10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

(Mark One)

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2020

OR

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ______________.

Commission File Number 1-32955

HOUSTON AMERICAN ENERGY CORP.

(Exact name of registrant as specified in its charter)

Delaware	76-0675953
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

801 Travis Street, Suite 1425, Houston, Texas 77002

(Address of principal executive offices)(Zip Code)

(713) 222-6966

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

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 [  ]

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 [  ]

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. See definition of “large accelerated filer,” “accelerated filer,” “smaller reporting company” or an “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	[  ]	Accelerated filer	[  ]	Non-accelerated filer	[X]
Smaller reporting company	[X]	Emerging growth company	[  ]

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. [  ]

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

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 per share	HUSA	NYSE American

As of November 12, 2020, we had 6,977,718 shares of $0.001 par value common stock outstanding.

HOUSTON AMERICAN ENERGY CORP.

FORM 10-Q

INDEX

		Page No.
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)
	Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019 (Unaudited)	3
	Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2020 and 2019 (Unaudited)	4
	Consolidated Statements of Changes in Stockholders’ Equity for the Three and Nine Months Ended September 30, 2020 and 2019 (Unaudited)	5
	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2020 and 2019 (Unaudited)	7
	Notes to Consolidated Financial Statements (Unaudited)	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	19
Item 4.	Controls and Procedures	19
PART II	OTHER INFORMATION
Item 6.	Exhibits	19

2

PART I - FINANCIAL INFORMATION

ITEM 1 Financial Statements

HOUSTON AMERICAN ENERGY CORP.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

	September 30, 2020			December 31, 2019
ASSETS
CURRENT ASSETS
Cash	$	1,574,775		$	97,915
Accounts receivable – oil and gas sales		21,136			80,195
Prepaid expenses and other current assets		75,025			39,505
TOTAL CURRENT ASSETS		1,670,936			217,615
PROPERTY AND EQUIPMENT
Oil and gas properties, full cost method
Costs subject to amortization		61,590,425			61,068,240
Costs not being amortized		3,228,404			2,478,456
Office equipment		90,004			90,004
Total		64,908,833			63,633,534
Accumulated depletion, depreciation, amortization, and impairment		(57,933,332	)		(57,267,145	)
PROPERTY AND EQUIPMENT, NET		6,975,501			6,369,555
Cost method investment		252,273			197,009
Right of use asset		216,566			281,489
Other assets		3,667			3,167
TOTAL ASSETS	$	9,118,943		$	7,068,835
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable	$	62,540		$	270,119
Accrued expenses		—			447
Notes payable – related party, net of debt discount		—			595,585
Current portion of lease liability		108,910			97,890
TOTAL CURRENT LIABILITIES		171,450			966,041
LONG-TERM LIABILITIES
Lease liability, net of current portion		136,372			219,410
Reserve for plugging and abandonment costs		51,965			44,186
TOTAL LONG-TERM LIABILITIES		188,337			263,596
TOTAL LIABILITIES		359,787			1,229,637
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY
Preferred stock, par value $0.001; 10,000,000 shares authorized,
Series A Convertible Preferred Stock, par value $0.001; 2,000 shares authorized; 1,085 and 1,085 shares issued and outstanding, respectively; liquidation preference of $1,085,000		1			1
Series B Convertible Preferred Stock, par value $0.001; 1,000 shares authorized; 835 and 835 shares issued and outstanding, respectively; liquidation preference of $835,000		1			1
Common stock, par value $0.001; 12,000,000 shares authorized; 6,977,718 and 5,275,816 shares issued and outstanding, respectively		6,977			5,276
Additional paid-in capital		78,184,271			73,877,332
Subscription receivable		—			(58,575	)
Accumulated deficit		(69,432,094	)		(67,984,837	)
TOTAL SHAREHOLDERS’ EQUITY		8,759,156			5,839,198
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	9,118,943		$	7,068,835

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

3

HOUSTON AMERICAN ENERGY CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
OIL AND GAS REVENUE	$	126,425		$	264,935		$	351,489		$	724,848
EXPENSES OF OPERATIONS
Lease operating expense and severance tax		53,603			139,874			233,753			483,970,
General and administrative expense		240,390			309,822			883,995			965,423
Depreciation and depletion		94,926			99,684			237,071			283,830
Impairment of oil and gas properties		—			—			429,116			—
Total operating expense		388,919			549,380			1,783,935			1,733,223
Loss from operations		(262,494	)		(284,445	)		(1,432,446	)		(1,008,375	)
OTHER INCOME
Interest income		—			66			12,006			1,953
Interest expense		(2,729	)		(20,254	)		(26,817	)		(20,254	)
Total other income		(2,729	)		(20,188	)		(14,811	)		(18,301	)
Net loss before taxes		(259,765	)		(304,633	)		(1,447,257	)		(1,026,676	)
Income tax expense		—			—			—			—
Net loss		(259,765	)		(304,633	)		(1,447,257	)		(1,026,676	)
Dividends to Series A and B preferred stockholders		(69,600	)		(57,600	)		(172,800	)		(172,800	)
Net loss attributable to common shareholders	$	(329,365	)	$	(362,233	)	$	(1,620,057	)	$	(1,199,476	)
Basic and diluted loss per common share	$	(0.05	)	$	(0.01	)	$	(0.23	)	$	(0.02	)
Based and diluted weighted average number of common shares outstanding		6,972,128			63,082,485			6,926,407			62,686,681

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

4

HOUSTON AMERICAN ENERGY CORP.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019

(Unaudited)

									Additional
	Preferred Stock				Common Stock				Paid-in			Subscription			Accumulated
	Shares		Amount		Shares		Amount		Capital			Receivable			Deficit			Total
Balance – December 31, 2019		1,920	$	2		5,275,816	$	5,276	$	73,877,332		$	(58,575	)	$	(67,984,837	)	$	5,839,198
Issuance of common stock for cash, net		—		—		1,684,760		1,684		4,373,910			58,575			—			4,434,169
Stock-based compensation		—		—		—		—		57,442			—			—			57,442
Series A and Series B Preferred Stock dividends paid		—		—		—		—		(57,600	)		—			—			(57,600	)
Net loss		—		—		—		—		—			—			(850,990	)		(850,990	)
Balance – March 31, 2020		1,920		2		6,960,576		6,960		78,251,084			—			(68,835,827	)		9,422,219
Stock-based compensation		—		—		—		—		39,323			—			—			39,323
Series A and Series B Preferred Stock dividends paid		—		—		—		—		(45,600	)		—			—			(45,600	)
Net loss		—		—		—		—		—			—			(336,502	)		(336,502	)
Balance – June 30, 2020		1,920		2		6,960,576		6,960		78,244,807			—			(69,172,329	)		9,079,440
Rounding of common stock due to reverse split		—		—		17,142		17		(17	)		—			—			—
Stock-based compensation		—		—		—		—		9,081			—			—			9,081
Series A and Series B Preferred Stock dividends paid		—		—		—		—		(69,600	)		—			—			(69,600	)
Net loss		—		—		—		—		—			—			(259,765	)		(259,765	)
Balance – September 30, 2020		1,920	$	2		6,977,718	$	6,977	$	78,184,271		$	—		$	69,432,094		$	8,759,156

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

5

HOUSTON AMERICAN ENERGY CORP.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019

(Unaudited)

									Additional
	Preferred Stock				Common Stock				Paid-in			Subscription		Accumulated
	Shares		Amount		Shares		Amount		Capital			Receivable		Deficit			Total
Balance – December 31, 2018		1,920	$	2		4,994,011	$	4,994	$	73,141,440		$	—	$	(65,469,143	)	$	7,677,295
Stock-based compensation		—		—		—		—		14,219			—		—			14,219
Series A and Series B Preferred Stock dividends paid		—		—		—		—		(57,600	)		—		—			(57,600	)
Net loss		—		—		—		—		—			—		(239,620	)		(239,620	)
Balance – March 31, 2019		1,920		2		4,994,011		4,994		73,098,059			—		(65,708,763	)		7,394,292
Issuance of common stock		—		—		22,408		22		56,048			—		—			56,070
Stock-based compensation		—		—		—		—		27,325			—		—			27,325
Series A and Series B Preferred Stock dividends paid		—		—		—		—		(57,600	)		—		—			(57,600	)
Net loss		—		—		—		—		—			—		(482,423	)		(482,423	)
Balance – June 30, 2019		1,920		2		5,016,419		5,016		73,123,832			—		(66,191,186	)		6,937,664
Issuance of common stock		—		—		161,773		162		416,322			—		—			416,484
Stock-based compensation		—		—		—		—		57,444			—		—			57,444
Series A and Series B Preferred Stock dividends paid		—		—		—		—		(57,600	)		—		—			(57,600	)
Warrants issued as debt inducement		—		—		—		—		144,948			—		—			144,948
Net loss		—		—		—		—		—			—		(304,633	)		(304,633	)
Balance – September 30, 2019		1,920	$	2		5,178,192	$	5,178	$	73,684,946		$	—	$	(66,495,819	)	$	7,194,307

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

6

HOUSTON AMERICAN ENERGY CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019

(Unaudited)

	For the Nine Months Ended September 30,
	2020			2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(1,447,257	)	$	(1,026,676	)
Adjustments to reconcile net loss to net cash used in operations:
Depreciation and depletion		237,071			283,830
Impairment of oil and gas properties		429,116			—
Accretion of asset retirement obligation		7,779			3,063
Stock-based compensation		105,846			98,988
Amortization of debt discount		23,467			17,600
Amortization of right of use asset		64,423			56,417
Changes in operating assets and liabilities:
Decrease in accounts receivable		59,059			33,587
Increase in prepaid expenses and other current assets		(35,520	)		(49,787	)
Increase in accounts payable and accrued expenses		(197,006	)		193,292
Decrease in operating lease liability		(83,038	)		(156,669	)
Net cash used in operating activities		(836,060	)		(546,355	)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for the acquisition and development of oil and gas properties		(1,272,133	)		(645,507	)
Payments for capital contribution for cost method investment		(55,264	)		—
Net cash used in investing activities		(1,327,397	)		(645,507	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of notes payable, net of debt discount		(621,052	)		590,000
Proceeds from the issuance of common stock, net of expenses		4,434,169			472,554
Payment of preferred stock dividends		(172,800	)		(172,800	)
Net cash provided by financing activities		3,640,317			889,754
Increase (decrease) in cash		1,476,860			(302,108	)
Cash, beginning of period		97,915			755,702
Cash, end of period	$	1,574,775		$	453,594
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid	$	3,350		$	2,654
Taxes paid	$	—		$	—
SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES
Debt discount from issuance of warrants as debt inducement	$	—		$	144,948

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

7

HOUSTON AMERICAN ENERGY CORP.

Notes to Consolidated Financial Statements

(Unaudited)

NOTE 1 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited consolidated financial statements of Houston American Energy Corp., a Delaware corporation (the “Company”), have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q. They do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for a complete financial presentation. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, considered necessary for a fair presentation, have been included in the accompanying unaudited consolidated financial statements. Operating results for the periods presented are not necessarily indicative of the results that may be expected for the full year.

These unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and footnotes, which are included as part of the Company’s Form 10-K for the year ended December 31, 2019.

Consolidation

The accompanying consolidated financial statements include all accounts of the Company and its subsidiaries (HAEC Louisiana E&P, Inc., HAEC Oklahoma E&P, Inc., and HAEC Caddo Lake E&P, Inc.). All significant inter-company balances and transactions have been eliminated in consolidation.

Reverse Stock Split

In July 2020, the Company’s shareholders approved a reverse split of the Company’s common stock in a ratio to be determined, within a specified range, by the Company’s board of directors. The Company’s board of directors approved, and, effective at the close of business on July 31, 2020, the Company’s Certificate of Incorporation was amended to affect a 1-for-12.5 reverse split (the “Reverse Split”) of the Company’s common stock. Fractional shares otherwise issuable pursuant to the Reverse Split were rounded up to the next highest whole number of shares. As a result of the Reverse Split, the shares of common stock outstanding immediately prior to the Reverse Split decreased from 87,007,145 to 6,960,575 shares and the shares of common stock authorized for issuance decreased from 150,000,000 shares to 12,000,000 shares. Similarly, all shares of common stock issuable under outstanding options, warrants and shares of convertible preferred stock were adjusted, and applicable conversion or exercise prices were proportionately adjusted, to reflect the Reverse Split. The par value of the Company’s common stock remained unchanged at $0.001 per share.

