UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
For the quarterly period ended
Or
For the transition period from ___________ to ___________
Commission file number:
| (Exact name of registrant as specified in charter) |
| (State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) | |
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|
||
| (Address of principal executive office) | (Zip Code) |
| +1 |
| (Registrant’s telephone number, including area code) |
Securities registered pursuant to Section 12(b) of the Act: None
Common Stock, par value $0.001 per share
(Title of Class)
Indicate
by checkmark whether the registrant has (1) 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.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data
File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§229.405 of this chapter) during the preceding 12
months (or for such shorter period that the registrant was required to submit and post such files).
Indicate by checkmark 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 the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ | |
| ☐ | Smaller reporting company | |||
| 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 standard 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 Act). Yes ☐
At August 15, 2023 there were shares of the registrant’s Common Stock issued and outstanding.
TABLE OF CONTENTS
| PART I. | FINANCIAL INFORMATION | 2 | ||
| Item 1. | Financial Statements | 2 | ||
| Balance Sheets at June 30, 2023 and December 31, 2022 | 2 | |||
| Statements of Operations for the three and six months ended June 30, 2023 and 2022 | 3 | |||
| Statements of Stockholders’ Equity for the three and six months ended June 30, 2023 and 2022 | 4 | |||
| Statements of Cash Flows for the six months ended June 30, 2023 and 2022 | 5 | |||
| Notes to Financial Statements | 6 | |||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 17 | ||
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 20 | ||
| Item 4. | Controls and Procedures | 20 | ||
| PART II. | OTHER INFORMATION | 21 | ||
| Item 1. | Legal Proceedings | 21 | ||
| Item 1A. | Risk Factors | 21 | ||
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 21 | ||
| Item 3. | Defaults Upon Senior Securities | 23 | ||
| Item 4. | Mine Safety Disclosures | 23 | ||
| Item 5. | Other Information | 23 | ||
| Item 6. | Exhibits | 23 | ||
| SIGNATURES | 24 | |||
| 1 |
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
CYBER ENVIRO-TECH, INC.
BALANCE SHEETS
| June 30, 2023 (Unaudited) | December 31, 2022 | |||||||
| ASSETS | ||||||||
| Current Assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Texas Railroad Commission bond | ||||||||
| Acquired intangible assets | ||||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued interest | ||||||||
| Contingent liability | ||||||||
| Note payable – related party | ||||||||
| Note payable, current maturities, net of discount of $ | ||||||||
| Convertible notes payable, net of discount of $ | ||||||||
| Convertible notes payable – related parties | ||||||||
| Total current liabilities | ||||||||
| Note payable, less current maturities, net of discount of $ | ||||||||
| Derivative liability | ||||||||
| Convertible notes payable, less current maturities | ||||||||
| Total Liabilities | ||||||||
| Commitments and contingencies (Note 4) | ||||||||
| Stockholders’ Equity: | ||||||||
| Series A Convertible Preferred Stock, par value $, shares authorized; share issued and outstanding | ||||||||
| Series B Convertible Preferred Stock, par value $, shares authorized; share issued and outstanding | ||||||||
| Series C Non-convertible, Preferred Stock, par value $, shares authorized; shares issued and outstanding | ||||||||
| Special 2020 Series A Preferred Stock, par value $, share authorized; share issued and outstanding | ||||||||
| Common Stock, par value $, shares authorized; and shares issued and outstanding, respectively | ||||||||
| Additional paid-in capital | ||||||||
| Common stock to be issued | ||||||||
| Unearned stock compensation | ( | ) | ( | ) | ||||
| Treasury stock, at cost | ( | ) | ( | ) | ||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Total Stockholders’ Equity | ||||||||
| Total Liabilities and Stockholders’ Equity | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited financial statements
| 2 |
CYBER ENVIRO-TECH, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
| Three Months Ending | Three Months Ending | Six Months Ending | Six Months Ending | |||||||||||||
| June 30, 2023 | June 30, 2022 | June 30, 2023 | June 30, 2022 | |||||||||||||
| Operating Expenses: | ||||||||||||||||
| Professional fees | $ | $ | $ | $ | ||||||||||||
| General and administrative | ||||||||||||||||
| Consulting | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other Income (Expense): | ||||||||||||||||
| Change in fair value of derivatives | ( | ) | ||||||||||||||
| Loss on issuance of derivatives | ( | ) | ( | ) | ||||||||||||
| Loss on sale of asset | ( | ) | ||||||||||||||
| Gain on extinguishment of debt | ||||||||||||||||
| Change in fair value of contingent liability | ( | ) | ||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total other income (expense) | ( | ) | ( | ) | ( | ) | ||||||||||
| Net Income (Loss) | $ | ( | ) | $ | ( | )) | $ | ( | ) | $ | ||||||
| Loss per share, basic and diluted | $ | ) | $ | ) | $ | ) | $ | |||||||||
| Weighted average shares outstanding, basic and diluted | ||||||||||||||||
The accompanying notes are an integral part of these unaudited financial statements
| 3 |
| CYBER ENVIRO-TECH, INC. |
| STATEMENTS OF STOCKHOLDERS’ EQUITY |
(Unaudited)
| Special 2020 Series A Preferred | Series A Preferred | Series B Preferred | Series C Preferred | Common Stock | APIC | Treasury Stock | CS to be Issued | Unearned Stock Comp | Accum Deficit | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Description | Shares | Amt | Shares | Amt | Shares | Amt | Shares | Amt | Shares | Amt | Shares | Amt | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2021 | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued from prior periods | — | — | — | — | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued for cash | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued for conversion of Advance on joint venture | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued for services | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued in connection with convertible notes payable | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued for conversion of notes payable | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net Income | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2022 | $ | $ | ($ | ) | ($ | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Book adjustments - rounding and fractional shs | — | — | — | — | — | ( | ) | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued from prior periods | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued for cash | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued for conversion of Advance on joint venture | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Options granted for services | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued for services | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued in connection with convertible notes payable | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued for conversion of notes payable | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net Income | — | — | — | — | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, June 30, 2022 | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2022 | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued from prior periods | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued for cash | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued for conversion of Advance on joint venture | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Options granted for services | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued for services | — | — | — | — | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued in connection with convertible notes payable | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued for conversion of notes payable | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, March 31, 2023 | $ | $ | $ | $ | $ | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock issued from prior periods | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued for cash | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued for conversion of Advance on joint venture | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Options granted for services | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued for services | — | — | — | — | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued in connection with convertible notes payable | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Shares issued for conversion of notes payable | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | — | — | — | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance, June 30, 2023 | $ | $ | ( | ) | $ | $ | ( | ) | $ | ( | ) | $ | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these unaudited financial statements
| 4 |
CYBER ENVIRO-TECH, INC.
STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022
(Unaudited)
| June 30, 2023 | June 30, 2022 | |||||||
| Cash flow from operating activities: | ||||||||
| Net Income (loss) | $ | ( |
) | $ | ||||
| Adjustments to reconcile net income (loss) to net cash from operating activities: | ||||||||
| Change in fair value of derivatives | ( | ) | ||||||
| Loss on sale of property and equipment | ||||||||
| Loss on issuance of derivatives | ||||||||
| Options issued for services | ||||||||
| Gain on extinguishment of debt | ( | ) | ||||||
| Change in fair value of contingent liability | ( |
) | ||||||
| Stock compensation | ||||||||
| Amortization of debt discount | ||||||||
| Depreciation and amortization expense | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses and other current assets | ( |
) | ( | ) | ||||
| Accounts payable | ( |
) | ||||||
| Accrued interest | ||||||||
| Net cash from operating activities | ( |
) | ( | ) | ||||
| Cash flows from investing activities: | ||||||||
| Proceeds from sale of property and equipment | ||||||||
| Purchase of property and equipment | ( |
) | ( | ) | ||||
| Acquisition of licenses from KAM Biotechnology, Ltd. | ( |
|||||||
| Net cash from investing activities | ( |
) | ( | ) | ||||
| Cash flows from financing activities: | ||||||||
| Repayment of convertible notes payable | ( |
) | ||||||
| Proceeds from convertible notes payable | ||||||||
| Proceeds from notes payable | ||||||||
| Repayment of notes payable – related party | ( |
) | ||||||
| Proceeds from the sale of common stock | ||||||||
| Net cash from financing activities | ||||||||
Net change in cash and cash equivalents | ( |
) | ( | ) | ||||
| Cash and cash equivalents at beginning of year | ||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||
| Cash paid during the period for: | ||||||||
| Interest | $ | $ | ||||||
| Income taxes | $ | $ | ||||||
| Non-cash investing and financing activities: | ||||||||
| Stock issued for conversion of advance on joint venture | $ | $ | ||||||
| Note payable conversion | $ | $ | ||||||
| Convertible note payable converted | ||||||||
| Stock issued for conversion of convertible notes payable and accrued interest | $ | $ | ||||||
$
The accompanying notes are an integral part of these unaudited financial statements.
| 5 |
CYBER ENVIRO-TECH, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS
Cyber Enviro-Tech, Inc. (the “Company”) is a publicly held water science technology company that designs water purification solutions for commercial applications and industries. Its pilot project is on a 479-acre oil field in West Texas called the Alvey Oil Field. The corporate headquarters are located in Scottsdale, Arizona.
On September 3, 2020, Synergy Management Group, LLC
(“Synergy”) and Global Environmental Technologies, Inc (“Global”), which was formed on April 20, 2020, entered
into a securities purchase agreement, whereby Synergy sold its share of Special 2020 Series A preferred stock and its one-half share of
Series C preferred stock to Global for $
Effective April 30, 2021, the Company effectuated a twenty to one reverse stock split. All shares throughout these financial statements have been adjusted to reflect the reverse split.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
Use of estimates
The preparation of financial statements in conformity with U.S. 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 and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Revenue recognition
The Company recognizes revenue in accordance with Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers,” (“Topic 606”). Revenue is recognized when a customer obtains control of promised goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amount of revenue that is recorded reflects the consideration that the Company expects to receive in exchange for those goods. The Company applies the following five-step model in order to determine this amount: (i) identification of the promised goods in the contract; (ii) determination of whether the promised goods are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.
The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. Once a contract is determined to be within the scope of Topic 606 at contract inception, the Company reviews the contract to determine which performance obligations the Company must deliver and which of these performance obligations are distinct. The Company expects to recognize revenues as the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied.
The Company recognizes sales when oil is picked up by the delivery company and control passes to the customer.
Cash equivalents
The Company considers all highly liquid investments
with a maturity of three months or less when purchased to be cash equivalents. There were
Property and Equipment
Property and equipment is recorded at cost. Cost of improvements that substantially extend the useful lives of the assets are capitalized. Maintenance and repair costs are expensed when incurred. When other property and equipment is sold or retired, the capitalized costs and related accumulated depreciation are removed from their respective accounts.
| 6 |
Asset Retirement Obligations
To cover the estimated future asset retirement obligations
("ARO") related to its oil and gas properties, the Company maintains a $
The Company believes the bond should cover the estimated liability for abandoning wells. Revisions to the liability could occur due to changes in estimated abandonment costs, changes in well economic lives, or if federal or state regulators enact new requirements regarding the abandonment of wells.
Impairment of Long-Lived Assets
In accordance with authoritative guidance on accounting for the impairment or disposal of long-lived assets, as set forth in Topic 360 of the Accounting Standards Codification (“ASC”), the Company assesses the recoverability of the carrying value of its non-oil and gas long-lived assets when events occur that indicate an impairment in value may exist. An impairment loss is indicated if the sum of the expected undiscounted future net cash flows is less than the carrying amount of the assets. If this occurs, an impairment loss is recognized for the amount by which the carrying amount of the assets exceeds the estimated fair value of the assets.
Intangible Assets
The Company recognizes intangible assets in accordance with ASC 350. Intangible assets are defined as identifiable non-monetary assets without physical substance, acquired through purchase, internally generated, or acquired as part of a business combination, which provide future economic benefits and are under the control of the Company.
Intangible assets with finite useful lives are amortized
over their estimated useful lives on a straight-line basis, unless another systematic and rational method better represents the consumption
of the economic benefits. Intangible assets with indefinite useful lives are not amortized but are tested for impairment annually or more
frequently if there are indications of impairment. The intangible assets consists of exclusive licenses obtained by the Company from KAM
Biotechnology Ltd (“KAM”) in May 2023 and the agreement has a term of ten years. Payments from the Company to KAM occur over
a 22-month period of time with no interest. As such, the asset is started at the net discounted amount of $758,501 less amortization in
May and June of a total of $
The Company reviews intangible assets for indicators of impairment at least annually, or whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss is recognized if the carrying amount of the asset exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and its value in use. Any impairment loss is recognized in the income statement. Upon impairment, the carrying amount of the intangible asset is reduced to its recoverable amount. The impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the asset and then to the remaining balance of the asset. The impairment loss is recognized as an expense in the income statement, unless the asset had previously been revalued, in which case the loss is recognized against any revaluation surplus.
