating expenses as a result of lack of three phase electricity to the property which forced the use of diesel generation equipment to power the production facilities.

 

Acquisition of Additional Interests in Hazel Project

 

On January 30, 2017, we and our then wholly-owned subsidiary, Torchlight Acquisition Corporation, a Texas corporation (“TAC”), entered into and closed an Agreement and Plan of Reorganization and a Plan of Merger with Line Drive Energy, LLC, a Texas limited liability company (“Line Drive”), and Mr. McCabe, under which agreements TAC merged with and into Line Drive and the separate existence of TAC ceased, with Line Drive being the surviving entity and becoming our wholly-owned subsidiary. Line Drive, which was wholly-owned by Mr. McCabe, owned certain assets and securities, including approximately 40.66% of 12,000 gross acres, 9,600 net acres, in the Hazel Project and 521,739 warrants to purchase shares of our common stock (which warrants had been assigned by Mr. McCabe to Line Drive). Upon the closing of the merger, all of the issued and outstanding shares of common stock of TAC automatically converted into a membership interest in Line Drive, constituting all of the issued and outstanding membership interests in Line Drive immediately following the closing of the merger, the membership interest in Line Drive held by Mr. McCabe and outstanding immediately prior to the closing of the merger ceased to exist, and we issued Mr. McCabe 3,301,739 restricted shares of our common stock as consideration therefor. Immediately after closing, the 521,739 warrants held by Line Drive were cancelled, which warrants had an exercise price of $1.40 per share and an expiration date of June 9, 2020. A Certificate of Merger for the merger transaction was filed with the Secretary of State of Texas on January 31, 2017. Subsequent to the closing the name of Line Drive Energy, LLC was changed to Torchlight Hazel, LLC. We are required to drill one well every six months to hold the entire 12,000 acre block for eighteen months, and thereafter two wells every six months starting June 2018. During the nine months ended September 30, 2019 modifications were made to mineral owner leases as described below.

 

Also on January 30, 2017, TEI entered into and closed a Purchase and Sale Agreement with Wolfbone. Under the agreement, TEI acquired certain of Wolfbone’s Hazel Project assets, including its interest in the Flying B Ranch #1 well and the 40 acre unit surrounding the well, for consideration of $415,000, and additionally, Wolfbone caused to be cancelled a total of 2,780,000 warrants to purchase shares of our common stock, including 1,500,000 warrants held by MPC, and 1,280,000 warrants held by Green Hill Minerals, an entity owned by Mr. McCabe’s son, which warrant cancellations were effected through certain Warrant Cancellation Agreements. The 1,500,000 warrants held by MPC that were cancelled had an exercise price of $1.00 per share and an expiration date of April 4, 2021. The warrants held by Green Hill Minerals that were cancelled included 100,000 warrants with an exercise price of $1.73 and an expiration date of September 30, 2018 and 1,180,000 warrants with an exercise price of $0.70 and an expiration date of February 15, 2020.

 

Since Mr. McCabe held the controlling interest in both Line Drive and Wolfbone, the transactions were combined for accounting purposes. The working interest in the Hazel Project was the only asset held by Line Drive. The warrant cancellation was treated in the aggregate as an exercise of the warrants with the transfer of the working interests as the consideration. We recorded the transactions as an increase in its investment in the Hazel Project working interests of $3,644,431, which is equal to the exercise price of the warrants plus the cash paid to Wolfbone.

 

Upon the closing of the transactions, our working interest in the Hazel Project increased by 40.66% to a total ownership of 74%.

 

Effective June 1, 2017, we acquired an additional 6% working interest from unrelated working interest owners in exchange for 268,656 shares of common stock valued at $373,430, increasing our working interest in the Hazel project to 80%, and an overall net revenue interest of 74-75%.