All references to shares of common stock and per share data for all periods in the financial statements and notes thereto have been adjusted to reflect the Reverse Split on a retroactive basis.

Liquidity and Capital Requirements

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business for the twelve-month period following the issuance date of these consolidated financial statements. The Company has incurred continuing losses since 2011, including a loss of $1,447,257 for the nine months ended September 30, 2020. Additionally, as a result of the steep global economic slowdown that began in March 2020 as the coronavirus pandemic (“COVID-19”) spread, prices realized from oil and gas sales declined sharply beginning late in the quarter ended March 31, 2020 and have only partially recovered as of September 30, 2020, with such price declines expected to persist until governments worldwide are confident that the pandemic is adequately contained to permit renewed economic activity. Depending upon the duration of the pandemic and the resulting global economic slowdown, the Company may incur continuing declines in revenues and increased losses, associated from lower demand for energy and resulting depressed oil and gas prices. However, during the three months ended March 31, 2020, the Company raised a total, net of offering costs, of $4,434,169 in its ATM offering. As of September 30, 2020, there were no remaining funds available under the ATM Offering.

The Company believes that it has the ability to fund, from cash on hand (as a result of the ATM funding received in the current period), its operating costs and anticipated drilling operations, as well as mitigate the immediate impact of COVID-19, for at least the next twelve months following the issuance of these financial statements.

8

The actual timing and number of wells drilled during 2020 will be principally controlled by the operators of the Company’s acreage, based on a number of factors, including but not limited to availability of financing, performance of existing wells on the subject acreage, energy prices and industry condition and outlook, costs of drilling and completion services and equipment and other factors beyond the Company’s control or that of its operators. With the steep decline in energy prices beginning in March 2020, due at least in part to the economic effects of COVID-19, drilling and development operations were deferred during the first half of 2020. With modest price improvements since the initial COVID-19 related price decline and lower rig and related costs, the Company and its operators have resumed select drilling and development operations in the Permian Basin during the quarter ended September 30, 2020.

In the event that the Company pursues additional acreage acquisitions or expands its drilling plans, the Company may be required to secure additional funding beyond our resources on hand. While the Company may, among other efforts, seek additional funding from “at-the-market” sales of common stock, and private sales of equity and debt securities, it presently does not have any commitments to provide additional funding, and there can be no assurance that the Company can secure the necessary capital to fund its share of drilling, acquisition or other costs on acceptable terms or at all. If, for any reason, the Company is unable to fund its share of drilling and completion costs, it would forego participation in one or more of such wells. In such event, the Company may be subject to penalties or to the possible loss of some of its rights and interests in prospects with respect to which it fails to satisfy funding obligations and it may be required to curtail operations and forego opportunities.

Accounting Principles and Use of Estimates

The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America. In preparing financial statements, management makes informed judgments and estimates that affect the reported amounts of assets and liabilities as of the date of the financial statements and affect the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, management reviews its estimates, including those related to such potential matters as litigation, environmental liabilities, income taxes and the related valuation allowance, determination of proved reserves of oil and gas and asset retirement obligations. Changes in facts and circumstances may result in revised estimates and actual results may differ from these estimates.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to a concentration of credit risk include cash, cash equivalents and any marketable securities (if any). The Company had cash deposits of $1,272,652 in excess of the FDIC’s current insured limit on interest bearing accounts of $250,000 as of September 30, 2020. The Company also had cash deposits of $3,646 in Colombian banks at September 30, 2020 that are not insured by the FDIC. The Company has not experienced any losses on its deposits of cash and cash equivalents.

Loss per Share

Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common shares were exercised or converted in common shares that then shared in the earnings of the Company. In periods in which the Company reports a net loss, dilutive securities are excluded from the calculation of diluted net loss per share amounts as the effect would be anti-dilutive. All per share calculations are adjusted to give retroactive effect to the Reverse Split.

For the three and nine months ended September 30, 2020 and 2019, the following convertible preferred stock and warrants and options to purchase shares of common stock were excluded from the computation of diluted net loss per share, as the inclusion of such shares would be anti-dilutive:

	Nine Months Ended September 30,				Three Months Ended September 30,
	2020		2019		2020		2019
Series A Convertible Preferred Stock		434,000		434,000		434,000		434,000
Series B Convertible Preferred Stock		185,644		185,644		185,644		185,644
Stock warrants		98,400		98,400		98,400		98,400
Stock options		488,973		480,973		488,973		480,973
Total		1,207,017		1,199,017		1,207,017		1,199,017

9

Recently Issued Accounting Pronouncements

The Company does not expect the adoption of any recently issued accounting pronouncements to have a significant impact on its financial position, results of operations, or cash flows.

Subsequent Events

The Company has evaluated all transactions from September 30, 2020 through the financial statement issuance date for subsequent event disclosure consideration.

NOTE 2 – REVENUE FROM CONTRACTS WITH CUSTOMERS

Disaggregation of Revenue from Contracts with Customers

The following table disaggregates revenue by significant product type for the three and nine-month periods ended September 30, 2020 and 2019:

	Three Months Ended September 30, 2020		Three Months Ended September 30, 2019		Nine Months Ended September 30, 2020		Nine Months Ended September 30, 2019
Oil sales	$	85,617	$	222,446	$	257,567	$	573,872
Natural gas sales		21,795		12,104		44,456		41,034
Natural gas liquids sales		19,013		30,385		49,466		109,942
Total revenue from customers	$	126,425	$	264,935	$	351,489	$	724,848

There were no significant contract liabilities or transaction price allocations to any remaining performance obligations as of September 30, 2020 or 2019.

NOTE 3 – OIL AND GAS PROPERTIES

In July 2020, the Company acquired, for $33,228, a 20% working interest in 466 gross acres within an area of mutual interest associated with our existing Northern Shelf of the Permian Basin acreage in Hockley County, Texas.

In August 2020, the Company sold its interest in a well in Vermillion Parish, Louisiana in exchange for $1,487, reflecting our share of the plugging costs previously withheld. Effective October 1, 2020 the Company released its rights in a well in Nueces County, Texas in exchange for the reassignment of the plugging liability to another party.

During the nine months ended September 30, 2020, the Company invested $1,272,133 for the acquisition and development of oil and gas properties, consisting of cost of development of U.S. properties of $1,272,133 principally attributable to acreage in Yoakum County and Hockley County, Texas. Of the amount invested, the Company capitalized $522,185 to oil and gas properties subject to amortization and capitalized $749,948 to oil and gas properties not subject to amortization, principally attributed to the acquisition and development of acreage in Hockley County, Texas. The Company also invested $55,264 in Hupecol Meta LLC (“Hupecol Meta”) relating to drilling operations in Colombia, reflected in the cost method investment on the Company’s balance sheet.

During the three and nine months ended September 30, 2020, the Company recorded depletion expense of $94,926 and $237,071, respectively. During the three and nine months ended September 30, 2019, the Company recorded depletion expense of $99,684 and $283,830, respectively.

During the three and nine months ended September 30, 2020, the Company recorded an impairment of oil and gas properties of none and $429,116, respectively, and none during the three and nine months ended September 30, 2019. Impairment was due to a full cost ceiling test write-down primarily relating to a decline in energy prices.

Geographical Information

The Company currently has properties in two geographical areas, the United States and Colombia. Revenues for the nine months ended September 30, 2020 and long lived assets (net of depletion, amortization, and impairment) as of September 30, 2020 attributable to each geographical area are presented below:

	Nine Months Ended September 30, 2020		As of September 30, 2020
	Revenues		Long Lived Assets, Net
United States	$	351,489	$	4,632,375
Colombia		—		2,343,126
Total	$	351,489	$	6,975,501

10

NOTE 4 – NOTES PAYABLE – RELATED PARTY

In September 2019, the Company issued promissory notes (the “Bridge Loan Notes”) with a total principal amount of $621,052, an original issue discount of 5%, warrants (the “Bridge Loan Warrants”) to purchase 1,180,000 shares of the Company’s common stock, and a term of 120 days. The net proceeds received by the Company for the Bridge Loan Notes and Warrants was $590,000.

The Bridge Loan Notes were recorded net of debt discount that consists of (i) $31,052 of original issue discount on the Bridge Loan Notes and (ii) the relative fair value of the Bridge Loan Warrants of $144,948. The debt discount is amortized over the life of the Bridge Loan Notes as additional interest expense. During the nine months ended September 30, 2020, interest expense paid in cash totaled $3,350 and interest expense attributable to amortization of debt discount totaled $23,467. The Bridge Loan Note was repaid in full as of September 30, 2020.

The holders of the Bridge Loan Notes were the CEO and a 10% shareholder of the Company.

NOTE 5 – STOCK-BASED COMPENSATION EXPENSE

In 2008, the Company adopted the Houston American Energy Corp. 2008 Equity Incentive Plan (the “2008 Plan”). The terms of the 2008 Plan, as amended in 2012 and 2013, allow for the issuance of up to 480,000 shares of the Company’s common stock pursuant to the grant of stock options and restricted stock.

In 2017, the Company adopted the Houston American Energy Corp. 2017 Equity Incentive Plan (the “2017 Plan” and, together with the 2008 Plan, the “Plans”). The terms of the 2017 Plan, allow for the issuance of up to 400,000 shares of the Company’s common stock pursuant to the grant of stock options and restricted stock. Persons eligible to participate in the Plans are key employees, consultants and directors of the Company.

The Company periodically grants options to employees, directors and consultants under the Plans and is required to make estimates of the fair value of the related instruments and recognize expense over the period benefited, usually the vesting period.

Stock Option Activity

A summary of stock option activity and related information for the nine months ended September 30, 2020 is presented below:

	Options			Weighted-Average Exercise Price		Aggregate Intrinsic Value
Outstanding at January 1, 2020		480,973		$	8.50
Granted		8,000			1.61
Exercised		—			—
Forfeited / Expired		(4,000	)		176.00
Outstanding at September 30, 2020		484,973		$	6.91	$	2,640
Exercisable at September 30, 2020		465,244		$	7.07	$	2,640

During the nine months ended September 30, 2020, options to purchase an aggregate of 8,000 shares of the Company’s common stock were granted to the Company’s directors. The options have a ten-year life and are exercisable at $1.61 per share. The options vest 20% on the date of grant and 80% ten months from the date of grant. The grant date fair value of these stock options was $13,080 based on the Black-Scholes Option Pricing model.

The fair value of the options granted during the nine months ended September 30, 2020 was calculated at the date of grant using the Black-Scholes option-pricing model with the following assumptions:

Market value of common stock on grant date	$	1.94
Risk free interest rate based on the applicable US Treasury bill rate		1.80	%
Dividend yield		0	%
Volatility factor based on the trading history of the Company		82.9	%
Weighted average expected life in years		10
Expected forfeiture rate		0	%

11

During the nine months ended September 30, 2020, the Company recognized $105,846 of stock-based compensation expense attributable to the amortization of stock options. As of September 30, 2020, total unrecognized stock-based compensation expense related to non-vested stock options was approximately $20,000. The unrecognized expense is expected to be recognized over a weighted average period of 0.49 years and the weighted average remaining contractual term of the outstanding options and exercisable options at September 30, 2020 is 5.31 years and 5.25 years, respectively.

Shares available for issuance under the 2008 Plan as of September 30, 2020 totaled 0. Shares available for issuance under the 2017 Plan, as of September 30, 2020, totaled 246,533.

Stock-Based Compensation Expense

The following table reflects total stock-based compensation recorded by the Company for the nine months ended September 30, 2020 and 2019:

	Nine Months Ended September 30,
	2020			2019
Stock-based compensation expense included in general and administrative expense	$	105,846		$	98,988
Earnings per share effect of share-based compensation expense – basic and diluted	$	(0.02	)	$	(0.00	)

NOTE 6 – CAPITAL STOCK

Common Stock - At-the-Market Offering

In May 2019, the Company entered into an At-the-Market Issuance Sales Agreement (the “Sales Agreement”) with WestPark Capital, Inc. (“WestPark Capital”) pursuant to which the Company could sell, at its option, up to an aggregate of $5.2 million in shares of its common stock through WestPark Capital, as sales agent. Sales of shares under the Sales Agreement (the “2019 ATM Offering”) were made, in accordance with one or more placement notices delivered by the Company to WestPark Capital, which notices set parameters under which shares could be sold. The 2019 ATM Offering was made pursuant to a shelf registration statement by methods deemed to be “at the market,” as defined in Rule 415 promulgated under the Securities Act of 1933. The Company paid WestPark a commission in cash equal to 3% of the gross proceeds from the sale of shares in the 2019 ATM Offering. Additionally, the Company reimbursed WestPark Capital for $18,000 of expenses incurred in connection with the 2019 ATM Offering.