Oil and Gas Producing Activities
The Company uses the successful efforts method of
accounting for oil and gas activities. Under this method, the costs of productive exploratory wells, all development wells, related asset
retirement obligation assets, and productive leases are capitalized and amortized, principally by field, on a units-of-production basis
over the life of the remaining proved reserves. Exploration costs, including personnel costs, geological and geophysical expenses, and
delay rentals for oil and gas leases are charged to expense as incurred. Exploratory drilling costs are initially capitalized, but charged
to expense if and when the well is determined not to have found reserves in commercial quantities. The sale of a partial interest in a
proved property is accounted for as a cost recovery, and no gain or loss is recognized as long as this treatment does not significantly
affect the units-of-production amortization rate. A gain or loss is recognized for all other sales of producing properties. There were
capitalized costs of $
Unproved oil and gas properties are assessed annually
to determine whether they have been impaired by the drilling of dry holes on or near the related acreage or other circumstances, which
may indicate a decline in value. When impairment occurs, a loss is recognized. When leases for unproved properties expire, the costs thereof,
net of any related allowance for impairment, is removed from the accounts and charged to expense. During the six months ended June 30,
2023 and 2022, there was
Costs associated with development wells that are unevaluated
or are waiting on access to transportation or processing facilities are reclassified into developmental wells-in-progress ("WIP").
These costs are not put into a depletable field basis until the wells are fully evaluated or access is gained to transportation and processing
facilities. Costs associated with WIP are included in the cash flows from investing as part of investment in oil and gas properties. At
June 30, 2023 and December 31, 2022,
Depreciation, depletion and amortization of proved
oil and gas properties is calculated using the units-of- production method based on proved reserves and estimated salvage values. During
the six months ended June 30, 2023 and 2022, the Company recorded
The Company reviews its proved oil and natural gas
properties for impairment whenever events and circumstances indicate that a decline in the recoverability of its carrying value may have
occurred. It estimates the undiscounted future net cash flows of its oil and natural gas properties and compares such undiscounted future
cash flows to the carrying amount of the oil and natural gas properties to determine if the carrying amount is recoverable. If the carrying
amount exceeds the estimated undiscounted future cash flows, the Company will adjust the carrying amount of the oil and natural gas properties
to fair value. During the six months ended June 30, 2023 and 2022, there was
| 7 |
The Company applies
the fair value method of Financial Accounting Standards Board (“FASB”) ASC 718, “Share Based Payment”, in accounting
for its stock-based compensation. This standard states that compensation cost is measured at the grant date based on the fair value of
the award and is recognized over the service period, which is usually the vesting period. The Company values stock-based compensation
at the market price for the Company’s common stock and other pertinent factors at the grant date. During the six months ended June
30, 2023 and 2022, the Company recorded $876,063 and $,794 in
stock-based compensation expense, respectively. In addition, the Company recorded unearned stock compensation of $
Fair Value of Financial Instruments
The Company adopted ASC 820, “Fair Value Measurements.” ASC 820 clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:
| Level 1: | Quoted market prices available in active markets for identical assets or liabilities as of the reporting date. |
| Level 2: | Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. |
| Level 3: | Pricing inputs that are generally unobservable inputs and not corroborated by market data. |
The carrying amount of the Company’s financial assets and liabilities, such as cash, prepaid expenses and accrued expenses approximate their fair value because of the short maturity of those instruments. The Company’s notes payable approximates the fair value of such instruments as the notes bear interest rates that are consistent with current market rates.
The Company evaluates convertible instruments, options, warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for under ASC 815, “Derivatives and Hedging”. The result of this accounting treatment is that the fair value of the derivative is marked to market each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as other income (expense). Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. Equity instruments that are initially classified as equity that become subject to reclassification under ASC 815 are reclassified to liabilities at the fair value of the instrument on the reclassification date.
The following table classifies the Company’s liability measured at fair value on a recurring basis into the fair value hierarchy as of June 30, 2023. . There were no fair value instruments as of December 31, 2022:
| Description | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Derivative | $ | $ | $ | $ | ||||||||||||
| Total | $ | $ | $ | $ | ||||||||||||
Income taxes
Income states are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss, capital loss and tax credit carryforwards. Deferred tax assets and liabilities are measures using enacted tax rates expected to apply to the taxable income in the years in which those temporary differences are expect to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest and penalties related to unrecognized tax benefits as a component of general and administrative expenses. The Company’s federal tax return and any state tax returns are not currently under examination.
| 8 |
The Company has adopted ASC 740, “Accounting for Income Taxes,” which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed annually from differences between the financial statement and tax basis of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.
The Company computes loss per common share in accordance with ASC 260, “Earnings Per Share”, which requires dual presentation of basic and diluted earnings per share. Basic income or loss per common share is computed by dividing net income or loss by the weighted average number of common shares outstanding during the period. Diluted income or loss per common share is computed by dividing net income or loss by the weighted average number of common shares outstanding, plus the issuance of common shares, if dilutive, that could result from the exercise of outstanding stock options and warrants.
Concentration of credit risks
The Company maintains accounts with financial institutions. All cash in checking accounts is non-interest bearing and is fully secured by the Federal Deposit Insurance Corporation (FDIC). At times, cash balances may exceed the maximum coverage provided by the FDIC on insured depositor accounts. The Company believes it mitigates its risk by depositing its cash and cash equivalents with major financial institutions.
Recently issued accounting pronouncements
The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
NOTE 3 – GOING CONCERN
The Company’s financial statements have been prepared on a going concern basis, which assumes that the Company will be able to realize its assets and discharge its liabilities and commitments in the normal course of business for the foreseeable future. The Company has just begun generating revenue and does not yet have sufficient revenue to cover its operating expenses. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern is dependent upon generating profitable operations in the future and/or to obtain the necessary financing to meet the Company’s obligations and repay its liabilities arising from normal business operations when they come due. Management intends to finance operating costs over the next twelve months with increased revenue and private placement loans or institutional investors. While the Company believes that it will be successful in obtaining the necessary financing and generating revenue to fund the Company’s operations, meet regulatory requirements and achieve commercial goals, there are no assurances that such additional funding will be achieved and that the Company will succeed in its future operations.
The financial statements of the Company do not include any adjustments that may result from the outcome of these uncertainties.
NOTE 4 – COMMITMENTS AND CONTINGENCIES
During the normal course of business, the Company may be exposed to litigation. When the Company becomes aware of potential litigation, it evaluates the merits of the case in accordance with ASC 450, Contingencies. The Company evaluates its exposure to the matter, possible legal or settlement strategies and the likelihood of an unfavorable outcome. If the Company determines that an unfavorable outcome is probable and can be reasonably estimated, it establishes the necessary accruals. As of June 30, 2023 and December 31, 2022, the Company is not aware of any contingent liabilities related to potential litigation that should be reflected in the financial statements.
In February 2021, the Company entered into an agreement
to operate the wells on the Alvey Oil Field. Under this agreement, the Company owes a contingent amount based upon a
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NOTE 5 – PROPERTY AND EQUIPMENT
As of June 30, 2023 and December 31, 2022, property and equipment consisted of the following:
| June 30, 2023 | December 31, 2022 | Useful Lives | ||||||||
| Equipment | $ | $ | ||||||||
| Vehicles | ||||||||||
| Well development costs | * | |||||||||
| Less accumulated depreciation | ( | ) | ( | ) | — | |||||
| Property and equipment, net | $ | $ | — | |||||||
| * | Once full production begins, “Well development costs” will be depreciated using the units-of-production method based on barrels of oil produced. As of June 30, 2023, a minimal amount of oil has been produced and work is ongoing to determine how to determine how to get regular production from the field. |
Depreciation expense for the three months ended
June 30, 2023 and 2022 was $
NOTE 6 – DEBT
| June 30, 2023 | December 31, 2022 | |||||||
| Note payable | $ | $ | ||||||
| Note payable – related party | ||||||||
| Convertible notes payable | ||||||||
| Convertible notes payable – related party | ||||||||
| Debt discount | ( | ) | ( | ) | ||||
| Less current portion | ||||||||
| Long term portion | $ | $ | ||||||
The following is a schedule of debt maturity and the years in which the debt is scheduled to mature:
| Year | Amount | |||||
| 2023 | ||||||
| 2024 | ||||||
| 2025 | ||||||
| $ | ||||||
Notes payable
In February 2021, the Company purchased certain oil
and gas production equipment in the Alvey Oil Field. The total purchase price was $
At December 31, 2022, the Company had a note payable
to a shareholder for $
At December 31, 2022, the Company had a note payable
to a related party for $
At June 30, 2022, the Company had a note payable
for $
In May 2023, the Company acquired certain intellectual
property rights from KAM Biotechnology. The total acquisition price was $
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Convertible notes payable
In 2020, the Company executed a convertible note payable
with a related party for $
During the year ended December 31, 2021, the Company
received $
During the year ended December 31, 2022,
the Company received $
During the year ended December 31, 2022, the Company converted
$
During the first six months of 2023, the Company raised
a net of another $
NOTE 7 – DERIVATIVE FINANCIAL INSTRUMENTS
Embedded derivatives
The Company’s convertible promissory notes gave rise to derivative financial instruments. The notes embodied certain terms and conditions that were not clearly and closely related to the host debt agreement in terms of economic risks and characteristics. These terms and features consist of the embedded conversion option.
The following tables summarize the components of the Company’s derivative liabilities and linked common shares as of June 30, 2023 and the amounts that were reflected in income related to derivatives for the period ended:
| June 30, 2023 | ||||||||
| The financings giving rise to derivative financial instruments | Indexed Shares | Fair Values | ||||||
| Embedded derivatives | $ | |||||||
| Total | $ | |||||||
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There were no fair value instruments as of December 31, 2022.
The following table summarizes the effects on the Company’s gain (loss) associated with changes in the fair values of the derivative financial instruments by type of financing for the three and six months ended June 30, 2023 and 2022:
| For the Three months Ended | ||||||||
| June 30, 2023 | June 30, 2022 | |||||||
| Embedded derivatives | $ | ( | ) | $ | ||||
| Loss on issuance of derivative | ||||||||
| Total gain (loss) | $ | ( | ) | $ | ||||
| For the Six months Ended | ||||||||
| June 30, 2023 | June 30, 2022 | |||||||
| Embedded derivatives | $ | $ | ||||||
| Loss on issuance of derivative | ( | ) | ||||||
| Total gain (loss) | $ | ( | ) | $ | ||||
Current accounting principles that are provided in ASC 815 - Derivatives and Hedging require derivative financial instruments to be classified in liabilities and carried at fair value with changes recorded in income. The Company has selected the Monte Carlo Simulation Model, which approximates the Monte Carlo Simulations, valuation technique to fair value the embedded derivative because it believes that this technique is reflective of all significant assumption types, and ranges of assumption inputs, that market participants would likely consider in transactions involving embedded derivatives. Such assumptions include, among other inputs, interest risk assumptions, credit risk assumptions and redemption behaviors in addition to traditional inputs for option models such as market trading volatility and risk-free rates. The Binomial Lattice Model technique is a level three valuation technique because it requires the development of significant internal assumptions in addition to observable market indicators. For instruments in which the time to expiration has expired, the Company has utilized the intrinsic value as the fair value. The intrinsic value is the difference between the quoted market price on the valuation date and the applicable conversion price.
Significant inputs and results arising from the Monte Carlo Simulation process are as follows for the embedded derivatives that have been bifurcated from the convertible notes and classified in liabilities:
| Inception Date | June 30, 2023 | |||||||
| Quoted market price on valuation date | $ | $ | ||||||
| Effective contractual conversion rates | $ | $ | ||||||
| Contractual term to maturity | ||||||||
| Market volatility: | ||||||||
| Volatility | %- | % | %- | % | ||||
| Risk-adjusted interest rate | % | % | ||||||
The following table reflects the issuances of embedded derivatives and changes in fair value inputs and assumptions related to the embedded derivatives as of June 30, 2023 and December 31, 2022.
Six months Ended June 30, 2023 | Year Ended December 31, 2022 | |||||||
| Balances at beginning of period | $ | $ | ||||||
| Issuances: | ||||||||
| Embedded derivatives | ||||||||
| Conversions | ( | ) | ||||||
| Changes in fair value inputs and assumptions reflected in income | ( | ) | ||||||
| Balances at end of period | $ | $ | ||||||
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| 12 |
NOTE 8 – RELATED PARTY TRANSACTIONS
At June 30, 2023 and December 31, 2022, the Company
had a convertible note payable for $
At December 31, 2022, the Company had a note payable
of $
During the periods ended June 30, 2023 and December
31, 2022, the Company paid various related parties for consulting services in the amounts of $
NOTE 9 – PREFERRED STOCK
Series A Convertible Preferred Stock
The Company previously designated shares of
Preferred Stock as Series A Convertible Preferred Stock and had issued shares.
Series B Convertible Preferred Stock
The Company previously designated
shares of Preferred Stock as Series B Convertible Preferred Stock and had issued
shares.
Series C Non-Convertible Preferred Stock
The Company previously designated shares of
Preferred Stock as Series C Non-Convertible Preferred Stock and had issued all shares.
