SUMMER ENERGY HOLDINGS, INC.
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(Exact name of registrant as specified in charter)
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Nevada
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20-2722022
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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800 Bering Drive, Suite 260, Houston, Texas
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77057
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(Address of principal executive offices)
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(Zip Code)
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(713) 375-2790
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(Issuer's telephone number, including area code)
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N/A
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(Former name, former address, and former fiscal year, if changed since last report)
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Large accelerated filer ☐
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Accelerated filer ☐
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Non-accelerated filer ☐
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Smaller reporting company ☑
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FOR THE QUARTER ENDED SEPTEMBER 30, 2016
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INDEX
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PART I – FINANCIAL INFORMATION
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Page
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Item 1.
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Unaudited Consolidated Financial Statements
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3 |
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Consolidated Balance Sheets
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3 | |
Consolidated Statements of Operations
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4 | |
Consolidated Statements of Cash Flows
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5 | |
Notes to Consolidated Financial Statements
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6 | |
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Item 2.
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Management's Discussion and Analysis of Financial Condition and Results of Operations
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13 |
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Item 3.
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Quantitative and Qualitative Disclosures About Market Risk
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16 |
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Item 4.
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Controls and Procedures
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16 |
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PART II – OTHER INFORMATION
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17
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Item 1A
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Risk Factors
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17 |
Item 6.
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Exhibits
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18 |
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SIGNATURES
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19 |
SUMMER ENERGY HOLDINGS, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2016 AND DECEMBER 31, 2015
(UNAUDITED)
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||||||||
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September 30, 2016
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December 31, 2015
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||||||
ASSETS
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||||||||
Current Assets
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||||||||
Cash
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$
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3,293,505
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$
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382,490
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||||
Restricted cash
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2,059,993
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632,868
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||||||
Accounts receivable, net
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19,090,161
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12,737,133
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||||||
Prepaid and other current assets
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226,733
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107,364
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||||||
Total current assets
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24,670,392
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13,859,855
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||||||
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||||||||
Property and equipment, net
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284,224
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372,512
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||||||
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||||||||
Deferred financing, net
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157,402
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-
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||||||
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||||||||
Total assets
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$
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25,112,018
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$
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14,232,367
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||||
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||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
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||||||||
Current Liabilities
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||||||||
Accounts payable
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$
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491,254
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$
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357,501
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||||
Accrued wholesale power purchased
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7,851,165
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4,730,703
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||||||
Accrued expenses
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5,849,118
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3,894,748
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Advance to loan amount note
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-
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111,057
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||||||
Short-term debt, net of debt discount
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-
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3,000,000
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||||||
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||||||||
Total current liabilities
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14,191,537
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12,094,009
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Long-Term Liabilities | ||||||||
Long-term debt, net of debt discount
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2,500,000
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-
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||||||
Total long-term liabilities
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2,500,000
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-
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Total liabilities
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16,691,537
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12,094,009
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Stockholders' Equity (Deficit)
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||||||||
Series B Preferred Stock - $.001 par value, 3,000,000 authorized, 0 shares and 1,900,000 shares issued and outstanding at September 30, 2016 and December 31, 2015 respectively
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-
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1,900
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||||||
Common Stock - $.001 par value, 100,000,000 shares authorized, 22,463,424 and
16,216,619 shares issued and outstanding at September 30, 2016 and December 31, 2015,
respectively
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22,463
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16,216
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||||||
Subscription receivable
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(52,000
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)
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(52,000
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)
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||||
Additional paid in capital
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14,288,924
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9,492,454
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Accumulated deficit
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(5,838,906
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)
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(7,320,212
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)
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Total stockholders' equity (deficit)
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8,420,481
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2,138,358
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Total liabilities and stockholders' equity (deficit)
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$
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25,112,018
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$
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14,232,367
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For the Three Months Ended September 30, 2016
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For the Three Months Ended September 30, 2015
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For the Nine Months Ended September 30, 2016
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For the Nine Months Ended September 30, 2015
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|||||||||||||
Electricity Revenue
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$
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28,060,468
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$
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25,551,126
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$
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70,449,308
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$
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62,416,285
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Cost of Goods Sold
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Power purchases and balancing/ancillary
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12,937,763
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12,342,503
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30,616,394
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28,004,319
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Transportation and distribution providers charge
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11,072,847
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8,103,843
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27,459,864
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22,226,565
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||||||||||||
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Total cost of goods sold
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24,010,610
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20,446,346
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58,076,258
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50,230,884
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Gross Profit
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4,049,858
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5,104,780
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12,373,050
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12,185,401
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General and Administrative
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3,574,276
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3,106,175
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9,790,775
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8,792,037
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||||||||||||
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Operating Income
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475,582
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1,998,605
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2,582,275
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3,393,364
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Other Income (Expense)
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Financing costs
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(22,486
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)
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(234,884
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)
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(555,473
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)
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(749,445
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)
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Interest expense, net
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(114,888
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)
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(159,322
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)
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(424,346
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)
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(457,010
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)
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||||||||
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Total other expense
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(137,374
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)
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(394,206
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)
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(979,819
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)
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(1,206,455
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)
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||||||||
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Net Income Before Income Taxes
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338,208
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1,604,399
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1,602,456
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2,186,909
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Income Taxes
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-
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-
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(11,210
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)
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-
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Net Income
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$
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338,208
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$
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1,604,399
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$
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1,591,246
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$
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2,186,909
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||||||||
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Series B Preferred shares dividend
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-
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(57,470
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)
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(109,940
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)
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(170,535
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)
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Net Income applicable to common shareholders
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$
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338,208
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$
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1,546,929
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$
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1,481,306
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$
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2,016,374
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Net income per common share: | ||||||||||||||||
Basic
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$
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0.02
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$
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0.10