During the nine months ended September 30, 2020, in connection with the 2019 ATM Offering, the Company (1) sold an aggregate of 1,684,760 shares of its common stock and received net proceeds of $4,375,594, net of commissions, and expenses, and (2) collected $58,575 of subscriptions receivable attributable to shares sold under the 2019 ATM Offering during 2019.

Series A Convertible Preferred Stock

During the nine months ended September 30, 2020 and 2019, the Company paid dividends on Series A Convertible Preferred Stock in the amount of $96,900 and $96,900, respectively. At September 30, 2020, there were 1,085 shares of Series A Convertible Preferred Stock issued and outstanding.

Series B Convertible Preferred Stock

During the nine months ended September 30, 2020 and 2019, the Company paid dividends on Series B Convertible Preferred Stock in the amount of $75,900 and $75,900, respectively. At September 30, 2020, there were 835 shares of Series B Convertible Preferred Stock issued and outstanding.

12

Warrants

A summary of warrant activity and related information for 2020 is presented below:

	Warrants		Weighted-Average Exercise Price		Aggregate Intrinsic Value
Outstanding at January 1, 2020		98,400	$	2.63
Issued		—		—
Exercised		—		—
Expired		—		—
Outstanding at September 30, 2020		98,400	$	2.63	$	—
Exercisable at September 30, 2020		98,400	$	2.63	$	—

NOTE 7 – COMMITMENTS AND CONTINGENCIES

Lease Commitment

The Company leases office facilities under an operating lease agreement that expires October 31, 2022. During the nine months ended September 30, 2020, the operating cash outflows related to operating lease liabilities of $83,038 and the expense for the right of use asset for operating leases was $64,423. As of September 30, 2020, the Company’s operating lease had a weighted-average remaining term of 2 years and a weighted average discount rate of 12%. As of September 30, 2020, the lease agreement requires future payments as follows:

Year	Amount
2020	$	32,976
2021		133,087
2022		112,551
2023		—
Total future lease payments		278,614
Less: imputed interest		33,332
Present value of future operating lease payments		245,282
Less: current portion of operating lease liabilities		108,910
Operating lease liabilities, net of current portion	$	136,372
Right of use assets	$	216,566

Total base rental expense was $90,145 and $84,516 for the nine months ended September 30, 2020 and September 30, 2019, respectively, and $30,049 and $22,293 for the three months ended September 30, 2020 and September 30, 2019, respectively. The Company does not have any capital leases or other operating lease commitments.

NOTE 8 – SUBSEQUENT EVENTS

In October 2020, the Company exercised its rights with respect to the area of mutual interest associated with its Lou Brock lease in Hockley County, Texas, acquiring a 20% interest in a 354.2 gross (309.925 net) acre tract for $25,194.

In October 2020, the Company amended its Crown Paper lease, reducing its royalty interest from 25% to 20%.

13

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

Forward-Looking Information

This Form 10-Q quarterly report of Houston American Energy Corp. (the “Company”) for the nine months ended September 30, 2020, contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbors created thereby. To the extent that there are statements that are not recitations of historical fact, such statements constitute forward-looking statements that, by definition, involve risks and uncertainties. In any forward-looking statement, where we express an expectation or belief as to future results or events, such expectation or belief is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the statement of expectation or belief will be achieved or accomplished.

The actual results or events may differ materially from those anticipated and as reflected in forward-looking statements included herein. Factors that may cause actual results or events to differ from those anticipated in the forward-looking statements included herein include the Risk Factors described in Item 1A herein and in our Form 10-K for the year ended December 31, 2019.

Readers are cautioned not to place undue reliance on the forward-looking statements contained herein, which speak only as of the date hereof. We believe the information contained in this Form 10-Q to be accurate as of the date hereof. Changes may occur after that date, and we will not update that information except as required by law in the normal course of our public disclosure practices.

Additionally, the following discussion regarding our financial condition and results of operations should be read in conjunction with the financial statements and related notes contained in Item 1 of Part 1 of this Form 10-Q, as well as the Risk Factors in Item 1A and the financial statements in Item 7 of Part II of our Form 10-K for the fiscal year ended December 31, 2019.

Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. We believe certain critical accounting policies affect the more significant judgments and estimates used in the preparation of our financial statements. A description of our critical accounting policies is set forth in our Form 10-K for the year ended December 31, 2019. As of, and for the nine months ended, September 30, 2020, there have been no material changes or updates to our critical accounting policies.

Unevaluated Oil and Gas Properties

Unevaluated oil and gas properties not subject to amortization, include the following at September 30, 2020:

	September 30, 2020
Acquisition costs	$	312,405
Development and evaluation costs		2,915,999
Total	$	3,228,404

The carrying value of unevaluated oil and gas prospects above was primarily attributable to properties in the South American country of Colombia and the costs related to the acquisition and development of the Lou Brock #1-H well in Hockley County, Texas.

Recent Developments

COVID-19

In early 2020, global health care systems and economies began to experience strain from the spread of the COVID-19 Coronavirus. As the virus spread, global economic activity began to slow and future economic activity was forecast to slow with a resulting forecast of a decline in oil and gas demand. In response, OPEC initiated discussions with Russia to lower production to support energy prices. By March 2020, with OPEC and Russia unable to agree on cuts, crude oil prices declined to less than $25 per barrel. Despite a subsequent agreement among major oil producers to cut global oil and gas production and a partial recovery in prices, energy prices remain at depressed levels.

14

The decline in economic activity and energy demand accompanying the COVID-19 pandemic adversely affected our revenues during the three and nine months ended September 30, 2020, contributed to an impairment charge during the nine months ended September 30, 2020 and, if price declines persist, will adversely affect the economics of our existing wells and planned future wells, possibly resulting in further impairment charges to existing properties and delaying or abandoning planned drilling operations as uneconomical.

In response to the COVID-19 pandemic, our staff began working remotely and many of our key vendors, service suppliers and partners have similarly begun to work remotely. As a result of such remote work arrangements, we anticipate that certain operational, reporting, accounting and other processes will slow which may result in longer time to execute critical business functions, higher operating costs and uncertainties regarding the quality of services and supplies, any of which could substantially adversely affect our operating results for as long as the current pandemic persists and potentially for some time after the pandemic subsides.

Drilling Activity

During the nine months ended September 30, 2020:

● We drilled and completed the Frost #2H well in Yoakum County, Texas; the well went on production in the last week of the quarter and continues to unload water;

● We drilled the Lou Brock #1-H well in Hockley County, Texas, reaching total depth by quarter-end; hydraulic fracturing operations were pending at quarter-end, commenced in October 2020 and are expected to be completed in November 2020; and

● Hupecol Meta drilled the Montuno-1 well on the CPO-11 block in the Llanos Basin in Colombia; the Montuno-1 well was a dry hole.

During the nine months ended September 30, 2020, our capital investment expenditures totaled $1,272,133, principally relating to Yoakum County and Hockley County, Texas drilling operations ($1,272,133) and investments in our cost method investment in Hupecol Meta ($55,264).

Oil and Gas Properties

In July 2020, we acquired, for $33,228, a 20% working interest in a 466-acre (gross) block within the 20,367-acre (gross) area of mutual interest associated with our existing Northern Shelf of the Permian Basin acreage in Hockley County, Texas.

In July 2020, our O’Brien #3-H well in Reeves County, Texas was shut-in for repairs, which repair work is ongoing.

During the nine months ended September 30, 2020, we sold our interests in two marginal wells, eliminating plugging liability on those wells.

Following a failed rework on the Crown Paper #01 well in October 2020, the well operator proposed a recompletion of the well in a different zone subject to reduction of our royalty interest from 25% to 20%. We accepted the operator’s proposal and amended the lease relating to the well to reduce the royalty payable thereunder.

In October 2020, we exercised our rights with respect to the area of mutual interest associated with our Lou Brock lease in Hockley County, Texas, acquiring a 20% interest a 354.2 gross (309.925 net) acre tract for $25,194.

Reverse Stock Split

In July 2020, we amended our Certificate of Incorporation to effect a 1-for-12.5 reverse split (the “Reverse Split”) of our common stock. All references to shares of common stock and per share data for all periods in this Management Discussion and Analysis of Financial Condition and Results of Operations have been adjusted to reflect the Reverse Split on a retroactive basis.

15

Financing Activities

2019 At-the-Market Offering. In May 2019, we entered into an At-the-Market Issuance Sales Agreement (the “Sales Agreement”) with WestPark Capital pursuant to which we may sell, at our option, up to an aggregate of $5.2 million in shares of common stock through WestPark Capital, as sales agent. Sales of shares under the Sales Agreement (the “2019 ATM Offering”) were made, in accordance with one or more placement notices delivered to WestPark Capital, which notices set parameters under which shares may be sold. The 2019 ATM Offering was made pursuant to a shelf registration statement by methods deemed to be “at the market,” as defined in Rule 415 promulgated under the Securities Act of 1933. We paid WestPark a commission in cash equal to 3% of the gross proceeds from the sale of shares in the 2019 ATM Offering. Additionally, we reimbursed WestPark Capital for $18,000 of expenses incurred in connection with the 2019 ATM Offering. During the nine months ended September 30, 2020, we (1) sold an aggregate of 1,684,760 shares in the 2019 ATM Offering and received proceeds, net of commissions, of $4,375,594, and (2) collected $58,575 of subscriptions receivable attributable to shares sold under the 2019 ATM Offering during 2019.

Bridge Loan Financing. In September 2019, we issued promissory notes (the “Bridge Loan Notes”) with a total principal amount of $621,052, an original issue discount of 5%, warrants (the “Bridge Loan Warrants”) to purchase 1,180,000 shares of common stock, and a term of 120 days. Net proceeds received for the Bridge Loan Notes and Warrants totaled $590,000.

The Bridge Loan Notes were unsecured obligations bearing interest at 12.0% per annum and payable interest only on the last day of each calendar month with any unpaid principal and accrued interest being payable in full on January 16, 2020.

The Bridge Loan Notes were subject to mandatory prepayment from and to the extent of (i) 100% of net proceeds we receive from any sales, for cash, of equity or debt securities (other than Bridge Loan Notes), (ii) 100% of net proceeds we receive from the sale of assets (other than sales in the ordinary course of business); and (iii) 75% of net proceeds we receive from the sale of oil and gas produced from our Hockley County, Texas properties. Additionally, we had the option to prepay the Bridge Loan Notes, at our sole election, without penalty. The holders of the Bridge Loan Notes waived mandatory prepayment at the end of each month during 2019.

The Bridge Loan Notes were recorded net of debt discount that consists of (i) $31,052 of original issue discount on the Bridge Loan Notes and (ii) the relative fair value of the Bridge Loan Warrants of $144,948. The debt discount is amortized over the life of the Bridge Loan Notes as additional interest expense.

During the three months ended March 31, 2020, interest expense paid in cash totaled $3,350. The Bridge Loan Notes were repaid in full in January 2020.

The holders of the Bridge Loan Notes were our Chief Executive Officer and a 10% shareholder.

Results of Operations

Oil and Gas Revenues. Total oil and gas revenues decreased 52% to $126,425 in the three months ended September 30, 2020, compared to $264,935 in the three months ended September 30, 2019. Oil and gas revenues decreased 52% to $351,489 in the nine months ended September 30, 2020, compared to $724,848 in the nine months ended September 30, 2019. The decrease in revenue was due to decreased production volumes attributable to our Reeves County wells, an adverse change in commodity pricing, and decreased royalties from cessation of production of our Crown Paper well.

The following table sets forth the gross and net producing wells, net oil and gas production volumes and average hydrocarbon sales prices for the quarter and nine months ended September 30, 2020 and 2019:

	Nine Months Ended September 30				Three Months Ended September 30,
	2020		2019		2020		2019
Gross producing wells		4		5		4		5
Net producing wells		0.78		0.52		0.78		0.52
Net oil production (Bbl)		7,372		10,227		1,941		4,605
Net gas production (Mcf)		64,269		78,430		16,941		29,274
Average sales price – oil (per barrel)	$	34.45	$	56.12	$	37.12	$	48.30
Average sales price – natural gas (per Mcf)	$	0.77	$	1.92	$	1.05	$	1.43

16

The decrease in gross/net producing wells resulted from cessation of operation of two uneconomical wells in Louisiana during 2019, partially offset by the commencement of operations of two wells in Yoakum County, Texas. The decrease in production was principally attributable to the shut-in of our O’Brien #3-H well for repair and natural decline in production from our Reeves County, Texas wells, partially offset by production from two Yoakum County wells commencing in 2019 and the last week of the 2020 third quarter.