 

Mr. Masterson is credited with originating the Hazel Project in the Midland Basin. With Mr. Masterson’s assistance, we are targeting prospects in the Midland Basin that have 150 to 130 feet of thickness, are likely to require six to eight laterals per bench, have the potential for 12 to 16 horizontal wells per section, and 200 long lateral locations, assuming only two benches.

 

In April 2018, we announced that we have commenced a process that could result in the monetization of the Hazel Project. We believe the development activity at the Hazel Project, coupled with nearby activities of other oil and gas operators, suggests that this project has achieved a level of value worth monetizing. We anticipate that the liquidity that would be provided from selling the Hazel Project could be redeployed into the Orogrande Project. While this process is underway, we will take all necessary steps to maintain the leasehold as required. As of this filing, we continue to maintain the leases in good standing and continue to market the acreage in an effort to focus on the Orogrande Project.

 

During the nine months ended September 30, 2019 the Company deepened the Flying B #4 and took whole cores through all of the Wolfcamp A and the upper portion of the Wolfcamp B. In addition, in May, 2019 we entered into agreements with two of the three mineral owners on the northern section of the leases to keep the entire acreage block as one lease with a one year extension. We issued each of them 50,000 shares of our common stock as consideration for this extension. At September 30, 2019 we were structuring the extension agreement with the third mineral owner for cash consideration. Due to this extension, our obligation in November reduces to one obligation well. We have finished that obligation well and are awaiting results. This well is targeting a shallow zone that is showing oil potential.

 

The marketing process is ongoing for the Hazel project. We continue to encounter, as does the entire industry, a soft market for acquisitions and divestitures transactions. We will continue to look to sell the property or joint venture the property via farm in or a drillco transaction.

 

Winkler Project, Winkler County, Texas

 

On December 1, 2017, the Agreement and Plan of Reorganization that we and our then wholly-owned subsidiary, Torchlight Wolfbone Properties, Inc., a Texas corporation (“TWP”), entered into with MPC and Warwink Properties, LLC (“Warwink Properties”) on November 14, 2017 closed. Under the agreement, TWP merged with and into Warwink Properties and the separate existence of TWP ceased, with Warwink Properties being the surviving entity and becoming our wholly-owned subsidiary. Warwink Properties was wholly owned by MPC. Warwink Properties owns certain assets, including a 10.71875% working interest in approximately 640 acres in Winkler County, Texas. Upon the closing of the merger, all of the issued and outstanding shares of common stock of TWP converted into a membership interest in Warwink Properties, constituting all of the issued and outstanding membership interests in Warwink Properties immediately following the closing of the merger, the membership interest in Warwink Properties held by MPC and outstanding immediately prior to the closing of the merger ceased to exist, and we issued MPC 2,500,000 restricted shares of our common stock as consideration. Also on December 1, 2017, MPC closed its transaction with MECO IV, LLC (” MECO”), for the purchase and sale of certain assets as contemplated by the Purchase and Sale Agreement dated November 9, 2017 among MPC, MECO and additional parties thereto (the “MECO PSA”), to which we are not a party. Under the MECO PSA, Warwink Properties received a carry from MECO (through the tanks) of up to $1,179,076 in the next well drilled on the Winkler County leases. A Certificate of Merger for the merger transaction was filed with the Secretary of State of Texas on December 5, 2017.

 

Also on December 1, 2017, the transactions contemplated by the Purchase Agreement that TEI entered into with MPC closed. Under the Purchase Agreement, which was entered into on November 14, 2017, TEI acquired beneficial ownership of certain of MPC’s assets, including acreage and wellbores located in Ward County, Texas (the “Ward County Assets”). As consideration under the Purchase Agreement, at closing TEI issued to MPC an unsecured promissory note in the principal amount of $3,250,000, payable in monthly installments of interest only beginning on January 1, 2018, at the rate of 5% per annum, with the entire principal amount together with all accrued interest due and payable on January 1, 2021. In connection with TEI’s acquisition of beneficial ownership in the Ward County Assets, MPC sold those same assets, on behalf of TEI, to MECO at closing of the MECO PSA, and accordingly, TEI received $3,250,000 in cash for its beneficial interest in the Ward County Assets. Additionally, at closing of the MECO PSA, MPC paid TEI a performance fee of $2,781,500 in cash as compensation for TEI’s marketing and selling the Winkler County assets of MPC and the Ward County Assets as a package to MECO.