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Special 2020 Series A Preferred
The Company has one share of preferred stock designated
as Special 2020 Series A Preferred, par value $. The holder for the Special 2020 Series A Preferred shall vote with the holders
of both preferred and common stockholders as a single class. The holder is entitled to 60% of all votes. The one share of Series A is
convertible into shares of common stock at any time and is not entitled to dividends. The Company purchased that one series
A preferred share for $
NOTE 10 – STOCK OPTIONS
In connection with
a consulting agreement dated March 7, 2022, the Company issued options
at an exercise price of $
As of June 30, 2023 and December 31, 2022, there are options outstanding, of which and are exercisable as of June 30, 2023 and December 31, 2022, respectively. The weighted average remaining term is years and years for the periods ending June 30, 2023 and December 31, 2022, respectively.
Significant inputs and results arising from the Black-Scholes process are as follows for the options:
| Quoted market price on valuation date | $ | |||
| Exercise price | $ | |||
| Range of expected term | Years – Years | |||
| Range of equivalent volatility | % - % | |||
| Range of interest rates | % - % | |||
NOTE 11 – INCOME TAXES
Deferred taxes are provided on a liability method
whereby deferred tax assets are recognized for deductible temporary differences and operating loss, and tax credit carryforwards and deferred
tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts
of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management,
it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities
are adjusted for the effects of changes in tax laws and rates on the date of enactment. The U.S. federal income tax rate of
Income taxes consist of the following components as of:
| June 30, 2023 | June 30, 2022 | |||||||
| Federal income tax benefit attributable to: | ||||||||
| Current Operations | $ | $ | ||||||
| Less: Valuation Allowance | ( | ) | ( | ) | ||||
| Net provision for Federal income taxes | $ | $ | ||||||
The income tax provision differs from the amount of income tax determined by applying the U.S. federal income tax rate to pretax income from continuing operations for the periods ended June 30, 2023 and December 31, 2022, due to the following:
| June 30, 2023 | December 31, 2022 | |||||||
| Deferred tax asset attributable to: | ||||||||
| Net operating loss carryover | $ | $ | ||||||
| Less: Valuation allowance | ( | ) | ( | ) | ||||
| Net deferred tax asset | $ | $ | ||||||
| 14 |
At June 30, 2023, the Company had net operating loss
carry forwards of $
Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards for Federal Income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carry forwards may be limited as to use in future years.
NOTE 12 – SUBSEQUENT EVENTS
The following are subsequent events that the Company considers may be material:
| · | New convertible debentures
were issued to investors between June 30, 2023 to August 14, 2023 totaling $ |
| · | Series “A” Convertible Preferred Stock terms were modified and the following was approved by the Board of Directors in March 2023. The terms of the stock were modified as follows: |
| • |
| • |
| • | As of August 14, 2023, this conversion of common into Series “A” Convertible Preferred Stock has not formerly been filed with the Secretary of State for Wyoming. Once that is completed, the financial statements will reflect this change. |
| · | The convertible note for $ |
NOTE 13 – SUPPLEMENTAL OIL AND GAS DISCLOSURES (UNAUDITED)
In accordance with ASC 932, Extractive Activities- Oil and Gas, the Company is required to provide additional information regarding its oil and gas producing activities when those activities are deemed to be significant. According to ASC 932, significance is defined as satisfying one or more of the following criteria: the revenues from oil and gas are 10% or more of total revenues; the operating income (loss) from oil and gas are 10% or more of total income (loss) from operations; the identifiable assets of oil and gas are 10% or more of total assets. In 2023 and 2022, the Company’s oil and gas activities were deemed to be significant since the operating loss from oil and gas is 10% or more of total loss from operations. In addition, there were no oil sales for the six months ended June 30, 2023 and 2022.
Oil and Gas Reserves
There are several factors that need to be considered in estimating quantities of proved crude oil and natural gas reserves. Crude oil and natural gas reserve engineering is a subjective process of estimating underground accumulations of crude oil and natural gas that cannot be precisely measured. The accuracy of any reserve estimate is a function of the quality of available data and of engineering and geological interpretation and judgment. Results of drilling, testing and production subsequent to the date of the estimate may justify revision of such estimate. Accordingly, reserves estimates are often different from the quantities of crude oil and natural gas that are ultimately recovered.
Proved oil and gas reserves are those quantities of oil and gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible – from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations – prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation. The project to extract the hydrocarbons must have commenced or the operator must be reasonably certain that it will commence the project within a reasonable time.
Existing economic conditions include prices and costs
at which economic productivity from a reservoir is to be determined. The price shall be the average price during the 12-month period prior
to the ending date of the period covered by the report, determined as an unweighted arithmetic average of the first-day-of-the-month price
for each month within such period, unless prices are defined by contractual arrangements, excluding escalations based upon future conditions.
For the periods ending June 30, 2023 and December 31, 2022, that price would be $
Proved reserves are estimated quantities of oil, gas and natural gas liquids that geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions. The reserve volumes presented are estimates only and should not be construed as being exact quantities.
The Company’s 479-acre oil field is located
in West Texas. Per the Preliminary Reserve Estimate done by an independent geologist, it is estimated to
contain 150 million barrels of oil. The geologist estimates the recovery factor at 30% to 40% of the total reserves. Based on the lower
estimated quantity and lower the recovery factor, the total barrels of recoverable oil for would be around 45 million barrels. The average
price of West Texas Intermediate oil for the six months ending June 30, 2023 was $
| 15 |
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis should be read in conjunction with our financial statements, including the notes thereto, appearing in this Form 10-Q and are hereby referenced. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed below and elsewhere in this report. You should not place undue certainty on these forward-looking statements, which apply only as of the date of this report. We believe it is important to communicate our expectations. However, our management disclaims any obligation to update any forward-looking statements whether as a result of new information, future events or otherwise.
These forward-looking statements are based on our management’s current expectations and beliefs and involve numerous risks and uncertainties that could cause actual results to differ materially from expectations. You should not rely upon these forward-looking statements as predictions of future events because we cannot assure you that the events or circumstances reflected in these statements will be achieved or will occur. You can identify a forward-looking statement by the use of the forward-terminology, including words such as “may”, “will”, “believes”, “anticipates”, “estimates”, “expects”, “continues”, “should”, “seeks”, “intends”, “plans”, and/or words of similar import, or the negative of these words and phrases or other variations of these words and phrases or comparable terminology. These forward-looking statements relate to, among other things: our sales, results of operations and anticipated cash flows; capital expenditures; depreciation and amortization expenses; sales, general and administrative expenses; our ability to maintain and develop relationship with our existing and potential future customers, and, our ability to maintain a level of investment that is required to remain competitive. Many factors could cause our actual results to differ materially from those projected in these forward-looking statements, including, but not limited to: variability of our revenues and financial performance; risks associated with technological changes; the acceptance of our products in the marketplace by existing and potential customers; disruption of operations or increases in expenses due to our involvement with litigation or caused by civil or political unrest or other catastrophic events; general economic conditions, government mandates; and, the continued employment of our key personnel and other risks associated with competition.
GENERAL OVERVIEW
Business Background
CYBER ENVIRO-TECH, INC. is a publicly held Wyoming oil and water filtration technology company that designs water purification solutions for commercial applications and industries
Our principal executive office is located at Cyber Enviro-Tech, Inc., 6991 E. Camelback Road, Suite D-300, Scottsdale, Arizona 85251. Our telephone number is 866 687-6856. Our Internet site is located at: www.cyberenviro.tech. We maintain our statutory registered agent's office at Registered Agents Inc. 30 N Gould St Ste R Sheridan, WY 82801 USA Telephone Number. (307) 200-2803
June 12, 2020, the District Court of Laramie County, Wyoming appointed Benjamin Berry of Synergy Management Group LLC (“Synergy”) as custodian of the Company.
On September 3, 2020, Synergy and Global Environmental Technologies, Inc. (“Global”), entered into a Securities Purchase Agreement, whereby Synergy sold its one share of Special Series A preferred stock and one-half share of Series C preferred stock to Global Environmental Technologies, Inc.
On September 23, 2020, the Company entered into a share exchange agreement with Global Environmental Technologies, Inc., (“Global”) a Wyoming corporation. Per the terms of the agreement, NexGen exchanged thirty-five shares of common stock for one share of Global.
On October 6, 2020, the Company formally changed its name with the State of Wyoming from NexGen Holdings to Cyber Enviro-Tech, Inc.
April 29, 2021, was the Announcement Date for the Company to do a reverse stock split of 1:20 and the Market Effective date was April 30, 2021. The symbol for Cyber Enviro-Tech, Inc. is CETI. All numbers in this 10-Q reflect the reverse split.
| 16 |
DESCRIPTION OF BUSINESS
Cyber Enviro-Tech, Inc is a water science technology company focusing on the remediation of contaminated industrial wastewater with an initial emphasis on the oil & gas industry. We are an emerging growth company with limited revenues and operating history. Our independent auditor has issued an audit opinion which includes a statement expressing substantial doubt as to our ability to continue as a going concern. Our pilot project is an oil field in West Texas. We currently own the mineral rights to a 479- acre, 33-well, located in Callahan County, Texas. These rights were secured from D-Bar Leasing, Inc, formerly owned by Mr. Danny Hyde.
GENERAL OVERVIEW
Form and year of organization;
Cyber Enviro-Tech, Inc., also referred to as “CETI” and the “Company”, was founded in the State of Wyoming as Biolectronics, Corp. in April 1986.
Bankruptcy, receivership;
The company has never filed Bankruptcy or been involved in any receiverships or similar proceedings.
Material reclassification;
Cyber Enviro-Tech, Inc - CURRENT.
NexGen Holdings Corp - Until April 30, 2021
WindPower Innovations, Inc. until January 2014
Educational Services International, Inc. until November 2009
Bio-Life Systems, Inc. until November 2001
Biolectronics, Corp. to April 1992
Electronic Biotek, Inc. April 1986
Business of the Cyber Enviro-Tech, Inc.;
Cyber Enviro-Tech, Inc is a water science technology company focusing on the remediation of contaminated industrial wastewater with an initial emphasis on the oil & gas industry. We do this by integrating technologies to include cyber, aerospace, satellite, industrial and AI engineering telemetry. Our water filtration, waste water and alternative energy systems will have neural sensors, controls and networks - all connected to a cellular device.
There are 26 oil wells on our Pilot Oil Field and, when funds become available, the Company will change over the old pumper jack systems to CETI’s current system.
The Company is reviewing its next project where CETI would complete its field water filtration system and put the system into use on the Pilot Oil field in Callahan County. At this time CETI, has not put its water filtration system into place at any location nor has it entered into any contracts with operators to put the water filtration system into the field.
During the second quarter of 2023, the Company expanded its focus in two main areas: overseas application of its water filtration systems in oil and gas as well as the meat packing industry. It has hired consultants and/or formed arrangements with a variety of consultants and partners in both industries. Our focus for the current fiscal year will be on further developing these relationships as well as oil production on 479-acre Pilot Oil Field in Callahan County, Texas.
The Companies industrial wastewater filtration technology will provide the following benefits to its customers including;
| • | Creative online monitoring to ensure and maintain water quality remotely in real time. |
| • | Utilizing the leading water filtration processes and technologies to make water usage and consumption safer, more efficient and less expensive. |
| • | Combined technologies that should produce a water filtration system that can treat water related contamination. |
| • | Through high volume water purification technologies, we can recycle contaminated water for reuse to address the depleting consumable supply of water. |
| 17 |
Sales Strategy – CETI’s B2B Sales Strategy will include partnering with individuals and companies who have many years of experience and developed relationships within their respective aforementioned targeted verticals. Prior knowledge of those specific industry issues, water filtration needs, history and relationships developed over many years will enable them to shorten the sales cycle for our water filtration system. As of August 15, 2023, the Company is in discussion with various individuals and has formed consulting arrangements with experts the oil industry, meat packing industry and acquired licenses from KAM Biotechnology to be used in both industries. In all cases, these contacts will be valuable in pursuing the Company’s B2B Sales Strategy.
Market Demand and Size - CETI’s water filtration system can be modified to address many of the water contamination issue that exists anywhere in the world. The markets envisioned for the CETI Water system when funds permit would be both domestic (U.S.) and global.
Results of Operations for the Three months Ending June 30, 2023 and 2022
| 2023 | 2022 | $ | % | |||||||||||||
| Operating Expenses: | ||||||||||||||||
| Professional Fees | 20,253 | 10,000 | 10,253 | 103 | % | |||||||||||
| General and administrative | 89,408 | 25,152 | 64,256 | 255 | % | |||||||||||
| Consulting | 768,704 | 109,211 | 659,493 | 648 | % | |||||||||||
| Total operating expenses | 878,365 | 144,363 | 335,238 | 462 | % | |||||||||||
| Loss from operations | (878,365 | ) | (144,363 | ) | (335,238 | ) | 462 | % | ||||||||
| Other Income (Expense): | ||||||||||||||||
| Change in fair value of derivative | (22,977 | ) | — | (22,977 | ) | 100 | % | |||||||||
| Interest expense | (47,950 | ) | (12,182 | ) | (35,768 | ) | (294 | %) | ||||||||
| Change in fair value of contingent liability | 1,350 | 2,535 | (1,185 | ) | (47 | %) | ||||||||||
| Total Other Income (Expense) | (69,577 | ) | (9,647 | ) | (59,930 | ) | (621 | %) | ||||||||
| Net Income (Loss) | $ | (947,942 | ) | $ | (154,010 | ) | $ | (793,932 | ) | (516 | %) | |||||
General and Administrative Expenses. General and administrative expenses for the three months ended June 30, 2023 were up by 255% vs 2022 largely due to an increase in travel expenses associated with developing customers and raising money.