The change in average sales prices realized reflects the steep decline, and partial recovery, in global commodity prices associated with a decline in energy demand associated with the COVID-19 pandemic.

Royalties from our Crown Paper well decreased from approximately $4,139 and $13,550, respectively, in the three and nine months ended September 30, 2019, to $1,119 and $10,314, respectively, in the three and nine months ended September 30, 2020. The Crown Paper well underwent an unsuccessful rework in October 2020. No future royalties are expected from the Crown Paper well unless and until the well is successfully recompleted by the operator.

All oil and gas sales and royalty revenues are attributable to U.S. operations.

Lease Operating Expenses. Lease operating expenses decreased 62% to $53,603 during the three months ended September 30, 2020 from $139,874 during the three months ended September 30, 2019. Lease operating expenses decreased 52% to $233,753 during the nine months ended September 30, 2020 from $483,970 during the nine months ended September 30, 2019.

The decrease in lease operating expenses was principally attributable to a reduction in wells operated, lower variable costs due to the decline in production and reduced severance taxes due to lower sales.

All lease operating expenses are attributable to U.S. operations.

Depreciation and Depletion Expense. Depreciation and depletion expense was $94,926 and $99,684 for the three months ended September 30, 2020 and 2019, respectively, and $237,071 and $283,830 for the nine months ended September, 30, 2020 and 2019, respectively. The change in depreciation and depletion was due to the decline in production volumes partially offset by additional capitalized costs associated with drilling of our Yoakum County wells.

Impairment of Oil and Gas Properties. Impairment of oil and gas properties was $0 for the three months ended September 30, 2020 and 2019, and $429,116 and $0 for the nine months ended September 30, 2020 and 2019, respectively. The change in impairment of oil and gas properties was due to a full cost ceiling test write-down in the current period primarily relating to a decline in energy prices. Depending on the timing of a recovery in energy prices, we may experience further impairments in future periods.

General and Administrative Expenses (excluding stock-based compensation). General and administrative expense decreased by 25% to $231,309 during the three months ended September 30, 2020 from $309,822 during the three months ended September 30, 2019 and decreased by 12% to $778,149 during the nine months ended September 30, 2020 from $886,435 during the nine months ended September 30, 2019. The decrease in general and administrative expense for the three and nine-month periods was primarily attributable to decreased insurance expenses, partially offset by increased exchange listing fees and professional fees for the nine-month period.

Stock-Based Compensation. Stock-based compensation decreased by 86% to $9,081 during the three months ended September 30, 2020 from $62,706 during the three months ended September 30, 2019 and increased 7% to $105,846 during the nine months ended September 30, 2020 from $98,988 during the nine months ended September 30, 2019. The change was attributable to the amortization of stock options granted during 2019.

Other Income (Expense). Other income/expense, net, totaled $2,729 of income during the three months ended September 30, 2020, compared to $20,188 of expense during the three months ended September 30, 2020, and totaled $14,811 of expense during the nine months ended September 30, 2020, compared to $18,301 of expense during the nine months ended September 30, 2019. Other income for all periods consisted on interest earned on cash balances which, during the nine months ended September 30, 2020, was offset by interest expense relating to Bridge Loan Notes. Interest income during the 2020 periods increased as a result of higher cash balances. The Bridge Loan Notes were repaid in full in January 2020 and no interest expense will be paid relating to those notes after the quarter ended March 31, 2020.

17

Financial Condition

Liquidity and Capital Resources. At September 30, 2020, we had a cash balance of $1,574,775 and working capital of $1,499,486, compared to a cash balance of $97,915 and a working capital deficit of $748,426 at December 31, 2019.

Cash Flows. Operating activities used cash of $836,060 during the nine months ended September 30, 2020, compared to $546,355 used during the nine months ended September 30, 2019. The change in operating cash flow was primarily attributable to the increased loss during 2020 which reflected the decline in oil and gas revenues.

Investing activities used cash of $1,327,397 during the nine months ended September 30, 2020, compared to $645,507 used during the nine months ended September 30, 2019. Cash used in investing activities were primarily attributed to (1) drilling operations on the Frost #2H well and the Lou Brock #1 well and (2) investments in acreage in Hockley County, during the 2020 period, and infrastructure/security upgrades in Reeves County during the 2019 period.

Financing activities provided cash of $3,640,317 during the nine months ended September 30, 2020, compared to $889,754 used during the nine months ended September 30, 2019. Cash provided by financing activities during the nine months ended September 30, 2020 was attributable to funds received from the sale of common stock ($4,434,169, including $58,575 of subscriptions receivable relating to shares sold at year-end 2019) under our 2019 ATM Offering, partially offset by repayment of our Bride Loan Notes ($621,052) and payment of dividends on our preferred stock ($172,800).

Long-Term Liabilities. At September 30, 2020, we had long-term liabilities of $188,337, compared to $263,596 at December 31, 2019. Long-term liabilities at September 30, 2020 and December 31, 2019, consisted of a reserve for plugging costs and the long-term lease liability.

Capital and Exploration Expenditures and Commitments. Our principal capital and exploration expenditures relate to ongoing efforts to acquire, drill and complete prospects, in particular our Permian Basin acreage and our newly acquired Colombian acreage. Given the current economic environment and the current COVID-19 pandemic, all planned additional acquisition, drilling and development operations were deferred through June 30, 2020 pending improved conditions. We selectively resumed acquisition, drilling and development operations during the third quarter of 2020 with the acquisition in July 2020, for $33,228, of a 20% working interest in additional acreage in Hockley County, fracking operations on our Frost #2H well, the commencement of drilling operations on our San Andres acreage, and the acquisition in October 2020, for $25,194, of a 20% interest in further additional acreage in Hockley County. The actual timing and number of well operations undertaken during 2020 will be principally controlled by the operators of our acreage, based on a number of factors, including but not limited to availability of financing, performance of existing wells on the subject acreage, energy prices and industry condition and outlook, costs of drilling and completion services and equipment and other factors beyond our control or that of our operators.

During the nine months ended September 30, 2020, we invested $1,272,133 for the acquisition and development of oil and gas properties, consisting of drilling and development operations in the U.S. Of the amount invested, we capitalized $749,948 to oil and gas properties not subject to amortization and capitalized $522,185 to oil and gas properties subject to amortization. During the period, we also invested $55,264 in Hupecol Meta relating to drilling operations in Colombia.

As our allocable share of well costs will vary depending on the timing and number of wells drilled as well as our working interest in each such well and the level of participation of other interest owners, we have not established a drilling budget but will budget on a well-by-well basis as our operators propose wells.

With our receipt, during 2020, of $4.4 million from sales of common stock under our 2019 ATM Offering, we believe that we have the ability, through our cash on-hand, to fund operations and our cost for all planned wells expected to be drilled during 2020.

In the event that we pursue additional acreage acquisitions or expand our drilling plans, we may be required to secure additional funding beyond our resources on hand. While we may, among other efforts, seek additional funding from “at-the-market” sales of common stock, and private sales of equity and debt securities, we presently have no commitments to provide additional funding, and there can be no assurance that we can secure the necessary capital to fund our share of drilling, acquisition or other costs on acceptable terms or at all. If, for any reason, we are unable to fund our share of drilling and completion costs and fail to satisfy commitments relative to our interest in our acreage, we may be subject to penalties or to the possible loss of some of our rights and interests in prospects with respect to which we fail to satisfy funding commitments and we may be required to curtail operations and forego opportunities. Unless and until the depressing economic effects of the coronavirus recede, we expect that new capital to fund projects will be difficult, if not impossible, to secure.

18

Off-Balance Sheet Arrangements

We had no off-balance sheet arrangements or guarantees of third party obligations at September 30, 2020.

Inflation

We believe that inflation has not had a significant impact on operations since inception.

ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Commodity Price Risk

The price we receive for our oil and gas production heavily influences our revenue, profitability, access to capital and future rate of growth. Crude oil and natural gas are commodities and, therefore, their prices are subject to wide fluctuations in response to relatively minor changes in supply and demand. Historically, the markets for oil and gas have been volatile, and these markets will likely continue to be volatile in the future. The price we receive for production depends on numerous factors beyond our control.

We have not historically entered into any hedges or other transactions designed to manage, or limit, exposure to oil and gas price volatility.

ITEM 4 CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation as of September 30, 2020 of the effectiveness of the design and operation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended. Based on this evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were not effective as of September 30, 2020. Such conclusion reflects the 2013 departure of our chief financial officer and assumption of duties of principal financial officer by our chief executive officer and the resulting lack of segregation of duties. Until we are able to remedy these material weaknesses, we are relying on third party consultants and our accounting firm to assist with financial reporting.

Changes in Internal Control over Financial Reporting

No change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) occurred during the quarter ended September 30, 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II

ITEM 6 EXHIBITS

Exhibit Number	Description
31.1	Certification of CEO and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of CEO and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

19

SIGNATURES

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

	HOUSTON AMERICAN ENERGY CORP.
Date: November 13, 2020
	By:	/s/ James Schoonover
		James Schoonover
		CEO and President (Principal Executive Officer and Principal Financial Officer)

20

EX-31.1

Exhibit 31.1

CERTIFICATION OF CEO PURSUANT TO 15 U.S.C. SECTION 10A, AS ADOPTED

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, James Schoonover, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Houston American Energy Corp.;
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 respect the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	I am 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 registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly 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 most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over 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:

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 controls over financial reporting.

Date: November 13, 2020
	/s/ James Schoonover
	James Schoonover,
	Chief Executive Officer and Principal
	Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, James Schoonover, 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 of Houston American Energy Corp. on Form 10-Q for the quarterly period ended September 30, 2020 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 Form 10-Q fairly presents in all material respects the financial condition and results of operations of Houston American Energy Corp.

By:	/s/ James Schoonover
Name:	James Schoonover
Title:	Chief Executive Officer and Principal
	Financial Officer
Dated:	November 13, 2020

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2020	Nov. 12, 2020
Cover [Abstract]
Entity Registrant Name	HOUSTON AMERICAN ENERGY CORP
Entity Central Index Key	0001156041
Document Type	10-Q
Document Period End Date	Sep. 30, 2020
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business Flag	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		6,977,718
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2020

XML

Consolidated Balance Sheets (Unaudited) - USD ($)	Sep. 30, 2020	Dec. 31, 2019
CURRENT ASSETS
Cash	$ 1,574,775	$ 97,915
Accounts receivable - oil and gas sales	21,136	80,195
Prepaid expenses and other current assets	75,025	39,505
TOTAL CURRENT ASSETS	1,670,936	217,615
Oil and gas properties, full cost method
Costs subject to amortization	61,590,425	61,068,240
Costs not being amortized	3,228,404	2,478,456
Office equipment	90,004	90,004
Total	64,908,833	63,633,534
Accumulated depletion, depreciation, amortization, and impairment	(57,933,332)	(57,267,145)
PROPERTY AND EQUIPMENT, NET	6,975,501	6,369,555
Cost method investment	252,273	197,009
Right of use asset	216,566	281,489
Other assets	3,667	3,167
TOTAL ASSETS	9,118,943	7,068,835
CURRENT LIABILITIES
Accounts payable	62,540	270,119
Accrued expenses		447
Notes payable - related party, net of debt discount		595,585
Current portion of lease liability	108,910	97,890
TOTAL CURRENT LIABILITIES	171,450	966,041
LONG-TERM LIABILITIES
Lease liability, net of current portion	136,372	219,410
Reserve for plugging and abandonment costs	51,965	44,186
TOTAL LONG-TERM LIABILITIES	188,337	263,596
TOTAL LIABILITIES	359,787	1,229,637
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Common stock, par value $0.001; 12,000,000 shares authorized; 6,977,718 and 5,275,816 shares issued and outstanding, respectively	6,977	5,276
Additional paid-in capital	78,184,271	73,877,332
Subscription receivable		(58,575)
Accumulated deficit	(69,432,094)	(67,984,837)
TOTAL SHAREHOLDERS' EQUITY	8,759,156	5,839,198
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	9,118,943	7,068,835
Series A Convertible Preferred Stock [Member]
SHAREHOLDERS' EQUITY
Preferred stock, par value $0.001; 10,000,000 shares authorized,	1	1
Series B Convertible Preferred Stock [Member]
SHAREHOLDERS' EQUITY
Preferred stock, par value $0.001; 10,000,000 shares authorized,	$ 1	$ 1