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$
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0.08
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$
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0.13
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||||||||
Dilutive
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$ | 0.02 | $ | 0.10 |
$
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0.08
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$
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0.13
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Weighted average number of shares: | ||||||||||||||||
Basic
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21,327,337
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15,671,201
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18,392,364
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15,611,650
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Dilutive
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22,299,604
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15,771,745
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18,692,566
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15,659,853
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SUMMER ENERGY HOLDINGS, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016
AND SEPTEMBER 30, 2015
(UNAUDITED)
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||||||||
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For the Nine Months Ended September 30, 2016
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For the Nine Months Ended September 30, 2015
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||||||
Cash Flows from Operating Activities
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||||||||
Net income
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$
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1,591,246
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$
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2,186,909
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Adjustments to reconcile net income to net cash used in operating activities:
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||||||||
Common stock issued for financing costs
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532,988
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724,995
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Stock compensation expense
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16,234
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74,547
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Depreciation of property and equipment
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158,502
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212,188
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Bad debt expense
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1,572,679
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1,178,915
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Changes in operating assets and liabilities:
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||||||||
Accounts receivable
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(7,925,707
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)
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(7,972,009
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)
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Prepaid and other current assets
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(119,369
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)
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692,451
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Accounts payable
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133,753
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38,209
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Accrued wholesale power purchases
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3,120,462
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(464,199
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)
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Accrued expenses
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1,954,370
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1,247,145
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Net cash (used in) provided by operating activities
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1,035,158
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(2,080,849
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)
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Cash Flows from Investing Activities
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||||||||
Sale (Purchase) of restricted cash
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(168,725
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)
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(193,559
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)
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Proceeds from certificate of deposit – restricted
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-
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15,044
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||||||
Cash restricted as collateral on letters of credit
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(1,258,400
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)
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Purchase of property and equipment
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(70,214
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)
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(91,344
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)
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Net cash used in investing activities
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(1,497,339
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)
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(269,859
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)
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Cash Flows from Financing Activity
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Deferred financing costs, net
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(157,402
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)
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-
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Proceeds from long term note payable
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2,500,000
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3,100,000
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Repayment on long term notes payable
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(3,000,000
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)
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-
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Proceeds from advance from loan note
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356,600
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-
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Repayment from advance from loan note
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(467,657
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)
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(740,843
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)
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Payment of dividends in cash on Series B Preferred stock
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(86,795
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)
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(143,606
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)
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Proceeds from issuance of units in a private placement offering
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4,228,450
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130,000
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||||||
,
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||||||||
Net cash provided by financing activities
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3,373,196
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2,345,551
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||||||
Net Change in Cash
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2,911,015
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(5,157
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)
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|||||
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Cash at Beginning of Period
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382,490
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550,342
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||||||
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||||||||
Cash at End of Period
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$
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3,293,505
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$
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545,185
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Supplemental Disclosure of Cash Flow Information:
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||||||||
Income taxes paid
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$
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11,210
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$
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-
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||||
Interest paid, net
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$
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424,551
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$
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457,073
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Non-Cash Transactions
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||||||||
Conversion of Series B Preferred stock to common stock
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$
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1,900,000
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$
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-
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||||
Series B Preferred stock dividends
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$
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23,145
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$
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26,929
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SUMMER ENERGY HOLDINGS, INC.
AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 2016 AND 2015
(UNAUDITED)
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No.
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Item
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31.1
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Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended.
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31.2
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Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) and Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended.
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32.1*
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Certification of the CEO and CFO pursuant to Rule 13a-14(b) and Rule 15d-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350.
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101.INS**
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XBRL Instance Document
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101.SCH**
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XBRL Taxonomy Extension Schema Document
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101.CAL**
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XBRL Taxonomy Extension Calculation Linkbase Document
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101.DEF**
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XBRL Taxonomy Extension Definition Linkbase Document
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101.LAB**
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XBRL Taxonomy Extension Label Linkbase Document
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101.PRE**
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XBRL Taxonomy Extension Presentation Linkbase Document
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SUMMER ENERGY HOLDINGS, INC.
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Date:
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November 14, 2016
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By:
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/s/ Neil M. Leibman
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Neil M. Leibman
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Chief Executive Officer
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(Principal Executive Officer)
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Date:
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November 14, 2016
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/s/ Jaleea P. George
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Jaleea P. George
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Chief Financial Officer
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(Principal Accounting Officer)
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/s/ Neil M. Leibman
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Neil M. Leibman,
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President and Chief Executive Officer
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(Principal Executive Officer)
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/s/ Jaleea P. George
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Jaleea P. George,
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Chief Financial Officer
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(Principal Financial Officer)
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By:
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/s/ Neil M. Leibman
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Neil M. Leibman,
President and Chief Executive Officer
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By:
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/s/ Jaleea P. George
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Jaleea P. George,
Chief Financial Officer
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Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Nov. 13, 2016 |
|
Document and Entity Information: | ||
Entity Registrant Name | SUMMER ENERGY HOLDINGS INC | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2016 | |
Amendment Flag | false | |
Entity Central Index Key | 0001396633 | |
Current Fiscal Year End Date | --12-31 | |
Entity Common Stock, Shares Outstanding | 22,463,424 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Current Reporting Status | Yes | |
Entity Voluntary Filers | No | |
Entity Well-known Seasoned Issuer | No | |
Document Fiscal Year Focus | 2016 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | sume |
CONSOLIDATED BALANCE SHEETS (PARENTHETICAL) - $ / shares |
Sep. 30, 2016 |
Dec. 31, 2015 |
---|---|---|
Statement of Financial Position | ||
Preferred Stock, par or stated value | $ 0.001 | $ 0.001 |
Preferred Stock, shares authorized | 3,000,000 | 3,000,000 |
Preferred Stock, shares issued | 0 | 1,900,000 |
Preferred Stock, shares outstanding | 0 | 1,900,000 |
Common Stock, par or stated value | $ 0.001 | $ 0.001 |
Common Stock, shares authorized | 100,000,000 | 100,000,000 |
Common Stock, shares issued | 22,463,424 | 16,216,619 |
Common Stock, shares outstanding | 22,463,424 | 16,216,619 |
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Income Statement | ||||
Electricity Revenue | $ 28,060,468 | $ 25,551,126 | $ 70,449,308 | $ 62,416,285 |
Cost of Goods Sold | ||||
Power purchases and balancing/ancillary | 12,937,763 | 12,342,503 | 30,616,394 | 28,004,319 |
Transportation and distribution providers charge | 11,072,847 | 8,103,843 | 27,459,864 | 22,226,565 |
Total cost of goods sold | 24,010,610 | 20,446,346 | 58,076,258 | 50,230,884 |
Gross Profit | 4,049,858 | 5,104,780 | 12,373,050 | 12,185,401 |
General and Administrative | 3,574,276 | 3,106,175 | 9,790,775 | 8,792,037 |
Operating Income | 475,582 | 1,998,605 | 2,582,275 | 3,393,364 |
Other Income (Expense) | ||||
Financing costs | (22,486) | (234,884) | (555,473) | (749,445) |
Interest expense, net | (114,888) | (159,322) | (424,346) | (457,010) |
Total other expense | (137,374) | (394,206) | (979,819) | (1,206,455) |
Net Income Before Income Taxes | 338,208 | 1,604,399 | 1,602,456 | 2,186,909 |
Income Taxes | (11,210) | |||
Net Income | 338,208 | 1,604,399 | 1,591,246 | 2,186,909 |
Series B Preferred shares dividend | (57,470) | (109,940) | (170,535) | |
Net Income applicable to common shareholders | $ 338,208 | $ 1,546,929 | $ 1,481,306 | $ 2,016,374 |
Net income per common share: | ||||
Basic | $ 0.02 | $ 0.10 | $ 0.08 | $ 0.13 |
Dilutive | $ 0.02 | $ 0.10 | $ 0.08 | $ 0.13 |
Weighted average number of shares: | ||||
Basic | 21,327,337 | 15,671,201 | 18,392,364 | 15,611,650 |
Dilutive | 22,299,604 | 15,771,745 | 18,692,566 | 15,659,853 |
Note 1 - Organization |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
Notes | |
Note 1 - Organization | NOTE 1 ORGANIZATION
The consolidated financial statements include the accounts of Summer Energy Holdings, Inc. and its wholly-owned subsidiaries Summer Energy, LLC ("Summer LLC"), Summer EM Marketing, LLC ("Marketing LLC") and Summer Energy of Ohio, LLC ("Summer Ohio") (collectively referred to as the "Company," "we," "us," or "our"). All significant intercompany transactions and balances have been eliminated in these consolidated financial statements.
