| Note 7 - Long Term Debt |
Long
term debt consisted of the following at December 31, 2017 and 2016:
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December
31,
2017
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December
31,
2016
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| On
February 19, 2016, the Company issued a total of $1,625,000 15% convertible notes with a term expiring August 18, 2016 (the
“Maturity Date”). The principal amounts of each note and interest is payable on the maturity date. Placement fees
of $145,000 were subtracted from proceeds. The notes are convertible into common stock at any time, at the holder’s
option, the conversion price shall be the lowest of (i) $0.15, (ii) 58% of the price of the Company’s securities that
are sold in any offering of the Company’s securities in excess of $100,000, of (iii) the conversion price of any Equity
converted on or prior to the Conversion Date. |
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125,000 |
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| On
April 29, 2016, the Company issued a total of $375,000 of 10% Secured Subordinated promissory notes with a term expiring January
12, 2017 (the “Maturity Date”), and an original issue discount of fifty percent (50%). Interest is payable on
the outstanding principal of these notes at 10% per annum on the Maturity Date. The balance shown is net of unamortized discount
of $8,824 at December 31, 2016. |
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366,176 |
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| On
July 27, 2016, the Company issued a promissory note in the amount of $20,000, bearing interest at 12%, with an initial maturity
date of August 27, 2016, and a provision for an extension of six additional terms of 30 days. |
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20,000 |
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| As
of December 31, 2016, the Company issued a total of $630,000 of 10% Secured promissory notes with a term expiring April 3,
2017 (the “Maturity Date”), and an original issue discount of thirty-seven and one-half percent (37.5%). The discount
was modified to fifty percent (50%) retroactively with an extension of the maturity to June 2017. During the quarter ended
March 31, 2017, the Company issued an additional $917,833 of 10% Secured promissory notes with terms expiring in June, August
and September of 2017, and an original issue discount of fifty percent (50%). Interest is payable on the outstanding principal
of these notes at 10% per annum on the various maturity dates. The balance shown is net of unamortized discount of $0 and
$208,064 at September 30, 2017 and December 31, 2016 respectively. |
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75,000 |
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421,936 |
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| On
October 4, 2016, the Company issued a non-interest-bearing note, payable on demand in the amount of $203,000. This amount
has been paid in full as of November 1, 2017. |
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203,000 |
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| On
October 4, 2016, the Company closed on a revolver loan with Crossfirst Bank in the amount of $1,800,000, payable at $15,000
per month, interest at 10%, with all unpaid principal and accrued interest payable on September 30, 2018. The balance shown
is net of unamortized discount of $10,341 and $24,167 at December 31, 2017 and 2016 respectively. |
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1,594,659 |
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1,745,833 |
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| During
July and August of 2017, the Company borrowed $1,475,000 from private lenders pursuant to a 10% Secured Convertible Promissory
Note with a twelve-month maturity. The balance shown is net of unamortized discount of $271,403 and $0 at December 31, 2017
and 2016 respectively. |
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1,203,597 |
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| During
August through December of 2017, the Company borrowed $2,989,000 from private lenders pursuant to a 10% Secured Promissory
Note with all principal and accrued interest payable on the maturity date of October 31, 2018. The balance shown is net of
unamortized discount of $867,399 and $0 at December 31, 2017 and 2016 respectively. |
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2,121,601 |
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| On
September 8, 2017, the Company closed on a Promissory Note with Cornerstone Bank in the amount of $256,983, payable interest
only for the first twelve months commencing October 8, 2017, variable interest rate, currently at 5.5%, followed by 83 monthly
payments of $3,765, interest at 6%, final payment due on September 8, 2025. The balance shown is net of unamortized discount
of $3,113 and $0 at December 31, 2017 and 2016 respectively. |
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253,870 |
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| On
September 29, 2017, the Company closed on a Promissory Note with Cornerstone Bank in the amount of $290,000, payable interest
only for the first twelve months commencing October 29, 2017, variable interest rate, currently at 5.5%, followed by 83 monthly
payments of $3,765, interest at 6%, final payment due on September 29, 2025. The balance shown is net of unamortized discount
of $3,925 and $0 at December 31, 2017 and 2016 respectively. |
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286,075 |
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| On
October 3, 2017, the Company closed on a Promissory Note with Cornerstone Bank in the amount of $204,000, payable interest
only for the first twelve months commencing November 3, 2017, variable interest rate, currently at 5.5%, followed by 83 monthly
payments of $3,765, interest at 6%, final payment due on October 3, 2025. The balance shown is net of unamortized discount
of $3,451 and $0 at December 31, 2017 and 2016 respectively. |
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200,549 |
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| On
December 22, 2017, the Company borrowed $8,510,638, through 405 Petrodome, LLC, as agent for Lenders, with an OID of 6%.,
bearing interest initially at 9.875% through June 2018, then 11.375% through December 2018, then 12.875% through June 2019,
then 14.375% through December 2019. Interest only through June 2018, at which time Principal will be payable at $75,000 monthly
for six months and then $125,000 monthly to the maturity date of December 22, 2019. The balance shown is net of unamortized
discounts of $941,108 and $0 at December 31, 2017 and 2016 respectively. |
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7,569,530 |
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13,304,881 |
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2,881,945 |
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| Less
current portion |
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(3,562,051 |
) |
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(1,302,476 |
) |
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$ |
9,742,830 |
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$ |
1,579,469 |
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Loan
Covenant Defaults and Waiver
Pursuant
to the terms of the credit facility executed on December 22, 2017 through 405 Petrodome, LLC, in the amount of $8,510,638, the
Company is required to provide certain information to the agent for the lenders relative to operational performance of Petrodome
Energy LLC, to include a certificate of compliance as pertaining to unaudited monthly financial statements, volume reports, budgetary
reports with variance analysis, and an aging analysis of payables for each period. The Company is required to provide audited
financial statements and compliance certificates for the year ended December 31, 2017, to provide financial projections for the
year ending December 31, 2018, to deliver to the agent acknowledgements of “Letters in Lieu of Transfer” relative
to each operator of wells in which the Borrowers have any interest, to have all payments received by borrower remitted to a “Lockbox
Account”, and to deliver to the operators the applicable Over Riding Royalty Interest Assignment established in the credit
facility. The Company is to maintain a current ratio of not less than 1.00 to 1.00, and is not to allow as of May 31, 2018 and
each November 30th and May 31st thereafter, the loan balance minus the amount of cash in the CapEx Account
as of the relevant date to be more than 50% of the PV-10 value of proved reserves.
As
of the date of this filing, the Company is not in default of any of the loan covenants associated with this credit facility that
the Company has not complied with, as the Lenders have provided a waiver of such defaults to be cured by May 10, 2018.
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