XML

Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($)	Sep. 30, 2020	Dec. 31, 2019
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	10,000,000	10,000,000
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	12,000,000	12,000,000
Common stock, shares issued	6,977,718	5,275,816
Common stock, shares outstanding	6,977,718	5,275,816
Series A Convertible Preferred Stock [Member]
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	2,000	2,000
Preferred stock, shares issued	1,085	1,085
Preferred stock, shares outstanding	1,085	1,085
Preferred stock liquidation share value	$ 1,085,000	$ 1,085,000
Series B Convertible Preferred Stock [Member]
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	1,000	1,000
Preferred stock, shares issued	835	835
Preferred stock, shares outstanding	835	835
Preferred stock liquidation share value	$ 835,000	$ 835,000

XML

Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Income Statement [Abstract]
OIL AND GAS REVENUE	$ 126,425	$ 264,935	$ 351,489	$ 724,848
EXPENSES OF OPERATIONS
Lease operating expense and severance tax	53,603	139,874	233,753	483,970
General and administrative expense	240,390	309,822	883,995	965,423
Depreciation and depletion	94,926	99,684	237,071	283,830
Impairment of oil and gas properties			429,116
Total operating expense	388,919	549,380	1,783,935	1,733,223
Loss from operations	(262,494)	(284,445)	(1,432,446)	(1,008,375)
OTHER INCOME
Interest income		66	12,006	1,953
Interest expense	(2,729)	(20,254)	(26,817)	(20,254)
Total other income	(2,729)	(20,188)	(14,811)	(18,301)
Net loss before taxes	(259,765)	(304,633)	(1,447,257)	(1,026,676)
Income tax expense
Net loss	(259,765)	(304,633)	(1,447,257)	(1,026,676)
Dividends to Series A and B preferred stockholders	(69,600)	(57,600)	(172,800)	(172,800)
Net loss attributable to common shareholders	$ (329,365)	$ (362,233)	$ (1,620,057)	$ (1,199,476)
Basic and diluted loss per common share	$ (0.05)	$ (0.01)	$ (0.23)	$ (0.02)
Based and diluted weighted average number of common shares outstanding	6,972,128	63,082,485	6,926,407	62,686,681

XML

Consolidated Statements of Changes in Shareholders' Equity (Unaudited) - USD ($)	Preferred Stock [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Subscription Receivable [Member]	Retained Earnings (Deficit) [Member]	Total
Balance at Dec. 31, 2018	$ 2	$ 4,994	$ 73,141,440		$ (65,469,143)	$ 7,677,295
Balance, shares at Dec. 31, 2018	1,920	4,994,011
Stock-based compensation			14,219			14,219
Series A and Series B Preferred Stock dividends paid			(57,600)			(57,600)
Net loss					(239,620)	(239,620)
Balance at Mar. 31, 2019	$ 2	$ 4,994	73,098,059		(65,708,763)	7,394,292
Balance, shares at Mar. 31, 2019	1,920	4,994,011
Balance at Dec. 31, 2018	$ 2	$ 4,994	73,141,440		(65,469,143)	7,677,295
Balance, shares at Dec. 31, 2018	1,920	4,994,011
Series A and Series B Preferred Stock dividends paid						(172,800)
Net loss						(1,026,676)
Balance at Sep. 30, 2019	$ 2	$ 5,178	73,684,946		(66,495,819)	7,194,307
Balance, shares at Sep. 30, 2019	1,920	5,178,192
Balance at Mar. 31, 2019	$ 2	$ 4,994	73,098,059		(65,708,763)	7,394,292
Balance, shares at Mar. 31, 2019	1,920	4,994,011
Issuance of common stock for cash, net		$ 22	56,048			56,070
Issuance of common stock for cash, net, shares		22,408
Stock-based compensation			27,325			27,325
Series A and Series B Preferred Stock dividends paid			(57,600)			(57,600)
Net loss					(482,423)	(482,423)
Balance at Jun. 30, 2019	$ 2	$ 5,016	73,123,832		(66,191,186)	6,937,664
Balance, shares at Jun. 30, 2019	1,920	5,016,419
Issuance of common stock for cash, net		$ 162	416,322			416,484
Issuance of common stock for cash, net, shares		161,773
Stock-based compensation			57,444			57,444
Series A and Series B Preferred Stock dividends paid			(57,600)			(57,600)
Warrants issued as debt inducement			144,948			144,948
Net loss					(304,633)	(304,633)
Balance at Sep. 30, 2019	$ 2	$ 5,178	73,684,946		(66,495,819)	7,194,307
Balance, shares at Sep. 30, 2019	1,920	5,178,192
Balance at Dec. 31, 2019	$ 2	$ 5,276	73,877,332	(58,575)	(67,984,837)	5,839,198
Balance, shares at Dec. 31, 2019	1,920	5,275,816
Issuance of common stock for cash, net		$ 1,684	4,373,910	58,575		4,434,169
Issuance of common stock for cash, net, shares		1,684,760
Stock-based compensation			57,442			57,442
Series A and Series B Preferred Stock dividends paid			(57,600)			(57,600)
Net loss					(850,990)	(850,990)
Balance at Mar. 31, 2020	$ 2	$ 6,960	78,251,084		(68,835,827)	9,422,219
Balance, shares at Mar. 31, 2020	1,920	6,960,576
Balance at Dec. 31, 2019	$ 2	$ 5,276	73,877,332	(58,575)	(67,984,837)	5,839,198
Balance, shares at Dec. 31, 2019	1,920	5,275,816
Series A and Series B Preferred Stock dividends paid						(172,800)
Net loss						(1,447,257)
Balance at Sep. 30, 2020	$ 2	$ 6,977	78,184,271		69,432,094	8,759,156
Balance, shares at Sep. 30, 2020	1,920	6,977,718
Balance at Mar. 31, 2020	$ 2	$ 6,960	78,251,084		(68,835,827)	9,422,219
Balance, shares at Mar. 31, 2020	1,920	6,960,576
Stock-based compensation			39,323			39,323
Series A and Series B Preferred Stock dividends paid			(45,600)			(45,600)
Net loss					(336,502)	(336,502)
Balance at Jun. 30, 2020	$ 2	$ 6,960	78,244,807		(69,172,329)	9,079,440
Balance, shares at Jun. 30, 2020	1,920	6,960,576
Stock-based compensation			9,081			9,081
Rounding of common stock due to reverse split		$ 17	(17)
Rounding of common stock due to reverse split, shares		17,142
Series A and Series B Preferred Stock dividends paid			(69,600)			(69,600)
Net loss					(259,765)	(259,765)
Balance at Sep. 30, 2020	$ 2	$ 6,977	$ 78,184,271		$ 69,432,094	$ 8,759,156
Balance, shares at Sep. 30, 2020	1,920	6,977,718

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$ (1,447,257)	$ (1,026,676)
Adjustments to reconcile net loss to net cash used in operations:
Depreciation and depletion	237,071	283,830
Impairment of oil and gas properties	429,116
Accretion of asset retirement obligation	7,779	3,063
Stock-based compensation	105,846	98,988
Amortization of debt discount	23,467	17,600
Amortization of right of use asset	64,423	56,417
Changes in operating assets and liabilities:
Decrease in accounts receivable	59,059	33,587
Increase in prepaid expenses and other current assets	(35,520)	(49,787)
Increase in accounts payable and accrued expenses	(197,006)	193,292
Decrease in operating lease liability	(83,038)	(156,669)
Net cash used in operating activities	(836,060)	(546,355)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for the acquisition and development of oil and gas properties	(1,272,133)	(645,507)
Payments for capital contribution for cost method investment	(55,264)
Net cash used in investing activities	(1,327,397)	(645,507)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from the issuance of notes payable, net of debt discount	(621,052)	590,000
Proceeds from the issuance of common stock, net of expenses	4,434,169	472,554
Payment of preferred stock dividends	(172,800)	(172,800)
Net cash provided by financing activities	3,640,317	889,754
Increase (decrease) in cash	1,476,860	(302,108)
Cash, beginning of period	97,915	755,702
Cash, end of period	1,574,775	453,594
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid	3,350	2,654
Taxes paid
SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES
Debt discount from issuance of warrants as debt inducement		$ 144,948

XML

Basis of Presentation and Significant Accounting Policies

9 Months Ended

Sep. 30, 2020

Accounting Policies [Abstract]

Basis of Presentation and Significant Accounting Policies

NOTE 1 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

The accompanying unaudited consolidated financial statements of Houston American Energy Corp., a Delaware corporation (the “Company”), have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q. They do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for a complete financial presentation. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, considered necessary for a fair presentation, have been included in the accompanying unaudited consolidated financial statements. Operating results for the periods presented are not necessarily indicative of the results that may be expected for the full year.

These unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and footnotes, which are included as part of the Company’s Form 10-K for the year ended December 31, 2019.

Consolidation

The accompanying consolidated financial statements include all accounts of the Company and its subsidiaries (HAEC Louisiana E&P, Inc., HAEC Oklahoma E&P, Inc., and HAEC Caddo Lake E&P, Inc.). All significant inter-company balances and transactions have been eliminated in consolidation.

Reverse Stock Split

In July 2020, the Company’s shareholders approved a reverse split of the Company’s common stock in a ratio to be determined, within a specified range, by the Company’s board of directors. The Company’s board of directors approved, and, effective at the close of business on July 31, 2020, the Company’s Certificate of Incorporation was amended to affect a 1-for-12.5 reverse split (the “Reverse Split”) of the Company’s common stock. Fractional shares otherwise issuable pursuant to the Reverse Split were rounded up to the next highest whole number of shares. As a result of the Reverse Split, the shares of common stock outstanding immediately prior to the Reverse Split decreased from 87,007,145 to 6,960,575 shares and the shares of common stock authorized for issuance decreased from 150,000,000 shares to 12,000,000 shares. Similarly, all shares of common stock issuable under outstanding options, warrants and shares of convertible preferred stock were adjusted, and applicable conversion or exercise prices were proportionately adjusted, to reflect the Reverse Split. The par value of the Company’s common stock remained unchanged at $0.001 per share.

All references to shares of common stock and per share data for all periods in the financial statements and notes thereto have been adjusted to reflect the Reverse Split on a retroactive basis.

Liquidity and Capital Requirements

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business for the twelve-month period following the issuance date of these consolidated financial statements. The Company has incurred continuing losses since 2011, including a loss of $1,447,257 for the nine months ended September 30, 2020. Additionally, as a result of the steep global economic slowdown that began in March 2020 as the coronavirus pandemic (“COVID-19”) spread, prices realized from oil and gas sales declined sharply beginning late in the quarter ended March 31, 2020 and have only partially recovered as of September 30, 2020, with such price declines expected to persist until governments worldwide are confident that the pandemic is adequately contained to permit renewed economic activity. Depending upon the duration of the pandemic and the resulting global economic slowdown, the Company may incur continuing declines in revenues and increased losses, associated from lower demand for energy and resulting depressed oil and gas prices. However, during the three months ended March 31, 2020, the Company raised a total, net of offering costs, of $4,434,169 in its ATM offering. As of September 30, 2020, there were no remaining funds available under the ATM Offering.

The Company believes that it has the ability to fund, from cash on hand (as a result of the ATM funding received in the current period), its operating costs and anticipated drilling operations, as well as mitigate the immediate impact of COVID-19, for at least the next twelve months following the issuance of these financial statements.

The actual timing and number of wells drilled during 2020 will be principally controlled by the operators of the Company’s acreage, based on a number of factors, including but not limited to availability of financing, performance of existing wells on the subject acreage, energy prices and industry condition and outlook, costs of drilling and completion services and equipment and other factors beyond the Company’s control or that of its operators. With the steep decline in energy prices beginning in March 2020, due at least in part to the economic effects of COVID-19, drilling and development operations were deferred during the first half of 2020. With modest price improvements since the initial COVID-19 related price decline and lower rig and related costs, the Company and its operators have resumed select drilling and development operations in the Permian Basin during the quarter ended September 30, 2020.