Summer LLC is a retail electric provider in the State of Texas under a license with the Public Utility Commission of Texas ("PUCT"). Summer LLC procures wholesale energy and resells it to commercial and residential customers. Summer LLC was organized on April 6, 2011, under the laws of the state of Texas. The operations of Summer LLC are the Company's sole line of business.
Marketing LLC was formed in the state of Texas on November 6, 2012, to provide certain marketing services to Summer LLC.
Summer Ohio was formed in the State of Ohio on December 16, 2013 to procure and sell electricity in the State of Ohio. The Public Utilities Commission of Ohio ("PUCO") issued a certificate as a Retail Electric Service Provider to Summer Ohio on June 16, 2015. At this time, there is no business activity in the State of Ohio. |
Note 2 - Basis of Presentation |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
Notes | |
Note 2 - Basis of Presentation | NOTE 2 - BASIS OF PRESENTATION
The accompanying financial statements have been prepared in accordance with generally accepted accounting principles of the United States of America ("GAAP") for interim financial statements pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the nine month period ended September 30, 2016, are not necessarily indicative of the results that may be expected for the year ending December 31, 2016. These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015, as filed with the Securities and Exchange Commission ("SEC") on March 30, 2016.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported amount of revenues and expenses during the reporting period. Actual results may differ from these estimates.
The Company determines the allowance based upon a review of outstanding receivables, historical write-off experience and existing economic conditions. Receivables past due over 90 days are considered delinquent and reviewed individually for collectability.
During the quarter ended September 30, 2016, the Company adjusted the allowance to equal all billed accounts receivables over 90 days plus a percentage for unbilled account receivables based upon the historical collection experience. The change in the estimate to the allowance had an impact to increase net income $261,000 for the quarter and for the nine months ended September 30, 2016. (77% and by 16%, respectively). Management has determined that the allowance for doubtful accounts as of September 30, 2016 at $1,324,715.
|
Note 3 - Significant Accounting Policies |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
Notes | |
Note 3 - Significant Accounting Policies | NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition
Our electricity revenue is recognized by our Company upon delivery of electricity to a customer's meter. This method of revenue recognition is commonly referred to as the flow method. The flow method of revenue relies upon Electric Reliability Council of Texas ("ERCOT") settlement statements to determine the estimated revenue for a given month. Supply delivered to customers for the month, measured on a daily basis, provides the basis for revenues. Electricity revenue consists of proceeds from energy sales, including, pass through charges from the Transmission and Distribution Providers ("TDSPs") billed to the customer at cost.
Unbilled Revenue and Accounts Receivable
Electric services not billed by month-end are accrued based upon estimated deliveries to customers as tracked and recorded by ERCOT multiplied by our average billing rate per kilowatt hour ("kWh") in effect at the time. At the end of each calendar month, revenue is accrued to unbilled receivables based on the estimated amount of power delivered to customers using the flow technique. Unbilled revenue also includes accruals for estimated TDSP charges and monthly service charges applicable to the estimated electricity usage for the period. All charges that were physically billed to customers in the calendar month are recorded from the unbilled account to the customer receivable account. Unbilled accounts as of September 30, 2016, were estimated at $13,003,866.
Accounts receivable are customer obligations billed at the customer's monthly meter read date for that period's electricity usage and due within 16 days of the date of the invoice. Balances past due are subject to a late fee that is assessed on that billing.
The Company determines the allowance based upon a review of outstanding receivables, historical write-off experience and existing economic conditions. Receivables past due over 90 days are considered delinquent and reviewed individually for collectability. During the quarter ended September 30, 2016, the Company adjusted the allowance to equal all billed accounts receivables over 90 days plus a percentage for unbilled account receivables based upon the historical collection experience. The change in the estimate to the allowance had an impact to increase net income $261,000 for the quarter and for the nine months ended September 30, 2016 (77% and by 16%, respectively). Management has determined that the allowance for doubtful accounts as of September 30, 2016 at $1,324,715.
Cost Recognition
Direct energy costs are recorded when the electricity is delivered to the customer's meter.
Cost of Goods Sold ("COGS") include electric power purchased and pass through charges from the TDSP's in the areas serviced by the Company. TDSP charges are costs for metering services and maintenance of the electric grid. TDSP charges are established by regulation of the PUCT.
The energy portion of our COGS is comprised of two components: bilateral wholesale costs and balancing/ancillary costs. These two cost components are incurred and recognized differently as follows:
Bilateral wholesale costs are incurred through contractual arrangements with wholesale power suppliers for firm delivery of power at a fixed volume and fixed price. We are invoiced for these wholesale volumes at the end of each calendar month for the volumes purchased for delivery during the month, with payment due 20 days after the end of the month.