Professional fees. These fees are largely made up of audit and audit-related fees ($15,753 and $10,000 as of June 30, 2023 and 2022 respectively). The increase in audit/audit-related fees is due to the Company’s audit performed in 2023 for 2022. The audit for 2021/2020 was performed in the second half of 2022 so there were lower accounting fees in the second quarter of 2022.
Consulting fees. Increased by 648% due significant push in marketing services related introducing the Company to potential clients and revenue sources. Around $525,000 of this amount is non-cash, stock-based compensation.
Other Income (Expense). The Company raised $1,180,000 and $400,000 by the sale of convertible debentures in second quarter of 2023 and 2022, respectively which largely accounted for the increase in interest expense.
Net Income (Loss). The above changes resulted in net loss of $947,942 in the three months ending June 30, 2023 compared to a net loss of $154,010 in the second quarter of 2022. As noted in “Consulting fees” these large changes were largely due to non-cash, the stock-based compensation paid to a variety of consultants.
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Results of Operations for the Six months Ending June 30, 2023 and 2022
| 2023 | 2022 | $ | % | |||||||||||||
| Operating Expenses: | ||||||||||||||||
| Professional Fees | 65,288 | 29,715 | 35,573 | 120 | % | |||||||||||
| General and administrative | 131,111 | 54,983 | 76,128 | 138 | % | |||||||||||
| Consulting | 1,136,514 | 156,312 | 980,202 | 627 | % | |||||||||||
| Total operating expenses | 1,332,913 | 240,470 | 1,092,443 | 454 | % | |||||||||||
| Loss from operations | (1,332,913 | ) | (240,470 | ) | (1,092,443 | ) | 454 | % | ||||||||
| Other Income (Expense): | ||||||||||||||||
| Change in fair value of derivative | 49,392 | 2,638,153 | (2,588,761 | ) | (98 | %) | ||||||||||
| Loss on issuance of derivative | (86,858 | ) | (149,010 | ) | 62,152 | (42 | %) | |||||||||
| Loss on sale of asset | (3,600 | ) | — | (3,600 | ) | (100 | %) | |||||||||
| Interest expense | (79,096 | ) | (1,224,495 | ) | 1,181,370 | (94 | %) | |||||||||
| Change in fair value of contingent liability | 1,050 | (3,031 | ) | 4,081 | 135 | % | ||||||||||
| Gain on extinguishment of debt | — | 627,591 | (627,591 | ) | (100 | %) | ||||||||||
| Total Other Income (Expense) | (119,112 | ) | 1,889,208 | (1,948,187 | ) | (106 | %) | |||||||||
| Net Income (Loss) | $ | (1,452,025 | ) | 1,648,738 | (2,283,425 | ) | (189 | %) | ||||||||
General and Administrative Expenses. General and administrative expenses for the year six months ended June 3, 2023 were up by 138% vs 202 largely due to an increase in depreciation expense related to assets purchased for the Alvey oil field and travel expenses associated with developing customers and raising money.
Professional fees. These fees are largely made up of audit and audit-related fees ($57,039 and $7,500 for the six months ending June 30, 2023 and 2022 respectively). The increase in audit/audit-related fees is due to the Company’s audit for 2022 being performed in 2023. The audit for 2021/2020 was performed in the second half of 2022 so there were lower accounting fees in the first quarter of 2022.
Consulting fees. Increased by 627% due significant push in marketing services related introducing the Company to potential clients and revenue sources. $657,282 of this amount is non-cash, stock-based compensation.
Other Income (Expense). Much of this is related to the issuance and conversion of convertible debentures used to raise money for the Company’s operations. $2,125,250 and $775,000 was raised by the sale of convertible debentures in first half of 2023 and 2022, respectively. During the first quarter of 2022, $1,550,000 of these convertible debentures were exchanged for common shares of stock. Since convertible debentures issued before March 31, 2022 did not contain a floor price, estimates were needed to determine the change in fair value of the derivatives, loss on issuance of derivatives as well as gain on extinguishment of debt when the debentures were converted to common shares which resulted in significant variations in income and expenses for accounting purposes. In addition, the change in Interest expense of $1,181,370 was largely due to the amortization of debt discount of $1,188,721. Interest expense is comprised of debt issue costs, amortization of debt discount and interest expense.
Net Income (Loss). The above changes resulted in net loss of $1,452,025 in the first six months of 2023 compared to a net gain of $1,648,738 in 2022. As noted in “Other Income (Expense)” these large changes were largely due to accounting for derivatives due to the issuance of convertible debentures and March 31, 2022 conversion into common stock as noted above.
| 19 |
Liquidity and Capital Resources
As of June 30, 2023, the Company had total assets of $4,291,228 including current assets of $328,057. We also have current liabilities of $599,974 which consist of accounts payable of $86,202 and short-term loans payable of $433,059 which is mostly the payable due on the Alvey Oil Field leasehold improvements. We also have $1,470,000 of long-term liabilities consisting of convertible notes payable. We believe our ability to achieve commercial success and continued growth will be dependent upon our continued access to capital either through sale of additional convertible debentures, sale of our equity or cash generated from operations. We will attempt to obtain additional capital through private investors; however, we have no agreements or understandings with third parties at this time in regards to investing additional monies.
S-1 Registration Statement Effective January 2023
The Company filed an S-1 Registration statement in 2022 and it became effective in January 2023. This gives the Company the right to sell 10 million shares of common stock at $0.40 per share and allowed almost seven million shares of stock from debentures converted in 2022 to become free trading shares. As of August 14, 2023, none of the 10 million shares of common stock have been sold.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
As a "smaller reporting company," as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.
Item 4. Controls and Procedures.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. The term "internal control over financial reporting" is defined as a process designed by, or under the supervision of, an issuer's principal executive and principal financial officers, or persons performing similar functions, and effected by the issuer's board of directors, management and other personnel, 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 and includes those policies and procedures that:
| (1) | Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the issuer; and |
| (2) | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the issuer are being made only in accordance with authorizations of management and directors of the issuer. |
Under the supervision of our chief executive officer, being our principal executive officer, and our chief financial officer, being our principal financial officer and principal accounting officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2022 using the criteria established in Internal Control Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). This evaluation included review of the documentation of controls, evaluation of the design effectiveness of controls, testing of the operating effectiveness of controls and a conclusion on this evaluation. Based on this evaluation, our management concluded our internal control over financial reporting were not effective at June 30, 2023.
A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a more than remote possibility that a misstatement of our company's annual or interim financial statements could occur. In its assessment of the effectiveness of our internal control over financial reporting as of June 30, 2023, we determined that there were control deficiencies that constituted material weaknesses which are indicative of many small companies with small staff, such as:
| (1) |
inadequate segregation of duties and effective risk assessment; and
| |
| (2) | insufficient written policies and procedures for documenting all transactions with vendors. | |
Our management is currently evaluating remediation plans for the above deficiencies. During the period covered by this quarterly report on Form 10-Q, we have been able to remediate some of the weaknesses described above. However, we plan to take steps to enhance and improve the design of our internal control over financial reporting.
| 20 |
PART II—OTHER INFORMATION
Instruction. The report shall contain the item numbers and captions of all applicable items of Part II, but the text of such items may be omitted provided the responses clearly indicate the coverage of the item. Any item which is inapplicable or to which the answer is negative may be omitted and no reference thereto need be made in the report. If substantially the same information has been previously reported by the registrant, an additional report of the information on this form need not be made. The term “previously reported” is defined
in Rule 12b-2 (17 CFR 240. 12b-2). A separate response need not be presented in Part II where information called for is already disclosed in the financial information provided in Part I and is incorporated by reference into Part II of the report by means of a statement to that effect in Part II which specifically identifies the incorporated information.
Item 1. Legal Proceedings.
We are not a party to any legal proceedings, nor are we aware of any threatened litigation whatsoever.
Item 1A. Risk Factors.
As a "Smaller Reporting Company," as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Date of Transaction | Transaction type (e.g. new issuance, cancellation, shares returned to treasury) | Number of Shares Issued (or cancelled) | Class of Securities | Value of shares issued ($/per share) at Issuance | Individual/ Entity Shares were issued to (entities must have individual with voting / investment control disclosed). | Reason for share issuance (e.g. for cash or debt conversion) -OR- Nature of Services Provided | Restricted or Unrestricted as of this filing. | |||||||||||||||
| 2/24/2021 | New | 123,457 | Common | 0.097 | Lester Black | Cash | Restricted | |||||||||||||||
| 3/18/2021 | New | 14,286 | Common | 0.350 | Frank Kigenyi | Cash | Restricted | |||||||||||||||
| 3/20/2021 | New | 14,286 | Common | 0.350 | Ramonte Parea Hackman | Cash | Restricted | |||||||||||||||
| 3/22/2021 | New | 28,572 | Common | 0.350 | Lenora Rodriguez | Cash | Restricted | |||||||||||||||
| 3/25/2021 | New | 14,286 | Common | 0.350 | Ernest Bevans | Cash | Restricted | |||||||||||||||
| 4/5/2021 | New | 14,286 | Common | 0.350 | Vanessa DeMattei | Cash | Restricted | |||||||||||||||
| 5/4/2021 | New | 50,000 | Common | 0.200 | Greg Hebert | Grant fee | Restricted | |||||||||||||||
| 9/27/2021 | New | 144,033 | Common | 0.097 | Lester Black | Cash | Restricted | |||||||||||||||
| 2/25/2022 | New | 3,000,000 | Common | 0.078 | Markham and ML Broughton RT, Markham Broughton | Cash | Restricted | |||||||||||||||
| 2/25/2022 | New | 750,000 | Common | 0.133 | Gary E. Smith Living Trust, Gary Smith | Cash | Restricted | |||||||||||||||
| 12/31/2022 | New | 400,000 | Common | 0.420 | Joe Isaac, Axiom Group | Services | Restricted | |||||||||||||||
| 12/31/2022 | New | 42,000 | Common | 0.457 | Malcolm Mcquire | Services | Restricted | |||||||||||||||
| 3/24/2023 | New | 300,000 | Common | 0.420 | Joe Isaac, Axiom Group | Services | Restricted | |||||||||||||||
| 5/23/2023 | New | 250,000 | Common | 0.42 | Joe Isaac | Services | Restricted | |||||||||||||||
| 5/23/2023 | New | 250,000 | Common | 0.38 | Frank Straw | Services | Restricted | |||||||||||||||
| 5/23/2023 | New | 250,000 | Common | 0.31 | Markus Miller | Services | Restricted | |||||||||||||||
| 5/23/2023 | New | 200,000 | Common | 0.38 | Bruce Moore | Services | Restricted | |||||||||||||||
| 5/23/2023 | New | 1,000,000 | Common | 0.38 | US Affiliated Inc, Joseph Scarpello | Services | Restricted | |||||||||||||||
| 21 |
Securities authorized for issuance under equity compensation plans
The Company has not reserved any securities for issuance under equity compensation plans for any officers, directors or any beneficial owners.
On November 21, 2023 the company entered into a consulting agreement with Axiom Group (Joseph Isaacs, sole Officer and director) for professional services wherein the Company paid Axiom Group (Joseph Isaacs) 950,000 common shares.
On April 25, 2023 the company entered into a consulting agreement with Dr. Markus Miller for professional services wherein the Company paid 1,000,000 common shares.
On May 17, 2023 the company entered into a consulting agreement with Frank Straw for professional services wherein the Company paid 1,000,000 common shares.
The Company has had a working relationship with Bruce Moore for several years. To keep him engaged, the Company gave him 200,000 common shares for professional services.
The Company has had a working relationship with Joseph Scarpello of US Affiliated, Inc for the past year. To keep him engaged, the Company gave him 1,000,000 common shares for professional services.
| 22 |
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
None.
Item 5. Other Information.
None.