In the event that the Company pursues additional acreage acquisitions or expands its drilling plans, the Company may be required to secure additional funding beyond our resources on hand. While the Company may, among other efforts, seek additional funding from “at-the-market” sales of common stock, and private sales of equity and debt securities, it presently does not have any commitments to provide additional funding, and there can be no assurance that the Company can secure the necessary capital to fund its share of drilling, acquisition or other costs on acceptable terms or at all. If, for any reason, the Company is unable to fund its share of drilling and completion costs, it would forego participation in one or more of such wells. In such event, the Company may be subject to penalties or to the possible loss of some of its rights and interests in prospects with respect to which it fails to satisfy funding obligations and it may be required to curtail operations and forego opportunities.

Accounting Principles and Use of Estimates

The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America. In preparing financial statements, management makes informed judgments and estimates that affect the reported amounts of assets and liabilities as of the date of the financial statements and affect the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, management reviews its estimates, including those related to such potential matters as litigation, environmental liabilities, income taxes and the related valuation allowance, determination of proved reserves of oil and gas and asset retirement obligations. Changes in facts and circumstances may result in revised estimates and actual results may differ from these estimates.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to a concentration of credit risk include cash, cash equivalents and any marketable securities (if any). The Company had cash deposits of $1,272,652 in excess of the FDIC’s current insured limit on interest bearing accounts of $250,000 as of September 30, 2020. The Company also had cash deposits of $3,646 in Colombian banks at September 30, 2020 that are not insured by the FDIC. The Company has not experienced any losses on its deposits of cash and cash equivalents.

Loss per Share

Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common shares were exercised or converted in common shares that then shared in the earnings of the Company. In periods in which the Company reports a net loss, dilutive securities are excluded from the calculation of diluted net loss per share amounts as the effect would be anti-dilutive. All per share calculations are adjusted to give retroactive effect to the Reverse Split.

For the three and nine months ended September 30, 2020 and 2019, the following convertible preferred stock and warrants and options to purchase shares of common stock were excluded from the computation of diluted net loss per share, as the inclusion of such shares would be anti-dilutive:

	Nine Months Ended September 30,				Three Months Ended September 30,
	2020		2019		2020		2019
Series A Convertible Preferred Stock		434,000		434,000		434,000		434,000
Series B Convertible Preferred Stock		185,644		185,644		185,644		185,644
Stock warrants		98,400		98,400		98,400		98,400
Stock options		488,973		480,973		488,973		480,973
Total		1,207,017		1,199,017		1,207,017		1,199,017

Recently Issued Accounting Pronouncements

The Company does not expect the adoption of any recently issued accounting pronouncements to have a significant impact on its financial position, results of operations, or cash flows.

Subsequent Events

The Company has evaluated all transactions from September 30, 2020 through the financial statement issuance date for subsequent event disclosure consideration.

XML

Revenue from Contracts with Customers

9 Months Ended

Sep. 30, 2020

Revenue from Contract with Customer [Abstract]

Revenue from Contracts with Customers

NOTE 2 – REVENUE FROM CONTRACTS WITH CUSTOMERS

Disaggregation of Revenue from Contracts with Customers

The following table disaggregates revenue by significant product type for the three and nine-month periods ended September 30, 2020 and 2019:

	Three Months Ended September 30, 2020		Three Months Ended September 30, 2019		Nine Months Ended September 30, 2020		Nine Months Ended September 30, 2019
Oil sales	$	85,617	$	222,446	$	257,567	$	573,872
Natural gas sales		21,795		12,104		44,456		41,034
Natural gas liquids sales		19,013		30,385		49,466		109,942
Total revenue from customers	$	126,425	$	264,935	$	351,489	$	724,848

There were no significant contract liabilities or transaction price allocations to any remaining performance obligations as of September 30, 2020 or 2019.

XML

Oil and Gas Properties

9 Months Ended

Sep. 30, 2020

Oil and Gas Property [Abstract]

Oil and Gas Properties

NOTE 3 – OIL AND GAS PROPERTIES

In July 2020, the Company acquired, for $33,228, a 20% working interest in 466 gross acres within an area of mutual interest associated with our existing Northern Shelf of the Permian Basin acreage in Hockley County, Texas.

In August 2020, the Company sold its interest in a well in Vermillion Parish, Louisiana in exchange for $1,487, reflecting our share of the plugging costs previously withheld. Effective October 1, 2020 the Company released its rights in a well in Nueces County, Texas in exchange for the reassignment of the plugging liability to another party.

During the nine months ended September 30, 2020, the Company invested $1,272,133 for the acquisition and development of oil and gas properties, consisting of cost of development of U.S. properties of $1,272,133 principally attributable to acreage in Yoakum County and Hockley County, Texas. Of the amount invested, the Company capitalized $522,185 to oil and gas properties subject to amortization and capitalized $749,948 to oil and gas properties not subject to amortization, principally attributed to the acquisition and development of acreage in Hockley County, Texas. The Company also invested $55,264 in Hupecol Meta LLC (“Hupecol Meta”) relating to drilling operations in Colombia, reflected in the cost method investment on the Company’s balance sheet.

During the three and nine months ended September 30, 2020, the Company recorded depletion expense of $94,926 and $237,071, respectively. During the three and nine months ended September 30, 2019, the Company recorded depletion expense of $99,684 and $283,830, respectively.

During the three and nine months ended September 30, 2020, the Company recorded an impairment of oil and gas properties of none and $429,116, respectively, and none during the three and nine months ended September 30, 2019. Impairment was due to a full cost ceiling test write-down primarily relating to a decline in energy prices.

Geographical Information

The Company currently has properties in two geographical areas, the United States and Colombia. Revenues for the nine months ended September 30, 2020 and long lived assets (net of depletion, amortization, and impairment) as of September 30, 2020 attributable to each geographical area are presented below:

	Nine Months Ended September 30, 2020		As of September 30, 2020
	Revenues		Long Lived Assets, Net
United States	$	351,489	$	4,632,375
Colombia		—		2,343,126
Total	$	351,489	$	6,975,501

XML

Notes Payable - Related Party

9 Months Ended

Sep. 30, 2020

Debt Disclosure [Abstract]

Notes Payable - Related Party

NOTE 4 – NOTES PAYABLE – RELATED PARTY

In September 2019, the Company issued promissory notes (the “Bridge Loan Notes”) with a total principal amount of $621,052, an original issue discount of 5%, warrants (the “Bridge Loan Warrants”) to purchase 1,180,000 shares of the Company’s common stock, and a term of 120 days. The net proceeds received by the Company for the Bridge Loan Notes and Warrants was $590,000.

The Bridge Loan Notes were recorded net of debt discount that consists of (i) $31,052 of original issue discount on the Bridge Loan Notes and (ii) the relative fair value of the Bridge Loan Warrants of $144,948. The debt discount is amortized over the life of the Bridge Loan Notes as additional interest expense. During the nine months ended September 30, 2020, interest expense paid in cash totaled $3,350 and interest expense attributable to amortization of debt discount totaled $23,467. The Bridge Loan Note was repaid in full as of September 30, 2020.

The holders of the Bridge Loan Notes were the CEO and a 10% shareholder of the Company.

XML

Stock-Based Compensation Expense

9 Months Ended

Sep. 30, 2020

Share-based Payment Arrangement [Abstract]

Stock-Based Compensation Expense

NOTE 5 – STOCK-BASED COMPENSATION EXPENSE

In 2008, the Company adopted the Houston American Energy Corp. 2008 Equity Incentive Plan (the “2008 Plan”). The terms of the 2008 Plan, as amended in 2012 and 2013, allow for the issuance of up to 480,000 shares of the Company’s common stock pursuant to the grant of stock options and restricted stock.

In 2017, the Company adopted the Houston American Energy Corp. 2017 Equity Incentive Plan (the “2017 Plan” and, together with the 2008 Plan, the “Plans”). The terms of the 2017 Plan, allow for the issuance of up to 400,000 shares of the Company’s common stock pursuant to the grant of stock options and restricted stock. Persons eligible to participate in the Plans are key employees, consultants and directors of the Company.

The Company periodically grants options to employees, directors and consultants under the Plans and is required to make estimates of the fair value of the related instruments and recognize expense over the period benefited, usually the vesting period.

Stock Option Activity

A summary of stock option activity and related information for the nine months ended September 30, 2020 is presented below:

	Options			Weighted-Average Exercise Price		Aggregate Intrinsic Value
Outstanding at January 1, 2020		480,973		$	8.50
Granted		8,000			1.61
Exercised		—			—
Forfeited / Expired		(4,000	)		176.00
Outstanding at September 30, 2020		484,973		$	6.91	$	2,640
Exercisable at September 30, 2020		465,244		$	7.07	$	2,640

During the nine months ended September 30, 2020, options to purchase an aggregate of 8,000 shares of the Company’s common stock were granted to the Company’s directors. The options have a ten-year life and are exercisable at $1.61 per share. The options vest 20% on the date of grant and 80% ten months from the date of grant. The grant date fair value of these stock options was $13,080 based on the Black-Scholes Option Pricing model.

The fair value of the options granted during the nine months ended September 30, 2020 was calculated at the date of grant using the Black-Scholes option-pricing model with the following assumptions:

Market value of common stock on grant date	$	1.94
Risk free interest rate based on the applicable US Treasury bill rate		1.80	%
Dividend yield		0	%
Volatility factor based on the trading history of the Company		82.9	%
Weighted average expected life in years		10
Expected forfeiture rate		0	%

During the nine months ended September 30, 2020, the Company recognized $105,846 of stock-based compensation expense attributable to the amortization of stock options. As of September 30, 2020, total unrecognized stock-based compensation expense related to non-vested stock options was approximately $20,000. The unrecognized expense is expected to be recognized over a weighted average period of 0.49 years and the weighted average remaining contractual term of the outstanding options and exercisable options at September 30, 2020 is 5.31 years and 5.25 years, respectively.

Shares available for issuance under the 2008 Plan as of September 30, 2020 totaled 0. Shares available for issuance under the 2017 Plan, as of September 30, 2020, totaled 246,533.

Stock-Based Compensation Expense

The following table reflects total stock-based compensation recorded by the Company for the nine months ended September 30, 2020 and 2019:

	Nine Months Ended September 30,
	2020			2019
Stock-based compensation expense included in general and administrative expense	$	105,846		$	98,988
Earnings per share effect of share-based compensation expense – basic and diluted	$	(0.02	)	$	(0.00	)

XML

Capital Stock

9 Months Ended

Sep. 30, 2020

Equity [Abstract]

Capital Stock

NOTE 6 – CAPITAL STOCK

Common Stock - At-the-Market Offering

In May 2019, the Company entered into an At-the-Market Issuance Sales Agreement (the “Sales Agreement”) with WestPark Capital, Inc. (“WestPark Capital”) pursuant to which the Company could sell, at its option, up to an aggregate of $5.2 million in shares of its common stock through WestPark Capital, as sales agent. Sales of shares under the Sales Agreement (the “2019 ATM Offering”) were made, in accordance with one or more placement notices delivered by the Company to WestPark Capital, which notices set parameters under which shares could be sold. The 2019 ATM Offering was made pursuant to a shelf registration statement by methods deemed to be “at the market,” as defined in Rule 415 promulgated under the Securities Act of 1933. The Company paid WestPark a commission in cash equal to 3% of the gross proceeds from the sale of shares in the 2019 ATM Offering. Additionally, the Company reimbursed WestPark Capital for $18,000 of expenses incurred in connection with the 2019 ATM Offering.

During the nine months ended September 30, 2020, in connection with the 2019 ATM Offering, the Company (1) sold an aggregate of 1,684,760 shares of its common stock and received net proceeds of $4,375,594, net of commissions, and expenses, and (2) collected $58,575 of subscriptions receivable attributable to shares sold under the 2019 ATM Offering during 2019.

Series A Convertible Preferred Stock

During the nine months ended September 30, 2020 and 2019, the Company paid dividends on Series A Convertible Preferred Stock in the amount of $96,900 and $96,900, respectively. At September 30, 2020, there were 1,085 shares of Series A Convertible Preferred Stock issued and outstanding.

Series B Convertible Preferred Stock

During the nine months ended September 30, 2020 and 2019, the Company paid dividends on Series B Convertible Preferred Stock in the amount of $75,900 and $75,900, respectively. At September 30, 2020, there were 835 shares of Series B Convertible Preferred Stock issued and outstanding.