Balancing/ancillary costs are based on the customer load and are determined by ERCOT through a multiple step settlement process. Balancing costs/revenues are related to the differential between supply that we provided through our bilateral wholesale supply and the supply required to serve our customer load. The Company endeavors to minimize the amount of balancing/ancillary costs through our load forecasting and forward purchasing programs. |
Note 4 - Series B Preferred Shares |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
Notes | |
Note 4 - Series B Preferred Shares | NOTE 4 SERIES B PREFERRED SHARES
On February 19, 2014, the Company filed a Certificate of Designation of Rights, Preferences, Privileges and Restrictions (the "Series B Designation") with respect to a class of preferred stock designated as Series B Preferred Stock (the "Series B Preferred").
The Series B Preferred is convertible into common stock at the election of the holder, with an initial conversion price of $1.00 per share. The Certificate of Designation provides certain adjustments to the conversion price to adjust for stock splits, adjustments, and issuance of additional shares of stock. Mandatory Conversion. Additionally, the Series B Preferred will automatically be converted upon the earlier to occur of (A) the affirmative election of the holders of fifty percent (50%) of the outstanding shares of Series B Preferred, voting as a separate class, or (B) the affirmative vote of the board of directors upon the closing of a firmly underwritten public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, which values the Company at least $50 million and in which the gross proceeds to the Company (after underwriting discounts, commissions and fees) are at least $10 million.
On June 24, 2016, the Series B Stockholders affirmatively elected to convert all outstanding Series B Shares into shares of Common Stock.
During the nine months ended September 30, 2016, the Company had paid $109,940 of cumulative monthly dividends on Series B Preferred Stock. Certain shareholders elected to be paid in shares of the Company's common stock valued at $23,145 and the remaining holders were paid a total of $86,795 in cash. |
Note 5 - Letters of Credit |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
Notes | |
Note 5 - Letters of Credit | NOTE 5 - LETTERS OF CREDIT
As of September 30, 2016, the Company had nine secured irrevocable stand-by letters of credit totaling $1,188,200 with a financial institution for the benefit of the Transmission and Distribution Providers ("TDSPs") that provide transition services to the Company. The nine letters of credit renewed during the third quarter of 2016 and are subject to automatic extension and renewal provisions until the third quarter of 2017.
As of September 30, 2016, none of the letters of credit issued on behalf of the Company were drawn upon. |
Note 6 - Advance To Loan Amount Note |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
Notes | |
Note 6 - Advance To Loan Amount Note | NOTE 6 - ADVANCE TO LOAN AMOUNT NOTE
On April 18, 2014, the Company signed an Advance to Loan Amount Note with Comerica Bank in the amount of $1,500,000. The Note had an original maturity date of December 22, 2014, which was extended through February 22, 2015. On February 22, 2015, the Advance to Loan Amount Note was increased from $1,500,000 to $1,700,000 and extended again to November 4, 2016, with interest thereon at a per annum rate equal to the "Prime Referenced Rate" plus the "Applicable Margin." The "Prime Referenced Rate" means, for any day, a per annum interest rate which is equal to the "Prime Rate" in effect on such day, but in no event and at no time shall the "Prime Reference Rate" be less than the sum of the Daily Adjusting LIBOR Rate for such day plus two and one-half percent (2.5%) per annum. "Prime Rate" means the per annum rate established by Comerica Bank as its prime rate for its borrowers at any such time. "Applicable Margin" means 2% per annum. Accrued and unpaid interest on the unpaid principal balance outstanding shall be payable monthly, in arrears, on the first Business Day of each month.
Guaranty of the Advance to Loan Amount Note was made by four members of the Company's board of directors ("Guarantors"). The Company agreed to issue the four Guarantors a total of 120,000 shares of the Company's common stock per month (30,000 shares of common stock per month per Guarantor) reduced accordingly as the loan is reduced for agreeing to act as a Guarantor of the Advance to Loan Amount.
In May 2016, the Company released the Guarantors from the obligation to guaranty the Advance to Loan Amount Note and stock payments for such guaranty were discontinued as of May 31, 2016. The balance of the Advance to Loan Amount was zero as of September 30, 2016.
During the nine months ended September 30, 2016, the Company issued 482,158 shares of common stock to the Guarantors and recognized $532,987 in financing cost. |
Note 7 - 2012 Stock Option and Stock Award Plan |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
Notes | |
Note 7 - 2012 Stock Option and Stock Award Plan | NOTE 7 2012 STOCK OPTION AND STOCK AWARD PLAN
On August 3, 2016, the Company granted stock options to purchase up to 2,500 shares of the Company's common stock to a key employee. The options covering a total of 2,500 shares vest one year after the date of grant. The stock options have an exercise price of $2.00 per share and will expire ten (10) years from the date of grant. The fair value of the options of $5,344 was determined using the Black-Scholes option-pricing model. The assumptions used to calculate the fair market value are as follows: (i) risk-free interest rate of 1.07% (ii) estimated volatility of 172% (iii) dividend yield of 0.00% and (iv) expected life of the options of ten years.
As of September 30, 2016, 783,000 securities have been awarded, net of forfeitures, from the 2012 Stock Option and Stock Award Plan with a remaining unissued balance of 2,000 securities.
During the nine months ended September 30, 2016, the Company recorded stock compensation expense of $922 for vesting options issued from the 2012 plan. |
Note 8 - 2015 Stock Option and Stock Award Plan |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
Notes | |
Note 8 - 2015 Stock Option and Stock Award Plan | NOTE 8 2015 STOCK OPTION AND STOCK AWARD PLAN
On March 31, 2016, the Company granted a total of 31,250 stock options to non-employee members of the Company's Board of Directors under the 2015 Stock Option and Stock Award Plan as compensation for service on the Company's Board. The director stock options were fully vested on the date of grant, have an exercise price of $1.50 per share, will expire ten (10) years from the date of the grant and are estimated to have a fair value of approximately $6,533 on the date of grant determined using the Black-Scholes option-pricing model. The assumptions used to calculate the fair market value are as follows: (i) risk-free interest rate of 0.87% (ii) estimated volatility of 17% (iii) dividend yield of 0.00% and (iv) expected life of the options of ten years.
On May 16, 2016, the Company granted a total of 31,250 stock options to non-employee members of the Company's Board of Directors under the 2015 Stock Option and Stock Award Plan as compensation for service on the Company's Board. The director stock options were fully vested on the date of grant, have an exercise price of $1.50 per share, will expire ten (10) years from the date of the grant and are estimated to have a fair value of approximately $5,284 on the date of grant determined using the Black-Scholes option-pricing model. The assumptions used to calculate the fair market value are as follows: (i) risk-free interest rate of 0.87% (ii) estimated volatility of 17% (iii) dividend yield of 0.00% and (iv) expected life of the options of ten years.