Item 6. Exhibits.
| Incorporated by Reference |
Filed or Furnished | |||||||||
| Exhibit # | Exhibit Description | Form | Date | Number | Herewith | |||||
| 31.1 | Certification of Principal Executive Officer (302) | Filed | ||||||||
| 31.2 | Certification of Principal Financial Officer (302) | Filed | ||||||||
| 32.1 | Certification of Principal Executive and Principal Financial Officers (906) | Furnished* | ||||||||
| 101.INS | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) | Filed | ||||||||
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | Filed | ||||||||
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | Filed | ||||||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | Filed | ||||||||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | Filed | ||||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | Filed | ||||||||
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | Filed | ||||||||
*This exhibit is being furnished rather than filed and shall not be deemed incorporated by reference into any filing, in accordance with Item 601 of Regulation S-K.
| 23 |
SIGNATURES*
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Signature | Title | Date | ||
|
/s/ Kim D. Southworth Kim D. Southworth
/s/ Dan Leboffe Dan Leboffe |
Chief Executive Officer
Principal Accounting Officer |
August 18, 2023
August 18, 2023 | ||
| 24 |
Exhibit 31.1
302 CERTIFICATION
I, Kim D. Southworth, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Cyber Enviro-Tech, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in the report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: August 18, 2023
| /s/ Kim D. Southworth | |
| Kim D. Southworth | |
| Chief Executive Officer | |
Exhibit 31.2
302 CERTIFICATION
I, Dan Leboffe, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Cyber Enviro-Tech, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in the report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: August 18, 2023
| /s/ Dan Leboffe | |
| Dan Leboffe | |
| Chief Financial Officer | |
EXHIBIT 32.1
SECTION 906 CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER
In connection with the Annual Report of Cyber Enviro-Tech, Inc., (the “Company”) on Form 10-Q for the period ended June 30, 2023, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Kim D. Southworth, Chief Executive Officer and Dan Leboffe, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:
1. The Report fully complies with requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
| /s/ Kim Southworth | |
| Kim D. Southworth | |
| Chief Executive Officer | |
| Dated: August 18, 2023 | |
| /s/ Dan Leboffe | |
| Dan Leboffe | |
| Chief Financial Officer | |
| Dated: August 18, 2023 | |
STATEMENTS OF OPERATIONS (Unaudited) - USD ($) |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
|
| Operating Expenses: | ||||
| Professional fees | $ 20,253 | $ 10,000 | $ 65,288 | $ 29,175 |
| General and administrative | 89,408 | 25,152 | 131,111 | 54,983 |
| Consulting | 768,701 | 109,211 | 1,136,514 | 156,312 |
| Total operating expenses | 878,365 | 144,363 | 1,332,913 | 240,470 |
| Loss from operations | (878,365) | (144,363) | (1,332,913) | (240,470) |
| Other Income (Expense): | ||||
| Change in fair value of derivatives | (22,977) | 49,392 | 2,638,153 | |
| Loss on issuance of derivatives | (86,858) | (149,010) | ||
| Loss on sale of asset | (3,600) | |||
| Gain on extinguishment of debt | 627,591 | |||
| Change in fair value of contingent liability | 1,350 | 2,535 | 1,050 | (3,031) |
| Interest expense | (47,950) | (12,182) | (79,096) | (1,224,495) |
| Total other income (expense) | (69,577) | (9,647) | (119,112) | 1,889,208 |
| Net Income (Loss) | $ (947,942) | $ (154,040) | $ (1,452,025) | $ 1,648,738 |
STATEMENTS OF OPERATIONS (Unaudited) (Parenthetical) - $ / shares |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
|
| Income Statement [Abstract] | ||||
| Loss per share - basic | $ (0.01) | $ (0.00) | $ (0.01) | $ 0.02 |
| Loss per share - diluted | $ (0.01) | $ (0.00) | $ (0.01) | $ 0.02 |
| Weighted average shares outstanding - basic | 116,526,714 | 107,444,943 | 115,943,449 | 106,954,123 |
| Weighted average shares outstanding - diluted | 116,526,714 | 107,444,943 | 115,943,449 | 106,954,123 |
ORGANIZATION AND DESCRIPTION OF BUSINESS |
6 Months Ended |
|---|---|
Jun. 30, 2023 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| ORGANIZATION AND DESCRIPTION OF BUSINESS | NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS
Cyber Enviro-Tech, Inc. (the “Company”) is a publicly held water science technology company that designs water purification solutions for commercial applications and industries. Its pilot project is on a 479-acre oil field in West Texas called the Alvey Oil Field. The corporate headquarters are located in Scottsdale, Arizona.
On September 3, 2020, Synergy Management Group, LLC (“Synergy”) and Global Environmental Technologies, Inc (“Global”), which was formed on April 20, 2020, entered into a securities purchase agreement, whereby Synergy sold its share of Special 2020 Series A preferred stock and its one-half share of Series C preferred stock to Global for $66,400 ($40,000 in cash and 15,000 shares of stock, post reverse split of one share for every 20 shares on April 30, 2021). The shares of stock are to be awarded contingent upon the effectiveness of a S-1 Registration. These shares are recorded as a contingent liability on the Balance Sheet and amount to $4,650 and $5,700 at June 30, 2023 and December 31, 2022, respectively.
Effective April 30, 2021, the Company effectuated a twenty to one reverse stock split. All shares throughout these financial statements have been adjusted to reflect the reverse split.
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation The Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
Use of estimates The preparation of financial statements in conformity with U.S. 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 and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Revenue recognition The Company recognizes revenue in accordance with Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers,” (“Topic 606”). Revenue is recognized when a customer obtains control of promised goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amount of revenue that is recorded reflects the consideration that the Company expects to receive in exchange for those goods. The Company applies the following five-step model in order to determine this amount: (i) identification of the promised goods in the contract; (ii) determination of whether the promised goods are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.
The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. Once a contract is determined to be within the scope of Topic 606 at contract inception, the Company reviews the contract to determine which performance obligations the Company must deliver and which of these performance obligations are distinct. The Company expects to recognize revenues as the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied.
The Company recognizes sales when oil is picked up by the delivery company and control passes to the customer.
Cash equivalents The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. There were no cash equivalents at June 30, 2023 and December 31, 2022.
Property and Equipment Property and equipment is recorded at cost. Cost of improvements that substantially extend the useful lives of the assets are capitalized. Maintenance and repair costs are expensed when incurred. When other property and equipment is sold or retired, the capitalized costs and related accumulated depreciation are removed from their respective accounts.
Asset Retirement Obligations To cover the estimated future asset retirement obligations ("ARO") related to its oil and gas properties, the Company maintains a $50,000 bond with the Railroad Commission of Texas (“RRC”). This bond is to ensure that the Company will cap any wells on the Alvey Oil Field that it decides are no longer productive. Once the Company decides it is finished working the Alvey Oil Field, it can apply to the RRC to have the bond repaid.
The Company believes the bond should cover the estimated liability for abandoning wells. Revisions to the liability could occur due to changes in estimated abandonment costs, changes in well economic lives, or if federal or state regulators enact new requirements regarding the abandonment of wells.
Impairment of Long-Lived Assets In accordance with authoritative guidance on accounting for the impairment or disposal of long-lived assets, as set forth in Topic 360 of the Accounting Standards Codification (“ASC”), the Company assesses the recoverability of the carrying value of its non-oil and gas long-lived assets when events occur that indicate an impairment in value may exist. An impairment loss is indicated if the sum of the expected undiscounted future net cash flows is less than the carrying amount of the assets. If this occurs, an impairment loss is recognized for the amount by which the carrying amount of the assets exceeds the estimated fair value of the assets.
Intangible Assets The Company recognizes intangible assets in accordance with ASC 350. Intangible assets are defined as identifiable non-monetary assets without physical substance, acquired through purchase, internally generated, or acquired as part of a business combination, which provide future economic benefits and are under the control of the Company.
Intangible assets with finite useful lives are amortized over their estimated useful lives on a straight-line basis, unless another systematic and rational method better represents the consumption of the economic benefits. Intangible assets with indefinite useful lives are not amortized but are tested for impairment annually or more frequently if there are indications of impairment. The intangible assets consists of exclusive licenses obtained by the Company from KAM Biotechnology Ltd (“KAM”) in May 2023 and the agreement has a term of ten years. Payments from the Company to KAM occur over a 22-month period of time with no interest. As such, the asset is started at the net discounted amount of $758,501 less amortization in May and June of a total of $12,642 for a net of $745,859. As of June 30, 2023, the Company has paid $663,111 towards this note payable.
The Company reviews intangible assets for indicators of impairment at least annually, or whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss is recognized if the carrying amount of the asset exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and its value in use. Any impairment loss is recognized in the income statement. Upon impairment, the carrying amount of the intangible asset is reduced to its recoverable amount. The impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the asset and then to the remaining balance of the asset. The impairment loss is recognized as an expense in the income statement, unless the asset had previously been revalued, in which case the loss is recognized against any revaluation surplus.
Oil and Gas Producing Activities The Company uses the successful efforts method of accounting for oil and gas activities. Under this method, the costs of productive exploratory wells, all development wells, related asset retirement obligation assets, and productive leases are capitalized and amortized, principally by field, on a units-of-production basis over the life of the remaining proved reserves. Exploration costs, including personnel costs, geological and geophysical expenses, and delay rentals for oil and gas leases are charged to expense as incurred. Exploratory drilling costs are initially capitalized, but charged to expense if and when the well is determined not to have found reserves in commercial quantities. The sale of a partial interest in a proved property is accounted for as a cost recovery, and no gain or loss is recognized as long as this treatment does not significantly affect the units-of-production amortization rate. A gain or loss is recognized for all other sales of producing properties. There were capitalized costs of $2,187,926 and $1,604,983 at June 30, 2023 and December 31, 2022, respectively.
Unproved oil and gas properties are assessed annually to determine whether they have been impaired by the drilling of dry holes on or near the related acreage or other circumstances, which may indicate a decline in value. When impairment occurs, a loss is recognized. When leases for unproved properties expire, the costs thereof, net of any related allowance for impairment, is removed from the accounts and charged to expense. During the six months ended June 30, 2023 and 2022, there was no impairment to unproved properties. The sale of a partial interest in an unproved property is accounted for as a recovery of cost when substantial uncertainty exists as to the ultimate recovery of the cost applicable to the interest retained. A gain on the sale is recognized to the extent that the sales price exceeds the carrying amount of the unproved property. A gain or loss is recognized for all other sales of unproved properties. For the six months ending June 30, 2023 and 2022, there was no gain or loss recognized for sales of unproved properties.
Costs associated with development wells that are unevaluated or are waiting on access to transportation or processing facilities are reclassified into developmental wells-in-progress ("WIP"). These costs are not put into a depletable field basis until the wells are fully evaluated or access is gained to transportation and processing facilities. Costs associated with WIP are included in the cash flows from investing as part of investment in oil and gas properties. At June 30, 2023 and December 31, 2022, no capitalized developmental costs were included in WIP.
Depreciation, depletion and amortization of proved oil and gas properties is calculated using the units-of- production method based on proved reserves and estimated salvage values. During the six months ended June 30, 2023 and 2022, the Company recorded no depreciation, depletion and amortization expense on oil and gas properties. The Company will start using the units-of-production method when the field is continuously operational and there are material sales.
The Company reviews its proved oil and natural gas properties for impairment whenever events and circumstances indicate that a decline in the recoverability of its carrying value may have occurred. It estimates the undiscounted future net cash flows of its oil and natural gas properties and compares such undiscounted future cash flows to the carrying amount of the oil and natural gas properties to determine if the carrying amount is recoverable. If the carrying amount exceeds the estimated undiscounted future cash flows, the Company will adjust the carrying amount of the oil and natural gas properties to fair value. During the six months ended June 30, 2023 and 2022, there was no impairment to proved properties.
The Company applies the fair value method of Financial Accounting Standards Board (“FASB”) ASC 718, “Share Based Payment”, in accounting for its stock-based compensation. This standard states that compensation cost is measured at the grant date based on the fair value of the award and is recognized over the service period, which is usually the vesting period. The Company values stock-based compensation at the market price for the Company’s common stock and other pertinent factors at the grant date. During the six months ended June 30, 2023 and 2022, the Company recorded $876,063 and $,794 in stock-based compensation expense, respectively. In addition, the Company recorded unearned stock compensation of $685,711 and $124,274 at June 30, 2023 and December 31, 2022, respectively.
Fair Value of Financial Instruments The Company adopted ASC 820, “Fair Value Measurements.” ASC 820 clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:
The carrying amount of the Company’s financial assets and liabilities, such as cash, prepaid expenses and accrued expenses approximate their fair value because of the short maturity of those instruments. The Company’s notes payable approximates the fair value of such instruments as the notes bear interest rates that are consistent with current market rates.
The Company evaluates convertible instruments, options, warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for under ASC 815, “Derivatives and Hedging”. The result of this accounting treatment is that the fair value of the derivative is marked to market each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as other income (expense). Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. Equity instruments that are initially classified as equity that become subject to reclassification under ASC 815 are reclassified to liabilities at the fair value of the instrument on the reclassification date.
The following table classifies the Company’s liability measured at fair value on a recurring basis into the fair value hierarchy as of June 30, 2023. . There were no fair value instruments as of December 31, 2022:
Income taxes Income states are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss, capital loss and tax credit carryforwards. Deferred tax assets and liabilities are measures using enacted tax rates expected to apply to the taxable income in the years in which those temporary differences are expect to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest and penalties related to unrecognized tax benefits as a component of general and administrative expenses. The Company’s federal tax return and any state tax returns are not currently under examination.
The Company has adopted ASC 740, “Accounting for Income Taxes,” which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed annually from differences between the financial statement and tax basis of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.
The Company computes loss per common share in accordance with ASC 260, “Earnings Per Share”, which requires dual presentation of basic and diluted earnings per share. Basic income or loss per common share is computed by dividing net income or loss by the weighted average number of common shares outstanding during the period. Diluted income or loss per common share is computed by dividing net income or loss by the weighted average number of common shares outstanding, plus the issuance of common shares, if dilutive, that could result from the exercise of outstanding stock options and warrants.