 

Addition to the Winkler Project

 

As of May 7, 2018 our Winkler project in the Delaware Basin had begun the drilling phase of the first Winkler Project well, the UL 21 War-Wink 47 #2H. Our operating partner, MECO had begun the pilot hole on the project. The plan is to evaluate the various potential zones for a lateral leg to be drilled once logging is completed. We expect the most likely target to be the Wolfcamp A interval. The well is on 320 newly acquired acres offsetting the original leasehold we entered into in December, 2017. The additional acreage was leased by our operating partner under the Area of Mutual Interest Agreement (AMI) and we exercised its right to participate for its 12.5% in the additional 1,080 gross acres at a cash cost of $447,847 in July, 2018. Our carried interest in the first well, as outlined in the agreement, was originally planned to be on the first acreage acquired. That carried interest is being applied to this new well and will allow MECO to drill and produce potential revenues sooner than originally planned. The primary leasehold is a 320-acre block directly west of the current position and will allow for 5,000-foot lateral wells to be drilled. The well was completed and began production in October, 2018 and is producing currently. Recently the operator has informed us that there will be no planned additional wells in the acreage this year. All acreage is presently held by production.

 

In December 2018, the Company began to take measures on its own to market the Winkler Project in an effort to focus on the Orogrande. This process is ongoing.

 

Hunton Play, Central Oklahoma

 

Presently, we are producing from one well in the Viking Area of Mutual Interest and one well in Prairie Grove.

 

Assets Held for Sale

 

With respect to marketing oil and natural gas properties, the Company has evaluated the properties being marketed to determine whether any should be reclassified as held-for-sale at September 30, 2019. The held-for-sale criteria include: management commits to a plan to sell; the asset is available for immediate sale; an active program to locate a buyer exists; the sale of the asset is probable and expected to be completed within one year; the asset is being actively marketed for sale; and it is unlikely that significant changes to the plan will be made. If each of these criteria is met, the property would be reclassified as held-for-sale on the Company’s consolidated balance sheets and measured at the lower of their carrying amount or estimated fair value less costs to sell. Fair values are estimated using accepted valuation techniques, such as a discounted cash flow model, valuations performed by third parties, earnings multiples, or indicative bids, when available. Management considers historical experience and all available information at the time the estimates are made; however, the fair value that is ultimately realized upon the sale of the assets to be divested may differ from the estimated fair values reflected in the consolidated financial statements. If each of these criteria is met, DD&A expense would not be recorded on assets to be divested once they are classified as held for sale. Based on management’s assessment, these criteria have not been met and no assets are classified as held for sale as of September 30, 2019.

 
XML 49 R26.htm IDEA: XBRL DOCUMENT v3.19.3
3. SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)
 3 Months Ended 9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
Accounting Policies [Abstract]        
Capitalized interest $ 2,084,026 $ 1,382,820 $ 2,084,026 $ 1,382,820
Impairment expense $ 0 $ 0 $ (474,357) $ (139,891)
XML 50 R22.htm IDEA: XBRL DOCUMENT v3.19.3
9. PROMISSORY NOTES (Tables)
 9 Months Ended
Sep. 30, 2019
Debt Disclosure [Abstract]  
Summary of unsecured promissory note transactions
Unsecured promissory note balance - December 31, 2018   $ 11,862,080  
         
Accretion of discount and amortization of debt issuance costs     386,813  
         
Unsecured promissory note balance - September 30, 2019   $ 12,248,893