On June 24, 2016, the Company granted stock options to purchase up to 2,500 shares of the Company's common stock to a key employee. The options covering a total of 2,500 shares vest one year after the date of grant. The stock options have an exercise price of $2.00 per share and will expire ten (10) years from the date of grant. The fair value of the options of $584 was determined using the Black-Scholes option-pricing model. The assumptions used to calculate the fair market value are as follows: (i) risk-free interest rate of 0.87% (ii) estimated volatility of 17% (iii) dividend yield of 0.00% and (iv) expected life of the options of ten years.
On September 2, 2016, the Company granted stock options to purchase up to 2,500 shares of the Company's common stock to a key employee. The options covering a total of 2,500 shares vest one year after the date of grant. The stock options have an exercise price of $2.00 per share and will expire ten (10) years from the date of grant. The fair value of the options of $4,595 was determined using the Black-Scholes option-pricing model. The assumptions used to calculate the fair market value are as follows: (i) risk-free interest rate of 1.6% (ii) estimated volatility of 171% (iii) dividend yield of 0.00% and (iv) expected life of the options of ten years.
As of September 30, 2016, 703,500 securities have been awarded, net of forfeitures, from the 2015 Stock Option and Stock Award Plan with a remaining unissued balance of 796,500 securities.
During the nine months ended September 30, 2016, the Company recorded stock compensation expense of $15,312 for vesting options issued from the 2015 plan. |
Note 9 - Private Placement |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
Notes | |
Note 9 - Private Placement | NOTE 9 PRIVATE PLACEMENT
On April 25, 2016, the Company entered into a Securities Purchase Agreement with an investor for such investor to purchase from the Company 227,273 shares of the Company's common stock for an aggregate purchase price of $250,000.
On May 4, 2016, the Company entered into a Securities Purchase Agreement with an investor for such investor to purchase from the Company 227,273 shares of the Company's common stock for an aggregate purchase price of $250,000.
On May 18, 2016, the Company entered into a Securities Purchase Agreement with an investor for such investor to purchase from the Company 909,901 shares of the Company's common stock for an aggregate purchase price of $1,000,000.
On May 19, 2016, the Company entered into a Securities Purchase Agreement with an investor for such investor to purchase from the Company 181,818 shares of the Company's common stock for an aggregate purchase price of $200,000.
On July 29, 2016, the Company entered into a Securities Purchase Agreement with an investor for such investor to purchase from the Company 136,364 shares of the Company's common stock for an aggregate purchase price of $150,000.
On July 29, 2016, the Company entered into a Securities Purchase Agreement with an investor for such investor to purchase from the Company 272,727 shares of the Company's common stock for an aggregate purchase price of $300,000.
On August 15, 2016, the Company entered into a Securities Purchase Agreement with an investor for such investor to purchase from the Company 49,500 shares of the Company's common stock for an aggregate purchase price of $54,450.
On August 17, 2016, the Company entered into a Securities Purchase Agreement with an investor for such investor to purchase from the Company 1,818,812 shares of the Company's common stock for an aggregate purchase price of $2,000,000.
On September 9, 2016, the Company entered into a Securities Purchase Agreement with an investor for such investor to purchase from the Company 21,818 shares of the Company's common stock for an aggregate purchase price of $24,000.
The Company intends to use the proceeds from these investments for general corporate and working capital purposes. |
Note 10 - Financing From Black Ink Energy LLC |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
Notes | |
Note 10 - Financing From Black Ink Energy LLC | NOTE 10 - FINANCING FROM BLACK INK ENERGY LLC
On March 2, 2015, Summer Energy, LLC (the "Borrower"), a wholly owned subsidiary of Summer Energy Holdings, Inc. ("SEH"), entered into a Second Lien Term Loan Agreement (the "Agreement") with Black Ink Energy, LLC ("BIE"). Pursuant to the Agreement, BIE agreed to provide a term loan (the "Term Loan") to the Borrower, and the Borrower agreed to borrow and repay funds loaned by BIE.
The amount of the Term Loan was Three Million Dollars ($3,000,000), and the loan is not revolving in nature. Pursuant to the Agreement, any amounts prepaid or repaid may not be re-borrowed by the Borrower. The maturity date of the loan was September 2, 2016. The Term Loan bears interest at a rate of 15% per annum, except in the occurrence of an event of default, at which point the default interest rate will be 18%. Interest is payable in arrears on the last day of each month and on the maturity date of the loan. The Term Loan was not evidenced by a promissory note.
Pursuant to the Agreement, the Borrower had the option to prepay the loan amount in whole by providing prior notice to BIE and by paying a pre-payment premium of $300,000. Additionally, the Borrower agreed to pay to BIE a facility fee. The facility fee in the amount of $24,450 was expensed immediately as fees occurred to obtain financial resource.
In connection with the March 2, 2015 Agreement, the Borrower and BIE also entered into a Second Lien Security Agreement (the "Security Agreement"), and SEH and BIE entered into a Second Lien Membership Interest Pledge Agreement (the "Pledge Agreement"). SEH also issued a warrant (the "Warrant") to purchase up to 800,000 shares of SEH's common stock.
The foregoing description of the Term Loan is qualified in its entirety by reference to the Term Loan Agreement, the Security Agreement, the Pledge Agreement and Warrant, which are found as Exhibits 10.1 10.4, respectively, to our Form 8-K filed on March 5, 2015.
The Warrant has a term of ten (10) years, has an exercise price of $1.50 per share, and is subject to adjustment as set forth in the Warrant. The Warrant also contains a cashless or net exercise provision, pursuant to which the holder of the Warrant may elect to convert all or a portion of the Warrant without the payment of additional consideration, byreceiving a net number of shares calculated pursuant to a formula set forth in the Warrant. SEH agreed to reserve 120% of the number of shares issuable upon the exercise of the Warrant so long as the Warrant is exercisable and outstanding. Additionally, SEH agreed to grant to the holder piggyback registration rights.
The Term Loan had a relative fair value of $2,967,535 and the warrant had a relative fair value of $32,465 at the date of issuance determined using the Black-Scholes option-pricing model. The assumptions used to calculate the fair market value are as follows: (i) risk-free interest rate of 0.87% (ii) estimated volatility of 17% (iii) dividend yield of 0.00% and (iv) expected life of the options of five years.