Concentration of credit risks The Company maintains accounts with financial institutions. All cash in checking accounts is non-interest bearing and is fully secured by the Federal Deposit Insurance Corporation (FDIC). At times, cash balances may exceed the maximum coverage provided by the FDIC on insured depositor accounts. The Company believes it mitigates its risk by depositing its cash and cash equivalents with major financial institutions.
Recently issued accounting pronouncements The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
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GOING CONCERN |
6 Months Ended |
|---|---|
Jun. 30, 2023 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| GOING CONCERN | NOTE 3 – GOING CONCERN
The Company’s financial statements have been prepared on a going concern basis, which assumes that the Company will be able to realize its assets and discharge its liabilities and commitments in the normal course of business for the foreseeable future. The Company has just begun generating revenue and does not yet have sufficient revenue to cover its operating expenses. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern is dependent upon generating profitable operations in the future and/or to obtain the necessary financing to meet the Company’s obligations and repay its liabilities arising from normal business operations when they come due. Management intends to finance operating costs over the next twelve months with increased revenue and private placement loans or institutional investors. While the Company believes that it will be successful in obtaining the necessary financing and generating revenue to fund the Company’s operations, meet regulatory requirements and achieve commercial goals, there are no assurances that such additional funding will be achieved and that the Company will succeed in its future operations.
The financial statements of the Company do not include any adjustments that may result from the outcome of these uncertainties.
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COMMITMENTS AND CONTINGENCIES |
6 Months Ended |
|---|---|
Jun. 30, 2023 | |
| Commitments and Contingencies Disclosure [Abstract] | |
| COMMITMENTS AND CONTINGENCIES | NOTE 4 – COMMITMENTS AND CONTINGENCIES
During the normal course of business, the Company may be exposed to litigation. When the Company becomes aware of potential litigation, it evaluates the merits of the case in accordance with ASC 450, Contingencies. The Company evaluates its exposure to the matter, possible legal or settlement strategies and the likelihood of an unfavorable outcome. If the Company determines that an unfavorable outcome is probable and can be reasonably estimated, it establishes the necessary accruals. As of June 30, 2023 and December 31, 2022, the Company is not aware of any contingent liabilities related to potential litigation that should be reflected in the financial statements.
In February 2021, the Company entered into an agreement to operate the wells on the Alvey Oil Field. Under this agreement, the Company owes a contingent amount based upon a 18.75% of the Working Interest less any rework and production costs to the Estate of Danny Hyde (“EDH) the former owner of the operator of record for the Alvey Oil Field. The rework costs incurred by the Company to date have been over $1 million so it is not anticipated any contingent payments will be made to EDH in 2022. In addition, the Company owes 20% of gross sales less severance tax to the landowners. At the same time of this agreement, the Company purchased $450,000 of equipment from the entity formerly owned by Danny Hyde. The Company is still evaluating the allocation of that purchase price to various assets acquired and potential liabilities assumed. The final allocation may be different than the current presentation.
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PROPERTY AND EQUIPMENT |
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Jun. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| PROPERTY AND EQUIPMENT | NOTE 5 – PROPERTY AND EQUIPMENT
As of June 30, 2023 and December 31, 2022, property and equipment consisted of the following:
Depreciation expense for the three months ended June 30, 2023 and 2022 was $12,646 and $10,912, respectively, and for the six months ended June 30, 2023 and 2022 it was $25,752 and $10,912, respectively.
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DEBT |
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| Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| DEBT | NOTE 6 – DEBT
The following is a schedule of debt maturity and the years in which the debt is scheduled to mature:
Notes payable In February 2021, the Company purchased certain oil and gas production equipment in the Alvey Oil Field. The total purchase price was $450,000 ($389,046 after discount). As of June 30, 2023 and December 31, 2022, the Company had repaid $106,500 leaving a balance of $343,500. The remaining amount due was to be paid in installments of $10,500 over an 18-month period of time that began in July 2022, with a balloon payment of any unpaid balance after 18 months. The note has an imputed interest rate of 7%.
At December 31, 2022, the Company had a note payable to a shareholder for $100,000 along with interest of $10,000. Repayment was due in January 2023 and the shareholder decided to take $50,000 in cash and converted the remaining $60,000 to common stock. These shares were not issued as of August 14, 2023.
At December 31, 2022, the Company had a note payable to a related party for $15,000 with an interest rate of 7%. This loan was paid off in January 2023.
At June 30, 2022, the Company had a note payable for $100,000. The note is payable on or before August 31, 2023.
In May 2023, the Company acquired certain intellectual property rights from KAM Biotechnology. The total acquisition price was $800,000 ($762,273 after discount). As of June 30, 2023, the Company has repaid $663,112 leaving a balance of $136,889. The remaining amount is to be paid in installments of $25,000 beginning in October 2024.
Convertible notes payable
In 2020, the Company executed a convertible note payable with a related party for $25,000 that is unsecured, non-interest bearing and convertible into shares of common stock at $0.001. This note matured on September 23, 2020 and is in default.
During the year ended December 31, 2021, the Company received $1,175,000 from the issuance of twenty- nine separate convertible notes payable. Each note bore interest at 7%. Each note holder received shares of commons stock for every $25,000 loaned to the Company which were valued at $94,959. These notes had a two-year maturity date when issued but were all were all converted during the year ended December 31, 2022.
During the year ended December 31, 2022, the Company received $1,461,000 from the issuance of thirty-two separate convertible notes payable. For $1,075,000 worth of notes payable issued before December 2022, the terms were the same as the notes issued in 2021 For $386,000 worth of notes payable issued in December 2022, these notes bear interest at 8%, do not have any bonus shares and are convertible into common stock at a minimum price of $0.10 share. All of notes issued during 2022 had a two-year maturity date when issued.
During the year ended December 31, 2022, the Company converted $2,250,000 of notes payable plus accrued interest into shares of common stock. This conversion created a one-time gain on the extinguishment of the debt of $627,592 as well as a write off of the derivative liability associated with these notes of $3,512,747. As of December 31, 2022, $386,000 worth of convertible notes payable remained.
During the first six months of 2023, the Company raised a net of another $2,046,250 in convertible notes payable. The terms were the same as the convertible notes payable issued in December 2022 with the exception of one note for $69,250. This note bears interest at 8% and is payable at maturity of January 27, 2024. The note is convertible into common stock at issuer’s option beginning July 27, 2023 at a 35% discount off of the lowest price for the ten preceding trading days.
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DERIVATIVE FINANCIAL INSTRUMENTS |
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| Investments, All Other Investments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| DERIVATIVE FINANCIAL INSTRUMENTS | NOTE 7 – DERIVATIVE FINANCIAL INSTRUMENTS
Embedded derivatives
The Company’s convertible promissory notes gave rise to derivative financial instruments. The notes embodied certain terms and conditions that were not clearly and closely related to the host debt agreement in terms of economic risks and characteristics. These terms and features consist of the embedded conversion option.
The following tables summarize the components of the Company’s derivative liabilities and linked common shares as of June 30, 2023 and the amounts that were reflected in income related to derivatives for the period ended:
There were no fair value instruments as of December 31, 2022.
The following table summarizes the effects on the Company’s gain (loss) associated with changes in the fair values of the derivative financial instruments by type of financing for the three and six months ended June 30, 2023 and 2022:
Current accounting principles that are provided in ASC 815 - Derivatives and Hedging require derivative financial instruments to be classified in liabilities and carried at fair value with changes recorded in income. The Company has selected the Monte Carlo Simulation Model, which approximates the Monte Carlo Simulations, valuation technique to fair value the embedded derivative because it believes that this technique is reflective of all significant assumption types, and ranges of assumption inputs, that market participants would likely consider in transactions involving embedded derivatives. Such assumptions include, among other inputs, interest risk assumptions, credit risk assumptions and redemption behaviors in addition to traditional inputs for option models such as market trading volatility and risk-free rates. The Binomial Lattice Model technique is a level three valuation technique because it requires the development of significant internal assumptions in addition to observable market indicators. For instruments in which the time to expiration has expired, the Company has utilized the intrinsic value as the fair value. The intrinsic value is the difference between the quoted market price on the valuation date and the applicable conversion price.
Significant inputs and results arising from the Monte Carlo Simulation process are as follows for the embedded derivatives that have been bifurcated from the convertible notes and classified in liabilities:
The following table reflects the issuances of embedded derivatives and changes in fair value inputs and assumptions related to the embedded derivatives as of June 30, 2023 and December 31, 2022.
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RELATED PARTY TRANSACTIONS |
6 Months Ended |
|---|---|
Jun. 30, 2023 | |
| Related Party Transactions [Abstract] | |
| RELATED PARTY TRANSACTIONS | NOTE 8 – RELATED PARTY TRANSACTIONS
At June 30, 2023 and December 31, 2022, the Company had a convertible note payable for $25,000 with a related party. The note is unsecured, non-interest bearing and is convertible into shares of common stock at $.
At December 31, 2022, the Company had a note payable of $15,000 to a related party. This note was paid off with interest in January 2023.
During the periods ended June 30, 2023 and December 31, 2022, the Company paid various related parties for consulting services in the amounts of $284,500 and $431,399 respectively. For the periods ended June 30, 2023 and December 31, 2022, $60,188 and $194,712, respectively, of the consulting fees were capitalized in property and equipment under well development costs.
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PREFERRED STOCK |
6 Months Ended |
|---|---|
Jun. 30, 2023 | |
| Equity [Abstract] | |
| PREFERRED STOCK | NOTE 9 – PREFERRED STOCK
Series A Convertible Preferred Stock The Company previously designated shares of Preferred Stock as Series A Convertible Preferred Stock and had issued shares. Voting Rights had been established whereby one (1) share of Series A Convertible Preferred Stock has ten (10) equivalent votes of stockholders of the Company's common stock for an aggregate of 10 votes. Each share of Series A Convertible Preferred Stock previously was convertible into ten (10) shares of the Company's common stock. In event of the liquidation of the Company, the shareholders of Series A Convertible Preferred Stock would have preference over the shareholders of the Company's common stock and all other series of Preferred Stock. As of June 30, 2023 and December 31, 2022, there is one share of Series A Convertible Stock issued and outstanding.
Series B Convertible Preferred Stock The Company previously designated shares of Preferred Stock as Series B Convertible Preferred Stock and had issued shares. Holders of Series B Convertible Preferred Stock had no voting Rights. Each share of Series B Preferred Stock previously was convertible into one (1) share of the Company's Common Stock. In event of the liquidation of the Company, the shareholders of Series B Convertible Preferred Stock would have preference over the shareholders of the Company's Common Stock and all other series of Preferred Stock except for the shareholders of Series A Convertible Preferred Stock. As of June 30, 2023 and December 31, 2022, there is one share of Series B Convertible Stock issued an outstanding.
Series C Non-Convertible Preferred Stock The Company previously designated shares of Preferred Stock as Series C Non-Convertible Preferred Stock and had issued all shares. Holders of Series C Non-Convertible Preferred Stock have 1,600 shares of voting Rights per share. Series C Non-Convertible Preferred Stock is not convertible into any of the Company's Common Stock or other Series of Preferred Stock. In event of the liquidation of the Company, the shareholders of Series C Non-Convertible Preferred Stock would have preference over the shareholders of the Company's Common Stock and all other series of Preferred Stock except for the shareholders of Series A and Series B Convertible Preferred Stock. As of June 30, 2023 and December 31, 2022, there is one-half share of Series C Convertible Stock issued an outstanding.
Special 2020 Series A Preferred The Company has one share of preferred stock designated as Special 2020 Series A Preferred, par value $. The holder for the Special 2020 Series A Preferred shall vote with the holders of both preferred and common stockholders as a single class. The holder is entitled to 60% of all votes. The one share of Series A is convertible into shares of common stock at any time and is not entitled to dividends. The Company purchased that one series A preferred share for $66,400. This share is now recorded as a Treasury stock. As of June 30, 2023 and December 31, 2022, there is share of Special 2020 Series A Preferred issued and 0 outstanding.
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STOCK OPTIONS |
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Jun. 30, 2023 | ||||||||||||||||||||||||||||||||||||
| Equity [Abstract] | ||||||||||||||||||||||||||||||||||||
| STOCK OPTIONS | NOTE 10 – STOCK OPTIONS
In connection with a consulting agreement dated March 7, 2022, the Company issued options at an exercise price of $0.58 per share. These options vest one-fourth each six months over a period of two years and have a term of three years. The grant date fair value was $. The Company recorded compensation expense in the amount of $11,089 and $ 18,318 for the periods ended June 30, 2023 and December 31, 2022, respectively. As of June 30, 2023 and December 31, 2022, there was $26,559 and $37,648, respectively, of total unrecognized compensation cost related to non-vested portion of options granted.
As of June 30, 2023 and December 31, 2022, there are options outstanding, of which and are exercisable as of June 30, 2023 and December 31, 2022, respectively. The weighted average remaining term is years and years for the periods ending June 30, 2023 and December 31, 2022, respectively.