Warrants

A summary of warrant activity and related information for 2020 is presented below:

	Warrants		Weighted-Average Exercise Price		Aggregate Intrinsic Value
Outstanding at January 1, 2020		98,400	$	2.63
Issued		—		—
Exercised		—		—
Expired		—		—
Outstanding at September 30, 2020		98,400	$	2.63	$	—
Exercisable at September 30, 2020		98,400	$	2.63	$	—

XML

Commitments and Contingencies

9 Months Ended

Sep. 30, 2020

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

NOTE 7 – COMMITMENTS AND CONTINGENCIES

Lease Commitment

The Company leases office facilities under an operating lease agreement that expires October 31, 2022. During the nine months ended September 30, 2020, the operating cash outflows related to operating lease liabilities of $83,038 and the expense for the right of use asset for operating leases was $64,423. As of September 30, 2020, the Company’s operating lease had a weighted-average remaining term of 2 years and a weighted average discount rate of 12%. As of September 30, 2020, the lease agreement requires future payments as follows:

Year	Amount
2020	$	32,976
2021		133,087
2022		112,551
2023		—
Total future lease payments		278,614
Less: imputed interest		33,332
Present value of future operating lease payments		245,282
Less: current portion of operating lease liabilities		108,910
Operating lease liabilities, net of current portion	$	136,372
Right of use assets	$	216,566

Total base rental expense was $90,145 and $84,516 for the nine months ended September 30, 2020 and September 30, 2019, respectively, and $30,049 and $22,293 for the three months ended September 30, 2020 and September 30, 2019, respectively. The Company does not have any capital leases or other operating lease commitments.

XML

Subsequent Events

9 Months Ended

Sep. 30, 2020

Subsequent Events [Abstract]

Subsequent Events

NOTE 8 – SUBSEQUENT EVENTS

In October 2020, the Company exercised its rights with respect to the area of mutual interest associated with its Lou Brock lease in Hockley County, Texas, acquiring a 20% interest a 354.2 gross (309.925 net) acre tract for $25,194.

In October 2020, the Company amended its Crown Paper lease, reducing its royalty interest from 25% to 20%.

XML

Basis of Presentation and Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2020

Accounting Policies [Abstract]

Consolidation

Consolidation

The accompanying consolidated financial statements include all accounts of the Company and its subsidiaries (HAEC Louisiana E&P, Inc., HAEC Oklahoma E&P, Inc., and HAEC Caddo Lake E&P, Inc.). All significant inter-company balances and transactions have been eliminated in consolidation.

Reverse Stock Split

Reverse Stock Split

In July 2020, the Company’s shareholders approved a reverse split of the Company’s common stock in a ratio to be determined, within a specified range, by the Company’s board of directors. The Company’s board of directors approved, and, effective at the close of business on July 31, 2020, the Company’s Certificate of Incorporation was amended to affect a 1-for-12.5 reverse split (the “Reverse Split”) of the Company’s common stock. Fractional shares otherwise issuable pursuant to the Reverse Split were rounded up to the next highest whole number of shares. As a result of the Reverse Split, the shares of common stock outstanding immediately prior to the Reverse Split decreased from 87,007,145 to 6,960,575 shares and the shares of common stock authorized for issuance decreased from 150,000,000 shares to 12,000,000 shares. Similarly, all shares of common stock issuable under outstanding options, warrants and shares of convertible preferred stock were adjusted, and applicable conversion or exercise prices were proportionately adjusted, to reflect the Reverse Split. The par value of the Company’s common stock remained unchanged at $0.001 per share.

All references to shares of common stock and per share data for all periods in the financial statements and notes thereto have been adjusted to reflect the Reverse Split on a retroactive basis.

Liquidity and Capital Requirements

Liquidity and Capital Requirements

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business for the twelve-month period following the issuance date of these consolidated financial statements. The Company has incurred continuing losses since 2011, including a loss of $1,447,257 for the nine months ended September 30, 2020. Additionally, as a result of the steep global economic slowdown that began in March 2020 as the coronavirus pandemic (“COVID-19”) spread, prices realized from oil and gas sales declined sharply beginning late in the quarter ended March 31, 2020 and have only partially recovered as of September 30, 2020, with such price declines expected to persist until governments worldwide are confident that the pandemic is adequately contained to permit renewed economic activity. Depending upon the duration of the pandemic and the resulting global economic slowdown, the Company may incur continuing declines in revenues and increased losses, associated from lower demand for energy and resulting depressed oil and gas prices. However, during the three months ended March 31, 2020, the Company raised a total, net of offering costs, of $4,434,169 in its ATM offering. As of September 30, 2020, there were no remaining funds available under the ATM Offering.

The Company believes that it has the ability to fund, from cash on hand (as a result of the ATM funding received in the current period), its operating costs and anticipated drilling operations, as well as mitigate the immediate impact of COVID-19, for at least the next twelve months following the issuance of these financial statements.

The actual timing and number of wells drilled during 2020 will be principally controlled by the operators of the Company’s acreage, based on a number of factors, including but not limited to availability of financing, performance of existing wells on the subject acreage, energy prices and industry condition and outlook, costs of drilling and completion services and equipment and other factors beyond the Company’s control or that of its operators. With the steep decline in energy prices beginning in March 2020, due at least in part to the economic effects of COVID-19, drilling and development operations were deferred during the first half of 2020. With modest price improvements since the initial COVID-19 related price decline and lower rig and related costs, the Company and its operators have resumed select drilling and development operations in the Permian Basin during the quarter ended September 30, 2020.

In the event that the Company pursues additional acreage acquisitions or expands its drilling plans, the Company may be required to secure additional funding beyond our resources on hand. While the Company may, among other efforts, seek additional funding from “at-the-market” sales of common stock, and private sales of equity and debt securities, it presently does not have any commitments to provide additional funding, and there can be no assurance that the Company can secure the necessary capital to fund its share of drilling, acquisition or other costs on acceptable terms or at all. If, for any reason, the Company is unable to fund its share of drilling and completion costs, it would forego participation in one or more of such wells. In such event, the Company may be subject to penalties or to the possible loss of some of its rights and interests in prospects with respect to which it fails to satisfy funding obligations and it may be required to curtail operations and forego opportunities.

Accounting Principles and Use of Estimates

Accounting Principles and Use of Estimates

The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America. In preparing financial statements, management makes informed judgments and estimates that affect the reported amounts of assets and liabilities as of the date of the financial statements and affect the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, management reviews its estimates, including those related to such potential matters as litigation, environmental liabilities, income taxes and the related valuation allowance, determination of proved reserves of oil and gas and asset retirement obligations. Changes in facts and circumstances may result in revised estimates and actual results may differ from these estimates.

Concentration of Credit Risk

Concentration of Credit Risk

Financial instruments that potentially subject the Company to a concentration of credit risk include cash, cash equivalents and any marketable securities (if any). The Company had cash deposits of $1,272,652 in excess of the FDIC’s current insured limit on interest bearing accounts of $250,000 as of September 30, 2020. The Company also had cash deposits of $3,646 in Colombian banks at September 30, 2020 that are not insured by the FDIC. The Company has not experienced any losses on its deposits of cash and cash equivalents.

Loss Per Share

Loss per Share

Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common shares were exercised or converted in common shares that then shared in the earnings of the Company. In periods in which the Company reports a net loss, dilutive securities are excluded from the calculation of diluted net loss per share amounts as the effect would be anti-dilutive. All per share calculations are adjusted to give retroactive effect to the Reverse Split.

For the three and nine months ended September 30, 2020 and 2019, the following convertible preferred stock and warrants and options to purchase shares of common stock were excluded from the computation of diluted net loss per share, as the inclusion of such shares would be anti-dilutive:

	Nine Months Ended September 30,				Three Months Ended September 30,
	2020		2019		2020		2019
Series A Convertible Preferred Stock		434,000		434,000		434,000		434,000
Series B Convertible Preferred Stock		185,644		185,644		185,644		185,644
Stock warrants		98,400		98,400		98,400		98,400
Stock options		488,973		480,973		488,973		480,973
Total		1,207,017		1,199,017		1,207,017		1,199,017

Recently Issued Accounting Pronouncements

Recently Issued Accounting Pronouncements

The Company does not expect the adoption of any recently issued accounting pronouncements to have a significant impact on its financial position, results of operations, or cash flows.

Subsequent Events

Subsequent Events

The Company has evaluated all transactions from September 30, 2020 through the financial statement issuance date for subsequent event disclosure consideration.

XML

Basis of Presentation and Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2020

Accounting Policies [Abstract]

Schedule of Computation of Diluted Net Loss Per Share

For the three and nine months ended September 30, 2020 and 2019, the following convertible preferred stock and warrants and options to purchase shares of common stock were excluded from the computation of diluted net loss per share, as the inclusion of such shares would be anti-dilutive:

	Nine Months Ended September 30,				Three Months Ended September 30,
	2020		2019		2020		2019
Series A Convertible Preferred Stock		434,000		434,000		434,000		434,000
Series B Convertible Preferred Stock		185,644		185,644		185,644		185,644
Stock warrants		98,400		98,400		98,400		98,400
Stock options		488,973		480,973		488,973		480,973
Total		1,207,017		1,199,017		1,207,017		1,199,017

XML

Revenue from Contracts with Customers (Tables)

9 Months Ended

Sep. 30, 2020

Revenue from Contract with Customer [Abstract]

Schedule of Disaggregates Revenue by Significant Product

The following table disaggregates revenue by significant product type for the three and nine-month periods ended September 30, 2020 and 2019:

	Three Months Ended September 30, 2020		Three Months Ended September 30, 2019		Nine Months Ended September 30, 2020		Nine Months Ended September 30, 2019
Oil sales	$	85,617	$	222,446	$	257,567	$	573,872
Natural gas sales		21,795		12,104		44,456		41,034
Natural gas liquids sales		19,013		30,385		49,466		109,942
Total revenue from customers	$	126,425	$	264,935	$	351,489	$	724,848

XML

Oil and Gas Properties (Tables)

9 Months Ended

Sep. 30, 2020

Oil and Gas Property [Abstract]

Schedule of Revenues and Long Lived Assets Attributable to Geographical Area

The Company currently has properties in two geographical areas, the United States and Colombia. Revenues for the nine months ended September 30, 2020 and long lived assets (net of depletion, amortization, and impairment) as of September 30, 2020 attributable to each geographical area are presented below:

	Nine Months Ended September 30, 2020		As of September 30, 2020
	Revenues		Long Lived Assets, Net
United States	$	351,489	$	4,632,375
Colombia		—		2,343,126
Total	$	351,489	$	6,975,501

XML

Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2020

Share-based Payment Arrangement [Abstract]

Summary of Stock Option Activity

A summary of stock option activity and related information for the nine months ended September 30, 2020 is presented below:

	Options			Weighted-Average Exercise Price		Aggregate Intrinsic Value
Outstanding at January 1, 2020		480,973		$	8.50
Granted		8,000			1.61
Exercised		—			—
Forfeited / Expired		(4,000	)		176.00
Outstanding at September 30, 2020		484,973		$	6.91	$	2,640
Exercisable at September 30, 2020		465,244		$	7.07	$	2,640

Schedule of Fair Value Assumptions of Options

The fair value of the options granted during the nine months ended September 30, 2020 was calculated at the date of grant using the Black-Scholes option-pricing model with the following assumptions:

Market value of common stock on grant date	$	1.94
Risk free interest rate based on the applicable US Treasury bill rate		1.80	%
Dividend yield		0	%
Volatility factor based on the trading history of the Company		82.9	%
Weighted average expected life in years		10
Expected forfeiture rate		0	%

Schedule of Stock-Based Compensation

The following table reflects total stock-based compensation recorded by the Company for the nine months ended September 30, 2020 and 2019:

	Nine Months Ended September 30,
	2020			2019
Stock-based compensation expense included in general and administrative expense	$	105,846		$	98,988
Earnings per share effect of share-based compensation expense – basic and diluted	$	(0.02	)	$	(0.00	)

XML

Capital Stock (Tables)

9 Months Ended

Sep. 30, 2020

Equity [Abstract]

Summary of Warrant Activity

A summary of warrant activity and related information for 2020 is presented below:

	Warrants		Weighted-Average Exercise Price		Aggregate Intrinsic Value
Outstanding at January 1, 2020		98,400	$	2.63
Issued		—		—
Exercised		—		—
Expired		—		—
Outstanding at September 30, 2020		98,400	$	2.63	$	—
Exercisable at September 30, 2020		98,400	$	2.63	$	—