During the nine months ended September 30, 2016, the Company paid interest expense in the amount of $227,500 to BIE.
The Term Loan to BIE in the amount $3,000,000 was paid in full during the second quarter of 2016 and the agreements between the Company and BIE were terminated. |
Note 11 - Financing From Blue Water Capital Funding LLC |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
Notes | |
Note 11 - Financing From Blue Water Capital Funding LLC | NOTE 11 - FINANCING FROM BLUE WATER CAPITAL FUNDING LLC
On June 29, 2016, Summer Energy, LLC (the "Borrower"), a wholly-owned subsidiary of Summer Energy Holdings, Inc. ("SEH"), entered into a Loan Agreement (the "Agreement") with Blue Water Capital Funding, LLC ("Blue Water"). Pursuant to the Agreement, Blue Water agreed to provide a revolving loan (the "Loan") to the Borrower, and the Borrower agreed to borrow and repay funds loaned by Blue Water.
The amount of available credit under the Loan is Five Million Dollars ($5,000,000). The Loan is revolving in nature and is evidenced by a Revolving Promissory Note (the "Note"). The maturity date of the Loan is June 30, 2018. The Loan will bear interest at a rate of 11% per annum, with a minimum monthly financing fee of $22,500 per month. Interest is payable on the tenth day of each month and on the maturity date of the Note. The loan balance as of September 30, 2016 is $2,500,000.
The proceeds of the Loan may be used by the Borrower to repay indebtedness owed to Black Ink Energy, LLC ("Black Ink"), and for other corporate purposes. Simultaneous with the closing of the Loan, Borrower paid off all outstanding debt due and owing to Black Ink and Black Ink's security interest in and to the assets of the Borrower and to SEH's ownership interest in Borrower were terminated. (See Footnote 10)
In connection with the Agreement, the Borrower made certain customary representations and warranties, and agreed that while the Loan amount remains outstanding, it would not take certain actions, including that it will not incur certain debts (as defined in the Agreement); create, assume, or suffer to exist any lien on any property or asset of the Borrower, except those set forth in and allowed by the Agreement; consolidate or merge with any other entity; or sell, lease, or transfer all or substantially all of the assets of the Borrower.
In connection with the Agreement, the Borrower and Blue Water also entered into a Security Agreement (the "Security Agreement"), and SEH executed a Guaranty (the "Guaranty") in favor of Blue Water.
Security Agreement
Pursuant to the Security Agreement, the Borrower granted to Blue Water a second position security interest in and to the Borrower's collateral, as more fully defined in the Security Agreement, and which includes receivables, equipment, inventory, personal property, other intangibles, and proceeds from any of these, to secure the Borrower's payment of its obligations under the Loan. The security interest granted to Blue Water is subordinate to a security interest granted to DTE Energy Trading, Inc. ("DTE") pursuant to a credit agreement between the Borrower and DTE dated April 1, 2014.
During the nine months ended September 30, 2016, the Company paid $71,806 in interest to Blue Water. |
Note 12 - Warrants |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
Notes | |
Note 12 - Warrants | NOTE 12 WARRANTS
The Company has issued warrants to purchase shares of the Company's common stock associated with certain agreements and has vested warrants from a previously terminated Master Marketing Agreement.
As of September 30, 2016, the outstanding number of warrants to purchase the Company's common stock was 1,891,000 of which 1,625,763 were vested. No new warrants were issued or vested during the nine months ended September 30, 2016. |
Note 13 - Wholesale Power Purchase Agreement |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
Notes | |
Note 13 - Wholesale Power Purchase Agreement | NOTE 13 - WHOLESALE POWER PURCHASE AGREEMENT
On April 25, 2014, the Company closed a transaction with DTE Energy Trading, Inc. ("DTE"), with an effective date of April 1, 2014. As part of the transaction, the Company and DTE entered into an Energy Marketing Agreement for Electric Power (the "Energy Marketing Agreement"). Pursuant to the terms of the Energy Marketing Agreement, the Company agreed to purchase its electric power and associated services requirements from DTE, and DTE agreed to provide the Company with certain credit facilities to assist the Company in the purchase of its electric power and associated service requirements. The Company also agreed to pay DTE a fixed monthly fee, as well as certain fees based on megawatt hours purchased. The terms of the Energy Marketing Agreement are governed by the ISDA 2002 Master Agreement, as well as a Schedule and Power
Annex thereto (the "2002 Master Agreement"). In conjunction therewith, the Company and DTE also entered into a Credit Agreement, a Security Agreement and a Membership Interest Pledge Agreement.
Pursuant to the Credit Agreement, among other things DTE agreed to (i) provide a guaranty (a "Credit Guaranty") to the Electric Reliability Council of Texas ("ERCOT") for the benefit of the Company, and (ii) provide commodity loans for the purchase of electricity ("Commodity Loans"). Each Commodity Loan and any Credit Guaranty shall bear interest on the outstanding principal amount thereof, from the date such Commodity Loan or Credit Guaranty is issued until it becomes due or is revoked, respectively, at a rate per annum equal to the Prime Rate (as reported by the Wall Street Journal) plus two percent (2%). The Company covenanted not to, among other things, (a) merge or consolidate with any other person, (b) acquire all or substantially all of the capital stock or property of another person, (c) create, assume or suffer to exist any lien on any property now owned or hereafter acquired by the Company except for permitted liens (as set forth in the Credit Agreement) or (d) become liable for any indebtedness (other than permitted indebtedness, as set forth in the Credit Agreement).
In consideration of the services and credit support provided by DTE to the Company, and pursuant to the Security Agreement, the Company is required to, among other things (i) grant a priority security interest to DTE in all of its assets, equipment and inventory; (ii) require its customers to remit monthly payments into a lockbox account over which DTE has a security interest; and (iii) deliver monthly and annual forecasted and audited statements to DTE.
Pursuant to the Membership Interest Pledge Agreement, the Company pledged to DTE, and granted to DTE a security interest in all of the membership interests of Summer Energy, LLC owned by the Company, as well as all additional membership interests of Summer Energy, LLC from time to time acquired by the Company.
The foregoing description of the transaction with DTE is qualified in its entirety by reference to the transaction documents which are found as Exhibits 10.1 10.6 to our Form 10-Q filed on May 15, 2014. |
Note 14 - Related Party |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
Notes | |
Note 14 - Related Party | NOTE 14 RELATED PARTY
On July 22, 2016, the Company advanced $611,424 to a related party for purposes of short-term financing. Such advances were paid back in full to the Company on August 9, 2016.