Significant inputs and results arising from the Black-Scholes process are as follows for the options:
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INCOME TAXES |
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| Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| INCOME TAXES | NOTE 11 – INCOME TAXES
Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss, and tax credit carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. The U.S. federal income tax rate of 21% is being used. Income taxes consist of the following components as of:
The income tax provision differs from the amount of income tax determined by applying the U.S. federal income tax rate to pretax income from continuing operations for the periods ended June 30, 2023 and December 31, 2022, due to the following:
At June 30, 2023, the Company had net operating loss carry forwards of $807,711 that may be offset against future taxable income from the year 2023 to 2040. No tax benefit has been reported in the June 2023 and 2022 financial statements since the potential tax benefit is offset by a valuation allowance of the same amount.
Due to the change in ownership provisions of the Tax Reform Act of 1986, net operating loss carry forwards for Federal Income tax reporting purposes are subject to annual limitations. Should a change in ownership occur, net operating loss carry forwards may be limited as to use in future years.
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SUBSEQUENT EVENTS |
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Jun. 30, 2023 | |||||||||||||||||||
| Subsequent Events [Abstract] | |||||||||||||||||||
| SUBSEQUENT EVENTS | NOTE 12 – SUBSEQUENT EVENTS
The following are subsequent events that the Company considers may be material:
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SUPPLEMENTAL OIL AND GAS DISCLOSURES (UNAUDITED) |
6 Months Ended |
|---|---|
Jun. 30, 2023 | |
| Supplemental Oil And Gas Disclosures | |
| SUPPLEMENTAL OIL AND GAS DISCLOSURES (UNAUDITED) | NOTE 13 – SUPPLEMENTAL OIL AND GAS DISCLOSURES (UNAUDITED)
In accordance with ASC 932, Extractive Activities- Oil and Gas, the Company is required to provide additional information regarding its oil and gas producing activities when those activities are deemed to be significant. According to ASC 932, significance is defined as satisfying one or more of the following criteria: the revenues from oil and gas are 10% or more of total revenues; the operating income (loss) from oil and gas are 10% or more of total income (loss) from operations; the identifiable assets of oil and gas are 10% or more of total assets. In 2023 and 2022, the Company’s oil and gas activities were deemed to be significant since the operating loss from oil and gas is 10% or more of total loss from operations. In addition, there were no oil sales for the six months ended June 30, 2023 and 2022.
Oil and Gas Reserves There are several factors that need to be considered in estimating quantities of proved crude oil and natural gas reserves. Crude oil and natural gas reserve engineering is a subjective process of estimating underground accumulations of crude oil and natural gas that cannot be precisely measured. The accuracy of any reserve estimate is a function of the quality of available data and of engineering and geological interpretation and judgment. Results of drilling, testing and production subsequent to the date of the estimate may justify revision of such estimate. Accordingly, reserves estimates are often different from the quantities of crude oil and natural gas that are ultimately recovered.
Proved oil and gas reserves are those quantities of oil and gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible – from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations – prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation. The project to extract the hydrocarbons must have commenced or the operator must be reasonably certain that it will commence the project within a reasonable time.
Existing economic conditions include prices and costs at which economic productivity from a reservoir is to be determined. The price shall be the average price during the 12-month period prior to the ending date of the period covered by the report, determined as an unweighted arithmetic average of the first-day-of-the-month price for each month within such period, unless prices are defined by contractual arrangements, excluding escalations based upon future conditions. For the periods ending June 30, 2023 and December 31, 2022, that price would be $70.64 and $94.13, respectively.
Proved reserves are estimated quantities of oil, gas and natural gas liquids that geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions. The reserve volumes presented are estimates only and should not be construed as being exact quantities. The Company’s 479-acre oil field is located in West Texas. Per the Preliminary Reserve Estimate done by an independent geologist, it is estimated to contain 150 million barrels of oil. The geologist estimates the recovery factor at 30% to 40% of the total reserves. Based on the lower estimated quantity and lower the recovery factor, the total barrels of recoverable oil for would be around 45 million barrels. The average price of West Texas Intermediate oil for the six months ending June 30, 2023 was $70.64. This would give an estimated total value of recoverable oil at approximately $3.2 billion. The cost of production would be around $1.0 billion which would leave a net of approximately $2.2 billion.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Basis of presentation | Basis of presentation The Company’s financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
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| Use of estimates | Use of estimates The preparation of financial statements in conformity with U.S. 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 and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
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| Revenue recognition | Revenue recognition The Company recognizes revenue in accordance with Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers,” (“Topic 606”). Revenue is recognized when a customer obtains control of promised goods or services. In addition, the standard requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The amount of revenue that is recorded reflects the consideration that the Company expects to receive in exchange for those goods. The Company applies the following five-step model in order to determine this amount: (i) identification of the promised goods in the contract; (ii) determination of whether the promised goods are performance obligations, including whether they are distinct in the context of the contract; (iii) measurement of the transaction price, including the constraint on variable consideration; (iv) allocation of the transaction price to the performance obligations; and (v) recognition of revenue when (or as) the Company satisfies each performance obligation.
The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. Once a contract is determined to be within the scope of Topic 606 at contract inception, the Company reviews the contract to determine which performance obligations the Company must deliver and which of these performance obligations are distinct. The Company expects to recognize revenues as the amount of the transaction price that is allocated to the respective performance obligation when the performance obligation is satisfied or as it is satisfied.
The Company recognizes sales when oil is picked up by the delivery company and control passes to the customer.
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| Cash equivalents | Cash equivalents The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. There were no cash equivalents at June 30, 2023 and December 31, 2022.
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| Property and Equipment | Property and Equipment Property and equipment is recorded at cost. Cost of improvements that substantially extend the useful lives of the assets are capitalized. Maintenance and repair costs are expensed when incurred. When other property and equipment is sold or retired, the capitalized costs and related accumulated depreciation are removed from their respective accounts.
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| Asset Retirement Obligations | Asset Retirement Obligations To cover the estimated future asset retirement obligations ("ARO") related to its oil and gas properties, the Company maintains a $50,000 bond with the Railroad Commission of Texas (“RRC”). This bond is to ensure that the Company will cap any wells on the Alvey Oil Field that it decides are no longer productive. Once the Company decides it is finished working the Alvey Oil Field, it can apply to the RRC to have the bond repaid.
The Company believes the bond should cover the estimated liability for abandoning wells. Revisions to the liability could occur due to changes in estimated abandonment costs, changes in well economic lives, or if federal or state regulators enact new requirements regarding the abandonment of wells.
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| Impairment of Long-Lived Assets | Impairment of Long-Lived Assets In accordance with authoritative guidance on accounting for the impairment or disposal of long-lived assets, as set forth in Topic 360 of the Accounting Standards Codification (“ASC”), the Company assesses the recoverability of the carrying value of its non-oil and gas long-lived assets when events occur that indicate an impairment in value may exist. An impairment loss is indicated if the sum of the expected undiscounted future net cash flows is less than the carrying amount of the assets. If this occurs, an impairment loss is recognized for the amount by which the carrying amount of the assets exceeds the estimated fair value of the assets.
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| Intangible Assets | Intangible Assets The Company recognizes intangible assets in accordance with ASC 350. Intangible assets are defined as identifiable non-monetary assets without physical substance, acquired through purchase, internally generated, or acquired as part of a business combination, which provide future economic benefits and are under the control of the Company.
Intangible assets with finite useful lives are amortized over their estimated useful lives on a straight-line basis, unless another systematic and rational method better represents the consumption of the economic benefits. Intangible assets with indefinite useful lives are not amortized but are tested for impairment annually or more frequently if there are indications of impairment. The intangible assets consists of exclusive licenses obtained by the Company from KAM Biotechnology Ltd (“KAM”) in May 2023 and the agreement has a term of ten years. Payments from the Company to KAM occur over a 22-month period of time with no interest. As such, the asset is started at the net discounted amount of $758,501 less amortization in May and June of a total of $12,642 for a net of $745,859. As of June 30, 2023, the Company has paid $663,111 towards this note payable.
The Company reviews intangible assets for indicators of impairment at least annually, or whenever events or circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment loss is recognized if the carrying amount of the asset exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and its value in use. Any impairment loss is recognized in the income statement. Upon impairment, the carrying amount of the intangible asset is reduced to its recoverable amount. The impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the asset and then to the remaining balance of the asset. The impairment loss is recognized as an expense in the income statement, unless the asset had previously been revalued, in which case the loss is recognized against any revaluation surplus.
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| Oil and Gas Producing Activities | Oil and Gas Producing Activities The Company uses the successful efforts method of accounting for oil and gas activities. Under this method, the costs of productive exploratory wells, all development wells, related asset retirement obligation assets, and productive leases are capitalized and amortized, principally by field, on a units-of-production basis over the life of the remaining proved reserves. Exploration costs, including personnel costs, geological and geophysical expenses, and delay rentals for oil and gas leases are charged to expense as incurred. Exploratory drilling costs are initially capitalized, but charged to expense if and when the well is determined not to have found reserves in commercial quantities. The sale of a partial interest in a proved property is accounted for as a cost recovery, and no gain or loss is recognized as long as this treatment does not significantly affect the units-of-production amortization rate. A gain or loss is recognized for all other sales of producing properties. There were capitalized costs of $2,187,926 and $1,604,983 at June 30, 2023 and December 31, 2022, respectively.
Unproved oil and gas properties are assessed annually to determine whether they have been impaired by the drilling of dry holes on or near the related acreage or other circumstances, which may indicate a decline in value. When impairment occurs, a loss is recognized. When leases for unproved properties expire, the costs thereof, net of any related allowance for impairment, is removed from the accounts and charged to expense. During the six months ended June 30, 2023 and 2022, there was no impairment to unproved properties. The sale of a partial interest in an unproved property is accounted for as a recovery of cost when substantial uncertainty exists as to the ultimate recovery of the cost applicable to the interest retained. A gain on the sale is recognized to the extent that the sales price exceeds the carrying amount of the unproved property. A gain or loss is recognized for all other sales of unproved properties. For the six months ending June 30, 2023 and 2022, there was no gain or loss recognized for sales of unproved properties.
Costs associated with development wells that are unevaluated or are waiting on access to transportation or processing facilities are reclassified into developmental wells-in-progress ("WIP"). These costs are not put into a depletable field basis until the wells are fully evaluated or access is gained to transportation and processing facilities. Costs associated with WIP are included in the cash flows from investing as part of investment in oil and gas properties. At June 30, 2023 and December 31, 2022, no capitalized developmental costs were included in WIP.
Depreciation, depletion and amortization of proved oil and gas properties is calculated using the units-of- production method based on proved reserves and estimated salvage values. During the six months ended June 30, 2023 and 2022, the Company recorded no depreciation, depletion and amortization expense on oil and gas properties. The Company will start using the units-of-production method when the field is continuously operational and there are material sales.
The Company reviews its proved oil and natural gas properties for impairment whenever events and circumstances indicate that a decline in the recoverability of its carrying value may have occurred. It estimates the undiscounted future net cash flows of its oil and natural gas properties and compares such undiscounted future cash flows to the carrying amount of the oil and natural gas properties to determine if the carrying amount is recoverable. If the carrying amount exceeds the estimated undiscounted future cash flows, the Company will adjust the carrying amount of the oil and natural gas properties to fair value. During the six months ended June 30, 2023 and 2022, there was no impairment to proved properties.
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| Stock-based Compensation |
The Company applies the fair value method of Financial Accounting Standards Board (“FASB”) ASC 718, “Share Based Payment”, in accounting for its stock-based compensation. This standard states that compensation cost is measured at the grant date based on the fair value of the award and is recognized over the service period, which is usually the vesting period. The Company values stock-based compensation at the market price for the Company’s common stock and other pertinent factors at the grant date. During the six months ended June 30, 2023 and 2022, the Company recorded $876,063 and $,794 in stock-based compensation expense, respectively. In addition, the Company recorded unearned stock compensation of $685,711 and $124,274 at June 30, 2023 and December 31, 2022, respectively.
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| Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company adopted ASC 820, “Fair Value Measurements.” ASC 820 clarifies the definition of fair value, prescribes methods for measuring fair value, and establishes a fair value hierarchy to classify the inputs used in measuring fair value as follows:
The carrying amount of the Company’s financial assets and liabilities, such as cash, prepaid expenses and accrued expenses approximate their fair value because of the short maturity of those instruments. The Company’s notes payable approximates the fair value of such instruments as the notes bear interest rates that are consistent with current market rates.
The Company evaluates convertible instruments, options, warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for under ASC 815, “Derivatives and Hedging”. The result of this accounting treatment is that the fair value of the derivative is marked to market each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as other income (expense). Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. Equity instruments that are initially classified as equity that become subject to reclassification under ASC 815 are reclassified to liabilities at the fair value of the instrument on the reclassification date.
The following table classifies the Company’s liability measured at fair value on a recurring basis into the fair value hierarchy as of June 30, 2023. . There were no fair value instruments as of December 31, 2022:
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| Income taxes | Income taxes Income states are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss, capital loss and tax credit carryforwards. Deferred tax assets and liabilities are measures using enacted tax rates expected to apply to the taxable income in the years in which those temporary differences are expect to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
The Company recognizes the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company records interest and penalties related to unrecognized tax benefits as a component of general and administrative expenses. The Company’s federal tax return and any state tax returns are not currently under examination.