XML

Commitments and Contingencies (Tables)

9 Months Ended

Sep. 30, 2020

Commitments and Contingencies Disclosure [Abstract]

Schedule of Future Payments Under Lease Agreement

As of September 30, 2020, the lease agreement requires future payments as follows:

Year	Amount
2020	$	32,976
2021		133,087
2022		112,551
2023		—
Total future lease payments		278,614
Less: imputed interest		33,332
Present value of future operating lease payments		245,282
Less: current portion of operating lease liabilities		108,910
Operating lease liabilities, net of current portion	$	136,372
Right of use assets	$	216,566

XML

Basis of Presentation and Significant Accounting Policies (Details Narrative) - USD ($)	1 Months Ended	3 Months Ended						9 Months Ended
	Jul. 31, 2020	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Reverse split, description	1-for-12.5 reverse split
Common stock, shares authorized	150,000,000	12,000,000						12,000,000		12,000,000
Preferred stock, par value	$ 0.001	$ 0.001						$ 0.001		$ 0.001
Net loss		$ (259,765)	$ (336,502)	$ (850,990)	$ (304,633)	$ (482,423)	$ (239,620)	$ (1,447,257)	$ (1,026,676)
Proceeds from ATM offering								4,434,169	$ 472,554
Cash deposits		1,272,652						1,272,652
Current insured limit on interest bearing accounts		250,000						250,000
Colombian Banks [Member]
Cash deposits		$ 3,646						$ 3,646
Minimum [Member]
Number of reverse split, shares	87,007,145
Maximum [Member]
Number of reverse split, shares	6,960,575

XML

Basis of Presentation and Significant Accounting Policies - Schedule of Computation of Diluted Net Loss Per Share (Details) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Total	1,207,017	1,199,017	1,207,017	1,199,017
Series A Convertible Preferred Stock [Member]
Total	434,000	434,000	434,000	434,000
Series B Convertible Preferred Stock [Member]
Total	185,644	185,644	185,644	185,644
Stock Warrants [Member]
Total	98,400	98,400	98,400	98,400
Stock Options [Member]
Total	488,973	480,973	488,973	480,973

XML

Revenue from Contracts with Customers (Details Narrative) - USD ($)	Sep. 30, 2020	Dec. 31, 2019
Revenue from Contract with Customer [Abstract]
Remaining performance obligations

XML

Revenue from Contracts with Customers - Schedule of Disaggregates Revenue by Significant Product (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Total revenue from customers	$ 126,425	$ 264,935	$ 351,489	$ 724,848
Oil Sales [Member]
Total revenue from customers	85,617	222,446	257,567	573,872
Natural Gas Sales [Member]
Total revenue from customers	21,795	12,104	44,456	41,034
Natural Gas Liquids Sales [Member]
Total revenue from customers	$ 19,013	$ 30,385	$ 49,466	$ 109,942

XML

Oil and Gas Properties (Details Narrative)	1 Months Ended		3 Months Ended		9 Months Ended
	Aug. 31, 2020 USD ($)	Jul. 31, 2020 USD ($) a	Sep. 30, 2020 USD ($)	Sep. 30, 2019 USD ($)	Sep. 30, 2020 USD ($)	Sep. 30, 2019 USD ($)
Payment for acquired oil and gas properties					$ 1,272,133	$ 645,507
Exchange fees	$ 1,487
Investment in development of oil and gas properties					1,272,133
Acquisition and development cost of oil and gas properties					522,185
Depletion expense			$ 94,926	$ 99,684	237,071	283,830
Impairment of oil and gas properties					429,116
Hockley County [Member]
Payment for acquired oil and gas properties		$ 33,228
Percentage of working interest		20.00%
Area of land | a		466
Description for oil and gas properties		The Company acquired, for $33,228, a 20% working interest in 466 gross acres within an area of mutual interest associated with our existing Northern Shelf of the Permian Basin acreage in Hockley County, Texas.
Hockley County, Texas [Member]
Acquisition and development cost of oil and gas properties					749,948
Hupecol Meta [Member]
Acquisition and development cost of oil and gas properties					$ 55,264

XML

Schedule of Revenues and Long Lived Assets Attributable to Geographical Area (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Results of Operations for Oil and Gas Producing Activities, by Geographic Area [Line Items]
Revenues	$ 126,425	$ 264,935	$ 351,489	$ 724,848
Long Lived Assets, Net	6,975,501		6,975,501
United States [Member]
Results of Operations for Oil and Gas Producing Activities, by Geographic Area [Line Items]
Revenues			351,489
Long Lived Assets, Net	4,632,375		4,632,375
Colombia [Member]
Results of Operations for Oil and Gas Producing Activities, by Geographic Area [Line Items]
Revenues
Long Lived Assets, Net	$ 2,343,126		$ 2,343,126

XML

Notes Payable - Related Party (Details Narrative) - USD ($)	1 Months Ended	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Amortization of debt discount		$ 23,467	$ 17,600
Bridge Loan Notes [Member]
Note, face amount	$ 621,052		$ 621,052
Original issue discount, percent	5.00%		5.00%
Bridge loan, debt discount		31,052
Fair value of warrants		144,948
Interest expense		3,350
Amortization of debt discount		$ 23,467
Bridge Loan Notes [Member] | Shareholder [Member]
Ownership percentage		10.00%
Bridge Loan Warrants [Member]
Number of warrant issued to purchase common stock	1,180,000		1,180,000
Bridge Loan Notes and Warrants [Member]
Consideration received from warrants	$ 590,000

XML

Stock-Based Compensation Expense (Details Narrative) - USD ($)	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2017	Dec. 31, 2008
Number of options granted during period	8,000
Stock option exercisable price per share	$ 7.07
Stock-based compensation	$ 105,846	$ 98,988
Unrecognized share-based compensation expense related to non-vested stock options	$ 20,000
Weighted average period for unrecognition of compensation expense	5 months 27 days
Weighted average remaining contractual term of the outstanding options	5 years 3 months 22 days
Weighted average remaining contractual term of the exercisable options	5 years 2 months 30 days
Director [Member]
Number of options granted during period	8,000
Option term	10 years
Stock option exercisable price per share	$ 1.61
Description on vesting of stock options	The options vest 20% on the date of grant and 80% ten months from the date of grant
Fair value of options granted	$ 13,080
2008 Equity Incentive Plan [Member]
Issuance of common stock, shares	0
2008 Equity Incentive Plan [Member] | Maximum [Member]
Number of options authorized to purchase shares of common stock				480,000
2017 Equity Incentive Plan [Member]
Issuance of common stock, shares	2,465,33.
2017 Equity Incentive Plan [Member] | Maximum [Member]
Number of options authorized to purchase shares of common stock			400,000

XML

Stock-Based Compensation Expense - Summary of Stock Option Activity (Details)	9 Months Ended
	Sep. 30, 2020 USD ($) $ / shares shares
Share-based Payment Arrangement [Abstract]
Options Outstanding at beginning of the period | shares	480,973
Options Granted | shares	8,000
Options Exercised | shares
Options Forfeited / Expired | shares	(4,000)
Options Outstanding at end of the period | shares	484,973
Options Outstanding Exercisable at end of the period | shares	465,244
Weighted-Average Exercise Price Outstanding at beginning of the period | $ / shares	$ 8.50
Weighted-Average Exercise Price Granted | $ / shares	1.61
Weighted-Average Exercise Price Exercised | $ / shares
Weighted-Average Exercise Price Forfeited / Expired | $ / shares	176.00
Weighted-Average Exercise Price Outstanding at end of the period | $ / shares	6.91
Weighted-Average Exercise Price Outstanding Exercisable at end of the period | $ / shares	$ 7.07
Aggregate Intrinsic Value Outstanding at end of the period | $	$ 2,640
Aggregate Intrinsic Value Outstanding Exercisable at end of the period | $	$ 2,640

XML

Stock-Based Compensation Expense - Schedule of Fair Value Assumptions of Options (Details)	9 Months Ended
	Sep. 30, 2020 $ / shares
Share-based Payment Arrangement [Abstract]
Market value of common stock on grant date	$ 1.94
Risk free interest rate based on the applicable US Treasury bill rate	1.80%
Dividend yield	0.00%
Volatility factor based on the trading history of the Company	82.90%
Weighted average expected life in years	10 years
Expected forfeiture rate	0.00%

XML

Stock-Based Compensation Expense - Schedule of Stock-Based Compensation (Details) - USD ($)	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Share-based Payment Arrangement [Abstract]
Stock-based compensation expense included in general and administrative expense	$ 105,846	$ 98,988
Earnings per share effect of share-based compensation expense - basic and diluted	$ (0.02)	$ (0.00)

XML

Capital Stock (Details Narrative) - USD ($)	1 Months Ended	3 Months Ended						9 Months Ended
	May 31, 2019	Sep. 30, 2020	Jun. 30, 2020	Mar. 31, 2020	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
Subscription receivable										$ 58,575
Dividends paid		$ 69,600	$ 45,600	$ 57,600	$ 57,600	$ 57,600	$ 57,600	172,800	$ 172,800
Series A Convertible Preferred Stock [Member]
Dividends paid								$ 96,900	96,900
Preferred stock, shares issued		1,085						1,085		1,085
Preferred stock, shares outstanding		1,085						1,085		1,085
Series B Convertible Preferred Stock [Member]
Dividends paid								$ 75,900	$ 75,900
Preferred stock, shares issued		835						835		835
Preferred stock, shares outstanding		835						835		835
Sales Agreement (2019 ATM Offering) [Member]
Subscription receivable										$ 58,575
Sales Agreement (2019 ATM Offering) [Member] | WestPark Capital, Inc [Member]
Sale of stock shares of common stock value	$ 5,200,000
Commission percentage	3.00%
Reimbursement of expenses connection with offering	$ 18,000
Number shares sold								1,684,760
Commissions and expenses								$ 4,375,594

XML

Capital Stock - Summary of Warrant Activity (Details)	9 Months Ended
	Sep. 30, 2020 USD ($) $ / shares shares
Equity [Abstract]
Warrants Outstanding, Beginning	98,400
Warrants Outstanding, Issued
Warrants Outstanding, Exercised
Warrants Outstanding, Expired
Warrants Outstanding, Ending	98,400
Warrants Outstanding, Exercisable	98,400
Weighted-Average Exercise Price Outstanding, Beginning | $ / shares	$ 2.63
Weighted-Average Exercise Price, Issued | $ / shares
Weighted-Average Exercise Price, Exercised | $ / shares
Weighted-Average Exercise Price, Expired | $ / shares
Weighted-Average Exercise Price Outstanding, Ending | $ / shares	$ 2.63
Weighted-Average Exercise Price Outstanding, Exercisable	2.63
Aggregate Intrinsic Value, Ending | $
Aggregate Intrinsic Value, Exercisable | $

XML

Commitments and Contingencies (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Jun. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Commitments and Contingencies Disclosure [Abstract]
Operating lease agreement expire date			Oct. 31, 2022
Operating cash outflows related to operating lease liabilities			$ 83,038
Amortization of right of use asset			$ 64,423	$ 56,417
Operating lease, weighted average remaining lease term	2 years		2 years
Weighted average discount rate	12.00%		12.00%
Rental expense	$ 30,049	$ 22,293	$ 90,145	$ 84,516

XML

Commitments and Contingencies - Schedule of Future Payments Under Lease Agreement (Details) - USD ($)	Sep. 30, 2020	Dec. 31, 2019
Commitments and Contingencies Disclosure [Abstract]
2020	$ 32,976
2021	133,087
2022	112,551
2023
Total future lease payments	278,614
Less: imputed interest	33,332
Present value of future operating lease payments	245,282
Less: current portion of operating lease liabilities	108,910	$ 97,890
Operating lease liabilities, net of current portion	136,372	219,410
Right of use assets	$ 216,566	$ 281,489

XML

Subsequent Events (Details Narrative) - Subsequent Event [Member]	1 Months Ended
	Oct. 31, 2020 USD ($)	Oct. 02, 2020 a
Description of acquired entity	The Company exercised its rights with respect to the area of mutual interest associated with its Lou Brock lease in Hockley County, Texas, acquiring a 20% interest a 354.2 gross (309.925 net) acre tract for $25,194.
Acquisition percentage		20.00%
Area of land | a		354.2
Payments To Acquire cost | $	$ 25,194
Maximum [Member]
Royalty interest percentage	25.00%
Minimum [Member]
Royalty interest percentage	20.00%