As of September 30, 2016, there were no outstanding balances due between the Company and such related party. |
Note 15 - Subsequent Events |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
Notes | |
Note 15 - Subsequent Events | NOTE 15 SUBSEQUENT EVENTS
On October 27, 2016, the Company posted an additional $116,836 cash collateral for the benefit of the Transmissions and Distribution Providers ("TDSPs") that provide transition services to the Company bringing the total cash deposited with the TDSPs to $190,119 and outstanding letters of credit in the amount of $1,188,200 (See Note 5).
On October 13, 2016, the Company granted stock options to purchase up to 100,000 shares of the Company's common stock to a key employee. The options covering a total of 100,000 shares vested immediately on the date of grant. The stock options have an exercise price of $1.10 per share and will expire ten (10) years from the date of grant. The fair value of the options of $174,089 was determined using the Black-Scholes option-pricing model. The assumptions used to calculate the fair market value are as follows: (i) risk-free interest rate of 1.27% (ii) estimated volatility of 171% (iii) dividend yield of 0.00% and (iv) expected life of the options of ten years.
On October 13, 2016, the Company granted stock options to purchase up to 5,000 shares of the Company's common stock to two key employees. The options covering a total of 5,000 shares vest two year after the date of grant. The stock options have an exercise price of $2.50 per share and will expire ten (10) years from the date of grant. The fair value of the options of $8,682 was determined using the Black-Scholes option-pricing model. The assumptions used to calculate the fair market value are as follows: (i) risk-free interest rate of 1.27% (ii) estimated volatility of 171% (iii) dividend yield of 0.00% and (iv) expected life of the options of ten years.
On October 28, the Company granted a total of 45,000 stock options to non-employee members of the Company's Board of Directors under the 2015 Stock Option and Stock Award Plan as compensation for service on the Company's Board. The director stock options were fully vested on the date of grant, have an exercise price of $2.25 per share, will expire ten (10) years from the date of the grant and are estimated to have a fair value of approximately $77,708 on the date of grant determined using the Black-Scholes option-pricing model. The assumptions used to calculate the fair market value are as follows: (i) risk-free interest rate of 1.33% (ii) estimated volatility of 171% (iii) dividend yield of 0.00% and (iv) expected life of the options of ten years. |
Note 3 - Significant Accounting Policies (Policies) |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
Policies | |
Revenue Recognition | Revenue Recognition
Our electricity revenue is recognized by our Company upon delivery of electricity to a customer's meter. This method of revenue recognition is commonly referred to as the flow method. The flow method of revenue relies upon Electric Reliability Council of Texas ("ERCOT") settlement statements to determine the estimated revenue for a given month. Supply delivered to customers for the month, measured on a daily basis, provides the basis for revenues. Electricity revenue consists of proceeds from energy sales, including, pass through charges from the Transmission and Distribution Providers ("TDSPs") billed to the customer at cost. |
Unbilled Revenue and Accounts Receivable | Unbilled Revenue and Accounts Receivable
Electric services not billed by month-end are accrued based upon estimated deliveries to customers as tracked and recorded by ERCOT multiplied by our average billing rate per kilowatt hour ("kWh") in effect at the time. At the end of each calendar month, revenue is accrued to unbilled receivables based on the estimated amount of power delivered to customers using the flow technique. Unbilled revenue also includes accruals for estimated TDSP charges and monthly service charges applicable to the estimated electricity usage for the period. All charges that were physically billed to customers in the calendar month are recorded from the unbilled account to the customer receivable account. Unbilled accounts as of September 30, 2016, were estimated at $13,003,866.
Accounts receivable are customer obligations billed at the customer's monthly meter read date for that period's electricity usage and due within 16 days of the date of the invoice. Balances past due are subject to a late fee that is assessed on that billing.
The Company determines the allowance based upon a review of outstanding receivables, historical write-off experience and existing economic conditions. Receivables past due over 90 days are considered delinquent and reviewed individually for collectability. During the quarter ended September 30, 2016, the Company adjusted the allowance to equal all billed accounts receivables over 90 days plus a percentage for unbilled account receivables based upon the historical collection experience. The change in the estimate to the allowance had an impact to increase net income $261,000 for the quarter and for the nine months ended September 30, 2016 (77% and by 16%, respectively). Management has determined that the allowance for doubtful accounts as of September 30, 2016 at $1,324,715. |
Cost Recognition | Cost Recognition
Direct energy costs are recorded when the electricity is delivered to the customer's meter.
Cost of Goods Sold ("COGS") include electric power purchased and pass through charges from the TDSP's in the areas serviced by the Company. TDSP charges are costs for metering services and maintenance of the electric grid. TDSP charges are established by regulation of the PUCT.
The energy portion of our COGS is comprised of two components: bilateral wholesale costs and balancing/ancillary costs. These two cost components are incurred and recognized differently as follows:
Bilateral wholesale costs are incurred through contractual arrangements with wholesale power suppliers for firm delivery of power at a fixed volume and fixed price. We are invoiced for these wholesale volumes at the end of each calendar month for the volumes purchased for delivery during the month, with payment due 20 days after the end of the month.