The Company has adopted ASC 740, “Accounting for Income Taxes,” which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed annually from differences between the financial statement and tax basis of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.
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| Net income (loss) per common share |
The Company computes loss per common share in accordance with ASC 260, “Earnings Per Share”, which requires dual presentation of basic and diluted earnings per share. Basic income or loss per common share is computed by dividing net income or loss by the weighted average number of common shares outstanding during the period. Diluted income or loss per common share is computed by dividing net income or loss by the weighted average number of common shares outstanding, plus the issuance of common shares, if dilutive, that could result from the exercise of outstanding stock options and warrants.
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| Concentration of credit risks | Concentration of credit risks The Company maintains accounts with financial institutions. All cash in checking accounts is non-interest bearing and is fully secured by the Federal Deposit Insurance Corporation (FDIC). At times, cash balances may exceed the maximum coverage provided by the FDIC on insured depositor accounts. The Company believes it mitigates its risk by depositing its cash and cash equivalents with major financial institutions.
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| Recently issued accounting pronouncements | Recently issued accounting pronouncements The Company has implemented all new accounting pronouncements that are in effect. These pronouncements did not have any material impact on the financial statements unless otherwise disclosed, and the Company does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on its financial position or results of operations.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of derivative liability |
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PROPERTY AND EQUIPMENT (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of property and equipment |
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DEBT (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of long term debt |
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| Schedule of long term debt mature |
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DERIVATIVE FINANCIAL INSTRUMENTS (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Offsetting Assets [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Changes in fair value derivative instruments |
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| Schedule of embedded derivatives |
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| Schedule of Fair value assumptions |
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| Embedded Derivative Financial Instruments [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Offsetting Assets [Line Items] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Changes in fair value derivative instruments |
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STOCK OPTIONS (Tables) |
6 Months Ended | |||||||||||||||||||||||||||||||||||
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Jun. 30, 2023 | ||||||||||||||||||||||||||||||||||||
| Equity [Abstract] | ||||||||||||||||||||||||||||||||||||
| Schedule of assumption |
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INCOME TAXES (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of federal income tax |
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| Schedule of deferred tax asset |
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ORGANIZATION AND DESCRIPTION OF BUSINESS (Details Narrative) - USD ($) |
Sep. 03, 2020 |
Jun. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|---|
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
| Contingent liability | $ 4,650 | $ 5,700 | |
| Global Environmental Technologies [Member] | Securities Purchase Agreement [Member] | |||
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
| Number of shares sold, value | $ 66,400 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) |
Jun. 30, 2023
USD ($)
|
|---|---|
| Platform Operator, Crypto-Asset [Line Items] | |
| Derivative | $ 102,466 |
| Total | 102,466 |
| Fair Value, Inputs, Level 1 [Member] | |
| Platform Operator, Crypto-Asset [Line Items] | |
| Derivative | |
| Total | |
| Fair Value, Inputs, Level 2 [Member] | |
| Platform Operator, Crypto-Asset [Line Items] | |
| Derivative | |
| Total | |
| Fair Value, Inputs, Level 3 [Member] | |
| Platform Operator, Crypto-Asset [Line Items] | |
| Derivative | 102,466 |
| Total | $ 102,466 |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) |
6 Months Ended | |||
|---|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
May 31, 2023 |
Dec. 31, 2022 |
|
| Accounting Policies [Abstract] | ||||
| Cash equivalents | $ 0 | $ 0 | ||
| Texas railroad commission bond | 50,000 | 50,000 | ||
| Intangible asset, net | 745,859 | $ 12,642 | ||
| Notes payable | 663,111 | |||
| Production capitalized costs | 2,187,926 | 1,604,983 | ||
| Impairment unproved properties | 0 | $ 0 | ||
| Gain loss on sales of unproved properties | 0 | 0 | ||
| Capitalized developmental costs | 0 | 0 | ||
| Depreciation and amortization expense on oil and gas properties | 0 | 0 | ||
| Impairment proved properties | 0 | $ 0 | ||
| Unearned stock compensation | $ 685,711 | $ 124,274 | ||
COMMITMENTS AND CONTINGENCIES (Details Narrative) |
1 Months Ended |
|---|---|
|
Feb. 28, 2021
USD ($)
| |
| Defined Benefit Plan Disclosure [Line Items] | |
| Working Interest | 18.75% |
| Danny Hyde [Member] | |
| Defined Benefit Plan Disclosure [Line Items] | |
| Equipment purchased | $ 450,000 |
PROPERTY AND EQUIPMENT (Details) - USD ($) |
Jun. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Property, Plant and Equipment [Line Items] | ||
| Less accumulated depreciation | $ (74,301) | $ (58,224) |
| Property and equipment, net | 3,167,312 | 2,429,035 |
| Equipment [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Property and equipment, gross | $ 966,687 | 782,576 |
| Equipment [Member] | Minimum [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Useful Lives | 5 years | |
| Equipment [Member] | Maximum [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Useful Lives | 20 years | |
| Vehicles [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Property and equipment, gross | $ 87,000 | 99,700 |
| Vehicles [Member] | Minimum [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Useful Lives | 5 years | |
| Vehicles [Member] | Maximum [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Useful Lives | 15 years | |
| Well Development Costs [Member] | ||
| Property, Plant and Equipment [Line Items] | ||
| Property and equipment, gross | $ 2,187,926 | $ 1,604,983 |
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
|
| Property, Plant and Equipment [Abstract] | ||||
| Depreciation expense | $ 12,646 | $ 10,912 | $ 25,752 | $ 10,912 |
DEBT (Details) - USD ($) |
Jun. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Debt Instrument [Line Items] | ||
| Debt | $ 2,144,639 | $ 869,500 |
| Debt discount | (85,743) | (21,532) |
| Short term debt | 2,058,895 | 847,968 |
| Less current portion | 489,734 | 277,613 |
| Long term portion | 1,569,161 | 570,355 |
| Note Payable [Member] | ||
| Debt Instrument [Line Items] | ||
| Debt | 480,389 | 443,500 |
| Note Payable Related Party [Member] | ||
| Debt Instrument [Line Items] | ||
| Debt | 100,000 | 15,000 |
| Convertible Notes Payable [Member] | ||
| Debt Instrument [Line Items] | ||
| Debt | 1,539,250 | 386,000 |
| Convertible Notes Payable Related Party [Member] | ||
| Debt Instrument [Line Items] | ||
| Debt | $ 25,000 | $ 25,000 |
DEBT (Details 1) |
Jun. 30, 2023
USD ($)
|
|---|---|
| Debt Disclosure [Abstract] | |
| 2023 | $ 282,500 |
| 2024 | 255,250 |
| 2025 | 1,606,889 |
| Total | $ 2,144,639 |
DERIVATIVE FINANCIAL INSTRUMENTS (Details) |
Jun. 30, 2023
USD ($)
|
|---|---|
| Indexed Shares [Member] | |
| Offsetting Assets [Line Items] | |
| Embedded derivatives | $ 355,834 |
| Total | 355,834 |
| Fair Values [Member] | |
| Offsetting Assets [Line Items] | |
| Embedded derivatives | 102,466 |
| Total | $ 102,466 |
DERIVATIVE FINANCIAL INSTRUMENTS (Details 1) - USD ($) |
3 Months Ended | 6 Months Ended | ||
|---|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
|
| Investments, All Other Investments [Abstract] | ||||
| Embedded derivatives | $ (22,977) | $ 49,392 | ||
| Loss on issuance of derivative | (86,858) | |||
| Total gain (loss) | $ (22,977) | $ (37,466) | ||
DERIVATIVE FINANCIAL INSTRUMENTS (Details 2) - $ / shares |
6 Months Ended | 12 Months Ended |
|---|---|---|
Jun. 30, 2023 |
Dec. 31, 2022 |
|
| Investments, All Other Investments [Abstract] | ||
| Quoted market price on valuation date | $ 0.3100 | $ 0.0072 |
| Effective contractual conversion rates | $ 0.0024 | |
| Effective contractual conversion rates | $ 0.2015 | |
| Contractual term to maturity | 6 months 29 days | 1 year |
| Volatility minimum | 68.78% | 151.08% |
| Volatility maximum | 197.81% | 171.20% |
| Risk-adjusted interest rate | 13.90% | 4.79% |
DERIVATIVE FINANCIAL INSTRUMENTS (Details 3) - USD ($) |
6 Months Ended | 12 Months Ended |
|---|---|---|
Jun. 30, 2023 |
Dec. 31, 2022 |
|
| Investments, All Other Investments [Abstract] | ||
| Derivative fair value at beginning | $ 3,116,734 | |
| Issuances embedded derivatives | 151,858 | 396,013 |
| Conversions | (3,512,747) | |
| Changes in fair value inputs and assumptions reflected in income | (49,392) | |
| Derivative fair value at ending | $ 102,466 |
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) |
6 Months Ended | 12 Months Ended |
|---|---|---|
Jun. 30, 2023 |
Dec. 31, 2022 |
|
| Related Party Transaction [Line Items] | ||
| Common stock par value | $ 0.001 | $ 0.001 |
| Consulting service | $ 284,500 | $ 431,399 |
| Consulting fees | 60,188 | 194,712 |
| Related Party [Member] | ||
| Related Party Transaction [Line Items] | ||
| Convertible note payable | $ 25,000 | 25,000 |
| Note payable | $ 15,000 |
STOCK OPTIONS (Details) - $ / shares |
6 Months Ended | 12 Months Ended |
|---|---|---|
Jun. 30, 2023 |
Dec. 31, 2022 |
|
| Quoted market price on valuation date | $ 0.782 | |
| Exercise price | $ 0.5765 | |
| Range of interest rates | 13.90% | 4.79% |
| Minimum [Member] | ||
| Range of expected term | 1 year 9 months | |
| Range of equivalent volatility | 29.47% | |
| Range of interest rates | 1.55% | |
| Maximum [Member] | ||
| Range of expected term | 2 years 6 months | |
| Range of equivalent volatility | 37.40% | |
| Range of interest rates | 1.68% |
STOCK OPTIONS (Details Narrative) - Equity Option [Member] - USD ($) |
6 Months Ended | 12 Months Ended | |
|---|---|---|---|
Mar. 07, 2022 |
Jun. 30, 2023 |
Dec. 31, 2022 |
|
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
| Unrecognized compensation cost | $ 26,559 | $ 37,648 | |
| Stock options outstanding | 200,000 | 200,000 | |
| Stock option exercisable | 100,000 | 50,000 | |
| Weighted average remaining term | 9 months 21 days | 1 year 3 months 21 days | |
| Consulting Agreement [Member] | |||
| Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||
| Stock option issued | 200,000 | ||
| Stock option exercise price | $ 0.58 | ||
| Stock option grant date fair value | $ 55,966 |
INCOME TAXES (Details) - USD ($) |
6 Months Ended | |
|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
|
| Federal income tax benefit attributable to: | ||
| Current Operations | $ 297,278 | $ 307,643 |
| Less: Valuation Allowance | (297,278) | (307,643) |
| Net provision for Federal income taxes | ||
INCOME TAXES (Details 1) - USD ($) |
Jun. 30, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Deferred tax asset attributable to: | ||
| Net operating loss carryover | $ 807,711 | $ 510,433 |
| Less: Valuation allowance | (807,711) | (510,433) |
| Net deferred tax asset |
INCOME TAXES (Details Narrative) - USD ($) |
6 Months Ended | |
|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
|
| Income Tax Disclosure [Abstract] | ||
| Income tax rate | 21.00% | |
| Operating loss carry forwards | $ 807,711 | |
| Income tax benefit | $ 0 | $ 0 |
SUBSEQUENT EVENTS (Details Narrative) - USD ($) |
1 Months Ended | 6 Months Ended | |
|---|---|---|---|
Aug. 15, 2023 |
Jun. 30, 2023 |
Sep. 30, 2023 |
|
| Forecast [Member] | |||
| Subsequent Event [Line Items] | |||
| Convertible note payable | $ 69,250 | ||
| Series A Preferred Stock [Member] | |||
| Subsequent Event [Line Items] | |||
| Preferred stock voting rights | The holders of the Series “A” Convertible Preferred Stock shall vote together with the holders of preferred stock (including on an as converted basis) and common stock as a single class. The Series “A” Convertible Preferred Stock stockholder is entitled to 3,000 votes for every one (1) share of Series “A” Convertible Preferred Stock held. | ||
| Convertible common stock description | The three major shareholders elected to convert 50,000,000 common shares of stock into 16,665 shares of Series “A” Convertible Stock. | ||
| Subsequent Event [Member] | |||
| Subsequent Event [Line Items] | |||
| Amount from investors | $ 200,000 |
SUPPLEMENTAL OIL AND GAS DISCLOSURES (UNAUDITED) (Details Narrative) - USD ($) $ / shares in Units, $ in Billions |
6 Months Ended | 12 Months Ended |
|---|---|---|
Jun. 30, 2023 |
Dec. 31, 2022 |
|
| Supplemental Oil And Gas Disclosures | ||
| Average price of West Texas Intermediate oil | $ 70.64 | $ 94.13 |
| Recoverable oil price | $ 3.2 | |
| Production cost | 1.0 | |
| Recoverable oil price net | $ 2.2 |