Balancing/ancillary costs are based on the customer load and are determined by ERCOT through a multiple step settlement process. Balancing costs/revenues are related to the differential between supply that we provided through our bilateral wholesale supply and the supply required to serve our customer load. The Company endeavors to minimize the amount of balancing/ancillary costs through our load forecasting and forward purchasing programs. |
Note 1 - Organization (Details) |
9 Months Ended |
---|---|
Sep. 30, 2016 | |
Summer Ohio | |
Entity Incorporation, Date of Incorporation | Dec. 16, 2013 |
Summer LLC | |
Entity Incorporation, Date of Incorporation | Apr. 06, 2011 |
Marketing LLC | |
Entity Incorporation, Date of Incorporation | Nov. 06, 2012 |
Note 3 - Significant Accounting Policies: Unbilled Revenue and Accounts Receivable (Details) |
3 Months Ended | 9 Months Ended |
---|---|---|
Sep. 30, 2016
USD ($)
|
Sep. 30, 2016
USD ($)
|
|
Details | ||
Unbilled accounts | $ 13,003,866 | $ 13,003,866 |
Increase in Net Income | $ 261,000 | $ 261,000 |
Rate of Increase in Net Income | 77.00% | 16.00% |
Allowance for Doubtful Accounts Receivable | $ 1,324,715 | $ 1,324,715 |
Note 4 - Series B Preferred Shares (Details) - USD ($) |
9 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Dividends on Series B preferred stock | $ 86,795 | $ 143,606 |
Preferred Stock | Preferred Class B | ||
Preferred Stock Conversion Price | $ 1.00 | |
Conversion of Stock, Description | On June 24, 2016, the Series B Stockholders affirmatively elected to convert all outstanding Series B Shares into shares of Common Stock. | |
Dividends on Series B preferred stock | $ 109,940 | |
Dividends, Preferred Stock, Cash | 86,795 | |
Common Stock | ||
Dividends, Preferred Stock, Stock | $ 23,145 |
Note 5 - Letters of Credit (Details) - Letter of Credit |
9 Months Ended |
---|---|
Sep. 30, 2016
USD ($)
| |
Line of Credit Facility, Maximum Borrowing Capacity | $ 1,188,200 |
Line of Credit Facility, Description | The nine letters of credit renewed during the third quarter of 2016 and are subject to automatic extension and renewal provisions until the third quarter of 2017. |
Letters of Credit Outstanding, Amount | $ 0 |
Note 6 - Advance To Loan Amount Note (Details) - USD ($) |
3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
---|---|---|---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
Dec. 31, 2014 |
Feb. 22, 2015 |
Apr. 18, 2014 |
|
Financing costs | $ 22,486 | $ 234,884 | $ 555,473 | $ 749,445 | |||
Common Stock | |||||||
Shares to be issued to Guarantors per month | 120,000 | ||||||
Shares to be issued to each Guarantor per month | 30,000 | ||||||
Advance to Loan Amount Note | |||||||
Debt Instrument, Face Amount | $ 1,700,000 | $ 1,500,000 | |||||
Debt Instrument, Maturity Date | Feb. 22, 2015 | ||||||
Debt Instrument, Interest Rate Terms | The 'Prime Referenced Rate' means, for any day, a per annum interest rate which is equal to the 'Prime Rate' in effect on such day, but in no event and at no time shall the 'Prime Reference Rate' be less than the sum of the Daily Adjusting LIBOR Rate for such day plus two and one-half percent (2.5%) per annum. 'Prime Rate' means the per annum rate established by Comerica Bank as its prime rate for its borrowers at any such time. 'Applicable Margin' means 2% per annum. | ||||||
Financing costs | $ 532,987 | ||||||
Advance to Loan Amount Note | Common Stock | |||||||
Stock issued to guarantors | 482,158 |
Note 7 - 2012 Stock Option and Stock Award Plan (Details) - 2012 Stock Option and Stock Award Plan |
9 Months Ended |
---|---|
Sep. 30, 2016
USD ($)
$ / shares
shares
| |
Options, Outstanding, Number | 783,000 |
Number of Shares Available for Grant | 2,000 |
Stock Compensation Expense | $ | $ 922 |
Employee Stock Option | August 3, 2016 | |
Shares issued | 2,500 |
Deferred Compensation Arrangement with Individual, Requisite Service Period | 1 year |
Exercise price | $ / shares | $ 2.00 |
Maximum contractual term | 10 years |
Fair value of shares issued | $ | $ 5,344 |
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Method Used | Black-Scholes option-pricing model |
Risk-free interest rate | 1.07% |
Estimated volatility | 172.00% |
Dividend yield | 0.00% |
Expected life of the options | 10 years |
Note 10 - Financing From Black Ink Energy LLC (Details) - USD ($) |
3 Months Ended | 9 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
Sep. 30, 2016 |
Sep. 30, 2015 |
Dec. 31, 2015 |
Mar. 02, 2015 |
|
Interest expense, net | $ 114,888 | $ 159,322 | $ 424,346 | $ 457,010 | ||
Black Ink Energy, LLC | Second Lien Term Loan Agreement | ||||||
Debt Instrument, Face Amount | $ 3,000,000 | |||||
Debt Instrument, Maturity Date | Sep. 02, 2016 | |||||
Debt Instrument, Interest Rate, Stated Percentage | 15.00% | |||||
Description of Terms in Event of Debt Default | except in the occurrence of an event of default, at which point the default interest rate will be 18%. | |||||
Prepayment terms | Pursuant to the Agreement, the Borrower had the option to prepay the loan amount in whole by providing prior notice to BIE and by paying a pre-payment premium of $300,000. | |||||
Facility Fee | $ 24,450 | |||||
Warrant, Outstanding | 800,000 | 800,000 | ||||
Warrant term | 10 years | |||||
Exercise price | $ 1.50 | $ 1.50 | ||||
Financial and Nonfinancial Liabilities, Fair Value Disclosure | $ 2,967,535 | $ 2,967,535 | ||||
Fair Value Measurements, Valuation Techniques | Black-Scholes option-pricing model | |||||
Risk-free interest rate | 0.87% | |||||
Estimated volatility | 17.00% | |||||
Dividend yield | 0.00% | |||||
Expected life of the options | 5 years | |||||
Interest expense, net | $ 227,500 | |||||
Payment of Loans | 3,000,000 | |||||
Black Ink Energy, LLC | Second Lien Term Loan Agreement | Warrant | ||||||
Shareholders' Equity, Fair Value Disclosure | $ 32,465 | $ 32,465 |
Note 11 - Financing From Blue Water Capital Funding LLC (Details) - USD ($) |
9 Months Ended | |
---|---|---|
Sep. 30, 2016 |
Sep. 30, 2015 |
|
Long-term debt, net of debt discount | $ 2,500,000 | |
Interest paid, net | 424,551 | $ 457,073 |
Blue Water Capital Funding | ||
Debt Instrument, Face Amount | $ 5,000,000 | |
Debt Instrument, Maturity Date | Jun. 30, 2018 | |
Debt Instrument, Interest Rate, Stated Percentage | 11.00% | |
Financing fee | $ 22,500 | |
Long-term debt, net of debt discount | 2,500,000 | |
Interest paid, net | $ 71,806 |
Note 12 - Warrants (Details) |
Sep. 30, 2016
shares
|
---|---|
Details | |
Warrants, Outstanding, Ending Balance | 1,891,000 |
Warrants, Exercisable | 1,625,763 |
Note 14 - Related Party (Details) |
9 Months Ended |
---|---|
Sep. 30, 2016
USD ($)
| |
Details | |
Amount advanced to a related party that was later paid back in full | $ 611,424 |
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